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2010 Income Tax Forms 1040ez

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2010 Income Tax Forms 1040ez

2010 income tax forms 1040ez 23. 2010 income tax forms 1040ez   Interest Expense Table of Contents Introduction Useful Items - You may want to see: Home Mortgage InterestAmount Deductible Points Mortgage Insurance Premiums Form 1098, Mortgage Interest Statement Investment InterestInvestment Property Allocation of Interest Expense Limit on Deduction Items You Cannot DeductPersonal Interest Allocation of Interest How To ReportMore than one borrower. 2010 income tax forms 1040ez Mortgage proceeds used for business or investment. 2010 income tax forms 1040ez Introduction This chapter discusses what interest expenses you can deduct. 2010 income tax forms 1040ez Interest is the amount you pay for the use of borrowed money. 2010 income tax forms 1040ez The following are types of interest you can deduct as itemized deductions on Schedule A (Form 1040). 2010 income tax forms 1040ez Home mortgage interest, including certain points and mortgage insurance premiums. 2010 income tax forms 1040ez Investment interest. 2010 income tax forms 1040ez This chapter explains these deductions. 2010 income tax forms 1040ez It also explains where to deduct other types of interest and lists some types of interest you cannot deduct. 2010 income tax forms 1040ez Use Table 23-1 to find out where to get more information on various types of interest, including investment interest. 2010 income tax forms 1040ez Useful Items - You may want to see: Publication 936 Home Mortgage Interest Deduction 550 Investment Income and Expenses Home Mortgage Interest Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). 2010 income tax forms 1040ez The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan. 2010 income tax forms 1040ez You can deduct home mortgage interest if all the following conditions are met. 2010 income tax forms 1040ez You file Form 1040 and itemize deductions on Schedule A (Form 1040). 2010 income tax forms 1040ez The mortgage is a secured debt on a qualified home in which you have an ownership interest. 2010 income tax forms 1040ez (Generally, your mortgage is a secured debt if you put your home up as collateral to protect the interest of the lender. 2010 income tax forms 1040ez The term “qualified home” means your main home or second home. 2010 income tax forms 1040ez For details, see Publication 936. 2010 income tax forms 1040ez )  Both you and the lender must intend that the loan be repaid. 2010 income tax forms 1040ez Amount Deductible In most cases, you can deduct all of your home mortgage interest. 2010 income tax forms 1040ez How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. 2010 income tax forms 1040ez Fully deductible interest. 2010 income tax forms 1040ez   If all of your mortgages fit into one or more of the following three categories at all times during the year, you can deduct all of the interest on those mortgages. 2010 income tax forms 1040ez (If any one mortgage fits into more than one category, add the debt that fits in each category to your other debt in the same category. 2010 income tax forms 1040ez )   The three categories are as follows: Mortgages you took out on or before October 13, 1987 (called grandfathered debt). 2010 income tax forms 1040ez Mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if throughout 2013 these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately). 2010 income tax forms 1040ez Mortgages you took out after October 13, 1987, other than to buy, build, or improve your home (called home equity debt), but only if throughout 2013 these mortgages totaled $100,000 or less ($50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by (1) and (2). 2010 income tax forms 1040ez The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home. 2010 income tax forms 1040ez   See Part II of Publication 936 for more detailed definitions of grandfathered, home acquisition, and home equity debt. 2010 income tax forms 1040ez    You can use Figure 23-A to check whether your home mortgage interest is fully deductible. 2010 income tax forms 1040ez Figure 23-A. 2010 income tax forms 1040ez Is My Home Mortgage Interest Fully Deductible? Please click here for the text description of the image. 2010 income tax forms 1040ez Figure 23-A. 2010 income tax forms 1040ez Is My Interest Fully Deductible? Limits on deduction. 2010 income tax forms 1040ez   You cannot fully deduct interest on a mortgage that does not fit into any of the three categories listed earlier. 2010 income tax forms 1040ez If this applies to you, see Part II of Publication 936 to figure the amount of interest you can deduct. 2010 income tax forms 1040ez Special Situations This section describes certain items that can be included as home mortgage interest and others that cannot. 2010 income tax forms 1040ez It also describes certain special situations that may affect your deduction. 2010 income tax forms 1040ez Late payment charge on mortgage payment. 2010 income tax forms 1040ez   You can deduct as home mortgage interest a late payment charge if it was not for a specific service performed in connection with your mortgage loan. 2010 income tax forms 1040ez Mortgage prepayment penalty. 2010 income tax forms 1040ez   If you pay off your home mortgage early, you may have to pay a penalty. 2010 income tax forms 1040ez 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. 2010 income tax forms 1040ez Sale of home. 2010 income tax forms 1040ez   If you sell your home, you can deduct your home mortgage interest (subject to any limits that apply) paid up to, but not including, the date of sale. 2010 income tax forms 1040ez Example. 2010 income tax forms 1040ez John and Peggy Harris sold their home on May 7. 2010 income tax forms 1040ez Through April 30, they made home mortgage interest payments of $1,220. 2010 income tax forms 1040ez The settlement sheet for the sale of the home showed $50 interest for the 6-day period in May up to, but not including, the date of sale. 2010 income tax forms 1040ez Their mortgage interest deduction is $1,270 ($1,220 + $50). 2010 income tax forms 1040ez Prepaid interest. 2010 income tax forms 1040ez   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. 2010 income tax forms 1040ez You can deduct in each year only the interest that qualifies as home mortgage interest for that year. 2010 income tax forms 1040ez However, there is an exception that applies to points, discussed later. 2010 income tax forms 1040ez Mortgage interest credit. 2010 income tax forms 1040ez   You may be able to claim a mortgage interest credit if you were issued a mortgage credit certificate (MCC) by a state or local government. 2010 income tax forms 1040ez Figure the credit on Form 8396, Mortgage Interest Credit. 2010 income tax forms 1040ez If you take this credit, you must reduce your mortgage interest deduction by the amount of the credit. 2010 income tax forms 1040ez   For more information on the credit, see chapter 37. 2010 income tax forms 1040ez Ministers' and military housing allowance. 2010 income tax forms 1040ez   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you can still deduct your home mortgage interest. 2010 income tax forms 1040ez Hardest Hit Fund and Emergency Homeowners' Loan Programs. 2010 income tax forms 1040ez   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. 2010 income tax forms 1040ez 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. 2010 income tax forms 1040ez 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. 2010 income tax forms 1040ez If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received from payer(s) / borrower(s)), box 4 (mortgage insurance premiums) and box 5 (real property taxes). 2010 income tax forms 1040ez 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. 2010 income tax forms 1040ez Mortgage assistance payments under section 235 of the National Housing Act. 2010 income tax forms 1040ez   If you qualify for mortgage assistance payments for lower-income families under section 235 of the National Housing Act, part or all of the interest on your mortgage may be paid for you. 2010 income tax forms 1040ez You cannot deduct the interest that is paid for you. 2010 income tax forms 1040ez No other effect on taxes. 2010 income tax forms 1040ez   Do not include these mortgage assistance payments in your income. 2010 income tax forms 1040ez Also, do not use these payments to reduce other deductions, such as real estate taxes. 2010 income tax forms 1040ez Divorced or separated individuals. 2010 income tax forms 1040ez   If a divorce or separation agreement requires you or your spouse or former spouse to pay home mortgage interest on a home owned by both of you, the payment of interest may be alimony. 2010 income tax forms 1040ez See the discussion of Payments for jointly-owned home in chapter 18. 2010 income tax forms 1040ez Redeemable ground rents. 2010 income tax forms 1040ez   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. 2010 income tax forms 1040ez   Payments made to end the lease and to buy the lessor's entire interest in the land are not deductible as mortgage interest. 2010 income tax forms 1040ez For more information, see Publication 936. 2010 income tax forms 1040ez Nonredeemable ground rents. 2010 income tax forms 1040ez   Payments on a nonredeemable ground rent are not mortgage interest. 2010 income tax forms 1040ez You can deduct them as rent if they are a business expense or if they are for rental property. 2010 income tax forms 1040ez Reverse mortgages. 2010 income tax forms 1040ez   A reverse mortgage is a loan where the lender pays you (in a lump sum, a monthly advance, a line of credit, or a combination of all three) while you continue to live in your home. 2010 income tax forms 1040ez With a reverse mortgage, you retain title to your home. 2010 income tax forms 1040ez Depending on the plan, your reverse mortgage becomes due with interest when you move, sell your home, reach the end of a pre-selected loan period, or die. 2010 income tax forms 1040ez Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable. 2010 income tax forms 1040ez Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until the loan is paid in full. 2010 income tax forms 1040ez Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt discussed in Publication 936. 2010 income tax forms 1040ez Rental payments. 2010 income tax forms 1040ez   If you live in a house before final settlement on the purchase, any payments you make for that period are rent and not interest. 2010 income tax forms 1040ez This is true even if the settlement papers call them interest. 2010 income tax forms 1040ez You cannot deduct these payments as home mortgage interest. 2010 income tax forms 1040ez Mortgage proceeds invested in tax-exempt securities. 2010 income tax forms 1040ez   You cannot deduct the home mortgage interest on grandfathered debt or home equity debt if you used the proceeds of the mortgage to buy securities or certificates that produce tax-free income. 2010 income tax forms 1040ez “Grandfathered debt” and “home equity debt” are defined earlier under Amount Deductible. 2010 income tax forms 1040ez Refunds of interest. 2010 income tax forms 1040ez   If you receive a refund of interest in the same tax year you paid it, you must reduce your interest expense by the amount refunded to you. 2010 income tax forms 1040ez If you receive a refund of interest you deducted in an earlier year, you generally must include the refund in income in the year you receive it. 2010 income tax forms 1040ez However, you need to include it only up to the amount of the deduction that reduced your tax in the earlier year. 2010 income tax forms 1040ez This is true whether the interest overcharge was refunded to you or was used to reduce the outstanding principal on your mortgage. 2010 income tax forms 1040ez    If you received a refund of interest you overpaid in an earlier year, you generally will receive a Form 1098, Mortgage Interest Statement, showing the refund in box 3. 2010 income tax forms 1040ez For information about Form 1098, see Form 1098, Mortgage Interest Statement , later. 2010 income tax forms 1040ez   For more information on how to treat refunds of interest deducted in earlier years, see Recoveries in chapter 12. 2010 income tax forms 1040ez Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. 2010 income tax forms 1040ez Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. 2010 income tax forms 1040ez A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. 2010 income tax forms 1040ez See Points paid by the seller , later. 2010 income tax forms 1040ez General Rule You generally cannot deduct the full amount of points in the year paid. 2010 income tax forms 1040ez Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. 2010 income tax forms 1040ez See Deduction Allowed Ratably , next. 2010 income tax forms 1040ez For exceptions to the general rule, see Deduction Allowed in Year Paid , later. 2010 income tax forms 1040ez Deduction Allowed Ratably If you do not meet the tests listed under Deduction Allowed in Year Paid , later, the loan is not a home improvement loan, or you choose not to deduct your points in full in the year paid, you can deduct the points ratably (equally) over the life of the loan if you meet all the following tests. 2010 income tax forms 1040ez You use the cash method of accounting. 2010 income tax forms 1040ez This means you report income in the year you receive it and deduct expenses in the year you pay them. 2010 income tax forms 1040ez Most individuals use this method. 2010 income tax forms 1040ez Your loan is secured by a home. 2010 income tax forms 1040ez (The home does not need to be your main home. 2010 income tax forms 1040ez ) Your loan period is not more than 30 years. 2010 income tax forms 1040ez If your loan period is more than 10 years, the terms of your loan are the same as other loans offered in your area for the same or longer period. 2010 income tax forms 1040ez Either your loan amount is $250,000 or less, or the number of points is not more than: 4, if your loan period is 15 years or less, or 6, if your loan period is more than 15 years. 2010 income tax forms 1040ez Deduction Allowed in Year Paid You can fully deduct points in the year paid if you meet all the following tests. 2010 income tax forms 1040ez (You can use Figure 23-B as a quick guide to see whether your points are fully deductible in the year paid. 2010 income tax forms 1040ez ) Your loan is secured by your main home. 2010 income tax forms 1040ez (Your main home is the one you ordinarily live in most of the time. 2010 income tax forms 1040ez ) Paying points is an established business practice in the area where the loan was made. 2010 income tax forms 1040ez The points paid were not more than the points generally charged in that area. 2010 income tax forms 1040ez You use the cash method of accounting. 2010 income tax forms 1040ez This means you report income in the year you receive it and deduct expenses in the year you pay them. 2010 income tax forms 1040ez (If you want more information about this method, see Accounting Methods in chapter 1. 2010 income tax forms 1040ez ) 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. 2010 income tax forms 1040ez The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. 2010 income tax forms 1040ez The funds you provided are not required to have been applied to the points. 2010 income tax forms 1040ez They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. 2010 income tax forms 1040ez You cannot have borrowed these funds from your lender or mortgage broker. 2010 income tax forms 1040ez You use your loan to buy or build your main home. 2010 income tax forms 1040ez The points were computed as a percentage of the principal amount of the mortgage. 2010 income tax forms 1040ez The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. 2010 income tax forms 1040ez The points may be shown as paid from either your funds or the seller's. 2010 income tax forms 1040ez Figure 23-B. 2010 income tax forms 1040ez Are My Points Fully Deductible This Year? Please click here for the text description of the image. 