CESA/529 withdrawals in December, not received by college until January

Forum|Forum|3 years ago
February 3, 2023
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Likely due to holiday delays, checks cut in December from a CESA and a 529 plan and paid directly to a college were not received until after January 2023. Thus, the amounts are included in the 2022 1099-Qs but not in the 2022 1099-T. I see where I can manually enter the spring semester tuition and room and board amounts not included in the 1099-T to avoid being taxed on the distributions but would the IRS have trouble with that?

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Hal_Al

Employee

Q. I see where I can manually enter the spring semester tuition and room and board amounts not included in the 1099-T to avoid being taxed on the distributions but would the IRS have trouble with that?

A. We don't know. It's a common question, in this forum, and so far there has not been a definitive answer. But, it appears that "everybody" is doing it.

Technically, you are not in compliance. From Pub 970 (page 60: To determine if total distributions for the year are more or less than the amount of qualified education expenses, you must compare the total of all QTP distributions for the tax year to the adjusted qualified education expenses.

For more detail, see these previous posts:

https://ttlc.intuit.com/community/college-education/discussion/529-provider-distributed-funds-on-12-30-for-spring-semester-resulting-in-a-mismatch-between-1099q/01/2200938/highlight/false#M41204

https://ttlc.intuit.com/community/college-education/discussion/i-took-a-529-distribution-in-2021-for-a-bill-due-jan-1-2022-is-there-a-way-to-reconcile-the-tax/01/2664891/highlight/false#M46863

and this reference:

https://www.savingforcollege.com/article/timing-of-529-plan-distributions-must-match-qualified-expenses