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"Stock" Reply on questions about  Qualified Tuition Plans  (QTP 529 Plans) or ESA Distributions General Discussion It’s complicated. For 529 plans, there is an “owner” (usually the parent), and a “beneficiary” (usually the student dependent). The "recipient" of the distribution can be either the owner or the beneficiary depending on who the money was sent to. When the money goes directly from the Qualified Tuition Plan (QTP) to the school, the student is the "recipient". The distribution will be reported on IRS form 1099-Q.  The 1099-Q gets reported on the recipient's return.** The recipient's name & SS# will be on the 1099-Q. Even though the 1099-Q is going on the student's return, the 1098-T should go on the parent's return, so you can claim the education credit. You can do this because he is your dependent. You can and should claim the tuition credit before claiming the 529 plan earnings exclusion. The American Opportunity Credit (AOC or AOTC) is 100% of the first $2000 of tuition and 25% of the next $2000 ($2500 maximum credit). The educational expenses he claims for the 1099-Q should be reduced by the amount of educational expenses you claim for the credit. Room and board (R&B) are also qualified expenses for the 529 distribution, but not the AOC (R&B are also not qualified expenses for a scholarship to be tax free). But be aware, you can not double dip. You cannot count the same tuition money, for the tuition credit,  that gets him an exclusion from the taxability of the earnings (interest) on the 529 plan. Since the credit is more generous; use as much of the tuition as is needed for the credit and the rest for the interest exclusion. Another special rule allows you to claim the tuition credit regardless of whose money was used to pay the tuition. In addition, there is another rule that says the 10% penalty is waived if he was unable to cover the 529 plan withdrawal with educational expenses either because he got scholarships or the expenses were used (by him or the parents) to claim the credits. He'll have to pay tax on the earnings, at his lower tax rate (subject to the “kiddie tax”), but not the penalty.   Total qualified expenses (including room & board) less amounts paid by scholarship less amounts used to claim the Tuition credit equals the amount you can use to claim the earnings exclusion on the 1099-Q.  Example:   $10,000 in educational expenses (including room & board)    -$3000 paid by tax free scholarship***    -$4000 used to claim the American Opportunity credit  =$3000 Can be used against the 1099-Q (on the recipient’s return)   Box 1 of the 1099-Q is $5000 Box 2 is $2800 3000/5000=60% of the earnings are tax free; 40% are taxable 40% x 2800= $1120 There is  $1120 of taxable income (on the recipient’s return)   **Alternatively; you can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. Again, you cannot double dip!  When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records, in case of an IRS inquiry. On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."  ***Another alternative is have the student report some of his scholarship as taxable income, to free up some expenses for the 1099-Q and/or tuition credit. Most people come out better having the scholarship taxable before the 529 earnings. A student, with no other income, can have up to $14,600 of taxable scholarship (in 2024) and still pay no income tax. 

Q. I believe we won't have any penalty, because we can show her scholarships applied to courses taken in spring 2025? A. Yes.   Q.  I assume that means it will be taxable on my taxes, not my daughter's? A. Yes. Having the check sent to you, makes you (the owner) the "recipient" of the distribution.  The 1099-Q will come to you.    Q.  Are only the earnings on the account taxable? Or is the whole check we received taxable? A. Only the earnings.   Q.  What is the basis of the account - the amount rolled into the 529 plan in January? Or the amount originally contributed to the Coverdell plan before we rolled it over?  A. The amount originally contributed to the Coverdell plan.  The 1099-Q may  indicate the earnings amount in box 2.    See my 2nd reply for more on 529 distributions.   

Sorry for the late response. I didn't get an email notification of your message for some reason and I just saw this.    I have asked my daughter to send over the diagnostic file. Token number is 50049-86175911   Thank you for looking into this.

Sorry for the late response. I didn't get an email notification of your message for some reason and I just saw this.    The fellowship was reported on line 8r of Schedule 1.    Thank you for contacting Turbotax for me. I will be sending information to them to look at.

Because of the aggressive speculation tax in British Columbia, if we do purchase a home, it would have to be under my brother in law (and me and my wife cannot be on the title), thus technically we would be buying the property for a family member. Does that change anything legally in terms of the money? I know Canada does not have a gift tax, and the money would go through my wife's account first before she "gifts it" to purchase property under my brother in law's name.     Also in googling, this is what I found. Does this come into play? I do not suspect this would be our issue because though my spouse ia a non-resident alien, for income taxes in the US, I am treating her as a resident alien and including all her assets in my US taxes and filing married filing jointly. "If your spouse is not a U.S. citizen, tax-free gifts are limited to present interest gifts whose total value is below the annual exclusion amount, which is $164,000 (for 2022), $175,000 (for 2023), and $185,000 (for 2024); and $190,000 for 2025. There is no lifetime gift tax credit available to offset tax where such gifts result in a tax liability"         

