taxable QTP distribution

Forum|Forum|6 years ago
March 18, 2020
1 reply
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I was the account owner (person who paid) for a QTP in Maryland for my daughter. She dropped out of college and never went back. After 10 years I asked for a refund. The 1099-Q that I got shows a gross distribution of $30,421 (box 1), earnings of $14,215 (box2) and a basis of $16,206 (box 3 - what I paid into it). I understand that I have to pay taxes on the gross distribution to the state (because they let me deduct it when I paid it), but why do I have to pay taxes on the gross distribution rather than the earnings for my federal taxes? I already paid taxes on the $16,206 basis that I paid for the plan. TT asks if I was the beneficiary, but never asks if I was the account owner.

MinhT1

On your federal return, you only pay taxes and the penalty of 10% on the earnings portion of the withdrawal. i.e. on $14,215.

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Kia2Author

Hi - I agree that is what should be taxable. However, because I was the account owner and not the beneficiary, TT doesn't ask me any further questions, it just plugs the $30,421 gross distribution number in. If I was the account owner but not the beneficiary, does that mean I have to pay federal taxes twice on the $16,206 basis that I paid? If not, how do I get TT to change the number?