$13,400 qualified expenses
- 2,000 pay by scholarship (sounds like it's restricted, but it won't matter)
- 4,000 used for the AOTC
= 7,400 can be used for the 529
+ 4, 378 Room & Board (2189 x 2)
= 11, 778 Total expense for the 529 Since that's more than the $11,250 distribution, none of the distribution is taxable
Just don't enter the 1099-Q on either your return or the student's. Enter the one 1098-T on your return to claim the scholarship. Don't bother entering any other numbers
If needed, some of the internet (while attending at home) is a 529 expense. A student's expense's are qualified, regardless of who paid. So, the cost of grandparent's gift computer is also includable (if the main purpose, of the purchase, was for school)
