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1040ez State Tax Form

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1040ez State Tax Form

1040ez state tax form 3. 1040ez state tax 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. 1040ez state tax form They are the American opportunity credit and the lifetime learning credit. 1040ez state tax form This chapter discusses the lifetime learning credit. 1040ez state tax form The American opportunity credit is discussed in chapter 2, The American Opportunity Credit . 1040ez state tax 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. 1040ez state tax form What is the tax benefit of the lifetime learning credit. 1040ez state tax 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. 1040ez state tax form There is no limit on the number of years the lifetime learning credit can be claimed for each student. 1040ez state tax form   A tax credit reduces the amount of income tax you may have to pay. 1040ez state tax form Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. 1040ez state tax form The lifetime learning credit is a nonrefundable credit. 1040ez state tax 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. 1040ez state tax form   Your allowable lifetime learning credit may be limited by the amount of your income and the amount of your tax. 1040ez state tax form Can you claim more than one education credit this year. 1040ez state tax form   For each student, you can elect for any year only one of the credits. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form Differences between the American opportunity and lifetime learning credits. 1040ez state tax form   There are several differences between these two credits. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form Overview of the lifetime learning credit. 1040ez state tax form   See Table 3-1, Overview of the Lifetime Learning Credit for the basics of the lifetime learning credit. 1040ez state tax form The details are discussed in this chapter. 1040ez state tax 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. 1040ez state tax form Who Can Claim the Credit Generally, you can claim the lifetime learning credit if all three of the following requirements are met. 1040ez state tax form You pay qualified education expenses of higher education. 1040ez state tax form You pay the education expenses for an eligible student. 1040ez state tax form The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. 1040ez state tax form Table 3-1. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form “Qualified education expenses” are defined later under Qualified Education Expenses . 1040ez state tax form “Eligible students” are defined later under Who Is an Eligible Student . 1040ez state tax form A dependent for whom you claim an exemption is defined later under Who Can Claim a Dependent's Expenses . 1040ez state tax 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. 1040ez state tax form Who Cannot Claim the Credit You cannot claim the lifetime learning credit for 2013 if any of the following apply. 1040ez state tax form Your filing status is married filing separately. 1040ez state tax form You are listed as a dependent on another person's tax return (such as your parents'). 1040ez state tax form See Who Can Claim a Dependent's Expenses , later. 1040ez state tax form Your modified adjusted gross income (MAGI) is $63,000 or more ($127,000 or more in the case of a joint return). 1040ez state tax form MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit . 1040ez state tax 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. 1040ez state tax form More information on nonresident aliens can be found in Publication 519. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form Academic period. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form Paid with borrowed funds. 1040ez state tax form   You can claim a lifetime learning credit for qualified education expenses paid with the proceeds of a loan. 1040ez state tax 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. 1040ez state tax form Treat loan disbursements sent directly to the educational institution as paid on the date the institution credits the student's account. 1040ez state tax form Student withdraws from class(es). 1040ez state tax form   You can claim a lifetime learning credit for qualified education expenses not refunded when a student withdraws. 1040ez state tax 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. 1040ez state tax form The course must be either part of a postsecondary degree program or taken by the student to acquire or improve job skills. 1040ez state tax form Eligible educational institution. 1040ez state tax 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. 1040ez state tax form S. 1040ez state tax form Department of Education. 1040ez state tax form It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 1040ez state tax form The educational institution should be able to tell you if it is an eligible educational institution. 1040ez state tax form   Certain educational institutions located outside the United States also participate in the U. 1040ez state tax form S. 1040ez state tax form Department of Education's Federal Student Aid (FSA) programs. 1040ez state tax form Related expenses. 1040ez state tax 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. 1040ez state tax form Prepaid expenses. 1040ez state tax 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. 1040ez state tax form See Academic period , earlier. 1040ez state tax 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). 1040ez state tax 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). 1040ez state tax form In the following examples, assume that each student is an eligible student at an eligible educational institution. 1040ez state tax form Example 1. 1040ez state tax form   Jackson is a sophomore in University V's degree program in dentistry. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form Example 2. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form Charles bought his books from a friend, so what he paid for them is not a qualified education expense. 1040ez state tax form Donna bought hers at College W's bookstore. 1040ez state tax 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. 1040ez state tax form Example 3. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form No portion of the fee covers personal expenses. 1040ez state tax form Although labeled as a student activity fee, the fee is required for Marci's enrollment and attendance at College X. 1040ez state tax form Therefore, it is a qualified expense. 1040ez state tax 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. 1040ez state tax form Claim a lifetime learning credit in the same year that you are claiming a tuition and fees deduction for the same student. 1040ez state tax form Claim a lifetime learning credit and an American opportunity credit based on the same qualified education expenses. 1040ez state tax 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). 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form See Adjustments to Qualified Education Expenses, next. 1040ez state tax form This image is too large to be displayed in the current screen. 1040ez state tax form Please click the link to view the image. 1040ez state tax 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. 1040ez state tax form The result is the amount of adjusted qualified education expenses for each student. 