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Www freetax com Publication 556 - Introductory Material Table of Contents The IRS Mission Reminders IntroductionOrdering forms and publications. Www freetax com Tax questions. Www freetax com Useful Items - You may want to see: The IRS Mission Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all. Www freetax com Reminders Penalty for filing erroneous claim for refund or credit. Www freetax com  You may have to pay a penalty if you file an erroneous claim for refund or credit. Www freetax com See Penalty for erroneous claim for refund, later under Claims for Refund. Www freetax com Interest and penalties suspended if notice not mailed within 36 months. Www freetax com  If you file your return timely (including extensions), interest and certain penalties will be suspended if the IRS does not mail a notice to you within 36 months. Www freetax com See Suspension of interest and penalties, later under Examination of Returns. Www freetax com Fast track mediation. Www freetax com  The IRS offers fast track mediation services to help taxpayers resolve many disputes resulting from: Examinations (audits), Offers in compromise, Trust fund recovery penalties, and Other collection actions. Www freetax com See Fast track mediation under If You Do Not Agree. Www freetax com Introduction The Internal Revenue Service (IRS) accepts most federal tax returns as filed. Www freetax com However, the IRS examines (or audits) some returns to determine if income, expenses, and credits are being reported accurately. Www freetax com If your return is selected for examination, it does not suggest that you made an error or are dishonest. Www freetax com Returns are chosen by computerized screening, by random sample, or by an income document matching program. Www freetax com See Examination selection criteria, later. Www freetax com You should also know that many examinations result in a refund or acceptance of the tax return without change. Www freetax com This publication discusses general rules and procedures that the IRS follows in examinations. Www freetax com It explains what happens during an examination and your appeal rights, both within the IRS and in the federal court system. Www freetax com It also explains how to file a claim for refund of tax you already paid. Www freetax com As a taxpayer, you have the right to be treated fairly, professionally, promptly, and courteously by IRS employees. Www freetax com Publication 1, Your Rights as a Taxpayer, explains your rights when dealing with the IRS. Www freetax com Comments and suggestions. Www freetax com   We welcome your comments about this publication and your suggestions for future editions. Www freetax com   You can write to us at the following address:  Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Www freetax com NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Www freetax com Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Www freetax com   You can send your comments from www. Www freetax com irs. Www freetax com gov/formspubs/. Www freetax com Click on “More Information” and then on “Comment on Tax Forms and Publications. Www freetax com ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Www freetax com Ordering forms and publications. Www freetax com   Visit www. Www freetax com irs. Www freetax com gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Www freetax com  Internal Revenue Service  1201 N. Www freetax com Mitsubishi Motorway Bloomington, IL 61704-6613 Tax questions. Www freetax com   If you have a tax question, check the information available on www. Www freetax com irs. Www freetax com gov or call 1-800-829-1040. Www freetax com We cannot answer tax questions sent to either of the above addresses. Www freetax com Useful Items - You may want to see: Publication 1 Your Rights as a Taxpayer 5 Your Appeal Rights and How To Prepare a Protest If You Don't Agree 547 Casualties, Disasters, and Thefts 594 The IRS Collection Process 910 Guide to Free Tax Services 971 Innocent Spouse Relief 1546 Taxpayer Advocate Service–Your Voice at the IRS 1660 Collection Appeal Rights 3605 Fast Track Mediation 3920 Tax Relief for Victims of Terrorist Attacks 4134 Low Income Taxpayer Clinic List Form (and Instructions) 843 Claim for Refund and Request for Abatement 911 Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order) 1040X Amended U. Www freetax com S. Www freetax com Individual Income Tax Return 2848 Power of Attorney and Declaration of Representative 4506 Request for Copy of Tax Return 4506-T Request for Transcript of Tax Return 8379 Injured Spouse Allocation 8857 Request for Innocent Spouse Relief See How To Get Tax Help , near the end of this publication, for information about getting these publications and forms. Www freetax com Prev  Up  Next   Home   More Online Publications
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IRS Live

IRS Live is for the tax pro in the know. A live webinar, IRS Live is a panel discussion among IRS experts and industry professionals aimed at educating tax professionals on the most current and complex tax issues affecting them and their clients. Tax professionals are encouraged to watch the free webinar and submit questions by e-mail during the webinar. Continuing education (CE) credit is often offered for Enrolled Agents who view the live broadcast.

