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Ed11
New Member

When must I include 1099-Q amounts and qualified educational expenses incurred on my return?

I received a 1099-Q showing amounts distributed from my 529 Plan.  The amount of the distribution did not exceed the amount of qualified education expenses incurred.  Must I enter the information from the 1099-Q and the qualified education expenses into turbo tax?
4 Replies
ToddL
New Member

When must I include 1099-Q amounts and qualified educational expenses incurred on my return?

Yes, you must  enter the information from the 1099-Q and the qualified education expenses into TurboTax. 

Since we guarantee the maximum refund or minimum tax liability, the program requires you to enter both  the 1099-Q and the qualified education expenses. Unless you enter the information into TurboTax, the program can't make the necessary calculations to know that you used it for qualifying education expenses greater than or equal to the distribution.

Ed11
New Member

When must I include 1099-Q amounts and qualified educational expenses incurred on my return?

In 2015 all of this information was entered into Turbo Tax.  The returns as filed included none of it.  That is, neither the amount of the distribution nor the amount of qualifed expenses were filed with the 'return as filed.'  Other Turbo Tax experts have indicated it is not necessary to include this information unless the amount distributed from the 529 exceeds the amount of qualified expenses which results in tax due.  Can you verify your response?
ToddL
New Member

When must I include 1099-Q amounts and qualified educational expenses incurred on my return?

I'm sticking with my instructions, which are also in the 1099-Q interview screens towards the end.

Not sure which "other Turbo Tax experts have indicated it is not necessary to include this information". When you complete the interview and confirm that the "qualified expenses" exceed the 529 distribution, it will be shown on a Education Expenses Worksheet. That worksheet is not filed with your return, but kept with your records.  Unless the amount distributed from the 529 exceeded the amount of qualified expenses (broader definition for 529 than AOC or LLC), it just doesn't appear as taxable income on your return.
Ed11
New Member

When must I include 1099-Q amounts and qualified educational expenses incurred on my return?

Thanks for your comment.  Again, the IRS does not see the information entered into Turbo Tax in regards to the 1099-Q distributions or the qualified educational expenses unless the distribution exceeds the qualified expenses (tax is due).  Ergo, I don’t understand from where the requirement to enter it into Turbo Tax is derived for this case where no tax is due.  Whether or not these two items are entered or not entered, the IRS will receive identical tax returns in either case.    That is, they will not see the information even if it is entered.  I understand Turbo Tax will use this information to generate worksheets (not sent to the IRS) but of course if the taxpayer maintains good organized records and receipts, these worksheets are not needed.  Ergo, if tax is not due on the distribution, the IRS will not see the information independent of whether or not it is entered into Turbo Tax.  
You said you were not sure about the other Turbo Tax experts who opined on this.  Here is a link to the answer provided by TurboTaxJaimeG, E.A. Tax Advice:
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/3711701-shouldn-t-room-and-board-be-considered-a-qualified-educati...
He states: “If you are sure that your Distribution was less than or equal to the amount of Qualified Education Expenses (such as Room and Board), you don't have to report any information from the 1099-Q or in regards to the 529 distribution to the IRS. It may sound strange, especially with the IRS, but you don't have to Substantiate the distributions from this account unless they were greater than you Qualified Education expenses. So basically if you didn't spend less than you received you do not enter anything into TurboTax….”  
I also spoke with Katherine N. CPA, CPC, PMP of Turbo Tax who agreed that neither distribution information nor qualified expenses need be entered unless the distributions exceed the qualified expenses (adjusted qualified expenses to be sure).  
These two answers appear to be conclusive, in particular because Turbo tax does not pass on the distribution or qualified expense information to the IRS for the case in my opening question where the distributions do not exceed the qualified educational expenses.
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