Get your taxes done using TurboTax

Here's a first draft (I haven't double checked it).

Are following statements true for me?

• Form 1099-Q is not filed with my joint tax return.
• Correct. Your son, the student, is the recipient.

• 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.
• No.  You use all the QEE you need (usually $4000) to claim the education credit.  Your son makes the adjustments for what you claimed on his TurboTax works sheets, reporting any taxable portion of the 1099-Q. 

• Some of the numbers on Form 1099-Q will be reported on my tax return or its forms per my example below.
• No. 

Are following statements true for my son?

• Form 1099-Q is filed with my son’s tax return.
• Yes, but Not exactly.

• 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.
• Yes, that's a more accurate statement

• 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.
• Again, not exactly.  The numbers will be used to calculate the taxable portion of the earnings.  Only the taxable amount will be reported on the tax forms (Schedule 1).

Are following statements true for me?

• Form 1098-T is filed with my joint tax return.
• Yes, it is entered in TurtboTax to calculate the Tuition Credit (assuming your son is your dependent and your income is not too high)

• 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.
• Yes

• Some of the numbers on Form 1099-Q will be reported on my tax return or its forms per my example below.
• No.  Nothing about the student's 1099-Q is entered on your return or in your TT program

Are following statements true for my son?

• Form 1099-Q is not filed with my son’s tax return.
• No, unless he still has sufficient QEE, to cover the entire distribution,  after you use $4000 for the credit

• 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.
• Yes, assuming some of the 1099-Q is taxable.

• 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.
• No. They will only be used in the calculations (on the TT worksheets

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.

That's simply  a reference to the IRS instructions that proves the previous statement: You don't have to enter the 1099-Q, at all, if  your net QEE is more than the distribution amount. 

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  

In your example, $500 (20,000 - 19,500 = 500) of your 529 plan distribution in non qualified. 

500 / 20,000 = 2.5% of the earnings are taxable

0.025 x  13, 000 = $325 of taxable income.

But that doesn't account for the $4000 you use for the tuition credit. He actually has $4500 non qualified distribution. 

4500 / 20,000 =22.5%  of the earnings are taxable

0.225 x 13,000 = $2925 of taxable income on the student's return.

Before reporting that you need to look at the option of the student reporting $4500 of taxable scholarship instead.  Taxable scholarship is earned income for purposes of a student-dependent's standard deduction.  If that $4500 is his only income, he will pay no income tax.  However $2925 of taxable 529 distribution (unearned income) will be taxed and trigger the kiddie tax). 

Provide actual numbers for more specific advice