I was the account owner (person who paid) for a QTP in Maryland for my daughter. She dropped out of college and never went back. After 10 years I asked for a refund. The 1099-Q that I got shows a gross distribution of $30,421 (box 1), earnings of $14,215 (box2) and a basis of $16,206 (box 3 - what I paid into it). I understand that I have to pay taxes on the gross distribution to the state (because they let me deduct it when I paid it), but why do I have to pay taxes on the gross distribution rather than the earnings for my federal taxes? I already paid taxes on the $16,206 basis that I paid for the plan. TT asks if I was the beneficiary, but never asks if I was the account owner.
