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1040 es tax forms 4. 1040 es tax forms   Filing U. 1040 es tax forms S. 1040 es tax forms Tax Returns Table of Contents Who Must FileFiling Requirement if Possession Income Is Excluded When To FileExtension of Time To File Where To File Special Rules for Completing Your U. 1040 es tax forms S. 1040 es tax forms Tax ReturnU. 1040 es tax forms S. 1040 es tax forms Armed Forces. 1040 es tax forms Deductions if Possession Income Is Excluded Foreign Tax Credit if Possession Income Is Excluded Self-Employment Tax Additional Medicare Tax Net Investment Income Tax Paying Your TaxesEstimated Tax Double TaxationCompetent Authority Assistance The information in chapter 3 will tell you if a U. 1040 es tax forms S. 1040 es tax forms income tax return is required for your situation. 1040 es tax forms If a U. 1040 es tax forms S. 1040 es tax forms return is required, your next step is to see if you meet the filing requirements. 1040 es tax forms If you do meet the filing requirements, the information presented in this chapter will help you understand the special procedures involved. 1040 es tax forms This chapter discusses: Filing requirements, When to file your return, Where to send your return, How to adjust your deductions and credits if you are excluding income from American Samoa or Puerto Rico, How to make estimated tax payments and pay self-employment tax, and How to request assistance in resolving instances of double taxation. 1040 es tax forms Who Must File If you are not required to file a possession tax return that includes your worldwide income, you must generally file a U. 1040 es tax forms S. 1040 es tax forms income tax return if your gross income is at least the amount shown in Table 4-1, later, for your filing status and age. 1040 es tax forms If you were a bona fide resident of American Samoa or Puerto Rico and are able to exclude your possession income from your U. 1040 es tax forms S. 1040 es tax forms tax return, your filing requirement may be less than the amount in Table 4-1. 1040 es tax forms For details, see the information under Filing Requirement if Possession Income Is Excluded , later. 1040 es tax forms Some individuals (such as those who can be claimed as a dependent on another person's return or who owe certain taxes, such as self-employment tax) must file a tax return even though the gross income is less than the amount shown in Table 4-1 for their filing status and age. 1040 es tax forms For more information, see the Form 1040 instructions. 1040 es tax forms Filing Requirement if Possession Income Is Excluded If you were a bona fide resident of American Samoa or Puerto Rico and qualify to exclude possession income on your U. 1040 es tax forms S. 1040 es tax forms tax return, you must determine your adjusted filing requirement. 1040 es tax forms Generally, your filing requirement is based on the total of your (and your spouse's if filing a joint return) personal exemption(s) plus your standard deduction. 1040 es tax forms Personal exemption. 1040 es tax forms   When figuring your filing requirement, your personal exemption is allowed in full. 1040 es tax forms Do not reduce it for this purpose. 1040 es tax forms Do not include exemptions for your dependents. 1040 es tax forms Allowable standard deduction. 1040 es tax forms   Unless your filing status is married filing separately, the minimum income level at which you must file a return is based, in part, on the standard deduction for your filing status and age. 1040 es tax forms Because the standard deduction applies to all types of income, it must be divided between your excluded income and income from other sources. 1040 es tax forms Multiply the regular standard deduction for your filing status and age (this is zero if you are married filing a separate return; all others, see Form 1040 instructions) by the following fraction:      Gross income subject to U. 1040 es tax forms S. 1040 es tax forms income tax     Gross income from all sources (including excluded possession income)   Example. 1040 es tax forms Barbara Spruce, a U. 1040 es tax forms S. 1040 es tax forms citizen, is single, under 65, and a bona fide resident of American Samoa. 1040 es tax forms During 2013, she received $20,000 of income from American Samoa sources (qualifies for exclusion) and $8,000 of income from sources outside the possession (subject to U. 1040 es tax forms S. 1040 es tax forms income tax). 1040 es tax forms Her allowable standard deduction for 2013 is figured as follows:   $8,000 $28,000 × $6,100 (regular standard deduction) = $1,743   Adjusted filing requirement. 1040 es tax forms   Figure your adjusted filing requirement by adding the amount of your allowable standard deduction to the amount of your personal exemption. 1040 es tax forms You must file a U. 1040 es tax forms S. 1040 es tax forms income tax return if your gross income is at least the amount shown on line 3 of the following worksheet. 1040 es tax forms    1. 1040 es tax forms Enter the allowable standard deduction you figured earlier under Allowable standard deduction . 1040 es tax forms If your filing status is married filing separately, enter -0-   2. 1040 es tax forms Personal exemption. 1040 es tax forms If your filing status is married filing jointly, enter $7,800; if someone can claim you as a dependent, enter -0-; otherwise, enter $3,900   3. 1040 es tax forms Add lines 1 and 2. 1040 es tax forms You must file a U. 1040 es tax forms S. 1040 es tax forms income tax return if your gross income from sources outside the relevant possession is at least this amount   Table 4-1. 1040 es tax forms 2013 Filing Requirements Chart for Most Taxpayers IF your filing status is. 1040 es tax forms . 1040 es tax forms . 1040 es tax forms AND at the end of 2013 you were*. 1040 es tax forms . 1040 es tax forms . 1040 es tax forms THEN file a return if your gross income** was at least. 1040 es tax forms . 1040 es tax forms . 1040 es tax forms single under 65 $10,000 65 or older $11,500 married filing jointly*** under 65 (both spouses) $20,000 65 or older (one spouse) $21,200 65 or older (both spouses) $22,400 married filing separately any age $3,900 head of household under 65 $12,850 65 or older $14,350 qualifying widow(er)  with dependent child under 65 $16,100 65 or older $17,300 * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. 1040 es tax forms ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States (even if you can exclude part or all of it). 1040 es tax forms Do not include social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time during 2013, or (b) one-half of your social security benefits plus your other gross income is more than $25,000 ($32,000 if married filing jointly). 1040 es tax forms If (a) or (b) applies, see the instructions for Form 1040 or Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure the taxable part of social security benefits you must include in gross income. 1040 es tax forms *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900 you must file a return regardless of your age. 1040 es tax forms Example 1. 1040 es tax forms James and Joan Thompson, one over 65, are U. 1040 es tax forms S. 1040 es tax forms citizens and bona fide residents of Puerto Rico during the entire tax year. 1040 es tax forms They file a joint income tax return. 1040 es tax forms During 2013, they received $35,000 of income from Puerto Rico sources (qualifies for exclusion) and $6,000 of income from sources outside Puerto Rico (subject to U. 1040 es tax forms S. 1040 es tax forms income tax). 1040 es tax forms Their allowable standard deduction for 2013 is figured as follows:   $6,000 $41,000 × $13,400 ( standard deduction for 65 or older (one spouse) ) = $1,961   The Thompsons do not have to file a U. 1040 es tax forms S. 1040 es tax forms income tax return because their gross income subject to U. 1040 es tax forms S. 1040 es tax forms tax ($6,000) is less than their allowable standard deduction plus their personal exemptions ($1,961+ $7,800= $9,761). 1040 es tax forms Example 2. 1040 es tax forms Barbara Spruce (see Example under Allowable standard deduction, earlier), however, must file a U. 1040 es tax forms S. 1040 es tax forms income tax return because her gross income subject to U. 1040 es tax forms S. 1040 es tax forms tax ($8,000) is more than her allowable standard deduction plus her personal exemption ($1,743 + $3,900 = $5,643). 1040 es tax forms If you must file a U. 1040 es tax forms S. 1040 es tax forms income tax return, you may be able to file a paperless return using IRS e-file. 1040 es tax forms See your form instructions or visit our website at IRS. 1040 es tax forms gov. 1040 es tax forms When To File If you file on a calendar year basis, the due date for filing your U. 1040 es tax forms S. 1040 es tax forms income tax return is April 15 following the end of your tax year. 1040 es tax forms If you use a fiscal year (a year ending on the last day of a month other than December), the due date is the 15th day of the 4th month after the end of your fiscal year. 1040 es tax forms If any due date falls on a Saturday, Sunday, or legal holiday, your tax return is due on the next business day. 1040 es tax forms For your 2013 tax return, the due date is April 15, 2014. 1040 es tax forms If you mail your federal tax return, it is considered timely if it bears an official postmark dated on or before the due date, including any extensions. 1040 es tax forms If you use a private delivery service designated by the IRS, generally the postmark date is the date the private delivery service records in its database or marks on the mailing label. 1040 es tax forms See your form instructions for a list of designated private delivery services. 1040 es tax forms Extension of Time To File You can get an extension of time to file your U. 1040 es tax forms S. 1040 es tax forms income tax return. 1040 es tax forms Special rules apply for those living outside the United States. 1040 es tax forms Automatic 6-Month Extension If you cannot file your 2013 return by the due date, you can get an automatic 6-month extension of time to file. 1040 es tax forms Example. 1040 es tax forms If your return must be filed by April 15, 2014, you will have until October 15, 2014, to file. 1040 es tax forms Although you are not required to make a payment of the tax you estimate as due, Form 4868 does not extend the time to pay taxes. 1040 es tax forms If you do not pay the amount due by the regular due date (generally April 15), you will owe interest on any unpaid tax from the original due date to the date you pay the tax. 1040 es tax forms You may also be charged penalties (see the Instructions for Form 4868). 1040 es tax forms How to get the automatic extension. 1040 es tax forms   You can get the automatic 6-month extension if you do one of the following by the due date for filing your return. 1040 es tax forms E-file Form 4868 using your personal computer or a tax professional. 1040 es tax forms E-file and pay by credit or debit card. 1040 es tax forms Your payment must be at least $1. 1040 es tax forms You may pay by phone or over the Internet. 1040 es tax forms Do not file Form 4868. 1040 es tax forms File a paper Form 4868. 1040 es tax forms If you are a fiscal year taxpayer, you must file a paper Form 4868. 1040 es tax forms See Form 4868 for information on getting an extension using these options. 1040 es tax forms When to file. 1040 es tax forms   You must request the automatic extension by the due date for your return. 1040 es tax forms You can file your return any time before the 6-month extension period ends. 1040 es tax forms When you file your return. 1040 es tax forms   Enter any payment you made related to the extension of time to file on Form 1040, line 68. 1040 es tax forms If you file Form 1040A, U. 1040 es tax forms S. 1040 es tax forms Individual Income Tax Return, or Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents, include that payment in your total payments on Form 1040A, line 41, or Form 1040EZ, line 9. 1040 es tax forms Also enter “Form 4868” and the amount paid in the space to the left of the entry space for line 41 or line 9. 1040 es tax forms You cannot ask the Internal Revenue Service to figure your tax if you use the extension of time to file. 1040 es tax forms Individuals Outside the United States and Puerto Rico You are allowed an automatic 2-month extension (until June 16, 2014, if you use the calendar year) to file your 2013 return and pay any federal income tax due if: You are a U. 1040 es tax forms S. 1040 es tax forms citizen or resident, and On the due date of your return: You are living outside of the United States and Puerto Rico, and your main place of business or post of duty is outside the United States and Puerto Rico, or You are in military or naval service on duty outside the United States and Puerto Rico. 1040 es tax forms However, if you pay the tax due after the regular due date (generally April 15), interest will be charged from April 15 until the date the tax is paid. 1040 es tax forms If you serve in a combat zone or qualified hazardous duty area, you may be eligible for a longer extension of time to file. 1040 es tax forms For more information, see Publication 3, Armed Forces' Tax Guide. 1040 es tax forms Married taxpayers. 1040 es tax forms   If you file a joint return, only one spouse has to qualify for this automatic extension. 1040 es tax forms However, if you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies. 1040 es tax forms How to get the extension. 1040 es tax forms   To use this special automatic extension, you must attach a statement to your return explaining what situation qualified you for the extension. 