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Turbotax 2013

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Turbotax 2013

Turbotax 2013 31. Turbotax 2013   Impuesto sobre Ingresos No Derivados del Trabajo de Determinados Hijos Table of Contents ¿Que Hay de Nuevo? Introduction Useful Items - You may want to see: Cómo Saber si se Tiene que Utilizar la Declaración del Padre o de la MadrePadres que no Presentan la Declaración Conjunta Elección de los Padres de Declarar los Intereses y Dividendos del HijoConsecuencias de Incluir los Ingresos del Hijo Cómo Calcular los Ingresos del Hijo Cómo Calcular el Impuesto Adicional Impuesto para Determinados Hijos con Ingresos No Derivados del TrabajoCómo Facilitar Información sobre los Padres (líneas A-C del Formulario 8615) Paso 1. Turbotax 2013 Cómo Calcular los Ingresos Netos No Derivados del Trabajo del Hijo (Parte I del Formulario 8615) Paso 2. Turbotax 2013 Cómo Calcular el Impuesto Provisional a la Tasa Impositiva de los Padres (Parte II del Formulario 8615) Paso 3. Turbotax 2013 Cómo Calcular el Impuesto del Hijo (Parte III del Formulario 8615) ¿Que Hay de Nuevo? Impuesto sobre el ingreso neto de inversiones. Turbotax 2013  Para años empezando después del 31 de diciembre de 2012, el impuesto de un hijo, el cual se calcula en el Formulario 8615, puede estar sujeto al impuesto sobre el ingreso neto de inversiones (NIIT, por sus siglas en inglés). Turbotax 2013 El NIIT es un impuesto de 3. Turbotax 2013 8% sobre la cantidad menor entre el ingreso neto de inversión o el exceso del ingreso bruto ajustado modificado (MAGI) del hijo que exceda del límite superior específico. Turbotax 2013 Utilice el Formulario 8960, Net Investment Income Tax (Impuesto sobre ingreso neto de inversiones), en inglés, para calcular este impuesto. Turbotax 2013 Para más información sobre el NIIT, visite www. Turbotax 2013 irs. Turbotax 2013 gov e ingrese “Net Investment Income Tax” en la casilla de búsqueda “Search” (Buscar), en inglés. Turbotax 2013 Introduction Este capítulo explica los dos requisitos siguientes, los cuales podrían afectar el impuesto sobre ingresos no derivados del trabajo de determinados hijos: Si los ingresos procedentes de intereses y dividendos del hijo (incluidas las distribuciones de ganancias de capital) totalizan menos de $10,000, el padre o la madre tal vez pueda optar por incluir dichos ingresos en la declaración de uno de los padres en vez de presentar una declaración a nombre del hijo. Turbotax 2013 Vea Elección de los Padres de Declarar Intereses y Dividendos del Hijo , más adelante. Turbotax 2013 Si el total de intereses, dividendos y otros ingresos no derivados del trabajo del hijo sobrepasa $2,000, una parte de dichos ingresos podría estar sujeta a la misma tasa de impuesto que la de sus padres en lugar de estar sujeta a la tasa del hijo. Turbotax 2013 (Vea Impuesto para Determinados Hijos con Ingresos No Derivados del Trabajo , más adelante). Turbotax 2013 En lo que concierne a estos requisitos, el término “hijo” abarca a hijos legalmente adoptados e hijastros. Turbotax 2013 Estos requisitos corresponden tanto si el hijo es dependiente como si no lo es. Turbotax 2013 Useful Items - You may want to see: Publicación 929 Tax Rules for Children and Dependents (Requisitos tributarios para hijos y dependientes), en inglés Formulario (e Instrucciones) 8615 Tax for Certain Children Who Have Unearned Income (Impuesto para determinados hijos con ingresos no derivados del trabajo), en inglés 8814 Parents' Election To Report Child's Interest and Dividends (Elección de los padres de declarar los intereses y dividendos del hijo), en inglés Cómo Saber si se Tiene que Utilizar la Declaración del Padre o de la Madre Si los padres del hijo están casados el uno con el otro y presentan una declaración conjunta, básese en la declaración conjunta para calcular el impuesto sobre los ingresos no derivados del trabajo de dicho hijo. Turbotax 2013 La tasa impositiva y otra información de dicha declaración se utiliza para calcular el impuesto del hijo según se explica más adelante bajo Impuesto para Determinados Hijos con Ingresos No Derivados del Trabajo . Turbotax 2013 Padres que no Presentan la Declaración Conjunta Para los padres que no presenten la declaración conjunta, los siguientes temas aclaran, cuál declaración de impuestos de los padres tiene que utilizar para calcular el impuesto. Turbotax 2013 Sólo el padre o la madre cuya declaración se utilice puede elegir la opción descrita bajo Elección de los Padres de Declarar Intereses y Dividendos del Hijo . Turbotax 2013 Padres casados. Turbotax 2013   Si los padres del hijo presentan declaraciones por separado, utilice la declaración de quien tenga el mayor ingreso tributable. Turbotax 2013 Padres que no viven juntos. Turbotax 2013   Si los padres del hijo están casados el uno con el otro pero no viven juntos, y el padre o la madre con quien vive el hijo (el padre o la madre con custodia) se considera no casado, utilice la declaración del padre o de la madre con custodia. Turbotax 2013 Si el padre o la madre con custodia no es considerado no casado, utilice la declaración de quien tenga el mayor ingreso tributable. Turbotax 2013   Para una explicación sobre cuándo una persona casada que vive aparte de su cónyuge es considerada no casada, vea Cabeza de Familia en el capítulo 2. Turbotax 2013 Padres divorciados. Turbotax 2013   Si los padres del hijo están divorciados o legalmente separados y el padre o la madre que tuvo la custodia del hijo durante la mayor parte del año (el padre o la madre con custodia) no se ha vuelto a casar, utilice la declaración del padre o de la madre con custodia. Turbotax 2013 Padre o madre con custodia que se ha vuelto a casar. Turbotax 2013   Si el padre o la madre con custodia ha vuelto a casarse, el padrastro o la madrastra (en vez del padre o la madre sin custodia) se considera el otro padre o la otra madre del hijo. Turbotax 2013 Por lo tanto, si el padre o la madre con custodia y el padrastro o la madrastra presentan una declaración conjunta, utilice dicha declaración conjunta. Turbotax 2013 No utilice la declaración del padre o de la madre sin custodia. Turbotax 2013   Si el padre o la madre con custodia está casado con el padrastro o la madrastra pero presentan declaraciones por separado, utilice la declaración de quien tenga el mayor ingreso tributable. Turbotax 2013 Si el padre o la madre con custodia está casado con el padrastro o la madrastra pero no viven juntos, corresponde el tema anterior Padres que no viven juntos . Turbotax 2013 Padres que nunca se han casado. Turbotax 2013   Si los padres del hijo nunca han estado casados el uno con el otro pero vivieron juntos durante todo el año, utilice la declaración de quien tenga el mayor ingreso tributable. Turbotax 2013 Si los padres no vivieron juntos durante todo el año, corresponden los requisitos explicados anteriormente bajo Padres divorciados . Turbotax 2013 Padre viudo o madre viuda que se vuelve a casar. Turbotax 2013   Si un viudo o una viuda vuelve a casarse, el nuevo cónyuge se considera el otro padre o la otra madre del hijo. Turbotax 2013 En este caso, corresponden los requisitos explicados anteriormente bajo Padre o madre con custodia que se ha vuelto a casar . Turbotax 2013 Elección de los Padres de Declarar los Intereses y Dividendos del Hijo Tal vez pueda optar por incluir los ingresos de su hijo procedentes de intereses y dividendos (incluidas las distribuciones de ganancias de capital) en la declaración de impuestos. Turbotax 2013 En tal caso, su hijo no estará obligado a presentar una declaración. Turbotax 2013 Puede elegir esta opción sólo si se cumplen todas las condiciones siguientes: Su hijo tenía menos de 19 años de edad (o tenía menos de 24 años si era estudiante a tiempo completo) al finalizar el año. Turbotax 2013 Su hijo recibió ingresos sólo de intereses y dividendos (incluidas las distribuciones de ganancias de capital y dividendos del Alaska Permanent Fund (Fondo Permanente de Alaska)). Turbotax 2013 Los ingresos brutos del hijo eran menos de $10,000. Turbotax 2013 El hijo está obligado a presentar la declaración a no ser que usted elija incluir estos ingresos. Turbotax 2013 El hijo no presenta una declaración conjunta correspondiente al año actual. Turbotax 2013 No se efectuó ningún pago de impuestos estimados para el año ni se aplicó a este año ningún pago del año anterior (ni de una declaración enmendada) en exceso bajo el nombre y número de Seguro Social de su hijo. Turbotax 2013 No se retuvo de los ingresos de su hijo ningún impuesto federal sobre los ingresos conforme a las reglas de la retención adicional. Turbotax 2013 Usted es el padre o la madre cuya declaración se tiene que utilizar al aplicar los requisitos tributarios especiales para hijos. Turbotax 2013 (Vea Cómo Saber si se Tiene que Utilizar la Declaración del Padre o de la Madre , anteriormente). Turbotax 2013 Estas condiciones se hallan también en la Figura 31-A. Turbotax 2013 Determinados cumpleaños el 1 de enero. Turbotax 2013   Un hijo que haya nacido el 1 de enero de 1995 se considerará de 19 años de edad al final del año 2013. Turbotax 2013 Usted no puede optar por declarar los intereses y dividendos de tal hijo a menos que éste fuera estudiante a tiempo completo. Turbotax 2013   Aquel hijo que haya nacido el 1 de enero de 1990 se considerará de 24 años de edad al final del año 2013. Turbotax 2013 Usted no puede optar por declarar los intereses y dividendos de tal hijo. Turbotax 2013 Estudiante a tiempo completo. Turbotax 2013   Un estudiante a tiempo completo es un hijo matriculado como tal durante alguna parte de cada uno de 5 meses del año calendario en una escuela o que asistió a tiempo completo a un curso de capacitación agrícola ofrecido sobre el terreno por una escuela, agencia del estado, condado o gobierno local. Turbotax 2013 El término “escuela” abarca escuelas politécnicas, profesionales e industriales. Turbotax 2013 Una escuela no incluye un curso de capacitación en el trabajo, escuela por correspondencia, ni escuelas que ofrecen cursos sólo por Internet. Turbotax 2013 Cómo optar por incluir los ingresos de su hijo. Turbotax 2013   Elija incluir los ingresos de su hijo adjuntando el Formulario 8814 al Formulario 1040. Turbotax 2013 (Si opta por hacer esto, no puede presentar el Formulario 1040A ni el Formulario 1040EZ). Turbotax 2013 Adjunte un Formulario 8814 distinto correspondiente a cada hijo cuyos ingresos desee incluir. Turbotax 2013 Puede incluir los ingresos de uno o más hijos y no incluir los ingresos de otros. Turbotax 2013 Consecuencias de Incluir los Ingresos del Hijo El impuesto federal sobre los ingresos de su hijo podría ser mayor si opta por usar el Formulario 8814. Turbotax 2013 La tasa impositiva podría ser más alta. Turbotax 2013   Si su hijo recibió dividendos calificados o distribuciones de ganancias de capital, usted podría pagar hasta $100 adicionales de impuestos si incluye los ingresos de su hijo en vez de presentar una declaración de impuestos por separado a nombre del hijo. Turbotax 2013 Esto se debe a que la tasa impositiva que corresponde a los ingresos de su hijo entre $1,000 y $2,000 es de 10% si usted opta por incluirlos. Turbotax 2013 No obstante, si presenta una declaración por separado en nombre del hijo, la tasa impositiva podría bajar hasta 0% (porcentaje de cero) debido a las tasas impositivas preferentes para dividendos calificados y distribuciones de ganancias de capital. Turbotax 2013 Deducciones que no puede tomar. Turbotax 2013   Al hacer la elección de incluir estos ingresos en el Formulario 8814, no puede tomar ninguna de las deducciones siguientes a la que el hijo tendría derecho en su propia declaración. Turbotax 2013 La deducción estándar adicional si el hijo es ciego. Turbotax 2013 La deducción por una multa por el retiro prematuro de los ahorros de su hijo. Turbotax 2013 Deducciones detalladas (como gastos de inversiones de su hijo o donaciones caritativas). Turbotax 2013 Deducciones o créditos reducidos. Turbotax 2013   Si utiliza el Formulario 8814, su ingreso bruto ajustado aumentado podría reducir determinados créditos o deducciones en la declaración, incluyendo lo siguiente: Deducciones por aportaciones a una cuenta de ahorros tradicional para la jubilación (IRA, por sus siglas en inglés). Turbotax 2013 Deducciones por intereses sobre un préstamo de estudios. Turbotax 2013 Deducciones detalladas por gastos médicos, pérdidas por hecho fortuito y robo y ciertos gastos misceláneos. Turbotax 2013 Crédito por gastos del cuidado de hijos y dependientes. Turbotax 2013 Crédito tributario por hijos. Turbotax 2013 Créditos tributarios por estudios. Turbotax 2013 Crédito por ingreso del trabajo. Turbotax 2013 Figura 31-A. Turbotax 2013 ¿Puede Incluir Usted en su Declaración de Impuestos los Ingresos de su Hijo? Please click here for the text description of the image. Turbotax 2013 Figura 31–A. Turbotax 2013 ¿Puede Incluir Usted en su Declaración de Impuestos los Ingresos de su Hijo? Multa por pago insuficiente del impuesto estimado. Turbotax 2013   Si elige incluir estos ingresos para 2013 y no se le retuvo impuesto suficiente o no pagó suficiente impuesto estimado para saldar los impuestos adeudados, podría estar sujeto a una multa. Turbotax 2013 Si piensa elegir lo mismo