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2012 Amended Tax Form

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2012 Amended Tax Form

2012 amended tax form 10. 2012 amended tax form   Education Savings Bond Program Table of Contents Introduction Who Can Cash In Bonds Tax FreeAdjusted qualified education expenses. 2012 amended tax form Eligible educational institution. 2012 amended tax form Dependent for whom you claim an exemption. 2012 amended tax form MAGI when using Form 1040A. 2012 amended tax form MAGI when using Form 1040. 2012 amended tax form Figuring the Tax-Free AmountEffect of the Amount of Your Income on the Amount of Your Exclusion Claiming the Exclusion Introduction Generally, you must pay tax on the interest earned on U. 2012 amended tax form S. 2012 amended tax form savings bonds. 2012 amended tax form If you do not include the interest in income in the years it is earned, you must include it in your income in the year in which you cash in the bonds. 2012 amended tax form However, when you cash in certain savings bonds under an education savings bond program, you may be able to exclude the interest from income. 2012 amended tax form Who Can Cash In Bonds Tax Free You may be able to cash in qualified U. 2012 amended tax form S. 2012 amended tax form savings bonds without having to include in your income some or all of the interest earned on the bonds if you meet the following conditions. 2012 amended tax form You pay qualified education expenses for yourself, your spouse, or a dependent for whom you claim an exemption on your return. 2012 amended tax form Your modified adjusted gross income (MAGI) is less than the amount specified for your filing status. 2012 amended tax form Your filing status is not married filing separately. 2012 amended tax form Qualified U. 2012 amended tax form S. 2012 amended tax form savings bonds. 2012 amended tax form   A qualified U. 2012 amended tax form S. 2012 amended tax form savings bond is a series EE bond issued after 1989 or a series I bond. 2012 amended tax form The bond must be issued either in your name (as the sole owner) or in the name of both you and your spouse (as co-owners). 2012 amended tax form   The owner must be at least 24 years old before the bond's issue date. 2012 amended tax form The issue date is printed on the front of the savings bond. 2012 amended tax form    The issue date is not necessarily the date of purchase—it will be the first day of the month in which the bond is purchased (or posted, if bought electronically). 2012 amended tax form Qualified education expenses. 2012 amended tax form   These include the following items you pay for either yourself, your spouse, or a dependent for whom you claim an exemption. 2012 amended tax form Tuition and fees required to enroll at or attend an eligible educational institution. 2012 amended tax form Qualified education 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. 2012 amended tax form Contributions to a qualified tuition program (QTP) (see How Much Can You Contribute in chapter 8, Qualified Tuition Program). 2012 amended tax form Contributions to a Coverdell education savings account (ESA) (see Contributions in chapter 7, Coverdell Education Savings Account). 2012 amended tax form Adjusted qualified education expenses. 2012 amended tax form   You must reduce your qualified education expenses by all of the following tax-free benefits. 2012 amended tax form Tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). 2012 amended tax form Expenses used to figure the tax-free portion of distributions from a Coverdell ESA (see Qualified Education Expenses in chapter 7, Coverdell Education Savings Account). 2012 amended tax form Expenses used to figure the tax-free portion of distributions from a QTP (see Qualified education expenses in chapter 8, Qualified Tuition Program). 2012 amended tax form Any tax-free payments (other than gifts or inheritances) received as educational assistance, such as: Veterans' educational assistance benefits (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Qualified tuition reductions (see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), or Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ). 2012 amended tax form Any expenses used in figuring the American opportunity and lifetime learning credits. 2012 amended tax form See What Expenses Qualify in chapter 2, American Opportunity Credit, and What Expenses Qualify in chapter 3, Lifetime Learning Credit, for more information. 2012 amended tax form Eligible educational institution. 2012 amended tax form   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. 2012 amended tax form S. 2012 amended tax form Department of Education. 2012 amended tax form It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 2012 amended tax form The educational institution should be able to tell you if it is an eligible educational institution. 2012 amended tax form   Certain educational institutions located outside the United States also participate in the U. 2012 amended tax form S. 2012 amended tax form Department of Education's Federal Student Aid (FSA) programs. 2012 amended tax form Dependent for whom you claim an exemption. 2012 amended tax form   You claim an exemption for a person if you list his or her name and other required information on Form 1040 (or Form 1040A), line 6c. 2012 amended tax form Modified adjusted gross income (MAGI). 2012 amended tax form   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return without taking into account this interest exclusion. 2012 amended tax form However, as discussed below, there may be other modifications. 2012 amended tax form MAGI when using Form 1040A. 2012 amended tax form   If you file Form 1040A, your MAGI is the AGI on line 22 of that form figured without taking into account any savings bond interest exclusion and modified by adding back any amount on line 18 (student loan interest deduction) and line 19 (tuition and fees deduction). 2012 amended tax form MAGI when using Form 1040. 