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H And R Block Free State

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H And R Block Free State

H and r block free state 4. H and r block free state   Student Loan Interest Deduction Table of Contents Introduction Student Loan Interest DefinedQualified Student Loan Qualified Education Expenses Include As Interest Do Not Include As Interest When Must Interest Be Paid Can You Claim the DeductionNo Double Benefit Allowed Figuring the DeductionEffect of the Amount of Your Income on the Amount of Your Deduction Which Worksheet To Use Claiming the Deduction Introduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. H and r block free state However, if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. H and r block free state For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. H and r block free state This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. H and r block free state The student loan interest deduction is taken as an adjustment to income. H and r block free state This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). H and r block free state This chapter explains: What type of loan interest you can deduct, Whether you can claim the deduction, What expenses you must have paid with the student loan, Who is an eligible student, How to figure the deduction, and How to claim the deduction. H and r block free state Table 4-1. H and r block free state Student Loan Interest Deduction at a Glance This table summarizes the features of the student loan interest deduction. H and r block free state Do not rely on this table alone. H and r block free state Refer to the text for complete details. H and r block free state Feature   Description Maximum benefit   You can reduce your income subject to tax by up to $2,500. H and r block free state Loan qualifications   Your student loan: •must have been taken out solely to pay qualified education expenses, and •cannot be from a related person or made under a qualified employer plan. H and r block free state Student qualifications   The student must be: •you, your spouse, or your dependent, and  •enrolled at least half-time in a degree program. H and r block free state Time limit on deduction   You can deduct interest paid during the remaining period of your student loan. H and r block free state Limit on modified adjusted gross income (MAGI)   $155,000 if married filing a joint return; $75,000 if single, head of household, or qualifying widow(er). H and r block free state Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. H and r block free state It includes both required and voluntary interest payments. H and r block free state Qualified Student Loan This is a loan you took out solely to pay qualified education expenses (defined later) that were: For you, your spouse, or a person who was your dependent when you took out the loan, Paid or incurred within a reasonable period of time before or after you took out the loan, and For education provided during an academic period for an eligible student. H and r block free state Loans from the following sources are not qualified student loans. H and r block free state A related person. H and r block free state A qualified employer plan. H and r block free state Your dependent. H and r block free state   Generally, your dependent is someone who is either a: Qualifying child, or Qualifying relative. H and r block free state You can find more information about dependents in Publication 501. H and r block free state Exceptions. H and r block free state   For purposes of the student loan interest deduction, there are the following exceptions to the general rules for dependents. H and r block free state An individual can be your dependent even if you are the dependent of another taxpayer. H and r block free state An individual can be your dependent even if the individual files a joint return with a spouse. H and r block free state An individual can be your dependent even if the individual had gross income for the year that was equal to or more than the exemption amount for the year ($3,900 for 2013). H and r block free state Reasonable period of time. H and r block free state   Qualified education expenses are treated as paid or incurred within a reasonable period of time before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal postsecondary education loan program. H and r block free state   Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met. H and r block free state The expenses relate to a specific academic period, and The loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period. H and r block free state   If neither of the above situations applies, the reasonable period of time usually is determined based on all the relevant facts and circumstances. H and r block free state Academic period. H and r block free state   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. H and r block free state 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. H and r block free state Eligible student. H and r block free state   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. H and r block free state Enrolled at least half-time. H and r block free state   A student was enrolled at least half-time if the student was taking at least half the normal full-time work load for his or her course of study. H and r block free state   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. H and r block free state However, the standard may not be lower than any of those established by the U. H and r block free state S. H and r block free state Department of Education under the Higher Education Act of 1965. H and r block free state Related person. H and r block free state   You cannot deduct interest on a loan you get from a related person. H and r block free state Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. H and r block free state ), Your lineal descendants (children, grandchildren, etc. H and r block free state ), and Certain corporations, partnerships, trusts, and exempt organizations. H and r block free state Qualified employer plan. H and r block free state   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. H and r block free state Qualified Education Expenses For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. H and r block free state They include amounts paid for the following items. H and r block free state Tuition and fees. H and r block free state Room and board. H and r block free state Books, supplies, and equipment. H and r block free state Other necessary expenses (such as transportation). H and r block free state The cost of room and board qualifies only to the extent that it is not more than the greater of: The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, or The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. H and r block free state Eligible educational institution. H and r block free state   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. H and r block free state S. H and r block free state Department of Education. H and r block free state It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. H and r block free state   Certain educational institutions located outside the United States also participate in the U. H and r block free state S. H and r block free state Department of Education's Federal Student Aid (FSA) programs. H and r block free state   For purposes of the student loan interest deduction, an eligible educational institution also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. H and r block free state   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. H and r block free state The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. H and r block free state    The educational institution should be able to tell you if it is an eligible educational institution. H and r block free state Adjustments to Qualified Education Expenses You must reduce your qualified education expenses by the total amount paid for them with the following tax-free items. H and r block free state Employer-provided educational assistance. H and r block free state See chapter 11, Employer-Provided Educational Assistance . H and r block free state Tax-free distribution of earnings from a Coverdell education savings account (ESA). H and r block free state See Tax-Free Distributions in chapter 7, Coverdell Education Savings Account. H and r block free state Tax-free distribution of earnings from a qualified tuition program (QTP). H and r block free state See Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program. H and r block free state U. H and r block free state S. H and r block free state savings bond interest that you exclude from income because it is used to pay qualified education expenses. H and r block free state See chapter 10, Education Savings Bond Program . H and r block free state The tax-free part of scholarships and fellowships. H and r block free state See Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. H and r block free state Veterans' educational assistance. H and r block free state See Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. H and r block free state Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. H and r block free state Include As Interest In addition to simple interest on the loan, if all other requirements are met, the items discussed below can be student loan interest. H and r block free state Loan origination fee. H and r block free state   In general, this is a one-time fee charged by the lender when a loan is made. H and r block free state To be deductible as interest, a loan origination fee must be for the use of money rather than for property or services (such as commitment fees or processing costs) provided by the lender. H and r block free state A loan origination fee treated as interest accrues over the term of the loan. H and r block free state   Loan origination fees were not required to be reported on Form 1098-E, Student Loan Interest Statement, for loans made before September 1, 2004. H and r block free state If loan origination fees are not included in the amount reported on your Form 1098-E, you can use any reasonable method to allocate the loan origination fees over the term of the loan. H and r block free state The method shown in the example below allocates equal portions of the loan origination fee to each payment required under the terms of the loan. H and r block free state A method that results in the double deduction of the same portion of a loan origination fee would not be reasonable. H and r block free state Example. H and r block free state In August 2004, Bill took out a student loan for $16,000 to pay the tuition for his senior year of college. H and r block free state The lender charged a 3% loan origination fee ($480) that was withheld from the funds Bill received. H and r block free state Bill began making payments on his student loan in 2013. H and r block free state Because the loan origination fee was not included in his 2013 Form 1098-E, Bill can use any reasonable method to allocate that fee over the term of the loan. H and r block free state Bill's loan is payable in 120 equal monthly payments. H and r block free state He allocates the $480 fee equally over the total number of payments ($480 ÷ 120 months = $4 per month). H and r block free state Bill made 7 payments in 2013, so he paid $28 ($4 × 7) of interest attributable to the loan origination fee. H and r block free state To determine his student loan interest deduction, he will add the $28 to the amount of other interest reported to him on Form 1098-E. H and r block free state Capitalized interest. H and r block free state   This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. H and r block free state Capitalized interest is treated as interest for tax purposes and is deductible as payments of principal are made on the loan. H and r block free state No deduction for capitalized interest is allowed in a year in which no loan payments were made. H and r block free state Interest on revolving lines of credit. H and r block free state   This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. H and r block free state See Qualified Education Expenses , earlier. H and r block free state Interest on refinanced student loans. H and r block free state   This includes interest on both: Consolidated loans—loans used to refinance more than one student loan of the same borrower, and Collapsed loans—two or more loans of the same borrower that are treated by both the lender and the borrower as one loan. H and r block free state    If you refinance a qualified student loan for more than your original loan and you use the additional amount for any purpose other than qualified education expenses, you cannot deduct any interest paid on the refinanced loan. H and r block free state Voluntary interest payments. H and r block free state   These are payments made on a qualified student loan during a period when interest payments are not required, such as when the borrower has been granted a deferment or the loan has not yet entered repayment status. H and r block free state Example. H and r block free state The payments on Roger's student loan were scheduled to begin in June 2012, 6 months after he graduated from college. H and r block free state He began making payments as required. H and r block free state In September 2013, Roger enrolled in graduate school on a full-time basis. H and r block free state He applied for and was granted deferment of his loan payments while in graduate school. H and r block free state Wanting to pay down his student loan as much as possible, he made loan payments in October and November 2013. H and r block free state Even though these were voluntary (not required) payments, Roger can deduct the interest paid in October and November. H and r block free state Allocating Payments Between Interest and Principal The allocation of payments between interest and principal for tax purposes might not be the same as the allocation shown on the Form 1098-E or other statement you receive from the lender or loan servicer. H and r block free state To make the allocation for tax purposes, a payment generally applies first to stated interest that remains unpaid as of the date the payment is due, second to any loan origination fees allocable to the payment, third to any capitalized interest that remains unpaid as of the date the payment is due, and fourth to the outstanding principal. H and r block free state Example. H and r block free state In August 2012, Peg took out a $10,000 student loan to pay the tuition for her senior year of college. H and r block free state The lender charged a 3% loan origination fee ($300) that was withheld from the funds Peg received. H and r block free state The interest (5% simple) on this loan accrued while she completed her senior year and for 6 months after she graduated. H and r block free state At the end of that period, the lender determined the amount to be repaid by capitalizing all accrued but unpaid interest ($625 interest accrued from August 2012 through October 2013) and adding it to the outstanding principal balance of the loan. H and r block free state The loan is payable over 60 months, with a payment of $200. H and r block free state 51 due on the first of each month, beginning November 2013. H and r block free state Peg did not receive a Form 1098-E for 2013 from her lender because the amount of interest she paid did not require the lender to issue an information return. H and r block free state However, she did receive an account statement from the lender that showed the following 2013 payments on her outstanding loan of $10,625 ($10,000 principal + $625 accrued but unpaid interest). H and r block free state Payment Date   Payment   Stated Interest   Principal November 2013   $200. H and