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Irs Extension Form

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Irs Extension Form

Irs extension form 3. Irs extension form   Adjustments to Income Table of Contents Individual Retirement Arrangement (IRA) Contributions and DeductionsContributions to Kay Bailey Hutchison Spousal IRAs. Irs extension form Deductible contribution. Irs extension form Nondeductible contribution. Irs extension form You may be able to subtract amounts from your total income (Form 1040, line 22 or Form 1040A, line 15) or total effectively connected income (Form 1040NR, line 23) to get your adjusted gross income (Form 1040, line 37; Form 1040A, line 21; or Form 1040NR, line 36). Irs extension form Some adjustments to income follow. Irs extension form Contributions to your individual retirement arrangement (IRA) (Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32), explained later in this publication. Irs extension form Certain moving expenses (Form 1040, line 26; or Form 1040NR, line 26) if you changed job locations or started a new job in 2013. Irs extension form See Publication 521, Moving Expenses, or see Form 3903, Moving Expenses, and its instructions. Irs extension form Some health insurance costs (Form 1040, line 29 or Form 1040NR, line 29) if you were self-employed and had a net profit for the year, or if you received wages in 2013 from an S corporation in which you were a more-than-2% shareholder. Irs extension form For more details, see Publication 535, Business Expenses. Irs extension form Payments to your self-employed SEP, SIMPLE, or qualified plan (Form 1040, line 28 or Form 1040NR, line 28). Irs extension form For more information, including limits on how much you can deduct, see Publication 560, Retirement Plans for Small Business. Irs extension form Penalties paid on early withdrawal of savings (Form 1040, line 30 or Form 1040NR, line 30). Irs extension form Form 1099-INT, Interest Income, or Form 1099-OID, Original Issue Discount, will show the amount of any penalty you were charged. Irs extension form Alimony payments (Form 1040, line 31a). Irs extension form For more information, see Publication 504, Divorced or Separated Individuals. Irs extension form There are other items you can claim as adjustments to income. Irs extension form These adjustments are discussed in your tax return instructions. Irs extension form Individual Retirement Arrangement (IRA) Contributions and Deductions This section explains the tax treatment of amounts you pay into traditional IRAs. Irs extension form A traditional IRA is any IRA that is not a Roth or SIMPLE IRA. Irs extension form Roth and SIMPLE IRAs are defined earlier in the IRA discussion under Retirement Plan Distributions . Irs extension form For more detailed information, see Publication 590. Irs extension form Contributions. Irs extension form   An IRA is a personal savings plan that offers you tax advantages to set aside money for your retirement. Irs extension form Two advantages of a traditional IRA are: You may be able to deduct some or all of your contributions to it, depending on your circumstances, and Generally, amounts in your IRA, including earnings and gains, are not taxed until distributed. Irs extension form    Although interest earned from your traditional IRA generally is not taxed in the year earned, it is not tax-exempt interest. Irs extension form Do not report this interest on your tax return as tax-exempt interest. Irs extension form General limit. Irs extension form   The most that can be contributed for 2013 to your traditional IRA is the smaller of the following amounts. Irs extension form Your taxable compensation for the year, or $5,500 ($6,500 if you were age 50 or older by the end of 2013). Irs extension form Contributions to Kay Bailey Hutchison Spousal IRAs. Irs extension form   In the case of a married couple filing a joint return for 2013, up to $5,500 ($6,500 for each spouse age 50 or older by the end of 2013) can be contributed to IRAs on behalf of each spouse, even if one spouse has little or no compensation. Irs extension form For more information on the general limit and the Kay Bailey Hutchison Spousal IRA limit, see How Much Can Be Contributed? in Publication 590. Irs extension form Deductible contribution. Irs extension form   Generally, you can deduct the lesser of the contributions to your traditional IRA for the year or the general limit (or Kay Bailey Hutchison Spousal IRA limit, if applicable) just explained. Irs extension form However, if you or your spouse was covered by an employer retirement plan at any time during the year for which contributions were made, you may not be able to deduct all of the contributions. Irs extension form Your deduction may be reduced or eliminated, depending on your filing status and the amount of your income. Irs extension form For more information, see Limit if Covered by Employer Plan in Publication 590. Irs extension form Nondeductible contribution. Irs extension form   The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. Irs extension form You must file Form 8606, Nondeductible IRAs, to report nondeductible contributions even if you do not have to file a tax return for the year. Irs extension form    For 2014, the most that can be contributed to your traditional IRA is $5,500 ($6,500 if you are age 50 or older at the end of 2014). Irs extension form Prev  Up  Next   Home   More Online Publications
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Understanding your CP11 Notice

We made changes to your return because we believe there’s a miscalculation. You owe money on your taxes as a result of these changes.

Looking for information for CP11A Notice or CP11M Notice?

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the toll free number listed on the top right corner of your notice is the fastest way to get your questions answered.

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

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

  • Read your notice carefully ― it will explain why you owe money on your taxes.
  • Pay the amount owed by the date on the notice's payment coupon.
  • Make payment arrangements if you can't pay the full amount you owe.
  • Contact us within 60 days of the date of your notice if you disagree with the change we made.
  • Correct the copy of your tax return that you kept for your records.

You may want to...


Answers to Common Questions

How can I find out what caused my tax return to change?
Please contact us at the number listed on your notice for specific information concerning your tax return.

