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Efile State Taxes

Efile state taxes Publication 517 - Main Content Table of Contents Social Security CoverageCoverage of Members of the Clergy Coverage of Religious Workers (Church Employees) U. Efile state taxes S. Efile state taxes Citizens and Resident and Nonresident Aliens Ministerial ServicesMinisters Members of Religious Orders Christian Science Practitioners and Readers Exemption From Self-Employment (SE) TaxMembers of the Clergy Members of Recognized Religious Sects Self-Employment Tax: Figuring Net EarningsRegular Method Nonfarm Optional Method Income Tax: Income and ExpensesIncome Items Expense Items Income Tax Withholding and Estimated Tax Filing Your Return Retirement Savings ArrangementsDeducting contributions to tax-sheltered annuity plans. Efile state taxes Full-time student. Efile state taxes Adjusted gross income. Efile state taxes More information. Efile state taxes Earned Income Credit Comprehensive ExampleForm W-2 From Church Form W-2 From College Schedule C-EZ (Form 1040) Form 2106-EZ Schedule A (Form 1040) Schedule SE (Form 1040) Form 1040 Attachment 1 Attachment 2 How To Get Tax HelpLow Income Taxpayer Clinics Social Security Coverage This section gives information about which system (SECA or FICA) is used to collect social security and Medicare taxes from members of the clergy (ministers, members of a religious order, and Christian Science practitioners and readers) and religious workers (church employees). Efile state taxes Coverage of Members of the Clergy The services you perform in the exercise of your ministry, of the duties required by your religious order, or of your profession as a Christian Science practitioner or reader are covered by social security and Medicare under SECA. Efile state taxes Your earnings for these ministerial services (defined later) are subject to self-employment (SE) tax unless one of the following applies. Efile state taxes You are a member of a religious order who has taken a vow of poverty. Efile state taxes You ask the Internal Revenue Service (IRS) for an exemption from SE tax for your services and the IRS approves your request. Efile state taxes See Exemption From Self-Employment (SE) Tax , later. Efile state taxes You are subject only to the social security laws of a foreign country under the provisions of a social security agreement between the United States and that country. Efile state taxes For more information, see Bilateral Social Security (Totalization) Agreements in Publication 54. Efile state taxes Your earnings that are not from ministerial services may be subject to social security tax under FICA or SECA according to the rules that apply to taxpayers in general. Efile state taxes See Ministerial Services , later. Efile state taxes Ministers If you are a minister of a church, your earnings for the services you perform in your capacity as a minister are subject to SE tax, even if you perform these services as an employee of that church. Efile state taxes However, you can request that the IRS grant you an exemption, as discussed under Exemption From Self-Employment (SE) Tax , later. Efile state taxes For the specific services covered, see Ministerial Services , later. Efile state taxes Ministers defined. Efile state taxes   Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. Efile state taxes Ministers have the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination. Efile state taxes   If a church or denomination ordains some ministers and licenses or commissions others, anyone licensed or commissioned must be able to perform substantially all the religious functions of an ordained minister to be treated as a minister for social security purposes. Efile state taxes Employment status for other tax purposes. Efile state taxes   Even though all of your income from performing ministerial services is subject to self-employment tax for social security tax purposes, you may be an employee for income tax or retirement plan purposes in performing those same services. Efile state taxes For income tax or retirement plan purposes, your income earned as an employee will be considered wages. Efile state taxes Common-law employee. Efile state taxes   Under common-law rules, you are considered either an employee or a self-employed person. Efile state taxes Generally, you are an employee if you perform services for someone who has the legal right to control both what you do and how you do it, even if you have considerable discretion and freedom of action. Efile state taxes For more information about the common-law rules, see Publication 15-A, Employer's Supplemental Tax Guide. Efile state taxes   If a congregation employs you and pays you a salary, you are generally a common-law employee and income from the exercise of your ministry is wages for income tax purposes. Efile state taxes However, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services, are not wages; such amounts are self-employment income for both income tax purposes and social security tax purposes. Efile state taxes Example. Efile state taxes A church hires and pays you a salary to perform ministerial services subject to its control. Efile state taxes Under the common-law rules, you are an employee of the church while performing those services. Efile state taxes Form SS-8. Efile state taxes   If you are not certain whether you are an employee or a self-employed person, you can get a determination from the IRS by filing Form SS-8. Efile state taxes Members of Religious Orders If you are a member of a religious order who has not taken a vow of poverty, your earnings for ministerial services you perform as a member of the order are subject to SE tax. Efile state taxes See Ministerial Services , later. Efile state taxes However, you can request that the IRS grant you an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. Efile state taxes Vow of poverty. Efile state taxes   If you are a member of a religious order and have taken a vow of poverty, you are already exempt from paying SE tax on your earnings for ministerial services you perform as an agent of your church or its agencies. Efile state taxes You do not need to request a separate exemption. Efile state taxes For income tax purposes, the earnings are tax free to you. Efile state taxes Your earnings are considered the income of the religious order. Efile state taxes Services covered under FICA at the election of the order. Efile state taxes   However, even if you have taken a vow of poverty, the services you perform for your church or its agencies may be covered under social security. Efile state taxes Your services are covered if your order, or an autonomous subdivision of the order, elects social security coverage for its current and future vow-of-poverty members. Efile state taxes   The order or subdivision elects coverage by filing Form SS-16. Efile state taxes The election may cover certain vow-of-poverty members for a retroactive period of up to 20 calendar quarters before the quarter in which it files the certificate. Efile state taxes If the election is made, the order or subdivision pays both the employer's and employee's share of the tax. Efile state taxes You do not pay any of the FICA tax. Efile state taxes Services performed outside the order. Efile state taxes   Even if you are a member of a religious order who has taken a vow of poverty and the order requires you to turn over amounts you earn, your earnings are subject to federal income tax and either SE tax or FICA tax (including estimated tax payments and/or withholding) if you: Are self-employed or an employee of an organization outside your religious community, and Perform work not required by, or done on behalf of, the order. Efile state taxes   In these cases, your income from self-employment or as an employee of that outside organization is taxable to you directly. Efile state taxes You may, however, be able to take a charitable deduction for the amount you turn over to the order. Efile state taxes See Publication 526, Charitable Contributions. Efile state taxes Rulings. Efile state taxes   Organizations and individuals may request rulings from the IRS on whether they are religious orders, or members of a religious order, respectively, for FICA tax, SE tax, and federal income tax withholding purposes. Efile state taxes To request a ruling, follow the procedures in Revenue Procedure 2014-1, 2014-1 I. Efile state taxes R. Efile state taxes B. Efile state taxes 1, available at www. Efile state taxes irs. Efile state taxes gov/irb/2014-1_IRB/ar05. Efile state taxes html. Efile state taxes Christian Science Practitioners and Readers Generally, your earnings from services you perform in your profession as a Christian Science practitioner or reader are subject to SE tax. Efile state taxes However, you can request an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. Efile state taxes Practitioners. Efile state taxes   Christian Science practitioners are members in good standing of the Mother Church, The First Church of Christ, Scientist, in Boston, Massachusetts, who practice healing according to the teachings of Christian Science. Efile state taxes State law specifically exempts Christian Science practitioners from licensing requirements. Efile state taxes   Some Christian Science practitioners also are Christian Science teachers or lecturers. Efile state taxes Income from teaching or lecturing is considered the same as income from their work as practitioners. Efile state taxes Readers. Efile state taxes   For tax purposes, Christian Science readers are considered the same as ordained, commissioned, or licensed ministers. Efile state taxes Coverage of Religious Workers (Church Employees) If you are a religious worker (a church employee) and are not in one of the classes already discussed, your wages are generally subject to social security and Medicare tax under FICA, not SECA. Efile state taxes Some exceptions are discussed next. Efile state taxes Election by Church To Exclude Its Employees From FICA Coverage Churches and qualified church-controlled organizations (church organizations) that are opposed for religious reasons to the payment of social security and Medicare taxes can elect to exclude their employees from FICA coverage. Efile state taxes If your employer makes this election, it does not pay the employer's portion of the FICA taxes or withhold from your pay your portion of the FICA taxes. Efile state taxes Instead, your wages are subject to SECA and you must pay SE tax on your wages if they exceed $108. Efile state taxes 28 during the tax year. Efile state taxes However, you can request an exemption from SE tax if you are a member of a recognized religious sect, as discussed below. Efile state taxes Churches and church organizations make this election by filing two copies of Form 8274. Efile state taxes For more information about making this election, see Form 8274. Efile state taxes Election by Certain Church Employees Who Are Opposed to Social Security and Medicare You may be able to choose to be exempt from social security and Medicare taxes, including the SE tax, if you are a member of a recognized religious sect or division and work for a church (or church-controlled nonprofit division) that does not pay the employer's part of the social security tax on wages. Efile state taxes This exemption does not apply to your service, if any, as a minister of a church or as a member of a religious order. Efile state taxes Make this choice by filing Form 4029. Efile state taxes See Requesting Exemption—Form 4029 , later, under Members of Recognized Religious Sects. Efile state taxes U. Efile state taxes S. Efile state taxes Citizens and Resident and Nonresident Aliens To be covered under the SE tax provisions (SECA), individuals generally must be citizens or resident aliens of the United States. Efile state taxes Nonresident aliens are not covered under SECA unless a social security agreement in effect between the United States and the foreign country determines that you are covered under the U. Efile state taxes S. Efile state taxes social security system. Efile state taxes To determine your alien status, see Publication 519, U. Efile state taxes S. Efile state taxes Tax Guide for Aliens. Efile state taxes Residents of Puerto Rico, the U. Efile state taxes S. Efile state taxes Virgin Islands, Guam, the CNMI, and American Samoa. Efile state taxes   If you are a resident of one of these U. Efile state taxes S. Efile state taxes possessions but not a U. Efile state taxes S. Efile state taxes citizen, for SE tax purposes you are treated the same as a citizen or resident alien of the United States. Efile state taxes For information on figuring the tax, see Self-Employment Tax: Figuring Net Earnings , later. Efile state taxes Ministerial Services Ministerial services, in general, are the services you perform in the exercise of your ministry, in the exercise of your duties as required by your religious order, or in the exercise of your profession as a Christian Science practitioner or reader. Efile state taxes Income you receive for performing ministerial services is subject to SE tax unless you have an exemption as explained later. Efile state taxes Even if you have an exemption, only the income you receive for performing ministerial services is exempt. Efile state taxes The exemption does not apply to any other income. Efile state taxes The following discussions provide more detailed information on ministerial services of ministers, members of a religious order, and Christian Science practitioners and readers. Efile state taxes Ministers Most services you perform as a minister, priest, rabbi, etc. Efile state taxes , are ministerial services. Efile state taxes These services include: Performing sacerdotal functions, Conducting religious worship, and Controlling, conducting, and maintaining religious organizations (including the religious boards, societies, and other integral agencies of such organizations) that are under the authority of a religious body that is a church or denomination. Efile state taxes You are considered to control, conduct, and maintain a religious organization if you direct, manage, or promote the organization's activities. Efile state taxes A religious organization is under the authority of a religious body that is a church or denomination if it is organized for and dedicated to carrying out the principles of a faith according to the requirements governing the creation of institutions of the faith. Efile state taxes Services for nonreligious organizations. Efile state taxes   Your services for a nonreligious organization are ministerial services if the services are assigned or designated by your church. Efile state taxes Assigned or designated services qualify even if they do not involve performing sacerdotal functions or conducting religious worship. Efile state taxes   If your services are not assigned or designated by your church, they are ministerial services only if they involve performing sacerdotal functions or conducting religious worship. Efile state taxes Services that are not part of your ministry. Efile state taxes   Income from services you perform as an employee that are not ministerial services is subject to social security and Medicare tax withholding under FICA (not SECA) under the rules that apply to employees in general. Efile state taxes The following are not ministerial services. Efile state taxes Services you perform for nonreligious organizations other than the services stated above. Efile state taxes Services you perform as a duly ordained, commissioned, or licensed minister of a church as an employee of the United States, the District of Columbia, a foreign government, or any of their political subdivisions. Efile state taxes These services are not ministerial services even if you are performing sacerdotal functions or conducting religious worship. Efile state taxes (For example, if you perform services as a chaplain in the Armed Forces of the United States, those services are not ministerial services. Efile state taxes ) Services you perform in a government-owned and operated hospital. Efile state taxes (These services are considered performed by a government employee, not by a minister as part of the ministry. Efile state taxes ) However, services that you perform at a church-related hospital or health and welfare institution, or a private nonprofit hospital, are considered to be part of the ministry and are considered ministerial services. Efile state taxes Books or articles. Efile state taxes   Writing religious books or articles is considered to be in the exercise of your ministry and is considered a ministerial service. Efile state taxes   This rule also applies to members of religious orders and to Christian Science practitioners and readers. Efile state taxes Members of Religious Orders Services you perform as a member of a religious order in the exercise of duties required by the order are ministerial services. Efile state taxes The services are considered ministerial because you perform them as an agent of the order. Efile state taxes For example, if the order directs you to perform services for another agency of the supervising church or an associated institution, you are considered to perform the services as an agent of the order. Efile state taxes However, if the order directs you to work outside the order, this employment will not be considered a duty required by the order unless: Your services are the kind that are ordinarily performed by members of the order, and Your services are part of the duties that must be exercised for, or on behalf of, the religious order as its agent. Efile state taxes Effect of employee status. Efile state taxes   Ordinarily, if your services are not considered directed or required of you by the order, you and the outside party for whom you work are considered employee and employer. Efile state taxes In this case, your earnings from the services are taxed under the rules that apply to employees in general, not under the rules for services provided as agent for the order. Efile state taxes This result is true even if you have taken a vow of poverty. Efile state taxes Example. Efile state taxes Pat Brown and Chris Green are members of a religious order and have taken vows of poverty. Efile state taxes They renounce all claims to their earnings. Efile state taxes The