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2011 Taxact Online

Can I Use Free File File Last Year Taxes2010 Federal Tax Return FormEz FormH And R Block Free State FileCan You File 2012 Taxes NowTax Act 2012 OnlineAmend Tax Return 2010File State Tax Return Free OnlineForm1040ezHow To File 2010 Taxes In 2013Free Tax File 2010Income Tax PreparationForm 1040a 2012How To File 2008 Taxes Free OnlineFile 2010 Tax Return FreePrintable Tax Forms 1040ezHow To Amend A Return2012 1040xState Tax Filing OnlineFile State Tax Returns FreeFile 1040ez OnlineHow Can I File My 2007 Taxes For FreeWhere Can I File 2011 TaxesFiling 1040nr EzHow To File For 2010 Taxes1040ez Printable Tax FormsDo Students Need To File A Tax ReturnIncome Tax Return PreparationH&r Block AdvantageIrs GovNeed To File 2012 Taxes LateFree 1040xFiling Amended ReturnCan You File 2012 Taxes Online1040ez Online1040 Ez Form1040x H&r BlockIrs.gov/form1040xNeed To Amend 2010 Tax ReturnFiling For 2012 Taxes

2011 Taxact Online

2011 taxact online Publication 946 - Introductory Material Table of Contents What's New for 2013 What's New for 2014 Reminders IntroductionOrdering forms and publications. 2011 taxact online Tax questions. 2011 taxact online What's New for 2013 Increased section 179 deduction dollar limits. 2011 taxact online  The maximum amount you can elect to deduct for most section 179 property you placed in service in 2013 is $500,000 ($535,000 for qualified enterprise zone property). 2011 taxact online This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2,000,000. 2011 taxact online See Dollar Limits under How Much Can You Deduct in chapter 2. 2011 taxact online Depreciation limits on business vehicles. 2011 taxact online  The total section 179 deduction and depreciation you can deduct for a passenger automobile (that is not a truck or van) you use in your business and first placed in service in 2013 is $3,160, if the special depreciation allowance does not apply. 2011 taxact online The maximum deduction you can take for a truck or van you use in your business and first placed in service in 2013 is $3,360, if the special depreciation allowance does not apply. 2011 taxact online See Maximum Depreciation Deduction in chapter 5. 2011 taxact online Special allowance for qualified second generation biofuel plant property. 2011 taxact online . 2011 taxact online  For tax years ending after December 31, 2012, you may be able to take a 50% special depreciation allowance for qualified second generation biofuel plant property placed in service after January 2, 2013, and before January 1, 2014. 2011 taxact online Election to accelerate minimum tax credits for round 3 extension property. 2011 taxact online . 2011 taxact online  For tax years ending after December 31, 2012, a corporation can elect to claim pre-2006 unused minimum tax credits in lieu of the special depreciation allowance for round 3 extension property. 2011 taxact online What's New for 2014 Expiration of the increased section 179 deduction limits and expanded definition of section 179 property. 2011 taxact online  For tax years beginning after 2013, the increased section 179 expense deduction limit and threshold amount before reduction in limitation will no longer apply. 2011 taxact online Also, the definition of section 179 property will no longer include certain qualified real property. 2011 taxact online Expiration of the 7-year recovery period for motor sports entertainment complexes. 2011 taxact online  Qualified motor sports entertainment complex property placed in service after December 31, 2013, will not be treated as 7-year property under MACRS. 2011 taxact online Expiration of the 15-year recovery period for qualified leasehold improvement, restaurant, and retail improvement properties. 2011 taxact online  Qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property placed in service after December 31, 2013, will not be treated as 15-year property under MACRS. 2011 taxact online Expiration of the accelerated depreciation for qualified Indian reservation property. 2011 taxact online  The accelerated depreciation of property on an Indian Reservation will not apply to property placed in service after December 31, 2013. 2011 taxact online Expiration of the 3-year recovery period for certain race horses. 2011 taxact online  The 3-year recovery period for race horses two years old or younger will expire for such horses placed in service after December 31, 2013. 2011 taxact online Reminders Photographs of missing children. 2011 taxact online  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. 2011 taxact online Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 2011 taxact online 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. 2011 taxact online Introduction Future developments. 2011 taxact online   For the latest information about developments related to Publication 946 such as legislation enacted after this publication was published, go to www. 2011 taxact online irs. 2011 taxact online gov/pub946. 2011 taxact online This publication explains how you can recover the cost of business or income-producing property through deductions for depreciation (for example, the special depreciation allowance and deductions under the Modified Accelerated Cost Recovery System (MACRS)). 2011 taxact online It also explains how you can elect to take a section 179 deduction, instead of depreciation deductions, for certain property, and the additional rules for listed property. 2011 taxact online The depreciation methods discussed in this publication generally do not apply to property placed in service before 1987. 2011 taxact online For more information, see Publication 534, Depreciating Property Placed in Service Before 1987. 2011 taxact online Definitions. 2011 taxact online   Many of the terms used in this publication are defined in the Glossary near the end of the publication. 2011 taxact online Glossary terms used in each discussion under the major headings are listed before the beginning of each discussion throughout the publication. 2011 taxact online Do you need a different publication?   The following table shows where you can get more detailed information when depreciating certain types of property. 2011 taxact online For information on depreciating: See Publication: A car 463, Travel, Entertainment, Gift, and Car Expenses Residential rental property 527, Residential Rental Property (Including Rental of Vacation Home) Office space in your home 587, Business Use of Your Home (Including Use by Daycare Providers) Farm property 225, Farmer's Tax Guide Comments and suggestions. 2011 taxact online   We welcome your comments about this publication and your suggestions for future editions. 2011 taxact online   You can write to us at the following address: Internal Revenue Service Business, Exempt Organizations and International Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. 2011 taxact online NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 2011 taxact online Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 2011 taxact online   You can send us comments from www. 2011 taxact online irs. 2011 taxact online gov/formspubs/. 2011 taxact online Select “Comment on Tax Forms and Publications” under “More Information. 2011 taxact online ”   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. 2011 taxact online Ordering forms and publications. 2011 taxact online   Visit www. 2011 taxact online irs. 2011 taxact online 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. 2011 taxact online Internal Revenue Service 1201 N. 2011 taxact online Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. 2011 taxact online   If you have a tax question, check the information available on IRS. 2011 taxact online gov or call 1-800-829-1040. 2011 taxact online We cannot answer tax questions sent to either of the above addresses. 2011 taxact online Prev  Up  Next   Home   More Online Publications
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SOI Tax Stats - Business Tax Statistics

