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2012 Irs Income Tax Forms

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2012 Irs Income Tax Forms

2012 irs income tax forms 32. 2012 irs income tax forms   Child and Dependent Care Credit Table of Contents Reminders Introduction Useful Items - You may want to see: Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. 2012 irs income tax forms Employment Taxes for Household Employers Reminders Taxpayer identification number needed for each qualifying person. 2012 irs income tax forms  You must include on line 2 of Form 2441 the name and taxpayer identification number (generally the social security number) of each qualifying person. 2012 irs income tax forms See Taxpayer identification number under Qualifying Person Test, later. 2012 irs income tax forms You may have to pay employment taxes. 2012 irs income tax forms  If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer who has to pay employment taxes. 2012 irs income tax forms Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. 2012 irs income tax forms See Employment Taxes for Household Employers , later. 2012 irs income tax forms Introduction This chapter discusses the credit for child and dependent care expenses and covers the following topics. 2012 irs income tax forms Tests you must meet to claim the credit. 2012 irs income tax forms How to figure the credit. 2012 irs income tax forms How to claim the credit. 2012 irs income tax forms Employment taxes you may have to pay as a household employer. 2012 irs income tax forms You may be able to claim the credit if you pay someone to care for your dependent who is under age 13 or for your spouse or dependent who is not able to care for himself or herself. 2012 irs income tax forms The credit can be up to 35% of your expenses. 2012 irs income tax forms To qualify, you must pay these expenses so you can work or look for work. 2012 irs income tax forms This credit should not be confused with the child tax credit discussed in chapter 34. 2012 irs income tax forms Dependent care benefits. 2012 irs income tax forms   If you received any dependent care benefits from your employer during the year, you may be able to exclude from your income all or part of them. 2012 irs income tax forms You must complete Form 2441, Part III, before you can figure the amount of your credit. 2012 irs income tax forms See Dependent Care Benefits under How To Figure the Credit, later. 2012 irs income tax forms Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 503 Child and Dependent Care Expenses 926 Household Employer's Tax Guide Form (and Instructions) 2441 Child and Dependent Care Expenses Schedule H (Form 1040) Household Employment Taxes W-7 Application for IRS Individual Taxpayer Identification Number W-10 Dependent Care Provider's Identification and Certification Tests To Claim the Credit To be able to claim the credit for child and dependent care expenses, you must file Form 1040 or Form 1040A, not Form 1040EZ, and meet all the following tests. 2012 irs income tax forms The care must be for one or more qualifying persons who are identified on Form 2441. 2012 irs income tax forms (See Qualifying Person Test . 2012 irs income tax forms ) You (and your spouse if filing jointly) must have earned income during the year. 2012 irs income tax forms (However, see Rule for student-spouse or spouse not able to care for self under Earned Income Test, later. 2012 irs income tax forms ) You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. 2012 irs income tax forms (See Work-Related Expense Test , later. 2012 irs income tax forms ) You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. 2012 irs income tax forms If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. 2012 irs income tax forms You cannot make payments to: Your spouse, or The parent of your qualifying person if your qualifying person is your child and under age 13. 2012 irs income tax forms (See Payments to Relatives or Dependents under Work-Related Expense Test, later. 2012 irs income tax forms ) Your filing status may be single, head of household, or qualifying widow(er) with dependent child. 2012 irs income tax forms If you are married, you must file a joint return, unless an exception applies to you. 2012 irs income tax forms (See Joint Return Test , later. 2012 irs income tax forms ) You must identify the care provider on your tax return. 2012 irs income tax forms (See Provider Identification Test , later. 2012 irs income tax forms ) If you exclude or deduct dependent care benefits provided by a dependent care benefits plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). 2012 irs income tax forms (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000. 2012 irs income tax forms See Reduced Dollar Limit under How To Figure the Credit, later. 2012 irs income tax forms ) These tests are presented in Figure 32-A and are also explained in detail in this chapter. 2012 irs income tax forms Figure 32-A. 2012 irs income tax forms Can You Claim the Credit? Please click here for the text description of the image. 2012 irs income tax forms Figure 32-A Can You Claim the Credit? Qualifying Person Test Your child and dependent care expenses must be for the care of one or more qualifying persons. 2012 irs income tax forms A qualifying person is: Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart, later), Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. 2012 irs income tax forms Dependent defined. 2012 irs income tax forms   A dependent is a person, other than you or your spouse, for whom you can claim an exemption. 2012 irs income tax forms To be your dependent, a person must be your qualifying child (or your qualifying relative). 2012 irs income tax forms Qualifying child. 2012 irs income tax forms   To be your qualifying child, a child must live with you for more than half the year and meet other requirements. 2012 irs income tax forms More information. 2012 irs income tax forms   For more information about who is a dependent or a qualifying child, see chapter 3. 2012 irs income tax forms Physically or mentally not able to care for oneself. 2012 irs income tax forms   Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. 2012 irs income tax forms Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves. 2012 irs income tax forms Person qualifying for part of year. 2012 irs income tax forms   You determine a person's qualifying status each day. 2012 irs income tax forms For example, if the person for whom you pay child and dependent care expenses no longer qualifies on September 16, count only those expenses through September 15. 2012 irs income tax forms Also see Yearly limit under Dollar Limit, later. 2012 irs income tax forms Birth or death of otherwise qualifying person. 2012 irs income tax forms   In determining whether a person is a qualifying person, a person who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the person's home for more than half the time he or she was alive in 2013. 2012 irs income tax forms Taxpayer identification number. 2012 irs income tax forms   You must include on your return the name and taxpayer identification number (generally the social security number) of the qualifying person(s). 2012 irs income tax forms If the correct information is not shown, the credit may be reduced or disallowed. 2012 irs income tax forms Individual taxpayer identification number (ITIN) for aliens. 2012 irs income tax forms   If your qualifying person is a nonresident or resident alien who does not have and cannot get a social security number (SSN), use that person's ITIN. 2012 irs income tax forms The ITIN is entered wherever an SSN is requested on a tax return. 2012 irs income tax forms To apply for an ITIN, see Form W-7. 2012 irs income tax forms   An ITIN is for tax use only. 2012 irs income tax forms It does not entitle the holder to social security benefits or change the holder's employment or immigration status under U. 2012 irs income tax forms S. 2012 irs income tax forms law. 2012 irs income tax forms Adoption taxpayer identification number (ATIN). 2012 irs income tax forms   If your qualifying person is a child who was placed in your home for adoption and for whom you do not have an SSN, you must get an ATIN for the child. 2012 irs income tax forms File Form W-7A, Application for Taxpayer Identification Number for Pending U. 2012 irs income tax forms S. 2012 irs income tax forms Adoptions. 2012 irs income tax forms Child of divorced or separated parents or parents living apart. 2012 irs income tax forms   Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if: The child was under age 13 or was not physically or mentally able to care for himself or herself, The child received over half of his or her support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year, The child was in the custody of one or both parents for more than half the year, and You were the child's custodial parent. 2012 irs income tax forms   The custodial parent is the parent with whom the child lived for the greater number of nights in 2013. 2012 irs income tax forms If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. 2012 irs income tax forms For details and an exception for a parent who works at night, see Pub. 2012 irs income tax forms 501. 2012 irs income tax forms   The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. 2012 irs income tax forms Earned Income Test To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. 2012 irs income tax forms Earned income. 2012 irs income tax forms   Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. 2012 irs income tax forms A net loss from self-employment reduces earned income. 2012 irs income tax forms Earned income also includes strike benefits and any disability pay you report as wages. 2012 irs income tax forms   Generally, only taxable compensation is included. 2012 irs income tax forms However, you can elect to include nontaxable combat pay in earned income. 2012 irs income tax forms If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. 2012 irs income tax forms (In other words, if one of you makes the election, the other one can also make it but does not have to. 2012 irs income tax forms ) You should figure your credit both ways and make the election if it gives you a greater tax benefit. 2012 irs income tax forms Members of certain religious faiths opposed to social security. 2012 irs income tax forms   Certain income earned by persons who are members of certain religious faiths that are opposed to participation in Social Security Act programs and have an IRS-approved form that exempts certain income from social security and Medicare taxes may not be considered earned income for this purpose. 2012 irs income tax forms See Earned Income Test in Publication 503. 2012 irs income tax forms Not earned income. 2012 irs income tax forms   Earned income does not include: Pensions and annuities, Social security and railroad retirement benefits, Workers' compensation, Interest and dividends, Unemployment compensation, Scholarship or fellowship grants, except for those reported on a Form W-2 and paid to you for teaching or other services, Nontaxable workfare payments, Child support payments received by you, Income of nonresident aliens that is not effectively connected with a U. 2012 irs income tax forms S. 2012 irs income tax forms trade or business, or Any amount received for work while an inmate in a penal institution. 2012 irs income tax forms Rule for student-spouse or spouse not able to care for self. 2012 irs income tax forms   Your spouse is treated as having earned income for any month that he or she is: A full-time student, or Physically or mentally not able to care for himself or herself. 2012 irs income tax forms (Your spouse also must live with you for more than half the year. 2012 irs income tax forms )   If you are filing a joint return, this rule also applies to you. 2012 irs income tax forms You can be treated as having earned income for any month you are a full-time student or not able to care for yourself. 2012 irs income tax forms   Figure the earned income of the nonworking spouse described under (1) or (2) above as explained under Earned Income Limit , later. 2012 irs income tax forms   This rule applies to only one spouse for any one month. 2012 irs income tax forms If, in the same month, both you and your spouse do not work and are either full-time students or not physically or mentally able to care for yourselves, only one of you can be treated as having earned income in that month. 