Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

1040nr Tax Calculator

Myfreetaxes.com/everettForms For 2012 Income TaxFreefilefillableforms ComH&r Block Taxcut Free FileFree E File State TaxesIncome Tax Forms 2012Where Can I File My 2012 Taxes Online For Free1040x FillableTurbotax Free For Military 2012File 1040nr Ez Online FreeWho Has Free State Tax Filing2011 10401040x Amended Tax FormRi 1040nrH R Block 2011How To File 2012 Taxes1040 Long FormFree Military Tax FilingCan I Still File My 2010 TaxesFile Tax Extension OnlineTurbotax Military Discount 2011Free Tax Filing 2012 OnlineWhat Forms Do I Need To Amend My TaxesH And R Block Free Tax FilingComplete 2005 Taxes OnlineTax Form 1040x More:label_tax_20form_201040x More:bizfinanceTax Planning Us Back TaxesHow To Amend Your Taxes OnlineIrs 2012 1040 Tax FormFree Turbo Tax For Low IncomeIrs Amended Forms1040 Ez 2012How To File A 2012 Tax ReturnFree Taxes OnlineFile Amended Tax Return 2010Free Online State Income Tax FilingWhere To Mail 1040xMilitary Taxes1040nr OnlineFiling An Amended Return For 2013

1040nr Tax Calculator

1040nr tax calculator Publication 969 - Main Content Table of Contents Health Savings Accounts (HSAs)Qualifying for an HSA Contributions to an HSA Distributions From an HSA Balance in an HSA Death of HSA Holder Filing Form 8889 Employer Participation Medical Savings Accounts (MSAs)Archer MSAs Contributions to an MSA Distributions From an MSA Balance in an Archer MSA Death of the Archer MSA Holder Filing Form 8853 Employer Participation Medicare Advantage MSAs Flexible Spending Arrangements (FSAs)Qualifying for an FSA Contributions to an FSA Distributions From an FSA Balance in an FSA Employer Participation Health Reimbursement Arrangements (HRAs)Qualifying for an HRA Contributions to an HRA Distributions From an HRA Balance in an HRA Employer Participation How To Get Tax HelpLow Income Taxpayer Clinics Health Savings Accounts (HSAs) A health savings account (HSA) is a tax-exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. 1040nr tax calculator You must be an eligible individual to qualify for an HSA. 1040nr tax calculator No permission or authorization from the IRS is necessary to establish an HSA. 1040nr tax calculator You set up an HSA with a trustee. 1040nr tax calculator A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of individual retirement arrangements (IRAs) or Archer MSAs. 1040nr tax calculator The HSA can be established through a trustee that is different from your health plan provider. 1040nr tax calculator Your employer may already have some information on HSA trustees in your area. 1040nr tax calculator If you have an Archer MSA, you can generally roll it over into an HSA tax free. 1040nr tax calculator See Rollovers, later. 1040nr tax calculator What are the benefits of an HSA?   You may enjoy several benefits from having an HSA. 1040nr tax calculator You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you do not itemize your deductions on Form 1040. 1040nr tax calculator Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income. 1040nr tax calculator The contributions remain in your account until you use them. 1040nr tax calculator The interest or other earnings on the assets in the account are tax free. 1040nr tax calculator Distributions may be tax free if you pay qualified medical expenses. 1040nr tax calculator See Qualified medical expenses , later. 1040nr tax calculator An HSA is “portable. 1040nr tax calculator ” It stays with you if you change employers or leave the work force. 1040nr tax calculator Qualifying for an HSA To be an eligible individual and qualify for an HSA, you must meet the following requirements. 1040nr tax calculator You must be covered under a high deductible health plan (HDHP), described later, on the first day of the month. 1040nr tax calculator You have no other health coverage except what is permitted under Other health coverage , later. 1040nr tax calculator You are not enrolled in Medicare. 1040nr tax calculator You cannot be claimed as a dependent on someone else's 2013 tax return. 1040nr tax calculator Under the last-month rule, you are considered to be an eligible individual for the entire year if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers). 1040nr tax calculator If you meet these requirements, you are an eligible individual even if your spouse has non-HDHP family coverage, provided your spouse's coverage does not cover you. 1040nr tax calculator If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an HSA contribution. 1040nr tax calculator This is true even if the other person does not actually claim your exemption. 1040nr tax calculator Each spouse who is an eligible individual who wants an HSA must open a separate HSA. 1040nr tax calculator You cannot have a joint HSA. 1040nr tax calculator High deductible health plan (HDHP). 1040nr tax calculator   An HDHP has: A higher annual deductible than typical health plans, and A maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that you must pay for covered expenses. 1040nr tax calculator Out-of-pocket expenses include copayments and other amounts, but do not include premiums. 1040nr tax calculator   An HDHP may provide preventive care benefits without a deductible or with a deductible less than the minimum annual deductible. 1040nr tax calculator Preventive care includes, but is not limited to, the following. 1040nr tax calculator Periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations, such as annual physicals. 1040nr tax calculator Routine prenatal and well-child care. 1040nr tax calculator Child and adult immunizations. 1040nr tax calculator Tobacco cessation programs. 1040nr tax calculator Obesity weight-loss programs. 1040nr tax calculator Screening services. 1040nr tax calculator This includes screening services for the following: Cancer. 1040nr tax calculator Heart and vascular diseases. 1040nr tax calculator Infectious diseases. 1040nr tax calculator Mental health conditions. 1040nr tax calculator Substance abuse. 1040nr tax calculator Metabolic, nutritional, and endocrine conditions. 1040nr tax calculator Musculoskeletal disorders. 1040nr tax calculator Obstetric and gynecological conditions. 1040nr tax calculator Pediatric conditions. 1040nr tax calculator Vision and hearing disorders. 1040nr tax calculator For more information on screening services, see Notice 2004-23, 2004-15 I. 1040nr tax calculator R. 1040nr tax calculator B. 1040nr tax calculator 725 available at www. 1040nr tax calculator irs. 1040nr tax calculator gov/irb/2004-15_IRB/ar10. 1040nr tax calculator html. 1040nr tax calculator     The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2013. 1040nr tax calculator      Self-only coverage Family coverage Minimum annual deductible $1,250 $2,500 Maximum annual deductible and other out-of-pocket expenses* $6,250 $12,500 * This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. 1040nr tax calculator Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies. 1040nr tax calculator    The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2014. 1040nr tax calculator      Self-only coverage Family coverage Minimum annual deductible $1,250 $2,500 Maximum annual deductible and other out-of-pocket expenses* $6,350 $12,700 * This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. 1040nr tax calculator Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies. 1040nr tax calculator   Self-only HDHP coverage is an HDHP covering only an eligible individual. 1040nr tax calculator Family HDHP coverage is an HDHP covering an eligible individual and at least one other individual (whether or not that individual is an eligible individual). 1040nr tax calculator Example. 1040nr tax calculator An eligible individual and his dependent child are covered under an “employee plus one” HDHP offered by the individual's employer. 1040nr tax calculator This is family HDHP coverage. 1040nr tax calculator Family plans that do not meet the high deductible rules. 1040nr tax calculator   There are some family plans that have deductibles for both the family as a whole and for individual family members. 1040nr tax calculator Under these plans, if you meet the individual deductible for one family member, you do not have to meet the higher annual deductible amount for the family. 1040nr tax calculator If either the deductible for the family as a whole or the deductible for an individual family member is less than the minimum annual deductible for family coverage, the plan does not qualify as an HDHP. 1040nr tax calculator Example. 1040nr tax calculator You have family health insurance coverage in 2013. 1040nr tax calculator The annual deductible for the family plan is $3,500. 1040nr tax calculator This plan also has an individual deductible of $1,500 for each family member. 1040nr tax calculator The plan does not qualify as an HDHP because the deductible for an individual family member is less than the minimum annual deductible ($2,500) for family coverage. 1040nr tax calculator Other health coverage. 1040nr tax calculator   You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. 1040nr tax calculator However, you can still be an eligible individual even if your spouse has non-HDHP coverage provided you are not covered by that plan. 1040nr tax calculator    You can have additional insurance that provides benefits only for the following items. 1040nr tax calculator Liabilities incurred under workers' compensation laws, tort liabilities, or liabilities related to ownership or use of property. 1040nr tax calculator A specific disease or illness. 1040nr tax calculator A fixed amount per day (or other period) of hospitalization. 1040nr tax calculator   You can also have coverage (whether provided through insurance or otherwise) for the following items. 1040nr tax calculator Accidents. 1040nr tax calculator Disability. 1040nr tax calculator Dental care. 1040nr tax calculator Vision care. 1040nr tax calculator Long-term care. 1040nr tax calculator    Plans in which substantially all of the coverage is through the items listed earlier are not HDHPs. 1040nr tax calculator For example, if your plan provides coverage substantially all of which is for a specific disease or illness, the plan is not an HDHP for purposes of establishing an HSA. 1040nr tax calculator Prescription drug plans. 1040nr tax calculator   You can have a prescription drug plan, either as part of your HDHP or a separate plan (or rider), and qualify as an eligible individual if the plan does not provide benefits until the minimum annual deductible of the HDHP has been met. 1040nr tax calculator If you can receive benefits before that deductible is met, you are not an eligible individual. 1040nr tax calculator Other employee health plans. 1040nr tax calculator   An employee covered by an HDHP and a health FSA or an HRA that pays or reimburses qualified medical expenses generally cannot make contributions to an HSA. 1040nr tax calculator Health FSAs and HRAs are discussed later. 1040nr tax calculator   However, an employee can make contributions to an HSA while covered under an HDHP and one or more of the following arrangements. 1040nr tax calculator Limited-purpose health FSA or HRA. 1040nr tax calculator These arrangements can pay or reimburse the items listed earlier under Other health coverage except long-term care. 1040nr tax calculator Also, these arrangements can pay or reimburse preventive care expenses because they can be paid without having to satisfy the deductible. 1040nr tax calculator Suspended HRA. 1040nr tax calculator Before the beginning of an HRA coverage period, you can elect to suspend the HRA. 1040nr tax calculator The HRA does not pay or reimburse, at any time, the medical expenses incurred during the suspension period except preventive care and items listed under Other health coverage. 1040nr tax calculator When the suspension period ends, you are no longer eligible to make contributions to an HSA. 1040nr tax calculator Post-deductible health FSA or HRA. 1040nr tax calculator These arrangements do not pay or reimburse any medical expenses incurred before the minimum annual deductible amount is met. 1040nr tax calculator The deductible for these arrangements does not have to be the same as the deductible for the HDHP, but benefits may not be provided before the minimum annual deductible amount is met. 1040nr tax calculator Retirement HRA. 1040nr tax calculator This arrangement pays or reimburses only those medical expenses incurred after retirement. 1040nr tax calculator After retirement you are no longer eligible to make contributions to an HSA. 1040nr tax calculator Health FSA – grace period. 1040nr tax calculator   Coverage during a grace period by a general purpose health FSA is allowed if the balance in the health FSA at the end of its prior year plan is zero. 1040nr tax calculator See Flexible Spending Arrangements (FSAs) , later. 1040nr tax calculator Contributions to an HSA Any eligible individual can contribute to an HSA. 1040nr tax calculator For an employee's HSA, the employee, the employee's employer, or both may contribute to the employee's HSA in the same year. 1040nr tax calculator For an HSA established by a self-employed (or unemployed) individual, the individual can contribute. 1040nr tax calculator Family members or any other person may also make contributions on behalf of an eligible individual. 1040nr tax calculator Contributions to an HSA must be made in cash. 1040nr tax calculator Contributions of stock or property are not allowed. 1040nr tax calculator Limit on Contributions The amount you or any other person can contribute to your HSA depends on the type of HDHP coverage you have, your age, the date you become an eligible individual, and the date you cease to be an eligible individual. 1040nr tax calculator For 2013, if you have self-only HDHP coverage, you can contribute up to $3,250. 1040nr tax calculator If you have family HDHP coverage, you can contribute up to $6,450. 1040nr tax calculator For 2014, if you have self-only HDHP coverage, you can contribute up to $3,300. 1040nr tax calculator If you have family HDHP coverage you can contribute up to $6,550. 1040nr tax calculator If you were, or were considered (under the last-month rule, discussed later), an eligible individual for the entire year and did not change your type of coverage, you can contribute the full amount based on your type of coverage. 1040nr tax calculator However, if you were not an eligible individual for the entire year or changed your coverage during the year, your contribution limit is the greater of: The limitation shown on the Line 3 Limitation Chart and Worksheetin the Instructions for Form 8889, Health Savings Accounts (HSAs), or The maximum annual HSA contribution based on your HDHP coverage (self-only or family) on the first day of the last month of your tax year. 1040nr tax calculator If you had family HDHP coverage on the first day of the last month of your tax year, your contribution limit for 2013 is $6,450 even if you changed coverage during the year. 1040nr tax calculator Last-month rule. 1040nr tax calculator   Under the last-month rule, if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers), you are considered an eligible individual for the entire year. 1040nr tax calculator You are treated as having the same HDHP coverage for the entire year as you had on the first day of the last month. 1040nr tax calculator Testing period. 1040nr tax calculator   If contributions were made to your HSA based on you being an eligible individual for the entire year under the last-month rule, you must remain an eligible individual during the testing period. 1040nr tax calculator For the last-month rule, the testing period begins with the last month of your tax year and ends on the last day of the 12th month following that month. 1040nr tax calculator For example, December 1, 2013, through December 31, 2014. 1040nr tax calculator   If you fail to remain an eligible individual during the testing period, other than because of death or becoming disabled, you will have to include in income the total contributions made to your HSA that would not have been made except for the last-month rule. 1040nr tax calculator You include this amount in your income in the year in which you fail to be an eligible individual. 1040nr tax calculator This amount is also subject to a 10% additional tax. 1040nr tax calculator The income and additional tax are shown on Form 8889, Part III. 1040nr tax calculator Example 1. 1040nr tax calculator Chris, age 53, becomes an eligible individual on December 1, 2013. 1040nr tax calculator He has family HDHP coverage on that date. 1040nr tax calculator Under the last-month rule, he contributes $6,450 to his HSA. 1040nr tax calculator Chris fails to be an eligible individual in June 2014. 1040nr tax calculator Because Chris did not remain an eligible individual during the testing period (December 1, 2013, through December 31, 2014), he must include in his 2014 income the contributions made in 2013 that would not have been made except for the last-month rule. 1040nr tax calculator Chris uses the worksheet in the Form 8889 instructions to determine this amount. 1040nr tax calculator January -0- February -0- March -0- April -0- May -0- June -0- July -0- August -0- September -0- October -0- November -0- December $6,450. 1040nr tax calculator 00 Total for all months $6,450. 1040nr tax calculator 00 Limitation. 1040nr tax calculator Divide the total by 12 $537. 1040nr tax calculator 50 Chris would include $5,912. 1040nr tax calculator 50 ($6,450. 1040nr tax calculator 00 – $537. 1040nr tax calculator 50) in his gross income on his 2014 tax return. 1040nr tax calculator Also, a 10% additional tax applies to this amount. 1040nr tax calculator Example 2. 1040nr tax calculator Erika, age 39, has self-only HDHP coverage on January 1, 2013. 1040nr tax calculator Erika changes to family HDHP coverage on November 1, 2013. 1040nr tax calculator Because Erika has family HDHP coverage on December 1, 2013, she contributes $6,450 for 2013. 1040nr tax calculator Erika fails to be an eligible individual in March 2014. 1040nr tax calculator Because she did not remain an eligible individual during the testing period (December 1, 2013, through December 31, 2014), she must include in income the contribution made that would not have been made except for the last-month rule. 1040nr tax calculator Erika uses the worksheet in the Form 8889 instructions to determine this amount. 1040nr tax calculator January $3,250. 1040nr tax calculator 00 February $3,250. 1040nr tax calculator 00 March $3,250. 1040nr tax calculator 00 April $3,250. 1040nr tax calculator 00 May $3,250. 1040nr tax calculator 00 June $3,250. 1040nr tax calculator 00 July $3,250. 1040nr tax calculator 00 August $3,250. 1040nr tax calculator 00 September $3,250. 1040nr tax calculator 00 October $3,250. 1040nr tax calculator 00 November $6,450. 1040nr tax calculator 00 December $6,450. 1040nr tax calculator 00 Total for all months $45,400. 1040nr tax calculator 00 Limitation. 1040nr tax calculator Divide the total by 12 $3,783. 1040nr tax calculator 34 Erika would include $2,666. 1040nr tax calculator 67 ($6,450 – $3,783. 1040nr tax calculator 34) in her gross income on her 2014 tax return. 1040nr tax calculator Also, a 10% additional tax applies to this amount. 1040nr tax calculator Additional contribution. 