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Tax Planning Us 2005 Taxes

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Tax Planning Us 2005 Taxes

Tax planning us 2005 taxes 4. Tax planning us 2005 taxes   Communications and Air Transportation Taxes Table of Contents Uncollected Tax Report Communications TaxLocal-only service. Tax planning us 2005 taxes Private communication service. Tax planning us 2005 taxes Exemptions Credits or Refunds Air Transportation TaxesTransportation of Persons by Air International Air Travel Facilities Transportation of Property by Air Special Rules on Transportation Taxes Excise taxes are imposed on amounts paid for certain facilities and services. Tax planning us 2005 taxes If you receive any payment on which tax is imposed, you are required to collect the tax, file returns, and pay the tax over to the government. Tax planning us 2005 taxes If you fail to collect and pay over the taxes, you may be liable for the trust fund recovery penalty. Tax planning us 2005 taxes See chapter 14, later. Tax planning us 2005 taxes Uncollected Tax Report A separate report is required to be filed by collecting agents of communications services and air transportation taxes if the person from whom the facilities or services tax (the tax) is required to be collected (the taxpayer) refuses to pay the tax, or it is impossible for the collecting agent to collect the tax. Tax planning us 2005 taxes The report must contain the name and address of the taxpayer, the type of facility provided or service rendered, the amount paid for the facility or service (the amount on which the tax is based), and the date paid. Tax planning us 2005 taxes Regular method taxpayers. Tax planning us 2005 taxes   For regular method taxpayers, the report must be filed by the due date of the Form 720 on which the tax would have been reported. Tax planning us 2005 taxes Alternative method taxpayers. Tax planning us 2005 taxes   For alternative method taxpayers, the report must be filed by the due date of the Form 720 that includes an adjustment to the separate account for the uncollected tax. Tax planning us 2005 taxes See Alternative method in  chapter 11. Tax planning us 2005 taxes Where to file. Tax planning us 2005 taxes    Do not file the uncollected tax report with Form 720. Tax planning us 2005 taxes Instead, mail the report to: Internal Revenue Service Excise Tax Program SE:S:SP:EX MS C9-109 5000 Ellin Rd. Tax planning us 2005 taxes  Lanham, MD 20706 Communications Tax A 3% tax is imposed on amounts paid for local telephone service and teletypewriter exchange service. Tax planning us 2005 taxes Local telephone service. Tax planning us 2005 taxes   This includes access to a local telephone system and the privilege of telephonic quality communication with most people who are part of the system. Tax planning us 2005 taxes Local telephone service also includes any facility or services provided in connection with this service. Tax planning us 2005 taxes The tax applies to lease payments for certain customer premises equipment (CPE) even though the lessor does not also provide access to a local telecommunications system. Tax planning us 2005 taxes Local-only service. Tax planning us 2005 taxes   Local-only service is local telephone service as described above, provided under a plan that does not include long distance telephone service or that separately states the charge for local service on the bill to customers. Tax planning us 2005 taxes Local-only service also includes any facility or services provided in connection with this service, even though these services and facilities may also be used with long-distance service. Tax planning us 2005 taxes Private communication service. Tax planning us 2005 taxes   Private communication service is not local telephone service. Tax planning us 2005 taxes Private communication service includes accessory-type services provided in connection with a Centrex, PBX, or other similar system for dual use accessory equipment. Tax planning us 2005 taxes However, the charge for the service must be stated separately from the charge for the basic system, and the accessory must function, in whole or in part, in connection with intercommunication among the subscriber's stations. Tax planning us 2005 taxes Teletypewriter exchange service. Tax planning us 2005 taxes   This includes access from a teletypewriter or other data station to a teletypewriter exchange system and the privilege of intercommunication by that station with most persons having teletypewriter or other data stations in the same exchange system. Tax planning us 2005 taxes Figuring the tax. Tax planning us 2005 taxes   The tax is based on the sum of all charges for local telephone service included in the bill. Tax planning us 2005 taxes However, if the bill groups individual items for billing and tax purposes, the tax is based on the sum of the individual items within that group. Tax planning us 2005 taxes The tax on the remaining items not included in any group is based on the charge for each item separately. Tax planning us 2005 taxes Do not include in the tax base state or local sales or use taxes that are separately stated on the taxpayer's bill. Tax planning us 2005 taxes Exemptions Payments for certain services or payments from certain users are exempt from the communications tax. Tax planning us 2005 taxes Nontaxable service. Tax planning us 2005 taxes   Nontaxable service means bundled service and long distance service. Tax planning us 2005 taxes Nontaxable service also includes pre-paid telephone cards and pre-paid cellular service. Tax planning us 2005 taxes Bundled service. Tax planning us 2005 taxes   Bundled service is local and long distance service provided under a plan that does not separately state the charge for the local telephone service. Tax planning us 2005 taxes Bundled service includes plans that provide both local and long distance service for either a flat monthly fee or a charge that varies with the elapsed transmission time for which the service is used. Tax planning us 2005 taxes Telecommunications companies provide bundled service for both landlines and wireless (cellular) service. Tax planning us 2005 taxes If Voice over Internet Protocol service provides both local and long distance service and the charges are not separately stated, such service is bundled service. Tax planning us 2005 taxes   The method for sending or receiving a call, such as on a landline telephone, wireless (cellular), or some other method, does not affect whether a service is local-only or bundled. Tax planning us 2005 taxes Long distance service. Tax planning us 2005 taxes   Long distance service is telephonic quality communication with persons whose telephones are outside the local telephone system of the caller. Tax planning us 2005 taxes Pre-paid telephone cards (PTC). Tax planning us 2005 taxes   A PTC will be treated as bundled service unless a PTC expressly states it is for local-only service. Tax planning us 2005 taxes Generally, the person responsible for collecting the tax is the carrier who transfers the PTC to the transferee. Tax planning us 2005 taxes The transferee is the first person that is not a carrier to whom a PTC is transferred by the carrier. Tax planning us 2005 taxes The transferee is the person liable for the tax and is eligible to request a credit or refund. Tax planning us 2005 taxes For more information, see Regulations section 49. Tax planning us 2005 taxes 4251-4. Tax planning us 2005 taxes   The holder is the person that purchases a PTC to use and not to resell. Tax planning us 2005 taxes Holders are not liable for the tax and cannot request a credit or refund. Tax planning us 2005 taxes Pre-paid cellular telephones. Tax planning us 2005 taxes   Rules similar to the PTC rules described above apply to pre-paid cellular telephones. Tax planning us 2005 taxes The transferee is the person eligible to request the credit or refund. Tax planning us 2005 taxes Installation charges. Tax planning us 2005 taxes   The tax does not apply to payments received for the installation of any instrument, wire, pole, switchboard, apparatus, or equipment. Tax planning us 2005 taxes However, the tax does apply to payments for the repair or replacement of those items incidental to ordinary maintenance. Tax planning us 2005 taxes Answering services. Tax planning us 2005 taxes   The tax does not apply to amounts paid for a private line, an answering service, and a one-way paging or message service if they do not provide access to a local telephone system and the privilege of telephonic communication as part of the local telephone system. Tax planning us 2005 taxes Mobile radio telephone service. Tax planning us 2005 taxes   The tax does not apply to payments for a two-way radio service that does not provide access to a local telephone system. Tax planning us 2005 taxes Coin-operated telephones. Tax planning us 2005 taxes   The tax for local telephone service does not apply to payments made for services by inserting coins in public coin-operated telephones. Tax planning us 2005 taxes But the tax applies if the coin-operated telephone service is furnished for a guaranteed amount. Tax planning us 2005 taxes Figure the tax on the amount paid under the guarantee plus any fixed monthly or other periodic charge. Tax planning us 