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E File Federal State Taxes Free

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E File Federal State Taxes Free

E file federal state taxes free Publication 4492-B - Main Content Table of Contents DefinitionsMidwestern Disaster Areas Applicable Disaster Date Charitable Giving IncentivesTemporary Suspension of Limits on Charitable Contributions Standard Mileage Rate for Charitable Use of Vehicles Mileage Reimbursements to Charitable Volunteers Casualty and Theft LossesTime limit for making election. E file federal state taxes free Replacement Period for Nonrecognition of Gain Net Operating Losses IRAs and Other Retirement PlansDefinitions Taxation of Qualified Disaster Recovery Assistance Distributions Repayment of Qualified Disaster Recovery Assistance Distributions Repayment of Qualified Distributions for the Purchase or Construction of a Main Home Loans From Qualified Plans Additional Tax Relief for IndividualsEarned Income Credit and Child Tax Credit Additional Exemption for Housing Individuals Displaced by the Severe Storms, Tornadoes, or Flooding Education Credits Recapture of Federal Mortgage Subsidy Exclusion of Certain Cancellations of Indebtedness by Reason of the Severe Storms, Tornadoes, or Flooding Tax Relief for Temporary Relocation Additional Tax Relief for BusinessesEmployee Retention Credit Employer Housing Credit and Exclusion Demolition and Clean-up Costs Increase in Rehabilitation Tax Credit Request for Copy or Transcript of Tax Return How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). E file federal state taxes free Definitions The following definitions are used throughout this publication. E file federal state taxes free Midwestern Disaster Areas A Midwestern disaster area is an area for which a major disaster was declared by the President during the period beginning on May 20, 2008, and ending on July 31, 2008, in the state of Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, or Wisconsin, as a result of severe storms, tornadoes, or flooding that occurred on the applicable disaster date. E file federal state taxes free See Tables 1 and 2 for a list of the counties included in the Midwestern disaster areas. E file federal state taxes free Applicable Disaster Date The term “applicable disaster date” as used in this publication, refers to the date on which the severe storms, tornadoes, or flooding occurred in the Midwestern disaster areas. E file federal state taxes free You will need to know this date when using this publication for the various tax provisions. E file federal state taxes free Table 1 The counties listed in Table 1 below are eligible for all tax provisions shown in this publication. E file federal state taxes free Applicable Disaster Dates* State Affected Counties—Midwestern Disaster Areas 05/02/2008through05/12/2008 Arkansas Arkansas, Benton, Cleburne, Conway, Crittenden, Grant, Lonoke, Mississippi, Phillips, Pulaski, Saline, and Van Buren. E file federal state taxes free 06/01/2008through07/22/2008 Illinois Adams, Calhoun, Clark, Coles, Crawford, Cumberland, Douglas, Edgar, Hancock, Henderson, Jasper, Jersey, Lake, Lawrence, Mercer, Rock Island, Whiteside, and Winnebago. E file federal state taxes free 05/30/2008through06/27/2008 Indiana Adams, Bartholomew, Brown, Clay, Daviess, Dearborn, Decatur, Gibson, Grant, Greene, Hamilton, Hancock, Hendricks, Henry, Huntington, Jackson, Jefferson, Jennings, Johnson, Knox, Lawrence, Madison, Marion, Monroe, Morgan, Owen, Parke, Pike, Posey, Putnam, Randolph, Ripley, Rush, Shelby, Sullivan, Tippecanoe, Vermillion, Vigo, Washington, and Wayne. E file federal state taxes free 05/25/2008through08/13/2008 Iowa Adair, Adams, Allamakee, Appanoose, Audubon, Benton, Black Hawk, Boone, Bremer, Buchanan, Butler, Cass, Cedar, Cerro Gordo, Chickasaw, Clarke, Clayton, Clinton, Crawford, Dallas, Davis, Decatur, Delaware, Des Moines, Dubuque, Fayette, Floyd, Franklin, Fremont, Greene, Grundy, Guthrie, Hamilton, Hancock, Hardin, Harrison, Henry, Howard, Humboldt, Iowa, Jackson, Jasper, Johnson, Jones, Keokuk, Kossuth, Lee, Linn, Louisa, Lucas, Madison, Mahaska, Marion, Marshall, Mills, Mitchell, Monona, Monroe, Montgomery, Muscatine, Page, Polk, Pottawattamie, Poweshiek, Ringgold, Scott, Story, Tama, Union, Van Buren, Wapello, Warren, Washington, Webster, Winnebago, Winneshiek, Worth, and Wright. E file federal state taxes free 05/10/2008through05/11/2008 Missouri Barry, Jasper, and Newton. E file federal state taxes free 06/01/2008through08/13/2008 Missouri Adair, Andrew, Callaway, Cass, Chariton, Clark, Gentry, Greene, Harrison, Holt, Johnson, Lewis, Lincoln, Linn, Livingston, Macon, Marion, Monroe, Nodaway, Pike, Putnam, Ralls, St. E file federal state taxes free Charles, Stone, Taney, Vernon, and Webster. E file federal state taxes free 05/22/2008through06/24/2008 Nebraska Buffalo, Butler, Colfax, Custer, Dawson, Douglas, Gage, Hamilton, Holt, Jefferson, Kearney, Lancaster, Platte, Richardson, Sarpy, and Saunders. E file federal state taxes free 06/05/2008through07/25/2008 Wisconsin Adams, Calumet, Crawford, Columbia, Dane, Dodge, Fond du Lac, Grant, Green, Green Lake, Iowa, Jefferson, Juneau, Kenosha, La Crosse, Manitowoc, Marquette, Milwaukee, Monroe, Ozaukee, Racine, Richland, Rock, Sauk, Sheboygan, Vernon, Walworth, Washington, Waukesha, and Winnebago. E file federal state taxes free *For more details, go to www. E file federal state taxes free fema. E file federal state taxes free gov Table 2 The counties listed in Table 2 below are eligible for all of the special tax provisions shown in this publication except the following. E file federal state taxes free Charitable Giving Incentives. E file federal state taxes free Net Operating Losses. E file federal state taxes free Education Credits. E file federal state taxes free Recapture of Federal Mortgage Subsidy. E file federal state taxes free Tax Relief for Temporary Relocation. E file federal state taxes free Employee Retention Credit. E file federal state taxes free Employer Housing Credit and Exclusion. E file federal state taxes free Demolition and Clean-up Costs. E file federal state taxes free Increase in Rehabilitation Credit. E file federal state taxes free Applicable Disaster Dates* State Affected Counties—Midwestern Disaster Areas 06/01/2008through07/22/2008 Illinois Greene, Madison, Monroe, Pike, Randolph, St. E file federal state taxes free Clair, and Scott. E file federal state taxes free 05/30/2008through06/27/2008 Indiana Benton, Boone, Fountain, Franklin, Jay, Montgomery, Ohio, Switzerland, Union, and Wabash. E file federal state taxes free 05/25/2008through08/13/2008 Iowa Carroll, Cherokee, Lyon, Palo Alto, Pocahontas, Taylor, and Wayne. E file federal state taxes free 05/22/2008through06/16/2008 Kansas Barber, Barton, Bourbon, Brown, Butler, Chautauqua, Cherokee, Clark, Clay, Comanche, Cowley, Crawford, Decatur, Dickinson, Edwards, Elk, Ellis, Ellsworth, Franklin, Gove, Graham, Harper, Haskell, Hodgeman, Jackson, Jewell, Kingman, Kiowa, Lane, Linn, Logan, Mitchell, Montgomery, Ness, Norton, Osborne, Pawnee, Phillips, Pratt, Reno, Republic, Riley, Rooks, Rush, Saline, Seward, Sheridan, Smith, Stafford, Sumner, Thomas, Trego, Wallace, and Wilson. E file federal state taxes free 06/06/2008through06/13/2008 Michigan Allegan, Barry, Eaton, Ingham, Lake, Manistee, Mason, Missaukee, Osceola, Ottawa, Saginaw, and Wexford. E file federal state taxes free 06/06/2008through06/12/2008 Minnesota Cook, Fillmore, Freeborn, Houston, Mower, and Nobles. E file federal state taxes free 06/01/2008through08/13/2008 Missouri Atchison, Audrain, Bates, Buchanan, Cape Girardeau, Carroll, Christian, Daviess, Grundy, Howard, Jefferson, Knox, Mercer, Miller, Mississippi, Morgan, New Madrid, Pemiscot, Perry, Pettis, Platte, Polk, Randolph, Ray, Saline, Schuyler, Scotland, Shelby, St. E file federal state taxes free Genevieve, St. E file federal state taxes free Louis, the Independent City of St. E file federal state taxes free Louis, Scott, Sullivan, and Worth. E file federal state taxes free 04/23/2008through04/26/2008 Nebraska Gage, Johnson, Morrill, Nemaha, and Pawnee. E file federal state taxes free 05/22/2008through06/24/2008 Nebraska Adams, Blaine, Boone, Boyd, Brown, Burt, Cass, Chase, Cherry, Cuming, Dundy, Fillmore, Frontier, Furnas, Garfield, Gosper, Greeley, Hall, Hayes, Howard, Johnson, Keya Paha, Lincoln, Logan, Loup, Merrick, McPherson, Morrill, Nance, Nemaha, Otoe, Phelps, Polk, Red Willow, Rock, Saline, Seward, Sherman, Stanton, Thayer, Thomas, Thurston, Valley, Webster, Wheeler, and York. E file federal state taxes free 06/27/2008 Nebraska Dodge, Douglas, Sarpy, and Saunders. E file federal state taxes free 06/05/2008through07/25/2008 Wisconsin Lafayette. E file federal state taxes free * For more details, go to www. E file federal state taxes free fema. E file federal state taxes free gov Charitable Giving Incentives Temporary Suspension of Limits on Charitable Contributions This benefit applies only to the counties in Table 1. E file federal state taxes free Individuals. E file federal state taxes free   Qualified contributions are not subject to the overall limit on itemized deductions or the 50% of adjusted gross income (AGI) limit. E file federal state taxes free A qualified contribution is a charitable contribution paid in cash or by check to a 50% limit organization if you make an election to have the 50% limit not apply to these contributions. E file federal state taxes free   A qualified contribution must also meet all of the following requirements. E file federal state taxes free Be paid after May 1, 2008, and before January 1, 2009. E file federal state taxes free The contribution must be for relief efforts in one or more Midwestern disaster areas. E file federal state taxes free Documentation must be provided by the donee organization that the contribution was used (or will be used) for relief efforts in one or more Midwestern disaster areas. E file federal state taxes free   Your deduction for qualified contributions is limited to your AGI minus your deduction for all other charitable contributions. E file federal state taxes free You can carry over any contributions you are not able to deduct for 2008 because of this limit. E file federal state taxes free In 2009, the carryover of your unused qualified contributions is subject to the 50% of AGI limit. E file federal state taxes free Exception. E file federal state taxes free   Qualified contributions do not include contributions to certain private foundations described in section 509(a)(3) or contributions for the establishment of a new, or maintenance of an existing, donor advised fund. E file federal state taxes free Corporations. E file federal state taxes free   A corporation can elect to deduct qualified cash contributions without regard to the 10% of taxable income limit if the contributions were paid after May 1, 2008, and before January 1, 2009, to a qualified charitable organization (other than certain private foundations described in section 509(a)(3) or contributions for the establishment of a new, or maintenance of an existing, donor advised fund), for relief efforts in one or more Midwestern disaster areas. E file federal state taxes free Documentation must be provided by the donee organization that the contribution was used (or will be used) for relief efforts in one or more Midwestern disaster areas. E file federal state taxes free The corporation's deduction for these qualified contributions is limited to 100% of taxable income (as modified for the 10% limit) minus the corporation's deduction for all other charitable contributions. E file federal state taxes free Any qualified contributions over this limit can be carried over to the next 5 years, subject to the 10% of taxable income limit. E file federal state taxes free Partners and shareholders. E file federal state taxes free   Each partner in a partnership and each shareholder in an S corporation must make a separate election to have the appropriate limit not apply. E file federal state taxes free More information. E file federal state taxes free   For more information, see Publication 526 or Publication 542, Corporations. E file federal state taxes free Publication 526 includes a worksheet you can use to figure your deduction if any limits apply to your charitable contributions. E file federal state taxes free Standard Mileage Rate for Charitable Use of Vehicles This benefit applies only to the counties in Table 1. E file federal state taxes free The following are special standard mileage rates in effect for 2008 for the cost of operating your vehicle for providing charitable services related only to the severe storms, tornadoes, or flooding. E file federal state taxes free 36 cents per mile for the period beginning on the applicable disaster date through June 30, 2008. E file federal state taxes free 41 cents per mile for the period July 1 through December 31, 2008. E file federal state taxes free Mileage Reimbursements to Charitable Volunteers This benefit applies only to the counties in Table 1. E file federal state taxes free You can exclude from income amounts you receive as mileage reimbursements for the use of a private passenger vehicle for the benefit of a qualified charitable organization in providing relief related to the severe storms, tornadoes, or flooding during the period beginning on the applicable disaster date, and ending on December 31, 2008. E file federal state taxes free You cannot claim a deduction or credit for amounts you exclude. E file federal state taxes free You must keep records of miles driven, time, place (or use), and purpose of the mileage. E file federal state taxes free The amount you can exclude cannot exceed the standard business mileage rate (shown below) for expenses incurred during the following periods. E file federal state taxes free 50. E file federal state taxes free 5 cents per mile for the period beginning on the applicable disaster date through June 30, 2008. E file federal state taxes free 58. E file federal state taxes free 5 cents per mile for the period July 1 through December 31, 2008. E file federal state taxes free Casualty and Theft Losses This benefit applies to the counties in both Tables 1 and 2. E file federal state taxes free The following paragraphs explain changes to casualty and theft losses that were caused by the severe storms, tornadoes, or flooding in the Midwestern disaster areas. E file federal state taxes free For more information, see Publication 547. E file federal state taxes free Limits on personal casualty or theft losses. E file federal state taxes free   Losses of personal use property that arose in a Midwestern disaster area on or after the applicable disaster date are not subject to the $100 or 10% of AGI limits. E file federal state taxes free Qualifying losses include losses from casualties and thefts that arose in a Midwestern disaster area that were attributable to the severe storms, tornadoes, or flooding. E file federal state taxes free When completing Form 4684, do not include on line 17 any losses that arose in a Midwestern disaster area. E file federal state taxes free A loss arising in a Midwestern disaster area is not considered a loss attributable to a federally declared disaster for purposes of that line and cannot be added to your standard deduction. E file federal state taxes free When to deduct the loss. E file federal state taxes free   Casualty and theft losses are generally deductible only in the year the casualty occurred or the theft was discovered. E file federal state taxes free However, you can elect to deduct losses caused by the severe storms, tornadoes, or flooding on your return for the prior year. E file federal state taxes free Special instructions for individuals who elect to claim a Midwestern disaster area casualty or theft loss for 2007. E file federal state taxes free   Individuals filing or amending their 2007 tax return for casualty or theft losses that were attributable to the severe storms, tornadoes, or flooding should: Enter “Midwestern Disaster Area” at the top of Form 1040 or Form 1040X, and Complete the 2008 version of Form 4684. E file federal state taxes free Cross out “2008” and enter “2007” at the top of Form 4684. E file