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Federal Amended Tax Return Instructions

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Federal Amended Tax Return Instructions

Federal amended tax return instructions 4. Federal amended tax return instructions   Student Loan Interest Deduction Table of Contents Introduction Student Loan Interest DefinedQualified Student Loan Qualified Education Expenses Include As Interest Do Not Include As Interest When Must Interest Be Paid Can You Claim the DeductionNo Double Benefit Allowed Figuring the DeductionEffect of the Amount of Your Income on the Amount of Your Deduction Which Worksheet To Use Claiming the Deduction Introduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. Federal amended tax return instructions However, if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. Federal amended tax return instructions For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. Federal amended tax return instructions This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. Federal amended tax return instructions The student loan interest deduction is taken as an adjustment to income. Federal amended tax return instructions This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). Federal amended tax return instructions This chapter explains: What type of loan interest you can deduct, Whether you can claim the deduction, What expenses you must have paid with the student loan, Who is an eligible student, How to figure the deduction, and How to claim the deduction. Federal amended tax return instructions Table 4-1. Federal amended tax return instructions Student Loan Interest Deduction at a Glance This table summarizes the features of the student loan interest deduction. Federal amended tax return instructions Do not rely on this table alone. Federal amended tax return instructions Refer to the text for complete details. Federal amended tax return instructions Feature   Description Maximum benefit   You can reduce your income subject to tax by up to $2,500. Federal amended tax return instructions Loan qualifications   Your student loan: •must have been taken out solely to pay qualified education expenses, and •cannot be from a related person or made under a qualified employer plan. Federal amended tax return instructions Student qualifications   The student must be: •you, your spouse, or your dependent, and  •enrolled at least half-time in a degree program. Federal amended tax return instructions Time limit on deduction   You can deduct interest paid during the remaining period of your student loan. Federal amended tax return instructions Limit on modified adjusted gross income (MAGI)   $155,000 if married filing a joint return; $75,000 if single, head of household, or qualifying widow(er). Federal amended tax return instructions Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. Federal amended tax return instructions It includes both required and voluntary interest payments. Federal amended tax return instructions Qualified Student Loan This is a loan you took out solely to pay qualified education expenses (defined later) that were: For you, your spouse, or a person who was your dependent when you took out the loan, Paid or incurred within a reasonable period of time before or after you took out the loan, and For education provided during an academic period for an eligible student. Federal amended tax return instructions Loans from the following sources are not qualified student loans. Federal amended tax return instructions A related person. Federal amended tax return instructions A qualified employer plan. Federal amended tax return instructions Your dependent. Federal amended tax return instructions   Generally, your dependent is someone who is either a: Qualifying child, or Qualifying relative. Federal amended tax return instructions You can find more information about dependents in Publication 501. Federal amended tax return instructions Exceptions. Federal amended tax return instructions   For purposes of the student loan interest deduction, there are the following exceptions to the general rules for dependents. Federal amended tax return instructions An individual can be your dependent even if you are the dependent of another taxpayer. Federal amended tax return instructions An individual can be your dependent even if the individual files a joint return with a spouse. Federal amended tax return instructions An individual can be your dependent even if the individual had gross income for the year that was equal to or more than the exemption amount for the year ($3,900 for 2013). Federal amended tax return instructions Reasonable period of time. Federal amended tax return instructions   Qualified education expenses are treated as paid or incurred within a reasonable period of time before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal postsecondary education loan program. Federal amended tax return instructions   Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met. Federal amended tax return instructions The expenses relate to a specific academic period, and The loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period. Federal