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Www freetax com Index A Additional Medicare Tax, What's New Allocated tips, Allocated Tips Assistance (see Tax help) C Cash tips, How to keep a daily tip record. Www freetax com Credit card charge tips, How to keep a daily tip record. Www freetax com D Daily tip record, Keeping a Daily Tip Record E Electronic tip record, Electronic tip record. Www freetax com Electronic tip statement, Electronic tip statement. Www freetax com Employers Giving money to, for taxes, Giving your employer money for taxes. Www freetax com Reporting tips to, Reporting Tips to Your Employer EmTRAC program, Tip Rate Determination and Education Program F Figures Form 4070A, sample filled-in, Form 1040 Schedule C, Self-employed persons. Www freetax com Unreported tips, Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer. Www freetax com Form 4070, What tips to report. Www freetax com Sample filled-in, Form 4070A, How to keep a daily tip record. Www freetax com Form 4137, Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer. Www freetax com Form 8027, How to request an approved lower rate. Www freetax com Form W-2 Uncollected taxes, Giving your employer money for taxes. Www freetax com , Reporting uncollected social security, Medicare, Additional Medicare, or railroad retirement taxes on tips reported to your employer. Www freetax com Free tax services, Free help with your tax return. Www freetax com G Gaming Industry Tip Compliance Agreement Program, Tip Rate Determination and Education Program H Help (see Tax help) M Missing children, photographs of, Reminder N Noncash tips, How to keep a daily tip record. Www freetax com P Penalties Failure to report tips to employer, Penalty for not reporting tips. Www freetax com Underpayment of estimated taxes, Giving your employer money for taxes. Www freetax com Publications (see Tax help) R Recordkeeping requirements Daily tip record, Keeping a Daily Tip Record Reporting Employee to report tips to employer, Reporting Tips to Your Employer Tip income, Introduction S Self-employed persons, Self-employed persons. Www freetax com Service charge paid as wages, Service charges. Www freetax com Social security and Medicare taxes Allocated tips, How to report allocated tips. Www freetax com Reporting of earnings to Social Security Administration, Why report tips to your employer. Www freetax com Tips not reported to employer, Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer. Www freetax com Uncollected taxes on tips, Reporting uncollected social security, Medicare, Additional Medicare, or railroad retirement taxes on tips reported to your employer. Www freetax com T Tax help, How To Get Tax Help Tax returns, Reporting Tips on Your Tax Return Tip pools, How to keep a daily tip record. Www freetax com Tip Rate Determination and Education Program, Tip Rate Determination and Education Program Tip splitting, How to keep a daily tip record. Www freetax com TTY/TDD information, How To Get Tax Help U Uncollected taxes, Giving your employer money for taxes. Www freetax com , Reporting uncollected social security, Medicare, Additional Medicare, or railroad retirement taxes on tips reported to your employer. Www freetax com W Withholding, Why report tips to your employer. Www freetax com Prev  Up     Home   More Online Publications
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Www freetax com 6. Www freetax com   Tuition and Fees Deduction Table of Contents IntroductionWhat is the tax benefit of the tuition and fees deduction. Www freetax com Can You Claim the DeductionWho Can Claim the Deduction Who Cannot Claim the Deduction What Expenses QualifyQualified Education Expenses No Double Benefit Allowed Expenses That Do Not Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses Figuring the DeductionEffect of the Amount of Your Income on the Amount of Your Deduction Claiming the Deduction Illustrated Example Introduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). Www freetax com You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. Www freetax com The qualified expenses must be for higher education, as explained later under Qualified Education Expenses . Www freetax com What is the tax benefit of the tuition and fees deduction. Www freetax com   The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. Www freetax com   This deduction is taken as an adjustment to income. Www freetax com This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). Www freetax com This deduction may be beneficial to you if you do not qualify for the American opportunity or lifetime learning credits. Www freetax com You can choose the education benefit that will give you the lowest tax. Www freetax com You may want to compare the tuition and fees deduction to the education credits. Www freetax com See chapter 2, American Opportunity Credit and chapter 3, Lifetime Learning Credit for more information on the education credits. Www freetax com Table 6-1. Www freetax com Tuition and Fees Deduction at a Glance summarizes the features of the tuition and fees deduction. Www freetax com Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. Www freetax com Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. Www freetax com You pay qualified education expenses of higher education. Www freetax com You pay the education expenses for an eligible student. Www freetax com The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return. Www freetax com The term “qualified education expenses” is defined later under Qualified Education Expenses . Www freetax com “Eligible student” is defined later under Who Is an Eligible Student . Www freetax com For more information on claiming the deduction for a dependent, see Who Can Claim a Dependent's Expenses , later. Www freetax com Table 6-1. Www freetax com Tuition and Fees Deduction at a Glance Do not rely on this table alone. Www freetax com Refer to the text for complete details. Www freetax com Question Answer What is the maximum benefit? You can reduce your income subject to tax by up to $4,000. Www freetax com What is the limit on modified adjusted gross income (MAGI)? $160,000 if married filing a joint return; $80,000 if single, head of household, or qualifying widow(er). Www freetax com Where is the deduction taken? As an adjustment to income on  Form 1040 or Form 1040A. Www freetax com For whom must the expenses be paid? A student enrolled in an eligible educational institution who is either: •you,  •your spouse, or  •your dependent for whom you claim an exemption. Www freetax com What tuition and fees are deductible? Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living, or family expenses, such as room and board. Www freetax com Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. Www freetax com Your filing status is married filing separately. Www freetax com Another person can claim an exemption for you as a dependent on his or her tax return. Www freetax com You cannot take the deduction even if the other person does not actually claim that exemption. Www freetax com Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). Www freetax com You (or your spouse) were a nonresident alien for any part of 2013 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. Www freetax com More information on nonresident aliens can be found in Publication 519. Www freetax com What Expenses Qualify The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Www freetax com Generally, the deduction is allowed for qualified education expenses paid in 2013 in connection with enrollment at an institution of higher education during 2013 or for an academic period beginning in 2013 or in the first 3 months of 2014. Www freetax com For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning in January 2014, you may be able to use that $1,500 in figuring your 2013 deduction. Www freetax com Academic period. Www freetax com   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. Www freetax com 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. Www freetax com Paid with borrowed funds. Www freetax com   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. Www freetax com Use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. Www freetax com Treat loan disbursements sent directly to the educational institution as paid on the date the institution credits the student's account. Www freetax com Student withdraws from class(es). Www freetax com   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. Www freetax com Qualified Education Expenses For purposes of the tuition and fees deduction, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Www freetax com Eligible educational institution. Www freetax com   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. Www freetax com S. Www freetax com Department of Education. Www freetax com It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Www freetax com The educational institution should be able to tell you if it is an eligible educational institution. Www freetax com   Certain educational institutions located outside the United States also participate in the U. Www freetax com S. Www freetax com Department of Education's Federal Student Aid (FSA) programs. Www freetax com Related expenses. Www freetax com   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Www freetax com Prepaid expenses. Www freetax com   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring an education credit for 2013 only. Www freetax com See Academic period , earlier. Www freetax com For example, you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring an education credit for 2013 only (if you meet all the other requirements). Www freetax com You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 education credit(s). Www freetax com In the following examples, assume that each student is an eligible student and each college or university an eligible educational institution. Www freetax com Example 1. Www freetax com Jackson is a sophomore in University V's degree program in dentistry. Www freetax com This year, in addition to tuition, he is required to pay a fee to the university for the rental of the dental equipment he will use in this program. Www freetax com Because the equipment rental fee must be paid to University V for enrollment and attendance, Jackson's equipment rental fee is a qualified education expense. Www freetax com Example 2. Www freetax com Donna and Charles, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. Www freetax com The college has no policy about how students should obtain these materials, but any student who purchases them from College W's bookstore will receive a bill directly from the college. Www freetax com Charles bought his books from a friend, so what he paid for them is not a qualified education expense. Www freetax com Donna bought hers at College W's bookstore. Www freetax com Although Donna paid College W directly for her first-year books and materials, her payment is not a qualified education expense because the books and materials are not required to be purchased from College W for enrollment or attendance at the institution. Www freetax com Example 3. Www freetax com When Marci enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. Www freetax com This activity fee is required of all students, and is used solely to fund on-campus organizations and activities run by students, such as the student newspaper and the student government. Www freetax com No portion of the fee covers personal expenses. Www freetax com Although labeled as a student activity fee, the fee is required for Marci's enrollment and attendance at College X. Www freetax com Therefore, it is a qualified expense. Www freetax com No Double Benefit Allowed You cannot do any of the following. Www freetax com Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. Www freetax com Deduct qualified education expenses for a student on your income tax return if you or anyone else claims an American opportunity or lifetime learning credit for that same student in the same year. Www freetax com Deduct qualified education expenses that have been used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or a qualified tuition program (QTP). Www freetax com For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Www freetax