529 distribution vs. CARES Act Grant

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  • #71461
    ftcnative
    Participant

    Here’s the situation:
    Parent did a final distribution from 529 to completely pay for remaining Fall Semester college expenses/bill on 10/1. Student received refund check yesterday (11/16) for the CARES Act Grant from the college – this wasn’t in the billing that was paid for in full from October 15. Also, the Grant was greater than the 529 distribution. If it matters, this is the final semester for Student – can’t pre-pay next year.

    1) Is that Grant a “college expense” refund (e.g. it forced an overdraft)? If so, is there a way to return it to the 529?

    2) If not overdraft, how to handle it on student’s 2021 tax return?

    #71496
    ftcnative
    Participant
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