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H&r Block 1040ez

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H&r Block 1040ez

H&r block 1040ez 6. H&r block 1040ez   Tuition and Fees Deduction Table of Contents IntroductionWhat is the tax benefit of the tuition and fees deduction. H&r block 1040ez Can You Claim the DeductionWho Can Claim the Deduction Who Cannot Claim the Deduction What Expenses QualifyQualified Education Expenses No Double Benefit Allowed Expenses That Do Not Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses Figuring the DeductionEffect of the Amount of Your Income on the Amount of Your Deduction Claiming the Deduction Illustrated Example Introduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). H&r block 1040ez 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. H&r block 1040ez The qualified expenses must be for higher education, as explained later under Qualified Education Expenses . H&r block 1040ez What is the tax benefit of the tuition and fees deduction. H&r block 1040ez   The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. H&r block 1040ez   This deduction is taken as an adjustment to income. H&r block 1040ez This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). H&r block 1040ez This deduction may be beneficial to you if you do not qualify for the American opportunity or lifetime learning credits. H&r block 1040ez You can choose the education benefit that will give you the lowest tax. H&r block 1040ez You may want to compare the tuition and fees deduction to the education credits. H&r block 1040ez See chapter 2, American Opportunity Credit and chapter 3, Lifetime Learning Credit for more information on the education credits. H&r block 1040ez Table 6-1. H&r block 1040ez Tuition and Fees Deduction at a Glance summarizes the features of the tuition and fees deduction. H&r block 1040ez Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. H&r block 1040ez Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. H&r block 1040ez You pay qualified education expenses of higher education. H&r block 1040ez You pay the education expenses for an eligible student. H&r block 1040ez The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return. H&r block 1040ez The term “qualified education expenses” is defined later under Qualified Education Expenses . H&r block 1040ez “Eligible student” is defined later under Who Is an Eligible Student . H&r block 1040ez For more information on claiming the deduction for a dependent, see Who Can Claim a Dependent's Expenses , later. H&r block 1040ez Table 6-1. H&r block 1040ez Tuition and Fees Deduction at a Glance Do not rely on this table alone. H&r block 1040ez Refer to the text for complete details. H&r block 1040ez Question Answer What is the maximum benefit? You can reduce your income subject to tax by up to $4,000. H&r block 1040ez What is the limit on modified adjusted gross income (MAGI)? $160,000 if married filing a joint return; $80,000 if single, head of household, or qualifying widow(er). H&r block 1040ez Where is the deduction taken? As an adjustment to income on  Form 1040 or Form 1040A. H&r block 1040ez 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. H&r block 1040ez 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. H&r block 1040ez Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. H&r block 1040ez Your filing status is married filing separately. H&r block 1040ez Another person can claim an exemption for you as a dependent on his or her tax return. H&r block 1040ez You cannot take the deduction even if the other person does not actually claim that exemption. H&r block 1040ez Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). H&r block 1040ez 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. H&r block 1040ez More information on nonresident aliens can be found in Publication 519. H&r block 1040ez 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. H&r block 1040ez 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 beginning in 2013 or in the first 3 months of 2014. H&r block 1040ez For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning in January 2014, you may be able to use that $1,500 in figuring your 2013 deduction. H&r block 1040ez Academic period. H&r block 1040ez   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. H&r block 1040ez 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. H&r block 1040ez Paid with borrowed funds. H&r block 1040ez   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. H&r block 1040ez 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. H&r block 1040ez Treat loan disbursements sent directly to the educational institution as paid on the date the institution credits the student's account. H&r block 1040ez Student withdraws from class(es). H&r block 1040ez   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. H&r block 1040ez 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. H&r block 1040ez Eligible educational institution. H&r block 1040ez   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. H&r block 1040ez S. H&r block 1040ez Department of Education. H&r block 1040ez It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. H&r block 1040ez The educational institution should be able to tell you if it is an eligible educational institution. H&r block 1040ez   Certain educational institutions located outside the United States also participate in the U. H&r block 1040ez S. H&r block 1040ez Department of Education's Federal Student Aid (FSA) programs. H&r block 1040ez Related expenses. H&r block 1040ez   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. H&r block 1040ez Prepaid expenses. H&r block 1040ez   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. H&r block 1040ez See Academic period , earlier. H&r block 1040ez For example, 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). H&r block 1040ez 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). H&r block 1040ez In the following examples, assume that each student is an eligible student and each college or university an eligible educational institution. H&r block 1040ez Example 1. H&r block 1040ez Jackson is a sophomore in University V's degree program in dentistry. H&r block 