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How To File 1040ez Online

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How To File 1040ez Online

How to file 1040ez online 7. How to file 1040ez online   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. How to file 1040ez online For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return. How to file 1040ez online There is no limit on the number of separate Coverdell ESAs that can be established for a designated beneficiary. How to file 1040ez online However, total contributions for the beneficiary in any year cannot be more than $2,000, no matter how many accounts have been established. How to file 1040ez online See Contributions , later. How to file 1040ez online This benefit applies not only to higher education expenses, but also to elementary and secondary education expenses. How to file 1040ez online What is the tax benefit of the Coverdell ESA. How to file 1040ez online   Contributions to a Coverdell ESA are not deductible, but amounts deposited in the account grow tax free until distributed. How to file 1040ez online   If, for a year, distributions from an account are not more than a designated beneficiary's qualified education expenses at an eligible educational institution, the beneficiary will not owe tax on the distributions. How to file 1040ez online See Tax-Free Distributions , later. How to file 1040ez online    Table 7-1 summarizes the main features of the Coverdell ESA. How to file 1040ez online Table 7-1. How to file 1040ez online Coverdell ESA at a Glance Do not rely on this table alone. How to file 1040ez online It provides only general highlights. How to file 1040ez online See the text for definitions of terms in bold type and for more complete explanations. How to file 1040ez online Question Answer What is a Coverdell ESA? A savings account that is set up to pay the qualified education expenses of a designated beneficiary. How to file 1040ez online 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. How to file 1040ez online Who can have a Coverdell ESA? Any beneficiary who is under age 18 or is a special needs beneficiary. How to file 1040ez online Who can contribute to a Coverdell ESA? Generally, any individual (including the beneficiary) whose modified adjusted gross income for the year is less than $110,000 ($220,000 in the case of a joint return). How to file 1040ez online Are distributions tax free? Yes, if the distributions are not more than the beneficiary's adjusted qualified education expenses for the year. How to file 1040ez online What Is a Coverdell ESA A Coverdell ESA is a trust or custodial account created or organized in the United States only for the purpose of paying the qualified education expenses of the Designated beneficiary (defined later) of the account. How to file 1040ez online When the account is established, the designated beneficiary must be under age 18 or a special needs beneficiary. How to file 1040ez online To be treated as a Coverdell ESA, the account must be designated as a Coverdell ESA when it is created. How to file 1040ez online The document creating and governing the account must be in writing and must satisfy the following requirements. How to file 1040ez online The trustee or custodian must be a bank or an entity approved by the IRS. How to file 1040ez online The document must provide that the trustee or custodian can only accept a contribution that meets all of the following conditions. How to file 1040ez online The contribution is in cash. How to file 1040ez online The contribution is made before the beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary. How to file 1040ez online The contribution would not result in total contributions for the year (not including rollover contributions) being more than $2,000. How to file 1040ez online Money in the account cannot be invested in life insurance contracts. How to file 1040ez online Money in the account cannot be combined with other property except in a common trust fund or common investment fund. How to file 1040ez online The balance in the account generally must be distributed within 30 days after the earlier of the following events. How to file 1040ez online The beneficiary reaches age 30, unless the beneficiary is a special needs beneficiary. How to file 1040ez online The beneficiary's death. How to file 1040ez online Qualified Education Expenses Generally, these are expenses required for the enrollment or attendance of the designated beneficiary at an eligible educational institution. How to file 1040ez online For purposes of Coverdell ESAs, the expenses can be either qualified higher education expenses or qualified elementary and secondary education expenses. How to file 1040ez online Designated beneficiary. How to file 1040ez online   This is the individual named in the document creating the trust or custodial account to receive the benefit of the funds in the account. How to file 1040ez online Contributions to a qualified tuition program (QTP). How to file 1040ez online   A contribution to a QTP is a qualified education expense if the contribution is on behalf of the designated beneficiary of the Coverdell ESA. How to file 1040ez online In the case of a change in beneficiary, this is a qualified expense only if the new beneficiary is a family member of that designated beneficiary. How to file 1040ez online See chapter 8, Qualified Tuition Program . How to file 1040ez online Eligible Educational Institution For purposes of Coverdell ESAs, an eligible educational institution can be either an eligible postsecondary school or an eligible elementary or secondary school. How to file 1040ez online Eligible postsecondary school. How to file 1040ez online   This is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. How to file 1040ez online S. How to file 1040ez online Department of Education. How to file 1040ez online It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. How to file 1040ez online The educational institution should be able to tell you if it is an eligible educational institution. How to file 1040ez online   Certain educational institutions located outside the United States also participate in the U. How to file 1040ez online S. How to file 1040ez online Department of Education's Federal Student Aid (FSA) programs. How to file 1040ez online Eligible elementary or secondary school. How to file 1040ez online   This is any public, private, or religious school that provides elementary or secondary education (kindergarten through grade 12), as determined under state law. How to file 1040ez online Qualified Higher Education Expenses These are expenses related to enrollment or attendance at an eligible postsecondary school. How to file 1040ez online 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. How to file 1040ez online The following expenses must be required for enrollment or attendance of a designated beneficiary at an eligible postsecondary school. How to file 1040ez online Tuition and fees. How to file 1040ez online Books, supplies, and equipment. How to file 1040ez online Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible postsecondary school. How to file 1040ez online Expenses for room and board must be incurred by students who are enrolled at least half-time (defined below). How to file 1040ez online The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts. How to file 1040ez online The allowance for room and board, as determined by the school, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. How to file 1040ez online The actual amount charged if the student is residing in housing owned or operated by the school. How to file 1040ez online Half-time student. How to file 1040ez online   A student is enrolled “at least half-time” if he or she is enrolled for at least half the full-time academic work load for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled. How to file 1040ez online Qualified Elementary and Secondary Education Expenses These are expenses related to enrollment or attendance at an eligible elementary or secondary school. How to file 1040ez online As shown in the following list, to be qualified, some of the expenses must be required or provided by the school. How to file 1040ez online There are special rules for computer-related expenses. How to file 1040ez online The following expenses must be incurred by a designated beneficiary in connection with enrollment or attendance at an eligible elementary or secondary school. How to file 1040ez online Tuition and fees. How to file 1040ez online Books, supplies, and equipment. How to file 1040ez online Academic tutoring. How to file 1040ez online Special needs services for a special needs beneficiary. How to file 1040ez online The following expenses must be required or provided by an eligible elementary or secondary school in connection with attendance or enrollment at the school. How to file 1040ez online Room and board. How to file 1040ez online Uniforms. How to file 1040ez online Transportation. How to file 1040ez online Supplementary items and services (including extended day programs). How to file 1040ez online The purchase of computer technology, equipment, or Internet access and related services is a qualified elementary and secondary education expense if it is to be used by the beneficiary and the beneficiary's family during any of the years the beneficiary is in elementary or secondary school. How to file 1040ez online (This does not include expenses for computer software designed for sports, games, or hobbies unless the software is predominantly educational in nature. How to file 1040ez online ) Contributions Any individual (including the designated beneficiary) can contribute to a Coverdell ESA if the individual's MAGI (defined later under Contribution Limits ) for the year is less than $110,000. How to file 1040ez online For individuals filing joint returns, that amount is $220,000. How to file 1040ez online Organizations, such as corporations and trusts, can also contribute to Coverdell ESAs. How to file 1040ez online There is no requirement that an organization's income be below a certain level. How to file 1040ez online Contributions must meet all of the following requirements. How to file 1040ez online They must be in cash. How to file 1040ez online They cannot be made after the beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary. How to file 1040ez online They must be made by the due date of the contributor's tax return (not including extensions). How to file 1040ez online Contributions can be made to one or several Coverdell ESAs for the same designated beneficiary provided that the total contributions are not more than the contribution limits (defined later) for a year. How to file 1040ez online Contributions can be made, without penalty, to both a Coverdell ESA and a QTP in the same year for the same beneficiary. How to file 1040ez online Table 7-2 summarizes many of the features of contributing to a Coverdell ESA. How to file 1040ez online When contributions considered made. How to file 1040ez online   Contributions made to a Coverdell ESA for the preceding tax year are considered to have been made on the last day of the preceding year. How to file 1040ez online They must be made by the due date (not including extensions) for filing your return for the preceding year. How to file 1040ez online   For example, if you make a contribution to a Coverdell ESA in February 2014, and you designate it as a contribution for 2013, you are considered to have made that contribution on December 31, 2013. How to file 1040ez online Contribution Limits There are two yearly limits: One on the total amount that can be contributed for each designated beneficiary in any year, and One on the amount that any individual can contribute for any one designated beneficiary for a year. How to file 1040ez online Limit for each designated beneficiary. How to file 1040ez online   For 2013, the total of all contributions to all Coverdell ESAs set up for the benefit of any one designated beneficiary cannot be more than $2,000. How to file 1040ez online This includes contributions (other than rollovers) to all the beneficiary's Coverdell ESAs from all sources. How to file 1040ez online Rollovers are discussed under Rollovers and Other Transfers , later. How to file 1040ez online Example. How to file 1040ez online When Maria Luna was born in 2012, three separate Coverdell ESAs were set up for her, one by her parents, one by her grandfather, and one by her aunt. How to file 1040ez online In 2013, the total of all contributions to Maria's three Coverdell ESAs cannot be more than $2,000. How to file 1040ez online For example, if her grandfather contributed $2,000 to one of her Coverdell ESAs, no one else could contribute to any of her three accounts. How to file 1040ez online Or, if her parents contributed $1,000 and her aunt $600, her grandfather or someone else could contribute no more than $400. How to file 1040ez online These contributions could be put into any of Maria's Coverdell ESA accounts. How to file 1040ez online Limit for each contributor. How to file 1040ez online   Generally, you can contribute up to $2,000 for each designated beneficiary for 2013. How to file 1040ez online This is the most you can contribute for the benefit of any one beneficiary for the year, regardless of the number of Coverdell ESAs set up for the beneficiary. How to file 1040ez online Example. How to file 1040ez online The facts are the same as in the previous example except that Maria Luna's older brother, Edgar, also has a Coverdell ESA. How to file 1040ez online If their grandfather contributed $2,000 to Maria's Coverdell ESA in 2013, he could also contribute $2,000 to Edgar's Coverdell ESA. How to file 1040ez online Reduced limit. How to file 1040ez online   Your contribution limit may be reduced. How to file 1040ez online If your MAGI (defined on this page) is between $95,000 and $110,000 (between $190,000 and $220,000 if filing a joint return), the $2,000 limit for each designated beneficiary is gradually reduced (see Figuring the limit , later). How to file 1040ez online If your MAGI is $110,000 or more ($220,000 or more if filing a joint return), you cannot contribute to anyone's Coverdell ESA. How to file 1040ez online Table 7-2. How to file 1040ez online Coverdell ESA Contributions at a Glance Do not rely on this table alone. How to file 1040ez online It provides only general highlights. How to file 1040ez online See the text for more complete explanations. How to file 1040ez online Question Answer Are contributions deductible? No. How to file 1040ez online What is the annual contribution limit per designated beneficiary? $2,000 for each designated beneficiary. How to file 1040ez online What if more than one Coverdell ESA has been opened for the same designated beneficiary? The annual contribution limit is $2,000 for each beneficiary, no matter how many Coverdell ESAs are set up for that beneficiary. How to file 1040ez online What if more than one individual makes contributions for the same designated beneficiary? The annual contribution limit is $2,000 per beneficiary, no matter how many individuals contribute. How to file 1040ez online Can contributions other than cash be made to a Coverdell ESA? No. How to file 1040ez online When must contributions stop? No contributions can be made to a beneficiary's Coverdell ESA after he or she reaches age 18, unless the beneficiary is a special needs beneficiary. How to file 1040ez online Modified adjusted gross income (MAGI). How to file 1040ez online   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. How to file 1040ez online MAGI when using Form 1040A. How to file 1040ez online   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. How to file 1040ez online MAGI when using Form 1040. How to file 1040ez online   If you file Form 1040, your MAGI is the AGI on line 38 of that form, modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. How to file 1040ez online MAGI when using Form 1040NR. How to file 1040ez online   If you file Form 1040NR, your MAGI is the AGI on line 36 of that form. How to file 1040ez online MAGI when using Form 1040NR-EZ. How to file 1040ez online   If you file Form 1040NR-EZ, your MAGI is the AGI on line 10 of that form. How to file 1040ez online   If you have any of these adjustments, you can use Worksheet 7-1. How to file 1040ez online MAGI for a