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2010 Income Tax Forms

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2010 Income Tax Forms

2010 income tax forms 35. 2010 income tax forms   Education Credits Table of Contents Introduction Useful Items - You may want to see: Who Can Claim an Education Credit Qualified Education ExpensesNo Double Benefit Allowed Adjustments to Qualified Education Expenses Introduction For 2013, there are two tax credits available to persons who pay expenses for higher (postsecondary) education. 2010 income tax forms They are: The American opportunity credit, and The lifetime learning credit. 2010 income tax forms The chapter will present an overview of these education credits. 2010 income tax forms To get the detailed information you will need to claim either of the credits, and for examples illustrating that information, see chapters 2 and 3 of Publication 970. 2010 income tax forms Can you claim more than one education credit this year?   For each student, you can choose for any year only one of the credits. 2010 income tax forms For example, if you choose to take the American opportunity credit for a child on your 2013 tax return, you cannot, for that same child, also claim the lifetime learning credit for 2013. 2010 income tax forms   If you are eligible to claim the American opportunity credit and you are also eligible to claim the lifetime learning credit for the same student in the same year, you can choose to claim either credit, but not both. 2010 income tax forms   If you pay qualified education expenses for more than one student in the same year, you can choose to take the American opportunity and the lifetime learning credits on a per-student, per-year basis. 2010 income tax forms This means that, for example, you can claim the American opportunity credit for one student and the lifetime learning credit for another student in the same year. 2010 income tax forms Table 35-1. 2010 income tax forms Comparison of Education Credits Caution. 2010 income tax forms You can claim both the American opportunity credit and the lifetime learning credit on the same return—but not for the same student. 2010 income tax forms   American Opportunity Credit Lifetime Learning Credit Maximum credit Up to $2,500 credit per eligible student Up to $2,000 credit per return Limit on modified adjusted gross income (MAGI) $180,000 if married filing jointly;  $90,000 if single, head of household, or qualifying widow(er) $127,000 if married filing jointly;  $63,000 if single, head of household, or qualifying widow(er) Refundable or nonrefundable 40% of credit may be refundable Credit limited to the amount of tax you must pay on your taxable income Number of years of postsecondary education Available ONLY if the student had not completed the first 4 years of postsecondary education before 2013 Available for all years of postsecondary education and for courses to acquire or improve job skills Number of tax years credit available Available ONLY for 4 tax years per eligible student (including any year(s) the Hope credit was claimed) Available for an unlimited number of years Type of program required Student must be pursuing a program leading to a degree or other recognized education credential Student does not need to be pursuing a program leading to a degree or other recognized education credential Number of courses Student must be enrolled at least half time for at least one academic period beginning during the tax year Available for one or more courses Felony drug conviction At the end of 2013, the student had not been convicted of a felony for possessing or distributing a controlled substance Felony drug convictions do not make the student ineligible Qualified expenses Tuition, required enrollment fees, and course materials that the student needs for a course of study whether or not the materials are bought at the educational institution as a condition of enrollment or attendance Tuition and fees required for enrollment or attendance (including amounts required to be paid to the institution for course-related books, supplies, and equipment) Payments for academic periods Payments made in 2013 for academic periods beginning in 2013 or beginning in the first 3 months of 2014 Differences between the American opportunity and lifetime learning credits. 2010 income tax forms   There are several differences between these two credits. 2010 income tax forms These differences are summarized in Table 35-1, later. 2010 income tax forms Useful Items - You may want to see: Publication 970 Tax Benefits for Education Form (and Instructions) 8863 Education Credits (American Opportunity and Lifetime Learning Credits) Who Can Claim an Education Credit You may be able to claim an education credit if you, your spouse, or a dependent you claim on your tax return was a student enrolled at or attending an eligible educational institution. 2010 income tax forms The credits are based on the amount of qualified education expenses paid for the student in 2013 for academic periods beginning in 2013 and in the first 3 months of 2014. 2010 income tax forms For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning in January 2014, you may be able to use that $1,500 in figuring your 2013 education credit(s). 2010 income tax forms Academic period. 2010 income tax forms   An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. 2010 income tax forms In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. 2010 income tax forms Eligible educational institution. 2010 income tax forms   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. 2010 income tax forms S. 2010 income tax forms Department of Education. 2010 income tax forms It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 2010 income tax forms The educational institution should be able to tell you if it is an eligible educational institution. 