1098 T

Forum|Forum|4 years ago
January 30, 2022
6 replies
25 views

I just received my 1098T after I filed my taxes because I forgot I got a $29 credit after my pell grant covered my tuition. Do I need to amend my return or is $29 not considered taxable?

Not A Product Question

Critter-3

Level 15

Grants are not taxable income and even if it was $29 will not make a difference.

AnhixenbaughAuthor

Level 2

Thank you!

Carl

Level 11

I think just to say that "Pell grants aren't taxable" may be a bit mis-leading. Generally speaking, it's true; but conditions have to be met. The two I'm aware of are:

You must be enrolled in a program as a degree candidate, or you must be pursuing a training program that prepares you for specific types of employment upon completion.
You must use the Pell grant only to pay for “qualified education expenses.”

But being a bit realistic, even if the $29 is taxable (I think it is, since you refer to it as a credit.) I don't think it's going to make any difference in your overall tax liability.

AnhixenbaughAuthor

Level 2

Basically, box 1 of my 1098T says $848 and box 5 says $877. Everything that I read said you have to file the 1098T if box 5 is bigger than box 1. Since the amount greater is only $29, I assumed it would be fine but I'm a worry wart, lol. I don’t want to be audited or have my taxes delayed over $29, lol.

Opus 17

Level 15

@Anhixenbaugh

If you already filed your return, there is nothing you can do but wait. If it causes a delay with your refund there’s nothing you can do about it.

On one level, I would not amend. I filed an amended return two years ago that took a 11 months to process, even though the claimed time is 4-5 months. And, you can also use a Pell Grant for necessary educational expenses like textbooks. If the IRS were to send you a letter telling you that you forgot to report your Pell grant and that you owe income tax on the $29, you could reply with a letter of explanation and receipts showing that you spent more than $29 on books.

On the other hand, there is a trick — not exactly a loophole — that might allow you to get a bigger tax refund for yourself by changing the way you report the Pell Grant. With a Pell Grant, you have the choice of applying it to tuition or to living expenses. If you apply it to living expenses, then you can use the $800 of tuition that you paid to claim a tuition tax credit. Even if you live at home with your parents, your school financial aid office probably has a dollar figure that will be acceptable to the financial aid bureaucracy and the IRS as living expenses for their students.

In this case, you are probably not a full-time student so you cannot claim the AOTC, but you could claim the lifetime learning credit, which I believe is 20% of the tuition. That means you would get an additional $200 refund. Here is an IRS fact sheet on this option.

https://www.irs.gov/pub/irs-utl/Pell%20AOTC%204%20pager.pdf

If you wanted to do this, you still need to wait until your first tax return is processed and whatever refund you claimed has been paid, then you could prepare an amended tax return to report the Pell Grant, the 1098-T, and claim the tuition credit. I would still expect that it could take up to a year for the amended return to actually be processed.

The person who is most qualified to help you navigate this process in TurboTax is @Hal_Al