I have a couple of questions that I cannot seem to find the answer to
1. Can you take a withdrawal from a Coverdell for scholarship? (withdrawal without the10% penalty)
If not, how do you take qualified expense withdrawals from a Coverdell and take a scholarship withdrawal from a 529 without the IRS forcing you to do the "proportional allocation." We will have $8000 in qualified expenses. Want to take this out of a Coverdell. Son received $6000 in scholarship. Want to take this out of 529. Following quote is directly from IRS PUB 970 pg 47 "If a designated beneficiary receives distributions from both a Coverdell ESA and a QTP in the same year, and the total distribution is more than the beneficiary's adjusted qualified higher education expenses, those expenses must be allocated between the distribution from the Coverdell ESA and the distribution from the QTP before figuring how much of each distribution is taxable."
Second kid is now in college. She will be required to pay her spring 2020 tuition in Dec of 2019. If I take a distribution in Dec of 2019, is this considered a qualified expense for the 2020 term? Somewhere there is a rule that money can only be take out for the year it is used. If it is billed and due in 2019, does this count? Or do I need to wait to withdraw money in 2020, even though it is billed in 2019.
With second kid in college, will all Coverdell qualified be expenses be lumped together or separate. Tax advisor says it is lumped together. Son will be claiming himself. I will claim daughter.
Thank you.