2012 amended tax form   If you file Form 1040, your MAGI is the AGI on line 38 of that form figured without taking into account any savings bond interest exclusion and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, Exclusion of income by bona fide residents of Puerto Rico, Exclusion for adoption benefits received under an employer's adoption assistance program, Deduction for student loan interest, Deduction for tuition and fees, and Deduction for domestic production activities. 2012 amended tax form    Use the worksheet in the instructions for line 9 of Form 8815 to figure your MAGI. 2012 amended tax form If you claim any of the exclusion or deduction items (1)–(6) listed above, add the amount of the exclusion or deduction to the amount on line 5 of the worksheet. 2012 amended tax form Do not add in the deduction for (7) student loan interest, and (8) tuition and fees, or (9) domestic production activities because line 4 of the worksheet already includes these amounts. 2012 amended tax form Enter the total on Form 8815, line 9, as your modified adjusted gross income (MAGI). 2012 amended tax form    Because the deduction for interest expenses attributable to royalties and other investments is limited to your net investment income, you cannot figure the deduction until you have figured this interest exclusion. 2012 amended tax form Therefore, if you had interest expenses attributable to royalties and deductible on Schedule E (Form 1040), Supplemental Income and Loss, you must make a special computation of your deductible interest without regard to this exclusion to figure the net royalty income included in your MAGI. 2012 amended tax form See Royalties included in MAGI under Education Savings Bond Program in Publication 550, chapter 1. 2012 amended tax form Figuring the Tax-Free Amount If the total you receive when you cash in the bonds is not more than the adjusted qualified education expenses for the year, all of the interest on the bonds may be tax free. 2012 amended tax form However, if the total you receive when you cash in the bonds is more than the adjusted expenses, only part of the interest may be tax free. 2012 amended tax form To determine the tax-free amount, multiply the interest part of the proceeds by a fraction. 2012 amended tax form The numerator (top part) of the fraction is the adjusted qualified education expenses (AQEE) you paid during the year. 2012 amended tax form The denominator (bottom part) of the fraction is the total proceeds you received during the year. 2012 amended tax form Example. 2012 amended tax form In February 2013, Mark and Joan Washington, a married couple, cashed a qualified series EE U. 2012 amended tax form S. 2012 amended tax form savings bond. 2012 amended tax form They received proceeds of $9,000, representing principal of $6,000 and interest of $3,000. 2012 amended tax form In 2013, they paid $7,650 of their daughter's college tuition. 2012 amended tax form They are not claiming an American opportunity or lifetime learning credit for those expenses, and their daughter does not have any tax-free educational assistance. 2012 amended tax form Their MAGI for 2013 was $80,000. 2012 amended tax form   $3,000 interest × $7,650 AQEE  $9,000 proceeds = $2,550 tax-free interest   They can exclude $2,550 of interest in 2013. 2012 amended tax form They must pay tax on the remaining $450 ($3,000 − $2,550) interest. 2012 amended tax form Effect of the Amount of Your Income on the Amount of Your Exclusion The amount of your interest exclusion is gradually reduced (phased out) based on your MAGI and filing status. 2012 amended tax form Claiming the Exclusion Use Form 8815 to figure your education savings bond interest exclusion. 2012 amended tax form Enter your exclusion on line 3 of Schedule B (Form 1040A or 1040), Interest and Ordinary Dividends. 2012 amended tax form Attach Form 8815 to your tax return. 2012 amended tax form Prev  Up  Next   Home   More Online Publications
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The 2012 Amended Tax Form

2012 amended tax form 22. 2012 amended tax form   Taxes Table of Contents IntroductionIndian tribal government. 2012 amended tax form Useful Items - You may want to see: Tests To Deduct Any Tax Income TaxesState and Local Income Taxes Foreign Income Taxes General Sales TaxesMotor vehicles. 2012 amended tax form Real Estate TaxesReal estate taxes for prior years. 2012 amended tax form Examples. 2012 amended tax form Form 1099-S. 2012 amended tax form Real Estate-Related Items You Cannot Deduct Personal Property Taxes Taxes and Fees You Cannot Deduct Where To Deduct Introduction This chapter discusses which taxes you can deduct if you itemize deductions on Schedule A (Form 1040). 2012 amended tax form It also explains which taxes you can deduct on other schedules or forms and which taxes you cannot deduct. 2012 amended tax form This chapter covers the following topics. 2012 amended tax form Income taxes (federal, state, local, and foreign). 2012 amended tax form General sales taxes (state and local). 2012 amended tax form Real estate taxes (state, local, and foreign). 2012 amended tax form Personal property taxes (state and local). 2012 amended tax form Taxes and fees you cannot deduct. 2012 amended tax form Use Table 22-1 as a guide to determine which taxes you can deduct. 2012 amended tax form The end of the chapter contains a section that explains which forms you use to deduct different types of taxes. 2012 amended tax form Business taxes. 2012 amended tax form   You can deduct certain taxes only if they are ordinary and necessary expenses of your trade or business or of producing income. 2012 amended tax form For information on these taxes, see Publication 535, Business Expenses. 2012 amended tax form State or local taxes. 2012 amended tax form   These are taxes imposed by the 50 states, U. 2012 amended tax form S. 2012 amended tax form possessions, or any of their political subdivisions (such as a county or city), or by the District of Columbia. 2012 amended tax form Indian tribal government. 2012 amended tax form   An Indian tribal government recognized by the Secretary of the Treasury as performing substantial government functions will be treated as a state for purposes of claiming a deduction for taxes. 2012 amended tax form Income taxes, real estate taxes, and personal property taxes imposed by that Indian tribal government (or by any of its subdivisions that are treated as political subdivisions of a state) are deductible. 