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alilash
Level 1

Education Savings accounts and 1098T

In my return I entered the 1099-Q and 1098-T for my dependent.  I am getting a message saying that "based on the education expenses you've entered, the student beneficiary must report $383 of taxable income from this distribution".

How does my dependent do that?  Does it means that she also has to enter the 1099Q and 1098T in her return (she has minimal income, $1000)?  I funded the Education savings account and paid for all her expenses not covered by the Education Savings account, i.e. books, room and board, etc.

 

Appreciate your help, this issue has me confused.

3 Replies
MarilynG1
Expert Alumni

Education Savings accounts and 1098T

 If you entered the 1098-T in your return and did not qualify for an Education Credit, you don't need to include it in your return. 

 

In that case, neither the 1098-T or the 1099-Q is reported in your tax return; the student reports both on their return. 

 

Basically, the student is liable for the excess taxable income, but only if they are required to file. 

 

Click this link for a more detailed discussion on Who Should Report the 1098-T and 1099-Q.

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alilash
Level 1

Education Savings accounts and 1098T

I did qualify for the Education Opportunity credit, but I also got that note about the student having that taxable distribution.  That is why I am confused.  We did pay for expenses from our money.  The QTP only paid for tuition.  

I inputted both 1098T and 1099Q, but not sure if Turbo decides not to include it when it tells me that the student has a taxable distribution. 

 

Is it possible to enter the 1098T in my tax return and the 1099Q in my daughters.  That doesn't seems right, but just wondering if that is how it has to be done for us to get the credit and her to pay taxes on the whole distribution.

 

I did read the article you sent, but they don't talk about what to do if parents qualify for credit,but there is also a taxable distribution.

 

Thank you

MarilynG1
Expert Alumni

Education Savings accounts and 1098T

If you qualified for the AOC, leave the 1098-T in your return.   Delete the 1099-Q from your return; it will be reported on the student's return (if they are required to file). 

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