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Military Income Tax

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Military Income Tax

Military income tax Publication 947 - Main Content Table of Contents Practice Before the IRSWhat Is Practice Before the IRS? Who Can Practice Before the IRS? Who Cannot Practice Before the IRS? How Does an Individual Become Enrolled? What Are the Rules of Practice? Authorizing a RepresentativeWhat Is a Power of Attorney? When Is a Power of Attorney Required? When Is a Power of Attorney Not Required? How Do I Fill Out Form 2848? What Happens to the Power of Attorney When Filed? How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Military income tax Practice Before the IRS The Office of Professional Responsibility and the Return Preparer Office generally are responsible for administering and enforcing the regulations governing practice before the IRS. Military income tax The Office of Professional Responsibility generally has responsibility for matters related to practitioner conduct and exclusive responsibility for discipline, including disciplinary proceedings and sanctions. Military income tax The Return Preparer Office is responsible for matters related to the authority to practice, including acting on applications for enrollment and administering competency testing and continuing education. Military income tax What Is Practice Before the IRS? Practice before the IRS covers all matters relating to any of the following. Military income tax Communicating with the IRS for a taxpayer regarding the taxpayer's rights, privileges, or liabilities under laws and regulations administered by the IRS. Military income tax Representing a taxpayer at conferences, hearings, or meetings with the IRS. Military income tax Preparing and filing documents, including tax returns, with the IRS for a taxpayer. Military income tax Providing a client with written advice which has a potential for tax avoidance or evasion. Military income tax Furnishing information at the request of the IRS or appearing as a witness for the taxpayer is not practice before the IRS. Military income tax Who Can Practice Before the IRS? The following individuals can practice before the IRS. Military income tax However, any individual who is recognized to practice (a recognized representative) must be designated as the taxpayer's representative and file a written declaration with the IRS stating that he or she is authorized and qualified to represent a particular taxpayer. Military income tax Form 2848 can be used for this purpose. Military income tax Attorneys. Military income tax   Any attorney who is not currently under suspension or disbarment from practice before the IRS and who is a member in good standing of the bar of the highest court of any state, possession, territory, commonwealth, or the District of Columbia may practice before the IRS. Military income tax Certified public accountants (CPAs). Military income tax   Any CPA who is not currently under suspension or disbarment from practice before the IRS and who is duly qualified to practice as a CPA in any state, possession, territory, commonwealth, or the District of Columbia may practice before the IRS. Military income tax Enrolled agents. Military income tax   Any enrolled agent in active status who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. Military income tax Enrolled retirement plan agents. Military income tax   Any enrolled retirement plan agent in active status who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. Military income tax The practice of enrolled retirement plan agents is limited to certain Internal Revenue Code sections that relate to their area of expertise, principally those sections governing employee retirement plans. Military income tax Enrolled actuaries. Military income tax   Any individual who is enrolled as an actuary by the Joint Board for the Enrollment of Actuaries who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. Military income tax The practice of enrolled actuaries is limited to certain Internal Revenue Code sections that relate to their area of expertise, principally those sections governing employee retirement plans. Military income tax Student. Military income tax    Under certain circumstances, a student who is supervised by a practitioner may request permission to represent another person before the IRS. Military income tax For more information, see Authorization for special appearances, later. Military income tax Registered tax return preparers and unenrolled return preparers. Military income tax   A registered tax return preparer is an individual who has passed an IRS competency test and is authorized to prepare and sign tax returns as the preparer. Military income tax An unenrolled return preparer is an individual other than an attorney, CPA, enrolled agent, enrolled retirement plan agent, or enrolled actuary who prepares and signs a taxpayer's return as the preparer, or who prepares a return but is not required (by the instructions to the return or regulations) to sign the return. Military income tax   Registered tax return preparers and unenrolled return preparers may only represent taxpayers before revenue agents, customer service representatives, or similar officers and employees of the Internal Revenue Service (including the Taxpayer Advocate Service) during an examination of the taxable year or period covered by the tax return they prepared and signed. Military income tax Registered tax return preparers and unenrolled return preparers cannot represent taxpayers, regardless of the circumstances requiring representation, before appeals officers, revenue officers, counsel or similar officers or employees of the Internal Revenue Service or the Department of Treasury. Military income tax Registered tax return preparers and unenrolled return preparers cannot execute closing agreements, extend the statutory period for tax assessments or collection of tax, execute waivers, execute claims for refund, or sign any document on behalf of a taxpayer. Military income tax   If the unenrolled return preparer does not meet the requirements for limited representation, you may file Form 8821 to allow the preparer to inspect your tax information and receive copies of notices sent to you by the IRS. Military income tax See Form 8821. Military income tax Practice denied. Military income tax   Any individual engaged in limited practice before the IRS who is involved in disreputable conduct is subject to disciplinary action. Military income tax Disreputable conduct includes, but is not limited to, the list of items under Incompetence and Disreputable Conduct shown later under What Are the Rules of Practice. Military income tax Other individuals who may serve as representatives. Military income tax   Because of their special relationship with a taxpayer, the following individuals can represent the specified taxpayers before the IRS, provided they present satisfactory identification and, except in the case of an individual described in (1) below, proof of authority to represent the taxpayer. Military income tax An individual. Military income tax An individual can represent himself or herself before the IRS and does not have to file a written declaration of qualification and authority. Military income tax A family member. Military income tax An individual can represent members of his or her immediate family. Military income tax Immediate family includes a spouse, child, parent, brother, or sister of the individual. Military income tax An officer. Military income tax A bona fide officer of a corporation (including a parent, subsidiary, or other affiliated corporation), association, or organized group can represent the corporation, association, or organized group. Military income tax An officer of a governmental unit, agency, or authority, in the course of his or her official duties, can represent the organization before the IRS. Military income tax A partner. Military income tax A general partner may represent the partnership before the IRS. Military income tax An employee. Military income tax A regular full-time employee can represent his or her employer. Military income tax An employer can be, but is not limited to, an individual, partnership, corporation (including a parent, subsidiary, or other affiliated corporation), association, trust, receivership, guardianship, estate, organized group, governmental unit, agency, or authority. Military income tax A fiduciary. Military income tax A fiduciary (trustee, executor, personal representative, administrator, receiver, or guardian) stands in the position of a taxpayer and acts as the taxpayer, not as a representative. Military income tax See Fiduciary under When Is a Power of Attorney Not Required, later. Military income tax Representation Outside the United States Any individual may represent an individual or entity, who is outside the United States, before personnel of the IRS when such representation occurs outside the United States. Military income tax See section 10. Military income tax 7(c)(1)(vii) of Circular 230. Military income tax Authorization for Special Appearances The Commissioner of Internal Revenue, or delegate, can authorize an individual who is not otherwise eligible to practice before the IRS to represent another person for a particular matter. Military income tax The prospective representative must request this authorization in writing from the Office of Professional Responsibility. Military income tax However, it is granted only when extremely compelling circumstances exist. Military income tax If granted, the Commissioner, or delegate, will issue a letter that details the conditions related to the appearance and the particular tax matter for which the authorization is granted. Military income tax The authorization letter should not be confused with a letter from an IRS center advising an individual that he or she has been assigned a Centralized Authorization File (CAF) number. Military income tax The issuance of a CAF number does not indicate that an individual is either recognized or authorized to practice before the IRS. Military income tax It merely confirms that a centralized file for authorizations has been established for the individual under that number. Military income tax Students in LITCs and the STCP. Military income tax   A student who works in a Low Income Taxpayer Clinic (LITC) or Student Tax Clinic Program (STCP) who is supervised by a practitioner may request permission to represent another person before the IRS. Military income tax Authorization requests must be made to the Office of Professional Responsibility. Military income tax If granted, a letter authorizing the student's special appearance and detailing any conditions related to the appearance will be issued. Military income tax Students receiving an authorization letter generally can represent taxpayers before any IRS function or office subject to any conditions in the authorization letter. Military income tax If you intend to have a student represent you, review the authorization letter and ask your student, your student's supervisor, or the Office of Professional Responsibility if you have questions about the terms of the authorization. Military income tax Who Cannot Practice Before the IRS? In general, individuals who are not eligible or who have lost the privilege as a result of certain actions cannot practice before the IRS. Military income tax If an individual loses eligibility to practice, the IRS will not recognize a power of attorney that names the individual as a representative. Military income tax Corporations, associations, partnerships, and other persons that are not individuals. Military income tax   These organizations (or persons) are not eligible to practice before the IRS. Military income tax Loss of Eligibility Generally, individuals lose their eligibility to practice before the IRS in the following ways. Military income tax Not meeting the requirements for renewal of enrollment (such as continuing professional education). Military income tax Requesting to be placed in inactive retirement status. Military income tax Being suspended or disbarred by the Office of Professional Responsibility for violating the regulations governing practice before the IRS. Military income tax Failure to