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Filing 2011 Taxes Late

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Filing 2011 Taxes Late

Filing 2011 taxes late 12. Filing 2011 taxes late   Other Income Table of Contents Introduction Useful Items - You may want to see: Bartering Canceled DebtsInterest included in canceled debt. Filing 2011 taxes late Exceptions Host or Hostess Life Insurance ProceedsSurviving spouse. Filing 2011 taxes late Endowment Contract Proceeds Accelerated Death Benefits Public Safety Officer Killed in the Line of Duty Partnership Income S Corporation Income RecoveriesItemized Deduction Recoveries Rents from Personal Property RepaymentsMethod 1. Filing 2011 taxes late Method 2. Filing 2011 taxes late RoyaltiesDepletion. Filing 2011 taxes late Coal and iron ore. Filing 2011 taxes late Sale of property interest. Filing 2011 taxes late Part of future production sold. Filing 2011 taxes late Unemployment BenefitsTypes of unemployment compensation. Filing 2011 taxes late Governmental program. Filing 2011 taxes late Repayment of unemployment compensation. Filing 2011 taxes late Tax withholding. Filing 2011 taxes late Repayment of benefits. Filing 2011 taxes late Welfare and Other Public Assistance Benefits Other IncomeEmotional distress. Filing 2011 taxes late Deduction for costs involved in unlawful discrimination suits. Filing 2011 taxes late Energy conservation measure. Filing 2011 taxes late Dwelling unit. Filing 2011 taxes late Current income required to be distributed. Filing 2011 taxes late Current income not required to be distributed. Filing 2011 taxes late How to report. Filing 2011 taxes late Losses. Filing 2011 taxes late Grantor trust. Filing 2011 taxes late Nonemployee compensation. Filing 2011 taxes late Corporate director. Filing 2011 taxes late Personal representatives. Filing 2011 taxes late Manager of trade or business for bankruptcy estate. Filing 2011 taxes late Notary public. Filing 2011 taxes late Election precinct official. Filing 2011 taxes late Difficulty-of-care payments. Filing 2011 taxes late Maintaining space in home. Filing 2011 taxes late Reporting taxable payments. Filing 2011 taxes late Lotteries and raffles. Filing 2011 taxes late Form W-2G. Filing 2011 taxes late Reporting winnings and recordkeeping. Filing 2011 taxes late Inherited pension or IRA. Filing 2011 taxes late Employee awards or bonuses. Filing 2011 taxes late Pulitzer, Nobel, and similar prizes. Filing 2011 taxes late Payment for services. Filing 2011 taxes late VA payments. Filing 2011 taxes late Prizes. Filing 2011 taxes late Strike and lockout benefits. Filing 2011 taxes late Introduction You must include on your return all items of income you receive in the form of money, property, and services unless the tax law states that you do not include them. Filing 2011 taxes late Some items, however, are only partly excluded from income. Filing 2011 taxes late This chapter discusses many kinds of income and explains whether they are taxable or nontaxable. Filing 2011 taxes late Income that is taxable must be reported on your tax return and is subject to tax. Filing 2011 taxes late Income that is nontaxable may have to be shown on your tax return but is not taxable. Filing 2011 taxes late This chapter begins with discussions of the following income items. Filing 2011 taxes late Bartering. Filing 2011 taxes late Canceled debts. Filing 2011 taxes late Sales parties at which you are the host or hostess. Filing 2011 taxes late Life insurance proceeds. Filing 2011 taxes late Partnership income. Filing 2011 taxes late S Corporation income. Filing 2011 taxes late Recoveries (including state income tax refunds). Filing 2011 taxes late Rents from personal property. Filing 2011 taxes late Repayments. Filing 2011 taxes late Royalties. Filing 2011 taxes late Unemployment benefits. Filing 2011 taxes late Welfare and other public assistance benefits. Filing 2011 taxes late These discussions are followed by brief discussions of other income items. Filing 2011 taxes late Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 544 Sales and Other Dispositions of Assets 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Bartering Bartering is an exchange of property or services. Filing 2011 taxes late You must include in your income, at the time received, the fair market value of property or services you receive in bartering. Filing 2011 taxes late If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise. Filing 2011 taxes late Generally, you report this income on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Filing 2011 taxes late However, if the barter involves an exchange of something other than services, such as in Example 3 below, you may have to use another form or schedule instead. Filing 2011 taxes late Example 1. Filing 2011 taxes late You are a self-employed attorney who performs legal services for a client, a small corporation. Filing 2011 taxes late The corporation gives you shares of its stock as payment for your services. Filing 2011 taxes late You must include the fair market value of the shares in your income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) in the year you receive them. Filing 2011 taxes late Example 2. Filing 2011 taxes late You are self-employed and a member of a barter club. Filing 2011 taxes late The club uses “credit units” as a means of exchange. Filing 2011 taxes late It adds credit units to your account for goods or services you provide to members, which you can use to purchase goods or services offered by other members of the barter club. Filing 2011 taxes late The club subtracts credit units from your account when you receive goods or services from other members. Filing 2011 taxes late You must include in your income the value of the credit units that are added to your account, even though you may not actually receive goods or services from other members until a later tax year. Filing 2011 taxes late Example 3. Filing 2011 taxes late You own a small apartment building. Filing 2011 taxes late In return for 6 months rent-free use of an apartment, an artist gives you a work of art she created. Filing 2011 taxes late You must report as rental income on Schedule E (Form 1040), Supplemental Income and Loss, the fair market value of the artwork, and the artist must report as income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) the fair rental value of the apartment. Filing 2011 taxes late Form 1099-B from barter exchange. Filing 2011 taxes late   If you exchanged property or services through a barter exchange, Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or a similar statement from the barter exchange should be sent to you by February 18, 2014. Filing 2011 taxes late It should show the value of cash, property, services, credits, or scrip you received from exchanges during 2013. Filing 2011 taxes late The IRS also will receive a copy of Form 1099-B. Filing 2011 taxes late Canceled Debts In most cases, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. Filing 2011 taxes late You have no income from the canceled debt if it is intended as a gift to you. Filing 2011 taxes late A debt includes any indebtedness for which you are liable or which attaches to property you hold. Filing 2011 taxes late If the debt is a nonbusiness debt, report the canceled amount on Form 1040, line 21. Filing 2011 taxes late If it is a business debt, report the amount on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) (or on Schedule F (Form 1040), Profit or Loss From Farming, if the debt is farm debt and you are a farmer). Filing 2011 taxes late Form 1099-C. Filing 2011 taxes late   If a Federal Government agency, financial institution, or credit union cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. Filing 2011 taxes late The amount of the canceled debt is shown in box 2. Filing 2011 taxes late Interest included in canceled debt. Filing 2011 taxes late   If any interest is forgiven and included in the amount of canceled debt in box 2, the amount of interest also will be shown in box 3. Filing 2011 taxes late Whether or not you must include the interest portion of the canceled debt in your income depends on whether the interest would be deductible when you paid it. Filing 2011 taxes late See Deductible debt under Exceptions, later. Filing 2011 taxes late   If the interest would not be deductible (such as interest on a personal loan), include in your income the amount from Form 1099-C, box 2. Filing 2011 taxes late If the interest would be deductible (such as on a business loan), include in your income the net amount of the canceled debt (the amount shown in box 2 less the interest amount shown in box 3). Filing 2011 taxes late Discounted mortgage loan. Filing 2011 taxes late   If your financial institution offers a discount for the early payment of your mortgage loan, the amount of the discount is canceled debt. Filing 2011 taxes late You must include the canceled amount in your income. Filing 2011 taxes late Mortgage relief upon sale or other disposition. Filing 2011 taxes late   If you are personally liable for a mortgage (recourse debt), and you are relieved of the mortgage when you dispose of the property, you may realize gain or loss up to the fair market value of the property. Filing 2011 taxes late To the extent the mortgage discharge exceeds the fair market value of the property, it is income from discharge of indebtedness unless it qualifies for exclusion under Excluded debt , later. Filing 2011 taxes late Report any income from discharge of indebtedness on nonbusiness debt that does not qualify for exclusion as other income on Form 1040, line 21. Filing 2011 taxes late    You may be able to exclude part of the mortgage relief on your principal residence. Filing 2011 taxes late See Excluded debt, later. Filing 2011 taxes late   If you are not personally liable for a mortgage (nonrecourse debt), and you are relieved of the mortgage when you dispose of the property (such as through foreclosure), that relief is included in the amount you realize. Filing 2011 taxes late You may have a taxable gain if the amount you realize exceeds your adjusted basis in the property. Filing 2011 taxes late Report any gain on nonbusiness property as a capital gain. Filing 2011 taxes late   See Publication 4681 for more information. Filing 2011 taxes late Stockholder debt. Filing 2011 taxes late   If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution that is generally dividend income to you. Filing 2011 taxes late For more information, see Publication 542, Corporations. Filing 2011 taxes late   If you are a stockholder in a corporation and you cancel a debt owed to you by the corporation, you generally do not realize income. Filing 2011 taxes late This is because the canceled debt is considered as a contribution to the capital of the corporation equal to the amount of debt principal that you canceled. Filing 2011 taxes late Repayment of canceled debt. Filing 2011 taxes late   If you included a canceled amount in your income and later pay the debt, you may be able to file a claim for refund for the year the amount was included in income. Filing 2011 taxes late You can file a claim on Form 1040X if the statute of limitations for filing a claim is still open. Filing 2011 taxes late The statute of limitations generally does not end until 3 years after the due date of your original return. Filing 2011 taxes late Exceptions There are several exceptions to the inclusion of canceled debt in income. Filing 2011 taxes late These are explained next. Filing 2011 taxes late Student loans. Filing 2011 taxes late   Certain student loans contain a provision that all or part of the debt incurred to attend the qualified educational institution will be canceled if you work for a certain period of time in certain professions for any of a broad class of employers. Filing 2011 taxes late   You do not have income if your student loan is canceled after you agreed to this provision and then performed the services required. Filing 2011 taxes late To qualify, the loan must have been made by: The Federal Government, a state or local government, or an instrumentality, agency, or subdivision thereof, A tax-exempt public benefit corporation that has assumed control of a state, county, or municipal hospital, and whose employees are considered public employees under state law, or An educational institution: Under an agreement with an entity described in (1) or (2) that provided the funds to the institution to make the loan, or As part of a program of the institution designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or a tax-exempt organization described in section 501(c)(3). Filing 2011 taxes late   A loan to refinance a qualified student loan also will qualify if it was made by an educational institution or a qualified tax-exempt organization under its program designed as described in (3)(b) above. Filing 2011 taxes late Education loan repayment assistance. Filing 2011 taxes late   Education loan repayments made to you by the National Health Service Corps Loan Repayment Program (NHSC Loan Repayment Program), a state education loan repayment program eligible for funds under the Public Health Service Act, or any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in underserved or health professional shortage areas are not taxable. Filing 2011 taxes late    The provision relating to the “other state loan repayment or loan forgiveness program” was added to this exclusion for amounts received in tax years beginning after December 31, 2008. Filing 2011 taxes late If you included these amounts in income in 2010, 2011, or 2012, you should file an amended tax return to exclude this income. Filing 2011 taxes late See Form 1040X and its instructions for details on filing. Filing 2011 taxes late Deductible debt. Filing 2011 taxes late   You do not have income from the cancellation of a debt if your payment of the debt would be deductible. Filing 2011 taxes late This exception applies only if you use the cash method of accounting. Filing 2011 taxes late For more information, see chapter 5 of Publication 334, Tax Guide for Small Business. Filing 2011 taxes late Price reduced after purchase. Filing 2011 taxes late   In most cases, if the seller reduces the amount of debt you owe for property you purchased, you do not have income from the reduction. Filing 2011 taxes late The reduction of the debt is treated as a purchase