AmyC
Employee Tax Expert

Education

While the federal government allows the distribution as a qualified withdrawal to repay student loan debt, the state of NY does not feel the same. NY classifies it as  a non-qualified distribution and it is taxable so you don't need to go through the hassle of entering anything since it is fully taxable.

 

Reference: How to make withdrawals | NY 529 Direct Plan

Distributions to pay K-12 tuition or qualified education loan repayments are considered nonqualified withdrawals for New York State tax purposes and will require the recapture of any tax benefits that have accrued on contributions.

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