In 2019, we took out more than actual college costs bc only 1 of the kids my now deceased father created 529s for are going to college so there will be left over money. We did this in 2019 because even though taxes have to be paid on the non-qualified withdrawal, our student’s scholarships remove the 10% penalty.
- Total eligible ed costs paid in 2019=$46047.
- College costs per T1098=$36,694; $9353 for dorm/board/computer/books
- Scholarships and grants for tuition: $23186
- Final amount we paid = $22861
- Withdrew from 529 plan: $35011 (earnings of $22968) as $27011 (earnings $17560) to student and $8000 (earnings of $5408) to parents.
- $4000 of expenses to AOTC.
- Do we owe taxes on $4117, $12150, or some other amt?
Entered 1099Qs on our respective taxes tax forms as well as all expenses on both forms. (For student’s return, TT said expenses should to be entered to get the deduction of expenses not used on parents form.) Beyond $4000 of expense to parent form for AOTC, how do we allocate the remaining expenses between parents and student? Should we allocate enough to cancel the 1099 income to parent ($8k with earnings of $5408) and the rest to student? Or some other way? Does the basis money withdrawn figure into anything regarding taxes besides subtracting it out of the amount received? Thanks for any help.
