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Can I File 1040nr Online

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Can I File 1040nr Online

Can i file 1040nr online 3. Can i file 1040nr online   Abandonments Table of Contents You abandon property when you voluntarily and permanently give up possession and use of the property with the intention of ending your ownership but without passing it on to anyone else. Can i file 1040nr online Whether an abandonment has occurred is determined in light of all the facts and circumstances. Can i file 1040nr online You must both show an intention to abandon the property and affirmatively act to abandon the property. Can i file 1040nr online A voluntary conveyance of the property in lieu of foreclosure is not an abandonment and is treated as the exchange of property to satisfy a debt. Can i file 1040nr online For more information, see Sales and Exchanges in Publication 544. Can i file 1040nr online The tax consequences of abandonment of property that secures a debt depend on whether you were personally liable for the debt (recourse debt) or were not personally liable for the debt (nonrecourse debt). Can i file 1040nr online See Publication 544 if you abandoned property that did not secure debt. Can i file 1040nr online This publication only discusses the tax consequences of abandoning property that secured a debt. Can i file 1040nr online Abandonment of property securing recourse debt. Can i file 1040nr online    In most cases, if you abandon property that secures debt for which you are personally liable (recourse debt), you do not have gain or loss until the later foreclosure is completed. Can i file 1040nr online For details on figuring gain or loss on the foreclosure, see chapter 2. Can i file 1040nr online Example 1—abandonment of personal-use property securing recourse debt. Can i file 1040nr online In 2009, Anne purchased a home for $200,000. Can i file 1040nr online She borrowed the entire purchase price, for which she was personally liable, and gave the bank a mortgage on the home. Can i file 1040nr online In 2013, Anne lost her job and was unable to continue making her mortgage loan payments. Can i file 1040nr online Because her mortgage loan balance was $185,000 and the FMV of her home was only $150,000, Anne decided to abandon her home by permanently moving out on August 1, 2013. Can i file 1040nr online Because Anne was personally liable for the debt and the bank did not complete a foreclosure of the property in 2013, Anne has neither gain nor loss in tax year 2013 from abandoning the home. Can i file 1040nr online If the bank sells the house at a foreclosure sale in 2014, Anne will have to figure her gain or nondeductible loss for tax year 2014 as discussed earlier in chapter 2. Can i file 1040nr online Example 2—abandonment of business or investment property securing recourse debt. Can i file 1040nr online In 2009, Sue purchased business property for $200,000. Can i file 1040nr online She borrowed the entire purchase price, for which she was personally liable, and gave the lender a security interest in the property. Can i file 1040nr online In 2013, Sue was unable to continue making her loan payments. Can i file 1040nr online Because her loan balance was $185,000 and the FMV of the property was only $150,000, Sue abandoned the property on August 1, 2013. Can i file 1040nr online Because Sue was personally liable for the debt and the lender did not complete a foreclosure of the property in 2013, Sue has neither gain nor loss in tax year 2013 from abandoning the property. Can i file 1040nr online If the lender sells the property at a foreclosure sale in 2014, Sue will have to figure her gain or deductible loss for tax year 2014 as discussed earlier in chapter 2. Can i file 1040nr online Abandonment of property securing nonrecourse debt. Can i file 1040nr online    If you abandon property that secures debt for which you are not personally liable (nonrecourse debt), the abandonment is treated as a sale or exchange. Can i file 1040nr online   The amount you realize on the abandonment of property that secured nonrecourse debt is the amount of the nonrecourse debt. Can i file 1040nr online If the amount you realize is more than your adjusted basis, then you have a gain. Can i file 1040nr online If your adjusted basis is more than the amount you realize, then you have a loss. Can i file 1040nr online For more information on how to figure gain and loss, see Gain or Loss from Sales or Exchanges in Publication 544. Can i file 1040nr online   Loss from abandonment of business or investment property is deductible as a loss. Can i file 1040nr online The character of the loss depends on the character of the property. Can i file 1040nr online The amount of deductible capital loss may be limited. Can i file 1040nr online For more information, see Treatment of Capital Losses in Publication 544. Can i file 1040nr online You cannot deduct any loss from abandonment of your home or other property held for personal use. Can i file 1040nr online Example 1—abandonment of personal-use property securing nonrecourse debt. Can i file 1040nr online In 2009, Timothy purchased a home for $200,000. Can i file 1040nr online He borrowed the entire purchase price, for which he was not personally liable, and gave the bank a mortgage on the home. Can i file 1040nr online In 2013, Timothy lost his job and was unable to continue making his mortgage loan payments. Can i file 1040nr online Because his mortgage loan balance was $185,000 and the FMV of his home was only $150,000, Timothy decided to abandon his home by permanently moving out on August 1, 2013. Can i file 1040nr online Because Timothy was not personally liable for the debt, the abandonment is treated as a sale or exchange of the home in tax year 2013. Can i file 1040nr online Timothy's amount realized is $185,000 and his adjusted basis in the home is $200,000. Can i file 1040nr online Timothy has a $15,000 nondeductible loss in tax year 2013. Can i file 1040nr online (Had Timothy’s adjusted basis been less than the amount realized, Timothy would have had a gain that he would have to include in gross income. Can i file 1040nr online ) The bank sells the house at a foreclosure sale in 2014. Can i file 1040nr online Timothy has neither gain nor loss from the foreclosure sale. Can i file 1040nr online Because he was not personally liable for the debt, he also has no cancellation of debt income. Can i file 1040nr online Example 2—abandonment of business or investment property securing nonrecourse debt. Can i file 1040nr online In 2009, Robert purchased business property for $200,000. Can i file 1040nr online He borrowed the entire purchase price, for which he was not personally liable, and gave the lender a security interest in the property. Can i file 1040nr online In 2013, Robert was unable to continue making his loan payments. Can i file 1040nr online Because his loan balance was $185,000 and the FMV of the property was only $150,000, Robert decided to abandon the property on August 1, 2013. Can i file 1040nr online Because Robert was not personally liable for the debt, the abandonment is treated as a sale or exchange of the property in tax year 2013. Can i file 1040nr online Robert's amount realized is $185,000 and his adjusted basis in the property is $180,000 (as a result of $20,000 of depreciation deductions on the property). Can i file 1040nr online Robert has a $5,000 gain in tax year 2013. Can i file 1040nr online (Had Robert’s adjusted basis been greater than the amount realized, he would have had a deductible loss. Can i file 1040nr online ) The lender sells the property at a foreclosure sale in 2014. Can i file 1040nr online Robert has neither gain nor loss from the foreclosure sale. Can i file 1040nr online Because he was not personally liable for the debt, he also has no cancellation of debt income. Can i file 1040nr online Canceled debt. Can i file 1040nr online    If the abandoned property secures a debt for which you are personally liable and the debt is canceled, you will realize ordinary income equal to the canceled debt. Can i file 1040nr online This income is separate from any amount realized from abandonment of the property. Can i file 1040nr online You must report this income on your return unless one of the exceptions or exclusions described in chapter 1 applies. Can i file 1040nr online See chapter 1 for more details. Can i file 1040nr online Forms 1099-A and 1099-C. Can i file 1040nr online    In most cases, if you abandon real property (such as a home), intangible property, or tangible personal property held (wholly or partly) for use in a trade or business or for investment, that secures a loan and the lender knows the property has been abandoned, the lender should send you Form 1099-A showing information you need to figure your gain or loss from the abandonment. Can i file 1040nr online Also, if your debt is canceled and the lender must file Form 1099-C, the lender can include the information about the abandonment on that form instead of on Form 1099-A. Can i file 1040nr online The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. Can i file 1040nr online For abandonments of property and debt cancellations occurring in 2013, these forms should be sent to you by January 31, 2014. Can i file 1040nr online Prev  Up  Next   Home   More Online Publications
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Individual Taxpayer Identification Number (ITIN)

Effective January 1, 2013, the IRS implemented new procedures that affect the Individual Taxpayer Identification Number (ITIN) application process. Some of the information below, including the documentation requirements for individuals seeking an ITIN, has been superseded by these changes. Taxpayers and their representatives should review these program changes,which are further explained in these Frequently Asked Questions, before requesting an ITIN.  

