You have to allocate both the principal and earnings ot the 529 plan and adjust for several factors in order to calculate the qualified education expense. I'm attaching a worksheet that was part of a NY NATP workshop on this topic that illustrates the factors involved.
Mel
__._,_.___
From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of bobva@aol.com
Sent: Tuesday, November 18, 2008 10:53 AM
To: taxchat@yahoogroups.com
Subject: [taxchat] 1099-Q EARNINGS
I have a client who had a distribution of $18,946 on a 1099-Q of which the earnings were $4,552. Her educational expenses were $3,100. She would then have income of $1,452. It appears the $1,452 is also subject to a 10% penalty? Is that correct?,___
IRS Circular 230 Disclosure: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.
Your email settings: Individual Email|Traditional
Change settings via the Web (Yahoo! ID required)
Change settings via email: Switch delivery to Daily Digest | Switch to Fully Featured
Visit Your Group | Yahoo! Groups Terms of Use | Unsubscribe
Change settings via the Web (Yahoo! ID required)
Change settings via email: Switch delivery to Daily Digest | Switch to Fully Featured
Visit Your Group | Yahoo! Groups Terms of Use | Unsubscribe
__,_._,___
