Claiming Stimulus Payments

[Ajt116]

Hello,

I posted this yesterday but need some help. I was a part time college student from January-May 2020. I received a 1098-T with the “at least half-time student” box checked and paid the majority of the tuition out of pocket, with some paid by financial aid. My main question is, in 2019 I was claimed as a dependent. For 2020, I’m claiming myself and I know I’m eligible for the two stimulus amounts for $1800. The main concern I have is, and I can’t find any further information, is that I received an amount from my school in May 2020 for the CARES ACT grant that colleges received (HEERF). It was then given to me from my school, I did not receive any stimulus payments from the IRS in 2020. Would I still be eligible for both payments even though I received the Higher Education Emergency Relief Fund (HEERF)? I logged into my IRS account and it shows that I got $0 in payments and to use that information when filing my tax return, I’m just getting stuck on if the amount I received from my college counts as the first stimulus payment? Or are these totally different. The IRS and the schools website states it is not taxable and that it will not be included on my 1098-t which it is not. Do I have to put this amount that the school gave me anywhere on my return? It wasn’t on my 1098-T, and I don’t see anywhere where I can put this amount of $1200.00.

thank you!

[DianeW777]

There is nothing that says because you got the Higher Education Emergency Relief Fund (HEERF) that you are not entitled to the stimulus payments.  The amount you received for educational support does not go on your tax return as stimulus payments. They are separate and distinct under the CARES Act.

It may affect your education tax credits.  HEERF & Emergency Financial Aid Grants Under CARES 

Do not enter it as income on your tax return.

Keep in mind that being independent for tax purposes is not optional.   A scholarship received by a child who is a student is not taken into account in determining whether the child provided more than half of his or her own support. If you did not provide more than half of your own support (without regard to the scholarships) then you may not be eligible to be considered independent for tax purposes. This might mean that only your parents could claim you as a dependent. The following worksheet will help determine it.

• Worksheet for Determining Support (may be helpful for evaluation)

You should record your actual receipts, in your case according to your notes was zero, for stimulus payments received in 2020.

IRS Recovery Rebate Credit

• In TurboTax Online once your return is open, select Wages & Income (to enter the tax return).
• Select Federal Review at the top of the page > Continue to answer the questions for Let's make sure you got the right stimulus amount
• TurboTax will then include any stimulus amount due on your 1040 form - either added to your refund or reduce the amount due.
• See the image below.

[Ajt116]

Hello,

@DianeW777 when you said it may affect my education tax credits, my 1098-T did not have anything on it reflecting the HEERF payment and my school as well as the IRS said it is not taxable. When filling out my education information, I put exactly what was on my 1098-T and only purchased 1 book so put the $40 amount for an expense. So do I not put this $1200 payment from the grant anywhere? I got the lifetime learning credit for the amount I paid out of pocket for school, obviously TurboTax took out my scholarship amount which was on my 1098 and gave me 20% of the amount I paid.

so I should not have to put the HEERF payment anywhere on my return as it asks no questions about it? I did put I got 0 for both stimulus amounts and I’m also eligible to claim myself for 2020 as I was only a part-time student and NOT full-time, and I’m 22 years old so my parents were not able to claim me due to being part-time.

[KrisD15]

If you attended at least part of at least 5 months in 2020, you COULD be considered a student for dependent purposes; Therefore, if you attended school at any time in January through any time at all in May, you could be claimed by your parents on their return if you did not supply more than half your own support.

Please click this link to see if you are a dependent

IRS has two definitions for being a student, one for a Taxpayer (such as your parents)  to claim you and another to receive the American Opportunity Tax Credit. 

To be "at least half-time" for the credit:

According to the IRS:

“For at least one academic period beginning (or treated as beginning) in 2020, the student both: a. Was enrolled in a program that leads to a degree, certificate, or other recognized educational credential; and b. Carried at least one-half the normal full-time workload for his or her course of study. The standard for what is half of the normal full-time workload is determined by each eligible educational institution. However, the standard may not be lower than any of those established by the U.S. Department of Education under the Higher Education Act of 1965.”

To answer your question about the Higher Education Emergency Relief Fund (HEERF) 

NO, it is NOT part of YOUR stimulus payment, 

YES, you MUST reduce the amount of education expenses by the amount of the tax-free grant if it was paid to you or to the school on your behalf (to your specific school account) and not just to the school in general.  If it is not listed on your 1098-T, enter the amount of the grant when the TurboTax program asks if you received any other aid not reported on a W2. 