federal state taxes free Time limit for making election. E file federal state taxes free   You must make this election to claim your casualty or theft loss in 2007 by the later of the following dates. E file federal state taxes free The due date (without extensions) for filing your 2008 income tax return. E file federal state taxes free The due date (with extensions) for filing your 2007 income tax return. E file federal state taxes free Example. E file federal state taxes free If you are a calendar year individual taxpayer, you have until April 15, 2009, to amend your 2007 tax return to claim a casualty or theft loss that occurred during 2008. E file federal state taxes free Replacement Period for Nonrecognition of Gain This benefit applies to the counties in both Tables 1 and 2. E file federal state taxes free Generally, an involuntary conversion occurs when property is damaged, destroyed, stolen, seized, requisitioned, or condemned, and you receive other property or money in payment, such as insurance or a condemnation award. E file federal state taxes free Generally, you do not have to report a gain (if any) if you replace the property within 2 years (4 years for a main home in a federally declared disaster area). E file federal state taxes free However, for property that was involuntarily converted on or after the applicable disaster date, as a result of the severe storms, tornadoes, or flooding, a 5-year replacement period applies if substantially all of the use of the replacement property is in a Midwestern disaster area. E file federal state taxes free For more information, see the Instructions for Form 4684. E file federal state taxes free Net Operating Losses This benefit applies only to the counties in Table 1. E file federal state taxes free Qualified disaster recovery assistance loss. E file federal state taxes free   Generally, you can carry a net operating loss (NOL) back to the 2 tax years before the NOL year. E file federal state taxes free However, the portion of an NOL that is a qualified disaster recovery assistance loss can be carried back to the 5 tax years before the NOL year. E file federal state taxes free In addition, the 90% limit on the alternative tax NOL deduction (ATNOLD) does not apply to such portion of the ATNOLD. E file federal state taxes free   A qualified disaster recovery assistance loss is the smaller of: The excess of the NOL for the year over the specified liability loss for the year to which a 10-year carryback applies, or The total of the following deductions (to the extent they are taken into account in computing the NOL for the tax year): Qualified disaster recovery assistance casualty loss (as defined below), Moving expenses paid or incurred on or after the applicable disaster date, and before January 1, 2011, for the employment of an individual whose main home was in a Midwestern disaster area before the applicable disaster date, who was unable to remain in that home because of the severe storms, tornadoes, or flooding, and whose main job location (after the move) is in a Midwestern disaster area, Temporary housing expenses paid or incurred on or after the applicable disaster date, and before January 1, 2011, to house employees of the taxpayer whose main job location is in a Midwestern disaster area, Depreciation or amortization allowable for any qualified disaster recovery assistance property (even if you elected not to claim the special disaster recovery assistance depreciation allowance for such property) for the year placed in service, and Repair expenses (including expenses for the removal of debris) paid or incurred on or after the applicable disaster date, and before January 1, 2011, for any damage from the severe storms, tornadoes, or flooding to property located in a Midwestern disaster area. E file federal state taxes free Qualified disaster recovery assistance casualty loss. E file federal state taxes free   A qualified disaster recovery assistance casualty loss is any deductible section 1231 loss of property located in a Midwestern disaster area if the loss was caused by the severe storms, tornadoes, or flooding. E file federal state taxes free For this purpose, the amount of the loss is reduced by any recognized gain from an involuntary conversion caused by the severe storms, tornadoes, or flooding of property located in a Midwestern disaster area. E file federal state taxes free Any such loss taken into account in figuring your qualified disaster recovery assistance loss is not eligible for the election to be treated as having occurred in the previous tax year. E file federal state taxes free More information. E file federal state taxes free   For more information on NOLs, see Publication 536 or Publication 542, Corporations. E file federal state taxes free IRAs and Other Retirement Plans New rules provide for tax-favored withdrawals, repayments, and loans from certain retirement plans for taxpayers who suffered economic losses as a result of the severe storms, tornadoes, or flooding. E file federal state taxes free Definitions Qualified disaster recovery assistance distribution. E file federal state taxes free   A qualified disaster recovery assistance distribution is any distribution you received from an eligible retirement plan if all of the following apply. E file federal state taxes free The distribution was made on or after the applicable disaster date and before January 1, 2010. E file federal state taxes free Your main home was located in a Midwestern disaster area on the applicable disaster date. E file federal state taxes free You sustained an economic loss because of the severe storms, tornadoes, or flooding and your main home was in a Midwestern disaster area on the applicable disaster date. E file federal state taxes free Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. E file federal state taxes free   If (1) through (3) above apply, you can generally designate any distribution (including periodic payments and required minimum distributions) from an eligible retirement plan as a qualified disaster recovery assistance distribution, regardless of whether the distribution was made on account of the severe storms, tornadoes, or flooding. E file federal state taxes free Qualified disaster recovery assistance distributions are permitted without regard to your need or the actual amount of your economic loss. E file federal state taxes free   The total of your qualified disaster recovery assistance distributions from all plans is limited to $100,000. E file federal state taxes free If you have distributions in excess of $100,000 from more than one type of plan, such as a 401(k) plan and an IRA, you can allocate the $100,000 limit among the plans any way you choose. E file federal state taxes free   A reduction or offset (on or after the applicable disaster date) of your account balance in an eligible retirement plan in order to repay a loan can also be designated as a qualified disaster recovery assistance distribution. E file federal state taxes free Eligible retirement plan. E file federal state taxes free   An eligible retirement plan can be any of the following. E file federal state taxes free A qualified pension, profit-sharing, or stock bonus plan (including a 401(k) plan). E file federal state taxes free A qualified annuity plan. E file federal state taxes free A tax-sheltered annuity contract. E file federal state taxes free A governmental section 457 deferred compensation plan. E file federal state taxes free A traditional, SEP, SIMPLE, or Roth IRA. E file federal state taxes free Main home. E file federal state taxes free   Generally, your main home is the home where you live most of the time. E file federal state taxes free A temporary absence due to special circumstances, such as illness, education, business, military service, evacuation, or vacation, will not change your main home. E file federal state taxes free Taxation of Qualified Disaster Recovery Assistance Distributions This benefit applies to the counties in both Tables 1 and 2. E file federal state taxes free Qualified disaster recovery assistance distributions are included in income in equal amounts over three years. E file federal state taxes free However, if you elect, you can include the entire distribution in your income in the year it was received. E file federal state taxes free Qualified disaster recovery assistance distributions are not subject to the additional 10% tax (or the additional 25% tax for certain distributions from SIMPLE IRAs) on early distributions from qualified retirement plans (including IRAs). E file federal state taxes free However, any distributions you receive in excess of the $100,000 qualified disaster recovery assistance distribution limit may be subject to the additional tax on early distributions. E file federal state taxes free For more information, see Form 8930. E file federal state taxes free Repayment of Qualified Disaster Recovery Assistance Distributions This benefit applies to the counties in both Tables 1 and 2. E file federal state taxes free If you choose, you generally can repay any portion of a qualified disaster recovery assistance distribution that is eligible for tax-free rollover treatment to an eligible retirement plan. E file federal state taxes free Also, you can repay a qualified disaster recovery assistance distribution made on account of a hardship from a retirement plan. E file federal state taxes free However, see Exceptions later for qualified disaster recovery assistance distributions you cannot repay. E file federal state taxes free You have three years from the day after the date you received the distribution to make a repayment. E file federal state taxes free Amounts that are repaid are treated as a qualified rollover and are not included in income. E file federal state taxes free Also, a repayment of a qualified disaster recovery assistance distribution to an IRA is not counted when figuring the one-rollover-per-year limitation. E file federal state taxes free See Form 8930 for more information on how to report repayments. E file federal state taxes free Exceptions. E file federal state taxes free   You cannot repay the following types of distributions. E file federal state taxes free Qualified disaster recovery assistance distributions received as a beneficiary (other than a surviving spouse). E file federal state taxes free Required minimum distributions. E file federal state taxes free Periodic payments (other than from an IRA) that are for: A period of 10 years or more, Your life or life expectancy, or The joint lives or joint life expectancies of you and your beneficiary. E file federal state taxes free Repayment of Qualified Distributions for the Purchase or Construction of a Main Home This benefit applies to the counties in both Tables 1 and 2. E file federal state taxes free If you received a qualified distribution to purchase or construct a main home in a Midwestern disaster area, you can repay part or all of that distribution on or after the applicable disaster date, but no later than March 3, 2009, to an eligible retirement plan. E file federal state taxes free For this purpose, an eligible retirement plan is any plan, annuity, or IRA to which a qualified rollover can be made. E file federal state taxes free To be a qualified distribution, the distribution must meet all of the following requirements. E file federal state taxes free The distribution is a hardship distribution from a 401(k) plan, a hardship distribution from a tax-sheltered annuity contract, or a qualified first-time homebuyer distribution from an IRA. E file federal state taxes free The distribution was received after the date that was 6 months before the day after the applicable disaster date. E file federal state taxes free The distribution was to be used to purchase or construct a main home in a Midwestern disaster area that was not purchased or constructed because of the severe storms, tornadoes, or flooding. E file federal state taxes free Amounts that are repaid before March 4, 2009, are treated as a qualified rollover and are not included in income. E file federal state taxes free Also, a repayment of a qualified distribution to an IRA is not counted when figuring the one-rollover-per-year limitation. E file federal state taxes free A qualified distribution not repaid before March 4, 2009, may be taxable for 2007 or 2008 and subject to the additional 10% tax (or the additional 25% tax for certain SIMPLE IRAs) on early distributions. E file federal state taxes free You must file Form 8930 if you received a qualified distribution that you repaid, in whole or in part, before March 4, 2009. E file federal state taxes free Loans From Qualified Plans This benefit applies to the counties in both Tables 1 and 2. E file federal state taxes free The following benefits are available to qualified individuals. E file federal state taxes free Increases to the limits for distributions treated as loans from employer plans. E file federal state taxes free A 1-year suspension for payments due on plan loans. E file federal state taxes free Qualified individual. E file federal state taxes free   You are a qualified individual if your main home was located in a Midwestern disaster area on the applicable disaster date and you had an economic loss because of the severe storms, tornadoes, or flooding. E file federal state taxes free Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. E file federal state taxes free Limits on plan loans. E file federal state taxes free   The $50,000 limit for distributions treated as plan loans is increased to $100,000. E file federal state taxes free In addition, the limit based on 50% of your vested accrued benefit is increased to 100% of that benefit. E file federal state taxes free If your main home was located in a Midwestern disaster area, the higher limits apply only to loans received during the period beginning on October 3, 2008, and ending on December 31, 2009. E file federal state taxes free One-year suspension of loan payments. E file federal state taxes free   Payments on plan loans outstanding on or after the applicable disaster date, may be suspended for 1 year by the plan administrator. E file federal state taxes free To qualify for the suspension, the due date for any loan payment must occur during the period beginning on the applicable disaster date and ending on December 31, 2009. E file federal state taxes free Additional Tax Relief for Individuals Earned Income Credit and Child Tax Credit This benefit applies to the counties in both Tables 1 and 2. E file federal state taxes free You can elect to use your 2007 earned income to figure your earned income credit (EIC) and additional child tax credit for 2008 if: Your 2008 earned income is less than your 2007 earned income, and At least one of the following statements is true. E file federal state taxes free Your main home on the applicable disaster date was in a Midwestern disaster area as shown in Table 1. E file federal state taxes free Your main home on the applicable disaster date was in a Midwestern disaster area as shown in Table 2, and you were displaced from that home because of the severe storms, tornadoes, or flooding. E file federal state taxes free Earned income. E file federal state taxes free    For the purpose of this election, your earned income for both the EIC and the additional child tax credit is the amount of earned income used to figure your EIC, even if you did not take the EIC and even if that amount is different than your earned income for the additional child tax credit. E file federal state taxes free If you are claiming only the additional child tax credit, you must figure the amount of your earned income for EIC purposes to determine your eligibility to make the election and the amount of the credit. E file federal state taxes free Joint returns. E file federal state taxes free   If you file a joint return, you qualify to make this election even if only one spouse meets the requirements. E file federal state taxes free If you make the election, your 2007 earned income is the sum of your 2007 earned income and your spouse's 2007 earned income. E file federal state taxes free Making the election. E file federal state taxes free   If you make the election to use your 2007 earned