Reporting 1099Q for non-dependent college student

[mdktech24]

I’ve a 529 plan for my son, a full-time college student. I plan to withdraw money from the 529-plan to help pay for the Spring 2026 tuition. This year (2026) I won’t be able to claim him as a dependent because he will have a full time job after graduation and his income will exceed the minimum income limit to be claimed as a dependent. In 2025's tax return, I will not be able to claim him as a dependent as well due to the income that he has made over summer 2025.

If the 529 plan make the check payable to me and I pay for my son’s tuition, will TurboTax allow me to enter the information from the 1099-Q for my son even though he will not be listed as a dependent on my tax return? The distribution amount (box 1 of 1099-Q) will be less than his tuition.

Because of my taxable income amount,  I won’t be able to claim the education credit.  Would it be better if the 529-plan makes the check payable to my son (or his school) so he can pay for the tuition and receive the education credit with his tax return? 

[KrisD15]

First, determine if the student your dependent. 

Please be aware that the student is your dependent (and you could claim them as your Qualifying Child) if the student is:

• Your child and 
• Under 24 at the end of the tax year and 
• Lives with you for more than half the year (being away at school is counted as living at home if they intend to return) and
• The student did not supply more than half their own support

The student's income is not a factor in claiming them as your "Qualifying Child" dependent as long as they meet the above requirements and did not supply more than half their own support. Working a summer job usually does not supply more than half a student's support. Scholarships are not considered as support supplied by the student, but loans are. Income earned and saved does not apply to support, only income used to pay for living expenses are considered as part of the student's support. 

If you need clarity on who is considered a dependent student, I suggest you use this link or post as a new question since that is a different topic. 

To address your question, when funds are withdrawn from a 529 education savings plan for education expenses, it is always best to have the funds withdrawn or transferred to the school in the name of the student (beneficiary).

If you, as the owner of the account, make the withdrawal, only you can enter the 1099-Q into your TurboTax program since that form with then be issued to your Social Security Number. If the student is also claimed on your return, the program can assign the withdrawal to the student's education expenses. If you do not claim the student, you will need to indicate in the TurboTax program that the funds were used for education expenses for a student not listed on your return. This gets complicated as the student will then need to claim the assistance on their return without a 1099-Q, or adjust the amount of expenses they paid. TurboTax can do the calculations for this situation, but the input of the data is difficult for both taxpayers.

I suggest you first gain clarity as to if the student is your dependent. If they are, you can still "Not claim" them, however they still cannot claim themselves. They can file a tax return as a dependent whether they are claimed by someone or not. 

If the student is your dependent, but your income will not allow you an education credit, you do have the option of "not claiming" the student in which case the student can file (as a dependent) and be eligible for the "NON-REFUNDABLE" portion of an education credit. The dependent student would select "Another taxpayer can claim me" and then "Another taxpayer will not claim me" (in other words, they are your dependent, but you are not claiming them on your tax return).

The student would then be eligible to apply for the non-refundable portion of the education credit. This non-refundable portion of the credit is only advantageous if the student has taxable income to which the non-refundable portion of the credit would apply.

You may find more useful information in IRS Pub 970, please see the chart on page 20 for when a dependent student may claim the non-refundable portion of an education credit. 

[mdktech24]

Thank you for your detailed reply. I have the following questions regarding your reply:

"I suggest you first gain clarity as to if the student is your dependent. If they are, you can still "Not claim" them, however they still cannot claim themselves. They can file a tax return as a dependent whether they are claimed by someone or not."

Does this mean that even though the student qualifies for my dependent, I don't have to claim him (if I decide to do so)? The reason is that my son will have a full time job from June to December and will have an regular income. Hence, he will need to file a tax return.  If I claim him as a dependent, then when he files his own tax return and indicates that "someone can claim him as a dependent", will he still be qualify for the standard deduction on his tax return?

In your reply: 

"If the student is your dependent, but your income will not allow you an education credit, you do have the option of "not claiming" the student in which case the student can file (as a dependent) and be eligible for the "NON-REFUNDABLE" portion of an education credit."

What is the NON-REFUNDABLE portion of the education credit? Does it matter if the 529 fund is paid to my name and then I make the tuition payment from my account? 

[AmyC · Accepted solution]

1. Yes. You can choose not to claim a dependent. However, if you did in fact provide over half their support, they must mark that they could be claimed as a dependent.

2. It depends. A dependent's deduction is earned income +$450 up to the standard deduction. Therefore, the amount of earned income will determine the deduction. If her earns more than the standard deduction, he will receive the standard deduction.

3. The nonrefundable portion of the education credit is up to $1,500. It is the portion that reduces your tax bill.

4. No, the 529 used for tuition payment will not affect either return. If the 529 disbursed funds beyond tuition and room and board, then there would be a taxable event.