All Education posts

Re: Parent is recipient of 1099Q distribution that was used to pay child dependent beneficiary qualified education expenses. TT-2025 appears to incorrectly calculate the distributation as taxable..

Hal_Al — Mon, 13 Apr 2026 01:37:35 GMT

Less than half time still qualifies for the Lifetime Learning Credit (LLC). But, less than half time does not qualify room & board for the 529 distribution.

Books and computers do not qualify for the LLC. The LLC is 20% of tuition and fees. Paying tax on some of the 1099-Q to get the LLC is not as lucrative as doing it for the AOC. But, it depends on your numbers.

Re: Parent is recipient of 1099Q distribution that was used to pay child dependent beneficiary qualified education expenses. TT-2025 appears to incorrectly calculate the distributation as taxable..

robca2010 — Mon, 13 Apr 2026 00:41:46 GMT

I agree with your comments. However, for this case since the parent did the distribution, the 1099-Q was issued to the parent as recipient and not the child.

The other thing to note that for this scenario AOC was not being applied for various reasons because the student didn't qualify for AOC. The student was less than part-time in both semesters for the year. So, AOC was not an option. Nor, any scholarships.

This particular scenario was very simple. The parent paid for the student's 2025 college tuition expenses all of which were reported on the student's 1098-t. The parent entered both the student 1098-t, which TT correctly includes as the AQEE on the student information sheet. Then the parent entered the 1099-Q, which was issued in the parent's name since they took the distribution from their 529 account.

There were no other AOC, LLC, or scholarships to affect the calculations. Parent just withdrawing money from their 529 account to pay the child's tuition.

This is a bug with Turbo-Tax and should be fixed.

Yes, one work around is if there were sufficient AQEE to cover the entire 529 distribution, then no 1099-Q needs to be submitted. Just delete the 1099-Q. However, for those make a distribution slightly in excess of the AQEE, then they have to include the 1099-Q on their return, and TT is not calculating correctly.

Re: Parent is recipient of 1099Q distribution that was used to pay child dependent beneficiary qualified education expenses. TT-2025 appears to incorrectly calculate the distributation as taxable..

user17760278101 — Mon, 13 Apr 2026 00:26:18 GMT

I agree with your observations and comments. Surely, for the scenario I described above, TT-2025 unfortunately is broken. That is very disappointing. I have children in higher education and doing 529 withdrawals over the past 5+ years. In previous years, when the child was the recipient and I enter that data into TT, it calculates everything correctly. This is the first year where things were done a little differently and the parent was the recipient. Unfortunately in this case even though Box-1 on the 1099-Q was covered by all college expenses on the beneficiary 1098-t (no scholarships and no AOC or LLC) and clearly shown on the info sheet, it does not subtract that amount from the 1099-Q distribution amount. You see on the worksheet that it incorrectly subtracts 0. It then calculates the tax on the earnings and then uses the corresponding tax to reduce the refund.

It could be because of the hidden $10,000 amount that you mentioned in your reply below. I will check into that further.

Thanks for the tips regarding "TT has allocated $10,0000 of expenses to the tuition credit" and "TT provided a screen titled 'education expenses used for a tax credit'. "

Yes, I have seen that screen in past years. It was very tricky to get. I believe you had to remove all the child education expenses and then if you applied a certain sequence for adding those things back in, then that prompt would sometimes appear. I may try to delete the education profiles and go through past notes to see how to get that prompt again. Also, look at editing Line-18. If I find something to work, I'll report back on this thread.

I also tried the same scenario in a competitive online tax program. If you put in the same information, it correctly calculates everything that no tax is due. This isn't rocket science and Turbo Tax should be calculating correctly. The user should be able to enter all their tax information. TT should then prompt with the appropriate questions and then properly calculate the user's tax for their scenario.

I agree that if the AQEE is sufficient to cover the 1099-Q distribution, then no form needs to be filed. However, it is very unfortunate that TT is not calculating correctly for those who may have a partial overage where some tax is due. In this case TT is calculating the tax on the full earnings and not correctly prorating when some, but not all of the distribution is in excess of the AQEE.

Re: Parent is recipient of 1099Q distribution that was used to pay child dependent beneficiary qualified education expenses. TT-2025 appears to incorrectly calculate the distributation as taxable..

Hal_Al — Sun, 12 Apr 2026 23:48:08 GMT

Qualified Tuition Plans (QTP 529 Plans) Distributions

General Discussion

It’s complicated.

For 529 plans, there is an “owner” (usually the parent), and a “beneficiary” (usually the student dependent). The "recipient" of the distribution can be either the owner or the beneficiary depending on who the money was sent to. When the money goes directly from the Qualified Tuition Plan (QTP) to the school, the student is the "recipient". The distribution will be reported on IRS form 1099-Q.
The 1099-Q gets reported on the recipient's return.** The recipient's name & SS# will be on the 1099-Q.
Even though the 1099-Q is going on the student's return, the 1098-T should go on the parent's return, so you can claim the education credit. You can do this because he is your dependent.

