Pell Grants and School Expenses

[Heidi]

Hello Tom!

I am working on my associates degree. Everything is paid for between the TEACH scholarship I received and PELL grants.

How do I account for this, and also books/tuition?

[TomCopeland]

College expenses

This is a tricky question:
Pell grants are not taxable income if:
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" (books and tuition).

A TEACH scholarship is taxable income. You can deduct expenses for your associates degree if you already have a post-secondary degree. If not, you cannot deduct any expenses associate with getting this degree.

Tonight! Join me for a webinar “2012 Tax Changes: How to Avoid Mistakes on Your Tax Return” Tuesday, February 12th at 8:30-10:00pm Eastern Time. The cost is $25 (100% tax deductible!). To register: http://events.r20.constantcontact.co...&llr=yatrx4cab

[Heidi]

Here's another one:

Our state grants us $500 each year for our quality improvement program. They do not give money-they require us to order from an approved list of vendors (with few exceptions). They then order the items for us and have them shipped to our address.

If they gave us money, and we then turned around and spent it on materials, it would be a wash. If they are giving us goods, which they are esentially doing, do we need to claim the worth of those goods?

[TomCopeland]

Grants

You do need to report the value of the goods you received with this grant as income. Then you can deduct them as a business expense based on the normal rules of deductions. I recently wrote an article on this: http://www.tomcopelandblog.com/2013/...t-a-grant.html


Tonight! Join me for a webinar “2012 Tax Changes: How to Avoid Mistakes on Your Tax Return” Tuesday, February 12th at 8:30-10:00pm Eastern Time. The cost is $25 (100% tax deductible!). To register: http://events.r20.constantcontact.co...&llr=yatrx4cab

[Heidi]

Thank you, Tom!