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Tax Software Review

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Tax Software Review

Tax software review Publication 901 - Additional Material Table of Contents How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Tax software review How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. Tax software review By selecting the method that is best for you, you will have quick and easy access to tax help. Tax software review Free help with your tax return. Tax software review   Free help in preparing your return is available nationwide from IRS-certified volunteers. Tax software review The Volunteer Income Tax Assistance (VITA) program is designed to help low-moderate income, elderly, disabled, and limited English proficient taxpayers. Tax software review The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Tax software review Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Tax software review Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Tax software review To find the nearest VITA or TCE site, visit IRS. Tax software review gov or call 1-800-906-9887 or 1-800-829-1040. Tax software review   As part of the TCE program, AARP offers the Tax-Aide counseling program. Tax software review To find the nearest AARP Tax-Aide site, visit AARP's website at www. Tax software review aarp. Tax software review org/money/taxaide or call 1-888-227-7669. Tax software review   For more information on these programs, go to IRS. Tax software review gov and enter “VITA” in the search box. Tax software review Internet. Tax software review You can access the IRS website at IRS. Tax software review gov 24 hours a day, 7 days a week to: E-file your return. Tax software review Find out about commercial tax preparation and e-file services available free to eligible taxpayers. Tax software review Check the status of your 2012 refund. Tax software review Go to IRS. Tax software review gov and click on Where’s My Refund. Tax software review Information about your return will generally be available within 24 hours after the IRS receives your e-filed return, or 4 weeks after you mail your paper return. Tax software review If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Tax software review Have your 2012 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Tax software review Where's My Refund? has a new look this year! The tool will include a tracker that displays progress through three stages: (1) return received, (2) refund approved, and (3) refund sent. Tax software review Where's My Refund? will provide an actual personalized refund date as soon as the IRS processes your tax return and approves your refund. Tax software review So in a change from previous filing seasons, you won't get an estimated refund date right away. Tax software review Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Tax software review You can obtain a free transcript online at IRS. Tax software review gov by clicking on Order a Return or Account Transcript under “Tools. Tax software review ” For a transcript by phone, call 1-800-908-9946 and follow the prompts in the recorded message. Tax software review You will be prompted to provide your SSN or Individual Taxpayer Identification Number (ITIN), date of birth, street address and ZIP code. Tax software review Download forms, including talking tax forms, instructions, and publications. Tax software review Order IRS products. Tax software review Research your tax questions. Tax software review Search publications by topic or keyword. Tax software review Use the Internal Revenue Code, regulations, or other official guidance. Tax software review View Internal Revenue Bulletins (IRBs) published in the last few years. Tax software review Figure your withholding allowances using the IRS Withholding Calculator at www. Tax software review irs. Tax software review gov/individuals. Tax software review Determine if Form 6251 (Alternative Minimum Tax— Individuals), must be filed by using our Alternative Minimum Tax (AMT) Assistant available at IRS. Tax software review gov by typing Alternative Minimum Tax Assistant in the search box. Tax software review Sign up to receive local and national tax news by email. Tax software review Get information on starting and operating a small business. Tax software review Phone. Tax software review Many services are available by phone. Tax software review   Ordering forms, instructions, and publications. Tax software review Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions (limited to 5 years). Tax software review You should receive your order within 10 days. Tax software review Asking tax questions. Tax software review Call the IRS with your tax questions at 1-800-829-1040. Tax software review Solving problems. Tax software review You can get face-to-face help solving tax problems most business days in IRS Taxpayer Assistance Centers (TAC). Tax software review An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Tax software review Call your local Taxpayer Assistance Center for an appointment. Tax software review To find the number, go to www. Tax software review irs. Tax software review gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Tax software review TTY/TDD equipment. Tax software review If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. Tax software review The TTY/TDD telephone number is for individuals who are deaf, hard of hearing, or have a speech disability. Tax software review These individuals can also access the IRS through relay services such as the Federal Relay Service at www. Tax software review gsa. Tax software review gov/fedrelay. Tax software review TeleTax topics. Tax software review Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. Tax software review Checking the status of your 2012 refund. Tax software review To check the status of your 2012 refund, call 1-800-829-1954 or 1-800-829-4477 (automated Where's My Refund? information 24 hours a day, 7 days a week). Tax software review Information about your return will generally be available within 24 hours after the IRS receives your e-filed return, or 4 weeks after you mail your paper return. Tax software review If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Tax software review Have your 2012 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Tax software review Where's My Refund? will provide an actual personalized refund date as soon as the IRS processes your tax return and approves your refund. Tax software review Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Tax software review Evaluating the quality of our telephone services. Tax software review To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. Tax software review One method is for a second IRS representative to listen in on or record random telephone calls. Tax software review Another is to ask some callers to complete a short survey at the end of the call. Tax software review Walk-in. Tax software review Some products and services are available on a walk-in