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

TurboTax Federal Free Edition - File Taxes Online

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

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


© 2012 - 2018 All rights reserved.

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

Turbotax Military 2012

Www H & R Block ComE-file 2012 TaxPrint State Tax FormIrs Tax FormsMyfreetax Com1040x Instructions2010 Amended Tax FormFree Tax 2007Amending My 2012 Tax ReturnEfile Tax CalculatorCan You E File An Amended ReturnWhat Can Military Claim On TaxesInstructions For 1040xH&r Block BasicFiling/late Taxes For 2012Free E-file For 2011I Need To Amend My TaxesH And R Block Tax EstimatorFree State Efile Tax ReturnCollege Student TaxesFree State Tax Return OnlineEz1040Can You Efile A 1040xFree Federal And State TaxFree Tax PreparationHttps Www Freefilefillableforms Com Ffa Checkstatus HtmAmend 2008 Tax ReturnTurbotax For 2011 Taxes2011 Tax PreparationIrs Gov Free FileHr Block Free FileHow Do I Fill Out 1040xAmend Your Taxes1040x 2013Free Tax Filing 2011Filing 2007 Tax Return LateIrs Form 1040xHow Do I File An Amended ReturnFile Federal And State Income Tax For FreeAmended Tax Return 2012

Turbotax Military 2012

Turbotax military 2012 1. Turbotax military 2012   Filing and Paying Business Taxes Table of Contents Introduction Useful Items - You may want to see: Identification NumbersNew EIN. Turbotax military 2012 Employee. Turbotax military 2012 Other payee. Turbotax military 2012 Income TaxDo I Have To File an Income Tax Return? How Do I File? IRS e-file (Electronic Filing) When Is My Tax Return Due? How Do I Pay Income Tax? Self-Employment (SE) TaxHow to become insured under social security. Turbotax military 2012 Earning credits in 2013 and 2014. Turbotax military 2012 Employment Taxes Excise Taxes Information ReturnsWaiver of penalties. Turbotax military 2012 Penalties. Turbotax military 2012 Introduction This chapter explains the business taxes you may have to pay and the forms you may have to file. Turbotax military 2012 It also discusses taxpayer identification numbers. Turbotax military 2012 Table 1-1 lists the benefits of filing electronically. Turbotax military 2012 Table 1-2 lists the federal taxes you may have to pay, their due dates, and the forms you use to report them. Turbotax military 2012 Table 1-3 provides checklists that highlight the typical forms and schedules you may need to file if you ever go out of business. Turbotax military 2012 You may want to get Publication 509, Tax Calendars. Turbotax military 2012 It has tax calendars that tell you when to file returns and make tax payments. Turbotax military 2012 Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) 1040 U. Turbotax military 2012 S. Turbotax military 2012 Individual Income Tax Return 1040-ES Estimated Tax for Individuals Sch C (Form 1040) Profit or Loss From Business Sch C-EZ (Form 1040) Net Profit From Business Sch SE (Form 1040) Self-Employment Tax See chapter 12 for information about getting publications and forms. Turbotax military 2012 Identification Numbers This section explains three types of taxpayer identification numbers, who needs them, when to use them, and how to get them. Turbotax military 2012 Social security number (SSN). Turbotax military 2012   Generally, use your SSN as your taxpayer identification number. Turbotax military 2012 You must put this number on each of your individual income tax forms, such as Form 1040 and its schedules. Turbotax military 2012   To apply for an SSN, use Form SS-5, Application for a Social Security Card. Turbotax military 2012 This form is available at Social Security Administration (SSA) offices or by calling 1-800-772-1213. Turbotax military 2012 It is also available from the SSA website at www. Turbotax military 2012 socialsecurity. Turbotax military 2012 gov. Turbotax military 2012 Individual taxpayer identification number (ITIN). Turbotax military 2012   The IRS will issue an ITIN if you are a nonresident or resident alien and you do not have and are not eligible to get an SSN. Turbotax military 2012 In general, if you need to obtain an ITIN, you must attach Form W-7, Application for IRS Individual Taxpayer Identification Number, with your signed, original, completed tax return and any other required documentation and mail them to the following address. Turbotax military 2012  Internal Revenue Service ITIN Operation P. Turbotax military 2012 O. Turbotax military 2012 Box 149342 Austin, TX 78714-9342 The exceptions are covered in detail in the instructions for Form W-7. Turbotax military 2012 If you must include another person's SSN on your return and that person does not have and cannot get an SSN, enter that person's ITIN. Turbotax military 2012 The application is also available in Spanish. Turbotax