529 and direct payment

[MelPSmith13]

I paid my daughter’s tuition by having the 529 plan make a direct payment to the college. Will I get a 1098-T and since “I” didn’t technically pay anything should I even report if they DO send me one as I paid nothing beyond that amount.  So far I haven’t received one. 

[KrisD15]

You should get a 1099-Q for the distribution in the name of the student. 

The student should also get a 1098-T from the school, although it might need to be printed off her online account. 

True, if the distribution subtracted from the tuition leaves no education expenses, there would be nothing to report, however if the distribution can be allocated to "Other" education expenses, such as room and board, you are allowed to do that if the tuition, fees, books and supplies allow you to get an education credit. 

If the distribution is allocated to these "Other" education expenses, the student would need to claim those funds as income, but depending on the amount, may or may not owe tax on that income. Regardless, there would NOT be the penalty tax. 

Education credits can be complicated. In your situation (distributions = expenses) you may leave the 1099-Q and 1098-T off the return, OR you can re-allocate and claim a credit if applicable. 

IRS Pub 970 is easy to read and has a lot of information you may find useful. 

IRS Pub 970

[MelPSmith13]

Thanks! We investigated further and the 1098-T was indeed in her student account and now in my possession. If my research is correct, and pleaser tell me if I'm wrong anyone:

1. I don't need to report the 1099Q but hang onto it in case I need to verify the education expenses were qualified (along with a copy of the tuition bill)

2. She does not need to file taxes or use the 1099Q sent to her because she only earned $3000 last year

3. I can, if I want to take advantage of the educational deduction, use the 1098-T to get credit for the tuition I paid out of the 529 on my own tax return.

hope this is all correct. 

[ReneeM7122]

You are correct.

You don't need to report the 1099Q but you should hang onto it in case I need to verify the education expenses were qualified (along with a copy of the tuition bill).  Your daughter doesn't have to file a tax return because $3,000 is below the required amount of $12,400 for a single filer.  And you can take advantage of the Lifetime Learning or American Opportunity Education credits.  

Here is a TurboTax article about the 1099-Q and another article about education credits.