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1040 Ez 2014

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1040 Ez 2014

1040 ez 2014 2. 1040 ez 2014   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. 1040 ez 2014 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. 1040 ez 2014 They are the American opportunity credit (this chapter) and the lifetime learning credit ( chapter 3 ). 1040 ez 2014 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. 1040 ez 2014 What is the tax benefit of the American opportunity credit. 1040 ez 2014   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. 1040 ez 2014   A tax credit reduces the amount of income tax you may have to pay. 1040 ez 2014 Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. 1040 ez 2014 Forty percent of the American opportunity credit may be refundable. 1040 ez 2014 This means that if the refundable portion of your credit is more than your tax, the excess will be refunded to you. 1040 ez 2014   Your allowable American opportunity credit may be limited by the amount of your income. 1040 ez 2014 Also, the nonrefundable part of the credit may be limited by the amount of your tax. 1040 ez 2014 Overview of the American opportunity credit. 1040 ez 2014   See Table 2-1, Overview of the American Opportunity Credit , for the basics of this credit. 1040 ez 2014 The details are discussed in this chapter. 1040 ez 2014 Can you claim more than one education credit this year. 1040 ez 2014   For each student, you can elect for any year only one of the credits. 1040 ez 2014 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. 1040 ez 2014   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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 Differences between the American opportunity and lifetime learning credits. 1040 ez 2014   There are several differences between these two credits. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 If you have the choice, the American opportunity credit will always be greater than the lifetime learning credit. 1040 ez 2014 Table 2-1. 1040 ez 2014 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. 1040 ez 2014 Who Can Claim the Credit Generally, you can claim the American opportunity credit if all three of the following requirements are met. 1040 ez 2014 You pay qualified education expenses of higher education. 1040 ez 2014 You pay the education expenses for an eligible student. 1040 ez 2014 The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. 1040 ez 2014 Student qualifications. 1040 ez 2014   Generally, you can take the American opportunity credit for a student only if all of the following four requirements are met. 1040 ez 2014 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. 1040 ez 2014 For this purpose, do not include academic credit awarded solely because of the student's performance on proficiency examinations. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 The standard for what is half of the normal full-time work load is determined by each eligible educational institution. 1040 ez 2014 However, the standard may not be lower than any of those established by the U. 1040 ez 2014 S. 1040 ez 2014 Department of Education under the Higher Education Act of 1965. 1040 ez 2014 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. 1040 ez 2014 See Prepaid expenses, later. 1040 ez 2014 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. 1040 ez 2014 Example 1. 1040 ez 2014 Sharon was eligible for the Hope Scholarship Credit for 2007 and 2008 and for the American opportunity credit for 2010 and 2012. 1040 ez 2014 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. 1040 ez 2014 Sharon claimed the American opportunity credit on her 2012 tax return. 1040 ez 2014 The American opportunity credit and Hope Scholarship Credit have been claimed for Sharon for four tax years before 2013. 1040 ez 2014 Therefore, the American opportunity credit cannot be claimed by Sharon for 2013. 1040 ez 2014 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. 1040 ez 2014 Example 2. 1040 ez 2014 Wilbert was eligible for the American opportunity credit for 2009, 2010, 2011, and 2013. 1040 ez 2014 His parents claimed the American opportunity credit for Wilbert on their tax returns for 2009, 2010, and 2011. 1040 ez 2014 No one claimed an American opportunity credit or Hope Scholarship Credit for Wilbert for any other tax year. 1040 ez 2014 The American opportunity credit and Hope Scholarship Credit have been claimed for Wilbert for only three tax years before 2013. 1040 ez 2014 Therefore, Wilbert meets the second requirement to be eligible for the American opportunity credit. 1040 ez 2014 If Wilbert were to file Form 8863 for 2013, he would check “No” for Part III, line 23. 1040 ez 2014 If Wilbert meets all of the other requirements, he is eligible for the American opportunity credit. 1040 ez 2014 Example 3. 1040 ez 2014 Glenda enrolls on a full-time basis in a degree program for the 2014 Spring semester, which begins in January 2014. 1040 ez 2014 Glenda pays her tuition for the 2014 Spring semester in December 2013. 1040 ez 2014 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. 1040 ez 2014 If the requirements above are not met for any student, you cannot take the American opportunity credit for that student. 1040 ez 2014 You may be able to take the lifetime learning credit for part or all of that student's qualified education expenses instead. 1040 ez 2014 Note. 1040 ez 2014 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. 1040 ez 2014 “Qualified education expenses” are defined later under Qualified Education Expenses . 1040 ez 2014 “Eligible students” are defined later under Who Is an Eligible Student . 1040 ez 2014 A dependent for whom you claim an exemption is defined later under Who Can Claim a Dependent's Expenses . 1040 ez 2014 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. 1040 ez 2014 This image is too large to be displayed in the current screen. 1040 ez 2014 Please click the link to view the image. 1040 ez 2014 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. 1040 ez 2014 Your filing status is married filing separately. 1040 ez 2014 You are listed as a dependent on another person's tax return (such as your parents'). 1040 ez 2014 See Who Can Claim a Dependent's Expenses , later. 1040 ez 2014 Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more in the case of a joint return). 1040 ez 2014 MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit . 1040 ez 2014 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. 