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

2017

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.

Reminder

In addition to these specific instructions, you should also use
the 2017 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 General
Intstructions for Certain Information Returns or www.irs.gov/
form1099q.

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.

Truncating recipient’s taxpayer identification number
on payee statements. Pursuant to Treasury Regulations
section 301.6109-4, all filers of this form may truncate a
recipient’s taxpayer identification number (social security
number (SSN), individual taxpayer identification number
(ITIN), adoption taxpayer identification number (ATIN), or
employer identification number (EIN)) on payee statements.
Truncation is not allowed on any documents the filer files with
the IRS. A payer’s/trustee's taxpayer identification number
may not be truncated on any form. See part J in the 2017
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 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 Taxpayer Identification
Number (TIN)
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
TIN for the applicable recipient.
Coverdell ESA. Enter the name and TIN of the designated
beneficiary as the recipient.

Account Number

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).

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 2017 General Instructions for Certain
Information Returns.

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.

Box 1. Gross Distribution

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 2017 General Instructions for Certain
Information Returns.
Sep 07, 2016

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.

!

If you do not have records showing that a gross

TIP distribution from a Coverdell ESA made in 2017 was

Box 2. Earnings

a trustee-to-trustee transfer, leave box 4 blank.

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, Notice 2001-81, and
Notice 2016-13. You can find Notice 2001-81 on page 617 of
Internal Revenue Bulletin 2001-52 at www.irs.gov/pub/irsirbs/irb01-52.pdf and Notice 2016-13 at www.irs.gov/irb/
2016-07_IRB/ar06.html.

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 2017, 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.

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 2017

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

3–Excess contributions plus
earnings taxable in 2016

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.
For determining basis of a Coverdell ESA, you may

TIP 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.

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Instructions for Form 1099-Q (2017)