File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Tax Correction Form

Where File Amended 1040xAmend Taxes TurbotaxTax 2012Filing 1040xFree State Tax Efile For Low IncomeHow To File 2007 Taxes Online FreeIncome Tax PreparationForm 1040x 20131040nr Tax ReturnWww Irs Gov Form1040xIrs Gov Free State File1040ez CalculatorFree 1040ez FormsStates Without Income TaxFile State Return FreeAmend My Taxes1040 EzBlank Printable 1040ez FormH&r Block Taxes OnlineIrs Ez Form 2011Filemy2010taxreturnforfreeOnline Tax Forms 1040ezFree E File 2011 TaxesIrs Amendment FormsFile 2012 Tax Return OnlineTax Form 1040ez InstructionsFiling Taxes StudentH&r Block FreeWww Myfreetaxes Com McrsvpH&r Block At Home DeluxeIf I Am Unemployed Do I File TaxesWhere Can I Find State Tax Forms1040ez Worksheet Line FFree Electronic Tax Filing2009 Turbo TaxFreefilefillableforms ComHow To File An Amended Tax Return For 2012Www Irs Gov Eitc1040a Instructions2012 Tax Return Filing

Tax Correction Form

Tax correction form Publication 526 - Main Content Table of Contents Organizations That Qualify To Receive Deductible ContributionsTypes of Qualified Organizations Contributions You Can DeductContributions From Which You Benefit Expenses Paid for Student Living With You Out-of-Pocket Expenses in Giving Services Expenses of Whaling Captains Contributions You Cannot DeductContributions to Individuals Contributions to Nonqualified Organizations Contributions From Which You Benefit Value of Time or Services Personal Expenses Appraisal Fees Contributions to Donor-Advised Funds Partial Interest in Property Contributions of PropertyContributions Subject to Special Rules Determining Fair Market Value Giving Property That Has Decreased in Value Giving Property That Has Increased in Value Penalty When To DeductChecks. Tax correction form Text message. Tax correction form Credit card. Tax correction form Pay-by-phone account. Tax correction form Stock certificate. Tax correction form Promissory note. Tax correction form Option. Tax correction form Borrowed funds. Tax correction form Conditional gift. Tax correction form Limits on Deductions50% Limit 30% Limit Special 30% Limit for Capital Gain Property 20% Limit Special 50% Limit for Qualified Conservation Contributions How To Figure Your Deduction When Limits Apply Records To KeepCash Contributions Noncash Contributions Out-of-Pocket Expenses How To ReportReporting expenses for student living with you. Tax correction form Total deduction over $500. Tax correction form Deduction over $5,000 for one item. Tax correction form Vehicle donations. Tax correction form Clothing and household items not in good used condition. Tax correction form Easement on building in historic district. Tax correction form Deduction over $500,000. Tax correction form How To Get Tax HelpLow Income Taxpayer Clinics Organizations That Qualify To Receive Deductible Contributions You can deduct your contributions only if you make them to a qualified organization. Tax correction form Most organizations, other than churches and governments, must apply to the IRS to become a qualified organization. Tax correction form How to check whether an organization can receive deductible charitable contributions. Tax correction form   You can ask any organization whether it is a qualified organization, and most will be able to tell you. Tax correction form Or go to IRS. Tax correction form gov. Tax correction form Click on “Tools” and then on “Exempt Organizations Select Check” (www. Tax correction form irs. Tax correction form gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check). Tax correction form This online tool will enable you to search for qualified organizations. Tax correction form You can also call the IRS to find out if an organization is qualified. Tax correction form Call 1-877-829-5500. Tax correction form People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 1-800-829-4059. Tax correction form Deaf or hard of hearing individuals can also contact the IRS through relay services such as the Federal Relay Service at www. Tax correction form gsa. Tax correction form gov/fedrelay. Tax correction form Types of Qualified Organizations Generally, only the following types of organizations can be qualified organizations. Tax correction form A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). Tax correction form It must, however, be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Tax correction form Certain organizations that foster national or international amateur sports competition also qualify. Tax correction form War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico). Tax correction form Domestic fraternal societies, orders, and associations operating under the lodge system. Tax correction form (Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Tax correction form ) Certain nonprofit cemetery companies or corporations. Tax correction form (Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum crypt. Tax correction form ) The United States or any state, the District of Columbia, a U. Tax correction form S. Tax correction form possession (including Puerto Rico), a political subdivision of a state or U. Tax correction form S. Tax correction form possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions. Tax correction form (Your contribution to this type of organization is deductible only if it is to be used solely for public purposes. Tax correction form ) Example 1. Tax correction form You contribute cash to your city's police department to be used as a reward for information about a crime. Tax correction form The city police department is a qualified organization, and your contribution is for a public purpose. Tax correction form You can deduct your contribution. Tax correction form Example 2. Tax correction form You make a voluntary contribution to the social security trust fund, not earmarked for a specific account. Tax correction form Because the trust fund is part of the U. Tax correction form S. Tax correction form Government, you contributed to a qualified organization. Tax correction form You can deduct your contribution. Tax correction form Examples. Tax correction form   The following list gives some examples of qualified organizations. Tax correction form Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations. Tax correction form Most nonprofit charitable organizations such as the American Red Cross and the United Way. Tax correction form Most nonprofit educational organizations, including the Boy Scouts of America, Girl Scouts of America, colleges, and museums. Tax correction form This also includes nonprofit daycare centers that provide childcare to the general public if substantially all the childcare is provided to enable parents and guardians to be gainfully employed. Tax correction form However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct . Tax correction form Nonprofit hospitals and medical research organizations. Tax correction form Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs. Tax correction form Nonprofit volunteer fire companies. Tax correction form Nonprofit organizations that develop and maintain public parks and recreation facilities. Tax correction form Civil defense organizations. Tax correction form Canadian charities. Tax correction form   You may be able to deduct contributions to certain Canadian charitable organizations covered under an income tax treaty with Canada. Tax correction form To deduct your contribution to a Canadian charity, you generally must have income from sources in Canada. Tax correction form See Publication 597, Information on the United States-Canada Income Tax Treaty, for information on how to figure your deduction. Tax correction form Mexican charities. Tax correction form   Under the U. Tax correction form S. Tax correction form -Mexico income tax treaty, a contribution to a Mexican charitable organization may be deductible, but only if and to the extent the contribution would have been treated as a charitable contribution to a public charity created or organized under U. Tax correction form S. Tax correction form law. Tax correction form To deduct your contribution to a Mexican charity, you must have income from sources in Mexico. Tax correction form The limits described in Limits on Deductions , later, apply and are figured using your income from Mexican sources. Tax correction form Israeli charities. Tax correction form   Under the U. Tax correction form S. Tax correction form -Israel income tax treaty, a contribution to an Israeli charitable organization is deductible if and to the extent the contribution would have been treated as a charitable contribution if the organization had been created or organized under U. Tax correction form S. Tax correction form law. Tax correction form To deduct your contribution to an Israeli charity, you must have income from sources in Israel. Tax correction form The limits described in Limits on Deductions , later, apply. Tax correction form The deduction is also limited to 25% of your adjusted gross income from Israeli sources. Tax correction form Contributions You Can Deduct Generally, you can deduct contributions of money or property you make to, or for the use of, a qualified organization. Tax correction form A contribution is “for the use of” a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement. Tax correction form The contributions must be made to a qualified organization and not set aside for use by a specific person. Tax correction form If you give property to a qualified organization, you generally can deduct the fair market value of the property at the time of the contribution. Tax correction form See Contributions of Property , later. Tax correction form Your deduction for charitable contributions generally cannot be more than 50% of your adjusted gross income (AGI), but in some cases 20% and 30% limits may apply. Tax correction form In addition, the total of your charitable contributions deduction and certain other itemized deductions may be limited. Tax correction form See Limits on Deductions , later. Tax correction form Table 1 in this publication gives examples of contributions you can and cannot deduct. Tax correction form Contributions From Which You Benefit If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. Tax correction form Also see Contributions From Which You Benefit under Contributions You Cannot Deduct, later. Tax correction form If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. Tax correction form For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Tax correction form Example 1. Tax correction form You pay $65 for a ticket to a dinner-dance at a church. Tax correction form Your entire $65 payment goes to the church. Tax correction form The ticket to the dinner-dance has a fair market value of $25. Tax correction form When you buy your ticket, you know its value is less than your payment. Tax correction form To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from your total payment ($65). Tax correction form You can deduct $40 as a charitable contribution to the church. Tax correction form Example 2. Tax correction form At a fundraising auction conducted by a charity, you pay $600 for a week's stay at a beach house. Tax correction form The amount you pay is no more than the fair rental value. Tax correction form You have not made a deductible charitable contribution. Tax correction form Athletic events. Tax correction form   If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic event in the athletic stadium of the college or university, you can deduct 80% of the payment as a charitable contribution. Tax correction form   If any part of your payment is for tickets (rather than the right to buy tickets), that part is not deductible. Tax correction form Subtract the price of the tickets from your payment. Tax correction form You can deduct 80% of the remaining amount as a charitable contribution. Tax correction form Example 1. Tax correction form You pay $300 a year for membership in a university's athletic scholarship program. Tax correction form The only benefit of membership is that you have the right to buy one season ticket for a seat in a designated area