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2007 Income Tax Online

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2007 Income Tax Online

2007 income tax online Publication 600 - Main Contents Table of Contents Actual Expenses Optional Sales Tax Tables Instructions for the State and Local General Sales Tax Deduction WorksheetWhat if you lived in more than one state? What if you lived in more than one locality? What if your local general sales tax rate changed during 2006? What if you lived in more than one locality in the same state during 2006? Actual Expenses Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) you paid in 2006 if the tax rate was the same as the general sales tax rate. 2007 income tax online 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. 2007 income tax online 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. 2007 income tax online Motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. 2007 income tax online Also include any state and local general sales taxes paid for a leased motor vehicle. 2007 income tax online Do not include sales taxes paid on items used in your trade or business. 2007 income tax online To deduct your actual expenses, enter the amount on Schedule A, line 5, and enter “ST” on the dotted line to the left of the line 5 entry space. 2007 income tax online You must keep your actual receipts showing general sales taxes paid to use this method. 2007 income tax online Refund of general sales taxes. 2007 income tax online   If you received a refund of state or local general sales taxes in 2006 for amounts paid in 2006, reduce your actual 2006 state and local general sales taxes by this amount. 2007 income tax online If you received a refund of state or local general sales taxes in 2006 for prior year purchases, do not reduce your 2006 state and local general sales taxes by this amount. 2007 income tax online But if you deducted your actual state and local general sales taxes in the earlier year and the deduction reduced your tax, you may have to include the refund in income on Form 1040, line 21. 2007 income tax online See Recoveries in Pub. 2007 income tax online 525 for details. 2007 income tax online Optional Sales Tax Tables Instead of using your actual expenses, you can use the tables on pages 5 through 7 to figure your state and local general sales tax deduction. 2007 income tax online You may also be able to add the state and local general sales taxes paid on certain specified items. 2007 income tax online To figure your state and local general sales tax deduction using the tables, complete the worksheet below. 2007 income tax online If your filing status is married filing separately, both you and your spouse elect to deduct sales taxes, and your spouse elects to use the optional sales tax tables, you also must use the tables to figure your state and local general sales tax deduction. 2007 income tax online State and Local General Sales Tax Deduction Worksheet (See the instructions that begin on page 3. 2007 income tax online ) Before you begin: See the instructions for line 1 on page 3 if: You lived in more than one state during 2006, or You had any nontaxable income in 2006. 2007 income tax online   1. 2007 income tax online Enter your state general sales taxes from the applicable table on page 5 or 6 (see page 3 of the instructions) 1. 2007 income tax online $     Next. 2007 income tax online If, for all of 2006, you lived only in Connecticut, the District of Columbia, Hawaii, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Rhode Island, Virginia, or West Virginia, skip lines 2 through 5, enter -0- on line 6, and go to line 7. 2007 income tax online Otherwise, go to line 2       2. 2007 income tax online Did you live in Alaska, Arizona, Arkansas (Texarkana only), California (Los Angeles County only), Colorado, Georgia, Illinois, Louisiana, New York State, or North Carolina in 2006?         No. 2007 income tax online Enter -0-                   Yes. 2007 income tax online Enter your local general sales taxes from the applicable table on page 7 (see page 3 of the instructions)     2. 2007 income tax online $       3. 2007 income tax online Did your locality impose a local general sales tax in 2006? Residents of California, Nevada, and Texarkana, Arkansas, see page 3 of the instructions             No. 2007 income tax online Skip lines 3 through 5, enter -0- on line 6, and go to line 7             Yes. 2007 income tax online Enter your local general sales tax rate, but omit the percentage sign. 2007 income tax online For example, if your local general sales tax rate was 2. 2007 income tax online 5%, enter 2. 2007 income tax online 5. 2007 income tax online If your local general sales tax rate changed or you lived in more than one locality in the same state during 2006, see page 3 of the instructions. 