income, the election applies for figuring both the EIC and the additional child tax credit. E file federal state taxes free However, you can make the election for the additional child tax credit even if you do not take the EIC. E file federal state taxes free   Electing to use your 2007 earned income can increase or decrease your EIC. E file federal state taxes free Take the following steps to decide whether to make the election. E file federal state taxes free Figure your 2008 EIC using your 2007 earned income. E file federal state taxes free Figure your 2008 additional child tax credit using your 2007 earned income for EIC purposes. E file federal state taxes free Add the results of (1) and (2). E file federal state taxes free Figure your 2008 EIC using your 2008 earned income. E file federal state taxes free Figure your 2008 additional child tax credit using your 2008 earned income for additional child tax credit purposes. E file federal state taxes free Add the results of (4) and (5). E file federal state taxes free Compare the results of (3) and (6). E file federal state taxes free If (3) is larger than (6), it is to your benefit to make the election. E file federal state taxes free If (3) is equal to or smaller than (6), making the election will not help you. E file federal state taxes free   If you elect to use your 2007 earned income and you are claiming the EIC, enter “PYEI” and the amount of your 2007 earned income on the dotted line next to line 64a of Form 1040, on the line next to line 40a of Form 1040A, or in the space to the left of line 8a of Form 1040EZ. E file federal state taxes free   If you elect to use your 2007 earned income and you are claiming the additional child tax credit, enter your 2007 earned income for EIC purposes (even if you did not claim the EIC) on Form 8812, Additional Child Tax Credit, line 4a, and check the box on that line. E file federal state taxes free Getting your 2007 tax return information. E file federal state taxes free   If you do not have your 2007 tax records, you can get the amount of earned income used to figure your 2007 EIC by calling 1-866-562-5227. E file federal state taxes free You can also get this information by visiting the IRS website at www. E file federal state taxes free irs. E file federal state taxes free gov. E file federal state taxes free   If you prefer to figure your 2007 earned income yourself, copies or transcripts of your filed and processed tax returns can help you reconstruct your tax records. E file federal state taxes free See Request for Copy or Transcript of Tax Return on page 11. E file federal state taxes free Additional Exemption for Housing Individuals Displaced by the Severe Storms, Tornadoes, or Flooding This benefit applies to the counties in both Tables 1 and 2. E file federal state taxes free You can claim an additional exemption amount of $500 for providing housing in your main home for each individual displaced by the severe storms, tornadoes, or flooding. E file federal state taxes free The additional exemption amount is claimed on Form 8914. E file federal state taxes free You can claim an additional exemption amount only one time for a specific individual. E file federal state taxes free If you claimed an additional exemption amount for an individual in 2008, you cannot claim that amount again for the same individual in 2009. E file federal state taxes free The maximum additional exemption amount you can claim for all displaced individuals is $2,000. E file federal state taxes free Any additional exemption amount you claimed for displaced individuals in 2008 will reduce the $2,000 maximum for 2009. E file federal state taxes free The $2,000 limit applies to a husband and wife, whether the husband and wife file joint returns or separate returns. E file federal state taxes free If married filing separately, the $2,000 can be divided in $500 increments between the spouses. E file federal state taxes free For example, if one spouse claims an additional exemption amount for one displaced individual, the other spouse, if otherwise eligible, can claim additional exemption amounts for three different displaced individuals. E file federal state taxes free If two or more taxpayers share the same main home, only one taxpayer in that main home can claim the additional exemption amount for a specific displaced individual. E file federal state taxes free In order for you to be considered to have provided housing, you must have a legal interest in the main home (that is, own or rent the home). E file federal state taxes free To qualify as a displaced individual, the individual: Must have had his or her main home in a Midwestern disaster area on the applicable disaster date, and he or she must have been displaced from that home. E file federal state taxes free If the individual's main home was located in a Midwestern disaster area as shown in Table 2, that home must have been damaged by the severe storms, tornadoes, or flooding or the individual must have been evacuated from that home because of the severe storms, tornadoes, or flooding, Must have been provided housing in your main home for a period of at least 60 consecutive days ending in the tax year in which the exemption is claimed, and Cannot be your spouse or dependent. E file federal state taxes free You cannot claim the additional exemption amount if you received rent (or any other amount) from any source for providing the housing. E file federal state taxes free You are permitted to receive payments or reimbursements that do not relate to normal housing costs, including the following. E file federal state taxes free Food, clothing, or personal items consumed or used by the displaced individual. E file federal state taxes free Reimbursement for the cost of any long distance telephone calls made by the displaced individual. E file federal state taxes free Reimbursement for the cost of gasoline for the displaced individual's use of your vehicle. E file federal state taxes free However, you cannot claim the additional exemption amount if you received any reimbursement for the extra costs of heat, electricity, or water used by the displaced individual. E file federal state taxes free Also, you must report on Form 8914 the displaced individual's social security number or individual taxpayer identification number to claim an additional exemption amount. E file federal state taxes free For more information, see Form 8914. E file federal state taxes free Education Credits This benefit applies only to the counties in Table 1. E file federal state taxes free The education credits have been expanded for students attending an eligible educational institution located in a Midwestern disaster area (Midwestern disaster area students) for any tax year beginning in 2008 or 2009. E file federal state taxes free The Hope credit for a Midwestern disaster area student is increased to 100% of the first $2,400 in qualified education expenses and 50% of the next $2,400 of qualified education expenses for a maximum credit of $3,600 per student. E file federal state taxes free The lifetime learning credit rate for a Midwestern disaster area student is increased from 20% to 40%. E file federal state taxes free The definition of qualified education expenses for a Midwestern disaster area student also has been expanded. E file federal state taxes free This expanded definition also applies to the tuition and fees deduction claimed on Form 8917. E file federal state taxes free In addition to tuition and fees required for the student's enrollment or attendance at an eligible educational institution, qualified education expenses for a Midwestern disaster area student include the following. E file federal state taxes free Books, supplies, and equipment required for enrollment or attendance at an eligible educational institution. E file federal state taxes free For a special needs student, expenses that are necessary for that person's enrollment or attendance at an eligible educational institution. E file federal state taxes free For a student who is at least a half-time student, the reasonable costs of room and board, but only to the extent that the costs are not more than the greater of the following two amounts. E file federal state taxes free The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. E file federal state taxes free The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. E file federal state taxes free You will need to contact the eligible educational institution for qualified room and board costs. E file federal state taxes free For more information, see Form 8863. E file federal state taxes free See Form 8917 for the tuition and fees deduction. E file federal state taxes free Recapture of Federal Mortgage Subsidy This benefit applies only to the counties in Table 1. E file federal state taxes free Generally, if you financed your home under a federally subsidized program (loans from tax-exempt qualified mortgage bonds or loans with mortgage credit certificates), you may have to recapture all or part of the benefit you received from that program when you sell or otherwise dispose of your home. E file federal state taxes free However, you do not have to recapture any benefit if your mortgage loan was a qualified home improvement loan of not more than $15,000. E file federal state taxes free This amount is increased to $150,000 if the loan was provided before 2011 and was used to alter, repair, or improve an existing owner-occupied residence in a Midwestern disaster area as shown in Table 1. E file federal state taxes free Exclusion of Certain Cancellations of Indebtedness by Reason of the Severe Storms, Tornadoes, or Flooding This benefit applies to the counties in both Tables 1 and 2. E file federal state taxes free Generally, discharges of nonbusiness debts (such as mortgages) made on or after the applicable disaster date and before January 1, 2010, are excluded from income for individuals whose main home was in a Midwestern disaster area on the applicable disaster date. E file federal state taxes free If the individual's main home was located in a Midwestern disaster area as shown in Table 2, the individual also must have had an economic loss because of the severe storms, tornadoes, or flooding. E file federal state taxes free Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. E file federal state taxes free This relief does not apply to any debt secured by real property located outside a Midwestern disaster area. E file federal state taxes free You may also have to reduce certain tax attributes by the amount excluded. E file federal state taxes free For more information, see Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). E file federal state taxes free Tax Relief for Temporary Relocation This benefit applies only to the counties in Table 1. E file federal state taxes free The IRS can adjust the internal revenue laws to ensure that taxpayers do not lose a deduction or credit or experience a change of filing status in 2008 or 2009 as a result of a temporary relocation caused by the severe storms, tornadoes, or flooding. E file federal state taxes free However, any such adjustment must ensure that an individual is not taken into account by more than one taxpayer for the same tax benefit. E file federal state taxes free The IRS has exercised this authority as follows. E file federal state taxes free In determining whether you furnished over one-half of the cost of maintaining a household, you can exclude from total household costs any assistance received from the government or charitable organizations because you were temporarily relocated as a result of the severe storms, tornadoes, or flooding. E file federal state taxes free In determining whether you provided more than one-half of an individual's support, you can disregard any assistance received from the government or charitable organizations because you were temporarily relocated as a result of the severe storms, tornadoes, or flooding. E file federal state taxes free You can treat as a student an individual who enrolled in school before the applicable disaster date, and who is unable to attend classes because of the severe storms, tornadoes, or flooding, for each month of the enrollment period that individual is prevented by the severe storms, tornadoes, or flooding from attending school as planned. E file federal state taxes free Additional Tax Relief for Businesses Employee Retention Credit This benefit applies only to the counties in Table 1. E file federal state taxes free An eligible employer who conducted an active trade or business in a Midwestern disaster area can claim the employee retention credit. E file federal state taxes free The credit is 40% of qualified wages for each eligible employee (up to a maximum of $6,000 in qualified wages per employee). E file federal state taxes free Generally, you must reduce your deduction for salaries and wages by the amount of this credit (before the tax liability limit). E file federal state taxes free Use Form 5884-A to claim the credit. E file federal state taxes free Employers affected by the severe storms, tornadoes, or flooding. E file federal state taxes free   The following definitions apply to employers affected by the severe storms, tornadoes, or flooding. E file federal state taxes free Eligible employer. E file federal state taxes free   For this purpose, an eligible employer is any employer who meets all of the following. E file federal state taxes free Employed an average of not more than 200 employees on business days during the tax year before the applicable disaster date. E file federal state taxes free Conducted an active trade or business on the applicable disaster date in a Midwestern disaster area. E file federal state taxes free Whose trade or business was inoperable on any day after the applicable disaster date and before January 1, 2009, because of the damage caused by the severe storms, tornadoes, or flooding. E file federal state taxes free Eligible employee. E file federal state taxes free   For this purpose, an eligible employee is an employee whose principal place of employment on the applicable disaster date with such eligible employer was in a Midwestern disaster area. E file federal state taxes free An employee is not an eligible employee for purposes of the severe storms, tornadoes, or flooding if the employee is treated as an eligible employee for the work opportunity credit. E file federal state taxes free Qualified wages. E file federal state taxes free   Qualified wages are wages (up to $6,000 per employee) you paid or incurred before January 1, 2009, for an eligible employee beginning on the date your trade or business first became inoperable at the employee's principal place of employment immediately before the applicable disaster, and ending on the date your trade or business resumed significant operations at that place. E file federal state taxes free In addition, the wages must have been paid or incurred after the applicable disaster date. E file federal state taxes free    This includes wages paid even if the employee performed no services, performed services at a place of employment other than the principal place of employment, or performed services at the principal place of employment before significant operations resumed. E file federal state taxes free    Wages qualifying for the credit generally have the same meaning as wages subject to the Federal Unemployment Tax Act (FUTA). E file federal state taxes free Qualified wages also include amounts you paid for medical or hospitalization expenses in connection with sickness or accident disability. E file federal state taxes free Qualified wages for any employee must be reduced by the amount of any work supplementation payment you received under the Social Security Act. E file federal state taxes free   For agricultural employees, if the work performed by any employee during more than half of any pay period qualified under FUTA as agricultural labor, that employee's wages subject to social security and Medicare taxes are qualified wages. E file federal state taxes free For a special rule that applies to railroad employees, see section 51(h)(1)(B). E file federal state taxes free   Qualified wages do not include the following. E file federal