You can and usually should claim the tuition credit before claiming the 529 plan earnings exclusion (unless your income is too high). The American Opportunity Credit (AOC or AOTC) is 100% of the first $2000 of tuition and 25% of the next $2000 ($2500 maximum credit). The educational expenses he claims for the 1099-Q should be reduced by the amount of educational expenses you claim for the credit. Room and board (R&B) are also qualified expenses for the 529 distribution, but not the AOC (R&B are also not qualified expenses for a scholarship to be tax free).
But be aware, you can not double dip. You cannot count the same tuition money, for the tuition credit, that gets him an exclusion from the taxability of the earnings (interest) on the 529 plan. Since the credit is more generous; use as much of the tuition as is needed for the credit and the rest for the interest exclusion. Another special rule allows you to claim the tuition credit regardless of whose money was used to pay the tuition.
In addition, there is another rule that says the 10% penalty is waived if he was unable to cover the 529 plan withdrawal with educational expenses either because he got scholarships or the expenses were used (by him or the parents) to claim the credits. He'll have to pay tax on the earnings, at his lower tax rate (subject to the “kiddie tax”), but not the penalty.

Total qualified expenses (including room & board) less amounts paid by scholarship less amounts used to claim the Tuition credit equals the amount you can use to claim the earnings exclusion on the 1099-Q.
Example:
$10,000 in educational expenses (including room & board)

-$3000 paid by tax free scholarship***

-$4000 used to claim the American Opportunity credit

=$3000 Can be used against the 1099-Q (on the recipient’s return)

Box 1 of the 1099-Q is $5000

Box 2 is $2800

3000/5000=60% of the distribution is qualified, so 40% of the earnings are taxable

40% x 2800= $1120

There is $1120 of taxable income (on the recipient’s return)

**Alternatively; you can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. Again, you cannot double dip! When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records, in case of an IRS inquiry.

On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."

***Another alternative is have the student report some of his scholarship as taxable income, to free up some expenses for the 1099-Q and/or tuition credit. Most people come out better having the scholarship taxable before the 529 earnings. A student, with no other income, can have up to $15,750 of taxable scholarship (in 2025) and still pay no income tax.

Re: Unable to get TurboTax to ask me about qualified education expenses when reviewing a 529 plan...

Hal_Al — Sun, 12 Apr 2026 23:47:22 GMT

TurboTax is broken*.

The 1099-Q is only an informational document. The numbers on it are not required to be entered onto your (or your student's) tax return. The interview is complicated and it's easy to make mistakes. Avoid it if you can and you probably can.

You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records (you don’t need it). You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. You also cannot count expenses that were paid by tax free scholarships.

References:

On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."
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”.
"IRS Publication 970, Tax Benefits for Education states: If the entire 1099-Q went to qualified expenses, room and board, tuition, etc; then, you do not need to enter the form."

*One frequent problem, I've seen in this forum,, and it carries over from last year, is that TT has allocated $10,0000 of expenses to the tuition credit, instead of the more appropriate $4000 (or $0 if you are not claiming the credit). In the past, TT provided a screen titled “education expenses used for a tax credit”. It was usually prepopulated (often with $10K). You could change it for the amount you want to allocate to the ed credit. So far, this year, I haven't found that screen, even after recent updates.

If you don't get that screen, you can check the student information worksheet. You can manually change it there (line 18). Make the change in the first column, on the left. It was line 17 prior to 2025.

Re: Form 1098T, Education Tax Credit and Dependency Determination

Luna_Tax — Sun, 12 Apr 2026 23:42:20 GMT

Thank you as always @Hal_Al for a quick and helpful response. I really appreciate your taking the time to help and educate us.

I initially had interpreted that the living expenses such as rent and utilities of a “dependent” college student, should be allocated based on the period that they were “physically” present at the parents’ home. This is usually 3-4 months a year for a full-time student who returns home for summer and winter breaks. By reading Pub 501 and your explanation, it seems that the lodging expenses or “Fair Rental Value” is allocated to dependent students on an annual basis, whether they have “physically” lived at home with the parents for the whole year or they attend an out-of-state college and only return home for breaks and holidays. This method certainly helps parents to meet the support test for a qualifying child and claim the students as their “dependents” on the parents’ returns.

The total of my son’s wages and Sch C (self-employed) earnings was about $9k. As you mentioned per Pub 501, scholarship and savings of student-child are not used in determining whether the child provided more than half of their own support”. And it seems we do not need to include federal, state and local income taxes paid by students from their own income and scholarships in the total support calculation either. These are all great news. However, Pub 501 did not seem to address how to treat the income from Form 1099-Misc. I assume if the 1099-Misc income is from rental property then it is considered “earned income”. But if it’s from summer internships, travel or research stipends, fellowships and such, the 1099-Misc income is not considered “earned income” for purposes of the child dependent support test so they can be excluded like scholarship monies. Is that correct? Thank you again for your time and insight.

Re: Unable to get TurboTax to ask me about qualified education expenses when reviewing a 529 plan...

