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Federal Tax Forms 1040ez 2013

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Federal Tax Forms 1040ez 2013

Federal tax forms 1040ez 2013 36. Federal tax forms 1040ez 2013   Earned Income Credit (EIC) Table of Contents What's New Reminders Introduction Useful Items - You may want to see: Do You Qualify for the Credit?If Improper Claim Made in Prior Year Part A. Federal tax forms 1040ez 2013 Rules for EveryoneRule 1. Federal tax forms 1040ez 2013 Your AGI Must Be Less Than: Rule 2. Federal tax forms 1040ez 2013 You Must Have a Valid Social Security Number (SSN) Rule 3. Federal tax forms 1040ez 2013 Your Filing Status Cannot Be Married Filing Separately Rule 4. Federal tax forms 1040ez 2013 You Must Be a U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 Citizen or Resident Alien All Year Rule 5. Federal tax forms 1040ez 2013 You Cannot File Form 2555 or Form 2555-EZ Rule 6. Federal tax forms 1040ez 2013 Your Investment Income Must Be $3,300 or Less Rule 7. Federal tax forms 1040ez 2013 You Must Have Earned Income Part B. Federal tax forms 1040ez 2013 Rules If You Have a Qualifying ChildRule 8. Federal tax forms 1040ez 2013 Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Rule 9. Federal tax forms 1040ez 2013 Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC Rule 10. Federal tax forms 1040ez 2013 You Cannot Be a Qualifying Child of Another Taxpayer Part C. Federal tax forms 1040ez 2013 Rules If You Do Not Have a Qualifying ChildRule 11. Federal tax forms 1040ez 2013 You Must Be at Least Age 25 but Under Age 65 Rule 12. Federal tax forms 1040ez 2013 You Cannot Be the Dependent of Another Person Rule 13. Federal tax forms 1040ez 2013 You Cannot Be a Qualifying Child of Another Taxpayer Rule 14. Federal tax forms 1040ez 2013 You Must Have Lived in the United States More Than Half of the Year Part D. Federal tax forms 1040ez 2013 Figuring and Claiming the EICRule 15. Federal tax forms 1040ez 2013 Your Earned Income Must Be Less Than: IRS Will Figure the EIC for You How To Figure the EIC Yourself ExamplesExample 1. Federal tax forms 1040ez 2013 John and Janet Smith (Form 1040A) Example 2. Federal tax forms 1040ez 2013 Kelly Green (Form 1040EZ) What's New Earned income amount is more. Federal tax forms 1040ez 2013  The maximum amount of income you can earn and still get the credit has increased. Federal tax forms 1040ez 2013 You may be able to take the credit if: You have three or more qualifying children and you earned less than $46,227 ($51,567 if married filing jointly), You have two qualifying children and you earned less than $43,038 ($48,378 if married filing jointly), You have one qualifying child and you earned less than $37,870 ($43,210 if married filing jointly), or You do not have a qualifying child and you earned less than $14,340 ($19,680 if married filing jointly). Federal tax forms 1040ez 2013 Your adjusted gross income also must be less than the amount in the above list that applies to you. Federal tax forms 1040ez 2013 For details, see Rules 1 and 15. Federal tax forms 1040ez 2013 Investment income amount is more. Federal tax forms 1040ez 2013  The maximum amount of investment income you can have and still get the credit has increased to $3,300. Federal tax forms 1040ez 2013 See Rule 6. Federal tax forms 1040ez 2013 Reminders Increased EIC on certain joint returns. Federal tax forms 1040ez 2013  A married person filing a joint return may get more EIC than someone with the same income but a different filing status. Federal tax forms 1040ez 2013 As a result, the EIC table has different columns for married persons filing jointly than for everyone else. Federal tax forms 1040ez 2013 When you look up your EIC in the EIC Table, be sure to use the correct column for your filing status and the number of children you have. Federal tax forms 1040ez 2013 Online help. Federal tax forms 1040ez 2013  You can use the EITC Assistant at www. Federal tax forms 1040ez 2013 irs. Federal tax forms 1040ez 2013 gov/eitc to find out if you are eligible for the credit. Federal tax forms 1040ez 2013 The EITC Assistant is available in English and Spanish. Federal tax forms 1040ez 2013 EIC questioned by IRS. Federal tax forms 1040ez 2013  The IRS may ask you to provide documents to prove you are entitled to claim the EIC. Federal tax forms 1040ez 2013 We will tell you what documents to send us. Federal tax forms 1040ez 2013 These may include: birth certificates, school records, medical records, etc. Federal tax forms 1040ez 2013 The process of establishing your eligibility will delay your refund. Federal tax forms 1040ez 2013 Introduction The earned income credit (EIC) is a tax credit for certain people who work and have less than $51,567 of earned income. Federal tax forms 1040ez 2013 A tax credit usually means more money in your pocket. Federal tax forms 1040ez 2013 It reduces the amount of tax you owe. Federal tax forms 1040ez 2013 The EIC may also give you a refund. Federal tax forms 1040ez 2013 How do you get the earned income credit?   To claim the EIC, you must: Qualify by meeting certain rules, and File a tax return, even if you: Do not owe any tax, Did not earn enough money to file a return, or Did not have income taxes withheld from your pay. Federal tax forms 1040ez 2013 When you complete your return, you can figure your EIC by using a worksheet in the instructions for Form 1040, Form 1040A, or Form 1040EZ. Federal tax forms 1040ez 2013 Or, if you prefer, you can let the IRS figure the credit for you. Federal tax forms 1040ez 2013 How will this chapter help you?   This chapter will explain the following. Federal tax forms 1040ez 2013 The rules you must meet to qualify for the EIC. Federal tax forms 1040ez 2013 How to figure the EIC. Federal tax forms 1040ez 2013 Useful Items - You may want to see: Publication 596 Earned Income Credit (EIC) Form (and Instructions) Schedule EIC Earned Income Credit (Qualifying Child Information) 8862 Information To Claim Earned Income Credit After Disallowance Do You Qualify for the Credit? To qualify to claim the EIC, you must first meet all of the rules explained in Part A, Rules for Everyone . Federal tax forms 1040ez 2013 Then you must meet the rules in Part B, Rules If You Have a Qualifying Child , or Part C, Rules If You Do Not Have a Qualifying Child . Federal tax forms 1040ez 2013 There is one final rule you must meet in Part D, Figuring and Claiming the EIC . Federal tax forms 1040ez 2013 You qualify for the credit if you meet all the rules in each part that applies to you. Federal tax forms 1040ez 2013 If you have a qualifying child, the rules in Parts A, B, and D apply to you. Federal tax forms 1040ez 2013 If you do not have a qualifying child, the rules in Parts A, C, and D apply to you. Federal tax forms 1040ez 2013 Table 36-1, Earned Income Credit in a Nutshell. Federal tax forms 1040ez 2013   Use Table 36–1 as a guide to Parts A, B, C, and D. Federal tax forms 1040ez 2013 The table is a summary of all the rules in each part. Federal tax forms 1040ez 2013 Do you have a qualifying child?   You have a qualifying child only if you have a child who meets the four tests described in Rule 8 and illustrated in Figure 36–1. Federal tax forms 1040ez 2013 If Improper Claim Made in Prior Year If your EIC for any year after 1996 was denied or reduced for any reason other than a math or clerical error, you must attach a completed Form 8862 to your next tax return to claim the EIC. Federal tax forms 1040ez 2013 You must also qualify to claim the EIC by meeting all the rules described in this chapter. Federal tax forms 1040ez 2013 However, if your EIC was denied or reduced as a result of a math or clerical error, do not attach Form 8862 to your next tax return. Federal tax forms 1040ez 2013 For example, if your arithmetic is incorrect, the IRS can correct it. Federal tax forms 1040ez 2013 If you do not provide a correct social security number, the IRS can deny the EIC. Federal tax forms 1040ez 2013 These kinds of errors are called math or clerical errors. Federal tax forms 1040ez 2013 If your EIC for any year after 1996 was denied and it was determined that your error was due to reckless or intentional disregard of the EIC rules, then you cannot claim the EIC for the next 2 years. Federal tax forms 1040ez 2013 If your error was due to fraud, then you cannot claim the EIC for the next 10 years. Federal tax forms 1040ez 2013 More information. Federal tax forms 1040ez 2013   See chapter 5 in Publication 596 for more detailed information about the disallowance period and Form 8862. Federal tax forms 1040ez 2013 Part A. Federal tax forms 1040ez 2013 Rules for Everyone This part of the chapter discusses Rules 1 through 7. Federal tax forms 1040ez 2013 You must meet all seven rules to qualify for the earned income credit. Federal tax forms 1040ez 2013 If you do not meet all seven rules, you cannot get the credit and you do not need to read the rest of the chapter. Federal tax forms 1040ez 2013 If you meet all seven rules in this part, then read either Part B or Part C (whichever applies) for more rules you must meet. Federal tax forms 1040ez 2013 Rule 1. Federal tax forms 1040ez 2013 Your AGI Must Be Less Than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Federal tax forms 1040ez 2013 Adjusted gross income (AGI). Federal tax forms 1040ez 2013   AGI is the amount on line 38 (Form 1040), line 22 (Form 1040A), or line 4 (Form 1040EZ). Federal tax forms 1040ez 2013 If your AGI is equal to or more than the applicable limit listed above, you cannot claim the EIC. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 Your AGI is $38,550, you are single, and you have one qualifying child. Federal tax forms 1040ez 2013 You cannot claim the EIC because your AGI is not less than $37,870. Federal tax forms 1040ez 2013 However, if your filing status was married filing jointly, you might be able to claim the EIC because your AGI is less than $43,210. Federal tax forms 1040ez 2013 Community property. Federal tax forms 1040ez 2013   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3 ), and live in a state that has community property laws, your AGI includes that portion of both your and your spouse's wages that you are required to include in gross income. Federal tax forms 1040ez 2013 This is different from the community property rules that apply under Rule 7 . Federal tax forms 1040ez 2013 Rule 2. Federal tax forms 1040ez 2013 You Must Have a Valid Social Security Number (SSN) To claim the EIC, you (and your spouse, if filing a joint return) must have a valid SSN issued by the Social Security Administration (SSA). Federal tax forms 1040ez 2013 Any qualifying child listed on Schedule EIC also must have a valid SSN. Federal tax forms 1040ez 2013 (See Rule 8 if you have a qualifying child. Federal tax forms 1040ez 2013 ) If your social security card (or your spouse's, if filing a joint return) says “Not valid for employment” and your SSN was issued so that you (or your spouse) could get a federally funded benefit, you cannot get the EIC. Federal tax forms 1040ez 2013 An example of a federally funded benefit is Medicaid. Federal tax forms 1040ez 2013 If you have a card with the legend “Not valid for employment” and your immigration status has changed so that you are now a U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 citizen or permanent resident, ask the SSA for a new social security card without the legend. Federal tax forms 1040ez 2013 U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 citizen. Federal tax forms 1040ez 2013   If you were a U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 citizen when you received your SSN, you have a valid SSN. Federal tax forms 1040ez 2013 Valid for work only with INS or DHS authorization. Federal tax forms 1040ez 2013   If your social security card reads “Valid for work only with INS authorization” or “Valid for work only with DHS authorization,” you have a valid SSN, but only if that authorization is still valid. Federal tax forms 1040ez 2013 SSN missing or incorrect. Federal tax forms 1040ez 2013   If an SSN for you or your spouse is missing from your tax return or is incorrect, you may not get the EIC. Federal tax forms 1040ez 2013 Other taxpayer identification number. Federal tax forms 1040ez 2013   You cannot get the EIC if, instead of an SSN, you (or your spouse, if filing a joint return) have an individual taxpayer identification number (ITIN). Federal tax forms 1040ez 2013 ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN. Federal tax forms 1040ez 2013 No SSN. Federal tax forms 1040ez 2013   If you do not have a valid SSN, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Federal tax forms 1040ez 2013 You cannot claim the EIC. Federal tax forms 1040ez 2013 Getting an SSN. Federal tax forms 1040ez 2013   If you (or your spouse, if filing a joint return) do not have an SSN, you can apply for one by filing Form SS-5, Application for a Social Security Card, with the SSA. Federal tax forms 1040ez 2013 You can get Form SS-5 online at www. Federal tax forms 1040ez 2013 socialsecurity. Federal tax forms 1040ez 2013 gov, from your local SSA office, or by calling the SSA at 1-800-772-1213. Federal tax forms 1040ez 2013 Filing deadline approaching and still no SSN. Federal tax forms 1040ez 2013   If the filing deadline is approaching and you still do not have an SSN, you have two choices. Federal tax forms 1040ez 2013 Request an automatic 6-month extension of time to file your return. Federal tax forms 1040ez 2013 You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 Individual Income Tax Return. Federal tax forms 1040ez 2013 For more information, see chapter 1 . Federal tax forms 1040ez 2013 File the return on time without claiming the EIC. Federal tax forms 1040ez 2013 After receiving the SSN, file an amended return (Form 1040X, Amended U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 Individual Income Tax Return) claiming the EIC. Federal tax forms 1040ez 2013 Attach a filled-in Schedule EIC if you have a qualifying child. Federal tax forms 1040ez 2013 Table 36-1. Federal tax forms 1040ez 2013 Earned Income Credit in a Nutshell First, you must meet all the rules in this column. Federal tax forms 1040ez 2013 Second, you must meet all the rules in one of these columns, whichever applies. Federal tax forms 1040ez 2013 Third, you must meet the rule in this column. Federal tax forms 1040ez 2013 Part A. Federal tax forms 1040ez 2013  Rules for Everyone Part B. Federal tax forms 1040ez 2013  Rules If You Have a Qualifying Child Part C. Federal tax forms 1040ez 2013  Rules If You Do Not Have a Qualifying Child Part D. Federal tax forms 1040ez 2013  Figuring and Claiming the EIC 1. Federal tax forms 1040ez 2013 Your adjusted gross income (AGI) must be less than: • $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,  • $43,038 ($48,378 for married filing jointly) if you have two qualifying children,  • $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or   • $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Federal tax forms 1040ez 2013 2. Federal tax forms 1040ez 2013 You must have a valid social security number. Federal tax forms 1040ez 2013  3. Federal tax forms 1040ez 2013 Your filing status cannot be “Married filing separately. Federal tax forms 1040ez 2013 ” 4. Federal tax forms 1040ez 2013 You must be a U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 citizen or resident alien all year. Federal tax forms 1040ez 2013  5. Federal tax forms 1040ez 2013 You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income). Federal tax forms 1040ez 2013  6. Federal tax forms 1040ez 2013 Your investment income must be $3,300 or less. Federal tax forms 1040ez 2013  7. Federal tax forms 1040ez 2013 You must have earned income. Federal tax forms 1040ez 2013 8. Federal tax forms 1040ez 2013 Your child must meet the relationship, age, residency, and joint return tests. Federal tax forms 1040ez 2013  9. Federal tax forms 1040ez 2013 Your qualifying child cannot be used by more than one person to claim the EIC. Federal tax forms 1040ez 2013  10. Federal tax forms 1040ez 2013 You cannot be a qualifying child of another person. Federal tax forms 1040ez 2013 11. Federal tax forms 1040ez 2013 You must be at least age 25 but under age 65. Federal tax forms 1040ez 2013  12. Federal tax forms 1040ez 2013 You cannot be the dependent of another person. Federal tax forms 1040ez 2013  13. Federal tax forms 1040ez 2013 You cannot be a qualifying child of another person. Federal tax forms 1040ez 2013  14. Federal tax forms 1040ez 2013 You must have lived in the United States more than half of the year. Federal tax forms 1040ez 2013 15. Federal tax forms 1040ez 2013 Your earned income must be less than: • $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,  • $43,038 ($48,378 for married filing jointly) if you have two qualifying children,  • $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or   • $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Federal tax forms 1040ez 2013 Rule 3. Federal tax forms 1040ez 2013 Your Filing Status Cannot Be Married Filing Separately If you are married, you usually must file a joint return to claim the EIC. Federal tax forms 1040ez 2013 Your filing status cannot be “Married filing separately. Federal tax forms 1040ez 2013 ” Spouse did not live with you. Federal tax forms 1040ez 2013   If you are married and your spouse did not live in your home at any time during the last 6 months of the year, you may be able to file as head of household, instead of married filing separately. Federal tax forms 1040ez 2013 In that case, you may be able to claim the EIC. Federal tax forms 1040ez 2013 For detailed information about filing as head of household, see chapter 2 . Federal tax forms 1040ez 2013 Rule 4. Federal tax forms 1040ez 2013 You Must Be a U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 Citizen or Resident Alien All Year If you (or your spouse, if married) were a nonresident alien for any part of the year, you cannot claim the earned income credit unless your filing status is married filing jointly. Federal tax forms 1040ez 2013 You can use that filing status only if one spouse is a U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 citizen or resident alien and you choose to treat the nonresident spouse as a U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 resident. Federal tax forms 1040ez 2013 If you make this choice, you and your spouse are taxed on your worldwide income. Federal tax forms 1040ez 2013 If you (or your spouse, if married) were a nonresident alien for any part of the year and your filing status is not married filing jointly, enter “No” on the dotted line next to line 64a (Form 1040) or in the space to the left of line 38a (Form 1040A). Federal tax forms 1040ez 2013 If you need more information on making this choice, get Publication 519, U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 Tax Guide for Aliens. Federal tax forms 1040ez 2013 Rule 5. Federal tax forms 1040ez 2013 You Cannot File Form 2555 or Form 2555-EZ You cannot claim the earned income credit if you file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Federal tax forms 1040ez 2013 You file these forms to exclude income earned in foreign countries from your gross income, or to deduct or exclude a foreign housing amount. Federal tax forms 1040ez 2013 U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 