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File 1040x

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File 1040x

File 1040x 10. File 1040x   Self-Employment (SE) Tax Table of Contents Who Must Pay SE Tax?Special Rules and Exceptions Figuring Earnings Subject to SE Tax Farm Optional Method Using Both Optional Methods Reporting Self-Employment Tax The SE tax rules apply no matter how old you are and even if you are already receiving social security and Medicare benefits. File 1040x Who Must Pay SE Tax? Generally, you must pay SE tax and file Schedule SE (Form 1040) if your net earnings from self-employment were $400 or more. File 1040x Use Schedule SE to figure net earnings from self-employment. File 1040x Sole proprietor or independent contractor. File 1040x   If you are self-employed as a sole proprietor or independent contractor, you generally use Schedule C or C-EZ (Form 1040) to figure your earnings subject to SE tax. File 1040x SE tax rate. File 1040x    For 2013, the SE tax rate on net earnings is 15. File 1040x 3% (12. File 1040x 4% social security tax plus 2. File 1040x 9% Medicare tax). File 1040x Maximum earnings subject to self-employment tax. File 1040x    Only the first $113,700 of your combined wages, tips, and net earnings in 2013 is subject to any combination of the 12. File 1040x 4% social security part of SE tax, social security tax, or railroad retirement (tier 1) tax. File 1040x   All of your combined wages, tips, and net earnings in 2013 are subject to any combination of the 2. File 1040x 9% Medicare part of SE tax, social security tax, or railroad retirement (tier 1) tax. File 1040x   If your wages and tips are subject to either social security or railroad retirement (tier 1) tax, or both, and total at least $113,700, do not pay the 12. File 1040x 4% social security part of the SE tax on any of your net earnings. File 1040x However, you must pay the 2. File 1040x 9% Medicare part of the SE tax on all your net earnings. File 1040x Special Rules and Exceptions Aliens. File 1040x   Generally, resident aliens must pay self-employment tax under the same rules that apply to U. File 1040x S. File 1040x citizens. File 1040x Nonresident aliens are not subject to SE tax unless an international social security agreement in effect determines that they are covered under the U. File 1040x S. File 1040x social security system. File 1040x However, residents of the Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are subject to self-employment tax, as they are considered U. File 1040x S. File 1040x residents for self-employment tax purposes. File 1040x For more information on aliens, see Publication 519, U. File 1040x S. File 1040x Tax Guide for Aliens. File 1040x Child employed by parent. File 1040x   You are not subject to SE tax if you are under age 18 and you are working for your father or mother. File 1040x Church employee. File 1040x    If you work for a church or a qualified church-controlled organization (other than as a minister or member of a religious order) that elected an exemption from social security and Medicare taxes, you are subject to SE tax if you receive $108. File 1040x 28 or more in wages from the church or organization. File 1040x For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. File 1040x Fishing crew member. File 1040x   If you are a member of the crew on a boat that catches fish or other water life, your earnings are subject to SE tax if all the following conditions apply. File 1040x You do not get any pay for the work except your share of the catch or a share of the proceeds from the sale of the catch, unless the pay meets all the following conditions. File 1040x The pay is not more than $100 per trip. File 1040x The pay is received only if there is a minimum catch. File 1040x The pay is solely for additional duties (such as mate, engineer, or cook) for which additional cash pay is traditional in the fishing industry. File 1040x You get a share of the catch or a share of the proceeds from the sale of the catch. File 1040x Your share depends on the amount of the catch. File 1040x The boat's operating crew normally numbers fewer than 10 individuals. File 1040x (An operating crew is considered as normally made up of fewer than 10 if the average size of the crew on trips made during the last four calendar quarters is fewer than 10. File 1040x ) Notary public. File 1040x   Fees you receive for services you perform as a notary public are reported on Schedule C or C-EZ but are not subject to self-employment tax (see the Instructions for Schedule SE (Form 1040)). File 1040x State or local government employee. File 1040x   You are subject to SE tax if you are an employee of a state or local government, are paid solely on a fee basis, and your services are not covered under a federal-state social security agreement. File 1040x Foreign government or international organization employee. File 1040x   You are subject to SE tax if both the following conditions are true. File 1040x You are a U. File 1040x S. File 1040x citizen employed in the United States, Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or the Virgin Islands by: A foreign government, A wholly-owned agency of a foreign government, or An international organization. File 1040x Your employer is not required to withhold social security and Medicare taxes from your wages. File 1040x U. File 1040x S. File 1040x citizen or resident alien residing abroad. File 1040x    If you are a self-employed U. File 1040x S. File 1040x citizen or resident alien living outside the United States, in most cases you must pay SE