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

1040 Ez Free File

Does A Working Student Have To File For Taxes1040x SoftwareFree State Tax Filing1040 Ez For 2012Filing Income Tax OnlineHow To File 1040ez OnlineIrs Tax Forms 2012I Need A 1040x FormI Didn T File My 2011 Taxes2011 Taxes Online FreePrior Year Taxes1040ez TaxHow To Submit An Amended Tax ReturnFreestatetaxTaxact 2011 Free EditionIrs FreefileAmending A Tax Return2011 1040Https Www Freefilefillableforms ComOnlinetaxes Hrblock Com1090ezWhat Is A 1040xPrevious Years Tax FormsFree E-file 1040ezFile Previous Years TaxesFile 1040ez ElectronicallyTax Software 2005 2006Irs Form 1040 EzFile Your Taxes OnlineWhere To Find State Tax FormsFile Taxes Past YearsFreefile TaxesIrs Easy FormFree 1040x Tax FormsFillable Tax Forms 2011Www H And R Block ComFree Fed And State EfileTaxes On Unemployment1040ez For 2012Turbotax 2010

1040 Ez Free File

1040 ez free file 12. 1040 ez free file   Other Income Table of Contents Introduction Useful Items - You may want to see: Bartering Canceled DebtsInterest included in canceled debt. 1040 ez free file Exceptions Host or Hostess Life Insurance ProceedsSurviving spouse. 1040 ez free file Endowment Contract Proceeds Accelerated Death Benefits Public Safety Officer Killed in the Line of Duty Partnership Income S Corporation Income RecoveriesItemized Deduction Recoveries Rents from Personal Property RepaymentsMethod 1. 1040 ez free file Method 2. 1040 ez free file RoyaltiesDepletion. 1040 ez free file Coal and iron ore. 1040 ez free file Sale of property interest. 1040 ez free file Part of future production sold. 1040 ez free file Unemployment BenefitsTypes of unemployment compensation. 1040 ez free file Governmental program. 1040 ez free file Repayment of unemployment compensation. 1040 ez free file Tax withholding. 1040 ez free file Repayment of benefits. 1040 ez free file Welfare and Other Public Assistance Benefits Other IncomeEmotional distress. 1040 ez free file Deduction for costs involved in unlawful discrimination suits. 1040 ez free file Energy conservation measure. 1040 ez free file Dwelling unit. 1040 ez free file Current income required to be distributed. 1040 ez free file Current income not required to be distributed. 1040 ez free file How to report. 1040 ez free file Losses. 1040 ez free file Grantor trust. 1040 ez free file Nonemployee compensation. 1040 ez free file Corporate director. 1040 ez free file Personal representatives. 1040 ez free file Manager of trade or business for bankruptcy estate. 1040 ez free file Notary public. 1040 ez free file Election precinct official. 1040 ez free file Difficulty-of-care payments. 1040 ez free file Maintaining space in home. 1040 ez free file Reporting taxable payments. 1040 ez free file Lotteries and raffles. 1040 ez free file Form W-2G. 1040 ez free file Reporting winnings and recordkeeping. 1040 ez free file Inherited pension or IRA. 1040 ez free file Employee awards or bonuses. 1040 ez free file Pulitzer, Nobel, and similar prizes. 1040 ez free file Payment for services. 1040 ez free file VA payments. 1040 ez free file Prizes. 1040 ez free file Strike and lockout benefits. 1040 ez free file Introduction You must include on your return all items of income you receive in the form of money, property, and services unless the tax law states that you do not include them. 1040 ez free file Some items, however, are only partly excluded from income. 1040 ez free file This chapter discusses many kinds of income and explains whether they are taxable or nontaxable. 1040 ez free file Income that is taxable must be reported on your tax return and is subject to tax. 1040 ez free file Income that is nontaxable may have to be shown on your tax return but is not taxable. 1040 ez free file This chapter begins with discussions of the following income items. 1040 ez free file Bartering. 1040 ez free file Canceled debts. 1040 ez free file Sales parties at which you are the host or hostess. 1040 ez free file Life insurance proceeds. 1040 ez free file Partnership income. 1040 ez free file S Corporation income. 1040 ez free file Recoveries (including state income tax refunds). 1040 ez free file Rents from personal property. 1040 ez free file Repayments. 1040 ez free file Royalties. 1040 ez free file Unemployment benefits. 1040 ez free file Welfare and other public assistance benefits. 1040 ez free file These discussions are followed by brief discussions of other income items. 1040 ez free file Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 544 Sales and Other Dispositions of Assets 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Bartering Bartering is an exchange of property or services. 1040 ez free file You must include in your income, at the time received, the fair market value of property or services you receive in bartering. 1040 ez free file If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise. 1040 ez free file Generally, you report this income on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. 1040 ez free file However, if the barter involves an exchange of something other than services, such as in Example 3 below, you may have to use another form or schedule instead. 1040 ez free file Example 1. 1040 ez free file You are a self-employed attorney who performs legal services for a client, a small corporation. 1040 ez free file The corporation gives you shares of its stock as payment for your services. 1040 ez free file You must include the fair market value of the shares in your income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) in the year you receive them. 1040 ez free file Example 2. 1040 ez free file You are self-employed and a member of a barter club. 1040 ez free file The club uses “credit units” as a means of exchange. 1040 ez free file It adds credit units to your account for goods or services you provide to members, which you can use to purchase goods or services offered by other members of the barter club. 1040 ez free file The club subtracts credit units from your account when you receive goods or services from other members. 1040 ez free file You must include in your income the value of the credit units that are added to your account, even though you may not actually receive goods or services from other members until a later tax year. 1040 ez free file Example 3. 1040 ez free file You own a small apartment building. 1040 ez free file In return for 6 months rent-free use of an apartment, an artist gives you a work of art she created. 1040 ez free file You must report as rental income on Schedule E (Form 1040), Supplemental Income and Loss, the fair market value of the artwork, and the artist must report as income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) the fair rental value of the apartment. 1040 ez free file Form 1099-B from barter exchange. 1040 ez free file   If you exchanged property or services through a barter exchange, Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or a similar statement from the barter exchange should be sent to you by February 18, 2014. 1040 ez free file It should show the value of cash, property, services, credits, or scrip you received from exchanges during 2013. 1040 ez free file The IRS also will receive a copy of Form 1099-B. 1040 ez free file Canceled Debts In most cases, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. 1040 ez free file You have no income from the canceled debt if it is intended as a gift to you. 1040 ez free file A debt includes any indebtedness for which you are liable or which attaches to property you hold. 1040 ez free file If the debt is a nonbusiness debt, report the canceled amount on Form 1040, line 21. 1040 ez free file If it is a business debt, report the amount on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) (or on Schedule F (Form 1040), Profit or Loss From Farming, if the debt is farm debt and you are a farmer). 1040 ez free file Form 1099-C. 1040 ez free file   If a Federal Government agency, financial institution, or credit union cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. 1040 ez free file The amount of the canceled debt is shown in box 2. 1040 ez free file Interest included in canceled debt. 1040 ez free file   If any interest is forgiven and included in the amount of canceled debt in box 2, the amount of interest also will be shown in box 3. 1040 ez free file Whether or not you must include the interest portion of the canceled debt in your income depends on whether the interest would be deductible when you paid it. 1040 ez free file See Deductible debt under Exceptions, later. 1040 ez free file   If the interest would not be deductible (such as interest on a personal loan), include in your income the amount from Form 1099-C, box 2. 1040 ez free file If the interest would be deductible (such as on a business loan), include in your income the net amount of the canceled debt (the amount shown in box 2 less the interest amount shown in box 3). 1040 ez free file Discounted mortgage loan. 1040 ez free file   If your financial institution offers a discount for the early payment of your mortgage loan, the amount of the discount is canceled debt. 1040 ez free file You must include the canceled amount in your income. 1040 ez free file Mortgage relief upon sale or other disposition. 1040 ez free file   If you are personally liable for a mortgage (recourse debt), and you are relieved of the mortgage when you dispose of the property, you may realize gain or loss up to the fair market value of the property. 1040 ez free file To the extent the mortgage discharge exceeds the fair market value of the property, it is income from discharge of indebtedness unless it qualifies for exclusion under Excluded debt , later. 1040 ez free file Report any income from discharge of indebtedness on nonbusiness debt that does not qualify for exclusion as other income on Form 1040, line 21. 1040 ez free file    You may be able to exclude part of the mortgage relief on your principal residence. 1040 ez free file See Excluded debt, later. 1040 ez free file   If you are not personally liable for a mortgage (nonrecourse debt), and you are relieved of the mortgage when you dispose of the property (such as through foreclosure), that relief is included in the amount you realize. 1040 ez free file You may have a taxable gain if the amount you realize exceeds your adjusted basis in the property. 1040 ez free file Report any gain on nonbusiness property as a capital gain. 1040 ez free file   See Publication 4681 for more information. 1040 ez free file Stockholder debt. 1040 ez free file   If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution that is generally dividend income to you. 1040 ez free file For more information, see Publication 542, Corporations. 1040 ez free file   If you are a stockholder in a corporation and you cancel a debt owed to you by the corporation, you generally do not realize income. 1040 ez free file This is because the canceled debt is considered as a contribution to the capital of the corporation equal to the amount of debt principal that you canceled. 1040 ez free file Repayment of canceled debt. 1040 ez free file   If you included a canceled amount in your income and later pay the debt, you may be able to file a claim for refund for the year the amount was included in income. 1040 ez free file You can file a claim on Form 1040X if the statute of limitations for filing a claim is still open. 1040 ez free file The statute of limitations generally does not end until 3 years after the due date of your original return. 1040 ez free file Exceptions There are several exceptions to the inclusion of canceled debt in income. 1040 ez free file These are explained next. 1040 ez free file Student loans. 1040 ez free file   Certain student loans contain a provision that all or part of the debt incurred to attend the qualified educational institution will be canceled if you work for a certain period of time in certain professions for any of a broad class of employers. 1040 ez free file   You do not have income if your student loan is canceled after you agreed to this provision and then performed the services required. 1040 ez free file To qualify, the loan must have been made by: The Federal Government, a state or local government, or an instrumentality, agency, or subdivision thereof, A tax-exempt public benefit corporation that has assumed control of a state, county, or municipal hospital, and whose employees are considered public employees under state law, or An educational institution: Under an agreement with an entity described in (1) or (2) that provided the funds to the institution to make the loan, or As part of a program of the institution designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or a tax-exempt organization described in section 501(c)(3). 1040 ez free file   A loan to refinance a qualified student loan also will qualify if it was made by an educational institution or a qualified tax-exempt organization under its program designed as described in (3)(b) above. 1040 ez free file Education loan repayment assistance. 1040 ez free file   Education loan repayments made to you by the National Health Service Corps Loan Repayment Program (NHSC Loan Repayment Program), a state education loan repayment program eligible for funds under the Public Health Service Act, or any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in underserved or health professional shortage areas are not taxable. 1040 ez free file    The provision relating to the “other state loan repayment or loan forgiveness program” was added to this exclusion for amounts received in tax years beginning after December 31, 2008. 1040 ez free file If you included these amounts in income in 2010, 2011, or 2012, you should file an amended tax return to exclude this income. 1040 ez free file See Form 1040X and its instructions for details on filing. 1040 ez free file Deductible debt. 1040 ez free file   You do not have income from the cancellation of a debt if your payment of the debt would be deductible. 1040 ez free file This exception applies only if you use the cash method of accounting. 1040 ez free file For more information, see chapter 5 of Publication 334, Tax Guide for Small Business. 1040 ez free file Price reduced after purchase. 1040 ez free file   In most cases, if the seller reduces the amount of debt you owe for property you purchased, you do not have income from the reduction. 1040 ez free file The reduction of the debt is treated as a purchase price adjustment and reduces your basis in the property. 1040 ez free file Excluded debt. 1040 ez free file   Do not include a canceled debt in your gross income in the following situations. 1040 ez free file The debt is canceled in a bankruptcy case under title 11 of the U. 1040 ez free file S. 1040 ez free file Code. 1040 ez free file See Publication 908, Bankruptcy Tax Guide. 1040 ez free file The debt is canceled when you are insolvent. 1040 ez free file However, you cannot exclude any amount of canceled debt that is more than the amount by which you are insolvent. 1040 ez free file See Publication 908. 1040 ez free file The debt is qualified farm debt and is canceled by a qualified person. 1040 ez free file See chapter 3 of Publication 225, Farmer's Tax Guide. 1040 ez free file The debt is qualified real property business debt. 1040 ez free file See chapter 5 of Publication 334. 1040 ez free file The cancellation is intended as a gift. 1040 ez free file The debt is qualified principal residence indebtedness. 1040 ez free file See Publication 525 for additional information. 1040 ez free file Host or Hostess If you host a party or event at which sales are made, any gift or gratuity you receive for giving the event is a payment for helping a direct seller make sales. 1040 ez free file You must report this item as income at its fair market value. 1040 ez free file Your out-of-pocket party expenses are subject to the 50% limit for meal and entertainment expenses. 1040 ez free file These expenses are deductible as miscellaneous itemized deductions subject to the 2%-of-AGI limit on Schedule A (Form 1040), but only up to the amount of income you receive for giving the party. 1040 ez free file For more information about the 50% limit for meal and entertainment expenses, see chapter 26. 1040 ez free file Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. 1040 ez free file This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. 1040 ez free file However, interest income received as a result of life insurance proceeds may be taxable. 1040 ez free file Proceeds not received in installments. 1040 ez free file   If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death. 1040 ez free file If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death. 1040 ez free file Proceeds received in installments. 1040 ez free file   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. 1040 ez free file   To determine the excluded part, divide the amount held by the insurance company (generally the total lump sum payable at the death of the insured person) by the number of installments to be paid. 1040 ez free file Include anything over this excluded part in your income as interest. 1040 ez free file Surviving spouse. 1040 ez free file   If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude up to $1,000 a year of the interest included in the installments. 1040 ez free file If you remarry, you can continue to take the exclusion. 1040 ez free file Surrender of policy for cash. 1040 ez free file   If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. 1040 ez free file In most cases, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income. 1040 ez free file    You should receive a Form 1099-R showing the total proceeds and the taxable part. 1040 ez free file Report these amounts on lines 16a and 16b of Form 1040 or lines 12a and 12b of Form 1040A. 1040 ez free file More information. 1040 ez free file   For more information, see Life Insurance Proceeds in Publication 525. 1040 ez free file Endowment Contract Proceeds An endowment contract is a policy under which you are paid a specified amount of money on a certain date unless you die before that date, in which case, the money is paid to your designated beneficiary. 