Reporting 1099-Q distributions for the last 6 months of college with no payments to school, hence no 1098-T

[seshadri1]

My daughter was in Grad school in the first half of 2020 and I am doing her return.  The last payment to her school was in Dec 2019 for Q1 of 2020 tuition, so we didn't receive a 1098-T for 2020.  However, for her off-campus boarding & lodging and books, I had sent funds from the 529 with her as the beneficiary, so we have 1099-Q for 2020 with her as a recipient.   How do I enter it so that amounts in the 1099-Q don't get placed in her taxable income?  If I go to Deductions & Credits, under education expenses summary, I can't enter anything under her school because there is no 1098-T, so I thought I could enter it under Other Education Expenses under Room and Board. However it said she can't claim an education tax break because what's entered do not make her eligible for an education deduction or credit. 

What do I need to do differently on her return?  Thanks.

[AmyC]

You may not need to enter the 1099-Q. See my 529 example and information on 529 expense withdrawals. Rarely does it need to be entered.

[Hal_Al]

  You can just not report the 1099-Q, at all, if your beneficiary has sufficient educational expenses, including room & board  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." 

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.

That said, the secret to getting to the screen to enter R&B and other expenses is tell TT that you have an exception to not having a 1098-T*.  When asked if you have book expenses answer yes (books are on the same screen as R&B).

*Or just say you do have a 1098-T and enter 0 in boxes 1 & 5. Lying to TurboTax to get it to do what you want does not constitute lying to the IRS.