Hal_Al
Level 15

Education

@bkpickering 

These gimmicks can get a little trick in entering in TurboTax.  Reply back for details, once you decide what to do. 

 

The IRS actually encourages use of this technique, to claim a tuition credit.  From the form 1040 instructions: “You may be able to increase an education credit if the student chooses to include all or part of a Pell grant or certain other scholarships or fellowships in income. For more information, see Pub. 970, the instructions for Form 1040 and IRS.gov/EdCredit".  PUB 970 even has examples of how to do the “loop hole”.

 

The same technique can be used to switch expenses to a 529 distribution.