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To report the room and board, you must first enter the 1098-T and the 1099-Q as they are reported to you. After you have entered them:
TurboTax should properly apply your 1099-Q withdrawal to the room and board first in order to maximize the education credit you are eligible for.
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. 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 also cannot count expenses that were paid by tax free scholarships. You cannot double dip!
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."
TurboTax will not, usually, give you the input screen for room and board, unless you enter the 1099-Q before you enter the 1098-T.
Another thing to be aware of: 529 money can be use for off campus living, but you are limited to the lesser of your actual costs or the school's "allowance for cost for attendance" (basically what on campus students pay for R&B).
Thank you! Very helpful.
Thank you! Great information.
This looks great except I don't see a "room and board" expense line.
Since Room & Board are only qualified expenses for a QTP distribution, TurboTax (TT) will not give you an entry point until you tell it you had a distribution. So, enter the 1099-Q before you enter the 1098-T or you won't get that screen. To get the screen to enter Room & Board, in the educational expenses (1098-T) section, answer yes when asked if you have book expenses.
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