529 Plan 1099-Q

Forum|Forum|1 year ago
February 9, 2025
1 reply
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I received a 1099-Q from Fidelity for distributions I received during 2024. I am the account owner - not the beneficiary. The distributions were reimbursement for qualified educational expenses I paid on behalf of the beneficiary. The qualified educational expenses were in excess of the distribution amount. TurboTax is treating the earnings portion of the distribution as taxable income, even through the entire distribution amount was for qualified educational expenses. How do I fix this?

MinhT1

On form 1099-Q, instructions to the recipient read: "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."

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.

Just keep the form 1099-Q and your calculations in your tax records.

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TJC4Author

Thanks! I am concerned that the IRS receives a copy of the 1099-Q and will flag my return if I do not report the information from the 1099. The distribution only covered a portion of my beneficiary's expenses so I am not concerned about reporting this information. I just do not want TurboTax to incorrectly treat it as taxable income.