IRS Revises 1098-T Guidance on Emergency Grants to Students
The IRS published new Frequently Asked Questions on how students and institutions should report pandemic-related emergency grants.
Institutions were not required to report emergency grants on the 2020 Form 1098-T. In the new IRS guidance, in Question #6, the IRS clarifies for colleges and universities that there is no special requirement to report student emergency grants on the 2021 Form 1098-T.
Institutions should report payments received for qualified tuition and related expenses—which may or may not be paid for with student emergency grants—as they normally would in Box 1 of the form. Emergency grants to students should not be reported in Box 5.
For students, the guidance reiterates that students do not need to report the grants as income, and that the emergency grants are not taxable to the student. Since the grants are not considered income to students, they should not be reported on Forms 1099- MISC.
Following a February IRS notice that indicated special reporting of emergency grants to students would be required on Form 1098-T, NACUBO convened a telephone meeting where members of NACUBO’s Student Financial Services Council and Tax Council spoke with Treasury and IRS officials to advocate for the continued position of the IRS to require no special reporting or tracking of the grants on the Form 1098-T.
We are grateful for the efforts of the following NACUBO volunteers on this advocacy project:
- Alisa Abadinsky, associate comptroller, student financial services and cashiering, University of Maryland
- Christine Blakney, managing director of student business services, Texas Tech University
- Jodi Kessler, assistant director, Tax, Massachusetts Institute of Technology
- Joel Levenson, assistant vice president for tax, payables and procurement, University of Central Florida
Director, Tax Policy
Director, Student Financial Services and Educational Programs