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Tax volunteer 3. Tax volunteer   Investment Expenses Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Limits on DeductionsPassive activity. Tax volunteer Other income (nonpassive income). Tax volunteer Expenses. Tax volunteer Additional information. Tax volunteer Interest ExpensesInvestment Interest Limit on Deduction Bond Premium AmortizationSpecial rules to determine amounts payable on a bond. Tax volunteer Basis. Tax volunteer How To Figure Amortization Choosing To Amortize How To Report Amortization Expenses of Producing IncomeFees to buy or sell. Tax volunteer Including mutual fund or REMIC expenses in income. Tax volunteer Nondeductible ExpensesUsed as collateral. Tax volunteer Short-sale expenses. Tax volunteer Expenses for both tax-exempt and taxable income. Tax volunteer State income taxes. Tax volunteer Nondeductible amount. Tax volunteer Basis adjustment. Tax volunteer How To Report Investment Expenses When To Report Investment Expenses Topics - This chapter discusses: Limits on Deductions , Interest Expenses , Bond Premium Amortization , Expenses of Producing Income , Nondeductible Expenses , How To Report Investment Expenses , and When To Report Investment Expenses . Tax volunteer Useful Items - You may want to see: Publication 535 Business Expenses 925 Passive Activity and At-Risk Rules 929 Tax Rules for Children and Dependents Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 4952 Investment Interest Expense Deduction See chapter 5, How To Get Tax Help , for information about getting these publications and forms. Tax volunteer Limits on Deductions Your deductions for investment expenses may be limited by: The at-risk rules, The passive activity loss limits, The limit on investment interest, or The 2% limit on certain miscellaneous itemized deductions. Tax volunteer The at-risk rules and passive activity rules are explained briefly in this section. Tax volunteer The limit on investment interest is explained later in this chapter under Interest Expenses . Tax volunteer The 2% limit is explained later in this chapter under Expenses of Producing Income . Tax volunteer At-risk rules. Tax volunteer   Special at-risk rules apply to most income-producing activities. Tax volunteer These rules limit the amount of loss you can deduct to the amount you risk losing in the activity. Tax volunteer Generally, this is the cash and the adjusted basis of property you contribute to the activity. Tax volunteer It also includes money you borrow for use in the activity if you are personally liable for repayment or if you use property not used in the activity as security for the loan. Tax volunteer For more information, see Publication 925. Tax volunteer Passive activity losses and credits. Tax volunteer   The amount of losses and tax credits you can claim from passive activities is limited. Tax volunteer Generally, you are allowed to deduct passive activity losses only up to the amount of your passive activity income. Tax volunteer Also, you can use credits from passive activities only against tax on the income from passive activities. Tax volunteer There are exceptions for certain activities, such as rental real estate activities. Tax volunteer Passive activity. Tax volunteer   A passive activity generally is any activity involving the conduct of any trade or business in which you do not materially participate and any rental activity. Tax volunteer However, if you are involved in renting real estate, the activity is not a passive activity if both of the following are true. Tax volunteer More than one-half of the personal services you perform during the year in all trades or businesses are performed in real property trades or businesses in which you materially participate. Tax volunteer You perform more than 750 hours of services during the year in real property trades or businesses in which you materially participate. Tax volunteer  The term “trade or business” generally means any activity that involves the conduct of a trade or business, is conducted in anticipation of starting a trade or business, or involves certain research or experimental expenditures. Tax volunteer However, it does not include rental activities or certain activities treated as incidental to holding property for investment. Tax volunteer   You are considered to materially participate in an activity if you are involved on a regular, continuous, and substantial basis in the operations of the activity. Tax volunteer Other income (nonpassive income). Tax volunteer    Generally, you can use losses from passive activities only to offset income from passive activities. Tax volunteer You cannot use passive activity losses to offset your other income, such as your wages or your portfolio income. Tax volunteer Portfolio income includes gross income from interest, dividends, annuities, or royalties that is not derived in the ordinary course of a trade or business. Tax volunteer It also includes gains or losses (not derived in the ordinary course of a trade or business) from the sale or trade of property (other than an interest in a passive activity) producing portfolio income or held for investment. Tax volunteer This includes capital gain distributions from mutual funds (and other regulated investment companies) and real estate investment trusts. Tax volunteer   You cannot use passive activity losses to offset Alaska Permanent Fund dividends. Tax volunteer Expenses. Tax volunteer   Do not include in the computation of your passive activity income or loss: Expenses (other than interest) that are clearly and directly allocable to your portfolio income, or Interest expense properly allocable to portfolio income. Tax volunteer However, this interest and other expenses may be subject to other limits. Tax volunteer These limits are explained in the rest of this chapter. Tax volunteer Additional information. Tax volunteer   For more information about determining and reporting income and losses from passive activities, see Publication 925. Tax volunteer Interest Expenses This section discusses interest expenses you may be able to deduct as an investor. Tax volunteer For information on business interest, see chapter 4 of Publication 535. Tax volunteer You cannot deduct personal interest expenses other than qualified home mortgage interest, as explained in Publication 936, Home Mortgage Interest Deduction, and interest on certain student loans, as explained in Publication 970. Tax volunteer Investment Interest If you borrow money to buy property you hold for investment, the interest you pay is investment interest. Tax volunteer You can deduct investment interest subject to the limit discussed later. Tax volunteer However, you cannot deduct interest you incurred to produce tax-exempt income. Tax volunteer See Tax-exempt income under Nondeductible Expenses, later. Tax volunteer You also cannot deduct interest expenses on straddles discussed under Interest expense and carrying charges on straddles , later. Tax volunteer Investment interest does not include any qualified home mortgage interest or any interest taken into account in computing income or loss from a passive activity. Tax volunteer Investment property. Tax volunteer   Property held for investment includes property that produces interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business. Tax volunteer It also includes property that produces gain or loss (not derived in the ordinary course of a trade or business) from the sale or trade of property producing these types of income or held for investment (other than an interest in a passive activity). Tax volunteer Investment property also includes an interest in a trade or business activity in which you did not materially participate (other than a passive activity). Tax volunteer Partners, shareholders, and beneficiaries. Tax volunteer   To determine your investment interest, combine your share of investment interest from a partnership, S corporation, estate, or trust with your other investment interest. Tax volunteer Allocation of Interest Expense If you borrow money for business or personal purposes as well as for investment, you must allocate the debt among those purposes. Tax volunteer Only the interest expense on the part of the debt used for investment purposes is treated as investment interest. Tax volunteer The allocation is not affected by the use of property that secures the debt. Tax volunteer Example 1. Tax volunteer You borrow $10,000 and use $8,000 to buy stock. Tax volunteer You use the other $2,000 to buy items for your home. Tax volunteer Since 80% of the debt is used for, and allocated to, investment purposes, 80% of the interest on that debt is investment interest. Tax volunteer The other 20% is nondeductible personal interest. Tax volunteer Debt proceeds received in cash. Tax volunteer   If you receive debt proceeds in cash, the proceeds are generally not treated as investment property. Tax volunteer Debt proceeds deposited in account. Tax volunteer   If you deposit debt proceeds in an account, that deposit is treated as investment property, regardless of whether the account bears interest. Tax volunteer But, if you withdraw the funds and use them for another purpose, you must reallocate the debt to determine the amount considered to be for investment purposes. Tax volunteer Example 2. Tax volunteer Assume in Example 1 that you borrowed the money on March 1 and immediately bought the stock for $8,000. Tax volunteer You did not buy the household items until June 1. Tax volunteer You had deposited the $2,000 in the bank. Tax volunteer You had no other transactions on the bank account until June. Tax volunteer You did not sell the stock, and you made no principal payments on the debt. Tax volunteer You paid interest from another account. Tax volunteer The $8,000 is treated as being used for an investment purpose. Tax volunteer The $2,000 is treated as being used for an investment purpose for the 3-month period. Tax volunteer Your total interest expense for 3 months on this debt is investment interest. Tax volunteer In June, when you spend the $2,000 for household items, you must begin to allocate 80% of the debt and the interest expense to investment purposes and 20% to personal purposes. Tax volunteer Amounts paid within 30 days. Tax volunteer   If you receive loan proceeds in cash or if the loan proceeds are deposited in an account, you can treat any payment (up to the amount of the proceeds) made from any account you own, or from cash, as made from those proceeds. Tax volunteer This applies to any payment made within 30 days before or after the proceeds are received in cash or deposited in your account. Tax volunteer   If you received the loan proceeds in cash, you can treat the payment as made on the date you received the cash instead of the date you actually made the payment. Tax volunteer Payments on debt may require new allocation. Tax volunteer   As you repay a debt used for more than one purpose, you must reallocate the balance. Tax volunteer You must first reduce the amount allocated to personal purposes by the repayment. Tax volunteer You then reallocate the rest of the debt to find what part is for investment purposes. Tax volunteer Example 3. Tax volunteer If, in Example 2 , you repay $500 on November 1, the entire repayment is applied against the amount allocated to personal purposes. Tax volunteer The debt balance is now allocated as $8,000 for investment purposes and $1,500 for personal purposes. Tax volunteer Until the next reallocation is necessary, 84% ($8,000 ÷ $9,500) of the debt and the interest expense is allocated to investment. Tax volunteer Pass-through entities. Tax volunteer   If you use borrowed funds to buy an interest in a partnership or S corporation, then the interest on those funds must be allocated based on the assets of the entity. Tax volunteer If you contribute to the capital of the entity, you can make the allocation using any reasonable method. Tax volunteer Additional allocation rules. Tax volunteer   For more information about allocating interest expense, see chapter 4 of Publication 535. Tax volunteer When To Deduct Investment Interest If you use the cash method of accounting, you must pay the interest before you can deduct it. Tax volunteer If you use an accrual method of accounting, you can deduct interest over the period it accrues, regardless of when you pay it. Tax volunteer For an exception, see Unpaid expenses owed to related party under When To Report Investment Expenses, later in this chapter. Tax volunteer Example. Tax volunteer You borrowed $1,000 on August 26, 2013, payable in 90 days at 12% interest. Tax volunteer On November 26, 2013, you paid this with a new note for $1,030, due on February 26, 2014. Tax volunteer If you use the cash method of accounting, you cannot deduct any part of the $30 interest on your return for 2013 because you did not actually pay it. Tax volunteer If you use an accrual method, you may be able to deduct a portion of the interest on the loans through December 31, 2013, on your return for 2013. Tax volunteer Interest paid in advance. Tax volunteer   Generally, if you pay interest in advance for a period that goes beyond the end of the tax year, you must spread the interest over the tax years to which it belongs under the OID rules discussed in chapter 1. Tax volunteer You can deduct in each year only the interest for that year. Tax volunteer Interest on margin accounts. Tax volunteer   If you are a cash method taxpayer, you can deduct interest on margin accounts to buy taxable securities as investment interest in the year you paid it. Tax volunteer You are considered to have paid interest on these accounts only when you actually pay the broker or when payment becomes available to the broker through your account. Tax volunteer Payment may become available to the broker through your account when the broker collects dividends or interest for your account, or sells securities held for you or received from you. Tax volunteer   You cannot deduct any interest on money borrowed for personal reasons. Tax volunteer Limit on interest deduction for market discount bonds. Tax volunteer   The amount you can deduct for interest expense you paid or accrued during the year to buy or carry a market discount bond may be limited. Tax volunteer This limit does not apply if you accrue the market discount and include it in your income currently. Tax volunteer   Under this limit, the interest is deductible only to the extent it is more than: The total interest and OID includible in gross income for the bond for the year, plus The market discount for the number of days you held the bond during the year. Tax volunteer Figure the amount in (2) above using the rules for figuring accrued market discount in chapter 1 under Market Discount Bonds . Tax volunteer Interest not deducted due to limit. Tax volunteer   In the year you dispose of the bond, you can deduct any interest expense you were not allowed to deduct in earlier years because of the limit. Tax volunteer Choosing to deduct disallowed interest expense before the year of disposition. Tax volunteer   You can choose to deduct disallowed interest expense in any year before the year you dispose of the bond, up to your net interest income from the bond during the year. Tax volunteer The rest of the disallowed interest expense remains deductible in the year you dispose of the bond. Tax volunteer Net interest income. Tax volunteer   This is the interest income (including OID) from the bond that you include in income for the year, minus the interest expense paid or accrued during the year to purchase or carry the bond. Tax volunteer Limit on interest deduction for short-term obligations. Tax volunteer   If the current income inclusion rules discussed in chapter 1 under Discount on Short-Term Obligations do not apply to you, the amount you can deduct for interest expense you paid or accrued during the year to buy or carry a short-term obligation is limited. Tax volunteer   The interest is deductible only to the extent it is more than: The amount of acquisition discount or OID on the obligation for the tax year, plus The amount of any interest payable on the obligation for the year that is not included in income because of your accounting method (other than interest taken into account in determining the amount of acquisition discount or OID). Tax volunteer The method of determining acquisition discount and OID for short-term obligations is discussed in chapter 1 under Discount on Short-Term Obligations . Tax volunteer Interest not deducted due to limit. Tax volunteer   In the year you dispose of the obligation, or, if you choose, in another year in which you have net interest income from the obligation, you can deduct any interest expense you were not allowed to deduct for an earlier year because of the limit. Tax volunteer Follow the same rules provided in the earlier discussion under Limit on interest deduction for market discount bonds , earlier. Tax volunteer Limit on Deduction Generally, your deduction for investment interest expense is limited to your net investment income. Tax volunteer You can carry over the amount of investment interest you could not deduct because of this limit to the next tax year. Tax volunteer The interest carried over is treated as investment interest paid or accrued in that next year. Tax volunteer You can carry over disallowed investment interest to the next tax year even if it is more than your taxable income in the year the interest was paid or accrued. Tax volunteer Net Investment Income Determine the amount of your net investment income by subtracting your investment expenses (other than interest expense) from your investment income. Tax volunteer Investment income. Tax volunteer   This generally includes your gross income from property held for investment (such as interest, dividends, annuities, and royalties). Tax volunteer Investment income does not include Alaska Permanent Fund dividends. Tax volunteer It also does not include qualified dividends or net capital gain unless you choose to include them. Tax volunteer Choosing to include qualified dividends. Tax volunteer   Investment income generally does not include qualified dividends, discussed in chapter 1. Tax volunteer However, you can choose to include all or part of your qualified dividends in investment income. Tax volunteer   You make this choice by completing Form 4952, line 4g, according to its instructions. Tax volunteer   If you choose to include any of your qualified dividends in investment income, you must reduce your qualified dividends that are eligible for the lower capital gains tax rates by the same amount. Tax volunteer Choosing to include net capital gain. Tax volunteer    Investment income generally does not include net capital gain from disposing of investment property (including capital gain distributions from mutual funds). Tax volunteer However, you can choose to include all or part of your net capital gain in investment income. Tax volunteer   You make this choice by completing Form 4952, line 4g, according to its instructions. Tax volunteer   If you choose to include any of your net capital gain in investment income, you must reduce your net capital gain that is eligible for the lower capital gains tax rates by the same amount. Tax volunteer   For more information about the capital gains rates, see Capital Gain Tax Rates in chapter 4. Tax volunteer    Before making either choice, consider the overall effect on your tax liability. Tax volunteer Compare your tax if you make one or both of these choices with your tax if you do not. Tax volunteer Investment income of child reported on parent's return. Tax volunteer   Investment income includes the part of your child's interest and dividend income you choose to report on your return. Tax volunteer If the child does not have qualified dividends, Alaska Permanent Fund dividends, or capital gain distributions, this is the amount on line 6 of Form 8814. Tax volunteer Include it on line 4a of Form 4952. Tax volunteer Example. Tax volunteer Your 8-year-old son has interest income of $2,200, which you choose to report on your own return. Tax volunteer You enter $2,200 on Form 8814, lines 1a and 4, and $200 on lines 6 and 12 and complete Part II. Tax volunteer Also enter $200 on Form 1040, line 21. Tax volunteer Your investment income includes this $200. Tax volunteer Child's qualified dividends. Tax volunteer   If part of the amount you report is your child's qualified dividends, that part (which is reported on Form 1040, line 9b) generally does not count as investment income. Tax volunteer However, you can choose to include all or part of it in investment income, as explained under Choosing to include qualified dividends , earlier. Tax volunteer   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured next under Child's Alaska Permanent Fund dividends). Tax volunteer Child's Alaska Permanent Fund dividends. Tax volunteer   If part of the amount you report is your child's Alaska Permanent Fund dividends, that part does not count as investment income. Tax volunteer To figure the amount of your child's income that you can consider your investment income, start with the amount on Form 8814, line 6. Tax volunteer Multiply that amount by a percentage that is equal to the Alaska Permanent Fund dividends divided by the total amount on Form 8814, line 4. Tax volunteer Subtract the result from the amount on Form 8814, line 12. Tax volunteer Example. Tax volunteer Your 10-year-old child has taxable interest income of $4,000 and Alaska Permanent Fund dividends of $2,000. Tax volunteer You choose to report this on your return. Tax volunteer You enter $4,000 on Form 8814, line 1a, $2,000 on line 2a, and $6,000 on line 4. Tax volunteer You then enter $4,000 on Form 8814, lines 6 and 12, and Form 1040, line 21. Tax volunteer You figure the amount of your child's income that you can consider your investment income as follows: $4,000 − ($4,000 × ($2,000 ÷ $6,000)) = $2,667 You include the result, $2,667, on Form 4952, line 4a. Tax volunteer Child's capital gain distributions. Tax volunteer   If part of the amount you report is your child's capital gain distributions, that part (which is reported on Schedule D (Form 1040), line 13, or Form 1040, line 13) generally does not count as investment income. Tax volunteer However, you can choose to include all or part of it in investment income, as explained in Choosing to include net capital gain , earlier. Tax volunteer   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured under Child's Alaska Permanent Fund dividends , earlier). Tax volunteer Investment expenses. Tax volunteer   Investment expenses are your allowed deductions (other than interest expense) directly connected with the production of investment income. Tax volunteer Investment expenses that are included as a miscellaneous itemized deduction on Schedule A (Form 1040) are allowable deductions after applying the 2% limit that applies to miscellaneous itemized deductions. Tax volunteer Use the smaller of: The investment expenses included on Schedule A (Form 1040), line 23, or The amount on Schedule A (Form 1040), line 27. Tax volunteer See Expenses of Producing