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Level 2

I cannot continue my Federal Taxes (QTP)

So I am a Grad Student with a 529 College Savings Account, and I already entered in my 1099Q form under my income. After I finished up with my W-2s and my credits, I am approached by a page stating: "Other Income Statement: Qualified tuition program distributions - Taxpayer - You can't file just yet due to a recent law passed by Congress". And it's telling me to review my distributions which I had already entered, and I checked that they are correct. What Law?! Why can't I submit my taxes now, when I already have all of my documents ready?

Is anyone else experiencing this, because I would love an explanation. Also what did Congress even do?

172 Replies
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Level 15

I cannot continue my Federal Taxes (QTP)

 "entered in my 1099Q form under my income"

 

The 1099-Q should be entered at Deductions and credits/ education, not in the income section.

 

The SECURE act, signed 12-20-19 allows 529 plan money to be used for student loan payments.  Even though you may not be affected, the program is. https://www.savingforcollege.com/article/new-law-allows-529-plans-to-repay-student-loans

 

Alternatively; you can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. 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 cannot double dip!  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, in case of an IRS inquiry.

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Level 2

I cannot continue my Federal Taxes (QTP)

Hi,

 

Thank you for your information. I took my 1099Q info out from income and put it under Deductions. However, TurboTax is not allowing me to enter in cent amounts for each of the three boxes, same as when I tried it before. So I rounded (again), and I am still being hit by the QTP page under the Federal Review. 

I don't want NOT to report it, as I would rather not have any issues with the IRS. Box 1 ends in (.56 cents), Box 2 ends in (.29 cents), and Box 3 ends in (.27 cents). Since TurboTax isn't allowing me to enter in the most accurate amounts, could this be the reason why I am still being hit at the end of my Federal Review?

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Level 15

I cannot continue my Federal Taxes (QTP)

when you use rounding you have to be sure the box 2 and box 3 amounts add up to the box 1 amount. So, in your case round 29 cents (box 2) up.  Round box 2 (rather than box 3) since box 2 is earnings (the potentially taxable portion).

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Level 1

I cannot continue my Federal Taxes (QTP)

I have a similar issue but not the same:

 

During the review process I get the following screen message: 

 

"Other Income Statement: Qualified tuition program distributions - Spouse - You can't file just yet due to a recent law passed by congress.  This means a better outcome for taxpayers like you who have taxable QTP distributions.  We can keep working on your tax return and we'll let you know when we can help you finish up you taxes.

 

That's nice but the 1099-Q was the last thing I needed to file my taxes so it is the only thing holding it up.  TurboTax - please issue this change ASAP; "well let you know" is not precise enough.  ty

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Level 15

I cannot continue my Federal Taxes (QTP)

It's an IRS hold up not TurboTax.

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Level 2

I cannot continue my Federal Taxes (QTP)

It would just be nice for them to state when I will be able to complete my taxes.

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Level 1

I cannot continue my Federal Taxes (QTP)

Does anyone know when the IRS is going to allow for returns to be filed that have QTP?

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Level 15

I cannot continue my Federal Taxes (QTP)

@photobike  - you're tagging on to an existing thread. That limits you to 3 possible responders.

 

Post a new question. 

 

It's probably low priority with the IRS.   The IRS has not had a form for QTP, in the past. They may be taking this opportunity to finally develop one.

 

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Level 2

I cannot continue my Federal Taxes (QTP)

In lieu of e-file, Can I just print off and file a paper return instead of waiting for IRS to develop a new form.  My distribution was not used to pay off a student loan and I am awaiting a large refund.

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Employee Tax Expert

I cannot continue my Federal Taxes (QTP)

@dabasa53

 

Since there are some changes that require an update of the information, printing and mailing you return sidesteps a possible issue. You may need to amend if your return is discovered to be incomplete.

 

Qualified tuition program (QTP).

 

For distributions made from qualified tuition programs (QTPs) after 2018, qualified higher education expenses may include: • Certain expenses required for a designated beneficiary's participation in certain apprenticeship programs. • No more than $10,000 paid as principal or interest on a qualified student loan of the designated beneficiary or the designated beneficiary's sibling.

 

2019 QTP

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Level 2

I cannot continue my Federal Taxes (QTP)

@ColeenD3 

I have read that form, but nowhere does it say how long it will be until I can complete my taxes.
Neither of those situations listed under QTP in your post apply to me, I am merely just a Grad Student using a 529 to pay for school. 

Does everyone on here that gets a QTP at the end of their taxes going to have to wait to file their taxes too? I am also waiting on a decent return and it would just me nice to know when taxes can be submitted, or if this is going to take a long time.

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Employee Tax & Finance Expert

I cannot continue my Federal Taxes (QTP)

An estimate cannot be given, because the IRS has not provided one.

 

Unless you have taken a taxable distribution from your Qualified Tuition Plan (one in excess of your expenses or one that is not qualified) the IRS does not require you to report it on your tax return.

 

If you do not have a tax due as a result of your distribution, you will not have any issue with the IRS if you simply remove the 1099-Q from your tax return and file.  

 

@Stahlwittchen

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Level 1

I cannot continue my Federal Taxes (QTP)

I called and spoke with an IRS agent and they said that they are not aware of any QTP issues that would hold up returns getting filed electronically. They suggested this may be a tax software issue.

 

Is there something going on the TurboTax side of things?

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Employee Tax Expert

I cannot continue my Federal Taxes (QTP)

The IRS does post drafts as they work on them here. The drafts mean absolutely nothing to taxpayers, only developers. Once the form is approved, then Turbo Tax can implement and test and release it for you all to use. Here is the actual Federal form availability.

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