U.S. · Tax forms
1099-Q box 3 basis, boxes and codes.
Boxes 1 to 6 and distribution codes 1 to 6 for 529 plan and Coverdell ESA withdrawals.
Form 1099-Q reports withdrawals from a 529 plan (qualified tuition program) or a Coverdell ESA. Box 1 is the gross distribution, box 2 is the earnings and box 3 is the basis (your contributions coming back), and box 3 must equal box 1 minus box 2. Only the earnings part can be taxable, and none of it is if the year’s adjusted qualified education expenses cover the distribution. Enter your box 2, box 1 and expenses below for an estimate.
Estimate taxable 529 earnings
Result
Form 1099-Q boxes and codes
| Box / code | Meaning | Where it goes (per the IRS instructions) |
|---|---|---|
| Box 1 | Gross distribution: Cash or in-kind distributions from a QTP, including tuition credits, vouchers and waivers, and refunds. For a Coverdell ESA it includes refunds, payments on death or disability and withdrawals of excess contributions plus earnings. | Compare with qualified expenses; Pub. 970 uses the total of all distributions for the year. |
| Box 2 | Earnings: Earnings (or loss) on the gross distribution using the earnings ratio. A loss is entered only in the final year of distributions; otherwise zero is entered. | Taxable earnings are included in income on Schedule 1 (Form 1040), line 8z, per Pub. 970. |
| Box 3 | Basis: The basis included in the gross distribution, when it can be determined. Box 3 must equal box 1 minus box 2. | Return of your contributions; not income. |
| Box 4a | Trustee-to-trustee transfer: Check if the money went directly from one QTP to another or to an ABLE account. For a Coverdell ESA, directly to another Coverdell ESA or a QTP. | Reported on a separate 1099-Q from other distributions. |
| Box 4b | QTP to Roth IRA transfer: Check if the money went directly from a QTP to a Roth IRA for the beneficiary. | A QTP-to-Roth rollover is included in box 10 of the Roth IRA’s Form 5498. |
| Box 5a, 5b, 5c | Distribution is from: 5a private QTP, 5b state QTP, 5c Coverdell ESA. | Identifies the type of account. |
| Box 6 | Designated beneficiary checkbox: Checked if the recipient is not the designated beneficiary under the QTP or Coverdell ESA. | The recipient is not the designated beneficiary. |
| Code 1 | Distributions: Distributions (including transfers) to the recipient and direct payments to a qualified educational facility, unless code 2 or 3 applies. | Normal distribution. |
| Code 2 | Excess contributions plus earnings taxable in current year: Withdrawals of excess Coverdell ESA contributions and earnings. | Coverdell ESA only. |
| Code 3 | Excess contributions plus earnings taxable in prior year: Withdrawals of excess contributions from a Coverdell ESA. Payees are advised the earnings are taxable in the year the excess was made. | Coverdell ESA only. |
| Code 4 | Disability: Distributions made after the recipient was disabled. | See section 72(m)(7). |
| Code 5 | Death: Payments to a decedent’s beneficiary, including an estate. | Distribution after death. |
| Code 6 | Prohibited transaction: Prohibited transactions, with similar rules for a Coverdell ESA. | See sections 408(e)(2) and 408(e)(4). |
Box 3 is your money coming back
The IRS instructions say that for QTPs and Coverdell ESAs, if the payer can determine basis, it goes in box 3 and the amount in box 3 must equal box 1 minus box 2. Pub. 970 describes box 3 as your basis, or return of investment, and says the gross distribution on each form is divided between box 2 earnings and box 3 basis. Only the earnings can be taxable. Distribution codes in box 7 are optional for the payer for the current year.
Worked example (Pub. 970 Example 1)
A student’s $8,300 of qualified expenses is reduced by a $3,100 tax-free scholarship, leaving $5,200 of adjusted qualified expenses. The 529 distribution was $5,300 and box 2 shows $950 of earnings. Tax-free earnings are $950 times $5,200 over $5,300, or about $932. Taxable earnings are $950 minus $932, which is about $18, reported on Schedule 1 line 8z. The calculator above runs the same steps.
Limits
The estimator covers a qualified tuition program distribution with a single set of expenses. Coverdell ESAs, an expense also used for an education credit, and additional tax are handled in Pub. 970 and are not modelled. The 1040 instructions add that an additional tax may apply to a taxable distribution from a Coverdell ESA or QTP, figured with the Instructions for Form 5329.
More form decoders
The AOTC and lifetime learning credit calculator and the 529 superfunding gift tax calculator cover the neighbouring questions.
Sources
- Instructions for Form 1099-Q: Specific Instructions: boxes 1 to 6 and distribution codes. Read November 2, 2026.
- Publication 970 (2025), Tax Benefits for Education: Chapter 7, Figuring the Taxable Portion of a Distribution, and Example 1. Read November 2, 2026.
- Instructions for Form 1040 (2025): Line 8z: taxable distributions from a Coverdell ESA or QTP. Read November 2, 2026.
IRS pages last reviewed April 30, 2026. Pub. 970 references are to the 2025 edition.
Frequently asked questions
What is box 3 on Form 1099-Q?
Box 3 is the basis included in the gross distribution, your contributions coming back. It must equal box 1 minus box 2 when the payer can determine it.
Is a 529 distribution taxable?
Only the earnings in box 2 can be taxable. Pub. 970 multiplies the earnings by adjusted qualified education expenses over total distributions and treats that part as tax free. The rest is included in income on Schedule 1 line 8z.
What does box 4b mean?
It means the money went by trustee-to-trustee transfer from a 529 plan to a Roth IRA for the beneficiary.
What do 1099-Q distribution codes mean?
Code 1 is a normal distribution, 2 and 3 are Coverdell excess contributions, 4 is disability, 5 is death and 6 is a prohibited transaction. The code is optional for the payer.
Who gets the 1099-Q for a 529 withdrawal?
The designated beneficiary is the recipient only if the money went to them, to the school for them or to their Roth IRA. Otherwise the account owner is listed.
Not tax advice
This page summarizes IRS instructions, mostly written for the people who prepare the form, and is not tax, legal or financial advice. The payer, a CPA or an enrolled agent can confirm what a box or code means for your return. Everything runs in your browser; nothing you enter is sent anywhere.