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Where can i get my taxes done for free Index A Additional Medicare Tax, What's New Allocated tips, Allocated Tips Assistance (see Tax help) C Cash tips, How to keep a daily tip record. Where can i get my taxes done for free Credit card charge tips, How to keep a daily tip record. Where can i get my taxes done for free D Daily tip record, Keeping a Daily Tip Record E Electronic tip record, Electronic tip record. Where can i get my taxes done for free Electronic tip statement, Electronic tip statement. Where can i get my taxes done for free Employers Giving money to, for taxes, Giving your employer money for taxes. Where can i get my taxes done for free Reporting tips to, Reporting Tips to Your Employer EmTRAC program, Tip Rate Determination and Education Program F Figures Form 4070A, sample filled-in, Form 1040 Schedule C, Self-employed persons. Where can i get my taxes done for free Unreported tips, Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer. Where can i get my taxes done for free Form 4070, What tips to report. Where can i get my taxes done for free Sample filled-in, Form 4070A, How to keep a daily tip record. Where can i get my taxes done for free Form 4137, Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer. Where can i get my taxes done for free Form 8027, How to request an approved lower rate. Where can i get my taxes done for free Form W-2 Uncollected taxes, Giving your employer money for taxes. Where can i get my taxes done for free , Reporting uncollected social security, Medicare, Additional Medicare, or railroad retirement taxes on tips reported to your employer. Where can i get my taxes done for free Free tax services, Free help with your tax return. Where can i get my taxes done for free G Gaming Industry Tip Compliance Agreement Program, Tip Rate Determination and Education Program H Help (see Tax help) M Missing children, photographs of, Reminder N Noncash tips, How to keep a daily tip record. Where can i get my taxes done for free P Penalties Failure to report tips to employer, Penalty for not reporting tips. Where can i get my taxes done for free Underpayment of estimated taxes, Giving your employer money for taxes. Where can i get my taxes done for free Publications (see Tax help) R Recordkeeping requirements Daily tip record, Keeping a Daily Tip Record Reporting Employee to report tips to employer, Reporting Tips to Your Employer Tip income, Introduction S Self-employed persons, Self-employed persons. Where can i get my taxes done for free Service charge paid as wages, Service charges. Where can i get my taxes done for free Social security and Medicare taxes Allocated tips, How to report allocated tips. Where can i get my taxes done for free Reporting of earnings to Social Security Administration, Why report tips to your employer. Where can i get my taxes done for free Tips not reported to employer, Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer. Where can i get my taxes done for free Uncollected taxes on tips, Reporting uncollected social security, Medicare, Additional Medicare, or railroad retirement taxes on tips reported to your employer. Where can i get my taxes done for free T Tax help, How To Get Tax Help Tax returns, Reporting Tips on Your Tax Return Tip pools, How to keep a daily tip record. Where can i get my taxes done for free Tip Rate Determination and Education Program, Tip Rate Determination and Education Program Tip splitting, How to keep a daily tip record. Where can i get my taxes done for free TTY/TDD information, How To Get Tax Help U Uncollected taxes, Giving your employer money for taxes. Where can i get my taxes done for free , Reporting uncollected social security, Medicare, Additional Medicare, or railroad retirement taxes on tips reported to your employer. Where can i get my taxes done for free W Withholding, Why report tips to your employer. Where can i get my taxes done for free Prev  Up     Home   More Online Publications
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Understanding your CP259 Notice

We've sent you this notice because our records indicate you didn't file the required business tax return identified in the notice.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).
 


What you need to do

  • File your required business return immediately.
    • If eligible, file your return electronically with all required schedules, using your e-file provider, or
    • File a paper return with all required schedules
  • Complete the Response form enclosed with your notice and mail it to us, using the enclosed envelope:
    • To explain why you are filing late.
    • To explain why you don’t think you need to file.
    • If you have already filed and it's been more than four weeks, or if you used a different name or Employer ID number (EIN) than shown on the notice when filing.
  • If you have filed within the last four weeks using the same name and EIN shown on the notice, you may disregard this notice.

