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Q. Should I just delete all of the 1099-Q and 1098-T information from TT?
A. Yes, if you know none of it is taxable.
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. 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:
That said, To get the screen to enter Room & Board, answer yes when asked if you have book expenses, in the 1098-T and educational expenses section. To get the R&B entry box, you must have entered the 1099-Q prior.
If the $326 is the student's only income, it would appear to be under the filing requirement ($1250 of unearned income). But, since the 10% penalty applies, he will need to file a return.
@Hal_Al - Thanks? The question mark is because your answer talks about things that contradict what I shared. For example I said there were no scholarships. And that we don't qualify for the education tax credits. And that the AQEE was slightly less than the distribution. Therefore, there is a taxable earnings implication. So the fact that you said Yes, just delete all the the 1099-Q and 1098-T information from TT is perplexing. Did you say this because you are AI or because all of the distributions were to my child?
On the other hand, I was finally able to get to a screen that allowed me to enter the Room and Board on a separate line by following the navigation that you mentioned in the last two sentences. So that part helped! I don't know why TT wasn't showing that previously despite trying various sequences (1098-T first then 1099-Q and vice-versa) and even deleting those sections and re-doing them.
The forms should be entered where they are taxable. If they both went to the student, then the student claims the income rather than being on your return.
We used 1 kid's 529 to pay for both kids' qualified expenses after older kid's 529 was exhausted. Therefore, we only received 1 1099-Q, so I think that's preventing the R&B box from appearing. How do I get R&B to appear for the older kid, OR does it matter and instead can I just enter those expenses in one of the books & materials? And if so, which one, required or not required?
"We used 1 kid's 529 to pay for both kids' qualified expenses"
You're not allowed to do that. The portion that went for the kid, who is not the beneficiary, is a non-qualified distribution.
What you are allowed to do is transfer (rollover) money from that account to the 2nd kid's account, or to a new account for the 2nd kid. Or, you could change the beneficiary of the old account, to the 2nd kid, after taking out the money needed for the 1st kid's expenses.
To get the screen to enter Room & Board, answer yes when asked if you have book expenses, in the 1098-T and educational expenses section. For the R&B entry box to appear, you must have entered the 1099-Q prior, so TT knows why you need to enter R&B.
Q. instead can I just enter those expenses in one of the books & materials? And if so, which one, required or not required?
A. Only if you are not claiming a tuition credit and/or tax free scholarship (R&B are not qualified expenses for those). It's OK if you are only doing it for a 529 distribution. It doesn't matter which.
Uh oh. Thanks.
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