File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Amend 1040

How To Amend A 2010 Tax Return2012 Irs Income Tax FormsIrs 1040ez 20122012 Tax Forms 1040ez1040ez File On LineIrs 1040ez File OnlineFree State Income Tax Filing Online2012 Tax Forms FederalHow To Fill 1040nrEfile Taxes FreeWww Irs GovHow To Fill Out A 1040x Tax Amendment FormFree Federal And State Income Tax FilingE File 1040ez FreeWww Free1040taxreturn ComPrint Free 1040ez Tax FormHttp Freefile Irs GovPast Years TaxesHr Block FreePrior Taxes1040ez Tax Forms To Print1040ez E-fileFree FileH&r Block TaxcutAmend 2012 Tax Return OnlineTurbotax 1040ezTurbotax 1040xBack Taxes Help1040a 2010 Tax Form1040ez 2012 Tax FormHow Can I Amend My 2010 Tax ReturnFree Online Tax FilingHow To Fill Out A 1040x Step By StepI Had Received Disability Can I File Income Tax Can I How Much Can I Money For RefurnHand R Block Free FileTurbotax Deluxe Federal E File 2012How To File Taxes For Self Employment IncomeClues Fill 1040x Form1040nr Instructions1040ez Worksheet

Amend 1040

Amend 1040 2. Amend 1040   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. Amend 1040 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. Amend 1040 They are the American opportunity credit (this chapter) and the lifetime learning credit ( chapter 3 ). Amend 1040 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. Amend 1040 What is the tax benefit of the American opportunity credit. Amend 1040   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. Amend 1040   A tax credit reduces the amount of income tax you may have to pay. Amend 1040 Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. Amend 1040 Forty percent of the American opportunity credit may be refundable. Amend 1040 This means that if the refundable portion of your credit is more than your tax, the excess will be refunded to you. Amend 1040   Your allowable American opportunity credit may be limited by the amount of your income. Amend 1040 Also, the nonrefundable part of the credit may be limited by the amount of your tax. Amend 1040 Overview of the American opportunity credit. Amend 1040   See Table 2-1, Overview of the American Opportunity Credit , for the basics of this credit. Amend 1040 The details are discussed in this chapter. Amend 1040 Can you claim more than one education credit this year. Amend 1040   For each student, you can elect for any year only one of the credits. Amend 1040 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. Amend 1040   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. Amend 1040 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. Amend 1040 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. Amend 1040 Differences between the American opportunity and lifetime learning credits. Amend 1040   There are several differences between these two credits. Amend 1040 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. Amend 1040 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. Amend 1040 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. Amend 1040 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. Amend 1040 If you have the choice, the American opportunity credit will always be greater than the lifetime learning credit. Amend 1040 Table 2-1. Amend 1040 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. Amend 1040 Who Can Claim the Credit Generally, you can claim the American opportunity credit if all three of the following requirements are met. Amend 1040 You pay qualified education expenses of higher education. Amend 1040 You pay the education expenses for an eligible student. Amend 1040 The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Amend 1040 Student qualifications. Amend 1040   Generally, you can take the American opportunity credit for a student only if all of the following four requirements are met. Amend 1040 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. Amend 1040 For this purpose, do not include academic credit awarded solely because of the student's performance on proficiency examinations. Amend 1040 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. Amend 1040 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. Amend 1040 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. Amend 1040 The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Amend 1040 However, the standard may not be lower than any of those established by the U. Amend 1040 S. Amend 1040 Department of Education under the Higher Education Act of 1965. Amend 1040 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. Amend 1040 See Prepaid expenses, later. Amend 1040 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. Amend 1040 Example 1. Amend 1040 Sharon was eligible for the Hope Scholarship Credit for 2007 and 2008 and for the American opportunity credit for 2010 and 2012. Amend 1040 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. Amend 1040 Sharon claimed the American opportunity credit on her 2012 tax return. Amend 1040 The American opportunity credit and Hope Scholarship Credit have been claimed for Sharon for four tax years before 2013. Amend 1040 Therefore, the American opportunity credit cannot be claimed by Sharon for 2013. Amend 1040 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. Amend 1040 Example 2. Amend 1040 Wilbert was eligible for the American opportunity credit for 2009, 2010, 2011, and 2013. Amend 1040 His parents claimed the American opportunity credit for Wilbert on their tax returns for 2009, 2010, and 2011. Amend 1040 No one claimed an American opportunity credit or Hope Scholarship Credit for Wilbert for any other tax year. Amend 1040 The American opportunity credit and Hope Scholarship Credit have been claimed for Wilbert for only three tax years before 2013. Amend 1040 Therefore, Wilbert meets the second requirement to be eligible for the American opportunity credit. Amend 1040 If Wilbert were to file Form 8863 for 2013, he would check “No” for Part III, line 23. Amend 1040 If Wilbert meets all of the other requirements, he is eligible for the American opportunity