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E File State Taxes For Free

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E File State Taxes For Free

E file state taxes for free Publication 600 - Main Contents Table of Contents Actual Expenses Optional Sales Tax Tables Instructions for the State and Local General Sales Tax Deduction WorksheetWhat if you lived in more than one state? What if you lived in more than one locality? What if your local general sales tax rate changed during 2006? What if you lived in more than one locality in the same state during 2006? Actual Expenses Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) you paid in 2006 if the tax rate was the same as the general sales tax rate. E file state taxes for free However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. E file state taxes for free If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. E file state taxes for free Motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. E file state taxes for free Also include any state and local general sales taxes paid for a leased motor vehicle. E file state taxes for free Do not include sales taxes paid on items used in your trade or business. E file state taxes for free To deduct your actual expenses, enter the amount on Schedule A, line 5, and enter “ST” on the dotted line to the left of the line 5 entry space. E file state taxes for free You must keep your actual receipts showing general sales taxes paid to use this method. E file state taxes for free Refund of general sales taxes. E file state taxes for free   If you received a refund of state or local general sales taxes in 2006 for amounts paid in 2006, reduce your actual 2006 state and local general sales taxes by this amount. E file state taxes for free If you received a refund of state or local general sales taxes in 2006 for prior year purchases, do not reduce your 2006 state and local general sales taxes by this amount. E file state taxes for free But if you deducted your actual state and local general sales taxes in the earlier year and the deduction reduced your tax, you may have to include the refund in income on Form 1040, line 21. E file state taxes for free See Recoveries in Pub. E file state taxes for free 525 for details. E file state taxes for free Optional Sales Tax Tables Instead of using your actual expenses, you can use the tables on pages 5 through 7 to figure your state and local general sales tax deduction. E file state taxes for free You may also be able to add the state and local general sales taxes paid on certain specified items. E file state taxes for free To figure your state and local general sales tax deduction using the tables, complete the worksheet below. E file state taxes for free If your filing status is married filing separately, both you and your spouse elect to deduct sales taxes, and your spouse elects to use the optional sales tax tables, you also must use the tables to figure your state and local general sales tax deduction. E file state taxes for free State and Local General Sales Tax Deduction Worksheet (See the instructions that begin on page 3. E file state taxes for free ) Before you begin: See the instructions for line 1 on page 3 if: You lived in more than one state during 2006, or You had any nontaxable income in 2006. E file state taxes for free   1. E file state taxes for free Enter your state general sales taxes from the applicable table on page 5 or 6 (see page 3 of the instructions) 1. E file state taxes for free $     Next. E file state taxes for free If, for all of 2006, you lived only in Connecticut, the District of Columbia, Hawaii, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Rhode Island, Virginia, or West Virginia, skip lines 2 through 5, enter -0- on line 6, and go to line 7. E file state taxes for free Otherwise, go to line 2       2. E file state taxes for free Did you live in Alaska, Arizona, Arkansas (Texarkana only), California (Los Angeles County only), Colorado, Georgia, Illinois, Louisiana, New York State, or North Carolina in 2006?         No. E file state taxes for free Enter -0-                   Yes. E file state taxes for free Enter your local general sales taxes from the applicable table on page 7 (see page 3 of the instructions)     2. E file state taxes for free $       3. E file state taxes for free Did your locality impose a local general sales tax in 2006? Residents of California, Nevada, and Texarkana, Arkansas, see page 3 of the instructions             No. E file state taxes for free Skip lines 3 through 5, enter -0- on line 6, and go to line 7             Yes. E file state taxes for free Enter your local general sales tax rate, but omit the percentage sign. E file state taxes for free For example, if your local general sales tax rate was 2. E file state taxes for free 5%, enter 2. E file state taxes for free 5. E file state taxes for free If your local general sales tax rate changed or you lived in more than one locality in the same state during 2006, see page 3 of the instructions. E file state taxes for free (If you do not know your local general sales tax rate, contact your local government. E file state taxes for free ) 3. E file state taxes for free . E file state taxes for free       4. E file state taxes for free Did you enter -0- on line 2 above?             No. E file state taxes for free Skip lines 4 and 5 and go to line 6             Yes. E file state taxes for free Enter your state general sales tax rate (shown in the table heading for your state), but omit the percentage sign. E file state taxes for free For example, if your state general sales tax rate is 6%, enter 6. E file state taxes for free 0 4. E file state taxes for free . E file state taxes for free       5. E file state taxes for free Divide line 3 by line 4. E file state taxes for free Enter the result as a decimal (rounded to at least three places) 5. E file state taxes for free . E file state taxes for free       6. E file state taxes for free Did you enter -0- on line 2 above?             