DawnC — Sun, 12 Apr 2026 23:40:29 GMT

If you received a 1099-Q and the full distribution was used on qualified education expenses, you should delete it as the form does not represent taxable income. When you receive IRS Form 1099-Q, you'll need to report this information on your tax return if the distribution is used for non-qualifying expenses.

If your distribution matches or is less than the qualifying educational expenses, you don't need to report it as income; however, any excess is typically taxable and could be subject to a penalty. See 1099-Q

How to delete forms in TurboTax Online

How to delete forms in TurboTax Desktop

If you do have taxable income from a 1099-Q, you can enter that information in the 1098-T interview. Where do I enter a 1099-Q?

Unable to get TurboTax to ask me about qualified education expenses when reviewing a 529 plan distribution

trevordbee — Sun, 12 Apr 2026 23:31:44 GMT

Re: Form 1098T, Education Tax Credit and Dependency Determination

Luna_Tax — Sun, 12 Apr 2026 23:29:12 GMT

Thank you very much to @NCperson for the updated link.

Re: Hoe can I correct the error on form 1099-Q. "Line D filed should not be linked to a Qualified Education Expenses Worksheet"?

Hal_Al — Sun, 12 Apr 2026 21:45:54 GMT

Several users report that What worked for them was to completely delete the form and re-enter the data

Reference:

https://ttlc.intuit.com/community/college-education/discussion/turbo-tax-is-not-allowing-me-to-input-qualified-education-expenses-from-my-529-plan-withdrawals/00/3749003

Re: I'm filling out the section in my tax form that says "did you have educational expenses" does...

DavidD66 — Sun, 12 Apr 2026 21:34:59 GMT

It would include your dependents. It is referring to post secondary education costs for college, trade, vocational, or technical schools that are "eligible education institutions".

Re: I'm filling out the section in my tax form that says "did you have educational expenses" does this refer to just myself or would it also include my dependents?

Hal_Al — Sun, 12 Apr 2026 21:34:17 GMT

It includes your dependents.

Here's a post on the five main points on the 1098-T tax form issued by colleges:

https://ttlc.intuit.com/community/college-education/discussion/re-what-do-i-do-with-form-1098t/01/3760212#M63114

I'm filling out the section in my tax form that says "did you have educational expenses" does this refer to just myself or would it also include my dependents?

snlwood — Sun, 12 Apr 2026 21:28:34 GMT

Hoe can I correct the error on form 1099-Q. "Line D filed should not be linked to a Qualified Education Expenses Worksheet"?

zknagy — Sun, 12 Apr 2026 21:16:11 GMT

Re: My son is nondependent who files own income tax. We withdrew 529 funds and used for his educa...

MarilynG1 — Sun, 12 Apr 2026 20:03:03 GMT

TurboTax does not track qualified expenses for a 529 distribution, so you need to keep your own records of what was paid from the distribution. If your expenses exceeded the distribution, you don't need to enter a 1099-Q.

However, if you received a 1098-T from the school, you can enter that in the Education section to see if you qualify for an Education Credit, or have taxable scholarship income to report (if Box 5 Scholarships is greater than Box 1 Tuition). The only expenses that qualify in this case are Tuition/Fees and Books/Supplies purchased from the school, which are entered in the 1098-T section.

Here's more info on Form 1098-T.

@jlee3

Re: 1098-T in 2025 & TT request for 2024 data

Hal_Al — Sun, 12 Apr 2026 19:03:45 GMT

The 1098-T worksheet has all the information as the original 1098-T, just in a different form.

Re: How to enter 1098-T?

Hal_Al — Sun, 12 Apr 2026 17:44:34 GMT

Here's a post on the five main points on the 1098-T:

https://ttlc.intuit.com/community/college-education/discussion/re-what-do-i-do-with-form-1098t/01/3760212#M63114

1098-T in 2025 & TT request for 2024 data

user17760152816 — Sun, 12 Apr 2026 17:42:56 GMT

Trying to complete taxes but this has had me stumped for the last week. I've entered the 2025 1098-T data for my 2 college students (both dependents), finished up the taxes (I thought), then I go to Smart Check and it asks for 1098-T data from 2024. I have a "1098-T Worksheet" from 2024 but that's all. Questions:

1. Why do I need 1098-T data from 2024 for my 2025 taxes?

2. How do I complete the requested information using just that 1098-T Worksheet?

3. Is there a workaround where I can simply skip this, pass the Smart Check, and move on to filing?
Thanks.

Re: How to enter 1098-T?

Vanessa A — Sun, 12 Apr 2026 17:37:09 GMT

To enter the 1098-T select the following:

Federal
Deductions and Credits
Education
1098-T

If you are the student claimed as a dependent on someone else's return, and your scholarship in box 5 was not more than box 1, then your parents would be the one to enter this on their return to claim the education credit.

Re: How to enter 1098-T?

DoninGA — Sun, 12 Apr 2026 17:35:08 GMT

To enter, edit or delete Education Expenses -

Click on Federal Taxes (Personal using Home and Business)
Click on Deductions and Credits
Click on I'll choose what I work on (if shown)
Scroll down to Education
On Expenses and Scholarships (Form 1098-T), click on the start or update button