Using the PELL Grant to pay Fedral Taxes?

Question

Hi
I know the PELL grant is meant for educational expenses to be considered tax free money. I used $2100 of my pell grant to pay for a used car. I know i will have to declare it and pay taxes on it.

But can i use my PELL grant to pay for the HR block fee, state and fedral taxes.

If i do that, i'll just declare the amount paid on my 2008 return.

Is that legal?

Answer 1

don't Think so. But make sure you know for Sure b4 you do it. You Will NEVER Dig your way out of that, And if you do it will cost you loads of $$

Answer 2

You are correct that any part of the PELL grant used for anything other than tuition and fees becomes taxable income to you. But yes, you can use it to pay your federal taxes and the cost of having them prepared.

If you go to H&R Block, be sure to get someone experienced enough to know how to deal with the taxable amount of the PELL grant - not everyone will.