Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Amended Tax

How To File 1040 Ez Form OnlineIrs Gov Tax ReturnIrs File 2012 TaxesTurbotax 2010 FreeFile Free 1040ezTax Exemptions For Disabled VeteransMilitary Free Turbo TaxPrint 1040ez1040x FormsTaxes Deduction2011 Tax Forms Federal2010 Tax AmendmentStudent Tax FilingTax Filing Deadline 2010Irs Tax Tables 2010H&r Block TaxcutH & R Block Tax ReturnHow Do You Amend Your Tax ReturnEz 1040 FormHow Do I File A Amended Tax ReturnIrs For 1040ezFiling Past Year Tax ReturnsFull Time Student Filing TaxesSelf Employed Tax CalculatorState Taxes Phone NumberFree 1040ez Tax FormsForm 1040ez Instructions 2013Fillable 1040x FormAmended State Tax FormHandr Block Free FileHow To File An Amended Tax Return For 2012 TurbotaxFile My 2009 Taxes Online Free1040nr Tax ReturnForm 1040a Tax TablesIrs Form1040ezHow To Amend Tax ReturnState Free FileHow Can I File My 2012 Taxes Online For FreeFree State Returns OnlineH And R Block Login

Amended Tax

Amended tax Publication 936 - Main Content Table of Contents Part I. Amended tax Home Mortgage InterestSecured Debt Qualified Home Special Situations Points Mortgage Insurance Premiums Form 1098, Mortgage Interest Statement How To Report Special Rule for Tenant-Stockholders in Cooperative Housing Corporations Part II. Amended tax Limits on Home Mortgage Interest DeductionHome Acquisition Debt Home Equity Debt Grandfathered Debt Table 1 Instructions How To Get Tax HelpLow Income Taxpayer Clinics Part I. Amended tax Home Mortgage Interest This part explains what you can deduct as home mortgage interest. Amended tax It includes discussions on points, mortgage insurance premiums, and how to report deductible interest on your tax return. Amended tax Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). Amended tax The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan. Amended tax You can deduct home mortgage interest if all the following conditions are met. Amended tax You file Form 1040 and itemize deductions on Schedule A (Form 1040). Amended tax The mortgage is a secured debt on a qualified home in which you have an ownership interest. Amended tax Secured Debt and Qualified Home are explained later. Amended tax  Both you and the lender must intend that the loan be repaid. Amended tax Fully deductible interest. Amended tax   In most cases, you can deduct all of your home mortgage interest. Amended tax How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. Amended tax   If all of your mortgages fit into one or more of the following three categories at all times during the year, you can deduct all of the interest on those mortgages. Amended tax (If any one mortgage fits into more than one category, add the debt that fits in each category to your other debt in the same category. Amended tax ) If one or more of your mortgages does not fit into any of these categories, use Part II of this publication to figure the amount of interest you can deduct. Amended tax   The three categories are as follows. Amended tax Mortgages you took out on or before October 13, 1987 (called grandfathered debt). Amended tax Mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if throughout 2013 these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately). Amended tax Mortgages you took out after October 13, 1987, other than to buy, build, or improve your home (called home equity debt), but only if throughout 2013 these mortgages totaled $100,000 or less ($50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by (1) and (2). Amended tax The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home. Amended tax   See Part II for more detailed definitions of grandfathered, home acquisition, and home equity debt. Amended tax    You can use Figure A to check whether your home mortgage interest is fully deductible. Amended tax This image is too large to be displayed in the current screen. Amended tax Please click the link to view the image. Amended tax Figure A. Amended tax Is My Home Mortgage Interest Fully Deductible? Secured Debt You can deduct your home mortgage interest only if your mortgage is a secured debt. Amended tax A secured debt is one in which you sign an instrument (such as a mortgage, deed of trust, or land contract) that: Makes your ownership in a qualified home security for payment of the debt, Provides, in case of default, that your home could satisfy the debt, and Is recorded or is otherwise perfected under any state or local law that applies. Amended tax In other words, your mortgage is a secured debt if you put your home up as collateral to protect the interests of the lender. Amended tax If you cannot pay the debt, your home can then serve as payment to the lender to satisfy (pay) the debt. Amended tax In this publication, mortgage will refer to secured debt. Amended tax Debt not secured by home. Amended tax   A debt is not secured by your home if it is secured solely because of a lien on your general assets or if it is a security interest that attaches to the property without your consent (such as a mechanic's lien or judgment lien). Amended tax   A debt is not secured by your home if it once was, but is no longer secured by your home. Amended tax Wraparound mortgage. Amended tax   This is not a secured debt unless it is recorded or otherwise perfected under state law. Amended tax Example. Amended tax Beth owns a home subject to a mortgage of $40,000. Amended tax She sells the home for $100,000 to John, who takes it subject to the $40,000 mortgage. Amended tax Beth continues to make the payments on the $40,000 note. Amended tax John pays $10,000 down and gives Beth a $90,000 note secured by a wraparound mortgage on the home. Amended tax Beth does not record or otherwise perfect the $90,000 mortgage under the state law that applies. Amended tax Therefore, the mortgage is not a secured debt and John cannot deduct any of the interest he pays on it as home mortgage interest. Amended tax Choice to treat the debt as not secured by your home. Amended tax   You can choose to treat any debt secured by your qualified home as not secured by the home. Amended tax This treatment begins with the tax year for which you make the choice and continues for all later tax years. Amended tax You can revoke your choice only with the consent of the Internal Revenue Service (IRS). Amended tax   You may want to treat a debt as not secured by your home if the interest on that debt is fully deductible (for example, as a business expense) whether or not it qualifies as home mortgage interest. Amended tax This may allow you, if the limits in Part II apply, more of a deduction for interest on other debts that are deductible only as home mortgage interest. Amended tax Cooperative apartment owner. Amended tax   If you own stock in a cooperative housing corporation, see the Special Rule for Tenant-Stockholders in Cooperative Housing Corporations , near the end of this Part I. Amended tax Qualified Home For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. Amended tax This means your main home or your second home. Amended tax A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. Amended tax The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes. Amended tax Otherwise, it is considered personal interest and is not deductible. Amended tax Main home. Amended tax   You can have only one main home at any one time. Amended tax This is the home where you ordinarily live most of the time. Amended tax Second home. Amended tax   A second home is a home that you choose to treat as your second home. Amended tax Second home not rented out. Amended tax   If you have a second home that you do not hold out for rent or resale to others at any time during the year, you can treat it as a qualified home. Amended tax You do not have to use the home during the year. Amended tax Second home rented out. Amended tax   If you have a second home and rent it out part of the year, you also must use it as a home during the year for it to be a qualified home. Amended tax You must use this home more than 14 days or more than 10% of the number of days during the year that the home is rented at a fair rental, whichever is longer. Amended tax If you do not use the home long enough, it is considered rental property and not a second home. Amended tax For information on residential rental property, see Publication 527. Amended tax More than one second home. Amended tax   If you have more than one second home, you can treat only one as the qualified second home during any year. Amended tax However, you can change the home you treat as a second home during the year in the following situations. Amended tax If you get a new home during the year, you can choose to treat the new home as your second home as of the day you buy it. Amended tax If your main home no longer qualifies as your main home, you can choose to treat it as your second home as of the day you stop using it as your main home. Amended tax If your second home is sold during the year or becomes your main home, you can choose a new second home as of the day you sell the old one or begin using it as your main home. Amended tax Divided use of your home. Amended tax   The only part of your home that is considered a qualified home is the part you use for residential living. Amended tax If you use part of your home for other than residential living, such as a home office, you must allocate the use of your home. Amended tax You must then divide both the cost and fair market value of your home between the part that is a qualified home and the part that is not. Amended tax Dividing the cost may affect the amount of your home acquisition debt, which is limited to the cost of your home plus the cost of any improvements. Amended tax (See Home Acquisition Debt in Part II. Amended tax ) Dividing the fair market value may affect your home equity debt limit, also explained in Part II . Amended tax Renting out part of home. Amended tax   If you rent out part of a qualified home to another person (tenant), you can treat the rented part as being used by you for residential living only if all of the following conditions apply. Amended tax The rented part of your home is used by the tenant primarily for residential living. Amended tax The rented part of your home is not a self-contained residential unit having separate sleeping, cooking, and toilet facilities. Amended tax You do not rent (directly or by sublease) the same or different parts of your home to more than two tenants at any time during the tax year. Amended tax If two persons (and dependents of either) share the same sleeping quarters, they are treated as one tenant. Amended tax Office in home. Amended tax   If you have an office in your home that you use in your business, see Publication 587, Business Use of Your Home. Amended tax It explains how to figure your deduction for the business use of your home, which includes the business part of your home mortgage interest. Amended tax Home under construction. Amended tax   You can treat a home under construction as a qualified home for a period of up to 24 months, but only if it becomes your qualified home at the time it is ready for occupancy. Amended tax   The 24-month period can start any time on or after the day construction begins. Amended tax Home destroyed. Amended tax   You may be able to continue treating your home as a qualified home even after it is destroyed in a fire, storm, tornado, earthquake, or other casualty. Amended tax This means you can continue to deduct the interest you pay on your home mortgage, subject to the limits described in this publication. Amended tax   You can continue treating a destroyed home as a qualified home if, within a reasonable period of time after the home is destroyed, you: Rebuild the destroyed home and move into it, or Sell the land on which the home was located. Amended