MEMBER ADVISORY
February 16, 2022
IRS updates FAQs for Higher Education Emergency Grants
On March 30, 2021, the IRS issued frequently asked questions (FAQs) on how students and higher education institutions should report pandemic-related emergency financial aid grants. Today, the IRS updated the FAQs by adding two more questions. A link to the complete FAQ list can be found here. Emergency aid granted to students due to COVID is not taxable, a link to official resources on emergency aid can be found here.
The updated FAQs on Higher Education Emergency Grants are the following:
Q8: I am a student at a higher education institution and my institution is using federal funds under the CARES Act, the CRRSAA, or the ARP to cancel or discharge my overdue balances, such as for tuition and fees. Is the amount of the discharge includible in my gross income? (Added February 15, 2022)
A8. No. If your institution is using federal funds to cancel or discharge your overdue balance for tuition and fees, your debt is being paid by the Federal government and such payment generally would be included in your gross income. However, because your debt is being paid by the Federal government in response to the COVID-19 pandemic, the amounts paid by the Federal government, including grants used to pay an overdue balance for tuition and fees owed to the institution, are not included in your gross income.
Q9. Do higher education institutions have any requirements under Internal Revenue Code section 6041 to report information on Form 1099-MISC if the institutions use federal funds under the CARES Act, the CRRSAA, or the ARP to pay the students’ overdue balances for tuition and fees? (Added February 15, 2022)
A9. No. Higher education institutions do not have information reporting requirements under section 6041 when using these federal funds to pay students’ overdue balances for tuition and fees. These payments are not included in students’ gross income. Because the payments are not income, section 6041 does not apply to them, and higher education institutions are not required to file or furnish Forms 1099-MISC, “Miscellaneous Income,” reporting the payments.
HACU Member Advisories are a service of the Hispanic Association of Colleges and Universities (HACU)