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1040s

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1040s

1040s Index Symbols 1231 property sale, Sale of property interest. 1040s 401(k) plans, Elective Deferrals Excess contributions, Excess Contributions 403(b) plans, Elective Deferrals Limit for, Limit for tax-sheltered annuities. 1040s 457 plans, Elective Deferrals Limit for deferrals under, Limit for deferrals under section 457 plans. 1040s 501(c)(18)(D) plans, Elective Deferrals Contributions, Section 501(c)(18)(D) contributions. 1040s 501(c)(3) organizations, Student loans. 1040s 529 program, Qualified tuition program (QTP). 1040s 83(b) election, How to make the choice. 1040s A Academic health centers Meals and lodging when teaching and research organization, Academic health center. 1040s Accelerated death benefits, Accelerated Death Benefits Accident insurance, Accident or Health Plan Accidental death benefits, Accidental death benefits. 1040s Accrual method taxpayers, Prepaid income. 1040s Accrued leave payment At time of retirement or resignation, Accrued leave payment. 1040s Disability retirement, Accrued leave payment. 1040s Activity not for profit, Activity not for profit. 1040s Adoption Employer assistance, Adoption Assistance Advance commissions, Miscellaneous Compensation Aircraft, Flights on employer-provided aircraft. 1040s Airlines No-additional-cost services, No-Additional-Cost Services Valuation of flights on employer-provided aircraft, Flights on employer-provided aircraft. 1040s Alaska Permanent Fund dividend, Alaska Permanent Fund dividend. 1040s Alien status, waiver of, Waiver of alien status. 1040s Aliens Nonresident, Nonresident aliens. 1040s Alimony, Alimony. 1040s Alternative minimum tax (AMT) Recoveries, refiguring of, Subject to alternative minimum tax. 1040s Stock options, Alternative minimum tax (AMT). 1040s Annuities Charitable gift, Charitable gift annuities. 1040s Railroad retirement, Railroad retirement annuities. 1040s Tax-sheltered, Limit for tax-sheltered annuities. 1040s Archer MSAs, Archer MSA contributions. 1040s , Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). 1040s Armed forces, Military Combat zone bonus, Veterans' benefits. 1040s Disability, Disability. 1040s Disability pensions, Military and Government Disability Pensions Health professions scholarship, Tuition Reduction Military action as cause of disability injuries, Terrorist attack or military action. 1040s Qualified reservist distribution, Qualified reservist distribution (QRD). 1040s Rehabilitative program payments, Veterans' benefits. 1040s Retirement pay, Military retirement pay. 1040s Veterans benefits, Veterans' benefits. 1040s Assistance (see Tax help) Athletic facilities, employer-provided, Athletic Facilities Automobile (see Vehicle, employer-provided) Awards (see Damages from lawsuits) B Babysitting, Babysitting. 1040s Back pay, award for, Back pay awards. 1040s Backup withholding Barter exchange transactions, Backup withholding. 1040s Bankruptcy Canceled debt not deemed to be income, Excluded debt. 1040s Barter income, Bartering Below-market loans, Below-market loans. 1040s Bequest for services, Bequest for services. 1040s Bicycle, Transportation Fringe benefit, Qualified bicycle commuting. 1040s Black lung benefit payments, Black lung benefit payments. 1040s Bonuses, Bonuses and awards. 1040s , Employee awards or bonuses. 1040s Breach of contract Damages as income, Court awards and damages. 1040s Bribes, Bribes. 1040s Business expenses Reimbursements, Allowances and reimbursements. 1040s Business income, Business and Investment Income, More information. 1040s C Cafeteria plans, Cafeteria plans. 1040s Campaign contributions, Campaign contributions. 1040s Campus lodging, Qualified campus lodging. 1040s , Moving Expense Reimbursements Cancellation of debt, Canceled Debts Cancellation of sales contracts, Canceled sales contract. 1040s Capital gains Recoveries, Capital gains. 1040s , Capital gains. 1040s Capital gains or losses Employee stock option plans (ESOPs), Option granted at a discount. 1040s Incentive stock options (ISOs), Incentive stock options (ISOs). 1040s Sale of personal property, Sale of personal items. 1040s Car (see Vehicle, employer-provided) Car pools, Car pools. 1040s Cash or deferred arrangements (CODAs), Elective Deferrals Cash rebates, Cash rebates. 1040s Casualty insurance Reimbursements from, Casualty insurance and other reimbursements. 1040s Catch-up contributions, Catch-up contributions. 1040s , Catch-up contributions. 1040s Charitable gift annuities, Charitable gift annuities. 1040s Child and Adult Care Food Program Payments to daycare providers, Food program payments to daycare providers. 1040s Child support payments, Child support payments. 1040s Childcare providers, Childcare providers. 1040s , Food program payments to daycare providers. 1040s Chronic illness, Chronically ill individual. 1040s Accelerated death benefits paid to, Exclusion for chronic illness. 1040s Citizens outside U. 1040s S. 1040s Exclusion of foreign income, Reminders Civil Rights Act of 1964, Title VII Back pay and damages for emotional distress under, Court awards and damages. 1040s Clergy, Clergy Coal, Coal and iron ore. 1040s Colleges and universities Faculty lodging, Faculty lodging. 1040s Scholarships and fellowships, Scholarships and fellowships. 1040s Commissions Advance, Miscellaneous Compensation Commuter highway vehicles, Transportation Compensation Employee, Employee Compensation Miscellaneous, Miscellaneous Compensation Unemployment, Unemployment compensation. 1040s Workers', Workers' Compensation Compensatory damages, Other compensation. 1040s , Court awards and damages. 1040s Constructive receipt of income, Constructively received income. 1040s Copyrights Infringement damages, Court awards and damages. 1040s Royalties, Copyrights and patents. 1040s Corporate directors, Corporate director. 1040s Cost-of-living allowances, Government cost-of-living allowances. 1040s Court awards, Court awards and damages. 1040s (see also Damages from lawsuits) Credit card Insurance, Credit card insurance. 1040s Credits Recoveries, refiguring of unused credits, Unused tax credits. 1040s , Unused tax credits. 1040s Currency transactions, foreign, Foreign currency transactions. 1040s D Damages from lawsuits, Court awards and damages. 1040s Back pay awards, Back pay awards. 1040s Breach of contract, Court awards and damages. 1040s Compensatory damages, Other compensation. 1040s , Court awards and damages. 1040s Emotional distress under Title VII, Civil Rights Act of 1964, Court awards and damages. 1040s Punitive damages, Court awards and damages. 1040s Daycare providers, Childcare providers. 1040s (see also Childcare providers) Food program payments to, Food program payments to daycare providers. 1040s De minimis benefits, De Minimis (Minimal) Benefits, Meals and Lodging Death benefits, Proceeds not received in installments. 1040s (see also Life insurance) Accelerated, Accelerated Death Benefits Debts Canceled, Canceled Debts Excluded debt, Excluded debt. 1040s Nonrecourse debts, Mortgage relief upon sale or other disposition. 1040s Recourse, Mortgage relief upon sale or other disposition. 1040s Stockholder's, Stockholder debt. 1040s Deduction Costs of discrimination suits, Deduction for costs involved in unlawful discrimination suits. 1040s Deferred compensation Nonqualified plans, Nonqualified deferred compensation plans. 