How do you enter box 7 on 1099Q?

[user17760202739]

I have seen other quesitons regarding the bug but still no answers. The 1099Q I am trying to enter has zeros in box 2 and 3, which are not permitted by Turbo Tax. TuboTax states "Your box 1 gross distribution must equal the sum of box 2 earnings plus box 3 basis." However the tax law states "The amount in box 3 must equal box 1 minus box 2." Also I have a box 7 to entere but no way to do this in TurboTax. Please help!

[MinhT1]

Please check your form. There is no box 7 on Form 1099-Q.

TurboTax is saying exactly what the tax law says, in different ways.

[user17760202739]

Yes there absolutely is a box 7 on my form with a value in it. Just because you do not have this value does not mean it is not applicable for others. It is used when both box 2 and 3 are 0.

[AmyC]

Some financial institutions will send a substitute form with more information than the Form 1099-Q can hold. Your box 7 will be something more specific to your situation and should be answered in the follow up questions. I am guess a rollover or transfer.

Meanwhile, the program wants box 1 to equal box 2 plus box 3. Match boxes 1 and 3 while leaving 2 at zero.

[Hal_Al]

There is no place to enter box 7.

If you have a 529 plan, the plan administrator almost always provides you the amounts in boxes 2 and 3 of the 1099-Q.  However, many ESA plan administrators do not provide that info. You have to calculate the earnings portion of the distribution.  The plan administrator will usually provide you the year end balance in the account, sometimes in the blank box underneath boxes 5 and 6 and label it box 7, with this note:

"7. If the fair market value (FMV) is shown below, see Pub. 970,
Tax Benefits for Education, for how to figure earnings."

[Hal_Al]

TT used to give you some help with this situation.  Out of curiosity, I decided to take a look at this year's program (I have desktop Deluxe).  It stills helps, but you have to use a workaround to get past the unbalanced boxes 1,2&3 screen.

Enter any numbers to make it balance. Later, after you check Coverdell ESA as the Qualified Tuition Program type, you will be given a screen to enter your basis* and year end value.  Check not "applicable" at the return of contribution screen ("no" doesn't work). TT will use the calculated earnings, rather than the made up ones entered earlier. You can go back and change the made up ones, although it does not appear to be necessary. 

*You have to know your basis.  If you have used TT in the past, for an ESA distribution, it should carry forward from last year, 

[user17760202739]

This was helpful. Where would I find the basis? It was inherited. 

[Hal_Al]

Q.  It was inherited. Where would I find the basis?

A.  The previous owner's files. The plan administrator may be helpful. 

 If the previous owner or beneficiary had taken ESA distributions, it might be in their tax files ( If you have used TT in the past, for an ESA distribution, it should carry forward from last year)

[user17760202739]

They are deceased and they did not use TT. Would it have been on older 1099Q when they were the owner?

[Hal_Al]

Q. Would it have been on older 1099Q when they were the owner?

A. That's unlikely.

You may have to just make you best estimate based on the amount in the account, how long the account has been open and how it was invested.   For most people it  doesn't matter, if it was all or mostly used for qualified expenses. None of it is usually taxable.