Why are my Virginia 529 contributions, used for tuition and room and board, generating Other Income on my Federal return? I thought 529 gains were not taxable?

 
KrisD
Intuit Alumni

Education

Did you enter a 1098-T? Are you getting an education credit?
KrisD
Intuit Alumni

Education

Please go back to the "Education" section. (Federal, Deductions & Credits, Scroll down to Education).

Make sure the room and board expenses are entered (Education expenses for all schools) 

Get to the "Education Information" section (the last option on the "Here's Your Education Summary" screen.

Re-answer the interview questions until you get to the last screen. This screen should show how much of the education expenses are being allocated to a credit. 

If you are eligible for the American Opportunity Tax Credit (usually the more valuable credit), the credit maxes out at 4,000 expenses, so you wouldn't want to allocate more than that. 

If you are taking the Lifetime Learner's Credit, the credit maxes out with 10,000 expenses. 

If you want all the expenses to be applied to the scholarships/grants/1099-Q distribution, change the amount to 0.

Type   letme   into the search box to see which credits you are eligible for and change the credit you claim if desired. 

Once you click "Maximize My Education Tax Break" the program determines the best allocation, so don't click this if you want something different.

You can always go back to this allocation screen and change the allocation amount. 

Sometimes the program will initially allocate 10,000 towards a credit if there is no income yet entered.