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2011 E File

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2011 E File

2011 e file Publication 4492-B - Main Content Table of Contents DefinitionsMidwestern Disaster Areas Applicable Disaster Date Charitable Giving IncentivesTemporary Suspension of Limits on Charitable Contributions Standard Mileage Rate for Charitable Use of Vehicles Mileage Reimbursements to Charitable Volunteers Casualty and Theft LossesTime limit for making election. 2011 e file Replacement Period for Nonrecognition of Gain Net Operating Losses IRAs and Other Retirement PlansDefinitions Taxation of Qualified Disaster Recovery Assistance Distributions Repayment of Qualified Disaster Recovery Assistance Distributions Repayment of Qualified Distributions for the Purchase or Construction of a Main Home Loans From Qualified Plans Additional Tax Relief for IndividualsEarned Income Credit and Child Tax Credit Additional Exemption for Housing Individuals Displaced by the Severe Storms, Tornadoes, or Flooding Education Credits Recapture of Federal Mortgage Subsidy Exclusion of Certain Cancellations of Indebtedness by Reason of the Severe Storms, Tornadoes, or Flooding Tax Relief for Temporary Relocation Additional Tax Relief for BusinessesEmployee Retention Credit Employer Housing Credit and Exclusion Demolition and Clean-up Costs Increase in Rehabilitation Tax Credit Request for Copy or Transcript of Tax Return How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). 2011 e file Definitions The following definitions are used throughout this publication. 2011 e file Midwestern Disaster Areas A Midwestern disaster area is an area for which a major disaster was declared by the President during the period beginning on May 20, 2008, and ending on July 31, 2008, in the state of Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, or Wisconsin, as a result of severe storms, tornadoes, or flooding that occurred on the applicable disaster date. 2011 e file See Tables 1 and 2 for a list of the counties included in the Midwestern disaster areas. 2011 e file Applicable Disaster Date The term “applicable disaster date” as used in this publication, refers to the date on which the severe storms, tornadoes, or flooding occurred in the Midwestern disaster areas. 2011 e file You will need to know this date when using this publication for the various tax provisions. 2011 e file Table 1 The counties listed in Table 1 below are eligible for all tax provisions shown in this publication. 2011 e file Applicable Disaster Dates* State Affected Counties—Midwestern Disaster Areas 05/02/2008through05/12/2008 Arkansas Arkansas, Benton, Cleburne, Conway, Crittenden, Grant, Lonoke, Mississippi, Phillips, Pulaski, Saline, and Van Buren. 2011 e file 06/01/2008through07/22/2008 Illinois Adams, Calhoun, Clark, Coles, Crawford, Cumberland, Douglas, Edgar, Hancock, Henderson, Jasper, Jersey, Lake, Lawrence, Mercer, Rock Island, Whiteside, and Winnebago. 2011 e file 05/30/2008through06/27/2008 Indiana Adams, Bartholomew, Brown, Clay, Daviess, Dearborn, Decatur, Gibson, Grant, Greene, Hamilton, Hancock, Hendricks, Henry, Huntington, Jackson, Jefferson, Jennings, Johnson, Knox, Lawrence, Madison, Marion, Monroe, Morgan, Owen, Parke, Pike, Posey, Putnam, Randolph, Ripley, Rush, Shelby, Sullivan, Tippecanoe, Vermillion, Vigo, Washington, and Wayne. 2011 e file 05/25/2008through08/13/2008 Iowa Adair, Adams, Allamakee, Appanoose, Audubon, Benton, Black Hawk, Boone, Bremer, Buchanan, Butler, Cass, Cedar, Cerro Gordo, Chickasaw, Clarke, Clayton, Clinton, Crawford, Dallas, Davis, Decatur, Delaware, Des Moines, Dubuque, Fayette, Floyd, Franklin, Fremont, Greene, Grundy, Guthrie, Hamilton, Hancock, Hardin, Harrison, Henry, Howard, Humboldt, Iowa, Jackson, Jasper, Johnson, Jones, Keokuk, Kossuth, Lee, Linn, Louisa, Lucas, Madison, Mahaska, Marion, Marshall, Mills, Mitchell, Monona, Monroe, Montgomery, Muscatine, Page, Polk, Pottawattamie, Poweshiek, Ringgold, Scott, Story, Tama, Union, Van Buren, Wapello, Warren, Washington, Webster, Winnebago, Winneshiek, Worth, and Wright. 2011 e file 05/10/2008through05/11/2008 Missouri Barry, Jasper, and Newton. 2011 e file 06/01/2008through08/13/2008 Missouri Adair, Andrew, Callaway, Cass, Chariton, Clark, Gentry, Greene, Harrison, Holt, Johnson, Lewis, Lincoln, Linn, Livingston, Macon, Marion, Monroe, Nodaway, Pike, Putnam, Ralls, St. 2011 e file Charles, Stone, Taney, Vernon, and Webster. 2011 e file 05/22/2008through06/24/2008 Nebraska Buffalo, Butler, Colfax, Custer, Dawson, Douglas, Gage, Hamilton, Holt, Jefferson, Kearney, Lancaster, Platte, Richardson, Sarpy, and Saunders. 2011 e file 06/05/2008through07/25/2008 Wisconsin Adams, Calumet, Crawford, Columbia, Dane, Dodge, Fond du Lac, Grant, Green, Green Lake, Iowa, Jefferson, Juneau, Kenosha, La Crosse, Manitowoc, Marquette, Milwaukee, Monroe, Ozaukee, Racine, Richland, Rock, Sauk, Sheboygan, Vernon, Walworth, Washington, Waukesha, and Winnebago. 2011 e file *For more details, go to www. 2011 e file fema. 2011 e file gov Table 2 The counties listed in Table 2 below are eligible for all of the special tax provisions shown in this publication except the following. 2011 e file Charitable Giving Incentives. 2011 e file Net Operating Losses. 2011 e file Education Credits. 2011 e file Recapture of Federal Mortgage Subsidy. 2011 e file Tax Relief for Temporary Relocation. 2011 e file Employee Retention Credit. 2011 e file Employer Housing Credit and Exclusion. 2011 e file Demolition and Clean-up Costs. 2011 e file Increase in Rehabilitation Credit. 2011 e file Applicable Disaster Dates* State Affected Counties—Midwestern Disaster Areas 06/01/2008through07/22/2008 Illinois Greene, Madison, Monroe, Pike, Randolph, St. 2011 e file Clair, and Scott. 2011 e file 05/30/2008through06/27/2008 Indiana Benton, Boone, Fountain, Franklin, Jay, Montgomery, Ohio, Switzerland, Union, and Wabash. 2011 e file 05/25/2008through08/13/2008 Iowa Carroll, Cherokee, Lyon, Palo Alto, Pocahontas, Taylor, and Wayne. 2011 e file 05/22/2008through06/16/2008 Kansas Barber, Barton, Bourbon, Brown, Butler, Chautauqua, Cherokee, Clark, Clay, Comanche, Cowley, Crawford, Decatur, Dickinson, Edwards, Elk, Ellis, Ellsworth, Franklin, Gove, Graham, Harper, Haskell, Hodgeman, Jackson, Jewell, Kingman, Kiowa, Lane, Linn, Logan, Mitchell, Montgomery, Ness, Norton, Osborne, Pawnee, Phillips, Pratt, Reno, Republic, Riley, Rooks, Rush, Saline, Seward, Sheridan, Smith, Stafford, Sumner, Thomas, Trego, Wallace, and Wilson. 2011 e file 06/06/2008through06/13/2008 Michigan Allegan, Barry, Eaton, Ingham, Lake, Manistee, Mason, Missaukee, Osceola, Ottawa, Saginaw, and Wexford. 2011 e file 06/06/2008through06/12/2008 Minnesota Cook, Fillmore, Freeborn, Houston, Mower, and Nobles. 2011 e file 06/01/2008through08/13/2008 Missouri Atchison, Audrain, Bates, Buchanan, Cape Girardeau, Carroll, Christian, Daviess, Grundy, Howard, Jefferson, Knox, Mercer, Miller, Mississippi, Morgan, New Madrid, Pemiscot, Perry, Pettis, Platte, Polk, Randolph, Ray, Saline, Schuyler, Scotland, Shelby, St. 2011 e file Genevieve, St. 2011 e file Louis, the Independent City of St. 2011 e file Louis, Scott, Sullivan, and Worth. 