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Federal Tax Extension

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Federal Tax Extension

Federal tax extension Publication 555 - Main Content Table of Contents Domicile Community or Separate Property and Income Identifying Income, Deductions, and CreditsIncome Exemptions Deductions Credits, Taxes, and Payments Community Property Laws DisregardedRequesting relief. Federal tax extension Equitable relief. Federal tax extension Earned income. Federal tax extension Trade or business income. Federal tax extension Partnership income or loss. Federal tax extension Separate property income. Federal tax extension Social security benefits. Federal tax extension Other income. Federal tax extension End of the Community Preparing a Federal Income Tax ReturnJoint Return Versus Separate Returns Separate Return Preparation How To Get Tax HelpLow Income Taxpayer Clinics Domicile Whether you have community property and community income depends on the state where you are domiciled. Federal tax extension If you and your spouse (or your registered domestic partner) have different domiciles, check the laws of each to see whether you have community property or community income. Federal tax extension You have only one domicile even if you have more than one home. Federal tax extension Your domicile is a permanent legal home that you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return. Federal tax extension The question of your domicile is mainly a matter of your intention as indicated by your actions. Federal tax extension You must be able to show that you intend a given place or state to be your permanent home. Federal tax extension If you move into or out of a community property state during the year, you may or may not have community income. Federal tax extension Factors considered in determining domicile include: Where you pay state income tax, Where you vote, Location of property you own, Your citizenship, Length of residence, and Business and social ties to the community. Federal tax extension Amount of time spent. Federal tax extension    The amount of time spent in one place does not always explain the difference between home and domicile. Federal tax extension A temporary home or residence may continue for months or years while a domicile may be established the first moment you occupy the property. Federal tax extension Your intent is the determining factor in proving where you have your domicile. Federal tax extension    Note. Federal tax extension When this publication refers to where you live, it means your domicile. Federal tax extension Community or Separate Property and Income If you file a federal tax return separately from your spouse, you must report half of all community income and all of your separate income. Federal tax extension Likewise, a registered domestic partner must report half of all community income and all of his or her separate income on his or her federal tax return. Federal tax extension You each must attach your Form 8958 to your Form 1040 showing how you figured the amount you are reporting on your return. Federal tax extension Generally, the laws of the state in which you are domiciled govern whether you have community property and community income or separate property and separate income for federal tax purposes. Federal tax extension The following is a summary of the general rules. Federal tax extension These rules are also shown in Table 1. Federal tax extension Community property. Federal tax extension    Generally, community property is property: That you, your spouse (or your registered domestic partner), or both acquire during your marriage (or registered domestic partnership) while you and your spouse (or your registered domestic partner) are domiciled in a community property state. Federal tax extension That you and your spouse (or your registered domestic partner) agreed to convert from separate to community property. Federal tax extension That cannot be identified as separate property. Federal tax extension Community income. Federal tax extension    Generally, community income is income from: Community property. Federal tax extension Salaries, wages, and other pay received for the services performed by you, your spouse (or your registered domestic partner), or both during your marriage (or registered domestic partnership) while domiciled in a community property state. Federal tax extension Real estate that is treated as community property under the laws of the state where the property is located. Federal tax extension Note Separate property. Federal tax extension    Generally, separate property is: Property that you or your spouse (or your registered domestic partner) owned separately before your marriage (or registered domestic partnership). Federal tax extension Money earned while domiciled in a noncommunity property state. Federal tax extension Property that you or your spouse (or your registered domestic partner) received separately as a gift or inheritance during your marriage (or registered domestic partnership). Federal tax extension Property that you or your spouse (or your registered domestic partner) bought with separate funds, or acquired in exchange for separate property, during your marriage (or registered domestic partnership). Federal tax extension Property that you and your spouse (or your registered domestic partner) converted from community property to separate property through an agreement valid under state law. Federal tax extension The part of property bought with separate funds, if part was bought with community funds and part with separate funds. Federal tax extension Separate income. Federal tax extension    Generally, income from separate property is the separate income of the spouse (or the registered domestic partner) who owns the property. Federal tax extension    In Idaho, Louisiana, Texas, and Wisconsin, income from most separate property is community income. Federal tax extension Table 1. Federal tax extension General Rules — Property and Income: Community or Separate? Community property is property: That you, your spouse (or your registered domestic partner), or both acquire during your marriage (or registered domestic partnership) while you and your spouse (or your registered domestic partner) are domiciled in a community property state. Federal tax extension (Includes the part of property bought with community property funds if part was bought with community funds and part with separate funds. Federal tax extension ) That you and your spouse (or your registered domestic partner) agreed to convert from separate to community property. Federal tax extension That cannot be identified as separate property. Federal tax extension Separate property is: Property that you or your spouse (or your registered domestic partner) owned separately before your marriage (or registered domestic partnership). Federal tax extension Money earned while domiciled in a noncommunity property state. Federal tax extension Property either of you received as a gift or inherited separately during your marriage (or registered domestic