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I had a Texas Tomorrow Fund account for my son. Due to going…

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Hello. I had a...

Hello. I had a Texas Tomorrow Fund account for my son. Due to going to junior college and us paying out of pocket for that and only using the Tomorrow Fund when he went to the university, he was able to graduate with funds remaining. I understand I can request the balance in the account be paid back out to me, the purchased. Will I have tax issues around this?

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

No, not that I can think of. Thank you

Submitted: 26 days ago.Category: Tax
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Answered in 34 minutes by:
3/28/2018
Tax Professional: Lev, Tax Advisor replied 26 days ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,697
Experience: Taxes, Immigration, Labor Relations
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For distribution NOT used for qualified educational expenses - there will be tax liability.

Your original contribution will be distributed tax free - as it was never deducted.

Earnings will be taxable - and reported as ordinary income.

In additional - these earnings will be subject to 10% penalty.

Under some circumstances - you may leave the money in the fund and change the beneficiary.

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