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Tax Act 2012 Returning User

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Tax Act 2012 Returning User

Tax act 2012 returning user 6. Tax act 2012 returning user   Tuition and Fees Deduction Table of Contents IntroductionWhat is the tax benefit of the tuition and fees deduction. Tax act 2012 returning user 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). Tax act 2012 returning user 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. Tax act 2012 returning user The qualified expenses must be for higher education, as explained later under Qualified Education Expenses . Tax act 2012 returning user What is the tax benefit of the tuition and fees deduction. Tax act 2012 returning user   The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. Tax act 2012 returning user   This deduction is taken as an adjustment to income. Tax act 2012 returning user This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). Tax act 2012 returning user This deduction may be beneficial to you if you do not qualify for the American opportunity or lifetime learning credits. Tax act 2012 returning user You can choose the education benefit that will give you the lowest tax. Tax act 2012 returning user You may want to compare the tuition and fees deduction to the education credits. Tax act 2012 returning user See chapter 2, American Opportunity Credit and chapter 3, Lifetime Learning Credit for more information on the education credits. Tax act 2012 returning user Table 6-1. Tax act 2012 returning user Tuition and Fees Deduction at a Glance summarizes the features of the tuition and fees deduction. Tax act 2012 returning user Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. Tax act 2012 returning user Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. Tax act 2012 returning user You pay qualified education expenses of higher education. Tax act 2012 returning user You pay the education expenses for an eligible student. Tax act 2012 returning user The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return. Tax act 2012 returning user The term “qualified education expenses” is defined later under Qualified Education Expenses . Tax act 2012 returning user “Eligible student” is defined later under Who Is an Eligible Student . Tax act 2012 returning user For more information on claiming the deduction for a dependent, see Who Can Claim a Dependent's Expenses , later. Tax act 2012 returning user Table 6-1. Tax act 2012 returning user Tuition and Fees Deduction at a Glance Do not rely on this table alone. Tax act 2012 returning user Refer to the text for complete details. Tax act 2012 returning user Question Answer What is the maximum benefit? You can reduce your income subject to tax by up to $4,000. Tax act 2012 returning user 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). Tax act 2012 returning user Where is the deduction taken? As an adjustment to income on  Form 1040 or Form 1040A. Tax act 2012 returning user 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. Tax act 2012 returning user 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. Tax act 2012 returning user Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. Tax act 2012 returning user Your filing status is married filing separately. Tax act 2012 returning user Another person can claim an exemption for you as a dependent on his or her tax return. Tax act 2012 returning user You cannot take the deduction even if the other person does not actually claim that exemption. Tax act 2012 returning user Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). Tax act 2012 returning user 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. Tax act 2012 returning user More information on nonresident aliens can be found in Publication 519. Tax act 2012 returning user 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. Tax act 2012 returning user 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. Tax act 2012 returning user 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. Tax act 2012 returning user Academic period. Tax act 2012 returning user   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. Tax act 2012 returning user 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. Tax act 2012 returning user Paid with borrowed funds. Tax act 2012 returning user   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. Tax act 2012 returning user 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. Tax act 2012 returning user Treat loan disbursements sent directly to the educational institution as paid on the date the institution credits the student's account. Tax act 2012 returning user Student withdraws from class(es). Tax act 2012 returning user   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. Tax act 2012 returning user 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. Tax act 2012 returning user Eligible educational institution. Tax act 2012 returning user   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. Tax act 2012 returning user S. Tax act 2012 returning user Department of Education. Tax act 2012 returning user It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Tax act 2012 returning user The educational institution should be able to tell you if it is an eligible educational institution. Tax act 2012 returning user   Certain educational institutions located outside the United States also participate in the U. Tax act 2012 returning user S. Tax act 2012 returning user Department of Education's Federal Student Aid (FSA) programs. Tax act 2012 returning user Related expenses. Tax act 2012 returning user   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. Tax act 2012 returning user Prepaid expenses. Tax act 2012 returning user   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. Tax act 2012 returning user See Academic period , earlier. Tax act 2012 returning user 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). Tax act 2012 returning user 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). Tax act 2012 returning user In the following examples, assume that each student is an eligible student and each college or university an eligible educational institution. Tax act 2012 returning user Example 1. Tax act 2012 returning user Jackson is a sophomore in University V's degree program in dentistry. Tax act 2012 returning user 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. Tax act 2012 returning user 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. Tax act 2012 returning user Example 2. Tax act 2012 returning user 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. Tax act 2012 returning user 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. Tax act 2012 returning user Charles bought his books from a friend, so what he paid for them is not a qualified education expense. Tax act 2012 returning user Donna bought hers at College W's bookstore. Tax act 2012 returning user 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. Tax act 2012 returning user Example 3. Tax act 2012 returning user When Marci enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. Tax act 2012 returning user 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. Tax act 2012 returning user No portion of the fee covers personal expenses. Tax act 2012 returning user Although labeled as a student activity fee, the fee is required for Marci's enrollment and attendance at College X. Tax act 2012 returning user Therefore, it is a qualified expense. Tax act 2012 returning user No Double Benefit Allowed You cannot do any of the following. Tax act 2012 returning user Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. Tax act 2012 returning user 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. Tax act 2012 returning user 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). Tax act 2012 returning user 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. Tax act 2012 returning user See Coordination With Tuition and Fees Deduction in chapter 8, Qualified Tuition Program, later. Tax act 2012 returning user Deduct qualified education expenses that have been paid with tax-free interest on U. Tax act 2012 returning user S. Tax