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2012 Irs 1040ez Form

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2012 Irs 1040ez Form

2012 irs 1040ez form 4. 2012 irs 1040ez form   Limit on Elective Deferrals Table of Contents Excess elective deferrals. 2012 irs 1040ez form General Limit 15-Year RuleYears of Service Figuring the Limit on Elective DeferralsExample The second and final component of MAC is the limit on elective deferrals. 2012 irs 1040ez form This is a limit on the amount of contributions that can be made to your account through a salary reduction agreement. 2012 irs 1040ez form A salary reduction agreement is an agreement between you and your employer that allows for a portion of your compensation to be directly invested in a 403(b) account on your behalf. 2012 irs 1040ez form You can enter into more than one salary reduction agreement during a year. 2012 irs 1040ez form More than one 403(b) account. 2012 irs 1040ez form If, for any year, elective deferrals are contributed to more than one 403(b) account for you (whether or not with the same employer), you must combine all the elective deferrals to determine whether the total is more than the limit for that year. 2012 irs 1040ez form 403(b) plan and another retirement plan. 2012 irs 1040ez form If, during the year, contributions in the form of elective deferrals are made to other retirement plans on your behalf, you must combine all of the elective deferrals to determine if they are more than your limit on elective deferrals. 2012 irs 1040ez form The limit on elective deferrals applies to amounts contributed to: 401(k) plans, to the extent excluded from income, Roth contribution programs, Section 501(c)(18) plans, to the extent excluded from income, Savings incentive match plan for employees (SIMPLE plans), Simplified employee pension (SEP) plans, and All 403(b) plans. 2012 irs 1040ez form Roth contribution program. 2012 irs 1040ez form   Your 403(b) plan may allow you to designate all or a portion of your elective deferrals as Roth contributions. 2012 irs 1040ez form Elective deferrals designated as Roth contributions must be maintained in a separate Roth account and are not excludable from your gross income. 2012 irs 1040ez form   The maximum amount of contributions allowed under a Roth contribution program is your limit on elective deferrals, less your elective deferrals not designated as Roth contributions. 2012 irs 1040ez form For more information on the Roth contribution program, see Publication 560, Retirement Plans for Small Business. 2012 irs 1040ez form Excess elective deferrals. 2012 irs 1040ez form   If the amount contributed is more than the allowable limit, you must include the excess that is not a Roth contribution in your gross income for the year contributed. 2012 irs 1040ez form General Limit Under the general limit on elective deferrals, the most that can be contributed to your 403(b) account through a salary reduction agreement is $17,500 for 2013 and 2014. 2012 irs 1040ez form This limit applies without regard to community property laws. 2012 irs 1040ez form 15-Year Rule If you have at least 15 years of service with an educational organization (such as a public or private school), hospital, home health service agency, health and welfare service agency, church, or convention or association of churches (or associated organization), the limit on elective deferrals to your 403(b) account is increased by the least of: $3,000, $15,000, reduced by the sum of: The additional pre-tax elective deferrals made in prior years because of this rule, plus The aggregate amount of designated Roth contributions permitted for prior years because of this rule, or $5,000 times the number of your years of service for the organization, minus the total elective deferrals made by your employer on your behalf for earlier years. 2012 irs 1040ez form If you qualify for the 15-year rule, your elective deferrals under this limit can be as high as $20,500 for 2013 and 2014. 2012 irs 1040ez form To determine whether you have 15 years of service with your employer, see Years of Service , next. 2012 irs 1040ez form Years of Service To determine if you are eligible for the increased limit on elective deferrals, you will first need to figure your years of service. 2012 irs 1040ez form How you figure your years of service depends on whether you were a full-time or a part-time employee, whether you worked for the full year or only part of the year, and whether you have worked for your employer for an entire year. 2012 irs 1040ez form You must figure years of service for each year during which you worked for the employer who is maintaining your 403(b) account. 2012 irs 1040ez form If more than one employer maintains a 403(b) account for you in the same year, you must figure years of service separately for each employer. 2012 irs 1040ez form Definition Your years of service are the total number of years you have worked as a full time employee for the employer maintaining your 403(b) account as of the end of the year. 2012 irs 1040ez form Figuring Your Years of Service Take the following rules into account when figuring your years of service. 2012 irs 1040ez form Status of employer. 2012 irs 1040ez form   Your years of service include only periods during which your employer was a qualified employer. 