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How To Do 2012 Taxes
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How to do 2012 taxes 7. How to do 2012 taxes 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 DistributionsTaxFree 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. How to do 2012 taxes For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return. How to do 2012 taxes There is no limit on the number of separate Coverdell ESAs that can be established for a designated beneficiary. How to do 2012 taxes However, total contributions for the beneficiary in any year cannot be more than $2,000, no matter how many accounts have been established. How to do 2012 taxes See Contributions , later. How to do 2012 taxes This benefit applies not only to higher education expenses, but also to elementary and secondary education expenses. How to do 2012 taxes What is the tax benefit of the Coverdell ESA. How to do 2012 taxes Contributions to a Coverdell ESA are not deductible, but amounts deposited in the account grow tax free until distributed. How to do 2012 taxes 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. How to do 2012 taxes See TaxFree Distributions , later. How to do 2012 taxes Table 71 summarizes the main features of the Coverdell ESA. How to do 2012 taxes Table 71. How to do 2012 taxes Coverdell ESA at a Glance Do not rely on this table alone. How to do 2012 taxes It provides only general highlights. How to do 2012 taxes See the text for definitions of terms in bold type and for more complete explanations. How to do 2012 taxes Question Answer What is a Coverdell ESA? A savings account that is set up to pay the qualified education expenses of a designated beneficiary. How to do 2012 taxes Where can it be established? It can be opened in the United States at any bank or other IRSapproved entity that offers Coverdell ESAs. How to do 2012 taxes Who can have a Coverdell ESA? Any beneficiary who is under age 18 or is a special needs beneficiary. How to do 2012 taxes 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). How to do 2012 taxes Are distributions tax free? Yes, if the distributions are not more than the beneficiary's adjusted qualified education expenses for the year. How to do 2012 taxes 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. How to do 2012 taxes When the account is established, the designated beneficiary must be under age 18 or a special needs beneficiary. How to do 2012 taxes To be treated as a Coverdell ESA, the account must be designated as a Coverdell ESA when it is created. How to do 2012 taxes The document creating and governing the account must be in writing and must satisfy the following requirements. How to do 2012 taxes The trustee or custodian must be a bank or an entity approved by the IRS. How to do 2012 taxes The document must provide that the trustee or custodian can only accept a contribution that meets all of the following conditions. How to do 2012 taxes The contribution is in cash. How to do 2012 taxes The contribution is made before the beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary. How to do 2012 taxes The contribution would not result in total contributions for the year (not including rollover contributions) being more than $2,000. How to do 2012 taxes Money in the account cannot be invested in life insurance contracts. How to do 2012 taxes Money in the account cannot be combined with other property except in a common trust fund or common investment fund. How to do 2012 taxes The balance in the account generally must be distributed within 30 days after the earlier of the following events. How to do 2012 taxes The beneficiary reaches age 30, unless the beneficiary is a special needs beneficiary. How to do 2012 taxes The beneficiary's death. How to do 2012 taxes Qualified Education Expenses Generally, these are expenses required for the enrollment or attendance of the designated beneficiary at an eligible educational institution. How to do 2012 taxes For purposes of Coverdell ESAs, the expenses can be either qualified higher education expenses or qualified elementary and secondary education expenses. How to do 2012 taxes Designated beneficiary. How to do 2012 taxes This is the individual named in the document creating the trust or custodial account to receive the benefit of the funds in the account. How to do 2012 taxes Contributions to a qualified tuition program (QTP). How to do 2012 taxes A contribution to a QTP is a qualified education expense if the contribution is on behalf of the designated beneficiary of the Coverdell ESA. How to do 2012 taxes 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. How to do 2012 taxes See chapter 8, Qualified Tuition Program . How to do 2012 taxes 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. How to do 2012 taxes Eligible postsecondary school. How to do 2012 taxes This is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. How to do 2012 taxes S. How to do 2012 taxes Department of Education. How to do 2012 taxes It includes virtually all accredited public, nonprofit, and proprietary (privately owned profitmaking) postsecondary institutions. How to do 2012 taxes The educational institution should be able to tell you if it is an eligible educational institution. How to do 2012 taxes Certain educational institutions located outside the United States also participate in the U. How to do 2012 taxes S. How to do 2012 taxes Department of Education's Federal Student Aid (FSA) programs. How to do 2012 taxes Eligible elementary or secondary school. How to do 2012 taxes This is any public, private, or religious school that provides elementary or secondary education (kindergarten through grade 12), as determined under state law. How to do 2012 taxes Qualified Higher Education Expenses These are