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 to Minnesota.
Do I need to pay this recapture tax?
You must pay this tax if both of the following 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.
What are 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.
How do I report this recapture tax?
Enter your additional tax on Form M1, Individual Income Tax, when you file your Minnesota income tax return.