1040 es tax forms (See the situations listed under (2), earlier. 1040 es tax forms ) Extension beyond 2 months. 1040 es tax forms   If you cannot file your 2013 return within the automatic 2-month extension period, you can get an additional 4-month extension, for a total of 6 months. 1040 es tax forms File Form 4868 by the end of the automatic extension period (June 16, 2014 for calendar year taxpayers). 1040 es tax forms Be sure to check the box on Form 4868, line 8, if appropriate. 1040 es tax forms   In addition to this 6-month extension, taxpayers who are out of the country (as defined under (2) earlier) can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). 1040 es tax forms   To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. 1040 es tax forms Send the letter by the extended due date (October 15 for calendar year taxpayers) to:  Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA   You will not receive any notification from the IRS unless your request is denied for being untimely. 1040 es tax forms Where To File Use the addresses listed below if you have to file Form 1040 with the United States and you are excluding possession income from American Samoa or Puerto Rico. 1040 es tax forms If you are not including a check or a money order, send your U. 1040 es tax forms S. 1040 es tax forms tax return and all attachments to:   Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA If you are including a check or a money order, send your U. 1040 es tax forms S. 1040 es tax forms tax return and all attachments to:  Internal Revenue Service P. 1040 es tax forms O. 1040 es tax forms Box 1303 Charlotte, NC 28201-1303 USA Also send your U. 1040 es tax forms S. 1040 es tax forms return to these addresses if you are attaching Form 5074 or Form 8689. 1040 es tax forms If you are not in either of the above categories, send your return to the address shown in the Form 1040 instructions for the possession or state in which you reside. 1040 es tax forms Special Rules for Completing Your U. 1040 es tax forms S. 1040 es tax forms Tax Return If you are not excluding possession income from your U. 1040 es tax forms S. 1040 es tax forms tax return, follow the instructions for the specific forms you file. 1040 es tax forms However, you may not qualify to claim the earned income credit (EIC). 1040 es tax forms Earned income credit. 1040 es tax forms   Even if you maintain a household in one of the possessions discussed in this publication that is your main home and the home of your qualifying child, you cannot claim the earned income credit on your U. 1040 es tax forms S. 1040 es tax forms tax return. 1040 es tax forms This credit is available only if you maintain the household in the United States or you are serving on extended active duty in the U. 1040 es tax forms S. 1040 es tax forms Armed Forces. 1040 es tax forms U. 1040 es tax forms S. 1040 es tax forms Armed Forces. 1040 es tax forms   U. 1040 es tax forms S. 1040 es tax forms military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC. 1040 es tax forms Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. 1040 es tax forms Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you do not serve more than 90 days. 1040 es tax forms Income from American Samoa or Puerto Rico excluded. 1040 es tax forms   You will not be allowed to take deductions and credits that apply to the excluded income. 1040 es tax forms The additional information you need follows. 1040 es tax forms Deductions if Possession Income Is Excluded Deductions that specifically apply to your excluded possession income, such as employee business expenses, are not allowable on your U. 1040 es tax forms S. 1040 es tax forms income tax return. 1040 es tax forms Deductions that do not specifically apply to any particular type of income must be divided between your excluded income from sources in the relevant possession and income from all other sources to find the part that you can deduct on your U. 1040 es tax forms S. 1040 es tax forms tax return. 1040 es tax forms Examples of such deductions are alimony payments, the standard deduction, and certain itemized deductions (such as medical expenses, charitable contributions, real estate taxes, and mortgage interest on your home). 1040 es tax forms Figuring the deduction. 1040 es tax forms   To find the part of a deduction that is allowable, multiply the deduction by the following fraction. 1040 es tax forms   Gross income subject to U. 1040 es tax forms S. 1040 es tax forms income tax     Gross income from all sources (including excluded possession income)   Adjustments to Income Your adjusted gross income equals your gross income minus certain deductions (adjustments). 1040 es tax forms Moving expense deduction. 1040 es tax forms   Generally, expenses of a move to a possession are directly attributable to wages, salaries, and other earned income from that possession. 1040 es tax forms Likewise, the expenses of a move back to the United States are generally attributable to U. 1040 es tax forms S. 1040 es tax forms earned income. 1040 es tax forms   If you are claiming expenses for a move to a relevant possession, how and where you will deduct the expenses depends on your status as a bona fide resident and if any of your possession income is excluded on your U. 1040 es tax forms S. 1040 es tax forms tax return. 1040 es tax forms For more information, see Moving expense deduction in chapter 3 under the name of the relevant possession. 1040 es tax forms   If you are claiming expenses for a move from a U. 1040 es tax forms S. 1040 es tax forms possession to the United States, use Form 3903 to figure your deductible expenses and enter the amount on Form 1040, line 26. 1040 es tax forms For purposes of deducting moving expenses, the possessions are considered part of the United States. 1040 es tax forms See Publication 521, Moving Expenses, for information about what expenses are deductible. 1040 es tax forms Self-employment tax deduction. 1040 es tax forms   Generally, if you are reporting self-employment income on your U. 1040 es tax forms S. 1040 es tax forms return, you can include the deductible part of your self-employment tax on Form 1040, line 27. 1040 es tax forms This is an income tax deduction only; it is not a deduction in figuring net earnings from self-employment (for self-employment tax). 1040 es tax forms   However, if you are a bona fide resident of American Samoa or Puerto Rico and you exclude all of your self-employment income from gross income, you cannot take the deduction on Form 1040, line 27, because the deduction is related to excluded income. 1040 es tax forms   If only part of your self-employment income is excluded, the part of the deduction that is based on the nonexcluded income is allowed. 1040 es tax forms This would happen if, for instance, you have two businesses and only the income from one of them is excludable. 1040 es tax forms   For purposes of the deduction only, figure the self-employment tax on the nonexcluded income by multiplying your total self-employment tax (from Schedule SE (Form 1040)), Self-Employment Tax) by the following fraction. 1040 es tax forms   Self-employment income subject to U. 1040 es tax forms S. 1040 es tax forms income tax     Total self-employment income (including excluded possession income)   The result is your self-employment tax on nonexcluded income. 1040 es tax forms Include the deductible part of this amount on Form 1040, line 27. 1040 es tax forms Individual retirement arrangement (IRA) deduction. 1040 es tax forms   Do not take excluded income into account when figuring your deductible IRA contribution. 1040 es tax forms Standard Deduction The standard deduction is composed of the regular standard deduction amount and the additional standard deduction for taxpayers who are blind or age 65 or over. 1040 es tax forms To find the amount you can claim on Form 1040, line 40, first figure your full standard deduction according to the Instructions for Form 1040. 1040 es tax forms Then multiply your full standard deduction by the following fraction. 1040 es tax forms   Gross income subject to U. 1040 es tax forms S. 1040 es tax forms income tax     Gross income from all sources (including excluded possession income)   In the space above line 40, enter “Standard deduction modified due to income excluded under section 931 (if American Samoa) or section 933 (if Puerto Rico). 1040 es tax forms ” This calculation may not be the same as the one you used to determine if you need to file a U. 1040 es tax forms S. 1040 es tax forms tax return. 1040 es tax forms Itemized Deductions Most itemized deductions do not apply to a particular type of income. 1040 es tax forms However, itemized deductions can be divided into three categories. 1040 es tax forms Those that apply specifically to excluded income, such as employee business expenses, are not deductible. 1040 es tax forms Those that apply specifically to income subject to U. 1040 es tax forms S. 1040 es tax forms income tax, which might also be employee business expenses, are fully allowable under the Instructions for Schedule A (Form 1040), Itemized Deductions. 1040 es tax forms Those that do not apply to specific income must be allocated between your gross income subject to U. 1040 es tax forms S. 1040 es tax forms income tax and your total gross income from all sources. 1040 es tax forms The example given later shows how to figure the deductible part of each type of expense that is not related to specific income. 1040 es tax forms Example. 1040 es tax forms In 2013, you and your spouse are both under 65 and U. 1040 es tax forms S. 1040 es tax forms citizens who are bona fide residents of Puerto Rico during the entire tax year. 1040 es tax forms You file a joint income tax return. 1040 es tax forms During 2013, you earned $20,000 from Puerto Rican sources (excluded from U. 1040 es tax forms S. 1040 es tax forms gross income) and your spouse earned $60,000 from the U. 1040 es tax forms S. 1040 es tax forms Government. 1040 es tax forms You have $16,000 of itemized deductions that do not apply to any specific type of income. 1040 es tax forms These are medical expenses of $4,000, real estate taxes of $5,000, home mortgage interest of $6,000, and charitable contributions of $1,000 (cash contributions). 1040 es tax forms You determine the amount of each deduction that you can claim on your Schedule A (Form 1040), Itemized Deductions, by multiplying the deduction by the fraction shown under Figuring the deduction , earlier under Deductions if Possession Income is Excluded. 1040 es tax forms   Medical Expenses   $60,000$80,000 × $4,000 = $3,000  (enter on line 1  of Schedule A)     Real Estate Taxes   $60,000$80,000 × $5,000 = $3,750  (enter on line 6  of Schedule A)     Home Mortgage Interest   $60,000$80,000 × $6,000 = $4,500  (enter on line 10 or 11 of  Schedule A)     Charitable Contributions (cash contributions)   $60,000$80,000 × $1,000 = $750  (enter on line 16 of Schedule A)   Enter on Schedule A (Form 1040) only the allowable portion of each deduction. 1040 es tax forms Overall limitation on itemized deductions. 1040 es tax forms   If your adjusted gross income (discussed earlier) is over $300,000 if married filing jointly or qualifying widow(er); $275,000 if head of household; $250,000 if single; or $150,000 if married filing separately; see the Itemized Deductions Worksheet in the Instructions for Schedule A (Form 1040), to figure your itemized deductions. 1040 es tax forms Personal Exemptions Personal exemptions are allowed in full even if excluding possession income. 1040 es tax forms However, depending upon your adjusted gross income and filing status, the amount you can deduct may be reduced. 1040 es tax forms See the Deduction for Exemptions Worksheet—Line 42 in the instructions for Form 1040. 1040 es tax forms Foreign Tax Credit if Possession Income Is Excluded If you must report American Samoa or Puerto Rico source income on your U. 1040 es tax forms S. 1040 es tax forms tax return, you can claim a foreign tax credit for income taxes paid to the possession on that income. 1040 es tax forms However, you cannot claim a foreign tax credit for taxes paid on possession income that is excluded on your U. 1040 es tax forms S. 1040 es tax forms tax return. 1040 es tax forms The foreign tax credit is generally figured on Form 1116. 1040 es tax forms If you have income, such as U. 1040 es tax forms S. 1040 es tax forms Government wages, that is not excludable, and you also have possession source income that is excludable, you must figure the credit by reducing your foreign taxes paid or accrued by the taxes based on the excluded income. 1040 es tax forms You make this reduction for each separate income category. 1040 es tax forms To find the amount of this reduction, use the following formula for each income category. 1040 es tax forms Excluded income from possession sources less deductible expenses based on that income x Tax paid or accrued to the possession = Reduction in foreign taxes Total income subject to possession tax less deductible expenses based on that income Enter the amount of the reduction on Form 1116, line 12. 1040 es tax forms For more information on the foreign tax credit, see Publication 514. 1040 es tax forms Example. 1040 es tax forms Jason and Lynn Reddy are U. 1040 es tax forms S. 1040 es tax forms citizens who were bona fide residents of Puerto Rico during all of 2013. 1040 es tax forms They file a joint tax return. 1040 es tax forms The following table shows their excludable and taxable income for U. 1040 es tax forms S. 1040 es tax forms federal income tax purposes. 