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1040ez Instructions 2012

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1040ez Instructions 2012

1040ez instructions 2012 Publication 915 - Main Content Table of Contents Are Any of Your Benefits Taxable?Worksheet A. 1040ez instructions 2012 Exemption from withholding. 1040ez instructions 2012 How To Report Your Benefits How Much Is Taxable?Examples Lump-Sum ElectionExample Deductions Related to Your BenefitsRepayments More Than Gross Benefits Worksheets AppendixForm SSA-1099, Social Security Benefit Statement 2013 Form SSA-1042S, Social Security Benefit Statement 2013 (Nonresident Aliens) Form RRB-1099, Payments by the Railroad Retirement Board 2013 Form RRB-1042S, Payments by the Railroad Retirement Board 2013 (Nonresident Aliens) How To Get Tax HelpLow Income Taxpayer Clinics Are Any of Your Benefits Taxable? To find out whether any of your benefits shown on Forms SSA-1099 and RRB-1099 may be taxable, compare the base amount (explained later) for your filing status with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. 1040ez instructions 2012 When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. 1040ez instructions 2012 S. 1040ez instructions 2012 savings bonds, Employer-provided adoption benefits, Foreign earned income or foreign housing, or Income earned by bona fide residents of American Samoa or Puerto Rico. 1040ez instructions 2012 Children's benefits. 1040ez instructions 2012   The rules in this publication apply to benefits received by children. 1040ez instructions 2012 See Who is taxed , later. 1040ez instructions 2012 The SSA issues Form SSA-1099 and Form SSA-1042S. 1040ez instructions 2012 The RRB issues Form RRB-1099 and Form RRB-1042S. 1040ez instructions 2012 These forms (tax statements) report the amounts paid and repaid, and taxes withheld for a tax year. 1040ez instructions 2012 You may receive more than one of these forms for the same tax year. 1040ez instructions 2012 See the Appendix at the end of this publication for more information. 1040ez instructions 2012 Each original Form RRB-1099 or Form RRB-1042S is valid unless it has been corrected. 1040ez instructions 2012 The RRB will issue a corrected Form RRB-1099 or Form RRB-1042S if there is an error in the original. 1040ez instructions 2012 A corrected Form RRB-1099 or Form RRB-1042S is indicated as “CORRECTED” and replaces the corresponding original Form RRB-1099 or Form RRB-1042S. 1040ez instructions 2012 You must use the latest corrected Form RRB-1099 or Form RRB-1042S you received and any original Form RRB-1099 or Form RRB-1042S that the RRB has not corrected when you determine what amounts to report on your tax return. 1040ez instructions 2012 Figuring total income. 1040ez instructions 2012   To figure the total of one-half of your benefits plus your other income, use Worksheet A, discussed later. 1040ez instructions 2012 If the total is more than your base amount, part of your benefits may be taxable. 1040ez instructions 2012   If you are married and file a joint return for 2013, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. 1040ez instructions 2012 Even if your spouse did not receive any benefits, you must add your spouse's income to yours to figure whether any of your benefits are taxable. 1040ez instructions 2012 If the only income you received during 2013 was your social security or the SSEB portion of tier 1 railroad retirement benefits, your benefits generally are not taxable and you probably do not have to file a return. 1040ez instructions 2012 If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. 1040ez instructions 2012 Base amount. 1040ez instructions 2012   Your base amount is: $25,000 if you are single, head of household, or qualifying widow(er), $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $-0- if you are married filing separately and lived with your spouse at any time during 2013. 1040ez instructions 2012 Worksheet A. 1040ez instructions 2012   You can use Worksheet A to figure the amount of income to compare with your base amount. 1040ez instructions 2012 This is a quick way to check whether some of your benefits may be taxable. 1040ez instructions 2012     Worksheet A. 1040ez instructions 2012 A Quick Way To Check if Your Benefits May Be Taxable Keep for your records A. 1040ez instructions 2012 Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. 1040ez instructions 2012 Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. 1040ez instructions 2012 (If you received more than one form, combine the amounts from box 5 and enter the total. 1040ez instructions 2012 ) A. 1040ez instructions 2012   Note. 1040ez instructions 2012 If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. 1040ez instructions 2012 B. 1040ez instructions 2012 Enter one-half of the amount on line A B. 1040ez instructions 2012   C. 1040ez instructions 2012 Enter your taxable pensions, wages, interest, dividends, and other taxable income C. 1040ez instructions 2012   D. 1040ez instructions 2012 Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. 1040ez instructions 2012   E. 1040ez instructions 2012 Add lines B, C, and D E. 1040ez instructions 2012   Note. 1040ez instructions 2012 Compare the amount on line E to your base amount for your filing status. 1040ez instructions 2012 If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. 1040ez instructions 2012 If the amount on line E is more than your base amount, some of your benefits may be taxable. 1040ez instructions 2012 You need to complete Worksheet 1, shown later. 1040ez instructions 2012 If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits . 1040ez instructions 2012   Example. 1040ez instructions 2012 You and your spouse (both over 65) are filing a joint return for 2013 and you both received social security benefits during the year. 1040ez instructions 2012 In January 2014, you received a Form SSA-1099 showing net benefits of $7,500 in box 5. 1040ez instructions 2012 Your spouse received a Form SSA-1099 showing net benefits of $3,500 in box 5. 1040ez instructions 2012 You also received a taxable pension of $22,800 and interest income of $500. 1040ez instructions 2012 You did not have any tax-exempt interest income. 1040ez instructions 2012 Your benefits are not taxable for 2013 because your income, as figured in Worksheet A below, is not more than your base amount ($32,000) for married filing jointly. 1040ez instructions 2012   Even though none of your benefits are taxable, you must file a return for 2013 because your taxable gross income ($23,300) exceeds the minimum filing requirement amount for your filing status. 1040ez instructions 2012     Filled-in Worksheet A. 1040ez instructions 2012 A Quick Way To Check if Your Benefits May Be Taxable Keep for your records A. 1040ez instructions 2012 Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. 1040ez instructions 2012 Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. 1040ez instructions 2012 (If you received more than one form, combine the amounts from box 5 and enter the total. 1040ez instructions 2012 ) A. 1040ez instructions 2012 $11,000 Note. 1040ez instructions 2012 If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. 1040ez instructions 2012 B. 1040ez instructions 2012 Enter one-half of the amount on line A B. 1040ez instructions 2012 5,500 C. 1040ez instructions 2012 Enter your taxable pensions, wages, interest, dividends, and other taxable income C. 1040ez instructions 2012 23,300 D. 1040ez instructions 2012 Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. 1040ez instructions 2012 -0- E. 1040ez instructions 2012 Add lines B, C, and D E. 1040ez instructions 2012 $28,800 Note. 1040ez instructions 2012 Compare the amount on line E to your base amount for your filing status. 1040ez instructions 2012 If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. 1040ez instructions 2012 If the amount on line E is more than your base amount, some of your benefits may be taxable. 1040ez instructions 2012 You need to complete Worksheet 1, shown later. 1040ez instructions 2012 If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits . 1040ez instructions 2012   Who is taxed. 1040ez instructions 2012   Benefits are included in the taxable income (to the extent they are taxable) of the person who has the legal right to receive the benefits. 1040ez instructions 2012 For example, if you and your child receive benefits, but the check for your child is made out in your name, you must use only your part of the benefits to see whether any benefits are taxable to you. 1040ez instructions 2012 One-half of the part that belongs to your child must be added to your child's other income to see whether any of those benefits are taxable to your child. 1040ez instructions 2012 Repayment of benefits. 1040ez instructions 2012   Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. 1040ez instructions 2012 It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. 1040ez instructions 2012 If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. 1040ez instructions 2012   Your gross benefits are shown in box 3 of Form SSA-1099 or Form RRB-1099. 1040ez instructions 2012 Your repayments are shown in box 4. 1040ez instructions 2012 The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). 1040ez instructions 2012 Use the amount in box 5 to figure whether any of your benefits are taxable. 