expenses related to enrollment or attendance at an eligible postsecondary school. How to do 2012 taxes 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 halftime. How to do 2012 taxes The following expenses must be required for enrollment or attendance of a designated beneficiary at an eligible postsecondary school. How to do 2012 taxes Tuition and fees. How to do 2012 taxes Books, supplies, and equipment. How to do 2012 taxes 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. How to do 2012 taxes Expenses for room and board must be incurred by students who are enrolled at least halftime (defined below). How to do 2012 taxes The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts. How to do 2012 taxes 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. How to do 2012 taxes The actual amount charged if the student is residing in housing owned or operated by the school. How to do 2012 taxes Halftime student. How to do 2012 taxes A student is enrolled “at least halftime” if he or she is enrolled for at least half the fulltime 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. How to do 2012 taxes Qualified Elementary and Secondary Education Expenses These are expenses related to enrollment or attendance at an eligible elementary or secondary school. How to do 2012 taxes As shown in the following list, to be qualified, some of the expenses must be required or provided by the school. How to do 2012 taxes There are special rules for computerrelated expenses. How to do 2012 taxes The following expenses must be incurred by a designated beneficiary in connection with enrollment or attendance at an eligible elementary or secondary school. How to do 2012 taxes Tuition and fees. How to do 2012 taxes Books, supplies, and equipment. How to do 2012 taxes Academic tutoring. How to do 2012 taxes Special needs services for a special needs beneficiary. How to do 2012 taxes The following expenses must be required or provided by an eligible elementary or secondary school in connection with attendance or enrollment at the school. How to do 2012 taxes Room and board. How to do 2012 taxes Uniforms. How to do 2012 taxes Transportation. How to do 2012 taxes Supplementary items and services (including extended day programs). How to do 2012 taxes 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. How to do 2012 taxes (This does not include expenses for computer software designed for sports, games, or hobbies unless the software is predominantly educational in nature. How to do 2012 taxes ) 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. How to do 2012 taxes For individuals filing joint returns, that amount is $220,000. How to do 2012 taxes Organizations, such as corporations and trusts, can also contribute to Coverdell ESAs. How to do 2012 taxes There is no requirement that an organization's income be below a certain level. How to do 2012 taxes Contributions must meet all of the following requirements. How to do 2012 taxes They must be in cash. How to do 2012 taxes They cannot be made after the beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary. How to do 2012 taxes They must be made by the due date of the contributor's tax return (not including extensions). How to do 2012 taxes 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. How to do 2012 taxes Contributions can be made, without penalty, to both a Coverdell ESA and a QTP in the same year for the same beneficiary. How to do 2012 taxes Table 72 summarizes many of the features of contributing to a Coverdell ESA. How to do 2012 taxes When contributions considered made. How to do 2012 taxes 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. How to do 2012 taxes They must be made by the due date (not including extensions) for filing your return for the preceding year. How to do 2012 taxes 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. How to do 2012 taxes 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. How to do 2012 taxes Limit for each designated beneficiary. How to do 2012 taxes 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. How to do 2012 taxes This includes contributions (other than rollovers) to all the beneficiary's Coverdell ESAs from all sources. How to do 2012 taxes Rollovers are discussed under Rollovers and Other Transfers , later. How to do 2012 taxes Example. How to do 2012 taxes 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. How to do 2012 taxes In 2013, the total of all contributions to Maria's three Coverdell ESAs cannot be more than $2,000. How to do 2012 taxes 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. How to do 2012 taxes Or, if her parents contributed $1,000 and her aunt $600, her grandfather or someone else could contribute no more than $400. How to do 2012 taxes These contributions could be put into any of Maria's Coverdell ESA accounts. How to do 2012 taxes Limit for each contributor. How to do 2012 taxes Generally, you can contribute up to $2,000 for each designated beneficiary for 2013. How to do 2012 taxes 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. How to do 2012 taxes Example. How to do 2012 taxes The facts are the same as in the previous example except that Maria Luna's older brother, Edgar, also has a Coverdell ESA. How to do 2012 taxes If their grandfather contributed $2,000 to Maria's Coverdell ESA in 2013, he could also contribute $2,000 to Edgar's Coverdell ESA. How to do 2012 taxes Reduced limit. How to do 2012 taxes Your contribution limit may be reduced. How to do 2012 taxes 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). How to do 2012 taxes 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. How to do 2012 taxes Table 72. How to do 2012 taxes Coverdell ESA Contributions at a Glance Do not rely on this table alone. How to do 2012 taxes It provides only general