earnings belong to the order. Efile state taxes Pat is a licensed attorney. Efile state taxes The superiors of the order instructed her to get a job with a law firm. Efile state taxes Pat joined a law firm as an employee and, as she requested, the firm made the salary payments directly to the order. Efile state taxes Chris is a secretary. Efile state taxes The superiors of the order instructed him to accept a job with the business office of the church that supervises the order. Efile state taxes Chris took the job and gave all his earnings to the order. Efile state taxes Pat's services are not duties required by the order. Efile state taxes Her earnings are subject to social security and Medicare tax under FICA and to federal income tax. Efile state taxes Chris' services are duties required by the order. Efile state taxes He is acting as an agent of the order and not as an employee of a third party. Efile state taxes He does not include the earnings in gross income, and they are not subject to income tax withholding or to social security and Medicare tax under FICA or SECA. Efile state taxes Christian Science Practitioners and Readers Services you perform as a Christian Science practitioner or reader in the exercise of your profession are ministerial services. Efile state taxes Amounts you receive for performing these services are generally subject to SE tax. Efile state taxes You may request an exemption from SE tax, discussed next, which applies only to those services. Efile state taxes Exemption From Self-Employment (SE) Tax You can request an exemption from SE tax if you are a member of the clergy (minister, member of a religious order, or Christian Science practitioner or reader) or a member of a recognized religious sect. Efile state taxes Generally, members of religious orders who have taken a vow of poverty are already exempt from paying SE tax, as discussed earlier under Members of Religious Orders under Social Security Coverage. Efile state taxes They do not have to request the exemption. Efile state taxes Who cannot be exempt. Efile state taxes   You cannot be exempt from SE tax if you made one of the following elections to be covered under social security. Efile state taxes These elections are irrevocable. Efile state taxes You elected to be covered under social security by filing Form 2031, Revocation of Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders, and Christian Science Practitioners, for your 1986, 1987, 2000, or 2001 tax year. Efile state taxes You elected before 1968 to be covered under social security for your ministerial services. Efile state taxes Requesting exemption. Efile state taxes    Table 2, earlier, briefly summarizes the procedure for requesting exemption from the SE tax. Efile state taxes More detailed explanations follow. Efile state taxes If you are a minister, member of a religious order, or Christian Science practitioner, an approved exemption only applies to earnings you receive for ministerial services, discussed earlier. Efile state taxes It does not apply to any other self-employment income. Efile state taxes Table 2. Efile state taxes The Self-Employment Tax Exemption Application and Approval Process   Who Can Apply Members of the Clergy Members of Recognized  Religious Sects How File Form 4361 File Form 4029 When File by the due date (including extensions) of your income tax return for the second tax year in which you had at least $400 of net earnings from self-employment (at least part from ministerial services) File anytime Approval If approved, you will receive an approved copy of Form 4361 If approved, you will receive an approved copy of Form 4029 Effective Date For all tax years after 1967 in which you have at least $400 of net earnings from self-employment For all tax years beginning with the first year you meet the eligibility requirements discussed later Members of the Clergy To claim the exemption from SE tax, you must meet all of the following conditions. Efile state taxes You file Form 4361, described below under Requesting Exemption—Form 4361 . Efile state taxes You are conscientiously opposed to public insurance because of your individual religious considerations (not because of your general conscience), or you are opposed because of the principles of your religious denomination. Efile state taxes You file for other than economic reasons. Efile state taxes You inform the ordaining, commissioning, or licensing body of your church or order that you are opposed to public insurance if you are a minister or a member of a religious order (other than a vow-of-poverty member). Efile state taxes This requirement does not apply to Christian Science practitioners or readers. Efile state taxes You establish that the organization that ordained, commissioned, or licensed you, or your religious order, is a tax-exempt religious organization. Efile state taxes You establish that the organization is a church or a convention or association of churches. Efile state taxes You did not make an election discussed earlier under Who cannot be exempt . Efile state taxes You sign and return the statement the IRS mails to you to certify that you are requesting an exemption based on the grounds listed on the statement. Efile state taxes Requesting Exemption—Form 4361 To request exemption from SE tax, file Form 4361 in triplicate (original and two copies) with the IRS. Efile state taxes The IRS will return to you a copy of the Form 4361 that you filed indicating whether it has approved your exemption. Efile state taxes If it is approved, keep the approved copy of Form 4361 in your permanent records. Efile state taxes When to file. Efile state taxes   File Form 4361 by the date your income tax return is due, including extensions, for the second tax year in which both of the following are true. Efile state taxes You have net earnings from self-employment of at least $400. Efile state taxes Any part of those net earnings was from ministerial services you performed as a: Minister, Member of a religious order, or Christian Science practitioner or reader. Efile state taxes The 2 years do not have to be consecutive tax years. Efile state taxes    The approval process can take some time, so you should file Form 4361 as soon as possible. Efile state taxes Example 1. Efile state taxes Rev. Efile state taxes Lawrence Jaeger, a clergyman ordained in 2013, has net self-employment earnings as a minister of $450 in 2013 and $500 in 2014. Efile state taxes He must file his application for exemption by the due date, including extensions, for his 2014 income tax return. Efile state taxes However, if Rev. Efile state taxes Jaeger does not receive IRS approval for an exemption by April 15, 2015, his SE tax for 2014 is due by that date. Efile state taxes Example 2. Efile state taxes Rev. Efile state taxes Louise Wolfe has only $300 in net self-employment earnings as a minister in 2013, but earned more than $400 in 2012 and expects to earn more than $400 in 2014. Efile state taxes She must file her application for exemption by the due date, including extensions, for her 2014 income tax return. Efile state taxes However, if she does not receive IRS approval for an exemption by April 15, 2015, her SE tax for 2014 is due by that date. Efile state taxes Example 3. Efile state taxes In 2011, Rev. Efile state taxes David Moss was ordained a minister and had $700 in net self-employment earnings as a minister. Efile state taxes In 2012, he received $1,000 as a minister, but his related expenses were over $1,000. Efile state taxes Therefore, he had no net self-employment earnings as a minister in 2012. Efile state taxes Also in 2012, he opened a book store and had $8,000 in net self-employment earnings from the store. Efile state taxes In 2013, he had net self-employment earnings of $1,500 as a minister and $10,000 net self-employment earnings from the store. Efile state taxes Rev. Efile state taxes Moss had net earnings from self-employment in 2011 and 2013 that were $400 or more each year, and part of the self-employment earnings in each of those years was for his services as a minister. Efile state taxes Thus, he must file his application for exemption by the due date, including extensions, for his 2013 income tax return. Efile state taxes Death of individual. Efile state taxes   The right to file an application for exemption ends with an individual's death. Efile state taxes A surviving spouse, executor, or administrator cannot file an exemption application for a deceased clergy member. Efile state taxes Effective date of exemption. Efile state taxes   An approved exemption is effective for all tax years after 1967 in which you have $400 or more of net earnings from self-employment and any part of those earnings is for services as a member of the clergy. Efile state taxes Once the exemption is approved, it is irrevocable. Efile state taxes Example. Efile state taxes Rev. Efile state taxes Trudy Austin, ordained in 2010, had $400 or more in net self-employment earnings as a minister in both 2010 and 2013. Efile state taxes She files an application for exemption on February 20, 2014. Efile state taxes If an exemption is granted, it is effective for 2010 and the following years. Efile state taxes Refunds of SE tax. Efile state taxes   If, after receiving an approved Form 4361, you find that you overpaid SE tax, you can file a claim for refund on Form 1040X. Efile state taxes Generally, for a refund, you must file Form 1040X within 3 years from the date you filed the return or within 2 years from the date you paid the tax, whichever is later. Efile state taxes A return you filed, or tax you paid, before the due date is considered to have been filed or paid on the due date. Efile state taxes   If you file a claim after the 3-year period but within 2 years from the time you paid the tax, the credit or refund will not be more than the tax you paid within the 2 years immediately before you file the claim. Efile state taxes Members of Recognized Religious Sects If you are a member of a recognized religious sect, or a division of a recognized religious sect, you can apply for an exemption from payment of social security and Medicare taxes on both your self-employment income and the wages you earn from an employer who also has an exemption. Efile state taxes Exception. Efile state taxes   If you received social security benefits or payments, or anyone else received these benefits or payments based on your wages or self-employment income, you cannot apply. Efile state taxes However, if you pay your benefits back, you may be considered for exemption. Efile state taxes Contact your local Social Security Administration office to find out the amount you must pay back. Efile state taxes Eligibility requirements. Efile state taxes   To claim this exemption from SE tax, all the following requirements must be met. Efile state taxes You must file Form 4029, discussed later under Requesting Exemption—Form 4029 . Efile state taxes As a follower of the established teachings of the sect or division, you must be conscientiously opposed to accepting benefits of any private or public insurance that makes payments for death, disability, old age, retirement, or medical care, or provides services for medical care. Efile state taxes You must waive all rights to receive any social security payment or benefit and agree that no benefits or payments will be made to anyone else based on your wages and self-employment income. Efile state taxes The Commissioner of Social Security must determine that: Your sect or division has the established teachings as described in (2) above, It is the practice, and has been for a substantial period of time, for members of the sect or division to provide for their dependent members in a manner that is reasonable in view of the members' general level of living, and The sect or division has existed at all times since December 31, 1950. Efile state taxes Requesting Exemption—Form 4029 To request the exemption, file Form 4029 in triplicate (original and two copies) with the Social Security Administration at the address shown on the form. Efile state taxes The sect or division must complete part of the form. Efile state taxes The IRS will return to you a copy of the Form 4029 that you filed indicating whether it has approved your exemption. Efile state taxes If it is approved, keep the approved copy of Form 4029 in your permanent records. Efile state taxes When to file. Efile state taxes   You can file Form 4029 at any time. Efile state taxes   If you have an approved exemption from SE tax and for some reason that approved exemption ended, you must file a new Form 4029 if you subsequently meet the eligibility requirements, discussed earlier. Efile state taxes See Effective date of exemption next for information on when the newly approved exemption would become effective. Efile state taxes    If you have a previously approved exemption from SE tax and you change membership to another recognized religious sect, without any change to your eligibility requirements, then you do not need to file a new Form 4029. Efile state taxes Effective date of exemption. Efile state taxes   An approved exemption from SE tax generally is effective for all tax years beginning with the first year you meet the eligibility requirements discussed earlier. Efile state taxes (For example, if you meet the eligibility requirements in 2011, you file Form 4029 in 2012, and the IRS approves your exemption in 2013, your exemption is effective for tax year 2011 and all later years. Efile state taxes )   The exemption will end if you fail to meet the eligibility requirements or if the Commissioner of Social Security determines that the sect or division fails to meet them. Efile state taxes You must notify the IRS within 60 days if you are no longer a member of the religious group, or if you no longer follow the established teachings of this group. Efile state taxes The exemption will end for the tax year where you or your sect/division first fails to meet the eligibility requirements. Efile state taxes Refunds of SE tax paid. Efile state taxes    To get a refund of any SE tax you paid while the exemption was in effect, file Form 1040X. Efile state taxes For information on filing this form, see Refunds of SE tax under Requesting Exemption—Form 4361, earlier. Efile state taxes Exemption From FICA Taxes Generally, under FICA, the employer and the employee each pay half of the social security and Medicare tax. Efile state taxes Both the employee and the employer, if they meet the eligibility requirements discussed earlier, can apply to be exempt from their share of FICA taxes on wages paid by the employer to the employee. Efile state taxes A partnership in which each partner holds a religious exemption from social security and Medicare is an employer for this purpose. Efile state taxes If the employer's application is approved, the exemption will apply only to FICA taxes on wages paid to employees who also received an approval of identical applications. Efile state taxes Information for employers. Efile state taxes   If you have an approved Form 4029 and you have an employee who has an approved Form 4029, do not report wages you paid to the employee as social security and Medicare wages. Efile state taxes   If you have an employee who does not have an approved Form 4029, you must withhold the employee's share of social security and Medicare taxes and pay the employer's share. Efile state taxes Form W-2. Efile state taxes   When preparing a Form W-2 for an employee with an approved Form 4029, enter “Form 4029” in box 14, “Other. Efile state taxes ” Do not make any entries in boxes 3, 4, 5, or 6. Efile state taxes Forms 941, 943, and 944. Efile state taxes   If both you and your employee have received approved Forms 4029, do not include these exempt wages on the following forms. Efile state taxes Instead, follow the instructions given below. Efile state taxes Form 941, Employer's QUARTERLY Federal Tax Return: check the box on line 4 and enter “Form 4029” in the empty space below the check box. Efile state taxes Form 943, Employer's Annual Federal Tax Return for Agricultural Employees: enter “Form 4029” on the dotted line next to the lines 2 and 4 entry spaces. Efile state taxes Form 944, Employer's ANNUAL Federal Tax Return: check the box on line 3 and enter “Form 4029” in the empty space below the check box. Efile state taxes Effective date. Efile state taxes   An approved exemption from FICA becomes effective on the first day of the first calendar quarter after the quarter in which you file Form 4029. Efile state taxes The exemption will end on the last day of the calendar quarter before the quarter in which the employer, employee, sect, or division fails to meet the requirements. Efile state taxes Self-Employment Tax: Figuring Net Earnings There are two methods for figuring your net earnings from self-employment as a member of the clergy or a religious worker. Efile state taxes Regular method. Efile state taxes Nonfarm optional method. Efile state taxes You may find Worksheets 1 through 4 helpful in figuring your net earnings from self-employment. Efile state taxes Blank worksheets are in the back of this publication, after the Comprehensive Example. Efile state taxes Regular Method Most people use the regular method. Efile state taxes Under this method, figure your net earnings from self-employment by totaling your gross income for services you performed as a minister, a member of a religious order who has not taken a vow of poverty, or a Christian Science practitioner or reader. Efile state taxes Then, subtract your allowable business deductions and multiply the difference by 92. Efile state taxes 35% (. Efile state taxes 9235). Efile state taxes Use Schedule SE (Form 1040) to figure your net earnings and SE tax. Efile state taxes If you are an employee of a church that elected to exclude you from FICA coverage, figure net earnings by multiplying your church wages shown on Form W-2 by 92. Efile state taxes 35% (. Efile state taxes 9235). Efile state taxes Do not reduce your wages by any business deductions when making this computation. Efile state taxes Use Schedule SE (Form 1040), Section B, to figure your net earnings and SE tax. Efile state taxes If you have an approved exemption, or you are automatically exempt, do not include the income or deductions from ministerial services in figuring your