Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Tax Act 2012 Free

Amended 1040 FormDoyourtaxes Net1040 AFederal Tax Ez Form 2011I Need To File My State Taxes OnlyFree Tax FormHow To File 1040ezAmend Your Tax ReturnFile Taxes Online For Free2009 1040File State Taxes Free2013 Ez Tax FormsFiling 2011 Taxes OnlineAmend 2009 Tax ReturnAmend Tax FormForm 1040ez InstructionsFile Tax Extension104ez FormFree 2007 Tax Software DownloadHow To Amend A Tax Return Online2012 Irs Form 1040ezEasy Tax FormsFree File State Federal TaxesAmended Tax ReturnsIrs E FileIrs Form 1040ez Instructions1040nrCan I File My 1040x OnlineIrs1040ez FormHow To File A State Tax ReturnIrs Form 1040 VH R Block Free FileFederal Tax Form 1040ezFile Income Tax Online FreeH And R Block Free State FileFree Tax Help1040nr-ezInstructions For Filing An Amended Tax ReturnH&r Block Free State FilingI Need To Find A Place On Line To File Back Taxes

Tax Act 2012 Free

Tax act 2012 free Publication 570 - Introductory Material Table of Contents Future developments. Tax act 2012 free What's New Reminders IntroductionOrdering forms and publications. Tax act 2012 free Tax questions. Tax act 2012 free Useful Items - You may want to see: Future developments. Tax act 2012 free For information about any additional changes to the 2013 tax law affecting Pub. Tax act 2012 free 570, please go to www. Tax act 2012 free irs. Tax act 2012 free gov/pub570. Tax act 2012 free What's New Maximum income subject to social security tax. Tax act 2012 free . Tax act 2012 free  For 2013, the maximum amount of self-employment income subject to social security is $113,700. Tax act 2012 free Optional methods to figure net earnings. Tax act 2012 free . Tax act 2012 free  For 2013, the maximum income for using the optional methods is $4,640. Tax act 2012 free Additional Medicare Tax. Tax act 2012 free  Beginning in 2013, you may be required to pay Additional Medicare Tax. Tax act 2012 free Also, you may need to report Additional Medicare Tax withheld by your employer. Tax act 2012 free For more information, see Additional Medicare Tax under Special Rules for Completing Your U. Tax act 2012 free S. Tax act 2012 free Tax Return in chapter 4. Tax act 2012 free Net Investment Income Tax. Tax act 2012 free  Beginning in 2013, the Net Investment Income Tax (NIIT) imposes a 3. Tax act 2012 free 8% tax on the lesser of an individual's net investment income or the excess of the individual's modified adjusted gross income over a specified threshold amount. Tax act 2012 free Bona fide residents of Puerto Rico and American Samoa who have a federal income tax return filing obligation may be liable for the NIIT if the taxpayer's modified adjusted gross income from non-territory sources exceeds a specified threshold amount. Tax act 2012 free Also, bona fide residents must take into account any additional tax liability associated with the NIIT when calculating their estimated tax payments. Tax act 2012 free The NIIT does not apply to any individual who is a nonresident alien with respect to the United States. Tax act 2012 free For more information, see Net Investment Income Tax under Bona Fide Resident of American Samoa and Bona Fide Resident of Puerto Rico in chapter 3. Tax act 2012 free Reminders Individual taxpayer identification numbers (ITINs) for aliens. Tax act 2012 free  If you are a nonresident or resident alien and you do not have and are not eligible to get a social security number (SSN), you must apply for an ITIN. Tax act 2012 free For details on how to do so, see Form W-7, Application for IRS Individual Taxpayer Identification Number, and its instructions. Tax act 2012 free Allow 6 weeks for the IRS to notify you of your ITIN (8-10 weeks if submitted during peak processing periods (January 15 through April 30) or if you are filing from overseas). Tax act 2012 free If you already have an ITIN, enter it wherever your SSN is requested on your tax return. Tax act 2012 free Effective January 1, 2013, the IRS implemented new procedures that affect the Individual Taxpayer Identification Number (ITIN) application process. Tax act 2012 free The documentation requirements for individuals seeking an ITIN, have been superseded by these changes. Tax act 2012 free Authorized representatives are required to complete forensic training and submit the certificate of completion to the IRS no later than January 31, 2014. Tax act 2012 free Taxpayers and their representatives should review these program changes, which are further explained in the Frequently Asked Questions at www. Tax act 2012 free irs. Tax act 2012 free gov/Individuals/Individual-Taxpayer-Identification-Number-(ITIN), before