Since your distribution ($56K) exceeds your QEE- qualified educational expenses (46 + 5.5 = 51.5), some of the box 2 amount will be taxable. Rough calculation 51.5/56 =91.96% of the distribution is qualified, 8.04% is not qualified. 0.0804 x 20K = $1607 taxable amount.
Room and board are QEE. For off campus living you may use the lower of your actual cost or the schools charge for on campus students. You probably can come up with more than $5.5.
The taxable income goes on the "recipient's" (who may or may not be the beneficiary) return.
Did the student have any scholarship? Are your eligible for the tuition credit (income under $90K [$180K married]).
Provide the following info for more specific help (repeat some of the above, so it's all in one place)
- Are you the student or parent.
- Is the student the parent's dependent.
- Box 1 of the 1098-T
- box 5 of the 1098-T
- Any other scholarships not shown in box 5
- Does box 5 include any of the 529/ESA plan payments (it should not)
- Is any of the Scholarship restricted; i.e. it must be used for tuition
- Box 1 of the 1099-Q
- Box 2 of the 1099-Q
- Who’s name and SS# are on the 1099-Q, parent or student (who’s the “recipient”)?
- Room & board paid. If student lives off campus, what is school's R&B on campus charge. If he lives at home, the school’s R&B “allowance for cost of attendance” for student living with parents.
- Other qualified expenses not included in box 1 of the 1098-T, e.g. books & computers
- How much taxable income does the student have, from what sources
- Are you trying to claim the tuition credit (are you eligible)?
- Is the student an undergrad or grad student?
- Is the student a degree candidate attending school half time or more?