1040 ez 2014 More information on nonresident aliens can be found in Publication 519, U. 1040 ez 2014 S. 1040 ez 2014 Tax Guide for Aliens. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 Academic period. 1040 ez 2014   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. 1040 ez 2014 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. 1040 ez 2014 Paid with borrowed funds. 1040 ez 2014   You can claim an American opportunity credit for qualified education expenses paid with the proceeds of a loan. 1040 ez 2014 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. 1040 ez 2014 Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. 1040 ez 2014 Student withdraws from class(es). 1040 ez 2014   You can claim an American opportunity credit for qualified education expenses not refunded when a student withdraws. 1040 ez 2014 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. 1040 ez 2014 Eligible educational institution. 1040 ez 2014   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. 1040 ez 2014 S. 1040 ez 2014 Department of Education. 1040 ez 2014 It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 1040 ez 2014 The educational institution should be able to tell you if it is an eligible educational institution. 1040 ez 2014   Certain educational institutions located outside the United States also participate in the U. 1040 ez 2014 S. 1040 ez 2014 Department of Education's Federal Student Aid (FSA) programs. 1040 ez 2014 Related expenses. 1040 ez 2014   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. 1040 ez 2014   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. 1040 ez 2014 Prepaid expenses. 1040 ez 2014   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. 1040 ez 2014 See Academic period, earlier. 1040 ez 2014 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). 1040 ez 2014    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). 1040 ez 2014   In the following examples, assume that each student is an eligible student at an eligible educational institution. 1040 ez 2014 Example 1. 1040 ez 2014 Jefferson is a sophomore in University V's degree program in dentistry. 1040 ez 2014 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. 1040 ez 2014 Because the equipment rental is needed for his course of study, Jefferson's equipment rental fee is a qualified expense. 1040 ez 2014 Example 2. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 William bought his books from a friend; Grace bought hers at College W's bookstore. 1040 ez 2014 Both are qualified education expenses for the American opportunity credit. 1040 ez 2014 Example 3. 1040 ez 2014 When Kelly enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. 1040 ez 2014 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. 1040 ez 2014 No portion of the fee covers personal expenses. 1040 ez 2014 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. 1040 ez 2014 No Double Benefit Allowed You cannot do any of the following. 1040 ez 2014 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. 1040 ez 2014 Claim an American opportunity credit in the same year that you are claiming a tuition and fees deduction for the same student. 1040 ez 2014 Claim an American opportunity credit for any student and use any of that student's expenses in figuring your lifetime learning credit. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 See Adjustments to Qualified Education Expenses, next. 1040 ez 2014 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. 1040 ez 2014 The result is the amount of adjusted qualified education expenses for each student. 1040 ez 2014 Tax-free educational assistance. 1040 ez 2014   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. 1040 ez 2014 See Academic period, earlier. 1040 ez 2014   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. 1040 ez 2014 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). 1040 ez 2014   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. 1040 ez 2014 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. 1040 ez 2014   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). 1040 ez 2014 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. 1040 ez 2014 Generally, any scholarship or fellowship is treated as tax free. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 For examples, see Coordination with Pell grants and other scholarships, later. 1040 ez 2014 Refunds. 1040 ez 2014   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. 1040 ez 2014 Some tax-free educational assistance received after 2013 may be treated as a refund. 1040 ez 2014 See Tax-free educational assistance, earlier. 1040 ez 2014 Refunds received in 2013. 1040 ez 2014   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. 1040 ez 2014 Refunds received after 2013 but before your income tax return is filed. 1040 ez 2014   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. 1040 ez 2014 Refunds received after 2013 and after your income tax return is filed. 1040 ez 2014   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. 1040 ez 2014 See Credit recapture, next. 1040 ez 2014 Credit recapture. 1040 ez 2014    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. 1040 ez 2014 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. 1040 ez 2014 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). 1040 ez 2014 Include that amount as an additional tax for the year the refund or tax-free assistance was received. 1040 ez 2014 Example. 1040 ez 2014   You paid $7,000 tuition and fees in August 2013, and your child began college in September 2013. 1040 ez 2014 You filed your 2013 tax return on February 17, 2014, and claimed an American opportunity credit of $2,500. 1040 ez 2014 After you filed your return, you received a refund of $4,000. 1040 ez 2014 You must refigure your 2013 American opportunity credit using $3,000 of qualified education expenses instead of $7,000. 1040 ez 2014 The refigured credit is $2,250. 1040 ez 2014 The increase to your tax liability is also $250. 1040 ez 2014 Include the difference of $250 as additional tax on your 2014 tax return. 1040 ez 2014 See the instructions for your 2014 income tax return to determine where to include this tax. 1040 ez 2014 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. 1040 ez 2014 Amounts that do not reduce qualified education expenses. 1040 ez 2014   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. 1040 ez 2014   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. 1040 ez 2014 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. 1040 ez 2014 The use of the money is not restricted. 1040 ez 2014 Example 1. 