Student attended College overseas and I received 529 distribution and a 1099Q

[want to know]

Hi,  Daughter age (24) non dependent attended College in UK and paid tuition (did not recieve a 1098).  I received a 1099Q as we took the money as it was easier and then gave to her to pay tuition.  How is that to be handled on her return (filing single) and my return (married filing joint)?  Can she claim the LLC?

[Hal_Al · Accepted solution]

Yes, she can claim the LLC, if the school is an eligible institution (many foreign schools are not).

Enter your school at the link below, to see if it's on the dept. of education list.

https://www.savingforcollege.com/eligible-institutions

If the school is an eligible institution, you can treat the 529 distribution as a qualified distribution, to the extent that you have net adjusted qualified educational expenses (AQEE).  You can NOT count the tuition she uses to claim the LLC (it takes $10,000 of tuition and fees to get the maximum $2000 LLC).  The LLC is non refundable.  That is, it can only be used to offset an actual tax liability on her tax return.

Room and board, books, other course materials and a computer are not qualified expenses for the LLC, but they are for the 1099-Q/529 distribution. 

If you have sufficient AQEE, you do not need to enter the 1099-Q on your return (or hers).  If some of the distribution earnings will be taxable, it goes on your return, not hers. You are the "recipient".