Nonprofit Resources
IRS Provides Guidance on Reporting Student Assistance Grants on Form 1098-T
On March 30, 2021, the IRS updated its Higher Education Emergency Grants Frequently Asked Questions (FAQs) page with information on reporting student grants provided with HEERF I or HEERF II funding on Form 1098-T, Tuition Statement. The FAQs do not address student grants provided under HEERF III, which was created under the American Rescue Plan Act of 2021 signed into law on March 11, 2021.
Funds provided through the Higher Education Emergency Relief Fund (HEERF) can be used for qualified tuition and related expenses (QTRE) as a result of the option to apply grant funds directly to a student’s account with expressed permission. FAQs 3 and 4 make it clear that a student who otherwise qualifies for the American Opportunity Credit or the Lifetime Learning Credit as a result of paying for QTRE may claim such credit even though the QTRE were paid for with an emergency financial aid grant.
Additionally, QTRE paid for on or before December 31, 2020, for which a credit is not claimed, remain deductible, notwithstanding the use of an emergency financial aid grant to pay for the QTRE.
FAQ 5 clarifies that institutions have no obligation to include emergency financial aid grants on Form 1099-MISC.
Finally, FAQ 6 provides that QTRE remain reportable in Form 1098-T, Box 1 regardless of whether the higher education institution:
- Paid the emergency financial aid grants to the students, who then used grant money to pay for QTRE; or
- Applied grant money directly to QTRE on a student’s account.
In addition, the institution is not required to separately identify the portion of QTRE paid with an emergency financial aid grant anywhere on Form 1098-T, nor are emergency financial aid grants reported in Form 1098-T, Box 5.
Please contact us with any questions about how this may affect your institution.
4 Comments
I’m somewhat confused with the regulation stipulated. For clarification, please just reply to this one question:
1. How do I present in the 1098T those Heerf funds that were directly applied to students’ accounts. Are they to be considered as Payments for QTRE Box 1 or as Grant Box 5, or do not report it at all?
Thanks.
Floreminda,
HEERF funds applied to a student account are includible at QTRE in Form 1098-T, Box 1 regardless of whether the school:
1. paid the emergency financial aid grants to the students, who then used grant money to pay for QTRE, or
2. applied grant money directly to a QTRE on a student’s account.
See FAQ 7 here: https://www.irs.gov/newsroom/higher-education-emergency-grants-frequently-asked-questions
Such funds are not reportable in Form 1098-T, Box 5, even if they were directly applied to the student’s account. See FAQ 7.
Some of our students choose to have their CRRSA or ARP money go directly to them. The HEERF money was applied to the student account and then refunded directly to the student. Just to clarify, since this money was not used for QTRE it does not need to be reported on the 1098T?
Christina,
That is correct.