1040ez state tax form Tax-free educational assistance. 1040ez state tax 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. 1040ez state tax form See Academic period , earlier. 1040ez state tax form   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. 1040ez state tax 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). 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form Generally, any scholarship or fellowship is treated as tax free. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form For examples, see Coordination with Pell grants and other scholarships, later. 1040ez state tax form Refunds. 1040ez state tax 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. 1040ez state tax form Some tax-free educational assistance received after 2013 may be treated as a refund. 1040ez state tax form See Tax-free educational assistance , earlier. 1040ez state tax form Refunds received in 2013. 1040ez state tax 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. 1040ez state tax form Refunds received after 2013 but before your income tax return is filed. 1040ez state tax 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. 1040ez state tax form Refunds received after 2013 and after your income tax return is filed. 1040ez state tax 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. 1040ez state tax form See Credit recapture, next. 1040ez state tax form Credit recapture. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax 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). 1040ez state tax form Include that amount as an additional tax for the year the refund or tax-free assistance was received. 1040ez state tax form Example. 1040ez state tax form   You pay $9,300 in tuition and fees in December 2013, and your child began college in January 2014. 1040ez state tax form You filed your 2013 tax return on February 14, 2014, and claimed a lifetime learning credit of $1,860. 1040ez state tax form You claimed no other tax credits. 1040ez state tax form After you filed your return, your child withdrew from two courses and you received a refund of $2,900. 1040ez state tax form You must refigure your 2013 lifetime learning credit using $6,400 of qualified education expenses instead of $9,300. 1040ez state tax form The refigured credit is $1,280 and your tax liability increased by $580. 1040ez state tax form See instructions for your 2014 income tax return to determine where to include this tax. 1040ez state tax 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. 1040ez state tax form Amounts that do not reduce qualified education expenses. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form The use of the money is not restricted. 1040ez state tax form For examples, see Adjustments to Qualified Education Expenses in chapter 2, American Opportunity Credit. 1040ez state tax form Coordination with Pell grants and other scholarships. 1040ez state tax form   In some cases, you may be able to reduce your tax liability by including scholarships in income. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form Example 1—No scholarship. 1040ez state tax form Judy Green, who is unmarried, is taking courses at a public community college to be recertified to teach in public schools. 1040ez state tax form Her AGI and her MAGI, for purposes of the credit, are $27,000. 1040ez state tax 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. 1040ez state tax form She claims no credits other than the lifetime learning credit. 1040ez state tax 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. 1040ez state tax form Judy and the college meet all requirements for the lifetime learning tax credit. 1040ez state tax form She can use all of the $4,500 tuition she paid in 2013 when figuring her 2013 lifetime learning credit. 1040ez state tax form She claims a $900 lifetime learning credit and her tax after credits is $1,256. 1040ez state tax form Example 2—Scholarship excluded from income. 1040ez state tax form The facts are the same as in Example 1—No scholarship, except that Judy was awarded a $1,500 scholarship. 1040ez state tax form Under the terms of her scholarship, it may be used to pay any educational expenses, including room and board. 1040ez state tax 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. 1040ez state tax form Only $3,000 of the $4,500 tuition she paid in 2013 could be used when figuring her 2013 lifetime learning credit. 1040ez state tax form Her lifetime learning credit would be reduced to $600 and her tax after credits would be $1,556. 1040ez state tax form Example 3—Scholarship included in income. 1040ez state tax form The facts are the same as in Example 2—Scholarship excluded from income. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form She would be able to use the $4,500 of adjusted qualified education expenses to figure her credit. 1040ez state tax form Judy could claim a $900 lifetime learning credit and her tax after credits would be $1,481. 1040ez state tax 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. 1040ez state tax form This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. 1040ez state tax form Sports, games, hobbies, and noncredit courses. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form Comprehensive or bundled fees. 1040ez state tax form   Some eligible educational institutions combine all of their fees for an academic period into one amount. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form See Figuring the Credit , later, for more information about Form 1098-T. 1040ez state tax 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). 1040ez state tax 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. 1040ez state tax form For you to claim a lifetime learning credit for your dependent's expenses, you must also claim an exemption for your dependent. 1040ez state tax form You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. 1040ez state tax form IF you. 1040ez state tax form . 1040ez state tax form . 1040ez state tax form THEN only. 1040ez state tax form . 1040ez state tax form . 1040ez state tax 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. 1040ez state tax form The dependent cannot claim the credit. 1040ez state tax 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. 1040ez state tax form You cannot claim the credit based on this dependent's expenses. 1040ez state tax form Expenses paid by dependent. 1040ez state tax 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. 1040ez state tax form Include these expenses when figuring the amount of your lifetime learning credit. 1040ez state tax 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. 1040ez state tax form Expenses paid by you. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form Expenses paid by others. 1040ez state tax 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. 1040ez state tax form In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. 1040ez state tax form If you claim an exemption on your tax return for the student, you are considered to have paid the expenses. 1040ez state tax form Example. 1040ez state tax form In 2013, Ms. 1040ez state tax form Allen makes a payment directly to an eligible educational institution for her grandson Todd's qualified education expenses. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form If anyone else claims an exemption for Todd, Todd cannot claim a lifetime learning credit. 