of the stadium at the university's home football games. Tax correction form You can deduct $240 (80% of $300) as a charitable contribution. Tax correction form Example 2. Tax correction form The facts are the same as in Example 1 except your $300 payment includes the purchase of one season ticket for the stated ticket price of $120. Tax correction form You must subtract the usual price of a ticket ($120) from your $300 payment. Tax correction form The result is $180. Tax correction form Your deductible charitable contribution is $144 (80% of $180). Tax correction form Charity benefit events. Tax correction form   If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive. Tax correction form   If there is an established charge for the event, that charge is the value of your benefit. Tax correction form If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit. Tax correction form Whether you use the tickets or other privileges has no effect on the amount you can deduct. Tax correction form However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount you paid for the ticket. Tax correction form    Even if the ticket or other evidence of payment indicates that the payment is a “contribution,” this does not mean you can deduct the entire amount. Tax correction form If the ticket shows the price of admission and the amount of the contribution, you can deduct the contribution amount. Tax correction form Example. Tax correction form You pay $40 to see a special showing of a movie for the benefit of a qualified organization. Tax correction form Printed on the ticket is “Contribution–$40. Tax correction form ” If the regular price for the movie is $8, your contribution is $32 ($40 payment − $8 regular price). Tax correction form Membership fees or dues. Tax correction form   You may be able to deduct membership fees or dues you pay to a qualified organization. Tax correction form However, you can deduct only the amount that is more than the value of the benefits you receive. Tax correction form   You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations. Tax correction form They are not qualified organizations. Tax correction form Certain membership benefits can be disregarded. Tax correction form   Both you and the organization can disregard the following membership benefits if you get them in return for an annual payment of $75 or less. Tax correction form Any rights or privileges, other than those discussed under Athletic events , earlier, that you can use frequently while you are a member, such as: Free or discounted admission to the organization's facilities or events, Free or discounted parking, Preferred access to goods or services, and Discounts on the purchase of goods and services. Tax correction form Admission, while you are a member, to events open only to members of the organization if the organization reasonably projects that the cost per person (excluding any allocated overhead) is not more than $10. Tax correction form 20. Tax correction form Token items. Tax correction form   You do not have to reduce your contribution by the value of any benefit you receive if both of the following are true. Tax correction form You receive only a small item or other benefit of token value. Tax correction form The qualified organization correctly determines that the value of the item or benefit you received is not substantial and informs you that you can deduct your payment in full. Tax correction form The organization determines whether the value of an item or benefit is substantial by using Revenue Procedures 90-12 and 92-49 and the inflation adjustment in Revenue Procedure 2012–41. Tax correction form Written statement. Tax correction form   A qualified organization must give you a written statement if you make a payment of more than $75 that is partly a contribution and partly for goods or services. Tax correction form The statement must say you can deduct only the amount of your payment that is more than the value of the goods or services you received. Tax correction form It must also give you a good faith estimate of the value of those goods or services. Tax correction form   The organization can give you the statement either when it solicits or when it receives the payment from you. Tax correction form Exception. Tax correction form   An organization will not have to give you this statement if one of the following is true. Tax correction form The organization is: A governmental organization described in (5) under Types of Qualified Organizations , earlier, or An organization formed only for religious purposes, and the only benefit you receive is an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in commercial transactions outside the donative context. Tax correction form You receive only items whose value is not substantial as described under Token items , earlier. Tax correction form You receive only membership benefits that can be disregarded, as described under Membership fees or dues , earlier. Tax correction form Expenses Paid for Student Living With You You may be able to deduct some expenses of having a student live with you. Tax correction form You can deduct qualifying expenses for a foreign or American student who: Lives in your home under a written agreement between you and a qualified organization (defined later) as part of a program of the organization to provide educational opportunities for the student, Is not your relative (defined later) or dependent (also defined later), and Is a full-time student in the twelfth or any lower grade at a school in the United States. Tax correction form You can deduct up to $50 a month for each full calendar month the student lives with you. Tax correction form Any month when conditions (1) through (3) above are met for 15 or more days counts as a full month. Tax correction form Qualified organization. Tax correction form   For these purposes, a qualified organization can be any of the organizations described earlier under Types of Qualified Organizations , except those in (4) and (5). Tax correction form For example, if you are providing a home for a student as part of a state or local government program, you cannot deduct your expenses as charitable contributions. Tax correction form But see Foster parents under Out-of-Pocket Expenses in Giving Services, later, if you provide the home as a foster parent. Tax correction form Relative. Tax correction form   The term “relative” means any of the following persons. Tax correction form Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). Tax correction form A legally adopted child is considered your child. Tax correction form Your brother, sister, half brother, half sister, stepbrother, or stepsister. Tax correction form Your father, mother, grandparent, or other direct ancestor. Tax correction form Your stepfather or stepmother. Tax correction form A son or daughter of your brother or sister. Tax correction form A brother or sister of your father or mother. Tax correction form Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. Tax correction form Dependent. Tax correction form   For this purpose, the term “dependent” means: A person you can claim as a dependent, or A person you could have claimed as a dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Tax correction form    Foreign students brought to this country under a qualified international education exchange program and placed in American homes for a temporary period generally are not U. Tax correction form S. Tax correction form residents and cannot be claimed as dependents. Tax correction form Qualifying expenses. Tax correction form   You may be able to deduct the cost of books, tuition, food, clothing, transportation, medical and dental care, entertainment, and other amounts you actually spend for the well-being of the student. Tax correction form Expenses that do not qualify. Tax correction form   You cannot deduct depreciation on your home, the fair market value of lodging, and similar items not considered amounts actually spent by you. Tax correction form Nor can you deduct general household expenses, such as taxes, insurance, and repairs. Tax correction form Reimbursed expenses. Tax correction form   In most cases, you cannot claim a charitable contribution deduction if you are compensated or reimbursed for any part of the costs of having a student live with you. Tax correction form However, you may be able to claim a charitable contribution deduction for the unreimbursed portion of your expenses if you are reimbursed only for an extraordinary or one-time item, such as a hospital bill or vacation trip, you paid in advance at the request of the student's parents or the sponsoring organization. Tax correction form Mutual exchange program. Tax correction form   You cannot deduct the costs of a foreign student living in your home under a mutual exchange program through which your child will live with a family in a foreign country. Tax correction form Reporting expenses. Tax correction form   For a list of what you must file with your return if you deduct expenses for a student living with you, see Reporting expenses for student living with you under How To Report, later. Tax correction form Out-of-Pocket Expenses in Giving Services Table 2. Tax correction form Volunteers' Questions and Answers If you volunteer for a qualified organization, the following questions and answers may apply to you. Tax correction form All of the rules explained in this publication also apply. Tax correction form See, in particular, Out-of-Pocket Expenses in Giving Services . Tax correction form Question Answer I volunteer 6 hours a week in the office of a qualified organization. Tax correction form The receptionist is paid $10 an hour for the same work. Tax correction form Can I deduct $60 a week for my time? No, you cannot deduct the value of your time or services. Tax correction form  The office is 30 miles from my home. Tax correction form Can I deduct any of my car expenses for these trips? Yes, you can deduct the costs of gas and oil that are directly related to getting to and from the place where you volunteer. Tax correction form If you do not want to figure your actual costs, you can deduct 14 cents for each mile. Tax correction form I volunteer as a Red Cross nurse's aide at a hospital. Tax correction form Can I deduct the cost of the uniforms I must wear? Yes, you can deduct the cost of buying and cleaning your uniforms if the hospital is a qualified organization, the uniforms are not suitable for everyday use, and you must wear them when volunteering. Tax correction form I pay a babysitter to watch my children while I volunteer for a qualified organization. Tax correction form Can I deduct these costs? No, you cannot deduct payments for childcare expenses as a charitable contribution, even if you would be unable to volunteer without childcare. Tax correction form (If you have childcare expenses so you can work for pay, see Publication 503, Child and Dependent Care Expenses. Tax correction form ) Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. Tax correction form The amounts must be: Unreimbursed, Directly connected with the services, Expenses you had only because of the services you gave, and Not personal, living, or family expenses. Tax correction form Table 2 contains questions and answers that apply to some individuals who volunteer their services. Tax correction form Underprivileged youths selected by charity. Tax correction form   You can deduct reasonable unreimbursed out-of-pocket expenses you pay to allow underprivileged youths to attend athletic events, movies, or dinners. Tax correction form The youths must be selected by a charitable organization whose goal is to reduce juvenile delinquency. Tax correction form Your own similar expenses in accompanying the youths are not deductible. Tax correction form Conventions. Tax correction form   If a qualified organization selects you to attend a convention as its representative, you can deduct your unreimbursed expenses for travel, including reasonable amounts for meals and lodging, while away from home overnight for the convention. Tax correction form However, see Travel , later. Tax correction form   You