Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Self Employment Tax

My Free Tax.comFree Tax ReturnsFile Taxes OnlineFederal Tax Forms 2007Www Irs GovFree File 2011 Tax ReturnH&r Block 2011H&r Block E FileIrs Gov Form 1040xHow To Amend 2012 Taxes Online1040x Amended Return FormBeware Amending Tax ReturnsIrs Form 1040 Ez Instructions1040ez Instructions 2013Taxes 1040ezWww Irs Gov 2011freeefileMy 1040ezTurbotax Login Tax Return 2012Where Can I File 2012 Taxes OnlineEzform1040ez OnlineAmending 2010 Tax ReturnFile An Amended Tax Return2010 Tax Forms 1040ezFiling Form 1040ezAmend Taxes TurbotaxIrs Extension Form1040a Tax FormIrs FreeAmending Taxes After FilingPrintiable State Tax Form2012 Form 1040ezIrs1040Free 1040ez FormsHow To File Your State Taxes Online For FreeIrs Form 1040ez InstructionsFiling Back Taxes For FreeFree 1040ez Online2012 940 Tax Form2010 Ez 1040 Form

Self Employment Tax

Self employment tax 1. Self employment tax   403(b) Plan Basics Table of Contents What Is a 403(b) Plan? What Are the Benefits of Contributing to a 403(b) Plan?Excluded. Self employment tax Deducted. Self employment tax Who Can Participate in a 403(b) Plan?Ministers. Self employment tax Who Can Set Up a 403(b) Account? How Can Contributions Be Made to My 403(b) Account? Do I Report Contributions on My Tax Return? How Much Can Be Contributed to My 403(b) Account? This chapter introduces you to 403(b) plans and accounts. Self employment tax Specifically, the chapter answers the following questions. Self employment tax What is a 403(b) plan? What are the benefits of contributing to a 403(b) plan? Who can participate in a 403(b) plan? Who can set up a 403(b) account? How can contributions be made to my 403(b) account? Do I report contributions on my tax return? How much can be contributed to my 403(b) account? What Is a 403(b) Plan? A 403(b) plan, also known as a tax-sheltered annuity (TSA) plan, is a retirement plan for certain employees of public schools, employees of certain tax-exempt organizations, and certain ministers. Self employment tax Individual accounts in a 403(b) plan can be any of the following types. Self employment tax An annuity contract, which is a contract provided through an insurance company, A custodial account, which is an account invested in mutual funds, or A retirement income account set up for church employees. Self employment tax Generally, retirement income accounts can invest in either annuities or mutual funds. Self employment tax We use the term “403(b) account” to refer to any one of these funding arrangements throughout this publication, unless otherwise specified. Self employment tax What Are the Benefits of Contributing to a 403(b) Plan?  There are three benefits to contributing to a 403(b) plan. Self employment tax The first benefit is that you do not pay income tax on allowable contributions until you begin making withdrawals from the plan, usually after you retire. Self employment tax Allowable contributions to a 403(b) plan are either excluded or deducted from your income. Self employment tax However, if your contributions are made to a Roth contribution program, this benefit does not apply. Self employment tax Instead, you pay income tax on the contributions to the plan but distributions from the plan (if certain requirements are met) are tax free. Self employment tax Note. Self employment tax Generally, employees must pay social security and Medicare tax on their contributions to a 403(b) plan, including those made under a salary reduction agreement. Self employment tax See chapter 4, Limit on Elective Deferrals , for more information. Self employment tax The second benefit is that earnings and gains on amounts in your 403(b) account are not taxed until you withdraw them. Self employment tax Earnings and gains on amounts in a Roth contribution program are not taxed if your withdrawals are qualified distributions. Self employment tax Otherwise, they are taxed when you withdraw them. Self employment tax The third benefit is that you may be eligible to take a credit for elective deferrals contributed to your 403(b) account. Self employment tax See chapter 10, Retirement Savings Contributions Credit (Saver's Credit) . Self employment tax Excluded. Self employment tax   If an amount is excluded from your income, it is not included in your total wages on your Form W-2. Self employment tax This means that you do not report the excluded amount on your tax return. Self employment tax Deducted. Self employment tax   If an amount is deducted from your income, it is included with your other wages on your Form W-2. Self employment tax You report this amount on your tax return, but you are allowed to subtract it when figuring the amount of income on which you must pay tax. Self employment tax Who Can Participate in a 403(b) Plan? Any eligible employee can participate in a 403(b) plan. Self employment tax Eligible employees. Self employment tax   The following employees are eligible to participate in a 403(b) plan. Self employment tax Employees of tax-exempt organizations established under section 501(c)(3). Self employment tax These organizations are usually referred to as section 501(c)(3) organizations or simply 501(c)(3) organizations. Self employment tax Employees of public school systems who are involved in the day-to-day operations of a school. Self employment tax Employees of cooperative hospital service organizations. Self employment tax Civilian faculty and staff of the Uniformed Services University of the Health Sciences. Self employment tax Employees of public school systems organized by Indian tribal governments. Self employment tax Certain ministers (explained next). Self employment tax Ministers. Self employment tax   The following ministers are eligible employees for whom a 403(b) account can be established. Self employment tax Ministers employed by section 501(c)(3) organizations. Self employment tax Self-employed ministers. Self employment tax A self-employed minister is treated as employed by a tax-exempt organization that is a qualified employer. Self employment tax Ministers (chaplains) who meet both of the following requirements. Self employment tax They are employed by organizations that are not section 501(c)(3) organizations. Self employment tax They function as ministers in their day-to-day professional responsibilities with their employers. Self employment tax   Throughout this publication, the term chaplain will be used to mean ministers described in the third category in the list above. Self employment tax Example. Self employment tax A minister employed as a chaplain by a state-run prison and a chaplain in the United States Armed Forces are eligible employees because their employers are not section 501(c)(3) organizations and they are employed as ministers. Self employment tax Who Can Set Up a 403(b) Account? You cannot set up your own 403(b) account. Self employment tax Only employers can set up 403(b) accounts. Self employment tax A self-employed minister cannot set up a 403(b) account for his or her benefit. Self employment tax If you are a self-employed minister, only the organization (denomination) with which you are associated can set up an account for your benefit. Self employment tax How Can Contributions Be Made to My 403(b) Account? Generally, only your employer can make contributions to your 403(b) account. Self employment tax However, some plans will allow you to make after-tax contributions (defined below). Self employment tax The following types of contributions can be made to 403(b) accounts. Self employment tax Elective deferrals . Self employment tax These are contributions made under a salary reduction agreement. Self employment tax This agreement allows your employer to withhold money from your paycheck to be contributed directly into a 403(b) account for your benefit. Self employment tax Except for Roth contributions, you do not pay income tax on these contributions until you withdraw them from the account. Self employment tax If your contributions are Roth contributions, you pay taxes on your contributions but any qualified distributions from your Roth account are tax free. Self employment tax Nonelective contributions . Self employment tax These are employer contributions that are not made under a salary reduction agreement. Self employment tax Nonelective contributions include matching contributions, discretionary contributions, and mandatory contributions from your employer. Self employment tax You do not pay income tax on these contributions until you withdraw them from the account. Self employment tax After-tax contributions . Self employment tax These are contributions (that are not Roth contributions) you make with funds that you must include in income on your tax return. Self employment tax A salary payment on which income tax has been withheld is a source of these contributions. Self employment tax If your plan allows you to make after-tax contributions, they are not excluded from income and you cannot deduct them on your tax return. Self employment tax A combination of any of the three contribution types listed above. Self employment tax Self-employed minister. Self employment tax   If you are a self-employed minister, you are considered both an employee and an employer, and you can contribute to a retirement income account for your own benefit. Self employment tax Do I Report Contributions on My Tax Return? Generally, you do not report contributions to your 403(b) account (except Roth contributions) on your tax return. Self employment tax Your employer will report contributions on your 2013 Form W-2. Self employment tax Elective deferrals will be shown in box 12 and the Retirement plan box will be checked in box 13. Self employment tax If you are a self-employed minister or chaplain, see the discussions next. Self employment tax Self-employed ministers. Self employment tax   If you are a self-employed minister, you must report the total contributions as a deduction on your tax return. Self employment tax Deduct your contributions on line 28 of the 2013 Form 1040. Self employment tax Chaplains. Self employment tax   If you are a chaplain and your employer does not exclude contributions made to your 403(b) account from your earned income, you may be able to take a deduction for those contributions on your tax return. Self employment tax    However, if your employer has agreed to exclude the contributions from your earned income, you will not be allowed a deduction on your tax return. Self employment tax   If you can take a deduction, include your contributions on line 36 of the 2013 Form 1040. Self employment tax Enter the amount of your deduction and write “403(b)” on the dotted line next to line 36. Self employment tax How Much Can Be Contributed to My 403(b) Account? There are limits on the amount of contributions that can be made to your 403(b) account each year. Self employment tax If contributions made to your 403(b) account are more than these contribution limits, penalties may apply. Self employment tax Chapters 2 through 6 provide information on how to determine the amount that can be contributed to your 403(b) account. Self employment tax Worksheets are provided in Chapter 9 to help you determine the maximum amount that can be contributed to your 403(b) account each year. Self employment tax Chapter 7, Excess Contributions , describes how to prevent excess contributions and how to get an excess contribution corrected. Self employment tax Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

IRS - The Basics

Looking for a few basics on the history and mission of the nation's tax agency? Try these:

IRS - An Overview
This provides a snapshot of the role and operations of the IRS.

IRS Timeline
From the Civil War to the 21st Century, the tax agency's work has changed with the times.

IRS Guidance in Plain English
This provides a starting point for understanding some of the basic guidance issued by the IRS. Just remember, we said this is a starting point.

Selected Tax Quotes
Who said tax talk can't be amusing?

Page Last Reviewed or Updated: 10-Mar-2014

The Self Employment Tax

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