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Hr Block 1040nr

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Hr Block 1040nr

Hr block 1040nr 1. Hr block 1040nr   Investment Income Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: General InformationSSN for joint account. Hr block 1040nr Custodian account for your child. Hr block 1040nr Penalty for failure to supply SSN. Hr block 1040nr Certification. Hr block 1040nr Underreported interest and dividends. Hr block 1040nr How to stop backup withholding due to underreporting. Hr block 1040nr How to stop backup withholding due to an incorrect identification number. Hr block 1040nr Reporting backup withholding. Hr block 1040nr Nonresident aliens. Hr block 1040nr Penalties. Hr block 1040nr Savings account with parent as trustee. Hr block 1040nr Interest IncomeInterest not reported on Form 1099-INT. Hr block 1040nr Nominees. Hr block 1040nr Incorrect amount. Hr block 1040nr Information reporting requirement. Hr block 1040nr Taxable Interest — General Below-Market Loans U. Hr block 1040nr S. Hr block 1040nr Savings Bonds U. Hr block 1040nr S. Hr block 1040nr Treasury Bills, Notes, and Bonds Bonds Sold Between Interest Dates Insurance State or Local Government Obligations Discount on Debt InstrumentsOriginal Issue Discount (OID) Market Discount Bonds Discount on Short-Term Obligations Election To Report All Interest as OID When To Report Interest IncomeConstructive receipt. Hr block 1040nr How To Report Interest IncomeSchedule B (Form 1040A or 1040). Hr block 1040nr Worksheet for savings bonds distributed from a retirement or profit-sharing plan. Hr block 1040nr File Form 1099-INT with the IRS. Hr block 1040nr Dividends and Other DistributionsDividends not reported on Form 1099-DIV. Hr block 1040nr Nominees. Hr block 1040nr Ordinary Dividends Capital Gain Distributions Nondividend Distributions Liquidating Distributions Distributions of Stock and Stock Rights Other Distributions How To Report Dividend IncomeElection. Hr block 1040nr Independent contractor. Hr block 1040nr Investment interest deducted. Hr block 1040nr Exception 1. Hr block 1040nr Exception 2. Hr block 1040nr Undistributed capital gains. Hr block 1040nr File Form 1099-DIV with the IRS. Hr block 1040nr Stripped Preferred Stock REMICs, FASITs, and Other CDOsREMICs Collateralized Debt Obligations (CDOs) FASITs S CorporationsLimit on losses and deductions. Hr block 1040nr Passive activity losses. Hr block 1040nr Form 8582. Hr block 1040nr Investment ClubsInvestments in name of member. Hr block 1040nr Tax Treatment of the Club Topics - This chapter discusses: Interest Income , Discount on Debt Instruments , When To Report Interest Income , How To Report Interest Income , Dividends and Other Distributions , How To Report Dividend Income , Stripped Preferred Stock , Real estate mortgage investment conduits (REMICs), financial asset securitization investment trusts (FASITs), and other collateralized debt obligations (CDOs) , S Corporations , and Investment Clubs . Hr block 1040nr Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 537 Installment Sales 590 Individual Retirement Arrangements (IRAs) 925 Passive Activity and At-Risk Rules 1212 Guide to Original Issue Discount (OID) Instruments Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends Schedule D (Form 1040) Capital Gains and Losses 1040 U. Hr block 1040nr S. Hr block 1040nr Individual Income Tax Return 1040A U. Hr block 1040nr S. Hr block 1040nr Individual Income Tax Return 1040EZ Income Tax Return for Single and Joint Filers With No Dependents 1099 General Instructions for Certain Information Returns 2439 Notice to Shareholder of Undistributed Long-Term Capital Gains 3115 Application for Change in Accounting Method 6251 Alternative Minimum Tax — Individuals 8582 Passive Activity Loss Limitations 8615 Tax for Certain Children Who Have Unearned Income 8814 Parents' Election To Report Child's Interest and Dividends 8815 Exclusion of Interest From Series EE and I U. Hr block 1040nr S. Hr block 1040nr Savings Bonds Issued After 1989 8818 Optional Form To Record Redemption of Series EE and I U. Hr block 1040nr S. Hr block 1040nr Savings Bonds Issued After 1989 8824 Like-Kind Exchanges 8949 Sales and Other Dispositions of Capital Assets 8960 Net Investment Income Tax—Individuals, Estates, and Trusts See chapter 5, How To Get Tax Help , for information about getting these publications and forms. Hr block 1040nr General Information A few items of general interest are covered here. Hr block 1040nr Recordkeeping. Hr block 1040nr You should keep a list showing sources and investment income amounts you receive during the year. Hr block 1040nr Also keep the forms you receive showing your investment income (Forms 1099-INT, Interest Income, and 1099-DIV, Dividends and Distributions, for example) as an important part of your records. Hr block 1040nr Net investment income tax (NIIT). Hr block 1040nr   Beginning in 2013, you may be subject to the NIIT. Hr block 1040nr The NIIT is a 3. Hr block 1040nr 8% tax on the lesser of your net investment income or the amount of your modified adjusted gross income (MAGI) that is over a threshold amount based on your filing status. Hr block 1040nr    Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household (with qualifying person) $200,000 Qualifying Widow(er) with dependent child $250,000    For more information, see Form 8960 and Instructions for Form 8960. Hr block 1040nr Tax on unearned income of certain children. Hr block 1040nr   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. Hr block 1040nr This may happen if all of the following are true. Hr block 1040nr The child had more than $2,000 of unearned income. Hr block 1040nr The child is required to file a tax return. Hr block 1040nr The child was: Under age 18 at the end of 2013, Age 18 at the end of 2013 and did not have earned income that was more than half of the child's support, or A full-time student over age 18 and under age 24 at the end of 2013 and did not have earned income that was more than half of the child's support. Hr block 1040nr At least one of the child's parents was alive at the end of 2013. Hr block 1040nr The child does not file a joint return for 2013. Hr block 1040nr A child born on January 1, 1996, is considered to be age 18 at the end of 2013; a child born on January 1, 1995, is considered to be age 19 at the end of 2013; a child born on January 1, 1990, is considered to be age 24 at the end of 2013. Hr block 1040nr   If all of these statements are true, Form 8615 must be completed and attached to the child's tax return. Hr block 1040nr If any of these statements is not true, Form 8615 is not required and the child's income is taxed at his or her own tax rate. Hr block 1040nr    However, the parent can choose to include the child's interest and dividends on the parent's return if certain requirements are met. Hr block 1040nr Use Form 8814 for this purpose. Hr block 1040nr   For more information about the tax on unearned income of children and the parents' election, see Publication 929, Tax Rules for Children and Dependents. Hr block 1040nr Beneficiary of an estate or trust. Hr block 1040nr   Interest, dividends, and other investment income you receive as a beneficiary of an estate or trust is generally taxable income. Hr block 1040nr You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Hr block 1040nr , from the fiduciary. Hr block 1040nr Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. Hr block 1040nr Social security number (SSN). Hr block 1040nr   You must give your name and SSN or individual tax identification number (ITIN) to any person required by federal tax law to make a return, statement, or other document that relates to you. Hr block 1040nr This includes payers of interest and dividends. Hr block 1040nr If you do not give your SSN or ITIN to the payer of interest, you may have to pay a penalty. Hr block 1040nr SSN for joint account. Hr block 1040nr   If the funds in a joint account belong to one person, list that person's name first on the account and give that person's SSN to the payer. Hr block 1040nr (For information on who owns the funds in a joint account, see Joint accounts , later. Hr block 1040nr ) If the joint account contains combined funds, give the SSN of the person whose name is listed first on the account. Hr block 1040nr This is because only one name and SSN can be shown on Form 1099. Hr block 1040nr   These rules apply both to joint ownership by a married couple and to joint ownership by other individuals. Hr block 1040nr For example, if you open a joint savings account with your child using funds belonging to the child, list the child's name first on the account and give the child's SSN. Hr block 1040nr Custodian account for your child. Hr block 1040nr   If your child is the actual owner of an account that is recorded in your name as custodian for the child, give the child's SSN to the payer. Hr block 1040nr For example, you must give your child's SSN to the payer of dividends on stock owned by your child, even though the dividends are paid to you as custodian. Hr block 1040nr Penalty for failure to supply SSN. Hr block 1040nr   You will be subject to a penalty if, when required, you fail to: Include your SSN on any return, statement, or other document, Give your SSN to another person who must include it on any return, statement, or other document, or Include the SSN of another person on any return, statement, or other document. Hr block 1040nr The penalty is $50 for each failure up to a maximum penalty of $100,000 for any calendar year. Hr block 1040nr   You will not be subject to this penalty if you can show that your failure to provide the SSN was due to reasonable cause and not to willful neglect. Hr block 1040nr   If you fail to supply an SSN, you may also be subject to backup withholding. Hr block 1040nr Backup withholding. Hr block 1040nr   Your investment income is generally not subject to regular withholding. Hr block 1040nr However, it may be subject to backup withholding to ensure that income tax is collected on the income. Hr block 1040nr Under backup withholding, the bank, broker, or other payer of interest, original issue discount (OID), dividends, cash patronage dividends, or royalties must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. Hr block 1040nr   Backup withholding applies if: You do not give the payer your identification number (either a social security number or an employer identification number) in the required manner, The IRS notifies the payer that you gave an incorrect identification number, The IRS notifies the payer that you are subject to backup withholding on interest or dividends because you have underreported interest or dividends on your income tax return, or You are required, but fail, to certify that you are not subject to backup withholding for the reason described in (3). Hr block 1040nr Certification. Hr block 1040nr   For new accounts paying interest or dividends, you must certify under penalties of perjury that your SSN is correct and that you are not subject to backup withholding. Hr block 1040nr Your payer will give you a Form