2007 income tax online (If you do not know your local general sales tax rate, contact your local government. 2007 income tax online ) 3. 2007 income tax online . 2007 income tax online       4. 2007 income tax online Did you enter -0- on line 2 above?             No. 2007 income tax online Skip lines 4 and 5 and go to line 6             Yes. 2007 income tax online Enter your state general sales tax rate (shown in the table heading for your state), but omit the percentage sign. 2007 income tax online For example, if your state general sales tax rate is 6%, enter 6. 2007 income tax online 0 4. 2007 income tax online . 2007 income tax online       5. 2007 income tax online Divide line 3 by line 4. 2007 income tax online Enter the result as a decimal (rounded to at least three places) 5. 2007 income tax online . 2007 income tax online       6. 2007 income tax online Did you enter -0- on line 2 above?             No. 2007 income tax online Multiply line 2 by line 3   6. 2007 income tax online $     Yes. 2007 income tax online Multiply line 1 by line 5. 2007 income tax online If you lived in more than one locality in the same state during 2006, see page 4 of the instructions           7. 2007 income tax online Enter your state and local general sales taxes paid on specified items, if any (see page 4 of the instructions) 7. 2007 income tax online $   8. 2007 income tax online Deduction for general sales taxes. 2007 income tax online Add lines 1, 6, and 7. 2007 income tax online Enter the result here and the total from all your state and local general sales tax deduction worksheets, if you completed more than one, on Schedule A, line 5. 2007 income tax online Be sure to enter “ST” on the dotted line to the left of the entry space 8. 2007 income tax online $     Instructions for the State and Local General Sales Tax Deduction Worksheet Line 1. 2007 income tax online    If you lived in the same state for all of 2006, enter the applicable amount, based on your 2006 income and exemptions, from the optional state sales tax table for your state on page 5 or 6. 2007 income tax online Read down the “At least-But less than” columns for your state and find the line that includes your 2006 income. 2007 income tax online If married filing separately, do not include your spouse's income. 2007 income tax online Your 2006 income is the amount shown on your Form 1040, line 38, plus any nontaxable items, such as the following. 2007 income tax online Tax-exempt interest. 2007 income tax online Veterans' benefits. 2007 income tax online Nontaxable combat pay. 2007 income tax online Workers' compensation. 2007 income tax online Nontaxable part of social security and railroad retirement benefits. 2007 income tax online Nontaxable part of IRA, pension, or annuity distributions. 2007 income tax online Do not include rollovers. 2007 income tax online Public assistance payments. 2007 income tax online The exemptions column refers to the number of exemptions claimed on Form 1040, line 6d. 2007 income tax online Do not include any additional exemptions you listed on Form 8914 for individuals displaced by Hurricane Katrina. 2007 income tax online What if you lived in more than one state?    If you lived in more than one state during 2006, look up the table amount for each state using the above rules. 2007 income tax online If there is no table for your state, the table amount is considered to be zero. 2007 income tax online Multiply the table amount for each state you lived in by a fraction. 2007 income tax online The numerator of the fraction is the number of days you lived in the state during 2006 and the denominator is the total number of days in the year (365). 2007 income tax online Enter the total of the prorated table amounts for each state on line 1. 2007 income tax online However, if you also lived in a locality during 2006 that imposed a local general sales tax, do not enter the total on line 1. 2007 income tax online Instead, complete a separate worksheet for each state you lived in and enter the prorated amount for that state on line 1. 2007 income tax online Example. 2007 income tax online You lived in State A from January 1 through August 31, 2006 (243 days), and in State B from September 1 through December 31, 2006 (122 days). 2007 income tax online The table amount for State A is $500. 2007 income tax online The table amount for State B is $400. 2007 income tax online You would figure your state general sales tax as follows. 2007 income tax online State A: $500 x 243/365 = $333   State B: $400 x 122/365 = 134   Total = $467   If none of the localities in which you lived during 2006 imposed a local general sales tax, enter $467 on line 1 of your worksheet. 