Co 529 K-12

Technical topics regarding tax preparation.
#1
Posts:
1018
Joined:
10-Jun-2019 4:20pm
Location:
WESTERN USA
New CO resident wants to take a $10,000 529 distribution for K-12 tuition. No prior CO returns or state 529 deduction.

Federal has K-12 qualifying education expenses. From my research CO does not conform. Do I just add the 1099-Q earnings portion to CO Form 104 line 6 as an another income addition?
 

#2
Posts:
1018
Joined:
10-Jun-2019 4:20pm
Location:
WESTERN USA
Any Colorado tax experts.

Thanks
 

#3
lckent  
Posts:
597
Joined:
21-Apr-2014 8:19pm
Location:
Colorado
I think it is unclear if the 1099-Q earning are reportable to Colorado. There is no specific adjustment I know of, however it makes sense that since the withdrawal is not used for qualifying expenses, as far as Colorado is concerned, that the income would be reported.

In addition, if a Colorado tax deduction was taken for a contribution to the plan, you would have to claim the withdrawal not spent on a qualified expense, such as K-12 tuition, as income. See Colorado publication FYI 44. Since your taxpayer has not taken a Colorado deduction for contributions, they will not have to report the principal distribution as income.
CPA, Retired
 

#4
Posts:
1018
Joined:
10-Jun-2019 4:20pm
Location:
WESTERN USA
Thanks, I had not thought about the CO contribution deduction adding principal to the taxable earnings( not my clients case now but could be in the future).
 

#5
mariaku  
Posts:
366
Joined:
11-Jul-2014 1:19pm
Location:
Oakland, CA
Also check if there is any early-distribution penalty CO imposes. I know CA does @ 2.5%.
 


Return to Taxation



Who is online

Users browsing this forum: beardenjv, Google [Bot], JoJoCPA, kyle242gt, NGeorgiaCPA, Nilodop, Permanently-Diff, rbynaker, TexasTaxCPA, Trailman423 and 135 guests