What should I do if I disagree with the changes you made?
If you disagree, contact us at the toll free number listed on the top right corner of your notice.

If you contact us in writing within 60 days of the date of this notice, we'll reverse the change we made to your account. However, if you're unable to provide us additional information that justifies the reversal and we believe the reversal is in error, we'll forward your case for audit. This step gives you formal appeal rights, including the right to appeal our decision in court before you have to pay the additional tax. After we forward your case, the audit staff will contact you within five to six weeks to fully explain the audit process and your rights. If you don’t contact us within the 60-day period, you'll lose your right to appeal our decision before payment of tax.

If you don't contact us within 60 days, the change won’t be reversed and you must pay the additional tax. You may then file a claim for refund. You must submit the claim within three years of the date you filed the tax return, or within two years of the date of your last payment for this tax.

What happens if I can’t pay the full amount I owe?
You can arrange to make a payment plan with us if you can’t pay the full amount you owe.

Am I charged interest on the money I owe?
Not if you pay the full amount you owe by the date on the payment coupon. However interest accrues on the unpaid balance after that date.

Will I receive a penalty if I can't pay the full amount?
Yes, you will receive a late payment penalty. You can contact us at the number given on your notice if you're unable to pay the full amount shown in your specific notice because of circumstances beyond your control. Contact us by the due date of your payment and, depending on your situation, we may be able to remove the penalty.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Page Last Reviewed or Updated: 19-Feb-2014

