1098-T Reporting of HEERF Student Aid

Thoughtware Alert Published: Dec 18, 2020
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The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on March 27, 2020, allowed higher education institutions to use certain funds received from the Higher Education Emergency Relief Fund (HEERF) to support students with financial needs related to the COVID-19 pandemic.

On December 14, the IRS released long-awaited guidance regarding the reporting of the emergency grants to students on Form 1098-T, Tuition Statement. In an updated frequently asked questions (FAQ) document, the IRS indicated it won’t require reporting of the grants on Form 1098-T.

HEERF funds were made available to:

  • Defray COVID-19-related expenses of higher education institutions, including lost revenues and payroll for employees
  • Make emergency grants to students for expenses related to the disruption of campus operations, including food, housing, course materials, technology, etc.

Higher education institutions were required to pay no less than 50 percent of the funds they received to students as emergency grants.

In the FAQ, the IRS indicated the grants to students are considered qualified disaster relief payments that won’t be includible in the gross income of the students. As such, the IRS is concerned the reporting of the payments on Form 1098-T could result in the issuance of underreporting notices, causing confusion for students.

The entire FAQ can be found on the IRS website.

For more information, reach out to your BKD Trusted Advisor™ or use the Contact Us form below.

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