Hi! Thank you for your reply!
1) "Basis"--that is Box 3 on my 1099-Q, this is the amount that I actually paid into the 529 account (I paid taxes on it at the time, as it was not tax deductible.)
2) No, I did not add on any expenses, only the tuition off the 1098-T was used. Both students lived at home, and yes while they did buy books, I didn't keep a record of that, so didn't include it. But yes, the tuition was greater than the Box 2 1099-Q earnings.
3) Ah, I see. The scholarship would count as my students earning and would go on his tax return. Since the scholarship is $1500 (less than $12,000) then it sounds like he would not have to file.
I guess my concern is that I'm getting the American Education Credit, but I didn't pay taxes on the Box 2 earnings....so is it saying that because the Credit was less than the amount in Box 3 that I did pay taxes on in the past, that is why I can claim the credit?