The Irs Extension Form

Irs extension form 2. Irs extension form   American Opportunity Credit Table of Contents Introduction Can You Claim the CreditWho Can Claim the Credit Who Cannot Claim the Credit What Expenses QualifyQualified Education Expenses No Double Benefit Allowed Expenses That Do Not Qualify Who Is an Eligible StudentException. Irs extension form Who Can Claim a Dependent's Expenses Figuring the CreditEffect of the Amount of Your Income on the Amount of Your Credit Refundable Part of Credit Claiming the Credit Introduction For 2013, there are two tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. Irs extension form They are the American opportunity credit (this chapter) and the lifetime learning credit ( chapter 3 ). Irs extension form This chapter explains: Who can claim the American opportunity credit, What expenses qualify for the credit, Who is an eligible student, Who can claim a dependent's expenses, How to figure the credit, How to claim the credit, and When the credit must be repaid. Irs extension form What is the tax benefit of the American opportunity credit. Irs extension form   For the tax year, you may be able to claim an American opportunity credit of up to $2,500 for qualified education expenses paid for each eligible student. Irs extension form   A tax credit reduces the amount of income tax you may have to pay. Irs extension form Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. Irs extension form Forty percent of the American opportunity credit may be refundable. Irs extension form This means that if the refundable portion of your credit is more than your tax, the excess will be refunded to you. Irs extension form   Your allowable American opportunity credit may be limited by the amount of your income. Irs extension form Also, the nonrefundable part of the credit may be limited by the amount of your tax. Irs extension form Overview of the American opportunity credit. Irs extension form   See Table 2-1, Overview of the American Opportunity Credit , for the basics of this credit. Irs extension form The details are discussed in this chapter. Irs extension form Can you claim more than one education credit this year. Irs extension form   For each student, you can elect for any year only one of the credits. Irs extension form For example, if you elect to take the American opportunity credit for a child on your 2013 tax return, you cannot use that same child's qualified education expenses to figure the lifetime learning credit for 2013. Irs extension form   If you pay qualified education expenses for more than one student in the same year, you can choose to take the American opportunity credit on a per-student, per-year basis. Irs extension form If you pay qualified education expenses for a student (or students) for whom you do not claim the American opportunity credit, you can use the adjusted qualified education expenses of that student (or those students) in figuring your lifetime learning credit. Irs extension form This means that, for example, you can claim the American opportunity credit for one student and the lifetime learning credit for another student in the same year. Irs extension form Differences between the American opportunity and lifetime learning credits. Irs extension form   There are several differences between these two credits. Irs extension form For example, you can claim the American opportunity credit based on the same student's expenses for no more than 4 tax years, which includes any tax years you claimed the Hope Scholarship Credit for that student. Irs extension form However, there is no limit on the number of years for which you can claim a lifetime learning credit based on the same student's expenses. Irs extension form The differences between these credits are shown in Appendix B, Highlights of Education Tax Benefits for Tax Year 2013 near the end of this publication. Irs extension form If you claim the American opportunity credit for any student, you can choose between using that student's adjusted qualified education expenses for the American opportunity credit or the lifetime learning credit. Irs extension form If you have the choice, the American opportunity credit will always be greater than the lifetime learning credit. Irs extension form Table 2-1. Irs extension form Overview of the American Opportunity Credit Maximum credit Up to $2,500 credit per eligible student Limit on modified adjusted gross income (MAGI) $180,000 if married filing jointly; $90,000 if single, head of household, or qualifying widow(er) Refundable or nonrefundable 40% of credit may be refundable; the rest is nonrefundable Number of years of postsecondary education Available ONLY if the student had not completed the first 4 years of postsecondary education before 2013 Number of tax years credit available Available ONLY for 4 tax years per eligible student (including any year(s) Hope Scholarship Credit was claimed) Type of program required Student must be pursuing a program leading to a degree or other recognized education credential Number of courses Student must be enrolled at least half time for at least one academic period that begins during the tax year Felony drug conviction As of the end of 2013, the student had not been convicted of a felony for possessing or distributing a controlled substance Qualified expenses Tuition, required enrollment fees, and course materials that the student needs for a course of study whether or not the materials are bought at the educational institution as a condition of enrollment or attendance Payments for academic periods Payments made in 2013 for academic periods beginning in 2013 or beginning in the first 3 months of 2014 Can You Claim the Credit The following rules will help you determine if you are eligible to claim the American opportunity credit on your tax return. Irs extension form Who Can Claim the Credit Generally, you can claim the American opportunity credit if all three of the following requirements are met. Irs extension form You pay qualified education expenses of higher education. Irs extension form You pay the education expenses for an eligible student. Irs extension form The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Irs extension form Student qualifications. Irs extension form   Generally, you can take the American opportunity credit for a student only if all of the following four requirements are met. Irs extension form As of the beginning of 2013, the student had not completed the first four years of postsecondary education (generally, the freshman through senior years of college), as determined by the eligible educational institution. Irs extension form For this purpose, do not include academic credit awarded solely because of the student's performance on proficiency examinations. Irs extension form Neither the American opportunity credit nor the Hope Scholarship Credit has been claimed (by you or anyone else) for this student for any four tax years before 2013. Irs extension form If the American opportunity credit (and Hope Scholarship Credit) has been claimed for this student for any three or fewer tax years before 2013, this requirement is met. Irs extension form For at least one academic period beginning (or treated as beginning) in 2013, the student both: Was enrolled in a program that leads to a degree, certificate, or other recognized educational credential; and Carried at least one-half the normal full-time workload for his or her course of study. Irs extension form The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Irs extension form However, the standard may not be lower than any of those established by the U. Irs extension form S. Irs extension form Department of Education under the Higher Education Act of 1965. Irs extension form For purposes of whether the student satisfies this third requirement for 2013, treat an academic period beginning in the first three months of 2014 as if it began in 2013 if qualified education expenses for the student were paid in 2013 for that academic period. Irs extension form See Prepaid expenses, later. Irs extension