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2011 Taxes Due

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2011 Taxes Due

2011 taxes due 5. 2011 taxes due   How To Get Tax Help Table of Contents Low Income Taxpayer Clinics Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. 2011 taxes due Free help with your tax return. 2011 taxes due   You can get free help preparing your return nationwide from IRS-certified volunteers. 2011 taxes due The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. 2011 taxes due The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 2011 taxes due Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 2011 taxes due In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. 2011 taxes due To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. 2011 taxes due gov, download the IRS2Go app, or call 1-800-906-9887. 2011 taxes due   As part of the TCE program, AARP offers the Tax-Aide counseling program. 2011 taxes due To find the nearest AARP Tax-Aide site, visit AARP's website at www. 2011 taxes due aarp. 2011 taxes due org/money/taxaide or call 1-888-227-7669. 2011 taxes due For more information on these programs, go to IRS. 2011 taxes due gov and enter “VITA” in the search box. 2011 taxes due Internet. 2011 taxes due    IRS. 2011 taxes due gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. 2011 taxes due Download the free IRS2Go app from the iTunes app store or from Google Play. 2011 taxes due Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. 2011 taxes due Check the status of your 2013 refund with the Where's My Refund? application on IRS. 2011 taxes due gov or download the IRS2Go app and select the Refund Status option. 2011 taxes due The IRS issues more than 9 out of 10 refunds in less than 21 days. 2011 taxes due Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. 2011 taxes due You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. 2011 taxes due The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 2011 taxes due Use the Interactive Tax Assistant (ITA) to research your tax questions. 2011 taxes due No need to wait on the phone or stand in line. 2011 taxes due The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. 2011 taxes due When you reach the response screen, you can print the entire interview and the final response for your records. 2011 taxes due New subject areas are added on a regular basis. 2011 taxes due  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. 2011 taxes due gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. 2011 taxes due You can use the IRS Tax Map, to search publications and instructions by topic or keyword. 2011 taxes due The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. 2011 taxes due When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. 2011 taxes due Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. 2011 taxes due You can also ask the IRS to mail a return or an account transcript to you. 2011 taxes due Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. 2011 taxes due gov or by calling 1-800-908-9946. 2011 taxes due Tax return and tax account transcripts are generally available for the current year and the past three years. 2011 taxes due Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. 2011 taxes due Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. 2011 taxes due If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. 2011 taxes due Check the status of your amended return using Where's My Amended Return? Go to IRS. 2011 taxes due gov and enter Where's My Amended Return? in the search box. 2011 taxes due You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 2011 taxes due It can take up to 3 weeks from the date you mailed it to show up in our system. 2011 taxes due Make a payment using one of several safe and convenient electronic payment options available on IRS. 2011 taxes due gov. 2011 taxes due Select the Payment tab on the front page of IRS. 2011 taxes due gov for more information. 2011 taxes due Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. 2011 taxes due Figure your income tax withholding with the IRS Withholding Calculator on IRS. 2011 taxes due gov. 2011 taxes due Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. 2011 taxes due Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 2011 taxes due gov. 2011 taxes due Request an Electronic Filing PIN by going to IRS. 2011 taxes due gov and entering Electronic Filing PIN in the search box. 2011 taxes due Download forms, instructions and publications, including accessible versions for people with disabilities. 2011 taxes due Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. 2011 taxes due gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. 2011 taxes due An employee can answer questions about your tax account or help you set up a payment plan. 2011 taxes due Before you visit, check the Office Locator on IRS. 2011 taxes due gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. 2011 taxes due If you have a special need, such as a disability, you can request an appointment. 2011 taxes due Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. 2011 taxes due Apply for an Employer Identification Number (EIN). 2011 taxes due Go to IRS. 2011 taxes due gov and enter Apply for an EIN in the search box. 2011 taxes due Read the Internal Revenue Code, regulations, or other official guidance. 2011 taxes due Read Internal Revenue Bulletins. 2011 taxes due Sign up to receive local and national tax news and more by email. 2011 taxes due Just click on “subscriptions” above the search box on IRS. 2011 taxes due gov and choose from a variety of options. 2011 taxes due    Phone. 2011 taxes due You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. 2011 taxes due Download the free IRS2Go app from the iTunes app store or from Google Play. 2011 taxes due Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. 2011 taxes due gov, or download the IRS2Go app. 2011 taxes due Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 2011 taxes due The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 2011 taxes due Most VITA and TCE sites offer free electronic filing. 2011 taxes due Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. 2011 taxes due Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. 2011 taxes due Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. 2011 taxes due If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. 2011 taxes due The IRS issues more than 9 out of 10 refunds in less than 21 days. 2011 taxes due Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. 2011 taxes due Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. 2011 taxes due The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 2011 taxes due Note, the above information is for our automated hotline. 2011 taxes due Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. 2011 taxes due Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. 2011 taxes due You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 2011 taxes due It can take up to 3 weeks from the date you mailed it to show up in our system. 2011 taxes due Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). 2011 taxes due You should receive your order within 10 business days. 2011 taxes due Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. 2011 taxes due If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. 2011 taxes due Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. 2011 taxes due The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. 2011 taxes due These individuals can also contact the IRS through relay services such as the Federal Relay Service. 2011 taxes due    Walk-in. 2011 taxes due You can find a selection of forms, publications and services — in-person. 2011 taxes due Products. 2011 taxes due You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 2011 taxes due Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. 2011 taxes due Services. 2011 taxes due You can walk in to your local TAC for face-to-face tax help. 2011 taxes due An employee can answer questions about your tax account or help you set up a payment plan. 2011 taxes due Before visiting, use the Office Locator tool on IRS. 2011 taxes due gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. 2011 taxes due    Mail. 2011 taxes due You can send your order for forms, instructions, and publications to the address below. 2011 taxes due You should receive a response within 10 business days after your request is received. 2011 taxes due Internal Revenue Service 1201 N. 2011 taxes due Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. 2011 taxes due The Taxpayer Advocate Service (TAS) is your voice at the IRS. 2011 taxes due Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. 2011 taxes due   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. 2011 taxes due We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. 2011 taxes due You face (or your business is facing) an immediate threat of adverse action. 2011 taxes due You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. 2011 taxes due   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. 2011 taxes due Here's why we can help: TAS is an independent organization within the IRS. 2011 taxes due Our advocates know how to work with the IRS. 2011 taxes due Our services are free and tailored to meet your needs. 2011 taxes due We have offices in every state, the District of Columbia, and Puerto Rico. 2011 taxes due   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. 2011 taxes due   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. 2011 taxes due If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. 2011 taxes due Low Income Taxpayer Clinics Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. 2011 taxes due Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. 2011 taxes due Visit Taxpayer Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. 2011 taxes due Prev  Up  Next   Home   More Online Publications
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IRS - Collecting Revenue

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These tables provide an overview of the main IRS functions: processing tax returns and collecting revenue. Much of these data are published by fiscal year; however, historical tax collection data are also available, as well as projections of returns to be filed in the future.

