1099-Q IRS letter

Forum|Forum|2 years ago
July 5, 2023
1 reply
0 views

I received a letter from the IRS stating I did not report accurately my 1099-Q information (they said I was low). I have looked back & everything matches up. What do I do now? Also, I have read that you technically don't have to report qualified distributions, which mine are, so I am wondering why it is being looked at. Very confused & could use your help.

NCPERSON1

what did the IRS SPECIFICALLY ask you to do?

LeeLee7069Author

They say I owe money, due in 1 month. I have checked my official 529 1099-Q end of year tax forms against what I entered into TurboTax, and all numbers match. I am not sure where to go from here.

Hal_Al

Employee

You need to reply to the IRS that you had a qualified 529 plan distribution, The IRS has done a poor job: if you use all your 529 money for qualified expenses (you say you have a qualified distribution), they don't make you fill out a form, showing that. By comparison, if you use all your HSA money for medical expenses, you have to fill out form 8889, to claim the exclusion. There is no similar form for a 529 distribution. So, there is no way for you to head off an IRS inquiry.

So, yes, people, here in the forum (including me), have reported getting a CP2000 letter, from the IRS, on 529 distributions. At least two replied that their child was in college and the distributions were for qualified expenses, which they listed, but they did not provide receipts.. They later received a notices saying they were in the clear. In my case, I provided copies of the school's billing statements and a copy of the TurboTax Student information worksheet. That satisfied the IRS. You may want to also include the TT 1099-Q worksheets. These worksheets were not part of you original tax return filing.