My son is in college. He paid his tuition with his AZ529 plan, and received scholarships and such that exceeds the tuition weeks later.
My Questions are:
1) He put back the exact amount back to to his AZ529 plan. Was he (or a parent) actually allowed to keep the money in his pocket without a penalty?
2) TurboTax asks, "Did you contribute to any AZ529 plans?" Yes, or no? Is his returning the exact amount of money (not a penny more) to his 529 Plan considered a "contribution"?
3) TurboTax asks, "Did you receive a qualified tuition distribution from any AZ 529 plans?" Is this "yes"?
4) TurboTax asks, "Did you make a non-qualified withdrawal from any AZ 529 plans?" Would it have been "yes" if we had kept the scholarship money without putting it back to the AZ 529 plan? Otherwise, "no," right?
1. No, nonqualified distributions are taxable.
2. No, you returned the money
3. No, the distribution was not qualified and returned.
4.Correct, it would have been yes if you kept the money. It is no since you returned the money.
No harm was done by taking the distribution and returning it so there is no effect on your taxes. Act as though it never happened.
1. No, nonqualified distributions are taxable.
2. No, you returned the money
3. No, the distribution was not qualified and returned.
4.Correct, it would have been yes if you kept the money. It is no since you returned the money.
No harm was done by taking the distribution and returning it so there is no effect on your taxes. Act as though it never happened.