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Education Credits and 1099-Q reporting


Ringers

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Hi again, Drake experts!  I don't like to be bothering you, but I value your opinion highly as I make the transition from ProSeries to Drake for 2018.  I have converted all of my 2016 clients to Drake and I am now in the process of re-preparing each of my 2017 returns in Drake and then comparing the outcome to what 2017 ProSeries wound up with.  It has been a great learning tool and I can already feel myself getting up to speed with Drake and even writing a few macros!

A few days ago I was re-preparing a return for a client that had educational expenses for one of his dependents and also a 1099-Q from a Bright Start program.  In ProSeries, there was an input screen for the 1099-Q which followed the format of the 1099-Q itself and also an input screen for the 1098 T information and a grid which let you enter other types of payments made for the student, both to and outside the institution.  On the same screen was a checkbox to maximize the credit or deduction choice and also a table which listed why any particular credit could not be taken (income phaseout level, 4 years post secondary already taken, etc.).  You also had the option of choosing the credit you wanted if you did not want to optimze it through the program.  Everytime you changed income, the 8283 "optimize" box would come up to again go through the optimization.  
Also, the taxable portion of the 1099-Q, if any, was calculated and transferred to the 1040 and 5329, if applicable, without further input.  The program also kept track of how many years the AOTC credit had been used for each dependent.

In Drake, I had to answer the quesitons on the 8283, manually input the number of years for AOTC, put in "other" educational expenses, and then select which credit or deduction I wanted to use.  Then, for the 1099-Q, I had to re-enter the expenses on the 5329 form to determine if any of the distribution was taxable.  The re-entering of the expenses seemed to go against the "one-time entry" policy of Drake and the whole process seemed rather cumbersome, unlike what I had experienced with Drake in all of the prior returns.  What am I missing?  I just know there has to be a good explanation😀

 

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Ringers, what you described sounds correct.  I don't have any with that exact fact pattern to check it out where the input must be completed for the 8863 on that input and on the 5329 if there is a 1099Q.  Then there are the due diligence questions that are all combined on one "set" of screens along with blank "notes" pages that I've been tailoring to each client's situation in a Q&A format for my documentation.  My clients' children who received 1099Qs didn't have any taxable portion so I had the 5329 and attached a pdf showing qualified expenditures and that no 8863 credits were taken that should reduce those amounts.  They were also dependents on their parents' returns where any 8863 credits would phase out due to income thresholds, so none were claimed.

I'm not sure if the # of years rolls fwd as Catherine describes.  I usually make brief notes in the bottom large box on the "Notes" screen that I mark to print with the preparer's version of the return that I keep in electronic format, and any info in that bottom large box has been rolling forward to the next tax year.  I just wish that section would be expanded to allow more characters of input.

There is a similar situation that requires input on multiple screens for the 2441 also.  Expenses paid are entered there and also must be entered on the dependent screen with the breakdowns by child also.  It is not automatic.

For all the other benes I've derived from switching to Drake, I can live with these that affect very few of the clients i serve.  

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