Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

10 40 Ez Form 2012

Free State Income Tax E FileForm 1040nr SoftwareWhere Do I Mail My 1040xH&r Block Basic1040ez 2013 FormState Tax Filing RequirementsH&r Block FreeFile State Taxes FreeIrsefileTax Preparer SoftwareIrs 2011 Tax FormsHow To Ammend 2010 Tax ReturnAmending Your Tax Return2012 1040Where To File Federal Tax Return 20112013 Tax Form 1040xCan Tax Form 1040x Be Filed Online2013 Tax Booklet 1040ez1040 Income Tax Form2009 Federal Income Tax Forms2011 Tax Return Form 1040Form 1040x Amended Us Individual Income Tax Return2011 Tax Forms Ez1040x Online FreeHr Block 1040xFile 2012 Taxes OnlineFree State Tax On LineFle 2012 Taxes Late Online Tax FilingAmmend Tax ReturnE FileFree 1040ez Tax ReturnHr Block Free TaxesTaxact 2010How To Amend TaxAmend Taxes OnlineFree State Tax Forms IncomeFillable 1040xFile State Income Tax FreeFree Prior Tax Years FilingMyfreetaxes Org

10 40 Ez Form 2012

10 40 ez form 2012 5. 10 40 ez form 2012   Taxes Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: When To Deduct Taxes Real Estate TaxesSeparate elections. 10 40 ez form 2012 Making the election. 10 40 ez form 2012 Form 3115. 10 40 ez form 2012 Income TaxesAccrual of contested income taxes. 10 40 ez form 2012 Employment Taxes Other TaxesAdditional Medicare Tax. 10 40 ez form 2012 What's New Additional Medicare Tax. 10 40 ez form 2012  Beginning in 2013, you must withhold a 0. 10 40 ez form 2012 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 10 40 ez form 2012 Also, self-employed individuals may be required to pay Additional Medicare Tax on self-employment income. 10 40 ez form 2012 See Employment Taxes , and Self-employment tax , later. 10 40 ez form 2012 Introduction You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses. 10 40 ez form 2012 You cannot deduct federal income taxes, estate and gift taxes, or state inheritance, legacy, and succession taxes. 10 40 ez form 2012 Topics - This chapter discusses: When to deduct taxes Real estate taxes Income taxes Employment taxes Other taxes Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 334 Tax Guide for Small Business 510 Excise Taxes 538 Accounting Periods and Methods 551 Basis of Assets Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch SE (Form 1040) Self-Employment Tax 3115 Application for Change in Accounting Method 8959 Additional Medicare Tax See chapter 12 for information about getting publications and forms. 10 40 ez form 2012 When To Deduct Taxes Generally, you can only deduct taxes in the year you pay them. 10 40 ez form 2012 This applies whether you use the cash method or an accrual method of accounting. 10 40 ez form 2012 Under an accrual method, you can deduct a tax before you pay it if you meet the exception for recurring items discussed under Economic Performance in Publication 538. 10 40 ez form 2012 You can also elect to ratably accrue real estate taxes as discussed later under Real Estate Taxes . 10 40 ez form 2012 Limit on accrual of taxes. 10 40 ez form 2012   A taxing jurisdiction can require the use of a date for accruing taxes that is earlier than the date it originally required. 10 40 ez form 2012 However, if you use an accrual method, and can deduct the tax before you pay it, use the original accrual date for the year of change and all future years to determine when you can deduct the tax. 10 40 ez form 2012 Example. 10 40 ez form 2012 Your state imposes a tax on personal property used in a trade or business conducted in the state. 10 40 ez form 2012 This tax is assessed and becomes a lien as of July 1 (accrual date). 10 40 ez form 2012 In 2013, the state changed the assessment and lien dates from July 1, 2014, to December 31, 2013, for property tax year 2014. 10 40 ez form 2012 Use the original accrual date (July 1, 2014) to determine when you can deduct the tax. 10 40 ez form 2012 You must also use the July 1 accrual date for all future years to determine when you can deduct the tax. 10 40 ez form 2012 Uniform capitalization rules. 10 40 ez form 2012   Uniform capitalization rules apply to certain taxpayers who produce real property or tangible personal property for use in a trade or business or for sale to customers. 10 40 ez form 2012 They also apply to certain taxpayers who acquire property for resale. 10 40 ez form 2012 Under these rules, you either include certain costs in inventory or capitalize certain expenses related to the property, such as taxes. 10 40 ez form 2012 For more information, see chapter 1. 10 40 ez form 2012 Carrying charges. 10 40 ez form 2012   Carrying charges include taxes you pay to carry or develop real estate or to carry, transport, or install personal property. 10 40 ez form 2012 You can elect to capitalize carrying charges not subject to the uniform capitalization rules if they are otherwise deductible. 10 40 ez form 2012 For more information, see chapter 7. 10 40 ez form 2012 Refunds of taxes. 10 40 ez form 2012   If you receive a refund for any taxes you deducted in an earlier year, include the refund in income to the extent the deduction reduced your federal income tax in the earlier year. 10 40 ez form 2012 For more information, see Recovery of amount deducted (tax benefit rule) in chapter 1. 10 40 ez form 2012    You must include in income any interest you receive on tax refunds. 10 40 ez form 2012 Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real estate levied for the general public welfare. 10 40 ez form 2012 The taxing authority must base the taxes on the assessed value of the real estate and charge them uniformly against all property under its jurisdiction. 10 40 ez form 2012 Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. 10 40 ez form 2012 See Taxes for local benefits , later. 10 40 ez form 2012 If you use an accrual method, you generally cannot accrue real estate taxes until you pay them to the government authority. 10 40 ez form 2012 However, you can elect to ratably accrue the taxes during the year. 10 40 ez form 2012 See Electing to ratably accrue , later. 10 40 ez form 2012 Taxes for local benefits. 10 40 ez form 2012   Generally, you cannot deduct taxes charged for local benefits and improvements that tend to increase the value of your property. 10 40 ez form 2012 These include assessments for streets, sidewalks, water mains, sewer lines, and public parking facilities. 10 40 ez form 2012 You should increase the basis of your property by the amount of the assessment. 10 40 ez form 2012   You can deduct taxes for these local benefits only if the taxes are for maintenance, repairs, or interest charges related to those benefits. 10 40 ez form 2012 If part of the tax is for maintenance, repairs, or interest, you must be able to show how much of the tax is for these expenses to claim a deduction for that part of the tax. 10 40 ez form 2012 Example. 10 40 ez form 2012 To improve downtown commercial business, Waterfront City converted a downtown business area street into an enclosed pedestrian mall. 10 40 ez form 2012 The city assessed the full cost of construction, financed with 10-year bonds, against the affected properties. 10 40 ez form 2012 The city is paying the principal and interest with the annual payments made by the property owners. 10 40 ez form 2012 The assessments for construction costs are not deductible as taxes or as business expenses, but are depreciable capital expenses. 10 40 ez form 2012 The part of the payments used to pay the interest charges on the bonds is deductible as taxes. 10 40 ez form 2012 Charges for services. 10 40 ez form 2012   Water bills, sewerage, and other service charges assessed against your business property are not real estate taxes, but are deductible as business expenses. 10 40 ez form 2012 Purchase or sale of real estate. 10 40 ez form 2012   If real estate is sold, the real estate taxes must be allocated between the buyer and the seller. 10 40 ez form 2012   The buyer and seller must allocate the real estate taxes according to the number of days in the real property tax year (the period to which the tax imposed relates) that each owned the property. 10 40 ez form 2012 Treat the seller as paying the taxes up to but not including the date of sale. 10 40 ez form 2012 Treat the buyer as paying the taxes beginning with the date of sale. 10 40 ez form 2012 You can usually find this information on the settlement statement you received at closing. 10 40 ez form 2012   If you (the seller) use an accrual method and have not elected to ratably accrue real estate taxes, you are considered to have accrued your part of the tax on the date you sell the property. 10 40 ez form 2012 Example. 10 40 ez form 2012 Alberto Verde, a calendar year accrual method taxpayer, owns real estate in Olmo County. 10 40 ez form 2012 He has not elected to ratably accrue property taxes. 10 40 ez form 2012 November 30 of each year is the assessment and lien date for the current real property tax year, which is the calendar year. 10 40 ez form 2012 He sold the property on June 30, 2013. 10 40 ez form 2012 Under his accounting method he would not be able to claim a deduction for the taxes because the sale occurred before November 30. 10 40 ez form 2012 He is treated as having accrued his part of the tax, 181/366  (January 1–June 29), on June 30, and he can deduct it for 2013. 10 40 ez form 2012 Electing to ratably accrue. 10 40 ez form 2012   If you use an accrual method, you can elect to accrue real estate tax related to a definite period ratably over that period. 10 40 ez form 2012 Example. 10 40 ez form 2012 Juan Sanchez is a calendar year taxpayer who uses an accrual method. 10 40 ez form 2012 His real estate taxes for the real property tax year, July 1, 2013, to June 30, 2014, are $1,200. 10 40 ez form 2012 July 1 is the assessment and lien date. 10 40 ez form 2012 If Juan elects to ratably accrue the taxes, $600 will accrue in 2013 ($1,200 × 6/12, July 1–December 31) and the balance will accrue in 2014. 10 40 ez form 2012 Separate elections. 10 40 ez form 2012   You can elect to ratably accrue the taxes for each separate trade or business and for nonbusiness activities if you account for them separately. 