1040ez 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. H&r block 1040ez Because the equipment rental fee must be paid to University V for enrollment and attendance, Jackson's equipment rental fee is a qualified education expense. H&r block 1040ez Example 2. H&r block 1040ez Donna and Charles, 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. H&r block 1040ez 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. H&r block 1040ez Charles bought his books from a friend, so what he paid for them is not a qualified education expense. H&r block 1040ez Donna bought hers at College W's bookstore. H&r block 1040ez Although Donna paid College W directly for her first-year books and materials, her payment is not a qualified education expense because the books and materials are not required to be purchased from College W for enrollment or attendance at the institution. H&r block 1040ez Example 3. H&r block 1040ez When Marci enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. H&r block 1040ez 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. H&r block 1040ez No portion of the fee covers personal expenses. H&r block 1040ez Although labeled as a student activity fee, the fee is required for Marci's enrollment and attendance at College X. H&r block 1040ez Therefore, it is a qualified expense. H&r block 1040ez No Double Benefit Allowed You cannot do any of the following. H&r block 1040ez Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. H&r block 1040ez 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. H&r block 1040ez 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). H&r block 1040ez 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. H&r block 1040ez See Coordination With Tuition and Fees Deduction in chapter 8, Qualified Tuition Program, later. H&r block 1040ez Deduct qualified education expenses that have been paid with tax-free interest on U. H&r block 1040ez S. H&r block 1040ez savings bonds (Form 8815). H&r block 1040ez See Figuring the Tax-Free Amount in chapter 10, Education Savings Bond Program, later. H&r block 1040ez Deduct qualified education expenses that have been paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. H&r block 1040ez See the following section on Adjustments to Qualified Education Expenses. H&r block 1040ez 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. H&r block 1040ez The result is the amount of adjusted qualified education expenses for each student. H&r block 1040ez You must also reduce qualified education expenses by the other amounts referred to in No Double Benefit Allowed , earlier. H&r block 1040ez Tax-free educational assistance. H&r block 1040ez   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. H&r block 1040ez See Academic period , earlier. H&r block 1040ez   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. H&r block 1040ez 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). H&r block 1040ez   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. H&r block 1040ez 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. H&r block 1040ez   This tax-free education assistance includes: The tax-free part 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), 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. H&r block 1040ez Generally, any scholarship or fellowship is treated as tax free. H&r block 1040ez 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. H&r block 1040ez 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. H&r block 1040ez 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. H&r block 1040ez 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. H&r block 1040ez For details, see Adjustments to Qualified Education Expenses in chapters 2 and 3. H&r block 1040ez Refunds. H&r block 1040ez   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. H&r block 1040ez Some tax-free educational assistance received after 2013 may be treated as a refund. H&r block 1040ez See Tax-free educational assistance , earlier. H&r block 1040ez Refunds received in 2013. H&r block 1040ez   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. H&r block 1040ez Refunds received after 2013 but before your income tax return is filed. H&r block 1040ez   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. H&r block 1040ez Refunds received after 2013 and after your income tax return is filed. H&r block 1040ez   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. H&r block 1040ez See Credit recapture , later. H&r block 1040ez Coordination with Coverdell education savings accounts and qualified tuition programs. H&r block 1040ez   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). H&r block 1040ez 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. H&r block 1040ez Credit recapture. H&r block 1040ez    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. H&r block 1040ez You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing that amount by the amount of the refund or tax-free educational assistance. H&r block 1040ez You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you had claimed the refigured credit(s). H&r block 1040ez Include that amount as an additional tax for the year the refund or tax-free assistance was received. H&r block 1040ez Example. H&r block 1040ez   You paid $3,500 of qualified education expenses in December 2013, and your child began college in January 2014. H&r block 1040ez You claimed $3,500 as the tuition and fees deduction on your 2013 income tax return. H&r block 1040ez The reduction reduced your taxable income by $3,500. H&r block 1040ez Also, you claimed no tax credits in 2013. H&r block 1040ez Your child withdrew from two classes and you received a refund of $2,000 in 2014 after you filed your 2013 tax return. H&r block 1040ez Refigure your 2013 tuition and fees deduction using $1,500 of qualified education expense instead of the $3,500. H&r block 1040ez The refigured tuition and fees deduction is $1,500. H&r block 1040ez Do not file an amended 2013 tax return to account for this adjustment. H&r block 1040ez Instead, include the difference of $2,000 (but only to the extent this difference would have increased your 2013 tax) on the “Other income” line of your 2014 Form 1040. H&r block 1040ez You cannot