2007 income tax online Otherwise, complete a separate worksheet for State A and State B. 2007 income tax online Enter $333 on line 1 of the State A worksheet and $134 on line 1 of the State B worksheet. 2007 income tax online Line 2. 2007 income tax online   If you checked the “No” box, enter -0- on line 2, and go to line 3. 2007 income tax online If you checked the “Yes” box and lived in the same locality for all of 2006, enter the applicable amount, based on your 2006 income and exemptions, from the optional local sales tax table for your locality on page 7. 2007 income tax online Read down the “At least-But less than” columns for your locality and find the line that includes your 2006 income. 2007 income tax online See the line 1 instructions on this page to figure your 2006 income. 2007 income tax online The exemptions column refers to the number of exemptions claimed on Form 1040, line 6d. 2007 income tax online Do not include any additional exemptions you listed on Form 8914 for individuals displaced by Hurricane Katrina. 2007 income tax online What if you lived in more than one locality?   If you lived in more than one locality during 2006, look up the table amount for each locality using the above rules. 2007 income tax online If there is no table for your locality, the table amount is considered to be zero. 2007 income tax online Multiply the table amount for each locality you lived in by a fraction. 2007 income tax online The numerator of the fraction is the number of days you lived in the locality during 2006 and the denominator is the total number of days in the year (365). 2007 income tax online If you lived in more than one locality in the same state and the local general sales tax rate was the same for each locality, enter the total of the prorated table amounts for each locality in that state on line 2. 2007 income tax online Otherwise, complete a separate worksheet for lines 2 through 6 for each locality and enter each prorated table amount on line 2 of the applicable worksheet. 2007 income tax online Example. 2007 income tax online You lived in Locality 1 from January 1 through August 31, 2006 (243 days), and in Locality 2 from September 1 through December 31, 2006 (122 days). 2007 income tax online The table amount for Locality 1 is $100. 2007 income tax online The table amount for Locality 2 is $150. 2007 income tax online You would figure the amount to enter on line 2 as follows. 2007 income tax online Note that this amount may not equal your local sales tax deduction, which is figured on line 6 of the worksheet. 2007 income tax online Locality 1: $100 x 243/365 = $67   Locality 2: $150 x 122/365 = 50   Total = $117   Line 3. 2007 income tax online   If you lived in California, check the “No” box if your combined state and local general sales tax rate is 7. 2007 income tax online 25%. 2007 income tax online Otherwise, check the “Yes” box and include on line 3 only the part of the combined rate that is more than 7. 2007 income tax online 25%. 2007 income tax online   If you lived in Nevada, check the “No” box if your combined state and local general sales tax rate is 6. 2007 income tax online 5%. 2007 income tax online Otherwise, check the “Yes” box and include on line 3 only the part of the combined rate that is more than 6. 2007 income tax online 5%. 2007 income tax online   If you lived in Texarkana, Arkansas, check the “Yes” box and enter “4. 2007 income tax online 0” on line 3. 2007 income tax online Your local general sales tax rate of 4. 2007 income tax online 0% includes the additional 1. 2007 income tax online 0% Arkansas state sales tax rate for Texarkana and the 1. 2007 income tax online 5% sales tax rate for Miller County. 2007 income tax online What if your local general sales tax rate changed during 2006?    If you checked the “Yes” box and your local general sales tax rate changed during 2006, figure the rate to enter on line 3 as follows. 2007 income tax online Multiply each tax rate for the period it was in effect by a fraction. 2007 income tax online The numerator of the fraction is the number of days the rate was in effect during 2006 and the denominator is the total number of days in the year (365). 2007 income tax online Enter the total of the prorated tax rates on line 3. 2007 income tax online Example. 2007 income tax online Locality 1 imposed a 1% local general sales tax from January 1 through September 30, 2006 (273 days). 2007 income tax online The rate increased to 1. 2007 income tax online 75% for the period from October 1 through December 31, 2006 (92 days). 2007 income tax online You would enter “1. 2007 income tax online 189” on line 3, figured as follows. 2007 income tax online January 1 - September 30: 1. 2007 income tax online 00 x 273/365 = 0. 2007 income tax online 748   October 1 - December 31: 1. 2007 income tax online 75 x 92/365 = 0. 2007 income tax online 441   Total = 1. 