1099-Q and 1098-T

[coligmueller]

I am always confused as to whose taxes to claim these on. My college age son is a full-time student and had very little income so we claim him as a dependent on our taxes. Do I enter the 1099-Q on his tax return and the 1098-T on ours? Or do I do it all on ours? Both forms came in his name; however, we are the ones who paid the expenses from a Qualified Education Program that we started for him. Thanks for any clarification!

[TomK100 · Accepted solution]

The 1099-Q is reported on the recipient's tax return (the person whose Social Security number is on the form). If the funds went directly to the school, consider the student as the recipient, and if the student is your dependent, you should enter the 1099-Q on your return.

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

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

If you're using the mobile app, go here for mobile-specific instructions.

To enter Form 1098-T:

1. Open or continue your return, if you're not already in it.
2. Search for 1098T and select the Jump to link at the top of the search results.
3. Select Yes on the Do you want to enter your higher education expenses? screen.
4. On the Your Education Expenses Summary screen, select Add A Student.
5. Select the name of your student (this could be you, your spouse, or a dependent) and Continue.
6. Answer some questions about the student and then you'll reach the Did [student] get a 1098-T from [school] for 2019? screen. Select Yes and Continue.
7. Enter the information from your 1098-T on the next screen. When you're finished, select Continue.

After you enter your 1098-T, we'll ask some additional questions, including whether the student had other expenses (books, supplies, equipment) and financial aid.

Here's some important info you need to know about Form 1098-T:

• If the student on the 1098-T is your dependent, enter the 1098-T on your return, even if your dependent paid the tuition.
• If you're the student on the 1098-T and you aren't being claimed as a dependent, enter the 1098-T on your return unless your employer paid for or reimbursed your tuition (in which case just keep the 1098-T with your tax records).
• Enter your 1098-T exactly as is even if the amounts are wrong (this is common). Don't worry, we'll give you the opportunity to correct the info and/or enter more expenses later.
• Leave blank boxes blank. Don't enter 0 for any blank boxes on the form, as this generates errors.

[NCperson]

simple

1099Q goes on the tax form of the taxpayer listed on the form:  Whose Social security number is listed?

1098-T ...if Box 1 is greater than Box 5, it goes on the parent's tax return ; otherwise the dependents. 

[Carl]

@NCperson just an FYI

1098-T ...if Box 1 is greater than Box 5, it goes on the parent's tax return ; otherwise the dependents.

That's not always true. You can't tie that to the 1098-T alone. Remember, it's perfectly possible and does happen quite a bit, where there are education expenses paid that were not included in box 1, as well as scholarships received that were not included in box 5. So you can't use the 1098-T alone to determine who reports the education stuff.

If the student received scholarships that are not include on the 1098-T, thus making the total of all scholarships received greater than all qualified education expenses paid, then the student will report all education expenses on the student's tax return.

[CarpAl2020]

I'm sorry--this isn't clear to me: "The 1099-Q is reported on the recipient's tax return (the person whose Social Security number is on the form). If the funds went directly to the school, consider the student as the recipient, and if the student is your dependent, you should enter the 1099-Q on your return."

So does the final part of the last sentence (after the comma) stand on its own? If the student is my dependent, do I enter the 1099-Q on my own return regardless of other factors? Payment did go directly to the school in my case, but the 1099-Q does not reflect this.

TurboTax prompts me to enter my son's 1099-Q on my own taxes even though he files his own returns for his own very modest income.  The 1099-Q and 1098-T are both in his name and SSN. But he *is* my dependent. So it seems like the rule may be: if the student is the dependent, enter the 1099-Q on the parent return. 

Do I have this right? THANK YOU

[NCperson]

whose social security number is on the 1099Q - THAT is who is to report it. 

if 529 administrator sent the money directly to the school (or to the student), the STUDENTs social security number should be on the 1099Q.  The IRS knows what happened to the money is the theory.

if the 529 administrator sent the money to the parent, the PARENT's social security number should be on the 1099Q. The IRS doesn't know the ultimate destination of where the money went is the theory. 

for the 1098-T, it's not straight forward.  if Box 1 exceeds Box 5, the form goes on the PARENT's return. If Box 5 exceeds Box 1, the form goes on the STUDENT's return (as this is taxable income to the student, but it is possible the student tax situation doesn't require him to file a tax return, in which case the 1098-T just goes in a drawer and is not reported anywhere. 

does that help?

[CarpAl2020]

Thank you very much. That is clear. The mismatch just seems odd to me. My son does have to file a return with his summer earnings. By keeping the large box 1 value in the 1098-T on my return (there is nothing in box 5), but moving the 1099-Q to my son's return, it feels like he could be liable to pay taxes for the 1099-Q values even though it was all for qualified educational expenses. Or maybe when I get to do my son's taxes next I'll find that Turbo Tax has this all figured out.  Anyway, thank you again.

[NCperson · Accepted solution]

if the qualified expenses EQUAL or EXCEED Box 1 of the 1099Q, he doesn't need to report it at all... just keep the documentation should you ever be audited.   (presumably, since his social security number is on the form , the payment went straight to the college which is proof enough it was qualified expenses.)

Since you state you fon't quality for AOTC, reporting the 1098-T should not impact your tax return in any way. 

[CarpAl2020]

Great. Thank you so much for your kind assistance!

[Hoosierina]

I think I did something stupid.  Took a 529 distribution in July to pay for Fall ‘19 college tuition bill for my daughter.  Then end of December, took another distribution to pay for Spring ‘20 semester, however both are showing up on 2019 tax statement, effectively losing me the tax credit.  Institution didn’t get the check until 2020.  Is there anything I can do to only claim the amount used for fall ‘19 and save other distribution for ‘20 taxes?

[MaryK4]

You cannot technically move the distribution forward to 2020 because you took it in 2019 but you can "shift" the 2020 payment back by decreasing the amount in 2020.  The most important thing is that you do not double count the expenses or credit and follow the rules.

@Hoosierina

[tonycil54]

Thank you for the answer. Well thought out and explained. However, Having done this since 2015 exactly as you explained, we receive a letter each year from the IRS stating we did not report the earnings from the  1099-Q we received. Thus, each year we have to print our all the documents that state 'keep for your records" and mail it to the IRS. Somehow the IRS does not see the reporting of the 1099-Q and subsequent 1098-T showing a qualified withdrawal.

[jcllaing1]

So do you enter the 1099-Q on both tax returns if the student is a dependent?

[tonycil54]

the 1099-q is issued to me and goes on my tax return along with the 1098-T

[NCperson]

if the student is a dependent of your AND Box 1 is greater than Box 5, the 1098-T goes on YOUR tax return; otherwise it goes on the dependent's tax return

the 1099Q goes on whomever's social security number is on the form.