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2011 Tax Forms 1040ez

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2011 Tax Forms 1040ez

2011 tax forms 1040ez 4. 2011 tax forms 1040ez   Student Loan Interest Deduction Table of Contents Introduction Student Loan Interest DefinedQualified Student Loan Qualified Education Expenses Include As Interest Do Not Include As Interest When Must Interest Be Paid Can You Claim the DeductionNo Double Benefit Allowed Figuring the DeductionEffect of the Amount of Your Income on the Amount of Your Deduction Which Worksheet To Use Claiming the Deduction Introduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. 2011 tax forms 1040ez However, if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. 2011 tax forms 1040ez For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. 2011 tax forms 1040ez This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. 2011 tax forms 1040ez The student loan interest deduction is taken as an adjustment to income. 2011 tax forms 1040ez This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). 2011 tax forms 1040ez This chapter explains: What type of loan interest you can deduct, Whether you can claim the deduction, What expenses you must have paid with the student loan, Who is an eligible student, How to figure the deduction, and How to claim the deduction. 2011 tax forms 1040ez Table 4-1. 2011 tax forms 1040ez Student Loan Interest Deduction at a Glance This table summarizes the features of the student loan interest deduction. 2011 tax forms 1040ez Do not rely on this table alone. 2011 tax forms 1040ez Refer to the text for complete details. 2011 tax forms 1040ez Feature   Description Maximum benefit   You can reduce your income subject to tax by up to $2,500. 2011 tax forms 1040ez Loan qualifications   Your student loan: •must have been taken out solely to pay qualified education expenses, and •cannot be from a related person or made under a qualified employer plan. 2011 tax forms 1040ez Student qualifications   The student must be: •you, your spouse, or your dependent, and  •enrolled at least half-time in a degree program. 2011 tax forms 1040ez Time limit on deduction   You can deduct interest paid during the remaining period of your student loan. 2011 tax forms 1040ez Limit on modified adjusted gross income (MAGI)   $155,000 if married filing a joint return; $75,000 if single, head of household, or qualifying widow(er). 2011 tax forms 1040ez Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. 2011 tax forms 1040ez It includes both required and voluntary interest payments. 2011 tax forms 1040ez Qualified Student Loan This is a loan you took out solely to pay qualified education expenses (defined later) that were: For you, your spouse, or a person who was your dependent when you took out the loan, Paid or incurred within a reasonable period of time before or after you took out the loan, and For education provided during an academic period for an eligible student. 2011 tax forms 1040ez Loans from the following sources are not qualified student loans. 2011 tax forms 1040ez A related person. 2011 tax forms 1040ez A qualified employer plan. 2011 tax forms 1040ez Your dependent. 2011 tax forms 1040ez   Generally, your dependent is someone who is either a: Qualifying child, or Qualifying relative. 2011 tax forms 1040ez You can find more information about dependents in Publication 501. 2011 tax forms 1040ez Exceptions. 2011 tax forms 1040ez   For purposes of the student loan interest deduction, there are the following exceptions to the general rules for dependents. 2011 tax forms 1040ez An individual can be your dependent even if you are the dependent of another taxpayer. 2011 tax forms 1040ez An individual can be your dependent even if the individual files a joint return with a spouse. 2011 tax forms 1040ez An individual can be your dependent even if the individual had gross income for the year that was equal to or more than the exemption amount for the year ($3,900 for 2013). 2011 tax forms 1040ez Reasonable period of time. 2011 tax forms 1040ez   Qualified education expenses are treated as paid or incurred within a reasonable period of time before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal postsecondary education loan program. 2011 tax forms 1040ez   Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met. 2011 tax forms 1040ez The expenses relate to a specific academic period, and The loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period. 2011 tax forms 1040ez   If neither of the above situations applies, the reasonable period of time usually is determined based on all the relevant facts and circumstances. 2011 tax forms 1040ez Academic period. 2011 tax forms 1040ez   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. 2011 tax forms 1040ez 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. 2011 tax forms 1040ez Eligible student. 2011 tax forms 1040ez   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. 2011 tax forms 1040ez Enrolled at least half-time. 2011 tax forms 1040ez   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. 2011 tax forms 1040ez   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. 2011 tax forms 1040ez However, the standard may not be lower than any of those established by the U. 2011 tax forms 1040ez S. 2011 tax forms 1040ez Department of Education under the Higher Education Act of 1965. 2011 tax forms 1040ez Related person. 2011 tax forms 1040ez   You cannot deduct interest on a loan you get from a related person. 2011 tax forms 1040ez Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. 2011 tax forms 1040ez ), Your lineal descendants (children, grandchildren, etc. 2011 tax forms 1040ez ), and Certain corporations, partnerships, trusts, and exempt organizations. 2011 tax forms 1040ez Qualified employer plan. 2011 tax forms 1040ez   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. 2011 tax forms 1040ez Qualified Education Expenses For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. 