net earnings from self-employment. Efile state taxes Amounts included in gross income. Efile state taxes   To figure your net earnings from self-employment (on Schedule SE (Form 1040)), include in gross income: Salaries and fees for your ministerial services (discussed earlier), Offerings you receive for marriages, baptisms, funerals, masses, etc. Efile state taxes , The value of meals and lodging provided to you, your spouse, and your dependents for your employer's convenience, The fair rental value of a parsonage provided to you (including the cost of utilities that are furnished) and the rental allowance (including an amount for payment of utilities) paid to you, and Any amount a church pays toward your income tax or SE tax, other than withholding the amount from your salary. Efile state taxes This amount is also subject to income tax. Efile state taxes   For the income tax treatment of items (2) and (4), see Income Tax: Income and Expenses , later. Efile state taxes Example. Efile state taxes Pastor Roger Adams receives an annual salary of $39,000 as a full-time minister. Efile state taxes The $39,000 includes $5,000 that is designated as a rental allowance to pay utilities. Efile state taxes His church owns a parsonage that has a fair rental value of $12,000 per year. Efile state taxes The church gives Pastor Adams the use of the parsonage. Efile state taxes He is not exempt from SE tax. Efile state taxes He must include $51,000 ($39,000 plus $12,000) when figuring his net earnings for SE tax purposes. Efile state taxes The results would be the same if, instead of the use of the parsonage and receipt of the rental allowance for utilities, Pastor Adams had received an annual salary of $51,000 of which $17,000 ($5,000 plus $12,000) per year was designated as a rental allowance. Efile state taxes Overseas duty. Efile state taxes   Your net earnings from self-employment are determined without any foreign earned income exclusion or the foreign housing exclusion or deduction if you are a U. Efile state taxes S. Efile state taxes citizen or resident alien serving abroad and living in a foreign country. Efile state taxes   For information on excluding foreign earned income or the foreign housing amount, see Publication 54. Efile state taxes Example. Efile state taxes Diane Jones was the minister of a U. Efile state taxes S. Efile state taxes church in Mexico. Efile state taxes She earned $35,000 in that position and was able to exclude it all for income tax purposes under the foreign earned income exclusion. Efile state taxes The United States does not have a social security agreement with Mexico, so Mrs. Efile state taxes Jones is subject to U. Efile state taxes S. Efile state taxes SE tax and must include $35,000 when figuring net earnings from self-employment. Efile state taxes Specified U. Efile state taxes S. Efile state taxes possessions. Efile state taxes    The exclusion from gross income for amounts derived from American Samoa or Puerto Rico does not apply in computing net earnings from self-employment. Efile state taxes Also see Residents of Puerto Rico, the U. Efile state taxes S. Efile state taxes Virgin Islands, Guam, the CNMI, and American Samoa , earlier, under U. Efile state taxes S. Efile state taxes Citizens and Resident and Nonresident Aliens. Efile state taxes Amounts not included in gross income. Efile state taxes   Do not include the following amounts in gross income when figuring your net earnings from self-employment. Efile state taxes Offerings that others made to the church. Efile state taxes Contributions by your church to a tax-sheltered annuity plan set up for you, including any salary reduction contributions (elective deferrals) that are not included in your gross income. Efile state taxes Pension payments or retirement allowances you receive for your past ministerial services. Efile state taxes The rental value of a parsonage or a parsonage allowance provided to you after you retire. Efile state taxes Allowable deductions. Efile state taxes   When figuring your net earnings from self-employment, deduct all your expenses related to your ministerial services performed as a self-employed person. Efile state taxes These are ministerial expenses you incurred while working other than as a common-law employee of the church. Efile state taxes They include expenses incurred in performing marriages and baptisms, and in delivering speeches. Efile state taxes Deduct these expenses on Schedule C or C-EZ (Form 1040), and carry the net amount to line 2 of Schedule SE (Form 1040), Section A or B. Efile state taxes   Wages earned as a common-law employee (explained earlier) of a church are generally subject to self-employment tax unless an exemption is requested, as discussed earlier under Exemption From Self-Employment (SE) Tax . Efile state taxes Subtract any allowable expenses (including unreimbursed employee business expenses) from those wages, include the net amount on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. Efile state taxes Do not complete Schedule C or C-EZ (Form 1040). Efile state taxes However, for income tax purposes, the expenses are allowed only as an itemized deduction on Schedule A (Form 1040) to the extent they exceed 2% of adjusted gross income. Efile state taxes Employee reimbursement arrangements. Efile state taxes   If you received an advance, allowance, or reimbursement for your employee expenses, how you report this amount and your employee expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. Efile state taxes Ask your employer if you are not sure if it reimburses you using an accountable or a nonaccountable plan. Efile state taxes Accountable plans. Efile state taxes   To be an accountable plan, your employer's reimbursement arrangement must include all three of the following rules. Efile state taxes Your expenses must have a business connection—that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Efile state taxes You must adequately account to your employer for these expenses within a reasonable period of time. Efile state taxes You must return any excess reimbursement or allowance within a reasonable period of time. Efile state taxes   The reimbursement is not reported on your Form W-2. Efile state taxes Generally, if your expenses equal your reimbursement, you have no deduction. Efile state taxes If your expenses are more than your reimbursement, you can deduct your excess expenses for SE tax and income tax purposes. Efile state taxes Nonaccountable plan. Efile state taxes   A nonaccountable plan is a reimbursement arrangement that does not meet all three of the rules listed under Accountable plans above. Efile state taxes In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan. Efile state taxes Excess reimbursements you fail to return to your employer. Efile state taxes Reimbursement of nondeductible expenses related to your employer's business. Efile state taxes   Your employer will combine any reimbursement paid to you under a nonaccountable plan with your wages, salary, or other compensation and report the combined total in box 1 of your Form W-2. Efile state taxes Since reimbursements under a nonaccountable plan are included in your gross income, you can deduct your related expenses (for SE tax and income tax purposes) regardless of whether they are more than, less than, or equal to your reimbursement. Efile state taxes   For more information on accountable and nonaccountable plans, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Efile state taxes Married Couple Missionary Team If both spouses are duly ordained, commissioned, or licensed ministers of a church and have an agreement that each will perform specific services for which they are paid jointly or separately, they must divide the self-employment income according to the agreement. Efile state taxes If the agreement is with one spouse only and the other spouse is not paid for any specific duties, amounts received for their services are included only in the self-employment income of the spouse having the agreement. Efile state taxes Earnings Subject to SE Tax For 2013, the maximum net earnings from self-employment subject to social security (old age, survivors, and disability insurance) tax is $113,700 minus any wages and tips you earned that were subject to social security tax. Efile state taxes The tax rate for the social security part is 12. Efile state taxes 4%. Efile state taxes In addition, all of your net earnings are subject to the Medicare (hospital insurance) part of the SE tax. Efile state taxes This tax rate is 2. Efile state taxes 9%. Efile state taxes The combined self-employment tax rate is 15. Efile state taxes 3%. Efile state taxes Additional Medicare Tax. Efile state taxes   Beginning in 2013, a 0. Efile state taxes 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. Efile state taxes Medicare wages and self-employment income are combined to determine if income exceeds the threshold. Efile state taxes A self-employment loss is not considered for purposes of this tax. Efile state taxes RRTA compensation is separately compared to the threshold. Efile state taxes For more information, see Form 8959, Additional Medicare Tax, and its separate instructions. Efile state taxes Nonfarm Optional Method You may be able to use the nonfarm optional method for figuring your net earnings from self-employment. Efile state taxes In general, the nonfarm optional method is intended to permit continued coverage for social security and Medicare purposes when your income for the tax year is low. Efile state taxes You may use the nonfarm optional method if you meet all the following tests. Efile state taxes You are self-employed on a regular basis. Efile state taxes You meet this test if your actual net earnings from self-employment were $400 or more in at least 2 of the 3 tax years before the one for which you use this method. Efile state taxes The net earnings can be from either farm or nonfarm earnings or both. Efile state taxes You have used this method less than 5 prior years. Efile state taxes (There is a 5-year lifetime limit. Efile state taxes ) The years do not have to be consecutive. Efile state taxes Your net nonfarm profits were: Less than $5,024, and Less than 72. Efile state taxes 189% of your gross nonfarm income. Efile state taxes If you meet all three tests, use Table 3 to figure your net earnings from self-employment under the nonfarm optional method. Efile state taxes Table 3. Efile state taxes Figuring Nonfarm Net Earnings IF your gross nonfarm income is . Efile state taxes . Efile state taxes . Efile state taxes THEN your net earnings are equal to . Efile state taxes . Efile state taxes . Efile state taxes $6,960 or less Two-thirds of your gross nonfarm income. Efile state taxes More than $6,960 $4,640. Efile state taxes Actual net earnings. Efile state taxes   Multiply your total earnings subject to SE tax by 92. Efile state taxes 35% (. Efile state taxes 9235) to get actual net earnings. Efile state taxes Actual net earnings are equivalent to net earnings under the “Regular Method. Efile state taxes ” More information. Efile state taxes   For more information on the nonfarm optional method, see Publication 334, Tax Guide for Small Business, and the Schedule SE (Form 1040) instructions. Efile state taxes Income Tax: Income and Expenses Some income and expense items are treated the same for both income tax and SE tax purposes and some are treated differently. Efile state taxes Note. Efile state taxes For purposes of this section, references to members of the clergy are only to ministers or members of a religious order. Efile state taxes Income Items The tax treatment of offerings and fees, outside earnings, rental allowances, rental value of a parsonage, earnings of members of religious orders, and foreign earned income is discussed here. Efile state taxes Offerings and Fees If you are a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc. Efile state taxes , in addition to your salary. Efile state taxes If the offering is made to the religious institution, it is not taxable to you. Efile state taxes Outside Earnings If you are a member of a religious organization and you give your outside earnings to the organization, you still must include the earnings in your income. Efile state taxes However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. Efile state taxes For more information, see Publication 526. Efile state taxes Exclusion of Rental Allowance and Fair Rental Value of a Parsonage Ordained, commissioned, or licensed ministers of the gospel may be able to exclude from income tax the rental allowance or fair rental value of a parsonage that is provided to them as pay for their services. Efile state taxes Services include: Ministerial services, discussed earlier, Administrative duties and teaching at theological seminaries, and The ordinary duties of a minister performed as an employee of the United States (other than as a chaplain in the Armed Forces), a state, possession, political subdivision, or the District of Columbia. Efile state taxes This exclusion applies only for income tax purposes. Efile state taxes It does not apply for SE tax purposes, as discussed earlier under Amounts included in gross income under Self-Employment Tax: Figuring Net Earnings. Efile state taxes Designation requirement. Efile state taxes   The church or organization that employs you must officially designate the payment as a housing allowance before it makes the payment. Efile state taxes It must designate a definite amount. Efile state taxes It cannot determine the amount of the housing allowance at a later date. Efile state taxes If the church or organization does not officially designate a definite amount as a housing allowance, you must include your total salary in your income. Efile state taxes   If you are employed and paid by a local congregation, a resolution by a national church agency of your denomination does not effectively designate a housing allowance for you. Efile state taxes The local congregation must officially designate the part of your salary that is a housing allowance. Efile state taxes However, a resolution of a national church agency can designate your housing allowance if you are directly employed by the national agency. Efile state taxes Rental allowances. Efile state taxes   If you receive in your salary an amount officially designated as a rental allowance (including an amount to pay utility costs), you can exclude the allowance from your gross income if: You use the amount to provide or rent a home, and The amount is not more than reasonable pay for your services. Efile state taxes   The amount you exclude cannot be more than the fair rental value of the home, including furnishings, plus the cost of utilities. Efile state taxes Fair rental value of parsonage. Efile state taxes   You can exclude from gross income the fair rental value of a house or parsonage, including utilities, furnished to you as part of your earnings. Efile state taxes However, the exclusion cannot be more than the reasonable pay for your services. Efile state taxes If you pay for the utilities, you can exclude any allowance designated for utility costs, up to your actual cost. Efile state taxes Example. Efile state taxes Rev. Efile state taxes Joanna Baker is a full-time minister. Efile state taxes The church allows her to use a parsonage that has an annual fair rental value of $24,000. Efile state taxes The church pays her an annual salary of $67,000, of which $7,500 is designated for utility costs. Efile state taxes Her actual utility costs during the year were $7,000. Efile state taxes For income tax purposes, Rev. Efile state taxes Baker excludes $31,000 from gross income ($24,000 fair rental value of the parsonage plus $7,000 from the allowance for utility costs). Efile state taxes She will report $60,000 ($59,500 salary plus $500 of unused utility allowance). Efile state taxes Her income for SE tax purposes, however, is $91,000 ($67,000 salary + $24,000 fair rental value of the parsonage). Efile state taxes Home ownership. Efile state taxes   If you own your home and you receive as part of your salary a housing or rental allowance, you may exclude from gross income the smallest of: The amount actually used to provide a home, The amount officially designated as a rental allowance, or The fair rental value of the home, including furnishings, utilities, garage, etc. Efile state taxes Excess rental allowance. Efile state taxes   You must include in gross income the amount of any rental allowance that is more than the smallest of: Your reasonable salary, The fair rental value of the home plus utilities, or The amount actually used to provide a home. Efile state taxes   Include in the total on Form 1040, line 7. Efile state taxes On the dotted line next to line 7, enter “Excess allowance” and the amount. Efile state taxes You may deduct the home mortgage interest and real estate taxes paid on your home even though you pay all or part of those expenses with funds you get through a tax-free rental or parsonage allowance. Efile state taxes However, you can only deduct these expenses as itemized deductions on Schedule A (Form 1040). Efile state taxes Retired ministers. Efile state taxes   If you are a retired minister, you can exclude from your gross income the rental value of a home (plus utilities) furnished to you by your church as a part of your pay for past services, or the part of your pension that was designated as a rental allowance. Efile state taxes However, a minister's surviving spouse cannot exclude the rental value unless the rental value is for ministerial services he or she performs or performed. Efile state taxes Teachers or administrators. Efile state taxes   If you are a minister employed as a teacher or administrator by a church school, college, or university, you are performing ministerial services for purposes of the housing exclusion. Efile state taxes However, if you perform services as a teacher or administrator on the faculty of a nonchurch college, you cannot exclude from your income a housing allowance or the value of a home that the college provides to you. Efile state taxes    If you live in faculty lodging as an employee of an educational institution or academic health center, all or part of the value of that lodging may be nontaxable under a different rule. Efile state taxes In Publication 525, see