requesting an ITIN. Tax act 2012 free An ITIN is for tax use only. Tax act 2012 free It does not entitle you to social security benefits or change your employment or immigration status under U. Tax act 2012 free S. Tax act 2012 free law. Tax act 2012 free Electronic filing. Tax act 2012 free . Tax act 2012 free  You can e-file Form 1040-SS. Tax act 2012 free For general information about  electronic filing, visit www. Tax act 2012 free irs. Tax act 2012 free gov/efile. Tax act 2012 free Earned income credit (EIC). Tax act 2012 free  Generally, if you are a bona fide resident of a U. Tax act 2012 free S. Tax act 2012 free possession, you cannot claim the EIC on your U. Tax act 2012 free S. Tax act 2012 free tax return. Tax act 2012 free However, certain U. Tax act 2012 free S. Tax act 2012 free possessions may allow bona fide residents to claim the EIC on their possession tax return. Tax act 2012 free To claim the EIC on your U. Tax act 2012 free S. Tax act 2012 free tax return, your home (and your spouse's if filing a joint return) must have been in the United States for more than half the year. Tax act 2012 free If you have a child, the child must have lived with you in the United States for more than half the year. Tax act 2012 free For this purpose, the United States includes only the 50 states and the District of Columbia. Tax act 2012 free Special rules apply to military personnel stationed outside the United States. Tax act 2012 free For more information on this credit, see Publication 596, Earned Income Credit. Tax act 2012 free Form 8938, Statement of Specified Foreign Financial Assets. Tax act 2012 free  If you have specified foreign financial assets in foreign jurisdictions valued above certain threshold dollar amounts, you may have to file Form 8938, Statement of Specified Foreign Financial Assets, when you file your U. Tax act 2012 free S. Tax act 2012 free income tax return with the IRS. Tax act 2012 free If you are required to file Form 8938, you do not have to report certain specified foreign financial assets on Form 8938. Tax act 2012 free See Bona fide resident of a U. Tax act 2012 free S. Tax act 2012 free possession, in the Instructions for Form 8938 for more details. Tax act 2012 free For additional details, go to the page for the Foreign Account Tax Compliance Act (FATCA) at www. Tax act 2012 free irs. Tax act 2012 free gov/businesses/corporations/article/0,,id=236667,00. Tax act 2012 free html. Tax act 2012 free If you do not have to file a federal income tax return with the United States, you are not required to file a Form 8938 with the IRS. Tax act 2012 free Change of address. Tax act 2012 free  If you change your mailing address, use Form 8822, Change of Address, to notify the Internal Revenue Service and U. Tax act 2012 free S. Tax act 2012 free possession tax administration, if appropriate. Tax act 2012 free Mail Form 8822 to the Internal Revenue Service Center or U. Tax act 2012 free S. Tax act 2012 free possession tax administration for your old address (addresses for the Service Centers are on the back of the form). Tax act 2012 free If you change your address before filing your tax return, write the new address in the appropriate boxes of your tax return when you file. Tax act 2012 free Photographs of missing children. Tax act 2012 free  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Tax act 2012 free Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Tax act 2012 free You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Tax act 2012 free Introduction This publication discusses how to treat income received from the following U. Tax act 2012 free S. Tax act 2012 free possessions on your tax return(s). Tax act 2012 free American Samoa. Tax act 2012 free The Commonwealth of Puerto Rico (Puerto Rico). Tax act 2012 free The Commonwealth of the Northern Mariana Islands (CNMI). Tax act 2012 free Guam. Tax act 2012 free The U. Tax act 2012 free S. Tax act 2012 free Virgin Islands (USVI). Tax act 2012 free Unless stated otherwise, when the term “possession” is used in this publication, it includes the Commonwealths of Puerto Rico and the Northern Mariana Islands. Tax act 2012 free Chapter 1 discusses the requirements for being considered a bona fide resident of the listed possessions. Tax act 2012 free Chapter 2 gives the rules for determining if your income is from sources within, or effectively connected with a trade or business in, those possessions. Tax act 2012 free Next, chapter 3 looks at the rules for filing tax returns when you receive income from any of these possessions. Tax act 2012 free You may have to file a U. Tax act 2012 free S. Tax act 2012 free tax