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2010 Tax Software

Can I Do My 2012 Taxes NowMypay Dfas MilIrs Form 1040a Or 1040ezFree Federal And State Taxes2012 Tax Forms 1040 InstructionsFederal Tax Form 2010Online TaxesFile 2011 Tax Online2011 1040 Tax Forms1040ez Free FilingFiling Taxes 2014Past Year TaxesSelf Employed Tax FilingTurbotax 2011 FreeFree Tax Calculator 2011StateincometaxformH & R Block Tax SoftwareHow Do I Fill Out A 1040xInstructions Michigan 2012 Mi 1040xAmend Tax Return Online1040nr Ez SoftwareHow Do I Fill Out A 1040x FormFile Amended Tax Return OnlineArmy One Source TaxesFile An Amended Return Online1040x Tax Form 20112011 1040ez InstructionsTaxslayer1040ez Booklet OnlineFile Taxes If UnemployedFiling 1040ez1040ez 2012 WorksheetWhere Can I File 2012 Taxes Online FreeMilitary Onesource TaxesH&r Block At Home2010 1040 Tax FormMilitary Filing TaxesTax 1040 Ez2012 Tax Form 1040Income Tax Return 2014

2010 Tax Software

2010 tax software Publication 517 - Introductory Material Table of Contents What's New Reminders IntroductionOrdering forms and publications. 2010 tax software Tax questions. 2010 tax software Useful Items - You may want to see: What's New SE tax rate. 2010 tax software  For 2013 and 2014, the Old Age, Survivors, and Disability Insurance (OASDI) portion of the SE tax is 12. 2010 tax software 4%. 2010 tax software The Medicare (HI) portion of the SE tax remains 2. 2010 tax software 9%. 2010 tax software As a result, the SE tax rate returns to 15. 2010 tax software 3%. 2010 tax software For more information, see the Instructions for Schedule SE (Form 1040). 2010 tax software Earnings subject to social security. 2010 tax software  For 2013, the maximum wages and self-employment income subject to social security tax increases from $110,100 to $113,700. 2010 tax software For 2014, the maximum wages and self-employment income subject to social security tax is $117,000. 2010 tax software Additional Medicare Tax. 2010 tax software  Beginning in 2013, a 0. 2010 tax software 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. 2010 tax software For more information, see Form 8959, Additional Medicare Tax, and its separate instructions. 2010 tax software Modified AGI limit for traditional IRA contributions increased. 2010 tax software  For 2013, you may be able to take an IRA deduction if you were covered by a retirement plan at work and your modified AGI is: Less than $115,000 if married filing jointly or qualifying widow(er), Less than $69,000 if single or head of household, or Less than $10,000 if married filing separately. 2010 tax software If you file a joint return and either you or your spouse was not covered by a retirement plan at work, you may be able to take an IRA deduction if your modified AGI is less than $188,000. 2010 tax software Modified AGI limit for Roth IRA contributions increased. 2010 tax software  For 2013, you may be able to contribute to your Roth IRA if your modified AGI is: Less than $188,000 if married filing jointly or qualifying widow(er), Less than $127,000 if single, head of household, or married filing separately and you did not live with your spouse at any time during the year, or Less than $10,000 if married filing separately and you lived with your spouse at any time during the year. 2010 tax software Earned income credit (EIC). 2010 tax software  For 2013, the maximum amount of income you can earn and still claim the EIC has increased. 2010 tax software You may be able to take the EIC if you earned less than $46,227 ($51,567 for married filing jointly) and you have three or more qualifying children; $43,038 ($48,378 for married filing jointly) and you have two qualifying children; $37,870 ($43,210 for married filing jointly) and you have one qualifying child; and $14,340 ($19,680 for married filing jointly) and you do not have any qualifying children. 2010 tax software Reminders Future developments. 2010 tax software . 2010 tax software   For the latest information about developments related to Publication 517, such as legislation enacted after it was published, go to www. 2010 tax software irs. 2010 tax software gov/pub517. 2010 tax software Photographs of missing children. 2010 tax software  The Internal Revenue Service is a proud partner with the National Center for Missing & Exploited Children. 2010 tax software Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 2010 tax software 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. 2010 tax software Introduction Three federal taxes are paid on wages and self-employment income—income tax, social security tax, and Medicare tax. 2010 tax software Social security and Medicare taxes are collected under one of two systems. 2010 tax software Under the Self-Employment Contributions Act (SECA), the self-employed person pays all the taxes. 2010 tax software Under the Federal Insurance Contributions Act (FICA), the employee and the employer each pay half of the social security and Medicare taxes. 2010 tax software No earnings are subject to both systems. 2010 tax software Table 1. 2010 tax software Are Your Ministerial Earnings* Covered Under FICA or SECA? Find the class to which you belong in the left column and read across the table to find if you are covered under FICA or SECA. 2010 tax software Do not rely on this table alone. 