Effective January 1, 2013, authorized representatives for Certifying Acceptance Agents are required to complete forensic training and submit the original certificate of completion with their Form 13551 "Application to Participate in the IRS Acceptance Agent Program."

Effective January 1, 2013, Individual Taxpayer Identification Number(s) (ITIN) issued on or after January 1, 2013, will expire on December 31st five years after the ITIN was issued. For more information, taxpayers and their representatives should review these program changes.


Acceptance Agents' Alert (Posted July 1, 2010)

Effective July 1, 2010, all applicants applying to become an authorized representative of an acceptance agent or certifying acceptance agent are required to take the mandatory Acceptance Agent training and submit the certification form along with the new, renewing or amended Form 13551.

New ITIN Acceptance Agent Program Changes
(Posted January 7, 2013)

Acceptance Agents Applications - Open Season

The Internal Revenue Service (IRS) will be accepting and processing Forms 13551, Application to Participate in the IRS Acceptance Agent Program, during open season May 1-August 31 of each year for new and renewing applicants. We will continue to accept amended applications throughout the year.

Alert:
The Acceptance Agent Program processes applications on a first-in, first-out basis. Existing approved acceptance agents who submitted a renewing application that was not rejected can continue to operate under the old agreement until the new agreement is finalized.

General ITIN Information

  • What is an ITIN?
  • What is an ITIN used for?
  • Who needs an ITIN?
  • How do I know if I need an ITIN?
  • How do I apply for an ITIN?
  • When should I apply for an ITIN?
  • Where can I get help with my ITIN application?
  • How and when can I expect to receive my ITIN?
  • When does my ITIN expire?


REVISED APPLICATION STANDARDS FOR ITINs

  • What are the revised application standards for ITINs?
  • Why did IRS change from an ITIN card to an authorization letter?
  • Why did IRS revise the ITIN application process?
  • What documents are acceptable as proof of identity and foreign status?


FORMS AND PUBLICATIONS

Before submitting Form 13551 to apply to participate in the Acceptance Agent Program, access and complete the mandatory
Acceptance Agent training


 Additional ITIN Information

 

  • How can I obtain an ITIN from abroad?
  • Are ITINs valid for identification?
  • Are ITINs valid for work purposes?
  • Can ITINs be used as proof of identification to obtain a state driver's license?
  • What do I do when I am assigned a social security number (SSN)? 
  • What ITIN information is available in Spanish? 
  • What ITIN information is available for tax professionals?
  • What is an ITIN Acceptance Agent?
  • How can I become an acceptance Agent?
  • What information is available for Foreign Property Buyers/Sellers? 
Page Last Reviewed or Updated: 19-Mar-2014