Income , later, for a discussion of the 2% limit. Tax volunteer Losses from passive activities. Tax volunteer   Income or expenses that you used in computing income or loss from a passive activity are not included in determining your investment income or investment expenses (including investment interest expense). Tax volunteer See Publication 925 for information about passive activities. Tax volunteer Example. Tax volunteer Ted is a partner in a partnership that operates a business. Tax volunteer However, he does not materially participate in the partnership's business. Tax volunteer Ted's interest in the partnership is considered a passive activity. Tax volunteer Ted's investment income from interest and dividends (other than qualified dividends) is $10,000. Tax volunteer His investment expenses (other than interest) are $3,200 after taking into account the 2% limit on miscellaneous itemized deductions. Tax volunteer His investment interest expense is $8,000. Tax volunteer Ted also has income from the partnership of $2,000. Tax volunteer Ted figures his net investment income and the limit on his investment interest expense deduction in the following way: Total investment income $10,000 Minus: Investment expenses (other than interest) 3,200 Net investment income $6,800 Deductible investment interest expense for the year $6,800 The $2,000 of income from the passive activity is not used in determining Ted's net investment income. Tax volunteer His investment interest deduction for the year is limited to $6,800, the amount of his net investment income. Tax volunteer Form 4952 Use Form 4952 to figure your deduction for investment interest. Tax volunteer See Form 4952 for more information. Tax volunteer Exception to use of Form 4952. Tax volunteer   You do not have to complete Form 4952 or attach it to your return if you meet all of the following tests. Tax volunteer Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified dividends. Tax volunteer You do not have any other deductible investment expenses. Tax volunteer You have no carryover of investment interest expense from 2012. Tax volunteer   If you meet all of these tests, you can deduct all of your investment interest. Tax volunteer    Bond Premium Amortization If you pay a premium to buy a bond, the premium is part of your basis in the bond. Tax volunteer If the bond yields taxable interest, you can choose to amortize the premium. Tax volunteer This generally means that each year, over the life of the bond, you use a part of the premium to reduce the amount of interest includible in your income. Tax volunteer If you make this choice, you must reduce your basis in the bond by the amortization for the year. Tax volunteer If the bond yields tax-exempt interest, you must amortize the premium. Tax volunteer This amortized amount is not deductible in determining taxable income. Tax volunteer However, each year you must reduce your basis in the bond (and tax-exempt interest otherwise reportable on Form 1040, line 8b) by the amortization for the year. Tax volunteer Bond premium. Tax volunteer   Bond premium is the amount by which your basis in the bond right after you get it is more than the total of all amounts payable on the bond after you get it (other than payments of qualified stated interest). Tax volunteer For example, a bond with a maturity value of $1,000 generally would have a $50 premium if you buy it for $1,050. Tax volunteer Special rules to determine amounts payable on a bond. Tax volunteer   For special rules that apply to determine the amounts payable on a variable rate bond, an inflation-indexed debt instrument, a bond that provides for certain alternative payment schedules (for example, a bond callable prior to the stated maturity date of the bond), or a bond that provides for remote or incidental contingencies, see Regulations section 1. Tax volunteer 171-3. Tax volunteer Basis. Tax volunteer   In general, your basis for figuring bond premium amortization is the same as your basis for figuring any loss on the sale of the bond. Tax volunteer However, you may need to use a different basis for: Convertible bonds, Bonds you got in a trade, and Bonds whose basis has to be determined using the basis of the person who transferred the bond to you. Tax volunteer See Regulations section 1. Tax volunteer 171-1(e). Tax volunteer Dealers. Tax volunteer   A dealer in taxable bonds (or anyone who holds them mainly for sale to customers in the ordinary course of a trade or business or who would properly include bonds in inventory at the close of the tax year) cannot claim a deduction for amortizable bond premium. Tax volunteer   See section 75 of the Internal Revenue Code for the treatment of bond premium by a dealer in tax-exempt bonds. Tax volunteer How To Figure Amortization For bonds issued after September 27, 1985, you must amortize bond premium using a constant yield method on the basis of the bond's yield to maturity, determined by using the bond's basis and compounding at the close of each accrual period. Tax volunteer Constant yield method. Tax volunteer   Figure the bond premium amortization for each accrual period as follows. Tax volunteer Step 1: Determine your yield. Tax volunteer   Your yield is the discount rate that, when used in figuring the present value of all remaining payments to be made on the bond (including payments of qualified stated interest), produces an amount equal to your basis in the bond. Tax volunteer Figure the yield as of the date you got the bond. Tax volunteer It must be constant over the term of the bond and must be figured to at least two decimal places when expressed as a percentage. Tax volunteer   If you do not know the yield, consult your broker or tax advisor. Tax volunteer Databases available to them are likely to show the yield at the date of purchase. Tax volunteer Step 2: Determine the accrual periods. Tax volunteer   You can choose the accrual periods to use. Tax volunteer They may be of any length and may vary in length over the term of the bond, but each accrual period can be no longer than 1 year and each scheduled payment of principal or interest must occur either on the first or the final day of an accrual period. Tax volunteer The computation is simplest if accrual periods are the same as the intervals between interest payment dates. Tax volunteer Step 3: Determine the bond premium for the accrual period. Tax volunteer   To do this, multiply your adjusted acquisition price at the beginning of the accrual period by your yield. Tax volunteer Then subtract the result from the qualified stated interest for the period. Tax volunteer   Your adjusted acquisition price at the beginning of the first accrual period is the same as your basis. Tax volunteer After that, it is your basis decreased by the amount of bond premium amortized for earlier periods and the amount of any payment previously made on the bond other than a payment of qualified stated interest. Tax volunteer Example. Tax volunteer On February 1, 2012, you bought a taxable bond for $110,000. Tax volunteer The bond has a stated principal amount of $100,000, payable at maturity on February 1, 2019, making your premium $10,000 ($110,000 − $100,000). Tax volunteer The bond pays qualified stated interest of $10,000 on February 1 of each year. Tax volunteer Your yield is 8. Tax volunteer 07439% compounded annually. Tax volunteer You choose to use annual accrual periods ending on February 1 of each year. Tax volunteer To find your bond premium amortization for the accrual period ending on February 1, 2013, you multiply the adjusted acquisition price at the beginning of the period ($110,000) by your yield. Tax volunteer When you subtract the result ($8,881. Tax volunteer 83) from the qualified stated