partnership). Federal tax extension Property bought with separate funds, or exchanged for separate property, during your marriage (or registered domestic partnership). Federal tax extension Property that you and your spouse (or your registered domestic partner) agreed to convert from community to separate property through an agreement valid under state law. Federal tax extension The part of property bought with separate funds, if part was bought with community funds and part with separate funds. Federal tax extension Community income 1,2,3 is income from: Community property. Federal tax extension Salaries, wages, or pay for services of you, your spouse (or your registered domestic partner), or both during your marriage (or registered domestic partnership) while domiciled in a community property state. Federal tax extension Real estate that is treated as community property under the laws of the state where the property is located. Federal tax extension Separate income 1,2 is income from: Separate property which belongs to the spouse (or registered domestic partner) who owns the property. Federal tax extension 1In Idaho, Louisiana, Texas, and Wisconsin, income from most separate property is community income. Federal tax extension 2Check your state law if you are separated but do not meet the conditions discussed in Spouses living apart all year , later. Federal tax extension In some states, the income you earn after you are separated and before a divorce decree is issued continues to be community income. Federal tax extension In other states, it is separate income. Federal tax extension 3Under special rules, income that can otherwise be characterized as community income may not be treated as community income for federal income tax purposes in certain situations. Federal tax extension See Community Property Laws Disregarded , later. Federal tax extension Identifying Income, Deductions, and Credits If you file separate returns, you and your spouse (or your registered domestic partner) each must attach your Form 8958 to your Form 1040 to identify your community and separate income, deductions, credits, and other return amounts according to the laws of your state. Federal tax extension Under special rules, income that can otherwise be characterized as community income may not be treated as community income for federal income tax purposes in certain situations. Federal tax extension See Community Property Laws Disregarded, later. Federal tax extension Check your state law if you are separated but do not meet the conditions discussed in Spouses living apart all year, later. Federal tax extension In some states, the income you earn after you are separated and before a divorce decree is issued continues to be community income. Federal tax extension In other states, it is separate income. Federal tax extension Income The following is a discussion of the general effect of community property laws on the federal income tax treatment of certain items of income. Federal tax extension Wages, earnings, and profits. Federal tax extension    A spouse's (or your registered domestic partner's) wages, earnings, and net profits from a sole proprietorship are community income and must be evenly split. Federal tax extension Dividends, interest, and rents. Federal tax extension    Dividends, interest, and rents from community property are community income and must be evenly split. Federal tax extension Dividends, interest, and rents from separate property are characterized in accordance with the discussion under Income from separate property , later. Federal tax extension Example. Federal tax extension If you and your spouse (or your registered domestic partner) buy a bond that is considered community property under your state laws, half the bond interest belongs to you and half belongs to your spouse. Federal tax extension You each must show the bond interest and the split of that interest on your Form 8958, and report half the interest on your Form 1040. Federal tax extension Attach your Form 8958 to your Form 1040. Federal tax extension Alimony received. Federal tax extension    Alimony or separate maintenance payments made prior to divorce are taxable to the payee spouse only to the extent they exceed 50% (his or her share) of the reportable community income. Federal tax extension This is so because the payee spouse is already required to report half of the community income. Federal tax extension See also Alimony paid , later. Federal tax extension Gains and losses. Federal tax extension    Gains and losses are classified as separate or community depending on how the property is held. Federal tax extension For example, a loss on separate property, such as stock held separately, is a separate loss. Federal tax extension On the other hand, a loss on community property, such as a casualty loss to your home held as community property, is a community loss. Federal tax extension See Publication 544, Sales and Other Dispositions of Assets, for information on gains and losses. Federal tax extension See Publication 547, Casualties, Disasters, and Thefts, for information on losses due to a casualty or theft. Federal tax extension Withdrawals from individual retirement arrangements (IRAs) and Coverdell Education Savings Accounts (ESAs). Federal tax extension    There are several kinds of individual retirement arrangements (IRAs). Federal tax extension They are traditional IRAs (including SEP-IRAs), SIMPLE IRAs, and Roth IRAs. Federal tax extension IRAs and ESAs by law are deemed to be separate property. Federal tax extension Therefore, taxable IRA and ESA distributions are separate property, even if the funds in the account would otherwise be community property. Federal tax extension These distributions are wholly taxable to the spouse (or registered domestic partner) whose name is on the account. Federal tax extension That spouse (or registered domestic partner) is also liable for any penalties and additional taxes on the distributions. Federal tax extension Pensions. Federal tax extension    Generally, distributions from pensions will be characterized as community or separate income depending on the respective periods of participation in the pension while married (or during the registered domestic partnership) and domiciled in a community property state or in a noncommunity property state during the total period of participation in the pension. Federal tax extension See the example under Civil service retirement , later. Federal tax extension These rules may vary between states. Federal tax extension Check your state law. Federal tax extension Lump-sum distributions. Federal tax extension    If you were born before January 2, 1936, and receive a lump-sum distribution from a qualified retirement plan, you may be able to choose an optional method of figuring the tax on the distribution. Federal tax extension For the 10-year tax option, you must disregard community property laws. Federal tax extension For more information, see Publication 575, Pension and Annuity Income, and Form 4972, Tax on Lump-Sum Distributions. Federal tax extension Civil service retirement. Federal