Audited over Scholarshare 529 withdrawals?

kluge
Thu, 08 Oct 2009 16:11:24 +0000

I’m curious if this is happening to anyone else. I received a notice from IRS saying I owed back taxes from 2007 based on my withdrawals that year from the Scholarshare 529 plans I had for my two sons. All of my withdrawals were “qualified” - that is, the money went for room and board for the students, in an amount less than the official “cost of attendance” figures the University uses.

I’m not clear why Scholarshare reported this to IRS as income. other than the fact that I changed to a different 529 plan last year. Has anyone else had the same thing happen?