@Hal_Al
As I did last year, I'm paying all tuition, fees, room and board, minus a scholarship, through a 529 distribution. Also, like last year, in order to get the AOTC credit I am assigning about $4,000 of a scholarship for my child to room and board. All this went as expected. However, this year I also redeemed some I-Bond that yielded $2,500 of interest income. I would like to see if I can assign the interest to my child’s qualified expenses, so I can save some of the tax on the bond interest.
I’m a bit confused about how to do this. Should I assign another $2,500 to my child’s room and board, i.e. the amount equivalent to the bond interest? I could assign up to the full amount of room and board and it would still be less than the scholarship value, but more than the bond interest.
I know I have to go through the question on the interest income section and answer yes to “Did you use your U.S. saving bonds to pay for higher education expenses?” When I get to that page “Report Educational Expenses and Benefits” would I enter the amount I assigned to room and board minus what I need for the AOTC credit for “Qualified Higher Education Expenses Paid in 2023”?
What goes in the next box “Nontaxiable Educational Benefits Received in 2023”?
Thanks for your help.
