My daughter is a first-year college student and we used funds from a 529 plan to help pay for college this past fall. Our daughter also received scholarship funds that were listed on her 1098-T. We are the owners of the 529 plan and she is the beneficiary; therefore, her name is on the 1098-T and 1099-Q.
I use Turbo Tax and it has never steered me wrong in the past; however, I’m having the hardest time figuring out how to report the qualified education expenses/529. We claim her as a dependent on our taxes but she also files her own return, as she has other income. Who enters the education expenses? It asks if we are the beneficiary of a 529 plan in the deductions and credits section, but since we are not the beneficiary and she is, what do we do? Does she get the tax credit, or do we? My understanding was that this 529 was not taxable and that since she is our dependent, we should claim the deduction/credit. But how do we do that? Also, it asks to list education expenses. Does this include the 529 distribution (which went directly to the college and never came to us)? Her tuition for 2021 was paid with a combination of her scholarships and the 529. We did not make personal payments. The amount she received in scholarships is also listed on the 1098-T. Is this something we claim, or does she? How about room and board? It asks that we list it in the expenses section but I didn’t think that was deductible. I read something about the student needing to claim some or any of the funds received as income. Is this true?
It’s all so confusing and several calls to Turbo Tax have all resulted in different answers. I’d really appreciate it if anyone could help!
