I have two daughters in College, For Education section, am I the beneficiary of a coverdell education savings account on my 1040?

[KrisD · Accepted solution]

No, the beneficiary is the student listed on the savings account. Each account has an owner and a beneficiary. If any distribution is taxable, it is taxed to the person that made the distribution, so it is usually wise to have the student make the distribution, therefore the tax would be at the student's rate. Also, distributions may be made directly to the school in the student's name. Distributions must be made in the same tax year as the education expenses are paid for the distribution to be tax-free. 

CLICK HERE for IRS Pub 970 Education Credits

[dsmithh]

Do I deal with all higher education issues on my daughters returns? Tuition statements, Coverdell, Education IRA, etc? I only contributed to one Education IRA this year due to second daughter turning 18.

[KrisD]

If she is your dependent, you enter the information and apply for a credit. If there is any taxable income, it is usually reported on the student's return, if the distribution was made by her, or there is taxable scholarship amounts. Be sure to ENTER THE 1099-Q FIRST, AND THEN THE 1098-T. The program will tell you if there is anything taxable, and if so, who need to report it. Be sure to also look at the student's school account statement to see if anything billed in one year was paid in the following year. the credit is based on what was PAID in 2017.

[lychee]

My account is titled in my name (owner) "FBO" my child's name (beneficiary).  The 1099-Q I get is address the same. TT asks if I received a 1099-Q or 1099-T.

So did I receive a 1099-Q or did my child? 

[Hal_Al]

Q. So did I receive a 1099-Q or did my child? 

A.  The "recipient". 

For Qualified tuition plans, there is an “owner” (usually the parent), and a “beneficiary” (usually the student dependent). The "recipient" of the distribution (and the 1099-Q) can be either the owner or the beneficiary depending on who the money was sent to. When the money goes directly from the Qualified Tuition Plan (QTP) to the school, the student is the "recipient". The distribution will be reported on IRS form 1099-Q. 
The 1099-Q gets reported on the recipient's return. The recipient's name & SS# will be on the 1099-Q.  "RECIPIENT'S name" will be the title of one of the boxes on the 1099-Q. 
Even though the 1099-Q is going on the student's return, the 1098-T should go on the parent's return, so you can claim the education credit. You can do this because he is your dependent.

[lychee]

Thanks. The money was distributed to me per my instructions which I think you're saying means I'm the "recipient". However, the 1099-Q has my child's SSN, which suggests she's the recipient.

The 1099-Q has both our names (my name FBO child/student's name), but my child's SSN. 

[Hal_Al]

I'm hearing your name is in the box "RECIPIENT’S name" but your child's SS# is in the box "RECIPIENT’S TIN".

You may need to request a corrected 1099-Q from the PAYER/TRUSTEE.  But before doing that you should decide what you need. 

You seem to be tagging on to several threads asking piecemeal questions.  You may want to start a new thread of your own, for your situation.

Most people don't need to bother with a 1099-Q and Turbotax doesn't always do a very good job, leading to frustration. 

  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."