Education Savings Account Recapture Tax
If you own an education savings account (529 plan) and use a withdrawal for anything other than qualified higher education expenses, you may need to pay an additional recapture tax.
When You Owe the Recapture Tax
You must pay this tax if both of these apply:
- You claimed an Education Savings Account Contribution Subtraction or Credit for contributions to a 529 plan
A Minnesota distribution is taken from the 529 plan and used for nonqualified expenses
Nonqualified expenses are any expenses other than those to attend a post-secondary educational institution. Expenses used for K-12 education are considered nonqualified expenses.
Report the Recapture Tax
Enter your additional tax on Form M1, Individual Income Tax, when you file your Minnesota income tax return.