cannot deduct personal expenses for sightseeing, fishing parties, theater tickets, or nightclubs. Tax correction form You also cannot deduct travel, meals and lodging, and other expenses for your spouse or children. Tax correction form   You cannot deduct your travel expenses in attending a church convention if you go only as a member of your church rather than as a chosen representative. Tax correction form You can, however, deduct unreimbursed expenses that are directly connected with giving services for your church during the convention. Tax correction form Uniforms. Tax correction form   You can deduct the cost and upkeep of uniforms that are not suitable for everyday use and that you must wear while performing donated services for a charitable organization. Tax correction form Foster parents. Tax correction form   You may be able to deduct as a charitable contribution some of the costs of being a foster parent (foster care provider) if you have no profit motive in providing the foster care and are not, in fact, making a profit. Tax correction form A qualified organization must select the individuals you take into your home for foster care. Tax correction form   You can deduct expenses that meet both of the following requirements. Tax correction form They are unreimbursed out-of-pocket expenses to feed, clothe, and care for the foster child. Tax correction form They are incurred primarily to benefit the qualified organization. Tax correction form   Unreimbursed expenses that you cannot deduct as charitable contributions may be considered support provided by you in determining whether you can claim the foster child as a dependent. Tax correction form For details, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Tax correction form Example. Tax correction form You cared for a foster child because you wanted to adopt her, not to benefit the agency that placed her in your home. Tax correction form Your unreimbursed expenses are not deductible as charitable contributions. Tax correction form Church deacon. Tax correction form   You can deduct as a charitable contribution any unreimbursed expenses you have while in a permanent diaconate program established by your church. Tax correction form These expenses include the cost of vestments, books, and transportation required in order to serve in the program as either a deacon candidate or an ordained deacon. Tax correction form Car expenses. Tax correction form   You can deduct as a charitable contribution any unreimbursed out-of-pocket expenses, such as the cost of gas and oil, directly related to the use of your car in giving services to a charitable organization. Tax correction form You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance. Tax correction form   If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution. Tax correction form   You can deduct parking fees and tolls whether you use your actual expenses or the standard mileage rate. Tax correction form   You must keep reliable written records of your car expenses. Tax correction form For more information, see Car expenses under Records To Keep, later. Tax correction form Travel. Tax correction form   Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. Tax correction form This applies whether you pay the expenses directly or indirectly. Tax correction form You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses. Tax correction form   The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. Tax correction form Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip. Tax correction form However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel expenses. Tax correction form Example 1. Tax correction form You are a troop leader for a tax-exempt youth group and you take the group on a camping trip. Tax correction form You are responsible for overseeing the setup of the camp and for providing adult supervision for other activities during the entire trip. Tax correction form You participate in the activities of the group and enjoy your time with them. Tax correction form You oversee the breaking of camp and you transport the group home. Tax correction form You can deduct your travel expenses. Tax correction form Example 2. Tax correction form You sail from one island to another and spend 8 hours a day counting whales and other forms of marine life. Tax correction form The project is sponsored by a charitable organization. Tax correction form In most circumstances, you cannot deduct your expenses. Tax correction form Example 3. Tax correction form You work for several hours each morning on an archeological dig sponsored by a charitable organization. Tax correction form The rest of the day is free for recreation and sightseeing. Tax correction form You cannot take a charitable contribution deduction even though you work very hard during those few hours. Tax correction form Example 4. Tax correction form You spend the entire day attending a charitable organization's regional meeting as a chosen representative. Tax correction form In the evening you go to the theater. Tax correction form You can claim your travel expenses as charitable contributions, but you cannot claim the cost of your evening at the theater. Tax correction form Daily allowance (per diem). Tax correction form   If you provide services for a charitable organization and receive a daily allowance to cover reasonable travel expenses, including meals and lodging while away from home overnight, you must include in income any part of the allowance that is more than your deductible travel expenses. Tax correction form You may be able to deduct any necessary travel expenses that are more than the allowance. Tax correction form Deductible travel expenses. Tax correction form   These include: Air, rail, and bus transportation, Out-of-pocket expenses for your car, Taxi fares or other costs of transportation between the airport or station and your hotel, Lodging costs, and The cost of meals. Tax correction form Because these travel expenses are not business-related, they are not subject to the same limits as business related expenses. Tax correction form For information on business travel expenses, see Travel in Publication 463, Travel, Entertainment, Gift, and Car Expenses. Tax correction form Expenses of Whaling Captains You may be able to deduct as a charitable contribution any reasonable and necessary whaling expenses you pay during the year to carry out sanctioned whaling activities. Tax correction form The deduction is limited to $10,000 a year. Tax correction form To claim the deduction, you must be recognized by the Alaska Eskimo Whaling Commission as a whaling captain charged with the responsibility of maintaining and carrying out sanctioned whaling activities. Tax correction form Sanctioned whaling activities are subsistence bowhead whale hunting activities conducted under the management plan of the Alaska Eskimo Whaling Commission. Tax correction form Whaling expenses include expenses for: Acquiring and maintaining whaling boats, weapons, and gear used in sanctioned whaling activities, Supplying food for the crew and other provisions for carrying out these activities, and Storing and distributing the catch from these activities. Tax correction form You must keep records showing the time, place, date, amount, and nature of the expenses. Tax correction form For details, see Revenue Procedure 2006-50, which is on page 944 of Internal Revenue Bulletin 2006-47 at www. Tax correction form irs. Tax correction form gov/pub/irs-irbs/irb06-47. Tax correction form pdf. Tax correction form Contributions You Cannot Deduct There are some contributions you cannot deduct and others you can deduct only in part. Tax correction form You cannot deduct as a charitable contribution: A contribution to a specific individual, A contribution to a nonqualified organization, The part of a contribution from which you receive or expect to receive a benefit, The value of your time or services, Your personal expenses, A qualified charitable distribution from an individual retirement arrangement (IRA), Appraisal fees, Certain contributions to donor-advised funds, or Certain contributions of partial interests in property. Tax correction form Detailed discussions of these items follow. Tax correction form Contributions to Individuals You cannot deduct contributions to specific individuals, including the following. Tax correction form Contributions to fraternal societies made for the purpose of paying medical or burial expenses of members. Tax correction form Contributions to individuals who are needy or worthy. Tax correction form You cannot deduct these contributions even if you make them to a qualified organization for the benefit of a specific person. Tax correction form But you can deduct a contribution to a qualified organization that helps needy or worthy individuals if you do not indicate that your contribution is for a specific person. Tax correction form Example. Tax correction form You can deduct contributions to a qualified organization for flood relief, hurricane relief, or other disaster relief. Tax correction form However, you cannot deduct contributions earmarked for relief of a particular individual or family. Tax correction form Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses. Tax correction form Expenses you paid for another person who provided services to a qualified organization. Tax correction form Example. Tax correction form Your son does missionary work. Tax correction form You pay his expenses. Tax correction form You cannot claim a deduction for your son's unreimbursed expenses related to his contribution of services. Tax correction form Payments to a hospital that are for a specific patient's care or for services for a specific patient. Tax correction form You cannot deduct these payments even if the hospital is operated by a city, state, or other qualified organization. Tax correction form Contributions to Nonqualified Organizations You cannot deduct contributions to organizations that are not qualified to receive tax-deductible contributions, including the following. Tax correction form Certain state bar associations if: The bar is not a political subdivision of a state, The bar has private, as well as public, purposes, such as promoting the professional interests of members, and Your contribution is unrestricted and can be used for private purposes. Tax correction form Chambers of commerce and other business leagues or organizations. Tax correction form Civic leagues and associations. Tax correction form Communist organizations. Tax correction form Country clubs and other social clubs. Tax correction form Foreign organizations other than certain Canadian, Israeli, or Mexican charitable organizations. Tax correction form (See Canadian charities , Mexican charities , and Israeli charities under Organizations That Qualify To Receive Deductible Contributions, earlier. Tax correction form ) Also, you cannot deduct a contribution you made to any qualifying organization if the contribution is earmarked to go to a foreign organization. Tax correction form However, certain contributions to a qualified organization for use in a program conducted by a foreign charity may be deductible as long as they are not earmarked to go to the foreign charity. Tax correction form For the contribution to be deductible, the qualified organization must approve the program as furthering its own exempt purposes and must keep control over the use of the contributed funds. Tax correction form The contribution is also deductible if the foreign charity is only an administrative arm of the qualified organization. Tax correction form Homeowners' associations. Tax correction form Labor unions. Tax correction form But you may be able to deduct union dues as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). Tax correction form See Publication 529, Miscellaneous Deductions. Tax correction form Political organizations and candidates. Tax correction form Contributions From Which You Benefit If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you cannot deduct the part of the contribution that represents the value of the benefit you receive. Tax correction form