529 and 1099Q

[KrisD15]

If the student is your dependent, list the student on your TurboTax program and enter all the related documents (1098-T and 1099-Q) so that your program can do the math. 

If there is taxable income, your program will tell you how much income the student needs to claim on their return (if any).

If there is an education credit, the credit will be listed on your return. 

IRS Pub 970

[ejudge69]

Ok thanks for passing this along.  After editing "Education Information" it adjusted things so that I am no longer paying tax on the 529 distribution (even though I've added the 1099Q info).  Weird.  I am 95% sure I went through these steps before.  So maybe one of the updates I took now handles this better or maybe going back in and walking through these steps again made it "reevaluate".  Anyway, thanks for the suggestion!

[brycepop]

I received both a 1098-T (showing tuition and fees only) and 1099-Q (529 distribution) for my son's college education expenses. In TurboTax I entered everything as it appeared in both forms, as well as filling out the individual boxes for the other expenses (room and board on campus, books, internet service fees).  We received a partial refund in the fall for room and board due to COVID as all students had been sent home for most of the semester.  I deposited that amount back to my 529 and entered it into TurboTax when it asked.  In the end, my expenses (tuition/fees, room/board, books)  exceed the adjusted distribution amount (1099-Q box 1 less the refund), so I should not have to pay tax on any earnings, correct?  TurboTax is adding some of the earnings to my 1040 as "Other Income".  When I took the withdrawals to pay for college I was the recipient, not my son who is beneficiary.  I have seen in some posts that I do not need to include the 1099-Q on my tax form, is this true?

[Hal_Al]

 Q.  I have seen in some posts that I do not need to include the 1099-Q on my tax form, is this true?

A.  Yes.  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." 

Since you have determined that your expenses exceed the distribution, you have determined that none of it is taxable.

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  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! 

[Iknowenough]

Similar situation...something is glitching in Turbo Tax...I entered $18k in tuition as shown on my student's 1098-T, which exceeds the $11k 529 withdrawal on the 1099-Q, so nothing should be taxable.  However, TT is generating 'other income' on line 8 of my 1040 of about $2k.  When I switched to 'forms view' and looked at the 1099-Q, there's a worksheet on page 3 of that form comparing the 529 withdrawal amount to the qualified tuition expenses.  It appears TT is subtracting $10k from the expense amount, so it thinks the tuition was $8k instead of $18k.  To test it out, I plugged in $28k on the input screen, and again the worksheet dropped it by $10k, this time to $18k.  Seems like a patch is in order...

[FangxiaL]

The "missing"10k might be used to claim the lifetime learning credit. Do you qualify for AOTC?