2010 tax software Also read the discussion for the class in the following pages. 2010 tax software Class Covered under FICA? Covered under SECA? Minister NO. 2010 tax software Your ministerial earnings are exempt. 2010 tax software YES, if you do not have an approved exemption from the IRS. 2010 tax software   NO, if you have an approved exemption. 2010 tax software Member of a religious order who has not taken a vow of poverty NO. 2010 tax software Your ministerial earnings are exempt. 2010 tax software YES, if you do not have an approved exemption from the IRS. 2010 tax software   NO, if you have an approved exemption. 2010 tax software Member of a religious order who has taken a vow of poverty YES, if: Your order elected FICA coverage for its members, or You worked outside the order and the work was not required by, or done on behalf of, the order. 2010 tax software   NO, if neither of the above applies. 2010 tax software NO. 2010 tax software Your ministerial earnings are exempt. 2010 tax software Christian Science practitioner or reader NO. 2010 tax software Your ministerial earnings are exempt. 2010 tax software YES, if you do not have an approved exemption from the IRS. 2010 tax software   NO, if you have an approved exemption. 2010 tax software Religious worker (church employee) YES, if your employer did not elect to exclude you. 2010 tax software    NO, if your employer elected to exclude you. 2010 tax software YES, if your employer elected to exclude you from FICA. 2010 tax software   NO, if you are covered under FICA. 2010 tax software Member of a recognized religious sect YES, if you are an employee and do not have an approved exemption from the IRS. 2010 tax software    NO, if you have an approved exemption. 2010 tax software YES, if you are self-employed and do not have an approved exemption from the IRS. 2010 tax software   NO, if you have an approved exemption. 2010 tax software * Ministerial earnings are the self-employment earnings that result from ministerial services, defined and discussed later. 2010 tax software In addition, all wages and self-employment income that are subject to Medicare tax are subject to a 0. 2010 tax software 9% Additional Medicare Tax if they are paid in excess of the applicable threshold for an individual's filing status. 2010 tax software Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. 2010 tax software Medicare wages and self-employment income are combined to determine if income exceeds the threshold. 2010 tax software A self-employment loss is not considered for purposes of this tax. 2010 tax software RRTA compensation is separately compared to the threshold. 2010 tax software There is no employer match for Additional Medicare Tax. 2010 tax software For more information, see Form 8959, Additional Medicare Tax, and its separate instructions. 2010 tax software This publication contains information for the following classes of taxpayers. 2010 tax software Ministers. 2010 tax software Members of a religious order. 2010 tax software Christian Science practitioners and readers. 2010 tax software Religious workers (church employees). 2010 tax software Members of a recognized religious sect. 2010 tax software Note. 2010 tax software Unless otherwise noted, in this publication references to members of the clergy include ministers, members of a religious order (but not members of a recognized religious sect), and Christian Science practitioners and readers. 2010 tax software This publication covers the following topics about the collection of social security and Medicare taxes from members of the clergy, religious workers, and members of a recognized religious sect. 2010 tax software Which earnings are taxed under FICA and which under SECA. 2010 tax software See Table 1 above. 2010 tax software How a member of the clergy can apply for an exemption from self-employment tax. 2010 tax software How a member of a recognized religious sect can apply for an exemption from both self-employment tax and FICA taxes. 2010 tax software How a member of the clergy or religious worker figures net earnings from self-employment. 2010 tax software This publication also covers certain income tax rules of interest to ministers and members of a religious order. 2010 tax software A Comprehensive Example shows filled-in forms for a minister who has income taxed under SECA, other income taxed under FICA, and income tax reporting of items specific to a minister. 2010 tax software In the back of Publication 517 is a set of worksheets that you can use to figure the amount of your taxable ministerial income and allowable deductions. 2010 tax software You will find these worksheets right after the Comprehensive Example . 2010 tax software Note. 2010 tax software In this publication, the term “church” is generally used in its generic sense and not in reference to any particular religion. 2010 tax software Comments and suggestions. 2010 tax software   We welcome your comments about this publication and your suggestions for future editions. 2010 tax software   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. 