meet requirements. Military income tax   Individuals who fail to comply with the requirements for eligibility for renewal of enrollment will be notified by the IRS. Military income tax The notice will explain the reason for noncompliance and provide the individual with an opportunity to furnish information for reconsideration. Military income tax The individual has 60 days from the date of the notice to respond. Military income tax Inactive roster. Military income tax   An individual will be placed on the roster of inactive individuals for a period of three years, if he or she: Fails to respond timely to the notice of noncompliance with the renewal requirements, Fails to file timely the application for renewal, or Does not satisfy the requirements of eligibility for renewal. Military income tax The individual must file an application for renewal and satisfy all requirements for renewal after being placed in inactive status. Military income tax Otherwise, at the conclusion of the next renewal cycle, he or she will be removed from the roster and the enrollment or registration terminated. Military income tax Inactive retirement status. Military income tax   Individuals who request to be placed in an inactive retirement status will be ineligible to practice before the IRS. Military income tax They must continue to adhere to all renewal requirements. Military income tax They can be reinstated to an active enrollment status by filing an application for renewal and providing evidence that they have completed the required continuing professional education hours for the enrollment cycle or registration year. Military income tax Suspension and disbarment. Military income tax   Individuals authorized to practice before the IRS are subject to disciplinary proceedings and may be suspended or disbarred for violating any regulation governing practice before the IRS. Military income tax This includes engaging in acts of disreputable conduct. Military income tax For more information, see Incompetence and Disreputable Conduct under What are the Rules of Practice, later. Military income tax   Practitioners who are suspended in a disciplinary proceeding are not allowed to practice before the IRS during the period of suspension. Military income tax See What Is Practice Before the IRS, earlier. Military income tax   Practitioners who are disbarred in a disciplinary proceeding are not allowed to practice before the IRS. Military income tax However, a practitioner can seek reinstatement from the Office of Professional Responsibility five years after disbarment. Military income tax   If the practitioner seeks reinstatement, he or she may not practice before the IRS until the Office of Professional Responsibility authorizes reinstatement. Military income tax The Office of Professional Responsibility may reinstate the practitioner if it is determined that: The practitioner's future conduct is not likely to be in violation of the regulations, and Granting the reinstatement would not be contrary to the public interest. Military income tax How Does an Individual Become Enrolled? The Return Preparer Office can grant enrollment to practice before the IRS to an applicant who demonstrates special competence in tax matters by passing a written examination administered by the IRS. Military income tax Enrollment also can be granted to an applicant who qualifies because of past service and technical experience in the IRS. Military income tax In either case, certain application forms, discussed next, must be filed. Military income tax Additionally, an applicant must not have engaged in any conduct that would justify suspension or disbarment from practice before the IRS. Military income tax See Incompetence and Disreputable Conduct, later. Military income tax Form 2587. Military income tax   Applicants can apply to take the special enrollment examination by filing Form 2587, Application for Special Enrollment Examination. Military income tax Form 2587 can be filed online, by mail, or by fax. Military income tax For more information, see instructions and fees listed on the form. Military income tax To get Form 2587, see How To Get Tax Help, later. Military income tax Form 23 and Form 23-EP. Military income tax   Individuals who have passed the examination or are applying on the basis of past service and technical experience with the IRS can apply for enrollment by filing Form 23, Application for Enrollment to Practice Before the Internal Revenue Service, or Form 23-EP, Application for Enrollment to Practice Before the Internal Revenue Service as an Enrolled Retirement Plan Agent. Military income tax The application must include a check or money order in the amount of the fee shown on Form 23 or Form 23-EP. Military income tax Alternatively, payment may be made electronically pursuant to instructions on the forms. Military income tax To get Form 23 or Form 23-EP, see How To Get Tax Help, later. Military income tax Form 5434. Military income tax   An individual may apply as an enrolled actuary on the basis of past employment with the IRS and technical experience by filing Form 5434, Application for Enrollment, with the Joint Board for the Enrollment of Actuaries. Military income tax The application must include a check or money order in the amount of the fee shown on Form 5434. Military income tax To get Form 5434, see How To Get Tax Help, later. Military income tax Period of enrollment. Military income tax   An enrollment card will be issued to each individual whose enrollment application is approved. Military income tax The individual is enrolled until the expiration date shown on the enrollment card or certificate. Military income tax To continue practicing beyond the expiration date, the individual must request renewal of the enrollment by filing Form 8554, Application for Renewal of Enrollment to Practice Before the Internal Revenue Service, or Form 8554-EP, Application for Renewal of Enrollment to Practice Before the Internal Revenue Service as an Enrolled Retirement Plan Agent (ERPA). Military income tax What Are the Rules of Practice? The rules governing practice before the IRS are published in the Code of Federal Regulations at 31 C. Military income tax F. Military income tax R. Military income tax part 10 and reprinted in Treasury Department Circular No. Military income tax 230 (Circular 230). Military income tax An attorney, CPA, enrolled agent, enrolled retirement plan agent, registered tax return preparer, or enrolled actuary authorized to practice before the IRS (referred to hereafter as a practitioner) has the duty to perform certain acts and is restricted from performing other acts. Military income tax In addition, a practitioner cannot engage in disreputable conduct (discussed later). Military income tax Any practitioner who does not comply with the rules of practice or engages in disreputable conduct is subject to disciplinary action. Military income tax Also, unenrolled preparers must comply with the rules of practice and conduct to exercise the privilege of limited practice before the IRS. Military income tax See Publication 470 for a discussion of the special rules for limited practice by unenrolled preparers. Military income tax Duties Practitioners must promptly submit records or information requested by officers or employees of the IRS, except when the practitioner believes on reasonable belief and good faith that the information is privileged. Military income tax Communications with respect to tax advice between a federally authorized tax practitioner and a taxpayer generally are confidential to the same extent that communication would be privileged if it were between a taxpayer and an attorney if the advice relates to: Noncriminal tax matters before the IRS, or Noncriminal tax proceedings brought in federal court by or against the United States. Military income tax Communications regarding corporate tax shelters. Military income tax   This protection of tax advice communications does not apply to any written communications between a federally authorized tax practitioner and any person, including a director, shareholder, officer, employee, agent, or representative of a corporation if the communication involves the promotion of the direct or indirect participation of the corporation in any tax shelter. Military income tax Duty to advise. Military income tax   A practitioner who knows that his or her client has not complied with the revenue laws or has made an error or omission in any return, document, affidavit, or other required paper, has the responsibility to advise the client promptly of the noncompliance, error, or omission, and the consequences of the noncompliance, error, or omission. Military income tax Due diligence. Military income tax   A practitioner must exercise due diligence when performing the following duties. Military income tax Preparing or assisting in the preparing, approving, and filing of returns, documents, affidavits, and other papers relating to IRS matters. Military income tax Determining the correctness of oral or written representations made by him or her to the Department of the Treasury. Military income tax Determining the correctness of oral or written representations made by him or her to clients with reference to any matter administered by the IRS. Military income tax Restrictions Practitioners are restricted from engaging in certain practices. Military income tax The following paragraphs discuss some of these restricted practices. Military income tax Delays. Military income tax   A practitioner must not unreasonably delay the prompt disposition of any matter before the IRS. Military income tax Assistance from disbarred or suspended persons and former IRS employees. Military income tax   A practitioner must not knowingly, directly or indirectly, do the following. Military income tax Accept assistance from, or assist, any person who is under disbarment or suspension from practice before the IRS if the assistance relates to matters considered practice before the IRS. Military income tax Accept assistance from any former government employee where provisions of Circular 230 or any federal law would be violated. Military income tax Performance as a notary. Military income tax   A practitioner who is a notary public and is employed as counsel, attorney, or agent in a matter before the IRS, or has a material interest in the matter, cannot engage in any notary activities related to that matter. Military income tax Negotiations of taxpayer refund checks. Military income tax   Practitioners must not endorse or otherwise negotiate (cash) any refund check (including directing or accepting payment by any means, electronic or otherwise, in an account owned or controlled by the practitioner or any firm or other entity with whom the practitioner is associated) issued to the taxpayer. Military income tax Incompetence and Disreputable Conduct Any practitioner or unenrolled return preparer may be disbarred or suspended from practice before the IRS, or censured, for incompetence or disreputable conduct. Military income tax The following list contains examples of conduct that is considered disreputable. Military income tax Being convicted of any criminal offense under the revenue laws or of any offense involving dishonesty or breach of trust. Military income tax Knowingly giving false or misleading information in connection with federal tax matters, or participating in such activity. Military income tax Soliciting employment by prohibited means as discussed in section 10. Military income tax 30 of Circular 230. Military income tax Willfully failing to file a federal tax return, evading or attempting to evade any federal tax or payment, or participating in such actions. Military income tax Misappropriating, or failing to properly and promptly remit, funds received from clients for payment of taxes or other obligations due the United States. Military income tax Directly or indirectly attempting to influence the official action of IRS employees by the use of threats, false accusations, duress, or coercion, or by offering gifts, favors, or any special inducements. Military income tax Being disbarred or suspended from practice as an attorney, CPA, public accountant, or actuary, by the District of Columbia or any state, possession, territory, commonwealth, or any