Here is the situation. My daughter is in graduate school. She attends part time has an internship and a part time job where she made 37k last year. She lived at home and it's twenty three years old and is no longer considered a dependent on mybtax return...which excludes me from the lifetime learning credit.
I was advised not even to enter her 1099Q and T on HER form based on some things I read in another forum topic. But for the heck of it I input them.
Prior to input she was getting back almost a thousand dollars refund - federal. At first prompted me to enter the 1099Q information. It essentially showed 15k in box one gross distribution 3k in earnings and 12k as the basis. It then prompted me for the 1098T information which shows in box one payments receive for qualified tuition 15K. Somehow turbotax reduced her federal refund almost four hundred dollars and the state went up too.
My understanding is 529 plans grow tax-free so long as I'm using them for qualified tuition ... and there should be no taxable consequence. So why the heck is turbo tax somehow calculating a taxable consequence?
Now I'm at a loss as to whether I need to input this or not. Or what is going on.