file Form 1040A for 2014. H&r block 1040ez Amounts that do not reduce qualified education expenses. H&r block 1040ez   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. H&r block 1040ez   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. H&r block 1040ez 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 Restrictions. H&r block 1040ez The use of the money is not restricted. H&r block 1040ez Example 1. H&r block 1040ez In 2013, Jackie paid $3,000 for tuition and $5,000 for room and board at University X. H&r block 1040ez The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. H&r block 1040ez To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. H&r block 1040ez The terms of the scholarship state that it can be used to pay any of Jackie's college expenses. H&r block 1040ez University X applies the $2,000 scholarship against Jackie's $8,000 total bill, and Jackie pays the $6,000 balance of her bill from University X with a combination of her student loan and her savings. H&r block 1040ez Jackie does not report any portion of the scholarship as income on her tax return. H&r block 1040ez In figuring the tuition and fees deduction, Jackie must reduce her qualified education expenses by the amount of the scholarship ($2,000) because she excluded the entire scholarship from her income. H&r block 1040ez 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. H&r block 1040ez Jackie is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship) in 2013. H&r block 1040ez Example 2. H&r block 1040ez The facts are the same as in Example 1, except that Jackie reports her entire scholarship as income on her tax return. H&r block 1040ez Because Jackie reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. H&r block 1040ez Jackie is treated as having paid $3,000 in qualified education expenses. H&r block 1040ez 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. H&r block 1040ez This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. H&r block 1040ez Sports, games, hobbies, and noncredit courses. H&r block 1040ez   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. H&r block 1040ez However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. H&r block 1040ez Comprehensive or bundled fees. H&r block 1040ez   Some eligible educational institutions combine all of their fees for an academic period into one amount. H&r block 1040ez 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. H&r block 1040ez 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. H&r block 1040ez See Figuring the Deduction , later, for more information about Form 1098-T. H&r block 1040ez 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 (as defined under Qualified Education Expenses , earlier). H&r block 1040ez 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. H&r block 1040ez For you to be able to deduct qualified education expenses for your dependent, you must claim an exemption for that individual. H&r block 1040ez You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. H&r block 1040ez IF your dependent is an eligible student and you. H&r block 1040ez . H&r block 1040ez . H&r block 1040ez AND. H&r block 1040ez . H&r block 1040ez . H&r block 1040ez THEN. H&r block 1040ez . H&r block 1040ez . H&r block 1040ez 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. H&r block 1040ez Your dependent cannot take a deduction. H&r block 1040ez claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. H&r block 1040ez do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. H&r block 1040ez do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. H&r block 1040ez Expenses paid by dependent. H&r block 1040ez   If your dependent pays qualified education expenses, no one can take a tuition and fees deduction for those expenses. H&r block 1040ez Neither you nor your dependent can deduct the expenses. H&r block 1040ez For purposes of the tuition and fees deduction, you are not treated as paying any expenses actually paid by a dependent for whom you or anyone other than the dependent can claim an exemption. H&r block 1040ez This rule applies even if you do not claim an exemption for your dependent on your tax return. H&r block 1040ez Expenses paid by you. H&r block 1040ez   If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring your tuition and fees deduction. H&r block 1040ez Expenses paid under divorce decree. H&r block 1040ez   Qualified education expenses paid directly to an eligible educational institution for a student under a court-approved divorce decree are treated as paid by the student. H&r block 1040ez Only the student would be eligible to take a tuition and fees deduction for that payment, and then only if no one else could claim an exemption for the student. H&r block 1040ez Expenses paid by others. H&r block 1040ez   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. H&r block 1040ez In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. H&r block 1040ez If you claim, or can claim, an exemption on your tax return for the student, you are not considered to have paid the expenses and you cannot deduct them. H&r block 1040ez If the student is not a dependent, only the student can deduct payments made directly to the institution for his or her expenses. H&r block 1040ez If the student is your dependent, no one can deduct the payments. H&r block 1040ez Example. H&r block 1040ez In 2013, Ms. H&r block 1040ez Baker makes a payment directly to an eligible educational institution for her grandson Dan's qualified education expenses. H&r block 1040ez For purposes of deducting tuition and fees, Dan is treated as receiving the money from his grandmother and, in turn, paying his own qualified education expenses. H&r block 1040ez If an exemption cannot be claimed for Dan on anyone else's tax return, only Dan can claim a tuition and fees deduction for his grandmother's payment. H&r block 1040ez If someone else can claim an exemption for Dan, no one will be allowed a deduction for Ms. H&r block 1040ez Baker's payment. H&r block 1040ez Tuition reduction. H&r block 1040ez   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. H&r block 1040ez 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. H&r block 1040ez For more information on tuition