How do I correct Form 1099-Q when using TT online

[crash345u]

I added a 1099-Q to my 2022 tax return which corresponds with one of my daughter's two ESA accounts (let's call this ESA #2). Unfortunately TT is filling in the 1099-Q entry under the section labelled "Coverdell Education Savings Account (ESA) Activity Information value as of 12/31/2021"  using a value from a different ESA apparently being tracked by TT from last year's 1099-Q (ESA #1). We did not take a distribution from ESA #1 in 2022 but TT is using last year's 1099-Q information which is irrelevent for tax year 2022.

I see no place during the TT interview screens to change this incorrect value. I REALLY don't want to delete this 1099-Q and start over since I know it can be a nightmare if you go out of sequence with the Education interviews. I don't see how deleting it will help, since I started with a new 1099-Q in the first place.

How do I fix this entry? I think I need to jump to the Form but don't know how.

[KrisD15]

Yes, the order you enter information in the Education Section is important. 

Additionally, you are correct to not have the ending balance of one account interfere with a second account. 

Please try to delete the 1099-Q in the TurboTax program 

In TurboTax Online, 

Click TAX TOOLS on the Left side bar

Then click TOOLS from the drop-down

this opens the Tools Center screen

Select "Delete a form" 

Scroll through the list and delete any 1099-Q Forms

re-enter the 1099-Q you have for Tax Year 2022

[Hal_Al]

Delete is the only solution.

[crash345u]

Does it matter that the 1099-Q Form completed by TT  is incorrect (value of ESA on 12/31/2021 is not correct) if I know this is the last year I will be enterring a 1099-Q on my return? My daughter graduates this year and will definitely not be my dependent in 2023. There is  no taxable income related to the 1099-Q in 2022  (all expenses were qualified and tax free).

Why would it matter under these circumstances? I'm reluctant to delete a form in the Education section unless it's absolutely necessary but will if advised. I have a feeling TT wlll just re-enter the incorrect  value from last year's 1099-Q as I suspect  there is a bug in TT. 

[Hal_Al · Accepted solution]

Q. There is  no taxable income due to the 1099-Q this year. Why would it matter under these circumstances?

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. 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.

On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution." 

[crash345u]

It bothered me that I knew the Form TT created was incorrect, even though it has no impact on this year or next year's taxes.

I was hoping there was a way to "Jump to" the incorrect entry on the form. Sounds like under these circumstances I may as well leave it alone.

[Hal_Al]

The download versions of TT allow you access to the forms and worksheets, for direct entries. TT online (TTO) does not.

[crash345u]

I don't understand why the TT form even tracks the ESA value at the end of 2021. It's not used to make any calculations for a distribution made in 2022 even if there was a taxable event. 

The Basis portion of the 2022 distribution and the Earnings portion of the 2022 distribution has nothing to do with the ending value of the ESA in 2021. It's the ESA value at the end of 2022 that matters.

[Hal_Al]

Unlike 529 plans, ESA custodians are not required to calculate the earnings portion an put it in box 2 of the 1099-Q (most will do it anyway). They are required to give you the year end value, so that you can calculate the earnings portion.  TT tries to help.

[crash345u]

Yes my ESA custodian leaves those 1099-Q boxes blank (Box 2 Earnings, Box 3 Basis) so I make the calculations myself (and TT thankfully agrees with me!).

The ending value in 2021 has nothing to do with the 2022 calculations, thus my confusion why TT tracks it.