This article will help you understand and enter Qualified Tuition Programs in Lacerte, ProConnect, and ProSeries.
Qualified Tuition Programs, also called 529 plans or QTPs, are programs that allow you to save up for or prepay a student's qualified higher education or K-12 expenses.
Tax treatment
For federal income tax purposes, QTPs generally function like a Roth IRA.
- You contribute after-tax dollars to the plan. The amount you contribute can't be deducted on your tax return.
- QTP earnings accumulate tax-free while they're in the account.
- When the beneficiary of the plan needs to pay for higher education, they get to withdraw money - both contributions and earnings - tax-free.
For more information on Qualified Tuition Programs, see IRS Pub. 970.
Entering distributions
No tax is due on a distribution that is used to pay qualified education expenses. The beneficiary generally doesn't have to include any of the earnings from a QTP in their income, as long as the distribution doesn't exceed their education expenses.
- QTP distributions are typically reported on Form 1099-Q.
- In Lacerte, enter distributions on Screen 14.3, Education Distributions.
- See here for more input details.
- In ProConnect, enter distributions on the Income > Education Distributions (1099-Q) screen.
- See here for more input details.
- In ProSeries, enter distributions on the 1099-Q Worksheet.
- See here for more input details.
Entering contributions
Contributions to a QTP can't be deducted on your federal tax return. However, some states allow a deduction for contributions.
For these states in Lacerte and ProConnect, contribution entries can be found on the appropriate State & Local input screen. For example:
- NY modifications,
- AZ modifications, or
- MD 529 plan.
For these states in ProSeries, contribution entries can be found as modifications on the appropriate State return, which you can navigate to by:
- Go to the File menu.
- From there, select Go to State/City.
- Select your state from the list and select OK.