federal court, or any federal agency, body, or board. Military income tax Knowingly aiding and abetting another person to practice before the IRS during a period of suspension, disbarment, or ineligibility of that other person. Military income tax Using abusive language, making false accusations and statements knowing them to be false, circulating or publishing malicious or libelous matter, or engaging in any contemptuous conduct in connection with practice before the IRS. Military income tax Giving a false opinion knowingly, recklessly, or through gross incompetence; or following a pattern of providing incompetent opinions in questions arising under the federal tax laws. Military income tax Censure, Disbarments, and Suspensions The Office of Professional Responsibility may censure or institute proceedings to censure, suspend or disbar any attorney, CPA, or enrolled agent who has violated Circular 230. Military income tax A practitioner will be given the opportunity to demonstrate compliance with the rules before any disciplinary action is taken. Military income tax Authorizing a Representative You may either represent yourself, or you may authorize an individual to represent you before the IRS. Military income tax If you chose to have someone represent you, your representative must be a person eligible to practice before the IRS. Military income tax See Who Can Practice Before the IRS, earlier. Military income tax What Is a Power of Attorney? A power of attorney is your written authorization for an individual to act on your behalf. Military income tax If the authorization is not limited, the individual generally can perform all acts that you can perform. Military income tax The authority granted to a registered tax return preparer or an unenrolled preparer is limited. Military income tax For information on the limits regarding registered tax return preparers, see Circular 230 §10. Military income tax 3(f). Military income tax For information on the limits regarding unenrolled preparers, see Publication 470. Military income tax Acts performed. Military income tax   Any representative, other than a registered tax return preparer or an unenrolled return preparer, can usually perform the following acts. Military income tax Represent you before any office of the IRS. Military income tax Sign an offer or a waiver of restriction on assessment or collection of a tax deficiency, or a waiver of notice of disallowance of claim for credit or refund. Military income tax Sign a consent to extend the statutory time period for assessment or collection of a tax. Military income tax Sign a closing agreement. Military income tax Signing your return. Military income tax   The representative named under a power of attorney is not permitted to sign your income tax return unless: The signature is permitted under the Internal Revenue Code and the related regulations (see Regulations section 1. Military income tax 6012-1(a)(5)). Military income tax You specifically authorize this in your power of attorney. Military income tax For example, the regulation permits a representative to sign your return if you are unable to sign the return due to: Disease or injury. Military income tax Continuous absence from the United States (including Puerto Rico) for a period of at least 60 days prior to the date required by law for filing the return. Military income tax Other good cause if specific permission is requested of and granted by the IRS. Military income tax When a return is signed by a representative, it must be accompanied by a power of attorney (or copy) authorizing the representative to sign the return. Military income tax For more information, see the Form 2848 instructions. Military income tax Limitation on substitution or delegation. Military income tax   A recognized representative can substitute or delegate authority under the power of attorney to another recognized representative only if the act is specifically authorized by you on the power of attorney. Military income tax   After a substitution has been made, only the newly recognized representative will be recognized as the taxpayer's representative. Military income tax If a delegation of power has been made, both the original and the delegated representative will be recognized by the IRS to represent you. Military income tax Disclosure of returns to a third party. Military income tax   Your representative cannot execute consents that will allow the IRS to disclose tax return or return information to a third party unless you specifically delegate this authority to your representative on line 5 of Form 2848. Military income tax Incapacity or incompetency. Military income tax   A power of attorney is generally terminated if you become incapacitated or incompetent. Military income tax   The power of attorney can continue, however, in the case of your incapacity or incompetency if you authorize this on line 5 “Other” of the Form 2848 and if your non-IRS durable power of attorney meets all the requirements for acceptance by the IRS. Military income tax See Non-IRS powers of attorney, later. Military income tax When Is a Power of Attorney Required? Submit a power of attorney when you want to authorize an individual to represent you before the IRS, whether or not the representative performs any of the other acts cited earlier under What Is a Power of Attorney. Military income tax A power of attorney is most often required when you want to authorize another individual to perform at least one of the following acts on your behalf. Military income tax Represent you at a meeting with the IRS. Military income tax Prepare and file a written response to the IRS. Military income tax Form Required Use Form 2848 to appoint a recognized representative to act on your behalf before the IRS. Military income tax Individuals recognized to practice before the IRS are listed under Part II, Declaration of Representative, of Form 2848. Military income tax Your representative must complete that part of the form. Military income tax Non-IRS powers of attorney. Military income tax   The IRS will accept a non-IRS power of attorney, but a completed Form 2848 must be attached in order for the power of attorney to be entered on the Centralized Authorization File (CAF) system. Military income tax For more information, see Processing a non-IRS power of attorney, later. Military income tax   If you want to use a power of attorney document other than Form 2848, it must contain the following information. Military income tax Your name and mailing address. Military income tax Your social security number and/or employer identification number. Military income tax Your employee plan number, if applicable. Military income tax The name and mailing address of your representative(s). Military income tax The types of tax involved. Military income tax The federal tax form number. Military income tax The specific year(s) or period(s) involved. Military income tax For estate tax matters, the decedent's date of death. Military income tax A clear expression of your intention concerning the scope of authority granted to your representative(s). Military income tax Your signature and date. Military income tax You also must attach to the non-IRS power of attorney a signed and dated statement made by your representative. Military income tax This statement, which is referred to as the Declaration of Representative, is contained in Part II of Form 2848. Military income tax The statement should read: I am not currently under suspension or disbarment from practice before the Internal Revenue Service or other practice of my profession by any other authority, I am aware of the regulations contained in Circular 230, I am authorized to represent the taxpayer(s) identified in the power of attorney, and I am an individual described in 26 CFR 601. Military income tax 502(b). Military income tax Required information missing. Military income tax   The IRS will not accept your non-IRS power of attorney if it does not contain all the information listed above. Military income tax You can sign and submit a completed Form 2848 or a new non-IRS power of attorney that contains all the information. Military income tax If you cannot sign an acceptable replacement document, your attorney-in-fact may be able to perfect (make acceptable to the IRS) your non-IRS power of attorney by using the procedure described next. Military income tax Procedure for perfecting a non-IRS power of attorney. Military income tax   Under the following conditions, the attorney-in-fact named in your non-IRS power of attorney can sign a Form 2848 on your behalf. Military income tax The original non-IRS power of attorney grants authority to handle federal tax matters (for example, general authority to perform any acts). Military income tax The attorney-in-fact attaches a statement (signed under penalty of perjury) to the Form 2848 stating that the original non-IRS power of attorney is valid under the laws of the governing jurisdiction. Military income tax Example. Military income tax John Elm, a taxpayer, signs a non-IRS durable power of attorney that names his neighbor and CPA, Ed Larch, as his attorney-in-fact. Military income tax The power of attorney grants Ed the authority to perform any and all acts on John's behalf. Military income tax However, it does not list specific tax-related information such as types of tax or tax form numbers. Military income tax Shortly after John signs the power of attorney, he is declared incompetent. Military income tax Later, a federal tax matter arises concerning a prior year return filed by John. Military income tax Ed attempts to represent John before the IRS but is rejected because the durable power of attorney does not contain required information. Military income tax If Ed attaches a statement (signed under the penalty of perjury) that the durable power of attorney is valid under the laws of the governing jurisdiction, he can sign a completed Form 2848 and submit it on John's behalf. Military income tax If Ed can practice before the IRS (see Who Can Practice Before the IRS, earlier), he can name himself as representative on Form 2848. Military income tax Otherwise, he must name another individual who can practice before the IRS. Military income tax Processing a non-IRS power of attorney. Military income tax   The IRS has a centralized computer database system called the CAF system. Military income tax This system contains information on the authority of taxpayer representatives. Military income tax Generally, when you submit a power of attorney document to the IRS, it is processed for inclusion on the CAF system. Military income tax Entry of your power of attorney on the CAF system enables IRS personnel, who do not have a copy of your power of attorney, to verify the authority of your representative by accessing the CAF. Military income tax It also enables the IRS to automatically send copies of notices and other IRS communications to your representative if you specify that your representative should receive those communications. Military income tax   You can have your non-IRS power of attorney entered on the CAF system by attaching it to a completed Form 2848 and submitting it to the IRS. Military income tax Your signature is not required; however, your attorney-in-fact must sign the Declaration of Representative (see Part II of Form 2848). Military income tax Preparation of Form — Helpful Hints The preparation of Form 2848 is illustrated by an example, later under How Do I Fill Out Form 2848. Military income tax However, the following will also assist you in preparing the form. Military income tax Line-by-line hints. Military income tax   The following hints are summaries of some of the line-by-line instructions for Form 2848. Military income tax Line 1—Taxpayer information. Military income tax   If a joint return is involved, the husband and wife each file a separate Form 2848 if they both want to be represented. Military income tax If only one spouse wants to be represented in the matter, that spouse files a Form 2848. Military income tax Line 2—Representative(s). Military income tax   Only individuals may be named as representatives. Military income tax If your representative has not been assigned a CAF number, enter “None” on that line and the IRS will issue one to your