the "cost" of obtaining the $2500 AOTC credit is that some of the Box 2 earnings are taxable and that is a good trade!
Since the student has to report the 1099-Q distribution on their own tax return, that student can claim that $15K of it was used to pay for room and board. But since the parents are claiming the education stuff, wouldn't that mean the left over amount from the 1099-Q (22K) would be taxable income to the student?
How can the student claim any amount of that money was spent on qualified expenses, when the parents are already claiming those qualified expenses? Keep in mind also, that any excess is taxed to the student, at the parents' higher tax rate too.
