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Fillable State Tax Forms

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Fillable State Tax Forms

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

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Corporate Foreign Tax Credit, Tax Year 2010 One Sheet
 

What is the Corporate Foreign Tax Credit?

The corporate foreign tax credit is a set of provisions designed by Congress to eliminate potential double taxation on the foreign-source income of U.S. corporations. Double taxation occurs when an item of income is taxed by both the United States, as the corporation's country of residence, as well as by the country where the income was generated. The current provisions allow U.S. businesses to credit their foreign taxes paid, accrued, or deemed paid against their U.S. income tax liability, subject to limitations that prevent taxpayers from using taxes paid in a country with a higher tax rate than the U.S. to offset their tax liability on U.S. income. Corporations are required to calculate this credit separately for different income categories to prevent taxpayers from combining income that is traditionally taxed at low rates, such as dividend or interest income, with income that is typically taxed at higher rates, such as active business income. The corporate foreign tax credit is reported on Form 1118, Foreign Tax Credit - Corporations.

For information about selected terms and concepts and a description of the data sources and limitations, please visit Corporate Foreign Tax Credit Study Metadata.

Statistical Tables      SOI Bulletin Articles      Archive
 


Statistical Tables

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U.S. Corporation Income Tax Returns with a Foreign Tax Credit: Total Assets, Income, Taxes, and Credits, and Foreign Income, Deductions, and Taxes 
Shown by major and selected minor industry.

U.S. Corporation Income Tax Returns with a Foreign Tax Credit: Returns with Income in Excess Credit Position: Foreign Income, Deductions, and Taxes 
Shown by major and selected minor industry.

U.S. Corporation Income Tax Returns with a Foreign Tax Credit: Returns with Income in Excess Limitation Position: Foreign Income, Deductions, and Taxes 
Shown by major and selected minor industry.

U.S. Corporation Income Tax Returns with a Foreign Tax Credit: Foreign Income, Deductions, and Taxes
Shown by industrial sector and by type of foreign income for which separate credit was computed. (Tax Year 2006 is the last year published for this table.)

U.S. Corporation Income Tax Returns with a Foreign Tax Credit: Foreign Income, Deductions, and Taxes Reported on Form 1118
Shown by selected country to which foreign taxes were paid.
 


SOI Bulletin Articles

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Archives

Foreign Tax Credit, Claimed on Corporation Income Tax Returns

 


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Page Last Reviewed or Updated: 24-Feb-2014

