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E file taxes free 7. E file taxes free   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. E file taxes free For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return. E file taxes free There is no limit on the number of separate Coverdell ESAs that can be established for a designated beneficiary. E file taxes free However, total contributions for the beneficiary in any year cannot be more than $2,000, no matter how many accounts have been established. E file taxes free See Contributions , later. E file taxes free This benefit applies not only to higher education expenses, but also to elementary and secondary education expenses. E file taxes free What is the tax benefit of the Coverdell ESA. E file taxes free   Contributions to a Coverdell ESA are not deductible, but amounts deposited in the account grow tax free until distributed. E file taxes free   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. E file taxes free See Tax-Free Distributions , later. E file taxes free    Table 7-1 summarizes the main features of the Coverdell ESA. E file taxes free Table 7-1. E file taxes free Coverdell ESA at a Glance Do not rely on this table alone. E file taxes free It provides only general highlights. E file taxes free See the text for definitions of terms in bold type and for more complete explanations. E file taxes free Question Answer What is a Coverdell ESA? A savings account that is set up to pay the qualified education expenses of a designated beneficiary. E file taxes free 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. E file taxes free Who can have a Coverdell ESA? Any beneficiary who is under age 18 or is a special needs beneficiary. E file taxes free 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). E file taxes free Are distributions tax free? Yes, if the distributions are not more than the beneficiary's adjusted qualified education expenses for the year. E file taxes free 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. E file taxes free When the account is established, the designated beneficiary must be under age 18 or a special needs beneficiary. E file taxes free To be treated as a Coverdell ESA, the account must be designated as a Coverdell ESA when it is created. E file taxes free The document creating and governing the account must be in writing and must satisfy the following requirements. E file taxes free The trustee or custodian must be a bank or an entity approved by the IRS. E file taxes free The document must provide that the trustee or custodian can only accept a contribution that meets all of the following conditions. E file taxes free The contribution is in cash. E file taxes free The contribution is made before the beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary. E file taxes free The contribution would not result in total contributions for the year (not including rollover contributions) being more than $2,000. E file taxes free Money in the account cannot be invested in life insurance contracts. E file taxes free Money in the account cannot be combined with other property except in a common trust fund or common investment fund. E file taxes free The balance in the account generally must be distributed within 30 days after the earlier of the following events. E file taxes free The beneficiary reaches age 30, unless the beneficiary is a special needs beneficiary. E file taxes free The beneficiary's death. E file taxes free Qualified Education Expenses Generally, these are expenses required for the enrollment or attendance of the designated beneficiary at an eligible educational institution. E file taxes free For purposes of Coverdell ESAs, the expenses can be either qualified higher education expenses or qualified elementary and secondary education expenses. E file taxes free Designated beneficiary. E file taxes free   This is the individual named in the document creating the trust or custodial account to receive the benefit of the funds in the account. E file taxes free Contributions to a qualified tuition program (QTP). E file taxes free   A contribution to a QTP is a qualified education expense if the contribution is on behalf of the designated beneficiary of the Coverdell ESA. E file taxes free 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. E file taxes free See chapter 8, Qualified Tuition Program . E file taxes free 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. E file taxes free Eligible postsecondary school. E file taxes free   This is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. E file taxes free S. E file taxes free Department of Education. E file taxes free It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. E file taxes free The educational institution should be able to tell you if it is an eligible educational institution. E file taxes free   Certain educational institutions located outside the United States also participate in the U. E file taxes free S. E file taxes free Department of Education's Federal Student Aid (FSA) programs. E file taxes free Eligible elementary or secondary school. E file taxes free   This is any public, private, or religious school that provides elementary or secondary education (kindergarten through grade 12), as determined under state law. E file taxes free Qualified Higher Education Expenses These are expenses related to enrollment or attendance at an eligible postsecondary school. E file taxes free 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. E file taxes free The following expenses must be required for enrollment or attendance of a designated beneficiary at an eligible postsecondary school. E file taxes free Tuition and fees. E file taxes free Books, supplies, and equipment. E file taxes free 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. E file taxes free Expenses for room and board must be incurred by students who are enrolled at least half-time (defined below). E file taxes free The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts. E file taxes free 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. E file taxes free The actual amount charged if the student is residing in housing owned or operated by the school. E file taxes free Half-time student. E file taxes free   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. E file taxes free Qualified Elementary and Secondary Education Expenses These are expenses related to enrollment or attendance at an eligible elementary or secondary school. E file taxes free As shown in the following list, to be qualified, some of the expenses must be required or provided by the school. E file taxes free There are special rules for computer-related expenses. E file taxes free The following expenses must be incurred by a designated beneficiary in connection with enrollment or attendance at an eligible elementary or secondary school. E file taxes free Tuition and fees. E file taxes free Books, supplies, and equipment. E file taxes free Academic tutoring. E file taxes free Special needs services for a special