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Irs 2010 Form 1040

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Irs 2010 Form 1040

Irs 2010 form 1040 7. Irs 2010 form 1040   Coverdell Education Savings Account (ESA) Table of Contents Introduction What Is a Coverdell ESAQualified Education Expenses ContributionsContribution Limits Additional Tax on Excess Contributions Rollovers and Other TransfersRollovers Changing the Designated Beneficiary Transfer Because of Divorce DistributionsTax-Free Distributions Taxable Distributions When Assets Must Be Distributed Introduction If your modified adjusted gross income (MAGI) is less than $110,000 ($220,000 if filing a joint return), you may be able to establish a Coverdell ESA to finance the qualified education expenses of a designated beneficiary. Irs 2010 form 1040 For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return. Irs 2010 form 1040 There is no limit on the number of separate Coverdell ESAs that can be established for a designated beneficiary. Irs 2010 form 1040 However, total contributions for the beneficiary in any year cannot be more than $2,000, no matter how many accounts have been established. Irs 2010 form 1040 See Contributions , later. Irs 2010 form 1040 This benefit applies not only to higher education expenses, but also to elementary and secondary education expenses. Irs 2010 form 1040 What is the tax benefit of the Coverdell ESA. Irs 2010 form 1040   Contributions to a Coverdell ESA are not deductible, but amounts deposited in the account grow tax free until distributed. Irs 2010 form 1040   If, for a year, distributions from an account are not more than a designated beneficiary's qualified education expenses at an eligible educational institution, the beneficiary will not owe tax on the distributions. Irs 2010 form 1040 See Tax-Free Distributions , later. Irs 2010 form 1040    Table 7-1 summarizes the main features of the Coverdell ESA. Irs 2010 form 1040 Table 7-1. Irs 2010 form 1040 Coverdell ESA at a Glance Do not rely on this table alone. Irs 2010 form 1040 It provides only general highlights. Irs 2010 form 1040 See the text for definitions of terms in bold type and for more complete explanations. Irs 2010 form 1040 Question Answer What is a Coverdell ESA? A savings account that is set up to pay the qualified education expenses of a designated beneficiary. Irs 2010 form 1040 Where can it be established? It can be opened in the United States at any bank or other IRS-approved entity that offers Coverdell ESAs. Irs 2010 form 1040 Who can have a Coverdell ESA? Any beneficiary who is under age 18 or is a special needs beneficiary. Irs 2010 form 1040 Who can contribute to a Coverdell ESA? Generally, any individual (including the beneficiary) whose modified adjusted gross income for the year is less than $110,000 ($220,000 in the case of a joint return). Irs 2010 form 1040 Are distributions tax free? Yes, if the distributions are not more than the beneficiary's adjusted qualified education expenses for the year. Irs 2010 form 1040 What Is a Coverdell ESA A Coverdell ESA is a trust or custodial account created or organized in the United States only for the purpose of paying the qualified education expenses of the Designated beneficiary (defined later) of the account. Irs 2010 form 1040 When the account is established, the designated beneficiary must be under age 18 or a special needs beneficiary. Irs 2010 form 1040 To be treated as a Coverdell ESA, the account must be designated as a Coverdell ESA when it is created. Irs 2010 form 1040 The document creating and governing the account must be in writing and must satisfy the following requirements. Irs 2010 form 1040 The trustee or custodian must be a bank or an entity approved by the IRS. Irs 2010 form 1040 The document must provide that the trustee or custodian can only accept a contribution that meets all of the following conditions. Irs 2010 form 1040 The contribution is in cash. Irs 2010 form 1040 The contribution is made before the beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary. Irs 2010 form 1040 The contribution would not result in total contributions for the year (not including rollover contributions) being more than $2,000. Irs 2010 form 1040 Money in the account cannot be invested in life insurance contracts. Irs 2010 form 1040 Money in the account cannot be combined with other property except in a common trust fund or common investment fund. Irs 2010 form 1040 The balance in the account generally must be distributed within 30 days after the earlier of the following events. Irs 2010 form 1040 The beneficiary reaches age 30, unless the beneficiary is a special needs beneficiary. Irs 2010 form 1040 The beneficiary's death. Irs 2010 form 1040 Qualified Education Expenses Generally, these are expenses required for the enrollment or attendance of the designated beneficiary at an eligible educational institution. Irs 2010 form 1040 For purposes of Coverdell ESAs, the expenses can be either qualified higher education expenses or qualified elementary and secondary education expenses. Irs 2010 form 1040 Designated beneficiary. Irs 2010 form 1040   This is the individual named in the document creating the trust or custodial account to receive the benefit of the funds in the account. Irs 2010 form 1040 Contributions to a qualified tuition program (QTP). Irs 2010 form 1040   A contribution to a QTP is a qualified education expense if the contribution is on behalf of the designated beneficiary of the Coverdell ESA. Irs 2010 form 1040 In the case of a change in beneficiary, this is a qualified expense only if the new beneficiary is a family member of that designated beneficiary. Irs 2010 form 1040 See chapter 8, Qualified Tuition Program . Irs 2010 form 1040 Eligible Educational Institution For purposes of Coverdell ESAs, an eligible educational institution can be either an eligible postsecondary school or an eligible elementary or secondary school. Irs 2010 form 1040 Eligible postsecondary school. Irs 2010 form 1040   This is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Irs 2010 form 1040 S. Irs 2010 form 1040 Department of Education. Irs 2010 form 1040 It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Irs 2010 form 1040 The educational institution should be able to tell you if it is an eligible educational institution. Irs 2010 form 1040   Certain educational institutions located outside the United States also participate in the U. Irs 2010 form 1040 S. Irs 2010 form 1040 Department of Education's Federal Student Aid (FSA) programs. Irs 2010 form 1040 Eligible elementary or secondary school. Irs 2010 form 1040   This is any public, private, or religious school that provides elementary or secondary education (kindergarten through grade 12), as determined under state law. Irs 2010 form 1040 Qualified Higher Education Expenses These are expenses related to enrollment or attendance at an eligible postsecondary school. Irs 2010 form 1040 As shown in the following list, to be qualified, some of the expenses must be required by the school and some must be incurred by students who are enrolled at least half-time. Irs 2010 form 1040 The following expenses must be required for enrollment or attendance of a designated beneficiary at an eligible postsecondary school. Irs 2010 form 1040 Tuition and fees. Irs 2010 form 1040 Books, supplies, and equipment. Irs 2010 form 1040 Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible postsecondary school. Irs 2010 form 1040 Expenses for room and board must be incurred by students who are enrolled at least half-time (defined below). Irs 2010 form 1040 The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts. Irs 2010 form 1040 The allowance for room and board, as determined by the school, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. Irs 2010 form 1040 The actual amount charged if the student is residing in housing owned or operated by the school. Irs 2010 form 1040 Half-time student. Irs 2010 form 1040   A student is enrolled “at least half-time” if he or she is enrolled for at least half the full-time academic work load for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled. Irs 