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1040 Ez Filing

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1040 Ez Filing

1040 ez filing Publication 970 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionComparison table. 1040 ez filing Ordering forms and publications. 1040 ez filing Tax questions. 1040 ez filing Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 970, such as legislation enacted after it was published, go to www. 1040 ez filing irs. 1040 ez filing gov/pub970. 1040 ez filing What's New Lifetime learning credit. 1040 ez filing  For 2013, the amount of your lifetime learning credit is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $53,000 and $63,000 ($107,000 and $127,000 if you file a joint return). 1040 ez filing You cannot claim a credit if your MAGI is $63,000 or more ($127,000 or more if you file a joint return). 1040 ez filing This is an increase from the 2012 limits of $52,000 and $62,000 ($104,000 and $124,000 if filing a joint return). 1040 ez filing For more information, see chapter 3, Lifetime Learning Credit . 1040 ez filing Business deduction for work-related education. 1040 ez filing  For 2013, if you drive your car to and from school and qualify to deduct transportation expenses, the amount you can deduct for miles driven from January 1, 2013 through December 31, 2013 is 56. 1040 ez filing 5 cents per mile. 1040 ez filing See chapter 12, Business Deduction for Work-Related Education , for more information. 1040 ez filing Reminders Form 1098-T, Tuition Statement. 1040 ez filing  When figuring an education credit or the tuition and fees deduction, use only the amounts you paid and are deemed to have paid during the tax year for qualified education expenses. 1040 ez filing In most cases, the student should receive Form 1098-T from the eligible educational institution by January 31, 2014. 1040 ez filing An institution my choose to report either payments received during calendar year 2013 (box 1), or amounts billed during the calendar year 2013 (box 2), for qualified education expenses. 1040 ez filing However, the amounts in boxes 1 and 2 of Form 1098-T might be different than the amount you actually paid and are deemed to have paid. 1040 ez filing In addition, the Form 1098-T should give you 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. 1040 ez filing The eligible educational institution may ask for a completed Form W-9S, Request for Student's or Borrower's Taxpayer Identification Number and Certification, or similar statement to obtain the student's name, address, and taxpayer identification number. 1040 ez filing Hope Scholarship Credit. 1040 ez filing  For 2013, the Hope Scholarship Credit is not available. 1040 ez filing However, you may be able to claim an American opportunity or lifetime learning credit. 1040 ez filing See chapter 2, American Opportunity Credit , and chapter 3, Lifetime Learning Credit , for more information. 1040 ez filing Estimated tax payments. 1040 ez filing  If you have taxable income from any of your education benefits and the payer does not withhold enough income tax, you may need to make estimated tax payments. 1040 ez filing For more information, see Publication 505, Tax Withholding and Estimated Tax. 1040 ez filing Photographs of missing children. 1040 ez filing  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. 1040 ez filing Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 1040 ez filing You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. 1040 ez filing Introduction This publication explains tax benefits that may be available to you if you are saving for or paying education costs for yourself or, in many cases, another student who is a member of your immediate family. 1040 ez filing Most benefits apply only to higher education. 1040 ez filing What is in this publication. 1040 ez filing    Chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions , explains the tax treatment of various types of educational assistance, including scholarships, fellowships, and tuition reductions. 1040 ez filing   Two tax credits for which you may be eligible are explained in chapter 2, American Opportunity Credit , and chapter 3, Lifetime Learning Credit . 1040 ez filing These benefits, which reduce the amount of income tax you may have to pay, are: The American opportunity credit, and The lifetime learning credit. 1040 ez filing    Ten other types of benefits are explained in chapters 4 through 12. 