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How To File Taxes If Unemployed

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How To File Taxes If Unemployed

How to file taxes if unemployed 2. How to file taxes if unemployed   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. How to file taxes if unemployed 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. How to file taxes if unemployed They are the American opportunity credit (this chapter) and the lifetime learning credit ( chapter 3 ). How to file taxes if unemployed 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. How to file taxes if unemployed What is the tax benefit of the American opportunity credit. How to file taxes if unemployed   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. How to file taxes if unemployed   A tax credit reduces the amount of income tax you may have to pay. How to file taxes if unemployed Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. How to file taxes if unemployed Forty percent of the American opportunity credit may be refundable. How to file taxes if unemployed This means that if the refundable portion of your credit is more than your tax, the excess will be refunded to you. How to file taxes if unemployed   Your allowable American opportunity credit may be limited by the amount of your income. How to file taxes if unemployed Also, the nonrefundable part of the credit may be limited by the amount of your tax. How to file taxes if unemployed Overview of the American opportunity credit. How to file taxes if unemployed   See Table 2-1, Overview of the American Opportunity Credit , for the basics of this credit. How to file taxes if unemployed The details are discussed in this chapter. How to file taxes if unemployed Can you claim more than one education credit this year. How to file taxes if unemployed   For each student, you can elect for any year only one of the credits. How to file taxes if unemployed 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. How to file taxes if unemployed   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. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed Differences between the American opportunity and lifetime learning credits. How to file taxes if unemployed   There are several differences between these two credits. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed If you have the choice, the American opportunity credit will always be greater than the lifetime learning credit. How to file taxes if unemployed Table 2-1. How to file taxes if unemployed 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. How to file taxes if unemployed Who Can Claim the Credit Generally, you can claim the American opportunity credit if all three of the following requirements are met. How to file taxes if unemployed You pay qualified education expenses of higher education. How to file taxes if unemployed You pay the education expenses for an eligible student. How to file taxes if unemployed The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. How to file taxes if unemployed Student qualifications. How to file taxes if unemployed   Generally, you can take the American opportunity credit for a student only if all of the following four requirements are met. How to file taxes if unemployed 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. How to file taxes if unemployed For this purpose, do not include academic credit awarded solely because of the student's performance on proficiency examinations. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed The standard for what is half of the normal full-time work load is determined by each eligible educational institution. How to file taxes if unemployed However, the standard may not be lower than any of those established by the U. How to file taxes if unemployed S. How to file taxes if unemployed Department of Education under the Higher Education Act of 1965. How to file taxes if unemployed 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. How to file taxes if unemployed See Prepaid expenses, later. How to file taxes if unemployed 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. How to file taxes if unemployed Example 1. How to file taxes if unemployed Sharon was eligible for the Hope Scholarship Credit for 2007 and 2008 and for the American opportunity credit for 2010 and 2012. How to file taxes if unemployed 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. How to file taxes if unemployed Sharon claimed the American opportunity credit on her 2012 tax return. How to file taxes if unemployed The American opportunity credit and Hope Scholarship Credit have been claimed for Sharon for four tax years before 2013. How to file taxes if unemployed Therefore, the American opportunity credit cannot be claimed by Sharon for 2013. How to file taxes if unemployed 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. How to file taxes if unemployed Example 2. How to file taxes if unemployed Wilbert was eligible for the American opportunity credit for 2009, 2010, 2011, and 2013. How to file taxes if unemployed His parents claimed the American opportunity credit for Wilbert on their tax returns for 2009, 2010, and 2011. How to file taxes if unemployed No one claimed an American opportunity credit or Hope Scholarship Credit for Wilbert for any other tax year. How to file taxes if unemployed The American opportunity credit and Hope Scholarship Credit have been claimed for Wilbert for only three tax years before 2013. How to file taxes if unemployed Therefore, Wilbert meets the second requirement to be eligible for the American opportunity credit. How to file taxes if unemployed If Wilbert were to file Form 8863 for 2013, he would check “No” for Part III, line 23. How to file taxes if unemployed If Wilbert meets all of the other requirements, he is eligible for the American opportunity credit. How to file taxes if unemployed Example 3. How to file taxes if unemployed Glenda enrolls on a full-time basis in a degree program for the 2014 Spring semester, which begins in January 2014. How to file taxes if unemployed Glenda pays her tuition for the 2014 Spring semester in December 2013. How to file taxes if unemployed 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. How to file taxes if unemployed If the requirements above are not met for any student, you cannot take the American opportunity credit for that student. How to file taxes if unemployed You may be able to take the lifetime learning credit for part or all of that student's qualified education expenses instead. How to file taxes if unemployed Note. How to file taxes if unemployed 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. How to file taxes if unemployed “Qualified education expenses” are defined later under Qualified Education Expenses . How to file taxes if unemployed “Eligible students” are defined