2010 form 1040 Qualified Elementary and Secondary Education Expenses These are expenses related to enrollment or attendance at an eligible elementary or secondary school. Irs 2010 form 1040 As shown in the following list, to be qualified, some of the expenses must be required or provided by the school. Irs 2010 form 1040 There are special rules for computer-related expenses. Irs 2010 form 1040 The following expenses must be incurred by a designated beneficiary in connection with enrollment or attendance at an eligible elementary or secondary school. Irs 2010 form 1040 Tuition and fees. Irs 2010 form 1040 Books, supplies, and equipment. Irs 2010 form 1040 Academic tutoring. Irs 2010 form 1040 Special needs services for a special needs beneficiary. Irs 2010 form 1040 The following expenses must be required or provided by an eligible elementary or secondary school in connection with attendance or enrollment at the school. Irs 2010 form 1040 Room and board. Irs 2010 form 1040 Uniforms. Irs 2010 form 1040 Transportation. Irs 2010 form 1040 Supplementary items and services (including extended day programs). Irs 2010 form 1040 The purchase of computer technology, equipment, or Internet access and related services is a qualified elementary and secondary education expense if it is to be used by the beneficiary and the beneficiary's family during any of the years the beneficiary is in elementary or secondary school. Irs 2010 form 1040 (This does not include expenses for computer software designed for sports, games, or hobbies unless the software is predominantly educational in nature. Irs 2010 form 1040 ) Contributions Any individual (including the designated beneficiary) can contribute to a Coverdell ESA if the individual's MAGI (defined later under Contribution Limits ) for the year is less than $110,000. Irs 2010 form 1040 For individuals filing joint returns, that amount is $220,000. Irs 2010 form 1040 Organizations, such as corporations and trusts, can also contribute to Coverdell ESAs. Irs 2010 form 1040 There is no requirement that an organization's income be below a certain level. Irs 2010 form 1040 Contributions must meet all of the following requirements. Irs 2010 form 1040 They must be in cash. Irs 2010 form 1040 They cannot be made after the beneficiary reaches age 18, unless the beneficiary is a special needs beneficiary. Irs 2010 form 1040 They must be made by the due date of the contributor's tax return (not including extensions). Irs 2010 form 1040 Contributions can be made to one or several Coverdell ESAs for the same designated beneficiary provided that the total contributions are not more than the contribution limits (defined later) for a year. Irs 2010 form 1040 Contributions can be made, without penalty, to both a Coverdell ESA and a QTP in the same year for the same beneficiary. Irs 2010 form 1040 Table 7-2 summarizes many of the features of contributing to a Coverdell ESA. Irs 2010 form 1040 When contributions considered made. Irs 2010 form 1040   Contributions made to a Coverdell ESA for the preceding tax year are considered to have been made on the last day of the preceding year. Irs 2010 form 1040 They must be made by the due date (not including extensions) for filing your return for the preceding year. Irs 2010 form 1040   For example, if you make a contribution to a Coverdell ESA in February 2014, and you designate it as a contribution for 2013, you are considered to have made that contribution on December 31, 2013. Irs 2010 form 1040 Contribution Limits There are two yearly limits: One on the total amount that can be contributed for each designated beneficiary in any year, and One on the amount that any individual can contribute for any one designated beneficiary for a year. Irs 2010 form 1040 Limit for each designated beneficiary. Irs 2010 form 1040   For 2013, the total of all contributions to all Coverdell ESAs set up for the benefit of any one designated beneficiary cannot be more than $2,000. Irs 2010 form 1040 This includes contributions (other than rollovers) to all the beneficiary's Coverdell ESAs from all sources. Irs 2010 form 1040 Rollovers are discussed under Rollovers and Other Transfers , later. Irs 2010 form 1040 Example. Irs 2010 form 1040 When Maria Luna was born in 2012, three separate Coverdell ESAs were set up for her, one by her parents, one by her grandfather, and one by her aunt. Irs 2010 form 1040 In 2013, the total of all contributions to Maria's three Coverdell ESAs cannot be more than $2,000. Irs 2010 form 1040 For example, if her grandfather contributed $2,000 to one of her Coverdell ESAs, no one else could contribute to any of her three accounts. Irs 2010 form 1040 Or, if her parents contributed $1,000 and her aunt $600, her grandfather or someone else could contribute no more than $400. Irs 2010 form 1040 These contributions could be put into any of Maria's Coverdell ESA accounts. Irs 2010 form 1040 Limit for each contributor. Irs 2010 form 1040   Generally, you can contribute up to $2,000 for each designated beneficiary for 2013. Irs 2010 form 1040 This is the most you can contribute for the benefit of any one beneficiary for the year, regardless of the number of Coverdell ESAs set up for the beneficiary. Irs 2010 form 1040 Example. Irs 2010 form 1040 The facts are the same as in the previous example except that Maria Luna's older brother, Edgar, also has a Coverdell ESA. Irs 2010 form 1040 If their grandfather contributed $2,000 to Maria's Coverdell ESA in 2013, he could also contribute $2,000 to Edgar's Coverdell ESA. Irs 2010 form 1040 Reduced limit. Irs 2010 form 1040   Your contribution limit may be reduced. Irs 2010 form 1040 If your MAGI (defined on this page) is between $95,000 and $110,000 (between $190,000 and $220,000 if filing a joint return), the $2,000 limit for each designated beneficiary is gradually reduced (see Figuring the limit , later). Irs 2010 form 1040 If your MAGI is $110,000 or more ($220,000 or more if filing a joint return), you cannot contribute to anyone's Coverdell ESA. Irs 2010 form 1040 Table 7-2. Irs 2010 form 1040 Coverdell ESA Contributions at a Glance Do not rely on this table alone. Irs 2010 form 1040 It provides only general highlights. Irs 2010 form 1040 See the text for more complete explanations. Irs 2010 form 1040 Question Answer Are contributions deductible? No. Irs 2010 form 1040 What is the annual contribution limit per designated beneficiary? $2,000 for each designated beneficiary. Irs 2010 form 1040 What if more than one Coverdell ESA has been opened for the same designated beneficiary? The annual contribution limit is $2,000 for each beneficiary, no matter how many Coverdell ESAs are set up for that beneficiary. Irs 2010 form 1040 What if more than one individual makes contributions for the same designated beneficiary? The annual contribution limit is $2,000 per beneficiary, no matter how many individuals contribute. Irs 2010 form 1040 Can contributions other than cash be made to a Coverdell ESA? No. Irs 2010 form 1040 When must contributions stop? No contributions can be made to a beneficiary's Coverdell ESA after he or she reaches age 18, unless the beneficiary is a special needs beneficiary. Irs 2010 form 1040 Modified adjusted gross income (MAGI). Irs 2010 form 1040   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. Irs 2010 form 1040 MAGI when using Form 1040A. Irs 2010 form 1040   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. Irs 2010 form 1040 MAGI when using Form 1040. Irs 2010 form 1040   If you file Form 1040, your MAGI is the AGI on line 38 of that form, modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Irs 2010 form 1040 MAGI when using Form 1040NR. Irs 2010 form 1040   If you file Form 1040NR, your MAGI is the AGI on line 36 of that form. Irs 2010 form 1040 MAGI when using Form 1040NR-EZ. Irs 2010 form 1040   If you file Form 1040NR-EZ, your MAGI is the AGI on line 10 of that form. Irs 2010 form 1040   If you have any of these adjustments, you can use Worksheet 7-1. Irs 2010 form 1040 MAGI for a Coverdell ESA , later, to figure your MAGI for Form 1040. Irs 2010 form 1040 Worksheet 7-1. Irs 2010 form 1040 MAGI for a Coverdell ESA 1. Irs 2010 