tax extension    For income tax purposes, community property laws apply to annuities payable under the Civil Service Retirement Act (CSRS) or Federal Employee Retirement System (FERS). Federal tax extension   Whether a civil service annuity is separate or community income depends on your marital status (or your status as a registered domestic partner) and domicile of the employee when the services were performed for which the annuity is paid. Federal tax extension Even if you now live in a noncommunity property state and you receive a civil service annuity, it may be community income if it is based on services you performed while married (or during the registered domestic partnership) and domiciled in a community property state. Federal tax extension   If a civil service annuity is a mixture of community income and separate income, it must be divided between the two kinds of income. Federal tax extension The division is based on the employee's domicile and marital status (or registered domestic partnership) in community and noncommunity property states during his or her periods of service. Federal tax extension Example. Federal tax extension Henry Wright retired this year after 30 years of civil service. Federal tax extension He and his wife were domiciled in a community property state during the past 15 years. Federal tax extension Since half the service was performed while the Wrights were married and domiciled in a community property state, half the civil service retirement pay is considered to be community income. Federal tax extension If Mr. Federal tax extension Wright receives $1,000 a month in retirement pay, $500 is considered community income—half ($250) is his income and half ($250) is his wife's. Federal tax extension Military retirement pay. Federal tax extension    State community property laws apply to military retirement pay. Federal tax extension Generally, the pay is either separate or community income based on the marital status and domicile of the couple while the member of the Armed Forces was in active military service. Federal tax extension For example, military retirement pay for services performed during marriage and domicile in a community property state is community income. Federal tax extension   Active military pay earned while married and domiciled in a community property state is also community income. Federal tax extension This income is considered to be received half by the member of the Armed Forces and half by the spouse. Federal tax extension Partnership income. Federal tax extension    If an interest is held in a partnership, and income from the partnership is attributable to the efforts of either spouse (or registered domestic partner), the partnership income is community property. Federal tax extension If it is merely a passive investment in a separate property partnership, the partnership income will be characterized in accordance with the discussion under Income from separate property , later. Federal tax extension Tax-exempt income. Federal tax extension    For spouses, community income exempt from federal tax generally keeps its exempt status for both spouses. Federal tax extension For example, under certain circumstances, income earned outside the United States is tax exempt. Federal tax extension If you earned income and met the conditions that made it exempt, the income is also exempt for your spouse even though he or she may not have met the conditions. Federal tax extension Registered domestic partners should consult the particular exclusion provision to see if the exempt status applies to both. Federal tax extension Income from separate property. Federal tax extension    In some states, income from separate property is separate income. Federal tax extension These states include Arizona, California, Nevada, New Mexico, and Washington. Federal tax extension Other states characterize income from separate property as community income. Federal tax extension These states include Idaho, Louisiana, Texas, and Wisconsin. Federal tax extension Exemptions When you file separate returns, you must claim your own exemption amount for that year. Federal tax extension (See your tax return instructions. Federal tax extension ) You cannot divide the amount allowed as an exemption for a dependent between you and your spouse (or your registered domestic partner). Federal tax extension When community funds provide support for more than one person, each of whom otherwise qualifies as a dependent, you and your spouse (or your registered domestic partner) may divide the number of dependency exemptions as explained in the following example. Federal tax extension Example. Federal tax extension Ron and Diane White have three dependent children and live in Nevada. Federal tax extension If Ron and Diane file separately, only Ron can claim his own exemption, and only Diane can claim her own exemption. Federal tax extension Ron and Diane can agree that one of them will claim the exemption for one, two, or all of their children and the other will claim any remaining exemptions. Federal tax extension They cannot each claim half of the total exemption amount for their three children. Federal tax extension Deductions If you file separate returns, your deductions generally depend on whether the expenses involve community or separate income. Federal tax extension Business and investment expenses. Federal tax extension    If you file separate returns, expenses incurred to earn or produce community business or investment income are generally divided equally between you and your spouse (or your registered domestic partner). Federal tax extension Each of you is entitled to deduct one-half of the expenses on your separate returns. Federal tax extension Expenses incurred by a spouse (or registered domestic partner) to produce separate business or investment income is deductible by the spouse (or the registered domestic partner) who earns the corresponding separate business or investment income. Federal tax extension    Other limits may also apply to business and investment expenses. Federal tax extension For more information, see Publication 535, Business Expenses, and Publication 550, Investment Income and Expenses. Federal tax extension Alimony paid. Federal tax extension    Payments that may otherwise qualify as alimony are not deductible by the payer if they are the recipient spouse's part of community income. Federal tax extension They are deductible as alimony only to the extent they are more than that spouse's part of community income. Federal tax extension Example. Federal tax extension You live in a community property state. Federal tax extension You are separated but the special rules explained later under Spouses living apart all year do not apply. Federal tax extension Under a written agreement, you pay your spouse $12,000 of your $20,000 total yearly community income. Federal tax extension Your spouse receives no other community income. Federal tax extension Under your state law, earnings of a spouse living separately and apart from the other spouse continue as community property. Federal tax extension