1040s , Nonqualified deferred compensation plans of nonqualified entities. 1040s Dependent care benefits, Dependent Care Benefits Depletion allowance, Depletion. 1040s Differential wage payments, Differential wage payments. 1040s Armed forces, Differential wage payments. 1040s Directors' fees, Corporate director. 1040s Disability Military, Disability. 1040s Pensions, Disability Pensions Workers' compensation, Disability pension. 1040s Person with, Persons with disabilities. 1040s Unemployment compensation, paid as substitute for, Types of unemployment compensation. 1040s Disaster relief Disaster mitigation payments, Disaster mitigation payments. 1040s Disaster Relief and Emergency Assistance Act Grants, Disaster relief grants. 1040s Unemployment benefits, Unemployment Benefits Mitigation payments, Reminders Payments, Disaster relief payments. 1040s Discounts Employee discounts, Employee Discounts Employee stock purchase plans, Option granted at a discount. 1040s Mortgage loan for early payment, Discounted mortgage loan. 1040s Dividends Restricted stock, Dividends received on restricted stock. 1040s Divorced taxpayers Stock options exercised incident to divorce, Tax form. 1040s Down payment assistance, Down payment assistance. 1040s E Educational assistance Employer-provided, Educational Assistance Scholarships and fellowships, Scholarships and fellowships. 1040s Educational institutions Faculty lodging, Faculty lodging. 1040s Elderly persons Nutrition Program for the Elderly, Nutrition Program for the Elderly. 1040s Tax Counseling for the Elderly, Volunteer tax counseling. 1040s Election precinct officials, Election precinct official. 1040s Elective deferrals, Elective Deferrals Catch-up contributions, Catch-up contributions. 1040s , Catch-up contributions. 1040s Excess annual additions, Excess Annual Additions Excess contributions, Excess Contributions Excess deferrals, Excess deferrals. 1040s Increased limit for last 3 years prior to retirement age, Increased limit. 1040s Limit on, Elective Deferrals Reporting by employer, Reporting by employer. 1040s Emergency Homeowners' Loan Program, Hardest Hit Fund and Emergency Homeowners' Loan Program. 1040s Emotional distress damages, Emotional distress. 1040s Employee achievement awards, Employee achievement award. 1040s Employee awards or bonuses, Employee awards or bonuses. 1040s Employee compensation, Employee Compensation, Inherited property not substantially vested. 1040s Fringe benefits, Fringe Benefits, Special valuation rules. 1040s Restricted property, Restricted Property, Inherited property not substantially vested. 1040s Retirement plan contributions, Retirement Plan Contributions Stock options, Stock Options, Statutory Stock Options Employee discounts, Employee Discounts Employee stock purchase plans, Statutory Stock Options, Employee stock purchase plan. 1040s Employer, foreign, Foreign Employer Employer-owned life insurance, Employer-owned life insurance contract. 1040s Employer-provided Educational assistance, Educational Assistance Vehicles, Employer-provided vehicles. 1040s Employment Abroad, Employment abroad. 1040s Agency fees, Employment agency fees. 1040s Contracts Severance pay for cancellation of, Severance pay. 1040s Endowment proceeds, Endowment Contract Proceeds Energy Assistance, Payments to reduce cost of winter energy. 1040s Conservation Subsidies, Energy conservation subsidies. 1040s Utility rebates, Utility rebates. 1040s Estate income, Estate and trust income. 1040s Estimated tax Unemployment compensation, Tax withholding. 1040s Excess Annual additions, Excess Annual Additions Contributions, Excess Contributions Deferrals, Excess deferrals. 1040s Expected inheritance, Expected inheritance. 1040s Expenses paid by another, Expenses paid by another. 1040s Exxon Valdez settlement, Exxon Valdez settlement income. 1040s Eligible retirement plan, Contributions to eligible retirement plan. 1040s Income averaging, Income averaging. 1040s Legal expenses, Legal expenses. 1040s Reporting requirement-statement, Statement. 1040s F Faculty lodging, Faculty lodging. 1040s Fair market value (FMV), Fair market value. 1040s Stock options, Grant of option. 1040s Farming Qualified farm debt, cancellation of, Excluded debt. 1040s Federal employees Accrued leave payment, Accrued leave payment. 1040s Cost-of-living allowances, Government cost-of-living allowances. 1040s Disability pensions, Military and Government Disability Pensions Thrift Savings Plan for, Elective Deferrals Federal Employees Compensation Act (FECA) payments, Federal Employees' Compensation Act (FECA). 1040s Federal income tax Refunds, Federal income tax refund. 1040s Fees for services, Fees for services. 1040s Financial counseling fees, Financial Counseling Fees Fellowships, Scholarships and fellowships. 1040s FICA withholding Foreign employers, U. 1040s S. 1040s citizens working for in U. 1040s S. 1040s , Social security and Medicare taxes. 1040s Paid by employer, Social security and Medicare taxes paid by employer. 1040s Fiduciaries Fees for services, Fees for services. 1040s , Personal representatives. 1040s Financial counseling fees, Financial Counseling Fees (see also Retirement planning services) Fitness programs Employer-provided, Athletic Facilities Flights Employer-provided aircraft, Flights on employer-provided aircraft. 1040s No-additional-cost services, No-Additional-Cost Services Food benefits Daycare providers, food program payments to, Food program payments to daycare providers. 1040s Nutrition Program for the Elderly, Nutrition Program for the Elderly. 1040s Foreign Currency transactions, Foreign currency transactions. 1040s Employment, Foreign Employer Governments, employees of, Employees of international organizations or foreign governments. 1040s Income, Reminders Service, Service-connected disability. 1040s Form 1040 Excess contributions to elective deferrals, Excess Contributions Recoveries, Where to report. 1040s Unemployment compensation, Unemployment Benefits Wages from Form W-2, Employee Compensation Form 1040 or 1040A, Schedule B Restricted stock dividends, Stock you chose to include in your income. 1040s Form 1040, Schedule A Outplacement services, deduction for, Outplacement services. 1040s Repayment of commissions paid in advance, Advance commissions and other earnings. 1040s Form 1040, Schedule C Bartering, Bartering Childcare providers to use, Childcare providers. 1040s Personal property rental, reporting income from, Reporting business income and expenses. 1040s Royalties, Royalties Form 1040, Schedule C-EZ Bartering, Bartering Childcare Providers to use, Childcare providers. 1040s Personal property rental, reporting income from, Reporting business income and expenses. 1040s Royalties, Royalties Form 1040, Schedule D Stock options, Sale of the stock. 1040s Stock options reported on, Statutory Stock Options Form 1040, Schedule E Partner's return, Partner's return. 1040s Royalties, Royalties Form 1040A Recoveries, Where to report. 1040s Unemployment compensation, Unemployment Benefits Wages from Form W-2, Employee Compensation Form 1040EZ Recoveries, Where to report. 1040s Unemployment compensation, Unemployment Benefits Wages from Form W-2, Employee Compensation Form 1041 Estates and trusts, Estate and trust income. 1040s Form 1041, Schedule K-1 Beneficiary's share of income, deductions, credits, etc. 1040s , Estate and trust income. 