1040ez state tax form Tuition reduction. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax form For more information on tuition reductions, see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 1040ez state tax 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. 1040ez state tax form The maximum amount of lifetime learning credit you can claim for 2013 is $2,000 (20% × $10,000). 1040ez state tax form However, that amount may be reduced based on your MAGI. 1040ez state tax form See Effect of the Amount of Your Income on the Amount of Your Credit , later. 1040ez state tax form Example. 1040ez state tax form Bruce and Toni Harper are married and file a joint tax return. 1040ez state tax form For 2013, their MAGI is $75,000. 1040ez state tax form Toni is attending a local college (an eligible educational institution) to earn credits toward a degree in nursing. 1040ez state tax form She already has a bachelor's degree in history and wants to become a nurse. 1040ez state tax form In August 2013, Toni paid $5,000 of qualified education expenses for her fall 2013 semester. 1040ez state tax form Bruce and Toni can claim a $1,000 (20% × $5,000) lifetime learning credit on their 2013 joint tax return. 1040ez state tax form Form 1098-T. 1040ez state tax form   To help you figure your lifetime learning credit, the student should receive Form 1098-T. 1040ez state tax 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. 1040ez state tax form An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. 1040ez state tax form However, the amounts in boxes 1 and 2 of Form 1098-T might be different from what you paid. 1040ez state tax form When figuring the credit, use only the amounts you paid or are deemed to have paid in 2013 for qualified education expenses. 1040ez state tax 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. 1040ez state tax 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. 1040ez state tax 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). 1040ez state tax 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). 1040ez state tax form Modified adjusted gross income (MAGI). 1040ez state tax form   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. 1040ez state tax form MAGI when using Form 1040A. 1040ez state tax form   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. 1040ez state tax form MAGI when using Form 1040. 1040ez state tax 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. 1040ez state tax form You can use Worksheet 3-1 to figure your MAGI. 1040ez state tax form Worksheet 3-1. 1040ez state tax form MAGI for the Lifetime Learning Credit 1. 1040ez state tax form Enter your adjusted gross income  (Form 1040, line 38)   1. 1040ez state tax form   2. 1040ez state tax form Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. 1040ez state tax form       3. 1040ez state tax form Enter your foreign housing deduction (Form 2555, line 50)   3. 1040ez state tax form       4. 1040ez state tax form Enter the amount of income from Puerto Rico you are excluding   4. 1040ez state tax form       5. 1040ez state tax form Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. 1040ez state tax form       6. 1040ez state tax form Add the amounts on lines 2, 3, 4, and 5   6. 1040ez state tax form   7. 1040ez state tax form Add the amounts on lines 1 and 6. 1040ez state tax form  This is your modified adjusted  gross income. 1040ez state tax form Enter this amount  on Form 8863, line 14   7. 1040ez state tax form   Phaseout. 1040ez state tax 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. 1040ez state tax form The same method is shown in the following example. 1040ez state tax form Example. 1040ez state tax form You are filing a joint return with a MAGI of $112,000. 1040ez state tax form In 2013, you paid $6,600 of qualified education expenses. 1040ez state tax form You figure the tentative lifetime learning credit (20% of the first $10,000 of qualified education expenses you paid for all eligible students). 1040ez state tax form The result is a $1,320 (20% x $6,600) tentative credit. 1040ez state tax 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. 1040ez state tax form The numerator of the fraction is $127,000 (the upper limit for those filing a joint return) minus your MAGI. 1040ez state tax form The denominator is $20,000, the range of incomes for the phaseout ($107,000 to $127,000). 1040ez state tax form The result is the amount of your phased out (reduced) lifetime learning credit ($990). 1040ez state tax 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. 1040ez state tax form Enter the credit on Form 1040, line 49, or Form 1040A, line 31. 1040ez state tax form Note. 1040ez state tax 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. 1040ez state tax form Prev  Up  Next   Home   More Online Publications
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The 1040ez State Tax Form

1040ez state tax form 22. 1040ez state tax form   Taxes Table of Contents IntroductionIndian tribal government. 1040ez state tax form Useful Items - You may want to see: Tests To Deduct Any Tax Income TaxesState and Local Income Taxes Foreign Income Taxes General Sales TaxesMotor vehicles. 1040ez state tax form Real Estate TaxesReal estate taxes for prior years. 1040ez state tax form Examples. 1040ez state tax form Form 1099-S. 1040ez state tax form Real Estate-Related Items You Cannot Deduct Personal Property Taxes Taxes and Fees You Cannot Deduct Where To Deduct Introduction This chapter discusses which taxes you can deduct if you itemize deductions on Schedule A (Form 1040). 1040ez state tax form It also explains which taxes you can deduct on other schedules or forms and which taxes you cannot deduct. 1040ez state tax form This chapter covers the following topics. 1040ez state tax form Income taxes (federal, state, local, and foreign). 1040ez state tax form General sales taxes (state and local). 1040ez state tax form Real estate taxes (state, local, and foreign). 1040ez state tax form Personal property taxes (state and local). 1040ez state tax form Taxes and fees you cannot deduct. 1040ez state tax form Use Table 22-1 as a guide to determine which taxes you can deduct. 1040ez state tax form The end of the chapter contains a section that explains which forms you use to deduct different types of taxes. 1040ez state tax form Business taxes. 1040ez state tax form   You can deduct certain taxes only if they are ordinary and necessary expenses of your trade or business or of producing income. 1040ez state tax form For information on these taxes, see Publication 535, Business Expenses. 1040ez state tax form State or local taxes. 1040ez state tax form   These are taxes imposed by the 50 states, U. 1040ez state tax form S. 1040ez state tax form possessions, or any of their political subdivisions (such as a county or city), or by the District of Columbia. 1040ez state tax form Indian tribal government. 1040ez state tax form   An Indian tribal government recognized by the Secretary of the Treasury as performing substantial government functions will be treated as a state for purposes of claiming a deduction for taxes. 1040ez state tax form Income taxes, real estate taxes, and personal property taxes imposed by that Indian tribal government (or by any of its subdivisions that are treated as political subdivisions of a state) are deductible. 1040ez state tax form General sales taxes. 1040ez state tax form   These are taxes imposed at one rate on retail sales of a broad range of classes of items. 