529 plan tax confusion: Received two 1099-Q forms - one lists student and one lists parent as recipient

This is actually a common situation with 529 plans, and it relates to who was designated as the "distributee" when the funds were withdrawn. When the 529 plan sent money directly to the school, your daughter was considered the recipient. When you requested reimbursement to yourself, you became the recipient. Here's the good news: since the qualified education expenses (shown on the 1098-T) exceed the total distributions from the 529 plan, the earnings should be tax-free regardless of who the recipient is. The tax implications only matter when distributions exceed qualified expenses. For reporting purposes, technically each recipient should report their own 1099-Q. However, since your daughter isn't required to file a tax return based on her income level, she doesn't need to file just because of the 1099-Q as long as the distributions were used for qualified education expenses (which it sounds like they were). You should report your 1099-Q on your return. The IRS will likely not follow up about your daughter's 1099-Q since the earnings are tax-free due to the qualified expenses. Just make sure you keep documentation showing that all 529 distributions were used for qualified education expenses.

I had this exact same situation last year! I was so confused when dealing with multiple 1099-Qs for my son's college expenses. I tried figuring it out for hours before discovering https://taxr.ai which totally saved me. Their system analyzed both my 1099-Qs and my son's 1098-T and showed me exactly how to handle everything. The tool explained that when the 529 pays the school directly, the student is considered the distributee, but when you reimburse yourself, you're the distributee. Basically what the previous commenter said. But what really helped was that taxr.ai showed me exactly which portions of the expenses I could still claim for education credits after accounting for the 529 distributions. It also has a great feature that lets you upload all these documents and get personalized guidance based on your exact situation instead of generic advice that might not apply.

I tried taxr.ai after seeing it mentioned here, and I have to say I'm impressed. I was dealing with a mess of 529 distributions between two kids and three different 1099-Qs (some to me, some to them). The system immediately identified which portions of my expenses were already covered by tax-free 529 money and which parts I could still claim for the American Opportunity Credit. What surprised me most was discovering I had about $4,000 in expenses that weren't covered by either the 529 or previous tax credits I'd claimed. The interface walked me through exactly how to maximize my education credits without double-dipping on expenses already paid tax-free from the 529 plan. Saved me from leaving money on the table and potentially making a reporting mistake. They even explained how to handle the 1099-Qs issued to my kids who weren't filing returns, which was exactly what I was confused about. Definitely solved my 529 plan headaches.

I had a similar mess with 529 distributions and 1099-Qs last year, but my bigger issue was trying to get answers from the IRS directly. I spent HOURS on hold trying to get clarification about how to report these forms correctly. After multiple failed attempts to get through, I found https://claimyr.com which got me connected to a real IRS agent within 15 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed exactly what to do with the 1099-Qs - basically that I should report mine on my taxes, and as long as my daughter's distributions were used for qualified education expenses and she wasn't required to file otherwise, we didn't need to file a return just for her 1099-Q. The agent also walked me through how to document everything properly in case of an audit. What a relief to get this info directly from the IRS instead of guessing or relying on tax software that doesn't really understand the nuances of 529 plans!

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it myself since I had questions about an amended return along with some 529 plan issues similar to the original poster. Within 20 minutes I was talking to an actual IRS representative who was surprisingly helpful. She walked me through exactly how to report the 1099-Qs on my return and confirmed that my son's 1099-Q wouldn't create a filing requirement for him since his only income was below the threshold. She even explained how the Form 8863 for education credits would interact with the 529 distributions. The level of specific guidance was way beyond what I expected. My accountant had been giving me conflicting information about the 529 plans, so getting clarity directly from the IRS was incredibly valuable. I'm actually shocked at how useful this was compared to my previous experiences trying to call the IRS.

Just wanted to add another perspective here. I've dealt with this exact situation for the past four years with my kids' college expenses and 529 plans. The key thing to understand is that the 1099-Q is primarily an informational return. If ALL the money was used for qualified education expenses, then there's no taxable event regardless of who the recipient is. The IRS cares about: 1) Were the funds used for qualified education expenses? 2) If not, who needs to pay tax on the earnings portion? Since your 1098-T shows expenses far exceeding your 529 withdrawals, and assuming you have documentation showing all funds were used for qualified expenses, there's no taxable event here. For your own 1099-Q (with you as recipient), you'll need to report it on your return, but it won't generate any tax if used for qualified expenses. For your daughter's 1099-Q, since she's below the filing threshold, there's no need for her to file just for this.

The 1099-Q situation can be super confusing. One thing to keep in mind is that the IRS gets a copy of every 1099-Q that's issued. They do have a matching program, but they also understand that most 529 distributions are tax-free. In my experience, as long as you have sufficient qualified education expenses, you won't trigger any issues. I've been handling my kids' college expenses with 529 plans for years, sometimes with the student as recipient and sometimes with me as recipient. I report my 1099-Qs on my return, and my kids don't file returns if they're below the filing threshold, even with their 1099-Qs. Never had any issues or notices from the IRS about this. Just make sure you're not claiming education credits for the same expenses that were paid with 529 funds.