Question

1099Q Tax increase

Forum|Forum|5 years ago
February 2, 2021
1 reply
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My wife has a 529 plan where my wife is listed as the recipient and her daughter as the beneficiary on the 1099. We received the $ directly and reimbursed her daughter for tuition. When I answer Turbo tax questions, it INCREASES my tax due. My wife is the recipient and her daughter the student. Why is this happening? If my wife is the student or her daughter the recipient the increase does not occur, but that is not the way the form is written.

M

mglauner

The account owner (such as a parent) will receive a copy of the 1099-Q if the distributions from a 529 plan aren’t made directly to the beneficiary or to an educational institution for the benefit of the beneficiary, so the way your 1099-Q is reported is not unusual.

If your 529 Distribution does not exceed Qualified Education Expenses (considering any other grants/scholarships received), you may not need to enter the 1099-Q in your return. The IRS does not require that this form be entered on any tax return unless there is a taxable distribution to report.

Click this link for more info on reporting the 1099-Q.