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Freetaxes Publication 907 - Main Content Table of Contents IncomeDependent Care Benefits Social Security and Railroad Retirement Benefits Disability Pensions Military and Government Disability Pensions Other Payments Itemized DeductionsMedical Expenses Impairment-Related Work Expenses Tax CreditsChild and Dependent Care Credit Credit for the Elderly or the Disabled Earned Income Credit Household Employers Business Tax Incentives How To Get Tax Help Income All income is taxable unless it is specifically excluded by law. Freetaxes The following discussions highlight some income items (both taxable and nontaxable) that are of particular interest to people with disabilities and those who care for people with disabilities. Freetaxes Dependent Care Benefits Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person(s) while you worked, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. Freetaxes Exclusion or deduction. Freetaxes   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Freetaxes Your employer can tell you whether your benefit plan qualifies. Freetaxes To claim the exclusion, you must complete Part III of Form 2441, Child and Dependent Care Expenses. Freetaxes You cannot use Form 1040EZ. Freetaxes   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. Freetaxes Therefore, you would not get an exclusion from wages. Freetaxes Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. Freetaxes To claim the deduction, you must use Form 2441. Freetaxes   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Freetaxes Statement for employee. Freetaxes   Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. Freetaxes Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. Freetaxes Qualifying person(s). Freetaxes   A qualifying person is: A qualifying child who is under age 13 whom you can claim as a dependent. Freetaxes If the child turned 13 during the year, the child is a qualifying person for the part of the year he or she was under age 13. Freetaxes Your disabled spouse who is not physically or mentally able to care for himself or herself. Freetaxes Any disabled person who was not physically or mentally able to care for himself or herself whom you can claim as a dependent (or could claim as a dependent except that the person had gross income of $3,900 or more or filed a joint return). Freetaxes Any disabled person who was not physically or mentally able to care for himself or herself whom you could claim as a dependent except that you (or your spouse if filing jointly) could be claimed as a dependent on another taxpayer's 2013 return. Freetaxes For information about excluding benefits on Form 1040, Form 1040NR, or Form 1040A, see Form 2441 and its instructions. Freetaxes Social Security and Railroad Retirement Benefits If you received social security or equivalent Tier 1 railroad retirement (RRTA) benefits during the year, part of the amount you received may be taxable. Freetaxes Are any of your benefits taxable?   If the only income you received during the year was your social security or equivalent Tier 1 railroad retirement (RRTA) benefits, your benefits generally are not taxable. Freetaxes   If you received income during the year in addition to social security or equivalent Tier 1 railroad retirement (RRTA) benefits, part of your benefits may be taxable if all of your other income, including tax-exempt interest, plus half of your benefits are more than: $25,000 if you are single, head of household, or qualifying widow(er), $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $-0- if you are married filing separately and lived with your spouse at any time during 2013. Freetaxes   For more information, see the instructions for Form 1040, lines 20a and 20b, or Form 1040A, lines 14a and 14b. Freetaxes Publication 915, Social Security and Equivalent Railroad Retirement Benefits, contains more detailed information. Freetaxes Supplemental security income (SSI) payments. Freetaxes   Social security benefits do not include SSI payments, which are not taxable. Freetaxes Do not include these payments in your income. Freetaxes Disability Pensions If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. Freetaxes You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A until you reach minimum retirement age. Freetaxes Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Freetaxes You may be entitled to a tax credit if you were permanently and totally disabled when you retired. Freetaxes For information on this credit, see Publication 524, Credit for the Elderly or the Disabled. Freetaxes Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Freetaxes Report the payments on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Freetaxes For more information on pensions and annuities, see Publication 575, Pension and Annuity Income. Freetaxes Retirement and profit-sharing plans. Freetaxes   If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat the payments as a disability pension. Freetaxes The payments must be reported as a pension or annuity. Freetaxes Accrued leave payment. Freetaxes   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. Freetaxes The payment is not a disability payment. Freetaxes Include it in your income in the tax year you receive it. Freetaxes See Publication 525, Taxable and Nontaxable Income, for more information. Freetaxes Military and Government Disability Pensions Generally, you must report disability pensions as income, but do not include certain military and government disability pensions. Freetaxes For information about military and government disability pensions, see Publication 525. Freetaxes VA disability benefits. Freetaxes   Do not include disability benefits you receive from the Department of Veterans Affairs (VA) in your gross income. Freetaxes If you are a military retiree and do not receive your disability benefits from the VA, see Publication 525 for more information. Freetaxes   Do not include in your income any veterans' benefits paid under any law, regulation, or administrative practice administered by the VA. Freetaxes These include: Education, training, and subsistence allowances, Disability compensation and pension payments for disabilities paid either to veterans or their families, Grants for homes designed for wheelchair living, Grants for motor vehicles for veterans who lost their sight or the use of their limbs, Veterans' insurance proceeds and dividends paid either to veterans or their beneficiaries, including the proceeds of a veteran's endowment policy paid before death, Interest on insurance dividends left on deposit with the VA, Benefits under a dependent-care assistance program, The death gratuity paid to a survivor of a member of the Armed Forces who died after September 10, 2001, or Payments made under the VA's compensated work therapy program. Freetaxes Other Payments You may receive other payments that are related to your disability. Freetaxes The following payments are not taxable. Freetaxes Benefit payments from a public welfare fund, such as payments due to blindness. Freetaxes Workers' compensation for an occupational sickness or injury if paid under a workers' compensation act or similar law. Freetaxes Compensatory (but not punitive) damages for physical injury or physical sickness. Freetaxes Disability benefits under a “no-fault” car insurance policy for loss of income or earning capacity as a result of injuries. Freetaxes Compensation for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement. Freetaxes Long-Term Care Insurance Long-term care insurance contracts generally are treated as accident and health insurance contracts. Freetaxes Amounts you receive from them (other than policyholder dividends or premium refunds) generally are excludable from income as amounts received for personal injury or sickness. Freetaxes More detailed information can be found in Publication 525. Freetaxes Accelerated Death Benefits You can exclude from income accelerated death benefits you receive on the life of an insured individual if certain requirements are met. Freetaxes Accelerated death benefits are amounts received under a life insurance contract before the death of the insured. Freetaxes These benefits also include amounts received on the sale or assignment of the contract to a viatical settlement provider. Freetaxes This exclusion applies only if the insured was a terminally ill individual or a chronically ill individual. Freetaxes For more information, see Publication 