highlights. How to do 2012 taxes See the text for more complete explanations. How to do 2012 taxes Question Answer Are contributions deductible? No. How to do 2012 taxes What is the annual contribution limit per designated beneficiary? $2,000 for each designated beneficiary. How to do 2012 taxes 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. How to do 2012 taxes 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. How to do 2012 taxes Can contributions other than cash be made to a Coverdell ESA? No. How to do 2012 taxes 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. How to do 2012 taxes Modified adjusted gross income (MAGI). How to do 2012 taxes For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. How to do 2012 taxes MAGI when using Form 1040A. How to do 2012 taxes If you file Form 1040A, your MAGI is the AGI on line 22 of that form. How to do 2012 taxes MAGI when using Form 1040. How to do 2012 taxes 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. How to do 2012 taxes MAGI when using Form 1040NR. How to do 2012 taxes If you file Form 1040NR, your MAGI is the AGI on line 36 of that form. How to do 2012 taxes MAGI when using Form 1040NREZ. How to do 2012 taxes If you file Form 1040NREZ, your MAGI is the AGI on line 10 of that form. How to do 2012 taxes If you have any of these adjustments, you can use Worksheet 71. How to do 2012 taxes MAGI for a Coverdell ESA , later, to figure your MAGI for Form 1040. How to do 2012 taxes Worksheet 71. How to do 2012 taxes MAGI for a Coverdell ESA 1. How to do 2012 taxes Enter your adjusted gross income (Form 1040, line 38) 1. How to do 2012 taxes 2. How to do 2012 taxes Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555EZ, line 18) 2. How to do 2012 taxes 3. How to do 2012 taxes Enter your foreign housing deduction (Form 2555, line 50) 3. How to do 2012 taxes 4. How to do 2012 taxes Enter the amount of income from Puerto Rico you are excluding 4. How to do 2012 taxes 5. How to do 2012 taxes Enter the amount of income from American Samoa you are excluding (Form 4563, line 15) 5. How to do 2012 taxes 6. How to do 2012 taxes Add lines 2, 3, 4, and 5 6. How to do 2012 taxes 7. How to do 2012 taxes Add lines 1 and 6. How to do 2012 taxes This is your modified adjusted gross income 7. How to do 2012 taxes Figuring the limit. How to do 2012 taxes To figure the limit on the amount you can contribute for each designated beneficiary, multiply $2,000 by a fraction. How to do 2012 taxes The numerator (top number) is your MAGI minus $95,000 ($190,000 if filing a joint return). How to do 2012 taxes The denominator (bottom number) is $15,000 ($30,000 if filing a joint return). How to do 2012 taxes Subtract the result from $2,000. How to do 2012 taxes This is the amount you can contribute for each beneficiary. How to do 2012 taxes You can use Worksheet 72. How to do 2012 taxes Coverdell ESA Contribution Limit to figure the limit on contributions. How to do 2012 taxes Worksheet 72. How to do 2012 taxes Coverdell ESA Contribution Limit 1. How to do 2012 taxes Maximum contribution 1. How to do 2012 taxes $2,000 2. How to do 2012 taxes Enter your modified adjusted gross income (MAGI) for purposes of figuring the contribution limit to a Coverdell ESA (see definition or Worksheet 71, earlier) 2. How to do 2012 taxes 3. How to do 2012 taxes Enter $190,000 if married filing jointly; $95,000 for all other filers 3. How to do 2012 taxes 4. How to do 2012 taxes Subtract line 3 from line 2. How to do 2012 taxes If zero or less, enter 0 on line 4, skip lines 5 through 7, and enter $2,000 on line 8 4. How to do 2012 taxes 5. How to do 2012 taxes Enter $30,000 if married filing jointly; $15,000 for all other filers 5. How to do 2012 taxes Note. How to do 2012 taxes If the amount on line 4 is greater than or equal to the amount on line 5, stop here. How to do 2012 taxes You are not allowed to contribute to a Coverdell ESA for 2013. How to do 2012 taxes 6. How to do 2012 taxes Divide line 4 by line 5 and enter the result as a decimal (rounded to at least 3 places) 6. How to do 2012 taxes . How to do 2012 taxes 7. How to do 2012 taxes Multiply line 1 by line 6 7. How to do 2012 taxes 8. How to do 2012 taxes Subtract line 7 from line 1 8. How to do 2012 taxes Note: The total Coverdell ESA contributions from all sources for the designated beneficiary during the tax year may not exceed $2,000. How to do 2012 taxes Example. How to do 2012 taxes Paul, who is single, had a MAGI of $96,500 for 2013. How to do 2012 taxes Paul can contribute up to $1,800 in 2013 for each beneficiary, as shown in the illustrated Worksheet 72, Coverdell ESA Contribution Limit–Illustrated. How to do 2012 taxes Worksheet 72. How to do 2012 taxes Coverdell ESA Contribution Limit—Illustrated 1. How to do 2012 taxes Maximum contribution 1. How to do 2012 taxes $2,000 2. How to do 2012 taxes Enter your modified adjusted gross income (MAGI) for purposes of figuring the contribution limit to a Coverdell ESA (see definition or Worksheet 71, earlier) 2. How to do 2012 taxes 96,500 3. How to do 2012 taxes Enter $190,000 if married filing jointly; $95,000 for all other filers 3. How to do 2012 taxes 95,000 4. How to do 2012 taxes Subtract line 3 from line 2. How to do 2012 taxes If zero or less, enter 0 on line 4, skip lines 5 through 7, and enter $2,000 on line 8 4. How to do 2012 taxes 1,500 5. How to do 2012 taxes Enter $30,000 if married filing jointly; $15,000 for all other filers 5. How to do 2012 taxes 15,000 Note. How to do 2012 taxes If the amount on line 4 is greater than or equal to the amount on line 5, stop here. How to do 2012 taxes You are not allowed to contribute to a Coverdell ESA for 2013. How to do 2012 taxes 6. How to do 2012 taxes Divide line 4 by line 5 and enter the result as a decimal (rounded to at