I have 1098-T for $11,624 for full time student and 1099Q for $3584. Turbo Tax attempts to charge me taxes on 1099Q. How can I fix this?

[KrisD]

Was there other tax-free assistance such as scholarships? Are you receiving any education credits?

[annabarh]

No other tax-free assistance. Seems like a bug in Turbo Tax or perhaps i am doing something incorrectly.

[KrisD]

What about an education credit? Is the program using the expenses towards a credit and taxing the distribution instead?

[annabarh]

we are not eligible for education credit, the income is too high.

[annabarh]

Any help to resolve this issue? Do I need to report 1099Q on my tax return if the money was used for education? If I do, how to do this correctly?

[KrisD · Accepted solution]

Yes, please sign into your account and return

Click Federal on the left side-bar

Click Deductions & Credits along the top

Scroll down to Expenses and Scholarships (Form 1098-T) and click Edit/Add

Click Edit next to the student's name

SCROLL DOWN to the bottom option "Education Information" and click Edit (see screenshot)

Continue through the interview screens, 

ON the 7th screen "Amount Used to Calculate Education Deduction or Credit" the program may have defaulted to 10,000. Change it to 8040 or less (see screenshot) 

(I used 8040 for you since you had 11,624 expenses and 3,584 distribution 11624-3584=8040)

The distribution should no longer show as taxable. 

[annabarh]

Thanks for your help!

[MichaelDC]

More than a pleasure. Good Luck!