Have a Tax Question? Ask a Tax Expert
How old is your daughter? What year of college is she in? How much of the $1,920 did she actually use for college?
I am going to opt out and let an expert with a better grasp on 1099-Q's help you with this one.
The form 1099-Q reports distributions from qualified tuition programs under section 529.
In your situation - $1,920.10 - Gross Distribution - is less than original contribution - $2,000.00 - Basis.
Because contributions to such programs are not deduced from taxable income - the distribution of the basis is not taxable income - and there is nothing to report on the line 21.
According to your information - the form 1098-T reports tuition expenses - $498. However before you would be eligible to claim educational credit - we need to be sure that the distribution from qualified tuition programs $1,920 was used for qualified educational expenses.
From your information - it is not clear how these money were used.
Your original contribution was from after-tax money - so - there is no earnings and there is no taxable income.
Because your educational expenses were paid with the distribution from the qualified tuition account - same expenses may not be used to claim an educational credit.
Let me know if you need any help.
So, on line 21 of her 1040 form I do not need to report anything.
Yes - that is correct - as long as there is no earnings - there is no taxable income regardless how the distribution is used.
I just need to keep the 1098T and 1099Q for my records.
Yes - the form 1099Q provides you a proof that there is no earnings on that account.
And I should not worry about taking the Hope credit or Opportunity credit.
Yes - as long as you had a distribution from the qualified tuition account - and that amount was not fully used to pay qualified educational expenses - you may not use same expenses to claim any other educational credits.
Please take a look at IRS publication 970 page 68 - http://www.irs.gov/pub/irs-pdf/p970.pdf
Coordination With American Opportunity, Hope, and Lifetime Learning Credits An American opportunity, Hope, or lifetime learning credit (education credit) can be claimed in the same year the beneficiary takes a tax-free distribution from a QTP, as long as the same expenses are not used for both benefits. This means that after the beneficiary reduces qualified education expenses by tax-free educational assistance, he or she must further reduce them by the expenses taken into account in determining the credit.
So you may use your tuition expenses - $498 for any educational credit - but in this case part of the distribution from a QTP might be taxable - however because there is no gain in your account - nothing would be taxable for you.
Please see example on the same page.
Sorry for confusion.
Let me know if you need any help with reporting.