1098-t & 1099-q numbers do not match, getting taxed for 529 withdrawals

Forum|Forum|6 years ago
March 9, 2020
1 reply
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Hello All,

I'm new to this forum. I have search some of the articles re. 1099-q & 1098-t but could not find the exact answer to my question. Hence, this post. I hope that all of you can help me. Thanks in advance.

the 1098-T from my son's college is reporting only Tuition & fees per IRS rules. And, the 1099-Q i received from my 529 plan is reporting funds that I withdrew. The 529 withdrawals are twice as large as the amount reported in the 1098-T. And, TT is taxing the $ amount difference between the 1098-T & 1099-Q. 😞

The 529 funds were used for Tuition, fees, on-campus housing, required books & on-campus meal plan.

My understanding is that the entire 529 withdrawal amount is for qualified higher-education expenses per the 529 guidelines. I have detailed receipts from the college & 529 in case I get audited by the IRS.

So, how do i prevent myself getting taxed for the 529 withdrawals?

linaj20201

The correct way to do is to enter the Form 1099-Q first before Form 1098-T.

May I have your numbers on both forms?

shivdadAuthor

Hi LinaJ2020

thanks for your reply.

the 1098-T reports $8488.60 & the 1009-Q reports $16,826.0

linaj20201

First of all, none of your distribution from Form 1099-Q should be taxable as it is used to pay for qualified education expenses. However, you would not qualify for any education tax breaks because your 529 plan distribution exceeds your total tuition amount on the Form 1098-T.

I would suggest you delete both the Form 1098-T and 1099-Q. Then re-enter the information FIRST from the 1099-Q before entering the Form 1098-T.

To delete forms, here are the steps:

In TurboTax online,

Sign in to your account, select Pick up where you left off
To your left, Select Tax Tools/drop-down menu
Select Tools
Under Other helpful links, choose to Delete a form
Select Delete next to Form 1098-T/1099Q and Continue with My Return to proceed

If you are using the desktop,

Open up your tax return if you have not already done so.
At the right upper corner, select Forms mode
In the Forms mode, the left side shows a list of all the generated forms, locate and click on Form 1098-T / 1099Q
At the bottom of that form, click Delete Form

[Edited 3/9/2020 |11:46AM EST]