Coverdell ESA , later, to figure your MAGI for Form 1040. How to file 1040ez online Worksheet 7-1. How to file 1040ez online MAGI for a Coverdell ESA 1. How to file 1040ez online Enter your adjusted gross income  (Form 1040, line 38)   1. How to file 1040ez online   2. How to file 1040ez online Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. How to file 1040ez online       3. How to file 1040ez online Enter your foreign housing deduction (Form 2555, line 50)   3. How to file 1040ez online         4. How to file 1040ez online Enter the amount of income from Puerto Rico you are excluding   4. How to file 1040ez online       5. How to file 1040ez online Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. How to file 1040ez online       6. How to file 1040ez online Add lines 2, 3, 4, and 5   6. How to file 1040ez online   7. How to file 1040ez online Add lines 1 and 6. How to file 1040ez online This is your  modified adjusted gross income   7. How to file 1040ez online   Figuring the limit. How to file 1040ez online    To figure the limit on the amount you can contribute for each designated beneficiary, multiply $2,000 by a fraction. How to file 1040ez online The numerator (top number) is your MAGI minus $95,000 ($190,000 if filing a joint return). How to file 1040ez online The denominator (bottom number) is $15,000 ($30,000 if filing a joint return). How to file 1040ez online Subtract the result from $2,000. How to file 1040ez online This is the amount you can contribute for each beneficiary. How to file 1040ez online You can use Worksheet 7-2. How to file 1040ez online Coverdell ESA Contribution Limit to figure the limit on contributions. How to file 1040ez online    Worksheet 7-2. How to file 1040ez online Coverdell ESA Contribution Limit 1. How to file 1040ez online Maximum contribution   1. How to file 1040ez online $2,000 2. How to file 1040ez online 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. How to file 1040ez online   3. How to file 1040ez online Enter $190,000 if married filing jointly; $95,000 for all other filers   3. How to file 1040ez online   4. How to file 1040ez online Subtract line 3 from line 2. How to file 1040ez online If zero or less, enter -0- on line 4, skip lines 5 through 7, and enter $2,000 on line 8   4. How to file 1040ez online   5. How to file 1040ez online Enter $30,000 if married filing jointly; $15,000 for all other filers   5. How to file 1040ez online     Note. How to file 1040ez online If the amount on line 4 is greater than or equal to the amount on line 5, stop here. How to file 1040ez online You are not allowed to contribute to a Coverdell ESA for 2013. How to file 1040ez online       6. How to file 1040ez online Divide line 4 by line 5 and enter the result as a decimal (rounded to at least 3 places)   6. How to file 1040ez online . How to file 1040ez online 7. How to file 1040ez online Multiply line 1 by line 6   7. How to file 1040ez online   8. How to file 1040ez online Subtract line 7 from line 1   8. How to file 1040ez online   Note: The total Coverdell ESA contributions from all sources for the designated beneficiary during the tax year may not exceed $2,000. How to file 1040ez online Example. How to file 1040ez online Paul, who is single, had a MAGI of $96,500 for 2013. How to file 1040ez online 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. How to file 1040ez online Worksheet 7-2. How to file 1040ez online Coverdell ESA Contribution Limit—Illustrated 1. How to file 1040ez online Maximum contribution   1. How to file 1040ez online $2,000 2. How to file 1040ez online 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. How to file 1040ez online 96,500 3. How to file 1040ez online Enter $190,000 if married filing jointly; $95,000 for all other filers   3. How to file 1040ez online 95,000 4. How to file 1040ez online Subtract line 3 from line 2. How to file 1040ez online If zero or less, enter -0- on line 4, skip lines 5 through 7, and enter $2,000 on line 8   4. How to file 1040ez online 1,500 5. How to file 1040ez online Enter $30,000 if married filing jointly; $15,000 for all other filers   5. How to file 1040ez online 15,000   Note. How to file 1040ez online If the amount on line 4 is greater than or equal to the amount on line 5,  stop here. How to file 1040ez online You are not allowed to  contribute to a Coverdell ESA for 2013. How to file 1040ez online       6. How to file 1040ez online Divide line 4 by line 5 and enter the result as a decimal (rounded to at least 3 places)   6. How to file 1040ez online . How to file 1040ez online 100 7. How to file 1040ez online Multiply line 1 by line 6   7. How to file 1040ez online 200 8. How to file 1040ez online Subtract line 7 from line 1   8. How to file 1040ez online 1,800 Note: The total Coverdell ESA contributions from all sources for the designated beneficiary during the tax year may not exceed $2,000. How to file 1040ez online Additional Tax on Excess Contributions The beneficiary must pay a 6% excise tax each year on excess contributions that are in a Coverdell ESA at the end of the year. How to file 1040ez online Excess contributions are the total of the following two amounts. How to file 1040ez online Contributions to any designated beneficiary's Coverdell ESA for the year that are more than $2,000 (or, if less, the total of each contributor's limit for the year, as discussed earlier). How to file 1040ez online Excess contributions for the preceding year, reduced by the total of the following two amounts: Distributions (other than those rolled over as discussed later) during the year, and The contribution limit for the current year minus the amount contributed for the current year. How to file 1040ez online Exceptions. How to file 1040ez online   The excise tax does not apply if excess contributions made during 2013 (and any earnings on them) are distributed before the first day of the sixth month of the following tax year (June 1, 2014, for a calendar year taxpayer). How to file 1040ez online   However, you must include the distributed earnings in gross income for the year in which the excess contribution was made. How to file 1040ez online You should receive Form 1099-Q, Payments From Qualified Education Programs, from each institution from which excess contributions were distributed. How to file 1040ez online Box 2 of that form will show the amount of earnings on your excess contributions. How to file 1040ez online Code “2” or “3” entered in the blank box below boxes 5 and 6 indicate the year in which the earnings are taxable. How to file 1040ez online See Instructions for Recipient on the back of copy B of your Form 1099-Q. How to file 1040ez online Enter the amount of earnings on line 21 of Form 1040 (or Form 1040NR) for the applicable tax year. How to file 1040ez online For more information, see Taxable Distributions , later. How to file 1040ez online   The excise tax does not apply to any rollover contribution. How to file 1040ez online Note. How to file 1040ez online Contributions made in one year for the preceding tax year are considered to have been made on the last day of the preceding year. How to file 1040ez online Example. How to file 1040ez online In 2012, Greta's parents and grandparents contributed a total of $2,300 to Greta's Coverdell ESA— an excess contribution of $300. How to file 1040ez online Because Greta did not withdraw the excess before June 1, 2013, she had to pay an additional tax of $18 (6% × $300) when she filed her 2012 tax return. How to file 1040ez online In 2013, excess contributions of $500 were made to Greta's account, however, she withdrew $250 from that account to use for qualified education expenses. How to file 1040ez online Using the steps shown earlier under Additional Tax on Excess Contributions , Greta figures the excess contribution in her account at the end of 2013 as follows. How to file 1040ez online (1)   $500 excess contributions made in 2013     + (2)   $300 excess contributions in ESA at end of 2012     − (2a)   $250 distribution during 2013         $550 excess at end of 2013   × 6%=$33           If Greta limits 2014 contributions to $1,450 ($2,000 maximum allowed − $550 excess contributions from 2013), she will not owe any additional tax in 2014 for excess contributions. How to file 1040ez online Figuring and reporting the additional tax. How to file 1040ez online   You figure this excise tax in Part V of Form 5329. How to file 1040ez online Report the additional tax on Form 1040, line 58 (or Form 1040NR, line 56). How to file 1040ez online Rollovers and Other Transfers Assets can be rolled over from one Coverdell ESA to another or the designated beneficiary can be changed. How to file 1040ez online The beneficiary's interest can be transferred to a spouse or former spouse because of divorce. How to file 1040ez online Rollovers Any amount distributed from a Coverdell ESA is not taxable if it is rolled over to another Coverdell ESA for the benefit of the same beneficiary or a member of the beneficiary's family (including the beneficiary's spouse) who is under age 30. How to file 1040ez online This age limitation does not apply if the new beneficiary is a special needs beneficiary. How to file 1040ez online An amount is rolled over if it is paid to another Coverdell ESA within 60 days after the date of the distribution. How to file 1040ez online Do not report qualifying rollovers (those that meet the above criteria) anywhere on Form 1040 or 1040NR. How to file 1040ez online These are not taxable distributions. How to file 1040ez online Members of the beneficiary's family. How to file 1040ez online   For these purposes, the beneficiary's family includes the beneficiary's spouse and the following other relatives of the beneficiary. How to file 1040ez online Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them. How to file 1040ez online Brother, sister, stepbrother, or stepsister. How to file 1040ez online Father or mother or ancestor of either. How to file 1040ez online Stepfather or stepmother. How to file 1040ez online Son or daughter of a brother or sister. How to file 1040ez online Brother or sister of father or mother. How to file 1040ez online Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. How to file 1040ez online The spouse of any individual listed above. How to file 1040ez online First cousin. How to file 1040ez online Example. How to file 1040ez online When Aaron graduated from college last year he had $5,000 left in his Coverdell ESA. How to file 1040ez online He wanted to give this money to his younger sister, who was still in high school. How to file 1040ez online In order to avoid paying tax on the distribution of the amount remaining in his account, Aaron contributed the same amount to his sister's Coverdell ESA within 60 days of the distribution. How to file 1040ez online Only one rollover per Coverdell ESA is allowed during the 12-month period ending on the date of the payment or distribution. How to file 1040ez online This rule does not apply to the rollover of a military death gratuity or payment from Servicemembers' Group Life Insurance (SGLI). How to file 1040ez online Military death gratuity. How to file 1040ez online   If you received a military death gratuity or a payment from Servicemembers' Group Life Insurance (SGLI), you may roll over all or part of the amount received to one or more Coverdell ESAs for the benefit of members of the beneficiary's family (see Members of the beneficiary's family , earlier). How to file 1040ez online Such payments are made to an eligible survivor upon the death of a member of the armed forces. How to file 1040ez online The contribution to a Coverdell ESA from survivor benefits received cannot be made later than 1 year after the date on which you receive the gratuity or SGLI payment. How to file 1040ez online   This rollover contribution is not subject to (but is in addition to) the contribution limits discussed earlier under Contribution Limits . How to file 1040ez online The amount you roll over cannot exceed the total survivor benefits you received, reduced by contributions from these benefits to a Roth IRA or other Coverdell ESAs. How to file 1040ez online   The amount contributed from the survivor benefits is treated as part of your basis (cost) in the Coverdell ESA, and will not be taxed when distributed. How to file 1040ez online See Distributions , later. How to file 1040ez online The limit of one rollover per Coverdell ESA during a 12-month period does not apply to a military death gratuity or SGLI payment. How to file 1040ez online Changing the Designated Beneficiary The designated beneficiary can be changed. How to file 1040ez online See Members of the beneficiary's family , earlier. How to file 1040ez online There are no tax consequences if, at the time of the change, the new beneficiary is under age 30 or is a special needs beneficiary. How to file 1040ez online Example. How to file 1040ez online Assume the same situation for Aaron as in the last example (see Rollovers , earlier). How to file 1040ez online Instead of closing his Coverdell ESA and paying the distribution into his sister's Coverdell ESA, Aaron could have instructed the trustee of his account to simply change the name of the beneficiary on his account to that of his sister. How to file 1040ez online Transfer Because of Divorce If a spouse or former spouse receives a Coverdell ESA under a divorce or separation instrument, it is not a taxable transfer. How to file 1040ez online After the transfer, the spouse or former spouse treats the Coverdell ESA as his or her own. How to file 1040ez online Example. How to file 1040ez online In their divorce settlement, Peg received her ex-husband's Coverdell ESA. How to file 1040ez online In this process, the account was transferred into her name. How to file 1040ez online Peg now treats the funds in this Coverdell ESA as if she were the original owner. How to file 1040ez online Distributions The designated beneficiary of a Coverdell ESA can take a distribution at any time. How to file 1040ez online Whether the distributions are tax free depends, in part, on whether the distributions are equal to or less than the amount of Adjusted qualified education expenses (defined later) that the beneficiary has in the same tax year. How to file 1040ez online See Table 7-3, Coverdell ESA Distributions at a Glance, for highlights. How to file 1040ez online Table 7-3. How to file 1040ez online Coverdell ESA Distributions at a Glance Do not rely on this table alone. How to file 1040ez online It provides only general highlights. How to file 1040ez online See the text for definitions of terms in bold type and for more complete explanations. How to file 1040ez online Question Answer Is a distribution from a Coverdell ESA to pay for a designated beneficiary's qualified education expenses tax free? Generally, yes, to the extent the amount of the distribution is not more than the designated beneficiary's adjusted qualified education expenses. How to file 1040ez online After the designated beneficiary completes his or her education at an eligible educational institution, can amounts remaining in the Coverdell ESA be distributed? Yes. How to file 1040ez online Amounts must be distributed when the designated beneficiary reaches age 30, unless he or she is a special needs beneficiary. How to file 1040ez online Also, certain transfers to members of the beneficiary's family are permitted. How to file 1040ez online Does the designated beneficiary need to be enrolled for a minimum number of courses to take a tax-free distribution? No. How to file 1040ez online Adjusted qualified education expenses. How to file 1040ez online   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. How to file 1040ez online 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. How to file 1040ez online The amount you get by subtracting tax-free educational assistance from your total qualified education expenses is your adjusted qualified education expenses. How to file 1040ez online Tax-Free Distributions Generally, distributions are tax free if they are not more than the beneficiary's adjusted qualified education expenses for the year. How to file 1040ez online Do not report tax-free distributions (including qualifying rollovers) on your tax return. How to file 1040ez online Taxable Distributions A portion of the distributions is generally taxable to the beneficiary if the total distributions are