Question about 529 distributions

[sgaitonde]

Dear Community,

2023 was the first year of my daughter's college so we used our 529 funds to pay for her tuition and boarding fees. The first semester we sent funds directly from 529 to her college whereas for the second semester we paid the fees ourselves and got ourselves reimbursed. So we received 2 1099 Q forms from the 529 plan. The first one for the payment made directly to the college and that 1099 Q form is for my daughter whereas the second one is for me. Now my questions are:

1) Can I enter my daughter's form 1099 Q in my return since I will be claiming her as a dependent?

2) If not then does my daughter has to file a return only for the form 1099 Q she has received?

3) There is only 1 form 1098T..how to split it between 2 returns if my daughter has to file the return?

Appreciate any help and guidance on this,

Thanks and regards

[KrisD15 · Accepted solution]

Form 1099-Q reports distributions.

Form 1098-T reports tuition and fees paid to the school (BOX 1) as well as scholarships (Box 5)

If there is an education credit (More expenses than scholarships/distributions) the taxpayer that claims the student claims the credit.

If there is more scholarship that expenses, the student claims the excess scholarships as income.

If a distribution is not used for qualifying expenses, the taxpayer listed on the 1099-Q claims the taxable income. 

The education credit is only based on Tuition, fees, books and supplies.

Distribution may be offset with all of the above as well as room and board. 

You can enter ALL the forms into your program (since you claim the student) and let TurboTax do the math,

OR

Allocate expenses and only enter what you need to,

for example if the distributions paid room and board (Only) then don't bother entering the 1099-Q.

If the distribution paid room and board and part of the tuition, lower the amount in Box 1 of the 1098-T to reflect the decrease in tuition that you allocated to the distribution. 

Pub 970 has some great explanations and examples

If you need more help, please provide additional information 

Amount of each distribution

Amount in Box 1 and Box 5 on the 1098-T

Amount of room and board expense