If you contributed to the 529 plan, you will be able to claim a subtraction from income. If you withdrew money from your 529 plan, you may have to add the withdrawal back to your income if it was not used for educational purposes.
What is the 529 plan?
Its main purpose is to help families contend with the future high costs of their children’s or grandchildren’s college or vocational education
What are the qualifications?
Qualifying expenses include tuition, fees, room, board, books, equipment and supplies required for attendance, according to the IRS guidelines.
What about carryovers?
Investment options may be changed, tax-free, twice during any calendar year. Future allocations can be changed on an unlimited basis.
What if I don’t use it for education expenses?
Earnings on non-qualified distributions are taxable as ordinary income and may also be subject to a 10% federal income tax penalty and may also have state tax implications.
Program Entry for 529 distributions not used for education expenses:
- State Section (edit)
- Additions to Income
- Enter Withdrawals from a WV Prepaid Tuition/Smart529 plan NOT used for qualifying expenses (reports on Schedule M, line 55)
Program Entry for 529 contributions:
- State Section (edit)
- Subtractions from Income
- Contributions to the WV Prepaid Tuition Trust Fund (reports on Schedule M, line 37)