W-9, Request for Taxpayer Identification Number and Certification, or similar form, to make this certification. Hr block 1040nr If you fail to make this certification, backup withholding may begin immediately on your new account or investment. Hr block 1040nr Underreported interest and dividends. Hr block 1040nr   You will be considered to have underreported your interest and dividends if the IRS has determined for a tax year that: You failed to include any part of a reportable interest or dividend payment required to be shown on your return, or You were required to file a return and to include a reportable interest or dividend payment on that return, but you failed to file the return. Hr block 1040nr How to stop backup withholding due to underreporting. Hr block 1040nr   If you have been notified that you underreported interest or dividends, you can request a determination from the IRS to prevent backup withholding from starting or to stop backup withholding once it has begun. Hr block 1040nr You must show that at least one of the following situations applies. Hr block 1040nr No underreporting occurred. Hr block 1040nr You have a bona fide dispute with the IRS about whether underreporting occurred. Hr block 1040nr Backup withholding will cause or is causing an undue hardship, and it is unlikely that you will underreport interest and dividends in the future. Hr block 1040nr You have corrected the underreporting by filing a return if you did not previously file one and by paying all taxes, penalties, and interest due for any underreported interest or dividend payments. Hr block 1040nr   If the IRS determines that backup withholding should stop, it will provide you with a certification and will notify the payers who were sent notices earlier. Hr block 1040nr How to stop backup withholding due to an incorrect identification number. Hr block 1040nr   If you have been notified by a payer that you are subject to backup withholding because you have provided an incorrect SSN or employer identification number, you can stop it by following the instructions the payer gives you. Hr block 1040nr Reporting backup withholding. Hr block 1040nr   If backup withholding is deducted from your interest or dividend income or other reportable payment, the bank or other business must give you an information return for the year (for example, a Form 1099-INT) indicating the amount withheld. Hr block 1040nr The information return will show any backup withholding as “Federal income tax withheld. Hr block 1040nr ” Nonresident aliens. Hr block 1040nr    Generally, payments made to nonresident aliens are not subject to backup withholding. Hr block 1040nr You can use Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, to certify exempt status. Hr block 1040nr However, this does not exempt you from the 30% (or lower treaty) withholding rate that may apply to your investment income. Hr block 1040nr For information on the 30% rate, see Publication 519, U. Hr block 1040nr S. Hr block 1040nr Tax Guide for Aliens. Hr block 1040nr Penalties. Hr block 1040nr   There are civil and criminal penalties for giving false information to avoid backup withholding. Hr block 1040nr The civil penalty is $500. Hr block 1040nr The criminal penalty, upon conviction, is a fine of up to $1,000, or imprisonment of up to 1 year, or both. Hr block 1040nr Where to report investment income. Hr block 1040nr   Table 1-1 gives an overview of the forms and schedules to use to report some common types of investment income. Hr block 1040nr But see the rest of this publication for detailed information about reporting investment income. Hr block 1040nr Joint accounts. Hr block 1040nr   If two or more persons hold property (such as a savings account, bond, or stock) as joint tenants, tenants by the entirety, or tenants in common, each person's share of any interest or dividends from the property is determined by local law. Hr block 1040nr Community property states. Hr block 1040nr   If you are married and receive a distribution that is community income, one-half of the distribution is generally considered to be received by each spouse. Hr block 1040nr If you file separate returns, you must each report one-half of any taxable distribution. Hr block 1040nr See Publication 555, Community Property, for more information on community income. Hr block 1040nr   If the distribution is not considered community property and you and your spouse file separate returns, each of you must report your separate taxable distributions. Hr block 1040nr Example. Hr block 1040nr You and your spouse have a joint money market account. Hr block 1040nr Under state law, half the income from the account belongs to you, and half belongs to your spouse. Hr block 1040nr If you file separate returns, you each report half the income. Hr block 1040nr Income from property given to a child. Hr block 1040nr   Property you give as a parent to your child under the Model Gifts of Securities to Minors Act, the Uniform Gifts to Minors Act, or any similar law becomes the child's property. Hr block 1040nr   Income from the property is taxable to the child, except that any part used to satisfy a legal obligation to support the child is taxable to the parent or guardian having that legal obligation. Hr block 1040nr Savings account with parent as trustee. Hr block 1040nr   Interest income from a savings account opened for a minor child, but placed in the name and subject to the order of the parents as trustees, is taxable to the child if, under the law of the state in which the child resides, both of the following are true. Hr block 1040nr The savings account legally belongs to the child. Hr block 1040nr The parents are not legally permitted to use any of the funds to support the child. Hr block 1040nr Table 1-1. Hr block 1040nr Where To Report Common Types of Investment Income (For detailed information about reporting investment income, see the rest of this publication, especially How To Report Interest Income and How To Report Dividend Income in chapter 1. Hr block 1040nr ) Type of Income If you file Form 1040, report on . Hr block 1040nr . Hr block 1040nr . Hr block 1040nr If you can file Form 1040A, report on . Hr block 1040nr . Hr block 1040nr . Hr block 1040nr If you can file Form 1040EZ, report on . Hr block 1040nr . Hr block 1040nr . Hr block 1040nr Tax-exempt interest (Form 1099-INT, box 8) Line 8b Line 8b Space to the left of line 2 (enter “TEI” and the amount) Taxable interest that totals $1,500 or less Line 8a (You may need to file Schedule B as well. Hr block 1040nr ) Line 8a (You may need to file Schedule B as well. Hr block 1040nr ) Line 2 Taxable interest that totals more than $1,500 Line 8a; also use Schedule B, line 1 Line 8a; also use Schedule B, line 1   Savings bond interest you will exclude because of higher education expenses Schedule B; also use Form 8815 Schedule B; also use Form 8815   Ordinary dividends that total $1,500 or less Line 9a (You may need to file Schedule B as well. Hr block 1040nr ) Line 9a (You may need to file Schedule B as well. Hr block 1040nr )   Ordinary dividends that total more than $1,500 Line 9a; also use Schedule B, line 5 Line 9a; also use Schedule B, line 5   Qualified dividends (if you do not have to file Schedule D) Line 9b; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 2 Line 9b; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 2   Qualified dividends (if you have to file Schedule D) Line 9b; also use the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet, line 2 You cannot use Form 1040A    You cannot use Form 1040EZ Capital gain distributions (if you do not have to file Schedule D) Line 13; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 3 Line 10; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 3   Capital gain distributions (if you have to file Schedule D) Schedule D, line 13; also use the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet     Section 1250, 1202, or collectibles gain (Form 1099-DIV, box 2b, 2c, or 2d) Form 8949 and Schedule D     Nondividend distributions (Form 1099-DIV, box 3) Generally not reported*     Undistributed capital gains (Form 2439, boxes 1a - 1d) Schedule D     Gain or loss from sales of stocks or bonds Line 13; also use Form 8949, Schedule D, and the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet You cannot use Form 1040A   Gain or loss from exchanges of like-kind investment property Line 13; also use Schedule D, Form 8824, and the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet     *Report any amounts in excess of your basis in your mutual fund shares on Form 8949. Hr block 1040nr Use Part II if you held the shares more than 1 year. Hr block 1040nr Use Part I if you held your mutual fund shares 1 year or less. Hr block 1040nr For details on Form 8949, see Reporting Capital Gains and Losses in chapter 4, and the Instructions for Form 8949. Hr block 1040nr Accuracy-related penalty. Hr block 1040nr   An accuracy-related penalty of 20% can be charged for underpayments of tax due to negligence or disregard of rules or regulations or substantial understatement of tax. Hr block 1040nr For information on the penalty and any interest that applies, see Penalties in chapter 2. Hr block 1040nr Interest Income This section discusses the tax treatment of different types of interest income. Hr block 1040nr In general, any interest that you receive or that is credited to your account and can be withdrawn is taxable income. Hr block 1040nr (It does not have to be entered in your passbook. Hr block 1040nr ) Exceptions to this rule are discussed later. Hr block 1040nr Form 1099-INT. Hr block 1040nr   Interest income is generally reported to you on Form 1099-INT, or a similar statement, by banks, savings and loans, and other payers of interest. Hr block 1040nr This form shows you the interest you received during the year. Hr block 1040nr Keep this form for your records. Hr block 1040nr You do not have to attach it to your tax return. Hr block 1040nr   Report on your tax return the total interest income you receive for the tax year. Hr block 1040nr Interest not reported on Form 1099-INT. Hr block 1040nr   Even if you do not receive Form 1099-INT, you must still report all of your interest income. Hr block 1040nr For example, you may receive distributive shares of interest from partnerships or S corporations. Hr block 1040nr This interest is reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Hr block 1040nr , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. Hr block 1040nr Nominees. Hr block 1040nr   Generally, if someone receives interest as a nominee for you, that person must give you a Form 1099-INT showing the interest received on your behalf. Hr block 1040nr   If you receive a Form 1099-INT that includes amounts belonging to another person, see the discussion on Nominee distributions , later, under How To Report Interest Income. Hr block 1040nr Incorrect amount. Hr block 1040nr   If you receive a Form 1099-INT that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. Hr block 1040nr The new Form 1099-INT you receive will be marked “Corrected. Hr block 1040nr ” Form 1099-OID. Hr block 1040nr   Reportable