credit. Amend 1040 Example 3. Amend 1040 Glenda enrolls on a full-time basis in a degree program for the 2014 Spring semester, which begins in January 2014. Amend 1040 Glenda pays her tuition for the 2014 Spring semester in December 2013. Amend 1040 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. Amend 1040 If the requirements above are not met for any student, you cannot take the American opportunity credit for that student. Amend 1040 You may be able to take the lifetime learning credit for part or all of that student's qualified education expenses instead. Amend 1040 Note. Amend 1040 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. Amend 1040 “Qualified education expenses” are defined later under Qualified Education Expenses . Amend 1040 “Eligible students” are defined later under Who Is an Eligible Student . Amend 1040 A dependent for whom you claim an exemption is defined later under Who Can Claim a Dependent's Expenses . Amend 1040 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. Amend 1040 This image is too large to be displayed in the current screen. Amend 1040 Please click the link to view the image. Amend 1040 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. Amend 1040 Your filing status is married filing separately. Amend 1040 You are listed as a dependent on another person's tax return (such as your parents'). Amend 1040 See Who Can Claim a Dependent's Expenses , later. Amend 1040 Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more in the case of a joint return). Amend 1040 MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit . Amend 1040 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. Amend 1040 More information on nonresident aliens can be found in Publication 519, U. Amend 1040 S. Amend 1040 Tax Guide for Aliens. Amend 1040 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. Amend 1040 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. Amend 1040 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. Amend 1040 Academic period. Amend 1040   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. Amend 1040 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. Amend 1040 Paid with borrowed funds. Amend 1040   You can claim an American opportunity credit for qualified education expenses paid with the proceeds of a loan. Amend 1040 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. Amend 1040 Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. Amend 1040 Student withdraws from class(es). Amend 1040   You can claim an American opportunity credit for qualified education expenses not refunded when a student withdraws. Amend 1040 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. Amend 1040 Eligible educational institution. Amend 1040   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. Amend 1040 S. Amend 1040 Department of Education. Amend 1040 It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Amend 1040 The educational institution should be able to tell you if it is an eligible educational institution. Amend 1040   Certain educational institutions located outside the United States also participate in the U. Amend 1040 S. Amend 1040 Department of Education's Federal Student Aid (FSA) programs. Amend 1040 Related expenses. Amend 1040   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. Amend 1040   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. Amend 1040 Prepaid expenses. Amend 1040   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. Amend 1040 See Academic period, earlier. Amend 1040 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). Amend 1040    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). Amend 1040   In the following examples, assume that each student is an eligible student at an eligible educational institution. Amend 1040 Example 1. Amend 1040 Jefferson is a sophomore in University V's degree program in dentistry. Amend 1040 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. Amend 1040 Because the equipment rental is needed for his course of study, Jefferson's equipment rental fee is a qualified expense. Amend 1040 Example 2. Amend 1040 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. Amend 1040 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. Amend 1040 William bought his books from a friend; Grace bought hers at College W's bookstore. Amend 1040 Both are qualified education expenses for the American opportunity credit. Amend 1040 Example 3. Amend 1040 When Kelly enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. Amend 1040 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. Amend 1040 No portion of the fee covers personal expenses. Amend 1040 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. Amend 1040 No Double Benefit Allowed You cannot do any of the following. Amend 1040 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. Amend 1040 Claim an American opportunity credit in the same year that you are claiming a tuition and fees deduction for the same student. Amend 1040 Claim an American opportunity credit for any student and use any of that student's expenses in figuring your lifetime learning credit. Amend 1040 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. Amend 1040 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. Amend 1040 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. Amend 1040 See Adjustments to Qualified Education Expenses, next. Amend 1040 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. Amend 1040 The result is the amount of adjusted qualified education expenses for each student. Amend 1040 Tax-free educational assistance. Amend 1040   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. Amend 1040 See Academic period, earlier. Amend 1040   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. Amend 1040 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). Amend 1040   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. Amend 1040 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. Amend 1040   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). Amend 