2011 e file 04/23/2008through04/26/2008 Nebraska Gage, Johnson, Morrill, Nemaha, and Pawnee. 2011 e file 05/22/2008through06/24/2008 Nebraska Adams, Blaine, Boone, Boyd, Brown, Burt, Cass, Chase, Cherry, Cuming, Dundy, Fillmore, Frontier, Furnas, Garfield, Gosper, Greeley, Hall, Hayes, Howard, Johnson, Keya Paha, Lincoln, Logan, Loup, Merrick, McPherson, Morrill, Nance, Nemaha, Otoe, Phelps, Polk, Red Willow, Rock, Saline, Seward, Sherman, Stanton, Thayer, Thomas, Thurston, Valley, Webster, Wheeler, and York. 2011 e file 06/27/2008 Nebraska Dodge, Douglas, Sarpy, and Saunders. 2011 e file 06/05/2008through07/25/2008 Wisconsin Lafayette. 2011 e file * For more details, go to www. 2011 e file fema. 2011 e file gov Charitable Giving Incentives Temporary Suspension of Limits on Charitable Contributions This benefit applies only to the counties in Table 1. 2011 e file Individuals. 2011 e file   Qualified contributions are not subject to the overall limit on itemized deductions or the 50% of adjusted gross income (AGI) limit. 2011 e file A qualified contribution is a charitable contribution paid in cash or by check to a 50% limit organization if you make an election to have the 50% limit not apply to these contributions. 2011 e file   A qualified contribution must also meet all of the following requirements. 2011 e file Be paid after May 1, 2008, and before January 1, 2009. 2011 e file The contribution must be for relief efforts in one or more Midwestern disaster areas. 2011 e file Documentation must be provided by the donee organization that the contribution was used (or will be used) for relief efforts in one or more Midwestern disaster areas. 2011 e file   Your deduction for qualified contributions is limited to your AGI minus your deduction for all other charitable contributions. 2011 e file You can carry over any contributions you are not able to deduct for 2008 because of this limit. 2011 e file In 2009, the carryover of your unused qualified contributions is subject to the 50% of AGI limit. 2011 e file Exception. 2011 e file   Qualified contributions do not include contributions to certain private foundations described in section 509(a)(3) or contributions for the establishment of a new, or maintenance of an existing, donor advised fund. 2011 e file Corporations. 2011 e file   A corporation can elect to deduct qualified cash contributions without regard to the 10% of taxable income limit if the contributions were paid after May 1, 2008, and before January 1, 2009, to a qualified charitable organization (other than certain private foundations described in section 509(a)(3) or contributions for the establishment of a new, or maintenance of an existing, donor advised fund), for relief efforts in one or more Midwestern disaster areas. 2011 e file Documentation must be provided by the donee organization that the contribution was used (or will be used) for relief efforts in one or more Midwestern disaster areas. 2011 e file The corporation's deduction for these qualified contributions is limited to 100% of taxable income (as modified for the 10% limit) minus the corporation's deduction for all other charitable contributions. 2011 e file Any qualified contributions over this limit can be carried over to the next 5 years, subject to the 10% of taxable income limit. 2011 e file Partners and shareholders. 2011 e file   Each partner in a partnership and each shareholder in an S corporation must make a separate election to have the appropriate limit not apply. 2011 e file More information. 2011 e file   For more information, see Publication 526 or Publication 542, Corporations. 2011 e file Publication 526 includes a worksheet you can use to figure your deduction if any limits apply to your charitable contributions. 2011 e file Standard Mileage Rate for Charitable Use of Vehicles This benefit applies only to the counties in Table 1. 2011 e file The following are special standard mileage rates in effect for 2008 for the cost of operating your vehicle for providing charitable services related only to the severe storms, tornadoes, or flooding. 2011 e file 36 cents per mile for the period beginning on the applicable disaster date through June 30, 2008. 2011 e file 41 cents per mile for the period July 1 through December 31, 2008. 2011 e file Mileage Reimbursements to Charitable Volunteers This benefit applies only to the counties in Table 1. 2011 e file You can exclude from income amounts you receive as mileage reimbursements for the use of a private passenger vehicle for the benefit of a qualified charitable organization in providing relief related to the severe storms, tornadoes, or flooding during the period beginning on the applicable disaster date, and ending on December 31, 2008. 2011 e file You cannot claim a deduction or credit for amounts you exclude. 2011 e file You must keep records of miles driven, time, place (or use), and purpose of the mileage. 2011 e file The amount you can exclude cannot exceed the standard business mileage rate (shown below) for expenses incurred during the following periods. 2011 e file 50. 2011 e file 5 cents per mile for the period beginning on the applicable disaster date through June 30, 2008. 2011 e file 58. 2011 e file 5 cents per mile for the period July 1 through December 31, 2008. 2011 e file Casualty and Theft Losses This benefit applies to the counties in both Tables 1 and 2. 2011 e file The following paragraphs explain changes to casualty and theft losses that were caused by the severe storms, tornadoes, or flooding in the Midwestern disaster areas. 2011 e file For more information, see Publication 547. 2011 e file Limits on personal casualty or theft losses. 2011 e file   Losses of personal use property that arose in a Midwestern disaster area on or after the applicable disaster date are not subject to the $100 or 10% of AGI limits. 2011 e file Qualifying losses include losses from casualties and thefts that arose in a Midwestern disaster area that were attributable to the severe storms, tornadoes, or flooding. 2011 e file When completing Form 4684, do not include on line 17 any losses that arose in a Midwestern disaster area. 2011 e file A loss arising in a Midwestern disaster area is not considered a loss attributable to a federally declared disaster for purposes of that line and cannot be added to your standard deduction. 2011 e file When to deduct the loss. 2011 e file   Casualty and theft losses are generally deductible only in the year the casualty occurred or the theft was discovered. 2011 e file However, you can elect to deduct losses caused by the severe storms, tornadoes, or flooding on your return for the prior year. 2011 e file Special instructions for individuals who elect to claim a Midwestern disaster area casualty or theft loss for 2007. 2011 e file   Individuals filing or amending their 2007 tax return for casualty or theft losses that were attributable to the severe storms, tornadoes, or flooding should: Enter “Midwestern Disaster Area” at the top of Form 1040 or Form 1040X, and Complete the 2008 version of Form 4684. 2011 e file Cross out “2008” and enter “2007” at the top of Form 4684. 