2010 income tax forms 1040ez Figure 23-B. 2010 income tax forms 1040ez Are My Points Fully Deductible This Year? Note. 2010 income tax forms 1040ez If you meet all of these tests, you can choose to either fully deduct the points in the year paid, or deduct them over the life of the loan. 2010 income tax forms 1040ez Home improvement loan. 2010 income tax forms 1040ez   You can also fully deduct in the year paid points paid on a loan to improve your main home, if tests (1) through (6) are met. 2010 income tax forms 1040ez Second home. 2010 income tax forms 1040ez You cannot fully deduct in the year paid points you pay on loans secured by your second home. 2010 income tax forms 1040ez You can deduct these points only over the life of the loan. 2010 income tax forms 1040ez Refinancing. 2010 income tax forms 1040ez   Generally, points you pay to refinance a mortgage are not deductible in full in the year you pay them. 2010 income tax forms 1040ez This is true even if the new mortgage is secured by your main home. 2010 income tax forms 1040ez   However, if you use part of the refinanced mortgage proceeds to improve your main home and you meet the first 6 tests listed under Deduction Allowed in Year Paid , earlier, you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. 2010 income tax forms 1040ez You can deduct the rest of the points over the life of the loan. 2010 income tax forms 1040ez Example 1. 2010 income tax forms 1040ez In 1998, Bill Fields got a mortgage to buy a home. 2010 income tax forms 1040ez In 2013, Bill refinanced that mortgage with a 15-year $100,000 mortgage loan. 2010 income tax forms 1040ez The mortgage is secured by his home. 2010 income tax forms 1040ez To get the new loan, he had to pay three points ($3,000). 2010 income tax forms 1040ez Two points ($2,000) were for prepaid interest, and one point ($1,000) was charged for services, in place of amounts that ordinarily are stated separately on the settlement statement. 2010 income tax forms 1040ez Bill paid the points out of his private funds, rather than out of the proceeds of the new loan. 2010 income tax forms 1040ez The payment of points is an established practice in the area, and the points charged are not more than the amount generally charged there. 2010 income tax forms 1040ez Bill's first payment on the new loan was due July 1. 2010 income tax forms 1040ez He made six payments on the loan in 2013 and is a cash basis taxpayer. 2010 income tax forms 1040ez Bill used the funds from the new mortgage to repay his existing mortgage. 2010 income tax forms 1040ez Although the new mortgage loan was for Bill's continued ownership of his main home, it was not for the purchase or improvement of that home. 2010 income tax forms 1040ez He cannot deduct all of the points in 2013. 2010 income tax forms 1040ez He can deduct two points ($2,000) ratably over the life of the loan. 2010 income tax forms 1040ez He deducts $67 [($2,000 ÷ 180 months) × 6 payments] of the points in 2013. 2010 income tax forms 1040ez The other point ($1,000) was a fee for services and is not deductible. 2010 income tax forms 1040ez Example 2. 2010 income tax forms 1040ez The facts are the same as in Example 1, except that Bill used $25,000 of the loan proceeds to improve his home and $75,000 to repay his existing mortgage. 2010 income tax forms 1040ez Bill deducts 25% ($25,000 ÷ $100,000) of the points ($2,000) in 2013. 2010 income tax forms 1040ez His deduction is $500 ($2,000 × 25%). 2010 income tax forms 1040ez Bill also deducts the ratable part of the remaining $1,500 ($2,000 − $500) that must be spread over the life of the loan. 2010 income tax forms 1040ez This is $50 [($1,500 ÷ 180 months) × 6 payments] in 2013. 2010 income tax forms 1040ez The total amount Bill deducts in 2013 is $550 ($500 + $50). 2010 income tax forms 1040ez Special Situations This section describes certain special situations that may affect your deduction of points. 2010 income tax forms 1040ez Original issue discount. 2010 income tax forms 1040ez   If you do not qualify to either deduct the points in the year paid or deduct them ratably over the life of the loan, or if you choose not to use either of these methods, the points reduce the issue price of the loan. 2010 income tax forms 1040ez This reduction results in original issue discount, which is discussed in chapter 4 of Publication 535. 2010 income tax forms 1040ez Amounts charged for services. 2010 income tax forms 1040ez   Amounts charged by the lender for specific services connected to the loan are not interest. 2010 income tax forms 1040ez Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. 2010 income tax forms 1040ez You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. 2010 income tax forms 1040ez Points paid by the seller. 2010 income tax forms 1040ez   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. 2010 income tax forms 1040ez Treatment by seller. 2010 income tax forms 1040ez   The seller cannot deduct these fees as interest. 2010 income tax forms 1040ez But they are a selling expense that reduces the amount realized by the seller. 2010 income tax forms 1040ez See chapter 15 for information on selling your home. 2010 income tax forms 1040ez Treatment by buyer. 2010 income tax forms 1040ez    The buyer reduces the basis of the home by the amount of the seller-paid points and treats the points as if he or she had paid them. 2010 income tax forms 1040ez If all the tests under Deduction Allowed in Year Paid , earlier, are met, the buyer can deduct the points in the year paid. 2010 income tax forms 1040ez If any of those tests are not met, the buyer deducts the points over the life of the loan. 2010 income tax forms 1040ez   For information about basis, see chapter 13. 2010 income tax forms 1040ez Funds provided are less than points. 2010 income tax forms 1040ez   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the funds you provided were less than the points charged to you (test (6)), you can deduct the points in the year paid, up to the amount of funds you provided. 2010 income tax forms 1040ez In addition, you can deduct any points paid by the seller. 2010 income tax forms 1040ez Example 1. 2010 income tax forms 1040ez When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). 2010 income tax forms 1040ez You meet all the tests for deducting points in the year paid, except the only funds you provided were a $750 down payment. 2010 income tax forms 1040ez Of the $1,000 charged for points, you can deduct $750 in the year paid. 2010 income tax forms 1040ez You spread the remaining $250 over the life of the mortgage. 2010 income tax forms 1040ez Example 2. 2010 income tax forms 1040ez 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. 2010 income tax forms 1040ez In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). 2010 income tax forms 1040ez You spread the remaining $250 over the life of the mortgage. 2010 income tax forms 1040ez You must reduce the basis of your home by the $1,000 paid by the seller. 2010 income tax forms 1040ez Excess points. 2010 income tax forms 1040ez   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the points paid were more than generally paid in your area (test (3)), you deduct in the year paid only the points that are generally charged. 2010 income tax forms 1040ez You must spread any additional points over the life of the mortgage. 2010 income tax forms 1040ez Mortgage ending early. 2010 income tax forms 1040ez   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. 2010 income tax forms 1040ez However, if you refinance the mortgage with the same lender, you cannot deduct any remaining balance of spread points. 2010 income tax forms 1040ez Instead, deduct the remaining balance over the term of the new loan. 2010 income tax forms 1040ez    A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. 2010 income tax forms 1040ez Example. 2010 income tax forms 1040ez Dan paid $3,000 in points in 2002 that he had to spread out over the 15-year life of the mortgage. 2010 income tax forms 1040ez He deducts $200 points per year. 2010 income tax forms 1040ez Through 2012, Dan has deducted $2,200 of the points. 2010 income tax forms 1040ez Dan prepaid his mortgage in full in 2013. 2010 income tax forms 1040ez He can deduct the remaining $800 of points in 2013. 2010 income tax forms 1040ez Limits on deduction. 2010 income tax forms 1040ez   You cannot fully deduct points paid on a mortgage unless the mortgage fits into one of the categories listed earlier under Fully deductible interest . 2010 income tax forms 1040ez See Publication 936 for details. 2010 income tax forms 1040ez Mortgage Insurance Premiums You can treat amounts you paid during 2013 for qualified mortgage insurance as home mortgage interest. 2010 income tax forms 1040ez The insurance must be in connection with home acquisition debt and the insurance contract must have been issued after 2006. 2010 income tax forms 1040ez Qualified mortgage insurance. 2010 income tax forms 1040ez   Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). 2010 income tax forms 1040ez   Mortgage insurance provided by the Department of Veterans Affairs is commonly known as a funding fee. 2010 income tax forms 1040ez If provided by the Rural Housing Service, it is commonly known as a guarantee fee. 2010 income tax forms 1040ez These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013. 2010 income tax forms 1040ez Contact the mortgage insurance issuer to determine the deductible amount if it is not reported in box 4 of Form 1098. 2010 income tax forms 1040ez Special rules for prepaid mortgage insurance. 2010 income tax forms 1040ez   Generally, if you paid premiums for qualified mortgage insurance that are allocable to periods after the close of the tax year, such premiums are treated as paid in the period to which they are allocated. 2010 income tax forms 1040ez You must allocate the premiums over the shorter of the stated term of the mortgage or 84 months, beginning with the month the insurance was obtained. 2010 income tax forms 1040ez No deduction is allowed for the unamortized balance if the mortgage is satisfied before its term. 2010 income tax forms 1040ez This paragraph does not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service. 2010 income tax forms 1040ez See the Example below. 2010 income tax forms 1040ez Example. 2010 income tax forms 1040ez Ryan purchased a home in May of 2012 and financed the home with a 15-year mortgage. 2010 income tax forms 1040ez Ryan also prepaid all of the $9,240 in private mortgage insurance required at the time of closing in May. 2010 income tax forms 1040ez Since the $9,240 in private mortgage insurance is allocable to periods after 2012, Ryan must allocate the $9,240 over the shorter of the life of the mortgage or 84 months. 2010 income tax forms 1040ez Ryan's adjusted gross income (AGI) for 2012 is $76,000. 2010 income tax forms 1040ez Ryan can deduct $880 ($9,240 ÷ 84 × 8 months) for qualified mortgage insurance premiums in 2012. 2010 income tax forms 1040ez For 2013, Ryan can deduct $1,320 ($9,240 ÷ 84 × 12 months) if his AGI is $100,000 or less. 2010 income tax forms 1040ez In this example, the mortgage insurance premiums are allocated over 84 months, which is shorter than the life of the mortgage of 15 years (180 months). 2010 income tax forms 1040ez Limit on deduction. 2010 income tax forms 1040ez   If your adjusted gross income on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated. 2010 income tax forms 1040ez 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. 2010 income tax forms 1040ez If your adjusted gross income is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. 2010 income tax forms 1040ez Form 1098, Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement from the mortgage holder. 2010 income tax forms 1040ez You will receive the statement if you pay interest to a person (including a financial institution or a cooperative housing corporation) in the course of that person's trade or business. 2010 income tax forms 1040ez A governmental unit is a person for purposes of furnishing the statement. 2010 income tax forms 1040ez The statement for each year should be sent to you by January 31 of the following year. 2010 income tax forms 1040ez A copy of this form will also be sent to the IRS. 2010 income tax forms 1040ez The statement will show the total interest you paid during the year, any mortgage insurance premiums you paid, and if you purchased a main home during the year, it also will show the deductible points paid during the year, including seller-paid points. 2010 income tax forms 1040ez However, it should not show any interest that was paid for you by a government agency. 2010 income tax forms 1040ez As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. 2010 income tax forms 1040ez However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan. 2010 income tax forms 1040ez See Points , earlier, to determine whether you can deduct points not shown on Form 1098. 2010 income tax forms 1040ez Prepaid interest on Form 1098. 2010 income tax forms 1040ez   If you prepaid interest in 2013 that accrued in full by January 15, 2014, this prepaid interest may be included in box 1 of Form 1098. 2010 income tax forms 1040ez However, you cannot deduct the prepaid amount for January 2014 in 2013. 2010 income tax forms 1040ez (See Prepaid interest , earlier. 2010 income tax forms 1040ez ) You will have to figure the interest that accrued for 2014 and subtract it from the amount in box 1. 2010 income tax forms 1040ez You will include the interest for January 2014 with the other interest you pay for 2014. 2010 income tax forms 1040ez See How To Report , later. 2010 income tax forms 1040ez Refunded interest. 2010 income tax forms 1040ez   If you received a refund of mortgage interest you overpaid in an earlier year, you generally will receive a Form 1098 showing the refund in box 3. 2010 income tax forms 1040ez See Refunds of interest , earlier. 2010 income tax forms 1040ez Mortgage insurance premiums. 2010 income tax forms 1040ez   The amount of mortgage insurance premiums you paid during 2013 may be shown in box 4 of Form 1098. 2010 income tax forms 1040ez See Mortgage Insurance Premiums, earlier. 2010 income tax forms 1040ez Investment Interest This section discusses interest expenses you may be able to deduct as an investor. 2010 income tax forms 1040ez If you borrow money to buy property you hold for investment, the interest you pay is investment interest. 2010 income tax forms 1040ez You can deduct investment interest subject to the limit discussed later. 2010 income tax forms 1040ez However, you cannot deduct interest you incurred to produce tax-exempt income. 2010 income tax forms 1040ez Nor can you deduct interest expenses on straddles. 2010 income tax forms 1040ez Investment interest does not include any qualified home mortgage interest or any interest taken into account in computing income or loss from a passive activity. 2010 income tax forms 1040ez Investment Property Property held for investment includes property that produces interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business. 2010 income tax forms 1040ez It also includes property that produces gain or loss (not derived in the ordinary course of a trade or business) from the sale or trade of property producing these types of income or held for investment (other than an interest in a passive activity). 2010 income tax forms 1040ez Investment property also includes an interest in a trade or business activity in which you did not materially participate (other than a passive activity). 2010 income tax forms 1040ez Partners, shareholders, and beneficiaries. 2010 income tax forms 1040ez   To determine your investment interest, combine your share of investment interest from a partnership, S corporation, estate, or trust with your other investment interest. 2010 income tax forms 1040ez Allocation of Interest Expense If you borrow money for business or personal purposes as well as for investment, you must allocate the debt among those purposes. 2010 income tax forms 1040ez Only the interest expense on the part of the debt used for investment purposes is treated as investment interest. 