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Paying for higher education costs with IRA Rollover funds and claiming exemption for early withdrawal. Do you do that in the year you file your taxes?

 
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Paying for higher education costs with IRA Rollover funds and claiming exemption for early withdrawal. Do you do that in the year you file your taxes?

If the withdrawal was made in 2024 then you report the rollover and withdrawal on your 2024 tax return that is filed in 2025.  You will receive a Form 1099-R in January of 2025 from the IRA plan administrator.

Paying for higher education costs with IRA Rollover funds and claiming exemption for early withdrawal. Do you do that in the year you file your taxes?

It's per year.

 

If you withdraw from an IRA in 2024, that will be reported and taxable on your 2024 tax return.  You can claim an exception to the additional 10% penalty if the funds are used for higher education, but the withdrawal is still subject to income tax.  And, if the 2024 withdrawal is more than your actual expenses in 2024, you must pay the penalty on the difference.

 

Likewise for 2025 and any other year, the withdrawal can't be more than your qualified expenses for that year, and the withdrawal will be reported and subject to regular income tax on that year's tax return. 

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