Question

I received a 1099-Q in my name, but I used the funds to pay the tuition of my college-aged child. Are funds reported on Form 1099-Q considered taxable income?

Answer

The full amount of earnings as reported on Form 1099-Q is taxable if:

  • You’re the designated beneficiary.
  • You didn’t use the funds for your own qualified education expenses.

An early withdrawal penalty of **dEarlyWDPenalty** applies. The penalty is reported on Form 5329.

Before taking the withdrawal, you could change the beneficiary on the account to a member of the beneficiary’s family. Then, you can use it for their education expenses without tax or penalty.

To learn more, see Publication 970 at www.irs.gov.

 

Related Topics

Related Resources

IRS Letter 1912 – Follow-Up Letter Transmitting Examination Reports

Learn more about letter 1912, why you received it, and how to handle an IRS 1912 letter with help from the tax experts at H&R Block.

IRS Correspondence Examination

Need help with an IRS correspondence examination (commonly called a mail audit)? Read the IRS definition and get more insight from experts at H&R Block.

IRS Letter 178C – Amended Return Incomplete

Learn more about letter 178C, why you received it, and how to handle an IRS 178C letter with help from the tax experts at H&R Block.

Tax Return Mismatch

Get the facts from H&R Block about tax return mismatches, and what to do if you receive a CP2000 notice from the IRS about income missing from your return.