para 2014, es posible que necesite aumentar la retención de impuestos federales sobre el ingreso o los pagos de impuesto estimado para evitar la multa. Turbotax 2013 Vea el capítulo 4 para más información. Turbotax 2013 Cómo Calcular los Ingresos del Hijo Utilice la Parte I del Formulario 8814 para calcular los ingresos de su hijo procedentes de intereses y dividendos declarados por usted. Turbotax 2013 A sus ingresos sólo se le añade la cantidad que sea superior a $2,000. Turbotax 2013 La cantidad superior a $2,000 se indica en la línea 6 del Formulario 8814. Turbotax 2013 A menos que los ingresos del hijo abarquen dividendos calificados o distribuciones de ganancias de capital (explicadas a continuación), la misma cantidad se indica en la línea 12 del Formulario 8814. Turbotax 2013 Incluya la cantidad de la línea 12 del Formulario 8814 en la línea 21 del Formulario 1040. Turbotax 2013 Anote en inglés “Form 8814” en la línea de puntos al lado de la línea 21. Turbotax 2013 Si presenta más de un Formulario 8814, incluya el total de los montos de la línea 12 de todos los Formularios 8814 en la línea 21 del Formulario 1040. Turbotax 2013 Distribuciones de ganancias de capital y dividendos calificados. Turbotax 2013   Si se incluye alguna distribución de ganancias de capital en los ingresos de dividendos de su hijo, vea Capital gain distributions (Distribuciones de ganancias de capital) bajo Figuring Child's Income (Cómo calcular los ingresos del hijo) en la Parte 2 de la Publicación 929, en inglés. Turbotax 2013 Si se incluye algún dividendo calificado en los ingresos de dividendos de su hijo, vea Qualified dividends (Dividendos calificados) bajo Figuring Child's Income (Cómo calcular los ingresos del hijo) en la Parte 2 de la Publicación 929, en inglés. Turbotax 2013 Cómo Calcular el Impuesto Adicional Utilice la Parte II del Formulario 8814 para calcular el impuesto sobre los $2,000 de los intereses y dividendos de su hijo que no incluya usted en sus ingresos. Turbotax 2013 Este impuesto se suma al impuesto calculado sobre los ingresos suyos. Turbotax 2013 Dicho impuesto adicional es la cantidad que sea menor entre: El 10% (multiplicado por la cantidad de los ingresos brutos de su hijo menos $1,000) o $100. Turbotax 2013 Incluya el monto de la línea 15 de todos los Formularios 8814 en el total de la línea 44 del Formulario 1040. Turbotax 2013 Marque el recuadro a de la línea 44 del Formulario 1040. Turbotax 2013 Figura 31-B. Turbotax 2013 ¿Tiene que Utilizar el Formulario 8615 para Calcular los Impuestos de su Hijo? Please click here for the text description of the image. Turbotax 2013 Figura 31-B. Turbotax 2013 ¿Tiene que Utilizar el Formulario 8615 para Calcular los Impuestos de su Hijo? Impuesto para Determinados Hijos con Ingresos No Derivados del Trabajo Si el total de intereses, dividendos y otros ingresos no derivados del trabajo de un hijo sobrepasa $2,000, una parte de dichos ingresos podría estar sujeta a la misma tasa impositiva que la de sus padres en lugar de estar sujeta a la tasa del hijo. Turbotax 2013 Si el padre o la madre no elige, o no puede elegir, incluir los ingresos del hijo en su declaración, utilice el Formulario 8615 para calcular los impuestos del hijo. Turbotax 2013 Adjunte el formulario completado al Formulario 1040 o al Formulario 1040A del hijo. Turbotax 2013 Cuándo se tiene que presentar el Formulario 8615. Turbotax 2013   El Formulario 8615 tiene que presentarse para un hijo si se dan todas las siguientes condiciones: Los ingresos del hijo no derivados del trabajo eran superiores a $2,000. Turbotax 2013 El hijo está obligado a presentar una declaración para 2013. Turbotax 2013 Dicho hijo: Era menor de 18 años de edad al final del año, Tenía 18 años a finales del año y su ingreso del trabajo no constituía más de la mitad de su manutención o Era estudiante a tiempo completo mayor de 18 años y menor de 24 años al finalizar el año y su ingreso del trabajo no constituía más de la mitad de la manutención suya. Turbotax 2013 Por lo menos uno de los padres del hijo estaba vivo al finalizar el año 2013. Turbotax 2013 El hijo no presenta una declaración conjunta para 2013. Turbotax 2013 Estas condiciones se hallan también en la Figura 31-B. Turbotax 2013 Ingreso del trabajo. Turbotax 2013   El ingreso del trabajo incluye sueldos, salarios, propinas y otras remuneraciones recibidas por servicios personales que usted prestó. Turbotax 2013 No incluye los ingresos no derivados del trabajo según se define más adelante en este capítulo. Turbotax 2013 Manutención. Turbotax 2013   La manutención de su hijo incluye todas las cantidades gastadas para proveerle alimentos, alojamiento, ropa, educación, cuidado médico y dental, recreación, transporte y necesidades similares. Turbotax 2013 Al calcular la manutención de su hijo, incluya aquélla proporcionada por usted, su hijo y otras personas. Turbotax 2013 Sin embargo, no se considera como manutención una beca que su hijo haya recibido si éste es estudiante a tiempo completo. Turbotax 2013 Vea el capítulo 3 para más detalles acerca de la manutención. Turbotax 2013 Determinados cumpleaños el 1 de enero. Turbotax 2013   Utilice la siguiente tabla para saber si determinados hijos con cumpleaños en el 1 de enero cumplen la condición 3 bajo Cuándo se tiene que presentar el Formulario 8615. Turbotax 2013    SI un hijo nació. Turbotax 2013 . Turbotax 2013 . Turbotax 2013 ENTONCES, al finalizar 2013, se considera que el hijo tiene. Turbotax 2013 . Turbotax 2013 . Turbotax 2013 el 1 de enero de 1996 18 años* el 1 de enero de 1995 19 años** el 1 de enero de 1990 24 años*** *Este hijo no es menor de 18 años. Turbotax 2013 El hijo cumple la condición 3 sólo si éste no tuvo ingresos derivados del trabajo superiores a más de la mitad de la manutención suya. Turbotax 2013  **El hijo cumple la condición 3 sólo si éste era estudiante a tiempo completo y no tuvo ingresos derivados del trabajo superiores a más de la mitad de la manutención suya. Turbotax 2013  ***No utilice el Formulario 8615 para este hijo. Turbotax 2013 Cómo Facilitar Información sobre los Padres (líneas A-C del Formulario 8615) En las líneas A y B del Formulario 8615, escriba el nombre y número de Seguro Social de los padres. Turbotax 2013 (Si los padres presentaron una declaración conjunta, escriba el nombre y número de Seguro Social que aparezca primero en la declaración conjunta). Turbotax 2013 En la línea C, marque el recuadro correspondiente al estado civil para efectos de la declaración del padre o de la madre. Turbotax 2013 Vea Cómo Saber si se Tiene que Utilizar la Declaración del Padre o de la Madre al principio de este capítulo para información sobre qué información de la declaración de los padres tiene que utilizar para llenar el Formulario 8615. Turbotax 2013 Padre o madre con año tributario distinto. Turbotax 2013   Si el padre o la madre y el hijo no tienen el mismo año tributario, complete el Formulario 8615 utilizando la información de la declaración del padre o de la madre para el año tributario que finalice durante el año tributario del hijo. Turbotax 2013 Si no se obtiene a tiempo la información de la declaración del padre o de la madre. Turbotax 2013   Si la información necesaria de la declaración de los padres no se obtiene para la fecha de vencimiento del plazo de entrega de la declaración del hijo (normalmente el 15 de abril), puede utilizar cálculos aproximados para presentar la declaración. Turbotax 2013   Puede utilizar cualquier cálculo aproximado razonable. Turbotax 2013 Dicho cálculo puede derivarse de información de la declaración del año anterior. Turbotax 2013 Si utiliza un cálculo aproximado en el Formulario 8615, anote en inglés, “Estimated” (Aproximado) en la línea junto a dicha cantidad. Turbotax 2013    Cuando obtenga la información correcta, presente una declaración enmendada utilizando el Formulario 1040X, Amended U. Turbotax 2013 S. Turbotax 2013 Individual Income Tax Return (Declaración enmendada de impuestos sobre el ingreso personal de los Estados Unidos), en inglés. Turbotax 2013   En vez de utilizar cálculos aproximados, quizás pueda conseguir una prórroga automática de 6 meses para presentar la declaración de impuestos si para la fecha de vencimiento del plazo de entrega de la misma, presenta el Formulario 4868(SP), Solicitud de Prórroga Automática para Presentar la Declaración del Impuesto sobre el Ingreso Personal de los Estados Unidos (o el Formulario 4868, en inglés). Turbotax 2013 Las prórrogas se explican en el capítulo 1 . Turbotax 2013 Paso 1. Turbotax 2013 Cómo Calcular los Ingresos Netos No Derivados del Trabajo del Hijo (Parte I del Formulario 8615) Al calcular el impuesto de un hijo utilizando el Formulario 8615, el primer paso es calcular los ingresos netos no derivados del trabajo del hijo. Turbotax 2013 Para hacerlo, utilice la Parte I del Formulario 8615. Turbotax 2013 Línea 1 (ingresos no derivados del trabajo). Turbotax 2013   Si el hijo no recibió ingresos del trabajo, anote en esta línea los ingresos brutos ajustados indicados en la declaración del hijo. Turbotax 2013 Los ingresos brutos ajustados aparecen en la línea 38 del Formulario 1040 o en la línea 22 del Formulario 1040A. Turbotax 2013 No se puede utilizar el Formulario 1040EZ si se tiene que presentar el Formulario 8615. Turbotax 2013   Si el hijo sí recibió ingresos del trabajo, calcule la cantidad a anotar en la línea 1 del Formulario 8615 utilizando la hoja de trabajo de las instrucciones del formulario. Turbotax 2013   No obstante, si el hijo: ha excluido de la declaración algunos ingresos ganados en el extranjero, ha deducido alguna pérdida del trabajo por cuenta propia o ha deducido alguna pérdida neta de operación de otro año, utilice la Alternate Worksheet (Hoja de trabajo alternativa) para la línea 1 del Formulario 8615 que se encuentra en la Publicación 929, en inglés, para calcular la cantidad a anotar en la línea 1 del Formulario 8615. Turbotax 2013 Definición de los ingresos no derivados del trabajo. Turbotax 2013   Los ingresos no derivados del trabajo generalmente son todos los ingresos que no sean sueldos, salarios ni otras cantidades recibidas como pago por trabajo que de hecho se haya realizado. Turbotax 2013 Dichos ingresos abarcan los intereses tributables, dividendos (inclusive las distribuciones de ganancias de capital), ganancias de capital, compensación por desempleo, la parte sujeta a impuestos de pagos del Seguro Social y pensiones y determinadas distribuciones de fideicomisos. Turbotax 2013 Además, los ingresos no derivados del trabajo abarcan cantidades derivadas de bienes que el hijo haya adquirido con ingresos del trabajo (como intereses sobre una cuenta de ahorros en la que el hijo haya depositado sueldos). Turbotax 2013 Ingresos no sujetos a impuestos. Turbotax 2013   Para este fin, los ingresos no derivados del trabajo sólo abarcan cantidades que su hijo tenga que incluir en el total de ingresos. Turbotax 2013 No se incluyen los ingresos no tributables no derivados del trabajo, tales como los intereses exentos de impuestos y la parte no tributable de pagos del Seguro Social y pensiones. Turbotax 2013 Ingresos procedentes de bienes recibidos como regalo. Turbotax 2013   Los ingresos no derivados del trabajo de un hijo abarcan todo ingreso generado por bienes que pertenezcan al hijo. Turbotax 2013 Esto es así aun si se le traspasaron los bienes al hijo, independientemente de cuándo se traspasaron o se compraron dichos bienes ni quién los traspasó. Turbotax 2013   Los ingresos no derivados del trabajo de un hijo incluyen ingresos generados por bienes dados al hijo como regalo. Turbotax 2013 Esto incluye regalos dados al hijo por los abuelos o cualquier otra persona y regalos dados conforme a la Uniform Gift to Minors Act (Ley de Uniformidad Respecto a Regalos a Menores). Turbotax 2013 Ejemplo. Turbotax 2013 Amanda Naranjo, de 13 años de edad, recibió los siguientes ingresos: Dividendos — $800 Salarios — $2,100 Intereses tributables — $1,200 Intereses exentos de impuestos — $100 Ganancias netas de capital — $100 Los dividendos eran dividendos calificados sobre acciones que le habían regalado sus abuelos. Turbotax 2013 Los ingresos no derivados del trabajo de Amanda son $2,100. Turbotax 2013 Éste es el total de dividendos ($800), intereses tributables ($1,200) y ganancias netas de capital ($100). Turbotax 2013 Su salario se considera ingreso del trabajo, y no de ingreso no derivado del trabajo porque se le paga por un trabajo que de hecho se ha realizado. Turbotax 2013 No se incluyen los intereses exentos de impuestos porque éstos no están sujetos a impuestos. Turbotax 2013 Ingresos provenientes de fideicomisos. Turbotax 2013   Si el hijo es beneficiario de un fideicomiso, las distribuciones de intereses, dividendos, ganancias de capital y otros ingresos no derivados del trabajo tributables procedentes de dicho fideicomiso se consideran ingresos no derivados del trabajo del hijo. Turbotax 2013   No obstante, para llenar el Formulario 8615, una distribución tributable de un fideicomiso calificado establecido para casos de incapacidad no se considera ingresos no derivados del trabajo sino ingresos del trabajo. Turbotax 2013 Línea 2 (deducciones). Turbotax 2013   Si el hijo no detalla las deducciones en el Anexo A del Formulario 1040, anote $2,000 en la línea 