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E File 2012 Taxes Late

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E File 2012 Taxes Late

E file 2012 taxes late 1. E file 2012 taxes late   Importance of Records Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Benefits of Recordkeeping Kinds of Records To Keep How Long To Keep Records Introduction A farmer, like other taxpayers, must keep records to prepare an accurate income tax return and determine the correct amount of tax. E file 2012 taxes late This chapter explains the benefits of keeping records, what kinds of records you must keep, and how long you must keep them for federal tax purposes. E file 2012 taxes late Tax records are not the only type of records you need to keep for your farming business. E file 2012 taxes late You should also keep records that measure your farm's financial performance. E file 2012 taxes late This publication only discusses tax records. E file 2012 taxes late The Farm Financial Standards Council has produced a publication that provides a detailed explanation of the recommendations of the Council for financial reporting and analysis. E file 2012 taxes late For information on recordkeeping, you can purchase and download Financial Guidelines for Agricultural Producers at www. E file 2012 taxes late ffsc. E file 2012 taxes late org. E file 2012 taxes late For more information, contact Countryside Marketing, Inc. E file 2012 taxes late in the following manner. E file 2012 taxes late Call 262-253-6902. E file 2012 taxes late Send a fax to 262-253-6903. E file 2012 taxes late Write to: Farm Financial Standards Council N78 W14573 Appleton Ave. E file 2012 taxes late , #287 Menomonee Falls, WI 53051. E file 2012 taxes late Topics - This chapter discusses: Benefits of recordkeeping Kinds of records to keep How long to keep records Useful Items - You may want to see: Publication 51 (Circular A), Agricultural Employer's Tax Guide 463 Travel, Entertainment, Gift, and Car Expenses See chapter 16 for information about getting publications. E file 2012 taxes late Benefits of Recordkeeping Everyone in business, including farmers, must keep appropriate records. E file 2012 taxes late Recordkeeping will help you do the following. E file 2012 taxes late Monitor the progress of your farming business. E file 2012 taxes late   You need records to monitor the progress of your farming business. E file 2012 taxes late Records can show whether your business is improving, which items are selling, or what changes you need to make. E file 2012 taxes late Records can help you make better decisions that may increase the likelihood of business success. E file 2012 taxes late Prepare your financial statements. E file 2012 taxes late   You need records to prepare accurate financial statements. E file 2012 taxes late These include income (profit and loss) statements and balance sheets. E file 2012 taxes late These statements can help you in dealing with your bank or creditors and help you to manage your farm business. E file 2012 taxes late Identify source of receipts. E file 2012 taxes late   You will receive money or property from many sources. E file 2012 taxes late Your records can identify the source of your receipts. E file 2012 taxes late You need this information to separate farm from nonfarm receipts and taxable from nontaxable income. E file 2012 taxes late Keep track of deductible expenses. E file 2012 taxes late   You may forget expenses when you prepare your tax return unless you record them when they occur. E file 2012 taxes late Prepare your tax returns. E file 2012 taxes late   You need records to prepare your tax return. E file 2012 taxes late For example, your records must support the income, expenses, and credits you report. E file 2012 taxes late Generally, these are the same records you use to monitor your farming business and prepare your financial statements. E file 2012 taxes late Support items reported on tax returns. E file 2012 taxes late   You must keep your business records available at all times for inspection by the IRS. E file 2012 taxes late If the IRS examines any of your tax returns, you may be asked to explain the items reported. E file 2012 taxes late A complete set of records will speed up the examination. E file 2012 taxes late Kinds of Records To Keep Except in a few cases, the law does not require any specific kind of records. E file 2012 taxes late You can choose any recordkeeping system suited to your farming business that clearly shows, for example, your income and expenses. E file 2012 taxes late You should set up your recordkeeping system using an accounting method that clearly shows your income for your tax year. E file 2012 taxes late See  chapter 2. E file 2012 taxes late If you are in more than one business, you should keep a complete and separate set of records for each business. E file 2012 taxes late A corporation should keep minutes of board of directors' meetings. E file 2012 taxes late Your recordkeeping system should include a summary of your business