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

Sometimes a manufacturer makes a design or production mistake on a motor vehicle. A service bulletin notifies the dealer of the problem and how to resolve it. Because these free repairs are not publicized, they are called "secret warranties." The National Highway Traffic Safety Administration maintains a database of service bulletins filed by manufacturers.

If you have a problem with a vehicle that is a safety hazard, check whether the manufacturer has recalled your vehicle. Click on Recalls or call NHTSA at 1-800-424-9393.Hazards that aren't listed should be reported to your dealer, the manufacturer of the vehicle, and NHTSA. If a safety-related defect exists, the maker must fix it at no cost to you-even if your warranty has expired.

If you have a vehicle with a unique problem that just never seems to get fixed, you may have a lemon. Some states have laws concerning lemons that require a refund or replacement if a problem is not fixed within a reasonable number of tries or if you haven't been able to use your vehicle for a certain number of days. Contact your local consumer protection office to learn whether you have such protections and what steps you must take to solve your problem. If you believe your car is a lemon:

  • Give the dealer a list of the problems every time you bring it in for repairs.
  • Get and keep copies of the repair orders listing the problems, the work done, and the dates the car was in the shop.
  • Contact the manufacturer, as well as the dealer, to report the problem. Check your owner's manual or the directory for the auto manufacturers.
  • Help other consumers avoid purchasing your lemon by registering it at safetyforum.com.

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The Free Downloadable Irs Tax Forms

Free downloadable irs tax forms Publication 526 - Main Content Table of Contents Organizations That Qualify To Receive Deductible ContributionsTypes of Qualified Organizations Contributions You Can DeductContributions From Which You Benefit Expenses Paid for Student Living With You Out-of-Pocket Expenses in Giving Services Expenses of Whaling Captains Contributions You Cannot DeductContributions to Individuals Contributions to Nonqualified Organizations Contributions From Which You Benefit Value of Time or Services Personal Expenses Appraisal Fees Contributions to Donor-Advised Funds Partial Interest in Property Contributions of PropertyContributions Subject to Special Rules Determining Fair Market Value Giving Property That Has Decreased in Value Giving Property That Has Increased in Value Penalty When To DeductChecks. Free downloadable irs tax forms Text message. Free downloadable irs tax forms Credit card. Free downloadable irs tax forms Pay-by-phone account. Free downloadable irs tax forms Stock certificate. Free downloadable irs tax forms Promissory note. Free downloadable irs tax forms Option. Free downloadable irs tax forms Borrowed funds. Free downloadable irs tax forms Conditional gift. Free downloadable irs tax forms Limits on Deductions50% Limit 30% Limit Special 30% Limit for Capital Gain Property 20% Limit Special 50% Limit for Qualified Conservation Contributions How To Figure Your Deduction When Limits Apply Records To KeepCash Contributions Noncash Contributions Out-of-Pocket Expenses How To ReportReporting expenses for student living with you. Free downloadable irs tax forms Total deduction over $500. Free downloadable irs tax forms Deduction over $5,000 for one item. Free downloadable irs tax forms Vehicle donations. Free downloadable irs tax forms Clothing and household items not in good used condition. Free downloadable irs tax forms Easement on building in historic district. Free downloadable irs tax forms Deduction over $500,000. Free downloadable irs tax forms How To Get Tax HelpLow Income Taxpayer Clinics Organizations That Qualify To Receive Deductible Contributions You can deduct your contributions only if you make them to a qualified organization. Free downloadable irs tax forms Most organizations, other than churches and governments, must apply to the IRS to become a qualified organization. Free downloadable irs tax forms How to check whether an organization can receive deductible charitable contributions. Free downloadable irs tax forms   You can ask any organization whether it is a qualified organization, and most will be able to tell you. Free downloadable irs tax forms Or go to IRS. Free downloadable irs tax forms gov. Free downloadable irs tax forms Click on “Tools” and then on “Exempt Organizations Select Check” (www. Free downloadable irs tax forms irs. Free downloadable irs tax forms gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check). Free downloadable irs tax forms This online tool will enable you to search for qualified organizations. Free downloadable irs tax forms You can also call the IRS to find out if an organization is qualified. Free downloadable irs tax forms Call 1-877-829-5500. Free downloadable irs tax forms People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 1-800-829-4059. Free downloadable irs tax forms Deaf or hard of hearing individuals can also contact the IRS through relay services such as the Federal Relay Service at www. Free downloadable irs tax forms gsa. Free downloadable irs tax forms gov/fedrelay. Free downloadable irs tax forms Types of Qualified Organizations Generally, only the following types of organizations can be qualified organizations. Free downloadable irs tax forms A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). Free downloadable irs tax forms It must, however, be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Free downloadable irs tax forms Certain organizations that foster national or international amateur sports competition also qualify. Free downloadable irs tax forms War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico). Free downloadable irs tax forms Domestic fraternal societies, orders, and associations operating under the lodge system. Free downloadable irs tax forms (Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Free downloadable irs tax forms ) Certain nonprofit cemetery companies or corporations. Free downloadable irs tax forms (Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum crypt. Free downloadable irs tax forms ) The United States or any state, the District of Columbia, a U. Free downloadable irs tax forms S. Free downloadable irs tax forms possession (including Puerto Rico), a political subdivision of a state or U. Free downloadable irs tax forms S. Free downloadable irs tax forms possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions. Free downloadable irs tax forms (Your contribution to this type of organization is deductible only if it is to be used solely for public purposes. Free downloadable irs tax forms ) Example 1. Free downloadable irs tax forms You contribute cash to your city's police department to be used as a reward for information about a crime. Free downloadable irs tax forms The city police department is a qualified organization, and your contribution is for a public purpose. Free downloadable irs tax forms You can deduct your contribution. Free downloadable irs tax forms Example 2. Free downloadable irs tax forms You make a voluntary contribution to the social security trust fund, not earmarked for a specific account. Free downloadable irs tax forms Because the trust fund is part of the U. Free downloadable irs tax forms S. Free downloadable irs tax forms Government, you contributed to a qualified organization. Free downloadable irs tax forms You can deduct your contribution. Free downloadable irs tax forms Examples. Free downloadable irs tax forms   The following list gives some examples of qualified organizations. Free downloadable irs tax forms Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations. Free downloadable irs tax forms Most nonprofit charitable organizations such as the American Red Cross and the United Way. Free downloadable irs tax forms Most nonprofit educational organizations, including the Boy Scouts of America, Girl Scouts of America, colleges, and museums. Free downloadable irs tax forms This also includes nonprofit daycare centers that provide childcare to the general public if substantially all the childcare is provided to enable parents and guardians to be gainfully employed. Free downloadable irs tax forms However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct . Free downloadable irs tax forms Nonprofit hospitals and medical research organizations. Free downloadable irs tax forms Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs. Free downloadable irs tax forms Nonprofit volunteer fire companies. Free downloadable irs tax forms Nonprofit organizations that develop and maintain public parks and recreation facilities. Free downloadable irs tax forms Civil defense organizations. Free downloadable irs tax forms Canadian charities. Free downloadable irs tax forms   You may be able to deduct contributions to certain Canadian charitable organizations covered under an income tax treaty with Canada. Free downloadable irs tax forms To deduct your contribution to a Canadian charity, you generally must have income from sources in Canada. Free downloadable irs tax forms See Publication 597, Information on the United States-Canada Income Tax Treaty, for information on how to figure your deduction. Free downloadable irs tax forms Mexican charities. Free downloadable irs tax forms   Under the U. Free downloadable irs tax forms S. Free downloadable irs tax forms -Mexico income tax treaty, a contribution to a Mexican charitable organization may be deductible, but only if and to the extent the contribution would have been treated as a charitable contribution to a public charity created or organized under U. Free downloadable irs tax forms S. Free downloadable irs tax