I received a form 1099q related to a 529 plan distribution for 2011. My son, who is the beneficiary, is a college student. The funds distributed were enough to pay for half his tuition & room and board expenses. I paid the balance out of pocket. There is still money remaining in the plan for his remaining college years (he is a freshman). My question is, do I enter the 1099-Q's on his tax return or mine?
The 1099-Q is enter on the tax return of the "recipient" - the one whose SS# is listed on the 1099-Q. The recipient may or may not be the beneficiary.
Who claims the scholarship and school expenses?
This might seem confusing but tax law says that if they are your dependents only you can claim the education credit. However, you must subtract any amount paid with the scholarship from the total amount paid when claiming the credit.
On the other hand the scholarship belongs to the students. If the scholarship is more than they spent for qualified education expenses, the remainder is taxable to them, not to you.
Who should file the 1098T form?
If you are claiming him as dependent child the 1098-T would be entered on your (the parents) return.
Are 529 Plan distributions that are less than qualified educational expenses I paid during the year for my son (the plan beneficiary) taxable because my income is too high?
You are correct - they are not subject to an income cap. Amounts entered here DO NOT offset the 529 distribution, so you should reduce the figure to allow expenses to be applied against the 529.
If i am claimed as a dependent on my parents tax return but I pay for a portion of my college expenses can I get and education credit on my return?
If you are claimed as a dependent on your parents return, then all of the qualified education expenses are THEIRS to claim - even if you, the student, paid for some of them. If you were independent and not claimed on anyone else’s return, then all of the qualified education expenses are YOURS to claim - even if your parents paid for some of them.
My daughter goes to a university. What should I consider as actually being paid to the school for her tuition? Do loans count along with scholarships, grants, and personal payments?
Yes, but you do not enter the loan on your return-only the expenses financed by the loan. You will, however, enter the scholarships and grants.