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1099Q distribution

Forum|Forum|6 years ago
February 26, 2020
3 replies
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Grandchildren decided not to go to college. I paid the basis in post tax dollars. It looks as though I am paying taxes on the gross distribution, not the earnings. Is this right?

Best answer by NCPERSON1

you are paying tax on BOX 2 only......(earnings)

as you mention, Box 3 was your aftertax contributions to begin with,

Carl11_2

Employee

Are you the named beneficiary on the 1099-Q? (Is your SSN in box Recipient's TIN box?)

If no to the above, does the named recipient qualify to be claimed as your dependent, and are you "in fact" claiming them as your dependent?

M

MinhT1

If you used your 1099-Q distribution for non-qualified expenses, you have to pay income tax and a 10% penalty on the earnings only, not the gross distribution.

Please revisit the entry of your form 1099-Q and make sure that you have entered everything correctly.

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N

NCPERSON1Answer

you are paying tax on BOX 2 only......(earnings)

as you mention, Box 3 was your aftertax contributions to begin with,

C

ChansonAuthor

TurboTax entered the gross distribution in income. Will it deduct the basis later?

N

NCPERSON1

it doesn't work like that.

Let's say Box 1 = $20,000 and Box 2 = $2,000 and box 3 = $18,000.

As you simply withdrew the $20,000 and kept it, as your grandchildren didn't go to college, you should see income of $2,000 on your return; Box 2 only. There will be a 10% penalty for taking money out that was not for college.

where do you see it entered $20,000 as part of gross income? what form and what line?