act 2012 returning user savings bonds (Form 8815). Tax act 2012 returning user See Figuring the Tax-Free Amount in chapter 10, Education Savings Bond Program, later. Tax act 2012 returning user Deduct qualified education expenses that have been paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. Tax act 2012 returning user See the following section on Adjustments to Qualified Education Expenses. Tax act 2012 returning user 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. Tax act 2012 returning user The result is the amount of adjusted qualified education expenses for each student. Tax act 2012 returning user You must also reduce qualified education expenses by the other amounts referred to in No Double Benefit Allowed , earlier. Tax act 2012 returning user Tax-free educational assistance. Tax act 2012 returning user   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. Tax act 2012 returning user See Academic period , earlier. Tax act 2012 returning user   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. Tax act 2012 returning user 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). Tax act 2012 returning user   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. Tax act 2012 returning user 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. Tax act 2012 returning user   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. Tax act 2012 returning user Generally, any scholarship or fellowship is treated as tax free. Tax act 2012 returning user 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. Tax act 2012 returning user 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. Tax act 2012 returning user 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. Tax act 2012 returning user 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. Tax act 2012 returning user For details, see Adjustments to Qualified Education Expenses in chapters 2 and 3. Tax act 2012 returning user Refunds. Tax act 2012 returning user   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. Tax act 2012 returning user Some tax-free educational assistance received after 2013 may be treated as a refund. Tax act 2012 returning user See Tax-free educational assistance , earlier. Tax act 2012 returning user Refunds received in 2013. Tax act 2012 returning user   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. Tax act 2012 returning user Refunds received after 2013 but before your income tax return is filed. Tax act 2012 returning user   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. Tax act 2012 returning user Refunds received after 2013 and after your income tax return is filed. Tax act 2012 returning user   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. Tax act 2012 returning user See Credit recapture , later. Tax act 2012 returning user Coordination with Coverdell education savings accounts and qualified tuition programs. Tax act 2012 returning user   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). Tax act 2012 returning user 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. Tax act 2012 returning user Credit recapture. Tax act 2012 returning user    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. Tax act 2012 returning user 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. Tax act 2012 returning user 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). Tax act 2012 returning user Include that amount as an additional tax for the year the refund or tax-free assistance was received. Tax act 2012 returning user Example. Tax act 2012 returning user   You paid $3,500 of qualified education expenses in December 2013, and your child began college in January 2014. Tax act 2012 returning user You claimed $3,500 as the tuition and fees deduction on your 2013 income tax return. Tax act 2012 returning user The reduction reduced your taxable income by $3,500. Tax act 2012 returning user Also, you claimed no tax credits in 2013. Tax act 2012 returning user Your child withdrew from two classes and you received a refund of $2,000 in 2014 after you filed your 2013 tax return. Tax act 2012 returning user Refigure your 2013 tuition and fees deduction using $1,500 of qualified education expense instead of the $3,500. Tax act 2012 returning user The refigured tuition and fees deduction is $1,500. Tax act 2012 returning user Do not file an amended 2013 tax return to account for this adjustment. Tax act 2012 returning user 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. Tax act 2012 returning user You cannot file Form 1040A for 2014. Tax act 2012 returning user Amounts that do not reduce qualified education expenses. Tax act 2012 returning user   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. Tax act 2012 returning user   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. Tax act 2012 returning user 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. Tax act 2012 returning user The use of the money is not restricted. Tax act 2012 returning user Example 1. Tax act 2012 returning user In 2013, Jackie paid $3,000 for tuition and $5,000 for room and board at University X. Tax act 2012 returning user The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. Tax act 2012 returning user To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. Tax act 2012 returning user The terms of the scholarship state that it can be used to pay any of Jackie's college expenses. Tax act 2012 returning user 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. Tax act 2012 returning user Jackie does not report any portion of the scholarship as income on her tax return. Tax act 2012 returning user 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. Tax act 2012 returning user 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. Tax act 2012 returning user Jackie is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship) in 2013. Tax act 2012 returning user Example 2. Tax act 2012 returning user The facts are the same as in Example 1, except that Jackie reports her entire scholarship as income on her tax return. Tax act 2012 returning user Because Jackie reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. Tax act 2012 returning user Jackie is treated as having paid $3,000 in qualified education expenses. Tax act 2012 returning user 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. Tax act 2012 returning user This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Tax act 2012 returning user Sports, games, hobbies, and noncredit courses. Tax act 2012 returning user   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. Tax act 2012 returning user However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. Tax act 2012 returning user Comprehensive or bundled fees. Tax act 2012 returning user   Some eligible educational institutions combine all of their fees for an academic period into one amount. Tax act 2012 returning user 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. Tax act 2012 returning user 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. Tax act 2012 returning user See Figuring the Deduction , later, for more information about Form 1098-T. Tax act 2012 returning user 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). Tax act 2012 returning user 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. Tax act 2012 returning user For you to be able to deduct qualified education expenses for your dependent, you must claim an exemption for that individual. Tax act 2012 returning user You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. Tax act 2012 returning user IF your dependent is an eligible student and you. Tax act 2012 returning user . Tax act 2012 returning user . Tax act 2012 returning user AND. Tax act 2012 returning user . Tax act 2012 returning user . Tax act 2012 returning user THEN. Tax act 2012 returning user . Tax act 2012 returning user . Tax act 2012 returning user 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. Tax act 2012 returning user Your dependent cannot take a deduction. Tax act 2012 returning user claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Tax act 2012 returning user do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. Tax act 2012 returning user