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State Returns

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State Returns

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Prevent and Report Identity Theft

Learn how to prevent and report identity theft.


Tips for Preventing Identity Theft

Identity thieves steal your personal information to commit fraud. They can damage your credit status and cost you time and money restoring your good name. To reduce your risk of becoming a victim, follow the tips below:

  • Don't carry your Social Security card in your wallet or write it on your checks. Only give out your SSN when absolutely necessary.
  • Protect your PIN. Never write a PIN on a credit/debit card or on a slip of paper kept in your wallet.
  • Watch out for "shoulder surfers". Use your free hand to shield the keypad when using pay phones and ATMs.
  • Collect mail promptly. Ask the post office to put your mail on hold when you are away from home for more than a day or two.
  • Pay attention to your billing cycles. If bills or financial statements are late, contact the sender.
  • Keep your receipts. Ask for carbons and incorrect charge slips as well. Promptly compare receipts with account statements. Watch for unauthorized transactions.
  • Tear up or shred unwanted receipts, credit offers, account statements, expired cards, etc., to prevent dumpster divers getting your personal information.
  • Store personal information in a safe place at home and at work. Don't leave it lying around.
  • Don't respond to unsolicited requests for personal information in the mail, over the phone or online.
  • Install firewalls and virus-detection software on your home computer.
  • Check your credit report once a year. Check it more frequently if you suspect someone has gotten access to your account information.

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How to Report Identity Theft

Your wallet contains some of your most important personal items, from hard-earned money to credit cards and driver’s license. For an identity thief, your wallet offers a treasure trove of personal information. If you suspect or become a victim of identity theft, follow these steps:

  • Report it to your financial institution. Call the phone number on your account statement or on the back of your credit or debit card.
  • Report the fraud to your local police immediately. Keep a copy of the police report, which will make it easier to prove your case to creditors and retailers.
  • Contact the credit-reporting bureaus and ask them to flag your account with a fraud alert, which asks merchants not to grant new credit without your approval.

If your identity has been stolen, you can use an ID Theft affidavit to report the theft to most of the parties involved. All three credit bureaus and many major creditors have agreed to accept the affidavit. You can download the ID theft affidavit or request a copy by calling toll-free 1-877-ID-THEFT (438-4338). You can also file a complaint with the Federal Trade Commission.

Use this helpful infographic (PDF) to help you remember the steps to take if your wallet or identity have been stolen.