1040 ez free file Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. 1040 ez free file To determine your cost, subtract any amount that you previously received under the contract and excluded from your income from the total premiums (or other consideration) paid for the contract. 1040 ez free file Include the part of the lump sum payment that is more than your cost in your income. 1040 ez free file Accelerated Death Benefits Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are excluded from income if the insured is terminally or chronically ill. 1040 ez free file Viatical settlement. 1040 ez free file   This is the sale or assignment of any part of the death benefit under a life insurance contract to a viatical settlement provider. 1040 ez free file A viatical settlement provider is a person who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill and who meets the requirements of section 101(g)(2)(B) of the Internal Revenue Code. 1040 ez free file Exclusion for terminal illness. 1040 ez free file    Accelerated death benefits are fully excludable if the insured is a terminally ill individual. 1040 ez free file This is a person who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death within 24 months from the date of the certification. 1040 ez free file Exclusion for chronic illness. 1040 ez free file    If the insured is a chronically ill individual who is not terminally ill, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. 1040 ez free file Accelerated death benefits paid on a per diem or other periodic basis are excludable up to a limit. 1040 ez free file This limit applies to the total of the accelerated death benefits and any periodic payments received from long-term care insurance contracts. 1040 ez free file For information on the limit and the definitions of chronically ill individual, qualified long-term care services, and long-term care insurance contracts, see Long-Term Care Insurance Contracts under Sickness and Injury Benefits in Publication 525. 1040 ez free file Exception. 1040 ez free file   The exclusion does not apply to any amount paid to a person (other than the insured) who has an insurable interest in the life of the insured because the insured: Is a director, officer, or employee of the person, or Has a financial interest in the person's business. 1040 ez free file Form 8853. 1040 ez free file   To claim an exclusion for accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return. 1040 ez free file You do not have to file Form 8853 to exclude accelerated death benefits paid on the basis of actual expenses incurred. 1040 ez free file Public Safety Officer Killed in the Line of Duty If you are a survivor of a public safety officer who was killed in the line of duty, you may be able to exclude from income certain amounts you receive. 1040 ez free file For this purpose, the term public safety officer includes law enforcement officers, firefighters, chaplains, and rescue squad and ambulance crew members. 1040 ez free file For more information, see Publication 559, Survivors, Executors, and Administrators. 1040 ez free file Partnership Income A partnership generally is not a taxable entity. 1040 ez free file The income, gains, losses, deductions, and credits of a partnership are passed through to the partners based on each partner's distributive share of these items. 1040 ez free file Schedule K-1 (Form 1065). 1040 ez free file    Although a partnership generally pays no tax, it must file an information return on Form 1065, U. 1040 ez free file S. 1040 ez free file Return of Partnership Income, and send Schedule K-1 (Form 1065) to each partner. 1040 ez free file In addition, the partnership will send each partner a copy of the Partner's Instructions for Schedule K-1 (Form 1065) to help each partner report his or her share of the partnership's income, deductions, credits, and tax preference items. 1040 ez free file Keep Schedule K-1 (Form 1065) for your records. 1040 ez free file Do not attach it to your Form 1040, unless you are specifically required to do so. 1040 ez free file For more information on partnerships, see Publication 541, Partnerships. 1040 ez free file Qualified joint venture. 1040 ez free file   If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. 1040 ez free file To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. 1040 ez free file For further information on how to make the election and which schedule(s) to file, see the instructions for your individual tax return. 1040 ez free file S Corporation Income In most cases, an S corporation does not pay tax on its income. 1040 ez free file Instead, the income, losses, deductions, and credits of the corporation are passed through to the shareholders based on each shareholder's pro rata share. 1040 ez free file Schedule K-1 (Form 1120S). 1040 ez free file   An S corporation must file a return on Form 1120S, U. 1040 ez free file S. 1040 ez free file Income Tax Return for an S Corporation, and send Schedule K-1 (Form 1120S) to each shareholder. 1040 ez free file In addition, the S corporation will send each shareholder a copy of the Shareholder's Instructions for Schedule K-1 (Form 1120S) to help each shareholder report his or her share of the S corporation's income, losses, credits, and deductions. 1040 ez free file Keep Schedule K-1 (Form 1120S) for your records. 1040 ez free file Do not attach it to your Form 1040, unless you are specifically required to do so. 1040 ez free file For more information on S corporations and their shareholders, see the Instructions for Form 1120S. 1040 ez free file Recoveries A recovery is a return of an amount you deducted or took a credit for in an earlier year. 1040 ez free file The most common recoveries are refunds, reimbursements, and rebates of deductions itemized on Schedule A (Form 1040). 1040 ez free file You also may have recoveries of non-itemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit. 1040 ez free file Tax benefit rule. 1040 ez free file   You must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. 1040 ez free file For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year. 1040 ez free file For more information, see Publication 525. 1040 ez free file Federal income tax refund. 1040 ez free file   Refunds of federal income taxes are not included in your income because they are never allowed as a deduction from income. 1040 ez free file State tax refund. 1040 ez free file   If you received a state or local income tax refund (or credit or offset) in 2013, you generally must include it in income if you deducted the tax in an earlier year. 1040 ez free file The payer should send Form 1099-G, Certain Government Payments, to you by January 31, 2014. 1040 ez free file The IRS also will receive a copy of the Form 1099-G. 1040 ez free file If you file Form 1040, use the State and Local Income Tax Refund Worksheet in the 2013 Form 1040 instructions for line 10 to figure the amount (if any) to include in your income. 1040 ez free file See Publication 525 for when you must use another worksheet. 1040 ez free file   If you could choose to deduct for a tax year either: State and local income taxes, or State and local general sales taxes, then the maximum refund that you may have to include in income is limited to the excess of the tax you chose to deduct for that year over the tax you did not choose to deduct for that year. 1040 ez free file For examples, see Publication 525. 1040 ez free file Mortgage interest refund. 1040 ez free file    If you received a refund or credit in 2013 of mortgage interest paid in an earlier year, the amount should be shown in box 3 of your Form 1098, Mortgage Interest Statement. 1040 ez free file Do not subtract the refund amount from the interest you paid in 2013. 1040 ez free file You may have to include it in your income under the rules explained in the following discussions. 1040 ez free file Interest on recovery. 1040 ez free file   Interest on any of the amounts you recover must be reported as interest income in the year received. 1040 ez free file For example, report any interest you received on state or local income tax refunds on Form 1040, line 8a. 1040 ez free file Recovery and expense in same year. 1040 ez free file   If the refund or other recovery and the expense occur in the same year, the recovery reduces the deduction or credit and is not reported as income. 1040 ez free file Recovery for 2 or more years. 1040 ez free file   If you receive a refund or other recovery that is for amounts you paid in 2 or more separate years, you must allocate, on a pro rata basis, the recovered amount between the years in which you paid it. 1040 ez free file This allocation is necessary to determine the amount of recovery from any earlier years and to determine the amount, if any, of your allowable deduction for this item for the current year. 1040 ez free file For information on how to compute the allocation, see Recoveries in Publication 525. 1040 ez free file Itemized Deduction Recoveries If you recover any amount that you deducted in an earlier year on Schedule A (Form 1040), you generally must include the full amount of the recovery in your income in the year you receive it. 1040 ez free file Where to report. 1040 ez free file   Enter your state or local income tax refund on Form 1040, line 10, and the total of all other recoveries as other income on Form 1040, line 21. 1040 ez free file You cannot use Form 1040A or Form 1040EZ. 1040 ez free file Standard deduction limit. 1040 ez free file   You generally are allowed to claim the standard deduction if you do not itemize your deductions. 1040 ez free file Only your itemized deductions that are more than your standard deduction are subject to the recovery rule (unless you are required to itemize your deductions). 1040 ez free file If your total deductions on the earlier year return were not more than your income for that year, include in your income this year the lesser of: Your recoveries, or The amount by which your itemized deductions exceeded the standard deduction. 1040 ez free file Example. 1040 ez free file For 2012, you filed a joint return. 1040 ez free file Your taxable income was $60,000 and you were not entitled to any tax credits. 1040 ez free file Your standard deduction was $11,900, and you had itemized deductions of $14,000. 1040 ez free file In 2013, you received the following recoveries for amounts deducted on your 2012 return: Medical expenses $200 State and local income tax refund 400 Refund of mortgage interest 325 Total recoveries $925 None of the recoveries were more than the deductions taken for 2012. 1040 ez free file The difference between the state and local income tax you deducted and your local general sales tax was more than $400. 1040 ez free file Your total recoveries are less than the amount by which your itemized deductions exceeded the standard deduction ($14,000 − 11,900 = $2,100), so you must include your total recoveries in your income for 2013. 1040 ez free file Report the state and local income tax refund of $400 on Form 1040, line 10, and the balance of your recoveries, $525, on Form 1040, line 21. 1040 ez free file Standard deduction for earlier years. 1040 ez free file   To determine if amounts recovered in 2013 must be included in your income, you must know the standard deduction for your filing status for the year the deduction was claimed. 1040 ez free file Look in the instructions for your tax return from prior years to locate the standard deduction for the filing status for that prior year. 1040 ez free file Example. 1040 ez free file You filed a joint return on Form 1040 for 2012 with taxable income of $45,000. 1040 ez free file Your itemized deductions were $12,350. 1040 ez free file The standard deduction that you could have claimed was $11,900. 1040 ez free file In 2013, you recovered $2,100 of your 2012 itemized deductions. 1040 ez free file None of the recoveries were more than the actual deductions for 2012. 1040 ez free file Include $450 of the recoveries in your 2013 income. 1040 ez free file This is the smaller of your recoveries ($2,100) or the amount by which your itemized deductions were more than the standard deduction ($12,350 − $11,900 = $450). 1040 ez free file Recovery limited to deduction. 1040 ez free file   You do not include in your income any amount of your recovery that is more than the amount you deducted in the earlier year. 1040 ez free file The amount you include in your income is limited to the smaller of: The amount deducted on Schedule A (Form 1040), or The amount recovered. 1040 ez free file Example. 1040 ez free file During 2012 you paid $1,700 for medical expenses. 1040 ez free file From this amount you subtracted $1,500, which was 7. 1040 ez free file 5% of your adjusted gross income. 1040 ez free file Your actual medical expense deduction was $200. 1040 ez free file In 2013, you received a $500 reimbursement from your medical insurance for your 2012 expenses. 1040 ez free file The only amount of the $500 reimbursement that must be included in your income for 2013 is $200—the amount actually deducted. 1040 ez free file Other recoveries. 1040 ez free file   See Recoveries in Publication 525 if: You have recoveries of items other than itemized deductions, or You received a recovery for an item for which you claimed a tax credit (other than investment credit or foreign tax credit) in a prior year. 1040 ez free file Rents from Personal Property If you rent out personal property, such as equipment or vehicles, how you report your income and expenses is in most cases determined by: Whether or not the rental activity is a business, and Whether or not the rental activity is conducted for profit. 1040 ez free file In most cases, if your primary purpose is income or profit and you are involved in the rental activity with continuity and regularity, your rental activity is a business. 1040 ez free file See Publication 535, Business Expenses, for details on deducting expenses for both business and not-for-profit activities. 1040 ez free file Reporting business income and expenses. 1040 ez free file    If you are in the business of renting personal property, report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). 1040 ez free file The form instructions have information on how to complete them. 1040 ez free file Reporting nonbusiness income. 1040 ez free file   If you are not in the business of renting personal property, report your rental income on Form 1040, line 21. 1040 ez free file List the type and amount of the income on the dotted line next to line 21. 1040 ez free file Reporting nonbusiness expenses. 1040 ez free file   If you rent personal property for profit, include your rental expenses in the total amount you enter on Form 1040, line 36. 1040 ez free file Also enter the amount and “PPR” on the dotted line next to line 36. 1040 ez free file   If you do not rent personal property for profit, your deductions are limited and you cannot report a loss to offset other income. 1040 ez free file See Activity not for profit , under Other Income, later. 1040 ez free file Repayments If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it. 1040 ez free file Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. 1040 ez free file Generally, you can claim a deduction or credit only if the repayment qualifies as an expense or loss incurred in your trade or business or in a for-profit transaction. 1040 ez free file Type of deduction. 1040 ez free file   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. 1040 ez free file You generally deduct the repayment on the same form or schedule on which you previously reported it as income. 1040 ez free file For example, if you reported it as self-employment income, deduct it as a business expense on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). 1040 ez free file If you reported it as a capital gain, deduct it as a capital loss as explained in the Instructions for Schedule D (Form 1040). 1040 ez free file If you reported it as wages, unemployment compensation, or other nonbusiness income, deduct it as a miscellaneous itemized deduction on Schedule A (Form 1040). 1040 ez free file Repaid social security benefits. 1040 ez free file   If you repaid social security benefits or equivalent railroad retirement benefits, see Repayment of benefits in chapter 11. 1040 ez free file Repayment of $3,000 or less. 1040 ez free file   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. 1040 ez free file If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 23. 1040 ez free file Repayment over $3,000. 1040 ez free file   If the amount you repaid was more than $3,000, you can deduct the repayment (as explained under Type of deduction , earlier). 1040 ez free file However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. 1040 ez free file This means that at the time you included the income, it appeared that you had an unrestricted right to it. 1040 ez free file If you qualify for this choice, figure your tax under both methods and compare the results. 1040 ez free file Use the method (deduction or credit) that results in less tax. 1040 ez free file When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. 1040 ez free file Each instance of repayment is not considered separately. 1040 ez free file Method 1. 1040 ez free file   Figure your tax for 2013 claiming a deduction for the repaid amount. 1040 ez free file If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28. 1040 ez free file Method 2. 1040 ez free file   Figure your tax for 2013 claiming a credit for the repaid amount. 1040 ez free file Follow these steps. 1040 ez free file Figure your tax for 2013 without deducting the repaid amount. 1040 ez free file Refigure your tax from the earlier year without including in income the amount you repaid in 2013. 1040 ez free file Subtract the tax in (2) from the tax shown on your return for the earlier year. 1040 ez free file This is the credit. 1040 ez free file Subtract the answer in (3) from the tax for 2013 figured without the deduction (Step 1). 