10 40 ez form 2012 Once you elect to ratably accrue real estate taxes, you must use that method unless you get permission from the IRS to change. 10 40 ez form 2012 See Form 3115 , later. 10 40 ez form 2012 Making the election. 10 40 ez form 2012   If you elect to ratably accrue the taxes for the first year in which you incur real estate taxes, attach a statement to your income tax return for that year. 10 40 ez form 2012 The statement should show all the following items. 10 40 ez form 2012 The trades or businesses to which the election applies and the accounting method or methods used. 10 40 ez form 2012 The period to which the taxes relate. 10 40 ez form 2012 The computation of the real estate tax deduction for that first year. 10 40 ez form 2012   Generally, you must file your return by the due date (including extensions). 10 40 ez form 2012 However, if you timely filed your return for the year without electing to ratably accrue, you can still make the election by filing an amended return within 6 months after the due date of the return (excluding extensions). 10 40 ez form 2012 Attach the statement to the amended return and write “Filed pursuant to section 301. 10 40 ez form 2012 9100-2” on the statement. 10 40 ez form 2012 File the amended return at the same address where you filed the original return. 10 40 ez form 2012 Form 3115. 10 40 ez form 2012    If you elect to ratably accrue real estate taxes for a year after the first year in which you incur real estate taxes, or if you want to revoke your election to ratably accrue real estate taxes, file Form 3115. 10 40 ez form 2012 For more information, including applicable time frames for filing, see the Instructions for Form 3115. 10 40 ez form 2012 Note. 10 40 ez form 2012 If you are filing an application for a change in accounting method filed after January 9, 2011, for a year of change ending after April 29, 2010, see Revenue Procedure 2011-14, 2011-4 I. 10 40 ez form 2012 R. 10 40 ez form 2012 B. 10 40 ez form 2012 330, as modified and clarified by Revenue Procedure 2012-19, 2012-14 I. 10 40 ez form 2012 R. 10 40 ez form 2012 B. 10 40 ez form 2012 689, and Revenue Procedure 2012-20, 2012-14 I. 10 40 ez form 2012 R. 10 40 ez form 2012 B. 10 40 ez form 2012 700, or any successor. 10 40 ez form 2012 Revenue Procedure 2011-14 is available at  www. 10 40 ez form 2012 irs. 10 40 ez form 2012 gov/irb/2011-04IRB/ar08. 10 40 ez form 2012 html. 10 40 ez form 2012 Income Taxes This section discusses federal, state, local, and foreign income taxes. 10 40 ez form 2012 Federal income taxes. 10 40 ez form 2012   You cannot deduct federal income taxes. 10 40 ez form 2012 State and local income taxes. 10 40 ez form 2012   A corporation or partnership can deduct state and local income taxes imposed on the corporation or partnership as business expenses. 10 40 ez form 2012 An individual can deduct state and local income taxes only as an itemized deduction on Schedule A (Form 1040). 10 40 ez form 2012   However, an individual can deduct a state tax on gross income (as distinguished from net income) directly attributable to a trade or business as a business expense. 10 40 ez form 2012 Accrual of contested income taxes. 10 40 ez form 2012   If you use an accrual method, and you contest a state or local income tax liability, you must accrue and deduct any contested amount in the tax year in which the liability is finally determined. 10 40 ez form 2012   If additional state or local income taxes for a prior year are assessed in a later year, you can deduct the taxes in the year in which they were originally imposed (the prior year) if the tax liability is not contested. 10 40 ez form 2012 You cannot deduct them in the year in which the liability is finally determined. 10 40 ez form 2012    The filing of an income tax return is not considered a contest and, in the absence of an overt act of protest, you can deduct the tax in the prior year. 10 40 ez form 2012 Also, you can deduct any additional taxes in the prior year if you do not show some affirmative evidence of denial of the liability. 10 40 ez form 2012   However, if you consistently deduct additional assessments in the year they are paid or finally determined (including those for which there was no contest), you must continue to do so. 10 40 ez form 2012 You cannot take a deduction in the earlier year unless you receive permission to change your method of accounting. 10 40 ez form 2012 For more information on accounting methods, see When Can I Deduct an Expense in chapter 1. 10 40 ez form 2012 Foreign income taxes. 10 40 ez form 2012   Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. 10 40 ez form 2012 S. 10 40 ez form 2012 possession. 10 40 ez form 2012 However, an individual cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. 10 40 ez form 2012 S. 10 40 ez form 2012 tax under the foreign earned income exclusion or the foreign housing exclusion. 10 40 ez form 2012 For information on these exclusions, see Publication 54, Tax Guide for U. 10 40 ez form 2012 S. 10 40 ez form 2012 Citizens and Resident Aliens Abroad. 10 40 ez form 2012 For information on the foreign tax credit, see Publication 514, Foreign Tax Credit for Individuals. 10 40 ez form 2012 Employment Taxes If you have employees, you must withhold various taxes from your employees' pay. 10 40 ez form 2012 Most employers must withhold their employees' share of social security, Medicare taxes, and Additional Medicare Tax (if applicable) along with state and federal income taxes. 10 40 ez form 2012 You may also need to pay certain employment taxes from your own funds. 10 40 ez form 2012 These include your share of social security and Medicare taxes as an employer, along with unemployment taxes. 10 40 ez form 2012 Note. 10 40 ez form 2012 Additional Medicare Tax is only imposed on the employee. 10 40 ez form 2012 There is no employer share of Additional Medicare Tax. 10 40 ez form 2012 Your deduction for wages paid is not reduced by the social security and Medicare taxes, Additional Medicare Tax, and income taxes you withhold from your employees. 10 40 ez form 2012 You can deduct the employment taxes you must pay from your own funds as taxes. 10 40 ez form 2012 Example. 10 40 ez form 2012 You pay your employee $18,000 a year. 10 40 ez form 2012 However, after you withhold various taxes, your employee receives $14,500. 10 40 ez form 2012 You also pay an additional $1,500 in employment taxes. 10 40 ez form 2012 You should deduct the full $18,000 as wages. 10 40 ez form 2012 You can deduct the $1,500 you pay from your own funds as taxes. 10 40 ez form 2012 For more information on employment taxes, see Publication 15 (Circular E). 10 40 ez form 2012 Unemployment fund taxes. 10 40 ez form 2012   As an employer, you may have to make payments to a state unemployment compensation fund or to a state disability benefit fund. 10 40 ez form 2012 Deduct these payments as taxes. 10 40 ez form 2012 Other Taxes The following are other taxes you can deduct if you incur them in the ordinary course of your trade or business. 10 40 ez form 2012 Excise taxes. 10 40 ez form 2012   Generally, you can deduct as a business expense all excise taxes that are ordinary and necessary expenses of carrying on your trade or business. 10 40 ez form 2012 However, see Fuel taxes , later. 10 40 ez form 2012   For more information on excise taxes, see Publication 510. 10 40 ez form 2012 Franchise taxes. 10 40 ez form 2012   You can deduct corporate franchise taxes as a business expense. 10 40 ez form 2012 Fuel taxes. 10 40 ez form 2012   Generally, taxes on gasoline, diesel fuel, and other motor fuels that you use in your business are included as part of the cost of the fuel. 10 40 ez form 2012 Do not deduct these taxes as a separate item. 10 40 ez form 2012   You may be entitled to a credit or refund for federal excise tax you paid on fuels used for certain purposes. 10 40 ez form 2012 For more information, see Publication 510. 10 40 ez form 2012 Occupational taxes. 10 40 ez form 2012   You can deduct as a business expense an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business in the locality. 10 40 ez form 2012 Personal property tax. 10 40 ez form 2012   You can deduct any tax imposed by a state or local government on personal property used in your trade or business. 10 40 ez form 2012 Sales tax. 10 40 ez form 2012   Treat any sales tax you pay on a service or on the purchase or use of property as part of the cost of the service or property. 10 40 ez form 2012 If the service or the cost or use of the property is a deductible business expense, you can deduct the tax as part of that service or cost. 10 40 ez form 2012 If the property is merchandise bought for resale, the sales tax is part of the cost of the merchandise. 10 40 ez form 2012 If the property is depreciable, add the sales tax to the basis for depreciation. 10 40 ez form 2012 For more information on basis, see Publication 551. 10 40 ez form 2012    Do not deduct state and local sales taxes imposed on the buyer that you must collect and pay over to the state or local government. 10 40 ez form 2012 Also, do not include these taxes in gross receipts or sales. 10 40 ez form 2012 Self-employment tax. 10 40 ez form 2012   You can deduct part of your self-employment tax as a business expense in figuring your adjusted gross income. 10 40 ez form 2012 This deduction only affects your income tax. 10 40 ez form 2012 It does not affect your net earnings from self-employment or your self-employment tax. 10 40 ez form 2012   To deduct the tax, enter on Form 1040, line 27, the amount shown on the Deduction for one-half of self-employment tax line of Schedule SE (Form 1040). 10 40 ez form 2012   For more information on self-employment tax, see Publication 334. 10 40 ez form 2012 Additional Medicare Tax. 10 40 ez form 2012   Beginning in 2013, you may be required to pay Additional Medicare Tax on self-employment income. 10 40 ez form 2012 See Form 8959 and the Instructions for Form 8959 for more information on the Additional Medicare Tax. 10 40 ez form 2012 Prev  Up  Next   Home   More Online Publications
Español