2012 irs income tax forms Full-time student. 2012 irs income tax forms   You are a full-time student if you are enrolled at a school for the number of hours or classes that the school considers full time. 2012 irs income tax forms You must have been a full-time student for some part of each of 5 calendar months during the year. 2012 irs income tax forms (The months need not be consecutive. 2012 irs income tax forms ) School. 2012 irs income tax forms   The term “school” includes high schools, colleges, universities, and technical, trade, and mechanical schools. 2012 irs income tax forms A school does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. 2012 irs income tax forms Work-Related Expense Test Child and dependent care expenses must be work-related to qualify for the credit. 2012 irs income tax forms Expenses are considered work-related only if both of the following are true. 2012 irs income tax forms They allow you (and your spouse if filing jointly) to work or look for work. 2012 irs income tax forms They are for a qualifying person's care. 2012 irs income tax forms Working or Looking for Work To be work-related, your expenses must allow you to work or look for work. 2012 irs income tax forms If you are married, generally both you and your spouse must work or look for work. 2012 irs income tax forms One spouse is treated as working during any month he or she is a full-time student or is not physically or mentally able to care for himself or herself. 2012 irs income tax forms Your work can be for others or in your own business or partnership. 2012 irs income tax forms It can be either full time or part time. 2012 irs income tax forms Work also includes actively looking for work. 2012 irs income tax forms However, if you do not find a job and have no earned income for the year, you cannot take this credit. 2012 irs income tax forms See Earned Income Test , earlier. 2012 irs income tax forms An expense is not considered work-related merely because you had it while you were working. 2012 irs income tax forms The purpose of the expense must be to allow you to work. 2012 irs income tax forms Whether your expenses allow you to work or look for work depends on the facts. 2012 irs income tax forms Example 1. 2012 irs income tax forms The cost of a babysitter while you and your spouse go out to eat is not normally a work-related expense. 2012 irs income tax forms Example 2. 2012 irs income tax forms You work during the day. 2012 irs income tax forms Your spouse works at night and sleeps during the day. 2012 irs income tax forms You pay for care of your 5-year-old child during the hours when you are working and your spouse is sleeping. 2012 irs income tax forms Your expenses are considered work-related. 2012 irs income tax forms Volunteer work. 2012 irs income tax forms    For this purpose, you are not considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary. 2012 irs income tax forms Work for part of year. 2012 irs income tax forms   If you work or actively look for work during only part of the period covered by the expenses, then you must figure your expenses for each day. 2012 irs income tax forms For example, if you work all year and pay care expenses of $250 a month ($3,000 for the year), all the expenses are work-related. 2012 irs income tax forms However, if you work or look for work for only 2 months and 15 days during the year and pay expenses of $250 a month, your work-related expenses are limited to $625 (2½ months × $250). 2012 irs income tax forms Temporary absence from work. 2012 irs income tax forms   You do not have to figure your expenses for each day during a short, temporary absence from work, such as for vacation or a minor illness, if you have to pay for care anyway. 2012 irs income tax forms Instead, you can figure your credit including the expenses you paid for the period of absence. 2012 irs income tax forms   An absence of 2 weeks or less is a short, temporary absence. 2012 irs income tax forms An absence of more than 2 weeks may be considered a short, temporary absence, depending on the circumstances. 2012 irs income tax forms Example. 2012 irs income tax forms You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. 2012 irs income tax forms You become ill and miss 4 months of work but receive sick pay. 2012 irs income tax forms You continue to pay the nanny to care for the children while you are ill. 2012 irs income tax forms Your absence is not a short, temporary absence, and your expenses are not considered work-related. 2012 irs income tax forms Part-time work. 2012 irs income tax forms   If you work part-time, you generally must figure your expenses for each day. 2012 irs income tax forms However, if you have to pay for care weekly, monthly, or in another way that includes both days worked and days not worked, you can figure your credit including the expenses you paid for days you did not work. 2012 irs income tax forms Any day when you work at least 1 hour is a day of work. 2012 irs income tax forms Example 1. 2012 irs income tax forms You work 3 days a week. 2012 irs income tax forms While you work, your 6-year-old child attends a dependent care center, which complies with all state and local regulations. 2012 irs income tax forms You can pay the center $150 for any 3 days a week or $250 for 5 days a week. 2012 irs income tax forms Your child attends the center 5 days a week. 2012 irs income tax forms Your work-related expenses are limited to $150 a week. 2012 irs income tax forms Example 2. 2012 irs income tax forms The facts are the same as in Example 1 except the center does not offer a 3-day option. 2012 irs income tax forms The entire $250 weekly fee may be a work-related expense. 2012 irs income tax forms Care of a Qualifying Person To be work-related, your expenses must be to provide care for a qualifying person. 2012 irs income tax forms You do not have to choose the least expensive way of providing care. 2012 irs income tax forms The cost of a paid care provider may be an expense for the care of a qualifying person even if another care provider is available at no cost. 2012 irs income tax forms Expenses are for the care of a qualifying person only if their main purpose is the person's well-being and protection. 2012 irs income tax forms Expenses for household services qualify if part of the services is for the care of qualifying persons. 2012 irs income tax forms See Household services , later. 2012 irs income tax forms Expenses not for care. 2012 irs income tax forms   Expenses for care do not include amounts you pay for food, lodging, clothing, education, and entertainment. 2012 irs income tax forms However, you can include small amounts paid for these items if they are incidental to and cannot be separated from the cost of caring for the qualifying person. 2012 irs income tax forms   Child support payments are not for care and do not qualify for the credit. 2012 irs income tax forms Education. 2012 irs income tax forms   Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. 2012 irs income tax forms Expenses to attend kindergarten or a higher grade are not expenses for care. 2012 irs income tax forms Do not use these expenses to figure your credit. 2012 irs income tax forms   However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care. 2012 irs income tax forms   Summer school and tutoring programs are not for care. 2012 irs income tax forms Example 1. 2012 irs income tax forms You take your 3-year-old child to a nursery school that provides lunch and educational activities as a part of its preschool childcare service. 2012 irs income tax forms The lunch and educational activities are incidental to the childcare, and their cost cannot be separated from the cost of care. 2012 irs income tax forms You can count the total cost when you figure the credit. 2012 irs income tax forms Example 2. 2012 irs income tax forms You place your 10-year-old child in a boarding school so you can work full time. 2012 irs income tax forms Only the part of the boarding school expense that is for the care of your child is a work-related expense. 2012 irs income tax forms You can count that part of the expense in figuring your credit if it can be separated from the cost of education. 2012 irs income tax forms You cannot count any part of the amount you pay the school for your child's education. 2012 irs income tax forms Care outside your home. 2012 irs income tax forms   You can count the cost of care provided outside your home if the care is for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours each day in your home. 2012 irs income tax forms Dependent care center. 2012 irs income tax forms   You can count care provided outside your home by a dependent care center only if the center complies with all state and local regulations that apply to these centers. 2012 irs income tax forms   A dependent care center is a place that provides care for more than six persons (other than persons who live there) and receives a fee, payment, or grant for providing services for any of those persons, even if the center is not run for profit. 2012 irs income tax forms Camp. 2012 irs income tax forms   The cost of sending your child to an overnight camp is not considered a work-related expense. 2012 irs income tax forms The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer. 2012 irs income tax forms Transportation. 2012 irs income tax forms   If a care provider takes a qualifying person to or from a place where care is provided, that transportation is for the care of the qualifying person. 2012 irs income tax forms This includes transportation by bus, subway, taxi, or private car. 2012 irs income tax forms However, transportation not provided by a care provider is not for the care of a qualifying person. 2012 irs income tax forms Also, if you pay the transportation cost for the care provider to come to your home, that expense is not for care of a qualifying person. 2012 irs income tax forms Fees and deposits. 2012 irs income tax forms   Fees you paid to an agency to get the services of a care provider, deposits you paid to an agency or preschool, application fees, and other indirect expenses are work-related expenses if you have to pay them to get care, even though they are not directly for care. 2012 irs income tax forms However, a forfeited deposit is not for the care of a qualifying person if care is not provided. 2012 irs income tax forms Example 1. 2012 irs income tax forms You paid a fee to an agency to get the services of the nanny who cares for your 2-year-old daughter while you work. 2012 irs income tax forms The fee you paid is a work-related expense. 2012 irs income tax forms Example 2. 2012 irs income tax forms You placed a deposit with a preschool to reserve a place for your 3-year-old child. 2012 irs income tax forms You later sent your child to a different preschool and forfeited the deposit. 2012 irs income tax forms The forfeited deposit is not for care and so is not a work-related expense. 2012 irs income tax forms Household services. 2012 irs income tax forms   Expenses you pay for household services meet the work-related expense test if they are at least partly for the well-being and protection of a qualifying person. 2012 irs income tax forms   Household services are ordinary and usual services done in and around your home that are necessary to run your home. 2012 irs income tax forms They include the services of a housekeeper, maid, or cook. 2012 irs income tax forms However, they do not include the services of a chauffeur, bartender, or gardener. 2012 irs income tax forms See Household Services in Publication 503 for more information. 2012 irs income tax forms   In this chapter, the term housekeeper refers to any household employee whose services include the care of a qualifying person. 2012 irs income tax forms Taxes paid on wages. 2012 irs income tax forms   The taxes you pay on wages for qualifying child and dependent care services are work-related expenses. 2012 irs income tax forms See Employment Taxes for Household Employers , later. 2012 irs income tax forms Payments to Relatives or Dependents You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. 2012 irs income tax forms However, do not count any amounts you pay to: A dependent for whom you (or your spouse if filing jointly) can claim an exemption, Your child who was under age 19 at the end of the year, even if he or she is not your dependent, A person who was your spouse any time during the year, or The parent of your qualifying person if your qualifying person is your child and under age 13. 