state taxes free Wages paid to your dependent or a related individual. E file federal state taxes free See section 51(i)(1). E file federal state taxes free Wages paid to any employee during the period for which you received payment for the employee from a federally funded on-the-job training program. E file federal state taxes free Wages for services of replacement workers during a strike or lockout. E file federal state taxes free   For more information, see Form 5884-A. E file federal state taxes free Employer Housing Credit and Exclusion This benefit applies only to the counties in Table 1. E file federal state taxes free An employer who conducted an active trade or business in a Midwestern disaster area can claim the employer housing credit. E file federal state taxes free The credit is equal to 30% of the value (up to $600 per month per employee) of in-kind lodging furnished to a qualified employee (and the employee's spouse or dependents) from November 1, 2008, through May 1, 2009. E file federal state taxes free The value of the lodging is excluded from the income of the qualified employee but is treated as wages for purposes of taxes imposed under the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA). E file federal state taxes free Generally, you must reduce your deduction for salaries and wages by the amount of this credit (before the tax liability limit). E file federal state taxes free The employer must use Form 5884-A to claim the credit. E file federal state taxes free A qualified employee is an individual who had a main home in a Midwestern disaster area on the applicable disaster date, and who performs substantially all employment services in a Midwestern disaster area for the employer furnishing the lodging. E file federal state taxes free The employee cannot be your dependent or a related individual. E file federal state taxes free See section 51(i)(1). E file federal state taxes free For more information, see Form 5884-A. E file federal state taxes free Demolition and Clean-up Costs This benefit applies only to the counties in Table 1. E file federal state taxes free You can elect to deduct 50% of any qualified disaster recovery assistance clean-up costs for the tax year in which the costs are paid or incurred, instead of capitalizing them. E file federal state taxes free Qualified disaster recovery assistance clean-up costs are any amounts paid or incurred on or after the applicable disaster date, and before January 1, 2011, for the removal of debris from, or the demolition of structures on, real property located in a Midwestern disaster area that is: Held by you for use in a trade or business or for the production of income, or Inventory or other property held primarily for sale to customers in the ordinary course of your trade or business. E file federal state taxes free Qualified disaster recovery assistance clean-up costs are limited to amounts necessary due to damage attributable to the severe storms, tornadoes, or flooding in the Midwestern disaster areas. E file federal state taxes free Increase in Rehabilitation Tax Credit This benefit applies only to the counties in Table 1. E file federal state taxes free The rehabilitation credit is increased for qualified rehabilitation expenditures paid or incurred on or after the applicable disaster date, and before January 1, 2012, on buildings located in a Midwestern disaster area as follows. E file federal state taxes free For pre-1936 buildings (other than certified historic structures), the credit percentage is increased from 10% to 13%. E file federal state taxes free For certified historic structures, the credit percentage is increased from 20% to 26%. E file federal state taxes free For more information, see Form 3468, Investment Credit. E file federal state taxes free Request for Copy or Transcript of Tax Return Request for copy of tax return. E file federal state taxes free   You can use Form 4506 to order a copy of your tax return. E file federal state taxes free Generally, there is a $57 fee for requesting each copy of a tax return. E file federal state taxes free If your main home, principal place of business, or tax records are located in a Midwestern disaster area, the fee will be waived if “Midwestern Disaster Area” is written in red across the top of the form when filed. E file federal state taxes free Request for transcript of tax return. E file federal state taxes free   You can use Form 4506-T to order a free transcript of your tax return. E file federal state taxes free A transcript provides most of the line entries from a tax return and usually contains the information that a third party requires. E file federal state taxes free You can also call 1-800-829-1040 to order a transcript. E file federal state taxes free How To Get Tax Help Special IRS assistance. E file federal state taxes free   The IRS is providing special help for those affected by the severe storms, tornadoes, or flooding, as well as survivors and personal representatives of the victims. E file federal state taxes free We have set up a special toll-free number for people who may have trouble filing or paying their taxes because they were affected by recent federally declared disasters, or who have other tax issues related to the severe storms, tornadoes, or flooding. E file federal state taxes free Call 1-866-562-5227 Monday through FridayIn English–7 a. E file federal state taxes free m. E file federal state taxes free to 10 p. E file federal state taxes free m. E file federal state taxes free local timeIn Spanish–8 a. E file federal state taxes free m. E file federal state taxes free to 9:30 p. E file federal state taxes free m. E file federal state taxes free local time   The IRS website at www. E file federal state taxes free irs. E file federal state taxes free gov has notices and other tax relief information. E file federal state taxes free Check it periodically for any new guidance. E file federal state taxes free You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. E file federal state taxes free By selecting the method that is best for you, you will have quick and easy access to tax help. E file federal state taxes free Contacting your Taxpayer Advocate. E file federal state taxes free   The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. E file federal state taxes free Here are seven things every taxpayer should know about TAS: TAS is your voice at the IRS. E file federal state taxes free Our service is free, confidential, and tailored to meet your needs. E file federal state taxes free You may be eligible for TAS help if you have tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn't working as it should. E file federal state taxes free TAS helps taxpayers whose problems are causing financial difficulty or significant cost, including the cost of professional representation. E file federal state taxes free This includes businesses as well as individuals. E file federal state taxes free TAS employees know the IRS and how to navigate it. E file federal state taxes free We will listen to your problem, help you understand what needs to be done to resolve it, and stay with you every step of the way until your problem is resolved. E file federal state taxes free TAS has at least one local taxpayer advocate in every state, the District of Columbia, and Puerto Rico. E file federal state taxes free You can call your local advocate, whose number is in your phone book, in Pub. E file federal state taxes free 1546, Taxpayer Advocate Service—Your Voice at the IRS, and on our website at www. E file federal state taxes free irs. E file federal state taxes free gov/advocate. E file federal state taxes free You can also call our toll-free line at 1-877-777-4778 or TTY/TDD 1-800-829-4059. E file federal state taxes free You can learn about your rights and responsibilities as a taxpayer by visiting our online tax toolkit at www. E file federal state taxes free taxtoolkit. E file federal state taxes free irs. E file federal state taxes free gov. E file federal state taxes free Low Income Taxpayer Clinics (LITCs). E file federal state taxes free   The Low Income Taxpayer Clinic program serves individuals who have a problem with the IRS and whose income is below a certain level. E file federal state taxes free LITCs are independent from the IRS. E file federal state taxes free Most LITCs can provide representation before the IRS or in court on audits, tax collection disputes, and other issues for free or a small fee. E file federal state taxes free If an individual's native language is not English, some clinics can provide multilingual information about taxpayer rights and responsibilities. E file federal state taxes free For more information, see Publication 4134, Low Income Taxpayer Clinic List. E file federal state taxes free This publication is available at www. E file federal state taxes free irs. E file federal state taxes free gov, by calling 1-800-TAX-FORM (1-800-829-3676), or at your local IRS office. E file federal state taxes free Free tax services. E file federal state taxes free   To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. E file federal state taxes free It contains lists of free tax information sources, including publications, services, and free tax education and assistance programs. E file federal state taxes free It also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on your telephone. E file federal state taxes free   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. E file federal state taxes free Free help with your return. E file federal state taxes free   Free help in preparing your return is available nationwide from IRS-trained volunteers. E file federal state taxes free The Volunteer Income Tax Assistance (VITA) program is designed to help low-income taxpayers and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. E file federal state taxes free Many VITA sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. E file federal state taxes free To find the nearest VITA or TCE site, call 1-800-829-1040. E file federal state taxes free   As part of the TCE program, AARP offers the Tax-Aide counseling program. E file federal state taxes free To find the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP's website atwww. E file federal state taxes free aarp. E file federal state taxes free org/money/taxaide. E file federal state taxes free   For more information on these programs, go to www. E file federal state taxes free irs. E file federal state taxes free gov and enter keyword “VITA” in the upper right-hand corner. E file federal state taxes free Internet. E file federal state taxes free You can access the IRS website at www. E file federal state taxes free irs. E file federal state taxes free gov 24 hours a day, 7 days a week to: E-file your return. E file federal state taxes free Find out about commercial tax preparation and e-file services available free to eligible taxpayers. E file federal state taxes free Check the status of your 2009 refund. E file federal state taxes free Go to www. E file federal state taxes free irs. E file federal state taxes free gov and click on Where's My Refund. E file federal state taxes free Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. E file federal state taxes free If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). E file federal state taxes free Have your 2009 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. E file federal state taxes free Download forms, instructions, and publications. E file federal state taxes free Order IRS products online. E file federal state taxes free Research your tax questions online. E file federal state taxes free Search publications online by topic or keyword. E file federal state taxes free Use the online Internal Revenue Code, Regulations, or other official guidance. E file federal state taxes free View Internal Revenue Bulletins (IRBs) published in the last few years. E file federal state taxes free Figure your withholding allowances using the withholding calculator online at www. E file federal state taxes free irs. E file federal state taxes free gov/individuals. E file federal state taxes free Determine if Form 6251 must be filed by using our Alternative Minimum Tax (AMT) Assistant. E file federal state taxes free Sign up to receive local and national tax news by email. E file federal state taxes free Get information on starting and operating a small business. E file federal state taxes free Phone. E file federal state taxes free Many services are available by phone. E file federal state taxes free Ordering forms, instructions, and publications. E file federal state taxes free Call 1-800-TAX FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions. E file federal state taxes free You should receive your order within 10 days. E file federal state taxes free Asking tax questions. E file federal state taxes free Call the IRS with your tax questions at 1-800-829-1040. E file federal state taxes free Solving problems. E file federal state taxes free You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. E file federal state taxes free An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. E file federal state taxes free Call your local Taxpayer Assistance Center for an appointment. E file federal state taxes free To find the number, go to www. E file federal state taxes free irs. E file federal state taxes free gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. E file federal state taxes free TTY/TDD equipment. E file federal state taxes free If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. E file federal state taxes free TeleTax topics. E file federal state taxes free Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. E file federal state taxes free Refund information. E file federal state taxes free To check the status of your 2009 refund, call 1-800-829-1954 during business hours or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). E file federal state taxes free Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. E file federal state taxes free If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). E file federal state taxes free Have your 2009 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. E file federal state taxes free Refunds are sent out weekly on Fridays. E file federal state taxes free If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. E file federal state taxes free Other refund information. E file federal state taxes free To check the status of a prior year refund or amended return refund, call 1-800-829-1954. E file federal state taxes free Evaluating the quality of our telephone services. E file federal state taxes free To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. E file federal state taxes free One method is for a second IRS representative to listen in on or record random telephone calls. E file federal state taxes free Another is to ask some callers to complete a short survey at the end of the call. E file federal state taxes free Walk-in. E file federal state taxes free Many products and services are available on a walk-in basis. E file federal state taxes free Products. E file federal state taxes free You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. E file federal state taxes free Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. E file federal state taxes free Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. E file federal state taxes free Services. E file federal state taxes free You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. E file federal state taxes free An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. E file federal state taxes free If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. E file federal state taxes free No appointment is necessary—just walk in. E file federal state taxes free If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. E file federal state taxes free A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. E file federal state taxes free If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. E file federal state taxes free All other issues will be handled without an appointment. E file federal state taxes free To find the number of your local office, go to www. E file federal state taxes free irs. E file federal state taxes free gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. E file federal state taxes free Mail. E file federal state taxes free You can send your order for forms, instructions, and publications to the address below. E file federal state taxes free You should receive a response within 10 days after your request is received. E file federal state taxes free Internal Revenue Service1201 N. E file federal state taxes free Mitsubishi MotorwayBloomington, IL 61705-6613 DVD for tax products. E file federal state taxes free You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. E file federal state taxes free Prior-year forms, instructions, and publications. E file federal state taxes free Tax Map: an electronic research tool and finding aid. E file federal state taxes free Tax law frequently asked questions. E file federal state taxes free Tax Topics from the IRS telephone response system. E file federal state taxes free Internal Revenue Code—Title 26 of the U. E file federal state taxes free S. E file federal state taxes free Code. E file federal state taxes free Fill-in, print, and save features for most tax forms. E file federal state taxes free Internal Revenue Bulletins. E file federal state taxes free Toll-free and email technical support. E file federal state taxes free Two releases during the year. E file federal state taxes free – The first release will ship the beginning of January 2010. E file federal state taxes free – The final release will ship the beginning of March 2010. E file federal state taxes free Purchase the DVD from National Technical Information Service (NTIS) at www. E file federal state taxes free irs. 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E file federal state taxes free 7. E file federal state taxes free   Coverdell Education Savings Account (ESA) Table of Contents Introduction What Is a Coverdell ESAQualified Education Expenses ContributionsContribution Limits Additional Tax on Excess Contributions Rollovers and Other TransfersRollovers Changing the Designated Beneficiary Transfer Because of Divorce DistributionsTax-Free Distributions Taxable Distributions When Assets Must Be Distributed Introduction If your modified adjusted gross income (MAGI) is less than $110,000 ($220,000 if filing a joint return), you may be able to establish a Coverdell ESA to finance the qualified education expenses of a designated beneficiary. E file federal state taxes free For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return. E file federal state taxes free There is no limit on the number of separate Coverdell ESAs that can be established for a designated beneficiary. E file federal state taxes free However, total contributions for the beneficiary in any year cannot be more than $2,000, no matter how many accounts have been established. E file federal state taxes free See Contributions , later. E file federal state taxes free This benefit applies not only to higher education expenses, but also to elementary and secondary education expenses. E file federal state taxes free What is the tax benefit of the Coverdell ESA. E file federal state taxes free   Contributions to a Coverdell ESA are not deductible, but amounts deposited in the account grow tax free until distributed. E file federal state taxes free   If, for a year, distributions from an account are not more than a designated beneficiary's qualified education expenses at an eligible educational institution, the beneficiary will not owe tax on the distributions. E file federal state taxes free See Tax-Free Distributions , later. E file federal state taxes free    Table 7-1 summarizes the main features of the Coverdell ESA. E file federal state taxes free Table 7-1. E file federal state taxes free Coverdell ESA at a Glance Do not rely on this table alone. E file federal state taxes free It provides only general highlights. E file federal state taxes free See the text for definitions of terms in bold type and for more complete explanations. E file federal state taxes free Question Answer What is a Coverdell ESA? A savings account that is set up to pay the qualified education expenses of a designated beneficiary. E file federal state taxes free Where can it be established? It can be opened in the United States at any bank or other IRS-approved entity that offers Coverdell ESAs. E file federal state taxes free Who can have a Coverdell ESA? Any beneficiary who is under age 18 or is a special needs beneficiary. E file federal state taxes free Who can contribute to a Coverdell ESA? Generally, any individual (including the beneficiary) whose modified adjusted gross income for the year is less than $110,000 ($220,000 in the case of a joint return). E file federal state taxes free Are distributions tax free? Yes, if the distributions are not more than the beneficiary's adjusted qualified education expenses for the year. E file federal state taxes free What Is a Coverdell ESA A Coverdell ESA is a trust or custodial account created or organized in the United States only for the purpose of paying the qualified education expenses of the Designated beneficiary (defined later) of the account. E file federal state taxes free When the account is established, the designated beneficiary must be under age 18 or a special needs beneficiary. E file federal state taxes free To be treated as a Coverdell ESA, the account must be designated as a Coverdell ESA when it is created. E file federal state taxes free The document creating and governing the account must be in writing and must satisfy the following requirements. E file federal state taxes free The trustee or custodian must be a bank or an entity approved by the IRS. E file federal state taxes free The document must provide that the trustee or custodian can only accept a contribution that meets all of the following conditions. E file federal state taxes free The contribution is in cash. E file federal state taxes free The contribution is made before the beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary. E file federal state taxes free The contribution would not result in total contributions for the year (not including rollover contributions) being more than $2,000. E file federal state taxes free Money in the account cannot be invested in life insurance contracts. E file federal state taxes free Money in the account cannot be combined with other property except in a common trust fund or common investment fund. E file federal state taxes free The balance in the account generally must be distributed within 30 days after the earlier of the following events. E file federal state taxes free The beneficiary reaches age 30, unless the beneficiary is a special needs beneficiary. E file federal state taxes free The beneficiary's death. E file federal state taxes free Qualified Education Expenses Generally, these are expenses required for the enrollment or attendance of the designated beneficiary at an eligible educational institution. E file federal state taxes free For purposes of Coverdell ESAs, the expenses can be either qualified higher education expenses or qualified elementary and secondary education expenses. E file federal state taxes free Designated beneficiary. E file federal state taxes free   This is the individual named in the document creating the trust or custodial account to receive the benefit of the funds in the account. E file federal state taxes free Contributions to a qualified tuition program (QTP). E file federal state taxes free   A contribution to a QTP is a qualified education expense if the contribution is on behalf of the designated beneficiary of the Coverdell ESA. E file federal state taxes free In the case of a change in beneficiary, this is a qualified expense only if the new beneficiary is a family member of that designated beneficiary. E file federal state taxes free See chapter 8, Qualified Tuition Program . E file federal state taxes free Eligible Educational Institution For purposes of Coverdell ESAs, an eligible educational institution can be either an eligible postsecondary school or an eligible elementary or secondary school. E file federal state taxes free Eligible postsecondary school. E file federal state taxes free   This is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. E file federal state taxes free S. E file federal state taxes free Department of Education. E file federal state taxes free It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. E file federal state taxes free The educational institution should be able to tell you if it is an eligible educational institution. E file federal state taxes free   Certain educational institutions located outside the United States also participate in the U. E file federal state taxes free S. E file federal state taxes free Department of Education's Federal Student Aid (FSA) programs. E file federal state taxes free Eligible elementary or secondary school. E file federal state taxes free   This is any public, private, or religious school that provides elementary or secondary education (kindergarten through grade 12), as determined under state law. E file federal state taxes free Qualified Higher Education Expenses These are expenses related to enrollment or attendance at an eligible postsecondary school. E file federal state taxes free As shown in the following list, to be qualified, some of the expenses must be required by the school and some must be incurred by students who are enrolled at least half-time. E file federal state taxes free The following expenses must be required for enrollment or attendance of a designated beneficiary at an eligible postsecondary school. E file federal state taxes free Tuition and fees. E file federal state taxes free Books, supplies, and equipment. E file federal state taxes free Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible postsecondary school. E file federal state taxes free Expenses for room and board must be incurred by students who are enrolled at least half-time (defined below). E file federal state taxes free The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts. E file federal state taxes free The allowance for room and board, as determined by the school, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. E file federal state taxes free The actual amount charged if the student is residing in housing owned or operated by the school. E file federal state taxes free Half-time student. E file federal state taxes free   A student is enrolled “at least half-time” if he or she is enrolled for at least half the full-time academic work load for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled. E file federal state taxes free Qualified Elementary and Secondary Education Expenses These are expenses related to enrollment or attendance at an eligible elementary or secondary school. E file federal state taxes free As shown in the following list, to be qualified, some of the expenses must be required or provided by the school. E file federal state taxes free There are special rules for computer-related expenses. E file federal state taxes free The following expenses must be incurred by a designated beneficiary in connection with enrollment or attendance at an eligible elementary or secondary school. E file federal state taxes free Tuition and fees. E file federal state taxes free Books, supplies, and equipment. E file federal state taxes free Academic tutoring. E file federal state taxes free Special needs services for a special needs beneficiary. E file federal state taxes free The following expenses must be required or provided by an eligible elementary or secondary school in connection with attendance or enrollment at the school. E file federal state taxes free Room and board. E file federal state taxes free Uniforms. E file federal state taxes free Transportation. E file federal state taxes free Supplementary items and services (including extended day programs). E file federal state taxes free The purchase of computer technology, equipment, or Internet access and related services is a qualified elementary and secondary education expense if it is to be used by the beneficiary and the beneficiary's family during any of the years the beneficiary is in elementary or secondary school. E file federal state taxes free (This does not include expenses for computer software designed for sports, games, or hobbies unless the software is predominantly educational in nature. E file federal state taxes free ) Contributions Any individual (including the designated beneficiary) can contribute to a Coverdell ESA if the individual's MAGI (defined later under Contribution Limits ) for the year is less than $110,000. E file federal state taxes free For individuals filing joint returns, that amount is $220,000. E file federal state taxes free Organizations, such as corporations and trusts, can also contribute to Coverdell ESAs. E file federal state taxes free There is no requirement that an organization's income be below a certain level. E file federal state taxes free Contributions must meet all of the following requirements. E file federal state taxes free They must be in cash. E file federal state taxes free They cannot be made after the beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary. E file federal state taxes free They must be made by the due date of the contributor's tax return (not including extensions). E file federal state taxes free Contributions can be made to one or several Coverdell ESAs for the same designated beneficiary provided that the total contributions are not more than the contribution limits (defined later) for a year. E file federal state taxes free Contributions can be made, without penalty, to both a Coverdell ESA and a QTP in the same year for the same beneficiary. E file federal state taxes free Table 7-2 summarizes many of the features of contributing to a Coverdell ESA. E file federal state taxes free When contributions considered made. E file federal state taxes free   Contributions made to a Coverdell ESA for the preceding tax year are considered to have been made on the last day of the preceding year. E file federal state taxes free They must be made by the due date (not including extensions) for filing your return for the preceding year. E file federal state taxes free   For example, if you make a contribution to a Coverdell ESA in February 2014, and you designate it as a contribution for 2013, you are considered to have made that contribution on December 31, 2013. E file federal state taxes free Contribution Limits There are two yearly limits: One on the total amount that can be contributed for each designated beneficiary in any year, and One on the amount that any individual can contribute for any one designated beneficiary for a year. E file federal state taxes free Limit for each designated beneficiary. E file federal state taxes free   For 2013, the total of all contributions to all Coverdell ESAs set up for the benefit of any one designated beneficiary cannot be more than $2,000. E file federal state taxes free This includes contributions (other than rollovers) to all the beneficiary's Coverdell ESAs from all sources. E file federal state taxes free Rollovers are discussed under Rollovers and Other Transfers , later. E file federal state taxes free Example. E file federal state taxes free When Maria Luna was born in 2012, three separate Coverdell ESAs were set up for her, one by her parents, one by her grandfather, and one by her aunt. E file federal state taxes free In 2013, the total of all contributions to Maria's three Coverdell ESAs cannot be more than $2,000. E file federal state taxes free For example, if her grandfather contributed $2,000 to one of her Coverdell ESAs, no one else could contribute to any of her three accounts. E file federal state taxes free Or, if her parents contributed $1,000 and her aunt $600, her grandfather or someone else could contribute no more than $400. E file federal state taxes free These contributions could be put into any of Maria's Coverdell ESA accounts. E file federal state taxes free Limit for each contributor. E file federal state taxes free   Generally, you can contribute up to $2,000 for each designated beneficiary for 2013. E file federal state taxes free This is the most you can contribute for the benefit of any one beneficiary