Daughter is a full-time student at a college in another state. I claim her as a dependent on my taxes since I pay for everything. We have a 529 set up...I'm the account owner, she is the beneficiary. All money withdrawn from the 529 goes to tuition and other qualified expenses. The 529 1099-Q is addressed to me and the school's 1098-T is addressed to my daughter. Here's the issue:
If the 1099-Q info is entered before the 1098-T info, TurboTax says I don't qualify for an education tax break. If I enter the 1099-T first, then the 1098-Q, TurboTax adds the American Opportunity credit. In both cases, the data entered is exactly the same. Reversing the data entry produces different results...it feels like a bug... Not sure how to proceed...
I feel your pain and agree! Something is not consistent and/or calculated correctly. I entered the numbers and took the credit. I'm also having an issue this year with the 529 withdrawal becoming a non-earned income taxable event ... even with tuition payments exceeding that amount.
If you enter the 1099-Q FIRST, the program asks for the expenses (1098-T) to be entered and then matches the expenses from the 1098-T to the distribution on the 1099-Q. If there are no additional expenses, there will be no credit generated.
If you enter the 1098-T FIRST, the program will take expenses for an education credit. In this case, it "appears" to the program that there are no expenses to apply to the distribution. This may result in an Education Credit and taxable distribution.
If the distribution is treated as taxable, that will need to be claimed by the person that was issued the 1099-Q.
You may also type
letme
into the search-box and click the letme link to see if the program took, and change if needed, the credit.