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emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2313
Experience:  IRS licensed Enrolled Agent and tax instructor
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I received a letter from the IRS today stating that I did not

Customer Question

I received a letter from the IRS today stating that I did not claim two sources of income. These were two check I received from my two children's 529 plans. The checks were made out to me but I used the payments to pay for their tuition and room and board.
I can dispute their claim according to their letter. What do I need to do to show that these two checks were not income.
Submitted: 7 months ago.
Category: Tax
Expert:  emc011075 replied 7 months ago.
Hi. My name is ***** ***** I will be happy to help you. Usually distributions from 529 are not treated as taxable income. When you look at the notice, what type of form the income was reported to IRS? Was it 1099Mics or some other form? It is not the checks but the tax form that was used to report it to IRS.
Customer: replied 7 months ago.
The forms were 1099Q according to the IRS.
Expert:  emc011075 replied 7 months ago.
Ok. Did you claimed the children as your dependent that year? Did they received 1098T? What about education credit? Did you claimed education credit for that year?
Customer: replied 7 months ago.
We claimed them as dependents. We did not claim an education credit as we were told by the tax software that our income was too high. Not sure if they received a 1098T. What would the 1098T signify?
Customer: replied 7 months ago.
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Expert:  emc011075 replied 7 months ago.
1098T is important, because currently it is the only proof IRS accept as payments for tuition. You will need to proof tuition expenses, and room and board you paid. Check with your children if they still have access to their college account. Most college have downloadable 1098T those days.
Expert:  emc011075 replied 7 months ago.
Check the box on the notice that say disagree with the changes, do not sign anything, attach an explanation letter and proof of education expenses (tuition, room and board and such) and mail it to the address provided on the notice.
Expert:  emc011075 replied 7 months ago.
Any questions? Is there anything else I can help you with today? I see you offline now. So if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. You find the rating bar on the top of the page – 5 stars. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.