College 529 and my 1099-Q

DD1969 · ‎February 18, 2023

We withdrew from our 529 plan and then our son decided not to stay so he dropped out and we received his full tuition back and a prorated housing / board back. We put that money back into the 529 plan but we still received a 1099-Q form. Technically we only ended up using about $600 of it but the 1099-Q make it look like we used the entire amount.

Not sure how to file this on our taxes.

Hal_Al · ‎February 19, 2023

Just ignore it.

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."

Retain your records in case of an IRS inquiry. There is nothing you can enter, either in TurboTax or on the IRS forms, to head that off. IRS inquiries about 1099-Qs are low.

View solution in original post

Hal_Al · ‎February 19, 2023

Just ignore it.

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."

Retain your records in case of an IRS inquiry. There is nothing you can enter, either in TurboTax or on the IRS forms, to head that off. IRS inquiries about 1099-Qs are low.