1040ez instructions 2012 Example. 1040ez instructions 2012 In 2012, you received $3,000 in social security benefits, and in 2013 you received $2,700. 1040ez instructions 2012 In March 2013, SSA notified you that you should have received only $2,500 in benefits in 2012. 1040ez instructions 2012 During 2013, you repaid $500 to SSA. 1040ez instructions 2012 The Form SSA-1099 you received for 2013 shows $2,700 in box 3 (gross amount) and $500 in box 4 (repayment). 1040ez instructions 2012 The amount in box 5 shows your net benefits of $2,200 ($2,700 minus $500). 1040ez instructions 2012 Tax withholding and estimated tax. 1040ez instructions 2012   You can choose to have federal income tax withheld from your social security benefits and/or the SSEB portion of your tier 1 railroad retirement benefits. 1040ez instructions 2012 If you choose to do this, you must complete a Form W-4V, Voluntary Withholding Statement. 1040ez instructions 2012   If you do not choose to have income tax withheld, you may have to request additional withholding from other income or pay estimated tax during the year. 1040ez instructions 2012 For details, see Publication 505, Tax Withholding and Estimated Tax, or the instructions for Form 1040-ES, Estimated Tax for Individuals. 1040ez instructions 2012 U. 1040ez instructions 2012 S. 1040ez instructions 2012 citizens residing abroad. 1040ez instructions 2012   U. 1040ez instructions 2012 S. 1040ez instructions 2012 citizens who are residents of the following countries are exempt from U. 1040ez instructions 2012 S. 1040ez instructions 2012 tax on their benefits. 1040ez instructions 2012 Canada. 1040ez instructions 2012 Egypt. 1040ez instructions 2012 Germany. 1040ez instructions 2012 Ireland. 1040ez instructions 2012 Israel. 1040ez instructions 2012 Italy. 1040ez instructions 2012 (You must also be a citizen of Italy for the exemption to apply. 1040ez instructions 2012 ) Romania. 1040ez instructions 2012 United Kingdom. 1040ez instructions 2012   The SSA will not withhold U. 1040ez instructions 2012 S. 1040ez instructions 2012 tax from your benefits if you are a U. 1040ez instructions 2012 S. 1040ez instructions 2012 citizen. 1040ez instructions 2012   The RRB will withhold U. 1040ez instructions 2012 S. 1040ez instructions 2012 tax from your benefits unless you file Form RRB-1001, Nonresident Questionnaire, with the RRB to provide citizenship and residency information. 1040ez instructions 2012 If you do not file Form RRB-1001, the RRB will consider you a nonresident alien and withhold tax from your railroad retirement benefits at a 30% rate. 1040ez instructions 2012 Contact the RRB to get this form. 1040ez instructions 2012 Lawful permanent residents. 1040ez instructions 2012   For U. 1040ez instructions 2012 S. 1040ez instructions 2012 income tax purposes, lawful permanent residents (green card holders) are considered resident aliens until their lawful permanent resident status under the immigration laws is either taken away or is administratively or judicially determined to have been abandoned. 1040ez instructions 2012 Social security benefits paid to a green card holder are not subject to 30% withholding. 1040ez instructions 2012 If you are a green card holder and tax was withheld in error on your social security benefits because you have a foreign address, the withholding tax is refundable by the Social Security Administration (SSA) or the IRS. 1040ez instructions 2012 SSA will refund taxes erroneously withheld if the refund can be processed during the same calendar year in which the tax was withheld. 1040ez instructions 2012 If SSA cannot refund the taxes withheld, you must file a Form 1040 or 1040A with the Internal Revenue Service Center, Austin, TX 73301 to determine if you are entitled to a refund. 1040ez instructions 2012 You must also attach the following information to your Form 1040 or 1040A: A copy of the Form SSA-1042S, Social Security Benefit Statement, A copy of the “green card,” and A signed declaration that includes the following statements:    “The SSA should not have withheld federal income tax from my social security benefits because I am a U. 1040ez instructions 2012 S. 1040ez instructions 2012 lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. 1040ez instructions 2012 I am filing a U. 1040ez instructions 2012 S. 1040ez instructions 2012 income tax return for the tax year as a resident alien reporting all of my worldwide income. 1040ez instructions 2012 I have not claimed benefits for the tax year under an income tax treaty as a nonresident alien. 1040ez instructions 2012 ” Nonresident aliens. 1040ez instructions 2012   A nonresident alien is an individual who is not a citizen or resident of the United States. 1040ez instructions 2012 If you are a nonresident alien, the rules discussed in this publication do not apply to you. 1040ez instructions 2012 Instead, 85% of your benefits are taxed at a 30% rate, unless exempt (or subject to a lower rate) by treaty. 1040ez instructions 2012 You will receive a Form SSA-1042S or Form RRB-1042S showing the amount of your benefits. 1040ez instructions 2012 These forms will also show the tax rate and the amount of tax withheld from your benefits. 1040ez instructions 2012   Under tax treaties with the following countries, residents of these countries are exempt from U. 1040ez instructions 2012 S. 1040ez instructions 2012 tax on their benefits. 1040ez instructions 2012 Canada. 1040ez instructions 2012 Egypt. 1040ez instructions 2012 Germany. 1040ez instructions 2012 Ireland. 1040ez instructions 2012 Israel. 1040ez instructions 2012 Italy. 1040ez instructions 2012 Japan. 1040ez instructions 2012 Romania. 1040ez instructions 2012 United Kingdom. 1040ez instructions 2012   Under a treaty with India, benefits paid to individuals who are both residents and nationals of India are exempt from U. 1040ez instructions 2012 S. 1040ez instructions 2012 tax if the benefits are for services performed for the United States, its subdivisions, or local government authorities. 1040ez instructions 2012   If you are a resident of Switzerland, your total benefit amount will be taxed at a 15% rate. 1040ez instructions 2012   For more information on whether you are a nonresident alien, see Publication 519, U. 1040ez instructions 2012 S. 1040ez instructions 2012 Tax Guide for Aliens. 1040ez instructions 2012 Exemption from withholding. 1040ez instructions 2012   If your social security benefits are exempt from tax because you are a resident of one of the treaty countries listed, the SSA will not withhold U. 1040ez instructions 2012 S. 1040ez instructions 2012 tax from your benefits. 1040ez instructions 2012   If your railroad retirement benefits are exempt from tax because you are a resident of one of the treaty countries listed, you can claim an exemption from withholding by filing Form RRB-1001 with the RRB. 1040ez instructions 2012 Contact the RRB to get this form. 1040ez instructions 2012 Canadian or German social security benefits paid to U. 1040ez instructions 2012 S. 1040ez instructions 2012 residents. 1040ez instructions 2012   Under income tax treaties with Canada and Germany, social security benefits paid by those countries to U. 1040ez instructions 2012 S. 1040ez instructions 2012 residents are treated for U. 1040ez instructions 2012 S. 1040ez instructions 2012 income tax purposes as if they were paid under the social security legislation of the United States. 1040ez instructions 2012 If you receive social security benefits from Canada or Germany, include them on line 1 of Worksheet 1, shown later. 1040ez instructions 2012 How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040 or Form 1040A. 1040ez instructions 2012 You cannot use Form 1040EZ. 1040ez instructions 2012 Reporting on Form 1040. 1040ez instructions 2012   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 20a and the taxable part on line 20b. 1040ez instructions 2012 If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 20a. 1040ez instructions 2012 Reporting on Form 1040A. 1040ez instructions 2012   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 14a and the taxable part on line 14b. 1040ez instructions 2012 If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 14a. 1040ez instructions 2012 Benefits not taxable. 1040ez instructions 2012   If you are filing Form 1040EZ, do not report any benefits on your tax return. 1040ez instructions 2012 If you are filing Form 1040 or Form 1040A, report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on Form 1040, line 20a, or Form 1040A, line 14a. 1040ez instructions 2012 Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 1040ez instructions 2012 If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 1040ez instructions 2012 How Much Is Taxable? If part of your benefits are taxable, how much is taxable depends on the total amount of your benefits and other income. 1040ez instructions 2012 Generally, the higher that total amount, the greater the taxable part of your benefits. 1040ez instructions 2012 Maximum taxable part. 1040ez instructions 2012   Generally, up to 50% of your benefits will be taxable. 1040ez instructions 2012 However, up to 85% of your benefits can be taxable if either of the following situations applies to you. 1040ez instructions 2012 The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly). 