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How To Refile Taxes

How to refile taxes Depreciation Table of Contents Introduction Special Depreciation AllowanceQualified Property Election Not To Claim the Allowance Rules for Returns Filed Before June 1, 2002 Passenger Automobiles New York Liberty Zone BenefitsSpecial Liberty Zone Depreciation Allowance Increased Section 179 Deduction Liberty Zone Leasehold Improvement Property If you depreciate business property that you acquired and placed in service after September 10, 2001, new law contains provisions that may affect your depreciation deduction for that property. How to refile taxes Publication 946, How To Depreciate Property, contains information on depreciation. How to refile taxes However, Publication 946 does not contain the new provisions because it was printed before the law was enacted. How to refile taxes The new provisions are in the Supplement to Publication 946, which is reprinted below. How to refile taxes Supplement to Publication 946 How To Depreciate Property   Introduction After Publication 946 was printed, the Job Creation and Worker Assistance Act of 2002 was signed into law by the President. How to refile taxes The new law made several changes in the tax rules explained in the publication. How to refile taxes Some of the changes apply to property placed in service during 2001. How to refile taxes This supplemental publication describes those changes and explains what you should do if you are affected by them. How to refile taxes The situations and examples in Publication 946 do not reflect any of the changes made by the Job Creation and Worker Assistance Act of 2002. How to refile taxes The new law contains the following provisions. How to refile taxes 30% depreciation deductions (special depreciation allowance and special New York Liberty Zone (Liberty Zone) depreciation allowance) for the year qualified property is placed in service after September 10, 2001. How to refile taxes An increased dollar limit on the section 179 deduction for qualified Liberty Zone property purchased after September 10, 2001. How to refile taxes A shorter recovery period for qualified Liberty Zone leasehold improvement property placed in service after September 10, 2001. How to refile taxes An increase in the maximum depreciation deduction for 2001 for a qualified passenger automobile placed in service after September 10, 2001. How to refile taxes If you believe you qualify for an increased deduction under any of these new rules, you must file the revised 2001 Form 4562 (dated March 2002) for 2001 calendar or fiscal years and 2000 fiscal years ending after September 10, 2001. How to refile taxes If you have already filed a tax return, this supplemental publication explains how to claim these benefits and how to elect not to claim the special depreciation allowance or special Liberty Zone depreciation allowance. How to refile taxes See Table 2 at the end of the supplement for an overview of the rules that apply if you filed your return before June 1, 2002. How to refile taxes Special Depreciation Allowance You can take a special depreciation allowance for qualified property you place in service after September 10, 2001. How to refile taxes The allowance is an additional deduction of 30% of the property's depreciable basis. How to refile taxes To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. How to refile taxes See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. How to refile taxes The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. How to refile taxes There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. How to refile taxes In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. How to refile taxes Example 1. How to refile taxes On November 1, 2001, you bought and placed in service in your business qualified property that cost $100,000. How to refile taxes You did not elect to claim a section 179 deduction. How to refile taxes You can deduct 30% of the cost ($30,000) as a special depreciation allowance for 2001. How to refile taxes You use the remaining $70,000 of cost to figure your regular depreciation deduction for 2001 and later years. How to refile taxes Example 2. How to refile taxes The facts are the same as in Example 1, except that you choose to deduct $24,000 of the property's cost as a section 179 deduction. How to refile taxes You use the remaining $76,000 of cost to figure your special depreciation allowance of $22,800 ($76,000 × 30%). How to refile taxes You use the remaining $53,200 of cost to figure your regular depreciation deduction for 2001 and later years. How to refile taxes Qualified Property To qualify for the special depreciation allowance, your property must meet the following requirements. How to refile taxes It is new property of one of the following types. How to refile taxes Property depreciated under the modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less. How to refile taxes See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. How to refile taxes Water utility property. How to refile taxes See 25-year property on page 22 in Publication 946. How to refile taxes Computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. How to refile taxes (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. How to refile taxes ) Qualified leasehold improvement property (defined later). How to refile taxes It meets the following tests (explained later under Tests To Be Met). How to refile taxes Acquisition date test. How to refile taxes Placed in service date test. How to refile taxes Original use test. How to refile taxes It is not excepted property (explained later under Excepted Property). How