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Level 1
posted Apr 7, 2025 11:02:19 AM

529 withdrawal for 2024 for Room and Board expenses for College education

Greetings,

   I made a Qualifying withdrawal from my 529 plan for my son to pay for his college-off-campus rent. He is the plan beneficiary and is claimed on my taxes as fully dependent. The funds however I directed to my checking account. Now the 1099-Q I received has Box-6 checked; "Recipient is not Designated Beneficiary".
The recipient TIN is my own. 

This caused my payable taxes to go up; although it is a Qualifying expense.

Question:  How can I remedy this situation in Turbo Tax data-entry. Note: all the 1099-Q expenses are within the University's annual cost of attendance.

Thanks for your guidance.

0 2 1794
2 Replies
Expert Alumni
Apr 7, 2025 11:06:23 AM

If the total distribution is used for the beneficiary's education expenses including room and board, you can just not enter the 1099-Q on your tax return. You just keep that form in your tax records and proof that the distribution was used for room and board.

 

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.

Level 15
Apr 7, 2025 11:07:04 AM

The 1099-Q is  only an informational document. The numbers on it are not required to be entered onto your (or your student's) tax return. The interview is complicated and it's easy to make mistakes. Avoid it if you can and you can. 

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. 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 don’t need it). You would normally still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. But, this isn't applicable to you, since you say it was all used for off campus room& board and within the school's cost of attendance allowance. R&B are not qualified expenses for the tuition credit, so there's no chance of "double dipping". 

References:

  1. 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." 
  2. IRS Pub 970 states: “Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return”.
  3. "IRS Publication 970, Tax Benefits for Education states: If the entire 1099-Q went to qualified expenses, room and board, tuition, etc; then, you do not need to enter the form."