tax. File 1040x Do not reduce your foreign earnings from self-employment by your foreign earned income exclusion. File 1040x Exception. File 1040x    The United States has social security agreements with many countries to eliminate double taxation under two social security systems. File 1040x Under these agreements, you generally must only pay social security and Medicare taxes to the country in which you live. File 1040x The country to which you must pay the tax will issue a certificate which serves as proof of exemption from social security tax in the other country. File 1040x   For more information, see the Instructions for Schedule SE (Form 1040). File 1040x More Than One Business If you have earnings subject to SE tax from more than one trade, business, or profession, you must combine the net profit (or loss) from each to determine your total earnings subject to SE tax. File 1040x A loss from one business reduces your profit from another business. File 1040x Community Property Income If any of the income from a trade or business, other than a partnership, is community property income under state law, it is included in the earnings subject to SE tax of the spouse carrying on the trade or business. File 1040x Gain or Loss Do not include in earnings subject to SE tax a gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers. File 1040x It does not matter whether the disposition is a sale, exchange, or an involuntary conversion. File 1040x Lost Income Payments If you are self-employed and reduce or stop your business activities, any payment you receive from insurance or other sources for the lost business income is included in earnings subject to SE tax. File 1040x If you are not working when you receive the payment, it still relates to your business and is included in earnings subject to SE tax, even though your business is temporarily inactive. File 1040x Figuring Earnings Subject to SE Tax Methods for Figuring Net Earnings There are three ways to figure your net earnings from self-employment. File 1040x The regular method. File 1040x The nonfarm optional method. File 1040x The farm optional method. File 1040x You must use the regular method unless you are eligible to use one or both of the optional methods. File 1040x Why use an optional method?    You may want to use the optional methods (discussed later) when you have a loss or a small net profit and any one of the following applies. File 1040x You want to receive credit for social security benefit coverage. File 1040x You incurred child or dependent care expenses for which you could claim a credit. File 1040x (An optional method may increase your earned income, which could increase your credit. File 1040x ) You are entitled to the earned income credit. File 1040x (An optional method may increase your earned income, which could increase your credit. File 1040x ) You are entitled to the additional child tax credit. File 1040x (An optional method may increase your earned income, which could increase your credit. File 1040x ) Effects of using an optional method. File 1040x   Using an optional method could increase your SE tax. File 1040x Paying more SE tax could result in your getting higher benefits when you retire. File 1040x   If you use either or both optional methods, you must figure and pay the SE tax due under these methods even if you would have had a smaller tax or no tax using the regular method. File 1040x   The optional methods may be used only to figure your SE tax. File 1040x To figure your income tax, include your actual earnings in gross income, regardless of which method you use to determine SE tax. File 1040x Regular Method Multiply your total earnings subject to SE tax by 92. File 1040x 35% (. File 1040x 9235) to get your net earnings under the regular method. File 1040x See Short Schedule SE, line 4, or Long Schedule SE, line 4a. File 1040x Net earnings figured using the regular method are also called actual net earnings. File 1040x Nonfarm Optional Method Use the nonfarm optional method only for earnings that do not come from farming. File 1040x You may use this method if you meet all the following tests. File 1040x You are self-employed on a regular basis. File 1040x This means that your actual net earnings from self-employment were $400 or more in at least 2 of the 3 tax years before the one for which you use this method. File 1040x The net earnings can be from either farm or nonfarm earnings or both. File 1040x You have used this method less than 5 years. File 1040x (There is a 5-year lifetime limit. File 1040x ) The years do not have to be one after another. File 1040x Your net nonfarm profits were: Less than $5,024, and Less than 72. File 1040x 189% of your gross nonfarm income. File 1040x Net nonfarm profits. File 1040x   Net nonfarm profit generally is the total of the amounts from: Line 31, Schedule C (Form 1040), Line 3, Schedule C-EZ (Form 1040), Box 14, code A, Schedule K-1 (Form 1065) (from nonfarm partnerships), and Box 9, code J1, Schedule K-1 (Form 1065-B). File 1040x   However, you may need to adjust the amount reported on Schedule K-1 if you are a general partner or if it is a loss. File 1040x Gross nonfarm income. File 1040x   Your gross nonfarm income generally is the total of the amounts from: Line 7, Schedule C (Form 1040), Line 1, Schedule C-EZ (Form 1040), Box 14, code C, Schedule K-1 (Form 1065) (from nonfarm partnerships), and Box 9, code J2, Schedule K-1 (Form 1065-B). File 1040x Figuring Nonfarm Net Earnings If you meet the three tests explained earlier, use the following table to figure your net earnings from