Question

Does the IRS send me a bill for taxes and penalty due for a 529 withdraw overage or does Turbo Tax do the math and deduct it from my refund? Who pays, me/owner or my son?

Forum|Forum|7 years ago
June 5, 2019
1 reply
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On the form view of my tax return, I can see that amount of 529 income that is taxable, also I see the amount that is taxed at 10% penalty. Turbo tax is telling me that my son (beneficiary) must claim this taxable income. How does he do this? The 1099Q is in my name not my son's.

TurboTax Premier Windows

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It depends. The person who receives the funds (whose social security number (SSN) is on the 1099-Q) has to report the Form 1099-Q on their tax return. If your son's SSN is on the 1099-Q he should file a tax return and report the 1099-Q. If the money went straight to the school, it is treated as if the funds went to the student. Any taxes and penalties due that result from a 529 plan withdrawal overage are calculated on your personal tax return. The information is entered in TurboTax, and TurboTax does the math.