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1040ez Instructions 2013

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1040ez Instructions 2013

1040ez instructions 2013 19. 1040ez instructions 2013   Education- Related Adjustments Table of Contents Introduction Useful Items - You may want to see: Student Loan Interest DeductionStudent Loan Interest Defined Can You Claim the Deduction How Much Can You Deduct How Do You Figure the Deduction Tuition and Fees DeductionCan You Claim the Deduction What Expenses Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses How Much Can You Deduct Educator Expenses Introduction This chapter discusses the education-related adjustment you can deduct in figuring your adjusted gross income. 1040ez instructions 2013 This chapter covers the student loan interest deduction, tuition and fees deduction, and the deduction for educator expenses. 1040ez instructions 2013 Useful Items - You may want to see: Publication 970 Tax Benefits for Education Student Loan Interest Deduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. 1040ez instructions 2013 However, if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. 1040ez instructions 2013 For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. 1040ez instructions 2013 This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. 1040ez instructions 2013 Table 19-1 summarizes the features of the student loan interest deduction. 1040ez instructions 2013 Table 19-1. 1040ez instructions 2013 Student Loan Interest Deduction at a Glance Do not rely on this table alone. 1040ez instructions 2013 Refer to the text for more details. 1040ez instructions 2013 Feature Description Maximum benefit You can reduce your income subject to tax by up to $2,500. 1040ez instructions 2013 Loan qualifications Your student loan: •  must have been taken out solely to pay qualified education expenses, and   • cannot be from a related person or made under a qualified employer plan. 1040ez instructions 2013 Student qualifications The student must be: • you, your spouse, or your dependent, and   • enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible educational institution. 1040ez instructions 2013 Time limit on deduction You can deduct interest paid during the remaining period of your student loan. 1040ez instructions 2013 Phaseout The amount of your deduction depends on your income level. 1040ez instructions 2013 Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. 1040ez instructions 2013 It includes both required and voluntary interest payments. 1040ez instructions 2013 Qualified Student Loan This is a loan you took out solely to pay qualified education expenses (defined later) that were: For you, your spouse, or a person who was your dependent (defined in chapter 3) when you took out the loan, Paid or incurred within a reasonable period of time before or after you took out the loan, and For education provided during an academic period when the student is an eligible student. 1040ez instructions 2013 Loans from the following sources are not qualified student loans. 1040ez instructions 2013 A related person. 1040ez instructions 2013 A qualified employer plan. 1040ez instructions 2013 Exceptions. 1040ez instructions 2013   For purposes of the student loan interest deduction, the following are exceptions to the general rules for dependents. 1040ez instructions 2013 An individual can be your dependent even if you are the dependent of another taxpayer. 1040ez instructions 2013 An individual can be your dependent even if the individual files a joint return with a spouse. 1040ez instructions 2013 An individual can be your dependent even if the individual had gross income for the year that was equal to or more than the exemption amount for the year ($3,900 for 2013). 1040ez instructions 2013    Reasonable period of time. 1040ez instructions 2013   Qualified education expenses are treated as paid or incurred within a reasonable period of time before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal postsecondary education loan program. 1040ez instructions 2013   Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met. 1040ez instructions 2013 The expenses relate to a specific academic period. 1040ez instructions 2013 The loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period. 1040ez instructions 2013   If neither of the above situations applies, the reasonable period of time is determined based on all the relevant facts and circumstances. 1040ez instructions 2013 Academic period. 1040ez instructions 2013   An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. 1040ez instructions 2013 In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. 1040ez instructions 2013 Eligible student. 1040ez instructions 2013   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. 1040ez instructions 2013 Enrolled at least half-time. 1040ez instructions 2013   A student was enrolled at least half-time if the student was taking at least half the normal full-time work load for his or her course of study. 1040ez instructions 2013   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. 1040ez instructions 2013 However, the standard may not be lower than any of those established by the U. 1040ez instructions 2013 S. 1040ez instructions 2013 Department of Education under the Higher Education Act of 1965. 1040ez instructions 2013 Related person. 1040ez instructions 2013   You cannot deduct interest on a loan you get from a related person. 1040ez instructions 2013 Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. 1040ez instructions 2013 ), Your lineal descendants (children, grandchildren, etc. 1040ez instructions 2013 ), and Certain corporations, partnerships, trusts, and exempt organizations. 1040ez instructions 2013 Qualified employer plan. 1040ez instructions 2013   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. 1040ez instructions 2013 Qualified Education Expenses For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. 1040ez instructions 2013 They include amounts paid for the following items. 1040ez instructions 2013 Tuition and fees. 1040ez instructions 2013 Room and board. 1040ez instructions 2013 Books, supplies, and equipment. 1040ez instructions 2013 Other necessary expenses (such as transportation). 1040ez instructions 2013 The cost of room and board qualifies only to the extent that it is not more than: 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, or If greater, the actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. 1040ez instructions 2013 Eligible educational institution. 1040ez instructions 2013   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. 1040ez instructions 2013 S. 1040ez instructions 2013 Department of Education. 1040ez instructions 2013 It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 1040ez instructions 2013   Certain educational institutions located outside the United States also participate in the U. 1040ez instructions 2013 S. 1040ez instructions 2013 Department of Education's Federal Student Aid (FSA) programs. 1040ez instructions 2013   For purposes of the student loan interest deduction, an eligible educational institution also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. 1040ez instructions 2013   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. 1040ez instructions 2013 The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. 1040ez instructions 2013    The educational institution should be able to tell you if it is an eligible educational institution. 1040ez instructions 2013 Adjustments to qualified education expenses. 