forms law. Free downloadable irs tax forms To deduct your contribution to a Mexican charity, you must have income from sources in Mexico. Free downloadable irs tax forms The limits described in Limits on Deductions , later, apply and are figured using your income from Mexican sources. Free downloadable irs tax forms Israeli charities. Free downloadable irs tax forms   Under the U. Free downloadable irs tax forms S. Free downloadable irs tax forms -Israel income tax treaty, a contribution to an Israeli charitable organization is deductible if and to the extent the contribution would have been treated as a charitable contribution if the organization had been created or organized under U. Free downloadable irs tax forms S. Free downloadable irs tax forms law. Free downloadable irs tax forms To deduct your contribution to an Israeli charity, you must have income from sources in Israel. Free downloadable irs tax forms The limits described in Limits on Deductions , later, apply. Free downloadable irs tax forms The deduction is also limited to 25% of your adjusted gross income from Israeli sources. Free downloadable irs tax forms Contributions You Can Deduct Generally, you can deduct contributions of money or property you make to, or for the use of, a qualified organization. Free downloadable irs tax forms A contribution is “for the use of” a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement. Free downloadable irs tax forms The contributions must be made to a qualified organization and not set aside for use by a specific person. Free downloadable irs tax forms If you give property to a qualified organization, you generally can deduct the fair market value of the property at the time of the contribution. Free downloadable irs tax forms See Contributions of Property , later. Free downloadable irs tax forms Your deduction for charitable contributions generally cannot be more than 50% of your adjusted gross income (AGI), but in some cases 20% and 30% limits may apply. Free downloadable irs tax forms In addition, the total of your charitable contributions deduction and certain other itemized deductions may be limited. Free downloadable irs tax forms See Limits on Deductions , later. Free downloadable irs tax forms Table 1 in this publication gives examples of contributions you can and cannot deduct. Free downloadable irs tax forms Contributions From Which You Benefit If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. Free downloadable irs tax forms Also see Contributions From Which You Benefit under Contributions You Cannot Deduct, later. Free downloadable irs tax forms If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. Free downloadable irs tax forms For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Free downloadable irs tax forms Example 1. Free downloadable irs tax forms You pay $65 for a ticket to a dinner-dance at a church. Free downloadable irs tax forms Your entire $65 payment goes to the church. Free downloadable irs tax forms The ticket to the dinner-dance has a fair market value of $25. Free downloadable irs tax forms When you buy your ticket, you know its value is less than your payment. Free downloadable irs tax forms To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from your total payment ($65). Free downloadable irs tax forms You can deduct $40 as a charitable contribution to the church. Free downloadable irs tax forms Example 2. Free downloadable irs tax forms At a fundraising auction conducted by a charity, you pay $600 for a week's stay at a beach house. Free downloadable irs tax forms The amount you pay is no more than the fair rental value. Free downloadable irs tax forms You have not made a deductible charitable contribution. Free downloadable irs tax forms Athletic events. Free downloadable irs tax forms   If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic event in the athletic stadium of the college or university, you can deduct 80% of the payment as a charitable contribution. Free downloadable irs tax forms   If any part of your payment is for tickets (rather than the right to buy tickets), that part is not deductible. Free downloadable irs tax forms Subtract the price of the tickets from your payment. Free downloadable irs tax forms You can deduct 80% of the remaining amount as a charitable contribution. Free downloadable irs tax forms Example 1. Free downloadable irs tax forms You pay $300 a year for membership in a university's athletic scholarship program. Free downloadable irs tax forms The only benefit of membership is that you have the right to buy one season ticket for a seat in a designated area of the stadium at the university's home football games. Free downloadable irs tax forms You can deduct $240 (80% of $300) as a charitable contribution. Free downloadable irs tax forms Example 2. Free downloadable irs tax forms The facts are the same as in Example 1 except your $300 payment includes the purchase of one season ticket for the stated ticket price of $120. Free downloadable irs tax forms You must subtract the usual price of a ticket ($120) from your $300 payment. Free downloadable irs tax forms The result is $180. Free downloadable irs tax forms Your deductible charitable contribution is $144 (80% of $180). Free downloadable irs tax forms Charity benefit events. Free downloadable irs tax forms   If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive. Free downloadable irs tax forms   If there is an established charge for the event, that charge is the value of your benefit. Free downloadable irs tax forms If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit. Free downloadable irs tax forms Whether you use the tickets or other privileges has no effect on the amount you can deduct. Free downloadable irs tax forms However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount you paid for the ticket. Free downloadable irs tax forms    Even if the ticket or other evidence of payment indicates that the payment is a “contribution,” this does not mean you can deduct the entire amount. Free downloadable irs tax forms If the ticket shows the price of admission and the amount of the contribution, you can deduct the contribution amount. Free downloadable irs tax forms Example. Free downloadable irs tax forms You pay $40 to see a special showing of a movie for the benefit of a qualified organization. Free downloadable irs tax forms Printed on the ticket is “Contribution–$40. Free downloadable irs tax forms ” If the regular price for the movie is $8, your contribution is $32 ($40 payment − $8 regular price). Free downloadable irs tax forms Membership fees or dues. Free downloadable irs tax forms   You may be able to deduct membership fees or dues you pay to a qualified organization. Free downloadable irs tax forms However, you can deduct only the amount that is more than the value of the benefits you receive. Free downloadable irs tax forms   You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations. Free downloadable irs tax forms They are not qualified organizations. Free downloadable irs tax forms Certain membership benefits can be disregarded. Free downloadable irs tax forms   Both you and the organization can disregard the following membership benefits if you get them in return for an annual payment of $75 or less. Free downloadable irs tax forms Any rights or privileges, other than those discussed under Athletic events , earlier, that you can use frequently while you are a member, such as: Free or discounted admission to the organization's facilities or events, Free or discounted parking, Preferred access to goods or services, and Discounts on the purchase of goods and services. Free downloadable irs tax forms Admission, while you are a member, to events open only to members of the organization if the organization reasonably projects that the cost per person (excluding any allocated overhead) is not more than $10. Free downloadable irs tax forms 20. Free downloadable irs tax forms Token items. Free downloadable irs tax forms   You do not have to reduce your contribution by the value of any benefit you receive if both of the following are true. Free downloadable irs tax forms You receive only a small item or other benefit of token value. Free downloadable irs tax forms The qualified organization correctly determines that the value of the item or benefit you received is not substantial and informs you that you can deduct your payment in full. Free downloadable irs tax forms The organization determines whether the value of an item or benefit is substantial by using Revenue Procedures 90-12 and 92-49 and the inflation adjustment in Revenue Procedure 2012–41. Free downloadable irs tax forms Written statement. Free downloadable irs tax forms   A qualified organization must give you a written statement if you make a payment of more than $75 that is partly a contribution and partly for goods or services. Free downloadable irs tax forms The statement must say you can deduct only the amount of your payment that is more than the value of the goods or services you received. Free downloadable irs tax forms It must also give you a good faith estimate of the value of those goods or services. Free downloadable irs tax forms   The organization can give you the statement either when it solicits or when it receives the payment from you. Free downloadable irs tax forms Exception. Free downloadable irs tax forms   An organization will not have to give you this statement if one of the following is true. Free downloadable irs tax forms The organization is: A governmental organization described in (5) under Types of Qualified Organizations , earlier, or An organization formed only for religious purposes, and the only benefit you receive is an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in commercial transactions outside the donative context. Free downloadable irs tax forms You receive only items whose