1099-Q Gross Distribution Box 1

AGD
AGD Member Posts: 1 Newcomer
in Income

Hello I am trying to figure out how to claim income from 529 account. Money was withdrawn from this account and is not being used for education expenses. The form we received has a value for box 1, none for box 2, and an account number for box 3 which does not fit into the box on the Free Tax USA software. What do I do?

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Answers

  • Austyn
    Austyn FreeTaxUSA Agent Posts: 46 image
    Hi,

    It sounds like you're already in the right place! You can enter your 1099-Q by going to Income > Uncommon Income > Tuition Program Distributions (1099-Q).

    The software only requires you to enter amounts for Box 2 and Box 3 if you have values on your form. If you don't have an amount in Box 3, we'd recommend contacting the financial institution that manages your 529 plan to verify the amounts on your form.

    For non-qualified 529 withdrawals (funds not used for education expenses), the earnings portion shown in Box 2 is generally taxed as ordinary income and subject to a 10% federal penalty. The original contributions you made are not taxed again since those were made with after-tax dollars. Since Box 2 on your form is blank, there may be no taxable earnings to report. But we recommend verify this with the financial institution that manages your 529 plan.

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