2012 amended tax form General sales taxes. 2012 amended tax form   These are taxes imposed at one rate on retail sales of a broad range of classes of items. 2012 amended tax form Foreign taxes. 2012 amended tax form   These are taxes imposed by a foreign country or any of its political subdivisions. 2012 amended tax form Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 530 Tax Information for Homeowners Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule E (Form 1040) Supplemental Income and Loss 1116 Foreign Tax Credit Tests To Deduct Any Tax The following two tests must be met for you to deduct any tax. 2012 amended tax form The tax must be imposed on you. 2012 amended tax form You must pay the tax during your tax year. 2012 amended tax form The tax must be imposed on you. 2012 amended tax form   In general, you can deduct only taxes imposed on you. 2012 amended tax form   Generally, you can deduct property taxes only if you are an owner of the property. 2012 amended tax form If your spouse owns the property and pays the real estate taxes, the taxes are deductible on your spouse's separate return or on your joint return. 2012 amended tax form You must pay the tax during your tax year. 2012 amended tax form   If you are a cash basis taxpayer, you can deduct only those taxes you actually paid during your tax year. 2012 amended tax form If you pay your taxes by check, the day you mail or deliver the check is the date of payment, provided the check is honored by the financial institution. 2012 amended tax form If you use a pay-by-phone account (such as a credit card or electronic funds withdrawal), the date reported on the statement of the financial institution showing when payment was made is the date of payment. 2012 amended tax form If you contest a tax liability and are a cash basis taxpayer, you can deduct the tax only in the year you actually pay it (or transfer money or other property to provide for satisfaction of the contested liability). 2012 amended tax form See Publication 538, Accounting Periods and Methods, for details. 2012 amended tax form    If you use an accrual method of accounting, see Publication 538 for more information. 2012 amended tax form Income Taxes This section discusses the deductibility of state and local income taxes (including employee contributions to state benefit funds) and foreign income taxes. 2012 amended tax form State and Local Income Taxes You can deduct state and local income taxes. 2012 amended tax form However, you can elect to deduct state and local general sales taxes instead of state and local income taxes. 2012 amended tax form See General Sales Taxes , later. 2012 amended tax form Exception. 2012 amended tax form    You cannot deduct state and local income taxes you pay on income that is exempt from federal income tax, unless the exempt income is interest income. 2012 amended tax form For example, you cannot deduct the part of a state's income tax that is on a cost-of-living allowance exempt from federal income tax. 2012 amended tax form What To Deduct Your deduction may be for withheld taxes, estimated tax payments, or other tax payments as follows. 2012 amended tax form Withheld taxes. 2012 amended tax form   You can deduct state and local income taxes withheld from your salary in the year they are withheld. 2012 amended tax form Your Form(s) W-2 will show these amounts. 2012 amended tax form Forms W-2G, 1099-G, 1099-R, and 1099-MISC may also show state and local income taxes withheld. 2012 amended tax form Estimated tax payments. 2012 amended tax form   You can deduct estimated tax payments you made during the year to a state or local government. 2012 amended tax form However, you must have a reasonable basis for making the estimated tax payments. 2012 amended tax form Any estimated state or local tax payments that are not made in good faith at the time of payment are not deductible. 2012 amended tax form For example, you made an estimated state income tax payment. 2012 amended tax form However, the estimate of your state tax liability shows that you will get a refund of the full amount of your estimated payment. 2012 amended tax form You had no reasonable basis to believe you had any additional liability for state income taxes and you cannot deduct the estimated tax payment. 2012 amended tax form Refund applied to taxes. 2012 amended tax form   You can deduct any part of a refund of prior-year state or local income taxes that you chose to have credited to your 2013 estimated state or local income taxes. 2012 amended tax form    Do not reduce your deduction by either of the following items. 2012 amended tax form Any state or local income tax refund (or credit) you expect to receive for 2013. 2012 amended tax form Any refund of (or credit for) prior-year state and local income taxes you actually received in 2013. 2012 amended tax form   However, part or all of this refund (or credit) may be taxable. 2012 amended tax form See Refund (or credit) of state or local income taxes , later. 2012 amended tax form Separate federal returns. 2012 amended tax form   If you and your spouse file separate state, local, and federal income tax returns, you each can deduct on your federal return only the amount of your own state and local income tax that you paid during the tax year. 2012 amended tax form Joint state and local returns. 2012 amended tax form   If you and your spouse file joint state and local returns and separate federal returns, each of you can deduct on your separate federal return a part of the total state and local income taxes paid during the tax year. 2012 amended tax form You can deduct only the amount of the total taxes that is proportionate to your gross income compared to the combined gross income of you and your spouse. 2012 amended tax form However, you cannot deduct more than the amount you actually paid during the year. 2012 amended tax form You can avoid this calculation if you and your spouse are jointly and individually liable for the full amount of the state and local income taxes. 2012 amended tax form If so, you and your spouse can deduct on your separate federal returns the amount you each actually paid. 2012 amended tax form Joint federal return. 