2011 tax forms 1040ez They include amounts paid for the following items. 2011 tax forms 1040ez Tuition and fees. 2011 tax forms 1040ez Room and board. 2011 tax forms 1040ez Books, supplies, and equipment. 2011 tax forms 1040ez Other necessary expenses (such as transportation). 2011 tax forms 1040ez The cost of room and board qualifies only to the extent that it is not more than the greater of: The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, or The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. 2011 tax forms 1040ez Eligible educational institution. 2011 tax forms 1040ez   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. 2011 tax forms 1040ez S. 2011 tax forms 1040ez Department of Education. 2011 tax forms 1040ez It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 2011 tax forms 1040ez   Certain educational institutions located outside the United States also participate in the U. 2011 tax forms 1040ez S. 2011 tax forms 1040ez Department of Education's Federal Student Aid (FSA) programs. 2011 tax forms 1040ez   For purposes of the student loan interest deduction, an eligible educational institution also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. 2011 tax forms 1040ez   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. 2011 tax forms 1040ez The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. 2011 tax forms 1040ez    The educational institution should be able to tell you if it is an eligible educational institution. 2011 tax forms 1040ez Adjustments to Qualified Education Expenses You must reduce your qualified education expenses by the total amount paid for them with the following tax-free items. 2011 tax forms 1040ez Employer-provided educational assistance. 2011 tax forms 1040ez See chapter 11, Employer-Provided Educational Assistance . 2011 tax forms 1040ez Tax-free distribution of earnings from a Coverdell education savings account (ESA). 2011 tax forms 1040ez See Tax-Free Distributions in chapter 7, Coverdell Education Savings Account. 2011 tax forms 1040ez Tax-free distribution of earnings from a qualified tuition program (QTP). 2011 tax forms 1040ez See Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program. 2011 tax forms 1040ez U. 2011 tax forms 1040ez S. 2011 tax forms 1040ez savings bond interest that you exclude from income because it is used to pay qualified education expenses. 2011 tax forms 1040ez See chapter 10, Education Savings Bond Program . 2011 tax forms 1040ez The tax-free part of scholarships and fellowships. 2011 tax forms 1040ez See Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 2011 tax forms 1040ez Veterans' educational assistance. 2011 tax forms 1040ez See Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 2011 tax forms 1040ez Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. 2011 tax forms 1040ez Include As Interest In addition to simple interest on the loan, if all other requirements are met, the items discussed below can be student loan interest. 2011 tax forms 1040ez Loan origination fee. 2011 tax forms 1040ez   In general, this is a one-time fee charged by the lender when a loan is made. 2011 tax forms 1040ez To be deductible as interest, a loan origination fee must be for the use of money rather than for property or services (such as commitment fees or processing costs) provided by the lender. 2011 tax forms 1040ez A loan origination fee treated as interest accrues over the term of the loan. 2011 tax forms 1040ez   Loan origination fees were not required to be reported on Form 1098-E, Student Loan Interest Statement, for loans made before September 1, 2004. 2011 tax forms 1040ez If loan origination fees are not included in the amount reported on your Form 1098-E, you can use any reasonable method to allocate the loan origination fees over the term of the loan. 2011 tax forms 1040ez The method shown in the example below allocates equal portions of the loan origination fee to each payment required under the terms of the loan. 2011 tax forms 1040ez A method that results in the double deduction of the same portion of a loan origination fee would not be reasonable. 2011 tax forms 1040ez Example. 2011 tax forms 1040ez In August 2004, Bill took out a student loan for $16,000 to pay the tuition for his senior year of college. 2011 tax forms 1040ez The lender charged a 3% loan origination fee ($480) that was withheld from the funds Bill received. 2011 tax forms 1040ez Bill began making payments on his student loan in 2013. 2011 tax forms 1040ez Because the loan origination fee was not included in his 2013 Form 1098-E, Bill can use any reasonable method to allocate that fee over the term of the loan. 2011 tax forms 1040ez Bill's loan is payable in 120 equal monthly payments. 2011 tax forms 1040ez He allocates the $480 fee equally over the total number of payments ($480 ÷ 120 months = $4 per month). 2011 tax forms 1040ez Bill made 7 payments in 2013, so he paid $28 ($4 × 7) of interest attributable to the loan origination fee. 2011 tax forms 1040ez To determine his student loan interest deduction, he will add the $28 to the amount of other interest reported to him on Form 1098-E. 2011 tax forms 1040ez Capitalized interest. 2011 tax forms 1040ez   This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. 2011 tax forms 1040ez Capitalized interest is treated as interest for tax purposes and is deductible as payments of principal are made on the loan. 2011 tax forms 1040ez No deduction for capitalized interest is allowed in a year in which no loan payments were made. 2011 tax forms 1040ez Interest on revolving lines of credit. 2011 tax forms 1040ez   This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. 2011 tax forms 1040ez See Qualified Education Expenses , earlier. 2011 tax forms 1040ez Interest on refinanced student loans. 