1098-T and 1099-Q

[dagrawal11]

I received 1098-T which is almost 10K less than 1099-Q. But the 100% of the amount in 1099-Q is sent to college only.

This is causing 10K difference as an income when I enter the info in my tax return.

Can someone guide me what should I do? 

[RaifH]

If the other $10,000 is not being spent on tuition, but other expenses related to your education, you can include those. This would reduce or eliminate the taxable income from your 1099-Q. To do this, you will first want to enter your 1099-Q. You will enter other qualified education expenses in the 1098-T screen on your return in TurboTax:

1. Select Start/Revisit next to Federal > Deductions & Credits > Education > Expenses and Scholarships (1098-T)
2. Select Edit next to the student's name.
3. Click Edit next to Other Education Expenses (for all schools)
4. Enter your qualified expenses here
5. Return to the Here's your education summary screen and press Continue.

[Hal_Al]

The 1099-T does not include Room & Board (R&B).  R&B is a qualified expenses for a 1099-Q.  If you entered the 1099-Q first, the 1098-T interview (educational expenses) will give you a chance to enter R&B, books and computers.

Better yet, just don't enter the 1099-Q or 1098-T.  The 1099-Q and the  1098-T are only an informational documents. The numbers on it are not required to be entered onto your (or your student's) tax return.

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! 

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."