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Irs Free File

Irs free file 5. Irs free file   How To Get Tax Help Table of Contents Go online, use a smart phone, call or walk in to an office near you. Irs free file Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. Irs free file Free help with your tax return. Irs free file    Free help in preparing your return is available nationwide from IRS-certified volunteers. Irs free file The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. Irs free file The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Irs free file Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Irs free file Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Irs free file To find the nearest VITA or TCE site, visit IRS. Irs free file gov or call 1-800-906-9887. Irs free file   As part of the TCE program, AARP offers the Tax-Aide counseling program. Irs free file To find the nearest AARP Tax-Aide site, visit AARP's website at www. Irs free file aarp. Irs free file org/money/taxaide or call 1-888-227-7669. Irs free file   For more information on these programs, go to IRS. Irs free file gov and enter “VITA” in the search box. Irs free file Internet. Irs free file IRS. Irs free file gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. Irs free file Apply for an Employer Identification Number (EIN). Irs free file Go to IRS. Irs free file gov and enter Apply for an EIN in the search box. Irs free file Request an Electronic Filing PIN by going to IRS. Irs free file gov and entering Electronic Filing PIN in the search box. Irs free file Check the status of your 2013 refund with Where's My Refund? Go to IRS. Irs free file gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. Irs free file If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Irs free file Check the status of your amended return. Irs free file Go to IRS. Irs free file gov and enter Where's My Amended Return in the search box. Irs free file Download forms, instructions, and publications, including some accessible versions. Irs free file Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. Irs free file gov or IRS2Go. Irs free file Tax return and tax account transcripts are generally available for the current year and past three years. Irs free file Figure your income tax withholding with the IRS Withholding Calculator on IRS. Irs free file gov. Irs free file Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Irs free file Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Irs free file gov. Irs free file Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. Irs free file gov or IRS2Go. Irs free file Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. Irs free file An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. Irs free file Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. Irs free file If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. Irs free file Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Irs free file Locate the nearest volunteer help site with the VITA Locator Tool on IRS. Irs free file gov. Irs free file Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Irs free file The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Irs free file Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. Irs free file AARP offers the Tax-Aide counseling program as part of the TCE program. Irs free file Visit AARP's website to find the nearest Tax-Aide location. Irs free file Research your tax questions. Irs free file Search publications and instructions by topic or keyword. Irs free file Read the Internal Revenue Code, regulations, or other official guidance. Irs free file Read Internal Revenue Bulletins. Irs free file Sign up to receive local and national tax news by email. Irs free file Phone. Irs free file You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Irs free file Download the free IRS2Go mobile app from the iTunes app store or from Google Play. Irs free file Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Irs free file Call to locate the nearest volunteer help site, 1-800-906-9887. Irs free file Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Irs free file The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Irs free file Most VITA and TCE sites offer free electronic filing. Irs free file Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Irs free file Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Irs free file Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. Irs free file The automated Where's My Refund? information is available 24 hours a day, 7 days a week. Irs free file If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Irs free file Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Irs free file Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Irs free file Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Irs free file Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Irs free file Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). Irs free file You should receive your order within 10 business days. Irs free file Call to order transcripts of your tax returns or tax account, 1-800-908-9946. Irs free file Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. Irs free file Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. Irs free file Call to ask tax questions, 1-800-829-1040. Irs free file Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Irs free file The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Irs free file These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. Irs free file gsa. Irs free file gov/fedrelay. Irs free file Walk-in. Irs free file You can find a selection of forms, publications and services — in-person, face-to-face. Irs free file Products. Irs free file You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Irs free file Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Irs free file Services. Irs free file You can walk in to your local TAC most business days for personal, face-to-face tax help. Irs free file An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Irs free file If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. Irs free file No appointment is necessary—just walk in. Irs free file Before visiting, check www. Irs free file irs. Irs free file gov/localcontacts for hours of operation and services provided. Irs free file Mail. Irs free file You can send your order for forms, instructions, and publications to the address below. Irs free file You should receive a response within 10 business days after your request is received. Irs free file  Internal Revenue Service 1201 N. Irs free file Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. Irs free file    The Taxpayer Advocate Service (TAS) is your voice at the IRS. Irs free file Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Irs free file What can TAS do for you?    We can offer you free help with IRS problems that you can't resolve on your own. Irs free file We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Irs free file You face (or your business is facing) an immediate threat of adverse action. Irs free file You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Irs free file   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Irs free file Here's why we can help: TAS is an independent organization within the IRS. Irs free file Our advocates know how to work with the IRS. Irs free file Our services are free and tailored to meet your needs. Irs free file We have offices in every state, the District of Columbia, and Puerto Rico. Irs free file How can you reach us?    If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. Irs free file irs. Irs free file gov/advocate, or call us toll-free at 1-877-777-4778. Irs free file How else does TAS help taxpayers?    TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Irs free file If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Irs free file irs. Irs free file gov/sams. Irs free file Low Income Taxpayer Clinics. Irs free file    Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. Irs free file Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Irs free file Visit www. Irs free file TaxpayerAdvocate. Irs free file irs. Irs free file gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. Irs free file Prev  Up  Next   Home   More Online Publications
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Higher Education

Find government information on higher education, including accredited colleges and universities, financial aid, GI bill enrollment, GPA calculator, grants, fellowships, studying abroad, tax benefits and more.

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