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Fiscal Year Data

The tables below were originally published in the IRS Data Book, which is IRS Publication 55B, and are complied by various divisions throughout the IRS. The IRS's fiscal year runs from October 1 to September 30.


Summary of Internal Revenue Collections

Internal Revenue Collections and Refunds
Internal Revenue collections and refunds, by type of tax, including corporation, individual, employment, estate, gift, and excise taxes.

Internal Revenue Gross Collections

Internal Revenue Gross Collections
These tables breakout the total taxes paid by type of tax, including corporation, individual, employment, estate & gift, and excise taxes.


Internal Revenue Gross Collections
Shown by state and by type of tax, including corporation, individual and employment, railroad retirement, unemployment insurance, estate, gift, and excise taxes.

•  Prior to 2000, gross collections were reported by IRS region and district, as shown in the tables below.

Fiscal Years available: 
1999    1998    1997    1996    1995

Summary of Number of Returns

Number of Returns Filed
These tables provide a summary of returns filed, by tax type, including income, estate, gift, employment, and excise taxes, as well as tax-exempt organizations, employee plan, and supplemental documents.

Number of Returns Filed
These tables provide a summary of returns filed, by tax type and state, including income, estate, gift, employment, and excise taxes, as well as tax-exempt organizations, employee plan, and supplemental documents.
by Type of Return and State

•  From 1995 to 1999, the number of returns filed are available by IRS region and district. 
by type of tax and fiscal years
1999     1998     1997     1996     1995

Number of Returns Filed Electronically, by Type of Return and State
The number of tax returns filed electronically is available broken out by state.  Also included are the breakouts for online filers and paid-preparer filed returns.

Selected Information from Returns Filed
For many years, IRS published information from filed returns.  Details cover the presidential election campaign fund, contributions to reduce public debt, the earned income tax credit, and IRS master file accounts.

Fiscal Years available:   
2005     2004     2003     2002     2001     2000     1999     1998     1997     1996     1995


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SOI Historical Tables

The following tables are part of the SOI Historical tables published in the SOI Bulletin.

Treasury Department Gross Tax Collections
Classified by: Amounts collected, by quarter and fiscal year, by type of return
Fiscal Years covered: 1987-2007
                                        
Federal Excise Taxes Reported to or Collected by the IRS, Alcohol and Tobacco Tax and Trade Bureau, and Customs Service

 

Classified by:

Fiscal Years
covered:

Type of excise tax (including luxury taxes, fuel, sport fishing equipment, environmental taxes, wine, beer, tobacco, etc.), by fiscal year

1999-2007

 


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Filing Projections for Selected Tax Returns

Projections of Federal Tax Return Filings: Calendar Years 2005-2012
                              
    • SOI Bulletin article This article discusses the return projections in detail, including the effects of new forms and e-file.  Projection highlights and methodology are also included.
                                                        
    • Data table Filing projections are broken out by form types and method of filing (where multiple options are available).

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Issuing Refunds  |  Enforcing Laws

Assisting Taxpayers  |  Managing the System

IRS Tax Compliance Activities  |  Taxpayer Compliance Research

 

 

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Page Last Reviewed or Updated: 25-Feb-2014

