What to do when received a 1099 Q form?

My relative took out money around Dec. 2008 to pay for her son's college tuition in 2009 from those education saving account. She received a 1099 Q form now, and her son will start college soon so the money have not been used for education purpose yet but will soon. Does she have to report the earnings from the 1099Q as interest income in her 2008 tax return?|||She didn't time it right. The distribution has to be in the same year as the education expense.





So the earnings are income AND are subject to a 10% penalty on form 5329.|||There is an excess distribution for 2008 since the distribution is more than the beneficiary鈥檚 adjusted qualified education expenses for the year. Page 49 of the IRS Pub 970 linked below describes figuring the taxable portion of this distribution. As the first paragraph describes the distribution is generally taxable to the beneficiary of the distribution if more than their adjusted qualified education expenses for the year.





Hope this helps determine the tax consequence of this distribution in a year that they were not used to pay expenses in that same year. Page 48 gives more info on the distributions also.








Laura H 鈥?H%26amp;R Block 鈥?Senior Tax Advisor 5


**This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided.|||It will be income: IRS Publication 970, Tax Benefits for Education. Generally, amounts distributed are included in gross income unless they are used to pay for qualified education expenses,





And, there is the penalty.