Qualified college expenses for my son are not properly flowing through in Turbotax 2023. Even though his total qualified expenses are greater than the withdrawals from 529 plan, a portion of the withdrawals are still showing up as taxable income. Do I have to manually override in the "Forms" to fix this issue? Please help!
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Distributions aren't taxable when used to pay for qualified higher education expenses.
If you used distributions to pay for qualified college expenses, you don't need to report form 1099-Q on your tax return but should keep the form with your tax records.
For more information, check: irs.gov
I used the Easy Step interview process like always to enter the college expenses. Somehow, this information did not flow through correctly in TT into Item 2C in form 1099-Q, under Qualified Tuition Program (which Georgia has). That's what puzzled me. I am having to manually override that value.
If you are entering the college expenses for the education credits, you do want to enter the 1098-T and claim any allowed amounts at the federal and state level.
You should not enter the 1099-Q. 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. Tuition paid for the first 3 months of the next year also qualify, see page 12, What Expenses Qualify, and page 52 for qualified distributions.
Page 45 repeats: Don't report tax-free distributions (including qualifying rollovers) on your tax return.
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