529 Distribution -Entering Room and Board as Qualified Education Expense

[rsw006]

Very frustrated - spent 2 hours on phone today with TT.  In years past there was a place to enter room and board as qualified expenses to offset 529 distributions, keep them from being taxable.  There is nowhere to enter it this year.  Rep was no help - please advice on timeline to get it fixed.  Thx. 

[DavidD66]

You may not need to enter your 529 Plan Distributions.  A 1099-Q (reporting 529 plan or Coverdell ESA distributions) isn't always requird to be entered on your tax return.  If the total distribution is used for qualified education expenses, then it is generally tax-free and nothing needs to be reported. However, you must enter it if the distribution exceeds expenses or if you are claiming education credits. 

[Hal_Al]

You can't enter  room and board expenses yet. This is a known glitch in TurboTax (TT). They are working on it (no announced fix date).   The 2025 education and 529 sections appear totally redesigned, from last year.

The 1099-Q is  only an informational document. The numbers on it are not required to be entered onto your (or your student's) tax return. The interview is complicated and it's easy to make mistakes. Avoid it if you can and you probably can. 

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 don’t need it). 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.

References:

1. 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." 
2. IRS Pub 970 states: “Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return”.
3. "IRS Publication 970, Tax Benefits for Education states: If the entire 1099-Q went to qualified expenses, room and board, tuition, etc; then, you do not need to enter the form." 

[user17711845260]

Does anyone have an idea as to when this will get fixed?  My youngest children's tax returns should be simple and Turbo Tax has now made it more difficult than just doing myself with fill in forms.   When I remove the 1099-Q 529 Plan distributions for room and board, it now auto calculates an American Opportunity Tax Credit that she should not be eligible for.  I can't wait to try and do my older daughters return who lives off campus and has rent and had 529 plan distributions this year due to a scholarship mixed in with all her rent reimbursements, etc.  That will all get reported on her 1099-Q but only part of it should be taxable.  

[LeticiaF1]

We are aware of this issue and  it is being investigated by our tech team.  

@user17711845260 

[Nonnaof6]

I'm having the same issues.  I understand that you don't have to enter it if you have qualified education expenses, however, Turbo Tax should still allow a place to enter in the education expenses to make it non taxable when you do enter in the 1099Q.  Extremely frustrating!

[AmyC]

We have been told the room and board should be coming out this weekend. Perhaps as  soon as Friday night.

@Nonnaof6