Q. Do I need to enter the 1098T and /or the 1099Qs?
A. No.
Q. If I just don't include them on any of the taxes, will I be in trouble or at risk for audit?
A. No. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. It will only prepare a 1099-Q worksheet for your records. The worksheet is not sent to the IRS. We've noted a significant drop, here in this forum, of users being contacted by the IRS over unreported 1099-Qs.
Q. Also, as another question, on the 1098T forms, there are boxes for gross distribution as well as earnings? is this because these investments have gained value over the years? It seems the taxes are taken off the earnings (box 2) part.
A. Yes, if anything is taxable, it's a portion of the box 2 amount not the box 1 amount. But that only happens if the box 1 amount was not fully used for qualified expenses. Room & board are also qualified expenses for a 529 distribution.