1040nr tax calculator   If you are an eligible individual who is age 55 or older at the end of your tax year, your contribution limit is increased by $1,000. 1040nr tax calculator For example, if you have self-only coverage, you can contribute up to $4,250 (the contribution limit for self-only coverage ($3,250) plus the additional contribution of $1,000). 1040nr tax calculator However, see Enrolled in Medicare , later. 1040nr tax calculator If you have more than one HSA in 2013, your total contributions to all the HSAs cannot be more than the limits discussed earlier. 1040nr tax calculator Reduction of contribution limit. 1040nr tax calculator   You must reduce the amount that can be contributed (including any additional contribution) to your HSA by the amount of any contribution made to your Archer MSA (including employer contributions) for the year. 1040nr tax calculator A special rule applies to married people, discussed next, if each spouse has family coverage under an HDHP. 1040nr tax calculator Rules for married people. 1040nr tax calculator   If either spouse has family HDHP coverage, both spouses are treated as having family HDHP coverage. 1040nr tax calculator If each spouse has family coverage under a separate plan, the contribution limit for 2013 is $6,450. 1040nr tax calculator You must reduce the limit on contributions, before taking into account any additional contributions, by the amount contributed to both spouses' Archer MSAs. 1040nr tax calculator After that reduction, the contribution limit is split equally between the spouses unless you agree on a different division. 1040nr tax calculator The rules for married people apply only if both spouses are eligible individuals. 1040nr tax calculator If both spouses are 55 or older and not enrolled in Medicare, each spouse's contribution limit is increased by the additional contribution. 1040nr tax calculator If both spouses meet the age requirement, the total contributions under family coverage cannot be more than $8,450. 1040nr tax calculator Each spouse must make the additional contribution to his or her own HSA. 1040nr tax calculator Example. 1040nr tax calculator For 2013, Mr. 1040nr tax calculator Auburn and his wife are both eligible individuals. 1040nr tax calculator They each have family coverage under separate HDHPs. 1040nr tax calculator Mr. 1040nr tax calculator Auburn is 58 years old and Mrs. 1040nr tax calculator Auburn is 53. 1040nr tax calculator Mr. 1040nr tax calculator and Mrs. 1040nr tax calculator Auburn can split the family contribution limit ($6,450) equally or they can agree on a different division. 1040nr tax calculator If they split it equally, Mr. 1040nr tax calculator Auburn can contribute $4,225 to an HSA (one-half the maximum contribution for family coverage ($3,225) + $1,000 additional contribution) and Mrs. 1040nr tax calculator Auburn can contribute $3,225 to an HSA. 1040nr tax calculator Employer contributions. 1040nr tax calculator   You must reduce the amount you, or any other person, can contribute to your HSA by the amount of any contributions made by your employer that are excludable from your income. 1040nr tax calculator This includes amounts contributed to your account by your employer through a cafeteria plan. 1040nr tax calculator Enrolled in Medicare. 1040nr tax calculator   Beginning with the first month you are enrolled in Medicare, your contribution limit is zero. 1040nr tax calculator Example. 1040nr tax calculator You turned age 65 in July 2013 and enrolled in Medicare. 1040nr tax calculator You had an HDHP with self-only coverage and are eligible for an additional contribution of $1,000. 1040nr tax calculator Your contribution limit is $2,125 ($4,250 × 6 ÷ 12). 1040nr tax calculator Qualified HSA funding distribution. 1040nr tax calculator   A qualified HSA funding distribution may be made from your traditional IRA or Roth IRA to your HSA. 1040nr tax calculator This distribution cannot be made from an ongoing SEP IRA or SIMPLE IRA. 1040nr tax calculator For this purpose, a SEP IRA or SIMPLE IRA is ongoing if an employer contribution is made for the plan year ending with or within your tax year in which the distribution would be made. 1040nr tax calculator   The maximum qualified HSA funding distribution depends on the HDHP coverage (self-only or family) you have on the first day of the month in which the contribution is made and your age as of the end of the tax year. 1040nr tax calculator The distribution must be made directly by the trustee of the IRA to the trustee of the HSA. 1040nr tax calculator The distribution is not included in your income, is not deductible, and reduces the amount that can be contributed to your HSA. 1040nr tax calculator The qualified HSA funding distribution is shown on Form 8889 for the year in which the distribution is made. 1040nr tax calculator   You can make only one qualified HSA funding distribution during your lifetime. 1040nr tax calculator However, if you make a distribution during a month when you have self-only HDHP coverage, you can make another qualified HSA funding distribution in a later month in that tax year if you change to family HDHP coverage. 1040nr tax calculator The total qualified HSA funding distribution cannot be more than the contribution limit for family HDHP coverage plus any additional contribution to which you are entitled. 1040nr tax calculator Example. 1040nr tax calculator In 2013, you are an eligible individual, age 57, with self-only HDHP coverage. 1040nr tax calculator You can make a qualified HSA funding distribution of $4,250 ($3,250 plus $1,000 additional contribution). 1040nr tax calculator Funding distribution – testing period. 1040nr tax calculator   You must remain an eligible individual during the testing period. 1040nr tax calculator For a qualified HSA funding distribution, the testing period begins with the month in which the qualified HSA funding distribution is contributed and ends on the last day of the 12th month following that month. 1040nr tax calculator For example, if a qualified HSA funding distribution is contributed to your HSA on August 10, 2013, your testing period begins in August 2013, and ends on August 31, 2014. 1040nr tax calculator   If you fail to remain an eligible individual during the testing period, other than because of death or becoming disabled, you will have to include in income the qualified HSA funding distribution. 1040nr tax calculator You include this amount in income in the year in which you fail to be an eligible individual. 1040nr tax calculator This amount is also subject to a 10% additional tax. 1040nr tax calculator The income and the additional tax are shown on Form 8889, Part III. 1040nr tax calculator   Each qualified HSA funding distribution allowed has its own testing period. 1040nr tax calculator For example, you are an eligible individual, age 45, with self-only HDHP coverage. 1040nr tax calculator On June 18, 2013, you make a qualified HSA funding distribution of $3,250. 1040nr tax calculator On July 27, 2013, you enroll in family HDHP coverage and on August 17, 2013, you make a qualified HSA funding distribution of $3,200. 1040nr tax calculator Your testing period for the first distribution begins in June 2013 and ends on June 30, 2014. 1040nr tax calculator Your testing period for the second distribution begins in August 2013 and ends on August 31, 2014. 1040nr tax calculator   The testing period rule that applies under the last-month rule (discussed earlier) does not apply to amounts contributed to an HSA through a qualified HSA funding distribution. 1040nr tax calculator If you remain an eligible individual during the entire funding distribution testing period, then no amount of that distribution is included in income and will not be subject to the additional tax for failing to meet the last-month rule testing period. 1040nr tax calculator Rollovers A rollover contribution is not included in your income, is not deductible, and does not reduce your contribution limit. 1040nr tax calculator Archer MSAs and other HSAs. 1040nr tax calculator   You can roll over amounts from Archer MSAs and other HSAs into an HSA. 1040nr tax calculator You do not have to be an eligible individual to make a rollover contribution from your existing HSA to a new HSA. 1040nr tax calculator Rollover contributions do not need to be in cash. 1040nr tax calculator Rollovers are not subject to the annual contribution limits. 1040nr tax calculator   You must roll over the amount within 60 days after the date of receipt. 1040nr tax calculator You can make only one rollover contribution to an HSA during a 1-year period. 1040nr tax calculator Note. 1040nr tax calculator If you instruct the trustee of your HSA to transfer funds directly to the trustee of another of your HSAs, the transfer is not considered a rollover. 1040nr tax calculator There is no limit on the number of these transfers. 1040nr tax calculator Do not include the amount transferred in income, deduct it as a contribution, or include it as a distribution on Form 8889. 1040nr tax calculator When To Contribute You can make contributions to your HSA for 2013 until April 15, 2014. 1040nr tax calculator If you fail to be an eligible individual during 2013, you can still make contributions, up until April 15, 2014, for the months you were an eligible individual. 1040nr tax calculator Your employer can make contributions to your HSA between January 1, 2014, and April 15, 2014, that are allocated to 2013. 1040nr tax calculator Your employer must notify you and the trustee of your HSA that the contribution is for 2013. 1040nr tax calculator The contribution will be reported on your 2014 Form W-2. 1040nr tax calculator Reporting Contributions on Your Return Contributions made by your employer are not included in your income. 1040nr tax calculator Contributions to an employee's account by an employer using the amount of an employee's salary reduction through a cafeteria plan are treated as employer contributions. 1040nr tax calculator Generally, you can claim contributions you made and contributions made by any other person, other than your employer, on your behalf, as an adjustment to income. 1040nr tax calculator Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. 1040nr tax calculator The contributions are treated as a distribution of money and are not included in the partner's gross income. 1040nr tax calculator Contributions by a partnership to a partner's HSA for services rendered are treated as guaranteed payments that are deductible by the partnership and includible in the partner's gross income. 1040nr tax calculator In both situations, the partner can deduct the contribution made to the partner's HSA. 1040nr tax calculator Contributions by an S corporation to a 2% shareholder-employee's HSA for services rendered are treated as guaranteed payments and are deductible by the S corporation and includible in the shareholder-employee's gross income. 1040nr tax calculator The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. 1040nr tax calculator Form 8889. 1040nr tax calculator   Report all contributions to your HSA on Form 8889 and file it with your Form 1040 or Form 1040NR. 1040nr tax calculator You should include all contributions made for 2013, including those made by April 15, 2014, that are designated for 2013. 1040nr tax calculator Contributions made by your employer and qualified HSA funding distributions are also shown on the form. 1040nr tax calculator   You should receive Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, from the trustee showing the amount contributed to your HSA during the year. 1040nr tax calculator Your employer's contributions also will be shown in box 12 of Form W-2, Wage and Tax Statement, with code W. 1040nr tax calculator Follow the instructions for Form 8889. 1040nr tax calculator Report your HSA deduction on Form 1040 or Form 1040NR. 1040nr tax calculator Excess contributions. 1040nr tax calculator   You will have excess contributions if the contributions to your HSA for the year are greater than the limits discussed earlier. 1040nr tax calculator Excess contributions are not deductible. 1040nr tax calculator Excess contributions made by your employer are included in your gross income. 1040nr tax calculator If the excess contribution is not included in box 1 of Form W-2, you must report the excess as “Other income” on your tax return. 1040nr tax calculator   Generally, you must pay a 6% excise tax on excess contributions. 1040nr tax calculator See Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. 1040nr tax calculator The excise tax applies to each tax year the excess contribution remains in the account. 1040nr tax calculator   You may withdraw some or all of the excess contributions and not pay the excise tax on the amount withdrawn if you meet the following conditions. 1040nr tax calculator You withdraw the excess contributions by the due date, including extensions, of your tax return for the year the contributions were made. 1040nr tax calculator You withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings. 1040nr tax calculator If you fail to remain an eligible individual during any of the testing periods, discussed earlier, the amount you have to include in income is not an excess contribution. 1040nr tax calculator If you withdraw any of those amounts, the amount is treated the same as any other distribution from an HSA, discussed later. 1040nr tax calculator Deducting an excess contribution in a later year. 1040nr tax calculator   You may be able to deduct excess contributions for previous years that are still in your HSA. 1040nr tax calculator The excess contribution you can deduct for the current year is the lesser of the following two amounts. 1040nr tax calculator Your maximum HSA contribution limit for the year minus any amounts contributed to your HSA for the year. 1040nr tax calculator The total excess contributions in your HSA at the beginning of the year. 1040nr tax calculator   Amounts contributed for the year include contributions by you, your employer, and any other person. 1040nr tax calculator They also include any qualified HSA funding distribution made to your HSA. 1040nr tax calculator Any excess contribution remaining at the end of a tax year is subject to the excise tax. 1040nr tax calculator See Form 5329. 1040nr tax calculator Distributions From an HSA You will generally pay medical expenses during the year without being reimbursed by your HDHP until you reach the annual deductible for the plan. 1040nr tax calculator When you pay medical expenses during the year that are not reimbursed by your HDHP, you can ask the trustee of your HSA to send you a distribution from your HSA. 1040nr tax calculator You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. 1040nr tax calculator If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax. 1040nr tax calculator You do not have to make distributions from your HSA each year. 1040nr tax calculator If you are no longer an eligible individual, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses. 1040nr tax calculator Generally, a distribution is money you get from your health savings account. 1040nr tax calculator Your total distributions include amounts paid with a debit card that restricts payments to health care and amounts withdrawn from the HSA by other individuals that you have designated. 1040nr tax calculator The trustee will report any distribution to you and the IRS on Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. 1040nr tax calculator Qualified medical expenses. 1040nr tax calculator   Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. 1040nr tax calculator These are explained in Publication 502, Medical and Dental Expenses. 1040nr tax calculator   Also, non-prescription medicines (other than insulin) are not considered qualified medical expenses for HSA purposes. 1040nr tax calculator A medicine or drug will be a qualified medical expense for HSA purposes only if the medicine or drug: Requires a prescription, Is available without a prescription (an over-the-counter medicine or drug) and you get a prescription for it, or Is insulin. 1040nr tax calculator   For HSA purposes, expenses incurred before you establish your HSA are not qualified medical expenses. 1040nr tax calculator State law determines when an HSA is established. 1040nr tax calculator An HSA that is funded by amounts rolled over from an Archer MSA or another HSA is established on the date the prior account was established. 1040nr tax calculator   If, under the last-month rule, you are considered to be an eligible individual for the entire year for determining the contribution amount, only those expenses incurred after you actually establish your HSA are qualified medical expenses. 1040nr tax calculator   Qualified medical expenses are those incurred by the following persons. 1040nr tax calculator You and your spouse. 1040nr tax calculator All dependents you claim on your tax return. 1040nr tax calculator Any person you could have claimed as a dependent on your return except that: The person filed a joint return, The person had gross income of $3,900 or more, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. 1040nr tax calculator    For this purpose, a child of parents that are divorced, separated, or living apart for the last 6 months of the calendar year is treated as the dependent of both parents whether or not the custodial parent releases the claim to the child's exemption. 1040nr tax calculator You cannot deduct qualified medical expenses as an itemized deduction on Schedule A (Form 1040) that are equal to the tax-free distribution from your HSA. 1040nr tax calculator Insurance premiums. 1040nr tax calculator   You cannot treat insurance premiums as qualified medical expenses unless the premiums are for: Long-term care insurance. 1040nr tax calculator Health care continuation coverage (such as coverage under COBRA). 1040nr tax calculator Health care coverage while receiving unemployment compensation under federal or state law. 1040nr tax calculator Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap). 1040nr tax calculator   The premiums for long-term care insurance (item (1)) that you can treat as qualified medical expenses are subject to limits based on age and are adjusted annually. 1040nr tax calculator See Limit on long-term care premiums you can deduct in the instructions for Schedule A (Form 1040). 1040nr tax calculator   Items (2) and (3) can be for your spouse or a dependent meeting the requirement for that type of coverage. 1040nr tax calculator For item (4), if you, the account beneficiary, are not 65 or older, Medicare premiums for coverage of your spouse or a dependent (who is 65 or older) generally are not qualified medical expenses. 1040nr tax calculator Health coverage tax credit. 1040nr tax calculator   You cannot claim this credit for premiums that you pay with a tax-free distribution from your HSA. 1040nr tax calculator See Publication 502 for more information on this credit. 1040nr tax calculator Deemed distributions from HSAs. 1040nr tax calculator   The following situations result in deemed taxable distributions from your HSA. 1040nr tax calculator You engaged in any transaction prohibited by section 4975 with respect to any of your HSAs, at any time in 2013. 1040nr tax calculator Your account ceases to be an HSA as of January 1, 2013, and you must include the fair market value of all assets in the account as of January 1, 2013, on Form 8889. 