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

1040x 2012 Form

2011 Ez 1040 FormHow To File An Amended Tax Return1040 Ez State Tax FormStatetaxesFederal Income Tax Forms 1040ez1040ez Forms 2014Military Tax CreditsFile 2011 Tax Return Free2009 Federal Tax FormsFree E File Irs1040x Tax FormsFiling 2010 Taxes Late OnlineMichigan 1040ez 2013File A 1040ez OnlinePrior Year Tax ReturnAmend Federal Tax Return 2011Amend 1040Free Tax EstimatorIncome Taxes FreeFree E File 2011Efile State TaxesCan I File A 1040x OnlineFile An Extension On My TaxesFederal Tax Return 1040ezTurbo Tax 2005Amended 1040x InstructionsFree Income Tax FilingEfile Free Federal And StateHow To Amend Federal Tax Return 20122012 Irs Form 1040ezTurbotax Free 1040ez1040x Amended Tax FormDownload Tax Forms 20111040ez Tax ReturnHow Do I Amend My 2012 TaxesFiling State TaxHow To Ammend A Federal Tax ReturnFile Taxes Online Free 20111040x Online Free2010 Ez Tax Form

1040x 2012 Form

1040x 2012 form 4. 1040x 2012 form   Tax Withholding and Estimated Tax Table of Contents What's New for 2014 Reminders Introduction Useful Items - You may want to see: Tax Withholding for 2014Salaries and Wages Tips Taxable Fringe Benefits Sick Pay Pensions and Annuities Gambling Winnings Unemployment Compensation Federal Payments Backup Withholding Estimated Tax for 2014Who Does Not Have To Pay Estimated Tax Who Must Pay Estimated Tax How To Figure Estimated Tax When To Pay Estimated Tax How To Figure Each Payment How To Pay Estimated Tax Credit for Withholding and Estimated Tax for 2013Withholding Estimated Tax Underpayment Penalty for 2013 What's New for 2014 Tax law changes for 2014. 1040x 2012 form  When you figure how much income tax you want withheld from your pay and when you figure your estimated tax, consider tax law changes effective in 2014. 1040x 2012 form For more information, see Publication 505. 1040x 2012 form Reminders Estimated tax safe harbor for higher income taxpayers. 1040x 2012 form  If your 2013 adjusted gross income was more than $150,000 ($75,000 if you are married filing a separate return), you must pay the smaller of 90% of your expected tax for 2014 or 110% of the tax shown on your 2013 return to avoid an estimated tax penalty. 1040x 2012 form Introduction This chapter discusses how to pay your tax as you earn or receive income during the year. 1040x 2012 form In general, the federal income tax is a pay-as-you-go tax. 1040x 2012 form There are two ways to pay as you go. 1040x 2012 form Withholding. 1040x 2012 form If you are an employee, your employer probably withholds income tax from your pay. 1040x 2012 form Tax also may be withheld from certain other income, such as pensions, bonuses, commissions, and gambling winnings. 1040x 2012 form The amount withheld is paid to the IRS in your name. 1040x 2012 form Estimated tax. 1040x 2012 form If you do not pay your tax through withholding, or do not pay enough tax that way, you may have to pay estimated tax. 1040x 2012 form People who are in business for themselves generally will have to pay their tax this way. 1040x 2012 form Also, you may have to pay estimated tax if you receive income such as dividends, interest, capital gains, rent, and royalties. 1040x 2012 form Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well. 1040x 2012 form This chapter explains these methods. 1040x 2012 form In addition, it also explains the following. 1040x 2012 form Credit for withholding and estimated tax. 1040x 2012 form When you file your 2013 income tax return, take credit for all the income tax withheld from your salary, wages, pensions, etc. 1040x 2012 form , and for the estimated tax you paid for 2013. 1040x 2012 form Also take credit for any excess social security or railroad retirement tax withheld (discussed in chapter 37). 1040x 2012 form Underpayment penalty. 1040x 2012 form If you did not pay enough tax during the year, either through withholding or by making estimated tax payments, you may have to pay a penalty. 1040x 2012 form In most cases, the IRS can figure this penalty for you. 1040x 2012 form See Underpayment Penalty for 2013 at the end of this chapter. 1040x 2012 form Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) W-4 Employee's Withholding Allowance Certificate W-4P Withholding Certificate for Pension or Annuity Payments W-4S Request for Federal Income Tax Withholding From Sick Pay W-4V Voluntary Withholding Request 1040-ES Estimated Tax for Individuals 2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts 2210-F Underpayment of Estimated Tax by Farmers and Fishermen Tax Withholding for 2014 This section discusses income tax withholding on: Salaries and wages, Tips, Taxable fringe benefits, Sick pay, Pensions and annuities, Gambling winnings, Unemployment compensation, and Certain federal payments. 1040x 2012 form This section explains the rules for withholding tax from each of these types of income. 1040x 2012 form This section also covers backup withholding on interest, dividends, and other payments. 1040x 2012 form Salaries and Wages Income tax is withheld from the pay of most employees. 1040x 2012 form Your pay includes your regular pay, bonuses, commissions, and vacation allowances. 1040x 2012 form It also includes reimbursements and other expense allowances paid under a nonaccountable plan. 1040x 2012 form See Supplemental Wages , later, for more information about reimbursements and allowances paid under a nonaccountable plan. 1040x 2012 form If your income is low enough that you will not have to pay income tax for the year, you may be exempt from withholding. 1040x 2012 form This is explained under Exemption From Withholding , later. 1040x 2012 form You can ask your employer to withhold income tax from noncash wages and other wages not subject to withholding. 1040x 2012 form If your employer does not agree to withhold tax, or if not enough is withheld, you may have to pay estimated tax, as discussed later under Estimated Tax for 2014 . 1040x 2012 form Military retirees. 1040x 2012 form   Military retirement pay is treated in the same manner as regular pay for income tax withholding purposes, even though it is treated as a pension or annuity for other tax purposes. 1040x 2012 form Household workers. 1040x 2012 form   If you are a household worker, you can ask your employer to withhold income tax from your pay. 1040x 2012 form A household worker is an employee who performs household work in a private home, local college club, or local fraternity or sorority chapter. 1040x 2012 form   Tax is withheld only if you want it withheld and your employer agrees to withhold it. 1040x 2012 form If you do not have enough income tax withheld, you may have to pay estimated tax, as discussed later under Estimated Tax for 2014 . 1040x 2012 form Farmworkers. 1040x 2012 form   Generally, income tax is withheld from your cash wages for work on a farm unless your employer does both of these: Pays you cash wages of less than $150 during the year, and Has expenditures for agricultural labor totaling less than $2,500 during the year. 1040x 2012 form Differential wage payments. 1040x 2012 form    When employees are on leave from employment for military duty, some employers make up the difference between the military pay and civilian pay. 1040x 2012 form Payments to an employee who is on active duty for a period of more than 30 days will be subject to income tax withholding, but not subject to social security or Medicare taxes. 1040x 2012 form The wages and withholding will be reported on Form W-2, Wage and Tax Statement. 1040x 2012 form   The credit employers can claim for differential wages paid to activated military reservists is scheduled to expire for wages paid after December 31, 2013. 1040x 2012 form Determining Amount of Tax Withheld Using Form W-4 The amount of income tax your employer withholds from your regular pay depends on two things. 1040x 2012 form The amount you earn in each payroll period. 1040x 2012 form The information you give your employer on Form W-4. 1040x 2012 form Form W-4 includes four types of information that your employer will use to figure your withholding. 1040x 2012 form Whether to withhold at the single rate or at the lower married rate. 1040x 2012 form How many withholding allowances you claim (each allowance reduces the amount withheld). 1040x 2012 form Whether you want an additional amount withheld. 1040x 2012 form Whether you are claiming an exemption from withholding in 2014. 1040x 2012 form See Exemption From Withholding , later. 1040x 2012 form Note. 1040x 2012 form You must specify a filing status and a number of withholding allowances on Form W-4. 1040x 2012 form You cannot specify only a dollar amount of withholding. 1040x 2012 form New Job When you start a new job, you must fill out Form W-4 and give it to your employer. 1040x 2012 form Your employer should have copies of the form. 1040x 2012 form If you need to change the information later, you must fill out a new form. 1040x 2012 form If you work only part of the year (for example, you start working after the beginning of the year), too much tax may be withheld. 1040x 2012 form You may be able to avoid overwithholding if your employer agrees to use the part-year method. 1040x 2012 form See Part-Year Method in chapter 1 of Publication 505 for more information. 1040x 2012 form Employee also receiving pension income. 1040x 2012 form   If you receive pension or annuity income and begin a new job, you will need to file Form W-4 with your new employer. 1040x 2012 form However, you can choose to split your withholding allowances between your pension and job in any manner. 1040x 2012 form Changing Your Withholding During the year changes may occur to your marital status, exemptions, adjustments, deductions, or credits you expect to claim on your tax return. 1040x 2012 form When this happens, you may need to give your employer a new Form W-4 to change your withholding status or your number of allowances. 1040x 2012 form If the changes reduce the number of allowances you are claiming or changes your marital status from married to single, you must give your employer a new Form W-4 within 10 days. 1040x 2012 form Generally, you can submit a new Form W-4 whenever you wish to change the number of your withholding allowances for any other reason. 1040x 2012 form Changing your withholding for 2015. 1040x 2012 form   If events in 2014 will decrease the number of your withholding allowances for 2015, you must give your employer a new Form W-4 by December 1, 2014. 1040x 2012 form If the event occurs in December 2014, submit a new Form W-4 within 10 days. 1040x 2012 form Checking Your Withholding After you have given your employer a Form W-4, you can check to see whether the amount of tax withheld from your pay is too little or too much. 1040x 2012 form If too much or too little tax is being withheld, you should give your employer a new Form W-4 to change your withholding. 1040x 2012 form You should try to have your withholding match your actual tax liability. 1040x 2012 form If not enough tax is withheld, you will owe tax at the end of the year and may have to pay interest and a penalty. 1040x 2012 form If too much tax is withheld, you will lose the use of that money until you get your refund. 1040x 2012 form Always check your withholding if there are personal or financial changes in your life or changes in the law that might change your tax liability. 1040x 2012 form Note. 1040x 2012 form You cannot give your employer a payment to cover withholding on salaries and wages for past pay periods or a payment for estimated tax. 1040x 2012 form Completing Form W-4 and Worksheets Form W-4 has worksheets to help you figure how many withholding allowances you can claim. 1040x 2012 form The worksheets are for your own records. 1040x 2012 form Do not give them to your employer. 1040x 2012 form Multiple jobs. 1040x 2012 form   If you have income from more than one job at the same time, complete only one set of Form W-4 worksheets. 1040x 2012 form Then split your allowances between the Forms W-4 for each job. 1040x 2012 form You cannot claim the same allowances with more than one employer at the same time. 1040x 2012 form You can claim all your allowances with one employer and none with the other(s), or divide them any other way. 1040x 2012 form Married individuals. 1040x 2012 form   If both you and your spouse are employed and expect to file a joint return, figure your withholding allowances using your combined income, adjustments, deductions, exemptions, and credits. 1040x 2012 form Use only one set of worksheets. 1040x 2012 form You can divide your total allowances any way, but you cannot claim an allowance that your spouse also claims. 1040x 2012 form   If you and your spouse expect to file separate returns, figure your allowances using separate worksheets based on your own individual income, adjustments, deductions, exemptions, and credits. 1040x 2012 form Alternative method of figuring withholding allowances. 1040x 2012 form   You do not have to use the Form W-4 worksheets if you use a more accurate method of figuring the number of withholding allowances. 1040x 2012 form For more information, see Alternative method of figuring withholding allowances under Completing Form W-4 and Worksheets in Publication 505, chapter 1. 1040x 2012 form Personal Allowances Worksheet. 1040x 2012 form   Use the Personal Allowances Worksheet on Form W-4 to figure your withholding allowances based on exemptions and any special allowances that apply. 1040x 2012 form Deduction and Adjustments Worksheet. 1040x 2012 form   Use the Deduction and Adjustments Worksheet on Form W-4 if you plan to itemize your deductions, claim certain credits, or claim adjustments to the income on your 2014 tax return and you want to reduce your withholding. 1040x 2012 form Also, complete this worksheet when you have changes to these items to see if you need to change your withholding. 1040x 2012 form Two-Earners/Multiple Jobs Worksheet. 1040x 2012 form   You may need to complete the Two-Earners/Multiple Jobs Worksheet on Form W-4 if you have more than one job, a working spouse, or are also receiving a pension. 1040x 2012 form Also, on this worksheet you can add any additional withholding necessary to cover any amount you expect to owe other than income tax, such as self-employment tax. 1040x 2012 form Getting the Right Amount of Tax Withheld In most situations, the tax withheld from your pay will be close to the tax you figure on your return if you follow these two rules. 1040x 2012 form You accurately complete all the Form W-4 worksheets that apply to you. 1040x 2012 form You give your employer a new Form W-4 when changes occur. 1040x 2012 form But because the worksheets and withholding methods do not account for all possible situations, you may not be getting the right amount withheld. 1040x 2012 form This is most likely to happen in the following situations. 1040x 2012 form You are married and both you and your spouse work. 1040x 2012 form You have more than one job at a time. 1040x 2012 form You have nonwage income, such as interest, dividends, alimony, unemployment compensation, or self-employment income. 1040x 2012 form You will owe additional amounts with your return, such as self-employment tax. 1040x 2012 form Your withholding is based on obsolete Form W-4 information for a substantial part of the year. 1040x 2012 form Your earnings are more than the amount shown under Check your withholding in the instructions at the top of page 1 of Form W-4. 1040x 2012 form You work only part of the year. 1040x 2012 form You change the number of your withholding allowances during the year. 1040x 2012 form Cumulative wage method. 1040x 2012 form   If you change the number of your withholding allowances during the year, too much or too little tax may have been withheld for the period before you made the change. 1040x 2012 form You may be able to compensate for this if your employer agrees to use the cumulative wage withholding method for the rest of the year. 1040x 2012 form You must ask your employer in writing to use this method. 1040x 2012 form   To be eligible, you must have been paid for the same kind of payroll period (weekly, biweekly, etc. 1040x 2012 form ) since the beginning of the year. 1040x 2012 form Publication 505 To make sure you are getting the right amount of tax withheld, get Publication 505. 1040x 2012 form It will help you compare the total tax to be withheld during the year with the tax you can expect to figure on your return. 1040x 2012 form It also will help you determine how much, if any, additional withholding is needed each payday to avoid owing tax when you file your return. 1040x 2012 form If you do not have enough tax withheld, you may have to pay estimated tax, as explained under Estimated Tax for 2014 , later. 1040x 2012 form You can use the IRS Withholding Calculator at www. 1040x 2012 form irs. 1040x 2012 form gov/Individuals, instead of Publication 505 or the worksheets included with Form W-4, to determine whether you need to have your withholding increased or decreased. 1040x 2012 form Rules Your Employer Must Follow It may be helpful for you to know some of the withholding rules your employer must follow. 1040x 2012 form These rules can affect how to fill out your Form W-4 and how to handle problems that may arise. 1040x 2012 form New Form W-4. 1040x 2012 form   When you start a new job, your employer should have you complete a Form W-4. 1040x 2012 form Beginning with your first payday, your employer will use the information you give on the form to figure your withholding. 1040x 2012 form   If you later fill out a new Form W-4, your employer can put it into effect as soon as possible. 1040x 2012 form The deadline for putting it into effect is the start of the first payroll period ending 30 or more days after you turn it in. 1040x 2012 form No Form W-4. 1040x 2012 form   If you do not give your employer a completed Form W-4, your employer must withhold at the highest rate, as if you were single and claimed no withholding allowances. 1040x 2012 form Repaying withheld tax. 1040x 2012 form   If you find you are having too much tax withheld because you did not claim all the withholding allowances you are entitled to, you should give your employer a new Form W-4. 1040x 2012 form Your employer cannot repay any of the tax previously withheld. 1040x 2012 form Instead, claim the full amount withheld when you file your tax return. 1040x 2012 form   However, if your employer has withheld more than the correct amount of tax for the Form W-4 you have in effect, you do not have to fill out a new Form W-4 to have your withholding lowered to the correct amount. 1040x 2012 form Your employer can repay the amount that was withheld incorrectly. 1040x 2012 form If you are not repaid, your Form W-2 will reflect the full amount actually withheld, which you would claim when you file your tax return. 1040x 2012 form Exemption From Withholding If you claim exemption from withholding, your employer will not withhold federal income tax from your wages. 1040x 2012 form The exemption applies only to income tax, not to social security or Medicare tax. 1040x 2012 form You can claim exemption from withholding for 2014 only if both of the following situations apply. 1040x 2012 form For 2013 you had a right to a refund of all federal income tax withheld because you had no tax liability. 1040x 2012 form For 2014 you expect a refund of all federal income tax withheld because you expect to have no tax liability. 1040x 2012 form Students. 1040x 2012 form   If you are a student, you are not automatically exempt. 1040x 2012 form See chapter 1 to find out if you must file a return. 1040x 2012 form If you work only part time or only during the summer, you may qualify for exemption from withholding. 1040x 2012 form Age 65 or older or blind. 1040x 2012 form   If you are 65 or older or blind, use Worksheet 1-3 or 1-4 in chapter 1 of Publication 505, to help you decide if you qualify for exemption from withholding. 1040x 2012 form Do not use either worksheet if you will itemize deductions, claim exemptions for dependents, or claim tax credits on your 2014 return. 1040x 2012 form Instead, see Itemizing deductions or claiming exemptions or credits in chapter 1 of Publication 505. 1040x 2012 form Claiming exemption from withholding. 1040x 2012 form   To claim exemption, you must give your employer a Form W-4. 1040x 2012 form Do not complete lines 5 and 6. 1040x 2012 form Enter “Exempt” on line 7. 1040x 2012 form   If you claim exemption, but later your situation changes so that you will have to pay income tax after all, you must file a new Form W-4 within 10 days after the change. 1040x 2012 form If you claim exemption in 2014, but you expect to owe income tax for 2015, you must file a new Form W-4 by December 1, 2014. 1040x 2012 form   Your claim of exempt status may be reviewed by the IRS. 1040x 2012 form An exemption is good for only 1 year. 1040x 2012 form   You must give your employer a new Form W-4 by February 15 each year to continue your exemption. 1040x 2012 form Supplemental Wages Supplemental wages include bonuses, commissions, overtime pay, vacation allowances, certain sick pay, and expense allowances under certain plans. 1040x 2012 form The payer can figure withholding on supplemental wages using the same method used for your regular wages. 1040x 2012 form However, if these payments are identified separately from your regular wages, your employer or other payer of supplemental wages can withhold income tax from these wages at a flat rate. 1040x 2012 form Expense allowances. 1040x 2012 form   Reimbursements or other expense allowances paid by your employer under a nonaccountable plan are treated as supplemental wages. 