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Each year SOI produces studies that provide statistics on income, deductions, taxes, credits, and more reported by businesses. Select the subject areas below that interest you.

Integrated Business Data (IBD)

 

This section contains statistical tables and articles on all businesses, which were compiled to form the SOI Integrated Business Dataset (IBD). The IBD was assembled at the table level from the annual SOI cross-sectional studies of corporations ( C and S corporations), partnerships, and nonfarm sole proprietorships. The dataset combines data from these types of organizations to enable examination of changes in business composition. Data from these annual statistical studies are generally publicly available and are published in a variety of SOI reports.
Form 8824 Data for Like-Kind Property Exchanges.  1995-2010

Corporations

 

Numerous articles and data which provide statistics on income, deductions, tax, credits, and more as reported by corporations filing on Form 1120 (1120, 1120-A, 1120-L, 1120-PC, 1120-REIT, 1120-RIC, and more) returns and associated schedules can be found here.

International

 

Find statistics for both inbound and outbound international corporate activities here. There's also information on specialized areas covering foreign trusts, international boycotts, and including form types: 5471, 5472, 1118, 1120-F, 1120-FSC, 5713, 5735, and more.

Partnerships

Snapshot of Partnership Returns, 2010

Partnerships are relationships between two or more persons who join to carry on a trade or business, with each person contributing money, property, labor or skill, and each expecting to share in the profits and losses of the business. These data come from taxpayers filing Form 1065 or 1065-B. Look here for statistics and related information on partnerships.

S Corporations

 

S corporations are domestic corporations that elect to be taxed individually on the corporation's income; they can have no more than 75 shareholders (only U.S. citizens, resident aliens, estates, certain trusts, and exempt organizations) and one class of stock. These corporations file on Form 1120S . Look here for statistics and related information on these corporations.

 Sole Proprietorships
 Non-Farm  ||  Farm

Sole Proprietorships are businesses too.  Here you'll find statistics covering basic data, business receipts, deductions, and net income reported by an individual taxpayer on Schedule C (non-farm) of Form 1040.  There are also statistics for Schedule F (farm) of Form 1040

Excise

This section contains statistics on taxes levied on the manufacture, sale, or consumption of commodities, including data for environmental, gasoline, and telephone excise taxes, and more.

Employment

Employment data are available in the IRS Data Book and in SOI Bulletin Articles.  Find statistics for FICA and SECA taxes, and more, here.

 SOI Bulletin Articles

The SOI Bulletin is a quarterly publication containing articles and data releases from all SOI programs. Look here for articles sorted by topic and relating to business tax statistics.

 

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Page Last Reviewed or Updated: 05-Sep-2013

