529 FUND- IRS asking for taxes to be paid

Parents Forum
1

<p>We just rec'd notification from IRS concerning 2007 taxes and $$$ deducted from 529. They want us to pay taxes on the amounts deducted. </p>

<p>This was our sons freshman year (or Fall term anyway) and wasn't a large amount as he is on full tuition scholarship. We also withdrew for a college course cost that our then HS junior was taking at his HS. </p>

<p>I expect at some point we will get a letter form the IRS for the subsequent college years.</p>

<p>My husband is writing the IRS concerning this. We have some receipts, some not (books purchased on-line and campus bookstore though we may be able to find it on our debit/credit cards.) Obviously in the end we should not owe any taxes on this but it is an unexpected pain.</p>

<p>Is everyone getting these? How do you avoid this happening every year?</p>

2

<p>I don’t think you can avoid this. If you withdraw money from 529, you need receipts to prove that it was for eligible expenses.</p>

3

<p>Do they send this out every year to prove you needed the money for college expenses?</p>

4

<p>We only withdrew money one year, and had to sent the proof that it was for college expenses.</p>

5

<p>We have withdrawn 529 money for two years and have never been questioned on it. DS has no scholarships or FA, though.</p>

6

<p>We have withdrawn money three times for my son and have not been asked about it - yet. So long as you can show what it is spent on, and they are qualified education expenses, you should be fine.</p>

7

<p>Good luck. The IRS is not comprised of a fun bunch of people</p>

8

<p>We’ve had our 529 disbursements sent directly from the company to the school to avoid this. They cut the check instead of us withdrawing the money and then writing a check.</p>