1040 ez filing These benefits, which reduce the amount of income tax you may have to pay, are: Deduct student loan interest; Receive tax-free treatment of a canceled student loan; Receive tax-free student loan repayment assistance; Deduct tuition and fees for education; Establish and contribute to a Coverdell education savings account (ESA), which features tax-free earnings; Participate in a qualified tuition program (QTP), which features tax-free earnings; Take early distributions from any type of individual retirement arrangement (IRA) for education costs without paying the 10% additional tax on early distributions; Cash in savings bonds for education costs without having to pay tax on the interest; Receive tax-free educational benefits from your employer; and Take a business deduction for work-related education. 1040 ez filing Note. 1040 ez filing You generally cannot claim more than one of the benefits described in the list above for the same qualifying education expense. 1040 ez filing Comparison table. 1040 ez filing   Some of the features of these benefits are highlighted in Appendix B, Highlights of Education Tax Benefits for Tax Year 2013 , later, in this publication. 1040 ez filing This general comparison table may guide you in determining which benefits you may be eligible for and which chapters you may want to read. 1040 ez filing When you figure your taxes, you may want to compare these tax benefits so you can choose the method(s) that gives you the lowest tax liability. 1040 ez filing If you qualify, you may find that a combination of credit(s) and deduction(s) gives you the lowest tax. 1040 ez filing Analyzing your tax withholding. 1040 ez filing   After you estimate your education tax benefits for the year, you may be able to reduce the amount of your federal income tax withholding. 1040 ez filing Also, you may want to recheck your withholding during the year if your personal or financial situation changes. 1040 ez filing See Publication 919, How Do I Adjust My Tax Withholding, for more information. 1040 ez filing Glossary. 1040 ez filing   In this publication, wherever appropriate, we have tried to use the same or similar terminology when referring to the basic components of each education benefit. 1040 ez filing Some of the terms used are: Qualified education expenses, Eligible educational institution, and Modified adjusted gross income. 1040 ez filing   Even though the same term, such as qualified education expenses, is used to label a basic component of many of the education benefits, the same expenses are not necessarily allowed for each benefit. 1040 ez filing For example, the cost of room and board is a qualified education expense for the qualified tuition program, but not for the education savings bond program. 1040 ez filing   Many of the terms used in the publication are defined in the glossary near the end of the publication. 1040 ez filing The glossary is not intended to be a substitute for reading the chapter on a particular education benefit, but it will give you an overview of how certain terms are used in discussing the different benefits. 1040 ez filing Comments and suggestions. 1040 ez filing   We welcome your comments about this publication and your suggestions for future editions. 1040 ez filing   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. 1040 ez filing NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 1040 ez filing Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 1040 ez filing   You can send your comments from www. 1040 ez filing irs. 1040 ez filing gov/formspubs/. 1040 ez filing Click on “More Information” and then on “Comment on Tax Forms and Publications”. 1040 ez filing   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. 1040 ez filing Ordering forms and publications. 1040 ez filing   Visit www. 1040 ez filing irs. 1040 ez filing 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. 1040 ez filing Internal Revenue Service 1201 N. 1040 ez filing Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. 1040 ez filing   If you have a tax question, check the information available on IRS. 1040 ez filing gov or call 1-800-829-1040. 1040 ez filing We cannot answer tax questions sent to either of the above addresses. 1040 ez filing Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 550 Investment Income and Expenses 590 Individual Retirement Arrangements (IRAs) Form (and Instructions) 1040 U. 1040 ez filing S. 1040 ez filing Individual Income Tax Return 1040A U. 1040 ez filing S. 1040 ez filing Individual Income Tax Return 1040EZ Income Tax Return for Single and Joint Filers With No Dependents 1040NR U. 1040 ez filing S. 1040 ez filing Nonresident Alien Income Tax Return 1040NR-EZ U. 1040 ez filing S. 1040 ez filing Income Tax Return for Certain Nonresident Aliens With No Dependents 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 5329 Additional Taxes on Qualified Plans and Other Tax-Favored Accounts 8815 Exclusion of Interest From Series EE and I U. 1040 ez filing S. 1040 ez filing Savings Bonds Issued After 1989 8863 Education Credits 8917 Tuition and Fees Deduction Schedule A (Form 1040) Itemized Deductions  See chapter 13, How To Get Tax Help , for information about getting these publications and forms. 1040 ez filing Prev  Up  Next   Home   More Online Publications