2010 income tax forms 1040ez The allocation is not affected by the use of property that secures the debt. 2010 income tax forms 1040ez Limit on Deduction Generally, your deduction for investment interest expense is limited to the amount of your net investment income. 2010 income tax forms 1040ez You can carry over the amount of investment interest that you could not deduct because of this limit to the next tax year. 2010 income tax forms 1040ez The interest carried over is treated as investment interest paid or accrued in that next year. 2010 income tax forms 1040ez You can carry over disallowed investment interest to the next tax year even if it is more than your taxable income in the year the interest was paid or accrued. 2010 income tax forms 1040ez Net Investment Income Determine the amount of your net investment income by subtracting your investment expenses (other than interest expense) from your investment income. 2010 income tax forms 1040ez Investment income. 2010 income tax forms 1040ez    This generally includes your gross income from property held for investment (such as interest, dividends, annuities, and royalties). 2010 income tax forms 1040ez Investment income does not include Alaska Permanent Fund dividends. 2010 income tax forms 1040ez It also does not include qualified dividends or net capital gain unless you choose to include them. 2010 income tax forms 1040ez Choosing to include qualified dividends. 2010 income tax forms 1040ez   Investment income generally does not include qualified dividends, discussed in chapter 8. 2010 income tax forms 1040ez However, you can choose to include all or part of your qualified dividends in investment income. 2010 income tax forms 1040ez   You make this choice by completing Form 4952, line 4g, according to its instructions. 2010 income tax forms 1040ez   If you choose to include any amount of your qualified dividends in investment income, you must reduce your qualified dividends that are eligible for the lower capital gains tax rates by the same amount. 2010 income tax forms 1040ez Choosing to include net capital gain. 2010 income tax forms 1040ez   Investment income generally does not include net capital gain from disposing of investment property (including capital gain distributions from mutual funds). 2010 income tax forms 1040ez However, you can choose to include all or part of your net capital gain in investment income. 2010 income tax forms 1040ez    You make this choice by completing Form 4952, line 4g, according to its instructions. 2010 income tax forms 1040ez   If you choose to include any amount of your net capital gain in investment income, you must reduce your net capital gain that is eligible for the lower capital gains tax rates by the same amount. 2010 income tax forms 1040ez    Before making either choice, consider the overall effect on your tax liability. 2010 income tax forms 1040ez Compare your tax if you make one or both of these choices with your tax if you do not. 2010 income tax forms 1040ez Investment income of child reported on parent's return. 2010 income tax forms 1040ez    Investment income includes the part of your child's interest and dividend income that you choose to report on your return. 2010 income tax forms 1040ez If the child does not have qualified dividends, Alaska Permanent Fund dividends, or capital gain distributions, this is the amount on line 6 of Form 8814, Parents' Election To Report Child's Interest and Dividends. 2010 income tax forms 1040ez Child's qualified dividends. 2010 income tax forms 1040ez   If part of the amount you report is your child's qualified dividends, that part (which is reported on Form 1040, line 9b) generally does not count as investment income. 2010 income tax forms 1040ez However, you can choose to include all or part of it in investment income, as explained under Choosing to include qualified dividends , earlier. 2010 income tax forms 1040ez   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured next under Child's Alaska Permanent Fund dividends). 2010 income tax forms 1040ez Child's Alaska Permanent Fund dividends. 2010 income tax forms 1040ez   If part of the amount you report is your child's Alaska Permanent Fund dividends, that part does not count as investment income. 2010 income tax forms 1040ez To figure the amount of your child's income that you can consider your investment income, start with the amount on Form 8814, line 6. 2010 income tax forms 1040ez Multiply that amount by a percentage that is equal to the Alaska Permanent Fund dividends divided by the total amount on Form 8814, line 4. 2010 income tax forms 1040ez Subtract the result from the amount on Form 8814, line 12. 2010 income tax forms 1040ez Child's capital gain distributions. 2010 income tax forms 1040ez    If part of the amount you report is your child's capital gain distributions, that part (which is reported on Schedule D, line 13, or Form 1040, line 13) generally does not count as investment income. 2010 income tax forms 1040ez However, you can choose to include all or part of it in investment income, as explained in Choosing to include net capital gain , earlier. 2010 income tax forms 1040ez   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured under Child's Alaska Permanent Fund dividends , earlier). 2010 income tax forms 1040ez Investment expenses. 2010 income tax forms 1040ez   Investment expenses are your allowed deductions (other than interest expense) directly connected with the production of investment income. 2010 income tax forms 1040ez Investment expenses that are included as a miscellaneous itemized deduction on Schedule A (Form 1040) are allowable deductions after applying the 2% limit that applies to miscellaneous itemized deductions. 2010 income tax forms 1040ez Use the smaller of: The investment expenses included on Schedule A (Form 1040), line 23, or The amount on Schedule A, line 27. 2010 income tax forms 1040ez Losses from passive activities. 2010 income tax forms 1040ez   Income or expenses that you used in computing income or loss from a passive activity are not included in determining your investment income or investment expenses (including investment interest expense). 2010 income tax forms 1040ez See Publication 925, Passive Activity and At-Risk Rules, for information about passive activities. 2010 income tax forms 1040ez Form 4952 Use Form 4952, Investment Interest Expense Deduction, to figure your deduction for investment interest. 2010 income tax forms 1040ez Exception to use of Form 4952. 2010 income tax forms 1040ez   You do not have to complete Form 4952 or attach it to your return if you meet all of the following tests. 2010 income tax forms 1040ez Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified dividends. 2010 income tax forms 1040ez You do not have any other deductible investment expenses. 2010 income tax forms 1040ez You have no carryover of investment interest expense from 2012. 2010 income tax forms 1040ez If you meet all of these tests, you can deduct all of your investment interest. 2010 income tax forms 1040ez More Information For more information on investment interest, see Interest Expenses in chapter 3 of Publication 550. 2010 income tax forms 1040ez Items You Cannot Deduct Some interest payments are not deductible. 2010 income tax forms 1040ez Certain expenses similar to interest also are not deductible. 2010 income tax forms 1040ez Nondeductible expenses include the following items. 2010 income tax forms 1040ez Personal interest (discussed later). 2010 income tax forms 1040ez Service charges (however, see Other Expenses (Line 23) in chapter 28). 2010 income tax forms 1040ez Annual fees for credit cards. 2010 income tax forms 1040ez Loan fees. 2010 income tax forms 1040ez Credit investigation fees. 2010 income tax forms 1040ez Interest to purchase or carry tax-exempt securities. 2010 income tax forms 1040ez Penalties. 2010 income tax forms 1040ez   You cannot deduct fines and penalties paid to a government for violations of law, regardless of their nature. 2010 income tax forms 1040ez Personal Interest Personal interest is not deductible. 2010 income tax forms 1040ez Personal interest is any interest that is not home mortgage interest, investment interest, business interest, or other deductible interest. 2010 income tax forms 1040ez It includes the following items. 2010 income tax forms 1040ez Interest on car loans (unless you use the car for business). 2010 income tax forms 1040ez Interest on federal, state, or local income tax. 2010 income tax forms 1040ez Finance charges on credit cards, retail installment contracts, and revolving charge accounts incurred for personal expenses. 2010 income tax forms 1040ez Late payment charges by a public utility. 2010 income tax forms 1040ez You may be able to deduct interest you pay on a qualified student loan. 2010 income tax forms 1040ez For details, see Publication 970, Tax Benefits for Education. 2010 income tax forms 1040ez Allocation of Interest If you use the proceeds of a loan for more than one purpose (for example, personal and business), you must allocate the interest on the loan to each use. 2010 income tax forms 1040ez However, you do not have to allocate home mortgage interest if it is fully deductible, regardless of how the funds are used. 2010 income tax forms 1040ez You allocate interest (other than fully deductible home mortgage interest) on a loan in the same way as the loan itself is allocated. 2010 income tax forms 1040ez You do this by tracing disbursements of the debt proceeds to specific uses. 2010 income tax forms 1040ez For details on how to do this, see chapter 4 of Publication 535. 2010 income tax forms 1040ez How To Report You must file Form 1040 to deduct any home mortgage interest expense on your tax return. 2010 income tax forms 1040ez Where you deduct your interest expense generally depends on how you use the loan proceeds. 2010 income tax forms 1040ez See Table 23-1 for a summary of where to deduct your interest expense. 2010 income tax forms 1040ez Home mortgage interest and points. 2010 income tax forms 1040ez   Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. 2010 income tax forms 1040ez If you paid more deductible interest to the financial institution than the amount shown on Form 1098, show the larger deductible amount on line 10. 2010 income tax forms 1040ez Attach a statement explaining the difference and print “See attached” next to line 10. 2010 income tax forms 1040ez    Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. 2010 income tax forms 1040ez If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and taxpayer identification number (TIN) on the dotted lines next to line 11. 2010 income tax forms 1040ez The seller must give you this number and you must give the seller your TIN. 2010 income tax forms 1040ez A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. 2010 income tax forms 1040ez Failure to meet any of these requirements may result in a $50 penalty for each failure. 2010 income tax forms 1040ez The TIN can be either a social security number, an individual taxpayer identification number (issued by the Internal Revenue Service), or an employer identification number. 2010 income tax forms 1040ez See Social Security Number (SSN) in chapter 1 for more information about TINs. 2010 income tax forms 1040ez    If you can take a deduction for points that were not reported to you on Form 1098, deduct those points on Schedule A (Form 1040), line 12. 2010 income tax forms 1040ez   Deduct mortgage insurance premiums on Schedule A (Form 1040), line 13. 2010 income tax forms 1040ez More than one borrower. 2010 income tax forms 1040ez   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. 2010 income tax forms 1040ez Show how much of the interest each of you paid, and give the name and address of the person who received the form. 2010 income tax forms 1040ez Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. 2010 income tax forms 1040ez Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13. 2010 income tax forms 1040ez   Similarly, if you are the payer of record on a mortgage on which there are other borrowers entitled to a deduction for the interest shown on the Form 1098 you received, deduct only your share of the interest on Schedule A (Form 1040), line 10. 2010 income tax forms 1040ez You should let each of the other borrowers know what his or her share is. 2010 income tax forms 1040ez Mortgage proceeds used for business or investment. 2010 income tax forms 1040ez    If your home mortgage interest deduction is limited, but all or part of the mortgage proceeds were used for business, investment, or other deductible activities, see Table 23-1. 2010 income tax forms 1040ez It shows where to deduct the part of your excess interest that is for those activities. 2010 income tax forms 1040ez Investment interest. 2010 income tax forms 1040ez    Deduct investment interest, subject to certain limits discussed in Publication 550, on Schedule A (Form 1040), line 14. 2010 income tax forms 1040ez Amortization of bond premium. 2010 income tax forms 1040ez   There are various ways to treat the premium you pay to buy taxable bonds. 2010 income tax forms 1040ez See Bond Premium Amortization in Publication 550. 2010 income tax forms 1040ez Income-producing rental or royalty interest. 2010 income tax forms 1040ez   Deduct interest on a loan for income-producing rental or royalty property that is not used in your business in Part I of Schedule E (Form 1040). 2010 income tax forms 1040ez Example. 2010 income tax forms 1040ez You rent out part of your home and borrow money to make repairs. 2010 income tax forms 1040ez You can deduct only the interest payment for the rented part in Part I of Schedule E (Form 1040). 2010 income tax forms 1040ez Deduct the rest of the interest payment on Schedule A (Form 1040) if it is deductible home mortgage interest. 2010 income tax forms 1040ez Table 23-1. 2010 income tax forms 1040ez Where To Deduct Your Interest Expense IF you have . 2010 income tax forms 1040ez . 2010 income tax forms 1040ez . 2010 income tax forms 1040ez THEN deduct it on . 2010 income tax forms 1040ez . 2010 income tax forms 1040ez . 2010 income tax forms 1040ez AND for more information go to . 2010 income tax forms 1040ez . 2010 income tax forms 1040ez . 2010 income tax forms 1040ez deductible student loan interest Form 1040, line 33, or Form 1040A, line 18 Publication 970. 2010 income tax forms 1040ez deductible home mortgage interest and points reported on Form 1098 Schedule A (Form 1040), line 10 Publication 936. 2010 income tax forms 1040ez deductible home mortgage interest not reported on Form 1098 Schedule A (Form 1040), line 11 Publication 936. 2010 income tax forms 1040ez deductible points not reported on Form 1098 Schedule A (Form 1040), line 12 Publication 936. 2010 income tax forms 1040ez deductible mortgage insurance premiums Schedule A (Form 1040), line 13 Publication 936. 2010 income tax forms 1040ez deductible investment interest (other than incurred to produce rents or royalties) Schedule A (Form 1040), line 14 Publication 550. 2010 income tax forms 1040ez deductible business interest (non-farm) Schedule C or C-EZ (Form 1040) Publication 535. 2010 income tax forms 1040ez deductible farm business interest Schedule F (Form 1040) Publications 225 and 535. 2010 income tax forms 1040ez deductible interest incurred to produce rents or royalties Schedule E (Form 1040) Publications 527 and 535. 2010 income tax forms 1040ez personal interest not deductible. 2010 income tax forms 1040ez Prev  Up  Next   Home   More Online Publications
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The 2010 Income Tax Forms 1040ez

