topic Where do I enter information about our 529 withdrawals? in State tax filing

Where do I enter information about our 529 withdrawals?

bagudli — Thu, 06 Jun 2019 05:50:45 GMT

Distributions (withdrawals) from 529 Plans are report to...

ToddL — Thu, 06 Jun 2019 05:50:46 GMT

Distributions (withdrawals) from 529 Plans are report to you on Form 1099-Q.

The person who receives the funds (whose SSN is on the 1099-Q ) has to report the Form 1099-Q on their tax return (If the money went straight to the school, it is treated as going to the student).

You can enter the Form 1099-Q in either the Wages & Income section or the Deductions & Credits section of Federal Taxes,

(If entering in Wages & Income, the Coverdell ESA and 529 qualified tuition plans interview is found under Less Common Income > Miscellaneous Income).

(If entering in Deductions and Credits, the ESA and 529 qualified tuitions interview is found under Education).

If the beneficiary is listed as a dependent on this tax return , you will have to complete the Education Expenses interview, including entering the Form 1098-T.

If the beneficiary is not listed as a dependent on this tax return (e.g. grandchild), you will have a screen to enter information about that student and their expenses. Unlike the Education Expenses interview, you can enter Room and Board costs (see attached screenshot).

Re: Distributions (withdrawals) from 529 Plans are report to...

Bill38 — Fri, 04 Feb 2022 06:04:05 GMT

My 529 plans are for my grandsons (ages 10 and 12) who live in Geneva Switzerland. They are both U.S. citizens and live with my son. I withdrew $10K from their 529 plans and sent the money to my son, who paid their tuition. There is nothing in Turbo Tax Premier that discusses this situation. I did receive a 1099Q from T. Rowe Price, but Turbo Tax indicates I must pay U.S. taxes on this distribution. It would appear that I may have to file by mail, vice electronic so that I can include the tuition receipts.

Re: Distributions (withdrawals) from 529 Plans are report to...

Hal_Al — Fri, 04 Feb 2022 14:40:39 GMT

@Bill38

Since the money was used for qualified expenses, none of it is taxable. The simplest thing to do is just don't enter the 1099-Q in TurboTax (TT).

You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, to cover the distribution. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records.

On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."

That said, the 1099-Q interview will allow you to enter offsetting expenses (it's actually easier in your situation than when the student is your dependent).

When asked who the student is, select "Someone not listed here". Then follow the interview. You'll eventually be asked what level of school the student attended and finally be given a screen to enter the expenses paid. The fact that the expenses were paid indirectly does not change the fact that the 529 plan was used for qualified expenses. In fact, all that needs to happen is for the student to have had qualified expenses in the same year that the distribution was made.

Re: Distributions (withdrawals) from 529 Plans are report to...

Willie38 — Fri, 04 Feb 2022 19:47:07 GMT

Thanks! This is the first time I have taken a distribution. Nothing like reading the instructions, huh? LOL