This AskRegs Knowledgebase Q&A was updated on February 17, 2021 to refer schools to the National Association of College and University Business Officers (NACUBO) guidance on the treatment of Higher Education Emergency Relief Fund (HEERF II) student grants under the 2021 Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA, Section 314 of the Consolidated Appropriations Act, 2021).
HEERF II Student Grants Under the CRRSAA
Refer to NACUBO's article, Second Round of Emergency Grants to Students Will Require 1098-T Reporting.
NACUBO is seeking additional clarification from the IRS, stating, "Until the IRS publishes clearer guidance, campus administrators should track amounts of student emergency grants distributed this year."
As soon as NASFAA becomes aware of additional guidance, we will update this AskRegs Q&A and post it in Today's News. As tax reporting requirements are not within NASFAA's area of expertise, questions should go to NACUBO or the IRS directly.
HEERF I Student Grants and Emergency Federal Supplemental Educational Opportunity Grant (FSEOG) Awards Under the CARES Act
The following guidance only applies to Emergency FSEOG awards and HEERF I grants to students under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
No. Emergency FSEOG awards and HEERF I student grants are not reported anywhere on IRS Form 1098-T.
The following was posted to the IRS FAQs: Higher Education Emergency Relief Fund and Emergency Financial Aid Grants under the CARES Act website on December 14, 2020:
"Q3: Do higher education institutions have any [IRS] information reporting requirements under section 6050S for emergency financial aid grants awarded to students under section 3504, 18004, or 18008 of the CARES Act? (added December 14, 2020)
A3: No. The emergency financial aid grants are qualified disaster relief payments ... and are not included in students' gross income. ... [S]tudents may not claim deductions or credits for these amounts. The reporting of these grants to the IRS on Forms 1098-T could result in the issuance of underreporter notices (Letters CP2000) to students and furnishing such Forms 1098-T to students could cause confusion. Thus, the IRS will not require that these grants be reported pursuant to section 6050S of the Internal Revenue Code on Form 1098-T."
Section 3504 funds under the CARES Act are Emergency FSEOG awards. Section 18004 funds are HEERF grants to students and institutions. Section 18008 funds are Governors's Emergency Education Relief Fund and Elementary and Secondary School Emergency Relief Fund monies.
Based on the above Q&A #3, HEERF grants to students and Emergency FSEOG amounts should not appear in Box 5 on the 1098-T. Furthermore, IRS FAQ #2 on that same website makes it clear that students cannot claim any education credits or deductions, so the emergency grant amounts should not appear in Box 1 of the 1098-T either.
Earlier Guidance: Early in 2020, the National Association of College and University Business Officers (NACUBO) interpreted the 26 CFR 1.6050S-1 reporting requirements for the 1098-T as still being in effect and requiring all schools to report all “grant aid processed and administered by the institution.” The above IRS guidance supersedes that earlier guidance.
Any additional questions on this topic go directly to the IRS or the school's business office, as tax rules and regulations are not within NASFAA's area of Title IV expertise.
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