1040ez instructions 2012 You are married filing separately and lived with your spouse at any time during 2013. 1040ez instructions 2012 Which worksheet to use. 1040ez instructions 2012   A worksheet you can use to figure your taxable benefits is in the instructions for your Form 1040 or 1040A. 1040ez instructions 2012 You can use either that worksheet or Worksheet 1 in this publication, unless any of the following situations applies to you. 1040ez instructions 2012 You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse is covered by a retirement plan at work. 1040ez instructions 2012 In this situation you must use the special worksheets in Appendix B of Publication 590 to figure both your IRA deduction and your taxable benefits. 1040ez instructions 2012 Situation (1) does not apply and you take an exclusion for interest from qualified U. 1040ez instructions 2012 S. 1040ez instructions 2012 savings bonds (Form 8815), for adoption benefits (Form 8839), for foreign earned income or housing (Form 2555 or Form 2555-EZ), or for income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. 1040ez instructions 2012 In this situation, you must use Worksheet 1 in this publication to figure your taxable benefits. 1040ez instructions 2012 You received a lump-sum payment for an earlier year. 1040ez instructions 2012 In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in this publication. 1040ez instructions 2012 See Lump-Sum Election , later. 1040ez instructions 2012 Examples A few examples you can use as a guide to figure the taxable part of your benefits follow. 1040ez instructions 2012 Filled-in Worksheet 1. 1040ez instructions 2012 Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 1040ez instructions 2012 Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). 1040ez instructions 2012 None of your benefits are taxable for 2013. 1040ez instructions 2012 For more information, see Repayments More Than Gross Benefits . 1040ez instructions 2012 If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 1040ez instructions 2012 S. 1040ez instructions 2012 Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. 1040ez instructions 2012 Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 1040ez instructions 2012 1. 1040ez instructions 2012 Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 1040ez instructions 2012 Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 1040ez instructions 2012 $5,980         2. 1040ez instructions 2012 Enter one-half of line 1 2. 1040ez instructions 2012 2,990     3. 1040ez instructions 2012 Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 1040ez instructions 2012 28,990     4. 1040ez instructions 2012 Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 1040ez instructions 2012 -0-     5. 1040ez instructions 2012 Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 1040ez instructions 2012 -0-     6. 1040ez instructions 2012 Combine lines 2, 3, 4, and 5 6. 1040ez instructions 2012 31,980     7. 1040ez instructions 2012 Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 1040ez instructions 2012  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 1040ez instructions 2012 -0-     8. 1040ez instructions 2012 Is the amount on line 7 less than the amount on line 6?             No. 1040ez instructions 2012 None of your social security benefits are taxable. 1040ez instructions 2012 Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 1040ez instructions 2012             Yes. 1040ez instructions 2012 Subtract line 7 from line 6 8. 1040ez instructions 2012 31,980     9. 1040ez instructions 2012 If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 1040ez instructions 2012 25,000       Note. 1040ez instructions 2012 If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. 1040ez instructions 2012 85) and enter the result on line 17. 1040ez instructions 2012 Then go to line 18. 1040ez instructions 2012         10. 1040ez instructions 2012 Is the amount on line 9 less than the amount on line 8?             No. 1040ez instructions 2012 None of your benefits are taxable. 1040ez instructions 2012 Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 1040ez instructions 2012 If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. 1040ez instructions 2012             Yes. 1040ez instructions 2012 Subtract line 9 from line 8 10. 1040ez instructions 2012 6,980     11. 1040ez instructions 2012 Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 1040ez instructions 2012 9,000     12. 1040ez instructions 2012 Subtract line 11 from line 10. 1040ez instructions 2012 If zero or less, enter -0- 12. 1040ez instructions 2012 -0-     13. 1040ez instructions 2012 Enter the smaller of line 10 or line 11 13. 1040ez instructions 2012 6,980     14. 1040ez instructions 2012 Enter one-half of line 13 14. 1040ez instructions 2012 3,490     15. 1040ez instructions 2012 Enter the smaller of line 2 or line 14 15. 1040ez instructions 2012 2,990     16. 1040ez instructions 2012 Multiply line 12 by 85% (. 1040ez instructions 2012 85). 1040ez instructions 2012 If line 12 is zero, enter -0- 16. 1040ez instructions 2012 -0-     17. 1040ez instructions 2012 Add lines 15 and 16 17. 1040ez instructions 2012 2,990     18. 1040ez instructions 2012 Multiply line 1 by 85% (. 1040ez instructions 2012 85) 18. 1040ez instructions 2012 5,083     19. 1040ez instructions 2012 Taxable benefits. 1040ez instructions 2012 Enter the smaller of line 17 or line 18. 1040ez instructions 2012 Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 1040ez instructions 2012 $2,990       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 1040ez instructions 2012         Example 1. 1040ez instructions 2012 George White is single and files Form 1040 for 2013. 1040ez instructions 2012 In addition to receiving social security payments, he received a fully taxable pension of $18,600, wages from a part-time job of $9,400, and taxable interest income of $990, for a total of $28,990. 1040ez instructions 2012 He received a Form SSA-1099 in January 2014 that shows his net social security benefits of $5,980 in box 5. 1040ez instructions 2012   To figure his taxable benefits, George completes Worksheet 1, shown below. 1040ez instructions 2012 On line 20a of his Form 1040, George enters his net benefits of $5,980. 1040ez instructions 2012 On line 20b, he enters his taxable benefits of $2,990. 1040ez instructions 2012 Example 2. 1040ez instructions 2012 Ray and Alice Hopkins file a joint return on Form 1040A for 2013. 1040ez instructions 2012 Ray is retired and received a fully taxable pension of $15,500. 1040ez instructions 2012 He also received social security benefits and his Form SSA-1099 for 2013 shows net benefits of $5,600 in box 5. 1040ez instructions 2012 Alice worked during the year and had wages of $14,000. 1040ez instructions 2012 She made a deductible payment to her IRA account of $1,000. 1040ez instructions 2012 Ray and Alice have two savings accounts with a total of $250 in taxable interest income. 1040ez instructions 2012 They complete Worksheet 1, entering $29,750 ($15,500 + $14,000 + $250) on line 3. 1040ez instructions 2012 They find none of Ray's social security benefits are taxable. 1040ez instructions 2012 On Form 1040A, they enter $5,600 on line 14a and -0- on line 14b. 1040ez instructions 2012 Filled-in Worksheet 1. 1040ez instructions 2012 Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 1040ez instructions 2012 Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). 1040ez instructions 2012 None of your benefits are taxable for 2013. 1040ez instructions 2012 For more information, see Repayments More Than Gross Benefits . 1040ez instructions 2012 If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 1040ez instructions 2012 S. 1040ez instructions 2012 Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. 1040ez instructions 2012 Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 1040ez instructions 2012 1. 1040ez instructions 2012 Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 1040ez instructions 2012 Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 1040ez instructions 2012 $5,600         2. 1040ez instructions 2012 Enter one-half of line 1 2. 1040ez instructions 2012 2,800     3. 1040ez instructions 2012 Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 1040ez instructions 2012 29,750     4. 1040ez instructions 2012 Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 1040ez instructions 2012 -0-     5. 1040ez instructions 2012 Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 1040ez instructions 2012 -0-     6. 1040ez instructions 2012 Combine lines 2, 3, 4, and 5 6. 1040ez instructions 2012 32,550     7. 1040ez instructions 2012 Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 1040ez instructions 2012  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 1040ez instructions 2012 1,000     8. 1040ez instructions 2012 Is the amount on line 7 less than the amount on line 6?             No. 1040ez instructions 2012 None of your social security benefits are taxable. 1040ez instructions 2012 Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 1040ez instructions 2012             Yes. 1040ez instructions 2012 Subtract line 7 from line 6 8. 1040ez instructions 2012 31,550     9. 1040ez instructions 2012 If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 1040ez instructions 2012 32,000       Note. 1040ez instructions 2012 If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. 