Faculty lodging in the discussion on meals and lodging under Fringe Benefits. Efile state taxes   If you serve as a minister of music or minister of education, or serve in an administrative or other function of your religious organization, but are not authorized to perform substantially all of the religious duties of an ordained minister in your church (even if you are commissioned as a minister of the gospel), the housing exclusion does not apply to you. Efile state taxes Theological students. Efile state taxes   If you are a theological student serving a required internship as a part-time or assistant pastor, you cannot exclude a parsonage or rental allowance from your income unless you are ordained, commissioned, or licensed as a minister. Efile state taxes Traveling evangelists. Efile state taxes   You can exclude a designated rental allowance from out-of-town churches if you meet all of the following requirements. Efile state taxes You are an ordained minister. Efile state taxes You perform ministerial services at churches located away from your community. Efile state taxes You actually use the rental allowance to maintain your permanent home. Efile state taxes Cantors. Efile state taxes   If you have a bona fide commission and your congregation employs you on a full-time basis to perform substantially all the religious functions of the Jewish faith, you can exclude a rental allowance from your gross income. Efile state taxes Earnings—Members of Religious Orders Your earnings may be exempt from both income tax and SE tax if you are a member of a religious order who: Has taken a vow of poverty, Receives earnings for services performed as an agent of the order and in the exercise of duties required by the order, and Renounces the earnings and gives them to the order. Efile state taxes See Members of Religious Orders , earlier, under Social Security Coverage. Efile state taxes Foreign Earned Income Certain income may be exempt from income tax if you work in a foreign country or in a specified U. Efile state taxes S. Efile state taxes possession. Efile state taxes Publication 54 discusses the foreign earned income exclusion. Efile state taxes Publication 570, Tax Guide for Individuals With Income From U. Efile state taxes S. Efile state taxes Possessions, covers the rules for taxpayers with income from U. Efile state taxes S. Efile state taxes possessions. Efile state taxes You can get these free publications from the Internal Revenue Service at IRS. Efile state taxes gov or from most U. Efile state taxes S. Efile state taxes Embassies or consulates. Efile state taxes Expense Items The tax treatment of ministerial trade or business expenses, expenses allocable to tax-free income, and health insurance costs is discussed here. Efile state taxes Ministerial Trade or Business Expenses as an Employee When you figure your income tax, you must itemize your deductions on Schedule A (Form 1040) to claim allowable deductions for ministerial trade or business expenses incurred while working as an employee. Efile state taxes You also may have to file Form 2106, Employee Business Expenses (or Form 2106-EZ, Unreimbursed Employee Business Expenses). Efile state taxes You claim these expenses as miscellaneous itemized deductions that are subject to the 2%-of-adjusted-gross-income (AGI) limit. Efile state taxes See Publication 529 for more information on this limit. Efile state taxes However, you cannot deduct any of your employee business expenses that are allocable to tax-free income (discussed next). Efile state taxes Expenses Allocable to Tax-Free Income If you receive a rental or parsonage allowance that is exempt from income tax (tax free), you must allocate a portion of the expenses of operating your ministry to that tax-free income. Efile state taxes You cannot deduct the portion of your expenses that you allocate to your tax-free rental or parsonage allowance. Efile state taxes Exception. Efile state taxes   This rule does not apply to your deductions for home mortgage interest or real estate taxes on your home. Efile state taxes Figuring the allocation. Efile state taxes   Figure the portion of your otherwise deductible expenses that you cannot deduct (because you must allocate that portion to tax-free income) by multiplying the expenses by the following fraction:      Tax-free rental or parsonage allowance     All income (taxable and tax free) earned from your ministry           When figuring the allocation, include the income and expenses related to the ministerial duties you perform both as an employee and as a self-employed person. Efile state taxes    Reduce your otherwise deductible expenses only in figuring your income tax, not your SE tax. Efile state taxes Example. Efile state taxes Rev. Efile state taxes Charles Ashford received $40,000 in earnings for ministerial services consisting of a $28,000 salary for ministerial services performed as an employee, $2,000 for weddings and baptisms performed as a self-employed person, and a $10,000 tax-free parsonage allowance. Efile state taxes He incurred $4,000 of unreimbursed expenses connected with his earnings for ministerial services. Efile state taxes $3,500 of the $4,000 is for employee expenses related to his ministerial salary, and $500 is related to the weddings and baptisms he performed as a self-employed person. Efile state taxes Rev. Efile state taxes Ashford figures the nondeductible (tax-free) portion of expenses related to his ministerial salary as follows: ($10,000 ÷ $40,000) x $3,500 = $875   Rev. Efile state taxes Ashford figures the nondeductible (tax-free) portion of expenses related to his wedding and baptism income as follows: ($10,000 ÷ $40,000) x $500 = $125 Required statement. Efile state taxes   If you receive a tax-free rental or parsonage allowance and have ministerial expenses, attach a statement to your tax return. Efile state taxes The statement must contain all of the following information. Efile state taxes A list of each item of taxable ministerial income by source (such as wages, salary, weddings, baptisms, etc. Efile state taxes ) plus the amount. Efile state taxes A list of each item of tax-free ministerial income by source (parsonage allowance) plus the amount. Efile state taxes A list of each item of otherwise deductible ministerial expenses plus the amount. Efile state taxes How you figured the nondeductible part of your otherwise deductible expenses. Efile state taxes A statement that the other deductions claimed on your tax return are not allocable to your tax-free income. Efile state taxes   See the attachments prepared for the Comprehensive Example , later. Efile state taxes Following the example, you will find blank worksheets for your own use. Efile state taxes Health Insurance Costs of Self-Employed Ministers If you are self-employed, you may be able to deduct the amount you paid in 2013 for medical and dental insurance and qualified long-term care insurance for you, your spouse, and your dependents. Efile state taxes If you qualify, you can take this deduction as an adjustment to income on Form 1040, line 29. Efile state taxes See the Instructions for Form 1040 to figure your deduction. Efile state taxes The following special rules apply to the self-employed health insurance deduction. Efile state taxes You cannot take a medical expense deduction on Schedule A (Form 1040) for any expenses you claim for purposes of the self-employed health insurance deduction. Efile state taxes You cannot take the deduction for any month you are eligible to participate in a subsidized plan of your (or your spouse's) employer. Efile state taxes The deduction cannot exceed your net earnings from the business under which the insurance plan is established. Efile state taxes Your net earnings under this rule do not include the income you earned as a common-law employee (discussed earlier) of a church. Efile state taxes More information. Efile state taxes   For more information about the self-employed health insurance deduction, see chapter 6 in Publication 535. Efile state taxes Deduction for SE Tax You can deduct one-half of your SE tax in figuring adjusted gross income. Efile state taxes This is an income tax deduction only, on Form 1040, line 27. Efile state taxes Do not claim this deduction in figuring net earnings from self-employment subject to SE tax. Efile state taxes Income Tax Withholding and Estimated Tax The federal income tax is a pay-as-you-go tax. Efile state taxes You must pay the tax as you earn or receive income during the year. Efile state taxes An employee usually has income tax withheld from his or her wages or salary. Efile state taxes However, your salary is not subject to federal income tax withholding if both of the following conditions apply. Efile state taxes You are a duly ordained, commissioned, or licensed minister, a member of a religious order (who has not taken a vow of poverty), or a Christian Science practitioner or reader. Efile state taxes Your salary is for ministerial services (see Ministerial Services , earlier). Efile state taxes If your salary is not subject to withholding, or if you do not pay enough tax through withholding, you may need to make estimated tax payments to avoid penalties for not paying enough tax as you earn your income. Efile state taxes You generally must make estimated tax payments if you expect to owe taxes, including SE tax, of $1,000 or more, when you file your return. Efile state taxes Determine your estimated tax by using the worksheets in Publication 505, Tax Withholding and Estimated Tax. Efile state taxes Pay the entire estimated tax for 2014 or the first installment by April 15, 2014. Efile state taxes See Form 1040-ES for the different payment methods. Efile state taxes The April 15 date applies whether or not your tax home and your abode are outside the United States and Puerto Rico. Efile state taxes For more information, see chapter 2 of Publication 505. Efile state taxes If you perform your services as a common-law employee of the church and your salary is not subject to income tax withholding, you can enter into a voluntary withholding agreement with the church to cover any income and SE tax that may be due. Efile state taxes Filing Your Return You must file an income tax return for 2013 if your gross income was at least the amount shown in the third column of Table 4 above. Efile state taxes Table 4. Efile state taxes 2013 Filing Requirements for Most Taxpayers IF your filing status is . Efile state taxes . Efile state taxes . Efile state taxes AND at the end of 2013 you were* . Efile state taxes . Efile state taxes . Efile state taxes THEN file a return if your gross income** was at least . Efile state taxes . Efile state taxes . Efile state taxes single under age 65 65 or older   $10,000 $11,500   married filing jointly*** under 65 (both spouses) 65 or older (one spouse) 65 or older (both spouses)   $20,000  $21,200  $22,400   married filing separately any age   $3,900   head of household under 65 65 or older   $12,850 $14,350   qualifying widow(er) with dependent child under 65 65 or older   $16,100  $17,300   * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Efile state taxes ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Efile state taxes Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2013, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). Efile state taxes If (a) or (b) applies, see the instructions for Form 1040, lines 20a and 20b, to figure the taxable part of social security benefits you must include in gross income. Efile state taxes Gross income includes gains, but not losses, reported on Form 8949 or Schedule D (Form 1040). Efile state taxes Gross income from a business means, for example, the amount on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. Efile state taxes But, in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. Efile state taxes *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900, you must file a return regardless of your age. Efile state taxes Additional requirements. Efile state taxes   Even if your income was less than the amount shown in Table 4, you must file an income tax return on Form 1040, and attach a completed Schedule SE (Form 1040), if:    You are not exempt from SE tax, and you have net earnings from self-employment (discussed earlier under Self-Employment Tax: Figuring Net Earnings ) of $400 or more in the tax year, You are exempt from SE tax on earnings from ministerial services and you have $400 or more of other net earnings subject to SE tax, or You had wages of $108. Efile state taxes 28 or more from an electing church or church-controlled organization (see Coverage of Religious Workers (Church Employees) , earlier, under Social Security Coverage). Efile state taxes Self-employment tax. Efile state taxes   If you are liable for SE tax, you must file Schedule SE (Form 1040) with your return. Efile state taxes   If you filed Form 4361 and did not receive approval from the IRS, you must pay SE tax on your ministerial earnings, as explained earlier. Efile state taxes You should report ministerial earnings and expenses from nonemployee ministerial services on Schedule C or C-EZ (Form 1040). Efile state taxes You should then carry the net amount over to line 2 of Schedule SE (Form 1040), Section A or B. Efile state taxes However, if you were a duly ordained minister who was an employee of a church and you must pay SE tax on the wages you earned for those services, do not report those wages on Schedule C or C-EZ (Form 1040). Efile state taxes Instead, report those wages less any allowable expenses (including any unreimbursed employee business expenses), on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. Efile state taxes Note. Efile state taxes For income tax purposes, the unreimbursed employee business expenses that you incurred as an employee of the church and subtracted from your wages on line 2 of Schedule SE (Form 1040) are allowed only as an itemized deduction on Schedule A (Form 1040) if they exceed 2% of your adjusted gross income. Efile state taxes You cannot deduct these expenses on Schedule C or C-EZ (Form 1040) as a trade or business expense. Efile state taxes Exemption from SE tax. Efile state taxes   If you filed Form 4361 and received IRS approval not to be taxed on your ministerial earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). Efile state taxes Instead, enter “Exempt—Form 4361” on the dotted line next to Form 1040, line 56. Efile state taxes However, if you had net earnings from another trade or business of $400 or more subject to SE tax, see line A at the top of Schedule SE (Form 1040), Section B. Efile state taxes    If you filed Form 4029 and received IRS approval not to be taxed on those earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). Efile state taxes Instead, enter “Exempt—Form 4029” on the dotted line next to Form 1040, line 56. Efile state taxes More information. Efile state taxes   For more information on filing your return, including when and where to file it, see the Instructions for Form 1040. Efile state taxes Retirement Savings Arrangements Retirement savings arrangements are plans that offer you a tax-favored way to save for your retirement. Efile state taxes You generally can deduct your contributions to the plan. Efile state taxes Your contributions and the earnings on them are not taxed until they are distributed. Efile state taxes Retirement plans for the self-employed. Efile state taxes   To set up one of the following plans you must be self-employed. Efile state taxes SEP (simplified employee pension) plan. Efile state taxes SIMPLE (savings incentive match plan for employees) plan. Efile state taxes Qualified retirement plan (also called a Keogh or H. Efile state taxes R. Efile state taxes 10 plan). Efile state taxes   The common-law rules determine whether you are an employee or a self-employed person for purposes of setting up a retirement plan. Efile state taxes See Employment status for other tax purposes under Coverage of Members of the Clergy, earlier. Efile state taxes This result is true even if your compensation for ministerial services (defined earlier) is subject to SE tax. Efile state taxes   For example, if a congregation pays you a salary for performing ministerial services and you are subject to the congregation's control, you generally are a common-law employee. Efile state taxes You are not a self-employed person for purposes of setting up a retirement plan. Efile state taxes This result is true even if your salary is subject to SE tax. Efile state taxes   On the other hand, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services that you report on Schedule C or C-EZ (Form 1040), are earnings from self-employment for all tax purposes. Efile state taxes   For more information on establishing a SEP, SIMPLE, or qualified retirement plan, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans). Efile state taxes Individual retirement arrangements (IRAs). Efile state taxes   The traditional IRA and the Roth IRA are two individual retirement arrangements you can use to save money for your retirement. Efile state taxes Generally, your maximum contribution for 2013 to either of these plans (or to a combination of the two) is the smaller of your taxable compensation or $5,500 ($6,500 if you are age 50 or older). Efile state taxes   However, your maximum contribution to a Roth IRA will be further reduced or eliminated if your adjusted gross income is above a certain amount. Efile state taxes You cannot deduct Roth IRA contributions, but if you satisfy certain requirements, all earnings in the Roth IRA are tax free and neither your nondeductible contributions nor any earnings on them are taxable when distributed. Efile state taxes   If you contribute to a traditional IRA, your contribution may be deductible. Efile state taxes However, your deduction may be reduced or eliminated if you or your spouse is covered by an employer retirement plan (including, but not limited to, a SEP, SIMPLE, or qualified retirement plan). Efile state taxes   For more information on IRAs, see Publication 590. Efile state taxes Tax-sheltered annuity plans. Efile state taxes   Church employees, members of religious orders, and duly ordained, commissioned, or licensed ministers working as ministers or chaplains can participate in tax-sheltered annuity (403(b)) plans. Efile state taxes For more
 