form As of the end of 2013, the student had not been convicted of a federal or state felony for possessing or distributing a controlled substance. Irs extension form Example 1. Irs extension form Sharon was eligible for the Hope Scholarship Credit for 2007 and 2008 and for the American opportunity credit for 2010 and 2012. Irs extension form Her parents claimed the Hope Scholarship Credit for Sharon on their tax returns for 2007 and 2008 and claimed the American opportunity credit for Sharon on their 2010 tax return. Irs extension form Sharon claimed the American opportunity credit on her 2012 tax return. Irs extension form The American opportunity credit and Hope Scholarship Credit have been claimed for Sharon for four tax years before 2013. Irs extension form Therefore, the American opportunity credit cannot be claimed by Sharon for 2013. Irs extension form If Sharon were to file Form 8863 for 2013, she would check “Yes” for Part III, line 23, and would be eligible to claim only the lifetime learning credit. Irs extension form Example 2. Irs extension form Wilbert was eligible for the American opportunity credit for 2009, 2010, 2011, and 2013. Irs extension form His parents claimed the American opportunity credit for Wilbert on their tax returns for 2009, 2010, and 2011. Irs extension form No one claimed an American opportunity credit or Hope Scholarship Credit for Wilbert for any other tax year. Irs extension form The American opportunity credit and Hope Scholarship Credit have been claimed for Wilbert for only three tax years before 2013. Irs extension form Therefore, Wilbert meets the second requirement to be eligible for the American opportunity credit. Irs extension form If Wilbert were to file Form 8863 for 2013, he would check “No” for Part III, line 23. Irs extension form If Wilbert meets all of the other requirements, he is eligible for the American opportunity credit. Irs extension form Example 3. Irs extension form Glenda enrolls on a full-time basis in a degree program for the 2014 Spring semester, which begins in January 2014. Irs extension form Glenda pays her tuition for the 2014 Spring semester in December 2013. Irs extension form Because the tuition Glenda paid in 2013 relates to an academic period that begins in the first 3 months of 2014, her eligibility to claim an American opportunity credit in 2013 is determined as if the 2014 Spring semester began in 2013. Irs extension form If the requirements above are not met for any student, you cannot take the American opportunity credit for that student. Irs extension form You may be able to take the lifetime learning credit for part or all of that student's qualified education expenses instead. Irs extension form Note. Irs extension form Qualified education expenses paid by a dependent for whom you claim an exemption, or by a third party for that dependent, are considered paid by you. Irs extension form “Qualified education expenses” are defined later under Qualified Education Expenses . Irs extension form “Eligible students” are defined later under Who Is an Eligible Student . Irs extension form A dependent for whom you claim an exemption is defined later under Who Can Claim a Dependent's Expenses . Irs extension form You may find Figure 2-1, Can You Claim the American Opportunity Credit for 2013 , later, helpful in determining if you can claim an American opportunity credit on your tax return. Irs extension form This image is too large to be displayed in the current screen. Irs extension form Please click the link to view the image. Irs extension form Figure 2-1 Can you claim the American opportunity credit for 2012? Who Cannot Claim the Credit You cannot claim the American opportunity credit for 2013 if any of the following apply. Irs extension form Your filing status is married filing separately. Irs extension form You are listed as a dependent on another person's tax return (such as your parents'). Irs extension form See Who Can Claim a Dependent's Expenses , later. Irs extension form Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more in the case of a joint return). Irs extension form MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit . Irs extension form You (or your spouse) were a nonresident alien for any part of 2013 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. Irs extension form More information on nonresident aliens can be found in Publication 519, U. Irs extension form S. Irs extension form Tax Guide for Aliens. Irs extension form What Expenses Qualify The American opportunity credit is based on adjusted qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Irs extension form Generally, the credit is allowed for adjusted qualified education expenses paid in 2013 for an academic period beginning in 2013 or beginning in the first three months of 2014. Irs extension form For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning January 2014, you can use that $1,500 in figuring your 2013 credit. Irs extension form Academic period. Irs extension form   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. Irs extension form 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. Irs extension form Paid with borrowed funds. Irs extension form   You can claim an American opportunity credit for qualified education expenses paid with the proceeds of a loan. Irs extension form Use the expenses to figure the American opportunity credit for the year in which the expenses are paid, not the year in which the loan is repaid. Irs extension form Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. Irs extension form Student withdraws from class(es). Irs extension form   You can claim an American opportunity credit for qualified education expenses not refunded when a student withdraws. Irs extension form Qualified Education Expenses For purposes of the American opportunity credit, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Irs extension form Eligible educational institution. Irs extension form   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. Irs extension form S. Irs extension form Department of Education. Irs extension form It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Irs extension form The educational institution should be able to tell you if it is an eligible educational institution. Irs extension form   Certain educational institutions located outside the United States also participate in the U. Irs extension form S. Irs extension form Department of Education's Federal Student Aid (FSA) programs. Irs extension form Related expenses. Irs extension form   Student-activity fees are included in qualified education expenses only if the fees must be paid to the institution as a condition of enrollment or attendance. Irs extension form   However, expenses for books, supplies, and equipment needed for a course of study are included in qualified education expenses whether or not the materials are purchased from the educational institution. Irs extension form Prepaid expenses. Irs extension form   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring an education credit for 2013 only. Irs extension form See Academic period, earlier. Irs extension form For example, if you pay $2,000 in December 2013, for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring an education credit for 2013 only (if you meet all the other requirements). Irs extension form    You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 education credit(s). Irs extension form   In the following examples, assume that each student is an eligible student at an eligible educational institution. Irs extension form Example 1. Irs extension form Jefferson is a sophomore in University V's degree program in dentistry. Irs extension form This year, in addition to tuition, he is required to pay a fee to the university for the rental of the dental equipment he will use in this program. Irs extension form Because the equipment rental is needed for his course of study, Jefferson's equipment rental fee is a qualified expense. Irs extension form Example 2. Irs extension form Grace and William, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. Irs extension form The college has no policy about how students should obtain these materials, but any student who purchases them from College W's bookstore will receive a bill directly from the college. Irs extension form William bought his books from a friend; Grace bought hers at College W's bookstore. Irs extension form Both are qualified education expenses for the American opportunity credit. Irs extension form Example 3. Irs extension form When Kelly enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. Irs extension form This activity fee is required of all students, and is used solely to fund on-campus organizations and activities run by students, such as the student newspaper and the student government. Irs extension form No portion of the fee covers personal expenses. Irs extension form Although labeled as a student activity fee, the fee is required for Kelly's enrollment and attendance at College X and is a qualified expense. Irs extension form No Double Benefit Allowed You cannot do any of the following. Irs extension form Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim an American opportunity credit based on those same expenses. Irs extension form Claim an American opportunity credit in the same year that you are claiming a tuition and fees deduction for the same student. Irs extension form Claim an American opportunity credit for any student and use any of that student's expenses in figuring your lifetime learning credit. Irs extension form Figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or qualified tuition program (QTP) using the same expenses you used to figure the American opportunity credit. Irs extension form See Coordination With American Opportunity and Lifetime Learning Credits in chapter 7, Coverdell Education Savings Account, and Coordination With American Opportunity and Lifetime Learning Credits in chapter 8, Qualified Tuition Program. Irs extension form Claim a credit based on qualified education expenses paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. Irs extension form See Adjustments to Qualified Education Expenses, next. Irs extension form Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. Irs extension form The result is the amount of adjusted qualified education expenses for each student. Irs extension form Tax-free educational assistance. Irs extension form   For tax-free educational assistance received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period. Irs extension form See Academic period, earlier. Irs extension form   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. Irs extension form This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). Irs extension form   If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed, later. Irs extension form If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed, later. Irs extension form   Tax-free educational assistance includes: The tax-free parts of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). Irs extension form Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Irs extension form Generally, any scholarship or fellowship is treated as tax free. Irs extension form However, a scholarship or fellowship is not treated as tax free to the extent the student includes it in gross income (if the student is required to file a tax return for the year the scholarship or fellowship is received) and either of the following is true. Irs extension form The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Irs extension form The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Irs extension form You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the educational assistance in income in the year it is received. Irs extension form For examples, see Coordination with Pell grants and other scholarships, later. Irs extension form Refunds. Irs extension form   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year. Irs extension form Some tax-free educational assistance received after 2013 may be treated as a refund. Irs extension form See Tax-free educational assistance, earlier. Irs extension form Refunds received in 2013. Irs extension form   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses for 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. Irs extension form Refunds received after 2013 but before your income tax return is filed. Irs extension form   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid before you file an income tax return for 2013, the amount of qualified education expenses for 2013 is reduced by the amount of the refund. Irs extension form Refunds received after 2013 and after your income tax return is filed. Irs extension form   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid after you file an income tax return for 2013, you may need to repay some or all of the credit. Irs extension form See Credit recapture, next. Irs extension form Credit recapture. Irs extension form    If any tax-free educational assistance for the qualified education expenses paid in 2013, or any refund of your qualified education expenses paid in 2013, is received after you file your 2013 income tax return, you must recapture (repay) any excess credit. Irs extension form You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing the expenses by the amount of the refund or tax-free educational assistance. Irs extension form You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you claimed the refigured credit(s). Irs extension form Include that amount as an additional tax for the year the refund or tax-free assistance was received. Irs extension form Example. Irs extension form   You paid $7,000 tuition and fees in August 2013, and your child began college in September 2013. Irs extension form You filed your 2013 tax return on February 17, 2014, and claimed an American opportunity credit of $2,500. Irs extension form After you filed your return, you received a refund of $4,000. Irs extension form You must refigure your 2013 American opportunity credit using $3,000 of qualified education expenses instead of $7,000. Irs extension form The refigured credit is $2,250. Irs extension form The increase to your tax liability is also $250. Irs extension form Include the difference of $250 as additional tax on your 2014 tax return. Irs extension form See the instructions for your 2014 income tax return to determine where to include this tax. Irs extension form If you pay qualified education expenses in 2014 for an academic period that begins in the first 3 months of 2014 and you receive tax-free educational assistance, or a refund, as described above, you may choose to reduce your qualified education expenses for 2014 instead of reducing your expenses for 2013. Irs extension form Amounts that do not reduce qualified education expenses. Irs extension form   Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Irs extension form   Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. Irs extension form The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Irs extension form The use of the money is not restricted. Irs extension form Example 1. Irs extension form Joan paid $3,000 for tuition and $5,000 for room and board at University X. Irs extension form The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. Irs extension form To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. Irs extension form The terms of the scholarship state that it can be used to pay any of Joan's college expenses. Irs extension form University X applies the $2,000 scholarship against Joan's $8,000 total bill, and Joan pays the $6,000 balance of her bill from University X with a combination of her student loan and her savings. Irs extension form Joan does not report any portion of the scholarship as income on her tax return. Irs extension form In figuring the amount of either education credit (American opportunity or lifetime learning), Joan must reduce her qualified education expenses by the amount of the scholarship ($2,000) because she excluded the entire scholarship from her income. Irs extension form The