Thank you very much to both of you for your very thoughtful advice.
To Answer Hal_Al’s question about E’s status, she is 23 years old and unmarried. She is not claimed by her parents on their return because she provides more than half of her support from her part time work.
She is living at home with her parents so she does not incur a large amount of living expenses. From what I gather from your kind reply, I assume that E will not qualify for her American Opportunity Credit since it would be a “double dip” situation if I cannot find at least $3000 in addition to the tuition to justify the qualified expenses.
I make payments for all of her expenses out of a checking account that I set up to hold the proceeds from the 529 distribution. There were a few thousands dollar balance left in the account at the beginning of 2024 (I withdrew more than needed in the prior year). E usually sends me receipts of her expenses (text books and supplies) to ask for reimbursements. From my records, she only asked for a little over $1K.
Thank you again for your valuable advice. I will delete the 1099-Q from my return.
