The program is not all over the place, you need to just answer the questions correctly, and TurboTax will calculate the amount of credit.
To enter what you paid and the other educational expenses not covered by the 1098-T, in TurboTax Desktop:
- Switch to Forms
- Scroll down the list of forms and click on 1098-T
- Scroll down the 1098-T form to the QuickZoom -Dependent students worksheet and click QuickZoom
- Scroll down to Part VI - Education Expenses and complete this section with your added expenses. Line 1 would be the $1,000 that you paid. Any other expenses would be put on the appropriate line.
When completed make sure you select to optimize the education credit. This would then tell you if you have a credit available or whether any of it is considered to income.
In your question you stated "the recipient will have $2,200 more in taxable income. . . . I would need to enter that $2,200 onto my daughter's return... there would be very little tax you would incur doing so but I don't know where to put it on her form." You would not report the $2,200 of income on your daughters return. If you are claiming your daughter as a dependent and claiming the tuition credit, then the $2,200 of income would be taxed on your return as income.
Additionally, if you are claiming your daughter as a dependent, your daughter cannot claim the tuition credit.
Right now, just using the numbers you have entered I can see that there is at least a $1,000 over payment of funds. In other words, at least $1,000 of reportable income.
