You must report the Form 1099-Q on your federal tax return, but will also have to report your child's qualified education expenses to avoid any additional tax or penalty as a result of the distribution.
Enter the 2017 Form 1099-Q in the "Coverdell ESA and 529 qualified tuition programs" interview found under Federal Taxes > Wages and Income > Less Common Income > Other Miscellaneous Income. The interview will ask, among other things, how much you received and if you used the money for qualified education expenses.
You must then complete the Expenses and Scholarships (Form 1098-T) interview found under Federal Income > Deductions and Credits > Education.
Your answers to these two interviews will determine how much additional tax, if any, you may owe.
