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Irs Tax Forms 1040 2010

2011 Tax Forms 1040 EzHr Block Free Tax FilingMy TurbotaxAmended 1040x InstructionsState Income Tax Form2011 Form 1040Amend Tax Return OnlineMilitary TaxFree Taxes OnlineFree Tax Calculator2011 Income Tax Forms 1040ezFile Taxes From 20122011 TaxHow To Amend Previous Tax ReturnsWww State Tax FormsH&r Block Free Military TaxesFile Taxes For FreeTax For MilitaryAmend 2012 Tax Return FreeFree Tax Filing 20121040ez 2009Form 1040ez2013 Tax Forms 1040ezFree Tax Form 1040ezOnlinetaxes Hrblock Com2011 Tax InstructionsE File Tax ReturnsE File Taxes FreeFile An Extension For 2011 Taxes OnlineIrs 1040ez Form 2011File 1040xHow To File State Taxes Free2006 Tax Return Software FreeFree 1040ez FormFree State Taxes OnlineFree Fed And State Efile1040 Ez Form Online1040ez Fillable FormTaxact Returning UserE File 1040x Free

Irs Tax Forms 1040 2010

Irs tax forms 1040 2010 Publication 4681 - Introductory Material Table of Contents Reminder IntroductionOrdering forms and publications. Irs tax forms 1040 2010 Tax questions. Irs tax forms 1040 2010 Useful Items - You may want to see: Common Situations Covered In This Publication Reminder Future Developments. Irs tax forms 1040 2010  Information about any future developments affecting Publication 4681 (such as legislation enacted after we release it) will be posted at www. Irs tax forms 1040 2010 irs. Irs tax forms 1040 2010 gov/pub4681. Irs tax forms 1040 2010 Photographs of missing children. Irs tax forms 1040 2010   The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Irs tax forms 1040 2010 Photographs of missing children selected by the Center may appear in this publication on pages that otherwise would be blank. Irs tax forms 1040 2010 You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Irs tax forms 1040 2010 Introduction This publication explains the federal tax treatment of canceled debts, foreclosures, repossessions, and abandonments. Irs tax forms 1040 2010 Generally, if you owe a debt to someone else and they cancel or forgive that debt for less than its full amount, you are treated for income tax purposes as having income and may have to pay tax on this income. Irs tax forms 1040 2010 Note. Irs tax forms 1040 2010 This publication generally refers to debt that is canceled, forgiven, or discharged for less than the full amount of the debt as “canceled debt. Irs tax forms 1040 2010 ” Sometimes a debt, or part of a debt, that you do not have to pay is not considered canceled debt. Irs tax forms 1040 2010 These exceptions are discussed later under Exceptions . Irs tax forms 1040 2010 Sometimes a canceled debt may be excluded from your income. Irs tax forms 1040 2010 But if you do exclude canceled debt from income, you may be required to reduce your “tax attributes. Irs tax forms 1040 2010 ” These exclusions and the reduction of tax attributes associated with them are discussed later under Exclusions . Irs tax forms 1040 2010 Foreclosure and repossession are remedies that your lender may exercise if you fail to make payments on your loan and you have previously granted that lender a mortgage or other security interest in some of your property. Irs tax forms 1040 2010 These remedies allow the lender to seize or sell the property securing the loan. Irs tax forms 1040 2010 When your property is foreclosed upon or repossessed and sold, you are treated as having sold the property and you may recognize taxable gain. Irs tax forms 1040 2010 Whether you also recognize income from canceled debt depends in part on whether you are personally liable for the debt and in part on whether the outstanding loan balance is more than the fair market value (FMV) of the property. Irs tax forms 1040 2010 Figuring your gain or loss and income from canceled debt arising from a foreclosure or repossession is discussed later under Foreclosures and Repossessions . Irs tax forms 1040 2010 Generally, you abandon property when you voluntarily and permanently give up possession and use of property you own with the intention of ending your ownership but without passing it on to anyone else. Irs tax forms 1040 2010 Figuring your gain or loss and income from canceled debt arising from an abandonment is discussed later under Abandonments . Irs tax forms 1040 2010 This publication also includes detailed examples with filled-in forms. Irs tax forms 1040 2010 Comments and suggestions. Irs tax forms 1040 2010    We welcome your comments about this publication and your suggestions for future editions. Irs tax forms 1040 2010   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Irs tax forms 1040 2010 NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Irs tax forms 1040 2010 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Irs tax forms 1040 2010   You can send your comments from www. Irs tax forms 1040 2010 irs. Irs tax forms 1040 2010 gov/formspubs. Irs tax forms 1040 2010 Click on “More Information” and then on “Comment on Tax Forms and Publications”. Irs tax forms 1040 2010   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Irs tax forms 1040 2010 Ordering forms and publications. Irs tax forms 1040 2010    Visit www. Irs tax forms 1040 2010 irs. Irs tax forms 1040 2010 gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Irs tax forms 1040 2010 Internal Revenue Service 1201 N. Irs tax forms 1040 2010 Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Irs tax forms 1040 2010    If you have a tax question, check the information available on IRS. Irs tax forms 1040 2010 gov or call 1-800-829-1040. Irs tax forms 1040 2010 We cannot answer tax questions sent