1040 es tax forms   Taxable   Excludable Jason's wages from  U. 1040 es tax forms S. 1040 es tax forms Government $25,000     Lynn's wages from Puerto Rico  corp. 1040 es tax forms     $15,000 Dividend from Puerto Rico corp. 1040 es tax forms doing business in Puerto Rico     200 Dividend from U. 1040 es tax forms S. 1040 es tax forms  corp. 1040 es tax forms doing business  in U. 1040 es tax forms S. 1040 es tax forms * 1,000     Totals $26,000   $15,200 * Income from sources outside Puerto Rico is taxable. 1040 es tax forms   Jason and Lynn must file 2013 income tax returns with both Puerto Rico and the United States. 1040 es tax forms They have gross income of $26,000 for U. 1040 es tax forms S. 1040 es tax forms tax purposes. 1040 es tax forms They paid taxes to Puerto Rico of $4,000 ($3,980 on their wages and $20 on the dividend from the Puerto Rico corporation). 1040 es tax forms They figure their foreign tax credit on two Forms 1116, which they must attach to their U. 1040 es tax forms S. 1040 es tax forms return. 1040 es tax forms They fill out one Form 1116 for wages and one Form 1116 for the dividend. 1040 es tax forms Jason and Lynn figure the Puerto Rico taxes on excluded income as follows. 1040 es tax forms   Wages: ($15,000 ÷ $40,000) × $3,980 = $1,493   Dividend: ($200 ÷ $200) × $20 = $20 They enter $1,493 on Form 1116, line 12, for wages and $20 on the second Form 1116, line 12, for the dividend. 1040 es tax forms Self-Employment Tax Self-employment tax includes both social security and Medicare taxes for individuals who are self-employed. 1040 es tax forms A U. 1040 es tax forms S. 1040 es tax forms citizen or resident alien who is self-employed must pay self-employment tax on net self-employment earnings of $400 or more. 1040 es tax forms This rule applies whether or not the earnings are excludable from gross income (or whether or not a U. 1040 es tax forms S. 1040 es tax forms income tax return must otherwise be filed). 1040 es tax forms Bona fide residents of the possessions discussed in this publication are considered U. 1040 es tax forms S. 1040 es tax forms residents for this purpose and are subject to the self-employment tax. 1040 es tax forms Forms to file. 1040 es tax forms   If you have net self-employment income and are subject to self-employment tax, file one of the following with the United States. 1040 es tax forms If you are required to file Form 1040 with the United States, complete Schedule SE (Form 1040) and attach it to your Form 1040. 1040 es tax forms If you are not required to file Form 1040 with the United States and you are a bona fide resident of American Samoa, the CNMI, Guam, Puerto Rico, or the USVI, file Form 1040-SS. 1040 es tax forms If you are a resident of Puerto Rico, you can file the Spanish-language Form 1040-PR instead. 1040 es tax forms Do not file forms 1040-SS or 1040-PR with Form 1040. 1040 es tax forms If you are required to pay Additional Medicare Tax (discussed later) on your self-employment income, attach Form 8959, Additional Medicare Tax to Form 1040, Form 1040-SS, or Form 1040-PR, as applicable. 1040 es tax forms Chapter 11 Bankruptcy cases. 1040 es tax forms   While you are a debtor in a chapter 11 bankruptcy case, your net profit or loss from self-employment will be included on the income tax return (Form 1041, U. 1040 es tax forms S. 1040 es tax forms Income Tax Return for Estates and Trusts) of the bankruptcy estate. 1040 es tax forms However, you—not the bankruptcy estate—are responsible for paying self-employment tax on your net earnings from self-employment. 1040 es tax forms   Use Schedule SE (Form 1040), Form 1040-SS, or Form 1040-PR, as determined above, to figure your correct amount of self-employment tax. 1040 es tax forms   For other reporting requirements, see Chapter 11 Bankruptcy Cases in the Instructions for Form 1040. 1040 es tax forms Additional Medicare Tax Beginning in 2013, a 0. 1040 es tax forms 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 if single, head of household, or qualifying widow(er). 1040 es tax forms Medicare wages and self-employment income are combined to determine if income exceeds the threshold. 1040 es tax forms A self-employment loss should not be considered for purposes of this tax. 1040 es tax forms RRTA compensation should be separately compared to the threshold. 1040 es tax forms Your employer is responsible for withholding the 0. 1040 es tax forms 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000. 1040 es tax forms You should consider this withholding, if applicable, in determining whether you need to make estimated tax payments. 1040 es tax forms There are no special rules for U. 1040 es tax forms S. 1040 es tax forms citizens and nonresident aliens living abroad for purposes of this provision. 1040 es tax forms Wages, RRTA compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold. 1040 es tax forms For more information, see Form 8959, Additional Medicare Tax, and its instructions or visit www. 1040 es tax forms irs. 1040 es tax forms gov and enter the following words in the search box: Additional Medicare Tax. 1040 es tax forms You cannot include the Additional Medicare Tax as a deductible part of your self-employment tax. 1040 es tax forms Net Investment Income Tax Beginning in 2013, the Net Investment Income Tax (NIIT) imposes a 3. 1040 es tax forms 8% tax on the lesser of an individual’s net investment income or the excess of the individual’s modified adjusted gross income over a specified threshold amount. 1040 es tax forms Bona fide residents of Puerto Rico and American Samoa who may have a federal income tax return filing obligation may be liable for the NIIT if the taxpayer’s modified adjusted gross income from non-territory sources exceeds a specified threshold amount. 1040 es tax forms The NIIT does not apply to any individual who is a nonresident alien with respect to the United States. 1040 es tax forms Bona fide residents must take into account any additional tax liability associated with the NIIT when calculating your estimated tax payments. 1040 es tax forms Forms to file. 1040 es tax forms   If you are a bona fide resident of American Samoa and Puerto Rico and you are required to pay the NIIT, you must file Form 1040 with the United States and attach Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts. 1040 es tax forms For more information, see Form 8960 and its instructions. 1040 es tax forms Paying Your Taxes You may find that not all of your income tax has been paid through withholding by either the United States or the possession. 1040 es tax forms This is often true if you have income that is not subject to withholding, such as self-employment, interest, or rental income. 1040 es tax forms In this situation, you may need to make estimated tax payments. 1040 es tax forms Estimated Tax If your estimated income tax obligation is to the United States, use the worksheet in the Form 1040-ES package to figure your estimated tax, including self-employment tax. 1040 es tax forms Include the Additional Medicare Tax and Net Investment Income Tax if applicable. 1040 es tax forms If you are paying by check or money order, use the payment vouchers in the Form 1040-ES package. 1040 es tax forms Or, you can make your payments electronically and not have to file any paper forms. 1040 es tax forms See the Form 1040-ES instructions for information on making payments. 1040 es tax forms Double Taxation Mutual agreement procedures exist to settle issues where there is inconsistent tax treatment between the IRS and the taxing authorities of the following possessions. 1040 es tax forms American Samoa. 1040 es tax forms The Commonwealth of Puerto Rico. 1040 es tax forms The Commonwealth of the Northern Mariana Islands. 1040 es tax forms Guam. 1040 es tax forms The U. 1040 es tax forms S. 1040 es tax forms Virgin Islands. 1040 es tax forms These issues usually involve allocations of income, deductions, credits, or allowances between related persons; determinations of residency; and determinations of the source of income and related expenses. 1040 es tax forms Competent Authority Assistance The tax coordination agreements between the United States and the possession tax departments contain provisions allowing the competent authorities of the United States and the relevant possession to resolve, by mutual agreement, inconsistent tax treatment by the two jurisdictions. 1040 es tax forms How to make your request. 1040 es tax forms   Your request for competent authority assistance must include all the information listed in Revenue Procedure 2006-23, 2006-20 I. 1040 es tax forms R. 1040 es tax forms B. 1040 es tax forms 900 available at www. 1040 es tax forms irs. 1040 es tax forms gov/pub/irs-irbs/irb06-49. 1040 es tax forms pdf. 1040 es tax forms    Also, see Notice 2013-78, which provides proposed updates to the procedures for requesting U. 1040 es tax forms S. 1040 es tax forms competent authority assistance under tax treaties. 1040 es tax forms As noted, an update to Revenue Procedure 2006-23 will be published in the future. 1040 es tax forms   Your request must be in the form of a letter addressed to the Deputy Commissioner (International) LB&I. 1040 es tax forms It must contain a statement that competent authority assistance is requested under the mutual agreement procedure with the possession. 1040 es tax forms You (or a person having authority to sign your federal return) must sign and date the request. 1040 es tax forms    Send your written request for U. 1040 es tax forms S. 1040 es tax forms assistance under this procedure to:   Deputy Commissioner (International) Large Business and International Division Internal Revenue Service 1111 Constitution Avenue, N. 1040 es tax forms W. 1040 es tax forms  Routing: M4-365 Washington, DC 20224 (Attention: TAIT) Nonresident aliens generally must present their initial request for assistance to the relevant possession tax agency. 1040 es tax forms Credit or Refund In addition to the tax assistance request, if you seek a credit or refund of any overpayment of U. 1040 es tax forms S. 1040 es tax forms tax paid on the income in question, you should file a claim on Form 1040X, Amended U. 1040 es tax forms S. 1040 es tax forms Individual Income Tax Return. 1040 es tax forms Indicate on the form that a request for assistance under the mutual agreement procedure with the possession has been filed. 1040 es tax forms Attach a copy of the request to the form. 1040 es tax forms Also, you should take whatever steps must be taken under the possession tax code to prevent the expiration of the statutory period for filing a claim for credit or refund of a possession tax. 1040 es tax forms See Revenue Procedure 2006-54 (or its successor), section 9, for complete information. 1040 es tax forms Prev  Up  Next   Home   More Online Publications
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1040 es tax forms 12. 1040 es tax forms   Other Income Table of Contents Introduction Useful Items - You may want to see: Bartering Canceled DebtsInterest included in canceled debt. 1040 es tax forms Exceptions Host or Hostess Life Insurance ProceedsSurviving spouse. 1040 es tax forms Endowment Contract Proceeds Accelerated Death Benefits Public Safety Officer Killed in the Line of Duty Partnership Income S Corporation Income RecoveriesItemized Deduction Recoveries Rents from Personal Property RepaymentsMethod 1. 1040 es tax forms Method 2. 1040 es tax forms RoyaltiesDepletion. 1040 es tax forms Coal and iron ore. 1040 es tax forms Sale of property interest. 1040 es tax forms Part of future production sold. 1040 es tax forms Unemployment BenefitsTypes of unemployment compensation. 1040 es tax forms Governmental program. 1040 es tax forms Repayment of unemployment compensation. 1040 es tax forms Tax withholding. 1040 es tax forms Repayment of benefits. 1040 es tax forms Welfare and Other Public Assistance Benefits Other IncomeEmotional distress. 1040 es tax forms Deduction for costs involved in unlawful discrimination suits. 1040 es tax forms Energy conservation measure. 1040 es tax forms Dwelling unit. 1040 es tax forms Current income required to be distributed. 1040 es tax forms Current income not required to be distributed. 1040 es tax forms How to report. 1040 es tax forms Losses. 1040 es tax forms Grantor trust. 1040 es tax forms Nonemployee compensation. 1040 es tax forms Corporate director. 1040 es tax forms Personal representatives. 1040 es tax forms Manager of trade or business for bankruptcy estate. 1040 es tax forms Notary public. 1040 es tax forms Election precinct official. 1040 es tax forms Difficulty-of-care payments. 1040 es tax forms Maintaining space in home. 1040 es tax forms Reporting taxable payments. 1040 es tax forms Lotteries and raffles. 1040 es tax forms Form W-2G. 1040 es tax forms Reporting winnings and recordkeeping. 1040 es tax forms Inherited pension or IRA. 1040 es tax forms Employee awards or bonuses. 1040 es tax forms Pulitzer, Nobel, and similar prizes. 1040 es tax forms Payment for services. 1040 es tax forms VA payments. 1040 es tax forms Prizes. 1040 es tax forms Strike and lockout benefits. 1040 es tax forms Introduction You must include on your return all items of income you receive in the form of money, property, and services unless the tax law states that you do not include them. 1040 es tax forms Some items, however, are only partly excluded from income. 1040 es tax forms This chapter discusses many kinds of income and explains whether they are taxable or nontaxable. 1040 es tax forms Income that is taxable must be reported on your tax return and is subject to tax. 1040 es tax forms Income that is nontaxable may have to be shown on your tax return but is not taxable. 1040 es tax forms This chapter begins with discussions of the following income items. 