question about 529 and tuition

[char1351]

My son is a full time student who receives scholarships that account for about half of his tuition and expenses each year. In prior college years he lived on campus and 100% of the scholarship went toward tuition plus room and board and we paid the difference from his 529 account. 

For 2025 he lived off campus and paid rent directly to the apartment complex. The scholarship covered more than his tuition expenses so they sent him a check to cover the difference, which we used toward his rent. 

There is a question in turbotax desktop asking if we received a refund of qualified education expenses. Not sure how to answer that since we got a check from the school for the scholarship balance after tuition was covered. 

Thanks-

C

[AmyC]

No, a qualified expense is for the classes and supplies but let's dig a little to be safe.

1. The 529 goes to room and board  off campus using the college guidelines along with education expenses. If all of the 529 money was spent on qualified expenses, it should not be entered.  IRS Publication 970, Tax Benefits for Education states that nontaxable distributions should not be entered. A refund for a class, could affect the 529 if it wasn't all used for qualified expenses. It is best to claim the 529 used first, then the scholarship.
2. The scholarship money also went towards education and room and board. The scholarship portion that went towards room and board - living expenses- is all taxable income. Refunding a portion of income already being taxed adds no value. The only concern would be if the student dropped a class and you are unaware. That would change the education expenses allowed to determine the remaining taxable portion.