Q The total cashed bond value is more than I can assign to R&B. I can only assign the R&B value minus the amount I need to use for the AOTC credit, right?
A. Yes. But, it's not really R&B that you're allocating. It's the tuition you're re-allocating from scholarship. So, you're limited by the amount of scholarship that can be made taxable. Calling it R&B is just the TurboTax entry mechanism for making the scholarship taxable.
You allocate the actual room and board to the 529 distribution.
Q. For one of them I do not want to assign additional income to them other than the amount I need for AOTC, because they have other income and it would increase taxes owned.
A. It depends on how much other income they have. His wage income plus taxable scholarship does not become taxable until that total reaches $13,850 (the standard deduction, for that situation). Above that, some will be taxed at only 10%
Q. So that would leave 6,300 to assign to bonds. So that is what I wound enter for “Report Educational Expenses and Benefits”?
A. Yes, if that's the amount you decide on.
Q. For Did Student 2 pay room and board with scholarship I would enter 10,000?
A. Yes, if you decide that only $10,000 of the scholarship will be taxable. You're not limited to the actual R&B figure.
