But you may have plenty of other expenses that qualify for tax-free 529 withdrawals. You can’t double dip tax breaks, so you can’t use 529 money for the same expenses. To claim the maximum credit, you’ll need to have $4,000 a year in eligible expenses. The American Opportunity Credit is worth up to $2,500 for each of the first four years of college and is based on 100% of the first $2,000 spent on qualified education expenses (tuition and fees) and 25% of the next $2,000 spent on eligible expenses for each year. “No action is needed on the 1099Q for withdrawals that were used for qualified education expenses.”īe particularly careful about documenting eligible expenses if you also claim the American Opportunity Credit, says Boswell. If the withdrawals are sent to the beneficiary or the school, the 1099Q will be in the beneficiary’s name, says Gross.

If the withdrawals are made by the account owner, the 1099Q will be in the account owner’s name. The 529 plan administrator will send you Form 1099Q by the end of January for any withdrawals taken in the previous calendar year. A qualified tuition program (QTP), also referred to as a section 529 plan, is a program established and maintained by a state, or an agency or instrumentality of a state, that allows a contributor either to prepay a beneficiary's qualified higher education expenses at an eligible educational institution or to contribute to an account for paying.

Irs 529 expenses