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Wendy Reed
Wendy Reed, Enrolled Agent
Category: Tax
Satisfied Customers: 3346
Experience:  15+ years tax preparation and tax advice.
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My Tax Year 2010 1099-Q (for my SMART529 West Virginia Direct

Customer Question

My Tax Year 2010 1099-Q (for my SMART529 West Virginia Direct College Savings Plan) shows: $7,320 in Box 1 (Gross Distribution); $2,695 in Box 2 (Earnings); and $4,625 (Basis) in Box 3.

Of the $7,320 Distribution, only $412 is Taxable (the remainder, $6805) was used for Qualidfied Educational Expenses for my daughter who is a full-time student.

Where in Turbo Tax do I enter the appropriate values listed above so that I'm only paying tax on the $412?
Submitted: 5 years ago.
Category: Tax
Expert:  Wendy Reed replied 5 years ago.

Thank you for giving me the opportunity to assist you. I will give the best answer that I can with the information provided.

 

Hello there,

Actually, from what you are describing, only $190 is taxable----the taxable amount of earnings is the ratio of the amount not used for education over the total distribution X the earnings. I am not sure where you are getting $412 from. However, if there were any scholarships or grants, or you are using either the american opp. credit (which you should if eligible) or the tuition and fees deduction....you will have to make additional adjustments.

 

Turbo Tax is not really sophisticated enough to handle these calculations and determine what is best for the taxpayer (even though the company claims they are). For the best bottom line, you should really see a tax professional that is an expert in educational tax benefits.

 

If you still wish to use Turbo Tax, I can assist you in determining what should be showing up and where---and how to calculate credits/deductions/taxable amounts.

Customer: replied 5 years ago.
Relist: Answer quality.
The just answer Turbo Tax expert stated that Turbo Tax is "not really sophisticated enough to handle these calculations..... even though the company claims they are". I am not satisfied with the answer and therefore choose the option to not to pay the associated $30 fee.
Expert:  Wendy Reed replied 5 years ago.

I told you that because it is very difficult to get the right tax calculations and benefits on Turbo Tax without having in depth knowledge of all the tax benefits---in case you wanted to opt for in person tax preparation....

 

I did also tell you that I would assist you in working through the program---however, if you don't want any additional assistance I will refer your question to customer service.

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