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Turbotax Free For Military

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Turbotax Free For Military

Turbotax free for military Index Symbols 28% rate gain, Collectibles (28% rate) gain. Turbotax free for military , Figuring 28% rate gain (line 11). Turbotax free for military A Adjustments to income, defined, Adjustment to income. Turbotax free for military Age 65 or older dependents, Both Earned and Unearned Income Aliens Individual taxpayer identification number (ITIN), Reminders Standard deduction, Standard Deduction of Zero Alternative minimum tax (AMT), Other Filing Requirements, Alternative minimum tax. Turbotax free for military , Alternative Minimum Tax Assistance (see Tax help) B Blind dependents, filing requirements, Both Earned and Unearned Income C Capital gain distributions, Capital gain distributions. Turbotax free for military Capital losses, Capital loss. Turbotax free for military Child's earnings, Child's earnings. Turbotax free for military Child's expenses, Child's expenses. Turbotax free for military Child's return Responsibility for, Should a Return Be Filed Even If Not Required?, Child's expenses. Turbotax free for military Child's unearned income Tax on, Renewing an exemption from withholding. Turbotax free for military Church, wages from, Other Filing Requirements Credits, reduced, Reduced deductions or credits. Turbotax free for military D Deductible investment interest, Deductible investment interest. Turbotax free for military Deductions, Deductions you cannot take. Turbotax free for military Deductions, reduced, Reduced deductions or credits. Turbotax free for military Dependents Exemption for, Standard Deduction of Zero Own exemption, Standard Deduction of Zero Social security numbers (SSNs) of, Reminders Divorced parents, reporting child's unearned income, Parents are divorced. Turbotax free for military E Earned income, Earned Income Only, Both Earned and Unearned Income Education credit, recaptured, Other Filing Requirements Election to include child's income on parent's return, Parent's Election To Report Child's Interest and Dividends, How to make the election. Turbotax free for military , Estimated tax, penalty, Penalty for underpayment of estimated tax. Turbotax free for military Exemption Own exemption — dependent, Dependent's Own Exemption Exemption from withholding, Claiming exemption from withholding. Turbotax free for military Extension of time to file, Extension of time to file. Turbotax free for military F Figures (see Tables and figures) Figuring child's income, Penalty for underpayment of estimated tax. Turbotax free for military Filing requirements, Part 1. Turbotax free for military Rules for All Dependents, Should a Return Be Filed Even If Not Required? Form 1040 Schedule A, Directly connected. Turbotax free for military Schedule J, Using Schedule J (Form 1040), for line 9 tax. Turbotax free for military , Using Schedule J for line 15 tax. Turbotax free for military Form 1040A Filled in example, Form 1099-DIV, Collectibles (28% rate) gain. Turbotax free for military Form 2555, Child files Form 2555 or 2555-EZ. Turbotax free for military , Parent files Form 2555 or 2555-EZ. Turbotax free for military , Child files Form 2555 or 2555-EZ. Turbotax free for military , Child files Form 2555 or 2555-EZ. Turbotax free for military , Child files Form 2555 or 2555-EZ. Turbotax free for military , Child files Form 2555 or 2555-EZ. Turbotax free for military Form 2555-EZ, Child files Form 2555 or 2555-EZ. Turbotax free for military , Parent files Form 2555 or 2555-EZ. Turbotax free for military , Child files Form 2555 or 2555-EZ. Turbotax free for military , Child files Form 2555 or 2555-EZ. Turbotax free for military , Child files Form 2555 or 2555-EZ. Turbotax free for military , Child files Form 2555 or 2555-EZ. Turbotax free for military Form 2848, Designated as representative. Turbotax free for military , How to request. Turbotax free for military Form 6251, Alternative minimum tax. Turbotax free for military , Limit on exemption amount (AMT). Turbotax free for military Form 8615, Providing Parental Information (Form 8615, Lines A–C), Line 18 (Tax) Filled in example, Form 8814, How to make the election. Turbotax free for military , Figuring Child's Income, Figuring Additional Tax Form W-4, Claiming exemption from withholding. Turbotax free for military Free tax services, Free help with your tax return. Turbotax free for military G Gift, income from property received as, Income from property received as a gift. Turbotax free for military H Help (see Tax help) I Individual taxpayer identification numbers (ITINs), Reminders Investment interest, Deductible investment interest. Turbotax free for military IRS notice sent to child, IRS notice. Turbotax free for military Itemized deductions Directly connected, Directly connected. Turbotax free for military J Joint return of parents, Which Parent's Return To Use L Life insurance, Other Filing Requirements Limit on exemption amount (AMT) Alternative Minimum Tax — Limit on exemption amount, Limit on exemption amount (AMT). Turbotax free for military M Married parents filing separately, Parents are married. Turbotax free for military Medicare tax, Other Filing Requirements Missing children, photographs of, Reminders N Net capital gain, Net capital gain. Turbotax free for military Net unearned income, Line 5 (Net Unearned Income) P Parents Election (see Election to include child's income on parent's return) Which parent's return to use, Which Parent's Return To Use Penalty, estimated tax, Penalty for underpayment of estimated tax. Turbotax free for military Publications (see Tax help) Q Qualified dividends, Qualified dividends. Turbotax free for military , Qualified dividends. Turbotax free for military R Recapture taxes, Other Filing Requirements Remarried custodial parent, reporting child's unearned income, Custodial parent remarried. Turbotax free for military Remarried widowed parent, reporting child's unearned income, Widowed parent remarried. Turbotax free for military Returns Filing even if not required, Should a Return Be Filed Even If Not Required? Parent's election to include child's income (see Election to include child's income on parent's return) Responsibility for child's return, Responsibility for Child's Return, Child's expenses. Turbotax free for military Signing child's return, Signing the child's return. Turbotax free for military Who must file, Filing Requirements, Should a Return Be Filed Even If Not Required? S Schedule D Tax Worksheet, Using the Schedule D Tax Worksheet for line 9 tax. Turbotax free for military , Figuring 28% rate gain (line 11). Turbotax free for military , Using the Schedule D Tax Worksheet for line 15 tax. Turbotax free for military Section 1202 gain, Section 1202 gain. Turbotax free for military Self-employed, filing requirements, Other Filing Requirements Separated parents, reporting child's unearned income, Parents not living together. Turbotax free for military Signing child's return, Signing the child's return. Turbotax free for military Social security numbers (SSNs) of dependents, Reminders Social security tax, Other Filing Requirements Standard deduction, Standard Deduction, Standard Deduction of Zero Worksheet for dependents (Worksheet 1), Worksheet 1. Turbotax free for military Zero, Standard Deduction of Zero T Tables and figures Determining whether Form 8615 is required (Figure 2), Election to include child's income on parent's return (Figure 1), Filing requirements for dependents (Table 1), Table 1. Turbotax free for military 2013 Filing Requirements for Dependents Tax help, How to request. Turbotax free for military , How To Get Tax Help Tax on child's unearned income, Renewing an exemption from withholding. Turbotax free for military Age requirement, Certain January 1 birthdays. Turbotax free for military Figured on Form 8615, Tax for Certain Children Who Have Unearned Income Third party designee, Third party designee. Turbotax free for military Tips not reported to employer, Other Filing Requirements Trust income, Trust income. Turbotax free for military TTY/TDD information, How To Get Tax Help U Unearned income, Unearned Income Only, Both Earned and Unearned Income Defined, Unearned income defined. Turbotax free for military Election to include child's income on parent's return (see Election to include child's income on parent's return) Tax on, Part 2. Turbotax free for military Tax on Unearned Income of Certain Children Unrecaptured section 1250 gain, Unrecaptured section 1250 gain. Turbotax free for military , Figuring unrecaptured section 1250 gain (line 11). Turbotax free for military W Withholding, Withholding From Wages Worksheets Dependent's filing requirement, Both Earned and Unearned Income Form 8615 alternate worksheet, Line 1 (Unearned Income) Qualified dividends and capital gain tax, Line 9 (Tax on Parent's Taxable Income Plus Children's Net Unearned Income) Schedule D Tax, Figuring 28% rate gain (line 11). Turbotax free for military Standard deduction worksheet for dependents (Worksheet 1), Worksheet 1. Turbotax free for military Unrecaptured section 1250 gain, Figuring unrecaptured section 1250 gain (line 11). Turbotax free for military Prev  Up     Home   More Online Publications
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Troubleshoot PTIN System Issues