2012 irs 1040ez form Your plan administrator can tell you whether or not your employer was qualified during all your periods of service. 2012 irs 1040ez form Service with one employer. 2012 irs 1040ez form   Generally, you cannot count service for any employer other than the one who maintains your 403(b) account. 2012 irs 1040ez form Church employee. 2012 irs 1040ez form   If you are a church employee, treat all of your years of service with related church organizations as years of service with the same employer. 2012 irs 1040ez form For more information about church employees, see chapter 5. 2012 irs 1040ez form Self-employed ministers. 2012 irs 1040ez form   If you are a self-employed minister, your years of service include full and part years in which you have been treated as employed by a tax-exempt organization that is a qualified employer. 2012 irs 1040ez form Total years of service. 2012 irs 1040ez form   When figuring prior years of service, figure each year individually and then add the individual years of service to determine your total years of service. 2012 irs 1040ez form Example. 2012 irs 1040ez form The annual work period for full-time teachers employed by ABC Public Schools is September through December and February through May. 2012 irs 1040ez form Marsha began working with ABC schools in September 2009. 2012 irs 1040ez form She has always worked full-time for each annual work period. 2012 irs 1040ez form At the end of 2013, Marsha had 4. 2012 irs 1040ez form 5 years of service with ABC Public Schools, as shown in Table 4-1. 2012 irs 1040ez form Table 4-1. 2012 irs 1040ez form Marsha's Years of Service Note. 2012 irs 1040ez form This table shows how Marsha figures her years of service, as explained in the previous example. 2012 irs 1040ez form Year Period Worked Portion of Work Period Years of Service 2009 Sept. 2012 irs 1040ez form –Dec. 2012 irs 1040ez form . 2012 irs 1040ez form 5 year . 2012 irs 1040ez form 5 year 2010 Feb. 2012 irs 1040ez form –May . 2012 irs 1040ez form 5 year 1 year Sept. 2012 irs 1040ez form –Dec. 2012 irs 1040ez form . 2012 irs 1040ez form 5 year 2011 Feb. 2012 irs 1040ez form –May . 2012 irs 1040ez form 5 year 1 year Sept. 2012 irs 1040ez form –Dec. 2012 irs 1040ez form . 2012 irs 1040ez form 5 year 2012 Feb. 2012 irs 1040ez form –May . 2012 irs 1040ez form 5 year 1 year Sept. 2012 irs 1040ez form –Dec. 2012 irs 1040ez form . 2012 irs 1040ez form 5 year 2013 Feb. 2012 irs 1040ez form –May . 2012 irs 1040ez form 5 year 1 year Sept. 2012 irs 1040ez form –Dec. 2012 irs 1040ez form . 2012 irs 1040ez form 5 year Total years of service 4. 2012 irs 1040ez form 5 years Full-time or part-time. 2012 irs 1040ez form   To figure your years of service, you must analyze each year individually and determine whether you worked full-time for the full year or something other than full-time. 2012 irs 1040ez form When determining whether you worked full-time or something other than full-time, use your employer's annual work period as the standard. 2012 irs 1040ez form Employer's annual work period. 2012 irs 1040ez form   Your employer's annual work period is the usual amount of time an individual working full-time in a specific position is required to work. 2012 irs 1040ez form Generally, this period of time is expressed in days, weeks, months, or semesters, and can span 2 calendar years. 2012 irs 1040ez form Note. 2012 irs 1040ez form You cannot accumulate more than 1 year of service in a 12-month period. 2012 irs 1040ez form Example. 2012 irs 1040ez form All full-time teachers at ABC Public Schools are required to work both the September through December semester and the February through May semester. 2012 irs 1040ez form Therefore, the annual work period for full-time teachers employed by ABC Public Schools is September through December and February through May. 2012 irs 1040ez form Teachers at ABC Public Schools who work both semesters in the same calendar year are considered working a full year of service in that calendar year. 2012 irs 1040ez form Full-Time Employee for the Full Year Count each full year during which you were employed full-time as 1 year of service. 2012 irs 1040ez form In determining whether you were employed full-time, compare the amount of work you were required to perform with the amount of work normally required of others who held the same position with the same employer and who generally received most of their pay from the position. 2012 irs 1040ez form How to compare. 2012 irs 1040ez form   You can use any method that reasonably and accurately reflects the amount of work required. 2012 irs 1040ez form For example, if you are a teacher, you can use the number of hours of classroom instruction as a measure of the amount of work required. 2012 irs 1040ez form   In determining whether positions with the same employer are the same, consider all of the facts and circumstances concerning the positions, including the work performed, the methods by which pay is determined, and the descriptions (or titles) of the positions. 2012 irs 1040ez form Example. 2012 irs 1040ez form An assistant professor employed in the English department of a university will be considered a full-time employee if the amount of work that he or she is required to perform is the same as the amount of work normally required of assistant professors of English at that university who get most of their pay from that position. 