File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Free State Tax Efile For Low Income

2012 Income Tax BookletIrs Form 1040x Amended Tax ReturnIncome TaxesFree E File 2012 Federal And StateH&r Block Tax OnlineMyfreetaxes Com Taxtime1040nr EzFederal Tax Return 20122012 Federal Income Tax FormsH & R Block Tax OnlineTurbo Tax Military DiscountState Income Tax Rates1040x Form 2014Filing State Tax ReturnFile My State Taxes For Free2012 Tax ReturnsTax Preparation SoftwareIrs Gov Forms1040xEfile State TaxesFree Income Tax Filing 2012Www Military ComState Tax Efile Free2011 Income Tax Forms IndividualFile Old Tax Returns FreeTax Filing 20111040ez InstructionsAmended Kansas Tax Return1040ez 2012 FormNeed To File State Taxes Only1040 ExHow Long Do I Have To File An Amended Tax ReturnFree E File1040ez Instruction Manual2011 Form 1040Taxes HrblockBankruptcy Back TaxesState Income Tax Forms 2011Federal Free State TaxForm 1040 Ez 2013 InstructionsE File 2012 Taxes For Free

Free State Tax Efile For Low Income

Free state tax efile for low income 2. Free state tax efile for low income   Filing Status Table of Contents What's New Introduction Useful Items - You may want to see: Marital StatusDivorced persons. Free state tax efile for low income Divorce and remarriage. Free state tax efile for low income Annulled marriages. Free state tax efile for low income Head of household or qualifying widow(er) with dependent child. Free state tax efile for low income Considered married. Free state tax efile for low income Same-sex marriage. Free state tax efile for low income Spouse died during the year. Free state tax efile for low income Married persons living apart. Free state tax efile for low income Single Married Filing JointlyFiling a Joint Return Married Filing SeparatelySpecial Rules Head of HouseholdConsidered Unmarried Keeping Up a Home Qualifying Person Qualifying Widow(er) With Dependent Child What's New Filing status for same-sex married couples. Free state tax efile for low income  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. Free state tax efile for low income See Same-sex marriage under Marital Status, later. Free state tax efile for low income Introduction This chapter helps you determine which filing status to use. Free state tax efile for low income There are five filing statuses. Free state tax efile for low income Single. Free state tax efile for low income Married Filing Jointly. Free state tax efile for low income Married Filing Separately. Free state tax efile for low income Head of Household. Free state tax efile for low income Qualifying Widow(er) With Dependent Child. Free state tax efile for low income If more than one filing status applies to you, choose the one that will give you the lowest tax. Free state tax efile for low income You must determine your filing status before you can determine whether you must file a tax return (chapter 1), your standard deduction (chapter 20), and your tax (chapter 30). Free state tax efile for low income You also use your filing status to determine whether you are eligible to claim certain deductions and credits. Free state tax efile for low income Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 519 U. Free state tax efile for low income S. Free state tax efile for low income Tax Guide for Aliens 555 Community Property Marital Status In general, your filing status depends on whether you are considered unmarried or married. Free state tax efile for low income Unmarried persons. Free state tax efile for low income   You are considered unmarried for the whole year if, on the last day of your tax year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree. Free state tax efile for low income State law governs whether you are married or legally separated under a divorce or separate maintenance decree. Free state tax efile for low income Divorced persons. Free state tax efile for low income   If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year. Free state tax efile for low income Divorce and remarriage. Free state tax efile for low income   If you obtain a divorce for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intend to and do, in fact, remarry each other in the next tax year, you and your spouse must file as married individuals in both years. Free state tax efile for low income Annulled marriages. Free state tax efile for low income    If you obtain a court decree of annulment, which holds that no valid marriage ever existed, you are considered unmarried even if you filed joint returns for earlier years. Free state tax efile for low income You must file Form 1040X, Amended U. Free state tax efile for low income S. Free state tax efile for low income Individual Income Tax Return, claiming single or head of household status for all tax years that are affected by the annulment and are not closed by the statute of limitations for filing a tax return. Free state tax efile for low income Generally, for a credit or refund, you must file Form 1040X within 3 years (including extensions) after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later. Free state tax efile for low income If you filed your original return early (for example, March 1), your return is considered filed on the due date (generally April 15). Free state tax efile for low income However, if you had an extension to file (for example, until October 15) but you filed earlier and we received it on July 1, your return is considered filed on July 1. Free state tax efile for low income Head of household or qualifying widow(er) with dependent child. Free state tax efile for low income   If you are considered unmarried, you may be able to file as a head of household or as a qualifying widow(er) with a dependent child. Free state tax efile for low income See Head of Household and Qualifying Widow(er) With Dependent Child to see if you qualify. Free state tax efile for low income Married persons. Free state tax efile for low income   If you are considered married, you and your spouse can file a joint return or separate returns. Free state tax efile for low income Considered married. Free state tax efile for low income   You are considered married for the whole year if, on the last day of your tax year, you and your spouse meet any one of the following tests. Free state tax efile for low income You are married and living together as a married couple. Free state tax efile for low income You are living together in a common law marriage recognized in the state where you now live or in the state where the common law marriage began. Free state tax efile for low income You are married and living apart, but not legally separated under a decree of divorce or separate maintenance. Free state tax efile for low income You are separated under an interlocutory (not final) decree of divorce. Free state tax efile for low income Same-sex marriage. Free state tax efile for low income   For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. Free state tax efile for low income The term “spouse” includes an individual married to a person of the same sex if the couple is lawfully married under state (or foreign) law. Free state tax efile for low income However, individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that is not considered a marriage under state (or foreign) law are not considered married for federal tax purposes. Free state tax efile for low income For more details, see Publication 501. Free state tax efile for low income Spouse died during the year. Free state tax efile for low income   If your spouse died during the year, you are considered married for the whole year for filing status purposes. Free state tax efile for low income   If you did not remarry before the end of the tax year, you can file a joint return for yourself and your deceased spouse. Free state tax efile for low income For the next 2 years, you may be entitled to the special benefits described later under Qualifying Widow(er) With Dependent Child . Free state tax efile for low income   If you remarried before the end of the tax year, you can file a joint return with your new spouse. Free state tax efile for low income Your deceased spouse's filing status is married filing separately for that year. Free state tax efile for low income Married persons living apart. Free state tax efile for low income   If you live apart from your spouse and meet certain tests, you may be able to file as head of household even if you are not divorced or legally separated. Free state tax efile for low income If you qualify to file as head of household instead of married filing separately, your standard deduction will be higher. Free state tax efile for low income Also, your tax may be lower, and you may be able to claim the earned income credit. Free state tax efile for low income See Head of Household , later. Free state tax efile for low income Single Your filing status is single if you are considered unmarried and you do not qualify for another filing status. Free state tax efile for low income To determine your marital status, see Marital Status , earlier. Free state tax efile for low income Widow(er). Free state tax efile for low income   Your filing status may be single if you were widowed before January 1, 2013, and did not remarry before the end of 2013. Free state tax efile for low income You may, however, be able to use another filing status that will give you a lower tax. Free state tax efile for low income See Head of Household and Qualifying Widow(er) With Dependent Child , later, to see if you qualify. Free state tax efile for low income How to file. Free state tax efile for low income   You can file Form 1040. Free state tax efile for low income If you have taxable income of less than $100,000, you may be able to file Form 1040A. Free state tax efile for low income If, in addition, you have no dependents, and are under 65 and not blind, and meet other requirements, you can file Form 1040EZ. Free state tax efile for low income If you file Form 1040A or Form 1040, show your filing status as single by checking the box on line 1. Free state tax efile for low income Use the Single column of the Tax Table or Section A of the Tax Computation Worksheet to figure your tax. Free state tax efile for low income Married Filing Jointly You can choose married filing jointly as your filing status if you are considered married and both you and your spouse agree to file a joint return. Free state tax efile for low income On a joint return, you and your spouse report your combined income and deduct your combined allowable expenses. Free state tax efile for low income You can file a joint return even if one of you had no income or deductions. Free state tax efile for low income If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Free state tax efile for low income Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses. Free state tax efile for low income If you and your spouse each have income, you may want to figure your tax both on a joint return and on separate returns (using the filing status of married filing separately). Free state tax efile for low income You can choose the method that gives the two of you the lower combined tax. Free state tax efile for low income How to file. Free state tax efile for low income   If you file as married filing jointly, you can use Form 1040. Free state tax efile for low income If you and your spouse have taxable income of less than $100,000, you may be able to file Form 1040A. Free state tax efile for low income If, in addition, you and your spouse have no dependents, are both under 65 and not blind, and meet other requirements, you can file Form 1040EZ. Free state tax efile for low income If you file Form 1040 or Form 1040A, show this filing status by checking the box on line 2. Free state tax efile for low income Use the Married filing jointly column of the Tax Table or Section B of the Tax Computation Worksheet to figure your tax. Free state tax efile for low income Spouse died. Free state tax efile for low income   If your spouse died during the year, you are considered married for the whole year and can choose married filing jointly as your filing status. Free state tax efile for low income See Spouse died during the year under Marital Status, earlier, for more information. Free state tax efile for low income   If your spouse died in 2014 before filing a 2013 return, you can choose married filing jointly as your filing status on your 2013 return. Free state tax efile for low income Divorced persons. Free state tax efile for low income   If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year and you cannot choose married filing jointly as your filing status. Free state tax efile for low income Filing a Joint Return Both you and your spouse must include all of your income, exemptions, and deductions on your joint return. Free state tax efile for low income Accounting period. Free state tax efile for low income   Both of you must use the same accounting period, but you can use different accounting methods. Free state tax efile for low income See Accounting Periods and Accounting Methods in chapter 1. Free state tax efile for low income Joint responsibility. Free state tax efile for low income   Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. Free state tax efile for low income This means that if one spouse does not pay the tax due, the other may have to. Free state tax efile for low income Or, if one spouse does not report the correct tax, both spouses may be responsible for any additional taxes assessed by the IRS. Free state tax efile for low income One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse. Free state tax efile for low income You may want to file separately if: You believe your spouse is not reporting all of his or her income, or You do not want to be responsible for any taxes due if your spouse does not have enough tax withheld or does not pay enough estimated tax. Free state tax efile for low income Divorced taxpayer. Free state tax efile for low income   You may be held jointly and individually responsible for any tax, interest, and penalties due on a joint return filed before your divorce. Free state tax efile for low income This responsibility may apply even if your divorce decree states that your former spouse will be responsible for any amounts due on previously filed joint returns. Free state tax efile for low income Relief from joint responsibility. Free state tax efile for low income   In some cases, one spouse may be relieved of joint responsibility for tax, interest, and penalties on a joint return for items of the other spouse that were incorrectly reported on the joint return. Free state tax efile for low income You can ask for relief no matter how small the liability. Free state tax efile for low income   There are three types of relief available. Free state tax efile for low income Innocent spouse relief. Free state tax efile for low income Separation of liability (available only to joint filers who are divorced, widowed, legally separated, or have not lived together for the 12 months ending on the date the election for this relief is filed). Free state tax efile for low income Equitable relief. Free state tax efile for low income    You must file Form 8857, Request for Innocent Spouse Relief, to request relief from joint responsibility. Free state tax efile for low income Publication 971, Innocent Spouse Relief, explains these kinds of relief and who may qualify for them. Free state tax efile for low income Signing a joint return. Free state tax efile for low income   For a return to be considered a joint return, both spouses generally must sign the return. Free state tax efile for low income Spouse died before signing. Free state tax efile for low income   If your spouse died before signing the return, the executor or administrator must sign the return for your spouse. Free state tax efile