Hoping someone can guide me on 529 withdrawal. Here is the situation. My daughter's Spring term bill has these line items:
Tuition & fees = $16,000
Scholarship = $ 6,000
Amount Due = $10,000
I have 2 options.
Option 1: withdraw $10,000
Option 2: withdraw $16,000
I know that Option 1 has no tax implications.
My question is about Option 2. Do I need to pay tax on $6000 scholarship in Option 2, even though that money ($6000) is actually applied against the tuition & fees automatically by the university. My PA 529 GSP agent tells me that it is taxable. Is this right?
I thought that if the Scholarship is used for Qualified Education Expenses, it is not subject to taxes. Can someone clarify this?
Thanks.