price adjustment and reduces your basis in the property. Filing 2011 taxes late Excluded debt. Filing 2011 taxes late   Do not include a canceled debt in your gross income in the following situations. Filing 2011 taxes late The debt is canceled in a bankruptcy case under title 11 of the U. Filing 2011 taxes late S. Filing 2011 taxes late Code. Filing 2011 taxes late See Publication 908, Bankruptcy Tax Guide. Filing 2011 taxes late The debt is canceled when you are insolvent. Filing 2011 taxes late However, you cannot exclude any amount of canceled debt that is more than the amount by which you are insolvent. Filing 2011 taxes late See Publication 908. Filing 2011 taxes late The debt is qualified farm debt and is canceled by a qualified person. Filing 2011 taxes late See chapter 3 of Publication 225, Farmer's Tax Guide. Filing 2011 taxes late The debt is qualified real property business debt. Filing 2011 taxes late See chapter 5 of Publication 334. Filing 2011 taxes late The cancellation is intended as a gift. Filing 2011 taxes late The debt is qualified principal residence indebtedness. Filing 2011 taxes late See Publication 525 for additional information. Filing 2011 taxes late Host or Hostess If you host a party or event at which sales are made, any gift or gratuity you receive for giving the event is a payment for helping a direct seller make sales. Filing 2011 taxes late You must report this item as income at its fair market value. Filing 2011 taxes late Your out-of-pocket party expenses are subject to the 50% limit for meal and entertainment expenses. Filing 2011 taxes late These expenses are deductible as miscellaneous itemized deductions subject to the 2%-of-AGI limit on Schedule A (Form 1040), but only up to the amount of income you receive for giving the party. Filing 2011 taxes late For more information about the 50% limit for meal and entertainment expenses, see chapter 26. Filing 2011 taxes late Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. Filing 2011 taxes late This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. Filing 2011 taxes late However, interest income received as a result of life insurance proceeds may be taxable. Filing 2011 taxes late Proceeds not received in installments. Filing 2011 taxes late   If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death. Filing 2011 taxes late If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death. Filing 2011 taxes late Proceeds received in installments. Filing 2011 taxes late   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. Filing 2011 taxes late   To determine the excluded part, divide the amount held by the insurance company (generally the total lump sum payable at the death of the insured person) by the number of installments to be paid. Filing 2011 taxes late Include anything over this excluded part in your income as interest. Filing 2011 taxes late Surviving spouse. Filing 2011 taxes late   If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude up to $1,000 a year of the interest included in the installments. Filing 2011 taxes late If you remarry, you can continue to take the exclusion. Filing 2011 taxes late Surrender of policy for cash. Filing 2011 taxes late   If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. Filing 2011 taxes late In most cases, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income. Filing 2011 taxes late    You should receive a Form 1099-R showing the total proceeds and the taxable part. Filing 2011 taxes late Report these amounts on lines 16a and 16b of Form 1040 or lines 12a and 12b of Form 1040A. Filing 2011 taxes late More information. Filing 2011 taxes late   For more information, see Life Insurance Proceeds in Publication 525. Filing 2011 taxes late Endowment Contract Proceeds An endowment contract is a policy under which you are paid a specified amount of money on a certain date unless you die before that date, in which case, the money is paid to your designated beneficiary. Filing 2011 taxes late Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. Filing 2011 taxes late To determine your cost, subtract any amount that you previously received under the contract and excluded from your income from the total premiums (or other consideration) paid for the contract. Filing 2011 taxes late Include the part of the lump sum payment that is more than your cost in your income. Filing 2011 taxes late Accelerated Death Benefits Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are excluded from income if the insured is terminally or chronically ill. Filing 2011 taxes late Viatical settlement. Filing 2011 taxes late   This is the sale or assignment of any part of the death benefit under a life insurance contract to a viatical settlement provider. Filing 2011 taxes late A viatical settlement provider is a person who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill and who meets the requirements of section 101(g)(2)(B) of the Internal Revenue Code. Filing 2011 taxes late Exclusion for terminal illness. Filing 2011 taxes late    Accelerated death benefits are fully excludable if the insured is a terminally ill individual. Filing 2011 taxes late This is a person who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death within 24 months from the date of the certification. Filing 2011 taxes late Exclusion for chronic illness. Filing 2011 taxes late    If the insured is a chronically ill individual who is not terminally ill, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. Filing 2011 taxes late Accelerated death benefits paid on a per diem or other periodic basis are excludable up to a limit. Filing 2011 taxes late This limit applies to the total of the accelerated death benefits and any periodic payments received from long-term care insurance contracts. Filing 2011 taxes late For information on the limit and the definitions of chronically ill individual, qualified long-term care services, and long-term care insurance contracts, see Long-Term Care Insurance Contracts under Sickness and Injury Benefits in Publication 525. Filing 2011 taxes late Exception. Filing 2011 taxes late   The exclusion does not apply to any amount paid to a person (other than the insured) who has an insurable interest in the life of the insured because the insured: Is a director, officer, or employee of the person, or Has a financial interest in the person's business. Filing 2011 taxes late Form 8853. Filing 2011 taxes late   To claim an exclusion for accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return. Filing 2011 taxes late You do not have to file Form 8853 to exclude accelerated death benefits paid on the basis of actual expenses incurred. Filing 2011 taxes late Public Safety Officer Killed in the Line of Duty If you are a survivor of a public safety officer who was killed in the line of duty, you may be able to exclude from income certain amounts you receive. Filing 2011 taxes late For this purpose, the term public safety officer includes law enforcement officers, firefighters, chaplains, and rescue squad and ambulance crew members. Filing 2011 taxes late For more information, see Publication 559, Survivors, Executors, and Administrators. Filing 2011 taxes late Partnership Income A partnership generally is not a taxable entity. Filing 2011 taxes late The income, gains, losses, deductions, and credits of a partnership are passed through to the partners based on each partner's distributive share of these items. Filing 2011 taxes late Schedule K-1 (Form 1065). Filing 2011 taxes late    Although a partnership generally pays no tax, it must file an information return on Form 1065, U. Filing 2011 taxes late S. Filing 2011 taxes late Return of Partnership Income, and send Schedule K-1 (Form 1065) to each partner. Filing 2011 taxes late In addition, the partnership will send each partner a copy of the Partner's Instructions for Schedule K-1 (Form 1065) to help each partner report his or her share of the partnership's income, deductions, credits, and tax preference items. Filing 2011 taxes late Keep Schedule K-1 (Form 1065) for your records. Filing 2011 taxes late Do not attach it to your Form 1040, unless you are specifically required to do so. Filing 2011 taxes late For more information on partnerships, see Publication 541, Partnerships. Filing 2011 taxes late Qualified joint venture. Filing 2011 taxes late   If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. Filing 2011 taxes late To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. Filing 2011 taxes late For further information on how to make the election and which schedule(s) to file, see the instructions for your individual tax return. Filing 2011 taxes late S Corporation Income In most cases, an S corporation does not pay tax on its income. Filing 2011 taxes late Instead, the income, losses, deductions, and credits of the corporation are passed through to the shareholders based on each shareholder's pro rata share. Filing 2011 taxes late Schedule K-1 (Form 1120S). Filing 2011 taxes late   An S corporation must file a return on Form 1120S, U. Filing 2011 taxes late S. Filing 2011 taxes late Income Tax Return for an S Corporation, and send Schedule K-1 (Form 1120S) to each shareholder. Filing 2011 taxes late In addition, the S corporation will send each shareholder a copy of the Shareholder's Instructions for Schedule K-1 (Form 1120S) to help each shareholder report his or her share of the S corporation's income, losses, credits, and deductions. Filing 2011 taxes late Keep Schedule K-1 (Form 1120S) for your records. Filing 2011 taxes late Do not attach it to your Form 1040, unless you are specifically required to do so. Filing 2011 taxes late For more information on S corporations and their shareholders, see the Instructions for Form 1120S. Filing 2011 taxes late Recoveries A recovery is a return of an amount you deducted or took a credit for in an earlier year. Filing 2011 taxes late The most common recoveries are refunds, reimbursements, and rebates of deductions itemized on Schedule A (Form 1040). Filing 2011 taxes late You also may have recoveries of non-itemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit. Filing 2011 taxes late Tax benefit rule. Filing 2011 taxes late   You must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. Filing 2011 taxes late For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year. Filing 2011 taxes late For more information, see Publication 525. Filing 2011 taxes late Federal income tax refund. Filing 2011 taxes late   Refunds of federal income taxes are not included in your income because they are never allowed as a deduction from income. Filing 2011 taxes late State tax refund. Filing 2011 taxes late   If you received a state or local income tax refund (or credit or offset) in 2013, you generally must include it in income if you deducted the tax in an earlier year. Filing 2011 taxes late The payer should send Form 1099-G, Certain Government Payments, to you by January 31, 2014. Filing 2011 taxes late The IRS also will receive a copy of the Form 1099-G. Filing 2011 taxes late If you file Form 1040, use the State and Local Income Tax Refund Worksheet in the 2013 Form 1040 instructions for line 10 to figure the amount (if any) to include in your income. Filing 2011 taxes late See Publication 525 for when you must use another worksheet. Filing 2011 taxes late   If you could choose to deduct for a tax year either: State and local income taxes, or State and local general sales taxes, then the maximum refund that you may have to include in income is limited to the excess of the tax you chose to deduct for that year over the tax you did not choose to deduct for that year. Filing 2011 taxes late For examples, see Publication 525. Filing 2011 taxes late Mortgage interest refund. Filing 2011 taxes late    If you received a refund or credit in 2013 of mortgage interest paid in an earlier year, the amount should be shown in box 3 of your Form 1098, Mortgage Interest Statement. Filing 2011 taxes late Do not subtract the refund amount from the interest you paid in 2013. Filing 2011 taxes late You may have to include it in your income under the rules explained in the following discussions. Filing 2011 taxes late Interest on recovery. Filing 2011 taxes late   Interest on any of the amounts you recover must be reported as interest income in the year received. Filing 2011 taxes late For example, report any interest you received on state or local income tax refunds on Form 1040, line 8a. Filing 2011 taxes late Recovery and expense in same year. Filing 2011 taxes late   If the refund or other recovery and the expense occur in the same year, the recovery reduces the deduction or credit and is not reported as income. Filing 2011 taxes late Recovery for 2 or more years. Filing 2011 taxes late   If you receive a refund or other recovery that is for amounts you paid in 2 or more separate years, you must allocate, on a pro rata basis, the recovered amount between the years in which you paid it. Filing 2011 taxes late This allocation is necessary to determine the amount of recovery from any earlier years and to determine the amount, if any, of your allowable deduction for this item for the current year. Filing 2011 taxes late For information on how to compute the allocation, see Recoveries in Publication 525. Filing 2011 taxes late Itemized Deduction Recoveries If you recover any amount that you deducted in an earlier year on Schedule A (Form 1040), you generally must include the full amount of the recovery in your income in the year you receive it. Filing 2011 taxes late Where to report. Filing 2011 taxes late   Enter your state or local income tax refund on Form 1040, line 10, and the total of all other recoveries as other income on Form 1040, line 21. Filing 2011 taxes late You cannot use Form 1040A or Form 1040EZ. Filing 2011 taxes late Standard deduction limit. Filing 2011 taxes late   You generally are allowed to claim the standard deduction if you do not itemize your deductions. Filing 2011 taxes late Only your itemized deductions that are more than your standard deduction are subject to the recovery rule (unless you are required to itemize your deductions). Filing 2011 taxes late If your total deductions on the earlier year return were not more than your income for that year, include in your income this year the lesser of: Your recoveries, or The amount by which your itemized deductions exceeded the standard deduction. Filing 