What is Form 1099-Q?
Form 1099-Q, (Payments from Qualified Education Programs) is an IRS (Internal Revenue Service) form sent to individuals who receive distributions from a Coverdell Education Savings Account (ESA) or a 529 plan. This form is used by taxpayers to fill out both federal and state tax returns if the distributions received are subjected to tax. A 529 plan is a state-run tax-advantaged account that allows you to set aside a fund for educational expenses. The institutions include elementary, secondary (middle school through high school), and postsecondary schools and the list of expenses includes among other things tuition, books, fees, room and board, and computer equipment.
Both ESAs and 529s are funded with money that has been taxed. If the taxpayer used all of the funds distributed for qualified education expenses, nothing needs to be reported on their federal income tax return. If you create one of the accounts to put someone other than yourself through school, that student has no control over the funds and is not responsible for any of the tax consequences.
1099-Q forms must be mailed to recipients by February 15 and e-filed with the IRS by March 31 each year.
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