![]() ![]() ![]() For example, Form 1098-T does not include room and board costs, computers and internet access, K-12 tuition, student loan repayments or costs of apprenticeship programs. Form 1098-T is used to determine whether or not the student qualifies for federal education tax credits, such as the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Tax Credit (LLTC).įorm 1098-T can be misleading because it does not provide a complete list of 529 plan qualified expenses. IRS Form 1098-T is a statement issued by a college or other eligible post-secondary education institution that lists the amount a student paid in tuition, fees required for enrollment or course materials required for enrollment. The earnings portion of a non-qualified 529 plan distribution is subject to income tax and a 10% penalty. Typically, Box 1 of a Form 1099-Q lists the total distribution, Box 2 includes the earnings portion of the distribution and Box 3 includes the basis, which is the contribution portion of the distribution. This typically results in a lower tax obligation than if the Form 1099-Q is issued to the parent or 529 plan account owner.įorm 1099-Q lists the total distributions from a 529 plan or Coverdell ESA during a given tax year, regardless of how the funds were spent. When the Form 1099-Q is issued to the 529 plan beneficiary, any taxable amount of the distribution will be reported on the beneficiary’s income tax return. The college, K-12 school or apprenticeship program the beneficiary attends.The Form 1099-Q will be issued to the beneficiary if the 529 distribution was paid to: IRS Form 1099-Q is a statement issued by a 529 plan or Coverdell ESA administrator that lists the amount of distributions in a given tax year. Form 1099-Q and Form 1098-T will list the amount of the 529 plan distribution and how much was used to pay for college tuition and fees, but it is up to the 529 plan account owner to calculate the taxable portion. When 529 plan funds are used to pay for qualified education expenses there is usually nothing to report on your federal income tax return. ![]()
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