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I am the owner of a 529 Plan with my dependent child as the

beneficiary. I have taken distributions...
I am the owner of a 529 Plan with my dependent child as the beneficiary. I have taken distributions this year in both of our names. Whose name(s) will be on the Form 1099-Q(s)?
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Answered in 6 minutes by:
7/15/2017
emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3,266
Experience: IRS licensed Enrolled Agent and tax instructor
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Hi. My name is ***** ***** I will be happy to help you.

Distributions made to you will be reported to you and distributions made to your child will be reported to your child. Both of you will receive 1099Q.

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Customer reply replied 4 months ago
Have you dealt with this situation?

With 1099Q distributions and related college expenses? Yes. Many of our clients use 529 plans to help their children with education expenses.

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Customer reply replied 4 months ago
With parents who have had distributions in their names?
Customer reply replied 4 months ago
Ignore yes

Most 1099Q are issued to parents if the children are their dependents, which is usually the case. If you claim the child as your dependent it really does not make any difference if the 1099Q is issued under your name or under your child's name. As long as the amount of tuition is more than 1099Qs received, the distribution does not need to be reported.

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Customer reply replied 4 months ago
I read that parents who receive distributions in their names always receive letters from the IRS requesting documentation of qualified expenses. Have you encountered this?

It can be a problem if you take a distribution and you do not claim the child as your dependent or your child dropped the college or received scholarship or grand. Than you will have to report the difference between your original contribution and total distribution as your income. Your 1099Q will break it down for you.

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Customer reply replied 4 months ago
Please see above

That's not true. As long as parents claim the child as their dependent and the child's 1098T form reports more than the amount of the distribution the IRS already has a proof of expenses. However, if the distribution is used for room and board not included on 1098T the IRS will request a proof.

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Customer reply replied 4 months ago
I'm going to need to provide proof for room and board then. What kind of proof will they want to see? My daughter's sharing a house with 5 other girls and they're taking turns shopping for food and cooking for the group.

First you need to ask the school what the "cost of attendance". It is usually based on cost of living on campus. This will be your maximum amount you can use. You can include rent, utilities and food. And you will need receipts since there's no per diem type of deduction allowed.

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If she is sharing the house with other you can only use her share of rent, utilities and food for herself. If she buys groceries for the entire group you will not be able to use it. The same would apply to restaurant meals. If she paid for herself, you can use it. But if she paid for the entire group you will not be able to use it unless you have an itemized bill. In that case it is better to leave it out.

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Customer reply replied 4 months ago
Thanks for your help! I'm very satisfied and will rate you 5 stars. Have a nice evening!

You're welcome. The best way to deal with the off campus expenses is to provide your daughter with a credit card that will be used strictly for room and board related expenses. This way you can use your monthly statements.

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Customer reply replied 4 months ago
That's what I was planning to do anyway, but I didn't think about using it for documentation. Great idea!

As long as the expenses are paid on monthly basis you do not need all the receipts. For instance if there's a charge from XYZ water company you only need the first and the last bill. The same with the rent. If you have rent agreement you only need the monthly CC bill to prove that you made the payment.

emc011075
emc011075, Tax adviser
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Satisfied Customers: 3,266
Experience: IRS licensed Enrolled Agent and tax instructor
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