2. Turbotax 2013   Si el hijo sí detalla las deducciones, anote en la línea 2 la cantidad mayor entre: $1,000 más la parte de las deducciones detalladas del hijo de la línea 29 del Anexo A del Formulario 1040 que esté directamente relacionada con la generación de ingresos no derivados del trabajo anotados en la línea 1 o $2,000. Turbotax 2013 Relación directa entre las deducciones y la generación de ingresos no derivados del trabajo. Turbotax 2013   Se considera que las deducciones detalladas están directamente relacionadas con la generación de ingresos no derivados del trabajo si las mismas corresponden a gastos pagados para generar o cobrar ingresos sujetos a impuestos o para administrar, conservar o mantener bienes cuyo fin es generar ingresos. Turbotax 2013 Esos gastos abarcan cargos por custodia y servicios, cargos por servicios de cobro de intereses y dividendos tributables y determinados cargos por asesoramiento sobre inversiones. Turbotax 2013   Estos gastos se suman a otras deducciones detalladas misceláneas en el Anexo A (Formulario 1040). Turbotax 2013 Sólo se puede deducir la cantidad que sea superior al 2% de los ingresos brutos ajustados del hijo. Turbotax 2013 Vea el capítulo 28 para más información. Turbotax 2013 Ejemplo 1. Turbotax 2013 Roberto, de 12 años de edad, tiene ingresos no derivados del trabajo de $8,000, sin otros ingresos ni ajustes a los ingresos. Turbotax 2013 Tiene deducciones detalladas de $300 (netas del límite del 2%) que están directamente relacionadas con sus ingresos no derivados del trabajo. Turbotax 2013 Tiene ingresos brutos ajustados de $8,000 que se anotan en la línea 38 del Formulario 1040 y en la línea 1 del Formulario 8615. Turbotax 2013 En la línea 2 se anotan $2,000 porque dicha cantidad supera la suma de $1,000 más las deducciones detalladas de $300 directamente relacionadas con la generación de ingresos de inversiones. Turbotax 2013 Ejemplo 2. Turbotax 2013 Elena, de 8 años de edad, tiene ingresos no derivados del trabajo de $16,000 y tiene una multa de $100 por retiro prematuro. Turbotax 2013 No tiene otros ingresos. Turbotax 2013 Tiene deducciones detalladas de $1,050 (netas del límite del 2%) que están directamente relacionadas con la generación de sus ingresos no derivados del trabajo. Turbotax 2013 Sus ingresos brutos ajustados, anotados en la línea 1, son $15,900 ($16,000 − $100). Turbotax 2013 La cantidad de la línea 2 es $2,050. Turbotax 2013 Ésta es la cantidad mayor de: $1,000 más los $1,050 de deducciones detalladas directamente relacionadas con la generación de ingresos de inversiones o $2,000. Turbotax 2013 Línea 3. Turbotax 2013   De la línea 1 reste la línea 2 y anote el resultado en esta línea. Turbotax 2013 Si es cero o menos, no llene el resto del formulario. Turbotax 2013 No obstante, tiene que adjuntar el Formulario 8615 a la declaración del hijo. Turbotax 2013 Calcule el impuesto sobre los ingresos tributables del hijo de manera normal. Turbotax 2013 Línea 4 (ingresos tributables del hijo). Turbotax 2013   Anote en la línea 4 los ingresos tributables del hijo provenientes de la línea 43 del Formulario 1040 o de la línea 27 del Formulario 1040A. Turbotax 2013   Sin embargo, si el hijo presenta el Formulario 2555 o el Formulario 2555-EZ para declarar la exclusión de ingresos ganados en el extranjero, la exclusión por concepto de vivienda o la deducción por concepto de vivienda, vea las Instrucciones del Formulario 8615 o la Publicación 929, ambas en inglés. Turbotax 2013 Línea 5 (ingresos netos no derivados del trabajo). Turbotax 2013   Los ingresos netos no derivados del trabajo del hijo no pueden sobrepasar sus ingresos tributables. Turbotax 2013 Anote en la línea 5 del Formulario 8615 la cantidad de la línea 3 o la línea 4, la que sea menor. Turbotax 2013 Esta cantidad corresponde a los ingresos netos no derivados del trabajo del hijo. Turbotax 2013   Si es cero o menos, no llene el resto del formulario. Turbotax 2013 No obstante, tiene que adjuntar el Formulario 8615 a la declaración del hijo. Turbotax 2013 Calcule el impuesto sobre los ingresos tributables del hijo de manera normal. Turbotax 2013 Paso 2. Turbotax 2013 Cómo Calcular el Impuesto Provisional a la Tasa Impositiva de los Padres (Parte II del Formulario 8615) El siguiente paso al llenar el Formulario 8615 es calcular un impuesto provisional sobre los ingresos netos no derivados del trabajo del hijo utilizando la tasa impositiva del padre o de la madre. Turbotax 2013 El impuesto provisional a la tasa impositiva del padre o de la madre es la diferencia entre el impuesto sobre los ingresos tributables del padre o de la madre calculados con los ingresos netos no derivados del trabajo del hijo (más los ingresos netos no derivados del trabajo de cualquier otro hijo cuyo Formulario 8615 incluya la información de la declaración de impuestos del padre o de la madre) y el impuesto calculado sin dichos ingresos. Turbotax 2013 Al calcular el impuesto provisional a la tasa impositiva del padre o de la madre en el Formulario 8615, no vuelva a calcular las exclusiones, deducciones ni créditos en la declaración del padre o de la madre debido a los ingresos netos no derivados del trabajo del hijo. Turbotax 2013 Por ejemplo, no vuelva a calcular la deducción por gastos médicos. Turbotax 2013 Calcule el impuesto provisional en las líneas 6 a 13 del Formulario 8615. Turbotax 2013 Nota: Si el hijo o el padre o la madre tiene pérdidas o ganancias de capital, obtenga la Publicación 929, en inglés, para información que le será de ayuda al completar la Parte II del Formulario 8615. Turbotax 2013 Línea 6 (ingresos tributables del padre o de la madre). Turbotax 2013   Anote en la línea 6 los ingresos tributables del padre o de la madre provenientes de la línea 43 del Formulario 1040, de la línea 27 del Formulario 1040A o la línea 6 del Formulario 1040EZ. Turbotax 2013   Si utilizó la Foreign Earned Income Tax Worksheet (Hoja de trabajo para el impuesto sobre los ingresos del trabajo en el extranjero) de las instrucciones del Formulario 1040 para calcular el impuesto correspondiente al padre o a la madre, anote la cantidad de la línea 3 de dicha hoja de trabajo en vez de los ingresos tributables del padre o de la madre. Turbotax 2013 Línea 7 (ingresos netos no derivados del trabajo de otros hijos). Turbotax 2013   Si la información de la declaración del padre o de la madre se utiliza también en el Formulario 8615 de otro hijo, anote en la línea 7 el total de las cantidades de la línea 5 de los Formularios 8615 de todos los demás hijos. Turbotax 2013 No incluya la cantidad de la línea 5 del Formulario 8615 que esté llenando. Turbotax 2013 Ejemplo. Turbotax 2013 Pablo y Juana del Pozo tienen tres hijos, Sandra, Geraldo y Miguel, quienes tienen que adjuntar el Formulario 8615 a sus declaraciones de impuestos respectivas. Turbotax 2013 Los ingresos netos no derivados del trabajo de los hijos en la línea 5 de sus Formularios 8615 son: Sandra — $800 Geraldo — $600 Miguel — $1,000 La línea 7 del Formulario 8615 de Sandra indicará $1,600, o sea, el total de las cantidades anotadas en la línea 5 de los Formularios 8615 de Geraldo y Miguel. Turbotax 2013 La línea 7 del Formulario 8615 de Geraldo indicará $1,800 ($800 + $1,000). Turbotax 2013 La línea 7 del Formulario 8615 de Miguel indicará $1,400 ($800 + $600). Turbotax 2013 Si no está disponible la información de los otros hijos. Turbotax 2013   Si no está disponible la cantidad de los ingresos netos no derivados del trabajo de los otros hijos antes de que venza el plazo para presentar la declaración, preséntela anotando cálculos aproximados o solicite una prórroga del plazo para presentarla. Turbotax 2013 Vea Si no se obtiene a tiempo la información de la declaración del padre o de la madre , anteriormente. Turbotax 2013 Línea 11 (impuesto provisional). Turbotax 2013   Reste la línea 10 de la línea 9 y anote el resultado en esta línea. Turbotax 2013 Éste es el impuesto provisional. Turbotax 2013   Si la línea 7 está en blanco, ignore las líneas 12a y 12b y anote en la línea 13 la cantidad proveniente de la línea 11. Turbotax 2013 Ignore asimismo el tema siguiente que trata de las líneas 12a y 12b. Turbotax 2013 Líneas 12a y 12b (dividiendo el impuesto provisional). Turbotax 2013   Si anota alguna cantidad en la línea 7 (fuera de cero), divida el impuesto provisional indicado en la línea 11 entre los hijos según la participación de cada hijo en el total de los ingresos netos no derivados del trabajo. Turbotax 2013 Esto se hace en las líneas 12a, 12b y 13. Turbotax 2013 Sume la cantidad de la línea 7 a la de la línea 5 y anote el total en la línea 12a. Turbotax 2013 Divida la cantidad de la línea 5 entre la de la línea 12a y anote el resultado, como número decimal, en la línea 12b. Turbotax 2013 Ejemplo. Turbotax 2013 En el ejemplo anterior bajo Línea 7 (ingresos netos no derivados del trabajo de otros hijos), el Formulario 8615 de Sandra indica $1,600 en la línea 7. Turbotax 2013 La cantidad anotada en la línea 12a es $2,400, o sea, el total de las cantidades provenientes de las líneas 5 y 7 ($800 + $1,600). Turbotax 2013 El número decimal en la línea 12b es . Turbotax 2013 333, calculado de la siguienta manera y redondeado hasta tres decimales:   $800 = . Turbotax 2013 333     $2,400   Paso 3. Turbotax 2013 Cómo Calcular el Impuesto del Hijo (Parte III del Formulario 8615) El último paso para calcular el impuesto de su hijo utilizando el Formulario 8615 es determinar la cantidad mayor entre: El total de: La parte del impuesto provisional correspondiente al hijo basado en la tasa impositiva del padre o de la madre, más El impuesto sobre los ingresos tributables del hijo que sean superiores a los ingresos netos no derivados del trabajo, calculado a la tasa impositiva del hijo o El impuesto sobre los ingresos tributables del hijo calculado a la tasa impositiva del hijo. Turbotax 2013 Éste es el impuesto del hijo. Turbotax 2013 Se calcula en las líneas 14 a 18 del Formulario 8615. Turbotax 2013 Impuesto mínimo alternativo. Turbotax 2013   Un hijo puede estar sujeto al impuesto mínimo alternativo (AMT, por sus siglas en inglés) si cuenta con determinados elementos que reciben un trato preferente conforme a la ley tributaria. Turbotax 2013 Vea el tema titulado Impuesto Mínimo Alternativo (AMT) , en el capítulo 30. Turbotax 2013    Para información adicional acerca de quién tiene que pagar el AMT y cómo calcularlo, vea el Formulario 6251, Alternative Minimum Tax—Individuals (Impuesto mínimo alternativo—individuos), en inglés. Turbotax 2013 Para información sobre límites especiales aplicables a un hijo que presente el Formulario 6251, vea Certain Children Under Age 24 (Determinados hijos menores de 24 años de edad), en las Instrucciones para el Formulario 6251, en inglés. Turbotax 2013 Prev  Up  Next   Home   More Online Publications
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The Turbotax 2013

Turbotax 2013 Publication 936 - Main Content Table of Contents Part I. Turbotax 2013 Home Mortgage InterestSecured Debt Qualified Home Special Situations Points Mortgage Insurance Premiums Form 1098, Mortgage Interest Statement How To Report Special Rule for Tenant-Stockholders in Cooperative Housing Corporations Part II. Turbotax 2013 Limits on Home Mortgage Interest DeductionHome Acquisition Debt Home Equity Debt Grandfathered Debt Table 1 Instructions How To Get Tax HelpLow Income Taxpayer Clinics Part I. Turbotax 2013 Home Mortgage Interest This part explains what you can deduct as home mortgage interest. Turbotax 2013 It includes discussions on points, mortgage insurance premiums, and how to report deductible interest on your tax return. Turbotax 2013 Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). Turbotax 2013 The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan. Turbotax 2013 You can deduct home mortgage interest if all the following conditions are met. Turbotax 2013 You file Form 1040 and itemize deductions on Schedule A (Form 1040). Turbotax 2013 The mortgage is a secured debt on a qualified home in which you have an ownership interest. Turbotax 2013 Secured Debt and Qualified Home are explained later. Turbotax 2013  Both you and the lender must intend that the loan be repaid. Turbotax 2013 Fully deductible interest. Turbotax 2013   In most cases, you can deduct all of your home mortgage interest. Turbotax 2013 How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. Turbotax 2013   If all of your mortgages fit into one or more of the following three categories at all times during the year, you can deduct all of the interest on those mortgages. Turbotax 2013 (If any one mortgage fits into more than one category, add the debt that fits in each category to your other debt in the same category. Turbotax 2013 ) If one or more of your mortgages does not fit into any of these categories, use Part II of this publication to figure the amount of interest you can deduct. Turbotax 2013   The three categories are as follows. Turbotax 2013 Mortgages you took out on or before October 13, 1987 (called grandfathered debt). Turbotax 2013 Mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if throughout 2013 these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately). Turbotax 2013 Mortgages you took out after October 13, 1987, other than to buy, build, or