1040ez state tax form Foreign taxes. 1040ez state tax form   These are taxes imposed by a foreign country or any of its political subdivisions. 1040ez state tax form Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 530 Tax Information for Homeowners Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule E (Form 1040) Supplemental Income and Loss 1116 Foreign Tax Credit Tests To Deduct Any Tax The following two tests must be met for you to deduct any tax. 1040ez state tax form The tax must be imposed on you. 1040ez state tax form You must pay the tax during your tax year. 1040ez state tax form The tax must be imposed on you. 1040ez state tax form   In general, you can deduct only taxes imposed on you. 1040ez state tax form   Generally, you can deduct property taxes only if you are an owner of the property. 1040ez state tax form If your spouse owns the property and pays the real estate taxes, the taxes are deductible on your spouse's separate return or on your joint return. 1040ez state tax form You must pay the tax during your tax year. 1040ez state tax form   If you are a cash basis taxpayer, you can deduct only those taxes you actually paid during your tax year. 1040ez state tax form If you pay your taxes by check, the day you mail or deliver the check is the date of payment, provided the check is honored by the financial institution. 1040ez state tax form If you use a pay-by-phone account (such as a credit card or electronic funds withdrawal), the date reported on the statement of the financial institution showing when payment was made is the date of payment. 1040ez state tax form If you contest a tax liability and are a cash basis taxpayer, you can deduct the tax only in the year you actually pay it (or transfer money or other property to provide for satisfaction of the contested liability). 1040ez state tax form See Publication 538, Accounting Periods and Methods, for details. 1040ez state tax form    If you use an accrual method of accounting, see Publication 538 for more information. 1040ez state tax form Income Taxes This section discusses the deductibility of state and local income taxes (including employee contributions to state benefit funds) and foreign income taxes. 1040ez state tax form State and Local Income Taxes You can deduct state and local income taxes. 1040ez state tax form However, you can elect to deduct state and local general sales taxes instead of state and local income taxes. 1040ez state tax form See General Sales Taxes , later. 1040ez state tax form Exception. 1040ez state tax form    You cannot deduct state and local income taxes you pay on income that is exempt from federal income tax, unless the exempt income is interest income. 1040ez state tax form For example, you cannot deduct the part of a state's income tax that is on a cost-of-living allowance exempt from federal income tax. 1040ez state tax form What To Deduct Your deduction may be for withheld taxes, estimated tax payments, or other tax payments as follows. 1040ez state tax form Withheld taxes. 1040ez state tax form   You can deduct state and local income taxes withheld from your salary in the year they are withheld. 1040ez state tax form Your Form(s) W-2 will show these amounts. 1040ez state tax form Forms W-2G, 1099-G, 1099-R, and 1099-MISC may also show state and local income taxes withheld. 1040ez state tax form Estimated tax payments. 1040ez state tax form   You can deduct estimated tax payments you made during the year to a state or local government. 1040ez state tax form However, you must have a reasonable basis for making the estimated tax payments. 1040ez state tax form Any estimated state or local tax payments that are not made in good faith at the time of payment are not deductible. 1040ez state tax form For example, you made an estimated state income tax payment. 1040ez state tax form However, the estimate of your state tax liability shows that you will get a refund of the full amount of your estimated payment. 1040ez state tax form You had no reasonable basis to believe you had any additional liability for state income taxes and you cannot deduct the estimated tax payment. 1040ez state tax form Refund applied to taxes. 1040ez state tax form   You can deduct any part of a refund of prior-year state or local income taxes that you chose to have credited to your 2013 estimated state or local income taxes. 1040ez state tax form    Do not reduce your deduction by either of the following items. 1040ez state tax form Any state or local income tax refund (or credit) you expect to receive for 2013. 1040ez state tax form Any refund of (or credit for) prior-year state and local income taxes you actually received in 2013. 1040ez state tax form   However, part or all of this refund (or credit) may be taxable. 1040ez state tax form See Refund (or credit) of state or local income taxes , later. 1040ez state tax form Separate federal returns. 1040ez state tax form   If you and your spouse file separate state, local, and federal income tax returns, you each can deduct on your federal return only the amount of your own state and local income tax that you paid during the tax year. 1040ez state tax form Joint state and local returns. 1040ez state tax form   If you and your spouse file joint state and local returns and separate federal returns, each of you can deduct on your separate federal return a part of the total state and local income taxes paid during the tax year. 1040ez state tax form You can deduct only the amount of the total taxes that is proportionate to your gross income compared to the combined gross income of you and your spouse. 1040ez state tax form However, you cannot deduct more than the amount you actually paid during the year. 1040ez state tax form You can avoid this calculation if you and your spouse are jointly and individually liable for the full amount of the state and local income taxes. 1040ez state tax form If so, you and your spouse can deduct on your separate federal returns the amount you each actually paid. 1040ez state tax form Joint federal return. 1040ez state tax form   If you file a joint federal return, you can deduct the total of the state and local income taxes both of you paid. 1040ez state tax form Contributions to state benefit funds. 1040ez state tax form    As an employee, you can deduct mandatory contributions to state benefit funds withheld from your wages that provide protection against loss of wages. 1040ez state tax form For example, certain states require employees to make contributions to state funds providing disability or unemployment insurance benefits. 1040ez state tax form Mandatory payments made to the following state benefit funds are deductible as state income taxes on Schedule A (Form 1040), line 5. 1040ez state tax form Alaska Unemployment Compensation Fund. 1040ez state tax form California Nonoccupational Disability Benefit Fund. 1040ez state tax form New Jersey Nonoccupational Disability Benefit Fund. 1040ez state tax form New Jersey Unemployment Compensation Fund. 1040ez state tax form New York Nonoccupational Disability Benefit Fund. 1040ez state tax form Pennsylvania Unemployment Compensation Fund. 1040ez state tax form Rhode Island Temporary Disability Benefit Fund. 1040ez state tax form Washington State Supplemental Workmen's Compensation Fund. 1040ez state tax form    Employee contributions to private or voluntary disability plans are not deductible. 