My daughter (the benficiary) is a full time student at a tech school. I pulled money from her 529 account to pay her tuition directly to the school. Then I bought her a laptop and printer to use and pulled money from the 529 account to reimburse myself. I also had monthly payments sent from the account to her landlord each month for the rent as the tech school does not offer housing. The total for the computer, printer and rent came to just over $3600, which is the gross distribution on line 1 of the 1099-Q. The earnings (line 2) are $2,846 and the basis (line3) is $754. There were other distributions that were sent directly to her, some QEE, some not. All of those appear on her 1099-Q. Those figures will be reported on her tax return.
Just to reiterate, I don't need to report ANY of the 1099-Q figures (or related expenses) on my tax return? Or should I indicate that I COULD claim her as a dependent (even though I'm not), report the gross distribution per the 1099-Q, and then report the expenses? Either way should give me the same result. I'm just worried that if I don't report it I might get a letter from the IRS.
Lastly, I don't understand your last suggestion - transfer the funds to the school so the 1099-Q will be properly issued to the non-dependent student.
