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WB1501
New Member

Education/529 Plan

We have a 529 plan.  The 1099-Q shows a $22,450 distribution, $8,800 in earnings, and a basis of  shows a basis of $13,650.  The 1098-T  shows $22,311 received for qualified tuition and expenses.  When I did my kids taxes, TT adjusted the qualified tuition and expenses to $12,000 and made other adjustments that resulted in $3,300 of income based on the 529 distribution.  I do not understand how TT is calculating this and there is so much income.  Following PUB 950 it looks like the income should be around $65.   Any ideas?

5 Replies
MarilynG1
Employee Tax Expert

Education/529 Plan

Without being able to see your return, basically if the Box 1 amount on your 1098-T is larger than the Box 5 amount, you may qualify for an Education Credit. 

 

If you claim your student as your Dependent, enter the 1098-T in your return, no matter who paid the expenses.

 

If the Box 5 amount is larger, there may be taxable income on the excess scholarship.  If so, enter the 1098-T in the student's return (if they are required to file a return). 

 

If the 1099-Q Distribution was used entirely for Qualified Education Expenses, you are not required to enter it either your return or your student's.  

 

Click this link for more info on the 1099-Q

 

 

 

 

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huskerdooo
New Member

Education/529 Plan

I am having a similar question in my situation.

 

My daughter needs to file taxes because of some 1099Bs.

Daughter received 1099Q, distribution of $1737. TurboTax has me enter 1099Q as part of an interview for HER return.

Entering the 1099Q inter her return increased what she owed in taxes. 

TurboTax says do not enter 1098T for her return because that should go on my return (she is dependent on someone else's return)

Her 1098T info - Qualified tuition $14473, scholarships Box 5 is 6000.

My (Parent) income greatly exceeds any 1098T benefit write-off. (e.g. >$250k)

 

According to the guidance in this thread, we should ignore the 1099Q for both returns?  This would not cause a red flag?

Considering that the 1098T is useless for my (parent) return due to my income, I do not see why TurboTax does not give me an option to enter it on my daughter's return to:

1. acknowledge 1099Q

2. cancel tax liability with qualified education expenses.

 

It does not seem correct to ignore the 1099Q even though there is no tax liability. The IRS knows of the 1099Q.

Any help would be greatly appreciated.

 

 

 

KrisD15
Employee Tax Expert

Education/529 Plan

 

When you say "she is dependent on someone else's return" do you mean she is YOUR dependent or someone else's? 

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huskerdooo
New Member

Education/529 Plan

She is my dependent on my return.

CatinaT1
Expert Alumni

Education/529 Plan

You enter the information on your return if she is your dependent.

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