1040 ez 2014 Joan paid $3,000 for tuition and $5,000 for room and board at University X. 1040 ez 2014 The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. 1040 ez 2014 To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. 1040 ez 2014 The terms of the scholarship state that it can be used to pay any of Joan's college expenses. 1040 ez 2014 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. 1040 ez 2014 Joan does not report any portion of the scholarship as income on her tax return. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 Joan is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship). 1040 ez 2014 Example 2. 1040 ez 2014 The facts are the same as in Example 1, except that Joan reports her entire scholarship as income on her tax return. 1040 ez 2014 Because Joan reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. 1040 ez 2014 Joan is treated as having paid $3,000 in qualified education expenses. 1040 ez 2014 Coordination with Pell grants and other scholarships. 1040 ez 2014   In some cases, you may be able to reduce your tax liability by including scholarships in income. 1040 ez 2014 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. 1040 ez 2014 The scholarship must be one that may (by its terms) be applied to expenses (such as room and board) other than qualified education expenses. 1040 ez 2014 Example 1—No scholarship. 1040 ez 2014 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. 1040 ez 2014 This was his first year of postsecondary education. 1040 ez 2014 During 2013, he paid $5,600 for his qualified education expenses and $4,400 for his room and board for the fall 2013 semester. 1040 ez 2014 He and the college meet all the requirements for the American opportunity credit. 1040 ez 2014 Bill's AGI and his MAGI, for purposes of figuring his credit, are $30,000. 1040 ez 2014 Bill takes the standard deduction of $5,950 and personal exemption of $3,800, reducing his AGI to taxable income of $20,250. 1040 ez 2014 His income tax liability, before credits, is $2,599 and Bill claims no credits other than the American opportunity credit. 1040 ez 2014 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. 1040 ez 2014 Example 2—Scholarship excluded from income. 1040 ez 2014 The facts are the same as in Example 1—No scholarship, except that Bill was awarded a $5,600 scholarship. 1040 ez 2014 Under the terms of his scholarship, it may be used to pay any educational expenses, including room and board. 1040 ez 2014 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. 1040 ez 2014 His adjusted qualified education expenses will be zero and he will not have an education credit. 1040 ez 2014 Therefore, Bill's tax after credits would be $2,599. 1040 ez 2014 Example 3—Scholarship partially included in income. 1040 ez 2014 The facts are the same as in Example 2—Scholarship excluded from income. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. 1040 ez 2014 Sports, games, hobbies, and noncredit courses. 1040 ez 2014   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. 1040 ez 2014 However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. 1040 ez 2014 Comprehensive or bundled fees. 1040 ez 2014   Some eligible educational institutions combine all of their fees for an academic period into one amount. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 See Figuring the Credit , later, for more information about Form 1098-T. 1040 ez 2014 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. 1040 ez 2014 This is a student who meets all of the following requirements. 1040 ez 2014 The student did not have expenses that were used to figure an American opportunity credit in any 4 earlier tax years. 1040 ez 2014 This includes any tax year(s) in which you claimed the Hope Scholarship Credit for the same student. 1040 ez 2014 The student had not completed the first 4 years of postsecondary education (generally, the freshman, sophomore, junior, and senior years of college) before 2013. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 These requirements are also shown in Figure 2-2, Who is an Eligible Student for the American Opportunity Credit , later. 1040 ez 2014 Completion of first 4 years. 1040 ez 2014   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. 1040 ez 2014 This student generally would not be an eligible student for purposes of the American opportunity credit. 1040 ez 2014 Exception. 1040 ez 2014   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. 1040 ez 2014 Enrolled at least half-time. 1040 ez 2014   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. 1040 ez 2014   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. 1040 ez 2014 However, the standard may not be lower than any of those established by the U. 1040 ez 2014 S. 1040 ez 2014 Department of Education under the Higher Education Act of 1965. 1040 ez 2014 Please click here for the text description of the image. 1040 ez 2014 Figure 2-2 Example 1. 1040 ez 2014 Mack graduated from high school in June 2012. 1040 ez 2014 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. 1040 ez 2014 For the 2013 fall semester, Mack was enrolled less than half-time. 1040 ez 2014 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). 1040 ez 2014 Example 2. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 Example 3. 1040 ez 2014 During the 2012 fall semester, Larry was a high school student who took classes on a half-time basis at College X. 1040 ez 2014 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. 1040 ez 2014 Because Larry was not enrolled in a degree program at College X during 2012, Larry was not an eligible student for tax year 2012. 1040 ez 2014 Example 4. 1040 ez 2014 The facts are the same as in Example 3. 1040 ez 2014 During the 2013 spring semester, Larry again attended College X but not as part of a degree program. 1040 ez 2014 Larry graduated from high school in June 2013. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 Example 5. 1040 ez 2014 Dee graduated from high school in June 2012. 1040 ez 2014 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. 1040 ez 2014 Dee completed the program in December 2013, and was awarded a certificate. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 For you to claim an American opportunity credit for your dependent's expenses, you must also claim an exemption for your dependent. 1040 ez 2014 You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. 1040 ez 2014 IF you. 1040 ez 2014 . 1040 ez 2014 . 1040 ez 2014 THEN only. 1040 ez 2014 . 1040 ez 2014 . 1040 ez 2014 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. 