COVID-19 refund? Learn the basics of recontributing to your my529 account
Due to the COVID-19 pandemic, you or your beneficiary may have received a refund for tuition, fees, room and board or other qualified higher education expenses. If your student’s eligible educational institution issued you a refund, here are a few things to know about recontributing the funds to your my529 account.
To avoid tax penalties, the recontribution must:
- Occur within 60 days of the refund date
- Not exceed the refunded amount
- Be deposited into a 529 account for the same beneficiary
If account owners do not recontribute the funds to a 529 account or otherwise use the refunded 529 funds for qualified higher education expenses of the beneficiary, the refund will be considered part of a nonqualified withdrawal, and it will be subject to state and federal income taxes and tax penalties. Utah taxpayers must add back the amount withdrawn (to the extent it was deducted or used in calculating the Utah my529 credit on their current or a previously filed Utah tax return) as income on their Utah state income tax form for the taxable year the nonqualified withdrawal is made.
As with any qualified withdrawal from your 529 account, it is important to keep receipts and documentation for the refund and subsequent recontribution.
Use my529 funds for remote learning
If your beneficiary’s summer or fall semester includes remote learning, my529 funds can still support qualified higher education expenses such as:
- Related equipment
- Internet access
The beneficiary must use the equipment and services while they are enrolled at an eligible educational institution.
See the Program Description for details.