529 withdraw

Forum|Forum|1 year ago
March 26, 2025
2 replies
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Hello, we withdrew funds out of our 529 account to pay for my son's tuition and room & board for college last year. The 1099-Q lists the amount at approximately $15,500. The college provided us with a 1098-T for tuition paid at approximately $11,800. Actual college expenses for 2024 that we paid for tuition and room & board were over $22,000. When I am entering the 1099-Q and 1098-T in Turbo Tax, it is treating the difference between the $15,500 and $11,800 as taxable income. 529 withdraws for tuition and room & board are supposed to be tax free as I understand it. How do I handle this in Turbo Tax so its not treated as taxable income? Thanks for your help!

Ask the Experts - Education - Mar 2025

Best answer by RobertB4444

If the withdrawals from the 529 plan were all used for qualified educational expenses (which DOES include room and board) then you don't need to enter the 1099-Q into TurboTax at all. Just enter the 1098-T and delete the 1099-Q.

@jrh7

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@jrh7

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Hal_Al

Employee

Based on the numbers you provided, you are still eligible for the tuition credit, even though most of your expenses were paid by the 529 distribution. It only takes $4000 of net tuition to claim the American Opportunity Credit (AOC or AOTC). $22,000 - 15,500 = $6500 (more than $4000). This assumes there was no scholarship $ in box 5 of the 1098-T

You can still omit the 1099-Q. Enter the 1098-T, as is. TT will only use $4000 for the credit, not the full $11,800.