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State Taxes For Military

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State Taxes For Military

State taxes for military Publication 596 - Main Content Table of Contents Chapter 1—Rules for EveryoneRule 1—Adjusted Gross Income (AGI) Limits Rule 2—You Must Have a Valid Social Security Number (SSN) Rule 3—Your Filing Status Cannot Be Married Filing Separately Rule 4—You Must Be a U. State taxes for military S. State taxes for military Citizen or Resident Alien All Year Rule 5—You Cannot File Form 2555 or Form 2555-EZ Rule 6—Your Investment Income Must Be $3,300 or Less Rule 7—You Must Have Earned Income Chapter 2—Rules If You Have a Qualifying ChildRule 8—Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Rule 9—Your Qualifying Child Cannot Be Used by More Than One Person To Claim the EIC Rule 10—You Cannot Be a Qualifying Child of Another Taxpayer Chapter 3—Rules If You Do Not Have a Qualifying ChildRule 11—You Must Be at Least Age 25 but Under Age 65 Rule 12—You Cannot Be the Dependent of Another Person Rule 13—You Cannot Be a Qualifying Child of Another Taxpayer Rule 14—You Must Have Lived in the United States More Than Half of the Year Chapter 4—Figuring and Claiming the EICRule 15—Earned Income Limits IRS Will Figure the EIC for You How To Figure the EIC Yourself Schedule EIC Chapter 5—Disallowance of the EICForm 8862 Are You Prohibited From Claiming the EIC for a Period of Years? Chapter 6—Detailed ExamplesExample 1—Sharon Rose Example 2—Cynthia and Jerry Grey Chapter 1—Rules for Everyone This chapter discusses Rules 1 through 7. State taxes for military You must meet all seven rules to qualify for the earned income credit. State taxes for military If you do not meet all seven rules, you cannot get the credit and you do not need to read the rest of the publication. State taxes for military If you meet all seven rules in this chapter, then read either chapter 2 or chapter 3 (whichever applies) for more rules you must meet. State taxes for military Rule 1—Adjusted Gross Income (AGI) Limits Your adjusted gross income (AGI) must be less than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. State taxes for military Adjusted gross income (AGI). State taxes for military   AGI is the amount on line 4 of Form 1040EZ, line 22 of Form 1040A, or line 38 of Form 1040. State taxes for military   If your AGI is equal to or more than the applicable limit listed above, you cannot claim the EIC. State taxes for military You do not need to read the rest of this publication. State taxes for military Example—AGI is more than limit. State taxes for military Your AGI is $38,550, you are single, and you have one qualifying child. State taxes for military You cannot claim the EIC because your AGI is not less than $37,870. State taxes for military However, if your filing status was married filing jointly, you might be able to claim the EIC because your AGI is less than $43,210. State taxes for military Community property. State taxes for military   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3), and live in a state that has community property laws, your AGI includes that portion of both your and your spouse's wages that you are required to include in gross income. State taxes for military This is different from the community property rules that apply under Rule 7. State taxes for military Rule 2—You Must Have a Valid Social Security Number (SSN) To claim the EIC, you (and your spouse, if filing a joint return) must have a valid SSN issued by the Social Security Administration (SSA). State taxes for military Any qualifying child listed on Schedule EIC also must have a valid SSN. State taxes for military (See Rule 8 if you have a qualifying child. State taxes for military ) If your social security card (or your spouse's, if filing a joint return) says “Not valid for employment” and your SSN was issued so that you (or your spouse) could get a federally funded benefit, you cannot get the EIC. State taxes for military An example of a federally funded benefit is Medicaid. State taxes for military If you have a card with the legend “Not valid for employment” and your immigration status has changed so that you are now a U. State taxes for military S. State taxes for military citizen or permanent resident, ask the SSA for a new social security card without the legend. State taxes for military If you get the new card after you have already filed your return, you can file an amended return on Form 1040X, Amended U. State taxes for military S. State taxes for military Individual Income Tax Return, to claim the EIC. State taxes for military U. State taxes for military S. State taxes for military citizen. State taxes for military   If you were a U. State taxes for military S. State taxes for military citizen when you received your SSN, you have a valid SSN. State taxes for military Valid for work only with INS authorization or DHS authorization. State taxes for military   If your social security card reads “Valid for work only with INS authorization” or “Valid for work only with DHS authorization,” you have a valid SSN, but only if that authorization is still valid. State taxes for military SSN missing or incorrect. State taxes for military   If an SSN for you or your spouse is missing from your tax return or is incorrect, you may not get the EIC. State taxes for military Other taxpayer identification number. State taxes for military   You cannot get the EIC if, instead of an SSN, you (or your spouse, if filing a joint return) have an individual taxpayer identification number (ITIN). State taxes for military ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN. State taxes for military No SSN. State taxes for military   If you do not have a valid SSN, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). State taxes for military You cannot claim the EIC. State taxes for military Getting an SSN. State taxes for military   If you (or your spouse, if filing a joint return) do not have an SSN, you can apply for one by filing Form SS-5 with the SSA. State taxes for military You can get Form SS-5 online at www. State taxes for military socialsecurity. State taxes for military gov, from your local SSA office, or by calling the SSA at 1-800-772-1213. State taxes for military Filing deadline approaching and still no SSN. State taxes for military   If the filing deadline is approaching and you still do not have an SSN, you have two choices. State taxes for military Request an automatic 6-month extension of time to file your return. State taxes for military You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. State taxes for military S. State taxes for military Individual Income Tax Return. State taxes for military For more information, see the instructions for Form 4868. State taxes for military File the return on time without claiming the EIC. State taxes for military After receiving the SSN, file an amended return, Form 1040X, claiming the EIC. State taxes for military Attach a filled-in Schedule EIC, Earned Income Credit, if you have a qualifying child. State taxes for military Rule 3—Your Filing Status Cannot Be “Married Filing Separately” If you are married, you usually must file a joint return to claim the EIC. State taxes for military Your filing status cannot be “Married filing separately. State taxes for military ” Spouse did not live with you. State taxes for military   If you are married and your spouse did not live in your home at any time during the last 6 months of the year, you may be able to file as head of household, instead of married filing separately. State taxes for military In that case, you may be able to claim the EIC. State taxes for military For detailed information about filing as head of household, see Publication 501, Exemptions, Standard Deduction, and Filing Information. State taxes for military Rule 4—You Must Be a U. State taxes for military S. State taxes for military Citizen or Resident Alien All Year If you (or your spouse, if married) were a nonresident alien for any part of the year, you cannot claim the earned income credit unless your filing status is married filing jointly. State taxes for military You can use that filing status only if one spouse is a U. State taxes for military S. State taxes for military citizen or resident alien and you choose to treat the nonresident spouse as a U. State taxes for military S. State taxes for military resident. State taxes for military If you make this choice, you and your spouse are taxed on your worldwide income. State taxes for military If you need more information on making this choice, get Publication 519, U. State taxes for military S. State taxes for military Tax Guide for Aliens. State taxes for military If you (or your spouse, if married) were a nonresident alien for any part of the year and your filing status is not married filing jointly, enter “No” on the dotted line next to line 64a (Form 1040) or in the space to the left of line 38a (Form 1040A). State taxes for military Rule 5—You Cannot File Form 2555 or Form 2555-EZ You cannot claim the earned income credit if you file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. State taxes for military You file these forms to exclude income earned in foreign countries from your gross income, or to deduct or exclude a foreign housing amount. State taxes for military U. State taxes for military S. State taxes for military possessions are not foreign countries. State taxes for military See Publication 54, Tax Guide for U. State taxes for military S. State taxes for military Citizens and Resident Aliens Abroad, for more detailed information. State taxes for military Rule 6—Your Investment Income Must Be $3,300 or Less You cannot claim the earned income credit unless your investment income is $3,300 or less. State taxes for military If your investment income is more than $3,300, you cannot claim the credit. State taxes for military Form 1040EZ. State taxes for military   If you file Form 1040EZ, your investment income is the total of the amount on line 2 and the amount of any tax-exempt interest you wrote to the right of the words “Form 1040EZ” on line 2. State taxes for military Form 1040A. State taxes for military   If you file Form 1040A, your investment income is the total of the amounts on lines 8a (taxable interest), 8b (tax-exempt interest), 9a (ordinary dividends), and 10 (capital gain distributions) on that form. State taxes for military Form 1040. State taxes for military   If you file Form 1040, use Worksheet 1 in this chapter to figure your investment income. State taxes for military    Worksheet 1. State taxes for military Investment Income If You Are Filing Form 1040 Use this worksheet to figure investment income for the earned income credit when you file Form 1040. State taxes for military Interest and Dividends         1. State taxes for military Enter any amount from Form 1040, line 8a 1. State taxes for military   2. State taxes for military Enter any amount from Form 1040, line 8b, plus any amount on Form 8814, line 1b 2. State taxes for military   3. State taxes for military Enter any amount from Form 1040, line 9a 3. State taxes for military   4. State taxes for military Enter the amount from Form 1040, line 21, that is from Form 8814 if you are filing that form to report your child's interest and dividend income on your return. State taxes for military (If your child received an Alaska Permanent Fund dividend, use Worksheet 2 in this chapter to figure the amount to enter on this line. State taxes for military ) 4. State taxes for military   Capital Gain Net Income         5. State taxes for military Enter the amount from Form 1040, line 13. State taxes for military If the amount on that line is a loss, enter -0- 5. State taxes for military       6. State taxes for military Enter any gain from Form 4797, Sales of Business Property, line 7. State taxes for military If the amount on that line is a loss, enter -0-. State taxes for military (But, if you completed lines 8 and 9 of Form 4797, enter the amount from line 9 instead. State taxes for military ) 6. State taxes for military       7. State taxes for military Substract line 6 of this worksheet from line 5 of this worksheet. State taxes for