to refile taxes Qualified leasehold improvement property. How to refile taxes    Generally, this is any improvement to an interior part of a building that is nonresidential real property, provided all of the following requirements are met. How to refile taxes The improvement is made under or pursuant to a lease by the lessee (or any sublessee) or the lessor of that part of the building. How to refile taxes That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. How to refile taxes The improvement is placed in service more than 3 years after the date the building was first placed in service. How to refile taxes   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. How to refile taxes The enlargement of the building. How to refile taxes Any elevator or escalator. How to refile taxes Any structural component benefiting a common area. How to refile taxes The internal structural framework of the building. How to refile taxes   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. How to refile taxes However, a binding commitment between related persons is not treated as a lease. How to refile taxes Related persons. How to refile taxes   For this purpose, the following are related persons. How to refile taxes Members of an affiliated group. How to refile taxes The persons listed in items (1) through (9) under Related persons on page 8 of Publication 946 (except that “80% or more” should be substituted for “more than 10%” each place it appears). How to refile taxes An executor and a beneficiary of the same estate. How to refile taxes Tests To Be Met To qualify for the special depreciation allowance, the property must meet all of the following tests. How to refile taxes Acquisition date test. How to refile taxes    Generally, you must have acquired the property either: After September 10, 2001, and before September 11, 2004, but only if no written binding contract for the acquisition was in effect before September 11, 2001, or Pursuant to a written binding contract entered into after September 10, 2001, and before September 11, 2004. How to refile taxes   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001, and before September 11, 2004. How to refile taxes Placed in service date test. How to refile taxes   Generally, the property must be placed in service for use in your trade or business or for the production of income after September 10, 2001, and before January 1, 2005. How to refile taxes   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. How to refile taxes Original use test. How to refile taxes   The original use of the property must have begun with you after September 10, 2001. How to refile taxes “Original use” means the first use to which the property is put, whether or not by you. How to refile taxes Additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test. How to refile taxes Excepted Property The following property does not qualify for the special depreciation allowance. How to refile taxes Property used by any person before September 11, 2001. How to refile taxes Property required to be depreciated using ADS. How to refile taxes This includes listed property used 50% or less in a qualified business use. How to refile taxes Qualified New York Liberty Zone leasehold improvement property (defined next). How to refile taxes Qualified New York Liberty Zone leasehold improvement property. How to refile taxes   This is any qualified leasehold improvement property (as defined earlier) if all of the following requirements are met. How to refile taxes The improvement is to a building located in the New York Liberty Zone (defined later under New York Liberty Zone Benefits). How to refile taxes The improvement is placed in service after September 10, 2001, and before January 1, 2007. How to refile taxes No written binding contract for the improvement was in effect before September 11, 2001. How to refile taxes Election Not To Claim the Allowance You can elect not to claim the special depreciation allowance for qualified property. How to refile taxes If you make this election for any property, it applies to all property in the same property class placed in service during the year. How to refile taxes To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. How to refile taxes When to make election. How to refile taxes   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. How to refile taxes   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). How to refile taxes Attach the election statement to the amended return. How to refile taxes At the top of the election statement, write “Filed pursuant to section 301. How to refile taxes 9100–2. How to refile taxes ” Revoking an election. How to refile taxes   Once you elect not to deduct the special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. How to refile taxes A request to revoke the election is subject to a user fee. How to refile taxes Rules for Returns Filed Before June 1, 2002 The following rules apply if you placed qualified property in service after September 10, 2001, and filed your return before June 1, 2002. How to refile taxes The rules apply to returns for the following years. How to refile taxes 2000 fiscal years that end after September 10, 2001. How to refile taxes 2001 calendar and fiscal years. How to refile taxes Claiming the allowance. How to refile taxes   If you did not claim the allowance on your return and did not make the election not to claim the allowance, you can do either of the following to claim the allowance. How to refile taxes File an amended return by the due date (not including extensions) of your return for the year following the year the property was placed in service. How to refile taxes