Are you a college student (or the parent of one) wondering how financial aid is going to affect your taxes? Are you concerned COVID grants are taxable income or will affect your future financial aid?
I have great news for you! Emergency financial aid grants made by a federal agency, state, Indian tribe, higher education institution or scholarship-granting organization to a student because of an event related to the COVID-19 pandemic are not included in the student’s gross income.
It is also important to know that you should not reduce the amount of qualified tuition and related expenses by the amount of an emergency financial aid grant that was received.
If you paid for qualified tuition and related expenses on or before December 31, 2020, you may be able to claim the American Opportunity Credit or Lifetime Learning Credit on your 2020 tax return.
If you have questions on this topic, be sure to call your tax preparer to make sure you claim all deductions and credits available to you.
