An economic stimulus payment that was directly deposited into an education account can be fully or partly withdrawn by the due date (including extensions) of your 2008 tax return. For a Coverdell ESA, the withdrawal can be made by the later of the above date or June 1, 2009. The amount withdrawn will not be subject to any additional tax or penalty.
This tax does not apply to distributions that are includible in income if:
- Due to the death or disability of the beneficiary;
- Made on account of a tax-free scholarship, allowance, or payment described in section 25A(g)(2);
- Made because of attendance by the beneficiary at a U.S. military academy. This exception applies only to the extent that the distribution does not exceed the costs of advanced education (as defined in title 10 of the U.S. Code) at the academy; or
- Included in income because you used the qualified education expenses to figure the Hope and lifetime learning credit.
Enter on line 6 the portion of line 5 that is excluded.