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You will receive a Form 1099-Q from each of the state programs from which you received a Qualified Tuition Program (QTP) distribution in the tax year. The amount of your gross distribution (box 1) shown on each form will be divided between your earnings (box 2) and your basis or return of investment (box 3). The part of a distribution representing the amount paid or contributed to a QTP does not have to be included in income. This is a return of the investment in the plan. The designated beneficiary generally does not have to include in income any earnings distributed from a QTP if the total distribution is less than or equal to adjusted qualified education expenses.

To enter data from your Form 1099-Q Payments from Qualified Education Program:

  1. From within your TaxAct® return (Online or Desktop), click on the Federal tab. On smaller devices, click in the upper left-hand corner, then select Federal.
  2. Click Education to expand the category, then click Education program payments (Form 1099-Q)
  3. The program will proceed with the interview questions for you to enter or review the appropriate information

IRS Publication 970 Tax Benefits for Education has additional information regarding the taxable and nontaxable distributions.

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