more than the beneficiary's adjusted qualified education expenses for the year. How to file 1040ez online Excess distribution. How to file 1040ez online   This is the part of the total distribution that is more than the beneficiary's adjusted qualified education expenses for the year. How to file 1040ez online Earnings and basis. How to file 1040ez online   You will receive a Form 1099-Q for each of the Coverdell ESAs from which money was distributed in 2013. How to file 1040ez online The amount of your gross distribution will be shown in box 1. How to file 1040ez online 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. How to file 1040ez online This will be shown in the blank box below boxes 5 and 6. How to file 1040ez online   The amount contributed from survivor benefits (see Military death gratuity , earlier) is treated as part of your basis and will not be taxed when distributed. How to file 1040ez online Figuring the Taxable Portion of a Distribution The taxable portion is the amount of the excess distribution that represents earnings that have accumulated tax free in the account. How to file 1040ez online Figure the taxable portion for 2013 as shown in the following steps. How to file 1040ez online Multiply the total amount distributed by a fraction. How to file 1040ez online The numerator is the basis (contributions not previously distributed) at the end of 2012 plus total contributions for 2013 and the denominator is the value (balance) of the account at the end of 2013 plus the amount distributed during 2013. How to file 1040ez online Subtract the amount figured in (1) from the total amount distributed during 2013. How to file 1040ez online The result is the amount of earnings included in the distribution(s). How to file 1040ez online Multiply the amount of earnings figured in (2) by a fraction. How to file 1040ez online The numerator is the adjusted qualified education expenses paid during 2013 and the denominator is the total amount distributed during 2013. How to file 1040ez online Subtract the amount figured in (3) from the amount figured in (2). How to file 1040ez online The result is the amount the beneficiary must include in income. How to file 1040ez online The taxable amount must be reported on Form 1040 or Form 1040NR, line 21. How to file 1040ez online Example. How to file 1040ez online You received an $850 distribution from your Coverdell ESA, to which $1,500 had been contributed before 2013. How to file 1040ez online There were no contributions in 2013. How to file 1040ez online This is your first distribution from the account, so your basis in the account on December 31, 2012, was $1,500. How to file 1040ez online The value (balance) of your account on December 31, 2013, was $950. How to file 1040ez online You had $700 of adjusted qualified education expenses (AQEE) for the year. How to file 1040ez online Using the steps in Figuring the Taxable Portion of a Distribution , earlier, figure the taxable portion of your distribution as follows. How to file 1040ez online   1. How to file 1040ez online $850 (distribution) × $1,500 basis + $0 contributions  $950 value + $850 distribution       =$708 (basis portion of distribution)     2. How to file 1040ez online $850 (distribution)−$708 (basis portion of distribution)     =$142 (earnings included in distribution)   3. How to file 1040ez online $142 (earnings) × $700 AQEE  $850 distribution           =$117 (tax-free earnings)     4. How to file 1040ez online $142 (earnings)−$117 (tax-free earnings)=$25 (taxable earnings)                 You must include $25 in income as distributed earnings not used for qualified education expenses. How to file 1040ez online Report this amount on Form 1040, line 21, listing the type and amount of income on the dotted line. How to file 1040ez online 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). How to file 1040ez online 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. How to file 1040ez online 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. How to file 1040ez online Example. How to file 1040ez online Derek Green had $5,800 of qualified higher education expenses for 2013, his first year in college. How to file 1040ez online He paid his college expenses from the following sources. How to file 1040ez online     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. How to file 1040ez online Derek's parents claimed a $2,500 American opportunity credit (based on $4,000 expenses) on their tax return. How to file 1040ez online Before Derek can determine the taxable portion of his Coverdell ESA distribution, he must reduce his total qualified higher education expenses. How to file 1040ez online     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. How to file 1040ez online The balance in Derek's account was $1,800 on December 31, 2013. How to file 1040ez online Prior to 2013, $2,100 had been contributed to this account. How to file 1040ez online Contributions for 2013 totaled $400. How to file 1040ez online Using the four steps outlined earlier, Derek figures the taxable portion of his distribution as shown below. How to file 1040ez online   1. How to file 1040ez online $1,000 (distribution) × $2,100 basis + $400 contributions  $1,800 value + $1,000 distribution           =$893 (basis portion of distribution)     2. How to file 1040ez online $1,000 (distribution)−$893 (basis portion of distribution)     = $107 (earnings included in distribution)   3. How to file 1040ez online $107 (earnings) × $300 AQHEE  $1,000 distribution       =$32 (tax-free earnings)     4. How to file 1040ez online $107 (earnings)−$32 (tax-free earnings)=$75 (taxable earnings)                 Derek must include $75 in income (Form 1040, line 21). How to file 1040ez online This is the amount of distributed earnings not used for adjusted qualified higher education expenses. How to file 1040ez online Coordination With Qualified Tuition Program (QTP) Distributions If a designated beneficiary receives distributions from both a Coverdell ESA and a QTP in the same year, and the total distribution is more than the beneficiary's adjusted qualified higher education expenses, those expenses must be allocated between the distribution from the Coverdell ESA and the distribution from the QTP before figuring how much of each distribution is taxable. How to file 1040ez online The following two examples illustrate possible allocations. How to file 1040ez online Example 1. How to file 1040ez online In 2013, Beatrice graduated from high school and began her first semester of college. How to file 1040ez online That year, she had $1,000 of qualified elementary and secondary education expenses (QESEE) for high school and $3,000 of qualified higher education expenses (QHEE) for college. How to file 1040ez online To pay these expenses, Beatrice withdrew $800 from her Coverdell ESA and $4,200 from her QTP. How to file 1040ez online No one claimed Beatrice as a dependent, nor was she eligible for an education credit. How to file 1040ez online She did not receive any tax-free educational assistance in 2013. How to file 1040ez online Beatrice must allocate her total qualified education expenses between the two distributions. How to file 1040ez online 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. How to file 1040ez online The qualified expenses are greater than the distribution, making the $800 Coverdell ESA distribution tax free. How to file 1040ez online Next, Beatrice matches her $4,200 QTP distribution to her $3,000 of QHEE, and finds she has an excess QTP distribution of $1,200 ($4,200 QTP − $3,000 QHEE). How to file 1040ez online 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. How to file 1040ez online Finally, Beatrice figures the taxable and tax-free portions of her QTP distribution based on her $3,000 of QHEE. How to file 1040ez online (See Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program for more information. How to file 1040ez online ) Example 2. How to file 1040ez online Assume the same facts as in Example 1 , except that Beatrice withdrew $1,800 from her Coverdell ESA and $3,200 from her QTP. How to file 1040ez online In this case, she allocates her qualified education expenses as follows. How to file 1040ez online Using the same reasoning as in Example 1, Beatrice matches $1,000 of her Coverdell ESA distribution to her $1,000 of QESEE—she has $800 of her distribution remaining. How to file 1040ez online 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). How to file 1040ez online   $3,000 QHEE × $800 ESA distribution  $4,000 total distribution = $600 QHEE (ESA)     $3,000 QHEE × $3,200 QTP distribution  $4,000 total distribution = $2,400 QHEE (QTP)   Beatrice then figures the taxable part of her: Coverdell ESA distribution based on qualified education expenses of $1,600 ($1,000 QESEE + $600 QHEE). How to file 1040ez online See Figuring the Taxable Portion of a Distribution , earlier, in this chapter. How to file 1040ez online   QTP distribution based on her $2,400 of QHEE (see Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program). How to file 1040ez online The above examples show two types of allocation between distributions from a Coverdell ESA and a QTP. How to file 1040ez online However, you do not have to allocate your expenses in the same way. How to file 1040ez online You can use any reasonable method. How to file 1040ez online Losses on Coverdell ESA Investments If you have a loss on your investment in a Coverdell ESA, you may be able to deduct the loss on your income tax return. How to file 1040ez online You can deduct the loss only when all amounts from that account have been distributed and the total distributions are less than your unrecovered basis. How to file 1040ez online Your basis is the total amount of contributions to that Coverdell ESA. How to file 1040ez online 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. How to file 1040ez online If you have distributions from more than one Coverdell ESA account during a year, you must combine the information (amount of distribution, basis, etc. How to file 1040ez online ) from all such accounts in order to determine your taxable earnings for the year. How to file 1040ez online By doing this, the loss from one ESA account reduces the distributed earnings (if any) from any other ESA account. How to file 1040ez online For examples of the calculation, see Losses on QTP Investments in chapter 8, Qualified Tuition Program. How to file 1040ez online Additional Tax on Taxable Distributions Generally, if you receive a taxable distribution, you also must pay a 10% additional tax on the amount included in income. How to file 1040ez online Exceptions. How to file 1040ez online   The 10% additional tax does not apply to distributions: Paid to a beneficiary (or to the estate of the designated beneficiary) on or after the death of the designated beneficiary. How to file 1040ez online Made because the designated beneficiary is disabled. How to file 1040ez online A person is considered to be disabled if he or she shows proof that he or she cannot do any substantial gainful activity because of his or her physical or mental condition. How to file 1040ez online 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. How to file 1040ez online 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. How to file 1040ez online Made on account of the attendance of the designated beneficiary at a U. How to file 1040ez online S. How to file 1040ez online military academy (such as the USMA at West Point). How to file 1040ez online This exception applies only to the extent that the amount of the distribution does not exceed the costs of advanced education (as defined in section 2005(d)(3) of title 10 of the U. How to file 1040ez online S. How to file 1040ez online Code) attributable to such attendance. How to file 1040ez online Included in income only because the qualified education expenses were taken into account in determining the American opportunity or lifetime learning credit (see Coordination With American Opportunity and Lifetime Learning Credits , earlier). How to file 1040ez online Made before June 1, 2014, of an excess 2013 contribution (and any earnings on it). How to file 1040ez online The distributed earnings must be included in gross income for the year in which the excess contribution was made. How to file 1040ez online Exception (3) applies only to the extent the distribution is not more than the scholarship, allowance, or payment. How to file 1040ez online Figuring the additional tax. How to file 1040ez online    Use Part II of Form 5329, to figure any additional tax. How to file 1040ez online Report the amount on Form 1040, line 58, or Form 1040NR, line 56. How to file 1040ez online When Assets Must Be Distributed Any assets remaining in a Coverdell ESA must be distributed when either one of the following two events occurs. How to file 1040ez online The designated beneficiary reaches age 30. How to file 1040ez online In this case, the remaining assets must be distributed within 30 days after the beneficiary reaches age 30. How to file 1040ez online However, this rule does not apply if the beneficiary is a special needs beneficiary. How to file 1040ez online The designated beneficiary dies before reaching age 30. How to file 1040ez online In this case, the remaining assets must generally be distributed within 30 days after the date of death. How to file 1040ez online Exception for Transfer to Surviving Spouse or Family Member If a Coverdell ESA is transferred to a surviving spouse or other family member as the result of the death of the designated beneficiary, the Coverdell ESA retains its status. How to file 1040ez online (“Family member” was defined earlier under Rollovers . How to file 1040ez online ) This means the spouse or other family member can treat the Coverdell ESA as his or her own and does not need to withdraw the assets until he or she reaches age 30. How to file 1040ez online This age limitation does not apply if the new beneficiary is a special needs beneficiary. How to file 1040ez online There are no tax consequences as a result of the transfer. How to file 1040ez online How To Figure the Taxable Earnings When a total distribution is made because the designated beneficiary either reached age 30 or died, the earnings that accumulated tax free in the account must be included in taxable income. How to file 1040ez online You determine these earnings as shown in the following two steps. How to file 1040ez online Multiply the amount distributed by a fraction. How to file 1040ez online The numerator is the basis (contributions not previously distributed) at the end of 2012 plus total contributions for 2013 and the denominator is the balance in the account at the end of 2013 plus the amount distributed during 2013. How to file 1040ez online Subtract the amount figured in (1) from the total amount distributed during 2013. How to file 1040ez online The result is the amount of earnings included in the distribution. How to file 1040ez online For an example, see steps (1) and (2) of the Example under Figuring the Taxable Portion of a Distribution, earlier. How to file 1040ez online The beneficiary or other person receiving the distribution must report this amount on Form 1040, line 21, or Form 1040NR, line 21, listing the type and amount of income on the dotted line. How to file 1040ez online Worksheet 7-3 Instructions. How to file 1040ez online Coverdell ESA—Taxable Distributions and Basis Line G. How to file 1040ez online Enter the total distributions received from all Coverdell ESAs during 2013. How to file 1040ez online Do not include amounts rolled over to another ESA within 60 days (only one rollover is allowed during any 12-month period). How to file 1040ez online Also, do not include excess contributions that were distributed with the related earnings (or less any loss) before the first day of the sixth month of the tax year following the year for which the contributions were made. How to file 1040ez online Line 2. How to file 1040ez online 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. How to file 1040ez online   If your last distribution from this Coverdell ESA was before 2013, you must start with the basis in your account as of the end of the last year in which you took a distribution. How to file 1040ez online For years before 2002, you can find that amount on the last line of the worksheet in the Instructions