No. E file state taxes for free Multiply line 2 by line 3   6. E file state taxes for free $     Yes. E file state taxes for free Multiply line 1 by line 5. E file state taxes for free If you lived in more than one locality in the same state during 2006, see page 4 of the instructions           7. E file state taxes for free Enter your state and local general sales taxes paid on specified items, if any (see page 4 of the instructions) 7. E file state taxes for free $   8. E file state taxes for free Deduction for general sales taxes. E file state taxes for free Add lines 1, 6, and 7. E file state taxes for free Enter the result here and the total from all your state and local general sales tax deduction worksheets, if you completed more than one, on Schedule A, line 5. E file state taxes for free Be sure to enter “ST” on the dotted line to the left of the entry space 8. E file state taxes for free $     Instructions for the State and Local General Sales Tax Deduction Worksheet Line 1. E file state taxes for free    If you lived in the same state for all of 2006, enter the applicable amount, based on your 2006 income and exemptions, from the optional state sales tax table for your state on page 5 or 6. E file state taxes for free Read down the “At least-But less than” columns for your state and find the line that includes your 2006 income. E file state taxes for free If married filing separately, do not include your spouse's income. E file state taxes for free Your 2006 income is the amount shown on your Form 1040, line 38, plus any nontaxable items, such as the following. E file state taxes for free Tax-exempt interest. E file state taxes for free Veterans' benefits. E file state taxes for free Nontaxable combat pay. E file state taxes for free Workers' compensation. E file state taxes for free Nontaxable part of social security and railroad retirement benefits. E file state taxes for free Nontaxable part of IRA, pension, or annuity distributions. E file state taxes for free Do not include rollovers. E file state taxes for free Public assistance payments. E file state taxes for free The exemptions column refers to the number of exemptions claimed on Form 1040, line 6d. E file state taxes for free Do not include any additional exemptions you listed on Form 8914 for individuals displaced by Hurricane Katrina. E file state taxes for free What if you lived in more than one state?    If you lived in more than one state during 2006, look up the table amount for each state using the above rules. E file state taxes for free If there is no table for your state, the table amount is considered to be zero. E file state taxes for free Multiply the table amount for each state you lived in by a fraction. E file state taxes for free The numerator of the fraction is the number of days you lived in the state during 2006 and the denominator is the total number of days in the year (365). E file state taxes for free Enter the total of the prorated table amounts for each state on line 1. E file state taxes for free However, if you also lived in a locality during 2006 that imposed a local general sales tax, do not enter the total on line 1. E file state taxes for free Instead, complete a separate worksheet for each state you lived in and enter the prorated amount for that state on line 1. E file state taxes for free Example. E file state taxes for free You lived in State A from January 1 through August 31, 2006 (243 days), and in State B from September 1 through December 31, 2006 (122 days). E file state taxes for free The table amount for State A is $500. E file state taxes for free The table amount for State B is $400. E file state taxes for free You would figure your state general sales tax as follows. E file state taxes for free State A: $500 x 243/365 = $333   State B: $400 x 122/365 = 134   Total = $467   If none of the localities in which you lived during 2006 imposed a local general sales tax, enter $467 on line 1 of your worksheet. E file state taxes for free Otherwise, complete a separate worksheet for State A and State B. E file state taxes for free Enter $333 on line 1 of the State A worksheet and $134 on line 1 of the State B worksheet. E file state taxes for free Line 2. E file state taxes for free   If you checked the “No” box, enter -0- on line 2, and go to line 3. E file state taxes for free If you checked the “Yes” box and lived in the same locality for all of 2006, enter the applicable amount, based on your 2006 income and exemptions, from the optional local sales tax table for your locality on page 7. E file state taxes for free Read down the “At least-But less than” columns for your locality and find the line that includes your 2006 income. E file state taxes for free See the line 1 instructions on this page to figure your 2006 income. E file state taxes for free The exemptions column refers to the number of exemptions claimed on Form 1040, line 6d. E file state taxes for free Do not include any additional exemptions you listed on Form 8914 for individuals displaced by Hurricane Katrina. E file state taxes for free What if you lived in more than one locality?   If you lived in more than one locality during 2006, look up the table amount for each locality using the above rules. E file state taxes for free If there is no table for your locality, the table amount is considered to be zero. E file state taxes for free Multiply the table amount for each locality you lived in by a fraction. E file state taxes for free The numerator of the fraction is the number of days you lived in the locality during 2006 and the denominator is the total number of days in the year (365). E file state taxes for free If you lived in more than one locality in the same state and the local general sales tax rate was the same for each locality, enter the total of the prorated table amounts for each locality in that state on line 2. E file state taxes for free Otherwise, complete a separate worksheet for lines 2 through 6 for each locality and enter each prorated table amount on line 2 of the applicable worksheet. E file state taxes for free Example. E file state taxes for free You lived in Locality 1 from January 1 through August 31, 2006 (243 days), and in Locality 2 from September 1 through December 31, 2006 (122 days). E file state taxes for free The table amount for Locality 1 is $100. E file state taxes for free The table amount for Locality 2 is $150. E file state taxes for free You would figure the amount to enter on line 2 as follows. E file state taxes for free Note that this amount may not equal your local sales tax deduction, which is figured on line 6 of the worksheet. E file state taxes for free Locality 1: $100 x 243/365 = $67   Locality 2: $150 x 122/365 = 50   Total = $117   Line 3. E file state taxes for free   If you lived in California, check the “No” box if your combined state and local general sales tax rate is 7. E file state taxes for free 25%. E file state taxes for free Otherwise, check the “Yes” box and include on line 3 only the part of the combined rate that is more than 7. E file state taxes for free 25%. E file state taxes for free   If you lived in Nevada, check the “No” box if your combined state and local general sales tax rate is 6. E file state taxes for free 5%. E file state taxes for free Otherwise, check the “Yes” box and include on line 3 only the part of the combined rate that is more than 6. E file state taxes for free 5%. E file state taxes for free   If you lived in Texarkana, Arkansas, check the “Yes” box and enter “4. E file state taxes for free 0” on line 3. E file state taxes for free Your local general sales tax rate of 4. E file state taxes for free 0% includes the additional 1. E file state taxes for free 0% Arkansas state sales tax rate for Texarkana and the 1. E file state taxes for free 5% sales tax rate for Miller County. E file state taxes for free What if your local general sales tax rate changed during 2006?    