We withdrew funds for my daughters tuition/room and board for college. (daughter dependent on parent return) The amount withdrawn was less than the actual expenses. I'm just confirming this is accurate as it seemed she paid a small amount of tax last year for interest. I'm not sure if input was wrong last year? please clarify
Her 1098T includes approx 7200 Box 1, Box 5(scholarship) was 5000.
Expenses including room and board approx $14000.
529 withdrawal of $9000 total, $2150 of earnings
Parent AGI is above 160,000 so no education credit on return
In addition on her return there is Question 'Education expense used for tax deduction or credit'. it states she has enough expenses to cover but to confirm the "Amount used to calculate education credit or deduction'. This should be zero, correct?
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Bottom line, in your situation: do not enter either the 1098-T or 1099-Q on ether your return or your student's. Both are only informational documents. The numbers on it are not required to be entered onto your tax return.
Since you are not eligible for a credit, your daughter's scholarship was used for qualified expenses (and therefore not taxable) and the 529 distribution was all used for qualified expenses (even after adjusting for scholarships), you have nothing to report; you have nothing to report.
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."
Yes, "Amount used to calculate education credit or deduction" should be zero. This is a flaw, in TurboTax, it will sometimes assign expenses to the credit, even for ineligible (by income ) parents. Good catch!
Q. It seemed she paid a small amount of tax last year for interest. I'm not sure if input was wrong last year? please clarify.
A. If you numbers were similar to this year, she should not have paid any tax. But, if they did not come even, that's possible. TT assigning expenses to an unclaimed credit may have been the problem. Check last year's 1099-Q work sheet and the the student information worksheet for details. Or depending on how small the tax was, just forget about it.
Scholarship is a tax-free amount paid to a student enrolled at higher educational institution for a purpose of getting a degree or diploma. The scholarship must be used to pay for tuition, books, lab fees, and related fees. If the total, scholarship received was more than the tuition paid or financed, a portion of it may be taxable.
The retirement withdrawal is fully taxable on your income tax return.
If you're claiming AOTC, your adjusted grosss income can not exceed $139,000 for married joint and $69,000 (all others). Even though, the tuition paid was more than the scholarship received, you may not qualify to claim AOTC because of the AGI. Your daughter may not qualify for American Opportunity Credit as well, if she's been claimed on someone's return. She doesn't need to enter 1098-T on her income tax return
Education expenses includes:
Note: Room and board are not deductible expenses.
Bottom line, in your situation: do not enter either the 1098-T or 1099-Q on ether your return or your student's. Both are only informational documents. The numbers on it are not required to be entered onto your tax return.
Since you are not eligible for a credit, your daughter's scholarship was used for qualified expenses (and therefore not taxable) and the 529 distribution was all used for qualified expenses (even after adjusting for scholarships), you have nothing to report; you have nothing to report.
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."
Yes, "Amount used to calculate education credit or deduction" should be zero. This is a flaw, in TurboTax, it will sometimes assign expenses to the credit, even for ineligible (by income ) parents. Good catch!
Q. It seemed she paid a small amount of tax last year for interest. I'm not sure if input was wrong last year? please clarify.
A. If you numbers were similar to this year, she should not have paid any tax. But, if they did not come even, that's possible. TT assigning expenses to an unclaimed credit may have been the problem. Check last year's 1099-Q work sheet and the the student information worksheet for details. Or depending on how small the tax was, just forget about it.
Thank you so much for your quick and educated response!
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