1040 ez 2014 The dependent cannot claim the credit. 1040 ez 2014 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. 1040 ez 2014 You cannot claim the credit based on this dependent's expenses. 1040 ez 2014 Expenses paid by dependent. 1040 ez 2014   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. 1040 ez 2014 Include these expenses when figuring the amount of your American opportunity credit. 1040 ez 2014    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. 1040 ez 2014 Expenses paid by you. 1040 ez 2014   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. 1040 ez 2014 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. 1040 ez 2014 Expenses paid by others. 1040 ez 2014   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. 1040 ez 2014 In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. 1040 ez 2014 If you claim an exemption on your tax return for the student, you are considered to have paid the expenses. 1040 ez 2014 Example. 1040 ez 2014 In 2013, Ms. 1040 ez 2014 Allen makes a payment directly to an eligible educational institution for her grandson Todd's qualified education expenses. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 If anyone else claims an exemption for Todd, Todd cannot claim an American opportunity credit. 1040 ez 2014 Tuition reduction. 1040 ez 2014    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. 1040 ez 2014 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. 1040 ez 2014 For more information on tuition reductions, see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 1040 ez 2014 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. 1040 ez 2014 The maximum amount of American opportunity credit you can claim in 2013 is $2,500 multiplied by the number of eligible students. 1040 ez 2014 You can claim the full $2,500 for each eligible student for whom you paid at least $4,000 of adjusted qualified education expenses. 1040 ez 2014 However, the credit may be reduced based on your MAGI. 1040 ez 2014 See Effect of the Amount of Your Income on the Amount of Your Credit , later. 1040 ez 2014 Example. 1040 ez 2014 Jack and Kay Ford are married and file a joint tax return. 1040 ez 2014 For 2013, they claim an exemption for their dependent daughter on their tax return. 1040 ez 2014 Their MAGI is $70,000. 1040 ez 2014 Their daughter is in her junior (third) year of studies at the local university. 1040 ez 2014 Jack and Kay paid qualified education expenses of $4,300 in 2013. 1040 ez 2014 Jack and Kay, their daughter, and the local university meet all of the requirements for the American opportunity credit. 1040 ez 2014 Jack and Kay can claim a $2,500 American opportunity credit in 2013. 1040 ez 2014 This is 100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000. 1040 ez 2014 Form 1098-T. 1040 ez 2014   To help you figure your American opportunity credit, the student should receive Form 1098-T, Tuition Statement. 1040 ez 2014 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. 1040 ez 2014 An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. 1040 ez 2014 However, the amounts in boxes 1 and 2 of Form 1098-T might be different than what you paid. 1040 ez 2014 When figuring the credit, use only the amounts you paid or are deemed to have paid in 2013 for qualified education expenses. 1040 ez 2014   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. 1040 ez 2014    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. 1040 ez 2014 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). 1040 ez 2014 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). 1040 ez 2014 Modified adjusted gross income (MAGI). 1040 ez 2014   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. 1040 ez 2014 MAGI when using Form 1040A. 1040 ez 2014   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. 1040 ez 2014 MAGI when using Form 1040. 1040 ez 2014   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. 1040 ez 2014 You can use Worksheet 2-1, next, to figure your MAGI. 1040 ez 2014    Worksheet 2-1. 1040 ez 2014 MAGI for the American Opportunity Credit 1. 1040 ez 2014 Enter your adjusted gross income  (Form 1040, line 38)   1. 1040 ez 2014   2. 1040 ez 2014 Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. 1040 ez 2014       3. 1040 ez 2014 Enter your foreign housing deduction (Form 2555, line 50)   3. 1040 ez 2014       4. 1040 ez 2014 Enter the amount of income from Puerto Rico you are excluding   4. 1040 ez 2014       5. 1040 ez 2014 Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. 1040 ez 2014       6. 1040 ez 2014 Add the amounts on lines 2, 3, 4, and 5   6. 1040 ez 2014   7. 1040 ez 2014 Add the amounts on lines 1 and 6. 1040 ez 2014  This is your modified adjusted  gross income. 1040 ez 2014 Enter here and  on Form 8863, line 3   7. 1040 ez 2014   Phaseout. 1040 ez 2014   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. 1040 ez 2014 The same method is shown in the following example. 1040 ez 2014 Example. 1040 ez 2014 You are filing a joint return and your MAGI is $165,000. 1040 ez 2014 In 2013, you paid $5,000 of qualified education expenses. 1040 ez 2014 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). 1040 ez 2014 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. 1040 ez 2014 The numerator of the fraction is $180,000 (the upper limit for those filing a joint return) minus your MAGI. 1040 ez 2014 The denominator is $20,000, the range of incomes for the phaseout ($160,000 to $180,000). 1040 ez 2014 The result is the amount of your phased out (reduced) American opportunity credit ($1,875). 1040 ez 2014      $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. 1040 ez 2014 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. 1040 ez 2014 Instead, your allowed credit (figured on Form 8863, Part II) will be used to reduce your tax as a nonrefundable credit only. 1040 ez 2014 You do not qualify for a refund if items 1 (a, b, or c), 2, and 3 below apply to you. 1040 ez 2014 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). 1040 ez 2014 At least one of your parents was alive at the end of 2013. 1040 ez 2014 You are filing a return as single, head of household, qualifying widow(er), or married filing separately for 2013. 1040 ez 2014 Earned income. 1040 ez 2014   Earned income includes wages, salaries, professional fees, and other payments received for personal services actually performed. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014   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). 1040 ez 2014 However, if capital is not an income-producing factor and your personal services produced the business income, the 30% limit does not apply. 