Solved: Re: Room & Board Expenses -- where to enter
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Level 1

Room & Board Expenses -- where to enter

Where in TurboTax do I enter the total I paid in 2019 for college room & board for my Daughter #1, if I don’t have a 1098-T for her?  I’ve queried this question and seen answers that say you don’t enter room & board payments in TurboTax, but I am seeing otherwise.  My Daughter #2 in college received a 1098-T for 2019, and when I entered that info into TurboTax, it also allowed me to enter what I paid for both room & board and books.

 

However, not the case for Daughter #1.  She attended her final college semester in Spring 2019 and then graduated.  In 2019, I withdrew funds from her 529 account to pay for room & board and her books.  I did not receive a 1098-T for 2019 from her college, because I paid her tuition and fees for her final semester in December of 2018.  In the 1098-T section of TurboTax, I entered NO to the question "Did you receive a 1098-T?"  The screen that came up next then gave me a place to enter what I paid for her books, but not the room & board.  

 

In an earlier section of TurboTax, I entered the 1099-Q info for both daughters' 529 accounts, showing the total amount of funds for qualified education expenses that I withdrew in 2019.  If I cannot enter anywhere in TurboTax the amount I paid for room & board for Daughter #1, won’t TurboTax think I withdrew more money from her 529 than I used to pay for qualified education expenses, and then charge me taxes and a 10% penalty on the earnings portion of the money I withdrew to pay her room & board? 

 

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Level 15

Room & Board Expenses -- where to enter

When a 1099-Q is involved, it is *imperative* that you work through the education section the way it is designed and intended to be used. If you do not, then chances are "extremely" high that you will not be asked for room and board expenses, meaning that any 1099-Q funds not used for the qualified expenses of tuition, books and lab fees *will* be taxed.

I would suggest you completely delete everything (both students) in the education section and then start that section over from scratch. At this point, jumping around trying to fix things will have the high probability of creating an entirely new problem with the 1098-T. (I am assuming TTX has not yet fixed that bug, since as far as I know we've not yet been able to identify the exact cause.)

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Level 15

Room & Board Expenses -- where to enter

When a 1099-Q is involved, it is *imperative* that you work through the education section the way it is designed and intended to be used. If you do not, then chances are "extremely" high that you will not be asked for room and board expenses, meaning that any 1099-Q funds not used for the qualified expenses of tuition, books and lab fees *will* be taxed.

I would suggest you completely delete everything (both students) in the education section and then start that section over from scratch. At this point, jumping around trying to fix things will have the high probability of creating an entirely new problem with the 1098-T. (I am assuming TTX has not yet fixed that bug, since as far as I know we've not yet been able to identify the exact cause.)

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Level 1

Room & Board Expenses -- where to enter

Carl - Thanks for your input.  What exactly is the "bug" you referred to?

 

I can do what you recommend, but I am pretty sure I filled it out correctly the first time.  And which is the part you refer to as the "education section?"  Under Deductions & Credits, there's a section titled "ESA and 529 qualified tuition programs (Form 1099-Q)" and a section titled "Expenses and Scholarships (Form 1098-T)."  Are you saying redo both of those?

 

I am kicking myself now for paying her 2019 spring tuition in late 2018.  If I had paid it in 2019, I would have a 1098-T and this would all be moot.  TurboTax completely shuts me down when I answer that I have no 1098-T for her. 

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Level 14

Room & Board Expenses -- where to enter

yes, you do enter the room and board when it's asked, but the issue is TT uses that information to determine if the earnings on the 1099-Q are taxable or not.

 

it is NOT an acceptable expense related to the 1098-T. 

 

on the 1099Q, whose name is on the form, THAT's whose tax return the form goes on (it'll be you if you received the money from the administrator, it will be your child, if the administrator was directed to send the money directly to the college or your child)

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Level 1

Room & Board Expenses -- where to enter

Thanks for your response.  I am the owner/recipient of the 529 plans for both my daughters; my daughters are the beneficiaries.  So it definitely gets addressed on my taxes.  

 

I am aware that room & board isn't listed on the 1098-T form.  But the TurboTax 1098-T section was the only place that, once I entered the data from the 1098-T, then also asked what I paid for room & board.  But it only asked for the daughter for whom I have a 1098-T.  It didn't ask for the other daughter.  When I answered NO to question "do you have a 1098-T for her" it brought up a screen that asked if I was an exception and her school didn't need to issue her a 1098-T.  I answered YES to that, thinking that would bring me to a screen where it would ask about room & board, like it did for my other daughter.  But it did not ever ask that. 

 

 

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New Member

Room & Board Expenses -- where to enter

I have a related problem concerning my dependent son's college expenses. After entering the 1099Q distributions, 1098T expenses, and all other qualifying expenses for a 529b, my federal return correctly determined no tax liability from the 529b distribution. However, the Alabama state return appears to treat the 529b distribution as income. Is this a bug in the AL state software?

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Expert Alumni

Room & Board Expenses -- where to enter

There shouldn't be. You might have a Tax support phone specialist to look at a diagnostic copy at your return to see why this is occurring otherwise it is hard to speculate what may have happened.

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New Member

Room & Board Expenses -- where to enter

I am following the EZStep process on turbotax premier to fill in my student daughters tax forms, and have entered the 1099-Q first and then the 1098-T.  Even though I was asked to fill out the room and board info, it is still treating the 529 distribution portion used for the room and board as taxable (even though the 529 distribution was less than the 1098-T Payments minus the scholarships plus the room and board amount).  I did try to delete both the 1098-T and the 1099-Q and walked through it again.  Is there a fix for this bug, or another way to fix it?