transactions. E file 2012 taxes late This summary is ordinarily made in accounting journals and ledgers. E file 2012 taxes late For example, they must show your gross income, as well as your deductions and credits. E file 2012 taxes late In addition, you must keep supporting documents. E file 2012 taxes late Purchases, sales, payroll, and other transactions you have in your business generate supporting documents such as invoices and receipts. E file 2012 taxes late These documents contain the information you need to record in your journals and ledgers. E file 2012 taxes late It is important to keep these documents because they support the entries in your journals and ledgers and on your tax return. E file 2012 taxes late Keep them in an orderly fashion and in a safe place. E file 2012 taxes late For instance, organize them by year and type of income or expense. E file 2012 taxes late Electronic records. E file 2012 taxes late   All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records. E file 2012 taxes late When you replace hard copy books and records, you must maintain the electronic storage systems for as long as they are material to the administration of tax law. E file 2012 taxes late An electronic storage system is any system for preparing or keeping your records either by electronic imaging or by transfer to an electronic storage media. E file 2012 taxes late The electronic storage system must index, store, preserve, retrieve and reproduce the electronically stored books and records in legible format. E file 2012 taxes late All electronic storage systems must provide a complete and accurate record of your data that is accessible to the IRS. E file 2012 taxes late Electronic storage systems are also subject to the same controls and retention guidelines as those imposed on your original hard copy books and records. E file 2012 taxes late The original hard copy books and records may be destroyed provided that the electronic storage system has been tested to establish that the hard copy books and records are being reproduced in compliance with IRS requirements for an electronic storage system and procedures are established to ensure continued compliance with all applicable rules and regulations. E file 2012 taxes late You still have the responsibility of retaining any other books and records that are required to be retained. E file 2012 taxes late The IRS may test your electronic storage system, including the equipment used, indexing methodology, software and retrieval capabilities. E file 2012 taxes late This test is not considered an examination and the results must be shared with you. E file 2012 taxes late If your electronic storage system meets the requirements mentioned earlier, you will be in compliance. E file 2012 taxes late If not, you may be subject to penalties for non-compliance, unless you continue to maintain your original hard copybooks and records in a manner that allows you and the IRS to determine your correct tax. E file 2012 taxes late For details on electronic storage system requirements, see Rev. E file 2012 taxes late Proc. E file 2012 taxes late 97-22. E file 2012 taxes late You can find Rev. E file 2012 taxes late Proc. E file 2012 taxes late 97-22 on page 9 of Internal Revenue Bulletin 1997-13 at  www. E file 2012 taxes late irs. E file 2012 taxes late gov/pub/irs-irbs/irb97-13. E file 2012 taxes late pdf. E file 2012 taxes late Travel, transportation, entertainment, and gift expenses. E file 2012 taxes late   Specific recordkeeping rules apply to these expenses. E file 2012 taxes late For more information, see Publication 463. E file 2012 taxes late Employment taxes. E file 2012 taxes late   There are specific employment tax records you must keep. E file 2012 taxes late For a list, see Publication 51 (Circular A). E file 2012 taxes late Excise taxes. E file 2012 taxes late   See How To Claim a Credit or Refund in chapter 14 for the specific records you must keep to verify your claim for credit or refund of excise taxes on certain fuels. E file 2012 taxes late Assets. E file 2012 taxes late   Assets are the property, such as machinery and equipment, you own and use in your business. E file 2012 taxes late You must keep records to verify certain information about your business assets. E file 2012 taxes late You need records to figure your annual depreciation deduction and the gain or (loss) when you sell the assets. E file 2012 taxes late Your records should show all the following. E file 2012 taxes late When and how you acquired the asset. E file 2012 taxes late Purchase price. E file 2012 taxes late Cost of any improvements. E file 2012 taxes late Section 179 deduction taken. E file 2012 taxes late Deductions taken for depreciation. E file 2012 taxes late Deductions taken for casualty losses, such as losses resulting from fires or storms. E file 2012 taxes late How you used the asset. E file 2012 taxes late When and how you disposed of the asset. E file 2012 taxes late Selling price. E file 2012 taxes late Expenses of sale. E file 2012 taxes