1098E.1098T issued for Student.1099Q recipient Father, Father received the $ and send it to student to pay off the loan. So Father file1099Q and student file 1098 - T&E?

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March 20, 2025
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Clarification regarding 1099-Q, 1098-T, 1098-E 1098-E around $279 Interest Payment - issued against Borrower which is my Daughter. 1098-T $40721 (box 1) and 16000 (Box 5) issued against Student which is my Daughter 1099-Q 2 Forms from 2 different 529 account $5400 & $3024==$8424 , issues against recipient which is Father. both has "The receipeint is not the designated beneficiary" CHECKED. Amount withdrwan/Rceived from 529 and reported in 1099-Q 5400+3024 == 8424 ----- Loan Paid 5500+2924=8424 i WITHDRAW the amount and send it to my daugher and she in turn pay off the loan. Questions: 1. 1099-Q because this is issued under my name as receipent , should I need to file in my Return ( I & My wife - file as Married and filing jointly) 2. 1098 - T, 1098-E, this is issued under my daugher name, should she need to file this in her Return ( File as Single - Student), and to get the Credit of $279?

TurboTax Online

Best answer by KrisD15

To answer your specific question about Form 1099-Q it isn't taxable, so you don't need to enter Form 1099-Q.

Yes, in your situation, if your daughter is filing as if she is not a dependent, your daughter can also claim the student loan interest that was paid.

If you pay her college and room and board, I think you should claim her as your dependent. Does she work? How can she support herself if you pay for everything? Perhaps you should talk to someone about whether you should be claiming her, but you don't have to worry about the 1099-Q.

Usually the parent claims the college student and also uses Form 1098-T (even when it is issue to the student) to get an education credit which can lower the parents tax liability and also inflate the parents refund.

If the student does not have a high income, they probably don't have a tax liability and the credit is reduced.

You might ask your daughter to talk to the financial aid office at the school and they might be able to explain what's best for both her and you.

KrisD15

Suppling an answer would be easier if we knew if you are claiming your daughter as your dependent.

1. You would be liable for tax on that distribution since you took it and the 1099-Q was issued to you, but if it isn't taxable, you needn't enter it.

If it isn't entered, the expenses paid cannot be used towards an education credit nor to offset other aid, such as a scholarship. same if it was used to pay student loans, the interest paid would not be a deduction.

2. You say she is filing as single student, but is she a dependent student?

How the 1098-T and 1098-E is entered depends on if the student is a dependent.

Time living away at school is the same as living at home.

The issue is if the student supplies more than half their own support. (they usually do not)

Tuition paid was reported as 40,000 in Box 1 of the 1098-T. If scholarships plus the distribution totaled only 24,424 (16,000 + 8,424) then DO NOT allocate the distribution to the student loan payments, allocate the distribution to tuition.

That leaves over 15,000 tuition fees to apply for an education credit and the total student loan interest as a deduction.

You can allocate the distribution to tuition even if it was withdrawn and sent as a loan payment.

IRS Pub 970 explains more about allocating education expenses.

We might help further if we know if the student is your dependent.

If yes, you claim the credit and the loan interest

If no, she claims the credit and the loan interest

If you are unsure if you can claim her, let us know her age and if she supplies more than half her support.

IRS Pub 970

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Hal_Al

Employee

@KrisD15 is correct: You do not want to allocate the the 529 distribution to student loan payments. There a $10,000 lifetime limit on paying student loans with 529 funds. You don't want to use up $8424 of that limit when there are some other qualified expenses available (excess tuition, room & board, and books).

Also, as KrisD15 said, what you do with the 1098-T depends on her dependent status. Students, under 24 are not usually eligible for the American Opportunity Credit. It is usually better if the 1098-T goes on your return.

The 1099-Q is only an informational document. The numbers on it are not required to be entered onto your (or your student's) tax return. The interview is complicated and it's easy to make mistakes. Avoid it if you can and you can.

QTP 529 QTP You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home), or student loan payments, to cover the distribution. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records (you don’t need it). You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. You also cannot count expenses that were paid by tax free scholarships. You cannot double dip!

References:

On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."
IRS Pub 970 states: “Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return”.
("IRS Publication 970, Tax Benefits for Education states: If the entire 1099-Q went to qualified expenses, room and board, tuition, etc then you do not need to enter the form."

The student loan interest is only a deduction (technically, an adjustment to income), not a tax credit. So, the $279 is of limited value.

saibuyAuthor

"The issue is if the student supplies more than half their own support. (they usually do not)"

Hi, I made the mistake and I clicked "Yes" in TurboTax Desktop Software, for this "the student supplies more than half their own support" Question and claimed $1000 American Opportunity Credit for my Student Daughter ( Individual) in Federal filing. State & Federal taxes already e-Filed and both are accepted for Year 2024. What should I do? Should I need to Amend my Federal and State Return? Should I need to pay for efile charges again for Federal and State file in TurboTax? also where and how to file the Amended Return? and which option should I need to choose to make this answer as "No"