525. Freetaxes Itemized Deductions If you file Form 1040, you generally can either claim the standard deduction or itemize your deductions. Freetaxes You must use Schedule A (Form 1040) to itemize your deductions. Freetaxes See your form instructions for information on the standard deduction and the deductions you can itemize. Freetaxes The following discussions highlight some itemized deductions that are of particular interest to persons with disabilities. Freetaxes Medical Expenses When figuring your deduction for medical expenses, you can generally include medical and dental expenses you pay for yourself, your spouse, and your dependents. Freetaxes Medical expenses are the cost of diagnosis, cure, mitigation, treatment, or prevention of disease and the costs for treatments affecting any part or function of the body. Freetaxes They include the costs of equipment, supplies, diagnostic devices, and transportation for needed medical care and payments for medical insurance. Freetaxes You can deduct only the amount of your medical and dental expenses that is more than 10% (7. Freetaxes 5% if either you or your spouse was born before January 2, 1949) of your adjusted gross income shown on Form 1040, line 38. Freetaxes The following list highlights some of the medical expenses you can include in figuring your medical expense deduction. Freetaxes For more detailed information, see Publication 502, Medical and Dental Expenses (Including the Health Coverage Tax Credit). Freetaxes Artificial limbs, contact lenses, eyeglasses, and hearing aids. Freetaxes The part of the cost of Braille books and magazines that is more than the price of regular printed editions. Freetaxes Cost and repair of special telephone equipment for hearing-impaired persons. Freetaxes Cost and maintenance of a wheelchair or a three-wheel motor vehicle commercially known as an “autoette. Freetaxes ” Cost and care of a guide dog or other animal aiding a person with a physical disability. Freetaxes Costs for a school that furnishes special education if a principal reason for using the school is its resources for relieving a mental or physical disability. Freetaxes This includes the cost of teaching Braille and lip reading and the cost of remedial language training to correct a condition caused by a birth defect. Freetaxes Premiums for qualified long-term care insurance, up to certain amounts. Freetaxes Improvements to a home that do not increase its value if the main purpose is medical care. Freetaxes An example is constructing entrance or exit ramps. Freetaxes Improvements that increase a home's value, if the main purpose is medical care, may be partly included as a medical expense. Freetaxes See Publication 502 for more information. Freetaxes Impairment-Related Work Expenses If you are disabled, you can take a business deduction for expenses that are necessary for you to be able to work. Freetaxes If you take a business deduction for these impairment-related work expenses, they are not subject to the 10% (7. Freetaxes 5% if you or your spouse is age 65 or older) limit that applies to medical expenses. Freetaxes You are disabled if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (including, but not limited to, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. Freetaxes Impairment-related expenses defined. Freetaxes   Impairment-related expenses are those ordinary and necessary business expenses that are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. Freetaxes Publication 502 contains more detailed information. Freetaxes Tax Credits This discussion highlights three tax credits that may be of interest to people with disabilities and those who care for people with disabilities. Freetaxes Child and Dependent Care Credit If you pay someone to care for either your dependent under age 13 or your spouse or dependent who is not able to care for himself or herself, you may be able to get a credit of up to 35% of your expenses. Freetaxes To qualify, you must pay these expenses so you can work or look for work. Freetaxes The care must be provided for: Your qualifying child who is your dependent and who was under age 13 when the care was provided, Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Freetaxes You can claim the credit on Form 1040 or 1040A. Freetaxes You cannot claim the credit on Form 1040EZ or Form 1040NR-EZ. Freetaxes You figure the credit on Form 2441. Freetaxes For more information, see the instructions for Form 1040, line 48, or Form 1040A, line 29. Freetaxes Publication 503, Child and Dependent Care Expenses, contains more detailed information. Freetaxes Credit for the Elderly or the Disabled You may be able to claim this credit if you are a U. Freetaxes S. Freetaxes citizen or a resident alien and either of the following apply. Freetaxes You were 65 or older at the end of 2013, You were under 65 at the end of 2013, and retired on permanent or total disability. Freetaxes You can claim the credit on Form 1040 or 1040A. Freetaxes You figure the credit on Schedule R. Freetaxes For more information, see the instructions for Form 1040, line 53, or Form 1040A, line 30. Freetaxes Publication 524, Credit for the Elderly or the Disabled, contains more detailed information. Freetaxes Earned Income Credit This credit is based on the amount of your earned income. Freetaxes You can get the credit if your adjusted gross income for 2013 is less than: $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, or $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children. Freetaxes To figure the credit, use the worksheet in the instructions for Form 1040, 1040A, or 1040EZ. Freetaxes If you have a qualifying child, also complete Schedule EIC, Earned Income Credit, and attach it to your Form 1040 or 1040A. Freetaxes You cannot use Form 1040EZ if you have a qualifying child. Freetaxes Qualifying child. Freetaxes   To be a qualifying child, your child must be younger than you (or your spouse if married filing jointly) and under age 19 or a full-time student under age 24 at the end of 2013, or permanently and totally disabled at any time during 2013, regardless of age. Freetaxes Earned income. Freetaxes   If you are retired on disability, benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. Freetaxes However, payments you received from a disability insurance policy that you paid the premiums for are not earned income. Freetaxes More information. Freetaxes   For more information, including all the requirements to claim the earned income credit, see the instructions for Form 1040, line 64a; Form 1040A, line 38a; or Form 1040EZ, line 8a. Freetaxes Publication 596, Earned Income Credit (EIC), contains more detailed information. Freetaxes Household Employers If you pay someone to work in your home, such as a babysitter or housekeeper, you may be a household employer who has to pay employment taxes. Freetaxes A person you hire through an agency is not your employee if the agency controls what work is done and how it is done. Freetaxes This control could include setting the fee, requiring regular reports, and providing rules of conduct and appearance. Freetaxes In this case you do not have to pay employment taxes on the amount you pay. Freetaxes But if you control what work is done and how it is done, the worker is your employee. Freetaxes If you possess the right to discharge a worker, that worker is generally considered to be your employee. Freetaxes If a worker is your employee, it does not matter that you hired the worker through an agency or from a list provided by an agency. Freetaxes To find out if you have to pay employment taxes, see Publication 926, Household Employer's Tax Guide For Wages Paid in 2013. Freetaxes Business Tax Incentives If you own or operate a business, or you are looking for work, you should be aware of the following tax incentives for businesses to help persons with disabilities. Freetaxes Deduction for costs of removing barriers to the disabled and the elderly—This is a deduction a business can take for making a facility or public transportation vehicle more accessible to and usable by persons who are disabled or elderly. Freetaxes For more information, see chapter 7 of Publication 535, Business Expenses. Freetaxes Disabled access credit—This is a nonrefundable tax credit for an eligible small business that pays or incurs expenses to provide access to persons with disabilities. Freetaxes The expenses must be to enable the eligible small business to comply with the Americans With