for low income If neither you nor anyone else has yet been appointed as executor or administrator, you can sign the return for your spouse and enter “Filing as surviving spouse” in the area where you sign the return. Free state tax efile for low income Spouse away from home. Free state tax efile for low income   If your spouse is away from home, you should prepare the return, sign it, and send it to your spouse to sign so that it can be filed on time. Free state tax efile for low income Injury or disease prevents signing. Free state tax efile for low income   If your spouse cannot sign because of disease or injury and tells you to sign for him or her, you can sign your spouse's name in the proper space on the return followed by the words “By (your name), Husband (or Wife). Free state tax efile for low income ” Be sure to also sign in the space provided for your signature. Free state tax efile for low income Attach a dated statement, signed by you, to the return. Free state tax efile for low income The statement should include the form number of the return you are filing, the tax year, and the reason your spouse cannot sign, and should state that your spouse has agreed to your signing for him or her. Free state tax efile for low income Signing as guardian of spouse. Free state tax efile for low income   If you are the guardian of your spouse who is mentally incompetent, you can sign the return for your spouse as guardian. Free state tax efile for low income Spouse in combat zone. Free state tax efile for low income   You can sign a joint return for your spouse if your spouse cannot sign because he or she is serving in a combat zone (such as the Persian Gulf Area, Serbia, Montenegro, Albania, or Afghanistan), even if you do not have a power of attorney or other statement. Free state tax efile for low income Attach a signed statement to your return explaining that your spouse is serving in a combat zone. Free state tax efile for low income For more information on special tax rules for persons who are serving in a combat zone, or who are in missing status as a result of serving in a combat zone, see Publication 3, Armed Forces' Tax Guide. Free state tax efile for low income Other reasons spouse cannot sign. Free state tax efile for low income    If your spouse cannot sign the joint return for any other reason, you can sign for your spouse only if you are given a valid power of attorney (a legal document giving you permission to act for your spouse). Free state tax efile for low income Attach the power of attorney (or a copy of it) to your tax return. Free state tax efile for low income You can use Form 2848, Power of Attorney and Declaration of Representative. Free state tax efile for low income Nonresident alien or dual-status alien. Free state tax efile for low income   Generally, a married couple cannot file a joint return if either one is a nonresident alien at any time during the tax year. Free state tax efile for low income However, if one spouse was a nonresident alien or dual-status alien who was married to a U. Free state tax efile for low income S. Free state tax efile for low income citizen or resident alien at the end of the year, the spouses can choose to file a joint return. Free state tax efile for low income If you do file a joint return, you and your spouse are both treated as U. Free state tax efile for low income S. Free state tax efile for low income residents for the entire tax year. Free state tax efile for low income See chapter 1 of Publication 519. Free state tax efile for low income Married Filing Separately You can choose married filing separately as your filing status if you are married. Free state tax efile for low income This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return. Free state tax efile for low income If you and your spouse do not agree to file a joint return, you must use this filing status unless you qualify for head of household status, discussed later. Free state tax efile for low income You may be able to choose head of household filing status if you are considered unmarried because you live apart from your spouse and meet certain tests (explained later, under Head of Household ). Free state tax efile for low income This can apply to you even if you are not divorced or legally separated. Free state tax efile for low income If you qualify to file as head of household, instead of as married filing separately, your tax may be lower, you may be able to claim the earned income credit and certain other credits, and your standard deduction will be higher. Free state tax efile for low income The head of household filing status allows you to choose the standard deduction even if your spouse chooses to itemize deductions. Free state tax efile for low income See Head of Household , later, for more information. Free state tax efile for low income You will generally pay more combined tax on separate returns than you would on a joint return for the reasons listed under Special Rules, later. Free state tax efile for low income However, unless you are required to file separately, you should figure your tax both ways (on a joint return and on separate returns). Free state tax efile for low income This way you can make sure you are using the filing status that results in the lowest combined tax. Free state tax efile for low income When figuring the combined tax of a married couple, you may want to consider state taxes as well as federal taxes. Free state tax efile for low income How to file. Free state tax efile for low income   If you file a separate return, you generally report only your own income, exemptions, credits, and deductions. Free state tax efile for low income You can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another person. Free state tax efile for low income You can file Form 1040. Free state tax efile for low income If your taxable income is less than $100,000, you may be able to file Form 1040A. Free state tax efile for low income Select this filing status by checking the box on line 3 of either form. Free state tax efile for low income Enter your spouse's full name and SSN or ITIN in the spaces provided. Free state tax efile for low income If your spouse does not have and is not required to have an SSN or ITIN, enter “NRA” in the space for your spouse's SSN. Free state tax efile for low income Use the Married filing separately column of the Tax Table or Section C of the Tax Computation Worksheet to figure your tax. Free state tax efile for low income Special Rules If you choose married filing separately as your filing status, the following special rules apply. Free state tax efile for low income Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for. Free state tax efile for low income   Your tax rate generally is higher than on a joint return. Free state tax efile for low income Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return. Free state tax efile for low income You cannot take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer's dependent care assistance program is limited to $2,500 (instead of $5,000). Free state tax efile for low income If you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. Free state tax efile for low income For more information about these expenses, the credit, and the exclusion, see chapter 32. Free state tax efile for low income You cannot take the earned income credit. Free state tax efile for low income You cannot take the exclusion or credit for adoption expenses in most cases. Free state tax efile for low income You cannot take the education credits (the American opportunity credit and lifetime learning credit), the deduction for student loan interest, or the tuition and fees deduction. Free state tax efile for low income You cannot exclude any interest income from qualified U. Free state tax efile for low income S. Free state tax efile for low income savings bonds you used for higher education expenses. Free state tax efile for low income If you lived with your spouse at any time during the tax year: You cannot claim the credit for the elderly or the disabled, and You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received. Free state tax efile for low income The following credits and deductions are reduced at income levels half those for a joint return: The child tax credit, The retirement savings contributions credit, The deduction for personal exemptions, and Itemized deductions. Free state tax efile for low income Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return). Free state tax efile for low income If your spouse itemizes deductions, you cannot claim the standard deduction. Free state tax efile for low income If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return. Free state tax efile for low income Adjusted gross income (AGI) limits. Free state tax efile for low income   If your AGI on a separate return is lower than it would have been on a joint return, you may be able to deduct a larger amount for certain deductions that are limited by AGI, such as medical expenses. Free state tax efile for low income Individual retirement arrangements (IRAs). Free state tax efile for low income   You may not be able to deduct all or part of your contributions to a traditional IRA if you or your spouse were covered by an employee retirement plan at work during the year. Free state tax efile for low income Your deduction is reduced or eliminated if your income is more than a certain amount. Free state tax efile for low income This amount is much lower for married individuals who file separately and lived together at any time during the year. Free state tax efile for low income For more information, see How Much Can You Deduct in chapter 17. Free state tax efile for low income Rental activity losses. Free state tax efile for low income   If you actively participated in a passive rental real estate activity that produced a loss, you generally can deduct the loss from your nonpassive income, up to $25,000. Free state tax efile for low income This is called a special allowance. Free state tax efile for low income However, married persons filing separate returns who lived together at any time during the year cannot claim this special allowance. Free state tax efile for low income Married persons filing separate returns who lived apart at all times during the year are each allowed a $12,500 maximum special allowance for losses from passive real estate activities. Free state tax efile for low income See Limits on Rental Losses in chapter 9. Free state tax efile for low income Community property states. Free state tax efile for low income   If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin and file separately, your income may be considered separate income or community income for income tax purposes. Free state tax efile for low income See Publication 555. Free state tax efile for low income Joint Return After Separate Returns You can change your filing status from a separate return to a joint return by filing an amended return using Form 1040X. Free state tax efile for low income You generally can change to a joint return any time within 3 years from the due date of the separate return or returns. Free state tax efile for low income This does not include any extensions. Free state tax efile for low income A separate return includes a return filed by you or your spouse claiming married filing separately, single, or head of household filing status. Free state tax efile for low income Separate Returns After Joint Return Once you file a joint return, you cannot choose to file separate returns for that year after the due date of the return. Free state tax efile for low income Exception. Free state tax efile for low income   A personal representative for a decedent can change from a joint return elected by the surviving spouse to a separate return for the decedent. Free state tax efile for low income The personal representative has 1 year from the due date of the return (including extensions) to make the change. Free state tax efile for low income See Publication 559, Survivors, Executors, and Administrators, for more information on filing a return for a decedent. Free state tax efile for low income Head of Household You may be able to file as head of household if you meet all the following requirements. Free state tax efile for low income You are unmarried or “considered unmarried” on the last day of the year. Free state tax efile for low income See Marital Status , earlier, and Considered Unmarried , later. Free state tax efile for low income You paid more than half the cost of keeping up a home for the year. Free state tax efile for low income A qualifying person lived with you in the home for more than half the year (except for temporary absences, such as school). Free state tax efile for low income However, if the qualifying person is your dependent parent, he or she does not have to live with you. Free state tax efile for low income See Special rule for parent , later, under Qualifying Person. Free state tax efile for low income If you qualify to file as head of household, your tax rate usually will be lower than the rates for single or married filing separately. Free state tax efile for low income You will also receive a higher standard deduction than if you file as single or married filing separately. Free state tax efile for low income Kidnapped child. Free state tax efile for low income   A child may qualify you to file as head of household even if the child has been kidnapped. Free state tax efile for low income For more information, see Publication 501. Free state tax efile for low income How to file. Free state tax efile for low income   If you file as head of household, you can use Form 1040. Free state tax efile for low income If your taxable income is less than $100,000, you may be able to file Form 1040A. Free state tax efile for low income Indicate your choice of this filing status by checking the box on line 4 of either form. Free state tax efile for low income Use the Head of a household column of the Tax Table or Section D of the Tax Computation Worksheet to figure your tax. Free state tax efile for low income Considered Unmarried To qualify for head of household status, you must be either unmarried or considered unmarried on the last day of the year. Free state tax efile for low income You are considered unmarried on the last day of the tax year if you meet all the following tests. Free state tax efile for low income You file a separate return (defined earlier under Joint Return After Separate Returns ). Free state tax efile for low income You paid more than half the cost of keeping up your home for the tax year. Free state tax efile for low income Your spouse did not live in your home during the last 6 months of the tax year. Free state tax efile for low income Your spouse is considered to live in your home even if he or she is temporarily absent due to special circumstances. Free state tax efile for low income See Temporary absences , under Qualifying Person, later. Free state tax efile for low income Your home was the main home of your child, stepchild, or foster child for more than half the year. Free state tax efile for low income (See Home of qualifying person , under Qualifying Person, later, for rules applying to a child's birth, death, or temporary absence during the year. Free state tax efile for low income ) You must be able to claim an exemption for the child. Free state tax efile for low income However, you meet this test if you cannot claim the exemption only because the noncustodial parent can claim the child using the rules described in Children of divorced or separated parents (or parents who live apart) under Qualifying Child in chapter 3, or in Support Test for Children of Divorced or Separated Parents (or Parents Who Live Apart) under Qualifying Relative in chapter 3. Free state tax efile for low