value is not substantial as described under Token items , earlier. Free downloadable irs tax forms You receive only membership benefits that can be disregarded, as described under Membership fees or dues , earlier. Free downloadable irs tax forms Expenses Paid for Student Living With You You may be able to deduct some expenses of having a student live with you. Free downloadable irs tax forms You can deduct qualifying expenses for a foreign or American student who: Lives in your home under a written agreement between you and a qualified organization (defined later) as part of a program of the organization to provide educational opportunities for the student, Is not your relative (defined later) or dependent (also defined later), and Is a full-time student in the twelfth or any lower grade at a school in the United States. Free downloadable irs tax forms You can deduct up to $50 a month for each full calendar month the student lives with you. Free downloadable irs tax forms Any month when conditions (1) through (3) above are met for 15 or more days counts as a full month. Free downloadable irs tax forms Qualified organization. Free downloadable irs tax forms   For these purposes, a qualified organization can be any of the organizations described earlier under Types of Qualified Organizations , except those in (4) and (5). Free downloadable irs tax forms For example, if you are providing a home for a student as part of a state or local government program, you cannot deduct your expenses as charitable contributions. Free downloadable irs tax forms But see Foster parents under Out-of-Pocket Expenses in Giving Services, later, if you provide the home as a foster parent. Free downloadable irs tax forms Relative. Free downloadable irs tax forms   The term “relative” means any of the following persons. Free downloadable irs tax forms Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). Free downloadable irs tax forms A legally adopted child is considered your child. Free downloadable irs tax forms Your brother, sister, half brother, half sister, stepbrother, or stepsister. Free downloadable irs tax forms Your father, mother, grandparent, or other direct ancestor. Free downloadable irs tax forms Your stepfather or stepmother. Free downloadable irs tax forms A son or daughter of your brother or sister. Free downloadable irs tax forms A brother or sister of your father or mother. Free downloadable irs tax forms Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. Free downloadable irs tax forms Dependent. Free downloadable irs tax forms   For this purpose, the term “dependent” means: A person you can claim as a dependent, or A person you could have claimed as a dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Free downloadable irs tax forms    Foreign students brought to this country under a qualified international education exchange program and placed in American homes for a temporary period generally are not U. Free downloadable irs tax forms S. Free downloadable irs tax forms residents and cannot be claimed as dependents. Free downloadable irs tax forms Qualifying expenses. Free downloadable irs tax forms   You may be able to deduct the cost of books, tuition, food, clothing, transportation, medical and dental care, entertainment, and other amounts you actually spend for the well-being of the student. Free downloadable irs tax forms Expenses that do not qualify. Free downloadable irs tax forms   You cannot deduct depreciation on your home, the fair market value of lodging, and similar items not considered amounts actually spent by you. Free downloadable irs tax forms Nor can you deduct general household expenses, such as taxes, insurance, and repairs. Free downloadable irs tax forms Reimbursed expenses. Free downloadable irs tax forms   In most cases, you cannot claim a charitable contribution deduction if you are compensated or reimbursed for any part of the costs of having a student live with you. Free downloadable irs tax forms However, you may be able to claim a charitable contribution deduction for the unreimbursed portion of your expenses if you are reimbursed only for an extraordinary or one-time item, such as a hospital bill or vacation trip, you paid in advance at the request of the student's parents or the sponsoring organization. Free downloadable irs tax forms Mutual exchange program. Free downloadable irs tax forms   You cannot deduct the costs of a foreign student living in your home under a mutual exchange program through which your child will live with a family in a foreign country. Free downloadable irs tax forms Reporting expenses. Free downloadable irs tax forms   For a list of what you must file with your return if you deduct expenses for a student living with you, see Reporting expenses for student living with you under How To Report, later. Free downloadable irs tax forms Out-of-Pocket Expenses in Giving Services Table 2. Free downloadable irs tax forms Volunteers' Questions and Answers If you volunteer for a qualified organization, the following questions and answers may apply to you. Free downloadable irs tax forms All of the rules explained in this publication also apply. Free downloadable irs tax forms See, in particular, Out-of-Pocket Expenses in Giving Services . Free downloadable irs tax forms Question Answer I volunteer 6 hours a week in the office of a qualified organization. Free downloadable irs tax forms The receptionist is paid $10 an hour for the same work. Free downloadable irs tax forms Can I deduct $60 a week for my time? No, you cannot deduct the value of your time or services. Free downloadable irs tax forms  The office is 30 miles from my home. Free downloadable irs tax forms Can I deduct any of my car expenses for these trips? Yes, you can deduct the costs of gas and oil that are directly related to getting to and from the place where you volunteer. Free downloadable irs tax forms If you do not want to figure your actual costs, you can deduct 14 cents for each mile. Free downloadable irs tax forms I volunteer as a Red Cross nurse's aide at a hospital. Free downloadable irs tax forms Can I deduct the cost of the uniforms I must wear? Yes, you can deduct the cost of buying and cleaning your uniforms if the hospital is a qualified organization, the uniforms are not suitable for everyday use, and you must wear them when volunteering. Free downloadable irs tax forms I pay a babysitter to watch my children while I volunteer for a qualified organization. Free downloadable irs tax forms Can I deduct these costs? No, you cannot deduct payments for childcare expenses as a charitable contribution, even if you would be unable to volunteer without childcare. Free downloadable irs tax forms (If you have childcare expenses so you can work for pay, see Publication 503, Child and Dependent Care Expenses. Free downloadable irs tax forms ) Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. Free downloadable irs tax forms The amounts must be: Unreimbursed, Directly connected with the services, Expenses you had only because of the services you gave, and Not personal, living, or family expenses. Free downloadable irs tax forms Table 2 contains questions and answers that apply to some individuals who volunteer their services. Free downloadable irs tax forms Underprivileged youths selected by charity. Free downloadable irs tax forms   You can deduct reasonable unreimbursed out-of-pocket expenses you pay to allow underprivileged youths to attend athletic events, movies, or dinners. Free downloadable irs tax forms The youths must be selected by a charitable organization whose goal is to reduce juvenile delinquency. Free downloadable irs tax forms Your own similar expenses in accompanying the youths are not deductible. Free downloadable irs tax forms Conventions. Free downloadable irs tax forms   If a qualified organization selects you to attend a convention as its representative, you can deduct your unreimbursed expenses for travel, including reasonable amounts for meals and lodging, while away from home overnight for the convention. Free downloadable irs tax forms However, see Travel , later. Free downloadable irs tax forms   You cannot deduct personal expenses for sightseeing, fishing parties, theater tickets, or nightclubs. Free downloadable irs tax forms You also cannot deduct travel, meals and lodging, and other expenses for your spouse or children. Free downloadable irs tax forms   You cannot deduct your travel expenses in attending a church convention if you go only as a member of your church rather than as a chosen representative. Free downloadable irs tax forms You can, however, deduct unreimbursed expenses that are directly connected with giving services for your church during the convention. Free downloadable irs tax forms Uniforms. Free downloadable irs tax forms   You can deduct the cost and upkeep of uniforms that are not suitable for everyday use and that you must wear while performing donated services for a charitable organization. Free downloadable irs tax forms Foster parents. Free downloadable irs tax forms   You may be able to deduct as a charitable contribution some of the costs of being a foster parent (foster care provider) if you have no profit motive in providing the foster care and are not, in fact, making a profit. Free downloadable irs tax forms A qualified organization must select the individuals you take into your home for foster care. Free downloadable irs tax forms   You can deduct expenses that meet both of the following requirements. Free downloadable irs tax forms They are unreimbursed out-of-pocket expenses to feed, clothe, and care for the foster child. Free downloadable irs tax forms They are incurred primarily to benefit the qualified organization. Free downloadable irs tax forms   Unreimbursed expenses that you cannot deduct as charitable contributions may be considered support provided by