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How To File A 1040ez

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How To File A 1040ez

How to file a 1040ez 8. How to file a 1040ez   Qualified Tuition Program (QTP) Table of Contents Introduction What Is a Qualified Tuition ProgramDesignated beneficiary. How to file a 1040ez Half-time student. How to file a 1040ez How Much Can You Contribute Are Distributions TaxableFiguring the Taxable Portion of a Distribution Additional Tax on Taxable Distributions Rollovers and Other TransfersRollovers Changing the Designated Beneficiary Introduction Qualified tuition programs (QTPs) are also called “529 plans. How to file a 1040ez ” States may establish and maintain programs that allow you to either prepay or contribute to an account for paying a student's qualified education expenses at a postsecondary institution. How to file a 1040ez Eligible educational institutions may establish and maintain programs that allow you to prepay a student's qualified education expenses. How to file a 1040ez If you prepay tuition, the student (designated beneficiary) will be entitled to a waiver or a payment of qualified education expenses. How to file a 1040ez You cannot deduct either payments or contributions to a QTP. How to file a 1040ez For information on a specific QTP, you will need to contact the state agency or eligible educational institution that established and maintains it. How to file a 1040ez What is the tax benefit of a QTP. How to file a 1040ez   No tax is due on a distribution from a QTP unless the amount distributed is greater than the beneficiary's adjusted qualified education expenses. How to file a 1040ez See Are Distributions Taxable , later, for more information. How to file a 1040ez    Even if a QTP is used to finance a student's education, the student or the student's parents still may be eligible to claim the American opportunity credit or the lifetime learning credit. How to file a 1040ez See Coordination With American Opportunity and Lifetime Learning Credits, later. How to file a 1040ez What Is a Qualified Tuition Program A qualified tuition program is a program set up to allow you to either prepay, or contribute to an account established for paying, a student's qualified education expenses at an eligible educational institution. How to file a 1040ez QTPs can be established and maintained by states (or agencies or instrumentalities of a state) and eligible educational institutions. How to file a 1040ez The program must meet certain requirements. How to file a 1040ez Your state government or the eligible educational institution in which you are interested can tell you whether or not they participate in a QTP. How to file a 1040ez Qualified education expenses. How to file a 1040ez   These are expenses related to enrollment or attendance at an Eligible educational institution (defined later). How to file a 1040ez As shown in the following list, to be qualified, some of the expenses must be required by the institution and some must be incurred by students who are enrolled at least half-time. How to file a 1040ez See Half-time student , later. How to file a 1040ez The following expenses must be required for enrollment or attendance of a Designated beneficiary (defined later) at an eligible educational institution. How to file a 1040ez Tuition and fees. How to file a 1040ez Books, supplies, and equipment. How to file a 1040ez Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible educational institution. How to file a 1040ez Expenses for room and board must be incurred by students who are enrolled at least half-time. How to file a 1040ez The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts. How to file a 1040ez 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. How to file a 1040ez The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. How to file a 1040ez You will need to contact the eligible educational institution for qualified room and board costs. How to file a 1040ez    For tax years after 2010, the purchase of computer technology or equipment is only a qualified education expense if the computer technology or equipment is required for enrollment or attendance at an eligible institution. How to file a 1040ez Designated beneficiary. How to file a 1040ez   The designated beneficiary is generally the student (or future student) for whom the QTP is intended to provide benefits. How to file a 1040ez The designated beneficiary can be changed after participation in the QTP begins. How to file a 1040ez If a state or local government or certain tax-exempt organizations purchase an interest in a QTP as part of a scholarship program, the designated beneficiary is the person who receives the interest as a scholarship. How to file a 1040ez Half-time student. How to file a 1040ez   A student is enrolled “at least half-time” if he or she is enrolled for at least half the full-time academic workload for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled. How to file a 1040ez Eligible educational institution. How to file a 1040ez   For purposes of a QTP, this is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. How to file a 1040ez S. How to file a 1040ez Department of Education. How