2005 taxes Telephone-operated security systems. Tax planning us 2005 taxes   The tax does not apply to amounts paid for telephones used only to originate calls to a limited number of telephone stations for security entry into a building. Tax planning us 2005 taxes In addition, the tax does not apply to any amounts paid for rented communication equipment used in the security system. Tax planning us 2005 taxes News services. Tax planning us 2005 taxes   The tax on teletypewriter exchange service does not apply to charges for the following news services. Tax planning us 2005 taxes Services dealing exclusively with the collection or dissemination of news for or through the public press or radio or television broadcasting. Tax planning us 2005 taxes Services used exclusively in the collection or dissemination of news by a news ticker service furnishing a general news service similar to that of the public press. Tax planning us 2005 taxes This exemption applies to payments received for messages from one member of the news media to another member (or to or from their bona fide correspondents). Tax planning us 2005 taxes For the exemption to apply, the charge for these services must be billed in writing to the person paying for the service and that person must certify in writing that the services are used for an exempt purpose. Tax planning us 2005 taxes Services not exempted. Tax planning us 2005 taxes   The tax applies to amounts paid by members of the news media for local telephone service. Tax planning us 2005 taxes International organizations and the American Red Cross. Tax planning us 2005 taxes   The tax does not apply to communication services furnished to an international organization or to the American National Red Cross. Tax planning us 2005 taxes Nonprofit hospitals. Tax planning us 2005 taxes   The tax does not apply to telephone services furnished to income tax-exempt nonprofit hospitals for their use. Tax planning us 2005 taxes Also, the tax does not apply to amounts paid by these hospitals to provide local telephone service in the homes of their personnel who must be reached during their off-duty hours. Tax planning us 2005 taxes Nonprofit educational organizations. Tax planning us 2005 taxes   The tax does not apply to payments received for services and facilities furnished to a nonprofit educational organization for its use. Tax planning us 2005 taxes A nonprofit educational organization is one that satisfies all the following requirements. Tax planning us 2005 taxes It normally maintains a regular faculty and curriculum. Tax planning us 2005 taxes It normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. Tax planning us 2005 taxes It is exempt from income tax under section 501(a). Tax planning us 2005 taxes This includes a school operated by an organization exempt under section 501(c)(3) if the school meets the above qualifications. Tax planning us 2005 taxes Qualified blood collector organizations. Tax planning us 2005 taxes   The tax does not apply to telephone services furnished to qualified blood collector organizations for their use. Tax planning us 2005 taxes A qualified blood collector organization is one that is: Described in section 501(c)(3) and exempt from tax under section 501(a), Primarily engaged in the activity of collecting human blood, Registered with the IRS, and Registered by the Food and Drug Administration to collect blood. Tax planning us 2005 taxes Federal, state, and local government. Tax planning us 2005 taxes   The tax does not apply to communication services provided to the government of the United States, the government of any state or its political subdivisions, the District of Columbia, or the United Nations. Tax planning us 2005 taxes Treat an Indian tribal government as a state for the exemption from the communications tax only if the services involve the exercise of an essential tribal government function. Tax planning us 2005 taxes Exemption certificate. Tax planning us 2005 taxes   Any form of exemption certificate will be acceptable if it includes all the information required by the Internal Revenue Code and Regulations. Tax planning us 2005 taxes See Regulations section 49. Tax planning us 2005 taxes 4253-11. Tax planning us 2005 taxes File the certificate with the provider of the communication services. Tax planning us 2005 taxes An exemption certificate is not required for nontaxable services. Tax planning us 2005 taxes   The following users that are exempt from the communications tax do not have to file an annual exemption certificate after they have filed the initial certificate to claim an exemption from the communications tax. Tax planning us 2005 taxes The American National Red Cross and other international organizations. Tax planning us 2005 taxes Nonprofit hospitals. Tax planning us 2005 taxes Nonprofit educational organizations. Tax planning us 2005 taxes Qualified blood collector organizations. Tax planning us 2005 taxes State and local governments. Tax planning us 2005 taxes   The federal government does not have to file any exemption certificate. Tax planning us 2005 taxes   All other organizations must furnish exemption certificates when required. Tax planning us 2005 taxes Credits or Refunds If tax is collected and paid over for nontaxable services, or for certain services or users exempt from the communications tax, the collector or taxpayer may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. Tax planning us 2005 taxes Alternatively, the person who paid the tax may claim a refund. Tax planning us 2005 taxes For more information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. Tax planning us 2005 taxes Collectors. Tax planning us 2005 taxes   The collector may request a credit or refund if it has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. Tax planning us 2005 taxes These requirements also apply to nontaxable service refunds. Tax planning us 2005 taxes Collectors using the regular method for deposits. Tax planning us 2005 taxes   Collectors using the regular method for deposits must use Form 720X to request a credit or refund if the collector has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. Tax planning us 2005 taxes Collectors using the alternative method for deposits. Tax planning us 2005 taxes   Collectors using the alternative method for deposits must adjust their separate accounts for the credit or refund if it has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. Tax planning us 2005 taxes For more information, see the Instructions for Form 720. Tax planning us 2005 taxes Air Transportation Taxes Taxes are imposed on amounts paid for: Transportation of persons by air, Use of international air travel facilities, and Transportation of property by air. Tax planning us 2005 taxes Transportation of Persons by Air The tax on transportation of persons by air is made up of the: Percentage tax, and Domestic-segment tax. Tax planning us 2005 taxes Percentage tax. Tax planning us 2005 taxes   A tax of 7. Tax planning us 2005 taxes 5% applies to amounts paid for taxable transportation of persons by air. Tax planning us 2005 taxes Amounts paid for transportation include charges for layover or waiting time and movement of aircraft in deadhead service. Tax planning us 2005 taxes Mileage awards. Tax planning us 2005 taxes   The percentage tax may apply to an amount paid (in cash or in kind) to an air carrier (or any related person) for the right to provide mileage awards for, or other reductions in the cost of, any transportation of persons by air. Tax planning us 2005 taxes For example, this applies to mileage awards purchased by credit card companies, telephone companies, restaurants, hotels, and other businesses. Tax planning us 2005 taxes   Generally, the percentage tax does not apply to amounts paid for mileage awards where the mileage awards cannot, under any circumstances, be redeemed for air transportation that is subject to the tax. Tax planning us 2005 taxes Until regulations are issued, the following rules apply to mileage awards. Tax planning us 2005 taxes Amounts paid for mileage awards that cannot be redeemed for taxable transportation beginning and ending in the United States are not subject to the tax. Tax planning us 2005 taxes For this rule, mileage awards issued by a foreign air carrier are considered to be usable only on that foreign air carrier and thus not redeemable for taxable transportation beginning and ending in the United States. Tax planning us 2005 taxes Therefore, amounts paid to a foreign air carrier for mileage awards are not subject to the tax. Tax planning us 2005 taxes Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are not subject to the tax to the extent those miles will be awarded in connection with the purchase of taxable transportation. Tax planning us 2005 taxes Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are subject to the tax to the extent those miles will not be awarded in connection with the purchase of taxable transportation. Tax planning us 2005 taxes Domestic-segment tax. Tax planning us 2005 taxes   The domestic-segment tax is a flat dollar amount for each segment of taxable transportation for which an amount is paid. Tax planning us 2005 taxes However, see Rural airports, later. Tax planning us 2005 taxes A segment is a single takeoff and a single landing. Tax planning