self-employment under the nonfarm optional method. File 1040x Table 10-1. File 1040x Figuring Nonfarm Net Earnings IF your gross nonfarm income is. File 1040x . File 1040x . File 1040x THEN your net earnings are equal to. File 1040x . File 1040x . File 1040x $6,960 or less Two-thirds of your gross nonfarm income. File 1040x More than $6,960 $4,640 Actual net earnings. File 1040x   Your actual net earnings are 92. File 1040x 35% of your total earnings subject to SE tax (that is, multiply total earnings subject to SE tax by 92. File 1040x 35% (. File 1040x 9235) to get actual net earnings). File 1040x Actual net earnings are equivalent to net earnings figured using the regular method. File 1040x Optional net earnings less than actual net earnings. File 1040x   You cannot use this method to report an amount less than your actual net earnings from self-employment. File 1040x Gross nonfarm income of $6,960 or less. File 1040x   The following examples illustrate how to figure net earnings when gross nonfarm income is $6,960 or less. File 1040x Example 1. File 1040x Net nonfarm profit less than $5,024 and less than 72. File 1040x 189% of gross nonfarm income. File 1040x Ann Green runs a craft business. File 1040x Her actual net earnings from self-employment were $800 in 2011 and $900 in 2012. File 1040x She meets the test for being self-employed on a regular basis. File 1040x She has used the nonfarm optional method less than 5 years. File 1040x Her gross income and net profit in 2013 are as follows: Gross nonfarm income $5,400 Net nonfarm profit $1,200 Ann's actual net earnings for 2013 are $1,108 ($1,200 × . File 1040x 9235). File 1040x Because her net profit is less than $5,024 and less than 72. File 1040x 189% of her gross income, she can use the nonfarm optional method to figure net earnings of $3,600 (2/3 × $5,400). File 1040x Because these net earnings are higher than her actual net earnings, she can report net earnings of $3,600 for 2013. File 1040x Example 2. File 1040x Net nonfarm profit less than $5,024 but not less than 72. File 1040x 189% of gross nonfarm income. File 1040x Assume that in Example 1 Ann's gross income is $1,000 and her net profit is $800. File 1040x She must use the regular method to figure her net earnings. File 1040x She cannot use the nonfarm optional method because her net profit is not less than 72. File 1040x 189% of her gross income. File 1040x Example 3. File 1040x Net loss from a nonfarm business. File 1040x Assume that in Example 1 Ann has a net loss of $700. File 1040x She can use the nonfarm optional method and report $3,600 (2/3 × $5,400) as her net earnings. File 1040x Example 4. File 1040x Nonfarm net earnings less than $400. File 1040x Assume that in Example 1 Ann has gross income of $525 and a net profit of $175. File 1040x In this situation, she would not pay any SE tax under either the regular method or the nonfarm optional method because her net earnings under both methods are less than $400. File 1040x Gross nonfarm income of more than $6,960. File 1040x   The following examples illustrate how to figure net earnings when gross nonfarm income is more than $6,960. File 1040x Example 1. File 1040x Net nonfarm profit less than $5,024 and less than 72. File 1040x 189% of gross nonfarm income. File 1040x John White runs an appliance repair shop. File 1040x His actual net earnings from self-employment were $10,500 in 2011 and $9,500 in 2012. File 1040x He meets the test for being self-employed on a regular basis. File 1040x He has used the nonfarm optional method less than 5 years. File 1040x His gross income and net profit in 2013 are as follows: Gross nonfarm income $12,000 Net nonfarm profit $1,200 John's actual net earnings for 2013 are $1,108 ($1,200 × . File 1040x 9235). File 1040x Because his net profit is less than $5,024 and less than 72. File 1040x 189% of his gross income, he can use the nonfarm optional method to figure net earnings of $4,640. File 1040x Because these net earnings are higher than his actual net earnings, he can report net earnings of $4,640 for 2013. File 1040x Example 2. File 1040x Net nonfarm profit not less than $5,024. File 1040x Assume that in Example 1 John's net profit is $5,400. File 1040x He must use the regular method. File 1040x He cannot use the nonfarm optional method because his net nonfarm profit is not less than $5,024. File 1040x Example 3. File 1040x Net loss from a nonfarm business. File 1040x Assume that in Example 1 John has a net loss of $700. File 1040x He can use the nonfarm optional method and report $4,640 as his net earnings from self-employment. File 1040x Farm Optional Method Use the farm optional method only for earnings from a farming business. File 1040x See Publication 225 for information about this method. File 1040x Using Both Optional Methods If you have both farm and nonfarm earnings, you may be able to use both optional methods to determine your net earnings from self-employment. File 1040x To figure your net earnings using both optional methods, you must: Figure your farm and nonfarm net earnings separately under each method. File 1040x Do not combine farm earnings with nonfarm earnings to figure your net earnings under either method. File 1040x Add the net earnings figured under each method to arrive at your total net earnings from self-employment. File 1040x You can report less than your total actual farm and nonfarm net earnings but not less than actual nonfarm net earnings. File 1040x If you use both optional methods, you can report no more than $4,640 as your combined net earnings from self-employment. File 1040x