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Free file gov 35. Free file gov   Education Credits Table of Contents Introduction Useful Items - You may want to see: Who Can Claim an Education Credit Qualified Education ExpensesNo Double Benefit Allowed Adjustments to Qualified Education Expenses Introduction For 2013, there are two tax credits available to persons who pay expenses for higher (postsecondary) education. Free file gov They are: The American opportunity credit, and The lifetime learning credit. Free file gov The chapter will present an overview of these education credits. Free file gov To get the detailed information you will need to claim either of the credits, and for examples illustrating that information, see chapters 2 and 3 of Publication 970. Free file gov Can you claim more than one education credit this year?   For each student, you can choose for any year only one of the credits. Free file gov For example, if you choose to take the American opportunity credit for a child on your 2013 tax return, you cannot, for that same child, also claim the lifetime learning credit for 2013. Free file gov   If you are eligible to claim the American opportunity credit and you are also eligible to claim the lifetime learning credit for the same student in the same year, you can choose to claim either credit, but not both. Free file gov   If you pay qualified education expenses for more than one student in the same year, you can choose to take the American opportunity and the lifetime learning credits on a per-student, per-year basis. Free file gov This means that, for example, you can claim the American opportunity credit for one student and the lifetime learning credit for another student in the same year. Free file gov Table 35-1. Free file gov Comparison of Education Credits Caution. Free file gov You can claim both the American opportunity credit and the lifetime learning credit on the same return—but not for the same student. Free file gov   American Opportunity Credit Lifetime Learning Credit Maximum credit Up to $2,500 credit per eligible student Up to $2,000 credit per return Limit on modified adjusted gross income (MAGI) $180,000 if married filing jointly;  $90,000 if single, head of household, or qualifying widow(er) $127,000 if married filing jointly;  $63,000 if single, head of household, or qualifying widow(er) Refundable or nonrefundable 40% of credit may be refundable Credit limited to the amount of tax you must pay on your taxable income Number of years of postsecondary education Available ONLY if the student had not completed the first 4 years of postsecondary education before 2013 Available for all years of postsecondary education and for courses to acquire or improve job skills Number of tax years credit available Available ONLY for 4 tax years per eligible student (including any year(s) the Hope credit was claimed) Available for an unlimited number of years Type of program required Student must be pursuing a program leading to a degree or other recognized education credential Student does not need to be pursuing a program leading to a degree or other recognized education credential Number of courses Student must be enrolled at least half time for at least one academic period beginning during the tax year Available for one or more courses Felony drug conviction At the end of 2013, the student had not been convicted of a felony for possessing or distributing a controlled substance Felony drug convictions do not make the student ineligible Qualified expenses Tuition, required enrollment fees, and course materials that the student needs for a course of study whether or not the materials are bought at the educational institution as a condition of enrollment or attendance Tuition and fees required for enrollment or attendance (including amounts required to be paid to the institution for course-related books, supplies, and equipment) Payments for academic periods Payments made in 2013 for academic periods beginning in 2013 or beginning in the first 3 months of 2014 Differences between the American opportunity and lifetime learning credits. Free file gov   There are several differences between these two credits. Free file gov These differences are summarized in Table 35-1, later. Free file gov Useful Items - You may want to see: Publication 970 Tax Benefits for Education Form (and Instructions) 8863 Education Credits (American Opportunity and Lifetime Learning Credits) Who Can Claim an Education Credit You may be able to claim an education credit if you, your spouse, or a dependent you claim on your tax return was a student enrolled at or attending an eligible educational institution. Free file gov The credits are based on the amount of qualified education expenses paid for the student in 2013 for academic periods beginning in 2013 and in the first 3 months of 2014. Free file gov For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning in January 2014, you may be able to use that $1,500 in figuring your 2013 education credit(s). Free file gov Academic period. Free file gov   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. Free file gov 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. Free file gov Eligible educational institution. Free file gov   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. Free file gov S. Free file gov Department of Education. Free file gov It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Free file gov The educational institution should be able to tell you if it is an eligible educational institution. Free file gov   Certain educational institutions located outside the United States also participate in the U. Free file gov S. Free file gov Department of Education's Federal Student Aid (FSA) programs. Free file gov Who can claim a dependent's expenses. Free file gov   If an exemption is allowed as a deduction for any person who claims the student as a dependent, all qualified education expenses of the student are treated as having been paid by that person. Free file gov Therefore, only that person can claim an education credit for the student. Free file gov If a student is not claimed as a dependent on another person's tax return, only the student can claim a credit. Free file gov Expenses paid by a third party. Free file gov   Qualified education expenses paid on behalf of the student by someone other than the student (such as a relative) are treated as paid by the student. Free file gov However, qualified education expenses paid (or treated as paid) by a student who is claimed as