military (If the result is less than zero, enter -0-. State taxes for military ) 7. State taxes for military   Royalties and Rental Income From Personal Property         8. State taxes for military Enter any royalty income from Schedule E, line 23b, plus any income from the rental of personal property shown on Form 1040, line 21 8. State taxes for military       9. State taxes for military Enter any expenses from Schedule E, line 20, related to royalty income, plus any expenses from the rental of personal property deducted on Form 1040, line 36 9. State taxes for military       10. State taxes for military Subtract the amount on line 9 of this worksheet from the amount on line 8. State taxes for military (If the result is less than zero, enter -0-. State taxes for military ) 10. State taxes for military   Passive Activities         11. State taxes for military Enter the total of any net income from passive activities (such as income included on Schedule E, line 26, 29a (col. State taxes for military (g)), 34a (col. State taxes for military (d)), or 40). State taxes for military (See instructions below for lines 11 and 12. State taxes for military ) 11. State taxes for military       12. State taxes for military Enter the total of any losses from passive activities (such as losses included on Schedule E, line 26, 29b (col. State taxes for military (f)), 34b (col. State taxes for military (c)), or 40). State taxes for military (See instructions below for lines 11 and 12. State taxes for military ) 12. State taxes for military       13. State taxes for military Combine the amounts on lines 11 and 12 of this worksheet. State taxes for military (If the result is less than zero, enter -0-. State taxes for military ) 13. State taxes for military   14. State taxes for military Add the amounts on lines 1, 2, 3, 4, 7, 10, and 13. State taxes for military Enter the total. State taxes for military This is your investment income 14. State taxes for military   15. State taxes for military Is the amount on line 14 more than $3,300? ❑ Yes. State taxes for military You cannot take the credit. State taxes for military  ❑ No. State taxes for military Go to Step 3 of the Form 1040 instructions for lines 64a and 64b to find out if you can take the credit (unless you are using this publication to find out if you can take the credit; in that case, go to Rule 7, next). State taxes for military       Instructions for lines 11 and 12. State taxes for military In figuring the amount to enter on lines 11 and 12, do not take into account any royalty income (or loss) included on line 26 of Schedule E or any amount included in your earned income. State taxes for military To find out if the income on line 26 or line 40 of Schedule E is from a passive activity, see the Schedule E instructions. State taxes for military If any of the rental real estate income (or loss) included on Schedule E, line 26, is not from a passive activity, print “NPA” and the amount of that income (or loss) on the dotted line next to line 26. State taxes for military Worksheet 2. State taxes for military Worksheet for Line 4 of Worksheet 1 Complete this worksheet only if Form 8814 includes an Alaska Permanent Fund dividend. State taxes for military Note. State taxes for military Fill out a separate Worksheet 2 for each Form 8814. State taxes for military     1. State taxes for military Enter the amount from Form 8814, line 2a 1. State taxes for military   2. State taxes for military Enter the amount from Form 8814, line 2b 2. State taxes for military   3. State taxes for military Subtract line 2 from line 1 3. State taxes for military   4. State taxes for military Enter the amount from Form 8814, line 1a 4. State taxes for military   5. State taxes for military Add lines 3 and 4 5. State taxes for military   6. State taxes for military Enter the amount of the child's Alaska Permanent Fund dividend 6. State taxes for military   7. State taxes for military Divide line 6 by line 5. State taxes for military Enter the result as a decimal (rounded to at least three places) 7. State taxes for military   8. State taxes for military Enter the amount from Form 8814, line 12 8. State taxes for military   9. State taxes for military Multiply line 7 by line 8 9. State taxes for military   10. State taxes for military Subtract line 9 from line 8. State taxes for military Enter the result on line 4 of Worksheet 1 10. State taxes for military     (If filing more than one Form 8814, enter on line 4 of Worksheet 1 the total of the amounts on line 10 of all Worksheets 2. State taxes for military )     Example—completing Worksheet 2. State taxes for military Your 10-year-old child has taxable interest income of $400, an Alaska Permanent Fund dividend of $1,000, and ordinary dividends of $1,100, of which $500 are qualified dividends. State taxes for military You choose to report this income on your return. State taxes for military You enter $400 on line 1a of Form 8814, $2,100 ($1,000 + $1,100) on line 2a, and $500 on line 2b. State taxes for military After completing lines 4 through 11, you enter $400 on line 12 of Form 8814 and line 21 of Form 1040. State taxes for military On Worksheet 2, you enter $2,100 on line 1, $500 on line 2, $1,600 on line 3, $400 on line 4, $2,000 on line 5, $1,000 on line 6, 0. State taxes for military 500 on line 7, $400 on line 8, $200 on line 9, and $200 on line 10. State taxes for military You then enter $200 on line 4 of Worksheet 1. State taxes for military Rule 7—You Must Have Earned Income This credit is called the “earned income” credit because, to qualify, you must work and have earned income. State taxes for military If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income. State taxes for military If you are an employee, earned income includes all the taxable income you get from your employer. State taxes for military Rule 15 has information that will help you figure the amount of your earned income. State taxes for military If you are self-employed or a statutory employee, you will figure your earned income on EIC Worksheet B in the Form 1040 instructions. State taxes for military Earned Income Earned income includes all of the following types of income. State taxes for military Wages, salaries, tips, and other taxable employee pay. State taxes for military Employee pay is earned income only if it is taxable. State taxes for military Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. State taxes for military But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained later in this chapter. State taxes for military Net earnings from self-employment. State taxes for military Gross income received as a statutory employee. State taxes for military Wages, salaries, and tips. State taxes for military    Wages, salaries, and tips you receive for working are reported to you on Form W-2, in box 1. State taxes for military You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040). State taxes for military Nontaxable combat pay election. State taxes for military   You can elect to include your nontaxable combat pay in earned income for the earned income credit. State taxes for military The amount of your nontaxable combat pay should be shown on your Form W-2, in box 12, with code Q. State taxes for military Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. State taxes for military For details, see Nontaxable combat pay in chapter 4. State taxes for military Net earnings from self-employment. State taxes for military   You may have net earnings from self-employment if: You own your own business, or You are a minister or member of a religious order. State taxes for military Minister's housing. State taxes for military   The rental value of a home or a housing allowance provided to a minister as part of the minister's pay generally is not subject to income tax but is included in net earnings from self-employment. State taxes for military For that reason, it is included in earned income for the EIC (except in the cases described in Approved Form 4361 or Form 4029 , below). State taxes for military Statutory employee. State taxes for military   You are a statutory employee if you receive a Form W-2 on which the “Statutory employee” box (box 13) is checked. State taxes for military You report your income and expenses as a statutory employee on Schedule C or C-EZ (Form 1040). State taxes for military Strike benefits. State taxes for military   Strike benefits paid by a union to its members are earned income. State taxes for military Approved Form 4361 or Form 4029 This section is for persons who have an approved: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, or Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits. State taxes for military Each approved form exempts certain income from social security taxes. State taxes for military Each form is discussed here in terms of what is or is not earned income for the EIC. State taxes for military Form 4361. State taxes for military   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. State taxes for military This includes wages, salaries, tips, and other taxable employee compensation. State taxes for military A nontaxable housing allowance or the nontaxable rental value of a home is not earned income. State taxes for military Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. State taxes for military Examples include fees for performing marriages and honoraria for delivering speeches. State taxes for military Form 4029. State taxes for military   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation count as earned income. State taxes for military However, amounts you received as a self-employed individual do not count as earned income. State taxes for military Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040. State taxes for military Disability Benefits If you retired on disability, taxable benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. State taxes for military Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. State taxes for military You must report your taxable disability payments on line 7 of either Form 1040 or Form 1040A until you reach minimum retirement age. State taxes for military Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. State taxes for military Report taxable pension payments on Form 1040, lines 16a and 16b, or Form 1040A, lines 12a and 12b. State taxes for military Disability insurance payments. State taxes for military   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. State taxes for military It does not matter whether you have reached minimum retirement age. State taxes for military If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J. State taxes for military ” Income That Is Not Earned Income Examples of items that are not earned income include interest and dividends, pensions and annuities, social security and railroad retirement benefits (including disability benefits), alimony and child support, welfare benefits, workers' compensation benefits, unemployment compensation (insurance), nontaxable foster care payments, and veterans' benefits, including VA rehabilitation payments. State taxes for military Do not include any of these items in your earned income. State taxes for military Earnings while an inmate. State taxes for military   Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. State taxes for military This includes amounts for work performed while in a work release program or while in a halfway house. State taxes for military Workfare payments. State taxes for military   Nontaxable workfare payments are not earned income for the EIC. State taxes for military These are cash payments certain people receive from a state or local agency that administers public assistance programs funded under the federal Temporary Assistance for Needy Families (TANF) program in return for certain work activities such as (1) work experience activities (including remodeling or repairing public housing) if sufficient private sector employment is not available, or (2) community service program activities. State taxes for military Community property. State taxes for military   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3), and live in a state that has community property laws, your earned income