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New Member
posted Jun 4, 2019 5:57:01 PM

How do I report withdrawals from a 529 plan that is not used for education? I know the earnings are taxable and there is a penalty of 10%.

The earnings distribution was not used for educational expenses. The basis portion of the withdrawal is not taxable But the earnings portion is. Where on my federal return do I enter these earnings?

How is the 10% reported as well?

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1 Best answer
Expert Alumni
Jun 4, 2019 5:57:03 PM

You have to enter your 1099-Q in TurboTax. As you do not have education expenses, TurboTax will automatically tax the earnings and calculate the penalty of 10% and include them in your tax return.

In TurboTax, you can enter your form 1099-Q by following these steps:

  • In TurboTax, open your tax return
  • Click on Federal in the left-hand column, then on Deductions & Credits on top of the screen
  • Scroll down to All Tax breaks, locate the section Education and click on Show more
  • Click Start next to ESA and 529 qualified tuition programs (form 1099-Q) (see attached screenshot).

2 Replies
Expert Alumni
Jun 4, 2019 5:57:03 PM

You have to enter your 1099-Q in TurboTax. As you do not have education expenses, TurboTax will automatically tax the earnings and calculate the penalty of 10% and include them in your tax return.

In TurboTax, you can enter your form 1099-Q by following these steps:

  • In TurboTax, open your tax return
  • Click on Federal in the left-hand column, then on Deductions & Credits on top of the screen
  • Scroll down to All Tax breaks, locate the section Education and click on Show more
  • Click Start next to ESA and 529 qualified tuition programs (form 1099-Q) (see attached screenshot).

New Member
May 18, 2020 11:33:21 AM

So I have entered the 1099Q information as instructed.  However, while it lists the expense on the form, it has not calculated the penalty or changed the total.  Am I missing something?  Is there another step?