Box 1 on my daughter's 1098T is larger than box 5. Box 1 on her 1098T is also larger than box 1 on the 1099Q reported for her. This should indicate the withdrawals did not exceed what was paid out in education expenses, correct? If that is correct, it is my understanding that no taxes should be due at all. Yet when I include the 1099Q on her return, she is shown to owe taxes on those withdrawals. This issue did not occur last year when I completed returns for myself and for my daughter.
I am completing a return for my daughter since she had a summer job in 2019 and received a W2, so I assume she is required to file a return. If I am incorrect in that, please let me know. Because her income level was very low, TurboTax is calculating a small refund for her. That is until I enter the 1099Q. She goes from a refund of approximately $130 to a tax payment of $1600 and she only earned $2200 in her summer job.
I did read the information from your link on 1099Q reporting. My daughter's situation isn't really addressed in the article, though. I don't understand why TT is calculating a tax payment for her when the amounts paid to her school for tuition and related expenses exceed the gross distribution on her 1099Q. This statement from that article makes me think I don't need to report the 1099Q on her return: "For most qualified education program beneficiaries, the amounts reported on the 1099-Q aren’t reported on a tax return." Am I correct in this? If not, how do I report it without causing a tax payment due on her behalf?
