Hello, ToddL,
Thank you for your post.
I am curious to understand what it means that the 1099-Q can be reported as income or as deduction.
First, does this include non-qualified distributions or only qualified? My withdrawal was non-qualified.
Second, what is the purpose or reason to list it as deduction vs. income? Might it lower my tax bracket?
Third, does entering it as deduction LOWER the income of the tax payer? I thought deductions were for EXPENSES rather than for income? I have $13,000 in earnings listed on my 1099Q and am considering itemizing my deductions by putting this 529 money as a large deduction.
Last, does the 10% penalty come off first and then the taxes are paid?
I appreciate any help you can provide as I am not a tax savvy person.
Eric