1040ez instructions 2013   You must reduce your qualified education expenses by certain tax-free items (such as the tax-free part of scholarships and fellowships). 1040ez instructions 2013 See chapter 4 of Publication 970 for details. 1040ez instructions 2013 Include as Interest In addition to simple interest on the loan, certain loan origination fees, capitalized interest, interest on revolving lines of credit, and interest on refinanced student loans can be student loan interest if all other requirements are met. 1040ez instructions 2013 Loan origination fee. 1040ez instructions 2013   In general, this is a one-time fee charged by the lender when a loan is made. 1040ez instructions 2013 To be deductible as interest, the fee must be for the use of money rather than for property or services (such as commitment fees or processing costs) provided by the lender. 1040ez instructions 2013 A loan origination fee treated as interest accrues over the life of the loan. 1040ez instructions 2013 Capitalized interest. 1040ez instructions 2013    This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. 1040ez instructions 2013 Interest on revolving lines of credit. 1040ez instructions 2013   This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. 1040ez instructions 2013 See Qualified Education Expenses , earlier. 1040ez instructions 2013 Interest on refinanced student loans. 1040ez instructions 2013   This includes interest on both: Consolidated loans—loans used to refinance more than one student loan of the same borrower, and Collapsed loans—two or more loans of the same borrower that are treated by both the lender and the borrower as one loan. 1040ez instructions 2013 If you refinance a qualified student loan for more than your original loan and you use the additional amount for any purpose other than qualified education expenses, you cannot deduct any interest paid on the refinanced loan. 1040ez instructions 2013 Voluntary interest payments. 1040ez instructions 2013   These are payments made on a qualified student loan during a period when interest payments are not required, such as when the borrower has been granted a deferment or the loan has not yet entered repayment status. 1040ez instructions 2013 Do Not Include as Interest You cannot claim a student loan interest deduction for any of the following items. 1040ez instructions 2013 Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. 1040ez instructions 2013 Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. 1040ez instructions 2013 Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the “NHSC Loan Repayment Program”) or certain other loan repayment assistance programs. 1040ez instructions 2013 For more information, see Student Loan Repayment Assistance in chapter 5 of Publication 970. 1040ez instructions 2013 Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. 1040ez instructions 2013 Your filing status is any filing status except married filing separately. 1040ez instructions 2013 No one else is claiming an exemption for you on his or her tax return. 1040ez instructions 2013 You are legally obligated to pay interest on a qualified student loan. 1040ez instructions 2013 You paid interest on a qualified student loan. 1040ez instructions 2013 Interest paid by others. 1040ez instructions 2013   If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest. 1040ez instructions 2013 See chapter 4 of Publication 970 for more information. 1040ez instructions 2013 No Double Benefit Allowed You cannot deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, home mortgage interest). 1040ez instructions 2013 How Much Can You Deduct Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. 1040ez instructions 2013 However, the amount determined above is phased out (gradually reduced) if your MAGI is between $60,000 and $75,000 ($125,000 and $155,000 if you file a joint return). 1040ez instructions 2013 You cannot take a student loan interest deduction if your MAGI is $75,000 or more ($155,000 or more if you file a joint return). 1040ez instructions 2013 For details on figuring your MAGI, see chapter 4 of Publication 970. 1040ez instructions 2013 How Do You Figure the Deduction Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the Form 1040 or Form 1040A instructions. 1040ez instructions 2013 However, if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1 in chapter 4 of Publication 970. 1040ez instructions 2013 To help you figure your student loan interest deduction, you should receive Form 1098-E, Student Loan Interest Statement. 1040ez instructions 2013 Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2013 on one or more qualified student loans must send Form 1098-E (or acceptable substitute) to each borrower by January 31, 2014. 1040ez instructions 2013 For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. 1040ez instructions 2013 Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. 1040ez instructions 2013 However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. 1040ez instructions 2013 For information on allocating payments between interest and principal, see chapter 4 of Publication 970. 1040ez instructions 2013 To claim the deduction, enter the allowable amount on Form 1040, line 33, or Form 1040A, line 18. 1040ez instructions 2013 Tuition and Fees Deduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). 1040ez instructions 2013 You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. 1040ez instructions 2013 The qualified expenses must be for higher education, as explained later under What Expenses Qualify . 1040ez instructions 2013 The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. 1040ez instructions 2013 Table 19-2 summarizes the features of the tuition and fees deduction. 1040ez instructions 2013 You may be able to take a credit for your education expenses instead of a deduction. 1040ez instructions 2013 You can choose the one that will give you the lower tax. 1040ez instructions 2013 See chapter 35, Education Credits, for details about the credits. 1040ez instructions 2013 Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. 1040ez instructions 2013 Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. 1040ez instructions 2013 You paid qualified education expenses of higher education in 2013 for academic periods beginning in 2013 and those beginning in the first three months of 2014. 1040ez instructions 2013 You paid the education expenses for an eligible student. 1040ez instructions 2013 The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption (defined in chapter 3) on your tax return. 1040ez instructions 2013 Qualified education expenses are defined under What Expenses Qualify . 1040ez instructions 2013 Eligible students are defined later under Who Is an Eligible Student . 1040ez instructions 2013 Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. 1040ez instructions 2013 Your filing status is married filing separately. 1040ez instructions 2013 Another person can claim an exemption for you as a dependent on his or her tax return. 1040ez instructions 2013 You cannot take the deduction even if the other person does not actually claim that exemption. 1040ez instructions 2013 Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). 1040ez instructions 2013 You (or your spouse) were a nonresident alien for any part of 2013 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. 1040ez instructions 2013 More information on nonresident aliens can be found in Publication 519, U. 1040ez instructions 2013 S. 1040ez instructions 2013 Tax Guide for Aliens. 1040ez instructions 2013 You or anyone else claims an American opportunity or lifetime learning credit in 2013 with respect to expenses of the student for whom the qualified education expenses were paid. 1040ez instructions 2013 However, a state tax credit will not disqualify you from claiming a tuition and fees deduction. 