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1099-Q received in dependent's name and another one in parent's name

ltax255
Level 3

Client received 2 1099-Qs, one in son's name ($4K earnings) and one in client's name. Education expenses were more than the 2 1099s combined.  I am almost certain this should all be tax-free, but I am having trouble finding the right way to enter in Proseries. 

1. If I enter both in client's return, proseries says part of it is taxable as other income

2. If I do a separate return for dependent, it shows $700 tax due, even though all this distribution was paid directly to school, but i am entering 1098T in the parent's return.

What's the best (right) way to enter these?

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Accountant-Man
Level 11

The only way the income shows as taxable is if the total distributions are more than the 1098T less grants plus room and board etc on the college expenses.

Also, check if the $10,000 is being claimed as a credit on the expense page. This reduces the amount eligible for exclusion.

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