military 2012 The form is available at IRS. Turbotax military 2012 gov or you can call 1-800-829-3676 to order the form. Turbotax military 2012    An ITIN is for tax use only. Turbotax military 2012 It does not entitle the holder to social security benefits or change the holder's employment or immigration status. Turbotax military 2012 Employer identification number (EIN). Turbotax military 2012   You must also have an EIN to use as a taxpayer identification number if you do either of the following. Turbotax military 2012 Pay wages to one or more employees. Turbotax military 2012 File pension or excise tax returns. Turbotax military 2012   If you must have an EIN, include it along with your SSN on your Schedule C or C-EZ. Turbotax military 2012   You can apply for an EIN: Online by clicking on the Employer ID Numbers (EINs) link at www. Turbotax military 2012 irs. Turbotax military 2012 gov/businesses/small. Turbotax military 2012 The EIN is issued immediately once the application information is validated. Turbotax military 2012 By telephone at 1-800-829-4933. Turbotax military 2012 By mailing or faxing Form SS-4, Application for Employer Identification Number. Turbotax military 2012 New EIN. Turbotax military 2012   You may need to get a new EIN if either the form or the ownership of your business changes. Turbotax military 2012 For more information, see Publication 1635, Understanding Your EIN. Turbotax military 2012 When you need identification numbers of other persons. Turbotax military 2012   In operating your business, you will probably make certain payments you must report on information returns. Turbotax military 2012 These payments are discussed under Information Returns, later in this chapter. Turbotax military 2012 You must give the recipient of these payments (the payee) a statement showing the total amount paid during the year. Turbotax military 2012 You must include the payee's identification number and your identification number on the returns and statements. Turbotax military 2012 Employee. Turbotax military 2012   If you have employees, you must get an SSN from each of them. Turbotax military 2012 Record the name and SSN of each employee exactly as they are shown on the employee's social security card. Turbotax military 2012 If the employee's name is not correct as shown on the card, the employee should request a new card from the SSA. Turbotax military 2012 This may occur if the employee's name was changed due to marriage or divorce. Turbotax military 2012   Form W-4, Employee's Withholding Allowance Certificate, is completed by each employee so the correct federal income tax can be withheld from their pay. Turbotax military 2012   If your employee does not have an SSN, he or she should file Form SS-5 with the SSA. Turbotax military 2012 Other payee. Turbotax military 2012   If you make payments to someone who is not your employee and you must report the payments on an information return, get that person's SSN. Turbotax military 2012 If you must report payments to an organization, such as a corporation or partnership, you must get its EIN. Turbotax military 2012   To get the payee's SSN or EIN, use Form W-9, Request for Taxpayer Identification Number and Certification. Turbotax military 2012   A payee who does not provide you with an identification number may be subject to backup withholding. Turbotax military 2012 For information on backup withholding, see the Form W-9 instructions and the General Instructions for Certain Information Returns. Turbotax military 2012 Income Tax This part explains whether you have to file an income tax return and when you file it. Turbotax military 2012 It also explains how you pay the tax. Turbotax military 2012 Do I Have To File an Income Tax Return? You have to file an income tax return for 2013 if your net earnings from self-employment were $400 or more. Turbotax military 2012 If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement listed in the Form 1040 instructions. Turbotax military 2012 How Do I File? File your income tax return on Form 1040 and attach Schedule C or Schedule C-EZ. Turbotax military 2012 Enter the net profit or loss from Schedule C or Schedule C-EZ on page 1 of Form 1040. Turbotax military 2012 Use Schedule C to figure your net profit or loss from your business. Turbotax military 2012 If you operated more than one business as a sole proprietorship, you must attach a separate Schedule C for each business. Turbotax military 2012 You can use the simpler Schedule C-EZ if you operated only one business as a sole proprietorship, you did not have a net loss, and you meet the other requirements listed in Part I of the schedule. Turbotax military 2012 IRS e-file (Electronic Filing) Please click here for the text description of the image. Turbotax military 2012 E-file