@TurboTaxBenny in checking this, I did a search with terms "Coverdell esa contribution credit" and the jump to link takes me somewhere under the Personal Income tab (which is wrong) and works me through a 1099-Q for distributions received, (which is also wrong). Can you check this out please? @TurboTaxAnnaB @TuboTaxGreg_B
@Carl Thanks, I'll look into it and reach out through the lounge.
Also aren't Coverdell contributions important for determining the amount of taxable interest when proceeds from redeemed US Savings Bonds are used to contribute to those accounts? If so, is there a place/way to input my contribution for Form 8815 Line 2? Thank you!
Also aren't Coverdell contributions important for determining the amount of taxable interest when proceeds from redeemed US Savings Bonds are used to contribute to those accounts? If so, is there a place/way to input my contribution for Form 8815 Line 2? Thank you!
Contributions to an ESA are not deductible for Federal income tax purposes.
Ahh yes! It's some states that do allow it on the state return. So if your state allows the deduction, you won't deal with it at all on the federal return.
Also aren't Coverdell contributions important for determining the amount of taxable interest when proceeds from redeemed US Savings Bonds are used to contribute to those accounts? If so, is there a place/way to input my contribution for Form 8815 Line 2? Thank you!
Coverdells and savings bonds are two totally unrelated things. Contributions are not a tax deduction either. (but may be on the state taxes) When you redeem a savings bond for education purposes, the interest is taxable income *initially*. (The bank may even withhold taxes). But the way the program handles it doesn't use the 8815. The taxability of that interest, as well as the principle, is offset in the education section by the qualified education expenses that are paid for with that "out of pocket" money.
Then why does Turbo Tax (in EasyStep mode) ask "Did you use your US Savings bonds to pay for higher education? This includes.....contributions to a Coverdell education savings account (ESA)"? I understand Coverdell contributions are not tax deductible, but Turbo Tax indicates it can be a tax break on the bond interest.
Form 8815 also states in the instructions for Line 2: "Qualified higher education expenses include tuition and fees required for the enrollment or attendance of the person(s) listed on line 1, column (a), at the institution(s) listed in column (b). They also include contributions to a Coverdell ESA or a QTP for the person(s) listed on line 1. "
I just figured out that Turbo Tax does allow input for Coverdell ESA contributions under US Savings bond interest, and I couldn't enter my contributions because I didn't meet all of the tax exclusion criteria. When I re-read (again!) IRS Form 8815 titled "Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989", the cashed US Savings bonds must meet these criteria: 1) the bonds must be series EE or I U.S. savings bonds issued after 1989 in your name, or, if you are married, they may be issued in your name and your spouse’s name, and 2) you must have been age 24 or older before the bonds were issued. Thanks!