2010 tax software NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 2010 tax software Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 2010 tax software   You can send your comments from www. 2010 tax software irs. 2010 tax software gov/formspubs/. 2010 tax software Click on “More Information” and then on “Give us feedback”. 2010 tax software   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. 2010 tax software Ordering forms and publications. 2010 tax software   Visit www. 2010 tax software irs. 2010 tax software 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. 2010 tax software Internal Revenue Service 1201 N. 2010 tax software Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. 2010 tax software   If you have a tax question, check the information available on IRS. 2010 tax software gov or call 1-800-829-1040. 2010 tax software We cannot answer tax questions sent to either of the above addresses. 2010 tax software Useful Items - You may want to see: Publication 54 Tax Guide for U. 2010 tax software S. 2010 tax software Citizens and Resident Aliens Abroad 525 Taxable and Nontaxable Income 529 Miscellaneous Deductions 535 Business Expenses 590 Individual Retirement Arrangements (IRAs) 596 Earned Income Credit (EIC) Form (and Instructions) SS-8 Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding SS-16 Certificate of Election of Coverage Under the Federal Insurance Contributions Act Schedule C (Form 1040) Profit or Loss From Business (Sole Proprietorship) Schedule C-EZ (Form 1040) Net Profit From Business (Sole Proprietorship) Schedule SE (Form 1040) Self-Employment Tax 1040-ES Estimated Tax for Individuals 1040X Amended U. 2010 tax software S. 2010 tax software Individual Income Tax Return 4029 Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits 4361 Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners 8274 Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption From Employer Social Security and Medicare Taxes 8959 Additional Medicare Tax Ordering publications and forms. 2010 tax software   See How To Get Tax Help , near the end of this publication, for information about getting these publications and forms. 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The 2010 Tax Software

2010 tax software 4. 2010 tax software   Student Loan Interest Deduction Table of Contents Introduction Student Loan Interest DefinedQualified Student Loan Qualified Education Expenses Include As Interest Do Not Include As Interest When Must Interest Be Paid Can You Claim the DeductionNo Double Benefit Allowed Figuring the DeductionEffect of the Amount of Your Income on the Amount of Your Deduction Which Worksheet To Use Claiming the Deduction Introduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. 2010 tax software However, if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. 2010 tax software For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. 2010 tax software This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. 2010 tax software The student loan interest deduction is taken as an adjustment to income. 2010 tax software This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). 2010 tax software This chapter explains: What type of loan interest you can deduct, Whether you can claim the deduction, What expenses you must have paid with the student loan, Who is an eligible student, How to figure the deduction, and How to claim the deduction. 2010 tax software Table 4-1. 2010 tax software Student Loan Interest Deduction at a Glance This table summarizes the features of the student loan interest deduction. 2010 tax software Do not rely on this table alone. 2010 tax software Refer to the text for complete details. 2010 tax software Feature   Description Maximum benefit   You can reduce your income subject to tax by up to $2,500. 2010 tax software Loan qualifications   Your student loan: •must have been taken out solely to pay qualified education expenses, and •cannot be from a related person or made under a qualified employer plan. 2010 tax software Student qualifications   The student must be: •you, your spouse, or your dependent, and  •enrolled at least half-time in a degree program. 2010 tax software Time limit on deduction   You can deduct interest paid during the remaining period of your student loan. 2010 tax software Limit on modified adjusted gross income (MAGI)   $155,000 if married filing a joint return; $75,000 if single, head of household, or qualifying widow(er). 2010 tax software Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. 2010 tax software It includes both required and voluntary interest payments. 2010 tax software Qualified Student Loan This is a loan you took out solely to pay qualified education expenses (defined later) that were: For you, your spouse, or a person who was your dependent when you took out the loan, Paid or incurred within a reasonable period of time before or after you took out the loan, and For education provided during an academic period for an eligible student. 2010 tax software Loans from the following sources are not qualified student loans. 2010 tax software A related person. 2010 tax software A qualified employer plan. 2010 tax software Your dependent. 