1040s Form 1065 Partnership return, Partnership return. 1040s Form 1065, Schedule K-1 Partner's share of income, Schedule K-1 (Form 1065). 1040s , Partnership Income Form 1098 Mortgage interest statement, Mortgage interest refund. 1040s Form 1099-B Barter exchange transactions, Form 1099-B from barter exchange. 1040s , Backup withholding. 1040s Form 1099-C Cancellation of debt, Form 1099-C. 1040s Form 1099-DIV Restricted stock dividends, Stock you chose to include in your income. 1040s Form 1099-G State tax refunds, State tax refund. 1040s Unemployment compensation, Unemployment Benefits Form 1099-MISC Services totaling $600 or more, Fees for services. 1040s Stock options exercised incident to divorce, Tax form. 1040s Form 1099-R Charitable gift annuities, Charitable gift annuities. 1040s Excess annual additions, Excess Annual Additions Excess deferral amounts, Excess distributed to you. 1040s Surrender of life insurance policy for cash, Surrender of policy for cash. 1040s Form 1120-POL Political organizations, Campaign contributions. 1040s Form 1120S S corporation return, S corporation return. 1040s Form 1120S, Schedule K-1 Shareholder's share of income, credits, deductions, etc. 1040s , Schedule K-1 (Form 1120S). 1040s Form 2441 Child and dependent care expenses, Dependent Care Benefits Form 4255 Recapture of investment credit, Amounts Recovered for Credits Form 6251 Alternative minimum tax, Alternative minimum tax (AMT). 1040s Form 8839 Adoption assistance, Adoption Assistance Form 8853 Accelerated death benefits, Form 8853. 1040s Archer MSAs and long-term care insurance contracts, Archer MSA contributions. 1040s Form 8919 Uncollected social security and Medicare tax on wages, Employee Compensation Form RRB-1099 Railroad retirement board payments, Form RRB-1099. 1040s Form SSA-1099 Social security benefit statement, Form SSA-1099. 1040s Form W-2 501(c)(18)(D) contributions, Section 501(c)(18)(D) contributions. 1040s Accrued leave payment at time of retirement or resignation, Accrued leave payment. 1040s Back pay awards, Back pay awards. 1040s Bonuses or awards, Bonuses and awards. 1040s Elective deferrals, reporting by employer, Reporting by employer. 1040s Failure to receive from employer, Employee Compensation Fringe benefits reported on, Form W-2. 1040s Stock options from employers, Tax form. 1040s Wage and tax statement, Employee Compensation Form W-2G Gambling winnings, Form W-2G. 1040s Form W-4V Unemployment compensation, voluntary withholding request, Tax withholding. 1040s Form W-9 Request for taxpayer identification number, Backup withholding. 1040s Foster care, Foster care providers. 1040s Foster Grandparent Program, National Senior Service Corps programs. 1040s Found property, Found property. 1040s Free tax services, Free help with your tax return. 1040s Fringe benefits, Fringe Benefits, Special valuation rules. 1040s Accident and health insurance, Accident or Health Plan Adoption, employer assistance, Adoption Assistance Athletic facilities, Athletic Facilities Commuter highway vehicles, Transportation De minimis benefits, De Minimis (Minimal) Benefits, Meals and Lodging Dependent care benefits, Dependent Care Benefits Educational assistance, Educational Assistance Employee discounts, Employee Discounts Faculty lodging, Faculty lodging. 1040s Financial counseling fees, Financial Counseling Fees Holiday gifts, Holiday gifts. 1040s Meals and lodging, Meals and Lodging Moving expenses (see Moving expenses) No-additional-cost services, No-Additional-Cost Services Parking, Transportation Retirement planning (see Retirement planning services) Transit pass, Transportation, Transit pass. 1040s Tuition reduction, Tuition Reduction Valuation of, Valuation of Fringe Benefits, Special valuation rules. 1040s Vehicle, Employer-provided vehicles. 1040s Working condition benefits, Working Condition Benefits Frozen deposits Interest on, Interest on frozen deposits. 1040s G Gambling winnings and losses, Gambling winnings. 1040s Gas Royalties from, Oil, gas, and minerals. 1040s Gifts, Gifts and inheritances. 1040s Holiday gifts from employer, Holiday gifts. 1040s Government employees (see Federal employees; State employees) Grantor trusts, Grantor trust. 1040s Group-term life insurance Worksheets, Figuring the taxable cost. 1040s , Worksheet 1. 1040s Figuring the Cost of Group-Term Life Insurance To Include in Income—Illustrated Gulf oil spill, Reminders, Gulf oil spill. 1040s H HAMP Home affordable modification program Pay-for-performance success payments, Home Affordable Modification Program (HAMP). 1040s Hardest Hit Fund Program, Hardest Hit Fund and Emergency Homeowners' Loan Program. 1040s Health Flexible spending arrangement, Health flexible spending arrangement (health FSA). 1040s Insurance, Accident or Health Plan Reimbursement arrangement, Health reimbursement arrangement (HRA). 1040s Savings account, Health savings accounts (HSA). 1040s Help (see Tax help) Highly compensated employees Excess contributions to elective deferrals, Excess Contributions Historic preservation grants, Historic preservation grants. 1040s Hobby losses, Hobby losses. 1040s Holding period requirement, Holding period requirement. 1040s Holiday gifts, Holiday gifts. 1040s Holocaust victims restitution, Holocaust victims restitution. 1040s Home, sale of, Sale of home. 1040s Host or hostess, Host or Hostess Hotels No-additional-cost services, No-Additional-Cost Services Housing (see Lodging) I Illegal activities, Illegal activities. 1040s Incentive stock options (ISOs), Statutory Stock Options, Incentive stock options (ISOs). 1040s Income Assigned, Assignment of income. 1040s Business and investment, Business and Investment Income, More information. 1040s Constructive receipt of, Constructively received income. 1040s Estate and trust, Estate and trust income. 1040s Foreign employers, Foreign Employer Illegal, Illegal activities. 1040s Miscellaneous, Miscellaneous Income Other, Other Income Partnership, Partnership Income Prepaid, Prepaid income. 1040s S corporation, S Corporation Income Indian fishing rights, Indian fishing rights. 1040s Indian money account, Indian money account litigation settlement. 1040s Individual retirement arrangements (IRAs) Deduction, Benefits may affect your IRA deduction. 1040s Inherited IRA, Inherited pension or IRA. 1040s Inheritance, Gifts and inheritances. 1040s IRA, Inherited pension or IRA. 1040s Property not substantially vested, Inherited property not substantially vested. 1040s Injury benefits, Sickness and Injury Benefits, Reimbursement for medical care. 1040s Insurance Credit card, Credit card insurance. 1040s Health, Accident or Health Plan Life (see Life insurance) Long-term care (see Long-term care insurance) Interest Canceled debt including, Interest included in canceled debt. 1040s Frozen deposits, Interest on frozen deposits. 1040s Mortgage refunds, Mortgage interest refund. 1040s Option on insurance, Interest option on insurance. 1040s Recovery amounts, Interest on recovery. 1040s Savings bond, Interest on qualified savings bonds. 1040s State and local government obligations, Interest on state and local government obligations. 1040s Interference with business operations Damages as income, Court awards and damages. 1040s International organizations, employees of, Foreign Employer Interview expenses, Job interview expenses. 