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Understanding Your IRS Notice or Letter

About Your Notice

If you receive a letter or notice from the IRS, it will explain the reason for the correspondence and provide instructions. Many of these letters and notices can be dealt with simply, without having to call or visit an IRS office.

The notice you receive covers a very specific issue about your account or tax return. Generally, the IRS will send a notice if it believes you owe additional tax, are due a larger refund, if there is a question about your tax return or a need for additional information.

IRS Notice Redesign

Currently, the IRS is in the process of redesigning and revising its correspondence with taxpayers for clarity, effectiveness and efficiency. The new format includes a plain language explanation of the nature of the correspondence, clearly states what action the taxpayer must take and presents a clear, clean design.    

Redesigned Notices

Notice Number Description Topic
CP01 We received the information that you provided and have verified your claim of identity theft. We have placed an identity theft indicator on your account. Identity Theft
CP01A This notice tells you about the Identity Protection Personal Identification Number (IP PIN) we sent you. Identity Theft
CP01H You received a CP 01H notice because we were unable to process your tax return. The IRS has locked your account because the Social Security Administration informed us that the Social Security number (SSN) of the primary or secondary taxpayer on the return belongs to someone who was deceased prior to the current tax year (before January 1, 2010 for a 2010 tax return).  
CP01S We received your Form 14039 or similar statement for your identity theft claim. We'll contact you when we finish processing your case or if we need additional information  
CP02H You owe a balance due as a result of amending your tax return to show receipt of a grant received as a result of Hurricane Katrina, Rita or Wilma. Balance Due
CP03C You received a tax credit (called the First-Time Homebuyer Credit) for a house you purchased. You may need to file a form to report a change in ownership to the house you purchased.  
CP04 Our records show that you or your spouse served in a combat zone, a qualified contingency operation, or a hazardous duty station during the tax year specified on your notice. As a result, you may be eligible for tax deferment.  
CP05 We’re reviewing your tax return.  
CP05A We are examining your return and we need documentation.  
CP07 We received your tax return and are holding your refund until we complete a more thorough review of the benefits you claimed under a treaty and/or the deductions claimed on Schedule A.  
CP08 You may qualify for the Additional Child Tax Credit and be entitled to some additional money. Additional Child Tax Credit
CP09 We've sent you this notice because our records indicate you may be eligible for the Earned Income Credit (EIC), but didn't claim it on your tax return.  
CP10 We made a change(s) to your return because we believe there's a miscalculation. This change(s) affected the estimated tax payment you wanted applied to your taxes for next year. Change To Your Estimated Tax Credit Amount
CP10A We made a change(s) to your return because we believe there's a miscalculation involving your Earned Income Credit. This change(s) affected the estimated tax payment you wanted applied to your taxes for next year. Change To Your Estimated Tax Credit Amount
CP11 We made changes to your return because we believe there’s a miscalculation. You owe money on your taxes as a result of these changes. Balance Due
CP11A We made changes to your return because we believe there's a miscalculation involving your Earned Income Credit. You owe money on your taxes as a result of these changes. Balance Due
CP11M We made changes to your return involving the Making Work Pay and Government Retiree Credit. You owe money on your taxes as a result of these changes. Balance Due
CP12 We made changes to correct a miscalculation on your return.  
CP12A We made changes to correct the Earned Income Credit (EIC) claimed on your tax return.  
CP12E We made changes to correct a miscalculation on your return.  
CP12M We made changes to the computation of the Making Work Pay and/or Government Retiree Credits on your return.  
CP12R We made changes to the computation of the Rebate Recovery Credit on your return.  
CP13 We made changes to your return because we believe there's a miscalculation. You're not due a refund nor do you owe an additional amount because of our changes. Your account balance is zero.  
CP13A We made changes to your return because we found an error involving your Earned Income Credit. You're not due a refund nor do you owe an additional amount because of our changes. Your account balance is zero.  
CP13M We made changes to your return involving the Making Work Pay credit or the Government Retiree Credit. You're not due a refund nor do you owe an additional amount because of our changes. Your account balance is zero.  
CP13R We made changes to your return involving the Recovery Rebate Credit. You're not due a refund nor do you owe an additional amount because of our changes. Your account balance is zero.  
CP14 We sent you this notice because you owe money on unpaid taxes.  
CP14I You owe taxes and penalties because you didn't take out the minimum amount you had to from your traditional individual retirement arrangement (IRA). Or, you put into a tax-sheltered account more than you can legally.  
CP15B We charged you a Trust Fund Recovery Penalty (TFRP) for not paying employment or excise taxes.  
CP16 We sent you this notice to tell you about changes we made to your return that affect your refund. We made these changes because we believe there was a miscalculation. Our records show you owe other tax debts and we applied all or part of your refund to them.  
CP18 We believe you incorrectly claimed one or more deductions or credits. As a result, your refund is less than you expected.  
CP19 We have increased the amount of tax you owe because we believe you incorrectly claimed one or more deductions or credits.  
CP20 We believe you incorrectly claimed one or more deductions or credits. As a result, your refund is less than you expected.  
CP21A We made the change(s) you requested to your tax return for the tax year specified on the notice. You owe money on your taxes as a result of the change(s). Balance Due
CP21B We made the change(s) you requested to your tax return for the tax year specified on the notice. You should receive your refund within 2-3 weeks of your notice. Refund
CP21C We made the change(s) you requested to your tax return for the tax year specified on the notice. You're not due a refund nor do you owe any additional amount. Your account balance for this tax form and tax year is zero. Even Balance
CP21E As a result of your recent audit, we made changes to your tax return for the tax year specified on the notice. You owe money on your taxes as a result of these changes. Balance Due
CP21I We made changes to your tax return for the tax year specified on the notice for Individual Retirement Arrangement (IRA) taxes. You owe money on your taxes as a result of these changes. Balance Due
CP22A We made the change(s) you requested to your tax return for the tax year specified on the notice. You owe money on your taxes as a result of the change(s). Balance Due
CP22E As a result of your recent audit, we made changes to your tax return for the tax year specified on the notice. You owe money on your taxes as a result of these changes. Balance Due
CP22I We made changes to your tax return for the tax year specified on the notice for Individual Retirement Arrangement (IRA) taxes. You owe money on your taxes as a result of these changes. Balance Due
CP23 We made changes to your return because we found a difference between the amount of estimated tax payments on your tax return and the amount we posted to your account. You have a balance due because of these changes.  
CP24 We made changes to your return because we found a difference between the amount of estimated tax payments on your tax return and the amount we posted to your account. You have a potential overpayment credit because of these changes.  
CP24E We made changes to your return because we found a difference between the amount of estimated tax payments on your tax return and the amount we posted to your account. You have a potential overpayment credit because of these changes.  
CP25 We made changes to your return because we found a difference between the amount of estimated tax payments on your tax return and the amount we posted to your account. You're not due a refund nor do you owe an additional amount because of our changes. Your account balance is zero.  
LT26 You were previously asked information regarding the filing of your tax return for a specific tax period.  
ST26 Antes le pedían información referente a la manera que fue presentada su declaración de impuestos para un período tributario específico.  
CP27 We've sent you this notice because our records indicate you may be eligible for the Earned Income Credit (EIC), but didn't claim it on your tax return.  
CP30 We charged you a penalty for not pre-paying enough of your tax either by having taxes withheld from your income, or by making timely estimated tax payments.  
CP30A We reduced or removed the penalty for underpayment of estimated tax reported on your tax return.  
CP31 Your refund check was returned to us, so you need to update your address. Refund
CP32 We sent you a replacement refund check.  
CP32A Call us to request your refund check.  
CP39 We used a refund from your spouse or former spouse to pay your past due tax debt. You may still owe money.  
CP42 The amount of your refund has changed because we used it to pay your spouse's past due tax debt.  
CP44 There is a delay processing your refund because you may owe other federal taxes.  
CP45 We were unable to apply your overpayment to your estimated tax as you requested. Overpayment
CP49 We sent you this notice to tell you we used all or part of your refund to pay a tax debt. Overpayment
CP51A We computed the tax on your Form 1040, 1040A or 1040EZ. You owe taxes.  
CP51B We computed the tax on your Form 1040, 1040A or 1040EZ. You owe taxes.  
CP51C We computed the tax on your Form 1040, 1040A or 1040EZ. You owe taxes.  
CP53 We can't provide your refund through direct deposit, so we're sending you a refund check by mail. Direct Deposits
CP53A We tried to direct deposit your refund, but the financial institution couldn’t process it.  We are researching your account, but it will take 8 to 10 weeks to reissue your refund.  
CP53B We tried to direct deposit your refund, but the financial institution couldn’t process it. We are researching your account, but it will take 8 to 10 weeks to complete our review and verify this refund.  
CP53C We tried to direct deposit your refund, but the financial institution couldn’t process it. When refund payments are questionable, we review related returns to ensure the return is valid. We are researching your account, but it will take 8 to 10 weeks to complete our review and verify this refund.  
CP54B Your tax return shows a different name and/or ID number from the information we have for your account. Please provide more information to us in order to receive your refund.  
CP54E Your tax return shows a different name and/or ID number from the information we have for your account. Please provide the requested information.  
CP54G Your tax return shows a different name and/or ID number from the information we have for your account. Please provide the requested information.  
CP54Q Your tax return shows a different name and/or ID number from the information we have on file for you or from the information from the Social Security Administration (SSA).We previously sent you a notice asking you to provide us some updated information. We still haven’t received a response from you.  
CP59 We sent you this notice because we have no record that you filed your prior personal tax return or returns.  
CP60 We removed a payment erroneously applied to your account.  
CP62 We applied a payment to your account.  
CP63 We are holding your refund because you have not filed one or more tax returns and we believe you will owe tax.  
CP71 You received this notice to remind you of the amount you owe in tax, penalty and interest.  
CP71A You received this notice to remind you of the amount you owe in tax, penalty and interest.  
CP71C You received this notice to remind you of the amount you owe in tax, penalty and interest.  
CP71D You received this notice to remind you of the amount you owe in tax, penalty and interest.  
CP72 You may have claimed a frivolous position on your tax return. A frivolous return is identified when some information on the return has no basis in the law.  
CP74 You are recertified for EITC. You don't have to fill out Form 8862, Information To Claim Earned Income Credit After Disallowance, in the future. You'll receive your EIC refund within 6 weeks as long as you don't owe other tax or debts we're required to collect.  
CP75 We’re auditing your tax return and we need documentation to verify the Earned Income Credit (EIC) that you claimed.  The Earned Income Credit and/or the Additional Child Tax Credit (ACTC) portion(s) of your refund is being held pending the results of the audit.  
CP75A We’re auditing your tax return and need documentation to verify the Earned Income Credit (EIC), dependent exemption(s) and filing status you claimed.  
CP75C You were banned from claiming the Earned Income Credit (EIC) in a prior tax year due to your intentional disregard of the rules or a fraudulent claim. Since your ban is still in effect, we disallowed the EIC for your current tax year.  
CP75D We’re auditing your tax return and we need documentation to verify the income and withholding you reported on your tax return. This may affect your eligibility for the Earned Income Credit (EIC), dependent exemption(s) and other refundable credits that you claimed. We are holding your refund pending the results of the audit.  
CP76 We are allowing your Earned Income Credit as claimed on your tax return. You will receive any expected refund in 8 weeks provided you owe no other taxes or legal debts we are required to collect.  
CP80 We credited payments and/or other credits to your tax account for the tax period shown on your notice. However, we haven't received your tax return.  
CP080 We credited payments and/or other credits to your tax account for the form and tax period shown on your notice. However, we haven't received your tax return.  
CP81 We haven’t received your tax return for a specific tax year. The statute of limitations to claim a refund of your credit or payment for that tax year is about to expire.  
CP081 We haven’t received your tax return for a specific tax year. The statute of limitations to claim a refund of your credit or payment for that tax year is about to expire.  
CP88 We are holding your refund because you have not filed one or more tax returns and we believe you will owe tax.  
CP90C We levied you for unpaid taxes. You have the right to a Collection Due Process hearing.  
CP102 We made changes to your return because we believe there’s a miscalculation.  You owe money on your taxes as a result of these changes.  
CP103 We made changes to your railroad retirement tax return because we believe there was a miscalculation. As a result of these changes, you have a balance due.  
CP104 We made changes to your excise tax return because we believe there was a miscalculation. As a result of these changes, there is a balance due.  
CP108 You are receiving this notice because you made a payment of $XXXXX on XXXXX, and we can’t determine the correct form or tax year to apply it to.  
CP112 We made changes to your return because we believe there’s a miscalculation. As a result, you are due a refund.  
CP113 We made changes to your railroad retirement tax return because we believe there was a miscalculation. As a result of these changes, you have an overpayment on your account.  
CP114 We made changes to your excise tax return because we believe there was a miscalculation. As a result of these changes, there is an overpayment on your account.  
CP120 You need to send us documentation of your tax-exempt status. Tax Exemptions
CP120A Your organization's tax-exempt status has been revoked for failure to file a Form 990 series return for three consecutive years. In addition, you are no longer eligible to sponsor a tax-sheltered annuity plan (Internal Revenue Code section 403(b) retirement plan).  
CP123 We made changes to your excise tax return because we believe there was a miscalculation. As a result of these changes, you have a balance due of less than $1.  
CP124 We made changes to your excise tax return because we believe there was a miscalculation. As a result of these changes, there is a balance due of less than $1.  
CP130 Your tax return filing requirements may have changed: You may no longer need to pay the Alternative Minimum Tax. Filing Requirements
CP138 This notice tells you that all or part of the overpayment on a return you filed was applied to other federal taxes you owe.  
CP141C You are receiving this notice because you did not respond to a previous request for missing or incomplete information on your return and your return is late.  
CP141I You are receiving this notice because you did not respond to a previous request for missing or incomplete information on your return.  
