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

IRS Notice CP15 – Notice of Penalty Charge

Learn more about notice CP15, why you received it, and how to handle the notice with help from the tax experts at H&R Block.

IRS Transcript

Learn about the types of IRS transcripts and how you can use them to view information about your IRS account, income sources, and tax return history.

IRS Letter 3289 – Notice of Determination Concerning Request for Innocent Spouse Relief

Did you receive IRS Letter 3289? Learn more about letter 3289 and how to handle it with help from the tax experts at H&R Block.