1040s Investment counseling fees, Financial Counseling Fees (see also Retirement planning services) Investment income, Business and Investment Income, More information. 1040s IRAs (see Individual retirement arrangements (IRAs)) Iron ore, Coal and iron ore. 1040s Itemized deductions Limited, Itemized deductions limited. 1040s Recoveries, Recoveries, Itemized Deduction Recoveries J Job interview expenses, Job interview expenses. 1040s Joint returns Social security benefits or railroad retirement payments, Joint return. 1040s Joint state/local tax return Recoveries, Joint state or local income tax return. 1040s Jury duty pay, Jury duty. 1040s K Kickbacks, Kickbacks. 1040s L Labor unions Convention expenses, reimbursed, Reimbursed union convention expenses. 1040s Dues, Union benefits and dues. 1040s Strike and lockout benefits, Strike and lockout benefits. 1040s Unemployment benefits paid from, Payments by a union. 1040s Last day of tax year, income received on, Constructively received income. 1040s Leave (see Accrued leave payment) Length-of-service awards, Employee achievement award. 1040s Life insurance Employer-owned, Employer-owned life insurance contract. 1040s Proceeds, Life Insurance Proceeds Surrender of policy for cash, Surrender of policy for cash. 1040s Loans, Discounted mortgage loan. 1040s (see also Mortgage) Below-market, Below-market loans. 1040s Student, Student loans. 1040s Lockout benefits, Strike and lockout benefits. 1040s Lodging Campus lodging, Qualified campus lodging. 1040s , Moving Expense Reimbursements Clergy, Housing Employer-paid or reimbursed, Meals and Lodging Faculty lodging, Faculty lodging. 1040s Replacement housing payments, Replacement housing payments. 1040s Long-term care insurance, Long-term care coverage. 1040s , Long-Term Care Insurance Contracts Lotteries and raffles, Lotteries and raffles. 1040s Lump-sum distributions Survivor benefits, Lump-sum payments. 1040s M Manufacturer incentive payments, Manufacturer incentive payments. 1040s Meals Employer-paid or reimbursed, Meals and Lodging Nutrition Program for the Elderly, Nutrition Program for the Elderly. 1040s Medical Care reimbursements, Reimbursement for medical care. 1040s Savings accounts, Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). 1040s Medicare Advantage MSAs, Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). 1040s Benefits, Medicare. 1040s Tax paid by employer, Social security and Medicare taxes paid by employer. 1040s Medicare tax (see Social security and Medicare taxes) Military (see Armed forces) Minerals Royalties from, Oil, gas, and minerals. 1040s Miscellaneous Compensation, Miscellaneous Compensation Income, Miscellaneous Income Missing children, photographs of, Reminders Mortgage Assistance payment (under sec. 1040s 235 of National Housing Act), Mortgage assistance payments under section 235 of the National Housing Act. 1040s Discounted loan, Discounted mortgage loan. 1040s Interest refund, Mortgage interest refund. 1040s Qualified principal residence indebtedness, Qualified principal residence indebtedness (QPRI). 1040s Relief, Mortgage relief upon sale or other disposition. 1040s Motor vehicle, employer-provided, Employer-provided vehicles. 1040s Moving expenses Reimbursements, Allowances and reimbursements. 1040s , Moving expense reimbursements. 1040s MSAs (Medical savings accounts), Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). 1040s N National Health Service Corps Scholarship Program, Tuition Reduction National Oceanic and Atmospheric Administration, Service-connected disability. 1040s National Senior Service Corps, National Senior Service Corps programs. 1040s No-additional-cost services, No-Additional-Cost Services No-fault car insurance Disability benefits under, Other compensation. 1040s Nobel prize, Pulitzer, Nobel, and similar prizes. 1040s Nonrecourse debt, Mortgage relief upon sale or other disposition. 1040s Nonstatutory stock options, Nonstatutory Stock Options Nontaxable income, Introduction Not-for-profit activities, Activity not for profit. 1040s Notary fees, Notary public. 1040s Notes received for services, Note received for services. 1040s Nutrition Program for the Elderly, Nutrition Program for the Elderly. 1040s O Oil Royalties from, Oil, gas, and minerals. 1040s Old-age, survivors, and disability insurance benefits (OASDI), Old-age, survivors, and disability insurance benefits (OASDI). 1040s Options, stock, Stock Options, Statutory Stock Options Outplacement services, Outplacement services. 1040s Overseas work, Reminders P Parking fees Employer-paid or reimbursed, Transportation, Qualified parking. 1040s Partner and partnership income, Partnership Income Patents Infringement damages, Court awards and damages. 1040s Royalties, Copyrights and patents. 1040s Peace Corps, Peace Corps. 1040s Pensions Clergy, Pension. 1040s Disability pensions, Disability Pensions Inherited pensions, Inherited pension or IRA. 1040s Military, Military retirement pay. 1040s Personal property Rental income and expense, Rents From Personal Property Sale of, Sale of personal items. 1040s Personal representatives (see Fiduciaries) Prepaid income, Prepaid income. 1040s Price reduced after purchase, Price reduced after purchase. 1040s Prizes and awards, Bonuses and awards. 1040s , Prizes and awards. 1040s Achievement awards, Employee achievement award. 1040s Employee awards or bonuses, Employee awards or bonuses. 1040s Length-of-service awards, Employee achievement award. 1040s Pulitzer, Nobel, and similar prizes, Pulitzer, Nobel, and similar prizes. 1040s Safety achievement, Employee achievement award. 1040s Scholarship prizes, Prizes. 1040s Profit-sharing plan, Retirement and profit-sharing plans. 1040s Public assistance benefits, Welfare and Other Public Assistance Benefits Public Health Service, Service-connected disability. 1040s Public safety officers killed in line of duty, Public safety officer killed in the line of duty. 1040s Public transportation passes, employer-provided, Transportation, Transit pass. 1040s Publications (see Tax help) Pulitzer prize, Pulitzer, Nobel, and similar prizes. 1040s Punitive damages, Court awards and damages. 1040s Q Qualified joint venture, Reminders Qualified tuition program (QTP), Qualified tuition program (QTP). 1040s R Raffles, Lotteries and raffles. 1040s Railroad Retirement annuities, Railroad retirement annuities. 1040s Retirement benefits, Social security and equivalent railroad retirement benefits. 1040s Sick pay, Railroad sick pay. 1040s Unemployment compensation benefits, Types of unemployment compensation. 1040s Real estate Qualified real property business debt, cancellation of, Excluded debt. 1040s Rebates Cash, Cash rebates. 1040s Utility, Utility rebates. 1040s Recovery of amounts previously deducted, Recoveries, Standard deduction for earlier years. 1040s Itemized deductions, Recoveries, Itemized Deduction Recoveries Non-itemized deductions, Non-Itemized Deduction Recoveries Unused tax credits, refiguring of, Unused tax credits. 1040s , Unused tax credits. 1040s Refunds Federal income tax, Federal income tax refund. 1040s Mortgage interest, Mortgage interest refund. 1040s State tax, State tax refund. 1040s Rehabilitative program payments, Veterans' benefits. 1040s Reimbursements Business expenses, Allowances and reimbursements. 1040s Casualty losses, Casualty insurance and other reimbursements. 1040s Meals and lodging, Meals and Lodging Medical expenses, Reimbursement for medical care. 1040s Moving expenses, Allowances and reimbursements. 