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  • Webinars for Tax Practitioners are broadcast on a variety of subjects. Webinars for Tax Practitioners are broadcast on a variety of subjects. The webinars are free and often offer CE credit for Enrolled Agents and Registered Tax Return Preparers..

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To receive a certificate of completion, you must:

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  • Register individually. Groups can not register with one e-mail address and then receive separate certificates. If certificates are needed, each person must register separately.

Certificates of Completion are e-mailed approximately three weeks after the broadcast.

If you are an Enrolled Agent, you must register for the webinar with your PTIN. Your PTIN begins with the letter P followed by eight digits. If you don't supply a PTIN, you will receive a certificate; however, your credit will not be reported to the IRS. Other participants will be sent a certificate and may receive credit if the broadcast meets their organization's or state's CE requirements.

Archived IRS Live Programs - Informative! But not eligible for CE credit.

August 29, 2012 Authorizations: When to use the CheckBox Authorizations, Form 8821 or Form 2848
March 28, 2012 S Corporations: Stock Basis of the Shareholders
Page Last Reviewed or Updated: 13-Mar-2014

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Www freetax com 1. Www freetax com   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). Www freetax com  You can set up and make contributions to an IRA if you receive taxable compensation. Www freetax com 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. Www freetax com For more information about IRAs, see Publication 590. Www freetax com 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. Www freetax com The educational assistance can be for a primary or secondary school, a college or university, or a vocational school. Www freetax com Included are discussions of: Scholarships, Fellowships, Need-based education grants, such as a Pell Grant, and Qualified tuition reductions. Www freetax com Many types of educational assistance are tax free if they meet the requirements discussed here. Www freetax com Special rules apply to U. Www freetax com S. Www freetax com citizens and resident aliens who have received scholarships or fellowships for studying, teaching, or researching abroad. Www freetax com For information about these rules, see Publication 54, Tax Guide for U. Www freetax com S. Www freetax com Citizens and Resident Aliens Abroad. Www freetax com 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. Www freetax com A fellowship is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research. Www freetax com Amount of scholarship or fellowship. Www freetax com   The amount of a scholarship or fellowship includes the following: The value of contributed services and accommodations. Www freetax com 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. Www freetax com 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. Www freetax com Any amount received in the nature of a family allowance as a part of a scholarship or fellowship. Www freetax com 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. Www freetax com 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. Www freetax com (But for exceptions, see Payment for services,later. Www freetax com Use Worksheet 1–1 to figure the amount of a scholarship or fellowship you can exclude from gross income. Www freetax com Candidate for a degree. Www freetax com   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. Www freetax com Eligible educational institution. Www freetax com   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. Www freetax com Qualified education expenses. Www freetax com   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. Www freetax com These items must be required of all students in your course of instruction. Www freetax com Expenses that do not qualify. Www freetax com   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. Www freetax com Payment for services. Www freetax com   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. Www freetax com This applies even if all candidates for a degree must perform the services to receive the degree. Www freetax com (See exceptions next. Www freetax com ) Exceptions. Www freetax com   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. Www freetax com Example 1. Www freetax com You received a scholarship of $2,500. Www freetax com The scholarship was not received under either of the exceptions mentioned above. Www freetax com As a condition for receiving the scholarship, you must serve as a part-time teaching assistant. Www freetax com Of the $2,500 scholarship, $1,000 represents payment for teaching. Www freetax com The provider of your scholarship gives you a Form W-2 showing $1,000 as income. Www freetax com Your qualified education expenses were at least $1,500. Www freetax com Assuming that all other conditions are met, $1,500 of your scholarship is tax free. Www freetax com The $1,000 you received for teaching is taxable. Www freetax com Example 2. Www