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.  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 in the TaxAct program, go to our Form 1099-Q - Entering Payments from Qualified Education Programs FAQ.

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