See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. Tax correction form These contributions include the following. Tax correction form Contributions for lobbying. Tax correction form This includes amounts you earmark for use in, or in connection with, influencing specific legislation. Tax correction form Contributions to a retirement home for room, board, maintenance, or admittance. Tax correction form Also, if the amount of your contribution depends on the type or size of apartment you will occupy, it is not a charitable contribution. Tax correction form Costs of raffles, bingo, lottery, etc. Tax correction form You cannot deduct as a charitable contribution amounts you pay to buy raffle or lottery tickets or to play bingo or other games of chance. Tax correction form For information on how to report gambling winnings and losses, see Deductions Not Subject to the 2% Limit in Publication 529. Tax correction form Dues to fraternal orders and similar groups. Tax correction form However, see Membership fees or dues under Contributions From Which You Benefit, earlier. Tax correction form Tuition, or amounts you pay instead of tuition. Tax correction form You cannot deduct as a charitable contribution amounts you pay as tuition even if you pay them for children to attend parochial schools or qualifying nonprofit daycare centers. Tax correction form You also cannot deduct any fixed amount you must pay in addition to, or instead of, tuition to enroll in a private school, even if it is designated as a “donation. Tax correction form ” Contributions connected with split-dollar insurance arrangements. Tax correction form You cannot deduct any part of a contribution to a charitable organization if, in connection with the contribution, the organization directly or indirectly pays, has paid, or is expected to pay any premium on any life insurance, annuity, or endowment contract for which you, any member of your family, or any other person chosen by you (other than a qualified charitable organization) is a beneficiary. Tax correction form Example. Tax correction form You donate money to a charitable organization. Tax correction form The charity uses the money to purchase a cash value life insurance policy. Tax correction form The beneficiaries under the insurance policy include members of your family. Tax correction form Even though the charity may eventually get some benefit out of the insurance policy, you cannot deduct any part of the donation. Tax correction form Qualified Charitable Distributions A qualified charitable distribution (QCD) is a distribution made directly by the trustee of your individual retirement arrangement (IRA), other than a SEP or SIMPLE IRA, to certain qualified organizations. Tax correction form You must have been at least age 70½ when the distribution was made. Tax correction form Your total QCDs for the year cannot be more than $100,000. Tax correction form If all the requirements are met, a QCD is nontaxable, but you cannot claim a charitable contribution deduction for a QCD. Tax correction form See Publication 590, Individual Retirement Arrangements (IRAs), for more information about QCDs. Tax correction form Value of Time or Services You cannot deduct the value of your time or services, including: Blood donations to the American Red Cross or to blood banks, and The value of income lost while you work as an unpaid volunteer for a qualified organization. Tax correction form Personal Expenses You cannot deduct personal, living, or family expenses, such as the following items. Tax correction form The cost of meals you eat while you perform services for a qualified organization, unless it is necessary for you to be away from home overnight while performing the services. Tax correction form Adoption expenses, including fees paid to an adoption agency and the costs of keeping a child in your home before adoption is final. Tax correction form However, you may be able to claim a tax credit for these expenses. Tax correction form Also, you may be able to exclude from your gross income amounts paid or reimbursed by your employer for your adoption expenses. Tax correction form See Form 8839, Qualified Adoption Expenses, and its instructions, for more information. Tax correction form You also may be able to claim an exemption for the child. Tax correction form See Exemptions for Dependents in Publication 501 for more information. Tax correction form Appraisal Fees You cannot deduct as a charitable contribution any fees you pay to find the fair market value of donated property. Tax correction form But you can claim them, subject to the 2%-of-adjusted-gross-income limit, as a miscellaneous itemized deduction on Schedule A (Form 1040). Tax correction form See Deductions Subject to the 2% Limit in Publication 529 for more information. Tax correction form Contributions to Donor-Advised Funds You cannot deduct a contribution to a donor-advised fund if: The qualified organization that sponsors the fund is a war veterans' organization, a fraternal society, or a nonprofit cemetery company, or You do not have an acknowledgment from that sponsoring organization that it has exclusive legal control over the assets contributed. Tax correction form There are also other circumstances in which you cannot deduct your contribution to a donor-advised fund. Tax correction form Generally, a donor-advised fund is a fund or account in which a donor can, because of being a donor, advise the fund how to distribute or invest amounts held in the fund. Tax correction form For details, see Internal Revenue Code section 170(f)(18). Tax correction form Partial Interest in Property Generally, you cannot deduct a contribution of less than your entire interest in property. Tax correction form For details, see Partial Interest in Property under Contributions of Property, later. Tax correction form Contributions of Property If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. Tax correction form However, if the property has increased in value, you may have to make some adjustments to the amount of your deduction. Tax correction form See Giving Property That Has Increased in Value , later. Tax correction form For information about the records you must keep and the information you must furnish with your return if you donate property, see Records To Keep and How To Report , later. Tax correction form Contributions Subject to Special Rules Special rules apply if you contribute: Clothing or household items, A car, boat, or airplane, Taxidermy property, Property subject to a debt, A partial interest in property, A fractional interest in tangible personal property, A qualified conservation contribution, A future interest in tangible personal property, Inventory from your business, or A patent or other intellectual property. Tax correction form These special rules are described next. Tax correction form Clothing and Household Items You cannot take a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better. Tax correction form Exception. Tax correction form   You can take a deduction for a contribution of an item of clothing or a household item that is not in good used condition or better if you deduct more than $500 for it and include a qualified appraisal of it with your return. Tax correction form Household items. Tax correction form   Household items include: Furniture and furnishings, Electronics, Appliances, Linens, and Other similar items. Tax correction form   Household items do not include: Food, Paintings, antiques, and other objects of art, Jewelry and gems, and Collections. Tax correction form Fair market value. Tax correction form   To determine the fair market value of these items, use the rules under Determining Fair Market Value , later. Tax correction form Cars, Boats, and Airplanes The following rules apply to any donation of a qualified vehicle. Tax correction form A qualified vehicle is: A car or any motor vehicle manufactured mainly for use on public streets, roads, and highways, A boat, or An airplane. Tax correction form Deduction more than $500. Tax correction form   If you donate a qualified vehicle with a claimed fair market value of more than $500, you can deduct the smaller of: The gross proceeds from the sale of the vehicle by the organization, or The vehicle's fair market value on the date of the contribution. Tax correction form If the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to figure the deductible amount, as described under Giving Property That Has Increased in Value , later. Tax correction form Form 1098-C. Tax correction form   You must attach to your return Copy B of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, (or other statement containing the same information as Form 1098-C) you received from the organization. Tax correction form The Form 1098-C (or other statement) will show the gross proceeds from the sale of the vehicle. Tax correction form   If you e-file your return, you must: Attach Copy B of Form 1098-C to Form 8453, U. Tax correction form S. Tax correction form Individual Income Tax Transmittal for an IRS e-file Return, and mail the forms to the IRS, or Include Copy B of Form 1098-C as a pdf attachment if your software program allows it. Tax correction form   If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution. Tax correction form    You must get Form 1098-C (or other statement) within 30 days of the sale of the vehicle. Tax correction form But if exception 1 or 2 (described later) applies, you must get Form 1098-C (or other statement) within 30 days of your donation. Tax correction form Filing deadline approaching and still no Form 1098-C. Tax correction form   If the filing deadline is approaching and you still do not have a Form 1098-C, you have two choices. Tax correction form Request an automatic 6-month extension of time to file your return. Tax correction form You can get this extension by filing Form 4868, Application for Automatic Extension of Time To File U. Tax correction form S. Tax correction form Individual Income Tax Return. Tax correction form For more information, see the instructions for Form 4868. Tax correction form File the return on time without claiming the deduction for the qualified vehicle. Tax correction form After receiving the Form 1098-C, file an amended return, Form 1040X, Amended U. Tax correction form S. Tax correction form Individual Income Tax Return, claiming the deduction. Tax correction form Attach Copy B of Form 1098-C (or other statement) to the amended return. Tax correction form Exceptions. Tax correction form   There are two exceptions to the rules just described for deductions of more than $500. Tax correction form Exception 1—vehicle used or improved by organization. Tax correction form   If the qualified organization makes a significant intervening use of or material improvement to the vehicle before transferring it, you generally can deduct the vehicle's fair market value at the time of the contribution. Tax correction form But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Tax correction form The Form 1098-C (or other statement) will show whether this exception applies. Tax correction form    Exception 2—vehicle given or sold to needy individual. Tax correction form   If the qualified organization will give the vehicle, or sell it for a price well below fair market value, to a needy individual to further the organization's charitable purpose, you generally can deduct the vehicle's fair market value at the time of the contribution. Tax correction form But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Tax correction form The Form 1098-C (or other statement) will show whether this exception applies. Tax correction form   This exception does not apply if the organization sells the vehicle at auction. Tax correction form In that case, you cannot deduct the vehicle's fair market value. Tax correction form Example. Tax correction form Anita donates a used car to a qualified organization. Tax correction form She bought it 3 years ago for $9,000. Tax correction form A used car guide shows the fair market value for this type of car is $6,000. Tax correction form However, Anita gets a Form 1098-C from the organization showing the car was sold for $2,900. Tax correction form Neither exception 1 nor exception 2 applies. Tax correction form If Anita itemizes her deductions, she can deduct $2,900 for her donation. Tax correction form She must attach Form 1098-C and Form 8283 to her return. Tax correction form Deduction $500 or less. Tax correction form   If the qualified organization sells the vehicle for $500 or less and exceptions 1 and 2 do not apply, you can deduct the smaller of: $500, or The vehicle's fair market value on the date of the contribution. Tax correction form But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Tax correction form   If the vehicle's fair market value is at least $250 but not more than $500, you must have a written statement from the qualified organization acknowledging your donation. Tax correction form The statement must contain the information and meet the tests for an acknowledgment described under Contributions of $250 or More under Records To Keep, later. Tax correction form Fair market value. Tax correction form   To determine a vehicle's fair market value, use the rules described under Determining Fair Market Value , later. Tax correction form Donations of inventory. Tax correction form   The vehicle donation rules just described do not apply to donations of inventory. Tax correction form For example, these rules do not apply if you are a car dealer who donates a car you had been holding for sale to customers. Tax correction form See Inventory , later. Tax correction form Taxidermy Property If you donate taxidermy property to a qualified organization, your deduction is limited to your basis in the property or its fair market value, whichever is less. Tax correction form This applies if you prepared, stuffed, or mounted the property or paid or incurred the cost of preparing, stuffing, or mounting the property. Tax correction form Your basis for this purpose includes only the cost of preparing, stuffing, and mounting the property. Tax correction form Your basis does not include transportation or travel costs. Tax correction form It also does not include the direct or indirect costs for hunting or killing an animal, such as equipment costs. Tax correction form In addition, it does not include the value of your time. Tax correction form Taxidermy property means any work of art that: Is the reproduction or preservation of an animal, in whole or in part, Is prepared, stuffed, or mounted to recreate one or more characteristics of the animal, and Contains a part of the body of the dead animal. Tax correction form Property Subject to a Debt If you contribute property subject to a debt (such as a mortgage), you must reduce the fair market value of the property by: Any allowable deduction for interest you paid (or will pay) that is attributable to any period after the contribution, and If the property is a bond, the lesser of: Any allowable deduction for interest you paid (or will pay) to buy or carry the bond that is attributable to any period before the contribution, or The interest, including bond discount, receivable on the bond that is attributable to any period before the contribution, and that is not includible in your income due to your accounting method. Tax correction form This prevents you from deducting the same amount as both investment interest and a charitable contribution. Tax correction form If the recipient (or another person) assumes the debt, you must also reduce the fair market value of the property by the amount of the outstanding debt assumed. Tax correction form The amount of the debt is also treated as an amount realized on the sale or exchange of property for purposes of figuring your taxable gain (if any). Tax correction form For more information, see Bargain Sales under Giving Property That Has Increased in Value, later. Tax correction form Partial Interest in Property Generally, you cannot deduct a charitable contribution of less than your entire interest in property. Tax correction form Right to use property. Tax correction form   A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible. Tax correction form Example 1. Tax correction form You own a 10-story office building and donate rent-free use of the top floor to a charitable organization. Tax correction form Because you still own the building, you have contributed a partial interest in the property and cannot take a deduction for the contribution. Tax correction form Example 2. Tax correction form Mandy White owns a vacation home at the beach that she sometimes rents to others. Tax correction form For a fund-raising auction at her church, she donated the right to use the vacation home for 1 week. Tax correction form At the auction, the church received and accepted a bid from Lauren Green equal to the fair rental value of the home for 1 week. Tax correction form Mandy cannot claim a deduction because of the partial interest rule. Tax correction form Lauren cannot claim a deduction either, because she received a benefit equal to the amount of her payment. Tax correction form See Contributions From Which You Benefit , earlier. Tax correction form Exceptions. Tax correction form   You can deduct a charitable contribution of a partial interest in property only if that interest represents one of the following items. Tax correction form A remainder interest in your personal home or farm. Tax correction form A remainder interest is one that passes to a beneficiary after the end of an earlier interest in the property. Tax correction form Example. Tax correction form You keep the right to live in your home during your lifetime and give your church a remainder interest that begins upon your death. Tax correction form You can deduct the value of the remainder interest. Tax correction form An undivided part of your entire interest. Tax correction form This must consist of a part of every substantial interest or right you own in the property and must last as long as your interest in the property lasts. Tax correction form But see Fractional Interest in Tangible Personal Property , later. Tax correction form Example. Tax correction form You contribute voting stock to a qualified organization but keep the right to vote the stock. Tax correction form The right to vote is a substantial right in the stock. Tax correction form You have not contributed an undivided part of your entire interest and cannot deduct your contribution. Tax correction form A partial interest that would be deductible if transferred to certain types of trusts. Tax correction form A qualified conservation contribution (defined later). Tax correction form For information about how to figure the value of a contribution of a partial interest in property, see Partial Interest in Property Not in Trust in Publication 561. Tax correction form Fractional Interest in Tangible Personal Property You cannot deduct a charitable contribution of a fractional interest in tangible personal property unless all interests in the property are held immediately before the contribution by: You, or You and the qualifying organization receiving the contribution. Tax correction form If you make an additional contribution later, the fair market value of that contribution will be determined by using the smaller of: The fair market value of the property at the time of the initial contribution, or The fair market value of the property at the time of the additional contribution. Tax correction form Tangible personal property is defined later under Future Interest in Tangible Personal Property . Tax correction form A fractional interest in property is an undivided portion of your entire interest in the property. Tax correction form Example. Tax correction form An undivided one-quarter interest in a painting that entitles an art museum to possession of the painting for 3 months of each year is a fractional interest in the property. Tax correction form Recapture of deduction. Tax correction form   You must recapture your charitable contribution deduction by including it in your income if both of the following statements are true. Tax correction form You contributed a fractional interest in tangible personal property after August 17, 2006. Tax correction form You do not contribute the rest of your interests in the property to the original recipient or, if it no longer exists, another qualified organization on or before the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. Tax correction form   Recapture is also required if the qualified organization has not taken substantial physical possession of the property and used it in a way related to the organization's purpose during the period beginning on the date of the initial contribution and ending on the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. Tax correction form Additional tax. Tax correction form   If you must recapture your deduction, you must also pay interest and an additional tax equal to 10% of the amount recaptured. Tax correction form Qualified Conservation Contribution A qualified conservation contribution is a contribution of a qualified real property interest to a qualified organization to be used only for conservation purposes. Tax correction form Qualified organization. Tax correction form   For purposes of a qualified conservation contribution, a qualified organization is: A governmental unit, A publicly supported charity, or An organization controlled by, and operated for the exclusive benefit of, a governmental unit or a publicly supported charity. Tax correction form The organization also must have a commitment to protect the conservation purposes of the donation and must have the resources to enforce the restrictions. Tax correction form   A publicly supported charity is an organization of the type described in (1) under Types of Qualified Organizations , earlier, that normally receives a substantial part of its support, other than income from its exempt activities, from direct or indirect contributions from the general public or from governmental units. Tax correction form Qualified real property interest. Tax correction form   This is any of the following interests in real property. Tax correction form Your entire interest in real estate other than a mineral interest (subsurface oil, gas, or other minerals, and the right of access to these minerals). Tax correction form A remainder interest. Tax correction form A restriction (granted in perpetuity) on the use that may be made of the real property. Tax correction form Conservation purposes. Tax correction form   Your contribution must be made only for one of the following conservation purposes. Tax correction form Preserving land areas for outdoor recreation by, or for the education of, the general public. Tax correction form Protecting a relatively natural habitat of fish, wildlife, or plants, or a similar ecosystem. Tax correction form Preserving open space, including farmland and forest land, if it yields a significant public benefit. Tax correction form The open space must be preserved either for the scenic enjoyment of the general public or under a clearly defined federal, state, or local governmental conservation policy. Tax correction form Preserving a historically important land area or a certified historic structure. Tax correction form Building in registered historic district. Tax correction form   If a building in a registered historic district is a certified historic structure, a contribution of a qualified real property interest that is an easement or other restriction on the exterior of the building is deductible only if it meets all of the following conditions. Tax correction form The restriction must preserve the entire exterior of the building (including its front, sides, rear, and height) and must prohibit any change to the exterior of the building that is inconsistent with its historical character. Tax correction form You and the organization receiving the contribution must enter into a written agreement certifying, under penalty of perjury, that the organization: Is a qualified organization with a purpose of environmental protection, land conservation, open space preservation, or historic preservation, and Has the resources to manage and enforce the restriction and a commitment to do