I made qualified distribution from state 529 tuition plan. Because my child received a scholarship and I am getting a partial American Opportunity credit of $1,000.00, turbo tax is calculating taxable income of $309.00 to her. I trust Turbo is calculating correctly but to me, nothing should be taxable with all the college expenses I had to pay. But let me get back on subject. This is her ONLY income. Is she required to file tax return for this taxable 529 distribution? Again the amount is $309.00. Do I have to include this income on 5329T for it to be taxed at parents rate? Or do I nor she do nothing with this?
