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Question

OMG Please Help...1098-T and 1099-Q question....not the typical ones...Sp21 payment made late ...in 2021!

Forum|Forum|5 years ago
February 14, 2021
2 replies
0 views

So last year I used TT and with the help of this forum was pretty confident I filed correctly in terms of entering education data for my daughter, 1098T, 1099Q and the Amer Opportunit Credit.

I purchased TT again but have NOT opened or installed it. I fear I may have to return it and get an accountant.

Something bad happened. My daughter's tuition for SP21, was due Dec 18,2020. Well I had covid and never thought of he bill. Further we got no bill in the mail. My daughter claims she was emailed nothing either. We got a friendly reminder from the school and I immediately got my daughter to go on line a print out a copy of the bill. I had her 529 release funds immediately. BUT......the check was cut 1/7/2021 I believe. The school gave us no grief and I thought nothing of it until now.

My 1099-Q appears to be missing the sp21 gross distribution...I guess since it was made in 2021 not 2020 like it should have been. I assume the 1098-T box 1 payments received are short as well.

MY HEAD IS SPINNING!!

I have no idea the implication of this on any American Opp Credits / refunds this year or next or what the heck will come of this. Has this happened to anyone? Were you still able to use TT? What did you do? I am freaking out...this stuff was hard to follow to begin with...now it seems I will have issues both this year and next..her last year.

Calm me down, tell me it will work out...and how!

Thanks TT users!!!!!

ColeenD3

Unfortunately, this is tax law and has nothing to do with the software on which you enter your information. You must have the 1099-Q distribution and the tuition expense in the same year.

To be a qualified distribution, the money must be used to PAY qualified expenses, in the same year as the distribution. So, money paid in 2020 cannot be reimbursed by a 2021 distribution, even though the payment was for a 2020 term.

confusedrfAuthor

Thanks for the quick response.

RE:

Unfortunately, this is tax law and has nothing to do with the software on which you enter your information. You must have the 1099-Q distribution and the tuition expense in the same year.

So the bill came 11/2020 for the Spring 2021 semester and should have been **paid in 2020**. Similar to prior years, that would have resulted in the distribution for Spring 2021 reflected with the fall 2020 distribution on the 2020 1099Q. Also I believe it would have resulted in both Fall 2020 and Spring 2021 payments reflected on the 2020 1098T.

Does that make sense? I think this is the pickle I am in.

So I believe the **2020** 1099Q ONLY really reflects the fall 2020 distribution. Similarly I believe the **2020** 1098T ONLY reflects the fall 2020 payments. I am checking the latter with the school.

If I am right, for **2021** taxes I will see payments received for Spring 2021, Fall 2021 and Spring 2022 reflected on 2021's 1098T and similar distributions on 2021's 1099Q.

Does this sound right? If so, How will it affect my AOC credit? Will it create some sort of issue with her being considered a FT student in 2020? Will it create a red flag....I mean the first two years the 1098 & / 1099Q represented 2 semesters. This past year it would represent 1 semester and next year 3 semesters! Surely I can't be the first person this happened to...

Thanks!

RE:

To be a qualified distribution, the money must be used to PAY qualified expenses, in the same year as the distribution.

Well, the 1099T I believe only shows payments received for the Fall semester, not this spring; ie half a year. I am checking. I think they report it this way since the distribution for sp21 was sent to the school in 2021 even though the bill came in Nov 2020. The received th epayment in 2021 so I assume it must be reported on next year's 1098T. Again I am checking.

Re:

So, money paid in 2020 cannot be reimbursed by a 2021 distribution, even though the payment was for a 2020 term.

Not sure I follow ...I don'think this is the situation we are in.

Spring semester is usaully billed and paid in the prior year. SP21 billed and paid in Nov/Dec 2020.

Technically, my late payment resulted in a distribution and payment received in the current year. Billed Nov 2020 but distributed in 2021 and payment received in 2021.

confusedrfAuthor

The plot thickens....The 2020 1098-T..I think the payments received may reflect BOTH fall 2020 and spring 2021 semesters...can they do that if the payment for spring 2021 was received in 2021. I emailed the college. If this is so there will be a situation NEXT year at tax time when the 1098T reflects 2 semesters but the 1099Q reflects more distribtution...since it will be for 3 semesters...it will look like I overdrew!

I cannot be the only person who paid late and had this happenen!

I will try to clarify this Monday.

Again thanks all....

JL_Kosa

I appreciate this thread. I'm in a similar situation with Spr21 payment made in Jan21 (per the school's due date), but may have messed up last year for TY2019 as well. And significant change in tuition & scholarships due to covid. I'm wondering if I should amend 2019 before filing 2020 to get it all sorted out... appreciate you reading my details below and giving any input.

