529 Plan was used for non-qualified withdrawals

Forum|Forum|1 year ago
February 19, 2025
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Essentially my mother let me withdraw the 529 she had set up for me and I'd like to take full responsibility for filing the taxes for it as my own income since I had used the money for bills due to emergency reasons. I have seen things about 1099Q but I don't know the first thing about where to input all this information or where to get these forms. Where do I even start and how do I go about finding the right forms so I can pay the penalties and taxes?

Ask the Experts - Deciphering - Feb 2025

Best answer by AmyC

Once I receive the 1099Q from my mother am I able to take on full responsibility for penalties and income tax for the non-qualified funds that were withdrawn or does that have to be paid for on her end?

If you are the beneficiary and received the income, you should be the one to file the 1099-Q.

If your mother is the account owner and received the 1099-Q, you will need to get it from her.
Make sure you can show that you took the funds and used them.
She does not need to include it on her return, even with her social on the form since you are claiming it.

If you are not the beneficiary, then you can't claim the income. See Guide to IRS Form 1099-Q: Payments from Qualified Education Programs.

AmyC

Employee

You have the form 1099-Q so you will input the form, see Where do I enter a 1099-Q?

The program will walk you through any questions and determine the penalties for you.

The program handles it all.

You will see the income on your 1040, line 8, additional income.
Form 5329 covers the penalties in Part V, line 33 will show the additional tax.

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babachiAuthor

I have seen stuff about it but where do I receive the 1099-Q for the information I need to fill in?

SharonD007

Check with your Mother; she may have received it. If she didn't receive it, you will have to contact the Plan Administrator to get the 1099-Q form. Also, the 1099-Q is reported on the tax return of the person's tax return whose Social Security number is on it. You may be subject to a penalty on the distribution since it wasn't used for education expenses.

Please review the TurboTax articles Information on 529 Plans, Guide to IRS Form 1099-Q: Payments from Qualified Education Programs, and What is IRS Form 1099-Q? for further details.

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