The 2011 Taxes Due

2011 taxes due 3. 2011 taxes due   Investment Expenses Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Limits on DeductionsPassive activity. 2011 taxes due Other income (nonpassive income). 2011 taxes due Expenses. 2011 taxes due Additional information. 2011 taxes due Interest ExpensesInvestment Interest Limit on Deduction Bond Premium AmortizationSpecial rules to determine amounts payable on a bond. 2011 taxes due Basis. 2011 taxes due How To Figure Amortization Choosing To Amortize How To Report Amortization Expenses of Producing IncomeFees to buy or sell. 2011 taxes due Including mutual fund or REMIC expenses in income. 2011 taxes due Nondeductible ExpensesUsed as collateral. 2011 taxes due Short-sale expenses. 2011 taxes due Expenses for both tax-exempt and taxable income. 2011 taxes due State income taxes. 2011 taxes due Nondeductible amount. 2011 taxes due Basis adjustment. 2011 taxes due How To Report Investment Expenses When To Report Investment Expenses Topics - This chapter discusses: Limits on Deductions , Interest Expenses , Bond Premium Amortization , Expenses of Producing Income , Nondeductible Expenses , How To Report Investment Expenses , and When To Report Investment Expenses . 2011 taxes due Useful Items - You may want to see: Publication 535 Business Expenses 925 Passive Activity and At-Risk Rules 929 Tax Rules for Children and Dependents Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 4952 Investment Interest Expense Deduction See chapter 5, How To Get Tax Help , for information about getting these publications and forms. 2011 taxes due Limits on Deductions Your deductions for investment expenses may be limited by: The at-risk rules, The passive activity loss limits, The limit on investment interest, or The 2% limit on certain miscellaneous itemized deductions. 2011 taxes due The at-risk rules and passive activity rules are explained briefly in this section. 2011 taxes due The limit on investment interest is explained later in this chapter under Interest Expenses . 2011 taxes due The 2% limit is explained later in this chapter under Expenses of Producing Income . 2011 taxes due At-risk rules. 2011 taxes due   Special at-risk rules apply to most income-producing activities. 2011 taxes due These rules limit the amount of loss you can deduct to the amount you risk losing in the activity. 2011 taxes due Generally, this is the cash and the adjusted basis of property you contribute to the activity. 2011 taxes due It also includes money you borrow for use in the activity if you are personally liable for repayment or if you use property not used in the activity as security for the loan. 2011 taxes due For more information, see Publication 925. 2011 taxes due Passive activity losses and credits. 2011 taxes due   The amount of losses and tax credits you can claim from passive activities is limited. 2011 taxes due Generally, you are allowed to deduct passive activity losses only up to the amount of your passive activity income. 2011 taxes due Also, you can use credits from passive activities only against tax on the income from passive activities. 2011 taxes due There are exceptions for certain activities, such as rental real estate activities. 2011 taxes due Passive activity. 2011 taxes due   A passive activity generally is any activity involving the conduct of any trade or business in which you do not materially participate and any rental activity. 2011 taxes due However, if you are involved in renting real estate, the activity is not a passive activity if both of the following are true. 2011 taxes due More than one-half of the personal services you perform during the year in all trades or businesses are performed in real property trades or businesses in which you materially participate. 2011 taxes due You perform more than 750 hours of services during the year in real property trades or businesses in which you materially participate. 2011 taxes due  The term “trade or business” generally means any activity that involves the conduct of a trade or business, is conducted in anticipation of starting a trade or business, or involves certain research or experimental expenditures. 2011 taxes due However, it does not include rental activities or certain activities treated as incidental to holding property for investment. 2011 taxes due   You are considered to materially participate in an activity if you are involved on a regular, continuous, and substantial basis in the operations of the activity. 2011 taxes due Other income (nonpassive income). 2011 taxes due    Generally, you can use losses from passive activities only to offset income from passive activities. 2011 taxes due You cannot use passive activity losses to offset your other income, such as your wages or your portfolio income. 2011 taxes due Portfolio income includes gross income from interest, dividends, annuities, or royalties that is not derived in the ordinary course of a trade or business. 2011 taxes due It also includes gains or losses (not derived in the ordinary course of a trade or business) from the sale or trade of property (other than an interest in a passive activity) producing portfolio income or held for investment. 2011 taxes due This includes capital gain distributions from mutual funds (and other regulated investment companies) and real estate investment trusts. 2011 taxes due   You cannot use passive activity losses to offset Alaska Permanent Fund dividends. 2011 taxes due Expenses. 2011 taxes due   Do not include in the computation of your passive activity income or loss: Expenses (other than interest) that are clearly and directly allocable to your portfolio income, or Interest expense properly allocable to portfolio income. 2011 taxes due However, this interest and other expenses may be subject to other limits. 2011 taxes due These limits are explained in the rest of this chapter. 2011 taxes due Additional information. 2011 taxes due   For more information about determining and reporting income and losses from passive activities, see Publication 925. 2011 taxes due Interest Expenses This section discusses interest expenses you may be able to deduct as an investor. 2011 taxes due For information on business interest, see chapter 4 of Publication 535. 2011 taxes due You cannot deduct personal interest expenses other than qualified home mortgage interest, as explained in Publication 936, Home Mortgage Interest Deduction, and interest on certain student loans, as explained in Publication 970. 2011 taxes due Investment Interest If you borrow money to buy property you hold for investment, the interest you pay is investment interest. 2011 taxes due You can deduct investment interest subject to the limit discussed later. 2011 taxes due However, you cannot deduct interest you incurred to produce tax-exempt income. 2011 taxes due See Tax-exempt income under Nondeductible Expenses, later. 2011 taxes due You also cannot deduct interest expenses on straddles discussed under Interest expense and carrying charges on straddles , later. 2011 taxes due Investment interest does not include any qualified home mortgage interest or any interest taken into account in computing income or loss from a passive activity. 2011 taxes due Investment property. 2011 taxes due   Property held for investment includes property that produces interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business. 2011 taxes due It also includes property that produces gain or loss (not derived in the ordinary course of a trade or business) from the sale or trade of property producing these types of income or held for investment (other than an interest in a passive activity). 2011 taxes due Investment property also includes an interest in a trade or business activity in which you did not materially participate (other than a passive activity). 2011 taxes due Partners, shareholders, and beneficiaries. 2011 taxes due   To determine your investment interest, combine your share of investment interest from a partnership, S corporation, estate, or trust with your other investment interest. 2011 taxes due Allocation of Interest Expense If you borrow money for business or personal purposes as well as for investment, you must allocate the debt among those purposes. 2011 taxes due Only the interest expense on the part of the debt used for investment purposes is treated as investment interest. 2011 taxes due The allocation is not affected by the use of property that secures the debt. 2011 taxes due Example 1. 2011 taxes due You borrow $10,000 and use $8,000 to buy stock. 2011 taxes due You use the other $2,000 to buy items for your home. 2011 taxes due Since 80% of the debt is used for, and allocated to, investment purposes, 80% of the interest on that debt is investment interest. 2011 taxes due The other 20% is nondeductible personal interest. 2011 taxes due Debt proceeds received in cash. 2011 taxes due   If you receive debt proceeds in cash, the proceeds are generally not treated as investment property. 2011 taxes due Debt proceeds deposited in account. 2011 taxes due   If you deposit debt proceeds in an account, that deposit is treated as investment property, regardless of whether the account bears interest. 