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File 1040ez Online

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File 1040ez Online

File 1040ez online Publication 600 - Main Contents Table of Contents Actual Expenses Optional Sales Tax Tables Instructions for the State and Local General Sales Tax Deduction WorksheetWhat if you lived in more than one state? What if you lived in more than one locality? What if your local general sales tax rate changed during 2006? What if you lived in more than one locality in the same state during 2006? Actual Expenses Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) you paid in 2006 if the tax rate was the same as the general sales tax rate. File 1040ez online However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. File 1040ez online If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. File 1040ez online Motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. File 1040ez online Also include any state and local general sales taxes paid for a leased motor vehicle. File 1040ez online Do not include sales taxes paid on items used in your trade or business. File 1040ez online To deduct your actual expenses, enter the amount on Schedule A, line 5, and enter “ST” on the dotted line to the left of the line 5 entry space. File 1040ez online You must keep your actual receipts showing general sales taxes paid to use this method. File 1040ez online Refund of general sales taxes. File 1040ez online   If you received a refund of state or local general sales taxes in 2006 for amounts paid in 2006, reduce your actual 2006 state and local general sales taxes by this amount. File 1040ez online If you received a refund of state or local general sales taxes in 2006 for prior year purchases, do not reduce your 2006 state and local general sales taxes by this amount. File 1040ez online But if you deducted your actual state and local general sales taxes in the earlier year and the deduction reduced your tax, you may have to include the refund in income on Form 1040, line 21. File 1040ez online See Recoveries in Pub. File 1040ez online 525 for details. File 1040ez online Optional Sales Tax Tables Instead of using your actual expenses, you can use the tables on pages 5 through 7 to figure your state and local general sales tax deduction. File 1040ez online You may also be able to add the state and local general sales taxes paid on certain specified items. File 1040ez online To figure your state and local general sales tax deduction using the tables, complete the worksheet below. File 1040ez online If your filing status is married filing separately, both you and your spouse elect to deduct sales taxes, and your spouse elects to use the optional sales tax tables, you also must use the tables to figure your state and local general sales tax deduction. File 1040ez online State and Local General Sales Tax Deduction Worksheet (See the instructions that begin on page 3. File 1040ez online ) Before you begin: See the instructions for line 1 on page 3 if: You lived in more than one state during 2006, or You had any nontaxable income in 2006. File 1040ez online   1. File 1040ez online Enter your state general sales taxes from the applicable table on page 5 or 6 (see page 3 of the instructions) 1. File 1040ez online $     Next. File 1040ez online If, for all of 2006, you lived only in Connecticut, the District of Columbia, Hawaii, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Rhode Island, Virginia, or West Virginia, skip lines 2 through 5, enter -0- on line 6, and go to line 7. File 1040ez online Otherwise, go to line 2       2. File 1040ez online Did you live in Alaska, Arizona, Arkansas (Texarkana only), California (Los Angeles County only), Colorado, Georgia, Illinois, Louisiana, New York State, or North Carolina in 2006?         No. File 1040ez online Enter -0-                   Yes. File 1040ez online Enter your local general sales taxes from the applicable table on page 7 (see page 3 of the instructions)     2. File 1040ez online $       3. File 1040ez online Did your locality impose a local general sales tax in 2006? Residents of California, Nevada, and Texarkana, Arkansas, see page 3 of the instructions             No. File 1040ez online Skip lines 3 through 5, enter -0- on line 6, and go to line 7             Yes. File 1040ez online Enter your local general sales tax rate, but omit the percentage sign. File 1040ez online For example, if your local general sales tax rate was 2. File 1040ez online 5%, enter 2. File 1040ez online 5. File 1040ez online If your local general sales tax rate changed or you lived in more than one locality in the same state during 2006, see page 3 of the instructions. File 1040ez online (If you do not know your local general sales tax rate, contact your local government. File 1040ez online ) 3. File 1040ez online . File 1040ez online       4. File 1040ez online Did you enter -0- on line 2 above?             No. File 1040ez online Skip lines 4 and 5 and go to line 6             Yes. File 1040ez online Enter your state general sales tax rate (shown in the table heading for your state), but omit the percentage sign. File 1040ez online For example, if your state general sales tax rate is 6%, enter 6. File 1040ez online 0 4. File 1040ez online . File 1040ez online       5. File 1040ez online Divide line 3 by line 4. File 1040ez online Enter the result as a decimal (rounded to at least three places) 5. File 1040ez online . File 1040ez online       6. File 1040ez online Did you enter -0- on line 2 above?             No. File 1040ez online Multiply line 2 by line 3   6. File 1040ez online $     Yes. File 1040ez online Multiply line 1 by line 5. File 1040ez online If you lived in more than one locality in the same state during 2006, see page 4 of the instructions           7. File 1040ez online Enter your state and local general sales taxes paid on specified items, if any (see page 4 of the instructions) 7. File 1040ez online $   8. File 1040ez online Deduction for general sales taxes. File 1040ez online Add lines 1, 6, and 7. File 1040ez online Enter the result here and the total from all your state and local general sales tax deduction worksheets, if you completed more than one, on Schedule A, line 5. File 1040ez online Be sure to enter “ST” on the dotted line to the left of the entry space 8. File 1040ez online $     Instructions for the State and Local General Sales Tax Deduction Worksheet Line 1. File 1040ez online    If you lived in the same state for all of 2006, enter the applicable amount, based on your 2006 income and exemptions, from the optional state sales tax table for your state on page 5 or 6. File 1040ez online Read down the “At least-But less than” columns for your state and find the line that includes your 2006 income. File 1040ez online If married filing separately, do not include your spouse's income. File 1040ez online Your 2006 income is the amount shown on your Form 1040, line 38, plus any nontaxable items, such as the following. File 1040ez online Tax-exempt interest. File 1040ez online Veterans' benefits. File 1040ez online Nontaxable combat pay. File 1040ez online Workers' compensation. File 1040ez online Nontaxable part of social security and railroad retirement benefits. File 1040ez online Nontaxable part of IRA, pension, or annuity distributions. File 1040ez online Do not include rollovers. File 1040ez online Public assistance payments. File 1040ez online The exemptions column refers to the number of exemptions claimed on Form 1040, line 6d. File 1040ez online Do not include any additional exemptions you listed on Form 8914 for individuals displaced by Hurricane Katrina. File 1040ez online What if you lived in more than one state?    