Form 1099-Q Payments from Qualified Education Prgrams

[zeros]

Client brought in 1099-Q with a gross distribution of $11K. 1098-K for tuition is $4K. Not familiar with this form. What do I do with it?

[Koss]

Form 1099-Q

1099-K for tuition? I think you mean Form 1099-T.

Data on Form 1099-T is often inaccurate. So first you need to determine how much tuition was actually paid, and whether any of it was paid by a scholarship or grant.

If all of the distribution on Form 1099-Q was used for qualifying expenses, then there is nothing to report.

If that is not the case, then some of it may be taxable. But the form should also show the basis. Even if the money was not used for qualifying education expenses, only the gain is taxable income. In other words, the gross distribution minus the basis.

If there is a taxable amount that has to be reported as income, then it is reported on line 21 of Form 1040.

I don't remember whether the funds can be used for books and supplies or for room and board. That depends on whether the distribution was from a Section 529 plan, or a Coverdell Education account, or something else...

BMK

[BP.]

1099-Q . . . What do I do with it?

After you determine whether the account is a 529 plan or an ESA, check the applicable page in Pub 970 that gives the formula for exactly how to treat the distribution and coordinate it with any eligible education credit.