Tax on part of 529/Coverdell?

[TG2]

Received funds from Coverdell and 529. Had expenses to cover all but a small portion. For some reason TurboTax is subtracting a $10k credit to the expenses which is taxing a large portion. I see the credit on the student information worksheet. Any help appreciated on how to change and where to change.

[CarolC]

Before I explain, know that if the student received scholarships or grants, the software will automatically apply the amount to cover tuition expenses.  The college plans will then be used to cover other education expenses.

TurboTax provides categories for tuition, books, fees, supplies, and room & board to enter your expenses.  Follow these steps:

• When entering education expenses enter your 1099-Qs for your 529 plan and Coverdell distributions first
• Next, enter ALL education expenses in the 1098-T section in TurboTax.  This includes tuition, books, room & board, supplies, and fees
• Check the school's website for their projected cost of room & board as you are only allowed to deduct room & board costs up to the school's published amount

As long as the education expenses (after grants or scholarships are deducted) are equal to or more than the total 1099-Q distributions, there will not be a tax implication.