<p>I am working on my taxes and am finding that the program “Tax Cut” is taxing me on the amount entered from the 1099Q received from FSU. I have entered the info in many different ways/sequences and am being taxed on the $7,000 then given the education credit which is around $2,500. Is anyone else having this issue?</p>
<p>I am starting to think I should just not enter the 1099Q since all of the $ is being used to fund college expenses, which makes it tax free.</p>
<p>It has been rumored that the program Turbo Tax has the same issue. Anyone else experiencing this problem?</p>
<p>Are you a parent or the student? Did Taxcut ask you for the amount of tuition/fees, room and board and books paid? Did it ask you for the amount of scholarships/grants? It may be to your advantage depending on the various amounts of college payments to pay tax on the earnings part of a QTP distribution and take the AOC credit. The credit is probably more valuable to you than the tax on the earnings. The full distribution shouldn’t be taxed, just the earnings if you enter the basis correctly. Many people do this including me. Whose SSN is on the 1099Q, parent or student? That’s who would report the 1099Q.</p>
<p>Likely it’s not an issue with Taxcut but rather Taxcut figuring things out from the numbers entered to your best advantage.</p>