1040ez instructions 2012 85) and enter the result on line 17. 1040ez instructions 2012 Then go to line 18. 1040ez instructions 2012         10. 1040ez instructions 2012 Is the amount on line 9 less than the amount on line 8?             No. 1040ez instructions 2012 None of your benefits are taxable. 1040ez instructions 2012 Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 1040ez instructions 2012 If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. 1040ez instructions 2012             Yes. 1040ez instructions 2012 Subtract line 9 from line 8 10. 1040ez instructions 2012       11. 1040ez instructions 2012 Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 1040ez instructions 2012       12. 1040ez instructions 2012 Subtract line 11 from line 10. 1040ez instructions 2012 If zero or less, enter -0- 12. 1040ez instructions 2012       13. 1040ez instructions 2012 Enter the smaller of line 10 or line 11 13. 1040ez instructions 2012       14. 1040ez instructions 2012 Enter one-half of line 13 14. 1040ez instructions 2012       15. 1040ez instructions 2012 Enter the smaller of line 2 or line 14 15. 1040ez instructions 2012       16. 1040ez instructions 2012 Multiply line 12 by 85% (. 1040ez instructions 2012 85). 1040ez instructions 2012 If line 12 is zero, enter -0- 16. 1040ez instructions 2012       17. 1040ez instructions 2012 Add lines 15 and 16 17. 1040ez instructions 2012       18. 1040ez instructions 2012 Multiply line 1 by 85% (. 1040ez instructions 2012 85) 18. 1040ez instructions 2012       19. 1040ez instructions 2012 Taxable benefits. 1040ez instructions 2012 Enter the smaller of line 17 or line 18. 1040ez instructions 2012 Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 1040ez instructions 2012         If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 1040ez instructions 2012         Example 3. 1040ez instructions 2012 Joe and Betty Johnson file a joint return on Form 1040 for 2013. 1040ez instructions 2012 Joe is a retired railroad worker and in 2013 received the social security equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. 1040ez instructions 2012 Joe's Form RRB-1099 shows $10,000 in box 5. 1040ez instructions 2012 Betty is a retired government worker and received a fully taxable pension of $38,000. 1040ez instructions 2012 They had $2,300 in taxable interest income plus interest of $200 on a qualified U. 1040ez instructions 2012 S. 1040ez instructions 2012 savings bond. 1040ez instructions 2012 The savings bond interest qualified for the exclusion. 1040ez instructions 2012 They figure their taxable benefits by completing Worksheet 1 below. 1040ez instructions 2012 Because they have qualified U. 1040ez instructions 2012 S. 1040ez instructions 2012 savings bond interest, they follow the note at the beginning of the worksheet and use the amount from line 2 of their Schedule B (Form 1040A or 1040) on line 3 of the worksheet instead of the amount from line 8a of their Form 1040. 1040ez instructions 2012 On line 3 of the worksheet, they enter $40,500 ($38,000 + $2,500). 1040ez instructions 2012 More than 50% of Joe's net benefits are taxable because the income on line 8 of the worksheet ($45,500) is more than $44,000. 1040ez instructions 2012 (See Maximum taxable part under How Much Is Taxable earlier. 1040ez instructions 2012 ) Joe and Betty enter $10,000 on Form 1040, line 20a, and $6,275 on Form 1040, line 20b. 1040ez instructions 2012 Filled-in Worksheet 1. 1040ez instructions 2012 Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 1040ez instructions 2012 Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). 1040ez instructions 2012 None of your benefits are taxable for 2013. 1040ez instructions 2012 For more information, see Repayments More Than Gross Benefits . 1040ez instructions 2012 If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 1040ez instructions 2012 S. 1040ez instructions 2012 Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. 1040ez instructions 2012 Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 1040ez instructions 2012 1. 1040ez instructions 2012 Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 1040ez instructions 2012 Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 1040ez instructions 2012 $10,000         2. 1040ez instructions 2012 Enter one-half of line 1 2. 1040ez instructions 2012 5,000     3. 1040ez instructions 2012 Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 1040ez instructions 2012 40,500     4. 1040ez instructions 2012 Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 1040ez instructions 2012 -0-     5. 1040ez instructions 2012 Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 1040ez instructions 2012 -0-     6. 1040ez instructions 2012 Combine lines 2, 3, 4, and 5 6. 1040ez instructions 2012 45,500     7. 1040ez instructions 2012 Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 1040ez instructions 2012  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 1040ez instructions 2012 -0-     8. 1040ez instructions 2012 Is the amount on line 7 less than the amount on line 6?             No. 1040ez instructions 2012 None of your social security benefits are taxable. 1040ez instructions 2012 Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 1040ez instructions 2012             Yes. 1040ez instructions 2012 Subtract line 7 from line 6 8. 1040ez instructions 2012 45,500     9. 1040ez instructions 2012 If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 1040ez instructions 2012 32,000       Note. 1040ez instructions 2012 If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. 1040ez instructions 2012 85) and enter the result on line 17. 1040ez instructions 2012 Then go to line 18. 1040ez instructions 2012         10. 1040ez instructions 2012 Is the amount on line 9 less than the amount on line 8?             No. 1040ez instructions 2012 None of your benefits are taxable. 1040ez instructions 2012 Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 1040ez instructions 2012 If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. 1040ez instructions 2012             Yes. 1040ez instructions 2012 Subtract line 9 from line 8 10. 1040ez instructions 2012 13,500     11. 1040ez instructions 2012 Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 1040ez instructions 2012 12,000     12. 1040ez instructions 2012 Subtract line 11 from line 10. 1040ez instructions 2012 If zero or less, enter -0- 12. 1040ez instructions 2012 1,500     13. 1040ez instructions 2012 Enter the smaller of line 10 or line 11 13. 1040ez instructions 2012 12,000     14. 1040ez instructions 2012 Enter one-half of line 13 14. 1040ez instructions 2012 6,000     15. 1040ez instructions 2012 Enter the smaller of line 2 or line 14 15. 1040ez instructions 2012 5,000     16. 1040ez instructions 2012 Multiply line 12 by 85% (. 1040ez instructions 2012 85). 1040ez instructions 2012 If line 12 is zero, enter -0- 16. 1040ez instructions 2012 1,275     17. 1040ez instructions 2012 Add lines 15 and 16 17. 1040ez instructions 2012 6,275     18. 1040ez instructions 2012 Multiply line 1 by 85% (. 1040ez instructions 2012 85) 18. 1040ez instructions 2012 8,500     19. 1040ez instructions 2012 Taxable benefits. 1040ez instructions 2012 Enter the smaller of line 17 or line 18. 1040ez instructions 2012 Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 1040ez instructions 2012 $6,275       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 1040ez instructions 2012         Filled-in Worksheet 1. 1040ez instructions 2012 Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 1040ez instructions 2012 Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). 1040ez instructions 2012 None of your benefits are taxable for 2013. 1040ez instructions 2012 For more information, see Repayments More Than Gross Benefits . 1040ez instructions 2012 If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 1040ez instructions 2012 S. 1040ez instructions 2012 Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. 1040ez instructions 2012 Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 1040ez instructions 2012 1. 1040ez instructions 2012 Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 1040ez instructions 2012 Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 1040ez instructions 2012 $4,000         2. 1040ez instructions 2012 Enter one-half of line 1 2. 1040ez instructions 2012 2,000     3. 1040ez instructions 2012 Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 1040ez instructions 2012 8,000     4. 1040ez instructions 2012 Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 1040ez instructions 2012 -0-     5. 1040ez instructions 2012 Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 1040ez instructions 2012 -0-     6. 1040ez instructions 2012 Combine lines 2, 3, 4, and 5 6. 1040ez instructions 2012 10,000     7. 1040ez instructions 2012 Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 1040ez instructions 2012  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 1040ez instructions 2012 -0-     8. 1040ez instructions 2012 Is the amount on line 7 less than the amount on line 6?             No. 1040ez instructions 2012 None of your social security benefits are taxable. 1040ez instructions 2012 Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 1040ez instructions 2012             Yes. 1040ez instructions 2012 Subtract line 7 from line 6 8. 