First be advised, that a large portion of his 529 distribution IS taxable. You cannot leave off the 1099-Q
I assume the $413 and $537 are additional tuition and fees, so that your total Tuition and fees are $12,021. Is that correct?
$23,137 in educational expenses (including room & board, books & internet)
-$8,021 paid by tax free scholarship (student reports (14,420-12,021 + 4000=6399 as income)
-$4000 used to claim the American Opportunity credit
= $11,116 Can be used against the 1099-Q (~ 52% of the $14,804, in box 2, will be taxable)
Does your son have any other income, such as W-2 wages or interest & dividends?
Due to the way a student-dependent's standard deduction is calculated, it is usually better if he reports more taxable scholarship (unless he also has wage income) and less taxable 529 plan distribution.
Provide the additional info and I'll try to provide more specific instructions.