1040 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. Amend 1040 Generally, any scholarship or fellowship is treated as tax free. Amend 1040 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. Amend 1040 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. Amend 1040 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. Amend 1040 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. Amend 1040 For examples, see Coordination with Pell grants and other scholarships, later. Amend 1040 Refunds. Amend 1040   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. Amend 1040 Some tax-free educational assistance received after 2013 may be treated as a refund. Amend 1040 See Tax-free educational assistance, earlier. Amend 1040 Refunds received in 2013. Amend 1040   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. Amend 1040 Refunds received after 2013 but before your income tax return is filed. Amend 1040   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. Amend 1040 Refunds received after 2013 and after your income tax return is filed. Amend 1040   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. Amend 1040 See Credit recapture, next. Amend 1040 Credit recapture. Amend 1040    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. Amend 1040 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. Amend 1040 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). Amend 1040 Include that amount as an additional tax for the year the refund or tax-free assistance was received. Amend 1040 Example. Amend 1040   You paid $7,000 tuition and fees in August 2013, and your child began college in September 2013. Amend 1040 You filed your 2013 tax return on February 17, 2014, and claimed an American opportunity credit of $2,500. Amend 1040 After you filed your return, you received a refund of $4,000. Amend 1040 You must refigure your 2013 American opportunity credit using $3,000 of qualified education expenses instead of $7,000. Amend 1040 The refigured credit is $2,250. Amend 1040 The increase to your tax liability is also $250. Amend 1040 Include the difference of $250 as additional tax on your 2014 tax return. Amend 1040 See the instructions for your 2014 income tax return to determine where to include this tax. Amend 1040 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. Amend 1040 Amounts that do not reduce qualified education expenses. Amend 1040   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. Amend 1040   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. Amend 1040 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. Amend 1040 The use of the money is not restricted. Amend 1040 Example 1. Amend 1040 Joan paid $3,000 for tuition and $5,000 for room and board at University X. Amend 1040 The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. Amend 1040 To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. Amend 1040 The terms of the scholarship state that it can be used to pay any of Joan's college expenses. Amend 1040 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. Amend 1040 Joan does not report any portion of the scholarship as income on her tax return. Amend 1040 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. Amend 1040 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. Amend 1040 Joan is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship). Amend 1040 Example 2. Amend 1040 The facts are the same as in Example 1, except that Joan reports her entire scholarship as income on her tax return. Amend 1040 Because Joan reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. Amend 1040 Joan is treated as having paid $3,000 in qualified education expenses. Amend 1040 Coordination with Pell grants and other scholarships. Amend 1040   In some cases, you may be able to reduce your tax liability by including scholarships in income. Amend 1040 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. Amend 1040 The scholarship must be one that may (by its terms) be applied to expenses (such as room and board) other than qualified education expenses. Amend 1040 Example 1—No scholarship. Amend 1040 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. Amend 1040 This was his first year of postsecondary education. Amend 1040 During 2013, he paid $5,600 for his qualified education expenses and $4,400 for his room and board for the fall 2013 semester. Amend 1040 He and the college meet all the requirements for the American opportunity credit. Amend 1040 Bill's AGI and his MAGI, for purposes of figuring his credit, are $30,000. Amend 1040 Bill takes the standard deduction of $5,950 and personal exemption of $3,800, reducing his AGI to taxable income of $20,250. Amend 1040 His income tax liability, before credits, is $2,599 and Bill claims no credits other than the American opportunity credit. Amend 1040 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. Amend 1040 Example 2—Scholarship excluded from income. Amend 1040 The facts are the same as in Example 1—No scholarship, except that Bill was awarded a $5,600 scholarship. Amend 1040 Under the terms of his scholarship, it may be used to pay any educational expenses, including room and board. Amend 1040 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. Amend 1040 His adjusted qualified education expenses will be zero and he will not have an education credit. Amend 1040 Therefore, Bill's tax after credits would be $2,599. Amend 1040 Example 3—Scholarship partially included in income. Amend 1040 The facts are the same as in Example 2—Scholarship excluded from income. Amend 1040 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. Amend 1040 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. Amend 1040 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. Amend 1040 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. Amend 1040 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. Amend 1040 This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Amend 1040 Sports, games, hobbies, and noncredit courses. Amend 1040   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. Amend 