2007 income tax online 189   What if you lived in more than one locality in the same state during 2006?    Complete a separate worksheet for lines 2 through 6 for each locality in your state if you lived in more than one locality in the same state during 2006 and either of the following applies. 2007 income tax online Each locality did not have the same local general sales tax rate. 2007 income tax online You lived in Texarkana, AR, or Los Angeles County, CA. 2007 income tax online   To figure the amount to enter on line 3 of the worksheet for each locality in which you lived (except a locality for which you used the table on page 7 to figure your local general sales tax deduction), multiply the local general sales tax rate by a fraction. 2007 income tax online The numerator of the fraction is the number of days you lived in the locality during 2006 and the denominator is the total number of days in the year (365). 2007 income tax online Example. 2007 income tax online You lived in Locality 1 from January 1 through August 31, 2006 (243 days), and in Locality 2 from September 1 through December 31, 2006 (122 days). 2007 income tax online The local general sales tax rate for Locality 1 is 1%. 2007 income tax online The rate for Locality 2 is 1. 2007 income tax online 75%. 2007 income tax online You would enter “0. 2007 income tax online 666” on line 3 for the Locality 1 worksheet and “0. 2007 income tax online 585” for the Locality 2 worksheet, figured as follows. 2007 income tax online Locality 1: 1. 2007 income tax online 00 x 243/365 = 0. 2007 income tax online 666   Locality 2: 1. 2007 income tax online 75 x 122/365 = 0. 2007 income tax online 585   Line 6. 2007 income tax online   If you lived in more than one locality in the same state during 2006, you should have completed line 1 only on the first worksheet for that state and separate worksheets for lines 2 through 6 for any other locality within that state in which you lived during 2006. 2007 income tax online If you checked the “Yes” box on line 6 of any of those worksheets, multiply line 5 of that worksheet by the amount that you entered on line 1 for that state on the first worksheet. 2007 income tax online Line 7. 2007 income tax online    Enter on line 7 any state and local general sales taxes paid on the following specified items. 2007 income tax online If you are completing more than one worksheet, include the total for line 7 on only one of the worksheets. 2007 income tax online A motor vehicle (including a car, motorcycle, motor home, recreational vehicle, sport utility vehicle, truck, van, and off-road vehicle). 2007 income tax online Also include any state and local general sales taxes paid for a leased motor vehicle. 2007 income tax online If the state sales tax rate on these items is higher than the general sales tax rate, only include the amount of tax you would have paid at the general sales tax rate. 2007 income tax online An aircraft or boat, if the tax rate was the same as the general sales tax rate. 2007 income tax online A home (including a mobile home or prefabricated home) or substantial addition to or major renovation of a home, but only if the tax rate was the same as the general sales tax rate and any of the following applies. 2007 income tax online Your state or locality imposes a general sales tax directly on the sale of a home or on the cost of a substantial addition or major renovation. 2007 income tax online You purchased the materials to build a home or substantial addition or to perform a major renovation and paid the sales tax directly. 2007 income tax online Under your state law, your contractor is considered your agent in the construction of the home or substantial addition or the performance of a major renovation. 2007 income tax online The contract must state that the contractor is authorized to act in your name and must follow your directions on construction decisions. 2007 income tax online In this case, you will be considered to have purchased any items subject to a sales tax and to have paid the sales tax directly. 2007 income tax online   Do not include sales taxes paid on items used in your trade or business. 2007 income tax online If you received a refund of state or local general sales taxes in 2006, see Refund of general sales taxes on page 1. 2007 income tax online Prev  Up  Next   Home   More Online Publications
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The 2007 Income Tax Online