income The general rules for claiming an exemption for a dependent are explained under Exemptions for Dependents in chapter 3. Free state tax efile for low income If you were considered married for part of the year and lived in a community property state (listed earlier under Married Filing Separately), special rules may apply in determining your income and expenses. Free state tax efile for low income See Publication 555 for more information. Free state tax efile for low income Nonresident alien spouse. Free state tax efile for low income   You are considered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year and you do not choose to treat your nonresident spouse as a resident alien. Free state tax efile for low income However, your spouse is not a qualifying person for head of household purposes. Free state tax efile for low income You must have another qualifying person and meet the other tests to be eligible to file as a head of household. Free state tax efile for low income Choice to treat spouse as resident. Free state tax efile for low income   You are considered married if you choose to treat your spouse as a resident alien. Free state tax efile for low income See Publication 519. Free state tax efile for low income Keeping Up a Home To qualify for head of household status, you must pay more than half of the cost of keeping up a home for the year. Free state tax efile for low income You can determine whether you paid more than half of the cost of keeping up a home by using Worksheet 2–1. Free state tax efile for low income Worksheet 2-1. Free state tax efile for low income Cost of Keeping Up a Home   Amount You Paid Total Cost Property taxes $ $ Mortgage interest expense     Rent     Utility charges     Repairs/maintenance     Property insurance     Food consumed on the premises     Other household expenses     Totals $ $ Minus total amount you paid   () Amount others paid   $ If the total amount you paid is more than the amount others paid, you meet the requirement of paying more than half the cost of keeping up the home. Free state tax efile for low income Costs you include. Free state tax efile for low income   Include in the cost of keeping up a home expenses such as rent, mortgage interest, real estate taxes, insurance on the home, repairs, utilities, and food eaten in the home. Free state tax efile for low income   If you used payments you received under Temporary Assistance for Needy Families (TANF) or other public assistance programs to pay part of the cost of keeping up your home, you cannot count them as money you paid. Free state tax efile for low income However, you must include them in the total cost of keeping up your home to figure if you paid over half the cost. Free state tax efile for low income Costs you do not include. Free state tax efile for low income   Do not include the costs of clothing, education, medical treatment, vacations, life insurance, or transportation. Free state tax efile for low income Also, do not include the rental value of a home you own or the value of your services or those of a member of your household. Free state tax efile for low income Qualifying Person See Table 2-1 to see who is a qualifying person. Free state tax efile for low income Any person not described in Table 2-1 is not a qualifying person. Free state tax efile for low income Table 2-1. Free state tax efile for low income Who Is a Qualifying Person Qualifying You To File as Head of Household?1 Caution. Free state tax efile for low income See the text of this chapter for the other requirements you must meet to claim head of household filing status. Free state tax efile for low income IF the person is your . Free state tax efile for low income . Free state tax efile for low income . Free state tax efile for low income   AND . Free state tax efile for low income . Free state tax efile for low income . Free state tax efile for low income   THEN that person is . Free state tax efile for low income . Free state tax efile for low income . Free state tax efile for low income qualifying child (such as a son, daughter, or grandchild who lived with you more than half the year and meets certain other tests)2   he or she is single   a qualifying person, whether or not you can claim an exemption for the person. Free state tax efile for low income   he or she is married and you can claim an exemption for him or her   a qualifying person. Free state tax efile for low income   he or she is married and you cannot claim an exemption for him or her   not a qualifying person. Free state tax efile for low income 3 qualifying relative4 who is your father or mother   you can claim an exemption for him or her5   a qualifying person. Free state tax efile for low income 6   you cannot claim an exemption for him or her   not a qualifying person. Free state tax efile for low income qualifying relative4 other than your father or mother (such as a grandparent, brother, or sister who meets certain tests)   he or she lived with you more than half the year, and he or she is related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3 and you can claim an exemption for him or her5   a qualifying person. Free state tax efile for low income   he or she did not live with you more than half the year   not a qualifying person. Free state tax efile for low income   he or she is not related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3 and is your qualifying relative only because he or she lived with you all year as a member of your household   not a qualifying person. Free state tax efile for low income   you cannot claim an exemption for him or her   not a qualifying person. Free state tax efile for low income 1A person cannot qualify more than one taxpayer to use the head of household filing status for the year. Free state tax efile for low income 2The term “qualifying child” is defined in chapter 3. Free state tax efile for low income Note. Free state tax efile for low income If you are a noncustodial parent, the term “qualifying child” for head of household filing status does not include a child who is your qualifying child for exemption purposes only because of the rules described under Children of divorced or separated parents (or parents who live apart) under Qualifying Child in chapter 3. Free state tax efile for low income If you are the custodial parent and those rules apply, the child generally is your qualifying child for head of household filing status even though the child is not a qualifying child for whom you can claim an exemption. Free state tax efile for low income 3This person is a qualifying person if the only reason you cannot claim the exemption is that you can be claimed as a dependent on someone else's return. Free state tax efile for low income 4The term “ qualifying relative ” is defined in chapter 3. Free state tax efile for low income 5If you can claim an exemption for a person only because of a multiple support agreement, that person is not a qualifying person. Free state tax efile for low income See Multiple Support Agreement in chapter 3. Free state tax efile for low income 6See Special rule for parent . Free state tax efile for low income Example 1—child. Free state tax efile for low income Your unmarried son lived with you all year and was 18 years old at the end of the year. Free state tax efile for low income He did not provide more than half of his own support and does not meet the tests to be a qualifying child of anyone else. Free state tax efile for low income As a result, he is your qualifying child (see Qualifying Child in chapter 3) and, because he is single, your qualifying person for you to claim head of household filing status. Free state tax efile for low income Example 2—child who is not qualifying person. Free state tax efile for low income The facts are the same as in Example 1 except your son was 25 years old at the end of the year and his gross income was $5,000. Free state tax efile for low income Because he does not meet the age test (explained under Qualifying Child in chapter 3), your son is not your qualifying child. Free state tax efile for low income Because he does not meet the gross income test (explained later under Qualifying Relative in chapter 3), he is not your qualifying relative. Free state tax efile for low income As a result, he is not your qualifying person for head of household purposes. Free state tax efile for low income Example 3—girlfriend. Free state tax efile for low income Your girlfriend lived with you all year. Free state tax efile for low income Even though she may be your qualifying relative if the gross income and support tests (explained in chapter 3) are met, she is not your qualifying person for head of household purposes because she is not related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3. Free state tax efile for low income See Table 2-1. Free state tax efile for low income Example 4—girlfriend's child. Free state tax efile for low income The facts are the same as in Example 3 except your girlfriend's 10-year-old son also lived with you all year. Free state tax efile for low income He is not your qualifying child and, because he is your girlfriend's qualifying child, he is not your qualifying relative (see Not a Qualifying Child Test in chapter 3). Free state tax efile for low income As a result, he is not your qualifying person for head of household purposes. Free state tax efile for low income Home of qualifying person. Free state tax efile for low income   Generally, the qualifying person must live with you for more than half of the year. Free state tax efile for low income Special rule for parent. Free state tax efile for low income   If your qualifying person is your father or mother, you may be eligible to file as head of household even if your father or mother does not live with you. Free state tax efile for low income However, you must be able to claim an exemption for your father or mother. Free state tax efile for low income Also, you must pay more than half the cost of keeping up a home that was the main home for the entire year for your father or mother. Free state tax efile for low income   You are keeping up a main home for your father or mother if you pay more than half the cost of keeping your parent in a rest home or home for the elderly. Free state tax efile for low income Death or birth. Free state tax efile for low income   You may be eligible to file as head of household even if the individual who qualifies you for this filing status is born or dies during the year. Free state tax efile for low income If the individual is your qualifying child, the child must have lived with you for more than half the part of the year he or she was alive. Free state tax efile for low income If the individual is anyone else, see Publication 501. Free state tax efile for low income Temporary absences. Free state tax efile for low income   You and your qualifying person are considered to live together even if one or both of you are temporarily absent from your home due to special circumstances such as illness, education, business, vacation, or military service. Free state tax efile for low income It must be reasonable to assume the absent person will return to the home after the temporary absence. Free state tax efile for low income You must continue to keep up the home during the absence. Free state tax efile for low income Qualifying Widow(er) With Dependent Child If your spouse died in 2013, you can use married filing jointly as your filing status for 2013 if you otherwise qualify to use that status. Free state tax efile for low income The year of death is the last year for which you can file jointly with your deceased spouse. Free state tax efile for low income See Married Filing Jointly , earlier. Free state tax efile for low income You may be eligible to use qualifying widow(er) with dependent child as your filing status for 2 years following the year your spouse died. Free state tax efile for low income For example, if your spouse died in 2012, and you have not remarried, you may be able to use this filing status for 2013 and 2014. Free state tax efile for low income This filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you do not itemize deductions). Free state tax efile for low income It does not entitle you to file a joint return. Free state tax efile for low income How to file. Free state tax efile for low income   If you file as qualifying widow(er) with dependent child, you can use Form 1040. Free state tax efile for low income If you also have taxable income of less than $100,000 and meet certain other conditions, you may be able to file Form 1040A. Free state tax efile for low income Check the box on line 5 of either form. Free state tax efile for low income Use the Married filing jointly column of the Tax Table or Section B of the Tax Computation Worksheet to figure your tax. Free state tax efile for low income Eligibility rules. Free state tax efile for low income   You are eligible to file your 2013 return as a qualifying widow(er) with dependent child if you meet all of the following tests. Free state tax efile for low income You were entitled to file a joint return with your spouse for the year your spouse died. Free state tax efile for low income It does not matter whether you actually filed a joint return. Free state tax efile for low income Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. Free state tax efile for low income You have a child or stepchild for whom you can claim an exemption. Free state tax efile for low income This does not include a foster child. Free state tax efile for low income This child lived in your home all year, except for temporary absences. Free state tax efile for low income See Temporary absences , earlier, under Head of Household. Free state tax efile for low income There are also exceptions, described later, for a child who was born or died during the year and for a kidnapped child. Free state tax efile for low income You paid more than half the cost of keeping up a home for the year. Free state tax efile for low income See Keeping Up a Home , earlier, under Head of Household. Free state tax efile for low income Example. Free state tax efile for low income John's wife died in 2011. Free state tax efile for low income John has not remarried. Free state tax efile for low income During 2012 and 2013, he continued to keep up a home for himself and his child, who lives with him and for whom he can claim an exemption. Free state tax efile for low income For 2011 he was entitled to file a joint return for himself and his deceased wife. Free state tax efile for low income For 2012 and 2013, he can file as qualifying widower with a dependent child. Free state tax efile for low income After 2013 he can file as head of household if he qualifies. Free state tax efile for low income Death or birth. Free state tax efile for low income    You may be eligible to file as a qualifying widow(er) with dependent child if the child who qualifies you for this filing status is born or dies during the year. Free state tax efile for low income You must have provided more than half of the cost of keeping up a home that was the child's main home during the entire part of the year he or she was alive. Free state tax efile for low income Kidnapped child. Free state tax efile for low income   A child may qualify you for qualifying widow(er) with dependent child, even if the child has been kidnapped. Free state tax efile for low income See Publication 501. Free state tax efile for low income    As mentioned earlier, this filing status is available for only 2 years following the year your spouse died. Free state tax efile for low income Prev  Up  Next   Home   More Online Publications
Español

Washington Headquarters Services

The Washington Headquarters Services provides essential administrative functions for the Department of Defense.