us 2005 taxes The amount of the domestic-segment tax is in the Instructions for Form 720. Tax planning us 2005 taxes Charter flights. Tax planning us 2005 taxes    If an aircraft is chartered, the domestic-segment tax for each segment of taxable transportation is figured by multiplying the tax by the number of passengers transported on the aircraft. Tax planning us 2005 taxes Rural airports. Tax planning us 2005 taxes   The domestic-segment tax does not apply to a segment to or from a rural airport. Tax planning us 2005 taxes An airport is a rural airport for a calendar year if fewer than 100,000 commercial passengers departed from the airport by air during the second preceding calendar year (the 100,000 passenger rule), and one of the following is true: The airport is not located within 75 miles of another airport from which 100,000 or more commercial passengers departed during the second preceding calendar year, The airport was receiving essential air service subsidies as of August 5, 1997, or The airport is not connected by paved roads to another airport. Tax planning us 2005 taxes   To apply the 100,000 passenger rule to any airport described in (3) above, only count commercial passengers departing from the airport by air on flight segments of at least 100 miles. Tax planning us 2005 taxes   An updated list of rural airports can be found on the Department of Transportation website at www. Tax planning us 2005 taxes dot. Tax planning us 2005 taxes gov and enter the phrase “Essential Air Service” in the search box. Tax planning us 2005 taxes Taxable transportation. Tax planning us 2005 taxes   Taxable transportation is transportation by air that meets either of the following tests. Tax planning us 2005 taxes It begins and ends either in the United States or at any place in Canada or Mexico not more than 225 miles from the nearest point on the continental United States boundary (this is the 225-mile zone). Tax planning us 2005 taxes It is directly or indirectly from one port or station in the United States to another port or station in the United States, but only if it is not a part of uninterrupted international air transportation, discussed later. Tax planning us 2005 taxes Round trip. Tax planning us 2005 taxes   A round trip is considered two separate trips. Tax planning us 2005 taxes The first trip is from the point of departure to the destination. Tax planning us 2005 taxes The second trip is the return trip from that destination. Tax planning us 2005 taxes Uninterrupted international air transportation. Tax planning us 2005 taxes   This means transportation entirely by air that does not begin and end in the United States or in the 225-mile zone if there is not more than a 12-hour scheduled interval between arrival and departure at any station in the United States. Tax planning us 2005 taxes For a special rule that applies to military personnel, see Exemptions, later. Tax planning us 2005 taxes Transportation between the continental U. Tax planning us 2005 taxes S. Tax planning us 2005 taxes and Alaska or Hawaii. Tax planning us 2005 taxes   This transportation is partially exempt from the tax on transportation of persons by air. Tax planning us 2005 taxes The tax does not apply to the part of the trip between the point at which the route of transportation leaves or enters the continental United States (or a port or station in the 225-mile zone) and the point at which it enters or leaves Hawaii or Alaska. Tax planning us 2005 taxes Leaving or entering occurs when the route of the transportation passes over either the United States border or a point 3 nautical miles (3. Tax planning us 2005 taxes 45 statute miles) from low tide on the coast line, or when it leaves a port or station in the 225-mile zone. Tax planning us 2005 taxes Therefore, this transportation is subject to the percentage tax on the part of the trip in U. Tax planning us 2005 taxes S. Tax planning us 2005 taxes airspace, the domestic-segment tax for each domestic segment, and the tax on the use of international air travel facilities, discussed later. Tax planning us 2005 taxes Transportation within Alaska or Hawaii. Tax planning us 2005 taxes   The tax on transportation of persons by air applies to the entire fare paid in the case of flights between any of the Hawaiian Islands, and between any ports or stations in the Aleutian Islands or other ports or stations elsewhere in Alaska. Tax planning us 2005 taxes The tax applies even though parts of the flights may be over international waters or over Canada, if no point on the direct line of transportation between the ports or stations is more than 225 miles from the United States (Hawaii or Alaska). Tax planning us 2005 taxes Package tours. Tax planning us 2005 taxes   The air transportation taxes apply to “complimentary” air transportation furnished solely to participants in package holiday tours. Tax planning us 2005 taxes The amount paid for these package tours includes a charge for air transportation even though it may be advertised as “free. Tax planning us 2005 taxes ” This rule also applies to the tax on the use of international air travel facilities, discussed later. Tax planning us 2005 taxes Liability for tax. Tax planning us 2005 taxes   The person paying for taxable transportation is liable for the tax and, ordinarily, the person receiving the payment collects the tax, files the returns, and pays the tax over to the government. Tax planning us 2005 taxes However, if payment is made outside the United States for a prepaid order, exchange order, or similar order, the person furnishing the initial transportation provided for under that order must collect the tax. Tax planning us 2005 taxes    A travel agency that is an independent broker and sells tours on aircraft that it charters must collect the transportation tax, file the returns, and pay the tax over to the government. Tax planning us 2005 taxes However, a travel agency that sells tours as the agent of an airline must collect the tax and remit it to the airline for the filing of returns and for the payment of the tax over to the government. Tax planning us 2005 taxes An independent third party that is not under the airline's supervision or control, but is acting on behalf of, and receiving compensation from, a passenger, is not required to collect the tax and pay it to the government. Tax planning us 2005 taxes For more information on resellers of air transportation, see Revenue Ruling 2006-52. Tax planning us 2005 taxes You can find Revenue Ruling 2006-52 on page 761 of I. Tax planning us 2005 taxes R. Tax planning us 2005 taxes B. Tax planning us 2005 taxes 2006-43 at www. Tax planning us 2005 taxes irs. Tax planning us 2005 taxes gov/pub/irs-irbs/irb06-43. Tax planning us 2005 taxes pdf. Tax planning us 2005 taxes   The fact that the aircraft does not use public or commercial airports in taking off and landing has no effect on the tax. Tax planning us 2005 taxes But see Certain helicopter uses, later. Tax planning us 2005 taxes   For taxable transportation that begins and ends in the United States, the tax applies regardless of whether the payment is made in or outside the United States. Tax planning us 2005 taxes   If the tax is not paid when payment for the transportation is made, the air carrier providing the initial segment of the transportation that begins or ends in the United States becomes liable for the tax. Tax planning us 2005 taxes Exemptions. Tax planning us 2005 taxes   The tax on transportation of persons by air does not apply in the following situations. Tax planning us 2005 taxes See also Special Rules on Transportation Taxes, later. Tax planning us 2005 taxes Military personnel on international trips. Tax planning us 2005 taxes   When traveling in uniform at their own expense, United States military personnel on authorized leave are deemed to be traveling in uninterrupted international air transportation (defined earlier) even if the scheduled interval between arrival and departure at any station in the United States is actually more than 12 hours. Tax planning us 2005 taxes However, such personnel must buy their tickets within 12 hours after landing at the first domestic airport and accept the first available accommodation of the type called for by their tickets. Tax planning us 2005 taxes The trip must begin or end outside the United States and the 225-mile zone. Tax planning us 2005 taxes Certain helicopter uses. Tax planning us 2005 taxes   The tax does not apply to air transportation by helicopter if the helicopter is used for any of the following purposes. Tax planning us 2005 taxes Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas. Tax planning us 2005 taxes Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). Tax planning us 2005 taxes Providing emergency medical transportation. Tax planning us 2005 taxes   However, during a use described in items (1) or (2), the tax applies if the helicopter takes off from, or lands at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise uses services provided under section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. Tax planning us 2005 taxes For item (1), treat each flight segment as a separate flight. Tax planning us 2005 taxes Fixed-wing aircraft uses. Tax planning us 2005 taxes   The tax does not apply to air transportation by fixed-wing aircraft if