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Education
Q. We were always told to keep every single receipt, record, etc. of what we paid for college so we don't get hit with any unqualified expenses and now it sounds like we don't even need to report that info to anyone?
A. That can be a problem. As previously noted; 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.
In the past, we saw several posts, in this forum, about IRS notices about the 1099-Q. I got one personally. So, hang on to those receipts.
At least two users have reported receiving a CP2000 letter, from the IRS, on 529 distributions. They replied that their child was in college and the distributions were for qualified expenses, which they listed, but they did not provide receipts.. They later received a notices saying they were in the clear. Others have reported that just sending copies of school statements satisfied the IRS. We have noticed, here in this forum, that the number of 1099-Q notices, from the IRS has dropped off significantly in recent years