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The 1040 Ez Filing

1040 ez filing 3. 1040 ez filing   Lifetime Learning Credit Table of Contents Introduction Can You Claim the CreditWho Can Claim the Credit Who Cannot Claim the Credit 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 CreditEffect of the Amount of Your Income on the Amount of Your Credit Claiming the Credit Introduction For 2013, there are two tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. 1040 ez filing They are the American opportunity credit and the lifetime learning credit. 1040 ez filing This chapter discusses the lifetime learning credit. 1040 ez filing The American opportunity credit is discussed in chapter 2, The American Opportunity Credit . 1040 ez filing This chapter explains: Who can claim the lifetime learning credit, What expenses qualify for the credit, Who is an eligible student, Who can claim a dependent's expenses, How to figure the credit, How to claim the credit, and When the credit must be repaid. 1040 ez filing What is the tax benefit of the lifetime learning credit. 1040 ez filing   For the tax year, you may be able to claim a lifetime learning credit of up to $2,000 for qualified education expenses paid for all eligible students. 1040 ez filing There is no limit on the number of years the lifetime learning credit can be claimed for each student. 1040 ez filing   A tax credit reduces the amount of income tax you may have to pay. 1040 ez filing Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. 1040 ez filing The lifetime learning credit is a nonrefundable credit. 1040 ez filing This means that it can reduce your tax to zero, but if the credit is more than your tax the excess will not be refunded to you. 1040 ez filing   Your allowable lifetime learning credit may be limited by the amount of your income and the amount of your tax. 1040 ez filing Can you claim more than one education credit this year. 1040 ez filing   For each student, you can elect for any year only one of the credits. 1040 ez filing For example, if you elect to take the lifetime learning credit for a child on your 2013 tax return, you cannot, for that same child, also claim the American opportunity credit for 2013. 1040 ez filing   If you are eligible to claim the lifetime learning credit and you are also eligible to claim the American opportunity credit for the same student in the same year, you can choose to claim either credit, but not both. 1040 ez filing   If you pay qualified education expenses for more than one student in the same year, you can choose to take certain credits on a per-student, per-year basis. 1040 ez filing This means that, for example, you can claim the American opportunity credit for one student and the lifetime learning credit for another student in the same year. 1040 ez filing Differences between the American opportunity and lifetime learning credits. 1040 ez filing   There are several differences between these two credits. 1040 ez filing For example, you can claim the American opportunity credit for the same student for no more than 4 tax years, but any year in which the Hope Scholarship Credit was claimed counts toward the 4 years. 1040 ez filing However, there is no limit on the number of years for which you can claim a lifetime learning credit based on the same student's expenses. 1040 ez filing The differences between these credits are shown in Appendix B, Highlights of Education Tax Benefits for Tax Year 2013 near the end of this publication. 1040 ez filing Overview of the lifetime learning credit. 1040 ez filing   See Table 3-1, Overview of the Lifetime Learning Credit for the basics of the lifetime learning credit. 1040 ez filing The details are discussed in this chapter. 1040 ez filing Can You Claim the Credit The following rules will help you determine if you are eligible to claim the lifetime learning credit on your tax return. 1040 ez filing Who Can Claim the Credit Generally, you can claim the lifetime learning credit if all three of the following requirements are met. 1040 ez filing You pay qualified education expenses of higher education. 1040 ez filing You pay the education expenses for an eligible student. 1040 ez filing The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. 1040 ez filing Table 3-1. 