2010 income tax forms   Certain educational institutions located outside the United States also participate in the U. 2010 income tax forms S. 2010 income tax forms Department of Education's Federal Student Aid (FSA) programs. 2010 income tax forms Who can claim a dependent's expenses. 2010 income tax forms   If an exemption is allowed as a deduction for any person who claims the student as a dependent, all qualified education expenses of the student are treated as having been paid by that person. 2010 income tax forms Therefore, only that person can claim an education credit for the student. 2010 income tax forms If a student is not claimed as a dependent on another person's tax return, only the student can claim a credit. 2010 income tax forms Expenses paid by a third party. 2010 income tax forms   Qualified education expenses paid on behalf of the student by someone other than the student (such as a relative) are treated as paid by the student. 2010 income tax forms However, qualified education expenses paid (or treated as paid) by a student who is claimed as a dependent on your tax return are treated as paid by you. 2010 income tax forms Therefore, you are treated as having paid expenses that were paid by the third party. 2010 income tax forms For more information and an example see Who Can Claim a Dependent's Expenses in Pub. 2010 income tax forms 970, chapter 2 or 3. 2010 income tax forms Who cannot claim a credit. 2010 income tax forms   You cannot take an education credit if any of the following apply. 2010 income tax forms You are claimed as a dependent on another person's tax return, such as your parent's return. 2010 income tax forms Your filing status is married filing separately. 2010 income tax forms You (or your spouse) were a nonresident alien for any part of 2013 and did not elect to be treated as a resident alien for tax purposes. 2010 income tax forms Your MAGI is one of the following. 2010 income tax forms American opportunity credit: $180,000 or more if married filing jointly, or $90,000 or more if single, head of household, or qualifying widow(er). 2010 income tax forms Lifetime learning credit: $127,000 or more if married filing jointly, or $63,000 or more if single, head of household, or qualifying widow(er) . 2010 income tax forms   Generally, your MAGI is the amount on your Form 1040, line 38, or Form 1040A, line 22. 2010 income tax forms However, if you are filing Form 2555, Form 2555–EZ, or Form 4563, or are excluding income from Puerto RIco, add to the amount on your Form 1040, line 38, or Form 1040A, line 22, the amount of income you excluded. 2010 income tax forms For details, see Pub. 2010 income tax forms 970. 2010 income tax forms    Figure 35-A may be helpful in determining if you can claim an education credit on your tax return. 2010 income tax forms The American opportunity credit will always be greater than or equal to the lifetime learning credit for any student who is eligible for both credits. 2010 income tax forms However, if any of the conditions for the American opportunity credit, listed in Table 35-1 earlier, are not met for any student, you cannot take the American opportunity credit for that student. 2010 income tax forms You may be able to take the lifetime learning credit for part or all of that student's qualified education expenses instead. 2010 income tax forms See Pub. 2010 income tax forms 970 for information on other education benefits. 2010 income tax forms Qualified Education Expenses Generally, qualified education expenses are amounts paid in 2013 for tuition and fees required for the student's enrollment or attendance at an eligible educational institution. 2010 income tax forms It does not matter whether the expenses were paid in cash, by check, by credit or debit card, or with borrowed funds. 2010 income tax forms For course-related books, supplies, and equipment, only certain expenses qualify. 2010 income tax forms American opportunity credit: Qualified education expenses include amounts spent on books, supplies, and equipment needed for a course of study, whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance. 2010 income tax forms Lifetime learning credit: Qualified education expenses include amounts for books, supplies, and equipment only if required to be paid to the institution as a condition of enrollment or attendance. 2010 income tax forms Qualified education expenses include nonacademic fees, such as student activity fees, athletic fees, or other expenses unrelated to the academic course of instruction, only if the fee must be paid to the institution as a condition of enrollment or attendance. 2010 income tax forms However, fees for personal expenses (described below) are never qualified education expenses. 2010 income tax forms Qualified education expenses for either credit do not include amounts paid for: Personal expenses. 2010 income tax forms This means room and board, insurance, medical expenses (including student health fees), transportation, and other similar personal, living, or family expenses. 2010 income tax forms Any course or other education involving sports, games, or hobbies, or any noncredit course, unless such course or other education is part of the student's degree program or (for the lifetime learning credit only) helps the student acquire or improve job skills. 2010 income tax forms You should receive Form 1098–T, Tuition Statement, from the institution reporting either payments received in 2013 (box 1) or amounts billed in 2013 (box 2). 2010 income tax forms However, the amount in box 1 or 2 of Form 1098–T may be different from the amount you paid (or are treated as having paid). 