What do you do if you have a withdrawal from a 529 that was made at the very end of the year in 2024, but was used to pay for education expenses in early January 2025? This seems to be making our taxes owed extremely high this year, which was unexpected because we thought withdrawals from a 529 were always tax free as long as they are used to pay for education expenses.
Here is the factual scenario: We made two withdrawals from our 529 account in 2024 in order to pay for our child's education expenses (tuition, room & board, books, etc.).
Our 1099-Q includes the total amount for both withdrawals form the 529 in box 1. Our 1098-T only includes amounts paid to the university in 2024.
529 withdrawals can only be used in the same tax year as expenses.
See:
Room and board, books and a required computer are also qualified expenses for a 529 plan distribution.