form 1040 Enter your adjusted gross income  (Form 1040, line 38)   1. Irs 2010 form 1040   2. Irs 2010 form 1040 Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. Irs 2010 form 1040       3. Irs 2010 form 1040 Enter your foreign housing deduction (Form 2555, line 50)   3. Irs 2010 form 1040         4. Irs 2010 form 1040 Enter the amount of income from Puerto Rico you are excluding   4. Irs 2010 form 1040       5. Irs 2010 form 1040 Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. Irs 2010 form 1040       6. Irs 2010 form 1040 Add lines 2, 3, 4, and 5   6. Irs 2010 form 1040   7. Irs 2010 form 1040 Add lines 1 and 6. Irs 2010 form 1040 This is your  modified adjusted gross income   7. Irs 2010 form 1040   Figuring the limit. Irs 2010 form 1040    To figure the limit on the amount you can contribute for each designated beneficiary, multiply $2,000 by a fraction. Irs 2010 form 1040 The numerator (top number) is your MAGI minus $95,000 ($190,000 if filing a joint return). Irs 2010 form 1040 The denominator (bottom number) is $15,000 ($30,000 if filing a joint return). Irs 2010 form 1040 Subtract the result from $2,000. Irs 2010 form 1040 This is the amount you can contribute for each beneficiary. Irs 2010 form 1040 You can use Worksheet 7-2. Irs 2010 form 1040 Coverdell ESA Contribution Limit to figure the limit on contributions. Irs 2010 form 1040    Worksheet 7-2. Irs 2010 form 1040 Coverdell ESA Contribution Limit 1. Irs 2010 form 1040 Maximum contribution   1. Irs 2010 form 1040 $2,000 2. Irs 2010 form 1040 Enter your modified adjusted gross income (MAGI) for purposes of figuring the contribution limit to a Coverdell ESA (see definition or Worksheet 7-1, earlier)   2. Irs 2010 form 1040   3. Irs 2010 form 1040 Enter $190,000 if married filing jointly; $95,000 for all other filers   3. Irs 2010 form 1040   4. Irs 2010 form 1040 Subtract line 3 from line 2. Irs 2010 form 1040 If zero or less, enter -0- on line 4, skip lines 5 through 7, and enter $2,000 on line 8   4. Irs 2010 form 1040   5. Irs 2010 form 1040 Enter $30,000 if married filing jointly; $15,000 for all other filers   5. Irs 2010 form 1040     Note. Irs 2010 form 1040 If the amount on line 4 is greater than or equal to the amount on line 5, stop here. Irs 2010 form 1040 You are not allowed to contribute to a Coverdell ESA for 2013. Irs 2010 form 1040       6. Irs 2010 form 1040 Divide line 4 by line 5 and enter the result as a decimal (rounded to at least 3 places)   6. Irs 2010 form 1040 . Irs 2010 form 1040 7. Irs 2010 form 1040 Multiply line 1 by line 6   7. Irs 2010 form 1040   8. Irs 2010 form 1040 Subtract line 7 from line 1   8. Irs 2010 form 1040   Note: The total Coverdell ESA contributions from all sources for the designated beneficiary during the tax year may not exceed $2,000. Irs 2010 form 1040 Example. Irs 2010 form 1040 Paul, who is single, had a MAGI of $96,500 for 2013. Irs 2010 form 1040 Paul can contribute up to $1,800 in 2013 for each beneficiary, as shown in the illustrated Worksheet 7-2, Coverdell ESA Contribution Limit–Illustrated. Irs 2010 form 1040 Worksheet 7-2. Irs 2010 form 1040 Coverdell ESA Contribution Limit—Illustrated 1. Irs 2010 form 1040 Maximum contribution   1. Irs 2010 form 1040 $2,000 2. Irs 2010 form 1040 Enter your modified adjusted gross  income (MAGI) for purposes of figuring the contribution limit to a Coverdell ESA (see definition or Worksheet 7-1, earlier)   2. Irs 2010 form 1040 96,500 3. Irs 2010 form 1040 Enter $190,000 if married filing jointly; $95,000 for all other filers   3. Irs 2010 form 1040 95,000 4. Irs 2010 form 1040 Subtract line 3 from line 2. Irs 2010 form 1040 If zero or less, enter -0- on line 4, skip lines 5 through 7, and enter $2,000 on line 8   4. Irs 2010 form 1040 1,500 5. Irs 2010 form 1040 Enter $30,000 if married filing jointly; $15,000 for all other filers   5. Irs 2010 form 1040 15,000   Note. Irs 2010 form 1040 If the amount on line 4 is greater than or equal to the amount on line 5,  stop here. Irs 2010 form 1040 You are not allowed to  contribute to a Coverdell ESA for 2013. Irs 2010 form 1040       6. Irs 2010 form 1040 Divide line 4 by line 5 and enter the result as a decimal (rounded to at least 3 places)   6. Irs 2010 form 1040 . Irs 2010 form 1040 100 7. Irs 2010 form 1040 Multiply line 1 by line 6   7. Irs 2010 form 1040 200 8. Irs 2010 form 1040 Subtract line 7 from line 1   8. Irs 2010 form 1040 1,800 Note: The total Coverdell ESA contributions from all sources for the designated beneficiary during the tax year may not exceed $2,000. Irs 2010 form 1040 Additional Tax on Excess Contributions The beneficiary must pay a 6% excise tax each year on excess contributions that are in a Coverdell ESA at the end of the year. Irs 2010 form 1040 Excess contributions are the total of the following two amounts. Irs 2010 form 1040 Contributions to any designated beneficiary's Coverdell ESA for the year that are more than $2,000 (or, if less, the total of each contributor's limit for the year, as discussed earlier). Irs 2010 form 1040 Excess contributions for the preceding year, reduced by the total of the following two amounts: Distributions (other than those rolled over as discussed later) during the year, and The contribution limit for the current year minus the amount contributed for the current year. Irs 2010 form 1040 Exceptions. Irs 2010 form 1040   The excise tax does not apply if excess contributions made during 2013 (and any earnings on them) are distributed before the first day of the sixth month of the following tax year (June 1, 2014, for a calendar year taxpayer). Irs 2010 form 1040   However, you must include the distributed earnings in gross income for the year in which the excess contribution was made. Irs 2010 form 1040 You should receive Form 1099-Q, Payments From Qualified Education Programs, from each institution from which excess contributions were distributed. Irs 2010 form 1040 Box 2 of that form will show the amount of earnings on your excess contributions. Irs 2010 form 1040 Code “2” or “3” entered in the blank box below boxes 5 and 6 indicate the year in which the earnings are taxable. Irs 2010 form 1040 See Instructions for Recipient on the back of copy B of your Form 1099-Q. Irs 2010 form 1040 Enter the amount of earnings on line 21 of Form 1040 (or Form 1040NR) for the applicable tax year. Irs 2010 form 1040 For more information, see Taxable Distributions , later. Irs 2010 form 1040   The excise tax does not apply to any rollover contribution. Irs 2010 form 1040 Note. Irs 2010 form 1040 Contributions made in one year for the preceding tax year are considered to have been made on the last day of the preceding year. Irs 2010 form 1040 Example. Irs 2010 form 1040 In 2012, Greta's parents and grandparents contributed a total of $2,300 to Greta's Coverdell ESA— an excess contribution of $300. Irs 2010 form 1040 Because Greta did not withdraw the excess before June 1, 2013, she had to pay an additional tax of $18 (6% × $300) when she filed her 2012 tax return. Irs 2010 form 1040 In 2013, excess contributions of $500 were made to Greta's account, however, she withdrew $250 from that account to use for qualified education expenses. Irs 2010 form 1040 Using the steps shown earlier under Additional Tax on Excess Contributions , Greta figures the excess contribution in her account at the end of 2013 as follows. Irs 2010 form 1040 (1)   $500 excess contributions made in 2013     + (2)   $300 excess contributions in ESA at end of 2012     − (2a)   $250 distribution during 2013         $550 excess at end of 2013   × 6%=$33           If Greta limits 2014 contributions to $1,450 ($2,000 maximum allowed − $550 excess contributions from 2013), she will not owe any additional tax in 2014 for excess contributions. Irs 2010 form 1040 Figuring and reporting the additional tax. Irs 2010 form 1040   You figure this excise tax in Part V of Form 5329. Irs 2010 form 1040 Report the additional tax on Form 1040, line 58 (or Form 1040NR, line 56). Irs 2010 form 1040 Rollovers and Other Transfers Assets can be rolled over from one Coverdell ESA to another or the designated beneficiary can be changed. Irs 2010 form 1040 The beneficiary's