2010 income tax forms In completing Form 8863, use only the amounts you actually paid (plus any amounts you are treated as having paid) in 2013, reduced as necessary, as described in Adjustments to Qualified Education Expenses , later. 2010 income tax forms Qualified education expenses paid on behalf of the student by someone other than the student (such as a relative) are treated as paid by the student. 2010 income tax forms Qualified education expenses paid (or treated as paid) by a student who is claimed as a dependent on your tax return are treated as paid by you. 2010 income tax forms If you or the student takes a deduction for higher education expenses, such as on Schedule A or C (Form 1040), you cannot use those expenses in your qualified education expenses when figuring your education credits. 2010 income tax forms Qualified education expenses for any academic period must be reduced by any tax-free educational assistance allocable to that academic period. 2010 income tax forms See Adjustments to Qualified Education Expenses, later. 2010 income tax forms Prepaid Expenses. 2010 income tax forms   Qualified education expenses paid in 2013 for an academic period that begins in the first 3 months of 2014 can be used in figuring an education credit for 2013 only. 2010 income tax forms See Academic period , earlier. 2010 income tax forms For example, if you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring an education credit for 2013 only (if you meet all the other requirements). 2010 income tax forms    You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 education credit(s). 2010 income tax forms Paid with borrowed funds. 2010 income tax forms   You can claim an education credit for qualified education expenses paid with the proceeds of a loan. 2010 income tax forms Use the expenses to figure the credit for the year in which the expenses are paid, not the year in which the loan is repaid. 2010 income tax forms Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. 2010 income tax forms Student withdraws from class(es). 2010 income tax forms   You can claim an education credit for qualified education expenses not refunded when a student withdraws. 2010 income tax forms No Double Benefit Allowed You cannot do any of the following. 2010 income tax forms Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim an education credit based on those same expenses. 2010 income tax forms Claim more than one education credit based on the same qualified education expenses. 2010 income tax forms Claim an education credit based on the same expenses used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or qualified tuition program (QTP). 2010 income tax forms Claim an education credit based on qualified education expenses paid with educational assistance, such as a tax-free scholarship, grant, or employer-provided educational assistance. 2010 income tax forms See Adjustments to Qualified Education Expenses, next. 2010 income tax forms Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid in 2013 by or on behalf of that student under the following rules. 2010 income tax forms The result is the amount of adjusted qualified education expenses for each student. 2010 income tax forms Tax-free educational assistance. 2010 income tax forms   For tax-free educational assistance received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period. 2010 income tax forms See Academic period , earlier. 2010 income tax forms      Tax-free educational assistance includes:    Tax-free parts of scholarships and fellowships (see chapter 12 of this publication and chapter 1 of Pub. 2010 income tax forms 970), The tax-free part of Pell grants (see chapter 1 of Pub. 2010 income tax forms 970), The tax-free part of employer-provided educational assistance (see Pub. 2010 income tax forms 970), Veterans' educational assistance (see chapter 1 of Pub. 2010 income tax forms 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. 2010 income tax forms Generally, any scholarship or fellowship is treated as tax-free educational assistance. 2010 income tax forms However, a scholarship or fellowship is not treated as tax-free educational assistance to the extent the student includes it in gross income (if the student is required to file a tax return) for the year the scholarship or fellowship is received and either: The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. 2010 income tax forms 970, chapter 1; or The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. 2010 income tax forms 970, chapter 1. 2010 income tax forms You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the educational assistance in income in the year received. 2010 income tax forms For details, see Adjustments of Qualified Education Expenses, in chapters 2 and 3 of Pub. 2010 income tax forms 970. 2010 income tax forms Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. 2010 income tax forms This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). 2010 income tax forms If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed, later. 2010 income tax forms If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed, later. 2010 income tax forms Refunds. 2010 income tax forms   A refund of qualified education expenses may reduce qualified education expenses for the tax year or may require you to repay (recapture) the credit that you claimed in an earlier year. 2010 income tax forms Some tax-free educational assistance received after 2013 may be treated as a refund. 2010 income tax forms See Tax-free educational assistance, earlier. 2010 income tax forms Refunds received in 2013. 2010 income tax forms   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses paid in 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. 2010 income tax forms Refunds received after 2013 but before your income tax return is filed. 