for the year, regardless of the number of Coverdell ESAs set up for the beneficiary. E file federal state taxes free Example. E file federal state taxes free The facts are the same as in the previous example except that Maria Luna's older brother, Edgar, also has a Coverdell ESA. E file federal state taxes free If their grandfather contributed $2,000 to Maria's Coverdell ESA in 2013, he could also contribute $2,000 to Edgar's Coverdell ESA. E file federal state taxes free Reduced limit. E file federal state taxes free   Your contribution limit may be reduced. E file federal state taxes free If your MAGI (defined on this page) is between $95,000 and $110,000 (between $190,000 and $220,000 if filing a joint return), the $2,000 limit for each designated beneficiary is gradually reduced (see Figuring the limit , later). E file federal state taxes free If your MAGI is $110,000 or more ($220,000 or more if filing a joint return), you cannot contribute to anyone's Coverdell ESA. E file federal state taxes free Table 7-2. E file federal state taxes free Coverdell ESA Contributions at a Glance Do not rely on this table alone. E file federal state taxes free It provides only general highlights. E file federal state taxes free See the text for more complete explanations. E file federal state taxes free Question Answer Are contributions deductible? No. E file federal state taxes free What is the annual contribution limit per designated beneficiary? $2,000 for each designated beneficiary. E file federal state taxes free What if more than one Coverdell ESA has been opened for the same designated beneficiary? The annual contribution limit is $2,000 for each beneficiary, no matter how many Coverdell ESAs are set up for that beneficiary. E file federal state taxes free What if more than one individual makes contributions for the same designated beneficiary? The annual contribution limit is $2,000 per beneficiary, no matter how many individuals contribute. E file federal state taxes free Can contributions other than cash be made to a Coverdell ESA? No. E file federal state taxes free When must contributions stop? No contributions can be made to a beneficiary's Coverdell ESA after he or she reaches age 18, unless the beneficiary is a special needs beneficiary. E file federal state taxes free Modified adjusted gross income (MAGI). E file federal state taxes free   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. E file federal state taxes free MAGI when using Form 1040A. E file federal state taxes free   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. E file federal state taxes free MAGI when using Form 1040. E file federal state taxes free   If you file Form 1040, your MAGI is the AGI on line 38 of that form, modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. E file federal state taxes free MAGI when using Form 1040NR. E file federal state taxes free   If you file Form 1040NR, your MAGI is the AGI on line 36 of that form. E file federal state taxes free MAGI when using Form 1040NR-EZ. E file federal state taxes free   If you file Form 1040NR-EZ, your MAGI is the AGI on line 10 of that form. E file federal state taxes free   If you have any of these adjustments, you can use Worksheet 7-1. E file federal state taxes free MAGI for a Coverdell ESA , later, to figure your MAGI for Form 1040. E file federal state taxes free Worksheet 7-1. E file federal state taxes free MAGI for a Coverdell ESA 1. E file federal state taxes free Enter your adjusted gross income  (Form 1040, line 38)   1. E file federal state taxes free   2. E file federal state taxes free Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. E file federal state taxes free       3. E file federal state taxes free Enter your foreign housing deduction (Form 2555, line 50)   3. E file federal state taxes free         4. E file federal state taxes free Enter the amount of income from Puerto Rico you are excluding   4. E file federal state taxes free       5. E file federal state taxes free Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. E file federal state taxes free       6. E file federal state taxes free Add lines 2, 3, 4, and 5   6. E file federal state taxes free   7. E file federal state taxes free Add lines 1 and 6. E file federal state taxes free This is your  modified adjusted gross income   7. E file federal state taxes free   Figuring the limit. E file federal state taxes free    To figure the limit on the amount you can contribute for each designated beneficiary, multiply $2,000 by a fraction. E file federal state taxes free The numerator (top number) is your MAGI minus $95,000 ($190,000 if filing a joint return). E file federal state taxes free The denominator (bottom number) is $15,000 ($30,000 if filing a joint return). E file federal state taxes free Subtract the result from $2,000. E file federal state taxes free This is the amount you can contribute for each beneficiary. E file federal state taxes free You can use Worksheet 7-2. E file federal state taxes free Coverdell ESA Contribution Limit to figure the limit on contributions. E file federal state taxes free    Worksheet 7-2. E file federal state taxes free Coverdell ESA Contribution Limit 1. E file federal state taxes free Maximum contribution   1. E file federal state taxes free $2,000 2. E file federal state taxes free Enter your modified adjusted gross income (MAGI) for purposes of figuring the contribution limit to a Coverdell ESA (see definition or Worksheet 7-1, earlier)   2. E file federal state taxes free   3. E file federal state taxes free Enter $190,000 if married filing jointly; $95,000 for all other filers   3. E file federal state taxes free   4. E file federal state taxes free Subtract line 3 from line 2. E file federal state taxes free If zero or less, enter -0- on line 4, skip lines 5 through 7, and enter $2,000 on line 8   4. E file federal state taxes free   5. E file federal state taxes free Enter $30,000 if married filing jointly; $15,000 for all other filers   5. E file federal state taxes free     Note. E file federal state taxes free If the amount on line 4 is greater than or equal to the amount on line 5, stop here. E file federal state taxes free You are not allowed to contribute to a Coverdell ESA for 2013. E file federal state taxes free       6. E file federal state taxes free Divide line 4 by line 5 and enter the result as a decimal (rounded to at least 3 places)   6. E file federal state taxes free . E file federal state taxes free 7. E file federal state taxes free Multiply line 1 by line 6   7. E file federal state taxes free   8. E file federal state taxes free Subtract line 7 from line 1   8. E file federal state taxes free   Note: The total Coverdell ESA contributions from all sources for the designated beneficiary during the tax year may not exceed $2,000. E file federal state taxes free Example. E file federal state taxes free Paul, who is single, had a MAGI of $96,500 for 2013. E file federal state taxes free Paul can contribute up to $1,800 in 2013 for each beneficiary, as shown in the illustrated Worksheet 7-2, Coverdell ESA Contribution Limit–Illustrated. E file federal state taxes free Worksheet 7-2. E file federal state taxes free Coverdell ESA Contribution Limit—Illustrated 1. E file federal state taxes free Maximum contribution   1. E file federal state taxes free $2,000 2. E file federal state taxes free Enter your modified adjusted gross  income (MAGI) for purposes of figuring the contribution limit to a Coverdell ESA (see definition or Worksheet 7-1, earlier)   2. E file federal state taxes free 96,500 3. E file federal state taxes free Enter $190,000 if married filing jointly; $95,000 for all other filers   3. E file federal state taxes free 95,000 4. E file federal state taxes free Subtract line 3 from line 2. E file federal state taxes free If zero or less, enter -0- on line 4, skip lines 5 through 7, and enter $2,000 on line 8   4. E file federal state taxes free 1,500 5. E file federal state taxes free Enter $30,000 if married filing jointly; $15,000 for all other filers   5. E file federal state taxes free 15,000   Note. E file federal state taxes free If the amount on line 4 is greater than or equal to the amount on line 5,  stop here. E file federal state taxes free You are not allowed to  contribute to a Coverdell ESA for 2013. E file federal state taxes free       6. E file federal state taxes free Divide line 4 by line 5 and enter the result as a decimal (rounded to at least 3 places)   6. E file federal state taxes free . E file federal state taxes free 100 7. E file federal state taxes free Multiply line 1 by line 6   7. E file federal state taxes free 200 8. E file federal state taxes free Subtract line 7 from line 1   8. E file federal state taxes free 1,800 Note: The total Coverdell ESA contributions from all sources for the designated beneficiary during the tax year may not exceed $2,000. E file federal state taxes free Additional Tax on Excess Contributions The beneficiary must pay a 6% excise tax each year on excess contributions that are in a Coverdell ESA at the end of the year. E file federal state taxes free Excess contributions are the total of the following two amounts. E file federal state taxes free Contributions to any designated beneficiary's Coverdell ESA for the year that are more than $2,000 (or, if less, the total of each contributor's limit for the year, as discussed earlier). E file federal state taxes free Excess contributions for the preceding year, reduced by the total of the following two amounts: Distributions (other than those rolled over as discussed later) during the year, and The contribution limit for the current year minus the amount contributed for the current year. E file federal state taxes free Exceptions. E file federal state taxes free   The excise tax does not apply if excess contributions made during 2013 (and any earnings on them) are distributed before the first day of the sixth month of the following tax year (June 1, 2014, for a calendar year taxpayer). E file federal state taxes free   However, you must include the distributed earnings in gross income for the year in which the excess contribution was made. E file federal state taxes free You should receive Form 1099-Q, Payments From Qualified Education Programs, from each institution from which excess contributions were distributed. E file federal state taxes free Box 2 of that form will show the amount of earnings on your excess contributions. E file federal state taxes free Code “2” or “3” entered in the blank box below boxes 5 and 6 indicate the year in which the earnings are taxable. E file federal state taxes free See Instructions for Recipient on the back of copy B of your Form 1099-Q. E file federal state taxes free Enter the amount of earnings on line 21 of Form 1040 (or Form 1040NR) for the applicable tax year. E file federal state taxes free For more information, see Taxable Distributions , later. E file federal state taxes free   The excise tax does not apply to any rollover contribution. E file federal state taxes free Note. E file federal state taxes free Contributions made in one year for the preceding tax year are considered to have been made on the last day of the preceding year. E file federal state taxes free Example. E file federal state taxes free In 2012, Greta's parents and grandparents contributed a total of $2,300 to Greta's Coverdell ESA— an excess contribution of $300. E file federal state taxes free Because Greta did not withdraw the excess before June 1, 2013, she had to pay an additional tax of $18 (6% × $300) when she filed her 2012 tax return. E file federal state taxes free In 2013, excess contributions of $500 were made to Greta's account, however, she withdrew $250 from that account to use for qualified education expenses. E file federal state taxes free Using the steps shown earlier under Additional Tax on Excess Contributions , Greta figures the excess contribution in her account at the end of 2013 as follows. E file federal state taxes free (1)   $500 excess contributions made in 2013     + (2)   $300 excess contributions in ESA at end of 2012     − (2a)   $250 distribution during 2013         $550 excess at end of 2013   × 6%=$33           If Greta limits 2014 contributions to $1,450 ($2,000 maximum allowed − $550 excess contributions from 2013), she will not owe any additional tax in 2014 for excess contributions. E file federal state taxes free Figuring and reporting the additional tax. E file federal state taxes free   You figure this excise tax in Part V of Form 5329. E file federal state taxes free Report the additional tax on Form 1040, line 58 (or Form 1040NR, line 56). E file federal state taxes free Rollovers and Other Transfers Assets can be rolled over from one Coverdell ESA to another or the designated beneficiary can be changed. E file federal state taxes free The beneficiary's interest can be transferred to a spouse or former spouse because of divorce. E file federal state taxes free Rollovers Any amount distributed from a Coverdell ESA is not taxable if it is rolled over to another Coverdell ESA for the benefit of the same beneficiary or a member of the beneficiary's family (including the beneficiary's spouse) who is under age 30. E file federal state taxes free This age limitation does not apply if the new beneficiary is a special needs beneficiary. E file federal state taxes free An amount is rolled over if it is paid to another Coverdell ESA within 60 days after the date of the distribution. E file federal state taxes free Do not report qualifying rollovers (those that meet the above criteria) anywhere on Form 1040 or 1040NR. E file federal state taxes free These are not taxable distributions. E file federal state taxes free Members of the beneficiary's family. E file federal state taxes free   For these purposes, the beneficiary's family includes the beneficiary's spouse and the following other relatives of the beneficiary. E file federal state taxes free Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them. E file federal state taxes free Brother, sister, stepbrother, or stepsister. E file federal state taxes free Father or mother or ancestor of either. E file federal state taxes free Stepfather or stepmother. E file federal state taxes free Son or daughter of a brother or sister. E file federal state taxes free Brother or sister of father or mother. E file federal state taxes free Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. E file federal state taxes free The spouse of any individual listed above. E file federal state taxes free First cousin. E file federal state taxes free Example. E file federal state taxes free When Aaron graduated from college last year he had $5,000 left in his Coverdell ESA. E file federal state taxes free He wanted to give this money to his younger sister, who was still in high school. E file federal state taxes free In order to avoid paying tax on the distribution of the amount remaining in his account, Aaron contributed the same amount to his sister's Coverdell ESA within 60 days of the distribution. E file federal state taxes free Only one rollover per Coverdell ESA is allowed during the 12-month period ending on the date of the payment or distribution. E file federal state taxes free This rule does not apply to the rollover of a military death gratuity or payment from Servicemembers' Group Life Insurance (SGLI). E file federal state taxes free Military death gratuity. E file federal state taxes free   If you received a military death gratuity or a payment from Servicemembers' Group Life Insurance (SGLI), you may roll over all or part of the amount received to one or more Coverdell ESAs for the benefit of members of the beneficiary's family (see Members of the beneficiary's family , earlier). E file federal state taxes free Such payments are made to an eligible survivor upon the death of a member of the armed forces. E file federal state taxes free The contribution to a Coverdell ESA from survivor benefits received cannot be made later than 1 year after the date on which you receive the gratuity or SGLI payment. E file federal state taxes free   This rollover contribution is not subject to (but is in addition to) the contribution limits discussed earlier under Contribution Limits . E