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2013 State Tax Return

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2013 State Tax Return

2013 state tax return 8. 2013 state tax return   Qualified Tuition Program (QTP) Table of Contents Introduction What Is a Qualified Tuition ProgramDesignated beneficiary. 2013 state tax return Half-time student. 2013 state 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. 2013 state 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. 2013 state tax return Eligible educational institutions may establish and maintain programs that allow you to prepay a student's qualified education expenses. 2013 state tax return If you prepay tuition, the student (designated beneficiary) will be entitled to a waiver or a payment of qualified education expenses. 2013 state tax return You cannot deduct either payments or contributions to a QTP. 2013 state 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. 2013 state tax return What is the tax benefit of a QTP. 2013 state 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. 2013 state tax return See Are Distributions Taxable , later, for more information. 2013 state 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. 2013 state tax return See Coordination With American Opportunity and Lifetime Learning Credits, later. 2013 state 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. 2013 state tax return QTPs can be established and maintained by states (or agencies or instrumentalities of a state) and eligible educational institutions. 2013 state tax return The program must meet certain requirements. 2013 state 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. 2013 state tax return Qualified education expenses. 2013 state tax return   These are expenses related to enrollment or attendance at an Eligible educational institution (defined later). 2013 state 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. 2013 state tax return See Half-time student , later. 2013 state tax return The following expenses must be required for enrollment or attendance of a Designated beneficiary (defined later) at an eligible educational institution. 2013 state tax return Tuition and fees. 2013 state tax return Books, supplies, and equipment. 2013 state 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. 2013 state tax return Expenses for room and board must be incurred by students who are enrolled at least half-time. 2013 state 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. 2013 state 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. 2013 state tax return The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. 2013 state tax return You will need to contact the eligible educational institution for qualified room and board costs. 2013 state 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. 2013 state tax return Designated beneficiary. 2013 state tax return   The designated beneficiary is generally the student (or future student) for whom the QTP is intended to provide benefits. 2013 state tax return The designated beneficiary can be changed after participation in the QTP begins. 2013 state 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. 2013 state tax return Half-time student. 2013 state 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. 2013 state tax return Eligible educational institution. 2013 state 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. 2013 state tax return S. 2013 state tax return Department of Education. 2013 state tax return It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 2013 state tax return The educational institution should be able to tell you if it is an eligible educational institution. 2013 state tax return   Certain educational institutions located outside the United States also participate in the U. 2013 state tax return S. 2013 state tax return Department of Education's Federal Student Aid (FSA) programs. 2013 state 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. 2013 state tax return There are no income restrictions on the individual contributors. 2013 state tax return You can contribute to both a QTP and a Coverdell ESA in the same year for the same designated beneficiary. 2013 state 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. 2013 state tax return This is a return of the investment in the plan. 2013 state 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). 2013 state tax return Earnings and return of investment. 2013 state tax return    You will receive a Form 1099-Q, from each of the programs from which you received a QTP distribution in 2013. 2013 state 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). 2013 state tax return Form 1099-Q should be sent to you by January 31, 2014. 2013 state 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. 2013 state tax return Adjusted qualified education expenses. 2013 state tax return   This amount is the total qualified education expenses reduced by any tax-free educational assistance. 2013 state 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. 2013 state tax return Taxable earnings. 2013 state tax return   Use the following steps to figure the taxable part. 2013 state tax return Multiply the total distributed earnings shown in box 2 of Form 1099-Q by a fraction. 2013 state 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. 2013 state tax return Subtract the amount figured in (1) from the total distributed earnings. 2013 state tax return The result is the amount the beneficiary must include in income. 2013 state tax return Report it on Form 1040 or Form 1040NR, line 21. 2013 state tax return Example 1. 2013 state tax return In 2007, Sara Clarke's parents opened a savings account for her with a QTP maintained by their state government. 2013 state tax return Over the years they contributed $18,000 to the account. 2013 state tax return The total balance in the account was $27,000 on the date the distribution was made. 2013 state 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. 