logo You may be able to file your tax returns electronically using an IRS e-file option. Turbotax military 2012 Table 1-1 lists the benefits of IRS e-file. Turbotax military 2012 IRS e-file uses automation to replace most of the manual steps needed to process paper returns. Turbotax military 2012 As a result, the processing of e-file returns is faster and more accurate than the processing of paper returns. Turbotax military 2012 As with a paper return, you are responsible for making sure your return contains accurate information and is filed on time. Turbotax military 2012 Using e-file does not affect your chances of an IRS examination of your return. Turbotax military 2012 You can file most commonly used business forms using IRS e-file. Turbotax military 2012 For more information, visit IRS. Turbotax military 2012 gov. Turbotax military 2012 Electronic signatures. Turbotax military 2012   Paperless filing is easier than you think and it's available to most taxpayers who file electronically—including those first-time filers who were 16 or older at the end of 2013. Turbotax military 2012 If you file electronically using tax preparation software or a tax professional, you will participate in the Self-Select PIN (personal identification number) program. Turbotax military 2012 If you are married filing jointly, you and your spouse will each need to create a PIN and enter these PINs as your electronic signatures. Turbotax military 2012    To create a PIN, you must know your adjusted gross income (AGI) from your originally filed 2012 income tax return (not from an amended return, Form 1040X, or any math error notice from the IRS). Turbotax military 2012 You will also need to provide your date of birth (DOB). Turbotax military 2012 Make sure your DOB is accurate and matches the information on record with the Social Security Administration before you e-file. Turbotax military 2012 To do this, check your annual Social Security Statement. Turbotax military 2012   With a Self-Select PIN, there is nothing to sign and nothing to mail—not even your Forms W-2. Turbotax military 2012 For more details on the Self-Select PIN program, visit IRS. Turbotax military 2012 gov. Turbotax military 2012 State returns. Turbotax military 2012   In most states, you can file an electronic state return simultaneously with your federal return. Turbotax military 2012 For more information, check with your local IRS office, state tax agency, tax professional, or IRS. Turbotax military 2012 gov. Turbotax military 2012 Refunds. Turbotax military 2012   You can have your refund check mailed to you, or you can have your refund deposited directly to your checking or savings account. Turbotax military 2012   With e-file, your refund will be issued in half the time as when filing on paper. Turbotax military 2012 Most refunds are issued within 3 weeks. Turbotax military 2012 If you choose Direct Deposit, you can receive your refund in as few as 10 days. Turbotax military 2012 Offset against debts. Turbotax military 2012   As with a paper return, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. Turbotax military 2012 You will be notified if the refund you claimed has been offset against your debts. Turbotax military 2012 Refund inquiries. Turbotax military 2012   You can check the status of your refund if it has been at least 24 hours (4 weeks if you mailed a paper return) from the date you filed your return. Turbotax military 2012 Be sure to have a copy of your tax return available because you will need to know the filing status, the first social security number shown on the return, and the exact whole-dollar amount of the refund. Turbotax military 2012 To check on your refund, do one of the following. Turbotax military 2012 Go to IRS. Turbotax military 2012 gov and click on Where's My Refund. Turbotax military 2012 Call 1-800-829-4477 for automated refund information, and follow the recorded instructions. Turbotax military 2012 Call 1-800-829-1954 during the hours shown in your form instructions. Turbotax military 2012 Balance due. Turbotax military 2012   If you owe tax, you must pay it by April 15, 2014, to avoid late-payment penalties and interest. Turbotax military 2012 You can make your payment electronically by scheduling an electronic funds withdrawal from your checking or savings account or by credit card. Turbotax military 2012 Using an Authorized IRS e-file Provider Many tax professionals can electronically file paperless returns for their clients. Turbotax military 2012 You have two options. Turbotax military 2012 You can prepare your return, take it to an authorized IRS e-file provider, and have the provider transmit it electronically to the IRS. Turbotax military 2012 You can have an authorized IRS e-file provider prepare your return and transmit it for you