2011 tax forms 1040ez   This includes interest on both: Consolidated loans—loans used to refinance more than one student loan of the same borrower, and Collapsed loans—two or more loans of the same borrower that are treated by both the lender and the borrower as one loan. 2011 tax forms 1040ez    If you refinance a qualified student loan for more than your original loan and you use the additional amount for any purpose other than qualified education expenses, you cannot deduct any interest paid on the refinanced loan. 2011 tax forms 1040ez Voluntary interest payments. 2011 tax forms 1040ez   These are payments made on a qualified student loan during a period when interest payments are not required, such as when the borrower has been granted a deferment or the loan has not yet entered repayment status. 2011 tax forms 1040ez Example. 2011 tax forms 1040ez The payments on Roger's student loan were scheduled to begin in June 2012, 6 months after he graduated from college. 2011 tax forms 1040ez He began making payments as required. 2011 tax forms 1040ez In September 2013, Roger enrolled in graduate school on a full-time basis. 2011 tax forms 1040ez He applied for and was granted deferment of his loan payments while in graduate school. 2011 tax forms 1040ez Wanting to pay down his student loan as much as possible, he made loan payments in October and November 2013. 2011 tax forms 1040ez Even though these were voluntary (not required) payments, Roger can deduct the interest paid in October and November. 2011 tax forms 1040ez Allocating Payments Between Interest and Principal The allocation of payments between interest and principal for tax purposes might not be the same as the allocation shown on the Form 1098-E or other statement you receive from the lender or loan servicer. 2011 tax forms 1040ez To make the allocation for tax purposes, a payment generally applies first to stated interest that remains unpaid as of the date the payment is due, second to any loan origination fees allocable to the payment, third to any capitalized interest that remains unpaid as of the date the payment is due, and fourth to the outstanding principal. 2011 tax forms 1040ez Example. 2011 tax forms 1040ez In August 2012, Peg took out a $10,000 student loan to pay the tuition for her senior year of college. 2011 tax forms 1040ez The lender charged a 3% loan origination fee ($300) that was withheld from the funds Peg received. 2011 tax forms 1040ez The interest (5% simple) on this loan accrued while she completed her senior year and for 6 months after she graduated. 2011 tax forms 1040ez At the end of that period, the lender determined the amount to be repaid by capitalizing all accrued but unpaid interest ($625 interest accrued from August 2012 through October 2013) and adding it to the outstanding principal balance of the loan. 2011 tax forms 1040ez The loan is payable over 60 months, with a payment of $200. 2011 tax forms 1040ez 51 due on the first of each month, beginning November 2013. 2011 tax forms 1040ez Peg did not receive a Form 1098-E for 2013 from her lender because the amount of interest she paid did not require the lender to issue an information return. 2011 tax forms 1040ez However, she did receive an account statement from the lender that showed the following 2013 payments on her outstanding loan of $10,625 ($10,000 principal + $625 accrued but unpaid interest). 2011 tax forms 1040ez Payment Date   Payment   Stated Interest   Principal November 2013   $200. 2011 tax forms 1040ez 51   $44. 2011 tax forms 1040ez 27   $156. 2011 tax forms 1040ez 24 December 2013   $200. 2011 tax forms 1040ez 51   $43. 2011 tax forms 1040ez 62   $156. 2011 tax forms 1040ez 89 Totals   $401. 2011 tax forms 1040ez 02   $87. 2011 tax forms 1040ez 89   $313. 2011 tax forms 1040ez 13 To determine the amount of interest that could be deducted on the loan for 2013, Peg starts with the total amount of stated interest she paid, $87. 2011 tax forms 1040ez 89. 2011 tax forms 1040ez Next, she allocates the loan origination fee over the term of the loan ($300 ÷ 60 months = $5 per month). 2011 tax forms 1040ez A total of $10 ($5 of each of the two principal payments) should be treated as interest for tax purposes. 2011 tax forms 1040ez Peg then applies the unpaid capitalized interest ($625) to the two principal payments in the order in which they were made, and determines that the remaining amount of principal of both payments is treated as interest for tax purposes. 2011 tax forms 1040ez Assuming that Peg qualifies to take the student loan interest deduction, she can deduct $401. 2011 tax forms 1040ez 02 ($87. 2011 tax forms 1040ez 89 + $10 + $303. 2011 tax forms 1040ez 13). 2011 tax forms 1040ez For 2014, Peg will continue to allocate $5 of the loan origination fee to the principal portion of each monthly payment she makes and treat that amount as interest for tax purposes. 2011 tax forms 1040ez She also will apply the remaining amount of capitalized interest ($625 − $303. 2011 tax forms 1040ez 13 = $321. 2011 tax forms 1040ez 87) to the principal payments in the order in which they are made until the balance is zero, and treat those amounts as interest for tax purposes. 2011 tax forms 1040ez Do Not Include As Interest You cannot claim a student loan interest deduction for any of the following items. 2011 tax forms 1040ez Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. 2011 tax forms 1040ez Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. 2011 tax forms 1040ez Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the “NHSC Loan Repayment Program”) or certain other loan repayment assistance programs. 2011 tax forms 1040ez For more information, see Student Loan Repayment Assistance in chapter 5, Student Loan Cancellations and Repayment Assistance. 2011 tax forms 1040ez When Must Interest Be Paid You can deduct all interest you paid during the year on your student loan, including voluntary payments, until the loan is paid off. 2011 tax forms 1040ez Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. 2011 tax forms 1040ez Your filing status is any filing status except married filing separately. 2011 tax forms 1040ez No one else is claiming an exemption for you on his or her tax return. 