Coverdell ESA Distributions or Qualified Tuition Programs (QTP)

Qualified Tuition Programs (QTPs) are different from Coverdell Education Savings Accounts (ESAs). QTPs include state (529 plans) and private plans. With QTPs, ownership remains with the contributor rather than passing to the designated beneficiary.

In other words, a taxpayer can own the QTP, have distributions made to them, and report 1099-Q data on their own return, even though the distribution was for the benefit of a dependent. 

Distributions from Coverdell ESAs on Form 1099-Q should be reported on the designated beneficiary's tax return. 

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

  1. From within your TaxAct® return (Online or Desktop), click Federal. 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. Click New Copy of Form 1099-Q (Desktop users click Add) to create a new copy of the form or click Review to review a form already created. The program will proceed with the interview questions for you to enter or review the appropriate information

You may want to refer to IRS Publication 970 Tax Benefits for Education or the IRS Instructions for Form 1099-Q for further information on Coverdell ESAs.