2010 income tax forms   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is received before you file your 2013 income tax return, reduce the amount of qualified education expenses for 2013 by the amount of the refund. 2010 income tax forms Refunds received after 2013 and after your income tax return is filed. 2010 income tax forms   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is received after you file your 2013 income tax return, you may need to repay some or all of the credit that you claimed. 2010 income tax forms See Credit recapture, next. 2010 income tax forms Credit recapture. 2010 income tax forms    If any tax-free educational assistance for the qualified education expenses paid in 2013, or any refund of your qualified education expenses paid in 2013, is received after you file your 2013 income tax return, you must recapture (repay) any excess credit. 2010 income tax forms You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing the expenses by the amount of the refund or tax-free educational assistance. 2010 income tax forms You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you had claimed the refigured credit(s). 2010 income tax forms Include that amount as an additional tax for the year the refund or tax-free assistance was received. 2010 income tax forms Example. 2010 income tax forms    You paid $8,000 tuition and fees in December 2013 for your child's Spring semester beginning in January 2014. 2010 income tax forms You filed your 2013 tax return on February 3, 2014, and claimed a lifetime learning credit of $1,600 ($8,000 qualified education expense paid x . 2010 income tax forms 20). 2010 income tax forms You claimed no other tax credits. 2010 income tax forms After you filed your return, your child withdrew from two courses and you received a refund of $1,400. 2010 income tax forms You must refigure your 2013 lifetime learning credit using $6,600 ($8,000 qualified education expenses − $1,400 refund). 2010 income tax forms The refigured credit is $1,320 and your tax liability increased by $280. 2010 income tax forms You must include the difference of $280 ($1,600 credit originally claimed − $1,320 refigured credit) as additional tax on your 2014 income tax return. 2010 income tax forms See the instructions for your 2014 income tax return to determine where to include this tax. 2010 income tax forms If you also pay qualified education expenses in 2014 for an academic period that begins in the first 3 months of 2014 and you receive tax-free educational assistance, or a refund, as described above, you may choose to reduce your qualified education expenses for 2014 instead of reducing your expenses for 2013. 2010 income tax forms Amounts that do not reduce qualified education expenses. 2010 income tax forms   Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. 2010 income tax forms   Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. 2010 income tax forms The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses, as defined in Chapter 1 of Pub. 2010 income tax forms 970. 2010 income tax forms The use of the money is not restricted. 2010 income tax forms   For examples, see chapter 2 in Pub. 2010 income tax forms 970. 2010 income tax forms Figure 35-A. 2010 income tax forms Can You Claim an Education Credit for 2013? This image is too large to be displayed in the current screen. 2010 income tax forms Please click the link to view the image. 2010 income tax forms Figure 35-A. 2010 income tax forms Can You Claim an Education Credit for 2013? Prev  Up  Next   Home   More Online Publications
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The 2010 Income Tax Forms

2010 income tax forms 5. 2010 income tax forms   Personal Use of Dwelling Unit (Including Vacation Home) Table of Contents Dividing Expenses Dwelling Unit Used as a HomeMain home. 2010 income tax forms Shared equity financing agreement. 2010 income tax forms Donation of use of the property. 2010 income tax forms Examples. 2010 income tax forms Days used for repairs and maintenance. 2010 income tax forms Days used as a main home before or after renting. 2010 income tax forms Reporting Income and DeductionsNot used as a home. 2010 income tax forms Used as a home but rented less than 15 days. 2010 income tax forms Used as a home and rented 15 days or more. 2010 income tax forms If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. 2010 income tax forms In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. 2010 income tax forms Only your rental expenses may deducted on Schedule E (Form 1040). 2010 income tax forms Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). 2010 income tax forms You must also determine if the dwelling unit is considered a home. 2010 income tax forms The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. 2010 income tax forms Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. 2010 income tax forms There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year. 2010 income tax forms Dwelling unit. 2010 income tax forms   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. 2010 income tax forms It also includes all structures or other property belonging to the dwelling unit. 2010 income tax forms A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. 2010 income tax forms   A dwelling unit does not include property (or part of the property) used solely as a hotel, motel, inn, or similar establishment. 2010 income tax forms Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. 2010 income tax forms Example. 2010 income tax forms You rent a room in your home that is always available for short-term occupancy by paying customers. 2010 income tax forms You do not use the room yourself and you allow only paying customers to use the room. 2010 income tax forms This room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. 