2011 taxes late Example. Filing 2011 taxes late For 2012, you filed a joint return. Filing 2011 taxes late Your taxable income was $60,000 and you were not entitled to any tax credits. Filing 2011 taxes late Your standard deduction was $11,900, and you had itemized deductions of $14,000. Filing 2011 taxes late In 2013, you received the following recoveries for amounts deducted on your 2012 return: Medical expenses $200 State and local income tax refund 400 Refund of mortgage interest 325 Total recoveries $925 None of the recoveries were more than the deductions taken for 2012. Filing 2011 taxes late The difference between the state and local income tax you deducted and your local general sales tax was more than $400. Filing 2011 taxes late Your total recoveries are less than the amount by which your itemized deductions exceeded the standard deduction ($14,000 − 11,900 = $2,100), so you must include your total recoveries in your income for 2013. Filing 2011 taxes late Report the state and local income tax refund of $400 on Form 1040, line 10, and the balance of your recoveries, $525, on Form 1040, line 21. Filing 2011 taxes late Standard deduction for earlier years. Filing 2011 taxes late   To determine if amounts recovered in 2013 must be included in your income, you must know the standard deduction for your filing status for the year the deduction was claimed. Filing 2011 taxes late Look in the instructions for your tax return from prior years to locate the standard deduction for the filing status for that prior year. Filing 2011 taxes late Example. Filing 2011 taxes late You filed a joint return on Form 1040 for 2012 with taxable income of $45,000. Filing 2011 taxes late Your itemized deductions were $12,350. Filing 2011 taxes late The standard deduction that you could have claimed was $11,900. Filing 2011 taxes late In 2013, you recovered $2,100 of your 2012 itemized deductions. Filing 2011 taxes late None of the recoveries were more than the actual deductions for 2012. Filing 2011 taxes late Include $450 of the recoveries in your 2013 income. Filing 2011 taxes late This is the smaller of your recoveries ($2,100) or the amount by which your itemized deductions were more than the standard deduction ($12,350 − $11,900 = $450). Filing 2011 taxes late Recovery limited to deduction. Filing 2011 taxes late   You do not include in your income any amount of your recovery that is more than the amount you deducted in the earlier year. Filing 2011 taxes late The amount you include in your income is limited to the smaller of: The amount deducted on Schedule A (Form 1040), or The amount recovered. Filing 2011 taxes late Example. Filing 2011 taxes late During 2012 you paid $1,700 for medical expenses. Filing 2011 taxes late From this amount you subtracted $1,500, which was 7. Filing 2011 taxes late 5% of your adjusted gross income. Filing 2011 taxes late Your actual medical expense deduction was $200. Filing 2011 taxes late In 2013, you received a $500 reimbursement from your medical insurance for your 2012 expenses. Filing 2011 taxes late The only amount of the $500 reimbursement that must be included in your income for 2013 is $200—the amount actually deducted. Filing 2011 taxes late Other recoveries. Filing 2011 taxes late   See Recoveries in Publication 525 if: You have recoveries of items other than itemized deductions, or You received a recovery for an item for which you claimed a tax credit (other than investment credit or foreign tax credit) in a prior year. Filing 2011 taxes late Rents from Personal Property If you rent out personal property, such as equipment or vehicles, how you report your income and expenses is in most cases determined by: Whether or not the rental activity is a business, and Whether or not the rental activity is conducted for profit. Filing 2011 taxes late In most cases, if your primary purpose is income or profit and you are involved in the rental activity with continuity and regularity, your rental activity is a business. Filing 2011 taxes late See Publication 535, Business Expenses, for details on deducting expenses for both business and not-for-profit activities. Filing 2011 taxes late Reporting business income and expenses. Filing 2011 taxes late    If you are in the business of renting personal property, report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). Filing 2011 taxes late The form instructions have information on how to complete them. Filing 2011 taxes late Reporting nonbusiness income. Filing 2011 taxes late   If you are not in the business of renting personal property, report your rental income on Form 1040, line 21. Filing 2011 taxes late List the type and amount of the income on the dotted line next to line 21. Filing 2011 taxes late Reporting nonbusiness expenses. Filing 2011 taxes late   If you rent personal property for profit, include your rental expenses in the total amount you enter on Form 1040, line 36. Filing 2011 taxes late Also enter the amount and “PPR” on the dotted line next to line 36. Filing 2011 taxes late   If you do not rent personal property for profit, your deductions are limited and you cannot report a loss to offset other income. Filing 2011 taxes late See Activity not for profit , under Other Income, later. Filing 2011 taxes late Repayments If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it. Filing 2011 taxes late Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. Filing 2011 taxes late Generally, you can claim a deduction or credit only if the repayment qualifies as an expense or loss incurred in your trade or business or in a for-profit transaction. Filing 2011 taxes late Type of deduction. Filing 2011 taxes late   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. Filing 2011 taxes late You generally deduct the repayment on the same form or schedule on which you previously reported it as income. Filing 2011 taxes late For example, if you reported it as self-employment income, deduct it as a business expense on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). Filing 2011 taxes late If you reported it as a capital gain, deduct it as a capital loss as explained in the Instructions for Schedule D (Form 1040). Filing 2011 taxes late If you reported it as wages, unemployment compensation, or other nonbusiness income, deduct it as a miscellaneous itemized deduction on Schedule A (Form 1040). Filing 2011 taxes late Repaid social security benefits. Filing 2011 taxes late   If you repaid social security benefits or equivalent railroad retirement benefits, see Repayment of benefits in chapter 11. Filing 2011 taxes late Repayment of $3,000 or less. Filing 2011 taxes late   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. Filing 2011 taxes late If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 23. Filing 2011 taxes late Repayment over $3,000. Filing 2011 taxes late   If the amount you repaid was more than $3,000, you can deduct the repayment (as explained under Type of deduction , earlier). Filing 2011 taxes late However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. Filing 2011 taxes late This means that at the time you included the income, it appeared that you had an unrestricted right to it. Filing 2011 taxes late If you qualify for this choice, figure your tax under both methods and compare the results. Filing 2011 taxes late Use the method (deduction or credit) that results in less tax. Filing 2011 taxes late When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. Filing 2011 taxes late Each instance of repayment is not considered separately. Filing 2011 taxes late Method 1. Filing 2011 taxes late   Figure your tax for 2013 claiming a deduction for the repaid amount. Filing 2011 taxes late If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28. Filing 2011 taxes late Method 2. Filing 2011 taxes late   Figure your tax for 2013 claiming a credit for the repaid amount. Filing 2011 taxes late Follow these steps. Filing 2011 taxes late Figure your tax for 2013 without deducting the repaid amount. Filing 2011 taxes late Refigure your tax from the earlier year without including in income the amount you repaid in 2013. Filing 2011 taxes late Subtract the tax in (2) from the tax shown on your return for the earlier year. Filing 2011 taxes late This is the credit. Filing 2011 taxes late Subtract the answer in (3) from the tax for 2013 figured without the deduction (Step 1). Filing 2011 taxes late   If method 1 results in less tax, deduct the amount repaid. Filing 2011 taxes late If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71, by adding the amount of the credit to any other credits on this line, and entering “I. Filing 2011 taxes late R. Filing 2011 taxes late C. Filing 2011 taxes late 1341” in the column to the right of line 71. Filing 2011 taxes late   An example of this computation can be found in Publication 525. Filing 2011 taxes late Repaid wages subject to social security and Medicare taxes. Filing 2011 taxes late   If you had to repay an amount that you included in your wages or compensation in an earlier year on which social security, Medicare, or tier 1 RRTA taxes were paid, ask your employer to refund the excess amount to you. Filing 2011 taxes late If the employer refuses to refund the taxes, ask for a statement indicating the amount of the overcollection to support your claim. Filing 2011 taxes late File a claim for refund using Form 843, Claim for Refund and Request for Abatement. Filing 2011 taxes late Repaid wages subject to Additional Medicare Tax. Filing 2011 taxes late   Employers cannot make an adjustment or file a claim for refund for Additional Medicare Tax withholding when there is a repayment of wages received by an employee in a prior year because the employee determines liability for Additional Medicare Tax on the employee's income tax return for the prior year. Filing 2011 taxes late If you had to repay an amount that you included in your wages or compensation in an earlier year, and on which Additional Medicare Tax was paid, you may be able to recover the Additional Medicare Tax paid on the amount. Filing 2011 taxes late To recover Additional Medicare Tax on the repaid wages or compensation, you must file Form 1040X, Amended U. Filing 2011 taxes late S. Filing 2011 taxes late Individual Income Tax Return, for the prior year in which the wages or compensation were originally received. Filing 2011 taxes late See the Instructions for Form 1040X. Filing 2011 taxes late Royalties Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. Filing 2011 taxes late In most cases you report royalties in Part I of Schedule E (Form 1040). Filing 2011 taxes late However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc. Filing 2011 taxes late , report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). Filing 2011 taxes late Copyrights and patents. Filing 2011 taxes late   Royalties from copyrights on literary, musical, or artistic works, and similar property, or from patents on inventions, are amounts paid to you for the right to use your work over a specified period of time. Filing 2011 taxes late Royalties generally are based on the number of units sold, such as the number of books, tickets to a performance, or machines sold. Filing 2011 taxes late Oil, gas, and minerals. Filing 2011 taxes late   Royalty income from oil, gas, and mineral properties is the amount you receive when natural resources are extracted from your property. Filing 2011 taxes late The royalties are based on units, such as barrels, tons, etc. Filing 2011 taxes late , and are paid to you by a person or company who leases the property from you. Filing 2011 taxes late Depletion. Filing 2011 taxes late   If you are the owner of an economic interest in mineral deposits or oil and gas wells, you can recover your investment through the depletion allowance. Filing 2011 taxes late For information on this subject, see chapter 9 of Publication 535. Filing 2011 taxes late Coal and iron ore. Filing 2011 taxes late   Under certain circumstances, you can treat amounts you receive from the disposal of coal and iron ore as payments from the sale of a capital asset, rather than as royalty income. Filing 2011 taxes late For information about gain or loss from the sale of coal and iron ore, see Publication 544. Filing 2011 taxes late Sale of property interest. Filing 2011 taxes late   If you sell your complete interest in oil, gas, or mineral rights, the amount you receive is considered payment for the sale of property used in a trade or business under section 1231, not royalty income. Filing 2011 taxes late Under certain circumstances, the sale is subject to capital gain or loss treatment as explained in the Instructions for Schedule D (Form 1040). Filing 2011 taxes late For more information on selling section 1231 property, see chapter 3 of Publication 544. Filing 2011 taxes late   If you retain a royalty, an overriding royalty, or a net profit interest in a mineral property for the life of the property, you have made a lease or a sublease, and any cash you receive for the assignment of other interests in the property is ordinary income subject to a depletion allowance. Filing 2011 taxes late Part of future production sold. Filing 2011 taxes late   If you own mineral property but sell part of the future production, in most cases you treat the money you receive from the buyer at the time of the sale as a loan from the buyer. Filing 2011 taxes late Do not include it in your income or take depletion based on it. Filing 2011 taxes late   When production begins, you include all the proceeds in your income, deduct all the production expenses, and deduct depletion from that amount to arrive at your taxable income from the property. Filing 2011 taxes late Unemployment Benefits The tax treatment of unemployment benefits you receive depends on the type of program paying the benefits. Filing 2011 taxes late Unemployment compensation. Filing 2011 taxes late   You must include in income all unemployment compensation you receive. Filing 2011 taxes late You should receive a Form 1099-G showing in box 1 the total unemployment compensation paid to you. Filing 2011 taxes late In most cases, you enter unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Filing 2011 taxes late Types of unemployment compensation. Filing 2011 taxes late   Unemployment compensation generally includes any amount received under an unemployment compensation law of the United States or of