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College Students Taxes

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College Students Taxes

College students taxes Publication 525 - Additional Material Prev  Up  Next   Home   More Online Publications
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Tax Relief for Victims of Floods in Nebraska

Updated 11/21/11 to add the Omaha Indian Reservation and Thurston county.
Updated 9/8/11 to add Lincoln, Nemaha and Richardson counties.

MIL-2011-06-NE, Aug. 17, 2011

Victims of flooding beginning on May 24, 2011 in parts of Nebraska may qualify for tax relief from the Internal Revenue Service.

The President has declared Boyd, Burt, Cass, Dakota, Dixon, Douglas, Knox, Lincoln, Nemaha, Richardson, Sarpy, Thurston and Washington counties and the Omaha Indian Reservation a federal disaster area. Individuals who reside or have a business in these localities may qualify for tax relief.

As a result, the IRS has postponed until Aug. 1, 2011, certain deadlines occurring from May 24 to Aug. 1 that affect taxpayers who live or have a business in the disaster area. This includes the June 15 deadline for making estimated tax payments.

In addition, the IRS is abating the failure-to-deposit penalties for employment and excise tax deposits due on or after May 24 and on or before June 8, 2011, as long as the deposits were made by June 8, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The areas listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS has given affected taxpayers until Aug. 1, 2011, to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after May 24 and on or before Aug. 1, 2011.

The IRS also gives affected taxpayers until Aug. 1 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after May 24 and on or before Aug. 1.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after May 24 and on or before June 8, provided the taxpayer made these deposits by June 8.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation, "Nebraska Flooding," at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information: Recent IRS Disaster Relief Announcements
 

 

