I have withdrawal Pa-529 Non Qualified withdrawal. I have added Form 1099-Q PA-529 fund withdrawal under Deduction & Credit section. Do i need to file Form 5329 too?

[DaveF1006]

Yes, you need to file Form 5329 (specifically Part II) because you identified the withdrawal as non-qualified.You enter the 1099-Q to report the income (the earnings). Form 5329 is the form that calculates the 10% federal penalty on the earnings.

[das-ujjwal]

I entered the information under “Miscellaneous Income” → “ESA and 529 Distributions (Form 1099-Q)” in TurboTax Online. Do I need to fill out Form 5329 separately in TurboTax? If so, which section should I go to to enter the additional tax? Or will TurboTax automatically take care of Form 5329 when filing the federal return?

[AmyC]

The program should automatically generate the form 5329 in the background. You can view your tax return and look on Sch 2, line 8 for the 10% penalty along with seeing the form 5329.

The PA 529 allows deductions for contributions so when you take a non-qualified distribution, you must add back the entire amount withdrawn - the principal plus earnings.  To add it back, look for 529 Plan distributions and enter the non-qualified portion.

To print or view  your forms, including all worksheets:

• In desktop, switch to Forms Mode. 
• For online:
  1. On the left side, select  Tax Tools
  2. Select Print center
  3. Select Print, save or preview this year's return
  4. If you have not paid, select pay now.

Reference: PA 529 FAQs | College and Career Savings Program