1040nr tax calculator You used any portion of any of your HSAs as security for a loan at any time in 2013. 1040nr tax calculator You must include the fair market value of the assets used as security for the loan as income on Form 1040 or Form 1040NR. 1040nr tax calculator   Examples of prohibited transactions include the direct or indirect: Sale, exchange, or leasing of property between you and the HSA, Lending of money between you and the HSA, Furnishing goods, services, or facilities between you and the HSA, and Transfer to or use by you, or for your benefit, of any assets of the HSA. 1040nr tax calculator   Any deemed distribution will not be treated as used to pay qualified medical expenses. 1040nr tax calculator These distributions are included in your income and are subject to the additional 20% tax, discussed later. 1040nr tax calculator Recordkeeping. 1040nr tax calculator You must keep records sufficient to show that: The distributions were exclusively to pay or reimburse qualified medical expenses, The qualified medical expenses had not been previously paid or reimbursed from another source, and The medical expenses had not been taken as an itemized deduction in any year. 1040nr tax calculator Do not send these records with your tax return. 1040nr tax calculator Keep them with your tax records. 1040nr tax calculator Reporting Distributions on Your Return How you report your distributions depends on whether or not you use the distribution for qualified medical expenses (defined earlier). 1040nr tax calculator If you use a distribution from your HSA for qualified medical expenses, you do not pay tax on the distribution but you have to report the distribution on Form 8889. 1040nr tax calculator However, the distribution of an excess contribution taken out after the due date, including extensions, of your return is subject to tax even if used for qualified medical expenses. 1040nr tax calculator Follow the instructions for the form and file it with your Form 1040 or Form 1040NR. 1040nr tax calculator If you do not use a distribution from your HSA for qualified medical expenses, you must pay tax on the distribution. 1040nr tax calculator Report the amount on Form 8889 and file it with your Form 1040 or Form 1040NR. 1040nr tax calculator You may have to pay an additional 20% tax on your taxable distribution. 1040nr tax calculator HSA administration and maintenance fees withdrawn by the trustee are not reported as distributions from the HSA. 1040nr tax calculator Additional tax. 1040nr tax calculator   There is an additional 20% tax on the part of your distributions not used for qualified medical expenses. 1040nr tax calculator Figure the tax on Form 8889 and file it with your Form 1040 or Form 1040NR. 1040nr tax calculator Exceptions. 1040nr tax calculator   There is no additional tax on distributions made after the date you are disabled, reach age 65, or die. 1040nr tax calculator Balance in an HSA An HSA is generally exempt from tax. 1040nr tax calculator You are permitted to take a distribution from your HSA at any time; however, only those amounts used exclusively to pay for qualified medical expenses are tax free. 1040nr tax calculator Amounts that remain at the end of the year are generally carried over to the next year (see Excess contributions , earlier). 1040nr tax calculator Earnings on amounts in an HSA are not included in your income while held in the HSA. 1040nr tax calculator Death of HSA Holder You should choose a beneficiary when you set up your HSA. 1040nr tax calculator What happens to that HSA when you die depends on whom you designate as the beneficiary. 1040nr tax calculator Spouse is the designated beneficiary. 1040nr tax calculator   If your spouse is the designated beneficiary of your HSA, it will be treated as your spouse's HSA after your death. 1040nr tax calculator Spouse is not the designated beneficiary. 1040nr tax calculator   If your spouse is not the designated beneficiary of your HSA: The account stops being an HSA, and The fair market value of the HSA becomes taxable to the beneficiary in the year in which you die. 1040nr tax calculator If your estate is the beneficiary, the value is included on your final income tax return. 1040nr tax calculator The amount taxable to a beneficiary other than the estate is reduced by any qualified medical expenses for the decedent that are paid by the beneficiary within 1 year after the date of death. 1040nr tax calculator Filing Form 8889 You must file Form 8889 with your Form 1040 or Form 1040NR if you (or your spouse, if married filing a joint return) had any activity in your HSA during the year. 1040nr tax calculator You must file the form even if only your employer or your spouse's employer made contributions to the HSA. 1040nr tax calculator If, during the tax year, you are the beneficiary of two or more HSAs or you are a beneficiary of an HSA and you have your own HSA, you must complete a separate Form 8889 for each HSA. 1040nr tax calculator Enter “statement” at the top of each Form 8889 and complete the form as instructed. 1040nr tax calculator Next, complete a controlling Form 8889 combining the amounts shown on each of the statement Forms 8889. 1040nr tax calculator Attach the statements to your tax return after the controlling Form 8889. 1040nr tax calculator Employer Participation This section contains the rules that employers must follow if they decide to make HSAs available to their employees. 1040nr tax calculator Unlike the previous discussions, “you” refers to the employer and not to the employee. 1040nr tax calculator Health plan. 1040nr tax calculator   If you want your employees to be able to have an HSA, they must have an HDHP. 1040nr tax calculator You can provide no additional coverage other than those exceptions listed previously under Other health coverage . 1040nr tax calculator Contributions. 1040nr tax calculator   You can make contributions to your employees' HSAs. 1040nr tax calculator You deduct the contributions on your business income tax return for the year in which you make the contributions. 1040nr tax calculator If the contribution is allocated to the prior year, you still deduct it in the year in which you made the contribution. 1040nr tax calculator   For more information on employer contributions, see Notice 2008-59, 2008-29 I. 1040nr tax calculator R. 1040nr tax calculator B. 1040nr tax calculator 123, questions 23 through 27, available at www. 1040nr tax calculator irs. 1040nr tax calculator gov/irb/2008-29_IRB/ar11. 1040nr tax calculator html. 1040nr tax calculator Comparable contributions. 1040nr tax calculator   If you decide to make contributions, you must make comparable contributions to all comparable participating employees' HSAs. 1040nr tax calculator Your contributions are comparable if they are either: The same amount, or The same percentage of the annual deductible limit under the HDHP covering the employees. 1040nr tax calculator The comparability rules do not apply to contributions made through a cafeteria plan. 1040nr tax calculator Comparable participating employees. 1040nr tax calculator   Comparable participating employees: Are covered by your HDHP and are eligible to establish an HSA, Have the same category of coverage (either self-only or family coverage), and Have the same category of employment (part-time, full-time, or former employees). 1040nr tax calculator   To meet the comparability requirements for eligible employees who have not established an HSA by December 31 or have not notified you that they have an HSA, you must meet a notice requirement and a contribution requirement. 1040nr tax calculator   You will meet the notice requirement if by January 15 of the following calendar year you provide a written notice to all such employees. 1040nr tax calculator The notice must state that each eligible employee who, by the last day of February, establishes an HSA and notifies you that they have established an HSA will receive a comparable contribution to the HSA for the prior year. 1040nr tax calculator For a sample of the notice, see Regulation 54. 1040nr tax calculator 4980G-4 A-14(c). 1040nr tax calculator You will meet the contribution requirement for these employees if by April 15, 2014, you contribute comparable amounts plus reasonable interest to the employee's HSA for the prior year. 1040nr tax calculator Note. 1040nr tax calculator For purposes of making contributions to HSAs of non-highly compensated employees, highly compensated employees shall not be treated as comparable participating employees. 1040nr tax calculator Excise tax. 1040nr tax calculator   If you made contributions to your employees' HSAs that were not comparable, you must pay an excise tax of 35% of the amount you contributed. 1040nr tax calculator Employment taxes. 1040nr tax calculator   Amounts you contribute to your employees' HSAs are generally not subject to employment taxes. 1040nr tax calculator You must report the contributions in box 12 of the Form W-2 you file for each employee. 1040nr tax calculator This includes the amounts the employee elected to contribute through a cafeteria plan. 1040nr tax calculator Enter code “W” in box 12. 1040nr tax calculator Medical Savings Accounts (MSAs) Archer MSAs were created to help self-employed individuals and employees of certain small employers meet the medical care costs of the account holder, the account holder's spouse, or the account holder's dependent(s). 1040nr tax calculator After December 31, 2007, you cannot be treated as an eligible individual for Archer MSA purposes unless: You were an active participant for any tax year ending before January 1, 2008, or You became an active participant for a tax year ending after December 31, 2007, by reason of coverage under a high deductible health plan (HDHP) of an Archer MSA participating employer. 1040nr tax calculator A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder who is eligible for Medicare. 1040nr tax calculator Archer MSAs An Archer MSA is a tax-exempt trust or custodial account that you set up with a U. 1040nr tax calculator S. 1040nr tax calculator financial institution (such as a bank or an insurance company) in which you can save money exclusively for future medical expenses. 1040nr tax calculator What are the benefits of an Archer MSA?   You may enjoy several benefits from having an Archer MSA. 1040nr tax calculator You can claim a tax deduction for contributions you make even if you do not itemize your deductions on Form 1040 or Form 1040NR. 1040nr tax calculator The interest or other earnings on the assets in your Archer MSA are tax free. 1040nr tax calculator Distributions may be tax free if you pay qualified medical expenses. 1040nr tax calculator See Qualified medical expenses , later. 1040nr tax calculator The contributions remain in your Archer MSA from year to year until you use them. 1040nr tax calculator An Archer MSA is “portable” so it stays with you if you change employers or leave the work force. 1040nr tax calculator Qualifying for an Archer MSA To qualify for an Archer MSA, you must be either of the following. 1040nr tax calculator An employee (or the spouse of an employee) of a small employer (defined later) that maintains a self-only or family HDHP for you (or your spouse). 1040nr tax calculator A self-employed person (or the spouse of a self-employed person) who maintains a self-only or family HDHP. 1040nr tax calculator You can have no other health or Medicare coverage except what is permitted under Other health coverage , later. 1040nr tax calculator You must be an eligible individual on the first day of a given month to get an Archer MSA deduction for that month. 1040nr tax calculator If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an Archer MSA contribution. 1040nr tax calculator This is true even if the other person does not actually claim your exemption. 1040nr tax calculator Small employer. 1040nr tax calculator   A small employer is generally an employer who had an average of 50 or fewer employees during either of the last 2 calendar years. 1040nr tax calculator The definition of small employer is modified for new employers and growing employers. 1040nr tax calculator Growing employer. 1040nr tax calculator   A small employer may begin HDHPs and Archer MSAs for his or her employees and then grow beyond 50 employees. 1040nr tax calculator The employer will continue to meet the requirement for small employers if he or she: Had 50 or fewer employees when the Archer MSAs began, Made a contribution that was excludable or deductible as an Archer MSA for the last year he or she had 50 or fewer employees, and Had an average of 200 or fewer employees each year after 1996. 1040nr tax calculator Changing employers. 1040nr tax calculator   If you change employers, your Archer MSA moves with you. 1040nr tax calculator However, you may not make additional contributions unless you are otherwise eligible. 1040nr tax calculator High deductible health plan (HDHP). 1040nr tax calculator   To be eligible for an Archer MSA, you must be covered under an HDHP. 1040nr tax calculator An HDHP has: A higher annual deductible than typical health plans, and A maximum limit on the annual out-of-pocket medical expenses that you must pay for covered expenses. 1040nr tax calculator Limits. 1040nr tax calculator   The following table shows the limits for annual deductibles and the maximum out-of-pocket expenses for HDHPs for 2013. 1040nr tax calculator   Self-only coverage Family coverage Minimum annual deductible $2,150 $4,300 Maximum annual deductible $3,200 $6,450 Maximum annual out-of-pocket expenses $4,300 $7,850 Family plans that do not meet the high deductible rules. 1040nr tax calculator   There are some family plans that have deductibles for both the family as a whole and for individual family members. 1040nr tax calculator Under these plans, if you meet the individual deductible for one family member, you do not have to meet the higher annual deductible amount for the family. 1040nr tax calculator If either the deductible for the family as a whole or the deductible for an individual family member is less than the minimum annual deductible for family coverage, the plan does not qualify as an HDHP. 1040nr tax calculator Example. 1040nr tax calculator You have family health insurance coverage in 2013. 1040nr tax calculator The annual deductible for the family plan is $5,500. 1040nr tax calculator This plan also has an individual deductible of $2,000 for each family member. 1040nr tax calculator The plan does not qualify as an HDHP because the deductible for an individual family member is less than the minimum annual deductible ($4,300) for family coverage. 1040nr tax calculator Other health coverage. 1040nr tax calculator   You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. 1040nr tax calculator However, you can still be an eligible individual even if your spouse has non-HDHP coverage provided you are not covered by that plan. 1040nr tax calculator However, you can have additional insurance that provides benefits only for the following items. 1040nr tax calculator Liabilities incurred under workers' compensation laws, torts, or ownership or use of property. 1040nr tax calculator A specific disease or illness. 1040nr tax calculator A fixed amount per day (or other period) of hospitalization. 1040nr tax calculator You can also have coverage (whether provided through insurance or otherwise) for the following items. 1040nr tax calculator Accidents. 1040nr tax calculator Disability. 1040nr tax calculator Dental care. 1040nr tax calculator Vision care. 1040nr tax calculator Long-term care. 1040nr tax calculator Contributions to an MSA Contributions to an Archer MSA must be made in cash. 1040nr tax calculator You cannot contribute stock or other property to an Archer MSA. 1040nr tax calculator Who can contribute to my Archer MSA?   If you are an employee, your employer may make contributions to your Archer MSA. 1040nr tax calculator (You do not pay tax on these contributions. 1040nr tax calculator ) If your employer does not make contributions to your Archer MSA, or you are self-employed, you can make your own contributions to your Archer MSA. 1040nr tax calculator Both you and your employer cannot make contributions to your Archer MSA in the same year. 1040nr tax calculator You do not have to make contributions to your Archer MSA every year. 1040nr tax calculator    If your spouse is covered by your HDHP and an excludable amount is contributed by your spouse's employer to an Archer MSA belonging to your spouse, you cannot make contributions to your own Archer MSA that year. 1040nr tax calculator Limits There are two limits on the amount you or your employer can contribute to your Archer MSA: The annual deductible limit. 1040nr tax calculator An income limit. 1040nr tax calculator Annual deductible limit. 1040nr tax calculator   You (or your employer) can contribute up to 75% of the annual deductible of your HDHP (65% if you have a self-only plan) to your Archer MSA. 1040nr tax calculator You must have the HDHP all year to contribute the full amount. 1040nr tax calculator If you do not qualify to contribute the full amount for the year, determine your annual deductible limit by using the worksheet in the Instructions for Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. 1040nr tax calculator Example 1. 1040nr tax calculator You have an HDHP for your family all year in 2013. 1040nr tax calculator The annual deductible is $5,000. 1040nr tax calculator You can contribute up to $3,750 ($5,000 × 75%) to your Archer MSA for the year. 1040nr tax calculator Example 2. 1040nr tax calculator You have an HDHP for your family for the entire months of July through December 2013 (6 months). 1040nr tax calculator The annual deductible is $5,000. 1040nr tax calculator You can contribute up to $1,875 ($5,000 × 75% ÷ 12 × 6) to your Archer MSA for the year. 1040nr tax calculator If you and your spouse each have a family plan, you are treated as having family coverage with the lower annual deductible of the two health plans. 1040nr tax calculator The contribution limit is split equally between you unless you agree on a different division. 1040nr tax calculator Income limit. 1040nr tax calculator   You cannot contribute more than you earned for the year from the employer through whom you have your HDHP. 1040nr tax calculator   If you are self-employed, you cannot contribute more than your net self-employment income. 1040nr tax calculator This is your income from self-employment minus expenses (including the deductible part of self-employment tax). 1040nr tax calculator Example 1. 1040nr tax calculator Noah Paul earned $25,000 from ABC Company in 2013. 1040nr tax calculator Through ABC, he had an HDHP for his family for the entire year. 1040nr tax calculator The annual deductible was $5,000. 1040nr tax calculator He can contribute up to $3,750 to his Archer MSA (75% × $5,000). 1040nr tax calculator He can contribute the full amount because he earned more than $3,750 at ABC. 1040nr tax calculator Example 2. 1040nr tax calculator Westley Lawrence is self-employed. 1040nr tax calculator He had an HDHP for his family for the entire year in 2013. 1040nr tax calculator The annual deductible was $5,000. 1040nr tax calculator Based on the annual deductible, the maximum contribution to his Archer MSA would have been $3,750 (75% × $5,000). 