I am a bit confused. Lets say I withdraw $10K grant money from 529. And, university COA says $5k for Room & board for commuters. I thought I can apply $5k towards room & board, and would be liable for tax for the earning portion of the remaining $5k (which is about $1.5k). Are you saying that I am liable for the $10K?
What confuses me is this… In a normal situation with no scholarship, I will be able to withdraw from 529 for room & board expenses that I paid, with no tax liability. Why would it be different with Scholarship money withdrawn and a portion is applied to room & boarding?
Can you please educate me? Thanks