Coverdell FSA-Distribution

[zeros]

Client brought in a 1099-Q which is a distribution from qualified education programs. He said he over-contributed in 2007 and the excess was placed in the 2008 program. Distribution code is "3". He received this form because of this. Do I suppose to do something with the information on this form?

[BP.]

Amount on the 1099-Q attributable only to earnings is taxable in the year of the excess contribution. I don't think the transfer to the 2008 program matters -- separate transaction in effect. He lost the tax deferral benefit on the earnings portion of the excess, then made a contribution for 2008.