It depends.
If you received Form 1099-Q you should have included it on your tax return. It doesn't mean you are going to pay more taxes. If you don't report it on your return, IRS might treat it (the earnings portion) as unreported income.
If you withdrew from the College Savings account as the recipient and then used the money to pay for your grandson's qualified educational expenses, you are considered as the recipient of the 1099-Q form.
If you entered the 1099-Q form and answer the questions correctly, you can avoid the income tax and penalty on the earnings as long as the funds were used to pay for your grandson's qualified education expenses, even if he is not a dependent.
For future reference or if you'd like to consider amending your refund, follow these steps to enter Form 1099-Q:
- Open or continue your return
- Select Federal and then Deductions & Credits
- Scroll down to the Education section under All tax breaks
- Select Show more and then select Start or Revisit next to ESA and 529 qualified tuition programs (Form 1099-Q)
- Follow the screens to enter your info.
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