the fixed-wing aircraft is used for any of the following purposes. Tax planning us 2005 taxes Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). Tax planning us 2005 taxes Providing emergency medical transportation. Tax planning us 2005 taxes The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. Tax planning us 2005 taxes   However, during a use described in item (1), the tax applies if the fixed-wing aircraft takes off from, or lands at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise uses services provided under section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. Tax planning us 2005 taxes Skydiving. Tax planning us 2005 taxes   The tax does not apply to any air transportation exclusively for the purpose of skydiving. Tax planning us 2005 taxes Seaplanes. Tax planning us 2005 taxes   The tax does not apply to any air transportation by seaplane for any segment consisting of a takeoff from, and a landing on, water if the places where the takeoff and landing occur are not receiving financial assistance from the Airport and Airways Trust Fund. Tax planning us 2005 taxes Bonus tickets. Tax planning us 2005 taxes   The tax does not apply to free bonus tickets issued by an airline company to its customers who have satisfied all requirements to qualify for the bonus tickets. Tax planning us 2005 taxes However, the tax applies to amounts paid by customers for advance bonus tickets when customers have traveled insufficient mileage to fully qualify for the free advance bonus tickets. Tax planning us 2005 taxes International Air Travel Facilities A tax per person is imposed (whether in or outside the United States) for international flights that begin or end in the United States. Tax planning us 2005 taxes However, for a domestic segment that begins or ends in Alaska or Hawaii, a reduced tax per person applies only to departures. Tax planning us 2005 taxes This tax does not apply if all the transportation is subject to the percentage tax, discussed earlier. Tax planning us 2005 taxes It also doesn't apply if the surtax on fuel used in a fractional ownership program aircraft (discussed earlier) is imposed. Tax planning us 2005 taxes See the Instructions for Form 720 for the tax rates. Tax planning us 2005 taxes Transportation of Property by Air A tax of 6. Tax planning us 2005 taxes 25% is imposed on amounts paid (whether in or outside the United States) for transportation of property by air. Tax planning us 2005 taxes The fact that the aircraft may not use public or commercial airports in taking off and landing has no effect on the tax. Tax planning us 2005 taxes The tax applies only to amounts paid to a person engaged in the business of transporting property by air for hire. Tax planning us 2005 taxes The tax applies only to transportation (including layover time and movement of aircraft in deadhead service) that begins and ends in the United States. Tax planning us 2005 taxes Thus, the tax does not apply to transportation of property by air that begins or ends outside the United States. Tax planning us 2005 taxes Exemptions. Tax planning us 2005 taxes   The tax on transportation of property by air does not apply in the following situations. Tax planning us 2005 taxes See also Special Rules on Transportation Taxes, later. Tax planning us 2005 taxes Cropdusting and firefighting service. Tax planning us 2005 taxes   The tax does not apply to amounts paid for cropdusting or aerial firefighting service. Tax planning us 2005 taxes Exportation. Tax planning us 2005 taxes    The tax does not apply to payments for transportation of property by air in the course of exportation (including to United States possessions) by continuous movement, as evidenced by the execution of Form 1363, Export Exemption Certificate. Tax planning us 2005 taxes See Form 1363 for more information. Tax planning us 2005 taxes Certain helicopter and fixed-wing air ambulance uses. Tax planning us 2005 taxes   The tax does not apply to amounts paid for the use of helicopters in construction to set heating and air conditioning units on roofs of buildings, to dismantle tower cranes, and to aid in construction of power lines and ski lifts. Tax planning us 2005 taxes   The tax also does not apply to air transportation by helicopter or fixed-wing aircraft for the purpose of providing emergency medical services. Tax planning us 2005 taxes The fixed-wing aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. Tax planning us 2005 taxes Skydiving. Tax planning us 2005 taxes   The tax does not apply to any air transportation exclusively for the purpose of skydiving. Tax planning us 2005 taxes Excess baggage. Tax planning us 2005 taxes    The tax does not apply to excess baggage accompanying a passenger on an aircraft operated on an established line. Tax planning us 2005 taxes Surtax on fuel used in a fractional ownership program aircraft. Tax planning us 2005 taxes   The tax does not apply if the surtax on fuel used in a fractional ownership program aircraft (discussed earlier) is imposed. Tax planning us 2005 taxes Alaska and Hawaii. Tax planning us 2005 taxes   For transportation of property to and from Alaska and Hawaii, the tax in general does not apply to the portion of the transportation that is entirely outside the continental United States (or the 225-mile zone if the aircraft departs from or arrives at an airport in the 225-mile zone). Tax planning us 2005 taxes But the tax applies to flights between ports or stations in Alaska and the Aleutian Islands, as well as between ports or stations in Hawaii. Tax planning us 2005 taxes The tax applies even though parts of the flights may be over international waters or over Canada, if no point on a line drawn from where the route of transportation leaves the United States (Alaska) to where it reenters the United States (Alaska) is more than 225 miles from the United States. Tax planning us 2005 taxes Liability for tax. Tax planning us 2005 taxes   The person paying for taxable transportation is liable for the tax and, ordinarily, the person engaged in the business of transporting property by air for hire receives the payment, collects the tax, files the returns, and pays the tax over to the government. Tax planning us 2005 taxes   If tax is not paid when a payment is made outside the United States, the person furnishing the last segment of taxable transportation collects the tax from the person to whom the property is delivered in the United States. Tax planning us 2005 taxes Special Rules on Transportation Taxes In certain circumstances, special rules apply to the taxes on transportation of persons and property by air. Tax planning us 2005 taxes Aircraft used by affiliated corporations. Tax planning us 2005 taxes   The taxes do not apply to payments received by one member of an affiliated group of corporations from another member for services furnished in connection with the use of an aircraft. Tax planning us 2005 taxes However, the aircraft must be owned or leased by a member of the affiliated group and cannot be available for hire by a nonmember of the affiliated group. Tax planning us 2005 taxes Determine whether an aircraft is available for hire by a nonmember of an affiliated group on a flight-by-flight basis. Tax planning us 2005 taxes   For this rule, an affiliated group of corporations is any group of corporations connected with a common parent corporation through 80% or more of stock ownership. Tax planning us 2005 taxes Small aircraft. Tax planning us 2005 taxes   The taxes do not apply to transportation furnished by an aircraft having a maximum certificated takeoff weight of 6,000 pounds or less. Tax planning us 2005 taxes However, the taxes do apply if the aircraft is operated on an established line. Tax planning us 2005 taxes “Operated on an established line” means the aircraft operates with some degree of regularity between definite points. Tax planning us 2005 taxes However, it does not include any time an aircraft is being operated on a flight that is solely for sightseeing. Tax planning us 2005 taxes   Consider an aircraft to be operated on an established line if it is operated on a charter basis between two cities also served by that carrier on a regularly scheduled basis. Tax planning us 2005 taxes   Also, the taxes apply if the aircraft is jet-powered, regardless of its maximum certificated takeoff weight or whether or not it is operated on an established line. Tax planning us 2005 taxes Mixed load of persons and property. Tax planning us 2005 taxes   If a single amount is paid for air transportation of persons and property, the payment must be allocated between the amount subject to the tax on transportation of persons and the amount subject to the tax on transportation of property. Tax planning us 2005 taxes The allocation must be reasonable and supported by adequate records. Tax planning us 2005 taxes Credits or refunds. Tax planning us 2005 taxes   If tax is collected and paid over for air transportation that is not taxable air transportation, the collector may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. Tax planning us 2005 taxes Alternatively, the person who paid the tax may claim a refund. Tax planning us 2005 taxes For information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. Tax planning us 2005 taxes Prev  Up  Next   Home   More Online Publications