1040 ez 2014 Support. 1040 ez 2014   Your support includes food, shelter, clothing, medical and dental care, education, and the like. 1040 ez 2014 Generally, the amount of the item of support will be the amount of expenses incurred by the one furnishing such item. 1040 ez 2014 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. 1040 ez 2014 However, a scholarship received by you is not considered support if you are a full-time student. 1040 ez 2014 See Publication 501 for details. 1040 ez 2014 Full-time student. 1040 ez 2014   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. 1040 ez 2014 Claiming the Credit You claim the American opportunity credit by completing Form 8863 and submitting it with your Form 1040 or 1040A. 1040 ez 2014 Enter the nonrefundable part of the credit on Form 1040, line 49, or on Form 1040A, line 31. 1040 ez 2014 Enter the refundable part of the credit on Form 1040, line 66, or on Form 1040A, line 40. 1040 ez 2014 A filled-in Form 8863 is shown at the end of this publication. 1040 ez 2014 Note. 1040 ez 2014 In Appendix A. 1040 ez 2014 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. 1040 ez 2014 Prev  Up  Next   Home   More Online Publications
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1040 ez 2014 19. 1040 ez 2014   Education- Related Adjustments Table of Contents Introduction Useful Items - You may want to see: Student Loan Interest DeductionStudent Loan Interest Defined Can You Claim the Deduction How Much Can You Deduct How Do You Figure the Deduction Tuition and Fees DeductionCan You Claim the Deduction What Expenses Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses How Much Can You Deduct Educator Expenses Introduction This chapter discusses the education-related adjustment you can deduct in figuring your adjusted gross income. 1040 ez 2014 This chapter covers the student loan interest deduction, tuition and fees deduction, and the deduction for educator expenses. 1040 ez 2014 Useful Items - You may want to see: Publication 970 Tax Benefits for Education Student Loan Interest Deduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. 1040 ez 2014 However, if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. 1040 ez 2014 For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. 1040 ez 2014 This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. 1040 ez 2014 Table 19-1 summarizes the features of the student loan interest deduction. 1040 ez 2014 Table 19-1. 1040 ez 2014 Student Loan Interest Deduction at a Glance Do not rely on this table alone. 1040 ez 2014 Refer to the text for more details. 1040 ez 2014 Feature Description Maximum benefit You can reduce your income subject to tax by up to $2,500. 1040 ez 2014 Loan qualifications Your student loan: •  must have been taken out solely to pay qualified education expenses, and   • cannot be from a related person or made under a qualified employer plan. 1040 ez 2014 Student qualifications The student must be: • you, your spouse, or your dependent, and   • enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible educational institution. 1040 ez 2014 Time limit on deduction You can deduct interest paid during the remaining period of your student loan. 1040 ez 2014 Phaseout The amount of your deduction depends on your income level. 1040 ez 2014 Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. 1040 ez 2014 It includes both required and voluntary interest payments. 1040 ez 2014 Qualified Student Loan This is a loan you took out solely to pay qualified education expenses (defined later) that were: For you, your spouse, or a person who was your dependent (defined in chapter 3) when you took out the loan, Paid or incurred within a reasonable period of time before or after you took out the loan, and For education provided during an academic period when the student is an eligible student. 1040 ez 2014 Loans from the following sources are not qualified student loans. 1040 ez 2014 A related person. 1040 ez 2014 A qualified employer plan. 1040 ez 2014 Exceptions. 1040 ez 2014   For purposes of the student loan interest deduction, the following are exceptions to the general rules for dependents. 1040 ez 2014 An individual can be your dependent even if you are the dependent of another taxpayer. 1040 ez 2014 An individual can be your dependent even if the individual files a joint return with a spouse. 1040 ez 2014 An individual can be your dependent even if the individual had gross income for the year that was equal to or more than the exemption amount for the year ($3,900 for 2013). 1040 ez 2014    Reasonable period of time. 1040 ez 2014   Qualified education expenses are treated as paid or incurred within a reasonable period of time before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal postsecondary education loan program. 1040 ez 2014   Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met. 1040 ez 2014 The expenses relate to a specific academic period. 1040 ez 2014 The loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period. 1040 ez 2014   If neither of the above situations applies, the reasonable period of time is determined based on all the relevant facts and circumstances. 1040 ez 2014 Academic period. 1040 ez 2014   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. 1040 ez 2014 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. 1040 ez 2014 Eligible student. 1040 ez 2014   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. 1040 ez 2014 Enrolled at least half-time. 1040 ez 2014   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. 1040 ez 2014   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. 1040 ez 2014 However, the standard may not be lower than any of those established by the U. 1040 ez 2014 S. 1040 ez 2014 Department of Education under the Higher Education Act of 1965. 1040 ez 2014 Related person. 1040 ez 2014   You cannot deduct interest on a loan you get from a related person. 1040 ez 2014 Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. 1040 ez 2014 ), Your lineal descendants (children, grandchildren, etc. 1040 ez 2014 ), and Certain corporations, partnerships, trusts, and exempt organizations. 1040 ez 2014 Qualified employer plan. 1040 ez 2014   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. 1040 ez 2014 Qualified Education Expenses For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. 1040 ez 2014 They include amounts paid for the following items. 1040 ez 2014 Tuition and fees. 1040 ez 2014 Room and board. 1040 ez 2014 Books, supplies, and equipment. 1040 ez 2014 Other necessary expenses (such as transportation). 