Question

This relates to a 1099Q distribution. Got full scholarship, so it should not be subject to additional 10% penalty. How to enter in TurboTax?

Forum|Forum|6 years ago
April 24, 2020
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TurboTax Premier Online

Enter both the 1099-Q and the 1098-T in the applicable sections. If you enter the 1099-Q first, when you enter the 1099-T the boxes to enter "things eligible for payment by a 529 plan but not eligible for other education credits" will be "opened up". Be sure to enter anything that is eligible for the 529 plan dollars, if any, to reduce the amount of the 1099-Q distribution that is taxed.

When your scholarships are entered (either from the 1098-T, or other ones that are not reported on the 1098-T) TurboTax will take that into account and you won't get the 10% extra penalty on those dollars.

You will, however, get taxed on the earnings portion of any 529 plan distribution that exceeds the qualified education expenses.

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J

jeff-dzubayAuthor

Thanks for the help! So close, but not quite there.

I did not receive any 1098-T, nor did my son. I see on his school's website "No Form 1098-T if a student’s qualified tuition and fees are waived or paid in entirety with scholarships. In such situation, pursuant to IRS regulations, the University is not required to prepare Form 1098-T for the student, nor to report information to the IRS on such student’s tuition and fees."

So how do I get to a place in TurboTax where I can explain about the scholarships, if he does not have a 1098-T?

I know we have to pay tax on the earnings, but we should not have to pay the 10% penalty.