com See Coordination With Tuition and Fees Deduction in chapter 8, Qualified Tuition Program, later. Www freetax com Deduct qualified education expenses that have been paid with tax-free interest on U. Www freetax com S. Www freetax com savings bonds (Form 8815). Www freetax com See Figuring the Tax-Free Amount in chapter 10, Education Savings Bond Program, later. Www freetax com Deduct qualified education expenses that have been paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. Www freetax com See the following section on Adjustments to Qualified Education Expenses. Www freetax com Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. Www freetax com The result is the amount of adjusted qualified education expenses for each student. Www freetax com You must also reduce qualified education expenses by the other amounts referred to in No Double Benefit Allowed , earlier. Www freetax com Tax-free educational assistance. Www freetax com   For tax-free educational assistance received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period. Www freetax com See Academic period , earlier. Www freetax com   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. Www freetax com This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). Www freetax com   If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed , later. Www freetax com If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed , later. Www freetax com   This tax-free education assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Www freetax com Generally, any scholarship or fellowship is treated as tax free. Www freetax com However, a scholarship or fellowship is not treated as tax free to the extent the student includes it in gross income (if the student is required to file a tax return for the year the scholarship or fellowship is received) and either of the following is true. Www freetax com The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Www freetax com The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Www freetax com You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the educational assistance in income in the year it is received. Www freetax com For details, see Adjustments to Qualified Education Expenses in chapters 2 and 3. Www freetax com Refunds. Www freetax com   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year. Www freetax com Some tax-free educational assistance received after 2013 may be treated as a refund. Www freetax com See Tax-free educational assistance , earlier. Www freetax com Refunds received in 2013. Www freetax com   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses for 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. Www freetax com Refunds received after 2013 but before your income tax return is filed. Www freetax com   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid before you file an income tax return for 2013, the amount of qualified education expenses for 2013 is reduced by the amount of the refund. Www freetax com Refunds received after 2013 and after your income tax return is filed. Www freetax com   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid after you file an income tax return for 2013, you may need to repay some or all of the credit. Www freetax com See Credit recapture , later. Www freetax com Coordination with Coverdell education savings accounts and qualified tuition programs. Www freetax com   Reduce your qualified education expenses by any qualified education expenses used to figure the exclusion from gross income of (a) interest received under an education savings bond program, or (b) any distribution from a Coverdell education savings account or qualified tuition program (QTP). Www freetax com For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Www freetax com Credit recapture. Www freetax com    If any tax-free educational assistance for the qualified education expenses paid in 2013 or any refund of your qualified education expenses paid in 2013 is received after you file your 2013 income tax return, you must recapture (repay) any excess credit. Www freetax com You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing that amount by the amount of the refund or tax-free educational assistance. Www freetax com You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you had claimed the refigured credit(s). Www freetax com Include that amount as an additional tax for the year the refund or tax-free assistance was received. Www freetax com Example. Www freetax com   You paid $3,500 of qualified education expenses in December 2013, and your child began college in January 2014. Www freetax com You claimed $3,500 as the tuition and fees deduction on your 2013 income tax return. Www freetax com The reduction reduced your taxable income by $3,500. Www freetax com Also, you claimed no tax credits in 2013. Www freetax com Your child withdrew from two classes and you received a refund of $2,000 in 2014 after you filed your 2013 tax return. Www freetax com Refigure your 2013 tuition and fees deduction using $1,500 of qualified education expense instead of the $3,500. Www freetax com The refigured tuition and fees deduction is $1,500. Www freetax com Do not file an amended 2013 tax return to account for this adjustment. Www freetax com Instead, include the difference of $2,000 (but only to the extent this difference would have increased your 2013 tax) on the “Other income” line of your 2014 Form 1040. Www freetax com You cannot file Form 1040A for 2014. Www freetax com Amounts that do not reduce qualified education expenses. Www freetax com   Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Www freetax com   Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. Www freetax com The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Restrictions. Www freetax com The use of the money is not restricted. Www freetax com Example 1. Www freetax com In 2013, Jackie paid $3,000 for tuition and $5,000 for room and board at University X. Www freetax com The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. Www freetax com To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. Www freetax com The terms of