How does Turbo Tax calculate "Amount Used to Calculate Education Deduction of Credit" relative to 529 earning with tax returns not eligible for AOC or Hope.
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SportfanSpurs
Returning Member

How does Turbo Tax calculate "Amount Used to Calculate Education Deduction of Credit" relative to 529 earning with tax returns not eligible for AOC or Hope.

Parti VI Eduction Expense for block 17, total column and 529 plans column.  I've toggled the value from zero to my total tuition amount.  Yield vastly different return values. If I input 0, our 529 earning are not taxed.  I am assuming it should be calculated from total qualified expenses - tax free assistance.   This is my real problem how do i determine this block 17.  What does a credit/deduction mean in this case?


 We are only eligible for Qualified Expenses 529 plan - looks like turbo tax adds the credit/deduction (line 17) + tax free assistance line (15)= total adjustments (line 19).    Total qualified expenses-total adjustments =adjusted qualified expenses.  Part VIII looks like it follows the publication.

Appreciate the help.

1 Reply
KrisD
Intuit Alumni

How does Turbo Tax calculate "Amount Used to Calculate Education Deduction of Credit" relative to 529 earning with tax returns not eligible for AOC or Hope.

The program allocates expenses to an education credit first, since that is usually most advantageous to the taxpayer. In your case, since you do not want to tax the distribution and you will not be reporting the expenses (because you are not eligible for the credits) do not report the 1099-Q. 

For 529 distributions, if the funds were used to pay education expenses for the student (beneficiary) do not report the distribution (do not enter the 1099-Q) and do not use the same expenses for an education credit.

According to the IRS:

“Tax-Free Distributions

Generally, distributions are tax free if they aren't more than the beneficiary's adjusted qualified education expenses for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return.”

CLICK HERE for IRS Pub 970 Education Credits

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