least 3 places) 6. How to do 2012 taxes . How to do 2012 taxes 100 7. How to do 2012 taxes Multiply line 1 by line 6 7. How to do 2012 taxes 200 8. How to do 2012 taxes Subtract line 7 from line 1 8. How to do 2012 taxes 1,800 Note: The total Coverdell ESA contributions from all sources for the designated beneficiary during the tax year may not exceed $2,000. How to do 2012 taxes 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. How to do 2012 taxes Excess contributions are the total of the following two amounts. How to do 2012 taxes 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). How to do 2012 taxes 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. How to do 2012 taxes Exceptions. How to do 2012 taxes 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). How to do 2012 taxes However, you must include the distributed earnings in gross income for the year in which the excess contribution was made. How to do 2012 taxes You should receive Form 1099Q, Payments From Qualified Education Programs, from each institution from which excess contributions were distributed. How to do 2012 taxes Box 2 of that form will show the amount of earnings on your excess contributions. How to do 2012 taxes Code “2” or “3” entered in the blank box below boxes 5 and 6 indicate the year in which the earnings are taxable. How to do 2012 taxes See Instructions for Recipient on the back of copy B of your Form 1099Q. How to do 2012 taxes Enter the amount of earnings on line 21 of Form 1040 (or Form 1040NR) for the applicable tax year. How to do 2012 taxes For more information, see Taxable Distributions , later. How to do 2012 taxes The excise tax does not apply to any rollover contribution. How to do 2012 taxes Note. How to do 2012 taxes Contributions made in one year for the preceding tax year are considered to have been made on the last day of the preceding year. How to do 2012 taxes Example. How to do 2012 taxes In 2012, Greta's parents and grandparents contributed a total of $2,300 to Greta's Coverdell ESA— an excess contribution of $300. How to do 2012 taxes 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. How to do 2012 taxes 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. How to do 2012 taxes 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. How to do 2012 taxes (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. How to do 2012 taxes Figuring and reporting the additional tax. How to do 2012 taxes You figure this excise tax in Part V of Form 5329. How to do 2012 taxes Report the additional tax on Form 1040, line 58 (or Form 1040NR, line 56). How to do 2012 taxes Rollovers and Other Transfers Assets can be rolled over from one Coverdell ESA to another or the designated beneficiary can be changed. How to do 2012 taxes The beneficiary's interest can be transferred to a spouse or former spouse because of divorce. How to do 2012 taxes 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. How to do 2012 taxes This age limitation does not apply if the new beneficiary is a special needs beneficiary. How to do 2012 taxes An amount is rolled over if it is paid to another Coverdell ESA within 60 days after the date of the distribution. How to do 2012 taxes Do not report qualifying rollovers (those that meet the above criteria) anywhere on Form 1040 or 1040NR. How to do 2012 taxes These are not taxable distributions. How to do 2012 taxes Members of the beneficiary's family. How to do 2012 taxes For these purposes, the beneficiary's family includes the beneficiary's spouse and the following other relatives of the beneficiary. How to do 2012 taxes Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them. How to do 2012 taxes Brother, sister, stepbrother, or stepsister. How to do 2012 taxes Father or mother or ancestor of either. How to do 2012 taxes Stepfather or stepmother. How to do 2012 taxes Son or daughter of a brother or sister. How to do 2012 taxes Brother or sister of father or mother. How to do 2012 taxes Soninlaw, daughterinlaw, fatherinlaw, motherinlaw, brotherinlaw, or sisterinlaw. How to do 2012 taxes The spouse of any individual listed above. How to do 2012 taxes First cousin. How to do 2012 taxes Example. How to do 2012 taxes When Aaron graduated from college last year he had $5,000 left in his Coverdell ESA. How to do 2012 taxes He wanted to give this money to his younger sister, who was still in high school. How to do 2012 taxes 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. How to do 2012 taxes Only one rollover per Coverdell ESA is allowed during the 12month period ending on the date of the payment or distribution. How to do 2012 taxes This rule does not apply to the rollover of a military death gratuity or payment from Servicemembers' Group Life Insurance (SGLI). How to do 2012 taxes Military death gratuity. How to do 2012 taxes 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). How to do 2012 taxes Such payments are made to an eligible survivor upon the death of a member of the armed forces. How to do 2012 taxes 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. How to do 2012 taxes This rollover contribution is not subject to (but is in addition to) the contribution limits discussed earlier under Contribution Limits . How to do 2012 taxes 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. How to do 2012 taxes 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. How to do 2012 taxes See Distributions , later. How to do 2012 taxes The limit of one rollover per Coverdell ESA during a 12month period does not apply to a military death gratuity or SGLI payment. How to do 2012 taxes Changing the Designated Beneficiary The designated beneficiary can be changed. How to do 2012 taxes See Members of the beneficiary's family , earlier. How to do 2012 taxes 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. How