Form 1099-QA: Distributions From ABLE Accounts

Form 1099-QA, titled "Distributions From ABLE Accounts," is an informational tax form used to report withdrawals and account closures from Achieving a Better Life Experience (ABLE) accounts. It's not a tax return itself, but rather a document sent by the program managing your ABLE account to you and the Internal Revenue Service (IRS).

Who Receives Form 1099-QA?

You, the designated beneficiary of an ABLE account, will receive a Form 1099-QA if there were any distributions made from your account during the previous calendar year. This includes withdrawals you made to cover qualified disability expenses (QDEs) or account closures.

What Information Does Form 1099-QA Include?

The form provides details about the ABLE account activity, including:

A. Your Name and Taxpayer Identification Number (TIN): This helps the IRS identify you for tax purposes.

B. State Agency Information: This section identifies the state agency that manages the ABLE program.

C. Account Number: This unique number identifies your specific ABLE account.

D. Total Distributions: This amount represents the total funds withdrawn from your ABLE account during the year.

E. Federal Taxable Amount: This is a crucial number used to determine the tax implications of your ABLE account distributions. Not all distributions are taxable, and this section clarifies the taxable portion.

How to Use Form 1099-QA?

  • You will receive a copy of Form 1099-QA from the state agency managing your ABLE program.
  • Use the information on the form to report your ABLE account distributions on your federal tax return.
  • The specific instructions for reporting these distributions will depend on the tax filing software you use or the tax professional you consult.

Important Notes About Form 1099-QA:

A. Not Required for Filing: Form 1099-QA is an informational document and doesn't need to be submitted with your tax return. However, you should retain it for your records.

B. Distributions and Tax Treatment: Generally, qualified disability expenses (QDEs) paid from your ABLE account are not considered taxable income. However, distributions not used for QDEs may be subject to federal income tax and a 10% penalty.

C. Multiple Forms: If you have multiple ABLE accounts, you may receive a separate Form 1099-QA for each one.