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Question

I withdrew money from a 529 account for non-educational expenses. How do I properly acknowledge this so I can pay the penalty and income tax?

Forum|Forum|2 years ago
February 27, 2024
1 reply
0 views

When I entered the 1099-Q form I noticed that my taxable income was lower than it should be and the penalty for withdrawing for a non-educational expense wasn't acknowledged. How do I properly file this?

TurboTax Deluxe Online

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You enter the 1099-Q and then do not enter any educational expenses. Do not enter a 1098-T.

Only the earnings portion of the distribution is taxable and subject to the penalty. If box 2 of the 1099-Q is zero or negative, there will be no tax or penalty. In that case you do not even need to enter the 1099-Q. When nothing is taxable, TurboTax enters nothing, about the 1099-Q, on the actual tax forms.