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

TurboTax Federal Free Edition - File Taxes Online

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

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


© 2012 - 2018 All rights reserved.

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

Free Taxes H&r Block

1040 Amendment 2011E File Tax Extension For Free2011 1040ez OnlineFile 2008 Taxes For FreeTax AmmendmentAmend 2011 TaxStudents TaxesFile 2011 Taxes In 2013 FreeHr Block Free State Return1040x Forms OnlineDoes Military Pay State TaxesFree Tax Filing MilitaryFree State Income Tax ReturnAmend My Tax Return OnlineIrs Forms 2010 Form 10401040 Ez File1040x Instructions For DummiesAmend Federal Tax Return FreeDownload Free Tax Software1040nr Online FilingHow Can I File 2012 Taxes OnlineTax Cut2011 Tax FormIrs 1040H&r Block 1040nrE-file 1040ez2012 Irs Form 1040ezOrder 2012 Tax Forms From IrsCan I File My 2012 Taxes OnlineMy1040ez ComOnline Ez FormOnline 1040ez Filing1040 Income Tax FormsWww Freefilefillableforms Com1040 Short FormAmend Federal TaxesFree File 1040ez FormFreefileForm 1040 V Payment VoucherHr Free File

Free Taxes H&r Block

Free taxes h&r block Index A Adjusted gross income (AGI) Income limits for, Income Limits Age Age 65, Age 65. Free taxes h&r block Mandatory retirement age, Payments that are not disability income. Free taxes h&r block Assistance (see Tax help) C Citizenship requirement, U. Free taxes h&r block S. Free taxes h&r block Citizen or Resident Alien Credit figured by IRS, Credit Figured for You Credit figured for you, Credit Figured for You D Disability benefits Nontaxable by law, Step 2. Free taxes h&r block Total Certain Nontaxable Pensions and Benefits Disability income, Disability income. Free taxes h&r block Disability, permanent and total disability, Qualified Individual, Permanent and total disability. Free taxes h&r block E Eligibility for credit, Are You Eligible for the Credit? Employer's accident or health plans or pension plans Disability income from, Disability income. Free taxes h&r block Excess adjusted gross income, Step 3. Free taxes h&r block Determine Excess Adjusted Gross Income F Figuring the credit yourself, Figuring the Credit Yourself Determine excess AGI, Step 3. Free taxes h&r block Determine Excess Adjusted Gross Income Determine initial amount, Step 1. Free taxes h&r block Determine Initial Amount Determine the credit, Step 5. Free taxes h&r block Determine Your Credit Determine the total of steps 2 and 3, Step 4. Free taxes h&r block Determine the Total of Steps 2 and 3 Total certain nontaxable pensions and benefits, Step 2. Free taxes h&r block Total Certain Nontaxable Pensions and Benefits Foreign military service Pension, annuity, or disability benefit from, Step 2. Free taxes h&r block Total Certain Nontaxable Pensions and Benefits Foreign Service Pension, annuity, or disability benefit from, Step 2. Free taxes h&r block Total Certain Nontaxable Pensions and Benefits Form RRB-1099 Payments by Railroad Retirement Board, Step 2. Free taxes h&r block Total Certain Nontaxable Pensions and Benefits Form SSA-1099 Social security benefit statement, Step 2. Free taxes h&r block Total Certain Nontaxable Pensions and Benefits Free tax services, Free help with your tax return. Free taxes h&r block H Head of household, Head of household. Free taxes h&r block Help (see Tax help) I Income limits, Income Limits Initial amounts for persons under age 65, Initial amounts for persons under age 65. Free taxes h&r block J Joint returns, Married Persons L Limit on credit, Limit on credit. Free taxes h&r block Lump-sum payments Accrued annual leave, Payments that are not disability income. Free taxes h&r block Death benefits paid to surviving spouse or child, Step 2. Free taxes h&r block Total Certain Nontaxable Pensions and Benefits M Mandatory retirement age, Payments that are not disability income. Free taxes h&r block Married taxpayers, Married Persons Mentally incompetent persons Sheltered employment for, Sheltered employment. Free taxes h&r block Missing children Photographs of, Reminders N National Oceanic and Atmospheric Administration Pension, annuity, or disability benefit from, Step 2. Free taxes h&r block Total Certain Nontaxable Pensions and Benefits Nonresident aliens, Exceptions. Free taxes h&r block Nontaxable payments, Step 2. Free taxes h&r block Total Certain Nontaxable Pensions and Benefits O Out of work, Substantial gainful activity. Free taxes h&r block P Pension or annuity payments Nontaxable by law, Step 2. Free taxes h&r block Total Certain Nontaxable Pensions and Benefits Permanent and total disability, Qualified Individual, Permanent and total disability. Free taxes h&r block Physician certification, Permanent and total disability. Free taxes h&r block , Physician's statement. Free taxes h&r block Public Health Service Pension, annuity, or disability benefit from, Step 2. Free taxes h&r block Total Certain Nontaxable Pensions and Benefits Publications (see Tax help) Q Qualified individual, Qualified Individual Age 65 or older, Qualified Individual Under age 65 and retired on permanent and total disability, Qualified Individual, Under Age 65 R Residence requirement, U. Free taxes h&r block S. Free taxes h&r block Citizen or Resident Alien S Schedule R, Credit Figured for You, Figuring the Credit Yourself, , Examples Sheltered employment, Sheltered employment. Free taxes h&r block Social security payments, Step 2. Free taxes h&r block Total Certain Nontaxable Pensions and Benefits Substantial gainful activity, Substantial gainful activity. Free taxes h&r block T Tables and figures Figure A, Qualified individual determination, Substantial gainful activity. Free taxes h&r block Table 1, Income limits, Substantial gainful activity. Free taxes h&r block , Table 1. Free taxes h&r block Income Limits Table 2, Initial amounts, Table 2. Free taxes h&r block Initial Amounts Tax help, How To Get Tax Help TTY/TDD information, How To Get Tax Help U U. Free taxes h&r block S. Free taxes h&r block citizens and resident aliens, U. Free taxes h&r block S. Free taxes h&r block Citizen or Resident Alien V VA Form 21-0172 Certification of permanent and total disability, Veterans. Free taxes h&r block Veterans Certification by VA of permanent and total disability, Veterans. Free taxes h&r block Exclusion of nontaxable pension or annuity payment or disability benefits, Step 2. Free taxes h&r block Total Certain Nontaxable Pensions and Benefits Prev  Up     Home   More Online Publications
Print - Click this link to Print this page

Understanding Your CP01A Notice

This notice tells you about the Identity Protection Personal Identification Number (IP PIN) we sent you.