needs beneficiary. E file taxes free The following expenses must be required or provided by an eligible elementary or secondary school in connection with attendance or enrollment at the school. E file taxes free Room and board. E file taxes free Uniforms. E file taxes free Transportation. E file taxes free Supplementary items and services (including extended day programs). E file taxes free 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. E file taxes free (This does not include expenses for computer software designed for sports, games, or hobbies unless the software is predominantly educational in nature. E file taxes free ) 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. E file taxes free For individuals filing joint returns, that amount is $220,000. E file taxes free Organizations, such as corporations and trusts, can also contribute to Coverdell ESAs. E file taxes free There is no requirement that an organization's income be below a certain level. E file taxes free Contributions must meet all of the following requirements. E file taxes free They must be in cash. E file taxes free They cannot be made after the beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary. E file taxes free They must be made by the due date of the contributor's tax return (not including extensions). E file taxes free 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. E file taxes free Contributions can be made, without penalty, to both a Coverdell ESA and a QTP in the same year for the same beneficiary. E file taxes free Table 7-2 summarizes many of the features of contributing to a Coverdell ESA. E file taxes free When contributions considered made. E file taxes free   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. E file taxes free They must be made by the due date (not including extensions) for filing your return for the preceding year. E file taxes free   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. E file taxes free 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. E file taxes free Limit for each designated beneficiary. E file taxes free   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. E file taxes free This includes contributions (other than rollovers) to all the beneficiary's Coverdell ESAs from all sources. E file taxes free Rollovers are discussed under Rollovers and Other Transfers , later. E file taxes free Example. E file taxes free 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. E file taxes free In 2013, the total of all contributions to Maria's three Coverdell ESAs cannot be more than $2,000. E file taxes free 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. E file taxes free Or, if her parents contributed $1,000 and her aunt $600, her grandfather or someone else could contribute no more than $400. E file taxes free These contributions could be put into any of Maria's Coverdell ESA accounts. E file taxes free Limit for each contributor. E file taxes free   Generally, you can contribute up to $2,000 for each designated beneficiary for 2013. E file taxes free 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. E file taxes free Example. E file taxes free The facts are the same as in the previous example except that Maria Luna's older brother, Edgar, also has a Coverdell ESA. E file taxes free If their grandfather contributed $2,000 to Maria's Coverdell ESA in 2013, he could also contribute $2,000 to Edgar's Coverdell ESA. E file taxes free Reduced limit. E file taxes free   Your contribution limit may be reduced. E file taxes free 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). E file taxes free 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. E file taxes free Table 7-2. E file taxes free Coverdell ESA Contributions at a Glance Do not rely on this table alone. E file taxes free It provides only general highlights. E file taxes free See the text for more complete explanations. E file taxes free Question Answer Are contributions deductible? No. E file taxes free What is the annual contribution limit per designated beneficiary? $2,000 for each designated beneficiary. E file taxes free 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. E file taxes free 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. E file taxes free Can contributions other than cash be made to a Coverdell ESA? No. E file taxes free 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. E file taxes free Modified adjusted gross income (MAGI). E file taxes free   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. E file taxes free MAGI when using Form 1040A. E file taxes free   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. E file taxes free MAGI when using Form 1040. E file taxes free   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. E file taxes free MAGI when using Form 1040NR. E file taxes free   If you file Form 1040NR, your MAGI is the AGI on line 36 of that form. E file taxes free MAGI when using Form 1040NR-EZ. E file taxes free   If you file Form 1040NR-EZ, your MAGI is the AGI on line 10 of that form. E file taxes free   If you have any of these adjustments, you can use Worksheet 7-1. E file taxes free MAGI for a Coverdell ESA , later, to figure your MAGI for Form 1040. E file taxes free Worksheet 7-1. E file taxes free MAGI for a Coverdell ESA 1. E file taxes free Enter your adjusted gross income  (Form 1040, line 38)   1. E file taxes free   2. E file taxes free Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. E file taxes free       3. E file taxes free Enter your foreign housing deduction (Form 2555, line 50)   3. E file taxes free         4. E file taxes free Enter the amount of income from Puerto Rico you are excluding   4. E file taxes free       5. E file taxes free Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. E file taxes free       6. E file taxes free Add lines 2, 3, 4, and 5   6. E file taxes free   7. E file taxes free Add lines 1 and 6. E file taxes free This is your  modified adjusted gross income   7. E file taxes free   Figuring the limit. E file taxes free    To figure the limit on the amount you can contribute for each designated beneficiary, multiply $2,000 by a fraction. E file taxes free The numerator (top number) is your MAGI minus $95,000 ($190,000 if filing a joint return). E file taxes free The denominator (bottom number) is $15,000 ($30,000 if filing a joint return). E file taxes free Subtract the result from $2,000. E file taxes free This is the amount you can contribute for each beneficiary. E file taxes free You can use Worksheet 7-2. E file taxes free Coverdell ESA Contribution Limit to figure the limit on contributions. E file taxes free    Worksheet 7-2. E file taxes free Coverdell ESA Contribution Limit 1. E file taxes free Maximum contribution   1. E file taxes free $2,000 2. E file taxes free 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. E file taxes free   3. E file taxes free Enter $190,000 if married filing jointly; $95,000 for all other filers   3. E file taxes free   4. E file taxes free Subtract line 3 from line 2. E file