improve your home (called home equity debt), but only if throughout 2013 these mortgages totaled $100,000 or less ($50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by (1) and (2). Turbotax 2013 The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home. Turbotax 2013   See Part II for more detailed definitions of grandfathered, home acquisition, and home equity debt. Turbotax 2013    You can use Figure A to check whether your home mortgage interest is fully deductible. Turbotax 2013 This image is too large to be displayed in the current screen. Turbotax 2013 Please click the link to view the image. Turbotax 2013 Figure A. Turbotax 2013 Is My Home Mortgage Interest Fully Deductible? Secured Debt You can deduct your home mortgage interest only if your mortgage is a secured debt. Turbotax 2013 A secured debt is one in which you sign an instrument (such as a mortgage, deed of trust, or land contract) that: Makes your ownership in a qualified home security for payment of the debt, Provides, in case of default, that your home could satisfy the debt, and Is recorded or is otherwise perfected under any state or local law that applies. Turbotax 2013 In other words, your mortgage is a secured debt if you put your home up as collateral to protect the interests of the lender. Turbotax 2013 If you cannot pay the debt, your home can then serve as payment to the lender to satisfy (pay) the debt. Turbotax 2013 In this publication, mortgage will refer to secured debt. Turbotax 2013 Debt not secured by home. Turbotax 2013   A debt is not secured by your home if it is secured solely because of a lien on your general assets or if it is a security interest that attaches to the property without your consent (such as a mechanic's lien or judgment lien). Turbotax 2013   A debt is not secured by your home if it once was, but is no longer secured by your home. Turbotax 2013 Wraparound mortgage. Turbotax 2013   This is not a secured debt unless it is recorded or otherwise perfected under state law. Turbotax 2013 Example. Turbotax 2013 Beth owns a home subject to a mortgage of $40,000. Turbotax 2013 She sells the home for $100,000 to John, who takes it subject to the $40,000 mortgage. Turbotax 2013 Beth continues to make the payments on the $40,000 note. Turbotax 2013 John pays $10,000 down and gives Beth a $90,000 note secured by a wraparound mortgage on the home. Turbotax 2013 Beth does not record or otherwise perfect the $90,000 mortgage under the state law that applies. Turbotax 2013 Therefore, the mortgage is not a secured debt and John cannot deduct any of the interest he pays on it as home mortgage interest. Turbotax 2013 Choice to treat the debt as not secured by your home. Turbotax 2013   You can choose to treat any debt secured by your qualified home as not secured by the home. Turbotax 2013 This treatment begins with the tax year for which you make the choice and continues for all later tax years. Turbotax 2013 You can revoke your choice only with the consent of the Internal Revenue Service (IRS). Turbotax 2013   You may want to treat a debt as not secured by your home if the interest on that debt is fully deductible (for example, as a business expense) whether or not it qualifies as home mortgage interest. Turbotax 2013 This may allow you, if the limits in Part II apply, more of a deduction for interest on other debts that are deductible only as home mortgage interest. Turbotax 2013 Cooperative apartment owner. Turbotax 2013   If you own stock in a cooperative housing corporation, see the Special Rule for Tenant-Stockholders in Cooperative Housing Corporations , near the end of this Part I. Turbotax 2013 Qualified Home For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. Turbotax 2013 This means your main home or your second home. Turbotax 2013 A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. Turbotax 2013 The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes. Turbotax 2013 Otherwise, it is considered personal interest and is not deductible. Turbotax 2013 Main home. Turbotax 2013   You can have only one main home at any one time. Turbotax 2013 This is the home where you ordinarily live most of the time. Turbotax 2013 Second home. Turbotax 2013   A second home is a home that you choose to treat as your second home. Turbotax 2013 Second home not rented out. Turbotax 2013   If you have a second home that you do not hold out for rent or resale to others at any time during the year, you can treat it as a qualified home. Turbotax 2013 You do not have to use the home during the year. Turbotax 2013 Second home rented out. Turbotax 2013   If you have a second home and rent it out part of the year, you also must use it as a home during the year for it to be a qualified home. Turbotax 2013 You must use this home more than 14 days or more than 10% of the number of days during the year that the home is rented at a fair rental, whichever is longer. Turbotax 2013 If you do not use the home long enough, it is considered rental property and not a second home. Turbotax 2013 For information on residential rental property, see Publication 527. Turbotax 2013 More than one second home. Turbotax 2013   If you have more than one second home, you can treat only one as the qualified second home during any year. Turbotax 2013 However, you can change the home you treat as a second home during the year in the following situations. Turbotax 2013 If you get a new home during the year, you can choose to treat the new home as your second home as of the day you buy it. Turbotax 2013 If your main home no longer qualifies as your main home, you can choose to treat it as your second home as of the day you stop using it as your main home. Turbotax 2013 If your second home is sold during the year or becomes your main home, you can choose a new second home as of the day you sell the old one or begin using it as your main home. Turbotax 2013 Divided use of your home. Turbotax 2013   The only part of your home that is considered a qualified home is the part you use for residential living. Turbotax 2013 If you use part of your home for other than residential living, such as a home office, you must allocate the use of your home. Turbotax 2013 You must then divide both the cost and fair market value of your home between the part that is a qualified home and the part that is not. Turbotax 2013 Dividing the cost may affect the amount of your home acquisition debt, which is limited to the cost of your home plus the cost of any improvements. Turbotax 2013 (See Home Acquisition Debt in Part II. Turbotax 2013 ) Dividing the fair market value may affect your home equity debt limit, also explained in Part II . Turbotax 2013 Renting out part of home. Turbotax 2013   If you rent out part of a qualified home to another person (tenant), you can treat the rented part as being used by you for residential living only if all of the following conditions apply. Turbotax 2013 The rented part of your home is used by the tenant primarily for residential living. Turbotax 2013 The rented part of your home is not a self-contained residential unit having separate sleeping, cooking, and toilet facilities. Turbotax 2013 You do not rent (directly or by sublease) the same or different parts of your home to more than two tenants at any time during the tax year. Turbotax 2013 If two persons (and dependents of either) share the same sleeping quarters, they are treated as one tenant. Turbotax 2013 Office in home. Turbotax 2013   If you have an office in your home that you use in your business, see Publication 587, Business Use of Your Home. Turbotax 2013 It explains how to figure your deduction for the business use of your home, which includes the business part of your home mortgage interest. Turbotax 2013 Home under construction. Turbotax 2013   You can treat a home under construction as a qualified home for a period of up to 24 months, but only if it becomes your qualified home at the time it is ready for occupancy. Turbotax 2013   The 24-month period can start any time on or after the day construction begins. Turbotax 2013 Home destroyed. Turbotax 2013   You may be able to continue treating your home as a qualified home even after it is destroyed in a fire, storm, tornado, earthquake, or other casualty. Turbotax 2013 This means you can continue to deduct the interest you pay on your home mortgage, subject to the limits described in this publication. Turbotax 2013   You can continue treating a destroyed home as a qualified home if, within a reasonable period of time after the home is destroyed, you: Rebuild the destroyed home and move into it, or Sell the land on which the home was located. Turbotax 2013   This rule applies to your main home and to a second home that you treat as a qualified home. Turbotax 2013 Time-sharing arrangements. Turbotax 2013   You can treat a home you own under a time-sharing plan as a qualified home if it meets all the requirements. Turbotax 2013 A time-sharing plan is an arrangement between two or more people that limits each person's interest in the home or right to use it to a certain part of the year. Turbotax 2013 Rental of time-share. Turbotax 2013   If you rent out your time-share, it qualifies as a second home only if you also use it as a home during the year. Turbotax 2013 See Second home rented out , earlier, for the use requirement. Turbotax 2013 To know whether you meet that requirement, count your days of use and rental of the home only during the time you have a right to use it or to receive any benefits from the rental of it. Turbotax 2013 Married taxpayers. Turbotax 2013   If you are married and file a joint return, your qualified home(s) can be owned either jointly or by only one spouse. Turbotax 2013 Separate returns. Turbotax 2013   If you are married filing separately and you and your spouse own more than one home, you can each take into account only one home as a qualified home. Turbotax 2013 However, if you both consent in writing, then one spouse can take both the main home and a second home into account. Turbotax 2013 Special Situations This section describes certain items that can be included as home mortgage interest and others that cannot. Turbotax 2013 It also describes certain special situations that may affect your deduction. Turbotax 2013 Late payment charge on mortgage payment. Turbotax 2013   You can deduct as home mortgage interest a late payment charge if it was not for a specific service performed in connection with your mortgage loan. Turbotax 2013 Mortgage prepayment penalty. Turbotax 2013   If you pay off your home mortgage early, you may have to pay a penalty. Turbotax 2013 You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. Turbotax 2013 Sale of home. Turbotax 2013   If you sell your home, you can deduct your home mortgage interest (subject to any limits that apply) paid up to, but not including, the date of the sale. Turbotax 2013 Example. Turbotax 2013 John and Peggy Harris sold their home on May 7. Turbotax 2013 Through April 30, they made home mortgage interest payments of $1,220. Turbotax 2013 The settlement sheet for the sale of the home showed $50 interest for the 6-day period in May up to, but not including, the date of sale. Turbotax 2013 Their mortgage interest deduction is $1,270 ($1,220 + $50). Turbotax 2013 Prepaid interest. Turbotax 2013   If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. Turbotax 2013 You can deduct in each year only the interest that qualifies as home mortgage interest for that year. Turbotax 2013 However, there is an exception that applies to points, discussed later. Turbotax 2013 Mortgage interest credit. Turbotax 2013    You may be able to claim a mortgage interest credit if you were issued a mortgage credit certificate (MCC) by a state or local government. Turbotax 2013 Figure the credit on Form 8396, Mortgage Interest Credit. Turbotax 2013 If you take this credit, you must reduce your mortgage interest deduction by the amount of the credit. Turbotax 2013   See Form 8396 and Publication 530 for more information on the mortgage interest credit. Turbotax 2013 Ministers' and military housing allowance. Turbotax 2013   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you can still deduct your home mortgage interest. Turbotax 2013 Hardest Hit Fund and Emergency Homeowners' Loan Programs. Turbotax 2013   You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. Turbotax 2013 You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. Turbotax 2013 You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. Turbotax 2013 If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098–MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received from payer(s) / borrower(s)), box 4 (mortgage insurance premiums), and box 5 (other information including real property taxes paid). Turbotax 2013 However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. Turbotax 2013 Mortgage assistance payments under section 235 of the National Housing Act. Turbotax 2013   If you qualify for mortgage assistance payments for lower-income families under section 235 of the National Housing Act, part or all of the interest on your mortgage may be paid for you. Turbotax 2013 You cannot deduct the interest that is paid for you. Turbotax 2013 No other effect on taxes. Turbotax 2013   Do not include these