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Can I Electronic File My 1040x

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Can I Electronic File My 1040x

Can i electronic file my 1040x Publication 957 - Main Content Table of Contents 1. Can i electronic file my 1040x What is Back Pay?Reporting Back Pay Back Pay Under a Statute Nonstatutory Back Pay Format for Report to the SSA Questions 2. Can i electronic file my 1040x Special Wage PaymentsReporting Special Wage Payments Reporting Nonstatutory (Nonqualified) Stock Options as Special Wage Payments Nonqualified Deferred Compensation and Section 457 Plans Additional Reporting Examples for Nonqualified Deferred Compensation (NQDC) PlansSpecial rule for box 11 of Form W-2 (distributions and deferral in the same year). Can i electronic file my 1040x 1. Can i electronic file my 1040x What is Back Pay? Back pay is pay received in a tax year(s) for actual or deemed employment in an earlier tax year(s). Can i electronic file my 1040x For social security coverage and benefit purposes, all back pay, whether or not under a statute, is wages if it is payment for covered employment. Can i electronic file my 1040x Damages for personal injury, interest, penalties, and legal fees included with back pay awards are not wages. Can i electronic file my 1040x Report all back pay. Can i electronic file my 1040x However, the tax year(s) for which back pay is credited as wages for social security purposes is different if it is awarded under a statute. Can i electronic file my 1040x See Back Pay Under a Statute , later, for more information. Can i electronic file my 1040x Reporting Back Pay The Internal Revenue Service (IRS) and the SSA consider back pay awards to be wages. Can i electronic file my 1040x However, for income tax purposes, the IRS treats all back pay as wages in the year paid. Can i electronic file my 1040x Employers should use Form W-2, Wage and Tax Statement, or electronic wage reports to report back pay as wages in the year they actually pay the employee. Can i electronic file my 1040x The SSA no longer accepts reports on tapes, cartridges, and diskettes. Can i electronic file my 1040x Example. Can i electronic file my 1040x In 2012, Terry Morris earned wages of $50,000. Can i electronic file my 1040x In the same year, she received $100,000 in settlement of a back pay case against her employer that covered the periods January 2007 through December 2011. Can i electronic file my 1040x Her employer properly reflected social security wages of $110,100 and Medicare wages of $150,000 on her 2012 Form W-2. Can i electronic file my 1040x However, if an employer did not include back pay wages on a previously filed Form W-2, magnetic media, or electronically filed wage report, the employer should prepare a wage correction report, Form W-2c, Corrected Wage and Tax Statement, or electronically filed report, to add the back pay award to the wages previously reported. Can i electronic file my 1040x Example. Can i electronic file my 1040x If, in the above example, Terry Morris' employer had prepared her 2012 Form W-2 reporting social security and Medicare wages of only $50,000 each, the employer would have to correct that report. Can i electronic file my 1040x A Form W-2c correcting the 2012 Form W-2 would show previously reported social security and Medicare wages of $50,000 and the correct amount of $110,100 for social security wages and $150,000 for Medicare wages. Can i electronic file my 1040x SSA treatment of back pay under a statute. Can i electronic file my 1040x   Under the law, the SSA credits back pay awarded under a statute to an individual's earnings record in the period(s) the wages should have been paid. Can i electronic file my 1040x This is important because wages not credited to the proper year may result in lower social security benefits or failure to meet the requirements for benefits. Can i electronic file my 1040x   However, back pay under statute payments will remain posted to the employee's social security earnings record in the year reported on Form W-2 (or Form W-2c) unless the employer or employee notifies the SSA (in a separate, special report) of the back pay under a statute payment. Can i electronic file my 1040x Then, the SSA can allocate the statutory back pay to the appropriate periods. Can i electronic file my 1040x   If a back pay award is not made under a statute, the SSA credits back pay as wages in the year paid. Can i electronic file my 1040x    If employers do notify the SSA of this payment, they should prepare a special report (with the information noted below) and send it to: Social Security Administration Attn: CPS Back Pay Staff 7-B-15 SWT 1500 Woodlawn Drive Baltimore, MD 21241-0001 Be sure to send this special report to the above address because the SSA handles it separately from other reports. Can i electronic file my 1040x    If you paid the back pay award in the same tax year to which it applies, report the wages on that year's Form W-2. Can i electronic file my 1040x No further action is necessary. Can i electronic file my 1040x Example. Can i electronic file my 1040x In 2012, Judy Wilson received a salary of $30,000 and a back pay under statute award of $2,000 for the period January through June 2012. Can i electronic file my 1040x Her employer properly reported wages of $32,000 for social security and Medicare on her 2012 Form W-2. Can i electronic file my 1040x No further action is necessary. Can i electronic file my 1040x Information the SSA needs to properly credit back pay under a statute (special report). Can i electronic file my 1040x   After you complete the special report, you or the employee should send it to the SSA when or after you submit the Form W-2 (on paper or electronically) to the SSA for the year you pay the statutory back pay to the employee. Can i electronic file my 1040x There is no statute of limitations on the filing of the special report to enable the SSA to allocate the wages. Can i electronic file my 1040x The special report must include the following information. Can i electronic file my 1040x The employer's name, address, and employer identification number (EIN). Can i electronic file my 1040x A signed statement citing the federal or state statute under which the payment was made. Can i electronic file my 1040x If the statute is not identified, the SSA will assume the payment was not under a statute and will not allocate to earlier period(s). Can i electronic file my 1040x The name and telephone number of a person to contact. Can i electronic file my 1040x The SSA may have additional questions concerning the back pay case or the individual employee's information. Can i electronic file my 1040x A list of employees receiving the payment and the following information for each employee: The tax year you paid and reported the back pay. Can i electronic file my 1040x The employee's social security number (SSN). Can i electronic file my 1040x The employee's name (as shown on his or her social security card). Can i electronic file my 1040x The amount of the back pay award excluding any amounts specifically designated otherwise, for example, damages for personal injury, interest, penalties, and legal fees. Can i electronic file my 1040x The period(s) the back pay award covers (beginning and ending dates—month and year). Can i electronic file my 1040x The other wages paid subject to social security and/or Medicare taxes and reported in the same year as the back pay award (if none, show zero)*. Can i electronic file my 1040x Do not include the back pay award shown in that wage report. Can i electronic file my 1040x If you originally submitted the report under an establishment number, show that number and the amount of money that is to remain under that establishment number. Can i electronic file my 1040x The amount to allocate to each reporting period*. Can i electronic file my 1040x This includes any amount you want allocated (if applicable) to the tax year of the award payment. Can i electronic file my 1040x If you do not give the SSA specific amounts to allocate, the SSA does the allocation by dividing the back pay award by the number of months or years covered by the award. Can i electronic file my 1040x *Note. Can i electronic file my 1040x   For periods before January 1, 1978 (before January 1, 1981, for state and local government employers covered by a Section 218 agreement), show the wage amounts for each calendar quarter ending March 31, June 30, September 30, and December 31. Can i electronic file my 1040x For all tax years, show and identify the social security and/or Medicare Qualified Government Employment (MQGE) wages (where applicable) separately. Can i electronic file my 1040x MQGE is applicable to federal employees beginning in 1983, and for certain state and local government employees beginning in 1986. Can i electronic file my 1040x For tax years 1991 and later, list the social security and Medicare wages separately. Can i electronic file my 1040x If you originally reported the individual's wages under an establishment or payroll record unit number, show the amount of wages to remain in the award year for that number and furnish that number to the SSA along with the EIN. Can i electronic file my 1040x Back Pay Under a Statute Back pay awarded under a statute is a payment by an employer following an award, determination, or agreement approved or sanctioned by a court or government agency responsible for enforcing a federal or state statute that protects an employee's right to employment or wages. Can i electronic file my 1040x Examples of pertinent statutes include: Age Discrimination in Employment Act, Americans with Disabilities Act, Equal Pay Act, Fair Labor Standards Act, National Labor Relations Act, State minimum wage laws, and State statutes that protect rights to employment and wages. Can i electronic file my 1040x Payments based on laws that have a similar effect to those listed above also may qualify as payments made under a statute. Can i electronic file my 1040x Back pay awards, under some of the statutes listed above, may be compensation for personal injury and not pay for employment. Can i electronic file my 1040x Such awards are not wages for social security coverage purposes. Can i electronic file my 1040x If a court-approved or sanctioned settlement agreement states that the agreement is not an admission of discrimination, liability, or act of wrongdoing, the statement does not change the nature of a back pay award. Can i electronic file my 1040x The payments made in such a settlement may still be back pay and wages under the rules discussed here. Can i electronic file my 1040x Nonstatutory Back Pay A payment for back wages negotiated between an employer and employee without an award, determination, or agreement approved or sanctioned by a court or government agency, the payment is not made under a statute. Can i electronic file my 1040x Delayed wage payments and retroactive pay increases resulting from union negotiation or payments under local ordinances or regulations are back pay and are wages. Can i electronic file my 1040x However, they are not payments made under a statute. Can i electronic file my 1040x If you are uncertain whether the back pay award was under a qualified statute, you may need to contact your personnel department or legal counsel or the attorney who filed the suit. Can i electronic file my 1040x Format for Report to the SSA Use the format shown in Table 1, later, to send the SSA the information needed to properly credit back pay under a statute. Can i electronic file my 1040x In a cover letter, include: Name and address of the employer, Statute under which you paid the back pay, Name and telephone number of the employer contact, and Signature of the reporting official. Can i electronic file my 1040x Under certain circumstances, back pay may be a special wage payment and excluded from wages counted under the social security earnings test. Can i electronic file my 1040x If you pay back pay to an employee age 61 or older, report it to the SSA in accordance with this section. Can i electronic file my 1040x Read Special Wage Payments, later, for additional reporting instructions. Can i electronic file my 1040x Questions If you have questions concerning back pay under a statute, call the SSA at 1-800-772-6270. Can i electronic file my 1040x Exception. Can i electronic file my 1040x   If you are a state or local government employer who was covered by an agreement under Section 218 of the Social Security Act before January 1, 1987, and you paid a back pay award before January 1, 1987, which you did not report to the SSA, contact your state Social Security Administrator's office. Can i electronic file my 1040x Table 1. Can i electronic file my 1040x Format for Report (Under Covering Letter) to Request SSA to Allocate Back Pay Under Statute Wages Employer's EIN: xx-xxxxxxx Tax Year in Which Award Payment Was Paid: 2012 (1) SSN and Employee Name (2)1 Award Amount and Period(s) (3)2,3 Other Soc. Can i electronic file my 1040x Sec. Can i electronic file my 1040x /Med. Can i electronic file my 1040x Wages Paid In Award Year (4)3 Allocation     Soc. Can i electronic file my 1040x Sec. Can i electronic file my 1040x Med. Can i