CP141L You are receiving this notice because you didn’t file your return by the due date.  
CP142 We sent you this notice because you filed your information returns late.  
CP143 We accepted your explanation for filing your information return late. We will continue processing your returns.  
CP145 We were unable to credit the full amount you requested to the succeeding tax period.  
CP152 We have received your return. Confirmation of Return Receipt
CP152A We received your Form 8038-CP, Return for Credit Payments to Issuers of Qualified Bonds and provides an explanation for the reduced credit payment amount.  
CP153 We can't provide you with your refund through a direct deposit, so we're sending you a refund check/credit payment by mail. Refund
CP156 We received your Form 990-T, Exempt Organization Business Income Tax Return and Form 8941, Credit for Small Employer Health Premiums.  
CP160 You received this notice to remind you of the amount you owe in tax, penalty and interest.  
CP161 You received this notice because of the money you owe from your tax return.  
CP163 You received this notice to remind you of the amount you owe in tax, penalty and interest.  
CP166 We were unable to process your monthly payment because there were insufficient funds in your bank account. Payment Process
CP169 You received this notice because we couldn't locate the return you said was previously filed.  
CP171 You received this notice to remind you of the amount you owe in tax, penalty and interest.  
CP178 Your tax return filing requirements may have changed: You may no longer owe excise tax. Filing Requirements
CP180/CP181 We sent you this notice because your tax return is missing a schedule or form.  
CP182 We sent you this notice because your tax return is missing Form 3468.  
CP187 You received this notice to remind you of the amount you owe in tax, penalty and interest.  
CP188 We are holding your refund until we determine you owe no other taxes.  
CP210/CP220 We made change(s) for the tax year specified on the notice.  
CP211A We approved your Form 8868, Application for Extension of Time To File an Exempt Organization Return.  
CP211B We denied your request to extend the time to file your Exempt Organization Return because your Form 8868, Application for Extension of Time To File an Exempt Organization Return, wasn't signed or was signed by someone who wasn’t authorized.  
CP211C We denied your request to extend the time to file your Exempt Organization Return because your Form 8868, Application for Extension of Time To File an Exempt Organization Return, wasn't received on time. A request for an extension of the time to file your Exempt Organization Return must be received on or before the due date of your return.  
CP211D We denied your request to extend the time to file your Exempt Organization Return for an additional three months because your Form 8868, Application for Extension of Time To File an Exempt Organization Return, Part II, Line 7 didn’t explain the need for addtional time OR establish reasons that prevented you from filing by the extended due date.  
CP211E We denied your request to extend the time to file your Exempt Organization Return because your Form 8868, Application for Extension of Time To File an Exempt Organization Return, didn’t meet one or more of the requirements.  
CP231 Your refund or credit payment was returned to us and we need you to update your current address. Address Update Needed
CP232A We approved your request for an extension to file your Form 5330.  
CP232B We denied your request to extend the time to file Form 5330 because your Form 5558, Application for Extension of Time To File Certain Employee Plan Returns, wasn't received on time. A request for an extension of the time to file Form 5330 must be received on or before the due date of your return.  
CP232C We denied your request to extend the time to file Form 5330 because your Form 5558, Application for Extension of Time To File Certain Employee Plan Returns, wasn't signed or was signed by someone who wasn’t authorized.  
CP232D We denied your request to extend the time to file Form 5330 because your Form 5558, Application for Extension of Time To File Certain Employee Plan Returns, didn’t state a reason why you need the extension.  
CP237 We sent you a replacement refund check.  
CP237A Call us to request your refund check.  
CP254 Your organization submitted a paper return for the tax period in question.  Because our records show that you must file electronically, the paper return doesn’t satisfy your filing obligation.  
CP255 We need information to complete the termination of your private foundation status.  
CP259 We've sent you this notice because our records indicate you didn't file the required business tax return identified in the notice.  
CP259A We sent you this notice because our records indicate you did not file a required Form 990/990-EZ, Return of Organization Exempt From Income Tax.  
CP259B We sent you this notice because our records indicate you didn't file a required Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation.  
CP259C We sent you this notice because our records indicate you are presumed to be a private foundation and you didn't file a required Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation.  
CP259D We sent you this notice because our records indicate you did not file a required Form 990-T, Exempt Organization Business Income Tax Return.  
CP259E We sent you this notice because our records indicate you did not file a required Form 990-N, e-Postcard.  
CP259F We're sending you this notice because our records indicate you did not file a required Form 5227, Split-Interest Trust information Return.  
CP259G We sent you this notice because our records indicate you did not file a required Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations.  
CP259H We sent you this notice because our records indicate you are a tax-exempt political organization and you did not file a required Form 990/990-EZ, Return of Organization Exempt From Income Tax.  
CP261 CP261 is the approval notice for Form 2553, Election by a Small Business Corporation.  
CP264 CP264 is the notice for denial of Form 2553, Election by a Small Business Corporation.  
CP267A You received a CP267A Notice because you’ve overpaid the Branded Prescription Drug Fee.  
CP267B You received a CP267B notice because you overpaid your Insurance Provider Fee under Section 9010 of ACA.  
CP268 We made changes to your return because we believe there is a miscalculation on your return. You have a potential overpayment credit because of this miscalculation.  
CP276A We didn't receive a correctly completed tax liability schedule. We normally charge a Federal Tax Deposit (FTD) penalty when this happens. We decided not to do so this time. FTD Penalty
CP276B We didn't receive the correct amount of tax deposits. We normally charge a Federal Tax Deposit penalty when this happens. We decided not to do so this time. FTD Penalty
CP279 CP279 is the notice of acceptance to the parent corporation of a Qualified Subchapter S Subsidiary (QSub) from Form 8869, Qualified Subchapter S Subsidiary Election.  
CP279A CP279A is the notice of acceptance for a Qualified Subchapter S Subsidiary.  
CP282 You received this notice because you indicated on your Form 1065, U.S. Return of Partnership Income, or Form1065-B, U.S. Return of Income for Electing Large Partnerships, that you have foreign partners.  
CP283C We charged you a penalty for filing a late or incomplete Form 8955-SSA, Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits.  
CP284 We approved your Form 1128, Application to Adopt, Change, or Retain a Tax Year.  
CP285 CP285 notifies BMF taxpayers the reason their Form 1128, Application To Adopt, Change, or Retain a Tax Year, was denied.  
CP286 We send this notice when we approve Form 8716, Election To Have a Tax Year Other Than a Required Tax Year.  
CP288 We accepted your election to be treated as a Qualified Subchapter S Trust (QSST).  
CP290 We're approving your Electing Small Business Trust (ESBT) election.  
CP291 We're revoking your Electing Small Business Trust (ESBT) election.  
CP292 We're revoking your Qualified Subchapter S Trust (QSST) election.  
CP295 We charged you a penalty on your Form 5500.  
CP295A We charged you a penalty on your Form 5500.  
CP297C We levied you for unpaid taxes. You have the right to a Collection Due Process hearing.  
CP299 Your organization may be required to file an annual electronic notice (e-Postcard), Form 990-N.  
CP301 We sent you this notice to inform that you visited IRS online services website and went through Identity Verification process.  
CP501 You have a balance due (money you owe the IRS) on one of your tax accounts.  
CP503 We have not heard from you and you still have an unpaid balance on one of your tax accounts.  
CP504 You have an unpaid amount due on your account. If you do not pay the amount due immediately, the IRS will seize (levy) your state income tax refund and apply it to pay the amount you owe.  
CP504B You have an unpaid amount due on your account. If you do not pay the amount due immediately, the IRS will seize (levy) certain property or rights to property and apply it to pay the amount you owe.  
CP515I This is a reminder notice that we still have no record that you filed your prior tax return or returns.  
CP515B You received this reminder notice because our records indicate you didn't file a business tax return.  
CP516 This is a reminder notice that we still have no record that you filed your prior tax return or returns.  
CP518I This is a final reminder notice that we still have no record that you filed your prior tax return(s).  
CP518B This is a final reminder notice that our records still indicate you haven't filed a business tax return.  
CP521 This notice is to remind you that you have an installment agreement payment due. Please send your payment immediately.  
CP523 This notice informs you of our intent to terminate your installment agreement and seize (levy) your assets. You have defaulted on your agreement.  
CP547 We received your Form 2848, 8821, or 706, and we assigned you a Centralized Authorization File (CAF) number.  
CP563 We reviewed your Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, and we need additional information in order to process it.  
CP565 We gave you an Individual Taxpayer Identification Number (ITIN).  
CP565 (SP) Nosotros le asignamos un Número de Identificación Personal del Contribuyente (ITIN, por sus siglas en inglés).  
CP566 We need more information to process your application for an Individual Taxpayer Identification Number (ITIN). You may have sent us an incomplete form. You may have sent us the wrong documents.  
CP566 (SP) Necesitamos más información para poder tramitar su solicitud para un Número de Identificación Personal del Contribuyente (ITIN, por sus siglas en inglés). Usted quizá nos envió un formulario incompleto. O, quizá nos envió los documentos incorrectos.  
CP567 We rejected your application for an Individual Taxpayer Identification Number (ITIN). You may not be eligible for an ITIN. Your documents may be invalid. We may not have received a reply when we asked for more information.  
CP567 (SP) Hemos rechazado su solicitud para un Número de Identificación Personal de Contribuyente (ITIN, por sus siglas en inglés). Es posible que no reúna los requisitos para un ITIN o que sus documentos no sean válidos. O es posible que no hayamos recibido una contestación de su parte cuando solicitamos más información.  
CP601 Usted tiene un saldo pendiente de pago (dinero que le debe al IRS) en una de sus cuentas contributivas.  
CP603 No hemos recibido respuesta de parte de usted y todavía tiene un saldo sin pagar en una de sus cuentas contributivas.  
CP604 Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará cualquier reembolso de impuestos estatales al que tenga derecho y aplicarlo al pago de su deuda.  
CP604B Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará ciertas propiedades o derechos de propiedad y lo aplicará al pago de su deuda.  
CP615I Este aviso es un recordatorio, que según nuestros registros, todavía no tenemos información de que usted haya presentado su anterior declaración o declaraciones de impuestos.  
CP615B Este aviso es un recordatorio,  que según nuestros registros, usted todavía no ha presentado una declaración de impuestos del negocio.  
CP616 Este es un recordatorio que todavía no tenemos un registro de que usted presentó su anterior declaración o declaraciones de impuestos.  
CP618I Lo presente, es el aviso final para recordarle que según nuestros registros, usted todavía no ha presentado su(s) declaración(es) anterior(es) de impuestos.  
CP618B Lo presente, es el aviso final para recordarle que según nuestros registros, usted todavía no ha presentado una declaración de impuestos del negocio.  
CP621 Este aviso es para notificarle que usted tiene un plan de pagos a plazos vencido. Por favor, envíe el pago inmediatamente.  
CP623 Este aviso es para informarle nuestra intención de cancelar su plan de pagos a plazos y confiscar (embargar) sus bienes. Usted incumplió en su acuerdo.  
CP701 Recibimos su Formulario 14039 (SP) o declaración similar sobre su reclamo de robo de identidad. Nos comunicaremos con usted cuando completemos el procesamiento de su caso o en caso de necesitar información adicional.  
CP711 Nosotros realizamos cambios a su planilla debido a que entendemos que hubo un cálculo erróneo. Como resultado de estos cambios, usted adeuda dinero por sus contribuciones.  
CP712 Hemos realizado cambios para corregir un error de cálculo en su planilla.  
CP713 Hemos realizado cambios para corregir un error de cálculo en su planilla. No se le debe un reembolso y no adeuda una cantidad de dinero adicional a causa de estos cambios. El saldo de su cuenta es cero.  
CP714 Le enviamos este aviso porque usted adeuda contribuciones pendientes de pago.  
CP721 Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos.  
CP722 Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos.  
CP749 Le enviamos este aviso para informarle que hemos utilizado todo o parte de su reintegro para pagar una deuda contributiva.  
CP759 Le enviamos este aviso porque no tenemos registro que indique que usted radicó su planilla o planillas de contribuciones personales para uno o varios años anteriores.  
CP771 Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.  
CP772 Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.  
CP773 Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.  
CP774 Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.  
CP802 Hemos hecho cambios a su declaración ya que creemos que hay un cálculo erróneo.  Usted adeuda dinero por sus impuestos como resultado de estos cambios.  
CP812 Hemos hecho cambios a su declaración ya que creemos que hay un cálculo erróneo.  Como resultado, a usted se le adeuda un reembolso.  
CP838 Este aviso le informa a usted, que parte o todo su pago en exceso en la declaración que usted presentó, fue acreditado a otros impuestos federales que usted adeuda.  
CP861 Usted recibió este aviso debido al dinero que adeuda de su planilla de contribuciones.  
CP910/CP920 Hicimos cambio(s) para el año tributario indicado en el aviso.  
CP959 Usted no radicó su planilla de contribución de negocios identificada en este aviso.  
CP2000 The income and/or payment information we have on file doesn’t match the information you reported on your tax return. This could affect your tax return; it may cause an increase or decrease in your tax, or may not change it at all.  
CP2005 We accepted the information you sent us. We're not going to change your tax return. We've closed our review of it.  
CP2006 We received your information. We'll look at it and let you know what we're going to do.  
CP2030 We are proposing changes in income, credits, and deductions reported on your U.S. Corporation Income Tax Return. We compared your information with items reported to us by banks, businesses and other payers.  
CP2057 You need to file an amended return. We've received information not reported on your tax return.  
CP2501 You need to contact us. We've received information not reported on your tax return.  
CP2531 Your Tax Return does not match the information we have on file.  
CP2566 We didn't receive your tax return. We have calculated your tax, penalty and interest based on wages and other income reported to us by employers, financial institutions and others.  
CP2566R We previously sent you a CP63 notice informing you we are holding your refund until we receive one or more unfiled tax returns. Because we received no reply to our previous notice, we have calculated your tax, penalty and interest based on wages and other income reported to us by employers, financial institutions and others.  
CP3219A We've received information that is different from what you reported on your tax return. This may result in an increase or decrease in your tax. The notice explains how the amount was calculated and how you can challenge it in U.S. Tax Court.  
CP3219B This Statutory Notice of Deficiency notifies you of the IRS’s intent to assess a tax deficiency and informs you of your right to petition the United States Tax Court to dispute the proposed adjustments. .  
CP3219N We didn't receive your tax return. We have calculated your tax, penalty and interest based on wages and other income reported to us by employers, financial institutions and others.  

