Missing basis and earnings on 1099-Q form, worried about taxes on education expenses

You're dealing with a common but frustrating situation. When a 1099-Q has blank boxes for basis and earnings, the responsibility unfortunately falls on you as the account owner to track this information. T-Rowe Price isn't technically doing anything wrong here. While they're required to issue the 1099-Q showing the total distribution, they're not legally obligated to track or report the basis and earnings breakdown for Coverdell ESAs. This is different from some other investment vehicles. Getting all your statements is actually the right approach. You'll need to create a paper trail showing your contributions (basis) and how the account has grown (earnings). Keep a detailed spreadsheet of all contributions made to the account and when they were made - that's your basis. The difference between your total distribution and your basis is your earnings. When you file, you'll report only the taxable portion (earnings) that exceeds your qualified education expenses. Keep all your documentation in case of questions from the IRS. They will accept your calculations if you have the paperwork to back it up.

I went through a similar nightmare with my kid's Coverdell last year. The statements from T-Rowe were driving me crazy until I found this lifesaver tool at https://taxr.ai that helped me sort through all the documents and calculate my basis properly. I uploaded all my account statements and it identified my contributions vs earnings automatically. Saved me hours of spreadsheet work! The tool actually creates a tax-compliant worksheet showing how it calculated everything, which I printed and kept with my tax records in case of an audit. What surprised me was that it could separate qualified vs non-qualified expenses too, which was super helpful since my situation was similar to yours where I exceeded the qualified amount.

Just wanted to update after trying taxr.ai for my Coverdell ESA nightmare. Can't believe I was about to manually go through 8 years of statements! The tool identified all my contributions and calculated my basis in about 10 minutes. Turns out I had a much higher basis than I thought - I was actually on track to overpay my taxes by nearly $1,800 because I was being super conservative with my estimates. The best part was the detailed report it generated showing exactly how it reached those numbers. For anyone dealing with missing info on 1099-Q forms, this seriously saved my sanity and probably paid for itself many times over by getting the numbers right.

If you're still having trouble getting through to T-Rowe Price for complete information, you might want to try Claimyr (https://claimyr.com). I was in a similar situation and needed to talk to someone at the IRS about my 1099-Q reporting issues after my account provider was less than helpful. I tried calling the IRS directly multiple times but kept getting stuck in that endless phone tree hell. Claimyr got me connected to an actual IRS agent in about 20 minutes when I'd previously spent hours just trying to get through. They have this cool demo video showing how it works: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with confirmed that my calculated basis was acceptable as long as I had documentation to back it up. They actually gave me specific guidance on what records to keep in case of questions later.

I need to eat my words about Claimyr. After posting that skeptical comment, I was desperate enough to try it for my refund issue AND the 1099-Q question I had. Holy crap it actually worked. Got connected to an IRS agent in 31 minutes when I'd spent literally hours trying on my own. The agent confirmed exactly what others have said here - they will accept your calculated basis for the Coverdell as long as you have documentation supporting it. For anyone dealing with missing info on 1099-Q forms AND struggling to get IRS confirmation about how to handle it, this service is legit. Saved me a ton of stress during an already stressful tax season.

For future reference, one thing I've learned from dealing with Coverdell ESAs is to track everything yourself from day one. I keep a separate spreadsheet with all contributions, growth, and distributions. The IRS Publication 970 covers this in detail, but here's the simple version: contributions = basis, growth = earnings. When you take money out, it's proportional (if 30% of your account is earnings, then 30% of your distribution is earnings). You only pay taxes on earnings distributed that exceed qualified education expenses. So if you have $5000 in qualified expenses but distributed $6000 with $1500 being earnings, you'd only pay tax on $500 of earnings.

Wait so if TRP doesn't track the basis and earnings for you, how do they even know what to report to the IRS? Are they just sending the 1099-Q with the total distribution amount and leaving it to us to figure out the rest? Seems kinda lazy on their part!

This is such a common frustration with Coverdell ESAs! I went through the exact same thing last year with my daughter's account from a different provider. The blank boxes on the 1099-Q are incredibly stressful when you know you'll have taxable distributions. Here's what I learned from my tax preparer: the IRS absolutely will accept your calculations as long as you have proper documentation. Keep every single statement, contribution record, and withdrawal confirmation. Create a clear spreadsheet showing your methodology - date of contributions (your basis), account growth over time, and the proportional calculation for each distribution. One tip that helped me: when reviewing your statements, look for any fees that were deducted from the account. Those reduce your basis, so don't forget to account for them in your calculations. The good news is that once you get through this year's calculations, you'll have a solid system in place for tracking everything going forward. It's a pain now but will save you headaches later!

This thread has been incredibly helpful! I'm dealing with a similar situation with my son's Coverdell ESA from Fidelity - also got a 1099-Q with blank boxes 2 and 3. One thing I want to add for anyone going through this: when you're gathering all your statements, make sure to include any year-end summaries or annual statements your provider sent you. These often have helpful breakdowns of contributions vs. earnings that can serve as checkpoints for your calculations. Also, if you've ever rolled over funds from another Coverdell ESA (like when changing beneficiaries or custodians), make sure you have documentation of the basis that transferred with those funds. That basis carries over and needs to be included in your total. The IRS Form 8863 instructions actually have a worksheet for calculating the taxable portion of education savings account distributions that might be helpful as a template for organizing your calculations. It's designed for different accounts but the methodology is similar. Thanks to everyone who shared their experiences - it's reassuring to know the IRS will accept our good-faith calculations when the custodian leaves us hanging!