You may want to...

  • Review Tax Information for Businesses which provides information regarding various business filing issues.
  • Review your records and ensure all returns are filed timely.

Answers to Common Questions

Why did I receive multiple CP 259 notices?
If your business hasn't filed tax returns, a notice will be generated and mailed for each tax form and tax period the IRS shows as delinquent.

I have never had employees and or filed this return previously so why did I receive a notice requesting me to file?
When you apply for an Employer Identification number, filing requirements are established requiring specific types of returns to be filed (e.g. Form 940, Employer's Annual Federal Unemployment Tax Return; Form 941, Employer's Quarterly Federal Tax Return; Form 1120, U.S. Corporation Income Tax Return, etc.). When the return is not filed, the IRS considers it to be delinquent and generates a notice requesting the return be filed.

Do I still need to file a tax return even if I had no employees or business activity during the tax period(s) in question?
If you had no employees or business activity during a tax period you are not required to file a return for that tax period. You still need to respond to this notice. If you made Federal Tax Deposits or other payments or credits for the tax period, you must file a signed return showing the payments to get a refund.


Tips for next year

File all required returns by the appropriate due date.


Understanding your notice

Reading your notice
Your notice may look different from the sample because the information contained in your notice is tailored to your situation.

Notice CP259, Page 1

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Page Last Reviewed or Updated: 28-Mar-2014

