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I withdrew money from a 529 account for non-educational expenses. How do I properly acknowledge this so I can pay the penalty and income tax?

When I entered the 1099-Q form I noticed that my taxable income was lower than it should be and the penalty for withdrawing for a non-educational expense wasn't acknowledged. How do I properly file this?
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1 Reply
Hal_Al
Level 15

I withdrew money from a 529 account for non-educational expenses. How do I properly acknowledge this so I can pay the penalty and income tax?

You enter the 1099-Q and then do not enter any educational expenses. Do not enter a 1098-T. 

 

Only the earnings portion of the distribution is taxable and subject to the penalty. If box 2 of the 1099-Q is zero or negative, there will be no tax or penalty.  In that case you do not even need to enter the 1099-Q.  When nothing is taxable, TurboTax enters nothing, about the 1099-Q,  on the actual tax forms. 

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