Sorry for complicating things!!!! To a lay person, this is complicated to understand. Sure, it seems TT gets to the right answer but I'd like to have a general idea of whats going on..and thank you assisting!! If its any consolation, a work buddy saw this post...he did not know it was me!!! It helped him too...in fact he mentioned it to me on break yesterday.
So let me ask one or two more basic questions.
I have a situation where my SON decided no to continue school. He says he is NOT going back. My first thought was...maybe he will change his mind. I'll have my daughter keep taking the $6k or so gov loans and if he does not go back use his 529 $$$ to pay off my daughters loans when she graduates in 2.5 years. WRONG!!! I found out there would be all sorts of penalties and interest---Only $10K from the 529 can be used to pay off loans..after that you suffer penalties and interest.
So, since he so adamant I am now thinking I should have her decline these loans, transfer the 529 $ from my son's account to hers and use the 529 to pay the entire balance.
I expect the numbers to end up like this next year:
Form 1098 T Box 1 = $41K, Scholarships/Grants = $22K.
Form 1099Q Box 1 = $19K,
Form 1099 Box 2 = Earnings - I'll guess Box 2 would be in the neighborhood of $7K
Form 1099Q Box 3 =Basis --I guess it might be $12K
1) Do we get the $2500 credit?
2) You keep mentioning Room and Board but she is a commuter living at home...not sure how that impacts the $2500 credit.
3) Does the 1099Q Basis / Earning in any way factor into the $2500 credit.
I think after this I can leave you alone...but seriously thanks for sharing your knowledge. I just am trying to be legal and fair and take advantage of what I am allowed to.