2012 amended tax form   If you file a joint federal return, you can deduct the total of the state and local income taxes both of you paid. 2012 amended tax form Contributions to state benefit funds. 2012 amended tax form    As an employee, you can deduct mandatory contributions to state benefit funds withheld from your wages that provide protection against loss of wages. 2012 amended tax form For example, certain states require employees to make contributions to state funds providing disability or unemployment insurance benefits. 2012 amended tax form Mandatory payments made to the following state benefit funds are deductible as state income taxes on Schedule A (Form 1040), line 5. 2012 amended tax form Alaska Unemployment Compensation Fund. 2012 amended tax form California Nonoccupational Disability Benefit Fund. 2012 amended tax form New Jersey Nonoccupational Disability Benefit Fund. 2012 amended tax form New Jersey Unemployment Compensation Fund. 2012 amended tax form New York Nonoccupational Disability Benefit Fund. 2012 amended tax form Pennsylvania Unemployment Compensation Fund. 2012 amended tax form Rhode Island Temporary Disability Benefit Fund. 2012 amended tax form Washington State Supplemental Workmen's Compensation Fund. 2012 amended tax form    Employee contributions to private or voluntary disability plans are not deductible. 2012 amended tax form Refund (or credit) of state or local income taxes. 2012 amended tax form   If you receive a refund of (or credit for) state or local income taxes in a year after the year in which you paid them, you may have to include the refund in income on Form 1040, line 10, in the year you receive it. 2012 amended tax form This includes refunds resulting from taxes that were overwithheld, applied from a prior year return, not figured correctly, or figured again because of an amended return. 2012 amended tax form If you did not itemize your deductions in the previous year, do not include the refund in income. 2012 amended tax form If you deducted the taxes in the previous year, include all or part of the refund on Form 1040, line 10, in the year you receive the refund. 2012 amended tax form For a discussion of how much to include, see Recoveries in chapter 12. 2012 amended tax form Foreign Income Taxes Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. 2012 amended tax form S. 2012 amended tax form possession. 2012 amended tax form However, you cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. 2012 amended tax form S. 2012 amended tax form tax under the foreign earned income exclusion or the foreign housing exclusion. 2012 amended tax form For information on these exclusions, see Publication 54, Tax Guide for U. 2012 amended tax form S. 2012 amended tax form Citizens and Resident Aliens Abroad. 2012 amended tax form For information on the foreign tax credit, see Publication 514. 2012 amended tax form General Sales Taxes You can elect to deduct state and local general sales taxes, instead of state and local income taxes, as an itemized deduction on Schedule A (Form 1040), line 5b. 2012 amended tax form You can use either your actual expenses or the state and local sales tax tables to figure your sales tax deduction. 2012 amended tax form Actual expenses. 2012 amended tax form   Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) if the tax rate was the same as the general sales tax rate. 2012 amended tax form However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. 2012 amended tax form If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. 2012 amended tax form If you use the actual expenses method, you must have receipts to show the general sales taxes paid. 2012 amended tax form Do not include sales taxes paid on items used in your trade or business. 2012 amended tax form Motor vehicles. 2012 amended tax form   For purposes of this section, motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. 2012 amended tax form This also includes sales taxes on a leased motor vehicle, but not on vehicles used in your trade or business. 2012 amended tax form Optional sales tax tables. 2012 amended tax form   Instead of using your actual expenses, you can figure your state and local general sales tax deduction using the state and local sales tax tables in the Instructions for Schedule A (Form 1040). 2012 amended tax form You may also be able to add the state and local general sales taxes paid on certain specified items. 2012 amended tax form   Your applicable table amount is based on the state where you live, your income, and the number of exemptions claimed on your tax return. 2012 amended tax form Your income is your adjusted gross income plus any nontaxable items such as the following. 2012 amended tax form Tax-exempt interest. 2012 amended tax form Veterans' benefits. 2012 amended tax form Nontaxable combat pay. 2012 amended tax form Workers' compensation. 2012 amended tax form Nontaxable part of social security and railroad retirement benefits. 2012 amended tax form Nontaxable part of IRA, pension, or annuity distributions, excluding rollovers. 2012 amended tax form Public assistance payments. 2012 amended tax form If you lived in different states during the same tax year, you must prorate your applicable table amount for each state based on the days you lived in each state. 2012 amended tax form See the Instructions for Schedule A (Form 1040), line 5, for details. 2012 amended tax form Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real property levied for the general public welfare. 2012 amended tax form You can deduct these taxes only if they are based on the assessed value of the real property and charged uniformly against all property under the jurisdiction of the taxing authority. 2012 amended tax form Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. 2012 amended tax form They also do not include itemized charges for services (such as trash collection) assessed against specific property or certain people, even if the charge is paid to the taxing authority. 2012 amended tax form For more information about taxes and charges that are not deductible, see Real Estate-Related Items You Cannot Deduct , later. 2012 amended tax form Tenant-shareholders in a cooperative housing corporation. 