interest income also may be shown on Form 1099-OID, Original Issue Discount. Hr block 1040nr For more information about amounts shown on this form, see Original Issue Discount (OID) , later in this chapter. Hr block 1040nr Exempt-interest dividends. Hr block 1040nr   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. Hr block 1040nr (However, see Information reporting requirement , next. Hr block 1040nr ) Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. Hr block 1040nr You do not reduce your basis for distributions that are exempt-interest dividends. Hr block 1040nr Information reporting requirement. Hr block 1040nr   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file. Hr block 1040nr This is an information reporting requirement and does not change the exempt-interest dividends into taxable income. Hr block 1040nr See How To Report Interest Income , later. Hr block 1040nr Note. Hr block 1040nr Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. Hr block 1040nr The exempt-interest dividends subject to the alternative minimum tax are shown in box 11 of Form 1099-DIV. Hr block 1040nr See Form 6251 and its instructions for more information about this tax. Hr block 1040nr Private activity bonds are discussed later under State or Local Government Obligations. Hr block 1040nr Interest on VA dividends. Hr block 1040nr   Interest on insurance dividends left on deposit with the Department of Veterans Affairs (VA) is not taxable. Hr block 1040nr This includes interest paid on dividends on converted United States Government Life Insurance policies and on National Service Life Insurance policies. Hr block 1040nr Individual retirement arrangements (IRAs). Hr block 1040nr   Interest on a Roth IRA generally is not taxable. Hr block 1040nr Interest on a traditional IRA is tax deferred. Hr block 1040nr You generally do not include it in your income until you make withdrawals from the IRA. Hr block 1040nr See Publication 590 for more information. Hr block 1040nr Taxable Interest — General Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. Hr block 1040nr The following are some sources of taxable interest. Hr block 1040nr Dividends that are actually interest. Hr block 1040nr   Certain distributions commonly called dividends are actually interest. Hr block 1040nr You must report as interest so-called “dividends” on deposits or on share accounts in: Cooperative banks, Credit unions, Domestic building and loan associations, Domestic savings and loan associations, Federal savings and loan associations, and Mutual savings banks. Hr block 1040nr  The “dividends” will be shown as interest income on Form 1099-INT. Hr block 1040nr Money market funds. Hr block 1040nr   Money market funds are offered by nonbank financial institutions such as mutual funds and stock brokerage houses, and pay dividends. Hr block 1040nr Generally, amounts you receive from money market funds should be reported as dividends, not as interest. Hr block 1040nr Certificates of deposit and other deferred interest accounts. Hr block 1040nr   If you open any of these accounts, interest may be paid at fixed intervals of 1 year or less during the term of the account. Hr block 1040nr You generally must include this interest in your income when you actually receive it or are entitled to receive it without paying a substantial penalty. Hr block 1040nr The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. Hr block 1040nr If interest is deferred for more than 1 year, see Original Issue Discount (OID) , later. Hr block 1040nr Interest subject to penalty for early withdrawal. Hr block 1040nr   If you withdraw funds from a deferred interest account before maturity, you may have to pay a penalty. Hr block 1040nr You must report the total amount of interest paid or credited to your account during the year, without subtracting the penalty. Hr block 1040nr See Penalty on early withdrawal of savings under How To Report Interest Income, later, for more information on how to report the interest and deduct the penalty. Hr block 1040nr Money borrowed to invest in certificate of deposit. Hr block 1040nr   The interest you pay on money borrowed from a bank or savings institution to meet the minimum deposit required for a certificate of deposit from the institution and the interest you earn on the certificate are two separate items. Hr block 1040nr You must report the total interest you earn on the certificate in your income. Hr block 1040nr If you itemize deductions, you can deduct the interest you pay as investment interest, up to the amount of your net investment income. Hr block 1040nr See Interest Expenses in chapter 3. Hr block 1040nr Example. Hr block 1040nr You deposited $5,000 with a bank and borrowed $5,000 from the bank to make up the $10,000 minimum deposit required to buy a 6-month certificate of deposit. Hr block 1040nr The certificate earned $575 at maturity in 2013, but you received only $265, which represented the $575 you earned minus $310 interest charged on your $5,000 loan. Hr block 1040nr The bank gives you a Form 1099-INT for 2013 showing the $575 interest you earned. Hr block 1040nr The bank also gives you a statement showing that you paid $310 interest for 2013. Hr block 1040nr You must include the $575 in your income. Hr block 1040nr If you itemize your deductions on Schedule A (Form 1040), Itemized Deductions, you can deduct $310, subject to the net investment income limit. Hr block 1040nr Gift for opening account. Hr block 1040nr   If you receive noncash gifts or services for making deposits or for opening an account in a savings institution, you may have to report the value as interest. Hr block 1040nr   For deposits of less than $5,000, gifts or services valued at more than $10 must be reported as interest. Hr block 1040nr For deposits of $5,000 or more, gifts or services valued at more than $20 must be reported as interest. Hr block 1040nr The value is determined by the cost to the financial institution. Hr block 1040nr Example. Hr block 1040nr You open a savings account at your local bank and deposit $800. Hr block 1040nr The account earns $20 interest. Hr block 1040nr You also receive a $15 calculator. Hr block 1040nr If no other interest is credited to your account during the year, the Form 1099-INT you receive will show $35 interest for the year. Hr block 1040nr You must report $35 interest income on your tax return. Hr block 1040nr Interest on insurance dividends. Hr block 1040nr   Interest on insurance dividends left on deposit with an insurance company that can be withdrawn annually is taxable to you in the year it is credited to your account. Hr block 1040nr However, if you can withdraw it only on the anniversary date of the policy (or other specified date), the interest is taxable in the year that date occurs. Hr block 1040nr Prepaid insurance premiums. Hr block 1040nr   Any increase in the value of prepaid insurance premiums, advance premiums, or premium deposit funds is interest if it is applied to the payment of premiums due on insurance policies or made available for you to withdraw. Hr block 1040nr U. Hr block 1040nr S. Hr block 1040nr obligations. Hr block 1040nr   Interest on U. Hr block 1040nr S. Hr block 1040nr obligations, such as U. Hr block 1040nr S. Hr block 1040nr Treasury bills, notes, and bonds, issued by any agency or instrumentality of the United States is taxable for federal income tax purposes. Hr block 1040nr Interest on tax refunds. Hr block 1040nr   Interest you receive on tax refunds is taxable income. Hr block 1040nr Interest on condemnation award. Hr block 1040nr   If the condemning authority pays you interest to compensate you for a delay in payment of an award, the interest is taxable. Hr block 1040nr Installment sale payments. Hr block 1040nr   If a contract for the sale or exchange of property provides for deferred payments, it also usually provides for interest payable with the deferred payments. Hr block 1040nr That interest is taxable when you receive it. Hr block 1040nr If little or no interest is provided for in a deferred payment contract, part of each payment may be treated as interest. Hr block 1040nr See Unstated Interest and Original Issue Discount (OID) in Publication 537. Hr block 1040nr Interest on annuity contract. Hr block 1040nr   Accumulated interest on an annuity contract you sell before its maturity date is taxable. Hr block 1040nr Usurious interest. Hr block 1040nr   Usurious interest is interest charged at an illegal rate. Hr block 1040nr This is taxable as interest unless state law automatically changes it to a payment on the principal. Hr block 1040nr Interest income on frozen deposits. Hr block 1040nr   Exclude from your gross income interest on frozen deposits. Hr block 1040nr A deposit is frozen if, at the end of the year, you cannot withdraw any part of the deposit because: The financial institution is bankrupt or insolvent, or The state in which the institution is located has placed limits on withdrawals because other financial institutions in the state are bankrupt or insolvent. Hr block 1040nr   The amount of interest you must exclude is the interest that was credited on the frozen deposits minus the sum of: The net amount you withdrew from these deposits during the year, and The amount you could have withdrawn as of the end of the year (not reduced by any penalty for premature withdrawals of a time deposit). Hr block 1040nr If you receive a Form 1099-INT for interest income on deposits that were frozen at the end of 2013, see Frozen deposits under How To Report Interest Income for information about reporting this interest income exclusion on your tax return. Hr block 1040nr   The interest you exclude is treated as credited to your account in the following year. Hr block 1040nr You must include it in income in the year you can withdraw it. Hr block 1040nr Example. Hr block 1040nr $100 of interest was credited on your frozen deposit during the year. Hr block 1040nr You withdrew $80 but could not withdraw any more as of the end of the year. Hr block 1040nr You must include $80 in your income and exclude $20 from your income for the year. Hr block 1040nr You must include the $20 in your income for the year you can withdraw it. Hr block 1040nr Bonds traded flat. Hr block 1040nr    If you buy a bond at a discount when interest has been defaulted or when the interest has accrued but has not been paid, the transaction is described as trading a bond flat. Hr block 1040nr The defaulted or unpaid interest is not income and is not taxable as interest if paid later. Hr block 1040nr When you receive a payment of that interest, it is a return of capital that reduces the remaining cost basis of your bond. Hr block 1040nr Interest that accrues after the date of purchase, however, is taxable interest income for the year received or accrued. Hr block 1040nr See Bonds Sold Between Interest Dates , later in this chapter. Hr block 1040nr Below-Market Loans If you make a below-market gift or demand loan, you must report as interest income any forgone interest (defined later) from that loan. Hr block 1040nr The below-market loan rules and exceptions are described in this section. Hr