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cdkasner
New Member

Our income does not allow for an education tax deduction. How do I ensure I am not taxed on my 529 distributions (to me) that I used for college for my dependent son?

I have already entered all college expenses such as tuition and room and board.  These do not appear on schedule A to offset the 1098Q distribution.

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Accepted Solutions
ChristinaS
New Member

Our income does not allow for an education tax deduction. How do I ensure I am not taxed on my 529 distributions (to me) that I used for college for my dependent son?

If you are ineligible for a tax credit, you will see a warning in the first screen of the Education expenses section. (Federal Taxes-Deductions and Credits- Education) However, you are still able to enter those expenses for the purposes of the 1099-Q distribution.

In the end, if the 1099-Q/ 529 funds were used for eligible expenses, the income will simply not flow to your tax return. There won't actually be a tax form on your return about this- its handled via worksheets which do not go to the IRS.

There are a few tips to ensure that the expenses "communicate with" the 1099-Q:

  1. Enter the education expenses after the 1099-Q entry. If you entered the education first, edit and go through the screens again after the 1099-Q is inputted
  2. Even though you may not qualify for the credit, put $0 in the screen below within the Education section- this can be critical: "Amount Used to Calculate Education Credit or Deduction"

**You can get back to this question by clicking Edit next to Education Information under Here's Your Education Summary.**

If you were being taxed on it, the earnings on the 529 would flow to Line 21 of your 1040. To ensure that they aren't there, you can preview your 1040 now:

-My Account (top right of online)

-Tools

-View Tax Summary

-Preview 1040. Scroll down to look at line 21

If using the Desktop, just switch to Forms and look at the 1040, line 21 there.

View solution in original post

1 Reply
ChristinaS
New Member

Our income does not allow for an education tax deduction. How do I ensure I am not taxed on my 529 distributions (to me) that I used for college for my dependent son?

If you are ineligible for a tax credit, you will see a warning in the first screen of the Education expenses section. (Federal Taxes-Deductions and Credits- Education) However, you are still able to enter those expenses for the purposes of the 1099-Q distribution.

In the end, if the 1099-Q/ 529 funds were used for eligible expenses, the income will simply not flow to your tax return. There won't actually be a tax form on your return about this- its handled via worksheets which do not go to the IRS.

There are a few tips to ensure that the expenses "communicate with" the 1099-Q:

  1. Enter the education expenses after the 1099-Q entry. If you entered the education first, edit and go through the screens again after the 1099-Q is inputted
  2. Even though you may not qualify for the credit, put $0 in the screen below within the Education section- this can be critical: "Amount Used to Calculate Education Credit or Deduction"

**You can get back to this question by clicking Edit next to Education Information under Here's Your Education Summary.**

If you were being taxed on it, the earnings on the 529 would flow to Line 21 of your 1040. To ensure that they aren't there, you can preview your 1040 now:

-My Account (top right of online)

-Tools

-View Tax Summary

-Preview 1040. Scroll down to look at line 21

If using the Desktop, just switch to Forms and look at the 1040, line 21 there.

View solution in original post

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