1040 However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. Amend 1040 Comprehensive or bundled fees. Amend 1040   Some eligible educational institutions combine all of their fees for an academic period into one amount. Amend 1040 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. Amend 1040 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. Amend 1040 See Figuring the Credit , later, for more information about Form 1098-T. Amend 1040 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. Amend 1040 This is a student who meets all of the following requirements. Amend 1040 The student did not have expenses that were used to figure an American opportunity credit in any 4 earlier tax years. Amend 1040 This includes any tax year(s) in which you claimed the Hope Scholarship Credit for the same student. Amend 1040 The student had not completed the first 4 years of postsecondary education (generally, the freshman, sophomore, junior, and senior years of college) before 2013. Amend 1040 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. Amend 1040 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. Amend 1040 These requirements are also shown in Figure 2-2, Who is an Eligible Student for the American Opportunity Credit , later. Amend 1040 Completion of first 4 years. Amend 1040   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. Amend 1040 This student generally would not be an eligible student for purposes of the American opportunity credit. Amend 1040 Exception. Amend 1040   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. Amend 1040 Enrolled at least half-time. Amend 1040   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. Amend 1040   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Amend 1040 However, the standard may not be lower than any of those established by the U. Amend 1040 S. Amend 1040 Department of Education under the Higher Education Act of 1965. Amend 1040 Please click here for the text description of the image. Amend 1040 Figure 2-2 Example 1. Amend 1040 Mack graduated from high school in June 2012. Amend 1040 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. Amend 1040 For the 2013 fall semester, Mack was enrolled less than half-time. Amend 1040 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). Amend 1040 Example 2. Amend 1040 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. Amend 1040 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. Amend 1040 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. Amend 1040 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. Amend 1040 Example 3. Amend 1040 During the 2012 fall semester, Larry was a high school student who took classes on a half-time basis at College X. Amend 1040 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. Amend 1040 Because Larry was not enrolled in a degree program at College X during 2012, Larry was not an eligible student for tax year 2012. Amend 1040 Example 4. Amend 1040 The facts are the same as in Example 3. Amend 1040 During the 2013 spring semester, Larry again attended College X but not as part of a degree program. Amend 1040 Larry graduated from high school in June 2013. Amend 1040 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. Amend 1040 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. Amend 1040 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. Amend 1040 Example 5. Amend 1040 Dee graduated from high school in June 2012. Amend 1040 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. Amend 1040 Dee completed the program in December 2013, and was awarded a certificate. Amend 1040 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. Amend 1040 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. Amend 1040 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. Amend 1040 For you to claim an American opportunity credit for your dependent's expenses, you must also claim an exemption for your dependent. Amend 1040 You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. Amend 1040 IF you. Amend 1040 . Amend 1040 . Amend 1040 THEN only. Amend 1040 . Amend 1040 . Amend 1040 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. Amend 1040 The dependent cannot claim the credit. Amend 1040 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. Amend 1040 You cannot claim the credit based on this dependent's expenses. Amend 1040 Expenses paid by dependent. Amend 1040   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. Amend 1040 Include these expenses when figuring the amount of your American opportunity credit. Amend 1040    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. Amend 1040 Expenses paid by you. Amend 1040   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. Amend 1040 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. Amend 1040 Expenses paid by others. Amend 1040   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. Amend 1040 In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. Amend 1040 If you claim an exemption on your tax return for the student, you are considered to have paid the expenses. Amend 1040 Example. Amend 1040 In 2013, Ms. Amend 1040 Allen makes a payment directly to an eligible educational institution for her grandson Todd's qualified education expenses. Amend 1040 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. Amend 1040 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. Amend 1040 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. Amend 1040 If anyone else claims an exemption for Todd, Todd cannot claim an American opportunity credit. Amend 1040 Tuition reduction. Amend 1040    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. Amend 1040 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. Amend 1040 For more information on tuition reductions, see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Amend 1040 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. Amend 1040 The maximum amount of American opportunity credit you can claim in 2013 is $2,500 multiplied by the number of