My 1099Q Gross distribution matches the expenses I entered for Room/Board, books, computer etc. but why do I have a Taxable amount? What happended?

Forum|Forum|4 years ago
April 14, 2022
1 reply
0 views

No text available

TurboTax Online

Hal_Al

Employee

The TurboTax interview is complicated because it has to handle so many scenarios. Mistakes can be made.

In your situation (you know the distribution was all used for qualified expenses, not including tuition), just don't enter the 1099-Q.

You can just not report 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. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. You also cannot count expenses that were paid by tax free scholarships. You cannot double dip!

On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."

StuDiego17Author

Well thank you. I did some sleuthing and found on TTAX "Qualifying Education Expense Worksheet, Students other than Taxpayer, Spouse or Dependents" Computer expenses were not considered qualified in turbo tax. IRS Pub 970 on 52 states that, "The purchase of computer or peripheral equipment, computer software, or internet access and related services..." are under the Qualified Expenses section. I think Turbo Tax mis-handled it and showed me owing tax on a portion of that amount. IT was a qualified expense. I found a work around.