a state. Filing 2011 taxes late It includes the following benefits. Filing 2011 taxes late Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund. Filing 2011 taxes late State unemployment insurance benefits. Filing 2011 taxes late Railroad unemployment compensation benefits. Filing 2011 taxes late Disability payments from a government program paid as a substitute for unemployment compensation. Filing 2011 taxes late (Amounts received as workers' compensation for injuries or illness are not unemployment compensation. Filing 2011 taxes late See chapter 5 for more information. Filing 2011 taxes late ) Trade readjustment allowances under the Trade Act of 1974. Filing 2011 taxes late Unemployment assistance under the Disaster Relief and Emergency Assistance Act. Filing 2011 taxes late Unemployment assistance under the Airline Deregulation Act of 1974 Program. Filing 2011 taxes late Governmental program. Filing 2011 taxes late   If you contribute to a governmental unemployment compensation program and your contributions are not deductible, amounts you receive under the program are not included as unemployment compensation until you recover your contributions. Filing 2011 taxes late If you deducted all of your contributions to the program, the entire amount you receive under the program is included in your income. Filing 2011 taxes late Repayment of unemployment compensation. Filing 2011 taxes late   If you repaid in 2013 unemployment compensation you received in 2013, subtract the amount you repaid from the total amount you received and enter the difference on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Filing 2011 taxes late On the dotted line next to your entry enter “Repaid” and the amount you repaid. Filing 2011 taxes late If you repaid unemployment compensation in 2013 that you included in income in an earlier year, you can deduct the amount repaid on Schedule A (Form 1040), line 23, if you itemize deductions. Filing 2011 taxes late If the amount is more than $3,000, see Repayments , earlier. Filing 2011 taxes late Tax withholding. Filing 2011 taxes late   You can choose to have federal income tax withheld from your unemployment compensation. Filing 2011 taxes late To make this choice, complete Form W-4V, Voluntary Withholding Request, and give it to the paying office. Filing 2011 taxes late Tax will be withheld at 10% of your payment. Filing 2011 taxes late    If you do not choose to have tax withheld from your unemployment compensation, you may be liable for estimated tax. Filing 2011 taxes late If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Filing 2011 taxes late For more information on estimated tax, see chapter 4. Filing 2011 taxes late Supplemental unemployment benefits. Filing 2011 taxes late   Benefits received from an employer-financed fund (to which the employees did not contribute) are not unemployment compensation. Filing 2011 taxes late They are taxable as wages and are subject to withholding for income tax. Filing 2011 taxes late They may be subject to social security and Medicare taxes. Filing 2011 taxes late For more information, see Supplemental Unemployment Benefits in section 5 of Publication 15-A, Employer's Supplemental Tax Guide. Filing 2011 taxes late Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Filing 2011 taxes late Repayment of benefits. Filing 2011 taxes late   You may have to repay some of your supplemental unemployment benefits to qualify for trade readjustment allowances under the Trade Act of 1974. Filing 2011 taxes late If you repay supplemental unemployment benefits in the same year you receive them, reduce the total benefits by the amount you repay. Filing 2011 taxes late If you repay the benefits in a later year, you must include the full amount of the benefits received in your income for the year you received them. Filing 2011 taxes late   Deduct the repayment in the later year as an adjustment to gross income on Form 1040. Filing 2011 taxes late (You cannot use Form 1040A or Form 1040EZ. Filing 2011 taxes late ) Include the repayment on Form 1040, line 36, and enter “Sub-Pay TRA” and the amount on the dotted line next to line 36. Filing 2011 taxes late If the amount you repay in a later year is more than $3,000, you may be able to take a credit against your tax for the later year instead of deducting the amount repaid. Filing 2011 taxes late For more information on this, see Repayments , earlier. Filing 2011 taxes late Private unemployment fund. Filing 2011 taxes late   Unemployment benefit payments from a private (nonunion) fund to which you voluntarily contribute are taxable only if the amounts you receive are more than your total payments into the fund. Filing 2011 taxes late Report the taxable amount on Form 1040, line 21. Filing 2011 taxes late Payments by a union. Filing 2011 taxes late   Benefits paid to you as an unemployed member of a union from regular union dues are included in your income on Form 1040, line 21. Filing 2011 taxes late However, if you contribute to a special union fund and your payments to the fund are not deductible, the unemployment benefits you receive from the fund are includible in your income only to the extent they are more than your contributions. Filing 2011 taxes late Guaranteed annual wage. Filing 2011 taxes late   Payments you receive from your employer during periods of unemployment, under a union agreement that guarantees you full pay during the year, are taxable as wages. Filing 2011 taxes late Include them on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Filing 2011 taxes late State employees. Filing 2011 taxes late   Payments similar to a state's unemployment compensation may be made by the state to its employees who are not covered by the state's unemployment compensation law. Filing 2011 taxes late Although the payments are fully taxable, do not report them as unemployment compensation. Filing 2011 taxes late Report these payments on Form 1040, line 21. Filing 2011 taxes late Welfare and Other Public Assistance Benefits Do not include in your income governmental benefit payments from a public welfare fund based upon need, such as payments to blind individuals under a state public assistance law. Filing 2011 taxes late Payments from a state fund for the victims of crime should not be included in the victims' incomes if they are in the nature of welfare payments. Filing 2011 taxes late Do not deduct medical expenses that are reimbursed by such a fund. Filing 2011 taxes late You must include in your income any welfare payments that are compensation for services or that are obtained fraudulently. Filing 2011 taxes late Reemployment Trade Adjustment Assistance (RTAA) payments. Filing 2011 taxes late   RTAA payments received from a state must be included in your income. Filing 2011 taxes late The state must send you Form 1099-G to advise you of the amount you should include in income. Filing 2011 taxes late The amount should be reported on Form 1040, line 21. Filing 2011 taxes late Persons with disabilities. Filing 2011 taxes late   If you have a disability, you must include in income compensation you receive for services you perform unless the compensation is otherwise excluded. Filing 2011 taxes late However, you do not include in income the value of goods, services, and cash that you receive, not in return for your services, but for your training and rehabilitation because you have a disability. Filing 2011 taxes late Excludable amounts include payments for transportation and attendant care, such as interpreter services for the deaf, reader services for the blind, and services to help individuals with an intellectual disability do their work. Filing 2011 taxes late Disaster relief grants. Filing 2011 taxes late    Do not include post-disaster grants received under the Robert T. Filing 2011 taxes late Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, child care, or funeral expenses. Filing 2011 taxes late Do not deduct casualty losses or medical expenses that are specifically reimbursed by these disaster relief grants. Filing 2011 taxes late If you have deducted a casualty loss for the loss of your personal residence and you later receive a disaster relief grant for the loss of the same residence, you may have to include part or all of the grant in your taxable income. Filing 2011 taxes late See Recoveries , earlier. Filing 2011 taxes late Unemployment assistance payments under the Act are taxable unemployment compensation. Filing 2011 taxes late See Unemployment compensation under Unemployment Benefits, earlier. Filing 2011 taxes late Disaster relief payments. Filing 2011 taxes late   You can exclude from income any amount you receive that is a qualified disaster relief payment. Filing 2011 taxes late A qualified disaster relief payment is an amount paid to you: To reimburse or pay reasonable and necessary personal, family, living, or funeral expenses that result from a qualified disaster; To reimburse or pay reasonable and necessary expenses incurred for the repair or rehabilitation of your home or repair or replacement of its contents to the extent it is due to a qualified disaster; By a person engaged in the furnishing or sale of transportation as a common carrier because of the death or personal physical injuries incurred as a result of a qualified disaster; or By a federal, state, or local government, or agency, or instrumentality in connection with a qualified disaster in order to promote the general welfare. Filing 2011 taxes late You can exclude this amount only to the extent any expense it pays for is not paid for by insurance or otherwise. Filing 2011 taxes late The exclusion does not apply if you were a participant or conspirator in a terrorist action or a representative of one. Filing 2011 taxes late   A qualified disaster is: A disaster which results from a terrorist or military action; A federally declared disaster; or A disaster which results from an accident involving a common carrier, or from any other event, which is determined to be catastrophic by the Secretary of the Treasury or his or her delegate. Filing 2011 taxes late   For amounts paid under item (4), a disaster is qualified if it is determined by an applicable federal, state, or local authority to warrant assistance from the federal, state, or local government, agency, or instrumentality. Filing 2011 taxes late Disaster mitigation payments. Filing 2011 taxes late   You also can exclude from income any amount you receive that is a qualified disaster mitigation payment. Filing 2011 taxes late Qualified disaster mitigation payments are also most commonly paid to you in the period immediately following damage to property as a result of a natural disaster. Filing 2011 taxes late However, disaster mitigation payments are used to mitigate (reduce the severity of) potential damage from future natural disasters. Filing 2011 taxes late They are paid to you through state and local governments based on the provisions of the Robert T. Filing 2011 taxes late Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act. Filing 2011 taxes late   You cannot increase the basis or adjusted basis of your property for improvements made with nontaxable disaster mitigation payments. Filing 2011 taxes late Home Affordable Modification Program (HAMP). Filing 2011 taxes late   If you benefit from Pay-for-Performance Success Payments under HAMP, the payments are not taxable. Filing 2011 taxes late Mortgage assistance payments under section 235 of the National Housing Act. Filing 2011 taxes late   Payments made under section 235 of the National Housing Act for mortgage assistance are not included in the homeowner's income. Filing 2011 taxes late Interest paid for the homeowner under the mortgage assistance program cannot be deducted. Filing 2011 taxes late Medicare. Filing 2011 taxes late   Medicare benefits received under title XVIII of the Social Security Act are not includible in the gross income of the individuals for whom they are paid. Filing 2011 taxes late This includes basic (part A (Hospital Insurance Benefits for the Aged)) and supplementary (part B (Supplementary Medical Insurance Benefits for the Aged)). Filing 2011 taxes late Old-age, survivors, and disability insurance benefits (OASDI). Filing 2011 taxes late   Generally, OASDI payments under section 202 of title II of the Social Security Act are not includible in the gross income of the individuals to whom they are paid. Filing 2011 taxes late This applies to old-age insurance benefits, and insurance benefits for wives, husbands, children, widows, widowers, mothers and fathers, and parents, as well as the lump-sum death payment. Filing 2011 taxes late Nutrition Program for the Elderly. Filing 2011 taxes late    Food benefits you receive under the Nutrition Program for the Elderly are not taxable. Filing 2011 taxes late If you prepare and serve free meals for the program, include in your income as wages the cash pay you receive, even if you are also eligible for food benefits. Filing 2011 taxes late Payments to reduce cost of winter energy. Filing 2011 taxes late   Payments made by a state to qualified people to reduce their cost of winter energy use are not taxable. Filing 2011 taxes late Other Income The following brief discussions are arranged in alphabetical order. Filing 2011 taxes late Other income items briefly discussed below are referenced to publications which provide more topical information. Filing 2011 taxes late Activity not for profit. Filing 2011 taxes late   You must include on your return income from an activity from which you do not expect to make a profit. Filing 2011 taxes late An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. Filing 2011 taxes late Enter this income on Form 1040, line 21. Filing 2011 taxes late Deductions for expenses related to the activity are limited. Filing 2011 taxes late They cannot total more than the income you report and can be taken only if you itemize deductions on Schedule A (Form 1040). Filing 2011 taxes late See Not-for-Profit Activities in chapter 1 of Publication 535 for information on whether an activity is considered carried on for a profit. Filing 2011 taxes late Alaska Permanent Fund dividend. Filing 2011 taxes late   If you received a payment from Alaska's mineral income fund (Alaska Permanent Fund dividend), report it as income on line 21 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Filing 2011 taxes late The state of Alaska sends each