to do 2012 taxes Example. How to do 2012 taxes Assume the same situation for Aaron as in the last example (see Rollovers , earlier). How to do 2012 taxes 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. How to do 2012 taxes 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. How to do 2012 taxes After the transfer, the spouse or former spouse treats the Coverdell ESA as his or her own. How to do 2012 taxes Example. How to do 2012 taxes In their divorce settlement, Peg received her exhusband's Coverdell ESA. How to do 2012 taxes In this process, the account was transferred into her name. How to do 2012 taxes Peg now treats the funds in this Coverdell ESA as if she were the original owner. How to do 2012 taxes Distributions The designated beneficiary of a Coverdell ESA can take a distribution at any time. How to do 2012 taxes 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. How to do 2012 taxes See Table 73, Coverdell ESA Distributions at a Glance, for highlights. How to do 2012 taxes Table 73. How to do 2012 taxes Coverdell ESA Distributions at a Glance Do not rely on this table alone. How to do 2012 taxes It provides only general highlights. How to do 2012 taxes See the text for definitions of terms in bold type and for more complete explanations. How to do 2012 taxes 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. How to do 2012 taxes After the designated beneficiary completes his or her education at an eligible educational institution, can amounts remaining in the Coverdell ESA be distributed? Yes. How to do 2012 taxes Amounts must be distributed when the designated beneficiary reaches age 30, unless he or she is a special needs beneficiary. How to do 2012 taxes Also, certain transfers to members of the beneficiary's family are permitted. How to do 2012 taxes Does the designated beneficiary need to be enrolled for a minimum number of courses to take a taxfree distribution? No. How to do 2012 taxes Adjusted qualified education expenses. How to do 2012 taxes To determine if total distributions for the year are more than the amount of qualified education expenses, reduce total qualified education expenses by any taxfree educational assistance. How to do 2012 taxes Taxfree educational assistance includes: The taxfree part of scholarships and fellowships (see TaxFree 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 NeedBased Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employerprovided educational assistance (see chapter 11, EmployerProvided Educational Assistance ), and Any other nontaxable (taxfree) payments (other than gifts or inheritances) received as educational assistance. How to do 2012 taxes The amount you get by subtracting taxfree educational assistance from your total qualified education expenses is your adjusted qualified education expenses. How to do 2012 taxes TaxFree Distributions Generally, distributions are tax free if they are not more than the beneficiary's adjusted qualified education expenses for the year. How to do 2012 taxes Do not report taxfree distributions (including qualifying rollovers) on your tax return. How to do 2012 taxes 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. How to do 2012 taxes Excess distribution. How to do 2012 taxes This is the part of the total distribution that is more than the beneficiary's adjusted qualified education expenses for the year. How to do 2012 taxes Earnings and basis. How to do 2012 taxes You will receive a Form 1099Q for each of the Coverdell ESAs from which money was distributed in 2013. How to do 2012 taxes The amount of your gross distribution will be shown in box 1. How to do 2012 taxes For 2013, instead of dividing the gross distribution between your earnings (box 2) and your basis (alreadytaxed amount) (box 3), the payer or trustee may report the fair market value (account balance) of the Coverdell ESA as of December 31, 2013. How to do 2012 taxes This will be shown in the blank box below boxes 5 and 6. How to do 2012 taxes 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. How to do 2012 taxes 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. How to do 2012 taxes Figure the taxable portion for 2013 as shown in the following steps. How to do 2012 taxes Multiply the total amount distributed by a fraction. How to do 2012 taxes 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. How to do 2012 taxes Subtract the amount figured in (1) from the total amount distributed during 2013. How to do 2012 taxes The result is the amount of earnings included in the distribution(s). How to do 2012 taxes Multiply the amount of earnings figured in (2) by a fraction. How to do 2012 taxes The numerator is the adjusted qualified education expenses paid during 2013 and the denominator is the total amount distributed during 2013. How to do 2012 taxes Subtract the amount figured in (3) from the amount figured in (2). How to do 2012 taxes The result is the amount the beneficiary must include in income. How to do 2012 taxes The taxable amount must be reported on Form 1040 or Form 1040NR, line 21. How to do 2012 taxes Example. How to do 2012 taxes You received an $850 distribution from your Coverdell ESA, to which $1,500 had been contributed before 2013. How to do 2012 taxes There were no contributions in 2013. How to do 2012 taxes This is your first distribution from the account, so your basis in the account on December 31, 2012, was $1,500. How to do 2012 taxes The value (balance) of your account on December 31, 2013, was $950. How to do 2012 taxes You had $700 of adjusted qualified education expenses (AQEE) for the year. How to do 2012 taxes Using the steps in Figuring the Taxable Portion of a Distribution , earlier, figure the taxable portion of your distribution as follows. How to do 2012 taxes 1. How to