2010 tax software   Generally, your dependent is someone who is either a: Qualifying child, or Qualifying relative. 2010 tax software You can find more information about dependents in Publication 501. 2010 tax software Exceptions. 2010 tax software   For purposes of the student loan interest deduction, there are the following exceptions to the general rules for dependents. 2010 tax software An individual can be your dependent even if you are the dependent of another taxpayer. 2010 tax software An individual can be your dependent even if the individual files a joint return with a spouse. 2010 tax software An individual can be your dependent even if the individual had gross income for the year that was equal to or more than the exemption amount for the year ($3,900 for 2013). 2010 tax software Reasonable period of time. 2010 tax software   Qualified education expenses are treated as paid or incurred within a reasonable period of time before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal postsecondary education loan program. 2010 tax software   Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met. 2010 tax software The expenses relate to a specific academic period, and The loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period. 2010 tax software   If neither of the above situations applies, the reasonable period of time usually is determined based on all the relevant facts and circumstances. 2010 tax software Academic period. 2010 tax software   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. 2010 tax software 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. 2010 tax software Eligible student. 2010 tax software   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. 2010 tax software Enrolled at least half-time. 2010 tax software   A student was enrolled at least half-time if the student was taking at least half the normal full-time work load for his or her course of study. 2010 tax software   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. 2010 tax software However, the standard may not be lower than any of those established by the U. 2010 tax software S. 2010 tax software Department of Education under the Higher Education Act of 1965. 2010 tax software Related person. 2010 tax software   You cannot deduct interest on a loan you get from a related person. 2010 tax software Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. 2010 tax software ), Your lineal descendants (children, grandchildren, etc. 2010 tax software ), and Certain corporations, partnerships, trusts, and exempt organizations. 2010 tax software Qualified employer plan. 2010 tax software   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. 2010 tax software Qualified Education Expenses For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. 2010 tax software They include amounts paid for the following items. 2010 tax software Tuition and fees. 2010 tax software Room and board. 2010 tax software Books, supplies, and equipment. 2010 tax software Other necessary expenses (such as transportation). 2010 tax software The cost of room and board qualifies only to the extent that it is not more than the greater of: The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, or The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. 2010 tax software Eligible educational institution. 2010 tax software   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. 2010 tax software S. 2010 tax software Department of Education. 2010 tax software It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 2010 tax software   Certain educational institutions located outside the United States also participate in the U. 2010 tax software S. 2010 tax software Department of Education's Federal Student Aid (FSA) programs. 2010 tax software   For purposes of the student loan interest deduction, an eligible educational institution also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. 2010 tax software   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. 2010 tax software The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. 2010 tax software    The educational institution should be able to tell you if it is an eligible educational institution. 2010 tax software Adjustments to Qualified Education Expenses You must reduce your qualified education expenses by the total amount paid for them with the following tax-free items. 2010 tax software Employer-provided educational assistance. 2010 tax software See chapter 11, Employer-Provided Educational Assistance . 2010 tax software Tax-free distribution of earnings from a Coverdell education savings account (ESA). 2010 tax software See Tax-Free Distributions in chapter 7, Coverdell Education Savings Account. 2010 tax software Tax-free distribution of earnings from a qualified tuition program (QTP). 2010 tax software See Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program. 2010 tax software U. 2010 tax software S. 2010 tax software savings bond interest that you exclude from income because it is used to pay qualified education expenses. 2010 tax software See chapter 10, Education Savings Bond Program . 2010 tax software The tax-free part of scholarships and fellowships. 