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How Do I File My 2010 Tax Return

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How Do I File My 2010 Tax Return

How do i file my 2010 tax return 1. How do i file my 2010 tax return   Importance of Records Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Benefits of Recordkeeping Kinds of Records To Keep How Long To Keep Records Introduction A farmer, like other taxpayers, must keep records to prepare an accurate income tax return and determine the correct amount of tax. How do i file my 2010 tax return This chapter explains the benefits of keeping records, what kinds of records you must keep, and how long you must keep them for federal tax purposes. How do i file my 2010 tax return Tax records are not the only type of records you need to keep for your farming business. How do i file my 2010 tax return You should also keep records that measure your farm's financial performance. How do i file my 2010 tax return This publication only discusses tax records. How do i file my 2010 tax return The Farm Financial Standards Council has produced a publication that provides a detailed explanation of the recommendations of the Council for financial reporting and analysis. How do i file my 2010 tax return For information on recordkeeping, you can purchase and download Financial Guidelines for Agricultural Producers at www. How do i file my 2010 tax return ffsc. How do i file my 2010 tax return org. How do i file my 2010 tax return For more information, contact Countryside Marketing, Inc. How do i file my 2010 tax return in the following manner. How do i file my 2010 tax return Call 262-253-6902. How do i file my 2010 tax return Send a fax to 262-253-6903. How do i file my 2010 tax return Write to: Farm Financial Standards Council N78 W14573 Appleton Ave. How do i file my 2010 tax return , #287 Menomonee Falls, WI 53051. How do i file my 2010 tax return Topics - This chapter discusses: Benefits of recordkeeping Kinds of records to keep How long to keep records Useful Items - You may want to see: Publication 51 (Circular A), Agricultural Employer's Tax Guide 463 Travel, Entertainment, Gift, and Car Expenses See chapter 16 for information about getting publications. How do i file my 2010 tax return Benefits of Recordkeeping Everyone in business, including farmers, must keep appropriate records. How do i file my 2010 tax return Recordkeeping will help you do the following. How do i file my 2010 tax return Monitor the progress of your farming business. How do i file my 2010 tax return   You need records to monitor the progress of your farming business. How do i file my 2010 tax return Records can show whether your business is improving, which items are selling, or what changes you need to make. How do i file my 2010 tax return Records can help you make better decisions that may increase the likelihood of business success. How do i file my 2010 tax return Prepare your financial statements. How do i file my 2010 tax return   You need records to prepare accurate financial statements. How do i file my 2010 tax return These include income (profit and loss) statements and balance sheets. How do i file my 2010 tax return These statements can help you in dealing with your bank or creditors and help you to manage your farm business. How do i file my 2010 tax return Identify source of receipts. How do i file my 2010 tax return   You will receive money or property from many sources. How do i file my 2010 tax return Your records can identify the source of your receipts. How do i file my 2010 tax return You need this information to separate farm from nonfarm receipts and taxable from nontaxable income. How do i file my 2010 tax return Keep track of deductible expenses. How do i file my 2010 tax return   You may forget expenses when you prepare your tax return unless you record them when they occur. How do i file my 2010 tax return Prepare your tax returns. How do i file my 2010 tax return   You need records to prepare your tax return. How do i file my 2010 tax return For example, your records must support the income, expenses, and credits you report. How do i file my 2010 tax return Generally, these are the same records you use to monitor your farming business and prepare your financial statements. How do i file my 2010 tax return Support items reported on tax returns. How do i file my 2010 tax return   You must keep your business records available at all times for inspection by the IRS. How do i file my 2010 tax return If the IRS examines any of your tax returns, you may be asked to explain the items reported. How do i file my 2010 tax return A complete set of records will speed up the examination. How do i file my 2010 tax return Kinds of Records To Keep Except in a few cases, the law does not require any specific kind of records. How do i file my 2010 tax return You can choose any recordkeeping system suited to your farming business that clearly shows, for example, your income and expenses. How do i file my 2010 tax return You should set up your recordkeeping system using an accounting method that clearly shows your income for your tax year. How do i file my 2010 tax return See  chapter 2. How do i file my 2010 tax return If you are in more than one business, you should keep a complete and separate set of records for each business. How do i file my 2010 tax return A corporation should keep minutes of board of directors' meetings. How do i file my 2010 tax return Your recordkeeping system should include a summary of your business transactions. How do i file my 2010 tax return This summary is ordinarily made in accounting journals and ledgers. How do i file my 2010 tax return For example, they must show your gross income, as well as your deductions and credits. How do i file my 2010 tax return In addition, you must keep supporting documents. How do i file my 2010 tax return Purchases, sales, payroll, and other transactions you have in your business generate supporting documents such as invoices and receipts. How do i file my 2010 tax return These documents contain the information you need to record in your journals and ledgers. How do i file my 2010 tax return It is important to keep these documents because they support the entries in your journals and ledgers and on your tax return. How do i file my 2010 tax return Keep them in an orderly fashion and in a safe place. How do i file my 2010 tax return For instance, organize them by year and type of income or expense. How do i file my 2010 tax return Electronic records. How do i file my 2010 tax return   All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records. How do i file my 2010 tax return When you replace hard copy books and records, you must maintain the electronic storage systems for as long as they are material to the administration of tax law. How do i file my 2010 tax return An electronic storage system is any system for preparing or keeping your records either by electronic imaging or by transfer to an electronic storage media. How do i file my 2010 tax return The electronic storage system must index, store, preserve, retrieve and reproduce the electronically stored books and records in legible format. How do i file my 2010 tax return All electronic storage systems must provide a complete and accurate record of your data that is accessible to the IRS. How do i file my 2010 tax return Electronic storage systems are also subject to the same controls and retention guidelines as those imposed on your original hard copy books and records. How do i file my 2010 tax return The original hard copy books and records may be destroyed provided that the electronic storage system has been tested to establish that the hard copy books and records are being reproduced in compliance with IRS requirements for an electronic storage system and procedures are established to ensure continued compliance with all applicable rules and regulations. How do i file my 2010 tax return You still have the responsibility of retaining