Form 1099-Q (Rev. November 2019) — (2019) Tax Year Checklist
Purpose and Scope
Form 1099-Q reports distributions and transfers from qualified tuition programs under Section 529 and Coverdell education savings accounts under Section 530. Payers and trustees must file this form for all distributions made during calendar year 2019, regardless of whether the distribution is taxable or nontaxable to the recipient.
Taxpayer Identification Requirements
You must verify the recipient's complete taxpayer identification number against program records before filing Form 1099-Q with the IRS. The recipient's TIN may be a social security number, individual taxpayer identification number, adoption taxpayer identification number, or employer identification number, based on the recipient's status.
The full TIN appears on Copy A filed with the IRS to ensure accurate reporting and processing by the Internal Revenue Service. Only the last four digits of the TIN appear on Copy B furnished to the recipient to protect sensitive taxpayer information while allowing the recipient to verify account identification.
Box 1: Gross Distribution Reporting
Enter the gross distribution amount in Box 1 for all payouts made during calendar year 2019, including both cash and in-kind distributions. Include in-kind distributions valued at fair market value, tuition credits, payment vouchers, tuition waivers, and similar items in the gross distribution calculation.
Box 2 and Box 3: Earnings and Basis Allocation
For qualified tuition program distributions, you must calculate earnings using the earnings ratio described in Proposed Regulations section 1.529-3, Notice 2001-81, and Notice 2016-13. Enter the earnings portion in Box 2 and the basis portion in Box 3, ensuring that Box 3 equals Box 1 minus Box 2. For Coverdell ESA distributions other than excess contributions, you may report the fair market value of the account as of December 31, 2019, in the blank space below boxes 5 and 6 instead of calculating separate earnings and basis amounts.
Label this amount "FMV" and leave boxes 2 and 3 blank without entering zero. Recipients must use the Coverdell ESA—Taxable Distributions and Basis worksheet in Publication 970 to calculate their own tax basis when payers use this optional reporting method.
Box 4: Trustee-to-Trustee Transfers
Check Box 4 if a trustee-to-trustee transfer occurred during 2019, and verify whether the transfer was QTP-to-QTP, CESA-to-CESA, CESA-to-QTP, or QTP-to-ABLE account. Each transfer category triggers different rollover holding-period requirements that affect the tax treatment of earnings distributed from the originating account. The 12-month same-beneficiary transfer rule applies to QTP rollovers and determines whether Box 2 earnings become taxable.
If more than one transfer or rollover with respect to the same beneficiary occurred within any 12 months, the earnings portion becomes taxable income to the recipient. Transfers from QTPs to ABLE accounts under Section 529(c)(3)(C)(i)(III) completed within 60 days are treated as nontaxable rollovers and represent an exception to this limitation.
Box 5: Program Type Identification
Mark Box 5 to identify the distribution source:
- Check "Private" if the distribution comes from a QTP established by one or more private eligible educational institutions.
- Check "State" if the distribution comes from a QTP established by a state.
- Check "Coverdell ESA" if the distribution comes from a Coverdell education savings account.
Box 6: Designated Beneficiary Status
Check Box 6 when the recipient is not the designated beneficiary under a QTP or Coverdell ESA. This designation triggers specific income recognition rules requiring the recipient to report applicable earnings as taxable income.
For Coverdell ESA distributions, identify any change in the designated beneficiary during 2019. If the new beneficiary is not a family member or is over age 30 without qualifying as a special needs beneficiary, check Box 6. Coverdell ESA assets must be distributed within 30 days after the beneficiary reaches age 30 unless the beneficiary has special needs, and any distribution is taxable to the extent it exceeds qualified education expenses.
Distribution Codes 1 Through 6
You may optionally report distribution codes in the blank box below boxes 5 and 6:
- Code 1 identifies distributions, including transfers to the recipient and direct payments to qualified educational facilities.
- Code 2 identifies withdrawals of excess Coverdell ESA contributions and earnings taxable in the current year.
- Code 3 identifies withdrawals of excess contributions from a Coverdell ESA where earnings are taxable in the year the excess contributions were made.
- Code 4 identifies disability distributions.
- Code 5 identifies death distributions.
- Code 6 identifies prohibited transactions.
Filing With the Internal Revenue Service
Prepare Copy A for IRS filing and attach it to Form 1096, which serves as the transmittal for information returns. Complete the form date field to show "2019" in the calendar year section to indicate the tax year for which distributions are being reported.
File by February 28, 2020, if submitting paper forms or by March 31, 2020, if filing electronically. Payers who file electronically do not submit Form 1096, as the transmittal requirement applies only to paper submissions sent to the IRS Submission Processing Center.
Furnishing Statements to Recipients
Furnish Copy B to recipients by January 31, 2020, or within the required extension period if filing occurs late in 2019. Form 1099-Q must be filed by payers for all distributions from QTPs and Coverdell ESAs, regardless of whether the distributions are taxable or nontaxable to the recipient.
Recipients are not required to report nontaxable distributions on their income tax returns, but must determine taxability for each distribution received. Any taxable amounts must be reported on Form 1040 or Form 1040-SR with reference to Publication 970 for calculation guidance and Form 5329 for penalty computations when applicable.
QTP to ABLE Account Rollovers
Distributions transferred to ABLE accounts within 60 days qualify as nontaxable rollovers under Section 529(c)(3)(C)(i)(III). This provision became effective for distributions made after December 22, 2017, and remains available through January 1, 2026.
The tax-free treatment applies when the account owner or designated beneficiary transfers funds to an ABLE account of the designated beneficiary or a family member of the designated beneficiary. Payers must verify the 60-day transfer requirement and properly document ABLE account rollovers to ensure recipients receive accurate tax reporting information.
Need Help With Your Tax Filing?
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
We offer:
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Call now before filing: (888) 260-9441
Fast transcript pull available
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.