The Where Can I Get My Taxes Done For Free

Where can i get my taxes done for free 4. Where can i get my taxes done for free   Student Loan Interest Deduction Table of Contents Introduction Student Loan Interest DefinedQualified Student Loan Qualified Education Expenses Include As Interest Do Not Include As Interest When Must Interest Be Paid Can You Claim the DeductionNo Double Benefit Allowed Figuring the DeductionEffect of the Amount of Your Income on the Amount of Your Deduction Which Worksheet To Use Claiming the Deduction Introduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. Where can i get my taxes done for free However, if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. Where can i get my taxes done for free For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. Where can i get my taxes done for free This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. Where can i get my taxes done for free The student loan interest deduction is taken as an adjustment to income. Where can i get my taxes done for free This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). Where can i get my taxes done for free This chapter explains: What type of loan interest you can deduct, Whether you can claim the deduction, What expenses you must have paid with the student loan, Who is an eligible student, How to figure the deduction, and How to claim the deduction. Where can i get my taxes done for free Table 4-1. Where can i get my taxes done for free Student Loan Interest Deduction at a Glance This table summarizes the features of the student loan interest deduction. Where can i get my taxes done for free Do not rely on this table alone. Where can i get my taxes done for free Refer to the text for complete details. Where can i get my taxes done for free Feature   Description Maximum benefit   You can reduce your income subject to tax by up to $2,500. Where can i get my taxes done for free Loan qualifications   Your student loan: •must have been taken out solely to pay qualified education expenses, and •cannot be from a related person or made under a qualified employer plan. Where can i get my taxes done for free Student qualifications   The student must be: •you, your spouse, or your dependent, and  •enrolled at least half-time in a degree program. Where can i get my taxes done for free Time limit on deduction   You can deduct interest paid during the remaining period of your student loan. Where can i get my taxes done for free Limit on modified adjusted gross income (MAGI)   $155,000 if married filing a joint return; $75,000 if single, head of household, or qualifying widow(er). Where can i get my taxes done for free Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. Where can i get my taxes done for free It includes both required and voluntary interest payments. Where can i get my taxes done for free Qualified Student Loan This is a loan you took out solely to pay qualified education expenses (defined later) that were: For you, your spouse, or a person who was your dependent when you took out the loan, Paid or incurred within a reasonable period of time before or after you took out the loan, and For education provided during an academic period for an eligible student. Where can i get my taxes done for free Loans from the following sources are not qualified student loans. Where can i get my taxes done for free A related person. Where can i get my taxes done for free A qualified employer plan. Where can i get my taxes done for free Your dependent. Where can i get my taxes done for free   Generally, your dependent is someone who is either a: Qualifying child, or Qualifying relative. Where can i get my taxes done for free You can find more information about dependents in Publication 501. Where can i get my taxes done for free Exceptions. Where can i get my taxes done for free   For purposes of the student loan interest deduction, there are the following exceptions to the general rules for dependents. Where can i get my taxes done for free An individual can be your dependent even if you are the dependent of another taxpayer. Where can i get my taxes done for free An individual can be your dependent even if the individual files a joint return with a spouse. Where can i get my taxes done for free An individual can be your dependent even if the individual had gross income for the year that was equal to or more than the exemption amount for the year ($3,900 for 2013). Where can i get my taxes done for free Reasonable period of time. Where can i get my taxes done for free   Qualified education expenses are treated as paid or incurred within a reasonable period of time before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal postsecondary education loan program. Where can i get my taxes done for free   Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met. Where can i get my taxes done for free The expenses relate to a specific academic period, and The loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period. Where can i get my taxes done for free   If neither of the above situations applies, the reasonable period of time usually is determined based on all the relevant facts and circumstances. Where can i get my taxes done for free Academic period. Where can i get my taxes done for free   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. Where can i get my taxes done for free 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. Where can i get my taxes done for free Eligible student. Where can i get my taxes done for free   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. Where can i get my taxes done for free Enrolled at least half-time. Where can i get my taxes done for free   A student was enrolled at least half-time if the student was taking at least half the normal full-time work load for his or her course of study. Where can i get my taxes done for free   