amended tax return instructions   If neither of the above situations applies, the reasonable period of time usually is determined based on all the relevant facts and circumstances. Federal amended tax return instructions Academic period. Federal amended tax return instructions   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. Federal amended tax return instructions 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. Federal amended tax return instructions Eligible student. Federal amended tax return instructions   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. Federal amended tax return instructions Enrolled at least half-time. Federal amended tax return instructions   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. Federal amended tax return instructions   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Federal amended tax return instructions However, the standard may not be lower than any of those established by the U. Federal amended tax return instructions S. Federal amended tax return instructions Department of Education under the Higher Education Act of 1965. Federal amended tax return instructions Related person. Federal amended tax return instructions   You cannot deduct interest on a loan you get from a related person. Federal amended tax return instructions Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. Federal amended tax return instructions ), Your lineal descendants (children, grandchildren, etc. Federal amended tax return instructions ), and Certain corporations, partnerships, trusts, and exempt organizations. Federal amended tax return instructions Qualified employer plan. Federal amended tax return instructions   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. Federal amended tax return instructions Qualified Education Expenses For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. Federal amended tax return instructions They include amounts paid for the following items. Federal amended tax return instructions Tuition and fees. Federal amended tax return instructions Room and board. Federal amended tax return instructions Books, supplies, and equipment. Federal amended tax return instructions Other necessary expenses (such as transportation). Federal amended tax return instructions The cost of room and board qualifies only to the extent that it is not more than the greater of: The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, or The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. Federal amended tax return instructions Eligible educational institution. Federal amended tax return instructions   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. Federal amended tax return instructions S. Federal amended tax return instructions Department of Education. Federal amended tax return instructions It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Federal amended tax return instructions   Certain educational institutions located outside the United States also participate in the U. Federal amended tax return instructions S. Federal amended tax return instructions Department of Education's Federal Student Aid (FSA) programs. Federal amended tax return instructions   For purposes of the student loan interest deduction, an eligible educational institution also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. Federal amended tax return instructions   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. Federal amended tax return instructions The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. Federal amended tax return instructions    The educational institution should be able to tell you if it is an eligible educational institution. Federal amended tax return instructions Adjustments to Qualified Education Expenses You must reduce your qualified education expenses by the total amount paid for them with the following tax-free items. Federal amended tax return instructions Employer-provided educational assistance. Federal amended tax return instructions See chapter 11, Employer-Provided Educational Assistance . Federal amended tax return instructions Tax-free distribution of earnings from a Coverdell education savings account (ESA). Federal amended tax return instructions See Tax-Free Distributions in chapter 7, Coverdell Education Savings Account. Federal amended tax return instructions Tax-free distribution of earnings from a qualified tuition program (QTP). Federal amended tax return instructions See Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program. Federal amended tax return instructions U. Federal amended tax return instructions S. Federal amended tax return instructions savings bond interest that you exclude from income because it is used to pay qualified education expenses. Federal amended tax return instructions See chapter 10, Education Savings Bond Program . Federal amended tax return instructions The tax-free part of scholarships and fellowships. Federal amended tax return instructions See Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Federal amended tax return instructions Veterans' educational assistance. Federal amended tax