late   The following are examples of records that may show this information. E file 2012 taxes late Purchase and sales invoices. E file 2012 taxes late Real estate closing statements. E file 2012 taxes late Canceled checks. E file 2012 taxes late Bank statements. E file 2012 taxes late Financial account statements as proof of payment. E file 2012 taxes late   If you do not have a canceled check, you may be able to prove payment with certain financial account statements prepared by financial institutions. E file 2012 taxes late These include account statements prepared for the financial institution by a third party. E file 2012 taxes late These account statements must be legible. E file 2012 taxes late The following table lists acceptable account statements. E file 2012 taxes late IF payment is by. E file 2012 taxes late . E file 2012 taxes late . E file 2012 taxes late THEN the statement must show the. E file 2012 taxes late . E file 2012 taxes late . E file 2012 taxes late Check Check number. E file 2012 taxes late Amount. E file 2012 taxes late Payee's name. E file 2012 taxes late Date the check amount was posted to the account by the financial institution. E file 2012 taxes late Electronic funds  transfer Amount transferred. E file 2012 taxes late Payee's name. E file 2012 taxes late Date the transfer was posted to the account by the financial institution. E file 2012 taxes late Credit card Amount charged. E file 2012 taxes late Payee's name. E file 2012 taxes late Transaction date. E file 2012 taxes late    Proof of payment of an amount, by itself, does not establish you are entitled to a tax deduction. E file 2012 taxes late You should also keep other documents, such as credit card sales slips and invoices, to show that you also incurred the cost. E file 2012 taxes late Tax returns. E file 2012 taxes late   Keep copies of your filed tax returns. E file 2012 taxes late They help in preparing future tax returns and making computations if you file an amended return. E file 2012 taxes late Keep copies of your information returns such as Form 1099, Schedule K-1, and Form W-2. E file 2012 taxes late How Long To Keep Records You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. E file 2012 taxes late Keep records that support an item of income or a deduction appearing on a return until the period of limitations for the return runs out. E file 2012 taxes late A period of limitations is the period of time after which no legal action can be brought. E file 2012 taxes late Generally, that means you must keep your records for at least 3 years from when your tax return was due or filed or within 2 years of the date the tax was paid, whichever is later. E file 2012 taxes late However, certain records must be kept for a longer period of time, as discussed below. E file 2012 taxes late Employment taxes. E file 2012 taxes late   If you have employees, you must keep all employment tax records for at least 4 years after the date the tax becomes due or is paid, whichever is later. E file 2012 taxes late Assets. E file 2012 taxes late   Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. E file 2012 taxes late You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure your basis for computing gain or (loss) when you sell or otherwise dispose of the property. E file 2012 taxes late   You may need to keep records relating to the basis of property longer than the period of limitation. E file 2012 taxes late Keep those records as long as they are important in figuring the basis of the original or replacement property. E file 2012 taxes late Generally, this means as long as you own the property and, after you dispose of it, for the period of limitations that applies to you. E file 2012 taxes late For example, if you received property in a nontaxable exchange, you must keep the records for the old property, as well as for the new property, until the period of limitations expires for the year in which you dispose of the new property in a taxable disposition. E file 2012 taxes late For more information on basis, see chapter 6. E file 2012 taxes late Records for nontax purposes. E file 2012 taxes late   When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes. E file 2012 taxes late For example, your insurance company or creditors may require you to keep them longer than the IRS does. E file 2012 taxes late Prev  Up  Next   Home   More Online Publications
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The Tax Gap

The tax gap is defined as the amount of tax liability faced by taxpayers that is not paid on time. The Internal Revenue Service collects more than $2 trillion annually in taxes so producing an estimate of the tax gap is a major statistical effort that it undertakes every few years.

This month, the IRS released a new set of tax gap estimates for tax year 2006. The new tax gap estimate represents the first full update of the report in five years, and it shows the nation’s compliance rate is essentially unchanged at about 83 percent from the last review covering tax year 2001.

Tax Gap Estimates for Tax Year 2006

Related Item: Additional Materials on the Tax Gap

Page Last Reviewed or Updated: 03-Dec-2013

The E File 2012 Taxes Late

E file 2012 taxes late 6. E file 2012 taxes late   Tuition and Fees Deduction Table of Contents IntroductionWhat is the tax benefit of the tuition and fees deduction. E file 2012 taxes late Can You Claim the DeductionWho Can Claim the Deduction Who Cannot Claim the Deduction What Expenses QualifyQualified Education Expenses No Double Benefit Allowed Expenses That Do Not Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses Figuring the DeductionEffect of the Amount of Your Income on the Amount of Your Deduction Claiming the Deduction Illustrated Example Introduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). E file 2012 taxes late 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. E file 2012 taxes late The qualified expenses must be for higher education, as explained later under Qualified Education Expenses . E file 2012 taxes late What is the tax benefit of the tuition and fees deduction. E file 2012 taxes late   The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. E file 2012 taxes late   This deduction is taken as an adjustment to income. E file 2012 taxes late This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). E file 2012 taxes late This deduction may be beneficial to you if you do not qualify for the American opportunity or lifetime learning credits. E file 2012 taxes late You can choose the education benefit that will give you the lowest tax. E file 2012 taxes late You may want to compare the tuition and fees deduction to the education credits. E file 2012 taxes late See chapter 2, American Opportunity Credit and chapter 3, Lifetime Learning Credit for more information on the education credits. E file 2012 taxes late Table 6-1. E file 2012 taxes late Tuition and Fees Deduction at a Glance summarizes the features of the tuition and fees deduction. E file 2012 taxes late Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. E file 2012 taxes late Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. E file 2012 taxes late You pay qualified education expenses of higher education. E file 2012 taxes late You pay the education expenses for an eligible student. E file 2012 taxes late The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return. E file 2012 taxes late The term “qualified education expenses” is defined later under Qualified Education Expenses . E file 2012 taxes late “Eligible student” is defined later under Who Is an Eligible Student . E file 2012 taxes late For more information on claiming the deduction for a dependent, see Who Can Claim a Dependent's Expenses , later. E file 2012 taxes late Table 6-1. E file 2012 taxes late Tuition and Fees Deduction at a Glance Do not rely on this table alone. E file 2012 taxes late Refer to the text for complete details. E file 2012 taxes late Question Answer What is the maximum benefit? You can reduce your income subject to tax by up to $4,000. E file 2012 taxes late What is the limit on modified adjusted gross income (MAGI)? $160,000 if married filing a joint return; $80,000 if single, head of household, or qualifying widow(er). E file 2012 taxes late Where is the deduction taken? As an adjustment to income on  Form 1040 or Form 1040A. E file 2012 taxes late 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. E file 2012 taxes late 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. E file 2012 taxes late Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. E file 2012 taxes late Your filing status is married filing separately. E file 2012 taxes late Another person can claim an exemption for you as a dependent on his or her tax return. E file 2012 taxes late You cannot take the deduction even if the other person does not actually claim that exemption. E file 2012 taxes late Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). E file 2012 taxes late 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. E file 2012 taxes late More information on nonresident aliens can be found in Publication 519. E file 2012 taxes late 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. E file 2012 taxes late 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 beginning in 2013 or in the first 3 months of 2014. E file 2012 taxes late For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning in January 2014, you may be able to use that $1,500 in figuring your 2013 deduction. E file 2012 taxes late Academic period. E file 2012 taxes late   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. E file 2012 taxes late 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. E file 2012 taxes late Paid with borrowed funds. E file 2012 taxes late   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. E file 2012 taxes late 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. E file 2012 taxes late Treat loan disbursements sent directly to the educational institution as paid on the date the institution credits the student's account. E file 2012 taxes late Student withdraws from class(es). E file 2012 taxes late   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. E file 2012 taxes late 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. E file 2012 taxes late Eligible educational institution. E file 2012 taxes late   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. E file 2012 taxes late S. E file 2012 taxes late Department of Education. E file 2012 taxes late It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. E file 2012 taxes late The educational institution should be able to tell you if it is an eligible educational