Hoping someone can help with this - I have tried so many different ways.
Daughter is sophomore in college. We use 529 to pay for tuition, fees, room & board. We also get American Opportunity credit (last year) and want to again this year (for expenses outside of tuition, fees, room & board - so for books, supplies, and computer expenses). Daughter gets a full tuition scholarship from the university, so 1098-T shows tuition, fees, room & board, plus the amount of her scholarship (so in essence we used 529 funds to pay for all of that minus tuition since scholarship paid for tuition).
So, very intentionally we took out an 'extra' amount from 529 this year, close to the amount of one semester of scholarship, so she could buy a car (we also pitched in, not that it matters but fyi).
I tried TT online first; now I've paid for the download version so I can access the forms directly but I'm hoping to not have to override TT to edit the forms myself b/c then I can't file electronically.
Problem is, every time I let TT walk me through, it tells me our 529 plan distribution exceeded the amount of QEE, which it did, so it's not letting me have AOTC. But nowhere will TT let me tell it that a portion of the distribution is taxable (without 10% penalty due to scholarship) so that we can still get AOTC. I read one similar help post that said to be sure to enter the 1099-Q first - well I tried and it won't let me. It keeps saying I don't have to enter 1099-Q at all but if I want to, it is making me enter the education expenses first and the 1098-T which then means it won't give me AOTC.
When I look at the tax forms, it appears we need to report the taxable amount of the distribution as income on Schedule 1, line 8 - but I've gone into the income section time and time again and see no way to do this. Is my only option to override TT and edit the form(s) myself? Does anyone know a way to do this in TT so that I can report a portion of the 529 distribution as taxable due to scholarship, and then use the adjusted 529 tax-free amount to show as covering QEE whereby I will have QEE leftover that will go towards AOTC?
Thanks!!