mortgage assistance payments in your income. Turbotax 2013 Also, do not use these payments to reduce other deductions, such as real estate taxes. Turbotax 2013 Divorced or separated individuals. Turbotax 2013   If a divorce or separation agreement requires you or your spouse or former spouse to pay home mortgage interest on a home owned by both of you, the payment of interest may be alimony. Turbotax 2013 See the discussion of Payments for jointly-owned home under Alimony in Publication 504, Divorced or Separated Individuals. Turbotax 2013 Redeemable ground rents. Turbotax 2013   In some states (such as Maryland), you can buy your home subject to a ground rent. Turbotax 2013 A ground rent is an obligation you assume to pay a fixed amount per year on the property. Turbotax 2013 Under this arrangement, you are leasing (rather than buying) the land on which your home is located. Turbotax 2013   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. Turbotax 2013   A ground rent is a redeemable ground rent if all of the following are true. Turbotax 2013 Your lease, including renewal periods, is for more than 15 years. Turbotax 2013 You can freely assign the lease. Turbotax 2013 You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a specific amount. Turbotax 2013 The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. Turbotax 2013   Payments made to end the lease and to buy the lessor's entire interest in the land are not deductible as mortgage interest. Turbotax 2013 Nonredeemable ground rents. Turbotax 2013   Payments on a nonredeemable ground rent are not mortgage interest. Turbotax 2013 You can deduct them as rent if they are a business expense or if they are for rental property. Turbotax 2013 Reverse mortgages. Turbotax 2013   A reverse mortgage is a loan where the lender pays you (in a lump sum, a monthly advance, a line of credit, or a combination of all three) while you continue to live in your home. Turbotax 2013 With a reverse mortgage, you retain title to your home. Turbotax 2013 Depending on the plan, your reverse mortgage becomes due with interest when you move, sell your home, reach the end of a pre-selected loan period, or die. Turbotax 2013 Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable. Turbotax 2013 Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until you actually pay it, which is usually when you pay off the loan in full. Turbotax 2013 Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt discussed in Part II. Turbotax 2013 Rental payments. Turbotax 2013   If you live in a house before final settlement on the purchase, any payments you make for that period are rent and not interest. Turbotax 2013 This is true even if the settlement papers call them interest. Turbotax 2013 You cannot deduct these payments as home mortgage interest. Turbotax 2013 Mortgage proceeds invested in tax-exempt securities. Turbotax 2013   You cannot deduct the home mortgage interest on grandfathered debt or home equity debt if you used the proceeds of the mortgage to buy securities or certificates that produce tax-free income. Turbotax 2013 “Grandfathered debt” and “home equity debt” are defined in Part II of this publication. Turbotax 2013 Refunds of interest. Turbotax 2013   If you receive a refund of interest in the same tax year you paid it, you must reduce your interest expense by the amount refunded to you. Turbotax 2013 If you receive a refund of interest you deducted in an earlier year, you generally must include the refund in income in the year you receive it. Turbotax 2013 However, you need to include it only up to the amount of the deduction that reduced your tax in the earlier year. Turbotax 2013 This is true whether the interest overcharge was refunded to you or was used to reduce the outstanding principal on your mortgage. Turbotax 2013 If you need to include the refund in income, report it on Form 1040, line 21. Turbotax 2013   If you received a refund of interest you overpaid in an earlier year, you generally will receive a Form 1098, Mortgage Interest Statement, showing the refund in box 3. Turbotax 2013 For information about Form 1098, see Form 1098, Mortgage Interest Statement , later. Turbotax 2013   For more information on how to treat refunds of interest deducted in earlier years, see Recoveries in Publication 525, Taxable and Nontaxable Income. Turbotax 2013 Cooperative apartment owner. Turbotax 2013   If you own a cooperative apartment, you must reduce your home mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. Turbotax 2013 The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year. Turbotax 2013   If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. Turbotax 2013 Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Turbotax 2013 Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. Turbotax 2013 This image is too large to be displayed in the current screen. Turbotax 2013 Please click the link to view the image. Turbotax 2013 Figure B. Turbotax 2013 Are My Points Fully Deductible This Year? A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. Turbotax 2013 See Points paid by the seller , later. Turbotax 2013 General Rule You generally cannot deduct the full amount of points in the year paid. Turbotax 2013 Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. Turbotax 2013 See Deduction Allowed Ratably , next. Turbotax 2013 For exceptions to the general rule, see Deduction Allowed in Year Paid , later. Turbotax 2013 Deduction Allowed Ratably If you do not meet the tests listed under Deduction Allowed in Year Paid , later, the loan is not a home improvement loan, or you choose not to deduct your points in full in the year paid, you can deduct the points ratably (equally) over the life of the loan if you meet all the following tests. Turbotax 2013 You use the cash method of accounting. Turbotax 2013 This means you report income in the year you receive it and deduct expenses in the year you pay them. Turbotax 2013 Most individuals use this method. Turbotax 2013 Your loan is secured by a home. Turbotax 2013 (The home does not need to be your main home. Turbotax 2013 ) Your loan period is not more than 30 years. Turbotax 2013 If your loan period is more than 10 years, the terms of your loan are the same as other loans offered in your area for the same or longer period. Turbotax 2013 Either your loan amount is $250,000 or less, or the number of points is not more than: 4, if your loan period is 15 years or less, or 6, if your loan period is more than 15 years. Turbotax 2013 Example. Turbotax 2013 You use the cash method of accounting. Turbotax 2013 In 2013, you took out a $100,000 loan payable over 20 years. Turbotax 2013 The terms of the loan are the same as for other 20-year loans offered in your area. Turbotax 2013 You paid $4,800 in points. Turbotax 2013 You made 3 monthly payments on the loan in 2013. Turbotax 2013 You can deduct $60 [($4,800 ÷ 240 months) x 3 payments] in 2013. Turbotax 2013 In 2014, if you make all twelve payments, you will be able to deduct $240 ($20 x 12). Turbotax 2013 Deduction Allowed in Year Paid You can fully deduct points in the year paid if you meet all the following tests. Turbotax 2013 (You can use Figure B as a quick guide to see whether your points are fully deductible in the year paid. Turbotax 2013 ) Your loan is secured by your main home. Turbotax 2013 (Your main home is the one you ordinarily live in most of the time. Turbotax 2013 ) Paying points is an established business practice in the area where the loan was made. Turbotax 2013 The points paid were not more than the points generally charged in that area. Turbotax 2013 You use the cash method of accounting. Turbotax 2013 This means you report income in the year you receive it and deduct expenses in the year you pay them. Turbotax 2013 Most individuals use this method. Turbotax 2013 The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. Turbotax 2013 The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. Turbotax 2013 The funds you provided are not required to have been applied to the points. Turbotax 2013 They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Turbotax 2013 You cannot have borrowed these funds from your lender or mortgage broker. Turbotax 2013 You use your loan to buy or build your main home. Turbotax 2013 The points were computed as a percentage of the principal amount of the mortgage. Turbotax 2013 The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. Turbotax 2013 The points may be shown as paid from either your funds or the seller's. Turbotax 2013 Note. Turbotax 2013 If you meet all of these tests, you can choose to either fully deduct the points in the year paid, or deduct them over the life of the loan. Turbotax 2013 Home improvement loan. Turbotax 2013   You can also fully deduct in the year paid points paid on a loan to improve your main home, if tests (1) through (6) are met. Turbotax 2013 Second home. Turbotax 2013 You cannot fully deduct in the year paid points you pay on loans secured by your second home. Turbotax 2013 You can deduct these points only over the life of the loan. Turbotax 2013 Refinancing. Turbotax 2013   Generally, points you pay to refinance a mortgage are not deductible in full in the year you pay them. Turbotax 2013 This is true even if the new mortgage is secured by your main home. Turbotax 2013   However, if you use part of the refinanced mortgage proceeds to improve your main home and you meet the first 6 tests listed under Deduction Allowed in Year Paid , you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. Turbotax 2013 You can deduct the rest of the points over the life of the loan. Turbotax 2013 Example 1. Turbotax 2013 In 1998, Bill Fields got a mortgage to buy a home. Turbotax 2013 In 2013, Bill refinanced that mortgage with a 15-year $100,000 mortgage loan. Turbotax 2013 The mortgage is secured by his home. Turbotax 2013 To get the new loan, he had to pay three points ($3,000). Turbotax 2013 Two points ($2,000) were for prepaid interest, and one point ($1,000) was charged for services, in place of amounts that ordinarily are stated separately on the settlement statement. Turbotax 2013 Bill paid the points out of his private funds, rather than out of the proceeds of the new loan. Turbotax 2013 The payment of points is an established practice in the area, and the points charged are not more than the amount generally charged there. Turbotax 2013 Bill's first payment on the new loan was due July 1. Turbotax 2013 He made six payments on the loan in 2013 and is a cash basis taxpayer. Turbotax 2013 Bill used the funds from the new mortgage to repay his existing mortgage. Turbotax 2013 Although the new mortgage loan was for Bill's continued ownership of his main home, it was not for the purchase or improvement of that home. Turbotax 2013 He cannot deduct all of the points in 2013. Turbotax 2013 He can deduct two points ($2,000) ratably over the life of the loan. Turbotax 2013 He deducts $67 [($2,000 ÷ 180 months) × 6 payments] of the points in 2013. Turbotax 2013 The other point ($1,000) was a fee for services and is not deductible. Turbotax 2013 Example 2. Turbotax 2013 The facts are the same as in Example 1, except that Bill used $25,000 of the loan proceeds to improve his home and $75,000 to repay his existing mortgage. Turbotax 2013 Bill deducts 25% ($25,000 ÷ $100,000) of the points ($2,000) in 2013. Turbotax 2013 His deduction is $500 ($2,000 × 25%). Turbotax 2013 Bill also deducts the ratable part of the remaining $1,500 ($2,000 − $500) that must be spread over the life of the loan. Turbotax 2013 This is $50 [($1,500 ÷ 180 months) × 6 payments] in 2013. Turbotax 2013 The total amount Bill deducts in 2013 is $550 ($500 + $50). Turbotax 2013 Special Situations This section describes certain special situations that may affect your deduction of points. Turbotax 2013 Original issue discount. Turbotax 2013   If you do not qualify to either deduct the points in the year paid or deduct them ratably over the life of the loan, or if you choose not to use either of these methods, the points reduce the issue price of the loan. Turbotax 2013 This reduction results in original issue discount, which is discussed in chapter 4 of Publication 535. Turbotax 2013 Amounts charged for services. Turbotax 2013    Amounts charged by the lender for specific services connected to the loan are not interest. Turbotax 2013 Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Turbotax 2013  You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Turbotax 2013 Points paid by the seller. Turbotax 2013   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Turbotax 2013 Treatment by seller. Turbotax 2013   The seller cannot deduct these fees as interest. Turbotax 2013 But they are a selling expense that reduces the amount realized by the seller. Turbotax 2013 See Publication 523 for information on selling your home. Turbotax 2013 Treatment by buyer. Turbotax 2013   The buyer reduces the basis of the home by the amount of the seller-paid points and treats the points as if he or she had paid them. Turbotax 2013 If all the tests under Deduction Allowed in Year Paid , earlier, are met, the buyer can deduct the points in the year paid. Turbotax 2013 If any of those tests are not met, the buyer deducts the points over the life of the loan. Turbotax 