student loan is not tax-free educational assistance, so she does not need to reduce her qualified expenses by any part of the loan proceeds. Irs extension form Joan is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship). Irs extension form Example 2. Irs extension form The facts are the same as in Example 1, except that Joan reports her entire scholarship as income on her tax return. Irs extension form Because Joan reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. Irs extension form Joan is treated as having paid $3,000 in qualified education expenses. Irs extension form Coordination with Pell grants and other scholarships. Irs extension form   In some cases, you may be able to reduce your tax liability by including scholarships in income. Irs extension form If you are claiming an education credit for a claimed dependent who received a scholarship, you may be able to reduce your tax liability if the student includes the scholarship in income. Irs extension form The scholarship must be one that may (by its terms) be applied to expenses (such as room and board) other than qualified education expenses. Irs extension form Example 1—No scholarship. Irs extension form Bill Pass, age 28 and unmarried, enrolled full-time in 2013 as a first-year student at a local college to earn a degree in law enforcement. Irs extension form This was his first year of postsecondary education. Irs extension form During 2013, he paid $5,600 for his qualified education expenses and $4,400 for his room and board for the fall 2013 semester. Irs extension form He and the college meet all the requirements for the American opportunity credit. Irs extension form Bill's AGI and his MAGI, for purposes of figuring his credit, are $30,000. Irs extension form Bill takes the standard deduction of $5,950 and personal exemption of $3,800, reducing his AGI to taxable income of $20,250. Irs extension form His income tax liability, before credits, is $2,599 and Bill claims no credits other than the American opportunity credit. Irs extension form He figures his American opportunity credit based on qualified education expenses of $4,000, which results in a credit of $2,500 and tax after credits of $99. Irs extension form Example 2—Scholarship excluded from income. Irs extension form The facts are the same as in Example 1—No scholarship, except that Bill was awarded a $5,600 scholarship. Irs extension form Under the terms of his scholarship, it may be used to pay any educational expenses, including room and board. Irs extension form If Bill excludes the scholarship from income, he will be deemed (for purposes of computing his education credit) to have used the scholarship to pay for tuition, required fees, and course materials. Irs extension form His adjusted qualified education expenses will be zero and he will not have an education credit. Irs extension form Therefore, Bill's tax after credits would be $2,599. Irs extension form Example 3—Scholarship partially included in income. Irs extension form The facts are the same as in Example 2—Scholarship excluded from income. Irs extension form If, unlike Example 2, Bill includes $4,000 of the scholarship in income, he will be deemed to have used that amount to pay for room and board. Irs extension form The remaining $1,600 of the $5,600 scholarship will reduce his qualified education expenses and his adjusted qualified education expenses will be $4,000. Irs extension form Bill's AGI will increase to $34,000, his taxable income will increase to $24,250, and his tax before credits will increase to $3,199. Irs extension form Based on his adjusted qualified education expenses of $4,000, Bill would be able to claim an American opportunity tax credit of $2,500 and his tax after credits would be $699. Irs extension form Expenses That Do Not Qualify Qualified education expenses do not include amounts paid for: Insurance, Medical expenses (including student health fees), Room and board, Transportation, or Similar personal, living, or family expenses. Irs extension form This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Irs extension form Sports, games, hobbies, and noncredit courses. Irs extension form   Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. Irs extension form However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. Irs extension form Comprehensive or bundled fees. Irs extension form   Some eligible educational institutions combine all of their fees for an academic period into one amount. Irs extension form If you do not receive or do not have access to an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed earlier, contact the institution. Irs extension form The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T, Tuition Statement. Irs extension form See Figuring the Credit , later, for more information about Form 1098-T. Irs extension form Who Is an Eligible Student To claim the American opportunity credit, the student for whom you pay qualified education expenses must be an eligible student. Irs extension form This is a student who meets all of the following requirements. Irs extension form The student did not have expenses that were used to figure an American opportunity credit in any 4 earlier tax years. Irs extension form This includes any tax year(s) in which you claimed the Hope Scholarship Credit for the same student. Irs extension form The student had not completed the first 4 years of postsecondary education (generally, the freshman, sophomore, junior, and senior years of college) before 2013. Irs extension form For at least one academic period beginning in 2013, the student was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. Irs extension form The student has not been convicted of any federal or state felony for possessing or distributing a controlled substance as of the end of 2013. Irs extension form These requirements are also shown in Figure 2-2, Who is an Eligible Student for the American Opportunity Credit , later. Irs extension form Completion of first 4 years. Irs extension form   A student has completed the first 4 years of postsecondary education if the institution at which the student is enrolled awards the student 4 years of academic credit at that institution for coursework completed by the student before 2013. Irs extension form This student generally would not be an eligible student for purposes of the American opportunity credit. Irs extension form Exception. Irs extension form   Any academic credit awarded solely on the basis of the student's performance on proficiency examinations is disregarded in determining whether the student has completed 4 years of postsecondary education. Irs extension form Enrolled at least half-time. Irs extension form   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. Irs extension form   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Irs extension form However, the standard may not be lower than any of those established by the U. Irs extension form S. Irs extension form Department of Education under the Higher Education Act of 1965. Irs extension form Please click here for the text description of the image. Irs extension form Figure 2-2 Example 1. Irs extension form Mack graduated from high school in June 2012. Irs extension form In September, he enrolled in an undergraduate degree program at College U, and attended full-time for both the 2012 fall and 2013 spring semesters. Irs extension form For the 2013 fall semester, Mack was enrolled less than half-time. Irs extension form Because Mack was enrolled in an undergraduate degree program on at least a half-time basis for at least one academic period that began during 2012 and at least one academic period that began during 2013, he is an eligible student for tax years 2012 and 2013 (including the 2013 fall semester when he enrolled at College U on less than a half-time basis). Irs extension form Example 2. Irs extension form After taking classes at College V on a part-time basis for a few years, Shelly became a full-time student for the 2013 spring semester. Irs extension form College V classified Shelly as a