2024 1098-T line 1 info not correct

[cbacons4]

I directed my 529 administrator to transfer 2025 spring tuition payment to university on 12/23/2024.  They mailed a check which was not received and posted by the college until 1/6/2025.  It was not included on my 2024 1098-T .  Can I adjust the amount on Line 1 of  the 1098-T while entering into Turbo Tax, or is there another way to adjust the amount paid to avoid that 2025 spring tuition payment being taxed?  (this seems very silly-and expensive for me).

[AmyC]

You won't adjust the 1098-T.  I think you are confusing payments made the first 3 months of 2025 with classes beginning. 

• Payments made in  2024 for 2024 classes and classes that begin the first 3 months of 2025. 
• Payments in 2025 are for classes in 2025 along with the first 3 months of 2026 classes.

What I don't know is:

• did you get a 1099-Q for the distribution? If so, use it against other eligible 529 expenses. Dorm or home, room and board usually exists as an expense.
• do you qualify for the education credit or are there scholarships involved?

The 529 is used towards room and board, books, supplies, etc.  Please look at another of my answers,  here which includes scholarships and 529 withdrawals to get the education credit.

References:

Qualified Education Expenses - IRS & room and board

[cbacons4]

Thank You Amy C for the reply!  I'm not sure what you mean by "confusing payments made the first 3 months of 2025 with classes beginning".  I understand that payments in 2024 can apply to spring 2025 tuition, the problem is that the payment I intended to make in 2024 apparently did not arrive until Jan 2025 thus didn't make the cutoff to be on the 2024 1098-T.  I did receive a 1099-Q with the 12/23/24 distribution for 2025 spring semester included.  The problem is that the college didn't receive (or post) it until 1/6/2025 so wasn't included on the 2024 1098-T.  That makes it trigger as a distribution that didn't pay for anything, and that turns (I guess the 529 gains) into income which creates more taxes for my daughter.  (My original question was written 1st person for simplicity but the subject is my daughter's 529 and college).

There are scholarships involved, all shown on the 1098-T and from the college.  If the 2024 1098-T had included the payment made for spring 2025 tuition all would have come out even:  i.e. the combined total of the 1099-Q distribution and the scholarships shown on the 1098-T would equal the payments made in  the 1098-T.   I have filed for and am eligible for the full AOTC.  I don't understand how I "apply" room and board(she's renting a shared apartment and buying food), books, and supplies first and then allocate the rest.  Do I do that in turbotax or on my legal pad?  All the distributions from the 529 actually did pay tuition, so isn't that lying to allocate them elsewhere?  Do I need to have actual receipts for room and board?  She is splitting rent 4 ways in a casual agreement and Venmoing one of the mom's who is actually paying the rent, so there are no receipts.

[AmyC]

1. The payment was Jan so it counts in 2025 for payment. The classes beginning in 2025 was fine, if the payment had arrived in  2024.

2. The IRS allows you to claim the money paid the best way for you. Your dollars paid for a lot of things!  The IRS has a great brochure that explains how scholarships and tax credits interact. You get to choose how you claim your dollars are used.

3. We will do some of the math here and the rest in the program. They key is to have a sheet with your taxes so you can explain it later, if you need to.

4. I will get you started. It is not lying to say you used the 529 for room and board, even if the money went directly to the college. That just freed up other dollars to use on room and board. The IRS understands paying the school from the 529 is easy and that kids have to live somewhere.

5. As long as your room and board expenses match up with the school, there is no issue. You will want to keep the rental agreement with your tax records, or some sort of proof - Venmo works for proof.

Let's deal with the issue at hand.

Let's start with the 1099-Q - it can towards room and board first. See 529 for Room and Board. If all of it can be used as room and board, tuck it away. If there is a little left over, subtract it from tuition paid.

Next, more to the scholarship - cover the rest of tuition and necessary /required items. See Qualified Education Expenses - Internal Revenue Service as you may have deductible expenses like a computer or internet -maybe not.

Is all the money used up? Normally it is and nothing is taxable income. If it is not all used up, then the remainder is income to the student and is added to her taxable income.