recipient a document that shows the amount of the payment with the check. Filing 2011 taxes late The amount also is reported to IRS. Filing 2011 taxes late Alimony. Filing 2011 taxes late   Include in your income on Form 1040, line 11, any alimony payments you receive. Filing 2011 taxes late Amounts you receive for child support are not income to you. Filing 2011 taxes late Alimony and child support payments are discussed in chapter 18. Filing 2011 taxes late Bribes. Filing 2011 taxes late   If you receive a bribe, include it in your income. Filing 2011 taxes late Campaign contributions. Filing 2011 taxes late   These contributions are not income to a candidate unless they are diverted to his or her personal use. Filing 2011 taxes late To be exempt from tax, the contributions must be spent for campaign purposes or kept in a fund for use in future campaigns. Filing 2011 taxes late However, interest earned on bank deposits, dividends received on contributed securities, and net gains realized on sales of contributed securities are taxable and must be reported on Form 1120-POL, U. Filing 2011 taxes late S. Filing 2011 taxes late Income Tax Return for Certain Political Organizations. Filing 2011 taxes late Excess campaign funds transferred to an office account must be included in the officeholder's income on Form 1040, line 21, in the year transferred. Filing 2011 taxes late Car pools. Filing 2011 taxes late   Do not include in your income amounts you receive from the passengers for driving a car in a car pool to and from work. Filing 2011 taxes late These amounts are considered reimbursement for your expenses. Filing 2011 taxes late However, this rule does not apply if you have developed car pool arrangements into a profit-making business of transporting workers for hire. Filing 2011 taxes late Cash rebates. Filing 2011 taxes late   A cash rebate you receive from a dealer or manufacturer of an item you buy is not income, but you must reduce your basis by the amount of the rebate. Filing 2011 taxes late Example. Filing 2011 taxes late You buy a new car for $24,000 cash and receive a $2,000 rebate check from the manufacturer. Filing 2011 taxes late The $2,000 is not income to you. Filing 2011 taxes late Your basis in the car is $22,000. Filing 2011 taxes late This is the basis on which you figure gain or loss if you sell the car and depreciation if you use it for business. Filing 2011 taxes late Casualty insurance and other reimbursements. Filing 2011 taxes late   You generally should not report these reimbursements on your return unless you are figuring gain or loss from the casualty or theft. Filing 2011 taxes late See chapter 25 for more information. Filing 2011 taxes late Child support payments. Filing 2011 taxes late   You should not report these payments on your return. Filing 2011 taxes late See chapter 18 for more information. Filing 2011 taxes late Court awards and damages. Filing 2011 taxes late   To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. Filing 2011 taxes late The character of the income as ordinary income or capital gain depends on the nature of the underlying claim. Filing 2011 taxes late Include the following as ordinary income. Filing 2011 taxes late Interest on any award. Filing 2011 taxes late Compensation for lost wages or lost profits in most cases. Filing 2011 taxes late Punitive damages, in most cases. Filing 2011 taxes late It does not matter if they relate to a physical injury or physical sickness. Filing 2011 taxes late Amounts received in settlement of pension rights (if you did not contribute to the plan). Filing 2011 taxes late Damages for: Patent or copyright infringement, Breach of contract, or Interference with business operations. Filing 2011 taxes late Back pay and damages for emotional distress received to satisfy a claim under title VII of the Civil Rights Act of 1964. Filing 2011 taxes late Attorney fees and costs (including contingent fees) where the underlying recovery is included in gross income. Filing 2011 taxes late   Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments). Filing 2011 taxes late Emotional distress. Filing 2011 taxes late   Emotional distress itself is not a physical injury or physical sickness, but damages you receive for emotional distress due to a physical injury or sickness are treated as received for the physical injury or sickness. Filing 2011 taxes late Do not include them in your income. Filing 2011 taxes late   If the emotional distress is due to a personal injury that is not due to a physical injury or sickness (for example, employment discrimination or injury to reputation), you must include the damages in your income, except for any damages you receive for medical care due to that emotional distress. Filing 2011 taxes late Emotional distress includes physical symptoms that result from emotional distress, such as headaches, insomnia, and stomach disorders. Filing 2011 taxes late Deduction for costs involved in unlawful discrimination suits. Filing 2011 taxes late   You may be able to deduct attorney fees and court costs paid to recover a judgment or settlement for a claim of unlawful discrimination under various provisions of federal, state, and local law listed in Internal Revenue Code section 62(e), a claim against the United States government, or a claim under section 1862(b)(3)(A) of the Social Security Act. Filing 2011 taxes late For more information, see Publication 525. Filing 2011 taxes late Credit card insurance. Filing 2011 taxes late   In most cases, if you receive benefits under a credit card disability or unemployment insurance plan, the benefits are taxable to you. Filing 2011 taxes late These plans make the minimum monthly payment on your credit card account if you cannot make the payment due to injury, illness, disability, or unemployment. Filing 2011 taxes late Report on Form 1040, line 21, the amount of benefits you received during the year that is more than the amount of the premiums you paid during the year. Filing 2011 taxes late Down payment assistance. Filing 2011 taxes late   If you purchase a home and receive assistance from a nonprofit corporation to make the down payment, that assistance is not included in your income. Filing 2011 taxes late If the corporation qualifies as a tax-exempt charitable organization, the assistance is treated as a gift and is included in your basis of the house. Filing 2011 taxes late If the corporation does not qualify, the assistance is treated as a rebate or reduction of the purchase price and is not included in your basis. Filing 2011 taxes late Employment agency fees. Filing 2011 taxes late   If you get a job through an employment agency, and the fee is paid by your employer, the fee is not includible in your income if you are not liable for it. Filing 2011 taxes late However, if you pay it and your employer reimburses you for it, it is includible in your income. Filing 2011 taxes late Energy conservation subsidies. Filing 2011 taxes late   You can exclude from gross income any subsidy provided, either directly or indirectly, by public utilities for the purchase or installation of an energy conservation measure for a dwelling unit. Filing 2011 taxes late Energy conservation measure. Filing 2011 taxes late   This includes installations or modifications that are primarily designed to reduce consumption of electricity or natural gas, or improve the management of energy demand. Filing 2011 taxes late Dwelling unit. Filing 2011 taxes late   This includes a house, apartment, condominium, mobile home, boat, or similar property. Filing 2011 taxes late If a building or structure contains both dwelling and other units, any subsidy must be properly allocated. Filing 2011 taxes late Estate and trust income. Filing 2011 taxes late    An estate or trust, unlike a partnership, may have to pay federal income tax. Filing 2011 taxes late If you are a beneficiary of an estate or trust, you may be taxed on your share of its income distributed or required to be distributed to you. Filing 2011 taxes late However, there is never a double tax. Filing 2011 taxes late Estates and trusts file their returns on Form 1041, U. Filing 2011 taxes late S. Filing 2011 taxes late Income Tax Return for Estates and Trusts, and your share of the income is reported to you on Schedule K-1 (Form 1041). Filing 2011 taxes late Current income required to be distributed. Filing 2011 taxes late   If you are the beneficiary of an estate or trust that must distribute all of its current income, you must report your share of the distributable net income, whether or not you actually received it. Filing 2011 taxes late Current income not required to be distributed. Filing 2011 taxes late    If you are the beneficiary of an estate or trust and the fiduciary has the choice of whether to distribute all or part of the current income, you must report: All income that is required to be distributed to you, whether or not it is actually distributed, plus All other amounts actually paid or credited to you, up to the amount of your share of distributable net income. Filing 2011 taxes late How to report. Filing 2011 taxes late   Treat each item of income the same way that the estate or trust would treat it. Filing 2011 taxes late For example, if a trust's dividend income is distributed to you, you report the distribution as dividend income on your return. Filing 2011 taxes late The same rule applies to distributions of tax-exempt interest and capital gains. Filing 2011 taxes late   The fiduciary of the estate or trust must tell you the type of items making up your share of the estate or trust income and any credits you are allowed on your individual income tax return. Filing 2011 taxes late Losses. Filing 2011 taxes late   Losses of estates and trusts generally are not deductible by the beneficiaries. Filing 2011 taxes late Grantor trust. Filing 2011 taxes late   Income earned by a grantor trust is taxable to the grantor, not the beneficiary, if the grantor keeps certain control over the trust. Filing 2011 taxes late (The grantor is the one who transferred property to the trust. Filing 2011 taxes late ) This rule applies if the property (or income from the property) put into the trust will or may revert (be returned) to the grantor or the grantor's spouse. Filing 2011 taxes late   Generally, a trust is a grantor trust if the grantor has a reversionary interest valued (at the date of transfer) at more than 5% of the value of the transferred property. Filing 2011 taxes late Expenses paid by another. Filing 2011 taxes late   If your personal expenses are paid for by another person, such as a corporation, the payment may be taxable to you depending upon your relationship with that person and the nature of the payment. Filing 2011 taxes late But if the payment makes up for a loss caused by that person, and only restores you to the position you were in before the loss, the payment is not includible in your income. Filing 2011 taxes late Fees for services. Filing 2011 taxes late   Include all fees for your services in your income. Filing 2011 taxes late Examples of these fees are amounts you receive for services you perform as: A corporate director, An executor, administrator, or personal representative of an estate, A manager of a trade or business you operated before declaring Chapter 11 bankruptcy, A notary public, or An election precinct official. Filing 2011 taxes late Nonemployee compensation. Filing 2011 taxes late   If you are not an employee and the fees for your services from the same payer total $600 or more for the year, you may receive a Form 1099-MISC. Filing 2011 taxes late You may need to report your fees as self-employment income. Filing 2011 taxes late See Self-Employed Persons , in chapter 1, for a discussion of when you are considered self-employed. Filing 2011 taxes late Corporate director. Filing 2011 taxes late   Corporate director fees are self-employment income. Filing 2011 taxes late Report these payments on Schedule C or Schedule C-EZ (Form 1040). Filing 2011 taxes late Personal representatives. Filing 2011 taxes late   All personal representatives must include in their gross income fees paid to them from an estate. Filing 2011 taxes late If you are not in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on Form 1040, line 21. Filing 2011 taxes late If you are in the trade or business of being an executor, report these fees as self-employment income on Schedule C or Schedule C-EZ (Form 1040). Filing 2011 taxes late The fee is not includible in income if it is waived. Filing 2011 taxes late Manager of trade or business for bankruptcy estate. Filing 2011 taxes late   Include in your income all payments received from your bankruptcy estate for managing or operating a trade or business that you operated before you filed for bankruptcy. Filing 2011 taxes late Report this income on Form 1040, line 21. Filing 2011 taxes late Notary public. Filing 2011 taxes late    Report payments for these services on Schedule C or Schedule C-EZ (Form 1040). Filing 2011 taxes late These payments are not subject to self-employment tax. Filing 2011 taxes late See the separate instructions for Schedule SE (Form 1040) for details. Filing 2011 taxes late Election precinct official. Filing 2011 taxes late    You should receive a Form W-2 showing payments for services performed as an election official or election worker. Filing 2011 taxes late Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Filing 2011 taxes late Foster care providers. Filing 2011 taxes late   Payments you receive from a state, political subdivision, or a qualified foster care placement agency for providing care to qualified foster individuals in your home generally are not included in your income. Filing 2011 taxes late However, you must include in your income payments received for the care of more than 5 individuals age 19 or older and certain difficulty-of-care payments. Filing 2011 taxes late   A qualified foster individual is a person who: Is living in a foster family home, and Was placed there by: An agency of a state or one of its political subdivisions, or A qualified foster care placement agency. Filing 2011 taxes late Difficulty-of-care payments. Filing 2011 taxes late   These are additional payments that are designated by the payer as compensation for providing the additional care that is required for physically, mentally, or emotionally handicapped qualified foster individuals. Filing 