529 EARNINGS REPORTING FOR STATE OF GA

Forum|Forum|5 years ago
March 30, 2021
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A 529 Distribution was made to Beneficiary who received a 1099-Q in their name for 2020. (Beneficiary attends a military academy.) Is it correct that the earnings on that distribution has to be recorded on the Account Owners tax return (per GA state tax law), even though the disbursement was made to the Beneficiary. Seems to create confusion since the Beneficiary has to report the 1099-Q, but the Owner the earnings (two separate tax returns). I read that GA does not confirm with federal tax reporting on their 529 plan. Just need to clarify whether this is, in fact, the case. I am aware that the 10% penalty would be waived for attending a military academy.

In June 2019 we made a $2000 deposit to Cadet Account, per USMA, at the time of entrance. Can we still deduct that from the reported distribution amount in 2020? Your advice is much appreciated. Thank you.

MAK70

Yes, you (as account owner) must report the earnings on the Georgia state tax return because it is considered a "nonqualified" (not for postsecondary) educational expense. The penalty is waived because it is a military academy.

Your 2019 contribution would have to be deducted on the 2019 tax return, so you would have to amend.