2011 e file Time limit for making election. 2011 e file   You must make this election to claim your casualty or theft loss in 2007 by the later of the following dates. 2011 e file The due date (without extensions) for filing your 2008 income tax return. 2011 e file The due date (with extensions) for filing your 2007 income tax return. 2011 e file Example. 2011 e file If you are a calendar year individual taxpayer, you have until April 15, 2009, to amend your 2007 tax return to claim a casualty or theft loss that occurred during 2008. 2011 e file Replacement Period for Nonrecognition of Gain This benefit applies to the counties in both Tables 1 and 2. 2011 e file Generally, an involuntary conversion occurs when property is damaged, destroyed, stolen, seized, requisitioned, or condemned, and you receive other property or money in payment, such as insurance or a condemnation award. 2011 e file Generally, you do not have to report a gain (if any) if you replace the property within 2 years (4 years for a main home in a federally declared disaster area). 2011 e file However, for property that was involuntarily converted on or after the applicable disaster date, as a result of the severe storms, tornadoes, or flooding, a 5-year replacement period applies if substantially all of the use of the replacement property is in a Midwestern disaster area. 2011 e file For more information, see the Instructions for Form 4684. 2011 e file Net Operating Losses This benefit applies only to the counties in Table 1. 2011 e file Qualified disaster recovery assistance loss. 2011 e file   Generally, you can carry a net operating loss (NOL) back to the 2 tax years before the NOL year. 2011 e file However, the portion of an NOL that is a qualified disaster recovery assistance loss can be carried back to the 5 tax years before the NOL year. 2011 e file In addition, the 90% limit on the alternative tax NOL deduction (ATNOLD) does not apply to such portion of the ATNOLD. 2011 e file   A qualified disaster recovery assistance loss is the smaller of: The excess of the NOL for the year over the specified liability loss for the year to which a 10-year carryback applies, or The total of the following deductions (to the extent they are taken into account in computing the NOL for the tax year): Qualified disaster recovery assistance casualty loss (as defined below), Moving expenses paid or incurred on or after the applicable disaster date, and before January 1, 2011, for the employment of an individual whose main home was in a Midwestern disaster area before the applicable disaster date, who was unable to remain in that home because of the severe storms, tornadoes, or flooding, and whose main job location (after the move) is in a Midwestern disaster area, Temporary housing expenses paid or incurred on or after the applicable disaster date, and before January 1, 2011, to house employees of the taxpayer whose main job location is in a Midwestern disaster area, Depreciation or amortization allowable for any qualified disaster recovery assistance property (even if you elected not to claim the special disaster recovery assistance depreciation allowance for such property) for the year placed in service, and Repair expenses (including expenses for the removal of debris) paid or incurred on or after the applicable disaster date, and before January 1, 2011, for any damage from the severe storms, tornadoes, or flooding to property located in a Midwestern disaster area. 2011 e file Qualified disaster recovery assistance casualty loss. 2011 e file   A qualified disaster recovery assistance casualty loss is any deductible section 1231 loss of property located in a Midwestern disaster area if the loss was caused by the severe storms, tornadoes, or flooding. 2011 e file For this purpose, the amount of the loss is reduced by any recognized gain from an involuntary conversion caused by the severe storms, tornadoes, or flooding of property located in a Midwestern disaster area. 2011 e file Any such loss taken into account in figuring your qualified disaster recovery assistance loss is not eligible for the election to be treated as having occurred in the previous tax year. 2011 e file More information. 2011 e file   For more information on NOLs, see Publication 536 or Publication 542, Corporations. 2011 e file IRAs and Other Retirement Plans New rules provide for tax-favored withdrawals, repayments, and loans from certain retirement plans for taxpayers who suffered economic losses as a result of the severe storms, tornadoes, or flooding. 2011 e file Definitions Qualified disaster recovery assistance distribution. 2011 e file   A qualified disaster recovery assistance distribution is any distribution you received from an eligible retirement plan if all of the following apply. 2011 e file The distribution was made on or after the applicable disaster date and before January 1, 2010. 2011 e file Your main home was located in a Midwestern disaster area on the applicable disaster date. 2011 e file You sustained an economic loss because of the severe storms, tornadoes, or flooding and your main home was in a Midwestern disaster area on the applicable disaster date. 2011 e file Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. 2011 e file   If (1) through (3) above apply, you can generally designate any distribution (including periodic payments and required minimum distributions) from an eligible retirement plan as a qualified disaster recovery assistance distribution, regardless of whether the distribution was made on account of the severe storms, tornadoes, or flooding. 2011 e file Qualified disaster recovery assistance distributions are permitted without regard to your need or the actual amount of your economic loss. 2011 e file   The total of your qualified disaster recovery assistance distributions from all plans is limited to $100,000. 2011 e file If you have distributions in excess of $100,000 from more than one type of plan, such as a 401(k) plan and an IRA, you can allocate the $100,000 limit among the plans any way you choose. 2011 e file   A reduction or offset (on or after the applicable disaster date) of your account balance in an eligible retirement plan in order to repay a loan can also be designated as a qualified disaster recovery assistance distribution. 2011 e file Eligible retirement plan. 2011 e file   An eligible retirement plan can be any of the following. 2011 e file A qualified pension, profit-sharing, or stock bonus plan (including a 401(k) plan). 2011 e file A qualified annuity plan. 2011 e file A tax-sheltered annuity contract. 2011 e file A governmental section 457 deferred compensation plan. 2011 e file A traditional, SEP, SIMPLE, or Roth IRA. 2011 e file Main home. 2011 e file   Generally, your main home is the home where you live most of the time. 2011 e file A temporary absence due to special circumstances, such as illness, education, business, military service, evacuation, or vacation, will not change your main home. 2011 e file Taxation of Qualified Disaster Recovery Assistance Distributions This benefit applies to the counties in both Tables 1 and 2. 2011 e file Qualified disaster recovery assistance distributions are included in income in equal amounts over three years. 