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Kane442
Level 1

Form 1099-Q and Form 1098-T

Does anyone know why Turbotax is only using a portion of the 1098-T tuition and other qualified college expenses to offset the earnings on Form 1099-Q? This is creating taxable income even though just the 1098-T amount alone is greater than the 1099-Q earnings. Also I do not qualify for the education tax credit, so none of the college expenses should be used for this purpose.

 

Your help would be greatly appreciated!

 

4 Replies
NCperson
Level 15

Form 1099-Q and Form 1098-T

@Kane442 

 

Can you please verify two things: 

 

1)  there are no tax credits: look at Line 29 of Form 1040 and Line 3 of Schedule 3 - they should both be zero if you assumption is correct.

2)  You state, TT is only using a portion of the tuition  (Box 1 of Form 1098-T which are the qualified exenses which is more than just tuition) plus whatever else you added upon prompt from TT, is there a scholarship involved?  TT would net the expenses and the scholarship together.  Look at Box 5  of Form 1098-T

 

 

Kane442
Level 1

Form 1099-Q and Form 1098-T

Thank you for kind assistance. I think I found my answer from another inquiry. I will answer your questions first before explaining what I did to fix.

 

Question #1. Yes there are no tax credits on Form 1040, line 29 and Schedule 3, line 3.

Question #2. There are no scholarships or other awards that would reduce box 1 on 1098-T.  Box 5 is a State qualified tuition program.

 

I found a response that indicated there is a glitch with TT. $10,000 ( I don't know where TT got this number) was included on the Student Info Worksheet under Adjustments 'Used for Credit.' My Adjusted Qualified Expenses were lowered by that amount. This caused qualified expenses to be lower than QTP total distributions. A fraction (Adjusted Qualified Expenses/QTP) of the AQE got calculated to determine taxable earnings. To fix, I zeroed out the $10,000 Used for Credit amount. I don't know where the $10,000 came from or why it was used, so I think it is reasonable to exclude.

 

Thank you again for your response. If you have any other thoughts and time, I would like hear.

 

 

 

 

Hal_Al
Level 15

Form 1099-Q and Form 1098-T

@Kane442 said " To fix, I zeroed out the $10,000 Used for Credit amount. I don't know where the $10,000 came from or why it was used, so I think it is reasonable to exclude."

 

That is the correct way to do it.  

 

Q.  Where does  the $10,000 come from?

A.  TurboTax (TT) assumes the you want to use $10,000 of tuition to claim the Lifetime Learning Credit,  even when you're not eligible (income too high). The TT interview should give you  a screen titled “Amount Used to Calculate Education Deduction or Credit”, for you to verify the amount or change it. But that doesn't always happen (that's the "glitch").

Kane442
Level 1

Form 1099-Q and Form 1098-T

Thank you for taking the time to confirm and clarify. Yes, TT did not ask the question to verify the Amount Used to Calculate Education Deduction or Credit. Thanks again for the clarification.

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