Do I need to fill out 1099-Q for distribution of money out of my childs Edvest (529) college fund in Wisconsin? I entered it & now it looks like additional taxed income.

[drjk0214]

Also, it was used for College tuition.

[Hal_Al]

No.

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.

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."

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, in case of an IRS inquiry.

You would have to do the math to see if there were enough expenses left over for you to claim the tuition credit.  You cannot double dip! You cannot count the same tuition money, for the tuition credit,  that gets you an exclusion from the taxability of the earnings (interest) on the 529 plan. Since the credit is more generous; you should claim it first, even if you have to pay a little tax on the 529 distribution.

[KrisD15]

Did you use it for education expenses? 

College or something else. 

[drjk0214]

Thanks for the reply!  

So let's say I got 12,000 distributed from Edvest (529 program) - and used that for tuition and some room and board - but the tuition expenses totaled 11,000 - and we used the remaining 1,000 plus an additional 5,000 (out of our own pocket) to pay for room and board.   In that case would i NOT have to fill out the 1099 Q, but do I still qualify for the American Opportunity Credit.   

There doesn't seem to be a place to add room and board as expenses to drive up the student expense within TurboTax (at least they don't ask you that question).   

For the time being, I tried removing the 1099-Q and it reduced what I owed, but now that I removed that, do I still enter the tuition amount later on when it asks to fill in the 1098-T?   

Thanks again!

[drjk0214]

I did enter the information from the 1098-T in the: Expenses and Scholarships (Form 1098-T)

[KrisD15 · Accepted solution]

Room and Board can be entered on the screen for additional education expenses. 

You should enter wages, then the 1099-Q and then the 1098-T in that order. 

[drjk0214]

Oddly enough - I do NOT see Room and Board as an option like you do.  I wonder if a previous question hides that.

[drjk0214]

Nevermind, I'm an idiot - thanks for all your help!!!