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The State Returns

State returns 1. State returns   Scholarships, Fellowships, Grants, and Tuition Reductions Table of Contents Reminder Introduction Scholarships and FellowshipsTax-Free Scholarships and Fellowships Taxable Scholarships and Fellowships Reporting Scholarships and Fellowships Other Types of Educational AssistanceFulbright Grants Pell Grants and Other Title IV Need-Based Education Grants Payment to Service Academy Cadets Veterans' Benefits Qualified Tuition Reduction Reminder Individual retirement arrangements (IRAs). State returns  You can set up and make contributions to an IRA if you receive taxable compensation. State returns Under this rule, a taxable scholarship or fellowship is compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. State returns For more information about IRAs, see Publication 590. State returns Introduction This chapter discusses the income tax treatment of various types of educational assistance you may receive if you are studying, teaching, or researching in the United States. State returns The educational assistance can be for a primary or secondary school, a college or university, or a vocational school. State returns Included are discussions of: Scholarships, Fellowships, Need-based education grants, such as a Pell Grant, and Qualified tuition reductions. State returns Many types of educational assistance are tax free if they meet the requirements discussed here. State returns Special rules apply to U. State returns S. State returns citizens and resident aliens who have received scholarships or fellowships for studying, teaching, or researching abroad. State returns For information about these rules, see Publication 54, Tax Guide for U. State returns S. State returns Citizens and Resident Aliens Abroad. State returns Scholarships and Fellowships A scholarship is generally an amount paid or allowed to, or for the benefit of, a student (whether an undergraduate or a graduate) at an educational institution to aid in the pursuit of his or her studies. State returns A fellowship is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research. State returns Amount of scholarship or fellowship. State returns   The amount of a scholarship or fellowship includes the following: The value of contributed services and accommodations. State returns This includes such services and accommodations as room (lodging), board (meals), laundry service, and similar services or accommodations that are received by an individual as a part of a scholarship or fellowship. State returns The amount of tuition, matriculation, and other fees that are paid or remitted to the student to aid the student in pursuing study or research. State returns Any amount received in the nature of a family allowance as a part of a scholarship or fellowship. State returns Tax-Free Scholarships and Fellowships A scholarship or fellowship is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution. State returns A scholarship or fellowship is tax free only to the extent: It does not exceed your expenses; It is not designated or earmarked for other purposes (such as room and board), and does not require (by its terms) that it cannot be used for qualified education expenses; and It does not represent payment for teaching, research, or other services required as a condition for receiving the scholarship. State returns (But for exceptions, see Payment for services,later. State returns Use Worksheet 1–1 to figure the amount of a scholarship or fellowship you can exclude from gross income. State returns Candidate for a degree. State returns   You are a candidate for a degree if you: Attend a primary or secondary school or are pursuing a degree at a college or university, or Attend an educational institution that: Provides a program that is acceptable for full credit toward a bachelor's or higher degree, or offers a program of training to prepare students for gainful employment in a recognized occupation; and Is authorized under federal or state law to provide such a program and is accredited by a nationally recognized accreditation agency. State returns Eligible educational institution. State returns   An eligible educational institution is one whose primary function is the presentation of formal instruction and that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. State returns Qualified education expenses. State returns   For purposes of tax-free scholarships and fellowships, these are expenses for: Tuition and fees required to enroll at or attend an eligible educational institution, and Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. State returns These items must be required of all students in your course of instruction. State returns Expenses that do not qualify. State returns   Qualified education expenses do not include the cost of: Room and board, Travel, Research, Clerical help, or Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution. State returns Payment for services. State returns   Generally, you cannot exclude from your gross income the part of any scholarship or fellowship that represents payment for teaching, research, or other services required as a condition for receiving the scholarship. State returns This applies even if all candidates for a degree must perform the services to receive the degree. State returns (See exceptions next. State returns ) Exceptions. State returns   You do not have to treat as payment for services the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. State returns Example 1. State returns You received a scholarship of $2,500. State returns The scholarship was not received under either of the exceptions mentioned above. State returns As a condition for receiving the scholarship, you must serve as a part-time teaching assistant. State returns Of the $2,500 scholarship, $1,000 represents payment for teaching. State returns The provider of your scholarship gives you a Form W-2 showing $1,000 as income. State returns Your qualified education expenses were at least $1,500. State returns Assuming that all other conditions are met, $1,500 of your scholarship is tax free. State returns The $1,000 you received for teaching is taxable. State returns Example 2. State returns You are a candidate for a degree at a medical school. State returns You receive a