1040 ez filing Overview of the Lifetime Learning Credit Maximum credit Up to $2,000 credit per return Limit on modified adjusted gross income (MAGI) $127,000 if married filling jointly;  $63,000 if single, head of household, or qualifying widow(er) Refundable or nonrefundable Nonrefundable—credit limited to the amount of tax you must pay on your taxable income Number of years of postsecondary education Available for all years of postsecondary education and for courses to acquire or improve job skills Number of tax years credit available Available for an unlimited number of years Type of program required Student does not need to be pursuing a program leading to a degree or other recognized education credential Number of courses Available for one or more courses Felony drug conviction Felony drug convictions do not make the student ineligible Qualified expenses Tuition and fees required for enrollment or attendance (including amounts required to be paid to the institution for course-related books, supplies, and equipment) Payments for academic periods Payments made in 2013 for academic periods beginning in 2013 or beginning in the first 3 months of 2014 Note. 1040 ez filing Qualified education expenses paid by a dependent for whom you claim an exemption, or by a third party for that dependent, are considered paid by you. 1040 ez filing “Qualified education expenses” are defined later under Qualified Education Expenses . 1040 ez filing “Eligible students” are defined later under Who Is an Eligible Student . 1040 ez filing A dependent for whom you claim an exemption is defined later under Who Can Claim a Dependent's Expenses . 1040 ez filing You may find Figure 3-1, Can You Claim the Lifetime Learning Credit for 2013 , later, helpful in determining if you can claim a lifetime learning credit on your tax return. 1040 ez filing Who Cannot Claim the Credit You cannot claim the lifetime learning credit for 2013 if any of the following apply. 1040 ez filing Your filing status is married filing separately. 1040 ez filing You are listed as a dependent on another person's tax return (such as your parents'). 1040 ez filing See Who Can Claim a Dependent's Expenses , later. 1040 ez filing Your modified adjusted gross income (MAGI) is $63,000 or more ($127,000 or more in the case of a joint return). 1040 ez filing MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit . 1040 ez filing 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. 1040 ez filing More information on nonresident aliens can be found in Publication 519. 1040 ez filing You claim the American Opportunity Credit (see chapter 2) or a Tuition and Fees Deduction (see chapter 6) for the same student in 2013. 1040 ez filing What Expenses Qualify The lifetime learning credit 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. 1040 ez filing Generally, the credit is allowed for qualified education expenses paid in 2013 for an academic period beginning in 2013 or in the first 3 months of 2014. 1040 ez filing 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 credit. 1040 ez filing Academic period. 1040 ez filing   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. 1040 ez filing 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. 1040 ez filing Paid with borrowed funds. 1040 ez filing   You can claim a lifetime learning credit for qualified education expenses paid with the proceeds of a loan. 1040 ez filing You use the expenses to figure the lifetime learning credit for the year in which the expenses are paid, not the year in which the loan is repaid. 1040 ez filing Treat loan disbursements sent directly to the educational institution as paid on the date the institution credits the student's account. 1040 ez filing Student withdraws from class(es). 1040 ez filing   You can claim a lifetime learning credit for qualified education expenses not refunded when a student withdraws. 1040 ez filing Qualified Education Expenses For purposes of the lifetime learning credit, qualified education expenses are tuition and certain related expenses required for enrollment in a course at an eligible educational institution. 1040 ez filing The course must be either part of a postsecondary degree program or taken by the student to acquire or improve job skills. 1040 ez filing Eligible educational institution. 1040 ez filing   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. 1040 ez filing S. 1040 ez filing Department of Education. 1040 ez filing It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 1040 ez filing The educational institution should be able to tell you if it is an eligible educational institution. 1040 ez filing   Certain educational institutions located outside the United States also participate in the U. 1040 ez filing S. 1040 ez filing Department of Education's Federal Student Aid (FSA) programs. 1040 ez filing Related expenses. 1040 ez filing   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 for enrollment or attendance. 1040 ez filing Prepaid expenses. 1040 ez filing   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. 1040 ez filing See Academic period , earlier. 1040 ez filing 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). 