1040x 2012 form   Reimbursements or other expense allowances paid under an accountable plan that are more than your proven expenses are treated as paid under a nonaccountable plan if you do not return the excess payments within a reasonable period of time. 1040x 2012 form   For more information about accountable and nonaccountable expense allowance plans, see Reimbursements in chapter 26. 1040x 2012 form Penalties You may have to pay a penalty of $500 if both of the following apply. 1040x 2012 form You make statements or claim withholding allowances on your Form W-4 that reduce the amount of tax withheld. 1040x 2012 form You have no reasonable basis for those statements or allowances at the time you prepare your Form W-4. 1040x 2012 form There is also a criminal penalty for willfully supplying false or fraudulent information on your Form W-4 or for willfully failing to supply information that would increase the amount withheld. 1040x 2012 form The penalty upon conviction can be either a fine of up to $1,000 or imprisonment for up to 1 year, or both. 1040x 2012 form These penalties will apply if you deliberately and knowingly falsify your Form W-4 in an attempt to reduce or eliminate the proper withholding of taxes. 1040x 2012 form A simple error or an honest mistake will not result in one of these penalties. 1040x 2012 form For example, a person who has tried to figure the number of withholding allowances correctly, but claims seven when the proper number is six, will not be charged a W-4 penalty. 1040x 2012 form Tips The tips you receive while working on your job are considered part of your pay. 1040x 2012 form You must include your tips on your tax return on the same line as your regular pay. 1040x 2012 form However, tax is not withheld directly from tip income, as it is from your regular pay. 1040x 2012 form Nevertheless, your employer will take into account the tips you report when figuring how much to withhold from your regular pay. 1040x 2012 form See chapter 6 for information on reporting your tips to your employer. 1040x 2012 form For more information on the withholding rules for tip income, see Publication 531, Reporting Tip Income. 1040x 2012 form How employer figures amount to withhold. 1040x 2012 form   The tips you report to your employer are counted as part of your income for the month you report them. 1040x 2012 form Your employer can figure your withholding in either of two ways. 1040x 2012 form By withholding at the regular rate on the sum of your pay plus your reported tips. 1040x 2012 form By withholding at the regular rate on your pay plus a percentage of your reported tips. 1040x 2012 form Not enough pay to cover taxes. 1040x 2012 form   If your regular pay is not enough for your employer to withhold all the tax (including income tax and social security and Medicare taxes (or the equivalent railroad retirement tax)) due on your pay plus your tips, you can give your employer money to cover the shortage. 1040x 2012 form See Giving your employer money for taxes in chapter 6. 1040x 2012 form Allocated tips. 1040x 2012 form   Your employer should not withhold income tax, Medicare tax, social security tax, or railroad retirement tax on any allocated tips. 1040x 2012 form Withholding is based only on your pay plus your reported tips. 1040x 2012 form Your employer should refund to you any incorrectly withheld tax. 1040x 2012 form See Allocated Tips in chapter 6 for more information. 1040x 2012 form Taxable Fringe Benefits The value of certain noncash fringe benefits you receive from your employer is considered part of your pay. 1040x 2012 form Your employer generally must withhold income tax on these benefits from your regular pay. 1040x 2012 form For information on fringe benefits, see Fringe Benefits under Employee Compensation in chapter 5. 1040x 2012 form Although the value of your personal use of an employer-provided car, truck, or other highway motor vehicle is taxable, your employer can choose not to withhold income tax on that amount. 1040x 2012 form Your employer must notify you if this choice is made. 1040x 2012 form For more information on withholding on taxable fringe benefits, see chapter 1 of Publication 505. 1040x 2012 form Sick Pay Sick pay is a payment to you to replace your regular wages while you are temporarily absent from work due to sickness or personal injury. 1040x 2012 form To qualify as sick pay, it must be paid under a plan to which your employer is a party. 1040x 2012 form If you receive sick pay from your employer or an agent of your employer, income tax must be withheld. 1040x 2012 form An agent who does not pay regular wages to you may choose to withhold income tax at a flat rate. 1040x 2012 form However, if you receive sick pay from a third party who is not acting as an agent of your employer, income tax will be withheld only if you choose to have it withheld. 1040x 2012 form See Form W-4S , later. 1040x 2012 form If you receive payments under a plan in which your employer does not participate (such as an accident or health plan where you paid all the premiums), the payments are not sick pay and usually are not taxable. 1040x 2012 form Union agreements. 1040x 2012 form   If you receive sick pay under a collective bargaining agreement between your union and your employer, the agreement may determine the amount of income tax withholding. 1040x 2012 form See your union representative or your employer for more information. 1040x 2012 form Form W-4S. 1040x 2012 form   If you choose to have income tax withheld from sick pay paid by a third party, such as an insurance company, you must fill out Form W-4S. 1040x 2012 form Its instructions contain a worksheet you can use to figure the amount you want withheld. 1040x 2012 form They also explain restrictions that may apply. 1040x 2012 form   Give the completed form to the payer of your sick pay. 1040x 2012 form The payer must withhold according to your directions on the form. 1040x 2012 form Estimated tax. 1040x 2012 form   If you do not request withholding on Form W-4S, or if you do not have enough tax withheld, you may have to make estimated tax payments. 1040x 2012 form If you do not pay enough tax, either through estimated tax or withholding, or a combination of both, you may have to pay a penalty. 1040x 2012 form See Underpayment Penalty for 2013 at the end of this chapter. 1040x 2012 form Pensions and Annuities Income tax usually will be withheld from your pension or annuity distributions unless you choose not to have it withheld. 1040x 2012 form This rule applies to distributions from: A traditional individual retirement arrangement (IRA); A life insurance company under an endowment, annuity, or life insurance contract; A pension, annuity, or profit-sharing plan; A stock bonus plan; and Any other plan that defers the time you receive compensation. 1040x 2012 form The amount withheld depends on whether you receive payments spread out over more than 1 year (periodic payments), within 1 year (nonperiodic payments), or as an eligible rollover distribution (ERD). 1040x 2012 form Income tax withholding from an ERD is mandatory. 1040x 2012 form More information. 1040x 2012 form   For more information on taxation of annuities and distributions (including ERDs) from qualified retirement plans, see chapter 10. 1040x 2012 form For information on IRAs, see chapter 17. 1040x 2012 form For more information on withholding on pensions and annuities, including a discussion of Form W-4P, see Pensions and Annuities in chapter 1 of Publication 505. 1040x 2012 form Gambling Winnings Income tax is withheld at a flat 25% rate from certain kinds of gambling winnings. 1040x 2012 form Gambling winnings of more than $5,000 from the following sources are subject to income tax withholding. 1040x 2012 form Any sweepstakes; wagering pool, including payments made to winners of poker tournaments; or lottery. 1040x 2012 form Any other wager, if the proceeds are at least 300 times the amount of the bet. 1040x 2012 form It does not matter whether your winnings are paid in cash, in property, or as an annuity. 1040x 2012 form Winnings not paid in cash are taken into account at their fair market value. 1040x 2012 form Exception. 1040x 2012 form   Gambling winnings from bingo, keno, and slot machines generally are not subject to income tax withholding. 1040x 2012 form However, you may need to provide the payer with a social security number to avoid withholding. 1040x 2012 form See Backup withholding on gambling winnings in chapter 1 of Publication 505. 1040x 2012 form If you receive gambling winnings not subject to withholding, you may need to pay estimated tax. 1040x 2012 form See Estimated Tax for 2014 , later. 1040x 2012 form 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. 1040x 2012 form See Underpayment Penalty for 2013 at the end of this chapter. 1040x 2012 form Form W-2G. 1040x 2012 form   If a payer withholds income tax from your gambling winnings, you should receive a Form W-2G, Certain Gambling Winnings, showing the amount you won and the amount withheld. 1040x 2012 form Report the tax withheld on line 62 of Form 1040. 1040x 2012 form Unemployment Compensation You can choose to have income tax withheld from unemployment compensation. 1040x 2012 form To make this choice, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer. 1040x 2012 form All unemployment compensation is taxable. 1040x 2012 form So, if you do not have income tax withheld, you may have to pay estimated tax. 1040x 2012 form See Estimated Tax for 2014 , later. 1040x 2012 form 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. 1040x 2012 form For information, see Underpayment Penalty for 2013 at the end of this chapter. 1040x 2012 form Federal Payments You can choose to have income tax withheld from certain federal payments you receive. 1040x 2012 form These payments are: Social security benefits, Tier 1 railroad retirement benefits, Commodity credit corporation loans you choose to include in your gross income, Payments under the Agricultural Act of 1949 (7 U. 1040x 2012 form S. 1040x 2012 form C. 1040x 2012 form 1421 et. 1040x 2012 form seq. 1040x 2012 form ), as amended, or title II of the Disaster Assistance Act of 1988, that are treated as insurance proceeds and that you receive because: Your crops were destroyed or damaged by drought, flood, or any other natural disaster, or You were unable to plant crops because of a natural disaster described in (a), and Any other payment under Federal law as determined by the Secretary. 1040x 2012 form To make this choice, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer. 1040x 2012 form If you do not choose to have income tax withheld, you may have to pay estimated tax. 1040x 2012 form See Estimated Tax for 2014 , later. 1040x 2012 form 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. 1040x 2012 form For information, see Underpayment Penalty for 2013 at the end of this chapter. 1040x 2012 form More information. 1040x 2012 form   For more information about the tax treatment of social security and railroad retirement benefits, see chapter 11. 1040x 2012 form Get Publication 225, Farmer's Tax Guide, for information about the tax treatment of commodity credit corporation loans or crop disaster payments. 1040x 2012 form Backup Withholding Banks or other businesses that pay you certain kinds of income must file an information return (Form 1099) with the IRS. 1040x 2012 form The information return shows how much you were paid during the year. 1040x 2012 form It also includes your name and taxpayer identification number (TIN). 1040x 2012 form TINs are explained in chapter 1 under Social Security Number (SSN) . 1040x 2012 form These payments generally are not subject to withholding. 1040x 2012 form However, “backup” withholding is required in certain situations. 1040x 2012 form Backup withholding can apply to most kinds of payments that are reported on Form 1099. 1040x 2012 form The payer must withhold at a flat 28% rate in the following situations. 1040x 2012 form You do not give the payer your TIN in the required manner. 1040x 2012 form The IRS notifies the payer that the TIN you gave is incorrect. 1040x 2012 form You are required, but fail, to certify that you are not subject to backup withholding. 1040x 2012 form The IRS notifies the payer to start withholding on interest or dividends because you have underreported interest or dividends on your income tax return. 1040x 2012 form The IRS will do this only after it has mailed you four notices over at least a 210-day period. 1040x 2012 form See Backup Withholding in chapter 1 of Publication 505 for more information. 1040x 2012 form Penalties. 1040x 2012 form   There are civil and criminal penalties for giving false information to avoid backup withholding. 1040x 2012 form The civil penalty is $500. 1040x 2012 form The criminal penalty, upon conviction, is a fine of up to $1,000 or imprisonment of up to 1 year, or both. 1040x 2012 form Estimated Tax for 2014 Estimated tax is the method used to pay tax on income that is not subject to withholding. 1040x 2012 form This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. 1040x 2012 form You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough. 1040x 2012 form Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. 1040x 2012 form 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. 1040x 2012 form If you do not pay enough by the due date of each payment period (see When To Pay Estimated Tax , later), you may be charged a penalty even if you are due a refund when you file your tax return. 1040x 2012 form For information on when the penalty applies, see Underpayment Penalty for 2013 at the end of this chapter. 1040x 2012 form Who Does Not Have To Pay Estimated Tax If you receive salaries or wages, you can avoid having to pay estimated tax by asking your employer to take more tax out of your earnings. 1040x 2012 form To do this, give a new Form W-4 to your employer. 1040x 2012 form See chapter 1 of Publication 505. 1040x 2012 form Estimated tax not required. 1040x 2012 form   You do not have to pay estimated tax for 2014 if you meet all three of the following conditions. 1040x 2012 form You had no tax liability for 2013. 1040x 2012 form You were a U. 1040x 2012 form S. 1040x 2012 form citizen or resident alien for the whole year. 1040x 2012 form Your 2013 tax year covered a 12-month period. 1040x 2012 form   You had no tax liability for 2013 if your total tax was zero or you did not have to file an income tax return. 1040x 2012 form For the definition of “total tax” for 2013, see Publication 505, chapter 2. 1040x 2012 form Who Must Pay Estimated Tax If you owe additional tax for 2013, you may have to pay estimated tax for 2014. 1040x 2012 form You can use the following general rule as a guide during the year to see if you will have enough withholding, or if you should increase your withholding or make estimated tax payments. 1040x 2012 form General rule. 1040x 2012 form   In most cases, you must pay estimated tax for 2014 if both of the following apply. 1040x 2012 form You expect to owe at least $1,000 in tax for 2014, after subtracting your withholding and refundable credits. 1040x 2012 form You expect your withholding plus your refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2014 tax return, or 100% of the tax shown on your 2013 tax return (but see Special rules for farmers, fishermen, and higher income taxpayers, later). 1040x 2012 form Your 2013 tax return must cover all 12 months. 1040x 2012 form    If the result from using the general rule above suggests that you will not have enough withholding, complete the 2014 Estimated Tax Worksheet in Publication 505 for a more accurate calculation. 1040x 2012 form Special rules for farmers, fishermen, and higher income taxpayers. 1040x 2012 form   If at least two-thirds of your gross income for tax year 2013 or 2014 is from farming or fishing, substitute 662/3% for 90% in (2a) under the General rule, earlier. 1040x 2012 form If your AGI for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing a separate return), substitute 110% for 100% in (2b) under General rule , earlier. 1040x 2012 form See Figure 4-A and Publication 505, chapter 2 for more information. 1040x 2012 form Figure 4-A. 1040x 2012 form Do You Have To Pay Estimated Tax? Please click here for the text description of the image. 1040x 2012 form Figure 4-A Do You Have To Pay Estimated Tax? Aliens. 1040x 2012 form   Resident and nonresident aliens also may have to pay estimated tax. 1040x 2012 form Resident aliens should follow the rules in this chapter unless noted otherwise. 1040x 2012 form Nonresident aliens should get Form 1040-ES (NR), U. 1040x 2012 form S. 1040x 2012 form Estimated Tax for Nonresident Alien Individuals. 1040x 2012 form   You are an alien if you are not a citizen or national of the United States. 1040x 2012 form You are a resident alien if you either have a green card or meet the substantial presence test. 1040x 2012 form For more information about the substantial presence test, see Publication 519, U. 1040x 2012 form S. 1040x 2012 form Tax Guide for Aliens. 1040x 2012 form Married taxpayers. 1040x 2012 form   If you qualify to make joint estimated tax payments, apply the rules discussed here to your joint estimated income. 1040x 2012 form   You and your spouse can make joint estimated tax payments even if you are not living together. 1040x 2012 form   However, you and your spouse cannot make joint estimated tax payments if:  You are legally separated under a decree of divorce or separate maintenance, You and your spouse have different tax years, or Either spouse is a nonresident alien (unless that spouse elected to be treated as a resident alien for tax purposes (see chapter 1 of Publication 519)). 1040x 2012 form   If you do not qualify to make joint estimated tax payments, apply these rules to your separate estimated income. 1040x 2012 form Making joint or separate estimated tax payments will not affect your choice of filing a joint tax return or separate returns for 2014. 1040x 2012 form 2013 separate returns and 2014 joint return. 1040x 2012 form   If you plan to file a joint return with your spouse for 2014, but you filed separate returns for 2013, your 2013 tax is the total of the tax shown on your separate returns. 1040x 2012 form You filed a separate return if you filed as single, head of household, or married filing separately. 1040x 2012 form 2013 joint return and 2014 separate returns. 1040x 2012 form   If you plan to file a separate return for 2014 but you filed a joint return for 2013, your 2013 tax is your share of the tax on the joint return. 1040x 2012 form You file a separate return if you file as single, head of household, or married filing separately. 1040x 2012 form   To figure your share of the tax on the joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2013 using the same filing status as for 2014. 1040x 2012 form Then multiply the tax on the joint return by the following fraction. 1040x 2012 form     The tax you would have paid had you filed a separate return   The total tax you and your spouse would have paid had you filed separate returns Example. 1040x 2012 form Joe and Heather filed a joint return for 2013 showing taxable income of $48,500 and a tax of $6,386. 1040x 2012 form Of the $48,500 taxable income, $40,100 was Joe's and the rest was Heather's. 1040x 2012 form For 2014, they plan to file married filing separately. 1040x 2012 form Joe figures his share of the tax on the 2013 joint return as follows. 1040x 2012 form   Tax on $40,100 based on a separate return $5,960     Tax on $8,400 based on a separate return 843     Total $6,803     Joe's percentage of total ($5,960 ÷ $6,803) 87. 1040x 2012 form 6%     Joe's share of tax on joint return  ($6,386 × 87. 1040x 2012 form 6%) $5,594   How To Figure Estimated Tax To figure your estimated tax, you must figure your expected adjusted gross income (AGI), taxable income, taxes, deductions, and credits for the year. 1040x 2012 form When figuring your 2014 estimated tax, it may be helpful to use your income, deductions, and credits for 2013 as a starting point. 1040x 2012 form Use your 2013 federal tax return as a guide. 1040x 2012 form You can use Form 1040-ES and Publication 505 to figure your estimated tax. 1040x 2012 form Nonresident aliens use Form 1040-ES (NR) and Publication 505 to figure estimated tax (see chapter 8 of Publication 519 for more information). 1040x 2012 form You must make adjustments both for changes in your own situation and for recent changes in the tax law. 1040x 2012 form For a discussion of these changes, visit IRS. 1040x 2012 form gov. 1040x 2012 form For more complete information on how to figure your estimated tax for 2014, see chapter 2 of Publication 505. 1040x 2012 form When To Pay Estimated Tax For estimated tax purposes, the tax year is divided into four payment periods. 1040x 2012 form Each period has a specific payment due date. 1040x 2012 form If you do not pay enough tax by the due date of each payment period, you may be charged a penalty even if you are due a refund when you file your income tax return. 1040x 2012 form The payment periods and due dates for estimated tax payments are shown next. 1040x 2012 form   For the period: Due date:*     Jan. 1040x 2012 form 1 – March 31 April 15     April 1 – May 31 June 16     June 1 – August 31 Sept. 1040x 2012 form 15     Sept. 1040x 2012 form 1– Dec. 1040x 2012 form 31 Jan. 1040x 2012 form 15, next year     *See Saturday, Sunday, holiday rule and January payment . 1040x 2012 form Saturday, Sunday, holiday rule. 1040x 2012 form   If the due date for an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that is not a Saturday, Sunday, or legal holiday. 