r block free state 51   $44. H and r block free state 27   $156. H and r block free state 24 December 2013   $200. H and r block free state 51   $43. H and r block free state 62   $156. H and r block free state 89 Totals   $401. H and r block free state 02   $87. H and r block free state 89   $313. H and r block free state 13 To determine the amount of interest that could be deducted on the loan for 2013, Peg starts with the total amount of stated interest she paid, $87. H and r block free state 89. H and r block free state Next, she allocates the loan origination fee over the term of the loan ($300 ÷ 60 months = $5 per month). H and r block free state A total of $10 ($5 of each of the two principal payments) should be treated as interest for tax purposes. H and r block free state Peg then applies the unpaid capitalized interest ($625) to the two principal payments in the order in which they were made, and determines that the remaining amount of principal of both payments is treated as interest for tax purposes. H and r block free state Assuming that Peg qualifies to take the student loan interest deduction, she can deduct $401. H and r block free state 02 ($87. H and r block free state 89 + $10 + $303. H and r block free state 13). H and r block free state For 2014, Peg will continue to allocate $5 of the loan origination fee to the principal portion of each monthly payment she makes and treat that amount as interest for tax purposes. H and r block free state She also will apply the remaining amount of capitalized interest ($625 − $303. H and r block free state 13 = $321. H and r block free state 87) to the principal payments in the order in which they are made until the balance is zero, and treat those amounts as interest for tax purposes. H and r block free state Do Not Include As Interest You cannot claim a student loan interest deduction for any of the following items. H and r block free state Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. H and r block free state Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. H and r block free state Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the “NHSC Loan Repayment Program”) or certain other loan repayment assistance programs. H and r block free state For more information, see Student Loan Repayment Assistance in chapter 5, Student Loan Cancellations and Repayment Assistance. H and r block free state When Must Interest Be Paid You can deduct all interest you paid during the year on your student loan, including voluntary payments, until the loan is paid off. H and r block free state Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. H and r block free state Your filing status is any filing status except married filing separately. H and r block free state No one else is claiming an exemption for you on his or her tax return. H and r block free state You are legally obligated to pay interest on a qualified student loan. H and r block free state You paid interest on a qualified student loan. H and r block free state Claiming an exemption for you. H and r block free state   Another taxpayer is claiming an exemption for you if he or she lists your name and other required information on his or her Form 1040 (or Form 1040A), line 6c, or Form 1040NR, line 7c. H and r block free state Example 1. H and r block free state During 2013, Josh paid $600 interest on his qualified student loan. H and r block free state Only he is legally obligated to make the payments. H and r block free state No one claimed an exemption for Josh for 2013. H and r block free state Assuming all other requirements are met, Josh can deduct the $600 of interest he paid on his 2013 Form 1040 or 1040A. H and r block free state Example 2. H and r block free state During 2013, Jo paid $1,100 interest on her qualified student loan. H and r block free state Only she is legally obligated to make the payments. H and r block free state Jo's parents claimed an exemption for her on their 2013 tax return. H and r block free state In this case, neither Jo nor her parents may deduct the student loan interest Jo paid in 2013. H and r block free state Interest paid by others. H and r block free state   If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest. H and r block free state Example 1. H and r block free state Darla obtained a qualified student loan to attend college. H and r block free state After Darla's graduation from college, she worked as an intern for a nonprofit organization. H and r block free state As part of the internship program, the nonprofit organization made an interest payment on behalf of Darla. H and r block free state This payment was treated as additional compensation and reported in box 1 of her Form W-2. H and r block free state Assuming all other qualifications are met, Darla can deduct this payment of interest on her tax return. H and r block free state Example 2. H and r block free state Ethan obtained a qualified student loan to attend college. H and r block free state After graduating from college, the first monthly payment on his loan was due in December. H and r block free state As a gift, Ethan's mother made this payment for him. H and r block free state No one is claiming a dependency exemption for Ethan on his or her tax return. H and r block free state Assuming all other qualifications are met, Ethan can deduct this payment of interest on his tax return. H and r block free state No Double Benefit Allowed You cannot deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, as home mortgage interest). H and r block free state Figuring the Deduction Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. H and r block free state However, the amount determined above may be gradually reduced (phased out) or eliminated based on your filing status and MAGI as explained below. H and r block free state You can use Worksheet 4-1. H and r block free state Student Loan Interest Deduction Worksheet (at the end of this chapter) to figure both your MAGI and your deduction. H and r block free state Form 1098-E. H and r block free state   To help you figure your student loan interest deduction, you should receive Form 1098-E. H and r block free state Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2013 on one or more qualified student loans must send Form 1098-E (or acceptable substitute) to each borrower by January 31, 2014. H and r block free state   For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. H and r block free state Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. H and r block free state However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. H and r block free state See Allocating Payments Between Interest and Principal , earlier. H and r block free state    The lender may ask for a completed Form W-9S, or similar statement to obtain the borrower's name, address, and taxpayer identification number. H and r block free state The form may also be used by the borrower to certify that the student loan was incurred solely to pay for qualified education expenses. H and r block free state Effect of the Amount of Your Income on the Amount of Your Deduction The amount of your student loan interest deduction is phased out (gradually reduced) if your MAGI is between $60,000 and $75,000 ($125,000 and $155,000 if you file a joint return). H and r block free state You cannot take a student loan interest deduction if your MAGI is $75,000 or more ($155,000 or more if you file a joint return). H and r block free state Modified adjusted gross income (MAGI). H and r block free state   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for student loan interest. H and r block free state However, as discussed below, there may be other modifications. H and r block free state Table 4-2 shows how the amount of your MAGI can affect your student loan interest deduction. H and r block free state Table 4-2. H and r block free state Effect of MAGI on Student Loan Interest Deduction IF your filing status is. H and r block free state . H and r block free state . H and r block free state AND your MAGI is. H and r block free state . H and r block free state . H and r block free state THEN your student loan interest deduction is. H and r block free state . H and r block free state . H and r block free state single,  head of household, or qualifying widow(er) not more than $60,000 not affected by the phaseout. H and r block free state more than $60,000  but less than $75,000 reduced because of the phaseout. H and r block free state $75,000 or more eliminated by the phaseout. H and r block free state married filing joint return not more than $125,000 not affected by the phaseout. H and r block free state more than $125,000 but less than $155,000 reduced because of the phaseout. H and r block free state $155,000 or more eliminated by the phaseout. H and r block free state MAGI when using Form 1040A. H and r block free state   If you file Form 1040A, your MAGI is the AGI on line 22 of that form figured without taking into account any amount on line 18 (student loan interest deduction) and line 19 (tuition and fees deduction). H and r block free state MAGI when using Form 1040. H and r block free state   If you file Form 1040, your MAGI is the AGI on line 38 of that form figured without taking into account any amount on line 33 (student loan interest deduction), line 34 (tuition and fees deduction), or line 35 (domestic production activities deduction), and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. H and r block free state MAGI when using Form 1040NR. H and r block free state   If you file Form 1040NR, your MAGI is the AGI on line 36 of that form figured without taking into account any amount on line 33 (student loan interest deduction) and line 34 (domestic production activities deduction). H and r block free state MAGI when using Form 1040NR-EZ. H and r block free state   If you file Form 1040NR-EZ, your MAGI is the AGI on line 10 of that form figured without taking into account any amount on line 9 (student loan interest deduction). H and r block free state Phaseout. H and r block free state   If your MAGI is within the range of incomes where the credit must be reduced, you must figure your reduced deduction. H and r block free state To figure the phaseout, multiply your interest deduction (before the phaseout) by a fraction. H and r block free state The numerator is your MAGI minus $60,000 ($125,000 in the case of a joint return). H and r block free state The denominator is $15,000 ($30,000 in the case of a joint return). H and r block free state Subtract the result from your deduction (before the phaseout) to give you the amount you can deduct. H and r block free state Example 1. H and r block free state During 2013 you paid $800 interest on a qualified student loan. H and r block free state Your 2013 MAGI is $145,000 and you are filing a joint return. H and r block free state You must reduce your deduction by $533, figured as follows. H and r block free state   $800 × $145,000 − $125,000  $30,000 = $533   Your reduced student loan interest deduction is $267 ($800 − $533). H and r block free state Example 2. H and r block free state The facts are the same as in Example 1 except that you paid $2,750 interest. H and r block free state Your maximum deduction for 2013 is $2,500. H and r block free state You must reduce your maximum deduction by $1,667, figured as follows. H and r block free state   $2,500 × $145,000 − $125,000  $30,000 = $1,667   In this example, your reduced student loan interest deduction is $833 ($2,500 − $1,667). H and r block free state Which Worksheet To Use Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the instructions for Form 1040, Form 1040A, or Form 1040NR. H and r block free state However, if you are filing Form 2555, Foreign Earned Income, Form 2555-EZ, Foreign Earned Income Exclusion, or Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1. H and r block free state Student Loan Interest Deduction Worksheet at the end of this chapter. H and r block free state Claiming the Deduction The student loan interest deduction is an adjustment to income. H and r block free state To claim the deduction, enter the allowable amount on line 33 (Form 1040), line 18 (Form 1040A), line 33 (Form 1040NR), or line 9 (Form 1040NR-EZ). H and r block free state Worksheet 4-1. H and r block free state Student Loan Interest Deduction Worksheet Use this worksheet instead of the worksheet in the Form 1040 instructions if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico. H and r block free state Before using this worksheet, you must complete Form 1040, lines 7 through 32, plus any amount to be entered on the dotted line next to line 36. H and r block free state 1. H and r block free state Enter the total interest you paid in 2013 on qualified student loans. H and r block free state Do not enter  more than $2,500 1. H and r block free state   2. H and r block free state Enter the amount from Form 1040, line 22 2. H and r block free state       3. H and r block free state Enter the total of the amounts from Form 1040,  lines 23 through 32 3. H and r block free state           4. H and r block free state Enter the total of any amounts entered on the dotted line next to Form 1040, line 36 4. H and r block free state           5. H and r block free state Add lines 3 and 4 5. H and r block free state       6. H and r block free state Subtract line 5 from line 2 6. H and r block free state       7. H and r block free state Enter any foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18) 7. H and r block free state       8. H and r block free state Enter any foreign housing deduction (Form 2555, line 50) 8. H and r block free state       9. H and r block free state Enter the amount of income from Puerto Rico you are excluding 9. H and r block free state       10. H and r block free state Enter the amount of income from American Samoa  you are excluding (Form 4563, line 15) 10. H and r block free state       11. H and r block free state Add lines 6 through 10. H and r block free state This is your modified adjusted gross income 11. H and r block free state   12. H and r block free state Enter the amount shown below for your filing status 12. H and r block free state     •Single, head of household, or qualifying widow(er)—$60,000       •Married filing jointly—$125,000     13. H and r block free state Is the amount on line 11 more than the amount on line 12?       □ No. H and r block free state Skip lines 13 and 14, enter -0- on line 15, and go to line 16. H and r block free state       □ Yes. H and r block free state Subtract line 12 from line 11 13. H and r block free state   14. H and r block free state Divide line 13 by $15,000 ($30,000 if married filing jointly). H and r block free state Enter the result as a decimal  (rounded to at least three places). H and r block free state If the result is 1. H and r block free state 000 or more, enter 1. H and r block free state 000 14. H and r block free state . H and r block free state 15. H and r block free state Multiply line 1 by line 14 15. H and r block free state   16. H and r block free state Student loan interest deduction. H and r block free state Subtract line 15 from line 1. H and r block free state Enter the result here  and on Form 1040, line 33. H and r block free state Do not include this amount in figuring any other  deduction on your return (such as on Schedule A, C, E, etc. H and r block free state ) 16. H and r block free state   Prev  Up  Next   Home   More Online Publications
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Phishing Scams

“Phishing” is the use of fraudulent e-mail designed to steal identities as well as vital personal information such as credit card numbers, bank account PINs, and passwords. Phishing e-mails often ask you to verify this type of information.