The hard part, any scholarship income that remains, is considered unearned income for the kiddie tax, see  What is the Kiddie Tax? If the numbers are small enough, you won't need to do anything. But, just in case, that's the last possible hurdle.

This was a lot of information so take it step by step. Best wishes!

[cbacons4]

So, do I enter the Room & Board and Internet expense  in the 1098-T "other expenses" section?  

Thank You so much for your help

[KrisD15]

If you are entering/reporting Form 1099-Q for a distribution, yes, you can enter room and board expenses in the program. 

After entering the 1098-T, there is an option to add books and supplies. IF A 1099-Q WAS ALSO ENTERED, the option to enter Room and Board is also available. 

If there is no 1099-Q, room and board expense does not matter. That expense can offset a distribution, but not a scholarship.

As far as your original question- If the 529 distribution did not post until 2025, that amount will be included in Box 1 of your 2025 Form 1098-T.  

Are you saying you told the 529 administrator to pay the school in 2024, but the school got the payment in 2025?

If yes, are you saying you now have a 2024 1099-Q reporting a distribution that the school won't claim as payment until 2025?

If this is the issue, treat it as prepaid tuition. 

Enter the 1098-T and select the "What if this is not what I paid?" link under box 1 and add the amount of the distribution. 

So if box 1 reports 15,000 but does not include a 5,000 distribution that is on the 1099-Q, enter 20,000.

MAKE SURE YOU ADJUST THE OPPOSITE WAY NEXT YEAR 

@cbacons4 

[cbacons4]

Geez- I feel like I'm on tumble in the drier.  I thought I had read that I could do that, and then I was told I could not alter box 1 on the 1098-T. When I called the school I was told that they didn't receive the distribution until 01/06/2025 so they had to put it on the 2025 1098-T (I apparently pushed the wrong button (send check instead of electronic transfer) on the admin website so it took about 12 days).  The money was for 2025 Spring semester.

Can I really claim I paid that $18,150 in 2024 even though they didn't receive it until 1/6/2025?  That would be wonderful!

So, moments ago  I pushed the button and filled the taxes but it's costing us (my daughter technically)about $1000 even after I entered the off campus room and board etc... I guess I can refile?

[AmyC]

Kris is talking about the 1099-Q.  Your 1099-Q does include your prepaid expenses for 2025. I was thinking those would be eliminated with room and board, etc. I was looking at the education credits primarily.

Prepaid tuition is for tuition paid in 2024 for classes in 2025, which is on your Q but not on your 1098-T. This is where it gets tricky. Note that Pub 970 specifically states that you can't use money paid in 2025 to claim the education credit for 2024. 

I went to  Pub 970 and found a few things to help decipher your situation.

• Form 1098-T, Tuition Statement. When figuring an education credit, use only the amounts you paid and are deemed to have paid during the tax year for qualified education expenses. In most cases, the student should receive Form 1098-T from the eligible educational institution by January 31, 2025. However, the amount on Form 1098-T might be different from the amount you actually paid and are deemed to have paid. 
• You must be able to substantiate the payment of qualified tuition and related expenses for that tax year.
• Example: Glenda enrolls on a full-time basis in a degree program for the 2025 spring semester, which begins in January 2025. Glenda pays the tuition for the 2025 spring semester in December 2024. Because the tuition Glenda paid in 2024 relates to an academic period that begins in the first 3 months of 2025, the eligibility to claim an American opportunity credit in 2024 is determined as if the 2025 spring semester began in 2024. Therefore, Glenda satisfies this third requirement.
• You can't use any amount you paid in 2023 or 2025 to figure the qualified education expenses you use to figure your 2024 education credit(s).

I don't know what your numbers look like or where things landed except you said it was costing you money which means you are not claiming the credit but instead has some 1099-Q or scholarship that became taxable. 

Now that you have filed, once the return is accepted, you can file an amended and correct the Q portion without claiming the education credit for the 2025 tuition payment.

See Adjusted qualified education expenses (AQEE) for calculating the taxable portion of the Q.

See How do I amend my federal tax return for this year?

See I need to amend my state return.