second-semester senior (fourth year) for the 2013 spring semester and as a first-semester graduate student (fifth year) for the 2013 fall semester. Irs extension form Because College V did not classify Shelly as having completed the first 4 years of postsecondary education as of the beginning of 2013, Shelly is an eligible student for tax year 2013. Irs extension form Therefore, the qualified education expenses paid for the 2013 spring semester and the 2013 fall semester are taken into account in calculating the American opportunity credit for 2013. Irs extension form Example 3. Irs extension form During the 2012 fall semester, Larry was a high school student who took classes on a half-time basis at College X. Irs extension form Larry was not enrolled as part of a degree program at College X because College X only admits students to a degree program if they have a high school diploma or equivalent. Irs extension form Because Larry was not enrolled in a degree program at College X during 2012, Larry was not an eligible student for tax year 2012. Irs extension form Example 4. Irs extension form The facts are the same as in Example 3. Irs extension form During the 2013 spring semester, Larry again attended College X but not as part of a degree program. Irs extension form Larry graduated from high school in June 2013. Irs extension form For the 2013 fall semester, Larry enrolled as a full-time student in College X as part of a degree program, and College X awarded Larry credit for his prior coursework at College X. Irs extension form Because Larry was enrolled in a degree program at College X for the 2013 fall term on at least a half-time basis, Larry is an eligible student for all of tax year 2013. Irs extension form Therefore, the qualified education expenses paid for classes taken at College X during both the 2013 spring semester (during which Larry was not enrolled in a degree program) and the 2013 fall semester are taken into account in computing any American opportunity credit. Irs extension form Example 5. Irs extension form Dee graduated from high school in June 2012. Irs extension form In January 2013, Dee enrolled in a 1-year postsecondary certificate program on a full-time basis to obtain a certificate as a travel agent. Irs extension form Dee completed the program in December 2013, and was awarded a certificate. Irs extension form In January 2014, she enrolled in a 1-year postsecondary certificate program on a full-time basis to obtain a certificate as a computer programmer. Irs extension form Dee is an eligible student for both tax years 2013 and 2014 because she meets the degree requirement, the work load requirement, and the year of study requirement for those years. Irs extension form Who Can Claim a Dependent's Expenses If there are qualified education expenses for your dependent during a tax year, either you or your dependent, but not both of you, can claim an American opportunity credit for your dependent's expenses for that year. Irs extension form For you to claim an American opportunity credit for your dependent's expenses, you must also claim an exemption for your dependent. Irs extension form You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. Irs extension form IF you. Irs extension form . Irs extension form . Irs extension form THEN only. Irs extension form . Irs extension form . Irs extension form claim an exemption on  your tax return for a  dependent who is an  eligible student you can claim the American opportunity credit based on that dependent's expenses. Irs extension form The dependent cannot claim the credit. Irs extension form do not claim an exemption on your tax return for a dependent who is an eligible student (even if entitled to the exemption) the dependent can claim the American opportunity credit. Irs extension form You cannot claim the credit based on this dependent's expenses. Irs extension form Expenses paid by dependent. Irs extension form   If you claim an exemption on your tax return for an eligible student who is your dependent, treat any expenses paid (or deemed paid) by your dependent as if you had paid them. Irs extension form Include these expenses when figuring the amount of your American opportunity credit. Irs extension form    Qualified education expenses paid directly to an eligible educational institution for your dependent under a court-approved divorce decree are treated as paid by your dependent. Irs extension form Expenses paid by you. Irs extension form   If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring the amount of the American opportunity credit. Irs extension form If neither you nor anyone else claims an exemption for the dependent, only the dependent can include any expenses you paid when figuring the American opportunity credit. Irs extension form Expenses paid by others. Irs extension form   Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. Irs extension form In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. Irs extension form If you claim an exemption on your tax return for the student, you are considered to have paid the expenses. Irs extension form Example. Irs extension form In 2013, Ms. Irs extension form Allen makes a payment directly to an eligible educational institution for her grandson Todd's qualified education expenses. Irs extension form For purposes of claiming an American opportunity credit, Todd is treated as receiving the money from his grandmother and, in turn, paying his qualified education expenses himself. Irs extension form Unless an exemption for Todd is claimed on someone else's 2013 tax return, only Todd can use the payment to claim an American opportunity credit. Irs extension form If anyone, such as Todd's parents, claims an exemption for Todd on his or her 2013 tax return, whoever claims the exemption may be able to use the expenses to claim an American opportunity credit. Irs extension form If anyone else claims an exemption for Todd, Todd cannot claim an American opportunity credit. Irs extension form Tuition reduction. Irs extension form    When an eligible educational institution provides a reduction in tuition to an employee of the institution (or spouse or dependent child of an employee), the amount of the reduction may or may not be taxable. Irs extension form If it is taxable, the employee is treated as receiving a payment of that amount and, in turn, paying it to the educational institution on behalf of the student. Irs extension form For more information on tuition reductions, see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Irs extension form Figuring the Credit The amount of the American opportunity credit (per eligible student) is the sum of: 100% of the first $2,000 of qualified education expenses you paid for the eligible student, and 25% of the next $2,000 of qualified education expenses you paid for that student. Irs extension form The maximum amount of American opportunity credit you can claim in 2013 is $2,500 multiplied by the number of eligible students. Irs extension form You can claim the full $2,500 for each eligible student for whom you paid at least $4,000 of adjusted qualified education expenses. Irs extension form However, the credit may be reduced based on your MAGI. Irs extension form See Effect of the Amount of Your Income on the Amount of Your Credit , later. Irs extension form Example. Irs extension form Jack and Kay Ford are married and file a joint tax return. Irs extension form For 2013, they claim an exemption for their dependent daughter on their tax return. Irs extension form Their MAGI is $70,000. Irs extension form Their daughter is in her junior (third) year of studies at the local university. Irs extension form Jack and Kay paid qualified education expenses of $4,300 in 2013. Irs extension form Jack and Kay, their daughter, and the local university meet all of the requirements for the American opportunity credit. Irs extension form Jack and Kay can claim a $2,500 American opportunity credit in 2013. Irs extension form This is 100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000. Irs extension form