We are using a 529 to pay for our son's first year in community college. I have successfully entered the 1099-Qs that we received in the parents name for the benefit of the child. However, TurboTax REFUSES to allow me to enter the associated expenses due to our "income being too high for deductions" (EXACT TurboTax MESSAGE). Of course, we are not trying to get any "deductions". We are simply trying to enter our ACTUAL expenses against the 1099-Q as ..directed by TurboTax and it ..won't let us do that. It look like there is no longer a number to call for TT support so perhaps this is the ONLY support forum?
The "Your Education Expenses Summary" page will show...
- The student's name (Age)
- School Name
- Working towards a Degree (in our son's case)
- Full-Time
with (Add a Student) below that....
That's it. That is ALL it shows which will erroneously leave the preparer to think those are the type of details hidden behind that "edit" button to the right...
Ah! but that would make too much sense and fortunately is not the case. All expenses can be accessed by clicking on that EDIT button.... yes, even IF our income prevents us from benefiting from any tax credits, it does allow one to enter the offsetting expenses as well as the 1098-T as the Intuit video directs.
Funds distributed from a 529 Plan, will be reported by the bank on a Form 1099-Q. The 1099-Q is sent to the owner/recipient of the 529 Plan funds. The Form 1099-Q is to be reported as income if they were not used to pay qualified college tuition/expenses. If the amount reported on the 1099-Q were used to cover qualified college tuition/expenses you do not need to report the income. If the amount exceeds the amount of college tuition/ expenses then the excess needs to be reported as other income on your 1040.
Since your income is too high for an education credit and as long as the educational expenses are at least the amount shown on the 1099-Q you do not have to list it on your return. You should keep the 1099-Q along with the documentation of your qualified educational expenses with your tax records.
In TurboTax (TT), enter at:
Federal Taxes Tab (Personal for H&B version)
Deductions & Credits
-Scroll down to:
--Education
--Education Expenses
When you encounter the screen "You can't claim a tuition credit" (or similar wording), just click continue. It will allow you to enter the student and the expenses.
Or as others have said, just delete the 1099-Q. 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. 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.
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."
The 1099-Q and the 1098-T are only an informational documents. The numbers on it are not required to be entered onto your (or your student's) tax return.
In this case, the 1099-Q was issued to the PARENT and the software DOES guide you to enter the data in such a case. The EDIT button to the right of the students name that LOOKS like would edit the name and the address is ACTUALLY.....
the (hidden) section of the TurboTax program where college expenses CAN be entered.
PS - I went back into the program and deleted all 1099-Qs which also winds up resulting in the same result. I guess one would just have to retain the paperwork rather than entering everything into TT that way.
The "Your Education Expenses Summary" page will show...
- The student's name (Age)
- School Name
- Working towards a Degree (in our son's case)
- Full-Time
with (Add a Student) below that....
That's it. That is ALL it shows which will erroneously leave the preparer to think those are the type of details hidden behind that "edit" button to the right...
Ah! but that would make too much sense and fortunately is not the case. All expenses can be accessed by clicking on that EDIT button.... yes, even IF our income prevents us from benefiting from any tax credits, it does allow one to enter the offsetting expenses as well as the 1098-T as the Intuit video directs.