2012 amended tax form   Generally, if you are a tenant-stockholder in a cooperative housing corporation, you can deduct the amount paid to the corporation that represents your share of the real estate taxes the corporation paid or incurred for your dwelling unit. 2012 amended tax form The corporation should provide you with a statement showing your share of the taxes. 2012 amended tax form For more information, see Special Rules for Cooperatives in Publication 530. 2012 amended tax form Division of real estate taxes between buyers and sellers. 2012 amended tax form   If you bought or sold real estate during the year, the real estate taxes must be divided between the buyer and the seller. 2012 amended tax form   The buyer and the seller must divide the real estate taxes according to the number of days in the real property tax year (the period to which the tax is imposed relates) that each owned the property. 2012 amended tax form The seller is treated as paying the taxes up to, but not including, the date of sale. 2012 amended tax form The buyer is treated as paying the taxes beginning with the date of sale. 2012 amended tax form This applies regardless of the lien dates under local law. 2012 amended tax form Generally, this information is included on the settlement statement provided at the closing. 2012 amended tax form    If you (the seller) cannot deduct taxes until they are paid because you use the cash method of accounting, and the buyer of your property is personally liable for the tax, you are considered to have paid your part of the tax at the time of the sale. 2012 amended tax form This lets you deduct the part of the tax to the date of sale even though you did not actually pay it. 2012 amended tax form However, you must also include the amount of that tax in the selling price of the property. 2012 amended tax form The buyer must include the same amount in his or her cost of the property. 2012 amended tax form   You figure your deduction for taxes on each property bought or sold during the real property tax year as follows. 2012 amended tax form Worksheet 22-1. 2012 amended tax form Figuring Your Real Estate Tax Deduction 1. 2012 amended tax form Enter the total real estate taxes for the real property tax year   2. 2012 amended tax form Enter the number of days in the real property tax year that you owned the property   3. 2012 amended tax form Divide line 2 by 365 (for leap years, divide line 2 by 366) . 2012 amended tax form 4. 2012 amended tax form Multiply line 1 by line 3. 2012 amended tax form This is your deduction. 2012 amended tax form Enter it on Schedule A (Form 1040), line 6   Note. 2012 amended tax form Repeat steps 1 through 4 for each property you bought or sold during the real property tax year. 2012 amended tax form Your total deduction is the sum of the line 4 amounts for all of the properties. 2012 amended tax form Real estate taxes for prior years. 2012 amended tax form   Do not divide delinquent taxes between the buyer and seller if the taxes are for any real property tax year before the one in which the property is sold. 2012 amended tax form Even if the buyer agrees to pay the delinquent taxes, the buyer cannot deduct them. 2012 amended tax form The buyer must add them to the cost of the property. 2012 amended tax form The seller can deduct these taxes paid by the buyer. 2012 amended tax form However, the seller must include them in the selling price. 2012 amended tax form Examples. 2012 amended tax form   The following examples illustrate how real estate taxes are divided between buyer and seller. 2012 amended tax form Example 1. 2012 amended tax form Dennis and Beth White's real property tax year for both their old home and their new home is the calendar year, with payment due August 1. 2012 amended tax form The tax on their old home, sold on May 7, was $620. 2012 amended tax form The tax on their new home, bought on May 3, was $732. 2012 amended tax form Dennis and Beth are considered to have paid a proportionate share of the real estate taxes on the old home even though they did not actually pay them to the taxing authority. 2012 amended tax form On the other hand, they can claim only a proportionate share of the taxes they paid on their new property even though they paid the entire amount. 2012 amended tax form Dennis and Beth owned their old home during the real property tax year for 126 days (January 1 to May 6, the day before the sale). 2012 amended tax form They figure their deduction for taxes on their old home as follows. 2012 amended tax form Worksheet 22-1. 2012 amended tax form Figuring Your Real Estate Tax Deduction — Taxes on Old Home 1. 2012 amended tax form Enter the total real estate taxes for the real property tax year $620 2. 2012 amended tax form Enter the number of days in the real property tax year that you owned the property 126 3. 2012 amended tax form Divide line 2 by 365 (for leap years, divide line 2 by 366) . 2012 amended tax form 3452 4. 2012 amended tax form Multiply line 1 by line 3. 2012 amended tax form This is your deduction. 2012 amended tax form Enter it on Schedule A (Form 1040), line 6 $214 Since the buyers of their old home paid all of the taxes, Dennis and Beth also include the $214 in the selling price of the old home. 2012 amended tax form (The buyers add the $214 to their cost of the home. 2012 amended tax form ) Dennis and Beth owned their new home during the real property tax year for 243 days (May 3 to December 31, including their date of purchase). 2012 amended tax form They figure their deduction for taxes on their new home as follows. 2012 amended tax form Worksheet 22-1. 2012 amended tax form Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. 2012 amended tax form Enter the total real estate taxes for the real property tax year $732 2. 2012 amended tax form Enter the number of days in the real property tax year that you owned the property 243 3. 2012 amended tax form Divide line 2 by 365 (for leap years, divide line 2 by 366) . 2012 amended tax form 6658 4. 2012 amended tax form Multiply line 1 by line 3. 2012 amended tax form This is your deduction. 