We (and a grandparent) paid our daughter's tuition directly to the college from our (i.e., the parents and grandparents) respective 529 plans so she received (in her name) two 1099Qs. She also received a 1099T from the school. The total of the Qs is more than the T. I'm not sure why this is the case because the funds from the 529 were used to pay the college bill in its entirety (which includes tuition, dining, accommodation etc.), all of which are qualified expenses to the best of my knowledge, so I'm not sure what the T is excluding. In any event, that's not my question...
The question is, when my daughter entered the Qs on her tax return, TT made the entire amount taxable, leaving her with a hefty tax bill. I then tried to add the T, hoping it would offset the Qs but I got a message saying she couldn't add the T because she was being claimed as a dependent. (She is a dependent on my tax return but I take the standard exemption so I don't know if she's officially being claimed or not.)
So I did some googling and I read that as long as all the expenses paid with the 529 are eligible expenses (as noted above, I think they all are) then it is not necessary to enter the Qs onto the beneficiary's tax return. So we removed it.
So neither the Qs nor the T were entered on anyone's return.
Please tell me this is right!