block 1040nr For more information, see section 7872 of the Internal Revenue Code and its regulations. Hr block 1040nr If you receive a below-market loan, you may be able to deduct the forgone interest as well as any interest you actually paid, but not if it is personal interest. Hr block 1040nr Loans subject to the rules. Hr block 1040nr   The rules for below-market loans apply to: Gift loans, Pay-related loans, Corporation-shareholder loans, Tax avoidance loans, and Certain loans made to qualified continuing care facilities under a continuing care contract. Hr block 1040nr A pay-related loan is any below-market loan between an employer and an employee or between an independent contractor and a person for whom the contractor provides services. Hr block 1040nr A tax avoidance loan is any below-market loan where the avoidance of federal tax is one of the main purposes of the interest arrangement. Hr block 1040nr Forgone interest. Hr block 1040nr   For any period, forgone interest is: The amount of interest that would be payable for that period if interest accrued on the loan at the applicable federal rate and was payable annually on December 31, minus Any interest actually payable on the loan for the period. Hr block 1040nr Applicable federal rate. Hr block 1040nr   Applicable federal rates are published by the IRS each month in the Internal Revenue Bulletin. Hr block 1040nr Some IRS offices have these bulletins available for research. Hr block 1040nr See chapter 5, How To Get Tax Help , for other ways to get this information. Hr block 1040nr Rules for below-market loans. Hr block 1040nr   The rules that apply to a below-market loan depend on whether the loan is a gift loan, demand loan, or term loan. Hr block 1040nr Gift and demand loans. Hr block 1040nr   A gift loan is any below-market loan where the forgone interest is in the nature of a gift. Hr block 1040nr   A demand loan is a loan payable in full at any time upon demand by the lender. Hr block 1040nr A demand loan is a below-market loan if no interest is charged or if interest is charged at a rate below the applicable federal rate. Hr block 1040nr   A demand loan or gift loan that is a below-market loan is generally treated as an arm's-length transaction in which the lender is treated as having made: A loan to the borrower in exchange for a note that requires the payment of interest at the applicable federal rate, and An additional payment to the borrower in an amount equal to the forgone interest. Hr block 1040nr The borrower is generally treated as transferring the additional payment back to the lender as interest. Hr block 1040nr The lender must report that amount as interest income. Hr block 1040nr   The lender's additional payment to the borrower is treated as a gift, dividend, contribution to capital, pay for services, or other payment, depending on the substance of the transaction. Hr block 1040nr The borrower may have to report this payment as taxable income, depending on its classification. Hr block 1040nr These transfers are considered to occur annually, generally on December 31. Hr block 1040nr Term loans. Hr block 1040nr   A term loan is any loan that is not a demand loan. Hr block 1040nr A term loan is a below-market loan if the amount of the loan is more than the present value of all payments due under the loan. Hr block 1040nr   A lender who makes a below-market term loan other than a gift loan is treated as transferring an additional lump-sum cash payment to the borrower (as a dividend, contribution to capital, etc. Hr block 1040nr ) on the date the loan is made. Hr block 1040nr The amount of this payment is the amount of the loan minus the present value, at the applicable federal rate, of all payments due under the loan. Hr block 1040nr An equal amount is treated as original issue discount (OID). Hr block 1040nr The lender must report the annual part of the OID as interest income. Hr block 1040nr The borrower may be able to deduct the OID as interest expense. Hr block 1040nr See Original Issue Discount (OID) , later. Hr block 1040nr Exceptions to the below-market loan rules. Hr block 1040nr   Exceptions to the below-market loan rules are discussed here. Hr block 1040nr Exception for loans of $10,000 or less. Hr block 1040nr   The rules for below-market loans do not apply to any day on which the total outstanding amount of loans between the borrower and lender is $10,000 or less. Hr block 1040nr This exception applies only to: Gift loans between individuals if the gift loan is not directly used to buy or carry income-producing assets, and Pay-related loans or corporation-shareholder loans if the avoidance of federal tax is not a principal purpose of the interest arrangement. Hr block 1040nr This exception does not apply to a term loan described in (2) earlier that previously has been subject to the below-market loan rules. Hr block 1040nr Those rules will continue to apply even if the outstanding balance is reduced to $10,000 or less. Hr block 1040nr Exception for loans to continuing care facilities. Hr block 1040nr   Loans to qualified continuing care facilities under continuing care contracts are not subject to the rules for below-market loans for the calendar year if the lender or the lender's spouse is age 62 or older at the end of the year. Hr block 1040nr For the definitions of qualified continuing care facility and continuing care contract, see Internal Revenue Code section 7872(h). Hr block 1040nr Exception for loans without significant tax effect. Hr block 1040nr   Loans are excluded from the below-market loan rules if their interest arrangements do not have a significant effect on the federal tax liability of the borrower or the lender. Hr block 1040nr These loans include: Loans made available by the lender to the general public on the same terms and conditions that are consistent with the lender's customary business practice; Loans subsidized by a federal, state, or municipal government that are made available under a program of general application to the public; Certain employee-relocation loans; Certain loans from a foreign person, unless the interest income would be effectively connected with the conduct of a U. Hr block 1040nr S. Hr block 1040nr trade or business and would not be exempt from U. Hr block 1040nr S. Hr block 1040nr tax under an income tax treaty; Gift loans to a charitable organization, contributions to which are deductible, if the total outstanding amount of loans between the organization and lender is $250,000 or less at all times during the tax year; and Other loans on which the interest arrangement can be shown to have no significant effect on the federal tax liability of the lender or the borrower. Hr block 1040nr For a loan described in (6) above, all the facts and circumstances are used to determine if the interest arrangement has a significant effect on the federal tax liability of the lender or borrower. Hr block 1040nr Some factors to be considered are: Whether items of income and deduction generated by the loan offset each other; The amount of these items; The cost to you of complying with the below-market loan rules, if they were to apply; and Any reasons other than taxes for structuring the transaction as a below-market loan. Hr block 1040nr If you structure a transaction to meet this exception and one of the principal purposes of that structure is the avoidance of federal tax, the loan will be considered a tax-avoidance loan, and this exception will not apply. Hr block 1040nr Limit on forgone interest for gift loans of $100,000 or less. Hr block 1040nr   For gift loans between individuals, if the outstanding loans between the lender and borrower total $100,000 or less, the forgone interest to be included in income by the lender and deducted by the borrower is limited to the amount of the borrower's net investment income for the year. Hr block 1040nr If the borrower's net investment income is $1,000 or less, it is treated as zero. Hr block 1040nr This limit does not apply to a loan if the avoidance of federal tax is one of the main purposes of the interest arrangement. Hr block 1040nr Effective dates. Hr block 1040nr    These rules apply to term loans made after June 6, 1984, and to demand loans outstanding after that date. Hr block 1040nr U. Hr block 1040nr S. Hr block 1040nr Savings Bonds This section provides tax information on U. Hr block 1040nr S. Hr block 1040nr savings bonds. Hr block 1040nr It explains how to report the interest income on these bonds and how to treat transfers of these bonds. Hr block 1040nr U. Hr block 1040nr S. Hr block 1040nr savings bonds currently offered to individuals include Series EE bonds and Series I bonds. Hr block 1040nr For other information on U. Hr block 1040nr S. Hr block 1040nr savings bonds, write to:  For Series HH/H: Bureau of the Fiscal Service Division of Customer Assistance P. Hr block 1040nr O. Hr block 1040nr Box 2186 Parkersburg, WV 26106-2186  For Series EE and I paper savings bonds: Bureau of the Fiscal Service Division of Customer Assistance P. Hr block 1040nr O. Hr block 1040nr Box 7012 Parkersburg, WV 26106-7012  For Series EE and I electronic bonds: Bureau of the Fiscal Service  Division of Customer Assistance P. Hr block 1040nr O. Hr block 1040nr Box 7015 Parkersburg, WV 26106-7015 Or, on the Internet, visit: www. Hr block 1040nr treasurydirect. Hr block 1040nr gov/indiv/indiv. Hr block 1040nr htm. Hr block 1040nr Accrual method taxpayers. Hr block 1040nr   If you use an accrual method of accounting, you must report interest on U. Hr block 1040nr S. Hr block 1040nr savings bonds each year as it accrues. Hr block 1040nr You cannot postpone reporting interest until you receive it or until the bonds mature. Hr block 1040nr Cash method taxpayers. Hr block 1040nr   If you use the cash method of accounting, as most individual taxpayers do, you generally report the interest on U. Hr block 1040nr S. Hr block 1040nr savings bonds when you receive it. Hr block 1040nr But see Reporting options for cash method taxpayers , later. Hr block 1040nr Series HH bonds. Hr block 1040nr   These bonds were issued at face value. Hr block 1040nr Interest is paid twice a year by direct deposit to your bank account. Hr block 1040nr If you are a cash method taxpayer, you must report interest on these bonds as income in the year you receive it. Hr block 1040nr   Series HH bonds were first offered in 1980 and last offered in August 2004. Hr block 1040nr Before 1980, series H bonds were issued. Hr block 1040nr Series H bonds are treated the same as series HH bonds. Hr block 1040nr If you are a cash method taxpayer, you must report the interest when you receive it. Hr block 1040nr   Series H bonds have a maturity period of 30 years. Hr block 1040nr Series HH bonds mature in 20 years. Hr block 1040nr The last series H bonds matured in 2009. Hr block 1040nr The last series HH bonds will mature in 2024. Hr block 1040nr Series EE and series I bonds. Hr block 1040nr   Interest on these bonds is payable when you redeem the bonds. Hr block 1040nr The difference between the purchase price and the redemption value is taxable interest. Hr block 1040nr Series EE bonds. Hr block 