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Can I File 2011 Taxes Online

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Can I File 2011 Taxes Online

Can i file 2011 taxes online 2. Can i file 2011 taxes online   Taxable and Nontaxable Income Table of Contents Compensation for Services Retirement Plan DistributionsIndividual Retirement Arrangements (IRAs) Pensions and Annuities Social Security and Equivalent Railroad Retirement BenefitsAre Any of Your Benefits Taxable? How Much Is Taxable? How To Report Your Benefits Lump-Sum Election Repayments More Than Gross Benefits Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits Life Insurance ProceedsInstallments for life. Can i file 2011 taxes online Surviving spouse. Can i file 2011 taxes online Endowment Contract Proceeds Accelerated Death Benefits Sale of HomeMaximum Amount of Exclusion Ownership and Use Tests Married Persons Business Use or Rental of Home Reporting the Sale Reverse Mortgages Other ItemsWelfare benefits. Can i file 2011 taxes online Payments from a state fund for victims of crime. Can i file 2011 taxes online Home Affordable Modification Program (HAMP). Can i file 2011 taxes online Mortgage assistance payments. Can i file 2011 taxes online Payments to reduce cost of winter energy use. Can i file 2011 taxes online Nutrition Program for the Elderly. Can i file 2011 taxes online Reemployment Trade Adjustment Assistance (RTAA). Can i file 2011 taxes online Generally, income is taxable unless it is specifically exempt (not taxed) by law. Can i file 2011 taxes online Your taxable income may include compensation for services, interest, dividends, rents, royalties, income from partnerships, estate or trust income, gain from sales or exchanges of property, and business income of all kinds. Can i file 2011 taxes online Under special provisions of the law, certain items are partially or fully exempt from tax. Can i file 2011 taxes online Provisions that are of special interest to older taxpayers are discussed in this chapter. Can i file 2011 taxes online Compensation for Services Generally, you must include in gross income everything you receive in payment for personal services. Can i file 2011 taxes online In addition to wages, salaries, commissions, fees, and tips, this includes other forms of compensation such as fringe benefits and stock options. Can i file 2011 taxes online You need not receive the compensation in cash for it to be taxable. Can i file 2011 taxes online Payments you receive in the form of goods or services generally must be included in gross income at their fair market value. Can i file 2011 taxes online Volunteer work. Can i file 2011 taxes online   Do not include in your gross income amounts you receive for supportive services or reimbursements for out-of-pocket expenses under any of the following volunteer programs. Can i file 2011 taxes online Retired Senior Volunteer Program (RSVP). Can i file 2011 taxes online Foster Grandparent Program. Can i file 2011 taxes online Senior Companion Program. Can i file 2011 taxes online Service Corps of Retired Executives (SCORE). Can i file 2011 taxes online Unemployment compensation. Can i file 2011 taxes online   You must include in income all unemployment compensation you or your spouse (if married filing jointly) received. Can i file 2011 taxes online More information. Can i file 2011 taxes online   See Publication 525, Taxable and Nontaxable Income, for more detailed information on specific types of income. Can i file 2011 taxes online Retirement Plan Distributions This section summarizes the tax treatment of amounts you receive from traditional individual retirement arrangements (IRA), employee pensions or annuities, and disability pensions or annuities. Can i file 2011 taxes online A traditional IRA is any IRA that is not a Roth or SIMPLE IRA. Can i file 2011 taxes online A Roth IRA is an individual retirement plan that can be either an account or an annuity and features nondeductible contributions and tax-free distributions. Can i file 2011 taxes online A SIMPLE IRA is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. Can i file 2011 taxes online More detailed information can be found in Publication 590, Individual Retirement Arrangements (IRAs), and Publication 575, Pension and Annuity Income. Can i file 2011 taxes online Individual Retirement Arrangements (IRAs) In general, distributions from a traditional IRA are taxable in the year you receive them. Can i file 2011 taxes online Exceptions to the general rule are rollovers, tax-free withdrawals of contributions, and the return of nondeductible contributions. Can i file 2011 taxes online These are discussed in Publication 590. Can i file 2011 taxes online If you made nondeductible contributions to a traditional IRA, you must file Form 8606, Nondeductible IRAs. Can i file 2011 taxes online If you do not file Form 8606 with your return, you may have to pay a $50 penalty. Can i file 2011 taxes online Also, when you receive distributions from your traditional IRA, the amounts will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. Can i file 2011 taxes online Early distributions. Can i file 2011 taxes online   Generally, early distributions are amounts distributed from your traditional IRA account or annuity before you are age 59½, or amounts you receive when you cash in retirement bonds before you are age  59½. Can i file 2011 taxes online You must include early distributions of taxable amounts in your gross income. Can i file 2011 taxes online These taxable amounts are also subject to an additional 10% tax unless the distribution qualifies for an exception. Can i file 2011 taxes online For purposes of the additional 10% tax, an IRA is a qualified retirement plan. Can i file 2011 taxes online For more information about this tax, see Tax on Early Distributions under Pensions and Annuities, later. Can i file 2011 taxes online After age 59½ and before age 70½. Can i file 2011 taxes online   After you reach age 59½, you can receive distributions from your traditional IRA without having to pay the 10% additional tax. Can i file 2011 taxes online Even though you can receive distributions after you reach age 59½, distributions are not required until you reach  age 70½. Can i file 2011 taxes online Required distributions. Can i file 2011 taxes online   If you are the owner of a traditional IRA, you generally must receive the entire balance in your IRA or start receiving periodic distributions from your IRA by April 1 of the year following the year in which you reach age 70½. Can i file 2011 taxes online See When Must You Withdraw Assets? (Required Minimum Distributions) in Publication 590. Can i file 2011 taxes online If distributions from your traditional IRA(s) are less than the required minimum distribution for the year, you may have to pay a 50% excise tax for that year on the amount not distributed as required. Can i file 2011 taxes online For purposes of the 50% excise tax, an IRA is a qualified retirement plan. Can i file 2011 taxes online For more information about this tax, see Tax on Excess Accumulation under Pensions and Annuities, later. Can i file 2011 taxes online See also Excess Accumulations (Insufficient Distributions) in Publication 590. Can i file 2011 taxes online Pensions and Annuities Generally, if you did not pay any part of the cost of your employee pension or annuity, and your employer did not withhold part of the cost of the contract from your pay while you worked, the amounts you receive each year are fully taxable. Can i file 2011 taxes online However, see Insurance Premiums for Retired Public Safety Officers , later. Can i file 2011 taxes online If you paid part of the cost of your pension or annuity plan (see Cost , later), you can exclude part of each annuity payment from income as a recovery of your cost (investment in the contract). Can i file 2011 taxes online This tax-free part of the payment is figured when your annuity starts and remains the same each year, even if the amount of the payment changes. Can i file 2011 taxes online The rest of each payment is taxable. Can i file 2011 taxes online However, see Insurance Premiums for Retired Public Safety Officers , later. Can i file 2011 taxes online You figure the tax-free part of the payment using one of the following methods. Can i file 2011 taxes online Simplified Method. Can i file 2011 taxes online You generally must use this method if your annuity is paid under a qualified plan (a qualified employee plan, a qualified employee annuity, or a tax-sheltered annuity plan or contract). Can i file 2011 taxes online You cannot use this method if your annuity is paid under a nonqualified plan. Can i file 2011 taxes online General Rule. Can i file 2011 taxes online You must use this method if your annuity is paid under a nonqualified plan. Can i file 2011 taxes online You generally cannot use this method if your annuity is paid under a qualified plan. Can i file 2011 taxes online Contact your employer or plan administrator to find out if your pension or annuity is paid under a qualified or nonqualified plan. Can i file 2011 taxes online You determine which method to use when you first begin receiving your annuity, and you continue using it each year that you recover part of your cost. Can i file 2011 taxes online Exclusion limit. Can i file 2011 taxes online   If your annuity starting date is after 1986, the total amount of annuity income you can exclude over the years as a recovery of the cost cannot exceed your total cost. Can i file 2011 taxes online Any unrecovered cost at your (or the last annuitant's) death is allowed as a miscellaneous itemized deduction on the final return of the decedent. Can i file 2011 taxes online This deduction is not subject to the 2%-of-adjusted-gross-income limit on miscellaneous deductions. Can i file 2011 taxes online   If you contributed to your pension or annuity and your annuity starting date is before 1987, you can continue to take your monthly exclusion for as long as you receive your annuity. Can i file 2011 taxes online If you chose a joint and survivor annuity, your survivor can continue to take the survivor's exclusion figured as of the annuity starting date. Can i file 2011 taxes online The total exclusion may be more than your cost. Can i file 2011 taxes online Cost. Can i file 2011 taxes online   Before you can figure how much, if any, of your pension or annuity benefits are taxable, you must determine your cost in the plan (your investment in the contract). Can i file 2011 taxes online Your total cost in the plan includes everything that you paid. Can i file 2011 taxes online It also includes amounts your employer contributed that were taxable to you when paid. Can i file 2011 taxes online However, see Foreign employment contributions , later. Can i file 2011 taxes online   From this total cost, subtract any refunded premiums, rebates, dividends, unrepaid loans, or other tax-free amounts you received by the later of the annuity starting date or the date on which you received your first payment. Can i file 2011 taxes online   The annuity starting date is the later of the first day of the first period for which you received a payment from the plan or the date on which the plan's obligations became fixed. Can i file 2011 taxes online    The amount of your contributions to the plan may be shown in box 9b of any Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Can i file 2011 taxes online , that you receive. Can i file 2011 taxes online Foreign employment contributions. Can i file 2011 taxes online   If you worked abroad, certain amounts your employer paid into your retirement plan that were not includible in your gross income may be considered part of your cost. Can i file 2011 taxes online For details, see Foreign employment contributions in Publication 575. Can i file 2011 taxes online Withholding. Can i file 2011 taxes online   The payer of your pension, profit-sharing, stock bonus, annuity, or deferred compensation plan will withhold income tax on the taxable part of amounts paid to you. Can i file 2011 taxes online However, you can choose not to have tax withheld on the payments you receive, unless they are eligible rollover distributions. Can i file 2011 taxes online (These are distributions that are eligible for rollover treatment but are not paid directly to another qualified retirement plan or to a traditional IRA. Can i file 2011 taxes online ) See Withholding Tax and Estimated Tax and Rollovers in Publication 575 for more information. Can i file 2011 taxes online   For payments other than eligible rollover distributions, you can tell the payer how much to withhold by filing a Form W-4P, Withholding Certificate for Pension or Annuity Payments. Can i file 2011 taxes online Simplified Method. Can i file 2011 taxes online   Under the Simplified Method, you figure the tax-free part of each annuity payment by dividing your cost by the total number of anticipated monthly payments. Can i file 2011 taxes online For an annuity that is payable over the lives of the annuitants, this number is based on the annuitants' ages on the annuity starting date and is determined from a table. Can i file 2011 taxes online For any other annuity, this number is the number of monthly annuity payments under the contract. Can i file 2011 taxes online Who must use the Simplified Method. Can i file 2011 taxes online   You must use the Simplified Method if your annuity starting date is after November 18, 1996, and you receive your pension or annuity payments from a qualified plan or annuity, unless you were at least 75 years old and entitled to at least 5 years of guaranteed payments (defined next). Can i file 2011 taxes online   In addition, if your annuity starting date is after July 1, 1986, and before November 19, 1996, you could have chosen to use the Simplified Method for payments from a qualified plan, unless you were at least 75 years old and entitled to at least 5 years of guaranteed payments. Can i file 2011 taxes online If you chose to use the Simplified Method, you must continue to use it each year that you recover part of your cost. Can i file 2011 taxes online Guaranteed payments. Can i file 2011 taxes online   Your annuity contract provides guaranteed payments if a minimum number of payments or a minimum amount (for example, the amount of your investment) is payable even if you and any survivor annuitant do not live to receive the minimum. Can i file 2011 taxes online If the minimum amount is less than the total amount of the payments you are to receive, barring death, during the first 5 years after payments begin (figured by ignoring any payment increases), you are entitled to less than 5 years of guaranteed payments. Can i file 2011 taxes online Who cannot use the Simplified Method. Can i file 2011 taxes online   You cannot use the Simplified Method and must use the General Rule if you receive pension or annuity payments from: A nonqualified plan, such as a private annuity, a purchased commercial annuity, or a nonqualified employee plan, or A qualified plan if you are age 75 or older on your annuity starting date and you are entitled to at least 5 years of guaranteed payments (defined above). Can i file 2011 taxes online   In addition, you had to use the General Rule for either circumstance described above if your annuity starting date is after July 1, 1986, and before November 19, 1996. Can i file 2011 taxes online If you did not have to use the General Rule, you could have chosen to use it. Can i file 2011 taxes online You also had to use the General Rule for payments from a qualified plan if your annuity starting date is before July 2, 1986, and you did not qualify to use the Three-Year Rule. Can i file 2011 taxes online   If you had to use the General Rule (or chose to use it), you must continue to use it each year that you recover your cost. Can i file 2011 taxes online   Unless your annuity starting date was before 1987, once you have recovered all of your non-taxable investment, all of each remaining payment you receive is fully taxable. Can i file 2011 taxes online Once your remaining payments are fully taxable, there is no longer a concern with the General Rule or Simplified Method. Can i file 2011 taxes online   Complete information on the General Rule, including the actuarial tables you need, is contained in Publication 939, General Rule for Pensions and Annuities. Can i file 2011 taxes online How to use the Simplified Method. Can i file 2011 taxes online   Complete the Simplified Method Worksheet in the Form 1040, Form 1040A, or Form 1040NR instructions or in Publication 575 to figure your taxable annuity for 2013. Can i file 2011 taxes online Be sure to keep the completed worksheet; it will help you figure your taxable annuity next year. Can i file 2011 taxes online   To complete line 3 of the worksheet, you must determine the total number of expected monthly payments for your annuity. Can i file 2011 taxes online How you do this depends on whether the annuity is for a single life, multiple lives, or a fixed period. Can i file 2011 taxes online For this purpose, treat an annuity that is payable over the life of an annuitant as payable for that annuitant's life even if the annuity has a fixed-period feature or also provides a temporary annuity payable to the annuitant's child under age 25. Can i file 2011 taxes online    You do not need to complete line 3 of the worksheet or make the computation on line 4 if you received annuity payments last year and used last year's worksheet to figure your taxable annuity. Can i file 2011 taxes online Instead, enter the amount from line 4 of last year's worksheet on line 4 of this year's worksheet. Can i file 2011 taxes online Single-life annuity. Can i file 2011 taxes online   If your annuity is payable for your life alone, use Table 1 at the bottom of the worksheet to determine the total number of expected monthly payments. Can i file 2011 taxes online Enter on line 3 the number shown for your age on your annuity starting date. Can i file 2011 taxes online This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. Can i file 2011 taxes online Multiple-lives annuity. Can i file 2011 taxes online   If your annuity is payable for the lives of more than one annuitant, use Table 2 at the bottom of the worksheet to determine the total number of expected monthly payments. Can i file 2011 taxes online Enter on line 3 the number shown for the annuitants' combined ages on the annuity starting date. Can i file 2011 taxes online For an annuity payable to you as the primary annuitant and to more than one survivor annuitant, combine your age and the age of the youngest survivor annuitant. Can i file 2011 taxes online For an annuity that has no primary annuitant and is payable to you and others as survivor annuitants, combine the ages of the oldest and youngest annuitants. Can i file 2011 taxes online Do not treat as a survivor annuitant anyone whose entitlement