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1099-Q Question....


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#1 Denne

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Posted 24 March 2009 - 01:32 PM

My client received a 1099Q. He said they told him it was taxable since it was issued to him. His son did go to college. The son had a nervous breakdown and ended up not being able to finish college. The father paid the tuition that was due and then requested the funds from the College fund. Because of the method of payment he has been told he has to pay tax on the College funds he received. That seems to be incorrect if it was actually used to pay the tuition...or be reimbursed for it anyway.

Also....I don't find a 1099Q Worksheet with ATX. Am I looking in the wrong place perhaps?

Thanks for your advise ;~)

#2 jasdlm

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Posted 24 March 2009 - 01:47 PM

Who told him he had to pay the tax? Did you verify that all $$ distributed was used to pay tuition (qualified education expenses)? Does father claim son as a dependent? There is no 1099Q input sheet for ATX that I am aware of. If the money was used to pay qualified expenses, I don't believe you need to report it anywhere. If it wasn't, you report on 5329.

#3 RitaB

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Posted 24 March 2009 - 01:50 PM

My client received a 1099Q. He said they told him it was taxable since it was issued to him. His son did go to college. The son had a nervous breakdown and ended up not being able to finish college. The father paid the tuition that was due and then requested the funds from the College fund. Because of the method of payment he has been told he has to pay tax on the College funds he received. That seems to be incorrect if it was actually used to pay the tuition...or be reimbursed for it anyway.

Also....I don't find a 1099Q Worksheet with ATX. Am I looking in the wrong place perhaps?

Thanks for your advise ;~)


I don't think there's a worksheet. If taxable (which I don't see why it would be if issued in the same year as the expense was paid and the son was a dependent), go to line 21 on Form 1040, open that list and there's a line there for taxable. IF taxable, only earnings are taxable, right? Don't know if contributions get distributed first (like ROTH).

Try Part II of Form 5329, and see if that takes care of your situation. Sorry, that's about all I know.


Edit: I must be the slowest typist on here. jasdlm sucked out my headlights.

#4 Denne

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Posted 25 March 2009 - 11:06 AM

I don't think there's a worksheet. If taxable (which I don't see why it would be if issued in the same year as the expense was paid and the son was a dependent), go to line 21 on Form 1040, open that list and there's a line there for taxable. IF taxable, only earnings are taxable, right? Don't know if contributions get distributed first (like ROTH).

Try Part II of Form 5329, and see if that takes care of your situation. Sorry, that's about all I know.


Edit: I must be the slowest typist on here. jasdlm sucked out my headlights.



I do have a little more information in regard to the distribution. The tuition was paid in 2007....by the parent. The payment from the Education plan was paid to the parent in 2008. He said that is why he was told he would have to pay income tax on the ditribution.




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