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Education
Form 1099-Q typically lists the total distributions from a 529 plan during a given tax year, regardless of how the funds were spent.
The earnings portion of a taxable 529 plan distribution must be reported on the beneficiary’s or the 529 plan account owner’s tax returns. To calculate the taxable portion of the 529 plan distribution:
- Divide the qualified distribution amount by the total 529 plan distribution (Form 1099-Q, Box 1)
- Multiply the answer by the earnings portion of the total distribution (Form 1099-Q, Box 2).
- Subtract this amount from the total distributed earnings If you are qualified for the AOTC or LLTC, you must adjust your total qualified higher education expenses to avoid double-dipping. To determine the amount of a qualified 529 plan distribution, any amount used to generate the federal education tax credit must be subtracted from the total qualified expenses.
You can learn more about the topic here:
Guide to IRS Form 1099-Q: Payments from Qualified Education Programs
January 31, 2021
4:57 PM