Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

I originally opened a 529 account with 3000.00 in 2002. I

I originally opened a 529...
I originally opened a 529 account with 3000.00 in 2002. I took it back out in 2003 leaving just the interest in it, about 300.00. I didn't know I should have paid a 10% penalty since I didn't use it for educational purposes, but for hardship. So my question is how do i pay that NOW, to avoid trouble AND do I owe regular taxes on it since it was the original amount I put in there?
Show More
Show Less
Ask Your Own Tax Question
Answered in 24 minutes by:
2/2/2009
Bill
Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3,153
Experience: EA, CEBS - 35 years experience providing financial advice
Verified
Did you receive Form 1099-Q for 2003? Were there amounts in boxes 1, 2, and 3? Has the IRS recently sent you an inquiry about this?
Ask Your Own Tax Question
Customer reply replied 8 years ago

I never received the 1099-Q. I just learned about it this month when i closed down the other 529 account for my daughter. No, I haven't heard from the IRS, but now that I know about the penalty and the potential taxes that should have been paid, I'm trying to take care of it before they DO try to get a hold of me about it.

Since the IRS has not already contacted you, it is unlikely that the they will contact you about this because it is 6 years ago and 529 distributions are only reported by a taxpayer on a tax return if the earnings are not used to pay college expenses. The only way that the IRS would presume that the earnings were not used for college is if they did not receive a copy of Form 1098-T from a college institution.

 

The 529 plan should have sent you a 1099-Q reporting the distribution, earnings, and basis amounts. If the account was worth $3,300 and the distribution was $3,000 then the basis portion of the distribution would be approximately $2,727 and the earnings would be approximately $273. Hence, you should have reported $273 as earnings on your return and Form 5329 should have been filed to report and pay the penalty tax of $27 (10% of the earnings).

 

If the check was made payable to your daughter, then the 1099-Q would have included her name and social security number as the recipient and the earnings would be taxable to her.

 

http://www.irs.gov/pub/irs-prior/f1099q--2003.pdf

 

http://www.irs.gov/pub/irs-prior/f5329--2003.pdf

 

 

Bill
Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3,153
Experience: EA, CEBS - 35 years experience providing financial advice
Verified
Bill and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Bill Your Own Question
Bill
Bill
Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3,153
3,153 Satisfied Customers
Experience: EA, CEBS - 35 years experience providing financial advice

Bill is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
I need to amend Form 1096/1099 to issue an additional 1099
I need to amend Form 1096/1099 to issue an additional 10991) Can I fill out form 1099 and 1096 with a black ink pen2) Does the total on Form 1096 only include the additional 1099 ( I had completed 109… read more
taxmanrog
taxmanrog
Master\u0027s Degree
697 satisfied customers
For form 1099-A what happens when the amount of the loan is
For form 1099-A what happens when the amount of the loan is less than the FMV of the property?… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
723 satisfied customers
Is Form 1099-R Box 9b distribution taxable? How long can I receive it?
I have a client who receives a 1099R each year. The benefit is a statement of survivor annuity paid. Each year the payer list the gross amount of distribution in box 1 and "unknown" in box 2 which is … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I need to complete form 5329 for an RMD due but not taken on
I need to complete form 5329 for an RMD due but not taken on an inherited IRA. I have the instructions but they aren't clear to me. I have entered the RMD amount of $1780 on line 52. I have entered th… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
If I get a 1099-Q and I am not the designated beneficiary,
If I get a 1099-Q and I am not the designated beneficiary, but I pay qualified education expenses for my dependent, is this 1099-Q taxable? Please reference an IRS code section or part of a publicatio… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
Want to see on irs website the correct way to report
want to see on irs website the correct way to report personal items i sold that show on my 1099k … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
723 satisfied customers
I am trying to reconstruct form 1099- from the Tax
I am trying to reconstruct form 1099-B from the Tax transcript since I did not receive the form, but I am not sure if it indicates "Short term covered" or "short term non-covered" based on the attachm… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
Filing my tax returns - did not receive a 1099 from aetna?
filing my tax returns - did not receive a 1099 from aetna? but i see it was put on return the last two years ( I've moved) don't even know what this is for but act asking for it … read more
abci168
abci168
Principal
27 satisfied customers
How do I report this? 1099 INT – Line 8 – Tax Exempt
How do I report this? 1099 INT – Line 8 – Tax Exempt Interest = 6,000 1099 INT – Line 13-Bond Premium Tax Exempt=1,500 1099 (Right Hand Side) Adjustments to Interest-Bond Premium Tax Exempt=1,100 Cash… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
Tax question - Form 1099, Line 8 Tax Exempt Interest
Tax question - Form 1099 , Line 8 Tax Exempt Interest reflects $500; OID 1099 is 0. Under heading Detail for tax exempt interest it says tax exempt interest is $300. Under Detail for Tax Exempt OID it… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
723 satisfied customers
Lev, where in the california return form 100s one report the
Good evening Lev, where in the california return form 100s one report the tax withholding from 1099k. Does this tax withholding flows through personal tax return or applies towards 100s estimated paym… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Form 5329. Taxpayer (his financial advisor) just realized
Form 5329.Hello,Taxpayer (his financial advisor) just realized that he should have taken his first RMD in 2016 tax year. They are making the required 2016 withdraw now and later in the year they will … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
Rules on Rollovers (Return of a non-taxed IRA Distribution).
Rules on Rollovers (Return of a non-taxed IRA Distribution). Over 70-1/2 years old) … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
Form 1099-DIv show there is a nondividend distribution on
Form 1099-DIv show there is a nondividend distribution on box 3. will this amount reduce the stock basis?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
IRS said the Roth IRA reported distribution was not held for
IRS said the Roth IRA reported distribution was not held for at least 5 years. It was. I was told I needed to send in a 8606 with my 2014 tax return. How do I go about doing that so I don't own the $1… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I filed my 2016 federal taxes and attached IRS Form 5329 and
I filed my 2016 federal taxes and attached IRS Form 5329 and asked for a waiver on the tax on an RMD. We received the RMD (in 2017) late through no fault of our own but because of the financial compan… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
1099-q? So - for 2015 I got a 1099-q with the 'corrected'
So - for 2015 I got a 1099-q with the 'corrected' box checked: they never sent an erroneous one prior. It had Gross Distribution of $0.00 and blank earnings and basis box … read more
Brian Michels
Brian Michels
Partner, CPA
Bachelors of Business Administration
154 satisfied customers
I have a form 1099-Q for a client that has the following
I have a form 1099-Q for a client that has the following items:Line 1 Gross Distribution $5,948.13 Line 2 Earnings $137.94 Line 3 Basis $5,810.19I also have a form 1098-T with education expenses of $1… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x