1040nr   Series EE bonds were first offered in January 1980 and have a maturity period of 30 years. Hr block 1040nr Before July 1980, series E bonds were issued. Hr block 1040nr The original 10-year maturity period of series E bonds has been extended to 40 years for bonds issued before December 1965 and 30 years for bonds issued after November 1965. Hr block 1040nr Paper series EE and series E bonds are issued at a discount. Hr block 1040nr The face value is payable to you at maturity. Hr block 1040nr Electronic series EE bonds are issued at their face value. Hr block 1040nr The face value plus accrued interest is payable to you at maturity. Hr block 1040nr As of January 1, 2012, paper savings bonds were no longer sold at financial institutions. Hr block 1040nr    Owners of paper series EE bonds can convert them to electronic bonds. Hr block 1040nr These converted bonds do not retain the denomination listed on the paper certificate but are posted at their purchase price (with accrued interest). Hr block 1040nr Series I bonds. Hr block 1040nr   Series I bonds were first offered in 1998. Hr block 1040nr These are inflation-indexed bonds issued at their face amount with a maturity period of 30 years. Hr block 1040nr The face value plus all accrued interest is payable to you at maturity. Hr block 1040nr Reporting options for cash method taxpayers. Hr block 1040nr   If you use the cash method of reporting income, you can report the interest on series EE, series E, and series I bonds in either of the following ways. Hr block 1040nr Method 1. Hr block 1040nr Postpone reporting the interest until the earlier of the year you cash or dispose of the bonds or the year in which they mature. Hr block 1040nr (However, see Savings bonds traded , later. Hr block 1040nr )  Note. Hr block 1040nr Series EE bonds issued in 1983 matured in 2013. Hr block 1040nr If you have used method 1, you generally must report the interest on these bonds on your 2013 return. Hr block 1040nr The last series E bonds were issued in 1980 and matured in 2010. Hr block 1040nr If you used method 1, you generally should have reported the interest on these bonds on your 2010 return. Hr block 1040nr Method 2. Hr block 1040nr Choose to report the increase in redemption value as interest each year. Hr block 1040nr  You must use the same method for all series EE, series E, and series I bonds you own. Hr block 1040nr If you do not choose method 2 by reporting the increase in redemption value as interest each year, you must use method 1. Hr block 1040nr If you plan to cash your bonds in the same year you will pay for higher educational expenses, you may want to use method 1 because you may be able to exclude the interest from your income. Hr block 1040nr To learn how, see Education Savings Bond Program, later. Hr block 1040nr Change from method 1. Hr block 1040nr   If you want to change your method of reporting the interest from method 1 to method 2, you can do so without permission from the IRS. Hr block 1040nr In the year of change, you must report all interest accrued to date and not previously reported for all your bonds. Hr block 1040nr   Once you choose to report the interest each year, you must continue to do so for all series EE, series E, and series I bonds you own and for any you get later, unless you request permission to change, as explained next. Hr block 1040nr Change from method 2. Hr block 1040nr   To change from method 2 to method 1, you must request permission from the IRS. Hr block 1040nr Permission for the change is automatically granted if you send the IRS a statement that meets all the following requirements. Hr block 1040nr You have typed or printed the following number at the top: “131. Hr block 1040nr ” It includes your name and social security number under “131. Hr block 1040nr ” It includes the year of change (both the beginning and ending dates). Hr block 1040nr It identifies the savings bonds for which you are requesting this change. Hr block 1040nr It includes your agreement to: Report all interest on any bonds acquired during or after the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest; and Report all interest on the bonds acquired before the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, with the exception of the interest reported in prior tax years. Hr block 1040nr   You must attach this statement to your tax return for the year of change, which you must file by the due date (including extensions). Hr block 1040nr   You can have an automatic extension of 6 months from the due date of your return for the year of change (excluding extensions) to file the statement with an amended return. Hr block 1040nr On the statement, type or print “Filed pursuant to section 301. Hr block 1040nr 9100-2. Hr block 1040nr ” To get this extension, you must have filed your original return for the year of the change by the due date (including extensions). Hr block 1040nr    By the date you file the original statement with your return, you must also send a signed copy to the address below. Hr block 1040nr    Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) P. Hr block 1040nr O. Hr block 1040nr Box 7604 Benjamin Franklin Station Washington, DC 20044   If you use a private delivery service, send the signed copy to the address below. Hr block 1040nr Internal Revenue Service Attention: CC:IT&A  (Automatic Rulings Branch) Room 5336 1111 Constitution Avenue, NW Washington, DC 20224    Instead of filing this statement, you can request permission to change from method 2 to method 1 by filing Form 3115. Hr block 1040nr In that case, follow the form instructions for an automatic change. Hr block 1040nr No user fee is required. Hr block 1040nr Co-owners. Hr block 1040nr   If a U. Hr block 1040nr S. Hr block 1040nr savings bond is issued in the names of co-owners, such as you and your child or you and your spouse, interest on the bond is generally taxable to the co-owner who bought the bond. Hr block 1040nr One co-owner's funds used. Hr block 1040nr   If you used your funds to buy the bond, you must pay the tax on the interest. Hr block 1040nr This is true even if you let the other co-owner redeem the bond and keep all the proceeds. Hr block 1040nr Under these circumstances, the co-owner who redeemed the bond will receive a Form 1099-INT at the time of redemption and must provide you with another Form 1099-INT showing the amount of interest from the bond taxable to you. Hr block 1040nr The co-owner who redeemed the bond is a “nominee. Hr block 1040nr ” See Nominee distributions under How To Report Interest Income, later, for more information about how a person who is a nominee reports interest income belonging to another person. Hr block 1040nr Both co-owners' funds used. Hr block 1040nr   If you and the other co-owner each contribute part of the bond's purchase price, the interest is generally taxable to each of you, in proportion to the amount each of you paid. Hr block 1040nr Community property. Hr block 1040nr   If you and your spouse live in a community property state and hold bonds as community property, one-half of the interest is considered received by each of you. Hr block 1040nr If you file separate returns, each of you generally must report one-half of the bond interest. Hr block 1040nr For more information about community property, see Publication 555. Hr block 1040nr Table 1-2. Hr block 1040nr   These rules are also shown in Table 1-2. Hr block 1040nr Child as only owner. Hr block 1040nr   Interest on U. Hr block 1040nr S. Hr block 1040nr savings bonds bought for and registered only in the name of your child is income to your child, even if you paid for the bonds and are named as beneficiary. Hr block 1040nr If the bonds are series EE, series E, or series I bonds, the interest on the bonds is income to your child in the earlier of the year the bonds are cashed or disposed of or the year the bonds mature, unless your child chooses to report the interest income each year. Hr block 1040nr Choice to report interest each year. Hr block 1040nr   The choice to report the accrued interest each year can be made either by your child or by you for your child. Hr block 1040nr This choice is made by filing an income tax return that shows all the interest earned to date, and by stating on the return that your child chooses to report the interest each year. Hr block 1040nr Either you or your child should keep a copy of this return. Hr block 1040nr   Unless your child is otherwise required to file a tax return for any year after making this choice, your child does not have to file a return only to report the annual accrual of U. Hr block 1040nr S. Hr block 1040nr savings bond interest under this choice. Hr block 1040nr However, see Tax on unearned income of certain children , earlier, under General Information. Hr block 1040nr Neither you nor your child can change the way you report the interest unless you request permission from the IRS, as discussed earlier under Change from method 2 . Hr block 1040nr Ownership transferred. Hr block 1040nr   If you bought series E, series EE, or series I bonds entirely with your own funds and had them reissued in your co-owner's name or beneficiary's name alone, you must include in your gross income for the year of reissue all interest that you earned on these bonds and have not previously reported. Hr block 1040nr But, if the bonds were reissued in your name alone, you do not have to report the interest accrued at that time. Hr block 1040nr   This same rule applies when bonds (other than bonds held as community property) are transferred between spouses or incident to divorce. Hr block 1040nr Example. Hr block 1040nr You bought series EE bonds entirely with your own funds. Hr block 1040nr You did not choose to report the accrued interest each year. Hr block 1040nr Later, you transfer the bonds to your former spouse under a divorce agreement. Hr block 1040nr You must include the deferred accrued interest, from the date of the original issue of the bonds to the date of transfer, in your income in the year of transfer. Hr block 1040nr Your former spouse includes in income the interest on the bonds from the date of transfer to the date of redemption. Hr block 1040nr Table 1-2. Hr block 1040nr Who Pays the Tax on U. Hr block 1040nr S. Hr block 1040nr Savings Bond Interest IF . Hr block 1040nr . Hr block 1040nr . Hr block 1040nr THEN the interest must be reported by . Hr block 1040nr . Hr block 1040nr . Hr block 1040nr you buy a bond in your name and the name of another person as co-owners, using only your own funds you. Hr block 1040nr you buy a bond in the name of another person, who is the sole owner of the bond the person for whom you bought the bond. Hr block 1040nr you and another person buy a bond as co-owners, each contributing part of the purchase price both you and the other co-owner, in proportion to the amount each paid for the bond. Hr block 1040nr you and your spouse, who live in a community property state, buy a bond that is community property you and your spouse. Hr block 1040nr If you file separate returns, both you and your spouse generally report one-half of the interest. Hr block 1040nr Purchased