interest for the period ($10,000), you find that your bond premium amortization for the period is $1,118. Tax volunteer 17. Tax volunteer Special rules to figure amortization. Tax volunteer   For special rules to figure the bond premium amortization on a variable rate bond, an inflation-indexed debt instrument, a bond that provides for certain alternative payment schedules (for example, a bond callable prior to the stated maturity date of the bond), or a bond that provides for remote or incidental contingencies, see Regulations section 1. Tax volunteer 171-3. Tax volunteer Bonds Issued Before September 28, 1985 For these bonds, you can amortize bond premium using any reasonable method. Tax volunteer Reasonable methods include: The straight-line method, and The Revenue Ruling 82-10 method. Tax volunteer Straight-line method. Tax volunteer   Under this method, the amount of your bond premium amortization is the same each month. Tax volunteer Divide the number of months you held the bond during the year by the number of months from the beginning of the tax year (or, if later, the date of acquisition) to the date of maturity or earlier call date. Tax volunteer Then multiply the result by the bond premium (reduced by any bond premium amortization claimed in earlier years). Tax volunteer This gives you your bond premium amortization for the year. Tax volunteer Revenue Ruling 82-10 method. Tax volunteer   Under this method, the amount of your bond premium amortization increases each month over the life of the bond. Tax volunteer This method is explained in Revenue Ruling 82-10, 1982-1 C. Tax volunteer B. Tax volunteer 46. Tax volunteer Choosing To Amortize You choose to amortize the premium on taxable bonds by reporting the amortization for the year on your income tax return for the first tax year you want the choice to apply. Tax volunteer You should attach a statement to your return that you are making this choice under section 171. Tax volunteer See How To Report Amortization, next. Tax volunteer This choice is binding for the year you make it and for later tax years. Tax volunteer It applies to all taxable bonds you own in the year you make the choice and also to those you acquire in later years. Tax volunteer You can change your decision to amortize bond premium only with the written approval of the IRS. Tax volunteer To request approval, use Form 3115. Tax volunteer For more information on requesting approval, see section 5 of the Appendix to Revenue Procedure 2011-14 in Internal Revenue Bulletin 2011-4. Tax volunteer You can find Revenue Procedure 2011-14 at www. Tax volunteer irs. Tax volunteer gov/irb/2011-04_IRB/ar08. Tax volunteer html. Tax volunteer How To Report Amortization Subtract the bond premium amortization from your interest income from these bonds. Tax volunteer Report the bond's interest on Schedule B (Form 1040A or 1040), line 1. Tax volunteer Under your last entry on line 1, put a subtotal of all interest listed on line 1. Tax volunteer Below this subtotal, print “ABP Adjustment,” and the total interest you received. Tax volunteer Subtract this amount from the subtotal, and enter the result on line 2. Tax volunteer Bond premium amortization more than interest. Tax volunteer   If the amount of your bond premium amortization for an accrual period is more than the qualified stated interest for the period, you can deduct the difference as a miscellaneous itemized deduction on Schedule A (Form 1040), line 28. Tax volunteer    But your deduction is limited to the amount by which your total interest inclusions on the bond in prior accrual periods is more than your total bond premium deductions on the bond in prior periods. Tax volunteer Any amount you cannot deduct because of this limit can be carried forward to the next accrual period. Tax volunteer Pre-1998 election to amortize bond premium. Tax volunteer   Generally, if you first elected to amortize bond premium before 1998, the above treatment of the premium does not apply to bonds you acquired before 1988. Tax volunteer Bonds acquired before October 23, 1986. Tax volunteer   The amortization of the premium on these bonds is a miscellaneous itemized deduction not subject to the 2%-of-adjusted-gross-income limit. Tax volunteer Bonds acquired after October 22, 1986, but before 1988. Tax volunteer    The amortization of the premium on these bonds is investment interest expense subject to the investment interest limit, unless you choose to treat it as an offset to interest income on the bond. Tax volunteer Expenses of Producing Income You deduct investment expenses (other than interest expenses) as miscellaneous itemized deductions on Schedule A (Form 1040). Tax volunteer To be deductible, these expenses must be ordinary and necessary expenses paid or incurred: To produce or collect income, or To manage property held for producing income. Tax volunteer The expenses must be directly related to the income or income-producing property, and the income must be taxable to you. Tax volunteer The deduction for most income-producing expenses is subject to a 2% limit that also applies to certain other miscellaneous itemized deductions. Tax volunteer The amount deductible is limited to the total of these miscellaneous deductions that is more than 2% of your adjusted gross income. Tax volunteer For information on how to report expenses of producing income, see How To Report Investment Expenses , later. Tax volunteer Attorney or accounting fees. Tax volunteer   You can deduct attorney or accounting fees that are necessary to produce or collect taxable income. Tax volunteer However, in some cases, attorney or accounting fees are part of the basis of property. Tax volunteer See Basis of Investment Property in chapter 4. Tax volunteer Automatic investment service and dividend reinvestment plans. Tax volunteer   A bank may offer its checking account customers an automatic investment service so that, for a charge, each customer can choose to invest a part of the checking account each month in common stock. Tax volunteer Or a bank that is a dividend disbursing agent for a number of publicly-owned corporations may set up an automatic dividend reinvestment service. Tax volunteer Through that service, cash dividends are reinvested in more shares of stock after the bank deducts a service charge. Tax volunteer   A corporation in which you own stock also may have a dividend reinvestment plan. Tax volunteer This plan lets you choose to use your dividends to buy more shares of stock in the corporation instead of receiving the dividends in cash. Tax volunteer   You can deduct the monthly service charge you pay to a bank to participate in an automatic investment service. Tax volunteer If you participate in a dividend reinvestment plan, you can deduct any service charge subtracted from your cash dividends before the dividends are used to buy more shares of stock. Tax volunteer Deduct the charges in the year you pay them. Tax volunteer Clerical help and office rent. Tax volunteer   You can deduct office expenses, such as rent and clerical help, you incurred in connection with your investments and collecting the taxable income on your investments. Tax volunteer Cost of replacing missing securities. Tax volunteer   To replace your taxable securities that are mislaid, lost, stolen, or destroyed, you may have to post an indemnity bond. Tax volunteer You can deduct the premium you pay to buy the indemnity bond and the related incidental expenses. Tax volunteer   You may, however, get a refund of part of the bond premium if the missing securities are recovered within a specified time. Tax volunteer Under certain types of insurance policies, you can recover some of the expenses. Tax volunteer   If you receive the refund in the