TurboTax 2025 - Enter qualified 529 withdrawal for non-dependent tuition expenses

[user17699641904]

Last year I was able to enter my qualified 529 withdrawal for non-dependent tuition expenses.  I'm unable to find where to enter that information. I get asked if the withdrawal was used to pay for a loan, but not tuition.

[user17699641904]

And I should mention that I don't have the Form 1098-T.  

[SharonD007]

The 529 distribution (reported on Form 1099-Q) only needs to be reported on the tax return of the person whose SSN is on the form if the withdrawal is more than the tuition paid in Box 1 of the 1098-T plus other adjusted qualified educational expenses. In that case, the earnings on the excess distribution would be taxable income.. 

You will need to find out from the recipient if the distribution was more that the tuition paid in box 1 of 1098-T plus qualified educational expenses.

First, determine if the Form 1099-Q needs to be reported on the tax return by comparing the withdrawal with the tuition paid on the 1098-T added to other qualified educational expenses. To find out what are qualified educational expenses, review the IRS Tax benefits for education: Information center. Refer to the TurboTax articles Guide to IRS Form 1099-Q: Payments from Qualified Education Programs and What is IRS Form 1099-Q? for further details.

Secondly, enter the 1099-Q if the withdrawal exceeds the educational expenses by following the directions in the TurboTax Help article Where do I enter a 1099-Q?

[user17699641904]

So I am the person who received the 529 withdrawal.  Are you saying that if the withdrawal is less than the tuition I don't need to report the 1098-Q at all?  That seems odd to not report it.  And that is different from what I've done in the past years.

In the past I was able to enter the amount of tuition paid.  I'm not seeing a question where I can do that.

[KrisD15]

It is always best to have the distributions made in the name of the student. 

Funds can be transferred directly to the school, in which case the 1099-Q will properly be issued to the student.

This way the 1099-Q and 1098-T end up on the same tax return.

This is the way the IRS intended the forms be reported. 

Sometimes the owner makes the distribution, does not claim the student, and receives the 1099-Q.  

In this situation, all the taxpayer can do is report the distribution as taxable income OR claim that the distribution was used for education expenses. 

There is no way that this tax return can communicate with the tax return claiming the student, therefore it's all on a type of "honor system". 

The person with the 1099-Q must communicate with the student and agree which expenses are being applied to the distribution so that no one else uses those same expenses to offset their distribution or use those same expenses to apply towards an education credit. 

Keep the copy of the 1099-Q, and a receipt for the expenses the distribution paid, with your tax file. Remember that the distribution can apply to Room and Board. Make sure the student is informed and no one else uses those same expenses. 

If the IRS questions your distribution, or an education credit the student may claim, you will need proof of what money went to which expense. 

Have future distributions made in the name of the student beneficiary. 

[user17699641904]

I appreciate your comments about how to do distributions in the future.  However, I need help with my taxes this year.  

I have a 1099-Q form that says the money has been distributed to me.  Tuition was paid, so the 529 withdrawal is a qualified withdrawal. The student is the beneficiary on the 529, but not my dependent.  

How do I enter the tuition into TurboTax so I am not taxed on the withdrawal?

[AmyC]

Do not enter it since you stated that it was all used on qualified expenses.  IRS Publication 970, Tax Benefits for Education states:

If the entire 1099-Q went to qualified expenses, room and board, tuition, etc then you do not need to enter the form. 

Entering a form triggers the program to look for ways to make it taxable. Tuck the form into your tax folder along with the expenses, in case the IRS asks.

[user17699641904]

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@AmyC wrote:

Do not enter it since you stated that it was all used on qualified expenses.  IRS Publication 970, Tax Benefits for Education states:

If the entire 1099-Q went to qualified expenses, room and board, tuition, etc then you do not need to enter the form. 

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Thanks.  Can you let me know on what page Pub 970 says that?

It seems odd that the program looks for way to make it taxable.  It seems that TurboTax should work on figuring out how to give me the maximum refund.

[SusanY1]

You will find this information HERE and also on the Form 1099-Q "instructions for recipient" included with the form itself.

It does feel strange not to report something that comes to you on an official form, but it's proper to leave the data off when there is no taxable distribution.  TurboTax accepts the information for assistance in calculating this, but disregards it when it determines there is no taxable distribution.  
 

[user17699641904]

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Thank you for showing me the information.

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@SusanY1 wrote:

TurboTax accepts the information for assistance in calculating this, but disregards it when it determines there is no taxable distribution.  

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This is the problem that I've been having!  TurboTax accepts the information but does NOT disregard it.  There is no place for me to enter the tuition paid amount, so TurboTax adds the distribution to my taxable income and charges me a penalty.
 

In the past I've been able to enter the tuition paid and TurboTax has correctly determined it was not a taxable distribution.  Not this year.

[ThomasM125]

If you want to enter the Form 1099-Q you can do so and then go to the Expenses and Scholarships (Form 1098-T) section in TurboTax and enter your education expenses. You don't need a Form 1098-T to enter your education expenses there.

[user17705791090]

Under Expenses and Scholarships (Form 1098-T) I am unable to report education expenses for a non-dependent. When adding a student under Education Summary, there is not an option to include anyone not designated in My Info. I thought I solved the problem by adding the student to my household, but clearly not a dependent. This resulted in a flag during the final review and would not allow me to submit the e-file. I’m at a loss as to how to fix this. 

[MarilynG1]

If you received a 1099-Q distribution as a 'Recipient' you don't need to enter it in TurboTax.  You only need to enter this form if your withdrawals exceeded your adjusted qualified education expenses. 

Here's more detailed info on Form 1099-Q.

@user17705791090