Payments From Qualified Education Programs (Under Sections 529 and 530)

2011

Department of the Treasury
Internal Revenue Service

Instructions for
Form 1099-Q
Section references are to the Internal Revenue Code unless
otherwise noted.

What’s New
Pilot program for truncating an individual’s identifying
number on paper payee statements has ended. Filers of
Form 1099-Q must show the recipient’s complete identifying
number on all copies of the form.

Reminder
In addition to these specific instructions, you should also use
the 2011 General Instructions for Certain Information
Returns (Forms 1097, 1098, 1099, 3921, 3922, 5498, and
W-2G). Those general instructions include information about
the following topics.
• Backup withholding.
• Electronic reporting requirements.
• Penalties.
• Who must file (nominee/middleman).
• When and where to file.
• Taxpayer identification numbers.
• Statements to recipients.
• Corrected and void returns.
• Other general topics.
You can get the general instructions at IRS.gov or by
calling 1-800-TAX-FORM (1-800-829-3676).

Specific Instructions
File Form 1099-Q, Payments From Qualified Education
Programs (Under Sections 529 and 530), if you (a) are an
officer or an employee, or the designee of an officer or
employee, having control of a program established by a
state or eligible educational institution; and (b) made a
distribution from a qualified tuition program (QTP). A trustee
of a Coverdell education savings account (ESA) must file
Form 1099-Q to report distributions made from Coverdell
ESAs.
Do not file Form 1099-Q for a change in the name of the
designated beneficiary on a QTP account if the new
beneficiary is a member of the former beneficiary’s family.
For a Coverdell ESA, the new beneficiary must be a
member of the designated beneficiary’s family and be under
age 30 (except beneficiaries with special needs).
Family members of the designated beneficiary include the
beneficiary’s spouse. Also included are the beneficiary’s
children, stepchildren, foster children, and their
descendants; siblings and their children; parents, their
siblings, and ancestors; stepparents; in-laws; the spouse of
any of the foregoing; and any first cousin of the designated
beneficiary.

Statements to Recipients
If you are required to file Form 1099-Q, you also must
provide a statement to the recipient. Furnish a copy of Form
1099-Q or an acceptable substitute statement to each
recipient. See part M in the 2011 General Instructions for
Certain Information Returns.

Payer’s Name and Federal Identification
Number
QTP. For the payer’s/trustee’s name and federal
identification number, enter the name and employer
identification number (EIN) of the QTP. For a program
established and maintained by a state that uses the EIN of
the state, enter the name of the state on the first name line
and the name of the program on the second name line.
Coverdell ESA. Enter the name and EIN of the trustee.

Recipient’s Name and Social Security
Number (SSN)
QTP. List the designated beneficiary as the recipient only if
the distribution is made (a) directly to the designated
beneficiary, or (b) to an eligible educational institution for the
benefit of the designated beneficiary. Otherwise, list the
account owner as the recipient of the distribution. Enter the
SSN for the applicable recipient.
Coverdell ESA. Enter the name and SSN of the
designated beneficiary as the recipient.

Account Number
The account number is required if you have multiple
accounts for a recipient for whom you are filing more than
one Form 1099-Q. Additionally, the IRS encourages you to
designate an account number for all Forms 1099-Q that you
file. See part L in the 2011 General Instructions for Certain
Information Returns.

Box 1. Gross Distribution
Gross distributions from a QTP, whether in cash or in kind,
include amounts for tuition credits or certificates, payment
vouchers, tuition waivers, or other similar items. Gross
distributions also include a refund to the account owner or
the designated beneficiary, or to the beneficiary upon death
or disability. For more information on reporting distributions,
see Proposed Regulations section 1.529-4.
Gross distributions from a Coverdell ESA include
amounts for a refund, a payment upon death or disability, or
a withdrawal of excess contributions plus earnings.
If earnings and basis are not reported for Coverdell
ESA distributions, leave boxes 2 and 3 blank. Do not
CAUTION
enter zero. Instead, you must report the fair market
value (FMV) as of the end of the year in the blank box below
boxes 5 and 6. Label the amount “FMV.” See Notice
2003-53, 2003-33 I.R.B. 362, available at www.irs.gov/irb/
2003-33_IRB/ar15.html, for more reporting requirements.