a dependent on your tax return are treated as paid by you. Free file gov Therefore, you are treated as having paid expenses that were paid by the third party. Free file gov For more information and an example see Who Can Claim a Dependent's Expenses in Pub. Free file gov 970, chapter 2 or 3. Free file gov Who cannot claim a credit. Free file gov   You cannot take an education credit if any of the following apply. Free file gov You are claimed as a dependent on another person's tax return, such as your parent's return. Free file gov Your filing status is married filing separately. Free file gov You (or your spouse) were a nonresident alien for any part of 2013 and did not elect to be treated as a resident alien for tax purposes. Free file gov Your MAGI is one of the following. Free file gov American opportunity credit: $180,000 or more if married filing jointly, or $90,000 or more if single, head of household, or qualifying widow(er). Free file gov Lifetime learning credit: $127,000 or more if married filing jointly, or $63,000 or more if single, head of household, or qualifying widow(er) . Free file gov   Generally, your MAGI is the amount on your Form 1040, line 38, or Form 1040A, line 22. Free file gov However, if you are filing Form 2555, Form 2555–EZ, or Form 4563, or are excluding income from Puerto RIco, add to the amount on your Form 1040, line 38, or Form 1040A, line 22, the amount of income you excluded. Free file gov For details, see Pub. Free file gov 970. Free file gov    Figure 35-A may be helpful in determining if you can claim an education credit on your tax return. Free file gov The American opportunity credit will always be greater than or equal to the lifetime learning credit for any student who is eligible for both credits. Free file gov However, if any of the conditions for the American opportunity credit, listed in Table 35-1 earlier, are not met for any student, you cannot take the American opportunity credit for that student. Free file gov You may be able to take the lifetime learning credit for part or all of that student's qualified education expenses instead. Free file gov See Pub. Free file gov 970 for information on other education benefits. Free file gov Qualified Education Expenses Generally, qualified education expenses are amounts paid in 2013 for tuition and fees required for the student's enrollment or attendance at an eligible educational institution. Free file gov It does not matter whether the expenses were paid in cash, by check, by credit or debit card, or with borrowed funds. Free file gov For course-related books, supplies, and equipment, only certain expenses qualify. Free file gov American opportunity credit: Qualified education expenses include amounts spent on books, supplies, and equipment needed for a course of study, whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance. Free file gov Lifetime learning credit: Qualified education expenses include amounts for books, supplies, and equipment only if required to be paid to the institution as a condition of enrollment or attendance. Free file gov Qualified education expenses include nonacademic fees, such as student activity fees, athletic fees, or other expenses unrelated to the academic course of instruction, only if the fee must be paid to the institution as a condition of enrollment or attendance. Free file gov However, fees for personal expenses (described below) are never qualified education expenses. Free file gov Qualified education expenses for either credit do not include amounts paid for: Personal expenses. Free file gov This means room and board, insurance, medical expenses (including student health fees), transportation, and other similar personal, living, or family expenses. Free file gov Any course or other education involving sports, games, or hobbies, or any noncredit course, unless such course or other education is part of the student's degree program or (for the lifetime learning credit only) helps the student acquire or improve job skills. Free file gov You should receive Form 1098–T, Tuition Statement, from the institution reporting either payments received in 2013 (box 1) or amounts billed in 2013 (box 2). Free file gov However, the amount in box 1 or 2 of Form 1098–T may be different from the amount you paid (or are treated as having paid). Free file gov In completing Form 8863, use only the amounts you actually paid (plus any amounts you are treated as having paid) in 2013, reduced as necessary, as described in Adjustments to Qualified Education Expenses , later. Free file gov Qualified education expenses paid on behalf of the student by someone other than the student (such as a relative) are treated as paid by the student. Free file gov Qualified education expenses paid (or treated as paid) by a student who is claimed as a dependent on your tax return are treated as paid by you. Free file gov If you or the student takes a deduction for higher education expenses, such as on Schedule A or C (Form 1040), you cannot use those expenses in your qualified education expenses when figuring your education credits. Free file gov Qualified education expenses for any academic period must be reduced by any tax-free educational assistance allocable to that academic period. Free file gov See Adjustments to Qualified Education Expenses, later. Free file gov Prepaid Expenses. Free file gov   Qualified education expenses paid in 2013 for an academic period that begins in the first 3 months of 2014 can be used in figuring an education credit for 2013 only. Free file gov See Academic period , earlier. Free file gov For example, if you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring an education credit for 2013 only (if you meet all the other requirements). Free file gov    You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 education credit(s). Free file gov Paid with borrowed funds. Free file gov   You can claim an education credit for qualified education expenses paid with the proceeds of a loan. Free file gov Use the expenses to figure the credit for the year in which the expenses are paid, not the year in which the loan is repaid. Free file gov Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. Free file gov Student withdraws from class(es). Free file gov   You can claim an education credit for qualified education expenses not refunded when a student withdraws. Free file gov No Double Benefit Allowed You cannot do any of the following. Free file gov Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim an education credit based on those same expenses. Free file gov Claim more than one education credit based on the same qualified education expenses. Free file gov Claim an education credit based on the same expenses used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or qualified tuition program (QTP). Free file gov Claim an education credit based on qualified education expenses paid with educational assistance, such as a tax-free scholarship, grant, or employer-provided educational assistance. Free file gov See Adjustments to Qualified Education Expenses, next. Free file gov Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid in 2013 by or on behalf of that student under the following rules. Free file gov The result is the amount of adjusted qualified education expenses for each student. Free file gov Tax-free educational assistance. Free file gov   For tax-free educational assistance received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period. Free file gov See Academic period , earlier. Free file gov      Tax-free educational assistance includes:    Tax-free parts of scholarships and fellowships (see chapter 12 of this publication and chapter 1 of Pub. Free file gov 970), The tax-free part of Pell grants (see chapter 1 of Pub. Free file gov 970), The tax-free part of employer-provided educational assistance (see Pub. Free file gov 970), Veterans' educational assistance (see chapter 1 of Pub. Free file gov 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Free file gov Generally, any scholarship or fellowship is treated as tax-free educational assistance. Free file gov However, a scholarship or fellowship is not treated as tax-free educational assistance to the extent the student includes it in gross income (if the student is required to file a tax return) for the year the scholarship or fellowship is received and either: The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. Free file gov 970, chapter 1; or The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. Free file gov 970, chapter 1. Free file gov You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the educational assistance in income in the year received. Free file gov For details, see Adjustments of Qualified Education Expenses, in chapters 2 and 3 of Pub. Free file gov 970. Free file gov Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. Free file gov 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). Free file gov 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. Free file gov 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. Free file gov Refunds. Free file gov   A refund of qualified education expenses may reduce qualified education expenses for the tax year or may require you to repay (recapture) the credit that you claimed in an earlier year. Free file gov Some tax-free educational assistance received after 2013 may be treated as a refund. Free file gov See Tax-free educational assistance, earlier. Free file gov Refunds received in 2013. Free file gov   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. Free file gov Refunds received after 2013 but before your income tax return is filed. Free file gov   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is received before you file your 2013 income tax return, reduce the amount of qualified education expenses for 2013 by the amount of the refund. Free file gov Refunds received after 2013 and after your income tax return is filed. Free file gov   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is received after you file your 2013 income tax return, you may need to repay some or all of the credit that you claimed. Free file gov See Credit recapture, next. Free file gov Credit recapture. Free file gov    If any tax-free educational assistance for the qualified education expenses paid in 2013, or any refund of your qualified education expenses paid in 2013, is received after you file your 2013 income tax return, you must recapture (repay) any excess credit. Free file gov You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing the expenses by the amount of the refund or tax-free educational assistance. Free file gov You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you had claimed the refigured credit(s). Free file gov Include that amount as an additional tax for the year the refund or tax-free assistance was received. Free file gov Example. Free file gov    You paid $8,000 tuition and fees in December 2013 for your child's Spring semester beginning in January 2014. Free file gov You filed your 2013 tax return on February 3, 2014, and claimed a lifetime learning credit of $1,600 ($8,000 qualified education expense paid x . Free file gov 20). Free file gov You claimed no other tax credits. Free file gov After you filed your return, your child withdrew from two courses and you received a refund of $1,400. Free file gov You must refigure your 2013 lifetime learning credit using $6,600 ($8,000 qualified education expenses − $1,400 refund). Free file gov The refigured credit is $1,320 and your tax liability increased by $280. Free file gov You must include the difference of $280 ($1,600 credit originally claimed − $1,320 refigured credit) as additional tax on your 2014 income tax return. Free file gov See the instructions for your 2014 income tax return to determine where to include this tax. Free file gov If you also pay qualified education expenses in 2014 for an academic period that begins in the first 3 months of 2014 and you receive tax-free educational assistance, or a refund, as described above, you may choose to reduce your qualified education expenses for 2014 instead of reducing your expenses for 2013. Free file gov Amounts that do not reduce qualified education expenses. Free file gov   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. Free file gov   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. Free file gov The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses, as defined in Chapter 1 of Pub. Free file gov 970. Free file gov The use of the money is not restricted. Free file gov   For examples, see chapter 2 in Pub. Free file gov 970. Free file gov Figure 35-A. Free file gov Can You Claim an Education Credit for 2013? This image is too large to be displayed in the current screen. Free file gov Please click the link to view the image. Free file gov Figure 35-A. Free file gov Can You Claim an Education Credit for 2013? Prev  Up  Next   Home   More Online Publications
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Has your business become the victim of a data security breach?

It is almost impossible to be in business and not collect or hold personally identifying information — names and addresses, Social Security numbers, etc., about your customers, employees or patients. If this information is lost or stolen, it could put these individuals at risk for identity theft

However, not all compromises of personal information result in identity theft.  The type of personal information compromised can significantly affect the degree of potential damage. What steps should you take and whom should you contact if personal information is compromised? Answers vary depending on the situation; however, the following information can help you make smart, sound decisions. Check federal and state laws or regulations for any specific requirements for your business.

Here are three important steps to take when you first realize your business has encountered a data security breach.

  • Notify law enforcement - When the compromise could result in harm to a person or business, call your local police department immediately. Report your situation and the potential risk for identity theft.
  • Notify affected businesses - Information compromises can affect other businesses, such as banks or credit issuers. If names and Social Security numbers have been stolen, you can contact the major credit bureaus for additional information or advice.
  • Notify individuals - Generally, early notification to individuals whose personal information has been compromised allows them to take steps to mitigate the misuse of their information.

Other resources for businesses facing a data security breach.

Identity protection page

 

Page Last Reviewed or Updated: 21-Mar-2014

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Free file gov Publication 972 - Introductory Material Table of Contents Future Developments Reminder IntroductionOrdering forms and publications. Free file gov Tax questions. Free file gov Future Developments For the latest information about developments related to Publication 972, such as legislation enacted after it was published, go to www. Free file gov irs. Free file gov gov/pub972. Free file gov Reminder Photographs of missing children. Free file gov  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Free file gov Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Free file gov You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Free file gov Introduction The purpose of this publication is: To figure the child tax credit you claim on Form 1040, line 51; Form 1040A, line 33; or Form 1040NR, line 48; and To figure the amount of earned income you enter on line 4a of Schedule 8812 (Form 1040A or 1040), Child Tax Credit. Free file gov This publication is intended primarily for individuals sent here by the instructions to Forms 1040, 1040A, or 1040NR, or Schedule 8812. Free file gov Even if you were not sent here by the instructions to one of the forms or the schedule, you can still choose to use this publication to figure your credit. Free file gov However, most individuals can use a simpler worksheet in their tax form instructions. Free file gov If you were sent here from your Form 1040, Form 1040A, or Form 1040NR instructions. Free file gov   Complete the Child Tax Credit Worksheet , later in this publication. Free file gov If you were sent here from your Schedule 8812 instructions. Free file gov   Complete the 1040 and 1040NR Filers — Earned Income Worksheet , later in this publication. Free file gov If you have not read your Form 1040, Form 1040A, or Form 1040NR instructions. Free file gov   Read the explanation of who must use this publication next. Free file gov If you find that you are not required to use this publication to figure your child tax credit, you can use the simpler worksheet in the Form 1040, Form 1040A, or Form 1040NR instructions to figure your credit. Free file gov Who must use this publication. Free file gov   If you answer “Yes” to either of the following questions, you must use this publication to figure your child tax credit. Free file gov Are you excluding income from Puerto Rico or filing any of the following forms? Form 2555 or 2555-EZ (relating to foreign earned income). Free file gov Form 4563 (exclusion of income for residents of American Samoa). Free file gov Are you claiming any of the following credits? Mortgage interest credit, Form 8396. Free file gov Adoption credit, Form 8839. Free file gov Residential energy efficient property credit, Form 5695, Part I. Free file gov District of Columbia first-time homebuyer credit, Form 8859. Free file gov Comments and suggestions. Free file gov   We welcome your comments about this publication and your suggestions for future editions. Free file gov   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Free file gov NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Free file gov Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Free file gov   You can send your comments from www. Free file gov irs. Free file gov gov/formspubs/. Free file gov Click on “More Information” and then on “Comment on Tax Forms and Publications. Free file gov ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Free file gov Ordering forms and publications. Free file gov   Visit www. Free file gov irs. Free file gov gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Free file gov Internal Revenue Service 1201 N. Free file gov Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Free file gov   If you have a tax question, check the information available on IRS. Free file gov gov or call 1-800-829-1040. Free file gov We cannot answer tax questions sent to either of the above addresses. Free file gov Prev  Up  Next   Home   More Online Publications