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Level 6

Solved

Adjusted Qualified Education Expenses

Forum|Forum|5 years ago
March 1, 2021
2 replies
0 views

Are the Adjusted Qualified Education Expenses calculated by adding the total tuition and required books/course material, minus grants/scholarships? I have provided an example below. Thank you.

Example:

Tuition: $10,000

Books/Course Materials: $2,000.

Total Grants/Scholarships: $8,000

Adjusted Qualified Education Expenses: $4,000

Not A Product Question

Best answer by MaryK4

Yes, that is 100% correct, Adjusted Qualified Education Expenses are the tuition and other fees less scholarships and other tax free payments. See Determining Qualified Education Expenses,

MaryK4Answer

Level 15

Yes, that is 100% correct, Adjusted Qualified Education Expenses are the tuition and other fees less scholarships and other tax free payments. See Determining Qualified Education Expenses,

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fasteddie577Author

Level 6

Thank you very much.

AmyC

Level 15

The override changes your return numbers and voids the accuracy guarantee but will not flag the IRS.

I tried to find your numbers in reading through the posts but only saw $26570 for box 1 of 1098-T. I don't know your Q distribution , room and board, or other education expenses. I do know that the Q should not be entered unless it has a taxable amount. I find people enter the form when they should not and that will also throw off the program.

IRS Pub 970 states: Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return.

@cliftstr

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cliftstr

Level 2

Hi Amy,

I appreciate you continuing to respond and try to help me.

I find it a little aggravating that by using the override to fix a bug in turbo tax, it would be voiding an accuracy guarantee that Turbo Tax has already failed by virtue of my having to override a value that is clearly wrong.

Having said that. I am unclear what I should do to get an accurate return.

My 1099Q shows these values in boxes 1-3:

1) $26904

2) $19254

3) $7650

None of those values are explicitly a "Taxable Amount"

The 1098Q shows

Box 1 $26570

Box 5 $4334

The box 1 amount must reflect only tuition because I paid $45k in tuition room and board after the scholarship adjustment.

Turbo Tax does not provide me a way to enter qualified expenses. You have mentioned that repeatedly but I've not been able to get TT to ask me those questions, but the simple answer is 45k.

So, I am unsure if I should enter the 1099Q and then manually force the 45k value into the QTD worksheet, or if I should just leave all of these college disbursements out since I spent more than I withdrew and TT does not handle the data properly.

When I enter the 1099Q and 1098T, the 1098T value is reduced by 10k and reduced by the scholarship. For my case, both deductions of the college expenses are incorrect.

I would greatly appreciate some advice on how to get TT to produce an accurate return for this data.

C-

AmyC

Level 15

Okay! We do not want to override anything to void the accuracy guarantee.

Instead, work in the program, step-by-step section. It is good to know you are using the desktop program so you can see what is happening.

You paid $45k to the school of which $26570 was tuition. The rest was room and board and required fees. $45 - $26570 = $18,430 to be taken from 1099-Q.

1099-Q of $26,904 -the room, etc of $18,430 = $8,474 to be used on actual tuition. 1099-Q is used up. Do not enter, tuck in tax folder.

1098-T Box 1 Tuition of $26,570 was partially covered by the Q for $8474. Leaving $18,096 to figure out and allocate.

Box 5 scholarships $4334 comes off $18,096 and you still have over $4,000 left for you to claim full AOTC credit.

Just enter the 1098-T as is and avoid the extra hassle. Keep this math and the 1099-Q in your tax folder. If the IRS asks, you will need to prove $4,000 was paid by you.