reductions, see Qualified Tuition Reduction , in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. H&r block 1040ez Figuring the Deduction The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. H&r block 1040ez See Effect of the Amount of Your Income on the Amount of Your Deduction , later. H&r block 1040ez Form 1098-T. H&r block 1040ez   To help you figure your tuition and fees deduction, the student should receive Form 1098-T (see Appendix A for a completed example of Form 1098-T). H&r block 1040ez 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. H&r block 1040ez An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. H&r block 1040ez However, the amount in boxes 1 and 2 of Form 1098-T might be different than what you paid. H&r block 1040ez When figuring the deduction, use only the amounts you paid in 2013 for qualified education expenses. H&r block 1040ez   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. H&r block 1040ez    The eligible educational institution may ask for a completed Form W-9S or similar statement to obtain the student's name, address, and taxpayer identification number. H&r block 1040ez Effect of the Amount of Your Income on the Amount of Your Deduction If your MAGI is not more than $65,000 ($130,000 if you are married filing jointly), your maximum tuition and fees deduction is $4,000. H&r block 1040ez If your MAGI is larger than $65,000 ($130,000 if you are married filing jointly), but is not more than $80,000 ($160,000 if you are married filing jointly), your maximum deduction is $2,000. H&r block 1040ez No tuition and fees deduction is allowed if your MAGI is larger than $80,000 ($160,000 if you are married filing jointly). H&r block 1040ez Modified adjusted gross income (MAGI). H&r block 1040ez   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for tuition and fees. H&r block 1040ez However, as discussed below, there may be other modifications. H&r block 1040ez MAGI when using Form 1040A. H&r block 1040ez   If you file Form 1040A, your MAGI is the AGI on line 22 of that form, figured without taking into account any amount on line 19 (tuition and fees deduction). H&r block 1040ez MAGI when using Form 1040. H&r block 1040ez   If you file Form 1040, your MAGI is the AGI on line 38 of that form, figured without taking into account any amount on line 34 (tuition and fees deduction) or line 35 (domestic production activities deduction), and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. H&r block 1040ez   Table 6-2 shows how the amount of your MAGI can affect your tuition and fees deduction. H&r block 1040ez   You can use Worksheet 6-1. H&r block 1040ez MAGI for the Tuition and Fees Deduction , later, to figure your MAGI. H&r block 1040ez Table 6-2. H&r block 1040ez Effect of MAGI on Maximum Tuition and Fees Deduction IF your filing status is. H&r block 1040ez . H&r block 1040ez . H&r block 1040ez AND your MAGI is. H&r block 1040ez . H&r block 1040ez . H&r block 1040ez THEN your maximum tuition and fees deduction is. H&r block 1040ez . H&r block 1040ez . H&r block 1040ez single,  head of household, or qualifying widow(er) not more than $65,000 $4,000. H&r block 1040ez more than $65,000  but not more than $80,000 $2,000. H&r block 1040ez more than $80,000 $0. H&r block 1040ez married filing joint return not more than $130,000 $4,000. H&r block 1040ez more than $130,000 but not more than $160,000 $2,000. H&r block 1040ez more than $160,000 $0. H&r block 1040ez Claiming the Deduction You claim a tuition and fees deduction by completing Form 8917 and submitting it with your Form 1040 or Form 1040A. H&r block 1040ez Enter the deduction on Form 1040, line 34, or Form 1040A, line 19. H&r block 1040ez A filled-in Form 8917 is shown at the end of this chapter. H&r block 1040ez Illustrated Example Tim Pfister, a single taxpayer, enrolled full-time at a local college to earn a degree in engineering. H&r block 1040ez This is the first year of his postsecondary education. H&r block 1040ez During 2013, he paid $3,600 for his qualified 2013 tuition expense. H&r block 1040ez Both he and the college meet all of the requirements for the tuition and fees deduction. H&r block 1040ez Tim's total income (Form 1040, line 22) and MAGI are $26,000. H&r block 1040ez He figures his deduction of $3,600 as shown on Form 8917, later. H&r block 1040ez Worksheet 6-1. H&r block 1040ez MAGI for the Tuition and Fees Deduction Use this worksheet if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico. H&r block 1040ez Before using this worksheet, you must complete Form 1040, lines 7 through 33, and figure any amount to be entered on the dotted line next to line 36. H&r block 1040ez 1. H&r block 1040ez Enter the amount from Form 1040, line 22   1. H&r block 1040ez         2. H&r block 1040ez Enter the total from Form 1040, lines 23 through 33   2. H&r block 1040ez               3. H&r block 1040ez Enter the total of any amounts entered on the dotted line next to Form 1040, line 36   3. H&r block 1040ez               4. H&r block 1040ez Add lines 2 and 3   4. H&r block 1040ez         5. H&r block 1040ez Subtract line 4 from line 1   5. H&r block 1040ez         6. H&r block 1040ez Enter your foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   6. H&r block 1040ez         7. H&r block 1040ez Enter your foreign housing deduction (Form 2555, line 50)   7. H&r block 1040ez         8. H&r block 1040ez Enter the amount of income from Puerto Rico you are excluding   8. H&r block 1040ez         9. H&r block 1040ez Enter the amount of income from American Samoa you are  excluding (Form 4563, line 15)   9. H&r block 1040ez         10. H&r block 1040ez Add lines 5 through 9. H&r block 1040ez This is your modified adjusted gross income   10. H&r block 1040ez     Note. H&r block 1040ez If the amount on line 10 is more than $80,000 ($160,000 if married filing jointly),  you cannot take the deduction for tuition and fees. H&r block 1040ez       This image is too large to be displayed in the current screen. H&r block 1040ez Please click the link to view the image. H&r block 1040ez Form 8917 for Tim Pfister Prev  Up  Next   Home   More Online Publications
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Income from Abroad is Taxable

