As recommended here, I plan to pay the whole college fees out of 529, and maybe next year claim aotc and have the beneficiary pay tax on earnings portion of $4000.
529 require me to declare if withdrawal is qualified or unqualified. Since I don't know how much aotc will be claimed (depending on income), can I declare the withdrawal as qualified for now? Next year, when tax is filed, I will put in the correct amount for tax. 1098T will show a smaller amount of taxable earning, but it will be safer than claiming withdrawal as qualified and then find out you cannot claim all of the $4000.