to file a 1040ez It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. How to file a 1040ez The educational institution should be able to tell you if it is an eligible educational institution. How to file a 1040ez   Certain educational institutions located outside the United States also participate in the U. How to file a 1040ez S. How to file a 1040ez Department of Education's Federal Student Aid (FSA) programs. How to file a 1040ez   How Much Can You Contribute Contributions to a QTP on behalf of any beneficiary cannot be more than the amount necessary to provide for the qualified education expenses of the beneficiary. How to file a 1040ez There are no income restrictions on the individual contributors. How to file a 1040ez You can contribute to both a QTP and a Coverdell ESA in the same year for the same designated beneficiary. How to file a 1040ez   Are Distributions Taxable The part of a distribution representing the amount paid or contributed to a QTP does not have to be included in income. How to file a 1040ez This is a return of the investment in the plan. How to file a 1040ez The designated beneficiary generally does not have to include in income any earnings distributed from a QTP if the total distribution is less than or equal to adjusted qualified education expenses (defined under Figuring the Taxable Portion of a Distribution , later). How to file a 1040ez Earnings and return of investment. How to file a 1040ez    You will receive a Form 1099-Q, from each of the programs from which you received a QTP distribution in 2013. How to file a 1040ez The amount of your gross distribution (box 1) shown on each form will be divided between your earnings (box 2) and your basis, or return of investment (box 3). How to file a 1040ez Form 1099-Q should be sent to you by January 31, 2014. How to file a 1040ez Figuring the Taxable Portion of a Distribution To determine if total distributions for the year are more or less than the amount of qualified education expenses, you must compare the total of all QTP distributions for the tax year to the adjusted qualified education expenses. How to file a 1040ez Adjusted qualified education expenses. How to file a 1040ez   This amount is the total qualified education expenses reduced by any tax-free educational assistance. How to file a 1040ez Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. How to file a 1040ez Taxable earnings. How to file a 1040ez   Use the following steps to figure the taxable part. How to file a 1040ez Multiply the total distributed earnings shown in box 2 of Form 1099-Q by a fraction. How to file a 1040ez The numerator is the adjusted qualified education expenses paid during the year and the denominator is the total amount distributed during the year. How to file a 1040ez Subtract the amount figured in (1) from the total distributed earnings. How to file a 1040ez The result is the amount the beneficiary must include in income. How to file a 1040ez Report it on Form 1040 or Form 1040NR, line 21. How to file a 1040ez Example 1. How to file a 1040ez In 2007, Sara Clarke's parents opened a savings account for her with a QTP maintained by their state government. How to file a 1040ez Over the years they contributed $18,000 to the account. How to file a 1040ez The total balance in the account was $27,000 on the date the distribution was made. How to file a 1040ez In the summer of 2013, Sara enrolled in college and had $8,300 of qualified education expenses for the rest of the year. How to file a 1040ez She paid her college expenses from the following sources. How to file a 1040ez   Gift from parents $1,600     Partial tuition scholarship (tax-free) 3,100     QTP distribution 5,300           Before Sara can determine the taxable part of her QTP distribution, she must reduce her total qualified education expenses by any tax-free educational assistance. How to file a 1040ez   Total qualified education expenses $8,300     Minus: Tax-free educational assistance −3,100     Equals: Adjusted qualified  education expenses (AQEE) $5,200   Since the remaining expenses ($5,200) are less than the QTP distribution, part of the earnings will be taxable. How to file a 1040ez Sara's Form 1099-Q shows that $950 of the QTP distribution is earnings. How to file a 1040ez Sara figures the taxable part of the distributed earnings as follows. How to file a 1040ez   1. How to file a 1040ez $950 (earnings) × $5,200 AQEE  $5,300 distribution           =$932 (tax-free earnings)     2. How to file a 1040ez $950 (earnings)−$932 (tax-free earnings)     =$18 (taxable earnings)  Sara must include $18 in income (Form 1040, line 21) as distributed QTP earnings not used for adjusted qualified education expenses. How to file a 1040ez Coordination With American Opportunity and Lifetime Learning Credits An American opportunity or lifetime learning credit (education credit) can be claimed in the same year the beneficiary takes a tax-free distribution from a QTP, as long as the same expenses are not used for both benefits. How to file a 1040ez This means that after the beneficiary reduces qualified education expenses by tax-free educational assistance, he or she must further reduce them by the expenses taken into account in determining