1040 es tax forms Bartering. 1040 es tax forms Canceled debts. 1040 es tax forms Sales parties at which you are the host or hostess. 1040 es tax forms Life insurance proceeds. 1040 es tax forms Partnership income. 1040 es tax forms S Corporation income. 1040 es tax forms Recoveries (including state income tax refunds). 1040 es tax forms Rents from personal property. 1040 es tax forms Repayments. 1040 es tax forms Royalties. 1040 es tax forms Unemployment benefits. 1040 es tax forms Welfare and other public assistance benefits. 1040 es tax forms These discussions are followed by brief discussions of other income items. 1040 es tax forms Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 544 Sales and Other Dispositions of Assets 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Bartering Bartering is an exchange of property or services. 1040 es tax forms You must include in your income, at the time received, the fair market value of property or services you receive in bartering. 1040 es tax forms If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise. 1040 es tax forms Generally, you report this income on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. 1040 es tax forms However, if the barter involves an exchange of something other than services, such as in Example 3 below, you may have to use another form or schedule instead. 1040 es tax forms Example 1. 1040 es tax forms You are a self-employed attorney who performs legal services for a client, a small corporation. 1040 es tax forms The corporation gives you shares of its stock as payment for your services. 1040 es tax forms You must include the fair market value of the shares in your income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) in the year you receive them. 1040 es tax forms Example 2. 1040 es tax forms You are self-employed and a member of a barter club. 1040 es tax forms The club uses “credit units” as a means of exchange. 1040 es tax forms It adds credit units to your account for goods or services you provide to members, which you can use to purchase goods or services offered by other members of the barter club. 1040 es tax forms The club subtracts credit units from your account when you receive goods or services from other members. 1040 es tax forms You must include in your income the value of the credit units that are added to your account, even though you may not actually receive goods or services from other members until a later tax year. 1040 es tax forms Example 3. 1040 es tax forms You own a small apartment building. 1040 es tax forms In return for 6 months rent-free use of an apartment, an artist gives you a work of art she created. 1040 es tax forms You must report as rental income on Schedule E (Form 1040), Supplemental Income and Loss, the fair market value of the artwork, and the artist must report as income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) the fair rental value of the apartment. 1040 es tax forms Form 1099-B from barter exchange. 1040 es tax forms   If you exchanged property or services through a barter exchange, Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or a similar statement from the barter exchange should be sent to you by February 18, 2014. 1040 es tax forms It should show the value of cash, property, services, credits, or scrip you received from exchanges during 2013. 1040 es tax forms The IRS also will receive a copy of Form 1099-B. 1040 es tax forms Canceled Debts In most cases, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. 1040 es tax forms You have no income from the canceled debt if it is intended as a gift to you. 1040 es tax forms A debt includes any indebtedness for which you are liable or which attaches to property you hold. 1040 es tax forms If the debt is a nonbusiness debt, report the canceled amount on Form 1040, line 21. 1040 es tax forms If it is a business debt, report the amount on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) (or on Schedule F (Form 1040), Profit or Loss From Farming, if the debt is farm debt and you are a farmer). 1040 es tax forms Form 1099-C. 1040 es tax forms   If a Federal Government agency, financial institution, or credit union cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. 1040 es tax forms The amount of the canceled debt is shown in box 2. 1040 es tax forms Interest included in canceled debt. 1040 es tax forms   If any interest is forgiven and included in the amount of canceled debt in box 2, the amount of interest also will be shown in box 3. 1040 es tax forms Whether or not you must include the interest portion of the canceled debt in your income depends on whether the interest would be deductible when you paid it. 1040 es tax forms See Deductible debt under Exceptions, later. 1040 es tax forms   If the interest would not be deductible (such as interest on a personal loan), include in your income the amount from Form 1099-C, box 2. 1040 es tax forms If the interest would be deductible (such as on a business loan), include in your income the net amount of the canceled debt (the amount shown in box 2 less the interest amount shown in box 3). 1040 es tax forms Discounted mortgage loan. 1040 es tax forms   If your financial institution offers a discount for the early payment of your mortgage loan, the amount of the discount is canceled debt. 1040 es tax forms You must include the canceled amount in your income. 1040 es tax forms Mortgage relief upon sale or other disposition. 1040 es tax forms   If you are personally liable for a mortgage (recourse debt), and you are relieved of the mortgage when you dispose of the property, you may realize gain or loss up to the fair market value of the property. 1040 es tax forms To the extent the mortgage discharge exceeds the fair market value of the property, it is income from discharge of indebtedness unless it qualifies for exclusion under Excluded debt , later. 1040 es tax forms Report any income from discharge of indebtedness on nonbusiness debt that does not qualify for exclusion as other income on Form 1040, line 21. 1040 es tax forms    You may be able to exclude part of the mortgage relief on your principal residence. 1040 es tax forms See Excluded debt, later. 1040 es tax forms   If you are not personally liable for a mortgage (nonrecourse debt), and you are relieved of the mortgage when you dispose of the property (such as through foreclosure), that relief is included in the amount you realize. 1040 es tax forms You may have a taxable gain if the amount you realize exceeds your adjusted basis in the property. 1040 es tax forms Report any gain on nonbusiness property as a capital gain. 1040 es tax forms   See Publication 4681 for more information. 1040 es tax forms Stockholder debt. 1040 es tax forms   If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution that is generally dividend income to you. 1040 es tax forms For more information, see Publication 542, Corporations. 1040 es tax forms   If you are a stockholder in a corporation and you cancel a debt owed to you by the corporation, you generally do not realize income. 1040 es tax forms This is because the canceled debt is considered as a contribution to the capital of the corporation equal to the amount of debt principal that you canceled. 1040 es tax forms Repayment of canceled debt. 1040 es tax forms   If you included a canceled amount in your income and later pay the debt, you may be able to file a claim for refund for the year the amount was included in income. 1040 es tax forms You can file a claim on Form 1040X if the statute of limitations for filing a claim is still open. 1040 es tax forms The statute of limitations generally does not end until 3 years after the due date of your original return. 1040 es tax forms Exceptions There are several exceptions to the inclusion of canceled debt in income. 1040 es tax forms These are explained next. 1040 es tax forms Student loans. 1040 es tax forms   Certain student loans contain a provision that all or part of the debt incurred to attend the qualified educational institution will be canceled if you work for a certain period of time in certain professions for any of a broad class of employers. 1040 es tax forms   You do not have income if your student loan is canceled after you agreed to this provision and then performed the services required. 1040 es tax forms To qualify, the loan must have been made by: The Federal Government, a state or local government, or an instrumentality, agency, or subdivision thereof, A tax-exempt public benefit corporation that has assumed control of a state, county, or municipal hospital, and whose employees are considered public employees under state law, or An educational institution: Under an agreement with an entity described in (1) or (2) that provided the funds to the institution to make the loan, or As part of a program of the institution designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or a tax-exempt organization described in section 501(c)(3). 1040 es tax forms   A loan to refinance a qualified student loan also will qualify if it was made by an educational institution or a qualified tax-exempt organization under its program designed as described in (3)(b) above. 1040 es tax forms Education loan repayment assistance. 1040 es tax forms   Education loan repayments made to you by the National Health Service Corps Loan Repayment Program (NHSC Loan Repayment Program), a state education loan repayment program eligible for funds under the Public Health Service Act, or any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in underserved or health professional shortage areas are not taxable. 1040 es tax forms    The provision relating to the “other state loan repayment or loan forgiveness program” was added to this exclusion for amounts received in tax years beginning after December 31, 2008. 1040 es tax forms If you included these amounts in income in 2010, 2011, or 2012, you should file an amended tax return to exclude this income. 1040 es tax forms See Form 1040X and its instructions for details on filing. 1040 es tax forms Deductible debt. 1040 es tax forms   You do not have income from the cancellation of a debt if your payment of the debt would be deductible. 1040 es tax forms This exception applies only if you use the cash method of accounting. 1040 es tax forms For more information, see chapter 5 of Publication 334, Tax Guide for Small Business. 1040 es tax forms Price reduced after purchase. 1040 es tax forms   In most cases, if the seller reduces the amount of debt you owe for property you purchased, you do not have income from the reduction. 1040 es tax forms The reduction of the debt is treated as a purchase price adjustment and reduces your basis in the property. 1040 es tax forms Excluded debt. 1040 es tax forms   Do not include a canceled debt in your gross income in the following situations. 1040 es tax forms The debt is canceled in a bankruptcy case under title 11 of the U. 1040 es tax forms S. 1040 es tax forms Code. 1040 es tax forms See Publication 908, Bankruptcy Tax Guide. 1040 es tax forms The debt is canceled when you are insolvent. 1040 es tax forms However, you cannot exclude any amount of canceled debt that is more than the amount by which you are insolvent. 1040 es tax forms See Publication 908. 1040 es tax forms The debt is qualified farm debt and is canceled by a qualified person. 1040 es tax forms See chapter 3 of Publication 225, Farmer's Tax Guide. 1040 es tax forms The debt is qualified real property business debt. 1040 es tax forms See chapter 5 of Publication 334. 1040 es tax forms The cancellation is intended as a gift. 1040 es tax forms The debt is qualified principal residence indebtedness. 1040 es tax forms See Publication 525 for additional information. 1040 es tax forms Host or Hostess If you host a party or event at which sales are made, any gift or gratuity you receive for giving the event is a payment for helping a direct seller make sales. 1040 es tax forms You must report this item as income at its fair market value. 1040 es tax forms Your out-of-pocket party expenses are subject to the 50% limit for meal and entertainment expenses. 1040 es tax forms These expenses are deductible as miscellaneous itemized deductions subject to the 2%-of-AGI limit on Schedule A (Form 1040), but only up to the amount of income you receive for giving the party. 1040 es tax forms For more information about the 50% limit for meal and entertainment expenses, see chapter 26. 1040 es tax forms Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. 1040 es tax forms This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. 1040 es tax forms However, interest income received as a result of life insurance proceeds may be taxable. 1040 es tax forms Proceeds not received in installments. 1040 es tax forms   If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death. 1040 es tax forms If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death. 1040 es tax forms Proceeds received in installments. 1040 es tax forms   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. 1040 es tax forms   To determine the excluded part, divide the amount held by the insurance company (generally the total lump sum payable at the death of the insured person) by the number of installments to be paid. 1040 es tax forms Include anything over this excluded part in your income as interest. 1040 es tax forms Surviving spouse. 1040 es tax forms   If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude up to $1,000 a year of the interest included in the installments. 1040 es tax forms If you remarry, you can continue to take the exclusion. 1040 es tax forms Surrender of policy for cash. 1040 es tax forms   If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. 