Education

let me answer in the form of an example

 

1) 1098-T - Box 1: $10,000

2) 1098-T - Box 5 - $5,000

3) 1099-Q - Box 1 - $5,000

4) 1099-Q - Box 2 - $500

5) room and board expenses - $6,000

 

(for simplicity, assume there is no AOC for Liftime learning credit

 

so this example means there are $16,000 of college expenses, $5,000 of which were covered by a scholarship.

 

of the remaining $11,000 of expenses, $5,000 was paid for with a distribution of a 529 plan. 

 

because the remaining expenses ($11,000) exceeds the 529 distribution, none of the $500 (1099-Q Box 2) of earnings should be taxable)

 

1) assuming the student is a dependent on the parents return, the 1098-T is to be posted on the PARENTS return (it only goes on the student's return if the student is not a dependent of anyone else OR Box 5 exceeds Box 1, which it is not in this example)

2) the 1099-Q goes on the return of the person whose social security number is listed (if the parent owned the 529 and had the money send directly to the school or the student, the student's ss# will be listed; if the parent received the money directly, the parent's SS# will be listed).  BE VERY CAREFUL HOW YOU ANSWER THE TT QUESTIONS, as it is tricky and this is where errors can be made.

 

does that answer the question?