2011 tax forms 1040ez You are legally obligated to pay interest on a qualified student loan. 2011 tax forms 1040ez You paid interest on a qualified student loan. 2011 tax forms 1040ez Claiming an exemption for you. 2011 tax forms 1040ez   Another taxpayer is claiming an exemption for you if he or she lists your name and other required information on his or her Form 1040 (or Form 1040A), line 6c, or Form 1040NR, line 7c. 2011 tax forms 1040ez Example 1. 2011 tax forms 1040ez During 2013, Josh paid $600 interest on his qualified student loan. 2011 tax forms 1040ez Only he is legally obligated to make the payments. 2011 tax forms 1040ez No one claimed an exemption for Josh for 2013. 2011 tax forms 1040ez Assuming all other requirements are met, Josh can deduct the $600 of interest he paid on his 2013 Form 1040 or 1040A. 2011 tax forms 1040ez Example 2. 2011 tax forms 1040ez During 2013, Jo paid $1,100 interest on her qualified student loan. 2011 tax forms 1040ez Only she is legally obligated to make the payments. 2011 tax forms 1040ez Jo's parents claimed an exemption for her on their 2013 tax return. 2011 tax forms 1040ez In this case, neither Jo nor her parents may deduct the student loan interest Jo paid in 2013. 2011 tax forms 1040ez Interest paid by others. 2011 tax forms 1040ez   If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest. 2011 tax forms 1040ez Example 1. 2011 tax forms 1040ez Darla obtained a qualified student loan to attend college. 2011 tax forms 1040ez After Darla's graduation from college, she worked as an intern for a nonprofit organization. 2011 tax forms 1040ez As part of the internship program, the nonprofit organization made an interest payment on behalf of Darla. 2011 tax forms 1040ez This payment was treated as additional compensation and reported in box 1 of her Form W-2. 2011 tax forms 1040ez Assuming all other qualifications are met, Darla can deduct this payment of interest on her tax return. 2011 tax forms 1040ez Example 2. 2011 tax forms 1040ez Ethan obtained a qualified student loan to attend college. 2011 tax forms 1040ez After graduating from college, the first monthly payment on his loan was due in December. 2011 tax forms 1040ez As a gift, Ethan's mother made this payment for him. 2011 tax forms 1040ez No one is claiming a dependency exemption for Ethan on his or her tax return. 2011 tax forms 1040ez Assuming all other qualifications are met, Ethan can deduct this payment of interest on his tax return. 2011 tax forms 1040ez No Double Benefit Allowed You cannot deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, as home mortgage interest). 2011 tax forms 1040ez Figuring the Deduction Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. 2011 tax forms 1040ez However, the amount determined above may be gradually reduced (phased out) or eliminated based on your filing status and MAGI as explained below. 2011 tax forms 1040ez You can use Worksheet 4-1. 2011 tax forms 1040ez Student Loan Interest Deduction Worksheet (at the end of this chapter) to figure both your MAGI and your deduction. 2011 tax forms 1040ez Form 1098-E. 2011 tax forms 1040ez   To help you figure your student loan interest deduction, you should receive Form 1098-E. 2011 tax forms 1040ez Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2013 on one or more qualified student loans must send Form 1098-E (or acceptable substitute) to each borrower by January 31, 2014. 2011 tax forms 1040ez   For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. 2011 tax forms 1040ez Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. 2011 tax forms 1040ez However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. 2011 tax forms 1040ez See Allocating Payments Between Interest and Principal , earlier. 2011 tax forms 1040ez    The lender may ask for a completed Form W-9S, or similar statement to obtain the borrower's name, address, and taxpayer identification number. 2011 tax forms 1040ez The form may also be used by the borrower to certify that the student loan was incurred solely to pay for qualified education expenses. 2011 tax forms 1040ez Effect of the Amount of Your Income on the Amount of Your Deduction The amount of your student loan interest deduction is phased out (gradually reduced) if your MAGI is between $60,000 and $75,000 ($125,000 and $155,000 if you file a joint return). 2011 tax forms 1040ez You cannot take a student loan interest deduction if your MAGI is $75,000 or more ($155,000 or more if you file a joint return). 2011 tax forms 1040ez Modified adjusted gross income (MAGI). 2011 tax forms 1040ez   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for student loan interest. 2011 tax forms 1040ez However, as discussed below, there may be other modifications. 2011 tax forms 1040ez Table 4-2 shows how the amount of your MAGI can affect your student loan interest deduction. 2011 tax forms 1040ez Table 4-2. 2011 tax forms 1040ez Effect of MAGI on Student Loan Interest Deduction IF your filing status is. 2011 tax forms 1040ez . 2011 tax forms 1040ez . 2011 tax forms 1040ez AND your MAGI is. 2011 tax forms 1040ez . 2011 tax forms 1040ez . 2011 tax forms 1040ez THEN your student loan interest deduction is. 2011 tax forms 1040ez . 2011 tax forms 1040ez . 2011 tax forms 1040ez single,  head of household, or qualifying widow(er) not more than $60,000 not affected by the phaseout. 2011 tax forms 1040ez more than $60,000  but less than $75,000 reduced because of the phaseout. 2011 tax forms 1040ez $75,000 or more eliminated by the phaseout. 2011 tax forms 1040ez married filing joint return not more than $125,000 not affected by the phaseout. 2011 tax forms 1040ez more than $125,000 but less than $155,000 reduced because of the phaseout. 2011 tax forms 1040ez $155,000 or more eliminated by the phaseout. 2011 tax forms 1040ez MAGI when using Form 1040A. 2011 tax forms 1040ez   If you file Form 1040A, your MAGI is the AGI on line 22 of that form figured without taking into account any amount on line 18 (student loan interest deduction) and line 19 (tuition and fees deduction). 2011 tax forms 1040ez MAGI when using Form 1040. 