Using these numbers for simplicity, If I did an early withdrawal from an IRA for $100,000 as well as a withdrawal from a 529 for $100,000 of which $50,000 was earnings and there were $25,000 of qualifying educational expenses, am I right to assume that it is better to offset the $25,000 expenses from the IRA, rather than the 529 since the IRA offset will be dollar for dollar, but the offset to the 529 will only be a proportion of expenses to distributions times earnings, giving $37,500 in taxable income?
If I choose to offset against the IRA in Turbotax, and then I enter the 1098-T info from the school, won't Turbotax then offset it from the 529 as well in error?
