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1040 Long Form

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1040 Long Form

1040 long form 3. 1040 long form   Lifetime Learning 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 Student Who Can Claim a Dependent's Expenses Figuring the CreditEffect of the Amount of Your Income on the Amount of Your 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 long form They are the American opportunity credit and the lifetime learning credit. 1040 long form This chapter discusses the lifetime learning credit. 1040 long form The American opportunity credit is discussed in chapter 2, The American Opportunity Credit . 1040 long form This chapter explains: Who can claim the lifetime learning 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 long form What is the tax benefit of the lifetime learning credit. 1040 long form   For the tax year, you may be able to claim a lifetime learning credit of up to $2,000 for qualified education expenses paid for all eligible students. 1040 long form There is no limit on the number of years the lifetime learning credit can be claimed for each student. 1040 long form   A tax credit reduces the amount of income tax you may have to pay. 1040 long form Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. 1040 long form The lifetime learning credit is a nonrefundable credit. 1040 long form This means that it can reduce your tax to zero, but if the credit is more than your tax the excess will not be refunded to you. 1040 long form   Your allowable lifetime learning credit may be limited by the amount of your income and the amount of your tax. 1040 long form Can you claim more than one education credit this year. 1040 long form   For each student, you can elect for any year only one of the credits. 1040 long form For example, if you elect to take the lifetime learning credit for a child on your 2013 tax return, you cannot, for that same child, also claim the American opportunity credit for 2013. 1040 long form   If you are eligible to claim the lifetime learning credit and you are also eligible to claim the American opportunity credit for the same student in the same year, you can choose to claim either credit, but not both. 1040 long form   If you pay qualified education expenses for more than one student in the same year, you can choose to take certain credits on a per-student, per-year basis. 1040 long form 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 long form Differences between the American opportunity and lifetime learning credits. 1040 long form   There are several differences between these two credits. 1040 long form For example, you can claim the American opportunity credit for the same student for no more than 4 tax years, but any year in which the Hope Scholarship Credit was claimed counts toward the 4 years. 1040 long form 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 long form 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 long form Overview of the lifetime learning credit. 1040 long form   See Table 3-1, Overview of the Lifetime Learning Credit for the basics of the lifetime learning credit. 1040 long form The details are discussed in this chapter. 1040 long form Can You Claim the Credit The following rules will help you determine if you are eligible to claim the lifetime learning credit on your tax return. 1040 long form Who Can Claim the Credit Generally, you can claim the lifetime learning credit if all three of the following requirements are met. 1040 long form You pay qualified education expenses of higher education. 1040 long form You pay the education expenses for an eligible student. 1040 long form The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. 1040 long form Table 3-1. 1040 long form Overview of the Lifetime Learning Credit Maximum credit Up to $2,000 credit per return Limit on modified adjusted gross income (MAGI) $127,000 if married filling jointly;  $63,000 if single, head of household, or qualifying widow(er) Refundable or nonrefundable Nonrefundable—credit limited to the amount of tax you must pay on your taxable income Number of years of postsecondary education Available for all years of postsecondary education and for courses to acquire or improve job skills Number of tax years credit available Available for an unlimited number of years Type of program required Student does not need to be pursuing a program leading to a degree or other recognized education credential Number of courses Available for one or more courses Felony drug conviction Felony drug convictions do not make the student ineligible Qualified expenses Tuition and fees required for enrollment or attendance (including amounts required to be paid to the institution for course-related books, supplies, and equipment) Payments for academic periods Payments made in 2013 for academic periods beginning in 2013 or beginning in the first 3 months of 2014 Note. 1040 long form 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 long form “Qualified education expenses” are defined later under Qualified Education Expenses . 1040 long form “Eligible students” are defined later under Who Is an Eligible Student . 1040 long form A dependent for whom you claim an exemption is defined later under Who Can Claim a Dependent's Expenses . 1040 long form You may find Figure 3-1, Can You Claim the Lifetime Learning Credit for 2013 , later, helpful in determining if you can claim a lifetime learning credit on your tax return. 1040 long form Who Cannot Claim the Credit You cannot claim the lifetime learning credit for 2013 if any of the following apply. 1040 long form Your filing status is married filing separately. 1040 long form You are listed as a dependent on another person's tax return (such as your parents'). 1040 long form See Who Can Claim a Dependent's Expenses , later. 1040 long form Your modified adjusted gross income (MAGI) is $63,000 or more ($127,000 or more in the case of a joint return). 1040 long form MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit . 1040 long form 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 long form More information on nonresident aliens can be found in Publication 519. 1040 long form You claim the American Opportunity Credit (see chapter 2) or a Tuition and Fees Deduction (see chapter 6) for the same student in 2013. 1040 long form What Expenses Qualify The lifetime learning credit 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 long form Generally, the credit is allowed for qualified education expenses paid in 2013 for an academic period beginning in 2013 or in the first 3 months of 2014. 1040 long form For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning in January 2014, you may be able to use that $1,500 in figuring your 2013 credit. 