2013   If you need information about the basis of your home, see Publication 523 or Publication 530. Turbotax 2013 Funds provided are less than points. Turbotax 2013   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the funds you provided were less than the points charged to you (test (6)), you can deduct the points in the year paid, up to the amount of funds you provided. Turbotax 2013 In addition, you can deduct any points paid by the seller. Turbotax 2013 Example 1. Turbotax 2013 When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Turbotax 2013 You meet all the tests for deducting points in the year paid, except the only funds you provided were a $750 down payment. Turbotax 2013 Of the $1,000 charged for points, you can deduct $750 in the year paid. Turbotax 2013 You spread the remaining $250 over the life of the mortgage. Turbotax 2013 Example 2. Turbotax 2013 The facts are the same as in Example 1, except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. Turbotax 2013 In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Turbotax 2013 You spread the remaining $250 over the life of the mortgage. Turbotax 2013 You must reduce the basis of your home by the $1,000 paid by the seller. Turbotax 2013 Excess points. Turbotax 2013   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the points paid were more than generally paid in your area (test (3)), you deduct in the year paid only the points that are generally charged. Turbotax 2013 You must spread any additional points over the life of the mortgage. Turbotax 2013 Mortgage ending early. Turbotax 2013   If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. Turbotax 2013 However, if you refinance the mortgage with the same lender, you cannot deduct any remaining balance of spread points. Turbotax 2013 Instead, deduct the remaining balance over the term of the new loan. Turbotax 2013   A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Turbotax 2013 Example. Turbotax 2013 Dan paid $3,000 in points in 2002 that he had to spread out over the 15-year life of the mortgage. Turbotax 2013 He deducts $200 points per year. Turbotax 2013 Through 2012, Dan has deducted $2,200 of the points. Turbotax 2013 Dan prepaid his mortgage in full in 2013. Turbotax 2013 He can deduct the remaining $800 of points in 2013. Turbotax 2013 Limits on deduction. Turbotax 2013   You cannot fully deduct points paid on a mortgage that exceeds the limits discussed in Part II . Turbotax 2013 See the Table 1 Instructions for line 10. Turbotax 2013 Form 1098. Turbotax 2013    The mortgage interest statement you receive should show not only the total interest paid during the year, but also your deductible points paid during the year. Turbotax 2013 See Form 1098, Mortgage Interest Statement , later. Turbotax 2013 Mortgage Insurance Premiums You can treat amounts you paid during 2013 for qualified mortgage insurance as home mortgage interest. Turbotax 2013 The insurance must be in connection with home acquisition debt, and the insurance contract must have been issued after 2006. Turbotax 2013 Qualified mortgage insurance. Turbotax 2013   Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). Turbotax 2013   Mortgage insurance provided by the Department of Veterans Affairs is commonly known as a funding fee. Turbotax 2013 If provided by the Rural Housing Service, it is commonly known as a guarantee fee. Turbotax 2013 The funding fee and guarantee fee can either be included in the amount of the loan or paid in full at the time of closing. Turbotax 2013 These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013. Turbotax 2013 Contact the mortgage insurance issuer to determine the deductible amount if it is not reported in box 4 of Form 1098. Turbotax 2013 Special rules for prepaid mortgage insurance. Turbotax 2013   Generally, if you paid premiums for qualified mortgage insurance that are properly allocable to periods after the close of the tax year, such premiums are treated as paid in the period to which they are allocated. Turbotax 2013 You must allocate the premiums over the shorter of the stated term of the mortgage or 84 months, beginning with the month the insurance was obtained. Turbotax 2013 No deduction is allowed for the unamortized balance if the mortgage is satisfied before its term. Turbotax 2013 This paragraph does not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service. Turbotax 2013 Example. Turbotax 2013 Ryan purchased a home in May of 2012 and financed the home with a 15-year mortgage. Turbotax 2013 Ryan also prepaid all of the $9,240 in private mortgage insurance required at the time of closing in May. Turbotax 2013 Since the $9,240 in private mortgage insurance is allocable to periods after 2012, Ryan must allocate the $9,240 over the shorter of the life of the mortgage or 84 months. Turbotax 2013 Ryan's adjusted gross income (AGI) for 2012 is $76,000. Turbotax 2013 Ryan can deduct $880 ($9,240 ÷ 84 x 8 months) for qualified mortgage insurance premiums in 2012. Turbotax 2013 For 2013, Ryan can deduct $1,320 ($9,240 ÷ 84 x 12 months) if his AGI is $100,000 or less. Turbotax 2013 In this example, the mortgage insurance premiums are allocated over 84 months, which is shorter than the life of the mortgage of 15 years (180 months). Turbotax 2013 Limit on deduction. Turbotax 2013   If your adjusted gross income on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated. Turbotax 2013 See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. Turbotax 2013 If your adjusted gross income is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Turbotax 2013 Form 1098. Turbotax 2013   The mortgage interest statement you receive should show not only the total interest paid during the year, but also your mortgage insurance premiums paid during the year, which may qualify to be treated as deductible mortgage interest. Turbotax 2013 See Form 1098, Mortgage Interest Statement, next. Turbotax 2013 Form 1098, Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement from the mortgage holder. Turbotax 2013 You will receive the statement if you pay interest to a person (including a financial institution or cooperative housing corporation) in the course of that person's trade or business. Turbotax 2013 A governmental unit is a person for purposes of furnishing the statement. Turbotax 2013 The statement for each year should be sent to you by January 31 of the following year. Turbotax 2013 A copy of this form will also be sent to the IRS. Turbotax 2013 The statement will show the total interest you paid during the year, any mortgage insurance premiums you paid, and if you purchased a main home during the year, it also will show the deductible points paid during the year, including seller-paid points. Turbotax 2013 However, it should not show any interest that was paid for you by a government agency. Turbotax 2013 As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. Turbotax 2013 However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan. Turbotax 2013 See the earlier discussion of Points to determine whether you can deduct points not shown on Form 1098. Turbotax 2013 Prepaid interest on Form 1098. Turbotax 2013   If you prepaid interest in 2013 that accrued in full by January 15, 2014, this prepaid interest may be included in box 1 of Form 1098. Turbotax 2013 However, you cannot deduct the prepaid amount for January 2014 in 2013. Turbotax 2013 (See Prepaid interest , earlier. Turbotax 2013 ) You will have to figure the interest that accrued for 2014 and subtract it from the amount in box 1. Turbotax 2013 You will include the interest for January 2014 with other interest you pay for 2014. Turbotax 2013 Refunded interest. Turbotax 2013   If you received a refund of mortgage interest you overpaid in an earlier year, you generally will receive a Form 1098 showing the refund in box 3. Turbotax 2013 See Refunds of interest , earlier. Turbotax 2013 Mortgage insurance premiums. Turbotax 2013   The amount of mortgage insurance premiums you paid during 2013 may be shown in Box 4 of Form 1098. Turbotax 2013 See Mortgage Insurance Premiums , earlier. Turbotax 2013 How To Report Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. Turbotax 2013 If you paid more deductible interest to the financial institution than the amount shown on Form 1098, show the larger deductible amount on line 10. Turbotax 2013 Attach a statement explaining the difference and print “See attached” next to line 10. Turbotax 2013 Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. Turbotax 2013 If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and taxpayer identification number (TIN) on the dotted lines next to line 11. Turbotax 2013 The seller must give you this number and you must give the seller your TIN. Turbotax 2013 A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Turbotax 2013 Failure to meet any of these requirements may result in a $50 penalty for each failure. Turbotax 2013 The TIN can be either a social security number, an individual taxpayer identification number (issued by the Internal Revenue Service), or an employer identification number. Turbotax 2013 If you can take a deduction for points that were not reported to you on Form 1098, deduct those points on Schedule A (Form 1040), line 12. Turbotax 2013 Deduct mortgage insurance premiums on Schedule A (Form 1040), line 13. Turbotax 2013 More than one borrower. Turbotax 2013   If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. Turbotax 2013 Show how much of the interest each of you paid, and give the name and address of the person who received the form. Turbotax 2013 Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. Turbotax 2013 Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13. Turbotax 2013   Similarly, if you are the payer of record on a mortgage on which there are other borrowers entitled to a deduction for the interest shown on the Form 1098 you received, deduct only your share of the interest on Schedule A (Form 1040), line 10. Turbotax 2013 Let each of the other borrowers know what his or her share is. Turbotax 2013 Mortgage proceeds used for business or investment. Turbotax 2013   If your home mortgage interest deduction is limited under the rules explained in Part II , but all or part of the mortgage proceeds were used for business, investment, or other deductible activities, see Table 2 near the end of this publication. Turbotax 2013 It shows where to deduct the part of your excess interest that is for those activities. Turbotax 2013 The Table 1 Instructions for line 13 in Part II explain how to divide the excess interest among the activities for which the mortgage proceeds were used. Turbotax 2013 Special Rule for Tenant-Stockholders in Cooperative Housing Corporations A qualified home includes stock in a cooperative housing corporation owned by a tenant-stockholder. Turbotax 2013 This applies only if the tenant-stockholder is entitled to live in the house or apartment because of owning stock in the cooperative. Turbotax 2013 Cooperative housing corporation. Turbotax 2013   This is a corporation that meets all of the following conditions. Turbotax 2013 Has only one class of stock outstanding, Has no stockholders other than those who own the stock that can live in a house, apartment, or house trailer owned or leased by the corporation, Has no stockholders who can receive any distribution out of capital other than on a liquidation of the corporation, and Meets at least one of the following requirements. Turbotax 2013 Receives at least 80% of its gross income for the year in which the mortgage interest is paid or incurred from tenant-stockholders. Turbotax 2013 For this purpose, gross income is all income received during the entire year, including amounts received before the corporation changed to cooperative ownership. Turbotax 2013 At all times during the year, at least 80% of the total square footage of the corporation's property is used or available for use by the tenant-stockholders for residential or residential-related use. Turbotax 2013 At least 90% of the corporation's expenditures paid or incurred during the year are for the acquisition, construction, management, maintenance, or care of corporate property for the benefit of the tenant-stockholders. Turbotax 2013 Stock used to secure debt. Turbotax 2013   In some cases, you cannot use your cooperative housing stock to secure a debt because of either: Restrictions under local or state law, or Restrictions in the cooperative agreement (other than restrictions in which the main purpose is to permit the tenant- stockholder to treat unsecured debt as secured debt). Turbotax 2013 However, you can treat a debt as secured by the stock to the extent that the proceeds are used to buy the stock under the allocation of interest rules. Turbotax 2013 See chapter 4 of Publication 535 for details on these rules. Turbotax 2013 Figuring deductible home mortgage interest. Turbotax 2013   Generally, if you are a tenant-stockholder, you can deduct payments you make for your share of the interest paid or incurred by the cooperative. Turbotax 2013 The interest must be on a debt to buy, build, change, improve, or maintain the cooperative's housing, or on a debt to buy the land. Turbotax 2013   Figure your share of this interest by multiplying the total by the following