NAICU Washington Update

Tax-Filing Help for Pell Recipients

June 30, 2014

Many students fail to maximize the tax benefits they deserve, missing out on critical financial support as they work to achieve a postsecondary education.

As part of the Obama Administration’s effort to promote college affordability, the Treasury Department posted a fact sheet on its website in mid-June to help taxpayers claim college benefits, particularly Pell Grant recipients eligible for the American Opportunity Tax Credit (AOTC).

Due to confusion about their eligibility for the ATOC, the families of as many as 9 million high-need students may pay higher taxes than required.

Working with the Education Department , Treasury has provided “a fact sheet that outlines how and when a student should allocate the Pell Grant to tuition, fees, and course related materials, or to living expenses when filing a tax return.”

Students have a choice in the allocation and the choice can affect their AOTC benefit and the taxes owed. The student or family’s allocation on the tax form may differ from the manner in which the institution allocates the Pell Grant.

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