What is Form 1099-Q?
Distributions or benefits reported on Form 1099-Q, Payments from Qualified Education Programs, are received from a Coverdell education savings account (ESA) or a 529 plan (also called a qualified tuition program (QTP)).
The form is sent from the bank or administrator that manages the 529 or ESA. The owner of a 529 account (whoever set it up and makes contributions to it) gets the form and has control over the funds.
If the beneficiary is the owner’s dependent, the owner is responsible for potential tax consequences. But if the beneficiary files their own tax return, they’re responsible for potential tax consequences.
The distributions aren’t subject to federal tax if the funds are used to pay for qualified education expenses, you often don’t have to pay state tax either. However, distributions that exceed those expenses can be taxable.