electronic file my 1040x /MQGE Year Soc. Can i electronic file my 1040x Sec. Can i electronic file my 1040x Med. Can i electronic file my 1040x /MQGE xxx-xx-xxxx HELEN T. Can i electronic file my 1040x SMITH $100,000 1/2009 - 12/2012 $40,000 $40,000 2009 2010 2011 2012 $20,000 25,000 27,000 28,000 $20,000 25,000 27,000 28,000 xxx-xx-xxxx SAM W. Can i electronic file my 1040x EVANS 30,000 7/89-12/91 -0- -0- 1989 1990 1991   6,000 12,000 12,000 xxx-xx-xxxx ROLAND S. Can i electronic file my 1040x ADAMS 15,000 7/80-12/81 -0- -0- 9/80 12/80 1981 3,500 3,500 8,000   1Exclude amounts specifically designated as damages, penalties, etc. Can i electronic file my 1040x  2Exclude the amount of back pay, if any, included in that amount. Can i electronic file my 1040x  3For periods before January 1, 1978 (and for state and local government (Section 218) employers before January 1, 1981), show the wage amounts by calendar quarters. Can i electronic file my 1040x The social security and/or Medicare Qualified Government Employment (MQGE) wages (where applicable) must be shown separately FOR ALL YEARS. Can i electronic file my 1040x (Wages subject ONLY to MQGE would be shown in the Medicare/MQGE column; no wages would be shown in the Soc. Can i electronic file my 1040x Sec. Can i electronic file my 1040x column. Can i electronic file my 1040x ) For tax years 1991 and later, the social security and Medicare wages must be listed separately. Can i electronic file my 1040x Explanation of examples. Can i electronic file my 1040x Helen T. Can i electronic file my 1040x Smith–The back pay award, excluding interest, was $100,000 for the periods 1/2009-12/2012. Can i electronic file my 1040x In 2012, this employee was also paid $40,000 in other wages. Can i electronic file my 1040x (Her Form W-2 for 2012 reported $110,100 for social security and $140,000 for Medicare. Can i electronic file my 1040x The SSA allocation will result in adjusted posted wages of $68,000 for social security and $68,000 for Medicare for 2012. Can i electronic file my 1040x ) Sam W. Can i electronic file my 1040x Evans–The back pay award was $30,000 for the periods 7/89-12/91. Can i electronic file my 1040x This employee was hired in 1989 and was subject to MQGE only. Can i electronic file my 1040x He was no longer employed by this governmental employer in 2012. Can i electronic file my 1040x (His Form W-2 for 2012 reported $30,000 for social security and $30,000 for Medicare. Can i electronic file my 1040x After the SSA allocation, he will not have any net posted wages for 2012. Can i electronic file my 1040x ) Roland S. Can i electronic file my 1040x Adams–The back pay award was $15,000 for the periods 7/80-12/81. Can i electronic file my 1040x He was no longer employed by this state and local government (Section 218) employer in 2012. Can i electronic file my 1040x (His Form W-2 for 2012 reported $15,000 for social security and $15,000 for Medicare; after the SSA allocation, he will not have any net posted wages for 2012. Can i electronic file my 1040x ) If the state Social Security Administrator's office needs more information, they can contact the SSA at the following address:   Social Security Administration Office of Income Security Programs Office of Earnings and Program Integrity Policy 6401 Security Boulevard 2506 OPS Baltimore, MD 21235 2. Can i electronic file my 1040x Special Wage Payments A special wage payment (SWP) is an amount paid by an employer to an employee (or former employee) for services performed in a prior year. Can i electronic file my 1040x Employers should report to the SSA special wage payments made to employees and former employees who are recipients of social security retirement benefits. Can i electronic file my 1040x Special wage payments made to a retired employee receiving social security or to an employee who continues to work while receiving social security benefits may reduce the benefits the individual receives if not reported to the SSA. Can i electronic file my 1040x Special wage payments may include (but are not limited to): Accumulated sick and vacation pay, Back pay, Bonuses, Deferred compensation, Payments because of retirement, Sales commissions, Severance pay, and Stock options. Can i electronic file my 1040x Note. Can i electronic file my 1040x Payments made after retirement that are part of the normal payroll cycle should not be routinely reported as special wage payments. Can i electronic file my 1040x Earnings Test. Can i electronic file my 1040x   Benefits paid to a social security beneficiary under full retirement age may be reduced if the beneficiary continues to work. Can i electronic file my 1040x The SSA uses the information in boxes 1, 3, and 5 of Form W-2 to determine the beneficiary's current year earnings. Can i electronic file my 1040x Special wage payments, which are for services performed in a prior year, will increase the current year earnings on Form W-2, which also may result in a reduction in the beneficiary's benefits. Can i electronic file my 1040x If a benefit is reduced because of a special wage payment, the beneficiary must get documentation from the employer before the SSA can restore the deducted portion. Can i electronic file my 1040x Therefore, employer reports of special wage payments help prevent incorrect benefit reductions. Can i electronic file my 1040x Reporting Special Wage Payments Employers must report special wage payments for income tax purposes and social security and Medicare taxes in the year received. Can i electronic file my 1040x Report income, social security, and/or Medicare taxes for special wage payments on Form W-2. Can i electronic file my 1040x See Nonqualified Deferred Compensation and Section 457 Plans, later, for reporting nonqualified deferred compensation plan deferrals and payments on Form W-2. Can i electronic file my 1040x In addition, report to the SSA special wage payments made during the reporting year to retired employees and employees who continue to work while receiving social security benefits. Can i electronic file my 1040x Submit reports after the close of the tax year. Can i electronic file my 1040x To avoid delays in processing, submit reports in time to reach the SSA by April 1. Can i electronic file my 1040x Use one of the following reporting methods. Can i electronic file my 1040x Electronic reporting. Can i electronic file my 1040x   Special wage payment files can be sent electronically by logging onto Business Services Online (BSO) via the socialsecurity. Can i electronic file my 1040x gov website. Can i electronic file my 1040x BSO enables organizations and authorized individuals to conduct business with and submit confidential information to the Social Security Administration. Can i electronic file my 1040x You must register to use this website. Can i electronic file my 1040x The web address is www. Can i electronic file my 1040x socialsecurity. Can i electronic file my 1040x gov/bso/bsowelcome. Can i electronic file my 1040x htm. Can i electronic file my 1040x   Use the specifications and record layout shown in  Table 2, later. Can i electronic file my 1040x Only one file at a time may be submitted. Can i electronic file my 1040x If your file is large (>10MB), or you have a slow internet connection, the transmission will be faster if the file is zipped. Can i electronic file my 1040x A zipped file contains a file that has been compressed to reduce its file size. Can i electronic file my 1040x WinZip and PKZIP are examples of acceptable compression packages. Can i electronic file my 1040x   Electronic submissions not meeting the specifications in Table 2 will be rejected. Can i electronic file my 1040x Paper listing. Can i electronic file my 1040x   A paper listing can be used to report special wage payments to several employees. Can i electronic file my 1040x Use the format shown in Table 3, later. Can i electronic file my 1040x Submit paper listings to the local SSA office nearest your place of business. Can i electronic file my 1040x Visit www. Can i electronic file my 1040x socialsecurity. Can i electronic file my 1040x gov/locator to find a Social Security office near you. Can i electronic file my 1040x Form SSA-131. Can i electronic file my 1040x   Use Form SSA-131 to report special wage payments made to an employee. Can i electronic file my 1040x Also use this form to report nonqualified deferred compensation and section 457 plan deferrals and payments that could not be reported in box 11 of Form W-2. Can i electronic file my 1040x    This image is too large to be displayed in the current screen. Can i electronic file my 1040x Please click the link to view the image. Can i electronic file my 1040x Publication 957 Reporting Back Pay to the Social Security Administration Instructions for Form SSA–131   EMPLOYER INSTRUCTIONS FOR COMPLETING SPECIAL WAGE PAYMENT FORM 1. Can i electronic file my 1040x Provide the EIN that was used or will be used to report the employee's wages on the Form W-2. Can i electronic file my 1040x 2. Can i electronic file my 1040x Enter the date the employee retired. Can i electronic file my 1040x Enter “Not Retired” if the employee has not retired. Can i electronic file my 1040x 3. Can i electronic file my 1040x Enter the date that the employee last performed services; was not expected to return to work; and was not subject to recall to render additional services. Can i electronic file my 1040x This date should be the same as or earlier than the date in item “2”. Can i electronic file my 1040x Enter “Not Retired” if the employee has not retired. Can i electronic file my 1040x 4. Can i electronic file my 1040x Enter the wages that were paid to the employee in the tax year that were for services that were performed in years prior to the tax year or that were paid on account of retirement. Can i electronic file my 1040x  Examples (not all inclusive) of payments to be included: Payments in lieu of vacation that were earned in a year prior to the tax year. Can i electronic file my 1040x Accumulated sick payments which were paid in a lump sum based on “retirement” as the sole condition of payment. Can i electronic file my 1040x Accumulated sick payments paid at or after the date in item 3, which were earned in a year prior to the tax year. Can i electronic file my 1040x Payments “on account of retirement”–dismissal, severance or termination pay paid because of retirement. Can i electronic file my 1040x Bonuses which are paid pursuant to a prior contract, agreement or promise causing the employee to expect such payments regularly; or announced to induce the employee to work more steadily, rapidly or efficiently or to remain with the employer. Can i electronic file my 1040x Stock Options. Can i electronic file my 1040x   Do not include in item “4” payments: For annual, sick, holiday, or vacation pay if used (absence from work) prior to the date of retirement (earlier of items “2” or “3”). Can i electronic file my 1040x That were reported or will be reported under “Nonqualified Plans” on the Form W-2. Can i electronic file my 1040x That were deducted from the employee's wages and paid to a deferred compensation plan (e. Can i electronic file my 1040x g. Can i electronic file my 1040x , 401k). Can i electronic file my 1040x Employees health and dental plan benefits (non-covered/non-taxable for Social Security Wages). Can i electronic file my 1040x Bonuses earned and paid in the tax year. Can i electronic file my 1040x 5. Can i electronic file my 1040x Check whether payments listed in item 4 will be made for years after the tax year. Can i electronic file my 1040x If yes, please show the amounts and years in which these will be paid, if known. Can i electronic file my 1040x 6. Can i electronic file my 1040x Nonqualified deferred compensation and section 457 plans only. Can i electronic file my 1040x If you were unable to report nonqualified deferred compensation or section 457 plan payments and deferrals (contributions) on Form W-2 because both payments and deferrals occurred during the year, show the amount of wages earned by the employee during the tax year. Can i electronic file my 1040x Generally, the wages earned will be the compensation reported in block 1 of Form W-2 less payments from a nonqualified deferred compensation (or 457) plan, but including any amounts deferred under the plan during the tax year (See IRS Publication 957). Can i electronic file my 1040x Paperwork/Privacy Act Notice: This report is authorized by regulation 20 CFR 404. Can i electronic file my 1040x 702. Can i electronic file my 1040x The information that you provide will be used in making a determination regarding the amount of Social Security benefits payable to the above named individual. Can i electronic file my 1040x While your response is voluntary, if you do not respond we may not be able to make a correct determination regarding the amount of Social Security benefits payable to the above named individual for the year in question. Can i electronic file my 1040x We may also use the information you give us when we match records by computer. Can i electronic file my 1040x Matching programs compare our records with those of other Federal, State, or local government agencies. Can i electronic file my 1040x Many