Contact UsSect 529 plan funds not used for education
How and where do you report (what schedule for form 1040) excess funds from a 529 plan not used for education expenses and not redeposited within 60 days? I know the excess amount not redeposit ed within 60 days is taxable and subject to a 10% penalty tax but I don't know where to report it on form 1040.
TaxConnections Members... Answer This Question
Want To be One of Our Tax Experts? Register Here
Tax Professional Answers
Harold Goedde
First, prepare form 1099Q, "Payments for Qualified Education Expenses under Sects 529 and 530." Enter gross distributions, earnings, basis, and qualified education expenses paid with the funds. Enter the funds rolled over (deposited back in the 529 plan), if any, within or after 60 days. If not rolled over or not in within 60 days, the excess is transferred to line 22 form 1040 as other income. Then you have to do schedule 5329 to compute the 10% penalty tax. This is entered on line 59, form 1040 as additional tax for 529 funds not used (similar to the tax on IRA funds distributed but not rolled over or not rolled over within the time required). The amounts from the schedules should be transferred to form 1040 by the tax software
Leave a Comment
490 weeks ago