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How to report differences from 1099-Q and 1098-T

My daughter is a full time college student. We claim her as a dependent.  Her 1098-T box 1 = \$0 (because UVA does not report payments received), box 2 = \$11,000 (fall 2010 and spring 2011 tuition and fees).  Her 1099-Q box 1 only shows fall 2010 tuition (\$5,500).
1. Do we eligible for American Opportunity Credit since VA529 paid for tuition?
2. 1099-T box 1 includes fall 2010 & spring 2011 (\$11,000).  1099-Q box 1 includes only fall 2010.  The amounts are different, how do we enter these?

Thank you!
Yes, you get to claim the American Opportunity Credit. Use the first \$4000 of tuition you paid to claim the American Opportunity Credit (AOC), even though the money came out of the 529 plan..

That means you can only claim \$1500 (5500-4000) toward the interest exclusion on the 1099-Q. I'm assuming you only paid \$5500 of the \$11K billed in 2010.  If you paid more, for example you paid  the full \$11,000, in 2010, you can claim the additional towards the 1099-Q. 11,000-4000=7000; since 7000 is more than the \$5500  529 plan distribution, none of the box  2 earnings would be taxable.
• Hi Hal_Al,

Thank you for your prompt responses!  I have a few more questions.
1. Why do I only claim the first \$4,000 instead of \$5,500) for AOC
2. I do not understand your 2nd paragraph
3. Anyway, my correct amount on 1098-T box 2 = \$10,848.   1099-Q box 1 = \$5,518
4. What should I enter for the below TT questions:
a. Out of \$10,848 that was billed by UVA, how much actually paid for the school?  (Should I put \$5,518 b/c this is what VA529 paid)
b. Tuition on 1098-T:  \$5,518, books = \$200, computer = \$600, Room & Board: \$4,046 (total = \$10,364).
c. Total qualified expenses = \$10,364.   I ran TT w/ 2 scenarios:  1) \$5,518  and 2) \$10,364 and got the same result that I qualified for  AOC \$2,500.  Do I bother to claim books and computers?
d. What should I put in â€˜Amount used to calculate Education Deduction and creditâ€™?
Actually TurboTax does all of that automatically. You enter all your expenses in the appropriate boxes, after the 1098-T screen. For example room & board cannot be used to claim the AOC but can be used to claim the 529 plan interest/earnings exclusion.
Out of \$10,848 that was billed by UVA, for how much was actually paid to the school, you should put how much was actually paid to UVA, in 2010, regardless of whether paid by you, grants or the 529 plan. For tax purposes, the 529 payments are considered as made by you.

You do claim books and computers. TT will disregard if those amounts aren't needed.

If you still get the  â€˜Amount used to calculate Education Deduction and creditâ€™ question, enter \$4000.

If you actually paid more than \$9518 (4000+5518) in expenses; you'll get the full \$2500 AOC and none of the 1099-Q earnings will be taxable.