Form 1098-T. Irs extension form   To help you figure your American opportunity credit, the student should receive Form 1098-T, Tuition Statement. Irs extension form Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2014. Irs extension form An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. Irs extension form However, the amounts in boxes 1 and 2 of Form 1098-T might be different than what you paid. Irs extension form When figuring the credit, use only the amounts you paid or are deemed to have paid in 2013 for qualified education expenses. Irs extension form   In addition, Form 1098-T should give other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether the student was enrolled at least half-time or was a graduate student. Irs extension form    The eligible educational institution may ask for a completed Form W-9S, Request for Student's or Borrower's Taxpayer Identification Number and Certification, or similar statement to obtain the student's name, address, and taxpayer identification number. Irs extension form Effect of the Amount of Your Income on the Amount of Your Credit The amount of your American opportunity credit is phased out (gradually reduced) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). Irs extension form You cannot claim an American opportunity credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return). Irs extension form Modified adjusted gross income (MAGI). Irs extension form   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. Irs extension form MAGI when using Form 1040A. Irs extension form   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. Irs extension form MAGI when using Form 1040. Irs extension form   If you file Form 1040, your MAGI is the AGI on line 38 of that form, 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. Irs extension form You can use Worksheet 2-1, next, to figure your MAGI. Irs extension form    Worksheet 2-1. Irs extension form MAGI for the American Opportunity Credit 1. Irs extension form Enter your adjusted gross income  (Form 1040, line 38)   1. Irs extension form   2. Irs extension form Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. Irs extension form       3. Irs extension form Enter your foreign housing deduction (Form 2555, line 50)   3. Irs extension form       4. Irs extension form Enter the amount of income from Puerto Rico you are excluding   4. Irs extension form       5. Irs extension form Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. Irs extension form       6. Irs extension form Add the amounts on lines 2, 3, 4, and 5   6. Irs extension form   7. Irs extension form Add the amounts on lines 1 and 6. Irs extension form  This is your modified adjusted  gross income. Irs extension form Enter here and  on Form 8863, line 3   7. Irs extension form   Phaseout. Irs extension form   If your MAGI is within the range of incomes where the credit must be reduced, you will figure your reduced credit using lines 2-7, of Form 8863, Part I. Irs extension form The same method is shown in the following example. Irs extension form Example. Irs extension form You are filing a joint return and your MAGI is $165,000. Irs extension form In 2013, you paid $5,000 of qualified education expenses. Irs extension form You figure a tentative American opportunity credit of $2,500 (100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000 of qualified education expenses). Irs extension form Because your MAGI is within the range of incomes where the credit must be reduced, you must multiply your tentative credit ($2,500) by a fraction. Irs extension form The numerator of the fraction is $180,000 (the upper limit for those filing a joint return) minus your MAGI. Irs extension form The denominator is $20,000, the range of incomes for the phaseout ($160,000 to $180,000). Irs extension form The result is the amount of your phased out (reduced) American opportunity credit ($1,875). Irs extension form      $2,500 × $180,000 − $165,000  $20,000 = $1,875   Refundable Part of Credit Forty percent of the American opportunity credit is refundable for most taxpayers. Irs extension form However, if you were under age 24 at the end of 2013 and the conditions listed below apply to you, you cannot claim any part of the American opportunity credit as a refundable credit on your tax return. Irs extension form Instead, your allowed credit (figured on Form 8863, Part II) will be used to reduce your tax as a nonrefundable credit only. Irs extension form You do not qualify for a refund if items 1 (a, b, or c), 2, and 3 below apply to you. Irs extension form You were: Under age 18 at the end of 2013, or Age 18 at the end of 2013 and your earned income (defined below) was less than one-half of your support (defined below), or Over age 18 and under age 24 at the end of 2013 and a full-time student (defined below) and your earned income (defined below) was less than one-half of your support (defined below). Irs extension form At least one of your parents was alive at the end of 2013. Irs extension form You are filing a return as single, head of household, qualifying widow(er), or married filing separately for 2013. Irs extension form Earned income. Irs extension form   Earned income includes wages, salaries, professional fees, and other payments received for personal services actually performed. Irs extension form Earned income includes the part of any scholarship or fellowship that represents payment for teaching, research, or other services performed by the student that are required as a condition for receiving the scholarship or fellowship. Irs extension form Earned income does not include that part of the compensation for personal services rendered to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered. Irs extension form   If you are a sole proprietor or a partner in a trade or business in which both personal services and capital are material income-producing factors, earned income also includes a reasonable allowance for compensation for personal services, but not more than 30% of your share of the net profits from that trade or business (after subtracting the deduction for one-half of self-employment tax). Irs extension form However, if capital is not an income-producing factor and your personal services produced the business income, the 30% limit does not apply. Irs extension form Support. Irs extension form   Your support includes food, shelter, clothing, medical and dental care, education, and the like. Irs extension form Generally, the amount of the item of support will be the amount of expenses incurred by the one furnishing such item. Irs extension form If the item of support is in the form of property or lodging, measure the amount of such item of support by its fair market value. Irs extension form However, a scholarship received by you is not considered support if you are a full-time student. Irs extension form See Publication 501 for details. Irs extension form Full-time student. Irs extension form   You are a full-time student for 2013 if during any part of any 5 calendar months during the year you were enrolled as a full-time student at an eligible educational institution (defined earlier), or took a full-time, on-farm training course given by such an institution or by a state, county, or local government agency. Irs extension form Claiming the Credit You claim the American opportunity credit by completing Form 8863 and submitting it with your Form 1040 or 1040A. Irs extension form Enter the nonrefundable part of the credit on Form 1040, line 49, or on Form 1040A, line 31. Irs extension form Enter the refundable part of the credit on Form 1040, line 66, or on Form 1040A, line 40. Irs extension form A filled-in Form 8863 is shown at the end of this publication. Irs extension form Note. Irs extension form In Appendix A. Irs extension form at the end of this publication, there is an example illustrating the use of Form 8863 when both the American opportunity credit and the lifetime learning credit are claimed on the same tax return. Irs extension form Prev  Up  Next   Home   More Online Publications