the scholarship state that it can be used to pay any of Jackie's college expenses. Www freetax com University X applies the $2,000 scholarship against Jackie's $8,000 total bill, and Jackie pays the $6,000 balance of her bill from University X with a combination of her student loan and her savings. Www freetax com Jackie does not report any portion of the scholarship as income on her tax return. Www freetax com In figuring the tuition and fees deduction, Jackie must reduce her qualified education expenses by the amount of the scholarship ($2,000) because she excluded the entire scholarship from her income. Www freetax com The student loan is not tax-free educational assistance, so she does not need to reduce her qualified expenses by any part of the loan proceeds. Www freetax com Jackie is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship) in 2013. Www freetax com Example 2. Www freetax com The facts are the same as in Example 1, except that Jackie reports her entire scholarship as income on her tax return. Www freetax com Because Jackie reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. Www freetax com Jackie is treated as having paid $3,000 in qualified education expenses. Www freetax com Expenses That Do Not Qualify Qualified education expenses do not include amounts paid for: Insurance, Medical expenses (including student health fees), Room and board, Transportation, or Similar personal, living, or family expenses. Www freetax com This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Www freetax com Sports, games, hobbies, and noncredit courses. Www freetax com   Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. Www freetax com However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. Www freetax com Comprehensive or bundled fees. Www freetax com   Some eligible educational institutions combine all of their fees for an academic period into one amount. Www freetax com If you do not receive, or do not have access to, an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. Www freetax com The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T. Www freetax com See Figuring the Deduction , later, for more information about Form 1098-T. Www freetax com Who Is an Eligible Student For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (as defined under Qualified Education Expenses , earlier). Www freetax com Who Can Claim a Dependent's Expenses Generally, in order to claim the tuition and fees deduction for qualified education expenses for a dependent, you must: Have paid the expenses, and Claim an exemption for the student as a dependent. Www freetax com For you to be able to deduct qualified education expenses for your dependent, you must claim an exemption for that individual. Www freetax com You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. Www freetax com IF your dependent is an eligible student and you. Www freetax com . Www freetax com . Www freetax com AND. Www freetax com . Www freetax com . Www freetax com THEN. Www freetax com . Www freetax com . Www freetax com claim an exemption for your dependent you paid all qualified education expenses for your dependent only you can deduct the qualified education expenses that you paid. Www freetax com Your dependent cannot take a deduction. Www freetax com claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Www freetax com do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. Www freetax com do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Www freetax com Expenses paid by dependent. Www freetax com   If your dependent pays qualified education expenses, no one can take a tuition and fees deduction for those expenses. Www freetax com Neither you nor your dependent can deduct the expenses. Www freetax com For purposes of the tuition and fees deduction, you are not treated as paying any expenses actually paid by a dependent for whom you or anyone other than the dependent can claim an exemption. Www freetax com This rule applies even if you do not claim an exemption for your dependent on your tax return. Www freetax com Expenses paid by you. Www freetax com   If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring your tuition and fees deduction. Www freetax com Expenses paid under divorce decree. Www freetax com   Qualified education expenses paid directly to an eligible educational institution for a student under a court-approved divorce decree are treated as paid by the student. Www freetax com Only the student would be eligible to take a tuition and fees deduction for that payment, and then only if no one else could claim an exemption for the student. Www freetax com Expenses paid by others. Www freetax com   Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. Www freetax com In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. Www freetax com If you claim, or can claim, an exemption on your tax return for the student, you are not considered to have paid the expenses and you cannot deduct them. Www freetax com If the student is not a dependent, only the student can deduct payments made directly to the institution for his or her expenses. Www freetax com If the student is your dependent, no one can deduct the payments. Www freetax com Example. Www freetax com In 2013, Ms. Www freetax com Baker makes a payment directly to an eligible educational institution for her grandson Dan's qualified education expenses. Www freetax com For purposes of deducting tuition and fees, Dan is treated as receiving the money from his grandmother and, in turn, paying his own qualified education expenses. Www freetax com If an exemption cannot be claimed for Dan on anyone else's tax return, only Dan can claim a tuition and fees deduction for his grandmother's payment. Www freetax com If someone else can claim an exemption for Dan, no one will be allowed a deduction for Ms. Www freetax com Baker's payment. Www freetax com Tuition reduction. Www freetax com   When an eligible educational institution provides a reduction in tuition to an employee of the institution (or spouse or dependent child of an employee), the amount of the reduction may or may not be taxable. Www freetax com If it