so. Tax correction form You must include with your return: A qualified appraisal, Photographs of the building's entire exterior, and A description of all restrictions on development of the building, such as zoning laws and restrictive covenants. Tax correction form   If you claimed the rehabilitation credit for the building for any of the 5 years before the year of the contribution, your charitable deduction is reduced. Tax correction form For more information, see Form 3468, Investment Credit, and Internal Revenue Code section 170(f)(14). Tax correction form   If you claim a deduction of more than $10,000, your deduction will not be allowed unless you pay a $500 filing fee. Tax correction form See Form 8283-V, Payment Voucher for Filing Fee Under Section 170(f)(13), and its instructions. Tax correction form You may be able to deduct the filing fee as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). Tax correction form See Deductions Subject to the 2% Limit in Publication 529 for more information. Tax correction form More information. Tax correction form   For information about determining the fair market value of qualified conservation contributions, see Publication 561. Tax correction form For information about the limits that apply to deductions for this type of contribution, see Limits on Deductions , later. Tax correction form For more information about qualified conservation contributions, see Regulations section 1. Tax correction form 170A-14. Tax correction form Future Interest in Tangible Personal Property You cannot deduct the value of a charitable contribution of a future interest in tangible personal property until all intervening interests in and rights to the actual possession or enjoyment of the property have either expired or been turned over to someone other than yourself, a related person, or a related organization. Tax correction form But see Fractional Interest in Tangible Personal Property , earlier, and Tangible personal property put to unrelated use , later. Tax correction form Related persons include your spouse, children, grandchildren, brothers, sisters, and parents. Tax correction form Related organizations may include a partnership or corporation in which you have an interest, or an estate or trust with which you have a connection. Tax correction form Tangible personal property. Tax correction form   This is any property, other than land or buildings, that can be seen or touched. Tax correction form It includes furniture, books, jewelry, paintings, and cars. Tax correction form Future interest. Tax correction form   This is any interest that is to begin at some future time, regardless of whether it is designated as a future interest under state law. Tax correction form Example. Tax correction form You own an antique car that you contribute to a museum. Tax correction form You give up ownership, but retain the right to keep the car in your garage with your personal collection. Tax correction form Because you keep an interest in the property, you cannot deduct the contribution. Tax correction form If you turn the car over to the museum in a later year, giving up all rights to its use, possession, and enjoyment, you can take a deduction for the contribution in that later year. Tax correction form Inventory If you contribute inventory (property you sell in the course of your business), the amount you can deduct is the smaller of its fair market value on the day you contributed it or its basis. Tax correction form The basis of contributed inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. Tax correction form You must remove the amount of your charitable contribution deduction from your opening inventory. Tax correction form It is not part of the cost of goods sold. Tax correction form If the cost of donated inventory is not included in your opening inventory, the inventory's basis is zero and you cannot claim a charitable contribution deduction. Tax correction form Treat the inventory's cost as you would ordinarily treat it under your method of accounting. Tax correction form For example, include the purchase price of inventory bought and donated in the same year in the cost of goods sold for that year. Tax correction form A special rule applies to certain donations of food inventory. Tax correction form See Food Inventory, later. Tax correction form Patents and Other Intellectual Property If you donate intellectual property to a qualified organization, your deduction is limited to the basis of the property or the fair market value of the property, whichever is smaller. Tax correction form Intellectual property means any of the following: Patents. Tax correction form Copyrights (other than a copyright described in Internal Revenue Code sections 1221(a)(3) or 1231(b)(1)(C)). Tax correction form Trademarks. Tax correction form Trade names. Tax correction form Trade secrets. Tax correction form Know-how. Tax correction form Software (other than software described in Internal Revenue Code section 197(e)(3)(A)(i)). Tax correction form Other similar property or applications or registrations of such property. Tax correction form Additional deduction based on income. Tax correction form   You may be able to claim additional charitable contribution deductions in the year of the contribution and years following, based on the income, if any, from the donated property. Tax correction form   The following table shows the percentage of income from the property that you can deduct for each of your tax years ending on or after the date of the contribution. Tax correction form In the table, “tax year 1,” for example, means your first tax year ending on or after the date of the contribution. Tax correction form However, you can take the additional deduction only to the extent the total of the amounts figured using this table is more than the amount of the deduction claimed for the original donation of the property. Tax correction form   After the legal life of the intellectual property ends, or after the 10th anniversary of the donation, whichever is earlier, no additional deduction is allowed. Tax correction form The additional deductions cannot be taken for intellectual property donated to certain private foundations. Tax correction form Tax year Deductible percentage 1 100% 2 100% 3 90% 4 80% 5 70% 6 60% 7 50% 8 40% 9 30% 10 20% 11 10% 12 10% Reporting requirements. Tax correction form   You must inform the organization at the time of the donation that you intend to treat the donation as a contribution subject to the provisions just discussed. Tax correction form   The organization is required to file an information return showing the income from the property, with a copy to you. Tax correction form This is done on Form 8899, Notice of Income From Donated Intellectual Property. Tax correction form Determining Fair Market Value This section discusses general guidelines for determining the fair market value of various types of donated property. Tax correction form Publication 561 contains a more complete discussion. Tax correction form Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. Tax correction form Used clothing. Tax correction form   The fair market value of used clothing and other personal items is usually far less than the price you paid for them. Tax correction form There are no fixed formulas or methods for finding the value of items of clothing. Tax correction form   You should claim as the value the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops. Tax correction form      Also see Clothing and Household Items , earlier. Tax correction form Example. Tax correction form    Kristin donated a coat to a thrift store operated by her church. Tax correction form She paid $300 for the coat 3 years ago. Tax correction form Similar coats in the thrift store sell for $50. Tax correction form The fair market value of the coat is $50. Tax correction form Kristin's donation is limited to $50. Tax correction form Household items. Tax correction form   The fair market value of used household items, such as furniture, appliances, and linens, is usually much lower than the price paid when new. Tax correction form These items may have little or no market value because they are in a worn condition, out of style, or no longer useful. Tax correction form For these reasons, formulas (such as using a percentage of the cost to buy a new replacement item) are not acceptable in determining value. Tax correction form   You should support your valuation with photographs, canceled checks, receipts from your purchase of the items, or other evidence. Tax correction form Magazine or newspaper articles and photographs that describe the items and statements by the recipients of the items are also useful. Tax correction form Do not include any of this evidence with your tax return. Tax correction form   If the property is valuable because it is old or unique, see the discussion under Paintings, Antiques, and Other Objects of Art in Publication 561. Tax correction form   Also see Clothing and Household Items , earlier. Tax correction form Cars, boats, and airplanes. Tax correction form   If you contribute a car, boat, or airplane to a charitable organization, you must determine its fair market value. Tax correction form Boats. Tax correction form   Except for small, inexpensive boats, the valuation of boats should be based on an appraisal by a marine surveyor or appraiser because the physical condition is critical to the value. Tax correction form Cars. Tax correction form   Certain commercial firms and trade organizations publish used car pricing guides, commonly called “blue books,” containing complete dealer sale prices or dealer average prices for recent model years. Tax correction form The guides may be published monthly or seasonally, and for different regions of the country. Tax correction form These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. Tax correction form The prices are not “official” and these publications are not considered an appraisal of any specific donated property. Tax correction form But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. Tax correction form   These publications are sometimes available from public libraries, or from the loan officer at a bank, credit union, or finance company. Tax correction form You can also find used car pricing information on the Internet. Tax correction form   To find the fair market value of a donated car, use the price listed in a used car guide for a private party sale, not the dealer retail value. Tax correction form However, the fair market value may be less if the car has engine trouble, body damage, high mileage, or any type of excessive wear. Tax correction form The fair market value of a donated car is the same as the price listed in a used car guide for a private party sale only if the guide lists a sales price for a car that is the same make, model, and year, sold in the same area, in the same condition, with the same or similar options or accessories, and with the same or similar warranties as the donated car. Tax correction form Example. Tax correction form You donate a used car in poor condition to a local high school for use by students studying car repair. Tax correction form A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. Tax correction form However, the guide shows the price for a private party sale of the car is only $750. Tax correction form The fair market value of the car is considered to be $750. Tax correction form Large quantities. Tax correction form   If you contribute a large number of the same item, fair market value is the price at which comparable numbers of the item are being sold. Tax correction form Example. Tax correction form You purchase 500 bibles for $1,000. Tax correction form The person who sells them to you says the retail value of these bibles is $3,000. Tax correction form If you contribute the bibles to a qualified organization, you can claim a deduction only for the price at which similar numbers of the same bible are currently being sold. Tax correction form Your charitable contribution is $1,000, unless you can show that similar numbers of that bible wer
Print - Click this link to Print this page