Disabilities Act of 1990. Freetaxes See Form 8826, Disabled Access Credit, for more information. Freetaxes Work opportunity credit—This credit provides businesses with an incentive to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs. Freetaxes One targeted group consists of vocational rehabilitation referrals. Freetaxes These are individuals who have a physical or mental disability that results in a substantial handicap to employment. Freetaxes See Form 5884, Work Opportunity Credit. Freetaxes How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. Freetaxes Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. Freetaxes Free help with your tax return. Freetaxes   Free help in preparing your return is available nationwide from IRS-certified volunteers. Freetaxes The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. Freetaxes The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Freetaxes Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Freetaxes Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Freetaxes To find the nearest VITA or TCE site, visit IRS. Freetaxes gov or call 1-800-906-9887. Freetaxes   As part of the TCE program, AARP offers the Tax-Aide counseling program. Freetaxes To find the nearest AARP Tax-Aide site, visit AARP's website at www. Freetaxes aarp. Freetaxes org/money/taxaide or call 1-888-227-7669. Freetaxes   For more information on these programs, go to IRS. Freetaxes gov and enter “VITA” in the search box. Freetaxes Internet. Freetaxes IRS. Freetaxes gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. Freetaxes Apply for an Employer Identification Number (EIN). Freetaxes Go to IRS. Freetaxes gov and enter Apply for an EIN in the search box. Freetaxes Request an Electronic Filing PIN by going to IRS. Freetaxes gov and entering Electronic Filing PIN in the search box. Freetaxes Check the status of your 2013 refund with Where's My Refund? Go to IRS. Freetaxes gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. Freetaxes If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Freetaxes Check the status of your amended return. Freetaxes Go to IRS. Freetaxes gov and enter Where's My Amended Return in the search box. Freetaxes Download forms, instructions, and publications, including some accessible versions. Freetaxes Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. Freetaxes gov or IRS2Go. Freetaxes Tax return and tax account transcripts are generally available for the current year and past three years. Freetaxes Figure your income tax withholding with the IRS Withholding Calculator on IRS. Freetaxes gov. Freetaxes Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Freetaxes Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Freetaxes gov. Freetaxes Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. Freetaxes gov or IRS2Go. Freetaxes Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. Freetaxes An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. Freetaxes Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. Freetaxes If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. Freetaxes Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Freetaxes Locate the nearest volunteer help site with the VITA Locator Tool on IRS. Freetaxes gov. Freetaxes Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Freetaxes The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Freetaxes Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. Freetaxes AARP offers the Tax-Aide counseling program as part of the TCE program. Freetaxes Visit AARP's website to find the nearest Tax-Aide location. Freetaxes Research your tax questions. Freetaxes Search publications and instructions by topic or keyword. Freetaxes Read the Internal Revenue Code, regulations, or other official guidance. Freetaxes Read Internal Revenue Bulletins. Freetaxes Sign up to receive local and national tax news by email. Freetaxes Phone. Freetaxes You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Freetaxes Download the free IRS2Go mobile app from the iTunes app store or from Google Play. Freetaxes Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Freetaxes Call to locate the nearest volunteer help site, 1-800-906-9887. Freetaxes Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Freetaxes The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Freetaxes Most VITA and TCE sites offer free electronic filing. Freetaxes Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Freetaxes Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Freetaxes Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. Freetaxes The automated Where's My Refund? information is available 24 hours a day, 7 days a week. Freetaxes If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Freetaxes Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Freetaxes Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Freetaxes Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Freetaxes Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Freetaxes Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). Freetaxes You should receive your order within 10 business days. Freetaxes Call to order transcripts of your tax returns or tax account, 1-800-908-9946. Freetaxes Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. Freetaxes Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. Freetaxes Call to ask tax questions, 1-800-829-1040. Freetaxes Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Freetaxes The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Freetaxes These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. Freetaxes gsa. Freetaxes gov/fedrelay. Freetaxes Walk-in. Freetaxes You can find a selection of forms, publications and services — in-person, face-to-face. Freetaxes Products. Freetaxes You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Freetaxes Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Freetaxes Services. Freetaxes You can walk in to your local TAC most business days for personal, face-to-face tax help. Freetaxes An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Freetaxes If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. Freetaxes No appointment is necessary—just walk in. Freetaxes Before visiting, check www. Freetaxes irs. Freetaxes gov/localcontacts for hours of operation and services provided. Freetaxes Mail. Freetaxes You can send your order for forms, instructions, and publications to the address below. Freetaxes You should receive a response within 10 business days after your request is received. Freetaxes  Internal Revenue Service 1201 N. Freetaxes Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. Freetaxes   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Freetaxes Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Freetaxes What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. Freetaxes We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Freetaxes You face (or your business is facing) an immediate threat of adverse action. Freetaxes You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Freetaxes   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Freetaxes Here's why we can help: TAS is an independent organization within the IRS. Freetaxes Our advocates know how to work with the IRS. Freetaxes Our services are free and tailored to meet your needs. Freetaxes We have offices in every state, the District of Columbia, and Puerto Rico. Freetaxes How can you reach us?   If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. Freetaxes irs. Freetaxes gov/advocate, or call us toll-free at 1-877-777-4778. Freetaxes How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Freetaxes If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Freetaxes irs. Freetaxes gov/sams. Freetaxes Low Income Taxpayer Clinics. Freetaxes   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. Freetaxes Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Freetaxes Visit www. Freetaxes TaxpayerAdvocate. Freetaxes irs. Freetaxes gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. Freetaxes Prev  Up  Next   Home   More Online Publications
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Federal Home Loan Mortgage Corporation (Freddie Mac)

A private corporation founded by Congress, the Federal Home Loan Mortgage corporation's mission is to promote stability and affordability in the housing market by purchasing mortgages from banks and other loan makers. The corporation is currently under conservatorship, under the direction of the Federal Housing Finance Agency.

