Audited over Scholarshare 529 withdrawals?

vballmom
Thu, 08 Oct 2009 16:46:17 +0000

Was the withdrawal in 2007 used to pay qualified expenses due in 2007? The year of the withdrawal and the year of the expense needs to match up exactly. You can’t pay a bill due in January by withdrawing from a 529 the December before.

If you’re ok there, then the IRS shouldn’t be dinging you for back taxes.

I believe the withdrawals will be reported to the IRS regardless (your 529 plan administrator doesn’t know the timing of your QHEE) but there should be no taxes due.

Good luck and let us know what happens.