Where do I enter room and board expenses for college? The 1098-T section only asks about tuition. 1099-Q section is no help either.

[Jeff_H]

When I enter the 1099-Q info, TT is saying that we have $8500 of taxable income, but it clearly has not taken into account nearly $13K of room and board (because there has been no prompt to enter the room and board). All 529 distributions were to my child and there were no scholarships. We do not qualify for the AOTC or LLC due to income. By my offline calculations, our AQEE is about $760 less than the gross distribution resulting in about $326 of taxable income for my child. Should I just delete all of the 1099-Q and 1098-T information from TT? I have read several things that TT does not handle this correctly.

[Hal_Al]

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:

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”.

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. 

[Jeff_H]

@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. 

[AmyC]

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.

[ssorgs]

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?

[Hal_Al]

"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. 

[ssorgs]

Uh oh.  Thanks.

[randsom]

I don't get a room and board option for entry.

[MayaD]

Room and Board are not qualified education expenses for the education credit. However, you can use a 529 plan to pay for qualified room and board expenses

After you enter the 1098-T form continue until you get to the screen Here's Your Education Summary. Scroll down to

Other Education Expenses and click Start. 

[Hal_Al]

At the Screen titled "Here's Your Education Summary", click Start or Edit  next to "Other educational Expenses (for all schools).  On the next screen, click yes when asked "Did you pay for books or materials to attend school?"  That gives you a drop down list to enter expenses, including Room & Board. 

 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.

[randsom]

Yes, I’m aware.  I do this and I still don’t get the room and board option. 

[randsom]

I do exactly this and I still don’t get the prompt for room and board.  

If I enter the 1099Q , suddenly my taxes shoot up. You would think TurboTax could understand all this for us. 

[spikemarbles]

@Hal_Al 

This actually makes me think of a "strategy" that I always wondered about.  If someone had one big 529, could they pay for one kids expenses, then change the beneficiary to kid 2 and pay for that expense, change back to kid 1...repeat until graduation?  I recognize the ideal case is that each kid has their own 529, but would this be an option?

[Hal_Al]

Q. This actually makes me think of a "strategy" that I always wondered about.  If someone had one big 529, could they pay for one kids expenses, then change the beneficiary to kid 2 and pay for that expense, change back to kid 1...repeat until graduation?  I recognize the ideal case is that each kid has their own 529, but would this be an option?

A. No. You are limited to one beneficiary change per year.  The right strategy in that situation is to roll over a portion of the money, in kid 1's plan,  to a new 529 for kid 2. 

[Hal_Al]

@randsom 

There's also a workaround. 

Instead of entering the educational expenses in the education expenses section, enter it in the 1099-Q section of TT. The workaround is: when asked who is the student, check "someone else not listed here" (Lying to TurboTax to get it to do what you want does not constitute lying to the IRS). On the next screen, enter the real student's name.  This will eventually give you one simple screen to enter all 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.