Write “Filed Pursuant to Rev. How to refile taxes Proc. How to refile taxes 2002–33” at the top of the amended return. How to refile taxes File Form 3115, Application for Change in Accounting Method, with your return for the year following the year the property was placed in service. How to refile taxes Your return must be filed by the due date (including extensions). How to refile taxes Write “Automatic Change Filed Under Rev. How to refile taxes Proc. How to refile taxes 2002–33” on the appropriate line of Form 3115. How to refile taxes You must also file a copy (with signature) of the completed Form 3115 with the IRS National Office no later than when you file the original with your return. How to refile taxes For more information about filing Form 3115, including the address to send it to, see Revenue Procedure 2002–9, Revenue Procedure 2002–19, and Revenue Procedure 2002–33. How to refile taxes Example 1. How to refile taxes You are an individual and you use the calendar year. How to refile taxes You placed qualified property in service for your business in December 2001. How to refile taxes You filed your 2001 income tax return before April 15, 2002. How to refile taxes You did not claim the special depreciation allowance for the property and did not make the election not to claim the allowance. How to refile taxes You can claim the special allowance by filing an amended 2001 return by April 15, 2003, with “Filed Pursuant to Rev. How to refile taxes Proc. How to refile taxes 2002–33” at the top of the amended return. How to refile taxes You must file an amended return by April 15, 2003, even if you get an extension of time to file your 2002 tax return. How to refile taxes Example 2. How to refile taxes The facts concerning your 2001 return are the same as in Example 1. How to refile taxes In addition, you got an automatic 4-month extension of time (to August 15, 2003) to file your 2002 return. How to refile taxes You can claim the special allowance by filing a Form 3115 (with “Filed Pursuant to Rev. How to refile taxes Proc. How to refile taxes 2002–33” on the appropriate line) with your 2002 return by August 15, 2003. How to refile taxes You must also file a copy of this Form 3115 with the IRS National Office no later than when you file your 2002 return. How to refile taxes Electing not to claim the allowance. How to refile taxes   Generally, you have elected not to claim the special depreciation allowance for a class of property if you: Filed your return timely (including extensions) for the year you placed qualified property in service and indicated on a statement with the return that you are not claiming the allowance, or Filed your return timely and filed an amended return within 6 months of the due date of the original return (not including extensions) and indicated on a statement with the amended return that you are not claiming the allowance. How to refile taxes The statement must indicate that you are not deducting the special depreciation allowance and the class of property to which the election applies. How to refile taxes The statement can be either attached to or written on the return. How to refile taxes You can, for example, write “not deducting 30%” on Form 4562. How to refile taxes Deemed election. How to refile taxes   If you have not followed either of the procedures described above to elect not to claim the allowance, you may still be treated as making the election. How to refile taxes You will be treated as making the election if you meet both of the following conditions. How to refile taxes You filed your return for the year you placed the property in service and claimed depreciation, but not the special allowance, for any class of property. How to refile taxes You do not file an amended return or a Form 3115 within the time prescribed for claiming the special allowance. How to refile taxes See Claiming the allowance, earlier. How to refile taxes Passenger Automobiles The limit on your depreciation deduction (including any section 179 deduction) for any passenger automobile that is qualified property (defined earlier) placed in service after September 10, 2001, and for which you claim the special depreciation allowance is increased. How to refile taxes Generally, the limit is increased from $3,060 to $7,660. How to refile taxes However, if the automobile is a qualified electric car, the limit is increased from $9,280 to $23,080 ($22,980 if placed in service in 2002). How to refile taxes Table 1 shows the maximum deduction amounts for 2001. How to refile taxes Table 1. How to refile taxes Maximum Deduction for 2001 Qualified Vehicle Placed in Service Before Sept. How to refile taxes 11 Placed in Service After Sept. How to refile taxes 10 Passenger automobile $3,060 $7,660 Electric car 9,280 23,080 1 1$22,980 if you place an electric car in service in 2002. How to refile taxes Election not to claim the allowance. How to refile taxes   The increased maximum depreciation deduction does not apply if you elected not to claim the special depreciation allowance as explained earlier under Election Not To Claim the Allowance and Rules for Returns Filed Before June 1, 2002. How to refile taxes New York Liberty Zone Benefits Several benefits are available for property you place in service in the New York Liberty Zone (Liberty Zone). How to refile taxes They include a special depreciation allowance for the year you place the property in service, an increased section 179 deduction, and the classification of certain leasehold improvement property as 5-year property. How to refile taxes Area defined. How to refile taxes   The New York Liberty Zone is the area located