<p>I have a number of questions which may require separate posts but I will state all of them for now.</p>
<p>1) Have to decide if to use grant/scholarship as taxable or not-taxable income because it affects the possible tax credits you can take.</p>
<p>A grant or scholarship, pell grant or like is considered tax free if used for a qualified expense. Usually, only tuition, not room and board and food.</p>
<p>However, this gets a bit complicate of you take the hope credit of lifetime experience credit and if you also have a 529 plan or similar qualified plan.</p>
<p>There are a number of ways of handing this.</p>
<p>1a) you take scholarship, grant money only for tuition and qualified expenses and you do not have to worry about it again.</p>
<p>1b) However, if you also want the hope credit or lifetime credit you cannot take both against the same fees, i.e. if tuition is $3000 and you have a scholarship of $2500 you will only have $500 left to apply to hope credit.</p>
<p>Therefore you can use your scholarship/grant as taxable income and apply all of it to the tax credit - it all depends which comes out better for you.</p>
<p>2) It seems to me a little complicated if you have a 529 plan because this seems to overlap a bit with the scholarship as tax free and hope/life credits. There are some grey areas which I need to research.</p>
<p>If you have a 529 plan or other qualified plan you can pay tuition as well as room and board and some other qualified expense. However, Hope and life credit is only for tuition and some other expenses for books and equipment only if billed by college directly.</p>
<p>3) I am wondering if food services is a qualified expense or is it considered a personal expense and cannot be applied as a qualified for grant/scholarship or tax credit. This is an expense charged by school but the tax code doesn't list it as a qualified expense so I assume it is not a qualified expense.</p>
<p>Total tuition $6844
Breakdown 1699 food service (probably unqualified)
College fee 12 not large enough to worry about this expense
Rent room 2465 (not qualified expense)
Tuition 2175
Fees 592 (maybe only $150 is qualified)</p>
<p>These numbers can possible be doubled for tax purposes if paid for the spring semester already.</p>
<p>Total Tuition$2175
Scholarship $1250
Stafford $1312
TAP $ 250</p>
<p>If take scholarship as tax free then $2175-$1250=$975 BAL which can be applied to Hope Credit or Lifetime credit.</p>
<p>If use Scholarship as taxable income then can use whole $2175 against Tax credits</p>
<p>Not sure how 529 payments affect these 2?</p>