1099-Q: The Earnings are zero and the cost basis is zero

[throwawaygf]

Do I need to enterr the 1099-Q for a Coverdell ESA and if so, where tdo I get the Earnings and Basis?

[TomK2023]

Form 1099-Q reports distributions and benefits from Coverdell education savings accounts and 529 plans. It's reported on the tax return of the person whose Social Security number is on the form.

Follow the steps below enter your 1099-Q in TurboTax.

1. Open or continue your return.
2. Select Search, enter 1099-Q and select Jump to 1099-q.
   1. You can also go to Federal, then Deductions & Credits, then Education.
   2. Select Start or Revisit next to ESA and 529 qualified tuition programs (Form 1099-Q).
3. Follow the screens to enter your info.

[Hal_Al]

Q. Do I need to enter the 1099-Q for a Coverdell ESA?

A. No.

You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. You also cannot count expenses that were paid by tax free scholarships. You cannot double dip! 

References:

1. On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution." 

1. IRS Pub 970 states: “Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return”.

Q. If I do enter the 10990Q, where do I get the Earnings and Basis?

A. From your own records of contributions and distributions, usually  from account statements.