If you lived in more than one state during 2006, look up the table amount for each state using the above rules. File 1040ez online If there is no table for your state, the table amount is considered to be zero. File 1040ez online Multiply the table amount for each state you lived in by a fraction. File 1040ez online The numerator of the fraction is the number of days you lived in the state during 2006 and the denominator is the total number of days in the year (365). File 1040ez online Enter the total of the prorated table amounts for each state on line 1. File 1040ez online However, if you also lived in a locality during 2006 that imposed a local general sales tax, do not enter the total on line 1. File 1040ez online Instead, complete a separate worksheet for each state you lived in and enter the prorated amount for that state on line 1. File 1040ez online Example. File 1040ez online You lived in State A from January 1 through August 31, 2006 (243 days), and in State B from September 1 through December 31, 2006 (122 days). File 1040ez online The table amount for State A is $500. File 1040ez online The table amount for State B is $400. File 1040ez online You would figure your state general sales tax as follows. File 1040ez online State A: $500 x 243/365 = $333   State B: $400 x 122/365 = 134   Total = $467   If none of the localities in which you lived during 2006 imposed a local general sales tax, enter $467 on line 1 of your worksheet. File 1040ez online Otherwise, complete a separate worksheet for State A and State B. File 1040ez online Enter $333 on line 1 of the State A worksheet and $134 on line 1 of the State B worksheet. File 1040ez online Line 2. File 1040ez online   If you checked the “No” box, enter -0- on line 2, and go to line 3. File 1040ez online If you checked the “Yes” box and lived in the same locality for all of 2006, enter the applicable amount, based on your 2006 income and exemptions, from the optional local sales tax table for your locality on page 7. File 1040ez online Read down the “At least-But less than” columns for your locality and find the line that includes your 2006 income. File 1040ez online See the line 1 instructions on this page to figure your 2006 income. File 1040ez online The exemptions column refers to the number of exemptions claimed on Form 1040, line 6d. File 1040ez online Do not include any additional exemptions you listed on Form 8914 for individuals displaced by Hurricane Katrina. File 1040ez online What if you lived in more than one locality?   If you lived in more than one locality during 2006, look up the table amount for each locality using the above rules. File 1040ez online If there is no table for your locality, the table amount is considered to be zero. File 1040ez online Multiply the table amount for each locality you lived in by a fraction. File 1040ez online The numerator of the fraction is the number of days you lived in the locality during 2006 and the denominator is the total number of days in the year (365). File 1040ez online If you lived in more than one locality in the same state and the local general sales tax rate was the same for each locality, enter the total of the prorated table amounts for each locality in that state on line 2. File 1040ez online Otherwise, complete a separate worksheet for lines 2 through 6 for each locality and enter each prorated table amount on line 2 of the applicable worksheet. File 1040ez online Example. File 1040ez online You lived in Locality 1 from January 1 through August 31, 2006 (243 days), and in Locality 2 from September 1 through December 31, 2006 (122 days). File 1040ez online The table amount for Locality 1 is $100. File 1040ez online The table amount for Locality 2 is $150. File 1040ez online You would figure the amount to enter on line 2 as follows. File 1040ez online Note that this amount may not equal your local sales tax deduction, which is figured on line 6 of the worksheet. File 1040ez online Locality 1: $100 x 243/365 = $67   Locality 2: $150 x 122/365 = 50   Total = $117   Line 3. File 1040ez online   If you lived in California, check the “No” box if your combined state and local general sales tax rate is 7. File 1040ez online 25%. File 1040ez online Otherwise, check the “Yes” box and include on line 3 only the part of the combined rate that is more than 7. File 1040ez online 25%. File 1040ez online   If you lived in Nevada, check the “No” box if your combined state and local general sales tax rate is 6. File 1040ez online 5%. File 1040ez online Otherwise, check the “Yes” box and include on line 3 only the part of the combined rate that is more than 6. File 1040ez online 5%. File 1040ez online   If you lived in Texarkana, Arkansas, check the “Yes” box and enter “4. File 1040ez online 0” on line 3. File 1040ez online Your local general sales tax rate of 4. File 1040ez online 0% includes the additional 1. File 1040ez online 0% Arkansas state sales tax rate for Texarkana and the 1. File 1040ez online 5% sales tax rate for Miller County. File 1040ez online What if your local general sales tax rate changed during 2006?    If you checked the “Yes” box and your local general sales tax rate changed during 2006, figure the rate to enter on line 3 as follows. File 1040ez online Multiply each tax rate for the period it was in effect by a fraction. File 1040ez online The numerator of the fraction is the number of days the rate was in effect during 2006 and the denominator is the total number of days in the year (365). File 1040ez online Enter the total of the prorated tax rates on line 3. File 1040ez online Example. File 1040ez online Locality 1 imposed a 1% local general sales tax from January 1 through September 30, 2006 (273 days). File 1040ez online The rate increased to 1. File 1040ez online 75% for the period from October 1 through December 31, 2006 (92 days). File 1040ez online You would enter “1. File 1040ez online 189” on line 3, figured as follows. File 1040ez online January 1 - September 30: 1. File 1040ez online 00 x 273/365 = 0. File 1040ez online 748   October 1 - December 31: 1. File 1040ez online 75 x 92/365 = 0. File 1040ez online 441   Total = 1. File 1040ez online 189   What if you lived in more than one locality in the same state during 2006?    Complete a separate worksheet for lines 2 through 6 for each locality in your state if you lived in more than one locality in the same state during 2006 and either of the following applies. File 1040ez online Each locality did not have the same local general sales tax rate. File 1040ez online You lived in Texarkana, AR, or Los Angeles County, CA. File 1040ez online   To figure the amount to enter on line 3 of the worksheet for each locality in which you lived (except a locality for which you used the table on page 7 to figure your local general sales tax deduction), multiply the local general sales tax rate by a fraction. File 1040ez online The numerator of the fraction is the number of days you lived in the locality during 2006 and the denominator is the total number of days in the year (365). File 1040ez online Example. File 1040ez online You lived in Locality 1 from January 1 through August 31, 2006 (243 days), and in Locality 2 from September 1 through December 31, 2006 (122 days). File 1040ez online The local general sales tax rate for Locality 1 is 1%. File 1040ez online The rate for Locality 2 is 1. File 1040ez online 75%. File 1040ez online You would enter “0. File 1040ez online 666” on line 3 for the Locality 1 worksheet and “0. File 1040ez online 585” for the Locality 2 worksheet, figured as follows. File 1040ez online Locality 1: 1. File 1040ez online 00 x 243/365 = 0. File 1040ez online 666   Locality 2: 1. File 1040ez online 75 x 122/365 = 0. File 1040ez online 585   