If I got a financial aid refund after tuition was paid, do I need to put down that as income?
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If I got a financial aid refund after tuition was paid, do I need to put down that as income?

 
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New Member

If I got a financial aid refund after tuition was paid, do I need to put down that as income?

Possibly. If the money refunded came from scholarships or grants, the refunded portion may be taxable income.

See the following excerpt from IRS Publication 970:

A scholarship or fellowship grant is tax free only to the extent :

  • It doesn't exceed your qualified education expenses;

  • It isn't designated or earmarked for other purposes (such as room and board), and doesn't require (by its terms) that it can't be used for qualified education expenses; and

  • It doesn't represent payment for teaching, research, or other services required as a condition for receiving the scholarship. For exceptions, see Payment for services, later.

Check your 1098-T from the school. If the amount for scholarships and grants is greater than the amount for tuition in box 1 or 2, you may have taxable scholarship or grant income. If this is the case, you will need to enter the 1098-T with your return. You should also enter any other education expenses like books and required school supplies.

Qualified education expenses include the following:

  • Tuition and fees required to enroll at or attend an eligible educational institution; and

  • Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. These items must be required of all students in your course of instruction.

Expenses that don't qualify . Qualified education expenses don't include the cost of:

  • Room and board,

  • Travel,

  • Research,

  • Clerical help, or

  • Equipment and other expenses that aren't required for enrollment in or attendance at an eligible educational institution.

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