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1099-Q income - recipient paid qualified expenses matching distribution amount but turbotax shows as income

Parent of a dependent in college has a College 529 Plan designating dependent full time student as the beneficiary. Parent is the holder of the 529 account. Distributions were made to the parent and then used by parent to pay tuition and other qualified expenses. Parent received 1099-Q and input information in TurboTax Deluxe. However, there does not seem to be a way for parent-taxpayer to reflect that the distributions were all for qualified expenses, so Turbo Tax shows the earnings on the distributions as income to parent-taxpayer. How can this be rectified?
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1 Reply
Fern
New Member

1099-Q income - recipient paid qualified expenses matching distribution amount but turbotax shows as income

When you enter the 1099 Q, you will be prompted to enter education expenses. Where those expenses are entered, depends on if the student is a dependent on your tax return.

To Report the 1099 Q in Education expenses:  

Select Federal Taxes
Select Deductions and Credits
Select Show More at Education
Select Start or Revisit at ESA and 529 qualified tuition programs (Form 1099-Q)

If the student is not a beneficiary in your return you should indicate that the payment was for "A beneficiary that's not a dependent on this return" - see screenshot below.

You will be prompted to enter the beneficiary name. Then, you will be directed to a screen where you can enter your student's education expenses.  See screenshot below.

If you are claiming the student as a dependent, select their name from the list of people in your tax return. Then you will enter the student's 1098 T information in the tab - Expenses and Scholarships (Form 1098-T)

To enter a 1098 T in Turbo Tax:

Select Federal Taxes
Select Deductions and Credits
Select Show More at Education
Select Start or Revisit at Expenses and Scholarships (Form 1098T)
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