to either of the above addresses. Irs tax forms 1040 2010 Useful Items - You may want to see: Publication 225 Farmer's Tax Guide 334 Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ) 523 Selling Your Home 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 542 Corporations 544 Sales and Other Dispositions of Assets 551 Basis of Assets 908 Bankruptcy Tax Guide Form (and Instructions) 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) 1099-C Cancellation of Debt 1099-DIV Dividends and Distributions 3800 General Business Credit Common Situations Covered In This Publication The sections of this publication that apply to you depend on the type of debt canceled, the tax attributes you have, and whether or not you continue to own the property that was subject to the debt. Irs tax forms 1040 2010 Some examples of common circumstances are provided in the following paragraphs to help guide you through this publication. Irs tax forms 1040 2010 These examples do not cover every situation but are intended to provide general guidance for the most common situations. Irs tax forms 1040 2010 Nonbusiness credit card debt cancellation. Irs tax forms 1040 2010    If you had a nonbusiness credit card debt canceled, you may be able to exclude the canceled debt from income if the cancellation occurred in a title 11 bankruptcy case or you were insolvent immediately before the cancellation. Irs tax forms 1040 2010 You should read Bankruptcy or Insolvency under Exclusions in chapter 1 to see if you can exclude the canceled debt from income under one of those provisions. Irs tax forms 1040 2010 If you can exclude part or all of the canceled debt from income, you should also read Bankruptcy and Insolvency under Reduction of Tax Attributes in chapter 1. Irs tax forms 1040 2010 Personal vehicle repossession. Irs tax forms 1040 2010    If you had a personal vehicle repossessed and disposed of by the lender during the year, you will need to determine your gain or nondeductible loss on the disposition. Irs tax forms 1040 2010 This is explained in chapter 2 . Irs tax forms 1040 2010 If the lender also canceled all or part of the remaining amount of the loan, you may be able to exclude the canceled debt from income if the cancellation occurred in a title 11 bankruptcy case or you were insolvent immediately before the cancellation. Irs tax forms 1040 2010 You should read Bankruptcy or Insolvency under Exclusions in chapter 1 to see if you can exclude the canceled debt from income under one of those provisions. Irs tax forms 1040 2010 If you can exclude part or all of the canceled debt from income, you should also read Bankruptcy and Insolvency under Reduction of Tax Attributes in chapter 1. Irs tax forms 1040 2010 Main home foreclosure or abandonment. Irs tax forms 1040 2010    If a lender foreclosed on your main home during the year, you will need to determine your gain or loss on the foreclosure. Irs tax forms 1040 2010 Foreclosures are explained in chapter 2 and abandonments are explained in chapter 3. Irs tax forms 1040 2010 If the lender also canceled all or part of the remaining amount on the mortgage loan and you were personally liable for the debt, you should also read Qualified Principal Residence Indebtedness under Exclusions in chapter 1 to see if you can exclude part or all of the canceled debt from income. Irs tax forms 1040 2010 Detailed Example 2 and Example 3 in chapter 4 use filled-in forms to help explain these provisions. Irs tax forms 1040 2010 Main home loan modification (workout agreement). Irs tax forms 1040 2010    If a lender agrees to a mortgage loan modification (a “workout”) that includes a reduction in the principal balance of the loan, you should read Qualified Principal Residence Indebtedness under Exclusions in chapter 1 to see if you can exclude part or all of the canceled debt from income. Irs tax forms 1040 2010 If you can exclude part or all of the canceled debt from income, you should also read Qualified Principal Residence Indebtedness under Reduction of Tax Attributes in chapter 1. Irs tax forms 1040 2010 Detailed Example 1 in chapter 4 uses filled-in forms to help explain the tax implications of a mortgage workout scenario. Irs tax forms 1040 2010 Prev  Up  Next   Home   More Online Publications
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SOI Tax Stats - Statistical Methodology

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Statistics compiled for the SOI studies are generally based on stratified probability samples of income tax returns or other forms filed with the Internal Revenue Service (IRS). The statistics do not reflect any changes made by the taxpayer through an amended return or by the IRS as a result of an audit. As returns are filed and processed for tax purposes, they are assigned to sampling classes (strata) based on such criteria as: industry, presence or absence of a tax form or schedule, and various income factors or other measures of economic size (such as total assets, total receipts, size of gift, and size of estate). The samples are selected from each stratum over the appropriate filing periods. Thus, sample selection can continue for a given study for several calendar years—3 for corporations because of the incidence of fiscal (noncalendar) year reporting and extensions of filing time. Because sampling must take place before the population size is known precisely, the rates of sample selection within each stratum are fixed. This means, in practice, that both the population and the sample size can differ from those planned. However, these factors do not compromise the validity of the estimates.