1040 es tax forms In most cases, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income. 1040 es tax forms    You should receive a Form 1099-R showing the total proceeds and the taxable part. 1040 es tax forms Report these amounts on lines 16a and 16b of Form 1040 or lines 12a and 12b of Form 1040A. 1040 es tax forms More information. 1040 es tax forms   For more information, see Life Insurance Proceeds in Publication 525. 1040 es tax forms Endowment Contract Proceeds An endowment contract is a policy under which you are paid a specified amount of money on a certain date unless you die before that date, in which case, the money is paid to your designated beneficiary. 1040 es tax forms Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. 1040 es tax forms To determine your cost, subtract any amount that you previously received under the contract and excluded from your income from the total premiums (or other consideration) paid for the contract. 1040 es tax forms Include the part of the lump sum payment that is more than your cost in your income. 1040 es tax forms Accelerated Death Benefits Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are excluded from income if the insured is terminally or chronically ill. 1040 es tax forms Viatical settlement. 1040 es tax forms   This is the sale or assignment of any part of the death benefit under a life insurance contract to a viatical settlement provider. 1040 es tax forms A viatical settlement provider is a person who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill and who meets the requirements of section 101(g)(2)(B) of the Internal Revenue Code. 1040 es tax forms Exclusion for terminal illness. 1040 es tax forms    Accelerated death benefits are fully excludable if the insured is a terminally ill individual. 1040 es tax forms This is a person who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death within 24 months from the date of the certification. 1040 es tax forms Exclusion for chronic illness. 1040 es tax forms    If the insured is a chronically ill individual who is not terminally ill, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. 1040 es tax forms Accelerated death benefits paid on a per diem or other periodic basis are excludable up to a limit. 1040 es tax forms This limit applies to the total of the accelerated death benefits and any periodic payments received from long-term care insurance contracts. 1040 es tax forms For information on the limit and the definitions of chronically ill individual, qualified long-term care services, and long-term care insurance contracts, see Long-Term Care Insurance Contracts under Sickness and Injury Benefits in Publication 525. 1040 es tax forms Exception. 1040 es tax forms   The exclusion does not apply to any amount paid to a person (other than the insured) who has an insurable interest in the life of the insured because the insured: Is a director, officer, or employee of the person, or Has a financial interest in the person's business. 1040 es tax forms Form 8853. 1040 es tax forms   To claim an exclusion for accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return. 1040 es tax forms You do not have to file Form 8853 to exclude accelerated death benefits paid on the basis of actual expenses incurred. 1040 es tax forms Public Safety Officer Killed in the Line of Duty If you are a survivor of a public safety officer who was killed in the line of duty, you may be able to exclude from income certain amounts you receive. 1040 es tax forms For this purpose, the term public safety officer includes law enforcement officers, firefighters, chaplains, and rescue squad and ambulance crew members. 1040 es tax forms For more information, see Publication 559, Survivors, Executors, and Administrators. 1040 es tax forms Partnership Income A partnership generally is not a taxable entity. 1040 es tax forms The income, gains, losses, deductions, and credits of a partnership are passed through to the partners based on each partner's distributive share of these items. 1040 es tax forms Schedule K-1 (Form 1065). 1040 es tax forms    Although a partnership generally pays no tax, it must file an information return on Form 1065, U. 1040 es tax forms S. 1040 es tax forms Return of Partnership Income, and send Schedule K-1 (Form 1065) to each partner. 1040 es tax forms In addition, the partnership will send each partner a copy of the Partner's Instructions for Schedule K-1 (Form 1065) to help each partner report his or her share of the partnership's income, deductions, credits, and tax preference items. 1040 es tax forms Keep Schedule K-1 (Form 1065) for your records. 1040 es tax forms Do not attach it to your Form 1040, unless you are specifically required to do so. 1040 es tax forms For more information on partnerships, see Publication 541, Partnerships. 1040 es tax forms Qualified joint venture. 1040 es tax forms   If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. 1040 es tax forms To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. 1040 es tax forms For further information on how to make the election and which schedule(s) to file, see the instructions for your individual tax return. 1040 es tax forms S Corporation Income In most cases, an S corporation does not pay tax on its income. 1040 es tax forms Instead, the income, losses, deductions, and credits of the corporation are passed through to the shareholders based on each shareholder's pro rata share. 1040 es tax forms Schedule K-1 (Form 1120S). 1040 es tax forms   An S corporation must file a return on Form 1120S, U. 1040 es tax forms S. 1040 es tax forms Income Tax Return for an S Corporation, and send Schedule K-1 (Form 1120S) to each shareholder. 1040 es tax forms In addition, the S corporation will send each shareholder a copy of the Shareholder's Instructions for Schedule K-1 (Form 1120S) to help each shareholder report his or her share of the S corporation's income, losses, credits, and deductions. 1040 es tax forms Keep Schedule K-1 (Form 1120S) for your records. 1040 es tax forms Do not attach it to your Form 1040, unless you are specifically required to do so. 1040 es tax forms For more information on S corporations and their shareholders, see the Instructions for Form 1120S. 1040 es tax forms Recoveries A recovery is a return of an amount you deducted or took a credit for in an earlier year. 1040 es tax forms The most common recoveries are refunds, reimbursements, and rebates of deductions itemized on Schedule A (Form 1040). 1040 es tax forms You also may have recoveries of non-itemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit. 1040 es tax forms Tax benefit rule. 1040 es tax forms   You must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. 1040 es tax forms For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year. 1040 es tax forms For more information, see Publication 525. 1040 es tax forms Federal income tax refund. 1040 es tax forms   Refunds of federal income taxes are not included in your income because they are never allowed as a deduction from income. 1040 es tax forms State tax refund. 1040 es tax forms   If you received a state or local income tax refund (or credit or offset) in 2013, you generally must include it in income if you deducted the tax in an earlier year. 1040 es tax forms The payer should send Form 1099-G, Certain Government Payments, to you by January 31, 2014. 1040 es tax forms The IRS also will receive a copy of the Form 1099-G. 1040 es tax forms If you file Form 1040, use the State and Local Income Tax Refund Worksheet in the 2013 Form 1040 instructions for line 10 to figure the amount (if any) to include in your income. 1040 es tax forms See Publication 525 for when you must use another worksheet. 1040 es tax forms   If you could choose to deduct for a tax year either: State and local income taxes, or State and local general sales taxes, then the maximum refund that you may have to include in income is limited to the excess of the tax you chose to deduct for that year over the tax you did not choose to deduct for that year. 1040 es tax forms For examples, see Publication 525. 1040 es tax forms Mortgage interest refund. 1040 es tax forms    If you received a refund or credit in 2013 of mortgage interest paid in an earlier year, the amount should be shown in box 3 of your Form 1098, Mortgage Interest Statement. 1040 es tax forms Do not subtract the refund amount from the interest you paid in 2013. 1040 es tax forms You may have to include it in your income under the rules explained in the following discussions. 1040 es tax forms Interest on recovery. 1040 es tax forms   Interest on any of the amounts you recover must be reported as interest income in the year received. 1040 es tax forms For example, report any interest you received on state or local income tax refunds on Form 1040, line 8a. 1040 es tax forms Recovery and expense in same year. 1040 es tax forms   If the refund or other recovery and the expense occur in the same year, the recovery reduces the deduction or credit and is not reported as income. 1040 es tax forms Recovery for 2 or more years. 1040 es tax forms   If you receive a refund or other recovery that is for amounts you paid in 2 or more separate years, you must allocate, on a pro rata basis, the recovered amount between the years in which you paid it. 1040 es tax forms This allocation is necessary to determine the amount of recovery from any earlier years and to determine the amount, if any, of your allowable deduction for this item for the current year. 1040 es tax forms For information on how to compute the allocation, see Recoveries in Publication 525. 1040 es tax forms Itemized Deduction Recoveries If you recover any amount that you deducted in an earlier year on Schedule A (Form 1040), you generally must include the full amount of the recovery in your income in the year you receive it. 1040 es tax forms Where to report. 1040 es tax forms   Enter your state or local income tax refund on Form 1040, line 10, and the total of all other recoveries as other income on Form 1040, line 21. 1040 es tax forms You cannot use Form 1040A or Form 1040EZ. 1040 es tax forms Standard deduction limit. 1040 es tax forms   You generally are allowed to claim the standard deduction if you do not itemize your deductions. 1040 es tax forms Only your itemized deductions that are more than your standard deduction are subject to the recovery rule (unless you are required to itemize your deductions). 1040 es tax forms If your total deductions on the earlier year return were not more than your income for that year, include in your income this year the lesser of: Your recoveries, or The amount by which your itemized deductions exceeded the standard deduction. 1040 es tax forms Example. 1040 es tax forms For 2012, you filed a joint return. 1040 es tax forms Your taxable income was $60,000 and you were not entitled to any tax credits. 1040 es tax forms Your standard deduction was $11,900, and you had itemized deductions of $14,000. 1040 es tax forms In 2013, you received the following recoveries for amounts deducted on your 2012 return: Medical expenses $200 State and local income tax refund 400 Refund of mortgage interest 325 Total recoveries $925 None of the recoveries were more than the deductions taken for 2012. 1040 es tax forms The difference between the state and local income tax you deducted and your local general sales tax was more than $400. 1040 es tax forms Your total recoveries are less than the amount by which your itemized deductions exceeded the standard deduction ($14,000 − 11,900 = $2,100), so you must include your total recoveries in your income for 2013. 1040 es tax forms Report the state and local income tax refund of $400 on Form 1040, line 10, and the balance of your recoveries, $525, on Form 1040, line 21. 1040 es tax forms Standard deduction for earlier years. 1040 es tax forms   To determine if amounts recovered in 2013 must be included in your income, you must know the standard deduction for your filing status for the year the deduction was claimed. 1040 es tax forms Look in the instructions for your tax return from prior years to locate the standard deduction for the filing status for that prior year. 1040 es tax forms Example. 1040 es tax forms You filed a joint return on Form 1040 for 2012 with taxable income of $45,000. 1040 es tax forms Your itemized deductions were $12,350. 1040 es tax forms The standard deduction that you could have claimed was $11,900. 1040 es tax forms In 2013, you recovered $2,100 of your 2012 itemized deductions. 1040 es tax forms None of the recoveries were more than the actual deductions for 2012. 1040 es tax forms Include $450 of the recoveries in your 2013 income. 1040 es tax forms This is the smaller of your recoveries ($2,100) or the amount by which your itemized deductions were more than the standard deduction ($12,350 − $11,900 = $450). 1040 es tax forms Recovery limited to deduction. 1040 es tax forms   You do not include in your income any amount of your recovery that is more than the amount you deducted in the earlier year. 1040 es tax forms The amount you include in your income is limited to the smaller of: The amount deducted on Schedule A (Form 1040), or The amount recovered. 1040 es tax forms Example. 1040 es tax forms During 2012 you paid $1,700 for medical expenses. 1040 es tax forms From this amount you subtracted $1,500, which was 7. 1040 es tax forms 5% of your adjusted gross income. 1040 es tax forms Your actual medical expense deduction was $200. 1040 es tax forms In 2013, you received a $500 reimbursement from your medical insurance for your 2012 expenses. 1040 es tax forms The only amount of the $500 reimbursement that must be included in your income for 2013 is $200—the amount actually deducted. 