for the EIC does not include any amount earned by your spouse that is treated as belonging to you under those laws. State taxes for military That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. State taxes for military Your earned income includes the entire amount you earned, even if part of it is treated as belonging to your spouse under your state's community property laws. State taxes for military Nevada, Washington, and California domestic partners. State taxes for military   If you are a registered domestic partner in Nevada, Washington, or California, the same rules apply. State taxes for military Your earned income for the EIC does not include any amount earned by your partner. State taxes for military Your earned income includes the entire amount you earned. State taxes for military For details, see Publication 555. State taxes for military Conservation Reserve Program (CRP) payments. State taxes for military   If you were receiving social security retirement benefits or social security disability benefits at the time you received any CRP payments, your CRP payments are not earned income for the EIC. State taxes for military Nontaxable military pay. State taxes for military   Nontaxable pay for members of the Armed Forces is not considered earned income for the EIC. State taxes for military Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). State taxes for military See Publication 3, Armed Forces' Tax Guide, for more information. State taxes for military    Combat pay. State taxes for military You can elect to include your nontaxable combat pay in earned income for the EIC. State taxes for military See Nontaxable combat pay in chapter 4. State taxes for military Chapter 2—Rules If You Have a Qualifying Child If you have met all the rules in chapter 1, use this chapter to see if you have a qualifying child. State taxes for military This chapter discusses Rules 8 through 10. State taxes for military You must meet all three of those rules, in addition to the rules in chapters 1 and 4, to qualify for the earned income credit with a qualifying child. State taxes for military You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. State taxes for military (You cannot file Form 1040EZ. State taxes for military ) You also must complete Schedule EIC and attach it to your return. State taxes for military If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. State taxes for military No qualifying child. State taxes for military   If you do not meet Rule 8, you do not have a qualifying child. State taxes for military Read chapter 3 to find out if you can get the earned income credit without a qualifying child. State taxes for military Rule 8—Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Your child is a qualifying child if your child meets four tests. State taxes for military The fours tests are: Relationship, Age, Residency, and Joint return. State taxes for military The four tests are illustrated in Figure 1. State taxes for military The paragraphs that follow contain more information about each test. State taxes for military Relationship Test To be your qualifying child, a child must be your: Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), or Brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew). State taxes for military The following definitions clarify the relationship test. State taxes for military Adopted child. State taxes for military   An adopted child is always treated as your own child. State taxes for military The term “adopted child” includes a child who was lawfully placed with you for legal adoption. State taxes for military Foster child. State taxes for military   For the EIC, a person is your foster child if the child is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. State taxes for military (An authorized placement agency includes a state or local government agency. State taxes for military It also includes a tax-exempt organization licensed by a state. State taxes for military In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children. State taxes for military ) Example. State taxes for military Debbie, who is 12 years old, was placed in your care 2 years ago by an authorized agency responsible for placing children in foster homes. State taxes for military Debbie is your foster child. State taxes for military Figure 1. State taxes for military Tests for Qualifying Child Please click here for the text description of the image. State taxes for military Conditions for Qualifying Child Age Test Your child must be: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a student, and younger than you (or your spouse, if filing jointly, or Permanently and totally disabled at any time during 2013, regardless of age. State taxes for military The following examples and definitions clarify the age test. State taxes for military Example 1—child not under age 19. State taxes for military Your son turned 19 on December 10. State taxes for military Unless he was permanently and totally disabled or a student, he is not a qualifying child because, at the end of the year, he was not under age 19. State taxes for military Example 2—child not younger than you or your spouse. State taxes for military Your 23-year-old brother, who is a full-time student and unmarried, lives with you and your spouse. State taxes for military He is not disabled. State taxes for military Both you and your spouse are 21 years old, and you file a joint return. State taxes for military Your brother is not your qualifying child because he is not younger than you or your spouse. State taxes for military Example 3—child younger than your spouse but not younger than you. State taxes for military The facts are the same as in Example 2 except that your spouse is 25 years old. State taxes for military Because your brother is younger than your spouse, he is your qualifying child, even though he is not younger than you. State taxes for military Student defined. State taxes for military   To qualify as a student, your child must be, during some part of each of any 5 calendar months during the calendar year: A full-time student at a school that has a regular teaching staff, course of study, and regular student body at the school, or A student taking a full-time, on-farm training course given by a school described in (1), or a state, county, or local government. State taxes for military   The 5 calendar months need not be consecutive. State taxes for military   A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance. State taxes for military School defined. State taxes for military   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. State taxes for military However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet do not count as schools for the EIC. State taxes for military Vocational high school students. State taxes for military   Students who work in co-op jobs in private industry as a part of a school's regular course of classroom and practical training are considered full-time students. State taxes for military Permanently and totally disabled. State taxes for military   Your child is permanently and totally disabled if both of the following apply. State taxes for military He or she cannot engage in any substantial gainful activity because of a physical or mental condition. State taxes for military A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. State taxes for military Residency Test Your child must have lived with you in the United States for more than half of 2013. State taxes for military The following definitions clarify the residency test. State taxes for military United States. State taxes for military   This means the 50 states and the District of Columbia. State taxes for military It does not include Puerto Rico or U. State taxes for military S. State taxes for military possessions such as Guam. State taxes for military Homeless shelter. State taxes for military   Your home can be any location where you regularly live. State taxes for military You do not need a traditional home. State taxes for military For example, if your child lived with you for more than half the year in one or more homeless shelters, your child meets the residency test. State taxes for military Military personnel stationed outside the United States. State taxes for military   U. State taxes for military S. State taxes for military military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC. State taxes for military Extended active duty. State taxes for military   Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. State taxes for military Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you do not serve more than 90 days. State taxes for military Birth or death of child. State taxes for military    child who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the child's home for more than half the time he or she was alive in 2013. State taxes for military Temporary absences. State taxes for military   Count time that you or your child is away from home on a temporary absence due to a special circumstance as time the child lived with you. State taxes for military Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility. State taxes for military Kidnapped child. State taxes for military   A kidnapped child is treated as living with you for more than half of the year if the child lived with you for more than half the part of the year before the date of the kidnapping. State taxes for military The child must be presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or the child's family. State taxes for military This treatment applies for all years until the child is returned. State taxes for military However, the last year this treatment can apply is the earlier of: The year there is a determination that the child is dead, or The year the child would have reached age 18. State taxes for military   If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC. State taxes for military Joint Return Test To meet this test, the child cannot file a joint return for the year. State taxes for military Exception. State taxes for military   An exception to the joint return test applies if your child and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid. State taxes for military Example 1—child files joint return. State taxes for military You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. State taxes for military He earned $25,000 for the year. State taxes for military The couple files a joint return. State taxes for military Because your daughter and her husband file a joint return, she is not your qualifying child. State taxes for military Example 2—child files joint return to get refund of tax withheld. State taxes for military Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. State taxes for military They do not have a child. State taxes for military Neither is required to file a tax return. State taxes for military Taxes were taken out of their pay, so they file a joint return only to get a refund of the withheld taxes. State taxes for military The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. State taxes for military Example 3—child files joint return to claim American opportunity credit. State taxes for military The facts are the same as in Example 2 except no taxes were taken out of your son's pay. State taxes for military He and his wife are not required to file a tax return, but they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. State taxes for military Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to claim a refund of income tax withheld or estimated tax paid. State taxes for military The exception to the joint return test does not apply, so your son is not your qualifying child. State taxes for military Married child. State taxes for military   Even if your child does not file a joint return, if your child was married at the end of the year, he or she cannot be your qualifying child unless: You can claim an exemption for the child, or The reason you cannot claim an exemption for the child is that you let the child's other parent claim the exemption under the Special rule for divorced or separated parents (or parents who live apart) described later. State taxes for military    Social security number. State taxes for military Your