to payments depends on an event other than the primary annuitant's death. Can i file 2011 taxes online   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. Can i file 2011 taxes online Instead, you must use Table 1 at the bottom of the worksheet and enter on line 3 the number shown for the primary annuitant's age on the annuity starting date. Can i file 2011 taxes online This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. Can i file 2011 taxes online Fixed-period annuities. Can i file 2011 taxes online   If your annuity does not depend in whole or in part on anyone's life expectancy, the total number of expected monthly payments to enter on line 3 of the worksheet is the number of monthly annuity payments under the contract. Can i file 2011 taxes online Line 6. Can i file 2011 taxes online   The amount on line 6 should include all amounts that could have been recovered in prior years. Can i file 2011 taxes online If you did not recover an amount in a prior year, you may be able to amend your returns for the affected years. Can i file 2011 taxes online    Be sure to keep a copy of the completed worksheet; it will help you figure your taxable annuity in later years. Can i file 2011 taxes online Example. Can i file 2011 taxes online Bill Smith, age 65, began receiving retirement benefits in 2013, under a joint and survivor annuity. Can i file 2011 taxes online Bill's annuity starting date is January 1, 2013. Can i file 2011 taxes online The benefits are to be paid over the joint lives of Bill and his wife, Kathy, age 65. Can i file 2011 taxes online Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. Can i file 2011 taxes online Bill is to receive a retirement benefit of $1,200 a month, and Kathy is to receive a monthly survivor benefit of $600 upon Bill's death. Can i file 2011 taxes online Bill must use the Simplified Method to figure his taxable annuity because his payments are from a qualified plan and he is under age 75. Can i file 2011 taxes online See the illustrated Worksheet 2-A, Simplified Method Worksheet, later. Can i file 2011 taxes online You can find a blank version of this worksheet in Publication 575. Can i file 2011 taxes online (The references in the illustrated worksheet are to sections in Publication 575). Can i file 2011 taxes online His annuity is payable over the lives of more than one annuitant, so Bill uses his and Kathy's combined ages, 130 (65 + 65), and Table 2 at the bottom of the worksheet in completing line 3 of the worksheet and finds the line 3 amount to be 310. Can i file 2011 taxes online Bill's tax-free monthly amount is $100 ($31,000 ÷ 310 as shown on line 4 of the worksheet). Can i file 2011 taxes online Upon Bill's death, if Bill has not recovered the full $31,000 investment, Kathy will also exclude $100 from her $600 monthly payment. Can i file 2011 taxes online The full amount of any annuity payments received after 310 payments are paid must generally be included in gross income. Can i file 2011 taxes online If Bill and Kathy die before 310 payments are made, a miscellaneous itemized deduction will be allowed for the unrecovered cost on the final income tax return of the last to die. Can i file 2011 taxes online This deduction is not subject to the 2%-of-adjusted-gross-income limit. Can i file 2011 taxes online Worksheet 2-A. Can i file 2011 taxes online Simplified Method Worksheet—Illustrated 1. Can i file 2011 taxes online Enter the total pension or annuity payments received this year. Can i file 2011 taxes online Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. Can i file 2011 taxes online $ 14,400 2. Can i file 2011 taxes online Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion* See Cost (Investment in the Contract), earlier 2. Can i file 2011 taxes online 31,000   Note. Can i file 2011 taxes online If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). Can i file 2011 taxes online Otherwise, go to line 3. Can i file 2011 taxes online     3. Can i file 2011 taxes online Enter the appropriate number from Table 1 below. Can i file 2011 taxes online But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below 3. Can i file 2011 taxes online 310 4. Can i file 2011 taxes online Divide line 2 by the number on line 3 4. Can i file 2011 taxes online 100 5. Can i file 2011 taxes online Multiply line 4 by the number of months for which this year's payments were made. Can i file 2011 taxes online If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Can i file 2011 taxes online Otherwise, go to line 6 5. Can i file 2011 taxes online 1,200 6. Can i file 2011 taxes online Enter any amount previously recovered tax free in years after 1986. Can i file 2011 taxes online This is the amount shown on line 10 of your worksheet for last year 6. Can i file 2011 taxes online 0 7. Can i file 2011 taxes online Subtract line 6 from line 2 7. Can i file 2011 taxes online 31,000 8. Can i file 2011 taxes online Enter the smaller of line 5 or line 7 8. Can i file 2011 taxes online 1,200 9. Can i file 2011 taxes online Taxable amount for year. Can i file 2011 taxes online Subtract line 8 from line 1. Can i file 2011 taxes online Enter the result, but not less than zero. Can i file 2011 taxes online Also, add this amount to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Can i file 2011 taxes online Note. Can i file 2011 taxes online If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. Can i file 2011 taxes online If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers, earlier, before entering an amount on your tax return. Can i file 2011 taxes online 9. Can i file 2011 taxes online $ 13,200 10. Can i file 2011 taxes online Was your annuity starting date before 1987? □ Yes. Can i file 2011 taxes online STOP. Can i file 2011 taxes online Do not complete the rest of this worksheet. Can i file 2011 taxes online  ☑ No. Can i file 2011 taxes online Add lines 6 and 8. Can i file 2011 taxes online This is the amount you have recovered tax free through 2013. Can i file 2011 taxes online You will need this number if you need to fill out this worksheet next year. Can i file 2011 taxes online 10. Can i file 2011 taxes online 1,200 11. Can i file 2011 taxes online Balance of cost to be recovered. Can i file 2011 taxes online Subtract line 10 from line 2. Can i file 2011 taxes online If zero, you will not have to complete this worksheet next year. Can i file 2011 taxes online The payments you receive next year will generally be fully taxable 11. Can i file 2011 taxes online $ 29,800 * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. Can i file 2011 taxes online   Table 1 for Line 3 Above       AND your annuity starting date was—   IF your age on your annuity starting date was . Can i file 2011 taxes online . Can i file 2011 taxes online . Can i file 2011 taxes online   BEFORE November 19, 1996, enter on line 3 . Can i file 2011 taxes online . Can i file 2011 taxes online . Can i file 2011 taxes online AFTER November 18, 1996, enter on line 3 . Can i file 2011 taxes online . Can i file 2011 taxes online . Can i file 2011 taxes online   55 or under 300 360   56-60 260 310   61-65 240 260   66-70 170 210   71 or over 120 160 Table 2 for Line 3 Above   IF the annuitants' combined ages on your annuity starting date were . Can i file 2011 taxes online . Can i file 2011 taxes online . Can i file 2011 taxes online   THEN enter on line 3 . Can i file 2011 taxes online . Can i file 2011 taxes online . Can i file 2011 taxes online         110 or under   410         111-120   360         121-130   310         131-140   260         141 or over   210       Survivors of retirees. Can i file 2011 taxes online   Benefits paid to you as a survivor under a joint and survivor annuity must be included in your gross income in the same way the retiree would have included them in gross income. Can i file 2011 taxes online   If you receive a survivor annuity because of the death of a retiree who had reported the annuity under the Three-Year Rule, include the total received in your income. Can i file 2011 taxes online The retiree's cost has already been recovered tax free. Can i file 2011 taxes online   If the retiree was reporting the annuity payments under the General Rule, you must apply the same exclusion percentage the retiree used to your initial payment called for in the contract. Can i file 2011 taxes online The resulting tax-free amount will then remain fixed. Can i file 2011 taxes online Any increases in the survivor annuity are fully taxable. Can i file 2011 taxes online   If the retiree was reporting the annuity payments under the Simplified Method, the part of each payment that is tax free is the same as the tax-free amount figured by the retiree at the annuity starting date. Can i file 2011 taxes online See Simplified Method , earlier. Can i file 2011 taxes online How to report. Can i file 2011 taxes online   If you file Form 1040, report your total annuity on line 16a, and the taxable part on line 16b. Can i file 2011 taxes online If your pension or annuity is fully taxable, enter it on line 16b. Can i file 2011 taxes online Do not make an entry on line 16a. Can i file 2011 taxes online   If you file Form 1040A, report your total annuity on line 12a, and the taxable part on line 12b. Can i file 2011 taxes online If your pension or annuity is fully taxable, enter it on line 12b. Can i file 2011 taxes online Do not make an entry on line 12a. Can i file 2011 taxes online   If you file Form 1040NR, report your total annuity on line 17a, and the taxable part on line 17b. Can i file 2011 taxes online If your pension or annuity is fully taxable, enter it on line 17b. Can i file 2011 taxes online Do not make an entry on line 17a. Can i file 2011 taxes online Example. Can i file 2011 taxes online You are a Form 1040 filer and you received monthly payments totaling $1,200 (12 months x $100) during 2013 from a pension plan that was completely financed by your employer. Can i file 2011 taxes online You had paid no tax on the payments that your employer made to the plan, and the payments were not used to pay for accident, health, or long-term care insurance premiums (as discussed later under Insurance Premiums for Retired Public Safety Officers ). Can i file 2011 taxes online The entire $1,200 is taxable. Can i file 2011 taxes online You include $1,200 only on Form 1040, line 16b. Can i file 2011 taxes online Joint return. Can i file 2011 taxes online   If you file a joint return and you and your spouse each receive one or more pensions or annuities, report the total of the pensions and annuities on line 16a of Form 1040, line 12a of Form 1040A, or line 17a of Form 1040NR. Can i file 2011 taxes online Report the total of the taxable parts on line 16b of Form 1040, line 12b of Form 1040A, or line 17b of Form 1040NR. Can i file 2011 taxes online Form 1099-R. Can i file 2011 taxes online   You should receive a Form 1099-R for your pension or annuity. Can i file 2011 taxes online Form 1099-R shows your pension or annuity for the year and any income tax withheld. Can i file 2011 taxes online You should receive a Form W-2 if you receive distributions from certain nonqualified plans. Can i file 2011 taxes online You must attach Forms 1099-R or Forms W-2 to your 2013 tax return if federal income tax was withheld. Can i file 2011 taxes online Generally, you should be sent these forms by January 31, 2014. Can i file 2011 taxes online Nonperiodic Distributions If you receive a nonperiodic distribution from your retirement plan, you may be able to exclude all or part of it from your income as a recovery of your cost. Can i file 2011 taxes online Nonperiodic distributions include cash withdrawals, distributions of current earnings (dividends) on your investment, and certain loans. Can i file 2011 taxes online For information on how to figure the taxable amount of a nonperiodic distribution, see Taxation of Nonperiodic Payments in Publication 575. Can i file 2011 taxes online The taxable part of a nonperiodic distribution may be subject to an additional 10% tax. Can i file 2011 taxes online See Tax on Early Distributions, later. Can i file 2011 taxes online Lump-sum distributions. Can i file 2011 taxes online   If you receive a lump-sum distribution from a qualified employee plan or qualified employee annuity and the plan participant was born before January 2, 1936, you may be able to elect optional methods of figuring the tax on the distribution. Can i file 2011 taxes online The part from active participation in the plan before 1974 may qualify as capital gain subject to a 20% tax rate. Can i file 2011 taxes online The part from participation after 1973 (and any part from participation before 1974 that you do not report as capital gain) is ordinary income. Can i file 2011 taxes online You may be able to use the 10-year tax option to figure tax on the ordinary income part. Can i file 2011 taxes online Form 1099-R. Can i file 2011 taxes online   If you receive a total distribution from a plan, you should receive a Form 1099-R. Can i file 2011 taxes online If the distribution qualifies as a lump-sum distribution, box 3 shows the capital gain part of the distribution. Can i file 2011 taxes online The amount in box 2a, Taxable amount, minus the amount in box 3, Capital gain, is the ordinary income part. Can i file 2011 taxes online More information. Can i file 2011 taxes online   For more detailed information on lump-sum distributions, see Publication 575 or Form 4972, Tax on Lump-Sum Distributions. Can i file 2011 taxes online Tax on Early Distributions Most distributions you receive from your qualified retirement plan and nonqualified annuity contracts before you reach age 59½ are subject to an additional tax of 10%. Can i file 2011 taxes online The tax applies to the taxable part of the distribution. Can i file 2011 taxes online For this purpose, a qualified retirement plan is: A qualified employee plan (including a qualified cash or deferred arrangement (CODA) under Internal Revenue Code section 401(k)), A qualified employee annuity plan, A tax-sheltered annuity plan (403(b) plan), or An eligible state or local government section 457 deferred compensation plan (to the extent that any distribution is attributable to amounts the plan received in a direct transfer or rollover from one of the other plans listed here or an IRA). Can i file 2011 taxes online  An IRA is also a qualified retirement plan for purposes of this tax. Can i file 2011 taxes online General exceptions to tax. Can i file 2011 taxes online   The early distribution tax does not apply to any distributions that are: Made as part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from a qualified retirement plan, the payments must begin after separation from service), Made because you are totally and permanently disabled, or Made on or after the death of the plan participant or contract holder. Can i file 2011 taxes online Additional exceptions. Can i file 2011 taxes online   There are additional exceptions to the early distribution tax for certain distributions from qualified retirement plans and nonqualified annuity contracts. Can i file 2011 taxes online See Publication 575 for details. Can i file 2011 taxes online Reporting tax. Can i file 2011 taxes online   If you owe only the tax on early distributions and distribution code 1 (early distribution, no known exception) is correctly shown in Form 1099-R, box 7, multiply the taxable part of the early distribution by 10% (. Can i file 2011 taxes online 10) and enter the result on Form 1040, line 58, or Form 1040NR, line 56. Can i file 2011 taxes online See the instructions for line 58 of Form 1040 or line 56 of Form 1040NR for more information about reporting the early distribution tax. Can i file 2011 taxes online Tax on Excess Accumulation To make sure that most of your retirement benefits are paid to you during your lifetime, rather than to your beneficiaries after your death, the payments that you receive from qualified retirement plans must begin no later than your required beginning date. Can i file 2011 taxes online Unless the rule for 5% owners applies, this is generally April 1 of the year that follows the later of: The calendar year in which you reach age 70½, or The calendar year in which you retire from employment with the employer maintaining the plan. Can i file 2011 taxes online However, your plan may require you to begin to receive payments by April 1 of the year that follows the year in which you reach 70½, even if you have not retired. Can i file 2011 taxes online For this purpose, a qualified retirement plan includes: A qualified employee plan, A qualified employee annuity plan, An eligible section 457 deferred compensation plan, or A tax-sheltered annuity plan (403(b) plan) (for benefits accruing after 1986). Can i file 2011 taxes online  An IRA is also a qualified retirement plan for purposes of this tax. Can i file 2011 taxes online An excess accumulation is the undistributed remainder of the required minimum distribution that was left in your qualified retirement plan. Can i file 2011 taxes online 5% owners. Can i file 2011 taxes online   If you own (or are considered to own under section 318 of the Internal Revenue Code) more than 5% of the company maintaining your qualified retirement plan, you must begin to receive distributions from the plan by April 1 of the year after the calendar year in which you reach age 70½. Can i file 2011 taxes online See Publication 575 for more information. Can i file 2011 taxes online Amount of tax. Can i file 2011 taxes online   If you do not receive the required minimum distribution, you are subject to an additional tax. Can i file 2011 taxes online The tax equals 50% of the difference between the amount that must be distributed and the amount that was distributed during the tax year. Can i file 2011 taxes online You can get this excise tax excused if you establish that the shortfall in distributions was due to reasonable error and that you are taking reasonable steps to remedy the shortfall. Can i file 2011 taxes online Form 5329. Can i file 2011 taxes online   You must file a Form 5329 if you owe a tax because you did not receive a minimum required distribution from your qualified retirement plan. Can i file 2011 taxes online Additional information. Can i file 2011 taxes online   For more detailed information on the tax on excess accumulation, see Publication 575. Can i file 2011 taxes online Insurance Premiums for Retired Public Safety Officers If you are an eligible retired public safety officer (law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew), you can elect to exclude from income distributions made from your eligible retirement plan that are used to pay the premiums for accident or health insurance or long-term care insurance. Can i file 2011 taxes online The premiums can be for coverage for you, your spouse, or dependent(s). Can i file 2011 taxes online The distribution must be made directly from the plan