1040 ez 2014 The cost of room and board qualifies only to the extent that it is not more than: The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, or If greater, the actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. 1040 ez 2014 Eligible educational institution. 1040 ez 2014   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. 1040 ez 2014 S. 1040 ez 2014 Department of Education. 1040 ez 2014 It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 1040 ez 2014   Certain educational institutions located outside the United States also participate in the U. 1040 ez 2014 S. 1040 ez 2014 Department of Education's Federal Student Aid (FSA) programs. 1040 ez 2014   For purposes of the student loan interest deduction, an eligible educational institution also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. 1040 ez 2014   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. 1040 ez 2014 The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. 1040 ez 2014    The educational institution should be able to tell you if it is an eligible educational institution. 1040 ez 2014 Adjustments to qualified education expenses. 1040 ez 2014   You must reduce your qualified education expenses by certain tax-free items (such as the tax-free part of scholarships and fellowships). 1040 ez 2014 See chapter 4 of Publication 970 for details. 1040 ez 2014 Include as Interest In addition to simple interest on the loan, certain loan origination fees, capitalized interest, interest on revolving lines of credit, and interest on refinanced student loans can be student loan interest if all other requirements are met. 1040 ez 2014 Loan origination fee. 1040 ez 2014   In general, this is a one-time fee charged by the lender when a loan is made. 1040 ez 2014 To be deductible as interest, the fee must be for the use of money rather than for property or services (such as commitment fees or processing costs) provided by the lender. 1040 ez 2014 A loan origination fee treated as interest accrues over the life of the loan. 1040 ez 2014 Capitalized interest. 1040 ez 2014    This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. 1040 ez 2014 Interest on revolving lines of credit. 1040 ez 2014   This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. 1040 ez 2014 See Qualified Education Expenses , earlier. 1040 ez 2014 Interest on refinanced student loans. 1040 ez 2014   This includes interest on both: Consolidated loans—loans used to refinance more than one student loan of the same borrower, and Collapsed loans—two or more loans of the same borrower that are treated by both the lender and the borrower as one loan. 1040 ez 2014 If you refinance a qualified student loan for more than your original loan and you use the additional amount for any purpose other than qualified education expenses, you cannot deduct any interest paid on the refinanced loan. 1040 ez 2014 Voluntary interest payments. 1040 ez 2014   These are payments made on a qualified student loan during a period when interest payments are not required, such as when the borrower has been granted a deferment or the loan has not yet entered repayment status. 1040 ez 2014 Do Not Include as Interest You cannot claim a student loan interest deduction for any of the following items. 1040 ez 2014 Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. 1040 ez 2014 Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. 1040 ez 2014 Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the “NHSC Loan Repayment Program”) or certain other loan repayment assistance programs. 1040 ez 2014 For more information, see Student Loan Repayment Assistance in chapter 5 of Publication 970. 1040 ez 2014 Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. 1040 ez 2014 Your filing status is any filing status except married filing separately. 1040 ez 2014 No one else is claiming an exemption for you on his or her tax return. 1040 ez 2014 You are legally obligated to pay interest on a qualified student loan. 1040 ez 2014 You paid interest on a qualified student loan. 1040 ez 2014 Interest paid by others. 1040 ez 2014   If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest. 1040 ez 2014 See chapter 4 of Publication 970 for more information. 1040 ez 2014 No Double Benefit Allowed You cannot deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, home mortgage interest). 1040 ez 2014 How Much Can You Deduct Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. 1040 ez 2014 However, the amount determined above is phased out (gradually reduced) if your MAGI is between $60,000 and $75,000 ($125,000 and $155,000 if you file a joint return). 1040 ez 2014 You cannot take a student loan interest deduction if your MAGI is $75,000 or more ($155,000 or more if you file a joint return). 1040 ez 2014 For details on figuring your MAGI, see chapter 4 of Publication 970. 1040 ez 2014 How Do You Figure the Deduction Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the Form 1040 or Form 1040A instructions. 1040 ez 2014 However, if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1 in chapter 4 of Publication 970. 1040 ez 2014 To help you figure your student loan interest deduction, you should receive Form 1098-E, Student Loan Interest Statement. 1040 ez 2014 Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2013 on one or more qualified student loans must send Form 1098-E (or acceptable substitute) to each borrower by January 31, 2014. 1040 ez 2014 For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. 1040 ez 2014 Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. 1040 ez 2014 However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. 1040 ez 2014 For information on allocating payments between interest and principal, see chapter 4 of Publication 970. 1040 ez 2014 To claim the deduction, enter the allowable amount on Form 1040, line 33, or Form 1040A, line 18. 1040 ez 2014 Tuition and Fees Deduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). 1040 ez 2014 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. 1040 ez 2014 The qualified expenses must be for higher education, as explained later under What Expenses Qualify . 1040 ez 2014 The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. 1040 ez 2014 Table 19-2 summarizes the features of the tuition and fees deduction. 1040 ez 2014 You may be able to take a credit for your education expenses instead of a deduction. 1040 ez 2014 You can choose the one that will give you the lower tax. 1040 ez 2014 See chapter 35, Education Credits, for details about the credits. 