possessions are not foreign countries. Federal tax forms 1040ez 2013 See Publication 54, Tax Guide for U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 Citizens and Resident Aliens Abroad, for more detailed information. Federal tax forms 1040ez 2013 Rule 6. Federal tax forms 1040ez 2013 Your Investment Income Must Be $3,300 or Less You cannot claim the earned income credit unless your investment income is $3,300 or less. Federal tax forms 1040ez 2013 If your investment income is more than $3,300, you cannot claim the credit. Federal tax forms 1040ez 2013 For most people, investment income is the total of the following amounts. Federal tax forms 1040ez 2013 Taxable interest (line 8a of Form 1040 or 1040A). Federal tax forms 1040ez 2013 Tax-exempt interest (line 8b of Form 1040 or 1040A). Federal tax forms 1040ez 2013 Dividend income (line 9a of Form 1040 or 1040A). Federal tax forms 1040ez 2013 Capital gain net income (line 13 of Form 1040, if more than zero, or line 10 of Form 1040A). Federal tax forms 1040ez 2013 If you file Form 1040EZ, your investment income is the total of the amount of line 2 and the amount of any tax-exempt interest you wrote to the right of the words “Form 1040EZ” on line 2. Federal tax forms 1040ez 2013 However, see Rule 6 in chapter 1 of Publication 596 if: You are filing Schedule E (Form 1040), Form 4797, or Form 8814, or You are reporting income from the rental of personal property on Form 1040, line 21. Federal tax forms 1040ez 2013 Rule 7. Federal tax forms 1040ez 2013 You Must Have Earned Income This credit is called the “earned income” credit because, to qualify, you must work and have earned income. Federal tax forms 1040ez 2013 If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income. Federal tax forms 1040ez 2013 If you are an employee, earned income includes all the taxable income you get from your employer. Federal tax forms 1040ez 2013 If you are self-employed or a statutory employee, you will figure your earned income on EIC Worksheet B in the instructions for Form 1040. Federal tax forms 1040ez 2013 Earned Income Earned income includes all of the following types of income. Federal tax forms 1040ez 2013 Wages, salaries, tips, and other taxable employee pay. Federal tax forms 1040ez 2013 Employee pay is earned income only if it is taxable. Federal tax forms 1040ez 2013 Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Federal tax forms 1040ez 2013 But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained below. Federal tax forms 1040ez 2013 Net earnings from self-employment. Federal tax forms 1040ez 2013 Gross income received as a statutory employee. Federal tax forms 1040ez 2013 Wages, salaries, and tips. Federal tax forms 1040ez 2013   Wages, salaries, and tips you receive for working are reported to you on Form W-2, in box 1. Federal tax forms 1040ez 2013 You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040). Federal tax forms 1040ez 2013 Nontaxable combat pay election. Federal tax forms 1040ez 2013   You can elect to include your nontaxable combat pay in earned income for the earned income credit. Federal tax forms 1040ez 2013 Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. Federal tax forms 1040ez 2013 Figure the credit with and without your nontaxable combat pay before making the election. Federal tax forms 1040ez 2013   If you make the election, you must include in earned income all nontaxable combat pay you received. Federal tax forms 1040ez 2013 If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. Federal tax forms 1040ez 2013 In other words, if one of you makes the election, the other one can also make it but does not have to. Federal tax forms 1040ez 2013   The amount of your nontaxable combat pay should be shown in box 12 of your Form W-2 with code “Q. Federal tax forms 1040ez 2013 ” Self-employed persons and statutory employees. Federal tax forms 1040ez 2013   If you are self-employed or received income as a statutory employee, you must use the Form 1040 instructions to see if you qualify to get the EIC. Federal tax forms 1040ez 2013 Approved Form 4361 or Form 4029 This section is for persons who have an approved: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, or Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits. Federal tax forms 1040ez 2013 Each approved form exempts certain income from social security taxes. Federal tax forms 1040ez 2013 Each form is discussed here in terms of what is or is not earned income for the EIC. Federal tax forms 1040ez 2013 Form 4361. Federal tax forms 1040ez 2013   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. Federal tax forms 1040ez 2013 This includes wages, salaries, tips, and other taxable employee compensation. Federal tax forms 1040ez 2013 A nontaxable housing allowance or the nontaxable rental value of a home is not earned income. Federal tax forms 1040ez 2013 Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. Federal tax forms 1040ez 2013 Examples include fees for performing marriages and honoraria for delivering speeches. Federal tax forms 1040ez 2013 Form 4029. Federal tax forms 1040ez 2013   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation count as earned income. Federal tax forms 1040ez 2013 However, amounts you received as a self-employed individual do not count as earned income. Federal tax forms 1040ez 2013 Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040. Federal tax forms 1040ez 2013 Disability Benefits If you retired on disability, taxable benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. Federal tax forms 1040ez 2013 Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. Federal tax forms 1040ez 2013 You must report your taxable disability payments on line 7 of either Form 1040 or Form 1040A until you reach minimum retirement age. Federal tax forms 1040ez 2013 Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. Federal tax forms 1040ez 2013 Report taxable pension payments on Form 1040, lines 16a and 16b (or Form 1040A, lines 12a and 12b). Federal tax forms 1040ez 2013 Disability insurance payments. Federal tax forms 1040ez 2013   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. Federal tax forms 1040ez 2013 It does not matter whether you have reached minimum retirement age. Federal tax forms 1040ez 2013 If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J. Federal tax forms 1040ez 2013 ” Income That Is Not Earned Income Examples of items that are not earned income include interest and dividends, pensions and annuities, social security and railroad retirement benefits (including disability benefits), alimony and child support, welfare benefits, workers' compensation benefits, unemployment compensation (insurance), nontaxable foster care payments, and veterans' benefits, including VA rehabilitation payments. Federal tax forms 1040ez 2013 Do not include any of these items in your earned income. Federal tax forms 1040ez 2013 Earnings while an inmate. Federal tax forms 1040ez 2013   Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. Federal tax forms 1040ez 2013 This includes amounts for work performed while in a work release program or while in a halfway house. Federal tax forms 1040ez 2013 Workfare payments. Federal tax forms 1040ez 2013   Nontaxable workfare payments are not earned income for the EIC. Federal tax forms 1040ez 2013 These are cash payments certain people receive from a state or local agency that administers public assistance programs funded under the federal Temporary Assistance for Needy Families (TANF) program in return for certain work activities such as (1) work experience activities (including remodeling or repairing public housing) if private sector employment is not available, or (2) community service program activities. Federal tax forms 1040ez 2013 Community property. Federal tax forms 1040ez 2013   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3 ), and live in a state that has community property laws, your earned income for the EIC does not include any amount earned by your spouse that is treated as belonging to you under those laws. Federal tax forms 1040ez 2013 That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. Federal tax forms 1040ez 2013 Your earned income includes the entire amount you earned, even if part of it is treated as belonging to your spouse under your state's community property laws. Federal tax forms 1040ez 2013 Nevada, Washington, and California domestic partners. Federal tax forms 1040ez 2013   If you are a registered domestic partner in Nevada, Washington, or California, the same rules apply. Federal tax forms 1040ez 2013 Your earned income for the EIC does not include any amount earned by your partner. Federal tax forms 1040ez 2013 Your earned income includes the entire amount you earned. Federal tax forms 1040ez 2013 For details, see Publication 555. Federal tax forms 1040ez 2013 Conservation Reserve Program (CRP) payments. Federal tax forms 1040ez 2013   If you were receiving social security retirement benefits or social security disability benefits at the time you received any CRP payments, your CRP payments are not earned income for the EIC. Federal tax forms 1040ez 2013 Nontaxable military pay. Federal tax forms 1040ez 2013   Nontaxable pay for members of the Armed Forces is not considered earned income for the EIC. Federal tax forms 1040ez 2013 Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). Federal tax forms 1040ez 2013 See Publication 3, Armed Forces' Tax Guide, for more information. Federal tax forms 1040ez 2013    Combat pay. Federal tax forms 1040ez 2013 You can elect to include your nontaxable combat pay in earned income for the EIC. Federal tax forms 1040ez 2013 See Nontaxable combat pay election, earlier. Federal tax forms 1040ez 2013 Part B. Federal tax forms 1040ez 2013 Rules If You Have a Qualifying Child If you have met all of the rules in Part A , read Part B to see if you have a qualifying child. Federal tax forms 1040ez 2013 Part B discusses Rules 8 through 10. Federal tax forms 1040ez 2013 You must meet all three of these rules, in addition to the rules in Parts A and D , to qualify for the earned income credit with a qualifying child. Federal tax forms 1040ez 2013 You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. Federal tax forms 1040ez 2013 (You cannot file Form 1040EZ. Federal tax forms 1040ez 2013 ) You also must complete Schedule EIC and attach it to your return. Federal tax forms 1040ez 2013 If you meet all the rules in Part A and this part, read Part D to find out what to do next. Federal tax forms 1040ez 2013 If you do not meet Rule 8, you do not have a qualifying child. Federal tax forms 1040ez 2013 Read Part C to find out if you can get the earned income credit without a qualifying child. Federal tax forms 1040ez 2013 Rule 8. Federal tax forms 1040ez 2013 Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Your child is a qualifying child if your child meets four tests. Federal tax forms 1040ez 2013 The four tests are: Relationship, Age, Residency, and Joint return. Federal tax forms 1040ez 2013 The four tests are illustrated in Figure 36–1. Federal tax forms 1040ez 2013 The paragraphs that follow contain more information about each test. Federal tax forms 1040ez 2013 Relationship Test To be your qualifying child, a child must be your: Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), or Brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew). Federal tax forms 1040ez 2013 The following definitions clarify the relationship test. Federal tax forms 1040ez 2013 Adopted child. Federal tax forms 1040ez 2013   An adopted child is always treated as your own child. Federal tax forms 1040ez 2013 The term “adopted child” includes a child who was lawfully placed with you for legal adoption. Federal tax forms 1040ez 2013 Foster child. Federal tax forms 1040ez 2013   For the EIC, a person is your foster child if the child is placed with you by an authorized placement agency or by judgement, decree, or other order of any court of competent jurisdiction. Federal tax forms 1040ez 2013 An authorized placement agency includes a state or local government agency. Federal tax forms 1040ez 2013 It also includes a tax-exempt organization licensed by a state. Federal tax forms 1040ez 2013 In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 Debbie, who is 12 years old, was placed in your care 2 years ago by an authorized agency responsible for placing children in foster homes. Federal tax forms 1040ez 2013 Debbie is your foster child. Federal tax forms 1040ez 2013 Age Test Your child must be: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a student, and younger than you (or your spouse, if filing jointly), or Permanently and totally disabled at any time during 2013, regardless of age. Federal tax forms 1040ez 2013    The following examples and definitions clarify the age test. Federal tax forms 1040ez 2013 Example 1—child not under age 19. Federal tax forms 1040ez 2013 Your son turned 19 on December 10. Federal tax forms 1040ez 2013 Unless he was permanently and totally disabled or a student, he is not a qualifying child because, at the end of the year, he was not under age 19. Federal tax forms 1040ez 2013 Example 2—child not younger than you or your spouse. Federal tax forms 1040ez 2013 Your 23-year-old brother, who is a full-time student and unmarried, lives with you and your spouse. Federal tax forms 1040ez 2013 He is not disabled. Federal tax forms 1040ez 2013 Both you and your spouse are 21 years old and you file a joint return. Federal tax forms 1040ez 2013 Your brother is not your qualifying child because he is not younger than you or your spouse. Federal tax forms 1040ez 2013 Example 3—child younger than your spouse but not younger than you. Federal tax forms 1040ez 2013 The facts are the same as in Example 2 except that your spouse is 25 years old. Federal tax forms 1040ez 2013 Because your brother is younger than your spouse, he is your qualifying child even though he is not younger than you. Federal tax forms 1040ez 2013 Student defined. Federal tax forms 1040ez 2013   To qualify as a student, your child must be, during some part of each of any 5 calendar months during the calendar year: A full-time student at a school that has a regular teaching staff, course of study, and regular student body at the school, or A student taking a full-time, on-farm training course given by a school described in (1), or a state, county, or local government. Federal tax forms 1040ez 2013 The 5 calendar months need not be consecutive. Federal tax forms 1040ez 2013   A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance. Federal tax forms 1040ez 2013 School defined. Federal tax forms 1040ez 2013   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. Federal tax forms 1040ez 2013 However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet do not count as schools for the EIC. Federal tax forms 1040ez 2013 Vocational high school students. Federal tax forms 1040ez 2013   Students who work in co-op jobs in private industry as a part of a school's regular course of classroom and practical training are considered full-time students. Federal tax forms 1040ez 2013 Permanently and totally disabled. Federal tax forms 1040ez 2013   Your child is permanently and totally disabled if both of the following apply. Federal tax forms 1040ez 2013 He or she cannot engage in any substantial gainful activity because of a physical or mental condition. Federal tax forms 1040ez 2013 A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. Federal tax forms 1040ez 2013 Residency Test Your child must have lived with you in the United States for more than half of 2013. Federal tax forms 1040ez 2013 The following definitions clarify the residency test. Federal tax forms 1040ez 2013 United States. Federal tax forms 1040ez 2013   This means the 50 states and the District of Columbia. Federal tax forms 1040ez 2013 It does not include Puerto Rico or U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 possessions such as Guam. Federal tax forms 1040ez 2013 Homeless shelter. Federal tax forms 1040ez 2013   Your home can be any location where you regularly live. Federal tax forms 1040ez 2013 You do not need a traditional home. Federal tax forms 1040ez 2013 For example, if your child lived with you for more than half the year in one or more homeless shelters, your child meets the residency test. Federal tax forms 1040ez 2013 Military personnel stationed outside the United States. Federal tax forms 1040ez 2013    U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC. Federal tax forms 1040ez 2013 Figure 36-1. Federal tax forms 1040ez 2013 Tests for Qualifying Child Please click here for the text description of the image. Federal tax forms 1040ez 2013 Qualifying child Extended active duty. Federal tax forms 1040ez 2013   Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Federal tax forms 1040ez 2013 Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you do not serve more than 90 days. Federal tax forms 1040ez 2013 Birth or death of a child. Federal tax forms 1040ez 2013   A child who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the child's home for more than half the time he or she was alive in 2013. Federal tax forms 1040ez 2013 Temporary absences. Federal tax forms 1040ez 2013   Count time that you or your child is away from home on a temporary absence due to a special circumstance as time the child lived with you. Federal tax forms 1040ez 2013 Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility. Federal tax forms 1040ez 2013 Kidnapped child. Federal tax forms 1040ez 2013    A kidnapped child is treated as living with you for more than half of the year if the child lived with you for more than half the part of the year before the date of the kidnapping. Federal tax forms 1040ez 2013 The child must be presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or your child's family. Federal tax forms 1040ez 2013 This treatment applies for all years until the child is returned. Federal tax forms 1040ez 2013 However, the last year this treatment can apply is the earlier of: The year there is a determination that the child is dead, or The year the child would have reached age 18. Federal tax forms 1040ez 2013   If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC. Federal tax forms 1040ez 2013 Joint Return Test To meet this test, the child cannot file a joint return for the year. Federal tax forms 1040ez 2013 Exception. Federal tax forms 1040ez 2013   An exception to the joint return test applies if your child and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid. Federal tax forms 1040ez 2013 Example 1—child files joint return. Federal tax forms 1040ez 2013 You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. Federal tax forms 1040ez 2013 He earned $25,000 for the year. Federal tax forms 1040ez 2013 The couple files a joint return. Federal tax forms 1040ez 2013 Because your daughter and her husband filed a joint return, she is not your qualifying child. Federal tax forms 1040ez 2013 Example 2—child files joint return only to claim a refund of withheld tax. Federal tax forms 1040ez 2013 Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. Federal tax forms 1040ez 2013 They do not have a child. Federal tax forms 1040ez 2013 Neither is required to file a tax return. Federal tax forms 1040ez 2013 Taxes were taken out of their pay, so they filed a joint return only to get a