agencies may use matching programs to find or prove that a person qualifies for benefits paid by the Federal Government. Can i electronic file my 1040x The law allows us to do this even if you do not agree to it. Can i electronic file my 1040x Explanations about these and other reasons why information you provide us may be used or given out are available in Social Security Offices. Can i electronic file my 1040x If you want to learn more about this, contact any Social Security Office. Can i electronic file my 1040x The Paperwork Reduction Act: This information collection meets the clearance requirements of 44 U. Can i electronic file my 1040x S. Can i electronic file my 1040x C. Can i electronic file my 1040x §3507, as amended by Section 2 of the Paperwork Reduction Act of 1995. Can i electronic file my 1040x You are not required to answer these questions unless we display a valid Office of Management and Budget control number. Can i electronic file my 1040x We estimate that it will take you about 20 minutes to read the instructions, gather the necessary facts, and answer the questions. Can i electronic file my 1040x Form SSA-131 (8-2001) EF (06-2002)   Submit Form SSA-131 to the SSA office nearest your place of business. Can i electronic file my 1040x Or, the employee can submit it to the SSA office handling the claim. Can i electronic file my 1040x You or the employee must submit this form before the SSA can exclude the special wage payments for purposes of the earnings test. Can i electronic file my 1040x If reporting on more than one employee, complete a separate Form SSA-131 for each employee or use the paper listing format (except for reporting nonqualified and section 457 plan deferrals and payments) in Table 3. Can i electronic file my 1040x Do not report payments from nonqualified deferred compensation or section 457 plans that were reported in box 11 of Form W-2. Can i electronic file my 1040x Use Form SSA-131 if deferrals to and payments from nonqualified or section 457 plans occurred during the tax year. Can i electronic file my 1040x Reporting Nonstatutory (Nonqualified) Stock Options as Special Wage Payments A nonstatutory (nonqualified) option to purchase stock which is exercised in a year after the year in which the option was earned is a special wage payment. Can i electronic file my 1040x It should not count for the social security earnings test. Can i electronic file my 1040x Nonstatutory (nonqualified) options exercised as special wage payments by retired employees or employees who continue to work while receiving social security benefits should be reported by employers using the above reporting methods. Can i electronic file my 1040x Nonqualified Deferred Compensation and Section 457 Plans A nonqualified deferred compensation plan is a plan or arrangement established and maintained by an employer for one or more of its employees that provides for the deferral of compensation, but does not meet the requirements for a tax-qualified deferred compensation plan. Can i electronic file my 1040x For social security and Medicare purposes, deferred compensation plans for employees of state and local governments (section 457 plans) are treated the same as nonqualified plans. Can i electronic file my 1040x Nonqualified and section 457 plans are reported differently than other special wage payments. Can i electronic file my 1040x See Reporting Amounts Deferred to Nonqualified and Section 457 Plans below for specific instructions. Can i electronic file my 1040x Reporting Amounts Deferred to Nonqualified and Section 457 Plans Generally, when the related services are performed, nonqualified deferred compensation is subject to social security and Medicare tax when deferred. Can i electronic file my 1040x However, if nonqualified and section 457 plans contain provisions that delay the employee's right to receive payments from the plan, a period of substantial risk of forfeiture exists. Can i electronic file my 1040x The plans' deferrals, or contributions, are not subject to social security and Medicare taxes until the period of substantial risk of forfeiture ends. Can i electronic file my 1040x No risk of forfeiture. Can i electronic file my 1040x   If there is no risk of forfeiture, report wage amounts deferred to a nonqualified deferred compensation or section 457 plan in box 3 (up to the wage base maximum) and/or box 5 of Form W-2. Can i electronic file my 1040x Example. Can i electronic file my 1040x Company X's nonqualified deferred compensation plan allows the deferral of up to $20,000 of employee salaries each year. Can i electronic file my 1040x The plan has no risk of forfeiture. Can i electronic file my 1040x In 2012, Employee A defers $20,000 to the plan from a total salary of $200,000. Can i electronic file my 1040x Form W-2 Completion Amount Box 1 $200,000 Box 3* 110,100 Box 5 200,000 *Wage base maximum for tax year 2012 Risk of forfeiture lapses before retirement. Can i electronic file my 1040x   If the substantial risk of forfeiture lapses before the employee retires, report all past contributions to the plan (or the value of the plan), including accumulated earned interest, in box 3 (up to the wage base maximum) and/or box 5 of Form W-2. Can i electronic file my 1040x The accumulated deferrals are reported along with any other social security and Medicare wages earned during the year. Can i electronic file my 1040x   Report in box 11 of Form W-2 the amount of deferrals, including any accumulated interest, that became taxable for social security and Medicare taxes during the year (but were for prior year services) because the deferred amounts were no longer subject to a substantial risk of forfeiture. Can i electronic file my 1040x If the employee continues working, future deferrals are social security and Medicare wages when they are earned. Can i electronic file my 1040x    Do not include in box 11 deferrals that are included in boxes 3 and/or 5 and that are for current year services. Can i electronic file my 1040x Risk of forfeiture lapses at retirement. Can i electronic file my 1040x   When an employee's right to a payment is contingent upon working until retirement, report all past contributions to the plan (or the value of the plan), including accumulated earned interest, as social security and/or Medicare wages in the year of retirement. Can i electronic file my 1040x Add the amount to other wages paid in that year, and enter in box 3 (up to the wage base maximum) and/or box 5 of Form W-2. Can i electronic file my 1040x   Report in box 11 of Form W-2 the amount of deferrals, including any accumulated interest, that became taxable for social security and Medicare taxes during the year (but were for prior year services) because the deferred amounts were no longer subject to a substantial risk of forfeiture. Can i electronic file my 1040x    Do not include in box 11 deferrals that are included in boxes 3 and/or 5 and that are for current year services. Can i electronic file my 1040x Example—risk of forfeiture. Can i electronic file my 1040x At the end of the risk-of-forfeiture period for Company Y's nonqualified deferred compensation plan, Employee B's accumulated deferrals, plus interest earned by the plan, are $120,000, not including B's $20,000 deferral for this year. Can i electronic file my 1040x B's wages, including this year's deferred amount, are $80,000. Can i electronic file my 1040x Form W-2 Completion Amount Box 1 $60,000 Box 3* 110,100 Box 5 200,000 Box 11 120,000 *Wage base maximum for tax year 2012 Reporting Payments From Nonqualified and Nongovernmental Section 457 Plans When an employee or former employee retires and begins receiving payments (distributions) from a nonqualified or nongovernmental section 457 plan, report the payments in boxes 1 and 11 of Form W-2. Can i electronic file my 1040x Report payments (distributions) from a governmental section 457 plan on Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Can i electronic file my 1040x Example. Can i electronic file my 1040x Employee D retired from the XYZ company and began receiving social security benefits. Can i electronic file my 1040x XYZ paid D a $12,000 bonus upon retirement for sales made in a prior year, and D received $25,000 in payments from XYZ's nonqualified deferred compensation plan. Can i electronic file my 1040x In addition, D agreed to continue performing services for XYZ, but on a part-time basis for wages of $15,000 per year. Can i electronic file my 1040x D made no deferrals to the nonqualified plan this year. Can i electronic file my 1040x Form W-2 Completion Amount Box 1 $52,000 Box 3 27,000 Box 5 27,000 Box 11 25,000 Report the $12,000 bonus to the SSA using electronic reporting, a paper listing, or Form SSA-131. Can i electronic file my 1040x For more information, see Reporting Special Wage Payments , earlier. Can i electronic file my 1040x Reporting Payments and Deferrals in the Same Year Do not complete box 11 when payments (distributions) are made from a nonqualified plan and deferrals are reported in boxes 3 and/or 5 of Form W-2 (including current year deferrals). Can i electronic file my 1040x Report to the SSA on Form SSA-131 the total amount the employee earned during the tax year. Can i electronic file my 1040x Normally, the amount earned is the amount reported in box 1 of Form W-2 less payments from a nonqualified or section 457 plan, but including any amounts deferred under the plan during the tax year. Can i electronic file my 1040x See Form SSA-131 and its instructions, earlier. Can i electronic file my 1040x Example. Can i electronic file my 1040x Employee K retired this year from Company XYZ and began receiving social security benefits. Can i electronic file my 1040x During the year he earned wages of $50,000 and deferred $35,000 of the wages into the company's nonqualified deferred compensation plan. Can i electronic file my 1040x K also received $75,000 in payments from the company's nonqualified plan. Can i electronic file my 1040x Form W-2 Completion Amount Special Wage Payment $75,000 Wages 50,000 Minus: deferral 35,000 Total reported in Box 1 $90,000     Wages including deferral reported in  Boxes 3 and 5 $50,000     Leave Box 11 blank. Can i electronic file my 1040x File Form SSA-131 -0-     Form SSA-131 Completion Amount from Box 1 of Form W-2 $90,000 Minus: payments from a nonqualified plan 75,000 Plus: amounts deferred into the plan during the year 35,000 Total wages earned for purposes of Form SSA-131 (item 6) $50,000 Additional Reporting Examples for Nonqualified Deferred Compensation (NQDC) Plans It is not necessary to show amounts deferred during the year under an NQDC plan subject to section 409A. Can i electronic file my 1040x If you report section 409A deferrals, show the amount in box 12 of Form W-2 using code Y. Can i electronic file my 1040x For more information, see Notice 2008-115, 2008-52 I. Can i electronic file my 1040x R. Can i electronic file my 1040x B. Can i electronic file my 1040x 1367, available at www. Can i electronic file my 1040x irs. Can i electronic file my 1040x gov/irb/2008-52_IRB/ar10. Can i electronic file my 1040x html. Can i electronic file my 1040x Special reporting rules apply when an NQDC plan is not compliant with section 409A (when there has been a “plan failure”). Can i electronic file my 1040x Income included under section 409A from an NQDC plan is reported in box 1 and box 12 of Form W-2 using code Z. Can i electronic file my 1040x See Notice 2008-115. Can i electronic file my 1040x The following examples use small dollar amounts for illustrative purposes. Can i electronic file my 1040x However, the amount reported in box 3 of Form W-2 is always limited by the social security earnings wage base (for example, $110,100 for 2012). Can i electronic file my 1040x The term “vested” in the following examples means that the amount deferred is not subject to a substantial risk of forfeiture. Can i electronic file my 1040x Conversely, the term “not vested” means that the amount deferred is subject to a substantial risk of forfeiture. Can i electronic file my 1040x The examples assume that the NQDC plan is in compliance with section 409A, and that amounts deferred under the plan are not includible in gross income as they are deferred. Can i electronic file my 1040x For purposes of the examples, it is assumed that the regular pay of the employee is remuneration for employment and wages for employment tax purposes except to the extent the deferral of a portion of the regular pay results in a reduction in wages. Can i electronic file my 1040x Example 1: Deferral that is immediately vested (no substantial risk of forfeiture) with no distributions and no vesting of prior-year deferrals. Can i electronic file my 1040x For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into her employer’s NQDC plan. Can i electronic file my 1040x The deferral of $20 was vested upon deferral and there was an employer match of $10 under the plan, which was also vested. Can i electronic file my 1040x Regular pay = $200; Deferral, vested = $20; Employer match, vested = $10. Can i electronic file my 1040x Form W-2 Completion Amount Box 1 ($200 Regular pay minus $20 vested deferral) $180 Box 3 ($200 Regular pay plus $10 Employer