do 2012 taxes $850 (distribution) × $1,500 basis + $0 contributions $950 value + $850 distribution =$708 (basis portion of distribution) 2. How to do 2012 taxes $850 (distribution)−$708 (basis portion of distribution) =$142 (earnings included in distribution) 3. How to do 2012 taxes $142 (earnings) × $700 AQEE $850 distribution =$117 (taxfree earnings) 4. How to do 2012 taxes $142 (earnings)−$117 (taxfree earnings)=$25 (taxable earnings) You must include $25 in income as distributed earnings not used for qualified education expenses. How to do 2012 taxes Report this amount on Form 1040, line 21, listing the type and amount of income on the dotted line. How to do 2012 taxes Worksheet 73, 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). How to do 2012 taxes 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 taxfree distribution from a Coverdell ESA, as long as the same expenses are not used for both benefits. How to do 2012 taxes This means the beneficiary must reduce qualified higher education expenses by taxfree educational assistance, and then further reduce them by any expenses taken into account in determining an American opportunity or lifetime learning credit. How to do 2012 taxes Example. How to do 2012 taxes Derek Green had $5,800 of qualified higher education expenses for 2013, his first year in college. How to do 2012 taxes He paid his college expenses from the following sources. How to do 2012 taxes Partial tuition scholarship (tax free) $1,500 Coverdell ESA distribution 1,000 Gift from parents 2,100 Earnings from parttime 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. How to do 2012 taxes Derek's parents claimed a $2,500 American opportunity credit (based on $4,000 expenses) on their tax return. How to do 2012 taxes Before Derek can determine the taxable portion of his Coverdell ESA distribution, he must reduce his total qualified higher education expenses. How to do 2012 taxes Total qualified higher education expenses $5,800 Minus: Taxfree 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. How to do 2012 taxes The balance in Derek's account was $1,800 on December 31, 2013. How to do 2012 taxes Prior to 2013, $2,100 had been contributed to this account. How to do 2012 taxes Contributions for 2013 totaled $400. How to do 2012 taxes Using the four steps outlined earlier, Derek figures the taxable portion of his distribution as shown below. How to do 2012 taxes 1. How to do 2012 taxes $1,000 (distribution) × $2,100 basis + $400 contributions $1,800 value + $1,000 distribution =$893 (basis portion of distribution) 2. How to do 2012 taxes $1,000 (distribution)−$893 (basis portion of distribution) = $107 (earnings included in distribution) 3. How to do 2012 taxes $107 (earnings) × $300 AQHEE $1,000 distribution =$32 (taxfree earnings) 4. How to do 2012 taxes $107 (earnings)−$32 (taxfree earnings)=$75 (taxable earnings) Derek must include $75 in income (Form 1040, line 21). How to do 2012 taxes This is the amount of distributed earnings not used for adjusted qualified higher education expenses. How to do 2012 taxes 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. How to do 2012 taxes The following two examples illustrate possible allocations. How to do 2012 taxes Example 1. How to do 2012 taxes In 2013, Beatrice graduated from high school and began her first semester of college. How to do 2012 taxes 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. How to do 2012 taxes To pay these expenses, Beatrice withdrew $800 from her Coverdell ESA and $4,200 from her QTP. How to do 2012 taxes No one claimed Beatrice as a dependent, nor was she eligible for an education credit. How to do 2012 taxes She did not receive any taxfree educational assistance in 2013. How to do 2012 taxes Beatrice must allocate her total qualified education expenses between the two distributions. How to do 2012 taxes Beatrice knows that taxfree treatment will be available if she applies her $800 Coverdell ESA distribution toward her $1,000 of qualified education expenses for high school. How to do 2012 taxes The qualified expenses are greater than the distribution, making the $800 Coverdell ESA distribution tax free. How to do 2012 taxes 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). How to do 2012 taxes 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 taxfree treatment. How to do 2012 taxes Finally, Beatrice figures the taxable and taxfree portions of her QTP distribution based on her $3,000 of QHEE. How to do 2012 taxes (See Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program for more information. How to do 2012 taxes ) Example 2. How to do 2012 taxes Assume the same facts as in Example 1 , except that Beatrice withdrew $1,800 from her Coverdell ESA and $3,200 from her QTP. How to do 2012 taxes In this case, she allocates her qualified education expenses as follows. How to do 2012 taxes 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. How to do 2012 taxes Because higher education expenses can also qualify a Coverdell ESA distribution for taxfree treatment, Beatrice allocates her $3,000 of QHEE between the remaining $800 Coverdell ESA and the $3,200 QTP distributions ($4,000 total). How to do 2012 taxes $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). How to do 2012 taxes See Figuring the Taxable Portion of a Distribution , earlier, in this chapter. How to do 2012 taxes QTP distribution based on her $2,400 of QHEE (see Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program). How to do 2012 taxes The above examples show two types of allocation between distributions from a Coverdell ESA and a QTP. How to do 2012 taxes However, you do not have to allocate your expenses in the same way. How to do 2012 taxes You can use any reasonable method. How to do 2012 taxes 