2011 taxes late A state must determine that the additional compensation is needed, and the care for which the payments are made must be provided in your home. Filing 2011 taxes late   You must include in your income difficulty-of-care payments received for more than: 10 qualified foster individuals under age 19, or 5 qualified foster individuals age 19 or older. Filing 2011 taxes late Maintaining space in home. Filing 2011 taxes late   If you are paid to maintain space in your home for emergency foster care, you must include the payment in your income. Filing 2011 taxes late Reporting taxable payments. Filing 2011 taxes late    If you receive payments that you must include in your income, you are in business as a foster care provider and you are self-employed. Filing 2011 taxes late Report the payments on Schedule C or Schedule C-EZ (Form 1040). Filing 2011 taxes late See Publication 587, Business Use of Your Home, to help you determine the amount you can deduct for the use of your home. Filing 2011 taxes late Found property. Filing 2011 taxes late   If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession. Filing 2011 taxes late Free tour. Filing 2011 taxes late   If you received a free tour from a travel agency for organizing a group of tourists, you must include its value in your income. Filing 2011 taxes late Report the fair market value of the tour on Form 1040, line 21, if you are not in the trade or business of organizing tours. Filing 2011 taxes late You cannot deduct your expenses in serving as the voluntary leader of the group at the group's request. Filing 2011 taxes late If you organize tours as a trade or business, report the tour's value on Schedule C or Schedule C-EZ (Form 1040). Filing 2011 taxes late Gambling winnings. Filing 2011 taxes late   You must include your gambling winnings in income on Form 1040, line 21. Filing 2011 taxes late If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings. Filing 2011 taxes late Lotteries and raffles. Filing 2011 taxes late   Winnings from lotteries and raffles are gambling winnings. Filing 2011 taxes late In addition to cash winnings, you must include in your income the fair market value of bonds, cars, houses, and other noncash prizes. Filing 2011 taxes late    If you win a state lottery prize payable in installments, see Publication 525 for more information. Filing 2011 taxes late Form W-2G. Filing 2011 taxes late   You may have received a Form W-2G, Certain Gambling Winnings, showing the amount of your gambling winnings and any tax taken out of them. Filing 2011 taxes late Include the amount from box 1 on Form 1040, line 21. Filing 2011 taxes late Include the amount shown in box 4 on Form 1040, line 62, as federal income tax withheld. Filing 2011 taxes late Reporting winnings and recordkeeping. Filing 2011 taxes late   For more information on reporting gam
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American Job Center Resources APIs
American Job Center partners with O'Net to provide a variety of APIs that are useful for jobseekers.
Style: RESTful APIs
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BusinessUSA Resource Access API
BusinessUSA connects businesses to government services and information. The API provides access to resource abstracts including programs, services, data, events, and more.
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Citizen Topics API
This API lists the topics that we use to organize content on USA.gov. You can access it via the /tags call to the Social Media Registry.
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DigitalGov Search API (formerly USASearch)
Provides DigitalGov Search customers with results. This API is only available for use on official government websites. Sign in is required.
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Federal Agency Directory API
This API contains directory information about federal agencies, such as contact methods, in English and Spanish.
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Go.USA.gov API
Go.USA.gov is a URL shortener for government employees. The API can shorten, preview, and show clicks on short URLs.
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Government Jobs API
This API returns job openings across the federal government and includes all current openings posted on USAJobs.gov that are open to the public and located in the United States. It also includes some state and local government jobs.
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MyUSA APIs
Project MyUSA re-imagines how citizens interact with government. Use the MyUSA API to build apps that integrate with MyUSA.
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Product Recall Data API
This API returns food recalls from FoodSafety.gov, car recalls from the National Highway Traffic Safety Administration, and product safety recalls from the Consumer Product Safety Commission.
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Social Media Registry API
The Social Media Registry is an official source of information about federal government social media accounts.
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Data Feeds

1.USA.gov Data
1.USA.gov URLs are created whenever anyone shortens a .gov or .mil URL using bitly.
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Frequently Asked Questions XML
The contents of our frequently asked questions are available in English and Spanish.
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List of Non-.gov URLs in Our Search
We search across all federal, state, local, tribal, and territorial government websites. Most government websites end in .gov or .mil, but many do not. This is a list of all government URLs that do not end in .gov or .mil.
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The Filing 2011 Taxes Late

Filing 2011 taxes late 23. Filing 2011 taxes late   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. Filing 2011 taxes late Mortgage proceeds used for business or investment. Filing 2011 taxes late Introduction This chapter discusses what interest expenses you can deduct. Filing 2011 taxes late Interest is the amount you pay for the use of borrowed money. Filing 2011 taxes late The following are types of interest you can deduct as itemized deductions on Schedule A (Form 1040). Filing 2011 taxes late Home mortgage interest, including certain points and mortgage insurance premiums. Filing 2011 taxes late Investment interest. Filing 2011 taxes late This chapter explains these deductions. Filing 2011 taxes late It also explains where to deduct other types of interest and lists some types of interest you cannot deduct. Filing 2011 taxes late Use Table 23-1 to find out where to get more information on various types of interest, including investment interest. Filing 2011 taxes late 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). Filing 2011 taxes late The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan. Filing 2011 taxes late You can deduct home mortgage interest if all the following conditions are met. Filing 2011 taxes late You file Form 1040 and itemize deductions on Schedule A (Form 1040). Filing 2011 taxes late The mortgage is a secured debt on a qualified home in which you have an ownership interest. Filing 2011 taxes late (Generally, your mortgage is a secured debt if you put your home up as collateral to protect the interest of the lender. Filing 2011 taxes late The term “qualified home” means your main home or second home. Filing 2011 taxes late For details, see Publication 936. Filing 2011 taxes late )  Both you and the lender must intend that the loan be repaid. Filing 2011 taxes late Amount Deductible In most cases, you can deduct all of your home mortgage interest. Filing 2011 taxes late How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. Filing 2011 taxes late Fully deductible interest. Filing 2011 taxes late   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. Filing 2011 taxes late (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. Filing 2011 taxes late )   The three categories are as follows: Mortgages you took out on or before October 13, 1987 (called grandfathered debt). Filing 2011 taxes late 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). Filing 2011 taxes late 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). Filing 2011 taxes late The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home. Filing 2011 taxes late   See Part II of Publication 936 for more detailed definitions of grandfathered, home acquisition, and home equity debt. Filing 2011 taxes late    You can use Figure 23-A to check whether your home mortgage interest is fully deductible. Filing 2011 taxes late Figure 23-A. Filing 2011 taxes late Is My Home Mortgage Interest Fully Deductible? Please click here for the text description of the image. Filing 2011 taxes late Figure 23-A. Filing 2011 taxes late Is My Interest Fully Deductible? Limits on deduction. Filing 2011 taxes late   You cannot fully deduct interest on a mortgage that does not fit into any of the three categories listed earlier. Filing 2011 taxes late If this applies to you, see Part II of Publication 936 to figure the amount of interest you can deduct. Filing 2011 taxes late Special Situations This section describes certain items that can be included as home mortgage interest and others that cannot. Filing 2011 taxes late It also describes certain special situations that may affect your deduction. Filing 2011 taxes late Late payment charge on mortgage payment. Filing 2011 taxes late   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. Filing 2011 taxes late Mortgage prepayment penalty. Filing 2011 taxes late   If you pay off your home mortgage early, you may have to pay a penalty. Filing 2011 taxes late 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. Filing 2011 taxes late Sale of home. Filing 2011 taxes late   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. Filing 2011 taxes late Example. Filing 2011 taxes late John and Peggy Harris sold their home on May 7. Filing 2011 taxes late Through April 30, they made home mortgage interest payments of $1,220. Filing 2011 taxes late 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. Filing 2011 taxes late Their mortgage interest deduction is $1,270 ($1,220 + $50). Filing 2011 taxes late Prepaid interest. Filing 2011 taxes late   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. Filing 2011 taxes late You can deduct in each year only the interest that qualifies as home mortgage interest for that year. Filing 2011 taxes late However, there is an exception that applies to points, discussed later. Filing 2011 taxes late Mortgage interest credit. Filing 2011 taxes late   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. Filing 2011 taxes late Figure the credit on Form 8396, Mortgage Interest Credit. Filing 2011 taxes late If you take this credit, you must reduce your mortgage interest deduction by the amount of the credit. Filing 2011 taxes late   For more information on the credit, see chapter 37. Filing 2011 taxes late Ministers' and military housing allowance. Filing 2011 taxes late   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. Filing 2011 taxes late Hardest Hit Fund and Emergency Homeowners' Loan Programs. Filing 2011 taxes late   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. Filing 2011 taxes late 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. Filing 2011 taxes late 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. Filing 2011 taxes late 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). Filing 2011 taxes late 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. Filing 2011 taxes late Mortgage assistance payments under section 235 of the National Housing Act. Filing 2011 taxes late   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. Filing 2011 taxes late You cannot deduct the interest that is paid for you. Filing 2011 taxes late No other effect on taxes. Filing 2011 taxes late   Do not include these mortgage assistance payments in your income. Filing 2011 taxes late Also, do not use these payments to reduce other deductions, such as real estate taxes. Filing 2011 taxes late Divorced or separated individuals. Filing 2011 taxes late   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. Filing 2011 taxes late See the discussion of Payments for jointly-owned home in chapter 18. Filing 2011 taxes late Redeemable ground rents. Filing 2011 taxes late   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. Filing 2011 taxes late   Payments made to end the lease and to buy the lessor's entire interest in the land are not deductible as mortgage interest. Filing 2011 taxes late For more information, see Publication 936. Filing 2011 taxes late Nonredeemable ground rents. Filing 2011 taxes late   Payments on a nonredeemable ground rent are not mortgage interest. Filing 2011 taxes late You can deduct them as rent if they are a business expense or if they are for rental property. Filing 2011 taxes late Reverse mortgages. Filing 2011 taxes late   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. Filing 2011 taxes late With a reverse mortgage, you retain title to your home. Filing 2011 taxes late 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. Filing 2011 taxes late Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable. Filing 2011 taxes late Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until the loan is paid in full. Filing 2011 taxes late Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt discussed in Publication 936. Filing 2011 taxes late Rental payments. Filing 2011 taxes late   If you live in a house before final settlement on the purchase, any payments you make for that period are rent and not interest. Filing 2011 taxes late This is true even if the settlement papers call them interest. Filing 2011 taxes late You cannot deduct these payments as home mortgage interest. Filing 2011 taxes late Mortgage proceeds invested in tax-exempt securities. Filing 2011 taxes late   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. Filing 2011 taxes late “Grandfathered debt” and “home equity debt” are defined earlier under Amount Deductible. Filing 2011 taxes late Refunds of interest. Filing 2011 taxes late   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. Filing 2011 taxes late 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. Filing 2011 taxes late However, you need to include