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I have a 1099-Q distribution showing as partially taxable, despite having a 1099-T Tuition expense exceeding the amount on the 1099-Q. Why?? No other aid received.
I the parent am listed as the recipient of the 1099-Q. My daughter is the beneficiary, and also the student listed on the 1099-T.
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Retirement tax questions
The 1099-Q has to be entered. Then when the 1099-T is entered, as you Continue through the interview for education expenses, you are asked how much of the expenses you want to apply to education credits. You can only use the expenses for a credit or to make the 529 distribution nontaxable, not both. Apparently you didn't answer this question or answered it in a manner that did not leave enough expense to cover the whole distribution. The most you need to maximize education credits is $4,000.
See lines 17 and 18 of this Student Information Worksheet. Click Forms on the upper right, then the worksheet on the left.
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