swimcatsmom

Can one choose to use a Pell grant to pay Room and Board expenses making it a taxable grant and use loan money to pay tuition and fees making the tuition and fees useable for the Hope credit? I have been trying to figure this out from the IRS970 but am not quite sure. Taxwise this would be a better way to file for my son but i am not sure if it is permisable.

I know the Pell grant can be used for other expenses other than tuition/fees because my other kid has a full tuition waiver scholarship so her pell is used for other expenses so in her case her Pell is automatically taxable. So I know she cannot use the Hope credit. Just not sure if one can elect to do it that way when there is no tuition scholarship.

NikkiiL

As long as there are tuition fees that are paid "out of pocket", you can take the Hope credit...it doesn't matter if the fees are paid through a student loan or cash directly out of pocket. I receive both loans and pell and have been a tax preparer for many years...and I always claim the tuition credit (no longer hope, as I am in my third year) and assess the pell as taxable income.

swimcatsmom

Thank you Nikkil. I thought from reading the tax rules that we could do it that way but was not sure.

hikids

I think there is a guy who floats around cc with the name taxman or something like that. Try to search for him and send a private email, he may help.