What you need to do

  • Forms 1040, 1040A, 1040EZ and 1040 PR/SS
    Be sure to enter your IP PIN in the correct place when you file your 2013 federal tax return:
    • Electronic Returns (Caution: see new joint filing rules below)
      • Your tax software or practitioner will tell you when and where to enter the IP PIN.
      • If you can’t find where to enter your IP PIN, search within your software on Identity Protection PIN or IP PIN or contact the software provider’s help desk. Due to software variations, the IRS doesn't know the location of the IP PIN within each package.
    • Paper Returns
      • Enter your IP PIN in the gray box marked “Identity Protection PIN” to the right of “Spouse’s signature and occupation”.
  • Amended Returns, Extensions and Installment Agreements
    An IP PIN is not required to file:
    • Form 1040X, Amended U.S. Individual Income Tax Return ,
    • Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, or
    • Form 433-D, Installment Agreement

If you are filing a joint return

  • Electronic Returns
    • Each taxpayer who receives an IP PIN must enter it on their tax return when filing as the primary (first SSN on the tax form) or secondary taxpayer.
      • If only one taxpayer receives an IP PIN, you must enter it with the taxpayer’s SSN to whom it belongs.
      • If both taxpayers receive an IP PIN, both taxpayers must enter the IP PIN that goes with their SSN.
  • Paper Returns
    • Only the primary taxpayer should enter their IP PIN on the tax return. The secondary taxpayer must not enter their IP PIN even if they received one
    • Note: The secondary taxpayer’s IP PIN still provides protection by preventing the fraudulent use of your SSN as the primary or secondary SSN on an e-filed return or as the primary SSN on a paper return

Important things to remember about your IP PIN

  • Store this letter with your tax records
  • A new IP PIN is assigned to you each year
  • The latest IP PIN assigned to you is your IP PIN of record and you should destroy all prior IP PINs securely
  • Do not reveal your IP PIN to anyone other than your tax preparer. Reveal it only when you are ready to sign and submit your federal income tax return
  • Use your IP PIN on your 2013 federal income tax return
    • Electronic Returns: We will reject your return if you fail to use your IP PIN.
    • Paper Returns: A significant delay processing your return and any refund you may be due will occur if you fail to use the primary taxpayer’s IP PIN.
  • Your IP PIN is not used on your state income tax return

Use on prior year returns

You must use your latest IP PIN on any delinquent 2012 or 2011 Forms 1040. 1040A, 1040EZ or 1040PR/SS returns you may file in calendar year 2014.


If you misplaced your IP PIN

Visit the Lost or Misplaced IP PINs page for instructions on how to recover your original IP PIN or request a replacement.


Answers to Common Questions

We have complete answers to questions you might have about the IP PIN process on our Frequently Asked Questions about the IP PIN page.