Scammers also go “SMishing,” or phishing using text messages, by asking you to verify or confirm sensitive information. Legitimate companies never ask for your password or account number via e-mail. Protect yourself:

  • Call the company directly to determine if the email is trustworthy
  • Forward the email to the Federal Trade Commission at spam@uce.gov.
  • Do not reveal personal or financial information in emails
  • Contact the company directly. Do not use contact information provided on a web site connected to the request; instead, use contact information from account statements that you already have.
  • Don’t reply to the email, even if it threatens to disable your account.

Beware: Cash Top-Up Scams

Cash top-up cards can be a convenient way to transfer money to other accounts. They are not designed to be used directly with retailers or online merchants; rather they are used to reload money on accounts that you control, such as your debit card.
Unfortunately, scammers know the ease and convenience of using these cards. They persuade you to share your top-up card number directly with them instead of using a wire or escrow service. However, if you send the top-up number you’ll be left without the merchandise you were promised or your money. To protect yourself from these scams:

  • Guard your top-up card like it is cash.
  • Be wary of advertisements where you are asked to pay with a cash top-up card.
  • Don’t share your top-up card number with someone you don’t know, even if a merchant asks you to e-mail it to them.
  • Never use these cards to pay taxes or fees on lottery or sweepstakes winnings. It’s likely that you haven’t won anything.

Protect Your PIN

Beware of “shoulder surfers.” Be suspicious of anyone lurking around an ATM or watching over your shoulder while you use your card. Some thieves even put a device over the card slot of an ATM to read the magnetic strip and record your PIN; this is known as “skimming”. If you suspect criminal activity, walk away and use a different ATM.

The H And R Block Free State

H and r block free state Publication 3 - Main Content Table of Contents Gross IncomeForeign Source Income Military Spouses Residency Relief Act (MSRRA) Community Property Form W-2 Codes Adjustments to IncomeArmed Forces Reservists Individual Retirement Arrangements Moving Expenses Combat Zone ExclusionCombat Zone Serving in a Combat Zone Amount of Exclusion Alien StatusResident Aliens Nonresident Aliens Dual-Status Aliens Sale of HomePeriod of suspension. H and r block free state Qualified official extended duty. H and r block free state ForeclosuresLump Sum Portion of Settlement Payment. H and r block free state Interest Payment on Lump Sum Portion of Settlement Payment. H and r block free state Lost Equity Portion of Settlement Payment. H and r block free state The rules that apply to a lost equity payment you received for the foreclosure of a property that was not your main home are different. H and r block free state Interest Payment on Lost Equity Portion of Settlement Payment. H and r block free state Itemized DeductionsEmployee Business Expenses Repayments CreditsFirst-Time Homebuyer Credit Child Tax Credit Earned Income Credit Credit for Excess Social Security Tax Withheld Forgiveness of Decedent's Tax LiabilityCombat Zone Related Forgiveness Terrorist or Military Action Related Forgiveness Claims for Tax Forgiveness Filing ReturnsSame-Sex Marriage Where To File When To File Signing Returns Extension of DeadlinesService That Qualifies for an Extension of Deadline Length of Extension Actions for Which Deadlines Are Extended Deferral of Payment Maximum Rate of Interest How To Get Tax HelpLow Income Taxpayer Clinics Gross Income Members of the Armed Forces receive many different types of pay and allowances. H and r block free state Some are included in gross income while others are excluded from gross income. H and r block free state Included items (Table 1) are subject to tax and must be reported on your tax return. H and r block free state Excluded items (Table 2) are not subject to tax, but may have to be shown on your tax return. H and r block free state For information on the exclusion of pay for service in a combat zone and other tax benefits for combat zone participants, see Combat Zone Exclusion and Extension of Deadlines , later. H and r block free state Table 1. H and r block free state Included Items These items are included in gross income, unless the pay is for service in a combat zone. H and r block free state Basic pay • Active duty   Bonus pay • Career status   • Attendance at a designated service school     • Enlistment  • Officer   • Back wages     • Overseas extension   • CONUS COLA       • Reenlistment   • Drills         • Reserve training         • Training duty   Other pay  • Accrued leave          • High deployment per diem Special • Aviation career incentives      • Personal money allowances paid to pay • Career sea     high-ranking officers   • Diving duty      • Student loan repayment from programs   • Foreign duty (outside the 48 contiguous     such as the Department of Defense   states and the District of Columbia)     Educational Loan Repayment Program   • Foreign language proficiency     when year's service (requirement) is not   • Hardship duty     attributable to a combat zone   • Hostile fire or imminent danger         • Medical and dental officers   Incentive pay  • Submarine   • Nuclear-qualified officers      • Flight   • Optometry      • Hazardous duty   • Pharmacy      • High altitude/Low Opening (HALO)   • Special compensation for assistance with activities of daily living (SCAADL)         • Special duty assignment pay         • Veterinarian         • Voluntary Separation Incentive       Basic allowance for housing (BAH). H and r block free state   You can still deduct mortgage interest and real estate taxes on your home if you pay these expenses with your BAH. H and r block free state Table 2. H and r block free state Excluded Items The exclusion for certain items applies whether the item is furnished in kind or is a reimbursement or allowance. H and r block free state There is no exclusion for the personal use of a government-provided vehicle. H and r block free state Combat  zone pay • Compensation for active service while in a combat zone Note: Limited amount for officers     • Housing and cost-of-living allowances abroad paid by the U. H and r block free state S. H and r block free state Government or by a foreign government         • OHA (Overseas Housing Allowance)                     Other pay • Defense counseling         • Disability, including payments received for injuries incurred as a direct result of a terrorist or military action         • Group-term life insurance   Moving • Dislocation   • Professional education   allowances • Military base realignment and   • ROTC educational and subsistence     closure benefit    allowances     (the exclusion is limited as   • State bonus pay for service in a     described above)   combat zone     • Move-in housing   • Survivor and retirement protection     • Moving household and   plan premiums     personal items   • Uniform allowances     • Moving trailers or mobile homes   • Uniforms furnished to enlisted     • Storage   personnel     • Temporary lodging and         temporary lodging expenses                 Travel • Annual round trip for dependent Death • Burial services   allowances students allowances • Death gratuity payments to     • Leave between consecutive   eligible survivors     overseas tours   • Travel of dependents to burial site     • Reassignment in a dependent         restricted status Family • Certain educational expenses for     • Transportation for you or your allowances dependents     dependents during ship overhaul   • Emergencies     or inactivation   • Evacuation to a place of safety     • Per diem   • Separation             In-kind military • Dependent-care assistance program Living • BAH (Basic Allowance for Housing)   benefits • Legal assistance allowances • BAS (Basic Allowance for Subsistence)     • Medical/dental care         • Commissary/exchange discounts         • Space-available travel on government aircraft           Death gratuity. H and r block free state   Any death gratuity paid to a survivor of a member of the Armed Forces is excluded from gross income. H and r block free state Differential wage payments. H and r block free state   Differential wage payments are any payments made by an employer to an individual for a period during which the individual is performing service in the uniformed services while on active duty for a period of more than 30 days and that represent all or a portion of the wages the individual would have received from the employer if the individual was performing services for the employer. H and r block free state These amounts are taxable and cannot be excluded as combat pay. H and r block free state Military base realignment and closure benefit. H and r block free state   Payments made under the Homeowners Assistance Program (HAP) generally are excluded from income. H and r block free state However, the excludable amount cannot be more than the maximum amount described in subsection (c) of 42 USC 3374 as in effect on November 6, 2009. H and r block free state Any part of the payment that is more than this limit is included in gross income. H and r block free state For more information about the HAP, see http://hap. H and r block free state usace. H and r block free state army. H and r block free state mil/Overview. H and r block free state html. H and r block free state Qualified reservist distribution (QRD). H and r block free state   A QRD is a distribution to an individual of all or part of the individual's balance in a cafeteria plan or health flexible spending arrangement if: The individual was a reservist who was ordered or called to active duty for more than 179 days or for an indefinite period, and The distribution is made no sooner than the date the reservist was ordered or called to active duty and no later than the last day reimbursements could otherwise be made under the arrangement for the plan year which includes the date of the order or the call to duty. H and r block free state A QRD is included in gross income and is subject to employment taxes. H and r block free state The employer must include the QRD (reduced by after-tax contributions to the health flexible spending arrangement) as wages on Form W-2, Wage and Tax Statement. H and r block free state Thrift Savings Plan (TSP) distributions. H and r block free state   If you participate in the Uniformed Services TSP and receive a distribution from your account, the distribution is generally included in your taxable income. H and r block free state   If your contributions included tax-exempt combat zone pay, the part of the distribution attributable to those contributions is tax exempt. H and r block free state However, the earnings on the tax-exempt portion of the distribution are taxable. H and r block free state The TSP will provide a statement showing the taxable and non-taxable portions of the distribution. H and r block free state Roth Thrift Savings Plan (TSP) balance. H and r block free state   You may be able to contribute to a designated Roth Account through the TSP known as the Roth TSP. H and r block free state Roth TSP contributions are after-tax contributions, subject to the same contribution limits as the traditional TSP. H and r block free state Qualified distributions from a Roth TSP are not included in your income. H and r block free state For more details, see Thrift Savings Accounts in Part II of Publication 721, Tax Guide to U. H and r block free state S. H and r block free state Civil Service Retirement Benefits. H and r block free state State bonus payments. H and r block free state   Bonus payments made by a state (or a political subdivision thereof) to a member or former member of the uniformed services of the United States or to a dependent of such member are considered combat pay (and therefore may not be taxable) if the payments are made only because of the member's service in a combat zone. H and r block free state See Combat Zone , later, for a list of designated combat zones. H and r block free state Foreign Source Income If you are a U. H and r block free state S. H and r block free state citizen with income from sources outside the United States (foreign income), you must report all of that income (except for amounts that U. H and r block free state S. H and r block free state law allows you to exclude) on your tax return. H and r block free state This is true whether you reside inside or outside the United States and whether or not you receive a Form W-2 or a Form 1099. H and r block free state This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents, and royalties). H and r block free state Certain taxpayers can exclude income earned in foreign countries. H and r block free state For 2013, this exclusion amount can be as much as $97,600. H and r block free state However, the foreign earned