2011 taxes due But, if you withdraw the funds and use them for another purpose, you must reallocate the debt to determine the amount considered to be for investment purposes. 2011 taxes due Example 2. 2011 taxes due Assume in Example 1 that you borrowed the money on March 1 and immediately bought the stock for $8,000. 2011 taxes due You did not buy the household items until June 1. 2011 taxes due You had deposited the $2,000 in the bank. 2011 taxes due You had no other transactions on the bank account until June. 2011 taxes due You did not sell the stock, and you made no principal payments on the debt. 2011 taxes due You paid interest from another account. 2011 taxes due The $8,000 is treated as being used for an investment purpose. 2011 taxes due The $2,000 is treated as being used for an investment purpose for the 3-month period. 2011 taxes due Your total interest expense for 3 months on this debt is investment interest. 2011 taxes due In June, when you spend the $2,000 for household items, you must begin to allocate 80% of the debt and the interest expense to investment purposes and 20% to personal purposes. 2011 taxes due Amounts paid within 30 days. 2011 taxes due   If you receive loan proceeds in cash or if the loan proceeds are deposited in an account, you can treat any payment (up to the amount of the proceeds) made from any account you own, or from cash, as made from those proceeds. 2011 taxes due This applies to any payment made within 30 days before or after the proceeds are received in cash or deposited in your account. 2011 taxes due   If you received the loan proceeds in cash, you can treat the payment as made on the date you received the cash instead of the date you actually made the payment. 2011 taxes due Payments on debt may require new allocation. 2011 taxes due   As you repay a debt used for more than one purpose, you must reallocate the balance. 2011 taxes due You must first reduce the amount allocated to personal purposes by the repayment. 2011 taxes due You then reallocate the rest of the debt to find what part is for investment purposes. 2011 taxes due Example 3. 2011 taxes due If, in Example 2 , you repay $500 on November 1, the entire repayment is applied against the amount allocated to personal purposes. 2011 taxes due The debt balance is now allocated as $8,000 for investment purposes and $1,500 for personal purposes. 2011 taxes due Until the next reallocation is necessary, 84% ($8,000 ÷ $9,500) of the debt and the interest expense is allocated to investment. 2011 taxes due Pass-through entities. 2011 taxes due   If you use borrowed funds to buy an interest in a partnership or S corporation, then the interest on those funds must be allocated based on the assets of the entity. 2011 taxes due If you contribute to the capital of the entity, you can make the allocation using any reasonable method. 2011 taxes due Additional allocation rules. 2011 taxes due   For more information about allocating interest expense, see chapter 4 of Publication 535. 2011 taxes due When To Deduct Investment Interest If you use the cash method of accounting, you must pay the interest before you can deduct it. 2011 taxes due If you use an accrual method of accounting, you can deduct interest over the period it accrues, regardless of when you pay it. 2011 taxes due For an exception, see Unpaid expenses owed to related party under When To Report Investment Expenses, later in this chapter. 2011 taxes due Example. 2011 taxes due You borrowed $1,000 on August 26, 2013, payable in 90 days at 12% interest. 2011 taxes due On November 26, 2013, you paid this with a new note for $1,030, due on February 26, 2014. 2011 taxes due If you use the cash method of accounting, you cannot deduct any part of the $30 interest on your return for 2013 because you did not actually pay it. 2011 taxes due If you use an accrual method, you may be able to deduct a portion of the interest on the loans through December 31, 2013, on your return for 2013. 2011 taxes due Interest paid in advance. 2011 taxes due   Generally, if you pay interest in advance for a period that goes beyond the end of the tax year, you must spread the interest over the tax years to which it belongs under the OID rules discussed in chapter 1. 2011 taxes due You can deduct in each year only the interest for that year. 2011 taxes due Interest on margin accounts. 2011 taxes due   If you are a cash method taxpayer, you can deduct interest on margin accounts to buy taxable securities as investment interest in the year you paid it. 2011 taxes due You are considered to have paid interest on these accounts only when you actually pay the broker or when payment becomes available to the broker through your account. 2011 taxes due Payment may become available to the broker through your account when the broker collects dividends or interest for your account, or sells securities held for you or received from you. 2011 taxes due   You cannot deduct any interest on money borrowed for personal reasons. 2011 taxes due Limit on interest deduction for market discount bonds. 2011 taxes due   The amount you can deduct for interest expense you paid or accrued during the year to buy or carry a market discount bond may be limited. 2011 taxes due This limit does not apply if you accrue the market discount and include it in your income currently. 2011 taxes due   Under this limit, the interest is deductible only to the extent it is more than: The total interest and OID includible in gross income for the bond for the year, plus The market discount for the number of days you held the bond during the year. 2011 taxes due Figure the amount in (2) above using the rules for figuring accrued market discount in chapter 1 under Market Discount Bonds . 2011 taxes due Interest not deducted due to limit. 2011 taxes due   In the year you dispose of the bond, you can deduct any interest expense you were not allowed to deduct in earlier years because of the limit. 2011 taxes due Choosing to deduct disallowed interest expense before the year of disposition. 2011 taxes due   You can choose to deduct disallowed interest expense in any year before the year you dispose of the bond, up to your net interest income from the bond during the year. 2011 taxes due The rest of the disallowed interest expense remains deductible in the year you dispose of the bond. 2011 taxes due Net interest income. 2011 taxes due   This is the interest income (including OID) from the bond that you include in income for the year, minus the interest expense paid or accrued during the year to purchase or carry the bond. 2011 taxes due Limit on interest deduction for short-term obligations. 2011 taxes due   If the current income inclusion rules discussed in chapter 1 under Discount on Short-Term Obligations do not apply to you, the amount you can deduct for interest expense you paid or accrued during the year to buy or carry a short-term obligation is limited. 2011 taxes due   The interest is deductible only to the extent it is more than: The amount of acquisition discount or OID on the obligation for the tax year, plus The amount of any interest payable on the obligation for the year that is not included in income because of your accounting method (other than interest taken into account in determining the amount of acquisition discount or OID). 2011 taxes due The method of determining acquisition discount and OID for short-term obligations is discussed in chapter 1 under Discount on Short-Term Obligations . 2011 taxes due Interest not deducted due to limit. 2011 taxes due   In the year you dispose of the obligation, or, if you choose, in another year in which you have net interest income from the obligation, you can deduct any interest expense you were not allowed to deduct for an earlier year because of the limit. 2011 taxes due Follow the same rules provided in the earlier discussion under Limit on interest deduction for market discount bonds , earlier. 2011 taxes due Limit on Deduction Generally, your deduction for investment interest expense is limited to your net investment income. 2011 taxes due You can carry over the amount of investment interest you could not deduct because of this limit to the next tax year. 2011 taxes due The interest carried over is treated as investment interest paid or accrued in that next year. 2011 taxes due You can carry over disallowed investment interest to the next tax year even if it is more than your taxable income in the year the interest was paid or accrued. 2011 taxes due Net Investment Income Determine the amount of your net investment income by subtracting your investment expenses (other than interest expense) from your investment income. 2011 taxes due Investment income. 2011 taxes due   This generally includes your gross income from property held for investment (such as interest, dividends, annuities, and royalties). 2011 taxes due Investment income does not include Alaska Permanent Fund dividends. 2011 taxes due It also does not include qualified dividends or net capital gain unless you choose to include them. 2011 taxes due Choosing to include qualified dividends. 2011 taxes due   Investment income generally does not include qualified dividends, discussed in chapter 1. 