you in determining whether you can claim the foster child as a dependent. Free downloadable irs tax forms For details, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Free downloadable irs tax forms Example. Free downloadable irs tax forms You cared for a foster child because you wanted to adopt her, not to benefit the agency that placed her in your home. Free downloadable irs tax forms Your unreimbursed expenses are not deductible as charitable contributions. Free downloadable irs tax forms Church deacon. Free downloadable irs tax forms   You can deduct as a charitable contribution any unreimbursed expenses you have while in a permanent diaconate program established by your church. Free downloadable irs tax forms These expenses include the cost of vestments, books, and transportation required in order to serve in the program as either a deacon candidate or an ordained deacon. Free downloadable irs tax forms Car expenses. Free downloadable irs tax forms   You can deduct as a charitable contribution any unreimbursed out-of-pocket expenses, such as the cost of gas and oil, directly related to the use of your car in giving services to a charitable organization. Free downloadable irs tax forms You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance. Free downloadable irs tax forms   If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution. Free downloadable irs tax forms   You can deduct parking fees and tolls whether you use your actual expenses or the standard mileage rate. Free downloadable irs tax forms   You must keep reliable written records of your car expenses. Free downloadable irs tax forms For more information, see Car expenses under Records To Keep, later. Free downloadable irs tax forms Travel. Free downloadable irs tax forms   Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. Free downloadable irs tax forms This applies whether you pay the expenses directly or indirectly. Free downloadable irs tax forms You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses. Free downloadable irs tax forms   The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. Free downloadable irs tax forms Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip. Free downloadable irs tax forms However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel expenses. Free downloadable irs tax forms Example 1. Free downloadable irs tax forms You are a troop leader for a tax-exempt youth group and you take the group on a camping trip. Free downloadable irs tax forms You are responsible for overseeing the setup of the camp and for providing adult supervision for other activities during the entire trip. Free downloadable irs tax forms You participate in the activities of the group and enjoy your time with them. Free downloadable irs tax forms You oversee the breaking of camp and you transport the group home. Free downloadable irs tax forms You can deduct your travel expenses. Free downloadable irs tax forms Example 2. Free downloadable irs tax forms You sail from one island to another and spend 8 hours a day counting whales and other forms of marine life. Free downloadable irs tax forms The project is sponsored by a charitable organization. Free downloadable irs tax forms In most circumstances, you cannot deduct your expenses. Free downloadable irs tax forms Example 3. Free downloadable irs tax forms You work for several hours each morning on an archeological dig sponsored by a charitable organization. Free downloadable irs tax forms The rest of the day is free for recreation and sightseeing. Free downloadable irs tax forms You cannot take a charitable contribution deduction even though you work very hard during those few hours. Free downloadable irs tax forms Example 4. Free downloadable irs tax forms You spend the entire day attending a charitable organization's regional meeting as a chosen representative. Free downloadable irs tax forms In the evening you go to the theater. Free downloadable irs tax forms You can claim your travel expenses as charitable contributions, but you cannot claim the cost of your evening at the theater. Free downloadable irs tax forms Daily allowance (per diem). Free downloadable irs tax forms   If you provide services for a charitable organization and receive a daily allowance to cover reasonable travel expenses, including meals and lodging while away from home overnight, you must include in income any part of the allowance that is more than your deductible travel expenses. Free downloadable irs tax forms You may be able to deduct any necessary travel expenses that are more than the allowance. Free downloadable irs tax forms Deductible travel expenses. Free downloadable irs tax forms   These include: Air, rail, and bus transportation, Out-of-pocket expenses for your car, Taxi fares or other costs of transportation between the airport or station and your hotel, Lodging costs, and The cost of meals. Free downloadable irs tax forms Because these travel expenses are not business-related, they are not subject to the same limits as business related expenses. Free downloadable irs tax forms For information on business travel expenses, see Travel in Publication 463, Travel, Entertainment, Gift, and Car Expenses. Free downloadable irs tax forms Expenses of Whaling Captains You may be able to deduct as a charitable contribution any reasonable and necessary whaling expenses you pay during the year to carry out sanctioned whaling activities. Free downloadable irs tax forms The deduction is limited to $10,000 a year. Free downloadable irs tax forms To claim the deduction, you must be recognized by the Alaska Eskimo Whaling Commission as a whaling captain charged with the responsibility of maintaining and carrying out sanctioned whaling activities. Free downloadable irs tax forms Sanctioned whaling activities are subsistence bowhead whale hunting activities conducted under the management plan of the Alaska Eskimo Whaling Commission. Free downloadable irs tax forms Whaling expenses include expenses for: Acquiring and maintaining whaling boats, weapons, and gear used in sanctioned whaling activities, Supplying food for the crew and other provisions for carrying out these activities, and Storing and distributing the catch from these activities. Free downloadable irs tax forms You must keep records showing the time, place, date, amount, and nature of the expenses. Free downloadable irs tax forms For details, see Revenue Procedure 2006-50, which is on page 944 of Internal Revenue Bulletin 2006-47 at www. Free downloadable irs tax forms irs. Free downloadable irs tax forms gov/pub/irs-irbs/irb06-47. Free downloadable irs tax forms pdf. Free downloadable irs tax forms Contributions You Cannot Deduct There are some contributions you cannot deduct and others you can deduct only in part. Free downloadable irs tax forms You cannot deduct as a charitable contribution: A contribution to a specific individual, A contribution to a nonqualified organization, The part of a contribution from which you receive or expect to receive a benefit, The value of your time or services, Your personal expenses, A qualified charitable distribution from an individual retirement arrangement (IRA), Appraisal fees, Certain contributions to donor-advised funds, or Certain contributions of partial interests in property. Free downloadable irs tax forms Detailed discussions of these items follow. Free downloadable irs tax forms Contributions to Individuals You cannot deduct contributions to specific individuals, including the following. Free downloadable irs tax forms Contributions to fraternal societies made for the purpose of paying medical or burial expenses of members. Free downloadable irs tax forms Contributions to individuals who are needy or worthy. Free downloadable irs tax forms You cannot deduct these contributions even if you make them to a qualified organization for the benefit of a specific person. Free downloadable irs tax forms But you can deduct a contribution to a qualified organization that helps needy or worthy individuals if you do not indicate that your contribution is for a specific person. Free downloadable irs tax forms Example. Free downloadable irs tax forms You can deduct contributions to a qualified organization for flood relief, hurricane relief, or other disaster relief. Free downloadable irs tax forms However, you cannot deduct contributions earmarked for relief of a particular individual or family. Free downloadable irs tax forms Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses. Free downloadable irs tax forms Expenses you paid for another person who provided services to a qualified organization. Free downloadable irs tax forms Example. Free downloadable irs tax forms Your son does missionary work. Free downloadable irs tax forms You pay his expenses. Free downloadable irs tax forms You cannot claim a deduction for your son's unreimbursed expenses related to his contribution of services. Free downloadable irs tax forms Payments to a hospital that are for a specific patient's care or for services for a specific patient. Free downloadable irs tax forms You cannot deduct these payments even if the hospital is operated by a city, state, or other qualified organization. Free downloadable irs tax forms Contributions to Nonqualified Organizations You cannot deduct contributions to organizations that are not qualified to receive tax-deductible contributions, including the following. Free downloadable irs tax forms Certain state bar associations if: The bar is not a political subdivision of a state, The bar has private, as well as public, purposes, such as promoting the professional interests of members, and Your contribution is unrestricted and can be used for private purposes. Free downloadable irs tax forms Chambers of commerce and other business leagues or organizations. Free downloadable irs tax forms Civic leagues and associations. Free