Where do I deduct room and board expenses paid using qualified education savings?

[rendellr]

I have apartment rent expense that I paid using my 529 plan.  Where do I report that expense in Turbo Tax?

[DawnC]

You don't need to report that unless the distribution reported on your 1099-Q is taxable.   If the distribution doesn’t exceed the amount of the student's qualifying expenses, then you don't have to report any of the distribution as income on your tax return. If the distribution exceeds these expenses, then you must report the earnings on the excess as "other income" on your tax return.  When you pay a student’s school expenses with these funds, you cannot claim a tuition deduction or either of the educational tax credits for the same expense.   

Room and board usually isn't considered a qualified education expense for the purpose of education credits.

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 part of the plan's distribution (on 1099-Q).   If you are not reporting an income, there is no need to report the room and board expense.    

If you do need to report it, it is entered in the Education section as you enter your 1098-T.   Search for 1098-t and use the Jump to link.  

[Hal_Al]

Q. Where do I deduct room and board expenses paid using qualified education savings?

A.  First enter the 1099-Q, so that TurboTax knows that you have a 529 distribution (otherwise it won't give you the room & board [R&B] screen).  Enter the R&B expenses* later at the educational expenses section. To get the screen to enter Room & Board, answer yes when asked if you have book expenses.

But , 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 off campus) 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! 

References:

1. 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." 
2. IRS Pub 970 states: “Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return”.

*Another thing to beware of: 529 money can be use for off campus living, but you are limited to the lesser of your actual costs or the school's "allowance for cost for attendance" (basically what on campus students pay for Room & Board). The student must be half time or more. 

[simon0001]

When I enter the 1099-Q, I do not receive the R&B screen.  The school sent a 1098-T for the tuition, which is less than the 1099-Q distribution because of the off campus R&B.  Since the program is not giving me the ability to enter R&B, the difference between the amounts on the forms is showing as an excess distribution and taxable.  How do I fix this?!

[simon0001]

When I enter the 1099-Q, I do not receive the R&B screen.  The school sent a 1098-T for the tuition, which is less than the 1099-Q distribution because of the off campus R&B.  Since the program is not giving me the ability to enter R&B, the difference between the amounts on the forms is showing as an excess distribution and taxable.  How do I fix this?!

[Hal_Al]

As explained above, you enter your expenses, including room and board, at the 1098-T section, later in the interview.

It can get messy and your situation is not unusual. If you're having problems, there is a workaround:

Enter the 1099-Q. When asked who the student is answer: someone else not listed here (lying to TurboTax to get it to do what you want does not constitute lying to the IRS).  Enter the student's name when asked.  A few screens later, you'll get one simple screen to enter expenses. Press Done at the 1099-Q summary screen, to get there. You do not have to deal with the complicated “Educational expenses and Scholarships” (1098-T) section later.