2011 taxes due However, you can choose to include all or part of your qualified dividends in investment income. 2011 taxes due   You make this choice by completing Form 4952, line 4g, according to its instructions. 2011 taxes due   If you choose to include any of your qualified dividends in investment income, you must reduce your qualified dividends that are eligible for the lower capital gains tax rates by the same amount. 2011 taxes due Choosing to include net capital gain. 2011 taxes due    Investment income generally does not include net capital gain from disposing of investment property (including capital gain distributions from mutual funds). 2011 taxes due However, you can choose to include all or part of your net capital gain in investment income. 2011 taxes due   You make this choice by completing Form 4952, line 4g, according to its instructions. 2011 taxes due   If you choose to include any of your net capital gain in investment income, you must reduce your net capital gain that is eligible for the lower capital gains tax rates by the same amount. 2011 taxes due   For more information about the capital gains rates, see Capital Gain Tax Rates in chapter 4. 2011 taxes due    Before making either choice, consider the overall effect on your tax liability. 2011 taxes due Compare your tax if you make one or both of these choices with your tax if you do not. 2011 taxes due Investment income of child reported on parent's return. 2011 taxes due   Investment income includes the part of your child's interest and dividend income you choose to report on your return. 2011 taxes due If the child does not have qualified dividends, Alaska Permanent Fund dividends, or capital gain distributions, this is the amount on line 6 of Form 8814. 2011 taxes due Include it on line 4a of Form 4952. 2011 taxes due Example. 2011 taxes due Your 8-year-old son has interest income of $2,200, which you choose to report on your own return. 2011 taxes due You enter $2,200 on Form 8814, lines 1a and 4, and $200 on lines 6 and 12 and complete Part II. 2011 taxes due Also enter $200 on Form 1040, line 21. 2011 taxes due Your investment income includes this $200. 2011 taxes due Child's qualified dividends. 2011 taxes due   If part of the amount you report is your child's qualified dividends, that part (which is reported on Form 1040, line 9b) generally does not count as investment income. 2011 taxes due However, you can choose to include all or part of it in investment income, as explained under Choosing to include qualified dividends , earlier. 2011 taxes due   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured next under Child's Alaska Permanent Fund dividends). 2011 taxes due Child's Alaska Permanent Fund dividends. 2011 taxes due   If part of the amount you report is your child's Alaska Permanent Fund dividends, that part does not count as investment income. 2011 taxes due To figure the amount of your child's income that you can consider your investment income, start with the amount on Form 8814, line 6. 2011 taxes due Multiply that amount by a percentage that is equal to the Alaska Permanent Fund dividends divided by the total amount on Form 8814, line 4. 2011 taxes due Subtract the result from the amount on Form 8814, line 12. 2011 taxes due Example. 2011 taxes due Your 10-year-old child has taxable interest income of $4,000 and Alaska Permanent Fund dividends of $2,000. 2011 taxes due You choose to report this on your return. 2011 taxes due You enter $4,000 on Form 8814, line 1a, $2,000 on line 2a, and $6,000 on line 4. 2011 taxes due You then enter $4,000 on Form 8814, lines 6 and 12, and Form 1040, line 21. 2011 taxes due You figure the amount of your child's income that you can consider your investment income as follows: $4,000 − ($4,000 × ($2,000 ÷ $6,000)) = $2,667 You include the result, $2,667, on Form 4952, line 4a. 2011 taxes due Child's capital gain distributions. 2011 taxes due   If part of the amount you report is your child's capital gain distributions, that part (which is reported on Schedule D (Form 1040), line 13, or Form 1040, line 13) generally does not count as investment income. 2011 taxes due However, you can choose to include all or part of it in investment income, as explained in Choosing to include net capital gain , earlier. 2011 taxes due   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured under Child's Alaska Permanent Fund dividends , earlier). 2011 taxes due Investment expenses. 2011 taxes due   Investment expenses are your allowed deductions (other than interest expense) directly connected with the production of investment income. 2011 taxes due Investment expenses that are included as a miscellaneous itemized deduction on Schedule A (Form 1040) are allowable deductions after applying the 2% limit that applies to miscellaneous itemized deductions. 2011 taxes due Use the smaller of: The investment expenses included on Schedule A (Form 1040), line 23, or The amount on Schedule A (Form 1040), line 27. 2011 taxes due See Expenses of Producing Income , later, for a discussion of the 2% limit. 2011 taxes due Losses from passive activities. 2011 taxes due   Income or expenses that you used in computing income or loss from a passive activity are not included in determining your investment income or investment expenses (including investment interest expense). 2011 taxes due See Publication 925 for information about passive activities. 2011 taxes due Example. 2011 taxes due Ted is a partner in a partnership that operates a business. 2011 taxes due However, he does not materially participate in the partnership's business. 2011 taxes due Ted's interest in the partnership is considered a passive activity. 2011 taxes due Ted's investment income from interest and dividends (other than qualified dividends) is $10,000. 2011 taxes due His investment expenses (other than interest) are $3,200 after taking into account the 2% limit on miscellaneous itemized deductions. 2011 taxes due His investment interest expense is $8,000. 2011 taxes due Ted also has income from the partnership of $2,000. 2011 taxes due Ted figures his net investment income and the limit on his investment interest expense deduction in the following way: Total investment income $10,000 Minus: Investment expenses (other than interest) 3,200 Net investment income $6,800 Deductible investment interest expense for the year $6,800 The $2,000 of income from the passive activity is not used in determining Ted's net investment income. 2011 taxes due His investment interest deduction for the year is limited to $6,800, the amount of his net investment income. 2011 taxes due Form 4952 Use Form 4952 to figure your deduction for investment interest. 2011 taxes due See Form 4952 for more information. 2011 taxes due Exception to use of Form 4952. 2011 taxes due   You do not have to complete Form 4952 or attach it to your return if you meet all of the following tests. 2011 taxes due Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified dividends. 2011 taxes due You do not have any other deductible investment expenses. 2011 taxes due You have no carryover of investment interest expense from 2012. 2011 taxes due   If you meet all of these tests, you can deduct all of your investment interest. 2011 taxes due    Bond Premium Amortization If you pay a premium to buy a bond, the premium is part of your basis in the bond. 2011 taxes due If the bond yields taxable interest, you can choose to amortize the premium. 2011 taxes due This generally means that each year, over the life of the bond, you use a part of the premium to reduce the amount of interest includible in your income. 2011 taxes due If you make this choice, you must reduce your basis in the bond by the amortization for the year. 2011 taxes due If the bond yields tax-exempt interest, you must amortize the premium. 2011 taxes due This amortized amount is not deductible in determining taxable income. 2011 taxes due However, each year you must reduce your basis in the bond (and tax-exempt interest otherwise reportable on Form 1040, line 8b) by the amortization for the year. 2011 taxes due Bond premium. 2011 taxes due   Bond premium is the amount by which your basis in the bond right after you get it is more than the total of all amounts payable on the bond after you get it (other than payments of qualified stated interest). 2011 taxes due For example, a bond with a maturity value of $1,000 generally would have a $50 premium if you buy it for $1,050. 2011 taxes due Special rules to determine amounts payable on a bond. 2011 taxes due   For special rules that apply to determine the amounts payable on a variable rate bond, an inflation-indexed debt instrument, a bond that provides for certain alternative payment schedules (for example, a bond callable prior to the stated maturity date of the bond), or a bond that provides for remote or incidental contingencies, see Regulations section 1. 2011 taxes due 171-3. 2011 taxes due Basis. 