Need to create an account and apply for a PTIN?


Learn how to create an account in
the IRS Tax Professional PTIN System.
It's the first step in applying for
a Preparer Tax Identification Number.


Learn the step-by-step process to
apply for a Preparer Tax Identification
Number or PTIN

 

Need to renew your PTIN?


Learn the step-by-step process to
renew a PTIN.

Have an account, but can’t log in?


Are you having trouble logging into your
online PTIN account? Watch this video
for tips on resolving common login problems


User ID: Most people’s user ID is their email address. If yours is not and you can’t remember it, select Forgot User ID from the PTIN system login page. Your user ID will be emailed to you.

Password: Passwords must meet the following criteria:

  • Be a minimum of eight characters
  • Not be the same as your user ID
  • Not be a variation of your user ID
  • Contain at least one alphabetic character
  • Contain at least one non-alphabetic character

If you can’t remember your password, you can use the Forgot Password function to reset it. Select Forgot Password from the PTIN system login page to have a temporary password to your email address:

  • You should copy and paste the password to avoid errors
    • Copy: Highlight the temporary password with your mouse, right-click your mouse, and select Copy
    • Paste: Place your cursor in the Password box, right-click your mouse, and select Paste.

Changed email addresses?


If you no longer have access to the email address you used when first created your account, you can change it without having to log into your account. Select Forgot or Cannot Access Email from the PTIN system login page.

You’ll need the following information:

  • Last name on the account
  • Date of birth
  • PTIN
  • Social Security Number
  • Answer to your secret question

Don’t have that information? You’ll have to call the IRS PTIN Information Line for help.

More PTIN account assistance

Page Last Reviewed or Updated: 10-Jan-2014

 

The Turbotax Free For Military

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