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blimb
New Member

1099q recipient is parent and child not dependent

Child is filing separate tax and not  being claimed as dependent on parent's return.

1099q received with parent ss# as recipient.  All money was used for qualified expenses ($4500).  Does the parent have to include 1099q on their return since they are not claiming child as dependent?  If so, how will IRS know that child is related to them since they are not being claimed as dependent?

6 Replies
MiriamF
New Member

1099q recipient is parent and child not dependent

If you were the owner of the 529 or Coverdell, and your child is the beneficiary, then only the beneficiary reports the income. Both the owner and the beneficiary are issued copies of the 1099-Q. Distributions are exempt from tax when used for qualified education expenses.

If you were the beneficiary, and you were not a student in 2016, then the distribution is taxable. Only the education expenses of the beneficiary count as non-taxable expenses. In addition to the tax on the earnings, there is a 10% additional tax on the distribution.

More information about calculating the tax on nonqualified distributions can be found in Chapter 8 of Publication 970, Tax Benefits for Education.


blimb
New Member

1099q recipient is parent and child not dependent

I am the owner and my child is the beneficiary.  She never gets a 1099-q if her ss# is not on the 1099q.
MiriamF
New Member

1099q recipient is parent and child not dependent

Hmm. Maybe because she was your dependent. Anyway, she is the one who reports it. And she is the one who claims any education credit. Thanks for letting me know - obviously, my information source is wrong...
anderson2
Level 1

1099q recipient is parent and child not dependent

Your answer seems to conflict with other information available on this and other forums. Last year, we actually entered 1099-Q and educational expense info in both returns (recipient's return and beneficiary's return as the beneficiary is not a dependent). This may not have been correct. This year I am thinking of just entering the information on our return (we are listed as the recipient). We may get questioned by the IRS at some point but we have good records showing that the beneficiary's expenses clearly exceed the 529 plan distributions even after the $4000 in opportunity credit (claimed on the beneficiary's return) is subtracted. I am quite sure how to avoid this dilemma. We did not want the distribution sent directly to the school as it was used for room and board expenses.
johnnydub
New Member

1099q recipient is parent and child not dependent

I am the parent.  I opened the 529 in my son's name.   I received the 1099-Q from Schwab.  I am the recipient as I did get the money deposited into my checking account.  Box 6 is checked "the recipient is not the designated beneficiary."  My son graduated in May, got a job, and lives on his own now.  Therefore, he is not a dependent in 2019.  However, the distribution was used for qualified education expenses.  How do I manage this on my taxes?  As of now, Turbotax is claiming the box 2 "earnings" as additional income in Schedule 1 line 8 "other income."

kkcinci
New Member

1099q recipient is parent and child not dependent

@johnnydubDid you ever get an answer for how to handle this?

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