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jade732
New Member

Is interest earned on US savings bonds exempt if used to open 3 individual 529 plans (as the owner) for my grandkids (beneficiaries)? If so, how do I enter into Turbotax?

 
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Hal_Al
Level 15

Is interest earned on US savings bonds exempt if used to open 3 individual 529 plans (as the owner) for my grandkids (beneficiaries)? If so, how do I enter into Turbotax?

Yes. Savings bonds cashed for education qualify for the interest exclusion. Depositing money into a 529 plan counts as "used for higher education". After entering the 1099-INT (with an amount in box 3), the Turbotax (TT) interview will ask "Did you use the U S Savings Bonds to pay higher education expenses?". Answer yes.

The next screen will verify that your particular bonds qualify. Then you will be asked details about the amounts, your student-beneficiary and the name of the Educational Institution (in your case the 529 plan)


There are AGI limits for doing this. (https://www.treasurydirect.gov/indiv/planning/plan_education.htm)

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Rainman12
Level 9

Is interest earned on US savings bonds exempt if used to open 3 individual 529 plans (as the owner) for my grandkids (beneficiaries)? If so, how do I enter into Turbotax?

Interest paid to a QTP (such as 529) qualifies for exemption. Look for that option in questions following 1099-INT entry.
Hal_Al
Level 15

Is interest earned on US savings bonds exempt if used to open 3 individual 529 plans (as the owner) for my grandkids (beneficiaries)? If so, how do I enter into Turbotax?

Yes. Savings bonds cashed for education qualify for the interest exclusion. Depositing money into a 529 plan counts as "used for higher education". After entering the 1099-INT (with an amount in box 3), the Turbotax (TT) interview will ask "Did you use the U S Savings Bonds to pay higher education expenses?". Answer yes.

The next screen will verify that your particular bonds qualify. Then you will be asked details about the amounts, your student-beneficiary and the name of the Educational Institution (in your case the 529 plan)


There are AGI limits for doing this. (https://www.treasurydirect.gov/indiv/planning/plan_education.htm)

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BOONIEBOY
New Member

Is interest earned on US savings bonds exempt if used to open 3 individual 529 plans (as the owner) for my grandkids (beneficiaries)? If so, how do I enter into Turbotax?

529s are not considered Cloverleaf plans or qualified tuition plans. Turbo tax does not list 529 Plans as option for contributions. How are 529s handled?
Hal_Al
Level 15

Is interest earned on US savings bonds exempt if used to open 3 individual 529 plans (as the owner) for my grandkids (beneficiaries)? If so, how do I enter into Turbotax?

A 529 plan is a Qualified tuition plan (QTP). The two terms are synonymous.  A Coverdell Educational savings account (ESA) is some thing different.
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