refund of the withheld taxes. Federal tax forms 1040ez 2013 The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. Federal tax forms 1040ez 2013 Example 3—child files joint return to claim American opportunity credit. Federal tax forms 1040ez 2013 The facts are the same as in Example 2 except no taxes were taken out of your son's pay. Federal tax forms 1040ez 2013 He and his wife are not required to file a tax return, but they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. Federal tax forms 1040ez 2013 Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to get a refund of income tax withheld or estimated tax paid. Federal tax forms 1040ez 2013 The exception to the joint return test does not apply, so your son is not your qualifying child. Federal tax forms 1040ez 2013 Married child. Federal tax forms 1040ez 2013   Even if your child does not file a joint return, if your child was married at the end of the year, he or she cannot be your qualifying child unless: You can claim an exemption for the child, or The reason you cannot claim an exemption for the child is that you let the child's other parent claim the exemption under the Special rule for divorced or separated parents (or parents who live apart) , described later. Federal tax forms 1040ez 2013 Social security number. Federal tax forms 1040ez 2013   The qualifying child must have a valid social security number (SSN) unless the child was born and died in 2013 and you attach to your return a copy of the child's birth certificate, death certificate, or hospital records showing a live birth. Federal tax forms 1040ez 2013 You cannot claim the EIC on the basis of a qualifying child if: The qualifying child's SSN is missing from your tax return or is incorrect, The qualifying child's social security card says “Not valid for employment” and was issued for use in getting a federally funded benefit, or Instead of an SSN, the qualifying child has: An individual taxpayer identification number (ITIN), which is issued to a noncitizen who cannot get an SSN, or An adoption taxpayer identification number (ATIN), which is issued to adopting parents who cannot get an SSN for the child being adopted until the adoption is final. Federal tax forms 1040ez 2013   If you have more than one qualifying child and only one has a valid SSN, you can use only that child to claim the EIC. Federal tax forms 1040ez 2013 For more information about SSNs, see Rule 2 . Federal tax forms 1040ez 2013 Rule 9. Federal tax forms 1040ez 2013 Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC Sometimes a child meets the tests to be a qualifying child of more than one person. Federal tax forms 1040ez 2013 However, only one of these persons can actually treat the child as a qualifying child. Federal tax forms 1040ez 2013 Only that person can use the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit). Federal tax forms 1040ez 2013 The exemption for the child. Federal tax forms 1040ez 2013 The child tax credit. Federal tax forms 1040ez 2013 Head of household filing status. Federal tax forms 1040ez 2013 The credit for child and dependent care expenses. Federal tax forms 1040ez 2013 The exclusion for dependent care benefits. Federal tax forms 1040ez 2013 The EIC. Federal tax forms 1040ez 2013 The other person cannot take any of these benefits based on this qualifying child. Federal tax forms 1040ez 2013 In other words, you and the other person cannot agree to divide these tax benefits between you. Federal tax forms 1040ez 2013 The other person cannot take any of these tax benefits unless he or she has a different qualifying child. Federal tax forms 1040ez 2013 The tiebreaker rules explained next explain who, if anyone, can claim the EIC when more than one person has the same qualifying child. Federal tax forms 1040ez 2013 However, the tiebreaker rules do not apply if the other person is your spouse and you file a joint return. Federal tax forms 1040ez 2013 Tiebreaker rules. Federal tax forms 1040ez 2013   To determine which person can treat the child as a qualifying child to claim the six tax benefits just listed, the following tiebreaker rules apply. Federal tax forms 1040ez 2013 If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. Federal tax forms 1040ez 2013 If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents. Federal tax forms 1040ez 2013 If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. Federal tax forms 1040ez 2013 If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year. Federal tax forms 1040ez 2013 If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year. Federal tax forms 1040ez 2013 If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child. Federal tax forms 1040ez 2013 If the child's parents file a joint return with each other, this rule can be applied by treating the parents' total AGI as divided evenly between them. Federal tax forms 1040ez 2013 See Example 8 . Federal tax forms 1040ez 2013   Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child. Federal tax forms 1040ez 2013 See Examples 1 through 13 . Federal tax forms 1040ez 2013   If you cannot claim the EIC because your qualifying child is treated under the tiebreaker rules as the qualifying child of another person for 2013, you may be able to take the EIC using a different qualifying child, but you cannot take the EIC using the rules in Part C for people who do not have a qualifying child. Federal tax forms 1040ez 2013 If the other person cannot claim the EIC. Federal tax forms 1040ez 2013   If you and someone else have the same qualifying child but the other person cannot claim the EIC because he or she is not eligible or his or her earned income or AGI is too high, you may be able to treat the child as a qualifying child. Federal tax forms 1040ez 2013 See Examples 6 and 7 . Federal tax forms 1040ez 2013 But you cannot treat the child as a qualifying child to claim the EIC if the other person uses the child to claim any of the other six tax benefits listed earlier. Federal tax forms 1040ez 2013 Examples. Federal tax forms 1040ez 2013 The following examples may help you in determining whether you can claim the EIC when you and someone else have the same qualifying child. Federal tax forms 1040ez 2013 Example 1. Federal tax forms 1040ez 2013 You and your 2-year-old son Jimmy lived with your mother all year. Federal tax forms 1040ez 2013 You are 25 years old, unmarried, and your AGI is $9,000. Federal tax forms 1040ez 2013 Your only income was $9,000 from a part-time job. Federal tax forms 1040ez 2013 Your mother's only income was $20,000 from her job, and her AGI is $20,000. Federal tax forms 1040ez 2013 Jimmy's father did not live with you or Jimmy. Federal tax forms 1040ez 2013 The special rule explained later for divorced or separated parents (or parents who live apart) does not apply. Federal tax forms 1040ez 2013 Jimmy is a qualifying child of both you and your mother because he meets the relationship, age, residency, and joint return tests for both you and your mother. Federal tax forms 1040ez 2013 However, only one of you can treat him as a qualifying child to claim the EIC (and the other tax benefits listed earlier for which that person qualifies). Federal tax forms 1040ez 2013 He is not a qualifying child of anyone else, including his father. Federal tax forms 1040ez 2013 If you do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can treat him as a qualifying child to claim the EIC (and any of the other tax benefits listed earlier for which she qualifies). Federal tax forms 1040ez 2013 Example 2. Federal tax forms 1040ez 2013 The facts are the same as in Example 1 except your AGI is $25,000. Federal tax forms 1040ez 2013 Because your mother's AGI is not higher than yours, she cannot claim Jimmy as a qualifying child. Federal tax forms 1040ez 2013 Only you can claim him. Federal tax forms 1040ez 2013 Example 3. Federal tax forms 1040ez 2013 The facts are the same as in Example 1 except that you and your mother both claim Jimmy as a qualifying child. Federal tax forms 1040ez 2013 In this case, you as the child's parent will be the only one allowed to claim Jimmy as a qualifying child for the EIC and the other tax benefits listed earlier for which you qualify. Federal tax forms 1040ez 2013 The IRS will disallow your mother's claim to the EIC and any of the other tax benefits listed earlier unless she has another qualifying child. Federal tax forms 1040ez 2013 Example 4. Federal tax forms 1040ez 2013 The facts are the same as in Example 1 except that you also have two other young children who are qualifying children of both you and your mother. Federal tax forms 1040ez 2013 Only one of you can claim each child. Federal tax forms 1040ez 2013 However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. Federal tax forms 1040ez 2013 For example, if you claim one child, your mother can claim the other two. Federal tax forms 1040ez 2013 Example 5. Federal tax forms 1040ez 2013 The facts are the same as in Example 1 except that you are only 18 years old. Federal tax forms 1040ez 2013 This means you are a qualifying child of your mother. Federal tax forms 1040ez 2013 Because of Rule 10 , discussed next, you cannot claim the EIC and cannot claim Jimmy as a qualifying child. Federal tax forms 1040ez 2013 Only your mother may be able to treat Jimmy as a qualifying child to claim the EIC. Federal tax forms 1040ez 2013 If your mother meets all the other requirements for claiming the EIC and you do not claim Jimmy as a qualifying child for any of the other tax benefits listed earlier, your mother can claim both you and Jimmy as qualifying children for the EIC. Federal tax forms 1040ez 2013 Example 6. Federal tax forms 1040ez 2013 The facts are the same as in Example 1 except that your mother earned $50,000 from her job. Federal tax forms 1040ez 2013 Because your mother's earned income is too high for her to claim the EIC, only you can claim the EIC using your son. Federal tax forms 1040ez 2013 Example 7. Federal tax forms 1040ez 2013 The facts are the same as in Example 1 except that you earned $50,000 from your job and your AGI is $50,500. Federal tax forms 1040ez 2013 Your earned income is too high for you to claim the EIC. Federal tax forms 1040ez 2013 But your mother cannot claim the EIC either, because her AGI is not higher than yours. Federal tax forms 1040ez 2013 Example 8. Federal tax forms 1040ez 2013 The facts are the same as in Example 1 except that you and Jimmy's father are married to each other, live with Jimmy and your mother, and have an AGI of $30,000 on a joint return. Federal tax forms 1040ez 2013 If you and your husband do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can claim him instead. Federal tax forms 1040ez 2013 Even though the AGI on your joint return, $30,000, is more than your mother's AGI of $20,000, for this purpose half of the joint AGI can be treated as yours and half as your husband's. Federal tax forms 1040ez 2013 In other words, each parent's AGI can be treated as $15,000. Federal tax forms 1040ez 2013 Example 9. Federal tax forms 1040ez 2013 You, your husband, and your 10-year-old son Joey lived together until August 1, 2013, when your husband moved out of the household. Federal tax forms 1040ez 2013 In August and September, Joey lived with you. Federal tax forms 1040ez 2013 For the rest of the year, Joey lived with your husband, who is Joey's father. Federal tax forms 1040ez 2013 Joey is a qualifying child of both you and your husband because he lived with each of you for more than half the year and because he met the relationship, age, and joint return tests for both of you. Federal tax forms 1040ez 2013 At the end of the year, you and your husband still were not divorced, legally separated, or separated under a written separation agreement, so the special rule for divorced or separated parents (or parents who live apart) does not apply. Federal tax forms 1040ez 2013 You and your husband will file separate returns. Federal tax forms 1040ez 2013 Your husband agrees to let you treat Joey as a qualifying child. Federal tax forms 1040ez 2013 This means, if your husband does not claim Joey as a qualifying child for any of the tax benefits listed earlier, you can claim him as a qualifying child for any tax benefit listed earlier for which you qualify. Federal tax forms 1040ez 2013 However, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. Federal tax forms 1040ez 2013 See Rule 3 . Federal tax forms 1040ez 2013 Example 10. Federal tax forms 1040ez 2013 The facts are the same as in Example 9 except that you and your husband both claim Joey as a qualifying child. Federal tax forms 1040ez 2013 In this case, only your husband will be allowed to treat Joey as a qualifying child. Federal tax forms 1040ez 2013 This is because, during 2013, the boy lived with him longer than with you. Federal tax forms 1040ez 2013 You cannot claim the EIC (either with or without a qualifying child). Federal tax forms 1040ez 2013 However, your husband's filing status is married filing separately, so he cannot claim the EIC or the credit for child and dependent care expenses. Federal tax forms 1040ez 2013 See Rule 3 . Federal tax forms 1040ez 2013 Example 11. Federal tax forms 1040ez 2013 You, your 5-year-old son and your son's father lived together all year. Federal tax forms 1040ez 2013 You and your son's father are not married. Federal tax forms 1040ez 2013 Your son is a qualifying child of both you and his father because he meets the relationship, age, residency, and joint return tests for both you and his father. Federal tax forms 1040ez 2013 Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. Federal tax forms 1040ez 2013 Neither of you had any other income. Federal tax forms 1040ez 2013 Your son's father agrees to let you treat the child as a qualifying child. Federal tax forms 1040ez 2013 This means, if your son's father does not claim your son as a qualifying child for the EIC or any of the other tax benefits listed earlier, you can claim him as a qualifying child for the EIC and any of the other tax benefits listed earlier for which you qualify. Federal tax forms 1040ez 2013 Example 12. Federal tax forms 1040ez 2013 The facts are the same as in Example 11 except that you and your son's father both claim your son as a qualifying child. Federal tax forms 1040ez 2013 In this case, only your son's father will be allowed to treat your son as a qualifying child. Federal tax forms 1040ez 2013 This is because his AGI, $14,000, is more than your AGI, $12,000. Federal tax forms 1040ez 2013 You cannot claim the EIC (either with or without a qualifying child). Federal tax forms 1040ez 2013 Example 13. Federal tax forms 1040ez 2013 You and your 7-year-old niece, your sister's child, lived with your mother all year. Federal tax forms 1040ez 2013 You are 25 years old, and your AGI is $9,300. Federal tax forms 1040ez 2013 Your only income was from a part-time job. Federal tax forms 1040ez 2013 Your mother's AGI is $15,000. Federal tax forms 1040ez 2013 Her only income was from her job. Federal tax forms 1040ez 2013 Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. Federal tax forms 1040ez 2013 Your niece is a qualifying child of both you and your mother because she meets the relationship, age, residency, and joint return tests for both you and your mother. Federal tax forms 1040ez 2013 However, only your mother can treat her as a qualifying child. Federal tax forms 1040ez 2013 This is because your mother's AGI, $15,000, is more than your AGI, $9,300. Federal tax forms 1040ez 2013 Special rule for divorced or separated parents (or parents who live apart). Federal tax forms 1040ez 2013   A child will be treated as the qualifying child of his or her noncustodial parent (for purposes of claiming an exemption and the child tax credit, but not for the EIC) if all of the following statements are true. Federal tax forms 1040ez 2013 The parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Lived apart at all times during the last 6 months of 2013, whether or not they are or were married. Federal tax forms 1040ez 2013 The child received over half of his or her support for the year from the parents. Federal tax forms 1040ez 2013 The child is in the custody of one or both parents for more than half of 2013. Federal tax forms 1040ez 2013 Either of the following statements is true. Federal tax forms 1040ez 2013 The custodial parent signs Form 8332 or a substantially similar statement that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches the form or statement to his or her return. Federal tax forms 1040ez 2013 If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. Federal tax forms 1040ez 2013 A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2013 provides that the noncustodial parent can claim the child as a dependent, and the noncustodial parent provides at least $600 for support of the child during 2013. Federal tax forms 1040ez 2013  For details, see chapter 3. Federal tax forms 1040ez 2013 Also see Applying Rule 9 to divorced or separated parents (or parents who live apart) , next. Federal tax forms 1040ez 2013 Applying Rule 9 to divorced or separated parents (or parents who live apart). Federal tax forms 1040ez 2013   If a child is treated as the qualifying child of the noncustodial parent under the special rule just described for children of divorced or separated parents (or parents who live apart), only the noncustodial parent can claim an exemption and the child tax credit for the child. Federal tax forms 1040ez 2013 However, the custodial parent, if eligible, or another eligible taxpayer can claim the child as a qualifying child for the EIC and other tax benefits listed earlier in this chapter. Federal tax forms 1040ez 2013 If the child is the qualifying child of more than one person for these benefits, then the tiebreaker rules determine which person can treat the child as a qualifying child. Federal tax forms 1040ez 2013 Example 1. Federal tax forms 1040ez 2013 You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Federal tax forms 1040ez 2013 Your AGI is $10,000. Federal tax forms 1040ez 2013 Your mother’s AGI is $25,000. Federal tax forms 1040ez 2013 Your son's father did not live with you or your son. Federal tax forms 1040ez 2013 Under the special rule for children of divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for the child. Federal tax forms 1040ez 2013 However, your son's father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the EIC. Federal tax forms 1040ez 2013 You and your mother did not have any child care expenses or dependent care benefits. Federal tax forms 1040ez 2013 If you do not claim your son as a qualifying child, your mother can claim him as a qualifying child for the EIC and head of household filing status, if she qualifies for these tax benefits. Federal tax forms 1040ez 2013 Example 2. Federal tax forms 1040ez 2013 The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. Federal tax forms 1040ez 2013 Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. Federal tax forms 1040ez 2013 Example 3. Federal tax forms 1040ez 2013 The facts are the same as in Example 1 except that you and your mother both claim your son as a qualifying child for the EIC. Federal tax forms 1040ez 2013 Your mother also claims him as a qualifying child for head of household filing status. Federal tax forms 1040ez 2013 You as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC. Federal tax forms 1040ez 2013 The IRS will disallow your mother's claim to the EIC and head of household filing status unless she has another qualifying child. Federal tax forms 1040ez 2013 Rule 10. Federal tax forms 1040ez 2013 You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. Federal tax forms 1040ez 2013 ) if all of the following statements are true. Federal tax forms 1040ez 2013 You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Federal tax forms 1040ez 2013 Or, you are that person's brother, sister, half brother, half sister, stepbrother, or stepsister (or a descendant of any of them). Federal tax forms 1040ez 2013 You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student, and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. Federal tax forms 1040ez 2013 You lived with that person in the United States for more than half of the year. Federal tax forms 1040ez 2013 You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). Federal tax forms 1040ez 2013 For more details about the tests to be a qualifying child, see Rule 8 . Federal tax forms 1040ez 2013 If you are a qualifying child of another taxpayer, you cannot claim the EIC. Federal tax forms 1040ez 2013 This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. Federal tax forms 1040ez 2013 Put “No” beside line 64a (Form 1040) or line 38a (Form 1040A). Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 You and your daughter lived with your mother all year. Federal tax forms 1040ez 2013 You are 22 years old, unmarried, and attended a trade school full time. Federal tax forms 1040ez 2013 You had a part-time job and earned $5,700. Federal tax forms 1040ez 2013 You had no other income. Federal tax forms 1040ez 2013 Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother. Federal tax forms 1040ez 2013 She can claim the EIC if she meets all the other requirements. Federal tax forms 1040ez 2013 Because you are your mother's qualifying child, you cannot claim the EIC. Federal tax forms 1040ez 2013 This is so even if your mother cannot or does not claim the EIC. Federal tax forms 1040ez 2013 Child of person not required to file a return. Federal tax forms 1040ez 2013   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you meet the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 The facts are the same as in the last example except your mother had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. Federal tax forms 1040ez 2013 As a result, you are not your mother's qualifying child. Federal tax forms 1040ez 2013 You can claim the EIC if you meet all the other requirements to do so. Federal tax forms 1040ez 2013   See Rule 10 in Publication 596 for additional examples. Federal tax forms 1040ez 2013 Part C. Federal tax forms 1040ez 2013 Rules If You Do Not Have a Qualifying Child Read this part if you: Do not have a qualifying child, and Have met all the rules in Part A . Federal tax forms 1040ez 2013  Part C discusses Rules 11 through 14. Federal tax forms 1040ez 2013 You must meet all four of these rules, in addition to the rules in Parts A and D , to qualify for the earned income credit without a qualifying child. Federal tax forms 1040ez 2013 If you have a qualifying child, the rules in this part do not apply to you. Federal tax forms 1040ez 2013 You can claim the credit only if you meet all the rules in Parts A, B, and D. Federal tax forms 1040ez 2013 See Rule 8 to find out if you have a qualifying child. Federal tax forms 1040ez 2013 Rule 11. Federal tax forms 1040ez 2013 You Must Be at Least Age 25 but Under Age 65 You must be at least age 25 but under age 65 at the end of 2013. Federal tax forms 1040ez 2013 If you are married filing a joint return, either you or your spouse must be at least age 25 but under age 65 at the end of 2013. Federal tax forms 1040ez 2013 It does not matter which spouse meets the age test, as long as one of the spouses does. Federal tax forms 1040ez 2013 You meet the age test if you were born after December 31, 1948, and before January 2, 1989. Federal tax forms 1040ez 2013 If you are married filing a joint return, you meet the age test if either you or your spouse was born after December 31, 1948, and before January 2, 1989. Federal tax forms 1040ez 2013 If neither you nor your spouse meets the age test, you cannot claim the EIC. Federal tax forms 1040ez 2013 Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Federal tax forms 1040ez 2013 Death of spouse. Federal tax forms 1040ez 2013   If you are filing a joint return with your spouse who died in 2013, you meet the age test if your spouse was at least age 25 but under age 65 at the time of death. Federal tax forms 1040ez 2013 Example 1. Federal tax forms 1040ez 2013 You are age 28 and unmarried. Federal tax forms 1040ez 2013 You meet the age test. Federal tax forms 1040ez 2013 Example 2—spouse meets age test. Federal tax forms 1040ez 2013 You are married and filing a joint return. Federal tax forms 1040ez 2013 You are age 23 and your spouse is age 27. Federal tax forms 1040ez 2013 You meet the age test because your spouse is at least age 25 but under age 65. Federal tax forms 1040ez 2013 Example 3—spouse dies in 2013. Federal tax forms 1040ez 2013 You are married and filing a joint return with your spouse who died in August 2013. Federal tax forms 1040ez 2013 You are age 67. Federal tax forms 1040ez 2013 Your spouse would have become age 65 in November 2013. Federal tax forms 1040ez 2013 Because your spouse was under age 65 when she died, you meet the age test. Federal tax forms 1040ez 2013 Rule 12. Federal tax forms 1040ez 2013 You Cannot Be the Dependent of Another Person If you are not filing a joint return, you meet this rule if: You checked box 6a on Form 1040 or 1040A, or You did not check the “You” box on line 5 of Form 1040EZ, and you entered $10,000 on that line. Federal tax forms 1040ez 2013 If you are filing a joint return, you meet this rule if: You checked both box 6a and box 6b on Form 1040 or 1040A, or You and your spouse did not check either the “You” box or the “Spouse” box on line 5 of Form 1040EZ, and you entered $20,000 on that line. Federal tax forms 1040ez 2013 If you are not sure whether someone else can claim you (or your spouse, if filing a joint return) as a dependent, read the rules for claiming a dependent in chapter 3. Federal tax forms 1040ez 2013 If someone else can claim you (or your spouse, if filing a joint return) as a dependent on his or her return, but does not, you still cannot claim the credit. Federal tax forms 1040ez 2013 Example 1. Federal tax forms 1040ez 2013 In 2013, you were age 25, single, and living at home with your parents. Federal tax forms 1040ez 2013 You worked and were not a student. Federal tax forms 1040ez 2013 You earned $7,500. Federal tax forms 1040ez 2013 Your parents cannot claim you as a dependent. Federal tax forms 1040ez 2013 When you file your return, you claim an exemption for yourself by not checking the “You” box on line 5 of your Form 1040EZ and by entering $10,000 on that line. Federal tax forms 1040ez 2013 You meet this rule. Federal tax forms 1040ez 2013 You can claim the EIC if you meet all the other requirements. Federal tax forms 1040ez 2013 Example 2. Federal tax forms 1040ez 2013 The facts are the same as in Example 1 , except that you earned $2,000. Federal tax forms 1040ez 2013 Your parents can claim you as a dependent but decide not to. Federal tax forms 1040ez 2013 You do not meet this rule. Federal tax forms 1040ez 2013 You cannot claim the credit because your parents could have claimed you as a dependent. Federal tax forms 1040ez 2013 Joint returns. Federal tax forms 1040ez 2013   You generally cannot be claimed as a dependent by another person if you are married and file a joint return. Federal tax forms 1040ez 2013   However, another person may be able to claim you as a dependent if you and your spouse file a joint return only to get a refund of income tax withheld or estimated tax paid. Federal tax forms 1040ez 2013 But neither you nor your spouse can be claimed as a dependent by another person if you claim the EIC on your joint return. Federal tax forms 1040ez 2013 Example 1. Federal tax forms 1040ez 2013 You are 26 years old. Federal tax forms 1040ez 2013 You and your wife live with your parents and had $800 of wages from part-time jobs and no other income. Federal tax forms 1040ez 2013 Neither you nor your wife is required to file a tax return. Federal tax forms 1040ez 2013 You do not have a child. Federal tax forms 1040ez 2013 Taxes were taken out of your pay, so you file a joint return only to get a refund of the withheld taxes. Federal tax forms 1040ez 2013 Your parents are not disqualified from claiming an exemption for you just because you filed a joint return. Federal tax forms 1040ez 2013 They can claim exemptions for you and your wife if all the other tests to do so are met. Federal tax forms 1040ez 2013 Example 2. Federal tax forms 1040ez 2013 The facts are the same as in Example 1 except no taxes were taken out of your pay. Federal tax forms 1040ez 2013 Also, you and your wife are not required to file a tax return, but you file a joint return to claim an EIC of $63 and get a refund of that amount. Federal tax forms 1040ez 2013 Because claiming the EIC is your reason for filing the return, you are not filing it only to get a refund of income tax withheld or estimated tax paid. Federal tax forms 1040ez 2013 Your parents cannot claim an exemption for either you or your wife. Federal tax forms 1040ez 2013 Rule 13. Federal tax forms 1040ez 2013 You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. Federal tax forms 1040ez 2013 ) if all of the following statements are true. Federal tax forms 1040ez 2013 You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Federal tax forms 1040ez 2013 Or, you are that person's brother, sister, half brother, half sister, stepbrother, or stepsister (or a descendant of any of them). Federal tax forms 1040ez 2013 You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student (as defined in Rule 8 ), and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. Federal tax forms 1040ez 2013 You lived with that person in the United States for more than half of the year. Federal tax forms 1040ez 2013 You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). Federal tax forms 1040ez 2013 For more details about the tests to be a qualifying child, see Rule 8 . Federal tax forms 1040ez 2013 If you are a qualifying child of another taxpayer, you cannot claim the EIC. Federal tax forms 1040ez 2013 This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. Federal tax forms 1040ez 2013 Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 You lived with your mother all year. Federal tax forms 1040ez 2013 You are age 26, unmarried, and permanently and totally disabled. Federal tax forms 1040ez 2013 Your only income was from a community center where you went three days a week to answer telephones. Federal tax forms 1040ez 2013 You earned $5,000 for the year and provided more than half of your own support. Federal tax forms 1040ez 2013 Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother for the EIC. Federal tax forms 1040ez 2013 She can claim the EIC if she meets all the other requirements. Federal tax forms 1040ez 2013 Because you are a qualifying child of your mother, you cannot claim the EIC. Federal tax forms 1040ez 2013 This is so even if your mother cannot or does not claim the EIC. Federal tax forms 1040ez 2013 Joint returns. Federal tax forms 1040ez 2013   You generally cannot be a qualifying child of another taxpayer if you are married and file a joint return. Federal tax forms 1040ez 2013   However, you may be a qualifying child of another taxpayer if you and your spouse file a joint return for the year only to get a refund of income tax withheld or estimated tax paid. Federal tax forms 1040ez 2013 But neither you nor your spouse can be a qualifying child of another taxpayer if you claim the EIC on your joint return. Federal tax forms 1040ez 2013 Child of person not required to file a return. Federal tax forms 1040ez 2013   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you meet the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 You lived all year with your father. Federal tax forms 1040ez 2013 You are 27 years old, unmarried, permanently and totally disabled, and earned $13,000. Federal tax forms 1040ez 2013 You have no other income, no children, and provided more than half of your own support. Federal tax forms 1040ez 2013 Your father had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. Federal tax forms 1040ez 2013 As a result, you are not your father's qualifying child. Federal tax forms 1040ez 2013 You can claim the EIC if you meet all the other requirements to do so. Federal tax forms 1040ez 2013   See Rule 13 in Publication 596 for additional examples. Federal tax forms 1040ez 2013 Rule 14. Federal tax forms 1040ez 2013 You Must Have Lived in the United States More Than Half of the Year Your home (and your spouse's, if filing a joint return) must have been in the United States for more than half the year. Federal tax forms 1040ez 2013 If it was not, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Federal tax forms 1040ez 2013 United States. Federal tax forms 1040ez 2013   This means the 50 states and the District of Columbia. Federal tax forms 1040ez 2013 It does not include Puerto Rico or U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 possessions such as Guam. Federal tax forms 1040ez 2013 Homeless shelter. Federal tax forms 1040ez 2013   Your home can be any location where you regularly live. Federal tax forms 1040ez 2013 You do not need a traditional home. Federal tax forms 1040ez 2013 If you lived in one or more homeless shelters in the United States for more than half the year, you meet this rule. Federal tax forms 1040ez 2013 Military personnel stationed outside the United States. Federal tax forms 1040ez 2013   U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 military personnel stationed outside the United States on extended active duty (defined in Rule 8 ) are considered to live in the United States during that duty period for purposes of the EIC. Federal tax forms 1040ez 2013 Part D. Federal tax forms 1040ez 2013 Figuring and Claiming the EIC Read this part if you have met all the rules in Parts A and B, or all the rules in Parts A and C. Federal tax forms 1040ez 2013 Part D discusses Rule 15 . Federal tax forms 1040ez 2013 You must meet this rule, in addition to the rules in Parts A and B , or Parts A and C , to qualify for the earned income credit. Federal tax forms 1040ez 2013 This part of the chapter also explains how to figure the amount of your credit. Federal tax forms 1040ez 2013 You have two choices. Federal tax forms 1040ez 2013 Have the IRS figure the EIC for you. Federal tax forms 1040ez 2013 If you want to do this, see IRS Will Figure the EIC for You . Federal tax forms 1040ez 2013 Figure the EIC yourself. Federal tax forms 1040ez 2013 If you want to do this, see How To Figure the EIC Yourself . Federal tax forms 1040ez 2013 Rule 15. Federal tax forms 1040ez 2013 Your Earned Income Must Be Less Than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Federal tax forms 1040ez 2013 Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. Federal tax forms 1040ez 2013 Employee pay is earned income only if it is taxable. Federal tax forms 1040ez 2013 Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Federal tax forms 1040ez 2013 But there is an exception for nontaxable combat pay, which you can choose to include in earned income. Federal tax forms 1040ez 2013 Earned income is explained in detail in Rule 7 . Federal tax forms 1040ez 2013 Figuring earned income. Federal tax forms 1040ez 2013   If you are self-employed, a statutory employee, or a member of the clergy or a church employee who files Schedule SE (Form 1040), you will figure your earned income when you fill out Part 4 of EIC Worksheet B in the Form 1040 instructions. Federal tax forms 1040ez 2013   Otherwise, figure your earned income by using the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b or the Form 1040A instructions for lines 38a and 38b, or the worksheet in Step 2 of the Form 1040EZ instructions for lines 8a and 8b. Federal tax forms 1040ez 2013   When using one of those worksheets to figure your earned income, you will start with the amount on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). Federal tax forms 1040ez 2013 You will then reduce that amount by any amount included on that line and described in the following list: Scholarship or fellowship grants not reported on a Form W-2, Inmate's income, and Pension or annuity from deferred compensation plans. Federal tax forms 1040ez 2013 Scholarship or fellowship grants not reported on a Form W-2. Federal tax forms 1040ez 2013   A scholarship or fellowship grant that was not reported to you on a Form W-2 is not considered earned income for the earned income credit. Federal tax forms 1040ez 2013 Inmate's income. Federal tax forms 1040ez 2013   Amounts received for work performed while an inmate in a penal institution are not earned income for the earned income credit. Federal tax forms 1040ez 2013 This includes amounts received for work performed while in a work release program or while in a halfway house. Federal tax forms 1040ez 2013 If you received any amount for work done while an inmate in a penal institution and that amount is included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “PRI” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). Federal tax forms 1040ez 2013 Pension or annuity from deferred compensation plans. Federal tax forms 1040ez 2013   A pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan is not considered earned income for the earned income credit. Federal tax forms 1040ez 2013 If you received such an amount and it was included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “DFC” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). Federal tax forms 1040ez 2013 This amount may be reported in box 11 of your Form W-2. Federal tax forms 1040ez 2013 If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or annuity. Federal tax forms 1040ez 2013 Clergy. Federal tax forms 1040ez 2013   If you are a member of the clergy who files Schedule SE and the amount on line 2 of that schedule includes an amount that was also reported on line 7 (Form 1040), subtract that amount from the amount on line 7 (Form 1040) and enter the result in the first space of the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b. Federal tax forms 1040ez 2013 Put “Clergy” on the dotted line next to line 64a (Form 1040). Federal tax forms 1040ez 2013 Church employees. Federal tax forms 1040ez 2013    A church employee means an employee (other than a minister or member of a religious order) of a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes. Federal tax forms 1040ez 2013 If you received wages as a
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Identity Protection

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The IRS is committed to working with taxpayers who are the victims of identity theft

The IRS has taken numerous steps to combat identity theft and protect taxpayers. We are continually looking at ways to increase data security and protect taxpayers' identities with assistance from our Identity Protection Specialized Unit. Identity theft cases are among the most complex ones we handle.