Many United States (U.S.) citizens and resident aliens receive income from foreign sources. There have been recent reports about the interest of the Internal Revenue Service (IRS) in taxpayers with accounts in Liechtenstein. The interest of the IRS, however, extends beyond accounts in Liechtenstein to accounts anywhere in the world. Consequently, the IRS reminds you to report your worldwide income on your U.S. tax return.

If you are a U.S. citizen or resident alien, you must report income from all sources within and outside of the U.S. This is true whether or not you receive a Form W-2 Wage and Tax Statement,  a Form 1099 (Information Return) or the foreign equivalents.    See Publication 525, Taxable and Nontaxable Income for more information.

Additionally, if you are a U.S. citizen or resident alien, the rules for filing income, estate and gift tax returns and for paying estimated tax are generally the same whether you are living in the U.S. or abroad.

Hiding Income Offshore

Not reporting income from foreign sources may be a crime.  The IRS and its international partners are pursuing those who hide income or assets offshore to evade taxes. Specially trained IRS examiners focus on aggressive international tax planning, including the abusive use of entities and structures established in foreign jurisdictions.  The goal is to ensure U.S. citizens and residents are accurately reporting their income and paying the correct tax. 

Foreign Financial Accounts

In addition to reporting your worldwide income, you must also report on your U.S. tax return whether you have any foreign bank or investment accounts.  The Bank Secrecy Act requires you to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), if:

  • You have financial interest in, signature authority, or other authority over one or more accounts in a foreign country, and
  • The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.

More information on foreign financial account reporting requirements is in News Release FS-2007-15, Foreign Financial Accounts Reporting Requirements and Publication 4261, Do You have a Foreign Financial Account?

