<p>My d has a prepaid college plan which provided a distribution for her tuition. She received a 1099Q "Payments from Qualified Education Programs". There is a gross distribution of $4807. indicating "earnings" of $977. with a basis of $3829. She did also receive scholarships $1000 from her college and $3500 and from the state scholarship. Where do we put the 1099Q earnings on the FAFSA, and the scholarship info? </p>
<p>Also, will she need to file a tax return, she had only $100 in wages. Thanks so much for the help!</p>
<p>I believe the “earning” reported on your 1099Q refers to the portion of the disbursement that came out of earnings on your prepaid college plan’s investments. It’s not earnings in the sense of wages. Of at least, that’s how I understand it. I don’t believe it is reportable on the FAFSA assuming it was all used for qualified expenses. You do report the balance of the accountas a parental asset though.</p>
<p>thanks 'rent…yes I realize that for her scholarships also, they are covering tuition so not taxable. guess that would mean she wouldn’t have to file a return?</p>
<p>Yeah, if her scholarships went for “qualified expenses” (tuition, mandatory fees, books - but not room and board) then they are not taxable. With just $100 in wages she is not required to file a tax return.</p>
<p>if you are paying for tuition using a prepaid college plan, will that still be considered qualified tuition expense for the American Opportunity credit?</p>
<p>The distributions from a prepaid tuition plan are tax free distributions if they are used to pay for qualified education expenses. You cannot use the same qualified education expense for 2 different tax benefits. If you are using the tuition to make the prepaid tuition tax free then you cannot also use the tuition to claim the AO tax credit. If there are other required fees and books that were paid with other money (loans, savings) then they can be used for the AO credit.</p>