The Can I File 1040nr Online

Can i file 1040nr online 7. Can i file 1040nr online   Coverdell Education Savings Account (ESA) Table of Contents Introduction What Is a Coverdell ESAQualified Education Expenses ContributionsContribution Limits Additional Tax on Excess Contributions Rollovers and Other TransfersRollovers Changing the Designated Beneficiary Transfer Because of Divorce DistributionsTax-Free Distributions Taxable Distributions When Assets Must Be Distributed Introduction If your modified adjusted gross income (MAGI) is less than $110,000 ($220,000 if filing a joint return), you may be able to establish a Coverdell ESA to finance the qualified education expenses of a designated beneficiary. Can i file 1040nr online For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return. Can i file 1040nr online There is no limit on the number of separate Coverdell ESAs that can be established for a designated beneficiary. Can i file 1040nr online However, total contributions for the beneficiary in any year cannot be more than $2,000, no matter how many accounts have been established. Can i file 1040nr online See Contributions , later. Can i file 1040nr online This benefit applies not only to higher education expenses, but also to elementary and secondary education expenses. Can i file 1040nr online What is the tax benefit of the Coverdell ESA. Can i file 1040nr online   Contributions to a Coverdell ESA are not deductible, but amounts deposited in the account grow tax free until distributed. Can i file 1040nr online   If, for a year, distributions from an account are not more than a designated beneficiary's qualified education expenses at an eligible educational institution, the beneficiary will not owe tax on the distributions. Can i file 1040nr online See Tax-Free Distributions , later. Can i file 1040nr online    Table 7-1 summarizes the main features of the Coverdell ESA. Can i file 1040nr online Table 7-1. Can i file 1040nr online Coverdell ESA at a Glance Do not rely on this table alone. Can i file 1040nr online It provides only general highlights. Can i file 1040nr online See the text for definitions of terms in bold type and for more complete explanations. Can i file 1040nr online Question Answer What is a Coverdell ESA? A savings account that is set up to pay the qualified education expenses of a designated beneficiary. Can i file 1040nr online Where can it be established? It can be opened in the United States at any bank or other IRS-approved entity that offers Coverdell ESAs. Can i file 1040nr online Who can have a Coverdell ESA? Any beneficiary who is under age 18 or is a special needs beneficiary. Can i file 1040nr online Who can contribute to a Coverdell ESA? Generally, any individual (including the beneficiary) whose modified adjusted gross income for the year is less than $110,000 ($220,000 in the case of a joint return). Can i file 1040nr online Are distributions tax free? Yes, if the distributions are not more than the beneficiary's adjusted qualified education expenses for the year. Can i file 1040nr online What Is a Coverdell ESA A Coverdell ESA is a trust or custodial account created or organized in the United States only for the purpose of paying the qualified education expenses of the Designated beneficiary (defined later) of the account. Can i file 1040nr online When the account is established, the designated beneficiary must be under age 18 or a special needs beneficiary. Can i file 1040nr online To be treated as a Coverdell ESA, the account must be designated as a Coverdell ESA when it is created. Can i file 1040nr online The document creating and governing the account must be in writing and must satisfy the following requirements. Can i file 1040nr online The trustee or custodian must be a bank or an entity approved by the IRS. Can i file 1040nr online The document must provide that the trustee or custodian can only accept a contribution that meets all of the following conditions. Can i file 1040nr online The contribution is in cash. Can i file 1040nr online The contribution is made before the beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary. Can i file 1040nr online The contribution would not result in total contributions for the year (not including rollover contributions) being more than $2,000. Can i file 1040nr online Money in the account cannot be invested in life insurance contracts. Can i file 1040nr online Money in the account cannot be combined with other property except in a common trust fund or common investment fund. Can i file 1040nr online The balance in the account generally must be distributed within 30 days after the earlier of the following events. Can i file 1040nr online The beneficiary reaches age 30, unless the beneficiary is a special needs beneficiary. Can i file 1040nr online The beneficiary's death. Can i file 1040nr online Qualified Education Expenses Generally, these are expenses required for the enrollment or attendance of the designated beneficiary at an eligible educational institution. Can i file 1040nr online For purposes of Coverdell ESAs, the expenses can be either qualified higher education expenses or qualified elementary and secondary education expenses. Can i file 1040nr online Designated beneficiary. Can i file 1040nr online   This is the individual named in the document creating the trust or custodial account to receive the benefit of the funds in the account. Can i file 1040nr online Contributions to a qualified tuition program (QTP). Can i file 1040nr online   A contribution to a QTP is a qualified education expense if the contribution is on behalf of the designated beneficiary of the Coverdell ESA. Can i file 1040nr online In the case of a change in beneficiary, this is a qualified expense only if the new beneficiary is a family member of that designated beneficiary. Can i file 1040nr online See chapter 8, Qualified Tuition Program . Can i file 1040nr online Eligible Educational Institution For purposes of Coverdell ESAs, an eligible educational institution can be either an eligible postsecondary school or an eligible elementary or secondary school. Can i file 1040nr online Eligible postsecondary school. Can i file 1040nr online   This is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Can i file 1040nr online S. Can i file 1040nr online Department of Education. Can i file 1040nr online It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Can i file 1040nr online The educational institution should be able to tell you if it is an eligible educational institution. Can i file 1040nr online   Certain educational institutions located outside the United States also participate in the U. Can i file 1040nr online S. Can i file 1040nr online Department of Education's Federal Student Aid (FSA) programs. Can i file 1040nr online Eligible elementary or secondary school. Can i file 1040nr online   This is any public, private, or religious school that provides elementary or secondary education (kindergarten through grade 12), as determined under state law. Can i file 1040nr online Qualified Higher Education Expenses These are expenses related to enrollment or attendance at an eligible postsecondary school. Can i file 1040nr online As shown in the following list, to be qualified, some of the expenses must be required by the school and some must be incurred by students who are enrolled at least half-time. Can i file 1040nr online The following expenses must be required for enrollment or attendance of a designated beneficiary at an eligible postsecondary school. Can i file 1040nr online Tuition and fees. Can i file 1040nr online Books, supplies, and equipment. Can i file 1040nr online Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible postsecondary school. Can i file 1040nr online Expenses for room and board must be incurred by students who are enrolled at least half-time (defined below). Can i file 1040nr online The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts. Can i file 1040nr online The allowance for room and board, as determined by the school, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. Can i file 1040nr online The actual amount charged if the student is residing in housing owned or operated by the school. Can i file 1040nr online Half-time student. Can i file 1040nr online   A student is enrolled “at least half-time” if he or she is enrolled for at least half the full-time academic work load for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled. Can i file 1040nr online Qualified Elementary and Secondary Education Expenses These are expenses related to enrollment or attendance at an eligible elementary or secondary school. Can i file 1040nr online As shown in the following list, to be qualified, some of the expenses must be required or provided by the school. Can i file 1040nr online There are special rules for computer-related expenses. Can i file 1040nr online The following expenses must be incurred by a designated beneficiary in connection with enrollment or attendance at an eligible elementary or secondary school. Can i file 1040nr online Tuition and fees. Can i file 1040nr online Books, supplies, and equipment. Can i file 1040nr online Academic tutoring. Can i file 1040nr online Special needs services for a special needs beneficiary. Can i file 1040nr online The following expenses must be required or provided by an eligible elementary or secondary school in connection with attendance or enrollment at the school. Can i file 1040nr online Room and board. Can i file 1040nr online Uniforms. Can i file 1040nr online Transportation. Can i file 1040nr online Supplementary items and services (including extended day programs). Can i file 1040nr online The purchase of computer technology, equipment, or Internet access and related services is a qualified elementary and secondary education expense if it is to be used by the beneficiary and the beneficiary's family during any of the years the beneficiary is in elementary or