The 2011 Taxact Online

2011 taxact online 2. 2011 taxact online   American Opportunity 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 StudentException. 2011 taxact online Who Can Claim a Dependent's Expenses Figuring the CreditEffect of the Amount of Your Income on the Amount of Your Credit Refundable Part of 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. 2011 taxact online They are the American opportunity credit (this chapter) and the lifetime learning credit ( chapter 3 ). 2011 taxact online This chapter explains: Who can claim the American opportunity 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. 2011 taxact online What is the tax benefit of the American opportunity credit. 2011 taxact online   For the tax year, you may be able to claim an American opportunity credit of up to $2,500 for qualified education expenses paid for each eligible student. 2011 taxact online   A tax credit reduces the amount of income tax you may have to pay. 2011 taxact online Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. 2011 taxact online Forty percent of the American opportunity credit may be refundable. 2011 taxact online This means that if the refundable portion of your credit is more than your tax, the excess will be refunded to you. 2011 taxact online   Your allowable American opportunity credit may be limited by the amount of your income. 2011 taxact online Also, the nonrefundable part of the credit may be limited by the amount of your tax. 2011 taxact online Overview of the American opportunity credit. 2011 taxact online   See Table 2-1, Overview of the American Opportunity Credit , for the basics of this credit. 2011 taxact online The details are discussed in this chapter. 2011 taxact online Can you claim more than one education credit this year. 2011 taxact online   For each student, you can elect for any year only one of the credits. 2011 taxact online For example, if you elect to take the American opportunity credit for a child on your 2013 tax return, you cannot use that same child's qualified education expenses to figure the lifetime learning credit for 2013. 2011 taxact online   If you pay qualified education expenses for more than one student in the same year, you can choose to take the American opportunity credit on a per-student, per-year basis. 2011 taxact online If you pay qualified education expenses for a student (or students) for whom you do not claim the American opportunity credit, you can use the adjusted qualified education expenses of that student (or those students) in figuring your lifetime learning credit. 2011 taxact online 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. 2011 taxact online Differences between the American opportunity and lifetime learning credits. 2011 taxact online   There are several differences between these two credits. 2011 taxact online For example, you can claim the American opportunity credit based on the same student's expenses for no more than 4 tax years, which includes any tax years you claimed the Hope Scholarship Credit for that student. 2011 taxact online 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. 2011 taxact online 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. 2011 taxact online If you claim the American opportunity credit for any student, you can choose between using that student's adjusted qualified education expenses for the American opportunity credit or the lifetime learning credit. 2011 taxact online If you have the choice, the American opportunity credit will always be greater than the lifetime learning credit. 2011 taxact online Table 2-1. 2011 taxact online Overview of the American Opportunity Credit Maximum credit Up to $2,500 credit per eligible student Limit on modified adjusted gross income (MAGI) $180,000 if married filing jointly; $90,000 if single, head of household, or qualifying widow(er) Refundable or nonrefundable 40% of credit may be refundable; the rest is nonrefundable Number of years of postsecondary education Available ONLY if the student had not completed the first 4 years of postsecondary education before 2013 Number of tax years credit available Available ONLY for 4 tax years per eligible student (including any year(s) Hope Scholarship Credit was claimed) Type of program required Student must be pursuing a program leading to a degree or other recognized education credential Number of courses Student must be enrolled at least half time for at least one academic period that begins during the tax year Felony drug conviction As of the end of 2013, the student had not been convicted of a felony for possessing or distributing a controlled substance Qualified expenses Tuition, required enrollment fees, and course materials that the student needs for a course of study whether or not the materials are bought at the educational institution as a condition of enrollment or attendance Payments for academic periods Payments made in 2013 for academic periods beginning in 2013 or beginning in the first 3 months of 2014 Can You Claim the Credit The following rules will help you determine if you are eligible to claim the American opportunity credit on your tax return. 2011 taxact online Who Can Claim the Credit Generally, you can claim the American opportunity credit if all three of the following requirements are met. 2011 taxact online You pay qualified education expenses of higher education. 2011 taxact online You pay the education expenses for an eligible student. 2011 taxact online The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. 2011 taxact online Student qualifications. 2011 taxact online   Generally, you can take the American opportunity credit for a student only if all of the following four requirements are met. 2011 taxact online As of the beginning of 2013, the student had not completed the first four years of postsecondary education (generally, the freshman through senior years of college), as determined by the eligible educational institution. 2011 taxact online For this purpose, do not include academic credit awarded solely because of the student's performance on proficiency examinations. 2011 taxact online Neither the American opportunity credit nor the Hope Scholarship Credit has been claimed (by you or anyone else) for this student for any four tax years before 2013. 2011 taxact online If the American opportunity credit (and Hope Scholarship Credit) has been claimed for this student for any three or fewer tax years before 2013, this requirement is met. 2011 taxact online For at least one academic period beginning (or treated as beginning) in 2013, the student both: Was enrolled in a program that leads to a degree, certificate, or other recognized educational credential; and Carried at least one-half the normal full-time workload for his or her course of study. 2011 taxact online The standard for what is half of the normal full-time work load is determined by each eligible educational institution. 2011 taxact online However, the standard may not be lower than any of those established by the U. 2011 taxact online S. 2011 taxact online Department of Education under the Higher Education Act of 1965. 2011 taxact online For purposes of whether the student satisfies this third requirement for 2013, treat an academic period beginning in the first three months of 2014 as if it began in 2013 if qualified education expenses for the student were paid in 2013 for that academic period. 