Are Pell Grants reportable on tax returns and 2024-25 FAFSA? Confused parent here

Good question! Pell Grants are generally not taxable if used for qualified education expenses (tuition, fees, books, supplies). If any portion was used for room and board or other non-qualified expenses, only THAT portion would be taxable on your son's return. As for the 2024-25 FAFSA, you don't report the Pell Grant as income. The Department of Education already knows about awarded Pell Grants since they're federal funds. Reporting it again would be double-counting and could reduce his aid eligibility incorrectly.

went thru this with my daughter last yr... the financial aid ppl make everything sooo confusing!!! drove me CRAZY

I had this EXACT same question and called the FSA hotline and waited for 2.5 HOURS only to get disconnected! Then tried again the next day and waited another hour. They told me Pell Grants aren't reported on the FAFSA as income (they know about them already) and for taxes, only the amount used for non-educational expenses is taxable. But honestly I'm still confused because some of my daughter's grant money went to her meal plan and I don't know if that counts as "qualified education expenses" or not?? The whole system feels designed to make us fail!

My son got a pell grant too but i think its different from your pearl grant? Is that a state specific thing? Just checking cause i never heard of pearl grants before

The IRS Publication 970 actually has detailed info on this. Pell Grants used for qualified education expenses aren't taxable. Room & board ARE considered qualified expenses IF your son is enrolled at least half-time. If he's taking less than half-time credits, then room & board become taxable. For the 2024-25 FAFSA, you definitely don't report Pell as income. The form will ask about "untaxed income" but federal education grants don't count there either. BTW - With the FAFSA Simplification Act changes, they're now using the Student Aid Index (SAI) instead of the old Expected Family Contribution (EFC), which changes how some aid is calculated. Just a heads up since you mentioned this is your first time through the process.

I remember when my oldest got his first Pell Grant back in 2019. We were confused too but then we ended up having to report part of it because he used some for a new laptop. Apparently educational supplies are fine but a computer was considered different somehow??? The financial aid rules make absolutely NO sense sometimes!!! Oh and we did have to list all scholarships and grants on the FAFSA back then, but maybe they changed the rules for the 2024-2025 form? They keep changing everything every year!

Here's a clear breakdown from someone who works with financial aid: 1. TAX RETURN: Pell Grants are only taxable if used for non-qualified expenses. Qualified = tuition, fees, books, required equipment. Non-qualified = room, board, transportation (unless student is at least half-time, then room & board ARE qualified). 2. 2024-25 FAFSA: You DO NOT report Pell Grants anywhere. The Department of Education tracks all federal aid automatically. The confusion often happens because the old FAFSA sometimes asked about "untaxed income" which confused parents. The new FAFSA is simpler but has had some technical issues during rollout.

i think its different in each state 2... my nephew in florida had different rules than my son in ohio

Has anyone received their SAI score from the 2024-25 FAFSA yet? We submitted in January and still waiting... wondering if others are getting results faster?

Just wanted to add my experience as someone who went through this last year! The key thing that helped me was getting a clear breakdown from our school's financial aid office of exactly how my daughter's Pell Grant was used. They provided a detailed statement showing tuition ($4,200), fees ($800), books ($300), and the remaining $2,000 went to her dorm room. Since she was full-time, ALL of it counted as qualified education expenses, so nothing was taxable on her return. For the FAFSA, I can confirm you definitely don't report the Pell Grant anywhere - learned that the hard way when I called and was told I was overthinking it! The system already knows about federal grants. Good luck navigating this - it gets easier once you understand the basics!