2010 income tax forms 1040ez 3. 2010 income tax forms 1040ez   Personal Exemptions and Dependents Table of Contents What's New Introduction Useful Items - You may want to see: ExemptionsPersonal Exemptions Exemptions for Dependents Qualifying Child Qualifying Relative Phaseout of Exemptions Social Security Numbers for DependentsBorn and died in 2013. 2010 income tax forms 1040ez Taxpayer identification numbers for aliens. 2010 income tax forms 1040ez Taxpayer identification numbers for adoptees. 2010 income tax forms 1040ez What's New Exemption amount. 2010 income tax forms 1040ez  The amount you can deduct for each exemption has increased. 2010 income tax forms 1040ez It was $3,800 for 2012. 2010 income tax forms 1040ez It is $3,900 for 2013. 2010 income tax forms 1040ez Exemption phaseout. 2010 income tax forms 1040ez  You lose at least part of the benefit of your exemptions if your adjusted gross income is more than a certain amount. 2010 income tax forms 1040ez For 2013, this amount is $150,000 for a married individual filing a separate return; $250,000 for a single individual; $275,000 for a head of household; and $300,000 for married individuals filing jointly or a qualifying widow(er). 2010 income tax forms 1040ez See Phaseout of Exemptions , later. 2010 income tax forms 1040ez Introduction This chapter discusses the following topics. 2010 income tax forms 1040ez Personal exemptions — You generally can take one for yourself and, if you are married, one for your spouse. 2010 income tax forms 1040ez Exemptions for dependents — You generally can take an exemption for each of your dependents. 2010 income tax forms 1040ez A dependent is your qualifying child or qualifying relative. 2010 income tax forms 1040ez If you are entitled to claim an exemption for a dependent, that dependent cannot claim a personal exemption on his or her own tax return. 2010 income tax forms 1040ez Phaseout of exemptions — Your deduction is reduced if your adjusted gross income is more than a certain amount. 2010 income tax forms 1040ez Social security number (SSN) requirement for dependents — You must list the SSN of any dependent for whom you claim an exemption. 2010 income tax forms 1040ez Deduction. 2010 income tax forms 1040ez   Exemptions reduce your taxable income. 2010 income tax forms 1040ez You can deduct $3,900 for each exemption you claim in 2013. 2010 income tax forms 1040ez But you may lose at least part of the dollar amount of your exemptions if your adjusted gross income is more than a certain amount. 2010 income tax forms 1040ez See Phaseout of Exemptions , later. 2010 income tax forms 1040ez How to claim exemptions. 2010 income tax forms 1040ez    How you claim an exemption on your tax return depends on which form you file. 2010 income tax forms 1040ez    If you file Form 1040EZ, the exemption amount is combined with the standard deduction amount and entered on line 5. 2010 income tax forms 1040ez    If you file Form 1040A, complete lines 6a through 6d. 2010 income tax forms 1040ez The total number of exemptions you can claim is the total in the box on line 6d. 2010 income tax forms 1040ez Also complete line 26. 2010 income tax forms 1040ez   If you file Form 1040, complete lines 6a through 6d. 2010 income tax forms 1040ez The total number of exemptions you can claim is the total in the box on line 6d. 2010 income tax forms 1040ez Also complete line 42. 2010 income tax forms 1040ez Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information Form (and Instructions) 2120 Multiple Support Declaration 8332 Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent Exemptions There are two types of exemptions you may be able to take: Personal exemptions for yourself and your spouse, and Exemptions for dependents (dependency exemptions). 2010 income tax forms 1040ez While each is worth the same amount ($3,900 for 2013), different rules apply to each type. 2010 income tax forms 1040ez Personal Exemptions You are generally allowed one exemption for yourself. 2010 income tax forms 1040ez If you are married, you may be allowed one exemption for your spouse. 2010 income tax forms 1040ez These are called personal exemptions. 2010 income tax forms 1040ez Your Own Exemption You can take one exemption for yourself unless you can be claimed as a dependent by another taxpayer. 2010 income tax forms 1040ez If another taxpayer is entitled to claim you as a dependent, you cannot take an exemption for yourself even if the other taxpayer does not actually claim you as a dependent. 2010 income tax forms 1040ez Your Spouse's Exemption Your spouse is never considered your dependent. 2010 income tax forms 1040ez Joint return. 2010 income tax forms 1040ez   On a joint return you can claim one exemption for yourself and one for your spouse. 2010 income tax forms 1040ez Separate return. 2010 income tax forms 1040ez   If you file a separate return, you can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer. 2010 income tax forms 1040ez This is true even if the other taxpayer does not actually claim your spouse as a dependent. 2010 income tax forms 1040ez You can claim an exemption for your spouse even if he or she is a nonresident alien; in that case, your spouse must have no gross income for U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez tax purposes, must not be filing a return, and must not be the dependent of another taxpayer. 2010 income tax forms 1040ez Death of spouse. 2010 income tax forms 1040ez   If your spouse died during the year and you file a joint return for yourself and your deceased spouse, you generally can claim your spouse's exemption under the rules just explained in Joint return . 2010 income tax forms 1040ez If you file a separate return for the year, you may be able to claim your spouse's exemption under the rules just described in Separate return . 2010 income tax forms 1040ez   If you remarried during the year, you cannot take an exemption for your deceased spouse. 2010 income tax forms 1040ez   If you are a surviving spouse without gross income and you remarry in the year your spouse died, you can be claimed as an exemption on both the final separate return of your deceased spouse and the separate return of your new spouse for that year. 2010 income tax forms 1040ez If you file a joint return with your new spouse, you can be claimed as an exemption only on that return. 2010 income tax forms 1040ez Divorced or separated spouse. 2010 income tax forms 1040ez   If you obtained a final decree of divorce or separate maintenance during the year, you cannot take your former spouse's exemption. 2010 income tax forms 1040ez This rule applies even if you provided all of your former spouse's support. 2010 income tax forms 1040ez Exemptions for Dependents You are allowed one exemption for each person you can claim as a dependent. 2010 income tax forms 1040ez You can claim an exemption for a dependent even if your dependent files a return. 2010 income tax forms 1040ez The term “dependent” means: A qualifying child, or A qualifying relative. 2010 income tax forms 1040ez The terms “ qualifying child ” and “ qualifying relative ” are defined later. 2010 income tax forms 1040ez You can claim an exemption for a qualifying child or qualifying relative only if these three tests are met. 2010 income tax forms 1040ez Dependent taxpayer test. 2010 income tax forms 1040ez Joint return test. 2010 income tax forms 1040ez Citizen or resident test. 2010 income tax forms 1040ez These three tests are explained in detail later. 2010 income tax forms 1040ez All the requirements for claiming an exemption for a dependent are summarized in Table 3-1. 2010 income tax forms 1040ez Table 3-1. 2010 income tax forms 1040ez Overview of the Rules for Claiming an Exemption for a Dependent Caution. 2010 income tax forms 1040ez This table is only an overview of the rules. 2010 income tax forms 1040ez For details, see the rest of this chapter. 2010 income tax forms 1040ez You cannot claim any dependents if you (or your spouse, if filing jointly) could be claimed as a dependent by another taxpayer. 2010 income tax forms 1040ez   You cannot claim a married person who files a joint return as a dependent unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid. 2010 income tax forms 1040ez   You cannot claim a person as a dependent unless that person is a U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez citizen, U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez resident alien, U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez national, or a resident of Canada or Mexico. 2010 income tax forms 1040ez 1  You cannot claim a person as a dependent unless that person is your qualifying child or qualifying relative. 2010 income tax forms 1040ez   Tests To Be a Qualifying Child   Tests To Be a Qualifying Relative The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. 2010 income tax forms 1040ez   The child must be (a) under age 19 at the end of the year and younger than you (or your spouse, if filing jointly), (b) under age 24 at the end of the year, a student, and younger than you (or your spouse, if filing jointly), or (c) any age if permanently and totally disabled. 2010 income tax forms 1040ez   The child must have lived with you for more than half of the year. 2010 income tax forms 1040ez 2  The child must not have provided more than half of his or her own support for the year. 2010 income tax forms 1040ez   The child is not filing a joint return for the year (unless that return is filed only to get a refund of income tax withheld or estimated tax paid). 2010 income tax forms 1040ez  If the child meets the rules to be a qualifying child of more than one person, only one person can actually treat the child as a qualifying child. 2010 income tax forms 1040ez See the Special Rule for Qualifying Child of More Than One Person to find out which person is the person entitled to claim the child as a qualifying child. 2010 income tax forms 1040ez   The person cannot be your qualifying child or the qualifying child of any other taxpayer. 2010 income tax forms 1040ez   The person either (a) must be related to you in one of the ways listed under Relatives who do not have to live with you , or (b) must live with you all year as a member of your household2 (and your relationship must not violate local law). 2010 income tax forms 1040ez   The person's gross income for the year must be less than $3,900. 2010 income tax forms 1040ez 3  You must provide more than half of the person's total support for the year. 2010 income tax forms 1040ez 4  1There is an exception for certain adopted children. 2010 income tax forms 1040ez 2There are exceptions for temporary absences, children who were born or died during the year, children of divorced or separated parents (or parents who live apart), and kidnapped children. 2010 income tax forms 1040ez 3There is an exception if the person is disabled and has income from a sheltered workshop. 2010 income tax forms 1040ez 4There are exceptions for multiple support agreements, children of divorced or separated parents (or parents who live apart), and kidnapped children. 2010 income tax forms 1040ez Dependent not allowed a personal exemption. 2010 income tax forms 1040ez If you can claim an exemption for your dependent, the dependent cannot claim his or her own personal exemption on his or her own tax return. 2010 income tax forms 1040ez This is true even if you do not claim the dependent's exemption on your return. 2010 income tax forms 1040ez It is also true if the dependent's exemption on your return is reduced or eliminated under the phaseout rule described under Phaseout of Exemptions, later. 2010 income tax forms 1040ez Housekeepers, maids, or servants. 2010 income tax forms 1040ez   If these people work for you, you cannot claim exemptions for them. 2010 income tax forms 1040ez Child tax credit. 2010 income tax forms 1040ez   You may be entitled to a child tax credit for each qualifying child who was under age 17 at the end of the year if you claimed an exemption for that child. 2010 income tax forms 1040ez For more information, see chapter 34. 2010 income tax forms 1040ez Dependent Taxpayer Test If you can be claimed as a dependent by another person, you cannot claim anyone else as a dependent. 2010 income tax forms 1040ez Even if you have a qualifying child or qualifying relative, you cannot claim that person as a dependent. 2010 income tax forms 1040ez If you are filing a joint return and your spouse can be claimed as a dependent by someone else, you and your spouse cannot claim any dependents on your joint return. 2010 income tax forms 1040ez Joint Return Test You generally cannot claim a married person as a dependent if he or she files a joint return. 2010 income tax forms 1040ez Exception. 2010 income tax forms 1040ez   You can claim an exemption for a person who files a joint return if that person and his or her spouse file the joint return only to claim a refund of income tax withheld or estimated tax paid. 2010 income tax forms 1040ez Example 1—child files joint return. 2010 income tax forms 1040ez You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. 2010 income tax forms 1040ez He earned $25,000 for the year. 2010 income tax forms 1040ez The couple files a joint return. 2010 income tax forms 1040ez You cannot take an exemption for your daughter. 2010 income tax forms 1040ez Example 2—child files joint return only as claim for refund of withheld tax. 2010 income tax forms 1040ez Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. 2010 income tax forms 1040ez Neither is required to file a tax return. 2010 income tax forms 1040ez They do not have a child. 2010 income tax forms 1040ez Taxes were taken out of their pay so they filed a joint return only to get a refund of the withheld taxes. 2010 income tax forms 1040ez The exception to the joint return test applies, so you are not disqualified from claiming an exemption for each of them just because they file a joint return. 2010 income tax forms 1040ez You can claim exemptions for each of them if all the other tests to do so are met. 2010 income tax forms 1040ez Example 3—child files joint return to claim American opportunity credit. 2010 income tax forms 1040ez The facts are the same as in Example 2 except no taxes were taken out of your son's pay. 2010 income tax forms 1040ez He and his wife are not required to file a tax return. 2010 income tax forms 1040ez However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. 2010 income tax forms 1040ez Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to get a refund of income tax withheld or estimated tax paid. 2010 income tax forms 1040ez The exception to the joint return test does not apply, so you cannot claim an exemption for either of them. 2010 income tax forms 1040ez Citizen or Resident Test You cannot claim a person as a dependent unless that person is a U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez citizen, U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez resident alien, U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez national, or a resident of Canada or Mexico. 2010 income tax forms 1040ez However, there is an exception for certain adopted children, as explained next. 2010 income tax forms 1040ez Exception for adopted child. 2010 income tax forms 1040ez   If you are a U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez citizen or U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez national who has legally adopted a child who is not a U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez citizen, U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez resident alien, or U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez national, this test is met if the child lived with you as a member of your household all year. 2010 income tax forms 1040ez This exception also applies if the child was lawfully placed with you for legal adoption. 2010 income tax forms 1040ez Child's place of residence. 2010 income tax forms 1040ez   Children usually are citizens or residents of the country of their parents. 2010 income tax forms 1040ez   If you were a U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez citizen when your child was born, the child may be a U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez citizen and meet this test even if the other parent was a nonresident alien and the child was born in a foreign country. 2010 income tax forms 1040ez Foreign students' place of residence. 2010 income tax forms 1040ez   Foreign students brought to this country under a qualified international education exchange program and placed in American homes for a temporary period generally are not U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez residents and do not meet this test. 2010 income tax forms 1040ez You cannot claim an exemption for them. 2010 income tax forms 1040ez However, if you provided a home for a foreign student, you may be able to take a charitable contribution deduction. 