1040 ez free file   If method 1 results in less tax, deduct the amount repaid. 1040 ez free file If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71, by adding the amount of the credit to any other credits on this line, and entering “I. 1040 ez free file R. 1040 ez free file C. 1040 ez free file 1341” in the column to the right of line 71. 1040 ez free file   An example of this computation can be found in Publication 525. 1040 ez free file Repaid wages subject to social security and Medicare taxes. 1040 ez free file   If you had to repay an amount that you included in your wages or compensation in an earlier year on which social security, Medicare, or tier 1 RRTA taxes were paid, ask your employer to refund the excess amount to you. 1040 ez free file If the employer refuses to refund the taxes, ask for a statement indicating the amount of the overcollection to support your claim. 1040 ez free file File a claim for refund using Form 843, Claim for Refund and Request for Abatement. 1040 ez free file Repaid wages subject to Additional Medicare Tax. 1040 ez free file   Employers cannot make an adjustment or file a claim for refund for Additional Medicare Tax withholding when there is a repayment of wages received by an employee in a prior year because the employee determines liability for Additional Medicare Tax on the employee's income tax return for the prior year. 1040 ez free file If you had to repay an amount that you included in your wages or compensation in an earlier year, and on which Additional Medicare Tax was paid, you may be able to recover the Additional Medicare Tax paid on the amount. 1040 ez free file To recover Additional Medicare Tax on the repaid wages or compensation, you must file Form 1040X, Amended U. 1040 ez free file S. 1040 ez free file Individual Income Tax Return, for the prior year in which the wages or compensation were originally received. 1040 ez free file See the Instructions for Form 1040X. 1040 ez free file Royalties Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. 1040 ez free file In most cases you report royalties in Part I of Schedule E (Form 1040). 1040 ez free file However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc. 1040 ez free file , report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). 1040 ez free file Copyrights and patents. 1040 ez free file   Royalties from copyrights on literary, musical, or artistic works, and similar property, or from patents on inventions, are amounts paid to you for the right to use your work over a specified period of time. 1040 ez free file Royalties generally are based on the number of units sold, such as the number of books, tickets to a performance, or machines sold. 1040 ez free file Oil, gas, and minerals. 1040 ez free file   Royalty income from oil, gas, and mineral properties is the amount you receive when natural resources are extracted from your property. 1040 ez free file The royalties are based on units, such as barrels, tons, etc. 1040 ez free file , and are paid to you by a person or company who leases the property from you. 1040 ez free file Depletion. 1040 ez free file   If you are the owner of an economic interest in mineral deposits or oil and gas wells, you can recover your investment through the depletion allowance. 1040 ez free file For information on this subject, see chapter 9 of Publication 535. 1040 ez free file Coal and iron ore. 1040 ez free file   Under certain circumstances, you can treat amounts you receive from the disposal of coal and iron ore as payments from the sale of a capital asset, rather than as royalty income. 1040 ez free file For information about gain or loss from the sale of coal and iron ore, see Publication 544. 1040 ez free file Sale of property interest. 1040 ez free file   If you sell your complete interest in oil, gas, or mineral rights, the amount you receive is considered payment for the sale of property used in a trade or business under section 1231, not royalty income. 1040 ez free file Under certain circumstances, the sale is subject to capital gain or loss treatment as explained in the Instructions for Schedule D (Form 1040). 1040 ez free file For more information on selling section 1231 property, see chapter 3 of Publication 544. 1040 ez free file   If you retain a royalty, an overriding royalty, or a net profit interest in a mineral property for the life of the property, you have made a lease or a sublease, and any cash you receive for the assignment of other interests in the property is ordinary income subject to a depletion allowance. 1040 ez free file Part of future production sold. 1040 ez free file   If you own mineral property but sell part of the future production, in most cases you treat the money you receive from the buyer at the time of the sale as a loan from the buyer. 1040 ez free file Do not include it in your income or take depletion based on it. 1040 ez free file   When production begins, you include all the proceeds in your income, deduct all the production expenses, and deduct depletion from that amount to arrive at your taxable income from the property. 1040 ez free file Unemployment Benefits The tax treatment of unemployment benefits you receive depends on the type of program paying the benefits. 1040 ez free file Unemployment compensation. 1040 ez free file   You must include in income all unemployment compensation you receive. 1040 ez free file You should receive a Form 1099-G showing in box 1 the total unemployment compensation paid to you. 1040 ez free file In most cases, you enter unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. 1040 ez free file Types of unemployment compensation. 1040 ez free file   Unemployment compensation generally includes any amount received under an unemployment compensation law of the United States or of a state. 1040 ez free file It includes the following benefits. 1040 ez free file Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund. 1040 ez free file State unemployment insurance benefits. 1040 ez free file Railroad unemployment compensation benefits. 1040 ez free file Disability payments from a government program paid as a substitute for unemployment compensation. 1040 ez free file (Amounts received as workers' compensation for injuries or illness are not unemployment compensation. 1040 ez free file See chapter 5 for more information. 1040 ez free file ) Trade readjustment allowances under the Trade Act of 1974. 1040 ez free file Unemployment assistance under the Disaster Relief and Emergency Assistance Act. 1040 ez free file Unemployment assistance under the Airline Deregulation Act of 1974 Program. 1040 ez free file Governmental program. 1040 ez free file   If you contribute to a governmental unemployment compensation program and your contributions are not deductible, amounts you receive under the program are not included as unemployment compensation until you recover your contributions. 1040 ez free file If you deducted all of your contributions to the program, the entire amount you receive under the program is included in your income. 1040 ez free file Repayment of unemployment compensation. 1040 ez free file   If you repaid in 2013 unemployment compensation you received in 2013, subtract the amount you repaid from the total amount you received and enter the difference on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. 1040 ez free file On the dotted line next to your entry enter “Repaid” and the amount you repaid. 1040 ez free file If you repaid unemployment compensation in 2013 that you included in income in an earlier year, you can deduct the amount repaid on Schedule A (Form 1040), line 23, if you itemize deductions. 1040 ez free file If the amount is more than $3,000, see Repayments , earlier. 1040 ez free file Tax withholding. 1040 ez free file   You can choose to have federal income tax withheld from your unemployment compensation. 1040 ez free file To make this choice, complete Form W-4V, Voluntary Withholding Request, and give it to the paying office. 1040 ez free file Tax will be withheld at 10% of your payment. 1040 ez free file    If you do not choose to have tax withheld from your unemployment compensation, you may be liable for estimated tax. 1040 ez free file If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. 1040 ez free file For more information on estimated tax, see chapter 4. 1040 ez free file Supplemental unemployment benefits. 1040 ez free file   Benefits received from an employer-financed fund (to which the employees did not contribute) are not unemployment compensation. 1040 ez free file They are taxable as wages and are subject to withholding for income tax. 1040 ez free file They may be subject to social security and Medicare taxes. 1040 ez free file For more information, see Supplemental Unemployment Benefits in section 5 of Publication 15-A, Employer's Supplemental Tax Guide. 1040 ez free file Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. 1040 ez free file Repayment of benefits. 1040 ez free file   You may have to repay some of your supplemental unemployment benefits to qualify for trade readjustment allowances under the Trade Act of 1974. 1040 ez free file If you repay supplemental unemployment benefits in the same year you receive them, reduce the total benefits by the amount you repay. 1040 ez free file If you repay the benefits in a later year, you must include the full amount of the benefits received in your income for the year you received them. 1040 ez free file   Deduct the repayment in the later year as an adjustment to gross income on Form 1040. 1040 ez free file (You cannot use Form 1040A or Form 1040EZ. 1040 ez free file ) Include the repayment on Form 1040, line 36, and enter “Sub-Pay TRA” and the amount on the dotted line next to line 36. 1040 ez free file If the amount you repay in a later year is more than $3,000, you may be able to take a credit against your tax for the later year instead of deducting the amount repaid. 1040 ez free file For more information on this, see Repayments , earlier. 1040 ez free file Private unemployment fund. 1040 ez free file   Unemployment benefit payments from a private (nonunion) fund to which you voluntarily contribute are taxable only if the amounts you receive are more than your total payments into the fund. 1040 ez free file Report the taxable amount on Form 1040, line 21. 1040 ez free file Payments by a union. 1040 ez free file   Benefits paid to you as an unemployed member of a union from regular union dues are included in your income on Form 1040, line 21. 1040 ez free file However, if you contribute to a special union fund and your payments to the fund are not deductible, the unemployment benefits you receive from the fund are includible in your income only to the extent they are more than your contributions. 1040 ez free file Guaranteed annual wage. 1040 ez free file   Payments you receive from your employer during periods of unemployment, under a union agreement that guarantees you full pay during the year, are taxable as wages. 1040 ez free file Include them on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. 1040 ez free file State employees. 1040 ez free file   Payments similar to a state's unemployment compensation may be made by the state to its employees who are not covered by the state's unemployment compensation law. 1040 ez free file Although the payments are fully taxable, do not report them as unemployment compensation. 1040 ez free file Report these payments on Form 1040, line 21. 1040 ez free file Welfare and Other Public Assistance Benefits Do not include in your income governmental benefit payments from a public welfare fund based upon need, such as payments to blind individuals under a state public assistance law. 1040 ez free file Payments from a state fund for the victims of crime should not be included in the victims' incomes if they are in the nature of welfare payments. 1040 ez free file Do not deduct medical expenses that are reimbursed by such a fund. 1040 ez free file You must include in your income any welfare payments that are compensation for services or that are obtained fraudulently. 1040 ez free file Reemployment Trade Adjustment Assistance (RTAA) payments. 1040 ez free file   RTAA payments received from a state must be included in your income. 1040 ez free file The state must send you Form 1099-G to advise you of the amount you should include in income. 1040 ez free file The amount should be reported on Form 1040, line 21. 1040 ez free file Persons with disabilities. 1040 ez free file   If you have a disability, you must include in income compensation you receive for services you perform unless the compensation is otherwise excluded. 1040 ez free file However, you do not include in income the value of goods, services, and cash that you receive, not in return for your services, but for your training and rehabilitation because you have a disability. 1040 ez free file Excludable amounts include payments for transportation and attendant care, such as interpreter services for the deaf, reader services for the blind, and services to help individuals with an intellectual disability do their work. 1040 ez free file Disaster relief grants. 1040 ez free file    Do not include post-disaster grants received under the Robert T. 1040 ez free file Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, child care, or funeral expenses. 1040 ez free file Do not deduct casualty losses or medical expenses that are specifically reimbursed by these disaster relief grants. 1040 ez free file If you have deducted a casualty loss for the loss of your personal residence and you later receive a disaster relief grant for the loss of the same residence, you may have to include part or all of the grant in your taxable income. 1040 ez free file See Recoveries , earlier. 1040 ez free file Unemployment assistance payments under the Act are taxable unemployment compensation. 1040 ez free file See Unemployment compensation under Unemployment Benefits, earlier. 1040 ez free file Disaster relief payments. 1040 ez free file   You can exclude from income any amount you receive that is a qualified disaster relief payment. 1040 ez free file A qualified disaster relief payment is an amount paid to you: To reimburse or pay reasonable and necessary personal, family, living, or funeral expenses that result from a qualified disaster; To reimburse or pay reasonable and necessary expenses incurred for the repair or rehabilitation of your home or repair or replacement of its contents to the extent it is due to a qualified disaster; By a person engaged in the furnishing or sale of transportation as a common carrier because of the death or personal physical injuries incurred as a result of a qualified disaster; or By a federal, state, or local government, or agency, or instrumentality in connection with a qualified disaster in order to promote the general welfare. 1040 ez free file You can exclude this amount only to the extent any expense it pays for is not paid for by insurance or otherwise. 1040 ez free file The exclusion does not apply if you were a participant or conspirator in a terrorist action or a representative of one. 1040 ez free file   A qualified disaster is: A disaster which results from a terrorist or military action; A federally declared disaster; or A disaster which results from an accident involving a common carrier, or from any other event, which is determined to be catastrophic by the Secretary of the Treasury or his or her delegate. 1040 ez free file   For amounts paid under item (4), a disaster is qualified if it is determined by an applicable federal, state, or local authority to warrant assistance from the federal, state, or local government, agency, or instrumentality. 1040 ez free file Disaster mitigation payments. 1040 ez free file   You also can exclude from income any amount you receive that is a qualified disaster mitigation payment. 1040 ez free file Qualified disaster mitigation payments are also most commonly paid to you in the period immediately following damage to property as a result of a natural disaster. 1040 ez free file However, disaster mitigation payments are used to mitigate (reduce the severity of) potential damage from future natural disasters. 1040 ez free file They are paid to you through state and local governments based on the provisions of the Robert T. 1040 ez free file Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act. 1040 ez free file   You cannot increase the basis or adjusted basis of your property for improvements made with nontaxable disaster mitigation payments. 1040 ez free file Home Affordable Modification Program (HAMP). 1040 ez free file   If you benefit from Pay-for-Performance Success Payments under HAMP, the payments are not taxable. 1040 ez free file Mortgage assistance payments under section 235 of the National Housing Act. 1040 ez free file   Payments made under section 235 of the National Housing Act for mortgage assistance are not included in the homeowner's income. 1040 ez free file Interest paid for the homeowner under the mortgage assistance program cannot be deducted. 1040 ez free file Medicare. 1040 ez free file   Medicare benefits received under title XVIII of the Social Security Act are not includible in the gross income of the individuals for whom they are paid. 1040 ez free file This includes basic (part A (Hospital Insurance Benefits for the Aged)) and supplementary (part B (Supplementary Medical Insurance Benefits for the Aged)). 1040 ez free file Old-age, survivors, and disability insurance benefits (OASDI). 1040 ez free file   Generally, OASDI payments under section 202 of title II of the Social Security Act are not includible in the gross income of the individuals to whom they are paid. 1040 ez free file This applies to old-age insurance benefits, and insurance benefits for wives, husbands, children, widows, widowers, mothers and fathers, and parents, as well as the lump-sum death payment. 1040 ez free file Nutrition Program for the Elderly. 1040 ez free file    Food benefits you receive under the Nutrition Program for the Elderly are not taxable. 