
Form 1099-Q and Instructions 
Payments From Qualified Education Programs
(Under Sections 529 and 530)
2012

Cat. No. 34283F

Department of the Treasury
Internal Revenue Service

In 1 File
Print pages 1-5 and 1-2

Provided by the IRS AMC
(Alternative Media Center)
2011

Contents

Section:  Page
Form 1099-Q:  1
Copy A--For IRS:  1
Copy B--For Recipient:  2
Instructions for Recipient:  3
Copy C--For Payer:  4
Instructions for Payer/Trustee:  5
2012 Instructions for Form 1099-Q:  1
What's New:  1
Reminders:  1
Specific Instructions:  1
Distribution Codes:  2

This electronic edition contains the entire text of the print editions.
<page 1>

Form 1099-Q
Payments From Qualified Education Programs
(Under Sections 529 and 530)
2012

Copy A
For Internal Revenue Service Center

File with Form 1096.
VOID --; CORRECTED --
PAYER'S/TRUSTEE'S name, street address, city, state, ZIP code, and telephone no.: ----
PAYER'S/TRUSTEE'S federal identification no.: ----
RECIPIENT'S social security number: ----
RECIPIENT'S name: ----
Street address (including apt. no.): ----
City, state, and ZIP code: ----
Account number (see instructions): ----

1. Gross distribution: $----
2. Earnings: $----
3. Basis: $----
4. Trustee-to-trustee transfer: --
5. Check one:
     Qualified tuition program: Private -- or State --
     Coverdell ESA: --
6. Check if the recipient is not the designated beneficiary: --

For Privacy Act and Paperwork Reduction Act Notice, see the 2012 General Instructions for Certain Information Returns.

<page 2>

Form 1099-Q
Payments From Qualified Education Programs
(Under Sections 529 and 530)
2012

Copy B
For Recipient
CORRECTED (if checked) --
PAYER'S/TRUSTEE'S name, street address, city, state, ZIP code, and telephone no.: ----
PAYER'S/TRUSTEE'S federal identification no.: ----
RECIPIENT'S social security number: ----
RECIPIENT'S name: ----
Street address (including apt. no.): ----
City, state, and ZIP code: ----
Account number (see instructions): ----

1. Gross distribution: $----
2. Earnings: $----
3. Basis: $----
4. Trustee-to-trustee transfer: --
5. Check one:
     Qualified tuition program: Private -- or State --
     Coverdell ESA: --
6. If this box is checked, the recipient is not the designated beneficiary: --
If the fair market value (FMV) is shown below, see Pub. 970, Tax Benefits for Education, for how to figure earnings:  $----

This is important tax information and is being furnished to the Internal Revenue Service.  If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported.

<page 3>

Instructions for Recipient

Recipient's identification number. For your protection, this form may show only the last four digits of your social security number (SSN), individual taxpayer identification number (ITIN), or adoption taxpayer identification number (ATIN). However, the issuer has reported your complete identification number to the IRS and, where applicable, to state and/or local governments.

Account number. May show an account or other unique number the payer has assigned to distinguish your account.

Box 1. Shows the gross distribution (including in-kind distributions) paid to you this year from a qualified tuition program (QTP), under section 529, or a Coverdell ESA (CESA), under section 530. This amount is the total of the amounts shown in box 2 and box 3. See Pub. 970 for more information.

Caution: For CESA distributions (other than earnings on excess contributions) made during 2012, the payer/trustee is not required to report amounts in boxes 2 and 3. Instead, the payer/trustee may report the fair market value of the CESA as of December 31, 2012, in the blank box below boxes 5 and 6. To figure your earnings and basis, use the Coverdell ESA--Taxable Distributions and Basis worksheet in Pub. 970.

Box 2. Shows the earnings part of the gross distribution shown in box 1. Generally, amounts distributed are included in income unless they are used to pay for qualified education expenses, transferred between trustees, or rolled over to another qualified education program within 60 days. Report taxable amounts as "Other Income" on Form 1040.

