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Does A Student Have To File Taxes

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Does A Student Have To File Taxes

Does a student have to file taxes It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors. Does a student have to file taxes Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors. Does a student have to file taxes Select the Scenario that Applies to You: Does a student have to file taxes I am an independent contractor or in business for myself Does a student have to file taxes If you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed. For more information on your tax obligations if you are self-employed (an independent contractor), see our Self-Employed Tax Center. Does a student have to file taxes I hire or contract with individuals to provide services to my business Does a student have to file taxes If you are a business owner hiring or contracting with other individuals to provide services, you must determine whether the individuals providing services are employees or independent contractors. Follow the rest of this page to find out more about this topic and what your responsibilities are. Does a student have to file taxes Determining Whether the Individuals Providing Services are Employees or Independent Contractors Does a student have to file taxes Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be - Does a student have to file taxes An independent contractor Does a student have to file taxes An employee (common-law employee) Does a student have to file taxes A statutory employee Does a student have to file taxes A statutory nonemployee Does a student have to file taxes In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered. Does a student have to file taxes Common Law Rules Does a student have to file taxes Facts that provide evidence of the degree of control and independence fall into three categories: Does a student have to file taxes Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job? Does a student have to file taxes Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.) Does a student have to file taxes Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business? Does a student have to file taxes Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another. Does a student have to file taxes The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination. Does a student have to file taxes Form SS-8 Does a student have to file taxes If, after reviewing the three categories of evidence, it is still unclear whether a worker is an employee or an independent contractor, Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding (PDF) can be filed with the IRS. The form may be filed by either the business or the worker. The IRS will review the facts and circumstances and officially determine the worker’s status. Does a student have to file taxes Be aware that it can take at least six months to get a determination, but a business that continually hires the same types of workers to perform particular services may want to consider filing the Form SS-8 (PDF).
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The Does A Student Have To File Taxes

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