2011 tax forms 1040ez   If you file Form 1040, your MAGI is the AGI on line 38 of that form figured without taking into account any amount on line 33 (student loan interest deduction), line 34 (tuition and fees deduction), or line 35 (domestic production activities deduction), and 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. 2011 tax forms 1040ez MAGI when using Form 1040NR. 2011 tax forms 1040ez   If you file Form 1040NR, your MAGI is the AGI on line 36 of that form figured without taking into account any amount on line 33 (student loan interest deduction) and line 34 (domestic production activities deduction). 2011 tax forms 1040ez MAGI when using Form 1040NR-EZ. 2011 tax forms 1040ez   If you file Form 1040NR-EZ, your MAGI is the AGI on line 10 of that form figured without taking into account any amount on line 9 (student loan interest deduction). 2011 tax forms 1040ez Phaseout. 2011 tax forms 1040ez   If your MAGI is within the range of incomes where the credit must be reduced, you must figure your reduced deduction. 2011 tax forms 1040ez To figure the phaseout, multiply your interest deduction (before the phaseout) by a fraction. 2011 tax forms 1040ez The numerator is your MAGI minus $60,000 ($125,000 in the case of a joint return). 2011 tax forms 1040ez The denominator is $15,000 ($30,000 in the case of a joint return). 2011 tax forms 1040ez Subtract the result from your deduction (before the phaseout) to give you the amount you can deduct. 2011 tax forms 1040ez Example 1. 2011 tax forms 1040ez During 2013 you paid $800 interest on a qualified student loan. 2011 tax forms 1040ez Your 2013 MAGI is $145,000 and you are filing a joint return. 2011 tax forms 1040ez You must reduce your deduction by $533, figured as follows. 2011 tax forms 1040ez   $800 × $145,000 − $125,000  $30,000 = $533   Your reduced student loan interest deduction is $267 ($800 − $533). 2011 tax forms 1040ez Example 2. 2011 tax forms 1040ez The facts are the same as in Example 1 except that you paid $2,750 interest. 2011 tax forms 1040ez Your maximum deduction for 2013 is $2,500. 2011 tax forms 1040ez You must reduce your maximum deduction by $1,667, figured as follows. 2011 tax forms 1040ez   $2,500 × $145,000 − $125,000  $30,000 = $1,667   In this example, your reduced student loan interest deduction is $833 ($2,500 − $1,667). 2011 tax forms 1040ez Which Worksheet To Use Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the instructions for Form 1040, Form 1040A, or Form 1040NR. 2011 tax forms 1040ez However, if you are filing Form 2555, Foreign Earned Income, Form 2555-EZ, Foreign Earned Income Exclusion, or Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1. 2011 tax forms 1040ez Student Loan Interest Deduction Worksheet at the end of this chapter. 2011 tax forms 1040ez Claiming the Deduction The student loan interest deduction is an adjustment to income. 2011 tax forms 1040ez To claim the deduction, enter the allowable amount on line 33 (Form 1040), line 18 (Form 1040A), line 33 (Form 1040NR), or line 9 (Form 1040NR-EZ). 2011 tax forms 1040ez Worksheet 4-1. 2011 tax forms 1040ez Student Loan Interest Deduction Worksheet Use this worksheet instead of the worksheet in the Form 1040 instructions if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico. 2011 tax forms 1040ez Before using this worksheet, you must complete Form 1040, lines 7 through 32, plus any amount to be entered on the dotted line next to line 36. 2011 tax forms 1040ez 1. 2011 tax forms 1040ez Enter the total interest you paid in 2013 on qualified student loans. 2011 tax forms 1040ez Do not enter  more than $2,500 1. 2011 tax forms 1040ez   2. 2011 tax forms 1040ez Enter the amount from Form 1040, line 22 2. 2011 tax forms 1040ez       3. 2011 tax forms 1040ez Enter the total of the amounts from Form 1040,  lines 23 through 32 3. 2011 tax forms 1040ez           4. 2011 tax forms 1040ez Enter the total of any amounts entered on the dotted line next to Form 1040, line 36 4. 2011 tax forms 1040ez           5. 2011 tax forms 1040ez Add lines 3 and 4 5. 2011 tax forms 1040ez       6. 2011 tax forms 1040ez Subtract line 5 from line 2 6. 2011 tax forms 1040ez       7. 2011 tax forms 1040ez Enter any foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18) 7. 2011 tax forms 1040ez       8. 2011 tax forms 1040ez Enter any foreign housing deduction (Form 2555, line 50) 8. 2011 tax forms 1040ez       9. 2011 tax forms 1040ez Enter the amount of income from Puerto Rico you are excluding 9. 2011 tax forms 1040ez       10. 2011 tax forms 1040ez Enter the amount of income from American Samoa  you are excluding (Form 4563, line 15) 10. 2011 tax forms 1040ez       11. 2011 tax forms 1040ez Add lines 6 through 10. 2011 tax forms 1040ez This is your modified adjusted gross income 11. 2011 tax forms 1040ez   12. 2011 tax forms 1040ez Enter the amount shown below for your filing status 12. 2011 tax forms 1040ez     •Single, head of household, or qualifying widow(er)—$60,000       •Married filing jointly—$125,000     13. 2011 tax forms 1040ez Is the amount on line 11 more than the amount on line 12?       □ No. 2011 tax forms 1040ez Skip lines 13 and 14, enter -0- on line 15, and go to line 16. 2011 tax forms 1040ez       □ Yes. 2011 tax forms 1040ez Subtract line 12 from line 11 13. 2011 tax forms 1040ez   14. 2011 tax forms 1040ez Divide line 13 by $15,000 ($30,000 if married filing jointly). 2011 tax forms 1040ez Enter the result as a decimal  (rounded to at least three places). 2011 tax forms 1040ez If the result is 1. 2011 tax forms 1040ez 000 or more, enter 1. 2011 tax forms 1040ez 000 14. 2011 tax forms 1040ez . 2011 tax forms 1040ez 15. 2011 tax forms 1040ez Multiply line 1 by line 14 15. 2011 tax forms 1040ez   16. 2011 tax forms 1040ez Student loan interest deduction. 2011 tax forms 1040ez Subtract line 15 from line 1. 2011 tax forms 1040ez Enter the result here  and on Form 1040, line 33. 2011 tax forms 1040ez Do not include this amount in figuring any other  deduction on your return (such as on Schedule A, C, E, etc. 2011 tax forms 1040ez ) 16. 2011 tax forms 1040ez   Prev  Up  Next   Home   More Online Publications