Example. File 1040x You are a self-employed farmer. File 1040x You also operate a retail grocery store. File 1040x Your gross income, actual net earnings from self-employment, and optional farm and optional nonfarm net earnings from self-employment are shown in Table 10-2. File 1040x Table 10-2. File 1040x Example—Farm and Nonfarm Earnings Income and Earnings Farm Nonfarm Gross income $3,000 $6,000 Actual net earnings $900 $500 Optional net earnings (2/3 of gross income) $2,000 $4,000 Table 10-3 shows four methods or combinations of methods you can use to figure net earnings from self-employment using the farm and nonfarm gross income and actual net earnings shown in Table 10-2. File 1040x Method 1. File 1040x Using the regular method for both farm and nonfarm income. File 1040x Method 2. File 1040x Using the optional method for farm income and the regular method for nonfarm income. File 1040x Method 3. File 1040x Using the regular method for farm income and the optional method for nonfarm income. File 1040x Method 4. File 1040x Using the optional method for both farm and nonfarm income. File 1040x Note. File 1040x Actual net earnings is the same as net earnings figured using the regular method. File 1040x Table 10-3. File 1040x Example—Net Earnings Net Earnings 1 2 3 4 Actual  farm $ 900   $ 900   Optional  farm   $ 2,000   $ 2,000 Actual nonfarm $ 500 $ 500     Optional nonfarm     $4,000 $4,000 Amount you can report: $1,400 $2,500 $4,900 $4,640* *Limited to $4,640 because you used both optional methods. File 1040x Fiscal Year Filer If you use a tax year other than the calendar year, you must use the tax rate and maximum earnings limit in effect at the beginning of your tax year. File 1040x Even if the tax rate or maximum earnings limit changes during your tax year, continue to use the same rate and limit throughout your tax year. File 1040x Reporting Self-Employment Tax Use Schedule SE (Form 1040) to figure and report your SE tax. File 1040x Then enter the SE tax on line 56 of Form 1040 and attach Schedule SE to Form 1040. File 1040x Most taxpayers can use Section A—Short Schedule SE to figure their SE tax. File 1040x However, certain taxpayers must use Section B—Long Schedule SE. File 1040x If you have to pay SE tax, you must file Form 1040 (with Schedule SE attached) even if you do not otherwise have to file a federal income tax return. File 1040x Joint return. File 1040x   Even if you file a joint return, you cannot file a joint Schedule SE. File 1040x This is true whether one spouse or both spouses have earnings subject to SE tax. File 1040x If both of you have earnings subject to SE tax, each of you must complete a separate Schedule SE. File 1040x However, if one spouse uses the Short Schedule SE and the other spouse has to use the Long Schedule SE, both can use the same form. File 1040x Attach both schedules to the joint return. File 1040x More than one business. File 1040x   If you have more than one trade or business, you must combine the net profit (or loss) from each business to figure your SE tax. File 1040x A loss from one business will reduce your profit from another business. File 1040x File one Schedule SE showing the earnings from self-employment, but file a separate Schedule C, C-EZ, or F for each business. File 1040x Example. File 1040x You are the sole proprietor of two separate businesses. File 1040x You operate a restaurant that made a net profit of $25,000. File 1040x You also have a cabinetmaking business that had a net loss of $500. File 1040x You must file a Schedule C for the restaurant showing your net profit of $25,000 and another Schedule C for the cabinetmaking business showing your net loss of $500. File 1040x You file Schedule SE showing total earnings subject to SE tax of $24,500. File 1040x Prev  Up  Next   Home   More Online Publications
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Page Last Reviewed or Updated: 13-Mar-2014

The File 1040x

File 1040x 19. File 1040x   Education- Related Adjustments Table of Contents Introduction Useful Items - You may want to see: Student Loan Interest DeductionStudent Loan Interest Defined Can You Claim the Deduction How Much Can You Deduct How Do You Figure the Deduction Tuition and Fees DeductionCan You Claim the Deduction What Expenses Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses How Much Can You Deduct Educator Expenses Introduction This chapter discusses the education-related adjustment you can deduct in figuring your adjusted gross income. File 1040x This chapter covers the student loan interest deduction, tuition and fees deduction, and the deduction for educator expenses. File 1040x Useful Items - You may want to see: Publication 970 Tax Benefits for Education Student Loan Interest Deduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. File 1040x 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. File 1040x 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. File 1040x This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. File 1040x Table 19-1 summarizes the features of the student loan interest deduction. File 1040x Table 19-1. File 1040x Student Loan Interest Deduction at a Glance Do not rely on this table alone. File 1040x Refer to the text for more details. File 1040x Feature Description Maximum benefit You can reduce your income subject to tax by up to $2,500. File 1040x 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. File 1040x Student qualifications The student must be: • you, your spouse, or your dependent, and   • enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible educational