electronically. Turbotax military 2012 You will be asked to complete Form 8879, IRS e-file Signature Authorization, to authorize the provider to enter your self-selected PIN on your return. Turbotax military 2012 Depending on the provider and the specific services requested, a fee may be charged. Turbotax military 2012 To find an authorized IRS e-file provider near you, go to IRS. Turbotax military 2012 gov or look for an “Authorized IRS e-file Provider” sign. Turbotax military 2012 Using Your Personal Computer A computer with Internet access is all you need to file your tax return using IRS e-file. Turbotax military 2012 When you use your personal computer, you can e-file your return from your home any time of the day or night. Turbotax military 2012 Sign your return electronically using a self-selected PIN to complete the process. Turbotax military 2012 There is no signature form to submit or Forms W-2 to send in. Turbotax military 2012 Free Internet filing options. Turbotax military 2012   More taxpayers can now prepare and e-file their individual income tax returns free using commercial tax preparation software accessible through IRS. Turbotax military 2012 gov or www. Turbotax military 2012 usa. Turbotax military 2012 gov. Turbotax military 2012 The IRS is partnering with the tax software industry to offer free preparation and filing services to a significant number of taxpayers. Turbotax military 2012 Security and privacy certificate programs will assure tax data is safe and secure. Turbotax military 2012 To see if you qualify for these services, visit the Return Preparation and Filing Options page at IRS. Turbotax military 2012 gov. Turbotax military 2012   If you cannot use the free services, you can buy tax preparation software at various electronics stores or computer and office supply stores. Turbotax military 2012 You can also download software from the Internet or prepare and file your return completely online by using tax preparation software available on the Internet. Turbotax military 2012 Filing Through Employers and Financial Institutions Some businesses offer free e-file to their employees, members, or customers. Turbotax military 2012 Others offer it for a fee. Turbotax military 2012 Ask your employer or financial institution if they offer IRS e-file as an employee, member, or customer benefit. Turbotax military 2012 Free Help With Your Return Free help in preparing your return is available nationwide from IRS-trained volunteers. Turbotax military 2012 The Volunteer Income Tax Assistance (VITA) program is designed to help low-income taxpayers, and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 or older with their tax returns. Turbotax military 2012 Some locations offer free electronic filing. Turbotax military 2012 Table 1-1. Turbotax military 2012 Benefits of IRS e-file Accuracy • Your chance of getting an error notice from the IRS is significantly reduced. Turbotax military 2012 Security • Your privacy and security are assured. Turbotax military 2012 Electronic signatures • Create your own personal identification number (PIN) and file a completely paperless return through your tax preparation software or tax professional. Turbotax military 2012 There is nothing to mail. Turbotax military 2012 Proof of acceptance • You receive an electronic acknowledgment within 48 hours that the IRS has accepted your return for processing. Turbotax military 2012 Fast refunds • You get your refund faster with Direct Deposit—in as few as 10 days. Turbotax military 2012 Free Internet filing options • Use IRS. Turbotax military 2012 gov to access commercial tax preparation and e-file services available at no cost to eligible taxpayers. Turbotax military 2012 Electronic payment options • Convenient, safe, and secure electronic payment options are available. Turbotax military 2012 E-file and pay your taxes in a single step. Turbotax military 2012 Schedule an electronic funds withdrawal from your checking or savings account (up to and including April 15, 2014) or pay by credit card. Turbotax military 2012 Federal/State filing • Prepare and file your federal and state tax returns together and double the benefits you get from e-file. Turbotax military 2012 When Is My Tax Return Due? Form 1040 for calendar year 2013 is due by April 15, 2014. Turbotax military 2012 If you use a fiscal year (explained in chapter 2), your return is due by the 15th day of the 4th month after the end of your fiscal year. Turbotax military 2012 If you file late, you may have to pay penalties and interest. Turbotax military 2012 If you cannot file your return on time, use Form 4868, Application for Automatic Extension of Time To File U. Turbotax military 2012 S. Turbotax military 2012 Individual Income Tax Return, to request an automatic 6-month extension. Turbotax military 