2011 e file However, if you elect, you can include the entire distribution in your income in the year it was received. 2011 e file Qualified disaster recovery assistance distributions are not subject to the additional 10% tax (or the additional 25% tax for certain distributions from SIMPLE IRAs) on early distributions from qualified retirement plans (including IRAs). 2011 e file However, any distributions you receive in excess of the $100,000 qualified disaster recovery assistance distribution limit may be subject to the additional tax on early distributions. 2011 e file For more information, see Form 8930. 2011 e file Repayment of Qualified Disaster Recovery Assistance Distributions This benefit applies to the counties in both Tables 1 and 2. 2011 e file If you choose, you generally can repay any portion of a qualified disaster recovery assistance distribution that is eligible for tax-free rollover treatment to an eligible retirement plan. 2011 e file Also, you can repay a qualified disaster recovery assistance distribution made on account of a hardship from a retirement plan. 2011 e file However, see Exceptions later for qualified disaster recovery assistance distributions you cannot repay. 2011 e file You have three years from the day after the date you received the distribution to make a repayment. 2011 e file Amounts that are repaid are treated as a qualified rollover and are not included in income. 2011 e file Also, a repayment of a qualified disaster recovery assistance distribution to an IRA is not counted when figuring the one-rollover-per-year limitation. 2011 e file See Form 8930 for more information on how to report repayments. 2011 e file Exceptions. 2011 e file   You cannot repay the following types of distributions. 2011 e file Qualified disaster recovery assistance distributions received as a beneficiary (other than a surviving spouse). 2011 e file Required minimum distributions. 2011 e file Periodic payments (other than from an IRA) that are for: A period of 10 years or more, Your life or life expectancy, or The joint lives or joint life expectancies of you and your beneficiary. 2011 e file Repayment of Qualified Distributions for the Purchase or Construction of a Main Home This benefit applies to the counties in both Tables 1 and 2. 2011 e file If you received a qualified distribution to purchase or construct a main home in a Midwestern disaster area, you can repay part or all of that distribution on or after the applicable disaster date, but no later than March 3, 2009, to an eligible retirement plan. 2011 e file For this purpose, an eligible retirement plan is any plan, annuity, or IRA to which a qualified rollover can be made. 2011 e file To be a qualified distribution, the distribution must meet all of the following requirements. 2011 e file The distribution is a hardship distribution from a 401(k) plan, a hardship distribution from a tax-sheltered annuity contract, or a qualified first-time homebuyer distribution from an IRA. 2011 e file The distribution was received after the date that was 6 months before the day after the applicable disaster date. 2011 e file The distribution was to be used to purchase or construct a main home in a Midwestern disaster area that was not purchased or constructed because of the severe storms, tornadoes, or flooding. 2011 e file Amounts that are repaid before March 4, 2009, are treated as a qualified rollover and are not included in income. 2011 e file Also, a repayment of a qualified distribution to an IRA is not counted when figuring the one-rollover-per-year limitation. 2011 e file A qualified distribution not repaid before March 4, 2009, may be taxable for 2007 or 2008 and subject to the additional 10% tax (or the additional 25% tax for certain SIMPLE IRAs) on early distributions. 2011 e file You must file Form 8930 if you received a qualified distribution that you repaid, in whole or in part, before March 4, 2009. 2011 e file Loans From Qualified Plans This benefit applies to the counties in both Tables 1 and 2. 2011 e file The following benefits are available to qualified individuals. 2011 e file Increases to the limits for distributions treated as loans from employer plans. 2011 e file A 1-year suspension for payments due on plan loans. 2011 e file Qualified individual. 2011 e file   You are a qualified individual if your main home was located in a Midwestern disaster area on the applicable disaster date and you had an economic loss because of the severe storms, tornadoes, or flooding. 2011 e file Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. 2011 e file Limits on plan loans. 2011 e file   The $50,000 limit for distributions treated as plan loans is increased to $100,000. 2011 e file In addition, the limit based on 50% of your vested accrued benefit is increased to 100% of that benefit. 2011 e file If your main home was located in a Midwestern disaster area, the higher limits apply only to loans received during the period beginning on October 3, 2008, and ending on December 31, 2009. 2011 e file One-year suspension of loan payments. 2011 e file   Payments on plan loans outstanding on or after the applicable disaster date, may be suspended for 1 year by the plan administrator. 2011 e file To qualify for the suspension, the due date for any loan payment must occur during the period beginning on the applicable disaster date and ending on December 31, 2009. 2011 e file Additional Tax Relief for Individuals Earned Income Credit and Child Tax Credit This benefit applies to the counties in both Tables 1 and 2. 2011 e file You can elect to use your 2007 earned income to figure your earned income credit (EIC) and additional child tax credit for 2008 if: Your 2008 earned income is less than your 2007 earned income, and At least one of the following statements is true. 2011 e file Your main home on the applicable disaster date was in a Midwestern disaster area as shown in Table 1. 2011 e file Your main home on the applicable disaster date was in a Midwestern disaster area as shown in Table 2, and you were displaced from that home because of the severe storms, tornadoes, or flooding. 2011 e file Earned income. 2011 e file    For the purpose of this election, your earned income for both the EIC and the additional child tax credit is the amount of earned income used to figure your EIC, even if you did not take the EIC and even if that amount is different than your earned income for the additional child tax credit. 2011 e file If you are claiming only the additional child tax credit, you must figure the amount of your earned income for EIC purposes to determine your eligibility to make the election and the amount of the credit. 2011 e file Joint returns. 2011 e file   If you file a joint return, you qualify to make this election even if only one spouse meets the requirements. 2011 e file If you make the election, your 2007 earned income is the sum of your 2007 earned income and your spouse's 2007 earned income. 2011 e file Making the election. 2011 e file   If you make the election to use your 2007 earned income, the election applies for figuring both the EIC and the additional child tax credit. 