Understanding your CP13R Notice

We made changes to your return involving the Recovery Rebate Credit. You're not due a refund nor do you owe an additional amount because of our changes. Your account balance is zero.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 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 how the Recovery Rebate Credit relates to the changes we made.
  • Review the notice and compare our changes to the information on your tax return.
  • Correct the copy of your tax return that you kept for your records.
  • You don't need to do anything if you agree with the notice.
  • If you disagree with the notice, please contact us at the toll-free number listed on its top right corner (within 60 days of its date).

You may want to...


Answers to Common Questions

What is the Recovery Rebate Credit?
It is a refundable credit that relates to the 2008 economic stimulus payment. Generally, a refundable credit increases the amount of a refund received or it reduces the amount of taxes owed.

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

What should I do if I need to make another correction to my tax return?
You'll need to file an amended return to make a correction.


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.

Perform a quick check on the amount you have withheld to make sure you won't owe money next year. You can use this IRS withholding calculator.

Page Last Reviewed or Updated: 20-Feb-2014

The Tax Correction Form

Tax correction form 2. Tax correction 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. Tax correction 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. Tax correction form They are the American opportunity credit (this chapter) and the lifetime learning credit ( chapter 3 ). Tax correction 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. Tax correction form What is the tax benefit of the American opportunity credit. Tax correction 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. Tax correction form   A tax credit reduces the amount of income tax you may have to pay. Tax correction form Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. Tax correction form Forty percent of the American opportunity credit may be refundable. Tax correction form This means that if the refundable portion of your credit is more than your tax, the excess will be refunded to you. Tax correction form   Your allowable American opportunity credit may be limited by the amount of your income. Tax correction form Also, the nonrefundable part of the credit may be limited by the amount of your tax. Tax correction form Overview of the American opportunity credit. Tax correction form   See Table 2-1, Overview of the American Opportunity Credit , for the basics of this credit. Tax correction form The details are discussed in this chapter. Tax correction form Can you claim more than one education credit this year. Tax correction form   For each student, you can elect for any year only one of the credits. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction form Differences between the American opportunity and lifetime learning credits. Tax correction form   There are several differences between these two credits. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction form If you have the choice, the American opportunity credit will always be greater than the lifetime learning credit. Tax correction form Table 2-1. Tax correction 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. Tax correction form Who Can Claim the Credit Generally, you can claim the American opportunity credit if all three of the following requirements are met. Tax correction form You pay qualified education expenses of higher education. Tax correction form You pay the education expenses for an eligible student. Tax correction form The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Tax correction form Student qualifications. Tax correction form   Generally, you can take the American opportunity credit for a student only if all of the following four requirements are met. Tax correction 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. Tax correction form For this purpose, do not include academic credit awarded solely because of the student's performance on proficiency examinations. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction form The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Tax correction form However, the standard may not be lower than any of those established by the U. Tax correction form S. Tax correction form Department of Education under the Higher Education Act of 1965. Tax correction 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. Tax correction form See Prepaid expenses, later. Tax correction 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. Tax correction form Example 1. Tax correction form Sharon was eligible for the Hope Scholarship Credit for 2007 and 2008 and for the American opportunity credit for 2010 and 2012. Tax correction 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. Tax correction form Sharon claimed the American opportunity credit on her 2012 tax return. Tax correction form The American opportunity credit and Hope Scholarship Credit have been claimed for Sharon for four tax years before 2013. Tax correction form Therefore, the American opportunity credit cannot be claimed by Sharon for 2013. Tax correction 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. Tax correction form Example 2. Tax correction form Wilbert was eligible for the American opportunity credit for 2009, 2010, 2011, and 2013. Tax correction form His parents claimed the American opportunity credit for Wilbert on their tax returns for 2009, 2010, and 2011. Tax correction form No one claimed an American opportunity credit or Hope Scholarship Credit for Wilbert for any other tax year. Tax correction form The American opportunity credit and Hope Scholarship Credit have been claimed for Wilbert for only three tax years before 2013. Tax correction form Therefore, Wilbert meets the second requirement to be eligible for the American opportunity credit. Tax correction form If Wilbert were to file Form 8863 for 2013, he would check “No” for Part III, line 23. Tax correction form If Wilbert meets all of the other requirements, he is eligible for the American opportunity credit. Tax correction form Example 3. Tax correction form Glenda enrolls on a full-time basis in a degree program for the 2014 Spring semester, which begins in January 2014. Tax correction form Glenda pays her tuition for the 2014 Spring semester in December 2013. Tax correction 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. Tax correction form If the requirements above are not met for any student, you cannot take the American opportunity credit for that student. Tax correction form You may be able to take the lifetime learning credit for part or all of that student's qualified education expenses instead. Tax correction form Note. Tax correction 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. Tax correction form “Qualified education expenses” are defined later under Qualified Education Expenses . Tax correction form “Eligible students” are defined later under Who Is an Eligible Student . Tax correction form A dependent for whom you claim an exemption is defined later under Who Can Claim a Dependent's Expenses . Tax correction 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. Tax correction form This image is too large to be displayed in the current screen. Tax correction form Please click the link to view the image. Tax correction 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. Tax correction form Your filing status is married filing separately. Tax correction form You are listed as a dependent on another person's tax return (such as your parents'). Tax correction form See Who Can Claim a Dependent's Expenses , later. Tax correction form Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more in the case of a joint return). Tax correction form MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit . Tax correction 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. Tax correction form More information on nonresident aliens can be found in Publication 519, U. Tax correction form S. Tax correction form Tax Guide for Aliens. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction form Academic period. Tax correction 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. Tax correction 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. Tax correction form Paid with borrowed funds. Tax correction form   You can claim an American opportunity credit for qualified education expenses paid with the proceeds of a loan. Tax correction 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. Tax correction form Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. Tax correction form Student withdraws from class(es). Tax correction form   You can claim an American opportunity credit for qualified education expenses not refunded when a student withdraws. Tax correction 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. Tax correction form Eligible educational institution. Tax correction 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. Tax correction form S. Tax correction form Department of Education. Tax correction form It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Tax correction form The educational institution should be able to tell you if it is an eligible educational institution. Tax correction form   Certain educational institutions located outside the United States also participate in the U. Tax correction form S. Tax correction form Department of Education's Federal Student Aid (FSA) programs. Tax correction form Related expenses. Tax correction 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. Tax correction 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. Tax correction form Prepaid expenses. Tax correction 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. Tax correction form See Academic period, earlier. Tax correction 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). Tax correction 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). Tax correction form   In the following examples, assume that each student is an eligible student at an eligible educational institution. Tax correction form Example 1. Tax correction form Jefferson is a sophomore in University V's degree program in dentistry. Tax correction 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. Tax correction form Because the equipment rental is needed for his course of study, Jefferson's equipment rental fee is a qualified expense. Tax correction form Example 2. Tax correction 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. Tax correction 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. Tax correction form William bought his books from a friend; Grace bought hers at College W's bookstore. Tax correction form Both are qualified education expenses for the American opportunity credit. Tax correction form Example 3. Tax correction 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. Tax correction 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. Tax correction form No portion of the fee covers personal expenses. Tax correction 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. Tax correction form No Double Benefit Allowed You cannot do any of the following. Tax correction 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. Tax correction form Claim an American opportunity credit in the same year that you are claiming a tuition and fees deduction for the same student. Tax correction form Claim an American opportunity credit for any student and use any of that student's expenses in figuring your lifetime learning credit. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction form See Adjustments to Qualified Education Expenses, next. Tax correction 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. Tax correction form The result is the amount of adjusted qualified education expenses for each student. Tax correction form Tax-free educational assistance. Tax correction 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. Tax correction form See Academic period, earlier. Tax correction form   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. Tax correction 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). Tax correction 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. Tax correction 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. Tax correction 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). Tax correction 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. Tax correction form Generally, any scholarship or fellowship is treated as tax free. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction form For examples, see Coordination with Pell grants and other scholarships, later. Tax correction form Refunds. Tax correction 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. Tax correction form Some tax-free educational assistance received after 2013 may be treated as a refund. Tax correction form See Tax-free educational assistance, earlier. Tax correction form Refunds received in 2013. Tax correction 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. Tax correction form Refunds received after 2013 but before your income tax return is filed. Tax correction 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. Tax correction form Refunds received after 2013 and after your income tax return is filed. Tax correction 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. Tax correction form See Credit recapture, next. Tax correction form Credit recapture. Tax correction 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. Tax correction 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. Tax correction 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). Tax correction form Include that amount as an additional tax for the year the refund or tax-free assistance was received. Tax correction form Example. Tax correction form   You paid $7,000 tuition and fees in August 2013, and your child began college in September 2013. Tax correction form You filed your 2013 tax return on February 17, 2014, and claimed an American opportunity credit of $2,500. Tax correction form After you filed your return, you received a refund of $4,000. Tax correction form You must refigure your 2013 American opportunity credit using $3,000 of qualified education expenses instead of $7,000. Tax correction form The refigured credit is $2,250. Tax correction form The increase to your tax liability is also $250. Tax correction form Include the difference of $250 as additional tax on your 2014 tax return. Tax correction form See the instructions for your 2014 income tax return to determine where to include this tax. Tax correction 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. Tax correction form Amounts that do not reduce qualified education expenses. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction form The use of the money is not restricted. Tax correction form Example 1. Tax correction form Joan paid $3,000 for tuition and $5,000 for room and board at University X. Tax correction form The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. Tax correction form To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. Tax correction form The terms of the scholarship state that it can be used to pay any of Joan's college expenses. Tax correction 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. Tax correction form Joan does not report any portion of the scholarship as income on her tax return. Tax correction 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. Tax correction 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. Tax correction form Joan is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship). Tax correction form Example 2. Tax correction form The facts are the same as in Example 1, except that Joan reports her entire scholarship as income on her tax return. Tax correction form Because Joan reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. Tax correction form Joan is treated as having paid $3,000 in qualified education expenses. Tax correction form Coordination with Pell grants and other scholarships. Tax correction form   In some cases, you may be able to reduce your tax liability by including scholarships in income. Tax correction 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. Tax correction 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. Tax correction form Example 1—No scholarship. Tax correction 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. Tax correction form This was his first year of postsecondary education. Tax correction 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. Tax correction form He and the college meet all the requirements for the American opportunity credit. Tax correction form Bill's AGI and his MAGI, for purposes of figuring his credit, are $30,000. Tax correction form Bill takes the standard deduction of $5,950 and personal exemption of $3,800, reducing his AGI to taxable income of $20,250. Tax correction form His income tax liability, before credits, is $2,599 and Bill claims no credits other than the American opportunity credit. Tax correction 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. Tax correction form Example 2—Scholarship excluded from income. Tax correction form The facts are the same as in Example 1—No scholarship, except that Bill was awarded a $5,600 scholarship. Tax correction form Under the terms of his scholarship, it may be used to pay any educational expenses, including room and board. Tax correction 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. Tax correction form His adjusted qualified education expenses will be zero and he will not have an education credit. Tax correction form Therefore, Bill's tax after credits would be $2,599. Tax correction form Example 3—Scholarship partially included in income. Tax correction form The facts are the same as in Example 2—Scholarship excluded from income. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction form This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Tax correction form Sports, games, hobbies, and noncredit courses. Tax correction 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. Tax correction form However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. Tax correction form Comprehensive or bundled fees. Tax correction form   Some eligible educational institutions combine all of their fees for an academic period into one amount. Tax correction 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. Tax correction 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. Tax correction form See Figuring the Credit , later, for more information about Form 1098-T. Tax correction 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. Tax correction form This is a student who meets all of the following requirements. Tax correction form The student did not have expenses that were used to figure an American opportunity credit in any 4 earlier tax years. Tax correction form This includes any tax year(s) in which you claimed the Hope Scholarship Credit for the same student. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction form These requirements are also shown in Figure 2-2, Who is an Eligible Student for the American Opportunity Credit , later. Tax correction form Completion of first 4 years. Tax correction 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. Tax correction form This student generally would not be an eligible student for purposes of the American opportunity credit. Tax correction form Exception. Tax correction 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. Tax correction form Enrolled at least half-time. Tax correction 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. Tax correction form   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Tax correction form However, the standard may not be lower than any of those established by the U. Tax correction form S. Tax correction form Department of Education under the Higher Education Act of 1965. Tax correction form Please click here for the text description of the image. Tax correction form Figure 2-2 Example 1. Tax correction form Mack graduated from high school in June 2012. Tax correction 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. Tax correction form For the 2013 fall semester, Mack was enrolled less than half-time. Tax correction 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). Tax correction form Example 2. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction form Example 3. Tax correction form During the 2012 fall semester, Larry was a high school student who took classes on a half-time basis at College X. Tax correction 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. Tax correction 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. Tax correction form Example 4. Tax correction form The facts are the same as in Example 3. Tax correction form During the 2013 spring semester, Larry again attended College X but not as part of a degree program. Tax correction form Larry graduated from high school in June 2013. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction form Example 5. Tax correction form Dee graduated from high school in June 2012. Tax correction 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. Tax correction form Dee completed the program in December 2013, and was awarded a certificate. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction form For you to claim an American opportunity credit for your dependent's expenses, you must also claim an exemption for your dependent. Tax correction form You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. Tax correction form IF you. Tax correction form . Tax correction form . Tax correction form THEN only. Tax correction form . Tax correction form . Tax correction 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. Tax correction form The dependent cannot claim the credit. Tax correction 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. Tax correction form You cannot claim the credit based on this dependent's expenses. Tax correction form Expenses paid by dependent. Tax correction 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. Tax correction form Include these expenses when figuring the amount of your American opportunity credit. Tax correction 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. Tax correction form Expenses paid by you. Tax correction 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. Tax correction 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. Tax correction form Expenses paid by others. Tax correction 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. Tax correction form In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. Tax correction form If you claim an exemption on your tax return for the student, you are considered to have paid the expenses. Tax correction form Example. Tax correction form In 2013, Ms. Tax correction form Allen makes a payment directly to an eligible educational institution for her grandson Todd's qualified education expenses. Tax correction 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. Tax correction 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. Tax correction 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. Tax correction form If anyone else claims an exemption for Todd, Todd cannot claim an American opportunity credit. Tax correction form Tuition reduction. Tax correction 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. Tax correction 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. Tax correction form For more information on tuition reductions, see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Tax correction 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. Tax correction form The maximum amount of American opportunity credit you can claim in 2013 is $2,500 multiplied by the number of eligible students. Tax correction 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. Tax correction form However, the credit may be reduced based on your MAGI. Tax correction form See Effect of the Amount of Your Income on the Amount of Your Credit , later. Tax correction form Example. Tax correction form Jack and Kay Ford are married and file a joint tax return. Tax correction form For 2013, they claim an exemption for their dependent daughter on their tax return. Tax correction form Their MAGI is $70,000. Tax correction form Their daughter is in her junior (third) year of studies at the local university. Tax correction form Jack and Kay paid qualified education expenses of $4,300 in 2013. Tax correction form Jack and Kay, their daughter, and the local university meet all of the requirements for the American opportunity credit. Tax correction form Jack and Kay can claim a $2,500 American opportunity credit in 2013. Tax correction form This is 100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000. Tax correction form Form 1098-T. Tax correction form   To help you figure your American opportunity credit, the student should receive Form 1098-T, Tuition Statement. Tax correction 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. Tax correction form An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. Tax correction form However, the amounts in boxes 1 and 2 of Form 1098-T might be different than what you paid. Tax correction form When figuring the credit, use only the amounts you paid or are deemed to have paid in 2013 for qualified education expenses. Tax correction 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. Tax correction 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. Tax correction 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). Tax correction 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). Tax correction form Modified adjusted gross income (MAGI). Tax correction form   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. Tax correction form MAGI when using Form 1040A. Tax correction form   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. Tax correction form MAGI when using Form 1040. Tax correction 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. Tax correction form You can use Worksheet 2-1, next, to figure your MAGI. Tax correction form    Worksheet 2-1. Tax correction form MAGI for the American Opportunity Credit 1. Tax correction form Enter your adjusted gross income  (Form 1040, line 38)   1. Tax correction form   2. Tax correction form Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. Tax correction form       3. Tax correction form Enter your foreign housing deduction (Form 2555, line 50)   3. Tax correction form       4. Tax correction form Enter the amount of income from Puerto Rico you are excluding   4. Tax correction form       5. Tax correction form Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. Tax correction form       6. Tax correction form Add the amounts on lines 2, 3, 4, and 5   6. Tax correction form   7. Tax correction form Add the amounts on lines 1 and 6. Tax correction form  This is your modified adjusted  gross income. Tax correction form Enter here and  on Form 8863, line 3   7. Tax correction form   Phaseout. Tax correction 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. Tax correction form The same method is shown in the following example. Tax correction form Example. Tax correction form You are filing a joint return and your MAGI is $165,000. Tax correction form In 2013, you paid $5,000 of qualified education expenses. Tax correction 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). Tax correction 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. Tax correction form The numerator of the fraction is $180,000 (the upper limit for those filing a joint return) minus your MAGI. Tax correction form The denominator is $20,000, the range of incomes for the phaseout ($160,000 to $180,000). Tax correction form The result is the amount of your phased out (reduced) American opportunity credit ($1,875). Tax correction 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. Tax correction 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. Tax correction form Instead, your allowed credit (figured on Form 8863, Part II) will be used to reduce your tax as a nonrefundable credit only. Tax correction form You do not qualify for a refund if items 1 (a, b, or c), 2, and 3 below apply to you. Tax correction 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). Tax correction form At least one of your parents was alive at the end of 2013. Tax correction form You are filing a return as single, head of household, qualifying widow(er), or married filing separately for 2013. Tax correction form Earned income. Tax correction form   Earned income includes wages, salaries, professional fees, and other payments received for personal services actually performed. Tax correction 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. Tax correction 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. Tax correction 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). Tax correction form However, if capital is not an income-producing factor and your personal services produced the business income, the 30% limit does not apply. Tax correction form Support. Tax correction form   Your support includes food, shelter, clothing, medical and dental care, education, and the like. Tax correction form Generally, the amount of the item of support will be the amount of expenses incurred by the one furnishing such item. Tax correction 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. Tax correction form However, a scholarship received by you is not considered support if you are a full-time student. Tax correction form See Publication 501 for details. Tax correction form Full-time student. Tax correction 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. Tax correction form Claiming the Credit You claim the American opportunity credit by completing Form 8863 and submitting it with your Form 1040 or 1040A. Tax correction form Enter the nonrefundable part of the credit on Form 1040, line 49, or on Form 1040A, line 31. Tax correction form Enter the refundable part of the credit on Form 1040, line 66, or on Form 1040A, line 40. Tax correction form A filled-in Form 8863 is shown at the end of this publication. Tax correction form Note. Tax correction form In Appendix A. Tax correction 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. Tax correction form Prev  Up  Next   Home   More Online Publications