My son (non-dependent due to gross income over $5,050) has a 1098-Q from our 529 plan distribution (I am the owner) and a 1098-T from his qualifying school that we used to pay for his undergraduate eduction in 2024. Both the 1098-Q and the 1098-T have the exact same gross distribution (for the 1099-Q) and payments received (for the 1098-T).
I do not understand why his return (as he is not considered a dependent and it's all in his name, we are including this info. on his return) is calculating earnings on the 529 as additional income. Since the distribution from the 529 went 100% directly to the school and was used for tuition and fees, shouldn't this be considered a tax free use of the 529 plan?
I can't seem to figure out how to make this work in Turbotax. All I can get at this point is some kind of offset credit for $4,000 which then brings a portion of the earnings from the 1098-Q box 2 into his taxable income for 2024.
I've read a lot about this and tried to resolve on my own, but now reaching out to the community for some help.