2011 taxact online See Prepaid expenses, later. 2011 taxact online As of the end of 2013, the student had not been convicted of a federal or state felony for possessing or distributing a controlled substance. 2011 taxact online Example 1. 2011 taxact online Sharon was eligible for the Hope Scholarship Credit for 2007 and 2008 and for the American opportunity credit for 2010 and 2012. 2011 taxact online Her parents claimed the Hope Scholarship Credit for Sharon on their tax returns for 2007 and 2008 and claimed the American opportunity credit for Sharon on their 2010 tax return. 2011 taxact online Sharon claimed the American opportunity credit on her 2012 tax return. 2011 taxact online The American opportunity credit and Hope Scholarship Credit have been claimed for Sharon for four tax years before 2013. 2011 taxact online Therefore, the American opportunity credit cannot be claimed by Sharon for 2013. 2011 taxact online If Sharon were to file Form 8863 for 2013, she would check “Yes” for Part III, line 23, and would be eligible to claim only the lifetime learning credit. 2011 taxact online Example 2. 2011 taxact online Wilbert was eligible for the American opportunity credit for 2009, 2010, 2011, and 2013. 2011 taxact online His parents claimed the American opportunity credit for Wilbert on their tax returns for 2009, 2010, and 2011. 2011 taxact online No one claimed an American opportunity credit or Hope Scholarship Credit for Wilbert for any other tax year. 2011 taxact online The American opportunity credit and Hope Scholarship Credit have been claimed for Wilbert for only three tax years before 2013. 2011 taxact online Therefore, Wilbert meets the second requirement to be eligible for the American opportunity credit. 2011 taxact online If Wilbert were to file Form 8863 for 2013, he would check “No” for Part III, line 23. 2011 taxact online If Wilbert meets all of the other requirements, he is eligible for the American opportunity credit. 2011 taxact online Example 3. 2011 taxact online Glenda enrolls on a full-time basis in a degree program for the 2014 Spring semester, which begins in January 2014. 2011 taxact online Glenda pays her tuition for the 2014 Spring semester in December 2013. 2011 taxact online Because the tuition Glenda paid in 2013 relates to an academic period that begins in the first 3 months of 2014, her eligibility to claim an American opportunity credit in 2013 is determined as if the 2014 Spring semester began in 2013. 2011 taxact online If the requirements above are not met for any student, you cannot take the American opportunity credit for that student. 2011 taxact online You may be able to take the lifetime learning credit for part or all of that student's qualified education expenses instead. 2011 taxact online Note. 2011 taxact online 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. 2011 taxact online “Qualified education expenses” are defined later under Qualified Education Expenses . 2011 taxact online “Eligible students” are defined later under Who Is an Eligible Student . 2011 taxact online A dependent for whom you claim an exemption is defined later under Who Can Claim a Dependent's Expenses . 2011 taxact online You may find Figure 2-1, Can You Claim the American Opportunity Credit for 2013 , later, helpful in determining if you can claim an American opportunity credit on your tax return. 2011 taxact online This image is too large to be displayed in the current screen. 2011 taxact online Please click the link to view the image. 2011 taxact online Figure 2-1 Can you claim the American opportunity credit for 2012? Who Cannot Claim the Credit You cannot claim the American opportunity credit for 2013 if any of the following apply. 2011 taxact online Your filing status is married filing separately. 2011 taxact online You are listed as a dependent on another person's tax return (such as your parents'). 2011 taxact online See Who Can Claim a Dependent's Expenses , later. 2011 taxact online Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more in the case of a joint return). 2011 taxact online MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit . 2011 taxact online 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. 2011 taxact online More information on nonresident aliens can be found in Publication 519, U. 2011 taxact online S. 2011 taxact online Tax Guide for Aliens. 2011 taxact online What Expenses Qualify The American opportunity credit is based on adjusted qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. 2011 taxact online Generally, the credit is allowed for adjusted qualified education expenses paid in 2013 for an academic period beginning in 2013 or beginning in the first three months of 2014. 2011 taxact online For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning January 2014, you can use that $1,500 in figuring your 2013 credit. 2011 taxact online Academic period. 2011 taxact online   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. 2011 taxact online 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. 2011 taxact online Paid with borrowed funds. 2011 taxact online   You can claim an American opportunity credit for qualified education expenses paid with the proceeds of a loan. 2011 taxact online Use the expenses to figure the American opportunity credit for the year in which the expenses are paid, not the year in which the loan is repaid. 2011 taxact online Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. 2011 taxact online Student withdraws from class(es). 2011 taxact online   You can claim an American opportunity credit for qualified education expenses not refunded when a student withdraws. 2011 taxact online Qualified Education Expenses For purposes of the American opportunity credit, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. 2011 taxact online Eligible educational institution. 2011 taxact online   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. 2011 taxact online S. 2011 taxact online Department of Education. 2011 taxact online It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 2011 taxact online The educational institution should be able to tell you if it is an eligible educational institution. 2011 taxact online   Certain educational institutions located outside the United States also participate in the U. 2011 taxact online S. 2011 taxact online Department of Education's Federal Student Aid (FSA) programs. 2011 taxact online Related expenses. 2011 taxact online   Student-activity fees are included in qualified education expenses only if the fees must be paid to the institution as a condition of enrollment or attendance. 2011 taxact online   However, expenses for books, supplies, and equipment needed for a course of study are included in qualified education expenses whether or not the materials are purchased from the educational institution. 2011 taxact online Prepaid expenses. 2011 taxact online   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. 2011 taxact online See Academic period, earlier. 2011 taxact online For example, if 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). 2011 taxact online    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). 2011 taxact online   In the following examples, assume that each student is an eligible student at an eligible educational institution. 