I always seem to have significantly more trouble doing my children’s taxes because of how turbotax handles 529 withdrawals and corresponding valid college expenses. So here are this years issues:
- I transferred $7k from my child’s 529 to their Roth. I have not found a way of working through the turbotax system to enter this as the money is comingled with normal 529 withdrawals on the 1099-Q form from the 529 company. I created a second 1099-Q entry in Turbotax checking the box for ‘direct transfer’, but turbotax is still treating it as a taxable withdrawal. Reading other questions to this forum it says to simply not report this money into turbotax at all which seems wrong as I’d then be ‘partially reporting the 1099-Q’ which seems like a red flag to the IRS.
- I didn’t realize the college did this until this year as my daughter graduated in December 2024 with no spring 2025 tuition..….Spring 2024 (last spring) her tuition was in 2023’s 1098-T statement (it flowed in late December 2023) from her college, but her scholarships she received for spring 2024 are in 2024’s 1098-T (they flowed early Jan 2024). Therefore, it ‘appears’ she received almost 20k over her tuition which turbotax is treating as taxable income.
It's just frustrating to spend hour/hours of time working on my children's taxes that their only complication is 529s while my/wife's relatively complicated taxes took me about 30 minutes to do.
