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1099Q - Parent is the recipient and dependent child is the beneficiary. The 1098T shows qualified tuition payment, but room and board are not included. How enter in TT?

Forum|Forum|6 years ago
March 28, 2020
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Ex. 1099Q gross distribution(line 1) = $15,480 and 1098T Payments received (line 1) = $9,687. There is a difference of $5,793. That is the exact amount that I paid for room and board. I need to know how and where to enter this in TT in the correct sequence so that I get advantage of any education credits and so I'm not taxed on the distribution. Also, How should I enter this on my son's tax form?

TurboTax Self Employed Online

Best answer by Hal_Al

Q. I need to know how and where to enter this in TT in the correct sequence so that I get advantage of any education credits and so I'm not taxed on the distribution.

A. In your example, you have exactly the same amount of expenses (9687+5793 = 15480) as your 1099-Q distribution. You can't have both a tuition credit and a totally tax free 529 plan distribution. You can not double dip (use the same expenses for both).

It's best to pay a little tax on the 1099-Q, so that you can claim the credit.

In TurboTax (TT), enter the 1099-Q, at:

Federal Taxes Tab (Personal for H&B version)

Deductions & Credits

-Scroll down to:

--Education

--ESA and 529 Qualified Tuition Programs (1099-Q

Later, enter the 1098-T, In TurboTax (TT), at:

Federal Taxes Tab (Personal for H&B version)

Deductions & Credits

-Scroll down to:

--Education

--Education Expenses

Follow the interview. When you reach a screen titled "Your Education Expenses Summary". Click edit next to the student's name. That should take you to a screen “Here’s your Education Summary”. Click edit next to “Education Information”. When you get to the screen titled “Amount Used to Calculate Education Deduction or Credit”, verify the amount you want to use (usually $4000) or change it.

KrisD15

You need to know what you want to do, you can enter your income, then the 1099-Q, then the 1098-T.

Answer the interview questions in the education section. Enter the Room and Board you paid.

If you click "Maximize my tax break" the program will do just that.

You can't do both, allocate education expenses to a distribution AND a credit, but you might have a choice.

If the student received any scholarships, that also needs to be factored in.

Whomever the 1099-Q was issued to reports that income if that income is taxable.

If scholarships are taxable income, the student reports that on their return.

Your program will tell you if the student needs to claim taxable income.

If it is scholarship income, that amount (only, not the entire 1098-T) is entered in the education section.

Distributions can be entered as "Other Income" on the student's return if the 1099-Q was issued to them.

Click here for IRS Pub 970 with many examples

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Hal_AlAnswer

Employee

Q. I need to know how and where to enter this in TT in the correct sequence so that I get advantage of any education credits and so I'm not taxed on the distribution.

A. In your example, you have exactly the same amount of expenses (9687+5793 = 15480) as your 1099-Q distribution. You can't have both a tuition credit and a totally tax free 529 plan distribution. You can not double dip (use the same expenses for both).

It's best to pay a little tax on the 1099-Q, so that you can claim the credit.

In TurboTax (TT), enter the 1099-Q, at:

Federal Taxes Tab (Personal for H&B version)

Deductions & Credits

-Scroll down to:

--Education

--ESA and 529 Qualified Tuition Programs (1099-Q

Later, enter the 1098-T, In TurboTax (TT), at:

Federal Taxes Tab (Personal for H&B version)

Deductions & Credits

-Scroll down to:

--Education

--Education Expenses

Follow the interview. When you reach a screen titled "Your Education Expenses Summary". Click edit next to the student's name. That should take you to a screen “Here’s your Education Summary”. Click edit next to “Education Information”. When you get to the screen titled “Amount Used to Calculate Education Deduction or Credit”, verify the amount you want to use (usually $4000) or change it.

D

dep0sit99Author

Thank you! Your steps worked. My MAGI is above the maximum amount to qualify for the education credit, so there is no difference based on that variable. For some reason, until I followed the sequence of your steps, TT was not off-setting the off campus room/board that I paid out of pocket with the 1099Q distribution amount and it was taxing a portion of the earnings.

My son (the student above) needs to file federal. I was the recipient on the 1099Q and he was the beneficiary. Does he need to declare anything from the 1099Q or 1098T? Would he qualify for the educational credits, since I could not claim them?

A

Anonymous

I had the same issue and Turbo Tax step by step process is not very intuitive.

Please note 1098-T is issued by the college in your Kid's name while 1099-Q is issued by your brokerage firm under your name even if the actual beneficiary is your kid.

Here are the steps you need to follow when you are dealing 1099-Q 529 Withdrawal to fund your kids college

Step 1) Please enter your Kid's 1098-T information in your personal return and make sure your Kid is included in your personal return as dependent. You can find 1098-T worksheet by directly searching 1098-T form in Turbo-tax (select Top menu -> Forms and then search->1098-T Wks)

Step 2) After you have entered 1098-T Worksheet information, then enter 1099-Q information in your personal return and select your kid as the beneficiary.

Once you complete these two steps, you will find 529 withdrawal is not treated as taxable income in your personal return. My son is in the final year of college and in the last 3 years, I had the same issue while preparing my personal tax return. I figured out the trick hard way ... I wish turbo-tax makes it intuitive for the users so that people don't have to spin wheels to figure things on their own and get stressed out.

@Turbotax - please fix the issue by adding a step to enter 1098-T worksheet information while someone is entering ESA and 529 qualified tuition programs (1099-Q).

Hope this helps and good luck.

Steve

G

GRivera1

So once this is done, neither the 10-99Q or 1098T get entered in the dependent child's return, correct?

Hal_Al

Employee

@GRivera1 said "So once this is done, neither the 10-99Q or 1098T get entered in the dependent child's return, correct? "

It's not clear what "this" is.

But, if you have determined that all the distribution (box 1 of the 1099-Q ) was used for qualified expenses, including room & board, after adjusting for the tuition credit and any tax free scholarships, then yes, neither the 1099-Q or 1098-T get entered in the dependent child's return.

The 1099-Q does not get entered on your return either. But the 1098-T does, if you are claiming the tuition credit (and you probably should be).