Announcement

Collapse
No announcement yet.

taxable earnings on 529 distribution

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    taxable earnings on 529 distribution

    Grandparents (owners) had started a 529 plan many years ago. Grandchild beneficiary is now in college

    Parents of the dependent child qualify for the full AOC.
    ($11,168 tuition and fees) ($ 3,788 room & board) ($11,020 gross 529 distribution) ($ 4,000 to AOC)
    ($ 3,510 529 plan earnings) ($ 7,511 529 cost basis)

    $ 3,510 earnings x $ 10,956 AQEE / $ 11,020 distribution = $ 3,490 tax free 529 earnings ( $ 20 taxable 529 plan distribution earnings )

    Assuming I have calculated this correctly, TTB pp 12-6 seems to say under "who is taxed" that if the distribution is made directly to the school for the qualified tuition & fees, no one reports or gets taxed on the distribution's taxable earnings. Am I reading this right ?

    Thanks for comments

    #2
    had provided inaccurate AQEE

    Originally posted by RWG1950 View Post
    Grandparents (owners) had started a 529 plan many years ago. Grandchild beneficiary is now in college

    Parents of the dependent child qualify for the full AOC.
    ($11,168 tuition and fees) ($ 3,788 room & board) ($11,020 gross 529 distribution) ($ 4,000 to AOC)
    ($ 3,510 529 plan earnings) ($ 7,511 529 cost basis)

    $ 3,510 earnings x $ 10,956 AQEE / $ 11,020 distribution = $ 3,490 tax free 529 earnings ( $ 20 taxable 529 plan distribution earnings )

    Assuming I have calculated this correctly, TTB pp 12-6 seems to say under "who is taxed" that if the distribution is made directly to the school for the qualified tuition & fees, no one reports or gets taxed on the distribution's taxable earnings. Am I reading this right ?

    Thanks for comments
    assuming AQEE to be $ 7,168, taxable earnings should be $ 1,227 ?

    Comment

    Working...
    X