interest can be transferred to a spouse or former spouse because of divorce. Irs 2010 form 1040 Rollovers Any amount distributed from a Coverdell ESA is not taxable if it is rolled over to another Coverdell ESA for the benefit of the same beneficiary or a member of the beneficiary's family (including the beneficiary's spouse) who is under age 30. Irs 2010 form 1040 This age limitation does not apply if the new beneficiary is a special needs beneficiary. Irs 2010 form 1040 An amount is rolled over if it is paid to another Coverdell ESA within 60 days after the date of the distribution. Irs 2010 form 1040 Do not report qualifying rollovers (those that meet the above criteria) anywhere on Form 1040 or 1040NR. Irs 2010 form 1040 These are not taxable distributions. Irs 2010 form 1040 Members of the beneficiary's family. Irs 2010 form 1040   For these purposes, the beneficiary's family includes the beneficiary's spouse and the following other relatives of the beneficiary. Irs 2010 form 1040 Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them. Irs 2010 form 1040 Brother, sister, stepbrother, or stepsister. Irs 2010 form 1040 Father or mother or ancestor of either. Irs 2010 form 1040 Stepfather or stepmother. Irs 2010 form 1040 Son or daughter of a brother or sister. Irs 2010 form 1040 Brother or sister of father or mother. Irs 2010 form 1040 Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. Irs 2010 form 1040 The spouse of any individual listed above. Irs 2010 form 1040 First cousin. Irs 2010 form 1040 Example. Irs 2010 form 1040 When Aaron graduated from college last year he had $5,000 left in his Coverdell ESA. Irs 2010 form 1040 He wanted to give this money to his younger sister, who was still in high school. Irs 2010 form 1040 In order to avoid paying tax on the distribution of the amount remaining in his account, Aaron contributed the same amount to his sister's Coverdell ESA within 60 days of the distribution. Irs 2010 form 1040 Only one rollover per Coverdell ESA is allowed during the 12-month period ending on the date of the payment or distribution. Irs 2010 form 1040 This rule does not apply to the rollover of a military death gratuity or payment from Servicemembers' Group Life Insurance (SGLI). Irs 2010 form 1040 Military death gratuity. Irs 2010 form 1040   If you received a military death gratuity or a payment from Servicemembers' Group Life Insurance (SGLI), you may roll over all or part of the amount received to one or more Coverdell ESAs for the benefit of members of the beneficiary's family (see Members of the beneficiary's family , earlier). Irs 2010 form 1040 Such payments are made to an eligible survivor upon the death of a member of the armed forces. Irs 2010 form 1040 The contribution to a Coverdell ESA from survivor benefits received cannot be made later than 1 year after the date on which you receive the gratuity or SGLI payment. Irs 2010 form 1040   This rollover contribution is not subject to (but is in addition to) the contribution limits discussed earlier under Contribution Limits . Irs 2010 form 1040 The amount you roll over cannot exceed the total survivor benefits you received, reduced by contributions from these benefits to a Roth IRA or other Coverdell ESAs. Irs 2010 form 1040   The amount contributed from the survivor benefits is treated as part of your basis (cost) in the Coverdell ESA, and will not be taxed when distributed. Irs 2010 form 1040 See Distributions , later. Irs 2010 form 1040 The limit of one rollover per Coverdell ESA during a 12-month period does not apply to a military death gratuity or SGLI payment. Irs 2010 form 1040 Changing the Designated Beneficiary The designated beneficiary can be changed. Irs 2010 form 1040 See Members of the beneficiary's family , earlier. Irs 2010 form 1040 There are no tax consequences if, at the time of the change, the new beneficiary is under age 30 or is a special needs beneficiary. Irs 2010 form 1040 Example. Irs 2010 form 1040 Assume the same situation for Aaron as in the last example (see Rollovers , earlier). Irs 2010 form 1040 Instead of closing his Coverdell ESA and paying the distribution into his sister's Coverdell ESA, Aaron could have instructed the trustee of his account to simply change the name of the beneficiary on his account to that of his sister. Irs 2010 form 1040 Transfer Because of Divorce If a spouse or former spouse receives a Coverdell ESA under a divorce or separation instrument, it is not a taxable transfer. Irs 2010 form 1040 After the transfer, the spouse or former spouse treats the Coverdell ESA as his or her own. Irs 2010 form 1040 Example. Irs 2010 form 1040 In their divorce settlement, Peg received her ex-husband's Coverdell ESA. Irs 2010 form 1040 In this process, the account was transferred into her name. Irs 2010 form 1040 Peg now treats the funds in this Coverdell ESA as if she were the original owner. Irs 2010 form 1040 Distributions The designated beneficiary of a Coverdell ESA can take a distribution at any time. Irs 2010 form 1040 Whether the distributions are tax free depends, in part, on whether the distributions are equal to or less than the amount of Adjusted qualified education expenses (defined later) that the beneficiary has in the same tax year. Irs 2010 form 1040 See Table 7-3, Coverdell ESA Distributions at a Glance, for highlights. Irs 2010 form 1040 Table 7-3. Irs 2010 form 1040 Coverdell ESA Distributions at a Glance Do not rely on this table alone. Irs 2010 form 1040 It provides only general highlights. Irs 2010 form 1040 See the text for definitions of terms in bold type and for more complete explanations. Irs 2010 form 1040 Question Answer Is a distribution from a Coverdell ESA to pay for a designated beneficiary's qualified education expenses tax free? Generally, yes, to the extent the amount of the distribution is not more than the designated beneficiary's adjusted qualified education expenses. Irs 2010 form 1040 After the designated beneficiary completes his or her education at an eligible educational institution, can amounts remaining in the Coverdell ESA be distributed? Yes. Irs 2010 form 1040 Amounts must be distributed when the designated beneficiary reaches age 30, unless he or she is a special needs beneficiary. Irs 2010 form 1040 Also, certain transfers to members of the beneficiary's family are permitted. Irs 2010 form 1040 Does the designated beneficiary need to be enrolled for a minimum number of courses to take a tax-free distribution? No. Irs 2010 form 1040 Adjusted qualified education expenses. Irs 2010 form 1040   To determine if total distributions for the year are more than the amount of qualified education expenses, reduce total qualified education expenses by any tax-free educational assistance. Irs 2010 form 1040 Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Irs 2010 form 1040 The amount you get by subtracting tax-free educational assistance from your total qualified education expenses is your adjusted qualified education expenses. Irs 2010 form 1040 Tax-Free Distributions Generally, distributions are tax free if they are not more than the beneficiary's adjusted qualified education expenses for the year. Irs 2010 form 1040 Do not report tax-free distributions (including qualifying rollovers) on your tax return. Irs 2010 form 1040 Taxable Distributions A portion of the distributions is generally taxable to the beneficiary if the total distributions are more than the beneficiary's adjusted qualified education expenses for the year. Irs 2010 form 1040 Excess distribution. Irs 2010 form 1040   This is the part of the total distribution that is more than the beneficiary's adjusted qualified education expenses for the year. Irs 2010 form 1040 Earnings and basis. Irs 2010 form 1040   You will receive a Form 1099-Q for each of the Coverdell ESAs from which money was distributed in 2013. Irs 2010 form 1040 The amount of your gross distribution will be shown in box 1. Irs 2010 form 1040 For 2013, instead of dividing the gross distribution between your earnings (box 2) and your basis (already-taxed amount) (box 3), the payer or trustee may report the fair market value (account balance) of the Coverdell ESA as of