Yes. First enter the 1099-Q, under 529 distributions. Then enter educational expenses, at the ed expense section, including room & Board. TurboTax will apply it to the 529 distribution.
To get the screen to enter Room & Board, answer yes when asked if you have book expenses.
If you also intend to claim a tuition credit, see more detail below on how to coordinate the two tax benefits.
Yes. First enter the 1099-Q, under 529 distributions. Then enter educational expenses, at the ed expense section, including room & Board. TurboTax will apply it to the 529 distribution.
To get the screen to enter Room & Board, answer yes when asked if you have book expenses.
If you also intend to claim a tuition credit, see more detail below on how to coordinate the two tax benefits.
This would be helpful if Turbotax was actually working this way, which it is not (in Home & Business). It's charging us tax on the room & board portion of the 529 distribution. (appears to be a bug, as I've checked everything, and my investment adviser looked at the worksheets and saw that it wasn't accounting for room & board properly)
I had the same problem but was able to get it to work by insuring the program recognized the student was at least 1/2 time. This required deleting a 1098T for a summer school class at the community college where he was not. Box 8 must be checked - it then accepted my input for room and board under the QHEE 529 column.
What is the fix for this bug? I have the identical problem - amount used from 529 used and entered for room and board is being treated as income in Home and Business.
There is no bug. Part of your expenses paid have been used to calculate the tuition credit or were offset by tax free scholarships. You cannot count the same expenses, you used for those, to claim an exclusion of the 529 plan earnings.
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
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)
See the worksheets, TT prepares:
-Student Info Worksheet
-1099-Q worksheet
The return does not include any amount for the American Opportunity credit, and there are no free scholarship amounts either.
Go through the education section again. When you get to the screen that says “Here’s your Education Summary”. Click edit next to “Education Information”. When you get to the screen titled “Amount Used to Calculate Education Deduction or Credit”, verify the amount you want to use or change it.
If that doesn't work, you can delete the 1099-Q and 1098-T and start over. If the 1099-Q goes on your return (because you are the recipient), enter it before you enter the 1098-T. The interview process goes smoother. Enter at Deductions & Credits/Education/ ESA and 529 Qualified Tuition Programs (or type> 1099-Q <in the search box).
Note that the qualified expenses have to be more than the box 1 amount on the 1099-Q, not just more than the box 2 amount.
That worked, along with including ALL of my expenses. Thanks.
There is a bug, my CPA investment adviser who's been in the business over 30yrs and is current on tax law, has many clients who have 529's, proved it to me by using different software in comparison. Turbotax is not properly accounting for 529. It counted 100% of my 529 withdrawal as income, deducted no expenses, and I triple checked entries (which were entered in right places). Look at the forums, they have numerous people posting about how Turbotax is confusing what education expenses are qualified/deductible with the oppty credit (these are not the same thing) and not offsetting 529 withdrawal income properly vs. qualified education expenses deductions (which are ALL expenses, tuition, room&board, books, institution required fees for attending). When very experienced CPA's are showing you how the software isn't calculating properly and others in forums are saying the same thing, there is something wrong with the software.
here's the link to someone who identified how to fix it
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/2007009-how-do-i-force-turbotax-to-correclty-apply-room-and-board-costs-to-my-529-distribution">https://ttlc.intuit.com/questions/2007009-how-do-i-force-turbotax-to-correclty-apply-room-and-board-costs-to-my-529-distribution</a>
how do I get a refund for the fee I paid for Turbo Tax since it is not working properly and allowing a room and board deduction?
Unfortunately while Turbo Tax still states Room & Board is deductible if paid by 529 (2018 taxes); however, as the owner of the 529 account paying tuition and room and board with the 529 on my dependent daughters behalf, I am unable to enter any Room and Board information - only Tuition and Books. Is this part of the tax law change?
No. The new tax law did not change that.
To get the screen to enter Room & Board, answer yes when asked if you have book expenses. The R&B screen will come up after books.