2010 income tax forms Dividing Expenses If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. 2010 income tax forms When dividing your expenses, follow these rules. 2010 income tax forms Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. 2010 income tax forms (This rule does not apply when determining whether you used the unit as a home. 2010 income tax forms ) Any day that the unit is available for rent but not actually rented is not a day of rental use. 2010 income tax forms Fair rental price. 2010 income tax forms   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. 2010 income tax forms The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. 2010 income tax forms   Ask yourself the following questions when comparing another property with yours. 2010 income tax forms Is it used for the same purpose? Is it approximately the same size? Is it in approximately the same condition? Does it have similar furnishings? Is it in a similar location? If any of the answers are no, the properties probably are not similar. 2010 income tax forms Example. 2010 income tax forms Your beach cottage was available for rent from June 1 through August 31 (92 days). 2010 income tax forms Except for the first week in August (7 days), when you were unable to find a renter, you rented the cottage at a fair rental price during that time. 2010 income tax forms The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. 2010 income tax forms Your family also used the cottage during the last 2 weeks of May (14 days). 2010 income tax forms The cottage was not used at all before May 17 or after August 31. 2010 income tax forms You figure the part of the cottage expenses to treat as rental expenses as follows. 2010 income tax forms The cottage was used for rental a total of 85 days (92 − 7). 2010 income tax forms The days it was available for rent but not rented (7 days) are not days of rental use. 2010 income tax forms The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. 2010 income tax forms You used the cottage for personal purposes for 14 days (the last 2 weeks in May). 2010 income tax forms The total use of the cottage was 99 days (14 days personal use + 85 days rental use). 2010 income tax forms Your rental expenses are 85/99 (86%) of the cottage expenses. 2010 income tax forms Note. 2010 income tax forms When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. 2010 income tax forms Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. 2010 income tax forms Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. 2010 income tax forms If you have a net loss, you may not be able to deduct all of the rental expenses. 2010 income tax forms See Dwelling Unit Used as a Home, next. 2010 income tax forms Dwelling Unit Used as a Home If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home. 2010 income tax forms You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of: 14 days, or 10% of the total days it is rented to others at a fair rental price. 2010 income tax forms See What is a day of personal use , later. 2010 income tax forms If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price (discussed earlier), do not count that day as a day of rental use in applying (2) above. 2010 income tax forms Instead, count it as a day of personal use in applying both (1) and (2) above. 2010 income tax forms What is a day of personal use?   A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons. 2010 income tax forms You or any other person who owns an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). 2010 income tax forms However, see Days used as a main home before or after renting , later. 2010 income tax forms A member of your family or a member of the family of any other person who owns an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. 2010 income tax forms Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. 2010 income tax forms ), and lineal descendants (children, grandchildren, etc. 2010 income tax forms ). 2010 income tax forms Anyone under an arrangement that lets you use some other dwelling unit. 2010 income tax forms Anyone at less than a fair rental price. 2010 income tax forms Main home. 2010 income tax forms   If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. 2010 income tax forms Shared equity financing agreement. 2010 income tax forms   This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. 2010 income tax forms Donation of use of the property. 2010 income tax forms   You use a dwelling unit for personal purposes if: You donate the use of the unit to a charitable organization, The organization sells the use of the unit at a fund-raising event, and The “purchaser” uses the unit. 2010 income tax forms Examples. 2010 income tax forms   The following examples show how to determine if you have days of personal use. 2010 income tax forms Example 1. 2010 income tax forms You and your neighbor are co-owners of a condominium at the beach. 2010 income tax forms Last year, you rented the unit to vacationers whenever possible. 2010 income tax forms The unit was not used as a main home by anyone. 2010 income tax forms Your neighbor used the unit for 2 weeks last year; you did not use it at all. 2010 income tax forms Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. 2010 income tax forms Example 2. 2010 income tax forms You and your neighbors are co-owners of a house under a shared equity financing agreement. 2010 income tax forms Your neighbors live in the house and pay you a fair rental price. 2010 income tax forms Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. 2010 income tax forms This is because your neighbors rent the house as their main home under a shared equity financing agreement. 2010 income tax forms Example 3. 