2012 For calendar year taxpayers, this will extend the tax filing due date until October 15. Turbotax military 2012 Filing an extension does not extend the time to pay your taxes, only the time to file the tax return. Turbotax military 2012 How Do I Pay Income Tax? Federal income tax is a pay-as-you-go tax. Turbotax military 2012 You must pay it as you earn or receive income during the year. Turbotax military 2012 An employee usually has income tax withheld from his or her pay. Turbotax military 2012 If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. Turbotax military 2012 You generally have to make estimated tax payments if you expect to owe taxes, including self-employment tax (discussed later), of $1,000 or more when you file your return. Turbotax military 2012 Use Form 1040-ES to figure and pay the tax. Turbotax military 2012 If you do not have to make estimated tax payments, you can pay any tax due when you file your return. Turbotax military 2012 For more information on estimated tax, see Publication 505, Tax Withholding and Estimated Tax. Turbotax military 2012 What are my payment options?   You can pay your estimated tax electronically using various options. Turbotax military 2012 If you pay electronically, there is no need to mail in Form 1040-ES payment vouchers. Turbotax military 2012 These options include: Paying electronically through the Electronic Federal Tax Payment System (EFTPS). Turbotax military 2012 Paying by authorizing an electronic funds withdrawal when you file Form 1040 electronically. Turbotax military 2012 Paying by credit or debit card over the phone or by Internet. Turbotax military 2012 Other options include crediting an overpayment from your 2013 return to your 2014 estimated tax, or mailing a check or money order with a Form 1040-ES payment voucher. Turbotax military 2012 EFTPS    To enroll in EFTPS, go to www. Turbotax military 2012 eftps. Turbotax military 2012 gov or call 1-800-555-4477. Turbotax military 2012 When you request a new EIN and you will have a tax obligation, you are automatically enrolled in EFTPS. Turbotax military 2012 Benefits of EFTPS: The chance of an error in making your payments is reduced. Turbotax military 2012 You receive immediate confirmation of every transaction. Turbotax military 2012 Penalty for underpayment of tax. Turbotax military 2012   If you did not pay enough income tax and self-employment tax for 2013 by withholding or by making estimated tax payments, you may have to pay a penalty on the amount not paid. Turbotax military 2012 The IRS will figure the penalty for you and send you a bill. Turbotax military 2012 Or you can use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if you have to pay a penalty and to figure the penalty amount. Turbotax military 2012 For more information, see Publication 505. Turbotax military 2012 Self-Employment (SE) Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Turbotax military 2012 It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. Turbotax military 2012 If you earned income as a statutory employee, you do not pay SE tax on that income. Turbotax military 2012 Social security coverage. Turbotax military 2012   Social security benefits are available to self-employed persons just as they are to wage earners. Turbotax military 2012 Your payments of SE tax contribute to your coverage under the social security system. Turbotax military 2012 Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. Turbotax military 2012 By not reporting all of your self-employment income, you could cause your social security benefits to be lower when you retire. Turbotax military 2012 How to become insured under social security. Turbotax military 2012   You must be insured under the social security system before you begin receiving social security benefits. Turbotax military 2012 You are insured if you have the required number of credits (also called quarters of coverage), discussed next. Turbotax military 2012 Earning credits in 2013 and 2014. Turbotax military 2012   For 2013, you received one credit, up to a maximum of four credits, for each $1,160 ($1,200 for 2014) of income subject to social security taxes. Turbotax military 2012 Therefore, for 2013, if you had income (self-employment and wages) of $4,640 that was subject to social security taxes, you receive four credits ($4,640 ÷ $1,160). Turbotax military 2012   For an explanation of the number of credits you must have to be insured and the benefits available to you and your family under the social security program, consult your nearest Social Security Administration (SSA) office. Turbotax military 2012    Making false statements to get or to increase social security benefits may subject you to penalties. Turbotax military 2012 The Social Security Administration (SSA) time limit for posting