jointly. Hr block 1040nr   If you and a co-owner each contributed funds to buy series E, series EE, or series I bonds jointly and later have the bonds reissued in the co-owner's name alone, you must include in your gross income for the year of reissue your share of all the interest earned on the bonds that you have not previously reported. Hr block 1040nr The former co-owner does not have to include in gross income at the time of reissue his or her share of the interest earned that was not reported before the transfer. Hr block 1040nr This interest, however, as well as all interest earned after the reissue, is income to the former co-owner. Hr block 1040nr   This income-reporting rule also applies when the bonds are reissued in the name of your former co-owner and a new co-owner. Hr block 1040nr But the new co-owner will report only his or her share of the interest earned after the transfer. Hr block 1040nr   If bonds that you and a co-owner bought jointly are reissued to each of you separately in the same proportion as your contribution to the purchase price, neither you nor your co-owner has to report at that time the interest earned before the bonds were reissued. Hr block 1040nr Example 1. Hr block 1040nr You and your spouse each spent an equal amount to buy a $1,000 series EE savings bond. Hr block 1040nr The bond was issued to you and your spouse as co-owners. Hr block 1040nr You both postpone reporting interest on the bond. Hr block 1040nr You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Hr block 1040nr At that time neither you nor your spouse has to report the interest earned to the date of reissue. Hr block 1040nr Example 2. Hr block 1040nr You bought a $1,000 series EE savings bond entirely with your own funds. Hr block 1040nr The bond was issued to you and your spouse as co-owners. Hr block 1040nr You both postponed reporting interest on the bond. Hr block 1040nr You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Hr block 1040nr You must report half the interest earned to the date of reissue. Hr block 1040nr Transfer to a trust. Hr block 1040nr   If you own series E, series EE, or series I bonds and transfer them to a trust, giving up all rights of ownership, you must include in your income for that year the interest earned to the date of transfer if you have not already reported it. Hr block 1040nr However, if you are considered the owner of the trust and if the increase in value both before and after the transfer continues to be taxable to you, you can continue to defer reporting the interest earned each year. Hr block 1040nr You must include the total interest in your income in the year you cash or dispose of the bonds or the year the bonds finally mature, whichever is earlier. Hr block 1040nr   The same rules apply to previously unreported interest on series EE or series E bonds if the transfer to a trust consisted of series HH or series H bonds you acquired in a trade for the series EE or series E bonds. Hr block 1040nr See Savings bonds traded , later. Hr block 1040nr Decedents. Hr block 1040nr   The manner of reporting interest income on series E, series EE, or series I bonds, after the death of the owner (decedent), depends on the accounting and income-reporting methods previously used by the decedent. Hr block 1040nr Decedent who reported interest each year. Hr block 1040nr   If the bonds transferred because of death were owned by a person who used an accrual method, or who used the cash method and had chosen to report the interest each year, the interest earned in the year of death up to the date of death must be reported on that person's final return. Hr block 1040nr The person who acquires the bonds includes in income only interest earned after the date of death. Hr block 1040nr Decedent who postponed reporting interest. Hr block 1040nr   If the transferred bonds were owned by a decedent who had used the cash method and had not chosen to report the interest each year, and who had bought the bonds entirely with his or her own funds, all interest earned before death must be reported in one of the following ways. Hr block 1040nr The surviving spouse or personal representative (executor, administrator, etc. Hr block 1040nr ) who files the final income tax return of the decedent can choose to include on that return all interest earned on the bonds before the decedent's death. Hr block 1040nr The person who acquires the bonds then includes in income only interest earned after the date of death. Hr block 1040nr If the choice in (1) is not made, the interest earned up to the date of death is income in respect of the decedent and should not be included in the decedent's final return. Hr block 1040nr All interest earned both before and after the decedent's death (except any part reported by the estate on its income tax return) is income to the person who acquires the bonds. Hr block 1040nr If that person uses the cash method and does not choose to report the interest each year, he or she can postpone reporting it until the year the bonds are cashed or disposed of or the year they mature, whichever is earlier. Hr block 1040nr In the year that person reports the interest, he or she can claim a deduction for any federal estate tax paid on the part of the interest included in the decedent's estate. Hr block 1040nr For more information on income in respect of a decedent, see Publication 559, Survivors, Executors, and Administrators. Hr block 1040nr Example 1. Hr block 1040nr Your uncle, a cash method taxpayer, died and left you a $1,000 series EE bond. Hr block 1040nr He had bought the bond for $500 and had not chosen to report the interest each year. Hr block 1040nr At the date of death, interest of $200 had accrued on the bond, and its value of $700 was included in your uncle's estate. Hr block 1040nr Your uncle's executor chose not to include the $200 accrued interest in your uncle's final income tax return. Hr block 1040nr The $200 is income in respect of the decedent. Hr block 1040nr You are a cash method taxpayer and do not choose to report the interest each year as it is earned. Hr block 1040nr If you cash the bond when it reaches maturity value of $1,000, you report $500 interest income—the difference between maturity value of $1,000 and the original cost of $500. Hr block 1040nr For that year, you can deduct (as a miscellaneous itemized deduction not subject to the 2%-of-adjusted-gross-income limit) any federal estate tax paid because the $200 interest was included in your uncle's estate. Hr block 1040nr Example 2. Hr block 1040nr If, in Example 1 , the executor had chosen to include the $200 accrued interest in your uncle's final return, you would report only $300 as interest when you cashed the bond at maturity. Hr block 1040nr $300 is the interest earned after your uncle's death. Hr block 1040nr Example 3. Hr block 1040nr If, in Example 1 , you make or have made the choice to report the increase in redemption value as interest each year, you include in gross income for the year you acquire the bond all of the unreported increase in value of all series E, series EE, and series I bonds you hold, including the $200 on the bond you inherited from your uncle. Hr block 1040nr Example 4. Hr block 1040nr When your aunt died, she owned series HH bonds that she had acquired in a trade for series EE bonds. Hr block 1040nr You were the beneficiary of these bonds. Hr block 1040nr Your aunt used the cash method and did not choose to report the interest on the series EE bonds each year as it accrued. Hr block 1040nr Your aunt's executor chose not to include any interest earned before your aunt's death on her final return. Hr block 1040nr The income in respect of the decedent is the sum of the unreported interest on the series EE bonds and the interest, if any, payable on the series HH bonds but not received as of the date of your aunt's death. Hr block 1040nr You must report any interest received during the year as income on your return. Hr block 1040nr The part of the interest payable but not received before your aunt's death is income in respect of the decedent and may qualify for the estate tax deduction. Hr block 1040nr For information on when to report the interest on the series EE bonds traded, see Savings bonds traded , later. Hr block 1040nr Savings bonds distributed from a retirement or profit-sharing plan. Hr block 1040nr   If you acquire a U. Hr block 1040nr S. Hr block 1040nr savings bond in a taxable distribution from a retirement or profit-sharing plan, your income for the year of distribution includes the bond's redemption value (its cost plus the interest accrued before the distribution). Hr block 1040nr When you redeem the bond (whether in the year of distribution or later), your interest income includes only the interest accrued after the bond was distributed. Hr block 1040nr To figure the interest reported as a taxable distribution and your interest income when you redeem the bond, see Worksheet for savings bonds distributed from a retirement or profit-sharing plan under How To Report Interest Income, later. Hr block 1040nr Savings bonds traded. Hr block 1040nr   If you postponed reporting the interest on your series EE or series E bonds, you did not recognize taxable income when you traded the bonds for series HH or series H bonds, unless you received cash in the trade. Hr block 1040nr (You cannot trade series I bonds for series HH bonds. Hr block 1040nr After August 31, 2004, you cannot trade any other series of bonds for series HH bonds. Hr block 1040nr ) Any cash you received is income up to the amount of the interest earned on the bonds traded. Hr block 1040nr When your series HH or series H bonds mature, or if you dispose of them before maturity, you report as interest the difference between their redemption value and your cost. Hr block 1040nr Your cost is the sum of the amount you paid for the traded series EE or series E bonds plus any amount you had to pay at the time of the trade. Hr block 1040nr Example. Hr block 1040nr You traded series EE bonds (on which you postponed reporting the interest) for $2,500 in series HH bonds and $223 in cash. Hr block 1040nr You reported the $223 as taxable income on your tax return. Hr block 1040nr At the time of the trade, the series EE bonds had accrued interest of $523 and a redemption value of $2,723. Hr block 1040nr You hold the series HH bonds until maturity, when you receive $2,500. Hr block 1040nr You must report $300 as interest income in the year of maturity. Hr block 1040nr This is the difference between their redemption value, $2,500, and your cost, $2,200 (the amount you paid for the series EE bonds). Hr block 1040nr (It is also the difference between the accrued interest of $523 on the series EE bonds and the $223 cash received on the trade. Hr block 1040nr ) Choice to report interest in year of trade. Hr block 1040nr   You could have chosen to treat all of the previously unreported accrued interest on series EE or series E bonds traded for series HH bonds as income in the year of the trade. Hr block 1040nr If you made this choice, it is treated as a change from method 1. Hr block 1040nr See Change from method 1 