Contact Us

Contact us about USA.gov or about any government question you have.

Frequently Asked Questions

Search our database of the most frequently asked questions about government programs and services.

Chat

Our web chat service is available Monday - Friday, 8:00 AM until 8:00 PM Eastern. Our chat service is only available in English, and is not available on federal holidays.

E-Mail

E-mail your questions, suggestions, compliments, complaints, or technical problems about USA.gov or the government. We will respond (in English or Spanish) within two business days.

Phone

Call us at 1 (800) FED INFO (333-4636)  – Our information specialists will answer your government questions between 8:00 AM and 8:00 PM Eastern Time, Monday through Friday, except federal holidays. This service is available in English and Spanish. Recorded information on frequently requested subjects is always available.

Social Media

You can connect with the government through Facebook, Twitter, blogs, and more!

Postal Mail

We prefer you contact us by e-mail or phone, so we can respond faster. Our mailing address is: 

USA.gov
U.S. General Services Administration
Office of Citizen Services and Innovative Technologies
1800 F Street, NW
Washington, DC 20405
U.S.A.

The 10 40 Ez Form 2012

10 40 ez form 2012 7. 10 40 ez form 2012   Interest Income Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationSSN for joint account. 10 40 ez form 2012 Custodian account for your child. 10 40 ez form 2012 Penalty for failure to supply SSN. 10 40 ez form 2012 Reporting backup withholding. 10 40 ez form 2012 Savings account with parent as trustee. 10 40 ez form 2012 Interest not reported on Form 1099-INT. 10 40 ez form 2012 Nominees. 10 40 ez form 2012 Incorrect amount. 10 40 ez form 2012 Information reporting requirement. 10 40 ez form 2012 Taxable InterestInterest subject to penalty for early withdrawal. 10 40 ez form 2012 Money borrowed to invest in certificate of deposit. 10 40 ez form 2012 U. 10 40 ez form 2012 S. 10 40 ez form 2012 Savings Bonds Education Savings Bond Program U. 10 40 ez form 2012 S. 10 40 ez form 2012 Treasury Bills, Notes, and Bonds Bonds Sold Between Interest Dates Insurance State or Local Government Obligations Original Issue Discount (OID) When To Report Interest IncomeConstructive receipt. 10 40 ez form 2012 How To Report Interest IncomeSchedule B (Form 1040A or 1040). 10 40 ez form 2012 Reporting tax-exempt interest. 10 40 ez form 2012 U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bond interest previously reported. 10 40 ez form 2012 Reminder Foreign-source income. 10 40 ez form 2012  If you are a U. 10 40 ez form 2012 S. 10 40 ez form 2012 citizen with interest income from sources outside the United States (foreign income), you must report that income on your tax return unless it is exempt by U. 10 40 ez form 2012 S. 10 40 ez form 2012 law. 10 40 ez form 2012 This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer. 10 40 ez form 2012 Introduction This chapter discusses the following topics. 10 40 ez form 2012 Different types of interest income. 10 40 ez form 2012 What interest is taxable and what interest is nontaxable. 10 40 ez form 2012 When to report interest income. 10 40 ez form 2012 How to report interest income on your tax return. 10 40 ez form 2012 In general, any interest you receive or that is credited to your account and can be withdrawn is taxable income. 10 40 ez form 2012 Exceptions to this rule are discussed later in this chapter. 10 40 ez form 2012 You may be able to deduct expenses you have in earning this income on Schedule A (Form 1040) if you itemize your deductions. 10 40 ez form 2012 See Money borrowed to invest in certificate of deposit , later, and chapter 28. 10 40 ez form 2012 Useful Items - You may want to see: Publication 537 Installment Sales 550 Investment Income and Expenses 1212 Guide to Original Issue Discount (OID) Instruments Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends 8815 Exclusion of Interest From Series EE and I U. 10 40 ez form 2012 S. 10 40 ez form 2012 Savings Bonds Issued After 1989 8818 Optional Form To Record Redemption of Series EE and I U. 10 40 ez form 2012 S. 10 40 ez form 2012 Savings Bonds Issued After 1989 General Information A few items of general interest are covered here. 10 40 ez form 2012 Recordkeeping. 10 40 ez form 2012 You should keep a list showing sources and interest amounts received during the year. 10 40 ez form 2012 Also, keep the forms you receive showing your interest income (Forms 1099-INT, for example) as an important part of your records. 10 40 ez form 2012 Tax on unearned income of certain children. 10 40 ez form 2012    Part of a child's 2013 unearned income may be taxed at the parent's tax rate. 10 40 ez form 2012 If so, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. 10 40 ez form 2012 If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. 10 40 ez form 2012   Some parents can choose to include the child's interest and dividends on the parent's return. 10 40 ez form 2012 If you can, use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. 10 40 ez form 2012   For more information about the tax on unearned income of children and the parents' election, see chapter 31. 10 40 ez form 2012 Beneficiary of an estate or trust. 10 40 ez form 2012   Interest you receive as a beneficiary of an estate or trust is generally taxable income. 10 40 ez form 2012 You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. 10 40 ez form 2012 , from the fiduciary. 10 40 ez form 2012 Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. 10 40 ez form 2012 Social security number (SSN). 10 40 ez form 2012   You must give your name and SSN or individual tax identification number (ITIN) to any person required by federal tax law to make a return, statement, or other document that relates to you. 10 40 ez form 2012 This includes payers of interest. 10 40 ez form 2012 If you do not give your SSN or ITIN to the payer of interest, you may have to pay a penalty. 10 40 ez form 2012 SSN for joint account. 10 40 ez form 2012   If the funds in a joint account belong to one person, list that person's name first on the account and give that person's SSN to the payer. 10 40 ez form 2012 (For information on who owns the funds in a joint account, see Joint accounts , later. 10 40 ez form 2012 ) If the joint account contains combined funds, give the SSN of the person whose name is listed first on the account. 10 40 ez form 2012 This is because only one name and SSN can be shown on Form 1099. 10 40 ez form 2012   These rules apply both to joint ownership by a married couple and to joint ownership by other individuals. 10 40 ez form 2012 For example, if you open a joint savings account with your child using funds belonging to the child, list the child's name first on the account and give the child's SSN. 10 40 ez form 2012 Custodian account for your child. 10 40 ez form 2012   If your child is the actual owner of an account that is recorded in your name as custodian for the child, give the child's SSN to the payer. 10 40 ez form 2012 For example, you must give your child's SSN to the payer of interest on an account owned by your child, even though the interest is paid to you as custodian. 10 40 ez form 2012 Penalty for failure to supply SSN. 10 40 ez form 2012   If you do not give your SSN to the payer of interest, you may have to pay a penalty. 10 40 ez form 2012 See Failure to supply SSN under Penalties in chapter 1. 10 40 ez form 2012 Backup withholding also may apply. 10 40 ez form 2012 Backup withholding. 10 40 ez form 2012   Your interest income is generally not subject to regular withholding. 10 40 ez form 2012 However, it may be subject to backup withholding to ensure that income tax is collected on the income. 10 40 ez form 2012 Under backup withholding, the payer of interest must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. 10 40 ez form 2012   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. 10 40 ez form 2012 For more information, see Backup Withholding in chapter 4. 10 40 ez form 2012 Reporting backup withholding. 10 40 ez form 2012   If backup withholding is deducted from your interest income, the payer must give you a Form 1099-INT for the year indicating the amount withheld. 10 40 ez form 2012 The Form 1099-INT will show any backup withholding as “Federal income tax withheld. 10 40 ez form 2012 ” Joint accounts. 10 40 ez form 2012   If two or more persons hold property (such as a savings account or bond) as joint tenants, tenants by the entirety, or tenants in common, each person's share of any interest from the property is determined by local law. 10 40 ez form 2012 Income from property given to a child. 10 40 ez form 2012   Property you give as a parent to your child under the Model Gifts of Securities to Minors Act, the Uniform Gifts to Minors Act, or any similar law becomes the child's property. 10 40 ez form 2012   Income from the property is taxable to the child, except that any part used to satisfy a legal obligation to support the child is taxable to the parent or guardian having that legal obligation. 10 40 ez form 2012 Savings account with parent as trustee. 10 40 ez form 2012   Interest income from a savings account opened for a minor child, but placed in the name and subject to the order of the parents as trustees, is taxable to the child if, under the law of the state in which the child resides, both of the following are true. 10 40 ez form 2012 The savings account legally belongs to the child. 10 40 ez form 2012 The parents are not legally permitted to use any of the funds to support the child. 10 40 ez form 2012 Form 1099-INT. 10 40 ez form 2012   Interest income is generally reported to you on Form 1099-INT, or a similar statement, by banks, savings and loans, and other payers of interest. 10 40 ez form 2012 This form shows you the interest you received during the year. 10 40 ez form 2012 Keep this form for your records. 10 40 ez form 2012 You do not have to attach it to your tax return. 10 40 ez form 2012   Report on your tax return the total interest income you receive for the tax year. 10 40 ez form 2012 Interest not reported on Form 1099-INT. 10 40 ez form 2012   Even if you do not receive Form 1099-INT, you must still report all of your interest income. 10 40 ez form 2012 For example, you may receive distributive shares of interest from partnerships or S corporations. 10 40 ez form 2012 This interest is reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deduction, Credits, etc. 10 40 ez form 2012 , or Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. 10 40 ez form 2012 Nominees. 10 40 ez form 2012   Generally, if someone receives interest as a nominee for you, that person must give you a Form 1099-INT showing the interest received on your behalf. 10 40 ez form 2012   If you receive a Form 1099-INT that includes amounts belonging to another person, see the discussion on nominee distributions under How To Report Interest Income in chapter 1 of Publication 550, or Schedule B (Form 1040A or 1040) instructions. 10 40 ez form 2012 Incorrect amount. 10 40 ez form 2012   If you receive a Form 1099-INT that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. 10 40 ez form 2012 The new Form 1099-INT you receive will be marked “Corrected. 10 40 ez form 2012 ” Form 1099-OID. 10 40 ez form 2012   Reportable interest income also may be shown on Form 1099-OID, Original Issue Discount. 10 40 ez form 2012 For more information about amounts shown on this form, see Original Issue Discount (OID) , later in this chapter. 10 40 ez form 2012 Exempt-interest dividends. 10 40 ez form 2012   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. 10 40 ez form 2012 (However, see Information reporting requirement , next. 10 40 ez form 2012 ) Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. 10 40 ez form 2012 You do not reduce your basis for distributions that are exempt-interest dividends. 10 40 ez form 2012 Information reporting requirement. 10 40 ez form 2012   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file. 10 40 ez form 2012 This is an information reporting requirement and does not change the exempt-interest dividends into taxable income. 10 40 ez form 2012 Note. 10 40 ez form 2012 Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. 10 40 ez form 2012 See Alternative Minimum Tax (AMT) in chapter 30 for more information. 10 40 ez form 2012 Chapter 1 of Publication 550 contains a discussion on private activity bonds under State or Local Government Obligations. 