qualifying child must have a valid social security number (SSN), unless the child was born and died in 2013 and you attach to your return a copy of the child's birth certificate, death certificate, or hospital records showing a live birth. State taxes for military You cannot claim the EIC on the basis of a qualifying child if: The qualifying child's SSN is missing from your tax return or is incorrect, The qualifying child's social security card says “Not valid for employment” and was issued for use in getting a federally funded benefit, or Instead of an SSN, the qualifying child has: An individual taxpayer identification number (ITIN), which is issued to a noncitizen who cannot get an SSN, or An adoption taxpayer identification number (ATIN), issued to adopting parents who cannot get an SSN for the child being adopted until the adoption is final. State taxes for military   If you have more than one qualifying child and only one has a valid SSN, you can use only that child to claim the EIC. State taxes for military For more information about SSNs, see Rule 2. State taxes for military Rule 9—Your Qualifying Child Cannot Be Used by More Than One Person To Claim the EIC Sometimes a child meets the tests to be a qualifying child of more than one person. State taxes for military However, only one of these persons can actually treat the child as a qualifying child. State taxes for military Only that person can use the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit). State taxes for military The exemption for the child. State taxes for military The child tax credit. State taxes for military Head of household filing status. State taxes for military The credit for child and dependent care expenses. State taxes for military The exclusion for dependent care benefits. State taxes for military The EIC. State taxes for military The other person cannot take any of these benefits based on this qualifying child. State taxes for military In other words, you and the other person cannot agree to divide these tax benefits between you. State taxes for military The other person cannot take any of these tax benefits unless he or she has a different qualifying child. State taxes for military The tiebreaker rules, which follow, explain who, if anyone, can claim the EIC when more than one person has the same qualifying child. State taxes for military However, the tiebreaker rules do not apply if the other person is your spouse and you file a joint return. State taxes for military Tiebreaker rules. State taxes for military   To determine which person can treat the child as a qualifying child to claim the six tax benefits just listed, the following tiebreaker rules apply. State taxes for military If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. State taxes for military If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents. State taxes for military If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. State taxes for military If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year. State taxes for military If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year. State taxes for military If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child. State taxes for military If the child's parents file a joint return with each other, this rule can be applied by treating the parents' total AGI as divided evenly between them. State taxes for military See Example 8. State taxes for military   Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child. State taxes for military See Examples 1 through 13. State taxes for military   If you cannot claim the EIC because your qualifying child is treated under the tiebreaker rules as the qualifying child of another person for 2013, you may be able to take the EIC using a different qualifying child, but you cannot take the EIC using the rules in chapter 3 for people who do not have a qualifying child. State taxes for military If the other person cannot claim the EIC. State taxes for military   If you and someone else have the same qualifying child but the other person cannot claim the EIC because he or she is not eligible or his or her earned income or AGI is too high, you may be able to treat the child as a qualifying child. State taxes for military See Examples 6 and 7. State taxes for military But you cannot treat the child as a qualifying child to claim the EIC if the other person uses the child to claim any of the other six tax benefits listed earlier in this chapter. State taxes for military Examples. State taxes for military    The following examples may help you in determining whether you can claim the EIC when you and someone else have the same qualifying child. State taxes for military Example 1—child lived with parent and grandparent. State taxes for military You and your 2-year-old son Jimmy lived with your mother all year. State taxes for military You are 25 years old, unmarried, and your AGI is $9,000. State taxes for military Your only income was $9,000 from a part-time job. State taxes for military Your mother's only income was $20,000 from her job, and her AGI is $20,000. State taxes for military Jimmy's father did not live with you or Jimmy. State taxes for military The special rule explained later for divorced or separated parents (or parents who live apart) does not apply. State taxes for military Jimmy is a qualifying child of both you and your mother because he meets the relationship, age, residency, and joint return tests for both you and your mother. State taxes for military However, only one of you can treat him as a qualifying child to claim the EIC (and the other tax benefits listed earlier in this chapter for which that person qualifies). State taxes for military He is not a qualifying child of anyone else, including his father. State taxes for military If you do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can treat him as a qualifying child to claim the EIC (and any of the other tax benefits listed earlier for which she qualifies). State taxes for military Example 2—parent has higher AGI than grandparent. State taxes for military The facts are the same as in Example 1 except your AGI is $25,000. State taxes for military Because your mother's AGI is not higher than yours, she cannot claim Jimmy as a qualifying child. State taxes for military Only you can claim him. State taxes for military Example 3—two persons claim same child. State taxes for military The facts are the same as in Example 1 except that you and your mother both claim Jimmy as a qualifying child. State taxes for military In this case, you as the child's parent will be the only one allowed to claim Jimmy as a qualifying child for the EIC and the other tax benefits listed earlier for which you qualify. State taxes for military The IRS will disallow your mother's claim to the EIC and any of the other tax benefits listed earlier unless she has another qualifying child. State taxes for military Example 4—qualifying children split between two persons. State taxes for military The facts are the same as in Example 1 except that you also have two other young children who are qualifying children of both you and your mother. State taxes for military Only one of you can claim each child. State taxes for military However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. State taxes for military For example, if you claim one child, your mother can claim the other two. State taxes for military Example 5—taxpayer who is a qualifying child. State taxes for military The facts are the same as in Example 1 except that you are only 18 years old. State taxes for military This means you are a qualifying child of your mother. State taxes for military Because of Rule 10, discussed next, you cannot claim the EIC and cannot claim your son as a qualifying child. State taxes for military Only your mother may be able to treat Jimmy as a qualifying child to claim the EIC. State taxes for military If your mother meets all the other requirements for claiming the EIC and you do not claim Jimmy as a qualifying child for any of the other tax benefits listed earlier, your mother can claim both you and Jimmy as qualifying children for the EIC. State taxes for military Example 6—grandparent with too much earned income to claim EIC. State taxes for military The facts are the same as in Example 1 except that your mother earned $50,000 from her job. State taxes for military Because your mother's earned income is too high for her to claim the EIC, only you can claim the EIC using your son. State taxes for military Example 7—parent with too much earned income to claim EIC. State taxes for military The facts are the same as in Example 1 except that you earned $50,000 from your job and your AGI is $50,500. State taxes for military Your earned income is too high for you to claim the EIC. State taxes for military But your mother cannot claim the EIC either, because her AGI is not higher than yours. State taxes for military Example 8—child lived with both parents and grandparent. State taxes for military The facts are the same as in Example 1 except that you and Jimmy's father are married to each other, live with Jimmy and your mother, and have AGI of $30,000 on a joint return. State taxes for military If you and your husband do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can claim him instead. State taxes for military Even though the AGI on your joint return, $30,000, is more than your mother's AGI of $20,000, for this purpose half of the joint AGI can be treated as yours and half as your husband's. State taxes for military In other words, each parent's AGI can be treated as $15,000. State taxes for military Example 9—separated parents. State taxes for military You, your husband, and your 10-year-old son Joey lived together until August 1, 2013, when your husband moved out of the household. State taxes for military In August and September, Joey lived with you. State taxes for military For the rest of the year, Joey lived with your husband, who is Joey's father. State taxes for military Joey is a qualifying child of both you and your husband because he lived with each of you for more than half the year and because he met the relationship, age, and joint return tests for both of you. State taxes for military At the end of the year, you and your husband still were not divorced, legally separated, or separated under a written separation agreement, so the Special rule for divorced or separated parents (or parents who live apart) does not apply. State taxes for military You and your husband will file separate returns. State taxes for military Your husband agrees to let you treat Joey as a qualifying child. State taxes for military This means, if your husband does not claim Joey as a qualifying child for any of the tax benefits listed earlier, you can claim him as a qualifying child for any tax benefit listed earlier for which you qualify. State taxes for military However, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. State taxes for military See Rule 3. State taxes for military Example 10—separated parents claim same child. State taxes for military The facts are the same as in Example 9 except that you and your husband both claim Joey as a qualifying child. State taxes for military In this case, only your husband will be allowed to treat Joey as a qualifying child. State taxes for military This is because, during 2013, the boy lived with him longer than with you. State taxes for military You cannot claim the EIC (either with or without a qualifying child). State taxes for military However, your husband's filing status is married filing separately, so he cannot claim the EIC or the credit for child and dependent care expenses. State taxes for military See Rule 3. State taxes for military Example 11—unmarried parents. State taxes for military You, your 5-year-old son, and your son's father lived together all year. State taxes for military You and your son's father are not married. State taxes for military Your son is a qualifying child of both you and his father because he meets the relationship, age, residency, and joint return tests for both you and his father. State taxes for military Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. State taxes for military Neither of you had