return instructions See Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Federal amended tax return instructions Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Federal amended tax return instructions Include As Interest In addition to simple interest on the loan, if all other requirements are met, the items discussed below can be student loan interest. Federal amended tax return instructions Loan origination fee. Federal amended tax return instructions   In general, this is a one-time fee charged by the lender when a loan is made. Federal amended tax return instructions To be deductible as interest, a loan origination fee must be for the use of money rather than for property or services (such as commitment fees or processing costs) provided by the lender. Federal amended tax return instructions A loan origination fee treated as interest accrues over the term of the loan. Federal amended tax return instructions   Loan origination fees were not required to be reported on Form 1098-E, Student Loan Interest Statement, for loans made before September 1, 2004. Federal amended tax return instructions If loan origination fees are not included in the amount reported on your Form 1098-E, you can use any reasonable method to allocate the loan origination fees over the term of the loan. Federal amended tax return instructions The method shown in the example below allocates equal portions of the loan origination fee to each payment required under the terms of the loan. Federal amended tax return instructions A method that results in the double deduction of the same portion of a loan origination fee would not be reasonable. Federal amended tax return instructions Example. Federal amended tax return instructions In August 2004, Bill took out a student loan for $16,000 to pay the tuition for his senior year of college. Federal amended tax return instructions The lender charged a 3% loan origination fee ($480) that was withheld from the funds Bill received. Federal amended tax return instructions Bill began making payments on his student loan in 2013. Federal amended tax return instructions Because the loan origination fee was not included in his 2013 Form 1098-E, Bill can use any reasonable method to allocate that fee over the term of the loan. Federal amended tax return instructions Bill's loan is payable in 120 equal monthly payments. Federal amended tax return instructions He allocates the $480 fee equally over the total number of payments ($480 ÷ 120 months = $4 per month). Federal amended tax return instructions Bill made 7 payments in 2013, so he paid $28 ($4 × 7) of interest attributable to the loan origination fee. Federal amended tax return instructions To determine his student loan interest deduction, he will add the $28 to the amount of other interest reported to him on Form 1098-E. Federal amended tax return instructions Capitalized interest. Federal amended tax return instructions   This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. Federal amended tax return instructions Capitalized interest is treated as interest for tax purposes and is deductible as payments of principal are made on the loan. Federal amended tax return instructions No deduction for capitalized interest is allowed in a year in which no loan payments were made. Federal amended tax return instructions Interest on revolving lines of credit. Federal amended tax return instructions   This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. Federal amended tax return instructions See Qualified Education Expenses , earlier. Federal amended tax return instructions Interest on refinanced student loans. Federal amended tax return instructions   This includes interest on both: Consolidated loans—loans used to refinance more than one student loan of the same borrower, and Collapsed loans—two or more loans of the same borrower that are treated by both the lender and the borrower as one loan. Federal amended tax return instructions    If you refinance a qualified student loan for more than your original loan and you use the additional amount for any purpose other than qualified education expenses, you cannot deduct any interest paid on the refinanced loan. Federal amended tax return instructions Voluntary interest payments. Federal amended tax return instructions   These are payments made on a qualified student loan during a period when interest payments are not required, such as when the borrower has been granted a deferment or the loan has not yet entered repayment status. Federal amended tax return instructions Example. Federal amended tax return instructions The payments on Roger's student loan were scheduled to begin in June 2012, 6 months after he graduated from college. Federal amended tax return instructions He began making payments as required. Federal amended tax return instructions In September 2013, Roger enrolled in graduate school on a full-time basis. Federal amended tax return instructions He applied for and was granted deferment of his loan payments while in graduate school. Federal amended tax return instructions Wanting to pay down his student loan as much as possible, he made loan payments