10 40 ez form 2012 Interest on VA dividends. 10 40 ez form 2012   Interest on insurance dividends left on deposit with the Department of Veterans Affairs (VA) is not taxable. 10 40 ez form 2012 This includes interest paid on dividends on converted United States Government Life Insurance and on National Service Life Insurance policies. 10 40 ez form 2012 Individual retirement arrangements (IRAs). 10 40 ez form 2012   Interest on a Roth IRA generally is not taxable. 10 40 ez form 2012 Interest on a traditional IRA is tax deferred. 10 40 ez form 2012 You generally do not include it in your income until you make withdrawals from the IRA. 10 40 ez form 2012 See chapter 17. 10 40 ez form 2012 Taxable Interest Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. 10 40 ez form 2012 The following are some sources of taxable interest. 10 40 ez form 2012 Dividends that are actually interest. 10 40 ez form 2012   Certain distributions commonly called dividends are actually interest. 10 40 ez form 2012 You must report as interest so-called “dividends” on deposits or on share accounts in: Cooperative banks, Credit unions, Domestic building and loan associations, Domestic savings and loan associations, Federal savings and loan associations, and Mutual savings banks. 10 40 ez form 2012  The “dividends” will be shown as interest income on Form 1099-INT. 10 40 ez form 2012 Money market funds. 10 40 ez form 2012   Money market funds pay dividends and are offered by nonbank financial institutions, such as mutual funds and stock brokerage houses. 10 40 ez form 2012 Generally, amounts you receive from money market funds should be reported as dividends, not as interest. 10 40 ez form 2012 Certificates of deposit and other deferred interest accounts. 10 40 ez form 2012   If you open any of these accounts, interest may be paid at fixed intervals of 1 year or less during the term of the account. 10 40 ez form 2012 You generally must include this interest in your income when you actually receive it or are entitled to receive it without paying a substantial penalty. 10 40 ez form 2012 The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. 10 40 ez form 2012 If interest is deferred for more than 1 year, see Original Issue Discount (OID) , later. 10 40 ez form 2012 Interest subject to penalty for early withdrawal. 10 40 ez form 2012   If you withdraw funds from a deferred interest account before maturity, you may have to pay a penalty. 10 40 ez form 2012 You must report the total amount of interest paid or credited to your account during the year, without subtracting the penalty. 10 40 ez form 2012 See Penalty on early withdrawal of savings in chapter 1 of Publication 550 for more information on how to report the interest and deduct the penalty. 10 40 ez form 2012 Money borrowed to invest in certificate of deposit. 10 40 ez form 2012   The interest you pay on money borrowed from a bank or savings institution to meet the minimum deposit required for a certificate of deposit from the institution and the interest you earn on the certificate are two separate items. 10 40 ez form 2012 You must report the total interest you earn on the certificate in your income. 10 40 ez form 2012 If you itemize deductions, you can deduct the interest you pay as investment interest, up to the amount of your net investment income. 10 40 ez form 2012 See Interest Expenses in chapter 3 of Publication 550. 10 40 ez form 2012 Example. 10 40 ez form 2012 You deposited $5,000 with a bank and borrowed $5,000 from the bank to make up the $10,000 minimum deposit required to buy a 6-month certificate of deposit. 10 40 ez form 2012 The certificate earned $575 at maturity in 2013, but you received only $265, which represented the $575 you earned minus $310 interest charged on your $5,000 loan. 10 40 ez form 2012 The bank gives you a Form 1099-INT for 2013 showing the $575 interest you earned. 10 40 ez form 2012 The bank also gives you a statement showing that you paid $310 interest for 2013. 10 40 ez form 2012 You must include the $575 in your income. 10 40 ez form 2012 If you itemize your deductions on Schedule A (Form 1040), you can deduct $310, subject to the net investment income limit. 10 40 ez form 2012 Gift for opening account. 10 40 ez form 2012   If you receive noncash gifts or services for making deposits or for opening an account in a savings institution, you may have to report the value as interest. 10 40 ez form 2012   For deposits of less than $5,000, gifts or services valued at more than $10 must be reported as interest. 10 40 ez form 2012 For deposits of $5,000 or more, gifts or services valued at more than $20 must be reported as interest. 10 40 ez form 2012 The value is determined by the cost to the financial institution. 10 40 ez form 2012 Example. 10 40 ez form 2012 You open a savings account at your local bank and deposit $800. 10 40 ez form 2012 The account earns $20 interest. 10 40 ez form 2012 You also receive a $15 calculator. 10 40 ez form 2012 If no other interest is credited to your account during the year, the Form 1099-INT you receive will show $35 interest for the year. 10 40 ez form 2012 You must report $35 interest income on your tax return. 10 40 ez form 2012 Interest on insurance dividends. 10 40 ez form 2012   Interest on insurance dividends left on deposit with an insurance company that can be withdrawn annually is taxable to you in the year it is credited to your account. 10 40 ez form 2012 However, if you can withdraw it only on the anniversary date of the policy (or other specified date), the interest is taxable in the year that date occurs. 10 40 ez form 2012 Prepaid insurance premiums. 10 40 ez form 2012   Any increase in the value of prepaid insurance premiums, advance premiums, or premium deposit funds is interest if it is applied to the payment of premiums due on insurance policies or made available for you to withdraw. 10 40 ez form 2012 U. 10 40 ez form 2012 S. 10 40 ez form 2012 obligations. 10 40 ez form 2012   Interest on U. 10 40 ez form 2012 S. 10 40 ez form 2012 obligations, such as U. 10 40 ez form 2012 S. 10 40 ez form 2012 Treasury bills, notes, and bonds, issued by any agency or instrumentality of the United States is taxable for federal income tax purposes. 10 40 ez form 2012 Interest on tax refunds. 10 40 ez form 2012   Interest you receive on tax refunds is taxable income. 10 40 ez form 2012 Interest on condemnation award. 10 40 ez form 2012   If the condemning authority pays you interest to compensate you for a delay in payment of an award, the interest is taxable. 10 40 ez form 2012 Installment sale payments. 10 40 ez form 2012   If a contract for the sale or exchange of property provides for deferred payments, it also usually provides for interest payable with the deferred payments. 10 40 ez form 2012 That interest is taxable when you receive it. 10 40 ez form 2012 If little or no interest is provided for in a deferred payment contract, part of each payment may be treated as interest. 10 40 ez form 2012 See Unstated Interest and Original Issue Discount in Publication 537, Installment Sales. 10 40 ez form 2012 Interest on annuity contract. 10 40 ez form 2012   Accumulated interest on an annuity contract you sell before its maturity date is taxable. 10 40 ez form 2012 Usurious interest. 10 40 ez form 2012   Usurious interest is interest charged at an illegal rate. 10 40 ez form 2012 This is taxable as interest unless state law automatically changes it to a payment on the principal. 10 40 ez form 2012 Interest income on frozen deposits. 10 40 ez form 2012   Exclude from your gross income interest on frozen deposits. 10 40 ez form 2012 A deposit is frozen if, at the end of the year, you cannot withdraw any part of the deposit because: The financial institution is bankrupt or insolvent, or The state where the institution is located has placed limits on withdrawals because other financial institutions in the state are bankrupt or insolvent. 10 40 ez form 2012   The amount of interest you must exclude is the interest that was credited on the frozen deposits minus the sum of: The net amount you withdrew from these deposits during the year, and The amount you could have withdrawn as of the end of the year (not reduced by any penalty for premature withdrawals of a time deposit). 10 40 ez form 2012 If you receive a Form 1099-INT for interest income on deposits that were frozen at the end of 2013, see Frozen deposits under How To Report Interest Income in chapter 1 of Publication 550, for information about reporting this interest income exclusion on your tax return. 10 40 ez form 2012   The interest you exclude is treated as credited to your account in the following year. 10 40 ez form 2012 You must include it in income in the year you can withdraw it. 10 40 ez form 2012 Example. 10 40 ez form 2012 $100 of interest was credited on your frozen deposit during the year. 10 40 ez form 2012 You withdrew $80 but could not withdraw any more as of the end of the year. 10 40 ez form 2012 You must include $80 in your income and exclude $20 from your income for the year. 10 40 ez form 2012 You must include the $20 in your income for the year you can withdraw it. 10 40 ez form 2012 Bonds traded flat. 10 40 ez form 2012   If you buy a bond at a discount when interest has been defaulted or when the interest has accrued but has not been paid, the transaction is described as trading a bond flat. 10 40 ez form 2012 The defaulted or unpaid interest is not income and is not taxable as interest if paid later. 10 40 ez form 2012 When you receive a payment of that interest, it is a return of capital that reduces the remaining cost basis of your bond. 10 40 ez form 2012 Interest that accrues after the date of purchase, however, is taxable interest income for the year it is received or accrued. 10 40 ez form 2012 See Bonds Sold Between Interest Dates , later, for more information. 10 40 ez form 2012 Below-market loans. 10 40 ez form 2012   In general, a below-market loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. 10 40 ez form 2012 See Below-Market Loans in chapter 1 of Publication 550 for more information. 10 40 ez form 2012 U. 10 40 ez form 2012 S. 10 40 ez form 2012 Savings Bonds This section provides tax information on U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bonds. 10 40 ez form 2012 It explains how to report the interest income on these bonds and how to treat transfers of these bonds. 10 40 ez form 2012 For other information on U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bonds, write to:  For series EE and I paper savings bonds: Bureau of the Public Debt Division of Customer Assistance P. 10 40 ez form 2012 O. 10 40 ez form 2012 Box 7012 Parkersburg, WV 26106-7012  For series EE and I electronic bonds: Bureau of the Public Debt Division of Customer Assistance P. 10 40 ez form 2012 O. 10 40 ez form 2012 Box 7015 Parkersburg, WV 26106–7015  For series HH/H: Bureau of the Public Debt Division of Customer Assistance P. 10 40 ez form 2012 O. 10 40 ez form 2012 Box 2186 Parkersburg, WV 26106-2186 Or, on the Internet, visit: www. 10 40 ez form 2012 treasurydirect. 10 40 ez form 2012 gov/indiv/indiv. 10 40 ez form 2012 htm. 10 40 ez form 2012 Accrual method taxpayers. 10 40 ez form 2012   If you use an accrual method of accounting, you must report interest on U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bonds each year as it accrues. 10 40 ez form 2012 You cannot postpone reporting interest until you receive it or until the bonds mature. 10 40 ez form 2012 Accrual methods of accounting are explained in chapter 1 under Accounting Methods . 10 40 ez form 2012 Cash method taxpayers. 10 40 ez form 2012   If you use the cash method of accounting, as most individual taxpayers do, you generally report the interest on U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bonds when you receive it. 10 40 ez form 2012 The cash method of accounting is explained in chapter 1 under Accounting Methods. 10 40 ez form 2012 But see Reporting options for cash method taxpayers , later. 10 40 ez form 2012 Series HH bonds. 10 40 ez form 2012    These bonds were issued at face value. 10 40 ez form 2012 Interest is paid twice a year by direct deposit to your bank account. 10 40 ez form 2012 If you are a cash method taxpayer, you must report interest on these bonds as income in the year you receive it. 10 40 ez form 2012   Series HH bonds were first offered in 1980 and last offered in August 2004. 10 40 ez form 2012 Before 1980, series H bonds were issued. 10 40 ez form 2012 Series H bonds are treated the same as series HH bonds. 