Education

To report the 1099-Q on your tax return follow these steps:

1. Open or continue your return.
2. Select Federal and then Deductions & Credits.
3. Scroll down to the Education section under All tax breaks.
4. Select, Show more and select Start or Revisit next to ESA and 529 qualified tuition programs (Form 1099-Q).
5. Follow the screens to enter your info.

Entering 1099-Q

1099-Q

You may still incur a penalty on the withdrawal.    The rules state if you don’t use your college savings plan for eligible expenses, your 529 plan nonqualified withdrawals may incur a 10 percent penalty and will also be subject to income taxes.  That said, both the penalty and the taxes apply only to your gains in the account.