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10ez 3. 10ez   Credit for Withholding and Estimated Tax for 2013 Table of Contents Introduction Topics - This chapter discusses: WithholdingForm W-2 Form W-2G The 1099 Series Form Not Correct Form Received After Filing Separate Returns Fiscal Years (FY) Estimated TaxSeparate Returns Divorced Taxpayers Excess Social Security or Railroad Retirement Tax WithholdingJoint returns. 10ez Worksheet for Nonrailroad Employees Worksheets for Railroad Employees Introduction When you file your 2013 income tax return, take credit for all the income tax and excess social security or railroad retirement tax withheld from your salary, wages, pensions, etc. 10ez Also take credit for the estimated tax you paid for 2013. 10ez These credits are subtracted from your total tax. 10ez Because these credits are refundable, you should file a return and claim these credits, even if you do not owe tax. 10ez If the total of your withholding and your estimated tax payments for any payment period is less than the amount you needed to pay by the due date for that period, you may be charged a penalty, even if the total of these credits is more than your tax for the year. 10ez Topics - This chapter discusses: How to take credit for withholding, How to take credit for estimated taxes you paid, and How to take credit for excess social security, Medicare, or railroad retirement tax withholding. 10ez Withholding If you had income tax withheld during 2013, you generally should be sent a statement by January 31, 2014, showing your income and the tax withheld. 10ez Depending on the source of your income, you will receive: Form W-2, Wage and Tax Statement, Form W-2G, Certain Gambling Winnings, or A form in the 1099 series. 10ez Form W-2 Your employer is required to provide or send Form W-2 to you no later than January 31, 2014. 10ez You should receive a separate Form W-2 from each employer you worked for. 10ez If you stopped working before the end of 2013, your employer could have given you your Form W-2 at any time after you stopped working. 10ez However, your employer must provide or send it to you by January 31, 2014. 10ez If you ask for the form, your employer must send it to you within 30 days after receiving your written request or within 30 days after your final wage payment, whichever is later. 10ez If you have not received your Form W-2 by January 31, contact your employer or payer to request a copy. 10ez If you still do not get the form by February 15, the IRS can help you by requesting the form from your employer. 10ez The phone number for the IRS is listed in chapter 5. 10ez You will be asked for the following information. 10ez Your name, address, city and state, zip code, and social security number. 10ez Your employer's name, address, city, state, zip code, and the employer's identification number (if known). 10ez An estimate of the wages you earned, the federal income tax withheld, and the period you worked for that employer. 10ez The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible. 10ez Form W-2 shows your total pay and other compensation and the income tax, social security tax, and Medicare tax that was withheld during the year. 10ez Total the federal income tax withheld (shown in box 2 of all Forms W-2 received) and enter that amount on the appropriate line of your tax return. 10ez In addition, Form W-2 is used to report any taxable sick pay you received and any income tax withheld from your sick pay. 10ez Your sick pay may be combined with other wages in one Form W-2 or you may receive a separate Form W-2 for sick pay. 10ez If you file a paper tax return, attach Copy B of Form W-2 to your return. 10ez Form W-2G If you had gambling winnings in 2013, the payer may have withheld income tax. 10ez If tax was withheld, the payer will give you a Form W-2G showing the amount you won and the amount of tax withheld. 10ez Report the amounts you won on line 21 of Form 1040. 10ez Take credit for the tax withheld on line 62 of Form 1040. 10ez If you had gambling winnings, you must use Form 1040; you cannot use Form 1040A or Form 1040EZ. 10ez Gambling losses can be deducted on Schedule A (Form 1040) as a miscellaneous itemized deduction. 10ez However, you cannot deduct more than the gambling winnings you report on Form 1040. 10ez File Form W-2G with your income tax return only if it shows any federal income tax withheld in box 2. 10ez The 1099 Series Most forms in the 1099 series are not filed with your return. 10ez In general, these forms should be furnished to you by January 31, 2014. 10ez Unless instructed to file any of these forms with your return, keep them for your records. 