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Whether you’re an experienced do-it-yourselfer or doing your own taxes for the first time, this is your place to learn and share. Here you’ll find information and resources for using H&R Block’s online and software DIY solutions. You’ll also find links to more information to assist you on your DIY journey.

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Pioneer
Posts: 2
Registered: ‎02-15-2018

2017 H&R Block Deluxe, Form 8863, 1098-T and 1099-Q Reconciliation

The Short Question -- Does 2017 H&R Block Deluxe have the ability to reconcile 529 Withdrawals  reported in 1099-Q with the 1098-T Tuition and Fees Billed as reported from a university in in order to properly calculate the Lifetime Learning Credit in form 8863? How do you do that?

 

The Longer Question - I've spent a few hours trying to do this in H&R Block deluxe and searched through the online forums and found no answers. I was easily able to do this in TurboTax and also TaxAct.

 

My daughter started graduate school in 2017. She has used up all four years of her American Opportunity Credit, but is still eligible to claim the Lifetime Learning Credit(LLC). To simplify the numbers: She was billed $15,000 for tuition and fees reported in a 1098-T.  She withdrew $10,000 from a 529 to pay for the tuition and fees reported in a 1099-Q, and $5,000 was paid out of pocket.

 

According to IRS publication 970, when calculating the LLC, you can't include tax advantaged (QTP)funds. The most you can claim for the LLC is 20% of $10,000 (subject to income restrictions). In my daughter's case,  $10,000 out of the $15,000 billed can't be included in the LLC calculation in Form 8863. She would be eligable for 20% of the remaining $5,000 for a $1,000 credit.

 

In H&R Block Deluxe, the interview process allows for entering in the 1098-T and then fills out form 8863 resulting in a $2,000 credit (off of the $10,000 maximum), as there seems to be no place to enter in the 1099-Q and adjust qualified eligible expenses accordingly.  Publication 970 supplies some worksheets to do this. Both TurboTax and TaxAct allows for entering in the 1099-Q as well as other educational expenses and assistist you in making the correct allocations for the credit. From what I can tell H&R Block Deluxe only allows for imputing the 1099-Q only if you withdrew more money than you have qualified eligible expenses for in order to calculate the income tax and 10% penalty.

 

It seems the only way to do this in H&R Block Deluxe is to manually make the calculations and then overide Form 8863 resulting in her not being able to efile.

 

Before I bail completely on H&R Block, does anyone have some insight into this?

 

Thanks in Advance!

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Pioneer
Posts: 1
Registered: ‎03-27-2018

Re: 2017 H&R Block Deluxe, Form 8863, 1098-T and 1099-Q Reconciliation

We had a very similar experience with preparing our 2017 return relating to properly calculating the American Opportunities Credit on Form 8863, and figuring out how to enter the appropriate Forms 1098-T and 1099-Q information.

 

Our daughter is in her 1st year of college, so this was a new filing experience.  The 1098-T, box 2 info included the amount billed during 2017 for tuition and fees, she had a $1,000 scholarship, also on the form, and we drew funds from the Sec 529 plan but the total draws did not exceed qualified expenses.  From reading various sections in Pub 970, I ended up developing my own worksheet and determined the amount that should flow to Line 27 of Form 8863 to calculate the credit, which was roughly $2,100.  The problem I experienced was with the inability to enter info from 1099-Q, and total expenses covered by the draws (room & board) the software would put $4,000 in Line 27 and calculate too much credit.  After struggling for hours, and not being able to contact anyone at H&R Block to discuss, I came to the conclusion that I would have to override the amount on the form, resulting in us not being able to e-file our return.

 

After reading a number of discussions posted and various responses, I decided to go back and try to rework my input.  I finally figured out what numbers needed to be entered where in order to get the correct balance flowing to Form 8863 to calculate to right credit amount without an override, allowing us to e-file the return with the information accurately entered.  Here is what I did:

 

After the screens where the student and school info is entered, the screens for 1098-T tuition opens.  I entered the info exactly as shown on the form received from the school.  On the next screen where it asks about additional funding, enter the Sec 529 draws relating to the amount of tuition and fees, and any other equipment/supply qualified expenses.  Since her scholarship was on the 1098-T, this info was already entered, so there were no other amounts to enter for the Grants, Scholarships and Aid screen.   Under Course Materials, I entered the amount of the remaining equipment/supplies not covered by the Sec 529 plan draws - in other words, this is the amount that would go to Line 27 on Form 8863.  She did not use any of her own funds, so the next screen is blank, then the summary screen comes up.

 

Once recalculated, Form 8863, Line 27, now had the correct amount of the remaining unreimbursed qualified expenses, the credit calculated correctly, there was no longer an override and we could e-file the return.

 

We have used H&R Block software for our tax prep for a number of years; we used TaxCut prior to that.  I have never had an issue like this come up but, with this specific issue, found the software inadequate and uninformative in trying to resolve the problem.  I took screen shots so I know exactly how I entered everything and now have my own worksheet to calculate the proper balances.  The software really should be modified to allow entry of all appropriate data from not only the 1098-T but also the 1099-Q info, other qualified expenses and any room & board.

 

I don't know if this helps with your specific issue but may provide some insight.  Good luck!

Pioneer
Posts: 2
Registered: ‎02-15-2018

Re: 2017 H&R Block Deluxe, Form 8863, 1098-T and 1099-Q Reconciliation

Sorry I did not respond sooner. I wanted to thank you for your long and detailed response. Hopefully it helps someone else with the same issue.

 

As you noted, other programs handled this particular issue much more cleanly. You entered in your 1098-T and 1099-Q along with non 1098-T expenses: room and board; books and supplies, and then it fills out your 8863 for you without added complexities. After not getting any response here for over a month, I ended up going to a competitor.