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Where can i get my taxes done for free However, the standard may not be lower than any of those established by the U. Where can i get my taxes done for free S. Where can i get my taxes done for free Department of Education under the Higher Education Act of 1965. Where can i get my taxes done for free Related person. Where can i get my taxes done for free   You cannot deduct interest on a loan you get from a related person. Where can i get my taxes done for free Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. Where can i get my taxes done for free ), Your lineal descendants (children, grandchildren, etc. Where can i get my taxes done for free ), and Certain corporations, partnerships, trusts, and exempt organizations. Where can i get my taxes done for free Qualified employer plan. Where can i get my taxes done for free   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. Where can i get my taxes done for free Qualified Education Expenses For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. Where can i get my taxes done for free They include amounts paid for the following items. Where can i get my taxes done for free Tuition and fees. Where can i get my taxes done for free Room and board. Where can i get my taxes done for free Books, supplies, and equipment. Where can i get my taxes done for free Other necessary expenses (such as transportation). Where can i get my taxes done for free The cost of room and board qualifies only to the extent that it is not more than the greater of: The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, or The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. Where can i get my taxes done for free Eligible educational institution. Where can i get my taxes done for free   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. Where can i get my taxes done for free S. Where can i get my taxes done for free Department of Education. Where can i get my taxes done for free It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Where can i get my taxes done for free   Certain educational institutions located outside the United States also participate in the U. Where can i get my taxes done for free S. Where can i get my taxes done for free Department of Education's Federal Student Aid (FSA) programs. Where can i get my taxes done for free   For purposes of the student loan interest deduction, an eligible educational institution also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. Where can i get my taxes done for free   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. Where can i get my taxes done for free The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. Where can i get my taxes done for free    The educational institution should be able to tell you if it is an eligible educational institution. Where can i get my taxes done for free Adjustments to Qualified Education Expenses You must reduce your qualified education expenses by the total amount paid for them with the following tax-free items. Where can i get my taxes done for free Employer-provided educational assistance. Where can i get my taxes done for free See chapter 11, Employer-Provided Educational Assistance . Where can i get my taxes done for free Tax-free distribution of earnings from a Coverdell education savings account (ESA). Where can i get my taxes done for free See Tax-Free Distributions in chapter 7, Coverdell Education Savings Account. Where can i get my taxes done for free Tax-free distribution of earnings from a qualified tuition program (QTP). Where can i get my taxes done for free See Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program. Where can i get my taxes done for free U. Where can i get my taxes done for free S. Where can i get my taxes done for free savings bond interest that you exclude from income because it is used to pay qualified education expenses. Where can i get my taxes done for free See chapter 10, Education Savings Bond Program . Where can i get my taxes done for free The tax-free part of scholarships and fellowships. Where can i get my taxes done for free See Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Where can i get my taxes done for free Veterans' educational assistance. Where can i get my taxes done for free See Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Where can i get my taxes done for free Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Where can i get my taxes done for free Include As Interest In addition to simple interest on the loan, if all other requirements are met, the items discussed below can be student loan interest. Where can i get my taxes done for free Loan origination fee. Where can i get my taxes done for free   In general, this is a one-time fee charged by the lender when a loan is made. Where can i get my taxes done for free To be deductible as interest, a loan origination fee must be for the use of money rather than for property or services (such as commitment fees or processing costs) provided by the lender. Where can i get my taxes done for free A loan origination fee treated as interest accrues over the term of the loan. Where can i get my taxes done for free   Loan origination fees were not required to be reported on Form 1098-E, Student Loan Interest Statement, for loans made before September 1, 2004. Where can i get my taxes done for free If loan origination fees are not included in the amount reported on your Form 1098-E, you can use any reasonable method to allocate the loan origination fees over the term of the loan. Where can i get my taxes done for free The method shown in the example below allocates equal portions of the loan origination fee to each payment required under the terms of the loan. Where can i get my taxes done for free A method that results in the double deduction of the same portion of a loan origination fee would not be reasonable. Where