any other books and records that are required to be retained. How do i file my 2010 tax return The IRS may test your electronic storage system, including the equipment used, indexing methodology, software and retrieval capabilities. How do i file my 2010 tax return This test is not considered an examination and the results must be shared with you. How do i file my 2010 tax return If your electronic storage system meets the requirements mentioned earlier, you will be in compliance. How do i file my 2010 tax return If not, you may be subject to penalties for non-compliance, unless you continue to maintain your original hard copybooks and records in a manner that allows you and the IRS to determine your correct tax. How do i file my 2010 tax return For details on electronic storage system requirements, see Rev. How do i file my 2010 tax return Proc. How do i file my 2010 tax return 97-22. How do i file my 2010 tax return You can find Rev. How do i file my 2010 tax return Proc. How do i file my 2010 tax return 97-22 on page 9 of Internal Revenue Bulletin 1997-13 at  www. How do i file my 2010 tax return irs. How do i file my 2010 tax return gov/pub/irs-irbs/irb97-13. How do i file my 2010 tax return pdf. How do i file my 2010 tax return Travel, transportation, entertainment, and gift expenses. How do i file my 2010 tax return   Specific recordkeeping rules apply to these expenses. How do i file my 2010 tax return For more information, see Publication 463. How do i file my 2010 tax return Employment taxes. How do i file my 2010 tax return   There are specific employment tax records you must keep. How do i file my 2010 tax return For a list, see Publication 51 (Circular A). How do i file my 2010 tax return Excise taxes. How do i file my 2010 tax return   See How To Claim a Credit or Refund in chapter 14 for the specific records you must keep to verify your claim for credit or refund of excise taxes on certain fuels. How do i file my 2010 tax return Assets. How do i file my 2010 tax return   Assets are the property, such as machinery and equipment, you own and use in your business. How do i file my 2010 tax return You must keep records to verify certain information about your business assets. How do i file my 2010 tax return You need records to figure your annual depreciation deduction and the gain or (loss) when you sell the assets. How do i file my 2010 tax return Your records should show all the following. How do i file my 2010 tax return When and how you acquired the asset. How do i file my 2010 tax return Purchase price. How do i file my 2010 tax return Cost of any improvements. How do i file my 2010 tax return Section 179 deduction taken. How do i file my 2010 tax return Deductions taken for depreciation. How do i file my 2010 tax return Deductions taken for casualty losses, such as losses resulting from fires or storms. How do i file my 2010 tax return How you used the asset. How do i file my 2010 tax return When and how you disposed of the asset. How do i file my 2010 tax return Selling price. How do i file my 2010 tax return Expenses of sale. How do i file my 2010 tax return   The following are examples of records that may show this information. How do i file my 2010 tax return Purchase and sales invoices. How do i file my 2010 tax return Real estate closing statements. How do i file my 2010 tax return Canceled checks. How do i file my 2010 tax return Bank statements. How do i file my 2010 tax return Financial account statements as proof of payment. How do i file my 2010 tax return   If you do not have a canceled check, you may be able to prove payment with certain financial account statements prepared by financial institutions. How do i file my 2010 tax return These include account statements prepared for the financial institution by a third party. How do i file my 2010 tax return These account statements must be legible. How do i file my 2010 tax return The following table lists acceptable account statements. How do i file my 2010 tax return IF payment is by. How do i file my 2010 tax return . How do i file my 2010 tax return . How do i file my 2010 tax return THEN the statement must show the. How do i file my 2010 tax return . How do i file my 2010 tax return . How do i file my 2010 tax return Check Check number. How do i file my 2010 tax return Amount. How do i file my 2010 tax return Payee's name. How do i file my 2010 tax return Date the check amount was posted to the account by the financial institution. How do i file my 2010 tax return Electronic funds  transfer Amount transferred. How do i file my 2010 tax return Payee's name. How do i file my 2010 tax return Date the transfer was posted to the account by the financial institution. How do i file my 2010 tax return Credit card Amount charged. How do i file my 2010 tax return Payee's name. How do i file my 2010 tax return Transaction date. How do i file my 2010 tax return    Proof of payment of an amount, by itself, does not establish you are entitled to a tax deduction. How do i file my 2010 tax return You should also keep other documents, such as credit card sales slips and invoices, to show that you also incurred the cost. How do i file my 2010 tax return Tax returns. How do i file my 2010 tax return   Keep copies of your filed tax returns. How do i file my 2010 tax return They help in preparing future tax returns and making computations if you file an amended return. How do i file my 2010 tax return Keep copies of your information returns such as Form 1099, Schedule K-1, and Form W-2. How do i file my 2010 tax return How Long To Keep Records You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. How do i file my 2010 tax return Keep records that support an item of income or a deduction appearing on a return until the period of limitations for the return runs out. How do i file my 2010 tax return A period of limitations is the period of time after which no legal action can be brought. How do i file my 2010 tax return Generally, that means you must keep your records for at least 3 years from when your tax return was due or filed or within 2 years of the date the tax was paid, whichever is later. How do i file my 2010 tax return However, certain records must be kept for a longer period of time, as discussed below. How do i file my 2010 tax return Employment taxes. How do i file my 2010 tax return   If you have employees, you must keep all employment tax records for at least 4 years after the date the tax becomes due or is paid, whichever is later. How do i file my 2010 tax return Assets. How do i file my 2010 tax return   Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. How do i file my 2010 tax return You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure your basis for computing gain or (loss) when you sell or otherwise dispose of the property. How do i file my 2010 tax return   You may need to keep records relating to the basis of property longer than the period of limitation. How do i file my 2010 tax return Keep those records as long as they are important in figuring the basis of the original or replacement property. How do i file my 2010 tax return Generally, this means as long as you own the property and, after you dispose of it, for the period of limitations that applies to you. How do i file my 2010 tax return For example, if you received property in a nontaxable exchange, you must keep the records for the old property, as well as for the new property, until the period of limitations expires for the year in which you dispose of the new property in a taxable disposition. How do i file my 2010 tax return For more information on basis, see chapter 6. How do i file my 2010 tax return Records for nontax purposes. How do i file my 2010 tax return   When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes. How do i file my 2010 tax return For example, your insurance company or creditors may require you to keep them longer than the IRS does. How do i file my 2010 tax return Prev  Up  Next   Home   More Online Publications
 
