What if I took a 529 distribution and had tax-free educational assistance?
Normally, if you take a 529 distribution and you don't use those funds for education-related expenses, you'll be taxed on your earnings from the distribution and you'll be charged an additional 10% penalty.
However, if your 529 distribution was less than any tax-free educational assistance received by the 529 beneficiary, you may qualify for an exception for the 529 distribution 10% penalty (note, the earnings may still be taxable).
You'll need to enter the beneficiary's education-related expenses and tax-free educational assistance so FreeTaxUSA can calculate your taxable earnings and any 10% penalty that may apply.
However, if your 529 distribution was less than any tax-free educational assistance received by the 529 beneficiary, you may qualify for an exception for the 529 distribution 10% penalty (note, the earnings may still be taxable).
You'll need to enter the beneficiary's education-related expenses and tax-free educational assistance so FreeTaxUSA can calculate your taxable earnings and any 10% penalty that may apply.