taxes free If zero or less, enter -0- on line 4, skip lines 5 through 7, and enter $2,000 on line 8   4. E file taxes free   5. E file taxes free Enter $30,000 if married filing jointly; $15,000 for all other filers   5. E file taxes free     Note. E file taxes free If the amount on line 4 is greater than or equal to the amount on line 5, stop here. E file taxes free You are not allowed to contribute to a Coverdell ESA for 2013. E file taxes free       6. E file taxes free Divide line 4 by line 5 and enter the result as a decimal (rounded to at least 3 places)   6. E file taxes free . E file taxes free 7. E file taxes free Multiply line 1 by line 6   7. E file taxes free   8. E file taxes free Subtract line 7 from line 1   8. E file taxes free   Note: The total Coverdell ESA contributions from all sources for the designated beneficiary during the tax year may not exceed $2,000. E file taxes free Example. E file taxes free Paul, who is single, had a MAGI of $96,500 for 2013. E file taxes free 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. E file taxes free Worksheet 7-2. E file taxes free Coverdell ESA Contribution Limit—Illustrated 1. E file taxes free Maximum contribution   1. E file taxes free $2,000 2. E file taxes free 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. E file taxes free 96,500 3. E file taxes free Enter $190,000 if married filing jointly; $95,000 for all other filers   3. E file taxes free 95,000 4. E file taxes free Subtract line 3 from line 2. E file taxes free If zero or less, enter -0- on line 4, skip lines 5 through 7, and enter $2,000 on line 8   4. E file taxes free 1,500 5. E file taxes free Enter $30,000 if married filing jointly; $15,000 for all other filers   5. E file taxes free 15,000   Note. E file taxes free If the amount on line 4 is greater than or equal to the amount on line 5,  stop here. E file taxes free You are not allowed to  contribute to a Coverdell ESA for 2013. E file taxes free       6. E file taxes free Divide line 4 by line 5 and enter the result as a decimal (rounded to at least 3 places)   6. E file taxes free . E file taxes free 100 7. E file taxes free Multiply line 1 by line 6   7. E file taxes free 200 8. E file taxes free Subtract line 7 from line 1   8. E file taxes free 1,800 Note: The total Coverdell ESA contributions from all sources for the designated beneficiary during the tax year may not exceed $2,000. E file taxes free 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. E file taxes free Excess contributions are the total of the following two amounts. E file taxes free 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). E file taxes free 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. E file taxes free Exceptions. E file taxes free   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). E file taxes free   However, you must include the distributed earnings in gross income for the year in which the excess contribution was made. E file taxes free You should receive Form 1099-Q, Payments From Qualified Education Programs, from each institution from which excess contributions were distributed. E file taxes free Box 2 of that form will show the amount of earnings on your excess contributions. E file taxes free Code “2” or “3” entered in the blank box below boxes 5 and 6 indicate the year in which the earnings are taxable. E file taxes free See Instructions for Recipient on the back of copy B of your Form 1099-Q. E file taxes free Enter the amount of earnings on line 21 of Form 1040 (or Form 1040NR) for the applicable tax year. E file taxes free For more information, see Taxable Distributions , later. E file taxes free   The excise tax does not apply to any rollover contribution. E file taxes free Note. E file taxes free Contributions made in one year for the preceding tax year are considered to have been made on the last day of the preceding year. E file taxes free Example. E file taxes free In 2012, Greta's parents and grandparents contributed a total of $2,300 to Greta's Coverdell ESA— an excess contribution of $300. E file taxes free 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. E file taxes free 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. E file taxes free 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. E file taxes free (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. E file taxes free Figuring and reporting the additional tax. E file taxes free   You figure this excise tax in Part V of Form 5329. E file taxes free Report the additional tax on Form 1040, line 58 (or Form 1040NR, line 56). E file taxes free Rollovers and Other Transfers Assets can be rolled over from one Coverdell ESA to another or the designated beneficiary can be changed. E file taxes free The beneficiary's interest can be transferred to a spouse or former spouse because of divorce. E file taxes free 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. E file taxes free This age limitation does not apply if the new beneficiary is a special needs beneficiary. E file taxes free An amount is rolled over if it is paid to another Coverdell ESA within 60 days after the date of the distribution. E file taxes free Do not report qualifying rollovers (those that meet the above criteria) anywhere on Form 1040 or 1040NR. E file taxes free These are not taxable distributions. E file taxes free Members of the beneficiary's family. E file taxes free   For these purposes, the beneficiary's family includes the beneficiary's spouse and the following other relatives of the beneficiary. E file taxes free Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them. E file taxes free Brother, sister, stepbrother, or stepsister. E file taxes free Father or mother or ancestor of either. E file taxes free Stepfather or stepmother. E file taxes free Son or daughter of a brother or sister. E file taxes free Brother or sister of father or mother. E file taxes free Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. E file taxes free The spouse of any individual listed above. E file taxes free First cousin. E file taxes free Example. E file taxes free When Aaron graduated from college last year he had $5,000 left in his Coverdell ESA. E file taxes free He wanted to give this money to his younger sister, who was still in high school. E file taxes free 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. E file taxes free Only one rollover per Coverdell ESA is allowed during the 12-month period ending on the date of the payment or distribution. E file taxes free This rule does not apply to the rollover of a military death gratuity or payment from Servicemembers' Group Life Insurance (SGLI). E file taxes free Military death gratuity. E file taxes free   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). E file taxes free Such payments are made to an eligible survivor upon the death of a member of the armed forces. E file taxes free 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. E file taxes free   This rollover contribution is not subject to (but is in addition to) the contribution limits