return only, a possession tax return only, or both returns. Tax act 2012 free This generally depends on whether you are a bona fide resident of the possession. Tax act 2012 free In some cases, you may have to file a U. Tax act 2012 free S. Tax act 2012 free return, but will be able to exclude income earned in a possession from U. Tax act 2012 free S. Tax act 2012 free tax. Tax act 2012 free You can find illustrated examples of some of the additional forms required in chapter 5. Tax act 2012 free If you are not a bona fide resident of one of the possessions listed earlier, or are otherwise required to file a U. Tax act 2012 free S. Tax act 2012 free income tax return, the information in chapter 4 will tell you how to file your U. Tax act 2012 free S. Tax act 2012 free tax return. Tax act 2012 free This information also applies if you have income from U. Tax act 2012 free S. Tax act 2012 free insular areas other than the five possessions listed earlier because that income will not qualify for any of the exclusions or other benefits discussed in chapter 3. Tax act 2012 free These other U. Tax act 2012 free S. Tax act 2012 free insular areas include: Baker Island, Howland Island, Jarvis Island, Johnston Island, Kingman Reef, Midway Islands, Palmyra Atoll, and Wake Island. Tax act 2012 free If you need information on U. Tax act 2012 free S. Tax act 2012 free taxation, write to: Internal Revenue Service Philadelphia, PA 19255-0725 If you need additional information on your tax obligations in a U. Tax act 2012 free S. Tax act 2012 free possession, write to the tax department of that possession. Tax act 2012 free Their addresses are provided in chapter 3 under the individual headings for each possession. Tax act 2012 free Comments and suggestions. Tax act 2012 free   We welcome your comments about this publication and your suggestions for future editions. Tax act 2012 free   You can send us comments from www. Tax act 2012 free irs. Tax act 2012 free gov/formspubs/. Tax act 2012 free Click on “More Information”and then on “Comment on Tax Forms and Publications. Tax act 2012 free ” Or you can write to us at the following address: Internal Revenue Service Tax Forms and Publications SE:W:CAR:MP:TFP 1111 Constitution Ave. Tax act 2012 free NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Tax act 2012 free Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Tax act 2012 free   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Tax act 2012 free Ordering forms and publications. Tax act 2012 free   Visit www. Tax act 2012 free irs. Tax act 2012 free gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Tax act 2012 free Internal Revenue Service 1201 N. Tax act 2012 free Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Tax act 2012 free   If you have a tax question, check the information available on IRS. Tax act 2012 free gov or call 1-800-829-1040. Tax act 2012 free We cannot answer tax questions sent to either of the above addresses. Tax act 2012 free You can get the necessary possession tax forms at the tax office for the appropriate possession. Tax act 2012 free The office addresses are given in chapter 3. Tax act 2012 free Useful Items - You may want to see: Publication 54 Tax Guide for U. Tax act 2012 free S. Tax act 2012 free Citizens and Resident Aliens Abroad 514 Foreign Tax Credit for Individuals 519 U. Tax act 2012 free S. Tax act 2012 free Tax Guide for Aliens Form (and Instructions) 1040-PR Planilla para la Declaración de la Contribución Federal sobre el Trabajo por Cuenta Propia (Incluyendo el Crédito Tributario Adicional por Hijos para Residentes Bona Fide de Puerto Rico) 1040-SS U. Tax act 2012 free S. Tax act 2012 free Self-Employment Tax Return (Including the Additional Child Tax Credit for Bona Fide Residents of Puerto Rico) 1116 Foreign Tax Credit 4563 Exclusion of Income for Bona Fide Residents of American Samoa 4868 Application for Automatic Extension of Time To File U. Tax act 2012 free S. Tax act 2012 free Individual Income Tax Return 5074 Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands (CNMI) 8689 Allocation of Individual Income Tax to the U. Tax act 2012 free S. Tax act 2012 free Virgin Islands 8898 Statement for Individuals Who Begin or End Bona Fide Residence In a U. Tax act 2012 free S. Tax act 2012 free Possession 8959 Additional Medicare Tax 8960 Net Investment Income Tax—Individuals, Estates, and Trusts Prev  Up  Next   Home   More Online Publications
Español

Look for Warning Signs

Look for these warning signs to avoid fraud:

  • Someone you don't know asks you to send money or money orders to claim a prize, lottery, credit card, loan, or other valuable offer.
