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I have a 20 year old daughter who was a full time student. I received both a 1098-T and a 1099-Q (the Q was in her name). Where and what should I enter?

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June 4, 2019
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I have a 20 year old daughter who was a full time student. She had a part time job which paid $690 for the year. So, she qualifies as my dependent because I support her and she lives at home. I received both a 1098-T and a 1099-Q (the Q was in her name because the money was paid directly to the school). Her education expenses ($12,000) far outweighed the amount of the distribution (Gross=$2522, Earnings =$1097) listed on the 1099-Q (from a 529 plan). When I enter the information in my tax return Turbo Tax says "...the student beneficiary most report $227 of taxable income". When I try to enter all of the 1099-Q and 1098-T information on her return Turbo Tax says "Generally whoever claims you as a dependent should take the education credits" but then it says "However, you should enter your education expenses to avoid paying tax on your Education Savings Account (ESA) or qualified tuition program (QTP)." So what should I do enter it on both her and my return? Only mine? Only hers? Why does Turbo Tax tell me she will have $227 of taxable income while doing my return when it knows nothing about her return except she is my dependent. And, most importantly, if I had $12,000 in expenses and this distribution was only for $2522 why would anything on my return or her return be taxable? Please help make some sense of this strange and sometimes conflicting information in Turbo Tax.

TurboTax Premier Windows

Best answer by KrisD15

Enter the forms on your return. Go back through the "Education Information" interview which is located on the "Here's Your Education Summary" screen.

(Federal, Deductions & Credits, scroll down to "Education")

Click "Maximize My Education Tax Break"

Are you getting an education credit on your return? (Look at forms and look at the 8863)

If you are getting the American Opportunity Tax Credit, go back through that same interview, on the last screen the allocation to the credit is shown, make sure it is only listing 4,000. (you can also make this change using the forms mode)

Sometimes the program will default to 10,000 if the 1098-T is entered before the 1099-Q.

Once you are done, only the amount the program says is taxable to the student needs to be entered on the students return, not the 1098-T nor the 1099-Q, just the amount as "Other Income"

But from what you describe, I feel the allocation needs t be adjusted and that there will be no tax on the distribution.

https://ttlc.intuit.com/replies/4194409

How does the dependent student report taxable income on their return?

Sign into your account, your return and click “Pick up where I eft off”
Click Federal
Click Wages & Income
Scroll down to “Less Common Income” (THE LAST SECTION) (online click Show more)
Scroll down to “Miscellaneous Income, 1099-A, 1099-C” (THE LAST SECTION) and click Start
Scroll down to “Other reportable income” (THE LAST SECTION) and click Start
Continue to the “Other taxable Income Screen” and type 1099-Q as the description and enter the amount
Click Continue
If the “Other Miscellaneous Income Summary” screen looks good, click Done

KrisD15Answer