Statistics of Income General Sampling Methodology and Data Limitations (PDF - Get Adobe Acrobat Reader)
This article discusses typical sampling procedures used in most Statistics of Income (SOI) programs. Aspects covered briefly include sampling criteria, selection techniques, methods of estimation, and sampling variability (coefficients of variation (CV)). Some of the nonsampling error limitations of the data are also described, as well as the tabular conventions employed.

Sampling Methodology and Data Limitations, by Study
Additional information on sample design and data limitations for specific SOI studies can be found in the link above. More technical information is available, on request, by writing to the Director, Statistics of Income Division RAS:S, Internal Revenue Service, P.O. Box 2608, Washington, DC 20013-2608.

Statistics of Income Research in Statistical Methodology
Follow the link above to find research papers written by members of SOI covering topics such as sample design and models, panel design and analysis, data disclosure and data sharing research, and more.

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Page Last Reviewed or Updated: 23-Jan-2013

The Irs Tax Forms 1040 2010

Irs tax forms 1040 2010 4. Irs tax forms 1040 2010   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. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. Irs tax forms 1040 2010 The student loan interest deduction is taken as an adjustment to income. Irs tax forms 1040 2010 This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 Table 4-1. Irs tax forms 1040 2010 Student Loan Interest Deduction at a Glance This table summarizes the features of the student loan interest deduction. Irs tax forms 1040 2010 Do not rely on this table alone. Irs tax forms 1040 2010 Refer to the text for complete details. Irs tax forms 1040 2010 Feature   Description Maximum benefit   You can reduce your income subject to tax by up to $2,500. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 Student qualifications   The student must be: •you, your spouse, or your dependent, and  •enrolled at least half-time in a degree program. Irs tax forms 1040 2010 Time limit on deduction   You can deduct interest paid during the remaining period of your student loan. Irs tax forms 1040 2010 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). Irs tax forms 1040 2010 Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. Irs tax forms 1040 2010 It includes both required and voluntary interest payments. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 Loans from the following sources are not qualified student loans. Irs tax forms 1040 2010 A related person. Irs tax forms 1040 2010 A qualified employer plan. Irs tax forms 1040 2010 Your dependent. Irs tax forms 1040 2010   Generally, your dependent is someone who is either a: Qualifying child, or Qualifying relative. Irs tax forms 1040 2010 You can find more information about dependents in Publication 501. Irs tax forms 1040 2010 Exceptions. Irs tax forms 1040 2010   For purposes of the student loan interest deduction, there are the following exceptions to the general rules for dependents. Irs tax forms 1040 2010 An individual can be your dependent even if you are the dependent of another taxpayer. Irs tax forms 1040 2010 An individual can be your dependent even if the individual files a joint return with a spouse. Irs tax forms 1040 2010 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). Irs tax forms 1040 2010 Reasonable period of time. Irs tax forms 1040 2010   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. Irs tax forms 1040 2010   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. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010   If neither of the above situations applies, the reasonable period of time usually is determined based on all the relevant facts and circumstances. Irs tax forms 1040 2010 Academic period. Irs tax forms 1040 2010   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 tax forms 1040 2010 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 tax forms 1040 2010 Eligible student. Irs tax forms 1040 2010   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. Irs tax forms 1040 2010 Enrolled at least half-time. Irs tax forms 1040 2010   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 tax forms 1040 2010   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Irs tax forms 1040 2010 However, the standard may not be lower than any of those established by the U. Irs tax forms 1040 2010 S. Irs tax forms 1040 2010 Department of Education under the Higher Education Act of 1965. Irs tax forms 1040 2010 Related person. Irs tax forms 1040 2010   You cannot deduct interest on a loan you get from a related person. Irs tax forms 1040 2010 Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. Irs tax forms 1040 2010 ), Your lineal descendants (children, grandchildren, etc. Irs tax forms 1040 2010 ), and Certain corporations, partnerships, trusts, and exempt organizations. Irs tax forms 1040 2010 Qualified employer plan. Irs tax forms 1040 2010   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 They include amounts paid for the following items. Irs tax forms 1040 2010 Tuition and fees. Irs tax forms 1040 2010 Room and board. Irs tax forms 1040 2010 Books, supplies, and equipment. Irs tax forms 1040 2010 Other necessary expenses (such as transportation). Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 Eligible educational institution. Irs tax forms 1040 2010   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 tax forms 1040 2010 S. Irs tax forms 1040 2010 Department of Education. Irs tax forms 1040 2010 It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Irs tax forms 1040 2010   Certain educational institutions located outside the United States also participate in the U. Irs tax forms 1040 2010 S. Irs tax forms 1040 2010 Department of Education's Federal Student Aid (FSA) programs. Irs tax forms 1040 2010   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. Irs tax forms 1040 2010   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. Irs tax forms 1040 2010 The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. Irs tax forms 1040 2010    The educational institution should be able to tell you if it is an eligible educational institution. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 Employer-provided educational assistance. Irs tax forms 1040 2010 See chapter 11, Employer-Provided Educational Assistance . Irs tax forms 1040 2010 Tax-free distribution of earnings from a Coverdell education savings account (ESA). Irs tax forms 1040 2010 See Tax-Free Distributions in chapter 7, Coverdell Education Savings Account. Irs tax forms 1040 2010 Tax-free distribution of earnings from a qualified tuition program (QTP). Irs tax forms 1040 2010 See Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program. Irs tax forms 1040 2010 U. Irs tax forms 1040 2010 S. Irs tax forms 1040 2010 savings bond interest that you exclude from income because it is used to pay qualified education expenses. Irs tax forms 1040 2010 See chapter 10, Education Savings Bond Program . Irs tax forms 1040 2010 The tax-free part of scholarships and fellowships. Irs tax forms 1040 2010 See Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Irs tax forms 1040 2010 Veterans' educational assistance. Irs tax forms 1040 2010 See Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Irs tax forms 1040 2010 Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 Loan origination fee. Irs tax forms 1040 2010   In general, this is a one-time fee charged by the lender when a loan is made. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 A loan origination fee treated as interest accrues over the term of the loan. Irs tax forms 1040 2010   Loan origination fees were not required to be reported on Form 1098-E, Student Loan Interest Statement, for loans made before September 1, 2004. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 A method that results in the double deduction of the same portion of a loan origination fee would not be reasonable. Irs tax forms 1040 2010 Example. Irs tax forms 1040 2010 In August 2004, Bill took out a student loan for $16,000 to pay the tuition for his senior year of college. Irs tax forms 1040 2010 The lender charged a 3% loan origination fee ($480) that was withheld from the funds Bill received. Irs tax forms 1040 2010 Bill began making payments on his student loan in 2013. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 Bill's loan is payable in 120 equal monthly payments. Irs tax forms 1040 2010 He allocates the $480 fee equally over the total number of payments ($480 ÷ 120 months = $4 per month). Irs tax forms 1040 2010 Bill made 7 payments in 2013, so he paid $28 ($4 × 7) of interest attributable to the loan origination fee. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 Capitalized interest. Irs tax forms 1040 2010   This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. Irs tax forms 1040 2010 Capitalized interest is treated as interest for tax purposes and is deductible as payments of principal are made on the loan. Irs tax forms 1040 2010 No deduction for capitalized interest is allowed in a year in which no loan payments were made. Irs tax forms 1040 2010 Interest on revolving lines of credit. Irs tax forms 1040 2010   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. Irs tax forms 1040 2010 See Qualified Education Expenses , earlier. Irs tax forms 1040 2010 Interest on refinanced student loans. Irs tax forms 1040 2010   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. Irs tax forms 1040 2010    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. Irs tax forms 1040 2010 Voluntary interest payments. Irs tax forms 1040 2010   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. Irs tax forms 1040 2010 Example. Irs tax forms 1040 2010 The payments on Roger's student loan were scheduled to begin in June 2012, 6 months after he graduated from college. Irs tax forms 1040 2010 He began making payments as required. Irs tax forms 1040 2010 In September 2013, Roger enrolled in graduate school on a full-time basis. Irs tax forms 1040 2010 He applied for and was granted deferment of his loan payments while in graduate school. Irs tax forms 1040 2010 Wanting to pay down his student loan as much as possible, he made loan payments in October and November 2013. Irs tax forms 1040 2010 Even though these were voluntary (not required) payments, Roger can deduct the interest paid in October and November. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 Example. Irs tax forms 1040 2010 In August 2012, Peg took out a $10,000 student loan to pay the tuition for her senior year of college. Irs tax forms 1040 2010 The lender charged a 3% loan origination fee ($300) that was withheld from the funds Peg received. Irs tax forms 1040 2010 The interest (5% simple) on this loan accrued while she completed her senior year and for 6 months after she graduated. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 The loan is payable over 60 months, with a payment of $200. Irs tax forms 1040 2010 51 due on the first of each month, beginning November 2013. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 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). Irs tax forms 1040 2010 Payment Date   Payment   Stated Interest   Principal November 2013   $200. Irs tax forms 1040 2010 51   $44. Irs tax forms 1040 2010 27   $156. Irs tax forms 1040 2010 24 December 2013   $200. Irs tax forms 1040 2010 51   $43. Irs tax forms 1040 2010 62   $156. Irs tax forms 1040 2010 89 Totals   $401. Irs tax forms 1040 2010 02   $87. Irs tax forms 1040 2010 89   $313. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 89. Irs tax forms 1040 2010 Next, she allocates the loan origination fee over the term of the loan ($300 ÷ 60 months = $5 per month). Irs tax forms 1040 2010 A total of $10 ($5 of each of the two principal payments) should be treated as interest for tax purposes. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 Assuming that Peg qualifies to take the student loan interest deduction, she can deduct $401. Irs tax forms 1040 2010 02 ($87. Irs tax forms 1040 2010 89 + $10 + $303. Irs tax forms 1040 2010 13). Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 She also will apply the remaining amount of capitalized interest ($625 − $303. Irs tax forms 1040 2010 13 = $321. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 Do Not Include As Interest You cannot claim a student loan interest deduction for any of the following items. Irs tax forms 1040 2010 Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. Irs tax forms 1040 2010 Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 For more information, see Student Loan Repayment Assistance in chapter 5, Student Loan Cancellations and Repayment Assistance. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. Irs tax forms 1040 2010 Your filing status is any filing status except married filing separately. Irs tax forms 1040 2010 No one else is claiming an exemption for you on his or her tax return. Irs tax forms 1040 2010 You are legally obligated to pay interest on a qualified student loan. Irs tax forms 1040 2010 You paid interest on a qualified student loan. Irs tax forms 1040 2010 Claiming an exemption for you. Irs tax forms 1040 2010   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. Irs tax forms 1040 2010 Example 1. Irs tax forms 1040 2010 During 2013, Josh paid $600 interest on his qualified student loan. Irs tax forms 1040 2010 Only he is legally obligated to make the payments. Irs tax forms 1040 2010 No one claimed an exemption for Josh for 2013. Irs tax forms 1040 2010 Assuming all other requirements are met, Josh can deduct the $600 of interest he paid on his 2013 Form 1040 or 1040A. Irs tax forms 1040 2010 Example 2. Irs tax forms 1040 2010 During 2013, Jo paid $1,100 interest on her qualified student loan. Irs tax forms 1040 2010 Only she is legally obligated to make the payments. Irs tax forms 1040 2010 Jo's parents claimed an exemption for her on their 2013 tax return. Irs tax forms 