I want to withdraw from 529 to reduce the account balance. But I don't know if it is better for tax benefit to choose me (account owner) or my son (beneficiary) as recipient for the distribution. The situation is:
- My son has excess scholarship that covers all qualified expenses. Scholarship = $40,000. Qualified expenses = $25000 (room & board not included here)
- He had a summer internship $10,000 (don't know if this will be a W-2 or 1099-MISC) and an on-campus part time job ($1200 on W-2)
- My income is too high for education credits
I want to withdraw from 529 for $12000 to cover room & board. And also a large amount comparable to the scholarship. I know the scholarship equivalent will be subjected to income tax but not 10% penalty. My question is if I should choose myself or my son as the 529 distribution recipient.
