Question 1

Are 529 plan distributions taxable?

Accepted Answer

Distributions used for qualified education expenses (tuition, fees, books, room and board) are tax-free. Earnings on nonqualified distributions are taxable and may be subject to a 10% penalty.

Question 2

What are qualified education expenses?

Accepted Answer

Tuition, fees, books, supplies, equipment, and room and board (if at least half-time enrollment). Up to $10,000 per year can be used for K-12 tuition from a 529 plan.

Question 3

How do I report Form 1099-Q?

Accepted Answer

If the distribution was fully used for qualified expenses, you may not need to report it. If there is a taxable portion, report the earnings as other income on your return.

Frequently Asked Questions