scholarship (not under either of the exceptions mentioned above) for your medical education and training. State returns The terms of your scholarship require you to perform future services. State returns A substantial penalty applies if you do not comply. State returns The entire amount of your grant is taxable as payment for services in the year it is received. State returns Athletic Scholarships An athletic scholarship is tax free only if and to the extent it meets the requirements discussed later. State returns Worksheet 1-1. State returns    You can use Worksheet 1-1, Taxable Scholarship and Fellowship Income , later, to figure the tax-free and taxable parts of your athletic scholarship. State returns    Worksheet 1-1. State returns Taxable Scholarship and Fellowship Income 1. State returns Enter the total amount of any scholarship or fellowship for 2013. State returns See Amount of scholarship or fellowship, earlier. State returns 1. State returns       If you are a degree candidate at an eligible educational institution, go to line 2. State returns If you are not a degree candidate at an eligible educational institution, stop here. State returns The entire amount is taxable. State returns For information on how to report this amount on your tax return, see Reporting Scholarships and Fellowships , earlier, in this chapter. State returns       2. State returns Enter the amount from line 1 that was for teaching, research, or any other services required as a condition for receiving the scholarship. State returns (Do not include amounts received for these items under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program. State returns ) 2. State returns     3. State returns Subtract line 2 from line 1 3. State returns     4. State returns Enter the amount from line 3 that your scholarship or fellowship required you to use for other than qualified education expenses 4. State returns     5. State returns Subtract line 4 from line 3 5. State returns     6. State returns Enter the amount of your qualified education expenses 6. State returns     7. State returns Enter the smaller of line 5 or line 6. State returns This amount is the most you can exclude from your gross income (the tax-free part of the scholarship or fellowship) 7. State returns     8. State returns Subtract line 7 from line 5 8. State returns     9. State returns Taxable part. State returns Add lines 2, 4, and 8. State returns See Reporting Scholarships and Fellowships , earlier, for how to report this amount on your tax return 9. State returns     Taxable Scholarships and Fellowships If and to the extent your scholarship or fellowship does not meet the requirements described earlier, it is taxable and must be included in gross income. State returns You can use Worksheet 1–1, Taxable Scholarship and Fellowship Income, later, to figure the tax-free and taxable parts of your scholarship or fellowship. State returns Reporting Scholarships and Fellowships Whether you must report your scholarship or fellowship depends on whether you must file a return and whether any part of your scholarship or fellowship is taxable. State returns If your only income is a completely tax-free scholarship or fellowship, you do not have to file a tax return and no reporting is necessary. State returns If all or part of your scholarship or fellowship is taxable and you are required to file a tax return, report the taxable amount as explained below. State returns You must report the taxable amount whether or not you received a Form W-2. State returns If you receive an incorrect Form W-2, ask the payer for a corrected one. State returns For information on whether you must file a return, see Publication 501, Exemptions, Standard Deduction, and Filing Information, or your income tax form instructions. State returns How To Report How you report any taxable scholarship or fellowship income depends on which return you file. State returns Form 1040EZ. State returns   If you file Form 1040EZ, include the taxable amount in the total on line 1. State returns If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 1. State returns Form 1040A. State returns   If you file Form 1040A, include the taxable amount in the total on line 7. State returns If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 7. State returns Form 1040. State returns   If you file Form 1040, include the taxable amount in the total on line 7. State returns If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 7. State returns Schedule SE (Form 1040). State returns   To determine your net earnings from self-employment, include amounts you receive under a scholarship as pay for your services that are reported to you on Form 1099-MISC, Miscellaneous Income. State returns If your net earnings are $400 or more, you must pay self-employment tax. State returns Use Schedule SE, Self-Employment Tax, to figure this tax. State returns Form 1040NR. State returns   If you file Form 1040NR, report the taxable amount on line 12. State returns Generally, you must report the amount shown in box 2 of Form(s) 1042-S, Foreign Person's U. State returns S. State returns Source Income Subject to Withholding. State returns See the Instructions for Form 1040NR for more information. State returns Form 1040NR-EZ. State returns   If you file Form 1040NR-EZ, report the taxable amount on line 5. State returns Generally, you must report the amount shown in box 2 of Form(s) 1042-S. State returns See the Instructions for Form 1040NR-EZ for more information. State returns Other Types of Educational Assistance The following discussions deal with other common types of educational assistance. State returns Fulbright Grants A Fulbright grant is generally treated as a scholarship or fellowship in figuring how much of the grant is tax free. State returns Pell Grants and Other Title IV Need-Based Education Grants These need-based grants are treated as scholarships for purposes of determining their tax treatment. State returns They are tax free to the extent used for qualified education expenses during the period for which a grant is awarded. State returns Payment to Service Academy Cadets An appointment to a United States military academy is not a scholarship or fellowship. State returns Payment you receive as a cadet or midshipman at an armed services academy is pay for personal services and