taxladies
Level 3
‎03-05-2020 02:07 PM

Mom received 1099-Q with her name social security number on it.

Son has a 1098-T.  Mom claims son & education expenses on her return.

We have her in ProSeries Pro as the 'recipient' and son as the 'designated beneficiary" on the 1099-Q worksheet.

1098-T is linked to 1099-Q in Proseries Pro.

Education expense is $8800.   Earnings (box 2) on 1099-Q is $9050.    Mom is being taxed on total amount of earnings.   There is also a 10% penalty on only a portion of the earnings which is calculating correctly.  Why is she being taxed on total earnings earnings. This doesn't seem to be correct.

 The education expense of $8800. are not being used to offset the earnings however, it does calculate correctly for the 10% penalty. 

Why is it not calculating correctly?

 

0 Cheers
IntuitCharlene
Moderator
Moderator
‎03-05-2020 02:17 PM

ProSeires typically defaults to using the Tuition and Fees for a tax credit vs making the 1099-Q earnings tax free. There is a way that you can change the amounts available to make the expenses offset the 1099-Q earnings. 

 

  1. Open the Dependent Student Info Worksheet for the son. 
  2. Scroll down to part VI - Education Expenses. 
  3. Look for line 17: Used for credit or deduction. This is probably the full amount of the expenses in the first column. If so, then ProSeries is trying to use the expenses to give them a tax credit. If you reduce this amount then it will 'free up' the expenses to offset the 1099-Q earnings. 
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