Topic 352 - Which Form – 1040, 1040A or 1040EZ?

The three forms used for filing individual federal income tax returns are Form 1040EZ (PDF), Form 1040A (PDF), and Form 1040 (PDF).

Form 1040EZ is the simplest form to fill out. You may use Form 1040EZ if you meet all the following conditions:

  1. Your filing status is single or married filing jointly
  2. You claim no dependents
  3. You, and your spouse if filing a joint return, were under age 65 on January 1, 2014, and not blind at the end of 2013
  4. You have only wages, salaries, tips, taxable scholarship and fellowship grants, unemployment compensation, or Alaska Permanent Fund dividends, and your taxable interest was not over $1,500
  5. Your taxable income is less than $100,000
  6. Your earned tips, if any, are included in boxes 5 and 7 of your Form W-2
  7. You do not owe any household employment taxes on wages you paid to a household employee
  8. You are not a debtor in a Chapter 11 bankruptcy case filed after October 16, 2005
  9. You do not claim any adjustments to income, such as a deduction for IRA contributions, a student loan interest deduction, an educator expenses deduction, or a tuition and fees deduction
  10. You do not claim any credits other than the earned income credit

If you file Form 1040EZ, you cannot itemize deductions or claim any adjustments to income or tax credits (other than the earned income credit).

Form 1040EZ Links

References:

Form 1040EZ Instructions (PDF)

Return Preparation and Filing Options

If you cannot use Form 1040EZ, you may be able to use Form 1040A if:

  1. Your income is only from wages, salaries, tips, taxable scholarships and fellowship grants, interest, or ordinary dividends, capital gain distributions, pensions, annuities, IRAs, unemployment compensation, taxable social security or railroad retirement benefits, and Alaska Permanent Fund dividends
  2. Your taxable income is less than $100,000
  3. You do not itemize deductions
  4. You did not have an alternative minimum tax adjustment on stock you acquired from the exercise of an incentive stock option
  5. Your taxes are only from the Tax Table, the alternative minimum tax, recapture of an education credit, Form 8615 (PDF) or the Qualified Dividends and Capital Gain Tax Worksheet
  6. Your only adjustments to income are the IRA deduction, the student loan interest deduction, the educator expenses deduction, the tuition and fees deduction, and
  7. The only credits you are claiming are the credit for child and dependent care expenses, the earned income credit, the credit for the elderly or the disabled, education credits, the child tax credit, the additional child tax credit, or the retirement savings contribution credit

You can also use Form 1040A if you received dependent care benefits.

Form 1040A Links

References:

Form 1040A Instructions (PDF)

Return Preparation and Filing Options

Often used Schedules:

Form 1040A or 1040, Schedule B (PDF) - Interest and Ordinary Dividends

Form 1040A or 1040, Schedule R (PDF) - Credit for the Elderly or the Disabled

Form 1040A or 1040, Schedule EIC (PDF) - Earned Income Credit

Form 1040A or 1040, Schedule 8812 (PDF) - Child Tax Credit

Often used Forms:

Form 8917 (PDF) - Tuition and Fees Deduction

Form 2441 (PDF) - Child and Dependent Care Expenses

Form 8863 (PDF) - Education Credits (American Opportunity and Lifetime Learning Credits)

Form 8888 (PDF) - Allocation of Refund (Including Savings Bond Purchases)

Finally, you must use Form 1040 under certain circumstances, such as:

  1. Your taxable income is $100,000 or more
  2. You have certain types of income such as unreported tips; certain nontaxable distributions; self-employment earnings; or income received as a partner, a shareholder in an "S" Corporation, or a beneficiary of an estate or trust
  3. You itemize deductions or claim certain tax credits or adjustments to income, or
  4. You owe household employment taxes

A complete list of conditions outlining when Form 1040 must be used is in the Form 1040A Instructions (PDF).

Form 1040 Links

References:

Form 1040 Instructions (PDF)

1040 Central

Return Preparation and Filing Options

Often used Schedules:

Form 1040, Schedule A (PDF) - Itemized Deductions

Form 1040A or 1040, Schedule B (PDF) - Interest and Ordinary Dividends

Form 1040, Schedule C (PDF) - Profit or Loss From Business (Sole Proprietorship)

Form 1040, Schedule C-EZ (PDF) - Net Profit From Business

Form 1040, Schedule D (PDF) - Capital Gains and Losses

Form 1040, Schedule E (PDF) - Supplemental Income and Loss

Form 1040A or 1040, Schedule EIC (PDF) - Earned Income Credit

Form 1040A or 1040, Schedule 8812 (PDF) - Child Tax Credit

Form 1040A or 1040, Schedule R (PDF) - Credit for the Elderly or the Disabled

Often used Forms:

Form 8917 (PDF) - Tuition and Fees Deduction

Form 2441 (PDF) - Child and Dependent Care Expenses

Form 8863 (PDF) - Education Credits (American Opportunity and Lifetime Learning Credits)

Form 8888 (PDF) - Allocation of Refund (Including Savings Bond Purchases)

Form 8949 (PDF) - Sales and Other Dispositions of Capital Assets

If you were a nonresident alien during the tax year and you were married to a U.S. citizen or resident alien, you may use any one of these three forms, based on your circumstances, only if you elect to file a joint return with your spouse. Other nonresident aliens may have to file Form 1040NR (PDF) or Form 1040NR-EZ (PDF). For more information on resident and nonresident aliens, refer to Topic 851 and Publication 519, U.S. Tax Guide for Aliens.