On your separate returns, each of you must report $10,000 of the total community income. Federal tax extension In addition, your spouse must report $2,000 as alimony received. Federal tax extension You can deduct $2,000 as alimony paid. Federal tax extension IRA deduction. Federal tax extension    Deductions for IRA contributions cannot be split between spouses (or registered domestic partners). Federal tax extension The deduction for each spouse (or each registered domestic partner) is figured separately and without regard to community property laws. Federal tax extension Personal expenses. Federal tax extension   Expenses that are paid out of separate funds, such as medical expenses, are deductible by the spouse who pays them. Federal tax extension If these expenses are paid from community funds, divide the deduction equally between you and your spouse. Federal tax extension Credits, Taxes, and Payments The following is a discussion of the general effect of community property laws on the treatment of certain credits, taxes, and payments on your separate return. Federal tax extension Child tax credit. Federal tax extension    You may be entitled to a child tax credit for each of your qualifying children. Federal tax extension You must provide the name and identification number (usually the social security number) of each qualifying child on your return. Federal tax extension See your tax return instructions for the maximum amount of the credit you can claim for each qualifying child. Federal tax extension Limit on credit. Federal tax extension    The credit is limited if your modified adjusted gross income (modified AGI) is above a certain amount. Federal tax extension The amount at which the limitation (phaseout) begins depends on your filing status. Federal tax extension Generally, your credit is limited to your tax liability unless you have three or more qualifying children. Federal tax extension See your tax return instructions for more information. Federal tax extension Self-employment tax. Federal tax extension    For the effect of community property laws on the income tax treatment of income from a sole proprietorship and partnerships, see Wages, earnings, and profits and Partnership income , earlier. Federal tax extension The following rules only apply to persons married for federal tax purposes. Federal tax extension Registered domestic partners report community income for self-employment tax purposes the same way they do for income tax purposes. Federal tax extension Sole proprietorship. Federal tax extension    With regard to net income from a trade or business (other than a partnership) that is community income, self-employment tax is imposed on the spouse carrying on the trade or business. Federal tax extension Partnerships. Federal tax extension    All of the distributive share of a married partner's income or loss from a partnership trade or business is attributable to the partner for computing any self-employment tax, even if a portion of the partner's distributive share of income or loss is community income or loss that is otherwise attributable to the partner's spouse for income tax purposes. Federal tax extension If both spouses are partners, any self-employment tax is allocated based on their distributive shares. Federal tax extension Federal income tax withheld. Federal tax extension    Report the credit for federal income tax withheld on community wages in the same manner as your wages. Federal tax extension If you and your spouse file separate returns on which each of you reports half the community wages, each of you is entitled to credit for half the income tax withheld on those wages. Federal tax extension Likewise, each registered domestic partner is entitled to credit for half the income tax withheld on those wages. Federal tax extension Estimated tax payments. Federal tax extension    In determining whether you must pay estimated tax, apply the estimated tax rules to your estimated income. Federal tax extension These rules are explained in Publication 505. Federal tax extension   If you think you may owe estimated tax and want to pay the tax separately (registered domestic partners must pay the tax separately), determine whether you must pay it by taking into account: Half the community income and deductions, All of your separate income and deductions, and Your own exemption and any exemptions for dependents that you may claim. Federal tax extension   Whether you and your spouse pay estimated tax jointly or separately will not affect your choice of filing joint or separate income tax returns. Federal tax extension   If you and your spouse paid estimated tax jointly but file separate income tax returns, either of you can claim all of the estimated tax paid, or you may divide it between you in any way that you agree upon. Federal tax extension   If you cannot agree on how to divide it, the estimated tax you can claim equals the total estimated tax paid times the tax shown on your separate return, divided by the total of the tax shown on your return and your spouse's return. Federal tax extension   If you paid your estimated taxes separately, you get credit for only the estimated taxes you paid. Federal tax extension Earned income credit. Federal tax extension    You may be entitled to an earned income credit (EIC). Federal tax extension You cannot claim this credit if your filing status is married filing separately. Federal tax extension   If you are married, but qualify to file as head of household under rules for married taxpayers living apart (see Publication 501, Exemptions, Standard Deduction, and Filing Information), and live in a state that has community property laws, your earned income for the EIC does not include any amount earned by your spouse that is treated as belonging to you under community property laws. Federal tax extension That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. Federal tax extension Your earned income includes the entire amount you earned, even if part of it is treated as belonging to your spouse under your state's community property laws. Federal tax extension The same rule applies to registered domestic partners. Federal tax extension    This rule does not apply when determining your adjusted gross income (AGI) for the EIC. Federal tax extension Your AGI includes that part of both your and your spouse's (or your registered domestic partner's) wages that you are required to include in gross income shown on your tax return. Federal tax extension   For more information about the EIC, see Publication 596, Earned Income Credit (EIC). Federal tax extension Overpayments. Federal tax extension    The amount of an overpayment on a joint return is allocated under the community property laws of the state in which you are domiciled. Federal tax extension If, under the laws of your state, community property is subject to premarital or other separate debts of either spouse, the full joint overpayment may be used to offset the obligation. Federal tax extension If, under the laws of your state, community property is not subject to premarital or other separate debts of either