Tax Law (Questions About Taxes)/1099-Q and 1098-T

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Question
I understand that since the 1099-Q is in my daughters name, it is reported on her tax return. My husband and I claim her as a dependant on our tax return and have read that we can report expenses from the 1098-T. Do you not show any expenses on her tax return?  Would that not make her have to pay taxes on the distribution?  The 1099-Q only shows distribution amount.  It is a Coverdell ESA. Her college expenses are about the same as her distribution from 1099-Q.  Since there was actually no expenses out of pocket after the distribution, would we as parents be able to get an education credit?  I'm so confused over all of this.  Thank You!

Answer
Jo,

Thanks for your question.

If the funds from the Coverdell account were spent on qualified educational expenses, the amount of the 1098-Q does not need to be reported on anybody's tax return.

Since it appears that the Coverdell account (and maybe some other stuff) fully covered her qualified education expenses, you do not have any education expenditures against which you can take a credit.  So the answer to the second part of your question is "No."

Bottom line, its pretty simple.  None of this goes on anybody's tax return.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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