We know identity theft is a frustrating process for victims. We take this issue very seriously and continue to expand on our robust screening process in order to stop fraudulent returns and protect innocent taxpayers.

On this page, you will find a wide range of information. Depending upon your personal circumstances, the information found here will cover a variety of scenarios involving identity theft, ranging from contacting us with a case of identity theft to providing tips to help keep your records safe.

  • Victim of identity theft?

Do you have reason to believe you are the victim of identity theft and your tax accounts have been affected?

Have you been informed that someone may be using your Social Security number for employment purposes?

Remember:
The IRS does not initiate contact with taxpayers by email to request personal or financial information.  This includes any type of electronic communication, such as text messages and social media channels.

Page Last Reviewed or Updated: 13-Mar-2014

The Federal Tax Forms 1040ez 2013

Federal tax forms 1040ez 2013 Publication 925 - Main Content Table of Contents Passive Activity LimitsWho Must Use These Rules? Passive Activity Loss Passive Activity Credit Publicly Traded Partnership Excess Farm Loss Passive Activities Activities That Are Not Passive Activities Passive Activity Income and Deductions Grouping Your Activities Recharacterization of Passive Income Dispositions How To Report Your Passive Activity Loss Comprehensive ExampleGeneral Information At-Risk LimitsWho Is Affected? Activities Covered by the At-Risk Rules At-Risk Amounts Amounts Not At Risk Reductions of Amounts At Risk Recapture Rule How To Get Tax HelpLow Income Taxpayer Clinics Passive Activity Limits Who Must Use These Rules? The passive activity rules apply to: Individuals, Estates, Trusts (other than grantor trusts), Personal service corporations, and Closely held corporations. Federal tax forms 1040ez 2013 Even though the rules do not apply to grantor trusts, partnerships, and S corporations directly, they do apply to the owners of these entities. Federal tax forms 1040ez 2013 For information about personal service corporations and closely held corporations, including definitions and how the passive activity rules apply to these corporations, see Form 8810 and its instructions. Federal tax forms 1040ez 2013 Before applying the passive activity limits, you must first determine the amount of the deductions disallowed under the basis, excess farm loss, or at-risk rules. Federal tax forms 1040ez 2013 See Passive Activity Deductions, later. Federal tax forms 1040ez 2013 Passive Activity Loss Generally, the passive activity loss for the tax year is not allowed. Federal tax forms 1040ez 2013 However, there is a special allowance under which some or all of your passive activity loss may be allowed. Federal tax forms 1040ez 2013 See Special $25,000 allowance , later. Federal tax forms 1040ez 2013 Definition of passive activity loss. Federal tax forms 1040ez 2013    Generally, your passive activity loss for the tax year is the excess of your passive activity deductions over your passive activity gross income. Federal tax forms 1040ez 2013 See Passive Activity Income and Deductions , later. Federal tax forms 1040ez 2013   For a closely held corporation, the passive activity loss is the excess of passive activity deductions over the sum of passive activity gross income and net active income. Federal tax forms 1040ez 2013 For details on net active income, see the Instructions for Form 8810. Federal tax forms 1040ez 2013 For the definition of passive activity gross income, see Passive Activity Income , later. Federal tax forms 1040ez 2013 For the definition of passive activity deductions, see Passive Activity Deductions , later. Federal tax forms 1040ez 2013 Identification of Disallowed Passive Activity Deductions If all or a part of your passive activity loss is disallowed for the tax year, you may need to allocate the disallowed passive activity loss among different passive activities and among different deductions within a passive activity. Federal tax forms 1040ez 2013 Allocation of disallowed passive activity loss among activities. Federal tax forms 1040ez 2013   If all or any part of your passive activity loss is disallowed for the tax year, a ratable portion of the loss (if any) from each of your passive activities is disallowed. Federal tax forms 1040ez 2013 The ratable portion of a loss from an activity is computed by multiplying the passive activity loss that is disallowed for the tax year by the fraction obtained by dividing: The loss from the activity for the tax year; by The sum of the losses for the tax year from all activities having losses for the tax year. Federal tax forms 1040ez 2013 Use Worksheet 5 of Form 8582 to figure the ratable portion of the loss from each activity that is disallowed. Federal tax forms 1040ez 2013 Loss from an activity. Federal tax forms 1040ez 2013   The term “loss from an activity” means: The amount by which the passive activity deductions (defined later) from the activity for the tax year exceed the passive activity gross income (defined later) from the activity for the tax year; reduced by Any part of such amount that is allowed under the Special $25,000 Allowance , later. Federal tax forms 1040ez 2013   If your passive activity gross income from significant participation passive activities (defined later) for the tax year is more than your passive activity deductions from those activities for the tax year, those activities shall be treated, solely for purposes of figuring your loss from the activity, as a single activity that does not have a loss for such taxable year. Federal tax forms 1040ez 2013 See Significant Participation Passive Activities , later. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 John Pine holds interests in three passive activities, A, B, and C. Federal tax forms 1040ez 2013 The gross income and deductions from these activities for the taxable year are as follows:   A B C Total Gross income $7,000 $4,000 $12,000 $23,000 Deductions (16,000) (20,000) (8,000) (44,000)           Net income (loss) ($9,000) ($16,000) $4,000 ($21,000)   John Pine’s $21,000 passive activity loss for the taxable year is disallowed. Federal tax forms 1040ez 2013 Therefore, a ratable portion of the losses from activities A and B is disallowed. Federal tax forms 1040ez 2013 He figures the disallowed portion of each loss as follows: A: $21,000 x $9,000/$25,000 $7,560 B: $21,000 x $16,000/$25,000 13,440     Total $21,000 Allocation within loss activities. Federal tax forms 1040ez 2013   If all or any part of your loss from an activity is disallowed under Allocation of disallowed passive activity loss among activities for the tax year, a ratable portion of each of your passive activity deductions (defined later), other than an excluded deduction (defined below) from such activity is disallowed. Federal tax forms 1040ez 2013 The ratable portion of a passive activity deduction is the amount of the disallowed portion of the loss from the activity for the tax year multiplied by the fraction obtained by dividing: The amount of such deduction; by The sum of all of your passive activity deductions (other than excluded deductions) from that activity from the tax year. Federal tax forms 1040ez 2013 Excluded deductions. Federal tax forms 1040ez 2013    “Excluded deduction” means any passive activity deduction that is taken into account in computing your net income from an item of property for a taxable year in which an amount of the taxpayer's gross income from such item of property is treated as not from a passive activity. Federal tax forms 1040ez 2013 See Recharacterization of Passive Income , later. Federal tax forms 1040ez 2013 Separately identified deductions. Federal tax forms 1040ez 2013   In identifying the deductions from an activity that are disallowed, you do not need to account separately for a deduction unless such deduction may, if separately taken into account, result in an income tax liability for any tax year different from that which would result were such deduction not taken into account separately. Federal tax forms 1040ez 2013   Use Form 8582, Worksheet 7, for any activity if you have passive activity deductions for that activity that must be separately identified. Federal tax forms 1040ez 2013   Deductions that must be accounted for separately include (but are not limited to) the following deductions. Federal tax forms 1040ez 2013 Deductions that arise in a rental real estate activity in tax years in which you actively participate in such activity. Federal tax forms 1040ez 2013 See Active participation , later. Federal tax forms 1040ez 2013 Deductions that arise in a rental real estate activity in tax years in which you do not actively participate in such activity. Federal tax forms 1040ez 2013 See Active participation , later. Federal tax forms 1040ez 2013 Losses from sales or exchanges of capital assets. Federal tax forms 1040ez 2013 Section 1231 losses. Federal tax forms 1040ez 2013 See Section 1231 Gains and Losses in Publication 544, Sales and Other Disposition of Assets, for more information. Federal tax forms 1040ez 2013 Carryover of Disallowed Deductions In the case of an activity with respect to which any deductions or credits are disallowed for a taxable year (the loss activity), the disallowed deductions are allocated among your activities for the next tax year in a manner that reasonably reflects the extent to which each activity continues the loss activity. Federal tax forms 1040ez 2013 The disallowed deductions or credits allocated to an activity under the preceding sentence are treated as deductions or credits from the activity for the next tax year. Federal tax forms 1040ez 2013 For more information, see Regulations section 1. Federal tax forms 1040ez 2013 469-1(f)(4). Federal tax forms 1040ez 2013 Passive Activity Credit Generally, the passive activity credit for the tax year is disallowed. Federal tax forms 1040ez 2013 The passive activity credit is the amount by which the sum of all your credits subject to the passive activity rules exceed your regular tax liability allocable to all passive activities for the tax year. Federal tax forms 1040ez 2013 Credits that are included in figuring the general business credit are subject to the passive activity rules. Federal tax forms 1040ez 2013 See the Instructions for Form 8582-CR for more information. Federal tax forms 1040ez 2013 Publicly Traded Partnership You must apply the rules in this part separately to your income or loss from a passive activity held through a publicly traded partnership (PTP). Federal tax forms 1040ez 2013 You also must apply the limit on passive activity credits separately to your credits from a passive activity held through a PTP. Federal tax forms 1040ez 2013 You can offset deductions from passive activities of a PTP only against income or gain from passive activities of the same PTP. Federal tax forms 1040ez 2013 Likewise, you can offset credits from passive activities of a PTP only against the tax on the net passive income from the same PTP. Federal tax forms 1040ez 2013 This separate treatment rule also applies to a regulated investment company holding an interest in a PTP for the items attributable to that interest. Federal tax forms 1040ez 2013 For more information on how to apply the passive activity loss rules to PTPs, and on how to apply the limit on passive activity credits to PTPs, see Publicly Traded Partnerships (PTPs) in the Instructions for Forms 8582 and 8582-CR, respectively. Federal tax forms 1040ez 2013 Excess Farm Loss If you receive an applicable subsidy for any tax year and you have an excess farm loss for the tax year, special rules apply. Federal tax forms 1040ez 2013 These rules do not apply to C corporations. Federal tax forms 1040ez 2013 For information, see the Instructions for Schedule F (Form 1040), Profit or Loss From Farming. Federal tax forms 1040ez 2013 Passive Activities There are two kinds of passive activities. Federal tax forms 1040ez 2013 Trade or business activities in which you do not materially participate during the year. Federal tax forms 1040ez 2013 Rental activities, even if you do materially participate in them, unless you are a real estate professional. Federal tax forms 1040ez 2013 Material participation in a trade or business is discussed later, under Activities That Are Not Passive Activities . Federal tax forms 1040ez 2013 Treatment of former passive activities. Federal tax forms 1040ez 2013   A former passive activity is an activity that was a passive activity in any earlier tax year, but is not a passive activity in the current tax year. Federal tax forms 1040ez 2013 You can deduct a prior year's unallowed loss from the activity up to the amount of your current year net income from the activity. Federal tax forms 1040ez 2013 Treat any remaining prior year unallowed loss like you treat any other passive loss. Federal tax forms 1040ez 2013   In addition, any prior year unallowed passive activity credits from a former passive activity offset the allocable part of your current year tax liability. Federal tax forms 1040ez 2013 The allocable part of your current year tax liability is that part of this year's tax liability that is allocable to the current year net income from the former passive activity. Federal tax forms 1040ez 2013 You figure this after you reduce your net income from the activity by any prior year unallowed loss from that activity (but not below zero). Federal tax forms 1040ez 2013 Trade or Business Activities A trade or business activity is an activity that: Involves the conduct of a trade or business (that is, deductions would be allowable under section 162 of the Internal Revenue Code if other limitations, such as the passive activity rules, did not apply), Is conducted in anticipation of starting a trade or business, or Involves research or experimental expenditures that are deductible under Internal Revenue Code section 174 (or that would be deductible if you chose to deduct rather than capitalize them). Federal tax forms 1040ez 2013 A trade or business activity does not include a rental activity or the rental of property that is incidental to an activity of holding the property for investment. Federal tax forms 1040ez 2013 You generally report trade or business activities on Schedule C, C-EZ, F, or in Part II or III of Schedule E. Federal tax forms 1040ez 2013 Rental Activities A rental activity is a passive activity even if you materially participated in that activity, unless you materially participated as a real estate professional. Federal tax forms 1040ez 2013 See Real Estate Professional under Activities That Are Not Passive Activities, later. Federal tax forms 1040ez 2013 An activity is a rental activity if tangible property (real or personal) is used by customers or held for use by customers, and the gross income (or expected gross income) from the activity represents amounts paid (or to be paid) mainly for the use of the property. Federal tax forms 1040ez 2013 It does not matter whether the use is under a lease, a service contract, or some other arrangement. Federal tax forms 1040ez 2013 Exceptions. Federal tax forms 1040ez 2013   Your activity is not a rental activity if any of the following apply. Federal tax forms 1040ez 2013 The average period of customer use of the property is 7 days or less. Federal tax forms 1040ez 2013 You figure the average period of customer use by dividing the total number of days in all rental periods by the number of rentals during the tax year. Federal tax forms 1040ez 2013 If the activity involves renting more than one class of property, multiply the average period of customer use of each class by a fraction. Federal tax forms 1040ez 2013 The numerator of the fraction is the gross rental income from that class of property and the denominator is the activity's total gross rental income. Federal tax forms 1040ez 2013 The activity's average period of customer use will equal the sum of the amounts for each class. Federal tax forms 1040ez 2013 The average period of customer use of the property, as figured in (1) above, is 30 days or less and you provide significant personal services with the rentals. Federal tax forms 1040ez 2013 Significant personal services include only services performed by individuals. Federal tax forms 1040ez 2013 To determine if personal services are significant, all relevant facts and circumstances are taken into consideration, including the frequency of the services, the type and amount of labor required to perform the services, and the value of the services relative to the amount charged for use of the property. Federal tax forms 1040ez 2013 Significant personal services do not include the following. Federal tax forms 1040ez 2013 Services needed to permit the lawful use of the property, Services to repair or improve property that would extend its useful life for a period substantially longer than the average rental, and Services that are similar to those commonly provided with long-term rentals of real estate, such as cleaning and maintenance of common areas or routine repairs. Federal tax forms 1040ez 2013 You provide extraordinary personal services in making the rental property available for customer use. Federal tax forms 1040ez 2013 Services are extraordinary personal services if they are performed by individuals and the customers' use of the property is incidental to their receipt of the services. Federal tax forms 1040ez 2013 The rental is incidental to a nonrental activity. Federal tax forms 1040ez 2013 The rental of property is incidental to an activity of holding property for investment if the main purpose of holding the property is to realize a gain from its appreciation and the gross rental income from the property is less than 2% of the smaller of the property's unadjusted basis or fair market value. Federal tax forms 1040ez 2013 The unadjusted basis of property is its cost not reduced by depreciation or any other basis adjustment. Federal tax forms 1040ez 2013 The rental of property is incidental to a trade or business activity if all of the following apply. Federal tax forms 1040ez 2013 You own an interest in the trade or business activity during the year. Federal tax forms 1040ez 2013 The rental property was used mainly in that trade or business activity during the current year, or during at least 2 of the 5 preceding tax years. Federal tax forms 1040ez 2013 Your gross rental income from the property is less than 2% of the smaller of its unadjusted basis or fair market value. Federal tax forms 1040ez 2013 Lodging provided to an employee or the employee's spouse or dependents is incidental to the activity or activities in which the employee performs services if the lodging is furnished for the employer's convenience. Federal tax forms 1040ez 2013 You customarily make the rental property available during defined business hours for nonexclusive use by various customers. Federal tax forms 1040ez 2013 You provide the property for use in a nonrental activity in your capacity as an owner of an interest in the partnership, S corporation, or joint venture conducting that activity. Federal tax forms 1040ez 2013    If you meet any of the exceptions listed above, see the instructions for Form 8582 for information about how to report any income or loss from the activity. Federal tax forms 1040ez 2013 Special $25,000 allowance. Federal tax forms 1040ez 2013   If you or your spouse actively participated in a passive rental real estate activity, the amount of the passive activity loss that is disallowed is decreased and you therefore can deduct up to $25,000 of loss from the activity from your nonpassive income. Federal tax forms 1040ez 2013 This special allowance is an exception to the general rule disallowing the passive activity loss. Federal tax forms 1040ez 2013 Similarly, you can offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. Federal tax forms 1040ez 2013   If you are married, filing a separate return, and lived apart from your spouse for the entire tax year, your special allowance cannot be more than $12,500. Federal tax forms 1040ez 2013 If you lived with your spouse at any time during the year and are filing a separate return, you cannot use the special allowance to reduce your nonpassive income or tax on nonpassive income. Federal tax forms 1040ez 2013   The maximum special allowance is reduced if your modified adjusted gross income exceeds certain amounts. Federal tax forms 1040ez 2013 See Phaseout rule , later. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 Kate, a single taxpayer, has $70,000 in wages, $15,000 income from a limited partnership, a $26,000 loss from rental real estate activities in which she actively participated, and is not subject to the modified adjusted gross income phaseout rule. Federal tax forms 1040ez 2013 She can use $15,000 of her $26,000 loss to offset her $15,000 passive income from the partnership. Federal tax forms 1040ez 2013 She actively participated in her rental real estate activities, so she can use the remaining $11,000 rental real estate loss to offset $11,000 of her nonpassive income (wages). Federal tax forms 1040ez 2013 Commercial revitalization deduction (CRD). Federal tax forms 1040ez 2013   The special allowance must first be applied to losses from rental real estate activities figured without the CRD. Federal tax forms 1040ez 2013 Any remaining part of the special allowance is available for the CRD from the rental real estate activities and is not subject to the active participation rules or the phaseout based on modified adjusted gross income. Federal tax forms 1040ez 2013 You cannot claim a CRD for a building placed in service after December 31, 2009. Federal tax forms 1040ez 2013 Active participation. Federal tax forms 1040ez 2013   Active participation is not the same as material participation (defined later). Federal tax forms 1040ez 2013 Active participation is a less stringent standard than material participation. Federal tax forms 1040ez 2013 For example, you may be treated as actively participating if you make management decisions in a significant and bona fide sense. Federal tax forms 1040ez 2013 Management decisions that count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. Federal tax forms 1040ez 2013   Only individuals can actively participate in rental real estate activities. Federal tax forms 1040ez 2013 However, a decedent's estate is treated as actively participating for its tax years ending less than 2 years after the decedent's death, if the decedent would have satisfied the active participation requirement for the activity for the tax year the decedent died. Federal tax forms 1040ez 2013   A decedent's qualified revocable trust can also be treated as actively participating if both the trustee and the executor (if any) of the estate choose to treat the trust as part of the estate. Federal tax forms 1040ez 2013 The choice applies to tax years ending after the decedent's death and before: 2 years after the decedent's death if no estate tax return is required, or 6 months after the estate tax liability is finally determined if an estate tax return is required. Federal tax forms 1040ez 2013   The choice is irrevocable and cannot be made later than the due date for the estate's first income tax return (including any extensions). Federal tax forms 1040ez 2013   Limited partners are not treated as actively participating in a partnership's rental real estate activities. Federal tax forms 1040ez 2013   You are not treated as actively participating in a rental real estate activity unless your interest in the activity (including your spouse's interest) was at least 10% (by value) of all interests in the activity throughout the year. Federal tax forms 1040ez 2013   Active participation is not required to take the low-income housing credit, the rehabilitation investment credit, or CRD from rental real estate activities. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 Mike, a single taxpayer, had the following income and loss during the tax year: Salary $42,300 Dividends 300 Interest 1,400 Rental loss (4,000) The rental loss came from a house Mike owned. Federal tax forms 1040ez 2013 He advertised and rented the house to the current tenant himself. Federal tax forms 1040ez 2013 He also collected the rents and did the repairs or hired someone to do them. Federal tax forms 1040ez 2013 Even though the rental loss is a loss from a passive activity, Mike can use the entire $4,000 loss to offset his other income because he actively participated. Federal tax forms 1040ez 2013 Phaseout rule. Federal tax forms 1040ez 2013   The maximum special allowance of $25,000 ($12,500 for married individuals filing separate returns and living apart at all times during the year) is reduced by 50% of the amount of your modified adjusted gross income that is more than $100,000 ($50,000 if you are married filing separately). Federal tax forms 1040ez 2013 If your modified adjusted gross income is $150,000 or more ($75,000 or more if you are married filing separately), you generally cannot use the special allowance. Federal tax forms 1040ez 2013    Modified adjusted gross income for this purpose is your adjusted gross income figured without the following. Federal tax forms 1040ez 2013 Taxable social security and tier 1 railroad retirement benefits. Federal tax forms 1040ez 2013 Deductible contributions to individual retirement accounts (IRAs) and section 501(c)(18) pension plans. Federal tax forms 1040ez 2013 The exclusion from income of interest from qualified U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 savings bonds used to pay qualified higher education expenses. Federal tax forms 1040ez 2013 The exclusion from income of amounts received from an employer's adoption assistance program. Federal tax forms 1040ez 2013 Passive activity income or loss included on Form 8582. Federal tax forms 1040ez 2013 Any rental real estate loss allowed because you materially participated in the rental activity as a Real Estate Professional (as discussed later, under Activities That Are Not Passive Activities). Federal tax forms 1040ez 2013 Any overall loss from a publicly traded partnership (see Publicly Traded Partnerships (PTPs) in the instructions for Form 8582). Federal tax forms 1040ez 2013 The deduction for the employer-equivalent portion of self-employment tax. Federal tax forms 1040ez 2013 The deduction for domestic production activities. Federal tax forms 1040ez 2013 The deduction allowed for interest on student loans. Federal tax forms 1040ez 2013 The deduction for qualified tuition and related expenses. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 During 2013, John was unmarried and was not a real estate professional. Federal tax forms 1040ez 2013 For 2013, he had $120,000 in salary and a $31,000 loss from his rental real estate activities in which he actively participated. Federal tax forms 1040ez 2013 His modified adjusted gross income is $120,000. Federal tax forms 1040ez 2013 When he files his 2013 return, he can deduct only $15,000 of his passive activity loss. Federal tax forms 1040ez 2013 He must carry over the remaining $16,000 passive activity loss to 2014. Federal tax forms 1040ez 2013 He figures his deduction and carryover as follows: Adjusted gross income, modified as required $120,000       Minus amount not subject to phaseout 100,000 Amount subject to phaseout rule $20,000 Multiply by 50% × 50% Required reduction to special allowance $10,000 Maximum special allowance $25,000 Minus required reduction (see above) 10,000 Adjusted special allowance $15,000 Passive loss from rental real estate $31,000 Deduction allowable/Adjusted  special allowance (see above) 15,000       Amount that must be carried forward $16,000 Exceptions to the phaseout rules. Federal tax forms 1040ez 2013   A higher phaseout range applies to rehabilitation investment credits from rental real estate activities. Federal tax forms 1040ez 2013 For those credits, the phaseout of the $25,000 special allowance starts when your modified adjusted gross income exceeds $200,000 ($100,000 if you are a married individual filing a separate return and living apart at all times during the year). Federal tax forms 1040ez 2013   There is no phaseout of the $25,000 special allowance for low-income housing credits or for the CRD. Federal tax forms 1040ez 2013 Ordering rules. Federal tax forms 1040ez 2013   If you have more than one of the exceptions to the phaseout rules in the same tax year, you must apply the $25,000 phaseout against your passive activity losses and credits in the following order. Federal tax forms 1040ez 2013 The portion of passive activity losses not attributable to the CRD. Federal tax forms 1040ez 2013 The portion of passive activity losses attributable to the CRD. Federal tax forms 1040ez 2013 The portion of passive activity credits attributable to credits other than the rehabilitation and low-income housing credits. Federal tax forms 1040ez 2013 The portion of passive activity credits attributable to the rehabilitation credit. Federal tax forms 1040ez 2013 The portion of passive activity credits attributable to the low-income housing credit. Federal tax forms 1040ez 2013 Activities That Are Not Passive Activities The following are not passive activities. Federal tax forms 1040ez 2013 Trade or business activities in which you materially participated for the tax year. Federal tax forms 1040ez 2013 A working interest in an oil or gas well which you hold directly or through an entity that does not limit your liability (such as a general partner interest in a partnership). Federal tax forms 1040ez 2013 It does not matter whether you materially participated in the activity for the tax year. Federal tax forms 1040ez 2013 However, if your liability was limited for part of the year (for example, you converted your general partner interest to a limited partner interest during the year) and you had a net loss from the well for the year, some of your income and deductions from the working interest may be treated as passive activity gross income and passive activity deductions. Federal tax forms 1040ez 2013  See Temporary Regulations section 1. Federal tax forms 1040ez 2013 469-1T(e)(4)(ii). Federal tax forms 1040ez 2013 The rental of a dwelling unit that you also used for personal purposes during the year for more than the greater of 14 days or 10% of the number of days during the year that the home was rented at a fair rental. Federal tax forms 1040ez 2013 An activity of trading personal property for the account of those who own interests in the activity. Federal tax forms 1040ez 2013 See Temporary Regulations section 1. Federal tax forms 1040ez 2013 469-1T(e)(6). Federal tax forms 1040ez 2013 Rental real estate activities in which you materially participated as a real estate professional. Federal tax forms 1040ez 2013 See Real Estate Professional , later. Federal tax forms 1040ez 2013 You should not enter income and losses from these activities on Form 8582. Federal tax forms 1040ez 2013 Instead, enter them on the forms or schedules you would normally use. Federal tax forms 1040ez 2013 Material Participation A trade or business activity is not a passive activity if you materially participated in the activity. Federal tax forms 1040ez 2013 Material participation tests. Federal tax forms 1040ez 2013    You materially participated in a trade or business activity for a tax year if you satisfy any of the following tests. Federal tax forms 1040ez 2013 You participated in the activity for more than 500 hours. Federal tax forms 1040ez 2013 Your participation was substantially all the participation in the activity of all individuals for the tax year, including the participation of individuals who did not own any interest in the activity. Federal tax forms 1040ez 2013 You participated in the activity for more than 100 hours during the tax year, and you participated at least as much as any other individual (including individuals who did not own any interest in the activity) for the year. Federal tax forms 1040ez 2013 The activity is a significant participation activity, and you participated in all significant participation activities for more than 500 hours. Federal tax forms 1040ez 2013 A significant participation activity is any trade or business activity in which you participated for more than 100 hours during the year and in which you did not materially participate under any of the material participation tests, other than this test. Federal tax forms 1040ez 2013 See Significant Participation Passive Activities , under Recharacterization of Passive Income, later. Federal tax forms 1040ez 2013 You materially participated in the activity for any 5 (whether or not consecutive) of the 10 immediately preceding tax years. Federal tax forms 1040ez 2013 The activity is a personal service activity in which you materially participated for any 3 (whether or not consecutive) preceding tax years. Federal tax forms 1040ez 2013 An activity is a personal service activity if it involves the performance of personal services in the fields of health (including veterinary services), law, engineering, architecture, accounting, actuarial science, performing arts, consulting, or any other trade or business in which capital is not a material income-producing factor. Federal tax forms 1040ez 2013 Based on all the facts and circumstances, you participated in the activity on a regular, continuous, and substantial basis during the year. Federal tax forms 1040ez 2013   You did not materially participate in the activity under test (7) if you participated in the activity for 100 hours or less during the year. Federal tax forms 1040ez 2013 Your participation in managing the activity does not count in determining whether you materially participated under this test if: Any person other than you received compensation for managing the activity, or Any individual spent more hours during the tax year managing the activity than you did (regardless of whether the individual was compensated for the management services). Federal tax forms 1040ez 2013 Participation. Federal tax forms 1040ez 2013   In general, any work you do in connection with an activity in which you own an interest is treated as participation in the activity. Federal tax forms 1040ez 2013 Work not usually performed by owners. Federal tax forms 1040ez 2013   You do not treat the work you do in connection with an activity as participation in the activity if both of the following are true. Federal tax forms 1040ez 2013 The work is not work that is customarily done by the owner of that type of activity. Federal tax forms 1040ez 2013 One of your main reasons for doing the work is to avoid the disallowance of any loss or credit from the activity under the passive activity rules. Federal tax forms 1040ez 2013 Participation as an investor. Federal tax forms 1040ez 2013   You do not treat the work you do in your capacity as an investor in an activity as participation unless you are directly involved in the day-to-day management or operations of the activity. Federal tax forms 1040ez 2013 Work you do as an investor includes: Studying and reviewing financial statements or reports on operations of the activity, Preparing or compiling summaries or analyses of the finances or operations of the activity for your own use, and Monitoring the finances or operations of the activity in a nonmanagerial capacity. Federal tax forms 1040ez 2013 Spouse's participation. Federal tax forms 1040ez 2013   Your participation in an activity includes your spouse's participation. Federal tax forms 1040ez 2013 This applies even if your spouse did not own any interest in the activity and you and your spouse do not file a joint return for the year. Federal tax forms 1040ez 2013 Proof of participation. Federal tax forms 1040ez 2013 You can use any reasonable method to prove your participation in an activity for the year. Federal tax forms 1040ez 2013 You do not have to keep contemporaneous daily time reports, logs, or similar documents if you can establish your participation in some other way. Federal tax forms 1040ez 2013 For example, you can show the services you performed and the approximate number of hours spent by using an appointment book, calendar, or narrative summary. Federal tax forms 1040ez 2013 Limited partners. Federal tax forms 1040ez 2013   If you owned an activity as a limited partner, you generally are not treated as materially participating in the activity. Federal tax forms 1040ez 2013 However, you are treated as materially participating in the activity if you met test (1), (5), or (6) under Material participation tests , discussed earlier, for the tax year. Federal tax forms 1040ez 2013   You are not treated as a limited partner, however, if you also were a general partner in the partnership at all times during the partnership's tax year ending with or within your tax year (or, if shorter, during that part of the partnership's tax year in which you directly or indirectly owned your limited partner interest). Federal tax forms 1040ez 2013 Retired or disabled farmer and surviving spouse of a farmer. Federal tax forms 1040ez 2013   If you are a retired or disabled farmer, you are treated as materially participating in a farming activity if you materially participated for 5 or more of the 8 years before your retirement or disability. Federal tax forms 1040ez 2013 Similarly, if you are a surviving spouse of a farmer, you are treated as materially participating in a farming activity if the real property used in the activity meets the estate tax rules for special valuation of farm property passed from a qualifying decedent, and you actively manage the farm. Federal tax forms 1040ez 2013 Corporations. Federal tax forms 1040ez 2013   A closely held corporation or a personal service corporation is treated as materially participating in an activity only if one or more shareholders holding more than 50% by value of the outstanding stock of the corporation materially participate in the activity. Federal tax forms 1040ez 2013   A closely held corporation can also satisfy the material participation standard by meeting the first two requirements for the qualifying business exception from the at-risk limits. Federal tax forms 1040ez 2013 See Special exception for qualified corporations under Activities Covered by the At-Risk Rules, later. Federal tax forms 1040ez 2013 Real Estate Professional Generally, rental activities are passive activities even if you materially participated in them. Federal tax forms 1040ez 2013 However, if you qualified as a real estate professional, rental real estate activities in which you materially participated are not passive activities. Federal tax forms 1040ez 2013 For this purpose, each interest you have in a rental real estate activity is a separate activity, unless you choose to treat all interests in rental real estate activities as one activity. Federal tax forms 1040ez 2013 See the Instructions for Schedule E (Form 1040), Supplemental Income and Loss, for information about making this choice. Federal tax forms 1040ez 2013 If you qualified as a real estate professional for 2013, report income or losses from rental real estate activities in which you materially participated as nonpassive income or losses, and complete line 43 of Schedule E (Form 1040). Federal tax forms 1040ez 2013 If you also have an unallowed loss from these activities from an earlier year when you did not qualify, see Treatment of former passive activities under Passive Activities, earlier. Federal tax forms 1040ez 2013 Qualifications. Federal tax forms 1040ez 2013   You qualified as a real estate professional for the year if you met both of the following requirements. Federal tax forms 1040ez 2013 More than half of the personal services you performed in all trades or businesses during the tax year were performed in real property trades or businesses in which you materially participated. Federal tax