Question

I have a question regarding 1099-Q reporting. My son received a Form 1099-Q. Does he have to report his earnings from this plan, or can he claim some deductions for education expenses?

Answer

Regarding 1099-Q reporting, most payments from qualified education program beneficiaries aren’t taxable. So, don’t report these on a return. However, annual distributions might be more than your son’s qualified education expenses. If so, he should report some of the earnings on Form 1099-Q, Box 2 as income on his return. If the earnings are more than his qualified educational expenses, he must report that amount without any further deduction. His qualified expenses will reduce the taxable amount. Qualified expenses include:

  • Tuition
  • Fees
  • Books
  • Supplies
  • Equipment

To learn more about reporting earnings and Form 1099-Q, see Publication 970 at www.irs.gov.

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