the credit. How to file a 1040ez Example 2. How to file a 1040ez Assume the same facts as in Example 1 , except that Sara's parents claimed an American opportunity credit of $2,500 (based on $4,000 expenses). How to file a 1040ez   Total qualified education expenses $8,300     Minus: Tax-free educational assistance −3,100     Minus: Expenses taken into account  in figuring American opportunity credit −4,000     Equals: Adjusted qualified  education expenses (AQEE) $1,200           The taxable part of the distribution is figured as follows. How to file a 1040ez   1. How to file a 1040ez $950 (earnings) × $1,200 AQEE  $5,300 distribution           =$215 (tax-free earnings)     2. How to file a 1040ez $950 (earnings)−$215 (tax-free earnings)     =$735 (taxable earnings)       Sara must include $735 in income (Form 1040, line 21). How to file a 1040ez This represents distributed earnings not used for adjusted qualified education expenses. How to file a 1040ez Coordination With Coverdell ESA Distributions If a designated beneficiary receives distributions from both a QTP and a Coverdell ESA in the same year, and the total of these distributions is more than the beneficiary's adjusted qualified higher education expenses, the expenses must be allocated between the distributions. How to file a 1040ez For purposes of this allocation, disregard any qualified elementary and secondary education expenses. How to file a 1040ez Example 3. How to file a 1040ez Assume the same facts as in Example 2 , except that instead of receiving a $5,300 distribution from her QTP, Sara received $4,600 from that account and $700 from her Coverdell ESA. How to file a 1040ez In this case, Sara must allocate her $1,200 of adjusted qualified higher education expenses (AQHEE) between the two distributions. How to file a 1040ez   $1,200 AQHEE × $700 ESA distribution  $5,300 total distribution = $158 AQHEE (ESA)     $1,200 AQHEE × $4,600 QTP distribution  $5,300 total distribution = $1,042 AQHEE (QTP)   Sara then figures the taxable portion of her Coverdell ESA distribution based on qualified higher education expenses of $158, and the taxable portion of her QTP distribution based on the other $1,042. How to file a 1040ez Note. How to file a 1040ez If you are required to allocate your expenses between Coverdell ESA and QTP distributions, and you have adjusted qualified elementary and secondary education expenses, see the examples in chapter 7, Coverdell Education Savings Account under Coordination With Qualified Tuition Program (QTP) Distributions . How to file a 1040ez Coordination With Tuition and Fees Deduction. How to file a 1040ez   A tuition and fees deduction can be claimed in the same year the beneficiary takes a tax-free distribution from a QTP, as long as the same expenses are not used for both benefits. How to file a 1040ez Losses on QTP Investments If you have a loss on your investment in a QTP account, you may be able to take the loss on your income tax return. How to file a 1040ez You can take the loss only when all amounts from that account have been distributed and the total distributions are less than your unrecovered basis. How to file a 1040ez Your basis is the total amount of contributions to that QTP account. How to file a 1040ez You claim the loss as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23 (Schedule A (Form 1040NR), line 9), subject to the 2%-of-adjusted-gross-income limit. How to file a 1040ez If you have distributions from more than one QTP account during a year, you must combine the information (amount of distribution, basis, etc. How to file a 1040ez ) from all such accounts in order to determine your taxable earnings for the year. How to file a 1040ez By doing this, the loss from one QTP account reduces the distributed earnings (if any) from any other QTP accounts. How to file a 1040ez Example 1. How to file a 1040ez In 2013, Taylor received a final distribution of $1,000 from QTP #1. How to file a 1040ez His unrecovered basis in that account before the distribution was $3,000. How to file a 1040ez If Taylor itemizes his deductions, he can claim the $2,000 loss on Schedule A (Form 1040). How to file a 1040ez Example 2. How to file a 1040ez Assume the same facts as in Example 1 , except that Taylor also had a distribution of $9,000 from QTP #2, giving him total distributions for 2013 of $10,000. How to file a 1040ez His total basis in these distributions was $4,500 ($3,000 for QTP #1 and $1,500 for QTP #2). How to file a 1040ez Taylor's adjusted qualified education expenses for 2013 totaled $6,000. How to file a 1040ez In order to figure his taxable earnings, Taylor combines the two accounts and determines his taxable earnings as follows. How to file a 1040ez   1. How to file a 1040ez $10,000 (total distribution)−$4,500 (basis portion of distribution)     = $5,500 (earnings included in distribution)   2. How to file a 1040ez $5,500 (earnings) x $6,000 AQEE  $10,000 distribution           =$3,300 (tax-free earnings)     3. How to file a 1040ez $5,500 (earnings)−$3,300 (tax-free earnings)     =$2,200 (taxable earnings)                 Taylor must include $2,200 in income on Form 1040, line 21. How to file a 1040ez Because Taylor's accounts must be combined, he