1040ez instructions 2013 Table 19-2. 1040ez instructions 2013 Tuition and Fees Deduction at a Glance Do not rely on this table alone. 1040ez instructions 2013 Refer to the text for more details. 1040ez instructions 2013 Question   Answer What is the maximum benefit?   You can reduce your income subject to tax by up to $4,000. 1040ez instructions 2013 Where is the deduction taken?   As an adjustment to income on Form 1040, line 34, or Form 1040A, line 19. 1040ez instructions 2013 For whom must the expenses be paid?   A student enrolled in an eligible educational institution who is either: you, your spouse, or your dependent for whom you claim an exemption. 1040ez instructions 2013 What tuition and fees are deductible?   Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living, or family expenses, such as room and board. 1040ez instructions 2013 What Expenses Qualify The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. 1040ez instructions 2013 Generally, the deduction is allowed for qualified education expenses paid in 2013 in connection with enrollment at an institution of higher education during 2013 or for an academic period (defined earlier under Student Loan Interest Deduction ) beginning in 2013 or in the first 3 months of 2014. 1040ez instructions 2013 Payments with borrowed funds. 1040ez instructions 2013   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. 1040ez instructions 2013 Use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. 1040ez instructions 2013 Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. 1040ez instructions 2013 Student withdraws from class(es). 1040ez instructions 2013   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. 1040ez instructions 2013 Qualified Education Expenses For purposes of the tuition and fees deduction, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. 1040ez instructions 2013 Eligible educational institution. 1040ez instructions 2013   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. 1040ez instructions 2013 S. 1040ez instructions 2013 Department of Education. 1040ez instructions 2013 It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 1040ez instructions 2013 The educational institution should be able to tell you if it is an eligible educational institution. 1040ez instructions 2013   Certain educational institutions located outside the United States also participate in the U. 1040ez instructions 2013 S. 1040ez instructions 2013 Department of Education's Federal Student Aid (FSA) programs. 1040ez instructions 2013 Academic period. 1040ez instructions 2013    An academic period is any quarter, semester, trimester, or any other period of study as reasonably determined by an eligible educational institution. 1040ez instructions 2013 If an eligible educational institution uses credit hours and does not have academic terms, each payment period may be treated as an academic period. 1040ez instructions 2013 Related expenses. 1040ez instructions 2013   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses for the tuition and fees deduction only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. 1040ez instructions 2013 Prepaid expenses. 1040ez instructions 2013   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring the tuition and fees deduction. 1040ez instructions 2013 See Academic period, earlier. 1040ez instructions 2013 For example, if you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring the tuition and fees deduction for 2013 only if you meet all the other requirements. 1040ez instructions 2013    You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 tuition and fees deduction. 1040ez instructions 2013 No Double Benefit Allowed You cannot do any of the following. 1040ez instructions 2013 Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. 1040ez instructions 2013 Deduct qualified education expenses for a student on your income tax return if you or anyone else claims an American opportunity or lifetime learning credit for that same student in the same year. 1040ez instructions 2013 Deduct qualified education expenses that have been used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or a qualified tuition program (QTP). 1040ez instructions 2013 For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. 1040ez instructions 2013 See Figuring the Taxable Portion of a Distribution in chapter 7 (Coverdell ESA) and chapter 8 (QTP) of Publication 970. 1040ez instructions 2013 Deduct qualified education expenses that have been paid with tax-free interest on U. 1040ez instructions 2013 S. 1040ez instructions 2013 savings bonds (Form 8815). 1040ez instructions 2013 See Figuring the Tax-Free Amount in chapter 10 of Publication 970. 1040ez instructions 2013 Deduct qualified education expenses that have been paid with tax-free educational assistance such as a scholarship, grant, or employer-provided educational assistance. 1040ez instructions 2013 See Adjustments to qualified education expenses, later. 1040ez instructions 2013 Adjustments to qualified education expenses. 1040ez instructions 2013   For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. 1040ez instructions 2013 The result is the amount of adjusted qualified education expenses for each student. 1040ez instructions 2013 Tax-free educational assistance. 1040ez instructions 2013   For tax-free educational assistance you received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance to that academic period. 1040ez instructions 2013 See Academic period, earlier. 1040ez instructions 2013   This includes: The tax-free part of scholarships and fellowships, including Pell grants (see chapter 1 of Publication 970), The tax-free part of any employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. 1040ez instructions 2013 Generally, any scholarship or fellowship you receive is treated as tax-free educational assistance. 1040ez instructions 2013 However, a scholarship or fellowship is not treated as tax-free educational assistance to the extent you include it in gross income (if you are required to file a tax return) for the year the scholarship or fellowship is received and either: The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. 1040ez instructions 2013 970, chapter 1. 1040ez instructions 2013 The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. 1040ez instructions 2013 970, chapter 1. 1040ez instructions 2013 You may be able to increase the combined value of your tuition and fees deduction and certain educational assistance if you include some or all of the educational assistance in income in the year it is received. 1040ez instructions 2013 For details, see Adjustments to Qualified Education Expenses in chapter 6 of Pub. 1040ez instructions 2013 970. 1040ez instructions 2013 Some tax-free educational assistance received in 2013 may be treated as a refund of qualified education expenses paid in 2013. 1040ez instructions 2013 This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). 1040ez instructions 2013 If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed, later. 1040ez instructions 2013 If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed, later. 1040ez instructions 2013 Refunds. 1040ez instructions 2013   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or may require you to include some or all of the refund in your gross income for the year the refund is received. 1040ez instructions 2013 See chapter 6 of Pub. 1040ez instructions 2013 970 for more information. 