If you checked the “Yes” box and your local general sales tax rate changed during 2006, figure the rate to enter on line 3 as follows. E file state taxes for free Multiply each tax rate for the period it was in effect by a fraction. E file state taxes for free The numerator of the fraction is the number of days the rate was in effect during 2006 and the denominator is the total number of days in the year (365). E file state taxes for free Enter the total of the prorated tax rates on line 3. E file state taxes for free Example. E file state taxes for free Locality 1 imposed a 1% local general sales tax from January 1 through September 30, 2006 (273 days). E file state taxes for free The rate increased to 1. E file state taxes for free 75% for the period from October 1 through December 31, 2006 (92 days). E file state taxes for free You would enter “1. E file state taxes for free 189” on line 3, figured as follows. E file state taxes for free January 1 - September 30: 1. E file state taxes for free 00 x 273/365 = 0. E file state taxes for free 748   October 1 - December 31: 1. E file state taxes for free 75 x 92/365 = 0. E file state taxes for free 441   Total = 1. E file state taxes for free 189   What if you lived in more than one locality in the same state during 2006?    Complete a separate worksheet for lines 2 through 6 for each locality in your state if you lived in more than one locality in the same state during 2006 and either of the following applies. E file state taxes for free Each locality did not have the same local general sales tax rate. E file state taxes for free You lived in Texarkana, AR, or Los Angeles County, CA. E file state taxes for free   To figure the amount to enter on line 3 of the worksheet for each locality in which you lived (except a locality for which you used the table on page 7 to figure your local general sales tax deduction), multiply the local general sales tax rate by a fraction. E file state taxes for free The numerator of the fraction is the number of days you lived in the locality during 2006 and the denominator is the total number of days in the year (365). E file state taxes for free Example. E file state taxes for free You lived in Locality 1 from January 1 through August 31, 2006 (243 days), and in Locality 2 from September 1 through December 31, 2006 (122 days). E file state taxes for free The local general sales tax rate for Locality 1 is 1%. E file state taxes for free The rate for Locality 2 is 1. E file state taxes for free 75%. E file state taxes for free You would enter “0. E file state taxes for free 666” on line 3 for the Locality 1 worksheet and “0. E file state taxes for free 585” for the Locality 2 worksheet, figured as follows. E file state taxes for free Locality 1: 1. E file state taxes for free 00 x 243/365 = 0. E file state taxes for free 666   Locality 2: 1. E file state taxes for free 75 x 122/365 = 0. E file state taxes for free 585   Line 6. E file state taxes for free   If you lived in more than one locality in the same state during 2006, you should have completed line 1 only on the first worksheet for that state and separate worksheets for lines 2 through 6 for any other locality within that state in which you lived during 2006. E file state taxes for free If you checked the “Yes” box on line 6 of any of those worksheets, multiply line 5 of that worksheet by the amount that you entered on line 1 for that state on the first worksheet. E file state taxes for free Line 7. E file state taxes for free    Enter on line 7 any state and local general sales taxes paid on the following specified items. E file state taxes for free If you are completing more than one worksheet, include the total for line 7 on only one of the worksheets. E file state taxes for free A motor vehicle (including a car, motorcycle, motor home, recreational vehicle, sport utility vehicle, truck, van, and off-road vehicle). E file state taxes for free Also include any state and local general sales taxes paid for a leased motor vehicle. E file state taxes for free If the state sales tax rate on these items is higher than the general sales tax rate, only include the amount of tax you would have paid at the general sales tax rate. E file state taxes for free An aircraft or boat, if the tax rate was the same as the general sales tax rate. E file state taxes for free A home (including a mobile home or prefabricated home) or substantial addition to or major renovation of a home, but only if the tax rate was the same as the general sales tax rate and any of the following applies. E file state taxes for free Your state or locality imposes a general sales tax directly on the sale of a home or on the cost of a substantial addition or major renovation. E file state taxes for free You purchased the materials to build a home or substantial addition or to perform a major renovation and paid the sales tax directly. E file state taxes for free Under your state law, your contractor is considered your agent in the construction of the home or substantial addition or the performance of a major renovation. E file state taxes for free The contract must state that the contractor is authorized to act in your name and must follow your directions on construction decisions. E file state taxes for free In this case, you will be considered to have purchased any items subject to a sales tax and to have paid the sales tax directly. E file state taxes for free   Do not include sales taxes paid on items used in your trade or business. E file state taxes for free If you received a refund of state or local general sales taxes in 2006, see Refund of general sales taxes on page 1. E file state taxes for free Prev  Up  Next   Home   More Online Publications
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Understanding Your CP104 Notice

