Mrkemp
Returning Member

529 for K-10

It seems there's no way to input k-10 educational expenses from a 529 because TTax only excepts them from a 1099-Q and elementary schools don't send out 1099-Q s?

Education

is this a private school?

 

does the expense exceed Box 1 of the 1099Q - if yes, there is no need to report it in TT at all.  Look at the instructions attached to the 1099Q and in the 1st paragraph it states 

 

"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."

 

if the expenses exceed Box 1 you have determined there is no tax liability from the distribution.  End of story.  Put it in a drawer and move on! 

Mrkemp
Returning Member

Education

Elementary schools don't send 1099-Q s  If I had a 1099-Q there wouldn't be a problem.  That's what my question is about

KathrynG3
Expert Alumni

Education

No, elementary schools would not issue Form 1099-Q. I think you may be thinking of the schools issuing Form 1098-T for tuition. Your qualified tuition program would be where to get Form 1099-Q. By definition, the elementary tuition qualifies as an education expense for grade school.

 

The Tax Cuts and Jobs Act: Section 529 Qualified Tuition Programs: 529 plans can allow distributions of up to $10,000 per-student to pay tuition expenses for a public, private, or religious elementary or secondary school.

 

From Internal Revenue Code Section 529: Treatment of elementary and secondary tuition

Any reference in this subsection to the term “qualified higher education expense” shall include a reference to expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school.

 

As long as your distribution was all for tuition, there would be no penalty.

Mrkemp
Returning Member

Education

I can put it in a drawer and move on, like you say--but that will include taking a hit from qualified 529 distribution plus a 10% penalty.  I'd rather not pay those.

Education

do you have expenses paid to the school that you can document that meet or exceed the distribution from the 529 plan? if yes, why do you think anything is  taxable?

Mrkemp
Returning Member

Education

Tuition and enrollment add up to around $6k  My problem is I made a very dumb mistake. In theory I can withdraw the principal tax free, and I raided the account when buying a house, then repaid the money when I sold the other house, but I took a qualified deduction, so I'm screwed.  So to mitigate, I want to add K-10 private school tuition and fees, which is legal to do with a 529, but it happens so infrequently that schools aren't required to send out 1099-Qs  TT keeps scolding me for inputing the expenses, (and the name and tax ID of the school) but not having a 1099-Q

KathrynG3
Expert Alumni

Education

In that case, then see IRC Section 408(e):

(2)Loss of exemption of account where employee engages in prohibited transaction

(A)In general If, during any taxable year of the individual for whose benefit any individual retirement account is established, that individual or his beneficiary engages in any transaction prohibited by section 4975 with respect to such account, such account ceases to be an individual retirement account as of the first day of such taxable year. For purposes of this paragraph—

(i) the individual for whose benefit any account was established is treated as the creator of such account, and

(ii) the separate account for any individual within an individual retirement account maintained by an employer or association of employees is treated as a separate individual retirement account.

(B)Account treated as distributing all its assets

In any case in which any account ceases to be an individual retirement account by reason of subparagraph

(A) as of the first day of any taxable year, paragraph

(1) of subsection (d) applies as if there were a distribution on such first day in an amount equal to the fair market value (on such first day) of all assets in the account (on such first day).