10ez There are several different forms in this series, including: Form 1099-B, Proceeds From Broker and Barter Exchange Transactions; Form 1099-C, Cancellation of Debt; Form 1099-DIV, Dividends and Distributions; Form 1099-G, Certain Government Payments; Form 1099-INT, Interest Income; Form 1099-K, Payment Card and Third-Party Network Transactions; Form 1099-MISC, Miscellaneous Income; Form 1099-OID, Original Issue Discount; Form 1099-PATR, Taxable Distributions Received From Cooperatives; Form 1099-Q, Payments From Qualified Education Programs (Under Sections 529 and 530); Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 10ez ; Form SSA-1099, Social Security Benefit Statement; and Form RRB-1099, Payments by the Railroad Retirement Board. 10ez If you received the types of income reported on some forms in the 1099 series, you may not be able to use Form 1040A or Form 1040EZ. 10ez See the instructions to these forms for details. 10ez Reporting your withholding. 10ez   Report on your tax return all federal income tax withholding shown on your Form 1099, Form SSA-1099, and/or Form RRB-1099. 10ez Include the amount withheld in the total on line 62 of Form 1040, line 36 of Form 1040A, or line 7 of Form 1040EZ. 10ez Form 1099-R. 10ez   Attach Form 1099-R to your paper return if federal income tax withholding is shown in box 4. 10ez Do not attach any other Form 1099. 10ez Form Not Correct If you receive a form with incorrect information, you should ask the payer for a corrected form. 10ez Call the telephone number or write to the address given for the payer on the form. 10ez The corrected Form W-2G or Form 1099 you receive will have an “X” in the “CORRECTED” box at the top of the form. 10ez A special form, Form W-2c, Corrected Wage and Tax Statement, is used to correct a Form W-2. 10ez In certain situations, you will receive two forms in place of the original incorrect form. 10ez This will happen when your taxpayer identification number is wrong or missing, your name and address are wrong, or you received the wrong type of form (for example, a Form 1099-DIV instead of a Form 1099-INT). 10ez One new form you receive will be the same incorrect form or have the same incorrect information, but all money amounts will be zero. 10ez This form will have an “X” in the “CORRECTED” box at the top of the form. 10ez The second new form should have all the correct information, prepared as though it is the original (the “CORRECTED” box will not be checked). 10ez Form Received After Filing If you file your return and you later receive a form for income that you did not include on your return, report the income and take credit for any income tax withheld by filing Form 1040X, Amended U. 10ez S. 10ez Individual Income Tax Return. 10ez Separate Returns If you are married but file a separate return, you can take credit only for the tax withheld from your own income. 10ez Do not include any amount withheld from your spouse's income. 10ez However, different rules may apply if you live in a community property state. 10ez Community property states. 10ez   The following are community property states. 10ez Arizona. 10ez California. 10ez Idaho. 10ez Louisiana. 10ez Nevada. 10ez New Mexico. 10ez Texas. 10ez Washington. 10ez Wisconsin. 10ez Generally, if you live in a community property state and file a separate return, you and your spouse each must report half of all community income in addition to your own separate income. 10ez If you are required to report half of all community income, you are entitled to take credit for half of all taxes withheld on the community income. 10ez If you were divorced during the year, each of you generally must report half the community income and can take credit for half the withholding on that community income for the period before the divorce. 10ez   For more information on these rules, and some exceptions, see Publication 555, Community Property. 10ez Fiscal Years (FY) If you file your tax return on the basis of a fiscal year (a 12-month period ending on the last day of any month except December), you must follow special rules, described below, to determine your credit for federal income tax withholding. 10ez Fiscal year withholding. 10ez    You can claim credit on your tax return only for the tax withheld during the calendar year (CY) ending within your fiscal year. 10ez You cannot claim credit for any of the tax withheld during the calendar year beginning in your fiscal year. 10ez You will be able to claim credit for that withholding on your return for your next fiscal year. 10ez   The Form W-2 or 1099 you receive for the calendar year that ends during your fiscal year will show the tax withheld and the income you received during that calendar year. 10ez   Although you take credit for all the withheld tax shown on the form, report only the part of the income shown on the form that you received during your fiscal year. 10ez Add to that the income you received during the rest of your fiscal year. 10ez Example. 