1040ez instructions 2013 Some tax-free educational assistance received after 2013 may be treated as a refund. 1040ez instructions 2013 See Tax-free educational assistance, earlier. 1040ez instructions 2013 Refunds received in 2013. 1040ez instructions 2013    For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses paid in 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. 1040ez instructions 2013 Refunds received after 2013 but before your income tax return is filed. 1040ez instructions 2013   If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received before you file your 2013 income tax return, reduce the amount of qualified education expenses for 2013 by the amount of the refund. 1040ez instructions 2013 Refunds received after 2013 and after your income tax return is filed. 1040ez instructions 2013   If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received after you file your 2013 income tax return, you may need to include some or all of the refund in your gross income for the year the refund is received. 1040ez instructions 2013 See chapter 6 of Pub. 1040ez instructions 2013 970 for more information. 1040ez instructions 2013 Coordination with Coverdell education savings accounts and qualified tuition programs. 1040ez instructions 2013    Reduce your qualified education expenses by any qualified education expenses used to figure the exclusion from gross income of (a) interest received under an education savings bond program, or (b) any distribution from a Coverdell education savings account or qualified tuition program (QTP). 1040ez instructions 2013 For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. 1040ez instructions 2013 Amounts that do not reduce qualified education expenses. 1040ez instructions 2013   Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. 1040ez instructions 2013   Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. 1040ez instructions 2013 The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses. 1040ez instructions 2013 The use of the money is not restricted. 1040ez instructions 2013 Expenses That Do Not Qualify Qualified education expenses do not include amounts paid for: Insurance, Medical expenses (including student health fees), Room and board, Transportation, or Similar personal, living, or family expenses. 1040ez instructions 2013 This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. 1040ez instructions 2013 Sports, games, hobbies, and noncredit courses. 1040ez instructions 2013   Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. 1040ez instructions 2013 However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. 1040ez instructions 2013 Comprehensive or bundled fees. 1040ez instructions 2013   Some eligible educational institutions combine all of their fees for an academic period into one amount. 1040ez instructions 2013 If you do not receive, or do not have access to, an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. 1040ez instructions 2013 The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T, Tuition Statement. 1040ez instructions 2013 See How Do You Figure the Deduction , later, for more information about Form 1098-T. 1040ez instructions 2013 Who Is an Eligible Student For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (defined earlier). 1040ez instructions 2013 Who Can Claim a Dependent's Expenses Generally, in order to claim the tuition and fees deduction for qualified education expenses for a dependent, you must: Have paid the expenses, and Claim an exemption for the student as a dependent. 1040ez instructions 2013 Table 19-3 summarizes who can claim the deduction. 1040ez instructions 2013 How Much Can You Deduct The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. 1040ez instructions 2013 For details on figuring your MAGI, see chapter 6 of Publication 970. 1040ez instructions 2013 How Do You Figure the Deduction Figure the deduction using Form 8917. 1040ez instructions 2013 To help you figure your tuition and fees deduction, you should receive Form 1098-T, Tuition Statement. 1040ez instructions 2013 Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2014. 1040ez instructions 2013 To claim the deduction, enter the allowable amount on Form 1040, line 34, or Form 1040A, line 19, and attach your completed Form 8917. 1040ez instructions 2013 Table 19-3. 1040ez instructions 2013 Who Can Claim a Dependent's Expenses Do not rely on this table alone. 1040ez instructions 2013 See Who Can Claim a Dependent's Expenses in chapter 6 of Publication 970. 1040ez instructions 2013 IF your dependent is an eligible student and you. 1040ez instructions 2013 . 1040ez instructions 2013 . 1040ez instructions 2013 AND. 1040ez instructions 2013 . 1040ez instructions 2013 . 1040ez instructions 2013 THEN. 1040ez instructions 2013 . 1040ez instructions 2013 . 1040ez instructions 2013 claim an exemption for your dependent you paid all qualified education expenses for your dependent only you can deduct the qualified education expenses that you paid. 1040ez instructions 2013 Your dependent cannot take a deduction. 1040ez instructions 2013 claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. 1040ez instructions 2013 do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. 1040ez instructions 2013 do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. 1040ez instructions 2013 Educator Expenses If you were an eligible educator in 2013, you can deduct on Form 1040, line 23, or Form 1040A, line 16, up to $250 of qualified expenses you paid in 2013. 1040ez instructions 2013 If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. 1040ez instructions 2013 However, neither spouse can deduct more than $250 of his or her qualified expenses on Form 1040, line 23, or Form 1040A, line 16. 1040ez instructions 2013 You may be able to deduct expenses that are more than the $250 (or $500) limit on Schedule A (Form 1040), line 21. 1040ez instructions 2013 Eligible educator. 1040ez instructions 2013   An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who worked in a school for at least 900 hours during a school year. 1040ez instructions 2013 Qualified expenses. 1040ez instructions 2013   Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. 1040ez instructions 2013 An ordinary expense is one that is common and accepted in your educational field. 1040ez instructions 2013 A necessary expense is one that is helpful and appropriate for your profession as an educator. 1040ez instructions 2013 An expense does not have to be required to be considered necessary. 1040ez instructions 2013   Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. 1040ez instructions 2013   You must reduce your qualified expenses by the following amounts. 1040ez instructions 2013 Excludable U. 1040ez instructions 2013 S. 1040ez instructions 2013 series EE and I savings bond interest from Form 8815. 1040ez instructions 2013 See Figuring the Tax-Free Amount in chapter 10 of Publication 970. 1040ez instructions 2013 Nontaxable qualified tuition program earnings or distributions. 1040ez instructions 2013 See Figuring the Taxable Portion of a Distribution in chapter 8 of Publication 970. 1040ez instructions 2013 Nontaxable distribution of earnings from a Coverdell education savings account. 1040ez instructions 2013 See Figuring the Taxable Portion of a Distribution in chapter 7 of Publication 970. 1040ez instructions 2013 Any reimbursements you received for these expenses that were not reported to you in box 1 of your Form W-2. 1040ez instructions 2013 Prev  Up  Next   Home   More Online Publications
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IRS Gives Tax Relief To Oklahoma Tornado Victims; Return Filing and Tax Payment Deadlines Extended to Sept. 30