1040 es tax forms Other recoveries. 1040 es tax forms   See Recoveries in Publication 525 if: You have recoveries of items other than itemized deductions, or You received a recovery for an item for which you claimed a tax credit (other than investment credit or foreign tax credit) in a prior year. 1040 es tax forms Rents from Personal Property If you rent out personal property, such as equipment or vehicles, how you report your income and expenses is in most cases determined by: Whether or not the rental activity is a business, and Whether or not the rental activity is conducted for profit. 1040 es tax forms In most cases, if your primary purpose is income or profit and you are involved in the rental activity with continuity and regularity, your rental activity is a business. 1040 es tax forms See Publication 535, Business Expenses, for details on deducting expenses for both business and not-for-profit activities. 1040 es tax forms Reporting business income and expenses. 1040 es tax forms    If you are in the business of renting personal property, report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). 1040 es tax forms The form instructions have information on how to complete them. 1040 es tax forms Reporting nonbusiness income. 1040 es tax forms   If you are not in the business of renting personal property, report your rental income on Form 1040, line 21. 1040 es tax forms List the type and amount of the income on the dotted line next to line 21. 1040 es tax forms Reporting nonbusiness expenses. 1040 es tax forms   If you rent personal property for profit, include your rental expenses in the total amount you enter on Form 1040, line 36. 1040 es tax forms Also enter the amount and “PPR” on the dotted line next to line 36. 1040 es tax forms   If you do not rent personal property for profit, your deductions are limited and you cannot report a loss to offset other income. 1040 es tax forms See Activity not for profit , under Other Income, later. 1040 es tax forms Repayments If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it. 1040 es tax forms Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. 1040 es tax forms Generally, you can claim a deduction or credit only if the repayment qualifies as an expense or loss incurred in your trade or business or in a for-profit transaction. 1040 es tax forms Type of deduction. 1040 es tax forms   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. 1040 es tax forms You generally deduct the repayment on the same form or schedule on which you previously reported it as income. 1040 es tax forms For example, if you reported it as self-employment income, deduct it as a business expense on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). 1040 es tax forms If you reported it as a capital gain, deduct it as a capital loss as explained in the Instructions for Schedule D (Form 1040). 1040 es tax forms If you reported it as wages, unemployment compensation, or other nonbusiness income, deduct it as a miscellaneous itemized deduction on Schedule A (Form 1040). 1040 es tax forms Repaid social security benefits. 1040 es tax forms   If you repaid social security benefits or equivalent railroad retirement benefits, see Repayment of benefits in chapter 11. 1040 es tax forms Repayment of $3,000 or less. 1040 es tax forms   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. 1040 es tax forms If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 23. 1040 es tax forms Repayment over $3,000. 1040 es tax forms   If the amount you repaid was more than $3,000, you can deduct the repayment (as explained under Type of deduction , earlier). 1040 es tax forms However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. 1040 es tax forms This means that at the time you included the income, it appeared that you had an unrestricted right to it. 1040 es tax forms If you qualify for this choice, figure your tax under both methods and compare the results. 1040 es tax forms Use the method (deduction or credit) that results in less tax. 1040 es tax forms When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. 1040 es tax forms Each instance of repayment is not considered separately. 1040 es tax forms Method 1. 1040 es tax forms   Figure your tax for 2013 claiming a deduction for the repaid amount. 1040 es tax forms If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28. 1040 es tax forms Method 2. 1040 es tax forms   Figure your tax for 2013 claiming a credit for the repaid amount. 1040 es tax forms Follow these steps. 1040 es tax forms Figure your tax for 2013 without deducting the repaid amount. 1040 es tax forms Refigure your tax from the earlier year without including in income the amount you repaid in 2013. 1040 es tax forms Subtract the tax in (2) from the tax shown on your return for the earlier year. 1040 es tax forms This is the credit. 1040 es tax forms Subtract the answer in (3) from the tax for 2013 figured without the deduction (Step 1). 1040 es tax forms   If method 1 results in less tax, deduct the amount repaid. 1040 es tax forms If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71, by adding the amount of the credit to any other credits on this line, and entering “I. 1040 es tax forms R. 1040 es tax forms C. 1040 es tax forms 1341” in the column to the right of line 71. 1040 es tax forms   An example of this computation can be found in Publication 525. 1040 es tax forms Repaid wages subject to social security and Medicare taxes. 1040 es tax forms   If you had to repay an amount that you included in your wages or compensation in an earlier year on which social security, Medicare, or tier 1 RRTA taxes were paid, ask your employer to refund the excess amount to you. 1040 es tax forms If the employer refuses to refund the taxes, ask for a statement indicating the amount of the overcollection to support your claim. 1040 es tax forms File a claim for refund using Form 843, Claim for Refund and Request for Abatement. 1040 es tax forms Repaid wages subject to Additional Medicare Tax. 1040 es tax forms   Employers cannot make an adjustment or file a claim for refund for Additional Medicare Tax withholding when there is a repayment of wages received by an employee in a prior year because the employee determines liability for Additional Medicare Tax on the employee's income tax return for the prior year. 1040 es tax forms If you had to repay an amount that you included in your wages or compensation in an earlier year, and on which Additional Medicare Tax was paid, you may be able to recover the Additional Medicare Tax paid on the amount. 1040 es tax forms To recover Additional Medicare Tax on the repaid wages or compensation, you must file Form 1040X, Amended U. 1040 es tax forms S. 1040 es tax forms Individual Income Tax Return, for the prior year in which the wages or compensation were originally received. 1040 es tax forms See the Instructions for Form 1040X. 1040 es tax forms Royalties Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. 1040 es tax forms In most cases you report royalties in Part I of Schedule E (Form 1040). 1040 es tax forms However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc. 1040 es tax forms , report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). 1040 es tax forms Copyrights and patents. 1040 es tax forms   Royalties from copyrights on literary, musical, or artistic works, and similar property, or from patents on inventions, are amounts paid to you for the right to use your work over a specified period of time. 1040 es tax forms Royalties generally are based on the number of units sold, such as the number of books, tickets to a performance, or machines sold. 1040 es tax forms Oil, gas, and minerals. 1040 es tax forms   Royalty income from oil, gas, and mineral properties is the amount you receive when natural resources are extracted from your property. 1040 es tax forms The royalties are based on units, such as barrels, tons, etc. 1040 es tax forms , and are paid to you by a person or company who leases the property from you. 1040 es tax forms Depletion. 1040 es tax forms   If you are the owner of an economic interest in mineral deposits or oil and gas wells, you can recover your investment through the depletion allowance. 1040 es tax forms For information on this subject, see chapter 9 of Publication 535. 1040 es tax forms Coal and iron ore. 1040 es tax forms   Under certain circumstances, you can treat amounts you receive from the disposal of coal and iron ore as payments from the sale of a capital asset, rather than as royalty income. 1040 es tax forms For information about gain or loss from the sale of coal and iron ore, see Publication 544. 1040 es tax forms Sale of property interest. 1040 es tax forms   If you sell your complete interest in oil, gas, or mineral rights, the amount you receive is considered payment for the sale of property used in a trade or business under section 1231, not royalty income. 1040 es tax forms Under certain circumstances, the sale is subject to capital gain or loss treatment as explained in the Instructions for Schedule D (Form 1040). 1040 es tax forms For more information on selling section 1231 property, see chapter 3 of Publication 544. 1040 es tax forms   If you retain a royalty, an overriding royalty, or a net profit interest in a mineral property for the life of the property, you have made a lease or a sublease, and any cash you receive for the assignment of other interests in the property is ordinary income subject to a depletion allowance. 1040 es tax forms Part of future production sold. 1040 es tax forms   If you own mineral property but sell part of the future production, in most cases you treat the money you receive from the buyer at the time of the sale as a loan from the buyer. 1040 es tax forms Do not include it in your income or take depletion based on it. 1040 es tax forms   When production begins, you include all the proceeds in your income, deduct all the production expenses, and deduct depletion from that amount to arrive at your taxable income from the property. 1040 es tax forms Unemployment Benefits The tax treatment of unemployment benefits you receive depends on the type of program paying the benefits. 1040 es tax forms Unemployment compensation. 1040 es tax forms   You must include in income all unemployment compensation you receive. 1040 es tax forms You should receive a Form 1099-G showing in box 1 the total unemployment compensation paid to you. 1040 es tax forms In most cases, you enter unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. 1040 es tax forms Types of unemployment compensation. 1040 es tax forms   Unemployment compensation generally includes any amount received under an unemployment compensation law of the United States or of a state. 1040 es tax forms It includes the following benefits. 1040 es tax forms Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund. 1040 es tax forms State unemployment insurance benefits. 1040 es tax forms Railroad unemployment compensation benefits. 1040 es tax forms Disability payments from a government program paid as a substitute for unemployment compensation. 1040 es tax forms (Amounts received as workers' compensation for injuries or illness are not unemployment compensation. 1040 es tax forms See chapter 5 for more information. 1040 es tax forms ) Trade readjustment allowances under the Trade Act of 1974. 1040 es tax forms Unemployment assistance under the Disaster Relief and Emergency Assistance Act. 1040 es tax forms Unemployment assistance under the Airline Deregulation Act of 1974 Program. 1040 es tax forms Governmental program. 1040 es tax forms   If you contribute to a governmental unemployment compensation program and your contributions are not deductible, amounts you receive under the program are not included as unemployment compensation until you recover your contributions. 1040 es tax forms If you deducted all of your contributions to the program, the entire amount you receive under the program is included in your income. 1040 es tax forms Repayment of unemployment compensation. 1040 es tax forms   If you repaid in 2013 unemployment compensation you received in 2013, subtract the amount you repaid from the total amount you received and enter the difference on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. 1040 es tax forms On the dotted line next to your entry enter “Repaid” and the amount you repaid. 1040 es tax forms If you repaid unemployment compensation in 2013 that you included in income in an earlier year, you can deduct the amount repaid on Schedule A (Form 1040), line 23, if you itemize deductions. 1040 es tax forms If the amount is more than $3,000, see Repayments , earlier. 1040 es tax forms Tax withholding. 1040 es tax forms   You can choose to have federal income tax withheld from your unemployment compensation. 1040 es tax forms To make this choice, complete Form W-4V, Voluntary Withholding Request, and give it to the paying office. 1040 es tax forms Tax will be withheld at 10% of your payment. 1040 es tax forms    If you do not choose to have tax withheld from your unemployment compensation, you may be liable for estimated tax. 1040 es tax forms If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. 1040 es tax forms For more information on estimated tax, see chapter 4. 1040 es tax forms Supplemental unemployment benefits. 1040 es tax forms   Benefits received from an employer-financed fund (to which the employees did not contribute) are not unemployment compensation. 1040 es tax forms They are taxable as wages and are subject to withholding for income tax. 1040 es tax forms They may be subject to social security and Medicare taxes. 