2012 irs income tax forms Joint Return Test Generally, married couples must file a joint return to take the credit. 2012 irs income tax forms However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. 2012 irs income tax forms Legally separated. 2012 irs income tax forms   You are not considered married if you are legally separated from your spouse under a decree of divorce or separate maintenance. 2012 irs income tax forms You may be eligible to take the credit on your return using head of household filing status. 2012 irs income tax forms Married and living apart. 2012 irs income tax forms   You are not considered married and are eligible to take the credit if all the following apply. 2012 irs income tax forms You file a return apart from your spouse. 2012 irs income tax forms Your home is the home of a qualifying person for more than half the year. 2012 irs income tax forms You pay more than half the cost of keeping up your home for the year. 2012 irs income tax forms Your spouse does not live in your home for the last 6 months of the year. 2012 irs income tax forms Costs of keeping up a home. 2012 irs income tax forms   The costs of keeping up a home normally include property taxes, mortgage interest, rent, utility charges, home repairs, insurance on the home, and food eaten at home. 2012 irs income tax forms   The costs of keeping up a home do not include payments for clothing, education, medical treatment, vacations, life insurance, transportation, or mortgage principal. 2012 irs income tax forms   They also do not include the purchase, permanent improvement, or replacement of property. 2012 irs income tax forms For example, you cannot include the cost of replacing a water heater. 2012 irs income tax forms However, you can include the cost of repairing a water heater. 2012 irs income tax forms Death of spouse. 2012 irs income tax forms   If your spouse died during the year and you do not remarry before the end of the year, you generally must file a joint return to take the credit. 2012 irs income tax forms If you do remarry before the end of the year, the credit can be claimed on your deceased spouse's return. 2012 irs income tax forms Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. 2012 irs income tax forms Use Form 2441, Part I, to show the information. 2012 irs income tax forms If you do not have any care providers and you are filing Form 2441 only to report taxable income in Part III, enter “none” in line 1, column (a). 2012 irs income tax forms Information needed. 2012 irs income tax forms   To identify the care provider, you must give the provider's: Name, Address, and Taxpayer identification number. 2012 irs income tax forms   If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. 2012 irs income tax forms If the care provider is an organization, then it is the employer identification number (EIN). 2012 irs income tax forms   You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). 2012 irs income tax forms In this case, enter “Tax-Exempt” in the space where Form 2441 asks for the number. 2012 irs income tax forms   If you cannot provide all of the information or if the information is incorrect, you must be able to show that you used due diligence (discussed later) in trying to furnish the necessary information. 2012 irs income tax forms Getting the information. 2012 irs income tax forms   You can use Form W-10 to request the required information from the care provider. 2012 irs income tax forms If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10 including: A copy of the provider's social security card, A copy of the provider's completed Form W-4 if he or she is your household employee, A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or A letter or invoice from the provider if it shows the information. 2012 irs income tax forms    You should keep this information with your tax records. 2012 irs income tax forms Do not send Form W-10 (or other document containing this information) to the Internal Revenue Service. 2012 irs income tax forms Due diligence. 2012 irs income tax forms   If the care provider information you give is incorrect or incomplete, your credit may not be allowed. 2012 irs income tax forms However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit. 2012 irs income tax forms   You can show due diligence by getting and keeping the provider's completed Form W-10 or one of the other sources of information just listed. 2012 irs income tax forms Care providers can be penalized if they do not provide this information to you or if they provide incorrect information. 2012 irs income tax forms Provider refusal. 2012 irs income tax forms   If the provider refuses to give you their identifying information, you should report on Form 2441 whatever information you have (such as the name and address). 2012 irs income tax forms Enter “See Attached Statement” in the columns calling for the information you do not have. 2012 irs income tax forms Then attach a statement explaining that you requested the information from the care provider, but the provider did not give you the information. 2012 irs income tax forms Be sure to write your name and social security number on this statement. 2012 irs income tax forms The statement will show that you used due diligence in trying to furnish the necessary information. 2012 irs income tax forms U. 2012 irs income tax forms S. 2012 irs income tax forms citizens and resident aliens living abroad. 2012 irs income tax forms   If you are living abroad, your care provider may not have, and may not be required to get, a U. 2012 irs income tax forms S. 2012 irs income tax forms taxpayer identification number (for example, an SSN or EIN). 2012 irs income tax forms If so, enter “LAFCP” (Living Abroad Foreign Care Provider) in the space for the care provider's taxpayer identification number. 2012 irs income tax forms How To Figure the Credit Your credit is a percentage of your work-related expenses. 2012 irs income tax forms Your expenses are subject to the earned income limit and the dollar limit. 2012 irs income tax forms The percentage is based on your adjusted gross income. 2012 irs income tax forms Figuring Total Work-Related Expenses To figure the credit for 2013 work-related expenses, count only those you paid by December 31, 2013. 2012 irs income tax forms Expenses prepaid in an earlier year. 2012 irs income tax forms   If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. 2012 irs income tax forms Claim the expenses for the later year as if they were actually paid in that later year. 2012 irs income tax forms Expenses not paid until the following year. 2012 irs income tax forms   Do not count 2012 expenses that you paid in 2013 as work-related expenses for 2013. 2012 irs income tax forms You may be able to claim an additional credit for them on your 2013 return, but you must figure it separately. 2012 irs income tax forms See Payments for prior year's expenses under Amount of Credit in Publication 503. 2012 irs income tax forms    If you had expenses in 2013 that you did not pay until 2014, you cannot count them when figuring your 2013 credit. 2012 irs income tax forms You may be able to claim a credit for them on your 2014 return. 2012 irs income tax forms Expenses reimbursed. 2012 irs income tax forms   If a state social services agency pays you a nontaxable amount to reimburse you for some of your child and dependent care expenses, you cannot count the expenses that are reimbursed as work-related expenses. 2012 irs income tax forms Example. 2012 irs income tax forms You paid work-related expenses of $3,000. 2012 irs income tax forms You are reimbursed $2,000 by a state social services agency. 2012 irs income tax forms You can use only $1,000 to figure your credit. 2012 irs income tax forms Medical expenses. 2012 irs income tax forms   Some expenses for the care of qualifying persons who are not able to care for themselves may qualify as work-related expenses and also as medical expenses. 2012 irs income tax forms You can use them either way, but you cannot use the same expenses to claim both a credit and a medical expense deduction. 2012 irs income tax forms   If you use these expenses to figure the credit and they are more than the earned income limit or the dollar limit, discussed later, you can add the excess to your medical expenses. 2012 irs income tax forms However, if you use your total expenses to figure your medical expense deduction, you cannot use any part of them to figure your credit. 2012 irs income tax forms    Amounts excluded from your income under your employer's dependent care benefits plan cannot be used to claim a medical expense deduction. 2012 irs income tax forms Dependent Care Benefits If you receive dependent care benefits, your dollar limit for purposes of the credit may be reduced. 2012 irs income tax forms See Reduced Dollar Limit , later. 2012 irs income tax forms But, even if you cannot take the credit, you may be able to take an exclusion or deduction for the dependent care benefits. 2012 irs income tax forms Dependent care benefits. 2012 irs income tax forms   Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. 2012 irs income tax forms Your salary may have been reduced to pay for these benefits. 2012 irs income tax forms If you received benefits as an employee, they should be shown in box 10 of your Form W-2. 2012 irs income tax forms See Statement for employee , later. 2012 irs income tax forms Benefits you received as a partner should be shown in box 13 of your Schedule K-1 (Form 1065) with code O. 2012 irs income tax forms Enter the amount of these benefits on Form 2441, Part III, line 12. 2012 irs income tax forms Exclusion or deduction. 2012 irs income tax forms   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. 2012 irs income tax forms Your employer can tell you whether your benefit plan qualifies. 2012 irs income tax forms To claim the exclusion, you must complete Part III of Form 2441. 2012 irs income tax forms You cannot use Form 1040EZ. 2012 irs income tax forms   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. 2012 irs income tax forms Therefore, you would not get an exclusion from wages. 2012 irs income tax forms Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. 2012 irs income tax forms To claim the deduction, you must use Form 2441. 2012 irs income tax forms   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). 2012 irs income tax forms The definition of earned income for the exclusion or deduction is the same as the definition used when figuring the credit except that earned income for the exclusion or deduction does not include any dependent care benefits you receive. 2012 irs income tax forms See Earned Income Limit, later. 2012 irs income tax forms    You can choose to include your nontaxable combat pay in earned income when figuring your exclusion or deduction, even if you choose not to include it in earned income for the earned income credit or the credit for child and dependent care expenses. 2012 irs income tax forms Statement for employee. 2012 irs income tax forms   Your employer must give you a Form W-2 (or similar statement) showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. 2012 irs income tax forms Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. 2012 irs income tax forms Effect of exclusion on credit. 2012 irs income tax forms   If you exclude dependent care benefits from your income, the amount of the excluded benefits: Is not included in your work-related expenses, and Reduces the dollar limit, discussed later. 2012 irs income tax forms Earned Income Limit The amount of work-related expenses you use to figure your credit cannot be more than: Your earned income for the year if you are single at the end of the year, or The smaller of your or your spouse's earned income for the year if you are married at the end of the year. 2012 irs income tax forms Earned income is defined under Earned Income Test , earlier. 2012 irs income tax forms For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year. 2012 irs income tax forms Separated spouse. 2012 irs income tax forms   If you are legally separated or married and living apart from your spouse (as described under Joint Return Test , earlier), you are not considered married for purposes of the earned income limit. 