IRS letter claiming taxes due on 1099-Q

Forum|Forum|1 year ago
February 22, 2025
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I received a letter from the IRS on my 2023 tax return saying I did not claim my 1099-Q withdrawal (issued to me, but for my son) income and that I owe taxed on it as well as removed the $2500 child tax credit. I entered my 1099-Q info as well as my 1098-T info and other college expenses supporting the 529 withdrawal as non-taxable. Turbotax walked me through adjustments to my education expenses to allow the credit if I recall correctly. I looked at my 1040 and the 1099-Q info gets recorded on schedule 1, line 8z. However the 1099-Q worksheet does not get filed. Error check was clean when I filed and I have followed this process for the prior 3 years of his college education. Any idea why the IRS called this out? Is there issues or missing documents Turbotax did not send?

AmyC

Employee

No, they randomly audit returns and ask for supporting information. I went through this as well. Just send them all your tuition expenses, room and board, whatever the Q went towards. Write a simple letter. The IRS has a document upload available as well. You can contact the department that sent the letter if they didn't include the portal information.

For example:

Q income of $xxx

Room and board $yyy

Tuition $zzz

and so on

Leaves no taxable amount according to IRS Pub 970.

Enclosed are the expenses to back up the distribution.

I do qualify for the AOTC because:

list Qualified Education Expenses - Internal Revenue Service

Enclosed are the expenses to back up the credit.

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amptaxAuthor

Would be the case if they did not ask for supporting backup proving that is was withdrawn for education expenses? They said it was unreported income. I sent them 1099-Q form from Turbotax showing the calculations as well as the 1098-T showing my son was a student that year. But not other receipts

KrisD15

You say they "removed the 2,500 Child Tax Credit", did you mean they removed the 2,500 American Opportunity Tax Credit instead?

In 2023, in order to get an education credit on your return, did the student need to claim income for the 1099-Q withdrawal? If yes, did the student file and claim that income?

Can you tell us the amount on the 1099-Q as well as Box1 and Box 5 on Form 1098-T?

Since you sent the copy of the TurboTax worksheet to the IRS, you may need to wait to hear their response.

IRS Pub 970 explains how the credit work.

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