2010 income tax forms 1040ez See Expenses Paid for Student Living With You in chapter 24. 2010 income tax forms 1040ez U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez national. 2010 income tax forms 1040ez   A U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez national is an individual who, although not a U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez citizen, owes his or her allegiance to the United States. 2010 income tax forms 1040ez U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez nationals include American Samoans and Northern Mariana Islanders who chose to become U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez nationals instead of U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez citizens. 2010 income tax forms 1040ez Qualifying Child Five tests must be met for a child to be your qualifying child. 2010 income tax forms 1040ez The five tests are: Relationship, Age, Residency, Support, and Joint return. 2010 income tax forms 1040ez These tests are explained next. 2010 income tax forms 1040ez If a child meets the five tests to be the qualifying child of more than one person, a special rule applies to determine which person can actually treat the child as a qualifying child. 2010 income tax forms 1040ez See Special Rule for Qualifying Child of More Than One Person, later. 2010 income tax forms 1040ez Relationship Test To meet this test, a child must be: Your son, daughter, stepchild, foster child, or a descendant (for example, your grandchild) of any of them, or Your brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant (for example, your niece or nephew) of any of them. 2010 income tax forms 1040ez Adopted child. 2010 income tax forms 1040ez   An adopted child is always treated as your own child. 2010 income tax forms 1040ez The term “adopted child” includes a child who was lawfully placed with you for legal adoption. 2010 income tax forms 1040ez Foster child. 2010 income tax forms 1040ez   A foster child is an individual who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. 2010 income tax forms 1040ez Age Test To meet this test, a child must be: Under age 19 at the end of the year and younger than you (or your spouse, if filing jointly), A student under age 24 at the end of the year and younger than you (or your spouse, if filing jointly), or Permanently and totally disabled at any time during the year, regardless of age. 2010 income tax forms 1040ez Example. 2010 income tax forms 1040ez Your son turned 19 on December 10. 2010 income tax forms 1040ez Unless he was permanently and totally disabled or a student, he does not meet the age test because, at the end of the year, he was not under age 19. 2010 income tax forms 1040ez Child must be younger than you or spouse. 2010 income tax forms 1040ez   To be your qualifying child, a child who is not permanently and totally disabled must be younger than you. 2010 income tax forms 1040ez However, if you are married filing jointly, the child must be younger than you or your spouse but does not have to be younger than both of you. 2010 income tax forms 1040ez Example 1—child not younger than you or spouse. 2010 income tax forms 1040ez Your 23-year-old brother, who is a student and unmarried, lives with you and your spouse. 2010 income tax forms 1040ez He is not disabled. 2010 income tax forms 1040ez Both you and your spouse are 21 years old, and you file a joint return. 2010 income tax forms 1040ez Your brother is not your qualifying child because he is not younger than you or your spouse. 2010 income tax forms 1040ez Example 2—child younger than your spouse but not younger than you. 2010 income tax forms 1040ez The facts are the same as in Example 1 except your spouse is 25 years old. 2010 income tax forms 1040ez Because your brother is younger than your spouse, and you and your spouse are filing a joint return, your brother is your qualifying child, even though he is not younger than you. 2010 income tax forms 1040ez Student defined. 2010 income tax forms 1040ez   To qualify as a student, your child must be, during some part of each of any 5 calendar months of the year: A full-time student at a school that has a regular teaching staff, course of study, and a regularly enrolled student body at the school, or A student taking a full-time, on-farm training course given by a school described in (1), or by a state, county, or local government agency. 2010 income tax forms 1040ez The 5 calendar months do not have to be consecutive. 2010 income tax forms 1040ez Full-time student. 2010 income tax forms 1040ez   A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance. 2010 income tax forms 1040ez School defined. 2010 income tax forms 1040ez   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. 2010 income tax forms 1040ez However, an on-the-job training course, correspondence school, or school offering courses only through the Internet does not count as a school. 2010 income tax forms 1040ez Vocational high school students. 2010 income tax forms 1040ez   Students who work on “co-op” jobs in private industry as a part of a school's regular course of classroom and practical training are considered full-time students. 2010 income tax forms 1040ez Permanently and totally disabled. 2010 income tax forms 1040ez   Your child is permanently and totally disabled if both of the following apply. 2010 income tax forms 1040ez He or she cannot engage in any substantial gainful activity because of a physical or mental condition. 2010 income tax forms 1040ez A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. 2010 income tax forms 1040ez Residency Test To meet this test, your child must have lived with you for more than half the year. 2010 income tax forms 1040ez There are exceptions for temporary absences, children who were born or died during the year, kidnapped children, and children of divorced or separated parents. 2010 income tax forms 1040ez Temporary absences. 2010 income tax forms 1040ez   Your child is considered to have lived with you during periods of time when one of you, or both, are temporarily absent due to special circumstances such as: Illness, Education, Business, Vacation, or Military service. 2010 income tax forms 1040ez Your child is also considered to have lived with you during any required hospital stay following birth, as long as the child would have lived with you during that time but for the hospitalization. 2010 income tax forms 1040ez Death or birth of child. 2010 income tax forms 1040ez   A child who was born or died during the year is treated as having lived with you more than half of the year if your home was the child's home more than half of the time he or she was alive during the year. 2010 income tax forms 1040ez Child born alive. 2010 income tax forms 1040ez   You may be able to claim an exemption for a child born alive during the year, even if the child lived only for a moment. 2010 income tax forms 1040ez State or local law must treat the child as having been born alive. 2010 income tax forms 1040ez There must be proof of a live birth shown by an official document, such as a birth certificate. 2010 income tax forms 1040ez The child must be your qualifying child or qualifying relative, and all the other tests to claim an exemption for a dependent must be met. 2010 income tax forms 1040ez Stillborn child. 2010 income tax forms 1040ez   You cannot claim an exemption for a stillborn child. 2010 income tax forms 1040ez Kidnapped child. 2010 income tax forms 1040ez   You may be able to treat your child as meeting the residency test even if the child has been kidnapped. 2010 income tax forms 1040ez See Publication 501 for details. 2010 income tax forms 1040ez Children of divorced or separated parents (or parents who live apart). 2010 income tax forms 1040ez   In most cases, because of the residency test, a child of divorced or separated parents is the qualifying child of the custodial parent. 2010 income tax forms 1040ez However, the child will be treated as the qualifying child of the noncustodial parent if all four of the following statements are true. 2010 income tax forms 1040ez The parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Lived apart at all times during the last 6 months of the year, whether or not they are or were married. 2010 income tax forms 1040ez The child received over half of his or her support for the year from the parents. 2010 income tax forms 1040ez The child is in the custody of one or both parents for more than half of the year. 2010 income tax forms 1040ez Either of the following statements is true. 2010 income tax forms 1040ez The custodial parent signs a written declaration, discussed later, that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches this written declaration to his or her return. 2010 income tax forms 1040ez (If the decree or agreement went into effect after 1984 and before 2009, see Post-1984 and pre-2009 divorce decree or separation agreement , later. 2010 income tax forms 1040ez If the decree or agreement went into effect after 2008, see Post-2008 divorce decree or separation agreement , later. 2010 income tax forms 1040ez ) A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2013 states that the noncustodial parent can claim the child as a dependent, the decree or agreement was not changed after 1984 to say the noncustodial parent cannot claim the child as a dependent, and the noncustodial parent provides at least $600 for the child's support during the year. 2010 income tax forms 1040ez Custodial parent and noncustodial parent. 2010 income tax forms 1040ez   The custodial parent is the parent with whom the child lived for the greater number of nights during the year. 2010 income tax forms 1040ez The other parent is the noncustodial parent. 2010 income tax forms 1040ez   If the parents divorced or separated during the year and the child lived with both parents before the separation, the custodial parent is the one with whom the child lived for the greater number of nights during the rest of the year. 2010 income tax forms 1040ez   A child is treated as living with a parent for a night if the child sleeps: At that parent's home, whether or not the parent is present, or In the company of the parent, when the child does not sleep at a parent's home (for example, the parent and child are on vacation together). 2010 income tax forms 1040ez Equal number of nights. 2010 income tax forms 1040ez   If the child lived with each parent for an equal number of nights during the year, the custodial parent is the parent with the higher adjusted gross income (AGI). 2010 income tax forms 1040ez December 31. 2010 income tax forms 1040ez   The night of December 31 is treated as part of the year in which it begins. 2010 income tax forms 1040ez For example, December 31, 2013, is treated as part of 2013. 2010 income tax forms 1040ez Emancipated child. 2010 income tax forms 1040ez   If a child is emancipated under state law, the child is treated as not living with either parent. 2010 income tax forms 1040ez See Examples 5 and 6. 2010 income tax forms 1040ez Absences. 2010 income tax forms 1040ez   If a child was not with either parent on a particular night (because, for example, the child was staying at a friend's house), the child is treated as living with the parent with whom the child normally would have lived for that night, except for the absence. 2010 income tax forms 1040ez But if it cannot be determined with which parent the child normally would have lived or if the child would not have lived with either parent that night, the child is treated as not living with either parent that night. 2010 income tax forms 1040ez Parent works at night. 2010 income tax forms 1040ez   If, due to a parent's nighttime work schedule, a child lives for a greater number of days, but not nights, with the parent who works at night, that parent is treated as the custodial parent. 2010 income tax forms 1040ez On a school day, the child is treated as living at the primary residence registered with the school. 2010 income tax forms 1040ez Example 1—child lived with one parent for a greater number of nights. 2010 income tax forms 1040ez You and your child’s other parent are divorced. 2010 income tax forms 1040ez In 2013, your child lived with you 210 nights and with the other parent 155 nights. 2010 income tax forms 1040ez You are the custodial parent. 2010 income tax forms 1040ez Example 2—child is away at camp. 2010 income tax forms 1040ez In 2013, your daughter lives with each parent for alternate weeks. 2010 income tax forms 1040ez In the summer, she spends 6 weeks at summer camp. 2010 income tax forms 1040ez During the time she is at camp, she is treated as living with you for 3 weeks and with her other parent, your ex-spouse, for 3 weeks because this is how long she would have lived with each parent if she had not attended summer camp. 2010 income tax forms 1040ez Example 3—child lived same number of nights with each parent. 2010 income tax forms 1040ez Your son lived with you 180 nights during the year and lived the same number of nights with his other parent, your ex-spouse. 2010 income tax forms 1040ez Your AGI is $40,000. 2010 income tax forms 1040ez Your ex-spouse's AGI is $25,000. 2010 income tax forms 1040ez You are treated as your son's custodial parent because you have the higher AGI. 2010 income tax forms 1040ez Example 4—child is at parent’s home but with other parent. 2010 income tax forms 1040ez Your son normally lives with you during the week and with his other parent, your ex-spouse, every other weekend. 2010 income tax forms 1040ez You become ill and are hospitalized. 2010 income tax forms 1040ez The other parent lives in your home with your son for 10 consecutive days while you are in the hospital. 2010 income tax forms 1040ez Your son is treated as living with you during this 10-day period because he was living in your home. 2010 income tax forms 1040ez Example 5—child emancipated in May. 2010 income tax forms 1040ez When your son turned age 18 in May 2013, he became emancipated under the law of the state where he lives. 2010 income tax forms 1040ez As a result, he is not considered in the custody of his parents for more than half of the year. 2010 income tax forms 1040ez The special rule for children of divorced or separated parents does not apply. 2010 income tax forms 1040ez Example 6—child emancipated in August. 2010 income tax forms 1040ez Your daughter lives with you from January 1, 2013, until May 31, 2013, and lives with her other parent, your ex-spouse, from June 1, 2013, through the end of the year. 2010 income tax forms 1040ez She turns 18 and is emancipated under state law on August 1, 2013. 2010 income tax forms 1040ez Because she is treated as not living with either parent beginning on August 1, she is treated as living with you the greater number of nights in 2013. 2010 income tax forms 1040ez You are the custodial parent. 2010 income tax forms 1040ez Written declaration. 2010 income tax forms 1040ez    The custodial parent may use either Form 8332 or a similar statement (containing the same information required by the form) to make the written declaration to release the exemption to the noncustodial parent. 2010 income tax forms 1040ez The noncustodial parent must attach a copy of the form or statement to his or her tax return. 2010 income tax forms 1040ez   The exemption can be released for 1 year, for a number of specified years (for example, alternate years), or for all future years, as specified in the declaration. 2010 income tax forms 1040ez Post-1984 and pre-2009 divorce decree or separation agreement. 2010 income tax forms 1040ez   If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. 2010 income tax forms 1040ez The decree or agreement must state all three of the following. 2010 income tax forms 1040ez The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support. 2010 income tax forms 1040ez The custodial parent will not claim the child as a dependent for the year. 2010 income tax forms 1040ez The years for which the noncustodial parent, rather than the custodial parent, can claim the child as a dependent. 2010 income tax forms 1040ez   The noncustodial parent must attach all of the following pages of the decree or agreement to his or her tax return. 