match, vested) 210 Box 5 ($200 Regular pay plus $10 Employer match, vested) 210 Box 11 -0- Example 2: Deferral with delayed vesting (substantial risk of forfeiture) of employee and employer portions (no distributions and no vesting of prior-year deferrals). Can i electronic file my 1040x For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s nonqualified deferred compensation plan. Can i electronic file my 1040x The deferral of $20 was not vested upon deferral, and there was an employer match of $10 under the plan, which was also not vested. Can i electronic file my 1040x Regular pay = $200; Deferral, not vested = $20; Employer match, not vested = $10. Can i electronic file my 1040x Form W-2 Completion Amount Box 1 ($200 Regular pay minus $20 Deferral, not vested) $180 Box 3 ($200 Regular pay minus $20 Deferral, not vested) 180 Box 5 ($200 Regular pay minus $20 Deferral, not vested) 180 Box 11 -0- Example 3: Deferral that is immediately vested with prior-year deferrals and investment earnings on the prior-year deferrals that are now vesting (no distributions). Can i electronic file my 1040x For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s nonqualified deferred compensation plan. Can i electronic file my 1040x The deferral of $20 was vested upon deferral. Can i electronic file my 1040x During the year, $100 of prior-year deferrals and $15 of investment earnings on the $100 of prior-year deferrals became vested. Can i electronic file my 1040x Regular pay = $200; Deferral, vested = $20; Vesting of prior-year deferrals = $100; Vesting of investment earnings on $100 of prior-year deferral = $15. Can i electronic file my 1040x Form W-2 Completion Amount Box 1 ($200 Regular pay minus $20 Deferral, vested) $180 Box 3 ($200 Regular pay plus $100 vested prior-year deferral plus $15 earnings on deferral) 315 Box 5 ($200 Regular pay plus $100 vested prior-year deferral plus $15 vested investment earnings on prior year deferral) 315 Box 11 ($100 vested prior-year deferral plus $15 earnings) 115 Example 4: No deferrals but there are distributions (no vesting of prior-year deferrals). Can i electronic file my 1040x For the year, the employee’s regular pay was $100, and the employee deferred no pay into the employer’s NQDC plan. Can i electronic file my 1040x There was no vesting of prior-year deferrals under the plan. Can i electronic file my 1040x During the year, there were total distributions of $50 from the plan to the employee. Can i electronic file my 1040x Regular pay = $100; Distribution = $50. Can i electronic file my 1040x Form W-2 Completion Amount Box 1 ($100 Regular pay plus $50 Distribution) $150 Box 3 ($100 Regular pay ) 100 Box 5 ($100 Regular pay) 100 Box 11 ($50 Distribution) 50 Special rule for box 11 of Form W-2 (distributions and deferral in the same year). Can i electronic file my 1040x   If, in the same year, there are NQDC distributions and there are deferrals that are reportable in boxes 3 and/or 5 (current or prior-year deferrals) of Form W-2, do not complete box 11. Can i electronic file my 1040x Instead, report on Form SSA-131 the total amount the employee earned during the year. Can i electronic file my 1040x * Submit the SSA-131 to the nearest SSA office or give it to the employee. Can i electronic file my 1040x   *Generally, the amount earned by the employee during the tax year for purposes of item 6 of Form SSA-131 is the amount reported in box 1 of Form W-2 plus current-year deferrals that are vested (employee and employer portions) less distributions. Can i electronic file my 1040x Do not consider prior-year deferrals that are vesting in the current year. Can i electronic file my 1040x If there was a plan failure, the box 1 amount in this calculation should be as if there were no plan failure. Can i electronic file my 1040x Example 5: Deferral that is immediately vested and there are distributions (no vesting of prior-year deferrals). Can i electronic file my 1040x For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. Can i electronic file my 1040x There was also an employer match of $10. Can i electronic file my 1040x The deferral and employer match were vested upon deferral. Can i electronic file my 1040x There was no vesting of prior-year deferrals under the plan. Can i electronic file my 1040x During the year, there were total distributions of $50 from the plan to the employee. Can i electronic file my 1040x Regular pay = $200; Deferral, vested = $20; Employer match, vested = $10; Distribution = $50. Can i electronic file my 1040x Form W-2 Completion Amount Box 1 ($50 Special Wage Payment (Distribution) plus $200 Regular pay minus $20 Deferral, vested) $230 Boxes 3 and 5 ($200 Regular pay plus $10 vested employer match) 210 Leave Box 11 blank. Can i electronic file my 1040x File Form SSA-131 -0-     Form SSA-131 Completion Item 6 - amount of wages earned by the employee during the tax year ($230 from Box 1 of Form W-2 minus $50 Distribution plus $30 vested current year employee deferral and employer match) $210 Example 6: Deferral with delayed vesting and there are distributions (no vesting of prior-year deferrals). Can i electronic file my 1040x For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. Can i electronic file my 1040x The deferral was not vested upon deferral. Can i electronic file my 1040x There was no vesting of prior-year deferrals under the plan. Can i electronic file my 1040x During the year, there were total distributions of $50 from the plan to the employee. Can i electronic file my 1040x Regular pay = $200; Deferral, not vested = $20; Distribution = $50. Can i electronic file my 1040x Form W-2 Completion Amount Box 1 ($50 Special Wage Payment (Distribution) plus $200 Regular pay minus $20 Deferral, not vested) $230 Boxes 3 and 5 ($200 Regular pay minus $20 deferral that is not vested) 180 Box 11 ($50 Distribution). Can i electronic file my 1040x 50 Example 7: Deferral that is immediately vested and there are distributions (also vesting of prior-year deferrals and earnings on those prior-year deferrals). Can i electronic file my 1040x For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. Can i electronic file my 1040x The deferral was vested upon deferral. Can i electronic file my 1040x There was vesting of $100 of prior-year deferrals and $15 of earnings on the $100 prior-year deferral under the plan. Can i electronic file my 1040x During the year, there were total distributions of $50 from the plan to the employee. Can i electronic file my 1040x Regular pay = $200; Deferral, vested = $20; Distribution = $50; Vesting of prior-year deferrals ($100) and earnings on those prior-year deferrals ($15) = $115. Can i electronic file my 1040x Form W-2 Completion Amount Box 1 ($50 Special Wage Payment (Distribution) plus $200 Regular pay minus $20 vested deferral $230 Boxes 3 and 5 ($200 Regular pay Plus $115 vested prior deferral (with vested earnings on the deferral)) 315 Leave Box 11 blank. Can i electronic file my 1040x File Form SSA-131 -0-     Form SSA-131 Completion Item 6, amount of wages earned by the employee during the tax year ($230 from Box 1 of Form W-2 minus $50 Distribution plus $20 vested current year deferral) $200 Example 8: Deferral with delayed vesting and there are distributions (vesting of prior-year deferrals, including employer matches, and earnings on those deferrals). Can i electronic file my 1040x For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. Can i electronic file my 1040x The deferral was not vested upon deferral. Can i electronic file my 1040x There was also vesting of prior-year deferrals and employer matches and earnings on these amounts under the plan ($115). Can i electronic file my 1040x During the year, there were total distributions of $50 from the plan to the employee. Can i electronic file my 1040x Regular pay = $200; Deferral, not vested = $20; Distribution = $50; Vesting of prior-year deferrals and employer match = $100 plus earnings on that $100 of $15. Can i electronic file my 1040x Form W-2 Completion Amount Box 1 ($50 Special Wage Payment (Distribution) plus $200 regular pay minus $20 Deferral, not vested) $230 Boxes 3 and 5 ($200 Regular pay plus $115 vested prior-year deferral and prior year employer match and earning on the prior year amounts minus $20 deferral that is not vested) 295 Leave Box 11 blank. Can i electronic file my 1040x File Form SSA-131 -0-     Form SSA-131 Completion Item 6 ($230 Amount from Box 1 of Form W-2 minus $50 Distribution) $180 Table 2. Can i electronic file my 1040x Specifications for Electronic Reporting of Special Wage Payments Record Position  Field Size   Description Start End 1 3 3 Record Type—must include only the capital letters “SWP” 4 12 9 SSN—must be numeric and may not be all zeros 13 27 15 Last Name—all capitals and no punctuation; may have blanks on right only 28 38 11 First Name—all capitals and no punctuation; may have blanks on right only 39 39 1 Middle Initial—must be either a capital letter or blank 40 48 9 EIN—must be numeric and may not be all zeros 49 59 11 Payment—must be numeric; may not be all zeros; last two digits on right are assumed to be cents; no period or dollar sign 60 63 4 Payment Year—must be only a four-digit year 64 66 3 SSA Office Code—must be numeric and may be all zeros 67 67 1 Payment Type Code—must be the capital letter “T” 68 117 50 Filler  The record format is a fixed length of 117. Can i electronic file my 1040x  The file format is ASCII. Can i electronic file my 1040x  Submit only one file at a time. Can i electronic file my 1040x   Table 3. Can i electronic file my 1040x Sample—Paper Listing for Reporting Special Wage Payments to Several Employees Report of Special Wage PaymentsTax Year: Page of A. Can i electronic file my 1040x Employer Name: EIN:   Address: Contact Name:     Phone: ( )   . Can i electronic file my 1040x 1) B. Can i electronic file my 1040x Employee Name: (Last) (First) (MI)   C. Can i electronic file my 1040x SSN: D. Can i electronic file my 1040x SWP:$ E. Can i electronic file my 1040x Type: Other: 2) B. Can i electronic file my 1040x Employee Name: (Last) (First) (MI)   C. Can i electronic file my 1040x SSN: D. Can i electronic file my 1040x SWP:$ E. Can i electronic file my 1040x Type: Other: 3) B. Can i electronic file my 1040x Employee Name: (Last) (First) (MI)   C. Can i electronic file my 1040x SSN: D. Can i electronic file my 1040x SWP:$ E. Can i electronic file my 1040x Type: Other: 4) B. Can i electronic file my 1040x Employee Name: (Last) (First) (MI)   C. Can i electronic file my 1040x SSN: D. Can i electronic file my 1040x SWP:$ E. Can i electronic file my 1040x Type: Other: 5) B. Can i electronic file my 1040x Employee Name: (Last) (First) (MI)   C. Can i electronic file my 1040x SSN: D. Can i electronic file my 1040x SWP:$ E. Can i electronic file my 1040x Type: Other:     INSTRUCTIONS:   Enter tax year and page number. Can i electronic file my 1040x   A. Can i electronic file my 1040x Employer name, employer identification number (EIN), address, the name of a contact person, and a phone number where the contact person can be reached during normal business hours. Can i electronic file my 1040x   B. Can i electronic file my 1040x Employee's name. Can i electronic file my 1040x   C. Can i electronic file my 1040x Employee's social security number (SSN). Can i electronic file my 1040x   D. Can i electronic file my 1040x Total amount of special wage payments made to the employee. Can i electronic file my 1040x   E. Can i electronic file my 1040x Type of special wage payment from the following list: (1) Vacation Pay, (2) Sick Pay, (3) Severance Pay,  (4) Bonus, (5) Deferred Compensation, (6) Stock Options, and (7) Other—Please explain. Can i electronic file my 1040x   Do not use a paper listing for nonqualified deferred compensation and section 457 plan deferrals and payments that could not be reported in block 11 of Form W-2. Can i electronic file my 1040x (Get Form SSA-131. Can i electronic file my 1040x )                 Prev  Up  Next   Home   More Online Publications
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Tax Relief for Victims of June 19 Severe Storms in Kentucky

IN-2011-12, Sept. 2, 2011

INDIANAPOLIS — Victims of severe storms, tornadoes, and flooding that began on June 19, 2011 in parts of Kentucky may qualify for tax relief from the Internal Revenue Service.

The President has declared the following counties a federal disaster area: Bell, Knox, and Perry. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone until August 18 certain deadlines falling on or after June 19 and on or before August 18 for taxpayers who reside or have a business in the disaster area.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after June 19 and on or before July 5, 2011, as long as the deposits were made by July 5, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until August 18 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after June 19 and on or before August 18.

The IRS also gives affected taxpayers until August 18 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (August 20, 2007), that are due to be performed on or after June 19 and on or before August 18.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after June 19 and on or before July 5 provided the taxpayer made these deposits by July 5.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.
Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Kentucky/Severe Storms, Tornadoes, and Flooding” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information

Page Last Reviewed or Updated: 20-Mar-2014

The Can I Electronic File My 1040x

Can i electronic file my 1040x 9. Can i electronic file my 1040x   Rental Income and Expenses Table of Contents Introduction Useful Items - You may want to see: Rental Income Rental ExpensesVacant while listed for sale. Can i electronic file my 1040x Repairs and Improvements Other Expenses Property Changed to Rental Use Renting Part of Property Not Rented for Profit Personal Use of Dwelling Unit (Including Vacation Home)Example. Can i electronic file my 1040x Dividing Expenses Dwelling Unit Used as a Home Reporting Income and Deductions DepreciationChanging your accounting method to deduct unclaimed depreciation. Can i electronic file my 1040x Limits on Rental LossesAt-Risk Rules Passive Activity Limits How To Report Rental Income and ExpensesSchedule E (Form 1040) Introduction This chapter discusses rental income and expenses. Can i electronic file my 1040x It also covers the following topics. Can i electronic file my 1040x Personal use of dwelling unit (including vacation home). Can i electronic file my 1040x Depreciation. Can i electronic file my 1040x Limits on rental losses. Can i electronic file my 1040x How to report your rental income and expenses. Can i electronic file my 1040x If you sell or otherwise dispose of your rental property, see Publication 544, Sales and Other Dispositions of Assets. Can i electronic file my 1040x If you have a loss from damage to, or theft of, rental property, see Publication 547, Casualties, Disasters, and Thefts. Can i electronic file my 1040x If you rent a condominium or a cooperative apartment, some special rules apply to you even though you receive the same tax treatment as other owners of rental property. Can i electronic file my 1040x See Publication 527, Residential Rental Property, for more information. Can i electronic file my 1040x Useful Items - You may want to see: Publication 527 Residential Rental Property 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 925 Passive Activity and At-Risk Rules 946 How To Depreciate Property Form (and Instructions) 4562 Depreciation and Amortization 6251 Alternative Minimum Tax—Individuals 8582 Passive Activity Loss Limitations Schedule E (Form 1040) Supplemental Income and Loss Rental Income In most cases, you must include in your gross income all amounts you receive as rent. Can i electronic file my 1040x Rental income is any payment you receive for the use or occupation of property. Can i electronic file my 1040x In addition to amounts you receive as normal rent payments, there are other amounts that may be rental income. Can i electronic file my 1040x When to report. Can i electronic file my 1040x   If you are a cash-basis taxpayer, you report rental income on your return for the year you actually or constructively receive it. Can i electronic file my 1040x You are a cash-basis taxpayer if you report income in the year you receive it, regardless of when it was earned. Can i electronic file my 1040x You constructively receive income when it is made available to you, for example, by being credited to your bank account. Can i electronic file my 1040x   For more information about when you constructively receive income, see Accounting Methods in chapter 1. Can i electronic file my 1040x Advance rent. Can i electronic file my 1040x   Advance rent is any amount you receive before the period that it covers. Can i electronic file my 1040x 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. Can i electronic file my 1040x Example. Can i electronic file my 1040x You sign a 10-year lease to rent your property. Can i electronic file my 1040x In the first year, you receive $5,000 for the first year's rent and $5,000 as rent for the last year of the lease. Can i electronic file my 1040x You must include $10,000 in your income in the first year. Can i electronic file my 1040x Canceling a lease. Can i electronic file my 1040x   If your tenant pays you to cancel a lease, the amount you receive is rent. Can i electronic file my 1040x Include the payment in your income in the year you receive it regardless of your method of accounting. Can i electronic file my 1040x Expenses paid by tenant. Can i electronic file my 1040x   If your tenant pays any of your expenses, the payments are rental income. Can i electronic file my 1040x Because you must include this amount in income, you can deduct the expenses if they are deductible rental expenses. Can i electronic file my 1040x See Rental Expenses , later, for more information. Can i electronic file my 1040x Property or services. Can i electronic file my 1040x   If you receive property or services, instead of money, as rent, include the fair market value of the property or services in your rental income. Can i electronic file my 1040x   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. Can i electronic file my 1040x Security deposits. Can i electronic file my 1040x   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. Can i electronic file my 1040x 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. Can i electronic file my 1040x   If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. Can i electronic file my 1040x Include it in your income when you receive it. Can i electronic file my 1040x Part interest. Can i electronic file my 1040x   If you own a part interest in rental property, you must report your part of the rental income from the property. Can i electronic file my 1040x Rental of property also used as your home. Can i electronic file my 1040x   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. Can i electronic file my 1040x However, you can deduct on Schedule A (Form 1040) the interest, taxes, and casualty and theft losses that are allowed for nonrental property. Can i electronic file my 1040x See Personal Use of Dwelling Unit (Including Vacation Home) , later. Can i electronic file my 1040x Rental Expenses This part discusses expenses of renting property that you ordinarily can deduct from your rental income. Can i electronic file my 1040x It includes information on the expenses you can deduct if you rent part of your property, or if you change your property to rental use. Can i electronic file my 1040x Depreciation , which you can also deduct from your rental income, is discussed later. Can i electronic file my 1040x Personal use of rental property. Can i electronic file my 1040x   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. Can i electronic file my 1040x Also, your rental expense deductions may be limited. Can i electronic file my 1040x See Personal Use of Dwelling Unit (Including Vacation Home) , later. Can i electronic file my 1040x Part interest. Can i electronic file my 1040x   If you own a part interest in rental property, you can deduct expenses that you paid according to your percentage of ownership. Can i electronic file my 1040x When to deduct. Can i electronic file my 1040x   If you are a cash-basis taxpayer, you generally deduct your rental expenses in the year you pay them. Can i electronic file my 1040x Depreciation. Can i electronic file my 1040x   You can begin to depreciate rental property when it is ready and available for rent. Can i electronic file my 1040x See Placed-in-Service under When Does Depreciation Begin and End in chapter 2 of Publication 527. Can i electronic file my 1040x Pre-rental expenses. Can i electronic file my 1040x   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. Can i electronic file my 1040x Uncollected rent. Can i electronic file my 1040x   If you are a cash-basis taxpayer, do not deduct uncollected rent. Can i electronic file my 1040x Because you have not included it in your income, it is not deductible. Can i electronic file my 1040x Vacant rental property. Can i electronic file my 1040x   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. Can i electronic file my 1040x However, you cannot deduct any loss of rental income for the period the property is vacant. Can i electronic file my 1040x Vacant while listed for sale. Can i electronic file my 1040x   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. Can i electronic file my 1040x If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. Can i electronic file my 1040x 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. Can i electronic file my 1040x Improvements. Can i electronic file my 1040x   You must capitalize any expense you pay to improve your rental property. Can i electronic file my 1040x 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. Can i electronic file my 1040x Betterments. Can i electronic file my 1040x   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. Can i electronic file my 1040x Restoration. Can i electronic file my 1040x   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. Can i electronic file my 1040x Adaptation. Can i electronic file my 1040x   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. Can i electronic file my 1040x Separate the costs of repairs and improvements, and keep accurate records. Can i electronic file my 1040x You will need to know the cost of improvements when you sell or depreciate your property. Can i electronic file my 1040x The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. Can i electronic file my 1040x Other Expenses Other expenses you can deduct from your rental income include advertising, cleaning and maintenance, utilities, fire and liability insurance, taxes, interest, commissions for the collection of rent, ordinary and necessary travel and transportation, and other expenses, discussed next. Can i electronic file my 1040x Insurance premiums paid in advance. Can i electronic file my 1040x   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. Can i electronic file my 1040x You cannot deduct the total premium in the year you pay it. Can i electronic file my 1040x Legal and other professional fees. Can i electronic file my 1040x   You can deduct, as a rental expense, legal and other professional expenses, such as tax return preparation fees you paid to prepare Schedule E (Form 1040), Part I. Can i electronic file my 1040x For example, on your 2013 Schedule E, you can deduct fees paid in 2013 to prepare your 2012 Schedule E, Part I. Can i electronic file my 1040x 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. Can i electronic file my 1040x Local benefit taxes. Can i electronic file my 1040x   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. Can i electronic file my 1040x These charges are nondepreciable capital expenditures, and must be added to the basis of your property. Can i electronic file my 1040x However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. Can i electronic file my 1040x Local transportation expenses. Can i electronic file my 1040x    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. Can i electronic file my 1040x 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. Can i electronic file my 1040x See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. Can i electronic file my 1040x   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. Can i electronic file my 1040x For 2013, the standard mileage rate for business use is 56. Can i electronic file my 1040x 5 cents per mile. Can i electronic file my 1040x For more information, see chapter 26. Can i electronic file my 1040x    To deduct car expenses under either method, you must keep records that follow the rules in chapter 26. Can i electronic file my 1040x In addition, you must complete Form 4562, Part V, and attach it to your tax return. Can i electronic file my 1040x Rental of equipment. Can i electronic file my 1040x   You can deduct the rent you pay for equipment that you use for rental purposes. Can i electronic file my 1040x However, in some cases, lease contracts are actually purchase contracts. Can i electronic file my 1040x If so, you cannot deduct these payments. Can i electronic file my 1040x You can recover the cost of purchased equipment through depreciation. Can i electronic file my 1040x Rental of property. Can i electronic file my 1040x   You can deduct the rent you pay for property that you use for rental purposes. Can i electronic file my 1040x 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. Can i electronic file my 1040x Travel expenses. Can i electronic file my 1040x   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. Can i electronic file my 1040x You must properly allocate your expenses between rental and nonrental activities. Can i electronic file my 1040x You cannot deduct the cost of traveling away from home if the primary purpose of the trip was to improve your property. Can i electronic file my 1040x You recover the cost of improvements by taking depreciation. Can i electronic file my 1040x For information on travel expenses, see chapter 26. Can i electronic file my 1040x    To deduct travel expenses, you must keep records that follow the rules in chapter 26. Can i electronic file my 1040x   See Rental Expenses in Publication 527 for more