on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway) in the Borough of Manhattan in the City of New York, New York. How to refile taxes Special Liberty Zone Depreciation Allowance You can take a special depreciation allowance for qualified Liberty Zone property you place in service after September 10, 2001. How to refile taxes The allowance is an additional deduction of 30% of the property's depreciable basis. How to refile taxes To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. How to refile taxes See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. How to refile taxes The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. How to refile taxes There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. How to refile taxes In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. How to refile taxes You cannot claim the special Liberty Zone depreciation allowance for property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. How to refile taxes Qualified property is eligible for only one special depreciation allowance. How to refile taxes Example 1. How to refile taxes On November 1, 2001, you bought and placed in service in your business, which is in the Liberty Zone, qualified Liberty Zone property that cost $200,000. How to refile taxes You did not elect to claim a section 179 deduction. How to refile taxes You can deduct 30% of the cost ($60,000) as a special Liberty Zone depreciation allowance for 2001. How to refile taxes You use the remaining $140,000 of cost to figure your regular depreciation deduction for 2001 and later years. How to refile taxes Example 2. How to refile taxes The facts are the same as in Example 1, except that you choose to deduct $59,000 of the property's cost as a section 179 deduction. How to refile taxes (See Increased Section 179 Deduction, later, for information concerning how this section 179 deduction amount is figured). How to refile taxes You use the remaining $141,000 of cost to figure your special Liberty Zone depreciation allowance of $42,300 ($141,000 × 30%). How to refile taxes You use the remaining $98,700 of cost to figure your regular depreciation deduction for 2001 and later years. How to refile taxes Qualified Liberty Zone Property For a 2001 calendar or fiscal year and a 2000 fiscal year that ends after September 10, 2001, property qualifies for the special Liberty Zone depreciation allowance if it meets the following requirements. How to refile taxes It is one of the following types of property. How to refile taxes Used property depreciated under MACRS with a recovery period of 20 years or less. How to refile taxes See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. How to refile taxes Used water utility property. How to refile taxes See 25-year property on page 22 in Publication 946. How to refile taxes Used computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. How to refile taxes (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. How to refile taxes ) Certain nonresidential real property and residential rental property (defined later). How to refile taxes It meets the following tests (explained later under Tests to be met). How to refile taxes Acquisition date test. How to refile taxes Placed in service date test. How to refile taxes Substantial use test. How to refile taxes Original use test. How to refile taxes It is not excepted property (explained later under Excepted property). How to refile taxes Nonresidential real property and residential rental property. How to refile taxes   This property is qualifying property only to the extent it rehabilitates real property damaged, or replaces real property destroyed or condemned, as a result of the terrorist attack of September 11, 2001. How to refile taxes Property is treated as replacing destroyed or condemned property if, as part of an integrated plan, such property replaces real property included in a continuous area that includes real property destroyed or condemned. How to refile taxes   For these purposes, real property is considered destroyed (or condemned) only if an entire building or structure was destroyed (or condemned) as a result of the terrorist attack. How to refile taxes Otherwise, the property is considered damaged real property. How to refile taxes For example, if certain structural components of a building (such as walls, floors, or plumbing fixtures) are damaged or destroyed as a result of the terrorist attack, but the building is not destroyed (or condemned), then only costs related to replacing the damaged or destroyed structural components qualify for the special Liberty Zone depreciation allowance. How to refile taxes Tests to be met. How to refile taxes   To qualify for the special Liberty Zone depreciation allowance, your property must meet all of the following tests. How to refile taxes Acquisition date test. How to refile taxes   You must have acquired the property by purchase after September 10, 2001, and there must not have been a binding written contract for the acquisition in effect before September 11, 2001. How to refile taxes   For information on the acquisition of property by purchase, see Property Acquired by Purchase on page 15 of Publication 946. How to refile taxes   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001. How to refile taxes Placed in service date test. How to refile taxes   Generally, the property must be placed in service for use in your trade or business or for the production of income before January 1, 2007 (January 1, 2010, in the case of qualifying nonresidential real property and residential rental property). How to refile taxes   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. How to refile taxes Substantial use test. How