We reimbursed our son from his 529 for his education expenses that he paid himself fall quarter 2015 in January 2016. This includes room and board so it was not a small amount, We do not qualify for education expense credit due to income level so all education expenses are used to offset 529 withdrawals. I have searched and searched, and from what I see you have to claim expenses the year they were incurred (2015), and you have to claim the 529 withdrawal the year it was taken (2016). This prevents us from matching the two up and sets up a taxable income problem for 2016 even though the funds were used for education expenses. Is there any way I can report 2015 expenses the year they were reimbursed through the 529 instead of the year my son paid them?
I do not understand the rule because, for example my college daughter's books were purchased 12/31/2015 by us (of course not even a day later!) for her Spring 2016 semester - now we can not reimburse ourselves from her 529 due to different years?
I will say that I completely understand including the education expenses in the correct year when you are receiving the tax credit, but I do not understand the rule when you are getting reimbursed later for expenses paid out of pocket.
Any information will be much appreciated so I can move on with taxes. Thank You