Solved: 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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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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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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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.
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)

View solution in original post

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?
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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