IRS does not allow "double benefit" when you withdraw tax-free funds for college expenses.
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"double benefit" is where the funds are already tax-free (such as from a 529 or prepaid college savings plan where distributions for college are tax-free) and then you claim a "deduction" on those very same funds, therefore receiving a DOUBLE benefit (which IRS does not permit). Turbo Tax software does not seem to detect situations where this double benefit may apply. Turbo Tax merely asks for a 1098-T and asks no further clarifying questions. Any suggestions?
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Answer:
I am looking at Turbo tax now, but I do not have your information for the 1098-T. But, it since the money is coming out of a 529, you should not be claiming it as a deduction. You should only be deducting those expenses that are not covered by funds from the 529. If you can send me a private message with the numbers or codes in the 9 boxes, I can run the 1098-T and see what the results are.
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