2012 irs income tax forms Use only your income in figuring the earned income limit. 2012 irs income tax forms Surviving spouse. 2012 irs income tax forms   If your spouse died during the year and you file a joint return as a surviving spouse, you may, but are not required to, take into account the earned income of your spouse who died during the year. 2012 irs income tax forms Community property laws. 2012 irs income tax forms   You should disregard community property laws when you figure earned income for this credit. 2012 irs income tax forms You or your spouse is a student or not able to care for self. 2012 irs income tax forms   Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. 2012 irs income tax forms His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more. 2012 irs income tax forms Spouse works. 2012 irs income tax forms   If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month. 2012 irs income tax forms Spouse qualifies for part of month. 2012 irs income tax forms    If your spouse is a full-time student or not able to care for himself or herself for only part of a month, the full $250 (or $500) still applies for that month. 2012 irs income tax forms You are a student or not able to care for self. 2012 irs income tax forms   These rules also apply if you are a student or not able to care for yourself and you are filing a joint return. 2012 irs income tax forms For each month or part of a month you are a student or not able to care for yourself, your earned income is considered to be at least $250 (or $500). 2012 irs income tax forms If you also work during that month, use the higher of $250 (or $500) or your actual earned income for that month. 2012 irs income tax forms Both spouses qualify. 2012 irs income tax forms   If, in the same month, both you and your spouse are either full-time students or not able to care for yourselves, only one spouse can be considered to have this earned income of $250 (or $500) for that month. 2012 irs income tax forms Dollar Limit There is a dollar limit on the amount of your work-related expenses you can use to figure the credit. 2012 irs income tax forms This limit is $3,000 for one qualifying person, or $6,000 for two or more qualifying persons. 2012 irs income tax forms If you paid work-related expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000. 2012 irs income tax forms This $6,000 limit does not need to be divided equally among them. 2012 irs income tax forms For example, if your work-related expenses for the care of one qualifying person are $3,200 and your work-related expenses for another qualifying person are $2,800, you can use the total, $6,000, when figuring the credit. 2012 irs income tax forms Yearly limit. 2012 irs income tax forms   The dollar limit is a yearly limit. 2012 irs income tax forms The amount of the dollar limit remains the same no matter how long, during the year, you have a qualifying person in your household. 2012 irs income tax forms Use the $3,000 limit if you paid work-related expenses for the care of one qualifying person at any time during the year. 2012 irs income tax forms Use $6,000 if you paid work-related expenses for the care of more than one qualifying person at any time during the year. 2012 irs income tax forms Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. 2012 irs income tax forms Your reduced dollar limit is figured on Form 2441, Part III. 2012 irs income tax forms See Dependent Care Benefits , earlier, for information on excluding or deducting these benefits. 2012 irs income tax forms Example 1. 2012 irs income tax forms George is a widower with one child and earns $24,000 a year. 2012 irs income tax forms He pays work-related expenses of $2,900 for the care of his 4-year-old child and qualifies to claim the credit for child and dependent care expenses. 2012 irs income tax forms His employer pays an additional $1,000 under a dependent care benefit plan. 2012 irs income tax forms This $1,000 is excluded from George's income. 2012 irs income tax forms Although the dollar limit for his work-related expenses is $3,000 (one qualifying person), George figures his credit on only $2,000 of the $2,900 work-related expenses he paid. 2012 irs income tax forms This is because his dollar limit is reduced as shown next. 2012 irs income tax forms   George's Reduced Dollar Limit 1) Maximum allowable expenses for one qualifying person $3,000 2) Minus: Dependent care benefits George excludes from income −1,000 3) Reduced dollar limit on expenses George can use for the credit $2,000 Example 2. 2012 irs income tax forms Randall is married and both he and his wife are employed. 2012 irs income tax forms Each has earned income in excess of $6,000. 2012 irs income tax forms They have two children, Anne and Andy, ages 2 and 4, who attend a daycare facility licensed and regulated by the state. 2012 irs income tax forms Randall's work-related expenses are $6,000 for the year. 2012 irs income tax forms Randall's employer has a dependent care assistance program as part of its cafeteria plan, which allows employees to make pre-tax contributions to a dependent care flexible spending arrangement. 2012 irs income tax forms Randall has elected to take the maximum $5,000 exclusion from his salary to cover dependent care expenses through this program. 2012 irs income tax forms Although the dollar limit for his work- related expenses is $6,000 (two or more qualifying persons), Randall figures his credit on only $1,000 of the $6,000 work-related expense paid. 2012 irs income tax forms This is because his dollar limit is reduced as shown next. 2012 irs income tax forms   Randall's Reduced Dollar Limit 1) Maximum allowable expenses for two qualifying persons $6,000 2) Minus: Dependent care benefits Randall selects from employer's cafeteria plan and excludes from income −5,000 3) Reduced dollar limit on expenses Randall can use for the credit $1,000 Amount of Credit To determine the amount of your credit, multiply your work-related expenses (after applying the earned income and dollar limits) by a percentage. 2012 irs income tax forms This percentage depends on your adjusted gross income shown on Form 1040, line 38, or Form 1040A, line 22. 2012 irs income tax forms The following table shows the percentage to use based on adjusted gross income. 2012 irs income tax forms   IF your adjusted gross income is: THEN the percentage is:       Over   But not over         $0   $15,000   35%       15,000   17,000   34%       17,000   19,000   33%       19,000   21,000   32%       21,000   23,000   31%       23,000   25,000   30%       25,000   27,000   29%       27,000   29,000   28%       29,000   31,000   27%       31,000   33,000   26%       33,000   35,000   25%       35,000   37,000   24%       37,000   39,000   23%       39,000   41,000   22%       41,000   43,000   21%       43,000   No limit   20%   How To Claim the Credit To claim the credit, you can file Form 1040 or Form 1040A. 2012 irs income tax forms You cannot claim the credit on Form 1040EZ. 2012 irs income tax forms Form 1040 or 1040A. 2012 irs income tax forms   You must complete Form 2441 and attach it to your Form 1040 or 1040A. 2012 irs income tax forms Enter the credit on Form 1040, line 48, or Form 1040A, line 29. 2012 irs income tax forms Limit on credit. 2012 irs income tax forms   The amount of credit you can claim is generally limited to the amount of your tax. 2012 irs income tax forms For more information, see the Instructions for Form 2441. 2012 irs income tax forms Tax credit not refundable. 2012 irs income tax forms   You cannot get a refund for any part of the credit that is more than this limit. 2012 irs income tax forms Recordkeeping. 2012 irs income tax forms You should keep records of your work-related expenses. 2012 irs income tax forms Also, if your dependent or spouse is not able to care for himself or herself, your records should show both the nature and the length of the disability. 2012 irs income tax forms Other records you should keep to support your claim for the credit are described earlier under Provider Identification Test . 2012 irs income tax forms Employment Taxes for Household Employers If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. 2012 irs income tax forms If you are a household employer, you will need an employer identification number (EIN) and you may have to pay employment taxes. 2012 irs income tax forms If the individuals who work in your home are self-employed, you are not liable for any of the taxes discussed in this section. 2012 irs income tax forms Self-employed persons who are in business for themselves are not household employees. 2012 irs income tax forms Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. 2012 irs income tax forms If you use a placement agency that exercises control over what work is done and how it will be done by a babysitter or companion who works in your home, the worker is not your employee. 2012 irs income tax forms This control could include providing rules of conduct and appearance and requiring regular reports. 2012 irs income tax forms In this case, you do not have to pay employment taxes. 2012 irs income tax forms But, if an agency merely gives you a list of sitters and you hire one from that list, and pay the sitter directly, the sitter may be your employee. 2012 irs income tax forms If you have a household employee, you may be subject to: Social security and Medicare taxes, Federal unemployment tax, and Federal income tax withholding. 2012 irs income tax forms Social security and Medicare taxes are generally withheld from the employee's pay and matched by the employer. 2012 irs income tax forms Federal unemployment (FUTA) tax is paid by the employer only and provides for payments of unemployment compensation to workers who have lost their jobs. 2012 irs income tax forms Federal income tax is withheld from the employee's total pay if the employee asks you to do so and you agree. 2012 irs income tax forms For more information on a household employer's tax responsibilities, see Publication 926 and Schedule H (Form 1040) and its instructions. 2012 irs income tax forms State employment tax. 2012 irs income tax forms   You may also have to pay state unemployment tax. 2012 irs income tax forms Contact your state unemployment tax office for information. 2012 irs income tax forms You should also find out whether you need to pay or collect other state employment taxes or carry workers' compensation insurance. 2012 irs income tax forms For a list of state unemployment tax agencies, visit the U. 2012 irs income tax forms S. 2012 irs income tax forms Department of Labor's website. 2012 irs income tax forms A link to that website is in Publication 926, or you can find it with an online search. 2012 irs income tax forms Prev  Up  Next   Home   More Online Publications
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Before renting a car:

  • Ask what the total cost will be after all fees are included.There may be an airport surcharge or drop-off fees, insurance fees, fuel charges, mileage fees, taxes, additional-driver fees, under aged-driver fees, and equipment rental fees (for items such as ski racks and car seats). See information on drip pricing.
  • Ask whether the rental company checks the driving records of customers when they arrive at the counter. If so, you could be rejected even if you have a confirmed reservation.
  • Check in advance to be sure you aren't duplicating insurance coverage. If you're traveling on business, your employer might have insurance that covers accidental damage to the vehicle. You might also have coverage through your personal auto insurance, a motor club membership, or the credit card you used to reserve the rental.
  • Carefully inspect the vehicle and its tires before renting and when you return it. Try to return the car during regular hours so you and the rental staff can look at the car together to verify that you didn't damage it.
  • Check refueling policies and charges.
  • Pay with a credit card rather than a debit card, to avoid holds on other funds in your checking account.
  • Ask the rental company if a deposit is required. If so, ask for a clear explanation of the deposit refund procedures.

The National Association of Insurance Commissioners has more information about renting a car and the insurance options.

Some state laws cover short-term car and truck rentals. Contact your state or local consumer protection office for information or to file a complaint.