Under a QTP, the amount in box 2 is included in income if there has been (a) more than one transfer or rollover within any 12-month period with respect to the same beneficiary, or (b) a change in the designated beneficiary and the new designated beneficiary is not a family member.

Under a CESA, the amount in box 2 is included in income if there has been a change in the designated beneficiary and the new designated beneficiary is not a family member or is over age 30 (except for beneficiaries with special needs).

Also, an additional 10% tax may apply to part or all of any amount included in income from the CESA or QTP. See Form 5329 and your tax return instructions for more information.

If a final (total) distribution is made from your account and you have not recovered your contributions, see Pub. 970 to determine if you have a deductible loss and how to claim it.

Box 3. Shows your basis in the gross distribution reported in box 1.

Box 4. This box is checked if a trustee-to-trustee transfer was made from one QTP to another QTP, from one CESA to another CESA, or from a CESA to a QTP. However, in certain transfers from a CESA, the box will be blank.

Box 5. Shows whether the gross distribution was from a QTP (private or state) or from a CESA.

Box 6. The designated beneficiary is the individual named in the document creating the trust or custodial account to receive the benefit of the funds in the account.

Distribution codes. For 2012, the payer/trustee may, but is not required to, report (in the box below boxes 5 and 6) one of the following codes to identify the distribution you received: 1--Distributions (including transfers); 2--Excess contributions plus earnings taxable in 2012; 3--Excess contributions plus earnings taxable in 2011; 4--Disability; 5--Death; 6--Prohibited transaction. Note: Nontaxable distributions from CESAs and QTPs, including rollovers, are not required to be reported on your income tax return. See Pub. 970 for more information.

<page 4>

Form 1099-Q
Payments From Qualified Education Programs
(Under Sections 529 and 530)
2012

Copy C
For Payer
VOID --; CORRECTED --
PAYER'S/TRUSTEE'S name, street address, city, state, ZIP code, and telephone no.: ----
PAYER'S/TRUSTEE'S federal identification no.: ----
RECIPIENT'S social security number: ----
RECIPIENT'S name: ----
Street address (including apt. no.): ----
City, state, and ZIP code: ----
Account number (see instructions): ----

1. Gross distribution: $----
2. Earnings: $----
3. Basis: $----
4. Trustee-to-trustee transfer: --
5. Check one:
     Qualified tuition program: Private -- or State --
     Coverdell ESA: --
6. Check if the recipient is not the designated beneficiary: --

For Privacy Act and Paperwork Reduction Act Notice, see the 2012 General Instructions for Certain Information Returns.

<page 5>

Instructions for Payer/Trustee

General and specific form instructions are provided as separate products. The products you should use to complete Form 1099-Q are the 2012 General Instructions for Certain Information Returns and the 2012 Instructions for Form 1099-Q. A chart in the general instructions gives a quick guide to which form must be filed to report a particular payment. To order these instructions and additional forms, visit IRS.gov or call 1-800-TAX-FORM (1-800-829-3676).

Caution: Because paper forms are scanned during processing, you cannot file with the IRS Forms 1096, 1097, 1098, 1099, 3921, 3922, or 5498 that you download from the IRS website.

Due dates. Furnish Copy B of this form to the recipient by January 31, 2013.

File Copy A of this form with the IRS by February 28, 2013. If you file electronically, the due date is April 1, 2013. To file electronically, you must have software that generates a file according to the specifications in Pub. 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically. IRS does not provide a fill-in form option.

Need help? If you have questions about reporting on Form 1099-Q, call the information reporting customer service site toll free at 1-866-455-7438 or 304-263-8700 (not toll free). For TTY/TDD equipment, call 304-579-4827 (not toll free). The hours of operation are Monday through Friday from 8:30 a.m. to 4:30 p.m., Eastern time.

<page 1>

2012 Instructions for Form 1099-Q

Section references are to the Internal Revenue Code unless otherwise noted.

