Tax Free College Savings

Discussion in 'Tax' started by SMF, Jan 24, 2006.

  1. SMF

    SMF Guest

    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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    << and does NOT constitute legal OR professional advice. >>
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    SMF, Jan 24, 2006
    #1
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  2. SMF

    Phil Marti Guest

    "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.


    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

    << ======================================================= >>
    << 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. >>
    << ======================================================= >>
     
    Phil Marti, Jan 24, 2006
    #2
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  3. SMF

    Herb Smith Guest

    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. >>
    << ======================================================= >>
     
    Herb Smith, Jan 25, 2006
    #3
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