10 40 ez form 2012 If you are a cash method taxpayer, you must report the interest when you receive it. 10 40 ez form 2012   Series H bonds have a maturity period of 30 years. 10 40 ez form 2012 Series HH bonds mature in 20 years. 10 40 ez form 2012 The last series H bonds matured in 2009. 10 40 ez form 2012 Series EE and series I bonds. 10 40 ez form 2012   Interest on these bonds is payable when you redeem the bonds. 10 40 ez form 2012 The difference between the purchase price and the redemption value is taxable interest. 10 40 ez form 2012 Series EE bonds. 10 40 ez form 2012   Series EE bonds were first offered in January 1980 and have a maturity period of 30 years. 10 40 ez form 2012   Before July 1980, series E bonds were issued. 10 40 ez form 2012 The original 10-year maturity period of series E bonds has been extended to 40 years for bonds issued before December 1965 and 30 years for bonds issued after November 1965. 10 40 ez form 2012 Paper series EE and series E bonds are issued at a discount. 10 40 ez form 2012 The face value is payable to you at maturity. 10 40 ez form 2012 Electronic series EE bonds are issued at their face value. 10 40 ez form 2012 The face value plus accrued interest is payable to you at maturity. 10 40 ez form 2012 As of January 1, 2012, paper savings bonds were no longer sold at financial institutions. 10 40 ez form 2012   Owners of paper series EE bonds can convert them to electronic bonds. 10 40 ez form 2012 These converted bonds do not retain the denomination listed on the paper certificate but are posted at their purchase price (with accrued interest). 10 40 ez form 2012 Series I bonds. 10 40 ez form 2012   Series I bonds were first offered in 1998. 10 40 ez form 2012 These are inflation-indexed bonds issued at their face amount with a maturity period of 30 years. 10 40 ez form 2012 The face value plus all accrued interest is payable to you at maturity. 10 40 ez form 2012 Reporting options for cash method taxpayers. 10 40 ez form 2012   If you use the cash method of reporting income, you can report the interest on series EE, series E, and series I bonds in either of the following ways. 10 40 ez form 2012 Method 1. 10 40 ez form 2012 Postpone reporting the interest until the earlier of the year you cash or dispose of the bonds or the year they mature. 10 40 ez form 2012 (However, see Savings bonds traded , later. 10 40 ez form 2012 )  Note. 10 40 ez form 2012 Series EE bonds issued in 1983 matured in 2013. 10 40 ez form 2012 If you have used method 1, you generally must report the interest on these bonds on your 2013 return. 10 40 ez form 2012 The last series E bonds were issued in 1980 and matured in 2010. 10 40 ez form 2012 If you used method 1, you generally should have reported the interest on these bonds on your 2010 return. 10 40 ez form 2012 Method 2. 10 40 ez form 2012 Choose to report the increase in redemption value as interest each year. 10 40 ez form 2012 You must use the same method for all series EE, series E, and series I bonds you own. 10 40 ez form 2012 If you do not choose method 2 by reporting the increase in redemption value as interest each year, you must use method 1. 10 40 ez form 2012    If you plan to cash your bonds in the same year you will pay for higher education expenses, you may want to use method 1 because you may be able to exclude the interest from your income. 10 40 ez form 2012 To learn how, see Education Savings Bond Program, later. 10 40 ez form 2012 Change from method 1. 10 40 ez form 2012   If you want to change your method of reporting the interest from method 1 to method 2, you can do so without permission from the IRS. 10 40 ez form 2012 In the year of change you must report all interest accrued to date and not previously reported for all your bonds. 10 40 ez form 2012   Once you choose to report the interest each year, you must continue to do so for all series EE, series E, and series I bonds you own and for any you get later, unless you request permission to change, as explained next. 10 40 ez form 2012 Change from method 2. 10 40 ez form 2012   To change from method 2 to method 1, you must request permission from the IRS. 10 40 ez form 2012 Permission for the change is automatically granted if you send the IRS a statement that meets all the following requirements. 10 40 ez form 2012 You have typed or printed the following number at the top: “131. 10 40 ez form 2012 ” It includes your name and social security number under “131. 10 40 ez form 2012 ” It includes the year of change (both the beginning and ending dates). 10 40 ez form 2012 It identifies the savings bonds for which you are requesting this change. 10 40 ez form 2012 It includes your agreement to: Report all interest on any bonds acquired during or after the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, and Report all interest on the bonds acquired before the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, with the exception of the interest reported in prior tax years. 10 40 ez form 2012   You must attach this statement to your tax return for the year of change, which you must file by the due date (including extensions). 10 40 ez form 2012   You can have an automatic extension of 6 months from the due date of your return for the year of change (excluding extensions) to file the statement with an amended return. 10 40 ez form 2012 On the statement, type or print “Filed pursuant to section 301. 10 40 ez form 2012 9100-2. 10 40 ez form 2012 ” To get this extension, you must have filed your original return for the year of the change by the due date (including extensions). 10 40 ez form 2012    By the date you file the original statement with your return, you must also send a signed copy to the address below. 10 40 ez form 2012   Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) P. 10 40 ez form 2012 O. 10 40 ez form 2012 Box 7604 Benjamin Franklin Station Washington, DC 20044   If you use a private delivery service, send the signed copy to the address below. 10 40 ez form 2012   Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) Room 5336 1111 Constitution Avenue, NW  Washington, DC 20224   Instead of filing this statement, you can request permission to change from method 2 to method 1 by filing Form 3115, Application for Change in Accounting Method. 10 40 ez form 2012 In that case, follow the form instructions for an automatic change. 10 40 ez form 2012 No user fee is required. 10 40 ez form 2012 Co-owners. 10 40 ez form 2012   If a U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bond is issued in the names of co-owners, such as you and your child or you and your spouse, interest on the bond is generally taxable to the co-owner who bought the bond. 10 40 ez form 2012 One co-owner's funds used. 10 40 ez form 2012    If you used your funds to buy the bond, you must pay the tax on the interest. 10 40 ez form 2012 This is true even if you let the other co-owner redeem the bond and keep all the proceeds. 10 40 ez form 2012 Under these circumstances, the co-owner who redeemed the bond will receive a Form 1099-INT at the time of redemption and must provide you with another Form 1099-INT showing the amount of interest from the bond taxable to you. 10 40 ez form 2012 The co-owner who redeemed the bond is a “nominee. 10 40 ez form 2012 ” See Nominee distributions under How To Report Interest Income in chapter 1 of Publication 550 for more information about how a person who is a nominee reports interest income belonging to another person. 10 40 ez form 2012 Both co-owners' funds used. 10 40 ez form 2012   If you and the other co-owner each contribute part of the bond's purchase price, the interest is generally taxable to each of you, in proportion to the amount each of you paid. 10 40 ez form 2012 Community property. 10 40 ez form 2012   If you and your spouse live in a community property state and hold bonds as community property, one-half of the interest is considered received by each of you. 10 40 ez form 2012 If you file separate returns, each of you generally must report one-half of the bond interest. 10 40 ez form 2012 For more information about community property, see Publication 555. 10 40 ez form 2012 Table 7-1. 10 40 ez form 2012   These rules are also shown in Table 7-1. 10 40 ez form 2012 Ownership transferred. 10 40 ez form 2012   If you bought series E, series EE, or series I bonds entirely with your own funds and had them reissued in your co-owner's name or beneficiary's name alone, you must include in your gross income for the year of reissue all interest that you earned on these bonds and have not previously reported. 10 40 ez form 2012 But, if the bonds were reissued in your name alone, you do not have to report the interest accrued at that time. 10 40 ez form 2012   This same rule applies when bonds (other than bonds held as community property) are transferred between spouses or incident to divorce. 10 40 ez form 2012 Purchased jointly. 10 40 ez form 2012   If you and a co-owner each contributed funds to buy series E, series EE, or series I bonds jointly and later have the bonds reissued in the co-owner's name alone, you must include in your gross income for the year of reissue your share of all the interest earned on the bonds that you have not previously reported. 10 40 ez form 2012 The former co-owner does not have to include in gross income at the time of reissue his or her share of the interest earned that was not reported before the transfer. 10 40 ez form 2012 This interest, however, as well as all interest earned after the reissue, is income to the former co-owner. 10 40 ez form 2012   This income-reporting rule also applies when the bonds are reissued in the name of your former co-owner and a new co-owner. 10 40 ez form 2012 But the new co-owner will report only his or her share of the interest earned after the transfer. 10 40 ez form 2012   If bonds that you and a co-owner bought jointly are reissued to each of you separately in the same proportion as your contribution to the purchase price, neither you nor your co-owner has to report at that time the interest earned before the bonds were reissued. 10 40 ez form 2012    Table 7-1. 10 40 ez form 2012 Who Pays the Tax on U. 10 40 ez form 2012 S. 10 40 ez form 2012 Savings Bond Interest IF . 10 40 ez form 2012 . 10 40 ez form 2012 . 10 40 ez form 2012 THEN the interest must be reported by . 10 40 ez form 2012 . 10 40 ez form 2012 . 10 40 ez form 2012 you buy a bond in your name and the name of another person as co-owners, using only your own funds you. 10 40 ez form 2012 you buy a bond in the name of another person, who is the sole owner of the bond the person for whom you bought the bond. 10 40 ez form 2012 you and another person buy a bond as co-owners, each contributing part of the purchase price both you and the other co-owner, in proportion to the amount each paid for the bond. 10 40 ez form 2012 you and your spouse, who live in a community property state, buy a bond that is community property you and your spouse. 10 40 ez form 2012 If you file separate returns, both you and your spouse generally report one-half of the interest. 10 40 ez form 2012 Example 1. 10 40 ez form 2012 You and your spouse each spent an equal amount to buy a $1,000 series EE savings bond. 10 40 ez form 2012 The bond was issued to you and your spouse as co-owners. 10 40 ez form 2012 You both postpone reporting interest on the bond. 10 40 ez form 2012 You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. 10 40 ez form 2012 At that time neither you nor your spouse has to report the interest earned to the date of reissue. 10 40 ez form 2012 Example 2. 10 40 ez form 2012 You bought a $1,000 series EE savings bond entirely with your own funds. 10 40 ez form 2012 The bond was issued to you and your spouse as co-owners. 10 40 ez form 2012 You both postpone reporting interest on the bond. 10 40 ez form 2012 You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. 10 40 ez form 2012 You must report half the interest earned to the date of reissue. 10 40 ez form 2012 Transfer to a trust. 10 40 ez form 2012   If you own series E, series EE, or series I bonds and transfer them to a trust, giving up all rights of ownership, you must include in your income for that year the interest earned to the date of transfer if you have not already reported it. 10 40 ez form 2012 However, if you are considered the owner of the trust and if the increase in value both before and after the transfer continues to be taxable to you, you can continue to defer reporting the interest earned each year. 10 40 ez form 2012 You must include the total interest in your income in the year you cash or dispose of the bonds or the year the bonds finally mature, whichever is earlier. 