1040ez instructions 2012 10,000     9. 1040ez instructions 2012 If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 1040ez instructions 2012         Note. 1040ez instructions 2012 If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. 1040ez instructions 2012 85) and enter the result on line 17. 1040ez instructions 2012 Then go to line 18. 1040ez instructions 2012         10. 1040ez instructions 2012 Is the amount on line 9 less than the amount on line 8?             No. 1040ez instructions 2012 None of your benefits are taxable. 1040ez instructions 2012 Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 1040ez instructions 2012 If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. 1040ez instructions 2012             Yes. 1040ez instructions 2012 Subtract line 9 from line 8 10. 1040ez instructions 2012       11. 1040ez instructions 2012 Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 1040ez instructions 2012       12. 1040ez instructions 2012 Subtract line 11 from line 10. 1040ez instructions 2012 If zero or less, enter -0- 12. 1040ez instructions 2012       13. 1040ez instructions 2012 Enter the smaller of line 10 or line 11 13. 1040ez instructions 2012       14. 1040ez instructions 2012 Enter one-half of line 13 14. 1040ez instructions 2012       15. 1040ez instructions 2012 Enter the smaller of line 2 or line 14 15. 1040ez instructions 2012       16. 1040ez instructions 2012 Multiply line 12 by 85% (. 1040ez instructions 2012 85). 1040ez instructions 2012 If line 12 is zero, enter -0- 16. 1040ez instructions 2012       17. 1040ez instructions 2012 Add lines 15 and 16 17. 1040ez instructions 2012 8,500     18. 1040ez instructions 2012 Multiply line 1 by 85% (. 1040ez instructions 2012 85) 18. 1040ez instructions 2012 3,400     19. 1040ez instructions 2012 Taxable benefits. 1040ez instructions 2012 Enter the smaller of line 17 or line 18. 1040ez instructions 2012 Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 1040ez instructions 2012 $3,400       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 1040ez instructions 2012         Example 4. 1040ez instructions 2012 Bill and Eileen Jones are married and live together, but file separate Form 1040 returns for 2013. 1040ez instructions 2012 Bill earned $8,000 during 2013. 1040ez instructions 2012 The only other income he had for the year was $4,000 net social security benefits (box 5 of his Form SSA-1099). 1040ez instructions 2012 Bill figures his taxable benefits by completing Worksheet 1 below. 1040ez instructions 2012 He must include 85% of his social security benefits in his taxable income because he is married filing separately and lived with his spouse during 2013. 1040ez instructions 2012 See How Much Is Taxable earlier. 1040ez instructions 2012 Bill enters $4,000 on his Form 1040, line 20a, and $3,400 on Form 1040, line 20b. 1040ez instructions 2012 Lump-Sum Election You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2013 in your 2013 income, even if the payment includes benefits for an earlier year. 1040ez instructions 2012 This type of lump-sum benefit payment should not be confused with the lump-sum death benefit that both the SSA and RRB pay to many of their beneficiaries. 1040ez instructions 2012 No part of the lump-sum death benefit is subject to tax. 1040ez instructions 2012 Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. 1040ez instructions 2012 However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year. 1040ez instructions 2012 You can elect this method if it lowers your taxable benefits. 1040ez instructions 2012 Under the lump-sum election method, you refigure the taxable part of all your benefits for the earlier year (including the lump-sum payment) using that year's income. 1040ez instructions 2012 Then you subtract any taxable benefits for that year that you previously reported. 1040ez instructions 2012 The remainder is the taxable part of the lump-sum payment. 1040ez instructions 2012 Add it to the taxable part of your benefits for 2013 (figured without the lump-sum payment for the earlier year). 1040ez instructions 2012 Because the earlier year's taxable benefits are included in your 2013 income, no adjustment is made to the earlier year's return. 1040ez instructions 2012 Do not file an amended return for the earlier year. 1040ez instructions 2012 Will the lump-sum election method lower your taxable benefits?   To find out, take the following steps. 1040ez instructions 2012 Complete Worksheet 1 in this publication. 1040ez instructions 2012 Complete Worksheet 2 and Worksheet 3 as appropriate. 1040ez instructions 2012 Use Worksheet 2 if your lump-sum payment was for a year after 1993. 1040ez instructions 2012 Use Worksheet 3 if it was for 1993 or an earlier year. 1040ez instructions 2012 Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received the lump-sum payment. 1040ez instructions 2012 Complete Worksheet 4. 1040ez instructions 2012 Compare the taxable benefits on line 19 of Worksheet 1 with the taxable benefits on line 21 of Worksheet 4. 1040ez instructions 2012 If the taxable benefits on Worksheet 4 are lower than the taxable benefits on Worksheet 1, you can elect to report the lower amount on your return. 1040ez instructions 2012 Making the election. 1040ez instructions 2012   If you elect to report your taxable benefits under the lump-sum election method, follow the instructions at the bottom of Worksheet 4. 1040ez instructions 2012 Do not attach the completed worksheets to your return. 1040ez instructions 2012 Keep them with your records. 1040ez instructions 2012    Once you elect this method of figuring the taxable part of a lump-sum payment, you can revoke your election only with the consent of the IRS. 1040ez instructions 2012 Lump-sum payment reported on Form SSA-1099 or RRB-1099. 1040ez instructions 2012   If you received a lump-sum payment in 2013 that includes benefits for one or more earlier years after 1983, it will be included in box 3 of either Form SSA-1099 or Form RRB-1099. 1040ez instructions 2012 That part of any lump-sum payment for years before 1984 is not taxed and will not be shown on the form. 1040ez instructions 2012 The form will also show the year (or years) the payment is for. 1040ez instructions 2012 However, Form RRB-1099 will not show a breakdown by year (or years) of any lump-sum payment for years before 2011. 1040ez instructions 2012 You must contact the RRB for a breakdown by year for any amount shown in box 9. 1040ez instructions 2012 Example Jane Jackson is single. 1040ez instructions 2012 In 2012 she applied for social security disability benefits but was told she was ineligible. 1040ez instructions 2012 She appealed the decision and won. 1040ez instructions 2012 In 2013, she received a lump-sum payment of $6,000, of which $2,000 was for 2012 and $4,000 was for 2013. 1040ez instructions 2012 Jane also received $5,000 in social security benefits in 2013, so her total benefits in 2013 were $11,000. 1040ez instructions 2012 Jane's other income for 2012 and 2013 is as follows. 1040ez instructions 2012   Income 2012 2013     Wages $20,000 $ 3,500     Interest income 2,000 2,500     Dividend income 1,000 1,500     Fully taxable pension   18,000     Total $23,000 $25,500   To see if the lump-sum election method results in lower taxable benefits, she completes Worksheets 1, 2, and 4 from this publication. 1040ez instructions 2012 She does not need to complete Worksheet 3 because her lump-sum payment was for years after 1993. 1040ez instructions 2012 Jane completes Worksheet 1 to find the amount of her taxable benefits for 2013 under the regular method. 1040ez instructions 2012 She completes Worksheet 2 to find the taxable part of the lump-sum payment for 2012 under the lump-sum election method. 1040ez instructions 2012 She completes Worksheet 4 to decide if the lump-sum election method will lower her taxable benefits. 1040ez instructions 2012 After completing the worksheets, Jane compares the amounts from Worksheet 4, line 21, and Worksheet 1, line 19. 1040ez instructions 2012 Because the amount on Worksheet 4 is smaller, she chooses to use the lump-sum election method. 1040ez instructions 2012 To do this, she prints “LSE” to the left of Form 1040, line 20a. 1040ez instructions 2012 She then enters $11,000 on Form 1040, line 20a, and her taxable benefits of $2,500 on line 20b. 1040ez instructions 2012 Jane's filled-in worksheets (1, 2, and 4) follow. 1040ez instructions 2012 Jane Jackson's Filled-in Worksheet 1. 1040ez instructions 2012 Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 1040ez instructions 2012 Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). 1040ez instructions 2012 None of your benefits are taxable for 2013. 1040ez instructions 2012 For more information, see Repayments More Than Gross Benefits . 1040ez instructions 2012 If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 1040ez instructions 2012 S. 1040ez instructions 2012 Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. 1040ez instructions 2012 Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 1040ez instructions 2012 1. 1040ez instructions 2012 Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 1040ez instructions 2012 Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 1040ez instructions 2012 $11,000         2. 1040ez instructions 2012 Enter one-half of line 1 2. 1040ez instructions 2012 5,500     3. 