10ez Miles Hanson files his return for a fiscal year ending June 30, 2013. 10ez In January 2013, he received a Form W-2 that showed that his wages for 2012 were $31,200 and that his income tax withheld was $3,380. 10ez His records show that he had received $15,000 of the wages by June 30, 2012, and $16,200 from July 1 through December 31, 2012. 10ez See Table 3-1 . 10ez On his return for the fiscal year ending June 30, 2013, Miles will report the $16,200 he was paid in July through December of 2012, plus the $18,850 he was paid during the rest of the fiscal year, January 1, 2013, through June 30, 2013. 10ez However, he takes credit for all $3,380 that was withheld during 2012. 10ez On his return for the fiscal year ending June 30, 2012, he reported the $15,000 he was paid in January through June 2012, but took no credit for the tax withheld during that time. 10ez On his return for the fiscal year ending June 30, 2014, he will take the credit for any tax withheld during 2013 but not for any tax withheld during 2014. 10ez Table 3-1. 10ez Example for Fiscal Year Ending June 30, 2013—Miles Hanson Date Form W-2 Miles' records Tax return for FY ending 6/30/20121 Tax return for FY ending 6/30/2013 Wages With- holding Wages With- holding Wages With- holding Wages With- holding CY 20122 $31,200 $3,380             1/1/2012 –  6/30/2012     $15,000 $1,600 $15,000       7/1/2012 –  12/31/2012     $16,200 $1,780     $16,200 $3,380 CY 2013 $37,700 $4,316 3             1/1/2013 –  6/30/2013     $18,850 $2,158     $18,850   7/1/2013 –  12/31/2013     $18,850 4 $2,158         1Miles' tax return for FY ending 6/30/2012 also included his wages for 7/1–12/31/2011 and the withholding shown on his 2011 Form W-2. 10ez  2Calendar year (January 1 – December 31). 10ez   3Withholding shown on 2013 Form W-2 ($4,316) will be included in Miles' tax return for FY ending 6/30/2014, the fiscal year in which calendar year 2013 ends. 10ez   4Wages for 7/1–12/31/2013 ($18,850) will be included in Miles' tax return for FY ending 6/30/2014, the fiscal year in which the wages were received. 10ez Backup withholding. 10ez   If income tax has been withheld under the backup withholding rule, take credit for it on your tax return for the fiscal year in which you received the income. 10ez Example. 10ez Emily Smith's records show that she received income in November 2013 and February 2014 from which there was backup withholding ($100 and $50, respectively). 10ez Emily takes credit for the entire $150 of backup withholding on her tax return for the fiscal year ending September 30, 2014. 10ez Estimated Tax Take credit for all your estimated tax payments for 2013 on line 63 of Form 1040 or line 37 of Form 1040A. 10ez Include any overpayment from 2012 that you had credited to your 2013 estimated tax. 10ez You must use Form 1040 or Form 1040A if you paid estimated tax. 10ez You cannot file Form 1040EZ. 10ez If you were a beneficiary of an estate or trust, you should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. 10ez , from the fiduciary. 10ez If you have estimated taxes credited to you from the estate or trust (from Schedule K-1 (Form 1041)), you must report the estimated taxes on Schedule E (Form 1040). 10ez On the dotted line next to the entry space for line 37 of Schedule E (Form 1040), enter “ES payment claimed” and the amount. 10ez However, do not include this amount in the total on line 37. 10ez Instead, enter the amount on Form 1040, line 63. 10ez This estimated tax payment for 2013 is treated as being made by you on January 15, 2014. 10ez Name changed. 10ez   If you changed your name, and you made estimated tax payments using your former name, attach a statement to the front of your paper tax return indicating: When you made the payments, The amount of each payment, Your name when you made the payments, and The social security number under which you made the payments. 10ez  The statement should cover payments you made jointly with your spouse as well as any you made separately. 10ez   Be sure to report the change to your local Social Security Administration office before filing your 2014 tax return. 10ez This prevents delays in processing your return and issuing refunds. 10ez It also safeguards your future social security benefits. 10ez For more information, call the Social Security Administration at 1-800-772-1213. 10ez Separate Returns If you and your spouse made separate estimated tax payments for 2013 and you file separate returns, you can take credit only for your own payments. 10ez If you made joint estimated tax payments, you must decide how to divide the payments between your returns. 10ez One of you can claim all of the estimated tax paid and the other none, or you can divide it in any other way you agree on. 10ez If you cannot agree, you must divide the payments in proportion to each spouse's individual tax as shown on your separate returns for 2013. 