Q. I was expecting to see $3014. What did I do wrong? A. On the screen where you allocate income, you, most likely, allocated the W-2 income to NJ.   I'm not specifically familiar with NJ software.  For some states, TurboTax (TT) uses the W-2 to allocate wage income.   If you're not being asked to allocate the W-2 income at the income allocation screens, in the NJ program (or if you're not getting an income allocation screen), you will probably have to use a work around to get TT to prepare the return to get you your refund.    At the w-2 screen, in the federal section, of the program, split the boxes 15-20 W-2 info into 2 lines. On the 1st line leave NJ in box 15 but make box 16 blank or 0; leave the NJ withholding ($3014) in box 17. On the 2nd line put FL in box 15 and the state wages amount in box 16; leave box 17 blank or 0.    

Assuming the income is from interest from U.S. obligations, it can be entered in TurboTax Business but the entry point will be slightly different.  In TurboTax, this would have been entered in the Federal Taxes tab under the income section.  Select update/start to the right of Interest and dividend income.     Proceed through the screens until you see a screen titled "U.S. Obligation Interest Income."  You will enter your income amount here.     Once you make those entries, you will be able to break out any in-state or out-of-state sources if applicable on the screen titled "Tax-Exempt Interest."     You can then preview your forms by select Forms on the top right of the program.  Locate and open Form 1120-S p3-5.  You should see the adjustment for U.S. obligations on line 4b as shown in the example below.         @bmc4 

JotikaT2, OK, for us totally tax challenged, old, fat, one eyed and retired Senior Citizens, what are you telling me in plain English? Is it that, since there is no recourse and under the terms of the Covid-19 EIDL since default is not allowed, it cannot be forgiven or "charged off debt" and therefore is not taxable as income, gift or other taxable money coming into the LLC? Or, since this money is loaned to the LLC and then goes to the employees (even if as dividends it is still given for performance of services if the person is an employee of the LLC engaged in efforts to generate (or involved in) revenue generating efforts, directly benefiting the LLC) it is not taxable as it stands as a debt until discharged in bankruptcy, insolvency or other? Just trying to get this straight in my head it will stand as a debt until resolved or the statute of limitations is satisfied? Thanks. Mudtech61

Hello,   I’m sorry I wasn’t more clear. I live in Florida and work remotely for a company in NJ. I receive a W-2 and had $3014 withheld in NJ.  I’m filling out the NJ 1040NR form. I see $0 refund. I was expecting to see $3014. What did I do wrong?

This is the TurboTax US user community website. Go to this TurboTax Canada website for assistance with a Canadian tax return or the TurboTax Canada editions - https://turbotax.community.intuit.ca/turbotax-support/en-ca

Assuming you are trying to enter the cost basis for assets on your rental property, you will need to enter the cost basis on your depreciation screen for your Schedule E for the specific rental property.  Please follow the directions in this link to access the entry location.   If you are asking about the cost basis for another type of property, please comment back with exactly what type of cost basis you are looking for, and we will do our best to assist you.

On an IRS Form 1099-R there is not an account number and a Document ID required to be entered on the tax return. If you have a paper 1099-R or a PDF of the 1099-R, there may be an account number box in the lower left of the form.  See IRS Form 1099-R for tax year 2024 - https://www.irs.gov/pub/irs-prior/f1099r--2024.pdf

If your brokerage is an approved import partner, you can import using the steps in this link.  Make sure to use the correct log in for each account when you start importing from your investment account.   If your brokerage is an approved partner but you are still having issues, please refer to the steps in this link for more troubleshooting steps.

In general, and if there is a tax treaty with your home country:   Most tax treaties say that your social retirement benefit (equivalent to US social security) should be taxed in your home country according to your home country's rules, and only your other income is taxed in the US.  This is the strategy of "relying on the treaty" as we might say.   Or, you can ignore the treaty, not pay tax in your home country.  In this case, the income is fully taxable in the US because, as a US resident, all your world-wide income is usually taxable in the US.     However, to know which exact rules apply to you, we need to know the country, among other details.  @pk is the absolute expert on this forum for this topic area.   If you paid tax in the US on all your foreign retirement income, instead of only on the portion that was not taxed in the foreign country, that is your mistake in preparing your returns.  There is a way to declare your foreign income as not taxable in the US due to the treaty.  The typical remedy would be to file amended US tax returns to adjust the amount of taxable income you report, so you are only taxed on the correct portion.  If the amended return results in lower tax, the difference would be refunded back to you.  You can amend your 2022, 2023 and 2024 tax returns.  It it too late to file an amended return for refund for tax years 2021 and earlier.   If you just want proof of what you reported to the IRS, so you can show that to your home country (that you paid tax on all your retirement, for example) you can get transcripts of your returns going back 10 years.   https://www.irs.gov/individuals/get-transcript