1099-Q tax questions

Forum|Forum|4 years ago
February 15, 2022
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I have accidentally withdrawn a wrong amount from my son's 529 plan to my bank account and then later put transferred the full amount back within 60 days to the original 529 plan. I then later withdrew the right amount from my son's 529 plan to his bank account to pay for his tuition. I got one 1099-Q under my name and one 1099-Q under my son's name.

Q1: Since the first withdrawal was put back to the original account immediately, it shouldn't incur any tax or penalty; however, I still got the 1099 -Q under my name, how do I deal with it when doing the tax return? Q2: The 2nd 1099-Q was under my son's name. Should I file it under my tax return? We are eligible to claim for the American Opportunity credit. By the way, my son didn't have any income to file for any tax return.

Thanks for your help!

ThomasM125

You need to enter the 1099-Q that was in your name on your tax return. When you do so, you will be asked if you rolled it over within 60 days to another qualified tuition plan, to which you will answer "yes."

Assuming the money withdrawn from the education savings plan was used for qualifying education expenses not used on your tax return to qualify for an education credit or associated room and board, your son would not have to file a tax return to report it. Otherwise, he would be the one who reports the form 1099-Q that is issued under his name.

@mimi57001 [Edited 2/15/22 at 12:52 PM PST]

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mimi57001Author

Hi, Thomas

Thanks for your reply! Just to clarify,

For Q1, the full amount on the 1099-Q in my name was rolled back to my son's original qualified tuition plan, could I still answer "yes" ?

For Q2, I will file the 1099-Q in my son's name on my tax return as the full amount was used for qualifying education expenses.

ThomasM125

You can make one tax-free rollover to a member of your family each year. So, assuming you qualify you should enter "yes" to the rollover question.

You are not required to enter the 1099-Q on your tax return since it is not in your name. To the extent you use the education expenses on your tax return to qualify for an education credit, you can't also use them to exempt income on your 529 plan withdrawal. However, you can use room and board as qualifying expenses for your 529 plan withdrawal, as they are not allowed for the education credit.

Even though not required, you can enter the form 1099-Q on your tax return to see if the income is taxable. If you find it is, if it is under $1,100 then your son does not need to file a tax return, as that is the standard deduction for dependent unearned income. Otherwise, you should file a return for him and enter the form 1099-Q and his room and board expenses in the education section to see if he needs to file and pay tax on the 529 plan income.

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