TurboTax

File with experts
File your taxes
Experts at your fingertips

An expert helps with your taxes, or does them for you
TurboTax Expert Full Service

TurboTax Expert Assist

TurboTax Self-Employed
Prior year taxes
File myself
File myself
Do it yourself

We'll guide you step-by-step
TurboTax Do It Yourself

TurboTax Self-Employed

TurboTax Desktop
TurboTax Free

Activate your product

Prior year taxes
Business
Business
Business taxes

Get your T2 corporate return done right, your way
TurboTax Business

TurboTax Business Desktop
Tax situations
Tax situations
Tax situations

Find extra guidance for your big life moves
For investors

For 25 and younger

For self-employed

For new to Canada

For life changes
Resources
Resources
Resources

Explore tax tools, get tips, and read reviews
Personal income tax calculator

RRSP savings calculator

Learning hub

TurboTax support (FAQ)

TurboTax community
Pricing

Community

Question

withdrew money from 529 account not for educ expenses. got a 1099-Q form. when i enter the amounts in turbo tax, it adds the gross distribution to my income, not earning

Forum|Forum|1 year ago
March 19, 2025
1 reply
0 views

from my understanding, only the earnings should be taxable. but turbo tax adds the full gross distribution to my income

The amount taxed will be listed on Schedule 1 line 8z and should only be the earnings portion listed in Box 2 of Form 1099-Q.

That will flow and be included on your 1040 line 8 (although 1040 line 8 might also include other income reported)

The penalty tax for that distribution (10%) will be listed on Schedule 2 line 8 and will flow and be included on your 1040 line 23, although that line on the 1040 could also include other taxes reported.

If this does not look right, please go back to the entry screen for the 1099-Q and make sure the earnings in reported in Box 2.

HERE is how to view your 1040 using TurboTax Online

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

zman1009usAuthor

When i try to enter the earnings on turbo tax, i cannot continue without including the gross distribution and basis. turbo tax is using my gross distribution in my income (not the earnings).

for the 10% penalty amount, where do i enter that on turbo tax?

Are you entering Form 1099-Q in the Education section under Deductions & Credits?

Are you then saying the distribution was not used for education?

The earnings in Box 2 goes to Schedule 1 line 8z

flows to Form 1040 line 8

The 10% penalty tax is on Schedule 2 line 8

flows to Form 1040 line 23

You report the 1099-Q, not as separate entries. TurboTax will separate the amount in Box 2 from Box 1.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"