2013 state tax return She paid her college expenses from the following sources. 2013 state 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. 2013 state 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. 2013 state tax return Sara's Form 1099-Q shows that $950 of the QTP distribution is earnings. 2013 state tax return Sara figures the taxable part of the distributed earnings as follows. 2013 state tax return   1. 2013 state tax return $950 (earnings) × $5,200 AQEE  $5,300 distribution           =$932 (tax-free earnings)     2. 2013 state 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. 2013 state 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. 2013 state 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. 2013 state tax return Example 2. 2013 state 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). 2013 state 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. 2013 state tax return   1. 2013 state tax return $950 (earnings) × $1,200 AQEE  $5,300 distribution           =$215 (tax-free earnings)     2. 2013 state tax return $950 (earnings)−$215 (tax-free earnings)     =$735 (taxable earnings)       Sara must include $735 in income (Form 1040, line 21). 2013 state tax return This represents distributed earnings not used for adjusted qualified education expenses. 2013 state 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. 2013 state tax return For purposes of this allocation, disregard any qualified elementary and secondary education expenses. 2013 state tax return Example 3. 2013 state 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. 2013 state tax return In this case, Sara must allocate her $1,200 of adjusted qualified higher education expenses (AQHEE) between the two distributions. 2013 state 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. 2013 state tax return Note. 2013 state 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 . 2013 state tax return Coordination With Tuition and Fees Deduction. 2013 state 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. 2013 state 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. 2013 state 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. 2013 state tax return Your basis is the total amount of contributions to that QTP account. 2013 state 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. 2013 state 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. 2013 state tax return ) from all such accounts in order to determine your taxable earnings for the year. 2013 state tax return By doing this, the loss from one QTP account reduces the distributed earnings (if any) from any other QTP accounts. 2013 state tax return Example 1. 2013 state tax return In 2013, Taylor received a final distribution of $1,000 from QTP #1. 2013 state tax return His unrecovered basis in that account before the distribution was $3,000. 2013 state tax return If Taylor itemizes his deductions, he can claim the $2,000 loss on Schedule A (Form 1040). 2013 state tax return Example 2. 2013 state 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. 2013 state tax return His total basis in these distributions was $4,500 ($3,000 for QTP #1 and $1,500 for QTP #2). 2013 state tax return Taylor's adjusted qualified education expenses for 2013 totaled $6,000. 2013 state tax return In order to figure his taxable earnings, Taylor combines the two accounts and determines his taxable earnings as follows. 2013 state tax return   1. 2013 state tax return $10,000 (total distribution)−$4,500 (basis portion of distribution)     = $5,500 (earnings included in distribution)   2. 2013 state tax return $5,500 (earnings) x $6,000 AQEE  $10,000 distribution           =$3,300 (tax-free earnings)     3. 2013 state 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. 2013 state tax return Because Taylor's accounts must be combined, he cannot deduct his $2,000 loss (QTP #1) on Schedule A (Form 1040). 2013 state tax return Instead, the $2,000 loss reduces the total earnings that were distributed, thereby reducing his taxable earnings. 2013 state 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. 2013 state tax return Exceptions. 2013 state 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. 2013 state tax return Made because the designated beneficiary is disabled. 2013 state 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. 2013 state 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. 2013 state 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. 2013 state tax return Made on account of the attendance of the designated beneficiary at a U. 2013 state tax return S. 2013 state tax return military academy (such as the USNA at Annapolis). 2013 state 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. 2013 state tax return S. 2013 state tax return Code) attributable to such attendance. 2013 state 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. 2013 state tax return ) Exception (3) applies only to the extent the distribution is not more than the scholarship, allowance, or payment. 2013 state tax return Figuring the additional tax. 2013 state tax return    Use Part II of Form 5329, to figure any additional tax. 2013 state tax return Report the amount on Form 1040, line 58, or Form 1040NR, line 56. 2013 state tax return Rollovers and Other Transfers Assets can be rolled over or transferred from one QTP to another. 2013 state tax return In addition, the designated beneficiary can be changed without transferring accounts. 2013 state 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). 2013 state tax return An amount is rolled over if it is paid to another QTP within 60 days after the date of the distribution. 2013 state tax return Do not report qualifying rollovers (those that meet the above criteria) anywhere on Form 1040 or 1040NR. 2013 state tax return These are not taxable distributions. 2013 state tax return Members of the beneficiary's family. 