secondary school. Can i file 1040nr online (This does not include expenses for computer software designed for sports, games, or hobbies unless the software is predominantly educational in nature. Can i file 1040nr online ) Contributions Any individual (including the designated beneficiary) can contribute to a Coverdell ESA if the individual's MAGI (defined later under Contribution Limits ) for the year is less than $110,000. Can i file 1040nr online For individuals filing joint returns, that amount is $220,000. Can i file 1040nr online Organizations, such as corporations and trusts, can also contribute to Coverdell ESAs. Can i file 1040nr online There is no requirement that an organization's income be below a certain level. Can i file 1040nr online Contributions must meet all of the following requirements. Can i file 1040nr online They must be in cash. Can i file 1040nr online They cannot be made after the beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary. Can i file 1040nr online They must be made by the due date of the contributor's tax return (not including extensions). Can i file 1040nr online Contributions can be made to one or several Coverdell ESAs for the same designated beneficiary provided that the total contributions are not more than the contribution limits (defined later) for a year. Can i file 1040nr online Contributions can be made, without penalty, to both a Coverdell ESA and a QTP in the same year for the same beneficiary. Can i file 1040nr online Table 7-2 summarizes many of the features of contributing to a Coverdell ESA. Can i file 1040nr online When contributions considered made. Can i file 1040nr online   Contributions made to a Coverdell ESA for the preceding tax year are considered to have been made on the last day of the preceding year. Can i file 1040nr online They must be made by the due date (not including extensions) for filing your return for the preceding year. Can i file 1040nr online   For example, if you make a contribution to a Coverdell ESA in February 2014, and you designate it as a contribution for 2013, you are considered to have made that contribution on December 31, 2013. Can i file 1040nr online Contribution Limits There are two yearly limits: One on the total amount that can be contributed for each designated beneficiary in any year, and One on the amount that any individual can contribute for any one designated beneficiary for a year. Can i file 1040nr online Limit for each designated beneficiary. Can i file 1040nr online   For 2013, the total of all contributions to all Coverdell ESAs set up for the benefit of any one designated beneficiary cannot be more than $2,000. Can i file 1040nr online This includes contributions (other than rollovers) to all the beneficiary's Coverdell ESAs from all sources. Can i file 1040nr online Rollovers are discussed under Rollovers and Other Transfers , later. Can i file 1040nr online Example. Can i file 1040nr online When Maria Luna was born in 2012, three separate Coverdell ESAs were set up for her, one by her parents, one by her grandfather, and one by her aunt. Can i file 1040nr online In 2013, the total of all contributions to Maria's three Coverdell ESAs cannot be more than $2,000. Can i file 1040nr online For example, if her grandfather contributed $2,000 to one of her Coverdell ESAs, no one else could contribute to any of her three accounts. Can i file 1040nr online Or, if her parents contributed $1,000 and her aunt $600, her grandfather or someone else could contribute no more than $400. Can i file 1040nr online These contributions could be put into any of Maria's Coverdell ESA accounts. Can i file 1040nr online Limit for each contributor. Can i file 1040nr online   Generally, you can contribute up to $2,000 for each designated beneficiary for 2013. Can i file 1040nr online This is the most you can contribute for the benefit of any one beneficiary for the year, regardless of the number of Coverdell ESAs set up for the beneficiary. Can i file 1040nr online Example. Can i file 1040nr online The facts are the same as in the previous example except that Maria Luna's older brother, Edgar, also has a Coverdell ESA. Can i file 1040nr online If their grandfather contributed $2,000 to Maria's Coverdell ESA in 2013, he could also contribute $2,000 to Edgar's Coverdell ESA. Can i file 1040nr online Reduced limit. Can i file 1040nr online   Your contribution limit may be reduced. Can i file 1040nr online If your MAGI (defined on this page) is between $95,000 and $110,000 (between $190,000 and $220,000 if filing a joint return), the $2,000 limit for each designated beneficiary is gradually reduced (see Figuring the limit , later). Can i file 1040nr online If your MAGI is $110,000 or more ($220,000 or more if filing a joint return), you cannot contribute to anyone's Coverdell ESA. Can i file 1040nr online Table 7-2. Can i file 1040nr online Coverdell ESA Contributions at a Glance Do not rely on this table alone. Can i file 1040nr online It provides only general highlights. Can i file 1040nr online See the text for more complete explanations. Can i file 1040nr online Question Answer Are contributions deductible? No. Can i file 1040nr online What is the annual contribution limit per designated beneficiary? $2,000 for each designated beneficiary. Can i file 1040nr online What if more than one Coverdell ESA has been opened for the same designated beneficiary? The annual contribution limit is $2,000 for each beneficiary, no matter how many Coverdell ESAs are set up for that beneficiary. Can i file 1040nr online What if more than one individual makes contributions for the same designated beneficiary? The annual contribution limit is $2,000 per beneficiary, no matter how many individuals contribute. Can i file 1040nr online Can contributions other than cash be made to a Coverdell ESA? No. Can i file 1040nr online When must contributions stop? No contributions can be made to a beneficiary's Coverdell ESA after he or she reaches age 18, unless the beneficiary is a special needs beneficiary. Can i file 1040nr online Modified adjusted gross income (MAGI). Can i file 1040nr online   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. Can i file 1040nr online MAGI when using Form 1040A. Can i file 1040nr online   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. Can i file 1040nr online MAGI when using Form 1040. Can i file 1040nr online   If you file Form 1040, your MAGI is the AGI on line 38 of that form, modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Can i file 1040nr online MAGI when using Form 1040NR. Can i file 1040nr online   If you file Form 1040NR, your MAGI is the AGI on line 36 of that form. Can i file 1040nr online MAGI when using Form 1040NR-EZ. Can i file 1040nr online   If you file Form 1040NR-EZ, your MAGI is the AGI on line 10 of that form. Can i file 1040nr online   If you have any of these adjustments, you can use Worksheet 7-1. Can i file 1040nr online MAGI for a Coverdell ESA , later, to figure your MAGI for Form 1040. Can i file 1040nr online Worksheet 7-1. Can i file 1040nr online MAGI for a Coverdell ESA 1. Can i file 1040nr online Enter your adjusted gross income  (Form 1040, line 38)   1. Can i file 1040nr online   2. Can i file 1040nr online Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. Can i file 1040nr online       3. Can i file 1040nr online Enter your foreign housing deduction (Form 2555, line 50)   3. Can i file 1040nr online         4. Can i file 1040nr online Enter the amount of income from Puerto Rico you are excluding   4. Can i file 1040nr online       5. Can i file 1040nr online Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. Can i file 1040nr online       6. Can i file 1040nr online Add lines 2, 3, 4, and 5   6. Can i file 1040nr online   7. Can i file 1040nr online Add lines 1 and 6. Can i file 1040nr online This is your  modified adjusted gross income   7. Can i file 1040nr online   Figuring the limit. Can i file 1040nr online    To figure the limit on the amount you can contribute for each designated beneficiary, multiply $2,000 by a fraction. Can i file 1040nr online The numerator (top number) is your MAGI minus $95,000 ($190,000 if filing a joint return). Can i file 1040nr online The denominator (bottom number) is $15,000 ($30,000 if filing a joint return). Can i file 1040nr online Subtract the result from $2,000. Can i file 1040nr online This is the amount you can contribute for each beneficiary. Can i file 1040nr online You can use Worksheet 7-2. Can i file 1040nr online Coverdell ESA Contribution Limit to figure the limit on contributions. Can i file 1040nr online    Worksheet 7-2. Can i file 1040nr online Coverdell ESA Contribution Limit 1. Can i file 1040nr online Maximum contribution   1. Can i file 1040nr online $2,000 2. Can i file 1040nr online Enter your modified adjusted gross income (MAGI) for purposes of figuring the contribution limit to a Coverdell ESA (see definition or Worksheet 7-1, earlier)   2. Can i file 1040nr online   3. Can i file 1040nr online Enter $190,000 if married filing jointly; $95,000 for all other filers   3. Can i file 1040nr online   4. Can i file 1040nr online Subtract line 3 from line 2. Can i file 1040nr online If zero or less, enter -0- on line 4, skip lines 5 through 7, and enter $2,000 on line 8   4. Can i file 1040nr online   5. Can i file 1040nr online Enter $30,000 if married filing jointly; $15,000 for all other filers   5. Can i file 1040nr online     Note. Can i file 1040nr online If the amount on line 4 is greater than or equal to the amount on line 5, stop here. Can i file 1040nr online You are not allowed to contribute to a Coverdell ESA for 2013. Can i file 1040nr online       6. Can i file 1040nr online Divide line 4 by line 5 and enter the result as a decimal (rounded to at least 3 places)   6. Can i file 1040nr online . Can i file 1040nr online 7. Can i file 1040nr online Multiply line 1 by line 6   7. Can i file 1040nr online   8. Can i