discussed earlier under Contribution Limits . E file taxes free 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. E file taxes free   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. E file taxes free See Distributions , later. E file taxes free The limit of one rollover per Coverdell ESA during a 12-month period does not apply to a military death gratuity or SGLI payment. E file taxes free Changing the Designated Beneficiary The designated beneficiary can be changed. E file taxes free See Members of the beneficiary's family , earlier. E file taxes free 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. E file taxes free Example. E file taxes free Assume the same situation for Aaron as in the last example (see Rollovers , earlier). E file taxes free 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. E file taxes free 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. E file taxes free After the transfer, the spouse or former spouse treats the Coverdell ESA as his or her own. E file taxes free Example. E file taxes free In their divorce settlement, Peg received her ex-husband's Coverdell ESA. E file taxes free In this process, the account was transferred into her name. E file taxes free Peg now treats the funds in this Coverdell ESA as if she were the original owner. E file taxes free Distributions The designated beneficiary of a Coverdell ESA can take a distribution at any time. E file taxes free 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. E file taxes free See Table 7-3, Coverdell ESA Distributions at a Glance, for highlights. E file taxes free Table 7-3. E file taxes free Coverdell ESA Distributions at a Glance Do not rely on this table alone. E file taxes free It provides only general highlights. E file taxes free See the text for definitions of terms in bold type and for more complete explanations. E file taxes free 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. E file taxes free After the designated beneficiary completes his or her education at an eligible educational institution, can amounts remaining in the Coverdell ESA be distributed? Yes. E file taxes free Amounts must be distributed when the designated beneficiary reaches age 30, unless he or she is a special needs beneficiary. E file taxes free Also, certain transfers to members of the beneficiary's family are permitted. E file taxes free Does the designated beneficiary need to be enrolled for a minimum number of courses to take a tax-free distribution? No. E file taxes free Adjusted qualified education expenses. E file taxes free   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. E file taxes free 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. E file taxes free The amount you get by subtracting tax-free educational assistance from your total qualified education expenses is your adjusted qualified education expenses. E file taxes free Tax-Free Distributions Generally, distributions are tax free if they are not more than the beneficiary's adjusted qualified education expenses for the year. E file taxes free Do not report tax-free distributions (including qualifying rollovers) on your tax return. E file taxes free 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. E file taxes free Excess distribution. E file taxes free   This is the part of the total distribution that is more than the beneficiary's adjusted qualified education expenses for the year. E file taxes free Earnings and basis. E file taxes free   You will receive a Form 1099-Q for each of the Coverdell ESAs from which money was distributed in 2013. E file taxes free The amount of your gross distribution will be shown in box 1. E file taxes free 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. E file taxes free This will be shown in the blank box below boxes 5 and 6. E file taxes free   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. E file taxes free 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. E file taxes free Figure the taxable portion for 2013 as shown in the following steps. E file taxes free Multiply the total amount distributed by a fraction. E file taxes free 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. E file taxes free Subtract the amount figured in (1) from the total amount distributed during 2013. E file taxes free The result is the amount of earnings included in the distribution(s). E file taxes free Multiply the amount of earnings figured in (2) by a fraction. E file taxes free The numerator is the adjusted qualified education expenses paid during 2013 and the denominator is the total amount distributed during 2013. E file taxes free Subtract the amount figured in (3) from the amount figured in (2). E file taxes free The result is the amount the beneficiary must include in income. E file taxes free The taxable amount must be reported on Form 1040 or Form 1040NR, line 21. E file taxes free Example. E file taxes free You received an $850 distribution from your Coverdell ESA, to which $1,500 had been contributed before 2013. E file taxes free There were no contributions in 2013. E file taxes free This is your first distribution from the account, so your basis in the account on December 31, 2012, was $1,500. E file taxes free The value (balance) of your account on December 31, 2013, was $950. E file taxes free You had $700 of adjusted qualified education expenses (AQEE) for the year. E file taxes free Using the steps in Figuring the Taxable Portion of a Distribution , earlier, figure the taxable portion of your distribution as follows. E file taxes free   1. E file taxes free $850 (distribution) × $1,500 basis + $0 contributions  $950 value + $850 distribution       =$708 (basis portion of distribution)     2. E file taxes free $850 (distribution)−$708 (basis portion of distribution)     =$142 (earnings included in distribution)   3. E file taxes free $142 (earnings) × $700 AQEE  $850 distribution           =$117 (tax-free earnings)     4. E file taxes free $142 (earnings)−$117 (tax-free earnings)=$25 (taxable earnings)                 You must include $25 in income as distributed earnings not used for qualified education expenses. E file taxes free Report this amount on Form 1040, line 21, listing the type and amount of income on the dotted line. E file taxes free 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). E file taxes free 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. E file taxes free 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. E file taxes free Example. E file taxes free Derek Green had $5,800 of qualified higher education expenses for 2013, his first year in college. E file taxes free He paid his college expenses from the following sources. E file taxes free     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. E file taxes free Derek's parents claimed a $2,500 American opportunity credit (based on $4,000 expenses) on their tax return. E file taxes free Before Derek can determine the taxable portion of his Coverdell ESA distribution, he must reduce his total qualified higher education expenses. E