AOC and 529 coordination of QEE and taxable scholarships.

Discussion in 'Tax' started by collegedad, Dec 24, 2014.

  1. collegedad

    collegedad Guest

    My daughter is in college and I am trying to determine what I can take out of
    her 529 plan:

    Scholarship: 2500
    School grant: 4000
    Pell: 5500
    Total scholarships: 12000

    Tuition, fees, books: 8000

    Room and Board: 11000

    The options I am considering:

    1) Taxable scholarship amount is 4000.
    529 QEE: 11000
    AOC QEE=0

    2) Declaring additional 2000 as taxable on my daughter's return.
    Taxable scholarship amount is 6000.
    529 QEE: 11000
    AOC QEE=2000

    Do I understand Pub 870 correctly that the 529 QEE is NOT reduced
    by the taxable amount of her scholarship. So declaring an additional
    2000 as taxable income has no impact on the expenses claimed for the
    529 distribution nor does the original require 4000 taxable amount.

    Note: The scholarship and school grant can be used for any expense
    included in the COA. It is not restricted.


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    collegedad, Dec 24, 2014
    #1
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