If my 529 ran out and I ended up paying towards tuition where do I put that

[confusedrf]

General question. Let's say I wrote a check for part of my daughter's tuition.... In other words it did not come from her 529 plan.  Where do I enter that. It feels like that should factor into my expenses for the year no?

[ColeenD3]

You can take an Education Credit for the amount you paid out of pocket. Ideally, you have a Form 1098-T.

Here's how to enter your 1098-T:

1. Open or continue your return
2. Select Search and search for 1098t 
3. Select the Jump to link in the search results
4. On the Do you want to enter your higher education expenses? screen, answer Yes
5. Answer Yes to Did you get a 1098-T for the year? and Continue
6. On the next screen, you can choose how you'd like to add your 1098-T. You can upload a digital copy from your computer or type it in yourself. Select which option you'd like and Continue
7. If you need to enter a 1098-T for someone else, continue through the screens until you get to the Your Education Expenses Summary screen, then select Add A Student

Some important tips about entering this form:

• Enter your 1098-T exactly as is, even if the amounts are wrong (this is common). You'll get a chance to correct this info and enter additional expenses later on
• Leave blank boxes blank. Don't enter 0 for any blank boxes on the form, as this generates errors
• Parents: If the student listed on the 1098-T is your dependent, enter the 1098-T on your return, even if your dependent paid the tuition
• Students: If you're not being claimed as a dependent, enter the 1098-T on your return regardless of who paid the tuition, unless it was your employer. In that case, just keep the 1098-T with your tax records
• TurboTax Free Edition doesn't support Form 1098-T

[confusedrf]

If I may I entered the queue and T forms depending on what word are you enter things I either get back 1500 $2,000 or 2500.. this is nuts! So I've been spending some time reading documentation on all this...

The T form shows payments received for qualified tuition and related expenses. That does not include books that I purchased for my daughter with cash out of my own pocket. Where would I enter that?

[confusedrf]

My daughter is a dependent by the way I enter the q&t on my tax return nothing on hers.

Now I did find an area to enter books but when I click the little help link it says I can only enter book expenses that she bought directly from the college IE those books had to be purchased from the college. I have never had to buy a book from the college I always buy them on Amazon does this not count towards education expenses somewhere it's not included on the T form?

Thanks;!!!

[ColeenD3]

If you are applying for the American Opportunity Credit, you can take the expense for the books. Please see this IRS LINK. Do what you need to do in the program to get the result you need. This program is a tool for you to prepare your tax return.

[confusedrf]

Do what you need to do is easier said than done it seems like this program is all over the place.

In my prior post I think I narrowed down the area to where I need to enter books and materials ...hopefully somebody can tell me which of the three areas I would enter it.

That leaves me with where do I put the amount for the check I wrote towards her tuition? 

I assume both of these would be expenses that count towards the 4K that will get me 2.5k credit.

Quick summary she has a T form which I put on my return it shows..

51k payments for tuition... 23k in scholarships. The balance or 28k was paid in two parts one a distribution from her 529 plan of 27k. And finally the last $1,000 was paid by me via a check I wrote.  I also had dollars I spent on Amazon for books..

In general I'm trying to find out if I qualify for either of these credits. I run the numbers through the software twice now and one time I seem to get roughly $1,000 credit and one time I seem to get the full 2500. In the case of the latter  it says the recipient will have $2,200 more in taxable income. Feels like somehow that might be coming from the basis of my 529 distribution but I'm not in other words perhaps the basis or money I put in somehow in some way goes towards this credit not in any event it sounds like  I would need to enter that $2,200 onto my daughter's return... there would be very little tax you would incur doing so but I don't know where to put it on her form. This hasn't happened the first 3 years she's been in school.

Further she's a commuting student and lives at home and I've never put in any expense room and board perhaps this alone could take me to the 4K required to get the $2,500 credit.  

[JillS56]

The program is not all over the place, you need to just answer the questions correctly, and TurboTax will calculate the amount of credit. 

To enter what you paid and the other educational expenses not covered by the 1098-T, in TurboTax Desktop:

1. Switch to Forms
2. Scroll down the list of forms and click on 1098-T
3. Scroll down the 1098-T form to the QuickZoom -Dependent students worksheet and click QuickZoom
4. Scroll down to Part VI - Education Expenses and complete this section with your added expenses.   Line 1 would be the $1,000 that you paid.  Any other expenses would be put on the appropriate line.

When completed make sure you select to optimize the education credit.   This would then tell you if you have a credit available or whether any of it is considered to income. 

In your question you stated "the recipient will have $2,200 more in taxable income. . . .   I would need to enter that $2,200 onto my daughter's return... there would be very little tax you would incur doing so but I don't know where to put it on her form."    You would not report the $2,200 of income on your daughters return.    If you are claiming your daughter as a dependent and claiming the tuition credit, then the $2,200 of income would be taxed on your return as income.

Additionally, if you are claiming your daughter as a dependent, your daughter cannot claim the tuition credit.  

Right now, just using the numbers you have entered I can see that there is at least a $1,000 over payment of funds.   In other words, at least $1,000 of reportable income.   

[confusedrf]

Thanks Jill.. I follow this to some degree. The 529 did not cover all tuition, I had to write a check for the $1,000 to cover the balance.  I'm not sure why that would be reportable... Or maybe you mean I need to report it so I can get credit for it towards the $2,500

Nevertheless I started from scratch!!!  A whole new return. I lwt it walk me through everything in the exact order it wanted to.

It never gave me a chance to enter the books I bought or $1,000 I paid out-of-pocket towards tuition. Perhaps I I must manually go to the area you described and do that.

However here is the interesting thing....

When all is said and done it awarded me $2,500. It also said $2200 of the 529 was taxable to the recipient. I thought the recipient would be my daughter since it's in her name. But if I understand you correctly since I'm putting it on my return I am the recipient.

IS THIS CORRECT? If so does this then mean I lost maybe a hundred bucks in taxes to get the 2500? I'll take it!

Now, I am not sure how it awarded me the 2500 without me putting in the books or the $1,000 or anything else  though.  I do you know it seemed to happen after I entered the 529 information. In other words after I entered the disbursement and the basis etc... That's when it told me I get the 2500 and I think right before that is when it told me the recipient has 2,200 in taxable income. I wonder somehow TurboTax looks at the amount I paid the basis etc and in some way shape or form part of that can somehow be considered towards the 4K?

I think I'm just going to let her rip and file it unless you feel something sounds fishy. 

[JillS56]

I would just let it go as it calculated.   It may be that for some reason there is tax due on the 529 funds.   Can I explain why, no?    My guess is that is where the $2,200 is coming from.  I also think because the $2,200 is taxable, that made enough available tuition to allow the full $2,500.  You come out ahead $2,400 if the $2,200 is only costing an additional tax of $100.

Your $1,000 payment and books, etc. would have to be entered manually as I previously explained.   I would not bother entering it at this time as you received the maximum credit.

I am glad it worked out in your favor.