any other income. State taxes for military Your son's father agrees to let you treat the child as a qualifying child. State taxes for military This means, if your son's father does not claim your son as a qualifying child for the EIC or any of the other tax benefits listed earlier, you can claim him as a qualifying child for the EIC and any of the other tax benefits listed earlier for which you qualify. State taxes for military Example 12—unmarried parents claim same child. State taxes for military The facts are the same as in Example 11 except that you and your son's father both claim your son as a qualifying child. State taxes for military In this case, only your son's father will be allowed to treat your son as a qualifying child. State taxes for military This is because his AGI, $14,000, is more than your AGI, $12,000. State taxes for military You cannot claim the EIC (either with or without a qualifying child). State taxes for military Example 13—child did not live with a parent. State taxes for military You and your 7-year-old niece, your sister's child, lived with your mother all year. State taxes for military You are 25 years old, and your AGI is $9,300. State taxes for military Your only income was from a part-time job. State taxes for military Your mother's AGI is $15,000. State taxes for military Her only income was from her job. State taxes for military Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. State taxes for military Your niece is a qualifying child of both you and your mother because she meets the relationship, age, residency, and joint return tests for both you and your mother. State taxes for military However, only your mother can treat her as a qualifying child. State taxes for military This is because your mother's AGI, $15,000, is more than your AGI, $9,300. State taxes for military Special rule for divorced or separated parents (or parents who live apart). State taxes for military   A child will be treated as the qualifying child of his or her noncustodial parent (for purposes of claiming an exemption and the child tax credit, but not for the EIC) if all of the following statements are true. State taxes for military The parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Lived apart at all time during the last 6 months of 2013, whether or not they are or were married. State taxes for military The child received over half of his or her support for the year from the parents. State taxes for military The child is in the custody of one or both parents for more than half of 2013. State taxes for military Either of the following statements is true. State taxes for military The custodial parent signs Form 8332 or a substantially similar statement that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches the form or statement to his or her return. State taxes for military If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. State taxes for military A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2013 provides that the noncustodial parent can claim the child as a dependent, and the noncustodial parent provides at least $600 for support of the child during 2013. State taxes for military For details, see Publication 501. State taxes for military Also see Applying Rule 9 to divorced or separated parents (or parents who live apart), next. State taxes for military Applying Rule 9 to divorced or separated parents (or parents who live apart). State taxes for military   If a child is treated as the qualifying child of the noncustodial parent under the special rule just described for children of divorced or separated parents (or parents who live apart), only the noncustodial parent can claim an exemption and the child tax credit for the child. State taxes for military However, the custodial parent, if eligible, or another eligible taxpayer can claim the child as a qualifying child for the EIC and other tax benefits listed earlier in this chapter. State taxes for military If the child is the qualifying child of more than one person for these benefits, then the tiebreaker rules determine which person can treat the child as a qualifying child. State taxes for military Example 1. State taxes for military You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. State taxes for military Your AGI is $10,000. State taxes for military Your mother’s AGI is $25,000. State taxes for military Your son's father did not live with you or your son. State taxes for military Under the Special rule for divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for the child. State taxes for military However, your son's father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the EIC. State taxes for military You and your mother did not have any child care expenses or dependent care benefits. State taxes for military If you do not claim your son as a qualifying child, your mother can claim him as a qualifying child for the EIC and head of household filing status, if she qualifies for these tax benefits. State taxes for military Example 2. State taxes for military The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. State taxes for military Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. State taxes for military Example 3. State taxes for military The facts are the same as in Example 1 except that you and your mother both claim your son as a qualifying child for the EIC. State taxes for military Your mother also claims him as a qualifying child for head of household filing status. State taxes for military You as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC. State taxes for military The IRS will disallow your mother's claim to the EIC and head of household filing status unless she has another qualifying child. State taxes for military Rule 10—You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. State taxes for military ) if all of the following statements are true. State taxes for military You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. State taxes for military Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. State taxes for military You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student, and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. State taxes for military You lived with that person in the United States for more than half of the year. State taxes for military You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). State taxes for military For more details about the tests to be a qualifying child, see Rule 8. State taxes for military If you are a qualifying child of another taxpayer, you cannot claim the EIC. State taxes for military This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. State taxes for military Put “No” beside line 64a (Form 1040) or line 38a (Form 1040A). State taxes for military Example. State taxes for military You and your daughter lived with your mother all year. State taxes for military You are 22 years old, unmarried, and attended a trade school full time. State taxes for military You had a part-time job and earned $5,700. State taxes for military You had no other income. State taxes for military Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother. State taxes for military She can claim the EIC if she meets all the other requirements. State taxes for military Because you are your mother's qualifying child, you cannot claim the EIC. State taxes for military This is so even if your mother cannot or does not claim the EIC. State taxes for military Child of person not required to file a return. State taxes for military   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you met the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. State taxes for military Example 1—return not required. State taxes for military The facts are the same as in the last example except your mother had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. State taxes for military As a result, you are not your mother's qualifying child. State taxes for military You can claim the EIC if you meet all the other requirements to do so. State taxes for military Example 2—return filed to get refund of tax withheld. State taxes for military The facts are the same as in Example 1 except your mother had wages of $1,500 and had income tax withheld from her wages. State taxes for military She files a return only to get a refund of the income tax withheld and does not claim the EIC or any other tax credits or deductions. State taxes for military As a result, you are not your mother's qualifying child. State taxes for military You can claim the EIC if you meet all the other requirements to do so. State taxes for military Example 3—return filed to get EIC. State taxes for military The facts are the same as in Example 2 except your mother claimed the EIC on her return. State taxes for military Since she filed the return to get the EIC, she is not filing it only to get a refund of income tax withheld. State taxes for military As a result, you are your mother's qualifying child. State taxes for military You cannot claim the EIC. State taxes for military Chapter 3—Rules If You Do Not Have a Qualifying Child Use this chapter if you do not have a qualifying child and have met all the rules in chapter 1. State taxes for military This chapter discusses Rules 11 through 14. State taxes for military You must meet all four of those rules, in addition to the rules in chapters 1 and 4, to qualify for the earned income credit without a qualifying child. State taxes for military You can file Form 1040, Form 1040A, or Form 1040EZ to claim the EIC without a qualifying child. State taxes for military If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. State taxes for military If you have a qualifying child. State taxes for military   If you meet Rule 8, you have a qualifying child. State taxes for military If you meet Rule 8 and do not claim the EIC with a qualifying child, you cannot claim the EIC without a qualifying child. State taxes for military Rule 11—You Must Be at Least Age 25 but Under Age 65 You must be at least age 25 but under age 65 at the end of 2013. State taxes for military If you are married filing a joint return, either you or your spouse must be at least age 25 but under age 65 at the end of 2013. State taxes for military It does not matter which spouse meets the age test, as long as one of the spouses does. State taxes for military You meet the age test if you were born after December 31, 1948, and before January 2, 1989. State taxes for military If you are married filing a joint return, you meet the age test if either you or your spouse was born after December 31, 1948, and before January 2, 1989. State taxes for military If neither you nor your spouse meets the age test, you cannot claim the EIC. State taxes for military Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). State taxes for military Death of spouse. State taxes for military   If you are filing a joint return with your spouse who died in 2013, you meet the age test if your spouse was at least age 25 but under age 65 at the time of death. State taxes for military Example 1. State taxes for military You are age 28 and unmarried. State taxes for military You meet the age test. State taxes for military Example 2—spouse meets age test. State taxes for military You are married and filing a joint return. State taxes for military You are age 23 and your spouse is age 27. State taxes for military You meet the age test because your spouse is at least age 25 but under age 65. State taxes for military Example 3—spouse dies in 2013. State taxes for military You are married and filing a joint return with your spouse who died in August 2013. State taxes for military You are age 67. State taxes for military Your spouse would have become age 65 in November 2013. State taxes for military Because your spouse was under age 65 when she died, you meet the age test. State taxes for military Rule 12—You Cannot Be the Dependent of Another Person If you are not filing a joint return, you meet this rule if: You checked box 6a on Form 1040 or 1040A, or You did not check the “You” box on line 5 of Form 1040EZ, and you entered $10,000 on that line. State taxes for military If you are filing a joint return, you meet this rule if: You checked both box 6a and box 6b on