2007 income tax online 10. 2007 income tax online   Education Savings Bond Program Table of Contents Introduction Who Can Cash In Bonds Tax FreeAdjusted qualified education expenses. 2007 income tax online Eligible educational institution. 2007 income tax online Dependent for whom you claim an exemption. 2007 income tax online MAGI when using Form 1040A. 2007 income tax online MAGI when using Form 1040. 2007 income tax online Figuring the Tax-Free AmountEffect of the Amount of Your Income on the Amount of Your Exclusion Claiming the Exclusion Introduction Generally, you must pay tax on the interest earned on U. 2007 income tax online S. 2007 income tax online savings bonds. 2007 income tax online If you do not include the interest in income in the years it is earned, you must include it in your income in the year in which you cash in the bonds. 2007 income tax online However, when you cash in certain savings bonds under an education savings bond program, you may be able to exclude the interest from income. 2007 income tax online Who Can Cash In Bonds Tax Free You may be able to cash in qualified U. 2007 income tax online S. 2007 income tax online savings bonds without having to include in your income some or all of the interest earned on the bonds if you meet the following conditions. 2007 income tax online You pay qualified education expenses for yourself, your spouse, or a dependent for whom you claim an exemption on your return. 2007 income tax online Your modified adjusted gross income (MAGI) is less than the amount specified for your filing status. 2007 income tax online Your filing status is not married filing separately. 2007 income tax online Qualified U. 2007 income tax online S. 2007 income tax online savings bonds. 2007 income tax online   A qualified U. 2007 income tax online S. 2007 income tax online savings bond is a series EE bond issued after 1989 or a series I bond. 2007 income tax online The bond must be issued either in your name (as the sole owner) or in the name of both you and your spouse (as co-owners). 2007 income tax online   The owner must be at least 24 years old before the bond's issue date. 2007 income tax online The issue date is printed on the front of the savings bond. 2007 income tax online    The issue date is not necessarily the date of purchase—it will be the first day of the month in which the bond is purchased (or posted, if bought electronically). 2007 income tax online Qualified education expenses. 2007 income tax online   These include the following items you pay for either yourself, your spouse, or a dependent for whom you claim an exemption. 2007 income tax online Tuition and fees required to enroll at or attend an eligible educational institution. 2007 income tax online Qualified education expenses do not include expenses for room and board or for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. 2007 income tax online Contributions to a qualified tuition program (QTP) (see How Much Can You Contribute in chapter 8, Qualified Tuition Program). 2007 income tax online Contributions to a Coverdell education savings account (ESA) (see Contributions in chapter 7, Coverdell Education Savings Account). 2007 income tax online Adjusted qualified education expenses. 2007 income tax online   You must reduce your qualified education expenses by all of the following tax-free benefits. 2007 income tax online Tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). 2007 income tax online Expenses used to figure the tax-free portion of distributions from a Coverdell ESA (see Qualified Education Expenses in chapter 7, Coverdell Education Savings Account). 2007 income tax online Expenses used to figure the tax-free portion of distributions from a QTP (see Qualified education expenses in chapter 8, Qualified Tuition Program). 2007 income tax online Any tax-free payments (other than gifts or inheritances) received as educational assistance, such as: Veterans' educational assistance benefits (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Qualified tuition reductions (see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), or Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ). 2007 income tax online Any expenses used in figuring the American opportunity and lifetime learning credits. 2007 income tax online See What Expenses Qualify in chapter 2, American Opportunity Credit, and What Expenses Qualify in chapter 3, Lifetime Learning Credit, for more information. 2007 income tax online Eligible educational institution. 2007 income tax online   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. 2007 income tax online S. 2007 income tax online Department of Education. 2007 income tax online It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 2007 income tax online The educational institution should be able to tell you if it is an eligible educational institution. 2007 income tax online   Certain educational institutions located outside the United States also participate in the U. 2007 income tax online S. 2007 income tax online Department of Education's Federal Student Aid (FSA) programs. 2007 income tax online Dependent for whom you claim an exemption. 