The 2012 Irs Income Tax Forms

2012 irs income tax forms 12. 2012 irs income tax forms   Other Income Table of Contents Introduction Useful Items - You may want to see: Bartering Canceled DebtsInterest included in canceled debt. 2012 irs income tax forms Exceptions Host or Hostess Life Insurance ProceedsSurviving spouse. 2012 irs income tax forms Endowment Contract Proceeds Accelerated Death Benefits Public Safety Officer Killed in the Line of Duty Partnership Income S Corporation Income RecoveriesItemized Deduction Recoveries Rents from Personal Property RepaymentsMethod 1. 2012 irs income tax forms Method 2. 2012 irs income tax forms RoyaltiesDepletion. 2012 irs income tax forms Coal and iron ore. 2012 irs income tax forms Sale of property interest. 2012 irs income tax forms Part of future production sold. 2012 irs income tax forms Unemployment BenefitsTypes of unemployment compensation. 2012 irs income tax forms Governmental program. 2012 irs income tax forms Repayment of unemployment compensation. 2012 irs income tax forms Tax withholding. 2012 irs income tax forms Repayment of benefits. 2012 irs income tax forms Welfare and Other Public Assistance Benefits Other IncomeEmotional distress. 2012 irs income tax forms Deduction for costs involved in unlawful discrimination suits. 2012 irs income tax forms Energy conservation measure. 2012 irs income tax forms Dwelling unit. 2012 irs income tax forms Current income required to be distributed. 2012 irs income tax forms Current income not required to be distributed. 2012 irs income tax forms How to report. 2012 irs income tax forms Losses. 2012 irs income tax forms Grantor trust. 2012 irs income tax forms Nonemployee compensation. 2012 irs income tax forms Corporate director. 2012 irs income tax forms Personal representatives. 2012 irs income tax forms Manager of trade or business for bankruptcy estate. 2012 irs income tax forms Notary public. 2012 irs income tax forms Election precinct official. 2012 irs income tax forms Difficulty-of-care payments. 2012 irs income tax forms Maintaining space in home. 2012 irs income tax forms Reporting taxable payments. 2012 irs income tax forms Lotteries and raffles. 2012 irs income tax forms Form W-2G. 2012 irs income tax forms Reporting winnings and recordkeeping. 2012 irs income tax forms Inherited pension or IRA. 2012 irs income tax forms Employee awards or bonuses. 2012 irs income tax forms Pulitzer, Nobel, and similar prizes. 2012 irs income tax forms Payment for services. 2012 irs income tax forms VA payments. 2012 irs income tax forms Prizes. 2012 irs income tax forms Strike and lockout benefits. 2012 irs income tax forms Introduction You must include on your return all items of income you receive in the form of money, property, and services unless the tax law states that you do not include them. 2012 irs income tax forms Some items, however, are only partly excluded from income. 2012 irs income tax forms This chapter discusses many kinds of income and explains whether they are taxable or nontaxable. 2012 irs income tax forms Income that is taxable must be reported on your tax return and is subject to tax. 2012 irs income tax forms Income that is nontaxable may have to be shown on your tax return but is not taxable. 2012 irs income tax forms This chapter begins with discussions of the following income items. 2012 irs income tax forms Bartering. 2012 irs income tax forms Canceled debts. 2012 irs income tax forms Sales parties at which you are the host or hostess. 2012 irs income tax forms Life insurance proceeds. 2012 irs income tax forms Partnership income. 2012 irs income tax forms S Corporation income. 2012 irs income tax forms Recoveries (including state income tax refunds). 2012 irs income tax forms Rents from personal property. 2012 irs income tax forms Repayments. 2012 irs income tax forms Royalties. 2012 irs income tax forms Unemployment benefits. 2012 irs income tax forms Welfare and other public assistance benefits. 2012 irs income tax forms These discussions are followed by brief discussions of other income items. 2012 irs income tax forms Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 544 Sales and Other Dispositions of Assets 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Bartering Bartering is an exchange of property or services. 2012 irs income tax forms You must include in your income, at the time received, the fair market value of property or services you receive in bartering. 2012 irs income tax forms If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise. 2012 irs income tax forms Generally, you report this income on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. 2012 irs income tax forms However, if the barter involves an exchange of something other than services, such as in Example 3 below, you may have to use another form or schedule instead. 2012 irs income tax forms Example 1. 2012 irs income tax forms You are a self-employed attorney who performs legal services for a client, a small corporation. 2012 irs income tax forms The corporation gives you shares of its stock as payment for your services. 2012 irs income tax forms You must include the fair market value of the shares in your income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) in the year you receive them. 2012 irs income tax forms Example 2. 2012 irs income tax forms You are self-employed and a member of a barter club. 2012 irs income tax forms The club uses “credit units” as a means of exchange. 2012 irs income tax forms It adds credit units to your account for goods or services you provide to members, which you can use to purchase goods or services offered by other members of the barter club. 2012 irs income tax forms The club subtracts credit units from your account when you receive goods or services from other members. 2012 irs income tax forms You must include in your income the value of the credit units that are added to your account, even though you may not actually receive goods or services from other members until a later tax year. 2012 irs income tax forms Example 3. 2012 irs income tax forms You own a small apartment building. 2012 irs income tax forms In return for 6 months rent-free use of an apartment, an artist gives you a work of art she created. 2012 irs income tax forms You must report as rental income on Schedule E (Form 1040), Supplemental Income and Loss, the fair market value of the artwork, and the artist must report as income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) the fair rental value of the apartment. 2012 irs income tax forms Form 1099-B from barter exchange. 2012 irs income tax forms   If you exchanged property or services through a barter exchange, Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or a similar statement from the barter exchange should be sent to you by February 18, 2014. 2012 irs income tax forms It should show the value of cash, property, services, credits, or scrip you received from exchanges during 2013. 2012 irs income tax forms The IRS also will receive a copy of Form 1099-B. 2012 irs income tax forms Canceled Debts In most cases, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. 2012 irs income tax forms You have no income from the canceled debt if it is intended as a gift to you. 2012 irs income tax forms A debt includes any indebtedness for which you are liable or which attaches to property you hold. 2012 irs income tax forms If the debt is a nonbusiness debt, report the canceled amount on Form 1040, line 21. 2012 irs income tax forms If it is a business debt, report the amount on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) (or on Schedule F (Form 1040), Profit or Loss From Farming, if the debt is farm debt and you are a farmer). 2012 irs income tax forms Form 1099-C. 2012 irs income tax forms   If a Federal Government agency, financial institution, or credit union cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. 2012 irs income tax forms The amount of the canceled debt is shown in box 2. 2012 irs income tax forms Interest included in canceled debt. 2012 irs income tax forms   If any interest is forgiven and included in the amount of canceled debt in box 2, the amount of interest also will be shown in box 3. 2012 irs income tax forms Whether or not you must include the interest portion of the canceled debt in your income depends on whether the interest would be deductible when you paid it. 2012 irs income tax forms See Deductible debt under Exceptions, later. 2012 irs income tax forms   If the interest would not be deductible (such as interest on a personal loan), include in your income the amount from Form 1099-C, box 2. 2012 irs income tax forms If the interest would be deductible (such as on a business loan), include in your income the net amount of the canceled debt (the amount shown in box 2 less the interest amount shown in box 3). 2012 irs income tax forms Discounted mortgage loan. 2012 irs income tax forms   If your financial institution offers a discount for the early payment of your mortgage loan, the amount of the discount is canceled debt. 2012 irs income tax forms You must include the canceled amount in your income. 2012 irs income tax forms Mortgage relief upon sale or other disposition. 2012 irs income tax forms   If you are personally liable for a mortgage (recourse debt), and you are relieved of the mortgage when you dispose of the property, you may realize gain or loss up to the fair market value of the property. 2012 irs income tax forms To the extent the mortgage discharge exceeds the fair market value of the property, it is income from discharge of indebtedness unless it qualifies for exclusion under Excluded debt , later. 2012 irs income tax forms Report any income from discharge of indebtedness on nonbusiness debt that does not qualify for exclusion as other income on Form 1040, line 21. 2012 irs income tax forms    You may be able to exclude part of the mortgage relief on your principal residence. 2012 irs income tax forms See Excluded debt, later. 2012 irs income tax forms   If you are not personally liable for a mortgage (nonrecourse debt), and you are relieved of the mortgage when you dispose of the property (such as through foreclosure), that relief is included in the amount you realize. 2012 irs income tax forms You may have a taxable gain if the amount you realize exceeds your adjusted basis in the property. 2012 irs income tax forms Report any gain on nonbusiness property as a capital gain. 2012 irs income tax forms   See Publication 4681 for more information. 2012 irs income tax forms Stockholder debt. 2012 irs income tax forms   If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution that is generally dividend income to you. 2012 irs income tax forms For more information, see Publication 542, Corporations. 2012 irs income tax forms   If you are a stockholder in a corporation and you cancel a debt owed to you by the corporation, you generally do not realize income. 2012 irs income tax forms This is because the canceled debt is considered as a contribution to the capital of the corporation equal to the amount of debt principal that you canceled. 2012 irs income tax forms Repayment of canceled debt. 2012 irs income tax forms   If you included a canceled amount in your income and later pay the debt, you may be able to file a claim for refund for the year the amount was included in income. 2012 irs income tax forms You can file a claim on Form 1040X if the statute of limitations for filing a claim is still open. 2012 irs income tax forms The statute of limitations generally does not end until 3 years after the due date of your original return. 2012 irs income tax forms Exceptions There are several exceptions to the inclusion of canceled debt in income. 2012 irs income tax forms These are explained next. 2012 irs income tax forms Student loans. 2012 irs income tax forms   Certain student loans contain a provision that all or part of the debt incurred to attend the qualified educational institution will be canceled if you work for a certain period of time in certain professions for any of a broad class of employers. 2012 irs income tax forms   You do not have income if your student loan is canceled after you agreed to this provision and then performed the services required. 2012 irs income tax forms To qualify, the loan must have been made by: The Federal Government, a state or local government, or an instrumentality, agency, or subdivision thereof, A tax-exempt public benefit corporation that has assumed control of a state, county, or municipal hospital, and whose employees are considered public employees under state law, or An educational institution: Under an agreement with an entity described in (1) or (2) that provided the funds to the institution to make the loan, or As part of a program of the institution designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or a tax-exempt organization described in section 501(c)(3). 