later under Who Is an Eligible Student . How to file taxes if unemployed A dependent for whom you claim an exemption is defined later under Who Can Claim a Dependent's Expenses . How to file taxes if unemployed 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. How to file taxes if unemployed This image is too large to be displayed in the current screen. How to file taxes if unemployed Please click the link to view the image. How to file taxes if unemployed 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. How to file taxes if unemployed Your filing status is married filing separately. How to file taxes if unemployed You are listed as a dependent on another person's tax return (such as your parents'). How to file taxes if unemployed See Who Can Claim a Dependent's Expenses , later. How to file taxes if unemployed Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more in the case of a joint return). How to file taxes if unemployed MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit . How to file taxes if unemployed 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. How to file taxes if unemployed More information on nonresident aliens can be found in Publication 519, U. How to file taxes if unemployed S. How to file taxes if unemployed Tax Guide for Aliens. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed Academic period. How to file taxes if unemployed   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. How to file taxes if unemployed 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. How to file taxes if unemployed Paid with borrowed funds. How to file taxes if unemployed   You can claim an American opportunity credit for qualified education expenses paid with the proceeds of a loan. How to file taxes if unemployed 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. How to file taxes if unemployed Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. How to file taxes if unemployed Student withdraws from class(es). How to file taxes if unemployed   You can claim an American opportunity credit for qualified education expenses not refunded when a student withdraws. How to file taxes if unemployed 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. How to file taxes if unemployed Eligible educational institution. How to file taxes if unemployed   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. How to file taxes if unemployed S. How to file taxes if unemployed Department of Education. How to file taxes if unemployed It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. How to file taxes if unemployed The educational institution should be able to tell you if it is an eligible educational institution. How to file taxes if unemployed   Certain educational institutions located outside the United States also participate in the U. How to file taxes if unemployed S. How to file taxes if unemployed Department of Education's Federal Student Aid (FSA) programs. How to file taxes if unemployed Related expenses. How to file taxes if unemployed   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. How to file taxes if unemployed   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. How to file taxes if unemployed Prepaid expenses. How to file taxes if unemployed   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. How to file taxes if unemployed See Academic period, earlier. How to file taxes if unemployed 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). How to file taxes if unemployed    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). How to file taxes if unemployed   In the following examples, assume that each student is an eligible student at an eligible educational institution. How to file taxes if unemployed Example 1. How to file taxes if unemployed Jefferson is a sophomore in University V's degree program in dentistry. How to file taxes if unemployed 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. How to file taxes if unemployed Because the equipment rental is needed for his course of study, Jefferson's equipment rental fee is a qualified expense. How to file taxes if unemployed Example 2. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed William bought his books from a friend; Grace bought hers at College W's bookstore. How to file taxes if unemployed Both are qualified education expenses for the American opportunity credit. How to file taxes if unemployed Example 3. How to file taxes if unemployed When Kelly enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. How to file taxes if unemployed 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. How to file taxes if unemployed No portion of the fee covers personal expenses. How to file taxes if unemployed 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. How to file taxes if unemployed No Double Benefit Allowed You cannot do any of the following. How to file taxes if unemployed 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. How to file taxes if unemployed Claim an American opportunity credit in the same year that you are claiming a tuition and fees deduction for the same student. How to file taxes if unemployed Claim an American opportunity credit for any student and use any of that student's expenses in figuring your lifetime learning credit. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed See Adjustments to Qualified Education Expenses, next. How to file taxes if unemployed 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. How to file taxes if unemployed The result is the amount of adjusted qualified education expenses for each student. How to file taxes if unemployed Tax-free educational assistance. How to file taxes if unemployed   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. How to file taxes if unemployed See Academic period, earlier. How to file taxes if unemployed   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. How to file taxes if unemployed 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). How to file taxes if unemployed   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. How to file taxes if unemployed 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. How to file taxes if unemployed   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). How to file taxes if unemployed 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. How to file taxes if unemployed Generally, any scholarship or fellowship is treated as tax free. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed For examples, see Coordination with Pell grants and other scholarships, later. How to file taxes if unemployed Refunds. How to file taxes if unemployed   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. How to file taxes if unemployed Some tax-free educational assistance received after 2013 may be treated as a refund. How to file taxes if unemployed See Tax-free educational assistance, earlier. How to file taxes if unemployed Refunds received in 2013. How to file taxes if unemployed   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. How to file taxes if unemployed Refunds received after 2013 but before your income tax return is filed. How to file taxes if unemployed   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. How to file taxes if unemployed Refunds received after 2013 and after your income tax return is filed. How to file taxes if unemployed   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. How to file taxes if unemployed See Credit recapture, next. How to file taxes if unemployed Credit recapture. How to file taxes if unemployed    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. How to file taxes if unemployed 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. How to file taxes if unemployed 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). How to file taxes if unemployed Include that amount as an additional tax for the year the refund or tax-free assistance was received. How to file taxes if unemployed Example. How to file taxes if unemployed   You paid $7,000 tuition and fees in August 2013, and your child began college in September 2013. How to file taxes if unemployed You filed your 2013 tax return on February 17, 2014, and claimed an American opportunity credit of $2,500. How to file taxes if unemployed After you filed your return, you received a refund of $4,000. How to file taxes if unemployed You must refigure your 2013 American opportunity credit using $3,000 of qualified education expenses instead of $7,000. How to file taxes if unemployed The refigured credit is $2,250. How to file taxes if unemployed The increase to your tax liability is also $250. How to file taxes if unemployed Include the difference of $250 as additional tax on your 2014 tax return. How to file taxes if unemployed See the instructions for your 2014 income tax return to determine where to include this tax. How to file taxes if unemployed 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. How to file taxes if unemployed Amounts that do not reduce qualified education expenses. How to file taxes if unemployed   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. How to file taxes if unemployed   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. How to file taxes if unemployed 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. How to file taxes if unemployed The use of the money is not restricted. How to file taxes if unemployed Example 1. How to file taxes if unemployed Joan paid $3,000 for tuition and $5,000 for room and board at University X. How to file taxes if unemployed The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. How to file taxes if unemployed To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. How to file taxes if unemployed The terms of the scholarship state that it can be used to pay any of Joan's college expenses. How to file taxes if unemployed 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. How to file taxes if unemployed Joan does not report any portion of the scholarship as income on her tax return. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed Joan is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship). How to file taxes if unemployed Example 2. How to file taxes if unemployed The facts are the same as in Example 1, except that Joan reports her entire scholarship as income on her tax return. How to file taxes if unemployed Because Joan reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. How to file taxes if unemployed Joan is treated as having paid $3,000 in qualified education expenses. How to file taxes if unemployed Coordination with Pell grants and other scholarships. How to file taxes if unemployed   In some cases, you may be able to reduce your tax liability by including scholarships in income. How to file taxes if unemployed 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. How to file taxes if unemployed The scholarship must be one that may (by its terms) be applied to expenses (such as room and board) other than qualified education expenses. How to file taxes if unemployed Example 1—No scholarship. How to file taxes if unemployed 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. How to file taxes if unemployed This was his first year of postsecondary education. How to file taxes if unemployed During 2013, he paid $5,600 for his qualified education expenses and $4,400 for his room and board for the fall 2013 semester. How to file taxes if unemployed He and the college meet all the requirements for the American opportunity credit. How to file taxes if unemployed Bill's AGI and his MAGI, for purposes of figuring his credit, are $30,000. How to file taxes if unemployed Bill takes the standard deduction of $5,950 and personal exemption of $3,800, reducing his AGI to taxable income of $20,250. How to file taxes if unemployed His income tax liability, before credits, is $2,599 and Bill claims no credits other than the American opportunity credit. How to file taxes if unemployed 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. How to file taxes if unemployed Example 2—Scholarship excluded from income. How to file taxes if unemployed The facts are the same as in Example 1—No scholarship, except that Bill was awarded a $5,600 scholarship. How to file taxes if unemployed Under the terms of his scholarship, it may be used to pay any educational expenses, including room and board. How to file taxes if unemployed 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. How to file taxes if unemployed His adjusted qualified education expenses will be zero and he will not have an education credit. How to file taxes if unemployed Therefore, Bill's tax after credits would be $2,599. How to file taxes if unemployed Example 3—Scholarship partially included in income. How to file taxes if unemployed The facts are the same as in Example 2—Scholarship excluded from income. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. How to file taxes if unemployed Sports, games, hobbies, and noncredit courses. How to file taxes if unemployed   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. How to file taxes if unemployed However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. How to file taxes if unemployed Comprehensive or bundled fees. How to file taxes if unemployed   Some eligible educational institutions combine all of their fees for an academic period into one amount. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed See Figuring the Credit , later, for more information about Form 1098-T. How to file taxes if unemployed 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. How to file taxes if unemployed This is a student who meets all of the following requirements. How to file taxes if unemployed The student did not have expenses that were used to figure an American opportunity credit in any 4 earlier tax years. How to file taxes if unemployed This includes any tax year(s) in which you claimed the Hope Scholarship Credit for the same student. How to file taxes if unemployed The student had not completed the first 4 years of postsecondary education (generally, the freshman, sophomore, junior, and senior years of college) before 2013. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed These requirements are also shown in Figure 2-2, Who is an Eligible Student for the American Opportunity Credit , later. How to file taxes if unemployed Completion of first 4 years. How to file taxes if unemployed   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. How to file taxes if unemployed This student generally would not be an eligible student for purposes of the American opportunity credit. How to file taxes if unemployed Exception. How to file taxes if unemployed   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. How to file taxes if unemployed Enrolled at least half-time. How to file taxes if unemployed   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. How to file taxes if unemployed   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. How to file taxes if unemployed However, the standard may not be lower than any of those established by the U. How to file taxes if unemployed S. How to file taxes if unemployed Department of Education under the Higher Education Act of 1965. How to file taxes if unemployed Please click here for the text description of the image. How to file taxes if unemployed Figure 2-2 Example 1. How to file taxes if unemployed Mack graduated from high school in June 2012. How to file taxes if unemployed 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. How to file taxes if unemployed For the 2013 fall semester, Mack was enrolled less than half-time. How to file taxes if unemployed 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). How to file taxes if unemployed Example 2. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed Example 3. How to file taxes if unemployed During the 2012 fall semester, Larry was a high school student who took classes on a half-time basis at College X. How to file taxes if unemployed 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. How to file taxes if unemployed Because Larry was not enrolled in a degree program at College X during 2012, Larry was not an eligible student for tax year 2012. How to file taxes if unemployed Example 4. How to file taxes if unemployed The facts are the same as in Example 3. How to file taxes if unemployed During the 2013 spring semester, Larry again attended College X but not as part of a degree program. How to file taxes if unemployed Larry graduated from high school in June 2013. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed Example 5. How to file taxes if unemployed Dee graduated from high school in June 2012. How to file taxes if unemployed 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. How to file taxes if unemployed Dee completed the program in December 2013, and was awarded a certificate. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed For you to claim an American opportunity credit for your dependent's expenses, you must also claim an exemption for your dependent. How to file taxes if unemployed You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. How to file taxes if unemployed IF you. How to file taxes if unemployed . How to file taxes if unemployed . How to file taxes if unemployed THEN only. How to file taxes if unemployed . How to file taxes if unemployed . How to file taxes if unemployed 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. How to file taxes if unemployed The dependent cannot claim the credit. How to file taxes if unemployed 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. How to file taxes if unemployed You cannot claim the credit based on this dependent's expenses. How to file taxes if unemployed Expenses paid by dependent. How to file taxes if unemployed   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. How to file taxes if unemployed Include these expenses when figuring the amount of your American opportunity credit. How to file taxes if unemployed    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. How to file taxes if unemployed Expenses paid by you. How to file taxes if unemployed   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. How to file taxes if unemployed 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. How to file taxes if unemployed Expenses paid by others. How to file taxes if unemployed   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. How to file taxes if unemployed In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. How to file taxes if unemployed If you claim an exemption on your tax return for the student, you are considered to have paid the expenses. How to file taxes if unemployed Example. How to file taxes if unemployed In 2013, Ms. How to file taxes if unemployed Allen makes a payment directly to an eligible educational institution for her grandson Todd's qualified education expenses. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed If anyone else claims an exemption for Todd, Todd cannot claim an American opportunity credit. How to file taxes if unemployed Tuition reduction. How to file taxes if unemployed    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. How to file taxes if unemployed 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. How to file taxes if unemployed For more information on tuition reductions, see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. How to file taxes if unemployed 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. How to file taxes if unemployed The maximum amount of American opportunity credit you can claim in 2013 is $2,500 multiplied by the number of eligible students. How to file taxes if unemployed You can claim the full $2,500 for each eligible student for whom you paid at least $4,000 of adjusted qualified education expenses. How to file taxes if unemployed However, the credit may be reduced based on your MAGI. How to file taxes if unemployed See Effect of the Amount of Your Income on the Amount of Your Credit , later. How to file taxes if unemployed Example. How to file taxes if unemployed Jack and Kay Ford are married and file a joint tax return. How to file taxes if unemployed For 2013, they claim an exemption for their dependent daughter on their tax return. How to file taxes if unemployed Their MAGI is $70,000. How to file taxes if unemployed Their daughter is in her junior (third) year of studies at the local university. How to file taxes if unemployed Jack and Kay paid qualified education expenses of $4,300 in 2013. How to file taxes if unemployed Jack and Kay, their daughter, and the local university meet all of the requirements for the