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January 18, 2025
Question

college paid through 529 then redeposited to 529

  • January 18, 2025
  • 2 replies
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We paid for our sons tuition through his 529 plan -- then college became free in our state so we were refunded and then deposited that refund BACK INTO the same 529 plan account-- But my 529 plan sent a statement for our sons taxes showing that we took a disbursement-- how do I then account for the fact that we put it back in ?

2 replies

Hal_Al
Employee
January 18, 2025

 On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution." 

 

So, the 1099-Q is only an informational document. You are not required to enter it.  You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution or if the money was recontributed to the 529 plan.  When the box 1 amount on form 1099-Q is fully covered by expenses (or the re-contribution), TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records.

 

That said, the TurboTax (TT) interview handles your situation.  After entering the 1099-Q, you will be asked if you got a refund of expenses from the school.  Then you will be asked if you recontributed any of it  to the plan. TT will treat only the net amount as distribution and the worksheet will provide the details.

 

Technically, the re-contribution must be made within 60 days of you receiving the refund to be valid.

January 18, 2025

If you received a refund from your son's 529 plan, you need to indicate that you recontributed the funds within 60 days in TurboTax

 

  • You should have received a 1099-Q for the disbursement. After you enter the 1099-Q information into TurboTax in the Education Section, there will be a follow up question asking if you received a refund of qualified education expenses.   You should indicate yes. Next, answer that you recontributed to the funds to the  tuition program within 60 days, if you did so.