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Did you make any payments on qualified education loans of the designated beneficiary? Does this mean did I use the 529 to make a loan payment or pay tuition with it?

 
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Did you make any payments on qualified education loans of the designated beneficiary? Does this mean did I use the 529 to make a loan payment or pay tuition with it?

The reason why Turbotax is asking you about the loans is that you may withdraw up to $10,000 from their plan to pay down qualified student loans penalty-free—with conditions. The first is that the $10,000 maximum is a lifetime limit for a beneficiary and each sibling.  Secondly, plan holders cannot claim any student loan interest deductions paid with this money. Turbo Tax is not assuming that you are using this money to pay down student loans, but if you are, then you would say yes to this question. This Turbo Tax link is a good illustration and provides clarification to this question.

When you pay for expenses, including tuition, books, computer equipment, and room and board, the school in which your beneficiary is enrolled issues a Form 1099-Q documenting the expenses. If you used the 529 to pay these types of expenses, then you will indicate this Turbo Tax.

 

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Expert Alumni

Did you make any payments on qualified education loans of the designated beneficiary? Does this mean did I use the 529 to make a loan payment or pay tuition with it?

If the student took student loans to finance the education, then it is asking if you made a loan payment on the Qualified Student Loan.  if you made it to make a tuition payment, then you would say "no" to this question. i would think that most distributions are used to pay tuition expenses.

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Highlighted
Expert Alumni

Did you make any payments on qualified education loans of the designated beneficiary? Does this mean did I use the 529 to make a loan payment or pay tuition with it?

The reason why Turbotax is asking you about the loans is that you may withdraw up to $10,000 from their plan to pay down qualified student loans penalty-free—with conditions. The first is that the $10,000 maximum is a lifetime limit for a beneficiary and each sibling.  Secondly, plan holders cannot claim any student loan interest deductions paid with this money. Turbo Tax is not assuming that you are using this money to pay down student loans, but if you are, then you would say yes to this question. This Turbo Tax link is a good illustration and provides clarification to this question.

When you pay for expenses, including tuition, books, computer equipment, and room and board, the school in which your beneficiary is enrolled issues a Form 1099-Q documenting the expenses. If you used the 529 to pay these types of expenses, then you will indicate this Turbo Tax.

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post