1099-Q Data

Forum|Forum|5 months ago
February 8, 2026
1 reply
225 views

Turbotax 2025 does not handle the entry of 1099-Q data properly. Funds that are used for approved educational expenses in accordance with the 529 program should not show up as taxable income on Form 1040, line 8; yet they do!

DavidD66

Level 15

Cam you clarify your situation? Is the beneficiary of the 529 Plan you (or your spouse), a dependent on your tax return, or a non-dependent?

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bobmcleod21Author

Level 2

Beneficiaries of 529 funds were grandchildren (4). They were not dependents. All proceeds were used for approved education expenses.

thank you,

[PII Removed]

BSEA

Level 2

If a 1099-Q is entered, the program is looking to tax the income. It does not expect extra forms to be entered without a reason. Since the 1099-Q was not income, it should not be entered. Tuck the 1099-Q into your tax folder. IRS Publication 970, Tax Benefits for Education states that nontaxable distributions should not be entered.

OP has a point here. As recently as last year, when entering a 1099-Q, TurboTax would ask if all of the distribution was spent on qualified educational expenses. If the answer was Yes then none of the amount was added to taxable income. That doesn't happen in 2025, and I just spent an hour trying to debug what was happening before finding this thread and deleting the 1099-Q's from my return to fix it.

I'd recommend updating the process to again ask the user if the distribution was used for qualified educational expenses. If so, then either tell the user to delete the 1099-Q, or properly record the distribution as fully qualified so it doesn't increase taxable income. It's a terrible user experience right now.