2012 irs income tax forms   A loan to refinance a qualified student loan also will qualify if it was made by an educational institution or a qualified tax-exempt organization under its program designed as described in (3)(b) above. 2012 irs income tax forms Education loan repayment assistance. 2012 irs income tax forms   Education loan repayments made to you by the National Health Service Corps Loan Repayment Program (NHSC Loan Repayment Program), a state education loan repayment program eligible for funds under the Public Health Service Act, or any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in underserved or health professional shortage areas are not taxable. 2012 irs income tax forms    The provision relating to the “other state loan repayment or loan forgiveness program” was added to this exclusion for amounts received in tax years beginning after December 31, 2008. 2012 irs income tax forms If you included these amounts in income in 2010, 2011, or 2012, you should file an amended tax return to exclude this income. 2012 irs income tax forms See Form 1040X and its instructions for details on filing. 2012 irs income tax forms Deductible debt. 2012 irs income tax forms   You do not have income from the cancellation of a debt if your payment of the debt would be deductible. 2012 irs income tax forms This exception applies only if you use the cash method of accounting. 2012 irs income tax forms For more information, see chapter 5 of Publication 334, Tax Guide for Small Business. 2012 irs income tax forms Price reduced after purchase. 2012 irs income tax forms   In most cases, if the seller reduces the amount of debt you owe for property you purchased, you do not have income from the reduction. 2012 irs income tax forms The reduction of the debt is treated as a purchase price adjustment and reduces your basis in the property. 2012 irs income tax forms Excluded debt. 2012 irs income tax forms   Do not include a canceled debt in your gross income in the following situations. 2012 irs income tax forms The debt is canceled in a bankruptcy case under title 11 of the U. 2012 irs income tax forms S. 2012 irs income tax forms Code. 2012 irs income tax forms See Publication 908, Bankruptcy Tax Guide. 2012 irs income tax forms The debt is canceled when you are insolvent. 2012 irs income tax forms However, you cannot exclude any amount of canceled debt that is more than the amount by which you are insolvent. 2012 irs income tax forms See Publication 908. 2012 irs income tax forms The debt is qualified farm debt and is canceled by a qualified person. 2012 irs income tax forms See chapter 3 of Publication 225, Farmer's Tax Guide. 2012 irs income tax forms The debt is qualified real property business debt. 2012 irs income tax forms See chapter 5 of Publication 334. 2012 irs income tax forms The cancellation is intended as a gift. 2012 irs income tax forms The debt is qualified principal residence indebtedness. 2012 irs income tax forms See Publication 525 for additional information. 2012 irs income tax forms Host or Hostess If you host a party or event at which sales are made, any gift or gratuity you receive for giving the event is a payment for helping a direct seller make sales. 2012 irs income tax forms You must report this item as income at its fair market value. 2012 irs income tax forms Your out-of-pocket party expenses are subject to the 50% limit for meal and entertainment expenses. 2012 irs income tax forms These expenses are deductible as miscellaneous itemized deductions subject to the 2%-of-AGI limit on Schedule A (Form 1040), but only up to the amount of income you receive for giving the party. 2012 irs income tax forms For more information about the 50% limit for meal and entertainment expenses, see chapter 26. 2012 irs income tax forms Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. 2012 irs income tax forms This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. 2012 irs income tax forms However, interest income received as a result of life insurance proceeds may be taxable. 2012 irs income tax forms Proceeds not received in installments. 2012 irs income tax forms   If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death. 2012 irs income tax forms If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death. 2012 irs income tax forms Proceeds received in installments. 2012 irs income tax forms   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. 2012 irs income tax forms   To determine the excluded part, divide the amount held by the insurance company (generally the total lump sum payable at the death of the insured person) by the number of installments to be paid. 2012 irs income tax forms Include anything over this excluded part in your income as interest. 2012 irs income tax forms Surviving spouse. 2012 irs income tax forms   If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude up to $1,000 a year of the interest included in the installments. 2012 irs income tax forms If you remarry, you can continue to take the exclusion. 2012 irs income tax forms Surrender of policy for cash. 2012 irs income tax forms   If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. 2012 irs income tax forms In most cases, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income. 2012 irs income tax forms    You should receive a Form 1099-R showing the total proceeds and the taxable part. 2012 irs income tax forms Report these amounts on lines 16a and 16b of Form 1040 or lines 12a and 12b of Form 1040A. 2012 irs income tax forms More information. 2012 irs income tax forms   For more information, see Life Insurance Proceeds in Publication 525. 2012 irs income tax forms Endowment Contract Proceeds An endowment contract is a policy under which you are paid a specified amount of money on a certain date unless you die before that date, in which case, the money is paid to your designated beneficiary. 2012 irs income tax forms Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. 2012 irs income tax forms To determine your cost, subtract any amount that you previously received under the contract and excluded from your income from the total premiums (or other consideration) paid for the contract. 2012 irs income tax forms Include the part of the lump sum payment that is more than your cost in your income. 2012 irs income tax forms Accelerated Death Benefits Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are excluded from income if the insured is terminally or chronically ill. 2012 irs income tax forms Viatical settlement. 2012 irs income tax forms   This is the sale or assignment of any part of the death benefit under a life insurance contract to a viatical settlement provider. 2012 irs income tax forms A viatical settlement provider is a person who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill and who meets the requirements of section 101(g)(2)(B) of the Internal Revenue Code. 2012 irs income tax forms Exclusion for terminal illness. 2012 irs income tax forms    Accelerated death benefits are fully excludable if the insured is a terminally ill individual. 2012 irs income tax forms This is a person who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death within 24 months from the date of the certification. 2012 irs income tax forms Exclusion for chronic illness. 2012 irs income tax forms    If the insured is a chronically ill individual who is not terminally ill, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. 2012 irs income tax forms Accelerated death benefits paid on a per diem or other periodic basis are excludable up to a limit. 2012 irs income tax forms This limit applies to the total of the accelerated death benefits and any periodic payments received from long-term care insurance contracts. 2012 irs income tax forms For information on the limit and the definitions of chronically ill individual, qualified long-term care services, and long-term care insurance contracts, see Long-Term Care Insurance Contracts under Sickness and Injury Benefits in Publication 525. 2012 irs income tax forms Exception. 2012 irs income tax forms   The exclusion does not apply to any amount paid to a person (other than the insured) who has an insurable interest in the life of the insured because the insured: Is a director, officer, or employee of the person, or Has a financial interest in the person's business. 2012 irs income tax forms Form 8853. 2012 irs income tax forms   To claim an exclusion for accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return. 2012 irs income tax forms You do not have to file Form 8853 to exclude accelerated death benefits paid on the basis of actual expenses incurred. 2012 irs income tax forms Public Safety Officer Killed in the Line of Duty If you are a survivor of a public safety officer who was killed in the line of duty, you may be able to exclude from income certain amounts you receive. 2012 irs income tax forms For this purpose, the term public safety officer includes law enforcement officers, firefighters, chaplains, and rescue squad and ambulance crew members. 2012 irs income tax forms For more information, see Publication 559, Survivors, Executors, and Administrators. 2012 irs income tax forms Partnership Income A partnership generally is not a taxable entity. 2012 irs income tax forms The income, gains, losses, deductions, and credits of a partnership are passed through to the partners based on each partner's distributive share of these items. 2012 irs income tax forms Schedule K-1 (Form 1065). 2012 irs income tax forms    Although a partnership generally pays no tax, it must file an information return on Form 1065, U. 2012 irs income tax forms S. 2012 irs income tax forms Return of Partnership Income, and send Schedule K-1 (Form 1065) to each partner. 2012 irs income tax forms In addition, the partnership will send each partner a copy of the Partner's Instructions for Schedule K-1 (Form 1065) to help each partner report his or her share of the partnership's income, deductions, credits, and tax preference items. 2012 irs income tax forms Keep Schedule K-1 (Form 1065) for your records. 2012 irs income tax forms Do not attach it to your Form 1040, unless you are specifically required to do so. 2012 irs income tax forms For more information on partnerships, see Publication 541, Partnerships. 2012 irs income tax forms Qualified joint venture. 2012 irs income tax forms   If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. 2012 irs income tax forms To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. 2012 irs income tax forms For further information on how to make the election and which schedule(s) to file, see the instructions for your individual tax return. 2012 irs income tax forms S Corporation Income In most cases, an S corporation does not pay tax on its income. 2012 irs income tax forms Instead, the income, losses, deductions, and credits of the corporation are passed through to the shareholders based on each shareholder's pro rata share. 2012 irs income tax forms Schedule K-1 (Form 1120S). 2012 irs income tax forms   An S corporation must file a return on Form 1120S, U. 2012 irs income tax forms S. 2012 irs income tax forms Income Tax Return for an S Corporation, and send Schedule K-1 (Form 1120S) to each shareholder. 2012 irs income tax forms In addition, the S corporation will send each shareholder a copy of the Shareholder's Instructions for Schedule K-1 (Form 1120S) to help each shareholder report his or her share of the S corporation's income, losses, credits, and deductions. 2012 irs income tax forms Keep Schedule K-1 (Form 1120S) for your records. 2012 irs income tax forms Do not attach it to your Form 1040, unless you are specifically required to do so. 2012 irs income tax forms For more information on S corporations and their shareholders, see the Instructions for Form 1120S. 2012 irs income tax forms Recoveries A recovery is a return of an amount you deducted or took a credit for in an earlier year. 2012 irs income tax forms The most common recoveries are refunds, reimbursements, and rebates of deductions itemized on Schedule A (Form 1040). 2012 irs income tax forms You also may have recoveries of non-itemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit. 2012 irs income tax forms Tax benefit rule. 2012 irs income tax forms   You must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. 