So I've been doing a lot of research on taxes and Pell grants the past few months, and I just wanted to share some tips that I've learned. I just feel like there is a lot of money college kids could be getting that they aren't, usually because they don't know about it. Here's some things you may not have known:
-College kids should claim the American Opportunity Education credit! There is almost no excuse for not claiming this unless you are in your fifth year of college or you are a dependent with parents who make over $180,000. You can get up to $1000 refunded from the government even if you owe no taxes. If you owe taxes, they can be reduced up to $2500!
What you can claim: any required fees or costs for the classes you are enrolled in. ie books, tuition, laptop, health insurance (for BYU), etc. You should try to think of every cost you can to maximize your benefit! And if you are paying your own tuition, there is NO reason not to be claiming the maximum amount of credit ($4000)
-You can still claim the American Opportunity Credit even if you have scholarships/grants! Just count up everything you paid for and then count the scholarships/grants as taxable income. That way you will get paid for your expenses and only be taxed for the scholarships/grants at a smaller percent.
-Taxable scholarships/grants don't count against you when you are filing FAFSA. That is- if you do it correctly. I didn't- but was then able to fix it- and am now getting $950 back. Woo hoo! Make sure you fill the form out correctly
-On FAFSA, you don't have to count scholarship/grant money you have in the bank as part of your assets! Subtract it out before you report how much money you have!
-The Pell grant formula is actually not just some mysterious mumbo-jumbo. You can figure out in advance how much grant money you should get with the charts and tables found here: http://ifap.ed.gov/efcformulaguide/attachments/010512EFCFormulaGuide1213.pdf
-Revise your tax form! I know, it sounds boring right? And your fancy tax software does it for you. But actually, a lot of times the software doesn't know all the benefits you can claim unless you tell it.
-You should still claim education benefits even if you are in your fifth year. Look into the lifelong learning credit or the education adjustment. You should also be claiming some sort of education benefit for every member of your family that is taking any college courses.
Well, that's most of what I can think of for now. But I'm almost positive I will post more in the next day or two. Also, I can help! Seriously, I love this stuff. (I'm weird, I know) But I also think I am pretty good at it. Last year I got more than $15,000 in grants and scholarships and we are learning more about how to get big tax refunds with the awesome education credits!