cannot deduct his $2,000 loss (QTP #1) on Schedule A (Form 1040). How to file a 1040ez Instead, the $2,000 loss reduces the total earnings that were distributed, thereby reducing his taxable earnings. How to file a 1040ez Additional Tax on Taxable Distributions Generally, if you receive a taxable distribution, you also must pay a 10% additional tax on the amount included in income. How to file a 1040ez Exceptions. How to file a 1040ez   The 10% additional tax does not apply to distributions: Paid to a beneficiary (or to the estate of the designated beneficiary) on or after the death of the designated beneficiary. How to file a 1040ez Made because the designated beneficiary is disabled. How to file a 1040ez A person is considered to be disabled if he or she shows proof that he or she cannot do any substantial gainful activity because of his or her physical or mental condition. How to file a 1040ez A physician must determine that his or her condition can be expected to result in death or to be of long-continued and indefinite duration. How to file a 1040ez Included in income because the designated beneficiary received: A tax-free scholarship or fellowship (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), or Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. How to file a 1040ez Made on account of the attendance of the designated beneficiary at a U. How to file a 1040ez S. How to file a 1040ez military academy (such as the USNA at Annapolis). How to file a 1040ez This exception applies only to the extent that the amount of the distribution does not exceed the costs of advanced education (as defined in section 2005(d)(3) of title 10 of the U. How to file a 1040ez S. How to file a 1040ez Code) attributable to such attendance. How to file a 1040ez Included in income only because the qualified education expenses were taken into account in determining the American opportunity or lifetime learning credit (see Coordination With American Opportunity and Lifetime Learning Credits , earlier. How to file a 1040ez ) Exception (3) applies only to the extent the distribution is not more than the scholarship, allowance, or payment. How to file a 1040ez Figuring the additional tax. How to file a 1040ez    Use Part II of Form 5329, to figure any additional tax. How to file a 1040ez Report the amount on Form 1040, line 58, or Form 1040NR, line 56. How to file a 1040ez Rollovers and Other Transfers Assets can be rolled over or transferred from one QTP to another. How to file a 1040ez In addition, the designated beneficiary can be changed without transferring accounts. How to file a 1040ez Rollovers Any amount distributed from a QTP is not taxable if it is rolled over to another QTP for the benefit of the same beneficiary or for the benefit of a member of the beneficiary's family (including the beneficiary's spouse). How to file a 1040ez An amount is rolled over if it is paid to another QTP within 60 days after the date of the distribution. How to file a 1040ez Do not report qualifying rollovers (those that meet the above criteria) anywhere on Form 1040 or 1040NR. How to file a 1040ez These are not taxable distributions. How to file a 1040ez Members of the beneficiary's family. How to file a 1040ez   For these purposes, the beneficiary's family includes the beneficiary's spouse and the following other relatives of the beneficiary. How to file a 1040ez Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them. How to file a 1040ez Brother, sister, stepbrother, or stepsister. How to file a 1040ez Father or mother or ancestor of either. How to file a 1040ez Stepfather or stepmother. How to file a 1040ez Son or daughter of a brother or sister. How to file a 1040ez Brother or sister of father or mother. How to file a 1040ez Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. How to file a 1040ez The spouse of any individual listed above. How to file a 1040ez First cousin. How to file a 1040ez Example. How to file a 1040ez When Aaron graduated from college last year he had $5,000 left in his QTP. How to file a 1040ez He wanted to give this money to his younger brother, who was in junior high school. How to file a 1040ez In order to avoid paying tax on the distribution of the amount remaining in his account, Aaron contributed the same amount to his brother's QTP within 60 days of the distribution. How to file a 1040ez If the rollover is to another QTP for the same beneficiary, only one rollover is allowed within 12 months of a previous transfer to any QTP for that designated beneficiary. How to file a 1040ez Changing the Designated Beneficiary There are no income tax consequences if the designated beneficiary of an account is changed to a member of the beneficiary's family. How to file a 1040ez See Members of the beneficiary's family , earlier. How to file a 1040ez Example. How to file a 1040ez Assume the same situation as in the last example. How to file a 1040ez Instead of closing his QTP and paying the distribution into his brother's QTP, Aaron could have instructed the trustee of his account to simply change the name of the beneficiary on his account to that of his brother. How to file a 1040ez Prev  Up  Next   Home   More Online Publications
