Q. Who needs to claim the 1099-Q?
A. The person who's name and SS# are on the 1099-Q. The "recipient" of the distribution can be either the owner or the beneficiary depending on who the money was sent to. When the money goes directly from the Qualified Tuition Plan (QTP) to the school, the student is the "recipient". The distribution will be reported on IRS form 1099-Q. The 1099-Q gets reported on the recipient's return.** The recipient's name & SS# will be on the 1099-Q.
"She did not start college until 1/2020." Was a payment made in 2019, for the first term starting in 2020? To be a qualified withdrawal (distribution), 529 plan money must be used to pay expenses in the same calendar (tax) year. If not, the distribution will be partially taxed plus a 10% penalty on the taxable part.
**Alternatively; you can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses to cover the distribution. It doesn't matter that you are not claiming the student as a dependent. You and the mom would still have to do the math and coordinate (divide up the payments), if the mom wants to claim a tuition credit (only the person claiming the dependent can claim a tuition credit). You cannot double dip! When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records, in case of an IRS inquiry.
There was not a payment made in 2019. She had been going to attend a trade school. We paid the entire tuition and then she withdrew, the school gave us a full refund minus the fee for her books and supplies.
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