Consequences for Evading Taxes on Foreign Source Income

You will face serious consequences if the IRS finds you have unreported income or undisclosed foreign financial accounts.  These consequences can include not only the additional taxes, but also substantial penalties, interest, fines and even imprisonment.

Reporting Promoters of Off-Shore Tax Avoidance Schemes

The IRS encourages you to report promoters of off-shore tax avoidance schemes.  Whistleblowers who provide allegations of fraud to the IRS may be eligible for a reward by filing Form 211, Application for Award for Original Information, and following the procedures outlined in Notice 2008-4, Claims Submitted to the IRS Whistleblower Office under Section 7623.

Page Last Reviewed or Updated: 29-Nov-2013

The H&r Block 1040ez

H&r block 1040ez 2. H&r block 1040ez   Withholding Tax Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Income Tax Withholding Statement. H&r block 1040ez 30% Flat Rate Withholding Social Security and Medicare TaxesGeneral Information Bilateral Social Security (Totalization) Agreements Topics - This chapter discusses: Withholding income tax from the pay of U. H&r block 1040ez S. H&r block 1040ez citizens, Withholding tax at a flat rate, and Social security and Medicare taxes. H&r block 1040ez Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) 673 Statement For Claiming Exemption From Withholding on Foreign Earned Income Eligible for the Exclusion Provided by Section 911 W-4 Employee's Withholding Allowance Certificate W-9 Request for Taxpayer Identification Number and Certification See chapter 7 for information about getting this publication and these forms. H&r block 1040ez Income Tax Withholding U. H&r block 1040ez S. H&r block 1040ez employers generally must withhold U. H&r block 1040ez S. H&r block 1040ez income tax from the pay of U. H&r block 1040ez S. H&r block 1040ez citizens working abroad unless the employer is required by foreign law to withhold foreign income tax. H&r block 1040ez Foreign earned income exclusion. H&r block 1040ez   Your employer does not have to withhold U. H&r block 1040ez S. H&r block 1040ez income taxes from wages you earn abroad if it is reasonable to believe that you will exclude them from income under the foreign earned income exclusion or the foreign housing exclusion. H&r block 1040ez   Your employer should withhold taxes from any wages you earn for working in the United States. H&r block 1040ez Statement. H&r block 1040ez   You can give a statement to your employer indicating that you expect to qualify for the foreign earned income exclusion under either the bona fide residence test or the physical presence test and indicating your estimated housing cost exclusion. H&r block 1040ez   Form 673 is an acceptable statement. H&r block 1040ez You can use Form 673 only if you are a U. H&r block 1040ez S. H&r block 1040ez citizen. H&r block 1040ez You do not have to use the form. H&r block 1040ez You can prepare your own statement. H&r block 1040ez See a copy of Form 673, later. H&r block 1040ez   Generally, your employer can stop the withholding once you submit the statement that includes a declaration that the statement is made under penalties of perjury. H&r block 1040ez However, if your employer has reason to believe that you will not qualify for either the foreign earned income or the foreign housing exclusion, your employer must continue to withhold. H&r block 1040ez   In determining whether your foreign earned income is more than the limit on either the foreign earned income exclusion or the foreign housing exclusion, if your employer has any information about pay you received from any other source outside the United States, your employer must take that information into account. H&r block 1040ez Foreign tax credit. H&r block 1040ez   If you plan to take a foreign tax credit, you may be eligible for additional withholding allowances on Form W-4. H&r block 1040ez You can take these additional withholding allowances only for foreign tax credits attributable to taxable salary or wage income. H&r block 1040ez Withholding from pension payments. H&r block 1040ez   U. H&r block 1040ez S. H&r block 1040ez payers of benefits from employer-deferred compensation plans, individual retirement plans, and commercial annuities generally must withhold income tax from payments delivered outside of the United States. H&r block 1040ez You can choose exemption from withholding if you: Provide the payer of the benefits with a residence address in the United States or a U. H&r block 1040ez S. H&r block 1040ez possession, or Certify to the payer that you are not a U. H&r block 1040ez S. H&r block 1040ez citizen or resident alien or someone who left the United States to avoid tax. H&r block 1040ez Check your withholding. H&r block 1040ez   Before you report U. H&r block 1040ez S. H&r block 1040ez income tax withholding on your tax return, you should