@mintheocean - while i didn't read the entire post in detail, the 1099-Q is confusing but is to be reported on the tax return based on whose SS# is on the form and NOT necessarily who owns the 529!
- if the 529 money was sent directly to the college (or the student), the student's SS# will be on the form and the student is to report it on their tax return.
- if the 529 money was sent to you, then your SS# will be on the form and you are to report it on your tax return.
- because there is normally a 1099-T involved....
- If a parent claims the child as their dependent, the parent will claim the 1098-T and education expenses, regardless who paid.
- If the parent does not claim the child as their dependent, the student will claim the 1098-T and education expenses, regardless who paid.
- If the scholarships, grants, and other aid (except loans) is more than the tuition, fees, books, and supplies, the student will claim the 1098-T and education expenses, and will claim the excess aid as taxable income.
if reporting correctly in TT (and it does work, but agree it's complicated) , and there were more qualified expenses than the the 529 distribution, it should work out to "no impact" (no tax).
