Get your taxes done using TurboTax
In the spirit of “I think I heard what you said. May I repeat what I heard, in my own words, so you can correct anything I misunderstood or missed?”...
May I ask you to review an example using numbers and a format that is easy for me to process, correct my errors, and my questions, which at times may be trivial?
My example will use Forms 1098-T and 1099-Q and the information below.
Are following statements true for me?
- Form 1099-Q is not filed with my joint tax return.
- Some of the numbers on Form 1099-Q will be used to calculate some numbers that will be reported on my tax return or its filed forms per my example below.
- Some of the numbers on Form 1099-Q will be reported on my tax return or its forms per my example below.
Are following statements true for my son?
- Form 1099-Q is filed with my son’s tax return.
- Some of the numbers on Form 1099-Q will be used to calculate some numbers that will be reported on son’s tax return or its filed forms. Note: I am not far enough along to ask for confirmation of my son's numbers.
- Some of the numbers on Form 1099-Q will be reported on my son’s tax return or its forms. Note: I am not far enough along to ask for confirmation my son's numbers.
Are following statements true for me?
- Form 1098-T is filed with my joint tax return.
- Some of the numbers on Form 1098-T will be used to calculate some numbers that will be reported on my tax return or its filed forms per my example below.
- Some of the numbers on Form 1099-Q will be reported on my tax return or its forms per my example below.
Are following statements true for my son?
- Form 1099-Q is not filed with my son’s tax return.
- Some of the numbers on Form 1099-Q will be used to calculate some numbers that will be reported on son’s tax return or its filed forms. Note: I am not far enough along to ask for confirmation of my son's numbers.
- Some of the numbers on Form 1099-Q will be reported on my son’s tax return or its forms. Note: I am not far enough along to ask for confirmation of my son's numbers.
1098-T; Box 1 | $50,000 | All expenses included in this amount were 529 qualified education expenses. |
Room and Board* | $7,500 | His off-campus room and board was less than the room and board reported in the college’s published Off-Campus COA. |
Required Textbooks* | $500 | He purchased all of his required textbooks at an independent bookstore and saved a substantial amount of money. |
School Supplies* | $250 | He purchased $250 of necessary, but not required, school supplies from local vendors. |
Computer Equipment* | $750 | He purchased a $750 used laptop based on his department’s published recommended specs since his old laptop died. |
Total 529 QEE | $59,500 |
|
Scholarships | $40,000 |
|
Net 529 QEE | $19,500 |
|
Gross 529 Distributions | $20,000 | Note: He purchased a $500 desk at the beginning of the spring semester, submitted the invoice to his grandmother for 529 reimbursement, she did and requested the disbursement check be sent directly to him, he deposited the check, and spent the $500 playing video games and golfing. This entire affair was only discovered when I reviewed his checking account in December. |
Non-QEE Expenses | $500 | These funds were not returned to the plan manager. |
Out of Pocket QEE | de minimis |
|
* Note the following
- Some of these QEE were paid from his savings, submitted for 529 reimbursement, and paid directly to him.
- At times during the year, his cash flow required me to advance him various amounts of money, for which he reimbursed when he received his 529 disbursement checks.
- I paid for those QEE he did not pay for and he reimbursed me after receiving the corresponding disbursement checks.
- His grandmother did not request any disbursement checks be sent to her.
Are any of the bullet points actionable in addition to the content of this example?
My Joint Form 1040 – Form 8863 – Part III American Opportunity Credit
27 | Adjusted QEE (see instructions). Don't enter more than $4,000 | $4,000 |
28 | Subtract $2,000 from line 27. If zero or less, enter -0- | $2,000 |
29 | Multiply line 28 by 25% (0.25) | $500 |
30 | If line 28 is zero, enter the amount from line 27. Otherwise, add $2,000 to the amount on line 29 and enter the result. Skip line 31. Include the total of all amounts from all Parts III, line 30, on Part I, line 1 | $2,500 |
I don’t understand how to apply the following. I would really appreciate it if you can help me on this.
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.
Likewise, I don’t understand how to apply the following and, again, I would really appreciate it if you can help me on this.
3,000/5,000 = 60% of the earnings are tax free; 40% are taxable
40% x 2,800 = $1,120
You have $1,120 of taxable income
Thank you so very much for your assistance with this. I am afraid I would be lost without your help!