1040 ez free file If you prepare and serve free meals for the program, include in your income as wages the cash pay you receive, even if you are also eligible for food benefits. 1040 ez free file Payments to reduce cost of winter energy. 1040 ez free file   Payments made by a state to qualified people to reduce their cost of winter energy use are not taxable. 1040 ez free file Other Income The following brief discussions are arranged in alphabetical order. 1040 ez free file Other income items briefly discussed below are referenced to publications which provide more topical information. 1040 ez free file Activity not for profit. 1040 ez free file   You must include on your return income from an activity from which you do not expect to make a profit. 1040 ez free file An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. 1040 ez free file Enter this income on Form 1040, line 21. 1040 ez free file Deductions for expenses related to the activity are limited. 1040 ez free file They cannot total more than the income you report and can be taken only if you itemize deductions on Schedule A (Form 1040). 1040 ez free file See Not-for-Profit Activities in chapter 1 of Publication 535 for information on whether an activity is considered carried on for a profit. 1040 ez free file Alaska Permanent Fund dividend. 1040 ez free file   If you received a payment from Alaska's mineral income fund (Alaska Permanent Fund dividend), report it as income on line 21 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. 1040 ez free file The state of Alaska sends each recipient a document that shows the amount of the payment with the check. 1040 ez free file The amount also is reported to IRS. 1040 ez free file Alimony. 1040 ez free file   Include in your income on Form 1040, line 11, any alimony payments you receive. 1040 ez free file Amounts you receive for child support are not income to you. 1040 ez free file Alimony and child support payments are discussed in chapter 18. 1040 ez free file Bribes. 1040 ez free file   If you receive a bribe, include it in your income. 1040 ez free file Campaign contributions. 1040 ez free file   These contributions are not income to a candidate unless they are diverted to his or her personal use. 1040 ez free file To be exempt from tax, the contributions must be spent for campaign purposes or kept in a fund for use in future campaigns. 1040 ez free file However, interest earned on bank deposits, dividends received on contributed securities, and net gains realized on sales of contributed securities are taxable and must be reported on Form 1120-POL, U. 1040 ez free file S. 1040 ez free file Income Tax Return for Certain Political Organizations. 1040 ez free file Excess campaign funds transferred to an office account must be included in the officeholder's income on Form 1040, line 21, in the year transferred. 1040 ez free file Car pools. 1040 ez free file   Do not include in your income amounts you receive from the passengers for driving a car in a car pool to and from work. 1040 ez free file These amounts are considered reimbursement for your expenses. 1040 ez free file However, this rule does not apply if you have developed car pool arrangements into a profit-making business of transporting workers for hire. 1040 ez free file Cash rebates. 1040 ez free file   A cash rebate you receive from a dealer or manufacturer of an item you buy is not income, but you must reduce your basis by the amount of the rebate. 1040 ez free file Example. 1040 ez free file You buy a new car for $24,000 cash and receive a $2,000 rebate check from the manufacturer. 1040 ez free file The $2,000 is not income to you. 1040 ez free file Your basis in the car is $22,000. 1040 ez free file This is the basis on which you figure gain or loss if you sell the car and depreciation if you use it for business. 1040 ez free file Casualty insurance and other reimbursements. 1040 ez free file   You generally should not report these reimbursements on your return unless you are figuring gain or loss from the casualty or theft. 1040 ez free file See chapter 25 for more information. 1040 ez free file Child support payments. 1040 ez free file   You should not report these payments on your return. 1040 ez free file See chapter 18 for more information. 1040 ez free file Court awards and damages. 1040 ez free file   To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. 1040 ez free file The character of the income as ordinary income or capital gain depends on the nature of the underlying claim. 1040 ez free file Include the following as ordinary income. 1040 ez free file Interest on any award. 1040 ez free file Compensation for lost wages or lost profits in most cases. 1040 ez free file Punitive damages, in most cases. 1040 ez free file It does not matter if they relate to a physical injury or physical sickness. 1040 ez free file Amounts received in settlement of pension rights (if you did not contribute to the plan). 1040 ez free file Damages for: Patent or copyright infringement, Breach of contract, or Interference with business operations. 1040 ez free file Back pay and damages for emotional distress received to satisfy a claim under title VII of the Civil Rights Act of 1964. 1040 ez free file Attorney fees and costs (including contingent fees) where the underlying recovery is included in gross income. 1040 ez free file   Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments). 1040 ez free file Emotional distress. 1040 ez free file   Emotional distress itself is not a physical injury or physical sickness, but damages you receive for emotional distress due to a physical injury or sickness are treated as received for the physical injury or sickness. 1040 ez free file Do not include them in your income. 1040 ez free file   If the emotional distress is due to a personal injury that is not due to a physical injury or sickness (for example, employment discrimination or injury to reputation), you must include the damages in your income, except for any damages you receive for medical care due to that emotional distress. 1040 ez free file Emotional distress includes physical symptoms that result from emotional distress, such as headaches, insomnia, and stomach disorders. 1040 ez free file Deduction for costs involved in unlawful discrimination suits. 1040 ez free file   You may be able to deduct attorney fees and court costs paid to recover a judgment or settlement for a claim of unlawful discrimination under various provisions of federal, state, and local law listed in Internal Revenue Code section 62(e), a claim against the United States government, or a claim under section 1862(b)(3)(A) of the Social Security Act. 1040 ez free file For more information, see Publication 525. 1040 ez free file Credit card insurance. 1040 ez free file   In most cases, if you receive benefits under a credit card disability or unemployment insurance plan, the benefits are taxable to you. 1040 ez free file These plans make the minimum monthly payment on your credit card account if you cannot make the payment due to injury, illness, disability, or unemployment. 1040 ez free file Report on Form 1040, line 21, the amount of benefits you received during the year that is more than the amount of the premiums you paid during the year. 1040 ez free file Down payment assistance. 1040 ez free file   If you purchase a home and receive assistance from a nonprofit corporation to make the down payment, that assistance is not included in your income. 1040 ez free file If the corporation qualifies as a tax-exempt charitable organization, the assistance is treated as a gift and is included in your basis of the house. 1040 ez free file If the corporation does not qualify, the assistance is treated as a rebate or reduction of the purchase price and is not included in your basis. 1040 ez free file Employment agency fees. 1040 ez free file   If you get a job through an employment agency, and the fee is paid by your employer, the fee is not includible in your income if you are not liable for it. 1040 ez free file However, if you pay it and your employer reimburses you for it, it is includible in your income. 1040 ez free file Energy conservation subsidies. 1040 ez free file   You can exclude from gross income any subsidy provided, either directly or indirectly, by public utilities for the purchase or installation of an energy conservation measure for a dwelling unit. 1040 ez free file Energy conservation measure. 1040 ez free file   This includes installations or modifications that are primarily designed to reduce consumption of electricity or natural gas, or improve the management of energy demand. 1040 ez free file Dwelling unit. 1040 ez free file   This includes a house, apartment, condominium, mobile home, boat, or similar property. 1040 ez free file If a building or structure contains both dwelling and other units, any subsidy must be properly allocated. 1040 ez free file Estate and trust income. 1040 ez free file    An estate or trust, unlike a partnership, may have to pay federal income tax. 1040 ez free file If you are a beneficiary of an estate or trust, you may be taxed on your share of its income distributed or required to be distributed to you. 1040 ez free file However, there is never a double tax. 1040 ez free file Estates and trusts file their returns on Form 1041, U. 1040 ez free file S. 1040 ez free file Income Tax Return for Estates and Trusts, and your share of the income is reported to you on Schedule K-1 (Form 1041). 1040 ez free file Current income required to be distributed. 1040 ez free file   If you are the beneficiary of an estate or trust that must distribute all of its current income, you must report your share of the distributable net income, whether or not you actually received it. 1040 ez free file Current income not required to be distributed. 1040 ez free file    If you are the beneficiary of an estate or trust and the fiduciary has the choice of whether to distribute all or part of the current income, you must report: All income that is required to be distributed to you, whether or not it is actually distributed, plus All other amounts actually paid or credited to you, up to the amount of your share of distributable net income. 1040 ez free file How to report. 1040 ez free file   Treat each item of income the same way that the estate or trust would treat it. 1040 ez free file For example, if a trust's dividend income is distributed to you, you report the distribution as dividend income on your return. 1040 ez free file The same rule applies to distributions of tax-exempt interest and capital gains. 1040 ez free file   The fiduciary of the estate or trust must tell you the type of items making up your share of the estate or trust income and any credits you are allowed on your individual income tax return. 1040 ez free file Losses. 1040 ez free file   Losses of estates and trusts generally are not deductible by the beneficiaries. 1040 ez free file Grantor trust. 1040 ez free file   Income earned by a grantor trust is taxable to the grantor, not the beneficiary, if the grantor keeps certain control over the trust. 1040 ez free file (The grantor is the one who transferred property to the trust. 1040 ez free file ) This rule applies if the property (or income from the property) put into the trust will or may revert (be returned) to the grantor or the grantor's spouse. 1040 ez free file   Generally, a trust is a grantor trust if the grantor has a reversionary interest valued (at the date of transfer) at more than 5% of the value of the transferred property. 1040 ez free file Expenses paid by another. 1040 ez free file   If your personal expenses are paid for by another person, such as a corporation, the payment may be taxable to you depending upon your relationship with that person and the nature of the payment. 1040 ez free file But if the payment makes up for a loss caused by that person, and only restores you to the position you were in before the loss, the payment is not includible in your income. 1040 ez free file Fees for services. 1040 ez free file   Include all fees for your services in your income. 1040 ez free file Examples of these fees are amounts you receive for services you perform as: A corporate director, An executor, administrator, or personal representative of an estate, A manager of a trade or business you operated before declaring Chapter 11 bankruptcy, A notary public, or An election precinct official. 1040 ez free file Nonemployee compensation. 1040 ez free file   If you are not an employee and the fees for your services from the same payer total $600 or more for the year, you may receive a Form 1099-MISC. 1040 ez free file You may need to report your fees as self-employment income. 1040 ez free file See Self-Employed Persons , in chapter 1, for a discussion of when you are considered self-employed. 1040 ez free file Corporate director. 1040 ez free file   Corporate director fees are self-employment income. 1040 ez free file Report these payments on Schedule C or Schedule C-EZ (Form 1040). 1040 ez free file Personal representatives. 1040 ez free file   All personal representatives must include in their gross income fees paid to them from an estate. 1040 ez free file If you are not in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on Form 1040, line 21. 1040 ez free file If you are in the trade or business of being an executor, report these fees as self-employment income on Schedule C or Schedule C-EZ (Form 1040). 1040 ez free file The fee is not includible in income if it is waived. 1040 ez free file Manager of trade or business for bankruptcy estate. 1040 ez free file   Include in your income all payments received from your bankruptcy estate for managing or operating a trade or business that you operated before you filed for bankruptcy. 1040 ez free file Report this income on Form 1040, line 21. 1040 ez free file Notary public. 1040 ez free file    Report payments for these services on Schedule C or Schedule C-EZ (Form 1040). 1040 ez free file These payments are not subject to self-employment tax. 1040 ez free file See the separate instructions for Schedule SE (Form 1040) for details. 1040 ez free file Election precinct official. 1040 ez free file    You should receive a Form W-2 showing payments for services performed as an election official or election worker. 1040 ez free file Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. 1040 ez free file Foster care providers. 1040 ez free file   Payments you receive from a state, political subdivision, or a qualified foster care placement agency for providing care to qualified foster individuals in your home generally are not included in your income. 1040 ez free file However, you must include in your income payments received for the care of more than 5 individuals age 19 or older and certain difficulty-of-care payments. 1040 ez free file   A qualified foster individual is a person who: Is living in a foster family home, and Was placed there by: An agency of a state or one of its political subdivisions, or A qualified foster care placement agency. 1040 ez free file Difficulty-of-care payments. 1040 ez free file   These are additional payments that are designated by the payer as compensation for providing the additional care that is required for physically, mentally, or emotionally handicapped qualified foster individuals. 1040 ez free file A state must determine that the additional compensation is needed, and the care for which the payments are made must be provided in your home. 1040 ez free file   You must include in your income difficulty-of-care payments received for more than: 10 qualified foster individuals under age 19, or 5 qualified foster individuals age 19 or older. 1040 ez free file Maintaining space in home. 1040 ez free file   If you are paid to maintain space in your home for emergency foster care, you must include the payment in your income. 1040 ez free file Reporting taxable payments. 1040 ez free file    If you receive payments that you must include in your income, you are in business as a foster care provider and you are self-employed. 1040 ez free file Report the payments on Schedule C or Schedule C-EZ (Form 1040). 1040 ez free file See Publication 587, Business Use of Your Home, to help you determine the amount you can deduct for the use of your home. 1040 ez free file Found property. 1040 ez free file   If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession. 1040 ez free file Free tour. 1040 ez free file   If you received a free tour from a travel agency for organizing a group of tourists, you must include its value in your income. 1040 ez free file Report the fair market value of the tour on Form 1040, line 21, if you are not in the trade or business of organizing tours. 1040 ez free file You cannot deduct your expenses in serving as the voluntary leader of the group at the group's request. 1040 ez free file If you organize tours as a trade or business, report the tour's value on Schedule C or Schedule C-EZ (Form 1040). 1040 ez free file Gambling winnings. 1040 ez free file   You must include your gambling winnings in income on Form 1040, line 21. 1040 ez free file If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings. 1040 ez free file Lotteries and raffles. 1040 ez free file   Winnings from lotteries and raffles are gambling winnings. 1040 ez free file In addition to cash winnings, you must include in your income the fair market value of bonds, cars, houses, and other noncash prizes. 1040 ez free file    If you win a state lottery prize payable in installments, see Publication 525 for more information. 1040 ez free file Form W-2G. 1040 ez free file   You may have received a Form W-2G, Certain Gambling Winnings, showing the amount of your gambling winnings and any tax taken out of them. 1040 ez free file Include the amount from box 1 on Form 1040, line 21. 1040 ez free file Include the amount shown in box 4 on Form 1040, line 62, as federal income tax withheld. 1040 ez free file Reporting winnings and recordkeeping. 1040 ez free file   For more information on reporting gam
Español

Money RSS Feeds

Government RSS feeds on the economy, federal reserve, consumer information, and the U.S. Mint.