can i get my taxes done for free Example. Where can i get my taxes done for free In August 2004, Bill took out a student loan for $16,000 to pay the tuition for his senior year of college. Where can i get my taxes done for free The lender charged a 3% loan origination fee ($480) that was withheld from the funds Bill received. Where can i get my taxes done for free Bill began making payments on his student loan in 2013. Where can i get my taxes done for free Because the loan origination fee was not included in his 2013 Form 1098-E, Bill can use any reasonable method to allocate that fee over the term of the loan. Where can i get my taxes done for free Bill's loan is payable in 120 equal monthly payments. Where can i get my taxes done for free He allocates the $480 fee equally over the total number of payments ($480 ÷ 120 months = $4 per month). Where can i get my taxes done for free Bill made 7 payments in 2013, so he paid $28 ($4 × 7) of interest attributable to the loan origination fee. Where can i get my taxes done for free To determine his student loan interest deduction, he will add the $28 to the amount of other interest reported to him on Form 1098-E. Where can i get my taxes done for free Capitalized interest. Where can i get my taxes done for free   This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. Where can i get my taxes done for free Capitalized interest is treated as interest for tax purposes and is deductible as payments of principal are made on the loan. Where can i get my taxes done for free No deduction for capitalized interest is allowed in a year in which no loan payments were made. Where can i get my taxes done for free Interest on revolving lines of credit. Where can i get my taxes done for free   This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. Where can i get my taxes done for free See Qualified Education Expenses , earlier. Where can i get my taxes done for free Interest on refinanced student loans. Where can i get my taxes done for free   This includes interest on both: Consolidated loans—loans used to refinance more than one student loan of the same borrower, and Collapsed loans—two or more loans of the same borrower that are treated by both the lender and the borrower as one loan. Where can i get my taxes done for free    If you refinance a qualified student loan for more than your original loan and you use the additional amount for any purpose other than qualified education expenses, you cannot deduct any interest paid on the refinanced loan. Where can i get my taxes done for free Voluntary interest payments. Where can i get my taxes done for free   These are payments made on a qualified student loan during a period when interest payments are not required, such as when the borrower has been granted a deferment or the loan has not yet entered repayment status. Where can i get my taxes done for free Example. Where can i get my taxes done for free The payments on Roger's student loan were scheduled to begin in June 2012, 6 months after he graduated from college. Where can i get my taxes done for free He began making payments as required. Where can i get my taxes done for free In September 2013, Roger enrolled in graduate school on a full-time basis. Where can i get my taxes done for free He applied for and was granted deferment of his loan payments while in graduate school. Where can i get my taxes done for free Wanting to pay down his student loan as much as possible, he made loan payments in October and November 2013. Where can i get my taxes done for free Even though these were voluntary (not required) payments, Roger can deduct the interest paid in October and November. Where can i get my taxes done for free Allocating Payments Between Interest and Principal The allocation of payments between interest and principal for tax purposes might not be the same as the allocation shown on the Form 1098-E or other statement you receive from the lender or loan servicer. Where can i get my taxes done for free To make the allocation for tax purposes, a payment generally applies first to stated interest that remains unpaid as of the date the payment is due, second to any loan origination fees allocable to the payment, third to any capitalized interest that remains unpaid as of the date the payment is due, and fourth to the outstanding principal. Where can i get my taxes done for free Example. Where can i get my taxes done for free In August 2012, Peg took out a $10,000 student loan to pay the tuition for her senior year of college. Where can i get my taxes done for free The lender charged a 3% loan origination fee ($300) that was withheld from the funds Peg received. Where can i get my taxes done for free The interest (5% simple) on this loan accrued while she completed her senior year and for 6 months after she graduated. Where can i get my taxes done for free At the end of that period, the lender determined the amount to be repaid by capitalizing all accrued but unpaid interest ($625 interest accrued from August 2012 through October 2013) and adding it to the outstanding principal balance of the loan. Where can i get my taxes done for free The loan is payable over 60 months, with a payment of $200. Where can i get my taxes done for free 51 due on the first of each month, beginning November 2013. Where can i get my taxes done for free Peg did not receive a Form 1098-E for 2013 from her lender because the amount of interest she paid did not require the lender to issue an information return. Where can i get my taxes done for free However, she did receive an account statement from the lender that showed the following 2013 payments on her outstanding loan of $10,625 ($10,000 principal + $625 accrued but unpaid interest). Where can i get my taxes done for free Payment Date   Payment   Stated Interest   Principal November 2013   $200. Where can i get my taxes done for free 