1099-Q

[David]

TP received a 1099-Q with box 6 checked stating that the recipient (TP) is not the designated beneficiary. The funds were used for the TP's dependent.

TP's income is too high to claim any education credits or deductions.

I don't want to waste time entering the education information since there will be no deduction or credit. 

Can I simply ignore the 1098-T and the 1099-Q and not enter either? All funds on the 1099-Q were used for education purposes.

Thanks.

[joanmcq]

If you want a notice, ignore the 1099-Q.

id enter it on line 21 and back it out with a notation, funds used for education expenses Dependent X.

ive been saying this since 529 plans came out, but there's a reason for the checkbox and that the plan has a beneficiary.  But no one ever ever takes out the funds in the beneficiaries name. Ever. 

[SaraEA]

The IRS does audit these 529 withdrawals--even said it was a "priority" item. As I recall, the pubs say don't report anything if used for education, but the IRS doesn't read its own pubs I guess.  Last summer we must have had five of these audits.  I recommend don't report anything (like the pubs say), but tell your client to pull the college payment transcripts now.  They will be needed when the letter arrives....

And don't get too complacent that all is okay because the funds were used for school. Dates matter.  If the withdrawal was made in December but spring tuition wasn't paid until January (or vice versa), you have a problem.  I had this happen with one client who also made too much to claim any education benefits. He ended up scrambling to find receipts for books, computer, etc.

Our joy that the IRS is finally requiring schools to report "amount paid" instead of "amount billed" on the T was short-lived.  Schools pleaded that they need more time to adjust their computer systems so were granted a pass until 2017.  When the T first came out (in 1997), they were granted time to adjust their computers.  How long does it take?  Do those 20-year old computers still exist?