spouse, only the portion of the joint overpayment allocated to the spouse liable for the obligation can be used to offset that liability. Federal tax extension The portion allocated to the other spouse can be refunded. Federal tax extension Community Property Laws Disregarded The following discussions are situations where special rules apply to community property and community income for spouses. Federal tax extension These rules do not apply to registered domestic partners. Federal tax extension Certain community income not treated as community income by one spouse. Federal tax extension    Community property laws may not apply to an item of community income that you received but did not treat as community income. Federal tax extension You are responsible for reporting all of that income item if: You treat the item as if only you are entitled to the income, and You do not notify your spouse of the nature and amount of the income by the due date for filing the return (including extensions). Federal tax extension Relief from liability arising from community property law. Federal tax extension    You are not responsible for the tax relating to an item of community income if all the following conditions are met. Federal tax extension You did not file a joint return for the tax year. Federal tax extension You did not include an item of community income in gross income. Federal tax extension The item of community income you did not include is one of the following: Wages, salaries, and other compensation your spouse (or former spouse) received for services he or she performed as an employee. Federal tax extension Income your spouse (or former spouse) derived from a trade or business he or she operated as a sole proprietor. Federal tax extension Your spouse's (or former spouse's) distributive share of partnership income. Federal tax extension Income from your spouse's (or former spouse's) separate property (other than income described in (a), (b), or (c)). Federal tax extension Use the appropriate community property law to determine what is separate property. Federal tax extension Any other income that belongs to your spouse (or former spouse) under community property law. Federal tax extension You establish that you did not know of, and had no reason to know of, that community income. Federal tax extension Under all facts and circumstances, it would not be fair to include the item of community income in your gross income. Federal tax extension Requesting relief. Federal tax extension    For information on how and when to request relief from liabilities arising from community property laws, see Community Property Laws in Publication 971, Innocent Spouse Relief. Federal tax extension Equitable relief. Federal tax extension    If you do not qualify for the relief discussed earlier under Relief from liability arising from community property law and are now liable for an underpaid or understated tax you believe should be paid only by your spouse (or former spouse), you may request equitable relief. Federal tax extension To request equitable relief, you must file Form 8857, Request for Innocent Spouse Relief. Federal tax extension Also see Publication 971. Federal tax extension Spousal agreements. Federal tax extension    In some states a married couple may enter into an agreement that affects the status of property or income as community or separate property. Federal tax extension Check your state law to determine how it affects you. Federal tax extension Nonresident alien spouse. Federal tax extension    If you are a U. Federal tax extension S. Federal tax extension citizen or resident alien and you choose to treat your nonresident alien spouse as a U. Federal tax extension S. Federal tax extension resident for tax purposes and you are domiciled in a community property state or country, use the community property rules. Federal tax extension You must file a joint return for the year you make the choice. Federal tax extension You can file separate returns in later years. Federal tax extension For details on making this choice, see Publication 519, U. Federal tax extension S. Federal tax extension Tax Guide for Aliens. Federal tax extension   If you are a U. Federal tax extension S. Federal tax extension citizen or resident alien and do not choose to treat your nonresident alien spouse as a U. Federal tax extension S. Federal tax extension resident for tax purposes, treat your community income as explained next under Spouses living apart all year. Federal tax extension However, you do not have to meet the four conditions discussed there. Federal tax extension Spouses living apart all year. Federal tax extension    If you are married at any time during the calendar year, special rules apply for reporting certain community income. Federal tax extension You must meet all the following conditions for these special rules to apply. Federal tax extension You and your spouse lived apart all year. Federal tax extension You and your spouse did not file a joint return for a tax year beginning or ending in the calendar year. Federal tax extension You and/or your spouse had earned income for the calendar year that is community income. Federal tax extension You and your spouse have not transferred, directly or indirectly, any of the earned income in condition (3) above between yourselves before the end of the year. Federal tax extension Do not take into account transfers satisfying child support obligations or transfers of very small amounts or value. Federal tax extension If all these conditions are met, you and your spouse must report your community income as discussed next. Federal tax extension See also Certain community income not treated as community income by one spouse , earlier. Federal tax extension Earned income. Federal tax extension    Treat earned income that is not trade or business or partnership income as the income of the spouse who performed the services to earn the income. Federal tax extension Earned income is wages, salaries, professional fees, and other pay for personal services. Federal tax extension   Earned income does not include amounts paid by a corporation that are a distribution of earnings and profits rather than a reasonable allowance for personal services rendered. Federal tax extension Trade or business income. Federal tax extension    Treat income and related deductions from a trade or business that is not a partnership as those of the spouse carrying on the trade or business. Federal tax extension Partnership income or loss. Federal tax extension    Treat income or loss from a trade or business carried on by a partnership as the income or loss of the spouse who is the partner. Federal tax extension Separate property income. Federal tax extension    Treat income from the separate property of one spouse as the income of that spouse. Federal tax extension Social security benefits. Federal tax extension    Treat social security and equivalent railroad retirement benefits as the income of the spouse who receives the benefits. Federal tax extension Other income. Federal tax extension    Treat all other community income, such