topic Re: 1099Q in Education

1099Q

Wjgsj10 — Tue, 25 Mar 2025 00:58:40 GMT

Want to pay only for the gains on a closed 529 account. I can get it to where I’m not getting the 10% penalty but I’m still paying more is it going to my income? Any suggestions on how to enter?

Box 1. 45644.24

Box 2. 21499.78

Re: 1099Q

KrisD15 — Tue, 25 Mar 2025 01:18:19 GMT

How much was the distribution?

Did you get Form 1098-T?

If yes, what is in Box 1 and Box 5?

Did you enter the 1099-Q and then the 1098-T into the program?

If yes, what did the program do with them? (Did it tax and if yes, how much?)

When a distribution is taxable, the tax is only on the earnings.

You should only see up to 21,500 (rounded) as income on Schedule 1 Line 8z.

Re: 1099Q

Hal_Al — Tue, 25 Mar 2025 01:21:28 GMT

If you closed the account, without any of the money going to qualified educational expenses, the entire box 2 (gains) amount is taxable and also subject to the 10% penalty.

You say "I can get it to where I’m not getting the 10% penalty". What makes you think you're not subject to the penalty?

What ever you did to make that happens is probably interfering with a correct calculation of the taxable amount (which is $21,500 rounding).

Q. Is it going to my income?

A. $21,500 should go to line 8z of Schedule 1 with the notation "Qual state (or private) tuition prgm from 1099-Q"

Q. Any suggestions on how to enter?

A. You enter the 1099-Q. When asked who is the student, you answer "the distribution was not used to pay any educational expenses"

Re: 1099Q

Wjgsj10 — Tue, 25 Mar 2025 01:32:55 GMT

Sorry did not enter all info. Received a scholarship for majority of the educational expenses (reason we took out leftover funds)

I believe I’m not subject to the 10% penalty if i received a scholarship

Re: 1099Q

Wjgsj10 — Tue, 25 Mar 2025 01:40:22 GMT

Sorry did not enter all info. Received a scholarship for majority of the educational expenses (reason we took out leftover 520 funds)

I believe I’m not subject to the 10% penalty if i received a scholarship. I did receive the 1098-T. Box 1. 17,274.00 and Bix 3. 8,810.00 but part of the Box one is a employer contribution scholarship

Re: 1099Q

Hal_Al — Tue, 25 Mar 2025 01:46:23 GMT

Here's quick workaround in TurboTax:

Enter the 1099-Q. When asked who the student is answer: someone else not listed here (lying to TurboTax to get it to do what you want does not constitute lying to the IRS). Enter the student's name when asked. A few screens later, you'll get one simple screen to enter expenses. Press Done at the 1099-Q summary screen, to get there. Enter $45,644 or more of expenses. Also enter $45,644 for the scholarship in the box "Tax-free assistance". This reports the earnings as taxable and claims the scholarship exception. You do not have to deal with the complicated “Educational expenses and Scholarships” (1098-T) section later. TT will prepare form 5329 to claim the penalty exception.

Re: 1099Q

Wjgsj10 — Tue, 25 Mar 2025 02:08:32 GMT

Thank you! I did enter that in that way just seemed like my portion to pay was higher than just the taxable $21000.00 but I will try again thank you

Re: 1099Q

Hal_Al — Tue, 25 Mar 2025 11:59:17 GMT

" I did enter that in that way just seemed like my portion to pay was higher than just the taxable $21,500."

That sounds like you entered the wrong number in box 2 at the 1099-Q screen. The taxable amount can't be more than what's in box 2.