My parents accidently made a double contribution to my child's 529 account online - hitting submit button twice. They then asked me to help get back the second payment as needed it for other bills and hadn't meant to give so much.
We reached out to "customer support" for the state 529 and online service they use for deposits immediately and were told there was no way to reverse transactions. We had to wait until money transferred to 529 and then take disbursement. Since we were taking money out immediately from money market thought there should be little to no gains.
Took disbursement directly and then refunded my parents. We received a 1099-Q reflecting the full disbursement and a fair amount of gains. The money was only in the account for a day or two but state must be cost averaging or similar...
If I enter the 1099-Q as received it comes up as taxable income etc... Am I best to just not include the 1099-Q at all, just say the money used for education expenses, or just stuck paying taxes because system unable to reverse transactions.