The 1040 Ez Free File

1040 ez free file Publication 3 - Main Content Table of Contents Gross IncomeForeign Source Income Military Spouses Residency Relief Act (MSRRA) Community Property Form W-2 Codes Adjustments to IncomeArmed Forces Reservists Individual Retirement Arrangements Moving Expenses Combat Zone ExclusionCombat Zone Serving in a Combat Zone Amount of Exclusion Alien StatusResident Aliens Nonresident Aliens Dual-Status Aliens Sale of HomePeriod of suspension. 1040 ez free file Qualified official extended duty. 1040 ez free file ForeclosuresLump Sum Portion of Settlement Payment. 1040 ez free file Interest Payment on Lump Sum Portion of Settlement Payment. 1040 ez free file Lost Equity Portion of Settlement Payment. 1040 ez free file The rules that apply to a lost equity payment you received for the foreclosure of a property that was not your main home are different. 1040 ez free file Interest Payment on Lost Equity Portion of Settlement Payment. 1040 ez free file Itemized DeductionsEmployee Business Expenses Repayments CreditsFirst-Time Homebuyer Credit Child Tax Credit Earned Income Credit Credit for Excess Social Security Tax Withheld Forgiveness of Decedent's Tax LiabilityCombat Zone Related Forgiveness Terrorist or Military Action Related Forgiveness Claims for Tax Forgiveness Filing ReturnsSame-Sex Marriage Where To File When To File Signing Returns Extension of DeadlinesService That Qualifies for an Extension of Deadline Length of Extension Actions for Which Deadlines Are Extended Deferral of Payment Maximum Rate of Interest How To Get Tax HelpLow Income Taxpayer Clinics Gross Income Members of the Armed Forces receive many different types of pay and allowances. 1040 ez free file Some are included in gross income while others are excluded from gross income. 1040 ez free file Included items (Table 1) are subject to tax and must be reported on your tax return. 1040 ez free file Excluded items (Table 2) are not subject to tax, but may have to be shown on your tax return. 1040 ez free file For information on the exclusion of pay for service in a combat zone and other tax benefits for combat zone participants, see Combat Zone Exclusion and Extension of Deadlines , later. 1040 ez free file Table 1. 1040 ez free file Included Items These items are included in gross income, unless the pay is for service in a combat zone. 1040 ez free file Basic pay • Active duty   Bonus pay • Career status   • Attendance at a designated service school     • Enlistment  • Officer   • Back wages     • Overseas extension   • CONUS COLA       • Reenlistment   • Drills         • Reserve training         • Training duty   Other pay  • Accrued leave          • High deployment per diem Special • Aviation career incentives      • Personal money allowances paid to pay • Career sea     high-ranking officers   • Diving duty      • Student loan repayment from programs   • Foreign duty (outside the 48 contiguous     such as the Department of Defense   states and the District of Columbia)     Educational Loan Repayment Program   • Foreign language proficiency     when year's service (requirement) is not   • Hardship duty     attributable to a combat zone   • Hostile fire or imminent danger         • Medical and dental officers   Incentive pay  • Submarine   • Nuclear-qualified officers      • Flight   • Optometry      • Hazardous duty   • Pharmacy      • High altitude/Low Opening (HALO)   • Special compensation for assistance with activities of daily living (SCAADL)         • Special duty assignment pay         • Veterinarian         • Voluntary Separation Incentive       Basic allowance for housing (BAH). 1040 ez free file   You can still deduct mortgage interest and real estate taxes on your home if you pay these expenses with your BAH. 1040 ez free file Table 2. 1040 ez free file Excluded Items The exclusion for certain items applies whether the item is furnished in kind or is a reimbursement or allowance. 1040 ez free file There is no exclusion for the personal use of a government-provided vehicle. 1040 ez free file Combat  zone pay • Compensation for active service while in a combat zone Note: Limited amount for officers     • Housing and cost-of-living allowances abroad paid by the U. 1040 ez free file S. 1040 ez free file Government or by a foreign government         • OHA (Overseas Housing Allowance)                     Other pay • Defense counseling         • Disability, including payments received for injuries incurred as a direct result of a terrorist or military action         • Group-term life insurance   Moving • Dislocation   • Professional education   allowances • Military base realignment and   • ROTC educational and subsistence     closure benefit    allowances     (the exclusion is limited as   • State bonus pay for service in a     described above)   combat zone     • Move-in housing   • Survivor and retirement protection     • Moving household and   plan premiums     personal items   • Uniform allowances     • Moving trailers or mobile homes   • Uniforms furnished to enlisted     • Storage   personnel     • Temporary lodging and         temporary lodging expenses                 Travel • Annual round trip for dependent Death • Burial services   allowances students allowances • Death gratuity payments to     • Leave between consecutive   eligible survivors     overseas tours   • Travel of dependents to burial site     • Reassignment in a dependent         restricted status Family • Certain educational expenses for     • Transportation for you or your allowances dependents     dependents during ship overhaul   • Emergencies     or inactivation   • Evacuation to a place of safety     • Per diem   • Separation             In-kind military • Dependent-care assistance program Living • BAH (Basic Allowance for Housing)   benefits • Legal assistance allowances • BAS (Basic Allowance for Subsistence)     • Medical/dental care         • Commissary/exchange discounts         • Space-available travel on government aircraft           Death gratuity. 1040 ez free file   Any death gratuity paid to a survivor of a member of the Armed Forces is excluded from gross income. 1040 ez free file Differential wage payments. 1040 ez free file   Differential wage payments are any payments made by an employer to an individual for a period during which the individual is performing service in the uniformed services while on active duty for a period of more than 30 days and that represent all or a portion of the wages the individual would have received from the employer if the individual was performing services for the employer. 1040 ez free file These amounts are taxable and cannot be excluded as combat pay. 1040 ez free file Military base realignment and closure benefit. 1040 ez free file   Payments made under the Homeowners Assistance Program (HAP) generally are excluded from income. 1040 ez free file However, the excludable amount cannot be more than the maximum amount described in subsection (c) of 42 USC 3374 as in effect on November 6, 2009. 1040 ez free file Any part of the payment that is more than this limit is included in gross income. 1040 ez free file For more information about the HAP, see http://hap. 1040 ez free file usace. 1040 ez free file army. 1040 ez free file mil/Overview. 1040 ez free file html. 1040 ez free file Qualified reservist distribution (QRD). 1040 ez free file   A QRD is a distribution to an individual of all or part of the individual's balance in a cafeteria plan or health flexible spending arrangement if: The individual was a reservist who was ordered or called to active duty for more than 179 days or for an indefinite period, and The distribution is made no sooner than the date the reservist was ordered or called to active duty and no later than the last day reimbursements could otherwise be made under the arrangement for the plan year which includes the date of the order or the call to duty. 1040 ez free file A QRD is included in gross income and is subject to employment taxes. 1040 ez free file The employer must include the QRD (reduced by after-tax contributions to the health flexible spending arrangement) as wages on Form W-2, Wage and Tax Statement. 1040 ez free file Thrift Savings Plan (TSP) distributions. 1040 ez free file   If you participate in the Uniformed Services TSP and receive a distribution from your account, the distribution is generally included in your taxable income. 1040 ez free file   If your contributions included tax-exempt combat zone pay, the part of the distribution attributable to those contributions is tax exempt. 1040 ez free file However, the earnings on the tax-exempt portion of the distribution are taxable. 1040 ez free file The TSP will provide a statement showing the taxable and non-taxable portions of the distribution. 1040 ez free file Roth Thrift Savings Plan (TSP) balance. 1040 ez free file   You may be able to contribute to a designated Roth Account through the TSP known as the Roth TSP. 1040 ez free file Roth TSP contributions are after-tax contributions, subject to the same contribution limits as the traditional TSP. 1040 ez free file Qualified distributions from a Roth TSP are not included in your income. 1040 ez free file For more details, see Thrift Savings Accounts in Part II of Publication 721, Tax Guide to U. 1040 ez free file S. 1040 ez free file Civil Service Retirement Benefits. 1040 ez free file State bonus payments. 1040 ez free file   Bonus payments made by a state (or a political subdivision thereof) to a member or former member of the uniformed services of the United States or to a dependent of such member are considered combat pay (and therefore may not be taxable) if the payments are made only because of the member's service in a combat zone. 1040 ez free file See Combat Zone , later, for a list of designated combat zones. 1040 ez free file Foreign Source Income If you are a U. 1040 ez free file S. 1040 ez free file citizen with income from sources outside the United States (foreign income), you must report all of that income (except for amounts that U. 1040 ez free file S. 1040 ez free file law allows you to exclude) on your tax return. 1040 ez free file This is true whether you reside inside or outside the United States and whether or not you receive a Form W-2 or a Form 1099. 1040 ez free file This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents, and royalties). 1040 ez free file Certain taxpayers can exclude income earned in foreign countries. 1040 ez free file For 2013, this exclusion amount can be as much as $97,600. 1040 ez free file However, the foreign earned income exclusion does not apply to the wages and salaries of military and civilian employees of the U. 1040 ez free file S. 1040 ez free file Government. 1040 ez free file Employees of the U. 1040 ez free file S. 1040 ez free file Government include those who work at United States Armed Forces exchanges, commissioned and noncommissioned officers' messes, Armed Forces motion picture services, and similar personnel. 1040 ez free file Other foreign income earned by military personnel or their spouses may be eligible for the foreign earned income exclusion. 1040 ez free file For more information on the exclusion, see Publication 54. 1040 ez free file Residents of American Samoa may be able to exclude income from American Samoa. 1040 ez free file This possession exclusion does not apply to wages and salaries of military and civilian employees of the U. 1040 ez free file S. 1040 ez free file Government. 1040 ez free file If you need information on the possession exclusion, see Publication 570, Tax Guide for Individuals With Income From U. 1040 ez free file S. 1040 ez free file Possessions. 1040 ez free file Military Spouses Residency Relief Act (MSRRA) If you are the civilian spouse of an active duty U. 1040 ez free file S. 1040 ez free file military servicemember and your domicile is the same as the servicemember's, you can choose to keep your prior residence or domicile for tax purposes when you accompany the servicemember spouse, who is relocating under military orders to a new duty station in one of the 50 states, the District of Columbia, or a U. 1040 ez free file S. 1040 ez free file possession. 1040 ez free file See Publication 570 for more information. 1040 ez free file Domicile. 1040 ez free file   Your domicile is the permanent legal home you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return. 1040 ez free file It is not always where you presently live. 1040 ez free file Community Property The pay you earn as a member of the Armed Forces may be subject to community property laws depending on your marital status, your domicile, and the nature of the payment. 1040 ez free file The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. 1040 ez free file Marital status. 1040 ez free file   Community property rules apply to married persons whose domicile during the tax year was in a community property state. 1040 ez free file The rules may affect your tax liability if you file separate returns or are divorced during the year. 1040 ez free file Nevada, Washington, and California domestic partners. 1040 ez free file   A registered domestic partner in Nevada, Washington, or California generally must report half the combined income of the individual and his or her domestic partner. 1040 ez free file See Form 8958 and Publication 555, Community Property. 1040 ez free file Nature of the payment. 1040 ez free file   Active duty military pay is subject to community property laws. 1040 ez free file Armed Forces retired or retainer pay may be subject to community property laws. 1040 ez free file   For more information on community property laws, see Publication 555. 1040 ez free file Form W-2 Codes Form W-2 shows your total pay and other compensation and the income tax, social security tax, and Medicare tax that was withheld during the year. 1040 ez free file Form W-2 also shows other amounts that you may find important in box 12. 1040 ez free file The amounts shown in box 12 are generally preceded by a code. 1040 ez free file A list of codes used in box 12 is shown, next. 1040 ez free file Form W-2 Reference Guide for Box 12 Codes A Uncollected social security or RRTA J Nontaxable sick pay T Adoption benefits   tax on tips             K 20% excise tax on excess golden V Income from exercise of B Uncollected Medicare tax on tips   parachute payments   nonstatutory stock option(s)             C Taxable cost of group-term life L Substantiated employee business W Employer contributions (including   insurance over $50,000   expense reimbursements   employee contributions through a           cafeteria plan) to an employee's D Elective deferrals under a section M Uncollected social security or RRTA   health savings account (HSA)   401(k) cash or deferred arrangement   tax on taxable cost of group-term life       plan (including a SIMPLE 401(k)   insurance over $50,000 (former Y Deferrals under a section 409A   arrangement)   employees only)   nonqualified deferred           compensation plan E Elective deferrals under a section N Uncollected Medicare tax on taxable       403(b) salary reduction agreement   cost of group-term life insurance Z Income under section 409A on a       over $50,000 (former employees only)   nonqualified deferred F Elective deferrals under a section       compensation plan   408(k)(6) salary reduction SEP P Excludable moving expense           reimbursements paid directly to AA Designated Roth contributions G Elective deferrals and employer   employee   under a section 401(k) plan   contributions (including nonelective           deferrals) to a section 457(b) Q Nontaxable combat pay BB Designated Roth contributions   deferred compensation plan       under a section 403(b) plan     R Employer contributions to an Archer     H Elective deferrals to a section   MSA DD Cost of employer-sponsored   501(c)(18)(D) tax-exempt       health coverage   organization plan S Employee salary reduction contributions under a section 408(p) SIMPLE  EE  Designated Roth contributions under a governmental section 457(b) plan  Note. 1040 ez free file For more information on these codes, see your Form(s) W-2. 1040 ez free file Adjustments to Income Adjusted gross income is your total income minus certain adjustments. 1040 ez free file The following adjustments are of particular interest to members of the Armed Forces. 1040 ez free file Armed Forces Reservists If you are a member of a reserve component of the Armed Forces and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your unreimbursed travel expenses as an adjustment to income on line 24 of Form 1040, U. 1040 ez free file S. 1040 ez free file Individual Income Tax Return, rather than as a miscellaneous itemized deduction. 1040 ez free file Include all unreimbursed expenses from the time you leave home until the time you return home. 1040 ez free file The deduction is limited to the amount the federal government generally reimburses its employees for travel expenses. 1040 ez free file For more information about this limit, see Per Diem and Car Allowances in chapter 6 of Publication 463. 1040 ez free file Member of a reserve component. 1040 ez free file   You are a member of a reserve component of the Armed Forces if you are in the Army, Navy, Marine Corps, Air Force, or Coast Guard Reserve, the Army National Guard of the United States, the Air National Guard of the United States, or the Reserve Corps of the Public Health Service. 1040 ez free file How to report. 1040 ez free file   If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses. 1040 ez free file Then enter on Form 1040, line 24, the part of your expenses, up to the federal rate, included on Form 2106, line 10, or Form 2106-EZ, line 6, that is for reserve-related travel more than 100 miles from your home. 1040 ez free file Subtract this amount from the total on Form 2106, line 10, or Form 2106-EZ, line 6, and deduct the balance as an itemized deduction on Schedule A (Form 1040), line 21. 1040 ez free file Example. 