10-99Q For catholic school being taxed in TurboTax

[Rcgus]

I withdrew just under the max amount of $10000.00 for Catholic School tuition in 2021.  I was the "recipient" of the payment and she is the "beneficiary".  Turbo Tax is taxing the distribution in the amount of $472.00.  If I change the recipient to my daughter, I'm not taxed.  However, I cant do that because its contrary to the 10-99Q.  It shouldn't matter since I am the account owner, the distribution should not be taxed, correct?  What am i missing here?  Has anyone else seen this?  Thank you in advance.

[FangxiaL · Accepted solution]

After you enter the amount used to pay for your dependent's tuition, the taxable amount should be removed from the list of your other income. 

To enter 1099-Q properly, follow these steps:

1. Open or continue your return
2. Select Federal and then Deductions & Credits
3. Scroll down to the Education section under All tax breaks
4. Select Show more and then select Start or Revisit next to ESA and 529 qualified tuition programs (Form 1099-Q)
5. Follow the screens to enter your info.
6. Click Done on the screen that says Form 1099-Q Summary
7. On the following screen, select Attended high school in 2021
8. Enter the school expenses on a screen that follows. 

If your expenses is at least the same as the distribution, there should not be any taxable earnings.

[Rcgus]

Ok.  That worked.  Not very straight forward but thank you.  This year I'll make her the recipient.  Seems much easier to process on the return.

Thanks again!!

[Hal_Al]

Don't make her the recipient next year.  The interview is the same in the case of a High school student.  You'll just have another return to prepare (maybe) and the "kiddie tax" may kick in. 

But the real solution is: just ignore the 1099-Q.  

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." 

[Rcgus]

Got it.  Thank you.  Much appreciated.