Form 1099-Q is issued for distributions taken from a Qualified Education Program. If you received this form, the way that you use the distribution will determine whether the income is taxable or not. You must determine what part, if any, of the distribution is taxable before you know what to do with the form.
Is part of my distribution taxable?
You need to know how much you paid for qualifying tuition, related fees, books, and room and board so you can determine if any part of the distribution is taxable.
Which is larger, the gross distribution in Box 1 of your 1099-Q or the amount of qualifying expenses that you paid for tuition and related fees?
The Two Amounts are Equal: When both amounts are equal, your distribution is not taxable and you don’t need to report this on your return. Retain the Form 1099-Q for your records.
The Amount in Box 1 is Larger: A portion of the distribution is taxable. Click here.
The Amount of Qualifying Expenses is Larger: When the qualifying expenses are larger than the distribution, the distribution is not taxable. You don’t need to report the distribution on your return. Retain the Form 1099-Q for your records.
You may qualify to take a credit or deduction for your expenses. You should receive a 1098-T for these expenses. You should reduce the amount of expenses by the amount in Box 1 of your 1099-Q. The remaining amount is what was paid out-of-pocket and can be claimed as either a Tuition and Fees Deduction or an Education Credit.
If part of the distribution is taxable, you will need to enter that portion in your account as taxable income. To enter, go to:
- Federal Section
- Income (Select My Forms)
- Less Common Income
- Payments from Qualified Education Programs
For more information, see: