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Free online taxes Index A Accrual foreign taxes, adjustments, You may have to post a bond. Free online taxes Accrual method of accounting, Accrual method of accounting. Free online taxes Allocation Carryback/carryover between spouses, Allocations Between Spouses Foreign losses, Foreign Losses Foreign taxes, Allocation of Foreign Taxes U. Free online taxes S. Free online taxes losses, U. Free online taxes S. Free online taxes Losses Alternative minimum tax, Reminders Amended return, Claim for Refund American Samoa, resident of, Possession Exclusion Assistance (see Tax help) B Bankruptcy, effect of, Effect of bankruptcy or insolvency. Free online taxes Beneficiary, Partner or S corporation shareholder. Free online taxes Bond, income tax, You may have to post a bond. Free online taxes Boycotting countries, Taxes From International Boycott Operations C Capital gains and losses, Capital Gains and Losses Carryback and carryover, Carrybacks and carryovers. Free online taxes Allocations between spouses, Allocations Between Spouses Claim for refund, Time Limit on Tax Assessment Joint return, Married Couples Joint return–deduction year, Joint Return Filed in a Deduction Year Taxes all credited or deducted, Claim for Refund Time limit on tax assessment, Time Limit on Tax Assessment Choice to take credit or deduction Changing your choice, Making or Changing Your Choice Choice applied to all qualified foreign taxes, Choice Applies to All Qualified Foreign Taxes Claim for refund, Claim for Refund Classes of gross income, Classes of gross income. Free online taxes Compensation for labor or personal services, Determining the Source of Compensation for Labor or Personal Services Geographical basis, Geographical basis. Free online taxes Comprehensive example, Comprehensive Example — Filled-In Form 1116 Controlled foreign corporation shareholder, Controlled foreign corporation shareholder. Free online taxes , Income from controlled foreign corporations. Free online taxes Covered asset acquisition, Covered Asset Acquisition Credit How to claim, How To Claim the Credit How to figure, How To Figure the Credit Limit on, Limit on the Credit Credit for taxes paid or accrued, Credit for Taxes Paid or Accrued D Deduction for foreign taxes that are not income taxes, Foreign taxes that are not income taxes. Free online taxes Distributions Lump-sum, Lump-Sum Distribution Dividends Taxes on, Taxes Imposed on Certain Dividends Dual-capacity taxpayers, Dual-capacity taxpayers. Free online taxes E Economic benefits, Specific economic benefit. Free online taxes Examples Comprehensive, Comprehensive Example — Filled-In Form 1116 Simple, Simple Example — Filled-In Form 1116 Excess limit, Carryback and Carryover Exchange rates, Foreign Currency and Exchange Rates Excluded income Foreign earned, Foreign Earned Income and Housing Exclusions Taxes on, Taxes on Excluded Income Exemption from foreign tax credit limit, Exemption from foreign tax credit limit. Free online taxes Export financing interest, Export financing interest. Free online taxes Extraterritorial income, Extraterritorial Income Exclusion F Financial services income, Financial services income. Free online taxes Foreign corporation–U. Free online taxes S. Free online taxes shareholders, filing requirements, Taxes of U. Free online taxes S. Free online taxes Persons Controlling Foreign Corporations and Partnerships Foreign country, Foreign country. Free online taxes Foreign currency and exchange rates, Foreign Currency and Exchange Rates Foreign income, translating, Translating foreign currency into U. Free online taxes S. Free online taxes dollars. Free online taxes Foreign losses Allocation of, Foreign Losses Recapture of, Recapture of Prior Year Overall Foreign Loss Accounts Foreign mineral income, taxes on, Taxes on Foreign Mineral Income Foreign oil and gas extraction income, taxes on, Taxes on Combined Foreign Oil and Gas Income Foreign partnerships–U. Free online taxes S. Free online taxes partners, filing requirement, Taxes of U. Free online taxes S. Free online taxes Persons Controlling Foreign Corporations and Partnerships Foreign tax refund, Foreign tax refund. Free online taxes , Foreign tax refund. Free online taxes Foreign tax(es) Allocation to income categories, Allocation of Foreign Taxes For which you cannot take a credit, Foreign Taxes for Which You Cannot Take a Credit Imposed on foreign refund, Foreign tax imposed on foreign refund. Free online taxes Qualifying for credit, What Foreign Taxes Qualify for the Credit? Redetermination, Foreign Tax Redetermination Refund, Foreign tax imposed on foreign refund. Free online taxes Form 1040X, Claim for Refund 1116, Form 1116, Simple Example — Filled-In Form 1116, Comprehensive Example — Filled-In Form 1116 5471, Taxes of U. Free online taxes S. Free online taxes Persons Controlling Foreign Corporations and Partnerships 5713, Form 5713 required. Free online taxes 8833, Report required. Free online taxes 8865, Taxes of U. Free online taxes S. Free online taxes Persons Controlling Foreign Corporations and Partnerships 8873, Extraterritorial Income Exclusion Free tax services, Free help with your tax return. Free online taxes Functional currency, Translating foreign currency into U. Free online taxes S. Free online taxes dollars. Free online taxes G General category income, separate limit, General Category Income H Help (see Tax help) High-taxed income, High-taxed income. Free online taxes I Income from sources in U. Free online taxes S. Free online taxes possessions, Determining the source of income from U. Free online taxes S. Free online taxes possessions. Free online taxes Income re-sourced by treaty, separate limit, Certain Income Re-Sourced By Treaty Income tax, Income Tax Income tax bond, You may have to post a bond. Free online taxes Interest, Penalties and interest. Free online taxes Interest expense, apportioning, Interest expense. Free online taxes International boycott, Taxes From International Boycott Operations Itemized deduction, Taxes for Which You Can Only Take an Itemized Deduction J Joint return Carryback and carryover, Married Couples Credit based on foreign tax of both spouses, Joint return. Free online taxes Filed in a deduction year, Joint Return Filed in a Deduction Year L Levy, Income Tax Limit on credit, Limit on the Credit Losses, foreign, Foreign Losses Allocation of, Foreign Losses Recapture of, Recapture of Prior Year Overall Foreign Loss Accounts Losses, U. Free online taxes S. Free online taxes , U. Free online taxes S. Free online taxes Losses Allocation of, U. Free online taxes S. Free online taxes Losses Lump-sum distributions, Lump-Sum Distribution M Making or changing your choice, Making or Changing Your Choice Married couples Carryback and carryover, Married Couples Joint return, Joint return. Free online taxes Mineral income, foreign,, Taxes on Foreign Mineral Income Mutual fund distributions, Mutual fund shareholder. Free online taxes , Passive income. Free online taxes Mutual fund shareholder, Mutual fund shareholder. Free online taxes N Nonresident aliens, Nonresident Aliens Notice to the IRS of change in tax, Notice to the Internal Revenue Service (IRS) of Redetermination O Overall foreign loss, Overall foreign loss. Free online taxes P Partner, Partner or S corporation shareholder. Free online taxes , Partnership distributive share. Free online taxes , Foreign Taxes From a Partnership or an S Corporation Passive category income, Passive Category Income Penalties, Failure-to-notify penalty. Free online taxes , Penalties and interest. Free online taxes Failure to file Form 5471, 8865, Penalty for not filing Form 5471 or Form 8865. Free online taxes Failure to file Form 5713, Penalty for failure to file. Free online taxes Failure to notify, foreign tax change, Failure-to-notify penalty. Free online taxes Failure to report treaty information, Report required. Free online taxes Pension, employment, and disability fund payments, Pension, unemployment, and disability fund payments. Free online taxes Personal property, sales or exchanges of, Determining the Source of Income From the Sales or Exchanges of Certain Personal Property Possession exclusion, Possession Exclusion Publications (see Tax help) Purchase or sale of oil or gas, taxes in connection with, Taxes in Connection With the Purchase or Sale of Oil or Gas Q Qualified business unit, Translating foreign currency into U. Free online taxes S. Free online taxes dollars. Free online taxes Qualified dividends, Capital Gains and Losses R Rate of exchange, Rate of exchange for foreign taxes paid. Free online taxes Recapture of foreign losses, Recapture of Prior Year Overall Foreign Loss Accounts Records to keep, Records To Keep Redetermination of foreign tax, Foreign Tax Redetermination Refund claims, time limit, Time Limit on Refund Claims Refund, foreign tax, Foreign tax refund. Free online taxes Reporting requirements (international boycott), Reporting requirements. Free online taxes Resident aliens, Resident Aliens S S corporation shareholder, Partner or S corporation shareholder. Free online taxes , Foreign Taxes From a Partnership or an S Corporation Sanctioned countries, Taxes Imposed By Sanctioned Countries (Section 901(j) Income) Section 901(j) income, Section 901(j) Income Section 901(j) sanctioned income, Taxes Imposed By Sanctioned Countries (Section 901(j) Income) Separate limit income, Separate Limit Income General category income, General Category Income Income re-sourced by treaty, Certain Income Re-Sourced By Treaty Lump-sum distribution, Lump-Sum Distribution Passive category income, Passive Category Income Section 901(j) income, Section 901(j) Income Shareholder, Mutual fund shareholder. Free online taxes Simple example, Simple Example — Filled-In Form 1116 Soak-up taxes, Soak-up taxes. Free online taxes Social security taxes, Pension, unemployment, and disability fund payments. Free online taxes Source of compensation for labor or personal services Alternative basis, Alternative basis. Free online taxes Multi-year compensation, Multi-year compensation. Free online taxes Time basis, Time basis. Free online taxes Transportation income, Transportation Income State income taxes, State income taxes. Free online taxes Subsidy, Subsidy received. Free online taxes T Tax help, How To Get Tax Help Tax treaties, Tax Treaties Taxable income from sources outside the U. Free online taxes S. Free online taxes , determination of, Determining Taxable Income From Sources Outside the United States Taxes Excluded income, Foreign Earned Income and Housing Exclusions In lieu of income taxes, Taxes in Lieu of Income Taxes On dividends, Taxes Imposed on Certain Dividends Paid or accrued, Credit for Taxes Paid or Accrued Withheld on income or gain, Taxes Withheld on Income or Gain (Other Than Dividends) Taxes related to a foreign tax credit splitting event, Taxes Related to a Foreign Tax Credit Splitting Event Time limit Refund claims, Time Limit on Refund Claims Tax assessment, Time Limit on Tax Assessment Translating foreign currency, Translating foreign currency into U. Free online taxes S. Free online taxes dollars. Free online taxes U U. Free online taxes S. Free online taxes citizens, U. Free online taxes S. Free online taxes Citizens U. Free online taxes S. Free online taxes losses Allocation of, U. Free online taxes S. Free online taxes Losses U. Free online taxes S. Free online taxes possessions, U. Free online taxes S. Free online taxes possessions. Free online taxes Unused foreign tax credits, carryback or carryover, Carrybacks and carryovers. Free online taxes , Carryback and Carryover W Wages, Wages completely excluded. Free online taxes When refunds can be claimed, Time Limit on Refund Claims When tax can be assessed, Time Limit on Tax Assessment Who can take the credit, Who Can Take the Credit? Why choose the credit, Why Choose the Credit? Prev  Up     Home   More Online Publications
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Free online taxes 19. Free online taxes   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. Free online taxes This chapter covers the student loan interest deduction, tuition and fees deduction, and the deduction for educator expenses. Free online taxes 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. Free online taxes 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. Free online taxes 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. Free online taxes This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. Free online taxes Table 19-1 summarizes the features of the student loan interest deduction. Free online taxes Table 19-1. Free online taxes Student Loan Interest Deduction at a Glance Do not rely on this table alone. Free online taxes Refer to the text for more details. Free online taxes Feature Description Maximum benefit You can reduce your income subject to tax by up to $2,500. Free online taxes 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. Free online taxes 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. Free online taxes Time limit on deduction You can deduct interest paid during the remaining period of your student loan. Free online taxes Phaseout The amount of your deduction depends on your income level. Free online taxes Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. Free online taxes It includes both required and voluntary interest payments. Free online taxes 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. Free online taxes Loans from the following sources are not qualified student loans. Free online taxes A related person. Free online taxes A qualified employer plan. Free online taxes Exceptions. Free online taxes   For purposes of the student loan interest deduction, the following are exceptions to the general rules for dependents. Free online taxes An individual can be your dependent even if you are the dependent of another taxpayer. Free online taxes An individual can be your dependent even if the individual files a joint return with a spouse. Free online taxes 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). Free online taxes    Reasonable period of time. Free online taxes   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. Free online taxes   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. Free online taxes The expenses relate to a specific academic period. Free online taxes 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. Free online taxes   If neither of the above situations applies, the reasonable period of time is determined based on all the relevant facts and circumstances. Free online taxes Academic period. Free online taxes   An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. Free online taxes In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. Free online taxes Eligible student. Free online taxes   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. Free online taxes Enrolled at least half-time. Free online taxes   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. Free online taxes   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Free online taxes However, the standard may not be lower than any of those established by the U. Free online taxes S. Free online taxes Department of Education under the Higher Education Act of 1965. Free online taxes Related person. Free online taxes   You cannot deduct interest on a loan you get from a related person. Free online taxes Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. Free online taxes ), Your lineal descendants (children, grandchildren, etc. Free online taxes ), and Certain corporations, partnerships, trusts, and exempt organizations. Free online taxes Qualified employer plan. Free online taxes   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. Free online taxes 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. Free online taxes They include amounts paid for the following items. Free online taxes Tuition and fees. Free online taxes Room and board. Free online taxes Books, supplies, and equipment. Free online taxes Other necessary expenses (such as transportation). Free online taxes 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. Free online taxes Eligible educational institution. Free online taxes   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Free online taxes S. Free online taxes Department of Education. Free online taxes It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Free online taxes   Certain educational institutions located outside the United States also participate in the U. Free online taxes S. Free online taxes Department of Education's Federal Student Aid (FSA) programs. Free online taxes   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. Free online taxes   