Q. I took this distribution late in 2024 really to help pay for her tuition for 2025 semester?
A. Technically, you are not allowed to do that. To be a qualified distribution, the money must be withdrawn in the same year that expenses were paid. If you actually paid the 2025 tuition, in 2024, that would count. But, that's just academic, as you're probably covered anyway. Read on.
Q. Additional College expenses are just for books and supplies?
A. Those expenses count against a 529 distribution. Room and board also count, even if the student lives at home. Use the lesser of her actual costs or the school's allowance for cost of attendance (COA).
Q. She received 1098-T with $18,800 in box 1 and $10,000 in box 5 (not 2).
A. She claims $8800 for the Lifetime Learning Credit. That's a $1760 reduction in her tax liability
Q. The 1099-q came to me with $14,600 in box one, $8,600 in box 2, and $6,000 in box 3. Please advise on how best to handle the 1099-q and 1098-T.
A. You claim the room and board and book expenses against the 1099-Q. A portion of the $8600 will most likely be taxable.