carefully review all information documents, such as Form W-2, Wage and Tax Statement, and the Form 1099 information returns. H&r block 1040ez Compare other records, such as final pay records or bank statements, with Form W-2 or Form 1099 to verify the withholding on these forms. H&r block 1040ez Check your U. H&r block 1040ez S. H&r block 1040ez income tax withholding even if you pay someone else to prepare your tax return. H&r block 1040ez You may be assessed penalties and interest if you claim more than your correct amount of withholding allowances. H&r block 1040ez This image is too large to be displayed in the current screen. H&r block 1040ez Please click the link to view the image. H&r block 1040ez Form 673 30% Flat Rate Withholding Generally, U. H&r block 1040ez S. H&r block 1040ez payers of income other than wages, such as dividends and royalties, are required to withhold tax at a flat 30% (or lower treaty) rate on nonwage income paid to nonresident aliens. H&r block 1040ez If you are a U. H&r block 1040ez S. H&r block 1040ez citizen or resident alien and this tax is withheld in error from payments to you because you have a foreign address, you should notify the payer of the income to stop the withholding. H&r block 1040ez Use Form W-9 to notify the payer. H&r block 1040ez You can claim the tax withheld in error as a withholding credit on your tax return if the amount is not adjusted by the payer. H&r block 1040ez Social security benefits paid to residents. H&r block 1040ez   If you are a lawful permanent resident (green card holder) and a flat 30% tax was withheld in error on your social security benefits, the tax is refundable by the Social Security Administration (SSA) or the IRS. H&r block 1040ez The SSA will refund the tax withheld if the refund can be processed during the same calendar year in which the tax was withheld. H&r block 1040ez If the SSA cannot refund the tax withheld, you must file a Form 1040 or 1040A with the Internal Revenue Service Center at the address listed under Where To File to determine if you are entitled to a refund. H&r block 1040ez The following information must be submitted with your Form 1040 or Form 1040A. H&r block 1040ez A copy of Form SSA-1042S, Social Security Benefit Statement. H&r block 1040ez A copy of your “green card. H&r block 1040ez ” A signed declaration that includes the following statements. H&r block 1040ez   “I am a U. H&r block 1040ez S. H&r block 1040ez lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. H&r block 1040ez I am filing a U. H&r block 1040ez S. H&r block 1040ez income tax return for the taxable year as a resident alien reporting all of my worldwide income. H&r block 1040ez I have not claimed benefits for the taxable year under an income tax treaty as a nonresident alien. H&r block 1040ez ” Social Security and Medicare Taxes Social security and Medicare taxes may apply to wages paid to an employee regardless of where the services are performed. H&r block 1040ez General Information In general, U. H&r block 1040ez S. H&r block 1040ez social security and Medicare taxes do not apply to wages for services you perform as an employee outside the United States unless one of the following exceptions applies. H&r block 1040ez You perform the services on or in connection with an American vessel or aircraft (defined later) and either: You entered into your employment contract within the United States, or The vessel or aircraft touches at a U. H&r block 1040ez S. H&r block 1040ez port while you are employed on it. H&r block 1040ez You are working in one of the countries with which the United States has entered into a bilateral social security agreement (discussed later). H&r block 1040ez You are working for an American employer (defined later). H&r block 1040ez You are working for a foreign affiliate (defined later) of an American employer under a voluntary agreement entered into between the American employer and the U. H&r block 1040ez S. H&r block 1040ez Treasury Department. H&r block 1040ez American vessel or aircraft. H&r block 1040ez   An American vessel is any vessel documented or numbered under the laws of the United States and any other vessel whose crew is employed solely by one or more U. H&r block 1040ez S. H&r block 1040ez citizens, residents, or corporations. H&r block 1040ez An American aircraft is an aircraft registered under the laws of the United States. H&r block 1040ez American employer. H&r block 1040ez   An American employer includes any of the following. H&r block 1040ez The U. H&r block 1040ez S. H&r block 1040ez Government or any of its instrumentalities. H&r block 1040ez An individual who is a resident of the United States. H&r block 1040ez A partnership of which at least two-thirds of the partners are U. H&r block 1040ez S. H&r block 1040ez residents. H&r block 1040ez A trust of which all the trustees are U. H&r block 1040ez S. H&r block 1040ez residents. H&r block 