51   $44. Where can i get my taxes done for free 27   $156. Where can i get my taxes done for free 24 December 2013   $200. Where can i get my taxes done for free 51   $43. Where can i get my taxes done for free 62   $156. Where can i get my taxes done for free 89 Totals   $401. Where can i get my taxes done for free 02   $87. Where can i get my taxes done for free 89   $313. Where can i get my taxes done for free 13 To determine the amount of interest that could be deducted on the loan for 2013, Peg starts with the total amount of stated interest she paid, $87. Where can i get my taxes done for free 89. Where can i get my taxes done for free Next, she allocates the loan origination fee over the term of the loan ($300 ÷ 60 months = $5 per month). Where can i get my taxes done for free A total of $10 ($5 of each of the two principal payments) should be treated as interest for tax purposes. Where can i get my taxes done for free Peg then applies the unpaid capitalized interest ($625) to the two principal payments in the order in which they were made, and determines that the remaining amount of principal of both payments is treated as interest for tax purposes. Where can i get my taxes done for free Assuming that Peg qualifies to take the student loan interest deduction, she can deduct $401. Where can i get my taxes done for free 02 ($87. Where can i get my taxes done for free 89 + $10 + $303. Where can i get my taxes done for free 13). Where can i get my taxes done for free For 2014, Peg will continue to allocate $5 of the loan origination fee to the principal portion of each monthly payment she makes and treat that amount as interest for tax purposes. Where can i get my taxes done for free She also will apply the remaining amount of capitalized interest ($625 − $303. Where can i get my taxes done for free 13 = $321. Where can i get my taxes done for free 87) to the principal payments in the order in which they are made until the balance is zero, and treat those amounts as interest for tax purposes. Where can i get my taxes done for free Do Not Include As Interest You cannot claim a student loan interest deduction for any of the following items. Where can i get my taxes done for free Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. Where can i get my taxes done for free Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. Where can i get my taxes done for free Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the “NHSC Loan Repayment Program”) or certain other loan repayment assistance programs. Where can i get my taxes done for free For more information, see Student Loan Repayment Assistance in chapter 5, Student Loan Cancellations and Repayment Assistance. Where can i get my taxes done for free When Must Interest Be Paid You can deduct all interest you paid during the year on your student loan, including voluntary payments, until the loan is paid off. Where can i get my taxes done for free Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. Where can i get my taxes done for free Your filing status is any filing status except married filing separately. Where can i get my taxes done for free No one else is claiming an exemption for you on his or her tax return. Where can i get my taxes done for free You are legally obligated to pay interest on a qualified student loan. Where can i get my taxes done for free You paid interest on a qualified student loan. Where can i get my taxes done for free Claiming an exemption for you. Where can i get my taxes done for free   Another taxpayer is claiming an exemption for you if he or she lists your name and other required information on his or her Form 1040 (or Form 1040A), line 6c, or Form 1040NR, line 7c. Where can i get my taxes done for free Example 1. Where can i get my taxes done for free During 2013, Josh paid $600 interest on his qualified student loan. Where can i get my taxes done for free Only he is legally obligated to make the payments. Where can i get my taxes done for free No one claimed an exemption for Josh for 2013. Where can i get my taxes done for free Assuming all other requirements are met, Josh can deduct the $600 of interest he paid on his 2013 Form 1040 or 1040A. Where can i get my taxes done for free Example 2. Where can i get my taxes done for free During 2013, Jo paid $1,100 interest on her qualified student loan. Where can i get my taxes done for free Only she is legally obligated to make the payments. Where can i get my taxes done for free Jo's parents claimed an exemption for her on their 2013 tax return. Where can i get my taxes done for free In this case, neither Jo nor her parents may deduct the student loan interest Jo paid in 2013. Where can i get my taxes done for free Interest paid by others. Where can i get my taxes done for free   If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest. Where can i get my taxes done for free Example 1. Where can i get my taxes done for free Darla obtained a qualified student loan to attend college. Where can i get my taxes done for free After Darla's graduation from college, she worked as an intern for a nonprofit organization. Where can i get my taxes done for free As part of the internship program, the nonprofit organization made an interest payment on behalf of Darla. Where can i get my taxes done for free This payment was treated as additional compensation and reported in box 1 of her Form W-2. Where can i get my taxes done for free Assuming all other qualifications are met, Darla can deduct this payment of interest on her tax return. Where can i get my taxes done for free Example 2. Where can i get my taxes done for free Ethan obtained a qualified student loan to attend college. Where can i get my taxes done for free After graduating from college, the first monthly payment on his loan was due in December. Where can i get my taxes done for free As a gift, Ethan's mother made this