529 Account distributions and completing tax forms

notrichenough
Mon, 14 Mar 2011 21:08:58 +0000

with no tax due. does she actually need to file at all?



From [Publication 501 (2010), Exemptions, Standard Deduction, and Filing Information](http://www.irs.gov/publications/p501/ar02.html#en_US_2010_publink1000220703:)

You must file a return if any of the following apply.


Your unearned income was more than $950.
Your earned income was more than $5,700.
Your gross income was more than the larger of —
1. $950, or
2. Your earned income (up to $5,400) plus $300.


or from table 3:

You had net earnings from self-employment of at least $400. (See Schedule SE (Form 1040) and its instructions.)

I would imagine that any taxable scholarships count as unearned income. I don’t think the QTP earnings would be taxable if used for qualified expenses, but if it is taxable, this would also be unearned income. Since it is over the $950 limit, your D will have to file.