Updated 7/02/2013 to include LeFlore, Okfuskee and Okmulgee counties.
Updated 6/13/2013 to include Canadian County.

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IR-2013-53, May 21, 2013

WASHINGTON –– After Monday’s devastating tornado in Moore and Oklahoma City,   the Internal Revenue Service today provided tax relief to individuals and businesses affected by this and other severe storms occurring in parts of Oklahoma.

Following Monday’s disaster declaration for individual assistance issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in Canadian, Cleveland, LeFlore, Lincoln, McClain, Okfuskee, Oklahoma, Okmulgee and Pottawatomie counties will receive special tax relief. Other locations may be added in coming days based on additional damage assessments by FEMA.

The tax relief postpones various tax filing and payment deadlines that occurred starting on May 18, 2013. As a result, affected individuals and businesses will have until Sept. 30, 2013 to file these returns and pay any taxes due. This includes the June 17 and Sept. 16 deadlines for making estimated tax payments. A variety of business tax deadlines are also affected including the July 31 deadline for second quarter payroll and excise tax returns and the Sept. 3 deadline for truckers filing highway use tax returns.

The IRS will abate any interest, late-payment or late-filing penalty that would otherwise apply. The agency automatically provides this relief to any taxpayer located in the disaster area. Taxpayers need not contact the IRS to get this relief.

Beyond the relief provided to taxpayers in the FEMA-designated counties, the IRS will work with any taxpayer who lives outside the disaster area but whose books, records or tax professional are located in the areas affected by these storms. All workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization also qualify for relief. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227.

Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either last year’s or this year’s return. Claiming these casualty loss deductions on either an original or amended 2012 return will get the taxpayer an earlier refund but waiting to claim them on a 2013 return could result in greater tax savings depending upon other income factors.

In addition, the IRS is waiving failure-to-deposit penalties for federal payroll and excise tax deposits normally due on or after May 18 and before June 3 if the deposits are made by June 3, 2013. Details on available relief can be found on the disaster relief page on IRS.gov.

The tax relief is part of a coordinated federal response to the damage caused by these storms and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

The IRS is actively monitoring the situation and will provide additional relief if needed.

See also: 

Tax Relief for Victims of Severe Storms and Tornadoes in Oklahoma

Extra Time Granted for Tax-Exempt Bond Issuers Affected by Severe Storms and Tornados in Oklahoma

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Page Last Reviewed or Updated: 04-Sep-2013