downloadable irs tax forms Communist organizations. Free downloadable irs tax forms Country clubs and other social clubs. Free downloadable irs tax forms Foreign organizations other than certain Canadian, Israeli, or Mexican charitable organizations. Free downloadable irs tax forms (See Canadian charities , Mexican charities , and Israeli charities under Organizations That Qualify To Receive Deductible Contributions, earlier. Free downloadable irs tax forms ) Also, you cannot deduct a contribution you made to any qualifying organization if the contribution is earmarked to go to a foreign organization. Free downloadable irs tax forms However, certain contributions to a qualified organization for use in a program conducted by a foreign charity may be deductible as long as they are not earmarked to go to the foreign charity. Free downloadable irs tax forms For the contribution to be deductible, the qualified organization must approve the program as furthering its own exempt purposes and must keep control over the use of the contributed funds. Free downloadable irs tax forms The contribution is also deductible if the foreign charity is only an administrative arm of the qualified organization. Free downloadable irs tax forms Homeowners' associations. Free downloadable irs tax forms Labor unions. Free downloadable irs tax forms But you may be able to deduct union dues as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). Free downloadable irs tax forms See Publication 529, Miscellaneous Deductions. Free downloadable irs tax forms Political organizations and candidates. Free downloadable irs tax forms Contributions From Which You Benefit If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you cannot deduct the part of the contribution that represents the value of the benefit you receive. Free downloadable irs tax forms See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. Free downloadable irs tax forms These contributions include the following. Free downloadable irs tax forms Contributions for lobbying. Free downloadable irs tax forms This includes amounts you earmark for use in, or in connection with, influencing specific legislation. Free downloadable irs tax forms Contributions to a retirement home for room, board, maintenance, or admittance. Free downloadable irs tax forms Also, if the amount of your contribution depends on the type or size of apartment you will occupy, it is not a charitable contribution. Free downloadable irs tax forms Costs of raffles, bingo, lottery, etc. Free downloadable irs tax forms You cannot deduct as a charitable contribution amounts you pay to buy raffle or lottery tickets or to play bingo or other games of chance. Free downloadable irs tax forms For information on how to report gambling winnings and losses, see Deductions Not Subject to the 2% Limit in Publication 529. Free downloadable irs tax forms Dues to fraternal orders and similar groups. Free downloadable irs tax forms However, see Membership fees or dues under Contributions From Which You Benefit, earlier. Free downloadable irs tax forms Tuition, or amounts you pay instead of tuition. Free downloadable irs tax forms You cannot deduct as a charitable contribution amounts you pay as tuition even if you pay them for children to attend parochial schools or qualifying nonprofit daycare centers. Free downloadable irs tax forms You also cannot deduct any fixed amount you must pay in addition to, or instead of, tuition to enroll in a private school, even if it is designated as a “donation. Free downloadable irs tax forms ” Contributions connected with split-dollar insurance arrangements. Free downloadable irs tax forms You cannot deduct any part of a contribution to a charitable organization if, in connection with the contribution, the organization directly or indirectly pays, has paid, or is expected to pay any premium on any life insurance, annuity, or endowment contract for which you, any member of your family, or any other person chosen by you (other than a qualified charitable organization) is a beneficiary. Free downloadable irs tax forms Example. Free downloadable irs tax forms You donate money to a charitable organization. Free downloadable irs tax forms The charity uses the money to purchase a cash value life insurance policy. Free downloadable irs tax forms The beneficiaries under the insurance policy include members of your family. Free downloadable irs tax forms Even though the charity may eventually get some benefit out of the insurance policy, you cannot deduct any part of the donation. Free downloadable irs tax forms Qualified Charitable Distributions A qualified charitable distribution (QCD) is a distribution made directly by the trustee of your individual retirement arrangement (IRA), other than a SEP or SIMPLE IRA, to certain qualified organizations. Free downloadable irs tax forms You must have been at least age 70½ when the distribution was made. Free downloadable irs tax forms Your total QCDs for the year cannot be more than $100,000. Free downloadable irs tax forms If all the requirements are met, a QCD is nontaxable, but you cannot claim a charitable contribution deduction for a QCD. Free downloadable irs tax forms See Publication 590, Individual Retirement Arrangements (IRAs), for more information about QCDs. Free downloadable irs tax forms Value of Time or Services You cannot deduct the value of your time or services, including: Blood donations to the American Red Cross or to blood banks, and The value of income lost while you work as an unpaid volunteer for a qualified organization. Free downloadable irs tax forms Personal Expenses You cannot deduct personal, living, or family expenses, such as the following items. Free downloadable irs tax forms The cost of meals you eat while you perform services for a qualified organization, unless it is necessary for you to be away from home overnight while performing the services. Free downloadable irs tax forms Adoption expenses, including fees paid to an adoption agency and the costs of keeping a child in your home before adoption is final. Free downloadable irs tax forms However, you may be able to claim a tax credit for these expenses. Free downloadable irs tax forms Also, you may be able to exclude from your gross income amounts paid or reimbursed by your employer for your adoption expenses. Free downloadable irs tax forms See Form 8839, Qualified Adoption Expenses, and its instructions, for more information. Free downloadable irs tax forms You also may be able to claim an exemption for the child. Free downloadable irs tax forms See Exemptions for Dependents in Publication 501 for more information. Free downloadable irs tax forms Appraisal Fees You cannot deduct as a charitable contribution any fees you pay to find the fair market value of donated property. Free downloadable irs tax forms But you can claim them, subject to the 2%-of-adjusted-gross-income limit, as a miscellaneous itemized deduction on Schedule A (Form 1040). Free downloadable irs tax forms See Deductions Subject to the 2% Limit in Publication 529 for more information. Free downloadable irs tax forms Contributions to Donor-Advised Funds You cannot deduct a contribution to a donor-advised fund if: The qualified organization that sponsors the fund is a war veterans' organization, a fraternal society, or a nonprofit cemetery company, or You do not have an acknowledgment from that sponsoring organization that it has exclusive legal control over the assets contributed. Free downloadable irs tax forms There are also other circumstances in which you cannot deduct your contribution to a donor-advised fund. Free downloadable irs tax forms Generally, a donor-advised fund is a fund or account in which a donor can, because of being a donor, advise the fund how to distribute or invest amounts held in the fund. Free downloadable irs tax forms For details, see Internal Revenue Code section 170(f)(18). Free downloadable irs tax forms Partial Interest in Property Generally, you cannot deduct a contribution of less than your entire interest in property. Free downloadable irs tax forms For details, see Partial Interest in Property under Contributions of Property, later. Free downloadable irs tax forms Contributions of Property If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. Free downloadable irs tax forms However, if the property has increased in value, you may have to make some adjustments to the amount of your deduction. Free downloadable irs tax forms See Giving Property That Has Increased in Value , later. Free downloadable irs tax forms For information about the records you must keep and the information you must furnish with your return if you donate property, see Records To Keep and How To Report , later. Free downloadable irs tax forms Contributions Subject to Special Rules Special rules apply if you contribute: Clothing or household items, A car, boat, or airplane, Taxidermy property, Property subject to a debt, A partial interest in property, A fractional interest in tangible personal property, A qualified conservation contribution, A future interest in tangible personal property, Inventory from your business, or A patent or other intellectual property. Free downloadable irs tax forms These special rules are described next. Free downloadable irs tax forms Clothing and Household Items You cannot take a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better. Free downloadable irs tax forms Exception. Free downloadable irs tax forms   You can take a deduction for a contribution of an item of clothing or a household item that is not in good used condition or better if you deduct more than $500 for it and include a qualified appraisal of it with your return. Free downloadable irs tax forms Household items. Free downloadable irs tax forms   Household items include: Furniture and furnishings, Electronics, Appliances, Linens, and Other