I apologize for having to ask this question, but I cannot find the answer in the forums to my specific questions. My daughter is a full-time student and only earned about $2200 last summer as a waitress. I am the owner of a 529 where she is the beneficiary. All withdrawals from that account have been for qualified expenses (tuition, room & board and a laptop). Except for the laptop, all payments from the 529 have gone straight to the university so a 1099Q was issued in her name. I received a 1099Q for the withdrawal for the laptop since I paid for it and reimbursed myself. My daughter is also a scholarship recipient, which only covers tuition (no room and board), and she received a 1098T. Since she is my dependent, I reported her 1098T and my 1099Q on my return. When I report her 1099Q in her return, TurboTax shows that my daughter owes $1600 in taxes for it. I have twice gone through the full interview for the education section for both my return and for hers and nothing changes.
One bit of information that I believe might be causing this problem that also might help in your response is that I actually made 3 tuition/room & board withdrawals in 2019 that might not reconcile with the scholarship amount on the 1908T. I paid for the Spring, 2019 semester on January 3, 2019; I paid for 2019 summer classes and the Fall, 2019 semester on August 13, 2019; I paid for the Spring, 2020 semester on December 18, 2019. When I add the total in box 1 on her 1099Q to the total in box 1 on my 1099Q, the amount is exactly what is shown as all YTD withdrawals on my 529 statement for 2019. So could 3 withdrawals for 3 semesters (reported on her 1099Q) against 2 semesters worth of scholarship (reported on her 1098T) be why the calculations show that taxes are owed by my daughter? If so, how do I rectify this? I can't find any worksheets that help correct this problem.
Otherwise, here are other questions if have:
1. If all withdrawals were made for qualified educational expenses as listed above, should any taxes be owed for withdrawals?
2. If no taxes should be owed, do I have to report her 1099Q at all? I have read in some replies that as long as I have good records that show all withdrawals match all qualified expenses, I don't need to even report a 1099Q.
3. If taxes are owed this year, how do I need to utilize the 529 in the future to avoid taxes being owed for qualified educational expenses?
Thanks in advance for your help!