forms 1040ez 2013 You performed more than 750 hours of services during the tax year in real property trades or businesses in which you materially participated. Federal tax forms 1040ez 2013   Do not count personal services you performed as an employee in real property trades or businesses unless you were a 5% owner of your employer. Federal tax forms 1040ez 2013 You were a 5% owner if you owned (or are considered to have owned) more than 5% of your employer's outstanding stock, outstanding voting stock, or capital or profits interest. Federal tax forms 1040ez 2013   If you file a joint return, do not count your spouse's personal services to determine whether you met the preceding requirements. Federal tax forms 1040ez 2013 However, you can count your spouse's participation in an activity in determining if you materially participated. Federal tax forms 1040ez 2013 Real property trades or businesses. Federal tax forms 1040ez 2013   A real property trade or business is a trade or business that does any of the following with real property. Federal tax forms 1040ez 2013 Develops or redevelops it. Federal tax forms 1040ez 2013 Constructs or reconstructs it. Federal tax forms 1040ez 2013 Acquires it. Federal tax forms 1040ez 2013 Converts it. Federal tax forms 1040ez 2013 Rents or leases it. Federal tax forms 1040ez 2013 Operates or manages it. Federal tax forms 1040ez 2013 Brokers it. Federal tax forms 1040ez 2013 Closely held corporations. Federal tax forms 1040ez 2013   A closely held corporation can qualify as a real estate professional if more than 50% of the gross receipts for its tax year came from real property trades or businesses in which it materially participated. Federal tax forms 1040ez 2013 Passive Activity Income and Deductions In figuring your net income or loss from a passive activity, take into account only passive activity income and passive activity deductions. Federal tax forms 1040ez 2013 Self-charged interest. Federal tax forms 1040ez 2013   Certain self-charged interest income or deductions may be treated as passive activity gross income or passive activity deductions if the loan proceeds are used in a passive activity. Federal tax forms 1040ez 2013   Generally, self-charged interest income and deductions result from loans between you and a partnership or S corporation in which you had a direct or indirect ownership interest. Federal tax forms 1040ez 2013 This includes both loans you made to the partnership or S corporation and loans the partnership or S corporation made to you. Federal tax forms 1040ez 2013   It also includes loans from one partnership or S corporation to another partnership or S corporation if each owner in the borrowing entity has the same proportional ownership interest in the lending entity. Federal tax forms 1040ez 2013    Exception. Federal tax forms 1040ez 2013 The self-charged interest rules do not apply to your interest in a partnership or S corporation if the entity made an election under Regulations section 1. Federal tax forms 1040ez 2013 469-7(g) to avoid the application of these rules. Federal tax forms 1040ez 2013 For more details on the self-charged interest rules, see Regulations section 1. Federal tax forms 1040ez 2013 469-7. Federal tax forms 1040ez 2013 Passive Activity Income Passive activity income includes all income from passive activities and generally includes gain from disposition of an interest in a passive activity or property used in a passive activity. Federal tax forms 1040ez 2013 Passive activity income does not include the following items. Federal tax forms 1040ez 2013 Income from an activity that is not a passive activity. Federal tax forms 1040ez 2013 These activities are discussed under Activities That Are Not Passive Activities , earlier. Federal tax forms 1040ez 2013 Portfolio income. Federal tax forms 1040ez 2013 This includes interest, dividends, annuities, and royalties not derived in the ordinary course of a trade or business. Federal tax forms 1040ez 2013 It includes gain or loss from the disposition of property that produces these types of income or that is held for investment. Federal tax forms 1040ez 2013 The exclusion for portfolio income does not apply to self-charged interest treated as passive activity income. Federal tax forms 1040ez 2013 For more information on self-charged interest, see Self-charged interest , earlier. Federal tax forms 1040ez 2013 Personal service income. Federal tax forms 1040ez 2013 This includes salaries, wages, commissions, self-employment income from trade or business activities in which you materially participated, deferred compensation, taxable social security and other retirement benefits, and payments from partnerships to partners for personal services. Federal tax forms 1040ez 2013 Income from positive section 481 adjustments allocated to activities other than passive activities. Federal tax forms 1040ez 2013 (Section 481 adjustments are adjustments that must be made due to changes in your accounting method. Federal tax forms 1040ez 2013 ) Income or gain from investments of working capital. Federal tax forms 1040ez 2013 Income from an oil or gas property if you treated any loss from a working interest in the property for any tax year beginning after 1986 as a nonpassive loss, as discussed in item (2) under Activities That Are Not Passive Activities , earlier. Federal tax forms 1040ez 2013 This also applies to income from other oil and gas property the basis of which is determined wholly or partly by the basis of the property in the preceding sentence. Federal tax forms 1040ez 2013 Any income from intangible property, such as a patent, copyright, or literary, musical, or artistic composition, if your personal efforts significantly contributed to the creation of the property. Federal tax forms 1040ez 2013 Any other income that must be treated as nonpassive income. Federal tax forms 1040ez 2013 See Recharacterization of Passive Income , later. Federal tax forms 1040ez 2013 Overall gain from any interest in a publicly traded partnership. Federal tax forms 1040ez 2013 See Publicly Traded Partnerships (PTPs) in the instructions for Form 8582. Federal tax forms 1040ez 2013 State, local, and foreign income tax refunds. Federal tax forms 1040ez 2013 Income from a covenant not to compete. Federal tax forms 1040ez 2013 Reimbursement of a casualty or theft loss included in gross income to recover all or part of a prior year loss deduction, if the loss deduction was not a passive activity deduction. Federal tax forms 1040ez 2013 Alaska Permanent Fund dividends. Federal tax forms 1040ez 2013 Cancellation of debt income, if at the time the debt is discharged the debt is not allocated to passive activities under the interest expense allocation rules. Federal tax forms 1040ez 2013 See chapter 4 of Publication 535, Business Expenses, for information about the rules for allocating interest. Federal tax forms 1040ez 2013 Disposition of property interests. Federal tax forms 1040ez 2013   Gain on the disposition of an interest in property generally is passive activity income if, at the time of the disposition, the property was used in an activity that was a passive activity in the year of disposition. Federal tax forms 1040ez 2013 The gain generally is not passive activity income if, at the time of disposition, the property was used in an activity that was not a passive activity in the year of disposition. Federal tax forms 1040ez 2013 An exception to this general rule may apply if you previously used the property in a different activity. Federal tax forms 1040ez 2013 Exception for more than one use in the preceding 12 months. Federal tax forms 1040ez 2013   If you used the property in more than one activity during the 12-month period before its disposition, you must allocate the gain between the activities on a basis that reasonably reflects the property's use during that period. Federal tax forms 1040ez 2013 Any gain allocated to a passive activity is passive activity income. Federal tax forms 1040ez 2013   For this purpose, an allocation of the gain solely to the activity in which the property was mainly used during that period reasonably reflects the property's use if the fair market value of your interest in the property is not more than the lesser of: $10,000, or 10% of the total of the fair market value of your interest in the property and the fair market value of all other property used in that activity immediately before the disposition. Federal tax forms 1040ez 2013 Exception for substantially appreciated property. Federal tax forms 1040ez 2013   The gain is passive activity income if the fair market value of the property at disposition was more than 120% of its adjusted basis and either of the following conditions applies. Federal tax forms 1040ez 2013 You used the property in a passive activity for 20% of the time you held your interest in the property. Federal tax forms 1040ez 2013 You used the property in a passive activity for the entire 24-month period before its disposition. Federal tax forms 1040ez 2013 If neither condition applies, the gain is not passive activity income. Federal tax forms 1040ez 2013 However, it is treated as portfolio income only if you held the property for investment for more than half of the time you held it in nonpassive activities. Federal tax forms 1040ez 2013   For this purpose, treat property you held through a corporation (other than an S corporation) or other entity whose owners receive only portfolio income as property held in a nonpassive activity and as property held for investment. Federal tax forms 1040ez 2013 Also, treat the date you agree to transfer your interest for a fixed or determinable amount as the disposition date. Federal tax forms 1040ez 2013   If you used the property in more than one activity during the 12-month period before its disposition, this exception applies only to the part of the gain allocated to a passive activity under the rules described in the preceding discussion. Federal tax forms 1040ez 2013 Disposition of property converted to inventory. Federal tax forms 1040ez 2013   If you disposed of property that you had converted to inventory from its use in another activity (for example, you sold condominium units you previously held for use in a rental activity), a special rule may apply. Federal tax forms 1040ez 2013 Under this rule, you disregard the property's use as inventory and treat it as if it were still used in that other activity at the time of disposition. Federal tax forms 1040ez 2013 This rule applies only if you meet all of the following conditions. Federal tax forms 1040ez 2013 At the time of disposition, you held your interest in the property in a dealing activity (an activity that involves holding the property or similar property mainly for sale to customers in the ordinary course of a trade or business). Federal tax forms 1040ez 2013 Your other activities included a nondealing activity (an activity that does not involve holding similar property for sale to customers in the ordinary course of a trade or business) in which you used the property for more than 80% of the period you held it. Federal tax forms 1040ez 2013 You did not acquire or hold your interest in the property for the main purpose of selling it to customers in the ordinary course of a trade or business. Federal tax forms 1040ez 2013 Passive Activity Deductions Generally, a deduction is a passive activity deduction for a taxable year if and only if such deduction either: Arises in connection with the conduct of an activity that is a passive activity for the tax year; or Is treated as a deduction from an activity for the tax year because it was disallowed by the passive activity rules in the preceding year and carried forward to the tax year. Federal tax forms 1040ez 2013 For purposes of item (1), above, an item of deduction arises in the taxable year in which the item would be allowable as a deduction under the taxpayer's method of accounting if taxable income for all taxable years were determined without regard to the passive activity rules and without regard to the basis, excess farm loss, and at-risk limits. Federal tax forms 1040ez 2013 See Coordination with other limitations on deductions that apply before the passive activity rules , later. Federal tax forms 1040ez 2013 Passive activity deductions generally include losses from dispositions of property used in a passive activity at the time of the disposition and losses from a disposition of less than your entire interest in a passive activity. Federal tax forms 1040ez 2013 Exceptions. Federal tax forms 1040ez 2013   Passive activity deductions do not include the following items. Federal tax forms 1040ez 2013 Deductions for expenses (other than interest expense) that are clearly and directly allocable to portfolio income. Federal tax forms 1040ez 2013 Qualified home mortgage interest, capitalized interest expenses, and other interest expenses (other than self-charged interest) properly allocable to passive activities. Federal tax forms 1040ez 2013 For more information on self-charged interest, see Self-charged interest under Passive Activity Income and Deductions, earlier. Federal tax forms 1040ez 2013 Losses from dispositions of property that produce portfolio income or property held for investment. Federal tax forms 1040ez 2013 State, local, and foreign income taxes. Federal tax forms 1040ez 2013 Miscellaneous itemized deductions that may be disallowed because of the 2%-of-adjusted-gross-income limit. Federal tax forms 1040ez 2013 Charitable contribution deductions. Federal tax forms 1040ez 2013 Net operating loss deductions. Federal tax forms 1040ez 2013 Percentage depletion carryovers for oil and gas wells. Federal tax forms 1040ez 2013 Capital loss carrybacks and carryovers. Federal tax forms 1040ez 2013 Items of deduction from a passive activity that are disallowed under the limits on deductions that apply before the passive activity rules. Federal tax forms 1040ez 2013 See Coordination with other limitations on deductions that apply before the passive activity rules , later. Federal tax forms 1040ez 2013 Deductions and losses that would have been allowed for tax years beginning before 1987 but for basis or at-risk limits. Federal tax forms 1040ez 2013 Net negative section 481 adjustments allocated to activities other than passive activities. Federal tax forms 1040ez 2013 (Section 481 adjustments are adjustments required due to changes in accounting methods. Federal tax forms 1040ez 2013 ) Casualty and theft losses, unless losses similar in cause and severity recur regularly in the activity. Federal tax forms 1040ez 2013 The deduction for the employer-equivalent portion of self-employment tax. Federal tax forms 1040ez 2013 Coordination with other limitations on deductions that apply before the passive activity rules. Federal tax forms 1040ez 2013   An item of deduction from a passive activity that is disallowed for a tax year under the basis or at-risk limitations is not a passive activity deduction for the tax year. Federal tax forms 1040ez 2013 The following sections provide rules for figuring the extent to which items of deduction from a passive activity are disallowed for a tax year under the basis or at-risk limitations. Federal tax forms 1040ez 2013 Proration of deductions disallowed under basis limitations. Federal tax forms 1040ez 2013   If any amount of your distributive share of a partnership's loss for the tax year is disallowed under the basis limitation, a ratable portion of your distributive share of each item of deduction or loss of the partnership is disallowed for the tax year. Federal tax forms 1040ez 2013 For this purpose, the ratable portion of an item of deduction or loss is the amount of such item multiplied by the fraction obtained by dividing: The amount of your distributive share of partnership loss that is disallowed for the taxable year; by The sum of your distributive shares of all items of deduction and loss of the partnership for the tax year. Federal tax forms 1040ez 2013   If any amount of your pro rata share of an S corporation's loss for the tax year is disallowed under the basis limitation, a ratable portion of your pro rata share of each item of deduction or loss of the S corporation is disallowed for the tax year. Federal tax forms 1040ez 2013 For this purpose, the ratable portion of an item of deduction or loss is the amount of such item multiplied by the fraction obtained by dividing: The amount of your share of S corporation loss that is disallowed for the tax year; by The sum of your pro rata shares of all items of deduction and loss of the corporation for the tax year. Federal tax forms 1040ez 2013 Proration of deductions disallowed under at-risk limitation. Federal tax forms 1040ez 2013   If any amount of your loss from an activity (as defined in Activities Covered by the At-Risk Rules , later) is disallowed under the at-risk rules for the tax year, a ratable portion of each item of deduction or loss from the activity is disallowed for the tax year. Federal tax forms 1040ez 2013 For this purpose, the ratable portion of an item of deduction or loss is the amount of such item multiplied by the fraction obtained by dividing: The amount of the loss from the activity that is disallowed for the tax year; by The sum of all deductions from the activity for the taxable year. Federal tax forms 1040ez 2013 Coordination of basis and at-risk limitations. Federal tax forms 1040ez 2013   The portion of any item of deduction or loss that is disallowed for the tax year under the basis limitations is not taken into account for the taxable year in determining the loss from an activity (as defined in Activities Covered by the At-Risk Rules , later) for purposes of applying the at-risk rules. Federal tax forms 1040ez 2013 Separately identified items of deduction and loss. Federal tax forms 1040ez 2013   In identifying the items of deduction and loss from an activity that are not disallowed under the basis and at-risk limitations (and that therefore may be treated as passive activity deductions), you need not account separately for any item of deduction or loss unless such item may, if separately taken into account, result in an income tax liability different from that which would result were such item of deduction or loss taken into account separately. Federal tax forms 1040ez 2013   Items of deduction or loss that must be accounted for separately include (but are not limited to) items of deduction or loss that: Are attributable to separate activities. Federal tax forms 1040ez 2013 See Grouping Your Activities , later. Federal tax forms 1040ez 2013 Arise in a rental real estate activity in tax years in which you actively participate in such activity; Arise in a rental real estate activity in taxable years in which you do not actively participate in such activity; Arose in a taxable year beginning before 1987 and were not allowed for such taxable year under the basis or at-risk limitations; Are taken into account under section 613A(d) (relating to limitations on certain depletion deductions); Are taken into account under section 1211 (relating to the limitation on capital losses); Are taken into account under section 1231 (relating to property used in a trade or business and involuntary conversions). Federal tax forms 1040ez 2013 See Section 1231 Gains and Losses in Publication 544 for more information. Federal tax forms 1040ez 2013 Are attributable to pre-enactment interests in activities. Federal tax forms 1040ez 2013 See Regulations section 1. Federal tax forms 1040ez 2013 469-11T(c). Federal tax forms 1040ez 2013 Grouping Your Activities You can treat one or more trade or business activities, or rental activities, as a single activity if those activities form an appropriate economic unit for measuring gain or loss under the passive activity rules. Federal tax forms 1040ez 2013 Grouping is important for a number of reasons. Federal tax forms 1040ez 2013 If you group two activities into one larger activity, you need only show material