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 10% 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

Amending Taxes For Form 1099-DIV

Did you receive Form 1099-DIV after filing your taxes? Qualified dividends may affect your return. Learn more from the tax experts at H&R Block.

IRS Letter 6000 – Advanced Premium Tax Credit Recipients Non-Filer Letter

Learn more about IRS Letter 6000 and how to file an unfiled tax return with help from the tax experts at H&R Block.

Direct Debit Installment Agreement (DDIA)

Learn about IRS direct debit installment agreements (DDIA), which can get you a lower user fee. Get the facts from the tax experts at H&R Block.