The designated beneficiary is usually the student, and the owner is the person who created the account (usually the parent. The recipient is generally the beneficiary.
Assuming this is your case, and you are the student using the money for qualified education expenses, the earnings portion of a taxable 529 plan distribution must be reported on the beneficiary’s (student) or the 529 plan account owner’s (parent, relative, etc) tax returns. There is a calculation used to figure the taxable portion of the 529 plan distribution:
- Divide the AQEE by the total 529 plan distribution (Form 1099-Q, Box 1)
- Multiply the answer by the earnings portion of the total distribution (Form 1099-Q, Box 2).
- Subtract this amount from the total distributed earnings
The result must be reported as income on the beneficiary’s or the account owner’s federal income tax return, Schedule 1 Form 1040, line 8.