institution. File 1040x Time limit on deduction You can deduct interest paid during the remaining period of your student loan. File 1040x Phaseout The amount of your deduction depends on your income level. File 1040x Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. File 1040x It includes both required and voluntary interest payments. File 1040x 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 (defined in chapter 3) 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 when the student is an eligible student. File 1040x Loans from the following sources are not qualified student loans. File 1040x A related person. File 1040x A qualified employer plan. File 1040x Exceptions. File 1040x   For purposes of the student loan interest deduction, the following are exceptions to the general rules for dependents. File 1040x An individual can be your dependent even if you are the dependent of another taxpayer. File 1040x An individual can be your dependent even if the individual files a joint return with a spouse. File 1040x 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). File 1040x    Reasonable period of time. File 1040x   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. File 1040x   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. File 1040x The expenses relate to a specific academic period. File 1040x 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. File 1040x   If neither of the above situations applies, the reasonable period of time is determined based on all the relevant facts and circumstances. File 1040x Academic period. File 1040x   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. File 1040x 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. File 1040x Eligible student. File 1040x   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. File 1040x Enrolled at least half-time. File 1040x   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. File 1040x   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. File 1040x However, the standard may not be lower than any of those established by the U. File 1040x S. File 1040x Department of Education under the Higher Education Act of 1965. File 1040x Related person. File 1040x   You cannot deduct interest on a loan you get from a related person. File 1040x Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. File 1040x ), Your lineal descendants (children, grandchildren, etc. File 1040x ), and Certain corporations, partnerships, trusts, and exempt organizations. File 1040x Qualified employer plan. File 1040x   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. File 1040x 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. File 1040x They include amounts paid for the following items. File 1040x Tuition and fees. File 1040x Room and board. File 1040x Books, supplies, and equipment. File 1040x Other necessary expenses (such as transportation). File 1040x The cost of room and board qualifies only to the extent that it is not more than: 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 If greater, the actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. File 1040x Eligible educational institution. File 1040x   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. File 1040x S. File 1040x Department of Education. File 1040x It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. File 1040x   Certain educational institutions located outside the United States also participate in the U. File 1040x S. File 1040x Department of Education's Federal Student Aid (FSA) programs. File 1040x   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. File 1040x   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. File 1040x The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. File 1040x    The educational institution should be able to tell you if it is an eligible educational institution. File 1040x Adjustments to qualified education expenses. File 1040x   You must reduce your qualified education expenses by certain tax-free items (such as the tax-free part of scholarships and fellowships). File 1040x See chapter 4 of Publication 970 for details. File 1040x Include as Interest In addition to simple interest on the loan, certain loan origination fees, capitalized interest, interest on revolving lines of credit, and interest on refinanced student loans can be student loan interest if all other requirements are met. File 1040x Loan origination fee. File 1040x   In general, this is a one-time fee charged by the lender when a loan is made. File 1040x To be deductible as interest, the 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. File 1040x A loan origination fee treated as interest accrues over the life of the loan. File 1040x Capitalized interest. File 1040x    This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. File 1040x Interest on revolving lines of credit. File 1040x   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. File 1040x See Qualified Education Expenses , earlier. File 1040x Interest on refinanced student loans. File 1040x   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. File 1040x 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. File 1040x Voluntary interest payments. File 1040x   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. File 1040x Do Not Include as Interest You cannot claim a student loan interest deduction for any of the following items. File 1040x Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. File 1040x Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. File 1040x 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. File 1040x For more information, see Student