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. Free online taxes The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. Free online taxes    The educational institution should be able to tell you if it is an eligible educational institution. Free online taxes Adjustments to qualified education expenses. Free online taxes   You must reduce your qualified education expenses by certain tax-free items (such as the tax-free part of scholarships and fellowships). Free online taxes See chapter 4 of Publication 970 for details. Free online taxes 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. Free online taxes Loan origination fee. Free online taxes   In general, this is a one-time fee charged by the lender when a loan is made. Free online taxes 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. Free online taxes A loan origination fee treated as interest accrues over the life of the loan. Free online taxes Capitalized interest. Free online taxes    This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. Free online taxes Interest on revolving lines of credit. Free online taxes   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. Free online taxes See Qualified Education Expenses , earlier. Free online taxes Interest on refinanced student loans. Free online taxes   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. Free online taxes 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. Free online taxes Voluntary interest payments. Free online taxes   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. Free online taxes Do Not Include as Interest You cannot claim a student loan interest deduction for any of the following items. Free online taxes Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. Free online taxes Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. Free online taxes 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. Free online taxes For more information, see Student Loan Repayment Assistance in chapter 5 of Publication 970. Free online taxes Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. Free online taxes Your filing status is any filing status except married filing separately. Free online taxes No one else is claiming an exemption for you on his or her tax return. Free online taxes You are legally obligated to pay interest on a qualified student loan. Free online taxes You paid interest on a qualified student loan. Free online taxes Interest paid by others. Free online taxes   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. Free online taxes See chapter 4 of Publication 970 for more information. Free online taxes 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). Free online taxes 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. Free online taxes 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). Free online taxes 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). Free online taxes For details on figuring your MAGI, see chapter 4 of Publication 970. Free online taxes 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. Free online taxes 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. Free online taxes To help you figure your student loan interest deduction, you should receive Form 1098-E, Student Loan Interest Statement. Free online taxes 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. Free online taxes 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. Free online taxes Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. Free online taxes However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. Free online taxes For information on allocating payments between interest and principal, see chapter 4 of Publication 970. Free online taxes To claim the deduction, enter the allowable amount on Form 1040, line 33, or Form 1040A, line 18. Free online taxes 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). Free online taxes 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. Free online taxes The qualified expenses must be for higher education, as explained later under What Expenses Qualify . Free online taxes The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. Free online taxes Table 19-2 summarizes the features of the tuition and fees deduction. Free online taxes You may be able to take a credit for your education expenses instead of a deduction. Free online taxes You can choose the one that will give you the lower tax. Free online taxes See chapter 35, Education Credits, for details about the credits. Free online taxes Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. Free online taxes Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. Free online taxes 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. Free online taxes You paid the education expenses for an eligible student. Free online taxes The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption (defined in chapter 3) on your tax return. Free online taxes Qualified education expenses are defined under What Expenses Qualify . Free online taxes Eligible students are defined later under Who Is an Eligible Student . Free online taxes Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. Free online taxes Your filing status is married filing separately. Free online taxes Another person can claim an exemption for you as a dependent on his or her tax return. Free online taxes You cannot take the deduction even if the other person does not actually claim that exemption. Free online taxes Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). Free online taxes 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. Free online taxes More information on nonresident aliens can be found in Publication 519, U. Free online taxes S. Free online taxes Tax Guide for Aliens. Free online taxes 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. Free online taxes However, a state tax credit will not disqualify you from claiming a tuition and fees deduction. Free online taxes Table 19-2. Free online taxes Tuition and Fees Deduction at a Glance Do not rely on this table alone. Free online taxes Refer to the text for more details. Free online taxes Question   Answer What is the maximum benefit?   