1099-Q Coverdell ESA

[ajp]

Taxpayer had a small amount distributed from a qualified educational fund.  She got a 1099-Q.  I entered it in, but the program is still treating it as taxable.  I've entered student information, a 1098-T, etc.  Does it matter that she is a dependent?  The form was reported under her tax ID.  Everything I read indicates that it should not be taxable.  

Amy

[jeffmcpa2010]

The 1098-T information goes to the person claiming the student as a dependent, not the student.

And actually now that I think about it, the 1099-Q goes to the person claiming as well.

I just did one a week ago where both the mother and daughter received forms in their names and #;s  but the daughter was the beneficiary.

Both forms went on the parents return with the 1098-T and nothing regarding education went to the dependent's return.

[PATAX]

If you are sure that it is 100% not taxable, then it does not show up anywhere on the return, and therefore you do not have to enter it in the software. Just make a photocopy of this 1099-q and save it in the file . This is just my opinion, but I think I am correct.

[taxiowa]

On the 1099-Q worksheet you look at line D on top.  You should be able to double click and link to student if they are your dependent.  Now whether you have enough qualified education expense is another manner.  But you do not just assume it is not taxable and leave off return.  And you definately don't enter any 1099-Q that is another's SS# on a return that is not theirs. 

[jeffmcpa2010]

"And you definately don't enter any 1099-Q that is another's SS# on a return that is not theirs. "

taxiowa - I disagree with you on this point

The 1099-Q input page question A ask's who the beneficiary of the distribution is

And Question B ask who was the recipient of the distribution reported?

Clearly this is set up to allow the person claiming the dependent (and therefore ALL of the education expenses) to report the 1099-Q information on the same return allowing the offset of the education expenses to the distribution.

If we had to report the distribution to the dependent's return, any earnings on the account would always be taxable, as all of the Education Expenses would have been reported on the Parent's return, with nothing left to offset the 1099-Q to the dependent.

[taxiowa]

I think you are mistaken Jeff.  A 1099-Q is reported on the  return of the recipient tax return only.  If you have to re-enter education benefits on another return to offset earnings then so be it. There is a place in the beneficiaries student worksheet to show how much of expense was claimed by another to obtain a credit or deduction.

But we don't put W-2s on a parents return.  Nor shall we put 1099-Q on another recipients return.