to the insurance provider. Can i file 2011 taxes online You can exclude from income the smaller of the amount of the insurance premiums or $3,000. Can i file 2011 taxes online You can only make this election for amounts that would otherwise be included in your income. Can i file 2011 taxes online The amount excluded from your income cannot be used to claim a medical expense deduction. Can i file 2011 taxes online An eligible retirement plan is a governmental plan that is a: Qualified trust, Section 403(a) plan, Section 403(b) annuity, or Section 457(b) plan. Can i file 2011 taxes online If you make this election, reduce the otherwise taxable amount of your pension or annuity by the amount excluded. Can i file 2011 taxes online The taxable amount shown in box 2a of any Form 1099-R that you receive does not reflect the exclusion. Can i file 2011 taxes online Report your total distributions on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Can i file 2011 taxes online Report the taxable amount on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Can i file 2011 taxes online Enter “PSO” next to the appropriate line on which you report the taxable amount. Can i file 2011 taxes online Railroad Retirement Benefits Benefits paid under the Railroad Retirement Act fall into two categories. Can i file 2011 taxes online These categories are treated differently for income tax purposes. Can i file 2011 taxes online Social security equivalent benefits. Can i file 2011 taxes online   The first category is the amount of tier 1 railroad retirement benefits that equals the social security benefit that a railroad employee or beneficiary would have been entitled to receive under the social security system. Can i file 2011 taxes online This part of the tier 1 benefit is the social security equivalent benefit (SSEB) and is treated for tax purposes like social security benefits. Can i file 2011 taxes online (See Social Security and Equivalent Railroad Retirement Benefits , later. Can i file 2011 taxes online ) Non-social security equivalent benefits. Can i file 2011 taxes online   The second category contains the rest of the tier 1 benefits, called the non-social security equivalent benefit (NSSEB). Can i file 2011 taxes online It also contains any tier 2 benefit, vested dual benefit (VDB), and supplemental annuity benefit. Can i file 2011 taxes online This category of benefits is treated as an amount received from a qualified employee plan. Can i file 2011 taxes online This allows for the tax-free (nontaxable) recovery of employee contributions from the tier 2 benefits and the NSSEB part of the tier 1 benefits. Can i file 2011 taxes online Vested dual benefits and supplemental annuity benefits are non-contributory pensions and are fully taxable. Can i file 2011 taxes online More information. Can i file 2011 taxes online   For more information about railroad retirement benefits, see Publication 575. Can i file 2011 taxes online Military Retirement Pay Military retirement pay based on age or length of service is taxable and must be included in income as a pension on Form 1040, lines 16a and 16b; on Form 1040A, lines 12a and 12b; or on Form 1040NR, lines 17a and 17b. Can i file 2011 taxes online But, certain military and government disability pensions that are based on a percentage of disability from active service in the Armed Forces of any country generally are not taxable. Can i file 2011 taxes online For more information, including information about veterans' benefits and insurance, see Publication 525. Can i file 2011 taxes online Social Security and Equivalent Railroad Retirement Benefits This discussion explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. Can i file 2011 taxes online Social security benefits include monthly retirement, survivor, and disability benefits. Can i file 2011 taxes online They do not include supplemental security income (SSI) payments, which are not taxable. Can i file 2011 taxes online Equivalent tier 1 railroad retirement benefits are the part of tier 1 benefits that a railroad employee or beneficiary would have been entitled to receive under the social security system. Can i file 2011 taxes online They commonly are called the social security equivalent benefit (SSEB) portion of tier 1 benefits. Can i file 2011 taxes online If you received these benefits during 2013, you should have received a Form SSA-1099 or Form RRB-1099 (Form SSA-1042S or Form RRB-1042S if you are a nonresident alien), showing the amount of the benefits. Can i file 2011 taxes online Are Any of Your Benefits Taxable? Note. Can i file 2011 taxes online When the term “benefits” is used in this section, it applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits. Can i file 2011 taxes online  To find out whether any of your benefits may be taxable, compare the base amount for your filing status (explained later) with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. Can i file 2011 taxes online When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. Can i file 2011 taxes online S. Can i file 2011 taxes online savings bonds, Employer-provided adoption benefits, Foreign earned income or foreign housing, or Income earned in American Samoa or Puerto Rico by bona fide residents. Can i file 2011 taxes online Figuring total income. Can i file 2011 taxes online   To figure the total of one-half of your benefits plus your other income, use Worksheet 2-B. Can i file 2011 taxes online If that total amount is more than your base amount, part of your benefits may be taxable. Can i file 2011 taxes online If you are married and file a joint return for 2013, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. Can i file 2011 taxes online Even if your spouse did not receive any benefits, you must add your spouse's income to yours to figure whether any of your benefits are taxable. Can i file 2011 taxes online If the only income you received during 2013 was your social security or the SSEB portion of tier 1 railroad retirement benefits, your benefits generally are not taxable and you probably do not have to file a return. Can i file 2011 taxes online If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. Can i file 2011 taxes online Worksheet 2-B. Can i file 2011 taxes online A Quick Way To Check if Your Benefits May Be Taxable A. Can i file 2011 taxes online Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Can i file 2011 taxes online Include  the full amount of any lump-sum benefit payments received in 2013, for 2013 and  earlier years. Can i file 2011 taxes online (If you received more than one form, combine the amounts from box 5  and enter the total. Can i file 2011 taxes online ) A. Can i file 2011 taxes online     Note. Can i file 2011 taxes online If the amount on line A is zero or less, stop here; none of your benefits are  taxable this year. Can i file 2011 taxes online     B. Can i file 2011 taxes online Enter one-half of the amount on line A B. Can i file 2011 taxes online   C. Can i file 2011 taxes online Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Can i file 2011 taxes online   D. Can i file 2011 taxes online Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income for: •Interest from qualified U. Can i file 2011 taxes online S. Can i file 2011 taxes online savings bonds, •Employer-provided adoption benefits, •Foreign earned income or foreign housing, or •Income earned in American Samoa or Puerto Rico by bona fide residents D. Can i file 2011 taxes online   E. Can i file 2011 taxes online Add lines B, C, and D and enter the total E. Can i file 2011 taxes online   F. Can i file 2011 taxes online If you are: •Married filing jointly, enter $32,000 •Single, head of household, qualifying widow(er), or married filing separately and you  lived apart from your spouse for all of 2013, enter $25,000 •Married filing separately and you lived with your spouse at any time during 2013,  enter -0- F. Can i file 2011 taxes online   G. Can i file 2011 taxes online Is the amount on line F less than or equal to the amount on line E? □ No. Can i file 2011 taxes online None of your benefits are taxable this year. Can i file 2011 taxes online  □ Yes. Can i file 2011 taxes online Some of your benefits may be taxable. Can i file 2011 taxes online To figure how much of your benefits  are taxable, see Which worksheet to use under How Much Is Taxable. Can i file 2011 taxes online     Base Amount Your base amount is: $25,000 if you are single, head of household, or qualifying widow(er) with dependent child, $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $0 if you are married filing separately and lived with your spouse at any time during 2013. Can i file 2011 taxes online Repayment of Benefits Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. Can i file 2011 taxes online It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. Can i file 2011 taxes online If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. Can i file 2011 taxes online Your gross benefits are shown in box 3 of Form SSA-1099 or Form RRB-1099. Can i file 2011 taxes online Your repayments are shown in box 4. Can i file 2011 taxes online The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). Can i file 2011 taxes online Use the amount in box 5 to figure whether any of your benefits are taxable. Can i file 2011 taxes online Tax Withholding and Estimated Tax You can choose to have federal income tax withheld from your social security and/or the SSEB portion of your tier 1 railroad retirement benefits. Can i file 2011 taxes online If you choose to do this, you must complete a Form W-4V, Voluntary Withholding Request. Can i file 2011 taxes online If you do not choose to have income tax withheld, you may have to request additional withholding from other income, or pay estimated tax during the year. Can i file 2011 taxes online For details, see Publication 505, Tax Withholding and Estimated Tax, or the instructions for Form 1040-ES, Estimated Tax for Individuals. Can i file 2011 taxes online How Much Is Taxable? If part of your benefits is taxable, how much is taxable depends on the total amount of your benefits and other income. Can i file 2011 taxes online Generally, the higher that total amount, the greater the taxable part of your benefits. Can i file 2011 taxes online Maximum taxable part. Can i file 2011 taxes online   The taxable part of your benefits usually cannot be more than 50%. Can i file 2011 taxes online However, up to 85% of your benefits can be taxable if either of the following situations applies to you. Can i file 2011 taxes online The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly). Can i file 2011 taxes online You are married filing separately and lived with your spouse at any time during 2013. Can i file 2011 taxes online   If you are a nonresident alien, 85% of your benefits are taxable. Can i file 2011 taxes online However, this income is exempt under some tax treaties. Can i file 2011 taxes online Which worksheet to use. Can i file 2011 taxes online   A worksheet to figure your taxable benefits is in the instructions for your Form 1040 or 1040A. Can i file 2011 taxes online However, you will need to use a different worksheet(s) if any of the following situations applies to you. Can i file 2011 taxes online You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse were covered by a retirement plan at work. Can i file 2011 taxes online In this situation, you must use the special worksheets in Appendix B of Publication 590 to figure both your IRA deduction and your taxable benefits. Can i file 2011 taxes online Situation (1) does not apply and you take one or more of the following exclusions. Can i file 2011 taxes online Interest from qualified U. Can i file 2011 taxes online S. Can i file 2011 taxes online savings bonds (Form 8815). Can i file 2011 taxes online Employer-provided adoption benefits (Form 8839). Can i file 2011 taxes online Foreign earned income or housing (Form 2555 or Form 2555-EZ). Can i file 2011 taxes online Income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. Can i file 2011 taxes online In these situations, you must use Worksheet 1 in Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure your taxable benefits. Can i file 2011 taxes online You received a lump-sum payment for an earlier year. Can i file 2011 taxes online In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in Publication 915. Can i file 2011 taxes online See Lump-Sum Election , later. Can i file 2011 taxes online How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040, Form 1040A, or Form 1040NR. Can i file 2011 taxes online You cannot use Form 1040EZ. Can i file 2011 taxes online Reporting on Form 1040. Can i file 2011 taxes online   Report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on line 20a and the taxable part on line 20b. Can i file 2011 taxes online If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 20a. Can i file 2011 taxes online Reporting on Form 1040A. Can i file 2011 taxes online   Report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on line 14a and the taxable part on line 14b. Can i file 2011 taxes online If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 14a. Can i file 2011 taxes online Reporting on Form 1040NR. Can i file 2011 taxes online   Report 85% of the total amount of your benefits (box 5 of your Form SSA-1042S or Form RRB-1042S) in the appropriate column of Form 1040NR, Schedule NEC, line 8. Can i file 2011 taxes online Benefits not taxable. Can i file 2011 taxes online   If you are filing Form 1040EZ, do not report any benefits on your tax return. Can i file 2011 taxes online If you are filing Form 1040 or Form 1040A, report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on Form 1040, line 20a, or Form 1040A, line 14a. Can i file 2011 taxes online Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Can i file 2011 taxes online If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Can i file 2011 taxes online Lump-Sum Election You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2013 in your 2013 income, even if the payment includes benefits for an earlier year. Can i file 2011 taxes online This type of lump-sum benefit payment should not be confused with the lump-sum death benefit that both the SSA and RRB pay to many of their beneficiaries. Can i file 2011 taxes online No part of the lump-sum death benefit is subject to tax. Can i file 2011 taxes online For more information about the lump-sum death benefit, visit the Social Security Administration website at www. Can i file 2011 taxes online SSA. Can i file 2011 taxes online gov, and use keyword: death benefit. Can i file 2011 taxes online Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. Can i file 2011 taxes online However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year. Can i file 2011 taxes online You can elect this method if it lowers your taxable benefits. Can i file 2011 taxes online See Publication 915 for more information. Can i file 2011 taxes online Repayments More Than Gross Benefits In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. Can i file 2011 taxes online If this occurred, your net benefits in box 5 will be a negative figure (a figure in parentheses) and none of your benefits will be taxable. Can i file 2011 taxes online If you receive more than one form, a negative figure in box 5 of one form is used to offset a positive figure in box 5 of another form for that same year. Can i file 2011 taxes online If you have any questions about this negative figure, contact your local Social Security Administration office or your local U. Can i file 2011 taxes online S. Can i file 2011 taxes online Railroad Retirement Board field office. Can i file 2011 taxes online Joint return. Can i file 2011 taxes online   If you and your spouse file a joint return, and your Form SSA-1099 or RRB-1099 has a negative figure in box 5 but your spouse's does not, subtract the box 5 amount on your form from the box 5 amount on your spouse's form. Can i file 2011 taxes online You do this to get your net benefits when figuring if your combined benefits are taxable. Can i file 2011 taxes online Repayment of benefits received in an earlier year. Can i file 2011 taxes online   If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 is a negative figure, you can take an itemized deduction for the part of this negative figure that represents benefits you included in gross income in an earlier year. Can i file 2011 taxes online   If this deduction is $3,000 or less, it is subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions. Can i file 2011 taxes online Claim it on Schedule A (Form 1040), line 23. Can i file 2011 taxes online   If this deduction is more than $3,000, you have to follow some special instructions. Can i file 2011 taxes online See Publication 915 for those instructions. Can i file 2011 taxes online Sickness and Injury Benefits Generally, you must report as income any amount you receive for personal injury or sickness through an accident or health plan that is paid for by your employer. Can i file 2011 taxes online If both you and your employer pay for the plan, only the amount you receive that is due to your employer's payments is reported as income. Can i file 2011 taxes online However, certain payments may not be taxable to you. Can i file 2011 taxes online Some of these payments are discussed later in this section. Can i file 2011 taxes online Also, see Military and Government Disability Pensions and Other Sickness and Injury Benefits in Publication 525. Can i file 2011 taxes online Cost paid by you. Can i file 2011 taxes online   If you pay the entire cost of an accident or health plan, do not include any amounts you receive from the plan for personal injury or sickness as income on your tax return. Can i file 2011 taxes online If your plan reimbursed you for medical expenses you deducted in an earlier year, you may have to include some, or all, of the reimbursement in your income. Can i file 2011 taxes online Disability Pensions If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. Can i file 2011 taxes online You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A or on line 8 of Form 1040NR until you reach minimum retirement age. Can i file 2011 taxes online Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Can i file 2011 taxes online If you were 65 or older by the end of 2013 or you were retired on permanent and total disability and received taxable disability income, you may be able to claim the credit for the elderly or the disabled. Can i file 2011 taxes online See Credit for the Elderly or the Disabled, later. Can i file 2011 taxes online For more information on this credit, see Publication 524, Credit for the Elderly or the Disabled. Can i file 2011 taxes online Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Can i file 2011 taxes online Report the payments on lines 16a and 16b of Form 1040, on lines 12a and 12b of Form 1040A, or on lines 17a and 17b of