similar items. Free downloadable irs tax forms   Household items do not include: Food, Paintings, antiques, and other objects of art, Jewelry and gems, and Collections. Free downloadable irs tax forms Fair market value. Free downloadable irs tax forms   To determine the fair market value of these items, use the rules under Determining Fair Market Value , later. Free downloadable irs tax forms Cars, Boats, and Airplanes The following rules apply to any donation of a qualified vehicle. Free downloadable irs tax forms A qualified vehicle is: A car or any motor vehicle manufactured mainly for use on public streets, roads, and highways, A boat, or An airplane. Free downloadable irs tax forms Deduction more than $500. Free downloadable irs tax forms   If you donate a qualified vehicle with a claimed fair market value of more than $500, you can deduct the smaller of: The gross proceeds from the sale of the vehicle by the organization, or The vehicle's fair market value on the date of the contribution. Free downloadable irs tax forms If the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to figure the deductible amount, as described under Giving Property That Has Increased in Value , later. Free downloadable irs tax forms Form 1098-C. Free downloadable irs tax forms   You must attach to your return Copy B of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, (or other statement containing the same information as Form 1098-C) you received from the organization. Free downloadable irs tax forms The Form 1098-C (or other statement) will show the gross proceeds from the sale of the vehicle. Free downloadable irs tax forms   If you e-file your return, you must: Attach Copy B of Form 1098-C to Form 8453, U. Free downloadable irs tax forms S. Free downloadable irs tax forms Individual Income Tax Transmittal for an IRS e-file Return, and mail the forms to the IRS, or Include Copy B of Form 1098-C as a pdf attachment if your software program allows it. Free downloadable irs tax forms   If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution. Free downloadable irs tax forms    You must get Form 1098-C (or other statement) within 30 days of the sale of the vehicle. Free downloadable irs tax forms But if exception 1 or 2 (described later) applies, you must get Form 1098-C (or other statement) within 30 days of your donation. Free downloadable irs tax forms Filing deadline approaching and still no Form 1098-C. Free downloadable irs tax forms   If the filing deadline is approaching and you still do not have a Form 1098-C, you have two choices. Free downloadable irs tax forms Request an automatic 6-month extension of time to file your return. Free downloadable irs tax forms You can get this extension by filing Form 4868, Application for Automatic Extension of Time To File U. Free downloadable irs tax forms S. Free downloadable irs tax forms Individual Income Tax Return. Free downloadable irs tax forms For more information, see the instructions for Form 4868. Free downloadable irs tax forms File the return on time without claiming the deduction for the qualified vehicle. Free downloadable irs tax forms After receiving the Form 1098-C, file an amended return, Form 1040X, Amended U. Free downloadable irs tax forms S. Free downloadable irs tax forms Individual Income Tax Return, claiming the deduction. Free downloadable irs tax forms Attach Copy B of Form 1098-C (or other statement) to the amended return. Free downloadable irs tax forms Exceptions. Free downloadable irs tax forms   There are two exceptions to the rules just described for deductions of more than $500. Free downloadable irs tax forms Exception 1—vehicle used or improved by organization. Free downloadable irs tax forms   If the qualified organization makes a significant intervening use of or material improvement to the vehicle before transferring it, you generally can deduct the vehicle's fair market value at the time of the contribution. Free downloadable irs tax forms But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Free downloadable irs tax forms The Form 1098-C (or other statement) will show whether this exception applies. Free downloadable irs tax forms    Exception 2—vehicle given or sold to needy individual. Free downloadable irs tax forms   If the qualified organization will give the vehicle, or sell it for a price well below fair market value, to a needy individual to further the organization's charitable purpose, you generally can deduct the vehicle's fair market value at the time of the contribution. Free downloadable irs tax forms But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Free downloadable irs tax forms The Form 1098-C (or other statement) will show whether this exception applies. Free downloadable irs tax forms   This exception does not apply if the organization sells the vehicle at auction. Free downloadable irs tax forms In that case, you cannot deduct the vehicle's fair market value. Free downloadable irs tax forms Example. Free downloadable irs tax forms Anita donates a used car to a qualified organization. Free downloadable irs tax forms She bought it 3 years ago for $9,000. Free downloadable irs tax forms A used car guide shows the fair market value for this type of car is $6,000. Free downloadable irs tax forms However, Anita gets a Form 1098-C from the organization showing the car was sold for $2,900. Free downloadable irs tax forms Neither exception 1 nor exception 2 applies. Free downloadable irs tax forms If Anita itemizes her deductions, she can deduct $2,900 for her donation. Free downloadable irs tax forms She must attach Form 1098-C and Form 8283 to her return. Free downloadable irs tax forms Deduction $500 or less. Free downloadable irs tax forms   If the qualified organization sells the vehicle for $500 or less and exceptions 1 and 2 do not apply, you can deduct the smaller of: $500, or The vehicle's fair market value on the date of the contribution. Free downloadable irs tax forms But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Free downloadable irs tax forms   If the vehicle's fair market value is at least $250 but not more than $500, you must have a written statement from the qualified organization acknowledging your donation. Free downloadable irs tax forms The statement must contain the information and meet the tests for an acknowledgment described under Contributions of $250 or More under Records To Keep, later. Free downloadable irs tax forms Fair market value. Free downloadable irs tax forms   To determine a vehicle's fair market value, use the rules described under Determining Fair Market Value , later. Free downloadable irs tax forms Donations of inventory. Free downloadable irs tax forms   The vehicle donation rules just described do not apply to donations of inventory. Free downloadable irs tax forms For example, these rules do not apply if you are a car dealer who donates a car you had been holding for sale to customers. Free downloadable irs tax forms See Inventory , later. Free downloadable irs tax forms Taxidermy Property If you donate taxidermy property to a qualified organization, your deduction is limited to your basis in the property or its fair market value, whichever is less. Free downloadable irs tax forms This applies if you prepared, stuffed, or mounted the property or paid or incurred the cost of preparing, stuffing, or mounting the property. Free downloadable irs tax forms Your basis for this purpose includes only the cost of preparing, stuffing, and mounting the property. Free downloadable irs tax forms Your basis does not include transportation or travel costs. Free downloadable irs tax forms It also does not include the direct or indirect costs for hunting or killing an animal, such as equipment costs. Free downloadable irs tax forms In addition, it does not include the value of your time. Free downloadable irs tax forms Taxidermy property means any work of art that: Is the reproduction or preservation of an animal, in whole or in part, Is prepared, stuffed, or mounted to recreate one or more characteristics of the animal, and Contains a part of the body of the dead animal. Free downloadable irs tax forms Property Subject to a Debt If you contribute property subject to a debt (such as a mortgage), you must reduce the fair market value of the property by: Any allowable deduction for interest you paid (or will pay) that is attributable to any period after the contribution, and If the property is a bond, the lesser of: Any allowable deduction for interest you paid (or will pay) to buy or carry the bond that is attributable to any period before the contribution, or The interest, including bond discount, receivable on the bond that is attributable to any period before the contribution, and that is not includible in your income due to your accounting method. Free downloadable irs tax forms This prevents you from deducting the same amount as both investment interest and a charitable contribution. Free downloadable irs tax forms If the recipient (or another person) assumes the debt, you must also reduce the fair market value of the property by the amount of the outstanding debt assumed. Free downloadable irs tax forms The amount of the debt is also treated as an amount realized on the sale or exchange of property for purposes of figuring your taxable gain (if any). Free downloadable irs tax forms For more information, see Bargain Sales under Giving Property That Has Increased in Value, later. Free downloadable irs tax forms Partial Interest in Property Generally, you cannot deduct a charitable contribution of less than your entire interest in property. Free downloadable irs tax forms Right to use property. Free downloadable irs tax forms   A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible. Free downloadable irs tax forms Example 1. Free downloadable irs tax forms You own a 10-story office building and donate rent-free