1040 long form Academic period. 1040 long form   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 long form 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 long form Paid with borrowed funds. 1040 long form   You can claim a lifetime learning credit for qualified education expenses paid with the proceeds of a loan. 1040 long form You use the expenses to figure the lifetime learning credit for the year in which the expenses are paid, not the year in which the loan is repaid. 1040 long form Treat loan disbursements sent directly to the educational institution as paid on the date the institution credits the student's account. 1040 long form Student withdraws from class(es). 1040 long form   You can claim a lifetime learning credit for qualified education expenses not refunded when a student withdraws. 1040 long form Qualified Education Expenses For purposes of the lifetime learning credit, qualified education expenses are tuition and certain related expenses required for enrollment in a course at an eligible educational institution. 1040 long form The course must be either part of a postsecondary degree program or taken by the student to acquire or improve job skills. 1040 long form Eligible educational institution. 1040 long form   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 long form S. 1040 long form Department of Education. 1040 long form It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 1040 long form The educational institution should be able to tell you if it is an eligible educational institution. 1040 long form   Certain educational institutions located outside the United States also participate in the U. 1040 long form S. 1040 long form Department of Education's Federal Student Aid (FSA) programs. 1040 long form Related expenses. 1040 long form   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution for enrollment or attendance. 1040 long form Prepaid expenses. 1040 long form   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 long form See Academic period , earlier. 1040 long form For example, you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring an education credit for 2013 only (if you meet all the other requirements). 1040 long form 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 long form In the following examples, assume that each student is an eligible student at an eligible educational institution. 1040 long form Example 1. 1040 long form   Jackson is a sophomore in University V's degree program in dentistry. 1040 long form 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 long form Because the equipment rental fee must be paid to University V for enrollment and attendance, Jackson's equipment rental fee is a qualified expense. 1040 long form Example 2. 1040 long form   Donna and Charles, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. 1040 long form 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 long form Charles bought his books from a friend, so what he paid for them is not a qualified education expense. 1040 long form Donna bought hers at College W's bookstore. 1040 long form Although Donna paid College W directly for her first-year books and materials, her payment is not a qualified expense because the books and materials are not required to be purchased from College W for enrollment or attendance at the institution. 1040 long form Example 3. 1040 long form   When Marci enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. 1040 long form 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 student government. 1040 long form No portion of the fee covers personal expenses. 1040 long form Although labeled as a student activity fee, the fee is required for Marci's enrollment and attendance at College X. 1040 long form Therefore, it is a qualified expense. 1040 long form No Double Benefit Allowed You cannot do any of the following: Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim a lifetime learning credit based on those same expenses. 1040 long form Claim a lifetime learning credit in the same year that you are claiming a tuition and fees deduction for the same student. 1040 long form Claim a lifetime learning credit and an American opportunity credit based on the same qualified education expenses. 1040 long form Claim a lifetime learning credit based on the same expenses used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or qualified tuition program (QTP). 1040 long form 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 long form 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 long form See Adjustments to Qualified Education Expenses, next. 1040 long form This image is too large to be displayed in the current screen. 1040 long form Please click the link to view the image. 1040 long form Figure 3-1 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 long form The result is the amount of adjusted qualified education expenses for each student. 1040 long form Tax-free educational assistance. 1040 long form   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 long form See Academic period , earlier. 1040 long form   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. 1040 long form 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 long form   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 long form 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 long form   Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. 1040 long form Generally, any scholarship or fellowship is treated as tax free. 1040 long form 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 long form 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 long form 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 long form 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 long form For examples, see Coordination with Pell grants and other scholarships, later. 1040 long form Refunds. 1040 long form   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 long form Some tax-free educational assistance received after 2013 may be treated as a refund. 1040 long form See Tax-free educational assistance , earlier. 1040 long form Refunds received in 2013. 1040 long form   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 long form Refunds received after 2013 but before your income tax return is filed. 1040 long form   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 long form Refunds received after 2013 and after your income tax return is filed. 1040 long form   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 long form See Credit recapture, next. 1040 long form Credit recapture. 