Other Notices and Letters

Notice or Letter Number Title
CP 57 Notice of Insufficient Funds
CP 90 / CP 297 Final Notice - Notice of Intent to Levy and Notice of Your Right to a Hearing
CP 297A Notice of Levy and Notice of Your Right to a Hearing
CP 91 / CP 298 Final Notice Before Levy on Social Security Benefits
Letter 0484C Collection Information Statement Requested (Form 433F/433D); Inability to Pay/Transfer
Letter 0549C Balance Due on Account is Paid
Letter 668D(LP 68) We released the taxpayer's levy.
Letter 0681C Proposal to Pay Accepted
Letter 0757C Installment Privilege Terminated
Letter 1058 (LT 11) Final Notice prior to levy; your right to a hearing
Letter 1615 (LT 18) Mail us your overdue tax returns.
Letter 1731 (LP 64) Please help us locate a taxpayer.
Letter 1737 (LT 27) Please complete and site Form 433F, Collection Information Statement.
Letter 1961C Installment Agreement for Direct Debit 433-G
Letter 1962C Installment Agreement Reply to Taxpayer
Letter 2050 (LT 16) Please call us about your overdue taxes or tax return.
Letter 2257C Balance Due Total to Taxpayer
Letter 2271C Installment Agreement for Direct Debit Revisions
Letter 2272C Installment Agreement Cannot be Considered
Letter 2273C Installment Agreement Accepted: Terms Explained
Letter 2318C Installment Agreement: Payroll Deduction (F2159) Incomplete
Letter 2357C Abatement of Penalties and Interest
Letter 2603C Installment Agreement Accepted - Notice of Federal Tax Lien Will be Filed
Letter 2604C Pre-assessed Installment Agreement
Letter 2761C Request for Combat Zone Service Dates
Letter 2789C Taxpayer Response to Reminder of Balance Due
Letter 2800C Incorrect Form W-4, Employee's Withholding Allowance Certificate.
Letter 2801C Exempt Status May not be Allowed
Letter 2840C CC IAPND Installment Agreement Confirmation
Letter 3030C Balance Due Explained:Tax/Interest Not Paid
Letter 3127C Revision to Installment Agreement
Letter 3217C Installment Agreement Accepted: Terms Explained
Letter 3228 (LT 39) Reminder notice.
Letter 4883C We received your federal income tax return; however, we need more information from you to process it.
Letter 5071C We received your federal income tax return; however, we need more information from you to process it.
Letter LP 47 Address Information Request
Letter LP 59 Please contact us about the taxpayer levy.

Eight Things to Know If You Receive an IRS Notice or Letter

Read about eight things every taxpayer should know about IRS notices.

How To Identify Your Notice

The notice number prints on the top right-hand side of each page of all our notices and on the lower right-hand side of the tear-off stub included with most of them. That number identifies the message we deliver in every notice. While the contents may vary somewhat, every notice with the same number has the same basic purpose.

What If My Notice Isn't Listed

You'll find useful information here about many of the notices we send, including the purpose of the notice, the reason we send it, and a list of enclosures we might include with it. There's also sample content for each. Since parts of our notices vary depending on account conditions, the samples may not exactly match the notices we mail. The basic message, though, will be the same.

  • Individual Filer Notices
    Notices we send about Form 1040, 1040A, or 1040EZ, or any schedules, forms, or attachments included with it are Individual Filer Notice.
  • Business Filer Notices
    Notices we send about business-related tax forms such as Forms 941, 1065, and 1120, are Business Filer Notices.

Get More Information

  • Look in the upper right-hand corner to find your notice number.
  • Select your notice number from one of the tables to the left to find additional information about your notice. (Please note that not all notices are on the list.)
  • Call 1-800-829-1040 or visit a local IRS office if you suspect that you have received a fraudulent notice or that you are a victim of identity theft.

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Page Last Reviewed or Updated: 24-Feb-2014