self-employment income. Turbotax military 2012   Generally, the SSA will give you credit only for self-employment income reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. Turbotax military 2012 If you file your tax return or report a change in your self-employment income after this time limit, the SSA may change its records, but only to remove or reduce the amount. Turbotax military 2012 The SSA will not change its records to increase your self-employment income. Turbotax military 2012 Who must pay self-employment tax. Turbotax military 2012   You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. Turbotax military 2012 Your net earnings from self-employment (excluding church employee income) were $400 or more. Turbotax military 2012 You had church employee income of $108. Turbotax military 2012 28 or more. Turbotax military 2012 The SE tax rules apply no matter how old you are and even if you are already receiving social security or Medicare benefits. Turbotax military 2012 SE tax rate. Turbotax military 2012   For 2013, the SE tax rate on net earnings is 15. Turbotax military 2012 3% (12. Turbotax military 2012 4% social security tax plus 2. Turbotax military 2012 9% Medicare tax). Turbotax military 2012 Maximum earnings subject to SE tax. Turbotax military 2012   Only the first $113,700 of your combined wages, tips, and net earnings in 2013 is subject to any combination of the 12. Turbotax military 2012 4% social security part of SE tax, social security tax, or railroad retirement (tier 1) tax. Turbotax military 2012   All your combined wages, tips, and net earnings in 2013 are subject to any combination of the 2. Turbotax military 2012 9% Medicare part of SE tax, social security tax, or railroad retirement (tier 1) tax. Turbotax military 2012   If wages and tips you receive as an employee are subject to either social security or railroad retirement (tier 1) tax, or both, and total at least $113,700, do not pay the 12. Turbotax military 2012 4% social security part of the SE tax on any of your net earnings. Turbotax military 2012 However, you must pay the 2. Turbotax military 2012 9% Medicare part of the SE tax on all your net earnings. Turbotax military 2012 Deduct one-half of your SE tax as an adjustment to income on line 27 of Form 1040. Turbotax military 2012   More information. Turbotax military 2012   For information on methods of calculating SE tax, see Chapter 10, Self-Employment Tax. Turbotax military 2012 Table 1-2. Turbotax military 2012 Which Forms Must I File? IF you are liable for: THEN use Form: DUE by:1 Income tax 1040 and Schedule C or C-EZ2 15th day of 4th month after end of  tax year. Turbotax military 2012 Self-employment tax Schedule SE File with Form 1040. Turbotax military 2012 Estimated tax 1040-ES 15th day of 4th, 6th, and 9th months of tax year, and 15th day of 1st month after the end of tax year. Turbotax military 2012 Social security and Medicare taxes and income tax withholding 941 or 944 April 30, July 31, October 31, and January 313. Turbotax military 2012     See Publication 15. Turbotax military 2012 Providing information on social security and Medicare taxes and income tax withholding W-2 (to employee)  W-2 and W-3 (to the Social Security Administration) January 313. Turbotax military 2012   Last day of February (March 31 if filing electronically)3. Turbotax military 2012 Federal unemployment (FUTA) tax 940 January 313. Turbotax military 2012     April 30, July 31, October 31, and January 31, but only if the liability for unpaid tax is more than $500. Turbotax military 2012 Filing information returns for payments to nonemployees and transactions with other persons See Information Returns Forms 1099 – to the recipient by January 31 and to the IRS by February 28 (March 31 if filing electronically). Turbotax military 2012     Other forms – see the General Instructions for Certain Information Returns. Turbotax military 2012 Excise tax See Excise Taxes See the instructions to the forms. Turbotax military 2012 1 If a due date falls on a Saturday, Sunday, or legal holiday, file by the next day that is not a Saturday, Sunday, or legal holiday. Turbotax military 2012 For more information, see Publication 509, Tax Calendars. Turbotax military 2012 2 File a separate schedule for each business. Turbotax military 2012 3 See the form instructions if you go out of business, change the form of your business, or stop paying wages. Turbotax military 2012     Employment Taxes If you have employees, you will need to file forms to report employment taxes. Turbotax military 2012 Employment taxes include the following items. Turbotax military 2012 Social security and Medicare taxes. Turbotax military 2012 Federal income tax withholding. Turbotax military 2012 Federal unemployment (FUTA) tax. Turbotax military 2012 For