1040 ez free file Captain Harris, a member of the Army Reserve, traveled to a location 220 miles from his home to perform his work in the reserves in April 2013. 1040 ez free file He incurred $1,549 of unreimbursed expenses consisting of $249 for mileage (440 miles × 56. 1040 ez free file 5 cents per mile), $300 for meals, and $1,000 for lodging. 1040 ez free file He also had other deductible mileage expenses of $110 for several trips to a location 20 miles from his home. 1040 ez free file Only 50% of his meal expenses are deductible. 1040 ez free file He shows his total deductible travel expenses of $1,509 ($249 + $150 (50% of $300) + $1,000 + $110) on Form 2106, line 10. 1040 ez free file He enters the $1,399 ($249 + $150 + $1,000) for travel over 100 miles from home on Form 1040, line 24. 1040 ez free file He then subtracts that $1,399 from the amount on Form 2106, $1,509, and enters $110 on Schedule A (Form 1040), line 21. 1040 ez free file Individual Retirement Arrangements Generally, you can deduct the lesser of the contributions to your traditional individual retirement arrangement (IRA) for the year or the general limit (or spousal IRA limit, if applicable). 1040 ez free file However, if you or your spouse was covered by an employer-maintained retirement plan at any time during the year for which contributions were made, you may not be able to deduct all of the contributions. 1040 ez free file The Form W-2 you or your spouse receives from an employer has a box used to indicate whether you were covered for the year. 1040 ez free file The “Retirement plan” box should have a mark in it if you were covered. 1040 ez free file For purposes of a deduction for contributions to a traditional IRA, Armed Forces members (including reservists on active duty for more than 90 days during the year) are considered covered by an employer-maintained retirement plan. 1040 ez free file Individuals serving in the U. 1040 ez free file S. 1040 ez free file Armed Forces or in support of the U. 1040 ez free file S. 1040 ez free file Armed Forces in designated combat zones have additional time to make a qualified retirement contribution to an IRA. 1040 ez free file For more information on this extension of deadline provision, see Extension of Deadlines , later. 1040 ez free file For more information on IRAs, see Publication 590. 1040 ez free file Combat Pay For IRA purposes, your compensation includes nontaxable combat pay. 1040 ez free file This means that even though you do not have to include the combat pay in your gross income, you do include it in your compensation when figuring the limits on contributions and deductions of contributions to IRAs. 1040 ez free file Qualified Reservist Distributions A qualified reservist distribution is defined below. 1040 ez free file It is not subject to the 10% additional tax on early distributions from certain retirement plans. 1040 ez free file Definition. 1040 ez free file   A distribution you receive is a qualified reservist distribution if the following requirements are met. 1040 ez free file You were ordered or called to active duty after September 11, 2001. 1040 ez free file You were ordered or called to active duty for a period of more than 179 days or for an indefinite period because you are a member of a reserve component (see Member of a reserve component , earlier, under Armed Forces Reservists. 1040 ez free file ) The distribution is from an IRA or from amounts attributable to elective deferrals under a section 401(k) or 403(b) plan or a similar arrangement. 1040 ez free file The distribution was made no earlier than the date of the order or call to active duty and no later than the close of the active duty period. 1040 ez free file Qualified Reservist Repayments You may be able to contribute (repay) to an IRA amounts equal to any qualified reservist distributions (defined earlier) you received. 1040 ez free file You can make these repayment contributions even if they would cause your total contributions to the IRA to be more than the general limit on contributions. 1040 ez free file You make these repayment contributions to an IRA, even if you received the qualified reservist distribution from a section 401(k) or 403(b) plan or a similar arrangement. 1040 ez free file Limit. 1040 ez free file   Your qualified reservist repayments cannot be more than your qualified reservist distributions. 1040 ez free file When repayment contributions can be made. 1040 ez free file   You cannot make these repayment contributions after the date that is 2 years after your active duty period ends. 1040 ez free file No deduction. 1040 ez free file   You cannot deduct qualified reservist repayments. 1040 ez free file Figuring your IRA deduction. 1040 ez free file   The repayment of qualified reservist distributions does not affect the amount you can deduct as an IRA contribution. 1040 ez free file Reporting the repayment. 1040 ez free file   If you repay a qualified reservist distribution, include the amount of the repayment with nondeductible contributions on line 1 of Form 8606, Nondeductible IRAs. 1040 ez free file Moving Expenses To deduct moving expenses, you generally must meet certain time and distance tests. 1040 ez free file However, if you are a member of the Armed Forces on active duty and you move because of a permanent change of station, you do not have to meet these tests. 1040 ez free file You can deduct your unreimbursed moving expenses on Form 3903. 1040 ez free file Permanent change of station. 1040 ez free file   A permanent change of station includes: A move from your home to your first post of active duty, A move from one permanent post of duty to another, and A move from your last post of duty to your home or to a nearer point in the United States. 1040 ez free file The move must occur within 1 year of ending your active duty or within the period allowed under the Joint Federal Travel Regulations. 1040 ez free file Spouse and dependents. 1040 ez free file   If you are the spouse or dependent of a member of the Armed Forces who deserts, is imprisoned, or dies, a permanent change of station for you includes a move to: The member's place of enlistment or induction, Your, or the member's, home of record, or A nearer point in the United States. 1040 ez free file   If the military moves you to or from a different location than the member, the moves are treated as a single move to your new main job location. 1040 ez free file Services or reimbursements provided by the government. 1040 ez free file   Do not include in your income the value of moving and storage services provided by the government because of a permanent change of station. 1040 ez free file Similarly, do not include in income amounts received as a dislocation allowance, temporary lodging expense, temporary lodging allowance, or move-in housing allowance. 1040 ez free file   Generally, if the total reimbursements or allowances that you receive from the government because of the move are more than your actual moving expenses, the excess is included in your wages on Form W-2. 1040 ez free file However, if any reimbursements or allowances (other than dislocation, temporary lodging, temporary lodging expense, or move-in housing allowances) exceed the cost of moving and the excess is not included in your wages on Form W-2, the excess still must be included in gross income on Form 1040, line 7. 1040 ez free file   Use Form 3903 to deduct qualified expenses that exceed your reimbursements and allowances (including dislocation, temporary lodging, temporary lodging expense, or move-in housing allowances that are excluded from gross income). 1040 ez free file   If you must relocate and your spouse and dependents move to or from a different location, do not include in income reimbursements, allowances, or the value of moving and storage services provided by the government to move you and your spouse and dependents to and from the separate locations. 1040 ez free file   Do not deduct any expenses for moving services that were provided by the government. 1040 ez free file Also, do not deduct any expenses that were reimbursed by an allowance you did not include in income. 1040 ez free file Deductible Moving Expenses If you move because of a permanent change of station, you can deduct the reasonable unreimbursed expenses of moving you and members of your household. 1040 ez free file You can deduct expenses (if not reimbursed or furnished in kind) for: Moving household goods and personal effects, and Travel. 1040 ez free file Moving household goods and personal effects. 1040 ez free file   You can deduct the expenses of moving your household goods and personal effects, including expenses for hauling a trailer, packing, crating, in-transit storage, and insurance. 1040 ez free file You cannot deduct expenses for moving furniture or other goods you bought on the way from your old home to your new home. 1040 ez free file Storing and insuring household goods and personal effects. 1040 ez free file   You can include only the cost of storing and insuring your household goods and personal effects within any period of 30 consecutive days after the day these goods and effects are moved from your former home and before they are delivered to your new home. 1040 ez free file Travel. 1040 ez free file   You can deduct the expenses of traveling (including lodging but not meals) from your old home to your new home, including car expenses and air fare. 1040 ez free file You can deduct as car expenses either: Your actual out-of-pocket expenses such as gas and oil, or The standard mileage rate of 24 cents a mile. 1040 ez free file   You can add parking fees and tolls to the amount claimed under either method. 1040 ez free file You cannot deduct any expenses for meals. 1040 ez free file You cannot deduct the cost of unnecessary side trips or lavish and extravagant lodging. 1040 ez free file Member of your household. 1040 ez free file   A member of your household is anyone who has both your former home and your new home as his or her main home. 1040 ez free file It does not include a tenant or employee unless you can claim that person as a dependent. 1040 ez free file Foreign Moves A foreign move is a move from the United States or its possessions to a foreign country or from one foreign country to another foreign country. 1040 ez free file A move from a foreign country to the United States or its possessions is not a foreign move. 1040 ez free file For a foreign move, the deductible moving expenses described earlier are expanded to include the reasonable expenses of: Moving your household goods and personal effects to and from storage, and Storing these items for part or all of the time the new job location remains your main job location. 1040 ez free file The new job location must be outside the United States. 1040 ez free file Reporting Moving Expenses Figure moving expense deductions on Form 3903. 1040 ez free file Carry the deduction from Form 3903 to Form 1040, line 26. 1040 ez free file For more information, see Publication 521 and Form 3903. 1040 ez free file Combat Zone Exclusion If you are a member of the U. 1040 ez free file S. 1040 ez free file Armed Forces who serves in a combat zone (defined later), you can exclude certain pay from your income. 1040 ez free file This pay is generally referred to as “combat pay. 1040 ez free file ” You do not actually need to show the exclusion on your tax return because income that qualifies for the combat zone exclusion is not included in the wages reported on your Form W-2. 1040 ez free file (See Form W-2 , later. 1040 ez free file ) The month for which you receive the pay must be a month in which you either served in a combat zone or were hospitalized as a result of wounds, disease, or injury incurred while serving in the combat zone. 1040 ez free file You do not have to receive the excluded pay while you are in a combat zone, are hospitalized, or in the same year you served in a combat zone. 1040 ez free file If you are an enlisted member, warrant officer, or commissioned warrant officer, you can exclude the following amounts from your income. 1040 ez free file (Other officer personnel are discussed under Amount of Exclusion , later. 1040 ez free file ) Active duty pay earned in any month you served in a combat zone. 1040 ez free file Imminent danger/hostile fire pay. 1040 ez free file A reenlistment bonus if the voluntary extension or reenlistment occurs in a month you served in a combat zone. 1040 ez free file Pay for accrued leave earned in any month you served in a combat zone. 1040 ez free file The Department of Defense must determine that the unused leave was earned during that period. 1040 ez free file Pay received for duties as a member of the Armed Forces in clubs, messes, post and station theaters, and other nonappropriated fund activities. 1040 ez free file The pay must be earned in a month you served in a combat zone. 1040 ez free file Awards for suggestions, inventions, or scientific achievements you are entitled to because of a submission you made in a month you served in a combat zone. 1040 ez free file Student loan repayments. 1040 ez free file If the entire year of service required to earn the repayment was performed in a combat zone, the entire repayment made because of that year of service is excluded. 1040 ez free file If only part of that year of service was performed in a combat zone, only part of the repayment qualifies for exclusion. 1040 ez free file For example, if you served in a combat zone for 5 months, 5/12 of your repayment qualifies for exclusion. 1040 ez free file Retirement pay and pensions do not qualify for the combat zone exclusion. 1040 ez free file Partial (month) service. 1040 ez free file   If you serve in a combat zone for any part of one or more days during a particular month, you are entitled to an exclusion for that entire month. 1040 ez free file Form W-2. 1040 ez free file   The wages shown in box 1 of your 2013 Form W-2 should not include military pay excluded from your income under the combat zone exclusion provisions. 1040 ez free file If it does, you will need to get a corrected Form W-2 from your finance office. 1040 ez free file   You cannot exclude as combat pay any wages shown in box 1 of Form W-2. 1040 ez free file Combat Zone A combat zone is any area the President of the United States designates by Executive Order as an area in which the U. 1040 ez free file S. 1040 ez free file Armed Forces are engaging or have engaged in combat. 1040 ez free file An area usually becomes a combat zone and ceases to be a combat zone on the dates the President designates by Executive Order. 1040 ez free file Afghanistan area. 1040 ez free file   By Executive Order No. 1040 ez free file 13239, Afghanistan (and airspace above) was designated as a combat zone beginning September 19, 2001. 1040 ez free file On December 14, 2001, the following countries were certified by the Department of Defense for combat zone tax benefits due to their direct support of military operations in the Afghanistan combat zone. 1040 ez free file Djibouti. 1040 ez free file Jordan. 1040 ez free file Kyrgyzstan. 1040 ez free file Pakistan. 1040 ez free file Somalia. 1040 ez free file Syria. 1040 ez free file Tajikistan. 1040 ez free file Uzbekistan. 1040 ez free file Yemen. 1040 ez free file The Philippines. 1040 ez free file  Note. 1040 ez free file For the Philippines only, the personnel must be deployed in conjunction with Operation Enduring Freedom supporting military operations in the Afghanistan combat zone. 1040 ez free file The Kosovo area. 1040 ez free file   By Executive Order No. 1040 ez free file 13119, the following locations (including airspace above) were designated as a combat zone beginning March 24, 1999. 1040 ez free file Federal Republic of Yugoslavia (Serbia/Montenegro). 1040 ez free file Albania. 1040 ez free file Kosovo. 1040 ez free file The Adriatic Sea. 1040 ez free file The Ionian Sea—north of the 39th parallel. 1040 ez free file Note. 1040 ez free file The combat zone designation for Montenegro and Kosovo (previously a province within Serbia) under Executive Order 13119 remains in force even though Montenegro and Kosovo became independent nations since EO 13119 was signed. 1040 ez free file Arabian peninsula. 1040 ez free file   By Executive Order No. 1040 ez free file 12744, the following locations (and airspace above) were designated as a combat zone beginning January 17, 1991. 1040 ez free file The Persian Gulf. 1040 ez free file The Red Sea. 1040 ez free file The Gulf of Oman. 1040 ez free file The part of the Arabian Sea that is north of 10 degrees north latitude and west of 68 degrees east longitude. 1040 ez free file The Gulf of Aden. 1040 ez free file The total land areas of Iraq, Kuwait, Saudi Arabia, Oman, Bahrain, Qatar, and the United Arab Emirates. 1040 ez free file Jordan which is in direct support of the Arabian Peninsula. 1040 ez free file Serving in a Combat Zone You are considered to be serving in a combat zone if you are either assigned on official temporary duty to a combat zone or you qualify for hostile fire/imminent danger pay while in a combat zone. 1040 ez free file Service in a combat zone includes any periods you are absent from duty because of sickness, wounds, or leave. 1040 ez free file If, as a result of serving in a combat zone, a person becomes a prisoner of war or is missing in action, that person is considered to be serving in the combat zone so long as he or she keeps that status for military pay purposes. 1040 ez free file Hospitalized While Serving in a Combat Zone If you are hospitalized while serving in a combat zone, the wound, disease, or injury causing the hospitalization will be presumed to have been incurred while serving in the combat zone unless there is clear evidence to the contrary. 1040 ez free file Example. 1040 ez free file You are hospitalized for a specific disease in a combat zone where you have been serving for 3 weeks, and the disease for which you are hospitalized has an incubation period of 2 to 4 weeks. 