Education

The 1099-Q was issued to you because you made the withdrawal. 

Going forward, if the distributions are used for education purposes, have the student beneficiary make the withdrawals, or transfer directly to the school. 

That way the 1099-Q is properly issued to the student. 

If your 2024 Form 1099-Q reports a distribution you made, you are responsible for any tax on that distribution. 

If it was used for education expenses, you must co-ordinate with the non-dependent student so that the student does not use the same expenses for their education credit or to offset scholarships. 

Yes, since the student is no longer your dependent, the student would use Form 1098-T for a possible credit. Any times you received the American Opportunity Tax Credit counts towards the four times that credit can be claimed and would limit her availability to that credit by the number of time you took it. 

So, if the distribution was used for room and board, nothing on her 1098-T would need to be changed. 

If her Form 1098-T shows 10,000 in Box 1 and you have a distribution of 2,000 that you are allocating to tuition, she would need to lower Box 1 to 8,000 so that the expenses are not used twice. 

1. You can enter your Form 1099-Q into your TurboTax program. 

It will ask if it was used for education expenses, and if you say "Yes" and "For someone else not listed on this return" there is no further reporting. You are done and the distribution will not be taxed.

No, you do not use Form 1098-T

2. Your non-dependent student daughter will use Form 1098-T to apply for a credit, but she might need to either adjust Box 1 OR not adjust Box 1 BUT ALSO report the distribution you took as "Scholarship or aid not already reported on W-2 or 1099" in her program. 

No, she does not enter Form 1099-Q since it was issued to you.

Again, if the distribution was used for room and board, there would be no need to adjust Form 1098-T.

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