1040 ez filing 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). 1040 ez filing In the following examples, assume that each student is an eligible student at an eligible educational institution. 1040 ez filing Example 1. 1040 ez filing   Jackson is a sophomore in University V's degree program in dentistry. 1040 ez filing 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. 1040 ez filing Because the equipment rental fee must be paid to University V for enrollment and attendance, Jackson's equipment rental fee is a qualified expense. 1040 ez filing Example 2. 1040 ez filing   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. 1040 ez filing 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. 1040 ez filing Charles bought his books from a friend, so what he paid for them is not a qualified education expense. 1040 ez filing Donna bought hers at College W's bookstore. 1040 ez filing Although Donna paid College W directly for her first-year books and materials, her payment is not a qualified expense because the books and materials are not required to be purchased from College W for enrollment or attendance at the institution. 1040 ez filing Example 3. 1040 ez filing   When Marci enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. 1040 ez filing 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 student government. 1040 ez filing No portion of the fee covers personal expenses. 1040 ez filing Although labeled as a student activity fee, the fee is required for Marci's enrollment and attendance at College X. 1040 ez filing Therefore, it is a qualified expense. 1040 ez filing No Double Benefit Allowed You cannot do any of the following: Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim a lifetime learning credit based on those same expenses. 1040 ez filing Claim a lifetime learning credit in the same year that you are claiming a tuition and fees deduction for the same student. 1040 ez filing Claim a lifetime learning credit and an American opportunity credit based on the same qualified education expenses. 1040 ez filing Claim a lifetime learning credit based on the same expenses used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or qualified tuition program (QTP). 1040 ez filing See Coordination With American Opportunity and Lifetime Learning Credits in chapter 7, Coverdell Education Savings Account, and Coordination With American Opportunity and Lifetime Learning Credits in chapter 8, Qualified Tuition Program. 1040 ez filing Claim a credit based on qualified education expenses paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. 1040 ez filing See Adjustments to Qualified Education Expenses, next. 1040 ez filing This image is too large to be displayed in the current screen. 1040 ez filing Please click the link to view the image. 1040 ez filing Figure 3-1 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. 1040 ez filing The result is the amount of adjusted qualified education expenses for each student. 1040 ez filing Tax-free educational assistance. 1040 ez filing   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. 1040 ez filing See Academic period , earlier. 1040 ez filing   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. 1040 ez filing 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). 1040 ez filing   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. 1040 ez filing 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. 1040 ez filing   Tax-free educational 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. 1040 ez filing Generally, any scholarship or fellowship is treated as tax free. 1040 ez filing 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. 1040 ez filing 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. 1040 ez filing 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. 1040 ez filing 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. 1040 ez filing For examples, see Coordination with Pell grants and other scholarships, later. 1040 ez filing Refunds. 1040 ez filing   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. 1040 ez filing Some tax-free educational assistance received after 2013 may be treated as a refund. 1040 ez filing See Tax-free educational assistance , earlier. 1040 ez filing Refunds received in 2013. 1040 ez filing   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. 1040 ez filing Refunds received after 2013 but before your income tax return is filed. 1040 ez filing   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. 1040 ez filing Refunds received after 2013 and after your income tax return is filed. 1040 ez filing   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. 1040 ez filing See Credit recapture, next. 1040 ez filing Credit recapture. 1040 ez filing    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. 