I received a 1099Q. The recipient is my son (age 20). I am the sponsor. I entered the1099Q box # 1 distribution (around $50,000) onto my son TT tax return. The entire 2020 1099Q distribution amount was his university tuition or college qualified expense. We did not withdraw any excess amount over his qualified college expense. My son has no other income except some small interest & dividend. I am also claiming him as dependent on our married filed joint tax return.
My question is why I need to pay tax on his 529 distribution? I am showing approx $8k taxable income from 529 that trigger approx $400 federal tax. I thought 529 distribution on college expense is tax free.
I am hoping someone can shed some light on this?
Thanks