1040s , Moving expense reimbursements. 1040s Related party transactions Stock option transfer, Transfer in non-arm's-length transaction. 1040s Religious order members, Members of Religious Orders Rental income and expenses Personal property rental, Rents From Personal Property Reporting of, Reporting business income and expenses. 1040s Repayments, Repayments, Year of deduction (or credit). 1040s Repossession, Canceled sales contract. 1040s Restricted property, Restricted Property, Inherited property not substantially vested. 1040s Retired Senior Volunteer Program (RSVP), National Senior Service Corps programs. 1040s Retirement Settlement, Reminders Retirement planning services, Financial Counseling Fees, Retirement Planning Services Retirement plans, Military retirement pay. 1040s (see also Pensions) Automatic contribution arrangements, Qualified automatic contribution arrangements. 1040s Contributions, Retirement Plan Contributions, Excess Annual Additions, Statutory Stock Options Elective deferrals (see Elective deferrals) Rewards, Rewards. 1040s Roth contributions, Designated Roth contributions. 1040s Royalties, Royalties S S corporations, S Corporation Income Safety achievement awards, Employee achievement award. 1040s Salary reduction simplified employee pension plans (see SARSEPs) Sale of home, Sale of home. 1040s Sales contracts Cancellation of, Canceled sales contract. 1040s SARSEPs, Elective Deferrals Excess contributions, Excess Contributions Savings bonds, Interest on qualified savings bonds. 1040s Savings incentive match plans for employees (see SIMPLE plans) Scholarships and fellowships, Scholarships and fellowships. 1040s Self-employed persons U. 1040s S. 1040s citizens working for foreign employers in U. 1040s S. 1040s treated as, Social security and Medicare taxes. 1040s Senior Companion Program, National Senior Service Corps programs. 1040s Service Corps of Retired Executives (SCORE), Service Corps of Retired Executives (SCORE). 1040s Severance pay, Severance pay. 1040s Outplacement services, Outplacement services. 1040s Sick pay, Sick pay. 1040s Sickness and injury benefits, Sickness and Injury Benefits, Reimbursement for medical care. 1040s SIMPLE plans, Elective Deferrals Limit for deferrals under, Limit for deferrals under SIMPLE plans. 1040s Smallpox vaccine injuries, Smallpox vaccine injuries. 1040s Social security and Medicare taxes Foreign employers, U. 1040s S. 1040s citizens working for in U. 1040s S. 1040s , Social security and Medicare taxes. 1040s Paid by employer, Social security and Medicare taxes paid by employer. 1040s Social security benefits, Social security and equivalent railroad retirement benefits. 1040s Standard deduction Recoveries, Standard deduction limit. 1040s , Standard deduction for earlier years. 1040s State employees Unemployment benefits paid to, State employees. 1040s State or local governments Interest on obligations of, Interest on state and local government obligations. 1040s State or local taxes Refunds, State tax refund. 1040s Statutory stock option holding period, Sale of the stock. 1040s Stock appreciation rights, Stock appreciation rights. 1040s Stock options, Stock Options, Statutory Stock Options Stock options, nonstatutory Exercise or transfer, Exercise or transfer of option. 1040s Grant, Grant of option. 1040s Sale, Sale of the stock. 1040s Stock options, statutory Exercise, Exercise of option. 1040s Grant, Grant of option. 1040s Sale, Sale of the stock. 1040s Stockholder debts, Stockholder debt. 1040s Stolen property, Stolen property. 1040s Strike benefits, Strike and lockout benefits. 1040s Student loans Cancellation of debt, Student loans. 1040s Substantial risk of forfeiture, Substantial risk of forfeiture. 1040s Substantially vested property, Substantially vested. 1040s Supplemental security income (SSI) payments, Social security and equivalent railroad retirement benefits. 1040s Supplemental unemployment benefits, Supplemental unemployment benefits. 1040s Surviving spouse Life insurance proceeds paid to, Surviving spouse. 1040s Survivor benefits, Survivor Benefits T Tables and figures Group-term life insurance (Table 1), Group-Term Life Insurance Tax benefit rule, Tax benefit rule. 1040s Tax Counseling for the Elderly, Volunteer tax counseling. 1040s Tax help, How To Get Tax Help Tax-sheltered annuity plans (403(b) plans), Elective Deferrals Limit for, Limit for tax-sheltered annuities. 1040s Terminal illness, Exclusion for terminal illness. 1040s Terrorist attacks Disability payments for injuries from, Terrorist attack or military action. 1040s Victims of, tax relief, Reminders Thrift Savings Plan, Elective Deferrals Title VII, Civil Rights Act of 1964 Back pay and damages for emotional distress under, Court awards and damages. 1040s Tour guides, free tours for, Free tour. 1040s Trade Act of 1974 Trade readjustment allowances under, Types of unemployment compensation. 1040s , Repayment of benefits. 1040s Transferable property, Transferable property. 1040s Transit passes, Transportation, Transit pass. 1040s Travel agencies Free tour to organizer of group of tourists, Free tour. 1040s Travel and transportation expenses Free tours from travel agencies, Free tour. 1040s Fringe benefits, Transportation Reimbursements, Allowances and reimbursements. 1040s School children, transporting of, Transporting school children. 1040s Trusts Grantor trusts, Grantor trust. 1040s Income, Estate and trust income. 1040s Tuition program, qualified (QTP), Qualified tuition program (QTP). 1040s Tuition reduction, Tuition Reduction U Unemployment compensation, Unemployment Benefits Unions (see Labor unions) Unlawful discrimination suits Deduction for costs, Deduction for costs involved in unlawful discrimination suits. 1040s V VA payments, VA payments. 1040s Valuation Fringe benefits, Valuation of Fringe Benefits, Special valuation rules. 1040s Stock options, Nonstatutory Stock Options Vehicle Commuter highway, Commuter highway vehicle. 1040s Employer-provided, Employer-provided vehicles. 1040s Veterans benefits, Veterans' benefits. 1040s Disability compensation, Retroactive VA determination. 1040s Retroactive VA determination, Retroactive VA determination. 1040s Special statute of limitations. 1040s , Special statute of limitations. 1040s Viatical settlements, Viatical settlement. 1040s Volunteer work, Volunteers Tax counseling (Volunteer Income Tax Assistance Program), Volunteer tax counseling. 1040s Volunteers in Service to America (VISTA), Volunteers in Service to America (VISTA). 1040s W W-2 form (see Form W-2) Welfare benefits, Welfare and Other Public Assistance Benefits Whistleblower, Whistleblower's award. 1040s Winter energy payments, Payments to reduce cost of winter energy. 1040s Withholding Barter exchange transactions, Backup withholding. 1040s Unemployment compensation, Tax withholding. 1040s Work-training programs, Work-training program. 1040s Workers' compensation, Workers' Compensation Working condition benefits, Working Condition Benefits Worksheets Group-term life insurance (Worksheet 1), Figuring the taxable cost. 1040s , Worksheet 1. 1040s Figuring the Cost of Group-Term Life Insurance To Include in Income—Illustrated Prev  Up     Home   More Online Publications
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Consumer Frauds and Scams

Tips to help you avoid scams and fraud.