payment for him. Where can i get my taxes done for free No one is claiming a dependency exemption for Ethan on his or her tax return. Where can i get my taxes done for free Assuming all other qualifications are met, Ethan can deduct this payment of interest on his tax return. Where can i get my taxes done for free No Double Benefit Allowed You cannot deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, as home mortgage interest). Where can i get my taxes done for free Figuring the Deduction Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. Where can i get my taxes done for free However, the amount determined above may be gradually reduced (phased out) or eliminated based on your filing status and MAGI as explained below. Where can i get my taxes done for free You can use Worksheet 4-1. Where can i get my taxes done for free Student Loan Interest Deduction Worksheet (at the end of this chapter) to figure both your MAGI and your deduction. Where can i get my taxes done for free Form 1098-E. Where can i get my taxes done for free   To help you figure your student loan interest deduction, you should receive Form 1098-E. Where can i get my taxes done for free Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2013 on one or more qualified student loans must send Form 1098-E (or acceptable substitute) to each borrower by January 31, 2014. Where can i get my taxes done for free   For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. Where can i get my taxes done for free Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. Where can i get my taxes done for free However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. Where can i get my taxes done for free See Allocating Payments Between Interest and Principal , earlier. Where can i get my taxes done for free    The lender may ask for a completed Form W-9S, or similar statement to obtain the borrower's name, address, and taxpayer identification number. Where can i get my taxes done for free The form may also be used by the borrower to certify that the student loan was incurred solely to pay for qualified education expenses. Where can i get my taxes done for free Effect of the Amount of Your Income on the Amount of Your Deduction The amount of your student loan interest deduction is phased out (gradually reduced) if your MAGI is between $60,000 and $75,000 ($125,000 and $155,000 if you file a joint return). Where can i get my taxes done for free You cannot take a student loan interest deduction if your MAGI is $75,000 or more ($155,000 or more if you file a joint return). Where can i get my taxes done for free Modified adjusted gross income (MAGI). Where can i get my taxes done for free   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for student loan interest. Where can i get my taxes done for free However, as discussed below, there may be other modifications. Where can i get my taxes done for free Table 4-2 shows how the amount of your MAGI can affect your student loan interest deduction. Where can i get my taxes done for free Table 4-2. Where can i get my taxes done for free Effect of MAGI on Student Loan Interest Deduction IF your filing status is. Where can i get my taxes done for free . Where can i get my taxes done for free . Where can i get my taxes done for free AND your MAGI is. Where can i get my taxes done for free . Where can i get my taxes done for free . Where can i get my taxes done for free THEN your student loan interest deduction is. Where can i get my taxes done for free . Where can i get my taxes done for free . Where can i get my taxes done for free single,  head of household, or qualifying widow(er) not more than $60,000 not affected by the phaseout. Where can i get my taxes done for free more than $60,000  but less than $75,000 reduced because of the phaseout. Where can i get my taxes done for free $75,000 or more eliminated by the phaseout. Where can i get my taxes done for free married filing joint return not more than $125,000 not affected by the phaseout. Where can i get my taxes done for free more than $125,000 but less than $155,000 reduced because of the phaseout. Where can i get my taxes done for free $155,000 or more eliminated by the phaseout. Where can i get my taxes done for free MAGI when using Form 1040A. Where can i get my taxes done for free   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 18 (student loan interest deduction) and line 19 (tuition and fees deduction). Where can i get my taxes done for free MAGI when using Form 1040. Where can i get my taxes done for free   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 33 (student loan interest deduction), 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. Where can i get my taxes done for free MAGI when using Form 1040NR. Where can i get my taxes done for free   If you file Form 1040NR, your MAGI is the AGI on line 36 of that form figured without taking into account any amount on line 33 (student loan interest deduction) and line 34 (domestic production activities deduction). Where can i get my taxes done for free MAGI when using Form 1040NR-EZ. Where can i get my taxes done for free   If you file Form 1040NR-EZ, your MAGI is the AGI on line 10 of that form figured without taking into account any amount on line 9 (student loan interest deduction). Where can i get my taxes done for free Phaseout. Where can i get my taxes done for free   If your MAGI is within the range of incomes where the credit must be reduced, you must figure your reduced deduction. Where can i get my taxes done for free To figure the phaseout, multiply your interest deduction (before the phaseout) by a fraction. Where can i get my taxes done for free The numerator is your MAGI minus $60,000 ($125,000 in the case of a joint return). Where can i get my taxes done for free The denominator is $15,000 ($30,000 in the case of a joint return). Where can i get my taxes done