2010 tax software See Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 2010 tax software Veterans' educational assistance. 2010 tax software See Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 2010 tax software Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. 2010 tax software Include As Interest In addition to simple interest on the loan, if all other requirements are met, the items discussed below can be student loan interest. 2010 tax software Loan origination fee. 2010 tax software   In general, this is a one-time fee charged by the lender when a loan is made. 2010 tax software To be deductible as interest, a loan origination fee must be for the use of money rather than for property or services (such as commitment fees or processing costs) provided by the lender. 2010 tax software A loan origination fee treated as interest accrues over the term of the loan. 2010 tax software   Loan origination fees were not required to be reported on Form 1098-E, Student Loan Interest Statement, for loans made before September 1, 2004. 2010 tax software If loan origination fees are not included in the amount reported on your Form 1098-E, you can use any reasonable method to allocate the loan origination fees over the term of the loan. 2010 tax software The method shown in the example below allocates equal portions of the loan origination fee to each payment required under the terms of the loan. 2010 tax software A method that results in the double deduction of the same portion of a loan origination fee would not be reasonable. 2010 tax software Example. 2010 tax software In August 2004, Bill took out a student loan for $16,000 to pay the tuition for his senior year of college. 2010 tax software The lender charged a 3% loan origination fee ($480) that was withheld from the funds Bill received. 2010 tax software Bill began making payments on his student loan in 2013. 2010 tax software Because the loan origination fee was not included in his 2013 Form 1098-E, Bill can use any reasonable method to allocate that fee over the term of the loan. 2010 tax software Bill's loan is payable in 120 equal monthly payments. 2010 tax software He allocates the $480 fee equally over the total number of payments ($480 ÷ 120 months = $4 per month). 2010 tax software Bill made 7 payments in 2013, so he paid $28 ($4 × 7) of interest attributable to the loan origination fee. 2010 tax software To determine his student loan interest deduction, he will add the $28 to the amount of other interest reported to him on Form 1098-E. 2010 tax software Capitalized interest. 2010 tax software   This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. 2010 tax software Capitalized interest is treated as interest for tax purposes and is deductible as payments of principal are made on the loan. 2010 tax software No deduction for capitalized interest is allowed in a year in which no loan payments were made. 2010 tax software Interest on revolving lines of credit. 2010 tax software   This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. 2010 tax software See Qualified Education Expenses , earlier. 2010 tax software Interest on refinanced student loans. 2010 tax software   This includes interest on both: Consolidated loans—loans used to refinance more than one student loan of the same borrower, and Collapsed loans—two or more loans of the same borrower that are treated by both the lender and the borrower as one loan. 2010 tax software    If you refinance a qualified student loan for more than your original loan and you use the additional amount for any purpose other than qualified education expenses, you cannot deduct any interest paid on the refinanced loan. 2010 tax software Voluntary interest payments. 2010 tax software   These are payments made on a qualified student loan during a period when interest payments are not required, such as when the borrower has been granted a deferment or the loan has not yet entered repayment status. 2010 tax software Example. 2010 tax software The payments on Roger's student loan were scheduled to begin in June 2012, 6 months after he graduated from college. 2010 tax software He began making payments as required. 2010 tax software In September 2013, Roger enrolled in graduate school on a full-time basis. 2010 tax software He applied for and was granted deferment of his loan payments while in graduate school. 2010 tax software Wanting to pay down his student loan as much as possible, he made loan payments in October and November 2013. 2010 tax software Even though these were voluntary (not required) payments, Roger can deduct the interest paid in October and November. 2010 tax software Allocating Payments Between Interest and Principal The allocation of payments between interest and principal for tax purposes might not be the same as the allocation shown on the Form 1098-E or other statement you receive from the lender or loan servicer. 2010 tax software To make the allocation for tax purposes, a payment generally applies first to stated interest that remains unpaid as of the date the payment is due, second to any loan origination fees allocable to the payment, third to any capitalized interest that remains unpaid as of the date the payment is due, and fourth to the outstanding principal. 