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I made a withdrawal. Where can I find my tax form?

If you have simply been contributing to your 529 plan account and have not been withdrawing any funds, then usually you do not have to report anything on your federal income tax return and should not expect to receive a tax form. Unlike contributions to an IRA, contributions to a 529 plan account are not deductible and therefore do not have to be reported on federal income tax returns, and any earnings in your 529 plan account are not reportable until the year they are withdrawn.

Withdrawals

If you make a withdrawal from your 529 plan account, you will be issued an IRS Form 1099-Q at the end of that year, which will indicate the amount that you withdrew from the account. This tax form will be provided to you directly from your 529 plan. If you used your 529 plan funds to pay for for qualified education expenses, you usually do not have to report anything on your federal income tax return. If you rolled your 529 plan funds into another 529 plan, you also do not have to report anything.

Backer does not issue any tax forms and does not provide tax advice. If you have any issues obtaining your tax forms from your 529 plan, please contact us at support@backer.com and we will be happy to assist you.

Contributions

The IRS considers contributions to a 529 plan to be a "gift," and the annual gift tax exemption is set at $15,000 for an individual, or $30,000 for a married couple filing a joint return, which means you can contribute up to that amount without having to file tax paperwork. That gift tax exemption is per beneficiary, so if you and your spouse have three children, you can jointly give $90,000 per year without gift tax consequences.

The IRS has also created a "superfunding" gift tax exemption for those who want to front-load their gift and contribute five years' worth of contributions all at once (so $75,000 for an individual, or $150,000 for a married couple). If you choose this option, you will need to complete a Form 709 gift tax return. This is not a form that you will be issued by your 529 plan, but is instead a form that you will need to fill out.

If your total gifts to an individual will be more than $15,000 this year, the excess amount will count against your lifetime estate and gift tax exemption and will have to be reported on Form 709 when you file your taxes. In 2020, individuals could gift up to $11.58 million without having to pay federal estate or gift tax.

Backer does not provide tax advice or assistance with filling out a Form 709 gift tax return. If you require tax advice, please consult a tax professional.

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