1040nr tax calculator However, after deducting his business expenses, Joe's net self-employment income is $2,500 for the year. 1040nr tax calculator Therefore, he is limited to a contribution of $2,500. 1040nr tax calculator Individuals enrolled in Medicare. 1040nr tax calculator   Beginning with the first month you are enrolled in Medicare, you cannot contribute to an Archer MSA. 1040nr tax calculator However, you may be eligible for a Medicare Advantage MSA, discussed later. 1040nr tax calculator When To Contribute You can make contributions to your Archer MSA for 2013 until April 15, 2014. 1040nr tax calculator Reporting Contributions on Your Return Report all contributions to your Archer MSA on Form 8853 and file it with your Form 1040 or Form 1040NR. 1040nr tax calculator You should include all contributions you, or your employer, made for 2013, including those made by April 15, 2014, that are designated for 2013. 1040nr tax calculator You should receive Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, from the trustee showing the amount you (or your employer) contributed during the year. 1040nr tax calculator Your employer's contributions should be shown in box 12 of Form W-2, Wage and Tax Statement, with code R. 1040nr tax calculator Follow the instructions for Form 8853 and complete the worksheet in the instructions. 1040nr tax calculator Report your Archer MSA deduction on Form 1040 or Form 1040NR. 1040nr tax calculator Excess contributions. 1040nr tax calculator   You will have excess contributions if the contributions to your Archer MSA for the year are greater than the limits discussed earlier. 1040nr tax calculator Excess contributions are not deductible. 1040nr tax calculator Excess contributions made by your employer are included in your gross income. 1040nr tax calculator If the excess contribution is not included in box 1 of Form W-2, you must report the excess as “Other income” on your tax return. 1040nr tax calculator   Generally, you must pay a 6% excise tax on excess contributions. 1040nr tax calculator See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. 1040nr tax calculator The excise tax applies to each tax year the excess contribution remains in the account. 1040nr tax calculator   You may withdraw some or all of the excess contributions and not pay the excise tax on the amount withdrawn if you meet the following conditions. 1040nr tax calculator You withdraw the excess contributions by the due date, including extensions, of your tax return. 1040nr tax calculator You withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings. 1040nr tax calculator Deducting an excess contribution in a later year. 1040nr tax calculator   You may be able to deduct excess contributions for previous years that are still in your Archer MSA. 1040nr tax calculator The excess contribution you can deduct in the current year is the lesser of the following two amounts. 1040nr tax calculator Your maximum Archer MSA contribution limit for the year minus any amounts contributed to your Archer MSA for the year. 1040nr tax calculator The total excess contributions in your Archer MSA at the beginning of the year. 1040nr tax calculator   Any excess contributions remaining at the end of a tax year are subject to the excise tax. 1040nr tax calculator See Form 5329. 1040nr tax calculator Distributions From an MSA You will generally pay medical expenses during the year without being reimbursed by your HDHP until you reach the annual deductible for the plan. 1040nr tax calculator When you pay medical expenses during the year that are not reimbursed by your HDHP, you can ask the trustee of your Archer MSA to send you a distribution from your Archer MSA. 1040nr tax calculator You can receive tax-free distributions from your Archer MSA to pay for qualified medical expenses (discussed later). 1040nr tax calculator If you receive distributions for other reasons, the amount will be subject to income tax and may be subject to an additional 20% tax as well. 1040nr tax calculator You do not have to make withdrawals from your Archer MSA each year. 1040nr tax calculator If you no longer qualify to make contributions, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses. 1040nr tax calculator A distribution is money you get from your Archer MSA. 1040nr tax calculator The trustee will report any distribution to you and the IRS on Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. 1040nr tax calculator Qualified medical expenses. 1040nr tax calculator   Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. 1040nr tax calculator These are explained in Publication 502. 1040nr tax calculator   Also, non-prescription medicines (other than insulin) are not considered qualified medical expenses for MSA purposes. 1040nr tax calculator A medicine or drug will be a qualified medical expense for MSA purposes only if the medicine or drug: Requires a prescription, Is available without a prescription (an over-the-counter medicine or drug) and you get a prescription for it, or Is insulin. 1040nr tax calculator   Qualified medical expenses are those incurred by the following persons. 1040nr tax calculator You and your spouse. 1040nr tax calculator All dependents you claim on your tax return. 1040nr tax calculator Any person you could have claimed as a dependent on your return except that: The person filed a joint return, The person had gross income of $3,900 or more, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. 1040nr tax calculator    For this purpose, a child of parents that are divorced, separated, or living apart for the last 6 months of the calendar year is treated as the dependent of both parents whether or not the custodial parent releases the claim to the child's exemption. 1040nr tax calculator    You cannot deduct qualified medical expenses as an itemized deduction on Schedule A (Form 1040) that are equal to the tax-free distribution from your Archer MSA. 1040nr tax calculator Special rules for insurance premiums. 1040nr tax calculator   Generally, you cannot treat insurance premiums as qualified medical expenses for Archer MSAs. 1040nr tax calculator You can, however, treat premiums for long-term care coverage, health care coverage while you receive unemployment benefits, or health care continuation coverage required under any federal law as qualified medical expenses for Archer MSAs. 1040nr tax calculator Health coverage tax credit. 1040nr tax calculator   You cannot claim this credit for premiums that you pay with a tax-free distribution from your Archer MSA. 1040nr tax calculator See Publication 502 for information on this credit. 1040nr tax calculator Deemed distributions from Archer MSAs. 1040nr tax calculator   The following situations result in deemed taxable distributions from your Archer MSA. 1040nr tax calculator You engaged in any transaction prohibited by section 4975 with respect to any of your Archer MSAs at any time in 2013. 1040nr tax calculator Your account ceases to be an Archer MSA as of January 1, 2013, and you must include the fair market value of all assets in the account as of January 1, 2013, on Form 8853. 1040nr tax calculator You used any portion of any of your Archer MSAs as security for a loan at any time in 2013. 1040nr tax calculator You must include the fair market value of the assets used as security for the loan as income on Form 1040 or Form 1040NR. 1040nr tax calculator   Examples of prohibited transactions include the direct or indirect: Sale, exchange, or leasing of property between you and the Archer MSA, Lending of money between you and the Archer MSA, Furnishing goods, services, or facilities between you and the Archer MSA, and Transfer to or use by you, or for your benefit, of any assets of the Archer MSA. 1040nr tax calculator   Any deemed distribution will not be treated as used to pay qualified medical expenses. 1040nr tax calculator These distributions are included in your income and are subject to the additional 20% tax, discussed later. 1040nr tax calculator Recordkeeping. 1040nr tax calculator You must keep records sufficient to show that: The distributions were exclusively to pay or reimburse qualified medical expenses, The qualified medical expenses had not been previously paid or reimbursed from another source, and The medical expenses had not been taken as an itemized deduction in any year. 1040nr tax calculator Do not send these records with your tax return. 1040nr tax calculator Keep them with your tax records. 1040nr tax calculator Reporting Distributions on Your Return How you report your distributions depends on whether or not you use the distribution for qualified medical expenses (defined earlier). 1040nr tax calculator If you use a distribution from your Archer MSA for qualified medical expenses, you do not pay tax on the distribution but you have to report the distribution on Form 8853. 1040nr tax calculator Follow the instructions for the form and file it with your Form 1040 or Form 1040NR. 1040nr tax calculator If you do not use a distribution from your Archer MSA for qualified medical expenses, you must pay tax on the distribution. 1040nr tax calculator Report the amount on Form 8853 and file it with your Form 1040 or Form 1040NR. 1040nr tax calculator You may have to pay an additional 20% tax, discussed later, on your taxable distribution. 1040nr tax calculator If an amount (other than a rollover) is contributed to your Archer MSA this year (by you or your employer), you also must report and pay tax on a distribution you receive from your Archer MSA this year that is used to pay medical expenses of someone who is not covered by an HDHP, or is also covered by another health plan that is not an HDHP, at the time the expenses are incurred. 1040nr tax calculator Rollovers. 1040nr tax calculator   Generally, any distribution from an Archer MSA that you roll over into another Archer MSA or an HSA is not taxable if you complete the rollover within 60 days. 1040nr tax calculator An Archer MSA and an HSA can only receive one rollover contribution during a 1-year period. 1040nr tax calculator See the Form 8853 instructions for more information. 1040nr tax calculator Additional tax. 1040nr tax calculator   There is a 20% additional tax on the part of your distributions not used for qualified medical expenses. 1040nr tax calculator Figure the tax on Form 8853 and file it with your Form 1040 or Form 1040NR. 1040nr tax calculator Report the additional tax in the total on Form 1040 or Form 1040NR. 1040nr tax calculator Exceptions. 1040nr tax calculator   There is no additional tax on distributions made after the date you are disabled, reach age 65, or die. 1040nr tax calculator Balance in an Archer MSA An Archer MSA is generally exempt from tax. 1040nr tax calculator You are permitted to take a distribution from your Archer MSA at any time; however, only those amounts used exclusively to pay for qualified medical expenses are tax free. 1040nr tax calculator Amounts that remain at the end of the year are generally carried over to the next year (see Excess contributions , earlier). 1040nr tax calculator Earnings on amounts in an Archer MSA are not included in your income while held in the Archer MSA. 1040nr tax calculator Death of the Archer MSA Holder You should choose a beneficiary when you set up your Archer MSA. 1040nr tax calculator What happens to that Archer MSA when you die depends on whom you designate as the beneficiary. 1040nr tax calculator Spouse is the designated beneficiary. 1040nr tax calculator   If your spouse is the designated beneficiary of your Archer MSA, it will be treated as your spouse's Archer MSA after your death. 1040nr tax calculator Spouse is not the designated beneficiary. 1040nr tax calculator   If your spouse is not the designated beneficiary of your Archer MSA: The account stops being an Archer MSA, and The fair market value of the Archer MSA becomes taxable to the beneficiary in the year in which you die. 1040nr tax calculator   If your estate is the beneficiary, the fair market value of the Archer MSA will be included on your final income tax return. 1040nr tax calculator The amount taxable to a beneficiary other than the estate is reduced by any qualified medical expenses for the decedent that are paid by the beneficiary within 1 year after the date of death. 1040nr tax calculator Filing Form 8853 You must file Form 8853 with your Form 1040 or Form 1040NR if you (or your spouse, if married filing a joint return) had any activity in your Archer MSA during the year. 1040nr tax calculator You must file the form even if only your employer or your spouse's employer made contributions to the Archer MSA. 1040nr tax calculator If, during the tax year, you are the beneficiary of two or more Archer MSAs or you are a beneficiary of an Archer MSA and you have your own Archer MSA, you must complete a separate Form 8853 for each MSA. 1040nr tax calculator Enter “statement” at the top of each Form 8853 and complete the form as instructed. 1040nr tax calculator Next, complete a controlling Form 8853 combining the amounts shown on each of the statement Forms 8853. 1040nr tax calculator Attach the statements to your tax return after the controlling Form 8853. 1040nr tax calculator Employer Participation This section contains the rules that employers must follow if they decide to make Archer MSAs available to their employees. 1040nr tax calculator Unlike the previous discussions, “you” refers to the employer and not to the employee. 1040nr tax calculator Health plan. 1040nr tax calculator   If you want your employees to be able to have an Archer MSA, you must make an HDHP available to them. 1040nr tax calculator You can provide no additional coverage other than those exceptions listed previously under Other health coverage . 1040nr tax calculator Contributions. 1040nr tax calculator   You can make contributions to your employees' Archer MSAs. 1040nr tax calculator You deduct the contributions on the “Employee benefit programs” line of your business income tax return for the year in which you make the contributions. 1040nr tax calculator If you are filing Form 1040, Schedule C, this is Part II, line 14. 1040nr tax calculator Comparable contributions. 1040nr tax calculator   If you decide to make contributions, you must make comparable contributions to all comparable participating employees' Archer MSAs. 1040nr tax calculator Your contributions are comparable if they are either: The same amount, or The same percentage of the annual deductible limit under the HDHP covering the employees. 1040nr tax calculator Comparable participating employees. 1040nr tax calculator   Comparable participating employees: Are covered by your HDHP and are eligible to establish an Archer MSA, Have the same category of coverage (either self-only or family coverage), and Have the same category of employment (either part-time or full-time). 1040nr tax calculator Excise tax. 1040nr tax calculator   If you made contributions to your employees' Archer MSAs that were not comparable, you must pay an excise tax of 35% of the amount you contributed. 1040nr tax calculator Employment taxes. 1040nr tax calculator   Amounts you contribute to your employees' Archer MSAs are generally not subject to employment taxes. 1040nr tax calculator You must report the contributions in box 12 of the Form W-2 you file for each employee. 1040nr tax calculator Enter code “R” in box 12. 1040nr tax calculator Medicare Advantage MSAs A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder. 1040nr tax calculator To be eligible for a Medicare Advantage MSA, you must be enrolled in Medicare and have a high deductible health plan (HDHP) that meets the Medicare guidelines. 1040nr tax calculator A Medicare Advantage MSA is a tax-exempt trust or custodial savings account that you set up with a financial institution (such as a bank or an insurance company) in which the Medicare program can deposit money for qualified medical expenses. 1040nr tax calculator The money in your account is not taxed if it is used for qualified medical expenses, and it may earn interest or dividends. 1040nr tax calculator An HDHP is a special health insurance policy that has a high deductible. 1040nr tax calculator You choose the policy you want to use as part of your Medicare Advantage MSA plan. 1040nr tax calculator However, the policy must be approved by the Medicare program. 1040nr tax calculator Medicare Advantage MSAs are administered through the federal Medicare program. 1040nr tax calculator You can get information by calling 1-800-Medicare (1-800-633-4227) or through the Internet at www. 1040nr tax calculator medicare. 1040nr tax calculator gov. 1040nr tax calculator Note. 1040nr tax calculator You must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your tax return if you have a Medicare Advantage MSA. 1040nr tax calculator Flexible Spending Arrangements (FSAs) A health flexible spending arrangement (FSA) allows employees to be reimbursed for medical expenses. 1040nr tax calculator FSAs are usually funded through voluntary salary reduction agreements with your employer. 1040nr tax calculator No employment or federal income taxes are deducted from your contribution. 1040nr tax calculator The employer may also contribute. 1040nr tax calculator Note. 1040nr tax calculator Unlike HSAs or Archer MSAs which must be reported on Form 1040 or Form 1040NR, there are no reporting requirements for FSAs on your income tax return. 1040nr tax calculator For information on the interaction between a health FSA and an HSA, see Other employee health plans under Qualifying for an HSA, earlier. 1040nr tax calculator What are the benefits of an FSA?   You may enjoy several benefits from having an FSA. 1040nr tax calculator Contributions made by your employer can be excluded from your gross income. 1040nr tax calculator No employment or federal income taxes are deducted from the contributions. 1040nr tax calculator Withdrawals may be tax free if you pay qualified medical expenses. 1040nr tax calculator See Qualified medical expenses , later. 1040nr tax calculator You can withdraw funds from the account to pay qualified medical expenses even if you have not yet placed the funds in the account. 1040nr tax calculator Qualifying for an FSA Health FSAs are employer-established benefit plans. 1040nr tax calculator These may be offered in conjunction with other employer-provided benefits as part of a cafeteria plan. 1040nr tax calculator Employers have complete flexibility to offer various combinations of benefits in designing their plan. 1040nr tax calculator You do not have to be covered under any other health care plan to participate. 1040nr tax calculator Self-employed persons are not eligible for an FSA. 1040nr tax calculator Certain limitations may apply if you are a highly compensated participant or a key employee. 1040nr tax calculator Contributions to an FSA You contribute to your FSA by electing an amount to be voluntarily withheld from your pay by your employer. 1040nr tax calculator This is sometimes called a salary reduction agreement. 1040nr tax calculator The employer may also contribute to your FSA if specified in the plan. 1040nr tax calculator You do not pay federal income tax or employment taxes on the salary you contribute or the amounts your employer contributes to the FSA. 1040nr tax calculator However, contributions made by your employer to provide coverage for long-term care insurance must be included in income. 1040nr tax calculator When To Contribute At the
Español

