joshuabarksatlcs
Level 10

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.