Tuition Expenses credit on WI tax return when 529 involved

[cjzimmer2]

WI income tax form starts with the federal adjusted gross income (line 11).  So this total includes any taxable money related to college expenses but does not include any of the credits related to those expenses. Turbo tax is asking for any tuition only expenses paid to a WI college that was not paid with 529 money.

We did use some 529 for expenses, however, on the federal form things ended up being reported as the full tuition went against the Lifetime Learning Credit and the money we took from the 529 went against board, books with the extra being listed as excess distributions and taxed accordingly.

Here's what the numbers looked like (as an FYI, there is no scholarships, grants, loans or anything else not listed below involved)

Tuition = $7632

Books and Board = $2257

LLC  ($7632 x20%) = $1526

529 Withdrawal= $7630 ($1828 was considered earnings)

529 Excess distributions = $5373

Taxable Earnings = $1287 (this is the amount that was included in federal income that was brought over to the starting line for WI Taxes)

So when WI is asking for tuition paid with non 529 money, I would report the full tuition since the 529 money was used either for non tuition expenses or taxed as extra income? Is that correct?

[Hal_Al]

Q. So when WI is asking for tuition paid with non 529 money, I would report the full tuition since the 529 money was used either for non tuition expenses or taxed as extra income? Is that correct?

A. Yes.  The logic is that the tuition credit is not reflected in the Federal AGI (since it's a credit not a deduction).  You're not double dipping by claiming the WI tuition deduction.

Caveat: I'm not specifically familiar with WI forms. But the above is the general rule for this situation in most (if not all) states.