1099-Q

Forum|Forum|1 year ago
February 5, 2025
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I withdrew money out of a 529 plan and used some money for my son's trade school (ipad, uniform, essentials, credentials). How would I show this on my taxes so that I am not penalized the entire amount since I didn't use it for an actual university?

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SharonD007

Form 1099-Q only needs to be reported on the tax return of the person whose SSN is on the form if the withdrawal is more than the tuition paid in Box 1 of the 1098-T plus other adjusted qualified educational expenses. In that case, the earnings on the excess distribution would be taxable income.

First, determine if the Form 1099-Q needs to be reported on the tax return by comparing the withdrawal with the tuition paid on the 1098-T added to other qualified educational expenses. To find out what are qualified educational expenses, please review the Guide to Tax Form 1098-T: Tuition Statement. Please review the TurboTax articles Guide to IRS Form 1099-Q: Payments from Qualified Education Programs and What is IRS Form 1099-Q? for further details.

Secondly, enter the 1099-Q if the withdrawal exceeds the educational expenses by following the directions in the TurboTax Help article Where do I enter a 1099-Q?

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dmonirodAuthor

He will not receive a 1098-T form. The trade school gave us a list of things that he needed (uniform, ipad, specific clothing, credentials). room and board was free but he had to buy all the other things needed to be accepted into the program and to complete the program. He is in trade school to become a Merchant Mariner.

AmyC

Employee

A 529 can be used to pay for eligible vocational or trade schools. To find out if his school is eligible and learn more, see Can You Use a 529 Plan to Pay for Trade School. These are the options:

If the amount you withdrew covers eligible expenses at an eligible school, then none of it is taxable. Your expenses sound reasonable, see Qualified Education Expenses - Internal Revenue Service. If none of it is taxable, you do not enter the 1099-Q.
If you withdrew for example- $10,000 but only $8,000 went to qualified expenses, then you would have some taxable income.
If the school is not eligible, then all of it is taxable.

@dmonirod

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