file taxes free     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. E file taxes free The balance in Derek's account was $1,800 on December 31, 2013. E file taxes free Prior to 2013, $2,100 had been contributed to this account. E file taxes free Contributions for 2013 totaled $400. E file taxes free Using the four steps outlined earlier, Derek figures the taxable portion of his distribution as shown below. E file taxes free   1. E file taxes free $1,000 (distribution) × $2,100 basis + $400 contributions  $1,800 value + $1,000 distribution           =$893 (basis portion of distribution)     2. E file taxes free $1,000 (distribution)−$893 (basis portion of distribution)     = $107 (earnings included in distribution)   3. E file taxes free $107 (earnings) × $300 AQHEE  $1,000 distribution       =$32 (tax-free earnings)     4. E file taxes free $107 (earnings)−$32 (tax-free earnings)=$75 (taxable earnings)                 Derek must include $75 in income (Form 1040, line 21). E file taxes free This is the amount of distributed earnings not used for adjusted qualified higher education expenses. E file taxes free 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. E file taxes free The following two examples illustrate possible allocations. E file taxes free Example 1. E file taxes free In 2013, Beatrice graduated from high school and began her first semester of college. E file taxes free 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. E file taxes free To pay these expenses, Beatrice withdrew $800 from her Coverdell ESA and $4,200 from her QTP. E file taxes free No one claimed Beatrice as a dependent, nor was she eligible for an education credit. E file taxes free She did not receive any tax-free educational assistance in 2013. E file taxes free Beatrice must allocate her total qualified education expenses between the two distributions. E file taxes free 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. E file taxes free The qualified expenses are greater than the distribution, making the $800 Coverdell ESA distribution tax free. E file taxes free 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). E file taxes free 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. E file taxes free Finally, Beatrice figures the taxable and tax-free portions of her QTP distribution based on her $3,000 of QHEE. E file taxes free (See Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program for more information. E file taxes free ) Example 2. E file taxes free Assume the same facts as in Example 1 , except that Beatrice withdrew $1,800 from her Coverdell ESA and $3,200 from her QTP. E file taxes free In this case, she allocates her qualified education expenses as follows. E file taxes free 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. E file taxes free 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). E file taxes free   $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). E file taxes free See Figuring the Taxable Portion of a Distribution , earlier, in this chapter. E file taxes free   QTP distribution based on her $2,400 of QHEE (see Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program). E file taxes free The above examples show two types of allocation between distributions from a Coverdell ESA and a QTP. E file taxes free However, you do not have to allocate your expenses in the same way. E file taxes free You can use any reasonable method. E file taxes free 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. E file taxes free 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. E file taxes free Your basis is the total amount of contributions to that Coverdell ESA. E file taxes free 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. E file taxes free If you have distributions from more than one Coverdell ESA account during a year, you must combine the information (amount of distribution, basis, etc. E file taxes free ) from all such accounts in order to determine your taxable earnings for the year. E file taxes free By doing this, the loss from one ESA account reduces the distributed earnings (if any) from any other ESA account. E file taxes free For examples of the calculation, see Losses on QTP Investments in chapter 8, Qualified Tuition Program. E file taxes free 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. E file taxes free Exceptions. E file taxes free   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. E file taxes free Made because the designated beneficiary is disabled. E file taxes free 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. E file taxes free 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. E file taxes free 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. E file taxes free Made on account of the attendance of the designated beneficiary at a U. E file taxes free S. E file taxes free military academy (such as the USMA at West Point). E file taxes free 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. E file taxes free S. E file taxes free Code) attributable to such attendance. E file taxes free 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). E file taxes free Made before June 1, 2014, of an excess 2013 contribution (and any earnings on it). E file taxes free The distributed earnings must be included in gross income for the year in which the excess contribution was made. E file taxes free Exception (3) applies only to the extent the distribution is not more than the scholarship, allowance, or payment. E file taxes free Figuring the additional tax. E file taxes free    Use Part II of Form 5329, to figure any additional tax. E file taxes free Report the amount on Form 1040, line 58, or Form 1040NR, line 56. E file taxes free When Assets Must Be Distributed Any assets remaining in a Coverdell ESA must be distributed when either one of the following two events occurs. E file taxes free The designated beneficiary reaches age 30. E file taxes free In this case, the remaining assets must be distributed within 30 days after the beneficiary reaches age 30. E file taxes free However, this rule does not apply if the beneficiary is a special needs beneficiary. E file taxes free The designated beneficiary dies before reaching age 30. E file taxes free In this case, the remaining assets must generally be distributed within 30 days after the date of death. E file taxes free 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. E file taxes free (“Family member” was defined earlier under Rollovers . E file taxes free ) 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. E file taxes free This age limitation does not apply if the new beneficiary is a special needs beneficiary. E file taxes free There are no tax consequences as a result of the transfer. E file taxes free 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. E file taxes free You determine these earnings as shown in the following two steps. E file taxes free Multiply the amount distributed by a fraction. E file taxes free 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. E file taxes free