Consumer Protection Offices

City, county, regional, and state consumer offices offer a variety of important services. They might mediate complaints, conduct investigations, prosecute offenders of consumer laws, license and regulate professional service providers, provide educational materials and advocate for consumer rights. To save time, call before sending a written complaint. Ask if the office handles the type of complaint you have and if complaint forms are provided.

State Consumer Protection Offices

Oregon Department of Justice

Website: Oregon Department of Justice

Address: Oregon Department of Justice
Financial Fraud/Consumer Protection Section
1162 Court St., NE
Salem, OR 97301-4096

Phone Number: 503-378-4320 (Salem) 503-229-5576 (Portland)

Toll-free: 1-877-877-9392 (OR)

TTY: 1-800-735-2900

Back to Top

Banking Authorities

The officials listed in this section regulate and supervise state-chartered banks. Many of them handle or refer problems and complaints about other types of financial institutions as well. Some also answer general questions about banking and consumer credit. If you are dealing with a federally chartered bank, check Federal Agencies.

Department of Consumer and Business Services

Website: Department of Consumer and Business Services

Address: Department of Consumer and Business Services
Division of Finance and Corporate Securities
PO Box 14480
Salem, OR 97309-0405

Phone Number: 503-378-4140

Toll-free: 1-866-814-9710 (OR)

Back to Top

Insurance Regulators

Each state has its own laws and regulations for each type of insurance. The officials listed in this section enforce these laws. Many of these offices can also provide you with information to help you make informed insurance buying decisions.

