I have a 529 for my kids that I use to pay tuition, qualified expenses for my son's 2025 graduate school. He is the beneficiary (I am the owner). We paid the school directly for all costs in 2025.
The 1099-Q amount paid ($13,388.00) equals the total of the payments received on the 1098-T ($16,440.00 - $3,052.00 [scholarship]).
I am getting a schedule 1 (line1z) taxable income on his return for $5,218.00. I don't know why this is the case when 100% of the 529 distribution went directly to the school and the amount of the distribution equals the payments received (less the scholarship).
We didn't have this problem last year and I don't know how to fix it. Last year, he received his undergraduate degree from the same school and is now in their Master's program.
Can someone help?
