I wanted to update on how things ended up with our return and Child #1's return. Fortunately, Child #1's 529 withdrawal was a small amount and the tax/penalty for not having supporting qualified expenses was a small amount for Federal and State combined. Child #1 claiming the 1098-T on his return qualified Child #1 over $1,000 for AOC and since the amount owed Federal was very small, the remainder of the award is being refunded to Child #1. Even if we deduct our tax owed from Child #1's 1099-Q, the remaining refund is still a good amount.
Thank you for making the suggestions as they worked out to Child #1's advantage.