2012 amended tax form Enter it on Schedule A (Form 1040), line 6 $487 Since Dennis and Beth paid all of the taxes on the new home, they add $245 ($732 paid less $487 deduction) to their cost of the new home. 2012 amended tax form (The sellers add this $245 to their selling price and deduct the $245 as a real estate tax. 2012 amended tax form ) Dennis and Beth's real estate tax deduction for their old and new homes is the sum of $214 and $487, or $701. 2012 amended tax form They will enter this amount on Schedule A (Form 1040), line 6. 2012 amended tax form Example 2. 2012 amended tax form George and Helen Brown bought a new home on May 3, 2013. 2012 amended tax form Their real property tax year for the new home is the calendar year. 2012 amended tax form Real estate taxes for 2012 were assessed in their state on January 1, 2013. 2012 amended tax form The taxes became due on May 31, 2013, and October 31, 2013. 2012 amended tax form The Browns agreed to pay all taxes due after the date of purchase. 2012 amended tax form Real estate taxes for 2012 were $680. 2012 amended tax form They paid $340 on May 31, 2013, and $340 on October 31, 2013. 2012 amended tax form These taxes were for the 2012 real property tax year. 2012 amended tax form The Browns cannot deduct them since they did not own the property until 2013. 2012 amended tax form Instead, they must add $680 to the cost of their new home. 2012 amended tax form In January 2014, the Browns receive their 2013 property tax statement for $752, which they will pay in 2014. 2012 amended tax form The Browns owned their new home during the 2013 real property tax year for 243 days (May 3 to December 31). 2012 amended tax form They will figure their 2014 deduction for taxes as follows. 2012 amended tax form Worksheet 22-1. 2012 amended tax form Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. 2012 amended tax form Enter the total real estate taxes for the real property tax year $752 2. 2012 amended tax form Enter the number of days in the real property tax year that you owned the property 243 3. 2012 amended tax form Divide line 2 by 365 (for leap years, divide line 2 by 366) . 2012 amended tax form 6658 4. 2012 amended tax form Multiply line 1 by line 3. 2012 amended tax form This is your deduction. 2012 amended tax form Claim it on Schedule A (Form 1040), line 6 $501 The remaining $251 ($752 paid less $501 deduction) of taxes paid in 2014, along with the $680 paid in 2013, is added to the cost of their new home. 2012 amended tax form Because the taxes up to the date of sale are considered paid by the seller on the date of sale, the seller is entitled to a 2013 tax deduction of $931. 2012 amended tax form This is the sum of the $680 for 2012 and the $251 for the 122 days the seller owned the home in 2013. 2012 amended tax form The seller must also include the $931 in the selling price when he or she figures the gain or loss on the sale. 2012 amended tax form The seller should contact the Browns in January 2014 to find out how much real estate tax is due for 2013. 2012 amended tax form Form 1099-S. 2012 amended tax form   For certain sales or exchanges of real estate, the person responsible for closing the sale (generally the settlement agent) prepares Form 1099-S, Proceeds From Real Estate Transactions, to report certain information to the IRS and to the seller of the property. 2012 amended tax form Box 2 of Form 1099-S is for the gross proceeds from the sale and should include the portion of the seller's real estate tax liability that the buyer will pay after the date of sale. 2012 amended tax form The buyer includes these taxes in the cost basis of the property, and the seller both deducts this amount as a tax paid and includes it in the sales price of the property. 2012 amended tax form   For a real estate transaction that involves a home, any real estate tax the seller paid in advance but that is the liability of the buyer appears on Form 1099-S, box 5. 2012 amended tax form The buyer deducts this amount as a real estate tax, and the seller reduces his or her real estate tax deduction (or includes it in income) by the same amount. 2012 amended tax form See Refund (or rebate) , later. 2012 amended tax form Taxes placed in escrow. 2012 amended tax form   If your monthly mortgage payment includes an amount placed in escrow (put in the care of a third party) for real estate taxes, you may not be able to deduct the total amount placed in escrow. 2012 amended tax form You can deduct only the real estate tax that the third party actually paid to the taxing authority. 2012 amended tax form If the third party does not notify you of the amount of real estate tax that was paid for you, contact the third party or the taxing authority to find the proper amount to show on your return. 2012 amended tax form Tenants by the entirety. 2012 amended tax form   If you and your spouse held property as tenants by the entirety and you file separate federal returns, each of you can deduct only the taxes each of you paid on the property. 2012 amended tax form Divorced individuals. 2012 amended tax form   If your divorce or separation agreement states that you must pay the real estate taxes for a home owned by you and your spouse, part of your payments may be deductible as alimony and part as real estate taxes. 2012 amended tax form See Taxes and insurance in chapter 18 for more information. 2012 amended tax form Ministers' and military housing allowances. 2012 amended tax form   If you are a minister or a member of the uniformed services and receive a housing allowance that you can exclude from income, you still can deduct all of the real estate taxes you pay on your home. 2012 amended tax form Refund (or rebate). 2012 amended tax form   If you received a refund or rebate in 2013 of real estate taxes you paid in 2013, you must reduce your deduction by the amount refunded to you. 2012 amended tax form If you received a refund or rebate in 2013 of real estate taxes you deducted in an earlier year (either as an itemized deduction or an increase to your standard deduction), you generally must include the refund or rebate in income in the year you receive it. 2012 amended tax form However, the amount you include in income is limited to the amount of the deduction that reduced your tax in the earlier year. 2012 amended tax form For more information, see Recoveries in chapter 12. 