Page Last Reviewed or Updated: December 12, 2013

The Tax Planning Us 2005 Taxes

Tax planning us 2005 taxes 19. Tax planning us 2005 taxes   Education- Related Adjustments Table of Contents Introduction Useful Items - You may want to see: Student Loan Interest DeductionStudent Loan Interest Defined Can You Claim the Deduction How Much Can You Deduct How Do You Figure the Deduction Tuition and Fees DeductionCan You Claim the Deduction What Expenses Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses How Much Can You Deduct Educator Expenses Introduction This chapter discusses the education-related adjustment you can deduct in figuring your adjusted gross income. Tax planning us 2005 taxes This chapter covers the student loan interest deduction, tuition and fees deduction, and the deduction for educator expenses. Tax planning us 2005 taxes Useful Items - You may want to see: Publication 970 Tax Benefits for Education Student Loan Interest Deduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. Tax planning us 2005 taxes However, if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. Tax planning us 2005 taxes For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. Tax planning us 2005 taxes This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. Tax planning us 2005 taxes Table 19-1 summarizes the features of the student loan interest deduction. Tax planning us 2005 taxes Table 19-1. Tax planning us 2005 taxes Student Loan Interest Deduction at a Glance Do not rely on this table alone. Tax planning us 2005 taxes Refer to the text for more details. Tax planning us 2005 taxes Feature Description Maximum benefit You can reduce your income subject to tax by up to $2,500. Tax planning us 2005 taxes Loan qualifications Your student loan: •  must have been taken out solely to pay qualified education expenses, and   • cannot be from a related person or made under a qualified employer plan. Tax planning us 2005 taxes Student qualifications The student must be: • you, your spouse, or your dependent, and   • enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible educational institution. Tax planning us 2005 taxes Time limit on deduction You can deduct interest paid during the remaining period of your student loan. Tax planning us 2005 taxes Phaseout The amount of your deduction depends on your income level. Tax planning us 2005 taxes Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. Tax planning us 2005 taxes It includes both required and voluntary interest payments. Tax planning us 2005 taxes Qualified Student Loan This is a loan you took out solely to pay qualified education expenses (defined later) that were: For you, your spouse, or a person who was your dependent (defined in chapter 3) when you took out the loan, Paid or incurred within a reasonable period of time before or after you took out the loan, and For education provided during an academic period when the student is an eligible student. Tax planning us 2005 taxes Loans from the following sources are not qualified student loans. Tax planning us 2005 taxes A related person. Tax planning us 2005 taxes A qualified employer plan. Tax planning us 2005 taxes Exceptions. Tax planning us 2005 taxes   For purposes of the student loan interest deduction, the following are exceptions to the general rules for dependents. Tax planning us 2005 taxes An individual can be your dependent even if you are the dependent of another taxpayer. Tax planning us 2005 taxes An individual can be your dependent even if the individual files a joint return with a spouse. Tax planning us 2005 taxes An individual can be your dependent even if the individual had gross income for the year that was equal to or more than the exemption amount for the year ($3,900 for 2013). Tax planning us 2005 taxes    Reasonable period of time. Tax planning us 2005 taxes   Qualified education expenses are treated as paid or incurred within a reasonable period of time before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal postsecondary education loan program. Tax planning us 2005 taxes   Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met. Tax planning us 2005 taxes The expenses relate to a specific academic period. Tax planning us 2005 taxes The loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period. Tax planning us 2005 taxes   If neither of the above situations applies, the reasonable period of time is determined based on all the relevant facts and circumstances. Tax planning us 2005 taxes Academic period. Tax planning us 2005 taxes   An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. Tax planning us 2005 taxes In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. Tax planning us 2005 taxes Eligible student. Tax planning us 2005 taxes   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. Tax planning us 2005 taxes Enrolled at least half-time. Tax planning us 2005 taxes   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 planning us 2005 taxes   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Tax planning us 2005 taxes However, the standard may not be lower than any of those established by the U. Tax planning us 2005 taxes S. Tax planning us 2005 taxes Department of Education under the Higher Education Act of 1965. Tax planning us 2005 taxes Related person. Tax planning us 2005 taxes   You cannot deduct interest on a loan you get from a related person. Tax planning us 2005 taxes Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. Tax planning us 2005 taxes ), Your lineal descendants (children, grandchildren, etc. Tax planning us 2005 taxes ), and Certain corporations, partnerships, trusts, and exempt organizations. Tax planning us 2005 taxes Qualified employer plan. Tax planning us 2005 taxes   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. Tax planning us 2005 taxes Qualified Education Expenses For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. Tax planning us 2005 taxes They include amounts paid for the following items. Tax planning us 2005 taxes Tuition and fees. Tax planning us 2005 taxes Room and board. Tax planning us 2005 taxes Books, supplies, and equipment. Tax planning us 2005 taxes Other necessary expenses (such as transportation). Tax planning us 2005 taxes The cost of room and board qualifies only to the extent that it is not more than: The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, or If greater, the actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. Tax planning us 2005 taxes Eligible educational institution. Tax planning us 2005 taxes   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Tax planning us 2005 taxes S. Tax planning us 2005 taxes Department of Education. Tax planning us 2005 taxes It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Tax planning us 2005 taxes   Certain educational institutions located outside the United States also participate in the U. Tax planning us 2005 taxes S. Tax planning us 2005 taxes Department of Education's Federal Student Aid (FSA) programs. Tax planning us 2005 taxes   For purposes of the student loan interest deduction, an eligible educational institution also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. Tax planning us 2005 taxes   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. Tax planning us 2005 taxes The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. Tax planning us 2005 taxes    The educational institution should be able to tell you if it is an eligible educational institution. Tax planning us 2005 taxes Adjustments to qualified education expenses. Tax planning us 2005 taxes   You must reduce your qualified education expenses by certain tax-free items (such as the tax-free part of scholarships and fellowships). Tax planning us 2005 taxes See chapter 4 of Publication 970 for details. Tax planning us 2005 taxes Include as Interest In addition to simple interest on the loan, certain loan origination fees, capitalized interest, interest on revolving lines of credit, and interest on refinanced student loans can be student loan interest if all other requirements are met. Tax planning us 2005 taxes Loan origination fee. Tax planning us 2005 taxes   In general, this is a one-time fee charged by the lender when a loan is made. Tax planning us 2005 taxes To be deductible as interest, the fee must be for the use of money rather than for property or services (such as commitment fees or processing costs) provided by the lender. Tax planning us 2005 taxes A loan origination fee treated as interest accrues over the life of the loan. Tax planning us 2005 taxes Capitalized interest. Tax planning us 2005 taxes    This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. Tax planning us 2005 taxes Interest on revolving lines of credit. Tax planning us 2005 taxes   This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. Tax planning us 2005 taxes See Qualified Education Expenses , earlier. Tax planning us 2005 taxes Interest on refinanced student loans. Tax planning us 2005 taxes   This includes interest on both: Consolidated loans—loans used to refinance more than one student loan of the same borrower, and Collapsed loans—two or more loans of the same borrower that are treated by both the lender and the borrower as one loan. Tax planning us 2005 taxes If you refinance a qualified student loan for more than your original loan and you use the additional amount for any purpose other than qualified education expenses, you cannot deduct any interest paid on the refinanced loan. Tax planning us 2005 taxes Voluntary interest payments. Tax planning us 2005 taxes   These are payments made on a qualified student loan during a period when interest payments are not required, such as when the borrower has been granted a deferment or the loan has not yet entered repayment status. Tax planning us 2005 taxes Do Not Include as Interest You cannot claim a student loan interest deduction for any of the following items. Tax planning us 2005 taxes Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. Tax planning us 2005 taxes Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. Tax planning us 2005 taxes Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the “NHSC Loan Repayment Program”) or certain other loan repayment assistance programs. Tax planning us 2005 