1040x 2012 form January payment. 1040x 2012 form   If you file your 2014 Form 1040 or Form 1040A by January 31, 2015, and pay the rest of the tax you owe, you do not need to make the payment due on January 15, 2015. 1040x 2012 form Fiscal year taxpayers. 1040x 2012 form   If your tax year does not start on January 1, see the Form 1040-ES instructions for your payment due dates. 1040x 2012 form When To Start You do not have to make estimated tax payments until you have income on which you will owe income tax. 1040x 2012 form If you have income subject to estimated tax during the first payment period, you must make your first payment by the due date for the first payment period. 1040x 2012 form You can pay all your estimated tax at that time, or you can pay it in installments. 1040x 2012 form If you choose to pay in installments, make your first payment by the due date for the first payment period. 1040x 2012 form Make your remaining installment payments by the due dates for the later periods. 1040x 2012 form No income subject to estimated tax during first period. 1040x 2012 form    If you do not have income subject to estimated tax until a later payment period, you must make your first payment by the due date for that period. 1040x 2012 form You can pay your entire estimated tax by the due date for that period or you can pay it in installments by the due date for that period and the due dates for the remaining periods. 1040x 2012 form The following chart shows when to make installment payments. 1040x 2012 form If you first have income on which you must pay estimated tax: Make a payment  by:* Make later installments by:* Before April 1 April 15 June 16 Sept. 1040x 2012 form 15 Jan. 1040x 2012 form 15 next year April 1–May 31 June 16 Sept. 1040x 2012 form 15 Jan. 1040x 2012 form 15 next year June 1–Aug. 1040x 2012 form 31 Sept. 1040x 2012 form 15 Jan. 1040x 2012 form 15 next year After Aug. 1040x 2012 form 31 Jan. 1040x 2012 form 15 next year (None) *See Saturday, Sunday, holiday rule and January payment . 1040x 2012 form How much to pay to avoid a penalty. 1040x 2012 form   To determine how much you should pay by each payment due date, see How To Figure Each Payment, next. 1040x 2012 form How To Figure Each Payment You should pay enough estimated tax by the due date of each payment period to avoid a penalty for that period. 1040x 2012 form You can figure your required payment for each period by using either the regular installment method or the annualized income installment method. 1040x 2012 form These methods are described in chapter 2 of Publication 505. 1040x 2012 form If you do not pay enough during each payment period, you may be charged a penalty even if you are due a refund when you file your tax return. 1040x 2012 form If the earlier discussion of No income subject to estimated tax during first period or the later discussion of Change in estimated tax applies to you, you may benefit from reading Annualized Income Installment Method in chapter 2 of Publication 505 for information on how to avoid a penalty. 1040x 2012 form Underpayment penalty. 1040x 2012 form   Under the regular installment method, if your estimated tax payment for any period is less than one-fourth of your estimated tax, you may be charged a penalty for underpayment of estimated tax for that period when you file your tax return. 1040x 2012 form Under the annualized income installment method, your estimated tax payments vary with your income, but the amount required must be paid each period. 1040x 2012 form See chapter 4 of Publication 505 for more information. 1040x 2012 form Change in estimated tax. 1040x 2012 form   After you make an estimated tax payment, changes in your income, adjustments, deductions, credits, or exemptions may make it necessary for you to refigure your estimated tax. 1040x 2012 form Pay the unpaid balance of your amended estimated tax by the next payment due date after the change or in installments by that date and the due dates for the remaining payment periods. 1040x 2012 form Estimated Tax Payments Not Required You do not have to pay estimated tax if your withholding in each payment period is at least as much as: One-fourth of your required annual payment, or Your required annualized income installment for that period. 1040x 2012 form You also do not have to pay estimated tax if you will pay enough through withholding to keep the amount you owe with your return under $1,000. 1040x 2012 form How To Pay Estimated Tax There are several ways to pay estimated tax. 1040x 2012 form Credit an overpayment on your 2013 return to your 2014 estimated tax. 1040x 2012 form Pay by direct transfer from your bank account, or pay by credit or debit card using a pay-by-phone system or the Internet. 1040x 2012 form Send in your payment (check or money order) with a payment voucher from Form 1040-ES. 1040x 2012 form Credit an Overpayment If you show an overpayment of tax after completing your Form 1040 or Form 1040A for 2013, you can apply part or all of it to your estimated tax for 2014. 1040x 2012 form On line 75 of Form 1040, or line 44 of Form 1040A, enter the amount you want credited to your estimated tax rather than refunded. 1040x 2012 form Take the amount you have credited into account when figuring your estimated tax payments. 1040x 2012 form You cannot have any of the amount you credited to your estimated tax refunded to you until you file your tax return for the following year. 1040x 2012 form You also cannot use that overpayment in any other way. 1040x 2012 form Pay Online Paying online is convenient and secure and helps make sure we get your payments on time. 1040x 2012 form You can pay using either of the following electronic payment methods. 1040x 2012 form Direct transfer from your bank account. 1040x 2012 form Credit or debit card. 1040x 2012 form To pay your taxes online or for more information, go to www. 1040x 2012 form irs. 1040x 2012 form gov/e-pay. 1040x 2012 form Pay by Phone Paying by phone is another safe and secure method of paying electronically. 1040x 2012 form Use one of the following methods. 1040x 2012 form Direct transfer from your bank account. 1040x 2012 form Credit or debit card. 1040x 2012 form To pay by direct transfer from your bank account, call 1-800-555-4477 (English), 1-800-244-4829 (Espanol). 1040x 2012 form People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD can call 1-800-733-4829. 1040x 2012 form To pay using a credit or debit card, you can call one of the following service providers. 1040x 2012 form There is a convenience fee charged by these providers that varies by provider, card type, and payment amount. 1040x 2012 form WorldPay 1-888-9-PAY-TAXTM(1-888-972-9829) www. 1040x 2012 form payUSAtax. 1040x 2012 form com Official Payments Corporation 1-888-UPAY-TAXTM (1-888-872-9829) www. 1040x 2012 form officialpayments. 1040x 2012 form com Link2Gov Corporation 1-888-PAY-1040TM (1-888-729-1040) www. 1040x 2012 form PAY1040. 1040x 2012 form com For the latest details on how to pay by phone, go to www. 1040x 2012 form irs. 1040x 2012 form gov/e-pay. 1040x 2012 form Pay by Check or Money Order Using the Estimated Tax Payment Voucher Each payment of estimated tax by check or money order must be accompanied by a payment voucher from Form 1040-ES. 1040x 2012 form During 2013, if you: made at least one estimated tax payment but not by electronic means, did not use software or a paid preparer to prepare or file your return,  then you should receive a copy of the 2014 Form 1040-ES/V. 1040x 2012 form The enclosed payment vouchers will be preprinted with your name, address, and social security number. 1040x 2012 form Using the preprinted vouchers will speed processing, reduce the chance of error, and help save processing costs. 1040x 2012 form Use the window envelopes that came with your Form 1040-ES package. 1040x 2012 form If you use your own envelopes, make sure you mail your payment vouchers to the address shown in the Form 1040-ES instructions for the place where you live. 1040x 2012 form Note. 1040x 2012 form These criteria can change without notice. 1040x 2012 form If you do not receive a Form 1040-ES/V package and you are required to make an estimated tax payment, you should go to www. 1040x 2012 form irs. 1040x 2012 form gov and print a copy of Form 1040-ES which includes four blank payment vouchers. 1040x 2012 form Complete one of these and make your payment timely to avoid penalties for paying late. 1040x 2012 form Do not use the address shown in the Form 1040 or Form 1040A instructions for your estimated tax payments. 1040x 2012 form If you did not pay estimated tax last year, you can order Form 1040-ES from the IRS (see inside back cover of this publication) or download it from IRS. 1040x 2012 form gov. 1040x 2012 form Follow the instructions to make sure you use the vouchers correctly. 1040x 2012 form Joint estimated tax payments. 1040x 2012 form   If you file a joint return and are making joint estimated tax payments, enter the names and social security numbers on the payment voucher in the same order as they will appear on the joint return. 1040x 2012 form Change of address. 1040x 2012 form   You must notify the IRS if you are making estimated tax payments and you changed your address during the year. 1040x 2012 form Complete Form 8822, Change of Address, and mail it to the address shown in the instructions for that form. 1040x 2012 form Credit for Withholding and Estimated Tax for 2013 When you file your 2013 income tax return, take credit for all the income tax and excess social security or railroad retirement tax withheld from your salary, wages, pensions, etc. 1040x 2012 form Also take credit for the estimated tax you paid for 2013. 1040x 2012 form These credits are subtracted from your total tax. 1040x 2012 form Because these credits are refundable, you should file a return and claim these credits, even if you do not owe tax. 1040x 2012 form Two or more employers. 1040x 2012 form   If you had two or more employers in 2013 and were paid wages of more than $113,700, too much social security or tier 1 railroad retirement tax may have been withheld from your pay. 1040x 2012 form You may be able to claim the excess as a credit against your income tax when you file your return. 1040x 2012 form See Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld in chapter 37. 1040x 2012 form Withholding If you had income tax withheld during 2013, you should be sent a statement by January 31, 2014, showing your income and the tax withheld. 1040x 2012 form Depending on the source of your income, you should receive: Form W-2, Wage and Tax Statement, Form W-2G, Certain Gambling Winnings, or A form in the 1099 series. 1040x 2012 form Forms W-2 and W-2G. 1040x 2012 form   If you file a paper return, always file Form W-2 with your income tax return. 1040x 2012 form File Form W-2G with your return only if it shows any federal income tax withheld from your winnings. 1040x 2012 form   You should get at least two copies of each form. 1040x 2012 form If you file a paper return, attach one copy to the front of your federal income tax return. 1040x 2012 form Keep one copy for your records. 1040x 2012 form You also should receive copies to file with your state and local returns. 1040x 2012 form Form W-2 Your employer is required to provide or send Form W-2 to you no later than January 31, 2014. 1040x 2012 form You should receive a separate Form W-2 from each employer you worked for. 1040x 2012 form If you stopped working before the end of 2013, your employer could have given you your Form W-2 at any time after you stopped working. 1040x 2012 form However, your employer must provide or send it to you by January 31, 2014. 1040x 2012 form If you ask for the form, your employer must send it to you within 30 days after receiving your written request or within 30 days after your final wage payment, whichever is later. 1040x 2012 form If you have not received your Form W-2 by January 31, you should ask your employer for it. 1040x 2012 form If you do not receive it by February 15, call the IRS. 1040x 2012 form 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. 1040x 2012 form Include the federal income tax withheld (as shown in box 2 of Form W-2) on: Line 62 if you file Form 1040, Line 36 if you file Form 1040A, or Line 7 if you file Form 1040EZ. 1040x 2012 form In addition, Form W-2 is used to report any taxable sick pay you received and any income tax withheld from your sick pay. 1040x 2012 form Form W-2G If you had gambling winnings in 2013, the payer may have withheld income tax. 1040x 2012 form If tax was withheld, the payer will give you a Form W-2G showing the amount you won and the amount of tax withheld. 1040x 2012 form Report the amounts you won on line 21 of Form 1040. 1040x 2012 form Take credit for the tax withheld on line 62 of Form 1040. 1040x 2012 form If you had gambling winnings, you must use Form 1040; you cannot use Form 1040A or Form 1040EZ. 1040x 2012 form The 1099 Series Most forms in the 1099 series are not filed with your return. 1040x 2012 form These forms should be furnished to you by January 31, 2014 (or, for Forms 1099-B, 1099-S, and certain Forms 1099-MISC, by February 15, 2014). 1040x 2012 form Unless instructed to file any of these forms with your return, keep them for your records. 1040x 2012 form There are several different forms in this series, including: Form 1099-B, Proceeds From Broker and Barter Exchange Transactions; Form 1099-DIV, Dividends and Distributions; Form 1099-G, Certain Government Payments; Form 1099-INT, Interest Income; Form 1099-K, Payment Card and Third Party Network Transactions; Form 1099-MISC, Miscellaneous Income; Form 1099-OID, Original Issue Discount; Form 1099-PATR, Taxable Distributions Received from Cooperatives; Form 1099-Q, Payments From Qualified Education Programs; Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 1040x 2012 form ; Form 1099-S, Proceeds From Real Estate Transactions; Form RRB-1099, Payments by the Railroad Retirement Board. 1040x 2012 form If you received the types of income reported on some forms in the 1099 series, you may not be able to use Form 1040A or Form 1040EZ. 1040x 2012 form See the instructions to these forms for details. 1040x 2012 form Form 1099-R. 1040x 2012 form   Attach Form 1099-R to your paper return if box 4 shows federal income tax withheld. 1040x 2012 form Include the amount withheld in the total on line 62 of Form 1040 or line 36 of Form 1040A. 1040x 2012 form You cannot use Form 1040EZ if you received payments reported on Form 1099-R. 1040x 2012 form Backup withholding. 1040x 2012 form   If you were subject to backup withholding on income you received during 2013, include the amount withheld, as shown on your Form 1099, in the total on line 62 of Form 1040, line 36 of Form 1040A, or line 7 of Form 1040EZ. 1040x 2012 form Form Not Correct If you receive a form with incorrect information on it, you should ask the payer for a corrected form. 1040x 2012 form Call the telephone number or write to the address given for the payer on the form. 1040x 2012 form The corrected Form W-2G or Form 1099 you receive will have an “X” in the “CORRECTED” box at the top of the form. 1040x 2012 form A special form, Form W-2c, Corrected Wage and Tax Statement, is used to correct a Form W-2. 1040x 2012 form In certain situations, you will receive two forms in place of the original incorrect form. 1040x 2012 form This will happen when your taxpayer identification number is wrong or missing, your name and address are wrong, or you received the wrong type of form (for example, a Form 1099-DIV instead of a Form 1099-INT). 1040x 2012 form One new form you receive will be the same incorrect form or have the same incorrect information, but all money amounts will be zero. 1040x 2012 form This form will have an “X” in the “CORRECTED” box at the top of the form. 1040x 2012 form The second new form should have all the correct information, prepared as though it is the original (the “CORRECTED” box will not be checked). 1040x 2012 form Form Received After Filing If you file your return and you later receive a form for income that you did not include on your return, you should report the income and take credit for any income tax withheld by filing Form 1040X, Amended U. 1040x 2012 form S. 1040x 2012 form Individual Income Tax Return. 1040x 2012 form Separate Returns If you are married but file a separate return, you can take credit only for the tax withheld from your own income. 1040x 2012 form Do not include any amount withheld from your spouse's income. 1040x 2012 form However, different rules may apply if you live in a community property state. 1040x 2012 form Community property states are listed in chapter 2. 1040x 2012 form For more information on these rules, and some exceptions, see Publication 555, Community Property. 1040x 2012 form Fiscal Years If you file your tax return on the basis of a fiscal year (a 12-month period ending on the last day of any month except December), you must follow special rules to determine your credit for federal income tax withholding. 1040x 2012 form For a discussion of how to take credit for withholding on a fiscal year return, see Fiscal Years (FY) in chapter 3 of Publication 505. 1040x 2012 form Estimated Tax Take credit for all your estimated tax payments for 2013 on line 63 of Form 1040 or line 37 of Form 1040A. 1040x 2012 form Include any overpayment from 2012 that you had credited to your 2013 estimated tax. 1040x 2012 form You must use Form 1040 or Form 1040A if you paid estimated tax. 1040x 2012 form You cannot use Form 1040EZ. 1040x 2012 form Name changed. 1040x 2012 form   If you changed your name, and you made estimated tax payments using your old name, attach a brief statement to the front of your paper tax return indicating: When you made the payments, The amount of each payment, Your name when you made the payments, and Your social security number. 1040x 2012 form The statement should cover payments you made jointly with your spouse as well as any you made separately. 1040x 2012 form   Be sure to report the change to the Social Security Administration. 1040x 2012 form This prevents delays in processing your return and issuing any refunds. 1040x 2012 form Separate Returns If you and your spouse made separate estimated tax payments for 2013 and you file separate returns, you can take credit only for your own payments. 1040x 2012 form If you made joint estimated tax payments, you must decide how to divide the payments between your returns. 1040x 2012 form One of you can claim all of the estimated tax paid and the other none, or you can divide it in any other way you agree on. 1040x 2012 form If you cannot agree, you must divide the payments in proportion to each spouse's individual tax as shown on your separate returns for 2013. 1040x 2012 form Divorced Taxpayers If you made joint estimated tax payments for 2013, and you were divorced during the year, either you or your former spouse can claim all of the joint payments, or you each can claim part of them. 1040x 2012 form If you cannot agree on how to divide the payments, you must divide them in proportion to each spouse's individual tax as shown on your separate returns for 2013. 1040x 2012 form If you claim any of the joint payments on your tax return, enter your former spouse's social security number (SSN) in the space provided on the front of Form 1040 or Form 1040A. 1040x 2012 form If you divorced and remarried in 2013, enter your present spouse's SSN in that space and write your former spouse's SSN, followed by “DIV,” to the left of Form 1040, line 63, or Form 1040A, line 37. 1040x 2012 form Underpayment Penalty for 2013 If you did not pay enough tax, either through withholding or by making timely estimated tax payments, you will have an underpayment of estimated tax and you may have to pay a penalty. 1040x 2012 form Generally, you will not have to pay a penalty for 2013 if any of the following apply. 1040x 2012 form The total of your withholding and estimated tax payments was at least as much as your 2012 tax (or 110% of your 2012 tax if your AGI was more than $150,000, $75,000 if your 2013 filing status is married filing separately) and you paid all required estimated tax payments on time. 1040x 2012 form The tax balance due on your 2013 return is no more than 10% of your total 2013 tax, and you paid all required estimated tax payments on time. 1040x 2012 form Your total 2013 tax minus your withholding and refundable credits is less than $1,000. 1040x 2012 form You did not have a tax liability for 2012 and your 2012 tax year was 12 months, or You did not have any withholding taxes and your current year tax less any household employment taxes is less than $1,000. 1040x 2012 form See Publication 505, chapter 4, for a definition of “total tax” for 2012 and 2013. 1040x 2012 form Farmers and fishermen. 1040x 2012 form   Special rules apply if you are a farmer or fisherman. 1040x 2012 form See Farmers and Fishermen in chapter 4 of Publication 505 for more information. 1040x 2012 form IRS can figure the penalty for you. 1040x 2012 form   If you think you owe the penalty but you do not want to figure it yourself when you file your tax return, you may not have to. 1040x 2012 form Generally, the IRS will figure the penalty for you and send you a bill. 1040x 2012 form However, if you think you are able to lower or eliminate your penalty, you must complete Form 2210 or Form 2210-F and attach it to your paper return. 1040x 2012 form See chapter 4 of Publication 505. 1040x 2012 form Prev  Up  Next   Home   More Online Publications
Español

