Try these steps to ensure your 1099-Q is property entered:
- When you enter the 1099-Q, you should get a TurboTax question asking who is the beneficiary. If your daughter is entered as a dependent on your return, you will be able to select your daughter as the beneficiary.
- You daughter must have qualified education expenses for at least as much as the 529 plan distribution. To the extent the 529 plan distribution exceeds the qualified expenses, the earnings portion of the excess is taxable, including a 10% "additional tax".
- The qualified expenses used for the American Opportunity Tax Credit (AOTC) can't also be applied against the 529 distribution. During the Education interview, TurboTax will ask how much of your qualified expenses do you want to use for the AOTC. So, make sure you complete all of the Education section interview questions.
Refer to IRS Publication 970 at this link for the details on when 529 plan distributions are taxed.
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