10 40 ez form 2012   The same rules apply to previously unreported interest on series EE or series E bonds if the transfer to a trust consisted of series HH or series H bonds you acquired in a trade for the series EE or series E bonds. 10 40 ez form 2012 See Savings bonds traded , later. 10 40 ez form 2012 Decedents. 10 40 ez form 2012   The manner of reporting interest income on series E, series EE, or series I bonds, after the death of the owner (decedent), depends on the accounting and income-reporting methods previously used by the decedent. 10 40 ez form 2012 This is explained in chapter 1 of Publication 550. 10 40 ez form 2012 Savings bonds traded. 10 40 ez form 2012   If you postponed reporting the interest on your series EE or series E bonds, you did not recognize taxable income when you traded the bonds for series HH or series H bonds, unless you received cash in the trade. 10 40 ez form 2012 (You cannot trade series I bonds for series HH bonds. 10 40 ez form 2012 After August 31, 2004, you cannot trade any other series of bonds for series HH bonds. 10 40 ez form 2012 ) Any cash you received is income up to the amount of the interest earned on the bonds traded. 10 40 ez form 2012 When your series HH or series H bonds mature, or if you dispose of them before maturity, you report as interest the difference between their redemption value and your cost. 10 40 ez form 2012 Your cost is the sum of the amount you paid for the traded series EE or series E bonds plus any amount you had to pay at the time of the trade. 10 40 ez form 2012 Example. 10 40 ez form 2012 You traded series EE bonds (on which you postponed reporting the interest) for $2,500 in series HH bonds and $223 in cash. 10 40 ez form 2012 You reported the $223 as taxable income on your tax return. 10 40 ez form 2012 At the time of the trade, the series EE bonds had accrued interest of $523 and a redemption value of $2,723. 10 40 ez form 2012 You hold the series HH bonds until maturity, when you receive $2,500. 10 40 ez form 2012 You must report $300 as interest income in the year of maturity. 10 40 ez form 2012 This is the difference between their redemption value, $2,500, and your cost, $2,200 (the amount you paid for the series EE bonds). 10 40 ez form 2012 (It is also the difference between the accrued interest of $523 on the series EE bonds and the $223 cash received on the trade. 10 40 ez form 2012 ) Choice to report interest in year of trade. 10 40 ez form 2012   You could have chosen to treat all of the previously unreported accrued interest on the series EE or series E bonds traded for series HH bonds as income in the year of the trade. 10 40 ez form 2012 If you made this choice, it is treated as a change from method 1. 10 40 ez form 2012 See Change from method 1 under Series EE and series I bonds, earlier. 10 40 ez form 2012 Form 1099-INT for U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bonds interest. 10 40 ez form 2012   When you cash a bond, the bank or other payer that redeems it must give you a Form 1099-INT if the interest part of the payment you receive is $10 or more. 10 40 ez form 2012 Box 3 of your Form 1099-INT should show the interest as the difference between the amount you received and the amount paid for the bond. 10 40 ez form 2012 However, your Form 1099-INT may show more interest than you have to include on your income tax return. 10 40 ez form 2012 For example, this may happen if any of the following are true. 10 40 ez form 2012 You chose to report the increase in the redemption value of the bond each year. 10 40 ez form 2012 The interest shown on your Form 1099-INT will not be reduced by amounts previously included in income. 10 40 ez form 2012 You received the bond from a decedent. 10 40 ez form 2012 The interest shown on your Form 1099-INT will not be reduced by any interest reported by the decedent before death, or on the decedent's final return, or by the estate on the estate's income tax return. 10 40 ez form 2012 Ownership of the bond was transferred. 10 40 ez form 2012 The interest shown on your Form 1099-INT will not be reduced by interest that accrued before the transfer. 10 40 ez form 2012 You were named as a co-owner, and the other co-owner contributed funds to buy the bond. 10 40 ez form 2012 The interest shown on your Form 1099-INT will not be reduced by the amount you received as nominee for the other co-owner. 10 40 ez form 2012 (See Co-owners , earlier in this chapter, for more information about the reporting requirements. 10 40 ez form 2012 ) You received the bond in a taxable distribution from a retirement or profit-sharing plan. 10 40 ez form 2012 The interest shown on your Form 1099-INT will not be reduced by the interest portion of the amount taxable as a distribution from the plan and not taxable as interest. 10 40 ez form 2012 (This amount is generally shown on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 10 40 ez form 2012 , for the year of distribution. 10 40 ez form 2012 )   For more information on including the correct amount of interest on your return, see How To Report Interest Income , later. 10 40 ez form 2012 Publication 550 includes examples showing how to report these amounts. 10 40 ez form 2012    Interest on U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bonds is exempt from state and local taxes. 10 40 ez form 2012 The Form 1099-INT you receive will indicate the amount that is for U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bond interest in box 3. 10 40 ez form 2012 Education Savings Bond Program You may be able to exclude from income all or part of the interest you receive on the redemption of qualified U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bonds during the year if you pay qualified higher educational expenses during the same year. 10 40 ez form 2012 This exclusion is known as the Education Savings Bond Program. 10 40 ez form 2012 You do not qualify for this exclusion if your filing status is married filing separately. 10 40 ez form 2012 Form 8815. 10 40 ez form 2012   Use Form 8815 to figure your exclusion. 10 40 ez form 2012 Attach the form to your Form 1040 or Form 1040A. 10 40 ez form 2012 Qualified U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bonds. 10 40 ez form 2012   A qualified U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bond is a series EE bond issued after 1989 or a series I bond. 10 40 ez form 2012 The bond must be issued either in your name (sole owner) or in your and your spouse's names (co-owners). 10 40 ez form 2012 You must be at least 24 years old before the bond's issue date. 10 40 ez form 2012 For example, a bond bought by a parent and issued in the name of his or her child under age 24 does not qualify for the exclusion by the parent or child. 10 40 ez form 2012    The issue date of a bond may be earlier than the date the bond is purchased because the issue date assigned to a bond is the first day of the month in which it is purchased. 10 40 ez form 2012 Beneficiary. 10 40 ez form 2012   You can designate any individual (including a child) as a beneficiary of the bond. 10 40 ez form 2012 Verification by IRS. 10 40 ez form 2012   If you claim the exclusion, the IRS will check it by using bond redemption information from the Department of the Treasury. 10 40 ez form 2012 Qualified expenses. 10 40 ez form 2012   Qualified higher educational expenses are tuition and fees required for you, your spouse, or your dependent (for whom you claim an exemption) to attend an eligible educational institution. 10 40 ez form 2012   Qualified expenses include any contribution you make to a qualified tuition program or to a Coverdell education savings account. 10 40 ez form 2012   Qualified expenses do not include expenses for room and board or for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. 10 40 ez form 2012 Eligible educational institutions. 10 40 ez form 2012   These institutions include most public, private, and nonprofit universities, colleges, and vocational schools that are accredited and eligible to participate in student aid programs run by the U. 10 40 ez form 2012 S. 10 40 ez form 2012 Department of Education. 10 40 ez form 2012 Reduction for certain benefits. 10 40 ez form 2012   You must reduce your qualified higher educational expenses by all of the following tax-free benefits. 10 40 ez form 2012 Tax-free part of scholarships and fellowships (see Scholarships and fellowships in chapter 12). 10 40 ez form 2012 Expenses used to figure the tax-free portion of distributions from a Coverdell ESA. 10 40 ez form 2012 Expenses used to figure the tax-free portion of distributions from a qualified tuition program. 10 40 ez form 2012 Any tax-free payments (other than gifts or inheritances) received for educational expenses, such as Veterans' educational assistance benefits, Qualified tuition reductions, or Employer-provided educational assistance. 10 40 ez form 2012 Any expense used in figuring the American Opportunity and lifetime learning credits. 10 40 ez form 2012 Amount excludable. 10 40 ez form 2012   If the total proceeds (interest and principal) from the qualified U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bonds you redeem during the year are not more than your adjusted qualified higher educational expenses for the year, you may be able to exclude all of the interest. 10 40 ez form 2012 If the proceeds are more than the expenses, you may be able to exclude only part of the interest. 10 40 ez form 2012   To determine the excludable amount, multiply the interest part of the proceeds by a fraction. 10 40 ez form 2012 The numerator of the fraction is the qualified higher educational expenses you paid during the year. 10 40 ez form 2012 The denominator of the fraction is the total proceeds you received during the year. 10 40 ez form 2012 Example. 10 40 ez form 2012 In February 2013, Mark and Joan, a married couple, cashed a qualified series EE U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bond they bought in April 1997. 10 40 ez form 2012 They received proceeds of $8,372 representing principal of $5,000 and interest of $3,372. 10 40 ez form 2012 In 2013, they paid $4,000 of their daughter's college tuition. 10 40 ez form 2012 They are not claiming an education credit for that amount, and their daughter does not have any tax-free educational assistance. 10 40 ez form 2012 They can exclude $1,611 ($3,372 × ($4,000 ÷ $8,372)) of interest in 2013. 10 40 ez form 2012 They must pay tax on the remaining $1,761 ($3,372 − $1,611) interest. 10 40 ez form 2012 Modified adjusted gross income limit. 10 40 ez form 2012   The interest exclusion is limited if your modified adjusted gross income (modified AGI) is: $74,700 to $89,700 for taxpayers filing single or head of household, and $112,050 to $142,050 for married taxpayers filing jointly or for a qualifying widow(er) with dependent child. 10 40 ez form 2012 You do not qualify for the interest exclusion if your modified AGI is equal to or more than the upper limit for your filing status. 10 40 ez form 2012   Modified AGI, for purposes of this exclusion, is adjusted gross income (Form 1040, line 37, or Form 1040A, line 21) figured before the interest exclusion, and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion and deduction, Exclusion of income for bona fide residents of American Samoa, Exclusion for income from Puerto Rico, Exclusion for adoption benefits received under an employer's adoption assistance program, Deduction for tuition and fees, Deduction for student loan interest, and Deduction for domestic production activities. 10 40 ez form 2012   Use the Line 9 Worksheet in the Form 8815 instructions to figure your modified AGI. 10 40 ez form 2012 If you claim any of the exclusion or deduction items listed above (except items 6, 7, and 8), add the amount of the exclusion or deduction (except items 6, 7, and 8) to the amount on line 5 of the worksheet, and enter the total on Form 8815, line 9, as your modified AGI. 10 40 ez form 2012   If you have investment interest expense incurred to earn royalties and other investment income, see Education Savings Bond Program in chapter 1 of Publication 550. 10 40 ez form 2012 Recordkeeping. 10 40 ez form 2012 If you claim the interest exclusion, you must keep a written record of the qualified U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bonds you redeem. 