Discussion:1099-Q

Where/how do I handle this? I can clearly see that for it to go on the TP's return he would have to have expenses. Help please & thank you.

Sandy

Never mind. Your last sentence states "he" for the TP, so I'm assuming the 1099-Q was issued in the daughter's name and SS#. The amount on the 1099-Q does not go on the father's return. It goes on the daughter's return, but most of the time, it's not taxable and is not actually shown on the student's return.

You should use the 1099-Q worksheet in your tax software and combine all expenses for tuition, books, room and board, and then subtract the amount used for the tuition credit or education deduction on the parent's return, and subtract any scholarships or grants received and used to pay for tuition.

Examples: If there is a Hope credit of $1,650, you have to subtract $2,200 from the total expenses when filling out the 1099-Q worksheet in the tax software. If the tuition deduction is $4,000 on Form 1040, subtract $4,000 from the total expenses.

Go through the worksheet to figure if any of the distribution is taxable to the daughter. If the total expenses (tuition, books, room and board) after you subtract scholarships, grants, and amounts used for the tuition credit or education deduction equal or exceed the 1099-Q distribution, there would be no taxable income on the daughter's return, and nothing needs to be reported on line 21, Form 1040.