taxes For more information, see Student Loan Repayment Assistance in chapter 5 of Publication 970. Tax planning us 2005 taxes Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. Tax planning us 2005 taxes Your filing status is any filing status except married filing separately. Tax planning us 2005 taxes No one else is claiming an exemption for you on his or her tax return. Tax planning us 2005 taxes You are legally obligated to pay interest on a qualified student loan. Tax planning us 2005 taxes You paid interest on a qualified student loan. Tax planning us 2005 taxes Interest paid by others. Tax planning us 2005 taxes   If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest. Tax planning us 2005 taxes See chapter 4 of Publication 970 for more information. Tax planning us 2005 taxes No Double Benefit Allowed You cannot deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, home mortgage interest). Tax planning us 2005 taxes How Much Can You Deduct Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. Tax planning us 2005 taxes However, the amount determined above is phased out (gradually reduced) if your MAGI is between $60,000 and $75,000 ($125,000 and $155,000 if you file a joint return). Tax planning us 2005 taxes You cannot take a student loan interest deduction if your MAGI is $75,000 or more ($155,000 or more if you file a joint return). Tax planning us 2005 taxes For details on figuring your MAGI, see chapter 4 of Publication 970. Tax planning us 2005 taxes How Do You Figure the Deduction Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the Form 1040 or Form 1040A instructions. Tax planning us 2005 taxes However, if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1 in chapter 4 of Publication 970. Tax planning us 2005 taxes To help you figure your student loan interest deduction, you should receive Form 1098-E, Student Loan Interest Statement. Tax planning us 2005 taxes Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2013 on one or more qualified student loans must send Form 1098-E (or acceptable substitute) to each borrower by January 31, 2014. Tax planning us 2005 taxes For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. Tax planning us 2005 taxes Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. Tax planning us 2005 taxes However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. Tax planning us 2005 taxes For information on allocating payments between interest and principal, see chapter 4 of Publication 970. Tax planning us 2005 taxes To claim the deduction, enter the allowable amount on Form 1040, line 33, or Form 1040A, line 18. Tax planning us 2005 taxes Tuition and Fees Deduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). Tax planning us 2005 taxes You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. Tax planning us 2005 taxes The qualified expenses must be for higher education, as explained later under What Expenses Qualify . Tax planning us 2005 taxes The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. Tax planning us 2005 taxes Table 19-2 summarizes the features of the tuition and fees deduction. Tax planning us 2005 taxes You may be able to take a credit for your education expenses instead of a deduction. Tax planning us 2005 taxes You can choose the one that will give you the lower tax. Tax planning us 2005 taxes See chapter 35, Education Credits, for details about the credits. Tax planning us 2005 taxes Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. Tax planning us 2005 taxes Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. Tax planning us 2005 taxes You paid qualified education expenses of higher education in 2013 for academic periods beginning in 2013 and those beginning in the first three months of 2014. Tax planning us 2005 taxes You paid the education expenses for an eligible student. Tax planning us 2005 taxes The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption (defined in chapter 3) on your tax return. Tax planning us 2005 taxes Qualified education expenses are defined under What Expenses Qualify . Tax planning us 2005 taxes Eligible students are defined later under Who Is an Eligible Student . Tax planning us 2005 taxes Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. Tax planning us 2005 taxes Your filing status is married filing separately. Tax planning us 2005 taxes Another person can claim an exemption for you as a dependent on his or her tax return. Tax planning us 2005 taxes You cannot take the deduction even if the other person does not actually claim that exemption. Tax planning us 2005 taxes Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). Tax planning us 2005 taxes You (or your spouse) were a nonresident alien for any part of 2013 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. Tax planning us 2005 taxes More information on nonresident aliens can be found in Publication 519, U. Tax planning us 2005 taxes S. Tax planning us 2005 taxes Tax Guide for Aliens. Tax planning us 2005 taxes You or anyone else claims an American opportunity or lifetime learning credit in 2013 with respect to expenses of the student for whom the qualified education expenses were paid. Tax planning us 2005 taxes However, a state tax credit will not disqualify you from claiming a tuition and fees deduction. Tax planning us 2005 taxes Table 19-2. Tax planning us 2005 taxes Tuition and Fees Deduction at a Glance Do not rely on this table alone. Tax planning us 2005 taxes Refer to the text for more details. Tax planning us 2005 taxes Question   Answer What is the maximum benefit?   You can reduce your income subject to tax by up to $4,000. Tax planning us 2005 taxes Where is the deduction taken?   As an adjustment to income on Form 1040, line 34, or Form 1040A, line 19. Tax planning us 2005 taxes For whom must the expenses be paid?   A student enrolled in an eligible educational institution who is either: you, your spouse, or your dependent for whom you claim an exemption. Tax planning us 2005 taxes What tuition and fees are deductible?   Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living, or family expenses, such as room and board. Tax planning us 2005 taxes What Expenses Qualify The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Tax planning us 2005 taxes Generally, the deduction is allowed for qualified education expenses paid in 2013 in connection with enrollment at an institution of higher education during 2013 or for an academic period (defined earlier under Student Loan Interest Deduction ) beginning in 2013 or in the first 3 months of 2014. Tax planning us 2005 taxes Payments with borrowed funds. Tax planning us 2005 taxes   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. Tax planning us 2005 taxes Use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. Tax planning us 2005 taxes Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. Tax planning us 2005 taxes Student withdraws from class(es). Tax planning us 2005 taxes   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. Tax planning us 2005 taxes Qualified Education Expenses For purposes of the tuition and fees deduction, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Tax planning us 2005 taxes Eligible educational institution. Tax planning us 2005 taxes   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Tax planning us 2005 taxes S. Tax planning us 2005 taxes Department of Education. Tax planning us 2005 taxes It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Tax planning us 2005 taxes The educational institution should be able to tell you if it is an eligible educational institution. Tax planning us 2005 taxes   Certain educational institutions located outside the United States also participate in the U. Tax planning us 2005 taxes S. Tax planning us 2005 taxes Department of Education's Federal Student Aid (FSA) programs. Tax planning us 2005 taxes Academic period. Tax planning us 2005 taxes    An academic period is any quarter, semester, trimester, or any other period of study as reasonably determined by an eligible educational institution. Tax planning us 2005 taxes If an eligible educational institution uses credit hours and does not have academic terms, each payment period may be treated as an academic period. Tax planning us 2005 taxes Related expenses. Tax planning us 2005 taxes   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses for the tuition and fees deduction only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Tax planning us 2005 taxes Prepaid expenses. Tax planning us 2005 taxes   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring the tuition and fees deduction. Tax planning us 2005 taxes See Academic period, earlier. Tax planning us 2005 taxes 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 the tuition and fees deduction for 2013 only if you meet all the other requirements. Tax planning us 2005 taxes    You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 tuition and fees deduction. Tax planning us 2005 taxes No Double Benefit Allowed You cannot do any of the following. Tax planning us 2005 taxes Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. Tax planning us 2005 taxes Deduct qualified education expenses for a student on your income tax return if you or anyone else claims an American opportunity or lifetime learning credit for that same student in the same year. Tax planning us 2005 taxes Deduct qualified education expenses that have been used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or a qualified tuition program (QTP). Tax planning us 2005 taxes For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Tax planning us 2005 taxes See Figuring the Taxable Portion of a Distribution in chapter 7 (Coverdell ESA) and chapter 8 (QTP) of Publication 970. Tax planning us 2005 taxes Deduct qualified education expenses that have been paid with tax-free interest on U. Tax planning us 2005 taxes S. Tax planning us 2005 taxes savings bonds (Form 8815). Tax planning us 2005 taxes See Figuring the Tax-Free Amount in chapter 10 of Publication 970. Tax planning us 2005 taxes Deduct qualified education expenses that have been paid with tax-free educational assistance such as a scholarship, grant, or employer-provided educational assistance. Tax planning us 2005 taxes See Adjustments