2010 tax software Example. 2010 tax software In August 2012, Peg took out a $10,000 student loan to pay the tuition for her senior year of college. 2010 tax software The lender charged a 3% loan origination fee ($300) that was withheld from the funds Peg received. 2010 tax software The interest (5% simple) on this loan accrued while she completed her senior year and for 6 months after she graduated. 2010 tax software At the end of that period, the lender determined the amount to be repaid by capitalizing all accrued but unpaid interest ($625 interest accrued from August 2012 through October 2013) and adding it to the outstanding principal balance of the loan. 2010 tax software The loan is payable over 60 months, with a payment of $200. 2010 tax software 51 due on the first of each month, beginning November 2013. 2010 tax software Peg did not receive a Form 1098-E for 2013 from her lender because the amount of interest she paid did not require the lender to issue an information return. 2010 tax software However, she did receive an account statement from the lender that showed the following 2013 payments on her outstanding loan of $10,625 ($10,000 principal + $625 accrued but unpaid interest). 2010 tax software Payment Date   Payment   Stated Interest   Principal November 2013   $200. 2010 tax software 51   $44. 2010 tax software 27   $156. 2010 tax software 24 December 2013   $200. 2010 tax software 51   $43. 2010 tax software 62   $156. 2010 tax software 89 Totals   $401. 2010 tax software 02   $87. 2010 tax software 89   $313. 2010 tax software 13 To determine the amount of interest that could be deducted on the loan for 2013, Peg starts with the total amount of stated interest she paid, $87. 2010 tax software 89. 2010 tax software Next, she allocates the loan origination fee over the term of the loan ($300 ÷ 60 months = $5 per month). 2010 tax software A total of $10 ($5 of each of the two principal payments) should be treated as interest for tax purposes. 2010 tax software Peg then applies the unpaid capitalized interest ($625) to the two principal payments in the order in which they were made, and determines that the remaining amount of principal of both payments is treated as interest for tax purposes. 2010 tax software Assuming that Peg qualifies to take the student loan interest deduction, she can deduct $401. 2010 tax software 02 ($87. 2010 tax software 89 + $10 + $303. 2010 tax software 13). 2010 tax software For 2014, Peg will continue to allocate $5 of the loan origination fee to the principal portion of each monthly payment she makes and treat that amount as interest for tax purposes. 2010 tax software She also will apply the remaining amount of capitalized interest ($625 − $303. 2010 tax software 13 = $321. 2010 tax software 87) to the principal payments in the order in which they are made until the balance is zero, and treat those amounts as interest for tax purposes. 2010 tax software Do Not Include As Interest You cannot claim a student loan interest deduction for any of the following items. 2010 tax software Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. 2010 tax software Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. 2010 tax software Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the “NHSC Loan Repayment Program”) or certain other loan repayment assistance programs. 2010 tax software For more information, see Student Loan Repayment Assistance in chapter 5, Student Loan Cancellations and Repayment Assistance. 2010 tax software When Must Interest Be Paid You can deduct all interest you paid during the year on your student loan, including voluntary payments, until the loan is paid off. 2010 tax software Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. 2010 tax software Your filing status is any filing status except married filing separately. 2010 tax software No one else is claiming an exemption for you on his or her tax return. 2010 tax software You are legally obligated to pay interest on a qualified student loan. 2010 tax software You paid interest on a qualified student loan. 2010 tax software Claiming an exemption for you. 2010 tax software   Another taxpayer is claiming an exemption for you if he or she lists your name and other required information on his or her Form 1040 (or Form 1040A), line 6c, or Form 1040NR, line 7c. 2010 tax software Example 1. 2010 tax software During 2013, Josh paid $600 interest on his qualified student loan. 2010 tax software Only he is legally obligated to make the payments. 2010 tax software No one claimed an exemption for Josh for 2013. 2010 tax software Assuming all other requirements are met, Josh can deduct the $600 of interest he paid on his 2013 Form 1040 or 1040A. 2010 tax software Example 2. 2010 tax software During 2013, Jo paid $1,100 interest on her qualified student loan. 2010 tax software Only she is legally obligated to make the payments. 2010 tax software Jo's parents claimed an exemption for her on their 2013 tax return. 2010 tax software In this case, neither Jo nor her parents may deduct the student loan interest Jo paid in 2013. 2010 tax software Interest paid by others. 2010 tax software   If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest. 2010 tax software Example 1. 