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Is my logic correct......kid in college, 529 plan scholarship withdrawals

@Hal_Al 

Thanks so much for this.  I need to sit down and digest the numbers so I can wrap my brain around the logic and the TT entries.  I appreciate your time.  I may come back later with follow-up questions if you don't mind.  Thanks again!

Is my logic correct......kid in college, 529 plan scholarship withdrawals

@Hal_Al 

I went through your numbers and understand where they all came from.  Very clever using the kiddie tax threshold to get more taxable scholarship money on my kid's low effective tax rate return.  I also understand that the entries you are making (which I will be using!) are designed to kinda "trick" TurboTax into taxing both me and my son appropriately on the scholarship withdrawals.

 

And the following is just for my own personal knowledge:  In my situation above, what I don't understand is why can't I take the $22,000 scholarship withdrawal (the earnings of which are fully taxable as ordinary income without penalty), "assign" my son the $3205+$7256 = $10461 of the scholarship that will bring his income up to his standard deduction + the kiddie tax threshold, leaving $11539 ($22K scholarship - $3205-$7256) for me to be "assigned" to my return.  On the kid's return I could enter $10461 in earnings on a 1099Q, leave everything else blank and have TT tax the $10461 on my kids return as ordinary income (Schedule 1 line 8r) brining him up the kiddie tax threshold in income.  Then in TT for me, do the same for the remaining $11539 ($22K - $10461) putting it in box 2 of a 1099-Q entry which would carry to my Schedule  1 line 8r?  I'm away from my TT program for the next several days so can't check this, but does a 1099-Q box 2 earnings entry in the software put those taxable earnings from a 1099-Q onto Schedule 1 line r.....or I could be totally wrong : )

 

Thanks for your time!

**and this will be my last question until I get home next week to execute your entries on my TT return.

Hal_Al
Level 15

Is my logic correct......kid in college, 529 plan scholarship withdrawals

Q. Does a 1099-Q box 2 earnings entry in the software put those taxable earnings from a 1099-Q onto Schedule 1 line r?

A. It goes on line 8z of Schedule 1 with the notation "Qual State (or Pvt)Tuition Prgm from 1099-Q".  Your taxable amount should be about $1500 and his $1250 (rounding in my hand calcs may vary that a little). TT will also generate form 5329 to claim the penalty exception (lines 7 & 8 should be 0). 

Is my logic correct......kid in college, 529 plan scholarship withdrawals

Thanks!

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