10ez Example. 10ez James and Evelyn Brown made joint estimated tax payments for 2013 totaling $3,000. 10ez They file separate 2013 Forms 1040. 10ez James' tax is $4,000 and Evelyn's is $1,000. 10ez If they do not agree on how to divide the $3,000, they must divide it proportionately between their returns. 10ez Because James' tax ($4,000) is 80% of the total tax ($5,000), his share of the estimated tax is $2,400 (80% of $3,000). 10ez The balance, $600 (20% of $3,000), is Evelyn's share. 10ez Divorced Taxpayers If you made joint estimated tax payments for 2013 and you were divorced during the year, either you or your former spouse can claim all of the joint payments, or you each can claim part of them. 10ez If you cannot agree on how to divide the payments, you must divide them in proportion to each spouse's individual tax as shown on your separate returns for 2013. 10ez See Example earlier under Separate Returns. 10ez If you claim any of the joint payments on your tax return, enter your former spouse's social security number (SSN) in the space provided at the top of page 1 of Form 1040 or Form 1040A. 10ez If you divorced and remarried in 2013, enter your present spouse's SSN in that space. 10ez Enter your former spouse's SSN, followed by “DIV,” under Payments to the left of Form 1040, line 63, or in the blank space to the left of Form 1040A, line 37. 10ez Excess Social Security or Railroad Retirement Tax Withholding Most employers must withhold social security tax from your wages. 10ez In some cases, however, the federal government and state and local governments do not have to withhold social security tax from their employees' wages. 10ez If you work for a railroad employer, that employer must withhold tier 1 railroad retirement (RRTA) tax and tier 2 RRTA tax. 10ez Two or more employers. 10ez   If you worked for two or more employers in 2013, too much social security tax or tier 1 RRTA tax may have been withheld from your pay. 10ez You may be able to claim the excess as a credit against your income tax when you file your return. 10ez Table 3-2 shows the maximum amount that should have been withheld for any of these taxes for 2013. 10ez Figure the excess withholding on the appropriate worksheet. 10ez    Table 3-2. 10ez Maximum Social Security and RRTA Withholding for 2013 Type of tax Maximum wages subject to tax Tax rate Maximum tax to be withheld Social security $113,700 6. 10ez 2% $7,049. 10ez 40 Tier 1 RRTA $113,700 6. 10ez 2% $7,049. 10ez 40 Tier 2 RRTA $84,300 4. 10ez 4% $3,709. 10ez 20 Joint returns. 10ez   If you are filing a joint return, you and your spouse must figure any excess social security or tier 1 RRTA separately. 10ez Note. 10ez All wages are subject to Medicare tax withholding. 10ez Employer's error. 10ez   If you had only one employer and he or she withheld too much social security, Medicare, or tier 1 RRTA tax, ask the employer to refund the excess amount to you. 10ez If the employer refuses to refund the overcollection, ask for a statement indicating the amount of the overcollection to support your claim. 10ez File a claim for refund using Form 843, Claim for Refund and Request for Abatement. 10ez Worksheet for Nonrailroad Employees If you did not work for a railroad during 2013, figure the excess social security withholding on Worksheet 3-1. 10ez Note. 10ez If you worked for both a railroad employer and a nonrailroad employer, use Worksheet 3-2, to figure excess social security and tier 1 RRTA tax. 10ez Where to claim credit for excess social security withholding. 10ez   If you file Form 1040, enter the excess on line 69. 10ez   If you file Form 1040A, include the excess in the total on line 41. 10ez Write “Excess SST” and show the amount of the credit in the space to the left of the line. 10ez   You cannot claim excess social security tax withholding on Form 1040EZ. 10ez Worksheets for Railroad Employees If you worked for a railroad during 2013, figure your excess withholding on Worksheet 3-2 and 3-3, as appropriate. 10ez Where to claim credit for excess tier 1 RRTA withholding. 10ez   If you file Form 1040, enter the excess on line 69. 10ez   If you file Form 1040A, include the excess in the total on line 41. 10ez Write “Excess SST” and show the amount of the credit in the space to the left of the line. 10ez   You cannot claim excess tier 1 RRTA withholding on Form 1040EZ. 10ez How to claim refund of excess tier 2 RRTA. 10ez   To claim a refund of tier 2 tax, use Form 843. 10ez Be sure to attach a copy of all of your Forms W-2. 10ez   See Worksheet 3-3 and the Instructions for Form 843, for more details. 10ez Worksheet 3-1. 10ez Excess Social Security—Nonrailroad Employees 1. 