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Page Last Reviewed or Updated: 28-Mar-2014

The 2011 Tax Forms 1040ez

2011 tax forms 1040ez 3. 2011 tax forms 1040ez   Savings Incentive Match Plans for Employees (SIMPLE) Table of Contents Introduction What Is a SIMPLE Plan?Eligible Employees How Are Contributions Made? How Much Can Be Contributed on Your Behalf?Matching contributions less than 3%. 2011 tax forms 1040ez Traditional IRA mistakenly moved to SIMPLE IRA. 2011 tax forms 1040ez When Can You Withdraw or Use Assets?Are Distributions Taxable? Introduction This chapter is for employees who need information about savings incentive match plans for employees (SIMPLE plans). 2011 tax forms 1040ez It explains what a SIMPLE plan is, contributions to a SIMPLE plan, and distributions from a SIMPLE plan. 2011 tax forms 1040ez Under a SIMPLE plan, SIMPLE retirement accounts for participating employees can be set up either as: Part of a 401(k) plan, or A plan using IRAs (SIMPLE IRA). 2011 tax forms 1040ez This chapter only discusses the SIMPLE plan rules that relate to SIMPLE IRAs. 2011 tax forms 1040ez See chapter 3 of Publication 560 for information on any special rules for SIMPLE plans that do not use IRAs. 2011 tax forms 1040ez If your employer maintains a SIMPLE plan, you must be notified, in writing, that you can choose the financial institution that will serve as trustee for your SIMPLE IRA and that you can roll over or transfer your SIMPLE IRA to another financial institution. 2011 tax forms 1040ez See Rollovers and Transfers Exception, later under When Can You Withdraw or Use Assets. 2011 tax forms 1040ez What Is a SIMPLE Plan? A SIMPLE plan is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. 2011 tax forms 1040ez See chapter 3 of Publication 560 for information on the requirements employers must satisfy to set up a SIMPLE plan. 2011 tax forms 1040ez A SIMPLE plan is a written agreement (salary reduction agreement) between you and your employer that allows you, if you are an eligible employee (including a self-employed individual), to choose to: Reduce your compensation (salary) by a certain percentage each pay period, and Have your employer contribute the salary reductions to a SIMPLE IRA on your behalf. 2011 tax forms 1040ez These contributions are called salary reduction contributions. 2011 tax forms 1040ez All contributions under a SIMPLE IRA plan must be made to SIMPLE IRAs, not to any other type of IRA. 2011 tax forms 1040ez The SIMPLE IRA can be an individual retirement account or an individual retirement annuity, described in chapter 1. 2011 tax forms 1040ez Contributions are made on behalf of eligible employees. 2011 tax forms 1040ez (See Eligible Employees below. 2011 tax forms 1040ez ) Contributions are also subject to various limits. 2011 tax forms 1040ez (See How Much Can Be Contributed on Your Behalf , later. 2011 tax forms 1040ez ) In addition to salary reduction contributions, your employer must make either matching contributions or nonelective contributions. 2011 tax forms 1040ez See How Are Contributions Made , later. 2011 tax forms 1040ez You may be able to claim a credit for contributions to your SIMPLE plan. 2011 tax forms 1040ez For more information, see chapter 4. 2011 tax forms 1040ez Eligible Employees You must be allowed to participate in your employer's SIMPLE plan if you: Received at least $5,000 in compensation from your employer during any 2 years prior to the current year, and Are reasonably expected to receive at least $5,000 in compensation during the calendar year for which contributions are made. 2011 tax forms 1040ez Self-employed individual. 2011 tax forms 1040ez   For SIMPLE plan purposes, the term employee includes a self-employed individual who received earned income. 2011 tax forms 1040ez Excludable employees. 2011 tax forms 1040ez   Your employer can exclude the following employees from participating in the SIMPLE plan. 2011 tax forms 1040ez Employees whose retirement benefits are covered by a collective bargaining agreement (union contract). 2011 tax forms 1040ez Employees who are nonresident aliens and received no earned income from sources within the United States. 2011 tax forms 1040ez Employees who would not have been eligible employees if an acquisition, disposition, or similar transaction had not occurred during the year. 2011 tax forms 1040ez Compensation. 2011 tax forms 1040ez   For purposes of the SIMPLE plan rules, your compensation for a year generally includes the following amounts. 2011 tax forms 1040ez Wages, tips, and other pay from your employer that is subject to income tax withholding. 2011 tax forms 1040ez Deferred amounts elected under any 401(k) plans, 403(b) plans, government (section 457) plans, SEP plans, and SIMPLE plans. 2011 tax forms 1040ez Self-employed individual compensation. 2011 tax forms 1040ez   For purposes of the SIMPLE plan rules, if you are self-employed, your compensation for a year is your net earnings from self-employment (Schedule SE (Form 1040), Section A, line 4, or Section B, line 6) before subtracting any contributions made to a SIMPLE IRA on your behalf. 2011 tax forms 1040ez   For these purposes, net earnings from self-employment include services performed while claiming exemption from self-employment tax as a member of a group conscientiously opposed to social security benefits. 2011 tax forms 1040ez How Are Contributions Made? Contributions under a salary reduction agreement are called salary reduction contributions. 2011 tax forms 1040ez They are made on your behalf by your employer. 2011 tax forms 1040ez Your employer must also make either matching contributions or nonelective contributions. 2011 tax forms 1040ez Salary reduction contributions. 2011 tax forms 1040ez   During the 60-day period before the beginning of any year, and during the 60-day period before you are eligible, you can choose salary reduction contributions expressed either as a percentage of compensation, or as a specific dollar amount (if your employer offers this choice). 