You can reduce your income subject to tax by up to $4,000. Free online taxes Where is the deduction taken?   As an adjustment to income on Form 1040, line 34, or Form 1040A, line 19. Free online taxes 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. Free online taxes 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. Free online taxes 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. Free online taxes 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. Free online taxes Payments with borrowed funds. Free online taxes   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. Free online taxes 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. Free online taxes Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. Free online taxes Student withdraws from class(es). Free online taxes   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. Free online taxes 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. Free online taxes Eligible educational institution. Free online taxes   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Free online taxes S. Free online taxes Department of Education. Free online taxes It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Free online taxes The educational institution should be able to tell you if it is an eligible educational institution. Free online taxes   Certain educational institutions located outside the United States also participate in the U. Free online taxes S. Free online taxes Department of Education's Federal Student Aid (FSA) programs. Free online taxes Academic period. Free online taxes    An academic period is any quarter, semester, trimester, or any other period of study as reasonably determined by an eligible educational institution. Free online taxes If an eligible educational institution uses credit hours and does not have academic terms, each payment period may be treated as an academic period. Free online taxes Related expenses. Free online taxes   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. Free online taxes Prepaid expenses. Free online taxes   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. Free online taxes See Academic period, earlier. Free online taxes For example, if you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring the tuition and fees deduction for 2013 only if you meet all the other requirements. Free online taxes    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. Free online taxes No Double Benefit Allowed You cannot do any of the following. Free online taxes Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. Free online taxes 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. Free online taxes 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). Free online taxes 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. Free online taxes See Figuring the Taxable Portion of a Distribution in chapter 7 (Coverdell ESA) and chapter 8 (QTP) of Publication 970. Free online taxes Deduct qualified education expenses that have been paid with tax-free interest on U. Free online taxes S. Free online taxes savings bonds (Form 8815). Free online taxes See Figuring the Tax-Free Amount in chapter 10 of Publication 970. Free online taxes Deduct qualified education expenses that have been paid with tax-free educational assistance such as a scholarship, grant, or employer-provided educational assistance. Free online taxes See Adjustments to qualified education expenses, later. Free online taxes Adjustments to qualified education expenses. Free online taxes   For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. Free online taxes The result is the amount of adjusted qualified education expenses for each student. Free online taxes Tax-free educational assistance. Free online taxes   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. Free online taxes See Academic period, earlier. Free online taxes   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. Free online taxes Generally, any scholarship or fellowship you receive is treated as tax-free educational assistance. Free online taxes 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. Free online taxes 970, chapter 1. Free online taxes 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 online taxes 970, chapter 1. Free online taxes 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. Free online taxes For details, see Adjustments to Qualified Education Expenses in chapter 6 of Pub. Free online taxes 970. Free online taxes Some tax-free educational assistance received in 2013 may be treated as a refund of qualified education expenses paid in 2013. Free online taxes This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). Free online taxes If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed, later. Free online taxes If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed, later. Free online taxes Refunds. Free online taxes   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. Free online taxes See chapter 6 of Pub. Free online taxes 970 for more information. Free online taxes Some tax-free educational