tax   This rule applies to your main home and to a second home that you treat as a qualified home. Amended tax Time-sharing arrangements. Amended tax   You can treat a home you own under a time-sharing plan as a qualified home if it meets all the requirements. Amended tax A time-sharing plan is an arrangement between two or more people that limits each person's interest in the home or right to use it to a certain part of the year. Amended tax Rental of time-share. Amended tax   If you rent out your time-share, it qualifies as a second home only if you also use it as a home during the year. Amended tax See Second home rented out , earlier, for the use requirement. Amended tax To know whether you meet that requirement, count your days of use and rental of the home only during the time you have a right to use it or to receive any benefits from the rental of it. Amended tax Married taxpayers. Amended tax   If you are married and file a joint return, your qualified home(s) can be owned either jointly or by only one spouse. Amended tax Separate returns. Amended tax   If you are married filing separately and you and your spouse own more than one home, you can each take into account only one home as a qualified home. Amended tax However, if you both consent in writing, then one spouse can take both the main home and a second home into account. Amended tax Special Situations This section describes certain items that can be included as home mortgage interest and others that cannot. Amended tax It also describes certain special situations that may affect your deduction. Amended tax Late payment charge on mortgage payment. Amended tax   You can deduct as home mortgage interest a late payment charge if it was not for a specific service performed in connection with your mortgage loan. Amended tax Mortgage prepayment penalty. Amended tax   If you pay off your home mortgage early, you may have to pay a penalty. Amended tax You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. Amended tax Sale of home. Amended tax   If you sell your home, you can deduct your home mortgage interest (subject to any limits that apply) paid up to, but not including, the date of the sale. Amended tax Example. Amended tax John and Peggy Harris sold their home on May 7. Amended tax Through April 30, they made home mortgage interest payments of $1,220. Amended tax The settlement sheet for the sale of the home showed $50 interest for the 6-day period in May up to, but not including, the date of sale. Amended tax Their mortgage interest deduction is $1,270 ($1,220 + $50). Amended tax Prepaid interest. Amended tax   If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. Amended tax You can deduct in each year only the interest that qualifies as home mortgage interest for that year. Amended tax However, there is an exception that applies to points, discussed later. Amended tax Mortgage interest credit. Amended tax    You may be able to claim a mortgage interest credit if you were issued a mortgage credit certificate (MCC) by a state or local government. Amended tax Figure the credit on Form 8396, Mortgage Interest Credit. Amended tax If you take this credit, you must reduce your mortgage interest deduction by the amount of the credit. Amended tax   See Form 8396 and Publication 530 for more information on the mortgage interest credit. Amended tax Ministers' and military housing allowance. Amended tax   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you can still deduct your home mortgage interest. Amended tax Hardest Hit Fund and Emergency Homeowners' Loan Programs. Amended tax   You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. Amended tax You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. Amended tax You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. Amended tax If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098–MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received from payer(s) / borrower(s)), box 4 (mortgage insurance premiums), and box 5 (other information including real property taxes paid). Amended tax However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. Amended tax Mortgage assistance payments under section 235 of the National Housing Act. Amended tax   If you qualify for mortgage assistance payments for lower-income families under section 235 of the National Housing Act, part or all of the interest on your mortgage may be paid for you. Amended tax You cannot deduct the interest that is paid for you. Amended tax No other effect on taxes. Amended tax   Do not include these mortgage assistance payments in your income. Amended tax Also, do not use these payments to reduce other deductions, such as real estate taxes. Amended tax Divorced or separated individuals. Amended tax   If a divorce or separation agreement requires you or your spouse or former spouse to pay home mortgage interest on a home owned by both of you, the payment of interest may be alimony. Amended tax See the discussion of Payments for jointly-owned home under Alimony in Publication 504, Divorced or Separated Individuals. Amended tax Redeemable ground rents. Amended tax   In some states (such as Maryland), you can buy your home subject to a ground rent. Amended tax A ground rent is an obligation you assume to pay a fixed amount per year on the property. Amended tax Under this arrangement, you are leasing (rather than buying) the land on which your home is located. Amended tax   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. Amended tax   A ground rent is a redeemable ground rent if all of the following are true. Amended tax Your lease, including renewal periods, is for more than 15 years. Amended tax You can freely assign the lease. Amended tax You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a specific amount. Amended tax The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. Amended tax   Payments made to end the lease and to buy the lessor's entire interest in the land are not deductible as mortgage interest. Amended tax Nonredeemable ground rents. Amended tax   Payments on a nonredeemable ground rent are not mortgage interest. Amended tax You can deduct them as rent if they are a business expense or if they are for rental property. Amended tax Reverse mortgages. Amended tax   A reverse mortgage is a loan where the lender pays you (in a lump sum, a monthly advance, a line of credit, or a combination of all three) while you continue to live in your home. Amended tax With a reverse mortgage, you retain title to your home. Amended tax Depending on the plan, your reverse mortgage becomes due with interest when you move, sell your home, reach the end of a pre-selected loan period, or die. Amended tax Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable. Amended tax Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until you actually pay it, which is usually when you pay off the loan in full. Amended tax Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt discussed in Part II. Amended tax Rental payments. Amended tax   If you live in a house before final settlement on the purchase, any payments you make for that period are rent and not interest. Amended tax This is true even if the settlement papers call them interest. Amended tax You cannot deduct these payments as home mortgage interest. Amended tax Mortgage proceeds invested in tax-exempt securities. Amended tax   You cannot deduct the home mortgage interest on grandfathered debt or home equity debt if you used the proceeds of the mortgage to buy securities or certificates that produce tax-free income. Amended tax “Grandfathered debt” and “home equity debt” are defined in Part II of this publication. Amended tax Refunds of interest. Amended tax   If you receive a refund of interest in the same tax year you paid it, you must reduce your interest expense by the amount refunded to you. Amended tax If you receive a refund of interest you deducted in an earlier year, you generally must include the refund in income in the year you receive it. Amended tax However, you need to include it only up to the amount of the deduction that reduced your tax in the earlier year. Amended tax This is true whether the interest overcharge was refunded to you or was used to reduce the outstanding principal on your mortgage. Amended tax If you need to include the refund in income, report it on Form 1040, line 21. Amended tax   If you received a refund of interest you overpaid in an earlier year, you generally will receive a Form 1098, Mortgage Interest Statement, showing the refund in box 3. Amended tax For information about Form 1098, see Form 1098, Mortgage Interest Statement , later. Amended tax   For more information on how to treat refunds of interest deducted in earlier years, see Recoveries in Publication 525, Taxable and Nontaxable Income. Amended tax Cooperative apartment owner. Amended tax   If you own a cooperative apartment, you must reduce your home mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. Amended tax The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year. Amended tax   If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. Amended tax Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Amended tax Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. Amended tax This image is too large to be displayed in the current screen. Amended tax Please click the link to view the image. Amended tax Figure B. Amended tax Are My Points Fully Deductible This Year? A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. Amended tax See Points paid by the seller , later. Amended tax General Rule You generally cannot deduct the full amount of points in the year paid. Amended tax Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. Amended tax See Deduction Allowed Ratably , next. Amended tax For exceptions to the general rule, see Deduction Allowed in Year Paid , later. Amended tax Deduction Allowed Ratably If you do not meet the tests listed under Deduction Allowed in Year Paid , later, the loan is not a home improvement loan, or you choose not to deduct your points in full in the year paid, you can deduct the points ratably (equally) over the life of the loan if you meet all the following tests. Amended tax You use the cash method of accounting. Amended tax This means you report income in the year you receive it and deduct expenses in the year you pay them. Amended tax Most individuals use this method. Amended tax Your loan is secured by a home. Amended tax (The home does not need to be your main home. Amended tax ) Your loan period is not more than 30 years. Amended tax If your loan period is more than 10 years, the terms of your loan are the same as other loans offered in your area for the same or longer period. Amended tax Either your loan amount is $250,000 or less, or the number of points is not more than: 4, if your loan period is 15 years or less, or 6, if your loan period is more than 15 years. Amended tax Example. Amended tax You use the cash method of accounting. Amended tax In 2013, you took out a $100,000 loan payable over 20 years. Amended tax The terms of the loan are the same as for other 20-year loans offered in your area. Amended tax You paid $4,800 in points. Amended tax You made 3 monthly payments on the loan in 2013. Amended tax You can deduct $60 [($4,800 ÷ 240 months) x 3 payments] in 2013. Amended tax In 2014, if you make all twelve payments, you will be able to deduct $240 ($20 x 12). Amended tax Deduction Allowed in Year Paid You can fully deduct points in the year paid if you meet all the following tests. Amended tax (You can use Figure B as a quick guide to see whether your points are fully deductible in the year paid. Amended tax ) Your loan is secured by your main home. Amended tax (Your main home is the one you ordinarily live in most of the time. Amended tax ) Paying points is an established