This question seems closest to my situation/question. We've got it figured out that I shouldn't owe taxes on the ESA distribution, but Turbo Tax asks about the amount used to calculate education credit or deduction (like the AOTC) on my parent's taxes. It preloads with the number that their run through Turbo Tax wants to use, which is higher than the $4000 that actually matters. If I leave that higher preloaded amount in place, then I owe a couple hundred in taxes (& maybe penalties is included in that too). If I reduce that to the $4000 like the message seems to indicate I should, then I don't owe taxes. However, we cannot figure out how to make my parent's run through Turbo Tax to only reflect $4000. How do we address this? From what I read in this response they need to reduce qualified expenses on their return by the amount of ESA $ mentioned on my return to make sure we are double counting expenses and tax benefits to paying those expenses, but we cannot figure out how.
The school included room and board in qualified expenses on the 1098-T. From what I've read that is rare, but could be because they require me to live on campus and require me to buy a certain level of food plan. So there is no noting room and board as a non-qualified expense that is appropriately covered without taxation on my return.
Am I making sense. Any one have suggestions?