institution. E file 2012 taxes late   Certain educational institutions located outside the United States also participate in the U. E file 2012 taxes late S. E file 2012 taxes late Department of Education's Federal Student Aid (FSA) programs. E file 2012 taxes late Related expenses. E file 2012 taxes late   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. E file 2012 taxes late Prepaid expenses. E file 2012 taxes late   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring an education credit for 2013 only. E file 2012 taxes late See Academic period , earlier. E file 2012 taxes late For example, you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring an education credit for 2013 only (if you meet all the other requirements). E file 2012 taxes late You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 education credit(s). E file 2012 taxes late In the following examples, assume that each student is an eligible student and each college or university an eligible educational institution. E file 2012 taxes late Example 1. E file 2012 taxes late Jackson is a sophomore in University V's degree program in dentistry. E file 2012 taxes late This year, in addition to tuition, he is required to pay a fee to the university for the rental of the dental equipment he will use in this program. E file 2012 taxes late Because the equipment rental fee must be paid to University V for enrollment and attendance, Jackson's equipment rental fee is a qualified education expense. E file 2012 taxes late Example 2. E file 2012 taxes late Donna and Charles, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. E file 2012 taxes late The college has no policy about how students should obtain these materials, but any student who purchases them from College W's bookstore will receive a bill directly from the college. E file 2012 taxes late Charles bought his books from a friend, so what he paid for them is not a qualified education expense. E file 2012 taxes late Donna bought hers at College W's bookstore. E file 2012 taxes late Although Donna paid College W directly for her first-year books and materials, her payment is not a qualified education expense because the books and materials are not required to be purchased from College W for enrollment or attendance at the institution. E file 2012 taxes late Example 3. E file 2012 taxes late When Marci enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. E file 2012 taxes late This activity fee is required of all students, and is used solely to fund on-campus organizations and activities run by students, such as the student newspaper and the student government. E file 2012 taxes late No portion of the fee covers personal expenses. E file 2012 taxes late Although labeled as a student activity fee, the fee is required for Marci's enrollment and attendance at College X. E file 2012 taxes late Therefore, it is a qualified expense. E file 2012 taxes late No Double Benefit Allowed You cannot do any of the following. E file 2012 taxes late Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. E file 2012 taxes late 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. E file 2012 taxes late 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). E file 2012 taxes late 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. E file 2012 taxes late See Coordination With Tuition and Fees Deduction in chapter 8, Qualified Tuition Program, later. E file 2012 taxes late Deduct qualified education expenses that have been paid with tax-free interest on U. E file 2012 taxes late S. E file 2012 taxes late savings bonds (Form 8815). E file 2012 taxes late See Figuring the Tax-Free Amount in chapter 10, Education Savings Bond Program, later. E file 2012 taxes late Deduct qualified education expenses that have been paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. E file 2012 taxes late See the following section on Adjustments to Qualified Education Expenses. E file 2012 taxes late Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. E file 2012 taxes late The result is the amount of adjusted qualified education expenses for each student. E file 2012 taxes late You must also reduce qualified education expenses by the other amounts referred to in No Double Benefit Allowed , earlier. E file 2012 taxes late Tax-free educational assistance. E file 2012 taxes late   For tax-free educational assistance received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period. E file 2012 taxes late See Academic period , earlier. E file 2012 taxes late   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. E file 2012 taxes late 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). E file 2012 taxes late   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. E file 2012 taxes late 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. E file 2012 taxes late   This tax-free education assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. E file 2012 taxes late Generally, any scholarship or fellowship is treated as tax free. E file 2012 taxes late However, a scholarship or fellowship is not treated as tax free to the extent the student includes it in gross income (if the student is required to file a tax return for the year the scholarship or fellowship is received) and either of the following is true. E file 2012 taxes late The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. E file 2012 taxes late The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. E file 2012 taxes late You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the educational assistance in income in the year it is received. E file 2012 taxes late For details, see Adjustments to Qualified