representative. Military income tax If the representative's address or phone number has changed since the CAF number was issued, you should check the appropriate box. Military income tax Enter your representative's fax number if available. Military income tax   If you want to name more than three representatives, attach additional Form(s) 2848. Military income tax The IRS can send copies of notices and communications to two of your representatives. Military income tax You must, however, check the boxes on line 2 of the Form 2848 if you want the IRS to routinely send copies of notices and communications to your representatives. Military income tax If you do not check the boxes, your representatives will not routinely receive copies of notices and communications. Military income tax Line 3—Tax matters. Military income tax   You may list any tax years or periods that have already ended as of the date you sign the power of attorney. Military income tax However, you may include on a power of attorney only future tax periods that end no later than 3 years after the date the power of attorney is received by the IRS. Military income tax The 3 future periods are determined starting after December 31 of the year the power of attorney is received by the IRS. Military income tax However, avoid general references such as “all years” or “all taxes. Military income tax ” Any Form 2848 with general references will be returned. Military income tax Line 4—Specific use not recorded on Centralized Authorization File (CAF). Military income tax   Certain matters cannot be recorded on the CAF system. Military income tax Examples of such matters include, but are not limited to, the following. Military income tax Requests for a private letter ruling or technical advice. Military income tax Applications for an employer identification number (EIN). Military income tax Claims filed on Form 843, Claim for Refund and Request for Abatement. Military income tax Corporate dissolutions. Military income tax Requests for change of accounting method. Military income tax Requests for change of accounting period. Military income tax Applications for recognition of exemption under sections 501(c)(3), 501(a), or 521 (Forms 1023, 1034, or 1028). Military income tax Request for a determination of the qualified status of an employee benefit plan (Forms 5300, 5307, or 5310). Military income tax Application for Award for Original Information under section 7623. Military income tax Voluntary submissions under the Employee Plans Compliance Resolution System (EPCRS). Military income tax Freedom of Information Act requests. Military income tax If the tax matter described on line 3 of Form 2848 concerns one of these matters specifically, check the box on line 4. Military income tax If this box is checked, the representative should mail or fax the power of attorney to the IRS office handling the matter. Military income tax Otherwise, the representative should bring a copy of the power of attorney to each meeting with the IRS. Military income tax Where To File a Power of Attorney Generally, you can mail or fax a paper Form 2848 directly to the IRS. Military income tax To determine where you should file Form 2848, see Where To File in the instructions for Form 2848. Military income tax If Form 2848 is for a specific use, mail or fax it to the office handling that matter. Military income tax For more information on specific use, see the Instructions for Form 2848, line 4. Military income tax FAX copies. Military income tax   The IRS will accept a copy of a power of attorney that is submitted by facsimile transmission (fax). Military income tax If you choose to file a power of attorney by fax, be sure the appropriate IRS office is equipped to accept this type of transmission. Military income tax Your representative may be able to file Form 2848 electronically via the IRS website. Military income tax For more information, your representative can go to www. Military income tax irs. Military income tax gov and under the Tax Professionals tab, click on e-services–Online Tools for Tax Professionals. Military income tax If you complete Form 2848 for electronic signature authorization, do not file Form 2848 with the IRS. Military income tax Instead, give it to your representative, who will retain the document. Military income tax Updating a power of attorney. Military income tax   Submit any update or modification to an existing power of attorney in writing. Military income tax Your signature (or the signature of the individual(s) authorized to sign on your behalf) is required. Military income tax Do this by sending the updated Form 2848 or non-IRS power of attorney to the IRS office(s) where you previously sent the original(s), including the center where the related return was, or will be filed. Military income tax   A recognized representative may substitute or delegate authority if you specifically authorize your representative to substitute or delegate representation in the original power of attorney. Military income tax To make a substitution or delegation, the representative must file the following items with the IRS office(s) where the power of attorney was filed. Military income tax A written notice of substitution or delegation signed by the recognized representative. Military income tax A written declaration of representative made by the new representative. Military income tax A copy of the power of attorney that specifically authorizes the substitution or delegation. Military income tax Retention/Revocation of Prior Power(s) of Attorney A newly filed power of attorney concerning the same matter will revoke a previously filed power of attorney. Military income tax However, the new power of attorney will not revoke the prior power of attorney if it specifically states it does not revoke such prior power of attorney and either of the following are attached to the new power of attorney. Military income tax A copy of the unrevoked prior power of attorney, or A statement signed by the taxpayer listing the name and address of each representative authorized under the prior unrevoked power of attorney. Military income tax Note. Military income tax The filing of Form 2848 will not revoke any  Form 8821 that is in effect. Military income tax Revocation of Power of Attorney/Withdrawal of Representative If you want to revoke an existing power of attorney and do not want to name a new representative, or if a representative wants to withdraw from representation, mail or fax a copy of the previously executed power of attorney to the IRS, or if the power of attorney is for a specific matter, to the IRS office handling the matter. Military income tax If the taxpayer is revoking the power of attorney, the taxpayer must write “REVOKE” across the top of the first page with a current signature and date below this annotation. Military income tax If the representative is withdrawing from the representation, the representative must write “WITHDRAW” across the top of the first page with a current signature and date below this annotation. Military income tax If you do not have a copy of the power of attorney you want to revoke or withdraw, send a statement to the IRS. Military income tax The statement of revocation or withdrawal must indicate that the authority of the power of attorney is revoked or withdrawn, list the matters and periods, and must be signed and dated by the taxpayer or representative as applicable. Military income tax If the taxpayer is revoking, list the name and address of each recognized representative whose authority is revoked. Military income tax When the taxpayer is completely revoking authority, the form should state “remove all years/periods” instead of listing the specific tax matter, years, or periods. Military income tax If the representative is withdrawing, list the name, TIN, and address (if known) of the taxpayer. Military income tax To revoke a specific use power of attorney, send the power of attorney or statement of revocation to the IRS office handling your case, using the above instructions. Military income tax A power of attorney held by a student will be recorded on the CAF system for 130 days from the receipt date. Military income tax If you are authorizing a student to represent you after that time, you will need to submit a current and valid Form 2848. Military income tax When Is a Power of Attorney Not Required? A power of attorney is not required when the third party is not dealing with the IRS as your representative. Military income tax The following situations do not require a power of attorney. Military income tax Providing information to the IRS. Military income tax Authorizing the disclosure of tax return information through Form 8821, Tax Information Authorization, or other written or oral disclosure consent. Military income tax Allowing the IRS to discuss return information with a third party via the checkbox provided on a tax return or other document. Military income tax Allowing a tax matters partner or person (TMP) to perform acts for the partnership. Military income tax Allowing the IRS to discuss return information with a fiduciary. Military income tax How Do I Fill Out Form 2848? The following example illustrates how to complete Form 2848. Military income tax The two completed forms for this example are shown on the next pages. Military income tax Example. Military income tax Stan and Mary Doe have been notified that their joint tax returns (Forms 1040) for 2009, 2010, and 2011 are being examined. Military income tax They have decided to appoint Jim Smith, an enrolled agent, to represent them in this matter and any future matters concerning these returns. Military income tax Jim, who has prepared returns at the same location for years, already has a Centralized Authorization File (CAF) number assigned to him. Military income tax Mary does not want Jim to sign any agreements on her behalf, but Stan is willing to have Jim do so. Military income tax They want copies of all notices and written communications sent to Jim. Military income tax This is the first time Stan and Mary have given power of attorney to anyone. Military income tax They should each complete a Form 2848 as follows. Military income tax Line 1—Taxpayer information. Military income tax   Stan and Mary must each file a separate Form 2848. Military income tax On his separate Form 2848, Stan enters his name, street address, and social security number in the spaces provided. Military income tax Mary does likewise on her separate Form 2848. Military income tax Line 2—Representative(s). Military income tax   On their separate Forms 2848, Stan and Mary each enters the name and current address of their chosen representative, Jim Smith. Military income tax Both Stan and Mary want Jim Smith to receive notices and communications concerning the matters identified in line 3, so on their separate Forms 2848, Stan and Mary each checks the box in the first column of line 2. Military income tax They also enter Mr. Military income tax Smith's CAF number, his telephone number, and his fax number. Military income tax Mr. Military income tax Smith's address, telephone number, and fax number have not changed since the IRS issued his CAF number, so Stan and Mary do not check the boxes in the second column. Military income tax Line 3—Tax Matters. Military income tax   On their separate Forms 2848, Stan and Mary each enters “income” for the type of tax, “1040” for the form number, and “2009, 2010, and 2011” for the tax years. Military income tax Line 4—Specific use not recorded on Centralized Authorization File (CAF). Military income tax   On their separate Forms 2848, Stan and Mary make no entry on this line because they do not want to restrict the use of their powers of attorney to a specific use that is not recorded on the CAF. Military income tax See Preparation of Form — Helpful Hints, earlier. Military income tax Line 5—Acts authorized. Military income tax   Mary wants to sign any agreement that reflects changes to her and Stan's joint 2009, 2010, and 2011 income tax liability, so she writes “Taxpayer must sign any agreement form” on line 5 of her Form 2848. Military income tax Stan does not wish to restrict the authority of Jim Smith in this regard, so he leaves line 5 of his Form 2848 blank. Military income tax If either Mary or Stan had