Here's how to enter your 1099-Q in TurboTax: Open or continue your return. Select Federal and then Deductions & Credits. Scroll down to the Education section under All tax breaks. Select, Show more and select Start or Revisit next to ESA and 529 qualified tuition programs (Form 1099-Q). Follow the screens to enter your info. Here's how to enter your 1098-T: Open or continue your return Select Search and search for 1098t Select the Jump to link in the search results On the Do you want to enter your higher education expenses? screen, answer Yes Answer Yes to Did you get a 1098-T for the year? and Continue On the next screen, you can choose how you'd like to add your 1098-T. You can upload a digital copy from your computer or type it in yourself. Select which option you'd like and Continue If you need to enter a 1098-T for someone else, continue through the screens until you get to the Your Education Expenses Summary screen, then select Add A Student Some important tips about entering this form: Enter your 1098-T exactly as is, even if the amounts are wrong (this is common). You'll get a chance to correct this info and enter additional expenses later on Leave blank boxes blank. Don't enter 0 for any blank boxes on the form, as this generates errors Parents: If the student listed on the 1098-T is your dependent, enter the 1098-T on your return, even if your dependent paid the tuition Students: If you're not being claimed as a dependent, enter the 1098-T on your return regardless of who paid the tuition, unless it was your employer. In that case, just keep the 1098-T with your tax records TurboTax Free Edition doesn't support Form 1098-T It appears you might have withdrawn too much from your 529 plan. While 529 withdrawals are tax-free to the extent your child (or other account beneficiary) incurs qualified education expenses (QHEE), withdrawing more than the QHEE means the excess is a non-qualified distribution. You or your beneficiary — you get to choose who receives the money — will have to report taxable income and pay a 10% federal penalty tax on the earnings portion of the non-qualified distribution. The principal portion of your 529 withdrawal is not subject to tax or penalty. @kcwojo

Question

Made $11K withdrawal from 529 Plan on 12/28/21 for Spring 2022 semester. Money direct to college. 1099-Q shows $11K more withdrawal than 1099-T expenses. How to input?

Forum|Forum|4 years ago
March 16, 2022
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G

GeorgeM777

Here's how to enter your 1099-Q in TurboTax:

Open or continue your return.
Select Federal and then Deductions & Credits.
Scroll down to the Education section under All tax breaks.
Select, Show more and select Start or Revisit next to ESA and 529 qualified tuition programs (Form 1099-Q).
Follow the screens to enter your info.

Here's how to enter your 1098-T:

Open or continue your return
Select Search and search for 1098t
Select the Jump to link in the search results
On the Do you want to enter your higher education expenses? screen, answer Yes
Answer Yes to Did you get a 1098-T for the year? and Continue
On the next screen, you can choose how you'd like to add your 1098-T. You can upload a digital copy from your computer or type it in yourself. Select which option you'd like and Continue
If you need to enter a 1098-T for someone else, continue through the screens until you get to the Your Education Expenses Summary screen, then select Add A Student

Some important tips about entering this form:

Enter your 1098-T exactly as is, even if the amounts are wrong (this is common). You'll get a chance to correct this info and enter additional expenses later on
Leave blank boxes blank. Don't enter 0 for any blank boxes on the form, as this generates errors
Parents: If the student listed on the 1098-T is your dependent, enter the 1098-T on your return, even if your dependent paid the tuition
Students: If you're not being claimed as a dependent, enter the 1098-T on your return regardless of who paid the tuition, unless it was your employer. In that case, just keep the 1098-T with your tax records
TurboTax Free Edition doesn't support Form 1098-T

It appears you might have withdrawn too much from your 529 plan. While 529 withdrawals are tax-free to the extent your child (or other account beneficiary) incurs qualified education expenses (QHEE), withdrawing more than the QHEE means the excess is a non-qualified distribution. You or your beneficiary — you get to choose who receives the money — will have to report taxable income and pay a 10% federal penalty tax on the earnings portion of the non-qualified distribution. The principal portion of your 529 withdrawal is not subject to tax or penalty.

@kcwojo

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kcwojoAuthor

GeorgeM777, Thank you for the detailed response. You mention one is able to correct/add to the 1099-T amounts. Where is this done?

Since the excess I withdrew ($11K) was used to pay for 2022 expenses (for which I have documentation), can I increase the amount paid for Room & Board to equal the excess amount I withdrew? Doesn't the IRS want to make sure that the amount withdrawn covers qualified expenses? The excess withdrawn WAS use for qualified expenses, but just for the next calendar year (3 days later).

For 2022 taxes, my 1099-Q will be $11K less, since it was already reported for 2021. So everything balances out when considering the years 2021 and 2022. Would this be a good defense if I am audited? Thank you for your time.

G

GeorgeM777

If you need to add additional educational expenses (expenses that are qualified) yet not included on your 1098-T, continue through the section where you enter your 1098-T information. In the search bar, upper right of your page, enter 1098-T and use the jump-to link. After entering your 1098-T information, click continue and you will eventually get to the page "Now Let's Gather Your Additional Educational Expenses" or similar page. That page is where you can begin to enter your additional educational expenses not already included on your 1098-T.

It appears that the funds you withdrew on December 28, 2021 for qualified educational expenses in 2022 should be reported on your 2022 tax return and not on your 2021 tax return. In other words, you might be able to claim, if questioned by the IRS, that there was no excess withdrawal at all for 2021.

There is no definitive guidance as to when withdrawals should take place in order to be excluded from taxable income. IRS Publication 970 which explains many matters of 529 tax law, makes no mention of reimbursement withdrawal deadlines. Neither does IRS Topic No. 313, which explains Qualified Tuition Programs such as 529 plans.

Consequently, some tax professionals recommend that the reimbursement for qualified expenses be effected in the same year that the expense occurred. If this cannot be done, then perhaps reimbursing prior to March 31 of the next year may provide some back-up. In your case, you took the withdrawal in the year prior (the last few days of 2021), but it was for educational expenses in 2022. Therefore, perhaps the better option is to report that withdrawal on your 2022 return.

@kcwojo

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"