Education Credit Help

[michaelmars]

I am doing a kids return and he is a dependent of his parents.  He has qualified tuition so it should go on the parents return.  But he also has a distribution from a 529 plan.  The 529 has the kids social security number on it. 

Here is what I did, let me know if I am wrong please.

I claimed the tuition on the parents return.  I put the distribution on the kids return and also entered his education info. Since he is a dependent he didn't qualify for any of the credits anyway.  This way the distribution shows on the kids return.

The tuition was $37,000 and the distribution was only $8,000 so the parents are entitled to the credits anyway.  Is this right or does the distribution go on the parents return?  If so won't the IRS assess the tax on the earnings against the kid?

[Pacun]

Use 29K on parents return and 8 on the kids return. Remember you are not taking a credit on the kids return and you are only saying that the 8K were used for education expenses.

The distribution should come under the father or mother's social security number if they set it up and they should have an option to use the distribution on another kid if they choose to do so. By being on the child's social security number, parents don't have that choice. I am just talking about the general rule (maybe your client's only have one child).

[grmy2h]

The 529 isn't taxable since they had more than 8K in QEE to offset it. It doesn't need to be on either return.

[michaelmars]

thank you both, I did as Pacun said. 

[Terry D EA]

11 hours ago, grmy2h said:

The 529 isn't taxable since they had more than 8K in QEE to offset it. It doesn't need to be on either return.

If I remember correctly, there is an entry for the 529 distribution along with a calculation showing what the qualified education expenses were and indicating what the 529 distribution was used for. Doing so tells the IRS the funds are either taxable or non taxable.