Education Expenses in chapters 2 and 3. E file 2012 taxes late Refunds. E file 2012 taxes late   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year. E file 2012 taxes late Some tax-free educational assistance received after 2013 may be treated as a refund. E file 2012 taxes late See Tax-free educational assistance , earlier. E file 2012 taxes late Refunds received in 2013. E file 2012 taxes late   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses for 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. E file 2012 taxes late Refunds received after 2013 but before your income tax return is filed. E file 2012 taxes late   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid before you file an income tax return for 2013, the amount of qualified education expenses for 2013 is reduced by the amount of the refund. E file 2012 taxes late Refunds received after 2013 and after your income tax return is filed. E file 2012 taxes late   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid after you file an income tax return for 2013, you may need to repay some or all of the credit. E file 2012 taxes late See Credit recapture , later. E file 2012 taxes late Coordination with Coverdell education savings accounts and qualified tuition programs. E file 2012 taxes late   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). E file 2012 taxes late 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. E file 2012 taxes late Credit recapture. E file 2012 taxes late    If any tax-free educational assistance for the qualified education expenses paid in 2013 or any refund of your qualified education expenses paid in 2013 is received after you file your 2013 income tax return, you must recapture (repay) any excess credit. E file 2012 taxes late You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing that amount by the amount of the refund or tax-free educational assistance. E file 2012 taxes late You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you had claimed the refigured credit(s). E file 2012 taxes late Include that amount as an additional tax for the year the refund or tax-free assistance was received. E file 2012 taxes late Example. E file 2012 taxes late   You paid $3,500 of qualified education expenses in December 2013, and your child began college in January 2014. E file 2012 taxes late You claimed $3,500 as the tuition and fees deduction on your 2013 income tax return. E file 2012 taxes late The reduction reduced your taxable income by $3,500. E file 2012 taxes late Also, you claimed no tax credits in 2013. E file 2012 taxes late Your child withdrew from two classes and you received a refund of $2,000 in 2014 after you filed your 2013 tax return. E file 2012 taxes late Refigure your 2013 tuition and fees deduction using $1,500 of qualified education expense instead of the $3,500. E file 2012 taxes late The refigured tuition and fees deduction is $1,500. E file 2012 taxes late Do not file an amended 2013 tax return to account for this adjustment. E file 2012 taxes late Instead, include the difference of $2,000 (but only to the extent this difference would have increased your 2013 tax) on the “Other income” line of your 2014 Form 1040. E file 2012 taxes late You cannot file Form 1040A for 2014. E file 2012 taxes late Amounts that do not reduce qualified education expenses. E file 2012 taxes late   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. E file 2012 taxes late   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. E file 2012 taxes late The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Restrictions. E file 2012 taxes late The use of the money is not restricted. E file 2012 taxes late Example 1. E file 2012 taxes late In 2013, Jackie paid $3,000 for tuition and $5,000 for room and board at University X. E file 2012 taxes late The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. E file 2012 taxes late To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. E file 2012 taxes late The terms of the scholarship state that it can be used to pay any of Jackie's college expenses. E file 2012 taxes late University X applies the $2,000 scholarship against Jackie's $8,000 total bill, and Jackie pays the $6,000 balance of her bill from University X with a combination of her student loan and her savings. E file 2012 taxes late Jackie does not report any portion of the scholarship as income on her tax return. E file 2012 taxes late In figuring the tuition and fees deduction, Jackie must reduce her qualified education expenses by the amount of the scholarship ($2,000) because she excluded the entire scholarship from her income. E file 2012 taxes late The student loan is not tax-free educational assistance, so she does not need to reduce her qualified expenses by any part of the loan proceeds. E file 2012 taxes late Jackie is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship) in 2013. E file 2012 taxes late Example 2. E file 2012 taxes late The facts are the same as in Example 1, except that Jackie reports her entire scholarship as income on her tax return. E file 2012 taxes late Because Jackie reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. E file 2012 taxes late Jackie is treated as having paid $3,000 in qualified education expenses. E file 2012 taxes late 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. E file 2012 taxes late This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. E file 2012 taxes late Sports, games, hobbies, and noncredit courses. E file 2012 taxes late   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. E file 2012 taxes late However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. E file 