This is for me, so therefore, not spent any time really researching yet. Just wondering, I have some money in a CFNC account that my son has not used (is 20) and my daughter probably won't need. I can definitely use the money. I know about the 10% penalty, if that is on earnings since inception, that is really not very much money. Is the penalty only on earnings, and does NC have a penalty? When I put money in, was able to deduct it from state income but no benefits on federal except not including earnings which is really not very much. I thought someone out there may have had experience with this, please don't waste anytime doing research, I can do that myself, SOMETIME!
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do the research...each state may be different.Believe nothing you have not personally researched and verified. -
529 fund distributions
So far as I know, NC follows the same rules as the IRS regarding qualified/non-qualified distributions of 529 funds and what is taxable. There should be no additional 10% penalties for NC.
Be careful on funds that originally went INTO a state's qualifying 529 program. The deduction was generally for the donor (just about anyone!) who could get a limited tax deduction/credit at the time of the gift so long as the gift fell within the guidelines *OF THE STATE* involved.
OTOH, any taxable income from disbursements of the fund assets is the responsibility of the owner of the fund ( = student , possibly parent claiming student?).
Two completely different issues!
As taxea suggested, you will need to do the background research on your own. . . Don't these distributions normally show up on a Form 1099-Q ? ? ? If so, following the numbers shown on the actual tax document (and your tax software's related Q&A option) should clear up things significantly.
FEComment
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Yes, I do get a 1099 Q for distributions, just haven't done it yet, wanted to know the tax implications BEFORE I do it---I will research--Thanks!!!Originally posted by FEDUKE404 View PostComment
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