You are asking me a lot of input that I know the answers to. First yes Turbo Tax has told me for the last decade our children are eligible for the American Opportunity Credit (they are allowed to take the credit for 4 years). Turbo Tax always prompts me to take that credit and even did this year. As long as each college student has enough expenses and your income is under a certain amount they can claim. I never pass up a $2,500 credit on our taxes. Sometimes it has been less if there aren't enough income, expenses or too many credits. What I forgot last year when taking ESA distributions was 2 of our children have academic scholarships. What Turbo Tax usually does when calculating the education credits is they minus $10K (expenses for credit) from their total education expenses. Then they minus the scholarships from the remaining total expenses. After those substructions from expenses, the remaining total is applied to the ESA worksheet calculation to figure out running basis + excess distribution if any. If the remaining expenses balance is more than your distributions, you pay no tax. If the remaining expense balance is less than distributions, there is an excess distribution (they don't penalize with the extra tax because the excess distribution was created after taking the education credit - you do owe tax on excess). You cannot use the same expenses for the ESA distribution that you used for the education credit. No double dipping on expenses. I've learned all this from using Turbo Tax over the years, and looking at the forms and calculation worksheets is invaluable. That's why all 1099Q distributions should be added to your return. If not, the result is more money in my pocket and less taxes paid. Researching in pub 970 is so convoluted, but I have done. You have to research credits besides ESAs. And yes I had to figure out the schools cost of attendance once they moved off campus (never knew I could do for my child who lived home - paid excess distributions then). Turbo Tax has always guided me along. I transferred my data from last year when I was able to input 1099Q. This year they are saying it's not required, and when I try to bypass & select I'm the recipient, they are requiring amounts in boxes 1 & 2 which ESAs NEVER have (and the tax amount changes when they think I'm the recipient). All my children are recipients and beneficiaries (the forms are their SSN). The other issue I had for one child was after inputting his 1098T, the fields for extra expenses like room bypasses, and I knew because my other children got that page. Once I updated he additional expenses in the forms, the fields screen returned. Turbo Tax really needs review their education section and correct inputs, so I can finish our return. Thank you