1040ez instructions 2012 Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 1040ez instructions 2012 25,500     4. 1040ez instructions 2012 Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 1040ez instructions 2012 -0-     5. 1040ez instructions 2012 Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 1040ez instructions 2012 -0-     6. 1040ez instructions 2012 Combine lines 2, 3, 4, and 5 6. 1040ez instructions 2012 31,000     7. 1040ez instructions 2012 Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 1040ez instructions 2012  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 1040ez instructions 2012 -0-     8. 1040ez instructions 2012 Is the amount on line 7 less than the amount on line 6?             No. 1040ez instructions 2012 None of your social security benefits are taxable. 1040ez instructions 2012 Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 1040ez instructions 2012             Yes. 1040ez instructions 2012 Subtract line 7 from line 6 8. 1040ez instructions 2012 31,000     9. 1040ez instructions 2012 If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 1040ez instructions 2012 25,000       Note. 1040ez instructions 2012 If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. 1040ez instructions 2012 85) and enter the result on line 17. 1040ez instructions 2012 Then go to line 18. 1040ez instructions 2012         10. 1040ez instructions 2012 Is the amount on line 9 less than the amount on line 8?             No. 1040ez instructions 2012 None of your benefits are taxable. 1040ez instructions 2012 Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 1040ez instructions 2012 If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. 1040ez instructions 2012             Yes. 1040ez instructions 2012 Subtract line 9 from line 8 10. 1040ez instructions 2012 6,000     11. 1040ez instructions 2012 Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 1040ez instructions 2012 9,000     12. 1040ez instructions 2012 Subtract line 11 from line 10. 1040ez instructions 2012 If zero or less, enter -0- 12. 1040ez instructions 2012 -0-     13. 1040ez instructions 2012 Enter the smaller of line 10 or line 11 13. 1040ez instructions 2012 6,000     14. 1040ez instructions 2012 Enter one-half of line 13 14. 1040ez instructions 2012 3,000     15. 1040ez instructions 2012 Enter the smaller of line 2 or line 14 15. 1040ez instructions 2012 3,000     16. 1040ez instructions 2012 Multiply line 12 by 85% (. 1040ez instructions 2012 85). 1040ez instructions 2012 If line 12 is zero, enter -0- 16. 1040ez instructions 2012 -0-     17. 1040ez instructions 2012 Add lines 15 and 16 17. 1040ez instructions 2012 3,000     18. 1040ez instructions 2012 Multiply line 1 by 85% (. 1040ez instructions 2012 85) 18. 1040ez instructions 2012 9,350     19. 1040ez instructions 2012 Taxable benefits. 1040ez instructions 2012 Enter the smaller of line 17 or line 18. 1040ez instructions 2012 Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 1040ez instructions 2012 $3,000       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 1040ez instructions 2012         Jane Jackson's Filled-in Worksheet 2. 1040ez instructions 2012 Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993)     Enter earlier year 2012 1. 1040ez instructions 2012 Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year, plus the lump-sum payment for the earlier year received after that year 1. 1040ez instructions 2012 $2,000           Note. 1040ez instructions 2012 If line 1 is zero or less, skip lines 2 through 20 and enter -0- on line 21. 1040ez instructions 2012 Otherwise, go on to line 2. 1040ez instructions 2012             2. 1040ez instructions 2012 Enter one-half of line 1 2. 1040ez instructions 2012 1,000   3. 1040ez instructions 2012 Enter your adjusted gross income for the earlier year 3. 1040ez instructions 2012 23,000   4. 1040ez instructions 2012 Enter the total of any exclusions/adjustments you claimed in the earlier year for: Adoption benefits (Form 8839) Qualified U. 1040ez instructions 2012 S. 1040ez instructions 2012 savings bond interest (Form 8815) Student loan interest (Form 1040, page 1, or Form 1040A, page 1) Tuition and fees (Form 1040, page 1, or Form 1040A, page 1) Domestic production activities (for 2005 through 2012) (Form 1040, page 1) Foreign earned income or housing (Form 2555 or Form 2555-EZ) Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico 4. 1040ez instructions 2012 -0-   5. 1040ez instructions 2012 Enter any tax-exempt interest received in the earlier year 5. 1040ez instructions 2012 -0-   6. 1040ez instructions 2012 Add lines 2 through 5 6. 1040ez instructions 2012 24,000   7. 1040ez instructions 2012 Enter your taxable benefits for the earlier year that you previously reported 7. 1040ez instructions 2012 -0-   8. 1040ez instructions 2012 Subtract line 7 from line 6 8. 1040ez instructions 2012 24,000   9. 1040ez instructions 2012 If, for the earlier year, you were:     Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), married filing separately and you lived apart from your spouse for all of the earlier year, enter $25,000 9. 1040ez instructions 2012 25,000     Note. 1040ez instructions 2012 If you were married filing separately and you lived with your spouse at any time during the earlier year, skip lines 9 through 16; multiply line 8 by 85% (. 1040ez instructions 2012 85) and enter the result on line 17. 1040ez instructions 2012 Then go to line 18. 1040ez instructions 2012         10. 1040ez instructions 2012 Is the amount on line 8 more than the amount on line 9?       No. 1040ez instructions 2012 Skip lines 10 through 20 and enter -0- on line 21. 1040ez instructions 2012       Yes. 1040ez instructions 2012 Subtract line 9 from line 8 10. 1040ez instructions 2012     11. 1040ez instructions 2012 Enter $12,000 if married filing jointly for the earlier year; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of the earlier year 11. 1040ez instructions 2012     12. 1040ez instructions 2012 Subtract line 11 from line 10. 1040ez instructions 2012 If zero or less, enter -0- 12. 1040ez instructions 2012     13. 1040ez instructions 2012 Enter the smaller of line 10 or line 11 13. 1040ez instructions 2012     14. 1040ez instructions 2012 Enter one-half of line 13 14. 1040ez instructions 2012     15. 1040ez instructions 2012 Enter the smaller of line 2 or line 14 15. 1040ez instructions 2012     16. 1040ez instructions 2012 Multiply line 12 by 85% (. 1040ez instructions 2012 85). 1040ez instructions 2012 If line 12 is zero, enter -0- 16. 1040ez instructions 2012     17. 1040ez instructions 2012 Add lines 15 and 16 17. 1040ez instructions 2012     18. 1040ez instructions 2012 Multiply line 1 by 85% (. 1040ez instructions 2012 85) 18. 1040ez instructions 2012     19. 1040ez instructions 2012 Refigured taxable benefits. 1040ez instructions 2012 Enter the smaller of line 17 or line 18 19. 1040ez instructions 2012     20. 1040ez instructions 2012 Enter your taxable benefits for the earlier year (or as refigured due to a previous lump-sum payment for the year) 20. 1040ez instructions 2012     21. 1040ez instructions 2012 Additional taxable benefits. 1040ez instructions 2012 Subtract line 20 from line 19. 1040ez instructions 2012 Also enter this amount on Worksheet 4, line 20 21. 1040ez instructions 2012 -0-     Do not file an amended return for this earlier year. 1040ez instructions 2012 Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received a lump-sum payment in 2013. 1040ez instructions 2012   Jane Jackson's Filled-in Worksheet 4. 1040ez instructions 2012 Figure Your Taxable Benefits Under the Lump-Sum Election Method (Use With Worksheet 2 or 3)     Complete Worksheet 1 and Worksheets 2 and 3 as appropriate before completing this worksheet. 1040ez instructions 2012 1. 1040ez instructions 2012 Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for 2013, minus the lump-sum payment for years before 2013 1. 1040ez instructions 2012 $9,000         Note. 1040ez instructions 2012 If line 1 is zero or less, skip lines 2 through 18, enter -0- on line 19 and go to line 20. 1040ez instructions 2012 Otherwise, go on to line 2. 1040ez instructions 2012           2. 1040ez instructions 2012 Enter one-half of line 1 2. 1040ez instructions 2012 4,500   3. 1040ez instructions 2012 Enter the amount from Worksheet 1, line 3 3. 1040ez instructions 2012 25,500   4. 1040ez instructions 2012 Enter the amount from Worksheet 1, line 4 4. 1040ez instructions 2012 -0-   5. 1040ez instructions 2012 Enter the amount from Worksheet 1, line 5 5. 1040ez instructions 2012 -0-   6. 1040ez instructions 2012 Combine lines 2, 3, 4, and 5 6. 1040ez instructions 2012 30,000   7. 1040ez instructions 2012 Enter the amount from Worksheet 1, line 7 7. 1040ez instructions 2012 -0-   8. 1040ez instructions 2012 Subtract line 7 from line 6 8. 1040ez instructions 2012 30,000   9. 1040ez instructions 2012 Enter the amount from Worksheet 1, line 9. 1040ez instructions 2012 But if you are married filing separately and lived with your spouse at any time during 2013, skip lines 9 through 16; multiply line 8 by 85% (. 1040ez instructions 2012 85) and enter the result on line 17. 1040ez instructions 2012 Then, go to line 18 9. 1040ez instructions 2012 25,000   10. 1040ez instructions 2012 Is the amount on line 8 more than the amount on line 9? No. 1040ez instructions 2012 Skip lines 10 through 18, enter -0- on line 19, and go to line 20. 