Turbotax is saying my income is too high to enter the 1098-T. But I have a 1099-Q which is then becoming taxable. Turbotax is showing $0 for the 1098-T after entering.

[laxmaxk10]

I have $10,000 on the 1099-Q ($1,000 of it earnings, basis $9,000) and a $10,000 1098-T.  I enter the 1099-Q and the earnings are taxable until I go to the 1098-T Section. I enter the $10,000 on the 1098-T and it says my income is too high to deduct any education expenses.  That's fine, but I at least need the $10,000 under the 1098-T section to stick in order to offset the 1099-Q from becoming taxable.  How do I bypass this?  Change the earnings to zero?  If I change the earnings on the 1099-Q section to zero, it changes my Federal to what it "should" be.  Any advice?

[Hal_Al · Accepted solution]

There's a glitch in TT.

But there's a simple fix: just don't enter either the 1099-Q or 1098-T. When the box 1 amount on form 1099-Q is fully covered by qualified educational expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. 

Another way, if you have already entered: Go through the education section again. When you get to the screen that says “Here’s your Education Summary”.  Click edit next to “Education Information”. When you get to the screen titled “Amount Used to Calculate Education Deduction or Credit”, verify the amount you want to use or change it to 0. (That's the glitch; TT prepopulates that even though you don't qualify for a credit)

[RJC64]

Hi,

My daughter is first year in college. A dependent on my tax return.

Her 1099-Q shows $46k but the 1098-T shows $23k. This is because the 1099-Q is showing the distribution for the first semester (2020) and the second (payment that I made in late December but is for 2021 tuition).

So, the 2020 tuition does not cover the dirtstribution and shows a big tax due.

Any ideas? Thx!

[Critter-3]

REMOVE the 1099-Q entry from the return ... if the total distribution was used for qualifying expenses then you do NOT have to enter it at all.  

[RJC64]

Thanks Critter-3.

$23k of the $46k distribution was for a qualified distribution in 2020.

The second $23k is for a qualified distribution but for next year semester. Tuition bill was due Jan 4 2021 so we sent Dec 20ish 2020.

So all distributions are for qualified tuition but we can't show that second $23k is qualified till we get a 2021 1098-T (in Jan 22). 

Still ok to ignore the 1099-Q?

Thx,

[Critter-3]

Yes ... ignore.

[RJC64]

Hi Critter-3. Couple more if I can after reviewing.

1. If I figure a) my 529 distributions do not exceed the qualified tuition expenses (so no tax due on that earnings portion of the distribution) and b) we are not elgible for any education credits (AGI too high), can I just punt the whole 1099-Q and 1098-T forms entirely?

2. If I figure I owe taxes on $100, say, where can I enter that easily? Remember, I can't enter the 2020 1099-Q data and 2020 1098-T data and have TT compute it, because the 2020 1099-Q includes 2021 Spring tuition distribution, and I will not get that 1098-T till Jan 2022.

 Thx again!