Student info worksheet part vi line 17- why a $10k "used for credit or deduction" reduction?

Forum|Forum|6 years ago
June 5, 2019
5 replies
0 views

No text available

TurboTax Deluxe Windows

Best answer by Hal_Al

There's a known glitch in TurboTax. It automatically assigns enough of your expenses to claim the tuition credit, even when you don't qualify.

Since you have desk top software, the simple fix is use override on the work sheet to change it.

For those using online TT, go through the education section again. When you get to the screen that says “Here’s your Education Summary”. Click edit next to “Education Information”. When you get to the screen titled “Amount Used to Calculate Education Deduction or Credit”, verify the amount you want to use or change it.

Reference: https://ttlc.intuit.com/questions/3129346-how-do-i-fix-an-error-where-turbotax-incorrectly-treats-a-...

Hal_AlAnswer

Employee

There's a known glitch in TurboTax. It automatically assigns enough of your expenses to claim the tuition credit, even when you don't qualify.

Since you have desk top software, the simple fix is use override on the work sheet to change it.

Reference: https://ttlc.intuit.com/questions/3129346-how-do-i-fix-an-error-where-turbotax-incorrectly-treats-a-...

arcoulson

Thanks. This bug would've cost me $1200 without my knowing it.

ebabinet

Looks like this issue is still not fixed in Turbotax Home & Business 2019. I just spent over 2.5 hours trying to figure out why I was getting taxed on a distribution from a 529 even though there were sufficient qualified educational expenses. It turned out to be this $10K that had been entered automatically on Line 17 "Used for credit or deduction" of Part IV - Education expenses, of the Student Information Worksheet.

JR64

I ran into this same issue. It took me several hours to resolve. I even spoke to one of the CPAs that work for Turbo Tax. She tried to convince me that room and board is not a qualified educational expense in regards to a 529 plan. I finally got to a person who told me about the $10k entry on line 17 of the student work sheet. That led me to this thread. At the end of the day I ended up fixing this issue myself. I can't imagine how many people have ended up paying too much on their taxes because of this glitch. I avoided losing $1,300.

Next year I'm going to a CPA and I'm having them go through my past returns.

DavidS127

Note that when you have a 1099-Q (529 plan) distribution and someone on your tax return is also eligible for other education credits (such as the American Opportunity Credit or AOTC) there is a screen in TurboTax where you are asked to "allocate" education expenses to those credits versus the 529 plan distribution. Generally, it is best to allocate enough (but only enough) to these credits first, with the remaining education expenses applied against the 529 plan distribution.

That allocation between education credits and 529 plan distributions can also be done in the Forms mode of your Download/CD version. Go to Forms mode and find the applicable "Student Info Wk". Scroll down to Part VI and find line 17. If you enter $4,000 on line 17, TurboTax will first use $4,000 of your qualified expenses for the education credits/deductions (e.g., AOTC) and then use the rest of the expenses you entered to apply against the 1099-Q (529 plan) distribution. If you enter zero, all the expenses will be allocated to the 529 plan distribution.

@JR64

@ebabinet

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

toddm017

Hello,

Can you explain how to get to the screen in TT that allows one to allocate expenses paid between a 529 and those paid out of pocket for the AOC?

skil

2020 tax filing season and the bug is still here. I'm very grateful this post existed so I could immediately understand what the issue was. C'mon Intuit can we please address this issue? Having the software calculate an additional tax liability when none may exist is just negligent since you guys know the error!

whodiini

I just wasted 2 hours tracking down this bug AGAIN! It is irritating that this KNOWN bug hasnt been fixed for several years!!!!

whodiini

I found the issue occurs when you dont go thru the step by step questionaire and skip a step manually.

Go to search topics, type "education" and go to the first top link that comes up

It goes to "education expenses summary" - click edit the school

It goes to "Here's your education summary". At the bottom, there is a "Education Information". Edit that and go thru the questionaire. If you do that, it removes the $10k deduction. Evidently you need to do that step for turbotax to run the calculation correctly. Otherwise it calculates wrong. That is a critical step!

Otherwise you need to fix it manually and override the $10k like people suggest.

DBK1

I am working on my 2021 return and this glitch looks like it still exists - somehow it is reducing my qualified 529 expenses by $10k (applying $10k populated in 'used for credit' (line 17 on the student information worksheet). How could this issue still exist after 2 years of reporting a problem and Turbo Tax acknowledging a glitch ?

mglauner

If all of the 529 distribution was used for 'qualified education expenses' (including room and board), you don't need to enter the 1099-Q in your return.

For most qualified education program beneficiaries, the amounts reported on the 1099-Q aren’t reported on a tax return.

Click this link for more info on the 1099-Q.

skil

I've posted before on this and the 2022 version is still doing it. I followed the advice and entered the 1098T first and NO dice. Still had to fix manually. Gotta say - this is extremely poor. Intuit needs to come up with a better way to prevent this same error from happening again and again year after year. Embarrassing.