1040ez instructions 2012  Yes. 1040ez instructions 2012 Subtract line 9 from line 8 10. 1040ez instructions 2012 5,000   11. 1040ez instructions 2012 Enter the amount from Worksheet 1, line 11 11. 1040ez instructions 2012 9,000   12. 1040ez instructions 2012 Subtract line 11 from line 10. 1040ez instructions 2012 If zero or less, enter -0- 12. 1040ez instructions 2012 -0-   13. 1040ez instructions 2012 Enter the smaller of line 10 or line 11 13. 1040ez instructions 2012 5,000   14. 1040ez instructions 2012 Enter one-half of line 13 14. 1040ez instructions 2012 2,500   15. 1040ez instructions 2012 Enter the smaller of line 2 or line 14 15. 1040ez instructions 2012 2,500   16. 1040ez instructions 2012 Multiply line 12 by 85% (. 1040ez instructions 2012 85). 1040ez instructions 2012 If line 12 is zero, enter -0- 16. 1040ez instructions 2012 -0-   17. 1040ez instructions 2012 Add lines 15 and 16 17. 1040ez instructions 2012 2,500   18. 1040ez instructions 2012 Multiply line 1 by 85% (. 1040ez instructions 2012 85) 18. 1040ez instructions 2012 7,650   19. 1040ez instructions 2012 Enter the smaller of line 17 or line 18 19. 1040ez instructions 2012 2,500   20. 1040ez instructions 2012 Enter the total of the amounts from Worksheet 2, line 21, and Worksheet 3, line 14, for all earlier years for which the lump-sum payment was received 20. 1040ez instructions 2012 -0-   21. 1040ez instructions 2012 Taxable benefits under lump-sum election method. 1040ez instructions 2012 Add lines 19 and 20 21. 1040ez instructions 2012 $2,500   Next. 1040ez instructions 2012 Is line 21 above smaller than Worksheet 1, line 19? No. 1040ez instructions 2012 Do not use this method to figure your taxable benefits. 1040ez instructions 2012 Follow the instructions on Worksheet 1 to report your benefits. 1040ez instructions 2012  Yes. 1040ez instructions 2012 You can elect to report your taxable benefits under this method. 1040ez instructions 2012 To elect this method:     Enter “LSE” to the left of Form 1040, line 20a, or Form 1040A, line 14a. 1040ez instructions 2012 If line 21 above is zero, follow the instructions in line 10 for “No” on Worksheet 1. 1040ez instructions 2012 Otherwise: Enter the amount from Worksheet 1, line 1, on Form 1040, line 20a, or on Form 1040A, line 14a. 1040ez instructions 2012 Enter the amount from line 21 above on Form 1040, line 20b, or on Form 1040A, line 14b. 1040ez instructions 2012 If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 1040ez instructions 2012   Deductions Related to Your Benefits You may be entitled to deduct certain amounts related to the benefits you receive. 1040ez instructions 2012 Disability payments. 1040ez instructions 2012   You may have received disability payments from your employer or an insurance company that you included as income on your tax return in an earlier year. 1040ez instructions 2012 If you received a lump-sum payment from SSA or RRB, and you had to repay the employer or insurance company for the disability payments, you can take an itemized deduction for the part of the payments you included in gross income in the earlier year. 1040ez instructions 2012 If the amount you repay is more than $3,000, you may be able to claim a tax credit instead. 1040ez instructions 2012 Claim the deduction or credit in the same way explained under Repayment of benefits received in an earlier year in the section Repayments More Than Gross Benefits , later. 1040ez instructions 2012 Legal expenses. 1040ez instructions 2012   You can usually deduct legal expenses that you pay or incur to produce or collect taxable income or in connection with the determination, collection, or refund of any tax. 1040ez instructions 2012   Legal expenses for collecting the taxable part of your benefits are deductible as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. 1040ez instructions 2012 Repayments More Than Gross Benefits In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. 1040ez instructions 2012 If this occurred, your net benefits in box 5 will be a negative figure (a figure in parentheses) and none of your benefits will be taxable. 1040ez instructions 2012 Do not use Worksheet 1 in this case. 1040ez instructions 2012 If you receive more than one form, a negative figure in box 5 of one form is used to offset a positive figure in box 5 of another form for that same year. 1040ez instructions 2012 If you have any questions about this negative figure, contact your local SSA office or your local RRB field office. 1040ez instructions 2012 Joint return. 1040ez instructions 2012   If you and your spouse file a joint return, and your Form SSA-1099 or RRB-1099 has a negative figure in box 5, but your spouse's does not, subtract the amount in box 5 of your form from the amount in box 5 of your spouse's form. 1040ez instructions 2012 You do this to get your net benefits when figuring if your combined benefits are taxable. 1040ez instructions 2012 Example. 1040ez instructions 2012 John and Mary file a joint return for 2013. 1040ez instructions 2012 John received Form SSA-1099 showing $3,000 in box 5. 1040ez instructions 2012 Mary also received Form SSA-1099 and the amount in box 5 was ($500). 1040ez instructions 2012 John and Mary will use $2,500 ($3,000 minus $500) as the amount of their net benefits when figuring if any of their combined benefits are taxable. 1040ez instructions 2012 Repayment of benefits received in an earlier year. 1040ez instructions 2012   If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 is a negative figure, you can take an itemized deduction for the part of this negative figure that represents benefits you included in gross income in an earlier year. 1040ez instructions 2012 Deduction $3,000 or less. 1040ez instructions 2012   If this deduction is $3,000 or less, it is subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions. 1040ez instructions 2012 Claim it on Schedule A (Form 1040), line 23. 1040ez instructions 2012 Deduction more than $3,000. 1040ez instructions 2012   If this deduction is more than $3,000, you should figure your tax two ways: Figure your tax for 2013 with the itemized deduction included on Schedule A, line 28. 1040ez instructions 2012 Figure your tax for 2013 in the following steps: Figure the tax without the itemized deduction included on Schedule A, line 28. 1040ez instructions 2012 For each year after 1983 for which part of the negative figure represents a repayment of benefits, refigure your taxable benefits as if your total benefits for the year were reduced by that part of the negative figure. 1040ez instructions 2012 Then refigure the tax for that year. 1040ez instructions 2012 Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts. 1040ez instructions 2012 Subtract the result in (c) from the result in (a). 1040ez instructions 2012   Compare the tax figured in methods (1) and (2). 1040ez instructions 2012 Your tax for 2013 is the smaller of the two amounts. 1040ez instructions 2012 If method (1) results in less tax, take the itemized deduction on Schedule A (Form 1040), line 28. 1040ez instructions 2012 If method (2) results in less tax, claim a credit for the amount from step 2(c) above on Form 1040, line 71. 1040ez instructions 2012 Check box d and enter “I. 1040ez instructions 2012 R. 1040ez instructions 2012 C. 1040ez instructions 2012 1341” in the space next to that box. 1040ez instructions 2012 If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 28. 1040ez instructions 2012 Worksheets Blank Worksheets 1 through 4 are provided in this section: Worksheet 1, Figuring Your Taxable Benefits; Worksheet 2, Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993); Worksheet 3, Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year Before 1994); Worksheet 4, Figure Your Taxable Benefits Under the Lump-Sum Election Method (Use With Worksheet 2 or 3). 1040ez instructions 2012 Worksheet 1. 1040ez instructions 2012 Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 1040ez instructions 2012 Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). 1040ez instructions 2012 None of your benefits are taxable for 2013. 1040ez instructions 2012 For more information, see Repayments More Than Gross Benefits . 1040ez instructions 2012 If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 1040ez instructions 2012 S. 1040ez instructions 2012 Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. 1040ez instructions 2012 Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 1040ez instructions 2012 1. 1040ez instructions 2012 Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 1040ez instructions 2012 Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 1040ez instructions 2012           2. 1040ez instructions 2012 Enter one-half of line 1 2. 1040ez instructions 2012       3. 1040ez instructions 2012 Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 1040ez instructions 2012       4. 1040ez instructions 2012 Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 1040ez instructions 2012       5. 1040ez instructions 2012 Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 1040ez instructions 2012       6. 1040ez instructions 2012 Combine lines 2, 3, 4, and 5 6. 1040ez instructions 2012       7. 1040ez instructions 2012 Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 1040ez instructions 2012  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 1040ez instructions 2012       8. 