as dividends, interest, rents, royalties, or gains, as provided under your state's community property law. Federal tax extension Example. Federal tax extension George and Sharon were married throughout the year but did not live together at any time during the year. Federal tax extension Both domiciles were in a community property state. Federal tax extension They did not file a joint return or transfer any of their earned income between themselves. Federal tax extension During the year their incomes were as follows:   George Sharon Wages $20,000 $22,000 Consulting business 5,000   Partnership   10,000 Dividends from separate property 1,000 2,000 Interest from community property 500 500 Total $26,500 $34,500 Under the community property law of their state, all the income is considered community income. Federal tax extension (Some states treat income from separate property as separate income—check your state law. Federal tax extension ) Sharon did not take part in George's consulting business. Federal tax extension Ordinarily, on their separate returns they would each report $30,500, half the total community income of $61,000 ($26,500 + $34,500). Federal tax extension But because they meet the four conditions listed earlier under Spouses living apart all year , they must disregard community property law in reporting all their income (except the interest income) from community property. Federal tax extension They each report on their returns only their own earnings and other income, and their share of the interest income from community property. Federal tax extension George reports $26,500 and Sharon reports $34,500. Federal tax extension Other separated spouses. Federal tax extension    If you and your spouse are separated but do not meet the four conditions discussed earlier under Spouses living apart all year , you must treat your income according to the laws of your state. Federal tax extension In some states, income earned after separation but before a decree of divorce continues to be community income. Federal tax extension In other states, it is separate income. Federal tax extension End of the Community The marital community may end in several ways. Federal tax extension When the marital community ends, the community assets (money and property) are divided between the spouses. Federal tax extension Similarly, a registered domestic partnership may end in several ways and the community assets must be divided between the registered domestic partners. Federal tax extension Death of spouse. Federal tax extension    If you own community property and your spouse dies, the total fair market value (FMV) of the community property, including the part that belongs to you, generally becomes the basis of the entire property. Federal tax extension For this rule to apply, at least half the value of the community property interest must be includible in your spouse's gross estate, whether or not the estate must file a return (this rule does not apply to registered domestic partners). Federal tax extension Example. Federal tax extension Bob and Ann owned community property that had a basis of $80,000. Federal tax extension When Bob died, his and Ann's community property had an FMV of $100,000. Federal tax extension One-half of the FMV of their community interest was includible in Bob's estate. Federal tax extension The basis of Ann's half of the property is $50,000 after Bob died (half of the $100,000 FMV). Federal tax extension The basis of the other half to Bob's heirs is also $50,000. Federal tax extension   For more information about the basis of assets, see Publication 551, Basis of Assets. Federal tax extension    The above basis rule does not apply if your spouse died in 2010 and the spouse's executor elected out of the estate tax, in which case section 1022 will apply. Federal tax extension See Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, for additional information. Federal tax extension Divorce or separation. Federal tax extension    If spouses divorce or separate, the (equal or unequal) division of community property in connection with the divorce or property settlement does not result in a gain or loss. Federal tax extension For registered domestic partners, an unequal division of community property in a property settlement may result in a gain or loss. Federal tax extension For information on the tax consequences of the division of property under a property settlement or divorce decree, see Publication 504. Federal tax extension   Each spouse (or each registered domestic partner) is taxed on half the community income for the part of the year before the community ends. Federal tax extension However, see Spouses living apart all year , earlier. Federal tax extension Any income received after the community ends is separate income. Federal tax extension This separate income is taxable only to the spouse (or the registered domestic partner) to whom it belongs. Federal tax extension   An absolute decree of divorce or annulment ends the marital community in all community property states. Federal tax extension A decree of annulment, even though it holds that no valid marriage ever existed, usually does not nullify community property rights arising during the “marriage. Federal tax extension ” However, you should check your state law for exceptions. Federal tax extension   A decree of legal separation or of separate maintenance may or may not end the marital community. Federal tax extension The court issuing the decree may terminate the marital community and divide the property between the spouses. Federal tax extension   A separation agreement may divide the community property between you and your spouse. Federal tax extension It may provide that this property, along with future earnings and property acquired, will be separate property. Federal tax extension This agreement may end the community. Federal tax extension   In some states, the marital community ends when the spouses permanently separate, even if there is no formal agreement. Federal tax extension Check your state law. Federal tax extension   If you are a registered domestic partner, you should check your state law to determine when the community ends. Federal tax extension Preparing a Federal Income Tax Return The following discussion does not apply to spouses who meet the conditions under Spouses living apart all year , discussed earlier. Federal tax extension Those spouses must report their community income as explained in that discussion. Federal tax extension Joint Return Versus Separate Returns Ordinarily, filing a joint return will give you a greater tax advantage than filing a separate return. Federal tax extension But in some cases, your combined income tax on separate returns may be less than it would be on a joint return. Federal tax extension This discussion concerning joint versus separate returns does not apply to registered domestic partners. Federal tax extension The following rules apply if your filing status is married filing separately. Federal tax extension You should itemize deductions if your spouse itemizes deductions, because you cannot claim the