10 40 ez form 2012 Your record must include the serial number, issue date, face value, and total redemption proceeds (principal and interest) of each bond. 10 40 ez form 2012 You can use Form 8818 to record this information. 10 40 ez form 2012 You should also keep bills, receipts, canceled checks, or other documentation that shows you paid qualified higher educational expenses during the year. 10 40 ez form 2012 U. 10 40 ez form 2012 S. 10 40 ez form 2012 Treasury Bills, Notes, and Bonds Treasury bills, notes, and bonds are direct debts (obligations) of the U. 10 40 ez form 2012 S. 10 40 ez form 2012 Government. 10 40 ez form 2012 Taxation of interest. 10 40 ez form 2012   Interest income from Treasury bills, notes, and bonds is subject to federal income tax but is exempt from all state and local income taxes. 10 40 ez form 2012 You should receive Form 1099-INT showing the interest (in box 3) paid to you for the year. 10 40 ez form 2012   Payments of principal and interest generally will be credited to your designated checking or savings account by direct deposit through the TreasuryDirect® system. 10 40 ez form 2012 Treasury bills. 10 40 ez form 2012   These bills generally have a 4-week, 13-week, 26-week, or 52-week maturity period. 10 40 ez form 2012 They are generally issued at a discount in the amount of $100 and multiples of $100. 10 40 ez form 2012 The difference between the discounted price you pay for the bills and the face value you receive at maturity is interest income. 10 40 ez form 2012 Generally, you report this interest income when the bill is paid at maturity. 10 40 ez form 2012 If you paid a premium for a bill (more than the face value), you generally report the premium as a section 171 deduction when the bill is paid at maturity. 10 40 ez form 2012 Treasury notes and bonds. 10 40 ez form 2012   Treasury notes have maturity periods of more than 1 year, ranging up to 10 years. 10 40 ez form 2012 Maturity periods for Treasury bonds are longer than 10 years. 10 40 ez form 2012 Both generally are issued in denominations of $100 to $1 million and generally pay interest every 6 months. 10 40 ez form 2012 Generally, you report this interest for the year paid. 10 40 ez form 2012 For more information, see U. 10 40 ez form 2012 S. 10 40 ez form 2012 Treasury Bills, Notes, and Bonds in chapter 1 of Publication 550. 10 40 ez form 2012 For other information on Treasury notes or bonds, write to:  Bureau of the Public Debt P. 10 40 ez form 2012 O. 10 40 ez form 2012 Box 7015 Parkersburg, WV 26106-7015 Or, on the Internet, visit: www. 10 40 ez form 2012 treasurydirect. 10 40 ez form 2012 gov/indiv/indiv. 10 40 ez form 2012 htm. 10 40 ez form 2012 For information on series EE, series I, and series HH savings bonds, see U. 10 40 ez form 2012 S. 10 40 ez form 2012 Savings Bonds , earlier. 10 40 ez form 2012 Treasury inflation-protected securities (TIPS). 10 40 ez form 2012   These securities pay interest twice a year at a fixed rate, based on a principal amount adjusted to take into account inflation and deflation. 10 40 ez form 2012 For the tax treatment of these securities, see Inflation-Indexed Debt Instruments under Original Issue Discount (OID), in Publication 550. 10 40 ez form 2012 Bonds Sold Between Interest Dates If you sell a bond between interest payment dates, part of the sales price represents interest accrued to the date of sale. 10 40 ez form 2012 You must report that part of the sales price as interest income for the year of sale. 10 40 ez form 2012 If you buy a bond between interest payment dates, part of the purchase price represents interest accrued before the date of purchase. 10 40 ez form 2012 When that interest is paid to you, treat it as a return of your capital investment, rather than interest income, by reducing your basis in the bond. 10 40 ez form 2012 See Accrued interest on bonds under How To Report Interest Income in chapter 1 of Publication 550 for information on reporting the payment. 10 40 ez form 2012 Insurance Life insurance proceeds paid to you as beneficiary of the insured person are usually not taxable. 10 40 ez form 2012 But if you receive the proceeds in installments, you must usually report a part of each installment payment as interest income. 10 40 ez form 2012 For more information about insurance proceeds received in installments, see Publication 525, Taxable and Nontaxable Income. 10 40 ez form 2012 Annuity. 10 40 ez form 2012   If you buy an annuity with life insurance proceeds, the annuity payments you receive are taxed as pension and annuity income from a nonqualified plan, not as interest income. 10 40 ez form 2012 See chapter 10 for information on pension and annuity income from nonqualified plans. 10 40 ez form 2012 State or Local Government Obligations Interest on a bond used to finance government operations generally is not taxable if the bond is issued by a state, the District of Columbia, a possession of the United States, or any of their political subdivisions. 10 40 ez form 2012 Bonds issued after 1982 (including tribal economic development bonds issued after February 17, 2009) by an Indian tribal government are treated as issued by a state. 10 40 ez form 2012 Interest on these bonds is generally tax exempt if the bonds are part of an issue of which substantially all proceeds are to be used in the exercise of any essential government function. 10 40 ez form 2012 For information on federally guaranteed bonds, mortgage revenue bonds, arbitrage bonds, private activity bonds, qualified tax credit bonds, and Build America bonds, see State or Local Government Obligations in chapter 1 of Publication 550. 10 40 ez form 2012 Information reporting requirement. 10 40 ez form 2012   If you must file a tax return, you are required to show any tax-exempt interest you received on your return. 10 40 ez form 2012 This is an information reporting requirement only. 10 40 ez form 2012 It does not change tax-exempt interest to taxable interest. 10 40 ez form 2012 Original Issue Discount (OID) Original issue discount (OID) is a form of interest. 10 40 ez form 2012 You generally include OID in your income as it accrues over the term of the debt instrument, whether or not you receive any payments from the issuer. 10 40 ez form 2012 A debt instrument generally has OID when the instrument is issued for a price that is less than its stated redemption price at maturity. 10 40 ez form 2012 OID is the difference between the stated redemption price at maturity and the issue price. 10 40 ez form 2012 All debt instruments that pay no interest before maturity are presumed to be issued at a discount. 10 40 ez form 2012 Zero coupon bonds are one example of these instruments. 10 40 ez form 2012 The OID accrual rules generally do not apply to short-term obligations (those with a fixed maturity date of 1 year or less from date of issue). 10 40 ez form 2012 See Discount on Short-Term Obligations in chapter 1 of Publication 550. 10 40 ez form 2012 De minimis OID. 10 40 ez form 2012   You can treat the discount as zero if it is less than one-fourth of 1% (. 10 40 ez form 2012 0025) of the stated redemption price at maturity multiplied by the number of full years from the date of original issue to maturity. 10 40 ez form 2012 This small discount is known as “de minimis” OID. 10 40 ez form 2012 Example 1. 10 40 ez form 2012 You bought a 10-year bond with a stated redemption price at maturity of $1,000, issued at $980 with OID of $20. 10 40 ez form 2012 One-fourth of 1% of $1,000 (stated redemption price) times 10 (the number of full years from the date of original issue to maturity) equals $25. 10 40 ez form 2012 Because the $20 discount is less than $25, the OID is treated as zero. 10 40 ez form 2012 (If you hold the bond at maturity, you will recognize $20 ($1,000 − $980) of capital gain. 10 40 ez form 2012 ) Example 2. 10 40 ez form 2012 The facts are the same as in Example 1, except that the bond was issued at $950. 10 40 ez form 2012 The OID is $50. 10 40 ez form 2012 Because the $50 discount is more than the $25 figured in Example 1, you must include the OID in income as it accrues over the term of the bond. 10 40 ez form 2012 Debt instrument bought after original issue. 10 40 ez form 2012   If you buy a debt instrument with de minimis OID at a premium, the discount is not includible in income. 10 40 ez form 2012 If you buy a debt instrument with de minimis OID at a discount, the discount is reported under the market discount rules. 10 40 ez form 2012 See Market Discount Bonds in chapter 1 of Publication 550. 10 40 ez form 2012 Exceptions to reporting OID. 10 40 ez form 2012   The OID rules discussed in this chapter do not apply to the following debt instruments. 10 40 ez form 2012 Tax-exempt obligations. 10 40 ez form 2012 (However, see Stripped tax-exempt obligations under Stripped Bonds and Coupons in chapter 1 of Publication 550). 10 40 ez form 2012 U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bonds. 10 40 ez form 2012 Short-term debt instruments (those with a fixed maturity date of not more than 1 year from the date of issue). 10 40 ez form 2012 Obligations issued by an individual before March 2, 1984. 10 40 ez form 2012 Loans between individuals if all the following are true. 10 40 ez form 2012 The lender is not in the business of lending money. 10 40 ez form 2012 The amount of the loan, plus the amount of any outstanding prior loans between the same individuals, is $10,000 or less. 10 40 ez form 2012 Avoiding any federal tax is not one of the principal purposes of the loan. 10 40 ez form 2012 Form 1099-OID. 10 40 ez form 2012   The issuer of the debt instrument (or your broker if you held the instrument through a broker) should give you Form 1099-OID, or a similar statement, if the total OID for the calendar year is $10 or more. 10 40 ez form 2012 Form 1099-OID will show, in box 1, the amount of OID for the part of the year that you held the bond. 10 40 ez form 2012 It also will show, in box 2, the stated interest you must include in your income. 10 40 ez form 2012 A copy of Form 1099-OID will be sent to the IRS. 10 40 ez form 2012 Do not file your copy with your return. 10 40 ez form 2012 Keep it for your records. 10 40 ez form 2012   In most cases, you must report the entire amount in boxes 1 and 2 of Form 1099-OID as interest income. 10 40 ez form 2012 But see Refiguring OID shown on Form 1099-OID, later in this discussion, for more information. 10 40 ez form 2012 Form 1099-OID not received. 10 40 ez form 2012   If you had OID for the year but did not receive a Form 1099-OID, you can find tables on IRS. 10 40 ez form 2012 gov that list total OID on certain debt instruments and have information that will help you figure OID. 10 40 ez form 2012 For the latest OID tables, go to www. 10 40 ez form 2012 irs. 10 40 ez form 2012 gov and enter “OID tables” in the Search box. 10 40 ez form 2012 If your debt instrument is not listed, consult the issuer for further information about the accrued OID for the year. 10 40 ez form 2012 Nominee. 10 40 ez form 2012   If someone else is the holder of record (the registered owner) of an OID instrument belonging to you and receives a Form 1099-OID on your behalf, that person must give you a Form 1099-OID. 10 40 ez form 2012 Refiguring OID shown on Form 1099-OID. 10 40 ez form 2012   You must refigure the OID shown in box 1 or box 8 of Form 1099-OID if either of the following apply. 10 40 ez form 2012 You bought the debt instrument after its original issue and paid a premium or an acquisition premium. 10 40 ez form 2012 The debt instrument is a stripped bond or a stripped coupon (including certain zero coupon instruments). 10 40 ez form 2012 For information about figuring the correct amount of OID to include in your income, see Figuring OID on Long-Term Debt Instruments in Publication 1212. 10 40 ez form 2012 Refiguring periodic interest shown on Form 1099-OID. 10 40 ez form 2012   If you disposed of a debt instrument or acquired it from another holder during the year, see Bonds Sold Between Interest Dates , earlier, for information about the treatment of periodic interest that may be shown in box 2 of Form 1099-OID for that instrument. 10 40 ez form 2012 Certificates of deposit (CDs). 10 40 ez form 2012   If you buy a CD with a maturity of more than 1 year, you must include in income each year a part of the total interest due and report it in the same manner as other OID. 10 40 ez form 2012   This also applies to similar deposit arrangements with banks, building and loan associations, etc. 10 40 ez form 2012 , including: Time deposits, Bonus plans, Savings certificates, Deferred income certificates, Bonus savings certificates, and Growth savings certificates. 