If the 1099-Q was completely used on qualified expenses, don't enter it. If the 1098-T does not create income or education credit, it does not need to be entered. The 529 plan/ 1099Q investment has earned money throughout the investment period. If the gains were not used for qualified expenses, it would be taxable. Since they are being used on qualified expenses, they are not taxable so the form does not need to be entered.
The law changed and AOTC eligibility was increased. The phaseout for AOTC is:
- $80,000-$90,000 or
- $160,000- $180,000 MFJ
Expenses paid for with the 529 are not eligible for credit. However, money paid out of pocket IS eligible. Example:
- $20,000 tuition,
- $20,000 529 disbursement.
- But half of the 529 money goes to room and board. This leaves $10k paid out of pocket to qualify for the credit.
See Publication 970, Tax Benefits for Education.
@clareb
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