1040ez A corporation organized under the laws of the United States, any U. H&r block 1040ez S. H&r block 1040ez state, or the District of Columbia, Puerto Rico, the U. H&r block 1040ez S. H&r block 1040ez Virgin Islands, Guam, or American Samoa. H&r block 1040ez   An American employer also includes any foreign person with an employee who is performing services in connection with a contract between the U. H&r block 1040ez S. H&r block 1040ez government (or any instrumentality thereof) and a member of a domestically controlled group of entities which includes such foreign person. H&r block 1040ez Foreign affiliate. H&r block 1040ez   A foreign affiliate of an American employer is any foreign entity in which the American employer has at least a 10% interest, directly or through one or more entities. H&r block 1040ez For a corporation, the 10% interest must be in its voting stock. H&r block 1040ez For any other entity, the 10% interest must be in its profits. H&r block 1040ez   Form 2032, Contract Coverage Under Title II of the Social Security Act, is used by American employers to extend social security coverage to U. H&r block 1040ez S. H&r block 1040ez citizens and resident aliens working abroad for foreign affiliates of American employers. H&r block 1040ez Once you enter into an agreement, coverage cannot be terminated. H&r block 1040ez Excludable meals and lodging. H&r block 1040ez   Social security tax does not apply to the value of meals and lodging provided to you for the convenience of your employer if it is reasonable to believe that you will be able to exclude the value from your income. H&r block 1040ez Bilateral Social Security (Totalization) Agreements The United States has entered into agreements with some foreign countries to coordinate social security coverage and taxation of workers who are employed in those countries. H&r block 1040ez These agreements are commonly referred to as totalization agreements and are in effect with the following countries. H&r block 1040ez Australia Greece Norway Austria Ireland Poland Belgium Italy Portugal Canada Japan Spain Chile Korea, Sweden Czech South Switzerland Republic Luxembourg United Denmark Netherlands Kingdom Finland     France     Germany           Under these agreements, dual coverage and dual contributions (taxes) for the same work are eliminated. H&r block 1040ez The agreements generally make sure that you pay social security taxes to only one country. H&r block 1040ez Generally, under these agreements, you will only be subject to social security taxes in the country where you are working. H&r block 1040ez However, if you are temporarily sent to work in a foreign country and your pay would otherwise be subject to social security taxes in both the United States and that country, you generally can remain covered only by U. H&r block 1040ez S. H&r block 1040ez social security. H&r block 1040ez You can get more information on any specific agreement by contacting: Social Security Administration Office of International Programs P. H&r block 1040ez O. H&r block 1040ez Box 17741 Baltimore, MD 21235-7741 If you have access to the Internet, you can get more information at: http://www. H&r block 1040ez socialsecurity. H&r block 1040ez gov/international. H&r block 1040ez Covered by U. H&r block 1040ez S. H&r block 1040ez only. H&r block 1040ez   If your pay in a foreign country is subject only to U. H&r block 1040ez S. H&r block 1040ez social security tax and is exempt from foreign social security tax, your employer should get a certificate of coverage from the Office of International Programs. H&r block 1040ez Covered by foreign country only. H&r block 1040ez   If you are permanently working in a foreign country with which the United States has a social security agreement and, under the agreement, your pay is exempt from U. H&r block 1040ez S. H&r block 1040ez social security tax, you or your employer should get a statement from the authorized official or agency of the foreign country verifying that your pay is subject to social security coverage in that country. H&r block 1040ez   If the authorities of the foreign country will not issue such a statement, either you or your employer should get a statement from the U. H&r block 1040ez S. H&r block 1040ez Social Security Administration, Office of International Programs, at the address listed earlier. H&r block 1040ez The statement should indicate that your wages are not covered by the U. H&r block 1040ez S. H&r block 1040ez social security system. H&r block 1040ez   This statement should be kept by your employer because it establishes that your pay is exempt from U. H&r block 1040ez S. H&r block 1040ez social security tax. H&r block 1040ez   Only wages paid on or after the effective date of the totalization agreement can be exempt from U. H&r block 1040ez S. H&r block 1040ez social security tax. H&r block 1040ez Prev  Up  Next   Home   More Online Publications