1040ez state tax form Refund (or credit) of state or local income taxes. 1040ez state tax form   If you receive a refund of (or credit for) state or local income taxes in a year after the year in which you paid them, you may have to include the refund in income on Form 1040, line 10, in the year you receive it. 1040ez state tax form This includes refunds resulting from taxes that were overwithheld, applied from a prior year return, not figured correctly, or figured again because of an amended return. 1040ez state tax form If you did not itemize your deductions in the previous year, do not include the refund in income. 1040ez state tax form If you deducted the taxes in the previous year, include all or part of the refund on Form 1040, line 10, in the year you receive the refund. 1040ez state tax form For a discussion of how much to include, see Recoveries in chapter 12. 1040ez state tax form Foreign Income Taxes Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. 1040ez state tax form S. 1040ez state tax form possession. 1040ez state tax form However, you cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. 1040ez state tax form S. 1040ez state tax form tax under the foreign earned income exclusion or the foreign housing exclusion. 1040ez state tax form For information on these exclusions, see Publication 54, Tax Guide for U. 1040ez state tax form S. 1040ez state tax form Citizens and Resident Aliens Abroad. 1040ez state tax form For information on the foreign tax credit, see Publication 514. 1040ez state tax form General Sales Taxes You can elect to deduct state and local general sales taxes, instead of state and local income taxes, as an itemized deduction on Schedule A (Form 1040), line 5b. 1040ez state tax form You can use either your actual expenses or the state and local sales tax tables to figure your sales tax deduction. 1040ez state tax form Actual expenses. 1040ez state tax form   Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) if the tax rate was the same as the general sales tax rate. 1040ez state tax form However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. 1040ez state tax form If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. 1040ez state tax form If you use the actual expenses method, you must have receipts to show the general sales taxes paid. 1040ez state tax form Do not include sales taxes paid on items used in your trade or business. 1040ez state tax form Motor vehicles. 1040ez state tax form   For purposes of this section, motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. 1040ez state tax form This also includes sales taxes on a leased motor vehicle, but not on vehicles used in your trade or business. 1040ez state tax form Optional sales tax tables. 1040ez state tax form   Instead of using your actual expenses, you can figure your state and local general sales tax deduction using the state and local sales tax tables in the Instructions for Schedule A (Form 1040). 1040ez state tax form You may also be able to add the state and local general sales taxes paid on certain specified items. 1040ez state tax form   Your applicable table amount is based on the state where you live, your income, and the number of exemptions claimed on your tax return. 1040ez state tax form Your income is your adjusted gross income plus any nontaxable items such as the following. 1040ez state tax form Tax-exempt interest. 1040ez state tax form Veterans' benefits. 1040ez state tax form Nontaxable combat pay. 1040ez state tax form Workers' compensation. 1040ez state tax form Nontaxable part of social security and railroad retirement benefits. 1040ez state tax form Nontaxable part of IRA, pension, or annuity distributions, excluding rollovers. 1040ez state tax form Public assistance payments. 1040ez state tax form If you lived in different states during the same tax year, you must prorate your applicable table amount for each state based on the days you lived in each state. 1040ez state tax form See the Instructions for Schedule A (Form 1040), line 5, for details. 1040ez state tax form Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real property levied for the general public welfare. 1040ez state tax form You can deduct these taxes only if they are based on the assessed value of the real property and charged uniformly against all property under the jurisdiction of the taxing authority. 1040ez state tax form Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. 1040ez state tax form They also do not include itemized charges for services (such as trash collection) assessed against specific property or certain people, even if the charge is paid to the taxing authority. 1040ez state tax form For more information about taxes and charges that are not deductible, see Real Estate-Related Items You Cannot Deduct , later. 1040ez state tax form Tenant-shareholders in a cooperative housing corporation. 1040ez state tax form   Generally, if you are a tenant-stockholder in a cooperative housing corporation, you can deduct the amount paid to the corporation that represents your share of the real estate taxes the corporation paid or incurred for your dwelling unit. 1040ez state tax form The corporation should provide you with a statement showing your share of the taxes. 1040ez state tax form For more information, see Special Rules for Cooperatives in Publication 530. 1040ez state tax form Division of real estate taxes between buyers and sellers. 1040ez state tax form   If you bought or sold real estate during the year, the real estate taxes must be divided between the buyer and the seller. 1040ez state tax form   The buyer and the seller must divide the real estate taxes according to the number of days in the real property tax year (the period to which the tax is imposed relates) that each owned the property. 1040ez state tax form The seller is treated as paying the taxes up to, but not including, the date of sale. 1040ez state tax form The buyer is treated as paying the taxes beginning with the date of sale. 1040ez state tax form This applies regardless of the lien dates under local law. 1040ez state tax form Generally, this information is included on the settlement statement provided at the closing. 1040ez state tax form    If you (the seller) cannot deduct taxes until they are paid because you use the cash method of accounting, and the buyer of your property is personally liable for the tax, you are considered to have paid your part of the tax at the time of the sale. 1040ez state tax form This lets you deduct the part of the tax to the date of sale even though you did not actually pay it. 1040ez state tax form However, you must also include the amount of that tax in the selling price of the property. 1040ez state tax form The buyer must include the same amount in his or her cost of the property. 1040ez state tax form   You figure your deduction for taxes on each property bought or sold during the real property tax year as follows. 1040ez state tax form Worksheet 22-1. 1040ez state tax form Figuring Your Real Estate Tax Deduction 1. 1040ez state tax form Enter the total real estate taxes for the real property tax year   2. 1040ez state tax form Enter the number of days in the real property tax year that you owned the property   3. 1040ez state tax form Divide line 2 by 365 (for leap years, divide line 2 by 366) . 1040ez state tax form 4. 1040ez state tax form Multiply line 1 by line 3. 1040ez state tax form This is your deduction. 