Specific Instructions for Form 1099-Q
File Form 1099-Q, Payments From Qualified Education Programs (Under Sections 529 and 530), if you 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 made a
distribution from a
qualified tuition program. 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 qualified tuition program account if the
new beneficiary is a
member of the former beneficiary's family. Also, 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).
A family member of the designated beneficiary includes their spouse, children and their descendants, stepchildren and their
descendants, siblings
and their children, parents and grandparents, stepparents, and their spouses. It also includes the first cousins of the designated
beneficiary.
If you are required to file Form 1099-Q, you must provide a statement to the recipient. Furnish a copy of Form 1099-Q or an
acceptable substitute
statement to each recipient. Also, see part M in the 2007 General Instructions for Forms 1099, 1098, 5498, and W-2G.
Payer's Name and Federal Identification Number
For the payer's/trustee's name and federal identification number, enter the name and employer identification number (EIN)
of the qualified tuition
program. 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.
For a Coverdell ESA, enter the name and EIN of
the trustee.
Recipient's Name and Social Security Number (SSN)
For a qualified tuition program, 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.
For a Coverdell ESA, enter the name and SSN of the designated beneficiary as the recipient.
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 2007 General Instructions
for Forms 1099,
1098, 5498, and W-2G.
Box 1. Gross Distribution
Gross distributions from a qualified tuition program,
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 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, which is
available on page 362 of Internal Revenue Bulletin 2003-33 at
www.irs.gov/pub/irs-irbs/irb03-33.pdf, for more reporting requirements.
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
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. Any 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 Q-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.
Enter the basis included in the gross distribution reported in box 1. The amount in box 3 must equal box 1 minus box 2.
For Coverdell ESAs, if you are not reporting basis, see the Caution on page Q-1.
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 qualified tuition program to another.
For a Coverdell
ESA, check this box if the distribution was made directly to another Coverdell ESA or a qualified tuition program.
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 you do not have records showing that a gross distribution from a Coverdell ESA made in 2007 was a trustee-to-trustee transfer,
leave box 4
blank.
Check the “Private” box if the distribution is from a qualified tuition program established by one or more private eligible educational
institutions or check the “State” box if the distribution is from a qualified tuition program 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)).
For 2007, 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.”