Insurance Division

Website: Insurance Division

Address: Insurance Division
PO Box 14480
Salem, OR 97309-0405

Phone Number: 503-947-7984

Toll-free: 1-888-877-4894 (OR)

Back to Top

Securities Administrators

Each state has its own laws and regulations for securities brokers and securities - including stocks, mutual funds, commodities, real estate, etc. The officials and agencies listed in this section enforce these laws and regulations. Many of these offices can also provide information to help you make informed investment decisions.

Department of Consumer and Business Services

Website: Department of Consumer and Business Services

Address: Department of Consumer and Business Services
Division of Finance and Corporate Securities
PO Box 14480
Salem, OR 97309-0405

Phone Number: 503-378-4140

Toll-free: 1-866-814-9710

TTY: 503-378-4100

Back to Top

Utility Commissions

State Utility Commissions regulate services and rates for gas, electricity and telephones within your state. In some states, the utility commissions regulate other services such as water, transportation, and the moving of household goods. Many utility commissions handle consumer complaints. Sometimes, if a number of complaints are received about the same utility matter, they will conduct investigations.

Public Utility Commission

Website: Public Utility Commission

Address: Public Utility Commission
Consumer Services Division
550 Capitol St., NE, Suite 215
PO Box 2148
Salem, OR 97308-2148

Toll-free: 1-800-522-2404

TTY: 1-800-648-3458 (OR)

