I have two clients who have paid for tuition expenses with money from a NY 529 plan.

Each client received a 1098-T from the school in the dependents name, and they also both received a 1099-Q in the dependents name.

Since the dependent is listed on the 1099-Q, do I have to report this, as well as the 1098-T, on the dependents tax return, and therefore remove them from the parents return?

My understanding is that 1099-Q distributions must be reported on the recipients tax return, and in order to avoid the penalty must show tuition expenses against them. In order to show tuition expenses against them I would need to report the 1098-T on the dependents return, which means they can not file as a dependent of another.


asked 08 Feb '12, 13:21

ConlonAndCompany's gravatar image

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After further research I have come to an answer on this so figured I would update this to show.

In situations such as this, the dependent must file (and can file as a dependent of another) and report the 1099-Q on their tax return. The tuition expense can subsequently be deducted against the 1099-Q to show no income and to file a 0 return. The 1098-T does not need to be shown on the dependents return.

As far as the parents are concerned, the 1098-T will still be filed on the parents return, and the child still claimed as a dependent.

Hope this helps anyone else dealing with this situation!


answered 08 Feb '12, 16:57

ConlonAndCompany's gravatar image

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Asked: 08 Feb '12, 13:21

Seen: 4,097 times

Last updated: 08 Feb '12, 16:57