Guide to Tax Form 1099-QA

Form 10-99-QA is linked to your ABLE Account, a tax-advantaged saving option for people with disabilities. This form reports distributions from ABLE programs. Here’s what this form means and how to report it on your tax return, if necessary.

At a glance:

• Form 1099-QA reports distributions from ABLE programs.
• Distributions from ABLE accounts are tax-free when used for qualified disability expenses.
• You may owe taxes on your earnings if you use the distributions for nonqualified

What is a 1099-QA form?

The Internal Revenue Service (IRS) uses Form 1099-QA, Distributions from ABLE Accounts, to report distributions you took from an ABLE program during the tax year. This form is sent to you if you are the owner or beneficiary of an ABLE Account and have received distributions in the past year. ABLE accounts are state-sponsored savings accounts. They are designed to help individuals with disabilities save for qualified disability expenses (QDEs) without jeopardizing their eligibility for benefits like Social Security.

These accounts come with tax benefits — if you use the money for QDEs, you won’t owe any income tax. The IRS uses 1099-QA tax forms to track distributions and ensure that funds were used for the right expenses. The IRS uses 1099-QA tax forms to track distributions and ensure those funds were used for the right expenses.

IRS Form 1099-QA example

Here’s a look at what Form 1099-QA looks like:

On the left, you’ll see:

The payer’s information address and taxpayer identification number (TIN)

The recipient’s name (you) and account number

• The recipient’s TIN (often your Social Security number)
• Let’s break the rest of the form down box by box:
• Box 1: Gross distribution

– This shows the total amount distributed from your

• ABLE account during the calendar year. This box will show the earnings portion of your distribution. This box can be checked if funds were rolled over to another ABLE account within 60 days or if the account was moved to a different state’s ABLE Program. As long as funds were rolled over to another account within 60 days, they do not count as income.Box 5:
• ABLE account terminated in the calendar year reported – This box will be checked if you terminated your account during the year.
• Box 6: Recipient not designated beneficiary – If this box is checked, it means you are not the designated beneficiary of the ABLE account.Form 1099-QA instructionsNow that you’ve got the form in hand, what do you do with it? Here’s a step-by-step guide on how to prepare to file your own tax returns:
• Check accuracy– First, make sure all the information is correct on your 1099 QA form. Double-check your name, account number, and the amounts reported.Determine if it’s taxable – Review how you used the distribution. Did you use the distribution for qualified disability expenses such as housing, transportation or health-related costs? If you spent the money on non-qualified expenses, some of the earnings portion may be taxable and you’ll need to report it on your tax return. But if you used the funds for non-qualified expenses, some of the earnings portion may be taxable, and you’ll need to report it on your tax return.Report taxable income – If you have taxable distributions, make sure to include them on your tax return. This will ensure that you are in compliance with IRS requirements. You should keep the 1099-QA for your records, even if no part of your distribution was taxable. The 1099-QA form has some frequently asked questions. You won’t owe income taxes on those funds if you use all your ABLE distributions for QDEs.
• What counts as a qualified disability expense?According to the IRS, QDEs “include any expenses incurred at a time when the designated beneficiary is an eligible individual. The expenses must relate to blindness or disability, including expenses for maintaining or improving health, independence, or quality of life.” Some examples of qualified expenses include housing, education, transportation, health, prevention and wellness, employment training and support, assistive technology, and personal support services.Check out the ABLE National Resource Center website for more information on this topic.Will I get another form for ABLE contributions?
• Yes, you may also receive Form 5498-QA, which shows ABLE account contribution information. If you transfer your ABLE to a different state, it will appear in Box 4 of your tax return as a program rollover. This event will not be taxable if the funds are transferred to the new ABLE accounts within 60 days after the withdrawal from the original account. You should expect to get it around mid-March. TaxAct makes it easy to report your 1099QA form

. Here’s how you can easily add the information to your tax return when you e-file with us:

From within your TaxAct return (Online or Desktop), click

1. Federal. (On smaller devices, click in the top left corner of your screen, then click
2. Federal).
3. Click the Other Income
4. dropdown, then click Distributions from ABLE Accounts (Form 1099-QA)

as shown below:

3. Click

+Add Form 1099-QA

or

Edit

for a new version of the form. (Desktop program: click

Review

instead of

Edit

).

4. Continue with the interview process to enter your information.

The bottom line

If you received

Form 1099-QA this year, it’s important to understand how the information affects your taxes. Knowing whether your distributions

1. are taxable or tax-free will help ensure that your tax filing goes off without a hitch. TaxAct will make the process as simple and painless as possible. We’re here to help you through the process.

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