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Tax Law (Questions About Taxes)/1099-Q for State 529 Tuition program

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My stepdaughters grandfather setup a 529 state tuition fund for her? She is 19 y/o and paid for Fall 2012 tuition with this.  She did not work in 2012. She did recieve a 1099-Q. My wife and I paid for all other expenses with withdrawal from wife's Roth IRA setup for my daughter's college expenses and savings. Does my daughter need to fill out return just for 1099-Q, or do my wife & I need to claim on our return? Can we claim any of the expenses we paid for (books, meal plan, room/board, etc.)on our 2012 return?

Answer
Dwayne,

Thanks for your question.

If the amount of 529 funds withdrawn do not exceed the amount of tuition and other qualified expenses paid, the 1099-Q does not need to be reported on anyone's return.  Your stepdaughter would not need to file a return.

Assuming you can take the dependency exemption for her, you can take a credit or deduction for any qualified education expenses you paid.  Qualified expenses include tuition, fees, and course materials.  Meals and housing are not included in this definition.

There are basically three option, american opportunity tax credit, the lifetime learning credit, and the tuition and fees deduction. This link gives an overview of each. http://www.1040.com/federal-taxes/credits/education-credits/

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

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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

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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.

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FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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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.

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DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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