1040ez state tax form Enter it on Schedule A (Form 1040), line 6   Note. 1040ez state tax form Repeat steps 1 through 4 for each property you bought or sold during the real property tax year. 1040ez state tax form Your total deduction is the sum of the line 4 amounts for all of the properties. 1040ez state tax form Real estate taxes for prior years. 1040ez state tax form   Do not divide delinquent taxes between the buyer and seller if the taxes are for any real property tax year before the one in which the property is sold. 1040ez state tax form Even if the buyer agrees to pay the delinquent taxes, the buyer cannot deduct them. 1040ez state tax form The buyer must add them to the cost of the property. 1040ez state tax form The seller can deduct these taxes paid by the buyer. 1040ez state tax form However, the seller must include them in the selling price. 1040ez state tax form Examples. 1040ez state tax form   The following examples illustrate how real estate taxes are divided between buyer and seller. 1040ez state tax form Example 1. 1040ez state tax form Dennis and Beth White's real property tax year for both their old home and their new home is the calendar year, with payment due August 1. 1040ez state tax form The tax on their old home, sold on May 7, was $620. 1040ez state tax form The tax on their new home, bought on May 3, was $732. 1040ez state tax form Dennis and Beth are considered to have paid a proportionate share of the real estate taxes on the old home even though they did not actually pay them to the taxing authority. 1040ez state tax form On the other hand, they can claim only a proportionate share of the taxes they paid on their new property even though they paid the entire amount. 1040ez state tax form Dennis and Beth owned their old home during the real property tax year for 126 days (January 1 to May 6, the day before the sale). 1040ez state tax form They figure their deduction for taxes on their old home as follows. 1040ez state tax form Worksheet 22-1. 1040ez state tax form Figuring Your Real Estate Tax Deduction — Taxes on Old Home 1. 1040ez state tax form Enter the total real estate taxes for the real property tax year $620 2. 1040ez state tax form Enter the number of days in the real property tax year that you owned the property 126 3. 1040ez state tax form Divide line 2 by 365 (for leap years, divide line 2 by 366) . 1040ez state tax form 3452 4. 1040ez state tax form Multiply line 1 by line 3. 1040ez state tax form This is your deduction. 1040ez state tax form Enter it on Schedule A (Form 1040), line 6 $214 Since the buyers of their old home paid all of the taxes, Dennis and Beth also include the $214 in the selling price of the old home. 1040ez state tax form (The buyers add the $214 to their cost of the home. 1040ez state tax form ) Dennis and Beth owned their new home during the real property tax year for 243 days (May 3 to December 31, including their date of purchase). 1040ez state tax form They figure their deduction for taxes on their new home as follows. 1040ez state tax form Worksheet 22-1. 1040ez state tax form Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. 1040ez state tax form Enter the total real estate taxes for the real property tax year $732 2. 1040ez state tax form Enter the number of days in the real property tax year that you owned the property 243 3. 1040ez state tax form Divide line 2 by 365 (for leap years, divide line 2 by 366) . 1040ez state tax form 6658 4. 1040ez state tax form Multiply line 1 by line 3. 1040ez state tax form This is your deduction. 1040ez state tax form Enter it on Schedule A (Form 1040), line 6 $487 Since Dennis and Beth paid all of the taxes on the new home, they add $245 ($732 paid less $487 deduction) to their cost of the new home. 1040ez state tax form (The sellers add this $245 to their selling price and deduct the $245 as a real estate tax. 1040ez state tax form ) Dennis and Beth's real estate tax deduction for their old and new homes is the sum of $214 and $487, or $701. 1040ez state tax form They will enter this amount on Schedule A (Form 1040), line 6. 1040ez state tax form Example 2. 1040ez state tax form George and Helen Brown bought a new home on May 3, 2013. 1040ez state tax form Their real property tax year for the new home is the calendar year. 1040ez state tax form Real estate taxes for 2012 were assessed in their state on January 1, 2013. 1040ez state tax form The taxes became due on May 31, 2013, and October 31, 2013. 1040ez state tax form The Browns agreed to pay all taxes due after the date of purchase. 1040ez state tax form Real estate taxes for 2012 were $680. 1040ez state tax form They paid $340 on May 31, 2013, and $340 on October 31, 2013. 1040ez state tax form These taxes were for the 2012 real property tax year. 1040ez state tax form The Browns cannot deduct them since they did not own the property until 2013. 1040ez state tax form Instead, they must add $680 to the cost of their new home. 1040ez state tax form In January 2014, the Browns receive their 2013 property tax statement for $752, which they will pay in 2014. 1040ez state tax form The Browns owned their new home during the 2013 real property tax year for 243 days (May 3 to December 31). 1040ez state tax form They will figure their 2014 deduction for taxes as follows. 1040ez state tax form Worksheet 22-1. 1040ez state tax form Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. 1040ez state tax form Enter the total real estate taxes for the real property tax year $752 2. 1040ez state tax form Enter the number of days in the real property tax year that you owned the property 243 3. 1040ez state tax form Divide line 2 by 365 (for leap years, divide line 2 by 366) . 1040ez state tax form 6658 4. 1040ez state tax form Multiply line 1 by line 3. 1040ez state tax form This is your deduction. 1040ez state tax form Claim it on Schedule A (Form 1040), line 6 $501 The remaining $251 ($752 paid less $501 deduction) of taxes paid in 2014, along with the $680 paid in 2013, is added to the cost of their new home. 1040ez state tax form Because the taxes up to the date of sale are considered paid by the seller on the date of sale, the seller is entitled to a 2013 tax deduction of $931. 1040ez state tax form This is the sum of the $680 for 2012 and the $251 for the 122 days the seller owned the home in 2013. 1040ez state tax form The seller must also include the $931 in the selling price when he or she figures the gain or loss on the sale. 1040ez state tax form The seller should contact the Browns in January 2014 to find out how much real estate tax is due for 2013. 1040ez state tax form Form 1099-S. 1040ez state tax form   For certain sales or exchanges of real estate, the person responsible for closing the sale (generally the settlement agent) prepares Form 1099-S, Proceeds From Real Estate Transactions, to report certain information to the IRS and to the seller of the property. 1040ez state tax form Box 2 of Form 1099-S is for the gross proceeds from the sale and should include the portion of the seller's real estate tax liability that the buyer will pay after the date of sale. 1040ez state tax form The buyer includes these taxes in the cost basis of the property, and the seller both deducts this amount as a tax paid and includes it in the sales price of the property. 1040ez state tax form   For a real estate transaction that involves a home, any real estate tax the seller paid in advance but that is the liability of the buyer appears on Form 1099-S, box 5. 