TY2019 -

Spr19 son took 4 community college classes

Sum19 son took 2 more classes, 1 at CC, 1 at his new university

Fall19 son was full time at his university, commuting from home, plus had 1 class at CC. He earned 1/2 scholarship, so bills were twice what we had to pay

Paid CC bills & Fall19 univ tuition bill out of pocket, requested 529plan reimbursement just for univ tuition paid. Didn't request 529 funds for other 2019 expenses because didn't need it, and read articles that there isn't technically a law requiring you to take reimb at same time (law proposed as far back as 2008, but not actually enacted, right?)

Spr20 semester, paid tuition on 12/30/19 on visa to get rewards points. Paid room & board on Jan 11, 2020 (he only found out they had a room for him on 1/5/20). Requested reimb for all of Spr20 tuition, room & board in late Jan 2020 so I could pay off that visa by due date.

2019 CommColl 1098T Box1 = tuition paid for Spr19, Sum19, Fall19; no scholarships

2019 univ 1098T Box1 = fall19 total tuition billed + spr20 tuition paid (I think that's the math) Box 5 shows the scholarship of 1/2 fall19 tuition and Box7 is checked (it incl amounts for Jan-Mar2020)

2019 1099-Q = my reimb request for the Fall19 tuition only, there were earnings over the basis.

In TurboTax for TY2019, me being a noob to this whole area (but a long time TT user), I entered both 1098-T and 1099-Q exactly as is, there was no change to my taxes due. I didn't even know about AOTC and didn't qualify for it last year anyway due to unexpected 1-time bonus from a company merger. My expenses on the 1098T were far above what I requested from the 529.

TY2020 -

Recall, Jan2020 - took 529 reimb for the Spr20 semester tuition & room/board, not for books; but apparently paying the bill on visa 12/30/19 doesn't match these together.

Mar2020 - son is sent home due to pandemic, school reimb a portion of room/board

Sum2020 - son took 1 online class, I paid out of pocket, didn't request reimb

Fall2020 - son enrolled full time, classes all remote and happily the univ steeply discounted tuition, scholarship much much lower because tuition was so low for online only classes; paid tuition bill, requested reimb from 529.

Dec2020 - Spr21 bill is issued, but not due until 1/5/21; again steeply discounted tuition, very tiny scholarship. Son living on campus again for Spr21. I paid this tuit & room/board bill in Jan2021, and reimb myself from 529 in Jan2021 for all.

2020 1098-T Box1 = approx $500 more than what I reimb myself from 529 in 2020! I think Box1= remaining Spr2020 tuition billed that was covered by the 1/2 scholarship + Sum20, Fall20, and Spr21 very low tuitions; Box 5 has the large 1/2 tuit scholarship from Spr20 + the small Fall20 scholar; and box7 is checked. So the Box1-Box5 implies I paid even less since the Spr20 large scholarship is on there.

2020 1099-Q = my reimb requests for spr20, fall20 with earnings above the basis

When I enter these forms as-is into TurboTax, it says I owe tax on 811 of non-qual 529 distributions. I only got it down that low by putting in room/board from Spr20 in full, plus a "living with parent" room/board # for the fall based on the school's published cost of attendance.

We do qualify for the AOTC this year, but due to the major mess up on the timing of 1098t billing vs my 1099q disbursements, we aren't getting it.

OTOH, if I just leave both of these forms off my return entirely, I owe less since I don't have the 811 of non-qual 529 distribution. Still don't get the AOTC since 1098 isn't filed.

I'm prob not the only 1st time college parent to screw this up, but I'd like to know if I can do anything to "fix" my situation going forward. Should I amend TY2019 to flat out remove the 1098t & 1099q? Would this make it better for me to leave these forms off my TY2020 return? Sure, I'd like to get the AOTC, but if I can't then so be it. I've spent way more on QHEE in 2019 & 2020 compared to what I reimbursed from the 529 and I feel that I'm being penalized for timing of payments around 1/1 each year.

If you've read this far and understand what I'm dealing with, you are a saint. Appreciate all thoughts. I've spent about 9hrs trying to figure this out over the past 2 days since finally getting the 1098T from his univ. If 1098t & 1099q are informational, should I just leave them out this year?

ReneeM7122

No, you should not amend your 2019 tax returns in order to remove form 1098-T and 1099-Q from your current tax return. However we would suggest requesting an offline review of your tax return, so an expert can view your two year comparison and see what's happening.

Here is more information about TurboTax expert reviews.