2012 irs 1040ez form   If no one else works for your employer in the same position, compare your work with the work normally required of others who held the same position with similar employers or similar positions with your employer. 2012 irs 1040ez form Full year of service. 2012 irs 1040ez form   A full year of service for a particular position means the usual annual work period of anyone employed full-time in that general type of work at that place of employment. 2012 irs 1040ez form Example. 2012 irs 1040ez form If a doctor works for a hospital 12 months of a year except for a 1-month vacation, the doctor will be considered as employed for a full year if the other doctors at that hospital also work 11 months of the year with a 1-month vacation. 2012 irs 1040ez form Similarly, if the usual annual work period at a university consists of the fall and spring semesters, an instructor at that university who teaches these semesters will be considered as working a full year. 2012 irs 1040ez form Other Than Full-Time for the Full Year If, during any year, you were employed full-time for only part of your employer's annual work period, part-time for the entire annual work period, or part-time for only part of the work period, your year of service for that year is a fraction of your employer's annual work period. 2012 irs 1040ez form Full-time for part of the year. 2012 irs 1040ez form   If, during a year, you were employed full-time for only part of your employer's annual work period, figure the fraction for that year as follows: The numerator (top number) is the number of weeks, months, or semesters you were a full-time employee. 2012 irs 1040ez form The denominator (bottom number) is the number of weeks, months, or semesters considered the normal annual work period for the position. 2012 irs 1040ez form Example. 2012 irs 1040ez form Jason was employed as a full-time instructor by a local college for the 4 months of the 2013 spring semester (February 2013 through May 2013). 2012 irs 1040ez form The annual work period for the college is 8 months (February through May and July through October). 2012 irs 1040ez form Given these facts, Jason was employed full-time for part of the annual work period and provided ½ of a year of service. 2012 irs 1040ez form Jason's years of service computation for 2013 is as follows: Number of months Jason worked = 4 = 1 Number of months in annual work period 8 2 Part-time for the full year. 2012 irs 1040ez form   If, during a year, you were employed part-time for the employer's entire annual work period, you figure the fraction for that year as follows: The numerator (top number) is the number of hours or days you worked. 2012 irs 1040ez form The denominator (bottom number) is the number of hours or days normally required of someone holding the same position who works full-time. 2012 irs 1040ez form Example. 2012 irs 1040ez form Vance teaches one course at a local medical school. 2012 irs 1040ez form He teaches 3 hours per week for two semesters. 2012 irs 1040ez form Other faculty members at the same school teach 9 hours per week for two semesters. 2012 irs 1040ez form The annual work period of the medical school is two semesters. 2012 irs 1040ez form An instructor teaching 9 hours a week for two semesters is considered a full-time employee. 2012 irs 1040ez form Given these facts, Vance has worked part-time for a full annual work period. 2012 irs 1040ez form Vance has completed 1/3 of a year of service, figured as shown below. 2012 irs 1040ez form Number of hours per week Vance worked = 3 = 1 Number of hours per week considered full-time 9 3 Part-time for part of the year. 2012 irs 1040ez form   If, during any year, you were employed part-time for only part of your employer's annual work period, you figure your fraction for that year by multiplying two fractions. 2012 irs 1040ez form   Figure the first fraction as though you had worked full-time for part of the annual work period. 2012 irs 1040ez form The fraction is as follows: The numerator (top number) is the number of weeks, months, or semesters you were a full-time employee. 2012 irs 1040ez form The denominator (bottom number) is the number of weeks, months, or semesters considered the normal annual work period for the position. 2012 irs 1040ez form   Figure the second fraction as though you had worked part-time for the entire annual work period. 2012 irs 1040ez form The fraction is as follows: The numerator (top number) is the number of hours or days you worked. 2012 irs 1040ez form The denominator (bottom number) is the number of hours or days normally required of someone holding the same position who works full-time. 2012 irs 1040ez form   Once you have figured these two fractions, multiply them together to determine the fraction representing your partial year of service for the year. 2012 irs 1040ez form Example. 2012 irs 1040ez form Maria, an attorney, teaches a course for one semester at a law school. 2012 irs 1040ez form She teaches 3 hours per week. 2012 irs 1040ez form The annual work period for teachers at the school is two semesters. 2012 irs 1040ez form All full-time instructors at the school are required to teach 12 hours per week. 2012 irs 1040ez form Based on these facts, Maria is employed part-time for part of the annual work period. 