How should excess financial aid be reported on a tax return?

by Paul S. Carpenter, CPA | Feb 26, 2019
askacpaicon

If the amount of financial aid, grants, or scholarships received exceeds tuition, books/supplies, room and board, etc., how do you accurately report the excess aid as earned income due to it being taxable?

Excess financial aid is reported on the same line as "wages" on your tax return. Attach an explanation to reconcile the amount since it will not be reported on a W-2 like other wages.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Paul S. Carpenter, CPA, is president of Carpenter Capital Advisors in Johnstown, Pa.

Disclaimer
The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
Ask a CPA

Search the most frequently asked finance and accounting questions and read the responses from PICPA members. Always consult a CPA before taking action.

Search