eligible students. Amend 1040 You can claim the full $2,500 for each eligible student for whom you paid at least $4,000 of adjusted qualified education expenses. Amend 1040 However, the credit may be reduced based on your MAGI. Amend 1040 See Effect of the Amount of Your Income on the Amount of Your Credit , later. Amend 1040 Example. Amend 1040 Jack and Kay Ford are married and file a joint tax return. Amend 1040 For 2013, they claim an exemption for their dependent daughter on their tax return. Amend 1040 Their MAGI is $70,000. Amend 1040 Their daughter is in her junior (third) year of studies at the local university. Amend 1040 Jack and Kay paid qualified education expenses of $4,300 in 2013. Amend 1040 Jack and Kay, their daughter, and the local university meet all of the requirements for the American opportunity credit. Amend 1040 Jack and Kay can claim a $2,500 American opportunity credit in 2013. Amend 1040 This is 100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000. Amend 1040 Form 1098-T. Amend 1040   To help you figure your American opportunity credit, the student should receive Form 1098-T, Tuition Statement. Amend 1040 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. Amend 1040 An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. Amend 1040 However, the amounts in boxes 1 and 2 of Form 1098-T might be different than what you paid. Amend 1040 When figuring the credit, use only the amounts you paid or are deemed to have paid in 2013 for qualified education expenses. Amend 1040   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. Amend 1040    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. Amend 1040 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). Amend 1040 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). Amend 1040 Modified adjusted gross income (MAGI). Amend 1040   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. Amend 1040 MAGI when using Form 1040A. Amend 1040   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. Amend 1040 MAGI when using Form 1040. Amend 1040   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. Amend 1040 You can use Worksheet 2-1, next, to figure your MAGI. Amend 1040    Worksheet 2-1. Amend 1040 MAGI for the American Opportunity Credit 1. Amend 1040 Enter your adjusted gross income  (Form 1040, line 38)   1. Amend 1040   2. Amend 1040 Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. Amend 1040       3. Amend 1040 Enter your foreign housing deduction (Form 2555, line 50)   3. Amend 1040       4. Amend 1040 Enter the amount of income from Puerto Rico you are excluding   4. Amend 1040       5. Amend 1040 Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. Amend 1040       6. Amend 1040 Add the amounts on lines 2, 3, 4, and 5   6. Amend 1040   7. Amend 1040 Add the amounts on lines 1 and 6. Amend 1040  This is your modified adjusted  gross income. Amend 1040 Enter here and  on Form 8863, line 3   7. Amend 1040   Phaseout. Amend 1040   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. Amend 1040 The same method is shown in the following example. Amend 1040 Example. Amend 1040 You are filing a joint return and your MAGI is $165,000. Amend 1040 In 2013, you paid $5,000 of qualified education expenses. Amend 1040 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). Amend 1040 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. Amend 1040 The numerator of the fraction is $180,000 (the upper limit for those filing a joint return) minus your MAGI. Amend 1040 The denominator is $20,000, the range of incomes for the phaseout ($160,000 to $180,000). Amend 1040 The result is the amount of your phased out (reduced) American opportunity credit ($1,875). Amend 1040      $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. Amend 1040 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. Amend 1040 Instead, your allowed credit (figured on Form 8863, Part II) will be used to reduce your tax as a nonrefundable credit only. Amend 1040 You do not qualify for a refund if items 1 (a, b, or c), 2, and 3 below apply to you. Amend 1040 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). Amend 1040 At least one of your parents was alive at the end of 2013. Amend 1040 You are filing a return as single, head of household, qualifying widow(er), or married filing separately for 2013. Amend 1040 Earned income. Amend 1040   Earned income includes wages, salaries, professional fees, and other payments received for personal services actually performed. Amend 1040 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. Amend 1040 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. Amend 1040   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). Amend 1040 However, if capital is not an income-producing factor and your personal services produced the business income, the 30% limit does not apply. Amend 1040 Support. Amend 1040   Your support includes food, shelter, clothing, medical and dental care, education, and the like. Amend 1040 Generally, the amount of the item of support will be the amount of expenses incurred by the one furnishing such item. Amend 1040 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. Amend 1040 However, a scholarship received by you is not considered support if you are a full-time student. Amend 1040 See Publication 501 for details. Amend 1040 Full-time student. Amend 1040   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. Amend 1040 Claiming the Credit You claim the American opportunity credit by completing Form 8863 and submitting it with your Form 1040 or 1040A. Amend 1040 Enter the nonrefundable part of the credit on Form 1040, line 49, or on Form 1040A, line 31. Amend 1040 Enter the refundable part of the credit on Form 1040, line 66, or on Form 1040A, line 40. Amend 1040 A filled-in Form 8863 is shown at the end of this publication. Amend 1040 Note. Amend 1040 In Appendix A. Amend 1040 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. Amend 1040 Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Understanding your CP01 Notice