in October and November 2013. Federal amended tax return instructions Even though these were voluntary (not required) payments, Roger can deduct the interest paid in October and November. Federal amended tax return instructions Allocating Payments Between Interest and Principal The allocation of payments between interest and principal for tax purposes might not be the same as the allocation shown on the Form 1098-E or other statement you receive from the lender or loan servicer. Federal amended tax return instructions To make the allocation for tax purposes, a payment generally applies first to stated interest that remains unpaid as of the date the payment is due, second to any loan origination fees allocable to the payment, third to any capitalized interest that remains unpaid as of the date the payment is due, and fourth to the outstanding principal. Federal amended tax return instructions Example. Federal amended tax return instructions In August 2012, Peg took out a $10,000 student loan to pay the tuition for her senior year of college. Federal amended tax return instructions The lender charged a 3% loan origination fee ($300) that was withheld from the funds Peg received. Federal amended tax return instructions The interest (5% simple) on this loan accrued while she completed her senior year and for 6 months after she graduated. Federal amended tax return instructions At the end of that period, the lender determined the amount to be repaid by capitalizing all accrued but unpaid interest ($625 interest accrued from August 2012 through October 2013) and adding it to the outstanding principal balance of the loan. Federal amended tax return instructions The loan is payable over 60 months, with a payment of $200. Federal amended tax return instructions 51 due on the first of each month, beginning November 2013. Federal amended tax return instructions Peg did not receive a Form 1098-E for 2013 from her lender because the amount of interest she paid did not require the lender to issue an information return. Federal amended tax return instructions However, she did receive an account statement from the lender that showed the following 2013 payments on her outstanding loan of $10,625 ($10,000 principal + $625 accrued but unpaid interest). Federal amended tax return instructions Payment Date   Payment   Stated Interest   Principal November 2013   $200. Federal amended tax return instructions 51   $44. Federal amended tax return instructions 27   $156. Federal amended tax return instructions 24 December 2013   $200. Federal amended tax return instructions 51   $43. Federal amended tax return instructions 62   $156. Federal amended tax return instructions 89 Totals   $401. Federal amended tax return instructions 02   $87. Federal amended tax return instructions 89   $313. Federal amended tax return instructions 13 To determine the amount of interest that could be deducted on the loan for 2013, Peg starts with the total amount of stated interest she paid, $87. Federal amended tax return instructions 89. Federal amended tax return instructions Next, she allocates the loan origination fee over the term of the loan ($300 ÷ 60 months = $5 per month). Federal amended tax return instructions A total of $10 ($5 of each of the two principal payments) should be treated as interest for tax purposes. Federal amended tax return instructions Peg then applies the unpaid capitalized interest ($625) to the two principal payments in the order in which they were made, and determines that the remaining amount of principal of both payments is treated as interest for tax purposes. Federal amended tax return instructions Assuming that Peg qualifies to take the student loan interest deduction, she can deduct $401. Federal amended tax return instructions 02 ($87. Federal amended tax return instructions 89 + $10 + $303. Federal amended tax return instructions 13). Federal amended tax return instructions For 2014, Peg will continue to allocate $5 of the loan origination fee to the principal portion of each monthly payment she makes and treat that amount as interest for tax purposes. Federal amended tax return instructions She also will apply the remaining amount of capitalized interest ($625 − $303. Federal amended tax return instructions 13 = $321. Federal amended tax return instructions 87) to the principal payments in the order in which they are made until the balance is zero, and treat those amounts as interest for tax purposes. Federal amended tax return instructions Do Not Include As Interest You cannot claim a student loan interest deduction for any of the following items. Federal amended tax return instructions Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. Federal amended tax return instructions Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. Federal amended tax return instructions Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the “NHSC Loan Repayment Program”) or certain other loan repayment assistance programs. Federal amended tax return instructions For more information, see Student Loan Repayment Assistance in chapter 5, Student Loan Cancellations and Repayment Assistance. Federal