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Address Changes

Question: Should I notify the IRS of my change of address?

Answer:

Yes, if you move, you should notify the IRS of your new address. We need to change our records so that any tax refunds due to you or any other IRS communications will reach you in a timely manner.  If you filed a joint return, you should provide the same information and signatures for both spouses. If you filed a joint return and you and/or your spouse have since established separate residences, you both should notify the IRS of your new addresses.

There are several ways to notify the IRS of an address change:

  • Tax Return: Update your address in the appropriate boxes on your tax return;
  • Submit a Form: Form 8822 (PDF), Change of Address, and/or Form 8822-B (PDF), Change of Address - Business;
  • Written Notification: Mail a signed written statement to an appropriate Service address informing the Service that you wish that the address of record be changed to a new address.  Generally, the appropriate Service address is the campus where you filed your last return.  In addition to the new address, this notification must contain your full name and old address as well as your social security number, individual taxpayer identification number, or employer identification number;
  • Oral Notification: Provide an oral statement in person or directly via telephone to a Service employee who has access to the Service Master File informing the Service employee of the address change. In addition to the new address, you must provide your full name and old address as well as your social security number, individual taxpayer identification number, or employee identification number;
  • Electronic Notification: Many taxpayers may submit their new address information through one of the secure applications found on the IRS website, such as Where’s My Refund?.  In addition to the new address, you must also provide your social security number, individual taxpayer identification number, or employer identification number, as well as any additional information requested by the specific application. You cannot notify the IRS of an address change through other forms of electronic notification, such as electronic mail sent to an IRS email address.

Note: The IRS may also update your address of record based on any new address you provide to the U.S. Postal Service (USPS) that the USPS retains in its National Change of Address (NCOA) database.  However, even if you notify USPS of your new address, you should still notify the IRS directly.  Because not all post offices forward government checks, notifying the post office that services your old address ensures that your mail will be forwarded, but not necessarily your refund check.

Caution:  If you are a representative signing on behalf of the taxpayer, you must attach to the written statement or to Forms 8822/8822-B a copy of your power of attorney.  You can use Form 2848 (PDF), Power of Attorney and Declaration of Representative.  The IRS will not complete an address change from an "unauthorized" third party.


Category: IRS Procedures
Subcategory: Address Changes

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The How Do I File My 2010 Tax Return

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