2012 irs 1040ez form Her year of service for this year is determined by multiplying two fractions. 2012 irs 1040ez form Her computation is as follows: Maria's first fraction Number of semesters Maria worked = 1 Number of semesters in annual work period 2 Maria's second fraction Number of hours Maria worked per week = 3 = 1 Number of hours per week considered full-time 12 4 Maria would multiply these fractions to obtain the fractional year of service: 1 x 1 = 1         2 4 8         Figuring the Limit on Elective Deferrals You can use Part II of Worksheet 1 in chapter 9 to figure the limit on elective deferrals. 2012 irs 1040ez form Example Floyd has figured his limit on annual additions. 2012 irs 1040ez form The only other component needed before he can determine his MAC for 2014 is his limit on elective deferrals. 2012 irs 1040ez form Figuring Floyd's limit on elective deferrals. 2012 irs 1040ez form   Floyd has been employed with his current employer for less than 15 years. 2012 irs 1040ez form He is not eligible for the special 15-year increase. 2012 irs 1040ez form Therefore, his limit on elective deferrals for 2014 is $17,500 as shown in Table 4-2. 2012 irs 1040ez form Floyd's employer will not make any nonelective contributions to his 403(b) account and Floyd will not make any after-tax contributions. 2012 irs 1040ez form Additionally, Floyd's employer does not offer a Roth contribution program. 2012 irs 1040ez form Figuring Floyd's MAC Floyd has determined that his limit on annual additions for 2014 is $52,000 and his limit on elective deferrals is $17,500. 2012 irs 1040ez form Because elective deferrals are the only contributions made to Floyd's account, the maximum amount that can be contributed to a 403(b) account on Floyd's behalf in 2014 is $17,500, the lesser of both limits. 2012 irs 1040ez form Table 4-2. 2012 irs 1040ez form Worksheet 1. 2012 irs 1040ez form Maximum Amount Contributable (MAC) Note. 2012 irs 1040ez form Use this worksheet to figure your MAC. 2012 irs 1040ez form Part I. 2012 irs 1040ez form Limit on Annual Additions     1. 2012 irs 1040ez form Enter your includible compensation for your most recent year of service 1. 2012 irs 1040ez form $70,475 2. 2012 irs 1040ez form Maximum: For 2013 enter $51,000 For 2014 enter $52,000 2. 2012 irs 1040ez form 52,000 3. 2012 irs 1040ez form Enter the lesser of line 1 or line 2. 2012 irs 1040ez form This is your limit on annual additions 3. 2012 irs 1040ez form 52,000   Caution: If you had only nonelective contributions, skip Part II and enter the amount from line 3 on line 18. 2012 irs 1040ez form     Part II. 2012 irs 1040ez form Limit on Elective Deferrals     4. 2012 irs 1040ez form Maximum contribution: For 2013, enter $17,500 For 2014, enter $17,500 4. 2012 irs 1040ez form 17,500   Note. 2012 irs 1040ez form If you have at least 15 years of service with a qualifying organization, complete lines 5 through 17. 2012 irs 1040ez form If not, enter zero (-0-) on line 16 and go to line 17. 2012 irs 1040ez form     5. 2012 irs 1040ez form Amount per year of service 5. 2012 irs 1040ez form 5,000 6. 2012 irs 1040ez form Enter your years of service 6. 2012 irs 1040ez form   7. 2012 irs 1040ez form Multiply line 5 by line 6 7. 2012 irs 1040ez form   8. 2012 irs 1040ez form Enter the total of all elective deferrals made for you by the qualifying organization for prior years 8. 2012 irs 1040ez form   9. 2012 irs 1040ez form Subtract line 8 from line 7. 2012 irs 1040ez form If zero or less, enter zero (-0-) 9. 2012 irs 1040ez form   10. 2012 irs 1040ez form Maximum increase in limit for long service 10. 2012 irs 1040ez form 15,000 11. 2012 irs 1040ez form Enter the total of additional pre-tax elective deferrals made in prior years under the 15-year rule 11. 2012 irs 1040ez form   12. 2012 irs 1040ez form Enter the aggregate amount of all designated Roth contributions permitted for prior years under the 15-year rule 12. 2012 irs 1040ez form   13. 2012 irs 1040ez form Add lines 11 and 12 13. 2012 irs 1040ez form   14. 2012 irs 1040ez form Subtract line 13 from line 10 14. 2012 irs 1040ez form   15. 2012 irs 1040ez form Maximum additional contributions 15. 2012 irs 1040ez form 3,000 16. 2012 irs 1040ez form Enter the least of lines 9, 14, or 15. 2012 irs 1040ez form This is your increase in the limit for long service 16. 2012 irs 1040ez form -0- 17. 2012 irs 1040ez form Add lines 4 and 16. 2012 irs 1040ez form This is your limit on elective deferrals 17. 2012 irs 1040ez form 17,500   Part III. 2012 irs 1040ez form Maximum Amount Contributable     18. 2012 irs 1040ez form If you had only nonelective contributions, enter the amount from line 3. 2012 irs 1040ez form This is your MAC. 2012 irs 1040ez form    If you had only elective deferrals, enter the lesser of lines 3 or 17. 2012 irs 1040ez form This is your MAC. 2012 irs 1040ez form    If you had both elective deferrals and nonelective contributions, enter the amount from line 3. 2012 irs 1040ez form This is your MAC. 2012 irs 1040ez form (Use the amount on line 17 to determine if you have excess elective deferrals as explained in chapter 7. 2012 irs 1040ez form ) 18. 2012 irs 1040ez form $17,500 Prev  Up  Next   Home   More Online Publications
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Contact My Local Office in Utah

