My 1099-Q form shows me, the parent/529 account owner, as the recipient (because I mistakenly had the distribution deposited into my bank account, instead of directly paying my child's private elementary school). I have documentation showing I paid my child's school. Also, box 6, "If this box is checked, the recipient is not the designated beneficiary", is checked. If I try to enter the form exactly as I received it, into TurboTax the distribution becomes taxable, which is not correct.
In reading this article, it sounds like entering my 1099-Q form into TurboTax is not required. However it also sounds like since box 6 was checked, if I don't enter the form with my tax return, I may enter into an unwanted exchange with the IRS.
Here are some of the key statements from the above linked article:
"If that box is checked, the IRS computers are apt to send out deficiency notices assessing tax, interest, and penalty, even when you know with certainty that the withdrawals were tax-free based on your beneficiary’s qualifying college expenses."
"Some will advocate attaching a statement to your tax return that details your beneficiary’s college expenses and explains that the withdrawals are tax-free, but I am not convinced that will help."
I called the 529 plan administrator, just talking to the first person I could get on their general phone line and it sounded like they may not send me a corrected form, since the form is correct from their perspective, but not mine. Should I push them harder, providing them documentation of the related education expense for the child/beneficiary?
How should I proceed?
Thank you.
