Education
1. Enter expenses: from the education summary - edit the areas that need correction.
2. If the 1099-Q was completely used on 529 qualified Room and Board and Qualified Education Expenses - Internal Revenue Service then the Q does not need to be entered. IRS Publication 970, Tax Benefits for Education states:
Page 45: Don't report tax-free distributions (including qualifying rollovers) on your tax return.
3. If you have additional expenses for tuition and fees, you may be able to claim the education credit. If you qualify for an education credit, that is the first goal. You cannot claim the credit if your MAGI is over $90,000 ($180,000 for joint filers).
I don't know if there are scholarships in box 5 so I will answer as if there are.
Step 1 -Do you qualify for an education credit (see What You Need to Know about AOTC and LLC
Yes, can claim the credit:
Are the scholarships restricted to paying for tuition?
- If restricted, remove those funds from the eligible scholarships.
- If not restricted, excellent.
How much tuition is in box 1 - we need $4k for AOTC or $10k for LLC
- For AOTC
- If less than $4,000 we want to use it all and make the scholarships go 100% toward room and board.
- If more than $4,000, scholarships can cover the amount over $4,000 and the rest to room and board.
No, can't claim the credit:
- the 1098-T is not entered on the parent's return and might need to be entered on the student return. if the scholarship exceeds tuition.
Does the student need to file a tax return is the next question. Take this quick quiz, Filing requirement.