2010 income tax forms You own a rental property that you rent to your son. 2010 income tax forms Your son does not own any interest in this property. 2010 income tax forms He uses it as his main home and pays you a fair rental price. 2010 income tax forms Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. 2010 income tax forms Example 4. 2010 income tax forms You rent your beach house to Rosa. 2010 income tax forms Rosa rents her cabin in the mountains to you. 2010 income tax forms You each pay a fair rental price. 2010 income tax forms You are using your beach house for personal purposes on the days that Rosa uses it because your house is used by Rosa under an arrangement that allows you to use her cabin. 2010 income tax forms Example 5. 2010 income tax forms You rent an apartment to your mother at less than a fair rental price. 2010 income tax forms You are using the apartment for personal purposes on the days that your mother rents it because you rent it for less than a fair rental price. 2010 income tax forms Days used for repairs and maintenance. 2010 income tax forms   Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. 2010 income tax forms Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. 2010 income tax forms Example. 2010 income tax forms Corey owns a cabin in the mountains that he rents for most of the year. 2010 income tax forms He spends a week at the cabin with family members. 2010 income tax forms Corey works on maintenance of the cabin 3 or 4 hours each day during the week and spends the rest of the time fishing, hiking, and relaxing. 2010 income tax forms Corey's family members, however, work substantially full time on the cabin each day during the week. 2010 income tax forms The main purpose of being at the cabin that week is to do maintenance work. 2010 income tax forms Therefore, the use of the cabin during the week by Corey and his family will not be considered personal use by Corey. 2010 income tax forms Days used as a main home before or after renting. 2010 income tax forms   For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. 2010 income tax forms Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. 2010 income tax forms You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold or exchanged the property. 2010 income tax forms However, this special rule does not apply when dividing expenses between rental and personal use. 2010 income tax forms See Property Changed to Rental Use in chapter 4. 2010 income tax forms Example 1. 2010 income tax forms On February 29, 2012, you moved out of the house you had lived in for 6 years because you accepted a job in another town. 2010 income tax forms You rented your house at a fair rental price from March 15, 2012, to May 14, 2013 (14 months). 2010 income tax forms On June 1, 2013, you moved back into your old house. 2010 income tax forms The days you used the house as your main home from January 1 to February 29, 2012, and from June 1 to December 31, 2013, are not counted as days of personal use. 2010 income tax forms Therefore, you would use the rules in chapter 1 when figuring your rental income and expenses. 2010 income tax forms Example 2. 2010 income tax forms On January 31, you moved out of the condominium where you had lived for 3 years. 2010 income tax forms You offered it for rent at a fair rental price beginning on February 1. 2010 income tax forms You were unable to rent it until April. 2010 income tax forms On September 15, you sold the condominium. 2010 income tax forms The days you used the condominium as your main home from January 1 to January 31 are not counted as days of personal use when determining whether you used it as a home. 2010 income tax forms Examples. 2010 income tax forms   The following examples show how to determine whether you used your rental property as a home. 2010 income tax forms Example 1. 2010 income tax forms You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. 2010 income tax forms You rented the basement apartment at a fair rental price to college students during the regular school year. 2010 income tax forms You rented to them on a 9-month lease (273 days). 2010 income tax forms You figured 10% of the total days rented to others at a fair rental price is 27 days. 2010 income tax forms During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. 2010 income tax forms Your basement apartment was used as a home because you used it for personal purposes for 30 days. 2010 income tax forms Rent-free use by your brothers is considered personal use. 2010 income tax forms Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). 2010 income tax forms Example 2. 2010 income tax forms You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). 2010 income tax forms Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. 2010 income tax forms You figured 10% of the total days rented to others at a fair rental price is 3 days. 2010 income tax forms The room was used as a home because you used it for personal purposes for 21 days. 2010 income tax forms That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). 2010 income tax forms Example 3. 2010 income tax forms You own a condominium apartment in a resort area. 2010 income tax forms You rented it at a fair rental price for a total of 170 days during the year. 2010 income tax forms For 12 of these days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. 2010 income tax forms Your family actually used the apartment for 10 of those days. 2010 income tax forms Therefore, the apartment is treated as having been rented for 160 (170 – 10) days. 2010 income tax forms You figured 10% of the total days rented to others at a fair rental price is 16 days. 2010 income tax forms Your family also used the apartment for 7 other days during the year. 2010 income tax forms You used the apartment as a home because you used it for personal purposes for 17 days. 2010 income tax forms That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). 