Contact the Agency or Department

Website: Washington Headquarters Services

E-mail:

Address: Washington Headquarters Services
1155 Defense Pentagon

Washington, DC 20301-1155

The Free State Tax Efile For Low Income

Free state tax efile for low income 7. Free state tax efile for low income   Coverdell Education Savings Account (ESA) Table of Contents Introduction What Is a Coverdell ESAQualified Education Expenses ContributionsContribution Limits Additional Tax on Excess Contributions Rollovers and Other TransfersRollovers Changing the Designated Beneficiary Transfer Because of Divorce DistributionsTax-Free Distributions Taxable Distributions When Assets Must Be Distributed Introduction If your modified adjusted gross income (MAGI) is less than $110,000 ($220,000 if filing a joint return), you may be able to establish a Coverdell ESA to finance the qualified education expenses of a designated beneficiary. Free state tax efile for low income For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return. Free state tax efile for low income There is no limit on the number of separate Coverdell ESAs that can be established for a designated beneficiary. Free state tax efile for low income However, total contributions for the beneficiary in any year cannot be more than $2,000, no matter how many accounts have been established. Free state tax efile for low income See Contributions , later. Free state tax efile for low income This benefit applies not only to higher education expenses, but also to elementary and secondary education expenses. Free state tax efile for low income What is the tax benefit of the Coverdell ESA. Free state tax efile for low income   Contributions to a Coverdell ESA are not deductible, but amounts deposited in the account grow tax free until distributed. Free state tax efile for low income   If, for a year, distributions from an account are not more than a designated beneficiary's qualified education expenses at an eligible educational institution, the beneficiary will not owe tax on the distributions. Free state tax efile for low income See Tax-Free Distributions , later. Free state tax efile for low income    Table 7-1 summarizes the main features of the Coverdell ESA. Free state tax efile for low income Table 7-1. Free state tax efile for low income Coverdell ESA at a Glance Do not rely on this table alone. Free state tax efile for low income It provides only general highlights. Free state tax efile for low income See the text for definitions of terms in bold type and for more complete explanations. Free state tax efile for low income Question Answer What is a Coverdell ESA? A savings account that is set up to pay the qualified education expenses of a designated beneficiary. Free state tax efile for low income Where can it be established? It can be opened in the United States at any bank or other IRS-approved entity that offers Coverdell ESAs. Free state tax efile for low income Who can have a Coverdell ESA? Any beneficiary who is under age 18 or is a special needs beneficiary. Free state tax efile for low income Who can contribute to a Coverdell ESA? Generally, any individual (including the beneficiary) whose modified adjusted gross income for the year is less than $110,000 ($220,000 in the case of a joint return). Free state tax efile for low income Are distributions tax free? Yes, if the distributions are not more than the beneficiary's adjusted qualified education expenses for the year. Free state tax efile for low income What Is a Coverdell ESA A Coverdell ESA is a trust or custodial account created or organized in the United States only for the purpose of paying the qualified education expenses of the Designated beneficiary (defined later) of the account. Free state tax efile for low income When the account is established, the designated beneficiary must be under age 18 or a special needs beneficiary. Free state tax efile for low income To be treated as a Coverdell ESA, the account must be designated as a Coverdell ESA when it is created. Free state tax efile for low income The document creating and governing the account must be in writing and must satisfy the following requirements. Free state tax efile for low income The trustee or custodian must be a bank or an entity approved by the IRS. Free state tax efile for low income The document must provide that the trustee or custodian can only accept a contribution that meets all of the following conditions. Free state tax efile for low income The contribution is in cash. Free state tax efile for low income The contribution is made before the beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary. Free state tax efile for low income The contribution would not result in total contributions for the year (not including rollover contributions) being more than $2,000. Free state tax efile for low income Money in the account cannot be invested in life insurance contracts. Free state tax efile for low income Money in the account cannot be combined with other property except in a common trust fund or common investment fund. Free state tax efile for low income The balance in the account generally must be distributed within 30 days after the earlier of the following events. Free state tax efile for low income The beneficiary reaches age 30, unless the beneficiary is a special needs beneficiary. Free state tax efile for low income The beneficiary's death. Free state tax efile for low income Qualified Education Expenses Generally, these are expenses required for the enrollment or attendance of the designated beneficiary at an eligible educational institution. Free state tax efile for low income For purposes of Coverdell ESAs, the expenses can be either qualified higher education expenses or qualified elementary and secondary education expenses. Free state tax efile for low income Designated beneficiary. Free state tax efile for low income   This is the individual named in the document creating the trust or custodial account to receive the benefit of the funds in the account. Free state tax efile for low income Contributions to a qualified tuition program (QTP). Free state tax efile for low income   A contribution to a QTP is a qualified education expense if the contribution is on behalf of the designated beneficiary of the Coverdell ESA. Free state tax efile for low income In the case of a change in beneficiary, this is a qualified expense only if the new beneficiary is a family member of that designated beneficiary. Free state tax efile for low income See chapter 8, Qualified Tuition Program . Free state tax efile for low income Eligible Educational Institution For purposes of Coverdell ESAs, an eligible educational institution can be either an eligible postsecondary school or an eligible elementary or secondary school. Free state tax efile for low income Eligible postsecondary school. Free state tax efile for low income   This is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Free state tax efile for low income S. Free state tax efile for low income Department of Education. Free state tax efile for low income It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Free state tax efile for low income The educational institution should be able to tell you if it is an eligible educational institution. Free state tax efile for low income   Certain educational institutions located outside the United States also participate in the U. Free state tax efile for low income S. Free state tax efile for low income Department of Education's Federal Student Aid (FSA) programs. Free state tax efile for low income Eligible elementary or secondary school. Free state tax efile for low income   This is any public, private, or religious school that provides elementary or secondary education (kindergarten through grade 12), as determined under state law. Free state tax efile for low income Qualified Higher Education Expenses These are expenses related to enrollment or attendance at an eligible postsecondary school. Free state tax efile for low income As shown in the following list, to be qualified, some of the expenses must be required by the school and some must be incurred by students who are enrolled at least half-time. Free state tax efile for low income The following expenses must be required for enrollment or attendance of a designated beneficiary at an eligible postsecondary school. Free state tax efile for low income Tuition and fees. Free state tax efile for low income Books, supplies, and equipment. Free state tax efile for low income Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible postsecondary school. Free state tax efile for low income Expenses for room and board must be incurred by students who are enrolled at least half-time (defined below). Free state tax efile for low income The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts. Free state tax efile for low income The allowance for room and board, as determined by the school, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. Free state tax efile for low income The actual amount charged if the student is residing in housing owned or operated by the school. Free state tax efile for low income Half-time student. Free state tax efile for low income   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. Free state tax efile for low income Qualified Elementary and Secondary Education Expenses These are expenses related to enrollment or attendance at an eligible elementary or secondary school. Free state tax efile for low income As shown in the following list, to be qualified, some of the expenses must be required or provided by the school. Free state tax efile for low income There are special rules for computer-related expenses. Free state tax efile for low income The following expenses must be incurred by a designated beneficiary in connection with enrollment or attendance at an eligible elementary or secondary school. Free state tax efile for low income Tuition and fees. Free state tax efile for low income Books, supplies, and equipment. Free state tax efile for low income Academic tutoring. Free state tax efile for low income Special needs services for a special needs beneficiary. Free state tax efile for low income The following expenses must be required or provided by an eligible elementary or secondary school in connection with attendance or enrollment at the school. Free state tax efile for low income Room and board. Free state tax efile for low income Uniforms. Free state tax efile for low income Transportation. Free state tax efile for low income Supplementary items and services (including extended day programs). Free state tax efile for low income The purchase of computer technology, equipment, or Internet access and related services is a qualified elementary and secondary education expense if it is to be used by the beneficiary and the beneficiary's family during any of the years the beneficiary is in elementary or secondary school. Free state tax efile for low income (This does not include expenses for computer software designed for sports, games, or hobbies unless the software is predominantly educational in nature. Free state tax efile for low income ) Contributions Any individual (including the designated beneficiary) can contribute to a Coverdell ESA if the individual's MAGI (defined later under Contribution Limits ) for the year is less than $110,000. Free state tax efile for low income For individuals filing joint returns, that amount is $220,000. Free state tax efile for low income Organizations, such as corporations and trusts, can also contribute to Coverdell ESAs. Free state tax efile for low income There is no requirement that an organization's income be below a certain level. Free state tax efile for low income Contributions must meet all of the following requirements. Free state tax efile for low income They must be in cash. Free state tax efile for low income They cannot be made after the beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary. Free state tax efile for low income They must be made by the due date of the contributor's tax return (not including extensions). Free state tax efile for low income 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. Free state tax efile for low income Contributions can be made, without penalty, to both a Coverdell ESA and a QTP in the same year for the same beneficiary. Free state tax efile for low income Table 7-2 summarizes many of the features of contributing to a Coverdell ESA. Free state tax efile for low income When contributions considered made. Free state tax efile for low income   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. Free state tax efile for low income They must be made by the due date (not including extensions) for filing your return for the preceding year. Free state tax efile for low income   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. Free state tax efile for