529 Account distributions and completing tax forms

lindz126
Mon, 14 Mar 2011 14:42:19 +0000

I am trying to make sense of this. my d’s QTP distribution did have earnings, but were all used for qualified education expenses. can’t tell if she fits the exception to the 10% additional tax. After entering all the info into Taxact it indicates it as — amount not subject to 10% additional tax, but then instructs you to determine if this is right. which is where I became confused…

Education Program Payments - Exception to 10% Additional Tax

Generally, if you receive a taxable distribution from a Coverdell ESA or a qualified tuition program (QTP), you must also pay a 10% additional tax (figured on Form 5329) on the amount included in income. However, an exception to the 10% additional tax may apply to all, or part of this distribution.
Currently $273.00 of this distribution is included in income and may be subject to the additional tax. Enter or confirm the portion of this distribution, if any, that is not subject to the 10% additional tax. If this does not apply, click Continue.

Amount not subject to the 10% additional tax:


The 10% additional tax does not apply to some distributions. Learn MoreForm 1099-Q - Exception to 10% Additional Tax
The 10% additional tax does not apply to distributions described in the following list:
Paid due to the death or disability of the designated beneficiary (distribution code 4 or 5)
Included in income because the designated beneficiary received a tax-free scholarship or fellowship, veterans’ educational assistance, employer-provided educational assistance or any other nontaxable (tax free) payments (other than gifts or inheritances) received as educational assistance. (This only applies to the extent the distribution is not more than the scholarship, allowance, or payment.)
Made on account of attendance at a military academy (restrictions apply)
Included in income only because the expenses were taken into account in determining the American opportunity or lifetime learning credits
Distributions from Coverdell ESAs made before June 1, 2011, of an excess 2010 contribution (and any earnings on it). The
distributed earnings must be included in gross income for the year in which the excess contribution was made (distribution code 2).