Q. You say what the 529 earnings (box 2 of the 1099-Q) were ($3106.71). But, you don't say what the distribution was (box1). That's the number that needs to be less than the $9,813.61Total expenses she can use to exclude 529 earnings.
A. Box 1 of the 1099-Q is $7389.06, so the 529 earnings can still be excluded. (Since she is not eligible for the AOTC, we could actually add the $4,000 back on as well).
"If the student actually has a tax liability, there is a provision to allow him to claim a non-refundable tuition credit. ... The student must still indicate that he can be claimed as a dependent, on his return. This is worth up to $2500 (AOTC shifts to all non refundable)."
Question on this: would this include a scenario where a student has a tax liability from having more money from scholarships/grants than qualified expenses - so the student could then claim a non-refundable AOTC to recover the taxes paid? Although now that I think about it some more, that probably couldn't happen since the AOTC itself is for covering tuition?
Thanks for all your input and help!