2010 income tax forms Minimal rental use. 2010 income tax forms   If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. 2010 income tax forms See Used as a home but rented less than 15 days, later, for more information. 2010 income tax forms Limit on deductions. 2010 income tax forms   Renting a dwelling unit that is considered a home is not a passive activity. 2010 income tax forms Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. 2010 income tax forms The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. 2010 income tax forms Any expenses carried forward to the next year will be subject to any limits that apply for that year. 2010 income tax forms This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year. 2010 income tax forms   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 5–1. 2010 income tax forms Reporting Income and Deductions Property not used for personal purposes. 2010 income tax forms   If you do not use a dwelling unit for personal purposes, see chapter 3 for how to report your rental income and expenses. 2010 income tax forms Property used for personal purposes. 2010 income tax forms   If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home. 2010 income tax forms Not used as a home. 2010 income tax forms   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. 2010 income tax forms Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in this chapter under Dividing Expenses . 2010 income tax forms The expenses for personal use are not deductible as rental expenses. 2010 income tax forms   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses in chapter 3. 2010 income tax forms Used as a home but rented less than 15 days. 2010 income tax forms   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). 2010 income tax forms You are not required to report the rental income and rental expenses from this activity. 2010 income tax forms The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). 2010 income tax forms See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. 2010 income tax forms Used as a home and rented 15 days or more. 2010 income tax forms   If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. 2010 income tax forms Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in this chapter under Dividing Expenses . 2010 income tax forms The expenses for personal use are not deductible as rental expenses. 2010 income tax forms   If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. 2010 income tax forms You do not need to use Worksheet 5-1. 2010 income tax forms   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. 2010 income tax forms To figure your deductible rental expenses and any carryover to next year, use Worksheet 5–1. 2010 income tax forms Worksheet 5-1. 2010 income tax forms Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Use this worksheet only if you answer “yes” to all of the following questions. 2010 income tax forms Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . 2010 income tax forms ) Did you rent the dwelling unit at a fair rental price 15 days or more this year? Is the total of your rental expenses and depreciation more than your rental income? PART I. 2010 income tax forms Rental Use Percentage A. 2010 income tax forms Total days available for rent at fair rental price A. 2010 income tax forms       B. 2010 income tax forms Total days available for rent (line A) but not rented B. 2010 income tax forms       C. 2010 income tax forms Total days of rental use. 2010 income tax forms Subtract line B from line A C. 2010 income tax forms       D. 2010 income tax forms Total days of personal use (including days rented at less than fair rental price) D. 2010 income tax forms       E. 2010 income tax forms Total days of rental and personal use. 2010 income tax forms Add lines C and D E. 2010 income tax forms       F. 2010 income tax forms Percentage of expenses allowed for rental. 2010 income tax forms Divide line C by line E     F. 2010 income tax forms . 2010 income tax forms PART II. 2010 income tax forms Allowable Rental Expenses 1. 2010 income tax forms Enter rents received 1. 2010 income tax forms   2a. 2010 income tax forms Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. 2010 income tax forms       b. 2010 income tax forms Enter the rental portion of real estate taxes b. 2010 income tax forms       c. 2010 income tax forms Enter the rental portion of deductible casualty and theft losses (see instructions) c. 2010 income tax forms       d. 2010 income tax forms Enter direct rental expenses (see instructions) d. 2010 income tax forms       e. 2010 income tax forms Fully deductible rental expenses. 2010 income tax forms Add lines 2a–2d. 2010 income tax forms Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. 2010 income tax forms   3. 2010 income tax forms Subtract line 2e from line 1. 2010 income tax forms If zero or less, enter -0- 3. 2010 income tax forms   4a. 2010 income tax forms Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. 2010 income tax forms       b. 2010 income tax forms Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. 2010 income tax forms       c. 2010 income tax forms Carryover of operating expenses from 2012 worksheet c. 2010 income tax forms       d. 2010 income tax forms Add lines 4a–4c d. 2010 income tax forms       e. 2010 income tax forms Allowable expenses. 2010 income tax forms Enter the smaller of line 3 or line 4d (see instructions) 4e. 2010 income tax forms   5. 2010 income tax forms Subtract line 4e from line 3. 2010 income tax forms If zero or less, enter -0- 5. 