business practice in the area where the loan was made. Amended tax The points paid were not more than the points generally charged in that area. Amended tax You use the cash method of accounting. Amended tax This means you report income in the year you receive it and deduct expenses in the year you pay them. Amended tax Most individuals use this method. Amended tax The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. Amended tax The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. Amended tax The funds you provided are not required to have been applied to the points. Amended tax They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Amended tax You cannot have borrowed these funds from your lender or mortgage broker. Amended tax You use your loan to buy or build your main home. Amended tax The points were computed as a percentage of the principal amount of the mortgage. Amended tax The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. Amended tax The points may be shown as paid from either your funds or the seller's. Amended tax Note. Amended tax If you meet all of these tests, you can choose to either fully deduct the points in the year paid, or deduct them over the life of the loan. Amended tax Home improvement loan. Amended tax   You can also fully deduct in the year paid points paid on a loan to improve your main home, if tests (1) through (6) are met. Amended tax Second home. Amended tax You cannot fully deduct in the year paid points you pay on loans secured by your second home. Amended tax You can deduct these points only over the life of the loan. Amended tax Refinancing. Amended tax   Generally, points you pay to refinance a mortgage are not deductible in full in the year you pay them. Amended tax This is true even if the new mortgage is secured by your main home. Amended tax   However, if you use part of the refinanced mortgage proceeds to improve your main home and you meet the first 6 tests listed under Deduction Allowed in Year Paid , you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. Amended tax You can deduct the rest of the points over the life of the loan. Amended tax Example 1. Amended tax In 1998, Bill Fields got a mortgage to buy a home. Amended tax In 2013, Bill refinanced that mortgage with a 15-year $100,000 mortgage loan. Amended tax The mortgage is secured by his home. Amended tax To get the new loan, he had to pay three points ($3,000). Amended tax Two points ($2,000) were for prepaid interest, and one point ($1,000) was charged for services, in place of amounts that ordinarily are stated separately on the settlement statement. Amended tax Bill paid the points out of his private funds, rather than out of the proceeds of the new loan. Amended tax The payment of points is an established practice in the area, and the points charged are not more than the amount generally charged there. Amended tax Bill's first payment on the new loan was due July 1. Amended tax He made six payments on the loan in 2013 and is a cash basis taxpayer. Amended tax Bill used the funds from the new mortgage to repay his existing mortgage. Amended tax Although the new mortgage loan was for Bill's continued ownership of his main home, it was not for the purchase or improvement of that home. Amended tax He cannot deduct all of the points in 2013. Amended tax He can deduct two points ($2,000) ratably over the life of the loan. Amended tax He deducts $67 [($2,000 ÷ 180 months) × 6 payments] of the points in 2013. Amended tax The other point ($1,000) was a fee for services and is not deductible. Amended tax Example 2. Amended tax The facts are the same as in Example 1, except that Bill used $25,000 of the loan proceeds to improve his home and $75,000 to repay his existing mortgage. Amended tax Bill deducts 25% ($25,000 ÷ $100,000) of the points ($2,000) in 2013. Amended tax His deduction is $500 ($2,000 × 25%). Amended tax Bill also deducts the ratable part of the remaining $1,500 ($2,000 − $500) that must be spread over the life of the loan. Amended tax This is $50 [($1,500 ÷ 180 months) × 6 payments] in 2013. Amended tax The total amount Bill deducts in 2013 is $550 ($500 + $50). Amended tax Special Situations This section describes certain special situations that may affect your deduction of points. Amended tax Original issue discount. Amended tax   If you do not qualify to either deduct the points in the year paid or deduct them ratably over the life of the loan, or if you choose not to use either of these methods, the points reduce the issue price of the loan. Amended tax This reduction results in original issue discount, which is discussed in chapter 4 of Publication 535. Amended tax Amounts charged for services. Amended tax    Amounts charged by the lender for specific services connected to the loan are not interest. Amended tax Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Amended tax  You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Amended tax Points paid by the seller. Amended tax   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Amended tax Treatment by seller. Amended tax   The seller cannot deduct these fees as interest. Amended tax But they are a selling expense that reduces the amount realized by the seller. Amended tax See Publication 523 for information on selling your home. Amended tax Treatment by buyer. Amended tax   The buyer reduces the basis of the home by the amount of the seller-paid points and treats the points as if he or she had paid them. Amended tax If all the tests under Deduction Allowed in Year Paid , earlier, are met, the buyer can deduct the points in the year paid. Amended tax If any of those tests are not met, the buyer deducts the points over the life of the loan. Amended tax   If you need information about the basis of your home, see Publication 523 or Publication 530. Amended tax Funds provided are less than points. Amended tax   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the funds you provided were less than the points charged to you (test (6)), you can deduct the points in the year paid, up to the amount of funds you provided. Amended tax In addition, you can deduct any points paid by the seller. Amended tax Example 1. Amended tax When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Amended tax You meet all the tests for deducting points in the year paid, except the only funds you provided were a $750 down payment. Amended tax Of the $1,000 charged for points, you can deduct $750 in the year paid. Amended tax You spread the remaining $250 over the life of the mortgage. Amended tax Example 2. Amended tax The facts are the same as in Example 1, except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. Amended tax In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Amended tax You spread the remaining $250 over the life of the mortgage. Amended tax You must reduce the basis of your home by the $1,000 paid by the seller. Amended tax Excess points. Amended tax   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the points paid were more than generally paid in your area (test (3)), you deduct in the year paid only the points that are generally charged. Amended tax You must spread any additional points over the life of the mortgage. Amended tax Mortgage ending early. Amended tax   If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. Amended tax However, if you refinance the mortgage with the same lender, you cannot deduct any remaining balance of spread points. Amended tax Instead, deduct the remaining balance over the term of the new loan. Amended tax   A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Amended tax Example. Amended tax Dan paid $3,000 in points in 2002 that he had to spread out over the 15-year life of the mortgage. Amended tax He deducts $200 points per year. Amended tax Through 2012, Dan has deducted $2,200 of the points. Amended tax Dan prepaid his mortgage in full in 2013. Amended tax He can deduct the remaining $800 of points in 2013. Amended tax Limits on deduction. Amended tax   You cannot fully deduct points paid on a mortgage that exceeds the limits discussed in Part II . Amended tax See the Table 1 Instructions for line 10. Amended tax Form 1098. Amended tax    The mortgage interest statement you receive should show not only the total interest paid during the year, but also your deductible points paid during the year. Amended tax See Form 1098, Mortgage Interest Statement , later. Amended tax Mortgage Insurance Premiums You can treat amounts you paid during 2013 for qualified mortgage insurance as home mortgage interest. Amended tax The insurance must be in connection with home acquisition debt, and the insurance contract must have been issued after 2006. Amended tax Qualified mortgage insurance. Amended tax   Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). Amended tax   Mortgage insurance provided by the Department of Veterans Affairs is commonly known as a funding fee. Amended tax If provided by the Rural Housing Service, it is commonly known as a guarantee fee. Amended tax The funding fee and guarantee fee can either be included in the amount of the loan or paid in full at the time of closing. Amended tax These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013. Amended tax Contact the mortgage insurance issuer to determine the deductible amount if it is not reported in box 4 of Form 1098. Amended tax Special rules for prepaid mortgage insurance. Amended tax   Generally, if you paid premiums for qualified mortgage insurance that are properly allocable to periods after the close of the tax year, such premiums are treated as paid in the period to which they are allocated. Amended tax You must allocate the premiums over the shorter of the stated term of the mortgage or 84 months, beginning with the month the insurance was obtained. Amended tax No deduction is allowed for the unamortized balance if the mortgage is satisfied before its term. Amended tax This paragraph does not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service. Amended tax Example. Amended tax Ryan purchased a home in May of 2012 and financed the home with a 15-year mortgage. Amended tax Ryan also prepaid all of the $9,240 in private mortgage insurance required at the time of closing in May. Amended tax Since the $9,240 in private mortgage insurance is allocable to periods after 2012, Ryan must allocate the $9,240 over the shorter of the life of the mortgage or 84 months. Amended tax Ryan's adjusted gross income (AGI) for 2012 is $76,000. Amended tax Ryan can deduct $880 ($9,240 ÷ 84 x 8 months) for qualified mortgage insurance premiums in 2012. Amended tax For 2013, Ryan can deduct $1,320 ($9,240 ÷ 84 x 12 months) if his AGI is $100,000 or less. Amended tax In this example, the mortgage insurance premiums are allocated over 84 months, which is shorter than the life of the mortgage of 15 years (180 months). Amended tax Limit on deduction. Amended tax   If your adjusted gross income on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated. Amended tax See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. Amended tax If your adjusted gross income is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Amended tax Form 1098. Amended tax   The mortgage interest statement you receive should show not only the total interest paid during the year, but also your mortgage insurance premiums paid during the year, which may qualify to be treated as deductible mortgage interest. Amended tax See Form 1098, Mortgage Interest Statement, next. Amended tax Form 1098, Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement from the mortgage holder. Amended tax You will receive the statement if you pay interest to a person (including a financial institution or cooperative housing corporation) in the course of that person's trade or business. Amended tax A governmental