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M
mon1cal
February 25, 2021
Question

What is the tax rate for an earnings refund from a qualified education program?

  • February 25, 2021
  • 1 reply
  • 0 views
Turbo tax says I owe more than $6000.00 on a 1099-Q earnings of $20,306.00 for a qualified education plan I purchased in 2000

1 reply

M
MinhT1
February 25, 2021

Earnings on a 1099-Q withdrawal not used for education purposes are taxed at your marginal tax bracket and also are subject to a tax penalty of 10%.

 

If you are in the 22% tax bracket, the $20,306 will be taxed at 22% for $4,467 (22% of $20,206) plus a penalty of $2,031 (10% of @2022_2,306). Total tax plus penalty equals $6,498.

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