1040 long form    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 long form 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 long form You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you had claimed the refigured credit(s). 1040 long form Include that amount as an additional tax for the year the refund or tax-free assistance was received. 1040 long form Example. 1040 long form   You pay $9,300 in tuition and fees in December 2013, and your child began college in January 2014. 1040 long form You filed your 2013 tax return on February 14, 2014, and claimed a lifetime learning credit of $1,860. 1040 long form You claimed no other tax credits. 1040 long form After you filed your return, your child withdrew from two courses and you received a refund of $2,900. 1040 long form You must refigure your 2013 lifetime learning credit using $6,400 of qualified education expenses instead of $9,300. 1040 long form The refigured credit is $1,280 and your tax liability increased by $580. 1040 long form See instructions for your 2014 income tax return to determine where to include this tax. 1040 long form 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 long form Amounts that do not reduce qualified education expenses. 1040 long form   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 long form   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 long form 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 long form The use of the money is not restricted. 1040 long form For examples, see Adjustments to Qualified Education Expenses in chapter 2, American Opportunity Credit. 1040 long form Coordination with Pell grants and other scholarships. 1040 long form   In some cases, you may be able to reduce your tax liability by including scholarships in income. 1040 long form 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 long form 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 long form Example 1—No scholarship. 1040 long form Judy Green, who is unmarried, is taking courses at a public community college to be recertified to teach in public schools. 1040 long form Her AGI and her MAGI, for purposes of the credit, are $27,000. 1040 long form Judy takes the standard deduction of $5,950 and personal exemption of $3,800, reducing her AGI to taxable income of $17,250 and her tax before credits is $2,156. 1040 long form She claims no credits other than the lifetime learning credit. 1040 long form In July 2013 she paid $700 for the summer 2013 semester; in August 2013 she paid $1,900 for the fall 2013 semester; and in December 2013 she paid another $1,900 for the spring semester beginning in January 2014. 1040 long form Judy and the college meet all requirements for the lifetime learning tax credit. 1040 long form She can use all of the $4,500 tuition she paid in 2013 when figuring her 2013 lifetime learning credit. 1040 long form She claims a $900 lifetime learning credit and her tax after credits is $1,256. 1040 long form Example 2—Scholarship excluded from income. 1040 long form The facts are the same as in Example 1—No scholarship, except that Judy was awarded a $1,500 scholarship. 1040 long form Under the terms of her scholarship, it may be used to pay any educational expenses, including room and board. 1040 long form If Judy excludes the scholarship from income, she will be deemed (for purposes of computing her education credit) as having used the scholarship to pay for tuition, required fees, and course materials. 1040 long form Only $3,000 of the $4,500 tuition she paid in 2013 could be used when figuring her 2013 lifetime learning credit. 1040 long form Her lifetime learning credit would be reduced to $600 and her tax after credits would be $1,556. 1040 long form Example 3—Scholarship included in income. 1040 long form The facts are the same as in Example 2—Scholarship excluded from income. 1040 long form If, unlike Example 2, Judy includes the $1,500 scholarship in income, she will be deemed to have used the entire scholarship to pay for room and board. 1040 long form Judy's AGI will increase to $28,500, her taxable income would be $18,750, and her tax before credits would be $2,381. 1040 long form She would be able to use the $4,500 of adjusted qualified education expenses to figure her credit. 1040 long form Judy could claim a $900 lifetime learning credit and her tax after credits would be $1,481. 1040 long form 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 long form This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. 1040 long form Sports, games, hobbies, and noncredit courses. 1040 long form   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 long form However, if the course of instruction or other education is part of the student's degree program or is taken by the student to acquire or improve job skills, these expenses can qualify. 1040 long form Comprehensive or bundled fees. 1040 long form   Some eligible educational institutions combine all of their fees for an academic period into one amount. 1040 long form 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 long form 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. 1040 long form See Figuring the Credit , later, for more information about Form 1098-T. 1040 long form Who Is an Eligible Student For purposes of the lifetime learning credit, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (as defined under Qualified Education Expenses , earlier). 1040 long form 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 a lifetime learning credit for your dependent's expenses for that year. 1040 long form For you to claim a lifetime learning credit for your dependent's expenses, you must also claim an exemption for your dependent. 1040 long form You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. 1040 long form IF you. 1040 long form . 1040 long form . 1040 long form THEN only. 1040 long form . 1040 long form . 1040 long form claim an exemption on your tax return for a dependent who is an eligible student you can claim the lifetime learning credit based on that dependent's expenses. 1040 long form The dependent cannot claim the credit. 1040 long form 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 lifetime learning credit. 1040 long form You cannot claim the credit based on this dependent's expenses. 1040 long form Expenses paid by dependent. 1040 long form   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 long form Include these expenses when figuring the amount of your lifetime learning credit. 1040 long form    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 long form Expenses paid by you. 1040 long form   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 lifetime learning credit. 1040 long form If neither you nor anyone else claims an exemption for the dependent, only the dependent can include any expenses you paid when figuring the lifetime learning credit. 