As your husband used the 529 distribution for non-qualified expenses, the earnings part of the distribution is taxable and subject to the 10% penalty and you have to report it on your tax return and pay the tax due. If you do not report it now, when you file an amendment to report it, you'll have to pay interest on the tax due on the form 1099-Q, not counting the hassle of filing an amended return.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