Subtract the amount figured in (1) from the total amount distributed during 2013. E file taxes free The result is the amount of earnings included in the distribution. E file taxes free For an example, see steps (1) and (2) of the Example under Figuring the Taxable Portion of a Distribution, earlier. E file taxes free 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. E file taxes free Worksheet 7-3 Instructions. E file taxes free Coverdell ESA—Taxable Distributions and Basis Line G. E file taxes free Enter the total distributions received from all Coverdell ESAs during 2013. E file taxes free Do not include amounts rolled over to another ESA within 60 days (only one rollover is allowed during any 12-month period). E file taxes free 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. E file taxes free Line 2. E file taxes free 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. E file taxes free   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. E file taxes free 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. E file taxes free For years after 2001, you can find that amount by using the ending basis from the worksheet in Publication 970 for that year. E file taxes free 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. E file taxes free Line 4. E file taxes free Enter the total distributions received from this Coverdell ESA in 2013. E file taxes free Do not include amounts rolled over to another Coverdell ESA within 60 days (only one rollover is allowed during any 12-month period). E file taxes free   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. E file taxes free Line 7. E file taxes free 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. E file taxes free A statement should be sent to you by January 31, 2014, for this Coverdell ESA showing the value on December 31, 2013. E file taxes free   A rollover is a tax-free withdrawal from one Coverdell ESA that is contributed to another Coverdell ESA. E file taxes free 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. E file taxes free Worksheet 7-3. E file taxes free Coverdell ESA—Taxable Distributions and Basis How to complete this worksheet. E file taxes free • • • Complete Part I, lines A through H, on only one worksheet. E file taxes free  Complete a separate Part II, lines 1 through 15, for each of your Coverdell ESAs. E file taxes free  Complete Part III, the Summary (line 16), on only one worksheet. E file taxes free Part I. E file taxes free Qualified Education Expenses (Complete for total expenses)       A. E file taxes free Enter your total qualified education expenses for 2013   A. E file taxes free   B. E file taxes free 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. E file taxes free         C. E file taxes free Enter those qualified higher education expenses deducted on Schedule C or C-EZ (Form 1040). E file taxes free Schedule F (Form 1040), or as a miscellaneous itemized deduction on Schedule A (Form 1040 or 1040NR)   C. E file taxes free         D. E file taxes free Enter those qualified higher education expenses on which  an American opportunity or lifetime learning credit was based   D. E file taxes free         E. E file taxes free Add lines B, C, and D   D. E file taxes free   F. E file taxes free Subtract line E from line A. E file taxes free This is your adjusted qualified education expense for 2013   E. E file taxes free   G. E file taxes free Enter your total distributions from all Coverdell ESAs during 2013. E file taxes free Do not include rollovers  or the return of excess contributions (see instructions)   F. E file taxes free   H. E file taxes free Divide line F by line G. E file taxes free Enter the result as a decimal (rounded to at least 3 places). E file taxes free If the  result is 1. E file taxes free 000 or more, enter 1. E file taxes free 000   G. E file taxes free . E file taxes free Part II. E file taxes free Taxable Distributions and Basis (Complete separately for each account) 1. E file taxes free Enter the amount contributed to this Coverdell ESA for 2013, including contributions made for 2013 from January 1, 2014, through April 15, 2014. E file taxes free Do not include rollovers or the return of excess contributions   1. E file taxes free   2. E file taxes free Enter your basis in this Coverdell ESA as of December 31, 2012 (see instructions)   2. E file taxes free   3. E file taxes free Add lines 1 and 2   3. E file taxes free   4. E file taxes free Enter the total distributions from this Coverdell ESA during 2013. E file taxes free Do not include rollovers  or the return of excess contributions (see instructions)   4. E file taxes free   5. E file taxes free Multiply line 4 by line H. E file taxes free This is the amount of adjusted qualified  education expense attributable to this Coverdell ESA   5. E file taxes free         6. E file taxes free Subtract line 5 from line 4   6. E file taxes free         7. E file taxes free Enter the total value of this Coverdell ESA as of December 31, 2013,  plus any outstanding rollovers (see instructions)   7. E file taxes free         8. E file taxes free Add lines 4 and 7   8. E file taxes free         9. E file taxes free Divide line 3 by line 8. E file taxes free Enter the result as a decimal (rounded to  at least 3 places). E file taxes free If the result is 1. E file taxes free 000 or more, enter 1. E file taxes free 000   9. E file taxes free . E file taxes free       10. E file taxes free Multiply line 4 by line 9. E file taxes free This is the amount of basis allocated to your  distributions, and is tax free   10. E file taxes free     Note. E file taxes free If line 6 is zero, skip lines 11 through 13, enter -0- on line 14, and go to line 15. E file taxes free       11. E file taxes free Subtract line 10 from line 4   11. E file taxes free   12. E file taxes free Divide line 5 by line 4. E file taxes free Enter the result as a decimal (rounded to  at least 3 places). E file taxes free If the result is 1. E file taxes free 000 or more, enter 1. E file taxes free 000   12. E file taxes free . E file taxes free       13. E file taxes free Multiply line 11 by line 12. E file taxes free This is the amount of qualified education  expenses allocated to your distributions, and is tax free   13. E file taxes free   14. E file taxes free Subtract line 13 from line 11. E file taxes free This is the portion of the distributions from this  Coverdell ESA in 2013 that you must include in income   14. E file taxes free   15. E file taxes free Subtract line 10 from line 3. E file taxes free This is your basis in this Coverdell ESA as of December 31, 2013   15. E file taxes free   Part III. E file taxes free Summary (Complete only once)       16. E file taxes free Taxable amount. E file taxes free Add together all amounts on line 14 for all your Coverdell ESAs. E file taxes free 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. E file taxes free   Prev  Up  Next   Home   More Online Publications
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Procurement Small Business Program Office