2011 taxes due   In general, your basis for figuring bond premium amortization is the same as your basis for figuring any loss on the sale of the bond. 2011 taxes due However, you may need to use a different basis for: Convertible bonds, Bonds you got in a trade, and Bonds whose basis has to be determined using the basis of the person who transferred the bond to you. 2011 taxes due See Regulations section 1. 2011 taxes due 171-1(e). 2011 taxes due Dealers. 2011 taxes due   A dealer in taxable bonds (or anyone who holds them mainly for sale to customers in the ordinary course of a trade or business or who would properly include bonds in inventory at the close of the tax year) cannot claim a deduction for amortizable bond premium. 2011 taxes due   See section 75 of the Internal Revenue Code for the treatment of bond premium by a dealer in tax-exempt bonds. 2011 taxes due How To Figure Amortization For bonds issued after September 27, 1985, you must amortize bond premium using a constant yield method on the basis of the bond's yield to maturity, determined by using the bond's basis and compounding at the close of each accrual period. 2011 taxes due Constant yield method. 2011 taxes due   Figure the bond premium amortization for each accrual period as follows. 2011 taxes due Step 1: Determine your yield. 2011 taxes due   Your yield is the discount rate that, when used in figuring the present value of all remaining payments to be made on the bond (including payments of qualified stated interest), produces an amount equal to your basis in the bond. 2011 taxes due Figure the yield as of the date you got the bond. 2011 taxes due It must be constant over the term of the bond and must be figured to at least two decimal places when expressed as a percentage. 2011 taxes due   If you do not know the yield, consult your broker or tax advisor. 2011 taxes due Databases available to them are likely to show the yield at the date of purchase. 2011 taxes due Step 2: Determine the accrual periods. 2011 taxes due   You can choose the accrual periods to use. 2011 taxes due They may be of any length and may vary in length over the term of the bond, but each accrual period can be no longer than 1 year and each scheduled payment of principal or interest must occur either on the first or the final day of an accrual period. 2011 taxes due The computation is simplest if accrual periods are the same as the intervals between interest payment dates. 2011 taxes due Step 3: Determine the bond premium for the accrual period. 2011 taxes due   To do this, multiply your adjusted acquisition price at the beginning of the accrual period by your yield. 2011 taxes due Then subtract the result from the qualified stated interest for the period. 2011 taxes due   Your adjusted acquisition price at the beginning of the first accrual period is the same as your basis. 2011 taxes due After that, it is your basis decreased by the amount of bond premium amortized for earlier periods and the amount of any payment previously made on the bond other than a payment of qualified stated interest. 2011 taxes due Example. 2011 taxes due On February 1, 2012, you bought a taxable bond for $110,000. 2011 taxes due The bond has a stated principal amount of $100,000, payable at maturity on February 1, 2019, making your premium $10,000 ($110,000 − $100,000). 2011 taxes due The bond pays qualified stated interest of $10,000 on February 1 of each year. 2011 taxes due Your yield is 8. 2011 taxes due 07439% compounded annually. 2011 taxes due You choose to use annual accrual periods ending on February 1 of each year. 2011 taxes due To find your bond premium amortization for the accrual period ending on February 1, 2013, you multiply the adjusted acquisition price at the beginning of the period ($110,000) by your yield. 2011 taxes due When you subtract the result ($8,881. 2011 taxes due 83) from the qualified stated interest for the period ($10,000), you find that your bond premium amortization for the period is $1,118. 2011 taxes due 17. 2011 taxes due Special rules to figure amortization. 2011 taxes due   For special rules to figure the bond premium amortization on a variable rate bond, an inflation-indexed debt instrument, a bond that provides for certain alternative payment schedules (for example, a bond callable prior to the stated maturity date of the bond), or a bond that provides for remote or incidental contingencies, see Regulations section 1. 2011 taxes due 171-3. 2011 taxes due Bonds Issued Before September 28, 1985 For these bonds, you can amortize bond premium using any reasonable method. 2011 taxes due Reasonable methods include: The straight-line method, and The Revenue Ruling 82-10 method. 2011 taxes due Straight-line method. 2011 taxes due   Under this method, the amount of your bond premium amortization is the same each month. 2011 taxes due Divide the number of months you held the bond during the year by the number of months from the beginning of the tax year (or, if later, the date of acquisition) to the date of maturity or earlier call date. 2011 taxes due Then multiply the result by the bond premium (reduced by any bond premium amortization claimed in earlier years). 2011 taxes due This gives you your bond premium amortization for the year. 2011 taxes due Revenue Ruling 82-10 method. 2011 taxes due   Under this method, the amount of your bond premium amortization increases each month over the life of the bond. 2011 taxes due This method is explained in Revenue Ruling 82-10, 1982-1 C. 2011 taxes due B. 2011 taxes due 46. 2011 taxes due Choosing To Amortize You choose to amortize the premium on taxable bonds by reporting the amortization for the year on your income tax return for the first tax year you want the choice to apply. 2011 taxes due You should attach a statement to your return that you are making this choice under section 171. 2011 taxes due See How To Report Amortization, next. 2011 taxes due This choice is binding for the year you make it and for later tax years. 2011 taxes due It applies to all taxable bonds you own in the year you make the choice and also to those you acquire in later years. 2011 taxes due You can change your decision to amortize bond premium only with the written approval of the IRS. 2011 taxes due To request approval, use Form 3115. 2011 taxes due For more information on requesting approval, see section 5 of the Appendix to Revenue Procedure 2011-14 in Internal Revenue Bulletin 2011-4. 2011 taxes due You can find Revenue Procedure 2011-14 at www. 2011 taxes due irs. 2011 taxes due gov/irb/2011-04_IRB/ar08. 2011 taxes due html. 2011 taxes due How To Report Amortization Subtract the bond premium amortization from your interest income from these bonds. 2011 taxes due Report the bond's interest on Schedule B (Form 1040A or 1040), line 1. 2011 taxes due Under your last entry on line 1, put a subtotal of all interest listed on line 1. 2011 taxes due Below this subtotal, print “ABP Adjustment,” and the total interest you received. 2011 taxes due Subtract this amount from the subtotal, and enter the result on line 2. 2011 taxes due Bond premium amortization more than interest. 2011 taxes due   If the amount of your bond premium amortization for an accrual period is more than the qualified stated interest for the period, you can deduct the difference as a miscellaneous itemized deduction on Schedule A (Form 1040), line 28. 2011 taxes due    But your deduction is limited to the amount by which your total interest inclusions on the bond in prior accrual periods is more than your total bond premium deductions on the bond in prior periods. 2011 taxes due Any amount you cannot deduct because of this limit can be carried forward to the next accrual period. 2011 taxes due Pre-1998 election to amortize bond premium. 2011 taxes due   Generally, if you first elected to amortize bond premium before 1998, the above treatment of the premium does not apply to bonds you acquired before 1988. 2011 taxes due Bonds acquired before October 23, 1986. 2011 taxes due   The amortization of the premium on these bonds is a miscellaneous itemized deduction not subject to the 2%-of-adjusted-gross-income limit. 2011 taxes due Bonds acquired after October 22, 1986, but before 1988. 2011 taxes due    The amortization of the premium on these bonds is investment interest expense subject to the investment interest limit, unless you choose to treat it as an offset to interest income on the bond. 2011 taxes due Expenses of Producing Income You deduct investment expenses (other than interest expenses) as miscellaneous itemized deductions on Schedule A (Form 1040). 2011 taxes due To be deductible, these expenses must be ordinary and necessary expenses paid or incurred: To produce or collect income, or To manage property held for producing income. 2011 taxes due The expenses must be directly related to the income or income-producing property, and the income must be taxable to you. 2011 taxes due The deduction for most income-producing expenses is subject to a 2% limit that also applies to certain other miscellaneous itemized deductions. 2011 taxes due The amount deductible is limited to the total of these miscellaneous deductions that is more than 2% of your adjusted gross income. 2011 taxes due For information on how to report expenses of producing income, see How To Report Investment Expenses , later. 