My son was beneficiary of CA Scholarshare 529 plan. He received so much money in grants & scholarships that over $40,000 was left. Could have withdrawn while he was in college but I left the $ in the plan in case he went on for a graduate degree. Now, 3 yrs. later he has a great job & doesn't need a graduate degree. We needed it for emergency and withdrew the money last year. Is there any way we can get credit for the scholarships & grants now to avoid the penalty for not using the $ for education ?
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When you enter a 1099-Q in TurboTax and indicate that it was not used for qualified education expenses, only the earnings will be taxable income.
Scholarships/Grants are applied against Tuition Expenses, so there's no way to do that now, plus that wouldn't change your current tax situation.
Type '1099-Q' in the Search area, then 'Jump to 1099-Q' to get to this section.
Here's more info on Form 1099-Q.
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