fraction. Turbotax 2013      Your shares of stock in the cooperative   The total shares of stock in the cooperative Limits on deduction. Turbotax 2013   To figure how the limits discussed in Part II apply to you, treat your share of the cooperative's debt as debt incurred by you. Turbotax 2013 The cooperative should determine your share of its grandfathered debt, its home acquisition debt, and its home equity debt. Turbotax 2013 (Your share of each of these types of debt is equal to the average balance of each debt multiplied by the fraction just given. Turbotax 2013 ) After your share of the average balance of each type of debt is determined, you include it with the average balance of that type of debt secured by your stock. Turbotax 2013 Form 1098. Turbotax 2013    The cooperative should give you a Form 1098 showing your share of the interest. Turbotax 2013 Use the rules in this publication to determine your deductible mortgage interest. Turbotax 2013 Part II. Turbotax 2013 Limits on Home Mortgage Interest Deduction This part of the publication discusses the limits on deductible home mortgage interest. Turbotax 2013 These limits apply to your home mortgage interest expense if you have a home mortgage that does not fit into any of the three categories listed at the beginning of Part I under Fully deductible interest . Turbotax 2013 Your home mortgage interest deduction is limited to the interest on the part of your home mortgage debt that is not more than your qualified loan limit. Turbotax 2013 This is the part of your home mortgage debt that is grandfathered debt or that is not more than the limits for home acquisition debt and home equity debt. Turbotax 2013 Table 1 can help you figure your qualified loan limit and your deductible home mortgage interest. Turbotax 2013 Home Acquisition Debt Home acquisition debt is a mortgage you took out after October 13, 1987, to buy, build, or substantially improve a qualified home (your main or second home). Turbotax 2013 It also must be secured by that home. Turbotax 2013 If the amount of your mortgage is more than the cost of the home plus the cost of any substantial improvements, only the debt that is not more than the cost of the home plus improvements qualifies as home acquisition debt. Turbotax 2013 The additional debt may qualify as home equity debt (discussed later). Turbotax 2013 Home acquisition debt limit. Turbotax 2013   The total amount you can treat as home acquisition debt at any time on your main home and second home cannot be more than $1 million ($500,000 if married filing separately). Turbotax 2013 This limit is reduced (but not below zero) by the amount of your grandfathered debt (discussed later). Turbotax 2013 Debt over this limit may qualify as home equity debt (also discussed later). Turbotax 2013 Refinanced home acquisition debt. Turbotax 2013   Any secured debt you use to refinance home acquisition debt is treated as home acquisition debt. Turbotax 2013 However, the new debt will qualify as home acquisition debt only up to the amount of the balance of the old mortgage principal just before the refinancing. Turbotax 2013 Any additional debt not used to buy, build, or substantially improve a qualified home is not home acquisition debt, but may qualify as home equity debt (discussed later). Turbotax 2013 Mortgage that qualifies later. Turbotax 2013   A mortgage that does not qualify as home acquisition debt because it does not meet all the requirements may qualify at a later time. Turbotax 2013 For example, a debt that you use to buy your home may not qualify as home acquisition debt because it is not secured by the home. Turbotax 2013 However, if the debt is later secured by the home, it may qualify as home acquisition debt after that time. Turbotax 2013 Similarly, a debt that you use to buy property may not qualify because the property is not a qualified home. Turbotax 2013 However, if the property later becomes a qualified home, the debt may qualify after that time. Turbotax 2013 Mortgage treated as used to buy, build, or improve home. Turbotax 2013   A mortgage secured by a qualified home may be treated as home acquisition debt, even if you do not actually use the proceeds to buy, build, or substantially improve the home. Turbotax 2013 This applies in the following situations. Turbotax 2013 You buy your home within 90 days before or after the date you take out the mortgage. Turbotax 2013 The home acquisition debt is limited to the home's cost, plus the cost of any substantial improvements within the limit described below in (2) or (3). Turbotax 2013 (See Example 1 later. Turbotax 2013 ) You build or improve your home and take out the mortgage before the work is completed. Turbotax 2013 The home acquisition debt is limited to the amount of the expenses incurred within 24 months before the date of the mortgage. Turbotax 2013 You build or improve your home and take out the mortgage within 90 days after the work is completed. Turbotax 2013 The home acquisition debt is limited to the amount of the expenses incurred within the period beginning 24 months before the work is completed and ending on the date of the mortgage. Turbotax 2013 (See Example 2 later. Turbotax 2013 ) Example 1. Turbotax 2013 You bought your main home on June 3 for $175,000. Turbotax 2013 You paid for the home with cash you got from the sale of your old home. Turbotax 2013 On July 15, you took out a mortgage of $150,000 secured by your main home. Turbotax 2013 You used the $150,000 to invest in stocks. Turbotax 2013 You can treat the mortgage as taken out to buy your home because you bought the home within 90 days before you took out the mortgage. Turbotax 2013 The entire mortgage qualifies as home acquisition debt because it was not more than the home's cost. Turbotax 2013 Example 2. Turbotax 2013 On January 31, John began building a home on the lot that he owned. Turbotax 2013 He used $45,000 of his personal funds to build the home. Turbotax 2013 The home was completed on October 31. Turbotax 2013 On November 21, John took out a $36,000 mortgage that was secured by the home. Turbotax 2013 The mortgage can be treated as used to build the home because it was taken out within 90 days after the home was completed. Turbotax 2013 The entire mortgage qualifies as home acquisition debt because it was not more than the expenses incurred within the period beginning 24 months before the home was completed. Turbotax 2013 This is illustrated by Figure C. Turbotax 2013   Please click here for the text description of the image. Turbotax 2013 Figure C. Turbotax 2013 John's example Date of the mortgage. Turbotax 2013   The date you take out your mortgage is the day the loan proceeds are disbursed. Turbotax 2013 This is generally the closing date. Turbotax 2013 You can treat the day you apply in writing for your mortgage as the date you take it out. Turbotax 2013 However, this applies only if you receive the loan proceeds within a reasonable time (such as within 30 days) after your application is approved. Turbotax 2013 If a timely application you make is rejected, a reasonable additional time will be allowed to make a new application. Turbotax 2013 Cost of home or improvements. Turbotax 2013   To determine your cost, include amounts paid to acquire any interest in a qualified home or to substantially improve the home. Turbotax 2013   The cost of building or substantially improving a qualified home includes the costs to acquire real property and building materials, fees for architects and design plans, and required building permits. Turbotax 2013 Substantial improvement. Turbotax 2013   An improvement is substantial if it: Adds to the value of your home, Prolongs your home's useful life, or Adapts your home to new uses. Turbotax 2013    Repairs that maintain your home in good condition, such as repainting your home, are not substantial improvements. Turbotax 2013 However, if you paint your home as part of a renovation that substantially improves your qualified home, you can include the painting costs in the cost of the improvements. Turbotax 2013 Acquiring an interest in a home because of a divorce. Turbotax 2013   If you incur debt to acquire the interest of a spouse or former spouse in a home, because of a divorce or legal separation, you can treat that debt as home acquisition debt. Turbotax 2013 Part of home not a qualified home. Turbotax 2013    To figure your home acquisition debt, you must divide the cost of your home and improvements between the part of your home that is a qualified home and any part that is not a qualified home. Turbotax 2013 See Divided use of your home under Qualified Home in Part I. Turbotax 2013 Home Equity Debt If you took out a loan for reasons other than to buy, build, or substantially improve your home, it may qualify as home equity debt. Turbotax 2013 In addition, debt you incurred to buy, build, or substantially improve your home, to the extent it is more than the home acquisition debt limit (discussed earlier), may qualify as home equity debt. Turbotax 2013 Home equity debt is a mortgage you took out after October 13, 1987, that: Does not qualify as home acquisition debt or as grandfathered debt, and Is secured by your qualified home. Turbotax 2013 Example. Turbotax 2013 You bought your home for cash 10 years ago. Turbotax 2013 You did not have a mortgage on your home until last year, when you took out a $50,000 loan, secured by your home, to pay for your daughter's college tuition and your father's medical bills. Turbotax 2013 This loan is home equity debt. Turbotax 2013 Home equity debt limit. Turbotax 2013   There is a limit on the amount of debt that can be treated as home equity debt. Turbotax 2013 The total home equity debt on your main home and second home is limited to the smaller of: $100,000 ($50,000 if married filing separately), or The total of each home's fair market value (FMV) reduced (but not below zero) by the amount of its home acquisition debt and grandfathered debt. Turbotax 2013 Determine the FMV and the outstanding home acquisition and grandfathered debt for each home on the date that the last debt was secured by the home. Turbotax 2013 Example. Turbotax 2013 You own one home that you bought in 2000. Turbotax 2013 Its FMV now is $110,000, and the current balance on your original mortgage (home acquisition debt) is $95,000. Turbotax 2013 Bank M offers you a home mortgage loan of 125% of the FMV of the home less any outstanding mortgages or other liens. Turbotax 2013 To consolidate some of your other debts, you take out a $42,500 home mortgage loan [(125% × $110,000) − $95,000] with Bank M. Turbotax 2013 Your home equity debt is limited to $15,000. Turbotax 2013 This is the smaller of: $100,000, the maximum limit, or $15,000, the amount that the FMV of $110,000 exceeds the amount of home acquisition debt of $95,000. Turbotax 2013 Debt higher than limit. Turbotax 2013   Interest on amounts over the home equity debt limit (such as the interest on $27,500 [$42,500 − $15,000] in the preceding example) generally is treated as personal interest and is not deductible. Turbotax 2013 But if the proceeds of the loan were used for investment, business, or other deductible purposes, the interest may be deductible. Turbotax 2013 If it is, see the Table 1 Instructions for line 13 for an explanation of how to allocate the excess interest. Turbotax 2013 Part of home not a qualified home. Turbotax 2013   To figure the limit on your home equity debt, you must divide the FMV of your home between the part that is a qualified home and any part that is not a qualified home. Turbotax 2013 See Divided use of your home under Qualified Home in Part I. Turbotax 2013 Fair market value (FMV). Turbotax 2013    This is the price at which the home would change hands between you and a buyer, neither having to sell or buy, and both having reasonable knowledge of all relevant facts. Turbotax 2013 Sales of similar homes in your area, on about the same date your last debt was secured by the home, may be helpful in figuring the FMV. Turbotax 2013 Grandfathered Debt If you took out a mortgage on your home before October 14, 1987, or you refinanced such a mortgage, it may qualify as grandfathered debt. Turbotax 2013 To qualify, it must have been secured by your qualified home on October 13, 1987, and at all times after that date. Turbotax 2013 How you used the proceeds does not matter. Turbotax 2013 Grandfathered debt is not limited. Turbotax 2013 All of the interest you paid on grandfathered debt is fully deductible home mortgage interest. Turbotax 2013 However, the amount of your grandfathered debt reduces the $1 million limit for home acquisition debt and the limit based on your home's fair market value for home equity debt. Turbotax 2013 Refinanced grandfathered debt. Turbotax 2013   If you refinanced grandfathered debt after October 13, 1987, for an amount that was not more than the mortgage principal left on the debt, then you still treat it as grandfathered debt. Turbotax 2013 To the extent the new debt is more than that mortgage principal, it is treated as home acquisition or home equity debt, and the mortgage is a mixed-use mortgage (discussed later under Average Mortgage Balance in the Table 1 instructions). Turbotax 2013 The debt must be secured by the qualified