We made changes to your excise tax return because we believe there was a miscalculation. As a result of these changes, there is a balance due.


What you need to do

  • Read your notice carefully — it explains the changes to your tax account.
  • Compare the figures on the notice with your excise tax return.
  • If you disagree with our change(s), contact us within 10 days from the date of your notice.
  • If you agree with our change(s), correct the copy of your excise tax return that you kept for your records.
  • Make your payment by your due date.
  • If you can’t pay the amount you owe, go to the payments page to find out more about your payment options.

You may want to

  • Download copies of the following materials (if they weren’t included with your notice).

 


Answers to Common Questions

Q. How can I find out what caused my tax return to change?

A. Please contact us at the toll free number listed on the top right corner of your notice for specific information about your tax return.

Q. What should I do if I disagree with the changes you made?

A. If you disagree, contact us at the toll free number listed on the top right corner of your notice or respond in writing within 10 days from the date of the notice. If your response provides us with additional information that justifies a reversal of the change, we’ll reverse the change we made to your account. If you agree with the change, please pay any additional balance due by the date specified in the notice.

Q. What happens if I can’t pay the full amount I owe?

A. You can arrange to make a payment plan with us if you can’t pay the full amount you owe. Go to the payments page to find out more about your payment options.

Q. Am I charged interest on the money I owe?

A. Not if you pay the full amount you owe by the date specified on the notice. However, interest accrues on the unpaid balance after that date.

Q. Will I receive a penalty if I can’t pay the full amount?

A. Yes, you will receive a late payment penalty. You can contact us at the number given on your notice if you’re unable to pay the full amount shown in your specific notice because of circumstances beyond your control. Contact us by the due date of your payment and, depending on your situation, we may be able to remove the penalty.


Tips for next year

Consider filing your excise taxes electronically. Filing online can help you to avoid mistakes and find credits and deductions for which you may qualify. Learn more about e-file.

Page Last Reviewed or Updated: 23-Jan-2014

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The E File State Taxes For Free

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