Q. I am guessing to get the maximum which I believe is $2000. ...You have to show $10000 in Qualified expenses that were not paid from ***earnings***on a 529 plan? Is that true?
A. No. You just have to show $10,000 in Tuition. It doesn't matter how it was paid.
Q. So shouldn't she essentially have the 10k there anyway to qualify for the lifetime learning without room and board etc? How is that different from her writing a check from her bank account for 10k or using gift of 10K to pay part of the 15k?
A. Yes. All the discussion about room & board is about how you're going to account for the 529 distribution, with as little tax as possible, since you have allocated $10K to the LLC and away from the 1099-Q.
Q. At worst, maybe through some funky rule, She would have to pay tax on the three thousand dollars in 529 plan earnings, but still have the 10K there to get the 2K lifetime learning ...no?
A. Yes. But, if we allocate some R&B to the 1099-Q that $3K can be reduced.
Q. Perhaps that is exactly what is going on...Am I starting to look at this correctly?
A. Yes
