DawnC
Employee Tax Expert

Get your taxes done using TurboTax

All of the items you listed are considered qualifying expenses for 529 funds.   The only difference is that for the purposes of claiming the education credits, room and board doesn't count.   But since you are reporting a 1099-Q, the room and board (and the other expenses) count as qualified education expenses (QEE).  

 

If you used all of the 529 funds on QEE, you do not have to enter the 1099-Q at all.   Have you entered the 1098-T yet?   After you enter the 1098-T along with any scholarship income, TurboTax should apply the excess to those other expenses.  

 

For most qualified education program beneficiaries, the amounts reported on the 1099-Q aren’t reported on a tax return.   However, if annual distributions exceed your adjusted qualified education expenses, you may need to report some of the earnings reported in box 2 as income on your tax return and pay an additional 10 percent tax on it as well.   Your adjusted expenses are equal to the total of your qualified education expenses minus other tax-free assistance you receive, such as scholarships and Pell grants

 

For example, suppose your qualified education expenses are $10,000, you receive a $2,000 Pell grant and boxes 1 and 2 of your 1099-Q report a gross distribution of $8,000 and earnings of $1,000. Your adjusted expenses are $8,000—which means you don’t have to report any education program distributions on your tax return.

 

Guide to IRS Form 1099-Q: Payments from Qualified Education Programs

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