under Series EE and series I bonds, earlier. Hr block 1040nr Form 1099-INT for U. Hr block 1040nr S. Hr block 1040nr savings bond interest. Hr block 1040nr   When you cash a bond, the bank or other payer that redeems it must give you a Form 1099-INT if the interest part of the payment you receive is $10 or more. Hr block 1040nr Box 3 of your Form 1099-INT should show the interest as the difference between the amount you received and the amount paid for the bond. Hr block 1040nr However, your Form 1099-INT may show more interest than you have to include on your income tax return. Hr block 1040nr For example, this may happen if any of the following are true. Hr block 1040nr You chose to report the increase in the redemption value of the bond each year. Hr block 1040nr The interest shown on your Form 1099-INT will not be reduced by amounts previously included in income. Hr block 1040nr You received the bond from a decedent. Hr block 1040nr The interest shown on your Form 1099-INT will not be reduced by any interest reported by the decedent before death, or on the decedent's final return, or by the estate on the estate's income tax return. Hr block 1040nr Ownership of the bond was transferred. Hr block 1040nr The interest shown on your Form 1099-INT will not be reduced by interest that accrued before the transfer. Hr block 1040nr You were named as a co-owner, and the other co-owner contributed funds to buy the bond. Hr block 1040nr The interest shown on your Form 1099-INT will not be reduced by the amount you received as nominee for the other co-owner. Hr block 1040nr (See Co-owners , earlier in this section, for more information about the reporting requirements. Hr block 1040nr ) You received the bond in a taxable distribution from a retirement or profit-sharing plan. Hr block 1040nr The interest shown on your Form 1099-INT will not be reduced by the interest portion of the amount taxable as a distribution from the plan and not taxable as interest. Hr block 1040nr (This amount is generally shown on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Hr block 1040nr , for the year of distribution. Hr block 1040nr )   For more information on including the correct amount of interest on your return, see U. Hr block 1040nr S. Hr block 1040nr savings bond interest previously reported or Nominee distributions under How To Report Interest Income, later. Hr block 1040nr    Interest on U. Hr block 1040nr S. Hr block 1040nr savings bonds is exempt from state and local taxes. Hr block 1040nr The Form 1099-INT you receive will indicate the amount that is for U. Hr block 1040nr S. Hr block 1040nr savings bonds interest in box 3. Hr block 1040nr Do not include this income on your state or local income tax return. Hr block 1040nr Education Savings Bond Program You may be able to exclude from income all or part of the interest you receive on the redemption of qualified U. Hr block 1040nr S. Hr block 1040nr savings bonds during the year if you pay qualified higher educational expenses during the same year. Hr block 1040nr This exclusion is known as the Education Savings Bond Program. Hr block 1040nr You do not qualify for this exclusion if your filing status is married filing separately. Hr block 1040nr Form 8815. Hr block 1040nr   Use Form 8815 to figure your exclusion. Hr block 1040nr Attach the form to your Form 1040 or Form 1040A. Hr block 1040nr Qualified U. Hr block 1040nr S. Hr block 1040nr savings bonds. Hr block 1040nr   A qualified U. Hr block 1040nr S. Hr block 1040nr savings bond is a series EE bond issued after 1989 or a series I bond. Hr block 1040nr The bond must be issued either in your name (sole owner) or in your and your spouse's names (co-owners). Hr block 1040nr You must be at least 24 years old before the bond's issue date. Hr block 1040nr For example, a bond bought by a parent and issued in the name of his or her child under age 24 does not qualify for the exclusion by the parent or child. Hr block 1040nr    The issue date of a bond may be earlier than the date the bond is purchased because the issue date assigned to a bond is the first day of the month in which it is purchased. Hr block 1040nr Beneficiary. Hr block 1040nr   You can designate any individual (including a child) as a beneficiary of the bond. Hr block 1040nr Verification by IRS. Hr block 1040nr   If you claim the exclusion, the IRS will check it by using bond redemption information from the Department of Treasury. Hr block 1040nr Qualified expenses. Hr block 1040nr   Qualified higher educational expenses are tuition and fees required for you, your spouse, or your dependent (for whom you claim an exemption) to attend an eligible educational institution. Hr block 1040nr   Qualified expenses include any contribution you make to a qualified tuition program or to a Coverdell education savings account. Hr block 1040nr For information about these programs, see Publication 970, Tax Benefits for Education. Hr block 1040nr   Qualified expenses do not include expenses for room and board or for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. Hr block 1040nr Eligible educational institutions. Hr block 1040nr   These institutions include most public, private, and nonprofit universities, colleges, and vocational schools that are accredited and eligible to participate in student aid programs run by the Department of Education. Hr block 1040nr Reduction for certain benefits. Hr block 1040nr   You must reduce your qualified higher educational expenses by all of the following tax-free benefits. Hr block 1040nr Tax-free part of scholarships and fellowships. Hr block 1040nr Expenses used to figure the tax-free portion of distributions from a Coverdell ESA. Hr block 1040nr Expenses used to figure the tax-free portion of distributions from a qualified tuition program. Hr block 1040nr Any tax-free payments (other than gifts or inheritances) received as educational assistance, such as: Veterans' educational assistance benefits, Qualified tuition reductions, or Employer-provided educational assistance. Hr block 1040nr Any expense used in figuring the American Opportunity and lifetime learning credits. Hr block 1040nr For information about these benefits, see Publication 970. Hr block 1040nr Amount excludable. Hr block 1040nr   If the total proceeds (interest and principal) from the qualified U. Hr block 1040nr S. Hr block 1040nr savings bonds you redeem during the year are not more than your adjusted qualified higher educational expenses for the year, you may be able to exclude all of the interest. Hr block 1040nr If the proceeds are more than the expenses, you may be able to exclude only part of the interest. Hr block 1040nr   To determine the excludable amount, multiply the interest part of the proceeds by a fraction. Hr block 1040nr The numer
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Should I itemize?

You should itemize deductions if your total deductions are more than the standard deduction amount. Also, if your standard deduction is zero, you should itemize any deductions you have if:

  • You are married and filing a separate return, and your spouse itemizes deductions,
  • You are filing a tax return for a short tax year because of a change in your annual accounting period, or
  • You are a nonresident or dual-status alien during the year. You are considered a dual-status alien if you were both a nonresident and resident alien during the year.

NOTE: If you are a nonresident alien who is married to a U.S. citizen or resident at the end of the year, you can choose to be treated as a U.S. resident. (See Publication 519, U.S. Tax Guide for Aliens.) If you make this choice, you can take the standard deduction.

When to itemize

You may benefit from itemizing your deductions on Schedule A (Form 1040) if you:

  • Do not qualify for the standard deduction, or the amount you can claim is limited,
  • Had large uninsured medical and dental expenses during the year,
  • Paid interest and taxes on your home,
  • Had large unreimbursed employee business expenses or other miscellaneous deductions,
  • Had large uninsured casualty or theft losses,
  • Made large contributions to qualified charities, or
  • Have total itemized deductions that are more than the standard deduction to which you otherwise are entitled.

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Page Last Reviewed or Updated: 12-Nov-2013

The Hr Block 1040nr

Hr block 1040nr Internal Revenue Bulletin:  2013-12  March 18, 2013  Rev. Hr block 1040nr Proc. Hr block 1040nr 2013-21 Table of Contents SECTION 1. Hr block 1040nr PURPOSE SECTION 2. Hr block 1040nr BACKGROUND SECTION 3. Hr block 1040nr SCOPE SECTION 4. Hr block 1040nr APPLICATION. Hr block 1040nr 01 Limitations on Depreciation Deductions for Certain Automobiles. Hr block 1040nr . Hr block 1040nr 02 Inclusions in Income of Lessees of Passenger Automobiles. Hr block 1040nr SECTION 5. Hr block 1040nr EFFECTIVE DATE SECTION 6. Hr block 1040nr DRAFTING INFORMATION SECTION 1. Hr block 1040nr PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2013, including separate tables of limitations on depreciation deductions for trucks and vans; and (2) the amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2013, including a separate table of inclusion amounts for lessees of trucks and vans. Hr block 1040nr The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. Hr block 1040nr SECTION 2. Hr block 1040nr BACKGROUND . Hr block 1040nr 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. Hr block 1040nr For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. Hr block 1040nr The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Hr block 1040nr This change reflects the higher rate of price inflation for trucks and vans since 1988. Hr block 1040nr . Hr block 1040nr 02 Section 331(a) of the American Taxpayer Relief Act of 2012, Pub. Hr block 1040nr L. Hr block 1040nr No. Hr block 1040nr 112-240, 126 Stat. Hr block 1040nr 2313 (Jan. Hr block 1040nr 2, 2013) (the “Act”) extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property acquired by the taxpayer after December 31, 2007, and before January 1, 2014, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2014. Hr block 1040nr Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies. Hr block 1040nr . Hr block 1040nr 03 Section 168(k)(2)(D)(i) provides that the § 168(k) additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). Hr block 1040nr Section 168(k)(2)(D)(iii) permits a taxpayer to elect out of the § 168(k) additional first year depreciation deduction for any class of property. Hr block 1040nr Section 168(k)(4), as amended by the Act, permits a corporation to elect to increase the alternative minimum tax (“AMT”) credit limitation under § 53(c), instead of claiming the § 168(k) additional first year depreciation deduction for all eligible qualified property placed in service after December 31, 2012, that is round 3 extension property (as defined in § 168(k)(4)(J)(iv)). Hr block 1040nr Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. Hr block 1040nr This revenue procedure also provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply, either because taxpayer: (1) purchased the passenger automobile used; (2) did not use the passenger automobile during 2013 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(2)(D)(iii); or (4) elected to increase the § 53 AMT credit limitation in lieu of claiming § 168(k) additional first year depreciation. Hr block 1040nr . Hr block 1040nr 04 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. Hr block 1040nr The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Hr block 1040nr Under § 1. Hr block 1040nr 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. Hr block 1040nr One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Hr block 1040nr Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Hr block 1040nr SECTION 3. Hr block 1040nr SCOPE . Hr block 1040nr 01 The limitations on depreciation deductions in section 4. Hr block 1040nr 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2013, and continue to apply for each taxable year that the passenger automobile remains in service. Hr block 1040nr . Hr block 1040nr 02 The tables in section 4. Hr block 1040nr 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2013. Hr block 1040nr Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Hr block 1040nr See Rev. Hr block 1040nr Proc. Hr block 1040nr 2008-22, 2008-1 C. Hr block 1040nr B. Hr block 1040nr 658, for passenger automobiles first leased during calendar year 2008; Rev. Hr block 1040nr Proc. Hr block 1040nr 2009-24, 2009-17 I. Hr block 1040nr R. Hr block 1040nr B. Hr block 1040nr 885, for passenger automobiles first leased during calendar year 2009; Rev. Hr block 1040nr Proc. Hr block 1040nr 2010-18, 2010-09 I. Hr block 1040nr R. Hr block 1040nr B. Hr block 1040nr 427, as amplified and modified by section 4. Hr block 1040nr 03 of Rev. Hr block 1040nr Proc. Hr block 1040nr 2011-21, 2011-12 I. Hr block 1040nr R. Hr block 1040nr B. Hr block 1040nr 560, for passenger automobiles first leased during calendar year 2010; Rev. Hr block 1040nr Proc. Hr block 1040nr 2011-21, for passenger automobiles first leased during calendar year 2011; and Rev. Hr block 1040nr Proc. Hr block 1040nr 2012-23, 2012-14 I. Hr block 1040nr R. Hr block 1040nr B. Hr block 1040nr 712, for passenger automobiles first leased during calendar year 2012. Hr block 1040nr SECTION 4. Hr block 1040nr APPLICATION . Hr block 1040nr 01 Limitations on Depreciation Deductions for Certain Automobiles. Hr block 1040nr (1) Amount of the inflation adjustment. Hr block 1040nr (a) Passenger automobiles (other than trucks or vans). Hr block 1040nr Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Hr block 1040nr Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” as the automobile component of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Hr block 1040nr The new car component of the CPI was 115. Hr block 1040nr 2 for October 1987 and 143. Hr block 1040nr 787 for October 2012. Hr block 1040nr The October 2012 index exceeded the October 1987 index by 28. Hr block 1040nr 587. Hr block 1040nr Therefore, the automobile price inflation adjustment for 2013 for passenger automobiles (other than trucks and vans) is 24. Hr block 1040nr 8 percent (28. Hr block 1040nr 587/115. Hr block 1040nr 2 x 100%). Hr block 1040nr The dollar limitations in § 280F(a) are multiplied by a factor of 0. Hr block 1040nr 248, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2013. Hr block 1040nr This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2013. Hr block 1040nr (b) Trucks and vans. Hr block 1040nr To determine the dollar limitations for trucks and vans first placed in service during calendar year 2013, the Service uses the new truck component of the CPI instead of the new car component. Hr block 1040nr The new truck component of the CPI was 112. Hr block 1040nr 4 for October 1987 and 149. Hr block 1040nr 386 for October 2012. Hr block 1040nr The October 2012 index exceeded the October 1987 index by 36. Hr block 1040nr 986. Hr block 1040nr Therefore, the automobile price inflation adjustment for 2013 for trucks and vans is 32. Hr block 1040nr 9 percent (36. Hr block 1040nr 986/112. Hr block 1040nr 4 x 100%). Hr block 1040nr The dollar limitations in § 280F(a) are multiplied by a factor of 0. Hr block 1040nr 329, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. Hr block 1040nr This adjustment applies to all trucks and vans that are first placed in service in calendar year 2013. Hr block 1040nr (2) Amount of the limitation. Hr block 1040nr Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2013. Hr block 1040nr Use Table 1 for a passenger automobile (other than a truck or van), and Table 2 for a truck or van, placed in service in calendar year 2013 for which the § 168(k) additional first year depreciation deduction applies. Hr block 1040nr Use Table 3 for a passenger automobile (other than a truck or van), and Table 4 for a truck or van, placed in service in calendar year 2013 for which the § 168(k) additional first year depreciation deduction does not apply. Hr block 1040nr REV. Hr block 1040nr PROC. Hr block 1040nr 2013-21 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. Hr block 1040nr PROC. Hr block 1040nr 2013-21 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,360 2nd Tax Year $5,400 3rd Tax Year $3,250 Each Succeeding Year $1,975 REV. Hr block 1040nr PROC. Hr block 1040nr 2013-21 TABLE 3 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. Hr block 1040nr PROC. Hr block 1040nr 2013-21 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,360 2nd Tax Year $5,400 3rd Tax Year $3,250 Each Succeeding Year $1,975 . Hr block 1040nr 02 Inclusions in Income of Lessees of Passenger Automobiles. Hr block 1040nr A taxpayer must follow the procedures in § 1. Hr block 1040nr 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2013. Hr block 1040nr In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure, while lessees of trucks and vans should use Table 6 of this revenue procedure. Hr block 1040nr REV. Hr block 1040nr PROC. Hr block 1040nr 2013-21 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2013 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $19,000 $19,500 2 4 6 7 8 19,500 20,000 2 5 6 9 9 20,000 20,500 2 5 8 9 11 20,500 21,000 3 6 8 10 12 21,000 21,500 3 6 10 11 13 21,500 22,000 3 7 10 13 14 22,000 23,000 4 8 11 14 16 23,000 24,000 4 9 14 16 18 24,000 25,000 5 10 15 18 21 25,000 26,000 5 12 16 21 23 26,000 27,000 6 12 19 23 25 27,000 28,000 6 14 20 25 28 28,000 29,000 7 15 22 27 30 29,000 30,000 7 16 24 29 33 30,000 31,000 8 17 26 31 35 31,000 32,000 8 19 27 33 38 32,000 33,000 9 20 29 35 40 33,000 34,000 10 21 31 37 43 34,000 35,000 10 22 33 39 45 35,000 36,000 11 23 35 41 48 36,000 37,000 11 25 36 43 50 37,000 38,000 12 26 38 45 53 38,000 39,000 12 27 40 47 55 39,000 40,000 13 28 42 49 58 40,000 41,000 13 29 44 52 59 41,000 42,000 14 30 45 54 63 42,000 43,000 14 32 47 56 64 43,000 44,000 15 33 48 59 67 44,000 45,000 15 34 51 60 69 45,000 46,000 16 35 52 63 72 46,000 47,000 17 36 54 65 74 47,000 48,000 17 38 55 67 77 48,000 49,000 18 39 57 69 79 49,000 50,000 18 40 59 71 82 50,000 51,000 19 41 61 73 84 51,000 52,000 19 42 63 75 87 52,000 53,000 20 43 65 77 89 53,000 54,000 20 45 66 79 92 54,000 55,000 21 46 68 81 94 55,000 56,000 21 47 70 84 96 56,000 57,000 22 48 72 85 99 57,000 58,000 22 50 73 88 101 58,000 59,000 23 51 75 90 103 59,000 60,000 24 52 76 92 106 60,000 62,000 24 54 79 95 110 62,000 64,000 25 56 83 99 115 64,000 66,000 27 58 87 103 120 66,000 68,000 28 60 90 108 125 68,000 70,000 29 63 93 112 130 70,000 72,000 30 65 97 117 134 72,000 74,000 31 68 100 121 139 74,000 76,000 32 70 104 125 144 76,000 78,000 33 73 107 129 149 78,000 80,000 34 75 111 133 154 80,000 85,000 36 79 117 141 162 85,000 90,000 39 85 126 151 174 90,000 95,000 41 91 135 162 186 95,000 100,000 44 97 144 172 199 100,000 110,000 48 106 157 188 217 110,000 120,000 53 118 174 210 241 120,000 130,000 59 129 193 230 266 130,000 140,000 64 141 210 252 290 140,000 150,000 70 153 227 273 315 150,000 160,000 75 165 245 294 339 160,000 170,000 80 177 263 315 363 170,000 180,000 86 189 280 336 388 180,000 190,000 91 201 298 357 412 190,000 200,000 97 212 316 378 436 200,000 210,000 102 224 333 400 461 210,000 220,000 107 236 351 420 486 220,000 230,000 113 248 368 442 509 230,000 240,000 118 260 386 463 534 240,000 And up 124 272 403 484 558 REV. Hr block 1040nr PROC. Hr block 1040nr 2013-21 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2013 Fair Market Value of Truck or Van Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $19,000 $19,500 1 3 4 5 6 19,500 20,000 2 3 5 6 7 20,000 20,500 2 4 6 7 8 20,500 21,000 2 5 7 8 9 21,000 21,500 2 5 8 9 11 21,500 22,000 3 6 8 10 12 22,000 23,000 3 7 10 11 14 23,000 24,000 4 8 11 14 16 24,000 25,000 4 9 14 16 18 25,000 26,000 5 10 15 18 21 26,000 27,000 5 12 17 20 23 27,000 28,000 6 13 18 23 25 28,000 29,000 6 14 20 25 28 29,000 30,000 7 15 22 27 30 30,000 31,000 7 16 24 29 33 31,000 32,000 8 17 26 31 35 32,000 33,000 8 19 27 33 38 33,000 34,000 9 20 29 35 41 34,000 35,000 10 21 31 37 43 35,000 36,000 10 22 33 39 46 36,000 37,000 11 23 35 41 48 37,000 38,000 11 25 36 43 51 38,000 39,000 12 26 38 45 53 39,000 40,000 12 27 40 48 55 40,000 41,000 13 28 42 49 58 41,000 42,000 13 29 44 52 60 42,000 43,000 14 30 46 54 62 43,000 44,000 14 32 47 56 65 44,000 45,000 15 33 48 59 67 45,000 46,000 15 34 51 60 70 46,000 47,000 16 35 52 63 72 47,000 48,000 17 36 54 65 74 48,000 49,000 17 38 55 67 77 49,000 50,000 18 39 57 69 79 50,000 51,000 18 40 59 71 82 51,000 52,000 19 41 61 73 84 52,000 53,000 19 42 63 75 87 53,000 54,000 20 43 65 77 89 54,000 55,000 20 45 66 80 91 55,000 56,000 21 46 68 81 94 56,000 57,000 21 47 70 84 96 57,000 58,000 22 48 72 86 98 58,000 59,000 22 50 73 88 101 59,000 60,000 23 51 75 90 103 60,000 62,000 24 52 78 93 108 62,000 64,000 25 55 81 97 113 64,000 66,000 26 57 85 101 118 66,000 68,000 27 60 88 106 122 68,000 70,000 28 62 92 110 127 70,000 72,000 29 64 96 114 132 72,000 74,000 30 67 99 118 137 74,000 76,000 31 69 103 122 142 76,000 78,000 32 72 105 127 147 78,000 80,000 34 73 110 131 151 80,000 85,000 35 78 116 138 160 85,000 90,000 38 84 124 149 172 90,000 95,000 41 90 133 160 184 95,000 100,000 44 95 142 171 196 100,000 110,000 48 104 156 186 214 110,000 120,000 53 116 173 207 240 120,000 130,000 58 128 191 228 264 130,000 140,000 64 140 208 249 288 140,000 150,000 69 152 226 270 313 150,000 160,000 75 164 243 292 336 160,000 170,000 80 176 261 312 361 170,000 180,000 85 188 278 334 386 180,000 190,000 91 199 296 355 410 190,000 200,000 96 211 314 376 434 200,000 210,000 101 223 332 397 459 210,000 220,000 107 235 349 418 483 220,000 230,000 112 247 367 439 507 230,000 240,000 118 259 384 460 532 240,000 And up 123 271 401 482 556 SECTION 5. Hr block 1040nr EFFECTIVE DATE This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2013. Hr block 1040nr SECTION 6. Hr block 1040nr DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Hr block 1040nr Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Hr block 1040nr For further information regarding this revenue procedure, contact Mr. Hr block 1040nr Harvey at (202) 622-4930 (not a toll-free call). Hr block 1040nr Prev  Up  Next   Home   More Internal Revenue Bulletins