Student Worksheet Line 18 Adjustment Randomly applied?

[mmatrull]

Now that the Education Expense entry issue in TT has finally been fixed I was able to enter all my 2 sons Education Expenses.  However, even though I have valid expenses for both of them to cover all 529 Distributions I made, TT is still trying to tax me on part of the distribution for 1 son.  When I look at the Student Worksheet, there is a completely random $10,000 that was entered In Part VI, as an Adjustment on Line 18 "Used for Credit".  We receive no education credits as we do not qualify for them based on income.  Can someone explain where the mystery $10,000 is coming from?  Because of this TT is trying to get me to pay thousands of dollars of extra tax on my 529 distributions.

[AmyC]

Yes, the worksheet is trying to give you credit. It does this first so you need to make an adjustment. Follow these steps:

1. Open to federal deductions and credits
2. Select education
3. Edit next to the son with the taxable distribution
4. Continue through to Your Education Expenses Summary
5. Edit Education information
6. Continue through to Amount used to calculate education credit/ deduction (this only appears after enter both Q and T. Always enter Q first.
7. Your $10,000 issue shows, change it to zero.

Finally, if there is still an issue, just follow IRS guidance and remove the Q since it isn't taxable.  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.