1040 ez free file The disease is presumed to have been incurred while you were serving in the combat zone. 1040 ez free file On the other hand, if the incubation period of the disease is 1 year, the disease would not have been incurred while you were serving in the combat zone. 1040 ez free file Hospitalized After Leaving a Combat Zone In some cases, the wound, disease, or injury may have been incurred while you were serving in the combat zone, even though you were not hospitalized until after you left. 1040 ez free file In that case, you can exclude military pay earned while you are hospitalized as a result of the wound, disease, or injury. 1040 ez free file Example. 1040 ez free file You were hospitalized for a specific disease 3 weeks after you left the combat zone. 1040 ez free file The incubation period of the disease is from 2 to 4 weeks. 1040 ez free file The disease is presumed to have been incurred while serving in the combat zone. 1040 ez free file Nonqualifying Presence in Combat Zone None of the following types of military service qualify as service in a combat zone. 1040 ez free file Presence in a combat zone while on leave from a duty station located outside the combat zone. 1040 ez free file Passage over or through a combat zone during a trip between two points that are outside a combat zone. 1040 ez free file Presence in a combat zone solely for your personal convenience. 1040 ez free file Service Outside Combat Zone Considered Service in Combat Zone Military service outside a combat zone is considered to be performed in a combat zone if: The Department of Defense designates that the service is in direct support of military operations in the combat zone, and The service qualifies you for special military pay for duty subject to hostile fire or imminent danger. 1040 ez free file Military pay received for this service will qualify for the combat zone exclusion if all of the requirements (other than service in a combat zone) are met and the pay is verifiable by reference to military pay records. 1040 ez free file Amount of Exclusion If you are an enlisted member, warrant officer, or commissioned warrant officer and you serve in a combat zone during any part of a month, you can exclude all of your military pay for that month. 1040 ez free file It should not be included in the wages reported on your Form W-2. 1040 ez free file You also can exclude military pay earned while you are hospitalized as a result of wounds, disease, or injury incurred in the combat zone. 1040 ez free file If you are hospitalized, you cannot exclude any military pay received for any month of service that begins more than 2 years after the end of combat activities in the combat zone. 1040 ez free file Your hospitalization does not have to be in the combat zone. 1040 ez free file If you are a commissioned officer (other than a commissioned warrant officer), you can exclude your pay according to the rules just discussed. 1040 ez free file However, the amount of your exclusion is limited to the highest rate of enlisted pay (plus imminent danger/hostile fire pay you received) for each month during any part of which you served in a combat zone or were hospitalized as a result of your service there. 1040 ez free file Alien Status For tax purposes, an alien is an individual who is not a U. 1040 ez free file S. 1040 ez free file citizen. 1040 ez free file An alien is in one of three categories: resident, nonresident, or dual-status. 1040 ez free file Placement in the correct category is crucial in determining what income to report and what forms to file. 1040 ez free file Under peacetime enlistment rules, you generally cannot enlist in the Armed Forces unless you are a citizen or have been legally admitted to the United States for permanent residence. 1040 ez free file If you are an alien enlistee in the Armed Forces, you are probably a resident alien. 1040 ez free file If, under an income tax treaty, you are considered a resident of a foreign country, see your base legal officer. 1040 ez free file Other aliens who are in the United States only because of military assignments and who have a home outside the United States are nonresident aliens. 1040 ez free file Guam and Puerto Rico have special rules. 1040 ez free file Residents of those areas should contact their taxing authority with their questions. 1040 ez free file Most members of the Armed Forces are U. 1040 ez free file S. 1040 ez free file citizens or resident aliens. 1040 ez free file However, if you have questions about your alien status or the alien status of your dependents or spouse, you should read the information in the following paragraphs and see Publication 519. 1040 ez free file Resident Aliens You are considered a resident alien of the United States for tax purposes if you meet either the “green card test” or the “substantial presence test” for the calendar year (January 1–December 31). 1040 ez free file If you meet the substantial presence test for 2014, you did not meet either the green card test or the substantial presence test for 2012 or 2013, and you did not choose to be treated as a resident for part of 2012, you may be able to choose to be treated as a U. 1040 ez free file S. 1040 ez free file resident for part of 2013. 1040 ez free file See First-Year Choice in Publication 519. 1040 ez free file These tests are explained in Publication 519. 1040 ez free file Generally, resident aliens are taxed on their worldwide income and file the same tax forms as U. 1040 ez free file S. 1040 ez free file citizens. 1040 ez free file Treating nonresident alien spouse as resident alien. 1040 ez free file   A nonresident alien spouse can be treated as a resident alien if all the following conditions are met. 1040 ez free file One spouse is a U. 1040 ez free file S. 1040 ez free file citizen or resident alien at the end of the tax year. 1040 ez free file That spouse is married to the nonresident alien at the end of the tax year. 1040 ez free file You both choose to treat the nonresident alien spouse as a resident alien. 1040 ez free file Making the choice. 1040 ez free file   Both you and your spouse must sign a statement and attach it to your joint return for the first tax year for which the choice applies. 1040 ez free file Include in the statement: A declaration that one spouse was a nonresident alien and the other was a U. 1040 ez free file S. 1040 ez free file citizen or resident alien on the last day of the year, A declaration that both spouses choose to be treated as U. 1040 ez free file S. 1040 ez free file residents for the entire tax year, and The name, address, and taxpayer identification number (social security number or individual taxpayer identification number) of each spouse. 1040 ez free file If the nonresident alien spouse is not eligible to get a social security number, he or she should file Form W-7, Application for IRS Individual Taxpayer Identification Number. 1040 ez free file    Once you make this choice, the nonresident alien spouse's worldwide income is subject to U. 1040 ez free file S. 1040 ez free file tax. 1040 ez free file If the nonresident alien spouse has substantial foreign income, there may be no advantage to making this choice. 1040 ez free file Ending the choice. 1040 ez free file   Once you make this choice, it applies to all later years unless one of the following situations occurs. 1040 ez free file You or your spouse revokes the choice. 1040 ez free file You or your spouse dies. 1040 ez free file You and your spouse become legally separated under a decree of divorce or separate maintenance. 1040 ez free file The Internal Revenue Service ends the choice because you or your spouse kept inadequate records. 1040 ez free file For specific details on these situations, see Publication 519. 1040 ez free file   If the choice is ended for any of these reasons, neither spouse can make the choice for any later year. 1040 ez free file Choice not made. 1040 ez free file   If you and your nonresident alien spouse do not make this choice: You cannot file a joint return. 1040 ez free file You can file as married filing separately, or head of household if you qualify. 1040 ez free file You can claim an exemption for your nonresident alien spouse if he or she has no gross income for U. 1040 ez free file S. 1040 ez free file tax purposes and is not another taxpayer's dependent. 1040 ez free file The nonresident alien spouse generally does not have to file a federal income tax return if he or she had no income from sources in the United States. 1040 ez free file If a return has to be filed, see the next discussion. 1040 ez free file The nonresident alien spouse is not eligible for the earned income credit if he or she has to file a return. 1040 ez free file Nonresident Aliens If you are an alien who does not meet the requirements discussed earlier to be a resident alien, you are a nonresident alien. 1040 ez free file If you are required to file a federal tax return, you must file either Form 1040NR, U. 1040 ez free file S. 1040 ez free file Nonresident Alien Income Tax Return, or Form 1040NR-EZ, U. 1040 ez free file S. 1040 ez free file Income Tax Return for Certain Nonresident Aliens With No Dependents. 1040 ez free file See the form instructions for information on who must file and filing status. 1040 ez free file If you are a nonresident alien, you generally must pay tax on income from sources in the United States. 1040 ez free file Your income from conducting a trade or business in the United States is taxed at graduated U. 1040 ez free file S. 1040 ez free file tax rates. 1040 ez free file Other income from U. 1040 ez free file S. 1040 ez free file sources is taxed at a flat 30% (or lower treaty) rate. 1040 ez free file For example, dividends from a U. 1040 ez free file S. 1040 ez free file corporation paid to a nonresident alien generally are subject to a 30% (or lower treaty) rate. 1040 ez free file Dual-Status Aliens You can be both a nonresident and resident alien during the same tax year. 1040 ez free file This usually occurs in the year you arrive in or depart from the United States. 1040 ez free file If you are a dual-status alien, you are taxed on income from all sources for the part of the year you are a resident alien. 1040 ez free file Generally, for the part of the year you are a nonresident alien, you are taxed only on income from sources in the United States. 1040 ez free file Sale of Home You may not have to pay tax on all or part of the gain from the sale of your main home. 1040 ez free file Usually, your main home is the one you live in most of the time. 1040 ez free file It can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. 1040 ez free file You generally can exclude up to $250,000 of gain ($500,000, in most cases, if married filing a joint return) realized on the sale or exchange of a main home in 2013. 1040 ez free file The exclusion is allowed each time you sell or exchange a main home, but generally not more than once every 2 years. 1040 ez free file To be eligible, during the 5-year period ending on the date of the sale, you must have owned the home for at least 2 years (the ownership test), and lived in the home as your main home for at least 2 years (the use test). 1040 ez free file Exception to ownership and use tests. 1040 ez free file   You can exclude gain, but the maximum amount of gain you can exclude will be reduced if you do not meet the ownership and use tests due to a move to a new permanent duty station. 1040 ez free file 5-year test period suspended. 1040 ez free file   You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve on qualified official extended duty as a member of the Armed Forces. 1040 ez free file This means that you may be able to meet the 2-year use test even if, because of your service, you did not actually live in your home for at least the required 2 years during the 5-year period ending on the date of sale. 1040 ez free file Example. 1040 ez free file David bought and moved into a home in 2005. 1040 ez free file He lived in it as his main home for 2½ years. 1040 ez free file For the next 6 years, he did not live in it because he was on qualified official extended duty with the Army. 1040 ez free file He then sold the home at a gain in 2013. 1040 ez free file To meet the use test, David chooses to suspend the 5-year test period for the 6 years he was on qualifying official extended duty. 1040 ez free file This means he can disregard those 6 years. 1040 ez free file Therefore, David's 5-year test period consists of the 5 years before he went on qualifying official extended duty. 1040 ez free file He meets the ownership and use tests because he owned and lived in the home for 2½ years during this test period. 1040 ez free file Period of suspension. 1040 ez free file   The period of suspension cannot last more than 10 years. 1040 ez free file You cannot suspend the 5-year period for more than one property at a time. 1040 ez free file You can revoke your choice to suspend the 5-year period at any time. 1040 ez free file Qualified official extended duty. 1040 ez free file   You are on qualified official extended duty if you serve on extended duty either: At a duty station at least 50 miles from your main home, or While you live in Government quarters under Government orders. 1040 ez free file   You are on extended duty when you are called or ordered to active duty for a period of more than 90 days or for an indefinite period. 1040 ez free file Property used for rental or business. 1040 ez free file   You may be able to exclude your gain from the sale of a home that you have used as a rental property or for business. 1040 ez free file However, you must meet the ownership and use tests discussed in Publication 523. 1040 ez free file Nonqualified use. 1040 ez free file   If the sale of your main home results in a gain that is allocated to one or more period(s) of nonqualified use, you cannot exclude that gain from your income. 1040 ez free file   Nonqualified use means any period after 2008 when neither you nor your spouse (or your former spouse) used the property as a main home, with certain exceptions. 1040 ez free file For example, a period of nonqualified use does not include any period (not to exceed a total of 10 years) during which you or your spouse is serving on qualified official extended duty. 1040 ez free file Loss. 1040 ez free file   You cannot deduct a loss from the sale of your main home. 1040 ez free file More information. 1040 ez free file   For more information, see Publication 523. 1040 ez free file Foreclosures There may be tax consequences as a result of compensation payments for foreclosures. 1040 ez free file Payments made for violations of the Service Members Civil Relief Act (SCRA). 1040 ez free file   All service members who received a settlement payment reported on a Form 1099 may need to report the amount on their tax return. 1040 ez free file Generally, you must include settlement payments in income. 1040 ez free file However, the tax treatment of settlement payments will depend on the facts and circumstances. 1040 ez free file Lump Sum Portion of Settlement Payment. 1040 ez free file    Generally, you must include the lump sum payment in gross income. 1040 ez free file In limited circumstances you may be able to exclude part or all of the lump sum payment from gross income. 1040 ez free file For example, you may qualify to exclude part or all of the payment from gross income if you can show that the payment was made to reimburse specific nondeductible expenses (such as living expenses) you incurred because of the SCRA violation. 1040 ez free file Interest Payment on Lump Sum Portion of Settlement Payment. 1040 ez free file    You must include any interest on the lump sum portion of your settlement payment in your income. 1040 ez free file Lost Equity Portion of Settlement Payment. 1040 ez free file    If you lost your main home in foreclosure, you should treat the lost equity payment as an additional amount you received on the foreclosure of the home. 1040 ez free file You will have a gain on the foreclosure only if the sum of the lost equity payment and the value of the main home at foreclosure is more than what you paid for the home. 1040 ez free file In many cases, this gain may be excluded from income. 1040 ez free file For more information on the rules for excluding all or part of any gain from the sale (including a foreclosure) of a main home, see Pub. 1040 ez free file 523, Selling Your Home. 1040 ez free file The rules that apply to a lost equity payment you received for the foreclosure of a property that was not your main home are different. 1040 ez free file    To find rules for reporting gain or loss on the foreclosure of property that was not your main home, see Pub. 1040 ez free file 544, Sales and Other Dispositions of Assets. 1040 ez free file Interest Payment on Lost Equity Portion of Settlement Payment. 1040 ez free file    You must include any interest on the lost equity portion of your settlement payment in your income. 1040 ez free file Itemized Deductions To figure your taxable income, you must subtract either your standard deduction or your itemized deductions from adjusted gross income. 1040 ez free file For information on the standard deduction, see Publication 501. 1040 ez free file Itemized deductions are figured on Schedule A (Form 1040). 1040 ez free file This chapter discusses miscellaneous itemized deductions of particular interest to members of the Armed Forces. 1040 ez free file For information on other itemized deductions, see the publications listed below. 1040 ez free file Publication 502, Medical and Dental Expenses. 1040 ez free file Publication 526, Charitable Contributions. 1040 ez free file Publication 547, Casualties, Disasters, and Thefts. 1040 ez free file Publication 550, Investment Income and Expenses. 1040 ez free file You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. 