2011 taxact online Example 1. 2011 taxact online Jefferson is a sophomore in University V's degree program in dentistry. 2011 taxact online 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. 2011 taxact online Because the equipment rental is needed for his course of study, Jefferson's equipment rental fee is a qualified expense. 2011 taxact online Example 2. 2011 taxact online Grace and William, 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. 2011 taxact online 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. 2011 taxact online William bought his books from a friend; Grace bought hers at College W's bookstore. 2011 taxact online Both are qualified education expenses for the American opportunity credit. 2011 taxact online Example 3. 2011 taxact online When Kelly enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. 2011 taxact online This activity fee is required of all students, and is used solely to fund on-campus organizations and activities run by students, such as the student newspaper and the student government. 2011 taxact online No portion of the fee covers personal expenses. 2011 taxact online Although labeled as a student activity fee, the fee is required for Kelly's enrollment and attendance at College X and is a qualified expense. 2011 taxact online No Double Benefit Allowed You cannot do any of the following. 2011 taxact online Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim an American opportunity credit based on those same expenses. 2011 taxact online Claim an American opportunity credit in the same year that you are claiming a tuition and fees deduction for the same student. 2011 taxact online Claim an American opportunity credit for any student and use any of that student's expenses in figuring your lifetime learning credit. 2011 taxact online Figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or qualified tuition program (QTP) using the same expenses you used to figure the American opportunity credit. 2011 taxact online 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. 2011 taxact online 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. 2011 taxact online See Adjustments to Qualified Education Expenses, next. 2011 taxact online 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. 2011 taxact online The result is the amount of adjusted qualified education expenses for each student. 2011 taxact online Tax-free educational assistance. 2011 taxact online   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. 2011 taxact online See Academic period, earlier. 2011 taxact online   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. 2011 taxact online 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). 2011 taxact online   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. 2011 taxact online 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. 2011 taxact online   Tax-free educational assistance includes: The tax-free parts 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). 2011 taxact online 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. 2011 taxact online Generally, any scholarship or fellowship is treated as tax free. 2011 taxact online 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. 2011 taxact online 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. 2011 taxact online 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. 2011 taxact online 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. 2011 taxact online For examples, see Coordination with Pell grants and other scholarships, later. 2011 taxact online Refunds. 2011 taxact online   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. 2011 taxact online Some tax-free educational assistance received after 2013 may be treated as a refund. 2011 taxact online See Tax-free educational assistance, earlier. 2011 taxact online Refunds received in 2013. 2011 taxact online   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. 2011 taxact online Refunds received after 2013 but before your income tax return is filed. 2011 taxact online   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. 2011 taxact online Refunds received after 2013 and after your income tax return is filed. 2011 taxact online   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. 2011 taxact online See Credit recapture, next. 2011 taxact online Credit recapture. 2011 taxact online    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. 2011 taxact online 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. 2011 taxact online You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you claimed the refigured credit(s). 2011 taxact online Include that amount as an additional tax for the year the refund or tax-free assistance was received. 2011 taxact online Example. 2011 taxact online   You paid $7,000 tuition and fees in August 2013, and your child began college in September 2013. 2011 taxact online You filed your 2013 tax return on February 17, 2014, and claimed an American opportunity credit of $2,500. 2011 taxact online After you filed your return, you received a refund of $4,000. 2011 taxact online You must refigure your 2013 American opportunity credit using $3,000 of qualified education expenses instead of $7,000. 2011 taxact online The refigured credit is $2,250. 2011 taxact online The increase to your tax liability is also $250. 2011 taxact online Include the difference of $250 as additional tax on your 2014 tax return. 2011 taxact online See the instructions for your 2014 income tax return to determine where to include this tax. 2011 taxact online 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. 2011 taxact online Amounts that do not reduce qualified education expenses. 2011 taxact online   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. 2011 taxact online   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. 2011 taxact online 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. 2011 taxact online The use of the money is not restricted. 2011 taxact online Example 1. 2011 taxact online Joan paid $3,000 for tuition and $5,000 for room and board at University X. 2011 taxact online The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. 2011 taxact online To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. 2011 taxact online The terms of the scholarship state that it can be used to pay any of Joan's college expenses. 2011 taxact online University X applies the $2,000 scholarship against Joan's $8,000 total bill, and Joan pays the $6,000 balance of her bill from University X with a combination of her student loan and her savings. 2011 taxact online Joan does not report any portion of the scholarship as income on her tax return. 2011 taxact online In figuring the amount of either education credit (American opportunity or lifetime learning), Joan must reduce her qualified education expenses by the amount of the scholarship ($2,000) because she excluded the entire scholarship from her income. 2011 taxact online The student loan is not tax-free educational assistance, so she does not need to reduce her qualified expenses by any part of the loan proceeds. 2011 taxact online Joan is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship). 2011 taxact online Example 2. 2011 taxact online The facts are the same as in Example 1, except that Joan reports her entire scholarship as income on her tax return. 