file federal state taxes free The amount you roll over cannot exceed the total survivor benefits you received, reduced by contributions from these benefits to a Roth IRA or other Coverdell ESAs. E file federal state taxes free   The amount contributed from the survivor benefits is treated as part of your basis (cost) in the Coverdell ESA, and will not be taxed when distributed. E file federal state taxes free See Distributions , later. E file federal state taxes free The limit of one rollover per Coverdell ESA during a 12-month period does not apply to a military death gratuity or SGLI payment. E file federal state taxes free Changing the Designated Beneficiary The designated beneficiary can be changed. E file federal state taxes free See Members of the beneficiary's family , earlier. E file federal state taxes free There are no tax consequences if, at the time of the change, the new beneficiary is under age 30 or is a special needs beneficiary. E file federal state taxes free Example. E file federal state taxes free Assume the same situation for Aaron as in the last example (see Rollovers , earlier). E file federal state taxes free Instead of closing his Coverdell ESA and paying the distribution into his sister's Coverdell ESA, Aaron could have instructed the trustee of his account to simply change the name of the beneficiary on his account to that of his sister. E file federal state taxes free Transfer Because of Divorce If a spouse or former spouse receives a Coverdell ESA under a divorce or separation instrument, it is not a taxable transfer. E file federal state taxes free After the transfer, the spouse or former spouse treats the Coverdell ESA as his or her own. E file federal state taxes free Example. E file federal state taxes free In their divorce settlement, Peg received her ex-husband's Coverdell ESA. E file federal state taxes free In this process, the account was transferred into her name. E file federal state taxes free Peg now treats the funds in this Coverdell ESA as if she were the original owner. E file federal state taxes free Distributions The designated beneficiary of a Coverdell ESA can take a distribution at any time. E file federal state taxes free Whether the distributions are tax free depends, in part, on whether the distributions are equal to or less than the amount of Adjusted qualified education expenses (defined later) that the beneficiary has in the same tax year. E file federal state taxes free See Table 7-3, Coverdell ESA Distributions at a Glance, for highlights. E file federal state taxes free Table 7-3. E file federal state taxes free Coverdell ESA Distributions at a Glance Do not rely on this table alone. E file federal state taxes free It provides only general highlights. E file federal state taxes free See the text for definitions of terms in bold type and for more complete explanations. E file federal state taxes free Question Answer Is a distribution from a Coverdell ESA to pay for a designated beneficiary's qualified education expenses tax free? Generally, yes, to the extent the amount of the distribution is not more than the designated beneficiary's adjusted qualified education expenses. E file federal state taxes free After the designated beneficiary completes his or her education at an eligible educational institution, can amounts remaining in the Coverdell ESA be distributed? Yes. E file federal state taxes free Amounts must be distributed when the designated beneficiary reaches age 30, unless he or she is a special needs beneficiary. E file federal state taxes free Also, certain transfers to members of the beneficiary's family are permitted. E file federal state taxes free Does the designated beneficiary need to be enrolled for a minimum number of courses to take a tax-free distribution? No. E file federal state taxes free Adjusted qualified education expenses. E file federal state taxes free   To determine if total distributions for the year are more than the amount of qualified education expenses, reduce total qualified education expenses by any tax-free educational assistance. E file federal state taxes free Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. E file federal state taxes free The amount you get by subtracting tax-free educational assistance from your total qualified education expenses is your adjusted qualified education expenses. E file federal state taxes free Tax-Free Distributions Generally, distributions are tax free if they are not more than the beneficiary's adjusted qualified education expenses for the year. E file federal state taxes free Do not report tax-free distributions (including qualifying rollovers) on your tax return. E file federal state taxes free Taxable Distributions A portion of the distributions is generally taxable to the beneficiary if the total distributions are more than the beneficiary's adjusted qualified education expenses for the year. E file federal state taxes free Excess distribution. E file federal state taxes free   This is the part of the total distribution that is more than the beneficiary's adjusted qualified education expenses for the year. E file federal state taxes free Earnings and basis. E file federal state taxes free   You will receive a Form 1099-Q for each of the Coverdell ESAs from which money was distributed in 2013. E file federal state taxes free The amount of your gross distribution will be shown in box 1. E file federal state taxes free For 2013, instead of dividing the gross distribution between your earnings (box 2) and your basis (already-taxed amount) (box 3), the payer or trustee may report the fair market value (account balance) of the Coverdell ESA as of December 31, 2013. E file federal state taxes free This will be shown in the blank box below boxes 5 and 6. E file federal state taxes free   The amount contributed from survivor benefits (see Military death gratuity , earlier) is treated as part of your basis and will not be taxed when distributed. E file federal state taxes free Figuring the Taxable Portion of a Distribution The taxable portion is the amount of the excess distribution that represents earnings that have accumulated tax free in the account. E file federal state taxes free Figure the taxable portion for 2013 as shown in the following steps. E file federal state taxes free Multiply the total amount distributed by a fraction. E file federal state taxes free The numerator is the basis (contributions not previously distributed) at the end of 2012 plus total contributions for 2013 and the denominator is the value (balance) of the account at the end of 2013 plus the amount distributed during 2013. E file federal state taxes free Subtract the amount figured in (1) from the total amount distributed during 2013. E file federal state taxes free The result is the amount of earnings included in the distribution(s). E file federal state taxes free Multiply the amount of earnings figured in (2) by a fraction. E file federal state taxes free The numerator is the adjusted qualified education expenses paid during 2013 and the denominator is the total amount distributed during 2013. E file federal state taxes free Subtract the amount figured in (3) from the amount figured in (2). E file federal state taxes free The result is the amount the beneficiary must include in income. E file federal state taxes free The taxable amount must be reported on Form 1040 or Form 1040NR, line 21. E file federal state taxes free Example. E file federal state taxes free You received an $850 distribution from your Coverdell ESA, to which $1,500 had been contributed before 2013. E file federal state taxes free There were no contributions in 2013. E file federal state taxes free This is your first distribution from the account, so your basis in the account on December 31, 2012, was $1,500. E file federal state taxes free The value (balance) of your account on December 31, 2013, was $950. E file federal state taxes free You had $700 of adjusted qualified education expenses (AQEE) for the year. E file federal state taxes free Using the steps in Figuring the Taxable Portion of a Distribution , earlier, figure the taxable portion of your distribution as follows. E file federal state taxes free   1. E file federal state taxes free $850 (distribution) × $1,500 basis + $0 contributions  $950 value + $850 distribution       =$708 (basis portion of distribution)     2. E file federal state taxes free $850 (distribution)−$708 (basis portion of distribution)     =$142 (earnings included in distribution)   3. E file federal state taxes free $142 (earnings) × $700 AQEE  $850 distribution           =$117 (tax-free earnings)     4. E file federal state taxes free $142 (earnings)−$117 (tax-free earnings)=$25 (taxable earnings)                 You must include $25 in income as distributed earnings not used for qualified education expenses. E file federal state taxes free Report this amount on Form 1040, line 21, listing the type and amount of income on the dotted line. E file federal state taxes free Worksheet 7-3, Coverdell ESA–Taxable Distributions and Basis , at the end of this chapter, can help you figure your adjusted qualified education expenses, how much of your distribution must be included in income, and the remaining basis in your Coverdell ESA(s). E file federal state taxes free Coordination With American Opportunity and Lifetime Learning Credits The American opportunity or lifetime learning credit can be claimed in the same year the beneficiary takes a tax-free distribution from a Coverdell ESA, as long as the same expenses are not used for both benefits. E file federal state taxes free This means the beneficiary must reduce qualified higher education expenses by tax-free educational assistance, and then further reduce them by any expenses taken into account in determining an American opportunity or lifetime learning credit. E file federal state taxes free Example. E file federal state taxes free Derek Green had $5,800 of qualified higher education expenses for 2013, his first year in college. E file federal state taxes free He paid his college expenses from the following sources. E file federal state taxes free     Partial tuition scholarship (tax free) $1,500     Coverdell ESA distribution 1,000     Gift from parents 2,100     Earnings from part-time job 1,200           Of his $5,800 of qualified higher education expenses, $4,000 was tuition and related expenses that also qualified for an American opportunity credit. E file federal state taxes free Derek's parents claimed a $2,500 American opportunity credit (based on $4,000 expenses) on their tax return. E file federal state taxes free Before Derek can determine the taxable portion of his Coverdell ESA distribution, he must reduce his total qualified higher education expenses. E file federal state taxes free     Total qualified higher education expenses $5,800     Minus: Tax-free educational assistance −1,500     Minus: Expenses taken into account in  figuring American opportunity credit − 4,000     Equals: Adjusted qualified higher education  expenses (AQHEE) $ 300           Since the adjusted qualified higher education expenses ($300) are less than the Coverdell ESA distribution ($1,000), part of the distribution will be taxable. E file federal state taxes free The balance in Derek's account was $1,800 on December 31, 2013. E file federal state taxes free Prior to 2013, $2,100 had been contributed to this account. E file federal state taxes free Contributions for 2013 totaled $400. E file federal state taxes free Using the four steps outlined earlier, Derek figures the taxable portion of his distribution as shown below. E file federal state taxes free   1. E file federal state taxes free $1,000 (distribution) × $2,100 basis + $400 contributions  $1,800 value + $1,000 distribution           =$893 (basis portion of distribution)     2. E file federal state taxes free $1,000 (distribution)−$893 (basis portion of distribution)     = $107 (earnings included in distribution)   3. E file federal state taxes free $107 (earnings) × $300 AQHEE  $1,000 distribution       =$32 (tax-free earnings)     4. E file federal state taxes free $107 (earnings)−$32 (tax-free earnings)=$75 (taxable earnings)                 Derek must include $75 in income (Form 1040, line 21). E file federal state taxes free This is the amount of distributed earnings not used for adjusted qualified higher education expenses. E file federal state taxes free Coordination With Qualified Tuition Program (QTP) Distributions If a designated beneficiary receives distributions from both a Coverdell ESA and a QTP in the same year, and the total distribution is more than the beneficiary's adjusted qualified higher education expenses, those expenses must be allocated between the distribution from the Coverdell ESA and the distribution from the QTP before figuring how much of each distribution is taxable. E file federal state taxes free The following two examples illustrate possible allocations. E file federal state taxes free Example 1. E file federal state taxes free In 2013, Beatrice graduated from high school and began her first semester of college. E file federal state taxes free That year, she had $1,000 of qualified elementary and secondary education expenses (QESEE) for high school and $3,000 of qualified higher education expenses (QHEE) for college. E file federal state taxes free To pay these expenses, Beatrice withdrew $800 from her Coverdell ESA and $4,200 from her QTP. E file federal state taxes free No one claimed Beatrice as a dependent, nor was she eligible for an education credit. E file federal state taxes free She did not receive any tax-free educational assistance in 2013. E file federal state taxes free Beatrice must allocate her total qualified education expenses between the two distributions. E file federal state taxes free Beatrice knows that tax-free treatment will be available if she applies her $800 Coverdell ESA distribution toward her $1,000 of qualified education expenses for high school. E file federal state taxes free The qualified expenses are greater than the distribution, making the $800 Coverdell ESA distribution tax free. E file federal state taxes free Next, Beatrice matches her $4,200 QTP distribution to her $3,000 of QHEE, and finds she has an excess QTP distribution of $1,200 ($4,200 QTP − $3,000 QHEE). E file federal state taxes free She cannot use the extra $200 of high school expenses (from (1) above) against the QTP distribution because those expenses do not qualify a QTP for tax-free treatment. E file federal state taxes free Finally, Beatrice figures the taxable and tax-free portions of her QTP distribution based on her $3,000 of QHEE. E file federal state taxes free (See Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program for more information. E file federal state taxes free ) Example 2. E file federal state taxes free Assume the same facts as in Example 1 , except that Beatrice withdrew $1,800 from her Coverdell ESA and $3,200 from her QTP. E file federal state taxes free In this case, she allocates her qualified education expenses as follows. E file federal state taxes free Using the same reasoning as in Example 1, Beatrice matches $1,000 of her Coverdell ESA distribution to her $1,000 of QESEE—she has $800 of her distribution remaining. E file federal state taxes free Because higher education expenses can also qualify a Coverdell ESA distribution for tax-free treatment, Beatrice allocates her $3,000 of QHEE between the remaining $800 Coverdell ESA and the $3,200 QTP distributions ($4,000 total). E file federal state taxes free   $3,000 QHEE × $800 ESA distribution  $4,000 total distribution = $600 QHEE (ESA)     $3,000 QHEE × $3,200 QTP distribution  $4,000 total distribution = $2,400 QHEE (QTP)   Beatrice then figures the taxable part of her: Coverdell ESA distribution based on qualified education expenses of $1,600 ($1,000 QESEE + $600 QHEE). E file federal state taxes free See Figuring the Taxable Portion of a Distribution , earlier, in this chapter. E file federal state taxes free   QTP distribution based on her $2,400 of QHEE (see Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program). E file federal state taxes free The above examples show two types of allocation between distributions from a Coverdell