  • Someone you don't know offers you the chance to receive a credit card, loan, prize, lottery, or other valuable item, but asks you for personal data to claim it.
  • An unknown caller claiming to be a lawyer or in law enforcement offers to help you get your money back (for a fee).
  • The deal is only good "for today" or a short period of time.
  • The seller offers "free gifts" in return for a minimum effort or a fee.
  • A "repair person" suddenly finds a dangerous defect in your car or home.
  • You are given little or no time to read a contract.
  • A sale item is suddenly unavailable but a "much better item" is available for slightly more money.
  • Someone is trying to scare you into purchasing credit protection plans.
  • The solicitation looks like a government document and suggests contest winnings or unclaimed assets are yours for a small fee. (The government doesn't solicit money from citizens.)
  • You are asked for your bank account or credit card number.

Quick Tips for Avoiding Fraud

  • Don't give out personal information. Be suspicious of anyone you don't know who asks for your Social Security number, credit card and bank account details, date of birth, etc.
  • Don't be intimidated. Be suspicious of calls or e-mails that want you to provide or verify personal information immediately. Tell them you're not interested and hang up or don't reply to the e-mail.
  • Monitor your accounts. Review bank and credit card statements carefully. Report unauthorized transactions to your financial institution immediately.
  • Use a shredder. Tear or shred credit offers you receive in the mail, bank statements, insurance forms and other papers with personal information.

Fraud Alert

Be on the lookout for these common scams:

  • Fake Check Scams- You discover the check is worthless after you've deposited it and wired money back to the crook.
  • Sweetheart Swindles- Criminals befriend you in online chat rooms or dating sites, then request money as a favor or for accident or travel expenses.
  • Auctions- Beware of fraudulent sellers and bogus merchandise.
  • Lotteries- Don't fall for foreign lotteries; they're illegal to play and may be a scam.
  • Advance Fee Loans and Credit- It's illegal for telemarketers to charge a fee in advance for help getting a loan.