income exclusion does not apply to the wages and salaries of military and civilian employees of the U. H and r block free state S. H and r block free state Government. H and r block free state Employees of the U. H and r block free state S. H and r block free state Government include those who work at United States Armed Forces exchanges, commissioned and noncommissioned officers' messes, Armed Forces motion picture services, and similar personnel. H and r block free state Other foreign income earned by military personnel or their spouses may be eligible for the foreign earned income exclusion. H and r block free state For more information on the exclusion, see Publication 54. H and r block free state Residents of American Samoa may be able to exclude income from American Samoa. H and r block free state This possession exclusion does not apply to wages and salaries of military and civilian employees of the U. H and r block free state S. H and r block free state Government. H and r block free state If you need information on the possession exclusion, see Publication 570, Tax Guide for Individuals With Income From U. H and r block free state S. H and r block free state Possessions. H and r block free state Military Spouses Residency Relief Act (MSRRA) If you are the civilian spouse of an active duty U. H and r block free state S. H and r block free state military servicemember and your domicile is the same as the servicemember's, you can choose to keep your prior residence or domicile for tax purposes when you accompany the servicemember spouse, who is relocating under military orders to a new duty station in one of the 50 states, the District of Columbia, or a U. H and r block free state S. H and r block free state possession. H and r block free state See Publication 570 for more information. H and r block free state Domicile. H and r block free state   Your domicile is the permanent legal home you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return. H and r block free state It is not always where you presently live. H and r block free state Community Property The pay you earn as a member of the Armed Forces may be subject to community property laws depending on your marital status, your domicile, and the nature of the payment. H and r block free state The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. H and r block free state Marital status. H and r block free state   Community property rules apply to married persons whose domicile during the tax year was in a community property state. H and r block free state The rules may affect your tax liability if you file separate returns or are divorced during the year. H and r block free state Nevada, Washington, and California domestic partners. H and r block free state   A registered domestic partner in Nevada, Washington, or California generally must report half the combined income of the individual and his or her domestic partner. H and r block free state See Form 8958 and Publication 555, Community Property. H and r block free state Nature of the payment. H and r block free state   Active duty military pay is subject to community property laws. H and r block free state Armed Forces retired or retainer pay may be subject to community property laws. H and r block free state   For more information on community property laws, see Publication 555. H and r block free state Form W-2 Codes Form W-2 shows your total pay and other compensation and the income tax, social security tax, and Medicare tax that was withheld during the year. H and r block free state Form W-2 also shows other amounts that you may find important in box 12. H and r block free state The amounts shown in box 12 are generally preceded by a code. H and r block free state A list of codes used in box 12 is shown, next. H and r block free state Form W-2 Reference Guide for Box 12 Codes A Uncollected social security or RRTA J Nontaxable sick pay T Adoption benefits   tax on tips             K 20% excise tax on excess golden V Income from exercise of B Uncollected Medicare tax on tips   parachute payments   nonstatutory stock option(s)             C Taxable cost of group-term life L Substantiated employee business W Employer contributions (including   insurance over $50,000   expense reimbursements   employee contributions through a           cafeteria plan) to an employee's D Elective deferrals under a section M Uncollected social security or RRTA   health savings account (HSA)   401(k) cash or deferred arrangement   tax on taxable cost of group-term life       plan (including a SIMPLE 401(k)   insurance over $50,000 (former Y Deferrals under a section 409A   arrangement)   employees only)   nonqualified deferred           compensation plan E Elective deferrals under a section N Uncollected Medicare tax on taxable       403(b) salary reduction agreement   cost of group-term life insurance Z Income under section 409A on a       over $50,000 (former employees only)   nonqualified deferred F Elective deferrals under a section       compensation plan   408(k)(6) salary reduction SEP P Excludable moving expense           reimbursements paid directly to AA Designated Roth contributions G Elective deferrals and employer   employee   under a section 401(k) plan   contributions (including nonelective           deferrals) to a section 457(b) Q Nontaxable combat pay BB Designated Roth contributions   deferred compensation plan       under a section 403(b) plan     R Employer contributions to an Archer     H Elective deferrals to a section   MSA DD Cost of employer-sponsored   501(c)(18)(D) tax-exempt       health coverage   organization plan S Employee salary reduction contributions under a section 408(p) SIMPLE  EE  Designated Roth contributions under a governmental section 457(b) plan  Note. H and r block free state For more information on these codes, see your Form(s) W-2. H and r block free state Adjustments to Income Adjusted gross income is your total income minus certain adjustments. H and r block free state The following adjustments are of particular interest to members of the Armed Forces. H and r block free state Armed Forces Reservists If you are a member of a reserve component of the Armed Forces and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your unreimbursed travel expenses as an adjustment to income on line 24 of Form 1040, U. H and r block free state S. H and r block free state Individual Income Tax Return, rather than as a miscellaneous itemized deduction. H and r block free state Include all unreimbursed expenses from the time you leave home until the time you return home. H and r block free state The deduction is limited to the amount the federal government generally reimburses its employees for travel expenses. H and r block free state For more information about this limit, see Per Diem and Car Allowances in chapter 6 of Publication 463. H and r block free state Member of a reserve component. H and r block free state   You are a member of a reserve component of the Armed Forces if you are in the Army, Navy, Marine Corps, Air Force, or Coast Guard Reserve, the Army National Guard of the United States, the Air National Guard of the United States, or the Reserve Corps of the Public Health Service. H and r block free state How to report. H and r block free state   If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses. H and r block free state Then enter on Form 1040, line 24, the part of your expenses, up to the federal rate, included on Form 2106, line 10, or Form 2106-EZ, line 6, that is for reserve-related travel more than 100 miles from your home. H and r block free state Subtract this amount from the total on Form 2106, line 10, or Form 2106-EZ, line 6, and deduct the balance as an itemized deduction on Schedule A (Form 1040), line 21. H and r block free state Example. H and r block free state Captain Harris, a member of the Army Reserve, traveled to a location 220 miles from his home to perform his work in the reserves in April 2013. H and r block free state He incurred $1,549 of unreimbursed expenses consisting of $249 for mileage (440 miles × 56. H and r block free state 5 cents per mile), $300 for meals, and $1,000 for lodging. H and r block free state He also had other deductible mileage expenses of $110 for several trips to a location 20 miles from his home. H and r block free state Only 50% of his meal expenses are deductible. H and r block free state He shows his total deductible travel expenses of $1,509 ($249 + $150 (50% of $300) + $1,000 + $110) on Form 2106, line 10. H and r block free state He enters the $1,399 ($249 + $150 + $1,000) for travel over 100 miles from home on Form 1040, line 24. H and r block free state He then subtracts that $1,399 from the amount on Form 2106, $1,509, and enters $110 on Schedule A (Form 1040), line 21. H and r block free state Individual Retirement Arrangements Generally, you can deduct the lesser of the contributions to your traditional individual retirement arrangement (IRA) for the year or the general limit (or spousal IRA limit, if applicable). H and r block free state However, if you or your spouse was covered by an employer-maintained retirement plan at any time during the year for which contributions were made, you may not be able to deduct all of the contributions. H and r block free state The Form W-2 you or your spouse receives from an employer has a box used to indicate whether you were covered for the year. H and r block free state The “Retirement plan” box should have a mark in it if you were covered. H and r block free state For purposes of a deduction for contributions to a traditional IRA, Armed Forces members (including reservists on active duty for more than 90 days during the year) are considered covered by an employer-maintained retirement plan. H and r block free state Individuals serving in the U. H and r block free state S. H and r block free state Armed Forces or in support of the U. H and r block free state S. H and r block free state Armed Forces in designated combat zones have additional time to make a qualified retirement contribution to an IRA. H and r block free state For more information on this extension of deadline provision, see Extension of Deadlines , later. H and r block free state For more information on IRAs, see Publication 590. H and r block free state Combat Pay For IRA purposes, your compensation includes nontaxable combat pay. H and r block free state This means that even though you do not have to include the combat pay in your gross income, you do include it in your compensation when figuring the limits on contributions and deductions of contributions to IRAs. H and r block free state Qualified Reservist Distributions A qualified reservist distribution is defined below. H and r block free state It is not subject to the 10% additional tax on early distributions from certain retirement plans. H and r block free state Definition. H and r block free state   A distribution you receive is a qualified reservist distribution if the following requirements are met. H and r block free state You were ordered or called to active duty after September 11, 2001. H and r block free state You were ordered or called to active duty for a period of more than 179 days or for an indefinite period because you are a member of a reserve component (see Member of a reserve component , earlier, under Armed Forces Reservists. H and r block free state ) The distribution is from an IRA or from amounts attributable to elective deferrals under a section 401(k) or 403(b) plan or a similar arrangement. H and r block free state The distribution was made no earlier than the date of the order or call to active duty and no later than the close of the active duty period. H and r block free state Qualified Reservist Repayments You may be able to contribute (repay) to an IRA amounts equal to any qualified reservist distributions (defined earlier) you received. H and r block free state You can make these repayment contributions even if they would cause your total contributions to the IRA to be more than the general limit on contributions. H and r block free state You make these repayment contributions to an IRA, even if you received the qualified reservist distribution from a section 401(k) or 403(b) plan or a similar arrangement. H and r block free state Limit. H and r block free state   Your qualified reservist repayments cannot be more than your qualified reservist distributions. H and r block free state When repayment contributions can be made. H and r block free state   You cannot make these repayment contributions after the date that is 2 years after your active duty period ends. H and r block free state No deduction. H and r block free state   You cannot deduct qualified reservist repayments. H and r block free state Figuring your IRA deduction. H and r block free state   The repayment of qualified reservist distributions does not affect the amount you can deduct as an IRA contribution. H and r block free state Reporting the repayment. H and r block free state   If you repay a qualified