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Free State Tax Filing Turbotax

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Free State Tax Filing Turbotax

Free state tax filing turbotax Publication 970 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionComparison table. Free state tax filing turbotax Ordering forms and publications. Free state tax filing turbotax Tax questions. Free state tax filing turbotax Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 970, such as legislation enacted after it was published, go to www. Free state tax filing turbotax irs. Free state tax filing turbotax gov/pub970. Free state tax filing turbotax What's New Lifetime learning credit. Free state tax filing turbotax  For 2013, the amount of your lifetime learning credit is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $53,000 and $63,000 ($107,000 and $127,000 if you file a joint return). Free state tax filing turbotax You cannot claim a credit if your MAGI is $63,000 or more ($127,000 or more if you file a joint return). Free state tax filing turbotax This is an increase from the 2012 limits of $52,000 and $62,000 ($104,000 and $124,000 if filing a joint return). Free state tax filing turbotax For more information, see chapter 3, Lifetime Learning Credit . Free state tax filing turbotax Business deduction for work-related education. Free state tax filing turbotax  For 2013, if you drive your car to and from school and qualify to deduct transportation expenses, the amount you can deduct for miles driven from January 1, 2013 through December 31, 2013 is 56. Free state tax filing turbotax 5 cents per mile. Free state tax filing turbotax See chapter 12, Business Deduction for Work-Related Education , for more information. Free state tax filing turbotax Reminders Form 1098-T, Tuition Statement. Free state tax filing turbotax  When figuring an education credit or the tuition and fees deduction, use only the amounts you paid and are deemed to have paid during the tax year for qualified education expenses. Free state tax filing turbotax In most cases, the student should receive Form 1098-T from the eligible educational institution by January 31, 2014. Free state tax filing turbotax An institution my choose to report either payments received during calendar year 2013 (box 1), or amounts billed during the calendar year 2013 (box 2), for qualified education expenses. Free state tax filing turbotax However, the amounts in boxes 1 and 2 of Form 1098-T might be different than the amount you actually paid and are deemed to have paid. Free state tax filing turbotax In addition, the Form 1098-T should give you other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements, or refunds, and whether the student was enrolled at least half-time or was a graduate student. Free state tax filing turbotax The eligible educational institution may ask for a completed Form W-9S, Request for Student's or Borrower's Taxpayer Identification Number and Certification, or similar statement to obtain the student's name, address, and taxpayer identification number. Free state tax filing turbotax Hope Scholarship Credit. Free state tax filing turbotax  For 2013, the Hope Scholarship Credit is not available. Free state tax filing turbotax However, you may be able to claim an American opportunity or lifetime learning credit. Free state tax filing turbotax See chapter 2, American Opportunity Credit , and chapter 3, Lifetime Learning Credit , for more information. Free state tax filing turbotax Estimated tax payments. Free state tax filing turbotax  If you have taxable income from any of your education benefits and the payer does not withhold enough income tax, you may need to make estimated tax payments. Free state tax filing turbotax For more information, see Publication 505, Tax Withholding and Estimated Tax. Free state tax filing turbotax Photographs of missing children. Free state tax filing turbotax  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Free state tax filing turbotax Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Free state tax filing turbotax You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Free state tax filing turbotax Introduction This publication explains tax benefits that may be available to you if you are saving for or paying education costs for yourself or, in many cases, another student who is a member of your immediate family. Free state tax filing turbotax Most benefits apply only to higher education. Free state tax filing turbotax What is in this publication. Free state tax filing turbotax    Chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions , explains the tax treatment of various types of educational assistance, including scholarships, fellowships, and tuition reductions. Free state tax filing turbotax   Two tax credits for which you may be eligible are explained in chapter 2, American Opportunity Credit , and chapter 3, Lifetime Learning Credit . Free state tax filing turbotax These benefits, which reduce the amount of income tax you may have to pay, are: The American opportunity credit, and The lifetime learning credit. Free state tax filing turbotax    Ten other types of benefits are explained in chapters 4 through 12. Free state tax filing turbotax These benefits, which reduce the amount of income tax you may have to pay, are: Deduct student loan interest; Receive tax-free treatment of a canceled student loan; Receive tax-free student loan repayment assistance; Deduct tuition and fees for education; Establish and contribute to a Coverdell education savings account (ESA), which features tax-free earnings; Participate in a qualified tuition program (QTP), which features tax-free