2012 taxes late Comprehensive or bundled fees. E file 2012 taxes late   Some eligible educational institutions combine all of their fees for an academic period into one amount. E file 2012 taxes late 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. E file 2012 taxes late 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. E file 2012 taxes late See Figuring the Deduction , later, for more information about Form 1098-T. E file 2012 taxes late 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 (as defined under Qualified Education Expenses , earlier). E file 2012 taxes late 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. E file 2012 taxes late For you to be able to deduct qualified education expenses for your dependent, you must claim an exemption for that individual. E file 2012 taxes late You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. E file 2012 taxes late IF your dependent is an eligible student and you. E file 2012 taxes late . E file 2012 taxes late . E file 2012 taxes late AND. E file 2012 taxes late . E file 2012 taxes late . E file 2012 taxes late THEN. E file 2012 taxes late . E file 2012 taxes late . E file 2012 taxes late 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. E file 2012 taxes late Your dependent cannot take a deduction. E file 2012 taxes late claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. E file 2012 taxes late do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. E file 2012 taxes late do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. E file 2012 taxes late Expenses paid by dependent. E file 2012 taxes late   If your dependent pays qualified education expenses, no one can take a tuition and fees deduction for those expenses. E file 2012 taxes late Neither you nor your dependent can deduct the expenses. E file 2012 taxes late For purposes of the tuition and fees deduction, you are not treated as paying any expenses actually paid by a dependent for whom you or anyone other than the dependent can claim an exemption. E file 2012 taxes late This rule applies even if you do not claim an exemption for your dependent on your tax return. E file 2012 taxes late Expenses paid by you. E file 2012 taxes late   If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring your tuition and fees deduction. E file 2012 taxes late Expenses paid under divorce decree. E file 2012 taxes late   Qualified education expenses paid directly to an eligible educational institution for a student under a court-approved divorce decree are treated as paid by the student. E file 2012 taxes late Only the student would be eligible to take a tuition and fees deduction for that payment, and then only if no one else could claim an exemption for the student. E file 2012 taxes late Expenses paid by others. E file 2012 taxes late   Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. E file 2012 taxes late In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. E file 2012 taxes late If you claim, or can claim, an exemption on your tax return for the student, you are not considered to have paid the expenses and you cannot deduct them. E file 2012 taxes late If the student is not a dependent, only the student can deduct payments made directly to the institution for his or her expenses. E file 2012 taxes late If the student is your dependent, no one can deduct the payments. E file 2012 taxes late Example. E file 2012 taxes late In 2013, Ms. E file 2012 taxes late Baker makes a payment directly to an eligible educational institution for her grandson Dan's qualified education expenses. E file 2012 taxes late For purposes of deducting tuition and fees, Dan is treated as receiving the money from his grandmother and, in turn, paying his own qualified education expenses. E file 2012 taxes late If an exemption cannot be claimed for Dan on anyone else's tax return, only Dan can claim a tuition and fees deduction for his grandmother's payment. E file 2012 taxes late If someone else can claim an exemption for Dan, no one will be allowed a deduction for Ms. E file 2012 taxes late Baker's payment. E file 2012 taxes late Tuition reduction. E file 2012 taxes late   When an eligible educational institution provides a reduction in tuition to an employee of the institution (or spouse or dependent child of an employee), the amount of the reduction may or may not be taxable. E file 2012 taxes late If it is taxable, the employee is treated as receiving a payment of that amount and, in turn, paying it to the educational institution on behalf of the student. E file 2012 taxes late For more information on tuition reductions, see Qualified Tuition Reduction , in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. E file 2012 taxes late Figuring the Deduction The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. E file 2012 taxes late See Effect of the Amount of Your Income on the Amount of Your Deduction , later. E file 2012 taxes late Form 1098-T. E file 2012 taxes late   To help you figure your tuition and fees deduction, the student should receive Form 1098-T (see Appendix A for a completed example of Form 1098-T). E file 2012 taxes late 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. E file 2012 taxes late An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. E file 2012 taxes late However, the amount in boxes 1 and 2 of Form 1098-T might be different than what you paid. E file 2012 taxes late When figuring the deduction, use only the amounts you paid in 2013 for qualified education expenses. E file 2012 taxes late   In addition, Form 1098-T should give other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether the student was enrolled at