Have received 1099-Q in my ss# for daughters college expenses. Amount is less than the 1098-T in her ss#. TTax is adding the earnings to my income. Is this correct?

[ToddL · Accepted solution]

Yes, the person who "receives" the 529 distribution has to report the Form 1099-Q for tax purposes. The interest portion  remains taxable until you complete the Education Expenses & Scholarships interview in Deductions and Credits and enter at least an amount of qualified education expenses (paid) that is equal to the interest portion on the Form 1099-Q.

Do you claim your daughter as a dependent on your tax return? If so, you will complete the Education Expenses & Scholarships interview in Deductions and Credits, reporting the Form 1098-T on your return, and claiming all of her education expenses.

If you don't claim your daughter on your tax return, you will still complete the Education Expenses & Scholarships interview in Deductions and Credits, (without the Form 1098-T), and will have to report qualifying education expenses equal to the interest portion on the Form 1099-Q. 

She will also complete the Education Expenses & Scholarships interview in Deductions and Credits , reporting the Form 1098-T on her return, but will have to reduce the qualifying education expenses by whatever amount you claimed against the 529 interest income.

[catlen]

Thank you Todd. I had done all of the entering before posting the question. Yes, our daughter is our dependent and the 1098T amount exceeds the 1099Q. The earnings from the 1099Q are still showing on Line 21 of the 1040.

[ToddL]

I understand. Without seeing the Form 1098-T and your answers to the Education Expense interview, I can't give you a definitive answer as to why the 1099-Q interest is showing up on Line 21. Unfortunately, I don't have access to the tools needed to view that information and we can't use AnswerXchange to work through that. You will need to Contact Us

[ToddL]

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[ToddL]

for phone support.