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available.  Services are limited and not all services are available at every TAC office.  Services may vary from site to site. You can get these services on a walk-in, non-advance appointment basis.

City  Street Address  Days/Hours of Service  Telephone* 
Ogden  324 25th St.
Ogden, UT 84401 

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.)

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(801) 626-0753 
Provo  173 E. 100 North
Provo, UT 84606 

Monday-Friday - 9:00 a.m.-3:30 p.m.
(Closed for lunch 11:30 a.m. - 12:30 p.m.)

 

Services Provided

(801) 377-6971 
Salt Lake City  50 S. 200 East
Salt Lake City, UT 84111 

Monday-Friday - 8:30 a.m.-4:30 p.m.

 

Services Provided

(801) 799-6963 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service:  Call (801) 799-6958 in Salt Lake City or 1-877-777-4778 elsewhere, or see Publication 1546, The Taxpayer Advocate Service of the IRS. 

For further information, see Tax Topic 104.

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
50 South 200 East, MS 6610SLC
Salt Lake City, UT 84111

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The 2012 Irs 1040ez Form

2012 irs 1040ez form 1. 2012 irs 1040ez form   Rental Income and Expenses (If No Personal Use of Dwelling) Table of Contents Rental IncomeWhen To Report Types of Income Rental ExpensesWhen To Deduct Types of Expenses This chapter discusses the various types of rental income and expenses for a residential rental activity with no personal use of the dwelling. 2012 irs 1040ez form Generally, each year you will report all income and deduct all out-of-pocket expenses in full. 2012 irs 1040ez form The deduction to recover the cost of your rental property—depreciation—is taken over a prescribed number of years, and is discussed in chapter 2, Depreciation of Rental Property. 2012 irs 1040ez form If your rental income is from property you also use personally or rent to someone at less than a fair rental price, first read the information in chapter 5 , Personal Use of Dwelling Unit (Including Vacation Home). 2012 irs 1040ez form Rental Income In most cases, you must include in your gross income all amounts you receive as rent. 2012 irs 1040ez form Rental income is any payment you receive for the use or occupation of property. 2012 irs 1040ez form In addition to amounts you receive as normal rental payments, there are other amounts that may be rental income. 2012 irs 1040ez form When To Report When you report rental income on your tax return generally depends on whether you are a cash basis taxpayer or use an accrual method. 2012 irs 1040ez form Most individual taxpayers use the cash method. 2012 irs 1040ez form Cash method. 2012 irs 1040ez form   You are a cash basis taxpayer if you report income on your return in the year you actually or constructively receive it, regardless of when it was earned. 2012 irs 1040ez form You constructively receive income when it is made available to you, for example, by being credited to your bank account. 2012 irs 1040ez form Accrual method. 2012 irs 1040ez form    If you are an accrual basis taxpayer, you generally report income when you earn it, rather than when you receive it. 2012 irs 1040ez form You generally deduct your expenses when you incur them, rather than when you pay them. 2012 irs 1040ez form More information. 2012 irs 1040ez form   See Publication 538, Accounting Periods and Methods, for more information about when you constructively receive income and accrual methods of accounting. 2012 irs 1040ez form Types of Income The following are common types of rental income. 2012 irs 1040ez form Advance rent. 2012 irs 1040ez form   Advance rent is any amount you receive before the period that it covers. 2012 irs 1040ez form Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use. 2012 irs 1040ez form Example. 2012 irs 1040ez form On March 18, 2013, you signed a 10-year lease to rent your property. 2012 irs 1040ez form During 2013, you received $9,600 for the first year's rent and $9,600 as rent for the last year of the lease. 2012 irs 1040ez form You must include $19,200 in your rental income in the first year. 2012 irs 1040ez form Canceling a lease. 2012 irs 1040ez form   If your tenant pays you to cancel a lease, the amount you receive is rent. 2012 irs 1040ez form Include the payment in your income in the year you receive it regardless of your method of accounting. 2012 irs 1040ez form Expenses paid by tenant. 2012 irs 1040ez form   If your tenant pays any of your expenses, those payments are rental income. 2012 irs 1040ez form Because you must include this amount in income, you can also deduct the expenses if they are deductible rental expenses. 2012 irs 1040ez form For more information, see Rental Expenses , later. 2012 irs 1040ez form Example 1. 2012 irs 1040ez form Your tenant pays the water and sewage bill for your rental property and deducts the amount from the normal rent payment. 2012 irs 1040ez form Under the terms of the lease, your tenant does not have to pay this bill. 2012 irs 1040ez form Include the utility bill paid by the tenant and any amount received as a rent payment in your rental income. 2012 irs 1040ez form You can deduct the utility payment made by your tenant as a rental expense. 2012 irs 1040ez form Example 2. 2012 irs 1040ez form While you are out of town, the furnace in your rental property stops working. 2012 irs 1040ez form Your tenant pays for the necessary repairs and deducts the repair bill from the rent payment. 2012 irs 1040ez form Include the repair bill paid by the tenant and any amount received as a rent payment in your rental income. 2012 irs 1040ez form You can deduct the repair payment made by your tenant as a rental expense. 2012 irs 1040ez form Property or services. 2012 irs 1040ez form   If you receive property or services as rent, instead of money, include the fair market value of the property or services in your rental income. 2012 irs 1040ez form   If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary. 2012 irs 1040ez form Example. 2012 irs 1040ez form Your tenant is a house painter. 2012 irs 1040ez form He offers to paint your rental property instead of paying 2 months rent. 2012 irs 1040ez form You accept his offer. 2012 irs 1040ez form Include in your rental income the amount the tenant would have paid for 2 months rent. 2012 irs 1040ez form You can deduct that same amount as a rental expense for painting your property. 2012 irs 1040ez form Security deposits. 2012 irs 1040ez form   Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. 