Q. Aren’t these essentially the conditions of the Pell grant?
A. No. The IRS specifically references Pell Grants as eligible for the gimmick. . 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.
Q. Can I actually claim that a portion of the Pell grant that was realistically used to pay my tuition and fees is taxable, so that I can earn the AOTC?
A. Yes. At tax time, you are mostly free to allocate expenses for the best outcome. You did not have to literally paid certain expenses with particular funds You only had to have had expenses in the tax year that were somehow paid.
