My child attended school in 2019. Tuition was paid with student loans. In 2020 I paid the loans with a 529 withdrawal. There's no 1098-T. How do I enter this?

Forum|Forum|5 years ago
March 17, 2021
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Child is not a dependent in 2020. I was the recipient of the 529 payment. The amount was $13,493.43. Do I owe taxes/penalties on the $3,493.43 about the $10K loan allowance? How do I enter all this so TurboTax will compute it correctly?

TurboTax Self Employed Online

Hal_Al

Employee

Q. Do I owe taxes/penalties on the $3,493.43 above the $10K loan allowance?

A. Yes, unless he/she was still a student in 2020. You cannot count the 2019 tuition because it was not in the same year as the withdrawal (distribution). Although a student must be your dependent for a tuition credit, he only needs to be the plan beneficiary for a qualified 2020 distribution.

Q. How do I enter all this so TurboTax will compute it correctly?

A. The 1099-Q interview will ask about loan payments. You do not need to enter anything at the education expenses section. Even if you claim his 2020 tuition for the remaining $3493, there is a place to enter that in the 1099-Q section when the student- beneficiary is not a dependent.

mark168Author

Thanks, but that does not appear to be the case. I did see the question about paying loans, but that was in the 1098-T dialog. However, I can find no place where Turbo Tax allows you to enter how much was paid for loans. I don't see how it can calculate taxes correctly without that bit of information. What am I missing???

Hal_Al

Employee

Delete the 1098-T and that whole education section. You don't belong there because the student is not your dependent.

Go through the entire education interview until you reach a screen titled "Your Education Expenses Summary". Click delete next to the student's name.

Enter the 1099-Q

In TurboTax (TT), enter at:

Federal Taxes Tab (Personal for H&B version)

Deductions & Credits

-Scroll down to:

--Education

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

You'll be asked who was the student. Since the student is not your dependent, choose "Someone else not listed here". Do not choose "This distribution was not used to pay any education expenses".

When asked what level of school attended, Choose "none of the above". The next screen will ask if you made loan payments.