Loan Repayment Assistance in chapter 5 of Publication 970. File 1040x Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. File 1040x Your filing status is any filing status except married filing separately. File 1040x No one else is claiming an exemption for you on his or her tax return. File 1040x You are legally obligated to pay interest on a qualified student loan. File 1040x You paid interest on a qualified student loan. File 1040x Interest paid by others. File 1040x   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. File 1040x See chapter 4 of Publication 970 for more information. File 1040x 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, home mortgage interest). File 1040x How Much Can You Deduct Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. File 1040x However, the amount determined above 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). File 1040x 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). File 1040x For details on figuring your MAGI, see chapter 4 of Publication 970. File 1040x How Do You Figure the Deduction Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the Form 1040 or Form 1040A instructions. File 1040x However, if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1 in chapter 4 of Publication 970. File 1040x To help you figure your student loan interest deduction, you should receive Form 1098-E, Student Loan Interest Statement. File 1040x 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. File 1040x 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. File 1040x Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. File 1040x However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. File 1040x For information on allocating payments between interest and principal, see chapter 4 of Publication 970. File 1040x To claim the deduction, enter the allowable amount on Form 1040, line 33, or Form 1040A, line 18. File 1040x Tuition and Fees Deduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). File 1040x You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. File 1040x The qualified expenses must be for higher education, as explained later under What Expenses Qualify . File 1040x The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. File 1040x Table 19-2 summarizes the features of the tuition and fees deduction. File 1040x You may be able to take a credit for your education expenses instead of a deduction. File 1040x You can choose the one that will give you the lower tax. File 1040x See chapter 35, Education Credits, for details about the credits. File 1040x Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. File 1040x Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. File 1040x You paid qualified education expenses of higher education in 2013 for academic periods beginning in 2013 and those beginning in the first three months of 2014. File 1040x You paid the education expenses for an eligible student. File 1040x The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption (defined in chapter 3) on your tax return. File 1040x Qualified education expenses are defined under What Expenses Qualify . File 1040x Eligible students are defined later under Who Is an Eligible Student . File 1040x Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. File 1040x Your filing status is married filing separately. File 1040x Another person can claim an exemption for you as a dependent on his or her tax return. File 1040x You cannot take the deduction even if the other person does not actually claim that exemption. File 1040x Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). File 1040x 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. File 1040x More information on nonresident aliens can be found in Publication 519, U. File 1040x S. File 1040x Tax Guide for Aliens. File 1040x You or anyone else claims an American opportunity or lifetime learning credit in 2013 with respect to expenses of the student for whom the qualified education expenses were paid. File 1040x However, a state tax credit will not disqualify you from claiming a tuition and fees deduction. File 1040x Table 19-2. File 1040x Tuition and Fees Deduction at a Glance Do not rely on this table alone. File 1040x Refer to the text for more details. File 1040x Question   Answer What is the maximum benefit?   You can reduce your income subject to tax by up to $4,000. File 1040x Where is the deduction taken?   As an adjustment to income on Form 1040, line 34, or Form 1040A, line 19. File 1040x For whom must the expenses be paid?   A student enrolled in an eligible educational institution who is either: you, your spouse, or your dependent for whom you claim an exemption. File 1040x What tuition and fees are deductible?   Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living, or family expenses, such as room and board. File 1040x What Expenses Qualify The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. File 1040x Generally, the deduction is allowed for qualified education expenses paid in 2013 in connection with enrollment at an institution of higher education during 2013 or for an academic period (defined earlier under Student Loan Interest Deduction ) beginning in 2013 or in the first 3 months of 2014. File 1040x Payments with borrowed funds. File 1040x   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. File 1040x Use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. File 1040x Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. File 1040x Student withdraws from class(es). File 1040x   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. File 1040x Qualified