information. Can i electronic file my 1040x Property Changed to Rental Use If you change your home or other property (or a part of it) to rental use at any time other than the beginning of your tax year, you must divide yearly expenses, such as taxes and insurance, between rental use and personal use. Can i electronic file my 1040x You can deduct as rental expenses only the part of the expense that is for the part of the year the property was used or held for rental purposes. Can i electronic file my 1040x You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. Can i electronic file my 1040x However, you can include the home mortgage interest, qualified mortgage insurance premiums, and real estate tax expenses for the part of the year the property was held for personal use as an itemized deduction on Schedule A (Form 1040). Can i electronic file my 1040x Example. Can i electronic file my 1040x Your tax year is the calendar year. Can i electronic file my 1040x You moved from your home in May and started renting it out on June 1. Can i electronic file my 1040x You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. Can i electronic file my 1040x Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. Can i electronic file my 1040x Renting Part of Property If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. Can i electronic file my 1040x You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). Can i electronic file my 1040x You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity or painting the outside of your house. Can i electronic file my 1040x There is no change in the types of expenses deductible for the personal-use part of your property. Can i electronic file my 1040x Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). Can i electronic file my 1040x You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. Can i electronic file my 1040x You do not have to divide the expenses that belong only to the rental part of your property. Can i electronic file my 1040x For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense. Can i electronic file my 1040x If you install a second phone line strictly for your tenants' use, all of the cost of the second line is deductible as a rental expense. Can i electronic file my 1040x You can deduct depreciation, discussed later, on the part of the house used for rental purposes as well as on the furniture and equipment you use for rental purposes. Can i electronic file my 1040x How to divide expenses. Can i electronic file my 1040x   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between the rental use and the personal use. Can i electronic file my 1040x You can use any reasonable method for dividing the expense. Can i electronic file my 1040x It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. Can i electronic file my 1040x The two most common methods for dividing an expense are based on (1) the number of rooms in your home, and (2) the square footage of your home. Can i electronic file my 1040x Not Rented for Profit If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. Can i electronic file my 1040x You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. Can i electronic file my 1040x For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Publication 535. Can i electronic file my 1040x Where to report. Can i electronic file my 1040x   Report your not-for-profit rental income on Form 1040, line 21. Can i electronic file my 1040x For example, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions. Can i electronic file my 1040x   If you itemize your deductions, claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on Form 1040, Schedule A, line 23. Can i electronic file my 1040x You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. Can i electronic file my 1040x Personal Use of Dwelling Unit (Including Vacation Home) If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. Can i electronic file my 1040x In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. Can i electronic file my 1040x Only your rental expenses may be deducted on Schedule E (Form 1040). Can i electronic file my 1040x Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). Can i electronic file my 1040x You must also determine if the dwelling unit is considered a home. Can i electronic file my 1040x The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. Can i electronic file my 1040x Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. Can i electronic file my 1040x There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year. Can i electronic file my 1040x Dwelling unit. Can i electronic file my 1040x   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. Can i electronic file my 1040x It also includes all structures or other property belonging to the dwelling unit. Can i electronic file my 1040x A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. Can i electronic file my 1040x   A dwelling unit does not include property used solely as a hotel, motel, inn, or similar establishment. Can i electronic file my 1040x Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. Can i electronic file my 1040x Example. Can i electronic file my 1040x   You rent a room in your home that is always available for short-term occupancy by paying customers. Can i electronic file my 1040x You do not use the room yourself, and you allow only paying customers to use the room. Can i electronic file my 1040x The room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. Can i electronic file my 1040x Dividing Expenses If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. Can i electronic file my 1040x When dividing your expenses, follow these rules. Can i electronic file my 1040x Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. Can i electronic file my 1040x This rule does not apply when determining whether you used the unit as a home. Can i electronic file my 1040x Any day that the unit is available for rent but not actually rented is not a day of rental use. Can i electronic file my 1040x Example. Can i electronic file my 1040x Your beach cottage was available for rent from June 1 through August 31 (92 days). Can i electronic file my 1040x During that time, except for the first week in August (7 days) when you were unable to find a renter, you rented the cottage at a fair rental price. Can i electronic file my 1040x The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. Can i electronic file my 1040x Your family also used the cottage during the last 2 weeks of May (14 days). Can i electronic file my 1040x The cottage was not used at all before May 17 or after August 31. Can i electronic file my 1040x You figure the part of the cottage expenses to treat as rental expenses as follows. Can i electronic file my 1040x The cottage was used for rental a total of 85 days (92 − 7). Can i electronic file my 1040x The days it was available for rent but not rented (7 days) are not days of rental use. Can i electronic file my 1040x The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. Can i electronic file my 1040x You used the cottage for personal purposes for 14 days (the last 2 weeks in May). Can i electronic file my 1040x The total use of the cottage was 99 days (14 days personal use + 85 days rental use). Can i electronic file my 1040x Your rental expenses are 85/99 (86%) of the cottage expenses. Can i electronic file my 1040x Note. Can i electronic file my 1040x When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. Can i electronic file my 1040x Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. Can i electronic file my 1040x Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. Can i electronic file my 1040x If you have a net loss, you may not be able to deduct all of the rental expenses. Can i electronic file my 1040x See Dwelling Unit Used as a Home, next. Can i electronic file my 1040x Dwelling Unit Used as a Home If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home. Can i electronic file my 1040x You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of: 14 days, or 10% of the total days it is rented to others at a fair rental price. Can i electronic file my 1040x See What is a day of personal use , later. Can i electronic file my 1040x Fair rental price. Can i electronic file my 1040x   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. Can i electronic file my 1040x The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. Can i electronic file my 1040x   If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price, do not count that day as a day of rental use in applying (2) above. Can i electronic file my 1040x Instead, count it as a day of personal use in applying both (1) and (2) above. Can i electronic file my 1040x What is a day of personal use?   A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons. Can i electronic file my 1040x You or any other person who has an interest in the unit, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). Can i electronic file my 1040x However, see Days used as a main home before or after renting , later. Can i electronic file my 1040x A member of your family or a member of the family of any other person who owns an interest in the unit, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Can i electronic file my 1040x Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. Can i electronic file my 1040x ), and lineal descendants (children, grandchildren, etc. Can i electronic file my 1040x ). Can i electronic file my 1040x Anyone under an arrangement that lets you use some other dwelling unit. Can i electronic file my 1040x Anyone at less than a fair rental price. Can i electronic file my 1040x Main home. Can i electronic file my 1040x   If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. Can i electronic file my 1040x Shared equity financing agreement. Can i electronic file my 1040x   This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. Can i electronic file my 1040x Donation of use of property. Can i electronic file my 1040x   You use a dwelling unit for personal purposes if: You donate the use of the unit to a charitable organization, The organization sells the use of the unit at a fund-raising event, and The “purchaser” uses the unit. Can i electronic file my 1040x Examples. Can i electronic file my 1040x   The following examples show how to determine days of personal use. Can i electronic file my 1040x Example 1. Can i electronic file my 1040x You and your neighbor are co-owners of a condominium at the beach. Can i electronic file my 1040x Last year, you rented the unit to vacationers whenever possible. Can i electronic file my 1040x The unit was not used as a main home by anyone. Can i electronic file my 1040x Your neighbor used the unit for 2 weeks last year; you did not use it at all. Can i electronic file my 1040x Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. Can i electronic file my 1040x Example 2. Can i electronic file my 1040x You and your neighbors are co-owners of a house under a shared equity financing agreement. Can i electronic file my 1040x Your neighbors live in the house and pay you a fair rental price. Can i electronic file my 1040x Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. Can i electronic file my 1040x This is because your neighbors rent the house as their main home under a shared equity financing agreement. Can i electronic file my 1040x Example 3. Can i electronic file my 1040x You own a rental property that you rent to your son. Can i electronic file my 1040x Your son does not own any interest in this property. Can i electronic file my 1040x He uses it as his main home and pays you a fair rental price. Can i electronic file my 1040x Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. Can i electronic file my 1040x Example 4. Can i electronic file my 1040x You rent your beach house to Joshua. Can i electronic file my 1040x Joshua rents his cabin in the mountains to you. Can i electronic file my 1040x You each pay a fair rental price. Can i electronic file my 1040x You are using your house for personal purposes on the days that Joshua uses it because your house is used by Joshua under an arrangement that allows you to use his house. Can i electronic file my 1040x Days used for repairs and maintenance. Can i electronic file my 1040x   Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. Can i electronic file my 1040x Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. Can i electronic file my 1040x Days used as a main home before or after renting. Can i electronic file my 1040x   For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. Can i electronic file my 1040x Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. Can i electronic file my 1040x You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold or exchanged the property. Can i electronic file my 1040x However, this special rule does not apply when dividing expenses between rental and personal use. Can i electronic file my 1040x Examples. Can i electronic file my 1040x   The following examples show how to determine whether you used your rental property as a home. Can i electronic file my 1040x Example 1. Can i electronic file my 1040x You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. Can i electronic file my 1040x You rented the basement apartment