file 1040nr online Subtract line 7 from line 1   8. Can i file 1040nr online   Note: The total Coverdell ESA contributions from all sources for the designated beneficiary during the tax year may not exceed $2,000. Can i file 1040nr online Example. Can i file 1040nr online Paul, who is single, had a MAGI of $96,500 for 2013. Can i file 1040nr online Paul can contribute up to $1,800 in 2013 for each beneficiary, as shown in the illustrated Worksheet 7-2, Coverdell ESA Contribution Limit–Illustrated. Can i file 1040nr online Worksheet 7-2. Can i file 1040nr online Coverdell ESA Contribution Limit—Illustrated 1. Can i file 1040nr online Maximum contribution   1. Can i file 1040nr online $2,000 2. Can i file 1040nr online Enter your modified adjusted gross  income (MAGI) for purposes of figuring the contribution limit to a Coverdell ESA (see definition or Worksheet 7-1, earlier)   2. Can i file 1040nr online 96,500 3. Can i file 1040nr online Enter $190,000 if married filing jointly; $95,000 for all other filers   3. Can i file 1040nr online 95,000 4. Can i file 1040nr online Subtract line 3 from line 2. Can i file 1040nr online If zero or less, enter -0- on line 4, skip lines 5 through 7, and enter $2,000 on line 8   4. Can i file 1040nr online 1,500 5. Can i file 1040nr online Enter $30,000 if married filing jointly; $15,000 for all other filers   5. Can i file 1040nr online 15,000   Note. Can i file 1040nr online If the amount on line 4 is greater than or equal to the amount on line 5,  stop here. Can i file 1040nr online You are not allowed to  contribute to a Coverdell ESA for 2013. Can i file 1040nr online       6. Can i file 1040nr online Divide line 4 by line 5 and enter the result as a decimal (rounded to at least 3 places)   6. Can i file 1040nr online . Can i file 1040nr online 100 7. Can i file 1040nr online Multiply line 1 by line 6   7. Can i file 1040nr online 200 8. Can i file 1040nr online Subtract line 7 from line 1   8. Can i file 1040nr online 1,800 Note: The total Coverdell ESA contributions from all sources for the designated beneficiary during the tax year may not exceed $2,000. Can i file 1040nr online Additional Tax on Excess Contributions The beneficiary must pay a 6% excise tax each year on excess contributions that are in a Coverdell ESA at the end of the year. Can i file 1040nr online Excess contributions are the total of the following two amounts. Can i file 1040nr online Contributions to any designated beneficiary's Coverdell ESA for the year that are more than $2,000 (or, if less, the total of each contributor's limit for the year, as discussed earlier). Can i file 1040nr online Excess contributions for the preceding year, reduced by the total of the following two amounts: Distributions (other than those rolled over as discussed later) during the year, and The contribution limit for the current year minus the amount contributed for the current year. Can i file 1040nr online Exceptions. Can i file 1040nr online   The excise tax does not apply if excess contributions made during 2013 (and any earnings on them) are distributed before the first day of the sixth month of the following tax year (June 1, 2014, for a calendar year taxpayer). Can i file 1040nr online   However, you must include the distributed earnings in gross income for the year in which the excess contribution was made. Can i file 1040nr online You should receive Form 1099-Q, Payments From Qualified Education Programs, from each institution from which excess contributions were distributed. Can i file 1040nr online Box 2 of that form will show the amount of earnings on your excess contributions. Can i file 1040nr online Code “2” or “3” entered in the blank box below boxes 5 and 6 indicate the year in which the earnings are taxable. Can i file 1040nr online See Instructions for Recipient on the back of copy B of your Form 1099-Q. Can i file 1040nr online Enter the amount of earnings on line 21 of Form 1040 (or Form 1040NR) for the applicable tax year. Can i file 1040nr online For more information, see Taxable Distributions , later. Can i file 1040nr online   The excise tax does not apply to any rollover contribution. Can i file 1040nr online Note. Can i file 1040nr online Contributions made in one year for the preceding tax year are considered to have been made on the last day of the preceding year. Can i file 1040nr online Example. Can i file 1040nr online In 2012, Greta's parents and grandparents contributed a total of $2,300 to Greta's Coverdell ESA— an excess contribution of $300. Can i file 1040nr online Because Greta did not withdraw the excess before June 1, 2013, she had to pay an additional tax of $18 (6% × $300) when she filed her 2012 tax return. Can i file 1040nr online In 2013, excess contributions of $500 were made to Greta's account, however, she withdrew $250 from that account to use for qualified education expenses. Can i file 1040nr online Using the steps shown earlier under Additional Tax on Excess Contributions , Greta figures the excess contribution in her account at the end of 2013 as follows. Can i file 1040nr online (1)   $500 excess contributions made in 2013     + (2)   $300 excess contributions in ESA at end of 2012     − (2a)   $250 distribution during 2013         $550 excess at end of 2013   × 6%=$33           If Greta limits 2014 contributions to $1,450 ($2,000 maximum allowed − $550 excess contributions from 2013), she will not owe any additional tax in 2014 for excess contributions. Can i file 1040nr online Figuring and reporting the additional tax. Can i file 1040nr online   You figure this excise tax in Part V of Form 5329. Can i file 1040nr online Report the additional tax on Form 1040, line 58 (or Form 1040NR, line 56). Can i file 1040nr online Rollovers and Other Transfers Assets can be rolled over from one Coverdell ESA to another or the designated beneficiary can be changed. Can i file 1040nr online The beneficiary's interest can be transferred to a spouse or former spouse because of divorce. Can i file 1040nr online Rollovers Any amount distributed from a Coverdell ESA is not taxable if it is rolled over to another Coverdell ESA for the benefit of the same beneficiary or a member of the beneficiary's family (including the beneficiary's spouse) who is under age 30. Can i file 1040nr online This age limitation does not apply if the new beneficiary is a special needs beneficiary. Can i file 1040nr online An amount is rolled over if it is paid to another Coverdell ESA within 60 days after the date of the distribution. Can i file 1040nr online Do not report qualifying rollovers (those that meet the above criteria) anywhere on Form 1040 or 1040NR. Can i file 1040nr online These are not taxable distributions. Can i file 1040nr online Members of the beneficiary's family. Can i file 1040nr online   For these purposes, the beneficiary's family includes the beneficiary's spouse and the following other relatives of the beneficiary. Can i file 1040nr online Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them. Can i file 1040nr online Brother, sister, stepbrother, or stepsister. Can i file 1040nr online Father or mother or ancestor of either. Can i file 1040nr online Stepfather or stepmother. Can i file 1040nr online Son or daughter of a brother or sister. Can i file 1040nr online Brother or sister of father or mother. Can i file 1040nr online Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. Can i file 1040nr online The spouse of any individual listed above. Can i file 1040nr online First cousin. Can i file 1040nr online Example. Can i file 1040nr online When Aaron graduated from college last year he had $5,000 left in his Coverdell ESA. Can i file 1040nr online He wanted to give this money to his younger sister, who was still in high school. Can i file 1040nr online In order to avoid paying tax on the distribution of the amount remaining in his account, Aaron contributed the same amount to his sister's Coverdell ESA within 60 days of the distribution. Can i file 1040nr online Only one rollover per Coverdell ESA is allowed during the 12-month period ending on the date of the payment or distribution. Can i file 1040nr online This rule does not apply to the rollover of a military death gratuity or payment from Servicemembers' Group Life Insurance (SGLI). Can i file 1040nr online Military death gratuity. Can i file 1040nr online   If you received a military death gratuity or a payment from Servicemembers' Group Life Insurance (SGLI), you may roll over all or part of the amount received to one or more Coverdell ESAs for the benefit of members of the beneficiary's family (see Members of the beneficiary's family , earlier). Can i file 1040nr online Such payments are made to an eligible survivor upon the death of a member of the armed forces. Can i file 1040nr online The contribution to a Coverdell ESA from survivor benefits received cannot be made later than 1 year after the date on which you receive the gratuity or SGLI payment. Can i file 1040nr online   This rollover contribution is not subject to (but is in addition to) the contribution limits discussed earlier under Contribution Limits . Can i file 1040nr online The amount you roll over cannot exceed the total survivor benefits you received, reduced by contributions from these benefits to a Roth IRA or other Coverdell ESAs. Can i file 1040nr online   The amount contributed from the survivor benefits is treated as part of your basis (cost) in the Coverdell ESA, and will not be taxed when distributed. Can i file 1040nr online See Distributions , later. Can i file 1040nr online The limit of one rollover per Coverdell ESA during a 12-month period does not apply to a military death gratuity or SGLI payment. Can i file 1040nr online Changing the Designated Beneficiary The designated beneficiary can be changed. Can i file 1040nr online See Members of the beneficiary's family , earlier. Can i file 1040nr online There are no tax consequences if, at the time of the