Arizona: What to Enter for the Distributions from a 529 College Savings

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February 1, 2025
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Arizona return asks, "Enter the amount of distributions you received from a Section 529 College Savings Plan...that you included in federal taxable income."

I have two children who received distributions, but one of them received scholarships that surpass all the distributions combined. Each received a 1098-T, and I included all the numbers in our federal tax return.

Child A's distribution: $18161 (all the money minus the cost of a new computer, $1055, eventually went back to his 529 plan)

Child B's distribution: $476 (took a college credit class from high school, and the money was paid to a university)

Child A's scholarships: $30725

What number should I enter for distributions for the state return, $0, $476 or $1531?

Best answer by mglauner

If you reported Child A's Scholarship in the Education section in your Federal return, and returned the 529 distribution back to his 529 account, you don't need to report this in your Arizona return.

Since Child B's distribution was used for Education Expenses, you did not have taxable income there, either.

Neither of your 529 distributions was included in your taxable income.

Normally, you are not required to report your 1099-Q distributions unless it exceeded Education Expenses.

mglaunerAnswer

If you reported Child A's Scholarship in the Education section in your Federal return, and returned the 529 distribution back to his 529 account, you don't need to report this in your Arizona return.

Since Child B's distribution was used for Education Expenses, you did not have taxable income there, either.

Neither of your 529 distributions was included in your taxable income.

Normally, you are not required to report your 1099-Q distributions unless it exceeded Education Expenses.