1040 ez 2014 Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. 1040 ez 2014 Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. 1040 ez 2014 You paid qualified education expenses of higher education in 2013 for academic periods beginning in 2013 and those beginning in the first three months of 2014. 1040 ez 2014 You paid the education expenses for an eligible student. 1040 ez 2014 The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption (defined in chapter 3) on your tax return. 1040 ez 2014 Qualified education expenses are defined under What Expenses Qualify . 1040 ez 2014 Eligible students are defined later under Who Is an Eligible Student . 1040 ez 2014 Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. 1040 ez 2014 Your filing status is married filing separately. 1040 ez 2014 Another person can claim an exemption for you as a dependent on his or her tax return. 1040 ez 2014 You cannot take the deduction even if the other person does not actually claim that exemption. 1040 ez 2014 Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). 1040 ez 2014 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. 1040 ez 2014 More information on nonresident aliens can be found in Publication 519, U. 1040 ez 2014 S. 1040 ez 2014 Tax Guide for Aliens. 1040 ez 2014 You or anyone else claims an American opportunity or lifetime learning credit in 2013 with respect to expenses of the student for whom the qualified education expenses were paid. 1040 ez 2014 However, a state tax credit will not disqualify you from claiming a tuition and fees deduction. 1040 ez 2014 Table 19-2. 1040 ez 2014 Tuition and Fees Deduction at a Glance Do not rely on this table alone. 1040 ez 2014 Refer to the text for more details. 1040 ez 2014 Question   Answer What is the maximum benefit?   You can reduce your income subject to tax by up to $4,000. 1040 ez 2014 Where is the deduction taken?   As an adjustment to income on Form 1040, line 34, or Form 1040A, line 19. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 Generally, the deduction is allowed for qualified education expenses paid in 2013 in connection with enrollment at an institution of higher education during 2013 or for an academic period (defined earlier under Student Loan Interest Deduction ) beginning in 2013 or in the first 3 months of 2014. 1040 ez 2014 Payments with borrowed funds. 1040 ez 2014   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. 1040 ez 2014 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. 1040 ez 2014 Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. 1040 ez 2014 Student withdraws from class(es). 1040 ez 2014   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. 1040 ez 2014 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. 1040 ez 2014 Eligible educational institution. 1040 ez 2014   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. 1040 ez 2014 S. 1040 ez 2014 Department of Education. 1040 ez 2014 It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 1040 ez 2014 The educational institution should be able to tell you if it is an eligible educational institution. 1040 ez 2014   Certain educational institutions located outside the United States also participate in the U. 1040 ez 2014 S. 1040 ez 2014 Department of Education's Federal Student Aid (FSA) programs. 1040 ez 2014 Academic period. 1040 ez 2014    An academic period is any quarter, semester, trimester, or any other period of study as reasonably determined by an eligible educational institution. 1040 ez 2014 If an eligible educational institution uses credit hours and does not have academic terms, each payment period may be treated as an academic period. 1040 ez 2014 Related expenses. 1040 ez 2014   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses for the tuition and fees deduction only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. 1040 ez 2014 Prepaid expenses. 1040 ez 2014   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring the tuition and fees deduction. 1040 ez 2014 See Academic period, earlier. 1040 ez 2014 For example, if you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring the tuition and fees deduction for 2013 only if you meet all the other requirements. 1040 ez 2014    You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 tuition and fees deduction. 1040 ez 2014 No Double Benefit Allowed You cannot do any of the following. 1040 ez 2014 Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. 1040 ez 2014 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. 1040 ez 2014 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). 1040 ez 2014 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. 1040 ez 2014 See Figuring the Taxable Portion of a Distribution in chapter 7 (Coverdell ESA) and chapter 8 (QTP) of Publication 970. 1040 ez 2014 Deduct qualified education expenses that have been paid with tax-free interest on U. 1040 ez 2014 S. 1040 ez 2014 savings bonds (Form 8815). 1040 ez 2014 See Figuring the Tax-Free Amount in chapter 10 of Publication 970. 1040 ez 2014 Deduct qualified education expenses that have been paid with tax-free educational assistance such as a scholarship, grant, or employer-provided educational assistance. 1040 ez 2014 See Adjustments to qualified education expenses, later. 1040 ez 2014 Adjustments to qualified education expenses. 1040 ez 2014   For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. 1040 ez 2014 The result is the amount of adjusted qualified education expenses for each student. 1040 ez 2014 Tax-free educational assistance. 1040 ez 2014   For tax-free educational assistance you received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance to that academic period. 1040 ez 2014 See Academic period, earlier. 1040 ez 2014   This includes: The tax-free part of scholarships and fellowships, including Pell grants (see chapter 1 of Publication 970), The tax-free part of any employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. 1040 ez 2014 Generally, any scholarship or fellowship you receive is treated as tax-free educational assistance. 1040 ez 2014 However, a scholarship or fellowship is not treated as tax-free educational assistance to the extent you include it in gross income (if you are required to file a tax return) for the year the scholarship or fellowship is received and either: The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. 1040 ez 2014 970, chapter 1. 1040 ez 2014 The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. 1040 ez 2014 970, chapter 1. 