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A qualified tuition program (also known as a 529 plan) is a program set up to allow you to either prepay or contribute to an account established for paying a student's qualified education expenses at an eligible educational institution. Your state government or eligible educational institution can tell you whether or not they participate in a QTP.

An American opportunity or lifetime learning credit can be claimed in the same year the beneficiary takes a tax-free distribution from a QTP, as long as the same expenses are not used for both benefits. This means that after the beneficiary reduces qualified education expenses by tax-free educational assistance, he or she must further reduce them by the expenses taken into account in determining the credit.

See IRS Publication 970 Tax Benefits for Education, pages 56-60 for more information.

You will receive a Form 1099-Q from each of the state programs from which you received a QTP distribution in the tax year. 

To enter data from your Form 1099-Q Payments from Qualified Education Program:

  1. From within your TaxAct® return (Online or Desktop), click on the Federal tab. On smaller devices, click in the upper left-hand corner, then select Federal.
  2. Click Education to expand the category, then click Education program payments (Form 1099-Q)
  3. Click Add to create a new copy of the form or click Review to review a form already created. The program will proceed with the interview questions for you to enter or review the appropriate information

For more information, see State Tuition Programs.


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