Andrea entered into a § 529 qualified tuition program for the benefit of her daughter, Joanna. Andrea contributed $15,000 to the fund. The fund balance had accumulated to $25,000 by the time Joanna was ready to enter college. However, Joanna received a scholarship that paid for her tuition, fees, books, supplies, and room and board. So Andrea withdrew the funds from the § 529 plan and bought Joanna a new car.
a. What are the tax consequences to Andrea of
withdrawing the funds?
Andrea includes 10,000 in her gross income and Joanna includes
_____________?
b. Assume instead that Joanna's scholarship did not cover her room and board, which cost $7,500 per academic year. During the current year, $7,500 of the fund balance was used to pay for Joanna's room and board. The remaining amount was left in the § 529 plan to cover her room and board for future academic years.
What are the tax consequences to Andrea and to Joanna of using
the $7,500 to pay for the room and board?
Andrea includes ________?
in her gross income and Joanna includes ________?
Get Answers For Free
Most questions answered within 1 hours.