participation in the activity as a whole. Federal tax forms 1040ez 2013 But if the two activities are separate, you must show material participation in each one. Federal tax forms 1040ez 2013 On the other hand, if you group two activities into one larger activity and you dispose of one of the two, then you have disposed of only part of your entire interest in the activity. Federal tax forms 1040ez 2013 But if the two activities are separate and you dispose of one of them, then you have disposed of your entire interest in that activity. Federal tax forms 1040ez 2013 Grouping can also be important in determining whether you meet the 10% ownership requirement for actively participating in a rental real estate activity. Federal tax forms 1040ez 2013 Appropriate Economic Units Generally, to determine if activities form an appropriate economic unit, you must consider all the relevant facts and circumstances. Federal tax forms 1040ez 2013 You can use any reasonable method of applying the relevant facts and circumstances in grouping activities. Federal tax forms 1040ez 2013 The following factors have the greatest weight in determining whether activities form an appropriate economic unit. Federal tax forms 1040ez 2013 All of the factors do not have to apply to treat more than one activity as a single activity. Federal tax forms 1040ez 2013 The factors that you should consider are: The similarities and differences in the types of trades or businesses, The extent of common control, The extent of common ownership, The geographical location, and The interdependencies between or among activities, which may include the extent to which the activities: Buy or sell goods between or among themselves, Involve products or services that are generally provided together, Have the same customers, Have the same employees, or Use a single set of books and records to account for the activities. Federal tax forms 1040ez 2013 Example 1. Federal tax forms 1040ez 2013 John Jackson owns a bakery and a movie theater at a shopping mall in Baltimore and a bakery and movie theater in Philadelphia. Federal tax forms 1040ez 2013 Based on all the relevant facts and circumstances, there may be more than one reasonable method for grouping John's activities. Federal tax forms 1040ez 2013 For example, John may be able to group the movie theaters and the bakeries into: One activity, A movie theater activity and a bakery activity, A Baltimore activity and a Philadelphia activity, or Four separate activities. Federal tax forms 1040ez 2013 Example 2. Federal tax forms 1040ez 2013 Betty is a partner in ABC partnership, which sells nonfood items to grocery stores. Federal tax forms 1040ez 2013 Betty is also a partner in DEF (a trucking business). Federal tax forms 1040ez 2013 ABC and DEF are under common control. Federal tax forms 1040ez 2013 The main part of DEF's business is transporting goods for ABC. Federal tax forms 1040ez 2013 DEF is the only trucking business in which Betty is involved. Federal tax forms 1040ez 2013 Based on the rules of this section, Betty treats ABC's wholesale activity and DEF's trucking activity as a single activity. Federal tax forms 1040ez 2013 Consistency and disclosure requirement. Federal tax forms 1040ez 2013   Generally, when you group activities into appropriate economic units, you may not regroup those activities in a later tax year. Federal tax forms 1040ez 2013 You must meet any disclosure requirements of the IRS when you first group your activities and when you add or dispose of any activities in your groupings. Federal tax forms 1040ez 2013   However, if the original grouping is clearly inappropriate or there is a material change in the facts and circumstances that makes the original grouping clearly inappropriate, you must regroup the activities and comply with any disclosure requirements of the IRS. Federal tax forms 1040ez 2013   See Disclosure Requirement , later. Federal tax forms 1040ez 2013 Regrouping by the IRS. Federal tax forms 1040ez 2013   If any of the activities resulting from your grouping is not an appropriate economic unit and one of the primary purposes of your grouping (or failure to regroup) is to avoid the passive activity rules, the IRS may regroup your activities. Federal tax forms 1040ez 2013 Rental activities. Federal tax forms 1040ez 2013   In general, you cannot group a rental activity with a trade or business activity. Federal tax forms 1040ez 2013 However, you can group them together if the activities form an appropriate economic unit and: The rental activity is insubstantial in relation to the trade or business activity, The trade or business activity is insubstantial in relation to the rental activity, or Each owner of the trade or business activity has the same ownership interest in the rental activity, in which case the part of the rental activity that involves the rental of items of property for use in the trade or business activity may be grouped with the trade or business activity. Federal tax forms 1040ez 2013 Example. Federal tax forms 1040ez 2013 Herbert and Wilma are married and file a joint return. Federal tax forms 1040ez 2013 Healthy Food, an S corporation, is a grocery store business. Federal tax forms 1040ez 2013 Herbert is Healthy Food's only shareholder. Federal tax forms 1040ez 2013 Plum Tower, an S corporation, owns and rents out the building. Federal tax forms 1040ez 2013 Wilma is Plum Tower's only shareholder. Federal tax forms 1040ez 2013 Plum Tower rents part of its building to Healthy Food. Federal tax forms 1040ez 2013 Plum Tower's grocery store rental business and Healthy Food's grocery business are not insubstantial in relation to each other. Federal tax forms 1040ez 2013 Herbert and Wilma file a joint return, so they are treated as one taxpayer for purposes of the passive activity rules. Federal tax forms 1040ez 2013 The same owner (Herbert and Wilma) owns both Healthy Food and Plum Tower with the same ownership interest (100% in each). Federal tax forms 1040ez 2013 If the grouping forms an appropriate economic unit, as discussed earlier, Herbert and Wilma can group Plum Tower's grocery store rental and Healthy Food's grocery business into a single trade or business activity. Federal tax forms 1040ez 2013 Grouping of real and personal property rentals. Federal tax forms 1040ez 2013   In general, you cannot treat an activity involving the rental of real property and an activity involving the rental of personal property as a single activity. Federal tax forms 1040ez 2013 However, you can treat them as a single activity if you provide the personal property in connection with the real property or the real property in connection with the personal property. Federal tax forms 1040ez 2013 Certain activities may not be grouped. Federal tax forms 1040ez 2013   In general, if you own an interest as a limited partner or a limited entrepreneur in one of the following activities, you may not group that activity with any other activity in another type of business. Federal tax forms 1040ez 2013 Holding, producing, or distributing motion picture films or video tapes. Federal tax forms 1040ez 2013 Farming. Federal tax forms 1040ez 2013 Leasing any section 1245 property (as defined in section 1245(a)(3) of the Internal Revenue Code). Federal tax forms 1040ez 2013 For a list of section 1245 property, see Section 1245 property under Activities Covered by the At-Risk Rules , later. Federal tax forms 1040ez 2013 Exploring for, or exploiting, oil and gas resources. Federal tax forms 1040ez 2013 Exploring for, or exploiting, geothermal deposits. Federal tax forms 1040ez 2013   If you own an interest as a limited partner or a limited entrepreneur in an activity described in the list above, you may group that activity with another activity in the same type of business if the grouping forms an appropriate economic unit as discussed earlier. Federal tax forms 1040ez 2013 Limited entrepreneur. Federal tax forms 1040ez 2013   A limited entrepreneur is a person who: Has an interest in an enterprise other than as a limited partner, and Does not actively participate in the management of the enterprise. Federal tax forms 1040ez 2013 Activities conducted through another entity. Federal tax forms 1040ez 2013   A personal service corporation, closely held corporation, partnership, or S corporation must group its activities using the rules discussed in this section. Federal tax forms 1040ez 2013 Once the entity groups its activities, you, as the partner or shareholder of the entity, may group those activities (following the rules of this section): With each other, With activities conducted directly by you, or With activities conducted through other entities. Federal tax forms 1040ez 2013    You may not treat activities grouped together by the entity as separate activities. Federal tax forms 1040ez 2013 Personal service and closely held corporations. Federal tax forms 1040ez 2013   You may group an activity conducted through a personal service or closely held corporation with your other activities only to determine whether you materially or significantly participated in those other activities. Federal tax forms 1040ez 2013 See Material Participation , earlier, and Significant Participation Passive Activities , later. Federal tax forms 1040ez 2013 Publicly traded partnership (PTP). Federal tax forms 1040ez 2013   You may not group activities conducted through a PTP with any other activity, including an activity conducted through another PTP. Federal tax forms 1040ez 2013 Partial dispositions. Federal tax forms 1040ez 2013   If you dispose of substantially all of an activity during your tax year, you may treat the part disposed of as a separate activity. Federal tax forms 1040ez 2013 However, you can do this only if you can show with reasonable certainty: The amount of deductions and credits disallowed in prior years under the passive activity rules that is allocable to the part of the activity disposed of, and The amount of gross income and any other deductions and credits for the current tax year that is allocable to the part of the activity disposed of. Federal tax forms 1040ez 2013 Disclosure Requirement For tax years beginning after January 24, 2010, the following disclosure requirements for groupings apply. Federal tax forms 1040ez 2013 You are required to report certain changes to your groupings that occur during the tax year to the IRS. Federal tax forms 1040ez 2013 If you fail to report these changes, each trade or business activity or rental activity will be treated as a separate activity. Federal tax forms 1040ez 2013 You will be considered to have made a timely disclosure if you filed all affected income tax returns consistent with the claimed grouping and make the required disclosure on the income tax return for the year in which you first discovered the failure to disclose. Federal tax forms 1040ez 2013 If the IRS discovered the failure to disclose, you must have reasonable cause for not making the required disclosure. Federal tax forms 1040ez 2013 New grouping. Federal tax forms 1040ez 2013   You must file a written statement with your original income tax return for the first tax year in which two or more activities are originally grouped into a single activity. Federal tax forms 1040ez 2013 The statement must provide the names, addresses, and employer identification numbers (EINs), if applicable, for the activities being grouped as a single activity. Federal tax forms 1040ez 2013 In addition, the statement must contain a declaration that the grouped activities make up an appropriate economic unit for the measurement of gain or loss under the passive activity rules. Federal tax forms 1040ez 2013 Addition to an existing grouping. Federal tax forms 1040ez 2013   You must file a written statement with your original income tax return for the tax year in which you add a new activity to an existing group. Federal tax forms 1040ez 2013 The statement must provide the name, address, and EIN, if applicable, for the activity that is being added and for the activities in the existing group. Federal tax forms 1040ez 2013 In addition, the statement must contain a declaration that the activities make up an appropriate economic unit for the measurement of gain or loss under the passive activity rules. Federal tax forms 1040ez 2013 Regrouping. Federal tax forms 1040ez 2013   You must file a written statement with your original income tax return for the tax year in which you regroup the activities. Federal tax forms 1040ez 2013 The statement must provide the names, addresses, and EINs, if applicable, for the activities that are being regrouped. Federal tax forms 1040ez 2013 If two or more activities are being regrouped into a single activity, the statement must contain a declaration that the regrouped activities make up an appropriate economic unit for the measurement of gain or loss under the passive activity rules. Federal tax forms 1040ez 2013 In addition, the statement must contain an explanation of the material change in the facts and circumstances that made the original grouping clearly inappropriate. Federal tax forms 1040ez 2013 Groupings by partnerships and S corporations. Federal tax forms 1040ez 2013   Partnerships and S corporations are not subject to the rules for new grouping, addition to an existing grouping, or regrouping. Federal tax forms 1040ez 2013 Instead, they must comply with the disclosure instructions for grouping activities provided in their Form 1065, U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 Return of Partnership Income, or Form 1120S, U. Federal tax forms 1040ez 2013 S. Federal tax forms 1040ez 2013 Income Tax Return for an S Corporation, whichever is applicable. Federal tax forms 1040ez 2013   The partner or shareholder is not required to make a separate disclosure of the groupings disclosed by the entity unless the partner or shareholder: Groups together any of the activities that the entity does not group together, Groups the entity's activities with activities conducted directly by the partner or shareholder, or Groups an entity's activities with activities conducted through another entity. Federal tax forms 1040ez 2013   A partner or shareholder may not treat activities grouped together by the entity as separate activities. Federal tax forms 1040ez 2013 Recharacterization of Passive Income Net income from the following passive activities may have to be recharacterized and excluded from passive activity income. Federal tax forms 1040ez 2013 Significant participation passive activities, Rental of property when less than 30% of the unadjusted basis of the property is subject to depreciation, Equity-financed lending activities, Rental of property incidental to development activities, Rental of property to nonpassive activities, and Licensing of intangible property by  pass-through entities. Federal tax forms 1040ez 2013 If you are engaged in or have an interest in one of these activities during the tax year (either directly or through a partnership or an S corporation), combine the income and losses from the activity to determine if you have a net loss or net income from that activity. Federal tax forms 1040ez 2013 If the result is a net loss, treat the income and losses the same as any other income or losses from that type of passive activity (trade or business activity or rental activity). Federal tax forms 1040ez 2013 If the result is net income, do not enter any of the income or losses from the activity or property on Form 8582 or its worksheets. Federal tax forms 1040ez 2013 Instead, enter income or losses on the form and schedules you normally use. Federal tax forms 1040ez 2013 However, see Significant Participation Passive Activities , later, if the activity is a significant participation passive activity and you also have a net loss from a different significant participation passive activity. Federal tax forms 1040ez 2013 Limit on recharacterized passive income. Federal tax forms 1040ez 2013   The total amount that you treat as nonpassive income under the rules described later in this discussion for significant participation passive activities, rental of nondepreciable property, and equity-financed lending activities cannot exceed the greatest amount that you treat as nonpassive income under any one of these rules. Federal tax forms 1040ez 2013 Investment income and investment expense. Federal tax forms 1040ez 2013   To figure your investment interest expense limitation on Form 4952, treat as investment income any net passive income recharacterized as nonpassive income from rental of nondepreciable property, equity-financed lending activity, or licensing of intangible property by a pass-through entity. Federal tax forms 1040ez 2013 Significant Participation Passive Activities A significant participation passive activity is any trade or business activity in which you participated for more than 100 hours during the tax year but did not materially participate. Federal tax forms 1040ez 2013 If your gross income from all significant participation passive activities is more than your deductions from those activities, a part of your net income from each significant participation passive activity is treated as nonpassive income. Federal tax forms 1040ez 2013 Corporations. Federal tax forms 1040ez 2013   An activity of a personal service corporation or closely held corporation is a significant participation passive activity if both of the following statements are true. Federal tax forms 1040ez 2013 The corporation is not treated as materially participating in the activity for the year. Federal tax forms 1040ez 2013 One or more individuals, each of whom is treated as significantly participating in the activity, directly or indirectly hold (in total) more than 50% (by value) of the corporation's outstanding stock. Federal tax forms 1040ez 2013 Worksheet A. Federal tax forms 1040ez 2013   Complete Worksheet A. Federal tax forms 1040ez 2013 Significant Participation Passive Activities , below, if you have income or losses from any significant participation activity. Federal tax forms 1040ez 2013 Begin by entering the name of each activity in the left column. Federal tax forms 1040ez 2013 Column (a). Federal tax forms 1040ez 2013   Enter the number of hours you participated in each activity and total the column. Federal tax forms 1040ez 2013   If the total is more than 500, do not complete Worksheet A or B. Federal tax forms 1040ez 2013 None of the activities are passive activities because you satisfy test 4 for material participation. Federal tax forms 1040ez 2013 (See Material participation tests , earlier. Federal tax forms 1040ez 2013 ) Report all the income and losses from these activities on the forms and schedules you normally use. Federal tax forms 1040ez 2013 Do not include the income and losses on Form 8582. Federal tax forms 1040ez 2013 Column (b). Federal tax forms 1040ez 2013   Enter the net loss, if any, from the activity. Federal tax forms 1040ez 2013 Net loss from an activity means either: The activity's current year net loss (if any) plus prior year unallowed losses (if any), or The excess of prior year unallowed losses over the current year net income (if any). Federal tax forms 1040ez 2013 Enter -0- here if the prior year unallowed loss is the same as the current year net income. Federal tax forms 1040ez 2013 Column (c). Federal tax forms 1040ez 2013   Enter net income (if any) from the activity. Federal tax forms 1040ez 2013 Net income means the excess of the current year's net income from the activity over any prior year unallowed losses from the activity. Federal tax forms 1040ez 2013 Column (d). Federal tax forms 1040ez 2013   Combine amounts in the Totals row for columns (b) and (c) and enter the total net income or net loss in the Totals row of column (d). Federal tax forms 1040ez 2013 If column (d) is a net loss, skip Worksheet B, Significant Participation Activities With Net Income. Federal tax forms 1040ez 2013 Include the income and losses in Worksheet 3 of Form 8582 (or Worksheet 2 in the Form 88