more information, see Publication 15 (Circular E), Employer's Tax Guide. Turbotax military 2012 That publication explains your tax responsibilities as an employer. Turbotax military 2012 To help you determine whether the people working for you are your employees, see Publication 15-A, Employer's Supplemental Tax Guide. Turbotax military 2012 That publication has information to help you determine whether an individual is an independent contractor or an employee. Turbotax military 2012 If you incorrectly classify an employee as an independent contractor, you may be held liable for employment taxes for that worker plus a penalty. Turbotax military 2012 An independent contractor is someone who is self-employed. Turbotax military 2012 You do not generally have to withhold or pay any taxes on payments made to an independent contractor. Turbotax military 2012 Excise Taxes This section identifies some of the excise taxes you may have to pay and the forms you have to file if you do any of the following. Turbotax military 2012 Manufacture or sell certain products. Turbotax military 2012 Operate certain kinds of businesses. Turbotax military 2012 Use various kinds of equipment, facilities, or products. Turbotax military 2012 Receive payment for certain services. Turbotax military 2012 For more information on excise taxes, see Publication 510, Excise Taxes. Turbotax military 2012 Form 720. Turbotax military 2012   The federal excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, consist of several broad categories of taxes, including the following. Turbotax military 2012 Environmental taxes on the sale or use of ozone-depleting chemicals and imported products containing or manufactured with these chemicals. Turbotax military 2012 Communications and air transportation taxes. Turbotax military 2012 Fuel taxes. Turbotax military 2012 Tax on the first retail sale of heavy trucks, trailers, and tractors. Turbotax military 2012 Manufacturers taxes on the sale or use of a variety of different articles. Turbotax military 2012 Tax on indoor tanning services. Turbotax military 2012 Form 2290. Turbotax military 2012   There is a federal excise tax on the use of certain trucks, truck tractors, and buses on public highways. Turbotax military 2012 The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. Turbotax military 2012 Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return. Turbotax military 2012 For more information, see the Instructions for Form 2290. Turbotax military 2012 Depositing excise taxes. Turbotax military 2012   If you have to file a quarterly excise tax return on Form 720, you may have to deposit your excise taxes before the return is due. Turbotax military 2012 For details on depositing excise taxes, see the Instructions for Form 720. Turbotax military 2012 Information Returns If you make or receive payments in your business, you may have to report them to the IRS on information returns. Turbotax military 2012 The IRS compares the payments shown on the information returns with each person's income tax return to see if the payments were included in income. Turbotax military 2012 You must give a copy of each information return you are required to file to the recipient or payer. Turbotax military 2012 In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions. Turbotax military 2012 For more details on information returns and when you have to file them, see the General Instructions for Certain Information Returns. Turbotax military 2012 Form 1099-MISC. Turbotax military 2012   Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your business. Turbotax military 2012 These payments include the following items. Turbotax military 2012 Payments of $600 or more for services performed for your business by people not treated as your employees, such as fees to subcontractors, attorneys, accountants, or directors. Turbotax military 2012 Rent payments of $600 or more, other than rents paid to real estate agents. Turbotax military 2012 Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows. Turbotax military 2012 Royalty payments of $10 or more. Turbotax military 2012 Payments to certain crew members by operators of fishing boats. Turbotax military 2012 You also use Form 1099-MISC to report your sales of $5,000 or more of consumer goods to a person for resale anywhere other than in a permanent retail establishment. Turbotax military 2012 Form W-2. Turbotax military 2012   You must file Form W-2, Wage and Tax Statement, to report payments to your employees, such as wages, tips, and other compensation, withheld income, social security, and Medicare taxes. Turbotax military 2012 You can file Form W-2 online. Turbotax military 2012 For more information about Form W-2, see the General Instructions for Forms W-2 and W-3. Turbotax military 2012 Penalties. Turbotax