Q. ok so basically if I had 15K in tuition and a 529K of $10K, I dont need to report the 529K even though I don't actually qualify for any college deductions or credits (because the Feds say my income is too high). I can just keep the 529K along with the 1098 T I received for my records and report nothing on taxes. Correct?
A. That's correct.
Q. We did use the 529K distribution to pay the tuition but I also qualify for no credits or expenses deductions because the income threshold is higher than allowed by maybe $10K
A. That's correct.
Q. I just want to be sure excluding this is ok because right now if I include the 1098-qt, turbo tax is adding about $1045 of the distributed amount as taxable income.
A. Basically, TurboTax (TT) got it wrong (it's a known glitch, they're working on it). Even though you're not eligible for a credit, TT's calculations assign $10K, of tuition, to the credit, making it appear that some of the distribution is taxable. You can view the erroneous calculations on both the student info worksheet (in particular part VI, line 17) and the 1099-Q worksheet.
