A trustee of a Coverdell account must report to the IRS and the beneficiary on contributions, distributions, etc. Contributions and rollovers are included on Form 5498-ESA, Coverdell ESA Contribution Information. The trustee reports distributions and the amounts that represent earnings and basis on Form 1099-Q, Payments from Qualified Education Programs.

Each failure to file the required form in 2022, without reasonable cause, carries a $50, $110, or $280 penalty, depending when the form is filed. The penalty amounts for 2023 failures to file are $50, $110 or $290.