1099Q and 1098T forms

[jmaiello]

Hello, 

My Name is {PII Removed}

I have Turbo Tax Deluxe and I have 1099Q forms to enter from a Coverdell distribution. I am the owner and my son {PII Removed} is the Beneficiary.  I also have a 1098T form from his College Montclair University. 

When I click Me {PII Removed} as the owner and {PII Removed} as the student Turbo Tax charges me tax on the entire distribution and it does not allow me to enter the 1098T form.

When I click on {PII Removed} as the owner and {PII Removed} as the student Turbo Tax does not include the 1099Q distribution in the tax return. 

I am extremely confused. We took $6000 in distributions and payed $6985.00 in Tuition. This is a qualified Distribution. Please help me enter the information in Turbo tax to properly reflect these transactions. 

Thank you

{PII Removed}

[AmyC]

You have a lot of moving parts here -so one at a time. First, the 1099-Q was used exclusively for qualified expenses, it does not need to be entered. Tuck the 1099-Q into your tax folder. 

Second, determine if the modified AGI will allow you, whichever of you is claiming the student, to claim an education credit.

The IRS changed the limitations to claim Education credits. The phaseout for  AOTC is a modified AGI of:

• $80,000-$90,000 or
• $160,000- $180,000 MFJ

Third, if you can claim the credit, you want to maximize it. You can shift most or all the 1099-Q income to room and board. TurboTax will not give you the room and board entry screen/box until you enter the 1099-Q and complete the 529 distribution interview.  Room & board (and other 529 qualified expenses) entry box will be on the same screen as books. However, you still don't need to enter the 1099-Q provided you track how you reached your education expenses- in case the IRS asks. The worksheets don't go to the IRS so entering the information, may help or may confuse you.

Fourth is the magic. Please see my 529 example with IRS information here and another here. These examples will help you maximize refunds and file correctly with the right forms on the right returns.