unit is a person for purposes of furnishing the statement. Amended tax The statement for each year should be sent to you by January 31 of the following year. Amended tax A copy of this form will also be sent to the IRS. Amended tax The statement will show the total interest you paid during the year, any mortgage insurance premiums you paid, and if you purchased a main home during the year, it also will show the deductible points paid during the year, including seller-paid points. Amended tax However, it should not show any interest that was paid for you by a government agency. Amended tax As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. Amended tax However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan. Amended tax See the earlier discussion of Points to determine whether you can deduct points not shown on Form 1098. Amended tax Prepaid interest on Form 1098. Amended tax   If you prepaid interest in 2013 that accrued in full by January 15, 2014, this prepaid interest may be included in box 1 of Form 1098. Amended tax However, you cannot deduct the prepaid amount for January 2014 in 2013. Amended tax (See Prepaid interest , earlier. Amended tax ) You will have to figure the interest that accrued for 2014 and subtract it from the amount in box 1. Amended tax You will include the interest for January 2014 with other interest you pay for 2014. Amended tax Refunded interest. Amended tax   If you received a refund of mortgage interest you overpaid in an earlier year, you generally will receive a Form 1098 showing the refund in box 3. Amended tax See Refunds of interest , earlier. Amended tax Mortgage insurance premiums. Amended tax   The amount of mortgage insurance premiums you paid during 2013 may be shown in Box 4 of Form 1098. Amended tax See Mortgage Insurance Premiums , earlier. Amended tax How To Report Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. Amended tax If you paid more deductible interest to the financial institution than the amount shown on Form 1098, show the larger deductible amount on line 10. Amended tax Attach a statement explaining the difference and print “See attached” next to line 10. Amended tax Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. Amended tax If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and taxpayer identification number (TIN) on the dotted lines next to line 11. Amended tax The seller must give you this number and you must give the seller your TIN. Amended tax A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Amended tax Failure to meet any of these requirements may result in a $50 penalty for each failure. Amended tax The TIN can be either a social security number, an individual taxpayer identification number (issued by the Internal Revenue Service), or an employer identification number. Amended tax If you can take a deduction for points that were not reported to you on Form 1098, deduct those points on Schedule A (Form 1040), line 12. Amended tax Deduct mortgage insurance premiums on Schedule A (Form 1040), line 13. Amended tax More than one borrower. Amended tax   If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. Amended tax Show how much of the interest each of you paid, and give the name and address of the person who received the form. Amended tax Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. Amended tax Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13. Amended tax   Similarly, if you are the payer of record on a mortgage on which there are other borrowers entitled to a deduction for the interest shown on the Form 1098 you received, deduct only your share of the interest on Schedule A (Form 1040), line 10. Amended tax Let each of the other borrowers know what his or her share is. Amended tax Mortgage proceeds used for business or investment. Amended tax   If your home mortgage interest deduction is limited under the rules explained in Part II , but all or part of the mortgage proceeds were used for business, investment, or other deductible activities, see Table 2 near the end of this publication. Amended tax It shows where to deduct the part of your excess interest that is for those activities. Amended tax The Table 1 Instructions for line 13 in Part II explain how to divide the excess interest among the activities for which the mortgage proceeds were used. Amended tax Special Rule for Tenant-Stockholders in Cooperative Housing Corporations A qualified home includes stock in a cooperative housing corporation owned by a tenant-stockholder. Amended tax This applies only if the tenant-stockholder is entitled to live in the house or apartment because of owning stock in the cooperative. Amended tax Cooperative housing corporation. Amended tax   This is a corporation that meets all of the following conditions. Amended tax Has only one class of stock outstanding, Has no stockholders other than those who own the stock that can live in a house, apartment, or house trailer owned or leased by the corporation, Has no stockholders who can receive any distribution out of capital other than on a liquidation of the corporation, and Meets at least one of the following requirements. Amended tax Receives at least 80% of its gross income for the year in which the mortgage interest is paid or incurred from tenant-stockholders. Amended tax For this purpose, gross income is all income received during the entire year, including amounts received before the corporation changed to cooperative ownership. Amended tax At all times during the year, at least 80% of the total square footage of the corporation's property is used or available for use by the tenant-stockholders for residential or residential-related use. Amended tax At least 90% of the corporation's expenditures paid or incurred during the year are for the acquisition, construction, management, maintenance, or care of corporate property for the benefit of the tenant-stockholders. Amended tax Stock used to secure debt. Amended tax   In some cases, you cannot use your cooperative housing stock to secure a debt because of either: Restrictions under local or state law, or Restrictions in the cooperative agreement (other than restrictions in which the main purpose is to permit the tenant- stockholder to treat unsecured debt as secured debt). Amended tax However, you can treat a debt as secured by the stock to the extent that the proceeds are used to buy the stock under the allocation of interest rules. Amended tax See chapter 4 of Publication 535 for details on these rules. Amended tax Figuring deductible home mortgage interest. Amended tax   Generally, if you are a tenant-stockholder, you can deduct payments you make for your share of the interest paid or incurred by the cooperative. Amended tax The interest must be on a debt to buy, build, change, improve, or maintain the cooperative's housing, or on a debt to buy the land. Amended tax   Figure your share of this interest by multiplying the total by the following fraction. Amended tax      Your shares of stock in the cooperative   The total shares of stock in the cooperative Limits on deduction. Amended tax   To figure how the limits discussed in Part II apply to you, treat your share of the cooperative's debt as debt incurred by you. Amended tax The cooperative should determine your share of its grandfathered debt, its home acquisition debt, and its home equity debt. Amended tax (Your share of each of these types of debt is equal to the average balance of each debt multiplied by the fraction just given. Amended tax ) After your share of the average balance of each type of debt is determined, you include it with the average balance of that type of debt secured by your stock. Amended tax Form 1098. Amended tax    The cooperative should give you a Form 1098 showing your share of the interest. Amended tax Use the rules in this publication to determine your deductible mortgage interest. Amended tax Part II. Amended tax Limits on Home Mortgage Interest Deduction This part of the publication discusses the limits on deductible home mortgage interest. Amended tax These limits apply to your home mortgage interest expense if you have a home mortgage that does not fit into any of the three categories listed at the beginning of Part I under Fully deductible interest . Amended tax Your home mortgage interest deduction is limited to the interest on the part of your home mortgage debt that is not more than your qualified loan limit. Amended tax This is the part of your home mortgage debt that is grandfathered debt or that is not more than the limits for home acquisition debt and home equity debt. Amended tax Table 1 can help you figure your qualified loan limit and your deductible home mortgage interest. Amended tax Home Acquisition Debt Home acquisition debt is a mortgage you took out after October 13, 1987, to buy, build, or substantially improve a qualified home (your main or second home). Amended tax It also must be secured by that home. Amended tax If the amount of your mortgage is more than the cost of the home plus the cost of any substantial improvements, only the debt that is not more than the cost of the home plus improvements qualifies as home acquisition debt. Amended tax The additional debt may qualify as home equity debt (discussed later). Amended tax Home acquisition debt limit. Amended tax   The total amount you can treat as home acquisition debt at any time on your main home and second home cannot be more than $1 million ($500,000 if married filing separately). Amended tax This limit is reduced (but not below zero) by the amount of your grandfathered debt (discussed later). Amended tax Debt over this limit may qualify as home equity debt (also discussed later). Amended tax Refinanced home acquisition debt. Amended tax   Any secured debt you use to refinance home acquisition debt is treated as home acquisition debt. Amended tax However, the new debt will qualify as home acquisition debt only up to the amount of the balance of the old mortgage principal just before the refinancing. Amended tax Any additional debt not used to buy, build, or substantially improve a qualified home is not home acquisition debt, but may qualify as home equity debt (discussed later). Amended tax Mortgage that qualifies later. Amended tax   A mortgage that does not qualify as home acquisition debt because it does not meet all the requirements may qualify at a later time. Amended tax For example, a debt that you use to buy your home may not qualify as home acquisition debt because it is not secured by the home. Amended tax However, if the debt is later secured by the home, it may qualify as home acquisition debt after that time. Amended tax Similarly, a debt that you use to buy property may not qualify because the property is not a qualified home. Amended tax However, if the property later becomes a qualified home, the debt may qualify after that time. Amended tax Mortgage treated as used to buy, build, or improve home. Amended tax   A mortgage secured by a qualified home may be treated as home acquisition debt, even if you do not actually use the proceeds to buy, build, or substantially improve the home. Amended tax This applies in the following situations. Amended tax You buy your home within 90 days before or after the date you take out the mortgage. Amended tax The home acquisition debt is limited to the home's cost, plus the cost of any substantial improvements within the limit described below in (2) or (3). Amended tax (See Example 1 later. Amended tax ) You build or improve your home and take out the mortgage before the work is completed. Amended tax The home acquisition debt is limited to the amount of the expenses incurred within 24 months before the date of the mortgage. Amended tax You build or improve your home and take out the mortgage within 90 days after the work is completed. Amended tax The home acquisition