529 Plan was set up for sons college. 1099Q was issued under the mothers S/S number because money was needed for household expenses.Distribution was $62,000 Basis $47,745 with earnings of $14,255. I have found information stating that taxable amount can be reduced by qualified education expenses if the original beneficairy if the person receiving a 1098T.
The real kicker is that the mother is under 59 1/2 and subject to 10% on Form 5329 for $5131.00. $14,255 earnigs less 1098T qualified expenses of $9124. The most interesting part is that the earnings were capital gain and become ordinary income upon withdrawl. The same example as gain earned in an IRA becomes ordinary income on withdrawl. Who said tax prep is simple? Any one had this example and knows a way around the 10 % penalty?
The real kicker is that the mother is under 59 1/2 and subject to 10% on Form 5329 for $5131.00. $14,255 earnigs less 1098T qualified expenses of $9124. The most interesting part is that the earnings were capital gain and become ordinary income upon withdrawl. The same example as gain earned in an IRA becomes ordinary income on withdrawl. Who said tax prep is simple? Any one had this example and knows a way around the 10 % penalty?
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