1099-Q Form

Forum|Forum|11 months ago
April 11, 2025
1 reply
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Hello,

I'm listed as a recipient on Form 1099-Q. The total amount in box 1: gross distribution was used to pay my daughters tuition (not more not less). The funds came from her 520 plan. When I put in the 1099-Q amount into turbo tax 2024 (box 1, 2, 3), I am automatically taxed for the earnings amount. Last year when I put in the data I was not taxed. Did something change in turbo tax this year? I know that if the distribution amount was used for educational purposes, I should not be paying tax on the earnings. My daughter is a full time 4.0 student. Can I just omit this form on my taxes this year? I don't want to be raise any red flags with the IRS and be audited. Also, not sure if this makes a difference, but both years I am not able to get tuition credit that was sent on Form 1098-T because my income is more that $180K.

Thank you so much to who ever responds to my message.

Best,

Penelope

AmyC

Employee

When the Q is fully used, it ends up not going on your actual tax forms. Please do not report it but do tuck it into your tax folder with the supporting documents.

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.

The 529 can be used towards 529 qualified Room and Board to free up money for AOTC credit -if you qualify. You cannot claim the credit if your MAGI is over $90,000 ($180,000 for joint filers).

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PenelopeKRAuthor

Thank you Amy for your quick response. I will not report the 1099-Q in this years tax return but rather save it my tax folder just in case the IRS has any questions.

Do you know why Turbo Tax automatically taxed me on the earnings portion of the 1099-Q. This was not the case in prior years.

Best,

Penelope

AmyC

Employee

You have to enter the forms in a particular order and then answer the questions just so. The program prefers to highjack $10,000 for the lifetime credit. I am not a programmer, I just know the best way to file correctly.

Since the IRS says not to report the form, that is perfect. I think that is part of the program issue, you are not expected to enter a form that isn't taxable so the program is working to make it taxable.

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