Our Purpose:

The Internal Revenue Service (IRS) Small Business Program Office was established to (1) assist small, HUBZone small, small disadvantaged, women-owned small, veteran-owned small, and service disabled veteran-owned small businesses, to develop, grow, and ensure their long-term success; (2) continually foster an environment where small, HUBZone small, small disadvantaged, women-owned small, veteran-owned small, and service disabled veteran-owned small businesses can compete successfully for a fair share of IRS's procurements on their own merits; and (3) assist large businesses to increase subcontracting opportunities for small, HUBZone small, small disadvantaged, women-owned small, veteran-owned small, and service disabled veteran-owned small businesses.

The IRS small business goals for FY 2014 are as follows:

 

IRS FY 2014 SMALL BUSINESS GOALS

Small Business (SB)

35.07%

Small Disadvantaged Business (SDB)

5.0%

Woman-Owned Small Business (WOSB)

5.0%

HUBZone Small Business (HUBZone)

3.0%

Service-Disabled Veteran-Owned Small Business (SDVOSB)

3.0%

Veteran-Owned Small Business (VOSB)

No Goal



 

IRS FY 2014 SUB-CONTRACTING GOALS

Small Business (SB)

35%

Small Disadvantaged Business (SDB)

5.0%

Woman-Owned Small Business (WOSB)

5.0%

HUBZone Small Business (HUBZone)

3.0%

Service-Disabled Veteran-Owned Small Business (SDVOSB)

3.0%


 

Points of Contact:

Please Note: This office does not have the expertise to answer tax questions. Please search the website under the Search Function for answers to tax questions or call the toll-free tax assistance line at 1-800-829-1040 for individual tax questions and 1-800-829-4933 for business tax questions. The IRS has no loan program. The IRS does have a small E-Grants Program for Low Income Taxpayer Clinics and Tax Counseling for Elderly (TCE) services. For further information on financing your business, please visit the Small Business Administrations (SBA's) web site.

 

For Small Business Concerns: Prior to contacting the Small Business Program Office, please review the information contained in this section as well as the Treasury Forecast of Procurement Opportunities to determine if the IRS actually purchases the products/services you are interested in selling to the IRS. Upon completion of the review, please feel free to contact the Small Business Program Office for further assistance in doing business with the IRS.

LaTonya Richardson - Small Business Specialist
Mary McKinzie - Procurement Analyst
Phone: 240-613-8600
Fax:  240-613-8552
Email: IRS Small Business Program

 


Office of Procurement - The Office of Procurement organization is located in Oxon Hill, Maryland, and handles nationwide IRS procurements, requirements for the Martinsburg, WV and Detroit, MI Computing Centers, and all local requirements for the IRS headquarters offices in the Washington, DC metropolitan area. In addition, there are four area procurement offices located in New York, NY, Atlanta, GA, Dallas, TX and Oakland, CA.

Purchase Card Program (Micropurchases) - The Internal Revenue Service currently spends approximately $4 million per month through individual purchase card transactions. Approximately 4,300 IRS field employees use the purchase cards to make purchases up to $3,000. These purchases, made throughout all IRS offices within the United States, cover a myriad of services, supplies, and equipment.

8(a) At-a-Glance Listing - The IRS' 8(a) At-A-Glance Listing contains information on the approximately 500 8(a) firms who are actively marketing the IRS at any given time. The listing contains each 8(a) firm's company name, address, phone number, graduation date, and a brief description of the products and/or services offered. The listing was developed to assist procurement and program personnel in selecting 8(a) firms for IRS contract opportunities. The listing is updated periodically to add new 8(a) firms and to delete graduated 8(a) firms.

HUBZone At-a-Glance Listing- The IRS’ HUBZone At-a-Glance Listing contains information on the HUBZone firms who are actively marketing the IRS. The listing contains each HUBZone firm’s company name, address, phone number, and a brief description of the products and/or services offered. The listing was developed to assist procurement and program personnel in selecting HUBZone firms for IRS contract opportunities. The listing is updated periodically to add new HUBZone firms.

Service Disabled Veteran-Owned Small Business (SDVOSB) At-a-Glance Listing- The IRS’ SDVOSB At-a-Glance Listing contains information on the SDVOSB firms who are actively marketing the IRS. The listing contains each SDVOSB firm’s company name, address, phone number, and a brief description of the products and/or services offered. The listing was developed to assist procurement and program personnel in selecting SDVOSB firms for IRS contract opportunities. The listing is updated periodically to add new SDVOSB firms.

Women Owned Small Business At-a-Glance Listing- The IRS' Women Owned Small Business At-a-Glance Listing contains information on the Women Owned Small Business (WOSB) firms who are actively marketing the IRS.  The listing contains each WOSB firm's company name, address, phone number, and a brief description of the products and/or services offered.  The listing was developed to assist procurement and program personnel in selecting WOSB firms for IRS contract opportunities.  The listing is updated periodically to add new WOSB firms.  

Freedom of Information Act (FOIA)- provides public access to agency records unless protected from disclosure by one of the FOIA’s nine exemptions or three exclusions.

Outreach Information - The Small Business Program Office is available to meet with small, (8a), HUBZone small, small disadvantaged, women-owned small, veteran-owned small, and service disabled veteran-owned small businesses to discuss a company's capabilities provide information on future procurement opportunities, and give advice on procurement questions. Individual appointments are available by phone or in person by calling 240-613-8600 or by sending an e-mail to AWSS.SBRO@IRS.GOV  .

