I am so confused over the whole college tax credit for my son! His pre-paid covered his tuition. He got scholarship for dorms. But we still paid for required computer.

[reenee]

My question is, WHY ON EARTH doesn't Turbo Tax walk you through this a little better? Lol! I expected more for the fee I'm paying. All I want to know is, after my son's QTP and scholarships are applied, are we still able to claim the computer that was a requirement? And does he absolutely have to claim the prepaid plan on his own tax return? If so, that's just ridiculous. I can understand having to claim the scholarship. This is just so confusing. I thought Turbo Tax was going to simplify this for me a little more. Even reading through many other parents' posts on the same subject, I still can not figure it out and I'm regretting not having a profession just do it for me.

[MiriamF · Accepted solution]

It's hard to simplify something as complex as dealing with a QTP. We get many questions about them, and they're not easy to answer.

Go ahead and enter the QTP (make sure your son is listed as the beneficiary in TurboTax), the 1098-T and the scholarships. Enter the computer you had to buy under Other education expenses (for all schools). If, as you said, all is covered except the cost of the computer, then you should be able to get an education credit for the computer.

The 1099-Q and the 1098-T can each be entered by typing "1099-Q" or "1098-T" in the Search box, then selecting Jump to 1099-Q (or 1098-T). After you have entered the 1098-T, on the page headed Here's Your Education Summary, you will see options for Scholarships/Grants (for all schools) where you can enter any scholarships not listed on the 1098-T. The line below that is where you will enter the computer. See the screenshot below for an image.

Note, however, that there is an income limit to who can claim an education credit. Check here for a comparison of education credits and the Tuition and Fees Deduction. 

[reenee]

So, I should enter the 1099-Q on MY tax return, not my son's, just to clarify? And his school "does not require" reporting. We only have a "representation" of the form 1098-T to go by. Son had a paid internship last summer before entering freshman year this fall, and received a w-2 form so he is filing a return. Is it my understanding that HE needs to list his scholarships as income? The 1099-Q is a Florida prepaid tuition plan. Is he supposed to list that as income as well? The more I read, the more confusing it gets, lol.

[MiriamF]

If he is your dependent, only you can claim the education credit. He can file his own to return to reclaim tax withheld, but if you provided more than half of his living expenses in 2016, then he is your dependent.

The 1099-Q income is tax exempt if used for his qualified education expenses, so he would need to report the income only if he used it to pay for room and board. The only reason for you to report it is to prove that he was attending school full-time, and therefore you have reason to claim his books and supplies. If you didn't get a 1098-T, then you can report that, because his school qualified for an exception to the reporting requirement.

[reenee]

Btw, there is absolutely nowhere to specify that his qualified tuition amount was paid with the QTP and not his scholarship money. It simply asks if we paid or if someone else paid the qualified tuition amount. We didn't pay it, his florida prepaid paid for it. Turbo Tax should should allow for that, I don't understand why it doesn't? So for amount of tuition that "we" paid, should we just enter $0?

[MiriamF]

No, enter the amount of tuition that was charged, then enter the methods by which it was paid separately.

[reenee]

TurboTaxMirium I understand that. I'm just not sure how to enter his tuition amount (which it asks for) and provide info that it was paid for in full by his florida prepaid (QTP, NOT a coverdell), in order to make it clear that he does have scholarship money that did go to room and board, and actuall meal plan too. He clearly needs to include it as income on his return, which on his return he claims he is a dependent. But since he made a little over $1000 over the summer, he is filing a return. When I enter on MY return on Turbo Tax, amount for qualified tuition paid, its telling me I'm getting a bunch of money back that I know I should not be getting, lol. I assumed at some point, it would ask if that tuition was paid for by the prepaid plan, as to omit it so it doesn't look like I paid for it. Does that make sense? Florida Prepaid is not a scholarship. But it only gives option asking if qualified tuition was paid for with scholarship, me, or someone else.

[reenee]

I am not trying to claim anything that is not due to me. I just want to be able to claim supplies, books, computer which we did pay for, but it's making it look like we paid for his tuition when we did not.

[MiriamF]

If you enter the tuition, his scholarships and his QTP from the 1099-Q, it should all work out in the end. I'm not saying that you're trying to claim anything you shouldn't. I'm just encouraging you to document everything so the IRS knows that a) your son attended school, b) his expenses were paid for except for c) the computer, which you are claiming for an education credit.

The scholarships go on the Here's your education summary page under Scholarships/Grants (for all schools). You enter the 1099-Q separately. His books, computer and other education expenses go on the line Other education expenses. When you're all done, you have a lot of expenses, a lot of tax-free money and only a little bit to claim.

[reenee]

Thank you so much for your help!

[reenee]

After going through it, Turbo Tax told us the amount that my son will need to report as income. Turbo Tax told us we are eligible for the American Opportunity Credit. I'm surprised at the amount that my husband and I are being refunded, seems a little high to me for only a computer and a couple of not extremely expensive required books.

[MiriamF]

You get back 100% of the first $2,000 you spend with the AOC. It's the best of all the education credits.