I graduated last year. I paid more than half of my education support. I filed my own return and entered 1098-T. There was a 529 final distribution to my mom. she is the recipient, she received 1099-Q. I am the beneficiary of this 529. Turbo tax ask these questions...
1. Were you a beneficiary of Coverdell Education Savings Account (ESA) ....
Should I answer Yes or No? is Coverdell ESA same as 529?
2. Did you receive form 1099-Q for distribution from a coverdell (ESA) or qualified tuition program (QTP)
Yes or No? the 1099-Q was for my mom but the money was spent on my education
Q. is Coverdell Education Savings Account same as 529?
A. Yes, for most of the rules. But not for your particular question.
Q. Were you a beneficiary of Coverdell Education Savings Account (ESA). Should I answer Yes or No?
A. Answer No.
Q. Did you receive form 1099-Q for distribution from a coverdell (ESA) or qualified tuition program (QTP). Yes No?
A. Answer no, because your Mom was the recipient. Theoretically, you could answer yes, If you needed help, in calculating your tuition credit, because some of the tuition was covered by the 529. But, that gets complicated and should be avoided if you are able to make your own determination.
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."
1. Say NO if your 529 was not specifically set up as a Coverdell ESA.
2. Say YES since you received a 1099-Q distribution.
In the Education section, TurboTax asks how much of your Education Expenses were covered by the 529 distribution, and how much were covered by any Scholarships.
Any remaining expenses may qualify you for an Education Credit.
As long your your expenses exceed the amount distributed by the 529, no one needs to enter the Form 1099-Q in their return. Just keep it for your records.