Lucho Posted February 13, 2011 Report Posted February 13, 2011 Taxpayer withdraw the whole balance from a ESA account (close to $1000.00) but did not use the money for tuition or anything related for education purpose; there is no earning reported in Bx. 2 of 1099-Q, just $xxx.xx in box 1 and the distribution code is #1 She opened the plan 7-8 years ago. According to what I read in Pub. 970 the whole amount is taxable (even though the contribution was an after tax money)or I am wrong. Any help will be appreciated. Lucho Quote
kcjenkins Posted February 14, 2011 Report Posted February 14, 2011 Box 1 is just the total distribution, box 2 is the taxable portion. If just recovering their contributions, it's not taxable, in fact if it is for less than the original contributions, they may have a deductible loss. Nontaxable distributions from CESAs and QTPs, including rollovers, are not required to be reported on your income tax return. See Pub. 970 for more information. Quote
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