Line 6. File 1040ez online   If you lived in more than one locality in the same state during 2006, you should have completed line 1 only on the first worksheet for that state and separate worksheets for lines 2 through 6 for any other locality within that state in which you lived during 2006. File 1040ez online If you checked the “Yes” box on line 6 of any of those worksheets, multiply line 5 of that worksheet by the amount that you entered on line 1 for that state on the first worksheet. File 1040ez online Line 7. File 1040ez online    Enter on line 7 any state and local general sales taxes paid on the following specified items. File 1040ez online If you are completing more than one worksheet, include the total for line 7 on only one of the worksheets. File 1040ez online A motor vehicle (including a car, motorcycle, motor home, recreational vehicle, sport utility vehicle, truck, van, and off-road vehicle). File 1040ez online Also include any state and local general sales taxes paid for a leased motor vehicle. File 1040ez online If the state sales tax rate on these items is higher than the general sales tax rate, only include the amount of tax you would have paid at the general sales tax rate. File 1040ez online An aircraft or boat, if the tax rate was the same as the general sales tax rate. File 1040ez online A home (including a mobile home or prefabricated home) or substantial addition to or major renovation of a home, but only if the tax rate was the same as the general sales tax rate and any of the following applies. File 1040ez online Your state or locality imposes a general sales tax directly on the sale of a home or on the cost of a substantial addition or major renovation. File 1040ez online You purchased the materials to build a home or substantial addition or to perform a major renovation and paid the sales tax directly. File 1040ez online Under your state law, your contractor is considered your agent in the construction of the home or substantial addition or the performance of a major renovation. File 1040ez online The contract must state that the contractor is authorized to act in your name and must follow your directions on construction decisions. File 1040ez online In this case, you will be considered to have purchased any items subject to a sales tax and to have paid the sales tax directly. File 1040ez online   Do not include sales taxes paid on items used in your trade or business. File 1040ez online If you received a refund of state or local general sales taxes in 2006, see Refund of general sales taxes on page 1. File 1040ez online Prev  Up  Next   Home   More Online Publications
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The File 1040ez Online

File 1040ez online 23. File 1040ez online   Interest Expense Table of Contents Introduction Useful Items - You may want to see: Home Mortgage InterestAmount Deductible Points Mortgage Insurance Premiums Form 1098, Mortgage Interest Statement Investment InterestInvestment Property Allocation of Interest Expense Limit on Deduction Items You Cannot DeductPersonal Interest Allocation of Interest How To ReportMore than one borrower. File 1040ez online Mortgage proceeds used for business or investment. File 1040ez online Introduction This chapter discusses what interest expenses you can deduct. File 1040ez online Interest is the amount you pay for the use of borrowed money. File 1040ez online The following are types of interest you can deduct as itemized deductions on Schedule A (Form 1040). File 1040ez online Home mortgage interest, including certain points and mortgage insurance premiums. File 1040ez online Investment interest. File 1040ez online This chapter explains these deductions. File 1040ez online It also explains where to deduct other types of interest and lists some types of interest you cannot deduct. File 1040ez online Use Table 23-1 to find out where to get more information on various types of interest, including investment interest. File 1040ez online Useful Items - You may want to see: Publication 936 Home Mortgage Interest Deduction 550 Investment Income and Expenses Home Mortgage Interest Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). File 1040ez online The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan. File 1040ez online You can deduct home mortgage interest if all the following conditions are met. File 1040ez online You file Form 1040 and itemize deductions on Schedule A (Form 1040). File 1040ez online The mortgage is a secured debt on a qualified home in which you have an ownership interest. File 1040ez online (Generally, your mortgage is a secured debt if you put your home up as collateral to protect the interest of the lender. File 1040ez online The term “qualified home” means your main home or second home. File 1040ez online For details, see Publication 936. File 1040ez online )  Both you and the lender must intend that the loan be repaid. File 1040ez online Amount Deductible In most cases, you can deduct all of your home mortgage interest. File 1040ez online How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. File 1040ez online Fully deductible interest. File 1040ez online   If all of your mortgages fit into one or more of the following three categories at all times during the year, you can deduct all of the interest on those mortgages. File 1040ez online (If any one mortgage fits into more than one category, add the debt that fits in each category to your other debt in the same category. File 1040ez online )   The three categories are as follows: Mortgages you took out on or before October 13, 1987 (called grandfathered debt). File 1040ez online Mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if throughout 2013 these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately). File 1040ez online Mortgages you took out after October 13, 1987, other than to buy, build, or improve your home (called home equity debt), but only if throughout 2013 these mortgages totaled $100,000 or less ($50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by (1) and (2). File 1040ez online The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home. File 1040ez online   See Part II of Publication 936 for more detailed definitions of grandfathered, home acquisition, and home equity debt. File 1040ez online    You can use Figure 23-A to check whether your home mortgage interest is fully deductible. File 1040ez online Figure 23-A. File 1040ez online Is My Home Mortgage Interest Fully Deductible? Please click here for the text description of the image. File 1040ez online Figure 23-A. File 1040ez online Is My Interest Fully Deductible? Limits on deduction. File 1040ez online   You cannot fully deduct interest on a mortgage that does not fit into any of the three categories listed earlier. File 1040ez online If this applies to you, see Part II of Publication 936 to figure the amount of interest you can deduct. File 1040ez online Special Situations This section describes certain items that can be included as home mortgage interest and others that cannot. File 1040ez online It also describes certain special situations that may affect your deduction. File 1040ez online Late payment charge on mortgage payment. File 1040ez online   You can deduct as home mortgage interest a late payment charge if it was not for a specific service performed in connection with your mortgage loan. File 1040ez online Mortgage prepayment penalty. File 1040ez online   If you pay off your home mortgage early, you may have to pay a penalty. File 1040ez online You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. File 1040ez online Sale of home. File 1040ez online   If you sell your home, you can deduct your home mortgage interest (subject to any limits that apply) paid