The Efile State Taxes

Efile state taxes 6. Efile state taxes   Tuition and Fees Deduction Table of Contents IntroductionWhat is the tax benefit of the tuition and fees deduction. Efile state taxes Can You Claim the DeductionWho Can Claim the Deduction Who Cannot Claim the Deduction What Expenses QualifyQualified Education Expenses No Double Benefit Allowed Expenses That Do Not Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses Figuring the DeductionEffect of the Amount of Your Income on the Amount of Your Deduction Claiming the Deduction Illustrated Example Introduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). Efile state taxes You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. Efile state taxes The qualified expenses must be for higher education, as explained later under Qualified Education Expenses . Efile state taxes What is the tax benefit of the tuition and fees deduction. Efile state taxes   The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. Efile state taxes   This deduction is taken as an adjustment to income. Efile state taxes This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). Efile state taxes This deduction may be beneficial to you if you do not qualify for the American opportunity or lifetime learning credits. Efile state taxes You can choose the education benefit that will give you the lowest tax. Efile state taxes You may want to compare the tuition and fees deduction to the education credits. Efile state taxes See chapter 2, American Opportunity Credit and chapter 3, Lifetime Learning Credit for more information on the education credits. Efile state taxes Table 6-1. Efile state taxes Tuition and Fees Deduction at a Glance summarizes the features of the tuition and fees deduction. Efile state taxes Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. Efile state taxes Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. Efile state taxes You pay qualified education expenses of higher education. Efile state taxes You pay the education expenses for an eligible student. Efile state taxes The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return. Efile state taxes The term “qualified education expenses” is defined later under Qualified Education Expenses . Efile state taxes “Eligible student” is defined later under Who Is an Eligible Student . Efile state taxes For more information on claiming the deduction for a dependent, see Who Can Claim a Dependent's Expenses , later. Efile state taxes Table 6-1. Efile state taxes Tuition and Fees Deduction at a Glance Do not rely on this table alone. Efile state taxes Refer to the text for complete details. Efile state taxes Question Answer What is the maximum benefit? You can reduce your income subject to tax by up to $4,000. Efile state taxes What is the limit on modified adjusted gross income (MAGI)? $160,000 if married filing a joint return; $80,000 if single, head of household, or qualifying widow(er). Efile state taxes Where is the deduction taken? As an adjustment to income on  Form 1040 or Form 1040A. Efile state taxes For whom must the expenses be paid? A student enrolled in an eligible educational institution who is either: •you,  •your spouse, or  •your dependent for whom you claim an exemption. Efile state taxes What tuition and fees are deductible? Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living, or family expenses, such as room and board. Efile state taxes Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. Efile state taxes Your filing status is married filing separately. Efile state taxes Another person can claim an exemption for you as a dependent on his or her tax return. Efile state taxes You cannot take the deduction even if the other person does not actually claim that exemption. Efile state taxes Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). Efile state taxes You (or your spouse) were a nonresident alien for any part of 2013 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. Efile state taxes More information on nonresident aliens can be found in Publication 519. Efile state taxes What Expenses Qualify The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Efile state taxes Generally, the deduction is allowed for qualified education expenses paid in 2013 in connection with enrollment at an institution of higher education during 2013 or for an academic period beginning in 2013 or in the first 3 months of 2014. Efile state taxes For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning in January 2014, you may be able to use that $1,500 in figuring your 2013 deduction. Efile state taxes Academic period. Efile state taxes   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. Efile state taxes 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. Efile state taxes Paid with borrowed funds. Efile state taxes   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. Efile state taxes Use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. Efile state taxes Treat loan disbursements sent directly to the educational institution as paid on the date the institution credits the student's account. Efile state taxes Student withdraws from class(es). Efile state taxes   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. Efile state taxes Qualified Education Expenses For purposes of the tuition and fees deduction, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Efile state taxes Eligible educational institution. Efile state taxes   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. Efile state taxes S. Efile state taxes Department of Education. Efile state taxes It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Efile state taxes The educational institution should be able to tell you if it is an eligible educational institution. Efile state taxes   Certain educational institutions located outside the United States also participate in the U. Efile state taxes S. Efile state taxes Department of Education's Federal Student Aid (FSA) programs. Efile state taxes Related expenses. Efile state taxes   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Efile state taxes Prepaid expenses. Efile state taxes   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring an education credit for 2013 only. Efile state taxes See Academic period , earlier. Efile state taxes For example, you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring an education credit for 2013 only (if you meet all the other requirements). Efile state taxes 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). Efile state taxes In the following examples, assume that each student is an eligible student and each college or university an eligible educational institution. Efile state taxes Example 1. Efile state taxes Jackson is a sophomore in University V's degree program in dentistry. Efile state taxes This year, in addition to tuition, he is required to pay a fee to the university for the rental of the dental equipment he will use in this program. Efile state taxes Because the equipment rental fee must be paid to University V for enrollment and attendance, Jackson's equipment rental fee is a qualified education expense. Efile state taxes Example 2. Efile state taxes Donna and Charles, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. Efile state taxes The college has no policy about how students should obtain these materials, but any student who purchases them from College W's bookstore will receive a bill directly from the college. Efile state taxes Charles bought his books from a friend, so what he paid for them is not a qualified education expense. Efile state taxes Donna bought hers at College W's bookstore. Efile state taxes Although Donna paid College W directly for her first-year books and materials, her payment is not a qualified education expense because the books and materials are not required to be purchased from College W for enrollment or attendance at the institution. Efile state taxes Example 3. Efile state taxes When Marci enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. Efile state taxes This activity fee is required of all students, and is used solely to fund on-campus organizations and activities run by students, such as the student newspaper and the student government. Efile state taxes No portion of the fee covers personal expenses. Efile state taxes Although labeled as a student activity fee, the fee is required for Marci's enrollment and attendance at College X. Efile state taxes Therefore, it is a qualified expense. Efile state taxes No Double Benefit Allowed You cannot do any of the following. Efile state taxes Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. Efile state taxes Deduct qualified education expenses for a student on your income tax return if you or anyone else claims an American opportunity or lifetime learning credit for that same student in the same year. Efile state taxes Deduct qualified education expenses that have been used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or a qualified tuition program (QTP). Efile state taxes For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Efile state taxes See Coordination With Tuition and Fees Deduction in chapter 8, Qualified Tuition Program, later. Efile state taxes Deduct qualified education expenses that have been paid with tax-free interest on U. Efile state taxes S. Efile state taxes savings bonds (Form 8815). Efile state taxes See Figuring the Tax-Free Amount in chapter 10, Education Savings Bond Program, later. Efile state taxes Deduct qualified education expenses that have been paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. Efile state taxes See the following section on Adjustments to Qualified Education Expenses. Efile state taxes Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. Efile state taxes The result is the amount of adjusted qualified education expenses for each student. Efile state taxes You must also reduce qualified education expenses by the other amounts referred to in No Double Benefit Allowed , earlier. Efile state taxes Tax-free educational assistance. Efile state taxes   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. Efile state taxes See Academic period , earlier. Efile state taxes   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. Efile state taxes 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). Efile state taxes   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. Efile state taxes 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. Efile state taxes   This tax-free education assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Efile state taxes Generally, any scholarship or fellowship is treated as tax free. Efile state taxes However, a scholarship or fellowship is not treated as tax free to the extent the student includes it in gross income (if the student is required to file a tax return for the year the scholarship or fellowship is received) and either of the following is true. Efile state taxes The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Efile state taxes The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Efile state taxes You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the educational assistance in income in the year it is received. Efile state taxes For details, see Adjustments to Qualified Education Expenses in chapters 2 and 3. Efile state taxes Refunds. Efile state taxes   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year. Efile state taxes Some tax-free educational assistance received after 2013 may be treated as a refund. Efile state taxes See Tax-free educational assistance , earlier. Efile state taxes Refunds received in 2013. Efile state taxes   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses for 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. Efile state taxes Refunds received after 2013 but before your income tax return is filed. Efile state taxes   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid before you file an income tax return for 2013, the amount of qualified education expenses for 2013 is reduced by the amount of the refund. Efile state taxes Refunds received after 2013 and after your income tax return is filed. Efile state taxes   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid after you file an income tax return for 2013, you may need to repay some or all of the credit. Efile state taxes See Credit recapture , later. Efile state taxes Coordination with Coverdell education savings accounts and qualified tuition programs. Efile state taxes   Reduce your qualified education expenses by any qualified education expenses used to figure the exclusion from gross income of (a) interest received under an education savings bond program, or (b) any distribution from a Coverdell education savings account or qualified tuition program (QTP). Efile state taxes For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Efile state taxes Credit recapture. Efile state taxes    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. Efile state taxes You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing that amount by the amount of the refund or tax-free educational assistance. Efile state taxes 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). Efile state taxes Include that amount as an additional tax for the year the refund or tax-free assistance was received. Efile state taxes Example. Efile state taxes   You paid $3,500 of qualified education expenses in December 2013, and your child began college in January 2014. Efile state taxes You claimed $3,500 as the tuition and fees deduction on your 2013 income tax return. Efile state taxes The reduction reduced your taxable income by $3,500. Efile state taxes Also, you claimed no tax credits in 2013. Efile state taxes Your child withdrew from two classes and you received a refund of $2,000 in 2014 after you filed your 2013 tax return. Efile state taxes Refigure your 2013 tuition and fees deduction using $1,500 of qualified education expense instead of the $3,500. Efile state taxes The refigured tuition and fees deduction is $1,500. Efile state taxes Do not file an amended 2013 tax return to account for this adjustment. Efile state taxes Instead, include the difference of $2,000 (but only to the extent this difference would have increased your 2013 tax) on the “Other income” line of your 2014 Form 1040. Efile state taxes You cannot file Form 1040A for 2014. Efile state taxes Amounts that do not reduce qualified education expenses. Efile state taxes   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. Efile state taxes   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. Efile state taxes The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Restrictions. Efile state taxes The use of the money is not restricted. Efile state taxes Example 1. Efile state taxes In 2013, Jackie paid $3,000 for tuition and $5,000 for room and board at University X. Efile state taxes The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. Efile state taxes To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. Efile state taxes The terms of the scholarship state that it can be used to pay any of Jackie's college expenses. Efile state taxes University X applies the $2,000 scholarship against Jackie's $8,000 total bill, and Jackie pays the $6,000 balance of her bill from University X with a combination of her student loan and her savings. Efile state taxes Jackie does not report any portion of the scholarship as income on her tax return. Efile state taxes In figuring the tuition and fees deduction, Jackie must reduce her qualified education expenses by the amount of the scholarship ($2,000) because she excluded the entire scholarship from her income. Efile state taxes The student loan is not tax-free educational assistance, so she does not need to reduce her qualified expenses by any part of the loan proceeds. Efile state taxes Jackie is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship) in 2013. Efile state taxes Example 2. Efile state taxes The facts are the same as in Example 1, except that Jackie reports her entire scholarship as income on her tax return. Efile state taxes Because Jackie reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. Efile state taxes Jackie is treated as having paid $3,000 in qualified education expenses. Efile state taxes Expenses That Do Not Qualify Qualified education expenses do not include amounts paid for: Insurance, Medical expenses (including student health fees), Room and board, Transportation, or Similar personal, living, or family expenses. Efile state taxes This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Efile state taxes Sports, games, hobbies, and noncredit courses. Efile state taxes   Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. Efile state taxes However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. Efile state taxes Comprehensive or bundled fees. Efile state taxes   Some eligible educational institutions combine all of their fees for an academic period into one amount. Efile state taxes If you do not receive, or do not have access to, an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. Efile state taxes The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T. Efile state taxes See Figuring the Deduction , later, for more information about Form 1098-T. Efile state taxes Who Is an Eligible Student For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (as defined under Qualified Education Expenses , earlier). Efile state taxes Who Can Claim a Dependent's Expenses Generally, in order to claim the tuition and fees deduction for qualified education expenses for a dependent, you must: Have paid the expenses, and Claim an exemption for the student as a dependent. Efile state taxes For you to be able to deduct qualified education expenses for your dependent, you must claim an exemption for that individual. Efile state taxes You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. Efile state taxes IF your dependent is an eligible student and you. Efile state taxes . Efile state taxes . Efile state taxes AND. Efile state taxes . Efile state taxes . Efile state taxes THEN. Efile state taxes . Efile state taxes . Efile state taxes claim an exemption for your dependent you paid all qualified education expenses for your dependent only you can deduct the qualified education expenses that you paid. Efile state taxes Your dependent cannot take a deduction. Efile state taxes claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Efile state taxes do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. Efile state taxes do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Efile state taxes Expenses paid by dependent. Efile state taxes   If your dependent pays qualified education expenses, no one can take a tuition and fees deduction for those expenses. Efile state taxes Neither you nor your dependent can deduct the expenses. Efile state taxes For purposes of the tuition and fees deduction, you are not treated as paying any expenses actually paid by a dependent for whom you or anyone other than the dependent can claim an exemption. Efile state taxes This rule applies even if you do not claim an exemption for your dependent on your tax return. Efile state taxes Expenses paid by you. Efile state taxes   If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring your tuition and fees deduction. Efile state taxes Expenses paid under divorce decree. Efile state taxes   Qualified education expenses paid directly to an eligible educational institution for a student under a court-approved divorce decree are treated as paid by the student. Efile state taxes Only the student would be eligible to take a tuition and fees deduction for that payment, and then only if no one else could claim an exemption for the student. Efile state taxes Expenses paid by others. Efile state taxes   Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. Efile state taxes In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. Efile state taxes If you claim, or can claim, an exemption on your tax return for the student, you are not considered to have paid the expenses and you cannot deduct them. Efile state taxes If the student is not a dependent, only the student can deduct payments made directly to the institution for his or her expenses. Efile state taxes If the student is your dependent, no one can deduct the payments. Efile state taxes Example. Efile state taxes In 2013, Ms. Efile state taxes Baker makes a payment directly to an eligible educational institution for her grandson Dan's qualified education expenses. Efile state taxes For purposes of deducting tuition and fees, Dan is treated as receiving the money from his grandmother and, in turn, paying his own qualified education expenses. Efile state taxes If an exemption cannot be claimed for Dan on anyone else's tax return, only Dan can claim a tuition and fees deduction for his grandmother's payment. Efile state taxes If someone else can claim an exemption for Dan, no one will be allowed a deduction for Ms. Efile state taxes Baker's payment. Efile state taxes Tuition reduction. Efile state taxes   When an eligible educational institution provides a reduction in tuition to an employee of the institution (or spouse or dependent child of an employee), the amount of the reduction may or may not be taxable. Efile state taxes If it is taxable, the employee is treated as receiving a payment of that amount and, in turn, paying it to the educational institution on behalf of the student. Efile state taxes For more information on tuition reductions, see Qualified Tuition Reduction , in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Efile state taxes Figuring the Deduction The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. Efile state taxes See Effect of the Amount of Your Income on the Amount of Your Deduction , later. Efile state taxes Form 1098-T. Efile state taxes   To help you figure your tuition and fees deduction, the student should receive Form 1098-T (see Appendix A for a completed example of Form 1098-T). Efile state taxes Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2014. Efile state taxes An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. Efile state taxes However, the amount in boxes 1 and 2 of Form 1098-T might be different than what you paid. Efile state taxes When figuring the deduction, use only the amounts you paid in 2013 for qualified education expenses. Efile state taxes   In addition, Form 1098-T should give other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether the student was enrolled at least half-time or was a graduate student. Efile state taxes    The eligible educational institution may ask for a completed Form W-9S or similar statement to obtain the student's name, address, and taxpayer identification number. Efile state taxes Effect of the Amount of Your Income on the Amount of Your Deduction If your MAGI is not more than $65,000 ($130,000 if you are married filing jointly), your maximum tuition and fees deduction is $4,000. Efile state taxes If your MAGI is larger than $65,000 ($130,000 if you are married filing jointly), but is not more than $80,000 ($160,000 if you are married filing jointly), your maximum deduction is $2,000. Efile state taxes No tuition and fees deduction is allowed if your MAGI is larger than $80,000 ($160,000 if you are married filing jointly). Efile state taxes Modified adjusted gross income (MAGI). Efile state taxes   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for tuition and fees. Efile state taxes However, as discussed below, there may be other modifications. Efile state taxes MAGI when using Form 1040A. Efile state taxes   If you file Form 1040A, your MAGI is the AGI on line 22 of that form, figured without taking into account any amount on line 19 (tuition and fees deduction). Efile state taxes MAGI when using Form 1040. Efile state taxes   If you file Form 1040, your MAGI is the AGI on line 38 of that form, figured without taking into account any amount on line 34 (tuition and fees deduction) or line 35 (domestic production activities deduction), and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Efile state taxes   Table 6-2 shows how the amount of your MAGI can affect your tuition and fees deduction. Efile state taxes   You can use Worksheet 6-1. Efile state taxes MAGI for the Tuition and Fees Deduction , later, to figure your MAGI. Efile state taxes Table 6-2. Efile state taxes Effect of MAGI on Maximum Tuition and Fees Deduction IF your filing status is. Efile state taxes . Efile state taxes . Efile state taxes AND your MAGI is. Efile state taxes . Efile state taxes . Efile state taxes THEN your maximum tuition and fees deduction is. Efile state taxes . Efile state taxes . Efile state taxes single,  head of household, or qualifying widow(er) not more than $65,000 $4,000. Efile state taxes more than $65,000  but not more than $80,000 $2,000. Efile state taxes more than $80,000 $0. Efile state taxes married filing joint return not more than $130,000 $4,000. Efile state taxes more than $130,000 but not more than $160,000 $2,000. Efile state taxes more than $160,000 $0. Efile state taxes Claiming the Deduction You claim a tuition and fees deduction by completing Form 8917 and submitting it with your Form 1040 or Form 1040A. Efile state taxes Enter the deduction on Form 1040, line 34, or Form 1040A, line 19. Efile state taxes A filled-in Form 8917 is shown at the end of this chapter. Efile state taxes Illustrated Example Tim Pfister, a single taxpayer, enrolled full-time at a local college to earn a degree in engineering. Efile state taxes This is the first year of his postsecondary education. Efile state taxes During 2013, he paid $3,600 for his qualified 2013 tuition expense. Efile state taxes Both he and the college meet all of the requirements for the tuition and fees deduction. Efile state taxes Tim's total income (Form 1040, line 22) and MAGI are $26,000. Efile state taxes He figures his deduction of $3,600 as shown on Form 8917, later. Efile state taxes Worksheet 6-1. Efile state taxes MAGI for the Tuition and Fees Deduction Use this worksheet if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico. Efile state taxes Before using this worksheet, you must complete Form 1040, lines 7 through 33, and figure any amount to be entered on the dotted line next to line 36. Efile state taxes 1. Efile state taxes Enter the amount from Form 1040, line 22   1. Efile state taxes         2. Efile state taxes Enter the total from Form 1040, lines 23 through 33   2. Efile state taxes               3. Efile state taxes Enter the total of any amounts entered on the dotted line next to Form 1040, line 36   3. Efile state taxes               4. Efile state taxes Add lines 2 and 3   4. Efile state taxes         5. Efile state taxes Subtract line 4 from line 1   5. Efile state taxes         6. Efile state taxes Enter your foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   6. Efile state taxes         7. Efile state taxes Enter your foreign housing deduction (Form 2555, line 50)   7. Efile state taxes         8. Efile state taxes Enter the amount of income from Puerto Rico you are excluding   8. Efile state taxes         9. Efile state taxes Enter the amount of income from American Samoa you are  excluding (Form 4563, line 15)   9. Efile state taxes         10. Efile state taxes Add lines 5 through 9. Efile state taxes This is your modified adjusted gross income   10. Efile state taxes     Note. Efile state taxes If the amount on line 10 is more than $80,000 ($160,000 if married filing jointly),  you cannot take the deduction for tuition and fees. Efile state taxes       This image is too large to be displayed in the current screen. Efile state taxes Please click the link to view the image. Efile state taxes Form 8917 for Tim Pfister Prev  Up  Next   Home   More Online Publications