1040ez instructions 2012 Is the amount on line 7 less than the amount on line 6?             No. 1040ez instructions 2012 None of your social security benefits are taxable. 1040ez instructions 2012 Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 1040ez instructions 2012             Yes. 1040ez instructions 2012 Subtract line 7 from line 6 8. 1040ez instructions 2012       9. 1040ez instructions 2012 If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 1040ez instructions 2012         Note. 1040ez instructions 2012 If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. 1040ez instructions 2012 85) and enter the result on line 17. 1040ez instructions 2012 Then go to line 18. 1040ez instructions 2012         10. 1040ez instructions 2012 Is the amount on line 9 less than the amount on line 8?             No. 1040ez instructions 2012 None of your benefits are taxable. 1040ez instructions 2012 Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 1040ez instructions 2012 If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. 1040ez instructions 2012             Yes. 1040ez instructions 2012 Subtract line 9 from line 8 10. 1040ez instructions 2012       11. 1040ez instructions 2012 Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 1040ez instructions 2012       12. 1040ez instructions 2012 Subtract line 11 from line 10. 1040ez instructions 2012 If zero or less, enter -0- 12. 1040ez instructions 2012       13. 1040ez instructions 2012 Enter the smaller of line 10 or line 11 13. 1040ez instructions 2012       14. 1040ez instructions 2012 Enter one-half of line 13 14. 1040ez instructions 2012       15. 1040ez instructions 2012 Enter the smaller of line 2 or line 14 15. 1040ez instructions 2012       16. 1040ez instructions 2012 Multiply line 12 by 85% (. 1040ez instructions 2012 85). 1040ez instructions 2012 If line 12 is zero, enter -0- 16. 1040ez instructions 2012       17. 1040ez instructions 2012 Add lines 15 and 16 17. 1040ez instructions 2012       18. 1040ez instructions 2012 Multiply line 1 by 85% (. 1040ez instructions 2012 85) 18. 1040ez instructions 2012       19. 1040ez instructions 2012 Taxable benefits. 1040ez instructions 2012 Enter the smaller of line 17 or line 18. 1040ez instructions 2012 Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 1040ez instructions 2012         If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 1040ez instructions 2012         Worksheet 2. 1040ez instructions 2012 Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993)     Enter earlier year 1. 1040ez instructions 2012 Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year, plus the lump-sum payment for the earlier year received after that year 1. 1040ez instructions 2012             Note. 1040ez instructions 2012 If line 1 is zero or less, skip lines 2 through 20 and enter -0- on line 21. 1040ez instructions 2012 Otherwise, go on to line 2. 1040ez instructions 2012             2. 1040ez instructions 2012 Enter one-half of line 1 2. 1040ez instructions 2012     3. 1040ez instructions 2012 Enter your adjusted gross income for the earlier year 3. 1040ez instructions 2012     4. 1040ez instructions 2012 Enter the total of any exclusions/adjustments you claimed in the earlier year for: Adoption benefits (Form 8839) Qualified U. 1040ez instructions 2012 S. 1040ez instructions 2012 savings bond interest (Form 8815) Student loan interest (Form 1040, page 1, or Form 1040A, page 1) Tuition and fees (Form 1040, page 1, or Form 1040A, page 1) Domestic production activities (for 2005 through 2012) (Form 1040, page 1) Foreign earned income or housing (Form 2555 or Form 2555-EZ) Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico 4. 1040ez instructions 2012     5. 1040ez instructions 2012 Enter any tax-exempt interest received in the earlier year 5. 1040ez instructions 2012     6. 1040ez instructions 2012 Add lines 2 through 5 6. 1040ez instructions 2012     7. 1040ez instructions 2012 Enter your taxable benefits for the earlier year that you previously reported 7. 1040ez instructions 2012     8. 1040ez instructions 2012 Subtract line 7 from line 6 8. 1040ez instructions 2012     9. 1040ez instructions 2012 If, for the earlier year, you were:     Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), married filing separately and you lived apart from your spouse for all of the earlier year, enter $25,000 9. 1040ez instructions 2012       Note. 1040ez instructions 2012 If you were married filing separately and you lived with your spouse at any time during the earlier year, skip lines 9 through 16; multiply line 8 by 85% (. 1040ez instructions 2012 85) and enter the result on line 17. 1040ez instructions 2012 Then go to line 18. 1040ez instructions 2012         10. 1040ez instructions 2012 Is the amount on line 8 more than the amount on line 9?       No. 1040ez instructions 2012 Skip lines 10 through 20 and enter -0- on line 21. 1040ez instructions 2012       Yes. 1040ez instructions 2012 Subtract line 9 from line 8 10. 1040ez instructions 2012     11. 1040ez instructions 2012 Enter $12,000 if married filing jointly for the earlier year; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of the earlier year 11. 1040ez instructions 2012     12. 1040ez instructions 2012 Subtract line 11 from line 10. 1040ez instructions 2012 If zero or less, enter -0- 12. 1040ez instructions 2012     13. 1040ez instructions 2012 Enter the smaller of line 10 or line 11 13. 1040ez instructions 2012     14. 1040ez instructions 2012 Enter one-half of line 13 14. 1040ez instructions 2012     15. 1040ez instructions 2012 Enter the smaller of line 2 or line 14 15. 1040ez instructions 2012     16. 1040ez instructions 2012 Multiply line 12 by 85% (. 1040ez instructions 2012 85). 1040ez instructions 2012 If line 12 is zero, enter -0- 16. 1040ez instructions 2012     17. 1040ez instructions 2012 Add lines 15 and 16 17. 1040ez instructions 2012     18. 1040ez instructions 2012 Multiply line 1 by 85% (. 1040ez instructions 2012 85) 18. 1040ez instructions 2012     19. 1040ez instructions 2012 Refigured taxable benefits. 1040ez instructions 2012 Enter the smaller of line 17 or line 18 19. 1040ez instructions 2012     20. 1040ez instructions 2012 Enter your taxable benefits for the earlier year (or as refigured due to a previous lump-sum payment for the year) 20. 1040ez instructions 2012     21. 1040ez instructions 2012 Additional taxable benefits. 1040ez instructions 2012 Subtract line 20 from line 19. 1040ez instructions 2012 Also enter this amount on Worksheet 4, line 20 21. 1040ez instructions 2012       Do not file an amended return for this earlier year. 1040ez instructions 2012 Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received a lump-sum payment in 2013. 1040ez instructions 2012   Worksheet 3. 1040ez instructions 2012 Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year Before 1994) Enter earlier year 1. 1040ez instructions 2012 Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year, plus the lump-sum payment for the earlier year received after that year 1. 1040ez instructions 2012           Note. 1040ez instructions 2012 If line 1 is zero or less, skip lines 2 through 13 and enter -0- on line 14. 1040ez instructions 2012 Otherwise, go on to line 2. 1040ez instructions 2012           2. 1040ez instructions 2012 Enter one-half of line 1 2. 1040ez instructions 2012     3. 1040ez instructions 2012 Enter your adjusted gross income for the earlier year 3. 1040ez instructions 2012     4. 1040ez instructions 2012 Enter the total of any exclusions/adjustments you claimed in the earlier year for: Qualified U. 1040ez instructions 2012 S. 1040ez instructions 2012 savings bond interest (Form 8815) Foreign earned income or housing (Form 2555 or Form 2555-EZ) Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico 4. 1040ez instructions 2012     5. 1040ez instructions 2012 Enter any tax-exempt interest received in the earlier year 5. 1040ez instructions 2012     6. 1040ez instructions 2012 Add lines 2 through 5 6. 1040ez instructions 2012     7. 1040ez instructions 2012 Enter your taxable benefits for the earlier year that you previously reported 7. 1040ez instructions 2012     8. 1040ez instructions 2012 Subtract line 7 from line 6 8. 1040ez instructions 2012     9. 1040ez instructions 2012 Enter $25,000 ($32,000 if married filing jointly for the earlier year; $-0- if married filing separately for the earlier year and you lived with your spouse at any time during the earlier year) 9. 1040ez instructions 2012     10. 1040ez instructions 2012 Is the amount on line 8 more than the amount on line 9? No. 1040ez instructions 2012 Skip lines 10 through 13 and enter -0- on line 14. 1040ez instructions 2012  Yes. 1040ez instructions 2012 Subtract line 9 from line 8. 1040ez instructions 2012 10. 1040ez instructions 2012     11. 1040ez instructions 2012 Enter one-half of line 10 11. 1040ez instructions 2012     12. 1040ez instructions 2012 Refigured taxable benefits. 1040ez instructions 2012 Enter the smaller of line 2 or line 11 12. 1040ez instructions 2012     13. 1040ez instructions 2012 Enter your taxable benefits for the earlier year (or as refigured due to a previous
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The 1040ez Instructions 2012

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