1099-Q Redeposited

Forum|Forum|2 years ago
February 26, 2024
1 reply
14 views

Have a client who closed one 529 and transferred it into another one for the same child. She received a 1099-Q for the distribution. She child didnt go to school, there were no actual education expenses. How do I show the 1099-Q to not be taxable because it was just transferred to the same kind of account for the same student.

ProSeries Professional

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Best answer by sjrcpa

If and when client gets a letter from IRS proposing tax, send a letter of explanation.

IRS should develop a form for 1099-Q distributions. I've had several clients get letters when all the money was used for qualified education expenses.

IRonMaN

Level 15

1099Q reporting is kinda stupid. As long as they didn't pull the money out and buy a dozen pairs of Trump sneakers, there is nothing to report. There is nothing on the return that allows you to report that a 1099Q was received but it isn't taxable.

Slava Ukraini!

G

gabjo00Author

Level 4

hmmmm...I had a client once that didnt put it on the return because it was not taxable and they received a letter. But I think you are right because I cant find another way to make this not taxable. And you are right, its kind of stupid.

sjrcpaAnswer

Level 15

If and when client gets a letter from IRS proposing tax, send a letter of explanation.

IRS should develop a form for 1099-Q distributions. I've had several clients get letters when all the money was used for qualified education expenses.

The more I know the more I don’t know.

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