1040 2010 In this case, neither Jo nor her parents may deduct the student loan interest Jo paid in 2013. Irs tax forms 1040 2010 Interest paid by others. Irs tax forms 1040 2010   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. Irs tax forms 1040 2010 Example 1. Irs tax forms 1040 2010 Darla obtained a qualified student loan to attend college. Irs tax forms 1040 2010 After Darla's graduation from college, she worked as an intern for a nonprofit organization. Irs tax forms 1040 2010 As part of the internship program, the nonprofit organization made an interest payment on behalf of Darla. Irs tax forms 1040 2010 This payment was treated as additional compensation and reported in box 1 of her Form W-2. Irs tax forms 1040 2010 Assuming all other qualifications are met, Darla can deduct this payment of interest on her tax return. Irs tax forms 1040 2010 Example 2. Irs tax forms 1040 2010 Ethan obtained a qualified student loan to attend college. Irs tax forms 1040 2010 After graduating from college, the first monthly payment on his loan was due in December. Irs tax forms 1040 2010 As a gift, Ethan's mother made this payment for him. Irs tax forms 1040 2010 No one is claiming a dependency exemption for Ethan on his or her tax return. Irs tax forms 1040 2010 Assuming all other qualifications are met, Ethan can deduct this payment of interest on his tax return. Irs tax forms 1040 2010 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). Irs tax forms 1040 2010 Figuring the Deduction Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. Irs tax forms 1040 2010 However, the amount determined above may be gradually reduced (phased out) or eliminated based on your filing status and MAGI as explained below. Irs tax forms 1040 2010 You can use Worksheet 4-1. Irs tax forms 1040 2010 Student Loan Interest Deduction Worksheet (at the end of this chapter) to figure both your MAGI and your deduction. Irs tax forms 1040 2010 Form 1098-E. Irs tax forms 1040 2010   To help you figure your student loan interest deduction, you should receive Form 1098-E. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010   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. Irs tax forms 1040 2010 Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. Irs tax forms 1040 2010 However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. Irs tax forms 1040 2010 See Allocating Payments Between Interest and Principal , earlier. Irs tax forms 1040 2010    The lender may ask for a completed Form W-9S, or similar statement to obtain the borrower's name, address, and taxpayer identification number. Irs tax forms 1040 2010 The form may also be used by the borrower to certify that the student loan was incurred solely to pay for qualified education expenses. Irs tax forms 1040 2010 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). Irs tax forms 1040 2010 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). Irs tax forms 1040 2010 Modified adjusted gross income (MAGI). Irs tax forms 1040 2010   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. Irs tax forms 1040 2010 However, as discussed below, there may be other modifications. Irs tax forms 1040 2010 Table 4-2 shows how the amount of your MAGI can affect your student loan interest deduction. Irs tax forms 1040 2010 Table 4-2. Irs tax forms 1040 2010 Effect of MAGI on Student Loan Interest Deduction IF your filing status is. Irs tax forms 1040 2010 . Irs tax forms 1040 2010 . Irs tax forms 1040 2010 AND your MAGI is. Irs tax forms 1040 2010 . Irs tax forms 1040 2010 . Irs tax forms 1040 2010 THEN your student loan interest deduction is. Irs tax forms 1040 2010 . Irs tax forms 1040 2010 . Irs tax forms 1040 2010 single,  head of household, or qualifying widow(er) not more than $60,000 not affected by the phaseout. Irs tax forms 1040 2010 more than $60,000  but less than $75,000 reduced because of the phaseout. Irs tax forms 1040 2010 $75,000 or more eliminated by the phaseout. Irs tax forms 1040 2010 married filing joint return not more than $125,000 not affected by the phaseout. Irs tax forms 1040 2010 more than $125,000 but less than $155,000 reduced because of the phaseout. Irs tax forms 1040 2010 $155,000 or more eliminated by the phaseout. Irs tax forms 1040 2010 MAGI when using Form 1040A. Irs tax forms 1040 2010   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). Irs tax forms 1040 2010 MAGI when using Form 1040. Irs tax forms 1040 2010   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. Irs tax forms 1040 2010 MAGI when using Form 1040NR. Irs tax forms 1040 2010   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). Irs tax forms 1040 2010 MAGI when using Form 1040NR-EZ. Irs tax forms 1040 2010   