529 plans

I am under the impression that 529 distributions satisfy IRS rules if they go to members of the immediate family.  Non-immediate family members do not qualify as beneficiaries.  How do I report this in Turbotax Deluxe if the money was withdrawn from a 529 plan and used to pay tuition for a college student's tuition if the student is not a member of the immediate family?  She is a granddaughter of my brother-in-law.

MinhT1
Employee Tax Expert

Get your taxes done using TurboTax

529 distributions used to pay education expenses for someone other than the designated beneficiary are non-qualified distributions.

 

The earnings part of the distribution is taxable and subject to a 10% penalty.

 

You enter your form 1099-Q and enter no education expenses. TurboTax will subject the earnings to taxation and the 10% penalty.

 

 

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