Hello. Is the amount in Miscellaneous Income, 1099-A, 1099-C being included in my taxable income?
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New Member

Hello. Is the amount in Miscellaneous Income, 1099-A, 1099-C being included in my taxable income?

This is money I withdrew from a 529 plan, so should not be included.

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Level 15

Hello. Is the amount in Miscellaneous Income, 1099-A, 1099-C being included in my taxable income?

529 funds are treated as taxable income *initially*. The taxability of that income will be offset by the qualified education expenses they are used to pay for.
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Level 15

Hello. Is the amount in Miscellaneous Income, 1099-A, 1099-C being included in my taxable income?

1099--a is for secured property and 1099-c is for debt cancellation which would have noting to do with education.   

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Level 15

Hello. Is the amount in Miscellaneous Income, 1099-A, 1099-C being included in my taxable income?

Actually, nothing concerning education or "anything" related to it is entered in that section. That's why I italicized the importance of working through the education section.
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Level 15

Hello. Is the amount in Miscellaneous Income, 1099-A, 1099-C being included in my taxable income?

                • 1099-Q Funds

 First, scholarships & grants are applied to qualified education expenses. The only qualified expenses for scholarships and grants are tuition, books, and lab fees. that's it. If there is any excess, then it's taxable income. It automatically gets transferred to and included in the total on line 7 of the 1040.

Next, 529/Coverdell funds reported on 1099-Q are applied to qualified education expenses. The qualified expenses for 1099-Q funds are tuition, books, lab fees, AND room & board. That's it. If there are any excess 1099-Q funds they are taxable. The amount is included in the total on line 7..

Finally, out of pocket money is applied to qualified education expenses. The only qualified expenses for out of pocket money is tuition, books, and lab fees. Room & board is NOT a qualified expense for out of pocket money. As of this writing, (3/26/2019) congress as not renewed the out of pocket expense deduction, which expired in 2017.

When you have a 1099-Q it is extremely important that you work through the education section of the program in the order it is designed and intended to be used. If you do not, then there is a high probability that you will not be asked for room & board expenses, and you could therefore be TAXED on your 1099-Q funds.

Finally, if "all" qualified expenses are covered by scholarships, grants, 1099-Q funds and there is ANY of those funds left over, the left over excess is taxable. While the parent can still claim the student as a dependent, it is the student who will report all the education stuff on the student's tax return. That's because the STUDENT pays the taxes on any excess scholarships, grants and 1099-Q funds.


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