Page Last Reviewed or Updated: 20-Feb-2014

The College Students Taxes

College students taxes 35. College students taxes   Education Credits Table of Contents Introduction Useful Items - You may want to see: Who Can Claim an Education Credit Qualified Education ExpensesNo Double Benefit Allowed Adjustments to Qualified Education Expenses Introduction For 2013, there are two tax credits available to persons who pay expenses for higher (postsecondary) education. College students taxes They are: The American opportunity credit, and The lifetime learning credit. College students taxes The chapter will present an overview of these education credits. College students taxes To get the detailed information you will need to claim either of the credits, and for examples illustrating that information, see chapters 2 and 3 of Publication 970. College students taxes Can you claim more than one education credit this year?   For each student, you can choose for any year only one of the credits. College students taxes For example, if you choose to take the American opportunity credit for a child on your 2013 tax return, you cannot, for that same child, also claim the lifetime learning credit for 2013. College students taxes   If you are eligible to claim the American opportunity credit and you are also eligible to claim the lifetime learning credit for the same student in the same year, you can choose to claim either credit, but not both. College students taxes   If you pay qualified education expenses for more than one student in the same year, you can choose to take the American opportunity and the lifetime learning credits on a per-student, per-year basis. College students taxes 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. College students taxes Table 35-1. College students taxes Comparison of Education Credits Caution. College students taxes You can claim both the American opportunity credit and the lifetime learning credit on the same return—but not for the same student. College students taxes   American Opportunity Credit Lifetime Learning Credit Maximum credit Up to $2,500 credit per eligible student Up to $2,000 credit per return Limit on modified adjusted gross income (MAGI) $180,000 if married filing jointly;  $90,000 if single, head of household, or qualifying widow(er) $127,000 if married filing jointly;  $63,000 if single, head of household, or qualifying widow(er) Refundable or nonrefundable 40% of credit may be refundable Credit limited to the amount of tax you must pay on your taxable income Number of years of postsecondary education Available ONLY if the student had not completed the first 4 years of postsecondary education before 2013 Available for all years of postsecondary education and for courses to acquire or improve job skills Number of tax years credit available Available ONLY for 4 tax years per eligible student (including any year(s) the Hope credit was claimed) Available for an unlimited number of years Type of program required Student must be pursuing a program leading to a degree or other recognized education credential Student does not need to 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 beginning during the tax year Available for one or more courses Felony drug conviction At the end of 2013, the student had not been convicted of a felony for possessing or distributing a controlled substance Felony drug convictions do not make the student ineligible 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 Tuition and fees required for enrollment or attendance (including amounts required to be paid to the institution for course-related books, supplies, and equipment) Payments for academic periods Payments made in 2013 for academic periods beginning in 2013 or beginning in the first 3 months of 2014 Differences between the American opportunity and lifetime learning credits. College students taxes   There are several differences between these two credits. College students taxes These differences are summarized in Table 35-1, later. College students taxes Useful Items - You may want to see: Publication 970 Tax Benefits for Education Form (and Instructions) 8863 Education Credits (American Opportunity and Lifetime Learning Credits) Who Can Claim an Education Credit You may be able to claim an education credit if you, your spouse, or a dependent you claim on your tax return was a student enrolled at or attending an eligible educational institution. College students taxes The credits are based on the amount of qualified education expenses paid for the student in 2013 for academic periods beginning in 2013 and in the first 3 months of 2014. College students taxes For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning in January 2014, you may be able to use that $1,500 in figuring your 2013 education credit(s). College students taxes Academic period. College students taxes   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. College students taxes 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. College students taxes Eligible educational institution. College students taxes   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. College students taxes S. College students taxes Department of Education. College students taxes It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. College students taxes The educational institution should be able to tell you if it is an eligible educational institution. College students taxes   Certain educational institutions located outside the United States also participate in the U. College students taxes S. College students taxes Department of Education's Federal Student Aid (FSA) programs. College students taxes Who can claim a dependent's expenses. College students taxes   If an exemption is allowed as a deduction for any person who claims the student as a dependent, all qualified education expenses of the student are treated as having been paid by that person. College students taxes Therefore, only that person can claim an education credit for the student. College students taxes If a student is not claimed as a dependent on another person's tax return, only the student can claim a credit. College students taxes Expenses paid by a third party. College students taxes   Qualified education expenses paid on behalf of the student by someone other than the student (such as a relative) are treated as paid by the student. College students taxes However, qualified education expenses paid (or treated as paid) by a student who is claimed as a dependent on your tax return are treated as paid by you. College students taxes Therefore, you are treated as having paid expenses that were paid by the third party. College students taxes For more information and an example see Who Can Claim a Dependent's Expenses in Pub. College students taxes 970, chapter 2 or 3. College students taxes Who cannot claim a credit. College students taxes   You cannot take an education credit if any of the following apply. College students taxes You are claimed as a dependent on another person's tax return, such as your parent's return. College students taxes Your filing status is married filing separately. College students taxes You (or your spouse) were a nonresident alien for any part of 2013 and did not elect to be treated as a resident alien for tax purposes. College students taxes Your MAGI is one of the following. College students taxes American opportunity credit: $180,000 or more if married filing jointly, or $90,000 or more if single, head of household, or qualifying widow(er). College students taxes Lifetime learning credit: $127,000 or more if married filing jointly, or $63,000 or more if single, head of household, or qualifying widow(er) . College students taxes   Generally, your MAGI is the amount on your Form 1040, line 38, or Form 1040A, line 22. College students taxes However, if you are filing Form 2555, Form 2555–EZ, or Form 4563, or are excluding income from Puerto RIco, add to the amount on your Form 1040, line 38, or Form 1040A, line 22, the amount of income you excluded. College students taxes For details, see Pub. College students taxes 970. College students taxes    Figure 35-A may be helpful in determining if you can claim an education credit on your tax return. College students taxes The American opportunity credit will always be greater than or equal to the lifetime learning credit for any student who is eligible for both credits. College students taxes However, if any of the conditions for the American opportunity credit, listed in Table 35-1 earlier, are not met for any student, you cannot take the American opportunity credit for that student. College students taxes You may be able to take the lifetime learning credit for part or all of that student's qualified education expenses instead. College students taxes See Pub. College students taxes 970 for information on other education benefits. College students taxes Qualified Education Expenses Generally, qualified education expenses are amounts paid in 2013 for tuition and fees required for the student's enrollment or attendance at an eligible educational institution. College students taxes It does not matter whether the expenses were paid in cash, by check, by credit or debit card, or with borrowed funds. College students taxes For course-related books, supplies, and equipment, only certain expenses qualify. College students taxes American opportunity credit: Qualified education expenses include amounts spent on books, supplies, and equipment needed for a course of study, whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance. College students taxes Lifetime learning credit: Qualified education expenses include amounts for books, supplies, and equipment only if required to be paid to the institution as a condition of enrollment or attendance. College students taxes Qualified education expenses