The 1040ez Instructions 2013

1040ez instructions 2013 1. 1040ez instructions 2013   Scholarships, Fellowships, Grants, and Tuition Reductions Table of Contents Reminder Introduction Scholarships and FellowshipsTax-Free Scholarships and Fellowships Taxable Scholarships and Fellowships Reporting Scholarships and Fellowships Other Types of Educational AssistanceFulbright Grants Pell Grants and Other Title IV Need-Based Education Grants Payment to Service Academy Cadets Veterans' Benefits Qualified Tuition Reduction Reminder Individual retirement arrangements (IRAs). 1040ez instructions 2013  You can set up and make contributions to an IRA if you receive taxable compensation. 1040ez instructions 2013 Under this rule, a taxable scholarship or fellowship is compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. 1040ez instructions 2013 For more information about IRAs, see Publication 590. 1040ez instructions 2013 Introduction This chapter discusses the income tax treatment of various types of educational assistance you may receive if you are studying, teaching, or researching in the United States. 1040ez instructions 2013 The educational assistance can be for a primary or secondary school, a college or university, or a vocational school. 1040ez instructions 2013 Included are discussions of: Scholarships, Fellowships, Need-based education grants, such as a Pell Grant, and Qualified tuition reductions. 1040ez instructions 2013 Many types of educational assistance are tax free if they meet the requirements discussed here. 1040ez instructions 2013 Special rules apply to U. 1040ez instructions 2013 S. 1040ez instructions 2013 citizens and resident aliens who have received scholarships or fellowships for studying, teaching, or researching abroad. 1040ez instructions 2013 For information about these rules, see Publication 54, Tax Guide for U. 1040ez instructions 2013 S. 1040ez instructions 2013 Citizens and Resident Aliens Abroad. 1040ez instructions 2013 Scholarships and Fellowships A scholarship is generally an amount paid or allowed to, or for the benefit of, a student (whether an undergraduate or a graduate) at an educational institution to aid in the pursuit of his or her studies. 1040ez instructions 2013 A fellowship is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research. 1040ez instructions 2013 Amount of scholarship or fellowship. 1040ez instructions 2013   The amount of a scholarship or fellowship includes the following: The value of contributed services and accommodations. 1040ez instructions 2013 This includes such services and accommodations as room (lodging), board (meals), laundry service, and similar services or accommodations that are received by an individual as a part of a scholarship or fellowship. 1040ez instructions 2013 The amount of tuition, matriculation, and other fees that are paid or remitted to the student to aid the student in pursuing study or research. 1040ez instructions 2013 Any amount received in the nature of a family allowance as a part of a scholarship or fellowship. 1040ez instructions 2013 Tax-Free Scholarships and Fellowships A scholarship or fellowship is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution. 1040ez instructions 2013 A scholarship or fellowship is tax free only to the extent: It does not exceed your expenses; It is not designated or earmarked for other purposes (such as room and board), and does not require (by its terms) that it cannot be used for qualified education expenses; and It does not represent payment for teaching, research, or other services required as a condition for receiving the scholarship. 1040ez instructions 2013 (But for exceptions, see Payment for services,later. 1040ez instructions 2013 Use Worksheet 1–1 to figure the amount of a scholarship or fellowship you can exclude from gross income. 1040ez instructions 2013 Candidate for a degree. 1040ez instructions 2013   You are a candidate for a degree if you: Attend a primary or secondary school or are pursuing a degree at a college or university, or Attend an educational institution that: Provides a program that is acceptable for full credit toward a bachelor's or higher degree, or offers a program of training to prepare students for gainful employment in a recognized occupation; and Is authorized under federal or state law to provide such a program and is accredited by a nationally recognized accreditation agency. 1040ez instructions 2013 Eligible educational institution. 1040ez instructions 2013   An eligible educational institution is one whose primary function is the presentation of formal instruction and that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. 1040ez instructions 2013 Qualified education expenses. 1040ez instructions 2013   For purposes of tax-free scholarships and fellowships, these are expenses for: Tuition and fees required to enroll at or attend an eligible educational institution, and Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. 1040ez instructions 2013 These items must be required of all students in your course of instruction. 1040ez instructions 2013 Expenses that do not qualify. 1040ez instructions 2013   Qualified education expenses do not include the cost of: Room and board, Travel, Research, Clerical help, or Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution. 1040ez instructions 2013 Payment for services. 1040ez instructions 2013   Generally, you cannot exclude from your gross income the part of any scholarship or fellowship that represents payment for teaching, research, or other services required as a condition for receiving the scholarship. 1040ez instructions 2013 This applies even if all candidates for a degree must perform the services to receive the degree. 1040ez instructions 2013 (See exceptions next. 1040ez instructions 2013 ) Exceptions. 1040ez instructions 2013   You do not have to treat as payment for services the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. 1040ez instructions 2013 Example 1. 1040ez instructions 2013 You received a scholarship of $2,500. 1040ez instructions 2013 The scholarship was not received under either of the exceptions mentioned above. 1040ez instructions 2013 As a condition for receiving the scholarship, you must serve as a part-time teaching assistant. 1040ez instructions 2013 Of the $2,500 scholarship, $1,000 represents payment for teaching. 1040ez instructions 2013 The provider of your scholarship gives you a Form W-2 showing $1,000 as income. 1040ez instructions 2013 Your qualified education expenses were at least $1,500. 1040ez instructions 2013 Assuming that all other conditions are met, $1,500 of your scholarship is tax free. 1040ez instructions 2013 The $1,000 you received for teaching is taxable. 1040ez instructions 2013 Example 2. 1040ez instructions 2013 You are a candidate for a degree at a medical school. 1040ez instructions 2013 You receive a scholarship (not under either of the exceptions mentioned above) for your medical education and training. 