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1099-Q earnings

Forum|Forum|4 years ago
March 27, 2022
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I have a less than half-time graduate student that is working full time that TT says the 1099-Q earnings of $1,568 box 2 are taxable for qualified Tutition that matches on the 1098-T exactly for $1950.

Also, the income level of beneficiary exceeds any life time educations credit ( not sure relevant to this ).

I have read just ignore putting 1099-Q but that doesn't seem right with reporting of 1099-Q

TurboTax Home & Biz Windows

Best answer by Hal_Al

Q. Should I just ignore putting 1099-Q? That doesn't seem right with reporting of 1099-Q.

A. Yes. Otherwise to get the result you want, you going to have to navigate the complicated TurboTax (TT) interview.

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) 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.

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."

The problem, in TT, is that it allocates money for the credit, even when you don't qualify. That reduces the amount that can be used to claim the 529 earnings, shown on the 1099-Q, as being totally tax free. If you want to get that worksheet, mentioned above, go through the entire education interview until you reach a screen titled "Your Education Expenses Summary". Click edit next to the student's name. That should take you to a screen “Here’s your Education Summary”. Click edit next to “Education Information”. When you get to the screen titled “Amount Used to Calculate Education Deduction or Credit”, verify the amount you want to use or change it (in your case to 0). You may reach that screen sooner. Some people say they never get it.

Hal_AlAnswer

Employee

Q. Should I just ignore putting 1099-Q? That doesn't seem right with reporting of 1099-Q.

A. Yes. Otherwise to get the result you want, you going to have to navigate the complicated TurboTax (TT) interview.

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) 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.

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."

The problem, in TT, is that it allocates money for the credit, even when you don't qualify. That reduces the amount that can be used to claim the 529 earnings, shown on the 1099-Q, as being totally tax free. If you want to get that worksheet, mentioned above, go through the entire education interview until you reach a screen titled "Your Education Expenses Summary". Click edit next to the student's name. That should take you to a screen “Here’s your Education Summary”. Click edit next to “Education Information”. When you get to the screen titled “Amount Used to Calculate Education Deduction or Credit”, verify the amount you want to use or change it (in your case to 0). You may reach that screen sooner. Some people say they never get it.