for Form 8606, Nondeductible IRAs, that you completed for that year. How to file 1040ez online For years after 2001, you can find that amount by using the ending basis from the worksheet in Publication 970 for that year. How to file 1040ez online You can determine your basis in this Coverdell ESA as of December 31, 2012, by adding to the basis as of the end of that year any contributions made to that account after the year of the distribution and before 2013. How to file 1040ez online Line 4. How to file 1040ez online Enter the total distributions received from this Coverdell ESA in 2013. How to file 1040ez online Do not include amounts rolled over to another Coverdell ESA within 60 days (only one rollover is allowed during any 12-month period). How to file 1040ez online   Also, do not include excess contributions that were distributed with the related earnings (or less any loss) before the first day of the sixth month of the tax year following the year of the contributions. How to file 1040ez online Line 7. How to file 1040ez online 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. How to file 1040ez online A statement should be sent to you by January 31, 2014, for this Coverdell ESA showing the value on December 31, 2013. How to file 1040ez online   A rollover is a tax-free withdrawal from one Coverdell ESA that is contributed to another Coverdell ESA. How to file 1040ez online 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. How to file 1040ez online Worksheet 7-3. How to file 1040ez online Coverdell ESA—Taxable Distributions and Basis How to complete this worksheet. How to file 1040ez online • • • Complete Part I, lines A through H, on only one worksheet. How to file 1040ez online  Complete a separate Part II, lines 1 through 15, for each of your Coverdell ESAs. How to file 1040ez online  Complete Part III, the Summary (line 16), on only one worksheet. How to file 1040ez online Part I. How to file 1040ez online Qualified Education Expenses (Complete for total expenses)       A. How to file 1040ez online Enter your total qualified education expenses for 2013   A. How to file 1040ez online   B. How to file 1040ez online 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. How to file 1040ez online         C. How to file 1040ez online Enter those qualified higher education expenses deducted on Schedule C or C-EZ (Form 1040). How to file 1040ez online Schedule F (Form 1040), or as a miscellaneous itemized deduction on Schedule A (Form 1040 or 1040NR)   C. How to file 1040ez online         D. How to file 1040ez online Enter those qualified higher education expenses on which  an American opportunity or lifetime learning credit was based   D. How to file 1040ez online         E. How to file 1040ez online Add lines B, C, and D   D. How to file 1040ez online   F. How to file 1040ez online Subtract line E from line A. How to file 1040ez online This is your adjusted qualified education expense for 2013   E. How to file 1040ez online   G. How to file 1040ez online Enter your total distributions from all Coverdell ESAs during 2013. How to file 1040ez online Do not include rollovers  or the return of excess contributions (see instructions)   F. How to file 1040ez online   H. How to file 1040ez online Divide line F by line G. How to file 1040ez online Enter the result as a decimal (rounded to at least 3 places). How to file 1040ez online If the  result is 1. How to file 1040ez online 000 or more, enter 1. How to file 1040ez online 000   G. How to file 1040ez online . How to file 1040ez online Part II. How to file 1040ez online Taxable Distributions and Basis (Complete separately for each account) 1. How to file 1040ez online Enter the amount contributed to this Coverdell ESA for 2013, including contributions made for 2013 from January 1, 2014, through April 15, 2014. How to file 1040ez online Do not include rollovers or the return of excess contributions   1. How to file 1040ez online   2. How to file 1040ez online Enter your basis in this Coverdell ESA as of December 31, 2012 (see instructions)   2. How to file 1040ez online   3. How to file 1040ez online Add lines 1 and 2   3. How to file 1040ez online   4. How to file 1040ez online Enter the total distributions from this Coverdell ESA during 2013. How to file 1040ez online Do not include rollovers  or the return of excess contributions (see instructions)   4. How to file 1040ez online   5. How to file 1040ez online Multiply line 4 by line H. How to file 1040ez online This is the amount of adjusted qualified  education expense attributable to this Coverdell ESA   5. How to file 1040ez online         6. How to file 1040ez online Subtract line 5 from line 4   6. How to file 1040ez online         7. How to file 1040ez online Enter the total value of this Coverdell ESA as of December 31, 2013,  plus any outstanding rollovers (see instructions)   7. How to file 1040ez online         8. How to file 1040ez online Add lines 4 and 7   8. How to file 1040ez online         9. How to file 1040ez online Divide line 3 by line 8. How to file 1040ez online Enter the result as a decimal (rounded to  at least 3 places). How to file 1040ez online If the result is 1. How to file 1040ez online 000 or more, enter 1. How to file 1040ez online 000   9. How to file 1040ez online . How to file 1040ez online       10. How to file 1040ez online Multiply line 4 by line 9. How to file 1040ez online This is the amount of basis allocated to your  distributions, and is tax free   10. How to file 1040ez online     Note. How to file 1040ez online If line 6 is zero, skip lines 11 through 13, enter -0- on line 14, and go to line 15. How to file 1040ez online       11. How to file 1040ez online Subtract line 10 from line 4   11. How to file 1040ez online   12. How to file 1040ez online Divide line 5 by line 4. How to file 1040ez online Enter the result as a decimal (rounded to  at least 3 places). How to file 1040ez online If the result is 1. How to file 1040ez online 000 or more, enter 1. How to file 1040ez online 000   12. How to file 1040ez online . How to file 1040ez online       13. How to file 1040ez online Multiply line 11 by line 12. How to file 1040ez online This is the amount of qualified education  expenses allocated to your distributions, and is tax free   13. How to file 1040ez online   14. How to file 1040ez online Subtract line 13 from line 11. How to file 1040ez online This is the portion of the distributions from this  Coverdell ESA in 2013 that you must include in income   14. How to file 1040ez online   15. How to file 1040ez online Subtract line 10 from line 3. How to file 1040ez online This is your basis in this Coverdell ESA as of December 31, 2013   15. How to file 1040ez online   Part III. How to file 1040ez online Summary (Complete only once)       16. How to file 1040ez online Taxable amount. How to file 1040ez online Add together all amounts on line 14 for all your Coverdell ESAs. How to file 1040ez online Enter here  and include on Form 1040, line 21, or Form 1040NR, line 21, listing the type and amount of income on the dotted line   16. How to file 1040ez online   Prev  Up  Next   Home   More Online Publications
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How to file 1040ez online 3. How to file 1040ez online   Section 501(c)(3) Organizations Table of Contents IntroductionChild care organizations. How to file 1040ez online Topics - This chapter discusses: Useful Items - You may want to see: Contributions to 501(c)(3) OrganizationsCertain annuity contracts. How to file 1040ez online Certain contracts held by a charitable remainder trust. How to file 1040ez online Excise Taxes. How to file 1040ez online Indoor tanning services. How to file 1040ez online Application for Recognition of ExemptionPolitical activity. How to file 1040ez online Private delivery service. How to file 1040ez online Amendments to organizing documents required. How to file 1040ez online How to show reasonable action and good faith. How to file 1040ez online Not acting reasonably and in good faith. How to file 1040ez online Prejudicing the interest of the Government. How to file 1040ez online Procedure for requesting extension. How to file 1040ez online More information. How to file 1040ez online Organizations Not Required To File Form 1023 Articles of OrganizationOrganizational Test Dedication and Distribution of Assets Educational Organizations and Private SchoolsEducational Organizations Private Schools Organizations Providing InsuranceCharitable Risk Pools Other Section 501(c)(3) OrganizationsCharitable Organizations Religious Organizations Scientific Organizations Literary Organizations Amateur Athletic Organizations Prevention of Cruelty to Children or Animals Private Foundations and Public CharitiesPrivate Foundations Public Charities Private Operating Foundations Lobbying ExpendituresLobbying expenditures. How to file 1040ez online Grass roots expenditures. How to file 1040ez online Lobbying nontaxable amount. How to file 1040ez online Grass roots nontaxable amount. How to file 1040ez online Organization that no longer qualifies. How to file 1040ez online Tax on organization. How to file 1040ez online Tax on managers. How to file 1040ez online Taxes on organizations. How to file 1040ez online Taxes on managers. How to file 1040ez online Political expenditures. How to file 1040ez online Correction of expenditure. How to file 1040ez online Introduction An organization may qualify for exemption from federal income tax if it is organized and operated exclusively for one or more of the following purposes. How to file 1040ez online Religious. How to file 1040ez online Charitable. How to file 1040ez online Scientific. How to file 1040ez online Testing for public safety. How to file 1040ez online Literary. How to file 1040ez online Educational. How to file 1040ez online Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment; however, see Amateur Athletic Organizations , later in this chapter). How to file 1040ez online The prevention of cruelty to children or animals. How to file 1040ez online To qualify, the organization must be a corporation, community chest, fund, articles of association, or foundation. How to file 1040ez online A trust is a fund or foundation and will qualify. How to file 1040ez online However, an individual or a partnership will not qualify. How to file 1040ez online Examples. How to file 1040ez online   Qualifying organizations include: Nonprofit old-age homes, Parent-teacher associations, Charitable hospitals or other charitable organizations, Alumni associations, Schools, Chapters of the Red Cross, Boys' or Girls' Clubs, and Churches. How to file 1040ez online Child care organizations. How to file 1040ez online   The term educational purposes includes providing for care of children away from their homes if substantially all the care provided is to enable individuals (the parents) to be gainfully employed and the services are available to the general public. How to file 1040ez online Instrumentalities. How to file 1040ez online   A state or municipal instrumentality may qualify under section 501(c)(3) if it is organized as a separate entity from the governmental unit that created it and if it otherwise meets the organizational and operational tests of section 501(c)(3). How to file 1040ez online Examples of a qualifying instrumentality might include state schools, universities, or hospitals. How to file 1040ez online However, if an organization is an integral part of the local government or possesses governmental powers, it does not qualify for exemption. How to file 1040ez online A state or municipality itself does not qualify for exemption. How to file 1040ez online Topics - This chapter discusses: Contributions to 501(c)(3) organizations, Applications for recognition of exemption, Articles of Organization, Educational organizations and private schools, Organizations providing insurance, Other section 501(c)(3) organizations, Private foundations and public charities, and Lobbying expenditures. How to file 1040ez online Useful Items - You may want to see: Forms (and Instructions) 1023 Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code See chapter 6 for information about getting publications and forms. How to file 1040ez online Contributions to 501(c)(3) Organizations Contributions to domestic organizations described in this chapter, except organizations testing for public safety, are deductible as charitable contributions on the donor's federal income tax return. How to file 1040ez online Fundraising events. How to file 1040ez online   If the donor receives something of value in return for the contribution, a common occurrence with fundraising efforts, part or all of the contribution may not be deductible. How to file 1040ez online This may apply to fundraising activities such as charity balls, bazaars, banquets, auctions, concerts, athletic events, and solicitations for membership or contributions when merchandise or benefits are given in return for payment of a specified minimum contribution. How to file 1040ez online   If the donor receives or expects to receive goods or services in return for a contribution to your organization, the donor cannot deduct any part of the contribution unless the donor intends to, and does, make a payment greater than the fair market value of the goods or services. How to file 1040ez online If a deduction is allowed, the donor can deduct only the part of the contribution, if any, that is more than the fair market value of the goods or services received. How to file 1040ez online You should determine in advance the fair market value of any goods or services to be given to contributors and tell them, when you publicize the fundraising event or solicit their contributions, how much is deductible and how much is for the goods or services. How to file 1040ez online See Disclosure of Quid Pro Quo Contributions in chapter 2. How to file 1040ez online Exemption application not filed. How to file 1040ez online   Donors cannot deduct any charitable contribution to an organization that is required to apply for recognition of exemption but has not done so. How to file 1040ez online Separate fund—contributions that are deductible. How to file 1040ez online   An organization that is exempt from federal income tax other than as an organization described in section 501(c)(3) can, if it desires, establish a fund, separate and apart from its other funds, exclusively for religious, charitable, scientific, literary, or educational purposes, fostering national or international amateur sports competition, or for the prevention of cruelty to children or animals. How to file 1040ez online   If the fund is organized and operated exclusively for these purposes, it may qualify for exemption as an organization described in section 501(c)(3), and contributions made to it will be deductible as provided by section 170. How to file 1040ez online A fund with these characteristics must be organized in such a manner as to prohibit the use of its funds upon dissolution, or otherwise, for the general purposes of the organization creating it. How to file 1040ez online Personal benefit contracts. How to file 1040ez online   Generally, charitable deductions will not be allowed for a transfer to, or for the use of, a section 501(c)(3) or (c)(4) organization if in connection with the transfer: The organization directly or indirectly pays, or previously paid, a premium on a personal benefit contract for the transferor, or There is an understanding or expectation that anyone will directly or indirectly pay a premium on a personal benefit contract for the transferor. How to file 1040ez online   A personal benefit contract with respect to the transferor is any life insurance, annuity, or endowment contract, if any direct or indirect beneficiary under the contract is the transferor, any member of the transferor's family, or any other person designated by the transferor. How to file 1040ez online Certain annuity contracts. How to file 1040ez online   If an organization incurs an obligation to pay a charitable gift annuity, and the organization purchases an annuity contract to fund the obligation, individuals receiving payments under the charitable gift annuity will not be treated as indirect beneficiaries if the organization owns all of the incidents of ownership under the contract, is entitled to all payments under the contract, and the timing and amount of