1040ez state tax form The buyer deducts this amount as a real estate tax, and the seller reduces his or her real estate tax deduction (or includes it in income) by the same amount. 1040ez state tax form See Refund (or rebate) , later. 1040ez state tax form Taxes placed in escrow. 1040ez state tax form   If your monthly mortgage payment includes an amount placed in escrow (put in the care of a third party) for real estate taxes, you may not be able to deduct the total amount placed in escrow. 1040ez state tax form You can deduct only the real estate tax that the third party actually paid to the taxing authority. 1040ez state tax form If the third party does not notify you of the amount of real estate tax that was paid for you, contact the third party or the taxing authority to find the proper amount to show on your return. 1040ez state tax form Tenants by the entirety. 1040ez state tax form   If you and your spouse held property as tenants by the entirety and you file separate federal returns, each of you can deduct only the taxes each of you paid on the property. 1040ez state tax form Divorced individuals. 1040ez state tax form   If your divorce or separation agreement states that you must pay the real estate taxes for a home owned by you and your spouse, part of your payments may be deductible as alimony and part as real estate taxes. 1040ez state tax form See Taxes and insurance in chapter 18 for more information. 1040ez state tax form Ministers' and military housing allowances. 1040ez state tax form   If you are a minister or a member of the uniformed services and receive a housing allowance that you can exclude from income, you still can deduct all of the real estate taxes you pay on your home. 1040ez state tax form Refund (or rebate). 1040ez state tax form   If you received a refund or rebate in 2013 of real estate taxes you paid in 2013, you must reduce your deduction by the amount refunded to you. 1040ez state tax form If you received a refund or rebate in 2013 of real estate taxes you deducted in an earlier year (either as an itemized deduction or an increase to your standard deduction), you generally must include the refund or rebate in income in the year you receive it. 1040ez state tax form However, the amount you include in income is limited to the amount of the deduction that reduced your tax in the earlier year. 1040ez state tax form For more information, see Recoveries in chapter 12. 1040ez state tax form Table 22-1. 1040ez state tax form Which Taxes Can You Deduct? Type of Tax You Can Deduct You Cannot Deduct Fees and Charges Fees and charges that are expenses of your trade or business or of producing income. 1040ez state tax form Fees and charges that are not expenses of your trade or business or of producing income, such as fees for driver's licenses, car inspections, parking, or charges for water bills (see Taxes and Fees You Cannot Deduct ). 1040ez state tax form     Fines and penalties. 1040ez state tax form Income Taxes State and local income taxes. 1040ez state tax form Federal income taxes. 1040ez state tax form   Foreign income taxes. 1040ez state tax form     Employee contributions to state funds listed under Contributions to state benefit funds . 1040ez state tax form Employee contributions to private or voluntary disability plans. 1040ez state tax form     State and local general sales taxes if you choose to deduct state and local income taxes. 1040ez state tax form General Sales Taxes State and local general sales taxes, including compensating use taxes. 1040ez state tax form State and local income taxes if you choose to deduct state and local general sales taxes. 1040ez state tax form Other Taxes Taxes that are expenses of your trade or business. 1040ez state tax form Federal excise taxes, such as tax on gasoline, that are not expenses of your trade or business or of producing income. 1040ez state tax form   Taxes on property producing rent or royalty income. 1040ez state tax form Per capita taxes. 1040ez state tax form   Occupational taxes. 1040ez state tax form See chapter 28. 1040ez state tax form     One-half of self-employment tax paid. 1040ez state tax form   Personal Property Taxes State and local personal property taxes. 1040ez state tax form Customs duties that are not expenses of your trade or business or of producing income. 1040ez state tax form Real Estate Taxes State and local real estate taxes. 1040ez state tax form Real estate taxes that are treated as imposed on someone else (see Division of real estate taxes between buyers and sellers ). 1040ez state tax form   Foreign real estate taxes. 1040ez state tax form Taxes for local benefits (with exceptions). 1040ez state tax form See Real Estate-Related Items You Cannot Deduct . 1040ez state tax form   Tenant's share of real estate taxes paid by  cooperative housing corporation. 1040ez state tax form Trash and garbage pickup fees (with exceptions). 1040ez state tax form See Real Estate-Related Items You Cannot Deduct . 1040ez state tax form     Rent increase due to higher real estate taxes. 1040ez state tax form     Homeowners' association charges. 1040ez state tax form Real Estate-Related Items You Cannot Deduct Payments for the following items generally are not deductible as real estate taxes. 1040ez state tax form Taxes for local benefits. 1040ez state tax form Itemized charges for services (such as trash and garbage pickup fees). 1040ez state tax form Transfer taxes (or stamp taxes). 1040ez state tax form Rent increases due to higher real estate taxes. 1040ez state tax form Homeowners' association charges. 1040ez state tax form Taxes for local benefits. 1040ez state tax form   Deductible real estate taxes generally do not include taxes charged for local benefits and improvements tending to increase the value of your property. 1040ez state tax form These include assessments for streets, sidewalks, water mains, sewer lines, public parking facilities, and similar improvements. 1040ez state tax form You should increase the basis of your property by the amount of the assessment. 1040ez state tax form   Local benefit taxes are deductible only if they are for maintenance, repair, or interest charges related to those benefits. 1040ez state tax form If only a part of the taxes is for maintenance, repair, or interest, you must be able to show the amount of that part to claim the deduction. 1040ez state tax form If you cannot determine what part of the tax is for maintenance, repair, or interest, none of it is deductible. 1040ez state tax form    Taxes for local benefits may be included in your real estate tax bill. 1040ez state tax form If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. 1040ez state tax form You should use the rules above to determine if the local benefit tax is deductible. 1040ez state tax form Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. 1040ez state tax form Itemized charges for services. 1040ez state tax form    An itemized charge for services assessed against specific property or certain people is not a tax, even if the charge is paid to the taxing authority. 1040ez state tax form For example, you cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged to each homeowner for trash collection), or A flat fee charged for a single service provided by your government (such as a $30 charge for mowing your lawn because it was allowed to grow higher than permitted under your local ordinance). 