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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?
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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.
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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