1040 es tax forms For more information, see Supplemental Unemployment Benefits in section 5 of Publication 15-A, Employer's Supplemental Tax Guide. 1040 es tax forms Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. 1040 es tax forms Repayment of benefits. 1040 es tax forms   You may have to repay some of your supplemental unemployment benefits to qualify for trade readjustment allowances under the Trade Act of 1974. 1040 es tax forms If you repay supplemental unemployment benefits in the same year you receive them, reduce the total benefits by the amount you repay. 1040 es tax forms If you repay the benefits in a later year, you must include the full amount of the benefits received in your income for the year you received them. 1040 es tax forms   Deduct the repayment in the later year as an adjustment to gross income on Form 1040. 1040 es tax forms (You cannot use Form 1040A or Form 1040EZ. 1040 es tax forms ) Include the repayment on Form 1040, line 36, and enter “Sub-Pay TRA” and the amount on the dotted line next to line 36. 1040 es tax forms If the amount you repay in a later year is more than $3,000, you may be able to take a credit against your tax for the later year instead of deducting the amount repaid. 1040 es tax forms For more information on this, see Repayments , earlier. 1040 es tax forms Private unemployment fund. 1040 es tax forms   Unemployment benefit payments from a private (nonunion) fund to which you voluntarily contribute are taxable only if the amounts you receive are more than your total payments into the fund. 1040 es tax forms Report the taxable amount on Form 1040, line 21. 1040 es tax forms Payments by a union. 1040 es tax forms   Benefits paid to you as an unemployed member of a union from regular union dues are included in your income on Form 1040, line 21. 1040 es tax forms However, if you contribute to a special union fund and your payments to the fund are not deductible, the unemployment benefits you receive from the fund are includible in your income only to the extent they are more than your contributions. 1040 es tax forms Guaranteed annual wage. 1040 es tax forms   Payments you receive from your employer during periods of unemployment, under a union agreement that guarantees you full pay during the year, are taxable as wages. 1040 es tax forms Include them on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. 1040 es tax forms State employees. 1040 es tax forms   Payments similar to a state's unemployment compensation may be made by the state to its employees who are not covered by the state's unemployment compensation law. 1040 es tax forms Although the payments are fully taxable, do not report them as unemployment compensation. 1040 es tax forms Report these payments on Form 1040, line 21. 1040 es tax forms Welfare and Other Public Assistance Benefits Do not include in your income governmental benefit payments from a public welfare fund based upon need, such as payments to blind individuals under a state public assistance law. 1040 es tax forms Payments from a state fund for the victims of crime should not be included in the victims' incomes if they are in the nature of welfare payments. 1040 es tax forms Do not deduct medical expenses that are reimbursed by such a fund. 1040 es tax forms You must include in your income any welfare payments that are compensation for services or that are obtained fraudulently. 1040 es tax forms Reemployment Trade Adjustment Assistance (RTAA) payments. 1040 es tax forms   RTAA payments received from a state must be included in your income. 1040 es tax forms The state must send you Form 1099-G to advise you of the amount you should include in income. 1040 es tax forms The amount should be reported on Form 1040, line 21. 1040 es tax forms Persons with disabilities. 1040 es tax forms   If you have a disability, you must include in income compensation you receive for services you perform unless the compensation is otherwise excluded. 1040 es tax forms However, you do not include in income the value of goods, services, and cash that you receive, not in return for your services, but for your training and rehabilitation because you have a disability. 1040 es tax forms Excludable amounts include payments for transportation and attendant care, such as interpreter services for the deaf, reader services for the blind, and services to help individuals with an intellectual disability do their work. 1040 es tax forms Disaster relief grants. 1040 es tax forms    Do not include post-disaster grants received under the Robert T. 1040 es tax forms Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, child care, or funeral expenses. 1040 es tax forms Do not deduct casualty losses or medical expenses that are specifically reimbursed by these disaster relief grants. 1040 es tax forms If you have deducted a casualty loss for the loss of your personal residence and you later receive a disaster relief grant for the loss of the same residence, you may have to include part or all of the grant in your taxable income. 1040 es tax forms See Recoveries , earlier. 1040 es tax forms Unemployment assistance payments under the Act are taxable unemployment compensation. 1040 es tax forms See Unemployment compensation under Unemployment Benefits, earlier. 1040 es tax forms Disaster relief payments. 1040 es tax forms   You can exclude from income any amount you receive that is a qualified disaster relief payment. 1040 es tax forms A qualified disaster relief payment is an amount paid to you: To reimburse or pay reasonable and necessary personal, family, living, or funeral expenses that result from a qualified disaster; To reimburse or pay reasonable and necessary expenses incurred for the repair or rehabilitation of your home or repair or replacement of its contents to the extent it is due to a qualified disaster; By a person engaged in the furnishing or sale of transportation as a common carrier because of the death or personal physical injuries incurred as a result of a qualified disaster; or By a federal, state, or local government, or agency, or instrumentality in connection with a qualified disaster in order to promote the general welfare. 1040 es tax forms You can exclude this amount only to the extent any expense it pays for is not paid for by insurance or otherwise. 1040 es tax forms The exclusion does not apply if you were a participant or conspirator in a terrorist action or a representative of one. 1040 es tax forms   A qualified disaster is: A disaster which results from a terrorist or military action; A federally declared disaster; or A disaster which results from an accident involving a common carrier, or from any other event, which is determined to be catastrophic by the Secretary of the Treasury or his or her delegate. 1040 es tax forms   For amounts paid under item (4), a disaster is qualified if it is determined by an applicable federal, state, or local authority to warrant assistance from the federal, state, or local government, agency, or instrumentality. 1040 es tax forms Disaster mitigation payments. 1040 es tax forms   You also can exclude from income any amount you receive that is a qualified disaster mitigation payment. 1040 es tax forms Qualified disaster mitigation payments are also most commonly paid to you in the period immediately following damage to property as a result of a natural disaster. 1040 es tax forms However, disaster mitigation payments are used to mitigate (reduce the severity of) potential damage from future natural disasters. 1040 es tax forms They are paid to you through state and local governments based on the provisions of the Robert T. 1040 es tax forms Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act. 1040 es tax forms   You cannot increase the basis or adjusted basis of your property for improvements made with nontaxable disaster mitigation payments. 1040 es tax forms Home Affordable Modification Program (HAMP). 1040 es tax forms   If you benefit from Pay-for-Performance Success Payments under HAMP, the payments are not taxable. 1040 es tax forms Mortgage assistance payments under section 235 of the National Housing Act. 1040 es tax forms   Payments made under section 235 of the National Housing Act for mortgage assistance are not included in the homeowner's income. 1040 es tax forms Interest paid for the homeowner under the mortgage assistance program cannot be deducted. 1040 es tax forms Medicare. 1040 es tax forms   Medicare benefits received under title XVIII of the Social Security Act are not includible in the gross income of the individuals for whom they are paid. 1040 es tax forms This includes basic (part A (Hospital Insurance Benefits for the Aged)) and supplementary (part B (Supplementary Medical Insurance Benefits for the Aged)). 1040 es tax forms Old-age, survivors, and disability insurance benefits (OASDI). 1040 es tax forms   Generally, OASDI payments under section 202 of title II of the Social Security Act are not includible in the gross income of the individuals to whom they are paid. 1040 es tax forms This applies to old-age insurance benefits, and insurance benefits for wives, husbands, children, widows, widowers, mothers and fathers, and parents, as well as the lump-sum death payment. 1040 es tax forms Nutrition Program for the Elderly. 1040 es tax forms    Food benefits you receive under the Nutrition Program for the Elderly are not taxable. 1040 es tax forms If you prepare and serve free meals for the program, include in your income as wages the cash pay you receive, even if you are also eligible for food benefits. 1040 es tax forms Payments to reduce cost of winter energy. 1040 es tax forms   Payments made by a state to qualified people to reduce their cost of winter energy use are not taxable. 1040 es tax forms Other Income The following brief discussions are arranged in alphabetical order. 1040 es tax forms Other income items briefly discussed below are referenced to publications which provide more topical information. 1040 es tax forms Activity not for profit. 1040 es tax forms   You must include on your return income from an activity from which you do not expect to make a profit. 1040 es tax forms An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. 1040 es tax forms Enter this income on Form 1040, line 21. 1040 es tax forms Deductions for expenses related to the activity are limited. 1040 es tax forms They cannot total more than the income you report and can be taken only if you itemize deductions on Schedule A (Form 1040). 1040 es tax forms See Not-for-Profit Activities in chapter 1 of Publication 535 for information on whether an activity is considered carried on for a profit. 1040 es tax forms Alaska Permanent Fund dividend. 1040 es tax forms   If you received a payment from Alaska's mineral income fund (Alaska Permanent Fund dividend), report it as income on line 21 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. 1040 es tax forms The state of Alaska sends each recipient a document that shows the amount of the payment with the check. 1040 es tax forms The amount also is reported to IRS. 1040 es tax forms Alimony. 1040 es tax forms   Include in your income on Form 1040, line 11, any alimony payments you receive. 1040 es tax forms Amounts you receive for child support are not income to you. 1040 es tax forms Alimony and child support payments are discussed in chapter 18. 1040 es tax forms Bribes. 1040 es tax forms   If you receive a bribe, include it in your income. 1040 es tax forms Campaign contributions. 1040 es tax forms   These contributions are not income to a candidate unless they are diverted to his or her personal use. 1040 es tax forms To be exempt from tax, the contributions must be spent for campaign purposes or kept in a fund for use in future campaigns. 1040 es tax forms However, interest earned on bank deposits, dividends received on contributed securities, and net gains realized on sales of contributed securities are taxable and must be reported on Form 1120-POL, U. 1040 es tax forms S. 1040 es tax forms Income Tax Return for Certain Political Organizations. 1040 es tax forms Excess campaign funds transferred to an office account must be included in the officeholder's income on Form 1040, line 21, in the year transferred. 1040 es tax forms Car pools. 1040 es tax forms   Do not include in your income amounts you receive from the passengers for driving a car in a car pool to and from work. 1040 es tax forms These amounts are considered reimbursement for your expenses. 1040 es tax forms However, this rule does not apply if you have developed car pool arrangements into a profit-making business of transporting workers for hire. 1040 es tax forms Cash rebates. 1040 es tax forms   A cash rebate you receive from a dealer or manufacturer of an item you buy is not income, but you must reduce your basis by the amount of the rebate. 1040 es tax forms Example. 1040 es tax forms You buy a new car for $24,000 cash and receive a $2,000 rebate check from the manufacturer. 1040 es tax forms The $2,000 is not income to you. 1040 es tax forms Your basis in the car is $22,000. 1040 es tax forms This is the basis on which you figure gain or loss if you sell the car and depreciation if you use it for business. 1040 es tax forms Casualty insurance and other reimbursements. 1040 es tax forms   You generally should not report these reimbursements on your return unless you are figuring gain or loss from the casualty or theft. 1040 es tax forms See chapter 25 for more information. 1040 es tax forms Child support payments. 1040 es tax forms   You should not report these payments on your return. 1040 es tax forms See chapter 18 for more information. 1040 es tax forms Court awards and damages. 