standard deduction. Federal tax extension You cannot take the credit for child and dependent care expenses in most instances. Federal tax extension You cannot take the earned income credit. Federal tax extension You cannot exclude any interest income from qualified U. Federal tax extension S. Federal tax extension savings bonds that you used for higher education expenses. Federal tax extension You cannot take the credit for the elderly or the disabled unless you lived apart from your spouse all year. Federal tax extension You may have to include in income more of any social security benefits (including any equivalent railroad retirement benefits) you received during the year than you would on a joint return. Federal tax extension You cannot deduct interest paid on a qualified student loan. Federal tax extension You cannot take the education credits. Federal tax extension You may have a smaller child tax credit than you would on a joint return. Federal tax extension You cannot take the exclusion or credit for adoption expenses in most instances. Federal tax extension Figure your tax both on a joint return and on separate returns under the community property laws of your state. Federal tax extension You can then compare the tax figured under both methods and use the one that results in less tax. Federal tax extension Separate Return Preparation If you file separate returns, you and your spouse must each report half of your combined community income and deductions in addition to your separate income and deductions. Federal tax extension Each of you must complete and attach Form 8958 to your Form 1040 showing how you figured the amount you are reporting on your return. Federal tax extension On the appropriate lines of your separate Form 1040, list only your share of the income and deductions on the appropriate lines of your separate tax returns (wages, interest, dividends, etc. Federal tax extension ). Federal tax extension The same reporting rule applies to registered domestic partners. Federal tax extension For a discussion of the effect of community property laws on certain items of income, deductions, credits, and other return amounts, see Identifying Income, Deductions, and Credits , earlier. Federal tax extension Attach your Form 8958 to your separate return showing how you figured the income, deductions, and federal income tax withheld that each of you reported. Federal tax extension Form 8958 is used for married spouses in community property states who choose to file married filing separately. Federal tax extension Form 8958 is also used for registered domestic partners who are domiciled in Nevada, Washington, or California. Federal tax extension A registered domestic partner in Nevada, Washington, or California must follow state community property laws and report half the combined community income of the individual and his or her registered domestic partner. Federal tax extension Extension of time to file. Federal tax extension    An extension of time for filing your separate return does not extend the time for filing your spouse's (or your registered domestic partner's) separate return. Federal tax extension If you and your spouse file a joint return, you cannot file separate returns after the due date for filing either separate return has passed. Federal tax extension How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Federal tax extension Free help with your tax return. Federal tax extension    You can get free help preparing your return nationwide from IRS-certified volunteers. Federal tax extension The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Federal tax extension The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Federal tax extension Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Federal tax extension In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Federal tax extension To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Federal tax extension gov, download the IRS2Go app, or call 1-800-906-9887. Federal tax extension   As part of the TCE program, AARP offers the Tax-Aide counseling program. Federal tax extension To find the nearest AARP Tax-Aide site, visit AARP's website at www. Federal tax extension aarp. Federal tax extension org/money/taxaide or call 1-888-227-7669. Federal tax extension For more information on these programs, go to IRS. Federal tax extension gov and enter “VITA” in the search box. Federal tax extension Internet. Federal tax extension    IRS. Federal tax extension gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Federal tax extension Download the free IRS2Go app from the iTunes app store or from Google Play. Federal tax extension Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Federal tax extension Check the status of your 2013 refund with the Where's My Refund? application on IRS. Federal tax extension gov or download the IRS2Go app and select the Refund Status option. Federal tax extension The IRS issues more than 9 out of 10 refunds in less than 21 days. Federal tax extension Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Federal tax extension You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Federal tax extension The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Federal tax extension Use the Interactive Tax Assistant (ITA) to research your tax questions. Federal tax extension No need to wait on the phone or stand in line. Federal tax extension The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Federal tax extension When you reach the response screen, you can print the entire interview and the final response for your records. Federal tax extension New subject areas are added on a regular basis. Federal tax extension  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Federal tax extension gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Federal tax extension You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Federal tax extension The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Federal tax extension When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Federal tax extension Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Federal tax extension You can also ask the IRS to mail a return or an account transcript to you. Federal tax extension Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Federal tax extension gov or by calling 1-800-908-9946. Federal tax extension Tax return and tax account transcripts are generally available for the current year and the past three years. Federal tax extension Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Federal tax extension Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Federal tax extension If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Federal tax extension Check the status of your amended return using Where's My Amended Return? Go to IRS. Federal tax extension gov and enter Where's My Amended Return? in the search box. Federal tax extension You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Federal tax extension It can take up to 3 weeks from the date you mailed it to show up in our system. Federal tax extension Make a payment using one