2011 taxact online Because Joan reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. 2011 taxact online Joan is treated as having paid $3,000 in qualified education expenses. 2011 taxact online Coordination with Pell grants and other scholarships. 2011 taxact online   In some cases, you may be able to reduce your tax liability by including scholarships in income. 2011 taxact online 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. 2011 taxact online The scholarship must be one that may (by its terms) be applied to expenses (such as room and board) other than qualified education expenses. 2011 taxact online Example 1—No scholarship. 2011 taxact online Bill Pass, age 28 and unmarried, enrolled full-time in 2013 as a first-year student at a local college to earn a degree in law enforcement. 2011 taxact online This was his first year of postsecondary education. 2011 taxact online During 2013, he paid $5,600 for his qualified education expenses and $4,400 for his room and board for the fall 2013 semester. 2011 taxact online He and the college meet all the requirements for the American opportunity credit. 2011 taxact online Bill's AGI and his MAGI, for purposes of figuring his credit, are $30,000. 2011 taxact online Bill takes the standard deduction of $5,950 and personal exemption of $3,800, reducing his AGI to taxable income of $20,250. 2011 taxact online His income tax liability, before credits, is $2,599 and Bill claims no credits other than the American opportunity credit. 2011 taxact online He figures his American opportunity credit based on qualified education expenses of $4,000, which results in a credit of $2,500 and tax after credits of $99. 2011 taxact online Example 2—Scholarship excluded from income. 2011 taxact online The facts are the same as in Example 1—No scholarship, except that Bill was awarded a $5,600 scholarship. 2011 taxact online Under the terms of his scholarship, it may be used to pay any educational expenses, including room and board. 2011 taxact online If Bill excludes the scholarship from income, he will be deemed (for purposes of computing his education credit) to have used the scholarship to pay for tuition, required fees, and course materials. 2011 taxact online His adjusted qualified education expenses will be zero and he will not have an education credit. 2011 taxact online Therefore, Bill's tax after credits would be $2,599. 2011 taxact online Example 3—Scholarship partially included in income. 2011 taxact online The facts are the same as in Example 2—Scholarship excluded from income. 2011 taxact online If, unlike Example 2, Bill includes $4,000 of the scholarship in income, he will be deemed to have used that amount to pay for room and board. 2011 taxact online The remaining $1,600 of the $5,600 scholarship will reduce his qualified education expenses and his adjusted qualified education expenses will be $4,000. 2011 taxact online Bill's AGI will increase to $34,000, his taxable income will increase to $24,250, and his tax before credits will increase to $3,199. 2011 taxact online Based on his adjusted qualified education expenses of $4,000, Bill would be able to claim an American opportunity tax credit of $2,500 and his tax after credits would be $699. 2011 taxact online 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. 2011 taxact online This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. 2011 taxact online Sports, games, hobbies, and noncredit courses. 2011 taxact online   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. 2011 taxact online However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. 2011 taxact online Comprehensive or bundled fees. 2011 taxact online   Some eligible educational institutions combine all of their fees for an academic period into one amount. 2011 taxact online 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 earlier, contact the institution. 2011 taxact online 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, Tuition Statement. 2011 taxact online See Figuring the Credit , later, for more information about Form 1098-T. 2011 taxact online Who Is an Eligible Student To claim the American opportunity credit, the student for whom you pay qualified education expenses must be an eligible student. 2011 taxact online This is a student who meets all of the following requirements. 2011 taxact online The student did not have expenses that were used to figure an American opportunity credit in any 4 earlier tax years. 2011 taxact online This includes any tax year(s) in which you claimed the Hope Scholarship Credit for the same student. 2011 taxact online The student had not completed the first 4 years of postsecondary education (generally, the freshman, sophomore, junior, and senior years of college) before 2013. 2011 taxact online For at least one academic period beginning in 2013, the student was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. 2011 taxact online The student has not been convicted of any federal or state felony for possessing or distributing a controlled substance as of the end of 2013. 2011 taxact online These requirements are also shown in Figure 2-2, Who is an Eligible Student for the American Opportunity Credit , later. 2011 taxact online Completion of first 4 years. 2011 taxact online   A student has completed the first 4 years of postsecondary education if the institution at which the student is enrolled awards the student 4 years of academic credit at that institution for coursework completed by the student before 2013. 2011 taxact online This student generally would not be an eligible student for purposes of the American opportunity credit. 2011 taxact online Exception. 2011 taxact online   Any academic credit awarded solely on the basis of the student's performance on proficiency examinations is disregarded in determining whether the student has completed 4 years of postsecondary education. 2011 taxact online Enrolled at least half-time. 2011 taxact online   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. 2011 taxact online   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. 2011 taxact online However, the standard may not be lower than any of those established by the U. 2011 taxact online S. 2011 taxact online Department of Education under the Higher Education Act of 1965. 2011 taxact online Please click here for the text description of the image. 2011 taxact online Figure 2-2 Example 1. 2011 taxact online Mack graduated from high school in June 2012. 2011 taxact online In September, he enrolled in an undergraduate degree program at College U, and attended full-time for both the 2012 fall and 2013 spring semesters. 2011 taxact online For the 2013 fall semester, Mack was enrolled less than half-time. 2011 taxact online Because Mack was enrolled in an undergraduate degree program on at least a half-time basis for at least one academic period that began during 2012 and at least one academic period that began during 2013, he is an eligible student for tax years 2012 and 2013 (including the 2013 fall semester when he enrolled at College U on less than a half-time basis). 2011 taxact online Example 2. 2011 taxact online After taking classes at College V on a part-time basis for a few years, Shelly became a full-time student for the 2013 spring semester. 2011 taxact online College V classified Shelly as a second-semester senior (fourth year) for the 2013 spring semester and as a first-semester graduate student (fifth year) for the 2013 fall semester. 