The Small Business Program Office periodically hosts small business outreach events to target 8(a), HUBZone, Service Disabled Veteran Owned and Women Owned Small Businesses. Notice of the events are posted on Federal Business Opportunities when scheduled and are posted on our Internet page under Outreach Events.

Forecast of Procurement Opportunities - The IRS Forecast of Procurement Opportunities is available under the Treasury Web Site. There are two sections to the IRS Forecast: existing contracts, and new opportunities. The existing contracts section contains a list of active IRS contracts including NAICS code, contract description, dollar value, final year of contract, procurement contact and phone number, contract number, and contractor name. The new opportunities section contains a list of future contract opportunities including NAICS code, project description, dollar value (estimated), quarter and fiscal year of release date of the RFP, set-aside information, procurement contact and phone number.

Bidders List Information - In order to receive an award from any Treasury bureau, it is now required that your company register in the System for Award Management (SAM) database. The SAM serves as the primary Government repository for contractor information required for the conduct of business with the Government. 

Links to Other Small Business Sites

Success Stories - In Fiscal Year 2012, the IRS awarded approximately $656 Million Dollars in contracts to small business concerns. There are many success stories regarding small business concerns who provide much needed products and services to the IRS.

 


Questions about the Procurement information on this site, please contact the webmaster.
Contact the Office of Procurement for other Procurement related questions.

Page Last Reviewed or Updated: 04-Feb-2014

The E File Taxes Free

E file taxes free 12. E file taxes free   Filing Form 720 Table of Contents Attachments to Form 720. E file taxes free Conditions to allowance. E file taxes free Use Form 720 to report and pay the excise taxes previously discussed in this publication. E file taxes free File Form 720 for each calendar quarter until you file a final Form 720. E file taxes free For information on filing Form 720 electronically, visit the IRS e-file website at www. E file taxes free irs. E file taxes free gov/efile. E file taxes free You may be required to file your returns on a monthly or semimonthly basis instead of quarterly if you do not make deposits as required (see Payment of Taxes, later) or are liable for the excise tax on taxable fuels and meet certain conditions. E file taxes free Form 720 has three parts and three schedules. E file taxes free Part I consists of excise taxes generally required to be deposited (see Payment of Taxes, later). E file taxes free Part II consists of excise taxes that are not required to be deposited. E file taxes free Part III is used to figure your tax liability for the quarter and the amount of any balance due or overpayment. E file taxes free Schedule A, Excise Tax Liability, is used to record your net tax liability for each semimonthly period in a quarter. E file taxes free Complete it if you have an entry in Part I. E file taxes free Schedule C, Claims, is used to make claims. E file taxes free However, Schedule C can only be used if you are reporting a liability in Part I or Part II. E file taxes free Schedule T, Two-Party Exchange Information Reporting, is used to report certain exchanges of taxable fuel before or in connection with the removal at the terminal rack. E file taxes free Attachments to Form 720. E file taxes free   You may have to attach the following forms. E file taxes free Form 6197 for the gas guzzler tax. E file taxes free Form 6627 for environmental taxes. E file taxes free Form 720X. E file taxes free   This form is used to make adjustments to Forms 720 filed in prior quarters. E file taxes free You can file Form 720X by itself or, if it shows a decrease in tax, you can attach it to Form 720. E file taxes free See Form 720X for more information. E file taxes free Conditions to allowance. E file taxes free   For tax decreases, the claimant must check the appropriate box on Form 720X stating that: For adjustments of communications or air transportation taxes, the claimant has: Repaid the tax to the person from whom it was collected, or Obtained the consent of that person to the allowance of the adjustment. E file taxes free For other adjustments, the claimant has: Not included the tax in the price of the article and not collected the tax from the purchaser, Repaid the tax to the ultimate purchaser, or Attached the written consent of the ultimate purchaser to the allowance of the adjustment. E file taxes free However, the conditions listed under (2) do not apply to environmental taxes, the ship passenger tax, obligations not in registered form, foreign insurance taxes, fuels used on inland waterways, cellulosic or second generation biofuel sold as but not used as fuel, biodiesel sold as fuel but not used as fuel, and certain fuel taxes if the tax was based on use (for example, dyed diesel fuel used in trains, LPG, and CNG). E file taxes free Final return. E file taxes free   File a final return if: You go out of business, or You will not owe excise taxes that are reportable on Form 720 in future quarters. E file taxes free Due dates. E file taxes free   Form 720 must be filed by the following due dates. E file taxes free Quarter Covered Due Dates January, February, March April 30 April, May, June July 31 July, August, September October 31 October, November, December January 31   If any due date falls on a Saturday, Sunday, or legal holiday, you can file the return on the next business day. E file taxes free One-time filing. E file taxes free   If you import a gas guzzling automobile, you may be eligible to make a one-time filing using your SSN if you: Do not import gas guzzling automobiles in the course of your trade or business, and Are not required to file Form 720 reporting other excise taxes for the calendar quarter, except for a one-time filing. E file taxes free   If you meet both requirements above, see Gas guzzler tax (IRS No. E file taxes free 40) in the Instructions for Form 720 for how to file and pay the tax. E file taxes free Payment voucher. E file taxes free   Form 720-V, Payment Voucher, must be included with Form 720 if you have a balance due on line 10 of Form 720 and you are making your payment by check or money order. E file taxes free Prev  Up  Next   Home   More Online Publications