Question

We withdrew from an IRA for college expenses. However, the Form 1099-R, Box 7, shows Code 1, reporting no exception applies. Is it possible to get a refund of the amount withheld?

Answer

While an early-distribution penalty does apply when using an IRA to pay student loans, there is no penalty when IRA distributions are used to pay for current educational expenses.

Simply report the early-distribution amount from the IRA used for college expenses on Form 5329. Enter the amount on Line 2 and enter exception number “08.” Any withdrawals in excess of education expenses will be subject to the penalty

Related Topics

Related Resources

Understanding the ITIN Renewal Process

There’s a new IRS process for those who have an expired ITIN. Learn how to renew your ITIN number with instructions from the experts at H&R Block.

Tax Return Transcript

Read the IRS definition and get more insight about tax return transcripts from the tax experts at H&R Block.

Automated Underreporter Unit

The IRS automated underreporter (AUR) unit screens tax returns for missing income. Read the IRS definition and get more insight from the experts H&R Block.

What Is a Third Party Designee?

Do you want to appoint a third party designee on your tax return? Learn how to include an IRS third party designee with the tax experts at H&R Block.