Hello! Two years ago you helped me claim $4,000 as taxable 529 money in order to claim the full AOTC amount. I kept all the notes so if the same situation came up I could handle it. Well it’s still confusing! I struggle with navigating TurboTax Online and not being able to see the big picture as I move to each step. I would be so grateful for your help again.
Background details:
- College daughter is a full-time student and my dependent.
- 1099-Q, 1098-T, daughter is recipient
- Only one prior AOTC claim, I meet the income guidelines.
1099-Q
Box 1 $51,000 Gross Distribution
Box 2 $39,338.33 Earnings
Box 3 $11,661.67 Basis
1098-T
Box 1 $62,603 Payments received
Box 5 $31,200 Grants
Deductions & Credits section - I’ve indicated Yes to having received a 1099-Q (currently no detailed info is entered in TurboTax)
“Here’s Your Education Summary” section -
Tuition of $62,603
Bks & supplies $1,309
Grants $31,200
*Room & Board $19,679 (turbo tax referenced it but did not provide a place for me to enter it)
Currently TT shows my AOTC amount of $2,248 and a slightly lower than $500 for a Child Credit amount.
Based on info you sent me in the past, I’ve made the following calculation:
$82,200 in educational expenses (inc. R&B)
-$31,200 college grants
-$4,000 used to claim the AOTC
= $47,000 can be used against the 1099-Q
Box 1 of the 1099-Q - $51,000
Box 2 - $39,338
47,000/51,000 = 92.2% of earnings are tax free, 7.8% are taxable
0.078 x 39,338 = $3,068
This $3,068 is taxable income to report. As you mentioned last time, “None will be subject to the 10% non-qualified distribution penalty because the non-qualified portion of distribution was used to claim a credit”. Is this still the case?
Let me know if all that is correct. If so, then I’ll have to get everything entered correctly into Turbo Tax online.
- I have yet to figure out how and where room and board gets entered… there was only a line for books & supplies.
- Do not know where I enter the $4,000 as I have not found the screen titled “Amount Used to Calculate Education Deduction or Credit”
- How do I find the area/form that shows line 8 of Schedule 1 to see if it shows $3,068? As well as the $1,000 refundable portion that should be on line 3 of Schedule 3.
1099-Q Comments:
I initially entered the 1099-Q in Turbo Tax, indicating my daughters name. In my search to find where I enter an amount of 529 money to be taxable, I’ve taken it out …then observed that took away the dependent child credit of $500 but the overall tax refund mysteriously went down to $413 and the overall tax refund increased by $444. Also, I think it was part of the process in entering 1099-Q info that I was asked to provide my daughter’s income for 2022 (taxable income is about $2,816). Some things after entered, seem to get hidden as I can’t find them if I go back to look.
Hoping you can help me out again this year!
