Question

I entered information I received on my 1099-Q (pmts from QEP..529plan) and once I entered the dollar amounts which included earnings, my tax liablitility increased. Why?

I though all distributions from a 529 were not taxable if used for qualified expenses which in this case they were.

Employee

Yes, nontaxable. The 1098T and expenses must be entered first for the Q to go against. See page 52 for qualified distributions at IRS Publication 970, Tax Benefits for Education.

If all of the distribution was used for qualified expenses, you can delete the 1099-Q, it is not required to be filed.

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