2012 amended tax form Table 22-1. 2012 amended tax form Which Taxes Can You Deduct? Type of Tax You Can Deduct You Cannot Deduct Fees and Charges Fees and charges that are expenses of your trade or business or of producing income. 2012 amended tax form Fees and charges that are not expenses of your trade or business or of producing income, such as fees for driver's licenses, car inspections, parking, or charges for water bills (see Taxes and Fees You Cannot Deduct ). 2012 amended tax form     Fines and penalties. 2012 amended tax form Income Taxes State and local income taxes. 2012 amended tax form Federal income taxes. 2012 amended tax form   Foreign income taxes. 2012 amended tax form     Employee contributions to state funds listed under Contributions to state benefit funds . 2012 amended tax form Employee contributions to private or voluntary disability plans. 2012 amended tax form     State and local general sales taxes if you choose to deduct state and local income taxes. 2012 amended tax form General Sales Taxes State and local general sales taxes, including compensating use taxes. 2012 amended tax form State and local income taxes if you choose to deduct state and local general sales taxes. 2012 amended tax form Other Taxes Taxes that are expenses of your trade or business. 2012 amended tax form Federal excise taxes, such as tax on gasoline, that are not expenses of your trade or business or of producing income. 2012 amended tax form   Taxes on property producing rent or royalty income. 2012 amended tax form Per capita taxes. 2012 amended tax form   Occupational taxes. 2012 amended tax form See chapter 28. 2012 amended tax form     One-half of self-employment tax paid. 2012 amended tax form   Personal Property Taxes State and local personal property taxes. 2012 amended tax form Customs duties that are not expenses of your trade or business or of producing income. 2012 amended tax form Real Estate Taxes State and local real estate taxes. 2012 amended tax form Real estate taxes that are treated as imposed on someone else (see Division of real estate taxes between buyers and sellers ). 2012 amended tax form   Foreign real estate taxes. 2012 amended tax form Taxes for local benefits (with exceptions). 2012 amended tax form See Real Estate-Related Items You Cannot Deduct . 2012 amended tax form   Tenant's share of real estate taxes paid by  cooperative housing corporation. 2012 amended tax form Trash and garbage pickup fees (with exceptions). 2012 amended tax form See Real Estate-Related Items You Cannot Deduct . 2012 amended tax form     Rent increase due to higher real estate taxes. 2012 amended tax form     Homeowners' association charges. 2012 amended tax form Real Estate-Related Items You Cannot Deduct Payments for the following items generally are not deductible as real estate taxes. 2012 amended tax form Taxes for local benefits. 2012 amended tax form Itemized charges for services (such as trash and garbage pickup fees). 2012 amended tax form Transfer taxes (or stamp taxes). 2012 amended tax form Rent increases due to higher real estate taxes. 2012 amended tax form Homeowners' association charges. 2012 amended tax form Taxes for local benefits. 2012 amended tax form   Deductible real estate taxes generally do not include taxes charged for local benefits and improvements tending to increase the value of your property. 2012 amended tax form These include assessments for streets, sidewalks, water mains, sewer lines, public parking facilities, and similar improvements. 2012 amended tax form You should increase the basis of your property by the amount of the assessment. 2012 amended tax form   Local benefit taxes are deductible only if they are for maintenance, repair, or interest charges related to those benefits. 2012 amended tax form If only a part of the taxes is for maintenance, repair, or interest, you must be able to show the amount of that part to claim the deduction. 2012 amended tax form If you cannot determine what part of the tax is for maintenance, repair, or interest, none of it is deductible. 2012 amended tax form    Taxes for local benefits may be included in your real estate tax bill. 2012 amended tax form If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. 2012 amended tax form You should use the rules above to determine if the local benefit tax is deductible. 2012 amended tax form Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. 2012 amended tax form Itemized charges for services. 2012 amended tax form    An itemized charge for services assessed against specific property or certain people is not a tax, even if the charge is paid to the taxing authority. 2012 amended tax form For example, you cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged to each homeowner for trash collection), or A flat fee charged for a single service provided by your government (such as a $30 charge for mowing your lawn because it was allowed to grow higher than permitted under your local ordinance). 2012 amended tax form    You must look at your real estate tax bill to determine if any nondeductible itemized charges, such as those listed above, are included in the bill. 2012 amended tax form If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. 2012 amended tax form Exception. 2012 amended tax form   Service charges used to maintain or improve services (such as trash collection or police and fire protection) are deductible as real estate taxes if: The fees or charges are imposed at a like rate against all property in the taxing jurisdiction, The funds collected are not earmarked; instead, they are commingled with general revenue funds, and Funds used to maintain or improve services are not limited to or determined by the amount of these fees or charges collected. 2012 amended tax form Transfer taxes (or stamp taxes). 2012 amended tax form   Transfer taxes and similar taxes and charges on the sale of a personal home are not deductible. 2012 amended tax form If they are paid by the seller, they are expenses of the sale and reduce the amount realized on the sale. 2012 amended tax form If paid by the buyer, they are included in the cost basis of the property. 