December 31, 2013. Irs 2010 form 1040 This will be shown in the blank box below boxes 5 and 6. Irs 2010 form 1040   The amount contributed from survivor benefits (see Military death gratuity , earlier) is treated as part of your basis and will not be taxed when distributed. Irs 2010 form 1040 Figuring the Taxable Portion of a Distribution The taxable portion is the amount of the excess distribution that represents earnings that have accumulated tax free in the account. Irs 2010 form 1040 Figure the taxable portion for 2013 as shown in the following steps. Irs 2010 form 1040 Multiply the total amount distributed by a fraction. Irs 2010 form 1040 The numerator is the basis (contributions not previously distributed) at the end of 2012 plus total contributions for 2013 and the denominator is the value (balance) of the account at the end of 2013 plus the amount distributed during 2013. Irs 2010 form 1040 Subtract the amount figured in (1) from the total amount distributed during 2013. Irs 2010 form 1040 The result is the amount of earnings included in the distribution(s). Irs 2010 form 1040 Multiply the amount of earnings figured in (2) by a fraction. Irs 2010 form 1040 The numerator is the adjusted qualified education expenses paid during 2013 and the denominator is the total amount distributed during 2013. Irs 2010 form 1040 Subtract the amount figured in (3) from the amount figured in (2). Irs 2010 form 1040 The result is the amount the beneficiary must include in income. Irs 2010 form 1040 The taxable amount must be reported on Form 1040 or Form 1040NR, line 21. Irs 2010 form 1040 Example. Irs 2010 form 1040 You received an $850 distribution from your Coverdell ESA, to which $1,500 had been contributed before 2013. Irs 2010 form 1040 There were no contributions in 2013. Irs 2010 form 1040 This is your first distribution from the account, so your basis in the account on December 31, 2012, was $1,500. Irs 2010 form 1040 The value (balance) of your account on December 31, 2013, was $950. Irs 2010 form 1040 You had $700 of adjusted qualified education expenses (AQEE) for the year. Irs 2010 form 1040 Using the steps in Figuring the Taxable Portion of a Distribution , earlier, figure the taxable portion of your distribution as follows. Irs 2010 form 1040   1. Irs 2010 form 1040 $850 (distribution) × $1,500 basis + $0 contributions  $950 value + $850 distribution       =$708 (basis portion of distribution)     2. Irs 2010 form 1040 $850 (distribution)−$708 (basis portion of distribution)     =$142 (earnings included in distribution)   3. Irs 2010 form 1040 $142 (earnings) × $700 AQEE  $850 distribution           =$117 (tax-free earnings)     4. Irs 2010 form 1040 $142 (earnings)−$117 (tax-free earnings)=$25 (taxable earnings)                 You must include $25 in income as distributed earnings not used for qualified education expenses. Irs 2010 form 1040 Report this amount on Form 1040, line 21, listing the type and amount of income on the dotted line. Irs 2010 form 1040 Worksheet 7-3, Coverdell ESA–Taxable Distributions and Basis , at the end of this chapter, can help you figure your adjusted qualified education expenses, how much of your distribution must be included in income, and the remaining basis in your Coverdell ESA(s). Irs 2010 form 1040 Coordination With American Opportunity and Lifetime Learning Credits The American opportunity or lifetime learning credit can be claimed in the same year the beneficiary takes a tax-free distribution from a Coverdell ESA, as long as the same expenses are not used for both benefits. Irs 2010 form 1040 This means the beneficiary must reduce qualified higher education expenses by tax-free educational assistance, and then further reduce them by any expenses taken into account in determining an American opportunity or lifetime learning credit. Irs 2010 form 1040 Example. Irs 2010 form 1040 Derek Green had $5,800 of qualified higher education expenses for 2013, his first year in college. Irs 2010 form 1040 He paid his college expenses from the following sources. Irs 2010 form 1040     Partial tuition scholarship (tax free) $1,500     Coverdell ESA distribution 1,000     Gift from parents 2,100     Earnings from part-time job 1,200           Of his $5,800 of qualified higher education expenses, $4,000 was tuition and related expenses that also qualified for an American opportunity credit. Irs 2010 form 1040 Derek's parents claimed a $2,500 American opportunity credit (based on $4,000 expenses) on their tax return. Irs 2010 form 1040 Before Derek can determine the taxable portion of his Coverdell ESA distribution, he must reduce his total qualified higher education expenses. Irs 2010 form 1040     Total qualified higher education expenses $5,800     Minus: Tax-free educational assistance −1,500     Minus: Expenses taken into account in  figuring American opportunity credit − 4,000     Equals: Adjusted qualified higher education  expenses (AQHEE) $ 300           Since the adjusted qualified higher education expenses ($300) are less than the Coverdell ESA distribution ($1,000), part of the distribution will be taxable. Irs 2010 form 1040 The balance in Derek's account was $1,800 on December 31, 2013. Irs 2010 form 1040 Prior to 2013, $2,100 had been contributed to this account. Irs 2010 form 1040 Contributions for 2013 totaled $400. Irs 2010 form 1040 Using the four steps outlined earlier, Derek figures the taxable portion of his distribution as shown below. Irs 2010 form 1040   1. Irs 2010 form 1040 $1,000 (distribution) × $2,100 basis + $400 contributions  $1,800 value + $1,000 distribution           =$893 (basis portion of distribution)     2. Irs 2010 form 1040 $1,000 (distribution)−$893 (basis portion of distribution)     = $107 (earnings included in distribution)   3. Irs 2010 form 1040 $107 (earnings) × $300 AQHEE  $1,000 distribution       =$32 (tax-free earnings)     4. Irs 2010 form 1040 $107 (earnings)−$32 (tax-free earnings)=$75 (taxable earnings)                 Derek must include $75 in income (Form 1040, line 21). Irs 2010 form 1040 This is the amount of distributed earnings not used for adjusted qualified higher education expenses. Irs 2010 form 1040 Coordination With Qualified Tuition Program (QTP) Distributions If a designated beneficiary receives distributions from both a Coverdell ESA and a QTP in the same year, and the total distribution is more than the beneficiary's adjusted qualified higher education expenses, those expenses must be allocated between the distribution from the Coverdell ESA and the distribution from the QTP before figuring how much of each distribution is taxable. Irs 2010 form 1040 The following two examples illustrate possible allocations. Irs 2010 form 1040 Example 1. Irs 2010 form 1040 In 2013, Beatrice graduated from high school and began her first semester of college. Irs 2010 form 1040 That year, she had $1,000 of qualified elementary and secondary education expenses (QESEE) for high school and $3,000 of qualified higher education expenses (QHEE) for college. Irs 2010 form 1040 To pay these expenses, Beatrice withdrew $800 from her Coverdell ESA and $4,200 from her QTP. Irs 2010 form 1040 No one claimed Beatrice as a dependent, nor was she eligible for an education credit. Irs 2010 form 1040 She did not receive any tax-free educational assistance in 2013. Irs 2010 form 1040 Beatrice must allocate her total qualified education expenses between the two distributions. Irs 2010 form 1040 Beatrice knows that tax-free treatment will be available if she applies her $800 Coverdell ESA distribution toward her $1,000 of qualified education expenses for high school. Irs 2010 form 1040 The qualified expenses are greater than the distribution, making the $800 Coverdell ESA distribution tax free. Irs 2010 form 1040 Next, Beatrice matches her $4,200 QTP distribution to her $3,000 of QHEE, and finds she has an excess QTP distribution of $1,200 ($4,200 QTP − $3,000 QHEE). Irs 2010 form 1040 She cannot use the extra $200 of high school expenses (from (1) above) against the QTP distribution because those expenses do not qualify a QTP for tax-free treatment. Irs 2010 form 1040 Finally, Beatrice figures the taxable and tax-free