freetax com You are a candidate for a degree at a medical school. Www freetax com You receive a scholarship (not under either of the exceptions mentioned above) for your medical education and training. Www freetax com The terms of your scholarship require you to perform future services. Www freetax com A substantial penalty applies if you do not comply. Www freetax com The entire amount of your grant is taxable as payment for services in the year it is received. Www freetax com Athletic Scholarships An athletic scholarship is tax free only if and to the extent it meets the requirements discussed later. Www freetax com Worksheet 1-1. Www freetax com    You can use Worksheet 1-1, Taxable Scholarship and Fellowship Income , later, to figure the tax-free and taxable parts of your athletic scholarship. Www freetax com    Worksheet 1-1. Www freetax com Taxable Scholarship and Fellowship Income 1. Www freetax com Enter the total amount of any scholarship or fellowship for 2013. Www freetax com See Amount of scholarship or fellowship, earlier. Www freetax com 1. Www freetax com       If you are a degree candidate at an eligible educational institution, go to line 2. Www freetax com If you are not a degree candidate at an eligible educational institution, stop here. Www freetax com The entire amount is taxable. Www freetax com For information on how to report this amount on your tax return, see Reporting Scholarships and Fellowships , earlier, in this chapter. Www freetax com       2. Www freetax com Enter the amount from line 1 that was for teaching, research, or any other services required as a condition for receiving the scholarship. Www freetax com (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. Www freetax com ) 2. Www freetax com     3. Www freetax com Subtract line 2 from line 1 3. Www freetax com     4. Www freetax com Enter the amount from line 3 that your scholarship or fellowship required you to use for other than qualified education expenses 4. Www freetax com     5. Www freetax com Subtract line 4 from line 3 5. Www freetax com     6. Www freetax com Enter the amount of your qualified education expenses 6. Www freetax com     7. Www freetax com Enter the smaller of line 5 or line 6. Www freetax com This amount is the most you can exclude from your gross income (the tax-free part of the scholarship or fellowship) 7. Www freetax com     8. Www freetax com Subtract line 7 from line 5 8. Www freetax com     9. Www freetax com Taxable part. Www freetax com Add lines 2, 4, and 8. Www freetax com See Reporting Scholarships and Fellowships , earlier, for how to report this amount on your tax return 9. Www freetax com     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. Www freetax com 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. Www freetax com 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. Www freetax com 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. Www freetax com 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. Www freetax com You must report the taxable amount whether or not you received a Form W-2. Www freetax com If you receive an incorrect Form W-2, ask the payer for a corrected one. Www freetax com For information on whether you must file a return, see Publication 501, Exemptions, Standard Deduction, and Filing Information, or your income tax form instructions. Www freetax com How To Report How you report any taxable scholarship or fellowship income depends on which return you file. Www freetax com Form 1040EZ. Www freetax com   If you file Form 1040EZ, include the taxable amount in the total on line 1. Www freetax com 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. Www freetax com Form 1040A. Www freetax com   If you file Form 1040A, include the taxable amount in the total on line 7. Www freetax com 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. Www freetax com Form 1040. Www freetax com   If you file Form 1040, include the taxable amount in the total on line 7. Www freetax com 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. Www freetax com Schedule SE (Form 1040). Www freetax com   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. Www freetax com If your net earnings are $400 or more, you must pay self-employment tax. Www freetax com Use Schedule SE, Self-Employment Tax, to figure this tax. Www freetax com Form 1040NR. Www freetax com   If you file Form 1040NR, report the taxable amount on line 12. Www freetax com Generally, you must report the amount shown in box 2 of Form(s) 1042-S, Foreign Person's U. Www freetax com S. Www freetax com Source Income Subject to Withholding. Www freetax com See the Instructions for Form 1040NR for more information. Www freetax com Form 1040NR-EZ. Www freetax com   If you file Form 1040NR-EZ, report the taxable amount on line 5. Www freetax com Generally, you must report the amount shown in box 2 of Form(s) 1042-S. Www freetax com See the Instructions for Form 1040NR-EZ for more information. Www freetax com Other Types of Educational Assistance The following discussions deal with other common types of educational assistance. Www freetax com Fulbright Grants A Fulbright grant is generally treated as a scholarship or fellowship in figuring