My 17 y/o got a 2018 1099-T for 529 distribution made directly to his school. The school didn't apply pmt til 1/3/19, so they didn't send him a 1098-T. How do we handle?

[tb13783]

The tuition payment is for his 1st semester of college which started in Jan 2019.  His income as our dependent is far less than the $12k required for him to file, even if it has to include this 529 distribution.  Ours is more than the phase-out amount for the American Opportunity tax credits.  We're MFJ.  What do we do?

[KrisD · Accepted solution]

If you intend to allocate the tuition expense against the distribution keep a copy of the student's school account statement, and the 1099-Q with your tax file. 

As far as you're concerned, the payment was made in 2018. 

Be sure you don't use the expenses it paid on your 2019 tax year return. 

If the entire distribution went towards tuition, you are not required to report it.

According to the IRS:

“Generally, distributions are tax free if they aren't more than the beneficiary's adjusted qualified education expenses for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return.”

“For 2018, treat an academic period beginning in the first 3 months of 2019 as if it began in 2018 if qualified education expenses for the student were paid in 2018 for that academic period.”

CLICK HERE for IRS Pub 970 Tax Benefits for Education