Am I responsible for a 10% tax on early IRA distribution, if I use funds to pay for my non-dependent child's qualified higher education expenses?

[lschiano9]

My child files a separate income tax return

[Opus 17]

See page 25 here,

https://www.irs.gov/pub/irs-pdf/p590b.pdf

You can be exempted from the 10% penalty for higher education expenses you pay for yourself, your spouse, or your children and grandchildren (but not other kinds of dependents).  Eligible expenses include tuition, required fees, and room and board.  If the child lives off-campus, your eligible room and board is what the college would have charged for on-campus housing, or the actual cost of rent, food and utilities, whichever is less.   You reduce the eligible expenses by the amount of any scholarships, grants, or other tax-free tuition assistance. 

You still have to pay the regular income tax on the distribution. 

[lschiano9]

Thank you! Will I only then be responsible for federal and state income tax related to the amount of the early IRA distribution?

[Opus 17]

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@lschiano9 wrote:

Thank you! Will I only then be responsible for federal and state income tax related to the amount of the early IRA distribution?

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Right.  When you file your 1099-R, turbotax will note that you are under age 59-1/2 and will ask if any exceptions apply.  Select higher education.  You don't need to submit proof to the IRS (like tuition bills) when you file, but keep your proof for 6 years in case of audit. 

[lschiano9]

Thank you!