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Adjusted Qualified Education Expenses

Forum|Forum|5 years ago
March 1, 2021
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Are the Adjusted Qualified Education Expenses calculated by adding the total tuition and required books/course material, minus grants/scholarships? I have provided an example below. Thank you.

Example:

Tuition: $10,000

Books/Course Materials: $2,000.

Total Grants/Scholarships: $8,000

Adjusted Qualified Education Expenses: $4,000

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Best answer by MAK70

Yes, that is 100% correct, Adjusted Qualified Education Expenses are the tuition and other fees less scholarships and other tax free payments. See Determining Qualified Education Expenses,

M

MAK70Answer

Yes, that is 100% correct, Adjusted Qualified Education Expenses are the tuition and other fees less scholarships and other tax free payments. See Determining Qualified Education Expenses,

fasteddie577Author

Thank you very much.

AmyC

Employee

The override changes your return numbers and voids the accuracy guarantee but will not flag the IRS.

I tried to find your numbers in reading through the posts but only saw $26570 for box 1 of 1098-T. I don't know your Q distribution , room and board, or other education expenses. I do know that the Q should not be entered unless it has a taxable amount. I find people enter the form when they should not and that will also throw off the program.

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.

@cliftstr

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C

cliftstr

Hi Amy,

I appreciate you continuing to respond and try to help me.

I find it a little aggravating that by using the override to fix a bug in turbo tax, it would be voiding an accuracy guarantee that Turbo Tax has already failed by virtue of my having to override a value that is clearly wrong.

Having said that. I am unclear what I should do to get an accurate return.

My 1099Q shows these values in boxes 1-3:

1) $26904

2) $19254

3) $7650

None of those values are explicitly a "Taxable Amount"

The 1098Q shows

Box 1 $26570

Box 5 $4334

The box 1 amount must reflect only tuition because I paid $45k in tuition room and board after the scholarship adjustment.

Turbo Tax does not provide me a way to enter qualified expenses. You have mentioned that repeatedly but I've not been able to get TT to ask me those questions, but the simple answer is 45k.

So, I am unsure if I should enter the 1099Q and then manually force the 45k value into the QTD worksheet, or if I should just leave all of these college disbursements out since I spent more than I withdrew and TT does not handle the data properly.

When I enter the 1099Q and 1098T, the 1098T value is reduced by 10k and reduced by the scholarship. For my case, both deductions of the college expenses are incorrect.

I would greatly appreciate some advice on how to get TT to produce an accurate return for this data.

C-

AmyC

Employee

Okay! We do not want to override anything to void the accuracy guarantee.

Instead, work in the program, step-by-step section. It is good to know you are using the desktop program so you can see what is happening.

You paid $45k to the school of which $26570 was tuition. The rest was room and board and required fees. $45 - $26570 = $18,430 to be taken from 1099-Q.

1099-Q of $26,904 -the room, etc of $18,430 = $8,474 to be used on actual tuition. 1099-Q is used up. Do not enter, tuck in tax folder.

1098-T Box 1 Tuition of $26,570 was partially covered by the Q for $8474. Leaving $18,096 to figure out and allocate.

Box 5 scholarships $4334 comes off $18,096 and you still have over $4,000 left for you to claim full AOTC credit.

Just enter the 1098-T as is and avoid the extra hassle. Keep this math and the 1099-Q in your tax folder. If the IRS asks, you will need to prove $4,000 was paid by you.