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Education
1. No, nothing missed. Each year, you will enter the total excess still in the account on Dec 31. You will need to amend for prior year overages. The penalty is 6% per year. Form 5329 will be generated when you remove the excess plus earnings.
2. Publication 970, Tax Benefits for Education page 47 contains information for excess. Distributions used for qualified expenses are tax free. Another thought that strikes me is a rollover to another Coverdell or a 529 account, that will have benefit in some states. See Coverdell ESA vs. 529 Plans: Which Is Right for You? as both might be the answer for you.
3. Since you are amending, you could claim education credits since the money was not distributed in 2021 and 2022. Distributions must be for the current year or first 3 months of the following year. See Qualified Education Expenses - Internal Revenue Service & IRS Q & A about education credits
Amending help:
- how to file an amended return.
- I need to amend my state return.
- Can I e-file my amended state return?
- Can I e-file my 1040X to amend my return?
- Pay additional tax. Taxpayers who will owe more tax should file Form 1040-X and pay the tax as soon as possible to avoid penalties and interest. They should consider using IRS Direct Pay to pay any tax directly from a checking or savings account for free.
- Use separate forms if amending more than one tax year.
- Each year on its own form
- Each year in its own envelope
- Track amended return status online. Taxpayers can track the status of their amended tax return in English and Spanish using Where’s My Amended Return? Amended returns take up to 16 weeks to process and up to three weeks from the date of mailing to show up in the system.
- Mail forms with tracking to ensure your privacy is protected and the documents safely reach their destination.
Additional help:
instructions on How to Undo an Amendment.
Second Amendment instructions.
Mail federal see Where to File Addresses for Taxpayers and be sure to use tracking to ensure safe arrival.
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