Form 1040NR. Can i file 2011 taxes online For more information on pensions and annuities, see Publication 575. Can i file 2011 taxes online Retirement and profit-sharing plans. Can i file 2011 taxes online   If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat the payments as a disability pension. Can i file 2011 taxes online The payments must be reported as a pension or annuity. Can i file 2011 taxes online Accrued leave payment. Can i file 2011 taxes online   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. Can i file 2011 taxes online The payment is not a disability payment. Can i file 2011 taxes online Include it in your income in the tax year you receive it. Can i file 2011 taxes online Long-Term Care Insurance Contracts In most cases, long-term care insurance contracts generally are treated as accident and health insurance contracts. Can i file 2011 taxes online Amounts you receive from them (other than policyholder dividends or premium refunds) generally are excludable from income as amounts received for personal injury or sickness. Can i file 2011 taxes online However, the amount you can exclude may be limited. Can i file 2011 taxes online Long-term care insurance contracts are discussed in more detail in Publication 525. Can i file 2011 taxes online Workers' Compensation Amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they are paid under a workers' compensation act or a statute in the nature of a workers' compensation act. Can i file 2011 taxes online The exemption also applies to your survivors. Can i file 2011 taxes online The exemption, however, does not apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness or injury. Can i file 2011 taxes online If part of your workers' compensation reduces your social security or equivalent railroad retirement benefits, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. Can i file 2011 taxes online For a discussion of the taxability of these benefits, see Social Security and Equivalent Railroad Retirement Benefits, earlier. Can i file 2011 taxes online Return to work. Can i file 2011 taxes online   If you return to work after qualifying for workers' compensation, salary payments you receive for performing light duties are taxable as wages. Can i file 2011 taxes online Other Sickness and Injury Benefits In addition to disability pensions and annuities, you may receive other payments for sickness or injury. Can i file 2011 taxes online Federal Employees' Compensation Act (FECA). Can i file 2011 taxes online   Payments received under this Act for personal injury or sickness, including payments to beneficiaries in case of death, are not taxable. Can i file 2011 taxes online However, you are taxed on amounts you receive under this Act as continuation of pay for up to 45 days while a claim is being decided. Can i file 2011 taxes online Report this income on Form 1040, line 7; Form 1040A, line 7; on Form 1040EZ, line 1; or Form 1040NR, line 8. Can i file 2011 taxes online Also, pay for sick leave while a claim is being processed is taxable and must be included in your income as wages. Can i file 2011 taxes online    If part of the payments you receive under FECA reduces your social security or equivalent railroad retirement benefits, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. Can i file 2011 taxes online For a discussion of the taxability of these benefits, see Social Security and Equivalent Railroad Retirement Benefits, earlier. Can i file 2011 taxes online Other compensation. Can i file 2011 taxes online   Many other amounts you receive as compensation for sickness or injury are not taxable. Can i file 2011 taxes online These include the following amounts. Can i file 2011 taxes online Benefits you receive under an accident or health insurance policy on which either you paid the premiums or your employer paid the premiums but you had to include them in your income. Can i file 2011 taxes online Disability benefits you receive for loss of income or earning capacity as a result of injuries under a no-fault car insurance policy. Can i file 2011 taxes online Compensation you receive for permanent loss or loss of use of a part or function of your body, for your permanent disfigurement, or for such loss or disfigurement suffered by your spouse or dependent(s). Can i file 2011 taxes online This compensation must be based only on the injury and not on the period of your absence from work. Can i file 2011 taxes online These benefits are not taxable even if your employer pays for the accident and health plan that provides these benefits. Can i file 2011 taxes online Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. Can i file 2011 taxes online This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. Can i file 2011 taxes online Proceeds not received in installments. Can i file 2011 taxes online   If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death. Can i file 2011 taxes online If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death. Can i file 2011 taxes online Proceeds received in installments. Can i file 2011 taxes online   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. Can i file 2011 taxes online   To determine the excluded part, divide the amount held by the insurance company (generally the total lump sum payable at the death of the insured person) by the number of installments to be paid. Can i file 2011 taxes online Include anything over this excluded part in your income as interest. Can i file 2011 taxes online Installments for life. Can i file 2011 taxes online   If, as the beneficiary under an insurance contract, you are entitled to receive the proceeds in installments for the rest of your life without a refund or period-certain guarantee, you figure the excluded part of each installment by dividing the amount held by the insurance company by your life expectancy. Can i file 2011 taxes online If there is a refund or period-certain guarantee, the amount held by the insurance company for this purpose is reduced by the actuarial value of the guarantee. Can i file 2011 taxes online Surviving spouse. Can i file 2011 taxes online   If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude, in any year, up to $1,000 of the interest included in the installments. Can i file 2011 taxes online If you remarry, you can continue to take the exclusion. Can i file 2011 taxes online Surrender of policy for cash. Can i file 2011 taxes online   If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. Can i file 2011 taxes online In general, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income. Can i file 2011 taxes online You should receive a Form 1099-R showing the total proceeds and the taxable part. Can i file 2011 taxes online Report these amounts on Form 1040, lines 16a and 16b; Form 1040A, lines 12a and 12b; or Form 1040NR, lines 17a and 17b. Can i file 2011 taxes online Endowment Contract Proceeds An endowment contract is a policy that pays over to you a specified amount of money on a certain date unless you die before that date, in which case, the money is paid to your designated beneficiary. Can i file 2011 taxes online Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. Can i file 2011 taxes online To determine your cost, subtract from the total premiums (or other consideration) paid for the contract any amount that you previously received under the contract and excluded from your income. Can i file 2011 taxes online Include in your income the part of the lump-sum payment that is more than your cost. Can i file 2011 taxes online Endowment proceeds that you choose to receive in installments instead of a lump-sum payment at the maturity of the policy are taxed as an annuity. Can i file 2011 taxes online The tax treatment of an annuity is explained in Publication 575. Can i file 2011 taxes online For this treatment to apply, you must choose to receive the proceeds in installments before receiving any part of the lump sum. Can i file 2011 taxes online This election must be made within 60 days after the lump-sum payment first becomes payable to you. Can i file 2011 taxes online Accelerated Death Benefits Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are generally excluded from income if the insured is terminally or chronically ill. Can i file 2011 taxes online However, see Exception , later. Can i file 2011 taxes online For a chronically ill individual, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. Can i file 2011 taxes online Accelerated death benefits paid on a per diem or other periodic basis without regard to the costs are excludable up to a limit. Can i file 2011 taxes online In addition, if any portion of a death benefit under a life insurance contract on the life of a terminally or chronically ill individual is sold or assigned to a viatical settlement provider, the amount received also is excluded from income. Can i file 2011 taxes online Generally, a viatical settlement provider is one who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill. Can i file 2011 taxes online To report taxable accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return. Can i file 2011 taxes online Terminally or chronically ill defined. Can i file 2011 taxes online   A terminally ill person is one who has been certified by a physician as having an illness or physical condition that reasonably can be expected to result in death within 24 months from the date of the certification. Can i file 2011 taxes online A chronically ill person is one who is not terminally ill but has been certified (within the previous 12 months) by a licensed health care practitioner as meeting either of the following conditions. Can i file 2011 taxes online The person is unable to perform (without substantial help) at least two activities of daily living (eating, toileting, transferring, bathing, dressing, and continence) for a period of 90 days or more because of a loss of functional capacity. Can i file 2011 taxes online The person requires substantial supervision to protect himself or herself from threats to health and safety due to severe cognitive impairment. Can i file 2011 taxes online Exception. Can i file 2011 taxes online   The exclusion does not apply to any amount paid to a person other than the insured if that other person has an insurable interest in the life of the insured because the insured: Is a director, officer, or employee of the other person, or Has a financial interest in the business of the other person. Can i file 2011 taxes online Sale of Home You may be able to exclude from income any gain up to $250,000 ($500,000 on a joint return in most cases) on the sale of your main home. Can i file 2011 taxes online Generally, if you can exclude all of the gain, you do not need to report the sale on your tax return. Can i file 2011 taxes online You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale. Can i file 2011 taxes online Main home. Can i file 2011 taxes online   Usually, your main home is the home you live in most of the time and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. Can i file 2011 taxes online Repaying the first-time homebuyer credit because you sold your home. Can i file 2011 taxes online   If you claimed a first-time homebuyer credit for your main home and you sell it, you may have to repay the credit. Can i file 2011 taxes online For a home purchased in 2008 and used as your main home until sold in 2013, you must file Form 5405 and repay the balance of the unpaid credit on your 2013 tax return. Can i file 2011 taxes online   For a home purchased after 2008, you generally must repay the entire credit if the home was sold (or otherwise ceased to be your main home) within 36 months of the purchase date. Can i file 2011 taxes online If you purchased your home in 2009 and used it as your main home until sold in 2013, you do not have to repay the credit or file Form 5405. Can i file 2011 taxes online If you purchased your home in 2010 and used it as your main home until sold in 2013, you may have to file Form 5405 and repay the entire credit on your 2013 tax return. Can i file 2011 taxes online   See the Instructions for Form 5405 for more information about repaying the credit and exceptions to repayment that may apply to you. Can i file 2011 taxes online Maximum Amount of Exclusion You can generally exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true. Can i file 2011 taxes online You meet the ownership test. Can i file 2011 taxes online You meet the use test. Can i file 2011 taxes online During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. Can i file 2011 taxes online You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons . Can i file 2011 taxes online Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. Can i file 2011 taxes online This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test). Can i file 2011 taxes online Exception to ownership and use tests. Can i file 2011 taxes online   If you owned and lived in the property as your main home for less than 2 years, you still can claim an exclusion in some cases. Can i file 2011 taxes online Generally, you must have sold the home due to a change in place of employment, health, or unforeseen circumstances. Can i file 2011 taxes online The maximum amount you can exclude will be reduced. Can i file 2011 taxes online See Publication 523, Selling Your Home, for more information. Can i file 2011 taxes online Exception to use test for individuals with a disability. Can i file 2011 taxes online   There is an exception to the use test if, during the 5-year period before the sale of your home: You become physically or mentally unable to care for yourself, and You owned and lived in your home as your main home for a total of at least 1 year. Can i file 2011 taxes online Under this exception, you are considered to live in your home during any time that you own the home and live in a facility (including a nursing home) that is licensed by a state or political subdivision to care for persons in your condition. Can i file 2011 taxes online   If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion. Can i file 2011 taxes online Exception to ownership test for property acquired in a like-kind exchange. Can i file 2011 taxes online   You must have owned your main home for at least 5 years to qualify for the exclusion if you acquired your main home in a like-kind exchange. Can i file 2011 taxes online This special 5-year ownership rule continues to apply to a home you acquired in a like-kind exchange and gave to another person. Can i file 2011 taxes online A like-kind exchange is an exchange of property held for productive use in a trade or business or for investment. Can i file 2011 taxes online See Publication 523 for more information. Can i file 2011 taxes online Period of nonqualified use. Can i file 2011 taxes online   Generally, the gain from the sale or exchange of your main home will not qualify for the exclusion to the extent that the gain is allocated to periods of nonqualified use. Can i file 2011 taxes online Nonqualified use is any period after December 31, 2008, during which the property is not used as the main home. Can i file 2011 taxes online See Publication 523 for more information. Can i file 2011 taxes online Married Persons In the special situations discussed below, if you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use test, you can exclude up to $250,000 of gain. Can i file 2011 taxes online However, see Special rules for joint returns , next. Can i file 2011 taxes online Special rules for joint returns. Can i file 2011 taxes online   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. Can i file 2011 taxes online You are married and file a joint return for the year. Can i file 2011 taxes online Either you or your spouse meets the ownership test. Can i file 2011 taxes online Both you and your spouse meet the use test. Can i file 2011 taxes online During the 2-year period ending on the date of the sale, neither you nor your spouse exclude gain from the sale of another home. Can i file 2011 taxes online Sale of home by surviving spouse. Can i file 2011 taxes online   If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home. Can i file 2011 taxes online   If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home in 2013. Can i file 2011 taxes online The sale or exchange took place no more than 2 years after the date of death of your spouse. Can i file 2011 taxes online You have not remarried. Can i file 2011 taxes online You and your spouse met the use test at the time of your spouse's death. Can i file 2011 taxes online You or your spouse met the ownership test at the time of your spouse's death. Can i file 2011 taxes online Neither you nor your spouse excluded gain from the sale of another home during the last 2 years. Can i file 2011 taxes online Home transferred from spouse. Can i file 2011 taxes online   If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it. Can i file 2011 taxes online Use of home after divorce. Can i file 2011 taxes online   You are considered to have used property as your main home during any period when: You owned it, and Your spouse or former spouse is allowed to live in it under a divorce or separation instrument and uses it as his or her main home. Can i file 2011 taxes online Business Use or Rental of Home You may be able to exclude gain from the sale of a home that you have used for business or to produce rental income. Can i file 2011 taxes online However, you must meet the ownership and use tests. Can i file 2011 taxes online See Publication 523 for more information. Can i file 2011 taxes online Depreciation after May 6, 1997. Can i file 2011 taxes online   If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. Can i file 2011 taxes online See Publication 523 for more information. Can i file 2011 taxes online Reporting the Sale Do not report the 2013 sale of your main home on your tax return unless: You have a gain and you do not qualify to exclude all of it, You have a gain and you choose not to exclude it, or You received Form 1099-S. Can i file 2011 taxes online If you have a gain that you cannot or choose not to exclude, if you received a Form 1099-S, or if you have a deductible loss, report the sale on your tax return. Can i file 2011 taxes online Report the sale on Part I or Part II of Form 8949 as a short-term or long-term transaction, depending on how long you owned the home. Can i file 2011 taxes online If you used your home for business or to produce rental income, you may have to use Form 4797, Sales of Business Property, to report the sale of the business or rental part. Can i file 2011 taxes online See Publication 523 for more information. Can i file 2011 taxes online Reverse Mortgages A revers
