529 earnings taxed when withdraw was made for stud...
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kurtzr824
Level 2

529 earnings taxed when withdraw was made for student loan

I received a 1099 Q for a non-beneficiary withdraw from a 529 plan, distribution code 1.  The funds were used by me to pay my former dependent's  student loan (she graduated and is no longer a student).  Turbo Tax asks is student loan principal or interest was paid, but doesn't give the opportunity to answer the question.  As a result, the earnings portion of the withdrawal are being taxed.

Should I just override?

2 Replies
NCperson
Level 15

529 earnings taxed when withdraw was made for student loan

there is probably something else that is incorrect. 

 

How much was the 1099Q Box 1 distribution? How much was the loan repayment? 

 

If the loan repayment was more than that ($10,000 maximum), I wouldn't even input in TT.  Under that circumstance it is not required.   

 

 

 

 

kurtzr824
Level 2

529 earnings taxed when withdraw was made for student loan

Thanks, but your response does not address my question.  Why does turbotax ask if the funds were used to pay a student loan, but the program doesn't give the user an opportunity to answer the question (yes or no).

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