low income 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. Free state tax efile for low income Limit for each designated beneficiary. Free state tax efile for low income   For 2013, the total of all contributions to all Coverdell ESAs set up for the benefit of any one designated beneficiary cannot be more than $2,000. Free state tax efile for low income This includes contributions (other than rollovers) to all the beneficiary's Coverdell ESAs from all sources. Free state tax efile for low income Rollovers are discussed under Rollovers and Other Transfers , later. Free state tax efile for low income Example. Free state tax efile for low income When Maria Luna was born in 2012, three separate Coverdell ESAs were set up for her, one by her parents, one by her grandfather, and one by her aunt. Free state tax efile for low income In 2013, the total of all contributions to Maria's three Coverdell ESAs cannot be more than $2,000. Free state tax efile for low income 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. Free state tax efile for low income Or, if her parents contributed $1,000 and her aunt $600, her grandfather or someone else could contribute no more than $400. Free state tax efile for low income These contributions could be put into any of Maria's Coverdell ESA accounts. Free state tax efile for low income Limit for each contributor. Free state tax efile for low income   Generally, you can contribute up to $2,000 for each designated beneficiary for 2013. Free state tax efile for low income 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. Free state tax efile for low income Example. Free state tax efile for low income The facts are the same as in the previous example except that Maria Luna's older brother, Edgar, also has a Coverdell ESA. Free state tax efile for low income If their grandfather contributed $2,000 to Maria's Coverdell ESA in 2013, he could also contribute $2,000 to Edgar's Coverdell ESA. Free state tax efile for low income Reduced limit. Free state tax efile for low income   Your contribution limit may be reduced. Free state tax efile for low income 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). Free state tax efile for low income 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. Free state tax efile for low income Table 7-2. Free state tax efile for low income Coverdell ESA Contributions at a Glance Do not rely on this table alone. Free state tax efile for low income It provides only general highlights. Free state tax efile for low income See the text for more complete explanations. Free state tax efile for low income Question Answer Are contributions deductible? No. Free state tax efile for low income What is the annual contribution limit per designated beneficiary? $2,000 for each designated beneficiary. Free state tax efile for low income What if more than one Coverdell ESA has been opened for the same designated beneficiary? The annual contribution limit is $2,000 for each beneficiary, no matter how many Coverdell ESAs are set up for that beneficiary. Free state tax efile for low income What if more than one individual makes contributions for the same designated beneficiary? The annual contribution limit is $2,000 per beneficiary, no matter how many individuals contribute. Free state tax efile for low income Can contributions other than cash be made to a Coverdell ESA? No. Free state tax efile for low income When must contributions stop? No contributions can be made to a beneficiary's Coverdell ESA after he or she reaches age 18, unless the beneficiary is a special needs beneficiary. Free state tax efile for low income Modified adjusted gross income (MAGI). Free state tax efile for low income   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. Free state tax efile for low income MAGI when using Form 1040A. Free state tax efile for low income   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. Free state tax efile for low income MAGI when using Form 1040. Free state tax efile for low income   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. Free state tax efile for low income MAGI when using Form 1040NR. Free state tax efile for low income   If you file Form 1040NR, your MAGI is the AGI on line 36 of that form. Free state tax efile for low income MAGI when using Form 1040NR-EZ. Free state tax efile for low income   If you file Form 1040NR-EZ, your MAGI is the AGI on line 10 of that form. Free state tax efile for low income   If you have any of these adjustments, you can use Worksheet 7-1. Free state tax efile for low income MAGI for a Coverdell ESA , later, to figure your MAGI for Form 1040. Free state tax efile for low income Worksheet 7-1. Free state tax efile for low income MAGI for a Coverdell ESA 1. Free state tax efile for low income Enter your adjusted gross income  (Form 1040, line 38)   1. Free state tax efile for low income   2. Free state tax efile for low income Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. Free state tax efile for low income       3. Free state tax efile for low income Enter your foreign housing deduction (Form 2555, line 50)   3. Free state tax efile for low income         4. Free state tax efile for low income Enter the amount of income from Puerto Rico you are excluding   4. Free state tax efile for low income       5. Free state tax efile for low income Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. Free state tax efile for low income       6. Free state tax efile for low income Add lines 2, 3, 4, and 5   6. Free state tax efile for low income   7. Free state tax efile for low income Add lines 1 and 6. Free state tax efile for low income This is your  modified adjusted gross income   7. Free state tax efile for low income   Figuring the limit. Free state tax efile for low income    To figure the limit on the amount you can contribute for each designated beneficiary, multiply $2,000 by a fraction. Free state tax efile for low income The numerator (top number) is your MAGI minus $95,000 ($190,000 if filing a joint return). Free state tax efile for low income The denominator (bottom number) is $15,000 ($30,000 if filing a joint return). Free state tax efile for low income Subtract the result from $2,000. Free state tax efile for low income This is the amount you can contribute for each beneficiary. Free state tax efile for low income You can use Worksheet 7-2. Free state tax efile for low income Coverdell ESA Contribution Limit to figure the limit on contributions. Free state tax efile for low income    Worksheet 7-2. Free state tax efile for low income Coverdell ESA Contribution Limit 1. Free state tax efile for low income Maximum contribution   1. Free state tax efile for low income $2,000 2. Free state tax efile for low income Enter your modified adjusted gross income (MAGI) for purposes of figuring the contribution limit to a Coverdell ESA (see definition or Worksheet 7-1, earlier)   2. Free state tax efile for low income   3. Free state tax efile for low income Enter $190,000 if married filing jointly; $95,000 for all other filers   3. Free state tax efile for low income   4. Free state tax efile for low income Subtract line 3 from line 2. Free state tax efile for low income If zero or less, enter -0- on line 4, skip lines 5 through 7, and enter $2,000 on line 8   4. Free state tax efile for low income   5. Free state tax efile for low income Enter $30,000 if married filing jointly; $15,000 for all other filers   5. Free state tax efile for low income     Note. Free state tax efile for low income If the amount on line 4 is greater than or equal to the amount on line 5, stop here. Free state tax efile for low income You are not allowed to contribute to a Coverdell ESA for 2013. Free state tax efile for low income       6. Free state tax efile for low income Divide line 4 by line 5 and enter the result as a decimal (rounded to at least 3 places)   6. Free state tax efile for low income . Free state tax efile for low income 7. Free state tax efile for low income Multiply line 1 by line 6   7. Free state tax efile for low income   8. Free state tax efile for low income Subtract line 7 from line 1   8. Free state tax efile for low income   Note: The total Coverdell ESA contributions from all sources for the designated beneficiary during the tax year may not exceed $2,000. Free state tax efile for low income Example. Free state tax efile for low income Paul, who is single, had a MAGI of $96,500 for 2013. Free state tax efile for low income Paul can contribute up to $1,800 in 2013 for each beneficiary, as shown in the illustrated Worksheet 7-2, Coverdell ESA Contribution Limit–Illustrated. Free state tax efile for low income Worksheet 7-2. Free state tax efile for low income Coverdell ESA Contribution Limit—Illustrated 1. Free state tax efile for low income Maximum contribution   1. Free state tax efile for low income $2,000 2. Free state tax efile for low income Enter your modified adjusted gross  income (MAGI) for purposes of figuring the contribution limit to a Coverdell ESA (see definition or Worksheet 7-1, earlier)   2. Free state tax efile for low income 96,500 3. Free state tax efile for low income Enter $190,000 if married filing jointly; $95,000 for all other filers   3. Free state tax efile for low income 95,000 4. Free state tax efile for low income Subtract line 3 from line 2. Free state tax efile for low income If zero or less, enter -0- on line 4, skip lines 5 through 7, and enter $2,000 on line 8   4. Free state tax efile for low income 1,500 5. Free state tax efile for low income Enter $30,000 if married filing jointly; $15,000 for all other filers   5. Free state tax efile for low income 15,000   Note. Free state tax efile for low income If the amount on line 4 is greater than or equal to the amount on line 5,  stop here. Free state tax efile for low income You are not allowed to  contribute to a Coverdell ESA for 2013. Free state tax efile for low income       6. Free state tax efile for low income Divide line 4 by line 5 and enter the result as a decimal (rounded to at least 3 places)   6. Free state tax efile for low income . Free state tax efile for low income 100 7. Free state tax efile for low income Multiply line 1 by line 6   7. Free state tax efile for low income 200 8. Free state tax efile for low income Subtract line 7 from line 1   8. Free state tax efile for low income 1,800 Note: The total Coverdell ESA contributions from all sources for the designated beneficiary during the tax year may not exceed $2,000. Free state tax efile for low income Additional Tax on Excess Contributions The beneficiary must pay a 6% excise tax each year on excess contributions that are in a Coverdell ESA at the end of the year. Free state tax efile for low income Excess contributions are the total of the following two amounts. Free state tax efile for low income Contributions to any designated beneficiary's Coverdell ESA for the year that are more than $2,000 (or, if less, the total of each contributor's limit for the year, as discussed earlier). Free state tax efile for low income Excess contributions for the preceding year, reduced by the total of the following two amounts: Distributions (other than those rolled over as discussed later) during the year, and The contribution limit for the current year minus the amount contributed for the current year. Free state tax efile for low income Exceptions. Free state tax efile for low income   The excise tax does not apply if excess contributions made during 2013 (and any earnings on them) are distributed before the first day of the sixth month of the following tax year (June 1, 2014, for a calendar year taxpayer). Free state tax efile for low income   However, you must include the distributed earnings in gross income for the year in which the excess contribution was made. Free state tax efile for low income You should receive Form 1099-Q, Payments From Qualified Education Programs, from each institution from which excess contributions were distributed. Free state tax efile for low income Box 2 of that form will show the amount of earnings on your excess contributions. Free state tax efile for low income Code “2” or “3” entered in the blank box below boxes 5 and 6 indicate the year in which the earnings are taxable. Free state tax efile for low income See Instructions for Recipient on the back of copy B of your Form 1099-Q. Free state tax efile for low income Enter the amount of earnings on line 21 of Form 1040 (or Form 1040NR) for the applicable tax year. Free state tax efile for low income For more information, see Taxable Distributions , later. Free state tax efile for low income   The excise tax does not apply to any rollover contribution. Free state tax efile for low income Note. Free state tax efile for low income Contributions made in one year for the preceding tax year are considered to have been made on the last day of the preceding year. Free