Page Last Reviewed or Updated: 19-Feb-2014

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Free Taxes H&r Block

Free taxes h&r block 2. Free taxes h&r block   American Opportunity Credit Table of Contents Introduction Can You Claim the CreditWho Can Claim the Credit Who Cannot Claim the Credit What Expenses QualifyQualified Education Expenses No Double Benefit Allowed Expenses That Do Not Qualify Who Is an Eligible StudentException. Free taxes h&r block Who Can Claim a Dependent's Expenses Figuring the CreditEffect of the Amount of Your Income on the Amount of Your Credit Refundable Part of Credit Claiming the Credit Introduction For 2013, there are two tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. Free taxes h&r block They are the American opportunity credit (this chapter) and the lifetime learning credit ( chapter 3 ). Free taxes h&r block This chapter explains: Who can claim the American opportunity credit, What expenses qualify for the credit, Who is an eligible student, Who can claim a dependent's expenses, How to figure the credit, How to claim the credit, and When the credit must be repaid. Free taxes h&r block What is the tax benefit of the American opportunity credit. Free taxes h&r block   For the tax year, you may be able to claim an American opportunity credit of up to $2,500 for qualified education expenses paid for each eligible student. Free taxes h&r block   A tax credit reduces the amount of income tax you may have to pay. Free taxes h&r block Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. Free taxes h&r block Forty percent of the American opportunity credit may be refundable. Free taxes h&r block This means that if the refundable portion of your credit is more than your tax, the excess will be refunded to you. Free taxes h&r block   Your allowable American opportunity credit may be limited by the amount of your income. Free taxes h&r block Also, the nonrefundable part of the credit may be limited by the amount of your tax. Free taxes h&r block Overview of the American opportunity credit. Free taxes h&r block   See Table 2-1, Overview of the American Opportunity Credit , for the basics of this credit. Free taxes h&r block The details are discussed in this chapter. Free taxes h&r block Can you claim more than one education credit this year. Free taxes h&r block   For each student, you can elect for any year only one of the credits. Free taxes h&r block For example, if you elect to take the American opportunity credit for a child on your 2013 tax return, you cannot use that same child's qualified education expenses to figure the lifetime learning credit for 2013. Free taxes h&r block   If you pay qualified education expenses for more than one student in the same year, you can choose to take the American opportunity credit on a per-student, per-year basis. Free taxes h&r block If you pay qualified education expenses for a student (or students) for whom you do not claim the American opportunity credit, you can use the adjusted qualified education expenses of that student (or those students) in figuring your lifetime learning credit. Free taxes h&r block This means that, for example, you can claim the American opportunity credit for one student and the lifetime learning credit for another student in the same year. Free taxes h&r block Differences between the American opportunity and lifetime learning credits. Free taxes h&r block   There are several differences between these two credits. Free taxes h&r block For example, you can claim the American opportunity credit based on the same student's expenses for no more than 4 tax years, which includes any tax years you claimed the Hope Scholarship Credit for that student. Free taxes h&r block However, there is no limit on the number of years for which you can claim a lifetime learning credit based on the same student's expenses. Free taxes h&r block The differences between these credits are shown in Appendix B, Highlights of Education Tax Benefits for Tax Year 2013 near the end of this publication. Free taxes h&r block If you claim the American opportunity credit for any student, you can choose between using that student's adjusted qualified education expenses for the American opportunity credit or the lifetime learning credit. Free taxes h&r block If you have the choice, the American opportunity credit will always be greater than the lifetime learning credit. Free taxes h&r block Table 2-1. Free taxes h&r block Overview of the American Opportunity Credit Maximum credit Up to $2,500 credit per eligible student Limit on modified adjusted gross income (MAGI) $180,000 if married filing jointly; $90,000 if single, head of household, or qualifying widow(er) Refundable or nonrefundable 40% of credit may be refundable; the rest is nonrefundable Number of years of postsecondary education Available ONLY if the student had not completed the first 4 years of postsecondary education before 2013 Number of tax years credit available Available ONLY for 4 tax years per eligible student (including any year(s) Hope Scholarship Credit was claimed) Type of program required Student must be pursuing a program leading to a degree or other recognized education credential Number of courses Student must be enrolled at least half time for at least one academic period that begins during the tax year Felony drug conviction As of the end of 2013, the student had not been convicted of a felony for possessing or distributing a controlled substance Qualified expenses Tuition, required enrollment fees, and course materials that the student needs for a course of study whether or not the materials are bought at the educational institution as a condition of enrollment or attendance Payments for academic periods Payments made in 2013 for academic periods beginning in 2013 or beginning in the first 3 months of 2014 Can You Claim the Credit The following rules will help you determine if you are eligible to claim the American opportunity credit on your tax return. Free taxes h&r block Who Can Claim the Credit Generally, you can claim the American opportunity credit if all three of the following requirements are met. Free taxes h&r block You pay qualified education expenses of higher education. Free taxes h&r block You pay the education expenses for an eligible student. Free taxes h&r block The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Free taxes h&r block Student qualifications. Free taxes h&r block   Generally, you can take the American opportunity credit for a student only if all of the following four requirements are met. Free taxes h&r block As of the beginning of 2013, the student had not completed the first four years of postsecondary education (generally, the freshman through senior years of college), as determined by the eligible educational institution. Free taxes h&r block For this purpose, do not include academic credit awarded solely because of the student's performance on proficiency examinations. Free taxes h&r block Neither the American opportunity credit nor the Hope Scholarship Credit has been claimed (by you or anyone else) for this student for any four tax years before 2013. Free taxes h&r block If the American opportunity credit (and Hope Scholarship Credit) has been claimed for this student for any three or fewer tax years before 2013, this requirement is met. Free taxes h&r block For at least one academic period beginning (or treated as beginning) in 2013, the student both: Was enrolled in a program that leads to a degree, certificate, or other recognized educational credential; and Carried at least one-half the normal full-time workload for his or her course of study. Free taxes h&r block The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Free taxes h&r block However, the standard may not be lower than any of those established by the U. Free taxes h&r block S. Free taxes h&r block Department of Education under the Higher Education Act of 1965. Free taxes h&r block For purposes of whether the student satisfies this third requirement for 2013, treat an academic period beginning in the first three months of 2014 as if it began in 2013 if qualified education expenses for the student were paid in 2013 