Form 1040 or 1040A, or You and your spouse did not check either the “You” box or the “Spouse” box on line 5 of Form 1040EZ, and you entered $20,000 on that line. State taxes for military If you are not sure whether someone else can claim you as a dependent, get Publication 501 and read the rules for claiming a dependent. State taxes for military If someone else can claim you as a dependent on his or her return, but does not, you still cannot claim the credit. State taxes for military Example 1. State taxes for military In 2013, you were age 25, single, and living at home with your parents. State taxes for military You worked and were not a student. State taxes for military You earned $7,500. State taxes for military Your parents cannot claim you as a dependent. State taxes for military When you file your return, you claim an exemption for yourself by not checking the You box on line 5 of your Form 1040EZ and by entering $10,000 on that line. State taxes for military You meet this rule. State taxes for military You can claim the EIC if you meet all the other requirements. State taxes for military Example 2. State taxes for military The facts are the same as in Example 1, except that you earned $2,000. State taxes for military Your parents can claim you as a dependent but decide not to. State taxes for military You do not meet this rule. State taxes for military You cannot claim the credit because your parents could have claimed you as a dependent. State taxes for military Joint returns. State taxes for military   You generally cannot be claimed as a dependent by another person if you are married and file a joint return. State taxes for military   However, another person may be able to claim you as a dependent if you and your spouse file a joint return merely to claim a refund of income tax withheld or estimated tax paid. State taxes for military But neither you nor your spouse can be claimed as a dependent by another person if you claim the EIC on your joint return. State taxes for military Example 1—return filed to get refund of tax withheld. State taxes for military You are 26 years old. State taxes for military You and your wife live with your parents and had $800 of wages from part-time jobs and no other income. State taxes for military Neither you nor your wife is required to file a tax return. State taxes for military You do not have a child. State taxes for military Taxes were taken out of your pay so you file a joint return only to get a refund of the withheld taxes. State taxes for military Your parents are not disqualified from claiming an exemption for you just because you filed a joint return. State taxes for military They can claim exemptions for you and your wife if all the other tests to do so are met. State taxes for military Example 2—return filed to get EIC. State taxes for military The facts are the same as in Example 1except no taxes were taken out of your pay. State taxes for military Also, you and your wife are not required to file a tax return, but you file a joint return to claim an EIC of $63 and get a refund of that amount. State taxes for military Because claiming the EIC is your reason for filing the return, you are not filing it only to claim a refund of income tax withheld or estimated tax paid. State taxes for military Your parents cannot claim an exemption for either you or your wife. State taxes for military Rule 13—You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. State taxes for military ) if all of the following statements are true. State taxes for military You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. State taxes for military Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. State taxes for military You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student, and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. State taxes for military You lived with that person in the United States for more than half of the year. State taxes for military You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). State taxes for military For more details about the tests to be a qualifying child, see Rule 8. State taxes for military If you are a qualifying child of another taxpayer, you cannot claim the EIC. State taxes for military This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. State taxes for military Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). State taxes for military Example. State taxes for military You lived with your mother all year. State taxes for military You are age 26, unmarried, and permanently and totally disabled. State taxes for military Your only income was from a community center where you went three days a week to answer telephones. State taxes for military You earned $5,000 for the year and provided more than half of your own support. State taxes for military Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother for the EIC. State taxes for military She can claim the EIC if she meets all the other requirements. State taxes for military Because you are a qualifying child of your mother, you cannot claim the EIC. State taxes for military This is so even if your mother cannot or does not claim the EIC. State taxes for military Joint returns. State taxes for military   You generally cannot be a qualifying child of another taxpayer if you are married and file a joint return. State taxes for military   However, you may be a qualifying child of another taxpayer if you and your spouse file a joint return merely to claim a refund of income tax withheld or estimated tax paid. State taxes for military But neither you nor your spouse can be a qualifying child of another taxpayer if you claim the EIC on your joint return. State taxes for military Child of person not required to file a return. State taxes for military   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you meet the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. State taxes for military Example 1—return not required. State taxes for military You lived all year with your father. State taxes for military You are 27 years old, unmarried, permanently and totally disabled, and earned $13,000. State taxes for military You have no other income, no children, and provided more than half of your own support. State taxes for military Your father had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. State taxes for military As a result, you are not your father's qualifying child. State taxes for military You can claim the EIC if you meet all the other requirements to do so. State taxes for military Example 2—return filed to get refund of tax withheld. State taxes for military The facts are the same as in Example 1 except your father had wages of $1,500 and had income tax withheld from his wages. State taxes for military He files a return only to get a refund of the income tax withheld and does not claim the EIC or any other tax credits or deductions. State taxes for military As a result, you are not your father's qualifying child. State taxes for military You can claim the EIC if you meet all the other requirements to do so. State taxes for military Example 3—return filed to get EIC. State taxes for military The facts are the same as in Example 2 except your father claimed the EIC on his return. State taxes for military Since he filed the return to get the EIC, he is not filing it only to get a refund of income tax withheld. State taxes for military As a result, you are your father's qualifying child. State taxes for military You cannot claim the EIC. State taxes for military Rule 14—You Must Have Lived in the United States More Than Half of the Year Your home (and your spouse's, if filing a joint return) must have been in the United States for more than half the year. State taxes for military If it was not, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). State taxes for military United States. State taxes for military   This means the 50 states and the District of Columbia. State taxes for military It does not include Puerto Rico or U. State taxes for military S. State taxes for military possessions such as Guam. State taxes for military Homeless shelter. State taxes for military   Your home can be any location where you regularly live. State taxes for military You do not need a traditional home. State taxes for military If you lived in one or more homeless shelters in the United States for more than half the year, you meet this rule. State taxes for military Military personnel stationed outside the United States. State taxes for military   U. State taxes for military S. State taxes for military military personnel stationed outside the United States on extended active duty (defined in chapter 2) are considered to live in the United States during that duty period for purposes of the EIC. State taxes for military Chapter 4—Figuring and Claiming the EIC You must meet one more rule to claim the EIC. State taxes for military You need to know the amount of your earned income to see if you meet the rule in this chapter. State taxes for military You also need to know that amount to figure your EIC. State taxes for military Rule 15—Earned Income Limits Your earned income must be less than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. State taxes for military Earned Income Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. State taxes for military Employee pay is earned income only if it is taxable. State taxes for military Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. State taxes for military But there is an exception for nontaxable combat pay, which you can choose to include in earned income. State taxes for military Earned income is explained in detail in Rule 7 in chapter 1. State taxes for military Figuring earned income. State taxes for military   If you are self-employed, a statutory employee, or a member of the clergy or a church employee who files Schedule SE (Form 1040), you will figure your earned income when you fill out Part 4 of EIC Worksheet B in the Form 1040 instructions. State taxes for military   Otherwise, figure your earned income by using the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b or the Form 1040A instructions for lines 38a and 38b, or the worksheet in Step 2 of the Form 1040EZ instructions for lines 8a and 8b. State taxes for military   When using one of those worksheets to figure your earned income, you will start with the amount on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). State taxes for military You will then reduce that amount by any amount included on that line and described in the following list. State taxes for military Scholarship or fellowship grants not reported on a Form W-2. State taxes for military A scholarship or fellowship grant that was not reported to you on a Form W-2 is not considered earned income for the earned income credit. State taxes for military Inmate's income. State taxes for military Amounts received for work performed while an inmate in a penal institution are not earned income for the earned income credit. State taxes for military This includes amounts received for work performed while in a work release program or while in a halfway house. State taxes for military If you received any amount for work done while an inmate in a penal institution and that amount is included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “PRI” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). State taxes for military Pension or annuity from deferred compensation plans. State taxes for military A pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan is not considered earned income for the earned income credit. State taxes for military If you received such an amount and it was included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “DFC” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). State taxes for military This amount may be reported in box 11 of your Form W-2. State taxes for military If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or an annuity. State taxes for military Clergy. State taxes for military   If you are a member of the clergy who files Schedule SE and the amount on line 2 of that schedule includes an amount that was also re
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Understanding your CP2501 Notice

