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Tax Free College Savings

 
 
SMF
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      01-24-2006, 04:20 AM
Will we receive a 1099-INT for disbursements from tax-free
college savings plans? Will it be reported somewhere on the
return? In all instances it won't all end up tax free if not
enough expenses were paid.

Thanks

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Phil Marti
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      01-24-2006, 11:05 PM
"SMF" <(E-Mail Removed)> wrote:

> Will we receive a 1099-INT for disbursements from tax-free
> college savings plans? Will it be reported somewhere on the
> return? In all instances it won't all end up tax free if not
> enough expenses were paid.


You'll receive a 1099-Q. See IRS Publication 970 for how to
calculate the taxable portion and how to report.

--
Phil Marti
Clarksburg, MD

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<< and does NOT constitute legal OR professional advice. >>
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<< Copyright (2006) - All rights reserved. >>
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Herb Smith
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      01-25-2006, 12:06 AM
SMF wrote:

> Will we receive a 1099-INT for disbursements from tax-free
> college savings plans? Will it be reported somewhere on the
> return? In all instances it won't all end up tax free if not
> enough expenses were paid.


Such disbursements are only tax free if used for their
intended purpose (eligible educational expenses), so I would
assume that a 1099-INT or 1099-DIV form would be issued by
the plan custodian. It will be your responsibility to show
that the funds were actually spent on such educational
expenses. The school should send you a 1098-T, which details
the qualifying expenses paid.

Only the portion (if any) NOT used for educational expenses
will show on your return, and be taxed at ordinary tax
rates.

<< ================================================== ===== >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
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