Education Expenses For purposes of the tuition and fees deduction, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. File 1040x Eligible educational institution. File 1040x   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. File 1040x S. File 1040x Department of Education. File 1040x It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. File 1040x The educational institution should be able to tell you if it is an eligible educational institution. File 1040x   Certain educational institutions located outside the United States also participate in the U. File 1040x S. File 1040x Department of Education's Federal Student Aid (FSA) programs. File 1040x Academic period. File 1040x    An academic period is any quarter, semester, trimester, or any other period of study as reasonably determined by an eligible educational institution. File 1040x If an eligible educational institution uses credit hours and does not have academic terms, each payment period may be treated as an academic period. File 1040x Related expenses. File 1040x   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses for the tuition and fees deduction only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. File 1040x Prepaid expenses. File 1040x   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring the tuition and fees deduction. File 1040x See Academic period, earlier. File 1040x 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 the tuition and fees deduction for 2013 only if you meet all the other requirements. File 1040x    You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 tuition and fees deduction. File 1040x No Double Benefit Allowed You cannot do any of the following. File 1040x Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. File 1040x Deduct qualified education expenses for a student on your income tax return if you or anyone else claims an American opportunity or lifetime learning credit for that same student in the same year. File 1040x Deduct qualified education expenses that have been used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or a qualified tuition program (QTP). File 1040x For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. File 1040x See Figuring the Taxable Portion of a Distribution in chapter 7 (Coverdell ESA) and chapter 8 (QTP) of Publication 970. File 1040x Deduct qualified education expenses that have been paid with tax-free interest on U. File 1040x S. File 1040x savings bonds (Form 8815). File 1040x See Figuring the Tax-Free Amount in chapter 10 of Publication 970. File 1040x Deduct qualified education expenses that have been paid with tax-free educational assistance such as a scholarship, grant, or employer-provided educational assistance. File 1040x See Adjustments to qualified education expenses, later. File 1040x Adjustments to qualified education expenses. File 1040x   For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. File 1040x The result is the amount of adjusted qualified education expenses for each student. File 1040x Tax-free educational assistance. File 1040x   For tax-free educational assistance you received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance to that academic period. File 1040x See Academic period, earlier. File 1040x   This includes: The tax-free part of scholarships and fellowships, including Pell grants (see chapter 1 of Publication 970), The tax-free part of any employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. File 1040x Generally, any scholarship or fellowship you receive is treated as tax-free educational assistance. File 1040x However, a scholarship or fellowship is not treated as tax-free educational assistance to the extent you include it in gross income (if you are required to file a tax return) for the year the scholarship or fellowship is received and either: 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 Pub. File 1040x 970, chapter 1. File 1040x 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 Pub. File 1040x 970, chapter 1. File 1040x You may be able to increase the combined value of your tuition and fees deduction and certain educational assistance if you include some or all of the educational assistance in income in the year it is received. File 1040x For details, see Adjustments to Qualified Education Expenses in chapter 6 of Pub. File 1040x 970. File 1040x Some tax-free educational assistance received in 2013 may be treated as a refund of qualified education expenses paid in 2013. File 1040x 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). File 1040x 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. File 1040x 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. File 1040x Refunds. File 1040x   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or may require you to include some or all of the refund in your gross income for the year the refund is received. File 1040x See chapter 6 of Pub. File 1040x 970 for more information. File 1040x Some tax-free educational assistance received after 2013 may be treated as a refund. File 1040x See Tax-free educational assistance, earlier. File 1040x Refunds received in 2013. File 1040x    For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses paid in 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. File 1040x Refunds received after 2013 but before your income tax return is filed. File 1040x   If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received before you file your 2013 income tax return, reduce the amount of qualified education expenses for 2013 by the amount of the refund. File 1040x Refunds received after 2013 and after