1040 ez 2014 You may be able to increase the combined value of your tuition and fees deduction and certain educational assistance if you include some or all of the educational assistance in income in the year it is received. 1040 ez 2014 For details, see Adjustments to Qualified Education Expenses in chapter 6 of Pub. 1040 ez 2014 970. 1040 ez 2014 Some tax-free educational assistance received in 2013 may be treated as a refund of qualified education expenses paid in 2013. 1040 ez 2014 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). 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 Refunds. 1040 ez 2014   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or may require you to include some or all of the refund in your gross income for the year the refund is received. 1040 ez 2014 See chapter 6 of Pub. 1040 ez 2014 970 for more information. 1040 ez 2014 Some tax-free educational assistance received after 2013 may be treated as a refund. 1040 ez 2014 See Tax-free educational assistance, earlier. 1040 ez 2014 Refunds received in 2013. 1040 ez 2014    For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses paid in 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. 1040 ez 2014 Refunds received after 2013 but before your income tax return is filed. 1040 ez 2014   If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received before you file your 2013 income tax return, reduce the amount of qualified education expenses for 2013 by the amount of the refund. 1040 ez 2014 Refunds received after 2013 and after your income tax return is filed. 1040 ez 2014   If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received after you file your 2013 income tax return, you may need to include some or all of the refund in your gross income for the year the refund is received. 1040 ez 2014 See chapter 6 of Pub. 1040 ez 2014 970 for more information. 1040 ez 2014 Coordination with Coverdell education savings accounts and qualified tuition programs. 1040 ez 2014    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). 1040 ez 2014 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. 1040 ez 2014 Amounts that do not reduce qualified education expenses. 1040 ez 2014   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. 1040 ez 2014   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. 1040 ez 2014 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. 1040 ez 2014 The use of the money is not restricted. 1040 ez 2014 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. 1040 ez 2014 This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. 1040 ez 2014 Sports, games, hobbies, and noncredit courses. 1040 ez 2014   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. 1040 ez 2014 However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. 1040 ez 2014 Comprehensive or bundled fees. 1040 ez 2014   Some eligible educational institutions combine all of their fees for an academic period into one amount. 1040 ez 2014 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. 1040 ez 2014 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. 1040 ez 2014 See How Do You Figure the Deduction , later, for more information about Form 1098-T. 1040 ez 2014 Who Is an Eligible Student For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (defined earlier). 1040 ez 2014 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. 1040 ez 2014 Table 19-3 summarizes who can claim the deduction. 1040 ez 2014 How Much Can You Deduct The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. 1040 ez 2014 For details on figuring your MAGI, see chapter 6 of Publication 970. 1040 ez 2014 How Do You Figure the Deduction Figure the deduction using Form 8917. 1040 ez 2014 To help you figure your tuition and fees deduction, you should receive Form 1098-T, Tuition Statement. 1040 ez 2014 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. 1040 ez 2014 To claim the deduction, enter the allowable amount on Form 1040, line 34, or Form 1040A, line 19, and attach your completed Form 8917. 1040 ez 2014 Table 19-3. 1040 ez 2014 Who Can Claim a Dependent's Expenses Do not rely on this table alone. 1040 ez 2014 See Who Can Claim a Dependent's Expenses in chapter 6 of Publication 970. 1040 ez 2014 IF your dependent is an eligible student and you. 1040 ez 2014 . 1040 ez 2014 . 1040 ez 2014 AND. 1040 ez 2014 . 1040 ez 2014 . 1040 ez 2014 THEN. 1040 ez 2014 . 1040 ez 2014 . 1040 ez 2014 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. 1040 ez 2014 Your dependent cannot take a deduction. 1040 ez 2014 claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. 1040 ez 2014 do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. 1040 ez 2014 do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. 1040 ez 2014 Educator Expenses If you were an eligible educator in 2013, you can deduct on Form 1040, line 23, or Form 1040A, line 16, up to $250 of qualified expenses you paid in 2013. 1040 ez 2014 If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. 1040 ez 2014 However, neither spouse can deduct more than $250 of his or her qualified expenses on Form 1040, line 23, or Form 1040A, line 16. 1040 ez 2014 You may be able to deduct expenses that are more than the $250 (or $500) limit on Schedule A (Form 1040), line 21. 1040 ez 2014 Eligible educator. 1040 ez 2014   An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who worked in a school for at least 900 hours during a school year. 1040 ez 2014 Qualified expenses. 1040 ez 2014   Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. 1040 ez 2014 An ordinary expense is one that is common and accepted in your educational field. 1040 ez 2014 A necessary expense is one that is helpful and appropriate for your profession as an educator. 1040 ez 2014 An expense does not have to be required to be considered necessary. 1040 ez 2014   Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. 1040 ez 2014   You must reduce your qualified expenses by the following amounts. 1040 ez 2014 Excludable U. 1040 ez 2014 S. 1040 ez 2014 series EE and I savings bond interest from Form 8815. 1040 ez 2014 See Figuring the Tax-Free Amount in chapter 10 of Publication 970. 1040 ez 2014 Nontaxable qualified tuition program earnings or distributions. 1040 ez 2014 See Figuring the Taxable Portion of a Distribution in chapter 8 of Publication 970. 1040 ez 2014 Nontaxable distribution of earnings from a Coverdell education savings account. 1040 ez 2014 See Figuring the Taxable Portion of a Distribution in chapter 7 of Publication 970. 1040 ez 2014 Any reimbursements you received for these expenses that were not reported to you in box 1 of your Form W-2. 1040 ez 2014 Prev  Up  Next   Home   More Online Publications