2010 income tax forms   6a. 2010 income tax forms Enter the rental portion of excess casualty and theft losses (see instructions) 6a. 2010 income tax forms       b. 2010 income tax forms Enter the rental portion of depreciation of the dwelling unit b. 2010 income tax forms       c. 2010 income tax forms Carryover of excess casualty losses and depreciation from 2012 worksheet c. 2010 income tax forms       d. 2010 income tax forms Add lines 6a–6c d. 2010 income tax forms       e. 2010 income tax forms Allowable excess casualty and theft losses and depreciation. 2010 income tax forms Enter the smaller of  line 5 or line 6d (see instructions) 6e. 2010 income tax forms   PART III. 2010 income tax forms Carryover of Unallowed Expenses to Next Year 7a. 2010 income tax forms Operating expenses to be carried over to next year. 2010 income tax forms Subtract line 4e from line 4d 7a. 2010 income tax forms   b. 2010 income tax forms Excess casualty and theft losses and depreciation to be carried over to next year. 2010 income tax forms  Subtract line 6e from line 6d b. 2010 income tax forms   Worksheet 5-1 Instructions. 2010 income tax forms Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. 2010 income tax forms Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4b, and 6a–6b of  Part II. 2010 income tax forms Line 2a. 2010 income tax forms Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. 2010 income tax forms Do not include interest on a loan that did not benefit the dwelling unit. 2010 income tax forms For example, do not include interest on a home equity loan used to pay off credit cards or other personal loans, buy a car, or pay college tuition. 2010 income tax forms Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. 2010 income tax forms Include the rental portion of this interest in the total you enter on line 2a of the worksheet. 2010 income tax forms   Figure the qualified mortgage insurance premiums on the dwelling unit that you could deduct on line 13 of Schedule A as if you had not rented the unit. 2010 income tax forms See the Schedule A instructions. 2010 income tax forms However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. 2010 income tax forms See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. 2010 income tax forms Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. 2010 income tax forms   Note. 2010 income tax forms Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. 2010 income tax forms Instead, figure the personal portion on a separate Schedule A. 2010 income tax forms If you have deducted mortgage interest or qualified mortgage insurance premiums on the dwelling unit on other forms, such as Schedule C or F, remember to reduce your Schedule A deduction by that amount. 2010 income tax forms           Line 2c. 2010 income tax forms Figure the casualty and theft losses related to the dwelling unit that you could deduct on Schedule A as if you had not rented the dwelling unit. 2010 income tax forms To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. 2010 income tax forms If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. 2010 income tax forms On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. 2010 income tax forms Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. 2010 income tax forms   Note. 2010 income tax forms Do not file this Form 4684 or use it to figure your personal losses on Schedule A. 2010 income tax forms Instead, figure the personal portion on a separate Form 4684. 2010 income tax forms           Line 2d. 2010 income tax forms Enter the total of your rental expenses that are directly related only to the rental activity. 2010 income tax forms These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. 2010 income tax forms Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. 2010 income tax forms           Line 2e. 2010 income tax forms You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses on Schedule E even if your rental expenses are more than your rental income. 2010 income tax forms Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. 2010 income tax forms           Line 4b. 2010 income tax forms On line 2a, you entered the rental portion of the mortgage interest or qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. 2010 income tax forms If you had additional mortgage interest and qualified mortgage insurance premiums that would not be deductible on Schedule A because of limits imposed on them, enter on line 4b of this worksheet the rental portion of those excess amounts. 2010 income tax forms Do not include interest on a loan that did not benefit the dwelling unit  (as explained in the line 2a instructions). 2010 income tax forms           Line 4e. 2010 income tax forms You can deduct the amounts on lines 4a, 4b, and 4c as rental expenses on Schedule E only to the extent they are not more than the amount on line 4e. 2010 income tax forms *           Line 6a. 2010 income tax forms To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. 2010 income tax forms   A. 2010 income tax forms Enter the amount from Form 4684, line 10       B. 2010 income tax forms Enter the rental portion of line A       C. 2010 income tax forms Enter the amount from line 2c of this worksheet       D. 2010 income tax forms Subtract line C from line B. 2010 income tax forms Enter the result here and on line 6a of this worksheet               Line 6e. 2010 income tax forms You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses on Schedule E only to the extent they are not more than the amount on line 6e. 2010 income tax forms * *Allocating the limited deduction. 2010 income tax forms If you cannot deduct all of the amount on line 4d or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4d or 6d. 2010 income tax forms Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. 2010 income tax forms Prev  Up  Next   Home   More Online Publications