2012 irs 1040ez form But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year. 2012 irs 1040ez form    If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. 2012 irs 1040ez form Include it in your income when you receive it. 2012 irs 1040ez form Other Sources of Rental Income Lease with option to buy. 2012 irs 1040ez form   If the rental agreement gives your tenant the right to buy your rental property, the payments you receive under the agreement are generally rental income. 2012 irs 1040ez form If your tenant exercises the right to buy the property, the payments you receive for the period after the date of sale are considered part of the selling price. 2012 irs 1040ez form Part interest. 2012 irs 1040ez form   If you own a part interest in rental property, you must report your part of the rental income from the property. 2012 irs 1040ez form Rental of property also used as your home. 2012 irs 1040ez form   If you rent property that you also use as your home and you rent it less than 15 days during the tax year, do not include the rent you receive in your income and do not deduct rental expenses. 2012 irs 1040ez form However, you can deduct on Schedule A (Form 1040), Itemized Deductions, the interest, taxes, and casualty and theft losses that are allowed for nonrental property. 2012 irs 1040ez form See chapter 5, Personal Use of Dwelling Unit (Including Vacation Home). 2012 irs 1040ez form Rental Expenses In most cases, the expenses of renting your property, such as maintenance, insurance, taxes, and interest, can be deducted from your rental income. 2012 irs 1040ez form Personal use of rental property. 2012 irs 1040ez form   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. 2012 irs 1040ez form Also, your rental expense deductions may be limited. 2012 irs 1040ez form See chapter 5, Personal Use of Dwelling Unit (Including Vacation Home). 2012 irs 1040ez form Part interest. 2012 irs 1040ez form   If you own a part interest in rental property, you can deduct expenses you paid according to your percentage of ownership. 2012 irs 1040ez form Example. 2012 irs 1040ez form Roger owns a one-half undivided interest in a rental house. 2012 irs 1040ez form Last year he paid $968 for necessary repairs on the property. 2012 irs 1040ez form Roger can deduct $484 (50% × $968) as a rental expense. 2012 irs 1040ez form He is entitled to reimbursement for the remaining half from the co-owner. 2012 irs 1040ez form When To Deduct You generally deduct your rental expenses in the year you pay them. 2012 irs 1040ez form If you use the accrual method, see Publication 538 for more information. 2012 irs 1040ez form Types of Expenses Listed below are the most common rental expenses. 2012 irs 1040ez form Advertising. 2012 irs 1040ez form Auto and travel expenses. 2012 irs 1040ez form Cleaning and maintenance. 2012 irs 1040ez form Commissions. 2012 irs 1040ez form Depreciation. 2012 irs 1040ez form Insurance. 2012 irs 1040ez form Interest (other). 2012 irs 1040ez form Legal and other professional fees. 2012 irs 1040ez form Local transportation expenses. 2012 irs 1040ez form Management fees. 2012 irs 1040ez form Mortgage interest paid to banks, etc. 2012 irs 1040ez form Points. 2012 irs 1040ez form Rental payments. 2012 irs 1040ez form Repairs. 2012 irs 1040ez form Taxes. 2012 irs 1040ez form Utilities. 2012 irs 1040ez form Some of these expenses, as well as other less common ones, are discussed below. 2012 irs 1040ez form Depreciation. 2012 irs 1040ez form   Depreciation is a capital expense. 2012 irs 1040ez form It is the mechanism for recovering your cost in an income producing property and must be taken over the expected life of the property. 2012 irs 1040ez form   You can begin to depreciate rental property when it is ready and available for rent. 2012 irs 1040ez form See Placed in Service under When Does Depreciation Begin and End in chapter 2. 2012 irs 1040ez form Insurance premiums paid in advance. 2012 irs 1040ez form   If you pay an insurance premium for more than one year in advance, for each year of coverage you can deduct the part of the premium payment that will apply to that year. 2012 irs 1040ez form You cannot deduct the total premium in the year you pay it. 2012 irs 1040ez form See chapter 6 of Publication 535 for information on deductible premiums. 2012 irs 1040ez form Interest expense. 2012 irs 1040ez form   You can deduct mortgage interest you pay on your rental property. 2012 irs 1040ez form When you refinance a rental property for more than the previous outstanding balance, the portion of the interest allocable to loan proceeds not related to rental use generally cannot be deducted as a rental expense. 2012 irs 1040ez form Chapter 4 of Publication 535 explains mortgage interest in detail. 2012 irs 1040ez form Expenses paid to obtain a mortgage. 2012 irs 1040ez form   Certain expenses you pay to obtain a mortgage on your rental property cannot be deducted as interest. 2012 irs 1040ez form These expenses, which include mortgage commissions, abstract fees, and recording fees, are capital expenses that are part of your basis in the property. 2012 irs 1040ez form Form 1098, Mortgage Interest Statement. 2012 irs 1040ez form   If you paid $600 or more of mortgage interest on your rental property to any one person, you should receive a Form 1098 or similar statement showing the interest you paid for the year. 2012 irs 1040ez form If you and at least one other person (other than your spouse if you file a joint return) were liable for, and paid interest on, the mortgage, and the other person received the Form 1098, report your share of the interest on Schedule E (Form 1040), line 13. 2012 irs 1040ez form Attach a statement to your return showing the name and address of the other person. 2012 irs 1040ez form On the dotted line next to line 13, enter “See attached. 2012 irs 1040ez form ” Legal and other professional fees. 2012 irs 1040ez form   You can deduct, as a rental expense, legal and other professional expenses such as tax return preparation fees you paid to prepare Schedule E, Part I. 2012 irs 1040ez form For example, on your 2013 Schedule E you can deduct fees paid in 2013 to prepare Part I of your 2012 Schedule E. 2012 irs 1040ez form You can also deduct, as a rental expense, any expense (other than federal taxes and penalties) you paid to resolve a tax underpayment related to your rental activities. 2012 irs 1040ez form Local benefit taxes. 2012 irs 1040ez form   In most cases, you cannot deduct charges for local benefits that increase the value of your property, such as charges for putting in streets, sidewalks, or water and sewer systems. 