include nonacademic fees, such as student activity fees, athletic fees, or other expenses unrelated to the academic course of instruction, only if the fee must be paid to the institution as a condition of enrollment or attendance. College students taxes However, fees for personal expenses (described below) are never qualified education expenses. College students taxes Qualified education expenses for either credit do not include amounts paid for: Personal expenses. College students taxes This means room and board, insurance, medical expenses (including student health fees), transportation, and other similar personal, living, or family expenses. College students taxes Any course or other education involving sports, games, or hobbies, or any noncredit course, unless such course or other education is part of the student's degree program or (for the lifetime learning credit only) helps the student acquire or improve job skills. College students taxes You should receive Form 1098–T, Tuition Statement, from the institution reporting either payments received in 2013 (box 1) or amounts billed in 2013 (box 2). College students taxes However, the amount in box 1 or 2 of Form 1098–T may be different from the amount you paid (or are treated as having paid). College students taxes In completing Form 8863, use only the amounts you actually paid (plus any amounts you are treated as having paid) in 2013, reduced as necessary, as described in Adjustments to Qualified Education Expenses , later. College students taxes Qualified education expenses paid on behalf of the student by someone other than the student (such as a relative) are treated as paid by the student. College students taxes Qualified education expenses paid (or treated as paid) by a student who is claimed as a dependent on your tax return are treated as paid by you. College students taxes If you or the student takes a deduction for higher education expenses, such as on Schedule A or C (Form 1040), you cannot use those expenses in your qualified education expenses when figuring your education credits. College students taxes Qualified education expenses for any academic period must be reduced by any tax-free educational assistance allocable to that academic period. College students taxes See Adjustments to Qualified Education Expenses, later. College students taxes Prepaid Expenses. College students taxes   Qualified education expenses paid in 2013 for an academic period that begins in the first 3 months of 2014 can be used in figuring an education credit for 2013 only. College students taxes See Academic period , earlier. College students taxes 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). College students taxes    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). College students taxes Paid with borrowed funds. College students taxes   You can claim an education credit for qualified education expenses paid with the proceeds of a loan. College students taxes Use the expenses to figure the credit for the year in which the expenses are paid, not the year in which the loan is repaid. College students taxes Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. College students taxes Student withdraws from class(es). College students taxes   You can claim an education credit for qualified education expenses not refunded when a student withdraws. College students taxes No Double Benefit Allowed You cannot do any of the following. College students taxes Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim an education credit based on those same expenses. College students taxes Claim more than one education credit based on the same qualified education expenses. College students taxes Claim an education credit based on the same expenses used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or qualified tuition program (QTP). College students taxes Claim an education credit based on qualified education expenses paid with educational assistance, such as a tax-free scholarship, grant, or employer-provided educational assistance. College students taxes See Adjustments to Qualified Education Expenses, next. College students taxes Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid in 2013 by or on behalf of that student under the following rules. College students taxes The result is the amount of adjusted qualified education expenses for each student. College students taxes Tax-free educational assistance. College students taxes   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. College students taxes See Academic period , earlier. College students taxes      Tax-free educational assistance includes:    Tax-free parts of scholarships and fellowships (see chapter 12 of this publication and chapter 1 of Pub. College students taxes 970), The tax-free part of Pell grants (see chapter 1 of Pub. College students taxes 970), The tax-free part of employer-provided educational assistance (see Pub. College students taxes 970), Veterans' educational assistance (see chapter 1 of Pub. College students taxes 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. College students taxes Generally, any scholarship or fellowship is treated as tax-free educational assistance. College students taxes However, a scholarship or fellowship is not treated as tax-free educational assistance 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: The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. College students taxes 970, chapter 1; or The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. College students taxes 970, chapter 1. College students taxes 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 received. College students taxes For details, see Adjustments of Qualified Education Expenses, in chapters 2 and 3 of Pub. College students taxes 970. College students taxes Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. College students taxes 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). College students taxes 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. College students taxes 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. College students taxes Refunds. College students taxes   A refund of qualified education expenses may reduce qualified education expenses for the tax year or may require you to repay (recapture) the credit that you claimed in an earlier year. College students taxes Some tax-free educational assistance received after 2013 may be treated as a refund. College students taxes See Tax-free educational assistance, earlier. College students taxes Refunds received in 2013. College students taxes   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses paid in 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. College students taxes Refunds received after 2013 but before your income tax return is filed. College students taxes   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is received before you file your 2013 income tax return, reduce the amount of qualified education expenses for 2013 by the amount of the refund. College students taxes Refunds received after 2013 and after your income tax return is filed. College students taxes   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is received after you file your 2013 income tax return, you may need to repay some or all of the credit that you claimed. College students taxes See Credit recapture, next. College students taxes Credit recapture. College students taxes    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. College students taxes 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. College students taxes You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you had claimed the refigured credit(s). College students taxes Include that amount as an additional tax for the year the refund or tax-free assistance was received. College students taxes Example. College students taxes    You paid $8,000 tuition and fees in December 2013 for your child's Spring semester beginning in January 2014. College students taxes You filed your 2013 tax return on February 3, 2014, and claimed a lifetime learning credit of $1,600 ($8,000 qualified education expense paid x . College students taxes 20). College students taxes You claimed no other tax credits. College students taxes After you filed your return, your child withdrew from two courses and you received a refund of $1,400. College students taxes You must refigure your 2013 lifetime learning credit using $6,600 ($8,000 qualified education expenses − $1,400 refund). College students taxes The refigured credit is $1,320 and your tax liability increased by $280. College students taxes You must include the difference of $280 ($1,600 credit originally claimed − $1,320 refigured credit) as additional tax on your 2014 income tax return. College students taxes See the instructions for your 2014 income tax return to determine where to include this tax. College students taxes If you also 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. College students taxes Amounts that do not reduce qualified education expenses. College students taxes   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. College students taxes   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. College students taxes 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 Chapter 1 of Pub. College students taxes 970. College students taxes The use of the money is not restricted. College students taxes   For examples, see chapter 2 in Pub. College students taxes 970. College students taxes Figure 35-A. College students taxes Can You Claim an Education Credit for 2013? This image is too large to be displayed in the current screen. College students taxes Please click the link to view the image. College students taxes Figure 35-A. College students taxes Can You Claim an Education Credit for 2013? Prev  Up  Next   Home   More Online Publications