military 2012   The law provides for the following penalties if you do not file Form 1099-MISC or Form W-2 or do not correctly report the information. Turbotax military 2012 For more information, see the General Instructions for Certain Information Returns. Turbotax military 2012 Failure to file information returns. Turbotax military 2012 This penalty applies if you do not file information returns by the due date, do not include all required information, or report incorrect information. Turbotax military 2012 Failure to furnish correct payee statements. Turbotax military 2012 This penalty applies if you do not furnish a required statement to a payee by the required date, do not include all required information, or report incorrect information. Turbotax military 2012 Waiver of penalties. Turbotax military 2012   These penalties will not apply if you can show that the failure was due to reasonable cause and not willful neglect. Turbotax military 2012   In addition, there is no penalty for failure to include all required information, or for including incorrect information, on a de minimis (small) number of information returns if you correct the errors by August 1 of the year the returns are due. Turbotax military 2012 (A de minimis number of returns is the greater of 10 or ½ of 1% of the total number of returns you are required to file for the year. Turbotax military 2012 ) Form 8300. Turbotax military 2012   You must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if you receive more than $10,000 in cash in one transaction, or two or more related business transactions. Turbotax military 2012 Cash includes U. Turbotax military 2012 S. Turbotax military 2012 and foreign coin and currency. Turbotax military 2012 It also includes certain monetary instruments such as cashier's and traveler's checks and money orders. Turbotax military 2012 Cash does not include a check drawn on an individual's personal account (personal check). Turbotax military 2012 For more information, see Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business). Turbotax military 2012 Penalties. Turbotax military 2012   There are civil and criminal penalties, including up to 5 years in prison, for not filing Form 8300, filing (or causing the filing of) a false or fraudulent Form 8300, or structuring a transaction to evade reporting requirements. Turbotax military 2012 Table 1-3. Turbotax military 2012 Going Out of Business Checklists (Note. Turbotax military 2012 The following checklists highlight the typical final forms and schedules you may need to file if you ever go out of business. Turbotax military 2012 For more information, see the instructions for the listed forms. Turbotax military 2012 ) IF you are liable for:   THEN you may need to: Income tax □ File Schedule C or C-EZ with your Form 1040 for the year in which you go out of business. Turbotax military 2012   □ File Form 4797 with your Form 1040 for each year in which you sell or exchange property used in your business or in which the business use of certain section 179 or listed property drops to 50% or less. Turbotax military 2012   □ File Form 8594 with your Form 1040 if you sold your business. Turbotax military 2012 Self-employment tax □ File Schedule SE with your Form 1040 for the year in which you go out of business. Turbotax military 2012 Employment taxes □ File Form 941 (or Form 944) for the calendar quarter in which you make final wage payments. Turbotax military 2012 Note. Turbotax military 2012 Do not forget to check the box and enter the date final wages were paid on line 15 of Form 941 or line 14 of Form 944. Turbotax military 2012   □ File Form 940 for the calendar year in which final wages were paid. Turbotax military 2012 Note. Turbotax military 2012 Do not forget to check box d, Final: Business closed or stopped paying wages, under Type of Return. Turbotax military 2012 Information returns □ Provide Forms W-2 to your employees for the calendar year in which you make final wage payments. Turbotax military 2012 Note. Turbotax military 2012 These forms are generally due by the due date of your final Form 941 or Form 944. Turbotax military 2012   □ File Form W-3 to file Forms W-2. Turbotax military 2012 Note. Turbotax military 2012 These forms are generally due within 1 month after the due date of your final Form 941 or Form 944. Turbotax military 2012   □ Provide Forms 1099-MISC to each person to whom you have paid at least $600 for services (including parts and materials) during the calendar year in which you go out of business. Turbotax military 2012   □ File Form 1096 to file Forms 1099-MISC. Turbotax military 2012 Prev  Up  Next   Home   More Online Publications
Español



Microsoft Windows Media
(7 MB)

The Turbotax Military 2012

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