How to Protect Yourself Against Consumer Frauds and Scams


The 1040s

1040s 4. 1040s   Detailed Examples Table of Contents These examples use actual forms to help you prepare your income tax return. 1040s However, the information shown on the filled-in forms is not from any actual person or scenario. 1040s Example 1—Mortgage loan modification. 1040s    In 2007, Nancy Oak bought a main home for $435,000. 1040s Nancy took out a $420,000 mortgage loan to buy the home and made a down payment of $15,000. 1040s The loan was secured by the home. 1040s The mortgage loan was a recourse debt, meaning that Nancy was personally liable for the debt. 1040s In 2008, Nancy took out a second mortgage loan (also a recourse debt) in the amount of $30,000 that was used to substantially improve her kitchen. 1040s    In 2011, when the outstanding principal of the first and second mortgage loans was $440,000, Nancy refinanced the two recourse loans into one recourse loan in the amount of $475,000. 1040s The FMV of Nancy's home at the time of the refinancing was $500,000. 1040s Nancy used the additional $35,000 debt ($475,000 new mortgage loan minus $440,000 outstanding principal of Nancy's first and second mortgage loans immediately before the refinancing) to pay off personal credit cards and to pay college tuition for her son. 1040s After the refinancing, Nancy has qualified principal residence indebtedness in the amount of $440,000 because the refinanced debt is qualified principal residence indebtedness only to the extent the amount of debt is not more than the old mortgage principal just before the refinancing. 1040s   In 2013, Nancy was unable to make her mortgage loan payments. 1040s On August 31, 2013, when the outstanding balance of her refinanced mortgage loan was still $475,000 and the FMV of the property was $425,000, Nancy's bank agreed to a loan modification (a “workout”) that resulted in a $40,000 reduction in the principal balance of her loan. 1040s Nancy was neither insolvent nor in bankruptcy at the time of the loan modification. 1040s   Nancy received a 2013 Form 1099-C from her bank in January 2014 showing canceled debt of $40,000 in box 2. 1040s Identifiable event code "F" appears in box 6. 1040s This box shows the reason the creditor has filed Form 1099-C. 1040s To determine if she must include the canceled debt in her income, Nancy must determine whether she meets any of the exceptions or exclusions that apply to canceled debts. 1040s Nancy determines that the only exception or exclusion that applies to her is the qualified principal residence indebtedness exclusion. 1040s   Next, Nancy determines the amount, if any, of the $40,000 of canceled debt that was qualified principal residence indebtedness. 1040s Although Nancy has $440,000 of qualified principal residence indebtedness, part of her loan ($35,000) was not qualified principal residence indebtedness because it was used to pay off personal credit cards and college tuition for her son. 1040s Applying the ordering rule, the qualified principal residence indebtedness exclusion applies only to the extent the amount canceled is more than the amount of the debt (immediately before the cancellation) that is not qualified principal residence indebtedness. 1040s Thus, Nancy can exclude only $5,000 of the canceled debt as qualified principal residence indebtedness ($40,000 amount canceled minus $35,000 nonqualified debt). 1040s   Because Nancy does not meet any other exception or exclusion, she checks only the box on line 1e of Form 982 and enters $5,000 on line 2. 1040s Nancy must also enter $5,000 on line 10b and reduce the basis of her main home by the $5,000 she excluded from income, bringing the adjusted basis in her home to $460,000 ($435,000 purchase price plus $30,000 substantial improvement minus $5,000). 1040s Nancy must also include the $35,000 nonqualified debt portion in income on Form 1040, line 21. 1040s You can see Nancy's Form 1099-C and a portion of her Form 1040 below. 1040s Nancy's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. 1040s Please click the link to view the image. 1040s Form 1099-C, Cancellation of Debt Nancy's 2013 Form 1040 This image is too large to be displayed in the current screen. 1040s Please click the link to view the image. 1040s Form 1040, U. 1040s S. 1040s Individual Income Tax Nancy's Form 982 This image is too large to be displayed in the current screen. 1040s Please click the link to view the image. 1040s Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)              Example 2—Mortgage loan foreclosure. 1040s    In 2005, John and Mary Elm bought a main home for $335,000. 1040s John and Mary took out a $320,000 mortgage loan to buy the home and made a down payment of $15,000. 1040s The loan was secured by the home and is a recourse debt, meaning John and Mary are personally liable for the debt. 1040s   John and Mary became unable to make their mortgage loan payments and on March 1, 2013, when the outstanding balance of the mortgage loan was $315,000 and the FMV of the property was $290,000, the bank foreclosed on the property and simultaneously canceled the remaining mortgage debt. 1040s Immediately before the foreclosure, John and Mary's only other assets and liabilities were a checking account with a balance of $6,000, retirement savings of $13,000, and credit card debt of $5,500. 1040s   John and Mary received a 2013 Form 1099-C showing canceled debt of $25,000 in box 2 ($315,000 outstanding balance minus $290,000 FMV) and an FMV of $290,000 in box 7. 1040s Identifiable event code "D" appears in box 6. 1040s This box shows the reason the creditor has filed Form 1099-C. 1040s In order to determine if John and Mary must include the canceled debt in income, they must first determine whether they meet any of the exceptions or exclusions that apply to canceled debts. 1040s In this example, John and Mary meet both the insolvency and qualified principal residence indebtedness exclusions. 1040s Their sample Form 1099-C is shown on this page. 1040s   John and Mary complete the insolvency worksheet and determine that they were insolvent immediately before the cancellation because at that time their liabilities exceeded the FMV of their assets by $11,500 ($320,500 total liabilities minus $309,000 FMV of total assets). 1040s However, because the entire debt canceled is qualified principal residence indebtedness, the insolvency exclusion only applies if John and Mary elect to apply the insolvency exclusion instead of the qualified principal residence exclusion. 1040s   John and Mary do not elect to apply the insolvency exclusion instead of the qualified principal residence exclusion because under the insolvency exclusion their exclusion would be limited to the amount by which they were insolvent ($11,500). 1040s Instead, John and Mary check box 1e of Form 982 to exclude the canceled debt under the qualified principal residence exclusion. 1040s Under the qualified principal residence exclusion, the amount that John and Mary can exclude is not limited because their qualified principal residence indebtedness is not more than $2 million and no portion of the loan was nonqualified debt. 1040s As a result, John and Mary enter the full $25,000 of canceled debt on line 2 of Form 982. 1040s Because John and Mary no longer own the home due to the foreclosure, John and Mary have no remaining basis in the home at the time of the debt cancellation. 1040s Thus, John and Mary leave line 10b of Form 982 blank. 1040s   John and Mary must also determine whether they have a gain or loss from the foreclosure. 1040s John and Mary complete Table 1-1 (shown below) and find that they have a $45,000 loss from the foreclosure. 1040s Because this loss relates to their home, it is a nondeductible loss. 1040s   John and Mary's Form 1099-C, Insolvency Worksheet, and Form 982 follow. 1040s John and Mary's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. 1040s Please click the link to view the image. 1040s Form 1099-C, Cancellation of Debt Table 1-1. 1040s Worksheet for Foreclosures and Repossessions (for John and Mary Elm) Part 1. 1040s Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). 1040s Otherwise, go to Part 2. 1040s 1. 