basis. Tax software review   Products. Tax software review You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Tax software review Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Tax software review Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Tax software review Services. Tax software review You can walk in to your local TAC most business days for personal, face-to-face tax help. Tax software review An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Tax software review If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. Tax software review No appointment is necessary—just walk in. Tax software review Before visiting, check www. Tax software review irs. Tax software review gov/localcontacts for hours of operation and services provided. Tax software review If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested by calling your local TAC. Tax software review You can leave a message and a representative will call you back within 2 business days. Tax software review All other issues will be handled without an appointment. Tax software review To call your local TAC, go to  www. Tax software review irs. Tax software review gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Tax software review Mail. Tax software review You can send your order for forms, instructions, and publications to the address below. Tax software review You should receive a response within 10 days after your request is received. Tax software review  Internal Revenue Service 1201 N. Tax software review Mitsubishi Motorway Bloomington, IL 61705-6613 Taxpayer Advocate Service. Tax software review   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Tax software review Its job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. Tax software review TAS offers free help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on your own. Tax software review Remember, the worst thing you can do is nothing at all. Tax software review   TAS can help if you can’t resolve your problem with the IRS and: Your problem is causing financial difficulties for you, your family, or your business. Tax software review You face (or your business is facing) an immediate threat of adverse action. Tax software review You have tried repeatedly to contact the IRS but no one has responded, or the IRS has not responded to you by the date promised. Tax software review   If you qualify for help, they will do everything they can to get your problem resolved. Tax software review You will be assigned to one advocate who will be with you at every turn. Tax software review TAS has offices in every state, the District of Columbia, and Puerto Rico. Tax software review Although TAS is independent within the IRS, their advocates know how to work with the IRS to get your problems resolved. Tax software review And its services are always free. Tax software review   As a taxpayer, you have rights that the IRS must abide by in its dealings with you. Tax software review The TAS tax toolkit at www. Tax software review TaxpayerAdvocate. Tax software review irs. Tax software review gov can help you understand these rights. Tax software review   If you think TAS might be able to help you, call your local advocate, whose number is in your phone book and on our website at www. Tax software review irs. Tax software review gov/advocate. Tax software review You can also call the toll-free number at 1-877-777-4778. Tax software review Deaf and hard of hearing individuals who have access to TTY/TDD equipment can call 1-800-829-4059. Tax software review These individuals can also access the IRS through relay services such as the Federal Relay Service at www. Tax software review gsa. Tax software review gov/fedrelay. Tax software review   TAS also handles large-scale or systemic problems that affect many taxpayers. Tax software review If you know of one of these broad issues, please report it through the Systemic Advocacy Management System at www. Tax software review irs. Tax software review gov/advocate. Tax software review Low Income Taxpayer Clinics (LITCs). Tax software review   Low Income Taxpayer Clinics (LITCs) are independent from the IRS. Tax software review Some clinics serve individuals whose income is below a certain level and who need to resolve a tax problem. Tax software review These clinics provide professional representation before the IRS or in court on audits, appeals, tax collection disputes, and other issues for free or for a small fee. Tax software review Some clinics can provide information about taxpayer rights and responsibilities in many different languages for individuals who speak English as a second language. Tax software review For more information and to find a clinic near you, see the LITC page on www. Tax software review irs. Tax software review gov/advocate or IRS Publication 4134, Low Income Taxpayer Clinic List. Tax software review This publication is also available by calling 1-800-TAX-FORM (1-800-829-3676) or at your local IRS office. Tax software review Free tax services. Tax software review   Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. Tax software review Learn about free tax information from the IRS, including publications, services, and education and assistance programs. Tax software review The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. Tax software review The majority of the information and services listed in this publication are available to you free of charge. Tax software review If there is a fee associated with a resource or service, it is listed in the publication. Tax software review   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. Tax software review DVD for tax products. Tax software review You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. Tax software review Prior-year forms, instructions, and publications. Tax software review Tax Map: an electronic research tool and finding aid. Tax software review Tax law frequently asked questions. Tax software review Tax Topics from the IRS telephone response system. Tax software review Internal Revenue Code—Title 26 of the U. Tax software review S. Tax software review Code. Tax software review Links to other Internet-based tax research materials. Tax software review Fill-in, print, and save features for most tax forms. Tax software review Internal Revenue Bulletins. Tax software review Toll-free and email technical support. Tax software review Two releases during the year. Tax software review  – The first release will ship the beginning of January 2013. Tax software review  – The final release will ship the beginning of March 2013. Tax software review Purchase the DVD from National Technical Information Service (NTIS) at www. Tax software review irs. Tax software review gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll free to buy the DVD for $30 (plus a $6 handling fee). Tax software review Prev  Up  Next   Home   More Online Publications
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The Tax Software Review

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