earnings; Take early distributions from any type of individual retirement arrangement (IRA) for education costs without paying the 10% additional tax on early distributions; Cash in savings bonds for education costs without having to pay tax on the interest; Receive tax-free educational benefits from your employer; and Take a business deduction for work-related education. Free state tax filing turbotax Note. Free state tax filing turbotax You generally cannot claim more than one of the benefits described in the list above for the same qualifying education expense. Free state tax filing turbotax Comparison table. Free state tax filing turbotax   Some of the features of these benefits are highlighted in Appendix B, Highlights of Education Tax Benefits for Tax Year 2013 , later, in this publication. Free state tax filing turbotax This general comparison table may guide you in determining which benefits you may be eligible for and which chapters you may want to read. Free state tax filing turbotax When you figure your taxes, you may want to compare these tax benefits so you can choose the method(s) that gives you the lowest tax liability. Free state tax filing turbotax If you qualify, you may find that a combination of credit(s) and deduction(s) gives you the lowest tax. Free state tax filing turbotax Analyzing your tax withholding. Free state tax filing turbotax   After you estimate your education tax benefits for the year, you may be able to reduce the amount of your federal income tax withholding. Free state tax filing turbotax Also, you may want to recheck your withholding during the year if your personal or financial situation changes. Free state tax filing turbotax See Publication 919, How Do I Adjust My Tax Withholding, for more information. Free state tax filing turbotax Glossary. Free state tax filing turbotax   In this publication, wherever appropriate, we have tried to use the same or similar terminology when referring to the basic components of each education benefit. Free state tax filing turbotax Some of the terms used are: Qualified education expenses, Eligible educational institution, and Modified adjusted gross income. Free state tax filing turbotax   Even though the same term, such as qualified education expenses, is used to label a basic component of many of the education benefits, the same expenses are not necessarily allowed for each benefit. Free state tax filing turbotax For example, the cost of room and board is a qualified education expense for the qualified tuition program, but not for the education savings bond program. Free state tax filing turbotax   Many of the terms used in the publication are defined in the glossary near the end of the publication. Free state tax filing turbotax The glossary is not intended to be a substitute for reading the chapter on a particular education benefit, but it will give you an overview of how certain terms are used in discussing the different benefits. Free state tax filing turbotax Comments and suggestions. Free state tax filing turbotax   We welcome your comments about this publication and your suggestions for future editions. Free state tax filing turbotax   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Free state tax filing turbotax NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Free state tax filing turbotax Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Free state tax filing turbotax   You can send your comments from www. Free state tax filing turbotax irs. Free state tax filing turbotax gov/formspubs/. Free state tax filing turbotax Click on “More Information” and then on “Comment on Tax Forms and Publications”. Free state tax filing turbotax   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Free state tax filing turbotax Ordering forms and publications. Free state tax filing turbotax   Visit www. Free state tax filing turbotax irs. Free state tax filing turbotax gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Free state tax filing turbotax Internal Revenue Service 1201 N. Free state tax filing turbotax Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Free state tax filing turbotax   If you have a tax question, check the information available on IRS. Free state tax filing turbotax gov or call 1-800-829-1040. Free state tax filing turbotax We cannot answer tax questions sent to either of the above addresses. Free state tax filing turbotax Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 550 Investment Income and Expenses 590 Individual Retirement Arrangements (IRAs) Form (and Instructions) 1040 U. Free state tax filing turbotax S. Free state tax filing turbotax Individual Income Tax Return 1040A U. Free state tax filing turbotax S. Free state tax filing turbotax Individual Income Tax Return 1040EZ Income Tax Return for Single and Joint Filers With No Dependents 1040NR U. Free state tax filing turbotax S. Free state tax filing turbotax Nonresident Alien Income Tax Return 1040NR-EZ U. Free state tax filing turbotax S. Free state tax filing turbotax Income Tax Return for Certain Nonresident Aliens With No Dependents 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 5329 Additional Taxes on Qualified Plans and Other Tax-Favored Accounts 8815 Exclusion of Interest From Series EE and I U. Free state tax filing turbotax S. Free state tax filing turbotax Savings Bonds Issued After 1989 8863 Education Credits 8917 Tuition and Fees Deduction Schedule A (Form 1040) Itemized Deductions  See chapter 13, How To Get Tax Help , for information about getting these publications and forms. 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The Free State Tax Filing Turbotax

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