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. How to do 2012 taxes 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. How to do 2012 taxes Your basis is the total amount of contributions to that Coverdell ESA. How to do 2012 taxes 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%ofadjustedgrossincome limit. How to do 2012 taxes If you have distributions from more than one Coverdell ESA account during a year, you must combine the information (amount of distribution, basis, etc. How to do 2012 taxes ) from all such accounts in order to determine your taxable earnings for the year. How to do 2012 taxes By doing this, the loss from one ESA account reduces the distributed earnings (if any) from any other ESA account. How to do 2012 taxes For examples of the calculation, see Losses on QTP Investments in chapter 8, Qualified Tuition Program. How to do 2012 taxes 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. How to do 2012 taxes Exceptions. How to do 2012 taxes 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. How to do 2012 taxes Made because the designated beneficiary is disabled. How to do 2012 taxes 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. How to do 2012 taxes A physician must determine that his or her condition can be expected to result in death or to be of longcontinued and indefinite duration. How to do 2012 taxes Included in income because the designated beneficiary received: A taxfree scholarship or fellowship (see TaxFree 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), Employerprovided educational assistance (see chapter 11, EmployerProvided Educational Assistance ), or Any other nontaxable (taxfree) payments (other than gifts or inheritances) received as educational assistance. How to do 2012 taxes Made on account of the attendance of the designated beneficiary at a U. How to do 2012 taxes S. How to do 2012 taxes military academy (such as the USMA at West Point). How to do 2012 taxes 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. How to do 2012 taxes S. How to do 2012 taxes Code) attributable to such attendance. How to do 2012 taxes 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). How to do 2012 taxes Made before June 1, 2014, of an excess 2013 contribution (and any earnings on it). How to do 2012 taxes The distributed earnings must be included in gross income for the year in which the excess contribution was made. How to do 2012 taxes Exception (3) applies only to the extent the distribution is not more than the scholarship, allowance, or payment. How to do 2012 taxes Figuring the additional tax. How to do 2012 taxes Use Part II of Form 5329, to figure any additional tax. How to do 2012 taxes Report the amount on Form 1040, line 58, or Form 1040NR, line 56. How to do 2012 taxes When Assets Must Be Distributed Any assets remaining in a Coverdell ESA must be distributed when either one of the following two events occurs. How to do 2012 taxes The designated beneficiary reaches age 30. How to do 2012 taxes In this case, the remaining assets must be distributed within 30 days after the beneficiary reaches age 30. How to do 2012 taxes However, this rule does not apply if the beneficiary is a special needs beneficiary. How to do 2012 taxes The designated beneficiary dies before reaching age 30. How to do 2012 taxes In this case, the remaining assets must generally be distributed within 30 days after the date of death. How to do 2012 taxes 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. How to do 2012 taxes (“Family member” was defined earlier under Rollovers . How to do 2012 taxes ) 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. How to do 2012 taxes This age limitation does not apply if the new beneficiary is a special needs beneficiary. How to do 2012 taxes There are no tax consequences as a result of the transfer. How to do 2012 taxes 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. How to do 2012 taxes You determine these earnings as shown in the following two steps. How to do 2012 taxes Multiply the amount distributed by a fraction. How to do 2012 taxes 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. How to do 2012 taxes Subtract the amount figured in (1) from the total amount distributed during 2013. How to do 2012 taxes The result is the amount of earnings included in the distribution. How to do 2012 taxes For an example, see steps (1) and (2) of the Example under Figuring the Taxable Portion of a Distribution, earlier. How to do 2012 taxes 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. How to do 2012 taxes Worksheet 73 Instructions. How to do 2012 taxes Coverdell ESA—Taxable Distributions and Basis Line G. How to do 2012 taxes Enter the total distributions received from all Coverdell ESAs during 2013. How to do 2012 taxes Do not include amounts rolled over to another ESA within 60 days (only one rollover is allowed during any 12month period). How to do 2012 taxes 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. How to do 2012 taxes Line 2. How to do 2012 taxes 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 taxfree portion of any distributions from this Coverdell ESA before 2013. How to do 2012 taxes 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. How to do 2012 taxes 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. How to do 2012 taxes For years after 2001, you can find that amount by using the ending basis from the worksheet in Publication 970 for that year. How to do 2012 taxes 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. How to do 2012 taxes Line 4. How to do 2012 taxes Enter the total distributions received from this Coverdell ESA in 2013. How to do 2012 taxes Do not include amounts rolled over to another Coverdell ESA within 60 days (only one rollover is allowed during any 12month period). How to do 2012 