1040 long form Expenses paid by others. 1040 long form   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 long form In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. 1040 long form If you claim an exemption on your tax return for the student, you are considered to have paid the expenses. 1040 long form Example. 1040 long form In 2013, Ms. 1040 long form Allen makes a payment directly to an eligible educational institution for her grandson Todd's qualified education expenses. 1040 long form For purposes of claiming a lifetime learning credit, Todd is treated as receiving the money from his grandmother and, in turn, paying his qualified education expenses himself. 1040 long form Unless an exemption for Todd is claimed on someone else's 2013 tax return, only Todd can use the payment to claim a lifetime learning credit. 1040 long form 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 a lifetime learning credit. 1040 long form If anyone else claims an exemption for Todd, Todd cannot claim a lifetime learning credit. 1040 long form Tuition reduction. 1040 long form   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 long form 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 long form For more information on tuition reductions, see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 1040 long form Figuring the Credit The amount of the lifetime learning credit is 20% of the first $10,000 of qualified education expenses you paid for all eligible students. 1040 long form The maximum amount of lifetime learning credit you can claim for 2013 is $2,000 (20% × $10,000). 1040 long form However, that amount may be reduced based on your MAGI. 1040 long form See Effect of the Amount of Your Income on the Amount of Your Credit , later. 1040 long form Example. 1040 long form Bruce and Toni Harper are married and file a joint tax return. 1040 long form For 2013, their MAGI is $75,000. 1040 long form Toni is attending a local college (an eligible educational institution) to earn credits toward a degree in nursing. 1040 long form She already has a bachelor's degree in history and wants to become a nurse. 1040 long form In August 2013, Toni paid $5,000 of qualified education expenses for her fall 2013 semester. 1040 long form Bruce and Toni can claim a $1,000 (20% × $5,000) lifetime learning credit on their 2013 joint tax return. 1040 long form Form 1098-T. 1040 long form   To help you figure your lifetime learning credit, the student should receive Form 1098-T. 1040 long form 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 long form An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. 1040 long form However, the amounts in boxes 1 and 2 of Form 1098-T might be different from what you paid. 1040 long form When figuring the credit, use only the amounts you paid or are deemed to have paid in 2013 for qualified education expenses. 1040 long form   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 long form    The eligible educational institution may ask for a completed Form W-9S, or similar statement to obtain the student's name, address, and taxpayer identification number. 1040 long form Effect of the Amount of Your Income on the Amount of Your Credit The amount of your lifetime learning credit is phased out (gradually reduced) if your MAGI is between $53,000 and $63,000 ($107,000 and $127,000 if you file a joint return). 1040 long form You cannot claim a lifetime learning credit if your MAGI is $63,000 or more ($127,000 or more if you file a joint return). 1040 long form Modified adjusted gross income (MAGI). 1040 long form   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. 1040 long form MAGI when using Form 1040A. 1040 long form   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. 1040 long form MAGI when using Form 1040. 1040 long form   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 long form You can use Worksheet 3-1 to figure your MAGI. 1040 long form Worksheet 3-1. 1040 long form MAGI for the Lifetime Learning Credit 1. 1040 long form Enter your adjusted gross income  (Form 1040, line 38)   1. 1040 long form   2. 1040 long form Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. 1040 long form       3. 1040 long form Enter your foreign housing deduction (Form 2555, line 50)   3. 1040 long form       4. 1040 long form Enter the amount of income from Puerto Rico you are excluding   4. 1040 long form       5. 1040 long form Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. 1040 long form       6. 1040 long form Add the amounts on lines 2, 3, 4, and 5   6. 1040 long form   7. 1040 long form Add the amounts on lines 1 and 6. 1040 long form  This is your modified adjusted  gross income. 1040 long form Enter this amount  on Form 8863, line 14   7. 1040 long form   Phaseout. 1040 long form   If your MAGI is within the range of incomes where the credit must be reduced, you will figure your reduced credit using lines 10-18 of Form 8863. 1040 long form The same method is shown in the following example. 1040 long form Example. 1040 long form You are filing a joint return with a MAGI of $112,000. 1040 long form In 2013, you paid $6,600 of qualified education expenses. 1040 long form You figure the tentative lifetime learning credit (20% of the first $10,000 of qualified education expenses you paid for all eligible students). 1040 long form The result is a $1,320 (20% x $6,600) tentative credit. 1040 long form Because your MAGI is within the range of incomes where the credit must be reduced, you must multiply your tentative credit ($1,320) by a fraction. 1040 long form The numerator of the fraction is $127,000 (the upper limit for those filing a joint return) minus your MAGI. 1040 long form The denominator is $20,000, the range of incomes for the phaseout ($107,000 to $127,000). 1040 long form The result is the amount of your phased out (reduced) lifetime learning credit ($990). 1040 long form   $1,320 × $127,000 − $112,000  $20,000 = $990   Claiming the Credit You claim the lifetime learning credit by completing Form 8863 and submitting it with your Form 1040 or 1040A. 1040 long form Enter the credit on Form 1040, line 49, or Form 1040A, line 31. 1040 long form Note. 1040 long form In Appendix A, Illustrated Example of Education Credits 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 long form Prev  Up  Next   Home   More Online Publications
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Part of the Department of Transportation, the Maritime Commission works to ensure the health of the U.S. merchant marine. The Maritime Administration also works to improve port efficiency, and to maintain an adequate ship building and repair infrastructure.