Back to Top

The 1040nr Tax Calculator

1040nr tax calculator 2. 1040nr tax calculator   American Opportunity Credit Table of Contents Introduction Can You Claim the CreditWho Can Claim the Credit Who Cannot Claim the Credit What Expenses QualifyQualified Education Expenses No Double Benefit Allowed Expenses That Do Not Qualify Who Is an Eligible StudentException. 1040nr tax calculator Who Can Claim a Dependent's Expenses Figuring the CreditEffect of the Amount of Your Income on the Amount of Your Credit Refundable Part of Credit Claiming the Credit Introduction For 2013, there are two tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. 1040nr tax calculator They are the American opportunity credit (this chapter) and the lifetime learning credit ( chapter 3 ). 1040nr tax calculator This chapter explains: Who can claim the American opportunity credit, What expenses qualify for the credit, Who is an eligible student, Who can claim a dependent's expenses, How to figure the credit, How to claim the credit, and When the credit must be repaid. 1040nr tax calculator What is the tax benefit of the American opportunity credit. 1040nr tax calculator   For the tax year, you may be able to claim an American opportunity credit of up to $2,500 for qualified education expenses paid for each eligible student. 1040nr tax calculator   A tax credit reduces the amount of income tax you may have to pay. 1040nr tax calculator Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. 1040nr tax calculator Forty percent of the American opportunity credit may be refundable. 1040nr tax calculator This means that if the refundable portion of your credit is more than your tax, the excess will be refunded to you. 1040nr tax calculator   Your allowable American opportunity credit may be limited by the amount of your income. 1040nr tax calculator Also, the nonrefundable part of the credit may be limited by the amount of your tax. 1040nr tax calculator Overview of the American opportunity credit. 1040nr tax calculator   See Table 2-1, Overview of the American Opportunity Credit , for the basics of this credit. 1040nr tax calculator The details are discussed in this chapter. 1040nr tax calculator Can you claim more than one education credit this year. 1040nr tax calculator   For each student, you can elect for any year only one of the credits. 1040nr tax calculator For example, if you elect to take the American opportunity credit for a child on your 2013 tax return, you cannot use that same child's qualified education expenses to figure the lifetime learning credit for 2013. 1040nr tax calculator   If you pay qualified education expenses for more than one student in the same year, you can choose to take the American opportunity credit on a per-student, per-year basis. 1040nr tax calculator If you pay qualified education expenses for a student (or students) for whom you do not claim the American opportunity credit, you can use the adjusted qualified education expenses of that student (or those students) in figuring your lifetime learning credit. 1040nr tax calculator This means that, for example, you can claim the American opportunity credit for one student and the lifetime learning credit for another student in the same year. 1040nr tax calculator Differences between the American opportunity and lifetime learning credits. 1040nr tax calculator   There are several differences between these two credits. 1040nr tax calculator For example, you can claim the American opportunity credit based on the same student's expenses for no more than 4 tax years, which includes any tax years you claimed the Hope Scholarship Credit for that student. 1040nr tax calculator However, there is no limit on the number of years for which you can claim a lifetime learning credit based on the same student's expenses. 1040nr tax calculator The differences between these credits are shown in Appendix B, Highlights of Education Tax Benefits for Tax Year 2013 near the end of this publication. 1040nr tax calculator If you claim the American opportunity credit for any student, you can choose between using that student's adjusted qualified education expenses for the American opportunity credit or the lifetime learning credit. 1040nr tax calculator If you have the choice, the American opportunity credit will always be greater than the lifetime learning credit. 1040nr tax calculator Table 2-1. 1040nr tax calculator Overview of the American Opportunity Credit Maximum credit Up to $2,500 credit per eligible student Limit on modified adjusted gross income (MAGI) $180,000 if married filing jointly; $90,000 if single, head of household, or qualifying widow(er) Refundable or nonrefundable 40% of credit may be refundable; the rest is nonrefundable Number of years of postsecondary education Available ONLY if the student had not completed the first 4 years of postsecondary education before 2013 Number of tax years credit available Available ONLY for 4 tax years per eligible student (including any year(s) Hope Scholarship Credit was claimed) Type of program required Student must be pursuing a program leading to a degree or other recognized education credential Number of courses Student must be enrolled at least half time for at least one academic period that begins during the tax year Felony drug conviction As of the end of 2013, the student had not been convicted of a felony for possessing or distributing a controlled substance Qualified expenses Tuition, required enrollment fees, and course materials that the student needs for a course of study whether or not the materials are bought at the educational institution as a condition of enrollment or attendance Payments for academic periods Payments made in 2013 for academic periods beginning in 2013 or beginning in the first 3 months of 2014 Can You Claim the Credit The following rules will help you determine if you are eligible to claim the American opportunity credit on your tax return. 1040nr tax calculator Who Can Claim the Credit Generally, you can claim the American opportunity credit if all three of the following requirements are met. 1040nr tax calculator You pay qualified education expenses of higher education. 1040nr tax calculator You pay the education expenses for an eligible student. 1040nr tax calculator The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. 1040nr tax calculator Student qualifications. 1040nr tax calculator   Generally, you can take the American opportunity credit for a student only if all of the following four requirements are met. 1040nr tax calculator As of the beginning of 2013, the student had not completed the first four years of postsecondary education (generally, the freshman through senior years of college), as determined by the eligible educational institution. 1040nr tax calculator For this purpose, do not include academic credit awarded solely because of the student's performance on proficiency examinations. 1040nr tax calculator Neither the American opportunity credit nor the Hope Scholarship Credit has been claimed (by you or anyone else) for this student for any four tax years before 2013. 1040nr tax calculator If the American opportunity credit (and Hope Scholarship Credit) has been claimed for this student for any three or fewer tax years before 2013, this requirement is met. 1040nr tax calculator For at least one academic period beginning (or treated as beginning) in 2013, the student both: Was enrolled in a program that leads to a degree, certificate, or other recognized educational credential; and Carried at least one-half the normal full-time workload for his or her course of study. 1040nr tax calculator The standard for what is half of the normal full-time work load is determined by each eligible educational institution. 1040nr tax calculator However, the standard may not be lower than any of those established by the U. 1040nr tax calculator S. 1040nr tax calculator Department of Education under the Higher Education Act of 1965. 1040nr tax calculator For purposes of whether the student satisfies this third requirement for 2013, treat an academic period beginning in the first three months of 2014 as if it began in 2013 if qualified education expenses for the student were paid in 2013 for that academic period. 1040nr tax calculator See Prepaid expenses, later. 1040nr tax calculator As of the end of 2013, the student had not been convicted of a federal or state felony for possessing or distributing a controlled substance. 1040nr tax calculator Example 1. 1040nr tax calculator Sharon was eligible for the Hope Scholarship Credit for 2007 and 2008 and for the American opportunity credit for 2010 and 2012. 1040nr tax calculator Her parents claimed the Hope Scholarship Credit for Sharon on their tax returns for 2007 and 2008 and claimed the American opportunity credit for Sharon on their 2010 tax return. 1040nr tax calculator Sharon claimed the American opportunity credit on her 2012 tax return. 1040nr tax calculator The American opportunity credit and Hope Scholarship Credit have been claimed for Sharon for four tax years before 2013. 1040nr tax calculator Therefore, the American opportunity credit cannot be claimed by Sharon for 2013. 1040nr tax calculator If Sharon were to file Form 8863 for 2013, she would check “Yes” for Part III, line 23, and would be eligible to claim only the lifetime learning credit. 1040nr tax calculator Example 2. 1040nr tax calculator Wilbert was eligible for the American opportunity credit for 2009, 2010, 2011, and 2013. 1040nr tax calculator His parents claimed the American opportunity credit for Wilbert on their tax returns for 2009, 2010, and 2011. 1040nr tax calculator No one claimed an American opportunity credit or Hope Scholarship Credit for Wilbert for any other tax year. 1040nr tax calculator The American opportunity credit and Hope Scholarship Credit have been claimed for Wilbert for only three tax years before 2013. 1040nr tax calculator Therefore, Wilbert meets the second requirement to be eligible for the American opportunity credit. 1040nr tax calculator If Wilbert were to file Form 8863 for 2013, he would check “No” for Part III, line 23. 1040nr tax calculator If Wilbert meets all of the other requirements, he is eligible for the American opportunity credit. 1040nr tax calculator Example 3. 1040nr tax calculator Glenda enrolls on a full-time basis in a degree program for the 2014 Spring semester, which begins in January 2014. 1040nr tax calculator Glenda pays her tuition for the 2014 Spring semester in December 2013. 1040nr tax calculator Because the tuition Glenda paid in 2013 relates to an academic period that begins in the first 3 months of 2014, her eligibility to claim an American opportunity credit in 2013 is determined as if the 2014 Spring semester began in 2013. 1040nr tax calculator If the requirements above are not met for any student, you cannot take the American opportunity credit for that student. 1040nr tax calculator You may be able to take the lifetime learning credit for part or all of that student's qualified education expenses instead. 1040nr tax calculator Note. 1040nr tax calculator Qualified education expenses paid by a dependent for whom you claim an exemption, or by a third party for that dependent, are considered paid by you. 1040nr tax calculator “Qualified education expenses” are defined later under Qualified Education Expenses . 1040nr tax calculator “Eligible students” are defined later under Who Is an Eligible Student . 1040nr tax calculator A dependent for whom you claim an exemption is defined later under Who Can Claim a Dependent's Expenses . 1040nr tax calculator You may find Figure 2-1, Can You Claim the American Opportunity Credit for 2013 , later, helpful in determining if you can claim an American opportunity credit on your tax return. 1040nr tax calculator This image is too large to be displayed in the current screen. 1040nr tax calculator Please click the link to view the image. 1040nr tax calculator Figure 2-1 Can you claim the American opportunity credit for 2012? Who Cannot Claim the Credit You cannot claim the American opportunity credit for 2013 if any of the following apply. 1040nr tax calculator Your filing status is married filing separately. 1040nr tax calculator You are listed as a dependent on another person's tax return (such as your parents'). 1040nr tax calculator See Who Can Claim a Dependent's Expenses , later. 1040nr tax calculator Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more in the case of a joint return). 1040nr tax calculator MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit . 1040nr tax calculator 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. 1040nr tax calculator More information on nonresident aliens can be found in Publication 519, U. 1040nr tax calculator S. 1040nr tax calculator Tax Guide for Aliens. 1040nr tax calculator What Expenses Qualify The American opportunity credit is based on adjusted qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. 1040nr tax calculator Generally, the credit is allowed for adjusted qualified education expenses paid in 2013 for an academic period beginning in 2013 or beginning in the first three months of 2014. 1040nr tax calculator For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning January 2014, you can use that $1,500 in figuring your 2013 credit. 1040nr tax calculator Academic period. 1040nr tax calculator   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. 1040nr tax calculator 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. 1040nr tax calculator Paid with borrowed funds. 1040nr tax calculator   You can claim an American opportunity credit for qualified education expenses paid with the proceeds of a loan. 1040nr tax calculator Use the expenses to figure the American opportunity credit for the year in which the expenses are paid, not the year in which the loan is repaid. 1040nr tax calculator Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. 1040nr tax calculator Student withdraws from class(es). 1040nr tax calculator   You can claim an American opportunity credit for qualified education expenses not refunded when a student withdraws. 1040nr tax calculator Qualified Education Expenses For purposes of the American opportunity credit, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. 1040nr tax calculator Eligible educational institution. 1040nr tax calculator   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. 1040nr tax calculator S. 1040nr tax calculator Department of Education. 1040nr tax calculator It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 1040nr tax calculator The educational institution should be able to tell you if it is an eligible educational institution. 1040nr tax calculator   Certain educational institutions located outside the United States also participate in the U. 1040nr tax calculator S. 1040nr tax calculator Department of Education's Federal Student Aid (FSA) programs. 1040nr tax calculator Related expenses. 1040nr tax calculator   Student-activity fees are included in qualified education expenses only if the fees must be paid to the institution as a condition of enrollment or attendance. 1040nr tax calculator   However, expenses for books, supplies, and equipment needed for a course of study are included in qualified education expenses whether or not the materials are purchased from the educational institution. 1040nr tax calculator Prepaid expenses. 1040nr tax calculator   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring an education credit for 2013 only. 1040nr tax calculator See Academic period, earlier. 1040nr tax calculator 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 an education credit for 2013 only (if you meet all the other requirements). 1040nr tax calculator    You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 education credit(s). 1040nr tax calculator   In the following examples, assume that each student is an eligible student at an eligible educational institution. 1040nr tax calculator Example 1. 1040nr tax calculator Jefferson is a sophomore in University V's degree program in dentistry. 1040nr tax calculator This year, in addition to tuition, he is required to pay a fee to the university for the rental of the dental equipment he will use in this program. 1040nr tax calculator Because the equipment rental is needed for his course of study, Jefferson's equipment rental fee is a qualified expense. 1040nr tax calculator Example 2. 1040nr tax calculator Grace and William, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. 1040nr tax calculator The college has no policy about how students should obtain these materials, but any student who purchases them from College W's bookstore will receive a bill directly from the college. 1040nr tax calculator William bought his books from a friend; Grace bought hers at College W's bookstore. 1040nr tax calculator Both are qualified education expenses for the American opportunity credit. 1040nr tax calculator Example 3. 1040nr tax calculator When Kelly enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. 1040nr tax calculator This activity fee is required of all students, and is used solely to fund on-campus organizations and activities run by students, such as the student newspaper and the student government. 1040nr tax calculator No portion of the fee covers personal expenses. 1040nr tax calculator Although labeled as a student activity fee, the fee is required for Kelly's enrollment and attendance at College X and is a qualified expense. 1040nr tax calculator No Double Benefit Allowed You cannot do any of the following. 1040nr tax calculator Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim an American opportunity credit based on those same expenses. 1040nr tax calculator Claim an American opportunity credit in the same year that you are claiming a tuition and fees deduction for the same student. 1040nr tax calculator Claim an American opportunity credit for any student and use any of that student's expenses in figuring your lifetime learning credit. 1040nr tax calculator Figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or qualified tuition program (QTP) using the same expenses you used to figure the American opportunity credit. 1040nr tax calculator See Coordination With American Opportunity and Lifetime Learning Credits in chapter 7, Coverdell Education Savings Account, and Coordination With American Opportunity and Lifetime Learning Credits in chapter 8, Qualified Tuition Program. 1040nr tax calculator Claim a credit based on qualified education expenses paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. 1040nr tax calculator See Adjustments to Qualified Education Expenses, next. 1040nr tax calculator Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. 1040nr tax calculator The result is the amount of adjusted qualified education expenses for each student. 1040nr tax calculator Tax-free educational assistance. 1040nr tax calculator   For tax-free educational assistance received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period. 1040nr tax calculator See Academic period, earlier. 1040nr tax calculator   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. 1040nr tax calculator 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). 1040nr tax calculator   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. 1040nr tax calculator 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. 1040nr tax calculator   Tax-free educational assistance includes: The tax-free parts of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). 1040nr tax calculator Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. 1040nr tax calculator Generally, any scholarship or fellowship is treated as tax free. 1040nr tax calculator However, a scholarship or fellowship is not treated as tax free to the extent the student includes it in gross income (if the student is required to file a tax return for the year the scholarship or fellowship is received) and either of the following is true. 1040nr tax calculator 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 chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 1040nr tax calculator 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 chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 1040nr tax calculator You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the educational assistance in income in the year it is received. 1040nr tax calculator For examples, see Coordination with Pell grants and other scholarships, later. 1040nr tax calculator Refunds. 1040nr tax calculator   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year. 1040nr tax calculator Some tax-free educational assistance received after 2013 may be treated as a refund. 1040nr tax calculator See Tax-free educational assistance, earlier. 1040nr tax calculator Refunds received in 2013. 1040nr tax calculator   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses for 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. 1040nr tax calculator Refunds received after 2013 but before your income tax return is filed. 1040nr tax calculator   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid before you file an income tax return for 2013, the amount of qualified education expenses for 2013 is reduced by the amount of the refund. 1040nr tax calculator Refunds received after 2013 and after your income tax return is filed. 1040nr tax calculator   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid after you file an income tax return for 2013, you may need to repay some or all of the credit. 1040nr tax calculator See Credit recapture, next. 1040nr tax calculator Credit recapture. 1040nr tax calculator    If any tax-free educational assistance for the qualified education expenses paid in 2013, or any refund of your qualified education expenses paid in 2013, is received after you file your 2013 income tax return, you must recapture (repay) any excess credit. 1040nr tax calculator You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing the expenses by the amount of the refund or tax-free educational assistance. 1040nr tax calculator You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you claimed the refigured credit(s). 1040nr tax calculator Include that amount as an additional tax for the year the refund or tax-free assistance was received. 1040nr tax calculator Example. 1040nr tax calculator   You paid $7,000 tuition and fees in August 2013, and your child began college in September 2013. 1040nr tax calculator You filed your 2013 tax return on February 17, 2014, and claimed an American opportunity credit of $2,500. 1040nr tax calculator After you filed your return, you received a refund of $4,000. 1040nr tax calculator You must refigure your 2013 American opportunity credit using $3,000 of qualified education expenses instead of $7,000. 1040nr tax calculator The refigured credit is $2,250. 1040nr tax calculator The increase to your tax liability is also $250. 1040nr tax calculator Include the difference of $250 as additional tax on your 2014 tax return. 1040nr tax calculator See the instructions for your 2014 income tax return to determine where to include this tax. 1040nr tax calculator If you pay qualified education expenses in 2014 for an academic period that begins in the first 3 months of 2014 and you receive tax-free educational assistance, or a refund, as described above, you may choose to reduce your qualified education expenses for 2014 instead of reducing your expenses for 2013. 1040nr tax calculator Amounts that do not reduce qualified education expenses. 1040nr tax calculator   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. 1040nr tax calculator   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. 1040nr tax calculator 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 as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 1040nr tax calculator The use of the money is not restricted. 1040nr tax calculator Example 1. 1040nr tax calculator Joan paid $3,000 for tuition and $5,000 for room and board at University X. 1040nr tax calculator The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. 1040nr tax calculator To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. 1040nr tax calculator The terms of the scholarship state that it can be used to pay any of Joan's college expenses. 1040nr tax calculator University X applies the $2,000 scholarship against Joan's $8,000 total bill, and Joan pays the $6,000 balance of her bill from University X with a combination of her student loan and her savings. 1040nr tax calculator Joan does not report any portion of the scholarship as income on her tax return. 1040nr tax calculator In figuring the amount of either education credit (American opportunity or lifetime learning), Joan must reduce her qualified education expenses by the amount of the scholarship ($2,000) because she excluded the entire scholarship from her income. 