You need to contact us. We've received information not reported on your tax return.


What you need to do

  • Read your notice carefully — it explains the information we received.
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You may want to...

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Answers to Common Questions

Is the notice a bill?
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Complete the notice's response form.

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The response form has instructions on what to do if the new information is wrong. You also may want to contact whoever reported the information and ask them to correct it.

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The information is wrong because someone else is using my name and Social Security number. What can I do?
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Our computer systems match the information you report on your tax return with information reported by employers, banks, businesses, and others. This matching takes several months to complete.


Tips for next year

You can avoid future problems by:

  • keeping accurate and full records
  • waiting until you get all of your income statements to file your tax return
  • checking the records you get from your employer, mortgage company, bank, or other sources of income (W-2s, 1098s, 1099s, etc.) to make sure they're correct
  • including all your income on your tax return
  • following the instructions on how to report income, expenses and deductions
  • filing an amended tax return for any information you receive after you've filed your return

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about how to file electronically.

Page Last Reviewed or Updated: 28-Feb-2014

How to get help

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The State Taxes For Military

State taxes for military 4. State taxes for military   Student Loan Interest Deduction Table of Contents Introduction Student Loan Interest DefinedQualified Student Loan Qualified Education Expenses Include As Interest Do Not Include As Interest When Must Interest Be Paid Can You Claim the DeductionNo Double Benefit Allowed Figuring the DeductionEffect of the Amount of Your Income on the Amount of Your Deduction Which Worksheet To Use Claiming the Deduction Introduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. State taxes for military However, if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. State taxes for military For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. State taxes for military This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. State taxes for military The student loan interest deduction is taken as an adjustment to income. State taxes for military This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). State taxes for military This chapter explains: What type of loan interest you can deduct, Whether you can claim the deduction, What expenses you must have paid with the student loan, Who is an eligible student, How to figure the deduction, and How to claim the deduction. State taxes for military Table 4-1. State taxes for military Student Loan Interest Deduction at a Glance This table summarizes the features of the student loan interest deduction. State taxes for military Do not rely on this table alone. State taxes for military Refer to the text for complete details. State taxes for military Feature   Description Maximum benefit   You can reduce your income subject to tax by up to $2,500. State taxes for military Loan qualifications   Your student loan: •must have been taken out solely to pay qualified education expenses, and •cannot be from a related person or made under a qualified employer plan. State taxes for military Student qualifications   The student must be: •you, your spouse, or your dependent, and  •enrolled at least half-time in a degree program. State taxes for military Time limit on deduction   You can deduct interest paid during the remaining period of your student loan. State taxes for military Limit on modified adjusted gross income (MAGI)   $155,000 if married filing a joint return; $75,000 if single, head of household, or qualifying widow(er). State taxes for military Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. State taxes for military It includes both required and voluntary interest payments. State taxes for military Qualified Student Loan This is a loan you took out solely to pay qualified education expenses (defined later) that were: For you, your spouse, or a person who was your dependent when you took out the loan, Paid or incurred within a reasonable period of time before or after you took out the loan, and For education provided during an academic period for an eligible student. State taxes for military Loans from the following sources are not qualified student loans. State taxes for military A related person. State taxes for military A qualified employer plan. State taxes for military Your dependent. State taxes for military   Generally, your dependent is someone who is either a: Qualifying child, or Qualifying relative. State taxes for military You can find more information about dependents in Publication 501. State taxes for military Exceptions. State taxes for military   For purposes of the student loan interest deduction, there are the following exceptions to the general rules for dependents. State taxes for military An individual can be your dependent even if you are the dependent of another taxpayer. State taxes for military An individual can be your dependent even if the individual files a joint return with a spouse. State taxes for military An individual can be your dependent even if the individual had gross income for the year that was equal to or more than the exemption amount for the year ($3,900 for 2013). State taxes for military Reasonable period of time. State taxes for military   Qualified education expenses are treated as paid or incurred within a reasonable period of time before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal postsecondary education loan program. State taxes for military   Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met. State taxes for military The expenses relate to a specific academic period, and The loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period. State taxes for military   If neither of the above situations applies, the reasonable period of time usually is determined based on all the relevant facts and circumstances. State taxes for military Academic period. State taxes for military   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. State taxes for military 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. State taxes for military Eligible student. State taxes for military   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. State taxes for military Enrolled at least half-time. State taxes for military   A student was enrolled at least half-time if the student was taking at least half the normal full-time work load for his or her course of study. State taxes for military   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. State taxes for military However, the standard may not be lower than any of those established by the U. State taxes for military S. State taxes for military Department of Education under the Higher Education Act of 1965. State taxes for military Related person. State taxes for military   You cannot deduct interest on a loan you get from a related person. State taxes for military Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. State taxes for military ), Your lineal descendants (children, grandchildren, etc. State taxes for military ), and Certain corporations, partnerships, trusts, and exempt organizations. State taxes for military Qualified employer plan. State taxes for military   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. State taxes for military Qualified Education Expenses For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. State taxes for military They include amounts paid for the following items. State taxes for military Tuition and fees. State taxes for military Room and board. State taxes for military Books, supplies, and equipment. State taxes for military Other necessary expenses (such as transportation). State taxes for military The cost of room and board qualifies only to the extent that it is not more than the greater of: The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, or The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. State taxes for military Eligible educational institution. State taxes for military   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. State taxes for military S. State taxes for military Department of Education. State taxes for military It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. State taxes for military   Certain educational institutions located outside the United States also participate in the U. State taxes for military S. State taxes for military Department of Education's Federal Student Aid (FSA) programs. State taxes for military   For purposes of the student loan interest deduction, an eligible educational institution also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. State taxes for military   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. State taxes for military The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. State taxes for military    The educational institution should be able to tell you if it is an eligible educational institution. State taxes for military Adjustments to Qualified Education Expenses You must reduce your qualified education expenses by the total amount paid for them with the following tax-free items. State taxes for military Employer-provided educational assistance. State taxes for military See chapter 11, Employer-Provided Educational Assistance . State taxes for military Tax-free distribution of earnings from a Coverdell education savings account (ESA). State taxes for military See Tax-Free Distributions in chapter 7, Coverdell Education Savings Account. State taxes for military Tax-free distribution of earnings from a qualified tuition program (QTP). State taxes for military See Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program. State taxes for military U. State taxes for military S. State taxes for military savings bond interest that you exclude from income because it is used to pay qualified education expenses. State taxes for military See chapter 10, Education Savings Bond Program . State taxes for military The tax-free part of scholarships and fellowships. State taxes for military See Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. State taxes for military Veterans' educational assistance. State taxes for military See Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. State taxes for military Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. State taxes for military Include As Interest In addition to simple interest on the loan, if all other requirements are met, the items discussed below can be student loan interest. State taxes for military Loan origination fee. State taxes for military   In general, this is a one-time fee charged by the lender when a loan is made. State taxes for military To be deductible as interest, a loan origination fee must be for the use of money rather than for property or services (such as commitment fees or processing costs) provided by the lender. State taxes for military A loan origination fee treated as interest accrues over the term of the loan. State taxes for military   Loan origination fees were not required to be reported on Form 1098-E, Student Loan Interest Statement, for loans made before September 1, 2004. State taxes for military If loan origination fees are not included in the amount reported on your Form 1098-E, you can use any reasonable method to allocate the loan origination fees over the term of the loan. State taxes for military The method shown in the example below allocates equal portions of the loan origination fee to each payment required under the terms of the loan. State taxes for military A method that results in the double deduction of the same portion of a loan origination fee would not be reasonable. State taxes for military Example. State taxes for military In August 2004, Bill took out a student loan for $16,000 to pay the tuition for his senior year of college. State taxes for military The lender charged a 3% loan origination fee ($480) that was withheld from the funds Bill received. State taxes for military Bill began making payments on his student loan in 2013. State taxes for military Because the loan origination fee was not included in his 2013 Form 1098-E, Bill can use any reasonable method to allocate that fee over the term of the loan. State taxes for military Bill's loan is payable in 120 equal monthly payments. State taxes for military He allocates the $480 fee equally over the total number of payments ($480 ÷ 120 months = $4 per month). State taxes for military Bill made 7 payments in 2013, so he paid $28 ($4 × 7) of interest attributable to the loan origination fee. State taxes for military To determine his student loan interest deduction, he will add the $28 to the amount of other interest reported to him on Form 1098-E. State taxes for military Capitalized interest. State taxes for military   This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. State taxes for military Capitalized interest is treated as interest for tax purposes and is deductible as payments of principal are made on the loan. State taxes for military No deduction for capitalized interest is allowed in a year in which no loan payments were made. State taxes for military Interest on revolving lines of credit. State taxes for military   This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. State taxes for military See Qualified Education Expenses , earlier. State taxes for military Interest on refinanced student loans. State taxes for military   This includes interest on both: Consolidated loans—loans used to refinance more than one student loan of the same borrower, and Collapsed loans—two or more loans of the same borrower that are treated by both the lender and the borrower as one loan. State taxes for military    If you refinance a qualified student loan for more than your original loan and you use the additional amount for any purpose other than qualified education expenses, you cannot deduct any interest paid on the refinanced loan. State taxes for military Voluntary interest payments. State taxes for military   These are payments made on a qualified student loan during a period when interest payments are not required, such as when the borrower has been granted a deferment or the loan has not yet entered repayment status. State taxes for military Example. State taxes for military The payments on Roger's student loan were scheduled to begin in June 2012, 6 months after he graduated from college. State taxes for military He began making payments as required. State taxes for military In September 2013, Roger enrolled in graduate school on a full-time basis. State taxes for military He applied for and was granted deferment of his loan payments while in graduate school. State taxes for military Wanting to pay down his student loan as much as possible, he made loan payments in October and November 2013. State taxes for military Even though these were voluntary (not required) payments, Roger can deduct the interest paid in October and November. State taxes for military Allocating Payments Between Interest and Principal The allocation of payments between interest and principal for tax purposes might not be the same as the allocation shown on the Form 1098-E or other statement you receive from the lender or loan servicer. State taxes for military To make the allocation for tax purposes, a payment generally applies first to stated interest that remains unpaid as of the date the payment is due, second to any loan origination fees allocable to the payment, third to any capitalized interest that remains unpaid as of the date the payment is due, and fourth to the outstanding principal. State taxes for military Example. State taxes for military In August 2012, Peg took out a $10,000 student loan to pay the tuition for her senior year of college. State taxes for military The lender charged a 3% loan origination fee ($300) that was withheld from the funds Peg received. State taxes for military The interest (5% simple) on this loan accrued while she