1099-Q and Non Dependents

[arahm]

I receive 1099-Qs for my children and I am not the designated beneficiary (i.e., box 6 of the 1099-Q) is checked.  Also, I do not claim my children as dependents.  I used the 529 distributions that came to me, and that are on the 1099-Q, to pay for their qualified educational expenses.  My children are not claiming these educational expenses.  How do I offset the earnings of the distribution by the qualified educational expenses that I paid on their behalf from their 529 plan?  In Turbo Tax, it won't let me add them as a student because they are not a dependent.  Thanks for any help you can provide!

[Hal_Al]

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! 

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." 

If you still want to enter the 1099-Q. it's actually easier when the beneficiary is not your dependent.  Enter the 1099-Q. When asked who is the student, check "someone not listed here" . On the next screen, enter the real student's name.  This will eventually give you one simple screen to enter all expenses.  Press Done at the 1099-Q summary screen, to get there. 

[PattiF]

You are not required to report this on your tax return. This will not be a red flag to the IRS. As long as the funds were used for qualified education expenses, the distribution is not taxable.

On form 1099-Q, instructions to the recipient read: "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 to cover the distribution. Again, you cannot double-dip!  When the box 1 amount on form 1099-Q is fully covered by expenses, there will not be a taxable distribution.

[arahm]

Thank you everyone!  I was worried that if I did not report the 1099-Q that I would get a notice from the IRS.