Do I Have to File a Tax Return if I Only Received a Pell Grant for College?

If you’re 18 years old and in your first year of college, you may not have ever filed your own taxes before. Especially for a newbie, financial aid can make taxes confusing. You might have tons of questions. Is there a special financial aid tax form? Is my Pell Grant taxable? Do I have to put financial aid on my tax return? Do I even have to file a tax return at all?

Depending on the sources of your funding, you may need to file a tax return. It is a good idea to sit down with your parent or guardian, get your finances in order and practice filing your taxes even if you haven’t made much money in the last year.

Is the Pell Grant Taxable?

Even though the Pell Grant comes from the federal government, the IRS taxes it the same way it would tax a private scholarship. That means your Pell Grant is taxable but only under certain circumstances. By following a few rules, you can keep your Pell Grant money tax free.

How to Keep Pell Grant Financial Aid off Your Tax Form

To keep Pell Grant financial aid off your tax return, you have to follow a few rules. These rules don't only apply to Pell Grants. They also apply to all other scholarships and financial aid.

To keep Pell Grant financial aid off your tax return, maintain enrollment and eligibility in a degree program at a school that qualifies for federal funding. Students at some for-profit colleges do not qualify for Pell Grants and other federal funding, so the students would need to report financial aid on their tax form.

Another thing you have to do to keep your Pell Grant financial aid off your tax form is to use the money only for qualified education expenses.

What Are Qualified Education Expenses?

Qualified education expenses are anything that is necessary for your schooling. These include tuition and fees. They also include required books and supplies. You may have to prove that something you purchased is required for one of your courses, so remember to keep all of your receipts and copies of your syllabi to prove that your purchases are qualified education expenses.

There are a few things you may need for school that aren’t qualified education expenses. You need to eat during college, right? Well, your meal plan is not a qualified education expense. Neither is the fee you pay to live in the dormitory. Be careful to spend your financial aid only on qualified expenses and use your own money for everything else.