artp Posted March 4 Report Share Posted March 4 Client received 2 1099-Q forms for the same college student from of 2 different 529 Bright Start accounts. One issued under the father's SSN and one under the son's SSN. The father is custodian on both accounts. FYI, the second account was originally created by his sister-in-law many years ago. After she was divorced the funds were transferred to account under his SSN. When calculating the AQEE and any earnings that are taxable and subject to 10% penalty do you use the full AQEE for each calculation or split between the two? Same question for the amount of AOC. Can you split the amount of AOC? or do you have to take the full amount of expense used for each calculation? I have never run into this situation before. Would appreciate feedback from others on the board. Quote Link to comment Share on other sites More sharing options...
TexTaxToo Posted March 5 Report Share Posted March 5 My take is that there is only one calculation per student/beneficiary. After subtracting scholarships and expenses used for AOC or LLC from the qualifying expenses, divide the remaining expenses by the total distributions (from both 1099-Q forms) to get the percentage of earnings that is non-taxable. Apply that percentage to the earnings on each 1099-Q separately to get the non-taxable amount for that 1099-Q. The remaining earnings on each are taxable to the person whose SSN is on that 1099-Q. If the distribution went directly to the school or to the beneficiary, the beneficiary's SSN should be on the 1099-Q, even if owned by the father. And note that room and board is a qualifying expense for QTP (529 plans). Even if the student lives at home, the school must publish a Cost of Attendance (COA) on their website with an allowance for that situation. The FAFSA Simplification Act which went into effect for the 2023-2024 school year requires that the allowance be non-zero for a live at home student. Also, "room and board" was renamed to "living expenses (including food and housing costs)" so the COA may list it that way - I've seen some listed as "Living expenses" and some listed as "Food and housing". 2 Quote Link to comment Share on other sites More sharing options...
artp Posted March 5 Author Report Share Posted March 5 TexTaxToo Thanks for the clarification. That makes sense. Quote Link to comment Share on other sites More sharing options...
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