Personal Finance (Not Investing) • 529 distribution and AOTC

Hello,

Thanks for reading and for any help or guidance you might have.

I have a dependent starting college in a couple weeks, and it's time to pay. I've read a lot on this site and I've gone through the IRS documents including Form 8863 and Pub 970 and here's my plan:

• Pay College tuition with MY Visa card through their payment portal

• Distribute from a 529 (I am owner, dependent is beneficiary) to ME for the exact amount paid to college (I'll check that it's all qualified)

• Claim AOTC on MY taxes

Let's say that tuition is $3,000, all qualified, and I take a distribution for that exact amount from the 529. From what I read in Publication 970 pp 51-53 I can still take the AOTC for $2,250 and not get taxed for any distribution from the 529 and not owe any penalties (I meet all the other qualifications to take AOTC). However, when I read through some posts on here, it seemed others don't agree, or I just misunderstood.

How's my plan sound?

Statistics: Posted by Augustivus — Thu Aug 15, 2024 7:16 am — Replies 4 — Views 135

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