reservist distribution, include the amount of the repayment with nondeductible contributions on line 1 of Form 8606, Nondeductible IRAs. H and r block free state Moving Expenses To deduct moving expenses, you generally must meet certain time and distance tests. H and r block free state However, if you are a member of the Armed Forces on active duty and you move because of a permanent change of station, you do not have to meet these tests. H and r block free state You can deduct your unreimbursed moving expenses on Form 3903. H and r block free state Permanent change of station. H and r block free state   A permanent change of station includes: A move from your home to your first post of active duty, A move from one permanent post of duty to another, and A move from your last post of duty to your home or to a nearer point in the United States. H and r block free state The move must occur within 1 year of ending your active duty or within the period allowed under the Joint Federal Travel Regulations. H and r block free state Spouse and dependents. H and r block free state   If you are the spouse or dependent of a member of the Armed Forces who deserts, is imprisoned, or dies, a permanent change of station for you includes a move to: The member's place of enlistment or induction, Your, or the member's, home of record, or A nearer point in the United States. H and r block free state   If the military moves you to or from a different location than the member, the moves are treated as a single move to your new main job location. H and r block free state Services or reimbursements provided by the government. H and r block free state   Do not include in your income the value of moving and storage services provided by the government because of a permanent change of station. H and r block free state Similarly, do not include in income amounts received as a dislocation allowance, temporary lodging expense, temporary lodging allowance, or move-in housing allowance. H and r block free state   Generally, if the total reimbursements or allowances that you receive from the government because of the move are more than your actual moving expenses, the excess is included in your wages on Form W-2. H and r block free state However, if any reimbursements or allowances (other than dislocation, temporary lodging, temporary lodging expense, or move-in housing allowances) exceed the cost of moving and the excess is not included in your wages on Form W-2, the excess still must be included in gross income on Form 1040, line 7. H and r block free state   Use Form 3903 to deduct qualified expenses that exceed your reimbursements and allowances (including dislocation, temporary lodging, temporary lodging expense, or move-in housing allowances that are excluded from gross income). H and r block free state   If you must relocate and your spouse and dependents move to or from a different location, do not include in income reimbursements, allowances, or the value of moving and storage services provided by the government to move you and your spouse and dependents to and from the separate locations. H and r block free state   Do not deduct any expenses for moving services that were provided by the government. H and r block free state Also, do not deduct any expenses that were reimbursed by an allowance you did not include in income. H and r block free state Deductible Moving Expenses If you move because of a permanent change of station, you can deduct the reasonable unreimbursed expenses of moving you and members of your household. H and r block free state You can deduct expenses (if not reimbursed or furnished in kind) for: Moving household goods and personal effects, and Travel. H and r block free state Moving household goods and personal effects. H and r block free state   You can deduct the expenses of moving your household goods and personal effects, including expenses for hauling a trailer, packing, crating, in-transit storage, and insurance. H and r block free state You cannot deduct expenses for moving furniture or other goods you bought on the way from your old home to your new home. H and r block free state Storing and insuring household goods and personal effects. H and r block free state   You can include only the cost of storing and insuring your household goods and personal effects within any period of 30 consecutive days after the day these goods and effects are moved from your former home and before they are delivered to your new home. H and r block free state Travel. H and r block free state   You can deduct the expenses of traveling (including lodging but not meals) from your old home to your new home, including car expenses and air fare. H and r block free state You can deduct as car expenses either: Your actual out-of-pocket expenses such as gas and oil, or The standard mileage rate of 24 cents a mile. H and r block free state   You can add parking fees and tolls to the amount claimed under either method. H and r block free state You cannot deduct any expenses for meals. H and r block free state You cannot deduct the cost of unnecessary side trips or lavish and extravagant lodging. H and r block free state Member of your household. H and r block free state   A member of your household is anyone who has both your former home and your new home as his or her main home. H and r block free state It does not include a tenant or employee unless you can claim that person as a dependent. H and r block free state Foreign Moves A foreign move is a move from the United States or its possessions to a foreign country or from one foreign country to another foreign country. H and r block free state A move from a foreign country to the United States or its possessions is not a foreign move. H and r block free state For a foreign move, the deductible moving expenses described earlier are expanded to include the reasonable expenses of: Moving your household goods and personal effects to and from storage, and Storing these items for part or all of the time the new job location remains your main job location. H and r block free state The new job location must be outside the United States. H and r block free state Reporting Moving Expenses Figure moving expense deductions on Form 3903. H and r block free state Carry the deduction from Form 3903 to Form 1040, line 26. H and r block free state For more information, see Publication 521 and Form 3903. H and r block free state Combat Zone Exclusion If you are a member of the U. H and r block free state S. H and r block free state Armed Forces who serves in a combat zone (defined later), you can exclude certain pay from your income. H and r block free state This pay is generally referred to as “combat pay. H and r block free state ” You do not actually need to show the exclusion on your tax return because income that qualifies for the combat zone exclusion is not included in the wages reported on your Form W-2. H and r block free state (See Form W-2 , later. H and r block free state ) The month for which you receive the pay must be a month in which you either served in a combat zone or were hospitalized as a result of wounds, disease, or injury incurred while serving in the combat zone. H and r block free state You do not have to receive the excluded pay while you are in a combat zone, are hospitalized, or in the same year you served in a combat zone. H and r block free state If you are an enlisted member, warrant officer, or commissioned warrant officer, you can exclude the following amounts from your income. H and r block free state (Other officer personnel are discussed under Amount of Exclusion , later. H and r block free state ) Active duty pay earned in any month you served in a combat zone. H and r block free state Imminent danger/hostile fire pay. H and r block free state A reenlistment bonus if the voluntary extension or reenlistment occurs in a month you served in a combat zone. H and r block free state Pay for accrued leave earned in any month you served in a combat zone. H and r block free state The Department of Defense must determine that the unused leave was earned during that period. H and r block free state Pay received for duties as a member of the Armed Forces in clubs, messes, post and station theaters, and other nonappropriated fund activities. H and r block free state The pay must be earned in a month you served in a combat zone. H and r block free state Awards for suggestions, inventions, or scientific achievements you are entitled to because of a submission you made in a month you served in a combat zone. H and r block free state Student loan repayments. H and r block free state If the entire year of service required to earn the repayment was performed in a combat zone, the entire repayment made because of that year of service is excluded. H and r block free state If only part of that year of service was performed in a combat zone, only part of the repayment qualifies for exclusion. H and r block free state For example, if you served in a combat zone for 5 months, 5/12 of your repayment qualifies for exclusion. H and r block free state Retirement pay and pensions do not qualify for the combat zone exclusion. H and r block free state Partial (month) service. H and r block free state   If you serve in a combat zone for any part of one or more days during a particular month, you are entitled to an exclusion for that entire month. H and r block free state Form W-2. H and r block free state   The wages shown in box 1 of your 2013 Form W-2 should not include military pay excluded from your income under the combat zone exclusion provisions. H and r block free state If it does, you will need to get a corrected Form W-2 from your finance office. H and r block free state   You cannot exclude as combat pay any wages shown in box 1 of Form W-2. H and r block free state Combat Zone A combat zone is any area the President of the United States designates by Executive Order as an area in which the U. H and r block free state S. H and r block free state Armed Forces are engaging or have engaged in combat. H and r block free state An area usually becomes a combat zone and ceases to be a combat zone on the dates the President designates by Executive Order. H and r block free state Afghanistan area. H and r block free state   By Executive Order No. H and r block free state 13239, Afghanistan (and airspace above) was designated as a combat zone beginning September 19, 2001. H and r block free state On December 14, 2001, the following countries were certified by the Department of Defense for combat zone tax benefits due to their direct support of military operations in the Afghanistan combat zone. H and r block free state Djibouti. H and r block free state Jordan. H and r block free state Kyrgyzstan. H and r block free state Pakistan. H and r block free state Somalia. H and r block free state Syria. H and r block free state Tajikistan. H and r block free state Uzbekistan. H and r block free state Yemen. H and r block free state The Philippines. H and r block free state  Note. H and r block free state For the Philippines only, the personnel must be deployed in conjunction with Operation Enduring Freedom supporting military operations in the Afghanistan combat zone. H and r block free state The Kosovo area. H and r block free state   By Executive Order No. H and r block free state 13119, the following locations (including airspace above) were designated as a combat zone beginning March 24, 1999. H and r block free state Federal Republic of Yugoslavia (Serbia/Montenegro). H and r block free state Albania. H and r block free state Kosovo. H and r block free state The Adriatic Sea. H and r block free state The Ionian Sea—north of the 39th parallel. H and r block free state Note. H and r block free state The combat zone designation for Montenegro and Kosovo (previously a province within Serbia) under Executive Order 13119 remains in force even though Montenegro and Kosovo became independent nations since EO 13119 was signed. H and r block free state Arabian peninsula. H and r block free state   By Executive Order No. H and r block free state 12744, the following locations (and airspace above) were designated as a combat zone beginning January 17, 1991. H and r block free state The Persian Gulf. H and r block free state The Red Sea. H and r block free state The Gulf of Oman. H and r block free state The part of the Arabian Sea that is north of 10 degrees north latitude and west of 68 degrees east longitude. H and r block free state The Gulf of Aden. H and r block free state The total land areas of Iraq, Kuwait, Saudi Arabia, Oman, Bahrain, Qatar, and the United Arab Emirates. H and r block free state Jordan which is in direct support of the Arabian Peninsula. H and r block free state Serving in a Combat Zone You are considered to be serving in a combat zone if you are either assigned on official temporary duty to a combat zone or you qualify for hostile fire/imminent danger pay while in a combat zone. H and r block free state Service in a combat zone includes any periods you are absent