My 1098-T Form is missing Room & Board expenses.

Forum|Forum|6 years ago
June 5, 2019
3 replies
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I've seen this question asked and answered in a variety of ways in different forums (even here). My understanding from CollegeInvest.org is that room & board should be considered a Qualified Expense. I have not started the process of trying to enter this data yet into TurboTax but will within the next month. My understanding is that basically all fees (including room & board) billed by a university are essentially considered qualified (but then it's a mystery to me why that wouldn't be on the 1098-T). Am I correct...are those fees a definitively a Qualified Expense?

TurboTax Premier Windows

Best answer by rjs

No, you are not correct. I don't know where you got your understanding. The American Opportunity Credit and the Lifetime Learning Credit are for tuition and fees. Room and board are not qualified expenses for either credit.

You can review all the rules for the education credits in detail in IRS Publication 970, which you can download from the following link.

https://www.irs.gov/pub/irs-pdf/p970.pdf

rjsAnswer

Employee

You can review all the rules for the education credits in detail in IRS Publication 970, which you can download from the following link.

https://www.irs.gov/pub/irs-pdf/p970.pdf

PrethenAuthor

That's unfortunate. I guess one of the CollegeInvest representatives misinformed me. I suppose that when I pull those funds out from my 529 that when I report that it will be taxable. Interestingly enough, I recall a CollegeInvest representative telling me what the IRS considers as "acceptable" room & board expenses if my child were to be living on their own in an apartment for instance.

rjs

Employee

Resolved in comments.

ahzimmerman

rjs, no, it's not resolved. Do you or does someone know the answer to TaxTim's question? I have the same issue. Thx.

NCPERSON1

let me answer in the form of an example

1) 1098-T - Box 1: $10,000

2) 1098-T - Box 5 - $5,000

3) 1099-Q - Box 1 - $5,000

4) 1099-Q - Box 2 - $500

5) room and board expenses - $6,000

(for simplicity, assume there is no AOC for Liftime learning credit

so this example means there are $16,000 of college expenses, $5,000 of which were covered by a scholarship.

of the remaining $11,000 of expenses, $5,000 was paid for with a distribution of a 529 plan.

because the remaining expenses ($11,000) exceeds the 529 distribution, none of the $500 (1099-Q Box 2) of earnings should be taxable)

1) assuming the student is a dependent on the parents return, the 1098-T is to be posted on the PARENTS return (it only goes on the student's return if the student is not a dependent of anyone else OR Box 5 exceeds Box 1, which it is not in this example)

2) the 1099-Q goes on the return of the person whose social security number is listed (if the parent owned the 529 and had the money send directly to the school or the student, the student's ss# will be listed; if the parent received the money directly, the parent's SS# will be listed). BE VERY CAREFUL HOW YOU ANSWER THE TT QUESTIONS, as it is tricky and this is where errors can be made.

does that answer the question?

Carl11_2

Employee

The only "QUALIFIED" education expenses are tuition, books, and lab fees. That's it. There are no exceptions. Not ever.

Qualified education expenses and stuff will be reported to you on a 1098-T.

529 distributions will be reported to you on a 1098-Q.

However, you must understand how things work when it comes to a 529 plan distribution.

For starters, colleges work in academic years, while the IRS works in calendar years. So the reality is, it takes you FIVE CALENDAR YEARS to get the four year degree. Now you would think that complicates matters when it comes to taxes. But it really doesn't. The IRS rules actually simplify it.

- Scholarships, grants, and 529 distributions are reported as taxable income *** INITIALLY*** in the tax year those funds are received. It *does* *not* *matter* what tax year those received funds may be "for".

- Qualified Education Expenses are reported/claimed in the tax year they are "PAID" and it *does* *not* *matter* what tax year is paid *for*.

Scholarships and grants can be used to pay for the qualified education expenses of tuition, books, and lab fees. That's it. There are no exceptions.

- 529 distributions can be used to pay for the qualified expenses of tuition, books, and labs fees *AND* the unqualified but allowed expense for room and board *PROVIDED* that room and board is paid "IN DIRECT SUPPORT" of the education.

So when entering information in the Education section of the program, it is imperative that you work through that section of the program the way it is designed and intended to be used. If you do not, then chances are EXTREMELY high that you will not be asked for room and board expenses, and therefore you WILL PAY TAX on the 529 distribution.

42baker--

Replying to Carl- so there is a spot to put in Room & Board? I am running into issue with a 529 withdrawal in December 2020 (received a few weeks early) for 2021 school year that is causing me to show more distribution in 2020 and wonder if the taxable income for 2020 can be reduced by counting 2020 room & board.