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New Member

Do I have to file taxes? I did not work, but did recieve alimony. I also attended college with a pell grant.

 
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Level 15

Do I have to file taxes? I did not work, but did recieve alimony. I also attended college with a pell grant.

Maybe.

Alimony is usually taxable.  "Excess" scholarship is also taxable. Excess scholarship is the amount that exceeds qualified expenses (tuition, fees and course materials).  Basically grant money that pays your living expenses is taxable. Usually, the amount in box 5 of your form 1098-T that exceeds box 1 is the taxable amount.

 

If your taxable scholarship plus alimony exceeds $12,200, you are required to file a tax return.

 

There is a refundable tuition credit available, if you are a half time or more,  undergrad,  over age 23.  So you may want to file for that if box 1 of your  1098-T exceeds box 5.

 

But, wait, there's more.  There is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, the parents  (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this if the conditions of the grant are that it be used to pay for qualified expenses (Pell grants do not have that condition).

Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, she can claim $4000 of qualified expenses for the $1000 refundable credit.  The non refundable part of the credit will wipe pout any tax due on the $6000 of income. 

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Expert Alumni

Do I have to file taxes? I did not work, but did recieve alimony. I also attended college with a pell grant.

It depends when your divorce agreement was finalized and if any part of your grant exceeded qualified education expenses. 

 

If your alimony was from an agreement executed

  • after December 31, 2018 (or modified after December 31, 2018 in certain circumstances), then it would not be reported as income due to the Tax Cuts and Jobs Act signed into law December 22, 2017.
  • before December 31, 2018, alimony received is reportable income

IRS Publication 970 Tax Benefits for Education, page 7 and 17: Pell Grants are free only to the extent that they are used for qualified education expenses during the period for which a grant is awarded. 

 

For more information, see the resources below:

Do I need to report alimony I received from a former spouse?

IRS Interactive Tax Assistance: Do I include my scholarship, fellowship, or education grant as income on my tax return? This only takes 15 minutes and is online.