My daughter used a 529 in November 2022 to pay for winter (Jan-April 2023) tuition, room, and board. For medical reasons, she dropped out of school in late March of 2023. The university refunded her tuition. At the time of the refund, I was told part of the refund was for meals, which I had not yet reimbursed my daughter for. Today, I learned the entire refund was for tuition and all of the money should have been sent back to the 529 within 60 days to avoid being taxed on the earnings. So, now we have $740.48 that was not recontributed to the 529. I calculated that $215.00 was the earnings (rest of $740.48 was basis). Where do we enter the $215 as taxable income? Right now I have it as Miscellaneous Income under the "Less Common Income" section. Will I be able to label the $215 as taxable income due to tuition refund which was paid with a 529?
Thank you!