Where to Enter New York 529 Plan Contributions

The educational expenses he claims for the 1099-Q should be reduced by the amount of educational expenses you claim for the credit.But be aware, you can not double dip. You cannot count the same tuition money, for the tuition credit,  that gets him an exclusion from the taxability of the earnings (interest) on the 529 plan. Since the credit is more generous; use as much of the tuition as is needed for the credit and the rest for the interest exclusion. He’ll have to pay tax on the earnings, at his lower tax rate (subject to the “kiddie tax”), but not the penalty. If the student’s parent qualifies for the AOTC or LLTC, they must adjust their total qualified higher education expenses to avoid double-dipping. To determine the amount of a qualified 529 plan distribution, you must subtract any amount used to generate the federal education tax credit from the total qualified expenses.

Has anyone located where in the TurboTax 2023 Illinois state return you can enter 529 contributions? I cannot find it anywhere and it’s the last thing I need where do i enter 529 contributions in turbotax before I can file. For the Online product, it’s there, hiding in the Income section. But check this out (I learned the hard way); contributions to a 529 are handled as a calendar-year thing, not like an IRA that you can contribute to in April for the previous tax year.

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You’ll need to sign in or create an account to connect with an expert. I tried out your clever trick, and it looks to work great. If I understand correctly, your idea is to set the tuition amount to be just enough to be offset by the scholarship, so the scholarship doesn’t accidentally offset anything else. The following TurboTax Online offers may be available for tax year 2024. Intuit reserves the right to modify or terminate any offer at any time for any reason in its sole discretion. Unless otherwise stated, each offer is not available in combination with any other TurboTax offers.

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I also appreciate your advice on considering having my nephew include some of the income on his return. If the student receives a $2,000 tax-free scholarship, the AQEE for the student in this example is reduced further to $4,000. Click Start or Update/Revisit beside Virginia College Savings Prepaid Tuition (section 529) Plan to enter your information. You have clicked a link to a site outside of the Intuit Accountants Community. By clicking “Continue”, you will leave the community and be taken to that site instead.

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Additionally, college savings plans generally have more varied investment choices. For both types of 529 plans, contributions are not tax-deductible for your federal taxes although some states provide a state tax deduction for contributions. As long as you make withdrawals only to pay for qualified higher education expenses, you won’t pay income tax when you put the money to use. Qualifying expenses typically include books, tuition, mandatory fees, room and board and any necessary equipment. The result must be reported as income on the beneficiary’s or the account owner’s federal income tax return, Schedule 1 Form 1040, line 8, or Form 1040NR, line 21.

If your niece’s parents don’t have an account for her in your state, you can open one for her yourself. There’s no limit to the number of 529 accounts that people can have for one student, and the accounts don’t need to be in the state where the student lives. Form 1098-T can be misleading because it does not provide a complete list of 529 plan qualified expenses.

Contributions to a QTP can’t be deducted on your federal tax return. However, some states allow a deduction for contributions. No tax is due on a distribution that is used to pay qualified education expenses. The beneficiary generally doesn’t have to include any of the earnings from a QTP in their income, as long as the distribution doesn’t exceed their education expenses.

How to report a taxable 529 plan distribution on federal income tax returns

If it is a Maryland 529 plan through T Rowe Price () then you can deduct up to $2,500 per account holder, per beneficiary for each the Maryland investment plan and the Maryland prepaid tuition plan. It is NOT per investment account per beneficiary (like Virginia). If your state is one of those states, we’ll prompt you to enter your 529 contributions when you get to the credits and deductions portion of your state taxes. Qualified Tuition Programs, also called 529 plans or QTPs, are programs that allow you to save up for or prepay a student’s qualified higher education or K-12 expenses. You need to coordinate with the student and/or his parent, if he is a dependent, in filing your taxes.

• For federal income tax purposes, QTPs generally function like a Roth IRA.
• If the distribution is subject to the 10% penalty tax, the additional tax must be reported on Schedule 2 (Form 1040), line 6, or Form 1040NR, line 57.
• If you are willing to pay taxes and penalties, you can even reclaim the balance of the account at any time without your beneficiary’s permission.
• Subject to the options available in your specific plan, you can choose where to invest the money in the account.

The earnings portion of a non-qualified withdrawal is subject to income tax and a 10% penalty. The owner of a 529 plan can choose where and when to make distributions from the account, change beneficiaries, and even reclaim the balance of the account, subject to taxes and penalties. My understanding is that I need to pay taxes on the earnings portion of the 13,500, but not the 10% penalty. Otherwise, none of the rest of the distributions are taxed. Be sure that you have entered the correct section in order to report contributions to the VA 529 plans.