1040ez state tax form    You must look at your real estate tax bill to determine if any nondeductible itemized charges, such as those listed above, are included in the bill. 1040ez state tax form If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. 1040ez state tax form Exception. 1040ez state tax form   Service charges used to maintain or improve services (such as trash collection or police and fire protection) are deductible as real estate taxes if: The fees or charges are imposed at a like rate against all property in the taxing jurisdiction, The funds collected are not earmarked; instead, they are commingled with general revenue funds, and Funds used to maintain or improve services are not limited to or determined by the amount of these fees or charges collected. 1040ez state tax form Transfer taxes (or stamp taxes). 1040ez state tax form   Transfer taxes and similar taxes and charges on the sale of a personal home are not deductible. 1040ez state tax form If they are paid by the seller, they are expenses of the sale and reduce the amount realized on the sale. 1040ez state tax form If paid by the buyer, they are included in the cost basis of the property. 1040ez state tax form Rent increase due to higher real estate taxes. 1040ez state tax form   If your landlord increases your rent in the form of a tax surcharge because of increased real estate taxes, you cannot deduct the increase as taxes. 1040ez state tax form Homeowners' association charges. 1040ez state tax form   These charges are not deductible because they are imposed by the homeowners' association, rather than the state or local government. 1040ez state tax form Personal Property Taxes Personal property tax is deductible if it is a state or local tax that is: Charged on personal property, Based only on the value of the personal property, and Charged on a yearly basis, even if it is collected more or less than once a year. 1040ez state tax form A tax that meets the above requirements can be considered charged on personal property even if it is for the exercise of a privilege. 1040ez state tax form For example, a yearly tax based on value qualifies as a personal property tax even if it is called a registration fee and is for the privilege of registering motor vehicles or using them on the highways. 1040ez state tax form If the tax is partly based on value and partly based on other criteria, it may qualify in part. 1040ez state tax form Example. 1040ez state tax form Your state charges a yearly motor vehicle registration tax of 1% of value plus 50 cents per hundredweight. 1040ez state tax form You paid $32 based on the value ($1,500) and weight (3,400 lbs. 1040ez state tax form ) of your car. 1040ez state tax form You can deduct $15 (1% × $1,500) as a personal property tax because it is based on the value. 1040ez state tax form The remaining $17 ($. 1040ez state tax form 50 × 34), based on the weight, is not deductible. 1040ez state tax form Taxes and Fees You Cannot Deduct Many federal, state, and local government taxes are not deductible because they do not fall within the categories discussed earlier. 1040ez state tax form Other taxes and fees, such as federal income taxes, are not deductible because the tax law specifically prohibits a deduction for them. 1040ez state tax form See Table 22-1. 1040ez state tax form Taxes and fees that are generally not deductible include the following items. 1040ez state tax form Employment taxes. 1040ez state tax form This includes social security, Medicare, and railroad retirement taxes withheld from your pay. 1040ez state tax form However, one-half of self-employment tax you pay is deductible. 1040ez state tax form In addition, the social security and other employment taxes you pay on the wages of a household worker may be included in medical expenses that you can deduct or child care expenses that allow you to claim the child and dependent care credit. 1040ez state tax form For more information, see chapters 21 and 32. 1040ez state tax form Estate, inheritance, legacy, or succession taxes. 1040ez state tax form However, you can deduct the estate tax attributable to income in respect of a decedent if you, as a beneficiary, must include that income in your gross income. 1040ez state tax form In that case, deduct the estate tax as a miscellaneous deduction that is not subject to the 2%-of-adjusted-gross-income limit. 1040ez state tax form For more information, see Publication 559, Survivors, Executors, and Administrators. 1040ez state tax form Federal income taxes. 1040ez state tax form This includes income taxes withheld from your pay. 1040ez state tax form Fines and penalties. 1040ez state tax form You cannot deduct fines and penalties paid to a government for violation of any law, including related amounts forfeited as collateral deposits. 1040ez state tax form Gift taxes. 1040ez state tax form License fees. 1040ez state tax form You cannot deduct license fees for personal purposes (such as marriage, driver's, and dog license fees). 1040ez state tax form Per capita taxes. 1040ez state tax form You cannot deduct state or local per capita taxes. 1040ez state tax form Many taxes and fees other than those listed above are also nondeductible, unless they are ordinary and necessary expenses of a business or income producing activity. 1040ez state tax form For other nondeductible items, see Real Estate-Related Items You Cannot Deduct , earlier. 1040ez state tax form Where To Deduct You deduct taxes on the following schedules. 1040ez state tax form State and local income taxes. 1040ez state tax form    These taxes are deducted on Schedule A (Form 1040), line 5, even if your only source of income is from business, rents, or royalties. 1040ez state tax form Check box a on line 5. 1040ez state tax form General sales taxes. 1040ez state tax form   Sales taxes are deducted on Schedule A (Form 1040), line 5. 1040ez state tax form You must check box b on line 5. 1040ez state tax form If you elect to deduct sales taxes, you cannot deduct state and local income taxes on Schedule A (Form 1040), line 5, box a. 1040ez state tax form Foreign income taxes. 1040ez state tax form   Generally, income taxes you pay to a foreign country or U. 1040ez state tax form S. 1040ez state tax form possession can be claimed as an itemized deduction on Schedule A (Form 1040), line 8, or as a credit against your U. 1040ez state tax form S. 1040ez state tax form income tax on Form 1040, line 47. 1040ez state tax form To claim the credit, you may have to complete and attach Form 1116. 1040ez state tax form For more information, see chapter 37, the Form 1040 instructions, or Publication 514. 1040ez state tax form Real estate taxes and personal property taxes. 1040ez state tax form    Real estate and personal property taxes are deducted on Schedule A (Form 1040), lines 6 and 7, respectively, unless they are paid on property used in your business, in which case they are deducted on Schedule C, Schedule C-EZ, or Schedule F (Form 1040). 1040ez state tax form Taxes on property that produces rent or royalty income are deducted on Schedule E (Form 1040). 1040ez state tax form Self-employment tax. 1040ez state tax form    Deduct one-half of your self-employment tax on Form 1040, line 27. 1040ez state tax form Other taxes. 1040ez state tax form    All other deductible taxes are deducted on Schedule A (Form 1040), line 8. 1040ez state tax form Prev  Up  Next   Home   More Online Publications