amended tax return instructions When Must Interest Be Paid You can deduct all interest you paid during the year on your student loan, including voluntary payments, until the loan is paid off. Federal amended tax return instructions Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. Federal amended tax return instructions Your filing status is any filing status except married filing separately. Federal amended tax return instructions No one else is claiming an exemption for you on his or her tax return. Federal amended tax return instructions You are legally obligated to pay interest on a qualified student loan. Federal amended tax return instructions You paid interest on a qualified student loan. Federal amended tax return instructions Claiming an exemption for you. Federal amended tax return instructions   Another taxpayer is claiming an exemption for you if he or she lists your name and other required information on his or her Form 1040 (or Form 1040A), line 6c, or Form 1040NR, line 7c. Federal amended tax return instructions Example 1. Federal amended tax return instructions During 2013, Josh paid $600 interest on his qualified student loan. Federal amended tax return instructions Only he is legally obligated to make the payments. Federal amended tax return instructions No one claimed an exemption for Josh for 2013. Federal amended tax return instructions Assuming all other requirements are met, Josh can deduct the $600 of interest he paid on his 2013 Form 1040 or 1040A. Federal amended tax return instructions Example 2. Federal amended tax return instructions During 2013, Jo paid $1,100 interest on her qualified student loan. Federal amended tax return instructions Only she is legally obligated to make the payments. Federal amended tax return instructions Jo's parents claimed an exemption for her on their 2013 tax return. Federal amended tax return instructions In this case, neither Jo nor her parents may deduct the student loan interest Jo paid in 2013. Federal amended tax return instructions Interest paid by others. Federal amended tax return instructions   If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest. Federal amended tax return instructions Example 1. Federal amended tax return instructions Darla obtained a qualified student loan to attend college. Federal amended tax return instructions After Darla's graduation from college, she worked as an intern for a nonprofit organization. Federal amended tax return instructions As part of the internship program, the nonprofit organization made an interest payment on behalf of Darla. Federal amended tax return instructions This payment was treated as additional compensation and reported in box 1 of her Form W-2. Federal amended tax return instructions Assuming all other qualifications are met, Darla can deduct this payment of interest on her tax return. Federal amended tax return instructions Example 2. Federal amended tax return instructions Ethan obtained a qualified student loan to attend college. Federal amended tax return instructions After graduating from college, the first monthly payment on his loan was due in December. Federal amended tax return instructions As a gift, Ethan's mother made this payment for him. Federal amended tax return instructions No one is claiming a dependency exemption for Ethan on his or her tax return. Federal amended tax return instructions Assuming all other qualifications are met, Ethan can deduct this payment of interest on his tax return. Federal amended tax return instructions No Double Benefit Allowed You cannot deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, as home mortgage interest). Federal amended tax return instructions Figuring the Deduction Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. Federal amended tax return instructions However, the amount determined above may be gradually reduced (phased out) or eliminated based on your filing status and MAGI as explained below. Federal amended tax return instructions You can use Worksheet 4-1. Federal amended tax return instructions Student Loan Interest Deduction Worksheet (at the end of this chapter) to figure both your MAGI and your deduction. Federal amended tax return instructions Form 1098-E. Federal amended tax return instructions   To help you figure your student loan interest deduction, you should receive Form 1098-E. Federal amended tax return instructions Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2013 on one or more qualified student loans must send Form 1098-E (or acceptable substitute) to each borrower by January 31, 2014. Federal amended tax return instructions   For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. Federal amended tax return instructions Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. Federal amended tax return instructions However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. Federal amended tax return instructions See Allocating Payments Between Interest and Principal , earlier. Federal amended tax return instructions    The lender may ask for a completed Form W-9S, or similar statement to obtain the borrower's name, address, and taxpayer