Contact the Agency or Department

Website: Federal Home Loan Mortgage Corporation (Freddie Mac)

Contact In-Person: Contact Freddie Mac

Address: 8200 Jones Branch Drive
McLean, VA 22102-3110

Phone Number: (703) 903-2000

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The Freetaxes

Freetaxes 37. Freetaxes   Other Credits Table of Contents What's New Introduction Useful Items - You may want to see: Nonrefundable CreditsAdoption Credit Alternative Motor Vehicle Credit Alternative Fuel Vehicle Refueling Property Credit Credit to Holders of Tax Credit Bonds Foreign Tax Credit Mortgage Interest Credit Nonrefundable Credit for Prior Year Minimum Tax Plug-in Electric Drive Motor Vehicle Credit Residential Energy Credits Retirement Savings Contributions Credit (Saver's Credit) Refundable CreditsCredit for Tax on Undistributed Capital Gain Health Coverage Tax Credit Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld What's New Adoption credit. Freetaxes  The maximum adoption credit is $12,970 for 2013. Freetaxes See Adoption Credit . Freetaxes Plug-in electric vehicle credit. Freetaxes  This credit has expired. Freetaxes Credit for prior year minimum tax. Freetaxes  The refundable portion of the credit for prior year minimum tax has expired. Freetaxes Excess withholding of social security and railroad retirement tax. Freetaxes  Social security tax and tier 1 railroad retirement (RRTA) tax were both withheld during 2013 at a rate of 6. Freetaxes 2% of wages up to $113,700. Freetaxes If you worked for more than one employer and had too much social security or RRTA tax withheld during 2013, you may be entitled to a credit for the excess withholding. Freetaxes See Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld . Freetaxes Introduction This chapter discusses the following nonrefundable credits. Freetaxes Adoption credit. Freetaxes Alternative motor vehicle credit. Freetaxes Alternative fuel vehicle refueling property credit. Freetaxes Credit to holders of tax credit bonds. Freetaxes Foreign tax credit. Freetaxes Mortgage interest credit. Freetaxes Nonrefundable credit for prior year minimum tax. Freetaxes Plug-in electric drive motor vehicle credit. Freetaxes Residential energy credits. Freetaxes Retirement savings contributions credit. Freetaxes This chapter also discusses the following refundable credits. Freetaxes Credit for tax on undistributed capital gain. Freetaxes Health coverage tax credit. Freetaxes Credit for excess social security tax or railroad retirement tax withheld. Freetaxes Several other credits are discussed in other chapters in this publication. Freetaxes Child and dependent care credit (chapter 32). Freetaxes Credit for the elderly or the disabled (chapter 33). Freetaxes Child tax credit (chapter 34). Freetaxes Education credits (chapter 35). Freetaxes Earned income credit (chapter 36). Freetaxes Nonrefundable credits. Freetaxes   The first part of this chapter, Nonrefundable Credits , covers ten credits that you subtract from your tax. Freetaxes These credits may reduce your tax to zero. Freetaxes If these credits are more than your tax, the excess is not refunded to you. Freetaxes Refundable credits. Freetaxes   The second part of this chapter, Refundable Credits , covers three credits that are treated as payments and are refundable to you. Freetaxes These credits are added to the federal income tax withheld and any estimated tax payments you made. Freetaxes If this total is more than your total tax, the excess will be refunded to you. Freetaxes Useful Items - You may want to see: Publication 502 Medical and Dental Expenses 514 Foreign Tax Credit for  Individuals 530 Tax Information for Homeowners 590 Individual Retirement Arrangements (IRAs) Form (and Instructions) 1116 Foreign Tax Credit 2439 Notice to Shareholder of Undistributed Long-Term Capital Gains 5695 Residential Energy Credits 8396 Mortgage Interest Credit 8801 Credit For Prior Year Minimum Tax — Individuals, Estates, and Trusts 8828 Recapture of Federal Mortgage Subsidy 8839 Qualified Adoption Expenses 8880 Credit for Qualified Retirement Savings Contributions 8885 Health Coverage Tax Credit 8910 Alternative Motor Vehicle Credit 8911 Alternative Fuel Vehicle Refueling Property Credit 8912 Credit to Holders of Tax Credit Bonds 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit Nonrefundable Credits The credits discussed in this part of the chapter can reduce your tax. Freetaxes However, if the total of these credits is more than your tax, the excess is not refunded to you. Freetaxes Adoption Credit You may be able to take a tax credit of up to $12,970 for qualified expenses paid to adopt an eligible child. Freetaxes The credit may be allowed for the adoption of a child with special needs even if you do not have any qualified expenses. Freetaxes If your modified adjusted gross income (AGI) is more than $194,580, your credit is reduced. Freetaxes If your modified AGI is $234,580 or more, you cannot take the credit. Freetaxes Qualified adoption expenses. Freetaxes   Qualified adoption expenses are reasonable and necessary expenses directly related to, and whose principal purpose is for, the legal adoption of an eligible child. Freetaxes These expenses include: Adoption fees, Court costs, Attorney fees, Travel expenses (including amounts spent for meals and lodging) while away from home, and Re-adoption expenses to adopt a foreign child. Freetaxes Nonqualified expenses. Freetaxes   Qualified adoption expenses do not include expenses: That violate state or federal law, For carrying out any surrogate parenting arrangement, For the adoption of your spouse's child, For which you received funds under any federal, state, or local program, Allowed as a credit or deduction under any other federal income tax rule, or Paid or reimbursed by your employer or any other person or organization. Freetaxes Eligible child. Freetaxes   The term “eligible child” means any individual: Under 18 years old, or Physically or mentally incapable of caring for himself or herself. Freetaxes Child with special needs. Freetaxes   An eligible child is a child with special needs if all three of the following apply. Freetaxes The child was a citizen or resident of the United States (including U. Freetaxes S. Freetaxes possessions) at the time the adoption process began. Freetaxes A state (including the District of Columbia) has determined that the child cannot or should not be returned to his or her parents' home. Freetaxes The state has determined that the child will not be adopted unless assistance is provided to the adoptive parents. Freetaxes Factors used by states to make this determination include: The child's ethnic background, The child's age, Whether the child is a member of a minority or sibling group, and Whether the child has a medical condition or a physical, mental, or emotional handicap. Freetaxes When to take the credit. Freetaxes   Generally, until the adoption becomes final, you take the credit in the year after your qualified expenses were paid or incurred. Freetaxes If the adoption becomes final, you take the credit in the year your expenses were paid or incurred. Freetaxes See the Instructions for Form 8839 for more specific information on when to take the credit. Freetaxes Foreign child. Freetaxes   If the child is not a U. Freetaxes S. Freetaxes citizen or resident at the time the adoption process began, you cannot take the credit unless the adoption becomes final. Freetaxes You treat all adoption expenses paid or incurred in years before the adoption becomes final as paid or incurred in the year it becomes final. Freetaxes How to take the credit. Freetaxes   Figure your 2013 nonrefundable credit and any carryforward to 2014 on Form 8839 and attach it to your Form 1040. Freetaxes Include the credit in