Q. My understanding after reading some articles and previously asked questions on this TurboTax website is that I do not need to enter 1098-Ts or 1099-Qs into TurboTax at all UNLESS that form involves some sort of taxable event. Is that correct?
A. They are both only informational documents and the numbers on them do not have to be reported on your tax return.
Q. His 1099-Q would not have to be entered on his tax return because the amount in Box 1 was the amount that was distributed from my (parent) 529 plan to cover tuition and other qualified expenses that was paid directly to the school from the 529 plan. The distribution described by this 1099-Q is not a taxable event, so therefore doesn't have to be entered on his return.........correct?
A. Yes, because the distribution amount is fully covered by qualified expenses and you know none of it is taxable.
Q. The 1098-T wouldn't be entered on my son's return anyway, correct?
A. Yes, in this case. You know he doesn't qualify for a credit and he has no taxable scholrship.
Q. The 1098-T will go on to the parent's return, if needed?
A. Yes, when the parent is eligible for an education credit.
On form 1099-Q, instructions to the recipient reads: "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 just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. You also cannot count expenses that were paid by tax free scholarships. You cannot double dip!