10ez Add all social security tax withheld (but not more than  $7,049. 10ez 40 for each employer). 10ez This tax should be shown  in box 4 of your Forms W-2. 10ez Enter the total here 1. 10ez   2. 10ez Enter any uncollected social security tax on tips or group-term life insurance on Form 1040, line 60, identified by “UT” 2. 10ez   3. 10ez Add lines 1 and 2. 10ez If $7,049. 10ez 40 or less, stop here. 10ez You cannot claim the credit 3. 10ez   4. 10ez Social security limit 4. 10ez $7,049. 10ez 40 5. 10ez Excess. 10ez Subtract line 4 from line 3 5. 10ez   Worksheet 3-2. 10ez Excess Social Security and Tier 1 RRTA—Railroad Employees 1. 10ez Add all social security and tier 1 RRTA tax withheld (but not more than $7,049. 10ez 40 for each employer). 10ez Social security tax should be shown in box 4 and tier 1 RRTA should be shown  in box 14 of your Forms W-2. 10ez Enter the total here 1. 10ez   2. 10ez Enter any uncollected social security and tier 1 RRTA tax on tips or group-term life insurance on Form 1040, line 60, identified by “UT” 2. 10ez   3. 10ez Add lines 1 and 2. 10ez If $7,049. 10ez 40 or less, stop here. 10ez You cannot claim the credit 3. 10ez   4. 10ez Social security and tier 1 RRTA tax limit 4. 10ez $7,049. 10ez 40 5. 10ez Excess. 10ez Subtract line 4 from line 3 5. 10ez   Worksheet 3-3. 10ez Excess Tier 2 RRTA—Railroad Employees 1. 10ez Add all tier 2 RRTA tax withheld (but not more than $3,709. 10ez 20 for each employer). 10ez Box 14 of your Forms W-2 should show tier 2 RRTA tax. 10ez Enter the total here 1. 10ez   2. 10ez Enter any uncollected tier 2 RRTA tax on tips or group-term life insurance on Form 1040, line 60, identified by “UT” 2. 10ez   3. 10ez Add lines 1 and 2. 10ez If $3,709. 10ez 20 or less, stop here. 10ez You cannot claim the credit. 10ez 3. 10ez   4. 10ez Tier 2 RRTA tax limit 4. 10ez $3,709. 10ez 20 5. 10ez Excess. 10ez Subtract line 4 from line 3. 10ez 5. 10ez   Prev  Up  Next   Home   More Online Publications

Topic 506 - Charitable Contributions

Charitable contributions are deductible only if you itemize deductions on Form 1040, Schedule A (PDF).

To be deductible, charitable contributions must be made to qualified organizations. Payments to individuals are never deductible. See Publication 526, Charitable Contributions. To determine if the organization that you have contributed to qualifies as a charitable organization for income tax deductions, review Exempt Organizations Select Check on the IRS.gov website.

If your contribution entitles you to merchandise, goods, or services, including admission to a charity ball, banquet, theatrical performance, or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received.

For a contribution of cash, check, or other monetary gift (regardless of amount), you must maintain as a record of the contribution a bank record or a written communication from the qualified organization containing the name of the organization, the date of the contribution, and the amount of the contribution. In addition to deducting your cash contributions, you generally can deduct the fair market value of any other property you donate to qualified organizations. See Publication 561, Determining the Value of Donated Property. For any contribution of $250 or more (including contributions of cash or property), you must obtain and keep in your records a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash and a description of any property contributed. The acknowledgment must say whether the organization provided any goods or services in exchange for the gift and, if so, must provide a description and a good faith estimate of the value of those goods or services. One document from the qualified organization may satisfy both the written communication requirement for monetary gifts and the contemporaneous written acknowledgment requirement for all contributions of $250 or more.

You must fill out Form 8283 (PDF), and attach it to your return, if your deduction for a noncash contribution is more than $500. If you claim a deduction for a contribution of noncash property worth $5,000 or less, you must fill out Form 8283, Section A. If you claim a deduction for a contribution of noncash property worth more than $5,000, you will need a qualified appraisal of the noncash property and must fill out Form 8283, Section B. If you claim a deduction for a contribution of noncash property worth more than $500,000, you also will need to attach the qualified appraisal to your return.

Special rules apply to donations of certain types of property such as automobiles, inventory and investments that have appreciated in value. For more information, refer to Publication 526, Charitable Contributions. For information on determining the value of your noncash contributions, refer to Publication 561, Determining the Value of Donated Property.