What's New

Truncating recipient's identification number on paper payee statements. Notice 2011-38 allows all filers of this form to truncate a recipient's identification number (social security number (SSN), individual taxpayer identification number (ITIN), or adoption taxpayer identification number (ATIN)) on paper payee statements for tax years 2011 and 2012. See part M in the 2012 General Instructions for Certain Information Returns.

Reminders

General Instructions. In addition to these specific instructions, you should also use the 2012 General Instructions for Certain Information Returns. Those general instructions include information about the following topics.
-- Backup withholding.
-- Electronic reporting requirements.
-- Penalties.
-- Who must file (nominee/middleman).
-- When and where to file.
-- Taxpayer identification numbers.
-- Statements to recipients.
-- Corrected and void returns.
-- Other general topics.

You can get the general instructions at IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676).

How to get the latest information. If there are changes to the 2012 tax law that affect Form 1099-Q, you will be able to find them at www.irs.gov/form1099q.

Specific Instructions

File Form 1099-Q, Payments From Qualified Education Programs (Under Sections 529 and 530), if you (a) 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 (b) made a distribution from a qualified tuition program (QTP). 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 QTP account if the new beneficiary is a member of the former beneficiary's family. 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).

Family members of the designated beneficiary include the beneficiary's spouse. Also included are the beneficiary's children, stepchildren, foster children, and their descendants; siblings and their children; parents, their siblings, and ancestors; stepparents; in-laws; the spouse of any of the foregoing; and any first cousin of the designated beneficiary.

Statements to Recipients

If you are required to file Form 1099-Q, you also must provide a statement to the recipient. Furnish a copy of Form 1099-Q or an acceptable substitute statement to each recipient. See part M in the 2012 General Instructions for Certain Information Returns.

Payer's Name and Federal Identification Number

QTP. For the payer's/trustee's name and federal identification number, enter the name and employer identification number (EIN) of the QTP. 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.

Coverdell ESA. Enter the name and EIN of the trustee.

Recipient's Name and Social Security Number (SSN)

QTP. 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.
Coverdell ESA. Enter the name and SSN of the designated beneficiary as the recipient.

Account Number

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 2012 General Instructions for Certain Information Returns.

Box 1. Gross Distribution

Gross distributions from a QTP, 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.

Caution: 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, 2003-33 I.R.B. 362, available at www.irs.gov/irb/2003-33_IRB/ar15.html, for more reporting requirements.

Box 2. Earnings

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.

<page 2>

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. 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 1.

TIP: 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.

Box 3. Basis

For QTPs and Coverdell ESAs, if you can determine basis, enter in box 3 the basis included in the gross distribution reported in box 1. The amount in box 3 must equal box 1 minus box 2.

TIP: 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 QTP to another. For a Coverdell ESA, check this box if the distribution was made directly to another Coverdell ESA or to a QTP.

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.

TIP: If you do not have records showing that a gross distribution from a Coverdell ESA made in 2012 was a trustee-to-trustee transfer, leave box 4 blank.

Box 5. Checkbox

Check the "Private" box if the distribution is from a QTP established by one or more private eligible educational institutions or check the "State" box if the distribution is from a QTP 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)).

Distribution Codes

For 2012, 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."

Note: In this table, columns follow each other in this order:  Distribution Code: Use this code for ...
1--Distributions: Distributions (including transfers) to the recipient and any direct payments to a qualified educational facility. However, use code 2 or 3 for withdrawals of excess contributions.
2--Excess contributions plus earnings taxable in 2012: Withdrawals of excess Coverdell ESA contributions and earnings unless Code 3 applies.
3--Excess contributions plus earnings taxable in 2011: Withdrawals of excess contributions from a Coverdell ESA. Advise payees, at the time the distribution is made, that the earnings are taxable in the year in which the excess contributions were made.
4--Disability: Distributions you made after the recipient was disabled (see section 72(m)(7)).
5--Death: Payments to a decedent's beneficiary, including an estate.
6--Prohibited transaction: Prohibited transactions. See sections 408(e)(2) and 408(e)(4) for similar rules that apply to a Coverdell ESA.

End of Form 1099-Q and Instructions