the payments are substantially the same as the timing and amount of payments to each person under the obligation (as such obligation is in effect at the time of the transfer). How to file 1040ez online Certain contracts held by a charitable remainder trust. How to file 1040ez online   An individual will not be considered an indirect beneficiary under a life insurance, annuity, or endowment contract held by a charitable remainder annuity trust or a charitable remainder unitrust solely by reason of being entitled to the payment if the trust owns all of the incidents of ownership under the contract, and the trust is entitled to all payments under the contract. How to file 1040ez online Excise tax. How to file 1040ez online   If the premiums are paid in connection with a transfer for which a deduction is not allowable under the deduction denial rule, without regard to when the transfer to the charitable organization was made, an excise tax will be applied that is equal to the amount of the premiums paid by the organization on any life insurance, annuity, or endowment contract. How to file 1040ez online The excise tax does not apply if all of the direct and indirect beneficiaries under the contract are organizations. How to file 1040ez online Excise Taxes. How to file 1040ez online   A charitable organization liable for excise taxes must file Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code. How to file 1040ez online Generally, the due date for filing Form 4720 occurs on the fifteenth day of the fifth month following the close of the organization's tax year. How to file 1040ez online Indoor tanning services. How to file 1040ez online   If your organization provides an indoor tanning bed service, the ACA imposed a 10% excise tax on services provided after June 30, 2010. How to file 1040ez online For more information, go to IRS. How to file 1040ez online gov and select Affordable Care Act Tax Provisions. How to file 1040ez online Application for Recognition of Exemption This discussion describes certain information to be provided upon application for recognition of exemption by all organizations created for any of the purposes described earlier in this chapter. How to file 1040ez online For example, the application must include a conformed copy of the organization's articles of incorporation, as discussed under Articles of Organization , later in this chapter. How to file 1040ez online See the organization headings that follow for specific information your organization may need to provide. How to file 1040ez online Form 1023. How to file 1040ez online   Your organization must file its application for recognition of exemption on Form 1023. How to file 1040ez online See chapter 1 and the instructions accompanying Form 1023 for the procedures to follow in applying. How to file 1040ez online Some organizations are not required to file Form 1023. How to file 1040ez online See Organizations Not Required To File Form 1023, later. How to file 1040ez online    Additional information to help you complete your application can be found online. How to file 1040ez online Go to Exemption Requirement – Section 501(c)(3) Organizations and select the link at the bottom of the Web page for step by step help with the application process. How to file 1040ez online See Exemption Requirements - Section 501(c)(3) Organizations. How to file 1040ez online   Form 1023 and accompanying statements must show that all of the following are true. How to file 1040ez online The organization is organized exclusively for, and will be operated exclusively for, one or more of the purposes (religious, charitable, etc. How to file 1040ez online ) specified in the introduction to this chapter. How to file 1040ez online No part of the organization's net earnings will inure to the benefit of private shareholders or individuals. How to file 1040ez online You must establish that your organization will not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. How to file 1040ez online The organization will not, as a substantial part of its activities, attempt to influence legislation (unless it elects to come under the provisions allowing certain lobbying expenditures) or participate to any extent in a political campaign for or against any candidate for public office. How to file 1040ez online See Political activity, next, and Lobbying Expenditures , near the end of this chapter. How to file 1040ez online Political activity. How to file 1040ez online   If any of the activities (whether or not substantial) of your organization consist of participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for public office, your organization will not qualify for tax-exempt status under section 501(c)(3). How to file 1040ez online Such participation or intervention includes the publishing or distributing of statements. How to file 1040ez online   Whether your organization is participating or intervening, directly or indirectly, in any political campaign on behalf of (or in opposition to) any candidate for public office depends upon all of the facts and circumstances of each case. How to file 1040ez online Certain voter education activities or public forums conducted in a nonpartisan manner may not be prohibited political activity under section 501(c)(3), while other so-called voter education activities may be prohibited. How to file 1040ez online Effective date of exemption. How to file 1040ez online   Most organizations described in this chapter that were organized after October 9, 1969, will not be treated as tax exempt unless they apply for recognition of exemption by filing Form 1023. How to file 1040ez online These organizations will not be treated as tax exempt for any period before they file Form 1023, unless they file the form within 27 months from the end of the month in which they were organized. How to file 1040ez online If the organization files the application within this 27-month period, the organization's exemption will be recognized retroactively to the date it was organized. How to file 1040ez online Otherwise, exemption will be recognized only from the date of receipt. How to file 1040ez online The date of receipt is the date of the U. How to file 1040ez online S. How to file 1040ez online postmark on the cover in which an exemption application is mailed or, if no postmark appears on the cover, the date the application is stamped as received by the IRS. How to file 1040ez online Private delivery service. How to file 1040ez online   If a private delivery service designated by the IRS, rather than the U. How to file 1040ez online S. How to file 1040ez online Postal Service, is used to deliver the application, the date of receipt is the date recorded or marked by the private delivery service. How to file 1040ez online The following private delivery services have been designated by the IRS. How to file 1040ez online DHL Express (DHL): DHL “Same Day” Service. How to file 1040ez online Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. How to file 1040ez online United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. How to file 1040ez online M. How to file 1040ez online , UPS Worldwide Express Plus, and UPS Worldwide Express. How to file 1040ez online Amendments to organizing documents required. How to file 1040ez online   If an organization is required to alter its activities or to make substantive amendments to its organizing document, the ruling or determination letter recognizing its exempt status will be effective as of the date the changes are made. How to file 1040ez online If only a nonsubstantive amendment is made, exempt status will be effective as of the date it was organized, if the application was filed within the 15-month period, or the date the application was filed. How to file 1040ez online Extensions of time for filing. How to file 1040ez online   There are two ways organizations seeking exemption can receive an extension of time for filing Form 1023. How to file 1040ez online Automatic 12-month extension. How to file 1040ez online Organizations will receive an automatic 12-month extension if they file an application for recognition of exemption with the IRS within 12 months of the original deadline. How to file 1040ez online To get this extension, an organization must add the following statement at the top of its application: “Filed Pursuant to Section 301. How to file 1040ez online 9100-2. How to file 1040ez online ” Discretionary extensions. How to file 1040ez online An organization that fails to file a Form 1023 within the extended 12-month period will be granted an extension to file if it submits evidence (including affidavits) to establish that: It acted reasonably and in good faith, and Granting a discretionary extension will not prejudice the interests of the government. How to file 1040ez online How to show reasonable action and good faith. How to file 1040ez online   An organization acted reasonably and showed good faith if at least one of the following is true. How to file 1040ez online The organization requests relief before its failure to file is discovered by the IRS. How to file 1040ez online The organization failed to file because of intervening events beyond its control. How to file 1040ez online The organization exercised reasonable diligence (taking into account the complexity of the return or issue and the organization's experience in these matters) but was not aware of the filing requirement. How to file 1040ez online The organization reasonably relied upon the written advice of the IRS. How to file 1040ez online The organization reasonably relied upon the advice of a qualified tax professional who failed to file or advise the organization to file Form 1023. How to file 1040ez online An organization cannot rely on the advice of a tax professional if it knows or should know that he or she is not competent to render advice on filing exemption applications or is not aware of all the relevant facts. How to file 1040ez online Not acting reasonably and in good faith. How to file 1040ez online   An organization has not acted reasonably and in good faith under the following circumstances. How to file 1040ez online It seeks to change a return position for which an accuracy-related penalty has been or could be imposed at the time the relief is requested. How to file 1040ez online It was informed of the requirement to file and related tax consequences, but chose not to file. How to file 1040ez online It uses hindsight in requesting relief. How to file 1040ez online The IRS will not ordinarily grant an extension if specific facts have changed since the due date that makes filing an application advantageous to an organization. How to file 1040ez online Prejudicing the interest of the Government. How to file 1040ez online   Prejudice to the interest of the Government results if granting an extension of time to file to an organization results in a lower total tax liability for the years to which the filing applies than would have been the case if the organization had filed on time. How to file 1040ez online Before granting an extension, the IRS can require the organization requesting it to submit a statement from an independent auditor certifying that no prejudice will result if the extension is granted. How to file 1040ez online The interests of the Government are ordinarily prejudiced if the tax year in which the application should have been filed (or any tax year that would have been affected had the filing been timely) are closed by the statute of limitations before relief is granted. How to file 1040ez online The IRS can condition a grant of relief on the organization providing the IRS with a statement from an independent auditor certifying that the interests of the Government are not prejudiced. How to file 1040ez online Procedure for requesting extension. How to file 1040ez online   To request a discretionary extension, an organization must submit (to the IRS address shown on Form 1023 and Notice 1382) the following. How to file 1040ez online A statement showing the date Form 1023 was required to have been filed and the date it was actually filed. How to file 1040ez online Any documents relevant to the application. How to file 1040ez online An affidavit describing in detail the events that led to the failure to apply and to the discovery of that failure. How to file 1040ez online If the organization relied on a tax professional's advice, the affidavit must describe the engagement and responsibilities of the professional and the extent to which the organization relied on him or her. How to file 1040ez online This affidavit must be accompanied by a dated declaration, signed by an individual who has personal knowledge of the facts and circumstances, who is authorized to act for the organization, which states, “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. How to file 1040ez online ” Detailed affidavits from individuals having knowledge or information about the events that led to the failure to make the application and to the discovery of that failure. How to file 1040ez online This includes the organization's return preparer, and any accountant or attorney, knowledgeable in tax matters, who advised the taxpayer on the application. How to file 1040ez online The affidavits must describe the engagement and responsibilities of the individual and the advice that he or she provided. How to file 1040ez online These affidavits must include the name, current address, and taxpayer identification number of the individual, and be accompanied by a dated declaration, signed by the individual, which states: “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. How to file 1040ez online ” The organization must state whether the returns for the tax year in which the application should have been filed or any tax years that would have been affected by the application had it been timely made are being examined by the IRS, an appeals office, or a federal court. How to file 1040ez online The organization must notify the IRS office considering the request for relief if the IRS starts an examination of any such return while the organization's request for relief is pending. How to file 1040ez online The organization, if requested, has to submit copies of its tax returns, and copies of the returns of other affected taxpayers. How to file 1040ez online   A request for this relief in connection with an application for exemption does not require payment of an additional user fee. How to file 1040ez online Also, a request for relief under the automatic 12-month extension does not require payment of a user fee. How to file 1040ez online More information. How to file 1040ez online   For more information about these procedures, see Regulations sections 301. How to file 1040ez online 9100-1, 301. How to file 1040ez online 9100-2, 301. How to file 1040ez online 9100-3, Revenue Procedure 2013-4, section 6. How to file 1040ez online 04, 2013-1 I. How to file 1040ez online R. How to file 1040ez online B. How to file 1040ez online 126, and Revenue Procedure 2013-8, 2013-1 I. How to file 1040ez online R. How to file 1040ez online B. How to file 1040ez online 237. How to file 1040ez online See Revenue Procedure 2013-4 and Revenue Procedure 2013-8. How to file 1040ez online Notification from the IRS. How to file 1040ez online   Organizations filing Form 1023 and satisfying all requirements of section 501(c)(3) will be notified of their exempt status in writing. How to file 1040ez online Organizations Not Required To File Form 1023 Some organizations are not required to file Form 1023. How to file 1040ez online These include: Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men's or women's organization, religious school, mission society, or youth group. How to file 1040ez online Any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 (see Gross receipts test, later). How to file 1040ez online These organizations are exempt automatically if they meet the requirements of section 501(c)(3). How to file 1040ez online Filing Form 1023 to establish exemption. How to file 1040ez online   If the organization wants to establish its exemption with the IRS and receive a ruling or determination letter recognizing its exempt status, it should file Form 1023. How to file 1040ez online By establishing its exemption, potential contributors are assured by the IRS that contributions will be deductible. How to file 1040ez online A subordinate organization (other than a private foundation) covered by a group exemption letter does not have to submit a Form 1023 for itself. How to file 1040ez online Private foundations. How to file 1040ez online   See Private Foundations and Public Charities, later in this chapter, for more information about the additional notice required from an organization in order for it not to be presumed to be a private foundation and for the additional information required from a private foundation claiming to be an operating foundation. How to file 1040ez online Gross receipts test. How to file 1040ez online   For purposes of the gross receipts test, an organization normally does not have more than $5,000 annually in gross receipts if: During its first tax year the organization received gross receipts of $7,500 or less, During its first 2 years the organization had a total of $12,000 or less in gross receipts, and In the case of an organization that has been in existence for at least 3 years, the total gross receipts received by the organization during the immediately preceding 2 years, plus the current year, are $15,000 or less. How to file 1040ez online   An organization with gross receipts more than the amounts in the gross receipts test, unless otherwise exempt from filing Form 1023, must file a Form 1023 within 90 days after the end of the period in which the amounts are exceeded. How to file 1040ez online For example, an organization's gross receipts for its first tax year were less than $7,500, but at the end of its second tax year its gross receipts for the 2-year period were more than $12,000. How to file 1040ez online The organization must file Form 1023 within 90 days after the end of its second tax year. How to file 1040ez online   If the organization had existed for at least 3 tax years and had met the gross receipts test for all prior tax years but fails to meet the requirement for the current tax year, its tax-exempt status for the prior years will not be lost even if Form 1023 is not filed within 90 days after the close of the current tax year. How to file 1040ez online However, the organization will not be treated as a section 501(c)(3) organization for the period beginning with the current tax year and ending with the filing of Form 1023. How to file 1040ez online Example. How to file 1040ez online   An organization is organized and operated exclusively for charitable purposes and is not a private foundation. How to file 1040ez online It was incorporated on January 1, 2009, and files returns on a calendar-year basis. How to file 1040ez online It did not file a Form 1023. How to file 1040ez online The organization's gross receipts during the years 2009 through 2012 were as follows: 2009 $3,600 2010 2,900 2011 400 2012 12,600   The organization's total gross receipts for 2009, 2010, and 2011 were $6,900. How to file 1040ez online Therefore, it did not have to file Form 1023 and is exempt for those years. How to file 1040ez online However, for 2010, 2011, and 2012 the total gross receipts were $15,900. How to file 1040ez online Therefore, the organization must file Form 1023 within 90 days after the end of its 2012 tax year. How to file 1040ez online If it does not file within this time period, it will not be exempt under section 501(c)(3) for the period beginning with tax year 2012 ending when the Form 1023 is received by the IRS. How to file 1040ez online The organization, however, will not lose its exempt status for the tax years ending before January 1, 2012. How to file 1040ez online   The IRS will consider applying the Commissioner's discretionary authority to extend the time for filing Form 1023. How to file 1040ez online See the procedures for this extension discussed earlier. How to file 1040ez online Articles of Organization Your organization must include a conformed copy of its articles of organization with the application for recognition of exemption. How to file 1040ez online This may be its trust instrument, corporate charter, articles of association, or any other written instrument by which it is created. How to file 1040ez online Organizational Test The articles of organization must limit the organization's purposes to one or more of those described at the beginning of this chapter and must not expressly empower it to engage, other than as an insubstantial part of its activities, in activities that do not further one or more of those purposes. How to file 1040ez online These conditions for exemption are referred to as the organizational test. How to file 1040ez online Section 501(c)(3) is the provision of law that grants exemption to the organizations described in this chapter. How to file 1040ez online Therefore, the organizational test may be met if the purposes stated in the articles of organization are limited in some way by reference to section 501(c)(3). How to file 1040ez online The requirement that your organization's purposes and powers must be limited by the articles of organization is not satisfied if the limit is contained only in the bylaws or other rules or regulations. How to file 1040ez online Moreover, the organizational test is not satisfied by statements of your organization's officers that you intend to operate only for exempt purposes. How to file 1040ez online Also, the test is not satisfied by the fact that your actual operations are for exempt purposes. How to file 1040ez online In interpreting an organization's articles, the law of the state where the organization was created is controlling. How to file 1040ez online If an organization contends that the terms of its articles have a different meaning under state law than their generally accepted meaning, such meaning must be established by a clear and convincing reference to relevant court decisions, opinions of the state attorney general, or other appropriate state authorities. How to file 1040ez online The following are examples illustrating the organizational test. How to file 1040ez online Example 1. How to file 1040ez online Articles of organization state that an organization is formed exclusively for literary and scientific purposes within the meaning of section 501(c)(3). How to file 1040ez online These articles appropriately limit the organization's purposes. How to file 1040ez online The organization meets the organizational test. How to file 1040ez online Example 2. How to file 1040ez online An organization, by the terms of its articles, is formed to engage in research without any further description or limitation. How to file 1040ez online The organization will not be properly limited as to its purposes since all research is not scientific. How to file 1040ez online The organization does not meet the organizational test. How to file 1040ez online Example 3. How to file 1040ez online An organization's articles state that its purpose is to receive contributions and pay them over to organizations that are described in section 501(c)(3) and exempt from taxation under section 501(a). How to file 1040ez online The organization meets the organizational test. How to file 1040ez online Example 4. How to file 1040ez online If a stated purpose in the articles is the conduct of a school of adult education and its manner of operation is described in detail, such a purpose will be satisfactorily limited. How to file 1040ez online Example 5. How to file 1040ez online If the articles state the organization is formed for charitable purposes, without any further description, such language ordinarily will be sufficient since the term charitable has a generally accepted legal meaning. How to file 1040ez online On the other hand, if the purposes are stated to be charitable, philanthropic, and benevolent, the organizational requirement will not be met since the terms philanthropic and benevolent have no generally accepted legal meaning and, therefore, the stated purposes may, under the laws of the state, permit activities that are broader than those intended by the exemption law. How to file 1040ez online Example 6. How to file 1040ez online If the articles state an organization is formed to promote American ideals, or to foster the best interests of the people, or to further the common welfare and well-being of the community, without any limitation or provision restricting such purposes to accomplishment only in a charitable manner, the purposes will not be sufficiently limited. How to file 1040ez online Such purposes are vague and may be accomplished other than in an exempt manner. How to file 1040ez online Example 7. How to file 1040ez online A stated purpose to operate a hospital does not meet the organizational test since it is not necessarily charitable. How to file 1040ez online A hospital may or may not be exempt depending on the manner in which it is operated. How to file 1040ez online Example 8. How to file 1040ez online An organization that is expressly empowered by its articles to carry on social activities will not be sufficiently limited as to its power, even if its articles state that it is organized and will be operated exclusively for charitable purposes. How to file 1040ez online Dedication and Distribution of Assets Assets of an organization must be permanently dedicated to an exempt purpose. How to file 1040ez online This means that should an organization dissolve, its assets must be distributed for an exempt purpose described in this chapter, or to the Federal Government or to a state or local government for a public purpose. How to file 1040ez online If the assets could be distributed to members or private individuals or for any other purpose, the organizational test is not met. How to file 1040ez online Dedication. How to file 1040ez online   To establish that your organization's assets will be permanently dedicated to an exempt purpose, the articles of organization should contain a provision ensuring their distribution for an exempt purpose in the event of dissolution. How to file 1040ez online Although reliance can be placed upon state law to establish permanent dedication of assets for exempt purposes, your organization's application probably can be processed much more rapidly if its articles of organization include a provision ensuring permanent dedication of assets for exempt purposes. How to file 1040ez online Distribution. How to file 1040ez online   Revenue Procedure 82-2, 1982-1 C. How to file 1040ez online B. How to file 1040ez online 367, identifies the states and circumstances in which the IRS will not require an express provision for the distribution of assets upon dissolution in the articles of organization. How to file 1040ez online The procedure also provides a sample of an acceptable dissolution provision for organizations required to have one. How to file 1040ez online   If a named beneficiary is to be the distributee, it must be one that would qualify and would be exempt within the meaning of section 501(c)(3) at the time the dissolution takes place. How to file 1040ez online Since the named beneficiary at the time of dissolution may not be qualified, may not be in existence, or may be unwilling or unable to accept the assets of the dissolving organization, a provision should be made for distribution of the assets for one or more of the purposes specified in this chapter in the event of any such contingency. How to file 1040ez online Sample articles of organization. How to file 1040ez online   See sample articles of organization in the Appendix in the back of this publication. How to file 1040ez online Educational Organizations and Private Schools If your organization wants to obtain recognition of exemption as an educational organization, you must submit complete information as to how your organization carries on or plans to carry on its educational activities, such as by conducting a school, by panels, discussions, lectures, forums, radio and television programs, or through various cultural media such as museums, symphony orchestras, or art exhibits. How to file 1040ez online In each instance, you must explain by whom and where these activities are or will be conducted and the amount of admission fees, if any. How to file 1040ez online You must submit a copy of the pertinent contracts, agreements, publications, programs, etc. How to file 1040ez online If you are organized to conduct a school, you must submit full information regarding your tuition charges, number of faculty members, number of full-time and part-time students enrolled, courses of study and degrees conferred, together with a copy of your school catalog. How to file 1040ez online See also Private Schools , discussed later. How to file 1040ez online Educational Organizations The term educational relates to: The instruction or training of individuals for the purpose of improving or developing their capabilities, or The instruction of the public on subjects useful to individuals and beneficial to the community. How to file 1040ez online Advocacy of a position. How to file 1040ez online   Advocacy of a particular position or viewpoint may be educational if there is a sufficiently full and fair exposition of pertinent facts to permit an individual or the public to form an independent opinion or conclusion. How to file 1040ez online The mere presentation of unsupported opinion is not educational. How to file 1040ez online Method not educational. How to file 1040ez online   The method used by an organization to develop and present its views is a factor in determining if an organization qualifies as educational within the meaning of section 501(c)(3). How to file 1040ez online The following factors may indicate that the method is not educational. How to file 1040ez online The presentation of viewpoints unsupported by facts is a significant part of the organization's communications. How to file 1040ez online The facts that purport to support the viewpoint are distorted. How to file 1040ez online The organization's presentations make substantial use of inflammatory and disparaging terms and express conclusions more on the basis of emotion than of objective evaluations. How to file 1040ez online The approach used is not aimed at developing an understanding on the part of the audience because it does not consider their background or training. How to file 1040ez online   Exceptional circumstances, however, may exist where an organization's advocacy may be educational even if one or more of the factors listed above are present. How to file 1040ez online Qualifying organizations. How to file 1040ez online   The following types of organizations may qualify as educational: An organization, such as a primary or secondary school, a college, or a professional or trade school, that has a regularly scheduled curriculum, a regular faculty, and a regularly enrolled student body in attendance at a place where the educational activities are regularly carried on, An organization whose activities consist of conducting public discussion groups, forums, panels, lectures, or other similar programs, An organization that presents a course of instruction by correspondence or through the use of television or radio, A museum, zoo, planetarium, symphony orchestra, or other similar organization, A nonprofit children's day-care center, and A credit counseling organization. How to file 1040ez online College book stores, cafeterias, restaurants, etc. How to file 1040ez online   These and other on-campus organizations should submit information to show that they are controlled by and operated for the convenience of the faculty and student body or by whom they are controlled and whom they serve. How to file 1040ez online Alumni association. How to file 1040ez online   An alumni association should establish that it is organized to promote the welfare of the university with which it is affiliated, is subject to the control of the university as to its policies and destination of funds, and is operated as an integral part of the university or is otherwise organized to promote the welfare of the college or university. How to file 1040ez online If your association does not have these characteristics, it may still be exempt as a social club if it meets the requirements described in chapter 4, under 501(c)(7) - Social and Recreation Clubs . How to file 1040ez online Athletic organization. How to file 1040ez online   This type of organization must submit evidence that it is engaged in activities such as directing and controlling interscholastic athletic competitions, conducting