We received the information that you provided and have verified your claim of identity theft. We have placed an identity theft indicator on your account.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

  • You need take no further action except continue to file your federal income tax returns as required by law.

You may want to...


Answers to Common Questions

What effect does the Identity Theft Indicator have on my account?
The indicator assists the IRS in identifying you as the valid owner of the Social Security Number (SSN) that is shown on your tax return. The indicator has no effect on your ability to file your tax return, make payments, or receive a refund.

What happens if someone else uses my SSN to file a fraudulent tax return?
The indicator that was placed on your account will alert us to research to make sure that a tax return filed with your SSN is valid. If the tax return is found to be invalid, we won't process it.

How long does the indicator remain on my account?
Because you were a victim of identity theft, to protect your tax account, the indicator will remain on your account unless you specifically request that it be removed.

Who should I contact if I have more questions about my account related to identity theft?
The Identity Theft Specialized Unit can assist you with questions regarding identity theft related to your account. You may call them at 1-800-908-4490. The number can also be found on your notice. For all other tax account related questions contact the IRS help desk at 1-800-829-1040.

Where can I find more information on preventing identity theft?


Tips for next year

File your return as you normally would. If we find that someone is attempting to use your SSN for filing a tax return we will notify you and provide you with a PIN to use when filing your return.

 