chosen, they could have listed other restrictions on line 5 of their separate Forms 2848. Military income tax Line 6—Retention/revocation of prior power(s) of attorney. Military income tax   Stan and Mary are each filing their first powers of attorney, so they make no entry on this line. Military income tax However, if they had filed prior powers of attorney, the filing of this current power would revoke any earlier ones for the same tax matter(s) unless they checked the box on line 6 and attached a copy of the prior power of attorney that they wanted to remain in effect. Military income tax   If Mary later decides that she can handle the examination on her own, she can revoke her power of attorney even though Stan does not revoke his power of attorney. Military income tax (See Revocation of Power of Attorney/Withdrawal of Representative, earlier, for the special rules that apply. Military income tax ) Line 7—Signature of taxpayer. Military income tax   Stan and Mary each signs and dates his or her Form 2848. Military income tax If a taxpayer does not sign, the IRS cannot accept the form. Military income tax Part II—Declaration of Representative. Military income tax   Jim Smith must complete this part of Form 2848. Military income tax If he does not sign this part, the IRS cannot accept the form. Military income tax What Happens to the Power of Attorney When Filed? A power of attorney will be recognized after it is received, reviewed, and determined by the IRS to contain the required information. Military income tax However, until a power of attorney is entered on the CAF system, IRS personnel may be unaware of the authority of the person you have named to represent you. Military income tax Therefore, during this interim period, IRS personnel may request that you or your representative bring a copy to any meeting with the IRS. Military income tax This image is too large to be displayed in the current screen. Military income tax Please click the link to view the image. Military income tax Filled-in Form 2848 - Page 1 This image is too large to be displayed in the current screen. Military income tax Please click the link to view the image. Military income tax Filled-in Form 2848 - Page 2 This image is too large to be displayed in the current screen. Military income tax Please click the link to view the image. Military income tax Filled-in Form 2848 - Page 1 This image is too large to be displayed in the current screen. Military income tax Please click the link to view the image. Military income tax Filled-in Form 2848 - Page 2 Processing and Handling How the power of attorney is processed and handled depends on whether it is a complete or incomplete document. Military income tax Incomplete document. Military income tax   If Form 2848 is incomplete, the IRS will attempt to secure the missing information either by writing or telephoning you or your representative. Military income tax For example, if your signature or signature date is missing, the IRS will contact you. Military income tax If information concerning your representative is missing and information sufficient to make a contact (such as an address and/or a telephone number) is on the document, the IRS will try to contact your representative. Military income tax   In either case, the power of attorney is not considered valid until all required information is entered on the document. Military income tax The individual(s) named as representative(s) will not be recognized to practice before the IRS, on your behalf, until the document is complete and accepted by the IRS. Military income tax Complete document. Military income tax   If the power of attorney is complete and valid, the IRS will take action to recognize the representative. Military income tax In most instances, this includes processing the document on the CAF system. Military income tax Recording the data on the CAF system enables the IRS to direct copies of mailings to authorized representatives and to readily recognize the scope of authority granted. Military income tax Documents not processed on CAF. Military income tax   Specific-use powers of attorney are not processed on the CAF system (see Preparation of Form – Helpful Hints, earlier). Military income tax For example, a power of attorney that is a one-time or specific-issue grant of authority is not processed on the CAF system. Military income tax These documents remain with the related case files. Military income tax In this situation, you should check the box on line 4 of Form 2848. Military income tax In these situations, the representative should bring a copy of the power of attorney to each meeting with the IRS. Military income tax Dealing With the Representative After a valid power of attorney is filed, the IRS will recognize your representative. Military income tax However, if it appears the representative is responsible for unreasonably delaying or hindering the prompt disposition of an IRS matter by failing to furnish, after repeated requests, nonprivileged information, the IRS can contact you directly. Military income tax For example, in most instances in which a power of attorney is recognized, the IRS will contact the representative to set up appointments and to provide lists of required items. Military income tax However, if the representative is unavailable, does not respond to repeated requests, and does not provide required items (other than items considered privileged), the IRS can bypass your representative and contact you directly. Military income tax If a representative engages in conduct described above, the matter can be referred to the Office of Professional Responsibility for consideration of possible disciplinary action. Military income tax Notices and other correspondence. Military income tax   If you have a recognized representative, you and the representative will routinely receive notices and other correspondence from the IRS (either the original or a copy) if you checked the box in the left column of line 2 of Form 2848. Military income tax If the power of attorney is processed on the CAF system, the IRS will send your representative(s) a duplicate of all computer-generated correspondence that is sent to you. Military income tax This includes notices and letters produced either at the Martinsburg Computing Center, or other IRS centers. Military income tax The IRS employee handling the case is responsible for ensuring that the original and any requested copies of each manually-generated correspondence are sent to you and your representative(s) in accordance with your authorization. Military income tax How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. Military income tax By selecting the method that is best for you, you will have quick and easy access to tax help. Military income tax Free help with your return. Military income tax   Free help in preparing your return is available nationwide from IRS-certified volunteers. Military income tax The Volunteer Income Tax Assistance (VITA) program is designed to help low and moderate income taxpayers and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Military income tax Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Military income tax To find the nearest VITA or TCE site, visit IRS. Military income tax gov or call 1-800-906-9887 or 1-800-829-1040. Military income tax   As part of the TCE program, AARP offers the Tax-Aide counseling program. Military income tax To find the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP's website at www. Military income tax aarp. Military income tax org/money/taxaide. Military income tax   For more information on these programs, go to IRS. Military income tax gov and enter keyword “VITA” in the upper right-hand corner. Military income tax Internet. Military income tax You can access the IRS website at IRS. Military income tax gov 24 hours a day, 7 days a week to: E-file your return. Military income tax Find out about commercial tax preparation and e-file services available free to eligible taxpayers. Military income tax Check the status of your refund. Military income tax Go to IRS. Military income tax gov and click on Where's My Refund. Military income tax Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Military income tax If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Military income tax Have your tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Military income tax Download forms, including talking tax forms, instructions, and publications. Military income tax Order IRS products online. Military income tax Research your tax questions online. Military income tax Search publications online by topic or keyword. Military income tax Use the online Internal Revenue Code, regulations, or other official guidance. Military income tax View Internal Revenue Bulletins (IRBs) published in the last few years. Military income tax Figure your withholding allowances using the withholding calculator online at www. Military income tax irs. Military income tax gov/individuals. Military income tax Determine if Form 6251 must be filed by using our Alternative Minimum Tax (AMT) Assistant available online at www. Military income tax irs. Military income tax gov/individuals. Military income tax Sign up to receive local and national tax news by email. Military income tax Get information on starting and operating a small business. Military income tax Phone. Military income tax Many services are available by phone. Military income tax   Ordering forms, instructions, and publications. Military income tax Call 1-800-TAX -FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions. Military income tax You should receive your order within 10 days. Military income tax Asking tax questions. Military income tax Call the IRS with your tax questions at 1-800-829-1040. Military income tax Solving problems. Military income tax You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. Military income tax An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Military income tax Call your local Taxpayer Assistance Center for an appointment. Military income tax To find the number, go to www. Military income tax irs. Military income tax gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Military income tax TTY/TDD equipment. Military income tax If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. Military income tax TeleTax topics. Military income tax Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. Military income tax Refund information. Military income tax To check the status of your refund, call 1-800-829-1954 or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). Military income tax Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Military income tax If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Military income tax Have your tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Military income tax If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. Military income tax Other refund information. Military income tax To check the status of a prior-year refund or amended return refund, call 1-800-829-1040. Military income tax Evaluating the quality of our telephone services. Military income tax To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. Military income tax One method is for a second IRS representative to listen in on or record random telephone calls. Military income tax Another is to ask some callers to complete a short survey at the end of the call. Military income tax Walk-in. Military income tax Many products and services are available on a walk-in basis. Military income tax   Products. Military income tax You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Military income tax Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. Military income tax Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Military income tax Services. Military income tax You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. Military income tax An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Military income tax If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. Military income tax No appointment is necessary—just walk in. Military income tax If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. Military income tax A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. Military income tax If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. Military