2007 income tax online   You claim an exemption for a person if you list his or her name and other required information on Form 1040 (or Form 1040A), line 6c. 2007 income tax online Modified adjusted gross income (MAGI). 2007 income tax online   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return without taking into account this interest exclusion. 2007 income tax online However, as discussed below, there may be other modifications. 2007 income tax online MAGI when using Form 1040A. 2007 income tax online   If you file Form 1040A, your MAGI is the AGI on line 22 of that form figured without taking into account any savings bond interest exclusion and modified by adding back any amount on line 18 (student loan interest deduction) and line 19 (tuition and fees deduction). 2007 income tax online MAGI when using Form 1040. 2007 income tax online   If you file Form 1040, your MAGI is the AGI on line 38 of that form figured without taking into account any savings bond interest exclusion and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, Exclusion of income by bona fide residents of Puerto Rico, Exclusion for adoption benefits received under an employer's adoption assistance program, Deduction for student loan interest, Deduction for tuition and fees, and Deduction for domestic production activities. 2007 income tax online    Use the worksheet in the instructions for line 9 of Form 8815 to figure your MAGI. 2007 income tax online If you claim any of the exclusion or deduction items (1)–(6) listed above, add the amount of the exclusion or deduction to the amount on line 5 of the worksheet. 2007 income tax online Do not add in the deduction for (7) student loan interest, and (8) tuition and fees, or (9) domestic production activities because line 4 of the worksheet already includes these amounts. 2007 income tax online Enter the total on Form 8815, line 9, as your modified adjusted gross income (MAGI). 2007 income tax online    Because the deduction for interest expenses attributable to royalties and other investments is limited to your net investment income, you cannot figure the deduction until you have figured this interest exclusion. 2007 income tax online Therefore, if you had interest expenses attributable to royalties and deductible on Schedule E (Form 1040), Supplemental Income and Loss, you must make a special computation of your deductible interest without regard to this exclusion to figure the net royalty income included in your MAGI. 2007 income tax online See Royalties included in MAGI under Education Savings Bond Program in Publication 550, chapter 1. 2007 income tax online Figuring the Tax-Free Amount If the total you receive when you cash in the bonds is not more than the adjusted qualified education expenses for the year, all of the interest on the bonds may be tax free. 2007 income tax online However, if the total you receive when you cash in the bonds is more than the adjusted expenses, only part of the interest may be tax free. 2007 income tax online To determine the tax-free amount, multiply the interest part of the proceeds by a fraction. 2007 income tax online The numerator (top part) of the fraction is the adjusted qualified education expenses (AQEE) you paid during the year. 2007 income tax online The denominator (bottom part) of the fraction is the total proceeds you received during the year. 2007 income tax online Example. 2007 income tax online In February 2013, Mark and Joan Washington, a married couple, cashed a qualified series EE U. 2007 income tax online S. 2007 income tax online savings bond. 2007 income tax online They received proceeds of $9,000, representing principal of $6,000 and interest of $3,000. 2007 income tax online In 2013, they paid $7,650 of their daughter's college tuition. 2007 income tax online They are not claiming an American opportunity or lifetime learning credit for those expenses, and their daughter does not have any tax-free educational assistance. 2007 income tax online Their MAGI for 2013 was $80,000. 2007 income tax online   $3,000 interest × $7,650 AQEE  $9,000 proceeds = $2,550 tax-free interest   They can exclude $2,550 of interest in 2013. 2007 income tax online They must pay tax on the remaining $450 ($3,000 − $2,550) interest. 2007 income tax online Effect of the Amount of Your Income on the Amount of Your Exclusion The amount of your interest exclusion is gradually reduced (phased out) based on your MAGI and filing status. 2007 income tax online Claiming the Exclusion Use Form 8815 to figure your education savings bond interest exclusion. 2007 income tax online Enter your exclusion on line 3 of Schedule B (Form 1040A or 1040), Interest and Ordinary Dividends. 2007 income tax online Attach Form 8815 to your tax return. 2007 income tax online Prev  Up  Next   Home   More Online Publications