AOTC and adding 529 distribution back to income

[jasdlm]

I know that housing isn't an eligible AOTC expense, but since housing (w/ all the rules/caveats) is an eligible 529 expense, do you use the housing cost that's eligible under the 529 rules when calculating AQEE and tax-free earnings?  I haven't been, but now I'm questioning whether I'm cheating my clients.  The one I'm working now would have 0 addback and still qualify for maximum AOTC if I include the allowable housing.

Thanks much.

[Margaret CPA in OH]

Yes, I do.  I have a little spreadsheet that has the qualified tuition less AOC then remaining expenses.  To that I add 529 qualified expenses and have a calculation that determines whether or not any of the distribution is to be included in income.  I've had clients in both situations but usually do a little planning ahead to prevent that.

[jasdlm]

Thank you!  Circling back to 'uncheat' my cheated clients.