1099-q

[rsandy]

Confused about how to record 1099 Q info if all proceeds were used for qualified educational expense. I understand if funds are received that don't qualify, that we use the Gross, Basis and Earnings info to report any income. I have simply not been reporting anything if qualified expenses are involved and assuming, probably always a mistake, that the IRS accepts that "Earnings" are not reported unless used for non qualified expenses.
Is my approach correct and, if not, how should I be doing it. Thanks for the advice.

[BP.]

I have simply not been reporting anything if qualified expenses are involved and assuming, probably always a mistake, that the IRS accepts that "Earnings" are not reported unless used for non qualified expenses.

I've been treating the 1099-Q's the same way as you have been.

Last year, one client did receive a notice to pay tax and 10% penalty on their 1099-Q earnings. Luckily IRS picked a family with the most meticulous and beautifully documented education expenses you could want, so it was a breeze to respond.