identification number. Federal amended tax return instructions The form may also be used by the borrower to certify that the student loan was incurred solely to pay for qualified education expenses. Federal amended tax return instructions Effect of the Amount of Your Income on the Amount of Your Deduction The amount of your student loan interest deduction is phased out (gradually reduced) if your MAGI is between $60,000 and $75,000 ($125,000 and $155,000 if you file a joint return). Federal amended tax return instructions You cannot take a student loan interest deduction if your MAGI is $75,000 or more ($155,000 or more if you file a joint return). Federal amended tax return instructions Modified adjusted gross income (MAGI). Federal amended tax return instructions   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for student loan interest. Federal amended tax return instructions However, as discussed below, there may be other modifications. Federal amended tax return instructions Table 4-2 shows how the amount of your MAGI can affect your student loan interest deduction. Federal amended tax return instructions Table 4-2. Federal amended tax return instructions Effect of MAGI on Student Loan Interest Deduction IF your filing status is. Federal amended tax return instructions . Federal amended tax return instructions . Federal amended tax return instructions AND your MAGI is. Federal amended tax return instructions . Federal amended tax return instructions . Federal amended tax return instructions THEN your student loan interest deduction is. Federal amended tax return instructions . Federal amended tax return instructions . Federal amended tax return instructions single,  head of household, or qualifying widow(er) not more than $60,000 not affected by the phaseout. Federal amended tax return instructions more than $60,000  but less than $75,000 reduced because of the phaseout. Federal amended tax return instructions $75,000 or more eliminated by the phaseout. Federal amended tax return instructions married filing joint return not more than $125,000 not affected by the phaseout. Federal amended tax return instructions more than $125,000 but less than $155,000 reduced because of the phaseout. Federal amended tax return instructions $155,000 or more eliminated by the phaseout. Federal amended tax return instructions MAGI when using Form 1040A. Federal amended tax return instructions   If you file Form 1040A, your MAGI is the AGI on line 22 of that form figured without taking into account any amount on line 18 (student loan interest deduction) and line 19 (tuition and fees deduction). Federal amended tax return instructions MAGI when using Form 1040. Federal amended tax return instructions   If you file Form 1040, your MAGI is the AGI on line 38 of that form figured without taking into account any amount on line 33 (student loan interest deduction), line 34 (tuition and fees deduction), or line 35 (domestic production activities deduction), and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Federal amended tax return instructions MAGI when using Form 1040NR. Federal amended tax return instructions   If you file Form 1040NR, your MAGI is the AGI on line 36 of that form figured without taking into account any amount on line 33 (student loan interest deduction) and line 34 (domestic production activities deduction). Federal amended tax return instructions MAGI when using Form 1040NR-EZ. Federal amended tax return instructions   If you file Form 1040NR-EZ, your MAGI is the AGI on line 10 of that form figured without taking into account any amount on line 9 (student loan interest deduction). Federal amended tax return instructions Phaseout. Federal amended tax return instructions   If your MAGI is within the range of incomes where the credit must be reduced, you must figure your reduced deduction. Federal amended tax return instructions To figure the phaseout, multiply your interest deduction (before the phaseout) by a fraction. Federal amended tax return instructions The numerator is your MAGI minus $60,000 ($125,000 in the case of a joint return). Federal amended tax return instructions The denominator is $15,000 ($30,000 in the case of a joint return). Federal amended tax return instructions Subtract the result from your deduction (before the phaseout) to give you the amount you can deduct. Federal amended tax return instructions Example 1. Federal amended tax return instructions During 2013 you paid $800 interest on a qualified student loan. Federal amended tax return instructions Your 2013 MAGI is $145,000 and you are filing a joint return. Federal amended tax return instructions You must reduce your deduction by $533, figured as follows. Federal amended tax return instructions   $800 × $145,000 − $125,000  $30,000 = $533   Your reduced student loan interest deduction is $267 ($800 − $533). Federal amended tax return instructions Example 2. Federal amended tax return instructions The facts are the same as in Example 1 except that you paid $2,750 interest. Federal amended tax return instructions Your maximum deduction for 2013 is $2,500. Federal amended tax return