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). Irs tax forms 1040 2010 Phaseout. Irs tax forms 1040 2010   If your MAGI is within the range of incomes where the credit must be reduced, you must figure your reduced deduction. Irs tax forms 1040 2010 To figure the phaseout, multiply your interest deduction (before the phaseout) by a fraction. Irs tax forms 1040 2010 The numerator is your MAGI minus $60,000 ($125,000 in the case of a joint return). Irs tax forms 1040 2010 The denominator is $15,000 ($30,000 in the case of a joint return). Irs tax forms 1040 2010 Subtract the result from your deduction (before the phaseout) to give you the amount you can deduct. Irs tax forms 1040 2010 Example 1. Irs tax forms 1040 2010 During 2013 you paid $800 interest on a qualified student loan. Irs tax forms 1040 2010 Your 2013 MAGI is $145,000 and you are filing a joint return. Irs tax forms 1040 2010 You must reduce your deduction by $533, figured as follows. Irs tax forms 1040 2010   $800 × $145,000 − $125,000  $30,000 = $533   Your reduced student loan interest deduction is $267 ($800 − $533). Irs tax forms 1040 2010 Example 2. Irs tax forms 1040 2010 The facts are the same as in Example 1 except that you paid $2,750 interest. Irs tax forms 1040 2010 Your maximum deduction for 2013 is $2,500. Irs tax forms 1040 2010 You must reduce your maximum deduction by $1,667, figured as follows. Irs tax forms 1040 2010   $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). Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 Student Loan Interest Deduction Worksheet at the end of this chapter. Irs tax forms 1040 2010 Claiming the Deduction The student loan interest deduction is an adjustment to income. Irs tax forms 1040 2010 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). Irs tax forms 1040 2010 Worksheet 4-1. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 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. Irs tax forms 1040 2010 1. Irs tax forms 1040 2010 Enter the total interest you paid in 2013 on qualified student loans. Irs tax forms 1040 2010 Do not enter  more than $2,500 1. Irs tax forms 1040 2010   2. Irs tax forms 1040 2010 Enter the amount from Form 1040, line 22 2. Irs tax forms 1040 2010       3. Irs tax forms 1040 2010 Enter the total of the amounts from Form 1040,  lines 23 through 32 3. Irs tax forms 1040 2010           4. Irs tax forms 1040 2010 Enter the total of any amounts entered on the dotted line next to Form 1040, line 36 4. Irs tax forms 1040 2010           5. Irs tax forms 1040 2010 Add lines 3 and 4 5. Irs tax forms 1040 2010       6. Irs tax forms 1040 2010 Subtract line 5 from line 2 6. Irs tax forms 1040 2010       7. Irs tax forms 1040 2010 Enter any foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18) 7. Irs tax forms 1040 2010       8. Irs tax forms 1040 2010 Enter any foreign housing deduction (Form 2555, line 50) 8. Irs tax forms 1040 2010       9. Irs tax forms 1040 2010 Enter the amount of income from Puerto Rico you are excluding 9. Irs tax forms 1040 2010       10. Irs tax forms 1040 2010 Enter the amount of income from American Samoa  you are excluding (Form 4563, line 15) 10. Irs tax forms 1040 2010       11. Irs tax forms 1040 2010 Add lines 6 through 10. Irs tax forms 1040 2010 This is your modified adjusted gross income 11. Irs tax forms 1040 2010   12. Irs tax forms 1040 2010 Enter the amount shown below for your filing status 12. Irs tax forms 1040 2010     •Single, head of household, or qualifying widow(er)—$60,000       •Married filing jointly—$125,000     13. Irs tax forms 1040 2010 Is the amount on line 11 more than the amount on line 12?       □ No. Irs tax forms 1040 2010 Skip lines 13 and 14, enter -0- on line 15, and go to line 16. Irs tax forms 1040 2010       □ Yes. Irs tax forms 1040 2010 Subtract line 12 from line 11 13. Irs tax forms 1040 2010   14. Irs tax forms 1040 2010 Divide line 13 by $15,000 ($30,000 if married filing jointly). Irs tax forms 1040 2010 Enter the result as a decimal  (rounded to at least three places). Irs tax forms 1040 2010 If the result is 1. Irs tax forms 1040 2010 000 or more, enter 1. Irs tax forms 1040 2010 000 14. Irs tax forms 1040 2010 . Irs tax forms 1040 2010 15. Irs tax forms 1040 2010 Multiply line 1 by line 14 15. Irs tax forms 1040 2010   16. Irs tax forms 1040 2010 Student loan interest deduction. Irs tax forms 1040 2010 Subtract line 15 from line 1. Irs tax forms 1040 2010 Enter the result here  and on Form 1040, line 33. Irs tax forms 1040 2010 Do not include this amount in figuring any other  deduction on your return (such as on Schedule A, C, E, etc. Irs tax forms 1040 2010 ) 16. Irs tax forms 1040 2010   Prev  Up  Next   Home   More Online Publications