from duty because of sickness, wounds, or leave. H and r block free state If, as a result of serving in a combat zone, a person becomes a prisoner of war or is missing in action, that person is considered to be serving in the combat zone so long as he or she keeps that status for military pay purposes. H and r block free state Hospitalized While Serving in a Combat Zone If you are hospitalized while serving in a combat zone, the wound, disease, or injury causing the hospitalization will be presumed to have been incurred while serving in the combat zone unless there is clear evidence to the contrary. H and r block free state Example. H and r block free state You are hospitalized for a specific disease in a combat zone where you have been serving for 3 weeks, and the disease for which you are hospitalized has an incubation period of 2 to 4 weeks. H and r block free state The disease is presumed to have been incurred while you were serving in the combat zone. H and r block free state On the other hand, if the incubation period of the disease is 1 year, the disease would not have been incurred while you were serving in the combat zone. H and r block free state Hospitalized After Leaving a Combat Zone In some cases, the wound, disease, or injury may have been incurred while you were serving in the combat zone, even though you were not hospitalized until after you left. H and r block free state In that case, you can exclude military pay earned while you are hospitalized as a result of the wound, disease, or injury. H and r block free state Example. H and r block free state You were hospitalized for a specific disease 3 weeks after you left the combat zone. H and r block free state The incubation period of the disease is from 2 to 4 weeks. H and r block free state The disease is presumed to have been incurred while serving in the combat zone. H and r block free state Nonqualifying Presence in Combat Zone None of the following types of military service qualify as service in a combat zone. H and r block free state Presence in a combat zone while on leave from a duty station located outside the combat zone. H and r block free state Passage over or through a combat zone during a trip between two points that are outside a combat zone. H and r block free state Presence in a combat zone solely for your personal convenience. H and r block free state Service Outside Combat Zone Considered Service in Combat Zone Military service outside a combat zone is considered to be performed in a combat zone if: The Department of Defense designates that the service is in direct support of military operations in the combat zone, and The service qualifies you for special military pay for duty subject to hostile fire or imminent danger. H and r block free state Military pay received for this service will qualify for the combat zone exclusion if all of the requirements (other than service in a combat zone) are met and the pay is verifiable by reference to military pay records. H and r block free state Amount of Exclusion If you are an enlisted member, warrant officer, or commissioned warrant officer and you serve in a combat zone during any part of a month, you can exclude all of your military pay for that month. H and r block free state It should not be included in the wages reported on your Form W-2. H and r block free state You also can exclude military pay earned while you are hospitalized as a result of wounds, disease, or injury incurred in the combat zone. H and r block free state If you are hospitalized, you cannot exclude any military pay received for any month of service that begins more than 2 years after the end of combat activities in the combat zone. H and r block free state Your hospitalization does not have to be in the combat zone. H and r block free state If you are a commissioned officer (other than a commissioned warrant officer), you can exclude your pay according to the rules just discussed. H and r block free state However, the amount of your exclusion is limited to the highest rate of enlisted pay (plus imminent danger/hostile fire pay you received) for each month during any part of which you served in a combat zone or were hospitalized as a result of your service there. H and r block free state Alien Status For tax purposes, an alien is an individual who is not a U. H and r block free state S. H and r block free state citizen. H and r block free state An alien is in one of three categories: resident, nonresident, or dual-status. H and r block free state Placement in the correct category is crucial in determining what income to report and what forms to file. H and r block free state Under peacetime enlistment rules, you generally cannot enlist in the Armed Forces unless you are a citizen or have been legally admitted to the United States for permanent residence. H and r block free state If you are an alien enlistee in the Armed Forces, you are probably a resident alien. H and r block free state If, under an income tax treaty, you are considered a resident of a foreign country, see your base legal officer. H and r block free state Other aliens who are in the United States only because of military assignments and who have a home outside the United States are nonresident aliens. H and r block free state Guam and Puerto Rico have special rules. H and r block free state Residents of those areas should contact their taxing authority with their questions. H and r block free state Most members of the Armed Forces are U. H and r block free state S. H and r block free state citizens or resident aliens. H and r block free state However, if you have questions about your alien status or the alien status of your dependents or spouse, you should read the information in the following paragraphs and see Publication 519. H and r block free state Resident Aliens You are considered a resident alien of the United States for tax purposes if you meet either the “green card test” or the “substantial presence test” for the calendar year (January 1–December 31). H and r block free state If you meet the substantial presence test for 2014, you did not meet either the green card test or the substantial presence test for 2012 or 2013, and you did not choose to be treated as a resident for part of 2012, you may be able to choose to be treated as a U. H and r block free state S. H and r block free state resident for part of 2013. H and r block free state See First-Year Choice in Publication 519. H and r block free state These tests are explained in Publication 519. H and r block free state Generally, resident aliens are taxed on their worldwide income and file the same tax forms as U. H and r block free state S. H and r block free state citizens. H and r block free state Treating nonresident alien spouse as resident alien. H and r block free state   A nonresident alien spouse can be treated as a resident alien if all the following conditions are met. H and r block free state One spouse is a U. H and r block free state S. H and r block free state citizen or resident alien at the end of the tax year. H and r block free state That spouse is married to the nonresident alien at the end of the tax year. H and r block free state You both choose to treat the nonresident alien spouse as a resident alien. H and r block free state Making the choice. H and r block free state   Both you and your spouse must sign a statement and attach it to your joint return for the first tax year for which the choice applies. H and r block free state Include in the statement: A declaration that one spouse was a nonresident alien and the other was a U. H and r block free state S. H and r block free state citizen or resident alien on the last day of the year, A declaration that both spouses choose to be treated as U. H and r block free state S. H and r block free state residents for the entire tax year, and The name, address, and taxpayer identification number (social security number or individual taxpayer identification number) of each spouse. H and r block free state If the nonresident alien spouse is not eligible to get a social security number, he or she should file Form W-7, Application for IRS Individual Taxpayer Identification Number. H and r block free state    Once you make this choice, the nonresident alien spouse's worldwide income is subject to U. H and r block free state S. H and r block free state tax. H and r block free state If the nonresident alien spouse has substantial foreign income, there may be no advantage to making this choice. H and r block free state Ending the choice. H and r block free state   Once you make this choice, it applies to all later years unless one of the following situations occurs. H and r block free state You or your spouse revokes the choice. H and r block free state You or your spouse dies. H and r block free state You and your spouse become legally separated under a decree of divorce or separate maintenance. H and r block free state The Internal Revenue Service ends the choice because you or your spouse kept inadequate records. H and r block free state For specific details on these situations, see Publication 519. H and r block free state   If the choice is ended for any of these reasons, neither spouse can make the choice for any later year. H and r block free state Choice not made. H and r block free state   If you and your nonresident alien spouse do not make this choice: You cannot file a joint return. H and r block free state You can file as married filing separately, or head of household if you qualify. H and r block free state You can claim an exemption for your nonresident alien spouse if he or she has no gross income for U. H and r block free state S. H and r block free state tax purposes and is not another taxpayer's dependent. H and r block free state The nonresident alien spouse generally does not have to file a federal income tax return if he or she had no income from sources in the United States. H and r block free state If a return has to be filed, see the next discussion. H and r block free state The nonresident alien spouse is not eligible for the earned income credit if he or she has to file a return. H and r block free state Nonresident Aliens If you are an alien who does not meet the requirements discussed earlier to be a resident alien, you are a nonresident alien. H and r block free state If you are required to file a federal tax return, you must file either Form 1040NR, U. H and r block free state S. H and r block free state Nonresident Alien Income Tax Return, or Form 1040NR-EZ, U. H and r block free state S. H and r block free state Income Tax Return for Certain Nonresident Aliens With No Dependents. H and r block free state See the form instructions for information on who must file and filing status. H and r block free state If you are a nonresident alien, you generally must pay tax on income from sources in the United States. H and r block free state Your income from conducting a trade or business in the United States is taxed at graduated U. H and r block free state S. H and r block free state tax rates. H and r block free state Other income from U. H and r block free state S. H and r block free state sources is taxed at a flat 30% (or lower treaty) rate. H and r block free state For example, dividends from a U. H and r block free state S. H and r block free state corporation paid to a nonresident alien generally are subject to a 30% (or lower treaty) rate. H and r block free state Dual-Status Aliens You can be both a nonresident and resident alien during the same tax year. H and r block free state This usually occurs in the year you arrive in or depart from the United States. H and r block free state If you are a dual-status alien, you are taxed on income from all sources for the part of the year you are a resident alien. H and r block free state Generally, for the part of the year you are a nonresident alien, you are taxed only on income from sources in the United States. H and r block free state Sale of Home You may not have to pay tax on all or part of the gain from the sale of your main home. H and r block free state Usually, your main home is the one you live in most of the time. H and r block free state It can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. H and r block free state You generally can exclude up to $250,000 of gain ($500,000, in most cases, if married filing a joint return) realized on the sale or exchange of a main home in 2013. H and r block free state The exclusion is allowed each time you sell or exchange a main home, but generally not more than once every 2 years. H and r block free state To be eligible, during the 5-year period ending on the date of the sale, you must have owned the home for at least 2 years (the ownership test), and lived in the home as your main home for at least 2 years (the use test). H and r block free state Exception to ownership and use tests. H and r block free state   You can exclude gain, but the maximum amount of gain you can exclude will be reduced if you do not meet the ownership and use tests due to a move to a new