My son graduated in 2022. He didn't use all the money I contributed into 529account because of scholarships. I withdrew leftover money in 2023. I know I pay tax on the earnings. Can I avoid paying 10% penalty with Turbotax?
No. To be a qualified distribution, the money must be withdrawn in the same calendar/tax year that qualified expenses were paid. Likewise, to be eligible for an exception to the 10% penalty, the distribution must be in the same year that the scholarship paid for expenses.
Some experts argue that the withdrawals can be made any time prior to graduation, but you have missed that window also.
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