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Can i file 2011 taxes online Publication 551 - Main Content Table of Contents Cost BasisStocks and Bonds Real Property Business Assets Allocating the Basis Adjusted BasisIncreases to Basis Decreases to Basis Adjustments to Basis Example Basis Other Than CostProperty Received for Services Taxable Exchanges Nontaxable Exchanges Property Transferred From a Spouse Property Received as a Gift Inherited Property Property Changed to Business or Rental Use How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Can i file 2011 taxes online Cost Basis The basis of property you buy is usually its cost. Can i file 2011 taxes online The cost is the amount you pay in cash, debt obligations, other property, or services. Can i file 2011 taxes online Your cost also includes amounts you pay for the following items. Can i file 2011 taxes online Sales tax, Freight, Installation and testing, Excise taxes, Legal and accounting fees (when they must be capitalized), Revenue stamps, Recording fees, and Real estate taxes (if assumed for the seller). Can i file 2011 taxes online  You may also have to capitalize (add to basis) certain other costs related to buying or producing property. Can i file 2011 taxes online Loans with low or no interest. Can i file 2011 taxes online   If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price, minus the amount considered to be unstated interest. Can i file 2011 taxes online You generally have unstated interest if your interest rate is less than the applicable federal rate. Can i file 2011 taxes online For more information, see Unstated Interest and Original Issue Discount in Publication 537. Can i file 2011 taxes online Purchase of a business. Can i file 2011 taxes online   When you purchase a trade or business, you generally purchase all assets used in the business operations, such as land, buildings, and machinery. Can i file 2011 taxes online Allocate the price among the various assets, including any section 197 intangibles. Can i file 2011 taxes online See Allocating the Basis, later. Can i file 2011 taxes online Stocks and Bonds The basis of stocks or bonds you buy is generally the purchase price plus any costs of purchase, such as commissions and recording or transfer fees. Can i file 2011 taxes online If you get stocks or bonds other than by purchase, your basis is usually determined by the fair market value (FMV) or the previous owner's adjusted basis of the stock. Can i file 2011 taxes online You must adjust the basis of stocks for certain events that occur after purchase. Can i file 2011 taxes online See Stocks and Bonds in chapter 4 of Publication 550 for more information on the basis of stock. Can i file 2011 taxes online Identifying stock or bonds sold. Can i file 2011 taxes online   If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stock or bonds. Can i file 2011 taxes online If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. Can i file 2011 taxes online For more information about identifying securities you sell, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. Can i file 2011 taxes online Mutual fund shares. Can i file 2011 taxes online   If you sell mutual fund shares acquired at different times and prices, you can choose to use an average basis. Can i file 2011 taxes online For more information, see Publication 550. Can i file 2011 taxes online Real Property Real property, also called real estate, is land and generally anything built on or attached to it. Can i file 2011 taxes online If you buy real property, certain fees and other expenses become part of your cost basis in the property. Can i file 2011 taxes online Real estate taxes. Can i file 2011 taxes online   If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. Can i file 2011 taxes online You cannot deduct them as taxes. Can i file 2011 taxes online   If you reimburse the seller for taxes the seller paid for you, you can usually deduct that amount as an expense in the year of purchase. Can i file 2011 taxes online Do not include that amount in the basis of the property. Can i file 2011 taxes online If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. Can i file 2011 taxes online Settlement costs. Can i file 2011 taxes online   Your basis includes the settlement fees and closing costs for buying property. Can i file 2011 taxes online You cannot include in your basis the fees and costs for getting a loan on property. Can i file 2011 taxes online A fee for buying property is a cost that must be paid even if you bought the property for cash. Can i file 2011 taxes online   The following items are some of the settlement fees or closing costs you can include in the basis of your property. Can i file 2011 taxes online Abstract fees (abstract of title fees); Charges for installing utility services; Legal fees (including title search and preparation of the sales contract and deed); Recording fees; Surveys; Transfer taxes; Owner's title insurance; and Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. Can i file 2011 taxes online   Settlement costs do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Can i file 2011 taxes online   The following items are some settlement fees and closing costs you cannot include in the basis of the property. Can i file 2011 taxes online Casualty insurance premiums. Can i file 2011 taxes online Rent for occupancy of the property before closing. Can i file 2011 taxes online Charges for utilities or other services related to occupancy of the property before closing. Can i file 2011 taxes online Charges connected with getting a loan. Can i file 2011 taxes online The following are examples of these charges. Can i file 2011 taxes online Points (discount points, loan origination fees). Can i file 2011 taxes online Mortgage insurance premiums. Can i file 2011 taxes online Loan assumption fees. Can i file 2011 taxes online Cost of a credit report. Can i file 2011 taxes online Fees for an appraisal required by a lender. Can i file 2011 taxes online Fees for refinancing a mortgage. Can i file 2011 taxes online If these costs relate to business property, items (1) through (3) are deductible as business expenses. Can i file 2011 taxes online Items (4) and (5) must be capitalized as costs of getting a loan and can be deducted over the period of the loan. Can i file 2011 taxes online Points. Can i file 2011 taxes online   If you pay points to obtain a loan (including a mortgage, second mortgage, line of credit, or a home equity loan), do not add the points to the basis of the related property. Can i file 2011 taxes online Generally, you deduct the points over the term of the loan. Can i file 2011 taxes online For more information on how to deduct points, see Points in chapter 4 of Publication 535. Can i file 2011 taxes online Points on home mortgage. Can i file 2011 taxes online   Special rules may apply to points you and the seller pay when you obtain a mortgage to purchase your main home. Can i file 2011 taxes online If certain requirements are met, you can deduct the points in full for the year in which they are paid. Can i file 2011 taxes online Reduce the basis of your home by any seller-paid points. Can i file 2011 taxes online For more information, see Points in Publication 936, Home Mortgage Interest Deduction. Can i file 2011 taxes online Assumption of mortgage. Can i file 2011 taxes online   If you buy property and assume (or buy subject to) an existing mortgage on the property, your basis includes the amount you pay for the property plus the amount to be paid on the mortgage. Can i file 2011 taxes online Example. Can i file 2011 taxes online If you buy a building for $20,000 cash and assume a mortgage of $80,000 on it, your basis is $100,000. Can i file 2011 taxes online Constructing assets. Can i file 2011 taxes online   If you build property or have assets built for you, your expenses for this construction are part of your basis. Can i file 2011 taxes online Some of these expenses include the following costs. Can i file 2011 taxes online Land, Labor and materials, Architect's fees, Building permit charges, Payments to contractors, Payments for rental equipment, and Inspection fees. Can i file 2011 taxes online In addition, if you own a business and use your employees, material, and equipment to build an asset, do not deduct the following expenses. Can i file 2011 taxes online You must include them in the asset's basis. Can i file 2011 taxes online Employee wages paid for the construction work, reduced by any employment credits allowed; Depreciation on equipment you own while it is used in the construction; Operating and maintenance costs for equipment used in the construction; and The cost of business supplies and materials used in the construction. Can i file 2011 taxes online    Do not include the value of your own labor, or any other labor you did not pay for, in the basis of any property you construct. Can i file 2011 taxes online Business Assets If you purchase property to use in your business, your basis is usually its actual cost to you. Can i file 2011 taxes online If you construct, create, or otherwise produce property, you must capitalize the costs as your basis. Can i file 2011 taxes online In certain circumstances, you may be subject to the uniform capitalization rules, next. Can i file 2011 taxes online Uniform Capitalization Rules The uniform capitalization rules specify the costs you add to basis in certain circumstances. Can i file 2011 taxes online Activities subject to the rules. Can i file 2011 taxes online   You must use the uniform capitalization rules if you do any of the following in your trade or business or activity carried on for profit. Can i file 2011 taxes online Produce real or tangible personal property for use in the business or activity, Produce real or tangible personal property for sale to customers, or Acquire property for resale. Can i file 2011 taxes online However, this rule does not apply to personal property if your average annual gross receipts for the 3 previous tax years are $10 million or less. Can i file 2011 taxes online   You produce property if you construct, build, install, manufacture, develop, improve, create, raise, or grow the property. Can i file 2011 taxes online Treat property produced for you under a contract as produced by you up to the amount you pay or costs you otherwise incur for the property. Can i file 2011 taxes online Tangible personal property includes films, sound recordings, video tapes, books, or similar property. Can i file 2011 taxes online    Under the uniform capitalization rules, you must capitalize all direct costs and an allocable part of most indirect costs you incur due to your production or resale activities. Can i file 2011 taxes online To capitalize means to include certain expenses in the basis of property you produce or in your inventory costs rather than deduct them as a current expense. Can i file 2011 taxes online You recover these costs through deductions for depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Can i file 2011 taxes online   Any cost you cannot use to figure your taxable income for any tax year is not subject to the uniform capitalization rules. Can i file 2011 taxes online Example. Can i file 2011 taxes online If you incur a business meal expense for which your deduction would be limited to 50% of the cost of the meal, that amount is subject to the uniform capitalization rules. Can i file 2011 taxes online The nondeductible part of the cost is not subject to the uniform capitalization rules. Can i file 2011 taxes online More information. Can i file 2011 taxes online   For more information about these rules, see the regulations under section 263A of the Internal Revenue Code and Publication 538, Accounting Periods and Methods. Can i file 2011 taxes online Exceptions. Can i file 2011 taxes online   The following are not subject to the uniform capitalization rules. Can i file 2011 taxes online Property you produce that you do not use in your trade, business, or activity conducted for profit; Qualified creative expenses you pay or incur as a free-lance (self-employed) writer, photographer, or artist that are otherwise deductible on your tax return; Property you produce under a long-term contract, except for certain home construction contracts; Research and experimental expenses deductible under section 174 of the Internal Revenue Code; and Costs for personal property acquired for resale if your (or your predecessor's) average annual gross receipts for the 3 previous tax years do not exceed $10 million. Can i file 2011 taxes online For other exceptions to the uniform capitalization rules, see section 1. Can i file 2011 taxes online 263A-1(b) of the regulations. Can i file 2011 taxes online   For information on the special rules that apply to costs incurred in the business of farming, see chapter 6 of Publication 225, Farmer's Tax Guide. Can i file 2011 taxes online Intangible Assets Intangible assets include goodwill, patents, copyrights, trademarks, trade names, and franchises. Can i file 2011 taxes online The basis of an intangible asset is usually the cost to buy or create it. Can i file 2011 taxes online If you acquire multiple assets, for example a going business for a lump sum, see Allocating the Basis below to figure the basis of the individual assets. Can i file 2011 taxes online The basis of certain intangibles can be amortized. Can i file 2011 taxes online See chapter 8 of Publication 535 for information on the amortization of these costs. Can i file 2011 taxes online Patents. Can i file 2011 taxes online   The basis of a patent you get for an invention is the cost of development, such as research and experimental expenditures, drawings, working models, and attorneys' and governmental fees. Can i file 2011 taxes online If you deduct the research and experimental expenditures as current business expenses, you cannot include them in the basis of the patent. Can i file 2011 taxes online The value of the inventor's time spent on an invention is not part of the basis. Can i file 2011 taxes online Copyrights. Can i file 2011 taxes online   If you are an author, the basis of a copyright will usually be the cost of getting the copyright plus copyright fees, attorneys' fees, clerical assistance, and the cost of plates that remain in your possession. Can i file 2011 taxes online Do not include the value of your time as the author, or any other person's time you did not pay for. Can i file 2011 taxes online Franchises, trademarks, and trade names. Can i file 2011 taxes online   If you buy a franchise, trademark, or trade name, the basis is its cost, unless you can deduct your payments as a business expense. Can i file 2011 taxes online Allocating the Basis If you buy multiple assets for a lump sum, allocate the amount you pay among the assets you receive. Can i file 2011 taxes online You must make this allocation to figure your basis for depreciation and gain or loss on a later disposition of any of these assets. Can i file 2011 taxes online See Trade or Business Acquired below. Can i file 2011 taxes online Group of Assets Acquired If you buy multiple assets for a lump sum, you and the seller may agree to a specific allocation of the purchase price among the assets in the sales contract. Can i file 2011 taxes online If this allocation is based on the value of each asset and you and the seller have adverse tax interests, the allocation generally will be accepted. Can i file 2011 taxes online However, see Trade or Business Acquired, next. Can i file 2011 taxes online Trade or Business Acquired If you acquire a trade or business, allocate the consideration paid to the various assets acquired. Can i file 2011 taxes online Generally, reduce the consideration paid by any cash and general deposit accounts (including checking and savings accounts) received. Can i file 2011 taxes online Allocate the remaining consideration to the other business assets received in proportion to (but not more than) their fair market value in the following order. Can i file 2011 taxes online Certificates of deposit, U. Can i file 2011 taxes online S. Can i file 2011 taxes online Government securities, foreign currency, and actively traded personal property, including stock and securities. Can i file 2011 taxes online Accounts receivable, other debt instruments, and assets you mark to market at least annually for federal income tax purposes. Can i file 2011 taxes online Property of a kind that would properly be included in inventory if on hand at the end of the tax year or property held primarily for sale to customers in the ordinary course of business. Can i file 2011 taxes online All other assets except section 197 intangibles, goodwill, and going concern value. Can i file 2011 taxes online Section 197 intangibles except goodwill and going concern value. Can i file 2011 taxes online Goodwill and going concern value (whether or not they qualify as section 197 intangibles). Can i file 2011 taxes online Agreement. Can i file 2011 taxes online   The buyer and seller may enter into a written agreement as to the allocation of any consideration or the fair market value (FMV) of any of the assets. Can i file 2011 taxes online This agreement is binding on both parties unless the IRS determines the amounts are not appropriate. Can i file 2011 taxes online Reporting requirement. Can i file 2011 taxes online   Both the buyer and seller involved in the sale of business assets must report to the IRS the allocation of the sales price among section 197 intangibles and the other business assets. Can i file 2011 taxes online Use Form 8594 to provide this information. Can i file 2011 taxes online The buyer and seller should each attach Form 8594 to their federal income tax return for the year in which the sale occurred. Can i file 2011 taxes online More information. Can i file 2011 taxes online   See Sale of a Business in chapter 2 of Publication 544 for more information. Can i file 2011 taxes online Land and Buildings If you buy buildings and the land on which they stand for a lump sum, allocate the basis of the property among the land and the buildings so you can figure the depreciation allowable on the buildings. Can i file 2011 taxes online Figure the basis of each asset by multiplying the lump sum by a fraction. Can i file 2011 taxes online The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. Can i file 2011 taxes online If you are not certain of the FMV of the land and buildings, you can allocate the basis based on their assessed values for real estate tax purposes. Can i file 2011 taxes online Demolition of building. Can i file 2011 taxes online   Add demolition costs and other losses incurred for the demolition of any building to the basis of the land on which the demolished building was located. Can i file 2011 taxes online Do not claim the costs as a current deduction. Can i file 2011 taxes online Modification of building. Can i file 2011 taxes online   A modification of a building will not be treated as a demolition if the following conditions are satisfied. Can i file 2011 taxes online 75 percent or more of the existing external walls of the building are retained in place as internal