assistance received after 2013 may be treated as a refund. Free online taxes See Tax-free educational assistance, earlier. Free online taxes Refunds received in 2013. Free online taxes    For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses paid in 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. Free online taxes Refunds received after 2013 but before your income tax return is filed. Free online taxes   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. Free online taxes Refunds received after 2013 and after your income tax return is filed. Free online taxes   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. Free online taxes See chapter 6 of Pub. Free online taxes 970 for more information. Free online taxes Coordination with Coverdell education savings accounts and qualified tuition programs. Free online taxes    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). Free online taxes 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. Free online taxes Amounts that do not reduce qualified education expenses. Free online taxes   Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Free online taxes   Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. Free online taxes The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses. Free online taxes The use of the money is not restricted. Free online taxes 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. Free online taxes This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Free online taxes Sports, games, hobbies, and noncredit courses. Free online taxes   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. Free online taxes However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. Free online taxes Comprehensive or bundled fees. Free online taxes   Some eligible educational institutions combine all of their fees for an academic period into one amount. Free online taxes 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. Free online taxes 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. Free online taxes See How Do You Figure the Deduction , later, for more information about Form 1098-T. Free online taxes 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). Free online taxes 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. Free online taxes Table 19-3 summarizes who can claim the deduction. Free online taxes 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. Free online taxes For details on figuring your MAGI, see chapter 6 of Publication 970. Free online taxes How Do You Figure the Deduction Figure the deduction using Form 8917. Free online taxes To help you figure your tuition and fees deduction, you should receive Form 1098-T, Tuition Statement. Free online taxes 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. Free online taxes To claim the deduction, enter the allowable amount on Form 1040, line 34, or Form 1040A, line 19, and attach your completed Form 8917. Free online taxes Table 19-3. Free online taxes Who Can Claim a Dependent's Expenses Do not rely on this table alone. Free online taxes See Who Can Claim a Dependent's Expenses in chapter 6 of Publication 970. Free online taxes IF your dependent is an eligible student and you. Free online taxes . Free online taxes . Free online taxes AND. Free online taxes . Free online taxes . Free online taxes THEN. Free online taxes . Free online taxes . Free online taxes 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. Free online taxes Your dependent cannot take a deduction. Free online taxes claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Free online taxes do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. Free online taxes do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Free online taxes 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. Free online taxes If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Free online taxes However, neither spouse can deduct more than $250 of his or her qualified expenses on Form 1040, line 23, or Form 1040A, line 16. Free online taxes You may be able to deduct expenses that are more than the $250 (or $500) limit on Schedule A (Form 1040), line 21. Free online taxes Eligible educator. Free online taxes   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. Free online taxes Qualified expenses. Free online taxes   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. Free online taxes An ordinary expense is one that is common and accepted in your educational field. Free online taxes A necessary expense is one that is helpful and appropriate for your profession as an educator. Free online taxes An expense does not have to be required to be considered necessary. Free online taxes   Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. Free online taxes   You must reduce your qualified expenses by the following amounts. Free online taxes Excludable U. Free online taxes S. Free online taxes series EE and I savings bond interest from Form 8815. Free online taxes See Figuring the Tax-Free Amount in chapter 10 of Publication 970. Free online taxes Nontaxable qualified tuition program earnings or distributions. Free online taxes See Figuring the Taxable Portion of a Distribution in chapter 8 of Publication 970. Free online taxes Nontaxable distribution of earnings from a Coverdell education savings account. Free online taxes See Figuring the Taxable Portion of a Distribution in chapter 7 of Publication 970. Free online taxes Any reimbursements you received for these expenses that were not reported to you in box 1 of your Form W-2. 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