how much of the grant is tax free. Www freetax com 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. Www freetax com They are tax free to the extent used for qualified education expenses during the period for which a grant is awarded. Www freetax com Payment to Service Academy Cadets An appointment to a United States military academy is not a scholarship or fellowship. Www freetax com 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. Www freetax com Include this pay in your income in the year you receive it unless one of the exceptions, discussed earlier under Payment for services , applies. Www freetax com Veterans' Benefits Payments you receive for education, training, or subsistence under any law administered by the Department of Veterans Affairs (VA) are tax free. Www freetax com Do not include these payments as income on your federal tax return. Www freetax com 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. Www freetax com This applies only to the part of your VA payments that is required to be used for education expenses. Www freetax com You may want to visit the Veteran's Administration website at www. Www freetax com gibill. Www freetax com va. Www freetax com gov for specific information about the various VA benefits for education. Www freetax com Example. Www freetax com 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. Www freetax com Neither of these benefits is taxable and you do not report them on your tax return. Www freetax com You also want to claim an American opportunity credit on your return. Www freetax com You paid $5,000 in qualified education expenses (see chapter 2, American Opportunity Credit , later). Www freetax com 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. Www freetax com You do not subtract any amount of the BHA because it was paid to you and its use was not restricted. Www freetax com 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. Www freetax com This is called a “tuition reduction. Www freetax com ” You do not have to include a qualified tuition reduction in your income. Www freetax com A tuition reduction is qualified only if you receive it from, and use it at, an eligible educational institution. Www freetax com You do not have to use the tuition reduction at the eligible educational institution from which you received it. Www freetax com 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. Www freetax com 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. Www freetax com You must include in your income any tuition reduction you receive that is payment for your services. Www freetax com Eligible educational institution. Www freetax com   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. Www freetax com Officers, owners, and highly compensated employees. Www freetax com   Qualified tuition reductions apply to officers, owners, or highly compensated employees only if benefits are available to employees on a nondiscriminatory basis. Www freetax com This means that the tuition reduction benefits must be available on substantially the same basis to each member of a group of employees. Www freetax com The group must be defined under a reasonable classification set up by the employer. Www freetax com The classification must not discriminate in favor of owners, officers, or highly compensated employees. Www freetax com Payment for services. Www freetax com   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. Www freetax com This applies even if all candidates for a degree must perform the services to receive the degree. Www freetax com (See below for exceptions. Www freetax com ) Exceptions. Www freetax com   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. Www freetax com 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. Www freetax com You are an employee of the eligible educational institution. Www freetax com You were an employee of the eligible educational institution, but you retired or left on disability. Www freetax com 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. Www freetax com You are the dependent child or spouse of an individual described in (1) through (3), above. Www freetax com Child of deceased parents. Www freetax com   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. Www freetax com Child of divorced parents. Www freetax com   For purposes of the qualified tuition reduction, a dependent child of divorced parents is treated as the dependent of both parents. Www freetax com Graduate Education A tuition reduction you receive for graduate education is qualified, and therefore tax free, if both of the following requirements are met. Www freetax com It is provided by an eligible educational institution. Www freetax com You are a graduate student who performs teaching or research activities for the educational institution. Www freetax com You must include in income any other tuition reductions for graduate education that you receive. Www freetax com How To Report Any tuition reduction that is taxable should be included as wages in box 1 of your Form W-2. Www freetax com Report the amount from Form W-2, box 1, on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). Www freetax com Prev  Up  Next   Home   More Online Publications