My daughter received the Pell Grant, I have not received anything from the school ever. Does that need to be reported on taxes?

[Hal_Al]

Q. Does that need to be reported on taxes?

A, Simple answer: No.

But taxes aren't simple,  and the education tax benefits are particularly flexible. 

Scholarships that pay for qualified educational expenses (QEE - tuition, fees, books and other course materials) is tax free.  Scholarship amounts that exceed QEE is taxable income, on the student’s tax return. The fact that the school didn't issue a 1098-T usually means that your QEE was totally offset by scholarship, with no excess and you have nothing to claim on you or your student's tax returns. 

But, there is a tax “loop hole” available to claim an education credit, for the parents of students on scholarship. The student reports all his scholarship, up to the amount needed to claim the American Opportunity Credit (AOC), 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 are not restricted like that). 

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, the parents can claim $4000 of qualified expenses on their return.

Books and computers are also qualifying expenses for the AOC. So, extending the example, the student had another $1000 in expenses for those course materials, paid out of pocket. She would only need to report $5000 of taxable scholarship income, instead of $6000.

The IRS actually encourages use of this technique. From the form 1040 instructions: “You may be able to increase an education credit if the student chooses to include all or part of a Pell grant or certain other scholarships or fellowships in income. For more information, see Pub. 970, the instructions for Form 1040 and IRS.gov/EdCredit".  PUB 970 even has examples of how to do the “loop hole”.

[SabrinaD2]

If you’re enrolled in a degree program or are pursuing a training program that prepares you for specific types of employment and you use your Pell grant to pay for “qualified education expenses,” you don’t need to report your grant on your tax return.

To determine if your daughter's Pell Grant is taxable with or without a 1098-T form from your school, you can follow these steps:

First option:

Get the 1098-T Form: First, obtain the 1098-T form from the school's Bursar's Office. This form will usually provide enough information about whether all scholarships and grants, including the Pell Grant, are tax-deductible.

Second  option:

If the 1098-T form is not available, you can still determine if your daughter's Pell Grant is taxable by following these steps:

1. Check if the Pell Grant was used for qualified education expenses, such as tuition, fees, books, supplies, and equipment required for courses. These expenses are tax-free
2. Determine if any portion of the Pell Grant was used for non-qualified expenses, like housing, travel, or other personal expenses. These amounts are taxable and must be reported as income
3. Access your daughter's financial account on the school's website. Look for billing statements, invoices, or account summaries that detail how the Pell Grant funds were applied
4. Subtract the total qualified education expenses from the total Pell Grant received. The difference, if any, is the taxable amount

Based on Option 1 or 2 - If you determine that part of the Pell Grant is taxable,

1. Be sure you are logged into TurboTax
2. Then click here to enter educational income and expenses.
3. Answer all questions
4. When you get to did you receive a 1098T select yes or no, which ever is applicable and
5. Continue through the questions

For Additional information click below:

TurboTax - is my PELL Grant Taxable

[Hal_Al]

After answering no, to the question did you receive a 1098-T, answer yes to the question "do you qualify for an exception". The circumstance, you describe qualify you. 

You could check you school account online. Many schools no longer mail oozy the 1098-T. You have to retrieve it.