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529 earnings taxed when withdraw was made for student loan
I received a 1099 Q for a non-beneficiary withdraw from a 529 plan, distribution code 1. The funds were used by me to pay my former dependent's student loan (she graduated and is no longer a student). Turbo Tax asks is student loan principal or interest was paid, but doesn't give the opportunity to answer the question. As a result, the earnings portion of the withdrawal are being taxed.
Should I just override?
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Education
there is probably something else that is incorrect.
How much was the 1099Q Box 1 distribution? How much was the loan repayment?
If the loan repayment was more than that ($10,000 maximum), I wouldn't even input in TT. Under that circumstance it is not required.
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Education
Thanks, but your response does not address my question. Why does turbotax ask if the funds were used to pay a student loan, but the program doesn't give the user an opportunity to answer the question (yes or no).