Situation:
Student is my son and filing as an independent taxpayer.
Junior in college, under 4 year ROTC scholarship and receiving State lottery scholarship.
I have a 529 w student as beneficiary. ROTC scholarship goes to tuition, State lottery scholarship goes to offset some R&B. Due to scholarships, I am distributing nonqualified funds out each year to student and taking advantage of no penalty distribution.
Some expenses were paid from 529 to me (parent). These show up on my 1099Q. I will ignore that for my return as all the expenses are qualified.
1099Q under student's SS#
Box1 25,000
Box 2 12,074
1098T
Box 1 15,230
Box 5 26,730
Box 7 checked
$5,750 of Box 5 was for 2019 costs
Below is how I have approached things.
Educational expense and application via Scholarship, 529
Tuition and fees $15,230.00
Housing $8,374.00
Meals $4,061.00
Books, etc, ROTC school $1,250.00
Total $28,915.00
Scholarships received and used for 2020 $26,730.00
Expenses not covered by scholarships $2,185.00
Expenses classified as taxable income on Student's return $10,028.00
Expenses used for AOTC $(4,000.00)
Expenses to be used against 1099-Q $8,213.00
Parent's QEP distributions $(4,902.90). Filed on parent's taxes, 100% qualified expenses.
Student's costs not covered by scholarships $3,310.10
My questions
Looking for input on any areas I am not doing correctly.
When I go thru the TT interview do I enter in all expenses even if paid for via scholarships under "Did you pay for Books or Materials to attend school?" Books, room and board, etc. I am confused on this and so far have only put in the amount that falls outside of what I have said is taxable, which is $3,310.
Under "Did you pay for Room and Board with a scholarship", I have put "yes" and inserted $10,028. I am using this number to maximize the credit.
Under credits, the student received AOTC last year. For this year, I have put in $4,000 as amount to be used to calculate credit.
Student's 1040 ends up with
Wages $13,080 ($3,052 of this is from a job, $10,028 from scholarship)
Line 8 "other income" $10,341, from Qual State Tuition program 1099Q. It is confusing to me how it comes up with this exact amount.
