Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

1099-Q Issued to Mom's SSN, But Money Given to Non-Dependent Son For Grad School

timtax
Level 2

Hello,

I have a client who contributed to a 529 plan for years when her son was growing up.  She never took money out of the 529 when the son was a dependent and attending undergrad school because the son received a full scholarship for his undergrad.  Now the son is in his 30s, married, lives across the country, etc. and attending graduate school (hasn't been a dependent for 10 years).  My client (his mom) took out $50,000 from the 529 plan in 2020 to help him pay for graduate school.  The 1099-Q is issued to the mom's SSN, the 1098-T was issued to the son's SSN, and the son is no longer a dependent on the mom's return. 

Is my client (the mom) stuck with paying tax on the 1099-Q distribution??

Thanks!

0 Cheers

This discussion has been locked. No new contributions can be made. You may start a new discussion here

6 Comments 6
sjrcpa
Level 15

Not if it was used for qualifying education expenses.

The more I know, the more I don't know.
timtax
Level 2

It was all used for her son's graduate school tuition.  Since I am required to report the 1099-Q on my client's return, what are the next steps to ensure that she doesn't pay tax on that 529 distribution?

0 Cheers
sjrcpa
Level 15

The software should have a place to enter the amount of the distribution spent on qualifying expenses.

The more I know, the more I don't know.
timtax
Level 2

I am not aware of any place to enter education expenses other than by creating a Form 1098-T, which wouldn't apply for her situation since her son received the Form 1098-T (assigned to the son's SSN) and he is not a dependent.  Do you use ProSeries?  Would you be able to tell me which area you are referring to?

Thanks!

0 Cheers
sjrcpa
Level 15

I do not use ProSeries so can't help there.

The more I know, the more I don't know.
0 Cheers
ritastone001
Level 5

Use "where to enter 1099-Q". There is a worksheet that will take you thru this. I had one of these this year. Can't remember exactly but I know it is there.