2 kids in college. Why is TurboTax considering one full time and other less than half time? Based on age (he joined college as a minor).

[kerkar]

I have two kids full time in college. One of them is being wrongly flagged by TT as less than half time? Where did TT get this info? Because he was under 18 when he joined college?

[Hal_Al]

If your child is under 19, he qualifies as a "Qualifying child" dependent, regardless of student status. So, you are not asked his student status, in the personal info section of TurboTax (TT), like you are for the older child.

But, if you are claiming a tuition credit based on his (the younger child) tuition, you will be asked for his student status in the education expenses section of TT. If his status, you  entered it wrong (or the 109-T did not have the half time box checked). Go back to the beginning of the ed expenses section and correct it.

[kerkar]

Thanks. Didn't get a 1099T. Reported based on expenses submitted for 529 reimbursement. At no point did TT ask if he is a full time or part time student? I went back and checked through all steps in PERSONAL INFO section as well as EDUCATION EXPENSES. Where do I correct this?

[Hal_Al]

The IRS doesn't care about half time status for 529 purposes (unless you are claiming room & board).  There's nothing to correct.

[Hal_Al]

If your real problem is that TurboTax (TT) is calculating tax on the 529 distribution, it's not because of the half time status.  There is a glitch in TT. It assumes that you use some of the tuition money to claim a tuition credit and that reduces the amount available for the 529 plan earnings exclusion.
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.

Alternatively; 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, in case of an IRS inquiry.

[kerkar]

Because son was not an adult, but in college, TT was flagging him as less than half time. Obvious bug in TT that had to be tricked into workaround: I changed his birth date in Personal info to earlier date, and TT asked me if he was full time student, and then applied the right amount. Then I changed his birth date back, and he is still Full Time under Education!

[kerkar]

I followed your instructions to change Education Information. Found that they had only applied $10K out of $23K of his Educational Expenses reported under 1099-Q. But when I manually corrected it to $23K, the tax went up? What's up with that? Another TT bug??

[Hal_Al]

You manually correct to 0 (from $10K). That entry is not asking how much you are claiming against the 1099-Q.  It's asking how much you are using for the Tuition credit. When you enter zero (0);  TT will then use whole $23,000 against the 1099-Q (rather than the $13,000 it was using before)

[kerkar]

Got it. IT FIXED THE PROBLEM! Thanks 🙂

[Hal_Al · Accepted solution]

Resolved in the comments.