The Tax Act 2012 Free

Tax act 2012 free 8. Tax act 2012 free   Qualified Tuition Program (QTP) Table of Contents Introduction What Is a Qualified Tuition ProgramDesignated beneficiary. Tax act 2012 free Half-time student. Tax act 2012 free How Much Can You Contribute Are Distributions TaxableFiguring the Taxable Portion of a Distribution Additional Tax on Taxable Distributions Rollovers and Other TransfersRollovers Changing the Designated Beneficiary Introduction Qualified tuition programs (QTPs) are also called “529 plans. Tax act 2012 free ” States may establish and maintain programs that allow you to either prepay or contribute to an account for paying a student's qualified education expenses at a postsecondary institution. Tax act 2012 free Eligible educational institutions may establish and maintain programs that allow you to prepay a student's qualified education expenses. Tax act 2012 free If you prepay tuition, the student (designated beneficiary) will be entitled to a waiver or a payment of qualified education expenses. Tax act 2012 free You cannot deduct either payments or contributions to a QTP. Tax act 2012 free For information on a specific QTP, you will need to contact the state agency or eligible educational institution that established and maintains it. Tax act 2012 free What is the tax benefit of a QTP. Tax act 2012 free   No tax is due on a distribution from a QTP unless the amount distributed is greater than the beneficiary's adjusted qualified education expenses. Tax act 2012 free See Are Distributions Taxable , later, for more information. Tax act 2012 free    Even if a QTP is used to finance a student's education, the student or the student's parents still may be eligible to claim the American opportunity credit or the lifetime learning credit. Tax act 2012 free See Coordination With American Opportunity and Lifetime Learning Credits, later. Tax act 2012 free What Is a Qualified Tuition Program A qualified tuition program is a program set up to allow you to either prepay, or contribute to an account established for paying, a student's qualified education expenses at an eligible educational institution. Tax act 2012 free QTPs can be established and maintained by states (or agencies or instrumentalities of a state) and eligible educational institutions. Tax act 2012 free The program must meet certain requirements. Tax act 2012 free Your state government or the eligible educational institution in which you are interested can tell you whether or not they participate in a QTP. Tax act 2012 free Qualified education expenses. Tax act 2012 free   These are expenses related to enrollment or attendance at an Eligible educational institution (defined later). Tax act 2012 free As shown in the following list, to be qualified, some of the expenses must be required by the institution and some must be incurred by students who are enrolled at least half-time. Tax act 2012 free See Half-time student , later. Tax act 2012 free The following expenses must be required for enrollment or attendance of a Designated beneficiary (defined later) at an eligible educational institution. Tax act 2012 free Tuition and fees. Tax act 2012 free Books, supplies, and equipment. Tax act 2012 free Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible educational institution. Tax act 2012 free Expenses for room and board must be incurred by students who are enrolled at least half-time. Tax act 2012 free The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts. Tax act 2012 free The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. Tax act 2012 free The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. Tax act 2012 free You will need to contact the eligible educational institution for qualified room and board costs. Tax act 2012 free    For tax years after 2010, the purchase of computer technology or equipment is only a qualified education expense if the computer technology or equipment is required for enrollment or attendance at an eligible institution. Tax act 2012 free Designated beneficiary. Tax act 2012 free   The designated beneficiary is generally the student (or future student) for whom the QTP is intended to provide benefits. Tax act 2012 free The designated beneficiary can be changed after participation in the QTP begins. Tax act 2012 free If a state or local government or certain tax-exempt organizations purchase an interest in a QTP as part of a scholarship program, the designated beneficiary is the person who receives the interest as a scholarship. Tax act 2012 free Half-time student. Tax act 2012 free   A student is enrolled “at least half-time” if he or she is enrolled for at least half the full-time academic workload for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled. Tax act 2012 free Eligible educational institution. Tax act 2012 free   For purposes of a QTP, this is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Tax act 2012 free S. Tax act 2012 free Department of Education. Tax act 2012 free It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Tax act 2012 free