So My Son had no income in 2019. He received the 1099Q Form from the 529 Plan Trust. Turbo Tax is saying he has to pay almost 800 dollars in taxes? All of the money was used for qualified expenses. The Plan actually sent the tuition check directly to the school for $10,341.70 so other than some books and a computer he bought with the extra how is it he has to pay taxes on the 529 plan money.
So here are the details.
His Tuition, Room and Board, and other 529 qualified expenses were $11,703 (after the application of a $6000 scholarship) as stated on the 1098T. The Gross Distribution was $12841 for a difference of $1138. We used that difference to buy his computer and some textbooks. So after adding the 1098T to my tax return we qualified for 2 of the 3 college tax credits.
I started a return for him to file the 1099Q info but it shows he has to pay $784 in taxes... on money that is supposed to be tax-free. I'm really missing something here. Can anyone advise on what I'm doing wrong? 529 Plan was supposed to be tax-free for qualified expenses. we didn't fudge a thing... I have receipts for every dime spent. I could really use some guidance here or I'm filling my first extension in 35 years. Or is the 1099Q form wrong.
Thanks
