1099 Q and Covid Related Recontributions

odyinpdx 2021-02-04 07:01:00 UTC #1

Has anyone dealt with (Turbotax) a Covid related recontribution of a previously taken 529 distribution?

After paying Spring tuition, my daughter reduced her course load, which resulted in a tuition refund. We redeposited the refund into her 529 plan. The 1099Q sent from the plan is for the original amount of the distribution. From what I have read, this is expected, but I was wondering if the software has a way to adjust the amount distributed.

mark 2021-02-09 22:15:59 UTC #2

I am pretty sure if you have no unqualified withdrawals from your 529, then the 1099Q is not entered on your return. Turbotax uses it to determine unqualified withdrawals. I have had to fake out Turbotax to do the right thing at times. I am very careful when I do that always looking at the forms view to make sure the result is what I want.

odyinpdx 2021-02-10 00:07:08 UTC #3

Thanks Mark. I heard from the plan custodian on how to handle it and did further research. I have read that as long as distributions < qualified expenses, you don't need to report the 1099Q on your return. The plan custodian said just to keep the year-end statement that shows the recontribution as backup (I also have the copy of the check I sent in and the recontribution form).

hoosierina 2021-02-27 23:09:56 UTC #4

I'm having a similar problem - tax form showing full amount dispersed, even though I then got over half of it refunded due to Covid. The 529 plan rep I spoke with said I don't need to put 1099Q on my taxes (using TurboTax) if all expenses qualified (and they were) but TurboTax asks for the 1098T and 1099Q (which I know goes on my daughters taxes, not mine, but they still ask on mine) and then say that she will have to pay taxes on a portion of the 529 funds. It feels like I'm cheating if I don't put the forms on my taxes, but I can't figure out how to get around it.

dcandmc 2021-03-01 15:56:48 UTC #5

If there was an unqualified 529 distribution, it may be reported on your return or it may be reported on your daughter's return, depending on how the distribution was made. I don't use Turbo Tax, so I can't address any specific software issues, but the 529 plan rep is correct in saying that if all the 529 money was used for qualified expenses there will be no tax liability, either for the account owner or the student/beneficiary. As this sounds like a Turbo Tax issue, perhaps you should address your questions to Turbo Tax customer help.