2010 income tax forms 1040ez The cover page (write the other parent's social security number on this page). 2010 income tax forms 1040ez The pages that include all of the information identified in items (1) through (3) above. 2010 income tax forms 1040ez The signature page with the other parent's signature and the date of the agreement. 2010 income tax forms 1040ez Post-2008 divorce decree or separation agreement. 2010 income tax forms 1040ez   The noncustodial parent cannot attach pages from the decree or agreement instead of Form 8332 if the decree or agreement went into effect after 2008. 2010 income tax forms 1040ez The custodial parent must sign either Form 8332 or a similar statement whose only purpose is to release the custodial parent's claim to an exemption for a child, and the noncustodial parent must attach a copy to his or her return. 2010 income tax forms 1040ez The form or statement must release the custodial parent's claim to the child without any conditions. 2010 income tax forms 1040ez For example, the release must not depend on the noncustodial parent paying support. 2010 income tax forms 1040ez    The noncustodial parent must attach the required information even if it was filed with a return in an earlier year. 2010 income tax forms 1040ez Revocation of release of claim to an exemption. 2010 income tax forms 1040ez   The custodial parent can revoke a release of claim to exemption that he or she previously released to the noncustodial parent on Form 8332 (or a similar statement). 2010 income tax forms 1040ez For the revocation to be effective for 2013, the custodial parent must have given (or made reasonable efforts to give) written notice of the revocation to the noncustodial parent in 2012 or earlier. 2010 income tax forms 1040ez The custodial parent can use Part III of Form 8332 for this purpose and must attach a copy of the revocation to his or her return for each tax year he or she claims the child as a dependent as a result of the revocation. 2010 income tax forms 1040ez Remarried parent. 2010 income tax forms 1040ez   If you remarry, the support provided by your new spouse is treated as provided by you. 2010 income tax forms 1040ez Parents who never married. 2010 income tax forms 1040ez   This special rule for divorced or separated parents also applies to parents who never married, and who lived apart at all times during the last 6 months of the year. 2010 income tax forms 1040ez Support Test (To Be a Qualifying Child) To meet this test, the child cannot have provided more than half of his or her own support for the year. 2010 income tax forms 1040ez This test is different from the support test to be a qualifying relative, which is described later. 2010 income tax forms 1040ez However, to see what is or is not support, see Support Test (To Be a Qualifying Relative) , later. 2010 income tax forms 1040ez If you are not sure whether a child provided more than half of his or her own support, you may find Worksheet 3-1 helpful. 2010 income tax forms 1040ez Worksheet 3-1. 2010 income tax forms 1040ez Worksheet for Determining Support Funds Belonging to the Person You Supported       1. 2010 income tax forms 1040ez Enter the total funds belonging to the person you supported, including income received (taxable and nontaxable) and amounts borrowed during the year, plus the amount in savings and other accounts at the beginning of the year. 2010 income tax forms 1040ez Do not include funds provided by the state; include those amounts on line 23 instead 1. 2010 income tax forms 1040ez     2. 2010 income tax forms 1040ez Enter the amount on line 1 that was used for the person's support 2. 2010 income tax forms 1040ez     3. 2010 income tax forms 1040ez Enter the amount on line 1 that was used for other purposes 3. 2010 income tax forms 1040ez     4. 2010 income tax forms 1040ez Enter the total amount in the person's savings and other accounts at the end of the year 4. 2010 income tax forms 1040ez     5. 2010 income tax forms 1040ez Add lines 2 through 4. 2010 income tax forms 1040ez (This amount should equal line 1. 2010 income tax forms 1040ez ) 5. 2010 income tax forms 1040ez     Expenses for Entire Household (where the person you supported lived)       6. 2010 income tax forms 1040ez Lodging (complete line 6a or 6b):         a. 2010 income tax forms 1040ez Enter the total rent paid 6a. 2010 income tax forms 1040ez       b. 2010 income tax forms 1040ez Enter the fair rental value of the home. 2010 income tax forms 1040ez If the person you supported owned the home,  also include this amount in line 21 6b. 2010 income tax forms 1040ez     7. 2010 income tax forms 1040ez Enter the total food expenses 7. 2010 income tax forms 1040ez     8. 2010 income tax forms 1040ez Enter the total amount of utilities (heat, light, water, etc. 2010 income tax forms 1040ez not included in line 6a or 6b) 8. 2010 income tax forms 1040ez     9. 2010 income tax forms 1040ez Enter the total amount of repairs (not included in line 6a or 6b) 9. 2010 income tax forms 1040ez     10. 2010 income tax forms 1040ez Enter the total of other expenses. 2010 income tax forms 1040ez Do not include expenses of maintaining the home, such as mortgage interest, real estate taxes, and insurance 10. 2010 income tax forms 1040ez     11. 2010 income tax forms 1040ez Add lines 6a through 10. 2010 income tax forms 1040ez These are the total household expenses 11. 2010 income tax forms 1040ez     12. 2010 income tax forms 1040ez Enter total number of persons who lived in the household 12. 2010 income tax forms 1040ez     Expenses for the Person You Supported       13. 2010 income tax forms 1040ez Divide line 11 by line 12. 2010 income tax forms 1040ez This is the person's share of the household expenses 13. 2010 income tax forms 1040ez     14. 2010 income tax forms 1040ez Enter the person's total clothing expenses 14. 2010 income tax forms 1040ez     15. 2010 income tax forms 1040ez Enter the person's total education expenses 15. 2010 income tax forms 1040ez     16. 2010 income tax forms 1040ez Enter the person's total medical and dental expenses not paid for or reimbursed by insurance 16. 2010 income tax forms 1040ez     17. 2010 income tax forms 1040ez Enter the person's total travel and recreation expenses 17. 2010 income tax forms 1040ez     18. 2010 income tax forms 1040ez Enter the total of the person's other expenses 18. 2010 income tax forms 1040ez     19. 2010 income tax forms 1040ez Add lines 13 through 18. 2010 income tax forms 1040ez This is the total cost of the person's support for the year 19. 2010 income tax forms 1040ez     Did the Person Provide More Than Half of His or Her Own Support?       20. 2010 income tax forms 1040ez Multiply line 19 by 50% (. 2010 income tax forms 1040ez 50) 20. 2010 income tax forms 1040ez     21. 2010 income tax forms 1040ez Enter the amount from line 2, plus the amount from line 6b if the person you supported owned  the home. 2010 income tax forms 1040ez This is the amount the person provided for his or her own support 21. 2010 income tax forms 1040ez     22. 2010 income tax forms 1040ez Is line 21 more than line 20?   No. 2010 income tax forms 1040ez You meet the support test for this person to be your qualifying child. 2010 income tax forms 1040ez If this person also meets the other tests to be a qualifying child, stop here; do not complete lines 23–26. 2010 income tax forms 1040ez Otherwise, go to line 23 and fill out the rest of the worksheet to determine if this person is your qualifying relative. 2010 income tax forms 1040ez    Yes. 2010 income tax forms 1040ez You do not meet the support test for this person to be either your qualifying child or your qualifying relative. 2010 income tax forms 1040ez Stop here. 2010 income tax forms 1040ez        Did You Provide More Than Half?       23. 2010 income tax forms 1040ez Enter the amount others provided for the person's support. 2010 income tax forms 1040ez Include amounts provided by state, local, and other welfare societies or agencies. 2010 income tax forms 1040ez Do not include any amounts included on line 1 23. 2010 income tax forms 1040ez     24. 2010 income tax forms 1040ez Add lines 21 and 23 24. 2010 income tax forms 1040ez     25. 2010 income tax forms 1040ez Subtract line 24 from line 19. 2010 income tax forms 1040ez This is the amount you provided for the person's support 25. 2010 income tax forms 1040ez     26. 2010 income tax forms 1040ez Is line 25 more than line 20?   Yes. 2010 income tax forms 1040ez You meet the support test for this person to be your qualifying relative. 2010 income tax forms 1040ez    No. 2010 income tax forms 1040ez You do not meet the support test for this person to be your qualifying relative. 2010 income tax forms 1040ez You cannot claim an exemption for this person unless you can do so under a multiple support agreement, the support test for children of divorced or separated parents, or the special rule for kidnapped children. 2010 income tax forms 1040ez See Multiple Support Agreement or Support Test for Children of Divorced or Separated Parents (or Parents Who Live Apart) , or Kidnapped child under Qualifying Relative. 2010 income tax forms 1040ez   Example. 2010 income tax forms 1040ez You provided $4,000 toward your 16-year-old son's support for the year. 2010 income tax forms 1040ez He has a part-time job and provided $6,000 to his own support. 2010 income tax forms 1040ez He provided more than half of his own support for the year. 2010 income tax forms 1040ez He is not your qualifying child. 2010 income tax forms 1040ez Foster care payments and expenses. 2010 income tax forms 1040ez   Payments you receive for the support of a foster child from a child placement agency are considered support provided by the agency. 2010 income tax forms 1040ez Similarly, payments you receive for the support of a foster child from a state or county are considered support provided by the state or county. 2010 income tax forms 1040ez   If you are not in the trade or business of providing foster care and your unreimbursed out-of-pocket expenses in caring for a foster child were mainly to benefit an organization qualified to receive deductible charitable contributions, the expenses are deductible as charitable contributions but are not considered support you provided. 2010 income tax forms 1040ez For more information about the deduction for charitable contributions, see chapter 24. 2010 income tax forms 1040ez If your unreimbursed expenses are not deductible as charitable contributions, they may qualify as support you provided. 2010 income tax forms 1040ez   If you are in the trade or business of providing foster care, your unreimbursed expenses are not considered support provided by you. 2010 income tax forms 1040ez Example 1. 2010 income tax forms 1040ez Lauren, a foster child, lived with Mr. 2010 income tax forms 1040ez and Mrs. 2010 income tax forms 1040ez Smith for the last 3 months of the year. 2010 income tax forms 1040ez The Smiths cared for Lauren because they wanted to adopt her (although she had not been placed with them for adoption). 2010 income tax forms 1040ez They did not care for her as a trade or business or to benefit the agency that placed her in their home. 2010 income tax forms 1040ez The Smiths' unreimbursed expenses are not deductible as charitable contributions but are considered support they provided for Lauren. 2010 income tax forms 1040ez Example 2. 2010 income tax forms 1040ez You provided $3,000 toward your 10-year-old foster child's support for the year. 2010 income tax forms 1040ez The state government provided $4,000, which is considered support provided by the state, not by the child. 2010 income tax forms 1040ez See Support provided by the state (welfare, food stamps, housing, etc. 2010 income tax forms 1040ez ) , later. 2010 income tax forms 1040ez Your foster child did not provide more than half of her own support for the year. 2010 income tax forms 1040ez Scholarships. 2010 income tax forms 1040ez   A scholarship received by a child who is a student is not taken into account in determining whether the child provided more than half of his or her own support. 2010 income tax forms 1040ez Joint Return Test (To Be a Qualifying Child) To meet this test, the child cannot file a joint return for the year. 2010 income tax forms 1040ez Exception. 2010 income tax forms 1040ez   An exception to the joint return test applies if your child and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid. 2010 income tax forms 1040ez Example 1—child files joint return. 2010 income tax forms 1040ez You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. 2010 income tax forms 1040ez He earned $25,000 for the year. 2010 income tax forms 1040ez The couple files a joint return. 2010 income tax forms 1040ez Because your daughter and her husband file a joint return, she is not your qualifying child. 2010 income tax forms 1040ez Example 2—child files joint return only as a claim for refund of withheld tax. 2010 income tax forms 1040ez Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. 2010 income tax forms 1040ez Neither is required to file a tax return. 2010 income tax forms 1040ez They do not have a child. 2010 income tax forms 1040ez Taxes were taken out of their pay so they filed a joint return only to get a refund of the withheld taxes. 2010 income tax forms 1040ez The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. 2010 income tax forms 1040ez Example 3—child files joint return to claim American opportunity credit. 2010 income tax forms 1040ez The facts are the same as in Example 2 except no taxes were taken out of your son's pay. 2010 income tax forms 1040ez He and his wife were not required to file a tax return. 2010 income tax forms 1040ez However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. 2010 income tax forms 1040ez Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to get a refund of income tax withheld or estimated tax paid. 2010 income tax forms 1040ez The exception to the joint return test does not apply, so your son is not your qualifying child. 2010 income tax forms 1040ez Special Rule for Qualifying Child of More Than One Person If your qualifying child is not a qualifying child of anyone else, this special rule does not apply to you and you do not need to read about it. 2010 income tax forms 1040ez This is also true if your qualifying child is not a qualifying child of anyone else except your spouse with whom you file a joint return. 2010 income tax forms 1040ez If a child is treated as the qualifying child of the noncustodial parent under the rules for children of divorced or separated parents (or parents who live apart) described earlier, see Applying this special rule to divorced or separated parents (or parents who live apart), later. 2010 income tax forms 1040ez Sometimes, a child meets the relationship, age, residency, support, and joint return tests to be a qualifying child of more than one person. 2010 income tax forms 1040ez Although the child is a qualifying child of each of these persons, only one person can actually treat the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit). 2010 income tax forms 1040ez The exemption for the child. 2010 income tax forms 1040ez The child tax credit. 2010 income tax forms 1040ez Head of household filing status. 2010 income tax forms 1040ez The credit for child and dependent care expenses. 2010 income tax forms 1040ez The exclusion from income for dependent care benefits. 2010 income tax forms 1040ez The earned income credit. 2010 income tax forms 1040ez The other person cannot take any of these benefits based on this qualifying child. 2010 income tax forms 1040ez In other words, you and the other person cannot agree to divide these benefits between you. 2010 income tax forms 1040ez The other person cannot take any of these tax benefits for a child unless he or she has a different qualifying child. 2010 income tax forms 1040ez Tiebreaker rules. 2010 income tax forms 1040ez   To determine which person can treat the child as a qualifying child to claim these six tax benefits, the following tiebreaker rules apply. 2010 income tax forms 1040ez If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. 2010 income tax forms 1040ez If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents. 2010 income tax forms 1040ez If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. 