1040 ez filing You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing the expenses by the amount of the refund or tax-free educational assistance. 1040 ez filing 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). 1040 ez filing Include that amount as an additional tax for the year the refund or tax-free assistance was received. 1040 ez filing Example. 1040 ez filing   You pay $9,300 in tuition and fees in December 2013, and your child began college in January 2014. 1040 ez filing You filed your 2013 tax return on February 14, 2014, and claimed a lifetime learning credit of $1,860. 1040 ez filing You claimed no other tax credits. 1040 ez filing After you filed your return, your child withdrew from two courses and you received a refund of $2,900. 1040 ez filing You must refigure your 2013 lifetime learning credit using $6,400 of qualified education expenses instead of $9,300. 1040 ez filing The refigured credit is $1,280 and your tax liability increased by $580. 1040 ez filing See instructions for your 2014 income tax return to determine where to include this tax. 1040 ez filing If you pay qualified education expenses in 2014 for an academic period that begins in the first 3 months of 2014 and you receive tax-free educational assistance, or a refund, as described above, you may choose to reduce your qualified education expenses for 2014 instead of reducing your expenses for 2013. 1040 ez filing Amounts that do not reduce qualified education expenses. 1040 ez filing   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. 1040 ez filing   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. 1040 ez filing 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 Reductions. 1040 ez filing The use of the money is not restricted. 1040 ez filing For examples, see Adjustments to Qualified Education Expenses in chapter 2, American Opportunity Credit. 1040 ez filing Coordination with Pell grants and other scholarships. 1040 ez filing   In some cases, you may be able to reduce your tax liability by including scholarships in income. 1040 ez filing If you are claiming an education credit for a claimed dependent who received a scholarship, you may be able to reduce your tax liability if the student includes the scholarship in income. 1040 ez filing The scholarship must be one that may (by its terms) be applied to expenses (such as room and board) other than qualified education expenses. 1040 ez filing Example 1—No scholarship. 1040 ez filing Judy Green, who is unmarried, is taking courses at a public community college to be recertified to teach in public schools. 1040 ez filing Her AGI and her MAGI, for purposes of the credit, are $27,000. 1040 ez filing Judy takes the standard deduction of $5,950 and personal exemption of $3,800, reducing her AGI to taxable income of $17,250 and her tax before credits is $2,156. 1040 ez filing She claims no credits other than the lifetime learning credit. 1040 ez filing In July 2013 she paid $700 for the summer 2013 semester; in August 2013 she paid $1,900 for the fall 2013 semester; and in December 2013 she paid another $1,900 for the spring semester beginning in January 2014. 1040 ez filing Judy and the college meet all requirements for the lifetime learning tax credit. 1040 ez filing She can use all of the $4,500 tuition she paid in 2013 when figuring her 2013 lifetime learning credit. 1040 ez filing She claims a $900 lifetime learning credit and her tax after credits is $1,256. 1040 ez filing Example 2—Scholarship excluded from income. 1040 ez filing The facts are the same as in Example 1—No scholarship, except that Judy was awarded a $1,500 scholarship. 1040 ez filing Under the terms of her scholarship, it may be used to pay any educational expenses, including room and board. 1040 ez filing If Judy excludes the scholarship from income, she will be deemed (for purposes of computing her education credit) as having used the scholarship to pay for tuition, required fees, and course materials. 1040 ez filing Only $3,000 of the $4,500 tuition she paid in 2013 could be used when figuring her 2013 lifetime learning credit. 1040 ez filing Her lifetime learning credit would be reduced to $600 and her tax after credits would be $1,556. 1040 ez filing Example 3—Scholarship included in income. 1040 ez filing The facts are the same as in Example 2—Scholarship excluded from income. 1040 ez filing If, unlike Example 2, Judy includes the $1,500 scholarship in income, she will be deemed to have used the entire scholarship to pay for room and board. 1040 ez filing Judy's AGI will increase to $28,500, her taxable income would be $18,750, and her tax before credits would be $2,381. 1040 ez filing She would be able to use the $4,500 of adjusted qualified education expenses to figure her credit. 1040 ez filing Judy could claim a $900 lifetime learning credit and her tax after credits would be $1,481. 