2011 e file However, you can make the election for the additional child tax credit even if you do not take the EIC. 2011 e file   Electing to use your 2007 earned income can increase or decrease your EIC. 2011 e file Take the following steps to decide whether to make the election. 2011 e file Figure your 2008 EIC using your 2007 earned income. 2011 e file Figure your 2008 additional child tax credit using your 2007 earned income for EIC purposes. 2011 e file Add the results of (1) and (2). 2011 e file Figure your 2008 EIC using your 2008 earned income. 2011 e file Figure your 2008 additional child tax credit using your 2008 earned income for additional child tax credit purposes. 2011 e file Add the results of (4) and (5). 2011 e file Compare the results of (3) and (6). 2011 e file If (3) is larger than (6), it is to your benefit to make the election. 2011 e file If (3) is equal to or smaller than (6), making the election will not help you. 2011 e file   If you elect to use your 2007 earned income and you are claiming the EIC, enter “PYEI” and the amount of your 2007 earned income on the dotted line next to line 64a of Form 1040, on the line next to line 40a of Form 1040A, or in the space to the left of line 8a of Form 1040EZ. 2011 e file   If you elect to use your 2007 earned income and you are claiming the additional child tax credit, enter your 2007 earned income for EIC purposes (even if you did not claim the EIC) on Form 8812, Additional Child Tax Credit, line 4a, and check the box on that line. 2011 e file Getting your 2007 tax return information. 2011 e file   If you do not have your 2007 tax records, you can get the amount of earned income used to figure your 2007 EIC by calling 1-866-562-5227. 2011 e file You can also get this information by visiting the IRS website at www. 2011 e file irs. 2011 e file gov. 2011 e file   If you prefer to figure your 2007 earned income yourself, copies or transcripts of your filed and processed tax returns can help you reconstruct your tax records. 2011 e file See Request for Copy or Transcript of Tax Return on page 11. 2011 e file Additional Exemption for Housing Individuals Displaced by the Severe Storms, Tornadoes, or Flooding This benefit applies to the counties in both Tables 1 and 2. 2011 e file You can claim an additional exemption amount of $500 for providing housing in your main home for each individual displaced by the severe storms, tornadoes, or flooding. 2011 e file The additional exemption amount is claimed on Form 8914. 2011 e file You can claim an additional exemption amount only one time for a specific individual. 2011 e file If you claimed an additional exemption amount for an individual in 2008, you cannot claim that amount again for the same individual in 2009. 2011 e file The maximum additional exemption amount you can claim for all displaced individuals is $2,000. 2011 e file Any additional exemption amount you claimed for displaced individuals in 2008 will reduce the $2,000 maximum for 2009. 2011 e file The $2,000 limit applies to a husband and wife, whether the husband and wife file joint returns or separate returns. 2011 e file If married filing separately, the $2,000 can be divided in $500 increments between the spouses. 2011 e file For example, if one spouse claims an additional exemption amount for one displaced individual, the other spouse, if otherwise eligible, can claim additional exemption amounts for three different displaced individuals. 2011 e file If two or more taxpayers share the same main home, only one taxpayer in that main home can claim the additional exemption amount for a specific displaced individual. 2011 e file In order for you to be considered to have provided housing, you must have a legal interest in the main home (that is, own or rent the home). 2011 e file To qualify as a displaced individual, the individual: Must have had his or her main home in a Midwestern disaster area on the applicable disaster date, and he or she must have been displaced from that home. 2011 e file If the individual's main home was located in a Midwestern disaster area as shown in Table 2, that home must have been damaged by the severe storms, tornadoes, or flooding or the individual must have been evacuated from that home because of the severe storms, tornadoes, or flooding, Must have been provided housing in your main home for a period of at least 60 consecutive days ending in the tax year in which the exemption is claimed, and Cannot be your spouse or dependent. 2011 e file You cannot claim the additional exemption amount if you received rent (or any other amount) from any source for providing the housing. 2011 e file You are permitted to receive payments or reimbursements that do not relate to normal housing costs, including the following. 2011 e file Food, clothing, or personal items consumed or used by the displaced individual. 2011 e file Reimbursement for the cost of any long distance telephone calls made by the displaced individual. 2011 e file Reimbursement for the cost of gasoline for the displaced individual's use of your vehicle. 2011 e file However, you cannot claim the additional exemption amount if you received any reimbursement for the extra costs of heat, electricity, or water used by the displaced individual. 2011 e file Also, you must report on Form 8914 the displaced individual's social security number or individual taxpayer identification number to claim an additional exemption amount. 2011 e file For more information, see Form 8914. 2011 e file Education Credits This benefit applies only to the counties in Table 1. 2011 e file The education credits have been expanded for students attending an eligible educational institution located in a Midwestern disaster area (Midwestern disaster area students) for any tax year beginning in 2008 or 2009. 2011 e file The Hope credit for a Midwestern disaster area student is increased to 100% of the first $2,400 in qualified education expenses and 50% of the next $2,400 of qualified education expenses for a maximum credit of $3,600 per student. 2011 e file The lifetime learning credit rate for a Midwestern disaster area student is increased from 20% to 40%. 2011 e file The definition of qualified education expenses for a Midwestern disaster area student also has been expanded. 2011 e file This expanded definition also applies to the tuition and fees deduction claimed on Form 8917. 2011 e file In addition to tuition and fees required for the student's enrollment or attendance at an eligible educational institution, qualified education expenses for a Midwestern disaster area student include the following. 2011 e file Books, supplies, and equipment required for enrollment or attendance at an eligible educational institution. 2011 e file For a special needs student, expenses that are necessary for that person's enrollment or attendance at an eligible educational institution. 2011 e file For a student who is at least a half-time student, the reasonable costs of room and board, but only to the extent that the costs are not more than the greater of the following two amounts. 2011 e file The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. 