your total for Form 1040, line 53. Freetaxes Check box c and enter “8839” on the line next to that box. Freetaxes More information. Freetaxes   For more information, see the Instructions for Form 8839. Freetaxes Alternative Motor Vehicle Credit You may be able to take this credit if you place a qualified fuel cell vehicle in service in 2013. Freetaxes Amount of credit. Freetaxes   Generally, you can rely on the manufacturer's certification to the IRS that a specific make, model, and model year vehicle qualifies for the credit and the amount of the credit for which it qualifies. Freetaxes In the case of a foreign manufacturer, you generally can rely on its domestic distributor's certification to the IRS. Freetaxes   Ordinarily the amount of the credit is 100% of the manufacturer's (or domestic distributor's) certification to the IRS of the maximum credit allowable. Freetaxes How to take the credit. Freetaxes   To take the credit, you must complete Form 8910 and attach it to your Form 1040. Freetaxes Include the credit in your total for Form 1040, line 53. Freetaxes Check box c and enter “8910” on the line next to that box. Freetaxes More information. Freetaxes   For more information on the credit, see the Instructions for Form 8910. Freetaxes Alternative Fuel Vehicle Refueling Property Credit You may be able to take a credit if you place qualified alternative fuel vehicle refueling property in service in 2013. Freetaxes Qualified alternative fuel vehicle refueling property. Freetaxes   Qualified alternative fuel vehicle refueling property is any property (other than a building or its structural components) used for either of the following. Freetaxes To store or dispense alternative fuel into the fuel tank of a motor vehicle propelled by the fuel, but only if the storage or dispensing is at the point where the fuel is delivered into that tank. Freetaxes To recharge an electric vehicle, but only if the recharging property is located at the point where the vehicle is recharged. Freetaxes   The following are alternative fuels. Freetaxes Any fuel at least 85% of the volume of which consists of one or more of the following: ethanol, natural gas, compressed natural gas, liquefied natural gas, liquefied petroleum gas, or hydrogen. Freetaxes Any mixture which consists of two or more of the following: biodiesel, diesel fuel, or kerosene, and at least 20% of the volume of which consists of biodiesel determined without regard to any kerosene. Freetaxes Electricity. Freetaxes Amount of the credit. Freetaxes   For personal use property, the credit is generally the smaller of 30% of the property's cost or $1,000. Freetaxes For business use property, the credit is generally the smaller of 30% of the property's cost or $30,000. Freetaxes How to take the credit. Freetaxes   To take the credit, you must complete Form 8911 and attach it to your Form 1040. Freetaxes Include the credit in your total for Form 1040, line 53. Freetaxes Check box c and enter “8911” on the line next to that box. Freetaxes More information. Freetaxes   For more information on the credit, see the Form 8911 instructions. Freetaxes Credit to Holders of Tax Credit Bonds Tax credit bonds are bonds in which the holder receives a tax credit in lieu of some or all of the interest on the bond. Freetaxes You may be able to take a credit if you are a holder of one of the following bonds. Freetaxes Clean renewable energy bonds (issued before 2010). Freetaxes New clean renewable energy bonds. Freetaxes Qualified energy conservation bonds. Freetaxes Qualified school construction bonds. Freetaxes Qualified zone academy bonds. Freetaxes Build America bonds. Freetaxes In some instances, an issuer may elect to receive a credit for interest paid on the bond. Freetaxes If the issuer makes this election, you cannot also claim a credit. Freetaxes Interest income. Freetaxes   The amount of any tax credit allowed (figured before applying tax liability limits) must be included as interest income on your tax return. Freetaxes How to take the credit. Freetaxes   Complete Form 8912 and attach it to your Form 1040. Freetaxes Include the credit in your total for Form 1040, line 53. Freetaxes Check box c and enter “8912” on the line next to that box. Freetaxes More information. Freetaxes   For more information, see the Instructions for Form 8912. Freetaxes Foreign Tax Credit You generally can choose to take income taxes you paid or accrued during the year to a foreign country or U. Freetaxes S. Freetaxes possession as a credit against your U. Freetaxes S. Freetaxes income tax. Freetaxes Or, you can deduct them as an itemized deduction (see chapter 22). Freetaxes You cannot take a credit (or deduction) for foreign income taxes paid on income that you exclude from U. Freetaxes S. Freetaxes tax under any of the following. Freetaxes Foreign earned income exclusion. Freetaxes Foreign housing exclusion. Freetaxes Income from Puerto Rico exempt from U. Freetaxes S. Freetaxes tax. Freetaxes Possession exclusion. Freetaxes Limit on the credit. Freetaxes   Unless you can elect not to file Form 1116 (see Exception , later), your foreign tax credit cannot be more than your U. Freetaxes S. Freetaxes tax liability (Form 1040, line 44), multiplied by a fraction. Freetaxes The numerator of the fraction is your taxable income from sources outside the United States. Freetaxes The denominator is your total taxable income from U. Freetaxes S. Freetaxes and foreign sources. Freetaxes See Publication 514 for more information. Freetaxes How to take the credit. Freetaxes   Complete Form 1116 and attach it to your Form 1040. Freetaxes Enter the credit on Form 1040, line 47. Freetaxes Exception. Freetaxes   You do not have to complete Form 1116 to take the credit if all of the following apply. Freetaxes All of your gross foreign source income was from interest and dividends and all of that income and the foreign tax paid on it were reported to you on Form 1099-INT, Form 1099-DIV, or Schedule K-1 (or substitute statement). Freetaxes If you had dividend income from shares of stock, you held those shares for at least 16 days. Freetaxes You are not filing Form 4563 or excluding income from sources within Puerto Rico. Freetaxes The total of your foreign taxes was not more than $300 (not more than $600 if married filing jointly). Freetaxes All of your foreign taxes were: Legally owed and not eligible for a refund, and Paid to countries that are recognized by the United States and do not support terrorism. Freetaxes More information. Freetaxes   For more information on the credit and these requirements, see the Instructions for Form 1116. Freetaxes Mortgage Interest Credit The mortgage interest credit is intended to help lower-income individuals own a home. Freetaxes If you qualify, you can take the credit each year for part of the home mortgage interest you pay. Freetaxes Who qualifies. Freetaxes   You may be eligible for the credit if you were issued a qualified mortgage credit certificate (MCC) from your state or local government. Freetaxes Generally, an MCC is issued only in connection with a new mortgage for the purchase of your main home. Freetaxes Amount of credit. Freetaxes   Figure your credit on Form 8396. Freetaxes If your mortgage loan amount is equal to (or smaller than) the certified indebtedness (loan) amount shown on your MCC, enter on Form 8396, line 1, all the interest you paid on your mortgage during the year. Freetaxes   If your mortgage loan amount is larger than the certified indebtedness amount shown on your MCC, you can figure the credit on only part of the interest you paid. Freetaxes To find the amount to enter on line 1, multiply the total interest you paid during the year on your mortgage by the following fraction. Freetaxes      Certified indebtedness amount on your