Thank you so much for the detailed response! For simplicity, I left out a lot of details but will offer them up now for your additional comment pls.
1. My daughter's ONLY income is about $600 on her W2 for a summer job. So, she doesn't look anywhere close to having to file.
2. When I said that her T and Q canceled out to the dollar, I was oversimplifying. The T only shows the tuition cost but I made the 529 withdrawal out for the total amount of her tuition, room, and board. She has no scholarships or anything else that would factor into that equation. So, I have burned up all of the qualifying costs with the 529 withdrawal.
3. If I wanted to 'say' that $4k of the payment was from parents to get the tax credit:
a. What would I put on my taxes? Enter the 1098-T full amount? or just $4000 in 'other qualified expenses'?
b. How would I know if the resulting 'overpayment' of 529 funds to my daughter would result in enough tax to cause her to have to file? Would I have to enter her situation into Turbotax and see what happens? I'm thinking tax on $4k would have to be a lot less than $1100 so is this moot on the face of it? Or, would I have file anyway to show that all of the 529 was NOT used for qualified expenses.
Short version is that I don't want to 'lose' any tuition tax credits for my 2021 return (since they make a dollar for dollar difference) but I want to make sure I am treating this properly with my daughter's tax situation as well. Thank you!
