Why is turbo tax not letting me file a 1098-T for my dependent even though I need it to avoid paying tax on my 1099-q form?

Forum|Forum|1 year ago
March 9, 2025
1 reply
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TT is saying my income exceeds the amount for an educational tax credit, however there is no limit I'm aware of for claiming tuition so I'm not taxed on a 1099-q disbursement.

KrisD15

Enter Form 1099-Q first and the program will ask what it was used for. Select "Education Expense" and the program will say something like "Good news! You don't need to report this form" and that is all you have to do.

In this situation, you do not need to enter Form 1098-T to match to the distribution. Keep the 1099-Q, 1098-T and any other expense receipts with your tax file.

If the student is your dependent, the program may ask for the 1098-T (as well as other education expenses) to be entered. Only if the 1099-Q is entered first will the TurboTax program give you the option for reporting Room and Board. This is because room and board can offset a distribution listed on a 1099-Q, but cannot be used to apply towards an education credit. (Although room and board is not NECESSARY to offset a 1099-Q, tuition, fees, books, and supplies also apply)

Although the program asks for these forms, the forms are not directly listed on your tax return unless an education credit applies, in which case the information from Form 1098-T will be listed on Form 8863.

If the distribution is taxed, the taxable amount of the distribution will be listed on Form 5329 and Schedule 1 line 8z.

When neither a credit nor taxable income is attributed for the 1098-T and 1099-Q, there will be nothing listed on your Federal Tax Return (Form 1040).

In the case where a distribution is offset by education expenses, and an education credit is not allowed, the program will only list information from Forms 1098-T and 1099-Q on a worksheet, which is not part of, and not transmitted with, your tax return.

If you need the assistance of the TurboTax program to make calculations regarding a 1099-Q and 1098-T, enter them into the program, (1099-Q first) but do not be alarmed if the program informs you that the forms are not needed.

[Edited 3/11/2025 I 11:03 am PST]

@Eloow

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Hal_Al

Employee

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!

References:

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."
IRS Pub 970 states: “Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return”.
("IRS Publication 970, Tax Benefits for Education states: If the entire 1099-Q went to qualified expenses, room and board, tuition, etc then you do not need to enter the form."