Can a non-dependent child claim any college expenses if the 1099-Q is in the parent's name?

[pattiv]

My husband received a 1099-Q for our son's college expenses since he is the owner of our son's 529 account. 

Our son is no longer a dependent on our taxes this year since he graduated from graduate school and pays his own expenses.

Can my son enter my husband's 1099-Q and his college expenses on his tax return even though the 1099-Q has my husband as the owner?

If that is not possible, can my son claim all his expenses other than what was distributed to my husband and reported on the 1099-Q?  For example, my son's tuition and expenses were $20,000.  We received a 529 distribution of $4,000.  Can my son claim $16,000 of college expenses on his tax returns?

Thank you!

[Hal_Al · Accepted solution]

Q. Can my son enter my husband's 1099-Q and his college expenses on his tax return even though the 1099-Q has my husband as the owner?

A. No.  It's not because your husband is the owner, it's because he's the "recipient" of the distribution.  His name and SS# are on the 1099-Q.

Q. If that is not possible, can my son claim all his expenses other than what was distributed to my husband and reported on the 1099-Q? 

A. Yes.

Q. Can my son claim all his expenses even if those same expense amounts  were distributed to my husband and reported on the 1099-Q? 

A.  Yes. Your son gets to decide how his expenses will be "allocated" either to his tuition credit or the recipient's 1099-Q.  In your example, you have no problem.  The student only needs $10,000 of expenses to get the maximum credit.  That leaves $10,000 of expenses to cover the $4000  529 distribution.  

As to entering the 1099-Q.:

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 don't need it). 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! 

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." 

[pattiv]

Thank you for your response!