debt is limited to the amount of the expenses incurred within the period beginning 24 months before the work is completed and ending on the date of the mortgage. Amended tax (See Example 2 later. Amended tax ) Example 1. Amended tax You bought your main home on June 3 for $175,000. Amended tax You paid for the home with cash you got from the sale of your old home. Amended tax On July 15, you took out a mortgage of $150,000 secured by your main home. Amended tax You used the $150,000 to invest in stocks. Amended tax You can treat the mortgage as taken out to buy your home because you bought the home within 90 days before you took out the mortgage. Amended tax The entire mortgage qualifies as home acquisition debt because it was not more than the home's cost. Amended tax Example 2. Amended tax On January 31, John began building a home on the lot that he owned. Amended tax He used $45,000 of his personal funds to build the home. Amended tax The home was completed on October 31. Amended tax On November 21, John took out a $36,000 mortgage that was secured by the home. Amended tax The mortgage can be treated as used to build the home because it was taken out within 90 days after the home was completed. Amended tax The entire mortgage qualifies as home acquisition debt because it was not more than the expenses incurred within the period beginning 24 months before the home was completed. Amended tax This is illustrated by Figure C. Amended tax   Please click here for the text description of the image. Amended tax Figure C. Amended tax John's example Date of the mortgage. Amended tax   The date you take out your mortgage is the day the loan proceeds are disbursed. Amended tax This is generally the closing date. Amended tax You can treat the day you apply in writing for your mortgage as the date you take it out. Amended tax However, this applies only if you receive the loan proceeds within a reasonable time (such as within 30 days) after your application is approved. Amended tax If a timely application you make is rejected, a reasonable additional time will be allowed to make a new application. Amended tax Cost of home or improvements. Amended tax   To determine your cost, include amounts paid to acquire any interest in a qualified home or to substantially improve the home. Amended tax   The cost of building or substantially improving a qualified home includes the costs to acquire real property and building materials, fees for architects and design plans, and required building permits. Amended tax Substantial improvement. Amended tax   An improvement is substantial if it: Adds to the value of your home, Prolongs your home's useful life, or Adapts your home to new uses. Amended tax    Repairs that maintain your home in good condition, such as repainting your home, are not substantial improvements. Amended tax However, if you paint your home as part of a renovation that substantially improves your qualified home, you can include the painting costs in the cost of the improvements. Amended tax Acquiring an interest in a home because of a divorce. Amended tax   If you incur debt to acquire the interest of a spouse or former spouse in a home, because of a divorce or legal separation, you can treat that debt as home acquisition debt. Amended tax Part of home not a qualified home. Amended tax    To figure your home acquisition debt, you must divide the cost of your home and improvements between the part of your home that is a qualified home and any part that is not a qualified home. Amended tax See Divided use of your home under Qualified Home in Part I. Amended tax Home Equity Debt If you took out a loan for reasons other than to buy, build, or substantially improve your home, it may qualify as home equity debt. Amended tax In addition, debt you incurred to buy, build, or substantially improve your home, to the extent it is more than the home acquisition debt limit (discussed earlier), may qualify as home equity debt. Amended tax Home equity debt is a mortgage you took out after October 13, 1987, that: Does not qualify as home acquisition debt or as grandfathered debt, and Is secured by your qualified home. Amended tax Example. Amended tax You bought your home for cash 10 years ago. Amended tax You did not have a mortgage on your home until last year, when you took out a $50,000 loan, secured by your home, to pay for your daughter's college tuition and your father's medical bills. Amended tax This loan is home equity debt. Amended tax Home equity debt limit. Amended tax   There is a limit on the amount of debt that can be treated as home equity debt. Amended tax The total home equity debt on your main home and second home is limited to the smaller of: $100,000 ($50,000 if married filing separately), or The total of each home's fair market value (FMV) reduced (but not below zero) by the amount of its home acquisition debt and grandfathered debt. Amended tax Determine the FMV and the outstanding home acquisition and grandfathered debt for each home on the date that the last debt was secured by the home. Amended tax Example. Amended tax You own one home that you bought in 2000. Amended tax Its FMV now is $110,000, and the current balance on your original mortgage (home acquisition debt) is $95,000. Amended tax Bank M offers you a home mortgage loan of 125% of the FMV of the home less any outstanding mortgages or other liens. Amended tax To consolidate some of your other debts, you take out a $42,500 home mortgage loan [(125% × $110,000) − $95,000] with Bank M. Amended tax Your home equity debt is limited to $15,000. Amended tax This is the smaller of: $100,000, the maximum limit, or $15,000, the amount that the FMV of $110,000 exceeds the amount of home acquisition debt of $95,000. Amended tax Debt higher than limit. Amended tax   Interest on amounts over the home equity debt limit (such as the interest on $27,500 [$42,500 − $15,000] in the preceding example) generally is treated as personal interest and is not deductible. Amended tax But if the proceeds of the loan were used for investment, business, or other deductible purposes, the interest may be deductible. Amended tax If it is, see the Table 1 Instructions for line 13 for an explanation of how to allocate the excess interest. Amended tax Part of home not a qualified home. Amended tax   To figure the limit on your home equity debt, you must divide the FMV of your home between the part that is a qualified home and any part that is not a qualified home. Amended tax See Divided use of your home under Qualified Home in Part I. Amended tax Fair market value (FMV). Amended tax    This is the price at which the home would change hands between you and a buyer, neither having to sell or buy, and both having reasonable knowledge of all relevant facts. Amended tax Sales of similar homes in your area, on about the same date your last debt was secured by the home, may be helpful in figuring the FMV. Amended tax Grandfathered Debt If you took out a mortgage on your home before October 14, 1987, or you refinanced such a mortgage, it may qualify as grandfathered debt. Amended tax To qualify, it must have been secured by your qualified home on October 13, 1987, and at all times after that date. Amended tax How you used the proceeds does not matter. Amended tax Grandfathered debt is not limited. Amended tax All of the interest you paid on grandfathered debt is fully deductible home mortgage interest. Amended tax However, the amount of your grandfathered debt reduces the $1 million limit for home acquisition debt and the limit based on your home's fair market value for home equity debt. Amended tax Refinanced grandfathered debt. Amended tax   If you refinanced grandfathered debt after October 13, 1987, for an amount that was not more than the mortgage principal left on the debt, then you still treat it as grandfathered debt. Amended tax To the extent the new debt is more than that mortgage principal, it is treated as home acquisition or home equity debt, and the mortgage is a mixed-use mortgage (discussed later under Average Mortgage Balance in the Table 1 instructions). Amended tax The debt must be secured by the qualified home. Amended tax   You treat grandfathered debt that was refinanced after October 13, 1987, as grandfathered debt only for the term left on the debt that was refinanced. Amended tax After that, you treat it as home acquisition debt or home equity debt, depending on how you used the proceeds. Amended tax Exception. Amended tax   If the debt before refinancing was like a balloon note (the principal on the debt was not amortized over the term of the debt), then you treat the refinanced debt as grandfathered debt for the term of the first refinancing. Amended tax This term cannot be more than 30 years. Amended tax Example. Amended tax Chester took out a $200,000 first mortgage on his home in 1986. Amended tax The mortgage was a five-year balloon note and the entire balance on the note was due in 1991. Amended tax Chester refinanced the debt in 1991 with a new 20-year mortgage. Amended tax The refinanced debt is treated as grandfathered debt for its entire term (20 years). Amended tax Line-of-credit mortgage. Amended tax    If you had a line-of-credit mortgage on October 13, 1987, and borrowed additional amounts against it after that date, then the additional amounts are either home acquisition debt or home equity debt depending on how you used the proceeds. Amended tax The balance on the mortgage before you borrowed the additional amounts is grandfathered debt. Amended tax The newly borrowed amounts are not grandfathered debt because the funds were borrowed after October 13, 1987. Amended tax See Average Mortgage Balance in the Table 1 Instructions that follow. Amended tax Table 1 Instructions Unless you are subject to the overall limit on itemized deductions, you can deduct all of the interest you paid during the year on mortgages secured by your main home or second home in either of the following two situations. Amended tax All the mortgages are grandfathered debt. Amended tax The total of the mortgage balances for the entire year is within the limits discussed earlier under Home Acquisition Debt and Home Equity Debt . Amended tax In either of those cases, you do not need Table 1. Amended tax Otherwise, you can use Table 1 to determine your qualified loan limit and deductible home mortgage interest. Amended tax Fill out only one Table 1 for both your main and second home regardless of how many mortgages you have. Amended tax Table 1. Amended tax Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. Amended tax Part I Qualified Loan Limit 1. Amended tax Enter the average balance of all your grandfathered debt. Amended tax See line 1 instructions 1. Amended tax   2. Amended tax Enter the average balance of all your home acquisition debt. Amended tax See line 2 instructions 2. Amended tax   3. Amended tax Enter $1,000,000 ($500,000 if married filing separately) 3. Amended tax   4. Amended tax Enter the larger of the amount on line 1 or the amount on line 3 4. Amended tax   5. Amended tax Add the amounts on lines 1 and 2. Amended tax Enter the total here 5. Amended tax   6. Amended tax Enter the smaller of the amount on line 4 or the amount on line 5 6. Amended tax   7. Amended tax If you have home equity debt, enter the smaller of $100,000 ($50,000 if married filing separately) or your limited amount. Amended tax See the line 7 instructions for the limit which may apply to you. Amended tax 7. Amended tax   8. Amended tax Add the amounts on lines 6 and 7. Amended tax Enter the total. Amended tax This is your qualified loan limit. Amended tax 8. Amended tax   Part II Deductible Home Mortgage Interest 9. Amended tax Enter the total of the average balances of all mortgages on all qualified homes. Amended tax  See line 9 instructions 9. Amended