or external walls, and 75 percent or more of the existing internal structural framework of the building is retained in place. Can i file 2011 taxes online   If the building is a certified historic structure, the modification must also be part of a certified rehabilitation. Can i file 2011 taxes online   If these conditions are met, add the costs of the modifications to the basis of the building. Can i file 2011 taxes online Subdivided lots. Can i file 2011 taxes online   If you buy a tract of land and subdivide it, you must determine the basis of each lot. Can i file 2011 taxes online This is necessary because you must figure the gain or loss on the sale of each individual lot. Can i file 2011 taxes online As a result, you do not recover your entire cost in the tract until you have sold all of the lots. Can i file 2011 taxes online   To determine the basis of an individual lot, multiply the total cost of the tract by a fraction. Can i file 2011 taxes online The numerator is the FMV of the lot and the denominator is the FMV of the entire tract. Can i file 2011 taxes online Future improvement costs. Can i file 2011 taxes online   If you are a developer and sell subdivided lots before the development work is completed, you can (with IRS consent) include in the basis of the properties sold an allocation of the estimated future cost for common improvements. Can i file 2011 taxes online See Revenue Procedure 92–29 for more information, including an explanation of the procedures for getting consent from the IRS. Can i file 2011 taxes online Use of erroneous cost basis. Can i file 2011 taxes online   If you made a mistake in figuring the cost basis of subdivided lots sold in previous years, you cannot correct the mistake for years for which the statute of limitations (generally 3 tax years) has expired. Can i file 2011 taxes online Figure the basis of any remaining lots by allocating the correct original cost basis of the entire tract among the original lots. Can i file 2011 taxes online Example. Can i file 2011 taxes online You bought a tract of land to which you assigned a cost of $15,000. Can i file 2011 taxes online You subdivided the land into 15 building lots of equal size and equitably divided your basis so that each lot had a basis of $1,000. Can i file 2011 taxes online You treated the sale of each lot as a separate transaction and figured gain or loss separately on each sale. Can i file 2011 taxes online Several years later you determine that your original basis in the tract was $22,500 and not $15,000. Can i file 2011 taxes online You sold eight lots using $8,000 of basis in years for which the statute of limitations has expired. Can i file 2011 taxes online You now can take $1,500 of basis into account for figuring gain or loss only on the sale of each of the remaining seven lots ($22,500 basis divided among all 15 lots). Can i file 2011 taxes online You cannot refigure the basis of the eight lots sold in tax years barred by the statute of limitations. Can i file 2011 taxes online Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments to the basis of the property. Can i file 2011 taxes online The result of these adjustments to the basis is the adjusted basis. Can i file 2011 taxes online Increases to Basis Increase the basis of any property by all items properly added to a capital account. Can i file 2011 taxes online These include the cost of any improvements having a useful life of more than 1 year. Can i file 2011 taxes online Rehabilitation expenses also increase basis. Can i file 2011 taxes online However, you must subtract any rehabilitation credit allowed for these expenses before you add them to your basis. Can i file 2011 taxes online If you have to recapture any of the credit, increase your basis by the recaptured amount. Can i file 2011 taxes online If you make additions or improvements to business property, keep separate accounts for them. Can i file 2011 taxes online Also, you must depreciate the basis of each according to the depreciation rules that would apply to the underlying property if you had placed it in service at the same time you placed the addition or improvement in service. Can i file 2011 taxes online For more information, see Publication 946. Can i file 2011 taxes online The following items increase the basis of property. Can i file 2011 taxes online The cost of extending utility service lines to the property; Impact fees; Legal fees, such as the cost of defending and perfecting title; Legal fees for obtaining a decrease in an assessment levied against property to pay for local improvements; Zoning costs; and The capitalized value of a redeemable ground rent. Can i file 2011 taxes online Assessments for Local Improvements Increase the basis of property by assessments for items such as paving roads and building ditches that increase the value of the property assessed. Can i file 2011 taxes online Do not deduct them as taxes. Can i file 2011 taxes online However, you can deduct as taxes charges for maintenance, repairs, or interest charges related to the improvements. Can i file 2011 taxes online Example. Can i file 2011 taxes online Your city changes the street in front of your store into an enclosed pedestrian mall and assesses you and other affected landowners for the cost of the conversion. Can i file 2011 taxes online Add the assessment to your property's basis. Can i file 2011 taxes online In this example, the assessment is a depreciable asset. Can i file 2011 taxes online Deducting vs. Can i file 2011 taxes online Capitalizing Costs Do not add to your basis costs you can deduct as current expenses. Can i file 2011 taxes online For example, amounts paid for incidental repairs or maintenance that are deductible as business expenses cannot be added to basis. Can i file 2011 taxes online However, you can choose either to deduct or to capitalize certain other costs. Can i file 2011 taxes online If you capitalize these costs, include them in your basis. Can i file 2011 taxes online If you deduct them, do not include them in your basis. Can i file 2011 taxes online See Uniform Capitalization Rules earlier. Can i file 2011 taxes online The costs you can choose to deduct or to capitalize include the following. Can i file 2011 taxes online Carrying charges, such as interest and taxes, that you pay to own property, except carrying charges that must be capitalized under the uniform capitalization rules; Research and experimentation costs; Intangible drilling and development costs for oil, gas, and geothermal wells; Exploration costs for new mineral deposits; Mining development costs for a new mineral deposit; Costs of establishing, maintaining, or increasing the circulation of a newspaper or other periodical; and Costs of removing architectural and transportation barriers to people with disabilities and the elderly. Can i file 2011 taxes online If you claim the disabled access credit, you must reduce the amount you deduct or capitalize by the amount of the credit. Can i file 2011 taxes online For more information about deducting or capitalizing costs, see chapter 7 in Publication 535. Can i file 2011 taxes online Table 1. Can i file 2011 taxes online Examples of Increases and Decreases to Basis Increases to Basis Decreases to Basis Capital improvements:   Putting an addition on your home   Replacing an entire roof  Paving your driveway  Installing central air conditioning Rewiring your home Exclusion from income of subsidies for energy conservation measures  Casualty or theft loss deductions and insurance reimbursements  Vehicle credits Assessments for local improvements: Water connections Sidewalks Roads Section 179 deduction  Casualty losses: Restoring damaged property Depreciation  Nontaxable corporate distributions Legal fees:  Cost of defending and perfecting a title   Zoning costs   Decreases to Basis The following are some items that reduce the basis of property. Can i file 2011 taxes online Section 179 deduction; Nontaxable corporate distributions; Deductions previously allowed (or allowable) for amortization, depreciation, and depletion; Exclusion of subsidies for energy conservation measures; Vehicle credits; Residential energy credits; Postponed gain from sale of home; Investment credit (part or all) taken; Casualty and theft losses and insurance reimbursement; Certain canceled debt excluded from income; Rebates from a manufacturer or seller; Easements; Gas-guzzler tax; Adoption tax benefits; and Credit for employer-provided child care. Can i file 2011 taxes online Some of these items are discussed next. Can i file 2011 taxes online Casualties and Thefts If you have a casualty or theft loss, decrease the basis in your property by any insurance or other reimbursement and by any deductible loss not covered by insurance. Can i file 2011 taxes online You must increase your basis in the property by the amount you spend on repairs that substantially prolong the life of the property, increase its value, or adapt it to a different use. Can i file 2011 taxes online To make this determination, compare the repaired property to the property before the casualty. Can i file 2011 taxes online For more information on casualty and theft losses, see Publication 547, Casualties, Disasters, and Thefts. Can i file 2011 taxes online Easements The amount you receive for granting an easement is generally considered to be a sale of an interest in real property. Can i file 2011 taxes online It reduces the basis of the affected part of the property. Can i file 2011 taxes online If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. Can i file 2011 taxes online Vehicle Credits Unless you elect not to claim the qualified plug-in electric vehicle credit, the alternative motor vehicle credit, or the qualified plug-in electric drive motor vehicle credit, you may have to reduce the basis of each qualified vehicle by certain amounts reported. Can i file 2011 taxes online For more information, see Form 8834, Qualified Plug-in Electric and Electric Vehicle Credit; Form 8910, Alternative Motor Vehicle Credit; Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit;and the related instructions. Can i file 2011 taxes online Gas-Guzzler Tax Decrease the basis in your car by the gas-guzzler (fuel economy) tax if you begin using the car within 1 year of the date of its first sale for ultimate use. Can i file 2011 taxes online This rule also applies to someone who later buys the car and begins using it not more than 1 year after the original sale for ultimate use. Can i file 2011 taxes online If the car is imported, the one-year period begins on the date of entry or withdrawal of the car from the warehouse if that date is later than the date of the first sale for ultimate use. Can i file 2011 taxes online Section 179 Deduction If you take the section 179 deduction for all or part of the cost of qualifying business property, decrease the basis of the property by the deduction. Can i file 2011 taxes online For more information about the section 179 deduction, see Publication 946. Can i file 2011 taxes online Exclusion of Subsidies for Energy Conservation Measures You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of any energy conservation measure for a dwelling unit. Can i file 2011 taxes online Reduce the basis of the property for which you received the subsidy by the excluded amount. Can i file 2011 taxes online For more information on this subsidy, see Publication 525. Can i file 2011 taxes online Depreciation Decrease the basis of property by the depreciation you deducted, or could have deducted, on your tax returns under the method of depreciation you chose. Can i file 2011 taxes online If you took less depreciation than you could have under the method chosen, decrease the basis by the amount you could have taken under that method. Can i file 2011 taxes online If you did not take a depreciation deduction, reduce the basis by the full amount of the depreciation you could have taken. Can i file 2011 taxes online Unless a timely election is made not to deduct the special depreciation allowance for property placed in service after September 10, 2001, decrease the property's basis by the special depreciation allowance you deducted or could have deducted. Can i file 2011 taxes online If you deducted more depreciation than you should have, decrease your basis by the amount equal to the depreciation you should have deducted plus the part of the excess depreciation you deducted that actually reduced your tax liability for the year. Can i file 2011 taxes online In decreasing your basis for depreciation, take into account the amount deducted on your tax returns as depreciation and any depreciation capitalized under the uniform capitalization rules. Can i file 2011 taxes online For information on figuring depreciation, see Publication 946. Can i file 2011 taxes online If you are claiming depreciation on a business vehicle, see Publication 463. Can i file 2011 taxes online If the car is not used more than 50% for business during the tax year, you may have to recapture excess depreciation. Can i file 2011 taxes online Include the excess depreciation in your gross income and add it to your basis in the property. Can i file 2011 taxes online For information on the computation of excess depreciation, see chapter 4 in Publication 463. Can i file 2011 taxes online Canceled Debt Excluded From Income If a debt you owe is canceled or forgiven, other than as a gift or bequest, you generally must include the canceled amount in your gross income for tax purposes. Can i file 2011 taxes online A debt includes any indebtedness for which you are liable or which attaches to property you hold. Can i file 2011 taxes online You can exclude canceled debt from income in the following situations. Can i file 2011 taxes online Debt canceled in a bankruptcy case or when you are insolvent, Qualified farm debt, and Qualified real property business debt (provided you are not a C corporation). Can i file 2011 taxes online If you exclude from income canceled debt under situation (1) or (2), you may have to reduce the basis of your depreciable and nondepreciable property. Can i file 2011 taxes online However, in situation (3), you must reduce the basis of your depreciable property by the excluded amount. Can i file 2011 taxes online For more information about canceled debt in a bankruptcy case or during insolvency, see Publication 908, Bankruptcy Tax Guide. Can i file 2011 taxes online For more information about canceled debt that is qualified farm debt, see chapter 3 in Publication 225. Can i file 2011 taxes online For more information about qualified real property business debt, see chapter 5 in Publication 334, Tax Guide for Small Business. Can i file 2011 taxes online Postponed Gain From Sale of Home If you postponed gain from the sale of your main home before May 7, 1997, you must reduce the basis of your new home by the postponed gain. Can i file 2011 taxes online For more information on the rules for the sale of a home, see Publication 523. Can i file 2011 taxes online Adoption Tax Benefits If you claim an adoption credit for the cost of improvements you added to the basis of your home, decrease the basis of your home by the credit allowed. Can i file 2011 taxes online This also applies to amounts you received under an employer's adoption assistance program and excluded from income. Can i file 2011 taxes online For more information Form 8839, Qualified Adoption Expenses. Can i file 2011 taxes online Employer-Provided Child Care If you are an employer, you can claim the employer-provided child care credit on amounts you paid or incurred to acquire, construct, rehabilitate, or expand property used as part of your qualified child care facility. Can i file 2011 taxes online You must reduce your basis in that property by the credit claimed. Can i file 2011 taxes online For more information, see Form 8882, Credit for Employer-Provided Child Care Facilities and Services. Can i file 2011 taxes online Adjustments to Basis Example In January 2005, you paid $80,000 for real property to be used as a factory. Can i file 2011 taxes online You also paid commissions of $2,000 and title search and legal fees of $600. Can i file 2011 taxes online You allocated the total cost of $82,600 between the land and the building—$10,325 for the land and $72,275 for the building. Can i file 2011 taxes online Immediately you spent $20,000 in remodeling the building before you placed it in service. Can i file 2011 taxes online You were allowed depreciation of $14,526 for the years 2005 through 2009. Can i file 2011 taxes online In 2008 you had a $5,000 casualty loss from a that was not covered by insurance on the building. Can i file 2011 taxes online You claimed a deduction for this loss. Can i file 2011 taxes online You spent $5,500 to repair the damages and extend the useful life of the building. Can i file 2011 taxes online The adjusted basis of the building on January 1, 2010, is figured as follows: Original cost of building including fees and commissions $72,275 Adjustments to basis:     Add:         Improvements 20,000   Repair of damages 5,500       $97,775 Subtract:       Depreciation $14,526     Deducted casualty loss 5,000 19,526 Adjusted basis on January 1, 2010 $78,249 The basis of the land, $10,325, remains unchanged. Can i file 2011 taxes online It is not affected by any of the above adjustments. Can i file 2011 taxes online Basis Other Than Cost There are many times when you cannot use cost as basis. Can i file 2011 taxes online In these cases, the fair market value or the adjusted basis of property may be used. Can i file 2011 taxes online Adjusted basis is discussed earlier. Can i file 2011 taxes online Fair market value (FMV). Can i file 2011 taxes online   FMV is the price at which property would change hands between a buyer and a seller, neither having to buy or sell, and both having reasonable knowledge of all necessary facts. Can i file 2011 taxes online Sales of similar property on or about the same date may be helpful in figuring the property's FMV. Can i file 2011 taxes online Property Received for Services If you receive property for services, include the property's FMV in income. Can i file 2011 taxes online The amount you include in income becomes your basis. Can i file 2011 taxes online If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. Can i file 2011 taxes online Bargain Purchases A bargain purchase is a purchase of an item for less than its FMV. Can i file 2011 taxes online If, as compensation for services, you purchase goods or other property at less than FMV, include the difference between the purchase price and the property's FMV in your income. Can i file 2011 taxes online Your basis in the property is its FMV (your purchase price plus the amount you include in income). Can i file 2011 taxes online If the difference between your purchase price and the FMV represents a qualified employee discount, do not include the difference