tax year you pay the amounts, you can deduct only the difference between the expenses paid and the amount refunded. Tax volunteer If the refund is made in a later tax year, you must include the refund in income in the year you received it, but only to the extent that the expenses decreased your tax in the year you deducted them. Tax volunteer Fees to collect income. Tax volunteer   You can deduct fees you pay to a broker, bank, trustee, or similar agent to collect investment income, such as your taxable bond or mortgage interest, or your dividends on shares of stock. Tax volunteer Fees to buy or sell. Tax volunteer   You cannot deduct a fee you pay to a broker to acquire investment property, such as stocks or bonds. Tax volunteer You must add the fee to the cost of the property. Tax volunteer See Basis of Investment Property in chapter 4. Tax volunteer    You cannot deduct any broker's fees, commissions, or option premiums you pay (or that were netted out) in connection with the sale of investment property. Tax volunteer They can be used only to figure gain or loss from the sale. Tax volunteer See Reporting Capital Gains and Losses , in chapter 4, for more information about the treatment of these sale expenses. Tax volunteer Investment counsel and advice. Tax volunteer   You can deduct fees you pay for counsel and advice about investments that produce taxable income. Tax volunteer This includes amounts you pay for investment advisory services. Tax volunteer Safe deposit box rent. Tax volunteer   You can deduct rent you pay for a safe deposit box if you use the box to store taxable income-producing stocks, bonds, or other investment-related papers and documents. Tax volunteer If you also use the box to store tax-exempt securities or personal items, you can deduct only part of the rent. Tax volunteer See Tax-exempt income under Nondeductible Expenses, later, to figure what part you can deduct. Tax volunteer State and local transfer taxes. Tax volunteer   You cannot deduct the state and local transfer taxes you pay when you buy or sell securities. Tax volunteer If you pay these transfer taxes when you buy securities, you must treat them as part of the cost of the property. Tax volunteer If you pay these transfer taxes when you sell securities, you must treat them as a reduction in the amount realized. Tax volunteer Trustee's commissions for revocable trust. Tax volunteer   If you set up a revocable trust and have its income distributed to you, you can deduct the commission you pay the trustee for managing the trust to the extent it is to produce or collect taxable income or to manage property. Tax volunteer However, you cannot deduct any part of the commission used for producing or collecting tax-exempt income or for managing property that produces tax-exempt income. Tax volunteer   If you are a cash-basis taxpayer and pay the commissions for several years in advance, you must deduct a part of the commission each year. Tax volunteer You cannot deduct the entire amount in the year you pay it. Tax volunteer Investment expenses from pass-through entities. Tax volunteer   If you hold an interest in a partnership, S corporation, real estate mortgage investment conduit (REMIC), or a nonpublicly offered mutual fund, you can deduct your share of that entity's investment expenses. Tax volunteer A partnership or S corporation will show your share of these expenses on your Schedule K-1 (Form 1065) or Schedule K-1 (Form 1120S). Tax volunteer A nonpublicly offered mutual fund will indicate your share of these expenses in box 5 of Form 1099-DIV (or substitute statement). Tax volunteer Publicly-offered mutual funds are discussed later. Tax volunteer   If you hold an interest in a REMIC, any expenses relating to your residual interest investment will be shown on Schedule Q (Form 1066), line 3b. Tax volunteer Any expenses relating to your regular interest investment will appear in box 5 of Form 1099-INT (or substitute statement) or box 9 of Form 1099-OID (or substitute statement). Tax volunteer   Report your share of these investment expenses on Schedule A (Form 1040), subject to the 2% limit, in the same manner as your other investment expenses. Tax volunteer Including mutual fund or REMIC expenses in income. Tax volunteer   Your share of the investment expenses of a REMIC or a nonpublicly offered mutual fund, as described above, are considered to be indirect deductions through that pass-through entity. Tax volunteer You must include in your gross income an amount equal to the expenses allocated to you, whether or not you are able to claim a deduction for those expenses. Tax volunteer If you are a shareholder in a nonpublicly offered mutual fund, you must include on your return the full amount of ordinary dividends or other distributions of stock, as shown in box 1a of Form 1099-DIV (or substitute statement). Tax volunteer If you are a residual interest holder in a REMIC, you must report as ordinary income on Schedule E (Form 1040) the total amounts shown on Schedule Q (Form 1066), lines 1b and 3b. Tax volunteer If you are a REMIC regular interest holder, you must include the amount of any expense allocation you received on Form 1040, line 8a. Tax volunteer Publicly-offered mutual funds. Tax volunteer   Most mutual funds are publicly offered. Tax volunteer These mutual funds, generally, are traded on an established securities exchange. Tax volunteer These funds do not pass investment expenses through to you. Tax volunteer Instead, the dividend income they report to you in box 1a of Form 1099-DIV (or substitute statement) is already reduced by your share of investment expenses. Tax volunteer As a result, you cannot deduct the expenses on your return. Tax volunteer   Include the amount from box 1a of Form 1099-DIV (or substitute statement) in your income. Tax volunteer    A publicly offered mutual fund is one that: Is continuously offered pursuant to a public offering, Is regularly traded on an established securities market, and Is held by or for no fewer than 500 persons at any time during the year. Tax volunteer Contact your mutual fund if you are not sure whether it is publicly offered. Tax volunteer Nondeductible Expenses Some expenses that you incur as an investor are not deductible. Tax volunteer Stockholders' meetings. Tax volunteer   You cannot deduct transportation and other expenses you pay to attend stockholders' meetings of companies in which you have no interest other than owning stock. Tax volunteer This is true even if your purpose in attending is to get information that would be useful in making further investments. Tax volunteer Investment-related seminar. Tax volunteer   You cannot deduct expenses for attending a convention, seminar, or similar meeting for investment purposes. Tax volunteer Single-premium life insurance, endowment, and annuity contracts. Tax volunteer   You cannot deduct interest on money you borrow to buy or carry a single-premium life insurance, endowment, or annuity contract. Tax volunteer Used as collateral. Tax volunteer   If you use a single premium annuity contract as collateral to obtain or continue a mortgage loan, you cannot deduct any interest on the loan that is collateralized by the annuity contract. Tax volunteer Figure the amount of interest expense disallowed by multiplying the current interest rate on the mortgage loan by the lesser of the amount of the annuity contract used as collateral or the amount of the loan. Tax volunteer Borrowing on insurance. Tax volunteer   Generally, you cannot deduct interest on money you borrow to buy or carry a life insurance, endowment, or annuity contract if you plan to systematically borrow part or all of the increases in the cash value of the contract. Tax volunteer This rule applies to