MCC     Original amount of your mortgage   Limit based on credit rate. Freetaxes   If the certificate credit rate is more than 20%, the credit you are allowed cannot be more than $2,000. Freetaxes If two or more persons (other than a married couple filing a joint return) hold an interest in the home to which the MCC relates, this $2,000 limit must be divided based on the interest held by each person. Freetaxes See Publication 530 for more information. Freetaxes Carryforward. Freetaxes   Your credit (after applying the limit based on the credit rate) is also subject to a limit based on your tax that is figured using Form 8396. Freetaxes If your allowable credit is reduced because of this tax liability limit, you can carry forward the unused portion of the credit to the next 3 years or until used, whichever comes first. Freetaxes   If you are subject to the $2,000 limit because your certificate credit rate is more than 20%, you cannot carry forward any amount more than $2,000 (or your share of the $2,000 if you must divide the credit). Freetaxes How to take the credit. Freetaxes    Figure your 2013 credit and any carryforward to 2014 on Form 8396, and attach it to your Form 1040. Freetaxes Be sure to include any credit carryforward from 2010, 2011, and 2012. Freetaxes   Include the credit in your total for Form 1040, line 53. Freetaxes Check box c and enter “8396” on the line next to that box. Freetaxes Reduced home mortgage interest deduction. Freetaxes   If you itemize your deductions on Schedule A (Form 1040), you must reduce your home mortgage interest deduction by the amount of the mortgage interest credit shown on Form 8396, line 3. Freetaxes You must do this even if part of that amount is to be carried forward to 2014. Freetaxes For more information about the home mortgage interest deduction, see chapter 23. Freetaxes Recapture of federal mortgage subsidy. Freetaxes   If you received an MCC with your mortgage loan, you may have to recapture (pay back) all or part of the benefit you received from that program. Freetaxes The recapture may be required if you sell or dispose of your home at a gain during the first 9 years after the date you closed your mortgage loan. Freetaxes See the Instructions for Form 8828 and chapter 15 for more information. Freetaxes More information. Freetaxes   For more information on the credit, see the Form 8396 instructions. Freetaxes Nonrefundable Credit for Prior Year Minimum Tax The tax laws give special treatment to some kinds of income and allow special deductions and credits for some kinds of expenses. Freetaxes If you benefit from these laws, you may have to pay at least a minimum amount of tax in addition to any other tax on these items. Freetaxes This is called the alternative minimum tax. Freetaxes The special treatment of some items of income and expenses only allows you to postpone paying tax until a later year. Freetaxes If in prior years you paid alternative minimum tax because of these tax postponement items, you may be able to take a credit for prior year minimum tax against your current year's regular tax. Freetaxes You may be able to take a credit against your regular tax if for 2012 you had: An alternative minimum tax liability and adjustments or preferences other than exclusion items, A minimum tax credit that you are carrying forward to 2013, or An unallowed qualified electric vehicle credit. Freetaxes How to take the credit. Freetaxes    Figure your 2013 nonrefundable credit (if any), and any carryforward to 2014 on Form 8801, and attach it to your Form 1040. Freetaxes Include the credit in your total for Form 1040, line 53, and check box b. Freetaxes You can carry forward any unused credit for prior year minimum tax to later years until it is completely used. Freetaxes More information. Freetaxes   For more information on the credit, see the Instructions for Form 8801. Freetaxes Plug-in Electric Drive Motor Vehicle Credit You may be able to take this credit if you placed in service for business or personal use a qualified plug-in electric drive motor vehicle or a qualified two- or three-wheeled plug-in electric vehicle in 2013 and you meet some other requirements. Freetaxes Qualified plug-in electric drive motor vehicle. Freetaxes   This is a new vehicle with at least four wheels that: Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 4 kilowatt hours and is capable of being recharged from an external source of electricity, and Has a gross vehicle weight of less than 14,000 pounds. Freetaxes Qualified two- or three-wheeled plug-in electric vehicle. Freetaxes   This is a new vehicle with two or three wheels that: Is capable of achieving a speed of 45 miles per hour or greater, Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 2. Freetaxes 5 kilowatt hours and is capable of being recharged from an external source of electricity, and Has a gross vehicle weight of less than 14,000 pounds. Freetaxes Certification and other requirements. Freetaxes   Generally, you can rely on the manufacturer's (or, in the case of a foreign manufacturer, its domestic distributor's) certification to the IRS that a specific make, model, and model year vehicle qualifies for the credit and, if applicable, the amount of the credit for which it qualifies. Freetaxes However, if the IRS publishes an announcement that the certification for any specific make, model, and model year vehicle has been withdrawn, you cannot rely on the certification for such a vehicle purchased after the date of publication of the withdrawal announcement. Freetaxes   The following requirements must also be met to qualify for the credit. Freetaxes You are the owner of the vehicle. Freetaxes If the vehicle is leased, only the lessor, and not the lessee, is entitled to the credit. Freetaxes You placed the vehicle in service during 2013. Freetaxes The vehicle is manufactured primarily for use on public streets, roads, and highways. Freetaxes The original use of the vehicle began with you. Freetaxes You acquired the vehicle for your use or to lease to others, and not for resale. Freetaxes In the case of the qualified two- or three-wheeled plug-in electric vehicle, the vehicle is acquired after 2011 and before 2014. Freetaxes You use the vehicle primarily in the United States. Freetaxes How to take the credit. Freetaxes   To take the credit, you must complete Form 8936 and attach it to your Form 1040. Freetaxes Include the credit in your total for Form 1040, line 53. Freetaxes Check box c and enter “8936” on the line next to that box. Freetaxes More information. Freetaxes   For more information on the credit, see the Form 8936 instructions. Freetaxes Residential Energy Credits You may be able to take one or both of the following credits if you made energy saving improvements to your home located in the United States in 2013. Freetaxes Nonbusiness energy property credit. Freetaxes Residential energy efficient property credit. Freetaxes If you are a member of a condominium management association for a condominium you own or a tenant-stockholder in a cooperative housing corporation, you are treated as having paid your proportionate share of any costs of the association or corporation for purposes of these credits. Freetaxes Nonbusiness energy property credit. Freetaxes   You may be able to take a credit equal to the sum of: 10% of the amount paid or incurred for qualified energy efficiency improvements installed during 2013, and Any residential energy property costs paid or incurred in 2013. Freetaxes   There is a lifetime limit of $500 for all years after 2005, of which only $200 can be for windows; $50 for any advanced main air circulating fan; $150 for any qualified natural gas, propane, or oil furnace or hot water boiler; and $300 for any item of energy efficient building property. Freetaxes    