2012 irs income tax forms For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year. 2012 irs income tax forms For more information, see Publication 525. 2012 irs income tax forms Federal income tax refund. 2012 irs income tax forms   Refunds of federal income taxes are not included in your income because they are never allowed as a deduction from income. 2012 irs income tax forms State tax refund. 2012 irs income tax forms   If you received a state or local income tax refund (or credit or offset) in 2013, you generally must include it in income if you deducted the tax in an earlier year. 2012 irs income tax forms The payer should send Form 1099-G, Certain Government Payments, to you by January 31, 2014. 2012 irs income tax forms The IRS also will receive a copy of the Form 1099-G. 2012 irs income tax forms If you file Form 1040, use the State and Local Income Tax Refund Worksheet in the 2013 Form 1040 instructions for line 10 to figure the amount (if any) to include in your income. 2012 irs income tax forms See Publication 525 for when you must use another worksheet. 2012 irs income tax forms   If you could choose to deduct for a tax year either: State and local income taxes, or State and local general sales taxes, then the maximum refund that you may have to include in income is limited to the excess of the tax you chose to deduct for that year over the tax you did not choose to deduct for that year. 2012 irs income tax forms For examples, see Publication 525. 2012 irs income tax forms Mortgage interest refund. 2012 irs income tax forms    If you received a refund or credit in 2013 of mortgage interest paid in an earlier year, the amount should be shown in box 3 of your Form 1098, Mortgage Interest Statement. 2012 irs income tax forms Do not subtract the refund amount from the interest you paid in 2013. 2012 irs income tax forms You may have to include it in your income under the rules explained in the following discussions. 2012 irs income tax forms Interest on recovery. 2012 irs income tax forms   Interest on any of the amounts you recover must be reported as interest income in the year received. 2012 irs income tax forms For example, report any interest you received on state or local income tax refunds on Form 1040, line 8a. 2012 irs income tax forms Recovery and expense in same year. 2012 irs income tax forms   If the refund or other recovery and the expense occur in the same year, the recovery reduces the deduction or credit and is not reported as income. 2012 irs income tax forms Recovery for 2 or more years. 2012 irs income tax forms   If you receive a refund or other recovery that is for amounts you paid in 2 or more separate years, you must allocate, on a pro rata basis, the recovered amount between the years in which you paid it. 2012 irs income tax forms This allocation is necessary to determine the amount of recovery from any earlier years and to determine the amount, if any, of your allowable deduction for this item for the current year. 2012 irs income tax forms For information on how to compute the allocation, see Recoveries in Publication 525. 2012 irs income tax forms Itemized Deduction Recoveries If you recover any amount that you deducted in an earlier year on Schedule A (Form 1040), you generally must include the full amount of the recovery in your income in the year you receive it. 2012 irs income tax forms Where to report. 2012 irs income tax forms   Enter your state or local income tax refund on Form 1040, line 10, and the total of all other recoveries as other income on Form 1040, line 21. 2012 irs income tax forms You cannot use Form 1040A or Form 1040EZ. 2012 irs income tax forms Standard deduction limit. 2012 irs income tax forms   You generally are allowed to claim the standard deduction if you do not itemize your deductions. 2012 irs income tax forms Only your itemized deductions that are more than your standard deduction are subject to the recovery rule (unless you are required to itemize your deductions). 2012 irs income tax forms If your total deductions on the earlier year return were not more than your income for that year, include in your income this year the lesser of: Your recoveries, or The amount by which your itemized deductions exceeded the standard deduction. 2012 irs income tax forms Example. 2012 irs income tax forms For 2012, you filed a joint return. 2012 irs income tax forms Your taxable income was $60,000 and you were not entitled to any tax credits. 2012 irs income tax forms Your standard deduction was $11,900, and you had itemized deductions of $14,000. 2012 irs income tax forms In 2013, you received the following recoveries for amounts deducted on your 2012 return: Medical expenses $200 State and local income tax refund 400 Refund of mortgage interest 325 Total recoveries $925 None of the recoveries were more than the deductions taken for 2012. 2012 irs income tax forms The difference between the state and local income tax you deducted and your local general sales tax was more than $400. 2012 irs income tax forms Your total recoveries are less than the amount by which your itemized deductions exceeded the standard deduction ($14,000 − 11,900 = $2,100), so you must include your total recoveries in your income for 2013. 2012 irs income tax forms Report the state and local income tax refund of $400 on Form 1040, line 10, and the balance of your recoveries, $525, on Form 1040, line 21. 2012 irs income tax forms Standard deduction for earlier years. 2012 irs income tax forms   To determine if amounts recovered in 2013 must be included in your income, you must know the standard deduction for your filing status for the year the deduction was claimed. 2012 irs income tax forms Look in the instructions for your tax return from prior years to locate the standard deduction for the filing status for that prior year. 2012 irs income tax forms Example. 2012 irs income tax forms You filed a joint return on Form 1040 for 2012 with taxable income of $45,000. 2012 irs income tax forms Your itemized deductions were $12,350. 2012 irs income tax forms The standard deduction that you could have claimed was $11,900. 2012 irs income tax forms In 2013, you recovered $2,100 of your 2012 itemized deductions. 2012 irs income tax forms None of the recoveries were more than the actual deductions for 2012. 2012 irs income tax forms Include $450 of the recoveries in your 2013 income. 2012 irs income tax forms This is the smaller of your recoveries ($2,100) or the amount by which your itemized deductions were more than the standard deduction ($12,350 − $11,900 = $450). 2012 irs income tax forms Recovery limited to deduction. 2012 irs income tax forms   You do not include in your income any amount of your recovery that is more than the amount you deducted in the earlier year. 2012 irs income tax forms The amount you include in your income is limited to the smaller of: The amount deducted on Schedule A (Form 1040), or The amount recovered. 2012 irs income tax forms Example. 2012 irs income tax forms During 2012 you paid $1,700 for medical expenses. 2012 irs income tax forms From this amount you subtracted $1,500, which was 7. 2012 irs income tax forms 5% of your adjusted gross income. 2012 irs income tax forms Your actual medical expense deduction was $200. 2012 irs income tax forms In 2013, you received a $500 reimbursement from your medical insurance for your 2012 expenses. 2012 irs income tax forms The only amount of the $500 reimbursement that must be included in your income for 2013 is $200—the amount actually deducted. 2012 irs income tax forms Other recoveries. 2012 irs income tax forms   See Recoveries in Publication 525 if: You have recoveries of items other than itemized deductions, or You received a recovery for an item for which you claimed a tax credit (other than investment credit or foreign tax credit) in a prior year. 2012 irs income tax forms Rents from Personal Property If you rent out personal property, such as equipment or vehicles, how you report your income and expenses is in most cases determined by: Whether or not the rental activity is a business, and Whether or not the rental activity is conducted for profit. 2012 irs income tax forms In most cases, if your primary purpose is income or profit and you are involved in the rental activity with continuity and regularity, your rental activity is a business. 2012 irs income tax forms See Publication 535, Business Expenses, for details on deducting expenses for both business and not-for-profit activities. 2012 irs income tax forms Reporting business income and expenses. 2012 irs income tax forms    If you are in the business of renting personal property, report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). 2012 irs income tax forms The form instructions have information on how to complete them. 2012 irs income tax forms Reporting nonbusiness income. 2012 irs income tax forms   If you are not in the business of renting personal property, report your rental income on Form 1040, line 21. 2012 irs income tax forms List the type and amount of the income on the dotted line next to line 21. 2012 irs income tax forms Reporting nonbusiness expenses. 2012 irs income tax forms   If you rent personal property for profit, include your rental expenses in the total amount you enter on Form 1040, line 36. 2012 irs income tax forms Also enter the amount and “PPR” on the dotted line next to line 36. 2012 irs income tax forms   If you do not rent personal property for profit, your deductions are limited and you cannot report a loss to offset other income. 2012 irs income tax forms See Activity not for profit , under Other Income, later. 2012 irs income tax forms Repayments If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it. 2012 irs income tax forms Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. 2012 irs income tax forms Generally, you can claim a deduction or credit only if the repayment qualifies as an expense or loss incurred in your trade or business or in a for-profit transaction. 2012 irs income tax forms Type of deduction. 2012 irs income tax forms   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. 2012 irs income tax forms You generally deduct the repayment on the same form or schedule on which you previously reported it as income. 2012 irs income tax forms For example, if you reported it as self-employment income, deduct it as a business expense on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). 2012 irs income tax forms If you reported it as a capital gain, deduct it as a capital loss as explained in the Instructions for Schedule D (Form 1040). 2012 irs income tax forms If you reported it as wages, unemployment compensation, or other nonbusiness income, deduct it as a miscellaneous itemized deduction on Schedule A (Form 1040). 2012 irs income tax forms Repaid social security benefits. 2012 irs income tax forms   If you repaid social security benefits or equivalent railroad retirement benefits, see Repayment of benefits in chapter 11. 2012 irs income tax forms Repayment of $3,000 or less. 2012 irs income tax forms   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. 2012 irs income tax forms If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 23. 2012 irs income tax forms Repayment over $3,000. 2012 irs income tax forms   If the amount you repaid was more than $3,000, you can deduct the repayment (as explained under Type of deduction , earlier). 2012 irs income tax forms However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. 2012 irs income tax forms This means that at the time you included the income, it appeared that you had an unrestricted right to it. 2012 irs income tax forms If you qualify for this choice, figure your tax under both methods and compare the results. 2012 irs income tax forms Use the method (deduction or credit) that results in less tax. 2012 irs income tax forms When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. 2012 irs income tax forms Each instance of repayment is not considered separately. 2012 irs income tax forms Method 1. 2012 irs income tax forms   Figure your tax for 2013 claiming a deduction for the repaid amount. 2012 irs income tax forms If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28. 2012 irs income tax forms Method 2. 2012 irs income tax forms   Figure your tax for 2013 claiming a credit for the repaid amount. 2012 irs income tax forms Follow these steps. 2012 irs income tax forms Figure your tax for 2013 without deducting the repaid amount. 2012 irs income tax forms Refigure your tax from the earlier year without including in income the amount you repaid in 2013. 