income tax All other issues will be handled without an appointment. Military income tax To find the number of your local office, go to  www. Military income tax irs. Military income tax gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Military income tax Mail. Military income tax You can send your order for forms, instructions, and publications to the address below. Military income tax You should receive a response within 10 days after your request is received. Military income tax  Internal Revenue Service 1201 N. Military income tax Mitsubishi Motorway Bloomington, IL 61705-6613 Taxpayer Advocate Service. Military income tax   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Military income tax Our job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. Military income tax We offer free help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on your own. Military income tax Remember, the worst thing you can do is nothing at all. Military income tax   TAS can help if you can’t resolve your problem with the IRS and: Your problem is causing financial difficulties for you, your family, or your business. Military income tax You face (or your business is facing) an immediate threat of adverse action. Military income tax You have tried repeatedly to contact the IRS but no one has responded, or the IRS has not responded to you by the date promised. Military income tax   If you qualify for our help, we’ll do everything we can to get your problem resolved. Military income tax You will be assigned to one advocate who will be with you at every turn. Military income tax We have offices in every state, the District of Columbia, and Puerto Rico. Military income tax Although TAS is independent within the IRS, our advocates know how to work with the IRS to get your problems resolved. Military income tax And our services are always free. Military income tax   As a taxpayer, you have rights that the IRS must abide by in its dealings with you. Military income tax Our tax toolkit at www. Military income tax TaxpayerAdvocate. Military income tax irs. Military income tax gov can help you understand these rights. Military income tax   If you think TAS might be able to help you, call your local advocate, whose number is in your phone book and on our website at www. Military income tax irs. Military income tax gov/advocate. Military income tax You can also call our toll-free number at 1-877-777-4778 or TTY/TDD 1-800-829-4059. Military income tax   TAS also handles large-scale or systemic problems that affect many taxpayers. Military income tax If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Military income tax irs. Military income tax gov/advocate. Military income tax Low Income Taxpayer Clinics (LITCs). Military income tax   Low Income Taxpayer Clinics (LITCs) are independent from the IRS. Military income tax Some clinics serve individuals whose income is below a certain level and who need to resolve a tax problem. Military income tax These clinics provide professional representation before the IRS or in court on audits, appeals, tax collection disputes, and other issues for free or for a small fee. Military income tax Some clinics can provide information about taxpayer rights and responsibilities in many different languages for individuals who speak English as a second language. Military income tax For more information and to find a clinic near you, see the LITC page on www. Military income tax irs. Military income tax gov/advocate or IRS Publication 4134, Low Income Taxpayer Clinic List. Military income tax This publication is also available by calling 1-800-829-3676 or at your local IRS office. Military income tax Free tax services. Military income tax   Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. Military income tax Learn about free tax information from the IRS, including publications, services, and education and assistance programs. Military income tax The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. Military income tax The majority of the information and services listed in this publication are available to you free of charge. Military income tax If there is a fee associated with a resource or service, it is listed in the publication. Military income tax   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. Military income tax DVD for tax products. Military income tax You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. Military income tax Prior-year forms, instructions, and publications. Military income tax Tax Map: an electronic research tool and finding aid. Military income tax Tax law frequently asked questions. Military income tax Tax Topics from the IRS telephone response system. Military income tax Internal Revenue Code—Title 26 of the U. Military income tax S. Military income tax Code. Military income tax Links to other Internet based Tax Research Materials. Military income tax Fill-in, print, and save features for most tax forms. Military income tax Internal Revenue Bulletins. Military income tax Toll-free and email technical support. Military income tax Two releases during the year. Military income tax  – The first release will ship the beginning of January. Military income tax  – The final release will ship the beginning of March. Military income tax Purchase the DVD from National Technical Information Service (NTIS) at www. Military income tax irs. Military income tax gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll free to buy the DVD for $30 (plus a $6 handling fee). Military income tax Prev  Up  Next   Home   More Online Publications
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The Military Income Tax

Military income tax 3. Military income tax   Lifetime Learning Credit Table of Contents Introduction Can You Claim the CreditWho Can Claim the Credit Who Cannot Claim the Credit What Expenses QualifyQualified Education Expenses No Double Benefit Allowed Expenses That Do Not Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses Figuring the CreditEffect of the Amount of Your Income on the Amount of Your Credit Claiming the Credit Introduction For 2013, there are two tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. Military income tax They are the American opportunity credit and the lifetime learning credit. Military income tax This chapter discusses the lifetime learning credit. Military income tax The American opportunity credit is discussed in chapter 2, The American Opportunity Credit . Military income tax This chapter explains: Who can claim the lifetime learning credit, What expenses qualify for the credit, Who is an eligible student, Who can claim a dependent's expenses, How to figure the credit, How to claim the credit, and When the credit must be repaid. Military income tax What is the tax benefit of the lifetime learning credit. Military income tax   For the tax year, you may be able to claim a lifetime learning credit of up to $2,000 for qualified education expenses paid for all eligible students. Military income tax There is no limit on the number of years the lifetime learning credit can be claimed for each student. Military income tax   A tax credit reduces the amount of income tax you may have to pay. Military income tax Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. Military income tax The lifetime learning credit is a nonrefundable credit. Military income tax This means that it can reduce your tax to zero, but if the credit is more than your tax the excess will not be refunded to you. Military income tax   Your allowable lifetime learning credit may be limited by the amount of your income and the amount of your tax. Military income tax Can you claim more than one education credit this year. Military income tax   For each student, you can elect for any year only one of the credits. Military income tax For example, if you elect to take the lifetime learning credit for a child on your 2013 tax return, you cannot, for that same child, also claim the American opportunity credit for 2013. Military income tax   If you are eligible to claim the lifetime learning credit and you are also eligible to claim the American opportunity credit for the same student in the same year, you can choose to claim either credit, but not both. Military income tax   If you pay qualified education expenses for more than one student in the same year, you can choose to take certain credits on a per-student, per-year basis. Military income tax 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. Military income tax Differences between the American opportunity and lifetime learning credits. Military income tax   There are several differences between these two credits. Military income tax For example, you can claim the American opportunity credit for the same student for no more than 4 tax years, but any year in which the Hope Scholarship Credit was claimed counts toward the 4 years. Military income tax However, there is no limit on the number of years for which you can claim a lifetime learning credit based on the same student's expenses. Military income tax The differences between these credits are shown in Appendix B, Highlights of Education Tax Benefits for Tax Year 2013 near the end of this publication. Military income tax Overview of the lifetime learning credit. Military income tax   See Table 3-1, Overview of the Lifetime Learning Credit for the basics of the lifetime learning credit. Military income tax The details are discussed in this chapter. Military income tax Can You Claim the Credit The following rules will help you determine if you are eligible to claim the lifetime learning credit on your tax return. Military income tax Who Can Claim the Credit Generally, you can claim the lifetime learning credit if all three of the following requirements are met. Military income tax You pay qualified education expenses of higher education. Military income tax You pay the education expenses for an eligible student. Military income tax The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Military income tax Table 3-1. Military income tax Overview of the Lifetime Learning Credit Maximum credit Up to $2,000 credit per return Limit on modified adjusted gross income (MAGI) $127,000 if married filling jointly;  $63,000 if single, head of household, or qualifying widow(er) Refundable or nonrefundable Nonrefundable—credit limited to the amount of tax you must pay on your taxable income Number of years of postsecondary education Available for all years of postsecondary education and for courses to acquire or improve job skills Number of tax years credit available Available for an unlimited number of years Type of program required Student does not need to be pursuing a program leading to a degree or other recognized education credential Number of courses Available for one or more courses Felony drug conviction Felony drug convictions do not make the student ineligible Qualified expenses 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 Note. Military income tax Qualified education expenses paid by a dependent for whom you claim an exemption, or by a third party for that dependent, are considered paid by you. Military income tax “Qualified education expenses” are defined later under Qualified Education Expenses . Military income tax “Eligible students” are defined later under Who Is an Eligible Student . Military income tax A dependent for whom you claim an exemption is defined later under Who Can Claim a Dependent's Expenses . Military income tax You may find Figure 3-1, Can You Claim the Lifetime Learning Credit for 2013 , later, helpful in determining if you can claim a lifetime learning credit on your tax return. Military income tax Who Cannot Claim the Credit You cannot claim the lifetime learning credit for 2013 if any of the following apply. Military income tax Your filing status is married filing separately. Military income tax You are listed as a dependent on another person's tax return (such as your parents'). Military income tax See Who Can Claim a Dependent's Expenses , later. Military income tax Your modified adjusted gross income (MAGI) is $63,000 or more ($127,000 or more in the case of a joint return). Military income tax MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit . Military income tax You (or your spouse) were a nonresident alien for any part of 