Two documents you may need when you prepare your 2018 tax returns
It’s tax time, and you may find yourself wondering what documentation you need regarding your my529 account.
Federal Income Tax Return
If you withdrew or rolled over money from the accounts you owned in 2018, my529 is required to issue you IRS Form 1099-Q (Payments From Qualified Education Programs) by Jan. 31, 2019. If the withdrawal was sent to the account’s beneficiary or to an eligible educational institution, the beneficiary will receive Form 1099-Q.
The 1099-Q reports the total of all withdrawals you made in 2018. You do not need to report the portion that is earnings on your tax return if you used a withdrawal for qualified higher education expenses, such as tuition and fees; required books, supplies, and equipment; computers and internet access; and certain room and board costs. You can also withdraw up to $10,000 for K-12 tuition expenses at a public, private, or religious school for your beneficiary.
If you used a withdrawal to pay for nonqualified expenses, the earnings portion is subject to federal income tax as ordinary income. An additional 10 percent federal tax penalty on the earnings portion also may apply. Utah taxpayers must add back the amount of a nonqualified withdrawal as income on their Utah state income tax form for 2018. The taxpayer’s 1099-Q will list the earnings portion of a nonqualified withdrawal.
Utah Income Tax Return
If you are a Utah taxpayer who contributed to, withdrew from, or transferred money to your my529 account(s) in 2018, my529 will issue Form TC-675H (my529 Tax Statement for Contributions, Withdrawals and Transfers) to you by Jan. 31, 2019. Use TC-675H to claim Utah state income tax benefits and/or report nonqualified withdrawals, rollovers, and transfers on your 2018 Utah state income tax return.
my529 will also send a copy of your TC-675H to the Utah State Tax Commission. You do not need to attach your TC-675H to your Utah state income tax return. Keep your TC-675H to substantiate your claim for a tax credit if the Utah State Tax Commission audits you.
See the Program Description for more information about the TC-675H as it relates to the Uniform Gifts to Minors Act/Uniform Transfers to Minors Act (UGMA/UTMA) custodial accounts and accounts owned by Utah trusts or corporations.
If you do not receive your Form 1099-Q or your TC-675H by January 31, 2019, contact my529. The forms are also available online at my529.org through Account Access.