Government and Public Libraries

Find local public or state libraries, federal libraries and archives, grants for libraries, or ask a librarian for help.


Public Libraries

  • Find Your Local Public Library  – Public libraries lend books, movies, music, and more. They also offer computers, programs for all ages, and help finding the information you need.

State Libraries

Federal Libraries and Archives

  • Library of Congress  – The Library of Congress is the nation's oldest federal cultural institution, the research arm of Congress, and the largest library in the world. It is also home to the U.S. Copyright Office.
  • National Archives and Records Administration  – Research your family history, military records, or a variety of other topics. They are the nation’s record keeper and preserve documents with legal and historical value.
  • Presidential Libraries  – The Presidential Libraries are archives and museums that bring together the documents and artifacts of a President and his administration.
  • National Library of Medicine  – Find current and historical information about health conditions, clinical trials, drugs, and more from the world’s largest biomedical library.
  • National Agricultural Library  – Get information about animals, livestock, plants and crops, food, nutrition, and more.
  • National Library of Education  – They provide education information, federal education policy, and education research and statistics.
  • National Transportation Library  – Find statistics and other information about transportation at the federal, state, and local levels.
  • Federal Depository Libraries  – Federal government information is available for free public use in over 1,200 locations.
  • Federal Library Directory  – Find more federal libraries around the world.

Grants for Libraries

  • Search for Grants  – The Institute of Museum and Library Services offers grants to public libraries, state and local government libraries, archives, museums, and other institutions.