to qualified education expenses, later. Tax planning us 2005 taxes Adjustments to qualified education expenses. Tax planning us 2005 taxes   For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. Tax planning us 2005 taxes The result is the amount of adjusted qualified education expenses for each student. Tax planning us 2005 taxes Tax-free educational assistance. Tax planning us 2005 taxes   For tax-free educational assistance you received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance to that academic period. Tax planning us 2005 taxes See Academic period, earlier. Tax planning us 2005 taxes   This includes: The tax-free part of scholarships and fellowships, including Pell grants (see chapter 1 of Publication 970), The tax-free part of any employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Tax planning us 2005 taxes Generally, any scholarship or fellowship you receive is treated as tax-free educational assistance. Tax planning us 2005 taxes However, a scholarship or fellowship is not treated as tax-free educational assistance to the extent you include it in gross income (if you are required to file a tax return) for the year the scholarship or fellowship is received and either: 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 Pub. Tax planning us 2005 taxes 970, chapter 1. Tax planning us 2005 taxes The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. Tax planning us 2005 taxes 970, chapter 1. Tax planning us 2005 taxes You may be able to increase the combined value of your tuition and fees deduction and certain educational assistance if you include some or all of the educational assistance in income in the year it is received. Tax planning us 2005 taxes For details, see Adjustments to Qualified Education Expenses in chapter 6 of Pub. Tax planning us 2005 taxes 970. Tax planning us 2005 taxes Some tax-free educational assistance received in 2013 may be treated as a refund of qualified education expenses paid in 2013. Tax planning us 2005 taxes This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). Tax planning us 2005 taxes If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed, later. Tax planning us 2005 taxes If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed, later. Tax planning us 2005 taxes Refunds. Tax planning us 2005 taxes   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or may require you to include some or all of the refund in your gross income for the year the refund is received. Tax planning us 2005 taxes See chapter 6 of Pub. Tax planning us 2005 taxes 970 for more information. Tax planning us 2005 taxes Some tax-free educational assistance received after 2013 may be treated as a refund. Tax planning us 2005 taxes See Tax-free educational assistance, earlier. Tax planning us 2005 taxes Refunds received in 2013. Tax planning us 2005 taxes    For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses paid in 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. Tax planning us 2005 taxes Refunds received after 2013 but before your income tax return is filed. Tax planning us 2005 taxes   If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received before you file your 2013 income tax return, reduce the amount of qualified education expenses for 2013 by the amount of the refund. Tax planning us 2005 taxes Refunds received after 2013 and after your income tax return is filed. Tax planning us 2005 taxes   If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received after you file your 2013 income tax return, you may need to include some or all of the refund in your gross income for the year the refund is received. Tax planning us 2005 taxes See chapter 6 of Pub. Tax planning us 2005 taxes 970 for more information. Tax planning us 2005 taxes Coordination with Coverdell education savings accounts and qualified tuition programs. Tax planning us 2005 taxes    Reduce your qualified education expenses by any qualified education expenses used to figure the exclusion from gross income of (a) interest received under an education savings bond program, or (b) any distribution from a Coverdell education savings account or qualified tuition program (QTP). Tax planning us 2005 taxes For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Tax planning us 2005 taxes Amounts that do not reduce qualified education expenses. Tax planning us 2005 taxes   Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Tax planning us 2005 taxes   Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. Tax planning us 2005 taxes The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses. Tax planning us 2005 taxes The use of the money is not restricted. Tax planning us 2005 taxes Expenses That Do Not Qualify Qualified education expenses do not include amounts paid for: Insurance, Medical expenses (including student health fees), Room and board, Transportation, or Similar personal, living, or family expenses. Tax planning us 2005 taxes This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Tax planning us 2005 taxes Sports, games, hobbies, and noncredit courses. Tax planning us 2005 taxes   Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. Tax planning us 2005 taxes However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. Tax planning us 2005 taxes Comprehensive or bundled fees. Tax planning us 2005 taxes   Some eligible educational institutions combine all of their fees for an academic period into one amount. Tax planning us 2005 taxes If you do not receive, or do not have access to, an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. Tax planning us 2005 taxes The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T, Tuition Statement. Tax planning us 2005 taxes See How Do You Figure the Deduction , later, for more information about Form 1098-T. Tax planning us 2005 taxes Who Is an Eligible Student For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (defined earlier). Tax planning us 2005 taxes Who Can Claim a Dependent's Expenses Generally, in order to claim the tuition and fees deduction for qualified education expenses for a dependent, you must: Have paid the expenses, and Claim an exemption for the student as a dependent. Tax planning us 2005 taxes Table 19-3 summarizes who can claim the deduction. Tax planning us 2005 taxes How Much Can You Deduct The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. Tax planning us 2005 taxes For details on figuring your MAGI, see chapter 6 of Publication 970. Tax planning us 2005 taxes How Do You Figure the Deduction Figure the deduction using Form 8917. Tax planning us 2005 taxes To help you figure your tuition and fees deduction, you should receive Form 1098-T, Tuition Statement. Tax planning us 2005 taxes Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2014. Tax planning us 2005 taxes To claim the deduction, enter the allowable amount on Form 1040, line 34, or Form 1040A, line 19, and attach your completed Form 8917. Tax planning us 2005 taxes Table 19-3. Tax planning us 2005 taxes Who Can Claim a Dependent's Expenses Do not rely on this table alone. Tax planning us 2005 taxes See Who Can Claim a Dependent's Expenses in chapter 6 of Publication 970. Tax planning us 2005 taxes IF your dependent is an eligible student and you. Tax planning us 2005 taxes . Tax planning us 2005 taxes . Tax planning us 2005 taxes AND. Tax planning us 2005 taxes . Tax planning us 2005 taxes . Tax planning us 2005 taxes THEN. Tax planning us 2005 taxes . Tax planning us 2005 taxes . Tax planning us 2005 taxes claim an exemption for your dependent you paid all qualified education expenses for your dependent only you can deduct the qualified education expenses that you paid. Tax planning us 2005 taxes Your dependent cannot take a deduction. Tax planning us 2005 taxes claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Tax planning us 2005 taxes do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. Tax planning us 2005 taxes do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Tax planning us 2005 taxes Educator Expenses If you were an eligible educator in 2013, you can deduct on Form 1040, line 23, or Form 1040A, line 16, up to $250 of qualified expenses you paid in 2013. Tax planning us 2005 taxes If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Tax planning us 2005 taxes However, neither spouse can deduct more than $250 of his or her qualified expenses on Form 1040, line 23, or Form 1040A, line 16. Tax planning us 2005 taxes You may be able to deduct expenses that are more than the $250 (or $500) limit on Schedule A (Form 1040), line 21. Tax planning us 2005 taxes Eligible educator. Tax planning us 2005 taxes   An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who worked in a school for at least 900 hours during a school year. Tax planning us 2005 taxes Qualified expenses. Tax planning us 2005 taxes   Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. Tax planning us 2005 taxes An ordinary expense is one that is common and accepted in your educational field. Tax planning us 2005 taxes A necessary expense is one that is helpful and appropriate for your profession as an educator. Tax planning us 2005 taxes An expense does not have to be required to be considered necessary. Tax planning us 2005 taxes   Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. Tax planning us 2005 taxes   You must reduce your qualified expenses by the following amounts. Tax planning us 2005 taxes Excludable U. Tax planning us 2005 taxes S. Tax planning us 2005 taxes series EE and I savings bond interest from Form 8815. Tax planning us 2005 taxes See Figuring the Tax-Free Amount in chapter 10 of Publication 970. Tax planning us 2005 taxes Nontaxable qualified tuition program earnings or distributions. Tax planning us 2005 taxes See Figuring the Taxable Portion of a Distribution in chapter 8 of Publication 970. Tax planning us 2005 taxes Nontaxable distribution of earnings from a Coverdell education savings account. Tax planning us 2005 taxes See Figuring the Taxable Portion of a Distribution in chapter 7 of Publication 970. Tax planning us 2005 taxes Any reimbursements you received for these expenses that were not reported to you in box 1 of your Form W-2. Tax planning us 2005 taxes Prev  Up  Next   Home   More Online Publications