The educational institution should be able to tell you if it is an eligible educational institution. Tax act 2012 free   Certain educational institutions located outside the United States also participate in the U. Tax act 2012 free S. Tax act 2012 free Department of Education's Federal Student Aid (FSA) programs. Tax act 2012 free   How Much Can You Contribute Contributions to a QTP on behalf of any beneficiary cannot be more than the amount necessary to provide for the qualified education expenses of the beneficiary. Tax act 2012 free There are no income restrictions on the individual contributors. Tax act 2012 free You can contribute to both a QTP and a Coverdell ESA in the same year for the same designated beneficiary. Tax act 2012 free   Are Distributions Taxable The part of a distribution representing the amount paid or contributed to a QTP does not have to be included in income. Tax act 2012 free This is a return of the investment in the plan. Tax act 2012 free The designated beneficiary generally does not have to include in income any earnings distributed from a QTP if the total distribution is less than or equal to adjusted qualified education expenses (defined under Figuring the Taxable Portion of a Distribution , later). Tax act 2012 free Earnings and return of investment. Tax act 2012 free    You will receive a Form 1099-Q, from each of the programs from which you received a QTP distribution in 2013. Tax act 2012 free The amount of your gross distribution (box 1) shown on each form will be divided between your earnings (box 2) and your basis, or return of investment (box 3). Tax act 2012 free Form 1099-Q should be sent to you by January 31, 2014. Tax act 2012 free Figuring the Taxable Portion of a Distribution To determine if total distributions for the year are more or less than the amount of qualified education expenses, you must compare the total of all QTP distributions for the tax year to the adjusted qualified education expenses. Tax act 2012 free Adjusted qualified education expenses. Tax act 2012 free   This amount is the total qualified education expenses reduced by any tax-free educational assistance. Tax act 2012 free Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Tax act 2012 free Taxable earnings. Tax act 2012 free   Use the following steps to figure the taxable part. Tax act 2012 free Multiply the total distributed earnings shown in box 2 of Form 1099-Q by a fraction. Tax act 2012 free The numerator is the adjusted qualified education expenses paid during the year and the denominator is the total amount distributed during the year. Tax act 2012 free Subtract the amount figured in (1) from the total distributed earnings. Tax act 2012 free The result is the amount the beneficiary must include in income. Tax act 2012 free Report it on Form 1040 or Form 1040NR, line 21. Tax act 2012 free Example 1. Tax act 2012 free In 2007, Sara Clarke's parents opened a savings account for her with a QTP maintained by their state government. Tax act 2012 free Over the years they contributed $18,000 to the account. Tax act 2012 free The total balance in the account was $27,000 on the date the distribution was made. Tax act 2012 free In the summer of 2013, Sara enrolled in college and had $8,300 of qualified education expenses for the rest of the year. Tax act 2012 free She paid her college expenses from the following sources. Tax act 2012 free   Gift from parents $1,600     Partial tuition scholarship (tax-free) 3,100     QTP distribution 5,300           Before Sara can determine the taxable part of her QTP distribution, she must reduce her total qualified education expenses by any tax-free educational assistance. Tax act 2012 free   Total qualified education expenses $8,300     Minus: Tax-free educational assistance −3,100     Equals: Adjusted qualified  education expenses (AQEE) $5,200   Since the remaining expenses ($5,200) are less than the QTP distribution, part of the earnings will be taxable. Tax act 2012 free Sara's Form 1099-Q shows that $950 of the QTP distribution is earnings. Tax act 2012 free Sara figures the taxable part of the distributed earnings as follows. Tax act 2012 free   1. Tax act 2012 free $950 (earnings) × $5,200 AQEE  $5,300 distribution           =$932 (tax-free earnings)     2. Tax act 2012 free $950 (earnings)−$932 (tax-free earnings)     =$18 (taxable earnings)  Sara must include $18 in income (Form 1040, line 21) as distributed QTP earnings not used for adjusted qualified education expenses. Tax act 2012 free Coordination With American Opportunity and Lifetime Learning Credits An American opportunity or lifetime learning credit (education credit) can be claimed in the same year the beneficiary takes a tax-free distribution from a QTP, as long as the same expenses are not used for both benefits. Tax act 2012 free This means that after the beneficiary reduces qualified education expenses by tax-free educational assistance, he or she must further reduce them by the expenses taken into account in determining the credit. Tax act 2012 free Example 2. Tax act 