2011 taxact online Because College V did not classify Shelly as having completed the first 4 years of postsecondary education as of the beginning of 2013, Shelly is an eligible student for tax year 2013. 2011 taxact online Therefore, the qualified education expenses paid for the 2013 spring semester and the 2013 fall semester are taken into account in calculating the American opportunity credit for 2013. 2011 taxact online Example 3. 2011 taxact online During the 2012 fall semester, Larry was a high school student who took classes on a half-time basis at College X. 2011 taxact online Larry was not enrolled as part of a degree program at College X because College X only admits students to a degree program if they have a high school diploma or equivalent. 2011 taxact online Because Larry was not enrolled in a degree program at College X during 2012, Larry was not an eligible student for tax year 2012. 2011 taxact online Example 4. 2011 taxact online The facts are the same as in Example 3. 2011 taxact online During the 2013 spring semester, Larry again attended College X but not as part of a degree program. 2011 taxact online Larry graduated from high school in June 2013. 2011 taxact online For the 2013 fall semester, Larry enrolled as a full-time student in College X as part of a degree program, and College X awarded Larry credit for his prior coursework at College X. 2011 taxact online Because Larry was enrolled in a degree program at College X for the 2013 fall term on at least a half-time basis, Larry is an eligible student for all of tax year 2013. 2011 taxact online Therefore, the qualified education expenses paid for classes taken at College X during both the 2013 spring semester (during which Larry was not enrolled in a degree program) and the 2013 fall semester are taken into account in computing any American opportunity credit. 2011 taxact online Example 5. 2011 taxact online Dee graduated from high school in June 2012. 2011 taxact online In January 2013, Dee enrolled in a 1-year postsecondary certificate program on a full-time basis to obtain a certificate as a travel agent. 2011 taxact online Dee completed the program in December 2013, and was awarded a certificate. 2011 taxact online In January 2014, she enrolled in a 1-year postsecondary certificate program on a full-time basis to obtain a certificate as a computer programmer. 2011 taxact online Dee is an eligible student for both tax years 2013 and 2014 because she meets the degree requirement, the work load requirement, and the year of study requirement for those years. 2011 taxact online 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 an American opportunity credit for your dependent's expenses for that year. 2011 taxact online For you to claim an American opportunity credit for your dependent's expenses, you must also claim an exemption for your dependent. 2011 taxact online You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. 2011 taxact online IF you. 2011 taxact online . 2011 taxact online . 2011 taxact online THEN only. 2011 taxact online . 2011 taxact online . 2011 taxact online claim an exemption on  your tax return for a  dependent who is an  eligible student you can claim the American opportunity credit based on that dependent's expenses. 2011 taxact online The dependent cannot claim the credit. 2011 taxact online 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 American opportunity credit. 2011 taxact online You cannot claim the credit based on this dependent's expenses. 2011 taxact online Expenses paid by dependent. 2011 taxact online   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. 2011 taxact online Include these expenses when figuring the amount of your American opportunity credit. 2011 taxact online    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. 2011 taxact online Expenses paid by you. 2011 taxact online   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 American opportunity credit. 2011 taxact online If neither you nor anyone else claims an exemption for the dependent, only the dependent can include any expenses you paid when figuring the American opportunity credit. 2011 taxact online Expenses paid by others. 2011 taxact online   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. 2011 taxact online In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. 2011 taxact online If you claim an exemption on your tax return for the student, you are considered to have paid the expenses. 2011 taxact online Example. 2011 taxact online In 2013, Ms. 2011 taxact online Allen makes a payment directly to an eligible educational institution for her grandson Todd's qualified education expenses. 2011 taxact online For purposes of claiming an American opportunity credit, Todd is treated as receiving the money from his grandmother and, in turn, paying his qualified education expenses himself. 2011 taxact online Unless an exemption for Todd is claimed on someone else's 2013 tax return, only Todd can use the payment to claim an American opportunity credit. 2011 taxact online 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 an American opportunity credit. 2011 taxact online If anyone else claims an exemption for Todd, Todd cannot claim an American opportunity credit. 2011 taxact online Tuition reduction. 2011 taxact online    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. 2011 taxact online 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. 2011 taxact online For more information on tuition reductions, see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 2011 taxact online Figuring the Credit The amount of the American opportunity credit (per eligible student) is the sum of: 100% of the first $2,000 of qualified education expenses you paid for the eligible student, and 25% of the next $2,000 of qualified education expenses you paid for that student. 2011 taxact online The maximum amount of American opportunity credit you can claim in 2013 is $2,500 multiplied by the number of eligible students. 2011 taxact online You can claim the full $2,500 for each eligible student for whom you paid at least $4,000 of adjusted qualified education expenses. 2011 taxact online However, the credit may be reduced based on your MAGI. 2011 taxact online See Effect of the Amount of Your Income on the Amount of Your Credit , later. 2011 taxact online Example. 2011 taxact online Jack and Kay Ford are married and file a joint tax return. 2011 taxact online For 2013, they claim an exemption for their dependent daughter on their tax return. 2011 taxact online Their MAGI is $70,000. 2011 taxact online Their daughter is in her junior (third) year of studies at the local university. 2011 taxact online Jack and Kay paid qualified education expenses of $4,300 in 2013. 2011 taxact online Jack and Kay, their daughter, and the local university meet all of the requirements for the American opportunity credit. 2011 taxact online Jack and Kay can claim a $2,500 American opportunity credit in 2013. 2011 taxact online This is 100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000. 2011 taxact online Form 1098-T. 2011 taxact online   To help you figure your American opportunity credit, the student should receive Form 1098-T, Tuition Statement. 2011 taxact online 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. 