change, the new beneficiary is under age 30 or is a special needs beneficiary. Can i file 1040nr online Example. Can i file 1040nr online Assume the same situation for Aaron as in the last example (see Rollovers , earlier). Can i file 1040nr online Instead of closing his Coverdell ESA and paying the distribution into his sister's Coverdell ESA, Aaron could have instructed the trustee of his account to simply change the name of the beneficiary on his account to that of his sister. Can i file 1040nr online Transfer Because of Divorce If a spouse or former spouse receives a Coverdell ESA under a divorce or separation instrument, it is not a taxable transfer. Can i file 1040nr online After the transfer, the spouse or former spouse treats the Coverdell ESA as his or her own. Can i file 1040nr online Example. Can i file 1040nr online In their divorce settlement, Peg received her ex-husband's Coverdell ESA. Can i file 1040nr online In this process, the account was transferred into her name. Can i file 1040nr online Peg now treats the funds in this Coverdell ESA as if she were the original owner. Can i file 1040nr online Distributions The designated beneficiary of a Coverdell ESA can take a distribution at any time. Can i file 1040nr online Whether the distributions are tax free depends, in part, on whether the distributions are equal to or less than the amount of Adjusted qualified education expenses (defined later) that the beneficiary has in the same tax year. Can i file 1040nr online See Table 7-3, Coverdell ESA Distributions at a Glance, for highlights. Can i file 1040nr online Table 7-3. Can i file 1040nr online Coverdell ESA Distributions at a Glance Do not rely on this table alone. Can i file 1040nr online It provides only general highlights. Can i file 1040nr online See the text for definitions of terms in bold type and for more complete explanations. Can i file 1040nr online Question Answer Is a distribution from a Coverdell ESA to pay for a designated beneficiary's qualified education expenses tax free? Generally, yes, to the extent the amount of the distribution is not more than the designated beneficiary's adjusted qualified education expenses. Can i file 1040nr online After the designated beneficiary completes his or her education at an eligible educational institution, can amounts remaining in the Coverdell ESA be distributed? Yes. Can i file 1040nr online Amounts must be distributed when the designated beneficiary reaches age 30, unless he or she is a special needs beneficiary. Can i file 1040nr online Also, certain transfers to members of the beneficiary's family are permitted. Can i file 1040nr online Does the designated beneficiary need to be enrolled for a minimum number of courses to take a tax-free distribution? No. Can i file 1040nr online Adjusted qualified education expenses. Can i file 1040nr online   To determine if total distributions for the year are more than the amount of qualified education expenses, reduce total qualified education expenses by any tax-free educational assistance. Can i file 1040nr online Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Can i file 1040nr online The amount you get by subtracting tax-free educational assistance from your total qualified education expenses is your adjusted qualified education expenses. Can i file 1040nr online Tax-Free Distributions Generally, distributions are tax free if they are not more than the beneficiary's adjusted qualified education expenses for the year. Can i file 1040nr online Do not report tax-free distributions (including qualifying rollovers) on your tax return. Can i file 1040nr online Taxable Distributions A portion of the distributions is generally taxable to the beneficiary if the total distributions are more than the beneficiary's adjusted qualified education expenses for the year. Can i file 1040nr online Excess distribution. Can i file 1040nr online   This is the part of the total distribution that is more than the beneficiary's adjusted qualified education expenses for the year. Can i file 1040nr online Earnings and basis. Can i file 1040nr online   You will receive a Form 1099-Q for each of the Coverdell ESAs from which money was distributed in 2013. Can i file 1040nr online The amount of your gross distribution will be shown in box 1. Can i file 1040nr online For 2013, instead of dividing the gross distribution between your earnings (box 2) and your basis (already-taxed amount) (box 3), the payer or trustee may report the fair market value (account balance) of the Coverdell ESA as of December 31, 2013. Can i file 1040nr online This will be shown in the blank box below boxes 5 and 6. Can i file 1040nr online   The amount contributed from survivor benefits (see Military death gratuity , earlier) is treated as part of your basis and will not be taxed when distributed. Can i file 1040nr online Figuring the Taxable Portion of a Distribution The taxable portion is the amount of the excess distribution that represents earnings that have accumulated tax free in the account. Can i file 1040nr online Figure the taxable portion for 2013 as shown in the following steps. Can i file 1040nr online Multiply the total amount distributed by a fraction. Can i file 1040nr online The numerator is the basis (contributions not previously distributed) at the end of 2012 plus total contributions for 2013 and the denominator is the value (balance) of the account at the end of 2013 plus the amount distributed during 2013. Can i file 1040nr online Subtract the amount figured in (1) from the total amount distributed during 2013. Can i file 1040nr online The result is the amount of earnings included in the distribution(s). Can i file 1040nr online Multiply the amount of earnings figured in (2) by a fraction. Can i file 1040nr online The numerator is the adjusted qualified education expenses paid during 2013 and the denominator is the total amount distributed during 2013. Can i file 1040nr online Subtract the amount figured in (3) from the amount figured in (2). Can i file 1040nr online The result is the amount the beneficiary must include in income. Can i file 1040nr online The taxable amount must be reported on Form 1040 or Form 1040NR, line 21. Can i file 1040nr online Example. Can i file 1040nr online You received an $850 distribution from your Coverdell ESA, to which $1,500 had been contributed before 2013. Can i file 1040nr online There were no contributions in 2013. Can i file 1040nr online This is your first distribution from the account, so your basis in the account on December 31, 2012, was $1,500. Can i file 1040nr online The value (balance) of your account on December 31, 2013, was $950. Can i file 1040nr online You had $700 of adjusted qualified education expenses (AQEE) for the year. Can i file 1040nr online Using the steps in Figuring the Taxable Portion of a Distribution , earlier, figure the taxable portion of your distribution as follows. Can i file 1040nr online   1. Can i file 1040nr online $850 (distribution) × $1,500 basis + $0 contributions  $950 value + $850 distribution       =$708 (basis portion of distribution)     2. Can i file 1040nr online $850 (distribution)−$708 (basis portion of distribution)     =$142 (earnings included in distribution)   3. Can i file 1040nr online $142 (earnings) × $700 AQEE  $850 distribution           =$117 (tax-free earnings)     4. Can i file 1040nr online $142 (earnings)−$117 (tax-free earnings)=$25 (taxable earnings)                 You must include $25 in income as distributed earnings not used for qualified education expenses. Can i file 1040nr online Report this amount on Form 1040, line 21, listing the type and amount of income on the dotted line. Can i file 1040nr online Worksheet 7-3, Coverdell ESA–Taxable Distributions and Basis , at the end of this chapter, can help you figure your adjusted qualified education expenses, how much of your distribution must be included in income, and the remaining basis in your Coverdell ESA(s). Can i file 1040nr online Coordination With American Opportunity and Lifetime Learning Credits The American opportunity or lifetime learning credit can be claimed in the same year the beneficiary takes a tax-free distribution from a Coverdell ESA, as long as the same expenses are not used for both benefits. Can i file 1040nr online This means the beneficiary must reduce qualified higher education expenses by tax-free educational assistance, and then further reduce them by any expenses taken into account in determining an American opportunity or lifetime learning credit. Can i file 1040nr online Example. Can i file 1040nr online Derek Green had $5,800 of qualified higher education expenses for 2013, his first year in college. Can i file 1040nr online He paid his college expenses from the following sources. Can i file 1040nr online     Partial tuition scholarship (tax free) $1,500     Coverdell ESA distribution 1,000     Gift from parents 2,100     Earnings from part-time job 1,200           Of his $5,800 of qualified higher education expenses, $4,000 was tuition and related expenses that also qualified for an American opportunity credit. Can i file 1040nr online Derek's parents claimed a $2,500 American opportunity credit (based on $4,000 expenses) on their tax return. Can i file 1040nr online Before Derek can determine the taxable portion of his Coverdell ESA distribution, he must reduce his total qualified higher education expenses. Can i file 1040nr online     Total qualified higher education expenses $5,800     Minus: Tax-free educational assistance −1,500     Minus: Expenses taken into account in  figuring American opportunity credit − 4,000     Equals: Adjusted qualified higher education  expenses (AQHEE) $ 300           Since the adjusted qualified higher education expenses ($300) are less than the Coverdell ESA distribution ($1,000), part of the distribution will be taxable. Can i file 1040nr online The balance in Derek's account was $1,800 on December 31, 2013. Can i