GeorgeM777
Expert Alumni

Retirement tax questions

If you need to add additional educational expenses (expenses that are qualified) yet not included on your 1098-T, continue through the section where you enter your 1098-T information.  In the search bar, upper right of your page, enter 1098-T and use the jump-to link.  After entering your 1098-T information, click continue and you will eventually get to  the page "Now Let's Gather Your Additional Educational Expenses" or similar page.  That page is where you can begin to enter your additional educational expenses not already included on your 1098-T.

 

It appears that the funds you withdrew on December 28, 2021 for qualified educational expenses in 2022 should be reported on your 2022 tax return and not on your 2021 tax return.  In other words, you might be able to claim, if questioned by the IRS, that there was no excess withdrawal at all for 2021.  

 

There is no definitive guidance as to when withdrawals should take place in order to be excluded from taxable income.  IRS Publication 970 which explains many matters of 529 tax law, makes no mention of reimbursement withdrawal deadlines.  Neither does IRS Topic No. 313, which explains Qualified Tuition Programs such as 529 plans. 

 

Consequently, some tax professionals recommend that the reimbursement for qualified expenses be effected in the same year that the expense occurred.  If this cannot be done, then perhaps reimbursing prior to March 31 of the next year may provide some back-up.  In your case, you took the withdrawal in the year prior (the last few days of 2021), but it was for educational expenses in 2022.  Therefore, perhaps the better option is to report that withdrawal on your 2022 return.  

 

@kcwojo

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