state tax efile for low income Example. Free state tax efile for low income In 2012, Greta's parents and grandparents contributed a total of $2,300 to Greta's Coverdell ESA— an excess contribution of $300. Free state tax efile for low income Because Greta did not withdraw the excess before June 1, 2013, she had to pay an additional tax of $18 (6% × $300) when she filed her 2012 tax return. Free state tax efile for low income In 2013, excess contributions of $500 were made to Greta's account, however, she withdrew $250 from that account to use for qualified education expenses. Free state tax efile for low income Using the steps shown earlier under Additional Tax on Excess Contributions , Greta figures the excess contribution in her account at the end of 2013 as follows. Free state tax efile for low income (1)   $500 excess contributions made in 2013     + (2)   $300 excess contributions in ESA at end of 2012     − (2a)   $250 distribution during 2013         $550 excess at end of 2013   × 6%=$33           If Greta limits 2014 contributions to $1,450 ($2,000 maximum allowed − $550 excess contributions from 2013), she will not owe any additional tax in 2014 for excess contributions. Free state tax efile for low income Figuring and reporting the additional tax. Free state tax efile for low income   You figure this excise tax in Part V of Form 5329. Free state tax efile for low income Report the additional tax on Form 1040, line 58 (or Form 1040NR, line 56). Free state tax efile for low income Rollovers and Other Transfers Assets can be rolled over from one Coverdell ESA to another or the designated beneficiary can be changed. Free state tax efile for low income The beneficiary's interest can be transferred to a spouse or former spouse because of divorce. Free state tax efile for low income 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. Free state tax efile for low income This age limitation does not apply if the new beneficiary is a special needs beneficiary. Free state tax efile for low income An amount is rolled over if it is paid to another Coverdell ESA within 60 days after the date of the distribution. Free state tax efile for low income Do not report qualifying rollovers (those that meet the above criteria) anywhere on Form 1040 or 1040NR. Free state tax efile for low income These are not taxable distributions. Free state tax efile for low income Members of the beneficiary's family. Free state tax efile for low income   For these purposes, the beneficiary's family includes the beneficiary's spouse and the following other relatives of the beneficiary. Free state tax efile for low income Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them. Free state tax efile for low income Brother, sister, stepbrother, or stepsister. Free state tax efile for low income Father or mother or ancestor of either. Free state tax efile for low income Stepfather or stepmother. Free state tax efile for low income Son or daughter of a brother or sister. Free state tax efile for low income Brother or sister of father or mother. Free state tax efile for low income Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. Free state tax efile for low income The spouse of any individual listed above. Free state tax efile for low income First cousin. Free state tax efile for low income Example. Free state tax efile for low income When Aaron graduated from college last year he had $5,000 left in his Coverdell ESA. Free state tax efile for low income He wanted to give this money to his younger sister, who was still in high school. Free state tax efile for low income In order to avoid paying tax on the distribution of the amount remaining in his account, Aaron contributed the same amount to his sister's Coverdell ESA within 60 days of the distribution. Free state tax efile for low income Only one rollover per Coverdell ESA is allowed during the 12-month period ending on the date of the payment or distribution. Free state tax efile for low income This rule does not apply to the rollover of a military death gratuity or payment from Servicemembers' Group Life Insurance (SGLI). Free state tax efile for low income Military death gratuity. Free state tax efile for low income   If you received a military death gratuity or a payment from Servicemembers' Group Life Insurance (SGLI), you may roll over all or part of the amount received to one or more Coverdell ESAs for the benefit of members of the beneficiary's family (see Members of the beneficiary's family , earlier). Free state tax efile for low income Such payments are made to an eligible survivor upon the death of a member of the armed forces. Free state tax efile for low income The contribution to a Coverdell ESA from survivor benefits received cannot be made later than 1 year after the date on which you receive the gratuity or SGLI payment. Free state tax efile for low income   This rollover contribution is not subject to (but is in addition to) the contribution limits discussed earlier under Contribution Limits . Free state tax efile for low income The amount you roll over cannot exceed the total survivor benefits you received, reduced by contributions from these benefits to a Roth IRA or other Coverdell ESAs. Free state tax efile for low income   The amount contributed from the survivor benefits is treated as part of your basis (cost) in the Coverdell ESA, and will not be taxed when distributed. Free state tax efile for low income See Distributions , later. Free state tax efile for low income The limit of one rollover per Coverdell ESA during a 12-month period does not apply to a military death gratuity or SGLI payment. Free state tax efile for low income Changing the Designated Beneficiary The designated beneficiary can be changed. Free state tax efile for low income See Members of the beneficiary's family , earlier. Free state tax efile for low income There are no tax consequences if, at the time of the change, the new beneficiary is under age 30 or is a special needs beneficiary. Free state tax efile for low income Example. Free state tax efile for low income Assume the same situation for Aaron as in the last example (see Rollovers , earlier). Free state tax efile for low income Instead of closing his Coverdell ESA and paying the distribution into his sister's Coverdell ESA, Aaron could have instructed the trustee of his account to simply change the name of the beneficiary on his account to that of his sister. Free state tax efile for low income Transfer Because of Divorce If a spouse or former spouse receives a Coverdell ESA under a divorce or separation instrument, it is not a taxable transfer. Free state tax efile for low income After the transfer, the spouse or former spouse treats the Coverdell ESA as his or her own. Free state tax efile for low income Example. Free state tax efile for low income In their divorce settlement, Peg received her ex-husband's Coverdell ESA. Free state tax efile for low income In this process, the account was transferred into her name. Free state tax efile for low income Peg now treats the funds in this Coverdell ESA as if she were the original owner. Free state tax efile for low income Distributions The designated beneficiary of a Coverdell ESA can take a distribution at any time. Free state tax efile for low income Whether the distributions are tax free depends, in part, on whether the distributions are equal to or less than the amount of Adjusted qualified education expenses (defined later) that the beneficiary has in the same tax year. Free state tax efile for low income See Table 7-3, Coverdell ESA Distributions at a Glance, for highlights. Free state tax efile for low income Table 7-3. Free state tax efile for low income Coverdell ESA Distributions at a Glance Do not rely on this table alone. Free state tax efile for low income It provides only general highlights. Free state tax efile for low income See the text for definitions of terms in bold type and for more complete explanations. Free state tax efile for low income Question Answer Is a distribution from a Coverdell ESA to pay for a designated beneficiary's qualified education expenses tax free? Generally, yes, to the extent the amount of the distribution is not more than the designated beneficiary's adjusted qualified education expenses. Free state tax efile for low income After the designated beneficiary completes his or her education at an eligible educational institution, can amounts remaining in the Coverdell ESA be distributed? Yes. Free state tax efile for low income Amounts must be distributed when the designated beneficiary reaches age 30, unless he or she is a special needs beneficiary. Free state tax efile for low income Also, certain transfers to members of the beneficiary's family are permitted. Free state tax efile for low income Does the designated beneficiary need to be enrolled for a minimum number of courses to take a tax-free distribution? No. Free state tax efile for low income Adjusted qualified education expenses. Free state tax efile for low income   To determine if total distributions for the year are more than the amount of qualified education expenses, reduce total qualified education expenses by any tax-free educational assistance. Free state tax efile for low income Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Free state tax efile for low income The amount you get by subtracting tax-free educational assistance from your total qualified education expenses is your adjusted qualified education expenses. Free state tax efile for low income Tax-Free Distributions Generally, distributions are tax free if they are not more than the beneficiary's adjusted qualified education expenses for the year. Free state tax efile for low income Do not report tax-free distributions (including qualifying rollovers) on your tax return. Free state tax efile for low income Taxable Distributions A portion of the distributions is generally taxable to the beneficiary if the total distributions are more than the beneficiary's adjusted qualified education expenses for the year. Free state tax efile for low income Excess distribution. Free state tax efile for low income   This is the part of the total distribution that is more than the beneficiary's adjusted qualified education expenses for the year. Free state tax efile for low income Earnings and basis. Free state tax efile for low income   You will receive a Form 1099-Q for each of the Coverdell ESAs from which money was distributed in 2013. Free state tax efile for low income The amount of your gross distribution will be shown in box 1. Free state tax efile for low income For 2013, instead of dividing the gross distribution between your earnings (box 2) and your basis (already-taxed amount) (box 3), the payer or trustee may report the fair market value (account balance) of the Coverdell ESA as of December 31, 2013. Free state tax efile for low income This will be shown in the blank box below boxes 5 and 6. Free state tax efile for low income   The amount contributed from survivor benefits (see Military death gratuity , earlier) is treated as part of your basis and will not be taxed when distributed. Free state tax efile for low income Figuring the Taxable Portion of a Distribution The taxable portion is the amount of the excess distribution that represents earnings that have accumulated tax free in the account. Free state tax efile for low income Figure the taxable portion for 2013 as shown in the following steps. Free state tax efile for low income Multiply the total amount distributed by a fraction. Free state tax efile for low income The numerator is the basis (contributions not previously distributed) at the end of 2012 plus total contributions for 2013 and the denominator is the value (balance) of the account at the end of 2013 plus the amount distributed during 2013. Free state tax efile for low income Subtract the amount figured in (1) from the total amount distributed during 2013. Free state tax efile for low income The result is the amount of earnings included in the distribution(s). Free state tax efile for low income Multiply the amount of earnings figured in (2) by a fraction. Free state tax efile for low income The numerator is the adjusted qualified education expenses paid during 2013 and the denominator is the total amount distributed during 2013. Free state tax efile for low income Subtract the amount figured in (3) from the amount figured in (2). Free state tax efile for low income The result is the amount the beneficiary must include in income. Free state tax efile for low income The taxable amount must be reported on Form 1040 or Form 1040NR, line 21. Free state tax efile for low income Example. Free state tax efile for low income You received an $850 distribution from your Coverdell ESA, to which $1,500 had been contributed before 2013. Free state tax efile for low income There were no contributions in 