Do I need to file a Tax Return for a 1098-T?

[evogroup]

I was a full time student in 2022 and did not receive any income.

I used money from my 529 college savings to pay for tuition and received a 1089-T and 1089-Q to prove it was a qualified payment.

I had no income reported and therefor no 1099 or W2.

Is there any reason to file tax returns this year in this situation?

[Hal_Al]

Simple answer: No.

Both the 1098-T and 1099-Q are only informational documents and there is no requirement that they be entered on your tax return.

However, if you (or your parents, if you are their dependent) are otherwise eligible to claim a tuition credit, it may be worthwhile to pay a little tax on the 1099-Q, or your scholarship, if any, to free up some tuition  for the credit.

Provide the following info for more specific help:

• Are you the student or parent.
• Is the  student  the parent's dependent.
• Box 1 of the 1098-T
• box 5 of the 1098-T
• Any other scholarships not shown in box 5
• Does box 5 include any of the 529/ESA plan payments (it should not)
• Is any of the Scholarship restricted; i.e. it must be used for tuition
• Box 1 of the 1099-Q
• Box 2 of the 1099-Q
• Who’s name and SS# are on the 1099-Q, parent or student (who’s the “recipient”)?
• Room & board paid. If student lives off campus, what is school's R&B on campus charge. If he lives at home, the school’s R&B “allowance for cost of attendance” for student living with parents.
• Other qualified expenses not included in box 1 of the 1098-T, e.g. books & computers
• How much taxable income does the student have, from what sources
• Are you trying to claim the tuition credit (are you eligible)?
• Is the student an undergrad or grad student?
• Is the student a degree candidate attending school half time or more?

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[evogroup]

Hal_Al, thank you for your input.

I am the parent asking about my son's tax return.

He did not work the first year of college and received no income.

I was just wondering if the 1098-T and 1098-Q needed to be reported and therefor a tax return needed to be filed.

I am not looking for a tuition credit.

[Hal_Al]

Since you know that the 1099-Q is fully covered by qualified expenses, the student and/or the parent  does not need to file the 1099-Q.  The 1098-T also does not need to be filed. Since the student has no other income, he does not need to file a tax return. 

 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! 

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”.