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posted Jun 6, 2019 1:37:28 AM

Grandparent transferred 529 to university. daughter received 1099Q in her own name. parent claiming daughter as dependent and does not qualify for AOTC. Who enters 1099Q?

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Intuit Alumni
Jun 6, 2019 1:37:29 AM

In order for the TurboTax program to make the proper calculations, you would enter the 1099-Q first as well as the 1098-T, into your TurboTax program. 

If you are not eligible for either credit (American Opportunity Tax Credit or Lifetime Learner's Credit) the distribution would only be taxable if the education expenses are less than the assistance (distributions plus scholarships/grants).

If there is taxable distributions and/or scholarships, your program will calculate the amount and the income is reported on the student's return. 

If you are not eligible for an education credit, and the student has a tax liability from other income, you do have the option of allowing the student to claim the "Non-refundable" part of the credit if this would be advantageous to you. This is done by no one claiming the student. Although your dependent, you would not claim her, and she would select "Yes, someone can claim me" but "No, someone else will claim me". Not claiming the student could affect your return in other ways, although the exemption amount for claiming a dependent has been suspended for tax year 2018, so you don't lose anything in that regard. If she is eligible for a credit, it would only apply to her tax liability, it would not be refundable. 

If you go this route, enter the 1099-Q and 1098-T into her program.