2010 income tax forms 1040ez If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year. 2010 income tax forms 1040ez If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year. 2010 income tax forms 1040ez If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child. 2010 income tax forms 1040ez If the child's parents file a joint return with each other, this rule can be applied by dividing the parents' combined AGI equally between the parents. 2010 income tax forms 1040ez See Example 6 . 2010 income tax forms 1040ez   Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child. 2010 income tax forms 1040ez Example 1—child lived with parent and grandparent. 2010 income tax forms 1040ez You and your 3-year-old daughter Jane lived with your mother all year. 2010 income tax forms 1040ez You are 25 years old, unmarried, and your AGI is $9,000. 2010 income tax forms 1040ez Your mother's AGI is $15,000. 2010 income tax forms 1040ez Jane's father did not live with you or your daughter. 2010 income tax forms 1040ez You have not signed Form 8332 (or a similar statement) to release the child's exemption to the noncustodial parent. 2010 income tax forms 1040ez Jane is a qualifying child of both you and your mother because she meets the relationship, age, residency, support, and joint return tests for both you and your mother. 2010 income tax forms 1040ez However, only one of you can claim her. 2010 income tax forms 1040ez Jane is not a qualifying child of anyone else, including her father. 2010 income tax forms 1040ez You agree to let your mother claim Jane. 2010 income tax forms 1040ez This means your mother can claim Jane as a qualifying child for all of the six tax benefits listed earlier, if she qualifies (and if you do not claim Jane as a qualifying child for any of those tax benefits). 2010 income tax forms 1040ez Example 2—parent has higher AGI than grandparent. 2010 income tax forms 1040ez The facts are the same as in Example 1 except your AGI is $18,000. 2010 income tax forms 1040ez Because your mother's AGI is not higher than yours, she cannot claim Jane. 2010 income tax forms 1040ez Only you can claim Jane. 2010 income tax forms 1040ez Example 3—two persons claim same child. 2010 income tax forms 1040ez The facts are the same as in Example 1 except that you and your mother both claim Jane as a qualifying child. 2010 income tax forms 1040ez In this case, you, as the child's parent, will be the only one allowed to claim Jane as a qualifying child. 2010 income tax forms 1040ez The IRS will disallow your mother's claim to the six tax benefits listed earlier unless she has another qualifying child. 2010 income tax forms 1040ez Example 4—qualifying children split between two persons. 2010 income tax forms 1040ez The facts are the same as in Example 1 except you also have two other young children who are qualifying children of both you and your mother. 2010 income tax forms 1040ez Only one of you can claim each child. 2010 income tax forms 1040ez However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. 2010 income tax forms 1040ez For example, if you claim one child, your mother can claim the other two. 2010 income tax forms 1040ez Example 5—taxpayer who is a qualifying child. 2010 income tax forms 1040ez The facts are the same as in Example 1 except you are only 18 years old and did not provide more than half of your own support for the year. 2010 income tax forms 1040ez This means you are your mother's qualifying child. 2010 income tax forms 1040ez If she can claim you as a dependent, then you cannot claim your daughter as a dependent because of the Dependent Taxpayer Test explained earlier. 2010 income tax forms 1040ez Example 6—child lived with both parents and grandparent. 2010 income tax forms 1040ez The facts are the same as in Example 1 except you are married to your daughter's father. 2010 income tax forms 1040ez The two of you live together with your daughter and your mother, and have an AGI of $20,000 on a joint return. 2010 income tax forms 1040ez If you and your husband do not claim your daughter as a qualifying child, your mother can claim her instead. 2010 income tax forms 1040ez Even though the AGI on your joint return, $20,000, is more than your mother's AGI of $15,000, for this purpose each parent's AGI can be treated as $10,000, so your mother's $15,000 AGI is treated as higher than the highest AGI of any of the child's parents who can claim the child. 2010 income tax forms 1040ez Example 7—separated parents. 2010 income tax forms 1040ez You, your husband, and your 10-year-old son lived together until August 1, 2013, when your husband moved out of the household. 2010 income tax forms 1040ez In August and September, your son lived with you. 2010 income tax forms 1040ez For the rest of the year, your son lived with your husband, the boy's father. 2010 income tax forms 1040ez Your son is a qualifying child of both you and your husband because your son lived with each of you for more than half the year and because he met the relationship, age, support, and joint return tests for both of you. 2010 income tax forms 1040ez At the end of the year, you and your husband still were not divorced, legally separated, or separated under a written separation agreement, so the rule for children of divorced or separated parents (or parents who live apart) does not apply. 2010 income tax forms 1040ez You and your husband will file separate returns. 2010 income tax forms 1040ez Your husband agrees to let you treat your son as a qualifying child. 2010 income tax forms 1040ez This means, if your husband does not claim your son as a qualifying child, you can claim your son as a qualifying child for the dependency exemption, child tax credit, and exclusion for dependent care benefits (if you qualify for each of those tax benefits). 2010 income tax forms 1040ez However, you cannot claim head of household filing status because you and your husband did not live apart for the last 6 months of the year. 2010 income tax forms 1040ez As a result, your filing status is married filing separately, so you cannot claim the earned income credit or the credit for child and dependent care expenses. 2010 income tax forms 1040ez Example 8—separated parents claim same child. 2010 income tax forms 1040ez The facts are the same as in Example 7 except that you and your husband both claim your son as a qualifying child. 2010 income tax forms 1040ez In this case, only your husband will be allowed to treat your son as a qualifying child. 2010 income tax forms 1040ez This is because, during 2013, the boy lived with him longer than with you. 2010 income tax forms 1040ez If you claimed an exemption or the child tax credit for your son, the IRS will disallow your claim to both these tax benefits. 2010 income tax forms 1040ez If you do not have another qualifying child or dependent, the IRS will also disallow your claim to the exclusion for dependent care benefits. 2010 income tax forms 1040ez In addition, because you and your husband did not live apart for the last 6 months of the year, your husband cannot claim head of household filing status. 2010 income tax forms 1040ez As a result, his filing status is married filing separately, so he cannot claim the earned income credit or the credit for child and dependent care expenses. 2010 income tax forms 1040ez Example 9—unmarried parents. 2010 income tax forms 1040ez You, your 5-year-old son, and your son's father lived together all year. 2010 income tax forms 1040ez You and your son's father are not married. 2010 income tax forms 1040ez Your son is a qualifying child of both you and his father because he meets the relationship, age, residency, support, and joint return tests for both you and his father. 2010 income tax forms 1040ez Your AGI is $12,000 and your son's father's AGI is $14,000. 2010 income tax forms 1040ez Your son's father agrees to let you claim the child as a qualifying child. 2010 income tax forms 1040ez This means you can claim him as a qualifying child for the dependency exemption, child tax credit, head of household filing status, credit for child and dependent care expenses, exclusion for dependent care benefits, and the earned income credit, if you qualify for each of those tax benefits (and if your son's father does not, in fact, claim your son as a qualifying child for any of those tax benefits). 2010 income tax forms 1040ez Example 10—unmarried parents claim same child. 2010 income tax forms 1040ez The facts are the same as in Example 9 except that you and your son's father both claim your son as a qualifying child. 2010 income tax forms 1040ez In this case, only your son's father will be allowed to treat your son as a qualifying child. 2010 income tax forms 1040ez This is because his AGI, $14,000, is more than your AGI, $12,000. 2010 income tax forms 1040ez If you claimed an exemption or the child tax credit for your son, the IRS will disallow your claim to both these tax benefits. 2010 income tax forms 1040ez If you do not have another qualifying child or dependent, the IRS will also disallow your claim to the earned income credit, head of household filing status, the credit for child and dependent care expenses, and the exclusion for dependent care benefits. 2010 income tax forms 1040ez Example 11—child did not live with a parent. 2010 income tax forms 1040ez You and your 7-year-old niece, your sister's child, lived with your mother all year. 2010 income tax forms 1040ez You are 25 years old, and your AGI is $9,300. 2010 income tax forms 1040ez Your mother's AGI is $15,000. 2010 income tax forms 1040ez Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. 2010 income tax forms 1040ez Your niece is a qualifying child of both you and your mother because she meets the relationship, age, residency, support, and joint return tests for both you and your mother. 2010 income tax forms 1040ez However, only your mother can treat her as a qualifying child. 2010 income tax forms 1040ez This is because your mother's AGI, $15,000, is more than your AGI, $9,300. 2010 income tax forms 1040ez Applying this special rule to divorced or separated parents (or parents who live apart). 2010 income tax forms 1040ez   If a child is treated as the qualifying child of the noncustodial parent under the rules described earlier for children of divorced or separated parents (or parents who live apart), only the noncustodial parent can claim an exemption and the child tax credit for the child. 2010 income tax forms 1040ez However, the custodial parent, if eligible, or other eligible person can claim the child as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, and the earned income credit. 2010 income tax forms 1040ez If the child is the qualifying child of more than one person for these benefits, then the tiebreaker rules just explained determine which person can treat the child as a qualifying child. 2010 income tax forms 1040ez Example 1. 2010 income tax forms 1040ez You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. 2010 income tax forms 1040ez Your AGI is $10,000. 2010 income tax forms 1040ez Your mother's AGI is $25,000. 2010 income tax forms 1040ez Your son's father did not live with you or your son. 2010 income tax forms 1040ez Under the rules explained earlier for children of divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for him. 2010 income tax forms 1040ez Because of this, you cannot claim an exemption or the child tax credit for your son. 2010 income tax forms 1040ez However, your son's father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the earned income credit. 2010 income tax forms 1040ez You and your mother did not have any child care expenses or dependent care benefits, so neither of you can claim the credit for child and dependent care expenses or the exclusion for dependent care benefits. 2010 income tax forms 1040ez But the boy is a qualifying child of both you and your mother for head of household filing status and the earned income credit because he meets the relationship, age, residency, support, and joint return tests for both you and your mother. 2010 income tax forms 1040ez (Note: The support test does not apply for the earned income credit. 2010 income tax forms 1040ez ) However, you agree to let your mother claim your son. 2010 income tax forms 1040ez This means she can claim him for head of household filing status and the earned income credit if she qualifies for each and if you do not claim him as a qualifying child for the earned income credit. 2010 income tax forms 1040ez (You cannot claim head of household filing status because your mother paid the entire cost of keeping up the home. 2010 income tax forms 1040ez ) Example 2. 2010 income tax forms 1040ez The facts are the same as in Example 1 except your AGI is $25,000 and your mother's AGI is $21,000. 2010 income tax forms 1040ez Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. 2010 income tax forms 1040ez Example 3. 2010 income tax forms 1040ez The facts are the same as in Example 1 except you and your mother both claim your son as a qualifying child for the earned income credit. 2010 income tax forms 1040ez Your mother also claims him as a qualifying child for head of household filing status. 2010 income tax forms 1040ez You, as the child's parent, will be the only one allowed to claim your son as a qualifying child for the earned income credit. 2010 income tax forms 1040ez The IRS will disallow your mother's claim to the earned income credit and head of household filing status unless she has another qualifying child. 2010 income tax forms 1040ez Qualifying Relative Four tests must be met for a person to be your qualifying relative. 2010 income tax forms 1040ez The four tests are: Not a qualifying child test, Member of household or relationship test, Gross income test, and Support test. 2010 income tax forms 1040ez Age. 2010 income tax forms 1040ez   Unlike a qualifying child, a qualifying relative can be any age. 2010 income tax forms 1040ez There is no age test for a qualifying relative. 2010 income tax forms 1040ez Kidnapped child. 2010 income tax forms 1040ez   You may be able to treat a child as your qualifying relative even if the child has been kidnapped. 2010 income tax forms 1040ez See Publication 501 for details. 2010 income tax forms 1040ez Not a Qualifying Child Test A child is not your qualifying relative if the child is your qualifying child or the qualifying child of any other taxpayer. 2010 income tax forms 1040ez Example 1. 2010 income tax forms 1040ez Your 22-year-old daughter, who is a student, lives with you and meets all the tests to be your qualifying child. 2010 income tax forms 1040ez She is not your qualifying relative. 2010 income tax forms 1040ez Example 2. 2010 income tax forms 1040ez Your 2-year-old son lives with your parents and meets all the tests to be their qualifying child. 2010 income tax forms 1040ez He is not your qualifying relative. 2010 income tax forms 1040ez Example 3. 2010 income tax forms 1040ez Your son lives with you but is not your qualifying child because he is 30 years old and does not meet the age test. 2010 income tax forms 1040ez He may be your qualifying relative if the gross income test and the support test are met. 2010 income tax forms 1040ez Example 4. 2010 income tax forms 1040ez Your 13-year-old grandson lived with his mother for 3 months, with his uncle for 4 months, and with you for 5 months during the year. 2010 income tax forms 1040ez He is not your qualifying child because he does not meet the residency test. 2010 income tax forms 1040ez He may be your qualifying relative if the gross income test and the support test are met. 2010 income tax forms 1040ez Child of person not required to file a return. 2010 income tax forms 1040ez   A child is not the qualifying child of any other taxpayer and so may qualify as your qualifying relative if the child's parent (or other person for whom the child is defined as a qualifying child) is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. 2010 income tax forms 1040ez Example 1—return not required. 2010 income tax forms 1040ez You support an unrelated friend and her 3-year-old child, who lived with you all year in your home. 2010 income tax forms 1040ez Your friend has no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. 