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The How To File A 1040ez

How to file a 1040ez 5. How to file a 1040ez   Student Loan Cancellations and Repayment Assistance Table of Contents Introduction Student Loan CancellationQualifying Loans Student Loan Repayment Assistance Introduction Generally, if you are responsible for making loan payments, and the loan is canceled (forgiven), you must include the amount that was forgiven in your gross income for tax purposes. How to file a 1040ez However, if you fulfill certain requirements, two types of student loan assistance may be tax free. How to file a 1040ez The types of assistance discussed in this chapter are: Student loan cancellation, and Student loan repayment assistance. How to file a 1040ez Student Loan Cancellation If your student loan is canceled, you may not have to include any amount in income. How to file a 1040ez This section describes the requirements for tax-free treatment of canceled student loans. How to file a 1040ez Qualifying Loans To qualify for tax-free treatment, for the cancellation of your loan, your loan must have been made by a qualified lender to assist you in attending an eligible educational institution and contain a provision that all or part of the debt will be canceled if you work: For a certain period of time, In certain professions, and For any of a broad class of employers. How to file a 1040ez The cancellation of your loan will not qualify for tax-free treatment if it is cancelled because of services you performed for the educational institution that made the loan or other organization that provided the funds. How to file a 1040ez See Exception, later. How to file a 1040ez Eligible educational institution. How to file a 1040ez   This is an educational institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. How to file a 1040ez Qualified lenders. How to file a 1040ez   These include the following. How to file a 1040ez The United States, or an instrumentality thereof. How to file a 1040ez A state, territory, or possession of the United States, or the District of Columbia, or any political subdivision thereof. How to file a 1040ez A public benefit corporation that is tax-exempt under section 501(c)(3); and that has assumed control of a state, county, or municipal hospital; and whose employees are considered public employees under state law. How to file a 1040ez An eligible educational institution, if the loan is made: As part of an agreement with an entity described in (1), (2), (3) under which the funds to make the loan were provided to the educational institution, or Under a program of the educational institution that is designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs where the services provided by the students (or former students) are for or under the direction of a governmental unit or a tax-exempt section 501(c)(3) organization. How to file a 1040ez   Occupations with unmet needs include medicine, nursing, teaching, and law. How to file a 1040ez Section 501(c)(3) organization. How to file a 1040ez   This is any corporation, community chest, fund, or foundation organized and operated exclusively for one or more of the following purposes. How to file a 1040ez Charitable. How to file a 1040ez Religious. How to file a 1040ez Educational. How to file a 1040ez Scientific. How to file a 1040ez Literary. How to file a 1040ez Testing for public safety. How to file a 1040ez Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment). How to file a 1040ez The prevention of cruelty to children or animals. How to file a 1040ez Exception. How to file a 1040ez   The cancellation of your loan does not qualify as tax-free student loan cancellation if your student loan was made by an educational institution and is canceled because of services you performed for the educational institution or other organization that provided the funds. How to file a 1040ez Refinanced Loan If you refinanced a student loan with another loan from an eligible educational institution or a tax-exempt organization, that loan may also be considered as made by a qualified lender. How to file a 1040ez The refinanced loan is considered made by a qualified lender if it is made under a program of the refinancing organization that is designed to encourage students to serve in occupations with unmet needs or in areas with unmet needs where the services required of the students are for or under the direction of a governmental unit or a tax-exempt section 501(c)(3) organization. How to file a 1040ez Student Loan Repayment Assistance Student loan repayments made to you are tax free if you received them for any of the following: The National Health Service Corps (NHSC) Loan Repayment Program (NHSC Loan Repayment Program). How to file a 1040ez A state education loan repayment program eligible for funds under the Public Health Service Act. How to file a 1040ez Any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in under served or health professional shortage areas (as determined by such state). How to file a 1040ez You cannot deduct the interest you paid on a student loan to the extent payments were made through your participation in the above programs. How to file a 1040ez Prev  Up  Next   Home   More Online Publications