to refile taxes   Substantially all use of the property must be in the Liberty Zone and in the active conduct of your trade or business in the Liberty Zone. How to refile taxes Original use test. How to refile taxes   The original use of the property in the Liberty Zone must have begun with you after September 10, 2001. How to refile taxes   Used property can be qualified Liberty Zone property if it has not previously been used within the Liberty Zone. How to refile taxes Also, additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test if the original use of the property in the Liberty Zone began with you. How to refile taxes Excepted property. How to refile taxes   The following property does not qualify for the special Liberty Zone depreciation allowance. How to refile taxes Property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. How to refile taxes Property required to be depreciated using ADS. How to refile taxes This includes listed property used 50% or less in a qualified business use. How to refile taxes Qualified New York Liberty Zone leasehold improvement property (defined earlier in Excepted Property under Special Depreciation Allowance). How to refile taxes Example. How to refile taxes In December 2001, you bought and placed in service in your business in the Liberty Zone the following property. How to refile taxes New office furniture with a MACRS recovery period of 7 years. How to refile taxes A used computer with a MACRS recovery period of 5 years. How to refile taxes The computer had not previously been used within the Liberty Zone. How to refile taxes Because the office furniture is new property, it qualifies for the special depreciation allowance, but not the special Liberty Zone depreciation allowance. How to refile taxes Because the computer is used property that had not previously been used in the Liberty Zone, it qualifies for the special Liberty Zone depreciation allowance, but not the special depreciation allowance. How to refile taxes Election Not To Claim the Liberty Zone Allowance You can elect not to claim the special Liberty Zone depreciation allowance for qualified property. How to refile taxes If you make this election for any property, it applies to all property in the same property class placed in service during the year. How to refile taxes To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. How to refile taxes When to make the election. How to refile taxes   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. How to refile taxes   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). How to refile taxes Attach the election statement to the amended return. How to refile taxes At the top of the election statement, write “Filed pursuant to section 301. How to refile taxes 9100–2. How to refile taxes ” Revoking an election. How to refile taxes   Once you elect not to deduct the special Liberty Zone depreciation allowance for a class of property, you cannot revoke the election without IRS consent. How to refile taxes A request to revoke the election is subject to a user fee. How to refile taxes Returns filed before June 1, 2002. How to refile taxes   The rules that apply to the special depreciation allowance discussed earlier in Rules for Returns Filed Before June 1, 2002 under Special Depreciation Allowance also apply to the special Liberty Zone depreciation allowance. How to refile taxes Increased Section 179 Deduction Under section 179 of the Internal Revenue Code, you can choose to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. How to refile taxes For tax years beginning in 2000, that limit was $20,000. How to refile taxes For tax years beginning in 2001 and 2002, that limit is generally $24,000. How to refile taxes If the cost of qualifying section 179 property placed in service in a year is over $200,000, you must reduce the dollar limit (but not below zero) by the amount of the cost over $200,000. How to refile taxes Increased Dollar Limit The dollar limit on the section 179 deduction is increased for certain property placed in service in the Liberty Zone. How to refile taxes The increase is the smaller of the following amounts. How to refile taxes $35,000. How to refile taxes The cost of section 179 property that is qualified Liberty Zone property placed in service during the year. How to refile taxes If you use the revised 2001 Form 4562 (dated March 2002) for a tax year beginning in 2000, you must reduce the section 179 dollar limit to $20,000 before adding the additional amount for qualified property. How to refile taxes Qualified property. How to refile taxes   To qualify for the increased section 179 deduction, your property must be section 179 property that is either: Qualified Liberty Zone property, or Property that would be qualified Liberty Zone property except that it is eligible for the special depreciation allowance. How to refile taxes Qualified Liberty Zone property is explained earlier in Qualified Liberty Zone Property under Special Liberty Zone Depreciation Allowance. How to refile taxes Property eligible for the special depreciation allowance is explained earlier in Qualified Property under Special Depreciation Allowance. How to refile taxes For information on the requirements that must be met for property to qualify for the section 179 deduction, see What Property Qualifies? on page 14 of Publication 946. How to refile taxes Example 1. How to refile taxes In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $25,000. How to refile taxes Because this cost is less than $35,000, the dollar limit on the section 179 deduction is increased by $25,000 to $49,000 ($24,000 + $25,000). How to refile taxes Example 2. How to refile taxes