1040s Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property $315,000. 1040s 00 2. 1040s Enter the fair market value of the transferred property $290,000. 1040s 00 3. 1040s Ordinary income from the cancellation of debt upon foreclosure or repossession. 1040s * Subtract line 2 from line 1. 1040s If less than zero, enter zero. 1040s Next, go to Part 2 $ 25,000. 1040s 00 Part 2. 1040s Gain or loss from foreclosure or repossession. 1040s   4. 1040s Enter the smaller of line 1 or line 2. 1040s If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property $290,000. 1040s 00 5. 1040s Enter any proceeds you received from the foreclosure sale   6. 1040s Add line 4 and line 5 $290,000. 1040s 00 7. 1040s Enter the adjusted basis of the transferred property $335,000. 1040s 00 8. 1040s Gain or loss from foreclosure or repossession. 1040s Subtract line 7 from line 6 ($ 45,000. 1040s 00) * The income may not be taxable. 1040s See chapter 1 for more details. 1040s Insolvency Worksheet—John and Mary Elm Date debt was canceled (mm/dd/yy) 03/01/13 Part I. 1040s Total liabilities immediately before the cancellation (do not include the same liability in more than one category) Liabilities (debts) Amount Owed Immediately Before the Cancellation 1. 1040s Credit card debt $ 5,500 2. 1040s Mortgage(s) on real property (including first and second mortgages and home equity loans) (mortgage(s) can be on personal residence, any additional residence, or property held for investment or used in a trade or business) $ 315,000 3. 1040s Car and other vehicle loans $ 4. 1040s Medical bills owed $ 5. 1040s Student loans $ 6. 1040s Accrued or past-due mortgage interest $ 7. 1040s Accrued or past-due real estate taxes $ 8. 1040s Accrued or past-due utilities (water, gas, electric) $ 9. 1040s Accrued or past-due child care costs $ 10. 1040s Federal or state income taxes remaining due (for prior tax years) $ 11. 1040s Judgments $ 12. 1040s Business debts (including those owed as a sole proprietor or partner) $ 13. 1040s Margin debt on stocks and other debt to purchase or secured by investment assets other than real property $ 14. 1040s Other liabilities (debts) not included above $ 15. 1040s Total liabilities immediately before the cancellation. 1040s Add lines 1 through 14. 1040s $ 320,500 Part II. 1040s Fair market value (FMV) of assets owned immediately before the cancellation (do not include the FMV of the same asset in more than one category) Assets FMV Immediately Before  the Cancellation 16. 1040s Cash and bank account balances $ 6,000 17. 1040s Real property, including the value of land (can be main home, any additional home, or property held for investment or used in a trade or business) $ 290,000 18. 1040s Cars and other vehicles $ 19. 1040s Computers $ 20. 1040s Household goods and furnishings (for example, appliances, electronics, furniture, etc. 1040s ) $ 21. 1040s Tools $ 22. 1040s Jewelry $ 23. 1040s Clothing $ 24. 1040s Books $ 25. 1040s Stocks and bonds $ 26. 1040s Investments in coins, stamps, paintings, or other collectibles $ 27. 1040s Firearms, sports, photographic, and other hobby equipment $ 28. 1040s Interest in retirement accounts (IRA accounts, 401(k) accounts, and other retirement accounts) $ 13,000 29. 1040s Interest in a pension plan $ 30. 1040s Interest in education accounts $ 31. 1040s Cash value of life insurance $ 32. 1040s Security deposits with landlords, utilities, and others $ 33. 1040s Interests in partnerships $ 34. 1040s Value of investment in a business $ 35. 1040s Other investments (for example, annuity contracts, guaranteed investment contracts, mutual funds, commodity accounts, interests in hedge funds, and options) $ 36. 1040s Other assets not included above $ 37. 1040s FMV of total assets immediately before the cancellation. 1040s Add lines 16 through 36. 1040s $ 309,000 Part III. 1040s Insolvency 38. 1040s Amount of Insolvency. 1040s Subtract line 37 from line 15. 1040s If zero or less, you are not insolvent. 1040s $ 11,500 John and Mary's Form 982 This image is too large to be displayed in the current screen. 1040s Please click the link to view the image. 1040s Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)          Example 3—Mortgage loan foreclosure with debt exceeding $2 million limit. 1040s    In 2011, Kathy and Frank Willow got married and entered into a contract with Hive Construction Corporation to build a house for $3,000,000 to be used as their main home. 1040s Kathy and Frank made a $400,000 down payment and took out a $2,600,000 mortgage to finance the remaining cost of the house. 1040s Kathy and Frank are personally liable for the mortgage loan, which is secured by the home. 1040s   In November 2013, when the outstanding principal balance on the mortgage loan was $2,500,000, the FMV of the property fell to $1,750,000 and Kathy and Frank abandoned the property by permanently moving out. 1040s The lender foreclosed on the property and, on December 5, 2013, sold the property to another buyer for $1,750,000. 1040s On December 26, 2013, the lender canceled the remaining debt. 1040s Kathy and Frank have no tax attributes other than basis of personal-use property. 1040s   The lender issued a 2013 Form 1099-C to Kathy and Frank showing canceled debt of $750,000 in box 2 (the remaining balance on the $2,500,000 mortgage debt after application of the foreclosure sale proceeds) and $1,750,000 in box 7 (FMV of the property). 1040s Identifiable event code "D" appears in box 6. 1040s This box shows the reason the creditor has filed Form 1099-C. 1040s Although Kathy and Frank abandoned the property, the lender did not need to also file a Form 1099-A because the lender canceled the debt in connection with the foreclosure in the same calendar year. 1040s Kathy and Frank are filing a joint return for 2013. 1040s   Because the foreclosure occurred prior to the debt cancellation, Kathy and Frank first calculate their gain or loss from the foreclosure using Table 1-1. 1040s Because Kathy and Frank remained personally liable for the $750,000 debt remaining after the foreclosure ($2,500,000 outstanding debt immediately before the foreclosure minus $1,750,000 satisfied through the sale of the home), Kathy and Frank enter $1,750,000 on line 1 of Table 1-1 ($2,500,000 outstanding debt immediately before the foreclosure minus the $750,000 for which they remained liable). 1040s Completing Table 1-1, Kathy and Frank find that they have no ordinary income from the cancellation of debt upon foreclosure and that they have a $1,250,000 loss. 1040s Because this loss relates to their home, it is a nondeductible loss. 1040s   Because the lender later canceled the remaining amount of the debt, Kathy and Frank must also determine whether that canceled debt is taxable. 1040s Immediately before the cancellation, Kathy and Frank had $15,000 in a savings account, household furnishings with an FMV of $17,000, a car with an FMV of $10,000, and $18,000 in credit card debt. 1040s Kathy and Frank also had the $750,000 remaining balance on the mortgage loan at that time. 1040s The household furnishings originally cost $30,000. 1040s The car had been fully paid off (so there was no related outstanding debt) and was originally purchased for $16,000. 1040s Kathy and Frank had no adjustments to the cost basis of the car. 1040s Kathy and Frank had no other assets or liabilities at the time of the cancellation. 1040s Kathy and Frank complete the insolvency worksheet to calculate that they were insolvent to the extent of $726,000 immediately before the cancellation ($768,000 of total liabilities minus $42,000 FMV of total assets). 1040s   At the beginning of 2014, Kathy and Frank had $9,000 in their savings account and $15,000 in credit card debt. 1040s Kathy and Frank also owned the same car at that time (still with an FMV of $10,000 and basis of $16,000) and the same household furnishings (still with an FMV of $17,000 and a basis of $30,000). 1040s Kathy and Frank had no other assets or liabilities at that time. 1040s Kathy and Frank no longer own the home because the lender foreclosed on it in 2013. 1040s   Because the canceled debt is qualified principal residence indebtedness, the insolvency exclusion does not apply unless Kathy and Frank elect to apply the insolvency exclusion instead of the qualified principal residence indebtedness exclusion. 