your income tax return is filed. File 1040x   If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received after you file your 2013 income tax return, you may need to include some or all of the refund in your gross income for the year the refund is received. File 1040x See chapter 6 of Pub. File 1040x 970 for more information. File 1040x Coordination with Coverdell education savings accounts and qualified tuition programs. File 1040x    Reduce your qualified education expenses by any qualified education expenses used to figure the exclusion from gross income of (a) interest received under an education savings bond program, or (b) any distribution from a Coverdell education savings account or qualified tuition program (QTP). File 1040x For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. File 1040x Amounts that do not reduce qualified education expenses. File 1040x   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. File 1040x   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. File 1040x 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. File 1040x The use of the money is not restricted. File 1040x 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. File 1040x This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. File 1040x Sports, games, hobbies, and noncredit courses. File 1040x   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. File 1040x However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. File 1040x Comprehensive or bundled fees. File 1040x   Some eligible educational institutions combine all of their fees for an academic period into one amount. File 1040x If you do not receive, or do not have access to, an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. File 1040x 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. File 1040x See How Do You Figure the Deduction , later, for more information about Form 1098-T. File 1040x Who Is an Eligible Student For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (defined earlier). File 1040x Who Can Claim a Dependent's Expenses Generally, in order to claim the tuition and fees deduction for qualified education expenses for a dependent, you must: Have paid the expenses, and Claim an exemption for the student as a dependent. File 1040x Table 19-3 summarizes who can claim the deduction. File 1040x How Much Can You Deduct The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. File 1040x For details on figuring your MAGI, see chapter 6 of Publication 970. File 1040x How Do You Figure the Deduction Figure the deduction using Form 8917. File 1040x To help you figure your tuition and fees deduction, you should receive Form 1098-T, Tuition Statement. File 1040x 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. File 1040x To claim the deduction, enter the allowable amount on Form 1040, line 34, or Form 1040A, line 19, and attach your completed Form 8917. File 1040x Table 19-3. File 1040x Who Can Claim a Dependent's Expenses Do not rely on this table alone. File 1040x See Who Can Claim a Dependent's Expenses in chapter 6 of Publication 970. File 1040x IF your dependent is an eligible student and you. File 1040x . File 1040x . File 1040x AND. File 1040x . File 1040x . File 1040x THEN. File 1040x . File 1040x . File 1040x claim an exemption for your dependent you paid all qualified education expenses for your dependent only you can deduct the qualified education expenses that you paid. File 1040x Your dependent cannot take a deduction. File 1040x claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. File 1040x do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. File 1040x do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. File 1040x Educator Expenses If you were an eligible educator in 2013, you can deduct on Form 1040, line 23, or Form 1040A, line 16, up to $250 of qualified expenses you paid in 2013. File 1040x If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. File 1040x However, neither spouse can deduct more than $250 of his or her qualified expenses on Form 1040, line 23, or Form 1040A, line 16. File 1040x You may be able to deduct expenses that are more than the $250 (or $500) limit on Schedule A (Form 1040), line 21. File 1040x Eligible educator. File 1040x   An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who worked in a school for at least 900 hours during a school year. File 1040x Qualified expenses. File 1040x   Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. File 1040x An ordinary expense is one that is common and accepted in your educational field. File 1040x A necessary expense is one that is helpful and appropriate for your profession as an educator. File 1040x An expense does not have to be required to be considered necessary. File 1040x   Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. File 1040x   You must reduce your qualified expenses by the following amounts. File 1040x Excludable U. File 1040x S. File 1040x series EE and I savings bond interest from Form 8815. File 1040x See Figuring the Tax-Free Amount in chapter 10 of Publication 970. File 1040x Nontaxable qualified tuition program earnings or distributions. File 1040x See Figuring the Taxable Portion of a Distribution in chapter 8 of Publication 970. File 1040x Nontaxable distribution of earnings from a Coverdell education savings account. File 1040x See Figuring the Taxable Portion of a Distribution in chapter 7 of Publication 970. File 1040x Any reimbursements you received for these expenses that were not reported to you in box 1 of your Form W-2. File 1040x Prev  Up  Next   Home   More Online Publications