use of the top floor to a charitable organization. Free downloadable irs tax forms Because you still own the building, you have contributed a partial interest in the property and cannot take a deduction for the contribution. Free downloadable irs tax forms Example 2. Free downloadable irs tax forms Mandy White owns a vacation home at the beach that she sometimes rents to others. Free downloadable irs tax forms For a fund-raising auction at her church, she donated the right to use the vacation home for 1 week. Free downloadable irs tax forms At the auction, the church received and accepted a bid from Lauren Green equal to the fair rental value of the home for 1 week. Free downloadable irs tax forms Mandy cannot claim a deduction because of the partial interest rule. Free downloadable irs tax forms Lauren cannot claim a deduction either, because she received a benefit equal to the amount of her payment. Free downloadable irs tax forms See Contributions From Which You Benefit , earlier. Free downloadable irs tax forms Exceptions. Free downloadable irs tax forms   You can deduct a charitable contribution of a partial interest in property only if that interest represents one of the following items. Free downloadable irs tax forms A remainder interest in your personal home or farm. Free downloadable irs tax forms A remainder interest is one that passes to a beneficiary after the end of an earlier interest in the property. Free downloadable irs tax forms Example. Free downloadable irs tax forms You keep the right to live in your home during your lifetime and give your church a remainder interest that begins upon your death. Free downloadable irs tax forms You can deduct the value of the remainder interest. Free downloadable irs tax forms An undivided part of your entire interest. Free downloadable irs tax forms This must consist of a part of every substantial interest or right you own in the property and must last as long as your interest in the property lasts. Free downloadable irs tax forms But see Fractional Interest in Tangible Personal Property , later. Free downloadable irs tax forms Example. Free downloadable irs tax forms You contribute voting stock to a qualified organization but keep the right to vote the stock. Free downloadable irs tax forms The right to vote is a substantial right in the stock. Free downloadable irs tax forms You have not contributed an undivided part of your entire interest and cannot deduct your contribution. Free downloadable irs tax forms A partial interest that would be deductible if transferred to certain types of trusts. Free downloadable irs tax forms A qualified conservation contribution (defined later). Free downloadable irs tax forms For information about how to figure the value of a contribution of a partial interest in property, see Partial Interest in Property Not in Trust in Publication 561. Free downloadable irs tax forms Fractional Interest in Tangible Personal Property You cannot deduct a charitable contribution of a fractional interest in tangible personal property unless all interests in the property are held immediately before the contribution by: You, or You and the qualifying organization receiving the contribution. Free downloadable irs tax forms If you make an additional contribution later, the fair market value of that contribution will be determined by using the smaller of: The fair market value of the property at the time of the initial contribution, or The fair market value of the property at the time of the additional contribution. Free downloadable irs tax forms Tangible personal property is defined later under Future Interest in Tangible Personal Property . Free downloadable irs tax forms A fractional interest in property is an undivided portion of your entire interest in the property. Free downloadable irs tax forms Example. Free downloadable irs tax forms An undivided one-quarter interest in a painting that entitles an art museum to possession of the painting for 3 months of each year is a fractional interest in the property. Free downloadable irs tax forms Recapture of deduction. Free downloadable irs tax forms   You must recapture your charitable contribution deduction by including it in your income if both of the following statements are true. Free downloadable irs tax forms You contributed a fractional interest in tangible personal property after August 17, 2006. Free downloadable irs tax forms You do not contribute the rest of your interests in the property to the original recipient or, if it no longer exists, another qualified organization on or before the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. Free downloadable irs tax forms   Recapture is also required if the qualified organization has not taken substantial physical possession of the property and used it in a way related to the organization's purpose during the period beginning on the date of the initial contribution and ending on the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. Free downloadable irs tax forms Additional tax. Free downloadable irs tax forms   If you must recapture your deduction, you must also pay interest and an additional tax equal to 10% of the amount recaptured. Free downloadable irs tax forms Qualified Conservation Contribution A qualified conservation contribution is a contribution of a qualified real property interest to a qualified organization to be used only for conservation purposes. Free downloadable irs tax forms Qualified organization. Free downloadable irs tax forms   For purposes of a qualified conservation contribution, a qualified organization is: A governmental unit, A publicly supported charity, or An organization controlled by, and operated for the exclusive benefit of, a governmental unit or a publicly supported charity. Free downloadable irs tax forms The organization also must have a commitment to protect the conservation purposes of the donation and must have the resources to enforce the restrictions. Free downloadable irs tax forms   A publicly supported charity is an organization of the type described in (1) under Types of Qualified Organizations , earlier, that normally receives a substantial part of its support, other than income from its exempt activities, from direct or indirect contributions from the general public or from governmental units. Free downloadable irs tax forms Qualified real property interest. Free downloadable irs tax forms   This is any of the following interests in real property. Free downloadable irs tax forms Your entire interest in real estate other than a mineral interest (subsurface oil, gas, or other minerals, and the right of access to these minerals). Free downloadable irs tax forms A remainder interest. Free downloadable irs tax forms A restriction (granted in perpetuity) on the use that may be made of the real property. Free downloadable irs tax forms Conservation purposes. Free downloadable irs tax forms   Your contribution must be made only for one of the following conservation purposes. Free downloadable irs tax forms Preserving land areas for outdoor recreation by, or for the education of, the general public. Free downloadable irs tax forms Protecting a relatively natural habitat of fish, wildlife, or plants, or a similar ecosystem. Free downloadable irs tax forms Preserving open space, including farmland and forest land, if it yields a significant public benefit. Free downloadable irs tax forms The open space must be preserved either for the scenic enjoyment of the general public or under a clearly defined federal, state, or local governmental conservation policy. Free downloadable irs tax forms Preserving a historically important land area or a certified historic structure. Free downloadable irs tax forms Building in registered historic district. Free downloadable irs tax forms   If a building in a registered historic district is a certified historic structure, a contribution of a qualified real property interest that is an easement or other restriction on the exterior of the building is deductible only if it meets all of the following conditions. Free downloadable irs tax forms The restriction must preserve the entire exterior of the building (including its front, sides, rear, and height) and must prohibit any change to the exterior of the building that is inconsistent with its historical character. Free downloadable irs tax forms You and the organization receiving the contribution must enter into a written agreement certifying, under penalty of perjury, that the organization: Is a qualified organization with a purpose of environmental protection, land conservation, open space preservation, or historic preservation, and Has the resources to manage and enforce the restriction and a commitment to do so. Free downloadable irs tax forms You must include with your return: A qualified appraisal, Photographs of the building's entire exterior, and A description of all restrictions on development of the building, such as zoning laws and restrictive covenants. Free downloadable irs tax forms   If you claimed the rehabilitation credit for the building for any of the 5 years before the year of the contribution, your charitable deduction is reduced. Free downloadable irs tax forms For more information, see Form 3468, Investment Credit, and Internal Revenue Code section 170(f)(14). Free downloadable irs tax forms   If you claim a deduction of more than $10,000, your deduction will not be allowed unless you pay a $500 filing fee. Free downloadable irs tax forms See Form 8283-V, Payment Voucher for Filing Fee Under Section 170(f)(13), and its instructions. Free downloadable irs tax forms You may be able to deduct the filing fee as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). Free downloadable irs tax forms See Deductions Subject to the 2% Limit in Publication 529 for more information. Free downloadable irs tax forms More information. Free