Q. Dependent vs. non-dependent determination is completed each tax year and can vary year-to-year for an individual student?
A. Yes. But, it would be rare for for it to vary back and forth.
Q. 529 distributions direct to school are considered self-support provided by the beneficiary student?
A. No, because the parent is the owner of the account. I revised my comment above, it was poorly worded and may have led to that conclusion.
Q. 529 distributions (taxable) to the student are undefined by IRS, but generally considered parent support (529 account owner) if funds are used for student support vs saved. This is confusing as some CPA's present QTP taxable distributions to student as self-support. Another example.
A. As previously stated the IRS has not issued guidance. "Some" say one way; "most" say the other way.
Q. Scholarships to student are excluded from support tests? So it comes down if the student provided >50% of support for costs outside of those covered by scholarships.
A. Simple answer: yes. Again, there appear to be two interpretations: 1. scholarships are ignored and are not part of the calculation or 2. Scholarships are 3rd party support and are part of the calculation. "Most" experts favor #1
Q. Sources of student funds that can be used for self-support. W2 wages are clear, how about student's savings? How are gifts handled? For example, money from relatives or parents to student that student then uses for their support?
A. Savings yes. Gifts, no. But, yet again, it could be. It depends on intent. Real gifts are the student's self support. Giving the student money, for his tuition, is not a gift, it's paying his tuition.
