Nothing in box 5.
It gets even weirder. I went back and had it walk me through everything on the education area. And this time a new section popped up, which asked some questions about her school and status... if she ever had , any credits before..... I answered no she had not got credits before on her tax return. FYI..I have gotten one form of credit or another for the past 4-5 years but this she does not meet the dependent criteria...so the q/t do not appear on my return for the first time.
A screen popped up suggesting to allocate 10k of what should be non-taxable 529 distributions as taxable in order to get a lifetime learning credit.
So we went from about nine hundred dollars and change before entering any of the t or q information.... To that being reduced to six hundred dollars and change after entering the t and q even though they should be tax free distributions.... To her now getting a twenty six hundred dollar refund with the lifetime learning credit.
I think it's somehow implying that the distribution should be tax-free because it's from a five twenty nine plan , but if instead , she pays taxes on that 10k she might get a better credit with the lifetime learning.
I don't really understand all. This somehow feels like a double dip to me but i'm not sure. Further, when I did the state review for Pennsylvania... It asked questions and prompted me and I entered. She had 15K in education expenses and A15K distribution. And that lowered her taxable income back down to the seventeen dollars she originally owed.
Very confusing... Her tuition was paid with money that grew tax-free from a 529 plan. But somehow turbotax calculates her paying tax on it and gives her an extra two thousand back? The numbers don't seem to make sense though. If a refund was $600 before the 10000 she must now pay tax for the 10000. I would think that would lower the refund from six hundred dollars 20 or less than zero so How could the refund jump up to twenty six hundred dollars.
Ugh.