1040 ez filing 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. 1040 ez filing This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. 1040 ez filing Sports, games, hobbies, and noncredit courses. 1040 ez filing   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. 1040 ez filing However, if the course of instruction or other education is part of the student's degree program or is taken by the student to acquire or improve job skills, these expenses can qualify. 1040 ez filing Comprehensive or bundled fees. 1040 ez filing   Some eligible educational institutions combine all of their fees for an academic period into one amount. 1040 ez filing 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. 1040 ez filing 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. 1040 ez filing See Figuring the Credit , later, for more information about Form 1098-T. 1040 ez filing Who Is an Eligible Student For purposes of the lifetime learning credit, 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). 1040 ez filing Who Can Claim a Dependent's Expenses If there are qualified education expenses for your dependent during a tax year, either you or your dependent, but not both of you, can claim a lifetime learning credit for your dependent's expenses for that year. 1040 ez filing For you to claim a lifetime learning credit for your dependent's expenses, you must also claim an exemption for your dependent. 1040 ez filing You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. 1040 ez filing IF you. 1040 ez filing . 1040 ez filing . 1040 ez filing THEN only. 1040 ez filing . 1040 ez filing . 1040 ez filing claim an exemption on your tax return for a dependent who is an eligible student you can claim the lifetime learning credit based on that dependent's expenses. 1040 ez filing The dependent cannot claim the credit. 1040 ez filing do not claim an exemption on your tax return for a dependent who is an eligible student (even if entitled to the exemption) the dependent can claim the lifetime learning credit. 1040 ez filing You cannot claim the credit based on this dependent's expenses. 1040 ez filing Expenses paid by dependent. 1040 ez filing   If you claim an exemption on your tax return for an eligible student who is your dependent, treat any expenses paid (or deemed paid) by your dependent as if you had paid them. 1040 ez filing Include these expenses when figuring the amount of your lifetime learning credit. 1040 ez filing    Qualified education expenses paid directly to an eligible educational institution for your dependent under a court-approved divorce decree are treated as paid by your dependent. 1040 ez filing Expenses paid by you. 1040 ez filing   If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring the amount of the lifetime learning credit. 1040 ez filing If neither you nor anyone else claims an exemption for the dependent, only the dependent can include any expenses you paid when figuring the lifetime learning credit. 1040 ez filing Expenses paid by others. 1040 ez filing   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. 1040 ez filing In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. 1040 ez filing If you claim an exemption on your tax return for the student, you are considered to have paid the expenses. 1040 ez filing Example. 1040 ez filing In 2013, Ms. 1040 ez filing Allen makes a payment directly to an eligible educational institution for her grandson Todd's qualified education expenses. 1040 ez filing For purposes of claiming a lifetime learning credit, Todd is treated as receiving the money from his grandmother and, in turn, paying his qualified education expenses himself. 1040 ez filing Unless an exemption for Todd is claimed on someone else's 2013 tax return, only Todd can use the payment to claim a lifetime learning credit. 1040 ez filing If anyone, such as Todd's parents, claims an exemption for Todd on his or her 2013 tax return, whoever claims the exemption may be able to use the expenses to claim a lifetime learning credit. 1040 ez filing If anyone else claims an exemption for Todd, Todd cannot claim a lifetime learning credit. 1040 ez filing Tuition reduction. 1040 ez filing   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. 1040 ez filing 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. 1040 ez filing For more information on tuition reductions, see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 1040 ez filing Figuring the Credit The amount of the lifetime learning credit is 20% of the first $10,000 of qualified education expenses you paid for all eligible students. 1040 ez filing The maximum amount of lifetime learning credit you can claim for 2013 is $2,000 (20% × $10,000). 