tax     If line 8 is less than line 9, go on to line 10. Amended tax If line 8 is equal to or more than line 9, stop here. Amended tax All of your interest on all the mortgages included on line 9 is deductible as home mortgage interest on Schedule A (Form 1040). Amended tax     10. Amended tax Enter the total amount of interest that you paid. Amended tax See line 10 instructions 10. Amended tax   11. Amended tax Divide the amount on line 8 by the amount on line 9. Amended tax Enter the result as a decimal amount (rounded to three places) 11. Amended tax × . Amended tax 12. Amended tax Multiply the amount on line 10 by the decimal amount on line 11. Amended tax Enter the result. Amended tax This is your deductible home mortgage interest. Amended tax Enter this amount on Schedule A (Form 1040) 12. Amended tax   13. Amended tax Subtract the amount on line 12 from the amount on line 10. Amended tax Enter the result. Amended tax This is not home mortgage interest. Amended tax See line 13 instructions 13. Amended tax   Home equity debt only. Amended tax   If all of your mortgages are home equity debt, do not fill in lines 1 through 5. Amended tax Enter zero on line 6 and complete the rest of Table 1. Amended tax Average Mortgage Balance You have to figure the average balance of each mortgage to determine your qualified loan limit. Amended tax You need these amounts to complete lines 1, 2, and 9 of Table 1. Amended tax You can use the highest mortgage balances during the year, but you may benefit most by using the average balances. Amended tax The following are methods you can use to figure your average mortgage balances. Amended tax However, if a mortgage has more than one category of debt, see Mixed-use mortgages , later, in this section. Amended tax Average of first and last balance method. Amended tax   You can use this method if all the following apply. Amended tax You did not borrow any new amounts on the mortgage during the year. Amended tax (This does not include borrowing the original mortgage amount. Amended tax ) You did not prepay more than one month's principal during the year. Amended tax (This includes prepayment by refinancing your home or by applying proceeds from its sale. Amended tax ) You had to make level payments at fixed equal intervals on at least a semi-annual basis. Amended tax You treat your payments as level even if they were adjusted from time to time because of changes in the interest rate. Amended tax    To figure your average balance, complete the following worksheet. Amended tax    1. Amended tax Enter the balance as of the first day of the year that the mortgage was secured by your qualified home during the year (generally January 1)   2. Amended tax Enter the balance as of the last day of the year that the mortgage was secured by your qualified home during the year (generally December 31)   3. Amended tax Add amounts on lines 1 and 2   4. Amended tax Divide the amount on line 3 by 2. Amended tax Enter the result   Interest paid divided by interest rate method. Amended tax   You can use this method if at all times in 2013 the mortgage was secured by your qualified home and the interest was paid at least monthly. Amended tax    Complete the following worksheet to figure your average balance. Amended tax    1. Amended tax Enter the interest paid in 2013. Amended tax Do not include points, mortgage insurance premiums, or any interest paid in 2013 that is for a year after 2013. Amended tax However, do include interest that is for 2013 but was paid in an earlier year   2. Amended tax Enter the annual interest rate on the mortgage. Amended tax If the interest rate varied in 2013, use the lowest rate for the year   3. Amended tax Divide the amount on line 1 by the amount on line 2. Amended tax Enter the result   Example. Amended tax Mr. Amended tax Blue had a line of credit secured by his main home all year. Amended tax He paid interest of $2,500 on this loan. Amended tax The interest rate on the loan was 9% (. Amended tax 09) all year. Amended tax His average balance using this method is $27,778, figured as follows. Amended tax 1. Amended tax Enter the interest paid in 2013. Amended tax Do not include points, mortgage insurance premiums, or any interest paid in 2013 that is for a year after 2013. Amended tax However, do include interest that is for 2013 but was paid in an earlier year $2,500 2. Amended tax Enter the annual interest rate on the mortgage. Amended tax If the interest rate varied in 2013, use the lowest rate for the year . Amended tax 09 3. Amended tax Divide the amount on line 1 by the amount on line 2. Amended tax Enter the result $27,778 Statements provided by your lender. Amended tax   If you receive monthly statements showing the closing balance or the average balance for the month, you can use either to figure your average balance for the year. Amended tax You can treat the balance as zero for any month the mortgage was not secured by your qualified home. Amended tax   For each mortgage, figure your average balance by adding your monthly closing or average balances and dividing that total by the number of months the home secured by that mortgage was a qualified home during the year. Amended tax   If your lender can give you your average balance for the year, you can use that amount. Amended tax Example. Amended tax Ms. Amended tax Brown had a home equity loan secured by her main home all year. Amended tax She received monthly statements showing her average balance for each month. Amended tax She can figure her average balance for the year by adding her monthly average balances and dividing the total by 12. Amended tax Mixed-use mortgages. Amended tax   A mixed-use mortgage is a loan that consists of more than one of the three categories of debt (grandfathered debt, home acquisition debt, and home equity debt). Amended tax For example, a mortgage you took out during the year is a mixed-use mortgage if you used its proceeds partly to refinance a mortgage that you took out in an earlier year to buy your home (home acquisition debt) and partly to buy a car (home equity debt). Amended tax   Complete lines 1 and 2 of Table 1 by including the separate average balances of any grandfathered debt and home acquisition debt in your mixed-use mortgage. Amended tax Do not use the methods described earlier in this section to figure the average balance of either category. Amended tax Instead, for each category, use the following method. Amended tax Figure the balance of that category of debt for each month. Amended tax This is the amount of the loan proceeds allocated to that category, reduced by your principal payments on the mortgage previously applied to that category. Amended tax Principal payments on a mixed-use mortgage are applied in full to each category of debt, until its balance is zero, in the following order: First, any home equity debt, Next, any grandfathered debt, and Finally, any home acquisition debt. Amended tax Add together the monthly balances figured in (1). Amended tax Divide the result in (2) by 12. Amended tax   Complete line 9 of Table 1 by including the average balance of the entire mixed-use mortgage, figured under one of the methods described earlier in this section. Amended tax Example 1. Amended tax In 1986, Sharon took out a $1,400,000 mortgage to buy her main home (grandfathered debt). Amended tax On March 2, 2013, when the home had a fair market value of $1,700,000 and she owed $1,100,000 on the mortgage, Sharon took out a second mortgage for $200,000. Amended tax She used $180,000 of the proceeds to make substantial improvements to her home (home acquisition debt) and the remaining $20,000 to buy a car (home equity debt). Amended tax Under the loan agreement, Sharon must make principal payments of $1,000 at the end of each month. Amended tax During 2013, her principal payments on the second mortgage totaled $10,000. Amended tax To complete Table 1, line 2, Sharon must figure a separate average balance for the part of her second mortgage that is home acquisition debt. Amended tax The January and February balances were zero. Amended tax The March through December balances were all $180,000, because none of her principal payments are applied to the home acquisition debt. Amended tax (They are all applied to the home equity debt, reducing it to $10,000 [$20,000 − $10,000]. Amended tax ) The monthly balances of the home acquisition debt total $1,800,000 ($180,000 × 10). Amended tax Therefore, the average balance of the home acquisition debt for 2013 was $150,000 ($1,800,000 ÷ 12). Amended tax Example 2. Amended tax The facts are the same as in Example 1. Amended tax In 2014, Sharon's January through October principal payments on her second mortgage are applied to the home equity debt, reducing it to zero. Amended tax The balance of the home acquisition debt remains $180,000 for each of those months. Amended tax Because her November and December principal payments are applied to the home acquisition debt, the November balance is $179,000 ($180,000 − $1,000) and the December balance is $178,000 ($180,000 − $2,000). Amended tax The monthly balances total $2,157,000 [($180,000 × 10) + $179,000 + $178,000]. Amended tax Therefore, the average balance of the home acquisition debt for 2014 is $179,750 ($2,157,000 ÷ 12). Amended tax L
Español

The Amended Tax

Amended tax 19. Amended tax   Education- Related Adjustments Table of Contents Introduction Useful Items - You may want to see: Student Loan Interest DeductionStudent Loan Interest Defined Can You Claim the Deduction How Much Can You Deduct How Do You Figure the Deduction Tuition and Fees DeductionCan You Claim the Deduction What Expenses Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses How Much Can You Deduct Educator Expenses Introduction This chapter discusses the education-related adjustment you can deduct in figuring your adjusted gross income. Amended tax This chapter covers the student loan interest deduction, tuition and fees deduction, and the deduction for educator expenses. Amended tax Useful Items - You may want to see: Publication 970 Tax Benefits for Education Student Loan Interest Deduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. Amended tax However, if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. Amended tax For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. Amended tax This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. Amended tax Table 19-1 summarizes the features of the student loan interest deduction. Amended tax Table 19-1. Amended tax Student Loan Interest Deduction at a Glance Do not rely on this table alone. Amended tax Refer to the text for more details. Amended tax Feature Description Maximum benefit You can reduce your income subject to tax by up to $2,500. Amended tax Loan qualifications Your student loan: •  must have been taken out solely to pay qualified education expenses, and   • cannot be from a related person or made under a qualified employer plan. Amended tax Student qualifications The student must be: • you, your spouse, or your dependent, and   • enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible educational institution. Amended tax Time limit on deduction You can deduct interest paid during the remaining period of your student loan. Amended tax Phaseout The amount of your deduction depends on your income level. Amended tax Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. Amended tax It includes both required and voluntary interest payments. Amended tax Qualified Student Loan This is a loan you took out solely to pay qualified education expenses (defined later) that were: For you, your spouse, or a person who was your dependent (defined in chapter 3) when you took out the loan, Paid or incurred within a reasonable period of time before or after you took out the loan, and For education