Paid Only Part of 1098-T Box One - How to Report

[DanRo1]

My daughter is a full time student, files independently as a single and is 28. She works also so she has an income.

Her 1098-T Box 1 reflects the total amount paid to the school. But she only paid a portion of this amount, while the remainder was paid from a 529 beneficiary account owned by me. I received the 1099-Q and reflected it on my tax return along with the amount I paid.

How do I reflect my daughter's portion of the payment in Box 1 of the 1098-T? Should I just modify the Box 1 amount to reflect what she paid or is there another way?  I don't want to overstate how much she paid as this would double dip for some of the tuition paid (both AOTC and the 529 applied).

Thanks so much!!!

[AmyC]

Only the person claiming the student claims the 1098T. Since she is filing on her own, she will file the 1098T on her return. As for your return, if the entire 1099-Q went to qualified expenses, tuition, room and board, etc then you are not required to enter the form on your return. 

See Guide to IRS Form 1099-Q: Payments from Qualified Education Programs. 

See page 52 for qualified distributions at IRS Publication 970, Tax Benefits for Education.

[DanRo1]

Thanks for the fast reply Amy!

So how does my daughter report the partial amount of box 1 of the 1098-T she paid on her return?

My return does NOT have the 1098-T but has the 1099-Q for her 529 distributions that match up to qualified expenses, inclusive of the partial tuition paid (i.e. the part my daughter did NOT pay that is reflected in the 1098-T).

Thanks again!

[KrisD15]

Going forward, please have the student make the withdrawals so that the forms match the student. 

The student can enter the 1098-T into the TurboTax program. The program will ask if she received any additional aid not yet listed, in which case she can report the amount of the 529 distribution. 

OR 

As you suggested, she can simply enter the 1098-T with the amount she paid in Box 1. 

If there is nothing in Box 5, it would work either way. 

Just to point out a few things to keep in mind:

the distribution can cover expenses not listed on the 1098-T, such as Room and Board which would make the distribution tax-free and could free-up expenses to be used for a credit

Only the EARNINGS portion of a distribution is subject to tax

If there is a credit, in your situation, the student would claim it since she is no longer a dependent HOWEVER-

The American Opportunity Tax Credit may only be used 4 times per student, so the number of times YOU (or anyone else that claimed her) claimed it on her behalf is included as part of HER limit. 

[Hal_Al]

Emphasizing what KrisD15 said, you should not claim any of her tuition on your tax return. Instead, you should claim that the 529 distribution was used for room and board.  This allows her to claim the tuition for the education credit.

If she lived off campus, the amount of "room and board" allowed against the 1099-Q (529 distribution) is limited to her actual expenses or the school's "allowance for attendance" (essentially what the school charges on campus students), whichever is less. 

[DanRo]

Thanks Kris, this solves my issue! I did not see the "Best Answer" icon to give you credit. :(

I did not see the option to enter any additional aid listed but will just put the amount paid into Box 1.

Thanks again for your prompt response!

[DanRo]

Thanks Hal for your response, helpful information!