American opportunity credit. How to file taxes if unemployed Jack and Kay can claim a $2,500 American opportunity credit in 2013. How to file taxes if unemployed This is 100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000. How to file taxes if unemployed Form 1098-T. How to file taxes if unemployed   To help you figure your American opportunity credit, the student should receive Form 1098-T, Tuition Statement. How to file taxes if unemployed 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. How to file taxes if unemployed An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. How to file taxes if unemployed However, the amounts in boxes 1 and 2 of Form 1098-T might be different than what you paid. How to file taxes if unemployed When figuring the credit, use only the amounts you paid or are deemed to have paid in 2013 for qualified education expenses. How to file taxes if unemployed   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. How to file taxes if unemployed    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. How to file taxes if unemployed 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). How to file taxes if unemployed 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). How to file taxes if unemployed Modified adjusted gross income (MAGI). How to file taxes if unemployed   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. How to file taxes if unemployed MAGI when using Form 1040A. How to file taxes if unemployed   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. How to file taxes if unemployed MAGI when using Form 1040. How to file taxes if unemployed   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. How to file taxes if unemployed You can use Worksheet 2-1, next, to figure your MAGI. How to file taxes if unemployed    Worksheet 2-1. How to file taxes if unemployed MAGI for the American Opportunity Credit 1. How to file taxes if unemployed Enter your adjusted gross income  (Form 1040, line 38)   1. How to file taxes if unemployed   2. How to file taxes if unemployed Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. How to file taxes if unemployed       3. How to file taxes if unemployed Enter your foreign housing deduction (Form 2555, line 50)   3. How to file taxes if unemployed       4. How to file taxes if unemployed Enter the amount of income from Puerto Rico you are excluding   4. How to file taxes if unemployed       5. How to file taxes if unemployed Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. How to file taxes if unemployed       6. How to file taxes if unemployed Add the amounts on lines 2, 3, 4, and 5   6. How to file taxes if unemployed   7. How to file taxes if unemployed Add the amounts on lines 1 and 6. How to file taxes if unemployed  This is your modified adjusted  gross income. How to file taxes if unemployed Enter here and  on Form 8863, line 3   7. How to file taxes if unemployed   Phaseout. How to file taxes if unemployed   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. How to file taxes if unemployed The same method is shown in the following example. How to file taxes if unemployed Example. How to file taxes if unemployed You are filing a joint return and your MAGI is $165,000. How to file taxes if unemployed In 2013, you paid $5,000 of qualified education expenses. How to file taxes if unemployed 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). How to file taxes if unemployed 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. How to file taxes if unemployed The numerator of the fraction is $180,000 (the upper limit for those filing a joint return) minus your MAGI. How to file taxes if unemployed The denominator is $20,000, the range of incomes for the phaseout ($160,000 to $180,000). How to file taxes if unemployed The result is the amount of your phased out (reduced) American opportunity credit ($1,875). How to file taxes if unemployed      $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. How to file taxes if unemployed 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. How to file taxes if unemployed Instead, your allowed credit (figured on Form 8863, Part II) will be used to reduce your tax as a nonrefundable credit only. How to file taxes if unemployed You do not qualify for a refund if items 1 (a, b, or c), 2, and 3 below apply to you. How to file taxes if unemployed 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). How to file taxes if unemployed At least one of your parents was alive at the end of 2013. How to file taxes if unemployed You are filing a return as single, head of household, qualifying widow(er), or married filing separately for 2013. How to file taxes if unemployed Earned income. How to file taxes if unemployed   Earned income includes wages, salaries, professional fees, and other payments received for personal services actually performed. How to file taxes if unemployed 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. How to file taxes if unemployed 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. How to file taxes if unemployed   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). How to file taxes if unemployed However, if capital is not an income-producing factor and your personal services produced the business income, the 30% limit does not apply. How to file taxes if unemployed Support. How to file taxes if unemployed   Your support includes food, shelter, clothing, medical and dental care, education, and the like. How to file taxes if unemployed Generally, the amount of the item of support will be the amount of expenses incurred by the one furnishing such item. How to file taxes if unemployed 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. How to file taxes if unemployed However, a scholarship received by you is not considered support if you are a full-time student. How to file taxes if unemployed See Publication 501 for details. How to file taxes if unemployed Full-time student. How to file taxes if unemployed   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. How to file taxes if unemployed Claiming the Credit You claim the American opportunity credit by completing Form 8863 and submitting it with your Form 1040 or 1040A. How to file taxes if unemployed Enter the nonrefundable part of the credit on Form 1040, line 49, or on Form 1040A, line 31. How to file taxes if unemployed Enter the refundable part of the credit on Form 1040, line 66, or on Form 1040A, line 40. How to file taxes if unemployed A filled-in Form 8863 is shown at the end of this publication. How to file taxes if unemployed Note. How to file taxes if unemployed In Appendix A. How to file taxes if unemployed 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. How to file taxes if unemployed Prev  Up  Next   Home   More Online Publications
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Understanding Your CP3219B Notice

