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VikingsRule
Returning Member

529 money for student loan payoff

A little background - My daughter had approx $6,500.00 (actually a wee bit over) in student loans when she graduated. She My graduated from college during COVID. She did not have to start paying on the loan due to that. The whole Biden-$10,000 forgiven fiasco happened and she waited to see what was going to happen with that. She has been in the work-world for a bit over 3 years now. Now that everything is settled, we went ahead and took out $6,500.00 from her 529s. We have received the 1099-Qs. Everything I have read states that the $10,000 from 529s is tax-free, but do I have to report it somewhere? If so which forms and which lines do I use? Also, what figures would I input to show the IRS what is happening so we don’t get audited. Finally, since my daughter has been out of college for a while and no longer a dependent, would it be on her return or would I still keep it on mine? HELP!

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1 Reply
AmyC
Expert Alumni

529 money for student loan payoff

Since it was used for qualified expenses, you do not report the Q but you do keep it and all supporting documents in case you are asked.

 

Reference : Publication 970

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