2012 irs 1040ez form These charges are nondepreciable capital expenditures and must be added to the basis of your property. 2012 irs 1040ez form However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. 2012 irs 1040ez form Local transportation expenses. 2012 irs 1040ez form   You may be able to deduct your ordinary and necessary local transportation expenses if you incur them to collect rental income or to manage, conserve, or maintain your rental property. 2012 irs 1040ez form However, transportation expenses incurred to travel between your home and a rental property generally constitute nondeductible commuting costs unless you use your home as your principal place of business. 2012 irs 1040ez form See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. 2012 irs 1040ez form   Generally, if you use your personal car, pickup truck, or light van for rental activities, you can deduct the expenses using one of two methods: actual expenses or the standard mileage rate. 2012 irs 1040ez form For 2013, the standard mileage rate for business use is 56. 2012 irs 1040ez form 5 cents per mile. 2012 irs 1040ez form For more information, see chapter 4 of Publication 463. 2012 irs 1040ez form    To deduct car expenses under either method, you must keep records that follow the rules in chapter 5 of Publication 463. 2012 irs 1040ez form In addition, you must complete Form 4562, Part V, and attach it to your tax return. 2012 irs 1040ez form Pre-rental expenses. 2012 irs 1040ez form   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. 2012 irs 1040ez form Rental of equipment. 2012 irs 1040ez form   You can deduct the rent you pay for equipment that you use for rental purposes. 2012 irs 1040ez form However, in some cases, lease contracts are actually purchase contracts. 2012 irs 1040ez form If so, you cannot deduct these payments. 2012 irs 1040ez form You can recover the cost of purchased equipment through depreciation. 2012 irs 1040ez form Rental of property. 2012 irs 1040ez form   You can deduct the rent you pay for property that you use for rental purposes. 2012 irs 1040ez form If you buy a leasehold for rental purposes, you can deduct an equal part of the cost each year over the term of the lease. 2012 irs 1040ez form Travel expenses. 2012 irs 1040ez form   You can deduct the ordinary and necessary expenses of traveling away from home if the primary purpose of the trip is to collect rental income or to manage, conserve, or maintain your rental property. 2012 irs 1040ez form You must properly allocate your expenses between rental and nonrental activities. 2012 irs 1040ez form You cannot deduct the cost of traveling away from home if the primary purpose of the trip is to improve the property. 2012 irs 1040ez form The cost of improvements is recovered by taking depreciation. 2012 irs 1040ez form For information on travel expenses, see chapter 1 of Publication 463. 2012 irs 1040ez form    To deduct travel expenses, you must keep records that follow the rules in chapter 5 of Publication 463. 2012 irs 1040ez form Uncollected rent. 2012 irs 1040ez form   If you are a cash basis taxpayer, do not deduct uncollected rent. 2012 irs 1040ez form Because you have not included it in your income, it is not deductible. 2012 irs 1040ez form   If you use an accrual method, report income when you earn it. 2012 irs 1040ez form If you are unable to collect the rent, you may be able to deduct it as a business bad debt. 2012 irs 1040ez form See chapter 10 of Publication 535 for more information about business bad debts. 2012 irs 1040ez form Vacant rental property. 2012 irs 1040ez form   If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. 2012 irs 1040ez form However, you cannot deduct any loss of rental income for the period the property is vacant. 2012 irs 1040ez form Vacant while listed for sale. 2012 irs 1040ez form   If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. 2012 irs 1040ez form If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. 2012 irs 1040ez form Points The term “points” is often used to describe some of the charges paid, or treated as paid, by a borrower to take out a loan or a mortgage. 2012 irs 1040ez form These charges are also called loan origination fees, maximum loan charges, or premium charges. 2012 irs 1040ez form Any of these charges (points) that are solely for the use of money are interest. 2012 irs 1040ez form Because points are prepaid interest, you generally cannot deduct the full amount in the year paid, but must deduct the interest over the term of the loan. 2012 irs 1040ez form The method used to figure the amount of points you can deduct each year follows the original issue discount (OID) rules. 2012 irs 1040ez form In this case, points are equivalent to OID, which is the difference between: The amount borrowed (redemption price at maturity, or principal) and The proceeds (issue price). 2012 irs 1040ez form The first step is to determine whether your total OID (which you may have on bonds or other investments in addition to the mortgage loan), including the OID resulting from the points, is insignificant or de minimis. 2012 irs 1040ez form If the OID is not de minimis, you must use the constant-yield method to figure how much you can deduct. 2012 irs 1040ez form De minimis OID. 2012 irs 1040ez form   The OID is de minimis if it is less than one-fourth of 1% (. 2012 irs 1040ez form 0025) of the stated redemption price at maturity (principal amount of the loan) multiplied by the number of full years from the date of original issue to maturity (term of the loan). 2012 irs 1040ez form   If the OID is de minimis, you can choose one of the following ways to figure the amount of points you can deduct each year. 2012 irs 1040ez form On a constant-yield basis over the term of the loan. 2012 irs 1040ez form On a straight line basis over the term of the loan. 2012 irs 1040ez form In proportion to stated interest payments. 2012 irs 1040ez form In its entirety at maturity of the loan. 2012 irs 1040ez form You make this choice by deducting the OID (points) in a manner consistent with the method chosen on your timely filed tax return for the tax year in which the loan is issued. 2012 irs 1040ez form Example. 2012 irs 1040ez form Carol Madison took out a $100,000 mortgage loan on January 1, 2013, to buy a house she will use as a rental during 2013. 2012 irs 1040ez form The loan is to be repaid over 30 years. 2012 irs 1040ez form During 2013, Carol paid $10,000 of mortgage interest (stated interest) to the lender. 2012 irs 1040ez form When the loan was made, she paid $1,500 in points to the lender. 