completed her senior year and for 6 months after she graduated. State taxes for military At the end of that period, the lender determined the amount to be repaid by capitalizing all accrued but unpaid interest ($625 interest accrued from August 2012 through October 2013) and adding it to the outstanding principal balance of the loan. State taxes for military The loan is payable over 60 months, with a payment of $200. State taxes for military 51 due on the first of each month, beginning November 2013. State taxes for military Peg did not receive a Form 1098-E for 2013 from her lender because the amount of interest she paid did not require the lender to issue an information return. State taxes for military However, she did receive an account statement from the lender that showed the following 2013 payments on her outstanding loan of $10,625 ($10,000 principal + $625 accrued but unpaid interest). State taxes for military Payment Date   Payment   Stated Interest   Principal November 2013   $200. State taxes for military 51   $44. State taxes for military 27   $156. State taxes for military 24 December 2013   $200. State taxes for military 51   $43. State taxes for military 62   $156. State taxes for military 89 Totals   $401. State taxes for military 02   $87. State taxes for military 89   $313. State taxes for military 13 To determine the amount of interest that could be deducted on the loan for 2013, Peg starts with the total amount of stated interest she paid, $87. State taxes for military 89. State taxes for military Next, she allocates the loan origination fee over the term of the loan ($300 ÷ 60 months = $5 per month). State taxes for military A total of $10 ($5 of each of the two principal payments) should be treated as interest for tax purposes. State taxes for military Peg then applies the unpaid capitalized interest ($625) to the two principal payments in the order in which they were made, and determines that the remaining amount of principal of both payments is treated as interest for tax purposes. State taxes for military Assuming that Peg qualifies to take the student loan interest deduction, she can deduct $401. State taxes for military 02 ($87. State taxes for military 89 + $10 + $303. State taxes for military 13). State taxes for military For 2014, Peg will continue to allocate $5 of the loan origination fee to the principal portion of each monthly payment she makes and treat that amount as interest for tax purposes. State taxes for military She also will apply the remaining amount of capitalized interest ($625 − $303. State taxes for military 13 = $321. State taxes for military 87) to the principal payments in the order in which they are made until the balance is zero, and treat those amounts as interest for tax purposes. State taxes for military Do Not Include As Interest You cannot claim a student loan interest deduction for any of the following items. State taxes for military Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. State taxes for military Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. State taxes for military Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the “NHSC Loan Repayment Program”) or certain other loan repayment assistance programs. State taxes for military For more information, see Student Loan Repayment Assistance in chapter 5, Student Loan Cancellations and Repayment Assistance. State taxes for military When Must Interest Be Paid You can deduct all interest you paid during the year on your student loan, including voluntary payments, until the loan is paid off. State taxes for military Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. State taxes for military Your filing status is any filing status except married filing separately. State taxes for military No one else is claiming an exemption for you on his or her tax return. State taxes for military You are legally obligated to pay interest on a qualified student loan. State taxes for military You paid interest on a qualified student loan. State taxes for military Claiming an exemption for you. State taxes for military   Another taxpayer is claiming an exemption for you if he or she lists your name and other required information on his or her Form 1040 (or Form 1040A), line 6c, or Form 1040NR, line 7c. State taxes for military Example 1. State taxes for military During 2013, Josh paid $600 interest on his qualified student loan. State taxes for military Only he is legally obligated to make the payments. State taxes for military No one claimed an exemption for Josh for 2013. State taxes for military Assuming all other requirements are met, Josh can deduct the $600 of interest he paid on his 2013 Form 1040 or 1040A. State taxes for military Example 2. State taxes for military During 2013, Jo paid $1,100 interest on her qualified student loan. State taxes for military Only she is legally obligated to make the payments. State taxes for military Jo's parents claimed an exemption for her on their 2013 tax return. State taxes for military In this case, neither Jo nor her parents may deduct the student loan interest Jo paid in 2013. State taxes for military Interest paid by others. State taxes for military   If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest. State taxes for military Example 1. State taxes for military Darla obtained a qualified student loan to attend college. State taxes for military After Darla's graduation from college, she worked as an intern for a nonprofit organization. State taxes for military As part of the internship program, the nonprofit organization made an interest payment on behalf of Darla. State taxes for military This payment was treated as additional compensation and reported in box 1 of her Form W-2. State taxes for military Assuming all other qualifications are met, Darla can deduct this payment of interest on her tax return. State taxes for military Example 2. State taxes for military Ethan obtained a qualified student loan to attend college. State taxes for military After graduating from college, the first monthly payment on his loan was due in December. State taxes for military As a gift, Ethan's mother made this payment for him. State taxes for military No one is claiming a dependency exemption for Ethan on his or her tax return. State taxes for military Assuming all other qualifications are met, Ethan can deduct this payment of interest on his tax return. State taxes for military No Double Benefit Allowed You cannot deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, as home mortgage interest). State taxes for military Figuring the Deduction Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. State taxes for military However, the amount determined above may be gradually reduced (phased out) or eliminated based on your filing status and MAGI as explained below. State taxes for military You can use Worksheet 4-1. State taxes for military Student Loan Interest Deduction Worksheet (at the end of this chapter) to figure both your MAGI and your deduction. State taxes for military Form 1098-E. State taxes for military   To help you figure your student loan interest deduction, you should receive Form 1098-E. State taxes for military Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2013 on one or more qualified student loans must send Form 1098-E (or acceptable substitute) to each borrower by January 31, 2014. State taxes for military   For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. State taxes for military Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. State taxes for military However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. State taxes for military See Allocating Payments Between Interest and Principal , earlier. State taxes for military    The lender may ask for a completed Form W-9S, or similar statement to obtain the borrower's name, address, and taxpayer identification number. State taxes for military The form may also be used by the borrower to certify that the student loan was incurred solely to pay for qualified education expenses. State taxes for military Effect of the Amount of Your Income on the Amount of Your Deduction The amount of your student loan interest deduction is phased out (gradually reduced) if your MAGI is between $60,000 and $75,000 ($125,000 and $155,000 if you file a joint return). State taxes for military You cannot take a student loan interest deduction if your MAGI is $75,000 or more ($155,000 or more if you file a joint return). State taxes for military Modified adjusted gross income (MAGI). State taxes for military   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for student loan interest. State taxes for military However, as discussed below, there may be other modifications. State taxes for military Table 4-2 shows how the amount of your MAGI can affect your student loan interest deduction. State taxes for military Table 4-2. State taxes for military Effect of MAGI on Student Loan Interest Deduction IF your filing status is. State taxes for military . State taxes for military . State taxes for military AND your MAGI is. State taxes for military . State taxes for military . State taxes for military THEN your student loan interest deduction is. State taxes for military . State taxes for military . State taxes for military single,  head of household, or qualifying widow(er) not more than $60,000 not affected by the phaseout. State taxes for military more than $60,000  but less than $75,000 reduced because of the phaseout. State taxes for military $75,000 or more eliminated by the phaseout. State taxes for military married filing joint return not more than $125,000 not affected by the phaseout. State taxes for military more than $125,000 but less than $155,000 reduced because of the phaseout. State taxes for military $155,000 or more eliminated by the phaseout. State taxes for military MAGI when using Form 1040A. State taxes for military   If you file Form 1040A, your MAGI is the AGI on line 22 of that form figured without taking into account any amount on line 18 (student loan interest deduction) and line 19 (tuition and fees deduction). State taxes for military MAGI when using Form 1040. State taxes for military   If you file Form 1040, your MAGI is the AGI on line 38 of that form figured without taking into account any amount on line 33 (student loan interest deduction), line 34 (tuition and fees deduction), or line 35 (domestic production activities deduction), and 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. State taxes for military MAGI when using Form 1040NR. State taxes for military   If you file Form 1040NR, your MAGI is the AGI on line 36 of that form figured without taking into account any amount on line 33 (student loan interest deduction) and line 34 (domestic production activities deduction). State taxes for military MAGI when using Form 1040NR-EZ. State taxes for military   If you file Form 1040NR-EZ, your MAGI is the AGI on line 10 of that form figured without taking into account any amount on line 9 (student loan interest deduction). State taxes for military Phaseout. State taxes for military   If your MAGI is within the range of incomes where the credit must be reduced, you must figure your reduced deduction. State taxes for military To figure the phaseout, multiply your interest deduction (before the phaseout) by a fraction. State taxes for military The numerator is your MAGI minus $60,000 ($125,000 in the case of a joint return). State taxes for military The denominator is $15,000 ($30,000 in the case of a joint return). State taxes for military Subtract the result from your deduction (before the phaseout) to give you the amount you can deduct. State taxes for military Example 1. State taxes for military During 2013 you paid $800 interest on a qualified student loan. State taxes for military Your 2013 MAGI is $145,000 and you are filing a joint return. State taxes for military You must reduce your deduction by $533, figured as follows. State taxes for military   $800 × $145,000 − $125,000  $30,000 = $533   Your reduced student loan interest deduction is $267 ($800 − $533). State taxes for military Example 2. State taxes for military The facts are the same as in Example 1 except that you paid $2,750 interest. State taxes for military Your maximum deduction for 2013 is $2,500. State taxes for military You must reduce your maximum deduction by $1,667, figured as follows. State taxes for military   $2,500 × $145,000 − $125,000  $30,000 = $1,667   In this example, your reduced student loan interest deduction is $833 ($2,500 − $1,667). State taxes for military Which Worksheet To Use Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the instructions for Form 1040, Form 1040A, or Form 1040NR. State taxes for military However, if you are filing Form 2555, Foreign Earned Income, Form 2555-EZ, Foreign Earned Income Exclusion, or Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1. State taxes for military Student Loan Interest Deduction Worksheet at the end of this chapter. State taxes for military Claiming the Deduction The student loan interest deduction is an adjustment to income. State taxes for military To claim the deduction, enter the allowable amount on line 33 (Form 1040), line 18 (Form 1040A), line 33 (Form 1040NR), or line 9 (Form 1040NR-EZ). State taxes for military Worksheet 4-1. State taxes for military Student Loan Interest Deduction Worksheet Use this worksheet instead of the worksheet in the Form 1040 instructions if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico. State taxes for military Before using this worksheet, you must complete Form 1040, lines 7 through 32, plus any amount to be entered on the dotted line next to line 36. State taxes for military 1. State taxes for military Enter the total interest you paid in 2013 on qualified student loans. State taxes for military Do not enter  more than $2,500 1. State taxes for military   2. State taxes for military Enter the amount from Form 1040, line 22 2. State taxes for military       3. State taxes for military Enter the total of the amounts from Form 1040,  lines 23 through 32 3. State taxes for military           4. State taxes for military Enter the total of any amounts entered on the dotted line next to Form 1040, line 36 4. State taxes for military           5. State taxes for military Add lines 3 and 4 5. State taxes for military       6. State taxes for military Subtract line 5 from line 2 6. State taxes for military       7. State taxes for military Enter any foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18) 7. State taxes for military       8. State taxes for military Enter any foreign housing deduction (Form 2555, line 50) 8. State taxes for military       9. State taxes for military Enter the amount of income from Puerto Rico you are excluding 9. State taxes for military       10. State taxes for military Enter the amount of income from American Samoa  you are excluding (Form 4563, line 15) 10. State taxes for military       11. State taxes for military Add lines 6 through 10. State taxes for military This is your modified adjusted gross income 11. State taxes for military   12. State taxes for military Enter the amount shown below for your filing status 12. State taxes for military     •Single, head of household, or qualifying widow(er)—$60,000       •Married filing jointly—$125,000     13. State taxes for military Is the amount on line 11 more than the amount on line 12?       □ No. State taxes for military Skip lines 13 and 14, enter -0- on line 15, and go to line 16. State taxes for military       □ Yes. State taxes for military Subtract line 12 from line 11 13. State taxes for military   14. State taxes for military Divide line 13 by $15,000 ($30,000 if married filing jointly). State taxes for military Enter the result as a decimal  (rounded to at least three places). State taxes for military If the result is 1. State taxes for military 000 or more, enter 1. State taxes for military 000 14. State taxes for military . State taxes for military 15. State taxes for military Multiply line 1 by line 14 15. State taxes for military   16. State taxes for military Student loan interest deduction. State taxes for military Subtract line 15 from line 1. State taxes for military Enter the result here  and on Form 1040, line 33. State taxes for military Do not include this amount in figuring any other  deduction on your return (such as on Schedule A, C, E, etc. State taxes for military ) 16. State taxes for military   Prev  Up  Next   Home   More Online Publications