Yes. Most vocational, technical, and graduate schools are eligible educational institutions. Check the eligibility of a specific school online at Studentaid.gov/fafsa-app/FSCsearch or contact the school directly.
It’s not required to report withdrawals used for qualified higher education expenses on your federal tax return. Virginia529 will issue an IRS Form 1099-Q (Qualified Tuition Program Payments) each year in which a withdrawal is made:
- For withdrawals made payable to the student or a school, the 1099-Q is sent to the student.
- For withdrawals made payable to the account owner, the 1099-Q is sent to the account owner.
- Non-qualified withdrawals will incur a 10 percent penalty on the earnings portion of that non-qualified withdrawal and should be reported as income by the 1099-Q recipient.
The same qualified higher education expense may not qualify for more than one tax benefit (e.g. tax-free withdrawals AND a federal tax credit).
For more information, view the blog article 529 Plans and Your Tax Return, the 1099-Q Fact Sheet, or the Invest529 Withdrawal Guide.
If you are a Virginia taxpayer, non-qualified withdrawals may require the recapture of prior Virginia income tax deductions. If you live outside of Virginia, please check with your state’s tax department to determine your state’s treatment of income from another state’s qualified tuition program.
Find information about tax benefits for education including examples, in IRS Publication 970, also available by calling the IRS toll-free at 1-800-829-1040. Your tax consequences depend on your individual circumstances. You should consult a tax advisor regarding specific tax consequences of taking withdrawals from your Virginia529 account(s).
No, you will only receive a Form 1099-Q if you withdrew funds from or closed your Virginia529 account. Internal rollovers, investment option changes and transfers within Virginia529 will not generate a 1099-Q.
Account owners can access their Form 1099-Q in their online account at Virginia529.com.
If a withdrawal was made directly to a student or the student’s school, then the student will need to set up their online login at Virginia529.com to access their Form 1099-Q.
If funds were withdrawn from your Virginia529 account in 2022, tax documents providing the 2022 withdrawal information (IRS Form 1099-Q) will be posted online and mailed in January 2023.
If the withdrawal was paid directly to the student or to the student's school: the Form 1099-Q will be mailed to the student.
If the withdrawal was paid directly to the account owner: the Form 1099-Q will be mailed to the account owner.
To prevent delays in receiving your Form 1099-Q, you should log in to your Virginia529 account online at Virginia529.com and verify that your address and the student's address are up to date.
Any non-retirement investment or savings account may affect eligibility. For accounts owned by parents and dependent students, the Free Application for Federal Student Aid (FAFSA) assesses 529 assets at a maximum of 5.64 percent of the value when calculating the Expected Family Contribution (EFC) for financial aid eligibility. Accounts owned by other parties will impact eligibility differently. For more information, consult studentaid.gov or an educational financial aid advisor.
No. All Virginia529 accounts, including Prepaid529, can be used at any eligible educational institution around the country or the world, public or private! Remember, Prepaid529 contract benefits differ depending on how and where they are used. Please see the applicable Program Description for more information.