2013. Free state tax efile for low income This is your first distribution from the account, so your basis in the account on December 31, 2012, was $1,500. Free state tax efile for low income The value (balance) of your account on December 31, 2013, was $950. Free state tax efile for low income You had $700 of adjusted qualified education expenses (AQEE) for the year. Free state tax efile for low income Using the steps in Figuring the Taxable Portion of a Distribution , earlier, figure the taxable portion of your distribution as follows. Free state tax efile for low income   1. Free state tax efile for low income $850 (distribution) × $1,500 basis + $0 contributions  $950 value + $850 distribution       =$708 (basis portion of distribution)     2. Free state tax efile for low income $850 (distribution)−$708 (basis portion of distribution)     =$142 (earnings included in distribution)   3. Free state tax efile for low income $142 (earnings) × $700 AQEE  $850 distribution           =$117 (tax-free earnings)     4. Free state tax efile for low income $142 (earnings)−$117 (tax-free earnings)=$25 (taxable earnings)                 You must include $25 in income as distributed earnings not used for qualified education expenses. Free state tax efile for low income Report this amount on Form 1040, line 21, listing the type and amount of income on the dotted line. Free state tax efile for low income Worksheet 7-3, Coverdell ESA–Taxable Distributions and Basis , at the end of this chapter, can help you figure your adjusted qualified education expenses, how much of your distribution must be included in income, and the remaining basis in your Coverdell ESA(s). Free state tax efile for low income Coordination With American Opportunity and Lifetime Learning Credits The American opportunity or lifetime learning credit can be claimed in the same year the beneficiary takes a tax-free distribution from a Coverdell ESA, as long as the same expenses are not used for both benefits. Free state tax efile for low income This means the beneficiary must reduce qualified higher education expenses by tax-free educational assistance, and then further reduce them by any expenses taken into account in determining an American opportunity or lifetime learning credit. Free state tax efile for low income Example. Free state tax efile for low income Derek Green had $5,800 of qualified higher education expenses for 2013, his first year in college. Free state tax efile for low income He paid his college expenses from the following sources. Free state tax efile for low income     Partial tuition scholarship (tax free) $1,500     Coverdell ESA distribution 1,000     Gift from parents 2,100     Earnings from part-time job 1,200           Of his $5,800 of qualified higher education expenses, $4,000 was tuition and related expenses that also qualified for an American opportunity credit. Free state tax efile for low income Derek's parents claimed a $2,500 American opportunity credit (based on $4,000 expenses) on their tax return. Free state tax efile for low income Before Derek can determine the taxable portion of his Coverdell ESA distribution, he must reduce his total qualified higher education expenses. Free state tax efile for low income     Total qualified higher education expenses $5,800     Minus: Tax-free educational assistance −1,500     Minus: Expenses taken into account in  figuring American opportunity credit − 4,000     Equals: Adjusted qualified higher education  expenses (AQHEE) $ 300           Since the adjusted qualified higher education expenses ($300) are less than the Coverdell ESA distribution ($1,000), part of the distribution will be taxable. Free state tax efile for low income The balance in Derek's account was $1,800 on December 31, 2013. Free state tax efile for low income Prior to 2013, $2,100 had been contributed to this account. Free state tax efile for low income Contributions for 2013 totaled $400. Free state tax efile for low income Using the four steps outlined earlier, Derek figures the taxable portion of his distribution as shown below. Free state tax efile for low income   1. Free state tax efile for low income $1,000 (distribution) × $2,100 basis + $400 contributions  $1,800 value + $1,000 distribution           =$893 (basis portion of distribution)     2. Free state tax efile for low income $1,000 (distribution)−$893 (basis portion of distribution)     = $107 (earnings included in distribution)   3. Free state tax efile for low income $107 (earnings) × $300 AQHEE  $1,000 distribution       =$32 (tax-free earnings)     4. Free state tax efile for low income $107 (earnings)−$32 (tax-free earnings)=$75 (taxable earnings)                 Derek must include $75 in income (Form 1040, line 21). Free state tax efile for low income This is the amount of distributed earnings not used for adjusted qualified higher education expenses. Free state tax efile for low income Coordination With Qualified Tuition Program (QTP) Distributions If a designated beneficiary receives distributions from both a Coverdell ESA and a QTP in the same year, and the total distribution is more than the beneficiary's adjusted qualified higher education expenses, those expenses must be allocated between the distribution from the Coverdell ESA and the distribution from the QTP before figuring how much of each distribution is taxable. Free state tax efile for low income The following two examples illustrate possible allocations. Free state tax efile for low income Example 1. Free state tax efile for low income In 2013, Beatrice graduated from high school and began her first semester of college. Free state tax efile for low income That year, she had $1,000 of qualified elementary and secondary education expenses (QESEE) for high school and $3,000 of qualified higher education expenses (QHEE) for college. Free state tax efile for low income To pay these expenses, Beatrice withdrew $800 from her Coverdell ESA and $4,200 from her QTP. Free state tax efile for low income No one claimed Beatrice as a dependent, nor was she eligible for an education credit. Free state tax efile for low income She did not receive any tax-free educational assistance in 2013. Free state tax efile for low income Beatrice must allocate her total qualified education expenses between the two distributions. Free state tax efile for low income Beatrice knows that tax-free treatment will be available if she applies her $800 Coverdell ESA distribution toward her $1,000 of qualified education expenses for high school. Free state tax efile for low income The qualified expenses are greater than the distribution, making the $800 Coverdell ESA distribution tax free. Free state tax efile for low income Next, Beatrice matches her $4,200 QTP distribution to her $3,000 of QHEE, and finds she has an excess QTP distribution of $1,200 ($4,200 QTP − $3,000 QHEE). Free state tax efile for low income She cannot use the extra $200 of high school expenses (from (1) above) against the QTP distribution because those expenses do not qualify a QTP for tax-free treatment. Free state tax efile for low income Finally, Beatrice figures the taxable and tax-free portions of her QTP distribution based on her $3,000 of QHEE. Free state tax efile for low income (See Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program for more information. Free state tax efile for low income ) Example 2. Free state tax efile for low income Assume the same facts as in Example 1 , except that Beatrice withdrew $1,800 from her Coverdell ESA and $3,200 from her QTP. Free state tax efile for low income In this case, she allocates her qualified education expenses as follows. Free state tax efile for low income Using the same reasoning as in Example 1, Beatrice matches $1,000 of her Coverdell ESA distribution to her $1,000 of QESEE—she has $800 of her distribution remaining. Free state tax efile for low income Because higher education expenses can also qualify a Coverdell ESA distribution for tax-free treatment, Beatrice allocates her $3,000 of QHEE between the remaining $800 Coverdell ESA and the $3,200 QTP distributions ($4,000 total). Free state tax efile for low income   $3,000 QHEE × $800 ESA distribution  $4,000 total distribution = $600 QHEE (ESA)     $3,000 QHEE × $3,200 QTP distribution  $4,000 total distribution = $2,400 QHEE (QTP)   Beatrice then figures the taxable part of her: Coverdell ESA distribution based on qualified education expenses of $1,600 ($1,000 QESEE + $600 QHEE). Free state tax efile for low income See Figuring the Taxable Portion of a Distribution , earlier, in this chapter. Free state tax efile for low income   QTP distribution based on her $2,400 of QHEE (see Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program). Free state tax efile for low income The above examples show two types of allocation between distributions from a Coverdell ESA and a QTP. Free state tax efile for low income However, you do not have to allocate your expenses in the same way. Free state tax efile for low income You can use any reasonable method. Free state tax efile for low income Losses on Coverdell ESA Investments If you have a loss on your investment in a Coverdell ESA, you may be able to deduct the loss on your income tax return. Free state tax efile for low income You can deduct the loss only when all amounts from that account have been distributed and the total distributions are less than your unrecovered basis. Free state tax efile for low income Your basis is the total amount of contributions to that Coverdell ESA. Free state tax efile for low income You claim the loss as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23 (Schedule A (Form 1040NR), line 9), subject to the 2%-of-adjusted-gross-income limit. Free state tax efile for low income If you have distributions from more than one Coverdell ESA account during a year, you must combine the information (amount of distribution, basis, etc. Free state tax efile for low income ) from all such accounts in order to determine your taxable earnings for the year. Free state tax efile for low income By doing this, the loss from one ESA account reduces the distributed earnings (if any) from any other ESA account. Free state tax efile for low income For examples of the calculation, see Losses on QTP Investments in chapter 8, Qualified Tuition Program. Free state tax efile for low income Additional Tax on Taxable Distributions Generally, if you receive a taxable distribution, you also must pay a 10% additional tax on the amount included in income. Free state tax efile for low income Exceptions. Free state tax efile for low income   The 10% additional tax does not apply to distributions: Paid to a beneficiary (or to the estate of the designated beneficiary) on or after the death of the designated beneficiary. Free state tax efile for low income Made because the designated beneficiary is disabled. Free state tax efile for low income A person is considered to be disabled if he or she shows proof that he or she cannot do any substantial gainful activity because of his or her physical or mental condition. Free state tax efile for low income A physician must determine that his or her condition can be expected to result in death or to be of long-continued and indefinite duration. Free state tax efile for low income Included in income because the designated beneficiary received: A tax-free scholarship or fellowship (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), or Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Free state tax efile for low income Made on account of the attendance of the designated beneficiary at a U. Free state tax efile for low income S. Free state tax efile for low income military academy (such as the USMA at West Point). Free state tax efile for low income This exception applies only to the extent that the amount of the distribution does not exceed the costs of advanced education (as defined in section 2005(d)(3) of title 10 of the U. Free state tax efile for low income S. Free state tax efile for low income Code) attributable to such attendance. Free state tax efile for low income Included in income only because the qualified education expenses were taken into account in determining the American opportunity or lifetime learning credit (see Coordination With American Opportunity and Lifetime Learning Credits , earlier). Free state tax efile for low income Made before June 1, 2014, of an excess 2013 contribution (and any earnings on it). Free state tax efile for low income The distributed earnings must be included in gross income for the year in which the excess contribution was made. Free state tax efile for low income Exception (3) applies only to the extent the distribution is not more than the scholarship, allowance, or payment. Free state tax efile for low income Figuring the additional tax. Free state tax efile for low income    Use Part II of Form 