Alternately, if the distribution, from the qualified tuition plan, was totally spent on qualified educational expenses, you do not need to report the 1099-Q as income. So, just don't enter the 1099-Q into TurboTax. When TT determines that none of it is taxable, there is no entry made anywhere on the IRS tax forms. The only paper work is a 1099-Q worksheet that is not sent to the IRS, but might come in handy if you are audited
I was able to enter room and board on my children’s personal taxes, but not on my individual taxes as I have in the past. This clearly reduces the education credits I received as a parent paying for my child’s college education. In previous years.
Additionally, the only place to enter College expenses (1098-Q) is on my dependent child’s taxes, not on mine as the parent of said dependent. As such I am restricted to only enter the 1098-T information and book expense in turbo tax as the parent there is no option for Room & Board on the parents taxes, only on the dependent child’s taxes where to 1098-Q is entered.
It’s interesting as my dependent child is told they cannot claim certain educational deductions as they are being claimed as a dependent on a parents taxes, but then things like room & board cannot be entered by the parent.
I have attempted what you recommend, but even then the only way to enter room and board is to manually enter it on the 8863 (?) form and it makes no difference. Turbo tax does NOT provide the option when I (as a parent) select books and expenses to include room & board. At least not in the 2018 tax version.
Granted the change in tax law has greatly increased my tax liability. My refund has been reduced by 66% with the removal of things like Unreimbursed employee expenses and the fact that my tax rate was reduced throughout the year so less tax was withheld initially.
That said, based on turbo taxes algorithms and my inability to enter room & board expenses, my educational credits have dropped from over $7k to $325 this year. AND this year I had 3 at the University of Delaware compare to 2 the previous tax year.
Talk about s kick in the teeth. Either I’ve missed something or the government is milking the middle class or turbo tax missed something. I tend to lean towards the latter two.
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.
Room and board are not qualified expenses (QE) for the tuition credit. R&B is only a QE for the 529 distributions (1099-Q). Only the person entering the 1099-Q needs to enter R&B. So, you should not be trying to enter R&B on form 8863.
There is a bug for sure. I have a lot more expenses than 529 distributions + scholarship Turbo Tax is telling me the scholarship my chid received is taxable income, which is not. It also not allowing me to claim education tax credits. Is the only way to fix this to deny that I receive a 1099Q or 1098T? I received both.
I'm working out this issue myself self but I have an issue I can't figure out. My son's 1099 Q Gross Distribution is about 1000 more than the 1098T payments... which is fine because we bought him a computer for school with the 529 plan disbursement. But the Earnings on 1099 Q are $4464 and the basis is $8376. Does that mean He getting taxed on 4464 from a 529 plan?
So here is where it matters. He had no wages in 2019. so do I file a return with only the 1099 Q for info? Or do I enter the 1099Q on My return and NOT file one for him? I started a return for him but is shows he has to pay $784 in taxes... on money that is supposed to be tax-free. I'm really missing something here. can anyone advise on what I'm doing wrong?
I guess the real question is should I be entering both the 1098 T and the 1099 Q on my tax return or do I have to file a return for him because his name and his Social are on the 1099Q form.
This is not correct, at least for the downloadable Home and Business version of Turbotax (2019 tax year). It is necessary to enter the room and board expense on the 1098-T form step by step dialog. You need to jump to 1098-T. This can be an issue. It isn't easy to jump to 1098-T but finally I got there (in step by step dialog)> There is no mention of room and board. Only book expenses! Wow is this confusing. If you click on the book expenses a bunch of boxes will pop up that allow you to enter room and board. Way to go Turbotax. One of another million instances where I'm my hair trying to figure out what to do. And, help on Turbotax sucks -- no help on this one.
When you have a 1099-Q it is extremely important that you work through the education section of the program in the order it is designed and intended to be used. If you do not, then there is a high probability that you will not be asked for room & board expenses, and you could therefore be TAXED on your 1099-Q funds.