This is long, bear with me. I thought a scenario would help.
Scenario below. Note that I know I don’t owe any taxes as I’ve taken out less distributions than overall expenses (we didn’t reimburse ourselves or our daughter for some food, etc. But I can’t figure out how to make this work on our returns.
- I have a daughter who is a dependent college student, but we filed her first tax return this year (she made ~$6K in income).
- Daughter attended school full time including summers.
- For this example, Let’s say she had $15K in tuition, a $5K scholarship, $5K in dorm fees for the first half of the year (paid to the university), and $5K in apartment rent that her Dad and I paid for that we reimbursed from our 529 plan.
- Note we had the 529 plan pay the University $15K ($15K in tuition, less $5K in scholarships, plus $5K in room and board for dorm).
- We received two 1099-Qs for Coverdale distributions:
- The $15K distribution paid directly to the university is in my daughter’s name.
- The $5K to me (her Mom) is in my name for living expense reimbursement.
- I know that each 1099-Q should be reported on the respective taxpayer return.
- We received one 1098-T from the University
- 1098-T had $15K in tuition and $5K in scholarships, in my daughter’s name (obviously not dorm charges).
- My understanding is that since she is our dependent, this should go on OUR return even though it’s in her name. (This is supposedly so we can claim an educational credit, which we likely don’t qualify for anyway).
Question/Issue: If I don’t state she has at least $15K in expenses on her return, then some portion of her 1099-Q earnings would be taxable. So I know I need to claim all net tuition less scholarships and dorm expenses on her form. But then, there is nothing left to claim except the remaining living expense on my return to offset by $5K 1099-Q. I can’t double dip, so the only thing that lets me get past the screen in TurboTax is to lie and say the University won’t provide me a 1098-T?? I have one from them, I just can’t claim the expenses as they have to go on her return.
Help??
(Caveat, we actually already filed our daughter’s return. We put the 1099-Q there along with the tuition and expenses to cover, and no 1098-T The issue I’m having now is what to do on my return…I didn’t know TT would send me in a loop.)