10 40 ez form 2012 Bearer CDs. 10 40 ez form 2012   CDs issued after 1982 generally must be in registered form. 10 40 ez form 2012 Bearer CDs are CDs not in registered form. 10 40 ez form 2012 They are not issued in the depositor's name and are transferable from one individual to another. 10 40 ez form 2012   Banks must provide the IRS and the person redeeming a bearer CD with a Form 1099-INT. 10 40 ez form 2012 More information. 10 40 ez form 2012   See chapter 1 of Publication 550 for more information about OID and related topics, such as market discount bonds. 10 40 ez form 2012 When To Report Interest Income When to report your interest income depends on whether you use the cash method or an accrual method to report income. 10 40 ez form 2012 Cash method. 10 40 ez form 2012   Most individual taxpayers use the cash method. 10 40 ez form 2012 If you use this method, you generally report your interest income in the year in which you actually or constructively receive it. 10 40 ez form 2012 However, there are special rules for reporting the discount on certain debt instruments. 10 40 ez form 2012 See U. 10 40 ez form 2012 S. 10 40 ez form 2012 Savings Bonds and Original Issue Discount (OID) , earlier. 10 40 ez form 2012 Example. 10 40 ez form 2012 On September 1, 2011, you loaned another individual $2,000 at 12%, compounded annually. 10 40 ez form 2012 You are not in the business of lending money. 10 40 ez form 2012 The note stated that principal and interest would be due on August 31, 2013. 10 40 ez form 2012 In 2013, you received $2,508. 10 40 ez form 2012 80 ($2,000 principal and $508. 10 40 ez form 2012 80 interest). 10 40 ez form 2012 If you use the cash method, you must include in income on your 2013 return the $508. 10 40 ez form 2012 80 interest you received in that year. 10 40 ez form 2012 Constructive receipt. 10 40 ez form 2012   You constructively receive income when it is credited to your account or made available to you. 10 40 ez form 2012 You do not need to have physical possession of it. 10 40 ez form 2012 For example, you are considered to receive interest, dividends, or other earnings on any deposit or account in a bank, savings and loan, or similar financial institution, or interest on life insurance policy dividends left to accumulate, when they are credited to your account and subject to your withdrawal. 10 40 ez form 2012 This is true even if they are not yet entered in your passbook. 10 40 ez form 2012   You constructively receive income on the deposit or account even if you must: Make withdrawals in multiples of even amounts, Give a notice to withdraw before making the withdrawal, Withdraw all or part of the account to withdraw the earnings, or Pay a penalty on early withdrawals, unless the interest you are to receive on an early withdrawal or redemption is substantially less than the interest payable at maturity. 10 40 ez form 2012 Accrual method. 10 40 ez form 2012   If you use an accrual method, you report your interest income when you earn it, whether or not you have received it. 10 40 ez form 2012 Interest is earned over the term of the debt instrument. 10 40 ez form 2012 Example. 10 40 ez form 2012 If, in the previous example, you use an accrual method, you must include the interest in your income as you earn it. 10 40 ez form 2012 You would report the interest as follows: 2011, $80; 2012, $249. 10 40 ez form 2012 60; and 2013, $179. 10 40 ez form 2012 20. 10 40 ez form 2012 Coupon bonds. 10 40 ez form 2012   Interest on coupon bonds is taxable in the year the coupon becomes due and payable. 10 40 ez form 2012 It does not matter when you mail the coupon for payment. 10 40 ez form 2012 How To Report Interest Income Generally, you report all your taxable interest income on Form 1040, line 8a; Form 1040A, line 8a; or Form 1040EZ, line 2. 10 40 ez form 2012 You cannot use Form 1040EZ if your taxable interest income is more than $1,500. 10 40 ez form 2012 Instead, you must use Form 1040A or Form 1040. 10 40 ez form 2012 Form 1040A. 10 40 ez form 2012   You must complete Schedule B (Form 1040A or 1040), Part I, if you file Form 1040A and any of the following are true. 10 40 ez form 2012 Your taxable interest income is more than $1,500. 10 40 ez form 2012 You are claiming the interest exclusion under the Education Savings Bond Program (discussed earlier). 10 40 ez form 2012 You received interest from a seller-financed mortgage, and the buyer used the property as a home. 10 40 ez form 2012 You received a Form 1099-INT for U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bond interest that includes amounts you reported before 2013. 10 40 ez form 2012 You received, as a nominee, interest that actually belongs to someone else. 10 40 ez form 2012 You received a Form 1099-INT for interest on frozen deposits. 10 40 ez form 2012 You are reporting OID in an amount less than the amount shown on Form 1099-OID. 10 40 ez form 2012 You received a Form 1099-INT for interest on a bond you bought between interest payment dates. 10 40 ez form 2012 You acquired taxable bonds after 1987 and choose to reduce interest income from the bonds by any amortizable bond premium (see Bond Premium Amortization in chapter 3 of Publication 550). 10 40 ez form 2012 List each payer's name and the amount of interest income received from each payer on line 1. 10 40 ez form 2012 If you received a Form 1099-INT or Form 1099-OID from a brokerage firm, list the brokerage firm as the payer. 10 40 ez form 2012   You cannot use Form 1040A if you must use Form 1040, as described next. 10 40 ez form 2012 Form 1040. 10 40 ez form 2012   You must use Form 1040 instead of Form 1040A or Form 1040EZ if: You forfeited interest income because of the early withdrawal of a time deposit; You acquired taxable bonds after 1987, you choose to reduce interest income from the bonds by any amortizable bond premium, and you are deducting the excess of bond premium amortization for the accrual period over the qualified stated interest for the period (see Bond Premium Amortization in chapter 3 of Publication 550); or You received tax-exempt interest from private activity bonds issued after August 7, 1986. 10 40 ez form 2012 Schedule B (Form 1040A or 1040). 10 40 ez form 2012   You must complete Schedule B (Form 1040A or 1040), Part I, if you file Form 1040 and any of the following apply. 10 40 ez form 2012 Your taxable interest income is more than $1,500. 10 40 ez form 2012 You are claiming the interest exclusion under the Education Savings Bond Program (discussed earlier). 10 40 ez form 2012 You received interest from a seller-financed mortgage, and the buyer used the property as a home. 10 40 ez form 2012 You received a Form 1099-INT for U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bond interest that includes amounts you reported before 2013. 10 40 ez form 2012 You received, as a nominee, interest that actually belongs to someone else. 10 40 ez form 2012 You received a Form 1099-INT for interest on frozen deposits. 10 40 ez form 2012 You received a Form 1099-INT for interest on a bond you bought between interest payment dates. 10 40 ez form 2012 You are reporting OID in an amount less than the amount shown on Form 1099-OID. 10 40 ez form 2012 Statement (2) in the preceding list under Form 1040 is true. 10 40 ez form 2012 In Part I, line 1, list each payer's name and the amount received from each. 10 40 ez form 2012 If you received a Form 1099-INT or Form 1099-OID from a brokerage firm, list the brokerage firm as the payer. 10 40 ez form 2012 Reporting tax-exempt interest. 10 40 ez form 2012   Total your tax-exempt interest (such as interest or accrued OID on certain state and municipal bonds, including tax-exempt interest on zero coupon municipal bonds) and exempt-interest dividends from a mutual fund as shown on Form 1099-INT, box 8, and on Form 1099-DIV, box 10. 10 40 ez form 2012 Add these amounts to any other tax-exempt interest you received. 10 40 ez form 2012 Report the total on line 8b of Form 1040A or 1040. 10 40 ez form 2012   If you file Form 1040EZ, enter “TEI” and the amount in the space to the left of line 2. 10 40 ez form 2012 Do not add tax-exempt interest in the total on Form 1040EZ, line 2. 10 40 ez form 2012   Form 1099-INT, box 9, and Form 1099-DIV, box 11, show the tax-exempt interest subject to the alternative minimum tax on Form 6251. 10 40 ez form 2012 These amounts are already included in the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 10. 10 40 ez form 2012 Do not add the amounts in Form 1099-INT, box 9 and Form 1099-DIV, box 11 to, or subtract them from, the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 10. 10 40 ez form 2012    Do not report interest from an individual retirement account (IRA) as tax-exempt interest. 10 40 ez form 2012 Form 1099-INT. 10 40 ez form 2012   Your taxable interest income, except for interest from U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bonds and Treasury obligations, is shown in box 1 of Form 1099-INT. 10 40 ez form 2012 Add this amount to any other taxable interest income you received. 10 40 ez form 2012 You must report all of your taxable interest income even if you do not receive a Form 1099-INT. 10 40 ez form 2012 Generally, contact your financial institution if you do not receive a Form 1099-INT by February 15. 10 40 ez form 2012 Your identifying number may be truncated on any paper Form 1099-INT you receive. 10 40 ez form 2012   If you forfeited interest income because of the early withdrawal of a time deposit, the deductible amount will be shown on Form 1099-INT in box 2. 10 40 ez form 2012 See Penalty on early withdrawal of savings in chapter 1 of Publication 550. 10 40 ez form 2012   Box 3 of Form 1099-INT shows the interest income you received from U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bonds, Treasury bills, Treasury notes, and Treasury bonds. 10 40 ez form 2012 Add the amount shown in box 3 to any other taxable interest income you received, unless part of the amount in box 3 was previously included in your interest income. 10 40 ez form 2012 If part of the amount shown in box 3 was previously included in your interest income, see U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bond interest previously reported , later. 10 40 ez form 2012   Box 4 of Form 1099-INT will contain an amount if you were subject to backup withholding. 10 40 ez form 2012 Report the amount from box 4 on Form 1040EZ, line 7; on Form 1040A, line 36; or Form 1040, line 62 (federal income tax withheld). 10 40 ez form 2012   Box 5 of Form 1099-INT shows investment expenses you may be able to deduct as an itemized deduction. 10 40 ez form 2012 See chapter 28 for more information about investment expenses. 10 40 ez form 2012   If there are entries in boxes 6 and 7 of Form 1099-INT, you must file Form 1040. 10 40 ez form 2012 You may be able to take a credit for the amount shown in box 6 unless you deduct this amount on line 8 of Schedule A (Form 1040). 10 40 ez form 2012 To take the credit, you may have to file Form 1116, Foreign Tax Credit. 10 40 ez form 2012 For more information, see Publication 514, Foreign Tax Credit for Individuals. 10 40 ez form 2012 U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bond interest previously reported. 10 40 ez form 2012   If you received a Form 1099-INT for U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bond interest, the form may show interest you do not have to report. 10 40 ez form 2012 See Form 1099-INT for U. 10 40 ez form 2012 S. 10 40 ez form 2012 savings bonds interest , earlier, under U. 10 40 ez form 2012 S. 10 40 ez form 2012 Savings Bonds. 10 40 ez form 2012   On Schedule B (Form 1040A or 1040), Part I, line 1, report all the interest shown on your Form 1099-INT. 10 40 ez form 2012 Then follow these steps. 10 40 ez form 2012 Several lines above line 2, enter a subtotal of all interest listed on line 1. 10 40 ez form 2012 Below the subtotal enter “U. 10 40 ez form 2012 S. 10 40 ez form 2012 Savings Bond Interest Previously Reported” and enter amounts previously reported or interest accrued before you received the bond. 10 40 ez form 2012 Subtract these amounts from the subtotal and enter the result on line 2. 10 40 ez form 2012 More information. 10 40 ez form 2012   For more information about how to report interest income, see chapter 1 of Publication 550 or the instructions for the form you must file. 10 40 ez form 2012 Prev  Up  Next   Home   More Online Publications