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529 distribution to payoff student loan

Maryl
Level 1

How do you represent that in Proseries?  There is no 1098-T because the student already graduated and the 529 was used to pay off the student loan.  The earnings are being

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IRonMaN
Level 15

You don't represent it in the software.  529 money just falls into a black hole for tax return reporting.  If the money was spent according to how it can be spent, you just pretend it didn't happen and look the other way.  But keep good notes because the IRS will send out notices here and there asking if the taxpayer really used the money for educational purposes.

ACME Taxes, Tatoos, Tires and Tomatoes (I had to get rid of the turtles - they kept running away)
Terry53029
Level 11
Level 11

You will receive a 1099Q when you have a 529 distribution,and you just click on where do I enter. Then just fill out the form

IRonMaN
Level 15

@Terry53029 wrote:

You will receive a 1099Q when you have a 529 distribution,and you just click on where do I enter. Then just fill out the form


Have they changed something in the software that it now shows the payor in other income with a zero or is the time to enter the 1099Q an exercise in futility?

ACME Taxes, Tatoos, Tires and Tomatoes (I had to get rid of the turtles - they kept running away)
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Terry53029
Level 11
Level 11

I have always filled out the 1099Q, but there has always been a 1099T to go along with it. New for 2019, you can now use the 529 to pay off student loans where as before you could not do that, and if you did the income from the 529 was taxable. I will play with the program to see how, or if I will fill out the 1099Q used to pay off 529. Anyone with thoughts on the subject, please let me know. Thanks

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rbynaker
Level 11

@IRonMaN wrote:

@Terry53029 wrote:

You will receive a 1099Q when you have a 529 distribution,and you just click on where do I enter. Then just fill out the form


Have they changed something in the software that it now shows the payor in other income with a zero or is the time to enter the 1099Q an exercise in futility?


I might be inclined to include it other income and then back it out as a negative on whatever Line 21 is called this week (S1-L8?)

I doubt it will help you with the IRS, but it will jump out and jog your memory in 2 1/2 years when the client gets a nastigram from the IRS about unreported 1099-Q income.

Rick

Terry53029
Level 11
Level 11

Whats with all you allstars talking about not being an allstar soon ?????

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rbynaker
Level 11

@Terry53029 wrote:

Whats with all you allstars talking about not being an allstar soon ?????


They're scheduled to eliminate the All-Star program and replace it with a "Champions" program later this month.  That's the PG version anyway...

Terry53029
Level 11
Level 11

Hope you are all coming back as champions, need your knowledge. I did play with program on the 1099Q, and have decided to fill out the 1099Q and student worksheet. I put that person was not a student, then scrolled down to part V111 line 2d and entered full amount of distribution in column 1 and 2. with supporting doc. "used for student loan". Don't like to use other income on 1040 to make adjustments

IRonMaN
Level 15

The AllStar designation will disappear at the stroke of mIdnight (or somewhere around there) on February 17th.  It will be replaced by the new CHAMPION designation for those wishing to trade in their capes.  The only hitch is, as Allstars we just kinda showed up here and along the way Intuit said would you like this shiny title and we each agreed to it.  With the Champion program we need to sign a 13 page legal document in order to volunteer here with a stupid moniker attached to our name.  I'm not biting and as you can see, a few others aren't either.  Just another one of Intuit's bright ideas that isn't so bright.

ACME Taxes, Tatoos, Tires and Tomatoes (I had to get rid of the turtles - they kept running away)
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Terry53029
Level 11
Level 11

hope you will still be around for questions, as I like your input. 🙂

IRonMaN
Level 15

I'll be around ------------------- unless Intuit kicks me out.  But if you see my name disappear after February 17th, keep your eye out for Lutefisk Larry.  He might be my hand picked successor 😁

ACME Taxes, Tatoos, Tires and Tomatoes (I had to get rid of the turtles - they kept running away)