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 — Sun, 12 Apr 2026 12:39:23 GMT

TurboTax is broken*. Just don't enter the 1099-Q.

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: I was a full time student for half the year, being supported by my parents. I started my firs...

Hal_Al — Sun, 12 Apr 2026 12:31:07 GMT

Can the student be claimed as a dependent in the Graduation year? (stock answer written as if the parent asked the question)

If he/she was a student (under 24) for at least 5 months and lived with you for more than half the year, and did not provide more than 1/2 his own support for the whole year, you can still claim him. Be sure he knows you're claiming him, so he doesn't claim himself. He can only be claimed once. But, he can "file taxes" without claiming his own exemption.

The real question is who should be claiming him in this "transition" year to adulthood. You two have to agree on who is going to claim his exemption. Each should do their taxes both ways and see which way the family comes out best. Even then, you have to meet the rules.

There are two types of dependents, "Qualifying Children"(QC) and Other ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test. Only a QC qualifies a taxpayer for the Earned Income Credit.

The rule is that a child of a taxpayer can still be a “Qualifying Child” dependent, regardless of his income, if:

he is a full-time student under 24 for at least 5 calendar months of the year (graduating in May usually means you meet the 5 month rule)
he did not provide more than 1/2 his own support (scholarships are considered 3rd party support and not support provided by the student).
lived with the parent (including time away at school) for more than half the year

So, it usually hinges on "Did he provide more than 1/2 his own support in 2024.

The support value of the home you provided is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants. IRS Publication 501 on page 20 has a worksheet that can be used to help with the support calculation. See: http://www.irs.gov/pub/irs-pdf/p501.pdf (page 15)

Re: I'm recognized as an independent student federally. How can I be claimed as a dependent?

Hal_Al — Sun, 12 Apr 2026 12:28:01 GMT

"the only case that applies is that I was 24 last year"

I'll assume that means you were 23 at the end of 2024 and 24 at the end of 2025. For 2024 you would not qualify for being a non dependent and could not get the refundable portion of the AOTC.

You probably do qualify as a non dependent* and for the AOTC for 2025. You just have to answer the interview questions correctly.

* You actually haven't provided enough info. You could still be a qualifying relative (instead of a qualifying child) after turning 24.

Re: How report 1098T with excess scholarship

Hal_Al — Sun, 12 Apr 2026 12:04:08 GMT

Q. What do I do, about this transaction history that reads like gobble-**bleep**? Or does it even matter since, I can tell that box 1 only has the tuition and fees?

A. You need to ask the school if the scholarship that is “the value of tuition” is actually restricted to being used for tuition and fees. You description implies that, but not conclusively. If it is restricted, you cannot use the loop hole. If it is not totally restricted, you can. Yes it matters. Everybody's box 1 only has the tuition and fee.

Q. Should she still be claimed as a dependent?

A. Yes, assuming she's under 24 and assuming she hasn't moved out of your home (being away at school doesn't count as moving out)

Q. If I can maximize this return, is it advisable to do an amended tax return for the prior years that were also very much like this one? Those I just basically left the scholarships as tax free, claimed the books paid for AOTC and she paid the tax on the “excess scholarships.!

A. Yes. She will have to amend too (most likely) to report up to $4000 more taxable scholarship.

How report 1098T with excess scholarship

NanuNanu — Sun, 12 Apr 2026 15:35:35 GMT

Hi. I’d like to know if and how I can utilize the AOTC tax loophole. My child has $8760 in earned income from a job. On the 1098T $38578 is in box 1 and 45063 in box 5. Box 7 and 8 are checked. She has a school awarded scholarship that is “the value of tuition.” The school supplied a transaction history on the 1098T. The amount in box 1 is the amount of tuition and $1000 in fees. The amount for scholarships in box 5 is correct. The payments for books ($360) posted on the transaction history are not included in the box 1 number. (The rest of the transaction history supplied on 1098T has refunds, her web payments, and scholarships listed as being for box 1 but they actually don’t add up to what’s in box 1. It totals 42000 in payments. I can only guess this is probably because of posts that occurred after the fall 2024? into her account ) .
Given this information, what can I do to maximize our parent AOTC , or is it even advised?
should she still be claimed as a dependent?
What do I do, if anything, about this transaction history that reads like gobble-**bleep**? Or does it even matter since, I can tell that box 1 only has the tuition and fees?
Lastly if I can maximize this return, is it advisable to do an amended tax return for the prior years that were also very much like this one? Those I just basically left the scholarships as tax free, claimed the books paid for AOTC and she paid the tax on the “excess scholarships.” Thanks!

