TurboTax is broken for 529 WIthdrawals for Tuition

[user17694748577]

On the Student Information Worksheet, in Part VI Education Expenses, in line 1, the "Tuition paid from Part IV and qualified elementary and secondary tuition" should copy into the column for "Qualified Higher Education Expense for 529 Plan".  But it doesn't , so you're taxed on gain for 529 money that pays for tuition that was reported by a university on a 1098-T.

[AmyC · Accepted solution]

The program isn't made for a 529 that isn't used. Let me double check what you are doing and what you need to do. For the 529, my first concern is following the rules. 

If the 1099-Q was used exclusively for qualified expenses, it does not need to be entered. Tuck the 1099-Q into your tax folder. IRS Publication 970, Tax Benefits for Education states:

If the entire 1099-Q went to qualified expenses, room and board, tuition, etc then you do not need to enter the form. 

Room and board is not a qualified expense for AOTC, but it is a qualified expense for the 529. For full details, see 529 for Room and Board- this includes off campus housing. Check with the college for their guidelines.
 

I encourage you to read another post of mine with more details here. Please reply back with any additional information, if you would like more help.

[Hal_Al]

TurboTax may have allocated some, or all, of the tuition to the Tuition Credit.  That would make some of the 529 earnings taxable. 

[user17694748577]

Today's TurboTax update fixed the problem.

On the Student Information Worksheet, in Part VI Education Expenses, in line 1, the "Tuition paid from Part IV and qualified elementary and secondary tuition" **does** copy into the column for "Qualified Higher Education Expense for 529 Plan".

The now-corrected bug was annoying, because Intuit had it working correctly in TurboTax 2020, 2021, 2022, 2023, and 2024.

TurboTax is still broken, because it doesn't save entries on the "Part VI Education Expenses".  If you enter them, close, TurboTax, and reopen TurboTax, all the entries are gone!

The now-corrected bug was annoying, because it didn't save entries on the "Part VI Education Expenses".  If you entered them, closed TurboTax, and reopened TurboTax, all the entries were gone.

[ruckerz]

I think it's still broken if you have tuition expenses for K-12 (elementary school / high school checkboxes under 'School Attendance').   Actually nevermind, it depends on whether the state recognizes k12 expenses as exempt from taxation/penalties.