2011 tax forms 1040ez You can choose to cancel the election at any time during the year. 2011 tax forms 1040ez   Salary reduction contributions are also referred to as “elective deferrals. 2011 tax forms 1040ez ”   Your employer cannot place restrictions on the contributions amount (such as by limiting the contributions percentage), except to comply with the salary reduction contributions limit, discussed under How Much Can Be Contributed on Your Behalf, later. 2011 tax forms 1040ez Matching contributions. 2011 tax forms 1040ez   Unless your employer chooses to make nonelective contributions, your employer must make contributions equal to the salary reduction contributions you choose (elect), but only up to certain limits. 2011 tax forms 1040ez See How Much Can Be Contributed on Your Behalf below. 2011 tax forms 1040ez These contributions are in addition to the salary reduction contributions and must be made to the SIMPLE IRAs of all eligible employees (defined earlier) who chose salary reductions. 2011 tax forms 1040ez These contributions are referred to as matching contributions. 2011 tax forms 1040ez   Matching contributions on behalf of a self-employed individual are not treated as salary reduction contributions. 2011 tax forms 1040ez Nonelective contributions. 2011 tax forms 1040ez   Instead of making matching contributions, your employer may be able to choose to make nonelective contributions on behalf of all eligible employees. 2011 tax forms 1040ez These nonelective contributions must be made on behalf of each eligible employee who has at least $5,000 of compensation from your employer, whether or not the employee chose salary reductions. 2011 tax forms 1040ez   One of the requirements your employer must satisfy is notifying the employees that the election was made. 2011 tax forms 1040ez For other requirements that your employer must satisfy, see chapter 3 of Publication 560. 2011 tax forms 1040ez How Much Can Be Contributed on Your Behalf? The limits on contributions to a SIMPLE IRA vary with the type of contribution that is made. 2011 tax forms 1040ez Salary reduction contributions limit. 2011 tax forms 1040ez   Salary reduction contributions (employee-chosen contributions or elective deferrals) that your employer can make on your behalf under a SIMPLE plan are limited to $12,000 for 2013. 2011 tax forms 1040ez The limitation remains at $12,000 for 2014. 2011 tax forms 1040ez If you are a participant in any other employer plans during 2013 and you have elective salary reductions or deferred compensation under those plans, the salary reduction contributions under the SIMPLE plan also are included in the annual limit of $17,500 for 2013 on exclusions of salary reductions and other elective deferrals. 2011 tax forms 1040ez You, not your employer, are responsible for monitoring compliance with these limits. 2011 tax forms 1040ez Additional elective deferrals can be contributed to your SIMPLE plan if: You reached age 50 by the end of 2013, and No other elective deferrals can be made for you to the plan for the year because of limits or restrictions, such as the regular annual limit. 2011 tax forms 1040ez The most that can be contributed in additional elective deferrals to your SIMPLE plan is the lesser of the following two amounts. 2011 tax forms 1040ez $2,500 for 2013, or Your compensation for the year reduced by your other elective deferrals for the year. 2011 tax forms 1040ez The additional deferrals are not subject to any other contribution limit and are not taken into account in applying other contribution limits. 2011 tax forms 1040ez The additional deferrals are not subject to the nondiscrimination rules as long as all eligible participants are allowed to make them. 2011 tax forms 1040ez Matching employer contributions limit. 2011 tax forms 1040ez   Generally, your employer must make matching contributions to your SIMPLE IRA in an amount equal to your salary reduction contributions. 2011 tax forms 1040ez These matching contributions cannot be more than 3% of your compensation for the calendar year. 2011 tax forms 1040ez See Matching contributions less than 3% below. 2011 tax forms 1040ez Example 1. 2011 tax forms 1040ez In 2013, Joshua was a participant in his employer's SIMPLE plan. 2011 tax forms 1040ez His compensation, before SIMPLE plan contributions, was $41,600 ($800 per week). 2011 tax forms 1040ez Instead of taking it all in cash, Joshua elected to have 12. 2011 tax forms 1040ez 5% of his weekly pay ($100) contributed to his SIMPLE IRA. 2011 tax forms 1040ez For the full year, Joshua's salary reduction contributions were $5,200, which is less than the $12,000 limit on these contributions. 2011 tax forms 1040ez Under the plan, Joshua's employer was required to make matching contributions to Joshua's SIMPLE IRA. 2011 tax forms 1040ez Because his employer's matching contributions must equal Joshua's salary reductions, but cannot be more than 3% of his compensation (before salary reductions) for the year, his employer's matching contribution was limited to $1,248 (3% of $41,600). 2011 tax forms 1040ez Example 2. 2011 tax forms 1040ez Assume the same facts as in Example 1 , except that Joshua's compensation for the year was $408,163 and he chose to have 2. 2011 tax forms 1040ez 94% of his weekly pay contributed to his SIMPLE IRA. 2011 tax forms 1040ez In this example, Joshua's salary reduction contributions for the year (2. 2011 tax forms 1040ez 94% × $408,163) were equal to the 2013 limit for salary reduction contributions ($12,000). 2011 tax forms 1040ez Because 3% of Joshua's compensation ($12,245) is more than the amount his employer was required to match ($12,000), his employer's matching contributions were limited to $12,000. 2011 tax forms 1040ez In this example, total contributions made on Joshua's behalf for the year were $24,000 ($12,000 (Joshua's contributions) + $12,000 (matching contributions)), the maximum contributions permitted under a SIMPLE IRA for 2013. 