up to, but not including, the date of sale. File 1040ez online Example. File 1040ez online John and Peggy Harris sold their home on May 7. File 1040ez online Through April 30, they made home mortgage interest payments of $1,220. File 1040ez online The settlement sheet for the sale of the home showed $50 interest for the 6-day period in May up to, but not including, the date of sale. File 1040ez online Their mortgage interest deduction is $1,270 ($1,220 + $50). File 1040ez online Prepaid interest. File 1040ez online   If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. File 1040ez online You can deduct in each year only the interest that qualifies as home mortgage interest for that year. File 1040ez online However, there is an exception that applies to points, discussed later. File 1040ez online Mortgage interest credit. File 1040ez online   You may be able to claim a mortgage interest credit if you were issued a mortgage credit certificate (MCC) by a state or local government. File 1040ez online Figure the credit on Form 8396, Mortgage Interest Credit. File 1040ez online If you take this credit, you must reduce your mortgage interest deduction by the amount of the credit. File 1040ez online   For more information on the credit, see chapter 37. File 1040ez online Ministers' and military housing allowance. File 1040ez online   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you can still deduct your home mortgage interest. File 1040ez online Hardest Hit Fund and Emergency Homeowners' Loan Programs. File 1040ez online   You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. File 1040ez online You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. File 1040ez online You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. File 1040ez online If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received from payer(s) / borrower(s)), box 4 (mortgage insurance premiums) and box 5 (real property taxes). File 1040ez online However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. File 1040ez online Mortgage assistance payments under section 235 of the National Housing Act. File 1040ez online   If you qualify for mortgage assistance payments for lower-income families under section 235 of the National Housing Act, part or all of the interest on your mortgage may be paid for you. File 1040ez online You cannot deduct the interest that is paid for you. File 1040ez online No other effect on taxes. File 1040ez online   Do not include these mortgage assistance payments in your income. File 1040ez online Also, do not use these payments to reduce other deductions, such as real estate taxes. File 1040ez online Divorced or separated individuals. File 1040ez online   If a divorce or separation agreement requires you or your spouse or former spouse to pay home mortgage interest on a home owned by both of you, the payment of interest may be alimony. File 1040ez online See the discussion of Payments for jointly-owned home in chapter 18. File 1040ez online Redeemable ground rents. File 1040ez online   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. File 1040ez online   Payments made to end the lease and to buy the lessor's entire interest in the land are not deductible as mortgage interest. File 1040ez online For more information, see Publication 936. File 1040ez online Nonredeemable ground rents. File 1040ez online   Payments on a nonredeemable ground rent are not mortgage interest. File 1040ez online You can deduct them as rent if they are a business expense or if they are for rental property. File 1040ez online Reverse mortgages. File 1040ez online   A reverse mortgage is a loan where the lender pays you (in a lump sum, a monthly advance, a line of credit, or a combination of all three) while you continue to live in your home. File 1040ez online With a reverse mortgage, you retain title to your home. File 1040ez online Depending on the plan, your reverse mortgage becomes due with interest when you move, sell your home, reach the end of a pre-selected loan period, or die. File 1040ez online Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable. File 1040ez online Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until the loan is paid in full. File 1040ez online Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt discussed in Publication 936. File 1040ez online Rental payments. File 1040ez online   If you live in a house before final settlement on the purchase, any payments you make for that period are rent and not interest. File 1040ez online This is true even if the settlement papers call them interest. File 1040ez online You cannot deduct these payments as home mortgage interest. File 1040ez online Mortgage proceeds invested in tax-exempt securities. File 1040ez online   You cannot deduct the home mortgage interest on grandfathered debt or home equity debt if you used the proceeds of the mortgage to buy securities or certificates that produce tax-free income. File 1040ez online “Grandfathered debt” and “home equity debt” are defined earlier under Amount Deductible. File 1040ez online Refunds of interest. File 1040ez online   If you receive a refund of interest in the same tax year you paid it, you must reduce your interest expense by the amount refunded to you. File 1040ez online If you receive a refund of interest you deducted in an earlier year, you generally must include the refund in income in the year you receive it. File 1040ez online However, you need to include it only up to the amount of the deduction that reduced your tax in the earlier year. File 1040ez online This is true whether the interest overcharge was refunded to you or was used to reduce the outstanding principal on your mortgage. File 1040ez online    If you received a refund of interest you overpaid in an earlier year, you generally will receive a Form 1098, Mortgage Interest Statement, showing the refund in box 3. File 1040ez online For information about Form 1098, see Form 1098, Mortgage Interest Statement , later. File 1040ez online   For more information on how to treat refunds of interest deducted in earlier years, see Recoveries in chapter 12. File 1040ez online Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. File 1040ez online Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. File 1040ez online A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. File 1040ez online See Points paid by the seller , later. File 1040ez online General Rule You generally cannot deduct the full amount of points in the year paid. File 1040ez online Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. File 1040ez online See Deduction Allowed Ratably , next. File 1040ez online For exceptions to the general rule, see Deduction Allowed in Year Paid , later. File 1040ez online Deduction Allowed Ratably If you do not meet the tests listed under Deduction Allowed in Year Paid , later, the loan is not a home improvement loan, or you choose not to deduct your points in full in the year paid, you can deduct the points ratably (equally) over the life of the loan if you meet all the following tests. File 1040ez online You use the cash method of accounting. File 1040ez online This means you report income in the year you receive it and deduct expenses in the year you pay them. File 1040ez online Most individuals use this method. File 1040ez online Your loan is secured by a home. File 1040ez online (The home does not need to be your main home. File 1040ez online ) Your loan period is not more than 30 years. File 1040ez online If your loan period is more than 10 years, the terms of your loan are the same as other loans offered in your area for the same or longer period. File 1040ez online Either your loan amount is $250,000 or less, or the number of points is not