least half-time or was a graduate student. E file 2012 taxes late    The eligible educational institution may ask for a completed Form W-9S or similar statement to obtain the student's name, address, and taxpayer identification number. E file 2012 taxes late Effect of the Amount of Your Income on the Amount of Your Deduction If your MAGI is not more than $65,000 ($130,000 if you are married filing jointly), your maximum tuition and fees deduction is $4,000. E file 2012 taxes late If your MAGI is larger than $65,000 ($130,000 if you are married filing jointly), but is not more than $80,000 ($160,000 if you are married filing jointly), your maximum deduction is $2,000. E file 2012 taxes late No tuition and fees deduction is allowed if your MAGI is larger than $80,000 ($160,000 if you are married filing jointly). E file 2012 taxes late Modified adjusted gross income (MAGI). E file 2012 taxes late   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for tuition and fees. E file 2012 taxes late However, as discussed below, there may be other modifications. E file 2012 taxes late MAGI when using Form 1040A. E file 2012 taxes late   If you file Form 1040A, your MAGI is the AGI on line 22 of that form, figured without taking into account any amount on line 19 (tuition and fees deduction). E file 2012 taxes late MAGI when using Form 1040. E file 2012 taxes late   If you file Form 1040, your MAGI is the AGI on line 38 of that form, figured without taking into account any amount on line 34 (tuition and fees deduction) or line 35 (domestic production activities deduction), and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. E file 2012 taxes late   Table 6-2 shows how the amount of your MAGI can affect your tuition and fees deduction. E file 2012 taxes late   You can use Worksheet 6-1. E file 2012 taxes late MAGI for the Tuition and Fees Deduction , later, to figure your MAGI. E file 2012 taxes late Table 6-2. E file 2012 taxes late Effect of MAGI on Maximum Tuition and Fees Deduction IF your filing status is. E file 2012 taxes late . E file 2012 taxes late . E file 2012 taxes late AND your MAGI is. E file 2012 taxes late . E file 2012 taxes late . E file 2012 taxes late THEN your maximum tuition and fees deduction is. E file 2012 taxes late . E file 2012 taxes late . E file 2012 taxes late single,  head of household, or qualifying widow(er) not more than $65,000 $4,000. E file 2012 taxes late more than $65,000  but not more than $80,000 $2,000. E file 2012 taxes late more than $80,000 $0. E file 2012 taxes late married filing joint return not more than $130,000 $4,000. E file 2012 taxes late more than $130,000 but not more than $160,000 $2,000. E file 2012 taxes late more than $160,000 $0. E file 2012 taxes late Claiming the Deduction You claim a tuition and fees deduction by completing Form 8917 and submitting it with your Form 1040 or Form 1040A. E file 2012 taxes late Enter the deduction on Form 1040, line 34, or Form 1040A, line 19. E file 2012 taxes late A filled-in Form 8917 is shown at the end of this chapter. E file 2012 taxes late Illustrated Example Tim Pfister, a single taxpayer, enrolled full-time at a local college to earn a degree in engineering. E file 2012 taxes late This is the first year of his postsecondary education. E file 2012 taxes late During 2013, he paid $3,600 for his qualified 2013 tuition expense. E file 2012 taxes late Both he and the college meet all of the requirements for the tuition and fees deduction. E file 2012 taxes late Tim's total income (Form 1040, line 22) and MAGI are $26,000. E file 2012 taxes late He figures his deduction of $3,600 as shown on Form 8917, later. E file 2012 taxes late Worksheet 6-1. E file 2012 taxes late MAGI for the Tuition and Fees Deduction Use this worksheet if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico. E file 2012 taxes late Before using this worksheet, you must complete Form 1040, lines 7 through 33, and figure any amount to be entered on the dotted line next to line 36. E file 2012 taxes late 1. E file 2012 taxes late Enter the amount from Form 1040, line 22   1. E file 2012 taxes late         2. E file 2012 taxes late Enter the total from Form 1040, lines 23 through 33   2. E file 2012 taxes late               3. E file 2012 taxes late Enter the total of any amounts entered on the dotted line next to Form 1040, line 36   3. E file 2012 taxes late               4. E file 2012 taxes late Add lines 2 and 3   4. E file 2012 taxes late         5. E file 2012 taxes late Subtract line 4 from line 1   5. E file 2012 taxes late         6. E file 2012 taxes late Enter your foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   6. E file 2012 taxes late         7. E file 2012 taxes late Enter your foreign housing deduction (Form 2555, line 50)   7. E file 2012 taxes late         8. E file 2012 taxes late Enter the amount of income from Puerto Rico you are excluding   8. E file 2012 taxes late         9. E file 2012 taxes late Enter the amount of income from American Samoa you are  excluding (Form 4563, line 15)   9. E file 2012 taxes late         10. E file 2012 taxes late Add lines 5 through 9. E file 2012 taxes late This is your modified adjusted gross income   10. E file 2012 taxes late     Note. E file 2012 taxes late If the amount on line 10 is more than $80,000 ($160,000 if married filing jointly),  you cannot take the deduction for tuition and fees. E file 2012 taxes late       This image is too large to be displayed in the current screen. E file 2012 taxes late Please click the link to view the image. E file 2012 taxes late Form 8917 for Tim Pfister Prev  Up  Next   Home   More Online Publications