Turbo Tax not letting me enter Room and Board Paid for from 529 Plan

[KayMae]

Turbo Tax did NOT allow me to enter Room and Board when I entered my 1098T nor my 1099T.  I paid for room and board from my 529 plan which then leaves enough other college expenses for me to get the American opportunity tax credit (AOTC).  If I answer yes to "Pay for books or materials to attend school" I can then enter this number under "Books and materials not required" which makes my 8863 federal worksheet come out as I would expect.  I would think Turbo Tax would be better in this area than what it is given the questions I see in years past on the same topic.  Something is obviously not right or at least mis-leading as it ask questions for this many people to have issues.  I did see I can enter Room and Board in one spot but it assumed I used grants and such to pay for room and board which I did not.  Am I missing something or is Turbo Tax really lacking year after year in this area ?

[KathrynG3]

Also, regarding entering the 1098-T here are some tips for Form 1098-T entering from TurboTax Expert KittyM:

STEP 1.) It will skip to books and supplies. KEEP GOING. You can't jump to, you can't hit back KEEP GOING as though you have entered.

STEP 2.) Do NOT put in scholarship amounts when it asks if the scholarship is listed on Box 5 of the 1098-T because you are about to double up. KEEP Going. you are about to circle back.

STEP 3.) Go through all screens. If says can't maximize because no expenses do not fret, Go all the way until it circles back to the Wages and Income screen.

STEP 4.) Go back into Education credit and hit Edit on the student. Will ask if you had education credit.

STEP 5) Once you do you may see the Summary Page of the student. Hit edit on the top one that reads Tuition.

Step 6.) Will ask if you had a 1098-T you say yes, and THERE is the 1098-T

[KayMae]

KathrynG3,  Thanks for the reply but I can enter my 1098-T its just that no where does it ask for what I paid in Room in Board thus Turbo Tax applies all my 529 dollars to tuition leaving me no expenses to claim the AOTC.

[Hal_Al]

To get the screen to enter Room & Board, answer yes when asked if you have book expenses.

[KayMae]

I answered yes but still no question about room and board which for me totals $10,310.  I put the room and board in the books section which made my 8863 come out as planned.  See below screen print... 

Here are my numbers:

 32,165 = Tuition and Fees

-21,133 = Scholarships and Grants

------------------------------------------------------

 11,032 is the difference

-  4,000 is used for AOTC

-----------------------------------------------------

  7,032 is the difference

10,310 Room and Board

-----------------------------------------------------

17,342 is the sum eligible for 529

12,413 is withdraw from 529

This leaves me 4,929 to the good but without room and board entry I am in trouble with either AOTC or 529 taxes...

[KrisD15 · Accepted solution]

Room and Board is listed under Books, supplies and equipment, but you must enter the 1099-Q first. 

Enter the 1099-Q, then the 1098-T and it will be available.

[KayMae]

This worked but then it lost the fact they were working towards a degree thus all sorts of other issues.  Once I got this entered again all was good.  Turned out to be the same results as me just entering room and board under the books not required by the school when i could not get the software to display the room and board question.  Turbo Tax could use some refinements in this area.

[twoods1958]

My son, full-time student and dependent, is the recipient of the Form 1099Q and, as a result, the form 1098T expenses are used to offset the Form 1099Q receipts.  Therefore, he has no tax impact or reporting on his return.  On my - the parent - return, I have unreimbursed room and board expenses which I need to report in order to qualify for the American Opportunity Credit (AOC).  Last year on TT, I just entered 4,000 in expenses to qualify.  This year, 2020, I have two issues with TT: 1) it is requiring me to enter the Form 1098T expenses which I already used to offset my son's 1099Q receipts on his return, and 2) there is nowhere to enter room and board expenses.  I am concerned about double-counting expenses but if I do not double count, TT will not qualify me for the AOC.  I would just like to enter my unreimbursed room and board expense that were not used on my son's return in order to qualify for the AOC.  Any suggestions will be helpful.  Thanks!

[Hal_Al]

Room and board are not qualified expenses for the AOC. They are qualified expenses for the 1099-Q (529 or ESA distribution).

So, you're doing it backwards.  You enter the 1098-T on your return and use $4000 of the box 1 amount  to claim the AOC.

You enter the room and board on his TurboTax return, as well as the 1098-T and any book and computers expenses. When you get to the screen* titled “Amount Used to Calculate Education Deduction or Credit”, verify that the  amount  used is $4000  or change it to $4000 (this prevents the double-counting of expenses).

*If TT doesn't give you that screen, Go through the entire education interview until you reach a screen titled "Your Education Expenses Summary".  Click edit next to the student's name. That should take you to a screen “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.

@twoods1958 

[twoods1958]

Perfect.  Thank you so much for that clarification - beyond helpful!

[twoods1958]

Thank you again for that answer  - it definitely clarified everything. I actually have one further question. 

When I enter the 1098-T tuition payments on my return, should I just enter $4,000 (what I need to qualify for the AOC) not the $21,814 actual and reported by the college amount?  Or should I enter the correct $21,814 amount in order to avoid any matching issues with the IRS and somehow deduct the $17,814 difference to avoid double-counting with my son's return?  Thanks!

[markjb]

Hi,   I entered $12,000.00 in room and board line item, however,  my Federal Taxes did not go down.   Please understand YES I did use a 529 distribution (recorded on 1099-Q( to pay for these expenses,   which I thought allowed for a deduction.   Reference Turbo Tax: The one exception is if room and board was paid for with a Coverdell ESA or 529 plan distribution.  In that case, the cost can be deducted from the taxable portion of the distribution.

[Hal_Al]

Correct,  the one exception is if room and board being deductible, is if there was  a Coverdell ESA or 529 plan distribution.  In that case, the cost can be deducted from  the distribution before calculating the taxable portion of the earnings.

The room and board cannot be deducted against ordinary income.  As such, entering it will not result in your federal tax going down.  Instead it will prevent your federal tax from going up for entering the 1099-Q.

The TurboTax interview  and calculation for 1099-Q is complicated and it's easy to make mistakes.  

You can just not report the 1099-Q, at all, if your student-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. 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! 

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." 

[markjb]

Thanks for your response,   I prepared two tax returns using Turbotax Premier Desktop yr 2021.  

Return #1  I did not enter the 1099Q and 1098T and $0 Room and Board.     

Return #2  I entered 1099Q, 1098T, and $$ for room and board.  

Turbotax that yielded the same results for both tax returns.

I see now that for return #2 one loads  1099Q and 1098T.....and must complete the last section labeled "education information" for this return #2 to calculate the refund correctly.    In my case the 529 plan distributions are less than the eligible education expenses so its best to not enter the 1099Q & 1098T to save time.

[KrisD15]

What you say could be true if

you understand the tax liability of the 1099-Q

you are not eligible for an education credit

In other words, if the 1099-Q and 1098-T will have no tax consequence, (no tax, no credit) they are not needed to be entered into the TurboTax program. 

The IRS does get copies of these forms, but will not be looking to see them listed with the return UNLESS your 1098-T indicates there may be income to report, such as more in Box 5 (scholarships) than in Box 1 (amount paid to school).