1040ez instructions 2013 The terms of your scholarship require you to perform future services. 1040ez instructions 2013 A substantial penalty applies if you do not comply. 1040ez instructions 2013 The entire amount of your grant is taxable as payment for services in the year it is received. 1040ez instructions 2013 Athletic Scholarships An athletic scholarship is tax free only if and to the extent it meets the requirements discussed later. 1040ez instructions 2013 Worksheet 1-1. 1040ez instructions 2013    You can use Worksheet 1-1, Taxable Scholarship and Fellowship Income , later, to figure the tax-free and taxable parts of your athletic scholarship. 1040ez instructions 2013    Worksheet 1-1. 1040ez instructions 2013 Taxable Scholarship and Fellowship Income 1. 1040ez instructions 2013 Enter the total amount of any scholarship or fellowship for 2013. 1040ez instructions 2013 See Amount of scholarship or fellowship, earlier. 1040ez instructions 2013 1. 1040ez instructions 2013       If you are a degree candidate at an eligible educational institution, go to line 2. 1040ez instructions 2013 If you are not a degree candidate at an eligible educational institution, stop here. 1040ez instructions 2013 The entire amount is taxable. 1040ez instructions 2013 For information on how to report this amount on your tax return, see Reporting Scholarships and Fellowships , earlier, in this chapter. 1040ez instructions 2013       2. 1040ez instructions 2013 Enter the amount from line 1 that was for teaching, research, or any other services required as a condition for receiving the scholarship. 1040ez instructions 2013 (Do not include amounts received for these items under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program. 1040ez instructions 2013 ) 2. 1040ez instructions 2013     3. 1040ez instructions 2013 Subtract line 2 from line 1 3. 1040ez instructions 2013     4. 1040ez instructions 2013 Enter the amount from line 3 that your scholarship or fellowship required you to use for other than qualified education expenses 4. 1040ez instructions 2013     5. 1040ez instructions 2013 Subtract line 4 from line 3 5. 1040ez instructions 2013     6. 1040ez instructions 2013 Enter the amount of your qualified education expenses 6. 1040ez instructions 2013     7. 1040ez instructions 2013 Enter the smaller of line 5 or line 6. 1040ez instructions 2013 This amount is the most you can exclude from your gross income (the tax-free part of the scholarship or fellowship) 7. 1040ez instructions 2013     8. 1040ez instructions 2013 Subtract line 7 from line 5 8. 1040ez instructions 2013     9. 1040ez instructions 2013 Taxable part. 1040ez instructions 2013 Add lines 2, 4, and 8. 1040ez instructions 2013 See Reporting Scholarships and Fellowships , earlier, for how to report this amount on your tax return 9. 1040ez instructions 2013     Taxable Scholarships and Fellowships If and to the extent your scholarship or fellowship does not meet the requirements described earlier, it is taxable and must be included in gross income. 1040ez instructions 2013 You can use Worksheet 1–1, Taxable Scholarship and Fellowship Income, later, to figure the tax-free and taxable parts of your scholarship or fellowship. 1040ez instructions 2013 Reporting Scholarships and Fellowships Whether you must report your scholarship or fellowship depends on whether you must file a return and whether any part of your scholarship or fellowship is taxable. 1040ez instructions 2013 If your only income is a completely tax-free scholarship or fellowship, you do not have to file a tax return and no reporting is necessary. 1040ez instructions 2013 If all or part of your scholarship or fellowship is taxable and you are required to file a tax return, report the taxable amount as explained below. 1040ez instructions 2013 You must report the taxable amount whether or not you received a Form W-2. 1040ez instructions 2013 If you receive an incorrect Form W-2, ask the payer for a corrected one. 1040ez instructions 2013 For information on whether you must file a return, see Publication 501, Exemptions, Standard Deduction, and Filing Information, or your income tax form instructions. 1040ez instructions 2013 How To Report How you report any taxable scholarship or fellowship income depends on which return you file. 1040ez instructions 2013 Form 1040EZ. 1040ez instructions 2013   If you file Form 1040EZ, include the taxable amount in the total on line 1. 1040ez instructions 2013 If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 1. 1040ez instructions 2013 Form 1040A. 1040ez instructions 2013   If you file Form 1040A, include the taxable amount in the total on line 7. 1040ez instructions 2013 If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 7. 1040ez instructions 2013 Form 1040. 1040ez instructions 2013   If you file Form 1040, include the taxable amount in the total on line 7. 1040ez instructions 2013 If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 7. 1040ez instructions 2013 Schedule SE (Form 1040). 1040ez instructions 2013   To determine your net earnings from self-employment, include amounts you receive under a scholarship as pay for your services that are reported to you on Form 1099-MISC, Miscellaneous Income. 1040ez instructions 2013 If your net earnings are $400 or more, you must pay self-employment tax. 1040ez instructions 2013 Use Schedule SE, Self-Employment Tax, to figure this tax. 1040ez instructions 2013 Form 1040NR. 1040ez instructions 2013   If you file Form 1040NR, report the taxable amount on line 12. 1040ez instructions 2013 Generally, you must report the amount shown in box 2 of Form(s) 1042-S, Foreign Person's U. 1040ez instructions 2013 S. 1040ez instructions 2013 Source Income Subject to Withholding. 1040ez instructions 2013 See the Instructions for Form 1040NR for more information. 1040ez instructions 2013 Form 1040NR-EZ. 1040ez instructions 2013   If you file Form 1040NR-EZ, report the taxable amount on line 5. 1040ez instructions 2013 Generally, you must report the amount shown in box 2 of Form(s) 1042-S. 1040ez instructions 2013 See the Instructions for Form 1040NR-EZ for more information. 1040ez instructions 2013 Other Types of Educational Assistance The following discussions deal with other common types of educational assistance. 1040ez instructions 2013 Fulbright Grants A Fulbright grant is generally treated as a scholarship or fellowship in figuring how much of the grant is tax free. 1040ez instructions 2013 Pell Grants and Other Title IV Need-Based Education Grants These need-based grants are treated as scholarships for purposes of determining their tax treatment. 1040ez instructions 2013 They are tax free to the extent used for qualified education expenses during the period for which a grant is awarded. 1040ez instructions 2013 Payment to Service Academy Cadets An appointment to a United States military academy is not a scholarship or fellowship. 