Updated October 19, 2026. Quick answer: Boxes 1 to 3 of Form 1099-QA are the money boxes. Box 1 is the gross distribution from the ABLE account, box 2 is the earnings part of it, and box 3 is the basis. The form goes to the person who received the money, and the recipient instructions point to Form 1040 and Form 5329 for what comes next.
What boxes 1 to 3 report
The recipient copy of the form defines each box in a sentence. For box 1: “Shows the gross distribution paid to you this year from an Achieving a Better Life Experience (ABLE) savings account in the calendar year being reported.” For box 2: “Shows the earnings part of the gross distribution shown in box 1.” For box 3: “Shows your basis in the gross distribution reported in box 1.”
Read together, the three boxes split one payment into pieces. Box 1 is the whole amount that left the account, box 2 is the part of that amount that is earnings, and box 3 is the part that is your own investment in the account. The other half of the form, boxes 4 to 6, is a set of checkboxes covered in Form 1099-QA boxes 4 to 6. If you are the beneficiary, the matching contribution statement is covered in Form 5498-QA boxes 1 to 4 and Form 5498-QA boxes 5 to 8.
What the gross distribution includes
The table sets out what the recipient instructions count in box 1.
| Question | What the recipient instructions say |
|---|---|
| Gross distribution (box 1) | “Gross distribution includes distributions from the ABLE account for both qualified and nonqualified disability expenses.” |
| Amounts meant for another ABLE account | “The gross distribution also includes amounts distributed that the designated beneficiary intends to roll over to another ABLE account” |
| Program-to-program transfers | “but does not include program-to-program transfers.” |
| Returned excess contributions | “A gross distribution also includes a return of excess contributions plus earnings.” |
The second and third rows go together: money headed to another ABLE account is counted, while a direct program-to-program transfer is not. Box 4 of the same form is where that transfer is flagged, which is the subject of Form 1099-QA boxes 4 to 6. Because the gross figure covers both qualified and nonqualified spending, the earnings part is shown separately in box 2 and the basis in box 3.
How earnings and basis relate
The payer instructions explain how the earnings figure in box 2 is built. They say to “multiply the gross distribution reported in box 1 by the earning ratio, as defined in section 1.529A(b)(7).” In other words, the payer, not you, does that calculation, and you read the answer from the form.
Basis is then what remains. The payer instructions say: “Enter the portion of the distribution that constitutes the return of investment in the account.” They add the formula: “The amount of the gross distribution (reported in box 1) minus the earnings portion of that distribution (reported in box 2) is the portion of the distribution that constitutes the return of investment in the account.”
As a labelled illustration of that relationship, not an IRS example: if box 1 showed $10,000 and box 2 showed $2,000 then box 3 would be $10,000 minus $2,000 which gives $8,000 (computed). If your form’s three boxes do not fit that relationship, ask the program that issued the form before you file.
What is and is not included in income
Box 2 is where the recipient instructions speak about income. They say: “Generally, amounts distributed that are used to pay for qualified disability expenses, or rolled over to another ABLE account within 60 days, are not included in income.”
Notice that this sentence is about how the money was used, which a Form 1099-QA does not show. The form reports what left the account. Whether it paid for qualified disability expenses is something you would know from your own records, and the same instructions then point onward with: “Also see Form 5329 and its separate instructions.” For how ABLE distributions are entered on the return itself, see Schedule 1 lines 8q to 8s, and for the main return see Form 1040.
When the recipient is a contributor
Not every Form 1099-QA goes to the beneficiary. The payer instructions say: “List the designated beneficiary as the recipient unless you are reporting a returned excess contribution to the contributor.” “In that case, list the contributor as the recipient.” For that kind of form, box 1 is different. “On a Form 1099-QA for a contributor, enter in box 1 the amount(s) of excess contributions returned plus earnings thereon.”
So if a relative who contributed to an ABLE account receives a Form 1099-QA, it may reflect a return of excess money, as the quoted instruction describes, rather than spending by the beneficiary. The contribution side of this story, including what counts as excess, is on the Form 5498-QA boxes 1 to 4 page and in the ABLE account contribution limit. How accounts like this fit alongside other planning tools is covered in ABLE accounts compared with special needs trusts.
Edition and box numbers
This page follows Form 1099-QA (Rev. April 2025) and the instructions printed with it. Check the year and edition printed on the form you received, because box numbers can change between editions. For a check on whether an account is open to someone at all, see the ABLE account age 46 rule.
Common mistakes
- Treating box 1 as the amount that will be taxed. The recipient instructions say “Gross distribution includes distributions from the ABLE account for both qualified and nonqualified disability expenses.”
- Expecting a program-to-program transfer to appear in box 1. The instructions say box 1 “does not include program-to-program transfers.”
- Skipping the arithmetic between boxes. The payer instructions say “Enter the portion of the distribution that constitutes the return of investment in the account.”
Related: the ABLE account age 46 rule, the ABLE account contribution limit, Schedule 1 lines 8q to 8s, Form 1040, and ABLE accounts compared with special needs trusts.
Sources
- Form 1099-QA, Distributions From ABLE Accounts, with Instructions for Recipient: https://www.irs.gov/pub/irs-pdf/f1099qa.pdf
- Instructions for Forms 1099-QA and 5498-QA: https://www.irs.gov/pub/irs-pdf/i1099qa.pdf
- IRS: About Form 1099-QA: https://www.irs.gov/forms-pubs/about-form-1099-qa
Read from the IRS documents linked above on October 19, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.