Carl,
I'm having a problem understanding the 1098-T and 1099-Q for my daughters tax return.
Her 1098-T
Box 1 $51,955
Box 5 $58,493
Difference $6,538
So I assume she will be paying Taxes on the difference between Box 1 & Box 5
On her 529 Plan we took out for the whole year but unfortunately we took it all out in 2020
So on her 1099-Q it shows the following
Box 1 $8,348 Gross distribution
Box 2 $4,345 Earnings
Box 3 $4002 Basis
She lived in the dorms part of the year and then was sent home in March and received a $950 credit for dorm room. Then in the fall of 2020 she rented a house with 3 other girls and paid $650 a month for rent and about $400 a month on food. I think those 2 items will help reduce her expense on the 1099-Q. Please let me know if I'm correct on the Rent and Food helping to reduce her taxes.
I think she needs to report both of these on her Tax Return. As I am divorced, her mom claims hers as a dependent on her return but does not Qualify for the AOTC, I think because of the 1098-T showing more in Box 5 than in Box 1.
Is there any way to reduce the amount of taxes my daughter will owe. You also talk about a chart at the bottom of your reply that doesn't seem to exist anymore. I would like to see that and maybe it will help my understanding of this whole process. It seems overly complicated but I know it's something that has to be done. Thanks for any help you can provide on my problem.
V/R,
Steve
US NAVY Veteran