1040 ez filing However, that amount may be reduced based on your MAGI. 1040 ez filing See Effect of the Amount of Your Income on the Amount of Your Credit , later. 1040 ez filing Example. 1040 ez filing Bruce and Toni Harper are married and file a joint tax return. 1040 ez filing For 2013, their MAGI is $75,000. 1040 ez filing Toni is attending a local college (an eligible educational institution) to earn credits toward a degree in nursing. 1040 ez filing She already has a bachelor's degree in history and wants to become a nurse. 1040 ez filing In August 2013, Toni paid $5,000 of qualified education expenses for her fall 2013 semester. 1040 ez filing Bruce and Toni can claim a $1,000 (20% × $5,000) lifetime learning credit on their 2013 joint tax return. 1040 ez filing Form 1098-T. 1040 ez filing   To help you figure your lifetime learning credit, the student should receive Form 1098-T. 1040 ez filing 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. 1040 ez filing An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. 1040 ez filing However, the amounts in boxes 1 and 2 of Form 1098-T might be different from what you paid. 1040 ez filing When figuring the credit, use only the amounts you paid or are deemed to have paid in 2013 for qualified education expenses. 1040 ez filing   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. 1040 ez filing    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. 1040 ez filing Effect of the Amount of Your Income on the Amount of Your Credit The amount of your lifetime learning credit is phased out (gradually reduced) if your MAGI is between $53,000 and $63,000 ($107,000 and $127,000 if you file a joint return). 1040 ez filing You cannot claim a lifetime learning credit if your MAGI is $63,000 or more ($127,000 or more if you file a joint return). 1040 ez filing Modified adjusted gross income (MAGI). 1040 ez filing   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. 1040 ez filing MAGI when using Form 1040A. 1040 ez filing   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. 1040 ez filing MAGI when using Form 1040. 1040 ez filing   If you file Form 1040, your MAGI is the AGI on line 38 of that form, 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. 1040 ez filing You can use Worksheet 3-1 to figure your MAGI. 1040 ez filing Worksheet 3-1. 1040 ez filing MAGI for the Lifetime Learning Credit 1. 1040 ez filing Enter your adjusted gross income  (Form 1040, line 38)   1. 1040 ez filing   2. 1040 ez filing Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. 1040 ez filing       3. 1040 ez filing Enter your foreign housing deduction (Form 2555, line 50)   3. 1040 ez filing       4. 1040 ez filing Enter the amount of income from Puerto Rico you are excluding   4. 1040 ez filing       5. 1040 ez filing Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. 1040 ez filing       6. 1040 ez filing Add the amounts on lines 2, 3, 4, and 5   6. 1040 ez filing   7. 1040 ez filing Add the amounts on lines 1 and 6. 1040 ez filing  This is your modified adjusted  gross income. 1040 ez filing Enter this amount  on Form 8863, line 14   7. 1040 ez filing   Phaseout. 1040 ez filing   If your MAGI is within the range of incomes where the credit must be reduced, you will figure your reduced credit using lines 10-18 of Form 8863. 1040 ez filing The same method is shown in the following example. 1040 ez filing Example. 1040 ez filing You are filing a joint return with a MAGI of $112,000. 1040 ez filing In 2013, you paid $6,600 of qualified education expenses. 1040 ez filing You figure the tentative lifetime learning credit (20% of the first $10,000 of qualified education expenses you paid for all eligible students). 1040 ez filing The result is a $1,320 (20% x $6,600) tentative credit. 1040 ez filing Because your MAGI is within the range of incomes where the credit must be reduced, you must multiply your tentative credit ($1,320) by a fraction. 1040 ez filing The numerator of the fraction is $127,000 (the upper limit for those filing a joint return) minus your MAGI. 1040 ez filing The denominator is $20,000, the range of incomes for the phaseout ($107,000 to $127,000). 1040 ez filing The result is the amount of your phased out (reduced) lifetime learning credit ($990). 1040 ez filing   $1,320 × $127,000 − $112,000  $20,000 = $990   Claiming the Credit You claim the lifetime learning credit by completing Form 8863 and submitting it with your Form 1040 or 1040A. 1040 ez filing Enter the credit on Form 1040, line 49, or Form 1040A, line 31. 1040 ez filing Note. 1040 ez filing In Appendix A, Illustrated Example of Education Credits at the end of this publication, there is an example illustrating the use of Form 8863 when both the American opportunity credit and the lifetime learning credit are claimed on the same tax return. 1040 ez filing Prev  Up  Next   Home   More Online Publications