Back to Top

The 1040x 2012 Form

1040x 2012 form Publication 530 - Main Content Table of Contents What You Can and Cannot DeductHardest Hit Fund and Emergency Homeowners' Loan Programs Real Estate Taxes Sales Taxes Home Mortgage Interest Mortgage Insurance Premiums Mortgage Interest CreditFiguring the Credit BasisFiguring Your Basis Adjusted Basis Keeping Records How To Get Tax HelpLow Income Taxpayer Clinics What You Can and Cannot Deduct To deduct expenses of owning a home, you must file Form 1040, U. 1040x 2012 form S. 1040x 2012 form Individual Income Tax Return, and itemize your deductions on Schedule A (Form 1040). 1040x 2012 form If you itemize, you cannot take the standard deduction. 1040x 2012 form This section explains what expenses you can deduct as a homeowner. 1040x 2012 form It also points out expenses that you cannot deduct. 1040x 2012 form There are four primary discussions: real estate taxes, sales taxes, home mortgage interest, and mortgage insurance premiums. 1040x 2012 form Generally, your real estate taxes, home mortgage interest, and mortgage insurance premiums are included in your house payment. 1040x 2012 form Your house payment. 1040x 2012 form   If you took out a mortgage (loan) to finance the purchase of your home, you probably have to make monthly house payments. 1040x 2012 form Your house payment may include several costs of owning a home. 1040x 2012 form The only costs you can deduct are real estate taxes actually paid to the taxing authority, interest that qualifies as home mortgage interest, and mortgage insurance premiums. 1040x 2012 form These are discussed in more detail later. 1040x 2012 form   Some nondeductible expenses that may be included in your house payment include: Fire or homeowner's insurance premiums, and The amount applied to reduce the principal of the mortgage. 1040x 2012 form Minister's or military housing allowance. 1040x 2012 form   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you still can deduct your real estate taxes and your home mortgage interest. 1040x 2012 form You do not have to reduce your deductions by your nontaxable allowance. 1040x 2012 form For more information see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers, and Publication 3, Armed Forces' Tax Guide. 1040x 2012 form Nondeductible payments. 1040x 2012 form   You cannot deduct any of the following items. 1040x 2012 form Insurance (other than mortgage insurance premiums), including fire and comprehensive coverage, and title insurance. 1040x 2012 form Wages you pay for domestic help. 1040x 2012 form Depreciation. 1040x 2012 form The cost of utilities, such as gas, electricity, or water. 1040x 2012 form Most settlement costs. 1040x 2012 form See Settlement or closing costs under Cost as Basis, later, for more information. 1040x 2012 form Forfeited deposits, down payments, or earnest money. 1040x 2012 form Hardest Hit Fund and Emergency Homeowners' Loan Programs You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. 1040x 2012 form You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. 1040x 2012 form You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. 1040x 2012 form If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received), box 4 (mortgage insurance premiums) and box 5 (real property taxes). 1040x 2012 form However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. 1040x 2012 form Real Estate Taxes Most state and local governments charge an annual tax on the value of real property. 1040x 2012 form This is called a real estate tax. 1040x 2012 form You can deduct the tax if it is assessed uniformly at a like rate on all real property throughout the community. 1040x 2012 form The proceeds must be for general community or governmental purposes and not be a payment for a special privilege granted or service rendered to you. 1040x 2012 form Deductible Real Estate Taxes You can deduct real estate taxes imposed on you. 1040x 2012 form You must have paid them either at settlement or closing, or to a taxing authority (either directly or through an escrow account) during the year. 1040x 2012 form If you own a cooperative apartment, see Special Rules for Cooperatives , later. 1040x 2012 form Where to deduct real estate taxes. 1040x 2012 form   Enter the amount of your deductible real estate taxes on Schedule A (Form 1040), line 6. 1040x 2012 form Real estate taxes paid at settlement or closing. 1040x 2012 form   Real estate taxes are generally divided so that you and the seller each pay taxes for the part of the property tax year you owned the home. 1040x 2012 form Your share of these taxes is fully deductible if you itemize your deductions. 1040x 2012 form Division of real estate taxes. 1040x 2012 form   For federal income tax purposes, the seller is treated as paying the property taxes up to, but not including, the date of sale. 1040x 2012 form You (the buyer) are treated as paying the taxes beginning with the date of sale. 1040x 2012 form This applies regardless of the lien dates under local law. 1040x 2012 form Generally, this information is included on the settlement statement you get at closing. 1040x 2012 form   You and the seller each are considered to have paid your own share of the taxes, even if one or the other paid the entire amount. 1040x 2012 form You each can deduct your own share, if you itemize deductions, for the year the property is sold. 1040x 2012 form Example. 1040x 2012 form You bought your home on September 1. 1040x 2012 form The property tax year (the period to which the tax relates) in your area is the calendar year. 1040x 2012 form The tax for the year was $730 and was due and paid by the seller on August 15. 1040x 2012 form You owned your new home during the property tax year for 122 days (September 1 to December 31, including your date of purchase). 1040x 2012 form You figure your deduction for real estate taxes on your home as follows. 1040x 2012 form 1. 1040x 2012 form Enter the total real estate taxes for the real property tax year $730 2. 1040x 2012 form Enter the number of days in the property tax year that you owned the property 122 3. 1040x 2012 form Divide line 2 by 365 . 1040x 2012 form 3342 4. 1040x 2012 form Multiply line 1 by line 3. 1040x 2012 form This is your deduction. 1040x 2012 form Enter it on Schedule A (Form 1040), line 6 $244   You can deduct $244 on your return for the year if you itemize your deductions. 1040x 2012 form You are considered to have paid this amount and can deduct it on your return even if, under the contract, you did not have to reimburse the seller. 1040x 2012 form Delinquent taxes. 1040x 2012 form   Delinquent taxes are unpaid taxes that were imposed on the seller for an earlier tax year. 1040x 2012 form If you agree to pay delinquent taxes when you buy your home, you cannot deduct them. 1040x 2012 form You treat them as part of the cost of your home. 1040x 2012 form See Real estate taxes , later, under Basis. 1040x 2012 form Escrow accounts. 1040x 2012 form   Many monthly house payments include an amount placed in escrow (put in the care of a third party) for real estate taxes. 1040x 2012 form You may not be able to deduct the total you pay into the escrow account. 1040x 2012 form You can deduct only the real estate taxes that the lender actually paid from escrow to the taxing authority. 1040x 2012 form Your real estate tax bill will show this amount. 1040x 2012 form Refund or rebate of real estate taxes. 1040x 2012 form   If you receive a refund or rebate of real estate taxes this year for amounts you paid this year, you must reduce your real estate tax deduction by the amount refunded to you. 1040x 2012 form If the refund or rebate was for real estate taxes paid for a prior year, you may have to include some or all of the refund in your income. 1040x 2012 form For more information, see Recoveries in Publication 525, Taxable and Nontaxable Income. 1040x 2012 form Items You Cannot Deduct as Real Estate Taxes The following items are not deductible as real estate taxes. 1040x 2012 form Charges for services. 1040x 2012 form   An itemized charge for services to specific property or people is not a tax, even if the charge is paid to the taxing authority. 1040x 2012 form You cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged for trash collection), or A flat fee charged for a single service provided by your local government (such as a $30 charge for mowing your lawn because it had grown higher than permitted under a local ordinance). 1040x 2012 form    You must look at your real estate tax bill to decide if any nondeductible itemized charges, such as those listed above, are included in the bill. 1040x 2012 form If your taxing authority (or lender) does not furnish you a copy of your real estate tax bill, ask for it. 1040x 2012 form Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. 1040x 2012 form Assessments for local benefits. 1040x 2012 form   You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. 1040x 2012 form Local benefits include the construction of streets, sidewalks, or water and sewer systems. 1040x 2012 form You must add these amounts to the basis of your property. 1040x 2012 form   You can, however, deduct assessments (or taxes) for local benefits if they are for maintenance, repair, or interest charges related to those benefits. 1040x 2012 form An example is a charge to repair an existing sidewalk and any interest included in that charge. 1040x 2012 form   If only a part of the assessment is for maintenance, repair, or interest charges, you must be able to show the amount of that part to claim the deduction. 1040x 2012 form If you cannot show what part of the assessment is for maintenance, repair, or interest charges, you cannot deduct any of it. 1040x 2012 form   An assessment for a local benefit may be listed as an item in your real estate tax bill. 1040x 2012 form If so, use the rules in this section to find how much of it, if any, you can deduct. 1040x 2012 form Transfer taxes (or stamp taxes). 1040x 2012 form   You cannot deduct transfer taxes and similar taxes and charges on the sale of a personal home. 1040x 2012 form If you are the buyer and you pay them, include them in the cost basis of the property. 1040x 2012 form If you are the seller and you pay them, they are expenses of the sale and reduce the amount realized on the sale. 1040x 2012 form Homeowners association assessments. 1040x 2012 form   You cannot deduct these assessments because the homeowners association, rather than a state or local government, imposes them. 1040x 2012 form Special Rules for Cooperatives If you own a cooperative apartment, some special rules apply to you, though you generally receive the same tax treatment as other homeowners. 1040x 2012 form As an owner of a cooperative apartment, you own shares of stock in a corporation that owns or leases housing facilities. 1040x 2012 form You can deduct your share of the corporation's deductible real estate taxes if the cooperative housing corporation meets the following conditions: The corporation has only one class of stock outstanding, Each stockholder, solely because of ownership of the stock, can live in a house, apartment, or house trailer owned or leased by the corporation, No stockholder can receive any distribution out of capital, except on a partial or complete liquidation of the corporation, and At least one of the following: At least 80% of the corporation's gross income for the tax year was paid by the tenant-stockholders. 1040x 2012 form For this purpose, gross income means all income received during the entire tax year, including any received before the corporation changed to cooperative ownership. 1040x 2012 form At least 80% of the total square footage of the corporation's property must be available for use by the tenant-stockholders during the entire tax year. 1040x 2012 form At least 90% of the expenditures paid or incurred by the corporation were used for the acquisition, construction, management, maintenance, or care of the property for the benefit of the tenant-shareholders during the entire tax year. 1040x 2012 form Tenant-stockholders. 1040x 2012 form   A tenant-stockholder can be any entity (such as a corporation, trust, estate, partnership, or association) as well as an individual. 1040x 2012 form The tenant-stockholder does not have to live in any of the cooperative's dwelling units. 1040x 2012 form The units that the tenant-stockholder has the right to occupy can be rented to others. 1040x 2012 form Deductible taxes. 1040x 2012 form   You figure your share of real estate taxes in the following way. 1040x 2012 form Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. 1040x 2012 form Multiply the corporation's deductible real estate taxes by the number you figured in (1). 1040x 2012 form This is your share of the real estate taxes. 1040x 2012 form   Generally, the corporation will tell you your share of its real estate tax. 1040x 2012 form This is the amount you can deduct if it reasonably reflects the cost of real estate taxes for your dwelling unit. 1040x 2012 form Refund of real estate taxes. 1040x 2012 form   If the corporation receives a refund of real estate taxes it paid in an earlier year, it must reduce the amount of real estate taxes paid this year when it allocates the tax expense to you. 1040x 2012 form Your deduction for real estate taxes the corporation paid this year is reduced by your share of the refund the corporation received. 1040x 2012 form Sales Taxes Generally, you can elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule A (Form 1040). 1040x 2012 form Deductible sales taxes may include sales taxes paid on your home (including mobile and prefabricated), or home building materials if the tax rate was the same as the general sales tax rate. 1040x 2012 form For information on figuring your deduction, see the Instructions for Schedule A (Form 1040). 1040x 2012 form If you elect to deduct the sales taxes paid on your home, or home building materials, you cannot include them as part of your cost basis in the home. 1040x 2012 form Home Mortgage Interest This section of the publication gives you basic information about home mortgage interest, including information on interest paid at settlement, points, and Form 1098, Mortgage Interest Statement. 1040x 2012 form Most home buyers take out a mortgage (loan) to buy their home. 1040x 2012 form They then make monthly payments to either the mortgage holder or someone collecting the payments for the mortgage holder. 1040x 2012 form Usually, you can deduct the entire part of your payment that is for mortgage interest, if you itemize your deductions on Schedule A (Form 1040). 1040x 2012 form However, your deduction may be limited if: Your total mortgage balance is more than $1 million ($500,000 if married filing separately), or You took out a mortgage for reasons other than to buy, build, or improve your home. 1040x 2012 form If either of these situations applies to you, see Publication 936 for more information. 1040x 2012 form Also see Publication 936 if you later refinance your mortgage or buy a second home. 1040x 2012 form Refund of home mortgage interest. 1040x 2012 form   If you receive a refund of home mortgage interest that you deducted in an earlier year and that reduced your tax, you generally must include the refund in income in the year you receive it. 1040x 2012 form For more information, see Recoveries in Publication 525. 1040x 2012 form The amount of the refund will usually be shown on the mortgage interest statement you receive from your mortgage lender. 1040x 2012 form See Mortgage Interest Statement , later. 1040x 2012 form Deductible Mortgage Interest To be deductible, the interest you pay must be on a loan secured by your main home or a second home. 1040x 2012 form The loan can be a first or second mortgage, a home improvement loan, or a home equity loan. 1040x 2012 form Prepaid interest. 1040x 2012 form   If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. 1040x 2012 form Generally, you can deduct in each year only the interest that qualifies as home mortgage interest for that year. 1040x 2012 form An exception (discussed later) applies to points. 1040x 2012 form Late payment charge on mortgage payment. 1040x 2012 form   You can deduct as home mortgage interest a late payment charge if it was not for a specific service in connection with your mortgage loan. 1040x 2012 form Mortgage prepayment penalty. 1040x 2012 form   If you pay off your home mortgage early, you may have to pay a penalty. 1040x 2012 form You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. 1040x 2012 form Ground rent. 1040x 2012 form   In some states (such as Maryland), you may buy your home subject to a ground rent. 1040x 2012 form A ground rent is an obligation you assume to pay a fixed amount per year on the property. 1040x 2012 form Under this arrangement, you are leasing (rather than buying) the land on which your home is located. 1040x 2012 form Redeemable ground rents. 1040x 2012 form   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct the payments as mortgage interest. 1040x 2012 form The ground rent is a redeemable ground rent only if all of the following are true. 1040x 2012 form Your lease, including renewal periods, is for more than 15 years. 1040x 2012 form You can freely assign the lease. 1040x 2012 form You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a specified amount. 1040x 2012 form The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. 