1040 ez free file For information on deductions that are not subject to the 2% limit, see Publication 529. 1040 ez free file Employee Business Expenses Deductible employee business expenses generally are miscellaneous itemized deductions subject to the 2% limit. 1040 ez free file Certain employee business expenses are deductible as adjustments to income. 1040 ez free file For information on many employee business expenses, see Publication 463. 1040 ez free file Generally, you must file Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses, to claim these expenses. 1040 ez free file You do not have to file Form 2106 or Form 2106-EZ if you are claiming only unreimbursed expenses for uniforms, professional society dues, and work-related educational expenses (all discussed later). 1040 ez free file You can deduct these expenses directly on Schedule A (Form 1040). 1040 ez free file Reimbursement. 1040 ez free file   Generally, to receive advances, reimbursements, or other allowances from the government, you must adequately account for your expenses and return any excess reimbursement. 1040 ez free file Your reimbursed expenses are not deductible. 1040 ez free file   If your expenses are more than your reimbursement, the excess expenses are deductible (subject to the 2% limit) if you can prove them. 1040 ez free file You must file Form 2106 to report these expenses. 1040 ez free file   You can use the shorter Form 2106-EZ if you meet all three of the following conditions. 1040 ez free file You are an employee deducting expenses related to your job. 1040 ez free file You were not reimbursed by your employer for your expenses. 1040 ez free file (Amounts included in box 1 of Form W-2 are not considered reimbursements. 1040 ez free file ) If you claim car expenses, you use the standard mileage rate. 1040 ez free file    For 2013, the standard mileage rate is 56. 1040 ez free file 5 cents a mile for all business miles driven. 1040 ez free file This rate is adjusted periodically. 1040 ez free file Travel Expenses You can deduct unreimbursed travel expenses only if they are incurred while you are traveling away from home. 1040 ez free file If you are a member of the U. 1040 ez free file S. 1040 ez free file Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. 1040 ez free file You cannot deduct your expenses for meals and lodging while at your permanent duty station. 1040 ez free file You cannot deduct these expenses even if you have to maintain a home in the United States for your family members who are not allowed to accompany you overseas. 1040 ez free file A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a home aboard ship for travel expense purposes. 1040 ez free file To be deductible, your travel expenses must be work related. 1040 ez free file You cannot deduct any expenses for personal travel, such as visits to family while on furlough, leave, or liberty. 1040 ez free file Away from home. 1040 ez free file   Home is your permanent duty station (which can be a ship or base), regardless of where you or your family live. 1040 ez free file You are away from home if you are away from your permanent duty station substantially longer than an ordinary day's work and you need to get sleep or rest to meet the demands of your work while away from home. 1040 ez free file   Examples of deductible travel expenses include: Expenses for business-related meals (generally limited to 50% of your unreimbursed cost), lodging, taxicabs, business telephone calls, tips, laundry, and dry cleaning while you are away from home on temporary duty or temporary additional duty, and Expenses of carrying out official business while on “No Cost” orders. 1040 ez free file    You cannot deduct any expenses for travel away from home if the temporary assignment in a single location is realistically expected to last (and does in fact last) for more than 1 year. 1040 ez free file This rule may not apply if you are participating in a federal crime investigation or prosecution. 1040 ez free file For more information, see Publication 463 and the Form 2106 instructions. 1040 ez free file Transportation Expenses These expenses include the ordinary and necessary costs of: Getting from one workplace to another when you are not away from home, Going to a business meeting away from your regular workplace, and Getting from your home to a temporary workplace when you have a regular place of work. 1040 ez free file These expenses include the costs of transportation by air, bus, rail, taxi, and driving and maintaining your car. 1040 ez free file Transportation expenses incurred while traveling away from home are included with your travel expenses, discussed earlier. 1040 ez free file However, if you use your car while traveling away from home overnight, see the rules in chapter 4 of Publication 463 to figure your car expense deduction. 1040 ez free file If you must go from one workplace to another while on duty (for example, as a courier or to attend meetings) without being away from home, your unreimbursed transportation expenses are deductible. 1040 ez free file However, the expenses of getting to and from your regular place of work (commuting) are not deductible. 1040 ez free file Temporary work location. 1040 ez free file   If you have one or more regular places of business away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location. 1040 ez free file   Generally, if your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary. 1040 ez free file   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. 1040 ez free file If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. 1040 ez free file    If you do not have a regular place of business, but you ordinarily work in the metropolitan area where you live, you can deduct daily transportation expenses between your home and a temporary work site outside your metropolitan area. 1040 ez free file However, you cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. 1040 ez free file These are nondeductible commuting costs. 1040 ez free file Armed Forces reservists. 1040 ez free file   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. 1040 ez free file You can deduct the expense of getting from one workplace to the other. 1040 ez free file You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. 1040 ez free file In this case, your transportation generally is a nondeductible commuting expense. 1040 ez free file However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. 1040 ez free file   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. 1040 ez free file If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. 1040 ez free file See Armed Forces Reservists under Adjustments to Income, earlier. 1040 ez free file Uniforms You usually cannot deduct the expenses for uniform cost and upkeep. 1040 ez free file Generally, you must wear uniforms when on duty and you are allowed to wear them when off duty. 1040 ez free file If military regulations prohibit you from wearing certain uniforms when off duty, you can deduct the cost and upkeep of the uniforms, but you must reduce your expenses by any allowance or reimbursement you receive. 1040 ez free file Unreimbursed expenses for the cost and upkeep of the following articles are deductible. 1040 ez free file Military battle dress uniforms and utility uniforms that you cannot wear when off duty. 1040 ez free file Articles not replacing regular clothing, including insignia of rank, corps devices, epaulets, aiguillettes, and swords. 1040 ez free file Reservists' uniforms if you can wear the uniform only while performing duties as a reservist. 1040 ez free file Professional Dues You can deduct unreimbursed dues paid to professional societies directly related to your military position. 1040 ez free file However, you cannot deduct amounts paid to an officers' club or a noncommissioned officers' club. 1040 ez free file Example. 1040 ez free file Lieutenant Margaret Allen, an electrical engineer at Maxwell Air Force Base, can deduct professional dues paid to the American Society of Electrical Engineers. 1040 ez free file Educational Expenses You can deduct the unreimbursed costs of qualifying work-related education. 1040 ez free file This is education that meets at least one of the following two tests. 1040 ez free file The education is required by your employer or the law to keep your present salary, status, or job. 1040 ez free file The required education must serve a bona fide business purpose of your employer. 1040 ez free file The education maintains or improves skills needed in your present work. 1040 ez free file However, even if the education meets one or both of the above tests, it is not qualifying education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. 1040 ez free file You can deduct the expenses for qualifying work-related education even if the education could lead to a degree. 1040 ez free file Example 1. 1040 ez free file Lieutenant Colonel Mason has a degree in financial management and is in charge of base finances at her post of duty. 1040 ez free file She took an advanced finance course. 1040 ez free file She already meets the minimum qualifications for her job. 1040 ez free file By taking the course, she is improving skills in her current position. 1040 ez free file The course does not qualify her for a new trade or business. 1040 ez free file She can deduct educational expenses that are more than the educational allowance she received. 1040 ez free file Example 2. 1040 ez free file Major Williams worked in the military base legal office as a legal intern. 1040 ez free file He was placed in excess leave status by his employer to attend law school. 1040 ez free file He paid all his educational expenses and was not reimbursed. 1040 ez free file After obtaining his law degree, he passed the state bar exam and worked as a judge advocate. 1040 ez free file His educational expenses are not deductible because the law degree qualified him for a new trade or business, even though the education maintained and improved his skills in his work. 1040 ez free file Travel to obtain education. 1040 ez free file   If your work-related education qualifies, you can deduct the costs of travel, including meals (subject to the 50% limit), and lodging, if the main purpose of the trip is to obtain the education. 1040 ez free file   You cannot deduct the cost of travel that is itself a form of education, even if it is directly related to your duties in your work or business. 1040 ez free file Transportation for education. 1040 ez free file   If your work-related education qualifies for a deduction, you can deduct the costs of transportation to obtain that education. 1040 ez free file However, you cannot deduct the cost of services provided in kind, such as base-provided transportation to or from class. 1040 ez free file Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. 1040 ez free file   If you need more information on educational expenses, see Publication 970. 1040 ez free file Repayments If you had to repay to your employer an amount that you included in your income in an earlier year, you may be able to deduct the repaid amount from your income for the year in which you repaid it. 1040 ez free file Repayment of $3,000 or less. 1040 ez free file   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. 1040 ez free file If you reported it as wages, deduct it as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. 1040 ez free file Repayment over $3,000. 1040 ez free file   If the amount you repaid was more than $3,000, see Repayments in Publication 525. 1040 ez free file Credits After you have figured your taxable income and tax liability, you can determine if you are entitled to any tax credits. 1040 ez free file This publication discusses the first-time homebuyer credit, child tax credit, earned income credit, and credit for excess social security tax withheld. 1040 ez free file For information on other credits, see your tax form instructions. 1040 ez free file First-Time Homebuyer Credit The first-time homebuyer credit is not available for homes purchased after 2011. 1040 ez free file In 2011, this credit had already expired for most taxpayers, however, certain members of the uniformed services and Foreign Service and certain employees of the intelligence community could claim the credit for homes purchased in 2011. 1040 ez free file If you bought the home (and claimed the credit) after 2008, you generally must repay the credit if you dispose of the home or the home stops being your main home within the 36-month period beginning on the purchase date. 1040 ez free file If the home continues to be your main home for at least 36 months beginning on the purchase date, you do not have to repay any of the credit. 1040 ez free file If you bought your home in 2008, you generally must repay the credit over a 15-year period in 15 equal installments. 1040 ez free file For more information, see Form 5405, Repayment of the First-Time Homebuyer Credit, and its instructions. 1040 ez free file Child Tax Credit The child tax credit is a credit that may reduce your tax by as much as $1,000 for each of your qualifying children. 1040 ez free file The additional child tax credit is a credit you may be able to take if you are not able to claim the full amount of the child tax credit. 1040 ez free file The child tax credit is not the same as the credit for child and dependent care expenses. 1040 ez free file See Publication 503 for information on the credit for child and dependent care expenses. 1040 ez free file Qualifying Child A qualifying child for purposes of the child tax credit is a child who: Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew), Was under age 17 at the end of 2013, Did not provide over half of his or her own support for 2013, Lived with you for more than half of 2013 (see Exceptions to time lived with you, later), Is claimed as a dependent on your return, Does not file a joint return for the year (or files it only as a claim for refund), and Was a U. 1040 ez free file S. 1040 ez free file citizen, a U. 1040 ez free file S. 1040 ez free file national, or a U. 1040 ez free file S. 1040 ez free file resident alien. 1040 ez free file If the child was adopted, see Adopted child . 1040 ez free file For each qualifying child you must check the box on Form 1040 or Form 1040A, line 6c, column (4). 1040 ez free file Exceptions to time lived with you. 1040 ez free file   A child is considered to have lived with you for all of 2013 if the child was born or died in 2013 and your home was this child's home for the entire time he or she was alive. 1040 ez free file Temporary absences by you or the child for special circumstances, such as school, vacation, business, medical care, military service, or detention in a juvenile facility, count as time the child lived with you. 1040 ez free file   There are also exceptions for kidnapped children and children of divorced or separated parents. 1040 ez free file For details, see Publication 501. 1040 ez free file Qualifying child of more than one person. 1040 ez free file   A special rule applies if your qualifying child is the qualifying child of more than one person. 1040 ez free file For details, see Publication 501. 1040 ez free file Adopted child. 1040 ez free file   An adopted child is always treated as your own child. 1040 ez free file An adopted child includes a child lawfully placed with you for legal adoption. 1040 ez free file   If you are a U. 1040 ez free file S. 1040 ez free file citizen or U. 1040 ez free file S. 1040 ez free file national and your adopted child lived with you as a member of your household all year, that child meets condition (7) above to be a qualifying child for the child tax credit. 1040 ez free file Amount of Credit The maximum amount you can claim for the credit is $1,000 for each qualifying child. 1040 ez free file Limits on the credit. 1040 ez free file   You must reduce your child tax credit if either (1) or (2), below, applies. 1040 ez free file The amount on Form 1040, line 46, or Form 1040A, line 28, is less than the credit. 1040 ez free file If the amount is zero, you cannot take this credit because there is no tax to reduce. 1040 ez free file However, you may be able to take the additional child tax credit. 1040 ez free file See Additional Child Tax Credit , later. 1040 ez free file Your modified adjusted gross income (AGI) is more than the amount shown below for your filing status. 1040 ez free file Married filing jointly — $110,000. 1040 ez free file Single, head of household,  or qualifying widow(er) — $75,000. 1040 ez free file Married filing separately — $55,000. 1040 ez free file Modified AGI. 1040 ez free file   For purposes of the child tax credit, your modified AGI is the amount on Form 1040, line 38, or Form 1040A, line 22, plus the following amounts that may apply to you. 1040 ez free file Any amount excluded from income because of the exclusion of income from Puerto Rico. 1040 ez free file Any amount on line 45 or line 50 of Form 2555, Foreign Earned Income. 1040 ez free file Any amount on line 18 of Form 2555-EZ, Foreign Earned Income Exclusion. 1040 ez free file Any amount on line 15 of Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa. 1040 ez free file   If you do not have any of the above, your modified AGI is the same as your AGI. 1040 ez free file Claiming the Credit To claim the child tax credit, you must file Form 1040 or Form 1040A. 1040 ez free file For more information on the child tax credit, see the instructions for Form 1040 or Form 1040A. 1040 ez free file Also attach Schedule 8812, Child Tax Credit, if required. 1040 ez free file Additional Child Tax Credit This credit is for certain individuals who get less than the full amount of the child tax credit. 1040 ez free file The additional child tax credit may give you a refund even if you do not owe any tax. 1040 ez free file For more information, see the instructions for Form 1040 or Form 1040A, and Schedule 8812. 1040 ez free file Earned Income Credit The earned income credit (EIC) is a cr