<p>Aren't withdrawals from a 529 for qualified expenses supposed to be tax free? </p>
<p>When I enter the info from the 1099Q, it increases the fed tax owed. Why would that be?</p>
<p>First let me note, that you shouldn't be doing your own tax return. It is akin to the old saying, "Only a fool is his own lawyer." </p>
<p>Second, yes , withdrawals from section 529 are tax free TO THE EXTENT that these withdrawals are for qualified tuition. Since I don't do my own tax return, I don't know how to treat this on Turbo Tax. Probably you would have to back out this amount as paid for qualified tuition on some schedule.</p>
<p>I use taxactonline. In addition to putting in the 1009-Q data, there was a question about how much I paid in tuition (which was more than I took out of the 529). I assume turbo tax has a similar question.</p>
<p>the online tax programs are very good, if you don't have complicated taxes and know what you are doing.</p>
<p>The only items turbotax asks for are the 1099Q and the 1098T. The 1098T only reports the actual tuition amount, which is pennies compared to the room & board. Isn't room & board a qualified expense?</p>
<p>yes, room and board counts too for 529 withdrawl (but not for tuition and fees deduction). I don't use turbo tax, but there must be a questions somewhere that asks how much you actually PAID for tuition R&B.</p>
<p>In my experience Turbotax does not handle 529 account withdrawals well at all. Our 529 account withdrawal for our son was used for qualified expenses (his living expenses up to the cost of room and board in the COA as allowed per IRS970). Our State 529 will only issue the check either to his dad, or direct to the school and does not give us the option to have it paid to our son (the beneficiary). If we enter it on turbotax it asks is one of us (husband or me) is the beneficiary and when we answer no turbotax tries to make it taxable, which I know it is not. So I ended up just not entering it on turbotax. i have kept the 1099 and the expenses it was used for filed with our taxes in case we are ever asked about it.</p>
<p>Blankmind, I used turbotax and have for many years. Our son is independent so I do his return separately. In the section on school expenses, you would put the college tuition and other fees in the first screen. On my version (and this may have been caused by some answer I gave very early in the process) it said questioned whether we had a distribution from a qualified tuition plan. When I answer yes to this on the next screen there's blank to fill for post secondary qualified expenses. That's where you put the total including room and board. Hope this helps.</p>
<p>swimcatsmom, that's exactly what's happening to me. I guess I'll just delete the 1099.</p>
<p>sharonohio, I never get a screen asking for qualified educational expenses.</p>
<p>taxguy, maybe you're right, I may just be too stupid to do my own taxes :)</p>
<p>Under personal information, go to miscellaneous income and check that you have a 1099Q then select that you received a 1099Q. After saying you paid tuition and fees, it asks if you want to enter education expenses that might reduce taxable income. The next screen gives u place to enter the amounts. As a note this is Turbotax deluxe (don't know if it matters).</p>
<p>If you pull up forms mode, try and put the information into form ESA/QTP Education Expense worksheet (and create the form if it hasn't created one for you).</p>
<p>Hey, I got it to work! I went back to revisit my education deductions and now it asked about the 1099Q expenses, just like you said sharonohio. But I swear it didn't ask me the first time through. Not sure why. Maybe I hadn't entered the 1099 info at that time so it didn't know ask me about the related expenses, I don't know. Maybe taxguy is right.</p>
<p>Glad you worked it out. What about timing problems? Pay tuition in December but take the 529 withdrawal in January. Stupid IRS!</p>
<p>blankmind, glad that worked for you. Stopped paying for someone to do our taxes in the early 80's after a tax "professional" who came highly recommended kept wanting to do things I didn't think were right. Have dealt with Turbo thru it's earliest spreadsheet incarnations and have had to learn new things as our life has changed (kids, then college etc). We may not get every dime we're entitled to but at least I know what went in and what came out.</p>
<p>fyi, taxactonline deluxe is less than $20 including federal and state file fees.</p>
<p>I found it very easy to use. Been doing my own taxes online for over 10 years. I never buy the product, I use the online version</p>
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<p>If he's independent, why are you doing his return? </p>
<p>I don't mean to get on your case. In fact, I just did my daughter's return over the weekend, because she is overseas & we need the return completed for FAFSA. But she only had income from a single W2 to report & doesn't owe anything. So I know sometimes there's a good reason. </p>
<p>But looking back I always appreciated that my dad made me start doing my own returns the first year I had a job as a teenager. My son has been independent since age 20 -- and I realized about then that it was a big mistake for me to be doing his taxes. So I started to tell my kids that they had to do their own taxes but they could call me for help. </p>
<p>They do call. Last year was odd because both kids had income from stipends or grants (for work) that was reported in 1099's, which had to be treated as self-employment income-- so there was some complicated stuff. My daughter went on her own to some sort of tax workshop available through her college financial aid office -- she learned some things I wouldn't have known and probably saved herself some money. </p>
<p>But I think its better when they are directly involved with the tax preparation.... so I'd encourage you to get your son in the habit of doing his own. For young people and students who do not make much money, there are a now a lot of online services that provide free electronic filing -- so it can all be done online and usually doesn't cost anything.</p>
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Pay tuition in December but take the 529 withdrawal in January.
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<p>I thought that you had to take the 529 withdrawal the same calendar year that you PAID the expense. So, I paid for spring tuition in Nov and made sure to make the withdrawal in Dec. Is that correct??</p>
<p>I'm using Turbo Tax and didn't see anything about 1099s, but didn't worry about it since all withdrawals were for qualified educational expenses, which I keep in my records. But it would be nice to have it all documented in TT too, I'll have to go back and try it again.</p>
<p>entomom, go to the wages & income section, then choose the less common income section, and then choose the miscellaneous income. It will list a bunch of stuff, one of which is coverdell & 529.</p>
<p>Thanks (not so) blankmind!</p>
<p>calmom, I agree with you completely that it's long past time for him to do his return. He's independent in the sense that we haven't claimed him on our returns but he still calls our house home (when not at school). So, we're working on the migration. This was the first year where he actually brought the subject of taxes up. For the first time, I sent him the completed return and scans of all his original documents and told him he would have to check it and approve it and then he could file it. In prior years I've done the returns and his dad has checked them. He's on spring break this week so hopefully he'll get to it. We'll see how that goes. And then maybe next year, he'll get to do the whole thing himself (that would be just fine with me).</p>
<p>I had the same problem with Turbotax. This is how to fix it. You must enter your educational deductions AFTER you enter the 1099Q distribution. If you do it in the opposite order, Turbotax will not ask you about expenses other than tuition.</p>