tournaments, and prescribing eligibility rules for contestants. How to file 1040ez online If it is not so engaged, your organization may be exempt as a social club described in chapter 4. How to file 1040ez online Raising funds to be used for travel and other activities to interview and persuade prospective students with outstanding athletic ability to attend a particular university does not show an exempt purpose. How to file 1040ez online If your organization is not exempt as an educational organization, see Amateur Athletic Organizations , later in this chapter. How to file 1040ez online Private Schools Every private school filing an application for recognition of tax-exempt status must supply the IRS (on Schedule B, Form 1023) with the following information. How to file 1040ez online The racial composition of the student body, and of the faculty and administrative staff, as of the current academic year. How to file 1040ez online (This information also must be projected, so far as may be feasible, for the next academic year. How to file 1040ez online ) The amount of scholarship and loan funds, if any, awarded to students enrolled and the racial composition of students who have received the awards. How to file 1040ez online A list of the school's incorporators, founders, board members, and donors of land or buildings, whether individuals or organizations. How to file 1040ez online A statement indicating whether any of the organizations described in item (3) above have an objective of maintaining segregated public or private school education at the time the application is filed and, if so, whether any of the individuals described in item (3) are officers or active members of those organizations at the time the application is filed. How to file 1040ez online The public school district and county in which the school is located. How to file 1040ez online How to determine racial composition. How to file 1040ez online   The racial composition of the student body, faculty, and administrative staff can be an estimate based on the best information readily available to the school, without requiring student applicants, students, faculty, or administrative staff to submit to the school information that the school otherwise does not require. How to file 1040ez online Nevertheless, a statement of the method by which the racial composition was determined must be supplied. How to file 1040ez online The identity of individual students or members of the faculty and administrative staff should not be included with this information. How to file 1040ez online   A school that is a state or municipal instrumentality (see Instrumentalities , near the beginning of this chapter), whether or not it qualifies for exemption under section 501(c)(3), is not considered to be a private school for purposes of the following discussion. How to file 1040ez online Racially Nondiscriminatory Policy To qualify as an organization exempt from federal income tax, a private school must include a statement in its charter, bylaws, or other governing instrument, or in a resolution of its governing body, that it has a racially nondiscriminatory policy as to students and that it does not discriminate against applicants and students on the basis of race, color, or national or ethnic origin. How to file 1040ez online Also, the school must circulate information that clearly states the school's admission policies. How to file 1040ez online A racially nondiscriminatory policy toward students means that the school admits the students of any race to all the rights, privileges, programs, and activities generally accorded or made available to students at that school and that the school does not discriminate on the basis of race in administering its educational policies, admission policies, scholarship and loan programs, and athletic and other school-administered programs. How to file 1040ez online The IRS considers discrimination on the basis of race to include discrimination on the basis of color or national or ethnic origin. How to file 1040ez online The existence of a racially discriminatory policy with respect to the employment of faculty and administrative staff is indicative of a racially discriminatory policy as to students. How to file 1040ez online Conversely, the absence of racial discrimination in the employment of faculty and administrative staff is indicative of a racially nondiscriminatory policy as to students. How to file 1040ez online A policy of a school that favors racial minority groups with respect to admissions, facilities and programs, and financial assistance is not discrimination on the basis of race when the purpose and effect of this policy is to promote establishing and maintaining the school's nondiscriminatory policy. How to file 1040ez online A school that selects students on the basis of membership in a religious denomination or unit is not discriminating if membership in the denomination or unit is open to all on a racially nondiscriminatory basis. How to file 1040ez online Policy statement. How to file 1040ez online   The school must include a statement of its racially nondiscriminatory policy in all its brochures and catalogs dealing with student admissions, programs, and scholarships. How to file 1040ez online Also, the school must include a reference to its racially nondiscriminatory policy in other written advertising that it uses to inform prospective students of its programs. How to file 1040ez online Publicity requirement. How to file 1040ez online   The school must make its racially nondiscriminatory policy known to all segments of the general community served by the school. How to file 1040ez online Selective communication of a racially nondiscriminatory policy that a school provides solely to leaders of racial groups will not be considered an effective means of communication to make the policy known to all segments of the community. How to file 1040ez online To satisfy this requirement, the school must use one of the following two methods. How to file 1040ez online Method one. How to file 1040ez online   The school can publish a notice of its racially nondiscriminatory policy in a newspaper of general circulation that serves all racial segments of the community. How to file 1040ez online Such publication must be repeated at least once annually during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. How to file 1040ez online When more than one community is served by a school, the school can publish the notice in those newspapers that are reasonably likely to be read by all racial segments in the communities that the school serves. How to file 1040ez online If this method is used, the notice must meet the following printing requirements. How to file 1040ez online It must appear in a section of the newspaper likely to be read by prospective students and their families. How to file 1040ez online It must occupy at least 3 column inches. How to file 1040ez online It must have its title printed in at least 12 point bold face type. How to file 1040ez online It must have the remaining text printed in at least 8 point type. How to file 1040ez online The following is an acceptable example of the notice:   NOTICE OF NONDISCRIMINATORY POLICY AS TO STUDENTS     The M School admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. How to file 1040ez online It does not discriminate on the basis of race, color, national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs. How to file 1040ez online   Method two. How to file 1040ez online   The school can use the broadcast media to publicize its racially nondiscriminatory policy if this use makes the policy known to all segments of the general community the school serves. How to file 1040ez online If the school uses this method, it must provide documentation showing that the means by which this policy was communicated to all segments of the general community was reasonably expected to be effective. How to file 1040ez online In this case, appropriate documentation would include copies of the tapes or scripts used and records showing that there was an adequate number of announcements. How to file 1040ez online The documentation also would include proof that these announcements were made during hours when they were likely to be communicated to all segments of the general community, that they were long enough to convey the message clearly, and that they were broadcast on radio or television stations likely to be listened to by substantial numbers of members of all racial segments of the general community. How to file 1040ez online Announcements must be made during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. How to file 1040ez online Exceptions. How to file 1040ez online   The publicity requirements will not apply in the following situations. How to file 1040ez online First, if for the preceding 3 years the enrollment of a parochial or other church-related school consists of students at least 75% of whom are members of the sponsoring religious denomination or unit, the school can make known its racially nondiscriminatory policy in whatever newspapers or circulars the religious denomination or unit uses in the communities from which the students are drawn. How to file 1040ez online These newspapers and circulars can be distributed by a particular religious denomination or unit or by an association that represents a number of religious organizations of the same denomination. How to file 1040ez online If, however, the school advertises in newspapers of general circulation in the community or communities from which its students are drawn and the second exception (discussed next) does not apply to the school, then it must comply with either of the publicity requirements explained earlier. How to file 1040ez online Second, if a school customarily draws a substantial percentage of its students nationwide, worldwide, from a large geographic section or sections of the United States, or from local communities, and if the school follows a racially nondiscriminatory policy as to its students, the school may satisfy the publicity requirement by complying with the instructions explained earlier under Policy statement . How to file 1040ez online   The school can demonstrate that it follows a racially nondiscriminatory policy either by showing that it currently enrolls students of racial minority groups in meaningful numbers or, except for local community schools, when minority students are not enrolled in meaningful numbers, that its promotional activities and recruiting efforts in each geographic area were reasonably designed to inform students of all racial segments in the general communities within the area of the availability of the school. How to file 1040ez online The question as to whether a school demonstrates such a policy satisfactorily will be determined on the basis of the facts and circumstances of each case. How to file 1040ez online   The IRS recognizes that the failure by a school drawing its students from local communities to enroll racial minority group students may not necessarily indicate the absence of a racially nondiscriminatory policy when there are relatively few or no such students in these communities. How to file 1040ez online Actual enrollment is, however, a meaningful indication of a racially nondiscriminatory policy in a community in which a public school or schools became subject to a desegregation order of a federal court or are otherwise expressly obligated to implement a desegregation plan under the terms of any written contract or other commitment to which any federal agency was a party. How to file 1040ez online   The IRS encourages schools to satisfy the publicity requirement by using either of the methods described earlier, even though a school considers itself to be within one of the Exceptions. How to file 1040ez online The IRS believes that these publicity requirements are the most effective methods to make known a school's racially nondiscriminatory policy. How to file 1040ez online In this regard, it is each school's responsibility to determine whether either of the exceptions applies. How to file 1040ez online Such responsibility will prepare the school, if it is audited by the IRS, to demonstrate that the failure to publish its racially nondiscriminatory policy in accordance with either one of the publicity requirements was justified by one of the exceptions. How to file 1040ez online Also, a school must be prepared to demonstrate that it has publicly disavowed or repudiated any statements purported to have been made on its behalf (after November 6, 1975) that are contrary to its publicity of a racially nondiscriminatory policy as to students, to the extent that the school or its principal official was aware of these statements. How to file 1040ez online Facilities and programs. How to file 1040ez online   A school must be able to show that all of its programs and facilities are operated in a racially nondiscriminatory manner. How to file 1040ez online Scholarship and loan programs. How to file 1040ez online   As a general rule, all scholarship or other comparable benefits obtainable at the school must be offered on a racially nondiscriminatory basis. How to file 1040ez online This must be known throughout the general community being served by the school and should be referred to in its publicity. How to file 1040ez online Financial assistance programs, as well as scholarships and loans made under financial assistance programs, that favor members of one or more racial minority groups and that do not significantly detract from or are designed to promote a school's racially nondiscriminatory policy will not adversely affect the school's exempt status. How to file 1040ez online Certification. How to file 1040ez online   An individual authorized to take official action on behalf of a school that claims to be racially nondiscriminatory as to students must certify annually, under penalties of perjury, on Schedule E (Form 990 or 990-EZ) or Form 5578, Annual Certification of Racial Nondiscrimination for a Private School Exempt From Federal Income Tax, whichever applies, that to the best of his or her knowledge and belief the school has satisfied all requirements that apply, as previously explained. How to file 1040ez online   Failure to comply with the guidelines ordinarily will result in the proposed revocation of the exempt status of a school. How to file 1040ez online Recordkeeping requirements. How to file 1040ez online With certain exceptions, given later, each exempt private school must maintain the following records for a minimum period of 3 years, beginning with the year after the year of compilation or acquisition. How to file 1040ez online Records indicating the racial composition of the student body, faculty, and administrative staff for each academic year. How to file 1040ez online Records sufficient to document that scholarship and other financial assistance is awarded on a racially nondiscriminatory basis. How to file 1040ez online Copies of all materials used by or on behalf of the school to solicit contributions. How to file 1040ez online Copies of all brochures, catalogs, and advertising dealing with student admissions, programs, and scholarships. How to file 1040ez online (Schools advertising nationally or in a large geographic segment or segments of the United States need only maintain a record sufficient to indicate when and in what publications their advertisements were placed. How to file 1040ez online ) The racial composition of the student body, faculty, and administrative staff can be determined in the same manner as that described at the beginning of this section. How to file 1040ez online However, a school cannot discontinue maintaining a system of records that reflect the racial composition of its students, faculty, and administrative staff used on November 6, 1975, unless it substitutes a different system that compiles substantially the same information, without advance approval of the IRS. How to file 1040ez online The IRS does not require that a school release any personally identifiable records or personal information except in accordance with the requirements of the Family Educational Rights and Privacy Act of 1974. How to file 1040ez online Similarly, the IRS does not require a school to keep records prohibited under state or federal law. How to file 1040ez online Exceptions. How to file 1040ez online   The school does