permanent duty station. H and r block free state 5-year test period suspended. H and r block free state   You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve on qualified official extended duty as a member of the Armed Forces. H and r block free state This means that you may be able to meet the 2-year use test even if, because of your service, you did not actually live in your home for at least the required 2 years during the 5-year period ending on the date of sale. H and r block free state Example. H and r block free state David bought and moved into a home in 2005. H and r block free state He lived in it as his main home for 2½ years. H and r block free state For the next 6 years, he did not live in it because he was on qualified official extended duty with the Army. H and r block free state He then sold the home at a gain in 2013. H and r block free state To meet the use test, David chooses to suspend the 5-year test period for the 6 years he was on qualifying official extended duty. H and r block free state This means he can disregard those 6 years. H and r block free state Therefore, David's 5-year test period consists of the 5 years before he went on qualifying official extended duty. H and r block free state He meets the ownership and use tests because he owned and lived in the home for 2½ years during this test period. H and r block free state Period of suspension. H and r block free state   The period of suspension cannot last more than 10 years. H and r block free state You cannot suspend the 5-year period for more than one property at a time. H and r block free state You can revoke your choice to suspend the 5-year period at any time. H and r block free state Qualified official extended duty. H and r block free state   You are on qualified official extended duty if you serve on extended duty either: At a duty station at least 50 miles from your main home, or While you live in Government quarters under Government orders. H and r block free state   You are on extended duty when you are called or ordered to active duty for a period of more than 90 days or for an indefinite period. H and r block free state Property used for rental or business. H and r block free state   You may be able to exclude your gain from the sale of a home that you have used as a rental property or for business. H and r block free state However, you must meet the ownership and use tests discussed in Publication 523. H and r block free state Nonqualified use. H and r block free state   If the sale of your main home results in a gain that is allocated to one or more period(s) of nonqualified use, you cannot exclude that gain from your income. H and r block free state   Nonqualified use means any period after 2008 when neither you nor your spouse (or your former spouse) used the property as a main home, with certain exceptions. H and r block free state For example, a period of nonqualified use does not include any period (not to exceed a total of 10 years) during which you or your spouse is serving on qualified official extended duty. H and r block free state Loss. H and r block free state   You cannot deduct a loss from the sale of your main home. H and r block free state More information. H and r block free state   For more information, see Publication 523. H and r block free state Foreclosures There may be tax consequences as a result of compensation payments for foreclosures. H and r block free state Payments made for violations of the Service Members Civil Relief Act (SCRA). H and r block free state   All service members who received a settlement payment reported on a Form 1099 may need to report the amount on their tax return. H and r block free state Generally, you must include settlement payments in income. H and r block free state However, the tax treatment of settlement payments will depend on the facts and circumstances. H and r block free state Lump Sum Portion of Settlement Payment. H and r block free state    Generally, you must include the lump sum payment in gross income. H and r block free state In limited circumstances you may be able to exclude part or all of the lump sum payment from gross income. H and r block free state For example, you may qualify to exclude part or all of the payment from gross income if you can show that the payment was made to reimburse specific nondeductible expenses (such as living expenses) you incurred because of the SCRA violation. H and r block free state Interest Payment on Lump Sum Portion of Settlement Payment. H and r block free state    You must include any interest on the lump sum portion of your settlement payment in your income. H and r block free state Lost Equity Portion of Settlement Payment. H and r block free state    If you lost your main home in foreclosure, you should treat the lost equity payment as an additional amount you received on the foreclosure of the home. H and r block free state You will have a gain on the foreclosure only if the sum of the lost equity payment and the value of the main home at foreclosure is more than what you paid for the home. H and r block free state In many cases, this gain may be excluded from income. H and r block free state For more information on the rules for excluding all or part of any gain from the sale (including a foreclosure) of a main home, see Pub. H and r block free state 523, Selling Your Home. H and r block free state The rules that apply to a lost equity payment you received for the foreclosure of a property that was not your main home are different. H and r block free state    To find rules for reporting gain or loss on the foreclosure of property that was not your main home, see Pub. H and r block free state 544, Sales and Other Dispositions of Assets. H and r block free state Interest Payment on Lost Equity Portion of Settlement Payment. H and r block free state    You must include any interest on the lost equity portion of your settlement payment in your income. H and r block free state Itemized Deductions To figure your taxable income, you must subtract either your standard deduction or your itemized deductions from adjusted gross income. H and r block free state For information on the standard deduction, see Publication 501. H and r block free state Itemized deductions are figured on Schedule A (Form 1040). H and r block free state This chapter discusses miscellaneous itemized deductions of particular interest to members of the Armed Forces. H and r block free state For information on other itemized deductions, see the publications listed below. H and r block free state Publication 502, Medical and Dental Expenses. H and r block free state Publication 526, Charitable Contributions. H and r block free state Publication 547, Casualties, Disasters, and Thefts. H and r block free state Publication 550, Investment Income and Expenses. H and r block free state You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. H and r block free state For information on deductions that are not subject to the 2% limit, see Publication 529. H and r block free state Employee Business Expenses Deductible employee business expenses generally are miscellaneous itemized deductions subject to the 2% limit. H and r block free state Certain employee business expenses are deductible as adjustments to income. H and r block free state For information on many employee business expenses, see Publication 463. H and r block free state Generally, you must file Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses, to claim these expenses. H and r block free state You do not have to file Form 2106 or Form 2106-EZ if you are claiming only unreimbursed expenses for uniforms, professional society dues, and work-related educational expenses (all discussed later). H and r block free state You can deduct these expenses directly on Schedule A (Form 1040). H and r block free state Reimbursement. H and r block free state   Generally, to receive advances, reimbursements, or other allowances from the government, you must adequately account for your expenses and return any excess reimbursement. H and r block free state Your reimbursed expenses are not deductible. H and r block free state   If your expenses are more than your reimbursement, the excess expenses are deductible (subject to the 2% limit) if you can prove them. H and r block free state You must file Form 2106 to report these expenses. H and r block free state   You can use the shorter Form 2106-EZ if you meet all three of the following conditions. H and r block free state You are an employee deducting expenses related to your job. H and r block free state You were not reimbursed by your employer for your expenses. H and r block free state (Amounts included in box 1 of Form W-2 are not considered reimbursements. H and r block free state ) If you claim car expenses, you use the standard mileage rate. H and r block free state    For 2013, the standard mileage rate is 56. H and r block free state 5 cents a mile for all business miles driven. H and r block free state This rate is adjusted periodically. H and r block free state Travel Expenses You can deduct unreimbursed travel expenses only if they are incurred while you are traveling away from home. H and r block free state If you are a member of the U. H and r block free state S. H and r block free state Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. H and r block free state You cannot deduct your expenses for meals and lodging while at your permanent duty station. H and r block free state You cannot deduct these expenses even if you have to maintain a home in the United States for your family members who are not allowed to accompany you overseas. H and r block free state A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a home aboard ship for travel expense purposes. H and r block free state To be deductible, your travel expenses must be work related. H and r block free state You cannot deduct any expenses for personal travel, such as visits to family while on furlough, leave, or liberty. H and r block free state Away from home. H and r block free state   Home is your permanent duty station (which can be a ship or base), regardless of where you or your family live. H and r block free state You are away from home if you are away from your permanent duty station substantially longer than an ordinary day's work and you need to get sleep or rest to meet the demands of your work while away from home. H and r block free state   Examples of deductible travel expenses include: Expenses for business-related meals (generally limited to 50% of your unreimbursed cost), lodging, taxicabs, business telephone calls, tips, laundry, and dry cleaning while you are away from home on temporary duty or temporary additional duty, and Expenses of carrying out official business while on “No Cost” orders. H and r block free state    You cannot deduct any expenses for travel away from home if the temporary assignment in a single location is realistically expected to last (and does in fact last) for more than 1 year. H and r block free state This rule may not apply if you are participating in a federal crime investigation or prosecution. H and r block free state For more information, see Publication 463 and the Form 2106 instructions. H and r block free state Transportation Expenses These expenses include the ordinary and necessary costs of: Getting from one workplace to another when you are not away from home, Going to a business meeting away from your regular workplace, and Getting from your home to a temporary workplace when you have a regular place of work. H and r block free state These expenses include the costs of transportation by air, bus, rail, taxi, and driving and maintaining your car. H and r block free state Transportation expenses incurred while traveling away from home are included with your travel expenses, discussed earlier. H and r block free state However, if you use your car while traveling away from home overnight, see the rules in chapter 4 of Publication 463 to figure your car expense deduction. H and r block free state If you must go from one workplace to another while on duty (for example, as a courier or to attend meetings) without being away from home, your unreimbursed transportation expenses are deductible. H and r block free state However, the expenses of getting to and from your regular place of work (commuting) are not deductible. H and r block free state Temporary work location. H and r block free state   If you have one or more regular places of business away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location. H and r block free state   Generally, if your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary. H and r block free state   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. H and r block free state If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. H and r block free state    If you do not have a regular place of business, but you ordinarily work in the metropolitan area where you live, you can deduct daily transportation expenses between your home and a temporary