Date Situation between 1099Q and 1098T

Forum|Forum|2 years ago
January 27, 2024
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I've been submitting 1099Q and 1098T for years. For 2023, I have an unfortunate date situation.

I withdrew from my 529 in July 2023 for 2023 Fall Semester and December 2023 for 2024 Spring Semester. 529 funds go directly to me and I, in turn, pay the college. Unfortunately, the funds to the college did not post until 1/2/2024, so naturally my 2023 1098T from the college only has ONE semester payment. But, my 2023 1099Q has BOTH semester payments. In past years, I was careful to ensure the 529 withdrawls were done in the same year as payments to the college, so the 1099Q and 1098T always had 2 semesters.

How do I handle this situation? Turbotax is obviously taxing me on excess 2023 withdrawls!

Best answer by Hal_Al

Q. I wonder if the 529 provider (Vanguard) will issue me a revised 2023 1099Q ?

A. No. But, you don't need it. You report it as a rollover (if you even report it).

Q. I was questioning whether or not I would really have to do this rollover considering the IRS pub that says: "You must pay the qualified education expenses for an academic period that starts during the tax year or the first three months of the next tax year. "

A. That only means you can pay for the first term of 2024 in Dec. 2023. But, it's questionable if you actually did that (posted 1/2/24).

Q. So I would think this would be ok despite crossing tax years?

A. I agree. It's just that there's no firm evidence of how the IRS might handle it. I think it's a common enough and reasonable situation that they will probably allow it.

Q. But, perhaps better on the safe side and do the rollover/withdrawal?

A. Yes. You have that option. Most of the time that we see this question, the taxpayer has already missed the 60 day window. It might be a minor (and unnecessary) hassle, but you're safe.

Hal_Al

Employee

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.

See previous discussions:

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

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

rollover within 60 days

skilAuthor

Thanks - seems like its recommended to do a rollover to put the funds back into the 529 (since it has been < 60 days) and then an immediate withdrawl is the solution. I wonder if the 529 provider (Vanguard) will issue me a revised 2023 1099Q ?

I was questioning whether or not I would really have to do this rollover considering the IRS pub that says: "You must pay the qualified education expenses for an academic period that starts during the tax year or the first three months of the next tax year. " So, my qualified expense is from December 2023 and I AM paying it within 3 months, so I would think this would be ok despite crossing tax years? But, perhaps better on the safe side and do the rollover/withdrawl.

Hal_AlAnswer