Q. Can I remove the 1099-Q info from my return?
A. Yes.
You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records.
References:
- On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."
- IRS Pub 970 states: “Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return”.
Just not entering the 1099-Q is the best option, as the interview gets complicated. But, for others reading this, here's how.
Q. I can support that these are legitimate expenses, but I don't see a way to input into TT.
A. You must enter the 1099-Q before entering the 1098-T. You do have to enter the 1098-T, later in the educational expenses section. That will get you the screens to enter other expenses. Answer yes to the books question to get to the Room & board section. Transportation is not a qualified expense. You will encounter a screen "amount used to claim the education credit". TT may have prepopulated that. In your case (you're not eligible for the credit), change it to 0.
Alternate method:
Instead of entering the educational expenses in the education expenses section, enter it in the 1099-Q section of TT. The workaround is: when asked who is the student, check "someone else not listed here" (Lying to TurboTax to get it to do what you want does not constitute lying to the IRS). On the next screen, enter the real student's name. This will eventually give you one simple screen to enter all expenses. Press Done at the 1099-Q summary screen, to get there.
