HELP ME REMMEMBER--1099Q and 1098T question

[drwallerjr]

3rd year FT dependent  commuting student at college.

Received 1099Q in her name and 1098T in her name.

I made distribution/s from a 529 account directly to the school. The distributions on the Q FORM seem correct. the  T form seems to show payments correctly as well.

I entered these forms on **MY** return and got the AOC credit. This was the case in year 1/2 as well.

What I forget is if I need to enter the Q or T form on my daughters return.  I see no evidence I did in prior years w/Turbo Tax based on what I printed last year.  I also do not recall entering it?

Must I?

[MinhT1]

As she is your dependent, only you can claim the education expenses on her form 1098-T. So you enter her 1098-T on your tax return. And she does not.

For the 1099-Q, because you are the recipient of the form (your name and SSN is on the form and she is the beneficiary), you will enter that form on your tax return. She does not enter it on her return.

Please also note that the funds from the 1099-Q cannot be used to claim the AOTC as they are already tax-advantaged funds. You can only use tuition you paid out-of-pocket to claim the AOTC.

[Hal_Al]

If, after using $4000 of the tuition expense to claim the AOC, on your tax return, there were enough expenses* left over to cover box 1 of the 1099-Q, the 1099-Q does not need to be reported.

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. 

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." 

* qualified expenses, for 529 plan distributions,  include books and computers and even meals for commuting students. Commuters may keep track of actual food cost or use the school's meal allowance for on-campus students, whichever is less. 

For 529 plans, there is an “owner” (usually the parent), and a “beneficiary” (usually the student dependent). The "recipient" of the distribution can be either the owner or the beneficiary depending on who the money was sent to. When the money goes directly from the Qualified Tuition Plan (QTP) to the school, the student is the "recipient". The distribution will be reported on IRS form 1099-Q. 
If you do need to report it, the 1099-Q gets reported on the recipient's return. The recipient's name & SS# will be on the 1099-Q.

[drwallerjr]

I entered both on ***MY*** return.  I am questioning HER return.  Thanks for the help.

I think you are saying if I subtract 4K from Box 1 on the 1099Q and the amount left over was still less than my total expenses, I need not enter this on my DAUGHTER'S return.
CORRECT?

That is my situation.... When I take the total payments received by the college (1098T) less scholarships less my distribution, I still have over 4K in expenses (a loan, books etc etc.) I do have the loan, books, summer course etc itemized and it was over 4k.  I know I found a place to enter the books, summer course etc..Funny though, it did not prompt about the loan.

Perhaps TT just took the Payments on the 1098 T, subtracted the Scholarship also shown on the 1098T then subtracted the distribution on the 1099Q...saw the amount left over was great than 4K and that was it.  Maybe I did not need to enter the books, summer course etc etc.

Anyway, I need not enter anything on her return correct?

[Hal_Al]

Q. I think you are saying if I subtract 4K from Box 1 on the 1099Q and the amount left over was still less than my total expenses, I need not enter this on my DAUGHTER'S return. CORRECT?

A. Correct.

Q.  it did not prompt about the loan?

A. Loans are irrelevant. You do not enter loan money received.  What you enter is what you spend  money on., regardless of the source of the money (529, loans, out of pocket). 

Q. Perhaps TT just took the Payments on the 1098 T, subtracted the Scholarship also shown on the 1098T then subtracted the distribution on the 1099Q...saw the amount left over was great than 4K and that was it.  Maybe I did not need to enter the books, summer course  etc.

A. That's essentially correct, but in a different order.  It took the Payments on the 1098 T, subtracted the Scholarship, subtracted the amount used for the AOC....saw the amount left over was greater than box 1 of the 1099-Q.  

Q. Anyway, I need not enter anything on her return correct?

A.  Correct.  The 1099-Q should not have been entered on your return.  But you do not need to delete it. 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

I added another paragraph to my original reply, explaining "recipient". 

[MikeW6]

My situation is slightly different as we are planning to NOT claim my college student daughter as a dependent this year.  The 1099-Q is sent to me (recipient) with my daughter being the beneficiary.  Since she is not my dependent, TT thinks my other child is the one going to school.  Should I just ignore the 1099Q on my return and report it on my daughters return?

[Hal_Al]

@MikeW6 

No, since you are the recipient, you don't report it on your daughter's return.  Go back the beginning of the 1099-Q interview.  When asked who the student is, select: Someone else not listed here. Follow the interview.  It will  give you boxes to enter education expenses in the 1099-Q interview (not separately in the education section, as is done for dependents).

As previously stated, in this thread, When the box 1 amount on form 1099-Q is fully covered by expenses, you do not need to enter the 1099-Q at all.  TurboTax will enter nothing about the 1099-Q on the actual tax forms. 

[MikeW6]

I got it now thanks.  I had to go back and delete the education stuff I had started so that I could start fresh.  That cleared it up.