<p>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.</p>
<p>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.</p>
<p>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.</p>
<p>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.</p>