Q. Does it matter when 529 withdrawals are made during the year?
A. No. The only timing requirement is that the distribution (withdrawal) must be in the same calendar year as the qualified expenses. So, your plan is allowed. You can withdraw $5000 in January and $6000 in December to cover the $15,000 you spent in January. That leaves you $4000 of tuition to use to claim a tuition tax credit.
As others have said, Room & Board (R&B) are also qualified expenses for 529 distributions. Board qualifies even if the student lives at home. The student must be half time or more. By allocating the 529 distribution to R&B, that allows more tuition to claim a tax credit for.
$4000 is the maximum amount of tuition needed to get the maximum American Opportunity Credit (AOC). Grad students are not eligible for the AOC. It takes $10,000 of tuition to get the max Lifetime Learning Credit, for which all students qualify.
