MarieMPN
Level 1
‎05-14-2020 05:00 PM

Grandparent owns 529 plan & the grandchild is beneficiary.  529 plan withdrawals for 2019 were transferred directly to grandchild's college towards tuition.  Does this 529 plan distribution from grandparent to grandchild's college effect education credits for the parents of the student (student is their dependent)?  ("According to IRS Pub 970, the student is treated as receiving the payment and, in turn, paying the institution.")

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Just-Lisa-Now-
Level 15
Level 15
‎05-14-2020 05:10 PM

Well on grandmas return, for the 1099Q, they need to show who used the distribution for educational purposes or grandma gets taxed on it....Im guessing that the IRS may have a way to cross match this info?

1099qother.png


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
sjrcpa
Level 15
‎05-14-2020 07:26 PM

If tuition was paid with nontaxable 529 plan funds, that amount is not eligible for an education credit.

No double dipping.

 

If parents paid some more tuition, they can use their payments toward the credit.


The more I know the more I don’t know.