I have a similar situation where my son received a 1099Q from 529 payments to the school in his name. Gross distribution was $12K, with $7300 as a basis and $4700 in earnings. Of the $12K distribution, $1400 was a refund to my son from the school for him to pay for books/supplies. The 1098T in his name reported $7K in block 1. I'm looking to also use either the American Opportunity credit or Lifetime Learning credit on my tax return without double dipping. In the above example, why do they use $4K to claim the credit. I thought the credit was for $2500.