downloadable irs tax forms   For information about determining the fair market value of qualified conservation contributions, see Publication 561. Free downloadable irs tax forms For information about the limits that apply to deductions for this type of contribution, see Limits on Deductions , later. Free downloadable irs tax forms For more information about qualified conservation contributions, see Regulations section 1. Free downloadable irs tax forms 170A-14. Free downloadable irs tax forms Future Interest in Tangible Personal Property You cannot deduct the value of a charitable contribution of a future interest in tangible personal property until all intervening interests in and rights to the actual possession or enjoyment of the property have either expired or been turned over to someone other than yourself, a related person, or a related organization. Free downloadable irs tax forms But see Fractional Interest in Tangible Personal Property , earlier, and Tangible personal property put to unrelated use , later. Free downloadable irs tax forms Related persons include your spouse, children, grandchildren, brothers, sisters, and parents. Free downloadable irs tax forms Related organizations may include a partnership or corporation in which you have an interest, or an estate or trust with which you have a connection. Free downloadable irs tax forms Tangible personal property. Free downloadable irs tax forms   This is any property, other than land or buildings, that can be seen or touched. Free downloadable irs tax forms It includes furniture, books, jewelry, paintings, and cars. Free downloadable irs tax forms Future interest. Free downloadable irs tax forms   This is any interest that is to begin at some future time, regardless of whether it is designated as a future interest under state law. Free downloadable irs tax forms Example. Free downloadable irs tax forms You own an antique car that you contribute to a museum. Free downloadable irs tax forms You give up ownership, but retain the right to keep the car in your garage with your personal collection. Free downloadable irs tax forms Because you keep an interest in the property, you cannot deduct the contribution. Free downloadable irs tax forms If you turn the car over to the museum in a later year, giving up all rights to its use, possession, and enjoyment, you can take a deduction for the contribution in that later year. Free downloadable irs tax forms Inventory If you contribute inventory (property you sell in the course of your business), the amount you can deduct is the smaller of its fair market value on the day you contributed it or its basis. Free downloadable irs tax forms The basis of contributed inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. Free downloadable irs tax forms You must remove the amount of your charitable contribution deduction from your opening inventory. Free downloadable irs tax forms It is not part of the cost of goods sold. Free downloadable irs tax forms If the cost of donated inventory is not included in your opening inventory, the inventory's basis is zero and you cannot claim a charitable contribution deduction. Free downloadable irs tax forms Treat the inventory's cost as you would ordinarily treat it under your method of accounting. Free downloadable irs tax forms For example, include the purchase price of inventory bought and donated in the same year in the cost of goods sold for that year. Free downloadable irs tax forms A special rule applies to certain donations of food inventory. Free downloadable irs tax forms See Food Inventory, later. Free downloadable irs tax forms Patents and Other Intellectual Property If you donate intellectual property to a qualified organization, your deduction is limited to the basis of the property or the fair market value of the property, whichever is smaller. Free downloadable irs tax forms Intellectual property means any of the following: Patents. Free downloadable irs tax forms Copyrights (other than a copyright described in Internal Revenue Code sections 1221(a)(3) or 1231(b)(1)(C)). Free downloadable irs tax forms Trademarks. Free downloadable irs tax forms Trade names. Free downloadable irs tax forms Trade secrets. Free downloadable irs tax forms Know-how. Free downloadable irs tax forms Software (other than software described in Internal Revenue Code section 197(e)(3)(A)(i)). Free downloadable irs tax forms Other similar property or applications or registrations of such property. Free downloadable irs tax forms Additional deduction based on income. Free downloadable irs tax forms   You may be able to claim additional charitable contribution deductions in the year of the contribution and years following, based on the income, if any, from the donated property. Free downloadable irs tax forms   The following table shows the percentage of income from the property that you can deduct for each of your tax years ending on or after the date of the contribution. Free downloadable irs tax forms In the table, “tax year 1,” for example, means your first tax year ending on or after the date of the contribution. Free downloadable irs tax forms However, you can take the additional deduction only to the extent the total of the amounts figured using this table is more than the amount of the deduction claimed for the original donation of the property. Free downloadable irs tax forms   After the legal life of the intellectual property ends, or after the 10th anniversary of the donation, whichever is earlier, no additional deduction is allowed. Free downloadable irs tax forms The additional deductions cannot be taken for intellectual property donated to certain private foundations. Free downloadable irs tax forms Tax year Deductible percentage 1 100% 2 100% 3 90% 4 80% 5 70% 6 60% 7 50% 8 40% 9 30% 10 20% 11 10% 12 10% Reporting requirements. Free downloadable irs tax forms   You must inform the organization at the time of the donation that you intend to treat the donation as a contribution subject to the provisions just discussed. Free downloadable irs tax forms   The organization is required to file an information return showing the income from the property, with a copy to you. Free downloadable irs tax forms This is done on Form 8899, Notice of Income From Donated Intellectual Property. Free downloadable irs tax forms Determining Fair Market Value This section discusses general guidelines for determining the fair market value of various types of donated property. Free downloadable irs tax forms Publication 561 contains a more complete discussion. Free downloadable irs tax forms Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. Free downloadable irs tax forms Used clothing. Free downloadable irs tax forms   The fair market value of used clothing and other personal items is usually far less than the price you paid for them. Free downloadable irs tax forms There are no fixed formulas or methods for finding the value of items of clothing. Free downloadable irs tax forms   You should claim as the value the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops. Free downloadable irs tax forms      Also see Clothing and Household Items , earlier. Free downloadable irs tax forms Example. Free downloadable irs tax forms    Kristin donated a coat to a thrift store operated by her church. 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Free downloadable irs tax forms   You should support your valuation with photographs, canceled checks, receipts from your purchase of the items, or other evidence. Free downloadable irs tax forms Magazine or newspaper articles and photographs that describe the items and statements by the recipients of the items are also useful. Free downloadable irs tax forms Do not include any of this evidence with your tax return. Free downloadable irs tax forms   If the property is valuable because it is old or unique, see the discussion under Paintings, Antiques, and Other Objects of Art in Publication 561. Free downloadable irs tax forms   Also see Clothing and Household Items , earlier. Free downloadable irs tax forms Cars, boats, and airplanes. Free downloadable irs tax forms   If you contribute a car, boat, or airplane to a charitable organization, you must determine its fair market value. Free downloadable irs tax forms Boats. Free downloadable irs tax forms   Except for small, inexpensive boats, the valuation of boats should be based on an appraisal by a marine surveyor or appraiser because the physical condition is critical to the value. Free downloadable irs tax forms Cars. Free downloadable irs tax forms   Certain commercial firms and trade organizations publish used car pricing guides, commonly called “blue books,” containing complete dealer sale prices or dealer average prices for recent model years. Free downloadable irs tax forms The guides may be published monthly or seasonally, and for different regions of the country. Free downloadable irs tax forms These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. Free downloadable irs tax forms The prices are not “official” and these publications are not considered an appraisal of any specific donated property. Free downloadable irs tax forms But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. Free downloadable irs tax forms   These publications are sometimes available from public libraries, or from the loan officer at a bank, credit union, or finance company. Free downloadable irs tax forms You can also find used car pricing information on the Internet. Free downloadable irs tax forms   To find the fair market value of a donated car, use the price listed in a used car guide for a private party sale, not the dealer retail value. Free downloadable irs tax forms However, the fair market value may be less if the car has engine trouble, body damage, high mileage, or any type of excessive wear. 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