^Only if the 529 money was not 100% used for qualified expenses.
OK - thanks! it was so I just hold the info just in case but don’t report, then?
Tax programs ask for the 1099Q info and ask for qualified expenses to check if there was an excess distribution. If there wasn’t, the programs don’t do anything with the info. If there was, appropriate entries on the tax forms will be made. That’s one of the program’s functions, to check if there was taxable income in a number of situations. Just because you enter something into a tax program, doesn’t mean it is sent with the return. Check the printed returns for what will actually be sent.
Adding: Another function the programs can do is make sure you aren’t double-dipping, for example, taking the AOTC based on the same expenses that were paid with 529 distributions. The programs can’t check for that if you don’t enter all the relevant info.
What if you use the 529 designated for Child B to finish paying tuition for Child A?
If it’s not a student-owned account, the account owner is likely able to simply change the beneficiary from Child B to Child A.
Just an update on this from the OP. We did not receive the 1098-T and contacted the FA office of the school. It turns out that they are not sending 1098-T since the grant and scholarships together exceeded the tuition and fees. Basically, we pay just most of the R&B cost. I am still not sure how to report all these in the tax return. I hope the software may help.