Instructions for Recipient
Box 1.
Shows the gross distribution (including in-kind distributions) paidto 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.
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.
Box 4.
This box is checked if you transferred the amount in box 1 fromone education program to another education program in a
trustee-to-trustee transfer. However, this box may not be checked if the
transfer was made from a CESA.
Box 5.
Shows whether the gross distribution was from a QTP (private orstate) or from a CESA.
Box 3.
Shows your basis in the gross distribution reported in box 1.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, you may have a deductible loss. If you
itemize, claim any loss on the "Other expenses" line of Schedule A (Form
1040), Itemized Deductions.
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.
Caution:
For CESA distributions (other than earnings on excesscontributions) made during 2008, 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, 2008, in the blank box below
boxes 5 and 6. To figure your earnings and basis, use the
CoverdellESA—Taxable Distributions and Basis
worksheet in Pub. 970.Distribution codes.
For 2008, the payer/trustee may, but is not requiredto, 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 2008; 3—Excess
contributions plus earnings taxable in 2007; 4—Disability; 5—Death;
6—Prohibited transaction.
Note: Nontaxable distributions from CESAsand QTPs, including rollovers, are not required to be reported on your
income tax return. See Pub. 970 for more information.
Account number.
May show an account or other unique number thepayer has assigned to distinguish your account.
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
----- Original Message -----From: bobva@aol.comSent: 11/18/2008 10:53 AMSubject: [taxchat] 1099-Q EARNINGS
I have a client who had a distribution of $18,946 on a 1099-Q of which the earnings were $4,552. Her educational expenses were $3,100. She would then have income of $1,452. It appears the $1,452 is also subject to a 10% penalty? Is that correct?,___
President
Ways & Means, Inc.
845-562-6070
IRS Circular 230 Disclosure: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.
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