QTP Computation of Taxable Distribution

[Fun_with_Taxes]

2018 Schedule 1, Line 21 shows additional income from a Qualified Tuition Program (QTP), referencing 1099-Q.  In the Student Information Worksheet, the total (Line 13) for Qualified Higher Education Expense for 529 Plan exceeds 1099-Q, Box 1.   We are NOT eligible for any education credits or deductions, and so the full amount of qualified expenses is available to cover the QTP distribution.

In trying to sort this out, I noticed on 1099-Q, the amount shown in Qualified Tuition Program (QTP) Computation of Taxable Distribution, Line 2b uses a lower amount for Adjusted Qualified Higher Education Expenses when calculating the amount For Purposes of Regular Tax than for For Purposes of 10% Additional Tax.  I don't know if this is a problem or a symptom.  I also cannot find any reason for this difference.

Any suggestions, or is this a bug and I should just override?  Thank you!

[Carl]

The 1099-Q distribution *is* taxable income *INITIALLY*. It's taxability is offset by the *qualified* education expenses those funds are used to pay for. I can't stress enough how important it is to work through the Education section of the program the way it is designed and intended to be used. If you don't, chances are extremely high that at least *one* of things you won't be asked about, are room and board expenses. Remember, 1099-Q funds can be used for the qualified education expenses of tuition, books and lab fees, and the additional unqualified expense of room and board provided that room and board was paid "in direct support" of the education.

Now I'm not sure if the deduction shows up on line 50 of SCH 3, or one of the other schedules. But if that education section is not worked through the way it's designed to be done, some of those (and possibly all) expenses won't show up as a deduction anywhere.

[Fun_with_Taxes]

Thank you, Carl!  I appreciate the response and additional thoughts.  I've worked through the Education section very carefully, twice.  Room and board expenses have been captured.  Sch 3, Line 50 is blank.  I welcome any other thoughts or suggestions.  Thanks again!