is taxable, the employee is treated as receiving a payment of that amount and, in turn, paying it to the educational institution on behalf of the student. Www freetax com For more information on tuition reductions, see Qualified Tuition Reduction , in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Www freetax com Figuring the Deduction The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. Www freetax com See Effect of the Amount of Your Income on the Amount of Your Deduction , later. Www freetax com Form 1098-T. Www freetax com   To help you figure your tuition and fees deduction, the student should receive Form 1098-T (see Appendix A for a completed example of Form 1098-T). Www freetax com Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2014. Www freetax com An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. Www freetax com However, the amount in boxes 1 and 2 of Form 1098-T might be different than what you paid. Www freetax com When figuring the deduction, use only the amounts you paid in 2013 for qualified education expenses. Www freetax com   In addition, Form 1098-T should give other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether the student was enrolled at least half-time or was a graduate student. Www freetax com    The eligible educational institution may ask for a completed Form W-9S or similar statement to obtain the student's name, address, and taxpayer identification number. Www freetax com Effect of the Amount of Your Income on the Amount of Your Deduction If your MAGI is not more than $65,000 ($130,000 if you are married filing jointly), your maximum tuition and fees deduction is $4,000. Www freetax com If your MAGI is larger than $65,000 ($130,000 if you are married filing jointly), but is not more than $80,000 ($160,000 if you are married filing jointly), your maximum deduction is $2,000. Www freetax com No tuition and fees deduction is allowed if your MAGI is larger than $80,000 ($160,000 if you are married filing jointly). Www freetax com Modified adjusted gross income (MAGI). Www freetax com   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for tuition and fees. Www freetax com However, as discussed below, there may be other modifications. Www freetax com MAGI when using Form 1040A. Www freetax com   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 19 (tuition and fees deduction). Www freetax com MAGI when using Form 1040. Www freetax com   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 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. Www freetax com   Table 6-2 shows how the amount of your MAGI can affect your tuition and fees deduction. Www freetax com   You can use Worksheet 6-1. Www freetax com MAGI for the Tuition and Fees Deduction , later, to figure your MAGI. Www freetax com Table 6-2. Www freetax com Effect of MAGI on Maximum Tuition and Fees Deduction IF your filing status is. Www freetax com . Www freetax com . Www freetax com AND your MAGI is. Www freetax com . Www freetax com . Www freetax com THEN your maximum tuition and fees deduction is. Www freetax com . Www freetax com . Www freetax com single,  head of household, or qualifying widow(er) not more than $65,000 $4,000. Www freetax com more than $65,000  but not more than $80,000 $2,000. Www freetax com more than $80,000 $0. Www freetax com married filing joint return not more than $130,000 $4,000. Www freetax com more than $130,000 but not more than $160,000 $2,000. Www freetax com more than $160,000 $0. Www freetax com Claiming the Deduction You claim a tuition and fees deduction by completing Form 8917 and submitting it with your Form 1040 or Form 1040A. Www freetax com Enter the deduction on Form 1040, line 34, or Form 1040A, line 19. Www freetax com A filled-in Form 8917 is shown at the end of this chapter. Www freetax com Illustrated Example Tim Pfister, a single taxpayer, enrolled full-time at a local college to earn a degree in engineering. Www freetax com This is the first year of his postsecondary education. Www freetax com During 2013, he paid $3,600 for his qualified 2013 tuition expense. Www freetax com Both he and the college meet all of the requirements for the tuition and fees deduction. Www freetax com Tim's total income (Form 1040, line 22) and MAGI are $26,000. Www freetax com He figures his deduction of $3,600 as shown on Form 8917, later. Www freetax com Worksheet 6-1. Www freetax com MAGI for the Tuition and Fees Deduction Use this worksheet if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico. Www freetax com Before using this worksheet, you must complete Form 1040, lines 7 through 33, and figure any amount to be entered on the dotted line next to line 36. Www freetax com 1. Www freetax com Enter the amount from Form 1040, line 22   1. Www freetax com         2. Www freetax com Enter the total from Form 1040, lines 23 through 33   2. Www freetax com               3. Www freetax com Enter the total of any amounts entered on the dotted line next to Form 1040, line 36   3. Www freetax com               4. Www freetax com Add lines 2 and 3   4. Www freetax com         5. Www freetax com Subtract line 4 from line 1   5. Www freetax com         6. Www freetax com Enter your foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   6. Www freetax com         7. Www freetax com Enter your foreign housing deduction (Form 2555, line 50)   7. Www freetax com         8. Www freetax com Enter the amount of income from Puerto Rico you are excluding   8. Www freetax com         9. Www freetax com Enter the amount of income from American Samoa you are  excluding (Form 4563, line 15)   9. Www freetax com         10. Www freetax com Add lines 5 through 9. Www freetax com This is your modified adjusted gross income   10. Www freetax com     Note. Www freetax com If the amount on line 10 is more than $80,000 ($160,000 if married filing jointly),  you cannot take the deduction for tuition and fees. Www freetax com       This image is too large to be displayed in the current screen. Www freetax com Please click the link to view the image. Www freetax com Form 8917 for Tim Pfister Prev  Up  Next   Home   More Online Publications