How to answer Coverdell ESA questions

[Hal_Al]

The kiddie tax threshold for 2023 is $2500, not $2300.

Q. If my parents have 0 for their qualified dividends in line 3a, form 1040, can the parental capital gains section of form 8615 be left blank? 

A. No. 

Q. I am assuming if qualified dividends in form 1040 is -0-, the information above can be left blank since they all pertain to dividend gain / loss. Please correct me if I am wrong.

A. I think what you're saying is your parents didn't sell any stocks or other securities and only got a 1099-DIV.  The 1099-DIV has other schedule D info, not just qualified dividends (box 1b); most typically capital gains distributions (box 2a). If the only entry is in box 1a, then you can skip the schedule D section. 

[rkingrea]

Should the reinvested dividends and capital gains be included as part of the basis or just the original contribution?

[AmyC]

No. Those are earnings accumulating along the way. The basis is what was actually put into the account. See IRS TAX TIP 2003-38 COVERDELL EDUCATION which explains earnings on the account and taxability.

[MD-Taxpayer1]

I just struggled through this exact situation with TIAA, who claims not to know what was deposited in the account.  Finally I found that I could request a "transcript" for all account activities for the last 20 years. It was only about 30 pages and took a month to get, but it was fairly easy to scan through and look for the contributions.    It may help to know that deposits were limited to $500 unil the early 2000s when the limit changed to 2,000.