do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Tax act 2012 returning user Expenses paid by dependent. Tax act 2012 returning user   If your dependent pays qualified education expenses, no one can take a tuition and fees deduction for those expenses. Tax act 2012 returning user Neither you nor your dependent can deduct the expenses. Tax act 2012 returning user 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. Tax act 2012 returning user This rule applies even if you do not claim an exemption for your dependent on your tax return. Tax act 2012 returning user Expenses paid by you. Tax act 2012 returning user   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. Tax act 2012 returning user Expenses paid under divorce decree. Tax act 2012 returning user   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. Tax act 2012 returning user 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. Tax act 2012 returning user Expenses paid by others. Tax act 2012 returning user   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. Tax act 2012 returning user In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. Tax act 2012 returning user 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. Tax act 2012 returning user If the student is not a dependent, only the student can deduct payments made directly to the institution for his or her expenses. Tax act 2012 returning user If the student is your dependent, no one can deduct the payments. Tax act 2012 returning user Example. Tax act 2012 returning user In 2013, Ms. Tax act 2012 returning user Baker makes a payment directly to an eligible educational institution for her grandson Dan's qualified education expenses. Tax act 2012 returning user 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. Tax act 2012 returning user 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. Tax act 2012 returning user If someone else can claim an exemption for Dan, no one will be allowed a deduction for Ms. Tax act 2012 returning user Baker's payment. Tax act 2012 returning user Tuition reduction. Tax act 2012 returning user   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. Tax act 2012 returning user 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. Tax act 2012 returning user For more information on tuition reductions, see Qualified Tuition Reduction , in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Tax act 2012 returning user 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. Tax act 2012 returning user See Effect of the Amount of Your Income on the Amount of Your Deduction , later. Tax act 2012 returning user Form 1098-T. Tax act 2012 returning user   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). Tax act 2012 returning user 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. Tax act 2012 returning user An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. Tax act 2012 returning user However, the amount in boxes 1 and 2 of Form 1098-T might be different than what you paid. Tax act 2012 returning user When figuring the deduction, use only the amounts you paid in 2013 for qualified education expenses. Tax act 2012 returning user   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. Tax act 2012 returning user    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. Tax act 2012 returning user 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. Tax act 2012 returning user 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. Tax act 2012 returning user No tuition and fees deduction is allowed if your MAGI is larger than $80,000 ($160,000 if you are married filing jointly). Tax act 2012 returning user Modified adjusted gross income (MAGI). Tax act 2012 returning user   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. Tax act 2012 returning user However, as discussed below, there may be other modifications. Tax act 2012 returning user MAGI when using Form 1040A. Tax act 2012 returning user   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). Tax act 2012 returning user MAGI when using Form 1040. Tax act 2012 returning user   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. Tax act 2012 returning user   Table 6-2 shows how the amount of your MAGI can affect your tuition and fees deduction. Tax act 2012 returning user   You can use Worksheet 6-1. Tax act 2012 returning user MAGI for the Tuition and Fees Deduction , later, to figure your MAGI. Tax act 2012 returning user Table 6-2. Tax act 2012 returning user Effect of MAGI on Maximum Tuition and Fees Deduction IF your filing status is. Tax act 2012 returning user . Tax act 2012 returning user . Tax act 2012 returning user AND your MAGI is. Tax act 2012 returning user . Tax act 2012 returning user . Tax act 2012 returning user THEN your maximum tuition and fees deduction is. Tax act 2012 returning user . Tax act 2012 returning user . Tax act 2012 returning user single,  head of household, or qualifying widow(er) not more than $65,000 $4,000. Tax act 2012 returning user more than $65,000  but not more than $80,000 $2,000. Tax act 2012 returning user more than $80,000 $0. Tax act 2012 returning user married filing joint return not more than $130,000 $4,000. Tax act 2012 returning user more than $130,000 but not more than $160,000 $2,000. Tax act 2012 returning user more than $160,000 $0. Tax act 2012 returning user Claiming the Deduction You claim a tuition and fees deduction by completing Form 8917 and submitting it with your Form 1040 or Form 1040A. Tax act 2012 returning user Enter the deduction on Form 1040, line 34, or Form 1040A, line 19. Tax act 2012 returning user A filled-in Form 8917 is shown at the end of this chapter. Tax act 2012 returning user Illustrated Example Tim Pfister, a single taxpayer, enrolled full-time at a local college to earn a degree in engineering. Tax act 2012 returning user This is the first year of his postsecondary education. Tax act 2012 returning user During 2013, he paid $3,600 for his qualified 2013 tuition expense. Tax act 2012 returning user Both he and the college meet all of the requirements for the tuition and fees deduction. Tax act 2012 returning user Tim's total income (Form 1040, line 22) and MAGI are $26,000. Tax act 2012 returning user He figures his deduction of $3,600 as shown on Form 8917, later. Tax act 2012 returning user Worksheet 6-1. Tax act 2012 returning user 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. Tax act 2012 returning user 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. Tax act 2012 returning user 1. Tax act 2012 returning user Enter the amount from Form 1040, line 22   1. Tax act 2012 returning user         2. Tax act 2012 returning user Enter the total from Form 1040, lines 23 through 33   2. Tax act 2012 returning user               3. Tax act 2012 returning user Enter the total of any amounts entered on the dotted line next to Form 1040, line 36   3. Tax act 2012 returning user               4. Tax act 2012 returning user Add lines 2 and 3   4. Tax act 2012 returning user         5. Tax act 2012 returning user Subtract line 4 from line 1   5. Tax act 2012 returning user         6. Tax act 2012 returning user Enter your foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   6. Tax act 2012 returning user         7. Tax act 2012 returning user Enter your foreign housing deduction (Form 2555, line 50)   7. Tax act 2012 returning user         8. Tax act 2012 returning user Enter the amount of income from Puerto Rico you are excluding   8. Tax act 2012 returning user         9. Tax act 2012 returning user Enter the amount of income from American Samoa you are  excluding (Form 4563, line 15)   9. Tax act 2012 returning user         10. Tax act 2012 returning user Add lines 5 through 9. Tax act 2012 returning user This is your modified adjusted gross income   10. Tax act 2012 returning user     Note. Tax act 2012 returning user 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. Tax act 2012 returning user       This image is too large to be displayed in the current screen. Tax act 2012 returning user Please click the link to view the image. 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Tax Relief for Victims of the Remnants of Tropical Storm Lee in New York

