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

2014

Department of the Treasury
Internal Revenue Service

Instructions for
Form 1099-Q

Payments from Qualified Education Programs (Under Sections 529 and 530)
Section references are to the Internal Revenue Code unless
otherwise noted.

Future Developments

For the latest information about developments related to
Form 1099-Q and its instructions, such as legislation enacted
after they were published, go to www.irs.gov/form1099q.

What's New
Truncating recipient’s identification number on paper
payee statements. Pursuant to proposed regulations
§ 301.6109-4 (REG-148873-09), all filers of this form may
truncate a recipient’s identification number (social security
number (SSN), individual taxpayer identification number
(ITIN), or adoption taxpayer identification number (ATIN)) on
payee statements. See part M in the 2014 General
Instructions for Certain Information Returns.

Reminder

In addition to these specific instructions, you should also use
the 2014 General Instructions for Certain Information
Returns. Those general instructions include information
about the following topics.
Who must file (nominee/middleman).
When and where to file.
Electronic reporting requirements.
Corrected and void returns.
Statements to recipients.
Taxpayer identification numbers.
Backup withholding.
Penalties.
Other general topics.
You can get the general instructions at www.irs.gov/
form1099q or by calling 1-800-TAX-FORM
(1-800-829-3676).

Statements to Recipients

If you are required to file Form 1099-Q, you also must furnish
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 2014 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

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

Sep 10, 2013

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.

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 2014 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.

Cat. No. 32260M

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.

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

TIP

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.

Box 5. Checkbox

Check the “Private” box if the distribution is from a QTP
established by one or more private eligible educational
institutions or check the “State” box if the distribution is from
a QTP established by a state. Otherwise, check the
“Coverdell ESA” box.

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 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.

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)).

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.

Distribution Codes

For 2014, 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.”

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 above.
For Coverdell ESAs, if you are reporting earnings on
TIP 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 box below boxes 5 and 6 (below the shading). See
Notice 2003-53 for more information.

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

If you do not have records showing that a gross
distribution from a Coverdell ESA made in 2014 was
a trustee-to-trustee transfer, leave box 4 blank.

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.

-2-

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 2014

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

3–Excess contributions plus
earnings taxable in 2013

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.

Instructions for Form 1099-Q (2014)