[Ajt116]

@KrisD15 the IRS website, along with my school website states that this is not taxable income. If I were to enter it on any other aid not reported on a W2 wouldn’t it tax it? I never received, or could find any info to say to put that payment on my taxes. The $1200 payment was instructed to not be listed on a 1098-T according to the IRS as it would cause confusion and they stated no where to include it when filing your taxes. 

also, you say that I COULD be claimed as a dependent, but I was only PART-TIME. The IRS website and dependent tool walks you through and asks if the student was FULL-TIME for at least 5 months (and they say full-time is what your school considers full-time which is 12 credit hours) I only took 6 credit hours for the 5 months, and was not a student at the end of 2020. Therefore they can’t claim me, as well as others have said on this community form that I should claim myself. 

[KrisD15]

No, reporting it will only result in subtracting the grant from the education expenses, NOT making the grant taxable. It is limiting the expenses you can use towards an education credit.

According to the IRS:

“Q2: I received an emergency financial aid grant under the CARES Act and used some of it to pay for course materials that are now required for online learning because my college or university campus is closed. Can I claim a tuition and fees deduction for the cost of these materials, or treat the cost of these materials as a qualifying education expense for purposes of claiming the American Opportunity Credit or the Lifetime Learning Credit?

A2: No. Because the emergency financial aid grant is not includible in your gross income, you cannot claim any deduction or credit for expenses paid with the grant including the tuition and fees deduction, the American Opportunity Credit, or the Lifetime Learning Credit. See section 139(h) of the Internal Revenue Code.”

IRS Source

Yes, if you were not considered a full-time student for those 5 months, you would not be their dependent. I understood you as meaning that it was part-time since it was only part of the year. To clarify, I included the TurboTax link with more information. I felt your real question had to do with the HEERF Grant. Now that I realize you were only part-time for those 5 months, you are correct. 

For being a dependent: 

"To qualify as a student, your child must be, during some part of each of any 5 calendar months of the year:

1. A full-time student at a school that has a regular teaching staff, course of study, and a regularly enrolled student body at the school; or
2. A student taking a full-time, on-farm training course given by a school described in (1), or by a state, county, or local government agency.

The 5 calendar months don't have to be consecutive.

Full-time student.

A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance."

[Ajt116]

@KrisD15 hello, thank you for the follow up. The only other question I have is, so before I received this payment. I made the payment difference that is indicated on my 1098-T. I received approx $800 in scholarships, and my tuition was $2500. I paid about $1700 out of pocket in January. I didn’t receive this grant until May, and was told to use it for certain expenses. I only put that I had $40 in expenses which I used for books in January. Since I received this grant in May, I did not put any of the expenses that I used it for when it asked what my expenses were, which is what I understood from that statement you posted from the IRS. Wouldn’t I still be qualified to get the lifetime learning credit for that $1700 I paid towards tuition? My parents already claimed the American opportunity credit for the previous 4 years so I put that I already claimed it 4 times, but it shows that I can get 20% of the $1700 I paid out of my pocket for tuition. I just understood it as, the $1200 I got from the CARES ACT grant was used for expenses and to just not include those expenses that you paid with on the grant.

[Ajt116]

@KrisD15 to follow up on my last message. I believe what the IRS is saying is that IF you used it for qualified tuition and expenses then you can’t put that $1200 in the expenses portion of your return. If I were to put $1200 more on the expenses portion that would of therefore caused me to get a bigger refund credit, which I did not do. I used the $1200 unexpected expenses and unmet financial need due to the pandemic. These $1200 expenses were NOT put on my return, and did not cause me to get a bigger credit, as I only put on my return what was on my 1098-T and 1 Book that I had purchased before the pandemic started. Would I have to put the $1200 amount from the HEERF if the normal education expenses are different from the qualified HEERF expenses? It says we can use for unexpected childcare, Healthcare, technology, etc. I would only need to put the $1200 amount of the grant on my tax form if I were to put the expenses paid with that grant? I’m so sorry for all of the questions this is just super confusing and they never gave any direction. From what I understand is as long as you don’t put the expense amount paid from the grant, then I wouldn’t have to put the grant on my return at all, as TurboTax also never asked if I received that.

[DianeW777]

You are correct.  Do not use any expense for education on your tax return that was paid by your Higher Education Emergency Relief Fund (HEERF).  Only use what you had to spend above and beyond that amount. 

Using the 1098-T and your extra expense for your book was the correct action for your tax return. Do not put the grant on your tax return at all.