IRS e-File to Remain Open through Oct. 31 for Victims of Tropical Storm Lee

Updated 10/24/11 to add Herkimer and Schoharie counties.
Updated 10/11/11 to add Fulton county.
Updated 10/5/11 to add Oneida, Orange and Ulster counties.
Updated 9/20/11 to add Chemung and Schenectady counties.

NY-2011-36, Sept. 14, 2011

NEW YORK — Victims of the remnants of Tropical Storm Lee that began on Sept. 7, 2011 in parts of New York State may qualify for tax relief from the Internal Revenue Service.

The President has declared the following counties a federal disaster area: Broome, Chemung, Chenango, Delaware, Fulton, Herkimer Oneida, Orange, Otsego, Schenectady, Schoharie, Tioga and Ulster. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Sept. 7, and on or before Oct. 31, have been postponed to Oct. 31, 2011. This includes corporations and other businesses that previously obtained an extension until Sept. 15 to file their 2010 returns, and individuals and businesses that received a similar extension until Oct. 17. It also includes the estimated tax payment for the third quarter, normally due Sept. 15.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Sept. 7, and on or before Sept. 22, as long as the deposits are made by Sept. 22, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Oct. 31 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Sept. 7 and on or before Oct. 31.

The IRS also gives affected taxpayers until Oct. 31 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Sept. 7 and on or before Oct. 31.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Sept. 7 and on or before Sept. 22 provided the taxpayer makes these deposits by Sept. 22.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “New York/Remnants of Tropical Storm Lee” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information

Page Last Reviewed or Updated: 26-Mar-2014

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