In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $75,000. How to refile taxes Because $35,000 is less than the cost of the property you place in service, the dollar limit on the section 179 deduction you can claim is increased by $35,000 to $59,000 ($24,000 + $35,000). How to refile taxes Reduced Dollar Limit Generally, you must reduce the dollar limit for a year by the cost of qualifying section 179 property placed in service in the year that is more than $200,000. How to refile taxes However, if the cost of your Liberty Zone property exceeds $200,000, you take into account only 50% (instead of 100%) of the cost of qualified property placed in service in a year. How to refile taxes Example. How to refile taxes In 2002, you place in service in your business, which is in the Liberty Zone, qualified property costing $460,000. How to refile taxes Your increased dollar limit is $59,000 ($35,000 + $24,000). How to refile taxes Because 50% of the cost of the property you place in service ($230,000) is $30,000 more than $200,000, you must reduce your $59,000 dollar limit to $29,000 ($59,000 - $30,000). How to refile taxes Recapture Rules Rules similar to those explained on page 20 of Publication 946 under When Must You Recapture the Deduction? apply with respect to any qualified property you stop using in the Liberty Zone. How to refile taxes Returns Filed Before June 1, 2002 If you filed a return before June 1, 2002, and did not deduct the increased section 179 amount for qualified property placed in service after September 10, 2001, you can deduct the increased amount by filing an amended return by the due date (not including extensions) of the return for the year after the year the property was placed in service. How to refile taxes This rule applies to returns for the following years. How to refile taxes 2000 fiscal years that end after September 10, 2001. How to refile taxes 2001 calendar and fiscal years. How to refile taxes On the amended return, write “Filed Pursuant to Rev. How to refile taxes Proc. How to refile taxes 2002–33. How to refile taxes ” Liberty Zone Leasehold Improvement Property Qualified Liberty Zone leasehold improvement property (described earlier in Qualified Property under Special Depreciation Allowance) is 5-year property. How to refile taxes This means that it is depreciated over a recovery period of 5 years. How to refile taxes For information about recovery periods, see Which Recovery Period Applies? on page 23 of Publication 946. How to refile taxes The straight-line method must be used with respect to qualified Liberty Zone leasehold improvement property. How to refile taxes Under ADS, the recovery period for qualified Liberty Zone leasehold improvement property is 9 years. How to refile taxes Returns Filed Before June 1, 2002 If you filed either of the following returns before June 1, 2002, and did not depreciate qualified Liberty Zone leasehold improvement property placed in service during the tax year as 5-year property using the straight line method, you should file an amended return before you file your return for the year after the year the property was placed in service. How to refile taxes Your 2000 fiscal year return (for a 2000 fiscal year that ends after September 10, 2001). How to refile taxes Your 2001 calendar or fiscal year return. How to refile taxes On the amended return, write “Filed Pursuant to Rev. How to refile taxes Proc. How to refile taxes 2002–33. How to refile taxes ” Table 2. How to refile taxes Rules for Returns Filed Before June 1, 2002 Note:This chart highlights the rules for returns affected by the Job Creation and Worker Assistance Act of 2002 that were filed before June 1, 2002, without accounting for any of the new benefits under the law. How to refile taxes See the text for definitions and examples. How to refile taxes Do not rely on this chart alone. How to refile taxes IF you want to. How to refile taxes . How to refile taxes . How to refile taxes THEN you. How to refile taxes . How to refile taxes . How to refile taxes BY. How to refile taxes . How to refile taxes . How to refile taxes claim the special depreciation allowance or special Liberty Zone depreciation allowance • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service, or • must file Form 3115, Application for Change in Accounting Method, with your return for the year after the year the property was placed in service • the due date (including extensions) of your return for the year after the year the property was placed in service, and • must file a copy of your completed Form 3115 with the IRS National Office • the date you file the original Form 3115 with your return for the year after the year the property was placed in service. How to refile taxes elect not to claim the special depreciation allowance or the special Liberty Zone depreciation allowance 1 • must have filed your return timely for the year the property was placed in service, and   • must file an amended return stating you are not claiming the allowance • the date that is 6 months after the due date of the original return (not including extensions). How to refile taxes deduct the increased section 179 amount • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service. How to refile taxes use a 5-year recovery period for depreciating qualified Liberty Zone leasehold improvement property • should file an amended return • the date you file your return for the year after the year the property was placed in service. How to refile taxes 1See also Deemed election under Rules for Returns Filed Before June 1, 2002, earlier. 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Contact My Local Office in New Mexico