2013 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. Military income tax More information on nonresident aliens can be found in Publication 519. Military income tax You claim the American Opportunity Credit (see chapter 2) or a Tuition and Fees Deduction (see chapter 6) for the same student in 2013. Military income tax What Expenses Qualify The lifetime learning credit is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Military income tax Generally, the credit is allowed for qualified education expenses paid in 2013 for an academic period beginning in 2013 or in the first 3 months of 2014. Military income tax 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 credit. Military income tax Academic period. Military income tax   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. Military income tax 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. Military income tax Paid with borrowed funds. Military income tax   You can claim a lifetime learning credit for qualified education expenses paid with the proceeds of a loan. Military income tax You use the expenses to figure the lifetime learning credit for the year in which the expenses are paid, not the year in which the loan is repaid. Military income tax Treat loan disbursements sent directly to the educational institution as paid on the date the institution credits the student's account. Military income tax Student withdraws from class(es). Military income tax   You can claim a lifetime learning credit for qualified education expenses not refunded when a student withdraws. Military income tax Qualified Education Expenses For purposes of the lifetime learning credit, qualified education expenses are tuition and certain related expenses required for enrollment in a course at an eligible educational institution. Military income tax The course must be either part of a postsecondary degree program or taken by the student to acquire or improve job skills. Military income tax Eligible educational institution. Military income tax   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. Military income tax S. Military income tax Department of Education. Military income tax It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Military income tax The educational institution should be able to tell you if it is an eligible educational institution. Military income tax   Certain educational institutions located outside the United States also participate in the U. Military income tax S. Military income tax Department of Education's Federal Student Aid (FSA) programs. Military income tax Related expenses. Military income tax   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution for enrollment or attendance. Military income tax Prepaid expenses. Military income tax   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring an education credit for 2013 only. Military income tax See Academic period , earlier. Military income tax For example, 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). Military income tax 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). Military income tax In the following examples, assume that each student is an eligible student at an eligible educational institution. Military income tax Example 1. Military income tax   Jackson is a sophomore in University V's degree program in dentistry. Military income tax This year, in addition to tuition, he is required to pay a fee to the university for the rental of the dental equipment he will use in this program. Military income tax Because the equipment rental fee must be paid to University V for enrollment and attendance, Jackson's equipment rental fee is a qualified expense. Military income tax Example 2. Military income tax   Donna and Charles, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. Military income tax The college has no policy about how students should obtain these materials, but any student who purchases them from College W's bookstore will receive a bill directly from the college. Military income tax Charles bought his books from a friend, so what he paid for them is not a qualified education expense. Military income tax Donna bought hers at College W's bookstore. Military income tax Although Donna paid College W directly for her first-year books and materials, her payment is not a qualified expense because the books and materials are not required to be purchased from College W for enrollment or attendance at the institution. Military income tax Example 3. Military income tax   When Marci enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. Military income tax This activity fee is required of all students, and is used solely to fund on-campus organizations and activities run by students, such as the student newspaper and student government. Military income tax No portion of the fee covers personal expenses. Military income tax Although labeled as a student activity fee, the fee is required for Marci's enrollment and attendance at College X. Military income tax Therefore, it is a qualified expense. Military income tax No Double Benefit Allowed You cannot do any of the following: Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim a lifetime learning credit based on those same expenses. Military income tax Claim a lifetime learning credit in the same year that you are claiming a tuition and fees deduction for the same student. Military income tax Claim a lifetime learning credit and an American opportunity credit based on the same qualified education expenses. Military income tax Claim a lifetime learning 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). Military income tax See Coordination With American Opportunity and Lifetime Learning Credits in chapter 7, Coverdell Education Savings Account, and Coordination With American Opportunity and Lifetime Learning Credits in chapter 8, Qualified Tuition Program. Military income tax Claim a credit based on qualified education expenses paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. Military income tax See Adjustments to Qualified Education Expenses, next. Military income tax This image is too large to be displayed in the current screen. Military income tax Please click the link to view the image. Military income tax Figure 3-1 Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. Military income tax The result is the amount of adjusted qualified education expenses for each student. Military income tax Tax-free educational assistance. Military income tax   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. Military income tax See Academic period , earlier. Military income tax   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. Military income tax 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). Military income tax   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. Military income tax 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. Military income tax   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), 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 ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Military income tax Generally, any scholarship or fellowship is treated as tax free. Military income tax However, a scholarship or fellowship is not treated as tax free 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 of the following is true. Military income tax 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 chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Military income tax 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 chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Military income tax 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 it is received. Military income tax For examples, see Coordination with Pell grants and other scholarships, later. Military income tax Refunds. Military income tax   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year. Military income tax Some tax-free educational assistance received after 2013 may be treated as a refund. Military income tax See Tax-free educational assistance , earlier. Military income tax Refunds received in 2013. Military income tax   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses for 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. Military income tax Refunds received after 2013 but before your income tax return is filed. Military income tax   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid before you file an income tax return for 2013, the amount of qualified education expenses for 2013 is reduced by the amount of the refund. Military income tax Refunds received after 2013 and after your income tax return is filed. Military income tax   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid after you file an income tax return for 2013, you may need to repay some or all of the credit. Military income tax See Credit recapture, next. Military income tax Credit recapture. Military income tax    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. Military income tax 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. Military income tax 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). Military income tax Include that amount as an additional tax for the year the refund or tax-free assistance was received. Military income tax Example. Military income tax   You pay $9,300 in tuition and fees in December 2013, and your child began college in January 2014. Military income tax You filed your 2013 tax return on February 14, 2014, and claimed a lifetime learning credit of $1,860. Military income tax You claimed no other tax credits. Military income tax After you filed your return, your child withdrew from two courses and you received a refund of $2,900. Military income tax You must refigure your 2013 lifetime learning credit using $6,400 of qualified education expenses instead of $9,300. Military income tax The refigured credit is $1,280 and your tax liability increased by $580. Military income tax See instructions for your 2014 income tax return to determine where to include this tax. Military income tax If you 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. Military income tax Amounts that do not reduce qualified education expenses. Military income tax   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. Military income tax   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. Military income tax 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 Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Military income tax The use of the money is not restricted. Military income tax For examples, see Adjustments to Qualified Education Expenses in chapter 2, American Opportunity Credit. Military income tax Coordination with Pell grants and other scholarships. Military income tax   In some cases, you may be able to reduce your tax liability by including scholarships in income. Military income tax If you are claiming an education credit for a claimed dependent who received a scholarship, you may be able to reduce your tax liability if the student includes the scholarship in income. Military income tax The scholarship must be one that may (by its terms) be applied to expenses (such as room and board) other than qualified education expenses. Military income tax Example 1—No scholarship. Military income tax Judy Green, who is unmarried, is taking courses at a public community college to be recertified to teach in public schools. Military income tax Her AGI and her MAGI, for purposes of the credit, are $27,000. Military income tax Judy takes the standard deduction of $5,950 and personal exemption of $3,800, reducing her AGI to taxable income of $17,250 and her tax before credits is $2,156. Military income tax She claims no credits other than the lifetime learning credit. Military income tax In July 2013 she paid $700 for the summer 2013 semester; in August 2013 she paid $1,900 for the fall 2013 semester; and in December 2013 she paid another $1,900 for the spring semester beginning in January 2014. Military income tax Judy and the college meet all requirements for the lifetime learning tax credit. Military income tax She can use all of the $4,500 tuition she paid in 2013 when figuring her 2013 lifetime learning credit. Military income tax She claims a $900 lifetime learning credit and her tax after credits is $1,256. Military income tax Example 2—Scholarship excluded