Where do I input high school and grade school qualifying education expenses paid with an ESA distribution?

[hungrydawg]

I have input the 1099-Q forms, but do I need to tie expenses to offset these distributions?  In the Education section, it seems to be for higher education only, vs. high school and grade school.

[MiriamF]

Yes, you will need to input the education expenses.

You can ignore all the references to higher education expenses, as they do not apply in your case. Work your way through all the interview questions, answering them as accurately as you can for your situation. You can report that your children's schools were not required to issue 1098-Ts, and you will be able to enter the cost for tuition and other expenses.

The only education savings plan that covers high school and grade school expenses is the Coverdell ESA. Because so few students use Coverdell plans, TurboTax designs their programs for the majority of our users, but please don't allow yourself to be distracted by the references to higher education. Coverdell distributions also cover room and board, unlike most other education credits. These will also be entered under Other Education Expenses (for all schools). (See the screenshot below.)

[hungrydawg]

Thanks Miriam.  With my various distributions, I paid for my kids books, administration fees, computer and tutoring.  I have found locations for all these except tutoring.  Where would that fall?  Thanks.

[MiriamF]

Yes, academic tutoring is a qualified expense. There appears to be no other place to enter this information, so try calling it a "fee" and entering under tuition and fees.

[hungrydawg]

Not sure that is right.  I am not presented with an itemized list for the Tuition and Fees area, it is just a single input.  Additionally, when I do that, I appear to receive a tax deduction for this expense which I did not think I was able to do as I paid for it with ESA funds.  Not sure where to put these expenses at this point.

[MiriamF]

You've really only got two spots, as tuition and fees or as books and supplies. Once again, you are dealing with something that TurboTax didn't itemize, because this is uncommon. But rest assured that the IRS lists academic tutoring as a deductible expense for elementary and high school students, so however you choose to list it, it counts as a qualified education expense.

[hungrydawg]

OK.  Am I correct that I should not be able to get a deduction for expenses that I paid with an ESA distribution though?  I thought I read that.

[MiriamF]

No, that's not what I meant. Academic tutoring is a qualified education expense for a Coverdell distribution. So you're good. Sorry I didn't make it clear.

[hungrydawg]

Yes, I understand it is a qualified expense.  My issue is that if I plug in the expenses, I get a Tuition Deduction which I do not think is allowed.  Per Turbotax Help... "You cannot claim expenses that you paid with tax-free money from a Coverdell Education Savings Account (ESA) or qualified tuition program (QTP), such as a Section 529 Plan."

[hungrydawg]

Maybe the answer is I just enter the 1099Q amounts, keep my receipts and do NOT enter any education expenses.

[MiriamF]

That's probably a good solution, since expenses at the elementary and high school level are otherwise not deductible expenses. But you will need to enter exactly the amount of expenses that equal what was paid by the 1099-Q. Otherwise, the proceeds of the 1099-Q are taxable.

[MiriamF]

The trick is to link the 1099-Q with the education expenses. If you have trouble with that, write back with a separate question.

[MiriamF]

Sorry - I just read our previous comments. If TurboTax is complaining, then you are right about what to do, though do check to make sure that you aren't being taxed on the distribution.