more than: 4, if your loan period is 15 years or less, or 6, if your loan period is more than 15 years. File 1040ez online Deduction Allowed in Year Paid You can fully deduct points in the year paid if you meet all the following tests. File 1040ez online (You can use Figure 23-B as a quick guide to see whether your points are fully deductible in the year paid. File 1040ez online ) Your loan is secured by your main home. File 1040ez online (Your main home is the one you ordinarily live in most of the time. File 1040ez online ) Paying points is an established business practice in the area where the loan was made. File 1040ez online The points paid were not more than the points generally charged in that area. File 1040ez online You use the cash method of accounting. File 1040ez online This means you report income in the year you receive it and deduct expenses in the year you pay them. File 1040ez online (If you want more information about this method, see Accounting Methods in chapter 1. File 1040ez online ) The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. File 1040ez online The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. File 1040ez online The funds you provided are not required to have been applied to the points. File 1040ez online They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. File 1040ez online You cannot have borrowed these funds from your lender or mortgage broker. File 1040ez online You use your loan to buy or build your main home. File 1040ez online The points were computed as a percentage of the principal amount of the mortgage. File 1040ez online The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. File 1040ez online The points may be shown as paid from either your funds or the seller's. File 1040ez online Figure 23-B. File 1040ez online Are My Points Fully Deductible This Year? Please click here for the text description of the image. File 1040ez online Figure 23-B. File 1040ez online Are My Points Fully Deductible This Year? Note. File 1040ez online If you meet all of these tests, you can choose to either fully deduct the points in the year paid, or deduct them over the life of the loan. File 1040ez online Home improvement loan. File 1040ez online   You can also fully deduct in the year paid points paid on a loan to improve your main home, if tests (1) through (6) are met. File 1040ez online Second home. File 1040ez online You cannot fully deduct in the year paid points you pay on loans secured by your second home. File 1040ez online You can deduct these points only over the life of the loan. File 1040ez online Refinancing. File 1040ez online   Generally, points you pay to refinance a mortgage are not deductible in full in the year you pay them. File 1040ez online This is true even if the new mortgage is secured by your main home. File 1040ez online   However, if you use part of the refinanced mortgage proceeds to improve your main home and you meet the first 6 tests listed under Deduction Allowed in Year Paid , earlier, you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. File 1040ez online You can deduct the rest of the points over the life of the loan. File 1040ez online Example 1. File 1040ez online In 1998, Bill Fields got a mortgage to buy a home. File 1040ez online In 2013, Bill refinanced that mortgage with a 15-year $100,000 mortgage loan. File 1040ez online The mortgage is secured by his home. File 1040ez online To get the new loan, he had to pay three points ($3,000). File 1040ez online Two points ($2,000) were for prepaid interest, and one point ($1,000) was charged for services, in place of amounts that ordinarily are stated separately on the settlement statement. File 1040ez online Bill paid the points out of his private funds, rather than out of the proceeds of the new loan. File 1040ez online The payment of points is an established practice in the area, and the points charged are not more than the amount generally charged there. File 1040ez online Bill's first payment on the new loan was due July 1. File 1040ez online He made six payments on the loan in 2013 and is a cash basis taxpayer. File 1040ez online Bill used the funds from the new mortgage to repay his existing mortgage. File 1040ez online Although the new mortgage loan was for Bill's continued ownership of his main home, it was not for the purchase or improvement of that home. File 1040ez online He cannot deduct all of the points in 2013. File 1040ez online He can deduct two points ($2,000) ratably over the life of the loan. File 1040ez online He deducts $67 [($2,000 ÷ 180 months) × 6 payments] of the points in 2013. File 1040ez online The other point ($1,000) was a fee for services and is not deductible. File 1040ez online Example 2. File 1040ez online The facts are the same as in Example 1, except that Bill used $25,000 of the loan proceeds to improve his home and $75,000 to repay his existing mortgage. File 1040ez online Bill deducts 25% ($25,000 ÷ $100,000) of the points ($2,000) in 2013. File 1040ez online His deduction is $500 ($2,000 × 25%). File 1040ez online Bill also deducts the ratable part of the remaining $1,500 ($2,000 − $500) that must be spread over the life of the loan. File 1040ez online This is $50 [($1,500 ÷ 180 months) × 6 payments] in 2013. File 1040ez online The total amount Bill deducts in 2013 is $550 ($500 + $50). File 1040ez online Special Situations This section describes certain special situations that may affect your deduction of points. File 1040ez online Original issue discount. File 1040ez online   If you do not qualify to either deduct the points in the year paid or deduct them ratably over the life of the loan, or if you choose not to use either of these methods, the points reduce the issue price of the loan. File 1040ez online This reduction results in original issue discount, which is discussed in chapter 4 of Publication 535. File 1040ez online Amounts charged for services. File 1040ez online   Amounts charged by the lender for specific services connected to the loan are not interest. File 1040ez online Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. File 1040ez online You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. File 1040ez online Points paid by the seller. File 1040ez online   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. File 1040ez online Treatment by seller. File 1040ez online   The seller cannot deduct these fees as interest. File 1040ez online But they are a selling expense that reduces the amount realized by the seller. File 1040ez online See chapter 15 for information on selling your home. File 1040ez online Treatment by buyer. File 1040ez online    The buyer reduces the basis of the home by the amount of the seller-paid points and treats the points as if he or she had paid them. File 1040ez online If all the tests under Deduction Allowed in Year Paid , earlier, are met, the buyer can deduct the points in the year paid. File 1040ez online If any of those tests are not met, the buyer deducts the points over the life of the loan. File 1040ez online   For information about basis, see chapter 13. File 1040ez online Funds provided are less than points. File 1040ez online   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the funds you provided were less than the points charged to you (test (6)), you can deduct the points in the year paid, up to the amount of funds you provided. File 1040ez online In addition, you can deduct any points paid by the seller. File 1040ez online Example 1. File 1040ez online When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). File 1040ez online You meet all the tests for deducting points in the year paid, except the only funds you provided were a $750 down payment. File 1040ez online Of the $1,000 charged