for free Subtract the result from your deduction (before the phaseout) to give you the amount you can deduct. Where can i get my taxes done for free Example 1. Where can i get my taxes done for free During 2013 you paid $800 interest on a qualified student loan. Where can i get my taxes done for free Your 2013 MAGI is $145,000 and you are filing a joint return. Where can i get my taxes done for free You must reduce your deduction by $533, figured as follows. Where can i get my taxes done for free   $800 × $145,000 − $125,000  $30,000 = $533   Your reduced student loan interest deduction is $267 ($800 − $533). Where can i get my taxes done for free Example 2. Where can i get my taxes done for free The facts are the same as in Example 1 except that you paid $2,750 interest. Where can i get my taxes done for free Your maximum deduction for 2013 is $2,500. Where can i get my taxes done for free You must reduce your maximum deduction by $1,667, figured as follows. Where can i get my taxes done for free   $2,500 × $145,000 − $125,000  $30,000 = $1,667   In this example, your reduced student loan interest deduction is $833 ($2,500 − $1,667). Where can i get my taxes done for free Which Worksheet To Use Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the instructions for Form 1040, Form 1040A, or Form 1040NR. Where can i get my taxes done for free However, if you are filing Form 2555, Foreign Earned Income, Form 2555-EZ, Foreign Earned Income Exclusion, or Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1. Where can i get my taxes done for free Student Loan Interest Deduction Worksheet at the end of this chapter. Where can i get my taxes done for free Claiming the Deduction The student loan interest deduction is an adjustment to income. Where can i get my taxes done for free To claim the deduction, enter the allowable amount on line 33 (Form 1040), line 18 (Form 1040A), line 33 (Form 1040NR), or line 9 (Form 1040NR-EZ). Where can i get my taxes done for free Worksheet 4-1. Where can i get my taxes done for free Student Loan Interest Deduction Worksheet Use this worksheet instead of the worksheet in the Form 1040 instructions if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico. Where can i get my taxes done for free Before using this worksheet, you must complete Form 1040, lines 7 through 32, plus any amount to be entered on the dotted line next to line 36. Where can i get my taxes done for free 1. Where can i get my taxes done for free Enter the total interest you paid in 2013 on qualified student loans. Where can i get my taxes done for free Do not enter  more than $2,500 1. Where can i get my taxes done for free   2. Where can i get my taxes done for free Enter the amount from Form 1040, line 22 2. Where can i get my taxes done for free       3. Where can i get my taxes done for free Enter the total of the amounts from Form 1040,  lines 23 through 32 3. Where can i get my taxes done for free           4. Where can i get my taxes done for free Enter the total of any amounts entered on the dotted line next to Form 1040, line 36 4. Where can i get my taxes done for free           5. Where can i get my taxes done for free Add lines 3 and 4 5. Where can i get my taxes done for free       6. Where can i get my taxes done for free Subtract line 5 from line 2 6. Where can i get my taxes done for free       7. Where can i get my taxes done for free Enter any foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18) 7. Where can i get my taxes done for free       8. Where can i get my taxes done for free Enter any foreign housing deduction (Form 2555, line 50) 8. Where can i get my taxes done for free       9. Where can i get my taxes done for free Enter the amount of income from Puerto Rico you are excluding 9. Where can i get my taxes done for free       10. Where can i get my taxes done for free Enter the amount of income from American Samoa  you are excluding (Form 4563, line 15) 10. Where can i get my taxes done for free       11. Where can i get my taxes done for free Add lines 6 through 10. Where can i get my taxes done for free This is your modified adjusted gross income 11. Where can i get my taxes done for free   12. Where can i get my taxes done for free Enter the amount shown below for your filing status 12. Where can i get my taxes done for free     •Single, head of household, or qualifying widow(er)—$60,000       •Married filing jointly—$125,000     13. Where can i get my taxes done for free Is the amount on line 11 more than the amount on line 12?       □ No. Where can i get my taxes done for free Skip lines 13 and 14, enter -0- on line 15, and go to line 16. Where can i get my taxes done for free       □ Yes. Where can i get my taxes done for free Subtract line 12 from line 11 13. Where can i get my taxes done for free   14. Where can i get my taxes done for free Divide line 13 by $15,000 ($30,000 if married filing jointly). Where can i get my taxes done for free Enter the result as a decimal  (rounded to at least three places). Where can i get my taxes done for free If the result is 1. Where can i get my taxes done for free 000 or more, enter 1. Where can i get my taxes done for free 000 14. Where can i get my taxes done for free . Where can i get my taxes done for free 15. Where can i get my taxes done for free Multiply line 1 by line 14 15. Where can i get my taxes done for free   16. Where can i get my taxes done for free Student loan interest deduction. Where can i get my taxes done for free Subtract line 15 from line 1. Where can i get my taxes done for free Enter the result here  and on Form 1040, line 33. Where can i get my taxes done for free Do not include this amount in figuring any other  deduction on your return (such as on Schedule A, C, E, etc. Where can i get my taxes done for free ) 16. Where can i get my taxes done for free   Prev  Up  Next   Home   More Online Publications