different year of gross distributions on 1099-q

Forum|Forum|5 years ago
February 13, 2021
2 replies
0 views

I received a 1099-Q from a 529 plan. In the gross distributions I was surprised they included an amount that i requested for 2021 tuition. I requested the distribution on 12/22/20 knowing it would takes weeks to get it and pay tuition on time. The college showed the funds recived on 1/11/21. Yet they are included in the 1099-q and thus being reported as additional income and subject to 10% penalty. Is there anything i can do to line the years up? I did not received the funds in 2020 as the 1099-Q says. Thank you.

MaryM428

You need to contact the plan administrator and request a corrected 1099-Q that does not include the funds that were received on 1/11/21. Those funds should be reported on your 2021 1099-Q.

[edited 2/15/2021 | 2:04 pm PST]

Hal_Al

Employee

@MaryM428 The college doesn't issue a 1099-Q, the 529 plan does.

@theofilt You could try asking the plan for a corrected 1099-Q but don't expect much success.

You have two options:

1. You can put the money back (re-contribute) into the 529 plan within 60 days of taking it out. That counts as a rollover and will not count as a 2020 distribution. But, you'll still have an erroneous 1099-Q

2. Technically you can not count it toward 2021 payment of expenses. You're not the only one this has happened too. Some have said they're just gonna do it and hope they can get some sympathy form the IRS in case of an inquiry, especially in this covid period. You (and they) certainly meet the intent of the law, if not the letter of the law.

The 1098-T and 1099-Q are only informational documents. The numbers on them are not required to be entered onto your tax return.

You claim the tuition credit, or report scholarship income, or claim the earnings exclusion from a 529 distribution based on your own financial records, not the 1098-T and/or 1099-Q.

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

When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records.

References:

https://www.forbes.com/sites/josephhurley/2016/02/04/dont-make-these-mistakes-when-reporting-529-pla...

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