Q. It looks like it has to go on my taxes given the 529 plan is in my wife's name with my daughter as beneficiary. I then enter the room and board on my taxes which hopefully covers the amount we took out of the 529. Does this sound right ?
A. Yes. When the beneficiary is not your dependent, there is a place in the 1099-Q interview to enter expenses. You do not have to enter info in the 1098-T section (which is more complicated).
But, better yet just don't enter the 1099-Q. It is only an informational document.
You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board 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.
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."
Q. It looks like the 1098-T will go on her taxes as she now claims herself so she should now get the AOTC or LLC credit?
A. Yes. Most likely the LLC. Graduation year is usually the 5th calendar/ tax year for undergrads. That means you most likely already claimed the maximum 4 times, for the AOC, on her education.