the interest on the total amount borrowed to buy or carry the contract, not just the interest on the borrowed increases in the cash value. Tax volunteer Tax-exempt income. Tax volunteer   You cannot deduct expenses you incur to produce tax-exempt income. Tax volunteer Nor can you deduct interest on money you borrow to buy tax-exempt securities or shares in a mutual fund or other regulated investment company that distributes only exempt-interest dividends. Tax volunteer Short-sale expenses. Tax volunteer   The rule disallowing a deduction for interest expenses on tax-exempt securities applies to amounts you pay in connection with personal property used in a short sale or amounts paid by others for the use of any collateral in connection with the short sale. Tax volunteer However, it does not apply to the expenses you incur if you deposit cash as collateral for the property used in the short sale and the cash does not earn a material return during the period of the sale. Tax volunteer Short sales are discussed in Short Sales in chapter 4. Tax volunteer Expenses for both tax-exempt and taxable income. Tax volunteer   You may have expenses that are for both tax-exempt and taxable income. Tax volunteer If you cannot specifically identify what part of the expenses is for each type of income, you can divide the expenses, using reasonable proportions based on facts and circumstances. Tax volunteer You must attach a statement to your return showing how you divided the expenses and stating that each deduction claimed is not based on tax-exempt income. Tax volunteer   One accepted method for dividing expenses is to do it in the same proportion that each type of income is to the total income. Tax volunteer If the expenses relate in part to capital gains and losses, include the gains, but not the losses, in figuring this proportion. Tax volunteer To find the part of the expenses that is for the tax-exempt income, divide your tax-exempt income by the total income and multiply your expenses by the result. Tax volunteer Example. Tax volunteer You received $6,000 interest; $4,800 was tax-exempt and $1,200 was taxable. Tax volunteer In earning this income, you had $500 of expenses. Tax volunteer You cannot specifically identify the amount of each expense item that is for each income item, so you must divide your expenses. Tax volunteer 80% ($4,800 tax-exempt interest divided by $6,000 total interest) of your expenses is for the tax-exempt income. Tax volunteer You cannot deduct $400 (80% of $500) of the expenses. Tax volunteer You can deduct $100 (the rest of the expenses) because they are for the taxable interest. Tax volunteer State income taxes. Tax volunteer   If you itemize your deductions, you can deduct, as taxes, state income taxes on interest income that is exempt from federal income tax. Tax volunteer But you cannot deduct, as either taxes or investment expenses, state income taxes on other exempt income. Tax volunteer Interest expense and carrying charges on straddles. Tax volunteer   You cannot deduct interest and carrying charges allocable to personal property that is part of a straddle. Tax volunteer The nondeductible interest and carrying charges are added to the basis of the straddle property. Tax volunteer However, this treatment does not apply if: All the offsetting positions making up the straddle either consist of one or more qualified covered call options and the optioned stock, or consist of section 1256 contracts (and the straddle is not part of a larger straddle); or The straddle is a hedging transaction. Tax volunteer  For information about straddles, including definitions of the terms used in this discussion, see Straddles in chapter 4. Tax volunteer   Interest includes any amount you pay or incur in connection with personal property used in a short sale. Tax volunteer However, you must first apply the rules discussed in Payments in lieu of dividends under Short Sales in chapter 4. Tax volunteer   To determine the interest on market discount bonds and short-term obligations that are part of a straddle, you must first apply the rules discussed under Limit on interest deduction for market discount bonds and Limit on interest deduction for short-term obligations (both under Interest Expenses, earlier). Tax volunteer Nondeductible amount. Tax volunteer   Figure the nondeductible interest and carrying charges on straddle property as follows. Tax volunteer Add: Interest on indebtedness incurred or continued to buy or carry the personal property, and All other amounts (including charges to insure, store, or transport the personal property) paid or incurred to carry the personal property. Tax volunteer Subtract from the amount in (1): Interest (including OID) includible in gross income for the year on the personal property, Any income from the personal property treated as ordinary income on the disposition of short-term government obligations or as ordinary income under the market discount and short-term bond provisions — see Discount on Debt Instruments in chapter 1, The dividends includible in gross income for the year from the personal property, and Any payment on a loan of the personal property for use in a short sale that is includible in gross income. Tax volunteer Basis adjustment. Tax volunteer   Add the nondeductible amount to the basis of your straddle property. Tax volunteer How To Report Investment Expenses To deduct your investment expenses, you must itemize deductions on Schedule A (Form 1040). Tax volunteer Enter your deductible investment interest expense on Schedule A (Form1040), line 14. Tax volunteer Include any deductible short sale expenses. Tax volunteer (See Short Sales in chapter 4 for information on these expenses. Tax volunteer ) Also attach a completed Form 4952 if you used that form to figure your investment interest expense. Tax volunteer Enter the total amount of your other investment expenses (other than interest expenses) on Schedule A (Form 1040), line 23. Tax volunteer List the type and amount of each expense on the dotted lines next to line 23. Tax volunteer (If necessary, you can show the required information on an attached statement. Tax volunteer ) For information on how to report amortizable bond premium, see Bond Premium Amortization , earlier in this chapter. Tax volunteer When To Report Investment Expenses If you use the cash method to report income and expenses, you generally deduct your expenses, except for certain prepaid interest, in the year you pay them. Tax volunteer If you use an accrual method, you generally deduct your expenses when you incur a liability for them, rather than when you pay them. Tax volunteer Also see When To Deduct Investment Interest , earlier in this chapter. Tax volunteer Unpaid expenses owed to related party. Tax volunteer   If you use an accrual method, you cannot deduct interest and other expenses owed to a related cash-basis person until payment is made and the amount is includible in the gross income of that person. Tax volunteer The relationship, for purposes of this rule, is determined as of the end of the tax year for which the interest or expense would otherwise be deductible. Tax volunteer If a deduction is denied under this rule, this rule will continue to apply even if your relationship with the person ceases to exist before the amount is includible in the gross income of that person. Tax volunteer   This rule generally applies to those relationships listed in chapter 4 under Related Party Transactions . Tax volunteer It also applies to accruals by partnerships to partners, partners to partnerships, shareholders to S corporations, and S corporations to shareholders. Tax volunteer   The postponement of deductions for unpaid expenses and interest under the related party rule does not apply to OID, regardless of when payment is made. Tax volunteer This rule also does not apply to loans with below-market interest rates or to certain payments for the use of property and services when the lender or recipient has to include payments periodically in income, even if a payment has not been made. Tax volunteer Prev  Up  Next   Home   More Online Publications
