1098-T: box 1($54,184) minus box 5($43,910) = !0,274 Qualified expenses.
Line 2b (adjusted qualified expenses) of the 1099-Q worksheet (ws) is only $274.
Where did the other $10,000 go? TurboTax assumed it was used to claim a tuition credit. So, it has correctly calculated the taxable portion of your 1099-Q.
TurboTax assumes you will claim a Tuition credit,
if you are eligible. So it reduces the amount used for the earnings exclusion,
on the 1099-Q, for the amount used for the credit. You are not allowed to
double dip.
Since the tuition credit is more generous than the
earnings exclusion, that is the best way to file.
If you some reason, you are not eligible for the
tuition credit, or do not want to claim it;
Go through the
education section again. When you get to the screen that says “Here’s your
Education Summary”. Click edit next to
“Education Information”. When you get to the screen titled “Amount Used to
Calculate Education Deduction or Credit”, verify the amount you want to use or
change it.
Note that even if you use $0 to claim a credit, a small portion of the 1099-Q will still be taxable because $11,468 is more than $10,274.