file 1040nr online Prior to 2013, $2,100 had been contributed to this account. Can i file 1040nr online Contributions for 2013 totaled $400. Can i file 1040nr online Using the four steps outlined earlier, Derek figures the taxable portion of his distribution as shown below. Can i file 1040nr online   1. Can i file 1040nr online $1,000 (distribution) × $2,100 basis + $400 contributions  $1,800 value + $1,000 distribution           =$893 (basis portion of distribution)     2. Can i file 1040nr online $1,000 (distribution)−$893 (basis portion of distribution)     = $107 (earnings included in distribution)   3. Can i file 1040nr online $107 (earnings) × $300 AQHEE  $1,000 distribution       =$32 (tax-free earnings)     4. Can i file 1040nr online $107 (earnings)−$32 (tax-free earnings)=$75 (taxable earnings)                 Derek must include $75 in income (Form 1040, line 21). Can i file 1040nr online This is the amount of distributed earnings not used for adjusted qualified higher education expenses. Can i file 1040nr online Coordination With Qualified Tuition Program (QTP) Distributions If a designated beneficiary receives distributions from both a Coverdell ESA and a QTP in the same year, and the total distribution is more than the beneficiary's adjusted qualified higher education expenses, those expenses must be allocated between the distribution from the Coverdell ESA and the distribution from the QTP before figuring how much of each distribution is taxable. Can i file 1040nr online The following two examples illustrate possible allocations. Can i file 1040nr online Example 1. Can i file 1040nr online In 2013, Beatrice graduated from high school and began her first semester of college. Can i file 1040nr online That year, she had $1,000 of qualified elementary and secondary education expenses (QESEE) for high school and $3,000 of qualified higher education expenses (QHEE) for college. Can i file 1040nr online To pay these expenses, Beatrice withdrew $800 from her Coverdell ESA and $4,200 from her QTP. Can i file 1040nr online No one claimed Beatrice as a dependent, nor was she eligible for an education credit. Can i file 1040nr online She did not receive any tax-free educational assistance in 2013. Can i file 1040nr online Beatrice must allocate her total qualified education expenses between the two distributions. Can i file 1040nr online Beatrice knows that tax-free treatment will be available if she applies her $800 Coverdell ESA distribution toward her $1,000 of qualified education expenses for high school. Can i file 1040nr online The qualified expenses are greater than the distribution, making the $800 Coverdell ESA distribution tax free. Can i file 1040nr online Next, Beatrice matches her $4,200 QTP distribution to her $3,000 of QHEE, and finds she has an excess QTP distribution of $1,200 ($4,200 QTP − $3,000 QHEE). Can i file 1040nr online She cannot use the extra $200 of high school expenses (from (1) above) against the QTP distribution because those expenses do not qualify a QTP for tax-free treatment. Can i file 1040nr online Finally, Beatrice figures the taxable and tax-free portions of her QTP distribution based on her $3,000 of QHEE. Can i file 1040nr online (See Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program for more information. Can i file 1040nr online ) Example 2. Can i file 1040nr online Assume the same facts as in Example 1 , except that Beatrice withdrew $1,800 from her Coverdell ESA and $3,200 from her QTP. Can i file 1040nr online In this case, she allocates her qualified education expenses as follows. Can i file 1040nr online Using the same reasoning as in Example 1, Beatrice matches $1,000 of her Coverdell ESA distribution to her $1,000 of QESEE—she has $800 of her distribution remaining. Can i file 1040nr online Because higher education expenses can also qualify a Coverdell ESA distribution for tax-free treatment, Beatrice allocates her $3,000 of QHEE between the remaining $800 Coverdell ESA and the $3,200 QTP distributions ($4,000 total). Can i file 1040nr online   $3,000 QHEE × $800 ESA distribution  $4,000 total distribution = $600 QHEE (ESA)     $3,000 QHEE × $3,200 QTP distribution  $4,000 total distribution = $2,400 QHEE (QTP)   Beatrice then figures the taxable part of her: Coverdell ESA distribution based on qualified education expenses of $1,600 ($1,000 QESEE + $600 QHEE). Can i file 1040nr online See Figuring the Taxable Portion of a Distribution , earlier, in this chapter. Can i file 1040nr online   QTP distribution based on her $2,400 of QHEE (see Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program). Can i file 1040nr online The above examples show two types of allocation between distributions from a Coverdell ESA and a QTP. Can i file 1040nr online However, you do not have to allocate your expenses in the same way. Can i file 1040nr online You can use any reasonable method. Can i file 1040nr online Losses on Coverdell ESA Investments If you have a loss on your investment in a Coverdell ESA, you may be able to deduct the loss on your income tax return. Can i file 1040nr online You can deduct the loss only when all amounts from that account have been distributed and the total distributions are less than your unrecovered basis. Can i file 1040nr online Your basis is the total amount of contributions to that Coverdell ESA. Can i file 1040nr online You claim the loss as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23 (Schedule A (Form 1040NR), line 9), subject to the 2%-of-adjusted-gross-income limit. Can i file 1040nr online If you have distributions from more than one Coverdell ESA account during a year, you must combine the information (amount of distribution, basis, etc. Can i file 1040nr online ) from all such accounts in order to determine your taxable earnings for the year. Can i file 1040nr online By doing this, the loss from one ESA account reduces the distributed earnings (if any) from any other ESA account. Can i file 1040nr online For examples of the calculation, see Losses on QTP Investments in chapter 8, Qualified Tuition Program. Can i file 1040nr online Additional Tax on Taxable Distributions Generally, if you receive a taxable distribution, you also must pay a 10% additional tax on the amount included in income. Can i file 1040nr online Exceptions. Can i file 1040nr online   The 10% additional tax does not apply to distributions: Paid to a beneficiary (or to the estate of the designated beneficiary) on or after the death of the designated beneficiary. Can i file 1040nr online Made because the designated beneficiary is disabled. Can i file 1040nr online A person is considered to be disabled if he or she shows proof that he or she cannot do any substantial gainful activity because of his or her physical or mental condition. Can i file 1040nr online A physician must determine that his or her condition can be expected to result in death or to be of long-continued and indefinite duration. Can i file 1040nr online Included in income because the designated beneficiary received: A tax-free scholarship or fellowship (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), or Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Can i file 1040nr online Made on account of the attendance of the designated beneficiary at a U. Can i file 1040nr online S. Can i file 1040nr online military academy (such as the USMA at West Point). Can i file 1040nr online This exception applies only to the extent that the amount of the distribution does not exceed the costs of advanced education (as defined in section 2005(d)(3) of title 10 of the U. Can i file 1040nr online S. Can i file 1040nr online Code) attributable to such attendance. Can i file 1040nr online Included in income only because the qualified education expenses were taken into account in determining the American opportunity or lifetime learning credit (see Coordination With American Opportunity and Lifetime Learning Credits , earlier). Can i file 1040nr online Made before June 1, 2014, of an excess 2013 contribution (and any earnings on it). Can i file 1040nr online The distributed earnings must be included in gross income for the year in which the excess contribution was made. Can i file 1040nr online Exception (3) applies only to the extent the distribution is not more than the scholarship, allowance, or payment. Can i file 1040nr online Figuring the additional tax. Can i file 1040nr online    Use Part II of Form 5329, to figure any additional tax. Can i file 1040nr online Report the amount on Form 1040, line 58, or Form 1040NR, line 56. Can i file 1040nr online When Assets Must Be Distributed Any assets remaining in a Coverdell ESA must be distributed when either one of the following two events occurs. Can i file 1040nr online The designated beneficiary reaches age 30. Can i file 1040nr online In this case, the remaining assets must be distributed within 30 days after the beneficiary reaches age 30. Can i file 1040nr online However, this rule does not apply if the beneficiary is a special needs beneficiary. Can i file 1040nr online The designated beneficiary dies before reaching age 30. Can i file 1040nr online In this case, the remaining assets must generally be distributed within 30 days after the date of death. Can i file 1040nr online Exception for Transfer to Surviving Spouse or Family Member If a Coverdell ESA is transferred to a surviving spouse or other family member as the result of the death of the designated beneficiary, the Coverdell ESA retains its status. Can i file 1040nr online (“Family member” was defined earlier under Rollovers . Can i file 1040nr online ) This means the spouse or other family member can treat the Coverdell ESA as his or her own and does not need to withdraw the assets until he or she reaches age 30. Can i file 1040nr online This age limitation does not apply if the new beneficiary is a special needs beneficiary. Can i file 1040nr online There are no tax consequences as a result