for points, you can deduct $750 in the year paid. File 1040ez online You spread the remaining $250 over the life of the mortgage. File 1040ez online Example 2. File 1040ez online The facts are the same as in Example 1, except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. File 1040ez online In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). File 1040ez online You spread the remaining $250 over the life of the mortgage. File 1040ez online You must reduce the basis of your home by the $1,000 paid by the seller. File 1040ez online Excess points. File 1040ez online   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the points paid were more than generally paid in your area (test (3)), you deduct in the year paid only the points that are generally charged. File 1040ez online You must spread any additional points over the life of the mortgage. File 1040ez online Mortgage ending early. File 1040ez online   If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. File 1040ez online However, if you refinance the mortgage with the same lender, you cannot deduct any remaining balance of spread points. File 1040ez online Instead, deduct the remaining balance over the term of the new loan. File 1040ez online    A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. File 1040ez online Example. File 1040ez online Dan paid $3,000 in points in 2002 that he had to spread out over the 15-year life of the mortgage. File 1040ez online He deducts $200 points per year. File 1040ez online Through 2012, Dan has deducted $2,200 of the points. File 1040ez online Dan prepaid his mortgage in full in 2013. File 1040ez online He can deduct the remaining $800 of points in 2013. File 1040ez online Limits on deduction. File 1040ez online   You cannot fully deduct points paid on a mortgage unless the mortgage fits into one of the categories listed earlier under Fully deductible interest . File 1040ez online See Publication 936 for details. File 1040ez online Mortgage Insurance Premiums You can treat amounts you paid during 2013 for qualified mortgage insurance as home mortgage interest. File 1040ez online The insurance must be in connection with home acquisition debt and the insurance contract must have been issued after 2006. File 1040ez online Qualified mortgage insurance. File 1040ez online   Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). File 1040ez online   Mortgage insurance provided by the Department of Veterans Affairs is commonly known as a funding fee. File 1040ez online If provided by the Rural Housing Service, it is commonly known as a guarantee fee. File 1040ez online These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013. File 1040ez online Contact the mortgage insurance issuer to determine the deductible amount if it is not reported in box 4 of Form 1098. File 1040ez online Special rules for prepaid mortgage insurance. File 1040ez online   Generally, if you paid premiums for qualified mortgage insurance that are allocable to periods after the close of the tax year, such premiums are treated as paid in the period to which they are allocated. File 1040ez online You must allocate the premiums over the shorter of the stated term of the mortgage or 84 months, beginning with the month the insurance was obtained. File 1040ez online No deduction is allowed for the unamortized balance if the mortgage is satisfied before its term. File 1040ez online This paragraph does not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service. File 1040ez online See the Example below. File 1040ez online Example. File 1040ez online Ryan purchased a home in May of 2012 and financed the home with a 15-year mortgage. File 1040ez online Ryan also prepaid all of the $9,240 in private mortgage insurance required at the time of closing in May. File 1040ez online Since the $9,240 in private mortgage insurance is allocable to periods after 2012, Ryan must allocate the $9,240 over the shorter of the life of the mortgage or 84 months. File 1040ez online Ryan's adjusted gross income (AGI) for 2012 is $76,000. File 1040ez online Ryan can deduct $880 ($9,240 ÷ 84 × 8 months) for qualified mortgage insurance premiums in 2012. File 1040ez online For 2013, Ryan can deduct $1,320 ($9,240 ÷ 84 × 12 months) if his AGI is $100,000 or less. File 1040ez online In this example, the mortgage insurance premiums are allocated over 84 months, which is shorter than the life of the mortgage of 15 years (180 months). File 1040ez online Limit on deduction. File 1040ez online   If your adjusted gross income on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated. File 1040ez online See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. File 1040ez online If your adjusted gross income is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. File 1040ez online Form 1098, Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement from the mortgage holder. File 1040ez online You will receive the statement if you pay interest to a person (including a financial institution or a cooperative housing corporation) in the course of that person's trade or business. File 1040ez online A governmental unit is a person for purposes of furnishing the statement. File 1040ez online The statement for each year should be sent to you by January 31 of the following year. File 1040ez online A copy of this form will also be sent to the IRS. File 1040ez online The statement will show the total interest you paid during the year, any mortgage insurance premiums you paid, and if you purchased a main home during the year, it also will show the deductible points paid during the year, including seller-paid points. File 1040ez online However, it should not show any interest that was paid for you by a government agency. File 1040ez online As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. File 1040ez online However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan. File 1040ez online See Points , earlier, to determine whether you can deduct points not shown on Form 1098. File 1040ez online Prepaid interest on Form 1098. File 1040ez online   If you prepaid interest in 2013 that accrued in full by January 15, 2014, this prepaid interest may be included in box 1 of Form 1098. File 1040ez online However, you cannot deduct the prepaid amount for January 2014 in 2013. File 1040ez online (See Prepaid interest , earlier. File 1040ez online ) You will have to figure the interest that accrued for 2014 and subtract it from the amount in box 1. File 1040ez online You will include the interest for January 2014 with the other interest you pay for 2014. File 1040ez online See How To Report , later. File 1040ez online Refunded interest. File 1040ez online   If you received a refund of mortgage interest you overpaid in an earlier year, you generally will receive a Form 1098 showing the refund in box 3. File 1040ez online See Refunds of interest , earlier. File 1040ez online Mortgage insurance premiums. File 1040ez online   The amount of mortgage insurance premiums you paid during 2013 may be shown in box 4 of Form 1098. File 1040ez online See Mortgage Insurance Premiums, earlier. File 1040ez online Investment Interest This section discusses interest expenses you may be able to deduct as an investor. File 1040ez online If you borrow money to buy property you hold for investment, the interest you pay is investment interest. File 1040ez online You can deduct investment interest subject to the limit discussed later. File 1040ez online However, you cannot deduct interest you incurred to produce tax-exempt income. File 1040ez online Nor can you deduct interest expenses on straddles. File 1040ez online Investment interest does not include any qualified home mortgage interest or any interest taken into account