in income. Can i file 2011 taxes online However, your basis in the property is still its FMV. Can i file 2011 taxes online See Employee Discounts in Publication 15-B. Can i file 2011 taxes online Restricted Property If you receive property for your services and the property is subject to certain restrictions, your basis in the property is its FMV when it becomes substantially vested unless you make the election discussed later. Can i file 2011 taxes online Property becomes substantially vested when your rights in the property or the rights of any person to whom you transfer the property are not subject to a substantial risk of forfeiture. Can i file 2011 taxes online There is substantial risk of forfeiture when the rights to full enjoyment of the property depend on the future performance of substantial services by any person. Can i file 2011 taxes online When the property becomes substantially vested, include the FMV, less any amount you paid for the property, in income. Can i file 2011 taxes online Example. Can i file 2011 taxes online Your employer gives you stock for services performed under the condition that you will have to return the stock unless you complete 5 years of service. Can i file 2011 taxes online The stock is under a substantial risk of forfeiture and is not substantially vested when you receive it. Can i file 2011 taxes online You do not report any income until you have completed the 5 years of service that satisfy the condition. Can i file 2011 taxes online Fair market value. Can i file 2011 taxes online   Figure the FMV of property you received without considering any restriction except one that by its terms will never end. Can i file 2011 taxes online Example. Can i file 2011 taxes online You received stock from your employer for services you performed. Can i file 2011 taxes online If you want to sell the stock while you are still employed, you must sell the stock to your employer at book value. Can i file 2011 taxes online At your retirement or death, you or your estate must offer to sell the stock to your employer at its book value. Can i file 2011 taxes online This is a restriction that by its terms will never end and you must consider it when you figure the FMV. Can i file 2011 taxes online Election. Can i file 2011 taxes online   You can choose to include in your gross income the FMV of the property at the time of transfer, less any amount you paid for it. Can i file 2011 taxes online If you make this choice, the substantially vested rules do not apply. Can i file 2011 taxes online Your basis is the amount you paid plus the amount you included in income. Can i file 2011 taxes online   See the discussion of Restricted Property in Publication 525 for more information. Can i file 2011 taxes online Taxable Exchanges A taxable exchange is one in which the gain is taxable or the loss is deductible. Can i file 2011 taxes online A taxable gain or deductible loss is also known as a recognized gain or loss. Can i file 2011 taxes online If you receive property in exchange for other property in a taxable exchange, the basis of property you receive is usually its FMV at the time of the exchange. Can i file 2011 taxes online A taxable exchange occurs when you receive cash or property not similar or related in use to the property exchanged. Can i file 2011 taxes online Example. Can i file 2011 taxes online You trade a tract of farm land with an adjusted basis of $3,000 for a tractor that has an FMV of $6,000. Can i file 2011 taxes online You must report a taxable gain of $3,000 for the land. Can i file 2011 taxes online The tractor has a basis of $6,000. Can i file 2011 taxes online Involuntary Conversions If you receive property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, you can figure the basis of the replacement property you receive using the basis of the converted property. Can i file 2011 taxes online Similar or related property. Can i file 2011 taxes online   If you receive replacement property similar or related in service or use to the converted property, the replacement property's basis is the old property's basis on the date of the conversion. Can i file 2011 taxes online However, make the following adjustments. Can i file 2011 taxes online Decrease the basis by the following. Can i file 2011 taxes online Any loss you recognize on the conversion, and Any money you receive that you do not spend on similar property. Can i file 2011 taxes online Increase the basis by the following. Can i file 2011 taxes online Any gain you recognize on the conversion, and Any cost of acquiring the replacement property. Can i file 2011 taxes online Money or property not similar or related. Can i file 2011 taxes online   If you receive money or property not similar or related in service or use to the converted property, and you buy replacement property similar or related in service or use to the converted property, the basis of the new property is its cost decreased by the gain not recognized on the conversion. Can i file 2011 taxes online Example. Can i file 2011 taxes online The state condemned your property. Can i file 2011 taxes online The property had an adjusted basis of $26,000 and the state paid you $31,000 for it. Can i file 2011 taxes online You realized a gain of $5,000 ($31,000 − $26,000). Can i file 2011 taxes online You bought replacement property similar in use to the converted property for $29,000. Can i file 2011 taxes online You recognize a gain of $2,000 ($31,000 − $29,000), the unspent part of the payment from the state. Can i file 2011 taxes online Your gain not recognized is $3,000, the difference between the $5,000 realized gain and the $2,000 recognized gain. Can i file 2011 taxes online The basis of the new property is figured as follows: Cost of replacement property $29,000 Minus: Gain not recognized 3,000 Basis of the replacement property $26,000 Allocating the basis. Can i file 2011 taxes online   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. Can i file 2011 taxes online Example. Can i file 2011 taxes online The state in the previous example condemned your unimproved real property and the replacement property you bought was improved real property with both land and buildings. Can i file 2011 taxes online Allocate the replacement property's $26,000 basis between land and buildings based on their respective costs. Can i file 2011 taxes online More information. Can i file 2011 taxes online   For more information about condemnations, see Involuntary Conversions in Publication 544. Can i file 2011 taxes online For more information about casualty and theft losses, see Publication 547. Can i file 2011 taxes online Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. Can i file 2011 taxes online If you receive property in a nontaxable exchange, its basis is usually the same as the basis of the property you transferred. Can i file 2011 taxes online A nontaxable gain or loss is also known as an unrecognized gain or loss. Can i file 2011 taxes online Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. Can i file 2011 taxes online To qualify as a like-kind exchange, you must hold for business or investment purposes both the property you transfer and the property you receive. Can i file 2011 taxes online There must also be an exchange of like-kind property. Can i file 2011 taxes online For more information, see Like-Kind Exchanges in Publication 544. Can i file 2011 taxes online The basis of the property you receive is the same as the basis of the property you gave up. Can i file 2011 taxes online Example. Can i file 2011 taxes online You exchange real estate (adjusted basis $50,000, FMV $80,000) held for investment for other real estate (FMV $80,000) held for investment. Can i file 2011 taxes online Your basis in the new property is the same as the basis of the old ($50,000). Can i file 2011 taxes online Exchange expenses. Can i file 2011 taxes online   Exchange expenses are generally the closing costs you pay. Can i file 2011 taxes online They include such items as brokerage commissions, attorney fees, deed preparation fees, etc. Can i file 2011 taxes online Add them to the basis of the like-kind property received. Can i file 2011 taxes online Property plus cash. Can i file 2011 taxes online   If you trade property in a like-kind exchange and also pay money, the basis of the property received is the basis of the property you gave up increased by the money you paid. Can i file 2011 taxes online Example. Can i file 2011 taxes online You trade in a truck (adjusted basis $3,000) for another truck (FMV $7,500) and pay $4,000. Can i file 2011 taxes online Your basis in the new truck is $7,000 (the $3,000 basis of the old truck plus the $4,000 paid). Can i file 2011 taxes online Special rules for related persons. Can i file 2011 taxes online   If a like-kind exchange takes place directly or indirectly between related persons and either party disposes of the property within 2 years after the exchange, the exchange no longer qualifies for like-kind exchange treatment. Can i file 2011 taxes online Each person must report any gain or loss not recognized on the original exchange. Can i file 2011 taxes online Each person reports it on the tax return filed for the year in which the later disposition occurs. Can i file 2011 taxes online If this rule applies, the basis of the property received in the original exchange will be its fair market value. Can i file 2011 taxes online   These rules generally do not apply to the following kinds of property dispositions. Can i file 2011 taxes online Dispositions due to the death of either related person, Involuntary conversions, and Dispositions in which neither the original exchange nor the subsequent disposition had as a main purpose the avoidance of federal income tax. Can i file 2011 taxes online Related persons. Can i file 2011 taxes online   Generally, related persons are ancestors, lineal descendants, brothers and sisters (whole or half), and a spouse. Can i file 2011 taxes online   For other related persons (for example, two corporations, an individual and a corporation, a grantor and fiduciary, etc. Can i file 2011 taxes online ), see Nondeductible Loss in chapter 2 of Publication 544. Can i file 2011 taxes online Exchange of business property. Can i file 2011 taxes online   Exchanging the assets of one business for the assets of another business is a multiple property exchange. Can i file 2011 taxes online For information on figuring basis, see Multiple Property Exchanges in chapter 1 of Publication 544. Can i file 2011 taxes online Partially Nontaxable Exchange A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like property. Can i file 2011 taxes online The basis of the property you receive is the same as the basis of the property you gave up, with the following adjustments. Can i file 2011 taxes online Decrease the basis by the following amounts. Can i file 2011 taxes online Any money you receive, and Any loss you recognize on the exchange. Can i file 2011 taxes online Increase the basis by the following amounts. Can i file 2011 taxes online Any additional costs you incur, and Any gain you recognize on the exchange. Can i file 2011 taxes online If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. Can i file 2011 taxes online Example. Can i file 2011 taxes online You traded a truck (adjusted basis $6,000) for a new truck (FMV $5,200) and $1,000 cash. Can i file 2011 taxes online You realized a gain of $200 ($6,200 − $6,000). Can i file 2011 taxes online This is the FMV of the truck received plus the cash minus the adjusted basis of the truck you traded ($5,200 + $1,000 – $6,000). Can i file 2011 taxes online You include all the gain in income (recognized gain) because the gain is less than the cash received. Can i file 2011 taxes online Your basis in the new truck is: Adjusted basis of old truck $6,000 Minus: Cash received (adjustment 1(a)) 1,000   $5,000 Plus: Gain recognized (adjustment 2(b)) 200 Basis of new truck $5,200 Allocation of basis. Can i file 2011 taxes online   Allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. Can i file 2011 taxes online The rest is the basis of the like property. Can i file 2011 taxes online Example. Can i file 2011 taxes online You had an adjusted basis of $15,000 in real estate you held for investment. Can i file 2011 taxes online You exchanged it for other real estate to be held for investment with an FMV of $12,500, a truck with an FMV of $3,000, and $1,000 cash. Can i file 2011 taxes online The truck is unlike property. Can i file 2011 taxes online You realized a gain of $1,500 ($16,500 − $15,000). Can i file 2011 taxes online This is the FMV of the real estate received plus the FMV of the truck received plus the cash minus the adjusted basis of the real estate you traded ($12,500 + $3,000 + $1,000 – $15,000). Can i file 2011 taxes online You include in income (recognize) all $1,500 of the gain because it is less than the FMV of the unlike property plus the cash received. Can i file 2011 taxes online Your basis in the properties you received is figured as follows. Can i file 2011 taxes online Adjusted basis of real estate transferred $15,000 Minus: Cash received (adjustment 1(a)) 1,000   $14,000 Plus: Gain recognized (adjustment 2(b)) 1,500 Total basis of properties received $15,500 Allocate the total basis of $15,500 first to the unlike property — the truck ($3,000). Can i file 2011 taxes online This is the truck's FMV. Can i file 2011 taxes online The rest ($12,500) is the basis of the real estate. Can i file 2011 taxes online Sale and Purchase If you sell property and buy similar property in two mutually dependent transactions, you may have to treat the sale and purchase as a single nontaxable exchange. Can i file 2011 taxes online Example. Can i file 2011 taxes online You are a salesperson and you use one of your cars 100% for business. Can i file 2011 taxes online You have used this car in your sales activities for 2 years and have depreciated it. Can i file 2011 taxes online Your adjusted basis in the car is $22,600 and its FMV is $23,100. Can i file 2011 taxes online You are interested in a new car, which sells for $28,000. Can i file 2011 taxes online If you trade your old car and pay $4,900 for the new one, your basis for depreciation for the new car would be $27,500 ($4,900 plus the $22,600 basis of your old car). Can i file 2011 taxes online However, you want a higher basis for depreciating the new car, so you agree to pay the dealer $28,000 for the new car if he will pay you $23,100 for your old car. Can i file 2011 taxes online Because the two transactions are dependent on each other, you are treated as having exchanged your old car for the new one and paid $4,900 ($28,000 − $23,100). Can i file 2011 taxes online Your basis for depreciating the new car is $27,500, the same as if you traded the old car. Can i file 2011 taxes online Partial Business Use of Property If you have property used partly for business and partly for personal use, and you exchange it in a nontaxable exchange for property to be used wholly or partly in your business, the basis of the property you receive is figured as if you had exchanged two properties. Can i file 2011 taxes online The first is an exchange of like-kind property. Can i file 2011 taxes online The second is personal-use property on which gain is recognized and loss is not recognized. Can i file 2011 taxes online First, figure your adjusted basis in the property as if you transferred two separate properties. Can i file 2011 taxes online Figure the adjusted basis of each part of the property by taking into account any adjustments to basis. Can i file 2011 taxes online Deduct the depreciation you took or could have taken from the adjusted basis of the business part. Can i file 2011 taxes online Then figure the amount realized for your property and allocate it to the business and nonbusiness parts of the property. Can i file 2011 taxes online The business part of the property is permitted to be exchanged tax free. Can i file 2011 taxes online However, you must recognize any gain from the exchange of the nonbusiness part. Can i file 2011 taxes online You are deemed to have received, in exchange for the nonbusiness part, an amount equal to its FMV on the date of the exchange. Can i file 2011 taxes online The basis of the property you acquired is the total basis of the property transferred (adjusted to the date of the exchange), increased by any gain recognized on the nonbusiness part. Can i file 2011 taxes online If the nonbusiness part of the property transferred is your main home, you may qualify to exclude from income all or part of the gain on that part. Can i file 2011 taxes online For more information, see Publication 523. Can i file 2011 taxes online Trade of car used partly in business. Can i file 2011 taxes online   If you trade in a car you used partly in your business for another car you will use in your business, your basis for depreciation of the new car is not the same as your basis for figuring a gain or loss on its sale. Can i file 2011 taxes online   For information on figuring your basis for depreciation, see Publication 463. Can i file 2011 taxes online Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse (or former spouse if the transfer is incident to divorce), is the same as your spouse's adjusted basis. Can i file 2011 taxes online However, adjust your basis for any gain recognized by your spouse or former spouse on property transferred in trust. Can i file 2011 taxes online This rule applies only to a transfer of property in trust in which the liabilities assumed, plus the liabilities to which the property is subject, are more than the adjusted basis of the property transferred. Can i file 2011 taxes online If the property transferred to you is a series E, series EE, or series I United States savings bond, the transferor must include in income the interest accrued to the date of transfer. Can i file 2011 taxes online Your basis in the bond immediately after the transfer is equal to the transferor's basis increased by the interest income includible in the transferor's income. Can i file 2011 taxes online For more information on these bonds, see Publication 550. Can i file 2011 taxes online At the time of the transfer, the transferor must give you the records necessary to determine the adjusted basis and holding period of the property as of the date of transfer. Can i file 2011 taxes online For more information, see Publication 504, Divorced or Separated Individuals. Can i file 2011 taxes online Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined earlier) to the donor just before it was given to you, its FMV at the time it was given to you, and any gift tax paid on it. Can i file 2011 taxes online FMV Less Than Donor's Adjusted Basis If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. Can i file 2011 taxes online Your basis for figuring gain is the same as the donor's adjusted basis plus or minus