One of two things happened:
- f you have a 1099-Q, it has to be entered first with the deductions, otherwise, you end up with a taxable scholarship. If all of your 1099-Q went to qualified expenses, delete it. If not, delete everything, enter the 529 information and then the scholarship information.
- If you have no 529 information, then a mistake was made entering qualified expenses and you need to revisit that area.
IRS Publication 970, Tax Benefits for Education states:
If the entire 1099-Q went to qualified expenses, room and board, tuition, etc then you do not need to enter the form. Tuition paid for the first 3 months of the next year also qualify, see page 12, What Expenses Qualify, and page 52 for qualified distributions.
Reference: Qualified Education Expenses - Internal Revenue Service
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