2012 free Assume the same facts as in Example 1 , except that Sara's parents claimed an American opportunity credit of $2,500 (based on $4,000 expenses). Tax act 2012 free   Total qualified education expenses $8,300     Minus: Tax-free educational assistance −3,100     Minus: Expenses taken into account  in figuring American opportunity credit −4,000     Equals: Adjusted qualified  education expenses (AQEE) $1,200           The taxable part of the distribution is figured as follows. Tax act 2012 free   1. Tax act 2012 free $950 (earnings) × $1,200 AQEE  $5,300 distribution           =$215 (tax-free earnings)     2. Tax act 2012 free $950 (earnings)−$215 (tax-free earnings)     =$735 (taxable earnings)       Sara must include $735 in income (Form 1040, line 21). Tax act 2012 free This represents distributed earnings not used for adjusted qualified education expenses. Tax act 2012 free Coordination With Coverdell ESA Distributions If a designated beneficiary receives distributions from both a QTP and a Coverdell ESA in the same year, and the total of these distributions is more than the beneficiary's adjusted qualified higher education expenses, the expenses must be allocated between the distributions. Tax act 2012 free For purposes of this allocation, disregard any qualified elementary and secondary education expenses. Tax act 2012 free Example 3. Tax act 2012 free Assume the same facts as in Example 2 , except that instead of receiving a $5,300 distribution from her QTP, Sara received $4,600 from that account and $700 from her Coverdell ESA. Tax act 2012 free In this case, Sara must allocate her $1,200 of adjusted qualified higher education expenses (AQHEE) between the two distributions. Tax act 2012 free   $1,200 AQHEE × $700 ESA distribution  $5,300 total distribution = $158 AQHEE (ESA)     $1,200 AQHEE × $4,600 QTP distribution  $5,300 total distribution = $1,042 AQHEE (QTP)   Sara then figures the taxable portion of her Coverdell ESA distribution based on qualified higher education expenses of $158, and the taxable portion of her QTP distribution based on the other $1,042. Tax act 2012 free Note. Tax act 2012 free If you are required to allocate your expenses between Coverdell ESA and QTP distributions, and you have adjusted qualified elementary and secondary education expenses, see the examples in chapter 7, Coverdell Education Savings Account under Coordination With Qualified Tuition Program (QTP) Distributions . Tax act 2012 free Coordination With Tuition and Fees Deduction. Tax act 2012 free   A tuition and fees deduction can be claimed in the same year the beneficiary takes a tax-free distribution from a QTP, as long as the same expenses are not used for both benefits. Tax act 2012 free Losses on QTP Investments If you have a loss on your investment in a QTP account, you may be able to take the loss on your income tax return. Tax act 2012 free You can take the loss only when all amounts from that account have been distributed and the total distributions are less than your unrecovered basis. Tax act 2012 free Your basis is the total amount of contributions to that QTP account. Tax act 2012 free You claim the loss as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23 (Schedule A (Form 1040NR), line 9), subject to the 2%-of-adjusted-gross-income limit. Tax act 2012 free If you have distributions from more than one QTP account during a year, you must combine the information (amount of distribution, basis, etc. Tax act 2012 free ) from all such accounts in order to determine your taxable earnings for the year. Tax act 2012 free By doing this, the loss from one QTP account reduces the distributed earnings (if any) from any other QTP accounts. Tax act 2012 free Example 1. Tax act 2012 free In 2013, Taylor received a final distribution of $1,000 from QTP #1. Tax act 2012 free His unrecovered basis in that account before the distribution was $3,000. Tax act 2012 free If Taylor itemizes his deductions, he can claim the $2,000 loss on Schedule A (Form 1040). Tax act 2012 free Example 2. Tax act 2012 free Assume the same facts as in Example 1 , except that Taylor also had a distribution of $9,000 from QTP #2, giving him total distributions for 2013 of $10,000. Tax act 2012 free His total basis in these distributions was $4,500 ($3,000 for QTP #1 and $1,500 for QTP #2). Tax act 2012 free Taylor's adjusted qualified education expenses for 2013 totaled $6,000. Tax act 2012 free In order to figure his taxable earnings, Taylor combines the two accounts and determines his taxable earnings as follows. Tax act 2012 free   1. Tax act 2012 free $10,000 (total distribution)−$4,500 (basis portion of distribution)     = $5,500 (earnings included in distribution)   2. Tax act 2012 free $5,500 (earnings) x $6,000 AQEE  $10,000 distribution           =$3,300 (tax-free earnings)     3. Tax act 2012 free $5,500 (earnings)−$3,300 (tax-free earnings)     =$2,200 (taxable earnings)                 Taylor must include $2,200 in income on Form 1040, line 21. Tax act 2012 free Because Taylor's accounts must be