at a fair rental price to college students during the regular school year. Can i electronic file my 1040x You rented to them on a 9-month lease (273 days). Can i electronic file my 1040x You figured 10% of the total days rented to others at a fair rental price is 27 days. Can i electronic file my 1040x During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. Can i electronic file my 1040x Your basement apartment was used as a home because you used it for personal purposes for 30 days. Can i electronic file my 1040x Rent-free use by your brothers is considered personal use. Can i electronic file my 1040x Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). Can i electronic file my 1040x Example 2. Can i electronic file my 1040x You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). Can i electronic file my 1040x Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. Can i electronic file my 1040x You figured 10% of the total days rented to others at a fair rental price is 3 days. Can i electronic file my 1040x The room was used as a home because you used it for personal purposes for 21 days. Can i electronic file my 1040x That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). Can i electronic file my 1040x Example 3. Can i electronic file my 1040x You own a condominium apartment in a resort area. Can i electronic file my 1040x You rented it at a fair rental price for a total of 170 days during the year. Can i electronic file my 1040x For 12 of those days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. Can i electronic file my 1040x Your family actually used the apartment for 10 of those days. Can i electronic file my 1040x Therefore, the apartment is treated as having been rented for 160 (170 − 10) days. Can i electronic file my 1040x You figured 10% of the total days rented to others at a fair rental price is 16 days. Can i electronic file my 1040x Your family also used the apartment for 7 other days during the year. Can i electronic file my 1040x You used the apartment as a home because you used it for personal purposes for 17 days. Can i electronic file my 1040x That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). Can i electronic file my 1040x Minimal rental use. Can i electronic file my 1040x   If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. Can i electronic file my 1040x See Used as a home but rented less than 15 days , later, for more information. Can i electronic file my 1040x Limit on deductions. Can i electronic file my 1040x   Renting a dwelling unit that is considered a home is not a passive activity. Can i electronic file my 1040x Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. Can i electronic file my 1040x The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. Can i electronic file my 1040x Any expenses carried forward to the next year will be subject to any limits that apply for that year. Can i electronic file my 1040x This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year. Can i electronic file my 1040x   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 9-1. Can i electronic file my 1040x Reporting Income and Deductions Property not used for personal purposes. Can i electronic file my 1040x   If you do not use a dwelling unit for personal purposes, see How To Report Rental Income and Expenses , later, for how to report your rental income and expenses. Can i electronic file my 1040x Property used for personal purposes. Can i electronic file my 1040x   If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home. Can i electronic file my 1040x Not used as a home. Can i electronic file my 1040x   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. Can i electronic file my 1040x Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . Can i electronic file my 1040x The expenses for personal use are not deductible as rental expenses. Can i electronic file my 1040x   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses , later. Can i electronic file my 1040x Used as a home but rented less than 15 days. Can i electronic file my 1040x   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). Can i electronic file my 1040x You are not required to report the rental income and rental expenses from this activity. Can i electronic file my 1040x The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). Can i electronic file my 1040x See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. Can i electronic file my 1040x Used as a home and rented 15 days or more. Can i electronic file my 1040x   If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. Can i electronic file my 1040x Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . Can i electronic file my 1040x The expenses for personal use are not deductible as rental expenses. Can i electronic file my 1040x   If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. Can i electronic file my 1040x You do not need to use Worksheet 9-1. Can i electronic file my 1040x   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. Can i electronic file my 1040x To figure your deductible rental expenses and any carryover to next year, use Worksheet 9-1. Can i electronic file my 1040x Depreciation You recover the cost of income-producing property through yearly tax deductions. Can i electronic file my 1040x You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. Can i electronic file my 1040x Three factors determine how much depreciation you can deduct each year: (1) your basis in the property, (2) the recovery period for the property, and (3) the depreciation method used. Can i electronic file my 1040x You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures, and equipment, as an expense. Can i electronic file my 1040x You can deduct depreciation only on the part of your property used for rental purposes. Can i electronic file my 1040x Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. Can i electronic file my 1040x You may have to use Form 4562 to figure and report your depreciation. Can i electronic file my 1040x See How To Report Rental Income and Expenses , later. Can i electronic file my 1040x Alternative minimum tax (AMT). Can i electronic file my 1040x    If you use accelerated depreciation, you may be subject to the AMT. Can i electronic file my 1040x Accelerated depreciation allows you to deduct more depreciation earlier in the recovery period than you could deduct using a straight line method (same deduction each year). Can i electronic file my 1040x Claiming the correct amount of depreciation. Can i electronic file my 1040x   You should claim the correct amount of depreciation each tax year. Can i electronic file my 1040x If you did not claim all the depreciation you were entitled to deduct, you must still reduce your basis in the property by the full amount of depreciation that you could have deducted. Can i electronic file my 1040x   If you deducted an incorrect amount of depreciation for property in any year, you may be able to make a correction by filing Form 1040X, Amended U. Can i electronic file my 1040x S Individual Income Tax Return. Can i electronic file my 1040x If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amount of depreciation. Can i electronic file my 1040x See Claiming the correct amount of depreciation in chapter 2 of Publication 527 for more information. Can i electronic file my 1040x Changing your accounting method to deduct unclaimed depreciation. Can i electronic file my 1040x   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. Can i electronic file my 1040x In some instances, that consent is automatic. Can i electronic file my 1040x For more information, see chapter 1 of Publication 946. Can i electronic file my 1040x Land. Can i electronic file my 1040x   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. Can i electronic file my 1040x The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. Can i electronic file my 1040x More information. Can i electronic file my 1040x   See Publication 527 for more information about depreciating rental property and see Publication 946 for more information about depreciation. Can i electronic file my 1040x Limits on Rental Losses If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can deduct. Can i electronic file my 1040x You must consider these rules in the order shown below. Can i electronic file my 1040x At-risk rules. Can i electronic file my 1040x These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. Can i electronic file my 1040x This applies only if the real property was placed in service after 1986. Can i electronic file my 1040x Passive activity limits. Can i electronic file my 1040x Generally, rental real estate activities are considered passive activities and losses are not deductible unless you have income from other passive activities to offset them. Can i electronic file my 1040x However, there are exceptions. Can i electronic file my 1040x At-Risk Rules You may be subject to the at-risk rules if you have: A loss from an activity carried on as a trade or business or for the production of income, and Amounts invested in the activity for which you are not fully at risk. Can i electronic file my 1040x Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. Can i electronic file my 1040x In most cases, any loss from an activity subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year. Can i electronic file my 1040x You are considered at risk in an activity to the extent of cash and the adjusted basis of other property you contributed to the activity and certain amounts borrowed for use in the activity. Can i electronic file my 1040x See Publication 925 for more information. Can i electronic file my 1040x Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. Can i electronic file my 1040x For this purpose, a rental activity is an activity from which you receive income mainly for the use of tangible property, rather than for services. Can i electronic file my 1040x Limits on passive activity deductions and credits. Can i electronic file my 1040x    Deductions or losses from passive activities are limited. Can i electronic file my 1040x You generally cannot offset income, other than passive income, with losses from passive activities. Can i electronic file my 1040x Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. Can i electronic file my 1040x Any excess loss or credit is carried forward to the next tax year. Can i electronic file my 1040x   For a detailed discussion of these rules, see Publication 925. Can i electronic file my 1040x    You may have to complete Form 8582 to figure the amount of any passive activity loss for the current tax year for all activities and the amount of the passive activity loss allowed on your tax return. Can i electronic file my 1040x Real estate professionals. Can i electronic file my 1040x   Rental activities in which you materially participated during the year are not passive activities if, for that year, you were a real estate professional. Can i electronic file my 1040x For a detailed discussion of the requirements, see Publication 527. Can i electronic file my 1040x For a detailed discussion of material participation, see Publication 925. Can i electronic file my 1040x Exception for Personal Use of Dwelling Unit If you used the rental property as a home during the year, any income, deductions, gain, or loss allocable to such use shall not be taken into account for purposes of the passive activity loss limitation. Can i electronic file my 1040x Instead, follow the rules explained in Personal Use of Dwelling Unit (Including Vacation Home), earlier. Can i electronic file my 1040x Exception for Rental Real Estate Activities With Active Participation If you or your spouse actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. Can i electronic file my 1040x This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. Can i electronic file my 1040x Similarly, you may be able to offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. Can i electronic file my 1040x Active participation. Can i electronic file my 1040x   You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. Can i electronic file my 1040x Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. Can i electronic file my 1040x Maximum special allowance. Can i electronic file my 1040x   The maximum special allowance is: $25,000 for single individuals and married individuals filing a joint return for the tax year, $12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year, and $25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified. Can i electronic file my 1040x   If your modified adjusted gross income (MAGI) is $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to the amount specified above. Can i electronic file my 1040x If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI. Can i electronic file my 1040x   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. Can i electronic file my 1040x More information. Can i electronic file my 1040x   See Publication 925 for more information on the passive loss limits, including information on the treatment of unused disallowed passive losses and credits and the treatment of gains and losses realized on the disposition of a passive activity. Can i electronic file my 1040x How To Report Rental Income and Expenses