529 plan, AOTC, and 1098-Q send to parent and student

[adrianv]

Yes, the $1800 was based on box2 of the 1099-q. 

So the final question then about the details with turbo tax:

On my taxes I report the 1098-T and take the ATOC.   I ignore the 1099-Q? 

On my daugther's taxes I report just the taxable part of the 529 distribution?  Do I just figure out what that number is from my records and put it somewhere?   Where?    (And how do I enter the earnings/basis info for this?)

[Hal_Al · Accepted solution]

Q.  On my taxes I report the 1098-T and take the ATOC?

A.  Yes

Q.  I ignore the 1099-Q on my return,

A.   Yes

Q.  On my daughter's taxes I report just the taxable part of the 529 distribution?

A.  Yes

Q.. Do I just figure out what that number is from my records and put it somewhere?

A. Yes, since you have already done all the work.   The normal  way to do is enter the 1099-Q, the 1098-T, expenses and adjustments and let TT do the calcs.  But, mistakes can and frequently do happen. 

Q. Where?

A. In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in  Home & Business)

 - Wages & Income

Scroll down to:

  -Less Common Income

      -Misc Income, 1099-A, 1099-C

       - On the next screen, choose – Other reportable income  

       - On the next screen, click yes

       - On the next screen, you'll get blanks to enter the amount ($1800?) and a description "Qual Tuition Prgm from 1099-Q".  TT will put in on line 8, schedule 1, Other Income

Keep your notes and calculations, in case of an IRS inquiry.

[adrianv]

I mentioned the notion that I could count grandma's purchase of the computer as an expense for the purpose of the 529 plan and was told that this was incorrect, that we could only count expenses either the parent or child incurred.  Are you sure this is OK?  Is there some IRS document that justifies/supports it? 

[Hal_Al]

Pub 970, page 11

"Qualified education expenses paid by a dependent you claim on your tax return, or by a third party for that
dependent, are considered paid by you."

https://www.irs.gov/pub/irs-pdf/p970.pdf

[adrianv]

Thanks for that reference.  I was reading over the publication and I noticed that section is about expenses for the AOTC.  Is that considered the general rule---that is, it applies to assessing expenses for the 529 as well?  The section on QTPs is silent on the matter, which I suppose does suggest that the rule on page 11 (the only rule given about the matter?) applies.  Why do they make this so confusing?