it only up to the amount of the deduction that reduced your tax in the earlier year. Filing 2011 taxes late This is true whether the interest overcharge was refunded to you or was used to reduce the outstanding principal on your mortgage. Filing 2011 taxes late    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. Filing 2011 taxes late For information about Form 1098, see Form 1098, Mortgage Interest Statement , later. Filing 2011 taxes late   For more information on how to treat refunds of interest deducted in earlier years, see Recoveries in chapter 12. Filing 2011 taxes late Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Filing 2011 taxes late Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. Filing 2011 taxes late A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. Filing 2011 taxes late See Points paid by the seller , later. Filing 2011 taxes late General Rule You generally cannot deduct the full amount of points in the year paid. Filing 2011 taxes late Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. Filing 2011 taxes late See Deduction Allowed Ratably , next. Filing 2011 taxes late For exceptions to the general rule, see Deduction Allowed in Year Paid , later. Filing 2011 taxes late 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. Filing 2011 taxes late You use the cash method of accounting. Filing 2011 taxes late This means you report income in the year you receive it and deduct expenses in the year you pay them. Filing 2011 taxes late Most individuals use this method. Filing 2011 taxes late Your loan is secured by a home. Filing 2011 taxes late (The home does not need to be your main home. Filing 2011 taxes late ) Your loan period is not more than 30 years. Filing 2011 taxes late 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. Filing 2011 taxes late 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. Filing 2011 taxes late Deduction Allowed in Year Paid You can fully deduct points in the year paid if you meet all the following tests. Filing 2011 taxes late (You can use Figure 23-B as a quick guide to see whether your points are fully deductible in the year paid. Filing 2011 taxes late ) Your loan is secured by your main home. Filing 2011 taxes late (Your main home is the one you ordinarily live in most of the time. Filing 2011 taxes late ) Paying points is an established business practice in the area where the loan was made. Filing 2011 taxes late The points paid were not more than the points generally charged in that area. Filing 2011 taxes late You use the cash method of accounting. Filing 2011 taxes late This means you report income in the year you receive it and deduct expenses in the year you pay them. Filing 2011 taxes late (If you want more information about this method, see Accounting Methods in chapter 1. Filing 2011 taxes late ) 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. Filing 2011 taxes late The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. Filing 2011 taxes late The funds you provided are not required to have been applied to the points. Filing 2011 taxes late They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Filing 2011 taxes late You cannot have borrowed these funds from your lender or mortgage broker. Filing 2011 taxes late You use your loan to buy or build your main home. Filing 2011 taxes late The points were computed as a percentage of the principal amount of the mortgage. Filing 2011 taxes late The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. Filing 2011 taxes late The points may be shown as paid from either your funds or the seller's. Filing 2011 taxes late Figure 23-B. Filing 2011 taxes late Are My Points Fully Deductible This Year? Please click here for the text description of the image. Filing 2011 taxes late Figure 23-B. Filing 2011 taxes late Are My Points Fully Deductible This Year? Note. Filing 2011 taxes late 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. Filing 2011 taxes late Home improvement loan. Filing 2011 taxes late   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. Filing 2011 taxes late Second home. Filing 2011 taxes late You cannot fully deduct in the year paid points you pay on loans secured by your second home. Filing 2011 taxes late You can deduct these points only over the life of the loan. Filing 2011 taxes late Refinancing. Filing 2011 taxes late   Generally, points you pay to refinance a mortgage are not deductible in full in the year you pay them. Filing 2011 taxes late This is true even if the new mortgage is secured by your main home. Filing 2011 taxes late   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. Filing 2011 taxes late You can deduct the rest of the points over the life of the loan. Filing 2011 taxes late Example 1. Filing 2011 taxes late In 1998, Bill Fields got a mortgage to buy a home. Filing 2011 taxes late In 2013, Bill refinanced that mortgage with a 15-year $100,000 mortgage loan. Filing 2011 taxes late The mortgage is secured by his home. Filing 2011 taxes late To get the new loan, he had to pay three points ($3,000). Filing 2011 taxes late 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. Filing 2011 taxes late Bill paid the points out of his private funds, rather than out of the proceeds of the new loan. Filing 2011 taxes late The payment of points is an established practice in the area, and the points charged are not more than the amount generally charged there. Filing 2011 taxes late Bill's first payment on the new loan was due July 1. Filing 2011 taxes late He made six payments on the loan in 2013 and is a cash basis taxpayer. Filing 2011 taxes late Bill used the funds from the new mortgage to repay his existing mortgage. Filing 2011 taxes late 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. Filing 2011 taxes late He cannot deduct all of the points in 2013. Filing 2011 taxes late He can deduct two points ($2,000) ratably over the life of the loan. Filing 2011 taxes late He deducts $67 [($2,000 ÷ 180 months) × 6 payments] of the points in 2013. Filing 2011 taxes late The other point ($1,000) was a fee for services and is not deductible. Filing 2011 taxes late Example 2. Filing 2011 taxes late 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. Filing 2011 taxes late Bill deducts 25% ($25,000 ÷ $100,000) of the points ($2,000) in 2013. Filing 2011 taxes late His deduction is $500 ($2,000 × 25%). Filing 2011 taxes late Bill also deducts the ratable part of the remaining $1,500 ($2,000 − $500) that must be spread over the life of the loan. Filing 2011 taxes late This is $50 [($1,500 ÷ 180 months) × 6 payments] in 2013. Filing 2011 taxes late The total amount Bill deducts in 2013 is $550 ($500 + $50). Filing 2011 taxes late Special Situations This section describes certain special situations that may affect your deduction of points. Filing 2011 taxes late Original issue discount. Filing 2011 taxes late   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. Filing 2011 taxes late This reduction results in original issue discount, which is discussed in chapter 4 of Publication 535. Filing 2011 taxes late Amounts charged for services. Filing 2011 taxes late   Amounts charged by the lender for specific services connected to the loan are not interest. Filing 2011 taxes late Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Filing 2011 taxes late You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Filing 2011 taxes late Points paid by the seller. Filing 2011 taxes late   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Filing 2011 taxes late Treatment by seller. Filing 2011 taxes late   The seller cannot deduct these fees as interest. Filing 2011 taxes late But they are a selling expense that reduces the amount realized by the seller. Filing 2011 taxes late See chapter 15 for information on selling your home. Filing 2011 taxes late Treatment by buyer. Filing 2011 taxes late    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. Filing 2011 taxes late If all the tests under Deduction Allowed in Year Paid , earlier, are met, the buyer can deduct the points in the year paid. Filing 2011 taxes late If any of those tests are not met, the buyer deducts the points over the life of the loan. Filing 2011 taxes late   For information about basis, see chapter 13. Filing 2011 taxes late Funds provided are less than points. Filing 2011 taxes late   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. Filing 2011 taxes late In addition, you can deduct any points paid by the seller. Filing 2011 taxes late Example 1. Filing 2011 taxes late When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Filing 2011 taxes late You meet all the tests for deducting points in the year paid, except the only funds you provided were a $750 down payment. Filing 2011 taxes late Of the $1,000 charged for points, you can deduct $750 in the year paid. Filing 2011 taxes late You spread the remaining $250 over the life of the mortgage. Filing 2011 taxes late Example 2. Filing 2011 taxes late 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. Filing 2011 taxes late In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Filing 2011 taxes late You spread the remaining $250 over the life of the mortgage. Filing 2011 taxes late You must reduce the basis of your home by the $1,000 paid by the seller. Filing 2011 taxes late Excess points. Filing 2011 taxes late   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. Filing 2011 taxes late You must spread any additional points over the life of the mortgage. Filing 2011 taxes late Mortgage ending early. Filing 2011 taxes late   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. Filing 2011 taxes late However, if you refinance the mortgage with the same lender, you cannot deduct any remaining balance of spread points. Filing 2011 taxes late Instead, deduct the remaining balance over the term of the new loan. Filing 2011 taxes late    A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Filing 2011 taxes late Example. Filing 2011 taxes late Dan paid $3,000 in points in 2002 that he had to spread out over the 15-year life of the mortgage. Filing 2011 taxes late He deducts $200 points per year. Filing 2011 taxes late Through 2012, Dan has deducted $2,200 of the points. Filing 2011 taxes late Dan prepaid his mortgage in full in 2013. Filing 2011 taxes late He can deduct the remaining $800 of points in 2013. Filing 2011 taxes late Limits on deduction. Filing 2011 taxes late   You cannot fully deduct points paid on a mortgage unless the mortgage fits into one of the categories listed earlier under Fully deductible interest . Filing 2011 taxes late See Publication 936 for details. Filing 2011 taxes late Mortgage Insurance Premiums You can treat amounts you paid during 2013 for qualified mortgage insurance as home mortgage interest. Filing 2011 taxes late The insurance must be in connection with home acquisition debt and the insurance contract must have been issued after 2006. Filing 2011 taxes late Qualified mortgage insurance. Filing 2011 taxes late   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). Filing 2011 taxes late   Mortgage insurance provided by the Department of Veterans Affairs is commonly known as a funding fee. Filing 2011 taxes late If provided by the Rural Housing Service, it is commonly known as a guarantee fee. Filing 2011 taxes late These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013. Filing 2011 taxes late Contact the mortgage insurance issuer to determine the deductible amount if it is not reported in box 4 of Form 1098. Filing 2011 taxes late Special rules for prepaid mortgage insurance. Filing 2011 taxes late   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. Filing 2011 taxes late 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. Filing 2011 taxes late No deduction is allowed for the unamortized balance if the mortgage is satisfied before its term. Filing 2011 taxes late This paragraph does not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service. Filing 2011 taxes late See the Example below. Filing 2011 taxes late Example. Filing 2011 taxes late Ryan purchased a home in May of 2012 and financed the home with a 15-year mortgage. Filing 2011 taxes late Ryan also prepaid all of the $9,240 in private mortgage insurance required at the time of closing in May. Filing 2011 taxes late 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. Filing 2011 taxes late Ryan's adjusted gross income (AGI) for 2012 is $76,000. Filing 2011 taxes late Ryan can deduct $880 ($9,240 ÷ 84 × 8 months) for qualified mortgage insurance premiums in 2012. Filing 2011 taxes late For 2013, Ryan can deduct $1,320 ($9,240 ÷ 84 × 12 months) if his AGI is $100,000 or less. Filing 2011 taxes late 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). Filing 2011 taxes late Limit on deduction. Filing 2011 taxes late   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. Filing 2011 taxes late 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. Filing 2011 taxes late If your adjusted gross income is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Filing 2011 taxes late 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. Filing 2011 taxes late 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. Filing 2011 taxes late A governmental unit is a person for purposes of furnishing the statement. Filing 2011 taxes late The statement for each year should be sent to you by January 31 of the following year. Filing 2011 taxes late A copy of this form will also be sent to the IRS. Filing 2011 taxes late 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. Filing 2011 taxes late However, it should not show any interest that was paid for you by a government agency. Filing 2011 taxes late As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. Filing 2011 taxes late However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan. Filing 2011 taxes late See Points , earlier, to determine whether you can deduct points not shown on Form 1098. Filing 2011 taxes late Prepaid interest on Form 1098. Filing 2011 taxes late   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. Filing 2011 taxes late However, you cannot deduct the prepaid amount for January 2014 in 2013. Filing 2011 taxes late (See Prepaid interest , earlier. Filing 2011 taxes late ) You will have to figure the interest that accrued for 2014 and subtract it from the amount in box 1. Filing 2011 taxes late You will include the interest for January 2014 