2011 e file The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. 2011 e file You will need to contact the eligible educational institution for qualified room and board costs. 2011 e file For more information, see Form 8863. 2011 e file See Form 8917 for the tuition and fees deduction. 2011 e file Recapture of Federal Mortgage Subsidy This benefit applies only to the counties in Table 1. 2011 e file Generally, if you financed your home under a federally subsidized program (loans from tax-exempt qualified mortgage bonds or loans with mortgage credit certificates), you may have to recapture all or part of the benefit you received from that program when you sell or otherwise dispose of your home. 2011 e file However, you do not have to recapture any benefit if your mortgage loan was a qualified home improvement loan of not more than $15,000. 2011 e file This amount is increased to $150,000 if the loan was provided before 2011 and was used to alter, repair, or improve an existing owner-occupied residence in a Midwestern disaster area as shown in Table 1. 2011 e file Exclusion of Certain Cancellations of Indebtedness by Reason of the Severe Storms, Tornadoes, or Flooding This benefit applies to the counties in both Tables 1 and 2. 2011 e file Generally, discharges of nonbusiness debts (such as mortgages) made on or after the applicable disaster date and before January 1, 2010, are excluded from income for individuals whose main home was in a Midwestern disaster area on the applicable disaster date. 2011 e file If the individual's main home was located in a Midwestern disaster area as shown in Table 2, the individual also must have had an economic loss because of the severe storms, tornadoes, or flooding. 2011 e file Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. 2011 e file This relief does not apply to any debt secured by real property located outside a Midwestern disaster area. 2011 e file You may also have to reduce certain tax attributes by the amount excluded. 2011 e file For more information, see Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). 2011 e file Tax Relief for Temporary Relocation This benefit applies only to the counties in Table 1. 2011 e file The IRS can adjust the internal revenue laws to ensure that taxpayers do not lose a deduction or credit or experience a change of filing status in 2008 or 2009 as a result of a temporary relocation caused by the severe storms, tornadoes, or flooding. 2011 e file However, any such adjustment must ensure that an individual is not taken into account by more than one taxpayer for the same tax benefit. 2011 e file The IRS has exercised this authority as follows. 2011 e file In determining whether you furnished over one-half of the cost of maintaining a household, you can exclude from total household costs any assistance received from the government or charitable organizations because you were temporarily relocated as a result of the severe storms, tornadoes, or flooding. 2011 e file In determining whether you provided more than one-half of an individual's support, you can disregard any assistance received from the government or charitable organizations because you were temporarily relocated as a result of the severe storms, tornadoes, or flooding. 2011 e file You can treat as a student an individual who enrolled in school before the applicable disaster date, and who is unable to attend classes because of the severe storms, tornadoes, or flooding, for each month of the enrollment period that individual is prevented by the severe storms, tornadoes, or flooding from attending school as planned. 2011 e file Additional Tax Relief for Businesses Employee Retention Credit This benefit applies only to the counties in Table 1. 2011 e file An eligible employer who conducted an active trade or business in a Midwestern disaster area can claim the employee retention credit. 2011 e file The credit is 40% of qualified wages for each eligible employee (up to a maximum of $6,000 in qualified wages per employee). 2011 e file Generally, you must reduce your deduction for salaries and wages by the amount of this credit (before the tax liability limit). 2011 e file Use Form 5884-A to claim the credit. 2011 e file Employers affected by the severe storms, tornadoes, or flooding. 2011 e file   The following definitions apply to employers affected by the severe storms, tornadoes, or flooding. 2011 e file Eligible employer. 2011 e file   For this purpose, an eligible employer is any employer who meets all of the following. 2011 e file Employed an average of not more than 200 employees on business days during the tax year before the applicable disaster date. 2011 e file Conducted an active trade or business on the applicable disaster date in a Midwestern disaster area. 2011 e file Whose trade or business was inoperable on any day after the applicable disaster date and before January 1, 2009, because of the damage caused by the severe storms, tornadoes, or flooding. 2011 e file Eligible employee. 2011 e file   For this purpose, an eligible employee is an employee whose principal place of employment on the applicable disaster date with such eligible employer was in a Midwestern disaster area. 2011 e file An employee is not an eligible employee for purposes of the severe storms, tornadoes, or flooding if the employee is treated as an eligible employee for the work opportunity credit. 2011 e file Qualified wages. 2011 e file   Qualified wages are wages (up to $6,000 per employee) you paid or incurred before January 1, 2009, for an eligible employee beginning on the date your trade or business first became inoperable at the employee's principal place of employment immediately before the applicable disaster, and ending on the date your trade or business resumed significant operations at that place. 2011 e file In addition, the wages must have been paid or incurred after the applicable disaster date. 2011 e file    This includes wages paid even if the employee performed no services, performed services at a place of employment other than the principal place of employment, or performed services at the principal place of employment before significant operations resumed. 2011 e file    Wages qualifying for the credit generally have the same meaning as wages subject to the Federal Unemployment Tax Act (FUTA). 2011 e file Qualified wages also include amounts you paid for medical or hospitalization expenses in connection with sickness or accident disability. 2011 e file Qualified wages for any employee must be reduced by the amount of any work supplementation payment you received under the Social Security Act. 2011 e file   For agricultural employees, if the work performed by any employee during more than half of any pay period qualified under FUTA as agricultural labor, that employee's wages subject to social security and Medicare taxes are qualified wages. 2011 e file For a special rule that applies to railroad employees, see section 51(h)(1)(B). 2011 e file   Qualified wages do not include the following. 2011 e file Wages paid to your dependent or a related individual. 2011 e file See section 51(i)(1). 