portions of her QTP distribution based on her $3,000 of QHEE. Irs 2010 form 1040 (See Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program for more information. Irs 2010 form 1040 ) Example 2. Irs 2010 form 1040 Assume the same facts as in Example 1 , except that Beatrice withdrew $1,800 from her Coverdell ESA and $3,200 from her QTP. Irs 2010 form 1040 In this case, she allocates her qualified education expenses as follows. Irs 2010 form 1040 Using the same reasoning as in Example 1, Beatrice matches $1,000 of her Coverdell ESA distribution to her $1,000 of QESEE—she has $800 of her distribution remaining. Irs 2010 form 1040 Because higher education expenses can also qualify a Coverdell ESA distribution for tax-free treatment, Beatrice allocates her $3,000 of QHEE between the remaining $800 Coverdell ESA and the $3,200 QTP distributions ($4,000 total). Irs 2010 form 1040   $3,000 QHEE × $800 ESA distribution  $4,000 total distribution = $600 QHEE (ESA)     $3,000 QHEE × $3,200 QTP distribution  $4,000 total distribution = $2,400 QHEE (QTP)   Beatrice then figures the taxable part of her: Coverdell ESA distribution based on qualified education expenses of $1,600 ($1,000 QESEE + $600 QHEE). Irs 2010 form 1040 See Figuring the Taxable Portion of a Distribution , earlier, in this chapter. Irs 2010 form 1040   QTP distribution based on her $2,400 of QHEE (see Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program). Irs 2010 form 1040 The above examples show two types of allocation between distributions from a Coverdell ESA and a QTP. Irs 2010 form 1040 However, you do not have to allocate your expenses in the same way. Irs 2010 form 1040 You can use any reasonable method. Irs 2010 form 1040 Losses on Coverdell ESA Investments If you have a loss on your investment in a Coverdell ESA, you may be able to deduct the loss on your income tax return. Irs 2010 form 1040 You can deduct the loss only when all amounts from that account have been distributed and the total distributions are less than your unrecovered basis. Irs 2010 form 1040 Your basis is the total amount of contributions to that Coverdell ESA. Irs 2010 form 1040 You claim the loss as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23 (Schedule A (Form 1040NR), line 9), subject to the 2%-of-adjusted-gross-income limit. Irs 2010 form 1040 If you have distributions from more than one Coverdell ESA account during a year, you must combine the information (amount of distribution, basis, etc. Irs 2010 form 1040 ) from all such accounts in order to determine your taxable earnings for the year. Irs 2010 form 1040 By doing this, the loss from one ESA account reduces the distributed earnings (if any) from any other ESA account. Irs 2010 form 1040 For examples of the calculation, see Losses on QTP Investments in chapter 8, Qualified Tuition Program. Irs 2010 form 1040 Additional Tax on Taxable Distributions Generally, if you receive a taxable distribution, you also must pay a 10% additional tax on the amount included in income. Irs 2010 form 1040 Exceptions. Irs 2010 form 1040   The 10% additional tax does not apply to distributions: Paid to a beneficiary (or to the estate of the designated beneficiary) on or after the death of the designated beneficiary. Irs 2010 form 1040 Made because the designated beneficiary is disabled. Irs 2010 form 1040 A person is considered to be disabled if he or she shows proof that he or she cannot do any substantial gainful activity because of his or her physical or mental condition. Irs 2010 form 1040 A physician must determine that his or her condition can be expected to result in death or to be of long-continued and indefinite duration. Irs 2010 form 1040 Included in income because the designated beneficiary received: A tax-free scholarship or fellowship (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), or Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Irs 2010 form 1040 Made on account of the attendance of the designated beneficiary at a U. Irs 2010 form 1040 S. Irs 2010 form 1040 military academy (such as the USMA at West Point). Irs 2010 form 1040 This exception applies only to the extent that the amount of the distribution does not exceed the costs of advanced education (as defined in section 2005(d)(3) of title 10 of the U. Irs 2010 form 1040 S. Irs 2010 form 1040 Code) attributable to such attendance. Irs 2010 form 1040 Included in income only because the qualified education expenses were taken into account in determining the American opportunity or lifetime learning credit (see Coordination With American Opportunity and Lifetime Learning Credits , earlier). Irs 2010 form 1040 Made before June 1, 2014, of an excess 2013 contribution (and any earnings on it). Irs 2010 form 1040 The distributed earnings must be included in gross income for the year in which the excess contribution was made. Irs 2010 form 1040 Exception (3) applies only to the extent the distribution is not more than the scholarship, allowance, or payment. Irs 2010 form 1040 Figuring the additional tax. Irs 2010 form 1040    Use Part II of Form 5329, to figure any additional tax. Irs 2010 form 1040 Report the amount on Form 1040, line 58, or Form 1040NR, line 56. Irs 2010 form 1040 When Assets Must Be Distributed Any assets remaining in a Coverdell ESA must be distributed when either one of the following two events occurs. Irs 2010 form 1040 The designated beneficiary reaches age 30. Irs 2010 form 1040 In this case, the remaining assets must be distributed within 30 days after the beneficiary reaches age 30. Irs 2010 form 1040 However, this rule does not apply if the beneficiary is a special needs beneficiary. Irs 2010 form 1040 The designated beneficiary dies before reaching age 30. Irs 2010 form 1040 In this case, the remaining assets must generally be distributed within 30 days after the date of death. Irs 2010 form 1040 Exception for Transfer to Surviving Spouse or Family Member If a Coverdell ESA is transferred to a surviving spouse or other family member as the result of the death of the designated beneficiary, the Coverdell ESA retains its status. Irs 2010 form 1040 (“Family member” was defined earlier under Rollovers . Irs 2010 form 1040 ) This means the spouse or other family member can treat the Coverdell ESA as his or her own and does not need to withdraw the assets until he or she reaches age 30. Irs 2010 form 1040 This age limitation does not apply if the new beneficiary is a special needs beneficiary. Irs 2010 form 1040 There are no tax consequences as a result of the transfer. Irs 2010 form 1040 How To Figure the Taxable Earnings When a total distribution is made because the designated beneficiary either reached age 30 or died, the earnings that accumulated tax free in the account must be included in taxable income. Irs 2010 form 1040 You determine these earnings as shown in the following two steps. Irs 2010 form 1040 Multiply the amount distributed by a fraction. Irs 2010 form 1040 The numerator is the basis (contributions not previously distributed) at the end of 2012 plus total contributions for 2013 and the denominator is the balance in the account at the end of 2013 plus the amount distributed during 2013. Irs 2010 form 1040 Subtract the amount figured in (1) from the total amount distributed during 2013. Irs 2010 form 1040 The result is the amount of earnings included in the distribution. Irs 2010 form 1040 For an example, see steps (1) and (2) of the Example under Figuring the Taxable Portion of a Distribution, earlier. Irs 2010 form 1040 The beneficiary or other person receiving the distribution must report this amount on Form 1040, line 21, or Form 1040NR, line 21, listing the type and amount of income on the dotted line. Irs 2010 form 1040 Worksheet 7-3 Instructions. Irs 2010 form 1040 Coverdell ESA—Taxable Distributions and Basis Line G. Irs 2010 form 1040 Enter the total distributions received from all Coverdell ESAs during 2013. Irs 2010 form 1040 Do not include amounts rolled over to another ESA within 60 days (only one rollover is allowed during any 12-month period). Irs 2010 form 1040 Also, do not include excess contributions that were distributed with the related earnings (or less any loss) before the first day of the sixth month of the tax year following the year for which the contributions were made. Irs 2010 form 1040 Line 2. Irs 2010 form 1040 Your basis (amount already taxed) in this Coverdell ESA as of December 31, 2012, is the total of:   •All contributions to this Coverdell ESA before 2013 •Minus the tax-free portion of any distributions from this Coverdell ESA before 2013. Irs 2010 form 1040   If your last distribution from this Coverdell ESA was before 2013, you must start with the basis in your account as of the end of the last year in which you took a distribution. Irs 2010 form 1040 For years before 2002, you can find that amount on the last line of the worksheet in the Instructions for Form 8606, Nondeductible IRAs, that you completed for that year. Irs 2010 form 1040 For years after 2001, you can find that amount by using the ending basis from the worksheet in Publication 970 for that year. Irs 2010 form 1040 You can determine your basis in this Coverdell ESA as of December 31, 2012, by adding to the basis as of the end of that year any contributions made to that account after the year of the distribution and before 2013. Irs 2010 form 1040 Line 4. Irs 2010 form 1040 Enter the total distributions received from this Coverdell ESA in 2013. Irs 2010 form 1040 Do not include amounts rolled over to another Coverdell ESA within 60 days (only one rollover is allowed during any 12-month period). Irs 2010 form 1040   Also, do not include excess contributions that were distributed with the related earnings (or less any loss) before the first day of the sixth month of the tax year following the year of the contributions. Irs 2010 form 1040 Line 7. Irs 2010 form 1040 Enter the total value of this Coverdell ESA as of December 31, 2013, plus any outstanding rollovers contributed to the account after 2012, but before the end of the 60-day rollover period. Irs 2010 form 1040 A statement should be sent to you by January 31, 2014, for this Coverdell ESA showing the value on December 31, 2013. Irs 2010 form 1040   A rollover is a tax-free withdrawal from one Coverdell ESA that is contributed to another Coverdell ESA. Irs 2010 form 1040 An outstanding rollover is any amount withdrawn within 60 days before the end of 2013 (November 2 through December 31) that was rolled over after December 31, 2013, but within the 60-day rollover period. Irs 2010 form 1040 Worksheet 7-3. Irs 2010 form 1040 Coverdell ESA—Taxable Distributions and Basis How to complete this worksheet. Irs 2010 form 1040 • • • Complete Part I, lines A through H, on only one worksheet. Irs 2010 form 1040  Complete a separate Part II, lines 1 through 15, for each of your Coverdell ESAs. Irs 2010 form 1040  Complete Part III, the Summary (line 16), on only one worksheet. Irs 2010 form 1040 Part I. Irs 2010 form 1040 Qualified Education Expenses (Complete for total expenses)       A. Irs 2010 form 1040 Enter your total qualified education expenses for 2013   A. Irs 2010 form 1040   B. Irs 2010 form 1040 Enter those qualified education expenses paid for with tax-free educational assistance (for example, tax-free scholarships, veterans' educational benefits, Pell grants, employer-provided educational assistance)   B. Irs 2010 form 1040         C. Irs 2010 form 1040 Enter those qualified higher education expenses deducted on Schedule C or C-EZ (Form 1040). Irs 2010 form 1040 Schedule F (Form 1040), or as a miscellaneous itemized deduction on Schedule A (Form 1040 or 1040NR)   C. Irs 2010 form 1040         D. Irs 2010 form 1040 Enter those qualified higher education expenses on which  an American opportunity or lifetime learning credit was based   D. Irs 2010 form 1040         E. Irs 2010 form 1040 Add lines B, C, and D   D. Irs 2010 form 1040   F. Irs 2010 form 1040 Subtract line E from line A. Irs 2010 form 1040 This is your adjusted qualified education expense for 2013   E. Irs 2010 form 1040   G. Irs 2010 form 1040 Enter your total distributions from all Coverdell ESAs during 2013. Irs 2010 form 1040 Do not include rollovers  or the return of excess contributions (see instructions)   F. Irs 2010 form 1040   H. Irs 2010 form 1040 Divide line F by line G. Irs 2010 form 1040 Enter the result as a decimal (rounded to at least 3 places). Irs 2010 form 1040 If the  result is 1. Irs 2010 form 1040 000 or more, enter 1. Irs 2010 form 1040 000   G. Irs 2010 form 1040 . Irs 2010 form 1040 Part II. Irs 2010 form 1040 Taxable Distributions and Basis (Complete separately for each account) 1. Irs 2010 form 1040 Enter the amount contributed to this Coverdell ESA for 2013, including contributions made for 2013 from January 1, 2014, through April 15, 2014. Irs 2010 form 1040 Do not include rollovers or the return of excess contributions   1. Irs 2010 form 1040   2. Irs 2010 form 1040 Enter your basis in this Coverdell ESA as of December 31, 2012 (see instructions)   2. Irs 2010 form 1040   3. Irs 2010 form 1040 Add lines 1 and 2   3. Irs 2010 form 1040   4. Irs 2010 form 1040 Enter the total distributions from this Coverdell ESA during 2013. Irs 2010 form 1040 Do not include rollovers  or the return of excess contributions (see instructions)   4. Irs 2010 form 1040   5. Irs 2010 form 1040 Multiply line 4 by line H. Irs 2010 form 1040 This is the amount of adjusted qualified  education expense attributable to this Coverdell ESA   5. Irs 2010 form 1040         6. Irs 2010 form 1040 Subtract line 5 from line 4   6. Irs 2010 form 1040         7. Irs 2010 form 1040 Enter the total value of this Coverdell ESA as of December 31, 2013,  plus any outstanding rollovers (see instructions)   7. Irs 2010 form 1040         8. Irs 2010 form 1040 Add lines 4 and 7   8. Irs 2010 form 1040         9. Irs 2010 form 1040 Divide line 3 by line 8. Irs 2010 form 1040 Enter the result as a decimal (rounded to  at least 3 places). Irs 2010 form 1040 If the result is 1. Irs 2010 form 1040 000 or more, enter 1. Irs 2010 form 1040 000   9. Irs 2010 form 1040 . Irs 2010 form 1040       10. Irs 2010 form 1040 Multiply line 4 by line 9. Irs 2010 form 1040 This is the amount of basis allocated to your  distributions, and is tax free   10. Irs 2010 form 1040     Note. Irs 2010 form 1040 If line 6 is zero, skip lines 11 through 13, enter -0- on line 14, and go to line 15. Irs 2010 form 1040       11. Irs 2010 form 1040 Subtract line 10 from line 4   11. Irs 2010 form 1040   12. Irs 2010 form 1040 Divide line 5 by line 4. Irs 2010 form 1040 Enter the result as a decimal (rounded to  at least 3 places). Irs 2010 form 1040 If the result is 1. Irs 2010 form 1040 000 or more, enter 1. Irs 2010 form 1040 000   12. Irs 2010 form 1040 . Irs 2010 form 1040       13. Irs 2010 form 1040 Multiply line 11 by line 12. Irs 2010 form 1040 This is the amount of qualified education  expenses allocated to your distributions, and is tax free   13. Irs 2010 form 1040   14. Irs 2010 form 1040 Subtract line 13 from line 11. Irs 2010 form 1040 This is the portion of the distributions from this  Coverdell ESA in 2013 that you must include in income   14. Irs 2010 form 1040   15. Irs 2010 form 1040 Subtract line 10 from line 3. Irs 2010 form 1040 This is your basis in this Coverdell ESA as of December 31, 2013   15. Irs 2010 form 1040   Part III. Irs 2010 form 1040 Summary (Complete only once)       16. Irs 2010 form 1040 Taxable amount. Irs 2010 form 1040 Add together all amounts on line 14 for all your Coverdell ESAs. Irs 2010 form 1040 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. Irs 2010 form 1040   Prev  Up  Next   Home   More Online Publications
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Diploma Mills

If you're ever tempted by an e-mail or ad claiming you can "earn a degree based on life experience," don't fall for it. Any company that offers degrees for a flat fee and requires little course work is a diploma mill. If your school is not recognized as an accredited institution by the Secretary of Education, you may not be able to receive financial aid and employers won't recognize it. You can check on a school's accreditation by contacting the Department of Education or search the Council for Higher Education Accreditation's database.