of the transfer. Can i file 1040nr online How To Figure the Taxable Earnings When a total distribution is made because the designated beneficiary either reached age 30 or died, the earnings that accumulated tax free in the account must be included in taxable income. Can i file 1040nr online You determine these earnings as shown in the following two steps. Can i file 1040nr online Multiply the amount distributed by a fraction. Can i file 1040nr online The numerator is the basis (contributions not previously distributed) at the end of 2012 plus total contributions for 2013 and the denominator is the balance in the account at the end of 2013 plus the amount distributed during 2013. Can i file 1040nr online Subtract the amount figured in (1) from the total amount distributed during 2013. Can i file 1040nr online The result is the amount of earnings included in the distribution. Can i file 1040nr online For an example, see steps (1) and (2) of the Example under Figuring the Taxable Portion of a Distribution, earlier. Can i file 1040nr online The beneficiary or other person receiving the distribution must report this amount on Form 1040, line 21, or Form 1040NR, line 21, listing the type and amount of income on the dotted line. Can i file 1040nr online Worksheet 7-3 Instructions. Can i file 1040nr online Coverdell ESA—Taxable Distributions and Basis Line G. Can i file 1040nr online Enter the total distributions received from all Coverdell ESAs during 2013. Can i file 1040nr online Do not include amounts rolled over to another ESA within 60 days (only one rollover is allowed during any 12-month period). Can i file 1040nr online Also, do not include excess contributions that were distributed with the related earnings (or less any loss) before the first day of the sixth month of the tax year following the year for which the contributions were made. Can i file 1040nr online Line 2. Can i file 1040nr online Your basis (amount already taxed) in this Coverdell ESA as of December 31, 2012, is the total of:   •All contributions to this Coverdell ESA before 2013 •Minus the tax-free portion of any distributions from this Coverdell ESA before 2013. Can i file 1040nr online   If your last distribution from this Coverdell ESA was before 2013, you must start with the basis in your account as of the end of the last year in which you took a distribution. Can i file 1040nr online For years before 2002, you can find that amount on the last line of the worksheet in the Instructions for Form 8606, Nondeductible IRAs, that you completed for that year. Can i file 1040nr online For years after 2001, you can find that amount by using the ending basis from the worksheet in Publication 970 for that year. Can i file 1040nr online You can determine your basis in this Coverdell ESA as of December 31, 2012, by adding to the basis as of the end of that year any contributions made to that account after the year of the distribution and before 2013. Can i file 1040nr online Line 4. Can i file 1040nr online Enter the total distributions received from this Coverdell ESA in 2013. Can i file 1040nr online Do not include amounts rolled over to another Coverdell ESA within 60 days (only one rollover is allowed during any 12-month period). Can i file 1040nr online   Also, do not include excess contributions that were distributed with the related earnings (or less any loss) before the first day of the sixth month of the tax year following the year of the contributions. Can i file 1040nr online Line 7. Can i file 1040nr online Enter the total value of this Coverdell ESA as of December 31, 2013, plus any outstanding rollovers contributed to the account after 2012, but before the end of the 60-day rollover period. Can i file 1040nr online A statement should be sent to you by January 31, 2014, for this Coverdell ESA showing the value on December 31, 2013. Can i file 1040nr online   A rollover is a tax-free withdrawal from one Coverdell ESA that is contributed to another Coverdell ESA. Can i file 1040nr online An outstanding rollover is any amount withdrawn within 60 days before the end of 2013 (November 2 through December 31) that was rolled over after December 31, 2013, but within the 60-day rollover period. Can i file 1040nr online Worksheet 7-3. Can i file 1040nr online Coverdell ESA—Taxable Distributions and Basis How to complete this worksheet. Can i file 1040nr online • • • Complete Part I, lines A through H, on only one worksheet. Can i file 1040nr online  Complete a separate Part II, lines 1 through 15, for each of your Coverdell ESAs. Can i file 1040nr online  Complete Part III, the Summary (line 16), on only one worksheet. Can i file 1040nr online Part I. Can i file 1040nr online Qualified Education Expenses (Complete for total expenses)       A. Can i file 1040nr online Enter your total qualified education expenses for 2013   A. Can i file 1040nr online   B. Can i file 1040nr online Enter those qualified education expenses paid for with tax-free educational assistance (for example, tax-free scholarships, veterans' educational benefits, Pell grants, employer-provided educational assistance)   B. Can i file 1040nr online         C. Can i file 1040nr online Enter those qualified higher education expenses deducted on Schedule C or C-EZ (Form 1040). Can i file 1040nr online Schedule F (Form 1040), or as a miscellaneous itemized deduction on Schedule A (Form 1040 or 1040NR)   C. Can i file 1040nr online         D. Can i file 1040nr online Enter those qualified higher education expenses on which  an American opportunity or lifetime learning credit was based   D. Can i file 1040nr online         E. Can i file 1040nr online Add lines B, C, and D   D. Can i file 1040nr online   F. Can i file 1040nr online Subtract line E from line A. Can i file 1040nr online This is your adjusted qualified education expense for 2013   E. Can i file 1040nr online   G. Can i file 1040nr online Enter your total distributions from all Coverdell ESAs during 2013. Can i file 1040nr online Do not include rollovers  or the return of excess contributions (see instructions)   F. Can i file 1040nr online   H. Can i file 1040nr online Divide line F by line G. Can i file 1040nr online Enter the result as a decimal (rounded to at least 3 places). Can i file 1040nr online If the  result is 1. Can i file 1040nr online 000 or more, enter 1. Can i file 1040nr online 000   G. Can i file 1040nr online . Can i file 1040nr online Part II. Can i file 1040nr online Taxable Distributions and Basis (Complete separately for each account) 1. Can i file 1040nr online Enter the amount contributed to this Coverdell ESA for 2013, including contributions made for 2013 from January 1, 2014, through April 15, 2014. Can i file 1040nr online Do not include rollovers or the return of excess contributions   1. Can i file 1040nr online   2. Can i file 1040nr online Enter your basis in this Coverdell ESA as of December 31, 2012 (see instructions)   2. Can i file 1040nr online   3. Can i file 1040nr online Add lines 1 and 2   3. Can i file 1040nr online   4. Can i file 1040nr online Enter the total distributions from this Coverdell ESA during 2013. Can i file 1040nr online Do not include rollovers  or the return of excess contributions (see instructions)   4. Can i file 1040nr online   5. Can i file 1040nr online Multiply line 4 by line H. Can i file 1040nr online This is the amount of adjusted qualified  education expense attributable to this Coverdell ESA   5. Can i file 1040nr online         6. Can i file 1040nr online Subtract line 5 from line 4   6. Can i file 1040nr online         7. Can i file 1040nr online Enter the total value of this Coverdell ESA as of December 31, 2013,  plus any outstanding rollovers (see instructions)   7. Can i file 1040nr online         8. Can i file 1040nr online Add lines 4 and 7   8. Can i file 1040nr online         9. Can i file 1040nr online Divide line 3 by line 8. Can i file 1040nr online Enter the result as a decimal (rounded to  at least 3 places). Can i file 1040nr online If the result is 1. Can i file 1040nr online 000 or more, enter 1. Can i file 1040nr online 000   9. Can i file 1040nr online . Can i file 1040nr online       10. Can i file 1040nr online Multiply line 4 by line 9. Can i file 1040nr online This is the amount of basis allocated to your  distributions, and is tax free   10. Can i file 1040nr online     Note. Can i file 1040nr online If line 6 is zero, skip lines 11 through 13, enter -0- on line 14, and go to line 15. Can i file 1040nr online       11. Can i file 1040nr online Subtract line 10 from line 4   11. Can i file 1040nr online   12. Can i file 1040nr online Divide line 5 by line 4. Can i file 1040nr online Enter the result as a decimal (rounded to  at least 3 places). Can i file 1040nr online If the result is 1. Can i file 1040nr online 000 or more, enter 1. Can i file 1040nr online 000   12. Can i file 1040nr online . Can i file 1040nr online       13. Can i file 1040nr online Multiply line 11 by line 12. Can i file 1040nr online This is the amount of qualified education  expenses allocated to your distributions, and is tax free   13. Can i file 1040nr online   14. Can i file 1040nr online Subtract line 13 from line 11. Can i file 1040nr online This is the portion of the distributions from this  Coverdell ESA in 2013 that you must include in income   14. Can i file 1040nr online   15. Can i file 1040nr online Subtract line 10 from line 3. Can i file 1040nr online This is your basis in this Coverdell ESA as of December 31, 2013   15. Can i file 1040nr online   Part III. Can i file 1040nr online Summary (Complete only once)       16. Can i file 1040nr online Taxable amount. Can i file 1040nr online Add together all amounts on line 14 for all your Coverdell ESAs. Can i file 1040nr online Enter here  and include on Form 1040, line 21, or Form 1040NR, line 21, listing the type and amount of income on the dotted line   16. 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