1040x 2012 form   Payments made to end the lease and buy the lessor's entire interest in the land are not redeemable ground rents. 1040x 2012 form You cannot deduct them. 1040x 2012 form Nonredeemable ground rents. 1040x 2012 form   Payments on a nonredeemable ground rent are not mortgage interest. 1040x 2012 form You can deduct them as rent only if they are a business expense or if they are for rental property. 1040x 2012 form Cooperative apartment. 1040x 2012 form   You can usually treat the interest on a loan you took out to buy stock in a cooperative housing corporation as home mortgage interest if you own a cooperative apartment, and the cooperative housing corporation meets the conditions described earlier under Special Rules for Cooperatives . 1040x 2012 form In addition, you can treat as home mortgage interest your share of the corporation's deductible mortgage interest. 1040x 2012 form Figure your share of mortgage interest the same way that is shown for figuring your share of real estate taxes in the Example under Division of real estate taxes, earlier. 1040x 2012 form For more information on cooperatives, see Special Rule for Tenant-Stockholders in Cooperative Housing Corporations in Publication 936. 1040x 2012 form Refund of cooperative's mortgage interest. 1040x 2012 form   You must reduce your mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. 1040x 2012 form The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year. 1040x 2012 form   If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. 1040x 2012 form Mortgage Interest Paid at Settlement One item that normally appears on a settlement or closing statement is home mortgage interest. 1040x 2012 form You can deduct the interest that you pay at settlement if you itemize your deductions on Schedule A (Form 1040). 1040x 2012 form This amount should be included in the mortgage interest statement provided by your lender. 1040x 2012 form See the discussion under Mortgage Interest Statement , later. 1040x 2012 form Also, if you pay interest in advance, see Prepaid interest , earlier, and Points , next. 1040x 2012 form Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. 1040x 2012 form Points also may be called loan origination fees, maximum loan charges, loan discount, or discount points. 1040x 2012 form A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. 1040x 2012 form See Points paid by the seller , later. 1040x 2012 form General rule. 1040x 2012 form   You cannot deduct the full amount of points in the year paid. 1040x 2012 form They are prepaid interest, so you generally must deduct them over the life (term) of the mortgage. 1040x 2012 form Exception. 1040x 2012 form   You can deduct the full amount of points in the year paid if you meet all the following tests. 1040x 2012 form Your loan is secured by your main home. 1040x 2012 form (Generally, your main home is the one you live in most of the time. 1040x 2012 form ) Paying points is an established business practice in the area where the loan was made. 1040x 2012 form The points paid were not more than the points generally charged in that area. 1040x 2012 form You use the cash method of accounting. 1040x 2012 form This means you report income in the year you receive it and deduct expenses in the year you pay them. 1040x 2012 form Most individuals use this method. 1040x 2012 form The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. 1040x 2012 form The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. 1040x 2012 form The funds you provided are not required to have been applied to the points. 1040x 2012 form They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. 1040x 2012 form You cannot have borrowed these funds. 1040x 2012 form You use your loan to buy or build your main home. 1040x 2012 form The points were computed as a percentage of the principal amount of the mortgage. 1040x 2012 form The amount is clearly shown on the settlement statement (such as the Uniform Settlement Statement, Form HUD-1) as points charged for the mortgage. 1040x 2012 form The points may be shown as paid from either your funds or the seller's. 1040x 2012 form Note. 1040x 2012 form If you meet all of the tests listed above and you itemize your deductions in the year you get the loan, you can either deduct the full amount of points in the year paid or deduct them over the life of the loan, beginning in the year you get the loan. 1040x 2012 form If you do not itemize your deductions in the year you get the loan, you can spread the points over the life of the loan and deduct the appropriate amount in each future year, if any, when you do itemize your deductions. 1040x 2012 form Home improvement loan. 1040x 2012 form   You can also fully deduct in the year paid points paid on a loan to improve your main home, if you meet the first six tests listed earlier. 1040x 2012 form Refinanced loan. 1040x 2012 form   If you use part of the refinanced mortgage proceeds to improve your main home and you meet the first six tests listed earlier, you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. 1040x 2012 form You can deduct the rest of the points over the life of the loan. 1040x 2012 form Points not fully deductible in year paid. 1040x 2012 form    If you do not qualify under the exception to deduct the full amount of points in the year paid (or choose not to do so), see Points in Publication 936 for the rules on when and how much you can deduct. 1040x 2012 form Figure A. 1040x 2012 form   You can use Figure A, next, as a quick guide to see whether your points are fully deductible in the year paid. 1040x 2012 form    Please click here for the text description of the image. 1040x 2012 form Figure A. 1040x 2012 form Are my points fully deductible this year? Amounts charged for services. 1040x 2012 form   Amounts charged by the lender for specific services connected to the loan are not interest. 1040x 2012 form Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. 1040x 2012 form You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. 1040x 2012 form For information about the tax treatment of these amounts and other settlement fees and closing costs, see Basis , later. 1040x 2012 form Points paid by the seller. 1040x 2012 form   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. 1040x 2012 form Treatment by seller. 1040x 2012 form   The seller cannot deduct these fees as interest. 1040x 2012 form However, they are a selling expense that reduces the seller's amount realized. 1040x 2012 form See Publication 523 for more information. 1040x 2012 form Treatment by buyer. 1040x 2012 form   The buyer treats seller-paid points as if he or she had paid them. 1040x 2012 form If all the tests listed earlier under Exception are met, the buyer can deduct the points in the year paid. 1040x 2012 form If any of those tests are not met, the buyer must deduct the points over the life of the loan. 1040x 2012 form   The buyer must also reduce the basis of the home by the amount of the seller-paid points. 1040x 2012 form For more information about the basis of your home, see Basis , later. 1040x 2012 form Funds provided are less than points. 1040x 2012 form   If you meet all the tests listed earlier under Exception except that the funds you provided were less than the points charged to you (test 6), you can deduct the points in the year paid up to the amount of funds you provided. 1040x 2012 form In addition, you can deduct any points paid by the seller. 1040x 2012 form Example 1. 1040x 2012 form When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). 1040x 2012 form You meet all the tests for deducting points in the year paid (see Exception , earlier), except the only funds you provided were a $750 down payment. 1040x 2012 form Of the $1,000 you were charged for points, you can deduct $750 in the year paid. 1040x 2012 form You spread the remaining $250 over the life of the mortgage. 1040x 2012 form Example 2. 1040x 2012 form The facts are the same as in Example 1 , except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. 1040x 2012 form In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). 1040x 2012 form You spread the remaining $250 over the life of the mortgage. 1040x 2012 form You must reduce the basis of your home by the $1,000 paid by the seller. 1040x 2012 form Excess points. 1040x 2012 form   If you meet all the tests under Exception , earlier, except that the points paid were more than are generally charged in your area (test 3), you can deduct in the year paid only the points that are generally charged. 1040x 2012 form You must spread any additional points over the life of the mortgage. 1040x 2012 form Mortgage ending early. 1040x 2012 form   If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. 1040x 2012 form A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. 1040x 2012 form Example. 1040x 2012 form Dan paid $3,000 in points in 2006 that he had to spread out over the 15-year life of the mortgage. 1040x 2012 form He had deducted $1,400 of these points through 2012. 1040x 2012 form Dan prepaid his mortgage in full in 2013. 1040x 2012 form He can deduct the remaining $1,600 of points in 2013. 1040x 2012 form Exception. 1040x 2012 form   If you refinance the mortgage with the same lender, you cannot deduct any remaining points for the year. 1040x 2012 form Instead, deduct them over the term of the new loan. 1040x 2012 form Form 1098. 1040x 2012 form   The mortgage interest statement you receive should show not only the total interest paid during the year, but also your deductible points paid during the year. 1040x 2012 form See Mortgage Interest Statement , later. 1040x 2012 form Where To Deduct Home Mortgage Interest Enter on Schedule A (Form 1040), line 10, the home mortgage interest and points reported to you on Form 1098 (discussed next). 1040x 2012 form If you did not receive a Form 1098, enter your deductible interest on line 11, and any deductible points on line 12. 1040x 2012 form See Table 1 below for a summary of where to deduct home mortgage interest and real estate taxes. 1040x 2012 form If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and social security number (SSN) or employer identification number (EIN) on the dotted lines next to line 11. 1040x 2012 form The seller must give you this number and you must give the seller your SSN. 1040x 2012 form Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. 1040x 2012 form Failure to meet either of these requirements may result in a $50 penalty for each failure. 1040x 2012 form Table 1. 1040x 2012 form Where To Deduct Interest and Taxes Paid on Your Home See the text for information on what expenses are eligible. 1040x 2012 form IF you are eligible to deduct . 1040x 2012 form . 1040x 2012 form . 1040x 2012 form THEN report the amount  on Schedule A (Form 1040) . 1040x 2012 form . 1040x 2012 form . 1040x 2012 form real estate taxes line 6. 1040x 2012 form home mortgage interest and points reported on Form 1098 line 10. 1040x 2012 form home mortgage interest not reported on  Form 1098 line 11. 1040x 2012 form points not reported on Form 1098 line 12. 1040x 2012 form qualified mortgage insurance premiums line 13. 1040x 2012 form Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage to a mortgage holder in the course of that holder's trade or business, you should receive a Form 1098 or similar statement from the mortgage holder. 1040x 2012 form The statement will show the total interest paid on your mortgage during the year. 1040x 2012 form If you bought a main home during the year, it also will show the deductible points you paid and any points you can deduct that were paid by the person who sold you your home. 1040x 2012 form See Points , earlier. 1040x 2012 form The interest you paid at settlement should be included on the statement. 1040x 2012 form If it is not, add the interest from the settlement sheet that qualifies as home mortgage interest to the total shown on Form 1098 or similar statement. 1040x 2012 form Put the total on Schedule A (Form 1040), line 10, and attach a statement to your return explaining the difference. 1040x 2012 form Write “See attached” to the right of line 10. 1040x 2012 form A mortgage holder can be a financial institution, a governmental unit, or a cooperative housing corporation. 1040x 2012 form If a statement comes from a cooperative housing corporation, it generally will show your share of interest. 1040x 2012 form Your mortgage interest statement for 2013 should be provided or sent to you by January 31, 2014. 1040x 2012 form If it is mailed, you should allow adequate time to receive it before contacting the mortgage holder. 1040x 2012 form A copy of this form will be sent to the IRS also. 1040x 2012 form Example. 1040x 2012 form You bought a new home on May 3. 1040x 2012 form You paid no points on the purchase. 1040x 2012 form During the year, you made mortgage payments which included $4,480 deductible interest on your new home. 1040x 2012 form The settlement sheet for the purchase of the home included interest of $620 for 29 days in May. 1040x 2012 form The mortgage statement you receive from the lender includes total interest of $5,100 ($4,480 + $620). 1040x 2012 form You can deduct the $5,100 if you itemize your deductions. 1040x 2012 form Refund of overpaid interest. 1040x 2012 form   If you receive a refund of mortgage interest you overpaid in a prior year, you generally will receive a Form 1098 showing the refund in box 3. 1040x 2012 form Generally, you must include the refund in income in the year you receive it. 1040x 2012 form See Refund of home mortgage interest , earlier, under Home Mortgage Interest. 1040x 2012 form More than one borrower. 1040x 2012 form   If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. 1040x 2012 form Show how much of the interest each of you paid, and give the name and address of the person who received the form. 1040x 2012 form Deduct your share of the interest on Schedule A (Form 1040), line 11, and write “See attached” to the right of that line. 1040x 2012 form Mortgage Insurance Premiums You may be able to take an itemized deduction on Schedule A (Form 1040), line 13, for premiums you pay or accrue during 2013 for qualified mortgage insurance in connection with home acquisition debt on your qualified home. 1040x 2012 form Mortgage insurance premiums you paid or accrued on any mortgage insurance contract issued before January 1, 2007, are not deductible as an itemized deduction. 1040x 2012 form Qualified Mortgage Insurance Qualified mortgage insurance is mortgage insurance provided by the Veterans Administration, the Federal Housing Administration, or the Rural Housing Administration, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). 1040x 2012 form Prepaid mortgage insurance premiums. 1040x 2012 form   If you paid premiums that are allocable to periods after 2013, you must allocate them over the shorter of: The stated term of the mortgage, or 84 months, beginning with the month the insurance was obtained. 1040x 2012 form The premiums are treated as paid in the year to which they were allocated. 1040x 2012 form If the mortgage is satisfied before its term, no deduction is allowed for the unamortized balance. 1040x 2012 form See Publication 936 for details. 1040x 2012 form Exception for certain mortgage insurance. 1040x 2012 form   The allocation rules, explained above, do not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or Rural Housing Service. 1040x 2012 form Home Acquisition Debt Home acquisition debt is a mortgage you took out after October 13, 1987, to buy, build, or substantially improve a qualified home. 1040x 2012 form It also must be secured by that home. 1040x 2012 form If the amount of your mortgage is more than the cost of the home plus the cost of any substantial improvements, only the debt that is not more than the cost of the home plus improvements qualifies as home acquisition debt. 1040x 2012 form Home acquisition debt limit. 1040x 2012 form   The total amount you can treat as home acquisition debt at any time on your home cannot be more than $1 million ($500,000 if married filing separately). 1040x 2012 form Discharges of qualified principal residence indebtedness. 1040x 2012 form   You can exclude from gross income any discharges of qualified principal residence indebtedness made after 2006 and before 2014. 1040x 2012 form You must reduce the basis of your principal residence (but not below zero) by the amount you exclude. 1040x 2012 form Principal residence. 1040x 2012 form   Your principal residence is the home where you ordinarily live most of the time. 1040x 2012 form You can have only one principal residence at any one time. 1040x 2012 form Qualified principal residence indebtedness. 1040x 2012 form   This is a mortgage that you took out to buy, build, or substantially improve your principal residence and that is secured by that residence. 1040x 2012 form If the amount of your original mortgage is more than the cost of your principal residence plus the cost of substantial improvements, qualified principal residence indebtedness cannot be more than the cost of your principal residence plus improvements. 1040x 2012 form   Any debt secured by your principal residence that you use to refinance qualified principal residence indebtedness is qualified principal residence indebtedness up to the amount of your old mortgage principal just before the refinancing. 