in computing income or loss from a passive activity. File 1040ez online Investment Property Property held for investment includes property that produces interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business. File 1040ez online It also includes property that produces gain or loss (not derived in the ordinary course of a trade or business) from the sale or trade of property producing these types of income or held for investment (other than an interest in a passive activity). File 1040ez online Investment property also includes an interest in a trade or business activity in which you did not materially participate (other than a passive activity). File 1040ez online Partners, shareholders, and beneficiaries. File 1040ez online   To determine your investment interest, combine your share of investment interest from a partnership, S corporation, estate, or trust with your other investment interest. File 1040ez online Allocation of Interest Expense If you borrow money for business or personal purposes as well as for investment, you must allocate the debt among those purposes. File 1040ez online Only the interest expense on the part of the debt used for investment purposes is treated as investment interest. File 1040ez online The allocation is not affected by the use of property that secures the debt. File 1040ez online Limit on Deduction Generally, your deduction for investment interest expense is limited to the amount of your net investment income. File 1040ez online You can carry over the amount of investment interest that you could not deduct because of this limit to the next tax year. File 1040ez online The interest carried over is treated as investment interest paid or accrued in that next year. File 1040ez online You can carry over disallowed investment interest to the next tax year even if it is more than your taxable income in the year the interest was paid or accrued. File 1040ez online Net Investment Income Determine the amount of your net investment income by subtracting your investment expenses (other than interest expense) from your investment income. File 1040ez online Investment income. File 1040ez online    This generally includes your gross income from property held for investment (such as interest, dividends, annuities, and royalties). File 1040ez online Investment income does not include Alaska Permanent Fund dividends. File 1040ez online It also does not include qualified dividends or net capital gain unless you choose to include them. File 1040ez online Choosing to include qualified dividends. File 1040ez online   Investment income generally does not include qualified dividends, discussed in chapter 8. File 1040ez online However, you can choose to include all or part of your qualified dividends in investment income. File 1040ez online   You make this choice by completing Form 4952, line 4g, according to its instructions. File 1040ez online   If you choose to include any amount of your qualified dividends in investment income, you must reduce your qualified dividends that are eligible for the lower capital gains tax rates by the same amount. File 1040ez online Choosing to include net capital gain. File 1040ez online   Investment income generally does not include net capital gain from disposing of investment property (including capital gain distributions from mutual funds). File 1040ez online However, you can choose to include all or part of your net capital gain in investment income. File 1040ez online    You make this choice by completing Form 4952, line 4g, according to its instructions. File 1040ez online   If you choose to include any amount of your net capital gain in investment income, you must reduce your net capital gain that is eligible for the lower capital gains tax rates by the same amount. File 1040ez online    Before making either choice, consider the overall effect on your tax liability. File 1040ez online Compare your tax if you make one or both of these choices with your tax if you do not. File 1040ez online Investment income of child reported on parent's return. File 1040ez online    Investment income includes the part of your child's interest and dividend income that you choose to report on your return. File 1040ez online If the child does not have qualified dividends, Alaska Permanent Fund dividends, or capital gain distributions, this is the amount on line 6 of Form 8814, Parents' Election To Report Child's Interest and Dividends. File 1040ez online Child's qualified dividends. File 1040ez online   If part of the amount you report is your child's qualified dividends, that part (which is reported on Form 1040, line 9b) generally does not count as investment income. File 1040ez online However, you can choose to include all or part of it in investment income, as explained under Choosing to include qualified dividends , earlier. File 1040ez online   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured next under Child's Alaska Permanent Fund dividends). File 1040ez online Child's Alaska Permanent Fund dividends. File 1040ez online   If part of the amount you report is your child's Alaska Permanent Fund dividends, that part does not count as investment income. File 1040ez online To figure the amount of your child's income that you can consider your investment income, start with the amount on Form 8814, line 6. File 1040ez online Multiply that amount by a percentage that is equal to the Alaska Permanent Fund dividends divided by the total amount on Form 8814, line 4. File 1040ez online Subtract the result from the amount on Form 8814, line 12. File 1040ez online Child's capital gain distributions. File 1040ez online    If part of the amount you report is your child's capital gain distributions, that part (which is reported on Schedule D, line 13, or Form 1040, line 13) generally does not count as investment income. File 1040ez online However, you can choose to include all or part of it in investment income, as explained in Choosing to include net capital gain , earlier. File 1040ez online   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured under Child's Alaska Permanent Fund dividends , earlier). File 1040ez online Investment expenses. File 1040ez online   Investment expenses are your allowed deductions (other than interest expense) directly connected with the production of investment income. File 1040ez online Investment expenses that are included as a miscellaneous itemized deduction on Schedule A (Form 1040) are allowable deductions after applying the 2% limit that applies to miscellaneous itemized deductions. File 1040ez online Use the smaller of: The investment expenses included on Schedule A (Form 1040), line 23, or The amount on Schedule A, line 27. File 1040ez online Losses from passive activities. File 1040ez online   Income or expenses that you used in computing income or loss from a passive activity are not included in determining your investment income or investment expenses (including investment interest expense). File 1040ez online See Publication 925, Passive Activity and At-Risk Rules, for information about passive activities. File 1040ez online Form 4952 Use Form 4952, Investment Interest Expense Deduction, to figure your deduction for investment interest. File 1040ez online Exception to use of Form 4952. File 1040ez online   You do not have to complete Form 4952 or attach it to your return if you meet all of the following tests. File 1040ez online Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified dividends. File 1040ez online You do not have any other deductible investment expenses. File 1040ez online You have no carryover of investment interest expense from 2012. File 1040ez online If you meet all of these tests, you can deduct all of your investment