for that academic period. Free taxes h&r block See Prepaid expenses, later. Free taxes h&r block As of the end of 2013, the student had not been convicted of a federal or state felony for possessing or distributing a controlled substance. Free taxes h&r block Example 1. Free taxes h&r block Sharon was eligible for the Hope Scholarship Credit for 2007 and 2008 and for the American opportunity credit for 2010 and 2012. Free taxes h&r block Her parents claimed the Hope Scholarship Credit for Sharon on their tax returns for 2007 and 2008 and claimed the American opportunity credit for Sharon on their 2010 tax return. Free taxes h&r block Sharon claimed the American opportunity credit on her 2012 tax return. Free taxes h&r block The American opportunity credit and Hope Scholarship Credit have been claimed for Sharon for four tax years before 2013. Free taxes h&r block Therefore, the American opportunity credit cannot be claimed by Sharon for 2013. Free taxes h&r block If Sharon were to file Form 8863 for 2013, she would check “Yes” for Part III, line 23, and would be eligible to claim only the lifetime learning credit. Free taxes h&r block Example 2. Free taxes h&r block Wilbert was eligible for the American opportunity credit for 2009, 2010, 2011, and 2013. Free taxes h&r block His parents claimed the American opportunity credit for Wilbert on their tax returns for 2009, 2010, and 2011. Free taxes h&r block No one claimed an American opportunity credit or Hope Scholarship Credit for Wilbert for any other tax year. Free taxes h&r block The American opportunity credit and Hope Scholarship Credit have been claimed for Wilbert for only three tax years before 2013. Free taxes h&r block Therefore, Wilbert meets the second requirement to be eligible for the American opportunity credit. Free taxes h&r block If Wilbert were to file Form 8863 for 2013, he would check “No” for Part III, line 23. Free taxes h&r block If Wilbert meets all of the other requirements, he is eligible for the American opportunity credit. Free taxes h&r block Example 3. Free taxes h&r block Glenda enrolls on a full-time basis in a degree program for the 2014 Spring semester, which begins in January 2014. Free taxes h&r block Glenda pays her tuition for the 2014 Spring semester in December 2013. Free taxes h&r block Because the tuition Glenda paid in 2013 relates to an academic period that begins in the first 3 months of 2014, her eligibility to claim an American opportunity credit in 2013 is determined as if the 2014 Spring semester began in 2013. Free taxes h&r block If the requirements above are not met for any student, you cannot take the American opportunity credit for that student. Free taxes h&r block You may be able to take the lifetime learning credit for part or all of that student's qualified education expenses instead. Free taxes h&r block Note. Free taxes h&r block Qualified education expenses paid by a dependent for whom you claim an exemption, or by a third party for that dependent, are considered paid by you. Free taxes h&r block “Qualified education expenses” are defined later under Qualified Education Expenses . Free taxes h&r block “Eligible students” are defined later under Who Is an Eligible Student . Free taxes h&r block A dependent for whom you claim an exemption is defined later under Who Can Claim a Dependent's Expenses . Free taxes h&r block You may find Figure 2-1, Can You Claim the American Opportunity Credit for 2013 , later, helpful in determining if you can claim an American opportunity credit on your tax return. Free taxes h&r block This image is too large to be displayed in the current screen. Free taxes h&r block Please click the link to view the image. Free taxes h&r block Figure 2-1 Can you claim the American opportunity credit for 2012? Who Cannot Claim the Credit You cannot claim the American opportunity credit for 2013 if any of the following apply. Free taxes h&r block Your filing status is married filing separately. Free taxes h&r block You are listed as a dependent on another person's tax return (such as your parents'). Free taxes h&r block See Who Can Claim a Dependent's Expenses , later. Free taxes h&r block Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more in the case of a joint return). Free taxes h&r block MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit . Free taxes h&r block 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. Free taxes h&r block More information on nonresident aliens can be found in Publication 519, U. Free taxes h&r block S. Free taxes h&r block Tax Guide for Aliens. Free taxes h&r block What Expenses Qualify The American opportunity credit is based on adjusted qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Free taxes h&r block Generally, the credit is allowed for adjusted qualified education expenses paid in 2013 for an academic period beginning in 2013 or beginning in the first three months of 2014. Free taxes h&r block For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning January 2014, you can use that $1,500 in figuring your 2013 credit. Free taxes h&r block Academic period. Free taxes h&r block   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. Free taxes h&r block 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. Free taxes h&r block Paid with borrowed funds. Free taxes h&r block   You can claim an American opportunity credit for qualified education expenses paid with the proceeds of a loan. Free taxes h&r block Use the expenses to figure the American opportunity credit for the year in which the expenses are paid, not the year in which the loan is repaid. Free taxes h&r block Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. Free taxes h&r block Student withdraws from class(es). Free taxes h&r block   You can claim an American opportunity credit for qualified education expenses not refunded when a student withdraws. Free taxes h&r block Qualified Education Expenses For purposes of the American opportunity credit, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Free taxes h&r block Eligible educational institution. Free taxes h&r block   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. Free taxes h&r block S. Free taxes h&r block Department of Education. Free taxes h&r block It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Free taxes h&r block The educational institution should be able to tell you if it is an eligible educational institution. Free taxes h&r block   Certain educational institutions located outside the United States also participate in the U. Free taxes h&r block S. Free taxes h&r block Department of Education's Federal Student Aid (FSA) programs. Free taxes h&r block Related expenses. Free taxes h&r block   Student-activity fees are included in qualified education expenses only if the fees must be paid to the institution as a condition of enrollment or attendance. Free taxes h&r block   However, expenses for books, supplies, and equipment needed for a course of study are included in qualified education expenses whether or not the materials are purchased from the educational institution. Free taxes h&r block Prepaid expenses. Free taxes h&r block   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring an education credit for 2013 only. Free taxes h&r block See Academic period, earlier. Free taxes h&r block For example, if you pay $2,000 in December 2013, for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring an education credit for 2013 only (if you meet all the other requirements). Free taxes h&r block    You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 education credit(s). Free taxes h&r block   In the following examples, assume that each student is an eligible student at an eligible educational institution. Free taxes h&r block Example 1. Free taxes h&r block Jefferson is a sophomore in University V's degree program in dentistry. Free taxes h&r block This year, in addition to tuition, he is required to pay a fee to the university for the rental of the dental equipment he will use in this program. Free taxes h&r block Because the equipment rental is needed for his course of study, Jefferson's equipment rental fee is a qualified expense. Free taxes