Re: I'm recognized as an independent student federally. How can I be claimed as a dependent?

aehlers156 — Sun, 12 Apr 2026 03:58:03 GMT

Hi Sharon,

the only case that applies is that I was 24 last year. None of the other conditions apply. I have been living by myself for the past 3 year covering all of my expenses with my own job. I checked with my family and ensured they didn’t claim me.
Am I disqualified because I could possibly be claimed just because I was 24 years old and a full time student last year? Even though I cover all my own personal living expenses.
I appreciated your thorough response and time, thanks Sharon!

Re: I'm recognized as an independent student federally. How can I be claimed as a dependent?

SharonD007 — Sun, 12 Apr 2026 03:43:56 GMT

Review the rules regarding qualifications for a dependent to determine if you qualify as a dependent for your parent(s). It's determined by your age, income and other eligibility requirements. If you meet all these requirements, your parent can claim you as a qualifying child dependent. A qualifying child can earn an unlimited amount of money and be claimed as a dependent as long as they don’t provide more than half of their own support Rules for Claiming Dependents on Taxes.

To determine if you are considered a qualifying child, the following questions must be true:

The child must be related to you.
The child can’t be claimed as a dependent by someone else.
The child must be a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.
If the child is married, they can’t file a joint return with their spouse.
The child must be under the age of 19 (or 24 for full-time students).
- No age limit for permanently and totally disabled children.
The child must have lived with you for more than half the year (exceptions apply).
The child didn't provide more than half of their own support for the year.

Refer to the TurboTax article What does "financially support another person" mean? To determine if your son provided more than half of his support.

The following questions must be true if you are considered a qualifying relative dependent:

The individual can’t be claimed as a dependent by someone else.
The individual must be a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.
If the individual is married, they can’t file a joint return with their spouse.
The individual must live with you all year.
The individual can’t have made more than $5,200 in income in 2025.
You must provide more than half of their total support for the year.

Please review the TurboTax Help article Who can I claim as my dependent? for more information.

If your parent(s) claimed you as a dependent, they would get the education credits if you are eligible.

For additional information, refer to the TurboTax articles Guide to Tax Form 1098-T: Tuition Statement and What Are Education Tax Credits? For additional information.

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 — Sun, 12 Apr 2026 03:12:48 GMT

The parent took a distribution from their 529 account (parent is the account owner) in 2025 to pay their dependent child beneficiary's qualified education expenses, for example college tuition. The dependent child is named as the beneficiary on the 529 account. The beneficiary that is on the account is also the same for which the funds that were withdrawn from the 529 were used. Let's say that the total qualified education expenses were $5000 for the 2025 calendar year.

The amount that was withdrawn from the 529 account in 2025 was $5000 that was used to pay for qualified college expenses that were incurred in 2025. The child received a 1098t-2025 of $5000 for the 2025 expenses. There were no scholarships received in 2025, so the $5000 were all out-of-pocket expenses incurred by the student.

Because the parent took the distribution, the 1099-Q at the end of the year was issued to the parent as the recipient.

On the parent's TT return, the parent was entered as the recipient of the 529 distribution and the child as beneficiary for which the distribution was used. The TT return shows that the beneficiary's student information sheet Part VI Education Expenses is showing the allowed qualified education expenses for the 529 plan of $5000. There are no credits this year for the AOC or life-time-learning credit. So, there should not be any taxes paid on the 529 distribution earnings. Yet, the student information worksheet Part VIII 2g and 2h (Adjusted Qualified Higher Education Expenses Applied) for the purposes of calculating the regular taxes are 0. Because the AQEE is not being subtracted from the distribution, TT then goes and calculates the tax on the full earnings.

By-the-way, if the beneficiary is entered as the recipient with everything else being the same, then Turbo Tax does report that no tax is due and the 1099-Q should be deleted. So, TT seems to be miscalculating when the taxpayer (parent) is different from the beneficiary.

Let's also say that for the purposes of the tax calculation that the basis was $3000 and the earnings was $2000.

However, under the column of "For the purposes of the 10% additional taxes" the $5000 is reported there.

So, in the end turbo tax is calculating the regular tax rate on the $3000 earnings but not applying the additional 10% tax penalty on the distribution. So, it is correct in not applying the 10% tax penalty. But wrong in that it should not be calculating tax on the earnings.

However, other posts I have seen say that if the parent takes a 529 distribution and pays for their child beneficiary's qualified expenses in the same calendar year and the distribution is less than the AQEE, then any earnings on the 529 distribution are not taxable and not reportable.

If that is true then, TT appears to have a bug and is not calculating correctly when the above information is input. There should be no tax on the earnings calculated by TT. It's really hard to know if TT is miscalculating or there is something important to know where the tax laws intend that the tax on the earnings in this case is actually due. Some suggest just don't report the 1099-Q if no tax is due. But we often want to put the data in TT expecting TT to calculate correctly and help the user know whether taxes would or would not be due in their particular case.