combined, he cannot deduct his $2,000 loss (QTP #1) on Schedule A (Form 1040). Tax act 2012 free Instead, the $2,000 loss reduces the total earnings that were distributed, thereby reducing his taxable earnings. Tax act 2012 free Additional Tax on Taxable Distributions Generally, if you receive a taxable distribution, you also must pay a 10% additional tax on the amount included in income. Tax act 2012 free Exceptions. Tax act 2012 free   The 10% additional tax does not apply to distributions: Paid to a beneficiary (or to the estate of the designated beneficiary) on or after the death of the designated beneficiary. Tax act 2012 free Made because the designated beneficiary is disabled. Tax act 2012 free A person is considered to be disabled if he or she shows proof that he or she cannot do any substantial gainful activity because of his or her physical or mental condition. Tax act 2012 free A physician must determine that his or her condition can be expected to result in death or to be of long-continued and indefinite duration. Tax act 2012 free Included in income because the designated beneficiary received: A tax-free scholarship or fellowship (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), or Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Tax act 2012 free Made on account of the attendance of the designated beneficiary at a U. Tax act 2012 free S. Tax act 2012 free military academy (such as the USNA at Annapolis). Tax act 2012 free This exception applies only to the extent that the amount of the distribution does not exceed the costs of advanced education (as defined in section 2005(d)(3) of title 10 of the U. Tax act 2012 free S. Tax act 2012 free Code) attributable to such attendance. Tax act 2012 free Included in income only because the qualified education expenses were taken into account in determining the American opportunity or lifetime learning credit (see Coordination With American Opportunity and Lifetime Learning Credits , earlier. Tax act 2012 free ) Exception (3) applies only to the extent the distribution is not more than the scholarship, allowance, or payment. Tax act 2012 free Figuring the additional tax. Tax act 2012 free    Use Part II of Form 5329, to figure any additional tax. Tax act 2012 free Report the amount on Form 1040, line 58, or Form 1040NR, line 56. Tax act 2012 free Rollovers and Other Transfers Assets can be rolled over or transferred from one QTP to another. Tax act 2012 free In addition, the designated beneficiary can be changed without transferring accounts. Tax act 2012 free Rollovers Any amount distributed from a QTP is not taxable if it is rolled over to another QTP for the benefit of the same beneficiary or for the benefit of a member of the beneficiary's family (including the beneficiary's spouse). Tax act 2012 free An amount is rolled over if it is paid to another QTP within 60 days after the date of the distribution. Tax act 2012 free Do not report qualifying rollovers (those that meet the above criteria) anywhere on Form 1040 or 1040NR. Tax act 2012 free These are not taxable distributions. Tax act 2012 free Members of the beneficiary's family. Tax act 2012 free   For these purposes, the beneficiary's family includes the beneficiary's spouse and the following other relatives of the beneficiary. Tax act 2012 free Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them. Tax act 2012 free Brother, sister, stepbrother, or stepsister. Tax act 2012 free Father or mother or ancestor of either. Tax act 2012 free Stepfather or stepmother. Tax act 2012 free Son or daughter of a brother or sister. Tax act 2012 free Brother or sister of father or mother. Tax act 2012 free Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. Tax act 2012 free The spouse of any individual listed above. Tax act 2012 free First cousin. Tax act 2012 free Example. Tax act 2012 free When Aaron graduated from college last year he had $5,000 left in his QTP. Tax act 2012 free He wanted to give this money to his younger brother, who was in junior high school. Tax act 2012 free In order to avoid paying tax on the distribution of the amount remaining in his account, Aaron contributed the same amount to his brother's QTP within 60 days of the distribution. Tax act 2012 free If the rollover is to another QTP for the same beneficiary, only one rollover is allowed within 12 months of a previous transfer to any QTP for that designated beneficiary. Tax act 2012 free Changing the Designated Beneficiary There are no income tax consequences if the designated beneficiary of an account is changed to a member of the beneficiary's family. Tax act 2012 free See Members of the beneficiary's family , earlier. Tax act 2012 free Example. Tax act 2012 free Assume the same situation as in the last example. Tax act 2012 free Instead of closing his QTP and paying the distribution into his brother's QTP, Aaron could have instructed the trustee of his account to simply change the name of the beneficiary on his account to that of his brother. Tax act 2012 free Prev  Up  Next   Home   More Online Publications