2013 state tax return   For these purposes, the beneficiary's family includes the beneficiary's spouse and the following other relatives of the beneficiary. 2013 state tax return Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them. 2013 state tax return Brother, sister, stepbrother, or stepsister. 2013 state tax return Father or mother or ancestor of either. 2013 state tax return Stepfather or stepmother. 2013 state tax return Son or daughter of a brother or sister. 2013 state tax return Brother or sister of father or mother. 2013 state tax return Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. 2013 state tax return The spouse of any individual listed above. 2013 state tax return First cousin. 2013 state tax return Example. 2013 state tax return When Aaron graduated from college last year he had $5,000 left in his QTP. 2013 state tax return He wanted to give this money to his younger brother, who was in junior high school. 2013 state 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. 2013 state 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. 2013 state 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. 2013 state tax return See Members of the beneficiary's family , earlier. 2013 state tax return Example. 2013 state tax return Assume the same situation as in the last example. 2013 state 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. 2013 state tax return Prev  Up  Next   Home   More Online Publications
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The 2013 State Tax Return

2013 state tax return Publication 551 - Introductory Material Table of Contents What's New Reminder IntroductionOrdering forms and publications. 2013 state tax return Tax questions. 2013 state tax return Useful Items - You may want to see: What's New Property acquired from a decedent who died in 2010. 2013 state tax return  Property acquired from a decedent dying in 2010 will no longer have an automatic increase in basis. 2013 state tax return See Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, for details. 2013 state tax return Reminder Photographs of missing children. 2013 state tax return  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. 2013 state tax return Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 2013 state tax return 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. 2013 state tax return Introduction Basis is the amount of your investment in property for tax purposes. 2013 state tax return Use the basis of property to figure depreciation, amortization, depletion, and casualty losses. 2013 state tax return Also use it to figure gain or loss on the sale or other disposition of property. 2013 state tax return You must keep accurate records of all items that affect the basis of property so you can make these computations. 2013 state tax return This publication is divided into the following sections. 2013 state tax return Cost Basis Adjusted Basis Basis Other Than Cost The basis of property you buy is usually its cost. 2013 state tax return You may also have to capitalize (add to basis) certain other costs related to buying or producing the property. 2013 state tax return Your original basis in property is adjusted (increased or decreased) by certain events. 2013 state tax return If you make improvements to the property, increase your basis. 2013 state tax return If you take deductions for depreciation or casualty losses, reduce your basis. 2013 state tax return You cannot determine your basis in some assets by cost. 2013 state tax return This includes property you receive as a gift or inheritance. 2013 state tax return It also applies to property received in an involuntary conversion and certain other circumstances. 2013 state tax return Comments and suggestions. 2013 state tax return   We welcome your comments about this publication and your suggestions for future editions. 2013 state tax return   You can write to us at the following address: Internal Revenue Service Business Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. 2013 state tax return NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 2013 state tax return Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 2013 state tax return   You can email us at taxforms@irs. 2013 state tax return gov. 2013 state tax return Please put “Publications Comment” on the subject line. 2013 state tax return You can also send us comments from www. 2013 state tax return irs. 2013 state tax return gov/formspubs/, select “Comment on Tax Forms and Publications” under “Information about. 2013 state tax return ”   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. 2013 state tax return Ordering forms and publications. 2013 state tax return   Visit www. 2013 state tax return irs. 2013 state tax return gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 business days after your request is received. 2013 state tax return  Internal Revenue Service  1201 N. 2013 state tax return Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. 2013 state tax return   If you have a tax question, visit IRS. 2013 state tax return gov or call 1-800-829-1040. 2013 state tax return We cannot answer tax questions sent to either of the above addresses. 2013 state tax return Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 523 Selling Your Home 525 Taxable and Nontaxable Income 527 Residential Rental Property 530 Tax Information for First-Time Homeowners 535 Business Expenses 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 559 Survivors, Executors, and Administrators 587 Business Use of Your Home 946 How To Depreciate Property Form (and Instructions) 706 United States Estate (and Generation-Skipping Transfer) Tax Return 706-A United States Additional Estate Tax Return 8594 Asset Acquisition Statement See How To Get Tax Help near the end of this publication for information about getting publications and forms. 2013 state tax return Prev  Up  Next   Home   More Online Publications