1040x 2012 form Additional debt incurred to substantially improve your principal residence is also qualified principal residence indebtedness. 1040x 2012 form Amount you can exclude. 1040x 2012 form   You can only exclude debt discharged after 2006 and before 2014. 1040x 2012 form The most you can exclude is $2 million ($1 million if married filing separately). 1040x 2012 form You cannot exclude any amount that was discharged because of services performed for the lender or on account of any other factor not directly related either to a decline in the value of your residence or to your financial condition. 1040x 2012 form Ordering rule. 1040x 2012 form   If only a part of a loan is qualified principal residence indebtedness, you can exclude only the amount of the discharge that is more than the amount of the loan (immediately before the discharge) that is not qualified principal residence indebtedness. 1040x 2012 form Qualified Home This means your main home or your second home. 1040x 2012 form A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. 1040x 2012 form Main home. 1040x 2012 form   You can have only one main home at any one time. 1040x 2012 form This is the home where you ordinarily live most of the time. 1040x 2012 form Second home and other special situations. 1040x 2012 form   If you have a second home, use part of your home for other than residential living (such as a home office), rent out part of your home, or are having your home constructed, see Qualified Home in Publication 936. 1040x 2012 form Limit on Deduction If your adjusted gross income (AGI) on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are deductible is reduced and may be eliminated. 1040x 2012 form See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. 1040x 2012 form If your AGI is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. 1040x 2012 form Form 1098. 1040x 2012 form   The amount of mortgage insurance premiums you paid during 2013 should be reported in box 4. 1040x 2012 form See Form 1098, Mortgage Interest Statement in Publication 936. 1040x 2012 form Mortgage Interest Credit The mortgage interest credit is intended to help lower-income individuals afford home ownership. 1040x 2012 form If you qualify, you can claim the credit on Form 8396 each year for part of the home mortgage interest you pay. 1040x 2012 form Who qualifies. 1040x 2012 form   You may be eligible for the credit if you were issued a qualified Mortgage Credit Certificate (MCC) from your state or local government. 1040x 2012 form Generally, an MCC is issued only in connection with a new mortgage for the purchase of your main home. 1040x 2012 form The MCC will show the certificate credit rate you will use to figure your credit. 1040x 2012 form It also will show the certified indebtedness amount. 1040x 2012 form Only the interest on that amount qualifies for the credit. 1040x 2012 form See Figuring the Credit , later. 1040x 2012 form You must contact the appropriate government agency about getting an MCC before you get a mortgage and buy your home. 1040x 2012 form Contact your state or local housing finance agency for information about the availability of MCCs in your area. 1040x 2012 form How to claim the credit. 1040x 2012 form   To claim the credit, complete Form 8396 and attach it to your Form 1040 or Form 1040NR, U. 1040x 2012 form S. 1040x 2012 form Nonresident Alien Income Tax Return. 1040x 2012 form Include the credit in your total for Form 1040, line 53, or Form 1040NR, line 50; be sure to check box c and write “Form 8396” on that line. 1040x 2012 form Reducing your home mortgage interest deduction. 1040x 2012 form   If you itemize your deductions on Schedule A (Form 1040), you must reduce your home mortgage interest deduction by the amount of the mortgage interest credit shown on Form 8396, line 3. 1040x 2012 form You must do this even if part of that amount is to be carried forward to 2014. 1040x 2012 form Selling your home. 1040x 2012 form   If you purchase a home after 1990 using an MCC, and you sell that home within 9 years, you may have to recapture (repay) all or part of the benefit you received from the MCC program. 1040x 2012 form For additional information, see Recapturing (Paying Back) a Federal Mortgage Subsidy, in Publication 523. 1040x 2012 form Figuring the Credit Figure your credit on Form 8396. 1040x 2012 form Mortgage not more than certified indebtedness. 1040x 2012 form   If your mortgage loan amount is equal to (or smaller than) the certified indebtedness amount shown on your MCC, enter on Form 8396, line 1, all the interest you paid on your mortgage during the year. 1040x 2012 form Mortgage more than certified indebtedness. 1040x 2012 form   If your mortgage loan amount is larger than the certified indebtedness amount shown on your MCC, you can figure the credit on only part of the interest you paid. 1040x 2012 form To find the amount to enter on line 1, multiply the total interest you paid during the year on your mortgage by the following fraction. 1040x 2012 form Certified indebtedness amount on your MCC Original amount of your mortgage   The fraction will not change as long as you are entitled to take the mortgage interest credit. 1040x 2012 form Example. 1040x 2012 form Emily bought a home this year. 1040x 2012 form Her mortgage loan is $125,000. 1040x 2012 form The certified indebtedness amount on her MCC is $100,000. 1040x 2012 form She paid $7,500 interest this year. 1040x 2012 form Emily figures the interest to enter on Form 8396, line 1, as follows:   $100,000 = 80% (. 1040x 2012 form 80)       $125,000       $7,500 x . 1040x 2012 form 80 = $6,000   Emily enters $6,000 on Form 8396, line 1. 1040x 2012 form In each later year, she will figure her credit using only 80% of the interest she pays for that year. 1040x 2012 form Limits Two limits may apply to your credit. 1040x 2012 form A limit based on the credit rate, and A limit based on your tax. 1040x 2012 form Limit based on credit rate. 1040x 2012 form   If the certificate credit rate is higher than 20%, the credit you are allowed cannot be more than $2,000. 1040x 2012 form Limit based on tax. 1040x 2012 form   After applying the limit based on the credit rate, your credit generally cannot be more than your tax liability. 1040x 2012 form See the Credit Limit Worksheet in the Form 8396 instructions to calculate the limit based on tax. 1040x 2012 form Dividing the Credit If two or more persons (other than a married couple filing a joint return) hold an interest in the home to which the MCC relates, the credit must be divided based on the interest held by each person. 1040x 2012 form Example. 1040x 2012 form John and his brother, George, were issued an MCC. 1040x 2012 form They used it to get a mortgage on their main home. 1040x 2012 form John has a 60% ownership interest in the home, and George has a 40% ownership interest in the home. 1040x 2012 form John paid $5,400 mortgage interest this year and George paid $3,600. 1040x 2012 form The MCC shows a credit rate of 25% and a certified indebtedness amount of $130,000. 1040x 2012 form The loan amount (mortgage) on their home is $120,000. 1040x 2012 form The credit is limited to $2,000 because the credit rate is more than 20%. 1040x 2012 form John figures the credit by multiplying the mortgage interest he paid this year ($5,400) by the certificate credit rate (25%) for a total of $1,350. 1040x 2012 form His credit is limited to $1,200 ($2,000 × 60%). 1040x 2012 form George figures the credit by multiplying the mortgage interest he paid this year ($3,600) by the certificate credit rate (25%) for a total of $900. 1040x 2012 form His credit is limited to $800 ($2,000 × 40%). 1040x 2012 form Carryforward If your allowable credit is reduced because of the limit based on your tax, you can carry forward the unused portion of the credit to the next 3 years or until used, whichever comes first. 1040x 2012 form Example. 1040x 2012 form You receive a mortgage credit certificate from State X. 1040x 2012 form This year, your regular tax liability is $1,100, you owe no alternative minimum tax, and your mortgage interest credit is $1,700. 1040x 2012 form You claim no other credits. 1040x 2012 form Your unused mortgage interest credit for this year is $600 ($1,700 − $1,100). 1040x 2012 form You can carry forward this amount to the next 3 years or until used, whichever comes first. 1040x 2012 form Credit rate more than 20%. 1040x 2012 form   If you are subject to the $2,000 limit because your certificate credit rate is more than 20%, you cannot carry forward any amount more than $2,000 (or your share of the $2,000 if you must divide the credit). 1040x 2012 form Example. 1040x 2012 form In the earlier example under Dividing the Credit , John and George used the entire $2,000 credit. 1040x 2012 form The excess   John $1,350 − $1,200 = $150     George $900 − $800 = $100   $150 for John ($1,350 − $1,200) and $100 for George ($900 − $800) cannot be carried forward to future years, despite the respective tax liabilities for John and George. 1040x 2012 form Refinancing If you refinance your original mortgage loan on which you had been given an MCC, you must get a new MCC to be able to claim the credit on the new loan. 1040x 2012 form The amount of credit you can claim on the new loan may change. 1040x 2012 form Table 2 below summarizes how to figure your credit if you refinance your original mortgage loan. 1040x 2012 form Table 2. 1040x 2012 form Effect of Refinancing on Your Credit IF you get a new (reissued) MCC and the amount of your new mortgage is . 1040x 2012 form . 1040x 2012 form . 1040x 2012 form THEN the interest you claim on Form 8396, line 1, is* . 1040x 2012 form . 1040x 2012 form . 1040x 2012 form smaller than or equal to the certified indebtedness amount on the new MCC all the interest paid during the year on your new mortgage. 1040x 2012 form larger than the certified indebtedness amount on the new MCC interest paid during the year on your new mortgage multiplied by the following fraction. 1040x 2012 form         certified indebtedness  amount on your new MCC       original amount of your  mortgage   *The credit using the new MCC cannot be more than the credit using the old MCC. 1040x 2012 form  See New MCC cannot increase your credit above. 1040x 2012 form An issuer may reissue an MCC after you refinance your mortgage. 1040x 2012 form If you did not get a new MCC, you may want to contact the state or local housing finance agency that issued your original MCC for information about whether you can get a reissued MCC. 1040x 2012 form Year of refinancing. 1040x 2012 form   In the year of refinancing, add the applicable amount of interest paid on the old mortgage and the applicable amount of interest paid on the new mortgage, and enter the total on Form 8396, line 1. 1040x 2012 form   If your new MCC has a credit rate different from the rate on the old MCC, you must attach a statement to Form 8396. 1040x 2012 form The statement must show the calculation for lines 1, 2, and 3 for the part of the year when the old MCC was in effect. 1040x 2012 form It must show a separate calculation for the part of the year when the new MCC was in effect. 1040x 2012 form Combine the amounts from both calculations for line 3, enter the total on line 3 of the form, and write “See attached” on the dotted line next to line 2. 1040x 2012 form New MCC cannot increase your credit. 1040x 2012 form   The credit that you claim with your new MCC cannot be more than the credit that you could have claimed with your old MCC. 1040x 2012 form   In most cases, the agency that issues your new MCC will make sure that it does not increase your credit. 1040x 2012 form However, if either your old loan or your new loan has a variable (adjustable) interest rate, you will need to check this yourself. 1040x 2012 form In that case, you will need to know the amount of the credit you could have claimed using the old MCC. 1040x 2012 form   There are two methods for figuring the credit you could have claimed. 1040x 2012 form Under one method, you figure the actual credit that would have been allowed. 1040x 2012 form This means you use the credit rate on the old MCC and the interest you would have paid on the old loan. 1040x 2012 form   If your old loan was a variable rate mortgage, you can use another method to determine the credit that you could have claimed. 1040x 2012 form Under this method, you figure the credit using a payment schedule of a hypothetical self-amortizing mortgage with level payments projected to the final maturity date of the old mortgage. 1040x 2012 form The interest rate of the hypothetical mortgage is the annual percentage rate (APR) of the new mortgage for purposes of the Federal Truth in Lending Act. 1040x 2012 form The principal of the hypothetical mortgage is the remaining outstanding balance of the certified mortgage indebtedness shown on the old MCC. 1040x 2012 form    You must choose one method and use it consistently beginning with the first tax year for which you claim the credit based on the new MCC. 1040x 2012 form    As part of your tax records, you should keep your old MCC and the schedule of payments for your old mortgage. 1040x 2012 form Basis Basis is your starting point for figuring a gain or loss if you later sell your home, or for figuring depreciation if you later use part of your home for business purposes or for rent. 1040x 2012 form While you own your home, you may add certain items to your basis. 1040x 2012 form You may subtract certain other items from your basis. 1040x 2012 form These items are called adjustments to basis and are explained later under Adjusted Basis . 1040x 2012 form It is important that you understand these terms when you first acquire your home because you must keep track of your basis and adjusted basis during the period you own your home. 1040x 2012 form You also must keep records of the events that affect basis or adjusted basis. 1040x 2012 form See Keeping Records , below. 1040x 2012 form Figuring Your Basis How you figure your basis depends on how you acquire your home. 1040x 2012 form If you buy or build your home, your cost is your basis. 1040x 2012 form If you receive your home as a gift, your basis is usually the same as the adjusted basis of the person who gave you the property. 1040x 2012 form If you inherit your home from a decedent, different rules apply depending on the date of the decedent's death. 1040x 2012 form Each of these topics is discussed later. 1040x 2012 form Property transferred from a spouse. 1040x 2012 form   If your home is transferred to you from your spouse, or from your former spouse as a result of a divorce, your basis is the same as your spouse's (or former spouse's) adjusted basis just before the transfer. 1040x 2012 form Publication 504, Divorced or Separated Individuals, fully discusses transfers between spouses. 1040x 2012 form Cost as Basis The cost of your home, whether you purchased it or constructed it, is the amount you paid for it, including any debt you assumed. 1040x 2012 form The cost of your home includes most settlement or closing costs you paid when you bought the home. 1040x 2012 form If you built your home, your cost includes most closing costs paid when you bought the land or settled on your mortgage. 1040x 2012 form See Settlement or closing costs , later. 1040x 2012 form If you elect to deduct the sales taxes on the purchase or construction of your home as an itemized deduction on Schedule A (Form 1040), you cannot include the sales taxes as part of your cost basis in the home. 1040x 2012 form Purchase. 1040x 2012 form   The basis of a home you bought is the amount you paid for it. 1040x 2012 form This usually includes your down payment and any debt you assumed. 1040x 2012 form The basis of a cooperative apartment is the amount you paid for your shares in the corporation that owns or controls the property. 1040x 2012 form This amount includes any purchase commissions or other costs of acquiring the shares. 1040x 2012 form Construction. 1040x 2012 form   If you contracted to have your home built on land that you own, your basis in the home is your basis in the land plus the amount you paid to have the home built. 1040x 2012 form This includes the cost of labor and materials, the amount you paid the contractor, any architect's fees, building permit charges, utility meter and connection charges, and legal fees that are directly connected with building your home. 1040x 2012 form If you built all or part of your home yourself, your basis is the total amount it cost you to build it. 1040x 2012 form You cannot include in basis the value of your own labor or any other labor for which you did not pay. 1040x 2012 form Real estate taxes. 1040x 2012 form   Real estate taxes are usually divided so that you and the seller each pay taxes for the part of the property tax year that each owned the home. 1040x 2012 form See the earlier discussion of Real estate taxes paid at settlement or closing , under Real Estate Taxes, earlier, to figure the real estate taxes you paid or are considered to have paid. 1040x 2012 form   If you pay any part of the seller's share of the real estate taxes (the taxes up to the date of sale), and the seller did not reimburse you, add those taxes to your basis in the home. 1040x 2012 form You cannot deduct them as taxes paid. 1040x 2012 form   If the seller paid any of your share of the real estate taxes (the taxes beginning with the date of sale), you can still deduct those taxes. 