1040 es tax forms   To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. 1040 es tax forms The character of the income as ordinary income or capital gain depends on the nature of the underlying claim. 1040 es tax forms Include the following as ordinary income. 1040 es tax forms Interest on any award. 1040 es tax forms Compensation for lost wages or lost profits in most cases. 1040 es tax forms Punitive damages, in most cases. 1040 es tax forms It does not matter if they relate to a physical injury or physical sickness. 1040 es tax forms Amounts received in settlement of pension rights (if you did not contribute to the plan). 1040 es tax forms Damages for: Patent or copyright infringement, Breach of contract, or Interference with business operations. 1040 es tax forms Back pay and damages for emotional distress received to satisfy a claim under title VII of the Civil Rights Act of 1964. 1040 es tax forms Attorney fees and costs (including contingent fees) where the underlying recovery is included in gross income. 1040 es tax forms   Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments). 1040 es tax forms Emotional distress. 1040 es tax forms   Emotional distress itself is not a physical injury or physical sickness, but damages you receive for emotional distress due to a physical injury or sickness are treated as received for the physical injury or sickness. 1040 es tax forms Do not include them in your income. 1040 es tax forms   If the emotional distress is due to a personal injury that is not due to a physical injury or sickness (for example, employment discrimination or injury to reputation), you must include the damages in your income, except for any damages you receive for medical care due to that emotional distress. 1040 es tax forms Emotional distress includes physical symptoms that result from emotional distress, such as headaches, insomnia, and stomach disorders. 1040 es tax forms Deduction for costs involved in unlawful discrimination suits. 1040 es tax forms   You may be able to deduct attorney fees and court costs paid to recover a judgment or settlement for a claim of unlawful discrimination under various provisions of federal, state, and local law listed in Internal Revenue Code section 62(e), a claim against the United States government, or a claim under section 1862(b)(3)(A) of the Social Security Act. 1040 es tax forms For more information, see Publication 525. 1040 es tax forms Credit card insurance. 1040 es tax forms   In most cases, if you receive benefits under a credit card disability or unemployment insurance plan, the benefits are taxable to you. 1040 es tax forms These plans make the minimum monthly payment on your credit card account if you cannot make the payment due to injury, illness, disability, or unemployment. 1040 es tax forms Report on Form 1040, line 21, the amount of benefits you received during the year that is more than the amount of the premiums you paid during the year. 1040 es tax forms Down payment assistance. 1040 es tax forms   If you purchase a home and receive assistance from a nonprofit corporation to make the down payment, that assistance is not included in your income. 1040 es tax forms If the corporation qualifies as a tax-exempt charitable organization, the assistance is treated as a gift and is included in your basis of the house. 1040 es tax forms If the corporation does not qualify, the assistance is treated as a rebate or reduction of the purchase price and is not included in your basis. 1040 es tax forms Employment agency fees. 1040 es tax forms   If you get a job through an employment agency, and the fee is paid by your employer, the fee is not includible in your income if you are not liable for it. 1040 es tax forms However, if you pay it and your employer reimburses you for it, it is includible in your income. 1040 es tax forms Energy conservation subsidies. 1040 es tax forms   You can exclude from gross income any subsidy provided, either directly or indirectly, by public utilities for the purchase or installation of an energy conservation measure for a dwelling unit. 1040 es tax forms Energy conservation measure. 1040 es tax forms   This includes installations or modifications that are primarily designed to reduce consumption of electricity or natural gas, or improve the management of energy demand. 1040 es tax forms Dwelling unit. 1040 es tax forms   This includes a house, apartment, condominium, mobile home, boat, or similar property. 1040 es tax forms If a building or structure contains both dwelling and other units, any subsidy must be properly allocated. 1040 es tax forms Estate and trust income. 1040 es tax forms    An estate or trust, unlike a partnership, may have to pay federal income tax. 1040 es tax forms If you are a beneficiary of an estate or trust, you may be taxed on your share of its income distributed or required to be distributed to you. 1040 es tax forms However, there is never a double tax. 1040 es tax forms Estates and trusts file their returns on Form 1041, U. 1040 es tax forms S. 1040 es tax forms Income Tax Return for Estates and Trusts, and your share of the income is reported to you on Schedule K-1 (Form 1041). 1040 es tax forms Current income required to be distributed. 1040 es tax forms   If you are the beneficiary of an estate or trust that must distribute all of its current income, you must report your share of the distributable net income, whether or not you actually received it. 1040 es tax forms Current income not required to be distributed. 1040 es tax forms    If you are the beneficiary of an estate or trust and the fiduciary has the choice of whether to distribute all or part of the current income, you must report: All income that is required to be distributed to you, whether or not it is actually distributed, plus All other amounts actually paid or credited to you, up to the amount of your share of distributable net income. 1040 es tax forms How to report. 1040 es tax forms   Treat each item of income the same way that the estate or trust would treat it. 1040 es tax forms For example, if a trust's dividend income is distributed to you, you report the distribution as dividend income on your return. 1040 es tax forms The same rule applies to distributions of tax-exempt interest and capital gains. 1040 es tax forms   The fiduciary of the estate or trust must tell you the type of items making up your share of the estate or trust income and any credits you are allowed on your individual income tax return. 1040 es tax forms Losses. 1040 es tax forms   Losses of estates and trusts generally are not deductible by the beneficiaries. 1040 es tax forms Grantor trust. 1040 es tax forms   Income earned by a grantor trust is taxable to the grantor, not the beneficiary, if the grantor keeps certain control over the trust. 1040 es tax forms (The grantor is the one who transferred property to the trust. 1040 es tax forms ) This rule applies if the property (or income from the property) put into the trust will or may revert (be returned) to the grantor or the grantor's spouse. 1040 es tax forms   Generally, a trust is a grantor trust if the grantor has a reversionary interest valued (at the date of transfer) at more than 5% of the value of the transferred property. 1040 es tax forms Expenses paid by another. 1040 es tax forms   If your personal expenses are paid for by another person, such as a corporation, the payment may be taxable to you depending upon your relationship with that person and the nature of the payment. 1040 es tax forms But if the payment makes up for a loss caused by that person, and only restores you to the position you were in before the loss, the payment is not includible in your income. 1040 es tax forms Fees for services. 1040 es tax forms   Include all fees for your services in your income. 1040 es tax forms Examples of these fees are amounts you receive for services you perform as: A corporate director, An executor, administrator, or personal representative of an estate, A manager of a trade or business you operated before declaring Chapter 11 bankruptcy, A notary public, or An election precinct official. 1040 es tax forms Nonemployee compensation. 1040 es tax forms   If you are not an employee and the fees for your services from the same payer total $600 or more for the year, you may receive a Form 1099-MISC. 1040 es tax forms You may need to report your fees as self-employment income. 1040 es tax forms See Self-Employed Persons , in chapter 1, for a discussion of when you are considered self-employed. 1040 es tax forms Corporate director. 1040 es tax forms   Corporate director fees are self-employment income. 1040 es tax forms Report these payments on Schedule C or Schedule C-EZ (Form 1040). 1040 es tax forms Personal representatives. 1040 es tax forms   All personal representatives must include in their gross income fees paid to them from an estate. 1040 es tax forms If you are not in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on Form 1040, line 21. 1040 es tax forms If you are in the trade or business of being an executor, report these fees as self-employment income on Schedule C or Schedule C-EZ (Form 1040). 1040 es tax forms The fee is not includible in income if it is waived. 1040 es tax forms Manager of trade or business for bankruptcy estate. 1040 es tax forms   Include in your income all payments received from your bankruptcy estate for managing or operating a trade or business that you operated before you filed for bankruptcy. 1040 es tax forms Report this income on Form 1040, line 21. 1040 es tax forms Notary public. 1040 es tax forms    Report payments for these services on Schedule C or Schedule C-EZ (Form 1040). 1040 es tax forms These payments are not subject to self-employment tax. 1040 es tax forms See the separate instructions for Schedule SE (Form 1040) for details. 1040 es tax forms Election precinct official. 1040 es tax forms    You should receive a Form W-2 showing payments for services performed as an election official or election worker. 1040 es tax forms Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. 1040 es tax forms Foster care providers. 1040 es tax forms   Payments you receive from a state, political subdivision, or a qualified foster care placement agency for providing care to qualified foster individuals in your home generally are not included in your income. 1040 es tax forms However, you must include in your income payments received for the care of more than 5 individuals age 19 or older and certain difficulty-of-care payments. 1040 es tax forms   A qualified foster individual is a person who: Is living in a foster family home, and Was placed there by: An agency of a state or one of its political subdivisions, or A qualified foster care placement agency. 1040 es tax forms Difficulty-of-care payments. 1040 es tax forms   These are additional payments that are designated by the payer as compensation for providing the additional care that is required for physically, mentally, or emotionally handicapped qualified foster individuals. 1040 es tax forms A state must determine that the additional compensation is needed, and the care for which the payments are made must be provided in your home. 1040 es tax forms   You must include in your income difficulty-of-care payments received for more than: 10 qualified foster individuals under age 19, or 5 qualified foster individuals age 19 or older. 1040 es tax forms Maintaining space in home. 1040 es tax forms   If you are paid to maintain space in your home for emergency foster care, you must include the payment in your income. 1040 es tax forms Reporting taxable payments. 1040 es tax forms    If you receive payments that you must include in your income, you are in business as a foster care provider and you are self-employed. 1040 es tax forms Report the payments on Schedule C or Schedule C-EZ (Form 1040). 1040 es tax forms See Publication 587, Business Use of Your Home, to help you determine the amount you can deduct for the use of your home. 1040 es tax forms Found property. 1040 es tax forms   If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession. 1040 es tax forms Free tour. 1040 es tax forms   If you received a free tour from a travel agency for organizing a group of tourists, you must include its value in your income. 1040 es tax forms Report the fair market value of the tour on Form 1040, line 21, if you are not in the trade or business of organizing tours. 1040 es tax forms You cannot deduct your expenses in serving as the voluntary leader of the group at the group's request. 1040 es tax forms If you organize tours as a trade or business, report the tour's value on Schedule C or Schedule C-EZ (Form 1040). 1040 es tax forms Gambling winnings. 1040 es tax forms   You must include your gambling winnings in income on Form 1040, line 21. 1040 es tax forms If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings. 1040 es tax forms Lotteries and raffles. 1040 es tax forms   Winnings from lotteries and raffles are gambling winnings. 1040 es tax forms In addition to cash winnings, you must include in your income the fair market value of bonds, cars, houses, and other noncash prizes. 1040 es tax forms    If you win a state lottery prize payable in installments, see Publication 525 for more information. 1040 es tax forms Form W-2G. 1040 es tax forms   You may have received a Form W-2G, Certain Gambling Winnings, showing the amount of your gambling winnings and any tax taken out of them. 1040 es tax forms Include the amount from box 1 on Form 1040, line 21. 1040 es tax forms Include the amount shown in box 4 on Form 1040, line 62, as federal income tax withheld. 1040 es tax forms Reporting winnings and recordkeeping. 1040 es tax forms   For more information on reporting gam