Confused about 1099-Q and 1098-T for my son's 529 plan withdrawal

The 1099-Q and 1098-T can definitely be confusing! Let me help clarify things. For your first question: Yes, you're on the right track. The 1098-T only shows qualified tuition and related expenses paid directly to the school. Other qualified expenses like room and board, books, and required supplies need to be entered separately. Just make sure you have documentation for these additional expenses in case of an audit. For your second question: If TurboTax is showing taxable income from the distribution, it's likely because your total withdrawal exceeded your qualified educational expenses. When this happens, a portion of the earnings becomes taxable. Since your son is the beneficiary on the 1099-Q, he would need to report this on his tax return, even as your dependent. If $5,550 is his only income, he'll likely still be below the filing threshold, but filing would allow him to receive any withholding back. Double-check that you've entered all qualified educational expenses correctly, as maximizing these can reduce or eliminate the taxable portion.

I went through this exact headache last year! I found https://taxr.ai incredibly helpful for sorting out my 529 confusion. I uploaded my 1099-Q and 1098-T documents, and their system analyzed everything and explained exactly what was qualified vs non-qualified expenses. Saved me hours of research and probably prevented me from making expensive mistakes. The most useful thing was that it showed me some expenses I didn't realize were qualified (like my son's required laptop for engineering classes) and warned me about the exact issue you're facing with potentially taxable distributions. They explained how to properly report the taxable portion to minimize any issues.

I was really skeptical about using an AI tax document service, but after reading about it here, I decided to try taxr.ai for my daughter's college expenses. What a relief! It immediately clarified that some of my "qualified expenses" actually weren't, and showed me which expenses I'd missed that WERE qualified. The system highlighted that I was about to make the same mistake you did - I didn't realize that because the 1099-Q was in my daughter's name, she needed to report the income. Would have completely missed that. It also showed me exactly what documentation I needed to keep for each expense category. Seriously, for anyone dealing with 529 plans and education expenses, this tool is a game-changer. Much clearer explanations than what I got from TurboTax or even my financial advisor.

If you're getting frustrated with the lack of clear answers from the IRS about your 529 questions (like I was), try https://claimyr.com to actually speak with an IRS agent. I spent weeks trying to get through to the IRS about a similar 529 plan issue - kept getting disconnected or waiting for hours. Using Claimyr, I got a callback from an actual IRS representative within 2 hours who answered all my specific questions about which expenses qualified and how the taxable portion should be reported. They have a demo video at https://youtu.be/_kiP6q8DX5c that shows how it works. The agent clarified that yes, your son would need to file his own return since he's the beneficiary named on the 1099-Q, but also helped me understand exactly which expenses count as qualified to minimize the taxable amount.

I have to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it anyway out of desperation for my refund issue. Within 90 minutes I was talking to an actual IRS agent who resolved my problem. But what's relevant to this thread - I also asked about 529 plans and 1099-Q reporting while I had them on the phone. The agent confirmed that if the beneficiary (your son) receives a 1099-Q in his name, he does need to file a return to report any taxable portion of the earnings. However, they also explained how to maximize qualified expenses to reduce that taxable amount. The agent was super helpful and walked me through exactly which expenses qualify beyond just tuition. Definitely worth getting this info straight from the source.

Make sure you're tracking ALL qualified expenses! I made this mistake last year. Remember qualified expenses include: - Tuition and fees - Books and supplies REQUIRED for enrollment - Computer/equipment (if required) - Room and board (if at least half-time student) - Special needs services - Internet access in dorm Keep receipts for EVERYTHING. My son had almost $6k taxable until I realized I hadn't counted his required course materials and housing deposit!

Has anyone had to deal with excess distributions from a 529? My daughter's 1099-Q was $5k more than her qualified expenses last year, and I'm trying to figure out the best way to handle it.

Just went through this exact situation with my son's 529 plan! A few things that might help: 1. Double-check that you're capturing ALL qualified expenses. Beyond tuition, room, and board, don't forget required textbooks, lab fees, technology fees, and any equipment specifically required for his courses. I initially missed about $2,000 in qualifying expenses. 2. Yes, your son will likely need to file his own return since the 1099-Q is in his name. Even though he's your dependent, he's responsible for reporting the taxable portion. The good news is if that $5,550 is his only income, he won't owe much (if any) tax on it. 3. One tip that saved me - if you have receipts for qualified expenses paid out-of-pocket (not covered by the 529 withdrawal), you can potentially use those to offset the taxable distribution. For example, if you paid for books or supplies separately, those count toward reducing the taxable amount. The 529/education tax rules are incredibly confusing, but getting it right can save you significant money. Make sure you keep detailed records of everything!