2011 taxact online An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. 2011 taxact online However, the amounts in boxes 1 and 2 of Form 1098-T might be different than what you paid. 2011 taxact online When figuring the credit, use only the amounts you paid or are deemed to have paid in 2013 for qualified education expenses. 2011 taxact online   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. 2011 taxact online    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. 2011 taxact online Effect of the Amount of Your Income on the Amount of Your Credit The amount of your American opportunity credit is phased out (gradually reduced) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). 2011 taxact online You cannot claim an American opportunity credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return). 2011 taxact online Modified adjusted gross income (MAGI). 2011 taxact online   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. 2011 taxact online MAGI when using Form 1040A. 2011 taxact online   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. 2011 taxact online MAGI when using Form 1040. 2011 taxact online   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. 2011 taxact online You can use Worksheet 2-1, next, to figure your MAGI. 2011 taxact online    Worksheet 2-1. 2011 taxact online MAGI for the American Opportunity Credit 1. 2011 taxact online Enter your adjusted gross income  (Form 1040, line 38)   1. 2011 taxact online   2. 2011 taxact online Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. 2011 taxact online       3. 2011 taxact online Enter your foreign housing deduction (Form 2555, line 50)   3. 2011 taxact online       4. 2011 taxact online Enter the amount of income from Puerto Rico you are excluding   4. 2011 taxact online       5. 2011 taxact online Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. 2011 taxact online       6. 2011 taxact online Add the amounts on lines 2, 3, 4, and 5   6. 2011 taxact online   7. 2011 taxact online Add the amounts on lines 1 and 6. 2011 taxact online  This is your modified adjusted  gross income. 2011 taxact online Enter here and  on Form 8863, line 3   7. 2011 taxact online   Phaseout. 2011 taxact online   If your MAGI is within the range of incomes where the credit must be reduced, you will figure your reduced credit using lines 2-7, of Form 8863, Part I. 2011 taxact online The same method is shown in the following example. 2011 taxact online Example. 2011 taxact online You are filing a joint return and your MAGI is $165,000. 2011 taxact online In 2013, you paid $5,000 of qualified education expenses. 2011 taxact online You figure a tentative American opportunity credit of $2,500 (100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000 of qualified education expenses). 2011 taxact online Because your MAGI is within the range of incomes where the credit must be reduced, you must multiply your tentative credit ($2,500) by a fraction. 2011 taxact online The numerator of the fraction is $180,000 (the upper limit for those filing a joint return) minus your MAGI. 2011 taxact online The denominator is $20,000, the range of incomes for the phaseout ($160,000 to $180,000). 2011 taxact online The result is the amount of your phased out (reduced) American opportunity credit ($1,875). 2011 taxact online      $2,500 × $180,000 − $165,000  $20,000 = $1,875   Refundable Part of Credit Forty percent of the American opportunity credit is refundable for most taxpayers. 2011 taxact online However, if you were under age 24 at the end of 2013 and the conditions listed below apply to you, you cannot claim any part of the American opportunity credit as a refundable credit on your tax return. 2011 taxact online Instead, your allowed credit (figured on Form 8863, Part II) will be used to reduce your tax as a nonrefundable credit only. 2011 taxact online You do not qualify for a refund if items 1 (a, b, or c), 2, and 3 below apply to you. 2011 taxact online You were: Under age 18 at the end of 2013, or Age 18 at the end of 2013 and your earned income (defined below) was less than one-half of your support (defined below), or Over age 18 and under age 24 at the end of 2013 and a full-time student (defined below) and your earned income (defined below) was less than one-half of your support (defined below). 2011 taxact online At least one of your parents was alive at the end of 2013. 2011 taxact online You are filing a return as single, head of household, qualifying widow(er), or married filing separately for 2013. 2011 taxact online Earned income. 2011 taxact online   Earned income includes wages, salaries, professional fees, and other payments received for personal services actually performed. 2011 taxact online Earned income includes the part of any scholarship or fellowship that represents payment for teaching, research, or other services performed by the student that are required as a condition for receiving the scholarship or fellowship. 2011 taxact online Earned income does not include that part of the compensation for personal services rendered to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered. 2011 taxact online   If you are a sole proprietor or a partner in a trade or business in which both personal services and capital are material income-producing factors, earned income also includes a reasonable allowance for compensation for personal services, but not more than 30% of your share of the net profits from that trade or business (after subtracting the deduction for one-half of self-employment tax). 2011 taxact online However, if capital is not an income-producing factor and your personal services produced the business income, the 30% limit does not apply. 2011 taxact online Support. 2011 taxact online   Your support includes food, shelter, clothing, medical and dental care, education, and the like. 2011 taxact online Generally, the amount of the item of support will be the amount of expenses incurred by the one furnishing such item. 2011 taxact online If the item of support is in the form of property or lodging, measure the amount of such item of support by its fair market value. 2011 taxact online However, a scholarship received by you is not considered support if you are a full-time student. 2011 taxact online See Publication 501 for details. 2011 taxact online Full-time student. 2011 taxact online   You are a full-time student for 2013 if during any part of any 5 calendar months during the year you were enrolled as a full-time student at an eligible educational institution (defined earlier), or took a full-time, on-farm training course given by such an institution or by a state, county, or local government agency. 2011 taxact online Claiming the Credit You claim the American opportunity credit by completing Form 8863 and submitting it with your Form 1040 or 1040A. 2011 taxact online Enter the nonrefundable part of the credit on Form 1040, line 49, or on Form 1040A, line 31. 2011 taxact online Enter the refundable part of the credit on Form 1040, line 66, or on Form 1040A, line 40. 2011 taxact online A filled-in Form 8863 is shown at the end of this publication. 2011 taxact online Note. 2011 taxact online In Appendix A. 2011 taxact online 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. 2011 taxact online Prev  Up  Next   Home   More Online Publications