We try to get the 529 used up first, preferably with room and board. Then we look at scholarship money. If it has to be used for tuition, ok. If not, we can say that some of the scholarship money went to living expenses instead of tuition. This may create a little income for the student but can allow a large credit for the parent. The IRS has a great brochure that explains how scholarships and tax credits interact. Hal_Al gave a great list of questions for better help.
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