Page Last Reviewed or Updated: 27-Feb-2014

The Amend 1040

Amend 1040 10. Amend 1040   Retirement Savings Contributions Credit (Saver's Credit) Table of Contents Full-time student. Amend 1040 Adjusted gross income. Amend 1040 Distributions received by spouse. Amend 1040 Testing period. Amend 1040 If you or your employer make eligible contributions (defined later) to a retirement plan, you may be able to take a credit of up to $1,000 (up to $2,000 if filing jointly). Amend 1040 This credit could reduce the federal income tax you pay dollar for dollar. Amend 1040 Can you claim the credit?   If you or your employer make eligible contributions to a retirement plan, you can claim the credit if all of the following apply. Amend 1040 You are not under age 18. Amend 1040 You are not a full-time student (explained next). Amend 1040 No one else, such as your parent(s), claims an exemption for you on their tax return. Amend 1040 Your adjusted gross income (defined later) is not more than: $59,000 for 2013 ($60,000 for 2014) if your filing status is married filing jointly, $44,250 for 2013 ($45,000 for 2014) if your filing status is head of household (with qualifying person), or $29,500 for 2013 ($30,000 for 2014) if your filing status is single, married filing separately, or qualifying widow(er) with dependent child. Amend 1040 Full-time student. Amend 1040   You are a full-time student if, during some part of each of 5 calendar months (not necessarily consecutive) during the calendar year, you are either: A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or A student taking a full-time, on-farm training course given by either a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or a state, county, or local government. Amend 1040 You are a full-time student if you are enrolled for the number of hours or courses the school considers to be full-time. Amend 1040 Adjusted gross income. Amend 1040   This is generally the amount on line 38 of your 2013 Form 1040 or line 22 of your 2013 Form 1040A. Amend 1040 However, you must add to that amount any exclusion or deduction claimed for the year for: Foreign earned income, Foreign housing costs, Income for bona fide residents of American Samoa, and Income from Puerto Rico. Amend 1040 Eligible contributions. Amend 1040   These include: Contributions to a traditional or Roth IRA, Elective deferrals, including amounts designated as after-tax Roth contributions, to: A 401(k) plan (including a SIMPLE 401(k)), A section 403(b) annuity, An eligible deferred compensation plan of a state or local government (a governmental 457 plan), A SIMPLE IRA plan, or A salary reduction SEP, and Contributions to a section 501(c)(18) plan. Amend 1040 They also include voluntary after-tax employee contributions to a tax-qualified retirement plan or a section 403(b) annuity. Amend 1040 For purposes of the credit, an employee contribution will be voluntary as long as it is not required as a condition of employment. Amend 1040 Reducing eligible contributions. Amend 1040   Reduce your eligible contributions (but not below zero) by the total distributions you received during the testing period (defined later) from any IRA, plan, or annuity included earlier under Eligible contributions. Amend 1040 Also reduce your eligible contributions by any distribution from a Roth IRA that is not rolled over, even if the distribution is not taxable. Amend 1040      Do not reduce your eligible contributions by any of the following: The portion of any distribution which is not includible in income because it is a trustee-to-trustee transfer or a rollover distribution. Amend 1040 Any distribution that is a return of a contribution to an IRA (including a Roth IRA) made during the year for which you claim the credit if: The distribution is made before the due date (including extensions) of your tax return for that year, You do not take a deduction for the contribution, and The distribution includes any income attributable to the contribution. Amend 1040 Loans from a qualified employer plan treated as a distribution. Amend 1040 Distributions of excess contributions or deferrals (and income attributable to excess contributions and deferrals). Amend 1040 Distributions of dividends paid on stock held by an employee stock ownership plan under section 404(k). Amend 1040 Distributions from an eligible retirement plan that are converted or rolled over to a Roth IRA. Amend 1040 Distributions from a military retirement plan. Amend 1040 Distributions received by spouse. Amend 1040   Any distributions your spouse receives are treated as received by you if you file a joint return with your spouse both for the year of the distribution and for the year for which you claim the credit. Amend 1040 Testing period. Amend 1040   The testing period consists of: The year in which you claim the credit, The 2 years before the year in which you claim the credit, and The period after the end of the year in which you claim the credit and before the due date of the return (including extensions) for filing your return for the year in which you claimed the credit. Amend 1040 Example. Amend 1040 You and your spouse filed joint returns in 2011 and 2012, and plan to do so in 2013 and 2014. Amend 1040 You received a taxable distribution from a qualified plan in 2011 and a taxable distribution from an eligible section 457(b) deferred compensation plan in 2012. Amend 1040 Your spouse received taxable distributions from a Roth IRA in 2013 and tax-free distributions from a Roth IRA in 2014 before April 15. Amend 1040 You made eligible contributions to an IRA in 2013 and you otherwise qualify for this credit. Amend 1040 You must reduce the amount of your qualifying contributions in 2013 by the total of the distributions you and your spouse received in 2011, 2012, 2013, and 2014. Amend 1040 Maximum eligible contributions. Amend 1040   After your contributions are reduced, the maximum annual contribution on which you can base the credit is $2,000 per person. Amend 1040 Effect on other credits. Amend 1040   The amount of this credit will not change the amount of your refundable tax credits. Amend 1040 A refundable tax credit, such as the earned income credit or the additional child tax credit, is an amount that you would receive as a refund even if you did not otherwise owe any taxes. Amend 1040 Maximum credit. Amend 1040   This is a nonrefundable credit. Amend 1040 The amount of the credit in any year cannot be more than the amount of tax that you would otherwise pay (not counting any refundable credits or the adoption credit) in any year. Amend 1040 If your tax liability is reduced to zero because of other nonrefundable credits, such as the education credits, then you will not be entitled to this credit. Amend 1040 How to figure and report the credit. Amend 1040   The amount of the credit you can get is based on the contributions you make and your credit rate. Amend 1040 The credit rate can be as low as 10% or as high as 50%. Amend 1040 Your credit rate depends on your income and your filing status. Amend 1040 See Form 8880, Credit for Qualified Retirement Savings Contributions, to determine your credit rate. Amend 1040   The maximum contribution taken into account is $2,000 per person. Amend 1040 On a joint return, up to $2,000 is taken into account for each spouse. Amend 1040   Figure the credit on Form 8880. Amend 1040 Report the credit on line 50 of your Form 1040 or line 32 of your Form 1040A, and attach Form 8880 to your return. Amend 1040 Prev  Up  Next   Home   More Online Publications