How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Lev Your Own Question
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28090
Experience:  Taxes, Immigration, Labor Relations
870116
Type Your Tax Question Here...
Lev is online now
A new question is answered every 9 seconds

My daughter received a 1098T($498.00) and 1099Q($1,920.10)-Gross

This answer was rated:

My daughter received a 1098T($498.00) and 1099Q($1,920.10)-Gross Distribution, ($79.90)-Earnings, & ($2,000.00)-Basis. What dollar amount do I need to put on Line 21
of her 1040 form as other income. She earned $11,103.61 on W-2. Would a form 8863 or 8917 be beneficial for her? Please help...

Yamom,

 

How old is your daughter? What year of college is she in? How much of the $1,920 did she actually use for college?

Customer: replied 6 years ago.
My daughter is 21 years old. Only $498.00 was used for college. She will graduate in May of this year with an Associates in Early Child Care. She graduated High School in 2006.

I am going to opt out and let an expert with a better grasp on 1099-Q's help you with this one.



Edited by TaxMomNJ on 2/23/2010 at 1:54 AM EST
Customer: replied 6 years ago.

OK, Thanks anyway. Just have them E-mail an answer if possible.
Customer: replied 6 years ago.
Relist: I still need help.
I did not receive an answer to my question yet. The expert decided to pass and let someone else answer the question who had better knowledge on 1099Q and 1098T.

The form 1099-Q reports distributions from qualified tuition programs under section 529.

In your situation - $1,920.10 - Gross Distribution - is less than original contribution - $2,000.00 - Basis.

 

Because contributions to such programs are not deduced from taxable income - the distribution of the basis is not taxable income - and there is nothing to report on the line 21.

 

According to your information - the form 1098-T reports tuition expenses - $498. However before you would be eligible to claim educational credit - we need to be sure that the distribution from qualified tuition programs $1,920 was used for qualified educational expenses.

From your information - it is not clear how these money were used.

 

Customer: replied 6 years ago.
Out of the $1,920.10 only $498.00 was used to pay for college classes. The rest of the money was originally deposit into a savings account.

Your original contribution was from after-tax money - so - there is no earnings and there is no taxable income.

 

Because your educational expenses were paid with the distribution from the qualified tuition account - same expenses may not be used to claim an educational credit.

 

Let me know if you need any help.

 

Customer: replied 6 years ago.
So, on line 21 of her 1040 form I do not need to report anything. I just need to keep the 1098T and 1099Q for my records. And I should not worry about taking the Hope credit
or Opportunity credit...Is this right.

So, on line 21 of her 1040 form I do not need to report anything.

Yes - that is correct - as long as there is no earnings - there is no taxable income regardless how the distribution is used.

 

I just need to keep the 1098T and 1099Q for my records.

Yes - the form 1099Q provides you a proof that there is no earnings on that account.

 

And I should not worry about taking the Hope credit or Opportunity credit.

Yes - as long as you had a distribution from the qualified tuition account - and that amount was not fully used to pay qualified educational expenses - you may not use same expenses to claim any other educational credits.

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28090
Experience: Taxes, Immigration, Labor Relations
Lev and other Tax Specialists are ready to help you

Some corrections...

Please take a look at IRS publication 970 page 68 - http://www.irs.gov/pub/irs-pdf/p970.pdf

Coordination With American Opportunity, Hope, and Lifetime Learning Credits
An American opportunity, Hope, or lifetime learning credit (education credit) can be claimed in the same year the beneficiary takes a tax-free distribution from a QTP, as long as the same expenses are not used for both benefits. This means that after the beneficiary reduces qualified education expenses by tax-free educational assistance, he or she must further reduce them by the expenses taken into account in determining the credit.

 

So you may use your tuition expenses - $498 for any educational credit - but in this case part of the distribution from a QTP might be taxable - however because there is no gain in your account - nothing would be taxable for you.

Please see example on the same page.

Sorry for confusion.

Let me know if you need any help with reporting.