I used a 529 to pay for K-12 private school. Turbo Tax is reporting part of the distribution as income even though school expenses were same amount as in Box 1. Why?

Forum|Forum|3 years ago
April 10, 2023
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Line 18, Education expenses not used as basis for credits, on 1099-Q TurboTax Worksheet is reporting $10K

TurboTax Online

MinhT1

529 plan rules allow for up to $10,000 per year to be applied toward private elementary or secondary school tuition expenses.

If form 1099-K box 1 is reporting $10,000 and you have k-12 tuition of $10,000 or more, you do not have to enter form 1099-Q on your tax return.

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."

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Hal_Al

Employee

TurboTax does not a good job with the 1099-Q. If you know none of it is taxable, just don't enter it.

In addition to the form 1099-Q, instructions, IRS Pub 970 states: “Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return”.