Q. I thought the taxable amount would be: 1099-Q Block2 (Earnings) 3793/ Block 1 (Gross distribution) 10975 x 529 Nonqualifying distribution used for AOC 3764=1301. Please advise.
A. No. You're not following the logic of the calculation. You use the ratio of expenses to distribution not total earnings to total distributions. $3764 is not the nonqualifying distribution, or even a portion of it (it was just a number used in the math).
Q. I have found that the problem was that the college is sending information based on amounts billed and not amounts paid and reporting scholarships in following year.
A. Yep it's a common problem and you have to work around it. The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. TT has provided some help: at the 1098-T screen, there is link "What if this is not what I paid the school" underneath box 1. You will then be able to enter the actual amounts paid. You will also reach a screen that allows you to adjust the scholarship amount for "amounts not awarded for 2020 expenses".
Q. As to the 529 money being support for dependency purposes, the article I cited is the only information I have found that ties the support to the recipient. I am hoping there is underlying authoritative support that can be located.
A. You accurately described the situation. There is no IRS guidance, at this time. The majority of opinions is that it is parental support, regardless of who is the "recipient" (you found one of the minority opinions) If you are going to try to file, on the basis of it's student support, your case has a better chance if the student was the recipient.