I also looked at the 2025 Tax Pub 970 Tax Benefits for Education.

These are the only mentions i could find in Pub 970

"What is the tax benefit of a QTP? No tax is due on a distribution from a QTP unless the amount distributed is greater than the beneficiary's adjusted qualified education expenses (AQEE)" and "The recipient of the distribution generally doesn’t have to include in income any earnings distributed from a QTP if the total distribution is less than or equal to AQEE (defined under Figuring the Taxable Portion of a Distribution, below). "

I'm recognized as an independent student federally. How can I be claimed as a dependent?

aehlers156 — Sun, 12 Apr 2026 03:12:24 GMT

I qualified last year for the American Opportunity Tax Credit. This year I do not qualify, even though nothing has changed.

Re: I was a full time student for half the year, being supported by my parents. I started my firs...

SharonD007 — Sun, 12 Apr 2026 03:10:29 GMT

There is no such filing status as "Student". Can you clarify if your parent's claimed you as a dependent so we can give you advice?

I was a full time student for half the year, being supported by my parents. I started my first job in August and have supported myself since. Should I file as a student?

aurbine03 — Sun, 12 Apr 2026 02:53:41 GMT

Re: where do i enter my 529 plan contributions in turbo tax online for illinois

MindyB — Sun, 12 Apr 2026 02:27:43 GMT

Here is how you can enter your Illinois 529 contributions.

Navigate to the Illinois section of TurboTax (State Taxes > Illinois)
Continue through the interview until you arrive at the screen Here's the income that Illinois handles differently
Expand Education
Start or Revisit College savings and prepaid tuition plan contributions
Enter the information from the 529 contribution

Here is some more information on deducting 529 contributions: 529 Plans and Taxes: Deductions, Tax-Free Withdrawals & More

where do i enter my 529 plan contributions in turbo tax online for illinois

bazjkm2 — Sun, 12 Apr 2026 02:26:17 GMT

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

NCperson — Sun, 12 Apr 2026 02:23:36 GMT

@Luna_Tax use the worksheet on page 16

https://www.irs.gov/pub/irs-pdf/p501.pdf

@Hal_Al - the link in your post no longer works, but I suspect the worksheet above is what you were refering to???

Re: Where do you select dependent is a full-time student?

MindyB — Sun, 12 Apr 2026 01:46:33 GMT

If your child is between 19 and 23, you can find this question in the My Info section. Navigate to My Info on the left of your screen, Your household, select your child's name to expand, then choose "Revisit" to go through the interview questions.

If your child is under 19, the box should not be checked, because they automatically meet the age test for a qualifying child.

Re: Where do you select dependent is a full-time student?

VolvoGirl — Sun, 12 Apr 2026 01:42:00 GMT

How old is your dependent? If they are under 19 you don’t need to check that. It’s only for ages 19-24.

Where do you select dependent is a full-time student?

stephen.m.foster — Sun, 12 Apr 2026 01:38:56 GMT

Box on front page is not checked and need to indicate dependent is full-time student

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

Hal_Al — Sun, 12 Apr 2026 02:31:37 GMT

Q. -Can we still claim our son as a dependent in 2025 based on above?

A. Probably. For the dependent support issue, you ignore scholarships. The $100K and the 1099-MISC stipend/scholarship and what they paid for (tuition and room & board) do not count as support. It may depend on how much the W-2 and 1099-NEC are.

A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:

He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled
He did not provide more than 1/2 his own support. Scholarships are excluded from the support calculation
He lived with the parent (including temporary absences such as away at school) for more than half the year

So, it doesn't matter how much he earned. What matters is how much he spent on support. Money he put into savings does not count as support he spent on himself.

The support value of the home, provided by the parent, is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants.

The IRS has a worksheet that can be used to help with the support calculation. See:

https://sites.allegheny.edu/human-resources//files/2019/05/IRS-Worksheet-for-Dependent-Tax-Status.pdf

Q. If we claim him as our dependent, can we choose to use alowertuition number in Box 1 (i.e. $2k) instead of the maximum allowable amount of $4k?

A. Yes

If you decide that he will not be your dependent, for 2025, come back and we'll deal with the remaining issues. He can get the AOTC, it's just a matter of following the interview carefully and adjusting the 1098-T.

Re: How do I enter HELOC interest under $600 without a 1098?

Hal_Al — Sat, 11 Apr 2026 21:44:44 GMT

You still enter it at the 1098 screen, even though you don't have a 1098.

Re: Why doesn't turbotax allow me to enter qualified education expenses like room & board? is the...

kramerica814 — Sat, 11 Apr 2026 20:56:39 GMT

anonymouse1 are you on desktop version? I don't know of a way to adjust the forms directly in online version.