Hi,
Filling out our MN state return in Turbotax Premier. When I fill in the amounts we contributed to the 529 plans for the year, the software gives me credit (reduces the tax I owe). However, when I enter the amounts from the two 1099-Q forms we have (and enter 0 for amount not used for qualified expenses), it nullifies the benefit we would have received from the 529 contributions.
Why is that?
You should be getting something when used for qualified expenses. Wait a minute. you have 1099-Q and all of the expenses were qualified education expenses!! You don't enter the 1099-Q at all. Then it does not pull over and cause a problem. That form is not supposed to be in your return unless it was used for nonqualified expenses. Go back to federal and delete.
See 2021 Publication 970 - Internal Revenue Service . For that matter, you may qualify for AOTC with the law changes. Please see another post of mine here.
For some states, including MN, the distribution could nullify the contribution. For MN there is an education savings account subtraction and a credit. You can't have both. Please check the rules here.
Thanks Amy. I have reviewed schedule M1529 and I am only claiming the subtraction, not the credit. With that said, my subtraction benefit is being wiped out when I add in the 1099-Q. This is the case even though the funds are being used for qualifying expenses. I see the note below on the page you linked to. It would seem this should not be happening if I use the funds for qualified expenses.
Note: You may be required to pay back some or all of the benefits received if you claim this credit and use the account funds for nonqualified expenses. See Education Savings Account Recapture Tax.
You should be getting something when used for qualified expenses. Wait a minute. you have 1099-Q and all of the expenses were qualified education expenses!! You don't enter the 1099-Q at all. Then it does not pull over and cause a problem. That form is not supposed to be in your return unless it was used for nonqualified expenses. Go back to federal and delete.
See 2021 Publication 970 - Internal Revenue Service . For that matter, you may qualify for AOTC with the law changes. Please see another post of mine here.