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The 1040 Long Form

1040 long form 5. 1040 long form   Ministers and Church Employees Table of Contents Alternative Limit for Church Employees Changes to Includible Compensation for Most Recent Year of ServiceChanges to Includible Compensation Changes to Years of Service Self-employed ministers and church employees who participate in 403(b) plans generally follow the same rules as other 403(b) plan participants. 1040 long form This means that if you are a self-employed minister or a church employee, your MAC generally is the lesser of: Your limit on annual additions, or Your limit on elective deferrals. 1040 long form For most ministers and church employees, the limit on annual additions is figured without any changes. 1040 long form This means that if you are a minister or church employee, your limit on annual additions generally is the lesser of: $51,000 for 2013 and $52,000 for 2014, or Your includible compensation for your most recent year of service. 1040 long form Although, in general, the same limit applies, church employees can choose an alternative limit and there are changes in how church employees, foreign missionaries, and self-employed ministers figure includible compensation for the most recent year of service. 1040 long form This chapter will explain the alternative limit and the changes. 1040 long form Who is a church employee?   A church employee is anyone who is an employee of a church or a convention or association of churches, including an employee of a tax-exempt organization controlled by or associated with a church or a convention or association of churches. 1040 long form Alternative Limit for Church Employees If you are a church employee, you can choose to use $10,000 a year as your limit on annual additions, even if your annual additions computed under the general rule is less. 1040 long form Total contributions over your lifetime under this choice cannot be more than $40,000. 1040 long form Changes to Includible Compensation for Most Recent Year of Service There are two types of changes in determining includible compensation for the most recent year of service. 1040 long form They are: Changes in how the includible compensation of foreign missionaries and self-employed ministers is figured, and A change to the years that are counted when figuring the most recent year of service for church employees and self-employed ministers. 1040 long form Changes to Includible Compensation Includible compensation is figured differently for foreign missionaries and self-employed ministers. 1040 long form Foreign missionary. 1040 long form   If you are a foreign missionary, your includible compensation includes foreign earned income that may otherwise be excludable from your gross income under section 911. 1040 long form   If you are a foreign missionary, and your adjusted gross income is $17,000 or less, contributions to your 403(b) account will not be treated as exceeding the limit on annual additions if the contributions are not in excess of $3,000. 1040 long form   You are a foreign missionary if you are either a layperson or a duly ordained, commissioned, or licensed minister of a church and you meet both of the following requirements. 1040 long form You are an employee of a church or convention or association of churches. 1040 long form You are performing services for the church outside the United States. 1040 long form Self-employed minister. 1040 long form   If you are a self-employed minister, you are treated as an employee of a tax-exempt organization that is a qualified employer. 1040 long form Your includible compensation is your net earnings from your ministry minus the contributions made to the retirement plan on your behalf and the deductible portion of your self-employment tax. 1040 long form Changes to Years of Service Generally, only service with the employer who maintains your 403(b) account can be counted when figuring your limit on annual additions. 1040 long form Church employees. 1040 long form   If you are a church employee, treat all of your years of service as an employee of a church or a convention or association of churches as years of service with one employer. 1040 long form Self-employed minister. 1040 long form   If you are a self-employed minister, your years of service include full and part years during which you were self-employed. 1040 long form Prev  Up  Next   Home   More Online Publications