joshuabarksatlc s
Level 10
10-05-2021
11:17 AM
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Surprise?
If you're surprised, here is another one for you:
You put $20K into a 529 Plan, it grew to $100K. Gain = 80K
You cashed out all $100K, paid tuition for $60K. Paid dorm fee for $40K. Sob sob, your spouse makes a lot of money and you two don't get the education credit. (And sob, sob, Junior got a 1.4 GPA, but that was another story.)
How much was taxable for the $100K of 529 draw? $80K? $0? Somewhere in between?
You had $100K of qualified education expenses, didn't you?
$0 taxable. Right?
Now, "surprise!!" You use the TAX FREE 529 growth to QUALIFY FOR the tax free treatment of the draw? Circular tax logic? Did you know the $0 answer? Are you now "surprised"?
I come here for kudos and IRonMaN's jokes.