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February 28, 2021
Question

529 Contribution

  • February 28, 2021
  • 1 reply
  • 0 views

My son cashed out stocks in his name to pay for his college tuition. He immediately deposited the proceeds of $13,000 to his 529 account.  He was sent a 1099-B form for his taxes from the stock.  Does he pay taxes on this as income or it waived since it went to a 529 acct?

1 reply

ColeenD3
February 28, 2021

No. It is not waived. He sold stock. It is taxable income no matter what he did with the proceeds.

 

Contributions are not deductible on your federal taxes. However, some states let you deduct all or part of your 529 plan contributions.

If your state is one of those states, we'll prompt you to enter your 529 contributions when you get to the credits & deductions portion of your state taxes.