instructions You must reduce your maximum deduction by $1,667, figured as follows. Federal amended tax return instructions   $2,500 × $145,000 − $125,000  $30,000 = $1,667   In this example, your reduced student loan interest deduction is $833 ($2,500 − $1,667). Federal amended tax return instructions Which Worksheet To Use Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the instructions for Form 1040, Form 1040A, or Form 1040NR. Federal amended tax return instructions However, if you are filing Form 2555, Foreign Earned Income, Form 2555-EZ, Foreign Earned Income Exclusion, or Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1. Federal amended tax return instructions Student Loan Interest Deduction Worksheet at the end of this chapter. Federal amended tax return instructions Claiming the Deduction The student loan interest deduction is an adjustment to income. Federal amended tax return instructions To claim the deduction, enter the allowable amount on line 33 (Form 1040), line 18 (Form 1040A), line 33 (Form 1040NR), or line 9 (Form 1040NR-EZ). Federal amended tax return instructions Worksheet 4-1. Federal amended tax return instructions Student Loan Interest Deduction Worksheet Use this worksheet instead of the worksheet in the Form 1040 instructions if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico. Federal amended tax return instructions Before using this worksheet, you must complete Form 1040, lines 7 through 32, plus any amount to be entered on the dotted line next to line 36. Federal amended tax return instructions 1. Federal amended tax return instructions Enter the total interest you paid in 2013 on qualified student loans. Federal amended tax return instructions Do not enter  more than $2,500 1. Federal amended tax return instructions   2. Federal amended tax return instructions Enter the amount from Form 1040, line 22 2. Federal amended tax return instructions       3. Federal amended tax return instructions Enter the total of the amounts from Form 1040,  lines 23 through 32 3. Federal amended tax return instructions           4. Federal amended tax return instructions Enter the total of any amounts entered on the dotted line next to Form 1040, line 36 4. Federal amended tax return instructions           5. Federal amended tax return instructions Add lines 3 and 4 5. Federal amended tax return instructions       6. Federal amended tax return instructions Subtract line 5 from line 2 6. Federal amended tax return instructions       7. Federal amended tax return instructions Enter any foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18) 7. Federal amended tax return instructions       8. Federal amended tax return instructions Enter any foreign housing deduction (Form 2555, line 50) 8. Federal amended tax return instructions       9. Federal amended tax return instructions Enter the amount of income from Puerto Rico you are excluding 9. Federal amended tax return instructions       10. Federal amended tax return instructions Enter the amount of income from American Samoa  you are excluding (Form 4563, line 15) 10. Federal amended tax return instructions       11. Federal amended tax return instructions Add lines 6 through 10. Federal amended tax return instructions This is your modified adjusted gross income 11. Federal amended tax return instructions   12. Federal amended tax return instructions Enter the amount shown below for your filing status 12. Federal amended tax return instructions     •Single, head of household, or qualifying widow(er)—$60,000       •Married filing jointly—$125,000     13. Federal amended tax return instructions Is the amount on line 11 more than the amount on line 12?       □ No. Federal amended tax return instructions Skip lines 13 and 14, enter -0- on line 15, and go to line 16. Federal amended tax return instructions       □ Yes. Federal amended tax return instructions Subtract line 12 from line 11 13. Federal amended tax return instructions   14. Federal amended tax return instructions Divide line 13 by $15,000 ($30,000 if married filing jointly). Federal amended tax return instructions Enter the result as a decimal  (rounded to at least three places). Federal amended tax return instructions If the result is 1. Federal amended tax return instructions 000 or more, enter 1. Federal amended tax return instructions 000 14. Federal amended tax return instructions . Federal amended tax return instructions 15. Federal amended tax return instructions Multiply line 1 by line 14 15. Federal amended tax return instructions   16. Federal amended tax return instructions Student loan interest deduction. Federal amended tax return instructions Subtract line 15 from line 1. Federal amended tax return instructions Enter the result here  and on Form 1040, line 33. Federal amended tax return instructions Do not include this amount in figuring any other  deduction on your return (such as on Schedule A, C, E, etc. Federal amended tax return instructions ) 16. Federal amended tax return instructions   Prev  Up  Next   Home   More Online Publications
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Understanding Your CP3219A Notice