This Statutory Notice of Deficiency notifies you of the IRS’s intent to assess a tax deficiency and informs you of your right to petition the United States Tax Court to dispute the proposed adjustments.


What you need to do immediately

  • Review this notice and compare our changes to the information on your tax return. On previous notices we asked you to verify the income, credits, and deductions reported on your tax return because they’re different from the information we received from other sources. You didn't provide any further information to us.
  • If you agree with the changes, complete the Form 4089, Notice of Deficiency - Waiver, sign and return it in order to limit additional interest charges.
  • If you don't send a payment with Form 4089, we will send a bill for the amount due with any interest and applicable penalties.
  • Mail any additional information you have to us immediately. Attach this letter to your correspondence to help us identify your case. Keep a copy for your records. Our consideration won't extend the deadline to file a petition with the U.S Tax Court.
  • If you don’t agree with the changes you have the right to challenge the increase in tax by filing a petition with the U.S. Tax Court. You have 90 days (150 if the notice was addressed outside the United States) to file the petition. The Court can’t consider your case if the petition is filed late. You can download a petition form and rules from www.ustaxcourt.gov or contact:

  • Clerk of the U.S. Tax Court
    400 Second Street, NW
    Washington, DC 20217
    1-202-521-0700

You may want to

  • Send us the name, address and taxpayer identification number of the other party that received the income if it isn't yours.
  • Notify the payers to correct their records to show the name and taxpayer identification number of the person or business who actually received the income, so that future reports to us are accurate.

Answers to Common Questions

Is this a Bill?
No. It tells you of the IRS’s intention to assess a tax deficiency. It isn't an assessment of tax nor does it require you to make immediate payment. We haven’t charged any additional tax at this time.

Should I call with my response or mail it in?
If you want us to consider additional information, please contact us immediately. Our consideration won't extend the deadline to file a petition with the U.S Tax Court.


If you have a simple response, such as directing us to a specific line on your original return where you reported the income, you can call a Customer Service Representative and provide the information. A toll-free number is listed in the top right hand corner of the notice.


A written response may be required if the issue is more involved, especially if you disagree with some of the proposed changes. You may want to mail copies of payer information documents such as Form(s) 1099 or Schedule(s) K-1. Include any other letters or documents that support your position. You should submit a written statement to fully explain any unusual tax situations.


If you choose to petition the United States Tax Court, the application must be submitted in writing.

Why did it take you so long to contact us about this?
Tax years generally end on Dec. 31, but we don't receive information from banks, businesses, and other payers until much later. Once we receive all the tax returns and payer information, we compare the information you reported with the information third party payers provided to us. It can take 8 months or more to complete this review.

