A couple of options and a warning:
Option 1:
- Return to the 1099-Q entry.
- When asked "Who is the student/ beneficiary?" Select someone else and enter your son's name.
- Keep going and look for Principal or interest payments on qualified education loans, enter $10,000
Option 2 - delete the 1099Q since it isn't taxable, keep your records in case the IRS asks. Since the 1099-Q was not income, it should not be entered. Tuck the 1099-Q into your tax folder. IRS Publication 970, Tax Benefits for Education states that nontaxable distributions should not be entered.
Warning: The 529 can be used for student loans up to $10,000 per lifetime. This means no further withdrawals are allowed for student loans for your son. If you as the parent have a PLUS loan, you can withdraw for that up to $10,000. You are allowed to roll the funds into a sibling account.
In addition, your state may tax the withdrawal as income.
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