How to Claim a Cal & Pell Grant on Income Taxes

A Pell grant is a federal student grant offered on the basis of a student's financial need. A Cal grant is a California educational grant offered to students in that state who demonstrate financial need, applied to an eligible school and maintained high grades. The rules for claiming either of these grants on your taxes depends on your individual circumstances and what you spent the money on.


Step 1

Determine whether your grant is taxable by Internal Revenue Service, or IRS, standards. The amount of your grant you spent on anything other than tuition and materials is taxable by law. This means if you received a $5,000 Pell grant and spent $3,500 on tuition and $1,500 on room and board, then $1,500 is taxable. If you spent all of your grants on tuition and materials, the money isn't taxable.


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Step 2

Include the taxable amount on Line 1 of a Form 1040EZ. If this amount wasn't reported on a W-2, then also write "SCH" and the taxable amount of the grant to the left of Line 1.

Step 3

Include the amount in the total on Line 7 if you're filing a Form 1040 or a 1040A. If the taxable amount wasn't reported on a W-2 for that year, then write "SCH" and the amount beside Line 7 as well.


Step 4

Report the taxable amount as miscellaneous income on a Form 1099-MISC if you're self-employed. If this amount plus your net income from self-employment exceeds $400, you must pay self-employment tax.


Step 5

Claim the taxable amount on Line 12 of a 1040NR and on Line 5 of a 1040NR-EZ. These forms are for non-residents of the U.S. The Foreign Person's U.S. Source Income Subject to Withholding Form shows the amount of taxable grant money on Line 2; use this number when filing.


No portion of a Pell grant is tax-free if you're attending college but don't plan to earn a degree.

If your tax-free grant money was your only source of income during the year, you don't have to file a tax return at all.



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