Get last AOC credit in daughter's college graduati...
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Level 1

Get last AOC credit in daughter's college graduation year on her tax return. Tuition + expenses paid with 529 funds

My wife and I divorced and neither of us is eligable to get the last (4th) year of the AOC credit.  My daughter just graduated and I hoped she could claim it.   We paid her tuition for 2019 Spring in December of 2018 using almost all 529 funds.  So the 1099Q only came for 2018.  Since we can't double dip, I wanted to have my daughter pay the excess contributions on the $4000 she would need in order to get the AOC.  Since she only recently started working, I figured the benefit of the AOC would outweigh the extra tax she would have to pay.  Quicken asks me if I received a 1099Q, but I did not for 2019.  How can I get the portion of 529 earnings needed so that I can properly calculate the taxable portion of the distribution? The 1099Q from 2018 shows all the distributions for the year.  Only a portion of that was used to pay the 2019 spring tuition.

2 Replies
Employee Tax Expert

Get last AOC credit in daughter's college graduation year on her tax return. Tuition + expenses paid with 529 funds

Here is what I think you are saying. 

You took a distribution in 2018 that paid for classes that started in 2019. 

That is 2018 transactions and has nothing to do with 2019. You had to deal with that distribution on your 2018 1099-Q.The tuition expense you paid for the 2019 classes is gone for 2019. 

 

Just because neither parent can claim the student does not mean she can claim herself. She can only claim herself, and the full credit if available, if she supplied more than have her own support. 

 

So, if she is able to claim herself, she simply enters the 1098-T. She does not have to report the excess 4,000 from 2018, in fact she can't. That should have been dealt with on the 2018 tax return of the recipient listed on the 1099-Q.

 

The 1098-T lists "What was paid in 2019" so whatever you paid in 2018, even if it was for 2019 classes, won't be on the 1098-T. 

 

So in conclusion, if the student can claim herself, she can enter the 1098-T and apply for an education credit. there is no 1099-Q for her to deal with. 

 

IRS Pub 970

 

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Level 1

Get last AOC credit in daughter's college graduation year on her tax return. Tuition + expenses paid with 529 funds

Thanks for your response!

 

Ok,  I read your response and I read through the tax booklet link that you included and found that I am not able to use any tuition expense paid in 2018, even if it was for spring 2019 semester, to claim the educational credit for 2019.  She had no education expenses paid in 2019. It was all paid in December 2018. Maybe i should have paid her last semester's tuition using installment payments and that way I would have had some payments in 2019 for her to use  to get the AOC credit...

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