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1099-Q

My son received a 1099-Q for his withdrawal from his Coverdell Account. The form only shows the distribution amount in box #1. Box #2(earnings) & Box #3 (basis) are empty. The amount of the distribution was the total amount of his tuition paid. Does he even need to enter the 1099-Q on his tax return. If he does how do I determine what these missing boxes should be.

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1 Best answer

Accepted Solutions
Hal_Al
Level 15

1099-Q

Q. Does he even need to enter the 1099-Q on his tax return?

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! 

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." 

 

Q. If he does, how do I determine what these missing boxes should be?

A. You calculate it from your own records.  Even though ESA custodians are not required to provide those numbers, they may be able to help.  But, you should not need those numbers unless you end up shifting some tuition to the tuition credit.  Room & board, books and computers  are also qualified expenses for an ESA distribution. 

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2 Replies
SantinoD
Expert Alumni

1099-Q

Yes, he will need to enter this on his tax return. But as long as the amount withdrawn was used for qualified school expenses, it is not taxable.

 

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

 

TurboTax Online

  1. Open or continue your return
  2. Search for 1099-Q and select the Jump to link
  3. Follow the screens to enter your info

If you are using TurboTax CD/Download, follow this link for instructions: TurboTax CD/Download

Hal_Al
Level 15

1099-Q

Q. Does he even need to enter the 1099-Q on his tax return?

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! 

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." 

 

Q. If he does, how do I determine what these missing boxes should be?

A. You calculate it from your own records.  Even though ESA custodians are not required to provide those numbers, they may be able to help.  But, you should not need those numbers unless you end up shifting some tuition to the tuition credit.  Room & board, books and computers  are also qualified expenses for an ESA distribution. 

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