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The Tax Volunteer

Tax volunteer Publication 721 - Introductory Material Table of Contents Reminders IntroductionOrdering forms and publications. Tax volunteer Tax questions. Tax volunteer Useful Items - You may want to see: Reminders Future developments. Tax volunteer  For the latest information about developments related to Publication 721, such as legislation enacted after it was published, go to www. Tax volunteer IRS. Tax volunteer gov/pub721. Tax volunteer Phased retirement. Tax volunteer   The new phased retirement program was signed into law by the Moving Ahead for Progress in the 21st Century Act and will be available for retirement eligible individuals once the regulations for this program are effective. Tax volunteer This new program will allow eligible employees to begin receiving annuity payments while working part-time. Tax volunteer For more information, go to the Office of Personnel Management (OPM) website at www. Tax volunteer opm. Tax volunteer gov. Tax volunteer Roth Thrift Savings Plan (TSP) balance. Tax volunteer  You may be able to contribute to a designated Roth account through the TSP known as the Roth TSP. Tax volunteer Roth TSP contributions are after-tax contributions, subject to the same contribution limits as the traditional TSP. Tax volunteer Qualified distributions from a Roth TSP are not included in your income. Tax volunteer See Thrift Savings Plan in Part II for more information. Tax volunteer Rollovers. Tax volunteer  You can roll over certain amounts from the CSRS, FERS, or TSP, to a tax-sheltered annuity plan (403(b) plan) or a state or local government section 457 deferred compensation plan. Tax volunteer See Rollover Rules in Part II. Tax volunteer Rollovers by surviving spouse. Tax volunteer  You may be able to roll over a distribution you receive as the surviving spouse of a deceased employee or retiree into a qualified retirement plan or an IRA. Tax volunteer See Rollover Rules in Part II. Tax volunteer Thrift Savings Plan (TSP) beneficiary participant accounts. Tax volunteer  If you are the spouse beneficiary of a decedent's TSP account, you have the option of leaving the death benefit payment in a TSP account in your own name (a beneficiary participant account). Tax volunteer The amounts in the beneficiary participant account are neither taxable or reportable until you choose to make a withdrawal, or otherwise receive a distribution from the account. Tax volunteer Benefits for public safety officer's survivors. Tax volunteer  A survivor annuity received by the spouse, former spouse, or child of a public safety officer killed in the line of duty generally will be excluded from the recipient's income. Tax volunteer For more information, see Dependents of public safety officers in Part IV. Tax volunteer Uniformed services Thrift Savings Plan (TSP) accounts. Tax volunteer  If you have a uniformed services TSP account, it may include contributions from combat zone pay. Tax volunteer This pay is tax-exempt and contributions attributable to that pay are tax-exempt when they are distributed from the uniformed services TSP account. Tax volunteer However, any earnings on those contributions are subject to tax when they are distributed. Tax volunteer The statement you receive from the TSP will separately state the total amount of your distribution and the amount of your taxable distribution for the year. Tax volunteer If you have both a civilian and a uniformed services TSP account, you should apply the rules discussed in this publication separately to each account. Tax volunteer You can get more information from the TSP website, www. Tax volunteer tsp. Tax volunteer gov, or the TSP Service Office. Tax volunteer Photographs of missing children. Tax volunteer  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Tax volunteer Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Tax volunteer You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Tax volunteer Introduction This publication explains how the federal income tax rules apply to civil service retirement benefits received by retired federal employees (including those disabled) or their survivors. Tax volunteer These benefits are paid primarily under the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS). Tax volunteer Tax rules for annuity benefits. Tax volunteer   Part of the annuity benefits you receive is a tax-free recovery of your contributions to the CSRS or FERS. Tax volunteer The rest of your benefits are taxable. Tax volunteer If your annuity starting date is after November 18, 1996, you must use the Simplified Method to figure the taxable and tax-free parts. Tax volunteer If your annuity starting date is before November 19, 1996, you generally could have chosen to use the Simplified Method or the General Rule. Tax volunteer See Part II, Rules for Retirees . Tax volunteer Thrift Savings Plan. Tax volunteer   The Thrift Savings Plan (TSP) provides federal employees with the same savings and tax benefits that many private employers offer their employees. Tax volunteer This plan is similar to private sector 401(k) plans. Tax volunteer You can defer tax on part of your pay by having it contributed to your traditional balance in the plan. Tax volunteer The contributions and earnings on them are not taxed until they are distributed to you. Tax volunteer Also the TSP offers a Roth TSP option. Tax volunteer Contributions to this type of balance are after tax and qualified distributions from the account are tax free. Tax volunteer See Thrift Savings Plan in Part II. Tax volunteer Comments and suggestions. Tax volunteer   We welcome your comments about this publication and your suggestions for future editions. Tax volunteer   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Tax volunteer NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Tax volunteer Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Tax volunteer   You can send your comments from www. Tax volunteer irs. Tax volunteer gov/formspubs/. Tax volunteer Click on “More Information” and then on “Comment on Tax Forms and Publications”. Tax volunteer   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Tax volunteer Ordering forms and publications. Tax volunteer   Visit www. Tax volunteer irs. Tax volunteer gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Tax volunteer Internal Revenue Service 1201 N. Tax volunteer Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Tax volunteer   If you have a tax question, check the information available on IRS. Tax volunteer gov or call 1-800-829-1040. Tax volunteer We cannot answer tax questions sent to either of the above addresses. Tax volunteer Useful Items - You may want to see: Publication 524 Credit for the Elderly or the Disabled 575 Pension and Annuity Income 590 Individual Retirement Arrangements (IRAs) 939 General Rule for Pensions and Annuities Form (and Instructions) CSA 1099R Statement of Annuity Paid CSF 1099R Statement of Survivor Annuity Paid W-4P Withholding Certificate for Pension or Annuity Payments 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Tax volunteer 5329 Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts See How To Get Tax Help near the end of this publication for information about getting publications and forms. Tax volunteer Prev  Up  Next   Home   More Online Publications