Question

1099-Q , 1098-T dependent parent confusion

Forum|Forum|6 years ago
February 18, 2020
1 reply
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I have always used turbotax to file but for whatever reason this year I feel like its not calculating right.

Son is 23 and is finishing up his Bachelors and Masters this May.

Had a Texas Tomorrow fund that he used and depleted during the Fall Semester.....had a 529 that is covering the rest plus he received a graduate grant of $2500 for the fall.

I am claiming him as a dependent and have selected in the program that he can be claimed by someone else....

After entering my sons W-2 income from his internship and using the standard deduction he is due $2100 in a refund (He made 18K in income)...but for whatever reason when I enter in his 1099Q's which total 20K ...Room and Board expenses are a estimated 13k ....if I delete the 17k tution from the 1098-T the refund is droppping down to 1200..... but I thought I needed to input the 1098-T on my return and not my sons?

Should I leave the 1098-T on his return if my income is over the MAGI limits to claim any education credits?

Bottom line all money that was pulled out of the 529 had more than enough expenses to cover it and the tax burden should be zero but Turbo Tax is not computing that way.

My thoughts are is return should be simple. He made 18k, paid in 2700 of taxes..with standard deduction and 10% tax rate he should have paid in $600 thus he should be getting a $2100 refund....and all of the 1099-Q data should not impact that since his 529 withdrawals were more than met by qualified expenses?

what am I missing?

Not A Product Question

Hal_Al

Employee

You can just not enter the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records, in case of an IRS inquiry. But your own math shows that already. Keep those records.

"What am I missing?" Actually, you figured it out; you do need to enter the 1098-T, on his return, to get TT to calculate that none of the 1099-Q is taxable. The 1098-T is only an informational document. It doesn't have to be entered, at all, or it can be entered on either or both returns (if you adjust the numbers for what was used on the other return). But, since you know you don't qualify for a credit, it does not have to be entered on your return, just because he is your dependent.

T

Texas_2000Author

Thanks for the quick reply.

Well I thought I figured it out...so that does make sense that when I remove the 1098-T his return goes from $2100 refund down to $1200? I mean Box 1 is fully covered by expenses but only if 1098-T is entered....I dont understand how that isnt the case for everyone...thats where the bulk of expense comes from right?

On the first 1099-Q...box 1 is 12025 box 2 is 8313 and box 3 is 3712....is it because of the earnings on the basis?

On his second 1099-Q box 1 is 8214, box 2 4453 and box 3 3761....again earnings on the basis.

Form 1098-T has 17164 in box 1 and 2500 in box 5 for a grant he received this past fall semester.

So right now, if I leave in both 1099-Q's and the 1098-T entered on his return...it is spitting out a $2100 refund which I agree with...thats what it should be based off his income, taxes paid in - minus standard deduction.

If I delete the 1098-T it drops that refund down to $1200 which I dont get.

I have not deleted it off my own return but I do not think it impacted my tax due since I was no eligible for any tax credits anyway.

I have read so many different things I confused myself...some say 1098-T has to go on parents return and should not go on kids return but in my case it looks like the exact opposite. Which I'm ok with as long as I dont get a letter from the IRS in 6 months lol.