2010 tax software Darla obtained a qualified student loan to attend college. 2010 tax software After Darla's graduation from college, she worked as an intern for a nonprofit organization. 2010 tax software As part of the internship program, the nonprofit organization made an interest payment on behalf of Darla. 2010 tax software This payment was treated as additional compensation and reported in box 1 of her Form W-2. 2010 tax software Assuming all other qualifications are met, Darla can deduct this payment of interest on her tax return. 2010 tax software Example 2. 2010 tax software Ethan obtained a qualified student loan to attend college. 2010 tax software After graduating from college, the first monthly payment on his loan was due in December. 2010 tax software As a gift, Ethan's mother made this payment for him. 2010 tax software No one is claiming a dependency exemption for Ethan on his or her tax return. 2010 tax software Assuming all other qualifications are met, Ethan can deduct this payment of interest on his tax return. 2010 tax software No Double Benefit Allowed You cannot deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, as home mortgage interest). 2010 tax software Figuring the Deduction Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. 2010 tax software However, the amount determined above may be gradually reduced (phased out) or eliminated based on your filing status and MAGI as explained below. 2010 tax software You can use Worksheet 4-1. 2010 tax software Student Loan Interest Deduction Worksheet (at the end of this chapter) to figure both your MAGI and your deduction. 2010 tax software Form 1098-E. 2010 tax software   To help you figure your student loan interest deduction, you should receive Form 1098-E. 2010 tax software Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2013 on one or more qualified student loans must send Form 1098-E (or acceptable substitute) to each borrower by January 31, 2014. 2010 tax software   For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. 2010 tax software Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. 2010 tax software However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. 2010 tax software See Allocating Payments Between Interest and Principal , earlier. 2010 tax software    The lender may ask for a completed Form W-9S, or similar statement to obtain the borrower's name, address, and taxpayer identification number. 2010 tax software The form may also be used by the borrower to certify that the student loan was incurred solely to pay for qualified education expenses. 2010 tax software Effect of the Amount of Your Income on the Amount of Your Deduction The amount of your student loan interest deduction is phased out (gradually reduced) if your MAGI is between $60,000 and $75,000 ($125,000 and $155,000 if you file a joint return). 2010 tax software You cannot take a student loan interest deduction if your MAGI is $75,000 or more ($155,000 or more if you file a joint return). 2010 tax software Modified adjusted gross income (MAGI). 2010 tax software   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for student loan interest. 2010 tax software However, as discussed below, there may be other modifications. 2010 tax software Table 4-2 shows how the amount of your MAGI can affect your student loan interest deduction. 2010 tax software Table 4-2. 2010 tax software Effect of MAGI on Student Loan Interest Deduction IF your filing status is. 2010 tax software . 2010 tax software . 2010 tax software AND your MAGI is. 2010 tax software . 2010 tax software . 2010 tax software THEN your student loan interest deduction is. 2010 tax software . 2010 tax software . 2010 tax software single,  head of household, or qualifying widow(er) not more than $60,000 not affected by the phaseout. 2010 tax software more than $60,000  but less than $75,000 reduced because of the phaseout. 2010 tax software $75,000 or more eliminated by the phaseout. 2010 tax software married filing joint return not more than $125,000 not affected by the phaseout. 2010 tax software more than $125,000 but less than $155,000 reduced because of the phaseout. 2010 tax software $155,000 or more eliminated by the phaseout. 2010 tax software MAGI when using Form 1040A. 2010 tax software   If you file Form 1040A, your MAGI is the AGI on line 22 of that form figured without taking into account any amount on line 18 (student loan interest deduction) and line 19 (tuition and fees deduction). 2010 tax software MAGI when using Form 1040. 2010 tax software   If you file Form 1040, your MAGI is the AGI on line 38 of that form figured without taking into account any amount on line 33 (student loan interest deduction), line 34 (tuition and fees deduction), or line 35 (domestic production activities deduction), and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. 2010 tax software MAGI when using Form 1040NR. 2010 tax software   If you file Form 1040NR, your MAGI is the AGI on line 36 of that form figured without taking into account any amount on line 33 (student loan interest deduction) and line 34 (domestic production activities deduction). 