h&r block Example 2. Free taxes h&r block Grace and William, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. Free taxes h&r block The college has no policy about how students should obtain these materials, but any student who purchases them from College W's bookstore will receive a bill directly from the college. Free taxes h&r block William bought his books from a friend; Grace bought hers at College W's bookstore. Free taxes h&r block Both are qualified education expenses for the American opportunity credit. Free taxes h&r block Example 3. Free taxes h&r block When Kelly enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. Free taxes h&r block This activity fee is required of all students, and is used solely to fund on-campus organizations and activities run by students, such as the student newspaper and the student government. Free taxes h&r block No portion of the fee covers personal expenses. Free taxes h&r block Although labeled as a student activity fee, the fee is required for Kelly's enrollment and attendance at College X and is a qualified expense. Free taxes h&r block No Double Benefit Allowed You cannot do any of the following. Free taxes h&r block Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim an American opportunity credit based on those same expenses. Free taxes h&r block Claim an American opportunity credit in the same year that you are claiming a tuition and fees deduction for the same student. Free taxes h&r block Claim an American opportunity credit for any student and use any of that student's expenses in figuring your lifetime learning credit. Free taxes h&r block Figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or qualified tuition program (QTP) using the same expenses you used to figure the American opportunity credit. Free taxes h&r block See Coordination With American Opportunity and Lifetime Learning Credits in chapter 7, Coverdell Education Savings Account, and Coordination With American Opportunity and Lifetime Learning Credits in chapter 8, Qualified Tuition Program. Free taxes h&r block Claim a credit based on qualified education expenses paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. Free taxes h&r block See Adjustments to Qualified Education Expenses, next. Free taxes h&r block Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. Free taxes h&r block The result is the amount of adjusted qualified education expenses for each student. Free taxes h&r block Tax-free educational assistance. Free taxes h&r block   For tax-free educational assistance received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period. Free taxes h&r block See Academic period, earlier. Free taxes h&r block   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. Free taxes h&r block 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). Free taxes h&r block   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. Free taxes h&r block 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. Free taxes h&r block   Tax-free educational assistance includes: The tax-free parts of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). Free taxes h&r block Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Free taxes h&r block Generally, any scholarship or fellowship is treated as tax free. Free taxes h&r block However, a scholarship or fellowship is not treated as tax free to the extent the student includes it in gross income (if the student is required to file a tax return for the year the scholarship or fellowship is received) and either of the following is true. Free taxes h&r block The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Free taxes h&r block The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Free taxes h&r block You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the educational assistance in income in the year it is received. Free taxes h&r block For examples, see Coordination with Pell grants and other scholarships, later. Free taxes h&r block Refunds. Free taxes h&r block   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year. Free taxes h&r block Some tax-free educational assistance received after 2013 may be treated as a refund. Free taxes h&r block See Tax-free educational assistance, earlier. Free taxes h&r block Refunds received in 2013. Free taxes h&r block   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses for 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. Free taxes h&r block Refunds received after 2013 but before your income tax return is filed. Free taxes h&r block   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid before you file an income tax return for 2013, the amount of qualified education expenses for 2013 is reduced by the amount of the refund. Free taxes h&r block Refunds received after 2013 and after your income tax return is filed. Free taxes h&r block   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid after you file an income tax return for 2013, you may need to repay some or all of the credit. Free taxes h&r block See Credit recapture, next. Free taxes h&r block Credit recapture. Free taxes h&r block    If any tax-free educational assistance for the qualified education expenses paid in 2013, or any refund of your qualified education expenses paid in 2013, is received after you file your 2013 income tax return, you must recapture (repay) any excess credit. Free taxes h&r block You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing the expenses by the amount of the refund or tax-free educational assistance. Free taxes h&r block You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you claimed the refigured credit(s). Free taxes h&r block Include that amount as an additional tax for the year the refund or tax-free assistance was received. Free taxes h&r block Example. Free taxes h&r block   You paid $7,000 tuition and fees in August 2013, and your child began college in September 2013. Free taxes h&r block You filed your 2013 tax return on February 17, 2014, and claimed an American opportunity credit of $2,500. Free taxes h&r block After you filed your return, you received a refund of $4,000. Free taxes h&r block You must refigure your 2013 American opportunity credit using $3,000 of qualified education expenses instead of $7,000. Free taxes h&r block The refigured credit is $2,250. Free taxes h&r block The increase to your tax liability is also $250. Free taxes h&r block Include the difference of $250 as additional tax on your 2014 tax return. Free taxes h&r block See the instructions for your 2014 income tax return to determine where to include this tax. Free taxes h&r block If you pay qualified education expenses in 2014 for an academic period that begins in the first 3 months of 2014 and you receive tax-free educational assistance, or a refund, as described above, you may choose to reduce your qualified education expenses for 2014 instead of reducing your expenses for 2013. Free taxes h&r block Amounts that do not reduce qualified education expenses. Free taxes h&r block   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. Free taxes h&r block   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. Free taxes h&r block The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Free taxes h&r block The use of the money is not restricted. Free taxes h&r block Example 1. Free taxes h&r block Joan paid $3,000 for tuition and $5,000 for room and board at University X. Free taxes h&r block The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. Free taxes h&r block To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. Free taxes h&r block The terms of the scholarship state that it can be used to pay any of Joan's college expenses. Free taxes h&r block University X applies the $2,000 scholarship against Joan's $8,000 total bill, and Joan pays the $6,000 balance of her bill from University X with a combination of her student loan and her savings. Free taxes h&r block Joan does not report any portion of the scholarship as income on her tax return. Free taxes h&r block In figuring the amount of either education credit (American opportunity or lifetime learning), Joan must reduce her qualified education expenses by the amount of the scholarship ($2,000) because she excluded the entire scholarship from her income. Free taxes h&r block The student loan is not tax-free educational assistance, so she does not need to reduce her qualified expenses by any part of the loan proceeds. Free taxes h&r block Joan is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship). Free taxes h&r block Example 2. Free taxes h&r block The facts are the same as in Example 1, except that Joan reports her entire scholarship as income on her tax return. Free taxes h&r block Because Joan reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. Free taxes h&r block Joan is treated as having paid $3,000 in qualified education expenses. Free taxes h&r block Coordination with Pell grants and other scholarships. Free taxes h&r block   In some cases, you may be able to reduce your tax liability by including scholarships in income. Free taxes h&r block If you are claiming an education credit for a claimed dependent who received a scholarship, you may be able to reduce your tax liability if the student includes the scholarship in income. Free taxes h&r block The scholarship must be one that may (by its terms) be applied to expenses (such as room and board) other than qualified education expenses. Free taxes h&r block Example 1—No scholarship. Free taxes h&r block Bill Pass, age 28 and unmarried, enrolled full-time in 2013 as a first-year student at a local college to earn a degree in law enforcement. Free taxes h&r block This was his first year of postsecondary education. Free taxes h&r block During 2013, he paid $5,600 for his qualified education expenses and $4,400 for his room and board for the fall 2013 semester. Free taxes h&r block He and the college meet all the requirements for the American opportunity credit. Free taxes h&r block Bill's AGI and his MAGI, for purposes of figuring his credit, are $30,000. Free taxes h&r block Bill takes the standard deduction of $5,950 and personal exemption of $3,800, reducing his AGI to taxable income of $20,250. Free taxes h&r block His income tax liability, before credits, is $2,599 and Bill claims no credits other than the American opportunity credit. Free taxes h&r block He figures his American opportunity credit based on qualified education expenses of $4,000, which results in a credit of $2,500 and tax after credits of $99. Free taxes h&r block Example 2—Scholarship excluded from income. Free taxes h&r block The facts are the same as in Example 1—No scholarship, except that Bill was awarded a $5,600 scholarship. Free taxes h&r block Under the terms of his scholarship, it may be used to pay any educational expenses, including room and board. Free taxes h&r block If Bill excludes the scholarship from income, he will be deemed (for purposes of computing his education credit) to have used the scholarship to pay for tuition, required fees, and course materials. Free taxes h&r block His adjusted qualified education expenses will be zero and he will not have an education credit. Free taxes h&r block Therefore, Bill's tax after credits would be $2,599. Free taxes h&r block Example 3—Scholarship partially included in income. Free taxes h&r block The facts are the same as in Example 2—Scholarship excluded from income. Free taxes h&r block If, unlike Example 2, Bill includes $4,000 of the scholarship in income, he will be deemed to have used that amount to pay for room and board. Free taxes h&r block The remaining $1,600 of the $5,600 scholarship will reduce his qualified education expenses and his adjusted qualified education expenses will be $4,000. Free taxes h&r block Bill's AGI will increase to $34,000, his taxable income will increase to $24,250, and his tax before credits will increase to $3,199. Free taxes h&r block Based on his adjusted qualified education expenses of $4,000, Bill would be able to claim an American opportunity tax credit of $2,500 and his tax after credits would be $699. Free taxes h&r block 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. Free taxes h&r block This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Free taxes h&r block Sports, games, hobbies, and noncredit courses. Free taxes h&r block   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. Free taxes h&r block However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. Free taxes h&r block Comprehensive or bundled fees. Free taxes h&r block   Some eligible educational institutions combine all of their fees for an academic period into one amount. Free taxes h&r block If you do not receive or do not have access to an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed earlier, contact the institution. Free taxes h&r block 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. Free taxes h&r block See Figuring the Credit , later, for more information about Form 1098-T. Free taxes h&r block Who Is an Eligible Student To claim the American opportunity credit, the student for whom you pay qualified education expenses must be an eligible student. Free taxes h&r block This is a student who meets all of the following requirements. Free taxes h&r block The student did not have expenses that were used to figure an American opportunity credit in any 4 earlier tax years. Free taxes h&r block This includes any tax year(s) in which you claimed the Hope Scholarship Credit for the same student. Free taxes h&r block The student had not completed the first 4 years of postsecondary education (generally, the freshman, sophomore, junior, and senior years of college) before 2013. Free taxes h&r block For at least one academic period beginning in 2013, the student was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. Free taxes h&r block The student has not been convicted of any federal or state felony for possessing or distributing a controlled substance as of the end of 2013. Free taxes h&r block These requirements are also shown in Figure 2-2, Who is an Eligible Student for the American Opportunity Credit , later. Free taxes h&r block Completion of first 4 years. Free taxes h&r block   A student has completed the first 4 years of postsecondary education if the institution at which the student is enrolled awards the student 4 years of academic credit at that institution for coursework completed by the student before 2013. Free taxes h&r block This student generally would not be an eligible student for purposes of the American opportunity credit. Free taxes h&r block Exception. Free taxes h&r block   Any academic credit awarded solely on the basis of the student's performance on proficiency examinations is disregarded in determining whether the student has completed 4 years of postsecondary education. Free taxes h&r block Enrolled at least half-time. Free taxes h&r block   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. Free taxes h&r block   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Free taxes h&r block However, the standard may not be lower than any of those established by the U. Free taxes h&r block S. Free taxes h&r block Department of Education under the Higher Education Act of 1965. Free taxes h&r block Please click here for the text description of the image. Free taxes h&r block Figure 2-2 Example 1. Free taxes h&r block Mack graduated from high school in June 2012. Free taxes h&r block In September, he enrolled in an undergraduate degree program at College U, and attended full-time for both the 2012 fall and 2013 spring semesters. Free taxes h&r block For the 2013 fall semester, Mack was enrolled less than half-time. Free taxes h&r block Because Mack was enrolled in an undergraduate degree program on at least a half-time basis for at least one academic period that began during 2012 and at least one academic period that began during 2013, he is an eligible student for tax years 2012 and 2013 (including the 2013 fall semester when he enrolled at College U on less than a half-time basis). Free taxes h&r block Example 2. Free taxes h&r block After taking classes at College V on a part-time basis for a few years, Shelly became a full-time student for the 2013 spring semester. Free taxes h&r block College V classified Shelly as a second-semester senior (fourth year) for the 2013 spring semester and as a