home. Turbotax 2013   You treat grandfathered debt that was refinanced after October 13, 1987, as grandfathered debt only for the term left on the debt that was refinanced. Turbotax 2013 After that, you treat it as home acquisition debt or home equity debt, depending on how you used the proceeds. Turbotax 2013 Exception. Turbotax 2013   If the debt before refinancing was like a balloon note (the principal on the debt was not amortized over the term of the debt), then you treat the refinanced debt as grandfathered debt for the term of the first refinancing. Turbotax 2013 This term cannot be more than 30 years. Turbotax 2013 Example. Turbotax 2013 Chester took out a $200,000 first mortgage on his home in 1986. Turbotax 2013 The mortgage was a five-year balloon note and the entire balance on the note was due in 1991. Turbotax 2013 Chester refinanced the debt in 1991 with a new 20-year mortgage. Turbotax 2013 The refinanced debt is treated as grandfathered debt for its entire term (20 years). Turbotax 2013 Line-of-credit mortgage. Turbotax 2013    If you had a line-of-credit mortgage on October 13, 1987, and borrowed additional amounts against it after that date, then the additional amounts are either home acquisition debt or home equity debt depending on how you used the proceeds. Turbotax 2013 The balance on the mortgage before you borrowed the additional amounts is grandfathered debt. Turbotax 2013 The newly borrowed amounts are not grandfathered debt because the funds were borrowed after October 13, 1987. Turbotax 2013 See Average Mortgage Balance in the Table 1 Instructions that follow. Turbotax 2013 Table 1 Instructions Unless you are subject to the overall limit on itemized deductions, you can deduct all of the interest you paid during the year on mortgages secured by your main home or second home in either of the following two situations. Turbotax 2013 All the mortgages are grandfathered debt. Turbotax 2013 The total of the mortgage balances for the entire year is within the limits discussed earlier under Home Acquisition Debt and Home Equity Debt . Turbotax 2013 In either of those cases, you do not need Table 1. Turbotax 2013 Otherwise, you can use Table 1 to determine your qualified loan limit and deductible home mortgage interest. Turbotax 2013 Fill out only one Table 1 for both your main and second home regardless of how many mortgages you have. Turbotax 2013 Table 1. Turbotax 2013 Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. Turbotax 2013 Part I Qualified Loan Limit 1. Turbotax 2013 Enter the average balance of all your grandfathered debt. Turbotax 2013 See line 1 instructions 1. Turbotax 2013   2. Turbotax 2013 Enter the average balance of all your home acquisition debt. Turbotax 2013 See line 2 instructions 2. Turbotax 2013   3. Turbotax 2013 Enter $1,000,000 ($500,000 if married filing separately) 3. Turbotax 2013   4. Turbotax 2013 Enter the larger of the amount on line 1 or the amount on line 3 4. Turbotax 2013   5. Turbotax 2013 Add the amounts on lines 1 and 2. Turbotax 2013 Enter the total here 5. Turbotax 2013   6. Turbotax 2013 Enter the smaller of the amount on line 4 or the amount on line 5 6. Turbotax 2013   7. Turbotax 2013 If you have home equity debt, enter the smaller of $100,000 ($50,000 if married filing separately) or your limited amount. Turbotax 2013 See the line 7 instructions for the limit which may apply to you. Turbotax 2013 7. Turbotax 2013   8. Turbotax 2013 Add the amounts on lines 6 and 7. Turbotax 2013 Enter the total. Turbotax 2013 This is your qualified loan limit. Turbotax 2013 8. Turbotax 2013   Part II Deductible Home Mortgage Interest 9. Turbotax 2013 Enter the total of the average balances of all mortgages on all qualified homes. Turbotax 2013  See line 9 instructions 9. Turbotax 2013     If line 8 is less than line 9, go on to line 10. Turbotax 2013 If line 8 is equal to or more than line 9, stop here. Turbotax 2013 All of your interest on all the mortgages included on line 9 is deductible as home mortgage interest on Schedule A (Form 1040). Turbotax 2013     10. Turbotax 2013 Enter the total amount of interest that you paid. Turbotax 2013 See line 10 instructions 10. Turbotax 2013   11. Turbotax 2013 Divide the amount on line 8 by the amount on line 9. Turbotax 2013 Enter the result as a decimal amount (rounded to three places) 11. Turbotax 2013 × . Turbotax 2013 12. Turbotax 2013 Multiply the amount on line 10 by the decimal amount on line 11. Turbotax 2013 Enter the result. Turbotax 2013 This is your deductible home mortgage interest. Turbotax 2013 Enter this amount on Schedule A (Form 1040) 12. Turbotax 2013   13. Turbotax 2013 Subtract the amount on line 12 from the amount on line 10. Turbotax 2013 Enter the result. Turbotax 2013 This is not home mortgage interest. Turbotax 2013 See line 13 instructions 13. Turbotax 2013   Home equity debt only. Turbotax 2013   If all of your mortgages are home equity debt, do not fill in lines 1 through 5. Turbotax 2013 Enter zero on line 6 and complete the rest of Table 1. Turbotax 2013 Average Mortgage Balance You have to figure the average balance of each mortgage to determine your qualified loan limit. Turbotax 2013 You need these amounts to complete lines 1, 2, and 9 of Table 1. Turbotax 2013 You can use the highest mortgage balances during the year, but you may benefit most by using the average balances. Turbotax 2013 The following are methods you can use to figure your average mortgage balances. Turbotax 2013 However, if a mortgage has more than one category of debt, see Mixed-use mortgages , later, in this section. Turbotax 2013 Average of first and last balance method. Turbotax 2013   You can use this method if all the following apply. Turbotax 2013 You did not borrow any new amounts on the mortgage during the year. Turbotax 2013 (This does not include borrowing the original mortgage amount. Turbotax 2013 ) You did not prepay more than one month's principal during the year. Turbotax 2013 (This includes prepayment by refinancing your home or by applying proceeds from its sale. Turbotax 2013 ) You had to make level payments at fixed equal intervals on at least a semi-annual basis. Turbotax 2013 You treat your payments as level even if they were adjusted from time to time because of changes in the interest rate. Turbotax 2013    To figure your average balance, complete the following worksheet. Turbotax 2013    1. Turbotax 2013 Enter the balance as of the first day of the year that the mortgage was secured by your qualified home during the year (generally January 1)   2. Turbotax 2013 Enter the balance as of the last day of the year that the mortgage was secured by your qualified home during the year (generally December 31)   3. Turbotax 2013 Add amounts on lines 1 and 2   4. Turbotax 2013 Divide the amount on line 3 by 2. Turbotax 2013 Enter the result   Interest paid divided by interest rate method. Turbotax 2013   You can use this method if at all times in 2013 the mortgage was secured by your qualified home and the interest was paid at least monthly. Turbotax 2013    Complete the following worksheet to figure your average balance. Turbotax 2013    1. Turbotax 2013 Enter the interest paid in 2013. Turbotax 2013 Do not include points, mortgage insurance premiums, or any interest paid in 2013 that is for a year after 2013. Turbotax 2013 However, do include interest that is for 2013 but was paid in an earlier year   2. Turbotax 2013 Enter the annual interest rate on the mortgage. Turbotax 2013 If the interest rate varied in 2013, use the lowest rate for the year   3. Turbotax 2013 Divide the amount on line 1 by the amount on line 2. Turbotax 2013 Enter the result   Example. Turbotax 2013 Mr. Turbotax 2013 Blue had a line of credit secured by his main home all year. Turbotax 2013 He paid interest of $2,500 on this loan. Turbotax 2013 The interest rate on the loan was 9% (. Turbotax 2013 09) all year. Turbotax 2013 His average balance using this method is $27,778, figured as follows. Turbotax 2013 1. Turbotax 2013 Enter the interest paid in 2013. Turbotax 2013 Do not include points, mortgage insurance premiums, or any interest paid in 2013 that is for a year after 2013. Turbotax 2013 However, do include interest that is for 2013 but was paid in an earlier year $2,500 2. Turbotax 2013 Enter the annual interest rate on the mortgage. Turbotax 2013 If the interest rate varied in 2013, use the lowest rate for the year . Turbotax 2013 09 3. Turbotax 2013 Divide the amount on line 1 by the amount on line 2. Turbotax 2013 Enter the result $27,778 Statements provided by your lender. Turbotax 2013   If you receive monthly statements showing the closing balance or the average balance for the month, you can use either to figure your average balance for the year. Turbotax 2013 You can treat the balance as zero for any month the mortgage was not secured by your qualified home. Turbotax 2013   For each mortgage, figure your average balance by adding your monthly closing or average balances and dividing that total by the number of months the home secured by that mortgage was a qualified home during the year. Turbotax 2013   If your lender can give you your average balance for the year, you can use that amount. Turbotax 2013 Example. Turbotax 2013 Ms. Turbotax 2013 Brown had a home equity loan secured by her main home all year. Turbotax 2013 She received monthly statements showing her average balance for each month. Turbotax 2013 She can figure her average balance for the year by adding her monthly average balances and dividing the total by 12. Turbotax 2013 Mixed-use mortgages. Turbotax 2013   A mixed-use mortgage is a loan that consists of more than one of the three categories of debt (grandfathered debt, home acquisition debt, and home equity debt). Turbotax 2013 For example, a mortgage you took out during the year is a mixed-use mortgage if you used its proceeds partly to refinance a mortgage that you took out in an earlier year to buy your home (home acquisition debt) and partly to buy a car (home equity debt). Turbotax 2013   Complete lines 1 and 2 of Table 1 by including the separate average balances of any grandfathered debt and home acquisition debt in your mixed-use mortgage. Turbotax 2013 Do not use the methods described earlier in this section to figure the average balance of either category. Turbotax 2013 Instead, for each category, use the following method. Turbotax 2013 Figure the balance of that category of debt for each month. Turbotax 2013 This is the amount of the loan proceeds allocated to that category, reduced by your principal payments on the mortgage previously applied to that category. Turbotax 2013 Principal payments on a mixed-use mortgage are applied in full to each category of debt, until its balance is zero, in the following order: First, any home equity debt, Next, any grandfathered debt, and Finally, any home acquisition debt. Turbotax 2013 Add together the monthly balances figured in (1). Turbotax 2013 Divide the result in (2) by 12. Turbotax 2013   Complete line 9 of Table 1 by including the average balance of the entire mixed-use mortgage, figured under one of the methods described earlier in this section. Turbotax 2013 Example 1. Turbotax 2013 In 1986, Sharon took out a $1,400,000 mortgage to buy her main home (grandfathered debt). Turbotax 2013 On March 2, 2013, when the home had a fair market value of $1,700,000 and she owed $1,100,000 on the mortgage, Sharon took out a second mortgage for $200,000. Turbotax 2013 She used $180,000 of the proceeds to make substantial improvements to her home (home acquisition debt) and the remaining $20,000 to buy a car (home equity debt). Turbotax 2013 Under the loan agreement, Sharon must make principal payments of $1,000 at the end of each month. Turbotax 2013 During 2013, her principal payments on the second mortgage totaled $10,000. Turbotax 2013 To complete Table 1, line 2, Sharon must figure a separate average balance for the part of her second mortgage that is home acquisition debt. Turbotax 2013 The January and February balances were zero. Turbotax 2013 The March through December balances were all $180,000, because none of her principal payments are applied to the home acquisition debt. Turbotax 2013 (They are all applied to the home equity debt, reducing it to $10,000 [$20,000 − $10,000]. Turbotax 2013 ) The monthly balances of the home acquisition debt total $1,800,000 ($180,000 × 10). Turbotax 2013 Therefore, the average balance of the home acquisition debt for 2013 was $150,000 ($1,800,000 ÷ 12). Turbotax 2013 Example 2. Turbotax 2013 The facts are the same as in Example 1. Turbotax 2013 In 2014, Sharon's January through October principal payments on her second mortgage are applied to the home equity debt, reducing it to zero. Turbotax 2013 The balance of the home acquisition debt remains $180,000 for each of those months. Turbotax 2013 Because her November and December principal payments are applied to the home acquisition debt, the November balance is $179,000 ($180,000 − $1,000) and the December balance is $178,000 ($180,000 − $2,000). Turbotax 2013 The monthly balances total $2,157,000 [($180,000 × 10) + $179,000 + $178,000]. Turbotax 2013 Therefore, the average balance of the home acquisition debt for 2014 is $179,750 ($2,157,000 ÷ 12). Turbotax 2013 L