The Fillable State Tax Forms

Fillable state tax forms Publication 554 - Introductory Material Table of Contents What's New Reminders IntroductionVolunteer Income Tax Assistance and Tax Counseling for the Elderly. Fillable state tax forms Ordering forms and publications. Fillable state tax forms Tax questions. Fillable state tax forms What's New Alternative minimum tax exemption increased. Fillable state tax forms  The AMT exemption amount has increased to $51,900 ($80,800 if married filing jointly or qualifying widow(er); $40,400 if married filing separately). Fillable state tax forms Earned income credit. Fillable state tax forms  The maximum amount of income you can earn and still get the credit has increased. Fillable state tax forms You may be able to take the credit if you earn less than: $14,340 ($19,680 if married filing jointly), do not have a qualifying child, and are at least 25 years old and under 65, $37,870 ($43,210 if married filing jointly), and you have one qualifying child, $43,038 ($48,378 if married filing jointly), and you have two qualifying children, or $46,227 ($51,567 if married filing jointly), and you have three or more qualifying children. Fillable state tax forms For more information, see Earned Income Credit , later. Fillable state tax forms Exemption phaseout. Fillable state tax forms  You lose at least part of the benefit of your exemptions if your adjusted gross income is above a certain amount. Fillable state tax forms For 2013, the phaseout begins at $150,000 for married individuals filing separate returns; $250,000 for single individuals; $275,000 for heads of household; and $300,000 for married individuals filing joint returns or qualifying widow(er)s. Fillable state tax forms For more information, see Phaseout of Exemptions in Publication 501. Fillable state tax forms Limit on itemized deductions. Fillable state tax forms   Beginning January 1, 2013, itemized deductions for taxpayers with adjusted gross incomes above $150,000 may be reduced. Fillable state tax forms See Overall limitation , later. Fillable state tax forms Medical and dental expenses. Fillable state tax forms   Beginning January 1, 2013, taxpayers 65 and older can deduct only the part of their medical and dental expenses that exceed 7. Fillable state tax forms 5% of their adjusted gross income (10% for taxpayers under 65). Fillable state tax forms Same-sex marriages. Fillable state tax forms  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. Fillable state tax forms For more information, see Publication 501. Fillable state tax forms Reminders Future developments. Fillable state tax forms  For the latest information about developments related to Publication 554, such as legislation enacted after it was published, go to www. Fillable state tax forms irs. Fillable state tax forms gov/pub554. Fillable state tax forms Tax return preparers. Fillable state tax forms  Choose your preparer carefully. Fillable state tax forms If you pay someone to prepare your return, the preparer is required, under the law, to sign the return and fill in the other blanks in the Paid Preparer's area of your return. Fillable state tax forms Remember, however, that you are still responsible for the accuracy of every item entered on your return. Fillable state tax forms If there is any underpayment, you are responsible for paying it, plus any interest and penalty that may be due. Fillable state tax forms Sale of home by surviving spouse. Fillable state tax forms  If you are an unmarried widow or widower, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. Fillable state tax forms For more information, see Sale of Home , later. Fillable state tax forms Third party designee. Fillable state tax forms  You can check the “Yes” box in the Third Party Designee area of your return to authorize the IRS to discuss your return with your preparer, a friend, family member, or any other person you choose. Fillable state tax forms This allows the IRS to call the person you identified as your designee to answer any questions that may arise during the processing of your return. Fillable state tax forms It also allows your designee to perform certain actions. Fillable state tax forms See your income tax return instructions for details. Fillable state tax forms Employment tax withholding. Fillable state tax forms  Your wages are subject to withholding for income tax, social security tax, and Medicare tax even if you are receiving social security benefits. Fillable state tax forms Photographs of missing children. Fillable state tax forms  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Fillable state tax forms Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Fillable state tax forms You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Fillable state tax forms Introduction The purpose of this publication is to provide a general overview of selected topics that are of interest to older taxpayers. Fillable state tax forms The publication will help you determine if you need to file a return and, if so, what items to report on your return. Fillable state tax forms Each topic is discussed only briefly, so you will find references to other free IRS publications that provide more detail on these topics if you need it. Fillable state tax forms Table I has a list of questions you may have about filing your federal tax return. Fillable state tax forms To the right of each question is the location of the answer in this publication. Fillable state tax forms Also, at the back of this publication there is an index to help you search for the topic you need. Fillable state tax forms While most federal income tax laws apply equally to all taxpayers, regardless of age, there are some provisions that give special treatment to older taxpayers. Fillable state tax forms The following are some examples. Fillable state tax forms Higher gross income threshold for filing. Fillable state tax forms You must be age 65 or older at the end of the year to get this benefit. Fillable state tax forms You are considered age 65 on the day before your 65th birthday. Fillable state tax forms Therefore, you are considered age 65 at the end of the year if your 65th birthday is on or before January 1 of the following year. Fillable state tax forms Higher standard deduction. Fillable state tax forms If you do not itemize deductions, you are entitled to a higher standard deduction if you are age 65 or older at the end of the year. Fillable state tax forms You are considered age 65 at the end of the year if your 65th birthday is on or before January 1 of the following year. Fillable state tax forms Credit for the elderly or the disabled. Fillable state tax forms If you qualify, you may benefit from the credit for the elderly or the disabled. Fillable state tax forms To determine if you qualify and how to figure this credit, see Credit for the Elderly or the Disabled , later. Fillable state tax forms Return preparation assistance. Fillable state tax forms   The IRS wants to make it easier for you to file your federal tax return. Fillable state tax forms You may find it helpful to visit a Volunteer Income Tax Assistance (VITA), Tax Counseling for the Elderly (TCE), or American Association of Retired Persons (AARP) Tax-Aide site near you. Fillable state tax forms Volunteer Income Tax Assistance and Tax Counseling for the Elderly. Fillable state tax forms   These programs provide free help for low-income taxpayers and taxpayers age 60 or older to fill in and file their returns. Fillable state tax forms For the VITA/TCE site nearest you, contact your local IRS office. Fillable state tax forms For more information, see Free help with your tax return under How To Get Tax Help. Fillable state tax forms   For the location of an AARP Tax-Aide site in your community, call 1-888-227-7669. Fillable state tax forms When asked, be ready to press in or speak your 5-digit ZIP code. Fillable state tax forms Or, you can visit their website on the Internet at www. Fillable state tax forms aarp. Fillable state tax forms org/money/taxaide. Fillable state tax forms Comments and suggestions. Fillable state tax forms   We welcome your comments about this publication and your suggestions for future editions. Fillable state tax forms   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Fillable state tax forms NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Fillable state tax forms Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Fillable state tax forms   You can send your comments from www. Fillable state tax forms irs. Fillable state tax forms gov/formspubs/. Fillable state tax forms Click on “More Information” and then on “Comment on Tax Forms and Publications. Fillable state tax forms ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Fillable state tax forms Ordering forms and publications. Fillable state tax forms   Visit www. Fillable state tax forms irs. Fillable state tax forms gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 business days after your request is received. Fillable state tax forms Internal Revenue Service 1201 N. Fillable state tax forms Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Fillable state tax forms   If you have a tax question, check the information available on IRS. Fillable state tax forms gov or call 1-800-829-1040. Fillable state tax forms We cannot answer tax questions sent to either of the above addresses. Fillable state tax forms Table I. Fillable state tax forms What You Should Know About Federal Taxes Note. Fillable state tax forms The following is a list of questions you may have about filling out your federal income tax return. Fillable state tax forms  To the right of each question is the location of the answer in this publication. Fillable state tax forms What I Should Know Where To Find the Answer Do I need to file a return? See chapter 1. Fillable state tax forms Is my income taxable or nontaxable?  If it is nontaxable, must I still report it? See chapter 2. Fillable state tax forms How do I report benefits I received from the Social Security Administration or the Railroad Retirement Board?  Are these benefits taxable? See Social Security and Equivalent Railroad Retirement Benefits in chapter 2. Fillable state tax forms Must I report the sale of my home?  If I had a gain, is any part of it taxable? See Sale of Home in chapter 2. Fillable state tax forms What are some of the items that I can deduct to reduce my income? See chapters 3 and 4. Fillable state tax forms How do I report the amounts I set aside for my IRA? See Individual Retirement Arrangement (IRA) Contributions and Deductions in chapter 3. Fillable state tax forms Would it be better for me to claim the standard deduction or itemize my deductions? See chapter 4. Fillable state tax forms What are some of the credits I can claim to reduce my tax? See chapter 5 for discussions on the credit for the elderly or the disabled, the child and dependent care credit, and the earned income credit. Fillable state tax forms Must I make estimated tax payments? See chapter 6. Fillable state tax forms How do I contact the IRS or get more information? See chapter 7. Fillable state tax forms Prev  Up  Next   Home   More Online Publications