2012 amended tax form Rent increase due to higher real estate taxes. 2012 amended tax form   If your landlord increases your rent in the form of a tax surcharge because of increased real estate taxes, you cannot deduct the increase as taxes. 2012 amended tax form Homeowners' association charges. 2012 amended tax form   These charges are not deductible because they are imposed by the homeowners' association, rather than the state or local government. 2012 amended tax form Personal Property Taxes Personal property tax is deductible if it is a state or local tax that is: Charged on personal property, Based only on the value of the personal property, and Charged on a yearly basis, even if it is collected more or less than once a year. 2012 amended tax form A tax that meets the above requirements can be considered charged on personal property even if it is for the exercise of a privilege. 2012 amended tax form For example, a yearly tax based on value qualifies as a personal property tax even if it is called a registration fee and is for the privilege of registering motor vehicles or using them on the highways. 2012 amended tax form If the tax is partly based on value and partly based on other criteria, it may qualify in part. 2012 amended tax form Example. 2012 amended tax form Your state charges a yearly motor vehicle registration tax of 1% of value plus 50 cents per hundredweight. 2012 amended tax form You paid $32 based on the value ($1,500) and weight (3,400 lbs. 2012 amended tax form ) of your car. 2012 amended tax form You can deduct $15 (1% × $1,500) as a personal property tax because it is based on the value. 2012 amended tax form The remaining $17 ($. 2012 amended tax form 50 × 34), based on the weight, is not deductible. 2012 amended tax form Taxes and Fees You Cannot Deduct Many federal, state, and local government taxes are not deductible because they do not fall within the categories discussed earlier. 2012 amended tax form Other taxes and fees, such as federal income taxes, are not deductible because the tax law specifically prohibits a deduction for them. 2012 amended tax form See Table 22-1. 2012 amended tax form Taxes and fees that are generally not deductible include the following items. 2012 amended tax form Employment taxes. 2012 amended tax form This includes social security, Medicare, and railroad retirement taxes withheld from your pay. 2012 amended tax form However, one-half of self-employment tax you pay is deductible. 2012 amended tax form In addition, the social security and other employment taxes you pay on the wages of a household worker may be included in medical expenses that you can deduct or child care expenses that allow you to claim the child and dependent care credit. 2012 amended tax form For more information, see chapters 21 and 32. 2012 amended tax form Estate, inheritance, legacy, or succession taxes. 2012 amended tax form However, you can deduct the estate tax attributable to income in respect of a decedent if you, as a beneficiary, must include that income in your gross income. 2012 amended tax form In that case, deduct the estate tax as a miscellaneous deduction that is not subject to the 2%-of-adjusted-gross-income limit. 2012 amended tax form For more information, see Publication 559, Survivors, Executors, and Administrators. 2012 amended tax form Federal income taxes. 2012 amended tax form This includes income taxes withheld from your pay. 2012 amended tax form Fines and penalties. 2012 amended tax form You cannot deduct fines and penalties paid to a government for violation of any law, including related amounts forfeited as collateral deposits. 2012 amended tax form Gift taxes. 2012 amended tax form License fees. 2012 amended tax form You cannot deduct license fees for personal purposes (such as marriage, driver's, and dog license fees). 2012 amended tax form Per capita taxes. 2012 amended tax form You cannot deduct state or local per capita taxes. 2012 amended tax form Many taxes and fees other than those listed above are also nondeductible, unless they are ordinary and necessary expenses of a business or income producing activity. 2012 amended tax form For other nondeductible items, see Real Estate-Related Items You Cannot Deduct , earlier. 2012 amended tax form Where To Deduct You deduct taxes on the following schedules. 2012 amended tax form State and local income taxes. 2012 amended tax form    These taxes are deducted on Schedule A (Form 1040), line 5, even if your only source of income is from business, rents, or royalties. 2012 amended tax form Check box a on line 5. 2012 amended tax form General sales taxes. 2012 amended tax form   Sales taxes are deducted on Schedule A (Form 1040), line 5. 2012 amended tax form You must check box b on line 5. 2012 amended tax form If you elect to deduct sales taxes, you cannot deduct state and local income taxes on Schedule A (Form 1040), line 5, box a. 2012 amended tax form Foreign income taxes. 2012 amended tax form   Generally, income taxes you pay to a foreign country or U. 2012 amended tax form S. 2012 amended tax form possession can be claimed as an itemized deduction on Schedule A (Form 1040), line 8, or as a credit against your U. 2012 amended tax form S. 2012 amended tax form income tax on Form 1040, line 47. 2012 amended tax form To claim the credit, you may have to complete and attach Form 1116. 2012 amended tax form For more information, see chapter 37, the Form 1040 instructions, or Publication 514. 2012 amended tax form Real estate taxes and personal property taxes. 2012 amended tax form    Real estate and personal property taxes are deducted on Schedule A (Form 1040), lines 6 and 7, respectively, unless they are paid on property used in your business, in which case they are deducted on Schedule C, Schedule C-EZ, or Schedule F (Form 1040). 2012 amended tax form Taxes on property that produces rent or royalty income are deducted on Schedule E (Form 1040). 2012 amended tax form Self-employment tax. 2012 amended tax form    Deduct one-half of your self-employment tax on Form 1040, line 27. 2012 amended tax form Other taxes. 2012 amended tax form    All other deductible taxes are deducted on Schedule A (Form 1040), line 8. 2012 amended tax form Prev  Up  Next   Home   More Online Publications