Qualified Tuition Programs (QTP or 529 Plan)

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, starting on page 57 for more information.

You will receive a Form 1099-Q Payments From Qualified Education Programs (Under Sections 529 and 530) 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:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Education in the Federal Quick Q&A Topics menu to expand, then click Education program payments (Form 1099-Q).
  3. Click + Add Form 1099-Q to create a new copy of the form or click Edit to review a form already created.
  4. Continue with the interview process to enter all of the appropriate information.

For more information, see Form 1099-Q Qualified Tuition Program Payments (Section 529 State Tuition Programs).

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.