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How do I claim Tax-Free Educational Assistance and Refunds of Qualified Expenses?

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Question
How do I claim Tax-Free Educational Assistance and Refunds of Qualified Expenses?

Answer

Tax-free educational assistance includes a tax-free scholarship, Pell Grant, or tax-free employer-provided educational assistance.

You must reduce the total of your qualified expenses by any tax-free educational assistance and by any refunds of qualified expenses. If the refund or tax-free assistance is received in the same year in which the expenses were paid or in the following year before you file your tax return, reduce your qualified expenses by the amount received and figure your education credits using the reduced amount of qualified expenses. If the refund or tax-free assistance is received after you file your return for the year in which the expenses were paid, you must figure the amount by which your education credits would have been reduced if the refund or tax-free assistance had been received in the year for which you claimed the education credits.

Include that amount as an additional tax for the year the refund or tax-free assistance was received on the tax line of your tax return. Enter the amount and "ECR" next to that line. Please note that you will not be able to do this and e-file. (must paper file)


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Views: 2966 Created on: Jun 15, 2013
Date updated: Dec 01, 2021

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