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Level 14

Room & Board Expenses -- where to enter

there is no requirement to input the 1099Q; rather you just need to confirm that the qualified expenses exceed Box 1.  From what you are stating, you have done that.  Just file away the documentation should you ever be asked by the IRS. 

 

look at the instructons that came with the 1099Q

 

"Taxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."

 

and you have done that.  Suggest deleting the 1099Q (but not the 1098T!) from your taxes and move on....

 

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Level 2

Room & Board Expenses -- where to enter

I’m having the same issue. 10% tax is being added on the 529 earning even though it is paid to university from my 529 plan for room/board. I compared last year turbo tax and it was not calculating the same way. By the way my 529 plan distributed for  room and boarding. The earning in box 2 shows taxable. If the beneficiary is my daughter  but I own the 529 plan should I enter 1099q in My return. Last year I had done that way but I think if student is filing tax then he/she should enter that . Please confirm.

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Level 15

Room & Board Expenses -- where to enter

As previous comments have said, if your 529 distribution is fully covered by expenses, including room and board, just don't enter the 1099-Q in TurboTax.  It's too complicated.

 

That said,  to get the screen to enter Room & Board,  answer yes when asked if you have book expenses., in the education expenses interview

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Level 2

Room & Board Expenses -- where to enter

Thanks. It was not an issue last year. I’m comparing side by side. Is it a Turbo tax software  issue? 

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Level 15

Room & Board Expenses -- where to enter

For 529 plans, there is an “owner” (usually the parent), and a “beneficiary” (usually the student dependent). The "recipient" of the distribution can be either the owner or the beneficiary depending on who the money was sent to. When the money goes directly from the Qualified Tuition Plan (QTP) to the school, the student is the "recipient". The distribution will be reported on IRS form 1099-Q. 
The 1099-Q gets reported on the recipient's return.** The recipient's name & SS# will be on the 1099-Q.
Even though the 1099-Q is going on the student's return, the 1098-T should go on the parent's return, so you can claim the education credit. You can do this because he is your dependent.

 

**Alternatively; 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. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. Again, you cannot double dip!  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, in case of an IRS inquiry.

 

Read on for more about 529 plan distributions.

__________________________________________________________________

Qualified Tuition Plans  (QTP 529 Plans)

It’s complicated.

For 529 plans, there is an “owner” (usually the parent), and a “beneficiary” (usually the student dependent). The "recipient" of the distribution can be either the owner or the beneficiary depending on who the money was sent to. When the money goes directly from the Qualified Tuition Plan (QTP) to the school, the student is the "recipient". The distribution will be reported on IRS form 1099-Q. 
The 1099-Q gets reported on the recipient's return.** The recipient's name & SS# will be on the 1099-Q.
Even though the 1099-Q is going on the student's return, the 1098-T should go on the parent's return, so you can claim the education credit. You can do this because he is your dependent.

You can and should claim the tuition credit before claiming the 529 plan earnings exclusion. The educational expenses he claims for the 1099-Q should be reduced by the amount of educational expenses you claim for the credit.
But be aware, you can not double dip. You cannot count the same tuition money, for the tuition credit,  that gets him an exclusion from the taxability of the earnings (interest) on the 529 plan. Since the credit is more generous; use as much of the tuition as is needed for the credit and the rest for the interest exclusion. Another special rule allows you to claim the tuition credit even though it was "his" money that paid the tuition.
In addition, there is another rule that says the 10% penalty is waived if he was unable to cover the 529 plan withdrawal with educational expenses either because he got scholarships or the expenses were used (by him or the parents) to claim the credits. He'll have to pay tax on the earnings, at his lower tax rate (subject to the “kiddie tax”), but not the penalty.

 

Total qualified expenses (including room & board) less amounts paid by scholarship less amounts used to claim the Tuition credit equals the amount you can use to claim the earnings exclusion on the 1099-Q. 
Example:
  $10,000 in educational expenses(including room & board)

   -$3000 paid by tax free scholarship***

   -$4000 used to claim the American Opportunity credit

 =$3000 Can be used against the 1099-Q (usually on the student’s return)

 

Box 1 of the 1099-Q is $5000

Box 2 is $600

3000/5000=60% of the earnings are tax free

60%x600= $360

You have $240 of taxable income (600-360)

 

**Alternatively; 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. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. Again, you cannot double dip!  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, in case of an IRS inquiry.

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." 

 

 ***Another alternative is have the student report some of his scholarship as taxable income, to free up some expenses for the 1099-Q and/or tuition credit.

 

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Level 2

Room & Board Expenses -- where to enter

Thanks for the detail answer. I need to clarify one point from your answer

“”””

You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. Again, you cannot double dip!  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.

“””“”

in my case tuitions are fully paid and paying room & boarding to school from 529 plan. I hope It is a qualified distribution. 
>>When the box 1 amount on form 1099-Q is fully covered by expenses.

 

Box1 Amt is fully paid to school for room/boarding/admin fees. Not sure why TurboTax is calculating tax on earning. It is not calculating correctly. As you said, I will delete the 1099Q from my daughters return. I’ll Keep 1099T in my return only. 

another question? Last year I had included 1099Q in my return ( fully qualified) instead of adding that to my daughter’s return. Will that cause any issue? Actually, TurboTax allows to enter 1099Q for dependents (beneficiary) in parents return. 

 

 

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Level 15

Room & Board Expenses -- where to enter

Yes, room and board are qualified expenses for the 1099-Q, even though R&B are not on the 1098-T.

 

It will not cause an issue  if the  1099Q was on your return , instead of your  daughter’s return, because it was fully qualified.

 

 

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