ESA and a QTP. E file federal state taxes free However, you do not have to allocate your expenses in the same way. E file federal state taxes free You can use any reasonable method. E file federal state taxes free Losses on Coverdell ESA Investments If you have a loss on your investment in a Coverdell ESA, you may be able to deduct the loss on your income tax return. E file federal state taxes free You can deduct the loss only when all amounts from that account have been distributed and the total distributions are less than your unrecovered basis. E file federal state taxes free Your basis is the total amount of contributions to that Coverdell ESA. E file federal state taxes free You claim the loss as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23 (Schedule A (Form 1040NR), line 9), subject to the 2%-of-adjusted-gross-income limit. E file federal state taxes free If you have distributions from more than one Coverdell ESA account during a year, you must combine the information (amount of distribution, basis, etc. E file federal state taxes free ) from all such accounts in order to determine your taxable earnings for the year. E file federal state taxes free By doing this, the loss from one ESA account reduces the distributed earnings (if any) from any other ESA account. E file federal state taxes free For examples of the calculation, see Losses on QTP Investments in chapter 8, Qualified Tuition Program. E file federal state taxes free Additional Tax on Taxable Distributions Generally, if you receive a taxable distribution, you also must pay a 10% additional tax on the amount included in income. E file federal state taxes free Exceptions. E file federal state taxes free   The 10% additional tax does not apply to distributions: Paid to a beneficiary (or to the estate of the designated beneficiary) on or after the death of the designated beneficiary. E file federal state taxes free Made because the designated beneficiary is disabled. E file federal state taxes free A person is considered to be disabled if he or she shows proof that he or she cannot do any substantial gainful activity because of his or her physical or mental condition. E file federal state taxes free A physician must determine that his or her condition can be expected to result in death or to be of long-continued and indefinite duration. E file federal state taxes free Included in income because the designated beneficiary received: A tax-free scholarship or fellowship (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), or Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. E file federal state taxes free Made on account of the attendance of the designated beneficiary at a U. E file federal state taxes free S. E file federal state taxes free military academy (such as the USMA at West Point). E file federal state taxes free This exception applies only to the extent that the amount of the distribution does not exceed the costs of advanced education (as defined in section 2005(d)(3) of title 10 of the U. E file federal state taxes free S. E file federal state taxes free Code) attributable to such attendance. E file federal state taxes free Included in income only because the qualified education expenses were taken into account in determining the American opportunity or lifetime learning credit (see Coordination With American Opportunity and Lifetime Learning Credits , earlier). E file federal state taxes free Made before June 1, 2014, of an excess 2013 contribution (and any earnings on it). E file federal state taxes free The distributed earnings must be included in gross income for the year in which the excess contribution was made. E file federal state taxes free Exception (3) applies only to the extent the distribution is not more than the scholarship, allowance, or payment. E file federal state taxes free Figuring the additional tax. E file federal state taxes free    Use Part II of Form 5329, to figure any additional tax. E file federal state taxes free Report the amount on Form 1040, line 58, or Form 1040NR, line 56. E file federal state taxes free When Assets Must Be Distributed Any assets remaining in a Coverdell ESA must be distributed when either one of the following two events occurs. E file federal state taxes free The designated beneficiary reaches age 30. E file federal state taxes free In this case, the remaining assets must be distributed within 30 days after the beneficiary reaches age 30. E file federal state taxes free However, this rule does not apply if the beneficiary is a special needs beneficiary. E file federal state taxes free The designated beneficiary dies before reaching age 30. E file federal state taxes free In this case, the remaining assets must generally be distributed within 30 days after the date of death. E file federal state taxes free Exception for Transfer to Surviving Spouse or Family Member If a Coverdell ESA is transferred to a surviving spouse or other family member as the result of the death of the designated beneficiary, the Coverdell ESA retains its status. E file federal state taxes free (“Family member” was defined earlier under Rollovers . E file federal state taxes free ) This means the spouse or other family member can treat the Coverdell ESA as his or her own and does not need to withdraw the assets until he or she reaches age 30. E file federal state taxes free This age limitation does not apply if the new beneficiary is a special needs beneficiary. E file federal state taxes free There are no tax consequences as a result of the transfer. E file federal state taxes free How To Figure the Taxable Earnings When a total distribution is made because the designated beneficiary either reached age 30 or died, the earnings that accumulated tax free in the account must be included in taxable income. E file federal state taxes free You determine these earnings as shown in the following two steps. E file federal state taxes free Multiply the amount distributed by a fraction. E file federal state taxes free The numerator is the basis (contributions not previously distributed) at the end of 2012 plus total contributions for 2013 and the denominator is the balance in the account at the end of 2013 plus the amount distributed during 2013. E file federal state taxes free Subtract the amount figured in (1) from the total amount distributed during 2013. E file federal state taxes free The result is the amount of earnings included in the distribution. E file federal state taxes free For an example, see steps (1) and (2) of the Example under Figuring the Taxable Portion of a Distribution, earlier. E file federal state taxes free The beneficiary or other person receiving the distribution must report this amount on Form 1040, line 21, or Form 1040NR, line 21, listing the type and amount of income on the dotted line. E file federal state taxes free Worksheet 7-3 Instructions. E file federal state taxes free Coverdell ESA—Taxable Distributions and Basis Line G. E file federal state taxes free Enter the total distributions received from all Coverdell ESAs during 2013. E file federal state taxes free Do not include amounts rolled over to another ESA within 60 days (only one rollover is allowed during any 12-month period). E file federal state taxes free Also, do not include excess contributions that were distributed with the related earnings (or less any loss) before the first day of the sixth month of the tax year following the year for which the contributions were made. E file federal state taxes free Line 2. E file federal state taxes free Your basis (amount already taxed) in this Coverdell ESA as of December 31, 2012, is the total of:   •All contributions to this Coverdell ESA before 2013 •Minus the tax-free portion of any distributions from this Coverdell ESA before 2013. E file federal state taxes free   If your last distribution from this Coverdell ESA was before 2013, you must start with the basis in your account as of the end of the last year in which you took a distribution. E file federal state taxes free For years before 2002, you can find that amount on the last line of the worksheet in the Instructions for Form 8606, Nondeductible IRAs, that you completed for that year. E file federal state taxes free For years after 2001, you can find that amount by using the ending basis from the worksheet in Publication 970 for that year. E file federal state taxes free You can determine your basis in this Coverdell ESA as of December 31, 2012, by adding to the basis as of the end of that year any contributions made to that account after the year of the distribution and before 2013. E file federal state taxes free Line 4. E file federal state taxes free Enter the total distributions received from this Coverdell ESA in 2013. E file federal state taxes free Do not include amounts rolled over to another Coverdell ESA within 60 days (only one rollover is allowed during any 12-month period). E file federal state taxes free   Also, do not include excess contributions that were distributed with the related earnings (or less any loss) before the first day of the sixth month of the tax year following the year of the contributions. E file federal state taxes free Line 7. E file federal state taxes free Enter the total value of this Coverdell ESA as of December 31, 2013, plus any outstanding rollovers contributed to the account after 2012, but before the end of the 60-day rollover period. E file federal state taxes free A statement should be sent to you by January 31, 2014, for this Coverdell ESA showing the value on December 31, 2013. E file federal state taxes free   A rollover is a tax-free withdrawal from one Coverdell ESA that is contributed to another Coverdell ESA. E file federal state taxes free An outstanding rollover is any amount withdrawn within 60 days before the end of 2013 (November 2 through December 31) that was rolled over after December 31, 2013, but within the 60-day rollover period. E file federal state taxes free Worksheet 7-3. E file federal state taxes free Coverdell ESA—Taxable Distributions and Basis How to complete this worksheet. E file federal state taxes free • • • Complete Part I, lines A through H, on only one worksheet. E file federal state taxes free  Complete a separate Part II, lines 1 through 15, for each of your Coverdell ESAs. E file federal state taxes free  Complete Part III, the Summary (line 16), on only one worksheet. E file federal state taxes free Part I. E file federal state taxes free Qualified Education Expenses (Complete for total expenses)       A. E file federal state taxes free Enter your total qualified education expenses for 2013   A. E file federal state taxes free   B. E file federal state taxes free Enter those qualified education expenses paid for with tax-free educational assistance (for example, tax-free scholarships, veterans' educational benefits, Pell grants, employer-provided educational assistance)   B. E file federal state taxes free         C. E file federal state taxes free Enter those qualified higher education expenses deducted on Schedule C or C-EZ (Form 1040). E file federal state taxes free Schedule F (Form 1040), or as a miscellaneous itemized deduction on Schedule A (Form 1040 or 1040NR)   C. E file federal state taxes free         D. E file federal state taxes free Enter those qualified higher education expenses on which  an American opportunity or lifetime learning credit was based   D. E file federal state taxes free         E. E file federal state taxes free Add lines B, C, and D   D. E file federal state taxes free   F. E file federal state taxes free Subtract line E from line A. E file federal state taxes free This is your adjusted qualified education expense for 2013   E. E file federal state taxes free   G. E file federal state taxes free Enter your total distributions from all Coverdell ESAs during 2013. E file federal state taxes free Do not include rollovers  or the return of excess contributions (see instructions)   F. E file federal state taxes free   H. E file federal state taxes free Divide line F by line G. E file federal state taxes free Enter the result as a decimal (rounded to at least 3 places). E file federal state taxes free If the  result is 1. E file federal state taxes free 000 or more, enter 1. E file federal state taxes free 000   G. E file federal state taxes free . E file federal state taxes free Part II. E file federal state taxes free Taxable Distributions and Basis (Complete separately for each account) 1. E file federal state taxes free Enter the amount contributed to this Coverdell ESA for 2013, including contributions made for 2013 from January 1, 2014, through April 15, 2014. E file federal state taxes free Do not include rollovers or the return of excess contributions   1. E file federal state taxes free   2. E file federal state taxes free Enter your basis in this Coverdell ESA as of December 31, 2012 (see instructions)   2. E file federal state taxes free   3. E file federal state taxes free Add lines 1 and 2   3. E file federal state taxes free   4. E file federal state taxes free Enter the total distributions from this Coverdell ESA during 2013. E file federal state taxes free Do not include rollovers  or the return of excess contributions (see instructions)   4. E file federal state taxes free   5. E file federal state taxes free Multiply line 4 by line H. E file federal state taxes free This is the amount of adjusted qualified  education expense attributable to this Coverdell ESA   5. E file federal state taxes free         6. E file federal state taxes free Subtract line 5 from line 4   6. E file federal state taxes free         7. E file federal state taxes free Enter the total value of this Coverdell ESA as of December 31, 2013,  plus any outstanding rollovers (see instructions)   7. E file federal state taxes free         8. E file federal state taxes free Add lines 4 and 7   8. E file federal state taxes free         9. E file federal state taxes free Divide line 3 by line 8. E file federal state taxes free Enter the result as a decimal (rounded to  at least 3 places). E file federal state taxes free If the result is 1. E file federal state taxes free 000 or more, enter 1. E file federal state taxes free 000   9. E file federal state taxes free . E file federal state taxes free       10. E file federal state taxes free Multiply line 4 by line 9. E file federal state taxes free This is the amount of basis allocated to your  distributions, and is tax free   10. E file federal state taxes free     Note. E file federal state taxes free If line 6 is zero, skip lines 11 through 13, enter -0- on line 14, and go to line 15. E file federal state taxes free       11. E file federal state taxes free Subtract line 10 from line 4   11. E file federal state taxes free   12. E file federal state taxes free Divide line 5 by line 4. E file federal state taxes free Enter the result as a decimal (rounded to  at least 3 places). E file federal state taxes free If the result is 1. E file federal state taxes free 000 or more, enter 1. E file federal state taxes free 000   12. E file federal state taxes free . E file federal state taxes free       13. E file federal state taxes free Multiply line 11 by line 12. E file federal state taxes free This is the amount of qualified education  expenses allocated to your distributions, and is tax free   13. E file federal state taxes free   14. E file federal state taxes free Subtract line 13 from line 11. E file federal state taxes free This is the portion of the distributions from this  Coverdell ESA in 2013 that you must include in income   14. E file federal state taxes free   15. E file federal state taxes free Subtract line 10 from line 3. E file federal state taxes free This is your basis in this Coverdell ESA as of December 31, 2013   15. E file federal state taxes free   Part III. E file federal state taxes free Summary (Complete only once)       16. E file federal state taxes free Taxable amount. E file federal state taxes free Add together all amounts on line 14 for all your Coverdell ESAs. E file federal state taxes free Enter here  and include on Form 1040, line 21, or Form 1040NR, line 21, listing the type and amount of income on the dotted line   16. E file federal state taxes free   Prev  Up  Next   Home   More Online Publications