1098-T Lifetime learning credit

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kglynch5
kglynch5 Member Newcomer

My 1098-T shows total amount I paid in tuition, and scholarships earned. I paid part of the tuition with my 529 and part with cash. Is there a way to report how much I paid in just cash bc I know the 529 money doesn’t qualify for Lifetime Learning credit.

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  • CarleneF
    CarleneF FreeTaxUSA Agent
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    Generally, you'll receive a Form 1099-Q reporting the distribution from your 529. You can enter this in the software under the Income section and then "Tuition Program Distribution" One of the questions is, "Is anyone claiming an education credit using the expenses paid with your 529 program distributions?" If you answer yes to that question and then you enter all of the information from those screens, the software should help you calculate it all correctly.

    Usually, if you claim an education credit for education expenses paid by your distribution, then part or all of the distribution can be taxable.

    You may want to try a few scenarios on your return to see which provides the most overall benefit for you (For example, not claiming an education credit and keeping your 529 distributions tax-free versus claiming an education credit and reporting your 529 program distributions as taxable income).