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April 8, 2022
Question

Coverdell Earnings - withhold taxes

  • April 8, 2022
  • 1 reply
  • 0 views

Hi Experts,

 

I had a distribution from the Coverdell account due to excess in contribution in 2021.  I was told by the brokerage company that they couldn't withhold federal and state taxes on the earnings for Coverdell accounts.   They couldn't explain why.  Any idea?

 

Thank you very much for the assistance!

    1 reply

    Hal_Al
    Employee
    April 8, 2022

    There's no place on IRS form 1099-Q to report withholding.

     

    https://www.irs.gov/pub/irs-pdf/f1099q.pdf

    MNYLAuthor
    April 8, 2022

    Thank you!  So on my 2022 tax return, I would need to pay federal and state taxes for the earnings shown on 1099Q, correct?  For the earnings, would I need to report on my 2021 tax return so I won't need to amend when I do taxes in 2022?

     

    Thank you so much!

    MNYLAuthor
    April 9, 2022

    Kindly advise, any insight on this?