Hi, thank you for the detail noted in this post that tuition payments reported on 1098T can be allocated between education credits and 529 distributions in Forms mode in Turbotax (under Part VI line 17). This is an extremely important detail, and not something that should be buried in Forms mode in my opinion.
As background, my son started college in the fall of 2021. I took a distribution from his 529 plan and used it to pay his tuition & fees + room and board. Since the entire distribution was used for qualified expenses I assumed all would be tax free. However I have since realized that if I want to allocate $4000 of those payments to claim an education credit, I need to adjust the amount used to offset the 529 distribution accordingly. As arcane as this sounds, it also strikes me as a not-uncommon situation for families to land in when figuring this out for the first time.
This left me struggling with how to allocate payments reported on 1098T between my return (to claim $4K for AOTC since he is my dependent) and my son's return (to offset income reported on 1099Q in his name). Due to $4K AOTC adjustment he did owe a small amount of tax, so I needed to include 1099Q on his return.
To get this right, I had to report the 1098T (which is in my son's name) on BOTH my return and his, and go into forms mode to specify the 4K allocation between the AOTC and 529 distribution (1099Q). This appears to give the right result, with me getting the tax credit and him paying the proper amount of tax. But it also feels odd to include the same 1098T on both my return and his, so I want to confirm I have this right, and would appreciate feedback from others if they have dealt with a similar situation.