I need more time to find my records and go through them all. Will you allow me additional time to respond?
No. The time you have to petition the United States Tax Court can't be extended. It’s important that you respond to the Statutory Notice of Deficiency or petition the United States Tax Court (if you choose to) by the due date shown on the notice. If you don’t, we’ll assume the proposed changes are correct and assess the additional deficiency.

Do I have to pay the interest? Can you remove it?
The law requires us to charge interest on any tax that isn't paid by the return due date (Internal Revenue Code Section 6601). 

The law doesn't permit us to reduce or remove interest for reasonable cause. However, in limited circumstances, we may waive penalties. If you believe you qualify for penalty removal, you should include related information in your response.

What should I do to avoid problems like this in the future?
Keep accurate payment information from banks and other payers to verify you've received all payment information for filing your return. Review the documents to be sure they show your most current address. Take the following actions when filing your tax return to avoid similar issues in the future:

  • Report specific income type on the correct line on the Form 1120, U.S. Corporation Income Tax Return. For example, rental income should be claimed on Form 1120, line 6 (Gross Rents). For additional information, please see the reporting instructions for Form 1120.
  • If you report income on a line not traditionally reserved for that type of income, provide a statement indicating where the income was reported. For example, your business is related to investment activity and you're reporting all interest income (including amounts reported to the IRS on Form 1099-INT, Interest Income) with your gross receipts on Form 1120, line 1.
  • Always attach a statement identifying the source of the amount reported on Form 1120, line 10 (Other Income).
  • Provide an attached statement explaining your percentage of gross proceeds (ex; reported to us on Form 1099-MISC) that you would be liable to claim on your tax return.
  • Generally, if you receive a Form 1099 for amounts that actually belong to another person, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received) for each of the other owners showing the amounts applicable to each.
Page Last Reviewed or Updated: 28-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 How To File Taxes If Unemployed

How to file taxes if unemployed Publication 936 - Introductory Material Table of Contents Reminders IntroductionOrdering forms and publications. How to file taxes if unemployed Tax questions. How to file taxes if unemployed Useful Items - You may want to see: Reminders Future developments. How to file taxes if unemployed  For the latest information about developments related to Publication 936, Home Mortgage Interest Deduction, such as legislation enacted after it was published, go to www. How to file taxes if unemployed irs. How to file taxes if unemployed gov/pub936. How to file taxes if unemployed Photographs of missing children. How to file taxes if unemployed  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. How to file taxes if unemployed Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. How to file taxes if unemployed You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. How to file taxes if unemployed Introduction This publication discusses the rules for deducting home mortgage interest. How to file taxes if unemployed Part I contains general information on home mortgage interest, including points and mortgage insurance premiums. How to file taxes if unemployed It also explains how to report deductible interest on your tax return. How to file taxes if unemployed Part II explains how your deduction for home mortgage interest may be limited. How to file taxes if unemployed It contains Table 1, which is a worksheet you can use to figure the limit on your deduction. How to file taxes if unemployed Comments and suggestions. How to file taxes if unemployed   We welcome your comments about this publication and your suggestions for future editions. How to file taxes if unemployed   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. How to file taxes if unemployed NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. How to file taxes if unemployed Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. How to file taxes if unemployed   You can send your comments from www. How to file taxes if unemployed irs. How to file taxes if unemployed gov/formspubs. How to file taxes if unemployed Click on “More Information” and then on “Comment on Tax Forms and Publications. How to file taxes if unemployed ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. How to file taxes if unemployed Ordering forms and publications. How to file taxes if unemployed   Visit www. How to file taxes if unemployed irs. How to file taxes if unemployed gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. How to file taxes if unemployed Internal Revenue Service 1201 N. How to file taxes if unemployed Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. How to file taxes if unemployed   If you have a tax question, check the information available on IRS. How to file taxes if unemployed gov or call 1-800-829-1040. How to file taxes if unemployed We cannot answer tax questions sent to either of the above addresses. How to file taxes if unemployed Useful Items - You may want to see: Publication 523 Selling Your Home 527 Residential Rental Property 530 Tax Information for Homeowners 535 Business Expenses   See How To Get Tax Help near the end of this publication, for information about getting these publications. How to file taxes if unemployed Prev  Up  Next   Home   More Online Publications