interest. File 1040ez online More Information For more information on investment interest, see Interest Expenses in chapter 3 of Publication 550. File 1040ez online Items You Cannot Deduct Some interest payments are not deductible. File 1040ez online Certain expenses similar to interest also are not deductible. File 1040ez online Nondeductible expenses include the following items. File 1040ez online Personal interest (discussed later). File 1040ez online Service charges (however, see Other Expenses (Line 23) in chapter 28). File 1040ez online Annual fees for credit cards. File 1040ez online Loan fees. File 1040ez online Credit investigation fees. File 1040ez online Interest to purchase or carry tax-exempt securities. File 1040ez online Penalties. File 1040ez online   You cannot deduct fines and penalties paid to a government for violations of law, regardless of their nature. File 1040ez online Personal Interest Personal interest is not deductible. File 1040ez online Personal interest is any interest that is not home mortgage interest, investment interest, business interest, or other deductible interest. File 1040ez online It includes the following items. File 1040ez online Interest on car loans (unless you use the car for business). File 1040ez online Interest on federal, state, or local income tax. File 1040ez online Finance charges on credit cards, retail installment contracts, and revolving charge accounts incurred for personal expenses. File 1040ez online Late payment charges by a public utility. File 1040ez online You may be able to deduct interest you pay on a qualified student loan. File 1040ez online For details, see Publication 970, Tax Benefits for Education. File 1040ez online Allocation of Interest If you use the proceeds of a loan for more than one purpose (for example, personal and business), you must allocate the interest on the loan to each use. File 1040ez online However, you do not have to allocate home mortgage interest if it is fully deductible, regardless of how the funds are used. File 1040ez online You allocate interest (other than fully deductible home mortgage interest) on a loan in the same way as the loan itself is allocated. File 1040ez online You do this by tracing disbursements of the debt proceeds to specific uses. File 1040ez online For details on how to do this, see chapter 4 of Publication 535. File 1040ez online How To Report You must file Form 1040 to deduct any home mortgage interest expense on your tax return. File 1040ez online Where you deduct your interest expense generally depends on how you use the loan proceeds. File 1040ez online See Table 23-1 for a summary of where to deduct your interest expense. File 1040ez online Home mortgage interest and points. File 1040ez online   Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. File 1040ez online If you paid more deductible interest to the financial institution than the amount shown on Form 1098, show the larger deductible amount on line 10. File 1040ez online Attach a statement explaining the difference and print “See attached” next to line 10. File 1040ez online    Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. File 1040ez online If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and taxpayer identification number (TIN) on the dotted lines next to line 11. File 1040ez online The seller must give you this number and you must give the seller your TIN. File 1040ez online A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. File 1040ez online Failure to meet any of these requirements may result in a $50 penalty for each failure. File 1040ez online The TIN can be either a social security number, an individual taxpayer identification number (issued by the Internal Revenue Service), or an employer identification number. File 1040ez online See Social Security Number (SSN) in chapter 1 for more information about TINs. File 1040ez online    If you can take a deduction for points that were not reported to you on Form 1098, deduct those points on Schedule A (Form 1040), line 12. File 1040ez online   Deduct mortgage insurance premiums on Schedule A (Form 1040), line 13. File 1040ez online More than one borrower. File 1040ez online   If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. File 1040ez online Show how much of the interest each of you paid, and give the name and address of the person who received the form. File 1040ez online Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. File 1040ez online Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13. File 1040ez online   Similarly, if you are the payer of record on a mortgage on which there are other borrowers entitled to a deduction for the interest shown on the Form 1098 you received, deduct only your share of the interest on Schedule A (Form 1040), line 10. File 1040ez online You should let each of the other borrowers know what his or her share is. File 1040ez online Mortgage proceeds used for business or investment. File 1040ez online    If your home mortgage interest deduction is limited, but all or part of the mortgage proceeds were used for business, investment, or other deductible activities, see Table 23-1. File 1040ez online It shows where to deduct the part of your excess interest that is for those activities. File 1040ez online Investment interest. File 1040ez online    Deduct investment interest, subject to certain limits discussed in Publication 550, on Schedule A (Form 1040), line 14. File 1040ez online Amortization of bond premium. File 1040ez online   There are various ways to treat the premium you pay to buy taxable bonds. File 1040ez online See Bond Premium Amortization in Publication 550. File 1040ez online Income-producing rental or royalty interest. File 1040ez online   Deduct interest on a loan for income-producing rental or royalty property that is not used in your business in Part I of Schedule E (Form 1040). File 1040ez online Example. File 1040ez online You rent out part of your home and borrow money to make repairs. File 1040ez online You can deduct only the interest payment for the rented part in Part I of Schedule E (Form 1040). File 1040ez online Deduct the rest of the interest payment on Schedule A (Form 1040) if it is deductible home mortgage interest. File 1040ez online Table 23-1. File 1040ez online Where To Deduct Your Interest Expense IF you have . File 1040ez online . File 1040ez online . File 1040ez online THEN deduct it on . File 1040ez online . File 1040ez online . File 1040ez online AND for more information go to . File 1040ez online . File 1040ez online . File 1040ez online deductible student loan interest Form 1040, line 33, or Form 1040A, line 18 Publication 970. File 1040ez online deductible home mortgage interest and points reported on Form 1098 Schedule A (Form 1040), line 10 Publication 936. File 1040ez online deductible home mortgage interest not reported on Form 1098 Schedule A (Form 1040), line 11 Publication 936. File 1040ez online deductible points not reported on Form 1098 Schedule A (Form 1040), line 12 Publication 936. File 1040ez online deductible mortgage insurance premiums Schedule A (Form 1040), line 13 Publication 936. File 1040ez online deductible investment interest (other than incurred to produce rents or royalties) Schedule A (Form 1040), line 14 Publication 550. File 1040ez online deductible business interest (non-farm) Schedule C or C-EZ (Form 1040) Publication 535. File 1040ez online deductible farm business interest Schedule F (Form 1040) Publications 225 and 535. File 1040ez online deductible interest incurred to produce rents or royalties Schedule E (Form 1040) Publications 527 and 535. File 1040ez online personal interest not deductible. File 1040ez online Prev  Up  Next   Home   More Online Publications