1040s The maximum amount that Kathy and Frank can treat as qualified principal residence indebtedness is $2,000,000. 1040s The remaining $500,000 ($2,500,000 outstanding mortgage loan minus $2,000,000 limit on qualified principal residence indebtedness) is not qualified principal residence indebtedness. 1040s Because only a part of the loan is qualified principal residence indebtedness, Kathy and Frank must apply the ordering rule to the canceled debt. 1040s Under the ordering rule, the qualified principal residence indebtedness exclusion applies only to the extent that the amount canceled ($750,000) exceeds the amount of the loan (immediately before the cancellation) that is not qualified principal residence indebtedness ($500,000). 1040s This means that Kathy and Frank can only exclude $250,000 ($750,000 amount canceled minus $500,000 nonqualified debt) under the qualified principal residence indebtedness exclusion. 1040s   Kathy and Frank do not elect to have the insolvency exclusion apply instead of the qualified principal residence exclusion. 1040s Nonetheless, they can still apply the insolvency exclusion to the $500,000 nonqualified debt because it is not qualified principal residence indebtedness. 1040s Kathy and Frank can exclude the remaining $500,000 canceled debt under the insolvency exclusion because they were insolvent immediately before the cancellation to the extent of $726,000. 1040s Thus, Kathy and Frank check the boxes on lines 1b and 1e of Form 982 and enter $750,000 on line 2 ($250,000 excluded under the qualified principal residence indebtedness exclusion plus $500,000 excluded under the insolvency exclusion). 1040s   Next, Kathy and Frank reduce their tax attributes using Part II of Form 982. 1040s Because Kathy and Frank no longer own the home due to the foreclosure, Kathy and Frank have no remaining basis in the home at the time of the debt cancellation. 1040s Thus, Kathy and Frank leave line 10b of Form 982 blank. 1040s However, Kathy and Frank are also excluding nonqualified debt under the insolvency exclusion. 1040s As a result, Kathy and Frank must reduce the basis of property they own based on the amount of canceled debt they are excluding from income under the insolvency rules. 1040s Because Kathy and Frank have no tax attributes other than basis of personal-use property to reduce, Kathy and Frank figure the amount they must include on line 10a of Form 982 by taking the smallest of: The $46,000 bases of their personal-use property held at the beginning of 2014 ($16,000 basis in the car plus $30,000 basis in household furnishings), The $500,000 of the nonbusiness debt (other than qualified principal residence indebtedness) that they are excluding from income on line 2 of Form 982, or The $43,000 excess of the total bases of the property and the amount of money they held immediately after the cancellation over their total liabilities immediately after the cancellation ($15,000 in savings account plus $30,000 basis in household furnishings plus $16,000 adjusted basis in car minus $18,000 credit card debt). 1040s Kathy and Frank enter $43,000 on Form 982, line 10a and reduce their bases in the car and the household furnishings in proportion to the total adjusted bases in all their property. 1040s Kathy and Frank reduce the basis in the car by $14,956. 1040s 52 ($43,000 x $16,000/$46,000). 1040s And they reduce the basis in the household furnishings by $28,043. 1040s 48 ($43,000 x $30,000/$46,000). 1040s   Following are Kathy and Frank's sample forms and worksheets. 1040s Frank and Kathy's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. 1040s Please click the link to view the image. 1040s Form 1099-C, Cancellation of Debt Table 1-1. 1040s Worksheet for Foreclosures and Repossessions (for Frank and Kathy Willow) Part 1. 1040s Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). 1040s Otherwise, go to Part 2. 1040s 1. 1040s Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property $1,750,000. 1040s 00 2. 1040s Enter the fair market value of the transferred property $1,750,000. 1040s 00 3. 1040s Ordinary income from the cancellation of debt upon foreclosure or repossession. 1040s * Subtract line 2 from line 1. 1040s If less than zero, enter zero. 1040s Next, go to Part 2 $0. 1040s 00 Part 2. 1040s Gain or loss from foreclosure or repossession. 1040s   4. 1040s Enter the smaller of line 1 or line 2. 1040s If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property. 1040s $1,750,000. 1040s 00 5. 1040s Enter any proceeds you received from the foreclosure sale   6. 1040s Add line 4 and line 5 $1,750,000. 1040s 00 7. 1040s Enter the adjusted basis of the transferred property $3,000,000. 1040s 00 8. 1040s Gain or loss from foreclosure or repossession. 1040s Subtract line 7 from line 6 ($1,250,000. 1040s 00) * The income may not be taxable. 1040s See chapter 1 for more details. 1040s    Insolvency Worksheet—Frank and Kathy Willow Date debt was canceled (mm/dd/yy) 12/26/13 Part I. 1040s Total liabilities immediately before the cancellation (do not include the same liability in more than one category) Liabilities (debts) Amount Owed Immediately Before the Cancellation 1. 1040s Credit card debt $ 18,000 2. 1040s Mortgage(s) on real property (including first and second mortgages and home equity loans) (mortgage(s) can be on personal residence, any additional residence, or property held for investment or used in a trade or business) $ 750,000 3. 1040s Car and other vehicle loans $ 4. 1040s Medical bills owed $ 5. 1040s Student loans $ 6. 1040s Accrued or past-due mortgage interest $ 7. 1040s Accrued or past-due real estate taxes $ 8. 1040s Accrued or past-due utilities (water, gas, electric) $ 9. 1040s Accrued or past-due child care costs $ 10. 1040s Federal or state income taxes remaining due (for prior tax years) $ 11. 1040s Judgments $ 12. 1040s Business debts (including those owed as a sole proprietor or partner) $ 13. 1040s Margin debt on stocks and other debt to purchase or secured by investment assets other than real property $ 14. 1040s Other liabilities (debts) not included above $ 15. 1040s Total liabilities immediately before the cancellation. 1040s Add lines 1 through 14. 1040s $ 768,000 Part II. 1040s Fair market value (FMV) of assets owned immediately before the cancellation (do not include the FMV of the same asset in more than one category) Assets FMV Immediately Before  the Cancellation 16. 1040s Cash and bank account balances $ 15,000 17. 1040s Real property, including the value of land (can be main home, any additional home, or property held for investment or used in a trade or business) $ 18. 1040s Cars and other vehicles $ 10,000 19. 1040s Computers $ 20. 1040s Household goods and furnishings (for example, appliances, electronics, furniture, etc. 1040s ) $ 17,000 21. 1040s Tools $ 22. 1040s Jewelry $ 23. 1040s Clothing $ 24. 1040s Books $ 25. 1040s Stocks and bonds $ 26. 1040s Investments in coins, stamps, paintings, or other collectibles $ 27. 1040s Firearms, sports, photographic, and other hobby equipment $ 28. 1040s Interest in retirement accounts (IRA accounts, 401(k) accounts, and other retirement accounts) $ 29. 1040s Interest in a pension plan $ 30. 1040s Interest in education accounts $ 31. 1040s Cash value of life insurance $ 32. 1040s Security deposits with landlords, utilities, and others $ 33. 1040s Interests in partnerships $ 34. 1040s Value of investment in a business $ 35. 1040s Other investments (for example, annuity contracts, guaranteed investment contracts, mutual funds, commodity accounts, interests in hedge funds, and options) $ 36. 1040s Other assets not included above $ 37. 1040s FMV of total assets immediately before the cancellation. 1040s Add lines 16 through 36. 1040s $ 42,000 Part III. 1040s Insolvency 38. 1040s Amount of Insolvency. 1040s Subtract line 37 from line 15. 1040s If zero or less, you are not insolvent. 1040s $ 726,000    Frank and Kathy's Form 982 This image is too large to be displayed in the current screen. 1040s Please click the link to view the image. 1040s Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) Prev  Up  Next   Home   More Online Publications