Is this correct? QTP income

[artp]

$153.61 of the earnings need to be included on parent’s return as income.

 

Client has son attending college (4^th year for AOC) and received 1099Q for payments from QEP:

 

Box 1 Gross Distributions                              $17,980.63

Box 2 Earnings                                                $  6,325.69

Box 4 Basis                                                                      $11,654.94

Box 6 checked

Amounts were not paid to designated beneficiary or college direct, but to Mom who sent payments to college

 

Total Billings from college                           $ 28,000.00

Scholarships & Grants                                        6,456.00

Expenses to take AOC                                        4,000.00

AQEE                                                                   17,544.00

 

Payments reflected on bursar’s statements:

Paid by ACH/Credit Cards                                17,544.00

 

Other qualifying expenses for classes                523.23

Total amounts paid                                           18,067.23

 

Tax-free 17,544/17,980.63 x 6325.69 = 6172.08

Earnings 6325.69- tax free 6172.08 = 153.61

[Pacun]

I would ask the student if they spent any money from their pocket to buy books or other stuff that can be added. Let's say that the student spent $200 in books, I would take only $3,800 for AOC and add $200 as book expense.

[artp]

That was the $523 of other qualifying expenses. I was wondering if this could be added to bring the AQEE to $18,067.23 and then there would be no income to include on the return and they could still get the max AOC of $2500 based on $4000 of qualifying expenses? 

[Lion EA]

Can 529 be used for room & board? Saving tuition for scholarship and AOC?

[Margaret CPA in OH]

Yes!

[artp]

Lion,

 

Per my reading TTB p 12-6 yes you can used room & board for 529.

[artp]

Thanks for all of the replies! I appreciate the feedback