Enter the 1099-Q and then enter that it was used for expenses, lets say Room and Board, since that's easy.
Enter the amount USED for Room and Board so that it leaves 4,122 income.
For example:
If the distribution was 10,000 enter the 1099-Q and 5878 as Room and Board expense so the student is taxed on 4,122.
It does not matter in this example if the student did pay Room and Board, it is just to have the program make the proper calculation.
This will be "Unearned" income for the student.
If the student also received scholarships, it MIGHT be better to have them claim scholarship income in lieu of Distribution.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