2011 taxes due Attorney or accounting fees. 2011 taxes due   You can deduct attorney or accounting fees that are necessary to produce or collect taxable income. 2011 taxes due However, in some cases, attorney or accounting fees are part of the basis of property. 2011 taxes due See Basis of Investment Property in chapter 4. 2011 taxes due Automatic investment service and dividend reinvestment plans. 2011 taxes due   A bank may offer its checking account customers an automatic investment service so that, for a charge, each customer can choose to invest a part of the checking account each month in common stock. 2011 taxes due Or a bank that is a dividend disbursing agent for a number of publicly-owned corporations may set up an automatic dividend reinvestment service. 2011 taxes due Through that service, cash dividends are reinvested in more shares of stock after the bank deducts a service charge. 2011 taxes due   A corporation in which you own stock also may have a dividend reinvestment plan. 2011 taxes due This plan lets you choose to use your dividends to buy more shares of stock in the corporation instead of receiving the dividends in cash. 2011 taxes due   You can deduct the monthly service charge you pay to a bank to participate in an automatic investment service. 2011 taxes due If you participate in a dividend reinvestment plan, you can deduct any service charge subtracted from your cash dividends before the dividends are used to buy more shares of stock. 2011 taxes due Deduct the charges in the year you pay them. 2011 taxes due Clerical help and office rent. 2011 taxes due   You can deduct office expenses, such as rent and clerical help, you incurred in connection with your investments and collecting the taxable income on your investments. 2011 taxes due Cost of replacing missing securities. 2011 taxes due   To replace your taxable securities that are mislaid, lost, stolen, or destroyed, you may have to post an indemnity bond. 2011 taxes due You can deduct the premium you pay to buy the indemnity bond and the related incidental expenses. 2011 taxes due   You may, however, get a refund of part of the bond premium if the missing securities are recovered within a specified time. 2011 taxes due Under certain types of insurance policies, you can recover some of the expenses. 2011 taxes due   If you receive the refund in the tax year you pay the amounts, you can deduct only the difference between the expenses paid and the amount refunded. 2011 taxes due If the refund is made in a later tax year, you must include the refund in income in the year you received it, but only to the extent that the expenses decreased your tax in the year you deducted them. 2011 taxes due Fees to collect income. 2011 taxes due   You can deduct fees you pay to a broker, bank, trustee, or similar agent to collect investment income, such as your taxable bond or mortgage interest, or your dividends on shares of stock. 2011 taxes due Fees to buy or sell. 2011 taxes due   You cannot deduct a fee you pay to a broker to acquire investment property, such as stocks or bonds. 2011 taxes due You must add the fee to the cost of the property. 2011 taxes due See Basis of Investment Property in chapter 4. 2011 taxes due    You cannot deduct any broker's fees, commissions, or option premiums you pay (or that were netted out) in connection with the sale of investment property. 2011 taxes due They can be used only to figure gain or loss from the sale. 2011 taxes due See Reporting Capital Gains and Losses , in chapter 4, for more information about the treatment of these sale expenses. 2011 taxes due Investment counsel and advice. 2011 taxes due   You can deduct fees you pay for counsel and advice about investments that produce taxable income. 2011 taxes due This includes amounts you pay for investment advisory services. 2011 taxes due Safe deposit box rent. 2011 taxes due   You can deduct rent you pay for a safe deposit box if you use the box to store taxable income-producing stocks, bonds, or other investment-related papers and documents. 2011 taxes due If you also use the box to store tax-exempt securities or personal items, you can deduct only part of the rent. 2011 taxes due See Tax-exempt income under Nondeductible Expenses, later, to figure what part you can deduct. 2011 taxes due State and local transfer taxes. 2011 taxes due   You cannot deduct the state and local transfer taxes you pay when you buy or sell securities. 2011 taxes due If you pay these transfer taxes when you buy securities, you must treat them as part of the cost of the property. 2011 taxes due If you pay these transfer taxes when you sell securities, you must treat them as a reduction in the amount realized. 2011 taxes due Trustee's commissions for revocable trust. 2011 taxes due   If you set up a revocable trust and have its income distributed to you, you can deduct the commission you pay the trustee for managing the trust to the extent it is to produce or collect taxable income or to manage property. 2011 taxes due However, you cannot deduct any part of the commission used for producing or collecting tax-exempt income or for managing property that produces tax-exempt income. 2011 taxes due   If you are a cash-basis taxpayer and pay the commissions for several years in advance, you must deduct a part of the commission each year. 2011 taxes due You cannot deduct the entire amount in the year you pay it. 2011 taxes due Investment expenses from pass-through entities. 2011 taxes due   If you hold an interest in a partnership, S corporation, real estate mortgage investment conduit (REMIC), or a nonpublicly offered mutual fund, you can deduct your share of that entity's investment expenses. 2011 taxes due A partnership or S corporation will show your share of these expenses on your Schedule K-1 (Form 1065) or Schedule K-1 (Form 1120S). 2011 taxes due A nonpublicly offered mutual fund will indicate your share of these expenses in box 5 of Form 1099-DIV (or substitute statement). 2011 taxes due Publicly-offered mutual funds are discussed later. 2011 taxes due   If you hold an interest in a REMIC, any expenses relating to your residual interest investment will be shown on Schedule Q (Form 1066), line 3b. 2011 taxes due Any expenses relating to your regular interest investment will appear in box 5 of Form 1099-INT (or substitute statement) or box 9 of Form 1099-OID (or substitute statement). 2011 taxes due   Report your share of these investment expenses on Schedule A (Form 1040), subject to the 2% limit, in the same manner as your other investment expenses. 2011 taxes due Including mutual fund or REMIC expenses in income. 2011 taxes due   Your share of the investment expenses of a REMIC or a nonpublicly offered mutual fund, as described above, are considered to be indirect deductions through that pass-through entity. 2011 taxes due You must include in your gross income an amount equal to the expenses allocated to you, whether or not you are able to claim a deduction for those expenses. 2011 taxes due If you are a shareholder in a nonpublicly offered mutual fund, you must include on your return the full amount of ordinary dividends or other distributions of stock, as shown in box 1a of Form 1099-DIV (or substitute statement). 2011 taxes due If you are a residual interest holder in a REMIC, you must report as ordinary income on Schedule E (Form 1040) the total amounts shown on Schedule Q (Form 1066), lines 1b and 3b. 2011 taxes due If you are a REMIC regular interest holder, you must include the amount of any expense allocation you received on Form 1040, line 8a. 2011 taxes due Publicly-offered mutual funds. 2011 taxes due   Most mutual funds are publicly offered. 2011 taxes due These mutual funds, generally, are traded on an established securities exchange. 2011 taxes due These funds do not pass investment expenses through to you. 2011 taxes due Instead, the dividend income they report to you in box 1a of Form 1099-DIV (or substitute statement) is already reduced by your share of investment expenses. 2011 taxes due As a result, you cannot deduct the expenses on your return. 2011 taxes due   Include the amount from box 1a of Form 1099-DIV (or substitute statement) in your income. 2011 taxes due    A publicly offered mutual fund is one that: Is continuously offered pursuant to a public offering, Is regularly traded on an established securities market, and Is held by or for no fewer than 500 persons at any time during the year. 2011 taxes due Contact your mutual fund if you are not sure whether it is publicly offered. 2011 taxes due Nondeductible Expenses Some expenses that you incur as an investor are not deductible. 2011 taxes due Stockholders' meetings. 2011 taxes due   You cannot deduct transportation and other expenses you pay to attend stockholders' meetings of companies in which you have no interest other than owning stock. 2011 taxes due This is true even if your purpose in attending is to get information that would be useful in making further investments. 2011 taxes due Investment-related seminar. 2011 taxes due   You cannot deduct expenses for attending a convention, seminar, or similar meeting for investment purposes. 