In order for the Distribution to remain Tax-Deferred, it must be used in its entirety to pay for Qualified Education Expenses. If you received and reported and Scholarships or grants, this will create an adjustment to these expenses, therefore making a portion of the earnings taxable.
To confirm that you have accounted for and entered all of your Qualified Education Expenses in TurboTax, please follow the steps below:
- Log into your TurboTax account and access your current Tax Return
- From the Welcome Screen find and click on Federal Taxes when the secondary screen appears click on Deductions and Credits
- From the Deductions and Credits section find the Education Section and click on Visit All.
- You will walk once again through the interview the TurboTax provides for he Education Section, if there is anything that you have missed, you will not be able to enter this information. When you get to the Education Expenses Summary page Stop and click on Edit next to your name.
- In this page you will now be able review the Education Expenses that are Qualified for 529 and Coverdell ESA purposes.
FYI: Qualified Education Expenses for 529 and Coverdell ESA purposes:
- Tuition and fees;
- Books, supplies and
equipment; Computers and Software
- Room and board
expenses for students enrolled at least half-time only to the extent they are
not more than the greater of
- The allowance for
room and board included in the cost of attendance for federal financial aid
purposes, or
- The actual amount
charged if the student resides in housing owned or operated by the eligible
education institution; and
- Expenses for special
needs services required by a special needs beneficiary and incurred in
connection with enrollment or attendance.