Beware: Scholarship and Financial Aid Scams

Scholarships and financial aid do not require upfront fees. While there are legitimate companies who will help guide you through the financial aid and college application process for a fee, disreputable companies may ask you for money up-front and provide nothing in return. Red flags to watch out for include the following:

  • A "money-back guarantee" to secure a scholarship. Don't believe it. Unscrupulous companies attach conditions that make it impossible to get the refund.
  • "Secret scholarships." If a company claims to have inside knowledge of scholarship money, they're lying. Information on scholarships is available freely to the public. Ask you librarian or school counselor.
  • Telling students they've been selected as "finalists" for awards. If they ask for an up-front fee, head for the nearest exit.
  • Asking for a student's checking account to "confirm eligibility." If they want bank account information or your credit card number to confirm or reserve a scholarship, it's a scam.
  • Quoting a relatively small "monthly" or "weekly" fee. Then asking for authorization to debit your checking account for an unspecified length of time. Ongoing fees are a sure sign of a scam.
  • Unsolicited offers. Whether it's an e-mail, phone call, or it arrived in your mailbox, if you didn't request the information, ignore the offer.

The Irs 2010 Form 1040

Irs 2010 form 1040 Publication 516 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionOrdering forms and publications. Irs 2010 form 1040 Tax questions. Irs 2010 form 1040 Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 516, such as treaties effective after it was published, go to www. Irs 2010 form 1040 irs. Irs 2010 form 1040 gov/pub516. Irs 2010 form 1040 What's New U. Irs 2010 form 1040 S. Irs 2010 form 1040 tax treaties and foreign tax laws. Irs 2010 form 1040  This publication has been expanded to cover U. Irs 2010 form 1040 S. Irs 2010 form 1040 tax treaties and compliance with foreign tax laws. Irs 2010 form 1040 Reminders Combat zone participants. Irs 2010 form 1040  If you were a civilian who served in a combat zone or qualified hazardous duty area in support of the U. Irs 2010 form 1040 S. Irs 2010 form 1040 Armed Forces, you can get certain extensions of deadlines for filing tax returns, paying taxes, filing claims for refund, and doing certain other tax-related acts. Irs 2010 form 1040 For details, see Publication 3, Armed Forces' Tax Guide. Irs 2010 form 1040 Death due to terrorist or military action. Irs 2010 form 1040  U. Irs 2010 form 1040 S. Irs 2010 form 1040 income taxes are forgiven for a U. Irs 2010 form 1040 S. Irs 2010 form 1040 Government civilian employee who dies as a result of wounds or injuries incurred while employed by the U. Irs 2010 form 1040 S. Irs 2010 form 1040 Government. Irs 2010 form 1040 The wounds or injuries must have been caused by terrorist or military action directed against the United States or its allies. Irs 2010 form 1040 The taxes are forgiven for the deceased employee's tax years beginning with the year immediately before the year in which the wounds or injury occurred and ending with the year of death. Irs 2010 form 1040 If the deceased government employee and the employee's spouse filed a joint return, only the decedent's part of the joint tax liability is forgiven. Irs 2010 form 1040 For additional details, see Publication 559, Survivors, Executors, and Administrators. Irs 2010 form 1040 Form 8938. Irs 2010 form 1040  If you had foreign financial assets in 2012, you may have to file Form 8938 with your return. Irs 2010 form 1040 See Foreign Bank Accounts, later. Irs 2010 form 1040 Introduction If you are a U. Irs 2010 form 1040 S. Irs 2010 form 1040 citizen working for the U. Irs 2010 form 1040 S. Irs 2010 form 1040 Government, including the foreign service, and you are stationed abroad, your income tax filing requirements are generally the same as those for citizens and residents living in the United States. Irs 2010 form 1040 You are taxed on your worldwide income, even though you live and work abroad. Irs 2010 form 1040 However, you may receive certain allowances and have certain expenses that you generally do not have while living in the United States. Irs 2010 form 1040 This publication explains: Many of the allowances, reimbursements, and property sales you are likely to have, and whether you must report them as income on your tax return, and Many of the expenses you are likely to have, such as moving expenses and foreign taxes, and whether you can deduct them on your tax return. Irs 2010 form 1040 U. Irs 2010 form 1040 S. Irs 2010 form 1040 possessions. Irs 2010 form 1040   This publication does not cover the rules that apply if you are stationed in American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the Virgin Islands, or Puerto Rico. Irs 2010 form 1040 That information is in Publication 570, Tax Guide for Individuals With Income From U. Irs 2010 form 1040 S. Irs 2010 form 1040 Possessions. Irs 2010 form 1040 Comments and suggestions. Irs 2010 form 1040   We welcome your comments about this publication and your suggestions for future editions. Irs 2010 form 1040   You can write to us at the following address: Internal Revenue Service Business Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. Irs 2010 form 1040 NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Irs 2010 form 1040 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Irs 2010 form 1040   You can email us at taxforms@irs. Irs 2010 form 1040 gov. Irs 2010 form 1040 Please put “Publications Comment” on the subject line. Irs 2010 form 1040 You can also send us comments from www. Irs 2010 form 1040 irs. Irs 2010 form 1040 gov/formspubs/. Irs 2010 form 1040 Select “Comment on Tax Forms and Publications” under “Information about. Irs 2010 form 1040 ”   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. Irs 2010 form 1040 Ordering forms and publications. Irs 2010 form 1040   Visit www. Irs 2010 form 1040 irs. Irs 2010 form 1040 gov/formspubs/ to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received. Irs 2010 form 1040 Internal Revenue Service 1201 N. Irs 2010 form 1040 Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Irs 2010 form 1040   If you have a tax question, check the information available on IRS. Irs 2010 form 1040 gov or call 1-800-829-1040. Irs 2010 form 1040 We cannot answer tax questions sent to either of the above addresses. Irs 2010 form 1040 Useful Items - You may want to see: Publication 54 Tax Guide for U. Irs 2010 form 1040 S. Irs 2010 form 1040 Citizens and Resident Aliens Abroad 463 Travel, Entertainment, Gift, and Car Expenses 514 Foreign Tax Credit for Individuals 519 U. Irs 2010 form 1040 S. Irs 2010 form 1040 Tax Guide for Aliens 521 Moving Expenses 523 Selling Your Home Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 1116 Foreign Tax Credit 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 3903 Moving Expenses 4868 Application for Automatic Extension of Time To File U. Irs 2010 form 1040 S. Irs 2010 form 1040 Individual Income Tax Return 8938 Statement of Specified Foreign Financial Assets TD F 90-22. Irs 2010 form 1040 1 Report of Foreign Bank and Financial Accounts See How To Get Tax Help near the end of this publication, for information about getting these publications and forms. Irs 2010 form 1040 Prev  Up  Next   Home   More Online Publications