Dear Hal_AI,
Thanks so much for your helpful reply! If you have a moment, would you be willing to elaborate on the following quote:
"You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses."
I ran into a quote from an IRS publication and would like to reconcile the two: "Student may allocate scholarships to living expenses (up to the amount of actual living expenses) regardless of how their school treats their Pell grant or other scholarship."
A student's university scholarship seems to be listed as either consuming all tuition and part of room and board (or vice versa).
Excess scholarships are disbursed to the student from the university via a refund. Do you feel I'd be able to use the strategy in this case for the portion of the scholarship allocated to tuition? For instance, could I shave $2,000 off the amount of scholarship money spent for tuition and count it as income as long as that scholarship can be used for qualified and unqualified expenditures?
If so, would the way I input scholarship money I received for nonqualified expenses on my tax forms change, or would I only increase my taxable income by the amount necessary to reach $4,000 in qualified expenditures and leave everything else unchanged?
Thank you!
