You should enter both in TurboTax exactly as printed on the paper form. TurboTax will ensure that you don't pay tax on the distribution AND don't take credit for tuition expenses paid with a 529 plan.
The
recipient listed on Form 1099-Q should report the distribution on his or her
tax return. If the listed recipient is another member of your family, the
distribution must be reported on that person's tax return rather than on your
return.
For
a qualified tuition program (QTP or Section 529 Plan), the beneficiary should
be listed as the recipient only if the distribution is made:
·
directly to the designated beneficiary, or
·
to an eligible educational institution for the
benefit of the designated beneficiary.
Otherwise,
the account owner should be listed as the recipient of the distribution.
To
enter the 1099-Q:
1.
Open (continue) your return in TurboTax.
2.
In the search box, search for 1099-Q (upper-
or lower-case, with or without the dash) and then click the "Jump to"
link in the search results.
3.
On the Form 1099-Q screen,
click Continue and follow the onscreen instructions.
Here's
some other info you may find helpful:
If
you contribute money to a qualified tuition program, such as a 529 plan or a
Coverdell ESA, you will likely receive an IRS Form 1099-Q in each year you make
withdrawals to pay school expenses of the beneficiary. The 1099-Q reports the
total of all withdrawals you make during the year; however, some of this amount
may be taxable depending on how you spend the money.
The
1099-Q provides three key pieces of information. Box 1 reports your annual
distributions or withdrawals from the account. The second box reports the
portion of the distribution that represents the income or earnings of your
initial investment. Finally, box 3 reports your basis in the distribution.
Essentially, this is the amount of your distribution that relates to original
contributions you make to the account.
The
form also includes information on the type of account you own and amounts, if
any, that you transfer between two qualified tuition plans.
Calculating
taxable amount
If
the distribution doesn’t exceed the amount of the student's qualifying
expenses, then you don't have to report any of the distribution as income on
your tax return. If the distribution exceeds these expenses, then you must
report the earnings on the excess as "other income" on your tax
return. When you pay a student’s school expenses with these funds, you cannot
claim a tuition deduction or either of the educational tax credits for the same
expense.