with the other interest you pay for 2014. Filing 2011 taxes late See How To Report , later. Filing 2011 taxes late Refunded interest. Filing 2011 taxes late   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. Filing 2011 taxes late See Refunds of interest , earlier. Filing 2011 taxes late Mortgage insurance premiums. Filing 2011 taxes late   The amount of mortgage insurance premiums you paid during 2013 may be shown in box 4 of Form 1098. Filing 2011 taxes late See Mortgage Insurance Premiums, earlier. Filing 2011 taxes late Investment Interest This section discusses interest expenses you may be able to deduct as an investor. Filing 2011 taxes late If you borrow money to buy property you hold for investment, the interest you pay is investment interest. Filing 2011 taxes late You can deduct investment interest subject to the limit discussed later. Filing 2011 taxes late However, you cannot deduct interest you incurred to produce tax-exempt income. Filing 2011 taxes late Nor can you deduct interest expenses on straddles. Filing 2011 taxes late 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. Filing 2011 taxes late 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. Filing 2011 taxes late 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). Filing 2011 taxes late Investment property also includes an interest in a trade or business activity in which you did not materially participate (other than a passive activity). Filing 2011 taxes late Partners, shareholders, and beneficiaries. Filing 2011 taxes late   To determine your investment interest, combine your share of investment interest from a partnership, S corporation, estate, or trust with your other investment interest. Filing 2011 taxes late 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. Filing 2011 taxes late Only the interest expense on the part of the debt used for investment purposes is treated as investment interest. Filing 2011 taxes late The allocation is not affected by the use of property that secures the debt. Filing 2011 taxes late Limit on Deduction Generally, your deduction for investment interest expense is limited to the amount of your net investment income. Filing 2011 taxes late You can carry over the amount of investment interest that you could not deduct because of this limit to the next tax year. Filing 2011 taxes late The interest carried over is treated as investment interest paid or accrued in that next year. Filing 2011 taxes late 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. Filing 2011 taxes late Net Investment Income Determine the amount of your net investment income by subtracting your investment expenses (other than interest expense) from your investment income. Filing 2011 taxes late Investment income. Filing 2011 taxes late    This generally includes your gross income from property held for investment (such as interest, dividends, annuities, and royalties). Filing 2011 taxes late Investment income does not include Alaska Permanent Fund dividends. Filing 2011 taxes late It also does not include qualified dividends or net capital gain unless you choose to include them. Filing 2011 taxes late Choosing to include qualified dividends. Filing 2011 taxes late   Investment income generally does not include qualified dividends, discussed in chapter 8. Filing 2011 taxes late However, you can choose to include all or part of your qualified dividends in investment income. Filing 2011 taxes late   You make this choice by completing Form 4952, line 4g, according to its instructions. Filing 2011 taxes late   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. Filing 2011 taxes late Choosing to include net capital gain. Filing 2011 taxes late   Investment income generally does not include net capital gain from disposing of investment property (including capital gain distributions from mutual funds). Filing 2011 taxes late However, you can choose to include all or part of your net capital gain in investment income. Filing 2011 taxes late    You make this choice by completing Form 4952, line 4g, according to its instructions. Filing 2011 taxes late   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. Filing 2011 taxes late    Before making either choice, consider the overall effect on your tax liability. Filing 2011 taxes late Compare your tax if you make one or both of these choices with your tax if you do not. Filing 2011 taxes late Investment income of child reported on parent's return. Filing 2011 taxes late    Investment income includes the part of your child's interest and dividend income that you choose to report on your return. Filing 2011 taxes late 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. Filing 2011 taxes late Child's qualified dividends. Filing 2011 taxes late   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. Filing 2011 taxes late However, you can choose to include all or part of it in investment income, as explained under Choosing to include qualified dividends , earlier. Filing 2011 taxes late   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). Filing 2011 taxes late Child's Alaska Permanent Fund dividends. Filing 2011 taxes late   If part of the amount you report is your child's Alaska Permanent Fund dividends, that part does not count as investment income. Filing 2011 taxes late 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. Filing 2011 taxes late 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. Filing 2011 taxes late Subtract the result from the amount on Form 8814, line 12. Filing 2011 taxes late Child's capital gain distributions. Filing 2011 taxes late    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. Filing 2011 taxes late However, you can choose to include all or part of it in investment income, as explained in Choosing to include net capital gain , earlier. Filing 2011 taxes late   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). Filing 2011 taxes late Investment expenses. Filing 2011 taxes late   Investment expenses are your allowed deductions (other than interest expense) directly connected with the production of investment income. Filing 2011 taxes late 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. Filing 2011 taxes late Use the smaller of: The investment expenses included on Schedule A (Form 1040), line 23, or The amount on Schedule A, line 27. Filing 2011 taxes late Losses from passive activities. Filing 2011 taxes late   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). Filing 2011 taxes late See Publication 925, Passive Activity and At-Risk Rules, for information about passive activities. Filing 2011 taxes late Form 4952 Use Form 4952, Investment Interest Expense Deduction, to figure your deduction for investment interest. Filing 2011 taxes late Exception to use of Form 4952. Filing 2011 taxes late   You do not have to complete Form 4952 or attach it to your return if you meet all of the following tests. Filing 2011 taxes late Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified dividends. Filing 2011 taxes late You do not have any other deductible investment expenses. Filing 2011 taxes late You have no carryover of investment interest expense from 2012. Filing 2011 taxes late If you meet all of these tests, you can deduct all of your investment interest. Filing 2011 taxes late More Information For more information on investment interest, see Interest Expenses in chapter 3 of Publication 550. Filing 2011 taxes late Items You Cannot Deduct Some interest payments are not deductible. Filing 2011 taxes late Certain expenses similar to interest also are not deductible. Filing 2011 taxes late Nondeductible expenses include the following items. Filing 2011 taxes late Personal interest (discussed later). Filing 2011 taxes late Service charges (however, see Other Expenses (Line 23) in chapter 28). Filing 2011 taxes late Annual fees for credit cards. Filing 2011 taxes late Loan fees. Filing 2011 taxes late Credit investigation fees. Filing 2011 taxes late Interest to purchase or carry tax-exempt securities. Filing 2011 taxes late Penalties. Filing 2011 taxes late   You cannot deduct fines and penalties paid to a government for violations of law, regardless of their nature. Filing 2011 taxes late Personal Interest Personal interest is not deductible. Filing 2011 taxes late Personal interest is any interest that is not home mortgage interest, investment interest, business interest, or other deductible interest. Filing 2011 taxes late It includes the following items. Filing 2011 taxes late Interest on car loans (unless you use the car for business). Filing 2011 taxes late Interest on federal, state, or local income tax. Filing 2011 taxes late Finance charges on credit cards, retail installment contracts, and revolving charge accounts incurred for personal expenses. Filing 2011 taxes late Late payment charges by a public utility. Filing 2011 taxes late You may be able to deduct interest you pay on a qualified student loan. Filing 2011 taxes late For details, see Publication 970, Tax Benefits for Education. Filing 2011 taxes late 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. Filing 2011 taxes late However, you do not have to allocate home mortgage interest if it is fully deductible, regardless of how the funds are used. Filing 2011 taxes late You allocate interest (other than fully deductible home mortgage interest) on a loan in the same way as the loan itself is allocated. Filing 2011 taxes late You do this by tracing disbursements of the debt proceeds to specific uses. Filing 2011 taxes late For details on how to do this, see chapter 4 of Publication 535. Filing 2011 taxes late How To Report You must file Form 1040 to deduct any home mortgage interest expense on your tax return. Filing 2011 taxes late Where you deduct your interest expense generally depends on how you use the loan proceeds. Filing 2011 taxes late See Table 23-1 for a summary of where to deduct your interest expense. Filing 2011 taxes late Home mortgage interest and points. Filing 2011 taxes late   Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. Filing 2011 taxes late 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. Filing 2011 taxes late Attach a statement explaining the difference and print “See attached” next to line 10. Filing 2011 taxes late    Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. Filing 2011 taxes late 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. Filing 2011 taxes late The seller must give you this number and you must give the seller your TIN. Filing 2011 taxes late A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Filing 2011 taxes late Failure to meet any of these requirements may result in a $50 penalty for each failure. Filing 2011 taxes late 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. Filing 2011 taxes late See Social Security Number (SSN) in chapter 1 for more information about TINs. Filing 2011 taxes late    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. Filing 2011 taxes late   Deduct mortgage insurance premiums on Schedule A (Form 1040), line 13. Filing 2011 taxes late More than one borrower. Filing 2011 taxes late   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. Filing 2011 taxes late Show how much of the interest each of you paid, and give the name and address of the person who received the form. Filing 2011 taxes late Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. Filing 2011 taxes late Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13. Filing 2011 taxes late   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. Filing 2011 taxes late You should let each of the other borrowers know what his or her share is. Filing 2011 taxes late Mortgage proceeds used for business or investment. Filing 2011 taxes late    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. Filing 2011 taxes late It shows where to deduct the part of your excess interest that is for those activities. Filing 2011 taxes late Investment interest. Filing 2011 taxes late    Deduct investment interest, subject to certain limits discussed in Publication 550, on Schedule A (Form 1040), line 14. Filing 2011 taxes late Amortization of bond premium. Filing 2011 taxes late   There are various ways to treat the premium you pay to buy taxable bonds. Filing 2011 taxes late See Bond Premium Amortization in Publication 550. Filing 2011 taxes late Income-producing rental or royalty interest. Filing 2011 taxes late   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). Filing 2011 taxes late Example. Filing 2011 taxes late You rent out part of your home and borrow money to make repairs. Filing 2011 taxes late You can deduct only the interest payment for the rented part in Part I of Schedule E (Form 1040). Filing 2011 taxes late Deduct the rest of the interest payment on Schedule A (Form 1040) if it is deductible home mortgage interest. Filing 2011 taxes late Table 23-1. Filing 2011 taxes late Where To Deduct Your Interest Expense IF you have . Filing 2011 taxes late . Filing 2011 taxes late . Filing 2011 taxes late THEN deduct it on . Filing 2011 taxes late . Filing 2011 taxes late . Filing 2011 taxes late AND for more information go to . Filing 2011 taxes late . Filing 2011 taxes late . Filing 2011 taxes late deductible student loan interest Form 1040, line 33, or Form 1040A, line 18 Publication 970. Filing 2011 taxes late deductible home mortgage interest and points reported on Form 1098 Schedule A (Form 1040), line 10 Publication 936. Filing 2011 taxes late deductible home mortgage interest not reported on Form 1098 Schedule A (Form 1040), line 11 Publication 936. Filing 2011 taxes late deductible points not reported on Form 1098 Schedule A (Form 1040), line 12 Publication 936. Filing 2011 taxes late deductible mortgage insurance premiums Schedule A (Form 1040), line 13 Publication 936. Filing 2011 taxes late deductible investment interest (other than incurred to produce rents or royalties) Schedule A (Form 1040), line 14 Publication 550. Filing 2011 taxes late deductible business interest (non-farm) Schedule C or C-EZ (Form 1040) Publication 535. Filing 2011 taxes late deductible farm business interest Schedule F (Form 1040) Publications 225 and 535. Filing 2011 taxes late deductible interest incurred to produce rents or royalties Schedule E (Form 1040) Publications 527 and 535. Filing 2011 taxes late personal interest not deductible. Filing 2011 taxes late Prev  Up  Next   Home   More Online Publications