in Education
2040931
I thought part of the Secure Act that parents can withdraw from 529 account tax free to pay for student loans as part of qualified education expenses up to $10,000.
As a parent and the recipient on 1099-Q, the Earnings is being picked up as Other Income on Schedule 1 and Additional Taxes on Schedule 2.
The 529 withdrawal was $5400+ and the Student Loan payment was $5500
Did I misinterpret the Secure Act or do I have something entered incorrectly?
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You entered something incorrectly.
The student loan question comes up in the 1099-Q interview, so you don't have to wait til the education expenses section to enter it.
But it still shows as excess even after entering that it is a loan!
Delete the 1099-Q.
You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including student loan payments to cover the distribution. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records.
On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."
My issue is it needs to be reported on my NY return as it is non-allowable there so my thought is I need it to carry over?
I'm not familiar with NY specifically, but there is usually a separate entry point in the state program for that sort of thing.
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