American opportunities act credit turbo tax not showing room and board

[aspielmansir]

Help! IN 2021 when filling in info for the AOA credit,  I listed 3000 additional in room and board for a qualifying student. This was important because I also took a distribution from a 529 account for this amount.  

Unfortaltly, it seems that TT does NOT pass the room and board amount to the IRS in the documents or data. IT only appears on the screen where I entered it,  but not in the forms sent to IRS. The IRS did not see the 3000, and reduced my eligible  education expeose for the AOC  . This resulted in an audit. I am using the audit defense service I paid for,  but the IRS took forever to acknowledge our submission and it may go to tax court. I AM VERY wrooied.

How do I prevent this prom happening in 2022? My son is still in college 




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[Hal_Al]

Room and board is only a qualified expense for a 529 distribution (not for the tuition credit). As, such TurboTax will not let you enter R&B until you tell it that you have a 529 distribution.  So, enter the 1099-Q before you enter the 1098-T.  In the educational expenses interview (1098-T) answer yes when asked if you have book expenses.  That gets you the misc. expenses screen, including R&B.

"Unfortunately, it seems that TT does NOT pass the room and board amount to the IRS in the documents or data."

This is not a TT short coming. The IRS provides no forms to report that information.

You don't need to be worried. This a very common problem.  I personally had to respond to an IRS notice about a 1099-Q.  I just sent them copies of my school billing statements. It went away. At least two users have reported receiving a CP2000 letter, from the IRS, on 529 distributions. They replied that their child was in college and the distributions were for qualified expenses, which they listed, but they did not provide receipts.. They  later received a notices saying they were in the clear. 

[aspielmansir]

529. and letting IRS know about expenses for room and board

Thank you for your  reply.  Unfor, it resulted in a long audit that almost went to tax court (YUCK)

Every year my kids are in school I triggers an automated audit  with the IRS that is resolved in my favor a year later. It is simply triggered by the fact that there is no place ,  no form, to let the IRS know the Qualified education expenses of ROOM AND BOARD that counts towards the 529.  I know that room and board do NOT count as as QEE for a AOA.

To make it simple, here is an example

2023   $4000 in tuition and fees for Undergrad at SUNY ALBANY
               4000  spend on dorms and meals at SUNY ALBANY
              4000 taken out in 2023  from a 529 to use for dorms and meals at SUNY ALBANY  

The IRS takes the 4000 QEE, and deducts the 4000 from the %29 withdrawal , thinking that the only expenses it goes towards is tuition. There is no  way to tell the IRS its towards tuition and fees.  That leaves 0 left as QEE and a audit claiming I had no right to claim a credit for the AOA

Do you know if the IRS finally fixed this issue, or if there is a way to alert them to prevent the automated audits that are very time consuming and stressful?

[aspielmansir]

529. and letting IRS know about expenses for room and board

Hi I saw you other post so I am hoping you are familiar with this situatio,

Every year my kids are in school I triggers an automated audit  with the IRS that is resolved in my favor a year later. It is simply triggered by the fact that there is no place ,  no form, to let the IRS know the Qualified education expenses of ROOM AND BOARD that counts towards the 529.  I know that room and board do NOT count as as QEE for a AOA.

To make it simple, here is an example

2023   $4000 in tuition and fees for Undergrad at SUNY ALBANY
               4000  spend on dorms and meals at SUNY ALBANY
              4000 taken out in 2023  from a 529 to use for dorms and meals at SUNY ALBANY  

The IRS takes the 4000 QEE, and deducts the 4000 from the %29 withdrawal , thinking that the only expenses it goes towards is tuition. There is no  way to tell the IRS its towards tuition and fees.  That leaves 0 left as QEE and a audit claiming I had no right to claim a credit for the AOA

Do you knwo if the IRS finally fixed this issue, or if there is a way to alert them to prevent the automated audits that are very time consuming and stressful?

[Hal_Al]

Q. Do you know if the IRS finally fixed this issue, or if there is a way to alert them to prevent the automated audits that are very time consuming and stressful?

A. No.  There is no way to head off an IRS query.  You'll have to respond with your proof to each CP2000 notice with your documented proof. 

However, you are the first person, I've seen in this forum, that has reported multiple year notices from the IRS. 

[aspielmansir]

thanks, which is why I am afraid it will keep happening. It took so long for the IRS to respond to my response,  that they told me Id need to go to tax court if they didn't resolve it 60 days, Finally, they agreed with 2 weeks left

[Hal_Al]

"Finally, they agreed with 2 weeks left".

That's fairly common.  In my case, the all clear letter was  75 days later.