1040ez instructions 2013 Payment you receive as a cadet or midshipman at an armed services academy is pay for personal services and will be reported to you in box 1 of Form W-2. 1040ez instructions 2013 Include this pay in your income in the year you receive it unless one of the exceptions, discussed earlier under Payment for services , applies. 1040ez instructions 2013 Veterans' Benefits Payments you receive for education, training, or subsistence under any law administered by the Department of Veterans Affairs (VA) are tax free. 1040ez instructions 2013 Do not include these payments as income on your federal tax return. 1040ez instructions 2013 If you qualify for one or more of the education benefits discussed in chapters 2 through 12, you may have to reduce the amount of education expenses qualifying for a specific benefit by part or all of your VA payments. 1040ez instructions 2013 This applies only to the part of your VA payments that is required to be used for education expenses. 1040ez instructions 2013 You may want to visit the Veteran's Administration website at www. 1040ez instructions 2013 gibill. 1040ez instructions 2013 va. 1040ez instructions 2013 gov for specific information about the various VA benefits for education. 1040ez instructions 2013 Example. 1040ez instructions 2013 You have returned to college and are receiving two education benefits under the latest GI Bill: (1) a $1,534 monthly basic housing allowance (BHA) that is directly deposited to your checking account, and (2) $3,840 paid directly to your college for tuition. 1040ez instructions 2013 Neither of these benefits is taxable and you do not report them on your tax return. 1040ez instructions 2013 You also want to claim an American opportunity credit on your return. 1040ez instructions 2013 You paid $5,000 in qualified education expenses (see chapter 2, American Opportunity Credit , later). 1040ez instructions 2013 To figure the amount of credit, you must first subtract the $3,840 from your qualified education expenses because this payment under the GI Bill was required to be used for education expenses. 1040ez instructions 2013 You do not subtract any amount of the BHA because it was paid to you and its use was not restricted. 1040ez instructions 2013 Qualified Tuition Reduction If you are allowed to study tuition free or for a reduced rate of tuition, you may not have to pay tax on this benefit. 1040ez instructions 2013 This is called a “tuition reduction. 1040ez instructions 2013 ” You do not have to include a qualified tuition reduction in your income. 1040ez instructions 2013 A tuition reduction is qualified only if you receive it from, and use it at, an eligible educational institution. 1040ez instructions 2013 You do not have to use the tuition reduction at the eligible educational institution from which you received it. 1040ez instructions 2013 In other words, if you work for an eligible educational institution and the institution arranges for you to take courses at another eligible educational institution without paying any tuition, you may not have to include the value of the free courses in your income. 1040ez instructions 2013 The rules for determining if a tuition reduction is qualified, and therefore tax free, are different if the education provided is below the graduate level or is graduate education. 1040ez instructions 2013 You must include in your income any tuition reduction you receive that is payment for your services. 1040ez instructions 2013 Eligible educational institution. 1040ez instructions 2013   An eligible educational institution is one that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. 1040ez instructions 2013 Officers, owners, and highly compensated employees. 1040ez instructions 2013   Qualified tuition reductions apply to officers, owners, or highly compensated employees only if benefits are available to employees on a nondiscriminatory basis. 1040ez instructions 2013 This means that the tuition reduction benefits must be available on substantially the same basis to each member of a group of employees. 1040ez instructions 2013 The group must be defined under a reasonable classification set up by the employer. 1040ez instructions 2013 The classification must not discriminate in favor of owners, officers, or highly compensated employees. 1040ez instructions 2013 Payment for services. 1040ez instructions 2013   Generally, you must include in income the part of any qualified tuition reduction that represents payment for teaching, research, or other services by the student required as a condition of receiving the qualified tuition reduction. 1040ez instructions 2013 This applies even if all candidates for a degree must perform the services to receive the degree. 1040ez instructions 2013 (See below for exceptions. 1040ez instructions 2013 ) Exceptions. 1040ez instructions 2013   You do not have to include in income the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. 1040ez instructions 2013 Education Below the Graduate Level If you receive a tuition reduction for education below the graduate level (including primary, secondary, or high school), it is a qualified tuition reduction, and therefore tax free, only if your relationship to the educational institution providing the benefit is described below. 1040ez instructions 2013 You are an employee of the eligible educational institution. 1040ez instructions 2013 You were an employee of the eligible educational institution, but you retired or left on disability. 1040ez instructions 2013 You are a widow or widower of an individual who died while an employee of the eligible educational institution or who retired or left on disability. 1040ez instructions 2013 You are the dependent child or spouse of an individual described in (1) through (3), above. 1040ez instructions 2013 Child of deceased parents. 1040ez instructions 2013   For purposes of the qualified tuition reduction, a child is a dependent child if the child is under age 25 and both parents have died. 1040ez instructions 2013 Child of divorced parents. 1040ez instructions 2013   For purposes of the qualified tuition reduction, a dependent child of divorced parents is treated as the dependent of both parents. 1040ez instructions 2013 Graduate Education A tuition reduction you receive for graduate education is qualified, and therefore tax free, if both of the following requirements are met. 1040ez instructions 2013 It is provided by an eligible educational institution. 1040ez instructions 2013 You are a graduate student who performs teaching or research activities for the educational institution. 1040ez instructions 2013 You must include in income any other tuition reductions for graduate education that you receive. 1040ez instructions 2013 How To Report Any tuition reduction that is taxable should be included as wages in box 1 of your Form W-2. 1040ez instructions 2013 Report the amount from Form W-2, box 1, on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). 1040ez instructions 2013 Prev  Up  Next   Home   More Online Publications