from income. Military income tax The facts are the same as in Example 1—No scholarship, except that Judy was awarded a $1,500 scholarship. Military income tax Under the terms of her scholarship, it may be used to pay any educational expenses, including room and board. Military income tax If Judy excludes the scholarship from income, she will be deemed (for purposes of computing her education credit) as having used the scholarship to pay for tuition, required fees, and course materials. Military income tax Only $3,000 of the $4,500 tuition she paid in 2013 could be used when figuring her 2013 lifetime learning credit. Military income tax Her lifetime learning credit would be reduced to $600 and her tax after credits would be $1,556. Military income tax Example 3—Scholarship included in income. Military income tax The facts are the same as in Example 2—Scholarship excluded from income. Military income tax If, unlike Example 2, Judy includes the $1,500 scholarship in income, she will be deemed to have used the entire scholarship to pay for room and board. Military income tax Judy's AGI will increase to $28,500, her taxable income would be $18,750, and her tax before credits would be $2,381. Military income tax She would be able to use the $4,500 of adjusted qualified education expenses to figure her credit. Military income tax Judy could claim a $900 lifetime learning credit and her tax after credits would be $1,481. Military income tax Expenses That Do Not Qualify Qualified education expenses do not include amounts paid for: Insurance, Medical expenses (including student health fees), Room and board, Transportation, or Similar personal, living, or family expenses. Military income tax This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Military income tax Sports, games, hobbies, and noncredit courses. Military income tax   Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. Military income tax However, if the course of instruction or other education is part of the student's degree program or is taken by the student to acquire or improve job skills, these expenses can qualify. Military income tax Comprehensive or bundled fees. Military income tax   Some eligible educational institutions combine all of their fees for an academic period into one amount. Military income tax If you do not receive or do not have access to an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. Military income tax The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T. Military income tax See Figuring the Credit , later, for more information about Form 1098-T. Military income tax Who Is an Eligible Student For purposes of the lifetime learning credit, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (as defined under Qualified Education Expenses , earlier). Military income tax Who Can Claim a Dependent's Expenses If there are qualified education expenses for your dependent during a tax year, either you or your dependent, but not both of you, can claim a lifetime learning credit for your dependent's expenses for that year. Military income tax For you to claim a lifetime learning credit for your dependent's expenses, you must also claim an exemption for your dependent. Military income tax You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. Military income tax IF you. Military income tax . Military income tax . Military income tax THEN only. Military income tax . Military income tax . Military income tax claim an exemption on your tax return for a dependent who is an eligible student you can claim the lifetime learning credit based on that dependent's expenses. Military income tax The dependent cannot claim the credit. Military income tax do not claim an exemption on your tax return for a dependent who is an eligible student (even if entitled to the exemption) the dependent can claim the lifetime learning credit. Military income tax You cannot claim the credit based on this dependent's expenses. Military income tax Expenses paid by dependent. Military income tax   If you claim an exemption on your tax return for an eligible student who is your dependent, treat any expenses paid (or deemed paid) by your dependent as if you had paid them. Military income tax Include these expenses when figuring the amount of your lifetime learning credit. Military income tax    Qualified education expenses paid directly to an eligible educational institution for your dependent under a court-approved divorce decree are treated as paid by your dependent. Military income tax Expenses paid by you. Military income tax   If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring the amount of the lifetime learning credit. Military income tax If neither you nor anyone else claims an exemption for the dependent, only the dependent can include any expenses you paid when figuring the lifetime learning credit. Military income tax Expenses paid by others. Military income tax   Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. Military income tax In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. Military income tax If you claim an exemption on your tax return for the student, you are considered to have paid the expenses. Military income tax Example. Military income tax In 2013, Ms. Military income tax Allen makes a payment directly to an eligible educational institution for her grandson Todd's qualified education expenses. Military income tax For purposes of claiming a lifetime learning credit, Todd is treated as receiving the money from his grandmother and, in turn, paying his qualified education expenses himself. Military income tax Unless an exemption for Todd is claimed on someone else's 2013 tax return, only Todd can use the payment to claim a lifetime learning credit. Military income tax If anyone, such as Todd's parents, claims an exemption for Todd on his or her 2013 tax return, whoever claims the exemption may be able to use the expenses to claim a lifetime learning credit. Military income tax If anyone else claims an exemption for Todd, Todd cannot claim a lifetime learning credit. Military income tax Tuition reduction. Military income tax   When an eligible educational institution provides a reduction in tuition to an employee of the institution (or spouse or dependent child of an employee), the amount of the reduction may or may not be taxable. Military income tax If it is taxable, the employee is treated as receiving a payment of that amount and, in turn, paying it to the educational institution on behalf of the student. Military income tax For more information on tuition reductions, see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Military income tax Figuring the Credit The amount of the lifetime learning credit is 20% of the first $10,000 of qualified education expenses you paid for all eligible students. Military income tax The maximum amount of lifetime learning credit you can claim for 2013 is $2,000 (20% × $10,000). Military income tax However, that amount may be reduced based on your MAGI. Military income tax See Effect of the Amount of Your Income on the Amount of Your Credit , later. Military income tax Example. Military income tax Bruce and Toni Harper are married and file a joint tax return. Military income tax For 2013, their MAGI is $75,000. Military income tax Toni is attending a local college (an eligible educational institution) to earn credits toward a degree in nursing. Military income tax She already has a bachelor's degree in history and wants to become a nurse. Military income tax In August 2013, Toni paid $5,000 of qualified education expenses for her fall 2013 semester. Military income tax Bruce and Toni can claim a $1,000 (20% × $5,000) lifetime learning credit on their 2013 joint tax return. Military income tax Form 1098-T. Military income tax   To help you figure your lifetime learning credit, the student should receive Form 1098-T. Military income tax Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2014. Military income tax An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. Military income tax However, the amounts in boxes 1 and 2 of Form 1098-T might be different from what you paid. Military income tax When figuring the credit, use only the amounts you paid or are deemed to have paid in 2013 for qualified education expenses. Military income tax   In addition, Form 1098-T should give other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether the student was enrolled at least half-time or was a graduate student. Military income tax    The eligible educational institution may ask for a completed Form W-9S, or similar statement to obtain the student's name, address, and taxpayer identification number. Military income tax Effect of the Amount of Your Income on the Amount of Your Credit The amount of your lifetime learning credit is phased out (gradually reduced) if your MAGI is between $53,000 and $63,000 ($107,000 and $127,000 if you file a joint return). Military income tax You cannot claim a lifetime learning credit if your MAGI is $63,000 or more ($127,000 or more if you file a joint return). Military income tax Modified adjusted gross income (MAGI). Military income tax   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. Military income tax MAGI when using Form 1040A. Military income tax   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. Military income tax MAGI when using Form 1040. Military income tax   If you file Form 1040, your MAGI is the AGI on line 38 of that form, modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Military income tax You can use Worksheet 3-1 to figure your MAGI. Military income tax Worksheet 3-1. Military income tax MAGI for the Lifetime Learning Credit 1. Military income tax Enter your adjusted gross income  (Form 1040, line 38)   1. Military income tax   2. Military income tax Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. Military income tax       3. Military income tax Enter your foreign housing deduction (Form 2555, line 50)   3. Military income tax       4. Military income tax Enter the amount of income from Puerto Rico you are excluding   4. Military income tax       5. Military income tax Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. Military income tax       6. Military income tax Add the amounts on lines 2, 3, 4, and 5   6. Military income tax   7. Military income tax Add the amounts on lines 1 and 6. Military income tax  This is your modified adjusted  gross income. Military income tax Enter this amount  on Form 8863, line 14   7. Military income tax   Phaseout. Military income tax   If your MAGI is within the range of incomes where the credit must be reduced, you will figure your reduced credit using lines 10-18 of Form 8863. Military income tax The same method is shown in the following example. Military income tax Example. Military income tax You are filing a joint return with a MAGI of $112,000. Military income tax In 2013, you paid $6,600 of qualified education expenses. Military income tax You figure the tentative lifetime learning credit (20% of the first $10,000 of qualified education expenses you paid for all eligible students). Military income tax The result is a $1,320 (20% x $6,600) tentative credit. Military income tax Because your MAGI is within the range of incomes where the credit must be reduced, you must multiply your tentative credit ($1,320) by a fraction. Military income tax The numerator of the fraction is $127,000 (the upper limit for those filing a joint return) minus your MAGI. Military income tax The denominator is $20,000, the range of incomes for the phaseout ($107,000 to $127,000). Military income tax The result is the amount of your phased out (reduced) lifetime learning credit ($990). Military income tax   $1,320 × $127,000 − $112,000  $20,000 = $990   Claiming the Credit You claim the lifetime learning credit by completing Form 8863 and submitting it with your Form 1040 or 1040A. Military income tax Enter the credit on Form 1040, line 49, or Form 1040A, line 31. Military income tax Note. Military income tax In Appendix A, Illustrated Example of Education Credits at the end of this publication, there is an example illustrating the use of Form 8863 when both the American opportunity credit and the lifetime learning credit are claimed on the same tax return. Military income tax Prev  Up  Next   Home   More Online Publications