1040nr tax calculator The student loan is not tax-free educational assistance, so she does not need to reduce her qualified expenses by any part of the loan proceeds. 1040nr tax calculator Joan is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship). 1040nr tax calculator Example 2. 1040nr tax calculator The facts are the same as in Example 1, except that Joan reports her entire scholarship as income on her tax return. 1040nr tax calculator Because Joan reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. 1040nr tax calculator Joan is treated as having paid $3,000 in qualified education expenses. 1040nr tax calculator Coordination with Pell grants and other scholarships. 1040nr tax calculator   In some cases, you may be able to reduce your tax liability by including scholarships in income. 1040nr tax calculator If you are claiming an education credit for a claimed dependent who received a scholarship, you may be able to reduce your tax liability if the student includes the scholarship in income. 1040nr tax calculator The scholarship must be one that may (by its terms) be applied to expenses (such as room and board) other than qualified education expenses. 1040nr tax calculator Example 1—No scholarship. 1040nr tax calculator Bill Pass, age 28 and unmarried, enrolled full-time in 2013 as a first-year student at a local college to earn a degree in law enforcement. 1040nr tax calculator This was his first year of postsecondary education. 1040nr tax calculator During 2013, he paid $5,600 for his qualified education expenses and $4,400 for his room and board for the fall 2013 semester. 1040nr tax calculator He and the college meet all the requirements for the American opportunity credit. 1040nr tax calculator Bill's AGI and his MAGI, for purposes of figuring his credit, are $30,000. 1040nr tax calculator Bill takes the standard deduction of $5,950 and personal exemption of $3,800, reducing his AGI to taxable income of $20,250. 1040nr tax calculator His income tax liability, before credits, is $2,599 and Bill claims no credits other than the American opportunity credit. 1040nr tax calculator He figures his American opportunity credit based on qualified education expenses of $4,000, which results in a credit of $2,500 and tax after credits of $99. 1040nr tax calculator Example 2—Scholarship excluded from income. 1040nr tax calculator The facts are the same as in Example 1—No scholarship, except that Bill was awarded a $5,600 scholarship. 1040nr tax calculator Under the terms of his scholarship, it may be used to pay any educational expenses, including room and board. 1040nr tax calculator If Bill excludes the scholarship from income, he will be deemed (for purposes of computing his education credit) to have used the scholarship to pay for tuition, required fees, and course materials. 1040nr tax calculator His adjusted qualified education expenses will be zero and he will not have an education credit. 1040nr tax calculator Therefore, Bill's tax after credits would be $2,599. 1040nr tax calculator Example 3—Scholarship partially included in income. 1040nr tax calculator The facts are the same as in Example 2—Scholarship excluded from income. 1040nr tax calculator If, unlike Example 2, Bill includes $4,000 of the scholarship in income, he will be deemed to have used that amount to pay for room and board. 1040nr tax calculator The remaining $1,600 of the $5,600 scholarship will reduce his qualified education expenses and his adjusted qualified education expenses will be $4,000. 1040nr tax calculator Bill's AGI will increase to $34,000, his taxable income will increase to $24,250, and his tax before credits will increase to $3,199. 1040nr tax calculator Based on his adjusted qualified education expenses of $4,000, Bill would be able to claim an American opportunity tax credit of $2,500 and his tax after credits would be $699. 1040nr tax calculator 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. 1040nr tax calculator This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. 1040nr tax calculator Sports, games, hobbies, and noncredit courses. 1040nr tax calculator   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. 1040nr tax calculator However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. 1040nr tax calculator Comprehensive or bundled fees. 1040nr tax calculator   Some eligible educational institutions combine all of their fees for an academic period into one amount. 1040nr tax calculator 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 earlier, contact the institution. 1040nr tax calculator 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. 1040nr tax calculator See Figuring the Credit , later, for more information about Form 1098-T. 1040nr tax calculator Who Is an Eligible Student To claim the American opportunity credit, the student for whom you pay qualified education expenses must be an eligible student. 1040nr tax calculator This is a student who meets all of the following requirements. 1040nr tax calculator The student did not have expenses that were used to figure an American opportunity credit in any 4 earlier tax years. 1040nr tax calculator This includes any tax year(s) in which you claimed the Hope Scholarship Credit for the same student. 1040nr tax calculator The student had not completed the first 4 years of postsecondary education (generally, the freshman, sophomore, junior, and senior years of college) before 2013. 1040nr tax calculator For at least one academic period beginning in 2013, the student was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. 1040nr tax calculator The student has not been convicted of any federal or state felony for possessing or distributing a controlled substance as of the end of 2013. 1040nr tax calculator These requirements are also shown in Figure 2-2, Who is an Eligible Student for the American Opportunity Credit , later. 1040nr tax calculator Completion of first 4 years. 1040nr tax calculator   A student has completed the first 4 years of postsecondary education if the institution at which the student is enrolled awards the student 4 years of academic credit at that institution for coursework completed by the student before 2013. 1040nr tax calculator This student generally would not be an eligible student for purposes of the American opportunity credit. 1040nr tax calculator Exception. 1040nr tax calculator   Any academic credit awarded solely on the basis of the student's performance on proficiency examinations is disregarded in determining whether the student has completed 4 years of postsecondary education. 1040nr tax calculator Enrolled at least half-time. 1040nr tax calculator   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. 1040nr tax calculator   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. 1040nr tax calculator However, the standard may not be lower than any of those established by the U. 1040nr tax calculator S. 1040nr tax calculator Department of Education under the Higher Education Act of 1965. 1040nr tax calculator Please click here for the text description of the image. 1040nr tax calculator Figure 2-2 Example 1. 1040nr tax calculator Mack graduated from high school in June 2012. 1040nr tax calculator In September, he enrolled in an undergraduate degree program at College U, and attended full-time for both the 2012 fall and 2013 spring semesters. 1040nr tax calculator For the 2013 fall semester, Mack was enrolled less than half-time. 1040nr tax calculator Because Mack was enrolled in an undergraduate degree program on at least a half-time basis for at least one academic period that began during 2012 and at least one academic period that began during 2013, he is an eligible student for tax years 2012 and 2013 (including the 2013 fall semester when he enrolled at College U on less than a half-time basis). 1040nr tax calculator Example 2. 1040nr tax calculator After taking classes at College V on a part-time basis for a few years, Shelly became a full-time student for the 2013 spring semester. 1040nr tax calculator College V classified Shelly as a second-semester senior (fourth year) for the 2013 spring semester and as a first-semester graduate student (fifth year) for the 2013 fall semester. 1040nr tax calculator Because College V did not classify Shelly as having completed the first 4 years of postsecondary education as of the beginning of 2013, Shelly is an eligible student for tax year 2013. 1040nr tax calculator Therefore, the qualified education expenses paid for the 2013 spring semester and the 2013 fall semester are taken into account in calculating the American opportunity credit for 2013. 1040nr tax calculator Example 3. 1040nr tax calculator During the 2012 fall semester, Larry was a high school student who took classes on a half-time basis at College X. 1040nr tax calculator Larry was not enrolled as part of a degree program at College X because College X only admits students to a degree program if they have a high school diploma or equivalent. 1040nr tax calculator Because Larry was not enrolled in a degree program at College X during 2012, Larry was not an eligible student for tax year 2012. 1040nr tax calculator Example 4. 1040nr tax calculator The facts are the same as in Example 3. 1040nr tax calculator During the 2013 spring semester, Larry again attended College X but not as part of a degree program. 1040nr tax calculator Larry graduated from high school in June 2013. 1040nr tax calculator For the 2013 fall semester, Larry enrolled as a full-time student in College X as part of a degree program, and College X awarded Larry credit for his prior coursework at College X. 1040nr tax calculator Because Larry was enrolled in a degree program at College X for the 2013 fall term on at least a half-time basis, Larry is an eligible student for all of tax year 2013. 1040nr tax calculator Therefore, the qualified education expenses paid for classes taken at College X during both the 2013 spring semester (during which Larry was not enrolled in a degree program) and the 2013 fall semester are taken into account in computing any American opportunity credit. 1040nr tax calculator Example 5. 1040nr tax calculator Dee graduated from high school in June 2012. 1040nr tax calculator In January 2013, Dee enrolled in a 1-year postsecondary certificate program on a full-time basis to obtain a certificate as a travel agent. 1040nr tax calculator Dee completed the program in December 2013, and was awarded a certificate. 1040nr tax calculator In January 2014, she enrolled in a 1-year postsecondary certificate program on a full-time basis to obtain a certificate as a computer programmer. 1040nr tax calculator Dee is an eligible student for both tax years 2013 and 2014 because she meets the degree requirement, the work load requirement, and the year of study requirement for those years. 1040nr tax calculator Who Can Claim a Dependent's Expenses If there are qualified education expenses for your dependent during a tax year, either you or your dependent, but not both of you, can claim an American opportunity credit for your dependent's expenses for that year. 1040nr tax calculator For you to claim an American opportunity credit for your dependent's expenses, you must also claim an exemption for your dependent. 1040nr tax calculator You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. 1040nr tax calculator IF you. 1040nr tax calculator . 1040nr tax calculator . 1040nr tax calculator THEN only. 1040nr tax calculator . 1040nr tax calculator . 1040nr tax calculator claim an exemption on  your tax return for a  dependent who is an  eligible student you can claim the American opportunity credit based on that dependent's expenses. 1040nr tax calculator The dependent cannot claim the credit. 1040nr tax calculator do not claim an exemption on your tax return for a dependent who is an eligible student (even if entitled to the exemption) the dependent can claim the American opportunity credit. 1040nr tax calculator You cannot claim the credit based on this dependent's expenses. 1040nr tax calculator Expenses paid by dependent. 1040nr tax calculator   If you claim an exemption on your tax return for an eligible student who is your dependent, treat any expenses paid (or deemed paid) by your dependent as if you had paid them. 1040nr tax calculator Include these expenses when figuring the amount of your American opportunity credit. 1040nr tax calculator    Qualified education expenses paid directly to an eligible educational institution for your dependent under a court-approved divorce decree are treated as paid by your dependent. 1040nr tax calculator Expenses paid by you. 1040nr tax calculator   If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring the amount of the American opportunity credit. 1040nr tax calculator If neither you nor anyone else claims an exemption for the dependent, only the dependent can include any expenses you paid when figuring the American opportunity credit. 1040nr tax calculator Expenses paid by others. 1040nr tax calculator   Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. 1040nr tax calculator In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. 1040nr tax calculator If you claim an exemption on your tax return for the student, you are considered to have paid the expenses. 1040nr tax calculator Example. 1040nr tax calculator In 2013, Ms. 1040nr tax calculator Allen makes a payment directly to an eligible educational institution for her grandson Todd's qualified education expenses. 1040nr tax calculator For purposes of claiming an American opportunity credit, Todd is treated as receiving the money from his grandmother and, in turn, paying his qualified education expenses himself. 1040nr tax calculator Unless an exemption for Todd is claimed on someone else's 2013 tax return, only Todd can use the payment to claim an American opportunity credit. 1040nr tax calculator If anyone, such as Todd's parents, claims an exemption for Todd on his or her 2013 tax return, whoever claims the exemption may be able to use the expenses to claim an American opportunity credit. 1040nr tax calculator If anyone else claims an exemption for Todd, Todd cannot claim an American opportunity credit. 1040nr tax calculator Tuition reduction. 1040nr tax calculator    When an eligible educational institution provides a reduction in tuition to an employee of the institution (or spouse or dependent child of an employee), the amount of the reduction may or may not be taxable. 1040nr tax calculator If it is taxable, the employee is treated as receiving a payment of that amount and, in turn, paying it to the educational institution on behalf of the student. 1040nr tax calculator For more information on tuition reductions, see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 1040nr tax calculator Figuring the Credit The amount of the American opportunity credit (per eligible student) is the sum of: 100% of the first $2,000 of qualified education expenses you paid for the eligible student, and 25% of the next $2,000 of qualified education expenses you paid for that student. 1040nr tax calculator The maximum amount of American opportunity credit you can claim in 2013 is $2,500 multiplied by the number of eligible students. 1040nr tax calculator You can claim the full $2,500 for each eligible student for whom you paid at least $4,000 of adjusted qualified education expenses. 1040nr tax calculator However, the credit may be reduced based on your MAGI. 1040nr tax calculator See Effect of the Amount of Your Income on the Amount of Your Credit , later. 1040nr tax calculator Example. 1040nr tax calculator Jack and Kay Ford are married and file a joint tax return. 1040nr tax calculator For 2013, they claim an exemption for their dependent daughter on their tax return. 1040nr tax calculator Their MAGI is $70,000. 1040nr tax calculator Their daughter is in her junior (third) year of studies at the local university. 1040nr tax calculator Jack and Kay paid qualified education expenses of $4,300 in 2013. 1040nr tax calculator Jack and Kay, their daughter, and the local university meet all of the requirements for the American opportunity credit. 1040nr tax calculator Jack and Kay can claim a $2,500 American opportunity credit in 2013. 1040nr tax calculator This is 100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000. 1040nr tax calculator Form 1098-T. 1040nr tax calculator   To help you figure your American opportunity credit, the student should receive Form 1098-T, Tuition Statement. 1040nr tax calculator 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. 1040nr tax calculator An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. 1040nr tax calculator However, the amounts in boxes 1 and 2 of Form 1098-T might be different than what you paid. 1040nr tax calculator When figuring the credit, use only the amounts you paid or are deemed to have paid in 2013 for qualified education expenses. 1040nr tax calculator   In addition, Form 1098-T should give other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether the student was enrolled at least half-time or was a graduate student. 1040nr tax calculator    The eligible educational institution may ask for a completed Form W-9S, Request for Student's or Borrower's Taxpayer Identification Number and Certification, or similar statement to obtain the student's name, address, and taxpayer identification number. 1040nr tax calculator Effect of the Amount of Your Income on the Amount of Your Credit The amount of your American opportunity credit is phased out (gradually reduced) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). 1040nr tax calculator You cannot claim an American opportunity credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return). 1040nr tax calculator Modified adjusted gross income (MAGI). 1040nr tax calculator   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. 1040nr tax calculator MAGI when using Form 1040A. 1040nr tax calculator   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. 1040nr tax calculator MAGI when using Form 1040. 1040nr tax calculator   If you file Form 1040, your MAGI is the AGI on line 38 of that form, modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. 1040nr tax calculator You can use Worksheet 2-1, next, to figure your MAGI. 1040nr tax calculator    Worksheet 2-1. 1040nr tax calculator MAGI for the American Opportunity Credit 1. 1040nr tax calculator Enter your adjusted gross income  (Form 1040, line 38)   1. 1040nr tax calculator   2. 1040nr tax calculator Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. 1040nr tax calculator       3. 1040nr tax calculator Enter your foreign housing deduction (Form 2555, line 50)   3. 1040nr tax calculator       4. 1040nr tax calculator Enter the amount of income from Puerto Rico you are excluding   4. 1040nr tax calculator       5. 1040nr tax calculator Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. 1040nr tax calculator       6. 1040nr tax calculator Add the amounts on lines 2, 3, 4, and 5   6. 1040nr tax calculator   7. 1040nr tax calculator Add the amounts on lines 1 and 6. 1040nr tax calculator  This is your modified adjusted  gross income. 1040nr tax calculator Enter here and  on Form 8863, line 3   7. 1040nr tax calculator   Phaseout. 1040nr tax calculator   If your MAGI is within the range of incomes where the credit must be reduced, you will figure your reduced credit using lines 2-7, of Form 8863, Part I. 1040nr tax calculator The same method is shown in the following example. 1040nr tax calculator Example. 1040nr tax calculator You are filing a joint return and your MAGI is $165,000. 1040nr tax calculator In 2013, you paid $5,000 of qualified education expenses. 1040nr tax calculator You figure a tentative American opportunity credit of $2,500 (100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000 of qualified education expenses). 1040nr tax calculator Because your MAGI is within the range of incomes where the credit must be reduced, you must multiply your tentative credit ($2,500) by a fraction. 1040nr tax calculator The numerator of the fraction is $180,000 (the upper limit for those filing a joint return) minus your MAGI. 1040nr tax calculator The denominator is $20,000, the range of incomes for the phaseout ($160,000 to $180,000). 1040nr tax calculator The result is the amount of your phased out (reduced) American opportunity credit ($1,875). 1040nr tax calculator      $2,500 × $180,000 − $165,000  $20,000 = $1,875   Refundable Part of Credit Forty percent of the American opportunity credit is refundable for most taxpayers. 1040nr tax calculator However, if you were under age 24 at the end of 2013 and the conditions listed below apply to you, you cannot claim any part of the American opportunity credit as a refundable credit on your tax return. 1040nr tax calculator Instead, your allowed credit (figured on Form 8863, Part II) will be used to reduce your tax as a nonrefundable credit only. 1040nr tax calculator You do not qualify for a refund if items 1 (a, b, or c), 2, and 3 below apply to you. 1040nr tax calculator You were: Under age 18 at the end of 2013, or Age 18 at the end of 2013 and your earned income (defined below) was less than one-half of your support (defined below), or Over age 18 and under age 24 at the end of 2013 and a full-time student (defined below) and your earned income (defined below) was less than one-half of your support (defined below). 1040nr tax calculator At least one of your parents was alive at the end of 2013. 1040nr tax calculator You are filing a return as single, head of household, qualifying widow(er), or married filing separately for 2013. 1040nr tax calculator Earned income. 1040nr tax calculator   Earned income includes wages, salaries, professional fees, and other payments received for personal services actually performed. 1040nr tax calculator Earned income includes the part of any scholarship or fellowship that represents payment for teaching, research, or other services performed by the student that are required as a condition for receiving the scholarship or fellowship. 1040nr tax calculator Earned income does not include that part of the compensation for personal services rendered to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered. 1040nr tax calculator   If you are a sole proprietor or a partner in a trade or business in which both personal services and capital are material income-producing factors, earned income also includes a reasonable allowance for compensation for personal services, but not more than 30% of your share of the net profits from that trade or business (after subtracting the deduction for one-half of self-employment tax). 1040nr tax calculator However, if capital is not an income-producing factor and your personal services produced the business income, the 30% limit does not apply. 1040nr tax calculator Support. 1040nr tax calculator   Your support includes food, shelter, clothing, medical and dental care, education, and the like. 1040nr tax calculator Generally, the amount of the item of support will be the amount of expenses incurred by the one furnishing such item. 1040nr tax calculator If the item of support is in the form of property or lodging, measure the amount of such item of support by its fair market value. 1040nr tax calculator However, a scholarship received by you is not considered support if you are a full-time student. 1040nr tax calculator See Publication 501 for details. 1040nr tax calculator Full-time student. 1040nr tax calculator   You are a full-time student for 2013 if during any part of any 5 calendar months during the year you were enrolled as a full-time student at an eligible educational institution (defined earlier), or took a full-time, on-farm training course given by such an institution or by a state, county, or local government agency. 1040nr tax calculator Claiming the Credit You claim the American opportunity credit by completing Form 8863 and submitting it with your Form 1040 or 1040A. 1040nr tax calculator Enter the nonrefundable part of the credit on Form 1040, line 49, or on Form 1040A, line 31. 1040nr tax calculator Enter the refundable part of the credit on Form 1040, line 66, or on Form 1040A, line 40. 1040nr tax calculator A filled-in Form 8863 is shown at the end of this publication. 1040nr tax calculator Note. 1040nr tax calculator In Appendix A. 1040nr tax calculator at the end of this publication, there is an example illustrating the use of Form 8863 when both the American opportunity credit and the lifetime learning credit are claimed on the same tax return. 1040nr tax calculator Prev  Up  Next   Home   More Online Publications