Form 1099-Q (2017) Tax Year Checklist
Purpose and Scope
Form 1099-Q reports distributions from Section 529 qualified tuition programs and Section 530 Coverdell education savings accounts during the tax year. Payers must report complete taxpayer identification numbers, including social security numbers, individual taxpayer identification numbers, adoption taxpayer identification numbers, or employer identification numbers, to the IRS on Copy A.
Copy B furnished to recipients may display only the last four digits of the taxpayer identification number per 2017 privacy rules established under Treasury Regulations section 301.6109-4.
Trustees must distinguish trustee-to-trustee transfers and identify non-designated beneficiaries using the appropriate checkboxes on the form to ensure accurate reporting and proper tax treatment.
Filing Requirements for Payers and Trustees
Officers, employees, or designees having control of a qualified tuition program established by a state or eligible educational institution must file Form 1099-Q when they make distributions from these programs. Trustees of Coverdell ESAs must file Form 1099-Q to report all distributions made from these accounts during the tax year.
Each payer must verify that the recipient's taxpayer identification numbers match IRS records before submitting the forms. The payer or trustee enters the name and employer identification number of the qualified tuition program or the trustee of the Coverdell ESA in the designated fields.
Recipient Identification Standards
For Qualified Tuition Programs: List the designated beneficiary as the recipient only if the distribution goes directly to the designated beneficiary or to an eligible educational institution for the benefit of the designated beneficiary. In all other cases, list the account owner as the recipient of the distribution. Enter the taxpayer identification number for the applicable recipient.
For Coverdell education savings accounts, you must enter the name of the designated beneficiary as the recipient on all forms reporting distributions. You must also include the taxpayer identification number of the designated beneficiary in the appropriate field on each Form 1099-Q.
Reporting Distribution Amounts
Enter the gross distribution in Box 1, which includes all distributions, whether in cash or in-kind. Gross distributions from qualified tuition programs include amounts for tuition credits or certificates, payment vouchers, tuition waivers, or similar items.
Gross distributions also include refunds to the account owner or designated beneficiary and payments made upon death or disability. For Coverdell ESAs, gross distributions include amounts for refunds, payments upon death or disability, or withdrawals of excess contributions plus earnings.
Earnings and Basis Reporting
Box 2 reports earnings on the distribution.
Calculate earnings or loss on the gross distribution using the earnings ratio described in Proposed Regulations section 1.529-3, Notice 2001-81, and Notice 2016-13. Enter the earnings in Box 2, or enter zero if there is a loss and this is not the final year for distributions, or if there are no earnings. Enter a loss in Box 2 only if this is the final year for distributions from the account.
Box 3 reports the basis of the distribution.
Enter the basis included in the gross distribution reported in Box 1 when you can determine this amount for the distribution. The amount you report in Box 3 must equal Box 1 minus Box 2 for both qualified tuition programs and Coverdell education savings accounts.
Alternative Reporting Method for Coverdell ESAs
For Coverdell ESA distributions other than earnings on excess contributions made during 2017, payers are not required to report amounts in Boxes 2 and 3. You may instead report the fair market value of the Coverdell ESA as of December 31, 2017, in the blank box below boxes 5 and 6.
Label this amount as fair market value when using this alternative reporting method. If you report distributions from a Coverdell ESA that include a returned contribution plus earnings, file two separate Forms 1099-Q to account for each component of the distribution properly.
Trustee-to-Trustee Transfer Documentation
Check Box 4 if the distribution was made directly as a trustee-to-trustee transfer from one qualified tuition program to another qualified tuition program. For a Coverdell ESA, check this box if the distribution was made directly to another Coverdell ESA or to a qualified tuition program.
If you do not have records showing that a gross distribution from a Coverdell ESA made in 2017 was a trustee-to-trustee transfer, leave Box 4 blank. File a separate Form 1099-Q for any trustee-to-trustee transfer to maintain clear documentation.
Program Type and Beneficiary Status
Check the appropriate box in Box 5 to identify whether the distribution came from a private qualified tuition program, a state qualified tuition program, or a Coverdell ESA. Check Box 6 only if the recipient is not the designated beneficiary under the qualified tuition program or Coverdell ESA. The designated beneficiary is the individual named in the document creating the trust or custodial account to receive the benefit of the funds.
Optional Distribution Codes
You may include one of the following distribution codes in the blank box below boxes 5 and 6, although reporting these codes is not required for 2017:
- Code 1: Distributions including transfers to the recipient and direct payments to qualified educational facilities
- Code 2: Withdrawals of excess Coverdell ESA contributions and earnings taxable in 2017
- Code 3: Withdrawals of excess contributions from a Coverdell ESA with earnings taxable in 2016
- Code 4: Distributions made after the recipient was disabled
- Code 5: Payments to a decedent's beneficiary, including an estate
- Code 6: Prohibited transactions as described in sections 408(e)(2) and 408(e)(4) for Coverdell ESAs
Filing Deadlines and Submission Requirements
Furnish Copy B to each recipient by January 31, 2018, to meet the required deadline for payee statements. File Copy A with the IRS by February 28, 2018, if filing on paper, or by April 2, 2018, if filing electronically through approved software.
Electronic filers must use software that generates files according to the technical specifications outlined in Publication 1220, and paper filers must submit Form 1096 as a transmittal document with all paper copies. Do not submit forms downloaded from the IRS website for paper filing because these forms cannot be scanned during processing, and use only official scannable copies or IRS-approved electronic filing software.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
