Form 1099-Q

Form 1099-Q


Tax Slayer entry:

Federal Section > Income > Other Income > Payments from Qualified Education Programs (Form 1099-Q)

  • Data on the 1099-Q is not highly reliable as an indicator of what expenses were paid and by whom.
  • It may be advantageous to allow some of the scholarship funds to be taxable income, especially if the student is the taxpayer (or spouse if filing jointly).
  • If the amount paid using Educational Savings Accounts (Coverdell ESA, 529 plans, early IRA distributions or savings bonds) is greater than expenses or used for non-education expenses, it is OUT OF SCOPE.
    • Note that the use of these funds may be used for some things that are not qualified expenses for a particular tax benefit (American Opportunity Credit, Lifetime Learning Credit, or Tuition and Fees deduction).
    • ⚠ CAUTION : The definition of what is covered by 529 plans was changed by the Tax Cut and Jobs Act of 2017. 529 plans are no longer just for college but also can be used for public, private, and religious elementary and secondary schools. However, Colorado tax law remains unchanged and the Colorado CollegeInvest 529 plans can only be used for qualified higher education expenses. Any other use, including K-12 tuition expenses, are considered non-qualified withdrawals and subject to penalties.
  • You may find the Education Calculator helpful.