Help with reporting 1098T and 1099Q

tpage70 · Feb 11, 2020 10:07:00 AM

I apologize for having to ask this question, but I cannot find the answer in the forums to my specific questions. My daughter is a full-time student and only earned about $2200 last summer as a waitress. I am the owner of a 529 where she is the beneficiary. All withdrawals from that account have been for qualified expenses (tuition, room & board and a laptop). Except for the laptop, all payments from the 529 have gone straight to the university so a 1099Q was issued in her name. I received a 1099Q for the withdrawal for the laptop since I paid for it and reimbursed myself. My daughter is also a scholarship recipient, which only covers tuition (no room and board), and she received a 1098T. Since she is my dependent, I reported her 1098T and my 1099Q on my return. When I report her 1099Q in her return, TurboTax shows that my daughter owes $1600 in taxes for it. I have twice gone through the full interview for the education section for both my return and for hers and nothing changes. One bit of information that I believe might be causing this problem that also might help in your response is that I actually made 3 tuition/room & board withdrawals in 2019 that might not reconcile with the scholarship amount on the 1908T. I paid for the Spring, 2019 semester on January 3, 2019; I paid for 2019 summer classes and the Fall, 2019 semester on August 13, 2019; I paid for the Spring, 2020 semester on December 18, 2019. When I add the total in box 1 on her 1099Q to the total in box 1 on my 1099Q, the amount is exactly what is shown as all YTD withdrawals on my 529 statement for 2019. So could 3 withdrawals for 3 semesters (reported on her 1099Q) against 2 semesters worth of scholarship (reported on her 1098T) be why the calculations show that taxes are owed by my daughter? If so, how do I rectify this? I can't find any worksheets that help correct this problem. Otherwise, here are other questions if have:1. If all withdrawals were made for qualified educational expenses as listed above, should any taxes be owed for withdrawals?2. If no taxes should be owed, do I have to report her 1099Q at all? I have read in some replies that as long as I have good records that show all withdrawals match all qualified expenses, I don't need to even report a 1099Q.3. If taxes are owed this year, how do I need to utilize the 529 in the future to avoid taxes being owed for qualified educational expenses? Thanks in advance for your help!

Q. But it also feels odd to include the same 1098T on both the parent's return and the student-dependent's return. So I want to confirm I have this right?

A. Yes, you have that right.

The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or possibly your student has taxable scholarship income. So, sometimes the 1098-T goes on the parent's return, sometime it goes on the student's and sometime it goes on both.

You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T.

If you claim the tuition credit, you do need to report that you got one or that you qualify for an exception (the TurboTax interview will handle this)