The
IRS announced last
week that CARES Act emergency student financial aid grants will not be taxable.
In
an FAQ posted on its website, the agency said CARES Act grants are “qualified
disaster relief payments under section 139 of the Internal Revenue Code” and
should not be included as part of gross income. ACE sent a letter
April 21 asking House and Senate leaders to address this issue.
ACE,
along with 15 other associations, is also strongly endorsing a
new bill introduced by Rep. Lloyd Doggett (D-TX) to help students during the
COVID-19 crisis and make important temporary changes and permanent reforms to
the American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit (LLC).
The American Opportunity Student Tax Relief Act of
2020 would temporarily increase the
AOTC to $3,000 and make it easier for students in lower-tuition programs to get
the full $2,000 under the LLC.
For
the long term, the bill would consolidate the AOTC and LLC into one simplified,
permanent AOTC that will provide up to $2,500 per year in tax relief for
students and their families, along with other changes that would make college
more affordable for low- and middle-income students.
“We
strongly support the goals of this bill to provide temporary pandemic relief to
students and to simplify the current higher education tax credits which are
overly complex and difficult for students and their families to correctly use,”
the groups wrote.