2011 e file Wages paid to any employee during the period for which you received payment for the employee from a federally funded on-the-job training program. 2011 e file Wages for services of replacement workers during a strike or lockout. 2011 e file   For more information, see Form 5884-A. 2011 e file Employer Housing Credit and Exclusion This benefit applies only to the counties in Table 1. 2011 e file An employer who conducted an active trade or business in a Midwestern disaster area can claim the employer housing credit. 2011 e file The credit is equal to 30% of the value (up to $600 per month per employee) of in-kind lodging furnished to a qualified employee (and the employee's spouse or dependents) from November 1, 2008, through May 1, 2009. 2011 e file The value of the lodging is excluded from the income of the qualified employee but is treated as wages for purposes of taxes imposed under the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA). 2011 e file Generally, you must reduce your deduction for salaries and wages by the amount of this credit (before the tax liability limit). 2011 e file The employer must use Form 5884-A to claim the credit. 2011 e file A qualified employee is an individual who had a main home in a Midwestern disaster area on the applicable disaster date, and who performs substantially all employment services in a Midwestern disaster area for the employer furnishing the lodging. 2011 e file The employee cannot be your dependent or a related individual. 2011 e file See section 51(i)(1). 2011 e file For more information, see Form 5884-A. 2011 e file Demolition and Clean-up Costs This benefit applies only to the counties in Table 1. 2011 e file You can elect to deduct 50% of any qualified disaster recovery assistance clean-up costs for the tax year in which the costs are paid or incurred, instead of capitalizing them. 2011 e file Qualified disaster recovery assistance clean-up costs are any amounts paid or incurred on or after the applicable disaster date, and before January 1, 2011, for the removal of debris from, or the demolition of structures on, real property located in a Midwestern disaster area that is: Held by you for use in a trade or business or for the production of income, or Inventory or other property held primarily for sale to customers in the ordinary course of your trade or business. 2011 e file Qualified disaster recovery assistance clean-up costs are limited to amounts necessary due to damage attributable to the severe storms, tornadoes, or flooding in the Midwestern disaster areas. 2011 e file Increase in Rehabilitation Tax Credit This benefit applies only to the counties in Table 1. 2011 e file The rehabilitation credit is increased for qualified rehabilitation expenditures paid or incurred on or after the applicable disaster date, and before January 1, 2012, on buildings located in a Midwestern disaster area as follows. 2011 e file For pre-1936 buildings (other than certified historic structures), the credit percentage is increased from 10% to 13%. 2011 e file For certified historic structures, the credit percentage is increased from 20% to 26%. 2011 e file For more information, see Form 3468, Investment Credit. 2011 e file Request for Copy or Transcript of Tax Return Request for copy of tax return. 2011 e file   You can use Form 4506 to order a copy of your tax return. 2011 e file Generally, there is a $57 fee for requesting each copy of a tax return. 2011 e file If your main home, principal place of business, or tax records are located in a Midwestern disaster area, the fee will be waived if “Midwestern Disaster Area” is written in red across the top of the form when filed. 2011 e file Request for transcript of tax return. 2011 e file   You can use Form 4506-T to order a free transcript of your tax return. 2011 e file A transcript provides most of the line entries from a tax return and usually contains the information that a third party requires. 2011 e file You can also call 1-800-829-1040 to order a transcript. 2011 e file How To Get Tax Help Special IRS assistance. 2011 e file   The IRS is providing special help for those affected by the severe storms, tornadoes, or flooding, as well as survivors and personal representatives of the victims. 2011 e file We have set up a special toll-free number for people who may have trouble filing or paying their taxes because they were affected by recent federally declared disasters, or who have other tax issues related to the severe storms, tornadoes, or flooding. 2011 e file Call 1-866-562-5227 Monday through FridayIn English–7 a. 2011 e file m. 2011 e file to 10 p. 2011 e file m. 2011 e file local timeIn Spanish–8 a. 2011 e file m. 2011 e file to 9:30 p. 2011 e file m. 2011 e file local time   The IRS website at www. 2011 e file irs. 2011 e file gov has notices and other tax relief information. 2011 e file Check it periodically for any new guidance. 2011 e file You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. 2011 e file By selecting the method that is best for you, you will have quick and easy access to tax help. 2011 e file Contacting your Taxpayer Advocate. 2011 e file   The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. 2011 e file Here are seven things every taxpayer should know about TAS: TAS is your voice at the IRS. 2011 e file Our service is free, confidential, and tailored to meet your needs. 2011 e file You may be eligible for TAS help if you have tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn't working as it should. 2011 e file TAS helps taxpayers whose problems are causing financial difficulty or significant cost, including the cost of professional representation. 2011 e file This includes businesses as well as individuals. 2011 e file TAS employees know the IRS and how to navigate it. 2011 e file We will listen to your problem, help you understand what needs to be done to resolve it, and stay with you every step of the way until your problem is resolved. 2011 e file TAS has at least one local taxpayer advocate in every state, the District of Columbia, and Puerto Rico. 2011 e file You can call your local advocate, whose number is in your phone book, in Pub. 2011 e file 1546, Taxpayer Advocate Service—Your Voice at the IRS, and on our website at www. 2011 e file irs. 2011 e file gov/advocate. 2011 e file You can also call our toll-free line at 1-877-777-4778 or TTY/TDD 1-800-829-4059. 2011 e file You can learn about your rights and responsibilities as a taxpayer by visiting our online tax toolkit at www. 2011 e file taxtoolkit. 2011 e file irs. 2011 e file gov. 2011 e file Low Income Taxpayer Clinics (LITCs). 2011 e file   The Low Income Taxpayer Clinic program serves individuals who have a problem with the IRS and whose income is below a certain level. 2011 e file LITCs are independent from the IRS. 2011 e file Most LITCs can provide representation before the IRS or in court on audits, tax collection disputes, and other issues for free or a small fee. 2011 e file If an individual's native language is not English, some clinics can provide multilingual information about taxpayer rights and responsibilities. 