How do I report withdrawals from a 529 plan that is not used for education? I know the earnings are taxable and there is a penalty of 10%.

Forum|Forum|6 years ago
June 5, 2019
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The earnings distribution was not used for educational expenses. The basis portion of the withdrawal is not taxable But the earnings portion is. Where on my federal return do I enter these earnings?

How is the 10% reported as well?

TurboTax Home & Biz Windows

Best answer by MinhT1

You have to enter your 1099-Q in TurboTax. As you do not have education expenses, TurboTax will automatically tax the earnings and calculate the penalty of 10% and include them in your tax return.

In TurboTax, you can enter your form 1099-Q by following these steps:

In TurboTax, open your tax return
Click on Federal in the left-hand column, then on Deductions & Credits on top of the screen
Scroll down to All Tax breaks, locate the section Education and click on Show more
Click Start next to ESA and 529 qualified tuition programs (form 1099-Q) (see attached screenshot).

MinhT1Answer

You have to enter your 1099-Q in TurboTax. As you do not have education expenses, TurboTax will automatically tax the earnings and calculate the penalty of 10% and include them in your tax return.

In TurboTax, you can enter your form 1099-Q by following these steps:

In TurboTax, open your tax return
Click on Federal in the left-hand column, then on Deductions & Credits on top of the screen
Scroll down to All Tax breaks, locate the section Education and click on Show more
Click Start next to ESA and 529 qualified tuition programs (form 1099-Q) (see attached screenshot).

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mf93436

So I have entered the 1099Q information as instructed. However, while it lists the expense on the form, it has not calculated the penalty or changed the total. Am I missing something? Is there another step?