Question on Form 1099-Q

Forum|Forum|2 years ago
April 6, 2024
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Hello,

Wondering if I can get some clarity around this, please.

My daughter is 19 years old and a full-time college student(no work involved). I claim her as my dependent and have set up a 529 college fund for her. The form 1099-Q has her name in the Recipient's name box. Similarly, Form 1098-T has her name as well. All the distributions from 1099-Q are used to pay for the college.

Box 1(Form 1099-Q): $ 13,192.88

Box 2: $ 4886.98

Box 3: $ 8305.90

The tuition/boarding was the exact amount of $ 13192 (since it was paid directly to the college). However, the 1098-T form shows a different amount of $ 5,770.81. I am not sure how that has been arrived at.

Based on the above situation, do I need to file 1099Q and 1099T? Or can I skip this section in TT? I am assuming I will need to file this under my tax return. Also, since the adjusted income was greater than 180,000, I was not eligible for education credit.

Thanks!

Hal_Al

Employee

Room and board are not included in box 1 of the 1098-T, only tuition and fees. . Books and other course materials, including a required computer, are also qualified expenses not shown on the 1098-T. You look to your billing statements for that information. But, you really don't need it.

The 1099-Q and the 1098-T are only informational documents. The numbers on them are not required to be entered onto your (or your student's) tax return.

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. 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. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit, if you qualified. You also cannot count expenses that were paid by tax free scholarships. You cannot double dip!

References:

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."
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”.

Thomas2023Author

Thank you for your response.

Just so I am clear about my understanding. If my child/beneficiary has sufficient educational expenses, including room & board to cover the distribution, I need not enter anything in Turbo Tax for the education section.

Hal_Al

Employee

Q. If my child/beneficiary has sufficient educational expenses, including room & board to cover the distribution, I need not enter anything in Turbo Tax for the education section, of my return.?

A. That's correct. The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return.

There is no need to enter anything in Turbo Tax for the education section, of the student's return, either, unless there is a chance that some of his scholarships, if any, are taxable.