first-semester graduate student (fifth year) for the 2013 fall semester. Free taxes h&r block Because College V did not classify Shelly as having completed the first 4 years of postsecondary education as of the beginning of 2013, Shelly is an eligible student for tax year 2013. Free taxes h&r block Therefore, the qualified education expenses paid for the 2013 spring semester and the 2013 fall semester are taken into account in calculating the American opportunity credit for 2013. Free taxes h&r block Example 3. Free taxes h&r block During the 2012 fall semester, Larry was a high school student who took classes on a half-time basis at College X. Free taxes h&r block Larry was not enrolled as part of a degree program at College X because College X only admits students to a degree program if they have a high school diploma or equivalent. Free taxes h&r block Because Larry was not enrolled in a degree program at College X during 2012, Larry was not an eligible student for tax year 2012. Free taxes h&r block Example 4. Free taxes h&r block The facts are the same as in Example 3. Free taxes h&r block During the 2013 spring semester, Larry again attended College X but not as part of a degree program. Free taxes h&r block Larry graduated from high school in June 2013. Free taxes h&r block For the 2013 fall semester, Larry enrolled as a full-time student in College X as part of a degree program, and College X awarded Larry credit for his prior coursework at College X. Free taxes h&r block Because Larry was enrolled in a degree program at College X for the 2013 fall term on at least a half-time basis, Larry is an eligible student for all of tax year 2013. Free taxes h&r block Therefore, the qualified education expenses paid for classes taken at College X during both the 2013 spring semester (during which Larry was not enrolled in a degree program) and the 2013 fall semester are taken into account in computing any American opportunity credit. Free taxes h&r block Example 5. Free taxes h&r block Dee graduated from high school in June 2012. Free taxes h&r block In January 2013, Dee enrolled in a 1-year postsecondary certificate program on a full-time basis to obtain a certificate as a travel agent. Free taxes h&r block Dee completed the program in December 2013, and was awarded a certificate. Free taxes h&r block In January 2014, she enrolled in a 1-year postsecondary certificate program on a full-time basis to obtain a certificate as a computer programmer. Free taxes h&r block Dee is an eligible student for both tax years 2013 and 2014 because she meets the degree requirement, the work load requirement, and the year of study requirement for those years. Free taxes h&r block Who Can Claim a Dependent's Expenses If there are qualified education expenses for your dependent during a tax year, either you or your dependent, but not both of you, can claim an American opportunity credit for your dependent's expenses for that year. Free taxes h&r block For you to claim an American opportunity credit for your dependent's expenses, you must also claim an exemption for your dependent. Free taxes h&r block You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. Free taxes h&r block IF you. Free taxes h&r block . Free taxes h&r block . Free taxes h&r block THEN only. Free taxes h&r block . Free taxes h&r block . Free taxes h&r block claim an exemption on  your tax return for a  dependent who is an  eligible student you can claim the American opportunity credit based on that dependent's expenses. Free taxes h&r block The dependent cannot claim the credit. Free taxes h&r block do not claim an exemption on your tax return for a dependent who is an eligible student (even if entitled to the exemption) the dependent can claim the American opportunity credit. Free taxes h&r block You cannot claim the credit based on this dependent's expenses. Free taxes h&r block Expenses paid by dependent. Free taxes h&r block   If you claim an exemption on your tax return for an eligible student who is your dependent, treat any expenses paid (or deemed paid) by your dependent as if you had paid them. Free taxes h&r block Include these expenses when figuring the amount of your American opportunity credit. Free taxes h&r block    Qualified education expenses paid directly to an eligible educational institution for your dependent under a court-approved divorce decree are treated as paid by your dependent. Free taxes h&r block Expenses paid by you. Free taxes h&r block   If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring the amount of the American opportunity credit. Free taxes h&r block If neither you nor anyone else claims an exemption for the dependent, only the dependent can include any expenses you paid when figuring the American opportunity credit. Free taxes h&r block Expenses paid by others. Free taxes h&r block   Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. Free taxes h&r block In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. Free taxes h&r block If you claim an exemption on your tax return for the student, you are considered to have paid the expenses. Free taxes h&r block Example. Free taxes h&r block In 2013, Ms. Free taxes h&r block Allen makes a payment directly to an eligible educational institution for her grandson Todd's qualified education expenses. Free taxes h&r block For purposes of claiming an American opportunity credit, Todd is treated as receiving the money from his grandmother and, in turn, paying his qualified education expenses himself. Free taxes h&r block Unless an exemption for Todd is claimed on someone else's 2013 tax return, only Todd can use the payment to claim an American opportunity credit. Free taxes h&r block If anyone, such as Todd's parents, claims an exemption for Todd on his or her 2013 tax return, whoever claims the exemption may be able to use the expenses to claim an American opportunity credit. Free taxes h&r block If anyone else claims an exemption for Todd, Todd cannot claim an American opportunity credit. Free taxes h&r block Tuition reduction. Free taxes h&r block    When an eligible educational institution provides a reduction in tuition to an employee of the institution (or spouse or dependent child of an employee), the amount of the reduction may or may not be taxable. Free taxes h&r block If it is taxable, the employee is treated as receiving a payment of that amount and, in turn, paying it to the educational institution on behalf of the student. Free taxes h&r block For more information on tuition reductions, see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Free taxes h&r block Figuring the Credit The amount of the American opportunity credit (per eligible student) is the sum of: 100% of the first $2,000 of qualified education expenses you paid for the eligible student, and 25% of the next $2,000 of qualified education expenses you paid for that student. Free taxes h&r block The maximum amount of American opportunity credit you can claim in 2013 is $2,500 multiplied by the number of eligible students. Free taxes h&r block You can claim the full $2,500 for each eligible student for whom you paid at least $4,000 of adjusted qualified education expenses. Free taxes h&r block However, the credit may be reduced based on your MAGI. Free taxes h&r block See Effect of the Amount of Your Income on the Amount of Your Credit , later. Free taxes h&r block Example. Free taxes h&r block Jack and Kay Ford are married and file a joint tax return. Free taxes h&r block For 2013, they claim an exemption for their dependent daughter on their tax return. Free taxes h&r block Their MAGI is $70,000. Free taxes h&r block Their daughter is in her junior (third) year of studies at the local university. Free taxes h&r block Jack and Kay paid qualified education expenses of $4,300 in 2013. Free taxes h&r block Jack and Kay, their daughter, and the local university meet all of the requirements for the American opportunity credit. Free taxes h&r block Jack and Kay can claim a $2,500 American opportunity credit in 2013. Free taxes h&r block This is 100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000. Free taxes h&r block Form 1098-T. Free taxes h&r block   To help