The money that you contribute to your Embark account is made with after-tax dollars, and any of your account earnings can be withdrawn and used to pay for qualified expenses tax-free.
What is IRS Form 1099-Q?
If you make a withdrawal from an Embark account, you will receive an IRS Form 1099-Q detailing all of the withdrawals you made from your account throughout the tax year.
When is IRS form 1099-Q available?
The plan administrator must send the 1099-Q by January 31, so you should receive the form no later than early February following the close of the tax year. You will receive it via mail or electronic delivery based on communications preferences.
Will I receive a tax form if I did not make a withdrawal from my account?
No. You will only receive a 1099-Q tax form if you withdrew funds from or closed your Embark account for that tax year.
Can I deposit my tax refund into an Embark account?
Yes. Any Oregon income tax refund that you earn can be deposited into an existing Embark account when you file your tax return.
Can I open an Embark account while filing my taxes?
Yes. The OR-529 tax form streamlines the process of opening an Embark account by connecting it to the tax filing process.
Are there tax penalties on withdrawals for non-qualified expenses?
Yes. If you make a withdrawal from your account for a non-qualified expense, the earnings tied to that distribution will be considered taxable income.
What is a taxable withdrawal?
There are certain circumstances, such as if your beneficiary receives a full ride scholarship, when you can make a taxable withdrawal.
Are there other tax credits I may qualify for?
Yes. Beyond the Oregon state income tax credit which you earn for contributing to an Embark account, the IRS offers several tax credits that can provide meaningful savings for families.