@jlar
1) I can see no reason why the distribution from the 529 could be in Box 5 of the 1098-T. MOST of that money from the 529 is YOUR after-tax money and for it to be reported on BOX 5 of the 1098-T would telegraph it is potentially new income to the student - illogical since it was mostly your after tax money to begin with. Let's leave that rabbit hole be.
2) the 1098-T is based on calendar year - that is how the IRS works. It doesn't work on school year.
3) I suspect the $25 difference on the 1098-T Box 1 entry is because there is probably a $25 fee that is not a qualified expense. Tuition and all 'related fees' are eligible. the definition of 'related fees" is on page 14 of publication 970,
Related expenses. Student activity fees are included in qualified education expenses only if the fees must be paid to the institution as a condition of enrollment or attendance. However, expenses for books, supplies, and equipment needed for a course of study are included in qualified education expenses whether or not the materials are purchased from the educational institution.
So for example if there is a $25 parking fee, that is not a required fee, so it would not be in Box 1.
4) what is eligible for AOTC is the tuition and related fees LESS scholarships. Again see the chart on page 13. So if the tuition and related fees is totally covered by scholarship, you can't 'double dip' and use those same tuition fees to claim the AOTC credit.
about AOTC and 529 plan - your eligibility for AOTC has nothing to do with the 529 (other than 'double dipping'), See the chart of eligibility on page 13 of publication 970. You are going to take advantage of AOTC first because obtaining that $2500 credit is a great trade for paying taxes on a portion of the 1099Q / Box 2 earnings. If you covered off the 1099Q first and then use the remaining dollars to attribute to the AOTC credit, you'd be giving up a lot of the credit dollars just to say you avoided paying any tax on the 1099Q / box 2 earnings - a bad trade! - and your student may not be paying income taxes at all!!!!!
