<p>I’ve been trying to avoid touching S1’s 529 account, but this year I finally took out $5500. I had it sent to me to repay part of the fall tuition. Now we’re doing the taxes. We got a 1099-Q for the amount of the withdrawal. We make too much for most of the credits, so in prior years I haven’t even listed the college expenses on the tax returns.</p>
<p>I would have thought that we would enter in the amount from the 1098-T to offset the $5500, but TurboTax generated some strange warning that to optimize our refund we should only enter $4000. Does anyone understand this? Trying to convince DH to enter at least $5500 - but he thinks as long as I have those receipts we’re fine.</p>
<p>Opinions?</p>
<p>The credit is $2,500 for $4,000 in expenses. I’m not aware of any other things that you can do but maybe TurboTax thinks that it can do something with the other $1,500 in expenses.</p>
<p>But since I took out $5500 I think I should declare >= $5500 in expenses. It’s weird that entering higher numbers causes the refund to decrease, but it’s weighing two different kinds of deductions I guess.</p>
<p>I don’t know the forms but I’d guess that it winds up as $4,000 on the form anyways after the internal calculation.</p>
<p>If you want to know what is going on, review all of the forms that it would generate if you had a final return. You may be able to see what it is doing with the pieces and where you get some extra deductions.</p>