Page Last Reviewed or Updated: December 12, 2013

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10ez 35. 10ez   Education Credits Table of Contents Introduction Useful Items - You may want to see: Who Can Claim an Education Credit Qualified Education ExpensesNo Double Benefit Allowed Adjustments to Qualified Education Expenses Introduction For 2013, there are two tax credits available to persons who pay expenses for higher (postsecondary) education. 10ez They are: The American opportunity credit, and The lifetime learning credit. 10ez The chapter will present an overview of these education credits. 10ez To get the detailed information you will need to claim either of the credits, and for examples illustrating that information, see chapters 2 and 3 of Publication 970. 10ez Can you claim more than one education credit this year?   For each student, you can choose for any year only one of the credits. 10ez For example, if you choose to take the American opportunity credit for a child on your 2013 tax return, you cannot, for that same child, also claim the lifetime learning credit for 2013. 10ez   If you are eligible to claim the American opportunity credit and you are also eligible to claim the lifetime learning credit for the same student in the same year, you can choose to claim either credit, but not both. 10ez   If you pay qualified education expenses for more than one student in the same year, you can choose to take the American opportunity and the lifetime learning credits on a per-student, per-year basis. 10ez This means that, for example, you can claim the American opportunity credit for one student and the lifetime learning credit for another student in the same year. 10ez Table 35-1. 10ez Comparison of Education Credits Caution. 10ez You can claim both the American opportunity credit and the lifetime learning credit on the same return—but not for the same student. 10ez   American Opportunity Credit Lifetime Learning Credit Maximum credit Up to $2,500 credit per eligible student Up to $2,000 credit per return Limit on modified adjusted gross income (MAGI) $180,000 if married filing jointly;  $90,000 if single, head of household, or qualifying widow(er) $127,000 if married filing jointly;  $63,000 if single, head of household, or qualifying widow(er) Refundable or nonrefundable 40% of credit may be refundable Credit limited to the amount of tax you must pay on your taxable income Number of years of postsecondary education Available ONLY if the student had not completed the first 4 years of postsecondary education before 2013 Available for all years of postsecondary education and for courses to acquire or improve job skills Number of tax years credit available Available ONLY for 4 tax years per eligible student (including any year(s) the Hope credit was claimed) Available for an unlimited number of years Type of program required Student must be pursuing a program leading to a degree or other recognized education credential Student does not need to be pursuing a program leading to a degree or other recognized education credential Number of courses Student must be enrolled at least half time for at least one academic period beginning during the tax year Available for one or more courses Felony drug conviction At the end of 2013, the student had not been convicted of a felony for possessing or distributing a controlled substance Felony drug convictions do not make the student ineligible Qualified expenses Tuition, required enrollment fees, and course materials that the student needs for a course of study whether or not the materials are bought at the educational institution as a condition of enrollment or attendance Tuition and fees required for enrollment or attendance (including amounts required to be paid to the institution for course-related books, supplies, and equipment) Payments for academic periods Payments made in 2013 for academic periods beginning in 2013 or beginning in the first 3 months of 2014 Differences between the American opportunity and lifetime learning credits. 10ez   There are several differences between these two credits. 10ez These differences are summarized in Table 35-1, later. 10ez Useful Items - You may want to see: Publication 970 Tax Benefits for Education Form (and Instructions) 8863 Education Credits (American Opportunity and Lifetime Learning Credits) Who Can Claim an Education Credit You may be able to claim an education credit if you, your spouse, or a dependent you claim on your tax return was a student enrolled at or attending an eligible educational institution. 10ez The credits are based on the amount of qualified education expenses paid for the student in 2013 for academic periods beginning in 2013 and in the first 3 months of 2014. 10ez 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 education credit(s). 10ez Academic period. 10ez   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. 10ez 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. 10ez Eligible educational institution. 10ez   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. 10ez S. 10ez Department of Education. 10ez It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 10ez The educational institution should be able to tell you if it is an eligible educational institution. 10ez   Certain educational institutions located outside the United States also participate in the U. 10ez S. 10ez Department of Education's Federal Student Aid (FSA) programs. 10ez Who can claim a dependent's expenses. 10ez   If an exemption is allowed as a deduction for any person who claims the student as a dependent, all qualified education expenses of the student are treated as having been paid by that person. 10ez Therefore, only that person can claim an education credit for the student. 10ez If a student is not claimed as a dependent on another person's tax return, only the student can claim a credit. 