any required adjustment to basis while you held the property. Can i file 2011 taxes online Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustment to basis while you held the property (see Adjusted Basis earlier). Can i file 2011 taxes online If you use the donor's adjusted basis for figuring a gain and get a loss, and then use the FMV for figuring a loss and have a gain, you have neither gain nor loss on the sale or disposition of the property. Can i file 2011 taxes online Example. Can i file 2011 taxes online You received an acre of land as a gift. Can i file 2011 taxes online At the time of the gift, the land had an FMV of $8,000. Can i file 2011 taxes online The donor's adjusted basis was $10,000. Can i file 2011 taxes online After you received the land, no events occurred to increase or decrease your basis. Can i file 2011 taxes online If you sell the land for $12,000, you will have a $2,000 gain because you must use the donor's adjusted basis ($10,000) at the time of the gift as your basis to figure gain. Can i file 2011 taxes online If you sell the land for $7,000, you will have a $1,000 loss because you must use the FMV ($8,000) at the time of the gift as your basis to figure a loss. Can i file 2011 taxes online If the sales price is between $8,000 and $10,000, you have neither gain nor loss. Can i file 2011 taxes online For instance, if the sales price was $9,000 and you tried to figure a gain using the donor's adjusted basis ($10,000), you would get a $1,000 loss. Can i file 2011 taxes online If you then tried to figure a loss using the FMV ($8,000), you would get a $1,000 gain. Can i file 2011 taxes online Business property. Can i file 2011 taxes online   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deduction is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. Can i file 2011 taxes online FMV Equal to or More Than Donor's Adjusted Basis If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis at the time you received the gift. Can i file 2011 taxes online Increase your basis by all or part of any gift tax paid, depending on the date of the gift. Can i file 2011 taxes online Also, for figuring gain or loss from a sale or other disposition of the property, or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis by any required adjustments to basis while you held the property. Can i file 2011 taxes online See Adjusted Basis earlier. Can i file 2011 taxes online Gift received before 1977. Can i file 2011 taxes online   If you received a gift before 1977, increase your basis in the gift (the donor's adjusted basis) by any gift tax paid on it. Can i file 2011 taxes online However, do not increase your basis above the FMV of the gift at the time it was given to you. Can i file 2011 taxes online Example 1. Can i file 2011 taxes online You were given a house in 1976 with an FMV of $21,000. Can i file 2011 taxes online The donor's adjusted basis was $20,000. Can i file 2011 taxes online The donor paid a gift tax of $500. Can i file 2011 taxes online Your basis is $20,500, the donor's adjusted basis plus the gift tax paid. Can i file 2011 taxes online Example 2. Can i file 2011 taxes online If, in Example 1, the gift tax paid had been $1,500, your basis would be $21,000. Can i file 2011 taxes online This is the donor's adjusted basis plus the gift tax paid, limited to the FMV of the house at the time you received the gift. Can i file 2011 taxes online Gift received after 1976. Can i file 2011 taxes online   If you received a gift after 1976, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it that is due to the net increase in value of the gift. Can i file 2011 taxes online Figure the increase by multiplying the gift tax paid by a fraction. Can i file 2011 taxes online The numerator of the fraction is the net increase in value of the gift and the denominator is the amount of the gift. Can i file 2011 taxes online   The net increase in value of the gift is the FMV of the gift less the donor's adjusted basis. Can i file 2011 taxes online The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Can i file 2011 taxes online For information on the gift tax, see Publication 950, Introduction to Estate and Gift Taxes. Can i file 2011 taxes online Example. Can i file 2011 taxes online In 2010, you received a gift of property from your mother that had an FMV of $50,000. Can i file 2011 taxes online Her adjusted basis was $20,000. Can i file 2011 taxes online The amount of the gift for gift tax purposes was $37,000 ($50,000 minus the $13,000 annual exclusion). Can i file 2011 taxes online She paid a gift tax of $9,000. Can i file 2011 taxes online Your basis, $27,290, is figured as follows: Fair market value $50,000 Minus: Adjusted basis 20,000 Net increase in value $30,000 Gift tax paid $9,000 Multiplied by ($30,000 ÷ $37,000) . Can i file 2011 taxes online 81 Gift tax due to net increase in value $7,290 Adjusted basis of property to your mother 20,000 Your basis in the property $27,290 Inherited Property Special rules apply to property acquired from a decedent who died in 2010. Can i file 2011 taxes online See Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, for details. Can i file 2011 taxes online If you inherited property from a decedent who died before 2010, your basis in property you inherit from a decedent is generally one of the following. Can i file 2011 taxes online The FMV of the property at the date of the individual's death. Can i file 2011 taxes online The FMV on the alternate valuation date if the personal representative for the estate chooses to use alternate valuation. Can i file 2011 taxes online For information on the alternate valuation date, see the Instructions for Form 706. Can i file 2011 taxes online The value under the special-use valuation method for real property used in farming or a closely held business if chosen for estate tax purposes. Can i file 2011 taxes online This method is discussed later. Can i file 2011 taxes online The decedent's adjusted basis in land to the extent of the value excluded from the decedent's taxable estate as a qualified conservation easement. Can i file 2011 taxes online For information on a qualified conservation easement, see the Instructions for Form 706. Can i file 2011 taxes online If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. Can i file 2011 taxes online For more information, see the Instructions for Form 706. Can i file 2011 taxes online Appreciated property. Can i file 2011 taxes online   The above rule does not apply to appreciated property you receive from a decedent if you or your spouse originally gave the property to the decedent within 1 year before the decedent's death. Can i file 2011 taxes online Your basis in this property is the same as the decedent's adjusted basis in the property immediately before his or her death, rather than its FMV. Can i file 2011 taxes online Appreciated property is any property whose FMV on the day it was given to the decedent is more than its adjusted basis. Can i file 2011 taxes online Community Property In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), husband and wife are each usually considered to own half the community property. Can i file 2011 taxes online When either spouse dies, the total value of the community property, even the part belonging to the surviving spouse, generally becomes the basis of the entire property. Can i file 2011 taxes online For this rule to apply, at least half the value of the community property interest must be includable in the decedent's gross estate, whether or not the estate must file a return. Can i file 2011 taxes online For example, you and your spouse owned community property that had a basis of $80,000. Can i file 2011 taxes online When your spouse died, half the FMV of the community interest was includible in your spouse's estate. Can i file 2011 taxes online The FMV of the community interest was $100,000. Can i file 2011 taxes online The basis of your half of the property after the death of your spouse is $50,000 (half of the $100,000 FMV). Can i file 2011 taxes online The basis of the other half to your spouse's heirs is also $50,000. Can i file 2011 taxes online For more information on community property, see Publication 555, Community Property. Can i file 2011 taxes online Property Held by Surviving Tenant The following example explains the rule for the basis of property held by a surviving tenant in joint tenancy or tenancy by the entirety. Can i file 2011 taxes online Example. Can i file 2011 taxes online John and Jim owned, as joint tenants with right of survivorship, business property they purchased for $30,000. Can i file 2011 taxes online John furnished two-thirds of the purchase price and Jim furnished one-third. Can i file 2011 taxes online Depreciation deductions allowed before John's death were $12,000. Can i file 2011 taxes online Under local law, each had a half interest in the income from the property. Can i file 2011 taxes online At the date of John's death, the property had an FMV of $60,000, two-thirds of which is includable in John's estate. Can i file 2011 taxes online Jim figures his basis in the property at the date of John's death as follows: Interest Jim bought with his own funds—1/3 of $30,000 cost $10,000   Interest Jim received on John's death—2/3 of $60,000 FMV 40,000 $50,000 Minus: ½ of $12,000 depreciation before John's death 6,000 Jim's basis at the date of John's death $44,000 If Jim had not contributed any part of the purchase price, his basis at the date of John's death would be $54,000. Can i file 2011 taxes online This is figured by subtracting from the $60,000 FMV, the $6,000 depreciation allocated to Jim's half interest before the date of death. Can i file 2011 taxes online If under local law Jim had no interest in the income from the property and he contributed no part of the purchase price, his basis at John's death would be $60,000, the FMV of the property. Can i file 2011 taxes online Qualified Joint Interest Include one-half of the value of a qualified joint interest in the decedent's gross estate. Can i file 2011 taxes online It does not matter how much each spouse contributed to the purchase price. Can i file 2011 taxes online Also, it does not matter which spouse dies first. Can i file 2011 taxes online A qualified joint interest is any interest in property held by husband and wife as either of the following. Can i file 2011 taxes online Tenants by the entirety, or Joint tenants with right of survivorship if husband and wife are the only joint tenants. Can i file 2011 taxes online Basis. Can i file 2011 taxes online   As the surviving spouse, your basis in property you owned with your spouse as a qualified joint interest is the cost of your half of the property with certain adjustments. Can i file 2011 taxes online Decrease the cost by any deductions allowed to you for depreciation and depletion. Can i file 2011 taxes online Increase the reduced cost by your basis in the half you inherited. Can i file 2011 taxes online Farm or Closely Held Business Under certain conditions, when a person dies the executor or personal representative of that person's estate can choose to value the qualified real property on other than its FMV. Can i file 2011 taxes online If so, the executor or personal representative values the qualified real property based on its use as a farm or its use in a closely held business. Can i file 2011 taxes online If the executor or personal representative chooses this method of valuation for estate tax purposes, that value is the basis of the property for the heirs. Can i file 2011 taxes online Qualified heirs should be able to get the necessary value from the executor or personal representative of the estate. Can i file 2011 taxes online Special-use valuation. Can i file 2011 taxes online   If you are a qualified heir who received special-use valuation property, your basis in the property is the estate's or trust's basis in that property immediately before the distribution. Can i file 2011 taxes online Increase your basis by any gain recognized by the estate or trust because of post-death appreciation. Can i file 2011 taxes online Post-death appreciation is the property's FMV on the date of distribution minus the property's FMV either on the date of the individual's death or the alternate valuation date. Can i file 2011 taxes online Figure all FMVs without regard to the special-use valuation. Can i file 2011 taxes online   You can elect to increase your basis in special-use valuation property if it becomes subject to the additional estate tax. Can i file 2011 taxes online This tax is assessed if, within 10 years after the death of the decedent, you transfer the property to a person who is not a member of your family or the property stops being used as a farm or in a closely held business. Can i file 2011 taxes online   To increase your basis in the property, you must make an irrevocable election and pay interest on the additional estate tax figured from the date 9 months after the decedent's death until the date of the payment of the additional estate tax. Can i file 2011 taxes online If you meet these requirements, increase your basis in the property to its FMV on the date of the decedent's death or the alternate valuation date. Can i file 2011 taxes online The increase in your basis is considered to have occurred immediately before the event that results in the additional estate tax. Can i file 2011 taxes online   You make the election by filing with Form 706-A a statement that does all of the following. Can i file 2011 taxes online Contains your name, address, and taxpayer identification number and those of the estate; Identifies the election as an election under section 1016(c) of the Internal Revenue Code; Specifies the property for which the election is made; and Provides any additional information required by the Instructions for Form 706-A. Can i file 2011 taxes online   For more information, see the Instructions for Form 706 and the Instructions for Form 706-A. Can i file 2011 taxes online Property Changed to Business or Rental Use If you hold property for personal use and then change it to business use or use it to produce rent, you must figure its basis for depreciation. Can i file 2011 taxes online An example of changing property held for personal use to business use would be renting out your former main home. Can i file 2011 taxes online Basis for depreciation. Can i file 2011 taxes online   The basis for depreciation is the lesser of the following amounts. Can i file 2011 taxes online The FMV of the property on the date of the change, or Your adjusted basis on the date of the change. Can i file 2011 taxes online Example. Can i file 2011 taxes online Several years ago you paid $160,000 to have your home built on a lot that cost $25,000. Can i file 2011 taxes online You paid $20,000 for permanent improvements to the house and claimed a $2,000 casualty loss deduction for damage to the house before changing the property to rental use last year. Can i file 2011 taxes online Because land is not depreciable, you include only the cost of the house when figuring the basis for depreciation. Can i file 2011 taxes online Your adjusted basis in the house when you changed its use was $178,000 ($160,000 + $20,000 − $2,000). Can i file 2011 taxes online On the same date, your property had an FMV of $180,000, of which $15,000 was for the land and $165,000 was for the house. Can i file 2011 taxes online The basis for figuring depreciation on the house is its FMV on the date of change ($165,000) because it is less than your adjusted basis ($178,000). Can i file 2011 taxes online Sale of property. Can i file 2011 taxes online   If you later sell or dispose of property changed to business or rental use, the basis of the property you use will depend on whether you are figuring gain or loss. Can i file 2011 taxes online Gain. Can i file 2011 taxes online   The basis for figuring a gain is your adjusted basis when you sell the property. Can i file 2011 taxes online Example. Can i file 2011 taxes online Assume the same facts as in the previous example except that you sell the property at a gain after being allowed depreciation deductions of $37,500. Can i file 2011 taxes online Your adjusted basis for figuring gain is $165,500 ($178,000 + $25,000 (land) − $37,500). Can i file 2011 taxes online Loss. Can i file 2011 taxes online   Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. Can i file 2011 taxes online Then adjust this amount for the period after the change in the property's use, as discussed earlier under Adjusted Basis, to arrive at a basis for loss. Can i file 2011 taxes online Example. Can i file 2011 taxes online Assume the same facts as in the previous example, except that you sell the property at a loss after being allowed depreciation deductions of $37,500. Can i file 2011 taxes online In this case, you would start with the FMV on the date of the change to rental use ($180,000) because it is less than the adjusted basis of $203,000 ($178,000 + $25,000) on that date. Can i file 2011 taxes online Reduce that amount ($180,000) by the depreciation deductions to arrive at a basis for loss of $142,500 ($180,000 − $37,500). Can i file 2011 taxes online How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways. Can i file 2011 taxes online By selecting the method that is best for you, you will have quick and easy access to tax help. Can i file 2011 taxes online Contacting your Taxpayer Advocate. Can i file 2011 taxes online   The Taxpayer Advocate Service (TAS) is an independent organization within the IRS. Can i file 2011 taxes online We help taxpayers who are experiencing economic harm, such as not being able to provide necessities like housing, transportation, or food; taxpayers who are seeking help in resolving tax problems with the IRS; and those who believe that an IRS system or procedure is not working as it should. Can i file 2011 taxes online Here are seven things every taxpayer should know about TAS. Can i file 2011 taxes online TAS is your voice at the IRS. Can i file 2011 taxes online Our service is free, confidential, and tailored to meet your needs. Can i file 2011 taxes online You may be eligible for our help if you have tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn't working as it should. Can i file 2011 taxes online We help taxpayers whose problems are causing financial difficulty or significant cost, including the cost of professional representation. 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Can i file 2011 taxes online The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. Can i file 2011 taxes online The majority of the information and services listed in this publication are available to you free of charge. Can i file 2011 taxes online If there is a fee associated with a resource or service, it is listed in the publication. Can i file 2011 taxes online   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with d