will be reported to you in box 1 of Form W-2. State returns Include this pay in your income in the year you receive it unless one of the exceptions, discussed earlier under Payment for services , applies. State returns Veterans' Benefits Payments you receive for education, training, or subsistence under any law administered by the Department of Veterans Affairs (VA) are tax free. State returns Do not include these payments as income on your federal tax return. State returns If you qualify for one or more of the education benefits discussed in chapters 2 through 12, you may have to reduce the amount of education expenses qualifying for a specific benefit by part or all of your VA payments. State returns This applies only to the part of your VA payments that is required to be used for education expenses. State returns You may want to visit the Veteran's Administration website at www. State returns gibill. State returns va. State returns gov for specific information about the various VA benefits for education. State returns Example. State returns You have returned to college and are receiving two education benefits under the latest GI Bill: (1) a $1,534 monthly basic housing allowance (BHA) that is directly deposited to your checking account, and (2) $3,840 paid directly to your college for tuition. State returns Neither of these benefits is taxable and you do not report them on your tax return. State returns You also want to claim an American opportunity credit on your return. State returns You paid $5,000 in qualified education expenses (see chapter 2, American Opportunity Credit , later). State returns To figure the amount of credit, you must first subtract the $3,840 from your qualified education expenses because this payment under the GI Bill was required to be used for education expenses. State returns You do not subtract any amount of the BHA because it was paid to you and its use was not restricted. State returns Qualified Tuition Reduction If you are allowed to study tuition free or for a reduced rate of tuition, you may not have to pay tax on this benefit. State returns This is called a “tuition reduction. State returns ” You do not have to include a qualified tuition reduction in your income. State returns A tuition reduction is qualified only if you receive it from, and use it at, an eligible educational institution. State returns You do not have to use the tuition reduction at the eligible educational institution from which you received it. State returns In other words, if you work for an eligible educational institution and the institution arranges for you to take courses at another eligible educational institution without paying any tuition, you may not have to include the value of the free courses in your income. State returns The rules for determining if a tuition reduction is qualified, and therefore tax free, are different if the education provided is below the graduate level or is graduate education. State returns You must include in your income any tuition reduction you receive that is payment for your services. State returns Eligible educational institution. State returns   An eligible educational institution is one that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. State returns Officers, owners, and highly compensated employees. State returns   Qualified tuition reductions apply to officers, owners, or highly compensated employees only if benefits are available to employees on a nondiscriminatory basis. State returns This means that the tuition reduction benefits must be available on substantially the same basis to each member of a group of employees. State returns The group must be defined under a reasonable classification set up by the employer. State returns The classification must not discriminate in favor of owners, officers, or highly compensated employees. State returns Payment for services. State returns   Generally, you must include in income the part of any qualified tuition reduction that represents payment for teaching, research, or other services by the student required as a condition of receiving the qualified tuition reduction. State returns This applies even if all candidates for a degree must perform the services to receive the degree. State returns (See below for exceptions. State returns ) Exceptions. State returns   You do not have to include in income the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. State returns Education Below the Graduate Level If you receive a tuition reduction for education below the graduate level (including primary, secondary, or high school), it is a qualified tuition reduction, and therefore tax free, only if your relationship to the educational institution providing the benefit is described below. State returns You are an employee of the eligible educational institution. State returns You were an employee of the eligible educational institution, but you retired or left on disability. State returns You are a widow or widower of an individual who died while an employee of the eligible educational institution or who retired or left on disability. State returns You are the dependent child or spouse of an individual described in (1) through (3), above. State returns Child of deceased parents. State returns   For purposes of the qualified tuition reduction, a child is a dependent child if the child is under age 25 and both parents have died. State returns Child of divorced parents. State returns   For purposes of the qualified tuition reduction, a dependent child of divorced parents is treated as the dependent of both parents. State returns Graduate Education A tuition reduction you receive for graduate education is qualified, and therefore tax free, if both of the following requirements are met. State returns It is provided by an eligible educational institution. State returns You are a graduate student who performs teaching or research activities for the educational institution. State returns You must include in income any other tuition reductions for graduate education that you receive. State returns How To Report Any tuition reduction that is taxable should be included as wages in box 1 of your Form W-2. State returns Report the amount from Form W-2, box 1, on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). State returns Prev  Up  Next   Home   More Online Publications