Thank you for that helpful reply. To make sure I understand, here's my take-away:
- When one enters a 1099-Q into TurboTax, marked as a dependent's 1099-Q, TT uses it to help generate the Student Information Worksheet, but does not attach it to the return.
- I should enter the 1099-Q on the student's return. (It is harmless to enter it in my TT, marked as the dependent's.)
- For each education expense:
- If it was paid by the 529 plan, we'll enter that expense on his return, to balance the 1099-Q.
- If I paid it, it can go on my return for the AOTC. It will also go on his return, and will be backed out by the "place to enter any tuition used (claimed) by the parent."
- The back-out item on his return is how double-dipping is avoided.
- The taxable distribution from the 529 shows up on his return due to the 1099-Q, and should be entered in the space for withdrawals not subject to 10% penalty (because it matches up with a scholarship), and the *earnings* portion will be taxed at the appropriate rate.
- Since he's a dependent student under 25, *earnings* over $2200 will be taxed at my rate, due to the kiddie tax.
All 529 distributions have been payable to the student or to the school.
Is that a fair take-away?