10ez Expenses paid by a third party. 10ez   Qualified education expenses paid on behalf of the student by someone other than the student (such as a relative) are treated as paid by the student. 10ez However, qualified education expenses paid (or treated as paid) by a student who is claimed as a dependent on your tax return are treated as paid by you. 10ez Therefore, you are treated as having paid expenses that were paid by the third party. 10ez For more information and an example see Who Can Claim a Dependent's Expenses in Pub. 10ez 970, chapter 2 or 3. 10ez Who cannot claim a credit. 10ez   You cannot take an education credit if any of the following apply. 10ez You are claimed as a dependent on another person's tax return, such as your parent's return. 10ez Your filing status is married filing separately. 10ez You (or your spouse) were a nonresident alien for any part of 2013 and did not elect to be treated as a resident alien for tax purposes. 10ez Your MAGI is one of the following. 10ez American opportunity credit: $180,000 or more if married filing jointly, or $90,000 or more if single, head of household, or qualifying widow(er). 10ez Lifetime learning credit: $127,000 or more if married filing jointly, or $63,000 or more if single, head of household, or qualifying widow(er) . 10ez   Generally, your MAGI is the amount on your Form 1040, line 38, or Form 1040A, line 22. 10ez However, if you are filing Form 2555, Form 2555–EZ, or Form 4563, or are excluding income from Puerto RIco, add to the amount on your Form 1040, line 38, or Form 1040A, line 22, the amount of income you excluded. 10ez For details, see Pub. 10ez 970. 10ez    Figure 35-A may be helpful in determining if you can claim an education credit on your tax return. 10ez The American opportunity credit will always be greater than or equal to the lifetime learning credit for any student who is eligible for both credits. 10ez However, if any of the conditions for the American opportunity credit, listed in Table 35-1 earlier, are not met for any student, you cannot take the American opportunity credit for that student. 10ez You may be able to take the lifetime learning credit for part or all of that student's qualified education expenses instead. 10ez See Pub. 10ez 970 for information on other education benefits. 10ez Qualified Education Expenses Generally, qualified education expenses are amounts paid in 2013 for tuition and fees required for the student's enrollment or attendance at an eligible educational institution. 10ez It does not matter whether the expenses were paid in cash, by check, by credit or debit card, or with borrowed funds. 10ez For course-related books, supplies, and equipment, only certain expenses qualify. 10ez American opportunity credit: Qualified education expenses include amounts spent on books, supplies, and equipment needed for a course of study, whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance. 10ez Lifetime learning credit: Qualified education expenses include amounts for books, supplies, and equipment only if required to be paid to the institution as a condition of enrollment or attendance. 10ez Qualified education expenses include nonacademic fees, such as student activity fees, athletic fees, or other expenses unrelated to the academic course of instruction, only if the fee must be paid to the institution as a condition of enrollment or attendance. 10ez However, fees for personal expenses (described below) are never qualified education expenses. 10ez Qualified education expenses for either credit do not include amounts paid for: Personal expenses. 10ez This means room and board, insurance, medical expenses (including student health fees), transportation, and other similar personal, living, or family expenses. 10ez Any course or other education involving sports, games, or hobbies, or any noncredit course, unless such course or other education is part of the student's degree program or (for the lifetime learning credit only) helps the student acquire or improve job skills. 10ez You should receive Form 1098–T, Tuition Statement, from the institution reporting either payments received in 2013 (box 1) or amounts billed in 2013 (box 2). 10ez However, the amount in box 1 or 2 of Form 1098–T may be different from the amount you paid (or are treated as having paid). 10ez In completing Form 8863, use only the amounts you actually paid (plus any amounts you are treated as having paid) in 2013, reduced as necessary, as described in Adjustments to Qualified Education Expenses , later. 10ez Qualified education expenses paid on behalf of the student by someone other than the student (such as a relative) are treated as paid by the student. 10ez Qualified education expenses paid (or treated as paid) by a student who is claimed as a dependent on your tax return are treated as paid by you. 10ez If you or the student takes a deduction for higher education expenses, such as on Schedule A or C (Form 1040), you cannot use those expenses in your qualified education expenses when figuring your education credits. 10ez Qualified education expenses for any academic period must be reduced by any tax-free educational assistance allocable to that academic period. 10ez See Adjustments to Qualified Education Expenses, later. 10ez Prepaid Expenses. 10ez   Qualified education expenses paid in 2013 for an academic period that begins in the first 3 months of 2014 can be used in figuring an education credit for 2013 only. 10ez See Academic period , earlier. 10ez For example, if you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring an education credit for 2013 only (if you meet all the other requirements). 10ez    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). 10ez Paid with borrowed funds. 10ez   You can claim an education credit for qualified education expenses paid with the proceeds of a loan. 10ez Use the expenses to figure the credit for the year in which the expenses are paid, not the year in which the loan is repaid. 