The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). Can i electronic file my 1040x However, do not use that schedule to report a not-for-profit activity. Can i electronic file my 1040x See Not Rented for Profit, earlier. Can i electronic file my 1040x Providing substantial services. Can i electronic file my 1040x   If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business (Sole Proprietorship). Can i electronic file my 1040x Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. Can i electronic file my 1040x For information, see Publication 334, Tax Guide for Small Business. Can i electronic file my 1040x You also may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. Can i electronic file my 1040x   Use Form 1065, U. Can i electronic file my 1040x S. Can i electronic file my 1040x Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). Can i electronic file my 1040x Qualified joint venture. Can i electronic file my 1040x   If you and your spouse each materially participate as the only members of a jointly owned and operated real estate business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. Can i electronic file my 1040x This election, in most cases, will not increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage if your rental income is subject to self-employment tax. Can i electronic file my 1040x For more information, see Publication 527. Can i electronic file my 1040x Form 1098, Mortgage Interest Statement. Can i electronic file my 1040x    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. Can i electronic file my 1040x 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. Can i electronic file my 1040x Attach a statement to your return showing the name and address of the other person. Can i electronic file my 1040x In the left margin of Schedule E, next to line 13, enter “See attached. Can i electronic file my 1040x ” Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. Can i electronic file my 1040x , you normally report your rental income and expenses on Schedule E, Part I. Can i electronic file my 1040x List your total income, expenses, and depreciation for each rental property. Can i electronic file my 1040x Be sure to enter the number of fair rental and personal use days on line 2. Can i electronic file my 1040x If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. Can i electronic file my 1040x Complete lines 1 and 2 for each property. Can i electronic file my 1040x However, fill in lines 23a through 26 on only one Schedule E. Can i electronic file my 1040x On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. Can i electronic file my 1040x To find out if you need to attach Form 4562, see Form 4562, in chapter 3 of Publication 527. Can i electronic file my 1040x If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. Can i electronic file my 1040x Form 6198, At-Risk Limitations. Can i electronic file my 1040x See At-Risk Rules , earlier. Can i electronic file my 1040x Also see Publication 925. Can i electronic file my 1040x Form 8582, Passive Activity Loss Limitations. Can i electronic file my 1040x See Passive Activity Limits , earlier. Can i electronic file my 1040x Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. Can i electronic file my 1040x If you need to use page 2 of Schedule E, be sure to use page 2 of the same Schedule E you used to enter your rental activity on page 1. Can i electronic file my 1040x Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). Can i electronic file my 1040x Worksheet 9-1. Can i electronic file my 1040x Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Use this worksheet only if you answer “yes” to all of the following questions. Can i electronic file my 1040x Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . Can i electronic file my 1040x ) Did you rent the dwelling unit at a fair rental price 15 days or more this year? Is the total of your rental expenses and depreciation more than your rental income? PART I. Can i electronic file my 1040x Rental Use Percentage A. Can i electronic file my 1040x Total days available for rent at fair rental price A. Can i electronic file my 1040x       B. Can i electronic file my 1040x Total days available for rent (line A) but not rented B. Can i electronic file my 1040x       C. Can i electronic file my 1040x Total days of rental use. Can i electronic file my 1040x Subtract line B from line A C. Can i electronic file my 1040x       D. Can i electronic file my 1040x Total days of personal use (including days rented at less than fair rental price) D. Can i electronic file my 1040x       E. Can i electronic file my 1040x Total days of rental and personal use. Can i electronic file my 1040x Add lines C and D E. Can i electronic file my 1040x       F. Can i electronic file my 1040x Percentage of expenses allowed for rental. Can i electronic file my 1040x Divide line C by line E     F. Can i electronic file my 1040x   PART II. Can i electronic file my 1040x Allowable Rental Expenses 1. Can i electronic file my 1040x Enter rents received 1. Can i electronic file my 1040x   2a. Can i electronic file my 1040x Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. Can i electronic file my 1040x       b. Can i electronic file my 1040x Enter the rental portion of real estate taxes b. Can i electronic file my 1040x       c. Can i electronic file my 1040x Enter the rental portion of deductible casualty and theft losses (see instructions) c. Can i electronic file my 1040x       d. Can i electronic file my 1040x Enter direct rental expenses (see instructions) d. Can i electronic file my 1040x       e. Can i electronic file my 1040x Fully deductible rental expenses. Can i electronic file my 1040x Add lines 2a–2d. Can i electronic file my 1040x Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. Can i electronic file my 1040x   3. Can i electronic file my 1040x Subtract line 2e from line 1. Can i electronic file my 1040x If zero or less, enter -0- 3. Can i electronic file my 1040x   4a. Can i electronic file my 1040x Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. Can i electronic file my 1040x       b. Can i electronic file my 1040x Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. Can i electronic file my 1040x       c. Can i electronic file my 1040x Carryover of operating expenses from 2012 worksheet c. Can i electronic file my 1040x       d. Can i electronic file my 1040x Add lines 4a–4c d. Can i electronic file my 1040x       e. Can i electronic file my 1040x Allowable expenses. Can i electronic file my 1040x Enter the smaller of line 3 or line 4d (see instructions) 4e. Can i electronic file my 1040x   5. Can i electronic file my 1040x Subtract line 4e from line 3. Can i electronic file my 1040x If zero or less, enter -0- 5. Can i electronic file my 1040x   6a. Can i electronic file my 1040x Enter the rental portion of excess casualty and theft losses (see instructions) 6a. Can i electronic file my 1040x       b. Can i electronic file my 1040x Enter the rental portion of depreciation of the dwelling unit b. Can i electronic file my 1040x       c. Can i electronic file my 1040x Carryover of excess casualty losses and depreciation from 2012 worksheet c. Can i electronic file my 1040x       d. Can i electronic file my 1040x Add lines 6a–6c d. Can i electronic file my 1040x       e. Can i electronic file my 1040x Allowable excess casualty and theft losses and depreciation. Can i electronic file my 1040x Enter the smaller of  line 5 or line 6d (see instructions) 6e. Can i electronic file my 1040x   PART III. Can i electronic file my 1040x Carryover of Unallowed Expenses to Next Year 7a. Can i electronic file my 1040x Operating expenses to be carried over to next year. Can i electronic file my 1040x Subtract line 4e from line 4d 7a. Can i electronic file my 1040x   b. Can i electronic file my 1040x Excess casualty and theft losses and depreciation to be carried over to next year. Can i electronic file my 1040x  Subtract line 6e from line 6d b. Can i electronic file my 1040x   Worksheet 9-1 Instructions. Can i electronic file my 1040x Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. Can i electronic file my 1040x Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4b, and 6a–6b of  Part II. Can i electronic file my 1040x Line 2a. Can i electronic file my 1040x Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. Can i electronic file my 1040x Do not include interest on a loan that did not benefit the dwelling unit. Can i electronic file my 1040x For example, do not include interest on a home equity loan used to pay off credit cards or other personal loans, buy a car, or pay college tuition. Can i electronic file my 1040x Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. Can i electronic file my 1040x Include the rental portion of this interest in the total you enter on line 2a of the worksheet. Can i electronic file my 1040x   Figure the qualified mortgage insurance premiums on the dwelling unit that you could deduct on line 13 of Schedule A as if you had not rented the unit. Can i electronic file my 1040x See the Schedule A instructions. Can i electronic file my 1040x However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. Can i electronic file my 1040x See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. Can i electronic file my 1040x Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. Can i electronic file my 1040x   Note. Can i electronic file my 1040x Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. Can i electronic file my 1040x Instead, figure the personal portion on a separate Schedule A. Can i electronic file my 1040x If you have deducted mortgage interest or qualified mortgage insurance premiums on the dwelling unit on other forms, such as Schedule C or F, remember to reduce your Schedule A deduction by that amount. Can i electronic file my 1040x           Line 2c. Can i electronic file my 1040x Figure the casualty and theft losses related to the dwelling unit that you could deduct on Schedule A as if you had not rented the dwelling unit. Can i electronic file my 1040x To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. Can i electronic file my 1040x If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. Can i electronic file my 1040x On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. Can i electronic file my 1040x Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. Can i electronic file my 1040x   Note. Can i electronic file my 1040x Do not file this Form 4684 or use it to figure your personal losses on Schedule A. Can i electronic file my 1040x Instead, figure the personal portion on a separate Form 4684. Can i electronic file my 1040x           Line 2d. Can i electronic file my 1040x Enter the total of your rental expenses that are directly related only to the rental activity. Can i electronic file my 1040x These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. Can i electronic file my 1040x Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. Can i electronic file my 1040x           Line 2e. Can i electronic file my 1040x You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses on Schedule E even if your rental expenses are more than your rental income. Can i electronic file my 1040x Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. Can i electronic file my 1040x           Line 4b. Can i electronic file my 1040x On line 2a, you entered the rental portion of the mortgage interest and qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. Can i electronic file my 1040x If you had additional mortgage interest and qualified mortgage insurance premiums that would not be deductible on Schedule A because of limits imposed on them, enter on line 4b of this worksheet the rental portion of those excess amounts. Can i electronic file my 1040x Do not include interest on a loan that did not benefit the dwelling unit (as explained in the line 2a instructions). Can i electronic file my 1040x           Line 4e. Can i electronic file my 1040x You can deduct the amounts on lines 4a, 4b, and 4c as rental expenses on Schedule E only to the extent they are not more than the amount on line 4e. Can i electronic file my 1040x *           Line 6a. Can i electronic file my 1040x To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. Can i electronic file my 1040x   A. Can i electronic file my 1040x Enter the amount from Form 4684, line 10       B. Can i electronic file my 1040x Enter the rental portion of line A       C. Can i electronic file my 1040x Enter the amount from line 2c of this worksheet       D. Can i electronic file my 1040x Subtract line C from line B. Can i electronic file my 1040x Enter the result here and on line 6a of this worksheet               Line 6e. Can i electronic file my 1040x You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses on Schedule E only to the extent they are not more than the amount on line 6e. Can i electronic file my 1040x * *Allocating the limited deduction. Can i electronic file my 1040x If you cannot deduct all of the amount on line 4d or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4d or 6d. Can i electronic file my 1040x Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. Can i electronic file my 1040x Prev  Up  Next   Home   More Online Publications