1040x 2012 form Do not include those taxes in your basis. 1040x 2012 form If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. 1040x 2012 form Example 1. 1040x 2012 form You bought your home on September 1. 1040x 2012 form The property tax year in your area is the calendar year, and the tax is due on August 15. 1040x 2012 form The real estate taxes on the home you bought were $1,275 for the year and had been paid by the seller on August 15. 1040x 2012 form You did not reimburse the seller for your share of the real estate taxes from September 1 through December 31. 1040x 2012 form You must reduce the basis of your home by the $426 [(122 ÷ 365) × $1,275] the seller paid for you. 1040x 2012 form You can deduct your $426 share of real estate taxes on your return for the year you purchased your home. 1040x 2012 form Example 2. 1040x 2012 form You bought your home on May 3, 2013. 1040x 2012 form The property tax year in your area is the calendar year. 1040x 2012 form The taxes for the previous year are assessed on January 2 and are due on May 31 and November 30. 1040x 2012 form Under state law, the taxes become a lien on May 31. 1040x 2012 form You agreed to pay all taxes due after the date of sale. 1040x 2012 form The taxes due in 2013 for 2012 were $1,375. 1040x 2012 form The taxes due in 2014 for 2013 will be $1,425. 1040x 2012 form You cannot deduct any of the taxes paid in 2013 because they relate to the 2012 property tax year and you did not own the home until 2013. 1040x 2012 form Instead, you add the $1,375 to the cost (basis) of your home. 1040x 2012 form You owned the home in 2013 for 243 days (May 3 to December 31), so you can take a tax deduction on your 2014 return of $949 [(243 ÷ 365) × $1,425] paid in 2014 for 2013. 1040x 2012 form You add the remaining $476 ($1,425 − $949) of taxes paid in 2014 to the cost (basis) of your home. 1040x 2012 form Settlement or closing costs. 1040x 2012 form   If you bought your home, you probably paid settlement or closing costs in addition to the contract price. 1040x 2012 form These costs are divided between you and the seller according to the sales contract, local custom, or understanding of the parties. 1040x 2012 form If you built your home, you probably paid these costs when you bought the land or settled on your mortgage. 1040x 2012 form   The only settlement or closing costs you can deduct are home mortgage interest and certain real estate taxes. 1040x 2012 form You deduct them in the year you buy your home if you itemize your deductions. 1040x 2012 form You can add certain other settlement or closing costs to the basis of your home. 1040x 2012 form Items added to basis. 1040x 2012 form   You can include in your basis the settlement fees and closing costs you paid for buying your home. 1040x 2012 form A fee is for buying the home if you would have had to pay it even if you paid cash for the home. 1040x 2012 form   The following are some of the settlement fees and closing costs that you can include in the original basis of your home. 1040x 2012 form Abstract fees (abstract of title fees). 1040x 2012 form Charges for installing utility services. 1040x 2012 form Legal fees (including fees for the title search and preparation of the sales contract and deed). 1040x 2012 form Recording fees. 1040x 2012 form Surveys. 1040x 2012 form Transfer or stamp taxes. 1040x 2012 form Owner's title insurance. 1040x 2012 form Any amount the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, cost for improvements or repairs, and sales commissions. 1040x 2012 form   If the seller actually paid for any item for which you are liable and for which you can take a deduction (such as your share of the real estate taxes for the year of sale), you must reduce your basis by that amount unless you are charged for it in the settlement. 1040x 2012 form Items not added to basis and not deductible. 1040x 2012 form   Here are some settlement and closing costs that you cannot deduct or add to your basis. 1040x 2012 form Fire insurance premiums. 1040x 2012 form Charges for using utilities or other services related to occupancy of the home before closing. 1040x 2012 form Rent for occupying the home before closing. 1040x 2012 form Charges connected with getting or refinancing a mortgage loan, such as: Loan assumption fees, Cost of a credit report, and Fee for an appraisal required by a lender. 1040x 2012 form Points paid by seller. 1040x 2012 form   If you bought your home after April 3, 1994, you must reduce your basis by any points paid for your mortgage by the person who sold you your home. 1040x 2012 form   If you bought your home after 1990 but before April 4, 1994, you must reduce your basis by seller-paid points only if you deducted them. 1040x 2012 form See Points , earlier, for the rules on deducting points. 1040x 2012 form Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined later) to the donor just before it was given to you, its fair market value (FMV) at the time it was given to you, and any gift tax paid on it. 1040x 2012 form Fair market value. 1040x 2012 form   Fair market value (FMV) is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and who both have a reasonable knowledge of all the necessary facts. 1040x 2012 form Donor's adjusted basis is more than FMV. 1040x 2012 form   If someone gave you your home and the donor's adjusted basis, when it was given to you, was more than the FMV, your basis at the time of receipt is the same as the donor's adjusted basis. 1040x 2012 form Disposition basis. 1040x 2012 form   If the donor's adjusted basis at the time of the gift is more than the FMV, your basis (plus or minus any required adjustments, see Adjusted Basis , later) when you dispose of the property will depend on whether you have a gain or a loss. 1040x 2012 form Your basis for figuring a gain is the same as the donor's adjusted basis. 1040x 2012 form Your basis for figuring a loss is the FMV when you received the gift. 1040x 2012 form If you use the donor's adjusted basis to figure a gain and it results in a loss, then you must use the FMV (at the time of the gift) to refigure the loss. 1040x 2012 form However, if using the FMV results in a gain, then you neither have a gain nor a loss. 1040x 2012 form Example 1. 1040x 2012 form Andrew received a house as a gift from Ishmael (the donor). 1040x 2012 form At the time of the gift, the home had an FMV of $80,000. 1040x 2012 form Ishmael's adjusted basis was $100,000. 1040x 2012 form After he received the house, no events occurred to increase or decrease the basis. 1040x 2012 form If Andrew sells the house for $120,000, he will have a $20,000 gain because he must use the donor's adjusted basis ($100,000) at the time of the gift as his basis to figure the gain. 1040x 2012 form Example 2. 1040x 2012 form Same facts as Example 1 , except this time Andrew sells the house for $70,000. 1040x 2012 form He will have a loss of $10,000 because he must use the FMV ($80,000) at the time of the gift as his basis to figure the loss. 1040x 2012 form Example 3. 1040x 2012 form Same facts as Example 1 , except this time Andrew sells the house for $90,000. 1040x 2012 form Initially, he figures the gain using Ishmael's adjusted basis ($100,000), which results in a loss of $10,000. 1040x 2012 form Since it is a loss, Andrew must now recalculate the loss using the FMV ($80,000), which results in a gain of $10,000. 1040x 2012 form So in this situation, Andrew will neither have a gain nor a loss. 1040x 2012 form Donor's adjusted basis equal to or less than the FMV. 1040x 2012 form   If someone gave you your home after 1976 and the donor's adjusted basis, when it was given to you, was equal to or less than the FMV, your basis at the time of receipt is the same as the donor's adjusted basis, plus the part of any federal gift tax paid that is due to the net increase in value of the home. 1040x 2012 form Part of federal gift tax due to net increase in value. 1040x 2012 form   Figure the part of the federal gift tax paid that is due to the net increase in value of the home by multiplying the total federal gift tax paid by a fraction. 1040x 2012 form The numerator (top part) of the fraction is the net increase in the value of the home, and the denominator (bottom part) is the value of the home for gift tax purposes after reduction for any annual exclusion and marital or charitable deduction that applies to the gift. 1040x 2012 form The net increase in the value of the home is its FMV minus the adjusted basis of the donor. 1040x 2012 form Publication 551 gives more information, including examples, on figuring your basis when you receive property as a gift. 1040x 2012 form Inheritance Your basis in a home you inherited is generally the fair market value of the home on the date of the decedent's death or on the alternative valuation date if the personal representative for the estate chooses to use alternative valuation. 1040x 2012 form If an estate tax return was filed, your basis is generally the value of the home listed on the estate tax return. 1040x 2012 form If an estate tax return was not filed, your basis is the appraised value of the home at the decedent's date of death for state inheritance or transmission taxes. 1040x 2012 form Publication 551 and Publication 559, Survivors, Executors, and Administrators, have more information on the basis of inherited property. 1040x 2012 form If you inherited your home from someone who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. 1040x 2012 form Adjusted Basis While you own your home, various events may take place that can change the original basis of your home. 1040x 2012 form These events can increase or decrease your original basis. 1040x 2012 form The result is called adjusted basis. 1040x 2012 form See Table 3, on this page, for a list of some of the items that can adjust your basis. 1040x 2012 form Table 3. 1040x 2012 form Adjusted Basis This table lists examples of some items that generally will increase or decrease your basis in your home. 1040x 2012 form It is not intended to be all-inclusive. 1040x 2012 form Increases to Basis Decreases to Basis Improvements: Putting an addition on your home Replacing an entire roof Paving your driveway Installing central air conditioning Rewiring your home Assessments for local improvements (see Assessments for local benefits , under What You Can and Cannot Deduct, earlier) Amounts spent to restore damaged property Insurance or other reimbursement for casualty losses Deductible casualty loss not covered by insurance Payments received for easement or right-of-way granted Depreciation allowed or allowable if home is used for business or rental purposes Value of subsidy for energy conservation measure excluded from income Improvements. 1040x 2012 form   An improvement materially adds to the value of your home, considerably prolongs its useful life, or adapts it to new uses. 1040x 2012 form You must add the cost of any improvements to the basis of your home. 1040x 2012 form You cannot deduct these costs. 1040x 2012 form   Improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, and paving your driveway. 1040x 2012 form Amount added to basis. 1040x 2012 form   The amount you add to your basis for improvements is your actual cost. 1040x 2012 form This includes all costs for material and labor, except your own labor, and all expenses related to the improvement. 1040x 2012 form For example, if you had your lot surveyed to put up a fence, the cost of the survey is a part of the cost of the fence. 1040x 2012 form   You also must add to your basis state and local assessments for improvements such as streets and sidewalks if they increase the value of the property. 1040x 2012 form These assessments are discussed earlier under Real Estate Taxes . 1040x 2012 form Improvements no longer part of home. 1040x 2012 form    Your home's adjusted basis does not include the cost of any improvements that are replaced and are no longer part of the home. 1040x 2012 form Example. 1040x 2012 form You put wall-to-wall carpeting in your home 15 years ago. 1040x 2012 form Later, you replaced that carpeting with new wall-to-wall carpeting. 1040x 2012 form The cost of the old carpeting you replaced is no longer part of your home's adjusted basis. 1040x 2012 form Repairs versus improvements. 1040x 2012 form   A repair keeps your home in an ordinary, efficient operating condition. 1040x 2012 form It does not add to the value of your home or prolong its life. 1040x 2012 form Repairs include repainting your home inside or outside, fixing your gutters or floors, fixing leaks or plastering, and replacing broken window panes. 1040x 2012 form You cannot deduct repair costs and generally cannot add them to the basis of your home. 1040x 2012 form   However, repairs that are done as part of an extensive remodeling or restoration of your home are considered improvements. 1040x 2012 form You add them to the basis of your home. 1040x 2012 form Records to keep. 1040x 2012 form   You can use Table 4 (at the end of the publication) as a guide to help you keep track of improvements to your home. 1040x 2012 form Also see Keeping Records , below. 1040x 2012 form Energy conservation subsidy. 1040x 2012 form   If a public utility gives you (directly or indirectly) a subsidy for the purchase or installation of an energy conservation measure for your home, do not include the value of that subsidy in your income. 1040x 2012 form You must reduce the basis of your home by that value. 1040x 2012 form   An energy conservation measure is an installation or modification primarily designed to reduce consumption of electricity or natural gas or to improve the management of energy demand. 1040x 2012 form Keeping Records Keeping full and accurate records is vital to properly report your income and expenses, to support your deductions and credits, and to know the basis or adjusted basis of your home. 1040x 2012 form These records include your purchase contract and settlement papers if you bought the property, or other objective evidence if you acquired it by gift, inheritance, or similar means. 1040x 2012 form You should keep any receipts, canceled checks, and similar evidence for improvements or other additions to the basis. 1040x 2012 form In addition, you should keep track of any decreases to the basis such as those listed in Table 3, earlier. 1040x 2012 form How to keep records. 1040x 2012 form   How you keep records is up to you, but they must be clear and accurate and must be available to the IRS. 1040x 2012 form How long to keep records. 1040x 2012 form   You must keep your records for as long as they are important for meeting any provision of the federal tax law. 1040x 2012 form   Keep records that support an item of income, a deduction, or a credit appearing on a return until the period of limitations for the return runs out. 1040x 2012 form (A period of limitations is the period of time after which no legal action can be brought. 1040x 2012 form ) For assessment of tax you owe, this is generally 3 years from the date you filed the return. 1040x 2012 form For filing a claim for credit or refund, this is generally 3 years from the date you filed the original return, or 2 years from the date you paid the tax, whichever is later. 1040x 2012 form Returns filed before the due date are treated as filed on the due date. 1040x 2012 form   You may need to keep records relating to the basis of property (discussed earlier) for longer than the period of limitations. 1040x 2012 form Keep those records as long as they are important in figuring the basis of the original or replacement property. 1040x 2012 form Generally, this means for as long as you own the property and, after you dispose of it, for the period of limitations that applies to you. 1040x 2012 form Table 4. 1040x 2012 form Record of Home Improvements Keep this for your records. 1040x 2012 form Also, keep receipts or other proof of improvements. 1040x 2012 form Remove from this record any improvements that are no longer part of your main home. 1040x 2012 form For example, if you put wall-to-wall carpeting in your home and later replace it with new wall-to-wall carpeting, remove the cost of the first carpeting. 1040x 2012 form (a) Type of Improvement (b) Date (c) Amount   (a) Type of Improvement (b) Date (c) Amount Additions:       Heating & Air  Conditioning:     Bedroom       Heating system     Bathroom       Central air conditioning     Deck       Furnace     Garage       Duct work     Porch       Central humidifier     Patio       Filtration system     Storage shed       Other     Fireplace       Electrical:     Other           Lawn & Grounds:       Lighting fixtures           Wiring upgrades     Landscaping       Other     Driveway       Plumbing:     Walkway           Fences       Water heater     Retaining wall       Soft water system     Sprinkler system       Filtration system     Swimming pool       Other     Exterior lighting       Insulation:     Other           Communications:       Attic           Walls     Satellite dish       Floors     Intercom       Pipes and duct work     Security system       Other     Other             Miscellaneous:       Interior  Improvements:     Storm windows and doors       Built-in appliances     Roof       Kitchen modernization     Central vacuum       Bathroom modernization     Other       Flooring             Wall-to-wall carpeting             Other     How To