you figure your American opportunity credit, the student should receive Form 1098-T, Tuition Statement. Free taxes h&r block 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. Free taxes h&r block An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. Free taxes h&r block However, the amounts in boxes 1 and 2 of Form 1098-T might be different than what you paid. Free taxes h&r block When figuring the credit, use only the amounts you paid or are deemed to have paid in 2013 for qualified education expenses. Free taxes h&r block   In addition, Form 1098-T should give other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether the student was enrolled at least half-time or was a graduate student. Free taxes h&r block    The eligible educational institution may ask for a completed Form W-9S, Request for Student's or Borrower's Taxpayer Identification Number and Certification, or similar statement to obtain the student's name, address, and taxpayer identification number. Free taxes h&r block Effect of the Amount of Your Income on the Amount of Your Credit The amount of your American opportunity credit is phased out (gradually reduced) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). Free taxes h&r block You cannot claim an American opportunity credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return). Free taxes h&r block Modified adjusted gross income (MAGI). Free taxes h&r block   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. Free taxes h&r block MAGI when using Form 1040A. Free taxes h&r block   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. Free taxes h&r block MAGI when using Form 1040. Free taxes h&r block   If you file Form 1040, your MAGI is the AGI on line 38 of that form, modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Free taxes h&r block You can use Worksheet 2-1, next, to figure your MAGI. Free taxes h&r block    Worksheet 2-1. Free taxes h&r block MAGI for the American Opportunity Credit 1. Free taxes h&r block Enter your adjusted gross income  (Form 1040, line 38)   1. Free taxes h&r block   2. Free taxes h&r block Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. Free taxes h&r block       3. Free taxes h&r block Enter your foreign housing deduction (Form 2555, line 50)   3. Free taxes h&r block       4. Free taxes h&r block Enter the amount of income from Puerto Rico you are excluding   4. Free taxes h&r block       5. Free taxes h&r block Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. Free taxes h&r block       6. Free taxes h&r block Add the amounts on lines 2, 3, 4, and 5   6. Free taxes h&r block   7. Free taxes h&r block Add the amounts on lines 1 and 6. Free taxes h&r block  This is your modified adjusted  gross income. Free taxes h&r block Enter here and  on Form 8863, line 3   7. Free taxes h&r block   Phaseout. Free taxes h&r block   If your MAGI is within the range of incomes where the credit must be reduced, you will figure your reduced credit using lines 2-7, of Form 8863, Part I. Free taxes h&r block The same method is shown in the following example. Free taxes h&r block Example. Free taxes h&r block You are filing a joint return and your MAGI is $165,000. Free taxes h&r block In 2013, you paid $5,000 of qualified education expenses. Free taxes h&r block You figure a tentative American opportunity credit of $2,500 (100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000 of qualified education expenses). Free taxes h&r block Because your MAGI is within the range of incomes where the credit must be reduced, you must multiply your tentative credit ($2,500) by a fraction. Free taxes h&r block The numerator of the fraction is $180,000 (the upper limit for those filing a joint return) minus your MAGI. Free taxes h&r block The denominator is $20,000, the range of incomes for the phaseout ($160,000 to $180,000). Free taxes h&r block The result is the amount of your phased out (reduced) American opportunity credit ($1,875). Free taxes h&r block      $2,500 × $180,000 − $165,000  $20,000 = $1,875   Refundable Part of Credit Forty percent of the American opportunity credit is refundable for most taxpayers. Free taxes h&r block However, if you were under age 24 at the end of 2013 and the conditions listed below apply to you, you cannot claim any part of the American opportunity credit as a refundable credit on your tax return. Free taxes h&r block Instead, your allowed credit (figured on Form 8863, Part II) will be used to reduce your tax as a nonrefundable credit only. Free taxes h&r block You do not qualify for a refund if items 1 (a, b, or c), 2, and 3 below apply to you. Free taxes h&r block You were: Under age 18 at the end of 2013, or Age 18 at the end of 2013 and your earned income (defined below) was less than one-half of your support (defined below), or Over age 18 and under age 24 at the end of 2013 and a full-time student (defined below) and your earned income (defined below) was less than one-half of your support (defined below). Free taxes h&r block At least one of your parents was alive at the end of 2013. Free taxes h&r block You are filing a return as single, head of household, qualifying widow(er), or married filing separately for 2013. Free taxes h&r block Earned income. Free taxes h&r block   Earned income includes wages, salaries, professional fees, and other payments received for personal services actually performed. Free taxes h&r block Earned income includes the part of any scholarship or fellowship that represents payment for teaching, research, or other services performed by the student that are required as a condition for receiving the scholarship or fellowship. Free taxes h&r block Earned income does not include that part of the compensation for personal services rendered to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered. Free taxes h&r block   If you are a sole proprietor or a partner in a trade or business in which both personal services and capital are material income-producing factors, earned income also includes a reasonable allowance for compensation for personal services, but not more than 30% of your share of the net profits from that trade or business (after subtracting the deduction for one-half of self-employment tax). Free taxes h&r block However, if capital is not an income-producing factor and your personal services produced the business income, the 30% limit does not apply. Free taxes h&r block Support. Free taxes h&r block   Your support includes food, shelter, clothing, medical and dental care, education, and the like. Free taxes h&r block Generally, the amount of the item of support will be the amount of expenses incurred by the one furnishing such item. Free taxes h&r block If the item of support is in the form of property or lodging, measure the amount of such item of support by its fair market value. Free taxes h&r block However, a scholarship received by you is not considered support if you are a full-time student. Free taxes h&r block See Publication 501 for details. Free taxes h&r block Full-time student. Free taxes h&r block   You are a full-time student for 2013 if during any part of any 5 calendar months during the year you were enrolled as a full-time student at an eligible educational institution (defined earlier), or took a full-time, on-farm training course given by such an institution or by a state, county, or local government agency. Free taxes h&r block Claiming the Credit You claim the American opportunity credit by completing Form 8863 and submitting it with your Form 1040 or 1040A. Free taxes h&r block Enter the nonrefundable part of the credit on Form 1040, line 49, or on Form 1040A, line 31. Free taxes h&r block Enter the refundable part of the credit on Form 1040, line 66, or on Form 1040A, line 40. Free taxes h&r block A filled-in Form 8863 is shown at the end of this publication. Free taxes h&r block Note. Free taxes h&r block In Appendix A. Free taxes h&r block at the end of this publication, there is an example illustrating the use of Form 8863 when both the American opportunity credit and the lifetime learning credit are claimed on the same tax return. Free taxes h&r block Prev  Up  Next   Home   More Online Publications