2010 tax software MAGI when using Form 1040NR-EZ. 2010 tax software   If you file Form 1040NR-EZ, your MAGI is the AGI on line 10 of that form figured without taking into account any amount on line 9 (student loan interest deduction). 2010 tax software Phaseout. 2010 tax software   If your MAGI is within the range of incomes where the credit must be reduced, you must figure your reduced deduction. 2010 tax software To figure the phaseout, multiply your interest deduction (before the phaseout) by a fraction. 2010 tax software The numerator is your MAGI minus $60,000 ($125,000 in the case of a joint return). 2010 tax software The denominator is $15,000 ($30,000 in the case of a joint return). 2010 tax software Subtract the result from your deduction (before the phaseout) to give you the amount you can deduct. 2010 tax software Example 1. 2010 tax software During 2013 you paid $800 interest on a qualified student loan. 2010 tax software Your 2013 MAGI is $145,000 and you are filing a joint return. 2010 tax software You must reduce your deduction by $533, figured as follows. 2010 tax software   $800 × $145,000 − $125,000  $30,000 = $533   Your reduced student loan interest deduction is $267 ($800 − $533). 2010 tax software Example 2. 2010 tax software The facts are the same as in Example 1 except that you paid $2,750 interest. 2010 tax software Your maximum deduction for 2013 is $2,500. 2010 tax software You must reduce your maximum deduction by $1,667, figured as follows. 2010 tax software   $2,500 × $145,000 − $125,000  $30,000 = $1,667   In this example, your reduced student loan interest deduction is $833 ($2,500 − $1,667). 2010 tax software Which Worksheet To Use Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the instructions for Form 1040, Form 1040A, or Form 1040NR. 2010 tax software However, if you are filing Form 2555, Foreign Earned Income, Form 2555-EZ, Foreign Earned Income Exclusion, or Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1. 2010 tax software Student Loan Interest Deduction Worksheet at the end of this chapter. 2010 tax software Claiming the Deduction The student loan interest deduction is an adjustment to income. 2010 tax software To claim the deduction, enter the allowable amount on line 33 (Form 1040), line 18 (Form 1040A), line 33 (Form 1040NR), or line 9 (Form 1040NR-EZ). 2010 tax software Worksheet 4-1. 2010 tax software Student Loan Interest Deduction Worksheet Use this worksheet instead of the worksheet in the Form 1040 instructions if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico. 2010 tax software Before using this worksheet, you must complete Form 1040, lines 7 through 32, plus any amount to be entered on the dotted line next to line 36. 2010 tax software 1. 2010 tax software Enter the total interest you paid in 2013 on qualified student loans. 2010 tax software Do not enter  more than $2,500 1. 2010 tax software   2. 2010 tax software Enter the amount from Form 1040, line 22 2. 2010 tax software       3. 2010 tax software Enter the total of the amounts from Form 1040,  lines 23 through 32 3. 2010 tax software           4. 2010 tax software Enter the total of any amounts entered on the dotted line next to Form 1040, line 36 4. 2010 tax software           5. 2010 tax software Add lines 3 and 4 5. 2010 tax software       6. 2010 tax software Subtract line 5 from line 2 6. 2010 tax software       7. 2010 tax software Enter any foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18) 7. 2010 tax software       8. 2010 tax software Enter any foreign housing deduction (Form 2555, line 50) 8. 2010 tax software       9. 2010 tax software Enter the amount of income from Puerto Rico you are excluding 9. 2010 tax software       10. 2010 tax software Enter the amount of income from American Samoa  you are excluding (Form 4563, line 15) 10. 2010 tax software       11. 2010 tax software Add lines 6 through 10. 2010 tax software This is your modified adjusted gross income 11. 2010 tax software   12. 2010 tax software Enter the amount shown below for your filing status 12. 2010 tax software     •Single, head of household, or qualifying widow(er)—$60,000       •Married filing jointly—$125,000     13. 2010 tax software Is the amount on line 11 more than the amount on line 12?       □ No. 2010 tax software Skip lines 13 and 14, enter -0- on line 15, and go to line 16. 2010 tax software       □ Yes. 2010 tax software Subtract line 12 from line 11 13. 2010 tax software   14. 2010 tax software Divide line 13 by $15,000 ($30,000 if married filing jointly). 2010 tax software Enter the result as a decimal  (rounded to at least three places). 2010 tax software If the result is 1. 2010 tax software 000 or more, enter 1. 2010 tax software 000 14. 2010 tax software . 2010 tax software 15. 2010 tax software Multiply line 1 by line 14 15. 2010 tax software   16. 2010 tax software Student loan interest deduction. 2010 tax software Subtract line 15 from line 1. 2010 tax software Enter the result here  and on Form 1040, line 33. 2010 tax software Do not include this amount in figuring any other  deduction on your return (such as on Schedule A, C, E, etc. 2010 tax software ) 16. 2010 tax software   Prev  Up  Next   Home   More Online Publications