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City  Street Address  Days/Hours of Service  Telephone* 
Albuquerque  5338 Montgomery Blvd. N.E.
Albuquerque, NM 87109 

Monday-Friday - 8:30 a.m. - 4:30 p.m.

 

Services Provided

(505) 837-5631 
Farmington  800 E. 30th St.
Farmington, NM 87401 

Wednesday & Thursday - 8:30 a.m.- 4:30 p.m.; Friday - 8:30 a.m.-11:30 a.m. 
(Closed for lunch 11:30 a.m. - 12:30 p.m.)
 

**This office will be open 2/12-2/14, 2/26-2/28, 3/12-3/14, 3/26-3/28, 4/09-4/11, 4/23-4/25, 5/07-5/09 and 5/21-5/23. Closed all other days/times.**


Services Provided

(505) 327-7906 
Las Cruces  505 S. Main, Ste. 149
Las Cruces, NM 88001 

Monday-Friday - 8:30 a.m. - 4:30 p.m.
 

Services Provided

(575) 526-0161 
Roswell  500 N. Richardson
Roswell, NM 88201 

This Office is Temporarily Closed

 

(575) 624-9442 
Roswell/remote Taxpayer Assistance
available at New
Mexico Legal Aid
200 E. 4th Street
Suite 200
Roswell, NM 88202

Monday-Friday - 8:30 a.m. - 3:00 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.)

 

Virtual Services Provided

(575) 624-9442
Santa Fe  2945 Rodeo Park Dr. East
Santa Fe, NM  87505 

Monday-Friday - 8:30 a.m. - 4:30 p.m. 
(Closed for lunch 11:30 a.m.- 12:30 p.m.)

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(505) 424-5961

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If  face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service: Call (505) 837-5505 in Albuquerque or 1-877-777-4778 elsewhere, or see Publication 1546, The Taxpayer Advocate Service of the IRS.

For further information, see Tax Topic 104.

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
5338 Montgomery Blvd., NE
MS 4040ALB
Albuquerque, NM 87109

