I have a client who took out $54,000 from the QTP for private high school tuition. His earnings are $6400. I can calculate the portion of earnings that will be income, but when it comes to the 5329, it is calculating the 10% on the $54,000 plus the portion of earnings, totaling $59,000. Does the $10,000 limit come in to play at all in the calculation of the 5329? Or is it just to calculate the portion of earnings that will be income? I appreciate any help. Thank you.
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Isn't only the earnings taxed 10% via 5329? Is all $54,000 for qualified education expenses? Did you designate all of it for qualified education? Check with your software to see if you need to check a box, use a drop-down, go to a different tab, or whatever to make sure the type of distribution, basis, and earnings are all recorded.
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