The short answer

What it reportsEarnings from qualified tuition programs and Coverdell ESAs.
Amounts to reportNo minimum; every amount is reported
To the recipientJanuary 31
To the IRS, on paperFebruary 28
To the IRS, electronicallyMarch 31

If one arrives

Not taxable when it goes to qualified education expenses. The form reports the distribution regardless; matching it to expenses is your record.

The form is how a payer tells the IRS what it paid. Its absence is not permission — income you received is reportable whether or not a form covers it, and a threshold decides only who must file, never what you owe.

What it reports

Form 1099-Q reports money taken out of two kinds of account for education: a qualified tuition program, usually called a 529 plan, run by a state or by an eligible educational institution, and a Coverdell education savings account. Publication 970 describes a qualified tuition program as one "set up to allow you to either prepay or contribute to an account established for paying a student's qualified education expenses." Opening one is a choice, and no one is required to.

The program, or the account's trustee, files it for each year in which money was paid out. It reports every amount, whether it went to the student, to the account owner or straight to the school.

Who is the recipient

The form goes to the student only when the money went to the student or "to an eligible educational institution for the benefit of the designated beneficiary." In every other case it goes to the account owner, usually a parent. That matters, because the recipient is the one who reports it.

The boxes

Box What it holds
1 Gross distribution: everything paid out in the year
2 Earnings
3 Basis: the part that returns what was paid in
4a, 4b Direct transfers: to another plan or an ABLE account, or to a Roth IRA for the student
5a–5c Which kind of account: a private plan, a state plan or a Coverdell account
6 Checked if the recipient is not the student

Box 2 and box 3 always add up to box 1. How box 2 is worked out is not covered here.

Taxable or not

The rule turns on one comparison: the year's total withdrawals against the student's adjusted qualified education expenses, which are the qualified expenses less any tax-free help such as scholarships. When the withdrawals are not more than those expenses, none of the withdrawal is income. When they are more, part of it can be, and an additional tax may apply as well. Publication 970 has the worksheet.

Qualified expenses must be for enrollment or attendance at an eligible school. For college and other postsecondary study they include tuition and fees, required books, supplies and equipment, room and board for a student enrolled at least half-time, and a computer and related equipment used mainly by the student. Elementary and secondary school tuition counts too, up to an annual limit.

Keep the school's statements and your receipts. The form reports the withdrawal; the proof that it paid for education is yours.

Common questions

Is money taken out of a 529 plan taxable?
Not when it pays for qualified education expenses. Publication 970: the part that is a return of what was paid in "doesn't have to be included in income," and the rest generally is not included either "if the total distribution is less than or equal to" the adjusted qualified education expenses.
Who gets the form, the parent or the student?
It depends on where the money went. The student is the recipient if the payment was made to the student or directly to the school for the student; otherwise it is the account owner.
What counts as a qualified education expense?
For college or other postsecondary study: tuition and fees, and the books, supplies and equipment the school requires; room and board for a student enrolled at least half-time, within the school's allowance; and a computer and related equipment used mainly by the student. Elementary and secondary school tuition counts too, up to an annual limit.
I moved the account to another plan. Is that a withdrawal?
It is reported, but box 4a is checked to show it was a direct transfer from one plan to another, which is not a withdrawal for spending.
What if more came out than the expenses?
Then part of the withdrawal can be income, and Publication 970 adds that "you must also pay a 10% additional tax on the amount included in income," with exceptions such as the student's death, disability or a tax-free scholarship.

This page is for educational purposes only and does not constitute tax, legal, or financial advice. It covers United States federal reporting. Consult a qualified tax professional about your situation.

Official sources