not have to independently maintain these records for IRS use if both of the following are true. How to file 1040ez online Substantially the same information has been included in a report or reports filed with an agency or agencies of federal, state, or local governments, and this information is current within 1 year. How to file 1040ez online The school maintains copies of these reports from which this information is readily obtainable. How to file 1040ez online If these reports do not include all of the information required, as discussed earlier, records providing such remaining information must be maintained by the school for IRS use. How to file 1040ez online Failure to maintain records. How to file 1040ez online   Failure to maintain or to produce the required records and information, upon proper request, will create a presumption that the organization has failed to comply with these guidelines. How to file 1040ez online Organizations Providing Insurance An organization described in sections 501(c)(3) or 501(c)(4) may be exempt from tax only if no substantial part of its activities consists of providing commercial-type insurance. How to file 1040ez online However, this rule does not apply to state-sponsored organizations described in sections 501(c)(26) or 501(c)(27), which are discussed in chapter 4, or to charitable risk pools, discussed next. How to file 1040ez online Charitable Risk Pools A charitable risk pool is treated as organized and operated exclusively for charitable purposes if it: Is organized and operated only to pool insurable risks of its members (not including risks related to medical malpractice) and to provide information to its members about loss control and risk management, Consists only of members that are section 501(c)(3) organizations exempt from tax under section 501(a), Is organized under state law authorizing this type of risk pooling, Is exempt from state income tax (or will be after qualifying as a section 501(c)(3) organization), Has obtained at least $1,000,000 in startup capital from nonmember charitable organizations, Is controlled by a board of directors elected by its members, and Is organized under documents requiring that: Each member be a section 501(c)(3) organization exempt from tax under section 501(a), Each member that receives a final determination that it no longer qualifies under section 501(c)(3) notify the pool immediately, and Each insurance policy issued by the pool provide that it will not cover events occurring after a final determination described in (b). How to file 1040ez online Other Section 501(c)(3) Organizations In addition to the information required for all organizations, as described earlier, you should include any other information described in this section. How to file 1040ez online Charitable Organizations If your organization is applying for recognition of exemption as a charitable organization, it must show that it is organized and operated for purposes that are beneficial to the public interest. How to file 1040ez online Some examples of this type of organization are those organized for: Relief of the poor, the distressed, or the underprivileged, Advancement of religion, Advancement of education or science, Erection or maintenance of public buildings, monuments, or works, Lessening the burdens of government, Lessening of neighborhood tensions, Elimination of prejudice and discrimination, Defense of human and civil rights secured by law, and Combating community deterioration and juvenile delinquency. How to file 1040ez online The rest of this section contains a description of the information to be provided by certain specific organizations. How to file 1040ez online This information is in addition to the required inclusions described in chapter 1, and other statements requested on Form 1023. How to file 1040ez online Each of the following organizations must submit the information described. How to file 1040ez online Charitable organization supporting education. How to file 1040ez online   Submit information showing how your organization supports education — for example, contributes to an existing educational institution, endows a professorial chair, contributes toward paying teachers' salaries, or contributes to an educational institution to enable it to carry on research. How to file 1040ez online Scholarships. How to file 1040ez online   If the organization awards or plans to award scholarships, complete Schedule H of Form 1023. How to file 1040ez online Also, submit the following: Criteria used for selecting recipients, including the rules of eligibility. How to file 1040ez online How and by whom the recipients are or will be selected. How to file 1040ez online If awards are or will be made directly to individuals, whether information is required assuring that the student remains in school. How to file 1040ez online If awards are or will be made to recipients of a particular class, for example, children of employees of a particular employer— Whether any preference is or will be accorded an applicant by reason of the parent's position, length of employment, or salary, Whether as a condition of the award the recipient must upon graduation accept employment with the company, and Whether the award will be continued even if the parent's employment ends. How to file 1040ez online A copy of the scholarship application form and any brochures or literature describing the scholarship program. How to file 1040ez online Hospital. How to file 1040ez online   If you are organized to operate a charitable hospital, complete and attach Section I of Schedule C, Form 1023. How to file 1040ez online   If your hospital was transferred to you from proprietary ownership, complete and attach Schedule G of Form 1023. How to file 1040ez online You must attach a list showing: The names of the active and courtesy staff members of the proprietary hospital, as well as the names of your medical staff members after the transfer to nonprofit ownership, and The names of any doctors who continued to lease office space in the hospital after its transfer to nonprofit ownership and the amount of rent paid. How to file 1040ez online Submit also an appraisal showing the fair rental value of the rented space. How to file 1040ez online Clinic. How to file 1040ez online   If you are organized to operate a clinic, attach a statement including: A description of the facilities and services, To whom the services are offered, such as the public at large or a specific group, How charges are determined, such as on a profit basis, to recover costs, or at less than cost, By whom administered and controlled, Whether any of the professional staff (that is, those who perform or will perform the clinical services) also serve or will serve in an administrative capacity, and How compensation paid the professional staff is or will be determined. How to file 1040ez online Home for the aged. How to file 1040ez online   If you are organized to operate a home for the aged, complete and attach Schedule F of Form 1023 and required attachments. How to file 1040ez online Community nursing bureau. How to file 1040ez online   If you provide a nursing register or community nursing bureau, provide information showing that your organization will be operated as a community project and will receive its primary support from public contributions to maintain a nonprofit register of qualified nursing personnel, including graduate nurses, unregistered nursing school graduates, licensed attendants and practical nurses for the benefit of hospitals, health agencies, doctors, and individuals. How to file 1040ez online Organization providing loans. How to file 1040ez online   If you make, or will make, loans for charitable and educational purposes, submit the following information. How to file 1040ez online An explanation of the circumstances under which such loans are, or will be, made. How to file 1040ez online Criteria for selection, including the rules of eligibility. How to file 1040ez online How and by whom the recipients are or will be selected. How to file 1040ez online Manner of repayment of the loan. How to file 1040ez online Security required, if any. How to file 1040ez online Interest charged, if any, and when payable. How to file 1040ez online Copies in duplicate of the loan application and any brochures or literature describing the loan program. How to file 1040ez online Public-interest law firms. How to file 1040ez online   If your organization was formed to litigate in the public interest (as opposed to providing legal services to the poor), such as in the area of protection of the environment, you should submit the following information. How to file 1040ez online How the litigation can reasonably be said to be representative of a broad public interest rather than a private one. How to file 1040ez online Whether the organization will accept fees for its services. How to file 1040ez online A description of the cases litigated or to be litigated and how they benefit the public generally. How to file 1040ez online Whether the policies and program of the organization are the responsibility of a board or committee representative of the public interest, which is neither controlled by employees or persons who litigate on behalf of the organization nor by any organization that is not itself an organization described in this chapter. How to file 1040ez online Whether the organization is operated, through sharing of office space or otherwise, in a way to create identification or confusion with a particular private law firm. How to file 1040ez online Whether there is an arrangement to provide, directly or indirectly, a deduction for the cost of litigation that is for the private benefit of the donor. How to file 1040ez online Acceptance of attorneys' fees. How to file 1040ez online   A nonprofit public-interest law firm can accept attorneys' fees in public-interest cases if the fees are paid directly by its clients and the fees are not more than the actual costs incurred in the case. How to file 1040ez online Upon undertaking a representation, the organization cannot withdraw from the case because the litigant is unable to pay the fee. How to file 1040ez online   Firms can accept fees awarded or approved by a court or an administrative agency and paid by an opposing party if the firms do not use the likelihood or probability of fee awards as a consideration in the selection of cases. How to file 1040ez online All fee awards must be paid to the organization and not to its individual staff attorneys. How to file 1040ez online Instead, a public-interest law firm can reasonably compensate its staff attorneys, but only on a straight salary basis. How to file 1040ez online Private attorneys, whose services are retained by the firm to assist it in particular cases, can be compensated by the firm, but only on a fixed fee or salary basis. How to file 1040ez online   The total amount of all attorneys' fees (court awarded and those received from clients) must not be more than 50% of the total cost of operations of the organization's legal functions, calculated over a 5-year period. How to file 1040ez online   If, in order to carry out its program, an organization violates applicable canons of ethics, disrupts the judicial system, or engages in any illegal action, the organization will jeopardize its exemption. How to file 1040ez online Religious Organizations To determine whether an organization meets the religious purposes test of section 501(c)(3), the IRS maintains two basic guidelines. How to file 1040ez online That the particular religious beliefs of the organization are truly and sincerely held. How to file 1040ez online That the practices and rituals associated with the organization's religious belief or creed are not illegal or contrary to clearly defined public policy. How to file 1040ez online Therefore, your group (or organization) may not qualify for treatment as an exempt religious organization for tax purposes if its actions, as contrasted with its beliefs, are contrary to well established and clearly defined public policy. How to file 1040ez online If there is a clear showing that the beliefs (or doctrines) are sincerely held by those professing them, the IRS will not question the religious nature of those beliefs. How to file 1040ez online Churches. How to file 1040ez online   Although a church, its integrated auxiliaries, or a convention or association of churches is not required to file Form 1023 to be exempt from federal income tax or to receive tax deductible contributions, the organization may find it advantageous to obtain recognition of exemption. How to file 1040ez online In this event, you should submit information showing that your organization is a church, synagogue, association or convention of churches, religious order, or religious organization that is an integral part of a church, and that it is engaged in carrying out the function of a church. How to file 1040ez online   In determining whether an admittedly religious organization is also a church, the IRS does not accept every assertion that the organization is a church. How to file 1040ez online Because beliefs and practices vary so widely, there is no single definition of the word church for tax purposes. How to file 1040ez online The IRS considers the facts and circumstances of each organization applying for church status. How to file 1040ez online Convention or association of churches. How to file 1040ez online   Any organization that is otherwise a convention or association of churches will not fail to qualify as a church merely because the membership of the organization includes individuals as well as churches or because the individuals have voting rights in the organization. How to file 1040ez online Integrated auxiliaries. How to file 1040ez online   An organization is an integrated auxiliary of a church if all the following are true. How to file 1040ez online The organization is described both in sections 501(c)(3) and 509(a)(1), 509(a)(2), or 509(a)(3). How to file 1040ez online It is affiliated with a church or a convention or association of churches. How to file 1040ez online It is internally supported. How to file 1040ez online An organization is internally supported unless both of the following are true. How to file 1040ez online It offers admissions, goods, services, or facilities for sale, other than on an incidental basis, to the general public (except goods, services, or facilities sold at a nominal charge or for a small part of the cost). How to file 1040ez online It normally gets more than 50% of its support from a combination of governmental sources, public solicitation of contributions, and receipts from the sale of admissions, goods, performance of services, or furnishing of facilities in activities that are not unrelated trades or businesses. How to file 1040ez online Special rule. How to file 1040ez online   Men's and women's organizations, seminaries, mission societies, and youth groups that satisfy (1) and (2) shown earlier are integrated auxiliaries of a church even if they are not internally supported. How to file 1040ez online   In order for an organization (including a church and religious organization) to qualify for tax exemption, no part of its net earnings can inure to any individual. How to file 1040ez online   Although an individual is entitled to a charitable deduction for contributions to a church, the assignment or similar transfer of compensation for personal services to a church generally does not relieve a taxpayer of federal income tax liability on the compensation, regardless of the motivation behind the transfer. How to file 1040ez online Scientific Organizations You must show that your organization's research will be carried on in the public interest. How to file 1040ez online Scientific research will be considered to be in the public interest if the results of the research (including any patents, copyrights, processes, or formulas) are made available to the public on a nondiscriminatory basis; if the research is performed for the United States or a state, county, or municipal government; or if the research is carried on for one of the following purposes. How to file 1040ez online Aiding in the scientific education of college or university students. How to file 1040ez online Obtaining scientific information that is published in a treatise, thesis, trade publication, or in any other form th