We (parents) paid for 75 percent of my son's college tuition; he paid 25 percent. We list him as a dependent, but he files his own tax return because he has a part-time job.
For the tax year 2017, we parents paid $4,000 out of pocket (not using any 529 or ESA funds) for our son's college expenses.
For expenses beyond that $4,000, we withdrew money from our son's ESA and from his 529 (we parents own it; our son is the beneficiary).
The first withdrawal from his 529 went directly to us, the parents: $2498).
The second withdrawal from the 529 went directly to our son, the dependent and student: ($6713).
Both were used for Qualified Educational Expenses over and beyond that $4,000 we spent out of pocket, and therefore should not be taxable to us or to our son.
Do we still need to report the 1099-Q with the parent's name as recipient on our tax form, and the 1099-Q with our son's name as recipient on his tax form?
My concern is that his larger distribution will appear taxable even though it was all used to pay qualified education expenses. His name is on the 1098-T, but since we as his parents qualify for the AOTC, my understanding is that we would include that on our tax return, not on his.