2011 e file For more information, see Publication 4134, Low Income Taxpayer Clinic List. 2011 e file This publication is available at www. 2011 e file irs. 2011 e file gov, by calling 1-800-TAX-FORM (1-800-829-3676), or at your local IRS office. 2011 e file Free tax services. 2011 e file   To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. 2011 e file It contains lists of free tax information sources, including publications, services, and free tax education and assistance programs. 2011 e file It also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on your telephone. 2011 e file   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. 2011 e file Free help with your return. 2011 e file   Free help in preparing your return is available nationwide from IRS-trained volunteers. 2011 e file The Volunteer Income Tax Assistance (VITA) program is designed to help low-income taxpayers and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. 2011 e file Many VITA sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 2011 e file To find the nearest VITA or TCE site, call 1-800-829-1040. 2011 e file   As part of the TCE program, AARP offers the Tax-Aide counseling program. 2011 e file To find the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP's website atwww. 2011 e file aarp. 2011 e file org/money/taxaide. 2011 e file   For more information on these programs, go to www. 2011 e file irs. 2011 e file gov and enter keyword “VITA” in the upper right-hand corner. 2011 e file Internet. 2011 e file You can access the IRS website at www. 2011 e file irs. 2011 e file gov 24 hours a day, 7 days a week to: E-file your return. 2011 e file Find out about commercial tax preparation and e-file services available free to eligible taxpayers. 2011 e file Check the status of your 2009 refund. 2011 e file Go to www. 2011 e file irs. 2011 e file gov and click on Where's My Refund. 2011 e file Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. 2011 e file If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). 2011 e file Have your 2009 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. 2011 e file Download forms, instructions, and publications. 2011 e file Order IRS products online. 2011 e file Research your tax questions online. 2011 e file Search publications online by topic or keyword. 2011 e file Use the online Internal Revenue Code, Regulations, or other official guidance. 2011 e file View Internal Revenue Bulletins (IRBs) published in the last few years. 2011 e file Figure your withholding allowances using the withholding calculator online at www. 2011 e file irs. 2011 e file gov/individuals. 2011 e file Determine if Form 6251 must be filed by using our Alternative Minimum Tax (AMT) Assistant. 2011 e file Sign up to receive local and national tax news by email. 2011 e file Get information on starting and operating a small business. 2011 e file Phone. 2011 e file Many services are available by phone. 2011 e file Ordering forms, instructions, and publications. 2011 e file Call 1-800-TAX FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions. 2011 e file You should receive your order within 10 days. 2011 e file Asking tax questions. 2011 e file Call the IRS with your tax questions at 1-800-829-1040. 2011 e file Solving problems. 2011 e file You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. 2011 e file An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. 2011 e file Call your local Taxpayer Assistance Center for an appointment. 2011 e file To find the number, go to www. 2011 e file irs. 2011 e file gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. 2011 e file TTY/TDD equipment. 2011 e file If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. 2011 e file TeleTax topics. 2011 e file Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. 2011 e file Refund information. 2011 e file To check the status of your 2009 refund, call 1-800-829-1954 during business hours or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). 2011 e file Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. 2011 e file If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). 2011 e file Have your 2009 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. 2011 e file Refunds are sent out weekly on Fridays. 2011 e file If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. 2011 e file Other refund information. 2011 e file To check the status of a prior year refund or amended return refund, call 1-800-829-1954. 2011 e file Evaluating the quality of our telephone services. 2011 e file To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. 2011 e file One method is for a second IRS representative to listen in on or record random telephone calls. 2011 e file Another is to ask some callers to complete a short survey at the end of the call. 2011 e file Walk-in. 2011 e file Many products and services are available on a walk-in basis. 2011 e file Products. 2011 e file You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 2011 e file Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. 2011 e file Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. 2011 e file Services. 2011 e file You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. 2011 e file An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. 2011 e file If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. 2011 e file No appointment is necessary—just walk in. 2011 e file If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. 2011 e file A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. 2011 e file If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. 2011 e file All other issues will be handled without an appointment. 2011 e file To find the number of your local office, go to www. 2011 e file irs. 2011 e file gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. 2011 e file Mail. 2011 e file You can send your order for forms, instructions, and publications to the address below. 2011 e file You should receive a response within 10 days after your request is received. 2011 e file Internal Revenue Service1201 N. 2011 e file Mitsubishi MotorwayBloomington, IL 61705-6613 DVD for tax products. 2011 e file You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. 2011 e file Prior-year forms, instructions, and publications. 2011 e file Tax Map: an electronic research tool and finding aid. 2011 e file Tax law frequently asked questions. 2011 e file Tax Topics from the IRS telephone response system. 2011 e file Internal Revenue Code—Title 26 of the U. 2011 e file S. 2011 e file Code. 2011 e file Fill-in, print, and save features for most tax forms. 2011 e file Internal Revenue Bulletins. 2011 e file Toll-free and email technical support. 2011 e file Two releases during the year. 2011 e file – The first release will ship the beginning of January 2010. 2011 e file – The final release will ship the beginning of March 2010. 2011 e file Purchase the DVD from National Technical Information Service (NTIS) at www. 2011 e file irs. 2011 e file gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll free to buy the DVD for $30 (plus a $6 handling fee). 2011 e file Prev  Up  Next   Home   More Online Publications
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The 2011 E File

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