Turbo Tax is not allowing me to input qualified education expenses from my 529 plan withdrawals.

[DMaus]

I fooled around trying to figure out this and finally found the ESA/QTP worksheet in Forms View and entered qualified expenses directly into the worksheet and the other taxable income amount disappeared

from the 1040. ; )

[joebob8000]

hmm.... appreciate the reply!  

I see $10k in line 18, that is labeled "Used for Credit" across all the worksheet lines.   I'm not sure why since I paid all expenses out of the 529.   I'm also learning more about using 529 funds to pay for everything (what i did) vs paying $4k out of pocket for some expenses and receiving the tax credits later.

So besides TT being very confused on this whole setup, I'm also seeing that i probably screwed up by paying the full expenses from the 529 instead of taking advantage of the tax credit.  investigating...

Final thought, its complicated, but preferably - I paid for software to make this easy for me and its not helping.

[TopShelfTax]

@joebob8000 

Its not about where you paid the expenses from.  Money from the 529 is of two types, what you put in (basis) and what you earn(income).  Both can be used tax free for education but the income portion is subject to a 10% penalty if not used for education, plus your marginal tax rate on that income.

The amount in the credit line is not driven by the 1099q entries, its driven by you 1098t you entered.  If that amount was greater than 10k, the 10k is being put on line 18 and you should see the rest flowing to the 529 calculations.  That it is populated across the worksheet for each column does not play into the calculation.  the next section down on the student worksheet after those tables shows the income calculation/offset. 

If you are receiving the Lifetime Learning Credit (LLC), a full 2k then the 10k is correct.  If you are getting a lesser amount its not right, or if you are actually receiving the American Opportunity Credit (AOC) it is not right.  For a full receipt of the AOC (2500) you should only have 4k for that credit amount. or a lesser amount if your AIC is phased out by income.  If you change it to 4k and your refund increases (assuming you have all your expenses entered) you are getting the AOC and the other 6k of expenses will get reallocated to the 529 calculations and offset that income its currently showing. 

If you look on page 3 of this thready you can see my post with images of the forms explaining how i handled my situation.  Or this link should take you there if the automatic moderation lets me post it:

https://ttlc.intuit.com/community/college-education/discussion/re-turbo-tax-is-not-allowing-me-to-in...

[SanJack]

I understand what you are saying about the 1098t, but if you are a grandparent you do not receive the 1098t. It is my understanding that the college sends a 1098t to the parent or student. Because my 1099q withdrawal was less than my grandson's qualified college expenses, I chose to not record it in TurboTax but I am keeping the 1099q and documents from the college showing how much I paid and what it covered.  There was originally an expense form under the 1099q  step by step walk thru and for some reason TT decided to eliminate it.  Very frustrating!

[Hal_Al]

For more on  Grandparent as  529 recipient, see:

 https://ttlc.intuit.com/community/college-education/discussion/re-my-grandmother-used-money-from-an-...