First, if all of the 529 went to qualified education expenses plus room and board, you can delete the form 1099-Q.
Room and board is not a qualified expense for AOTC, but it is a qualified expense for the 529. For full details, see 529 for Room and Board. Did all of it go to room and board?
- Yes - delete the 1099-Q
- No - the 529 was bigger than all of the above expenses. The amount beyond room, board, tuition, books, etc is taxable.
Example of no- but went to qualified expenses:
- $15,000 529 distribution. $12,000 went to room and board with $3,000 towards tuition, books, etc.
- 1098T shows $12,000 tuition. Plus you have additional expenses of $1,000 for books and miscellaneous.
- The 529 paid $3,000 towards the tuition and books. If we subtract the $3,000 from the amount paid for tuition and books, we have $13,000- $3,000 = $10,000 actually spent out of pocket.
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