2011 taxes due Single-premium life insurance, endowment, and annuity contracts. 2011 taxes due   You cannot deduct interest on money you borrow to buy or carry a single-premium life insurance, endowment, or annuity contract. 2011 taxes due Used as collateral. 2011 taxes due   If you use a single premium annuity contract as collateral to obtain or continue a mortgage loan, you cannot deduct any interest on the loan that is collateralized by the annuity contract. 2011 taxes due Figure the amount of interest expense disallowed by multiplying the current interest rate on the mortgage loan by the lesser of the amount of the annuity contract used as collateral or the amount of the loan. 2011 taxes due Borrowing on insurance. 2011 taxes due   Generally, you cannot deduct interest on money you borrow to buy or carry a life insurance, endowment, or annuity contract if you plan to systematically borrow part or all of the increases in the cash value of the contract. 2011 taxes due This rule applies to the interest on the total amount borrowed to buy or carry the contract, not just the interest on the borrowed increases in the cash value. 2011 taxes due Tax-exempt income. 2011 taxes due   You cannot deduct expenses you incur to produce tax-exempt income. 2011 taxes due Nor can you deduct interest on money you borrow to buy tax-exempt securities or shares in a mutual fund or other regulated investment company that distributes only exempt-interest dividends. 2011 taxes due Short-sale expenses. 2011 taxes due   The rule disallowing a deduction for interest expenses on tax-exempt securities applies to amounts you pay in connection with personal property used in a short sale or amounts paid by others for the use of any collateral in connection with the short sale. 2011 taxes due However, it does not apply to the expenses you incur if you deposit cash as collateral for the property used in the short sale and the cash does not earn a material return during the period of the sale. 2011 taxes due Short sales are discussed in Short Sales in chapter 4. 2011 taxes due Expenses for both tax-exempt and taxable income. 2011 taxes due   You may have expenses that are for both tax-exempt and taxable income. 2011 taxes due If you cannot specifically identify what part of the expenses is for each type of income, you can divide the expenses, using reasonable proportions based on facts and circumstances. 2011 taxes due You must attach a statement to your return showing how you divided the expenses and stating that each deduction claimed is not based on tax-exempt income. 2011 taxes due   One accepted method for dividing expenses is to do it in the same proportion that each type of income is to the total income. 2011 taxes due If the expenses relate in part to capital gains and losses, include the gains, but not the losses, in figuring this proportion. 2011 taxes due To find the part of the expenses that is for the tax-exempt income, divide your tax-exempt income by the total income and multiply your expenses by the result. 2011 taxes due Example. 2011 taxes due You received $6,000 interest; $4,800 was tax-exempt and $1,200 was taxable. 2011 taxes due In earning this income, you had $500 of expenses. 2011 taxes due You cannot specifically identify the amount of each expense item that is for each income item, so you must divide your expenses. 2011 taxes due 80% ($4,800 tax-exempt interest divided by $6,000 total interest) of your expenses is for the tax-exempt income. 2011 taxes due You cannot deduct $400 (80% of $500) of the expenses. 2011 taxes due You can deduct $100 (the rest of the expenses) because they are for the taxable interest. 2011 taxes due State income taxes. 2011 taxes due   If you itemize your deductions, you can deduct, as taxes, state income taxes on interest income that is exempt from federal income tax. 2011 taxes due But you cannot deduct, as either taxes or investment expenses, state income taxes on other exempt income. 2011 taxes due Interest expense and carrying charges on straddles. 2011 taxes due   You cannot deduct interest and carrying charges allocable to personal property that is part of a straddle. 2011 taxes due The nondeductible interest and carrying charges are added to the basis of the straddle property. 2011 taxes due However, this treatment does not apply if: All the offsetting positions making up the straddle either consist of one or more qualified covered call options and the optioned stock, or consist of section 1256 contracts (and the straddle is not part of a larger straddle); or The straddle is a hedging transaction. 2011 taxes due  For information about straddles, including definitions of the terms used in this discussion, see Straddles in chapter 4. 2011 taxes due   Interest includes any amount you pay or incur in connection with personal property used in a short sale. 2011 taxes due However, you must first apply the rules discussed in Payments in lieu of dividends under Short Sales in chapter 4. 2011 taxes due   To determine the interest on market discount bonds and short-term obligations that are part of a straddle, you must first apply the rules discussed under Limit on interest deduction for market discount bonds and Limit on interest deduction for short-term obligations (both under Interest Expenses, earlier). 2011 taxes due Nondeductible amount. 2011 taxes due   Figure the nondeductible interest and carrying charges on straddle property as follows. 2011 taxes due Add: Interest on indebtedness incurred or continued to buy or carry the personal property, and All other amounts (including charges to insure, store, or transport the personal property) paid or incurred to carry the personal property. 2011 taxes due Subtract from the amount in (1): Interest (including OID) includible in gross income for the year on the personal property, Any income from the personal property treated as ordinary income on the disposition of short-term government obligations or as ordinary income under the market discount and short-term bond provisions — see Discount on Debt Instruments in chapter 1, The dividends includible in gross income for the year from the personal property, and Any payment on a loan of the personal property for use in a short sale that is includible in gross income. 2011 taxes due Basis adjustment. 2011 taxes due   Add the nondeductible amount to the basis of your straddle property. 2011 taxes due How To Report Investment Expenses To deduct your investment expenses, you must itemize deductions on Schedule A (Form 1040). 2011 taxes due Enter your deductible investment interest expense on Schedule A (Form1040), line 14. 2011 taxes due Include any deductible short sale expenses. 2011 taxes due (See Short Sales in chapter 4 for information on these expenses. 2011 taxes due ) Also attach a completed Form 4952 if you used that form to figure your investment interest expense. 2011 taxes due Enter the total amount of your other investment expenses (other than interest expenses) on Schedule A (Form 1040), line 23. 2011 taxes due List the type and amount of each expense on the dotted lines next to line 23. 2011 taxes due (If necessary, you can show the required information on an attached statement. 2011 taxes due ) For information on how to report amortizable bond premium, see Bond Premium Amortization , earlier in this chapter. 2011 taxes due When To Report Investment Expenses If you use the cash method to report income and expenses, you generally deduct your expenses, except for certain prepaid interest, in the year you pay them. 2011 taxes due If you use an accrual method, you generally deduct your expenses when you incur a liability for them, rather than when you pay them. 2011 taxes due Also see When To Deduct Investment Interest , earlier in this chapter. 2011 taxes due Unpaid expenses owed to related party. 2011 taxes due   If you use an accrual method, you cannot deduct interest and other expenses owed to a related cash-basis person until payment is made and the amount is includible in the gross income of that person. 2011 taxes due The relationship, for purposes of this rule, is determined as of the end of the tax year for which the interest or expense would otherwise be deductible. 2011 taxes due If a deduction is denied under this rule, this rule will continue to apply even if your relationship with the person ceases to exist before the amount is includible in the gross income of that person. 2011 taxes due   This rule generally applies to those relationships listed in chapter 4 under Related Party Transactions . 2011 taxes due It also applies to accruals by partnerships to partners, partners to partnerships, shareholders to S corporations, and S corporations to shareholders. 2011 taxes due   The postponement of deductions for unpaid expenses and interest under the related party rule does not apply to OID, regardless of when payment is made. 2011 taxes due This rule also does not apply to loans with below-market interest rates or to certain payments for the use of property and services when the lender or recipient has to include payments periodically in income, even if a payment has not been made. 2011 taxes due Prev  Up  Next   Home   More Online Publications