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bushidogiant88
New Member

A dependent took out SallieMae loan to pay for school. A year after this expense, we paid off the loan with 529 money. How do I enter the loan as an educational expense?

The question is to retain the tax exempt part of using the 529 money to cover this educational expense.

1 Reply
Anita01
New Member

A dependent took out SallieMae loan to pay for school. A year after this expense, we paid off the loan with 529 money. How do I enter the loan as an educational expense?

Payoffs of loans are not educational expenses.  The expenses would be the things the money was used for like tuition.  If you already took education credits last year for those expenses, you cannot use them again to make any part of the 529 distribution nontaxable.

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