1099-Q Question

Forum|Forum|1 year ago
April 7, 2025
1 reply
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I keep reading that if your 529 withdrawal was for a qualified expense (in this case for R&B) then you do not have to enter the 1099-Q on your taxes. When asked how to handle, it just says to leave off. However, the question on Turbo Tax is did you receive a 1099-Q Yes or No. Are you supposed to answer No that you did not receive a 1099-Q in order to leave it off? Seems wrong to say no when I did but don't know how else to handle.

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MinhT1

You are correct.

You don't need to enter your 1099-Q if it is used for education expenses including room and board.

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.

You can say No to the question as TurboTax asks that question so that you can enter form 1099-Q. Your answer is not reported to the IRS.

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Colleen224Author

Thank you very much! Good to know the response is not reported! Makes me feel better. Did you mean to say then you can leave off the 1099-Q versus so you can enter it? Just want to confirm. I have a follow question up to this also. My daughter received more scholarship than tuition on her 1098-T. Therefore we do not qualify for the AOTC. I believe she will have to file as she is over 14,600 with the extra scholarship money plus some income, by such a small amount. I believe she will enter the 1098T on her taxes, is that correct? Do I just delete her 1098-T for this year on my taxes even though entered prior years?

MinhT1

TurboTax asks the question whether you have received a form 1099-Q so that the program can take you to the form entry page if you answer yes.

On your second question, if your daughter is otherwise eligible for the AOTC and you are not phased out of the AOTC by your income, you can reserve $4,000 of tuition to claim the AOTC on your tax return.

Your daughter will also enter the form 1098-T on her return. TurboTax will report as taxable income the excess of scholarship over tuition. The taxable amount will be reduced by any amount of books and supplies entered. It will be increased by the amount you have used to claim the AOTC. She will find a page asking for the amount used to claim the education credit. She would then enter $4,000.

The tax that she will pay on the $4,000 extra scholarship will be much less than the AOTC of $2,500 that you'll receive.

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