How do I handle Bright Start (State of IL / Illinois) in Turbo Tax?

Our situation: Grandparents contributed to our son's IL Bright Start account. We withdrew $ for his education in 2020 (and have the 1099-Q showing that). This 1099-Q amount is less than what shows on our son's 1098t.

On the Federal (deductions & credits - education) section of Turbo Tax I have entered the 1099-Q. Then when I went to enter the 1098t it says "You Can't Claim Tuition and Other Fees" (because our AGI is too high). So I left that out. It also says "You Can't Claim an Education Tax Break - Based on what you've entered so far you're not eligible to claim an education deduction or credit."

Questions:

The state of IL does handle 529 accounts differently (than federal). How do I enter things correctly for our situation? Do I use the item "Distributions from college savings plans", and if so how do I determine if the distributions were included in our federal income?

Thanks much for any help you can offer!

100

Expert Alumni

Feb 22, 2021 5:22:57 PM

The distributions were not included in your federal income (because the distributions were used for qualified educational expenses), so you do not need to make an Illinois adjustment.

Illinois Qualified Expenses do not include expenses for:

tuition in connection with the Beneficiary’s enrollment or attendance at an elementary or secondary public, private, or religious school. The amount of cash distributions for such expenses from all 529 qualified tuition programs with respect to a Beneficiary shall, in the aggregate, not exceed $10,000 during the taxable year;
tuition, fees, books, supplies, and equipment required for participation in an Apprenticeship Program;
payments on Qualified Education Loans of the Beneficiary or a sibling of the Beneficiary, subject to a $10,000 aggregate limit.

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How do I handle Bright Start (State of IL / Illinois) in Turbo Tax?