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

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

Complete Schedule M1529, Education Savings Account Contribution Credit or Subtraction.

Enter your additional tax on Form M1, Individual Income Tax, when you file your Minnesota income tax return.

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