2010 income tax forms 1040ez Both your friend and her child are your qualifying relatives if the support test is met. 2010 income tax forms 1040ez Example 2—return filed to claim refund. 2010 income tax forms 1040ez The facts are the same as in Example 1 except your friend had wages of $1,500 during the year and had income tax withheld from her wages. 2010 income tax forms 1040ez She files a return only to get a refund of the income tax withheld and does not claim the earned income credit or any other tax credits or deductions. 2010 income tax forms 1040ez Both your friend and her child are your qualifying relatives if the support test is met. 2010 income tax forms 1040ez Example 3—earned income credit claimed. 2010 income tax forms 1040ez The facts are the same as in Example 2 except your friend had wages of $8,000 during the year and claimed the earned income credit on her return. 2010 income tax forms 1040ez Your friend's child is the qualifying child of another taxpayer (your friend), so you cannot claim your friend's child as your qualifying relative. 2010 income tax forms 1040ez Child in Canada or Mexico. 2010 income tax forms 1040ez   You may be able to claim your child as a dependent even if the child lives in Canada or Mexico. 2010 income tax forms 1040ez If the child does not live with you, the child does not meet the residency test to be your qualifying child. 2010 income tax forms 1040ez However, the child may still be your qualifying relative. 2010 income tax forms 1040ez If the persons the child does live with are not U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez citizens and have no U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez gross income, those persons are not “taxpayers,” so the child is not the qualifying child of any other taxpayer. 2010 income tax forms 1040ez If the child is not the qualifying child of any other taxpayer, the child is your qualifying relative as long as the gross income test and the support test are met. 2010 income tax forms 1040ez   You cannot claim as a dependent a child who lives in a foreign country other than Canada or Mexico, unless the child is a U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez citizen, U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez resident alien, or U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez national. 2010 income tax forms 1040ez There is an exception for certain adopted children who lived with you all year. 2010 income tax forms 1040ez See Citizen or Resident Test , earlier. 2010 income tax forms 1040ez Example. 2010 income tax forms 1040ez You provide all the support of your children, ages 6, 8, and 12, who live in Mexico with your mother and have no income. 2010 income tax forms 1040ez You are single and live in the United States. 2010 income tax forms 1040ez Your mother is not a U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez citizen and has no U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez income, so she is not a “taxpayer. 2010 income tax forms 1040ez ” Your children are not your qualifying children because they do not meet the residency test. 2010 income tax forms 1040ez But since they are not the qualifying children of any other taxpayer, they are your qualifying relatives and you can claim them as dependents. 2010 income tax forms 1040ez You may also be able to claim your mother as a dependent if the gross income and support tests are met. 2010 income tax forms 1040ez Member of Household or Relationship Test To meet this test, a person must either: Live with you all year as a member of your household, or Be related to you in one of the ways listed under Relatives who do not have to live with you . 2010 income tax forms 1040ez If at any time during the year the person was your spouse, that person cannot be your qualifying relative. 2010 income tax forms 1040ez However, see Personal Exemptions , earlier. 2010 income tax forms 1040ez Relatives who do not have to live with you. 2010 income tax forms 1040ez   A person related to you in any of the following ways does not have to live with you all year as a member of your household to meet this test. 2010 income tax forms 1040ez Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). 2010 income tax forms 1040ez (A legally adopted child is considered your child. 2010 income tax forms 1040ez ) Your brother, sister, half brother, half sister, stepbrother, or stepsister. 2010 income tax forms 1040ez Your father, mother, grandparent, or other direct ancestor, but not foster parent. 2010 income tax forms 1040ez Your stepfather or stepmother. 2010 income tax forms 1040ez A son or daughter of your brother or sister. 2010 income tax forms 1040ez A son or daughter of your half brother or half sister. 2010 income tax forms 1040ez A brother or sister of your father or mother. 2010 income tax forms 1040ez Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. 2010 income tax forms 1040ez Any of these relationships that were established by marriage are not ended by death or divorce. 2010 income tax forms 1040ez Example. 2010 income tax forms 1040ez You and your wife began supporting your wife's father, a widower, in 2006. 2010 income tax forms 1040ez Your wife died in 2012. 2010 income tax forms 1040ez Despite your wife's death, your father-in-law continues to meet this test, even if he does not live with you. 2010 income tax forms 1040ez You can claim him as a dependent if all other tests are met, including the gross income test and support test. 2010 income tax forms 1040ez Foster child. 2010 income tax forms 1040ez   A foster child is an individual who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. 2010 income tax forms 1040ez Joint return. 2010 income tax forms 1040ez   If you file a joint return, the person can be related to either you or your spouse. 2010 income tax forms 1040ez Also, the person does not need to be related to the spouse who provides support. 2010 income tax forms 1040ez   For example, your spouse's uncle who receives more than half of his support from you may be your qualifying relative, even though he does not live with you. 2010 income tax forms 1040ez However, if you and your spouse file separate returns, your spouse's uncle can be your qualifying relative only if he lives with you all year as a member of your household. 2010 income tax forms 1040ez Temporary absences. 2010 income tax forms 1040ez   A person is considered to live with you as a member of your household during periods of time when one of you, or both, are temporarily absent due to special circumstances such as: Illness, Education, Business, Vacation, or Military service. 2010 income tax forms 1040ez   If the person is placed in a nursing home for an indefinite period of time to receive constant medical care, the absence may be considered temporary. 2010 income tax forms 1040ez Death or birth. 2010 income tax forms 1040ez   A person who died during the year, but lived with you as a member of your household until death, will meet this test. 2010 income tax forms 1040ez The same is true for a child who was born during the year and lived with you as a member of your household for the rest of the year. 2010 income tax forms 1040ez The test is also met if a child lived with you as a member of your household except for any required hospital stay following birth. 2010 income tax forms 1040ez   If your dependent died during the year and you otherwise qualify to claim an exemption for the dependent, you can still claim the exemption. 2010 income tax forms 1040ez Example. 2010 income tax forms 1040ez Your dependent mother died on January 15. 2010 income tax forms 1040ez She met the tests to be your qualifying relative. 2010 income tax forms 1040ez The other tests to claim an exemption for a dependent were also met. 2010 income tax forms 1040ez You can claim an exemption for her on your return. 2010 income tax forms 1040ez Local law violated. 2010 income tax forms 1040ez   A person does not meet this test if at any time during the year the relationship between you and that person violates local law. 2010 income tax forms 1040ez Example. 2010 income tax forms 1040ez Your girlfriend lived with you as a member of your household all year. 2010 income tax forms 1040ez However, your relationship with her violated the laws of the state where you live, because she was married to someone else. 2010 income tax forms 1040ez Therefore, she does not meet this test and you cannot claim her as a dependent. 2010 income tax forms 1040ez Adopted child. 2010 income tax forms 1040ez   An adopted child is always treated as your own child. 2010 income tax forms 1040ez The term “adopted child” includes a child who was lawfully placed with you for legal adoption. 2010 income tax forms 1040ez Cousin. 2010 income tax forms 1040ez   Your cousin meets this test only if he or she lives with you all year as a member of your household. 2010 income tax forms 1040ez A cousin is a descendant of a brother or sister of your father or mother. 2010 income tax forms 1040ez Gross Income Test To meet this test, a person's gross income for the year must be less than $3,900. 2010 income tax forms 1040ez Gross income defined. 2010 income tax forms 1040ez   Gross income is all income in the form of money, property, and services that is not exempt from tax. 2010 income tax forms 1040ez   In a manufacturing, merchandising, or mining business, gross income is the total net sales minus the cost of goods sold, plus any miscellaneous income from the business. 2010 income tax forms 1040ez   Gross receipts from rental property are gross income. 2010 income tax forms 1040ez Do not deduct taxes, repairs, or other expenses, to determine the gross income from rental property. 2010 income tax forms 1040ez   Gross income includes a partner's share of the gross (not a share of the net) partnership income. 2010 income tax forms 1040ez    Gross income also includes all taxable unemployment compensation and certain scholarship and fellowship grants. 2010 income tax forms 1040ez Scholarships received by degree candidates and used for tuition, fees, supplies, books, and equipment required for particular courses generally are not included in gross income. 2010 income tax forms 1040ez For more information about scholarships, see chapter 12. 2010 income tax forms 1040ez   Tax-exempt income, such as certain social security benefits, is not included in gross income. 2010 income tax forms 1040ez Disabled dependent working at sheltered workshop. 2010 income tax forms 1040ez   For purposes of the gross income test, the gross income of an individual who is permanently and totally disabled at any time during the year does not include income for services the individual performs at a sheltered workshop. 2010 income tax forms 1040ez The availability of medical care at the workshop must be the main reason for the individual's presence there. 2010 income tax forms 1040ez Also, the income must come solely from activities at the workshop that are incident to this medical care. 2010 income tax forms 1040ez   A “sheltered workshop” is a school that: Provides special instruction or training designed to alleviate the disability of the individual, and Is operated by certain tax-exempt organizations, or by a state, a U. 2010 income tax forms 1040ez S. 2010 income tax forms 1040ez possession, a political subdivision of a state or possession, the United States, or the District of Columbia. 2010 income tax forms 1040ez “Permanently and totally disabled” has the same meaning here as under Qualifying Child, earlier. 2010 income tax forms 1040ez Support Test (To Be a Qualifying Relative) To meet this test, you generally must provide more than half of a person's total support during the calendar year. 2010 income tax forms 1040ez However, if two or more persons provide support, but no one person provides more than half of a person's total support, see Multiple Support Agreement , later. 2010 income tax forms 1040ez How to determine if support test is met. 2010 income tax forms 1040ez   You figure whether you have provided more than half of a person's total support by comparing the amount you contributed to that person's support with the entire amount of support that person received from all sources. 2010 income tax forms 1040ez This includes support the person provided from his or her own funds. 2010 income tax forms 1040ez   You may find Worksheet 3-1 helpful in figuring whether you provided more than half of a person's support. 2010 income tax forms 1040ez Person's own funds not used for support. 2010 income tax forms 1040ez   A person's own funds are not support unless they are actually spent for support. 2010 income tax forms 1040ez Example. 2010 income tax forms 1040ez Your mother received $2,400 in social security benefits and $300 in interest. 2010 income tax forms 1040ez She paid $2,000 for lodging and $400 for recreation. 2010 income tax forms 1040ez She put $300 in a savings account. 2010 income tax forms 1040ez Even though your mother received a total of $2,700 ($2,400 + $300), she spent only $2,400 ($2,000 + $400) for her own support. 2010 income tax forms 1040ez If you spent more than $2,400 for her support and no other support was received, you have provided more than half of her support. 2010 income tax forms 1040ez Child's wages used for own support. 2010 income tax forms 1040ez   You cannot include in your contribution to your child's support any support paid for by the child with the child's own wages, even if you paid the wages. 2010 income tax forms 1040ez Year support is provided. 2010 income tax forms 1040ez   The year you provide the support is the year you pay for it, even if you do so with borrowed money that you repay in a later year. 2010 income tax forms 1040ez   If you use a fiscal year to report your income, you must provide more than half of the dependent's support for the calendar year in which your fiscal year begins. 2010 income tax forms 1040ez Armed Forces dependency allotments. 2010 income tax forms 1040ez   The part of the allotment contributed by the government and the part taken out of your military pay are both considered provided by you in figuring whether you provide more than half of the support. 2010 income tax forms 1040ez If your allotment is used to support persons other than those you name, you can take the exemptions for them if they otherwise qualify. 2010 income tax forms 1040ez Example. 2010 income tax forms 1040ez You are in the Armed Forces. 2010 income tax forms 1040ez You authorize an allotment for your widowed mother that she uses to support herself and her sister. 2010 income tax forms 1040ez If the allotment provides more than half of each person's support, you can take an exemption for each of them, if they otherwise qualify, even though you authorize the allotment only for your mother. 2010 income tax forms 1040ez Tax-exempt military quarters allowances. 2010 income tax forms 1040ez   These allowances are treated the same way as dependency allotments in figuring support. 2010 income tax forms 1040ez The allotment of pay and the tax-exempt basic allowance for quarters are both considered as provided by you for support. 2010 income tax forms 1040ez Tax-exempt income. 2010 income tax forms 1040ez   In figuring a person's total support, include tax-exempt income, savings, and borrowed amounts used to support that person. 2010 income tax forms 1040ez Tax-exempt income includes certain social security benefits, welfare benefits, nontaxable life insurance proceeds, Armed Forces family allotments, nontaxable pensions, and tax-exempt interest. 2010 income tax forms 1040ez Example 1. 2010 income tax forms 1040ez You provide $4,000 toward your mother's support during the year. 2010 income tax forms 1040ez She has earned income of $600, nontaxable social security benefits of $4,800, and tax-exempt interest of $200. 2010 income tax forms 1040ez She uses all these for her support. 2010 income tax forms 1040ez You cannot claim an exemption for your mother because the $4,000 you provide is not more than half of her total support of $9,600 ($4,000 + $600 + $4,800 + $200). 2010 income tax forms 1040ez Example 2. 2010 income tax forms 1040ez Your niece takes out a student loan of $2,500 a