Paragraph 4: The program asked about the tax free distribution as a double check since that disallows the deduction of student loan interest on the return.
Paragraph 5: Correct, all of your 529 was used for allowed expenses and therefore, does not need to be reported.
Paragraph 6: Yep, you lost me there. I am not following how taxable scholarship can be applied to 529 distribution. Again, no 529 in program, seems simpler to me.
Paragraph 7: The point of the 1099-Q is simply for you to pay tax on anything that was not spent on qualified expenses. Again, if not needed to report income, delete the 1099-Q.
Let's also be clear:
- whoever claims the student, claims the tuition deduction.
- Only the student claims the scholarship income.
- Student loan interest must meet these qualifications, see Topic No. 456 Student Loan Interest
.
In conclusion,
delete the 1099-Q.
Any interest paid using the 529 is not allowed to be claimed. Only claim any interest paid without using the 529.
As for the 1098-T, you have taxable scholarship income and want to keep the 1098-T. You can and adjust expenses paid by the 529 or
I would also delete the 1098-T and enter the scholarship income See Where do I enter scholarship income?
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