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The How To Refile Taxes

How to refile taxes 35. How to refile taxes   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. How to refile taxes They are: The American opportunity credit, and The lifetime learning credit. How to refile taxes The chapter will present an overview of these education credits. How to refile taxes 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. How to refile taxes Can you claim more than one education credit this year?   For each student, you can choose for any year only one of the credits. How to refile taxes 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. How to refile taxes   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. How to refile taxes   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. How to refile taxes 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. How to refile taxes Table 35-1. How to refile taxes Comparison of Education Credits Caution. How to refile taxes You can claim both the American opportunity credit and the lifetime learning credit on the same return—but not for the same student. How to refile taxes   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. How to refile taxes   There are several differences between these two credits. How to refile taxes These differences are summarized in Table 35-1, later. How to refile taxes 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. How to refile taxes 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. How to refile taxes 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). How to refile taxes Academic period. How to refile 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. How to refile 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. How to refile taxes Eligible educational institution. How to refile 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. How to refile taxes S. How to refile taxes Department of Education. How to refile taxes It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. How to refile taxes The educational institution should be able to tell you if it is an eligible educational institution. How to refile taxes   Certain educational institutions located outside the United States also participate in the U. How to refile taxes S. How to refile taxes Department of Education's Federal Student Aid (FSA) programs. How to refile taxes Who can claim a dependent's expenses. How to refile taxes   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. How to refile taxes Therefore, only that person can claim an education credit for the student. How to refile taxes If a student is not claimed as a dependent on another person's tax return, only the student can claim a credit. How to refile taxes Expenses paid by a third party. How to refile taxes   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. How to refile taxes 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. How to refile taxes Therefore, you are treated as having paid expenses that were paid by the third party. How to refile taxes For more information and an example see Who Can Claim a Dependent's Expenses in Pub. How to refile taxes 970, chapter 2 or 3. How to refile taxes Who cannot claim a credit. How to refile taxes   You cannot take an education credit if any of the following apply. How to refile taxes You are claimed as a dependent on another person's tax return, such as your parent's return. How to refile taxes Your filing status is married filing separately. How to refile taxes 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. How to refile taxes Your MAGI is one of the following. How to refile taxes 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). How to refile taxes 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) . How to refile taxes   Generally, your MAGI is the amount on your Form 1040, line 38, or Form 1040A, line 22. How to refile taxes 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. How to refile taxes For details, see Pub. How to refile taxes 970. How to refile taxes    Figure 35-A may be helpful in determining if you can claim an education credit on your tax return. How to refile taxes 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. How to refile taxes 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. How to refile taxes You may be able to take the lifetime learning credit for part or all of that student's qualified education expenses instead. How to refile taxes See Pub. How to refile taxes 970 for information on other education benefits. How to refile taxes 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. How to refile taxes It does not matter whether the expenses were paid in cash, by check, by credit or debit card, or with borrowed funds. How to refile taxes For course-related books, supplies, and equipment, only certain expenses qualify. How to refile taxes 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. How to refile taxes 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. How to refile taxes 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. How to refile taxes However, fees for personal expenses (described below) are never qualified education expenses. How to refile taxes Qualified education expenses for either credit do not include amounts paid for: Personal expenses. How to refile taxes This means room and board, insurance, medical expenses (including student health fees), transportation, and other similar personal, living, or family expenses. How to refile taxes 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. How to refile taxes 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). How to refile taxes 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). How to refile taxes 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. How to refile taxes 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. How to refile taxes 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. How to refile taxes 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. How to refile taxes Qualified education expenses for any academic period must be reduced by any tax-free educational assistance allocable to that academic period. How to refile taxes See Adjustments to Qualified Education Expenses, later. How to refile taxes Prepaid Expenses. How to refile taxes   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. How to refile taxes See Academic period , earlier. How to refile 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 an education credit for 2013 only (if you meet all the other requirements). How to refile taxes    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). How to refile taxes Paid with borrowed funds. How to refile taxes   You can claim an education credit for qualified education expenses paid with the proceeds of a loan. How to refile taxes 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. How to refile taxes Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. How to refile taxes Student withdraws from class(es). How to refile taxes   You can claim an education credit for qualified education expenses not refunded when a student withdraws. How to refile taxes No Double Benefit Allowed You cannot do any of the following. How to refile taxes 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. How to refile taxes Claim more than one education credit based on the same qualified education expenses. How to refile taxes 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). How to refile taxes 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. How to refile taxes See Adjustments to Qualified Education Expenses, next. How to refile taxes 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. How to refile taxes The result is the amount of adjusted qualified education expenses for each student. How to refile taxes Tax-free educational assistance. How to refile taxes   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. How to refile taxes See Academic period , earlier. How to refile taxes      Tax-free educational assistance includes:    Tax-free parts of scholarships and fellowships (see chapter 12 of this publication and chapter 1 of Pub. How to refile taxes 970), The tax-free part of Pell grants (see chapter 1 of Pub. How to refile taxes 970), The tax-free part of employer-provided educational assistance (see Pub. How to refile taxes 970), Veterans' educational assistance (see chapter 1 of Pub. How to refile taxes 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. How to refile taxes Generally, any scholarship or fellowship is treated as tax-free educational assistance. How to refile taxes 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. How to refile taxes 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. How to refile taxes 970, chapter 1. How to refile taxes 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. How to refile taxes For details, see Adjustments of Qualified Education Expenses, in chapters 2 and 3 of Pub. How to refile taxes 970. How to refile taxes Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. How to refile 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). How to refile 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. How to refile 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. How to refile taxes Refunds. How to refile taxes   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. How to refile taxes Some tax-free educational assistance received after 2013 may be treated as a refund. How to refile taxes See Tax-free educational assistance, earlier. How to refile taxes Refunds received in 2013. How to refile 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. How to refile taxes Refunds received after 2013 but before your income tax return is filed. How to refile taxes   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. How to refile taxes Refunds received after 2013 and after your income tax return is filed. How to refile taxes   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. How to refile taxes See Credit recapture, next. How to refile taxes Credit recapture. How to refile taxes    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. How to refile taxes 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. How to refile taxes 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). How to refile taxes Include that amount as an additional tax for the year the refund or tax-free assistance was received. How to refile taxes Example. How to refile taxes    You paid $8,000 tuition and fees in December 2013 for your child's Spring semester beginning in January 2014. How to refile taxes 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 . How to refile taxes 20). How to refile taxes You claimed no other tax credits. How to refile taxes After you filed your return, your child withdrew from two courses and you received a refund of $1,400. How to refile taxes You must refigure your 2013 lifetime learning credit using $6,600 ($8,000 qualified education expenses − $1,400 refund). How to refile taxes The refigured credit is $1,320 and your tax liability increased by $280. How to refile taxes 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. How to refile taxes See the instructions for your 2014 income tax return to determine where to include this tax. How to refile taxes 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. How to refile taxes Amounts that do not reduce qualified education expenses. How to refile 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. How to refile 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. How to refile 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, as defined in Chapter 1 of Pub. How to refile taxes 970. How to refile taxes The use of the money is not restricted. How to refile taxes   For examples, see chapter 2 in Pub. How to refile taxes 970. How to refile taxes Figure 35-A. How to refile taxes Can You Claim an Education Credit for 2013? This image is too large to be displayed in the current screen. How to refile taxes Please click the link to view the image. How to refile taxes Figure 35-A. How to refile taxes Can You Claim an Education Credit for 2013? Prev  Up  Next   Home   More Online Publications