of several safe and convenient electronic payment options available on IRS. Federal tax extension gov. Federal tax extension Select the Payment tab on the front page of IRS. Federal tax extension gov for more information. Federal tax extension Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Federal tax extension Figure your income tax withholding with the IRS Withholding Calculator on IRS. Federal tax extension gov. Federal tax extension Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Federal tax extension Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Federal tax extension gov. Federal tax extension Request an Electronic Filing PIN by going to IRS. Federal tax extension gov and entering Electronic Filing PIN in the search box. Federal tax extension Download forms, instructions and publications, including accessible versions for people with disabilities. Federal tax extension Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Federal tax extension gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Federal tax extension An employee can answer questions about your tax account or help you set up a payment plan. Federal tax extension Before you visit, check the Office Locator on IRS. Federal tax extension gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Federal tax extension If you have a special need, such as a disability, you can request an appointment. Federal tax extension Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Federal tax extension Apply for an Employer Identification Number (EIN). Federal tax extension Go to IRS. Federal tax extension gov and enter Apply for an EIN in the search box. Federal tax extension Read the Internal Revenue Code, regulations, or other official guidance. Federal tax extension Read Internal Revenue Bulletins. Federal tax extension Sign up to receive local and national tax news and more by email. Federal tax extension Just click on “subscriptions” above the search box on IRS. Federal tax extension gov and choose from a variety of options. Federal tax extension    Phone. Federal tax extension You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Federal tax extension Download the free IRS2Go app from the iTunes app store or from Google Play. Federal tax extension Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Federal tax extension gov, or download the IRS2Go app. Federal tax extension Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Federal tax extension The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Federal tax extension Most VITA and TCE sites offer free electronic filing. Federal tax extension Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Federal tax extension Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Federal tax extension Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. Federal tax extension If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Federal tax extension The IRS issues more than 9 out of 10 refunds in less than 21 days. Federal tax extension Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Federal tax extension Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. Federal tax extension The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Federal tax extension Note, the above information is for our automated hotline. Federal tax extension Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. Federal tax extension Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Federal tax extension You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Federal tax extension It can take up to 3 weeks from the date you mailed it to show up in our system. Federal tax extension Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). Federal tax extension You should receive your order within 10 business days. Federal tax extension Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. Federal tax extension If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. Federal tax extension Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Federal tax extension The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Federal tax extension These individuals can also contact the IRS through relay services such as the Federal Relay Service. Federal tax extension    Walk-in. Federal tax extension You can find a selection of forms, publications and services — in-person. Federal tax extension Products. Federal tax extension You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Federal tax extension Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Federal tax extension Services. Federal tax extension You can walk in to your local TAC for face-to-face tax help. Federal tax extension An employee can answer questions about your tax account or help you set up a payment plan. Federal tax extension Before visiting, use the Office Locator tool on IRS. Federal tax extension gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. Federal tax extension    Mail. Federal tax extension You can send your order for forms, instructions, and publications to the address below. Federal tax extension You should receive a response within 10 business days after your request is received. Federal tax extension Internal Revenue Service 1201 N. Federal tax extension Mitsubishi Motorway Bloomington, IL 61705-6613   The Taxpayer Advocate Service Is Here to Help You. Federal tax extension The Taxpayer Advocate Service (TAS) is your voice at the IRS. Federal tax extension Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Federal tax extension   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. Federal tax extension We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Federal tax extension You face (or your business is facing) an immediate threat of adverse action. Federal tax extension You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Federal tax extension   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Federal tax extension Here's why we can help: TAS is an independent organization within the IRS. Federal tax extension Our advocates know how to work with the IRS. Federal tax extension Our services are free and tailored to meet your needs. Federal tax extension We have offices in every state, the District of Columbia, and Puerto Rico. Federal tax extension   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. Federal tax extension irs. Federal tax extension gov/advocate, or call us toll-free at 1-877-777-4778. Federal tax extension   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Federal tax extension If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Federal tax extension irs. Federal tax extension gov/sams. Federal tax extension Low Income Taxpayer Clinics Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. Federal tax extension Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Federal tax extension Visit www. Federal tax extension irs. Federal tax extension gov/litc or see IRS Publication 4134, Low Income Taxpayer Clinic List. Federal tax extension Prev  Up  Next   Home   More Online Publications
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The Federal Tax Extension

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