If the total of nonbusiness energy property credits you have taken in previous years (after 2005) is more than $500, you cannot take this credit in 2013. Freetaxes   Qualified energy efficiency improvements are the following improvements that are new, can be expected to remain in use at least 5 years, and meet certain requirements for energy efficiency. Freetaxes Any insulation material or system that is specifically and primarily designed to reduce heat loss or gain of a home. Freetaxes Exterior window (including skylights). Freetaxes Exterior doors. Freetaxes Any metal or asphalt roof that has appropriate pigmented coatings or cooling granules specifically and primarily designed to reduce heat gain of the home. Freetaxes   Residential energy property is any of the following. Freetaxes Certain electric heat pump water heaters; electric heat pumps; central air conditioners; natural gas, propane, or oil water heater; and stoves that use biomass fuel. Freetaxes Qualified natural gas, propane, or oil furnaces; and qualified natural gas, propane, or oil hot water boilers. Freetaxes Certain advanced main air circulating fans used in natural gas, propane, or oil furnaces. Freetaxes Residential energy efficient property credit. Freetaxes   You may be able to take a credit of 30% of your costs of qualified solar electric property, solar water heating property, fuel cell property, small wind energy property, and geothermal heat pump property. Freetaxes The credit amount for costs paid for qualified fuel cell property is limited to $500 for each one-half kilowatt of capacity of the property. Freetaxes Basis reduction. Freetaxes   You must reduce the basis of your home by the amount of any credit allowed. Freetaxes How to take the credit. Freetaxes   Complete Form 5695 and attach it to your Form 1040. Freetaxes Enter the credit on Form 1040, line 52. Freetaxes More information. Freetaxes   For more information on these credits, see the Form 5695 instructions. Freetaxes Retirement Savings Contributions Credit (Saver's Credit) You may be able to take this credit if you, or your spouse if filing jointly, made: Contributions (other than rollover contributions) to a traditional or Roth IRA, Elective deferrals to a 401(k) or 403(b) plan (including designated Roth contributions) or to a governmental 457, SEP, or SIMPLE plan, Voluntary employee contributions to a qualified retirement plan (including the federal Thrift Savings Plan), or Contributions to a 501(c)(18)(D) plan. Freetaxes However, you cannot take the credit if either of the following applies. Freetaxes The amount on Form 1040, line 38, or Form 1040A, line 22, is more than $29,500 ($44,250 if head of household; $59,000 if married filing jointly). Freetaxes The person(s) who made the qualified contribution or elective deferral (a) was born after January 1, 1996, (b) is claimed as a dependent on someone else's 2013 tax return, or (c) was a student (defined next). Freetaxes Student. Freetaxes   You were a student if during any part of 5 calendar months of 2013 you: Were enrolled as a full-time student at a school, or Took a full-time, on-farm training course given by a school or a state, county, or local government agency. Freetaxes School. Freetaxes   A school includes a technical, trade, or mechanical school. Freetaxes It does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. Freetaxes How to take the credit. Freetaxes   Figure the credit on Form 8880. Freetaxes Enter the credit on your Form 1040, line 50, or your Form 1040A, line 32, and attach Form 8880 to your return. Freetaxes More information. Freetaxes   For more information on the credit, see the Form 8880 instructions. Freetaxes Refundable Credits The credits discussed in this part of the chapter are treated as payments of tax. Freetaxes If the total of these credits, withheld federal income tax, and estimated tax payments is more than your total tax, the excess can be refunded to you. Freetaxes Credit for Tax on Undistributed Capital Gain You must include in your income any amounts that regulated investment companies (commonly called mutual funds) or real estate investment trusts (REITs) allocated to you as capital gain distributions, even if you did not actually receive them. Freetaxes If the mutual fund or REIT paid a tax on the capital gain, you are allowed a credit for the tax since it is considered paid by you. Freetaxes The mutual fund or REIT will send you Form 2439 showing your share of the undistributed capital gains and the tax paid, if any. Freetaxes How to take the credit. Freetaxes   To take the credit, attach Copy B of Form 2439 to your Form 1040. Freetaxes Include the amount from box 2 of your Form 2439 in the total for Form 1040, line 71, and check box a. Freetaxes More information. Freetaxes   See Capital Gain Distributions in chapter 8 for more information on undistributed capital gains. Freetaxes Health Coverage Tax Credit You may be able to take this credit for any month in which all the following statements were true on the first day of the month. Freetaxes You were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment TAA (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient (defined later); or you were a qualified family member of one of these individuals when the individual died or you finalized a divorce with one of these individuals. Freetaxes You and/or your family members were covered by a qualified health insurance plan for which you paid the entire premiums, or your portion of the premiums, directly to your health plan or to “U. Freetaxes S. Freetaxes Treasury–HCTC. Freetaxes ” You were not enrolled in Medicare Part A, B, or C, or you were enrolled in Medicare but your family member(s) qualified for the HCTC. Freetaxes You were not enrolled in Medicaid or the Children's Health Insurance Program (CHIP). Freetaxes You were not enrolled in the Federal Employees Health Benefits program (FEHBP) or eligible to receive benefits under the U. Freetaxes S. Freetaxes military health system (TRICARE). Freetaxes You were not imprisoned under federal, state, or local authority. Freetaxes Your employer did not pay 50% or more of the cost of coverage. Freetaxes You did not receive a 65% COBRA premium reduction from your former employer or COBRA administrator. Freetaxes But, you cannot take the credit if you can be claimed as a dependent on someone else's 2013 tax return. Freetaxes If you meet all of these conditions, you may be able to take a credit of up to 72. Freetaxes 5% of the amount you paid directly to a qualified health plan for you and any qualifying family members. Freetaxes You cannot take the credit for insurance premiums on coverage that was actually paid for with a National Emergency Grant. Freetaxes The amount you paid for qualified health insurance coverage must be reduced by any Archer MSA and health savings account distributions used to pay for the coverage. Freetaxes You can take this credit on your tax return or have it paid on your behalf in advance to your insurance company. Freetaxes If the credit is paid on your behalf in advance, that amount will reduce the amount of the credit you can take on your tax return. Freetaxes TAA recipient. Freetaxes   You were an eligible TAA recipient on the first day of the month if, for any day in that month or the prior month, you: Received a trade readjustment allowance, or Would have been entitled to receive such an allowance except that you had not exhausted all rights to any unemployment insurance (except additional compensation that is funded by a state and is not reimbursed from any federal funds) to which you were entitled (or would be entitled if you applied). Freetaxes Example. Freetaxes You received a trade adjustment allowance for January 2013. Freetaxes You were an eligible TAA