@NCperson Thank you!
Well, this sent a shudder down my spine: "probably taxable income to the parents when paid".
So, 7590 - 4000 AOTC = 3590 'to cover'. Earnings on that is 2158. She had books around $400. So around 3190 'to cover'. ...and a little less on the 'earned' though I haven't actually run that yet.
She is above, 12,220 so there is 10% INCOME TAX on the $2158 or any amount CAUSED BY me using 4k to get the AOTC on my (parent) return. Plus 10% penalty - this also needs to be addressed because it's been stated many times...and there is a VERY specific line item on Form 1099Q for this...that is, there should be no penalty if this 'gap' of 529 1099Q over tuition is CAUSED BY taking the AOTC.
However, the way TT walks me through, it is a -923 delta on her Fed Tax. That is because TT asks NO questions about the 1098T (it only says 'the parent will use that on their return to get a credit'). SO, TT is giving her the earned portion of the full 7590 (4618) on her return - and adding 10% income tax + 10% penalty.
I know that is NOT correct. But I've 'walked through' it several times and gotten the same result. The only way I've found to adjust this is to use the OVERRIDE feature on the line 2c, 2e down in the last two sections of the 1099Q Form.
Has anyone ever used the overide on those lines?
TT leaves a big whole here...because it doesn't seem to know that I as the parent only need to use 4000 of that 1098 T to get the AOTC. I need some way to tell TT about the 3590 that is being STRANDED on my (parent) return.
This is why I think people are saying DON'T FILE 1099Q. It may be better just to send an explanation letter later.