!

Box 2. Earnings
To determine the earnings or (loss) on the gross distribution
reported in box 1, use the earnings ratio described in
Proposed Regulations section 1.529-3 and Notice 2001-81.
You can find Notice 2001-81 on page 617 of Internal
Revenue Bulletin 2001-52 at www.irs.gov/pub/irs-irbs/
irb01-52.pdf.
Enter the earnings in box 2. If there is a loss and this is
not the final year for distributions from the account or there

Cat. No. 32260M

are no earnings, enter zero in box 2. Enter a loss in box 2
only if this is the final year for distributions from the account.
Earnings are not subject to backup withholding.
If you are reporting a distribution from a Coverdell ESA
that includes a returned contribution plus earnings, you
should file two Forms 1099-Q — one to report the returned
contribution plus earnings, the other to report the distribution
of the other part of the account.
You should file a separate Form 1099-Q for any
trustee-to-trustee transfer.
For Coverdell ESAs, if you are not reporting earnings,
see the Caution on page 1.

institutions or check the “State” box if the distribution is from
a QTP established by a state. Otherwise, check the
“Coverdell ESA” box.

Box 6. Designated Beneficiary Checkbox
Check the box if the recipient is not the designated
beneficiary under a qualified tuition program or a Coverdell
ESA (see section 529(e)(1)).

Distribution Codes
For 2011, you may, but are not required to, include one of
the following distribution codes in the blank box below boxes
5 and 6. You may abbreviate as needed. For example, for
distribution code 1, you may enter “distr. code 1.”

For Coverdell ESAs, if you are reporting earnings on
a distribution of excess contributions, use the
method under Regulations section 1.408-11 for
calculating the net income attributable to IRA contributions
that are distributed as a returned contribution.
If the amount in box 2 includes earnings on excess
contributions, enter distribution code 2 or 3 (as applicable) in
the blank box below boxes 5 and 6. See Notice 2003-53 for
more information.
TIP

Distribution Code

Use this code for...

1 – Distributions

Distributions (including
transfers) to the recipient and
any direct payments to a
qualified educational facility.
However, use code 2 or 3 for
withdrawals of excess
contributions.

2 – Excess contributions plus
earnings taxable in 2011

Withdrawals of excess
Coverdell ESA contributions
and earnings unless code 3
applies.

3 – Excess contributions plus
earnings taxable in 2010

Withdrawals of excess
contributions from a Coverdell
ESA. Advise payees, at the time
the distribution is made, that the
earnings are taxable in the year
in which the excess
contributions were made.

4 – Disability

Distributions you made after the
recipient was disabled (see
section 72(m)(7)).

5 – Death

Payments to a decedent’s
beneficiary, including an estate.

6 – Prohibited transaction

Prohibited transactions. See
sections 408(e)(2) and
408(e)(4) for similar rules that
apply to a Coverdell ESA.

Box 3. Basis
For QTPs and Coverdell ESAs, if you can determine basis,
enter in box 3 the basis included in the gross distribution
reported in box 1. The amount in box 3 must equal box 1
minus box 2.
TIP

For determining basis of a Coverdell ESA, you may
rely on Notice 2001-81.

Box 4. Trustee-to-Trustee Transfer
Checkbox
Check this box if the distribution was made directly
(trustee-to-trustee transfer) from one QTP to another. For a
Coverdell ESA, check this box if the distribution was made
directly to another Coverdell ESA or to a QTP.
In a trustee-to-trustee transfer between qualified
education programs, the distributing program must provide
you with a statement reporting the earnings portion of the
distribution within 30 days of the distribution or by January
10th, whichever is earlier. You must properly account for this
in computing the earnings or (loss) reported in box 2 and the
basis reported in box 3.
TIP

If you do not have records showing that a gross
distribution from a Coverdell ESA made in 2011 was
a trustee-to-trustee transfer, leave box 4 blank.

Box 5. Checkbox
Check the “Private” box if the distribution is from a QTP
established by one or more private eligible educational

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Instructions for Form 1099-Q (2011)