Who uses the 1099-Q for their tax return? Whoever the 1099-Q is issued to must report that 1099-Q on their tax return. In other words, the person whose SSN is on the 1099-Q should report the form – it could be the beneficiary student or the account owner, who may be a parent or other relative.
How 529 distributions are treated in the support test?
529 plans affect the support tests. These distributions can be substantial. If the distribution is counted as support provided by the beneficiary (child), it could prevent the child from qualifying as a dependent. 529 plans allow the owner (usually a parent or grandparent) to change the beneficiary.
Does a 529 beneficiary need to be a dependent?
Yes – your daughter claims 1099-Q from the 529 plan and her 1098-T to claim education expenses if she is no longer your dependent. When the money goes directly from 529 plan to the school, the student is the “recipient” of the funds.
How are 529 distributions paid to account owner and beneficiary?
Here is my situation: Distributions from 529 were paid to me (account owner) and used to pay my daughters (beneficiary) college expenses. So as in prior years, 1099Q will be issued to me (under my SS#) and a 1098T will be issued to my daughter (under her SS#).
Can a 529 plan be used for a non qualified distribution?
If the 529 plan is a custodial 529 plan, distributions from the 529 plan must be used for the benefit of the beneficiary, not the parents. So, a non-qualified distribution can be invested in an annuity for the student, not the parents.
How are 529 plans treated by tax law?
Their reasoning is that the tax law treats the contributions to a 529 plan as completed gifts to the account beneficiary. Furthermore, for any year in which distributions are paid to the school or to the beneficiary, a Form 1099-Q is issued to the beneficiary.
Can a 529 be claimed as a 1099-q?
I have a daughter in college and I have a 529 with her as the beneficiary. However, the 1099-Q is in my name. Usually I claim her as dependent and also claim the 529 and the expenses on my tax forms. However, this year it might be beneficial for her to file her own tax return and claim the stimulus check.