1099-Q box 6 is checked but my income is too high to enter in offsetting 1098-T expenses.

[shashi4]

I see this question asked many times but I am still not clear how to handle this. Education expenses were paid by me and hence I (tax payer not beneficiary) received the funds from 529. When I enter education expenses, my income is too high to enter offsetting 1098-T expenses. How do I show in Turbotax that I incurred these qualified education expenses? Where do I mention that?

[MiriamF · Accepted solution]

If all of the 1099-Q income was used to pay for the beneficiary's qualified education expenses (tuition, fees, books and required supplies), then you don't need to enter the 1099-Q. If this form was for a Coverdell, then room and board count as well.

If your income is too high to claim an education credit, or there are no expenses not covered by tax-exempt income, then you don't need to report the 1098-T, either.

Do keep all the receipts in case the IRS wants proof that the money was properly spent.

[shashi4]

What happens if I don't enter 1099-Q and IRS gets 1099-Q from the 529 Administrator? I may still get the inquiry, Right?

On whether Room and Boarding is covered or not, IRS publication gives further clarification on when Room and Boarding are qualified expenses. So we can use that correct?

Another related question - If the institution provides estimate of food, boarding, can that be used as expenses in my return?

[Semantax]

MiriamF, thanks for your helpful response!  If Turbo Tax is monitoring this forum, my suggestion is to add MiriamF's clarification to TT either with an improved informational message and/or better handling of this scenario.  Given the system is aware the beneficiary is different than the recipient, it doesn't seem this would be terribly difficult to add. It may save parents money if they mistakenly pay taxes on 1099-Qs they enter into TT. It certainly would have saved me quite a lot of time!