2011 tax forms 1040ez Matching contributions less than 3%. 2011 tax forms 1040ez   Your employer can reduce the 3% limit on matching contributions for a calendar year, but only if: The limit is not reduced below 1%, The limit is not reduced for more than 2 years out of the 5-year period that ends with (and includes) the year for which the election is effective, and Employees are notified of the reduced limit within a reasonable period of time before the 60-day election period during which they can enter into salary reduction agreements. 2011 tax forms 1040ez   For purposes of applying the rule in item (2) in determining whether the limit was reduced below 3% for the year, any year before the first year in which your employer (or a former employer) maintains a SIMPLE IRA plan will be treated as a year for which the limit was 3%. 2011 tax forms 1040ez If your employer chooses to make nonelective contributions for a year, that year also will be treated as a year for which the limit was 3%. 2011 tax forms 1040ez Nonelective employer contributions limit. 2011 tax forms 1040ez   If your employer chooses to make nonelective contributions, instead of matching contributions, to each eligible employee's SIMPLE IRA, contributions must be 2% of your compensation for the entire year. 2011 tax forms 1040ez For 2013, only $255,000 of your compensation can be taken into account to figure the contribution limit. 2011 tax forms 1040ez   Your employer can substitute the 2% nonelective contribution for the matching contribution for a year if both of the following requirements are met. 2011 tax forms 1040ez Eligible employees are notified that a 2% nonelective contribution will be made instead of a matching contribution. 2011 tax forms 1040ez This notice is provided within a reasonable period during which employees can enter into salary reduction agreements. 2011 tax forms 1040ez Example 3. 2011 tax forms 1040ez Assume the same facts as in Example 2 , except that Joshua's employer chose to make nonelective contributions instead of matching contributions. 2011 tax forms 1040ez Because his employer's nonelective contributions are limited to 2% of up to $255,000 of Joshua's compensation, his employer's contribution to Joshua's SIMPLE IRA was limited to $5,100. 2011 tax forms 1040ez In this example, total contributions made on Joshua's behalf for the year were $17,100 (Joshua's salary reductions of $12,000 plus his employer's contribution of $5,100). 2011 tax forms 1040ez Traditional IRA mistakenly moved to SIMPLE IRA. 2011 tax forms 1040ez   If you mistakenly roll over or transfer an amount from a traditional IRA to a SIMPLE IRA, you can later recharacterize the amount as a contribution to another traditional IRA. 2011 tax forms 1040ez For more information, see Recharacterizations in chapter 1. 2011 tax forms 1040ez Recharacterizing employer contributions. 2011 tax forms 1040ez   You cannot recharacterize employer contributions (including elective deferrals) under a SEP or SIMPLE plan as contributions to another IRA. 2011 tax forms 1040ez SEPs are discussed in chapter 2 of Publication 560. 2011 tax forms 1040ez SIMPLE plans are discussed in this chapter. 2011 tax forms 1040ez Converting from a SIMPLE IRA. 2011 tax forms 1040ez   Generally, you can convert an amount in your SIMPLE IRA to a Roth IRA under the same rules explained in chapter 1 under Converting From Any Traditional IRA Into a Roth IRA . 2011 tax forms 1040ez    However, you cannot convert any amount distributed from the SIMPLE IRA during the 2-year period beginning on the date you first participated in any SIMPLE IRA plan maintained by your employer. 2011 tax forms 1040ez When Can You Withdraw or Use Assets? Generally, the same distribution (withdrawal) rules that apply to traditional IRAs apply to SIMPLE IRAs. 2011 tax forms 1040ez These rules are discussed in chapter 1. 2011 tax forms 1040ez Your employer cannot restrict you from taking distributions from a SIMPLE IRA. 2011 tax forms 1040ez Are Distributions Taxable? Generally, distributions from a SIMPLE IRA are fully taxable as ordinary income. 2011 tax forms 1040ez If the distribution is an early distribution (discussed in chapter 1), it may be subject to the additional tax on early distributions. 2011 tax forms 1040ez See Additional Tax on Early Distributions, later. 2011 tax forms 1040ez Rollovers and Transfers Exception Generally, rollovers and trustee-to-trustee transfers are not taxable distributions. 2011 tax forms 1040ez Two-year rule. 2011 tax forms 1040ez   To qualify as a tax-free rollover (or a tax-free trustee-to-trustee transfer), a rollover distribution (or a transfer) made from a SIMPLE IRA during the 2-year period beginning on the date on which you first participated in your employer's SIMPLE plan must be contributed (or transferred) to another SIMPLE IRA. 2011 tax forms 1040ez The 2-year period begins on the first day on which contributions made by your employer are deposited in your SIMPLE IRA. 2011 tax forms 1040ez   After the 2-year period, amounts in a SIMPLE IRA can be rolled over or transferred tax free to an IRA other than a SIMPLE IRA, or to a qualified plan, a tax-sheltered annuity plan (section 403(b) plan), or deferred compensation plan of a state or local government (section 457 plan). 2011 tax forms 1040ez Additional Tax on Early Distributions The additional tax on early distributions (discussed in chapter 1) applies to SIMPLE IRAs. 2011 tax forms 1040ez If a distribution is an early distribution and occurs during the 2-year period following the date on which you first participated in your employer's SIMPLE plan, the additional tax on early distributions is increased from 10% to 25%. 2011 tax forms 1040ez If a rollover distribution (or transfer) from a SIMPLE IRA does not satisfy the 2-year rule, and is otherwise an early distribution, the additional tax imposed because of the early distribution is increased from 10% to 25% of the amount distributed. 2011 tax forms 1040ez Prev  Up  Next   Home   More Online Publications