taxes 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. How to do 2012 taxes Line 7. How to do 2012 taxes 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 60day rollover period. How to do 2012 taxes A statement should be sent to you by January 31, 2014, for this Coverdell ESA showing the value on December 31, 2013. How to do 2012 taxes A rollover is a taxfree withdrawal from one Coverdell ESA that is contributed to another Coverdell ESA. How to do 2012 taxes 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 60day rollover period. How to do 2012 taxes Worksheet 73. How to do 2012 taxes Coverdell ESA—Taxable Distributions and Basis How to complete this worksheet. How to do 2012 taxes • • • Complete Part I, lines A through H, on only one worksheet. How to do 2012 taxes Complete a separate Part II, lines 1 through 15, for each of your Coverdell ESAs. How to do 2012 taxes Complete Part III, the Summary (line 16), on only one worksheet. How to do 2012 taxes Part I. How to do 2012 taxes Qualified Education Expenses (Complete for total expenses) A. How to do 2012 taxes Enter your total qualified education expenses for 2013 A. How to do 2012 taxes B. How to do 2012 taxes Enter those qualified education expenses paid for with taxfree educational assistance (for example, taxfree scholarships, veterans' educational benefits, Pell grants, employerprovided educational assistance) B. How to do 2012 taxes C. How to do 2012 taxes Enter those qualified higher education expenses deducted on Schedule C or CEZ (Form 1040). How to do 2012 taxes Schedule F (Form 1040), or as a miscellaneous itemized deduction on Schedule A (Form 1040 or 1040NR) C. How to do 2012 taxes D. How to do 2012 taxes Enter those qualified higher education expenses on which an American opportunity or lifetime learning credit was based D. How to do 2012 taxes E. How to do 2012 taxes Add lines B, C, and D D. How to do 2012 taxes F. How to do 2012 taxes Subtract line E from line A. How to do 2012 taxes This is your adjusted qualified education expense for 2013 E. How to do 2012 taxes G. How to do 2012 taxes Enter your total distributions from all Coverdell ESAs during 2013. How to do 2012 taxes Do not include rollovers or the return of excess contributions (see instructions) F. How to do 2012 taxes H. How to do 2012 taxes Divide line F by line G. How to do 2012 taxes Enter the result as a decimal (rounded to at least 3 places). How to do 2012 taxes If the result is 1. How to do 2012 taxes 000 or more, enter 1. How to do 2012 taxes 000 G. How to do 2012 taxes . How to do 2012 taxes Part II. How to do 2012 taxes Taxable Distributions and Basis (Complete separately for each account) 1. How to do 2012 taxes Enter the amount contributed to this Coverdell ESA for 2013, including contributions made for 2013 from January 1, 2014, through April 15, 2014. How to do 2012 taxes Do not include rollovers or the return of excess contributions 1. How to do 2012 taxes 2. How to do 2012 taxes Enter your basis in this Coverdell ESA as of December 31, 2012 (see instructions) 2. How to do 2012 taxes 3. How to do 2012 taxes Add lines 1 and 2 3. How to do 2012 taxes 4. How to do 2012 taxes Enter the total distributions from this Coverdell ESA during 2013. How to do 2012 taxes Do not include rollovers or the return of excess contributions (see instructions) 4. How to do 2012 taxes 5. How to do 2012 taxes Multiply line 4 by line H. How to do 2012 taxes This is the amount of adjusted qualified education expense attributable to this Coverdell ESA 5. How to do 2012 taxes 6. How to do 2012 taxes Subtract line 5 from line 4 6. How to do 2012 taxes 7. How to do 2012 taxes Enter the total value of this Coverdell ESA as of December 31, 2013, plus any outstanding rollovers (see instructions) 7. How to do 2012 taxes 8. How to do 2012 taxes Add lines 4 and 7 8. How to do 2012 taxes 9. How to do 2012 taxes Divide line 3 by line 8. How to do 2012 taxes Enter the result as a decimal (rounded to at least 3 places). How to do 2012 taxes If the result is 1. How to do 2012 taxes 000 or more, enter 1. How to do 2012 taxes 000 9. How to do 2012 taxes . How to do 2012 taxes 10. How to do 2012 taxes Multiply line 4 by line 9. How to do 2012 taxes This is the amount of basis allocated to your distributions, and is tax free 10. How to do 2012 taxes Note. How to do 2012 taxes If line 6 is zero, skip lines 11 through 13, enter 0 on line 14, and go to line 15. How to do 2012 taxes 11. How to do 2012 taxes Subtract line 10 from line 4 11. How to do 2012 taxes 12. How to do 2012 taxes Divide line 5 by line 4. How to do 2012 taxes Enter the result as a decimal (rounded to at least 3 places). How to do 2012 taxes If the result is 1. How to do 2012 taxes 000 or more, enter 1. How to do 2012 taxes 000 12. How to do 2012 taxes . How to do 2012 taxes 13. How to do 2012 taxes Multiply line 11 by line 12. How to do 2012 taxes This is the amount of qualified education expenses allocated to your distributions, and is tax free 13. How to do 2012 taxes 14. How to do 2012 taxes Subtract line 13 from line 11. How to do 2012 taxes This is the portion of the distributions from this Coverdell ESA in 2013 that you must include in income 14. How to do 2012 taxes 15. How to do 2012 taxes Subtract line 10 from line 3. How to do 2012 taxes This is your basis in this Coverdell ESA as of December 31, 2013 15. How to do 2012 taxes Part III. How to do 2012 taxes Summary (Complete only once) 16. How to do 2012 taxes Taxable amount. How to do 2012 taxes Add together all amounts on line 14 for all your Coverdell ESAs. How to do 2012 taxes 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. How to do 2012 taxes Prev Up Next Home More Online PublicationsU.S. Court of Appeals for Veterans Claims
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