10ez Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. 10ez Student withdraws from class(es). 10ez   You can claim an education credit for qualified education expenses not refunded when a student withdraws. 10ez No Double Benefit Allowed You cannot do any of the following. 10ez Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim an education credit based on those same expenses. 10ez Claim more than one education credit based on the same qualified education expenses. 10ez Claim an education credit based on the same expenses used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or qualified tuition program (QTP). 10ez Claim an education credit based on qualified education expenses paid with educational assistance, such as a tax-free scholarship, grant, or employer-provided educational assistance. 10ez See Adjustments to Qualified Education Expenses, next. 10ez Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid in 2013 by or on behalf of that student under the following rules. 10ez The result is the amount of adjusted qualified education expenses for each student. 10ez Tax-free educational assistance. 10ez   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. 10ez See Academic period , earlier. 10ez      Tax-free educational assistance includes:    Tax-free parts of scholarships and fellowships (see chapter 12 of this publication and chapter 1 of Pub. 10ez 970), The tax-free part of Pell grants (see chapter 1 of Pub. 10ez 970), The tax-free part of employer-provided educational assistance (see Pub. 10ez 970), Veterans' educational assistance (see chapter 1 of Pub. 10ez 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. 10ez Generally, any scholarship or fellowship is treated as tax-free educational assistance. 10ez However, a scholarship or fellowship is not treated as tax-free educational assistance 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: The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. 10ez 970, chapter 1; or The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. 10ez 970, chapter 1. 10ez 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 received. 10ez For details, see Adjustments of Qualified Education Expenses, in chapters 2 and 3 of Pub. 10ez 970. 10ez Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. 10ez 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). 10ez 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. 10ez 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. 10ez Refunds. 10ez   A refund of qualified education expenses may reduce qualified education expenses for the tax year or may require you to repay (recapture) the credit that you claimed in an earlier year. 10ez Some tax-free educational assistance received after 2013 may be treated as a refund. 10ez See Tax-free educational assistance, earlier. 10ez Refunds received in 2013. 10ez   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses paid in 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. 10ez Refunds received after 2013 but before your income tax return is filed. 10ez   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is received before you file your 2013 income tax return, reduce the amount of qualified education expenses for 2013 by the amount of the refund. 10ez Refunds received after 2013 and after your income tax return is filed. 10ez   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is received after you file your 2013 income tax return, you may need to repay some or all of the credit that you claimed. 10ez See Credit recapture, next. 10ez Credit recapture. 10ez    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. 10ez You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing the expenses by the amount of the refund or tax-free educational assistance. 10ez 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). 10ez Include that amount as an additional tax for the year the refund or tax-free assistance was received. 10ez Example. 10ez    You paid $8,000 tuition and fees in December 2013 for your child's Spring semester beginning in January 2014. 10ez You filed your 2013 tax return on February 3, 2014, and claimed a lifetime learning credit of $1,600 ($8,000 qualified education expense paid x . 10ez 20). 10ez You claimed no other tax credits. 10ez After you filed your return, your child withdrew from two courses and you received a refund of $1,400. 10ez You must refigure your 2013 lifetime learning credit using $6,600 ($8,000 qualified education expenses − $1,400 refund). 10ez The refigured credit is $1,320 and your tax liability increased by $280. 10ez You must include the difference of $280 ($1,600 credit originally claimed − $1,320 refigured credit) as additional tax on your 2014 income tax return. 10ez See the instructions for your 2014 income tax return to determine where to include this tax. 10ez If you also pay qualified education expenses in 2014 for an academic period that begins in the first 3 months of 2014 and you receive tax-free educational assistance, or a refund, as described above, you may choose to reduce your qualified education expenses for 2014 instead of reducing your expenses for 2013. 10ez Amounts that do not reduce qualified education expenses. 10ez   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. 10ez   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. 10ez 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 Chapter 1 of Pub. 10ez 970. 10ez The use of the money is not restricted. 10ez   For examples, see chapter 2 in Pub. 10ez 970. 10ez Figure 35-A. 10ez Can You Claim an Education Credit for 2013? This image is too large to be displayed in the current screen. 10ez Please click the link to view the image. 10ez Figure 35-A. 10ez Can You Claim an Education Credit for 2013? Prev  Up  Next   Home   More Online Publications