To enter Form 1099-Q distributions in your account, go to:
- Federal Section
- Income -Select My Forms
- Less Common Income
- Payments from Qualified Education Programs Form 1099-Q
Form 1099-Q information is entered, and the program will calculate the taxable portion (if any) of the earnings included in the distribution. Please be sure to have the total that was paid for qualified education expenses on hand.
A taxpayer may establish, for a designated beneficiary, a Coverdell Education Savings Account (ESA) to finance the qualified education expenses, if the taxpayer's modified AGI is less than $110,000 ($220,000 if filing a joint return). Contributions are not deductible to a Coverdell ESA but amounts deposited, grow tax-free in the account until distributed.
How will this affect my return?
If the distribution and the qualified education expenses are equal to, generally none of your earnings will be taxable. Generally, the IRS will not tax the earnings if the distribution was spent wholly for education expenses.
If qualified education expenses exceed the distribution amount, the difference (excess) may be claimed as an education credit or tuition and fees adjustment.
If the distribution exceeds the qualified education expenses, the part of the distribution not used for qualified expenses will be taxable. The entire distribution will not be subject to tax, but a percentage of the earnings may be.