How to deduct education expenses as student for 1099-Q?

[ed-herbeck]

I'm a student that received a 1099-Q for a 529 distrubution that paid tution (it went directly to the school). The 1098-T shows the tuition is more than the amount withdrawn.  Turbo tax asks me to enter the 1099-Q on my taxes but won't let me put in the education expenses from the 1098-T (I'm a dependent on my parents tax as I'm full time student under 24). They don't qualify for any hope or other tuition benefits so there is no double dipping.  According to turbo tax the earnings on this 1099-Q are taxable on my tax return? How can I fix that to enter my expense or should I just not report the 1099-Q at all as it was all used for tuition?

[DawnC]

Don't report the 1099-Q.   It is not required if you used all the disbursement on qualified education expenses.  See 1099-Q Guide.  

If the distribution doesn’t exceed the amount of the student's qualifying expenses, then you don't have to report any of the distribution as income on your tax return. If the distribution exceeds these expenses, then you must report the earnings on the excess as "other income" on your tax return.

[Hal_Al]

The 1098-Q is just an informational document. It does not have to be entered into TurboTax or on to your tax return. You can just not report the 1099-Q, at all, if the  student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. You also cannot count expenses that were paid by tax free scholarships. You cannot double dip! 

References:

1. On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution." 
2. IRS Pub 970 states: “Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return”.