1099 q and 1098 t difference

Forum|Forum|3 years ago
April 9, 2023
1 reply
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529 plan directly paid tuition for 2023 spring semester to my university in Dec 29, 2022 however it showed in university system on Jan 5, 2023 that they received the payment. Hence 2022 1099 T does not show the amount whereas 1099 Q showed that I withdrew the money. How do I reconcile this?

KrisD15

Level 15

The 1099-Q and 1098-T are used to make calculations.

Distributions can be applied to Room and Board OR Tuition/Fees, to be non-taxable.

Scholarships may only be applied to Tuition/Fees, or they are taxable.

More information would be needed, such as whether you are applying for an education credit,

but basically, the payment shown on your 1099-Q may be offset by the payment that will post in 2023.

If the distribution was used for education purposes, leave the 1099-Q out of the program and lower the expenses you claim if you are applying for a credit.

If the distribution went all to Room and Board, you can leave the 1099-Q off and no other adjustments are required since Room and Board cannot be used for a credit.

If the distribution covered all the tuition, and there was no scholarship in Box 5, you can leave the 1098-T off as well.

If the distribution covered PART OF the tuition, enter Form 1098-T and adjust the amount in Box 1 so that it reflects what you paid out of pocket in 2022. Don't include the portion of the distribution for the 2023 payment, you will adjust for that next year (adjust Box 1 DOWN by the amount on the 2022 1099-Q that paid for the 2023 1098-T)

If you WANT to enter your 2022 1099-Q, use the link under Box 1 on the 1098-T entry screen and increase Box 1 to reflect the portion that crossed calendar years.

Forms 1099-Q and 1098-T are used to

Get an Education Credit (based on expenses paid over assistance, such as Distributions, and Scholarships)

Claim taxable income for assistance received that was not used for education expenses.

If neither of these apply to you, you can leave the Forms off, the program does not need these numbers if they are not needed for a calculation.

Be sure that next you you do not use the expenses reported on the 1098-T that are allocated to the 2022 Distribution.

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rkvshAuthor

Level 2

Many thanks for your quick reply. My tuition (only) is paid by 529 plan. Room and board, I paid from my personal account. The tuition bill is directly sent to the university by the 529 plan. I got the spring tuition bill in Dec 2022. My parents told the 529 plan to send the payment to the university on Dec 29, 2022 which university received in the January 5, 2023. Hence 1099 Q shows the Dec 29 payment whereas 1098 T does not show because they received it in 2023. Hence 1099 q shows more money (equivalent to the spring 2023 tuition bill they paid) than the 1098 T. My main concern is that IRS will think that I withdrew more money than needed to pay the 2022 tuition.

KrisD15

Level 15

It would be better if the distribution (1099-Q) matched the 1098-T, but as long as you have documentation, you will be fine.

I think you (and your parents if they claim you) would be MUCH better to use the distribution for Room and Board.

Then, the tuition paid "out-of-pocket" may be used towards a credit.

It does NOT matter how the events transpired over the year, the IRS lets you allocate distributions, scholarships, and expenses however is best for the taxpayer. The IRS shows several great examples in Pub 970 of putting Distributions to Room and Board so that tuition can be used for a credit.

If you are eligible for an education credit, the IRS encourages you to take it.

In TurboTax, enter the 1099-Q first, then expenses including Room and Board.

You can pay for the first three months of the following year and claim it the year paid, so add the payment that crossed years. As long as you have proof that you made the distribution in 2022, you should be able to claim the expense for the January, February, and March classes.

Pub 970

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