5329, to figure any additional tax. Free state tax efile for low income Report the amount on Form 1040, line 58, or Form 1040NR, line 56. Free state tax efile for low income When Assets Must Be Distributed Any assets remaining in a Coverdell ESA must be distributed when either one of the following two events occurs. Free state tax efile for low income The designated beneficiary reaches age 30. Free state tax efile for low income In this case, the remaining assets must be distributed within 30 days after the beneficiary reaches age 30. Free state tax efile for low income However, this rule does not apply if the beneficiary is a special needs beneficiary. Free state tax efile for low income The designated beneficiary dies before reaching age 30. Free state tax efile for low income In this case, the remaining assets must generally be distributed within 30 days after the date of death. Free state tax efile for low income Exception for Transfer to Surviving Spouse or Family Member If a Coverdell ESA is transferred to a surviving spouse or other family member as the result of the death of the designated beneficiary, the Coverdell ESA retains its status. Free state tax efile for low income (“Family member” was defined earlier under Rollovers . Free state tax efile for low income ) This means the spouse or other family member can treat the Coverdell ESA as his or her own and does not need to withdraw the assets until he or she reaches age 30. Free state tax efile for low income This age limitation does not apply if the new beneficiary is a special needs beneficiary. Free state tax efile for low income There are no tax consequences as a result of the transfer. Free state tax efile for low income How To Figure the Taxable Earnings When a total distribution is made because the designated beneficiary either reached age 30 or died, the earnings that accumulated tax free in the account must be included in taxable income. Free state tax efile for low income You determine these earnings as shown in the following two steps. Free state tax efile for low income Multiply the amount distributed by a fraction. Free state tax efile for low income The numerator is the basis (contributions not previously distributed) at the end of 2012 plus total contributions for 2013 and the denominator is the balance in the account at the end of 2013 plus the amount distributed during 2013. Free state tax efile for low income Subtract the amount figured in (1) from the total amount distributed during 2013. Free state tax efile for low income The result is the amount of earnings included in the distribution. Free state tax efile for low income For an example, see steps (1) and (2) of the Example under Figuring the Taxable Portion of a Distribution, earlier. Free state tax efile for low income The beneficiary or other person receiving the distribution must report this amount on Form 1040, line 21, or Form 1040NR, line 21, listing the type and amount of income on the dotted line. Free state tax efile for low income Worksheet 7-3 Instructions. Free state tax efile for low income Coverdell ESA—Taxable Distributions and Basis Line G. Free state tax efile for low income Enter the total distributions received from all Coverdell ESAs during 2013. Free state tax efile for low income Do not include amounts rolled over to another ESA within 60 days (only one rollover is allowed during any 12-month period). Free state tax efile for low income Also, do not include excess contributions that were distributed with the related earnings (or less any loss) before the first day of the sixth month of the tax year following the year for which the contributions were made. Free state tax efile for low income Line 2. Free state tax efile for low income Your basis (amount already taxed) in this Coverdell ESA as of December 31, 2012, is the total of:   •All contributions to this Coverdell ESA before 2013 •Minus the tax-free portion of any distributions from this Coverdell ESA before 2013. Free state tax efile for low income   If your last distribution from this Coverdell ESA was before 2013, you must start with the basis in your account as of the end of the last year in which you took a distribution. Free state tax efile for low income For years before 2002, you can find that amount on the last line of the worksheet in the Instructions for Form 8606, Nondeductible IRAs, that you completed for that year. Free state tax efile for low income For years after 2001, you can find that amount by using the ending basis from the worksheet in Publication 970 for that year. Free state tax efile for low income You can determine your basis in this Coverdell ESA as of December 31, 2012, by adding to the basis as of the end of that year any contributions made to that account after the year of the distribution and before 2013. Free state tax efile for low income Line 4. Free state tax efile for low income Enter the total distributions received from this Coverdell ESA in 2013. Free state tax efile for low income Do not include amounts rolled over to another Coverdell ESA within 60 days (only one rollover is allowed during any 12-month period). Free state tax efile for low income   Also, do not include excess contributions that were distributed with the related earnings (or less any loss) before the first day of the sixth month of the tax year following the year of the contributions. Free state tax efile for low income Line 7. Free state tax efile for low income Enter the total value of this Coverdell ESA as of December 31, 2013, plus any outstanding rollovers contributed to the account after 2012, but before the end of the 60-day rollover period. Free state tax efile for low income A statement should be sent to you by January 31, 2014, for this Coverdell ESA showing the value on December 31, 2013. Free state tax efile for low income   A rollover is a tax-free withdrawal from one Coverdell ESA that is contributed to another Coverdell ESA. Free state tax efile for low income An outstanding rollover is any amount withdrawn within 60 days before the end of 2013 (November 2 through December 31) that was rolled over after December 31, 2013, but within the 60-day rollover period. Free state tax efile for low income Worksheet 7-3. Free state tax efile for low income Coverdell ESA—Taxable Distributions and Basis How to complete this worksheet. Free state tax efile for low income • • • Complete Part I, lines A through H, on only one worksheet. Free state tax efile for low income  Complete a separate Part II, lines 1 through 15, for each of your Coverdell ESAs. Free state tax efile for low income  Complete Part III, the Summary (line 16), on only one worksheet. Free state tax efile for low income Part I. Free state tax efile for low income Qualified Education Expenses (Complete for total expenses)       A. Free state tax efile for low income Enter your total qualified education expenses for 2013   A. Free state tax efile for low income   B. Free state tax efile for low income Enter those qualified education expenses paid for with tax-free educational assistance (for example, tax-free scholarships, veterans' educational benefits, Pell grants, employer-provided educational assistance)   B. Free state tax efile for low income         C. Free state tax efile for low income Enter those qualified higher education expenses deducted on Schedule C or C-EZ (Form 1040). Free state tax efile for low income Schedule F (Form 1040), or as a miscellaneous itemized deduction on Schedule A (Form 1040 or 1040NR)   C. Free state tax efile for low income         D. Free state tax efile for low income Enter those qualified higher education expenses on which  an American opportunity or lifetime learning credit was based   D. Free state tax efile for low income         E. Free state tax efile for low income Add lines B, C, and D   D. Free state tax efile for low income   F. Free state tax efile for low income Subtract line E from line A. Free state tax efile for low income This is your adjusted qualified education expense for 2013   E. Free state tax efile for low income   G. Free state tax efile for low income Enter your total distributions from all Coverdell ESAs during 2013. Free state tax efile for low income Do not include rollovers  or the return of excess contributions (see instructions)   F. Free state tax efile for low income   H. Free state tax efile for low income Divide line F by line G. Free state tax efile for low income Enter the result as a decimal (rounded to at least 3 places). Free state tax efile for low income If the  result is 1. Free state tax efile for low income 000 or more, enter 1. Free state tax efile for low income 000   G. Free state tax efile for low income . Free state tax efile for low income Part II. Free state tax efile for low income Taxable Distributions and Basis (Complete separately for each account) 1. Free state tax efile for low income Enter the amount contributed to this Coverdell ESA for 2013, including contributions made for 2013 from January 1, 2014, through April 15, 2014. Free state tax efile for low income Do not include rollovers or the return of excess contributions   1. Free state tax efile for low income   2. Free state tax efile for low income Enter your basis in this Coverdell ESA as of December 31, 2012 (see instructions)   2. Free state tax efile for low income   3. Free state tax efile for low income Add lines 1 and 2   3. Free state tax efile for low income   4. Free state tax efile for low income Enter the total distributions from this Coverdell ESA during 2013. Free state tax efile for low income Do not include rollovers  or the return of excess contributions (see instructions)   4. Free state tax efile for low income   5. Free state tax efile for low income Multiply line 4 by line H. Free state tax efile for low income This is the amount of adjusted qualified  education expense attributable to this Coverdell ESA   5. Free state tax efile for low income         6. Free state tax efile for low income Subtract line 5 from line 4   6. Free state tax efile for low income         7. Free state tax efile for low income Enter the total value of this Coverdell ESA as of December 31, 2013,  plus any outstanding rollovers (see instructions)   7. Free state tax efile for low income         8. Free state tax efile for low income Add lines 4 and 7   8. Free state tax efile for low income         9. Free state tax efile for low income Divide line 3 by line 8. Free state tax efile for low income Enter the result as a decimal (rounded to  at least 3 places). Free state tax efile for low income If the result is 1. Free state tax efile for low income 000 or more, enter 1. Free state tax efile for low income 000   9. Free state tax efile for low income . Free state tax efile for low income       10. Free state tax efile for low income Multiply line 4 by line 9. Free state tax efile for low income This is the amount of basis allocated to your  distributions, and is tax free   10. Free state tax efile for low income     Note. Free state tax efile for low income If line 6 is zero, skip lines 11 through 13, enter -0- on line 14, and go to line 15. Free state tax efile for low income       11. Free state tax efile for low income Subtract line 10 from line 4   11. Free state tax efile for low income   12. Free state tax efile for low income Divide line 5 by line 4. Free state tax efile for low income Enter the result as a decimal (rounded to  at least 3 places). Free state tax efile for low income If the result is 1. Free state tax efile for low income 000 or more, enter 1. Free state tax efile for low income 000   12. Free state tax efile for low income . Free state tax efile for low income       13. Free state tax efile for low income Multiply line 11 by line 12. Free state tax efile for low income This is the amount of qualified education  expenses allocated to your distributions, and is tax free   13. Free state tax efile for low income   14. Free state tax efile for low income Subtract line 13 from line 11. Free state tax efile for low income This is the portion of the distributions from this  Coverdell ESA in 2013 that you must include in income   14. Free state tax efile for low income   15. Free state tax efile for low income Subtract line 10 from line 3. Free state tax efile for low income This is your basis in this Coverdell ESA as of December 31, 2013   15. Free state tax efile for low income   Part III. Free state tax efile for low income Summary (Complete only once)       16. Free state tax efile for low income Taxable amount. Free state tax efile for low income Add together all amounts on line 14 for all your Coverdell ESAs. Free state tax efile for low income Enter here  and include on Form 1040, line 21, or Form 1040NR, line 21, listing the type and amount of income on the dotted line   16. Free state tax efile for low income   Prev  Up  Next   Home   More Online Publications