work site outside your metropolitan area. H and r block free state However, you cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. H and r block free state These are nondeductible commuting costs. H and r block free state Armed Forces reservists. H and r block free state   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. H and r block free state You can deduct the expense of getting from one workplace to the other. H and r block free state You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. H and r block free state In this case, your transportation generally is a nondeductible commuting expense. H and r block free state However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. H and r block free state   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. H and r block free state If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. H and r block free state See Armed Forces Reservists under Adjustments to Income, earlier. H and r block free state Uniforms You usually cannot deduct the expenses for uniform cost and upkeep. H and r block free state Generally, you must wear uniforms when on duty and you are allowed to wear them when off duty. H and r block free state If military regulations prohibit you from wearing certain uniforms when off duty, you can deduct the cost and upkeep of the uniforms, but you must reduce your expenses by any allowance or reimbursement you receive. H and r block free state Unreimbursed expenses for the cost and upkeep of the following articles are deductible. H and r block free state Military battle dress uniforms and utility uniforms that you cannot wear when off duty. H and r block free state Articles not replacing regular clothing, including insignia of rank, corps devices, epaulets, aiguillettes, and swords. H and r block free state Reservists' uniforms if you can wear the uniform only while performing duties as a reservist. H and r block free state Professional Dues You can deduct unreimbursed dues paid to professional societies directly related to your military position. H and r block free state However, you cannot deduct amounts paid to an officers' club or a noncommissioned officers' club. H and r block free state Example. H and r block free state Lieutenant Margaret Allen, an electrical engineer at Maxwell Air Force Base, can deduct professional dues paid to the American Society of Electrical Engineers. H and r block free state Educational Expenses You can deduct the unreimbursed costs of qualifying work-related education. H and r block free state This is education that meets at least one of the following two tests. H and r block free state The education is required by your employer or the law to keep your present salary, status, or job. H and r block free state The required education must serve a bona fide business purpose of your employer. H and r block free state The education maintains or improves skills needed in your present work. H and r block free state However, even if the education meets one or both of the above tests, it is not qualifying education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. H and r block free state You can deduct the expenses for qualifying work-related education even if the education could lead to a degree. H and r block free state Example 1. H and r block free state Lieutenant Colonel Mason has a degree in financial management and is in charge of base finances at her post of duty. H and r block free state She took an advanced finance course. H and r block free state She already meets the minimum qualifications for her job. H and r block free state By taking the course, she is improving skills in her current position. H and r block free state The course does not qualify her for a new trade or business. H and r block free state She can deduct educational expenses that are more than the educational allowance she received. H and r block free state Example 2. H and r block free state Major Williams worked in the military base legal office as a legal intern. H and r block free state He was placed in excess leave status by his employer to attend law school. H and r block free state He paid all his educational expenses and was not reimbursed. H and r block free state After obtaining his law degree, he passed the state bar exam and worked as a judge advocate. H and r block free state His educational expenses are not deductible because the law degree qualified him for a new trade or business, even though the education maintained and improved his skills in his work. H and r block free state Travel to obtain education. H and r block free state   If your work-related education qualifies, you can deduct the costs of travel, including meals (subject to the 50% limit), and lodging, if the main purpose of the trip is to obtain the education. H and r block free state   You cannot deduct the cost of travel that is itself a form of education, even if it is directly related to your duties in your work or business. H and r block free state Transportation for education. H and r block free state   If your work-related education qualifies for a deduction, you can deduct the costs of transportation to obtain that education. H and r block free state However, you cannot deduct the cost of services provided in kind, such as base-provided transportation to or from class. H and r block free state Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. H and r block free state   If you need more information on educational expenses, see Publication 970. H and r block free state Repayments If you had to repay to your employer an amount that you included in your income in an earlier year, you may be able to deduct the repaid amount from your income for the year in which you repaid it. H and r block free state Repayment of $3,000 or less. H and r block free state   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. H and r block free state If you reported it as wages, deduct it as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. H and r block free state Repayment over $3,000. H and r block free state   If the amount you repaid was more than $3,000, see Repayments in Publication 525. H and r block free state Credits After you have figured your taxable income and tax liability, you can determine if you are entitled to any tax credits. H and r block free state This publication discusses the first-time homebuyer credit, child tax credit, earned income credit, and credit for excess social security tax withheld. H and r block free state For information on other credits, see your tax form instructions. H and r block free state First-Time Homebuyer Credit The first-time homebuyer credit is not available for homes purchased after 2011. H and r block free state In 2011, this credit had already expired for most taxpayers, however, certain members of the uniformed services and Foreign Service and certain employees of the intelligence community could claim the credit for homes purchased in 2011. H and r block free state If you bought the home (and claimed the credit) after 2008, you generally must repay the credit if you dispose of the home or the home stops being your main home within the 36-month period beginning on the purchase date. H and r block free state If the home continues to be your main home for at least 36 months beginning on the purchase date, you do not have to repay any of the credit. H and r block free state If you bought your home in 2008, you generally must repay the credit over a 15-year period in 15 equal installments. H and r block free state For more information, see Form 5405, Repayment of the First-Time Homebuyer Credit, and its instructions. H and r block free state Child Tax Credit The child tax credit is a credit that may reduce your tax by as much as $1,000 for each of your qualifying children. H and r block free state The additional child tax credit is a credit you may be able to take if you are not able to claim the full amount of the child tax credit. H and r block free state The child tax credit is not the same as the credit for child and dependent care expenses. H and r block free state See Publication 503 for information on the credit for child and dependent care expenses. H and r block free state Qualifying Child A qualifying child for purposes of the child tax credit is a child who: Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew), Was under age 17 at the end of 2013, Did not provide over half of his or her own support for 2013, Lived with you for more than half of 2013 (see Exceptions to time lived with you, later), Is claimed as a dependent on your return, Does not file a joint return for the year (or files it only as a claim for refund), and Was a U. H and r block free state S. H and r block free state citizen, a U. H and r block free state S. H and r block free state national, or a U. H and r block free state S. H and r block free state resident alien. H and r block free state If the child was adopted, see Adopted child . H and r block free state For each qualifying child you must check the box on Form 1040 or Form 1040A, line 6c, column (4). H and r block free state Exceptions to time lived with you. H and r block free state   A child is considered to have lived with you for all of 2013 if the child was born or died in 2013 and your home was this child's home for the entire time he or she was alive. H and r block free state Temporary absences by you or the child for special circumstances, such as school, vacation, business, medical care, military service, or detention in a juvenile facility, count as time the child lived with you. H and r block free state   There are also exceptions for kidnapped children and children of divorced or separated parents. H and r block free state For details, see Publication 501. H and r block free state Qualifying child of more than one person. H and r block free state   A special rule applies if your qualifying child is the qualifying child of more than one person. H and r block free state For details, see Publication 501. H and r block free state Adopted child. H and r block free state   An adopted child is always treated as your own child. H and r block free state An adopted child includes a child lawfully placed with you for legal adoption. H and r block free state   If you are a U. H and r block free state S. H and r block free state citizen or U. H and r block free state S. H and r block free state national and your adopted child lived with you as a member of your household all year, that child meets condition (7) above to be a qualifying child for the child tax credit. H and r block free state Amount of Credit The maximum amount you can claim for the credit is $1,000 for each qualifying child. H and r block free state Limits on the credit. H and r block free state   You must reduce your child tax credit if either (1) or (2), below, applies. H and r block free state The amount on Form 1040, line 46, or Form 1040A, line 28, is less than the credit. H and r block free state If the amount is zero, you cannot take this credit because there is no tax to reduce. H and r block free state However, you may be able to take the additional child tax credit. H and r block free state See Additional Child Tax Credit , later. H and r block free state Your modified adjusted gross income (AGI) is more than the amount shown below for your filing status. H and r block free state Married filing jointly — $110,000. H and r block free state Single, head of household,  or qualifying widow(er) — $75,000. H and r block free state Married filing separately — $55,000. H and r block free state Modified AGI. H and r block free state   For purposes of the child tax credit, your modified AGI is the amount on Form 1040, line 38, or Form 1040A, line 22, plus the following amounts that may apply to you. H and r block free state Any amount excluded from income because of the exclusion of income from Puerto Rico. H and r block free state Any amount on line 45 or line 50 of Form 2555, Foreign Earned Income. H and r block free state Any amount on line 18 of Form 2555-EZ, Foreign Earned Income Exclusion. H and r block free state Any amount on line 15 of Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa. H and r block free state   If you do not have any of the above, your modified AGI is the same as your AGI. H and r block free state Claiming the Credit To claim the child tax credit, you must file Form 1040 or Form 1040A. H and r block free state For more information on the child tax credit, see the instructions for Form 1040 or Form 1040A. H and r block free state Also attach Schedule 8812, Child Tax Credit, if required. H and r block free state Additional Child Tax Credit This credit is for certain individuals who get less than the full amount of the child tax credit. H and r block free state The additional child tax credit may give you a refund even if you do not owe any tax. H and r block free state For more information, see the instructions for Form 1040 or Form 1040A, and Schedule 8812. H and r block free state Earned Income Credit The earned income credit (EIC) is a cr