We've received information that is different from what you reported on your tax return. This may result in an increase or decrease in your tax. The notice explains how the amount was calculated and how you can challenge it in U.S Tax Court.


What you need to do

  • Read the notice carefully – it explains the proposed increase or decrease in your tax. Note: The amounts shown as due on the notice may not match your previous notice because not all items can be challenged in tax court.
  • If you agree with the changes – sign the enclosed Form 5564, Notice of Deficiency - Waiver, and mail to the address shown on the notice.
  • If you don’t agree with the changes – you have the right to challenge the proposed changes by filing a petition with the U.S. Tax Court no later than the date listed on the notice. The Court can't consider your case if the petition is filed late.
  • If you don’t agree with the changes and have additional information – mail the information to the address listed on the notice. Our review won't extend the time you have to file a petition with the U.S. Tax Court.

You may want to…


Answers to Common Questions

Why did I receive the notice?

We received information from a third party that doesn’t match the information you reported on your return. This affects your tax return.

Is the notice a bill?

No. It shows the information we’ve received and how it affects your tax. It also provides you contact information for filing a petition with the tax court.

Can I get an extension of time to respond?

No. Once the CP3219A, Notice of Deficiency has been issued, we are unable to extend the time you have to respond or to file a petition with the U.S. Tax Court.

What do I need to do?

If you agree, sign the Form 5564, Notice of Deficiency - Waiver response form and mail to the address on the notice.

What if the information is wrong or if I disagree?

If you want us to consider additional information, send it to us, along with a written explanation supporting your position. You may contact us with the phone number provided on the first page of the notice. You may want to contact whoever reported the information and ask them to correct it. You should send your response to us as soon as possible, since we can't extend the time you have to file a petition with the tax court.

The information is wrong because someone else is using my name and social security number. What can I do?

Call us and let us know. You also can use this link to go to our Identity theft information webpage to find out more about what you can do.

I reported the information but I reported it incorrectly. Can I call you to correct my return?

We can accept your information over the phone for incorrectly reported information as long as the mistake doesn't increase or decrease your tax. If the information you provide over the phone isn't enough to resolve all issues with your case, we're unable to extend the time you have to file a petition with the tax court.

Do I need to amend my return?

If the information displayed in the “Changes to your tax return” section of the notice is correct, you don't need to amend your return unless you have additional income, credits or expenses to report. If you agree with our notice, follow the instructions to sign the Form 5564, Notice of Deficiency - Waiver and return it to us in the envelope provided. 

If you have additional income, credits or expenses to report, you may want to complete and submit a Form 1040-X, Amended U.S. Individual Income Tax Return. You can receive help at an IRS Taxpayer Assistance Center.

I want to check a copy of my original return. I don’t have one. How can I get one?

You can get a transcript of your return on our ”Order a Transcript” webpage at irs.gov. You also can get one by completing and sending us a Form 4506-T, Request for Transcript of Tax Return. We can't extend the time allowed to petition the tax court.

I don’t want a transcript of my return. I want a copy. How can I get one?

Did an accountant or some other person prepare your return? You could ask them for a copy.

I can’t get a copy of my return from a tax preparer. How else can I get a copy of it?

You can get a copy of your return by completing and sending us a Form 4506, Request for Copy of Tax Return. We charge a fee for tax return requests.

How can I find an IRS Taxpayer Assistance Center?

We have centers located throughout the country. Our website has directions on how to find the center nearest to you.

Why did it take you so long to contact me about this matter?

Our computer systems match the information you report on your tax return with information reported by employers, banks, businesses, and others. This matching takes several months to complete.

The notice says my taxes will increase. Will I be charged interest on the money I owe?

Yes, interest accrues on the unpaid balance until it is paid in full.

What happens if I can’t pay the full amount I owe?

You can make a payment plan with us when you can’t pay the full amount you owe.

How can I make a payment plan?

Call us at the toll-free number on the top right corner of your notice to talk about payment plans or learn more about them at this web page.


Tips for next year

You can avoid future problems by:

  • keeping accurate and full records
  • waiting until you get all of your income statements before filing your tax return
  • checking the records you get from your employer, mortgage company, bank, or other sources of income (W-2s, 1098s, 1099s, etc.) to make sure they're correct
  • including all your income on your tax return
  • following the instructions on how to report income, expenses and deductions
  • filing an amended tax return for any information you receive after you’ve filed your return

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Page Last Reviewed or Updated: 28-Feb-2014

The Federal Amended Tax Return Instructions

Federal amended tax return instructions 6. Federal amended tax return instructions   How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Federal amended tax return instructions Prev  Up  Next   Home   More Online Publications