1099-Q

[bstaxes]

Client brings in 1099-Q with box 1 (gross distribution) 6000, box 2 (earnings) -4000, box 3 (basis) 10000. He has 5 of these. I need some help. I never saw this form before and am not sure what to do with it. ATX does not have this form either. Did some research but came up empty handed. How do I handle it? It was not used for education, he took the money to pay last years taxes.

Thanks for any help or suggestions.

[Pacun]

It seems that he contributed $10,000 and he lost money on the stock market. No income to report but maybe a loss, regardless of what he did with the money.

Since that money was invested after taxes, he shouldn't have to pay taxes again.

[bstaxes]

Thanks for the help but don't I have to show it on the return?

[Dale in IN]

Client brings in 1099-Q with box 1 (gross distribution) 6000, box 2 (earnings) -4000, box 3 (basis) 10000. He has 5 of these. I need some help. I never saw this form before and am not sure what to do with it. ATX does not have this form either. Did some research but came up empty handed. How do I handle it? It was not used for education, he took the money to pay last years taxes.

Thanks for any help or suggestions.

bstaxe:

Your 1099 Q is for a distribution from a Qualified Tuition Program or and Education Savings account. In your case it looks like the distribution was used for other purposes rather than education. You take the amount of your distribution * the basis/over the value at the years end That = your basis ditribution that is not taxable. The remainder is your taxable amount. and if you have a loss as it looks like y ou do it goes to Sch A subject to the 2%excess of AGI. Information from the TAXBOOK page 12-5 or it can be found in Pub 970.

Dale