I am a divorced noncustodial parent, so my child is not a dependent. How do I demonstrate that the funds were used for qualified expenses (college tuition)?

JS4 · ‎June 3, 2019

I received a 1099-Q, which I entered into TT. TT then asks if the beneficiary is a dependent (I check no and enter the name of the beneficiary, my child), but TT ends the process there. During Smartcheck, TT takes me to a qualified expenses worksheet but I can't figure out how to fill anything in. If I go directly to 1098-T worksheet using Tools, it will not let me proceed because beneficiary is not a dependent.

It looks like TT wants to consider the earnings to be taxable, but they should not be taxable if they are used for qualified expenses, correct? How do I enter the qualified expenses?

Hal_Al · ‎June 3, 2019

After you enter the 1099-Q, the interview will give you a screen titled "Student". On the list on that page, select "A beneficiary that's not a dependent on this return". You will then be given a screen to enter the expenses directly.

You have to coordinate with the other parent. Even though the expenses may have been totally paid by the 529 plan, she is allowed to claim the tuition credit. You must reduce the amount of qualifying expenses you use for the 529 plan earnings exclusion by the amount she uses (usually $4000) to claim the credit.

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JS4 · ‎June 3, 2019

I did click on "A beneficiary that's not a dependent on this return". It takes me to a screen to enter the beneficiary (student)'s name, and then to the 1099-Q information, then to the recipient's name -- no place to enter expenses. Also, the other parent paid her half of the tuition separately, so she has her own set of expenses (tuition) to go against the credit, correct? Thanks.

Hal_Al · ‎June 3, 2019

Try deleting the 1099-Q and starting over. I get the screen to enter expenses every time I try. I'm using desktop software, instead of online, but it should work the same.
Yes, if she has enough separate expenses, you don't need to coordinate; unless her excess expenses could help you make more of the 529 distribution tax free.

JS4 · ‎June 3, 2019

Thank you!! Actually, deleting and re-adding the 1099-Q didn't work at first, but deleting and re-adding the beneficiary (student) name worked. Thanks so much!

I am a divorced noncustodial parent, so my child is not a dependent. How do I demonstrate that the funds were used for qualified expenses (college tuition)?

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