529 - timing of withdrawals

[Anonymous]

Do qualifying withdrawals have to be made in the same calendar year in which the expenses are incurred? In other words, can we still make a withdrawal for last fall's books and supplies?

[Anonymous]

My understanding is yes it has to be spent in the same calendar year it’s withdrawn

[Anonymous]

I figured, thanks.

[Anonymous]

I must be doing something wrong, because somehow I wound up having my withdrawals being posted as income when I did my Federal taxes. (Because I received them, not my daughter. Because they were reimbursing me for University bills I had paid. )

She has several scholarships, which are also complicated. But I actually think I paid more taxes last year because of 529 deductions. I used electronic software and just answered questions honestly. Wah!!!

[Anonymous]

Anonymous wrote:I must be doing something wrong, because somehow I wound up having my withdrawals being posted as income when I did my Federal taxes. (Because I received them, not my daughter. Because they were reimbursing me for University bills I had paid. )

She has several scholarships, which are also complicated. But I actually think I paid more taxes last year because of 529 deductions. I used electronic software and just answered questions honestly. Wah!!!

On the tax software I use (TurboTax), the withdrawals appear as income, with capitol gains. But that is all offset by the tuition paid with those funds.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I must be doing something wrong, because somehow I wound up having my withdrawals being posted as income when I did my Federal taxes. (Because I received them, not my daughter. Because they were reimbursing me for University bills I had paid. )

She has several scholarships, which are also complicated. But I actually think I paid more taxes last year because of 529 deductions. I used electronic software and just answered questions honestly. Wah!!!

On the tax software I use (TurboTax), the withdrawals appear as income, with capitol gains. But that is all offset by the tuition paid with those funds.

DC is a Frosh so we are new to 529 withdrawals and I guess I'll see.... but I have the 529 mail the check directly to the school for the exact amount of the bill... so hopefully avoid the income/capital gains mess ....

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I must be doing something wrong, because somehow I wound up having my withdrawals being posted as income when I did my Federal taxes. (Because I received them, not my daughter. Because they were reimbursing me for University bills I had paid. )

She has several scholarships, which are also complicated. But I actually think I paid more taxes last year because of 529 deductions. I used electronic software and just answered questions honestly. Wah!!!

On the tax software I use (TurboTax), the withdrawals appear as income, with capitol gains. But that is all offset by the tuition paid with those funds.

DC is a Frosh so we are new to 529 withdrawals and I guess I'll see.... but I have the 529 mail the check directly to the school for the exact amount of the bill... so hopefully avoid the income/capital gains mess ....

That's fine but whether you send it directly to the school or to yourself as a reimbursement, you'll still receive the IRS form 1099-Q reporting the amount of the distribution.

Here is TurboTax's explanation:
https://turbotax.intuit.com/tax-tips/college-and-education/what-is-irs-form-1099-q/L7MAdcKz5

Key part: "If the distribution doesn’t exceed the amount of the student's qualifying expenses, then you don't have to report any of the distribution as income on your tax return. If the distribution exceeds these expenses, then you must report the earnings on the excess as "other income" on your tax return."