2012 irs 1040ez form The points reduced the principal amount of the loan from $100,000 to $98,500, resulting in $1,500 of OID. 2012 irs 1040ez form Carol determines that the points (OID) she paid are de minimis based on the following computation. 2012 irs 1040ez form Redemption price at maturity (principal amount of the loan) $100,000 Multiplied by: The term of the  loan in complete years ×30 Multiplied by ×. 2012 irs 1040ez form 0025 De minimis amount $7,500 The points (OID) she paid ($1,500) are less than the de minimis amount ($7,500). 2012 irs 1040ez form Therefore, Carol has de minimis OID and she can choose one of the four ways discussed earlier to figure the amount she can deduct each year. 2012 irs 1040ez form Under the straight line method, she can deduct $50 each year for 30 years. 2012 irs 1040ez form Constant-yield method. 2012 irs 1040ez form   If the OID is not de minimis, you must use the constant-yield method to figure how much you can deduct each year. 2012 irs 1040ez form   You figure your deduction for the first year in the following manner. 2012 irs 1040ez form Determine the issue price of the loan. 2012 irs 1040ez form If you paid points on the loan, the issue price generally is the difference between the principal and the points. 2012 irs 1040ez form Multiply the result in (1) by the yield to maturity (defined later). 2012 irs 1040ez form Subtract any qualified stated interest payments (defined later) from the result in (2). 2012 irs 1040ez form This is the OID you can deduct in the first year. 2012 irs 1040ez form Yield to maturity (YTM). 2012 irs 1040ez form   This rate is generally shown in the literature you receive from your lender. 2012 irs 1040ez form If you do not have this information, consult your lender or tax advisor. 2012 irs 1040ez form In general, the YTM is the discount rate that, when used in computing the present value of all principal and interest payments, produces an amount equal to the principal amount of the loan. 2012 irs 1040ez form Qualified stated interest (QSI). 2012 irs 1040ez form   In general, this is the stated interest that is unconditionally payable in cash or property (other than another loan of the issuer) at least annually over the term of the loan at a fixed rate. 2012 irs 1040ez form Example—Year 1. 2012 irs 1040ez form The facts are the same as in the previous example. 2012 irs 1040ez form The yield to maturity on Carol's loan is 10. 2012 irs 1040ez form 2467%, compounded annually. 2012 irs 1040ez form She figured the amount of points (OID) she could deduct in 2013 as follows. 2012 irs 1040ez form Principal amount of the loan $100,000 Minus: Points (OID) –1,500 Issue price of the loan $98,500 Multiplied by: YTM × . 2012 irs 1040ez form 102467 Total 10,093 Minus: QSI –10,000 Points (OID) deductible in 2013 $93 To figure your deduction in any subsequent year, you start with the adjusted issue price. 2012 irs 1040ez form To get the adjusted issue price, add to the issue price figured in Year 1 any OID previously deducted. 2012 irs 1040ez form Then follow steps (2) and (3), earlier. 2012 irs 1040ez form Example—Year 2. 2012 irs 1040ez form Carol figured the deduction for 2014 as follows. 2012 irs 1040ez form Issue price $98,500 Plus: Points (OID) deducted  in 2013 +93 Adjusted issue price $98,593 Multiplied by: YTM × . 2012 irs 1040ez form 102467 Total 10,103 Minus: QSI –10,000 Points (OID) deductible in 2014 $103 Loan or mortgage ends. 2012 irs 1040ez form    If your loan or mortgage ends, you may be able to deduct any remaining points (OID) in the tax year in which the loan or mortgage ends. 2012 irs 1040ez form A loan or mortgage may end due to a refinancing, prepayment, foreclosure, or similar event. 2012 irs 1040ez form However, if the refinancing is with the same lender, the remaining points (OID) generally are not deductible in the year in which the refinancing occurs, but may be deductible over the term of the new mortgage or loan. 2012 irs 1040ez form Points when loan refinance is more than the previous outstanding balance. 2012 irs 1040ez form   When you refinance a rental property for more than the previous outstanding balance, the portion of the points allocable to loan proceeds not related to rental use generally cannot be deducted as a rental expense. 2012 irs 1040ez form For example, if an individual refinanced a loan with a balance of $100,000, the amount of the new loan was $120,000, and the taxpayer used $20,000 to purchase a car, points allocable to the $20,000 would be treated as nondeductible personal interest. 2012 irs 1040ez form Repairs and Improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense. 2012 irs 1040ez form Improvements. 2012 irs 1040ez form   You must capitalize any expense you pay to improve your rental property. 2012 irs 1040ez form An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use. 2012 irs 1040ez form Betterments. 2012 irs 1040ez form   Expenses that may result in a betterment to your property include expenses for fixing a pre-existing defect or condition, enlarging or expanding your property, or increasing the capacity, strength, or quality of your property. 2012 irs 1040ez form Restoration. 2012 irs 1040ez form   Expenses that may be for restoration include expenses for replacing a substantial structural part of your property, repairing damage to your property after you properly adjusted the basis of your property as a result of a casualty loss, or rebuilding your property to a like-new condition. 2012 irs 1040ez form Adaptation. 2012 irs 1040ez form   Expenses that may be for adaptation include expenses for altering your property to a use that is not consistent with the intended ordinary use of your property when you began renting the property. 2012 irs 1040ez form Separate the costs of repairs and improvements, and keep accurate records. 2012 irs 1040ez form You will need to know the cost of improvements when you sell or depreciate your property. 2012 irs 1040ez form The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. 2012 irs 1040ez form Table 1-1. 2012 irs 1040ez form Examples of Improvements Additions Bedroom Bathroom Deck Garage Porch Patio  Lawn & Grounds Landscaping Driveway Walkway Fence Retaining wall Sprinkler system Swimming pool Miscellaneous Storm windows, doors New roof Central vacuum Wiring upgrades Satellite dish Security system   Heating & Air Conditioning Heating system Central air conditioning Furnace Duct work Central humidifier Filtration system Plumbing Septic system Water heater Soft water system Filtration system  Interior Improvements Built-in appliances Kitchen modernization Flooring Wall-to-wall carpeting  Insulation Attic Walls, floor Pipes, duct work Prev  Up  Next   Home   More Online Publications