Hal_Al
Level 15

Education

Q. Am I best to just not include the 1099-Q at all?

A. Yes.  I have the same problem (although I haven't gotten a 1099-Q yet) and that's what I intend to do.

 

Q. And just say the money was used for education expenses? 

A. You don't have to "say' anything, since you are not entering it in TurboTax or any IRS forms.  I'm treating it like a "rollover". But, if contacted by the IRS (unlikely) will explain the actual facts. Keep your paper work. In my case it's the re-deposit bank slip. 

 

Going forward, we have a problem. The 529 plan's records no longer reflect the correct amount of earnings and basis, in the account.  You will have to do that manually in case you ever make a non qualified distribution in the future. Make only qualified distributions, in the future, and you can ignore it.