recipient on the first day of January and February. Freetaxes Alternative TAA recipient. Freetaxes   You were an eligible alternative TAA recipient on the first day of the month if, for that month or the prior month, you received benefits under an alternative trade adjustment assistance program for older workers established by the Department of Labor. Freetaxes Example. Freetaxes You received benefits under an alternative trade adjustment assistance program for older workers for October 2013. Freetaxes The program was established by the Department of Labor. Freetaxes You were an eligible alternative TAA recipient on the first day of October and November. Freetaxes RTAA recipient. Freetaxes   You were an eligible RTAA recipient on the first day of the month if, for that month or the prior month, you received benefits under a reemployment trade adjustment assistance program for older workers established by the Department of Labor. Freetaxes PBGC pension recipient. Freetaxes   You were an eligible PBGC pension recipient on the first day of the month, if both of the following apply. Freetaxes You were age 55 or older on the first day of the month. Freetaxes You received a benefit for that month paid by the PBGC under title IV of the Employee Retirement Income Security Act of 1974 (ERISA). Freetaxes If you received a lump-sum payment from the PBGC after August 5, 2002, you meet item (2) above for any month that you would have received a PBGC benefit if you had not received the lump-sum payment. Freetaxes How to take the credit. Freetaxes   To take the credit, complete Form 8885 and attach it to your Form 1040. Freetaxes Include your credit in the total for Form 1040, line 71, and check box c. Freetaxes   You must attach health insurance bills (or COBRA payment coupons) and proof of payment for any amounts you include on Form 8885, line 2. Freetaxes For details, see Publication 502 or Form 8885. Freetaxes More information. Freetaxes   For definitions and special rules, including those relating to qualified health insurance plans, qualifying family members, the effect of certain life events, and employer-sponsored health insurance plans, see Publication 502 and the Form 8885 instructions. Freetaxes Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld Most employers must withhold social security tax from your wages. Freetaxes If you work for a railroad employer, that employer must withhold tier 1 railroad retirement (RRTA) tax and tier 2 RRTA tax. Freetaxes If you worked for two or more employers in 2013, you may have had too much social security tax withheld from your pay. Freetaxes If one or more of those employers was a railroad employer, too much tier 1 RRTA tax may also have been withheld at the 6. Freetaxes 2% rate. Freetaxes You can claim the excess social security or tier 1 RRTA tax as a credit against your income tax when you file your return. Freetaxes For the tier 1 RRTA tax, only use the portion of the tier 1 RRTA tax that was taxed at the 6. Freetaxes 2% rate when figuring if excess tier 1 RRTA tax was withheld; do not include any portion of the tier 1 RRTA tax that was withheld at the Medicare tax rate (1. Freetaxes 45%) or the Additional Medicare Tax rate (. Freetaxes 9%). Freetaxes The following table shows the maximum amount of wages subject to tax and the maximum amount of tax that should have been withheld for 2013. Freetaxes Type of tax Maximum  wages subject to tax Maximum tax that should have been withheld Social security or RRTA tier 1 $113,700 $7,049. Freetaxes 40 RRTA tier 2 $84,300 $3,709. Freetaxes 20 All wages are subject to Medicare tax withholding. Freetaxes   Use Form 843, Claim for Refund and Request for Abatement, to claim a refund of excess tier 2 RRTA tax. Freetaxes Be sure to attach a copy of all of your W-2 forms. Freetaxes Use Worksheet 3-3 in Publication 505, Tax Withholding and Estimated Tax, to help you figure the excess amount. Freetaxes Employer's error. Freetaxes   If any one employer withheld too much social security or tier 1 RRTA tax, you cannot take the excess as a credit against your income tax. Freetaxes The employer should adjust the tax for you. Freetaxes If the employer does not adjust the overcollection, you can file a claim for refund using Form 843. Freetaxes Joint return. Freetaxes   If you are filing a joint return, you cannot add the social security or tier 1 RRTA tax withheld from your spouse's wages to the amount withheld from your wages. Freetaxes Figure the withholding separately for you and your spouse to determine if either of you has excess withholding. Freetaxes How to figure the credit if you did not work for a railroad. Freetaxes   If you did not work for a railroad during 2013, figure the credit as follows: 1. Freetaxes Add all social security tax withheld (but not more than $7,049. Freetaxes 40 for each employer). Freetaxes Enter the total here   2. Freetaxes Enter any uncollected social security tax on tips or group-term life insurance included in the total on Form 1040, line 60, identified by “UT”   3. Freetaxes Add lines 1 and 2. Freetaxes If $7,049. Freetaxes 40 or less, stop here. Freetaxes You cannot take  the credit   4. Freetaxes Social security tax limit 7,049. Freetaxes 40 5. Freetaxes Credit. Freetaxes Subtract line 4 from line 3. Freetaxes Enter the result here and on Form 1040, line 69 (or Form 1040A, line 41) $ Example. Freetaxes You are married and file a joint return with your spouse who had no gross income in 2013. Freetaxes During 2013, you worked for the Brown Technology Company and earned $60,000 in wages. Freetaxes Social security tax of $3,720 was withheld. Freetaxes You also worked for another employer in 2013 and earned $55,000 in wages. Freetaxes $3,410 of social security tax was withheld from these wages. Freetaxes Because you worked for more than one employer and your total wages were more than $113,700, you can take a credit of $80. Freetaxes 60 for the excess social security tax withheld. Freetaxes 1. Freetaxes Add all social security tax withheld (but not more than $7,049. Freetaxes 40 for each employer). Freetaxes Enter the total here $7,130. Freetaxes 00 2. Freetaxes Enter any uncollected social security tax on tips or group-term life insurance included in the total on Form 1040, line 60, identified by “UT” -0- 3. Freetaxes Add lines 1 and 2. Freetaxes If $7,049. Freetaxes 40 or less, stop here. Freetaxes You cannot take the credit 7,130. Freetaxes 00 4. Freetaxes Social security tax limit 7,049. Freetaxes 40 5. Freetaxes Credit. Freetaxes Subtract line 4 from line 3. Freetaxes Enter the result here and on Form 1040, line 69 (or Form 1040A, line 41) $80. Freetaxes 60 How to figure the credit if you worked for a railroad. Freetaxes   If you were a railroad employee at any time during 2013, figure the credit as follows: 1. Freetaxes Add all social security and tier 1 RRTA tax withheld at the 6. Freetaxes 2% rate (but not more than $7,049. Freetaxes 40 for each employer). Freetaxes Enter the total here   2. Freetaxes Enter any uncollected social security and tier 1 RRTA tax on tips or group-term life insurance included in the total on Form 1040, line 60, identified by “UT”   3. Freetaxes Add lines 1 and 2. Freetaxes If $7,049. Freetaxes 40 or less, stop here. Freetaxes You cannot take  the credit   4. Freetaxes Social security and tier 1 RRTA  tax limit 7,049. Freetaxes 40 5. Freetaxes Credit. Freetaxes Subtract line 4 from line 3. Freetaxes Enter the result here and on Form 1040, line 69 (or Form 1040A, line 41) $ How to take the credit. Freetaxes   Enter the credit on Form 1040, line 69, or include it in the total for Form 1040A, line 41. Freetaxes More information. Freetaxes   For more information on the credit, see Publication 505. Freetaxes Prev  Up  Next   Home   More Online Publications