provided during an academic period when the student is an eligible student. Amended tax Loans from the following sources are not qualified student loans. Amended tax A related person. Amended tax A qualified employer plan. Amended tax Exceptions. Amended tax   For purposes of the student loan interest deduction, the following are exceptions to the general rules for dependents. Amended tax An individual can be your dependent even if you are the dependent of another taxpayer. Amended tax An individual can be your dependent even if the individual files a joint return with a spouse. Amended tax An individual can be your dependent even if the individual had gross income for the year that was equal to or more than the exemption amount for the year ($3,900 for 2013). Amended tax    Reasonable period of time. Amended tax   Qualified education expenses are treated as paid or incurred within a reasonable period of time before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal postsecondary education loan program. Amended tax   Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met. Amended tax The expenses relate to a specific academic period. Amended tax The loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period. Amended tax   If neither of the above situations applies, the reasonable period of time is determined based on all the relevant facts and circumstances. Amended tax Academic period. Amended tax   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. Amended tax 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. Amended tax Eligible student. Amended tax   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. Amended tax Enrolled at least half-time. Amended tax   A student was enrolled at least half-time if the student was taking at least half the normal full-time work load for his or her course of study. Amended tax   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Amended tax However, the standard may not be lower than any of those established by the U. Amended tax S. Amended tax Department of Education under the Higher Education Act of 1965. Amended tax Related person. Amended tax   You cannot deduct interest on a loan you get from a related person. Amended tax Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. Amended tax ), Your lineal descendants (children, grandchildren, etc. Amended tax ), and Certain corporations, partnerships, trusts, and exempt organizations. Amended tax Qualified employer plan. Amended tax   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. Amended tax Qualified Education Expenses For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. Amended tax They include amounts paid for the following items. Amended tax Tuition and fees. Amended tax Room and board. Amended tax Books, supplies, and equipment. Amended tax Other necessary expenses (such as transportation). Amended tax The cost of room and board qualifies only to the extent that it is not more than: The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, or If greater, the actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. Amended tax Eligible educational institution. Amended tax   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. Amended tax S. Amended tax Department of Education. Amended tax It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Amended tax   Certain educational institutions located outside the United States also participate in the U. Amended tax S. Amended tax Department of Education's Federal Student Aid (FSA) programs. Amended tax   For purposes of the student loan interest deduction, an eligible educational institution also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. Amended tax   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. Amended tax The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. Amended tax    The educational institution should be able to tell you if it is an eligible educational institution. Amended tax Adjustments to qualified education expenses. Amended tax   You must reduce your qualified education expenses by certain tax-free items (such as the tax-free part of scholarships and fellowships). Amended tax See chapter 4 of Publication 970 for details. Amended tax Include as Interest In addition to simple interest on the loan, certain loan origination fees, capitalized interest, interest on revolving lines of credit, and interest on refinanced student loans can be student loan interest if all other requirements are met. Amended tax Loan origination fee. Amended tax   In general, this is a one-time fee charged by the lender when a loan is made. Amended tax To be deductible as interest, the fee must be for the use of money rather than for property or services (such as commitment fees or processing costs) provided by the lender. Amended tax A loan origination fee treated as interest accrues over the life of the loan. Amended tax Capitalized interest. Amended tax    This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. Amended tax Interest on revolving lines of credit. Amended tax   This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. Amended tax See Qualified Education Expenses , earlier. Amended tax Interest on refinanced student loans. Amended tax   This includes interest on both: Consolidated loans—loans used to refinance more than one student loan of the same borrower, and Collapsed loans—two or more loans of the same borrower that are treated by both the lender and the borrower as one loan. Amended tax If you refinance a qualified student loan for more than your original loan and you use the additional amount for any purpose other than qualified education expenses, you cannot deduct any interest paid on the refinanced loan. Amended tax Voluntary interest payments. Amended tax   These are payments made on a qualified student loan during a period when interest payments are not required, such as when the borrower has been granted a deferment or the loan has not yet entered repayment status. Amended tax Do Not Include as Interest You cannot claim a student loan interest deduction for any of the following items. Amended tax Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. Amended tax Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. Amended tax Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the “NHSC Loan Repayment Program”) or certain other loan repayment assistance programs. Amended tax For more information, see Student Loan Repayment Assistance in chapter 5 of Publication 970. Amended tax Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. Amended tax Your filing status is any filing status except married filing separately. Amended tax No one else is claiming an exemption for you on his or her tax return. Amended tax You are legally obligated to pay interest on a qualified student loan. Amended tax You paid interest on a qualified student loan. Amended tax Interest paid by others. Amended tax   If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest. Amended tax See chapter 4 of Publication 970 for more information. Amended tax No Double Benefit Allowed You cannot deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, home mortgage interest). Amended tax How Much Can You Deduct Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. Amended tax However, the amount determined above is phased out (gradually reduced) if your MAGI is between $60,000 and $75,000 ($125,000 and $155,000 if you file a joint return). Amended tax You cannot take a student loan interest deduction if your MAGI is $75,000 or more ($155,000 or more if you file a joint return). Amended tax For details on figuring your MAGI, see chapter 4 of Publication 970. Amended tax How Do You Figure the Deduction Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the Form 1040 or Form 1040A instructions. Amended tax However, if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1 in chapter 4 of Publication 970. Amended tax To help you figure your student loan interest deduction, you should receive Form 1098-E, Student Loan Interest Statement. Amended tax Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2013 on one or more qualified student loans must send Form 1098-E (or acceptable substitute) to each borrower by January 31, 2014. Amended tax For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. Amended tax Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. Amended tax However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. Amended tax For information on allocating payments between interest and principal, see chapter 4 of Publication 970. Amended tax To claim the deduction, enter the allowable amount on Form 1040, line 33, or Form 1040A, line 18. Amended tax Tuition and Fees Deduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). Amended tax You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. Amended tax The qualified expenses must be for higher education, as explained later under What Expenses Qualify . Amended tax The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. Amended tax Table 19-2 summarizes the features of the tuition and fees deduction. Amended tax You may be able to take a credit for your education expenses instead of a deduction. Amended tax You can choose the one that will give you the lower tax. Amended tax See chapter 35, Education Credits, for details about the credits. Amended tax Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. Amended tax Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. Amended tax You paid qualified education expenses of higher education in 2013 for academic periods beginning in 2013 and those beginning in the first three months of 2014. Amended tax You paid the education expenses for an eligible student. Amended tax The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption (defined in chapter 3) on your tax return. Amended tax Qualified education expenses are defined under What Expenses Qualify . Amended tax Eligible students are defined later under Who Is an Eligible Student . Amended tax Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. Amended tax Your filing status is married filing separately. Amended tax Another person can claim an exemption for you as a dependent on his or her tax return. Amended tax You cannot take the deduction even if the other person does not actually claim that exemption. Amended tax Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). Amended tax 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. Amended tax More information on nonresident aliens can be found in Publication 519, U. Amended tax S. Amended tax Tax Guide for Aliens. Amended tax You or anyone else claims an American opportunity or lifetime learning credit in 2013 with respect to expenses of the student for whom the qualified education expenses were paid. Amended tax However, a state tax credit will not disqualify you from claiming a tuition and fees deduction. Amended tax Table 19-2. Amended tax Tuition and Fees Deduction at a Glance Do not rely on this table alone. Amended tax Refer to the text for more details. Amended tax Question   Answer What is the maximum benefit?   You can reduce your income subject to tax by up to $4,000. Amended tax Where is the deduction taken?   As an adjustment to income on Form 1040, line 34, or Form 1040A, line 19. Amended tax For whom must the expenses be paid?   A student enrolled in an eligible educational institution who is either: you, your spouse, or your dependent for whom you claim an exemption. Amended tax What tuition and fees are deductible?   Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living, or family expenses, such as room and board. Amended tax What Expenses Qualify The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Amended tax Generally, the deduction is allowed for qualified education expenses paid in 2013 in connection with enrollment at an institution of higher education during 2013 or for an academic period (defined earlier under Student Loan Interest Deduction ) beginning in 2013 or in the first 3 months of 2014. Amended tax Payments with borrowed funds. Amended tax   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. Amended tax Use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. Amended tax Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. Amended tax Student withdraws from class(es). Amended tax   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. Amended tax Qualified Education Expenses For purposes of the tuition and fees deduction, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Amended tax Eligible educational institution. Amended tax   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. Amended tax S. Amended tax Department of Education. Amended tax It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Amended tax The educational institution should be able to tell you if it is an eligible educational institution. Amended tax   Certain educational institutions located outside the United States also participate in the U. Amended tax S. Amended tax Department of Education's Federal Student Aid (FSA) programs. Amended tax Academic period. Amended tax    An academic period is any quarter, semester, trimester, or any other period of study as reasonably determined by an eligible educational institution. Amended tax If an eligible educational institution uses credit hours and does not have academic terms, each payment period may be treated as an academic period. Amended tax Related expenses. Amended tax   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses for the tuition and fees deduction only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Amended tax Prepaid expenses. Amended tax   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring the tuition and fees deduction. Amended tax See Academic period, earlier. Amended tax For example, if you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring the tuition and fees deduction for 2013 only if you meet all the other requirements. Amended tax    You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 tuition and fees deduction. Amended tax No Double Benefit Allowed You cannot do any of the following. Amended tax Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. Amended tax Deduct qualified education expenses for a student on your income tax return if you or anyone else claims an American opportunity or lifetime learning credit for that same student in the same year. Amended tax Deduct qualified education expenses that have been used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or a qualified tuition program (QTP). Amended tax For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Amended tax See Figuring the Taxable Portion of a Distribution in chapter 7 (Coverdell ESA) and chapter 8 (QTP) of Publication 970. Amended tax Deduct qualified education expenses that have been paid with tax-free interest on U. Amended tax S. Amended tax savings bonds (Form 8815). Amended tax See Figuring the Tax-Free Amount in chapter 10 of Publication 970. Amended tax Deduct qualified education expenses that have been paid with tax-free educational assistance such as a scholarship, grant, or employer-provided educational assistance. Amended tax See Adjustments to qualified education expenses, later. Amended tax Adjustments to qualified education expenses. Amended tax   For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. Amended tax The result is the amount of adjusted qualified education expenses for each student. Amended tax Tax-free educational assistance. Amended tax   For tax-free educational assistance you received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance to that academic period. Amended tax See Academic period, earlier. Amended tax   This includes: The tax-free part of scholarships and fellowships, including Pell grants (see chapter 1 of Publication 970), The tax-free part of any employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Amended tax Generally, any scholarship or fellowship you receive is treated as tax-free educational assistance. Amended tax However, a scholarship or fellowship is not treated as tax-free educational assistance to the extent you include it in gross income (if you are required to file a tax return) for the year the scholarship or fellowship is received and either: The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. Amended tax 970, chapter 1. Amended tax The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. Amended tax 970, chapter 1. Amended tax You may be able to increase the combined value of your tuition and fees deduction and certain educational assistance if you include some or all of the educational assistance in income in the year it is received. Amended tax For details, see Adjustments to Qualified Education Expenses in chapter 6 of Pub. Amended tax 970. Amended tax Some tax-free educational assistance received in 2013 may be treated as a refund of qualified education expenses paid in 2013. Amended tax 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). Amended tax 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. Amended tax 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. Amended tax Refunds. Amended tax   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or may require you to include some or all of the refund in your gross income for the year the refund is received. Amended tax See chapter 6 of Pub. Amended tax 970 for more information. Amended tax Some tax-free educational assistance received after 2013 may be treated as a refund. Amended tax See Tax-free educational assistance, earlier. Amended tax Refunds received in 2013. Amended tax    For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses paid in 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. Amended tax Refunds received after 2013 but before your income tax return is filed. Amended tax   If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received before you file your 2013 income tax return, reduce the amount of qualified education expenses for 2013 by the amount of the refund. Amended tax Refunds received after 2013 and after your income tax return is filed. Amended tax   If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received after you file your 2013 income tax return, you may need to include some or all of the refund in your gross income for the year the refund is received. Amended tax See chapter 6 of Pub. Amended tax 970 for more information. Amended tax Coordination with Coverdell education savings accounts and qualified tuition programs. Amended tax    Reduce your qualified education expenses by any qualified education expenses used to figure the exclusion from gross income of (a) interest received under an education savings bond program, or (b) any distribution from a Coverdell education savings account or qualified tuition program (QTP). Amended tax For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Amended tax Amounts that do not reduce qualified education expenses. Amended tax   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. Amended tax   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. Amended tax 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. Amended tax The use of the money is not restricted. Amended tax 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. Amended tax This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Amended tax Sports, games, hobbies, and noncredit courses. Amended tax   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. Amended tax However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. Amended tax Comprehensive or bundled fees. Amended tax   Some eligible educational institutions combine all of their fees for an academic period into one amount. Amended tax 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. Amended tax The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T, Tuition Statement. Amended tax See How Do You Figure the Deduction , later, for more information about Form 1098-T. Amended tax Who Is an Eligible Student For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (defined earlier). Amended tax Who Can Claim a Dependent's Expenses Generally, in order to claim the tuition and fees deduction for qualified education expenses for a dependent, you must: Have paid the expenses, and Claim an exemption for the student as a dependent. Amended tax Table 19-3 summarizes who can claim the deduction. Amended tax How Much Can You Deduct The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. Amended tax For details on figuring your MAGI, see chapter 6 of Publication 970. Amended tax How Do You Figure the Deduction Figure the deduction using Form 8917. Amended tax To help you figure your tuition and fees deduction, you should receive Form 1098-T, Tuition Statement. Amended tax 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. Amended tax To claim the deduction, enter the allowable amount on Form 1040, line 34, or Form 1040A, line 19, and attach your completed Form 8917. Amended tax Table 19-3. Amended tax Who Can Claim a Dependent's Expenses Do not rely on this table alone. Amended tax See Who Can Claim a Dependent's Expenses in chapter 6 of Publication 970. Amended tax IF your dependent is an eligible student and you. Amended tax . Amended tax . Amended tax AND. Amended tax . Amended tax . Amended tax THEN. Amended tax . Amended tax . Amended tax claim an exemption for your dependent you paid all qualified education expenses for your dependent only you can deduct the qualified education expenses that you paid. Amended tax Your dependent cannot take a deduction. Amended tax claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Amended tax do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. Amended tax do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Amended tax Educator Expenses If you were an eligible educator in 2013, you can deduct on Form 1040, line 23, or Form 1040A, line 16, up to $250 of qualified expenses you paid in 2013. Amended tax If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Amended tax However, neither spouse can deduct more than $250 of his or her qualified expenses on Form 1040, line 23, or Form 1040A, line 16. Amended tax You may be able to deduct expenses that are more than the $250 (or $500) limit on Schedule A (Form 1040), line 21. Amended tax Eligible educator. Amended tax   An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who worked in a school for at least 900 hours during a school year. Amended tax Qualified expenses. Amended tax   Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. Amended tax An ordinary expense is one that is common and accepted in your educational field. Amended tax A necessary expense is one that is helpful and appropriate for your profession as an educator. Amended tax An expense does not have to be required to be considered necessary. Amended tax   Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. Amended tax   You must reduce your qualified expenses by the following amounts. Amended tax Excludable U. Amended tax S. Amended tax series EE and I savings bond interest from Form 8815. Amended tax See Figuring the Tax-Free Amount in chapter 10 of Publication 970. Amended tax Nontaxable qualified tuition program earnings or distributions. Amended tax See Figuring the Taxable Portion of a Distribution in chapter 8 of Publication 970. Amended tax Nontaxable distribution of earnings from a Coverdell education savings account. Amended tax See Figuring the Taxable Portion of a Distribution in chapter 7 of Publication 970. Amended tax Any reimbursements you received for these expenses that were not reported to you in box 1 of your Form W-2. Amended tax Prev  Up  Next   Home   More Online Publications