IRS Form 1099-QA – If you’re managing finances for someone with a disability, you’ve likely encountered ABLE accounts—tax-advantaged savings plans designed to cover qualified disability expenses without affecting eligibility for government benefits. A key part of handling these accounts is IRS Form 1099-QA, which reports distributions. This comprehensive guide explains what Form 1099-QA is, how it works, its tax implications, and recent updates for 2026, helping you navigate tax season with confidence.
What Are ABLE Accounts?
ABLE accounts, established under the Achieving a Better Life Experience (ABLE) Act of 2014, are savings programs for individuals with disabilities. These 529A plans allow eligible people to save money for disability-related expenses while maintaining access to benefits like Supplemental Security Income (SSI) and Medicaid. Funds grow tax-free, and distributions for qualified expenses—such as housing, education, transportation, health care, and assistive technology—are not taxable.
Eligibility traditionally required the disability to onset before age 26, but the ABLE Age Adjustment Act changes this starting January 1, 2026, expanding it to before age 46. Contribution limits also rise: $20,000 annually in 2026, up from $19,000 in 2025. Employed beneficiaries can contribute additional amounts up to the federal poverty line (around $15,060 in the continental U.S. for 2026).
ABLE programs are state-run but available nationwide, with no impact on SSI if the balance stays under $100,000.
What Is IRS Form 1099-QA?
Form 1099-QA, titled “Distributions From ABLE Accounts,” is an information return used to report withdrawals from ABLE accounts to the IRS and the account beneficiary. It’s similar to Form 1099-Q for qualified tuition programs but specific to ABLE distributions.
The form documents gross distributions, earnings, and basis, helping determine if any portion is taxable. It’s issued for any calendar year with distributions or account terminations. Unlike contribution reports on Form 5498-QA, 1099-QA focuses on outflows.
Who Files and Receives Form 1099-QA?
The entity responsible for filing is the qualified ABLE program administrator—typically a state agency or its instrumentality. They must submit the form to the IRS by February 28 of the following year (e.g., February 28, 2027, for 2026 distributions).
Recipients, who are the designated beneficiaries or their representatives, receive Copy B by January 31. If you withdrew funds or closed an ABLE account, expect this form. It’s not filed by individuals; the program handles it.
Penalties for non-filing include up to $310 per form, with higher amounts for intentional disregard. Recent changes mandate e-filing for 10 or more returns starting in 2026, down from 250 previously.
Key Boxes on Form 1099-QA
The form includes standard payer and recipient information, plus specific boxes:
- Box 1: Gross Distribution – Total amount distributed from the ABLE account, including rollovers (even if not completed).
- Box 2: Earnings – Taxable earnings portion if distributions exceed qualified expenses.
- Box 3: Basis – Your contributions (non-taxable return of principal).
- Box 4: Program-to-Program Transfer – Checked if the distribution was a direct transfer to another ABLE account.
- Box 5: Check if ABLE Account Terminated – Indicates if the account closed during the year.
- Box 6: Check if Not the Designated Beneficiary – For distributions to someone other than the beneficiary.
Use these details to calculate taxable income on your return.
Tax Implications of ABLE Distributions
Distributions are tax-free when used for qualified disability expenses. Non-qualified withdrawals trigger income tax on earnings plus a 10% penalty. Report taxable amounts on Form 1040, Schedule 1, as “Other Income.”
Rollovers to another ABLE account or a 529 plan (limited to $20,000 in 2026) are non-taxable if completed within 60 days. Upon the beneficiary’s death, remaining funds may be subject to estate taxes or claims by Medicaid.
Recent Changes to ABLE Accounts and Form 1099-QA for 2026
As of 2026, key updates include:
- Expanded Eligibility: Disability onset now qualifies up to age 46, potentially benefiting millions more.
- Higher Contribution Limits: $20,000 base, plus employment add-ons.
- E-Filing Requirements: Mandatory for 10+ forms, with continuous-use forms and instructions.
- No Major Form Changes: The layout remains consistent, but always check IRS updates.
These changes make ABLE accounts more accessible, but consult the latest IRS guidance.
How to Report Form 1099-QA on Your Tax Return?
If all distributions were for qualified expenses, no reporting is needed. For taxable portions:
- Calculate earnings using Boxes 1-3.
- Add taxable amount to Form 1040, line 8 (Other Income).
- Report the 10% penalty on Schedule 2.
- Keep records of expenses for audits.
Software like TaxAct or TaxSlayer can import the form directly.
Conclusion
IRS Form 1099-QA plays a crucial role in ensuring compliant reporting of ABLE account distributions. With tax advantages and recent expansions in 2026, ABLE accounts offer powerful financial tools for those with disabilities. Download the latest form from the IRS website: Form 1099-QA PDF. Always consult a tax professional for personalized advice, as rules can evolve. For more details, visit the IRS ABLE accounts page or your state’s program site.