2012 irs income tax forms Subtract the tax in (2) from the tax shown on your return for the earlier year. 2012 irs income tax forms This is the credit. 2012 irs income tax forms Subtract the answer in (3) from the tax for 2013 figured without the deduction (Step 1). 2012 irs income tax forms   If method 1 results in less tax, deduct the amount repaid. 2012 irs income tax forms If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71, by adding the amount of the credit to any other credits on this line, and entering “I. 2012 irs income tax forms R. 2012 irs income tax forms C. 2012 irs income tax forms 1341” in the column to the right of line 71. 2012 irs income tax forms   An example of this computation can be found in Publication 525. 2012 irs income tax forms Repaid wages subject to social security and Medicare taxes. 2012 irs income tax forms   If you had to repay an amount that you included in your wages or compensation in an earlier year on which social security, Medicare, or tier 1 RRTA taxes were paid, ask your employer to refund the excess amount to you. 2012 irs income tax forms If the employer refuses to refund the taxes, ask for a statement indicating the amount of the overcollection to support your claim. 2012 irs income tax forms File a claim for refund using Form 843, Claim for Refund and Request for Abatement. 2012 irs income tax forms Repaid wages subject to Additional Medicare Tax. 2012 irs income tax forms   Employers cannot make an adjustment or file a claim for refund for Additional Medicare Tax withholding when there is a repayment of wages received by an employee in a prior year because the employee determines liability for Additional Medicare Tax on the employee's income tax return for the prior year. 2012 irs income tax forms If you had to repay an amount that you included in your wages or compensation in an earlier year, and on which Additional Medicare Tax was paid, you may be able to recover the Additional Medicare Tax paid on the amount. 2012 irs income tax forms To recover Additional Medicare Tax on the repaid wages or compensation, you must file Form 1040X, Amended U. 2012 irs income tax forms S. 2012 irs income tax forms Individual Income Tax Return, for the prior year in which the wages or compensation were originally received. 2012 irs income tax forms See the Instructions for Form 1040X. 2012 irs income tax forms Royalties Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. 2012 irs income tax forms In most cases you report royalties in Part I of Schedule E (Form 1040). 2012 irs income tax forms However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc. 2012 irs income tax forms , report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). 2012 irs income tax forms Copyrights and patents. 2012 irs income tax forms   Royalties from copyrights on literary, musical, or artistic works, and similar property, or from patents on inventions, are amounts paid to you for the right to use your work over a specified period of time. 2012 irs income tax forms Royalties generally are based on the number of units sold, such as the number of books, tickets to a performance, or machines sold. 2012 irs income tax forms Oil, gas, and minerals. 2012 irs income tax forms   Royalty income from oil, gas, and mineral properties is the amount you receive when natural resources are extracted from your property. 2012 irs income tax forms The royalties are based on units, such as barrels, tons, etc. 2012 irs income tax forms , and are paid to you by a person or company who leases the property from you. 2012 irs income tax forms Depletion. 2012 irs income tax forms   If you are the owner of an economic interest in mineral deposits or oil and gas wells, you can recover your investment through the depletion allowance. 2012 irs income tax forms For information on this subject, see chapter 9 of Publication 535. 2012 irs income tax forms Coal and iron ore. 2012 irs income tax forms   Under certain circumstances, you can treat amounts you receive from the disposal of coal and iron ore as payments from the sale of a capital asset, rather than as royalty income. 2012 irs income tax forms For information about gain or loss from the sale of coal and iron ore, see Publication 544. 2012 irs income tax forms Sale of property interest. 2012 irs income tax forms   If you sell your complete interest in oil, gas, or mineral rights, the amount you receive is considered payment for the sale of property used in a trade or business under section 1231, not royalty income. 2012 irs income tax forms Under certain circumstances, the sale is subject to capital gain or loss treatment as explained in the Instructions for Schedule D (Form 1040). 2012 irs income tax forms For more information on selling section 1231 property, see chapter 3 of Publication 544. 2012 irs income tax forms   If you retain a royalty, an overriding royalty, or a net profit interest in a mineral property for the life of the property, you have made a lease or a sublease, and any cash you receive for the assignment of other interests in the property is ordinary income subject to a depletion allowance. 2012 irs income tax forms Part of future production sold. 2012 irs income tax forms   If you own mineral property but sell part of the future production, in most cases you treat the money you receive from the buyer at the time of the sale as a loan from the buyer. 2012 irs income tax forms Do not include it in your income or take depletion based on it. 2012 irs income tax forms   When production begins, you include all the proceeds in your income, deduct all the production expenses, and deduct depletion from that amount to arrive at your taxable income from the property. 2012 irs income tax forms Unemployment Benefits The tax treatment of unemployment benefits you receive depends on the type of program paying the benefits. 2012 irs income tax forms Unemployment compensation. 2012 irs income tax forms   You must include in income all unemployment compensation you receive. 2012 irs income tax forms You should receive a Form 1099-G showing in box 1 the total unemployment compensation paid to you. 2012 irs income tax forms In most cases, you enter unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. 2012 irs income tax forms Types of unemployment compensation. 2012 irs income tax forms   Unemployment compensation generally includes any amount received under an unemployment compensation law of the United States or of a state. 2012 irs income tax forms It includes the following benefits. 2012 irs income tax forms Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund. 2012 irs income tax forms State unemployment insurance benefits. 2012 irs income tax forms Railroad unemployment compensation benefits. 2012 irs income tax forms Disability payments from a government program paid as a substitute for unemployment compensation. 2012 irs income tax forms (Amounts received as workers' compensation for injuries or illness are not unemployment compensation. 2012 irs income tax forms See chapter 5 for more information. 2012 irs income tax forms ) Trade readjustment allowances under the Trade Act of 1974. 2012 irs income tax forms Unemployment assistance under the Disaster Relief and Emergency Assistance Act. 2012 irs income tax forms Unemployment assistance under the Airline Deregulation Act of 1974 Program. 2012 irs income tax forms Governmental program. 2012 irs income tax forms   If you contribute to a governmental unemployment compensation program and your contributions are not deductible, amounts you receive under the program are not included as unemployment compensation until you recover your contributions. 2012 irs income tax forms If you deducted all of your contributions to the program, the entire amount you receive under the program is included in your income. 2012 irs income tax forms Repayment of unemployment compensation. 2012 irs income tax forms   If you repaid in 2013 unemployment compensation you received in 2013, subtract the amount you repaid from the total amount you received and enter the difference on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. 2012 irs income tax forms On the dotted line next to your entry enter “Repaid” and the amount you repaid. 2012 irs income tax forms If you repaid unemployment compensation in 2013 that you included in income in an earlier year, you can deduct the amount repaid on Schedule A (Form 1040), line 23, if you itemize deductions. 2012 irs income tax forms If the amount is more than $3,000, see Repayments , earlier. 2012 irs income tax forms Tax withholding. 2012 irs income tax forms   You can choose to have federal income tax withheld from your unemployment compensation. 2012 irs income tax forms To make this choice, complete Form W-4V, Voluntary Withholding Request, and give it to the paying office. 2012 irs income tax forms Tax will be withheld at 10% of your payment. 2012 irs income tax forms    If you do not choose to have tax withheld from your unemployment compensation, you may be liable for estimated tax. 2012 irs income tax forms If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. 2012 irs income tax forms For more information on estimated tax, see chapter 4. 2012 irs income tax forms Supplemental unemployment benefits. 2012 irs income tax forms   Benefits received from an employer-financed fund (to which the employees did not contribute) are not unemployment compensation. 2012 irs income tax forms They are taxable as wages and are subject to withholding for income tax. 2012 irs income tax forms They may be subject to social security and Medicare taxes. 2012 irs income tax forms For more information, see Supplemental Unemployment Benefits in section 5 of Publication 15-A, Employer's Supplemental Tax Guide. 2012 irs income tax forms Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. 2012 irs income tax forms Repayment of benefits. 2012 irs income tax forms   You may have to repay some of your supplemental unemployment benefits to qualify for trade readjustment allowances under the Trade Act of 1974. 2012 irs income tax forms If you repay supplemental unemployment benefits in the same year you receive them, reduce the total benefits by the amount you repay. 2012 irs income tax forms If you repay the benefits in a later year, you must include the full amount of the benefits received in your income for the year you received them. 2012 irs income tax forms   Deduct the repayment in the later year as an adjustment to gross income on Form 1040. 2012 irs income tax forms (You cannot use Form 1040A or Form 1040EZ. 2012 irs income tax forms ) Include the repayment on Form 1040, line 36, and enter “Sub-Pay TRA” and the amount on the dotted line next to line 36. 2012 irs income tax forms If the amount you repay in a later year is more than $3,000, you may be able to take a credit against your tax for the later year instead of deducting the amount repaid. 2012 irs income tax forms For more information on this, see Repayments , earlier. 2012 irs income tax forms Private unemployment fund. 2012 irs income tax forms   Unemployment benefit payments from a private (nonunion) fund to which you voluntarily contribute are taxable only if the amounts you receive are more than your total payments into the fund. 2012 irs income tax forms Report the taxable amount on Form 1040, line 21. 2012 irs income tax forms Payments by a union. 2012 irs income tax forms   Benefits paid to you as an unemployed member of a union from regular union dues are included in your income on Form 1040, line 21. 2012 irs income tax forms However, if you contribute to a special union fund and your payments to the fund are not deductible, the unemployment benefits you receive from the fund are includible in your income only to the extent they are more than your contributions. 2012 irs income tax forms Guaranteed annual wage. 2012 irs income tax forms   Payments you receive from your employer during periods of unemployment, under a union agreement that guarantees you full pay during the year, are taxable as wages. 2012 irs income tax forms Include them on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. 2012 irs income tax forms State employees. 2012 irs income tax forms   Payments similar to a state's unemployment compensation may be made by the state to its employees who are not covered by the state's unemployment compensation law. 2012 irs income tax forms Although the payments are fully taxable, do not report them as unemployment compensation. 2012 irs income tax forms Report these payments on Form 1040, line 21. 2012 irs income tax forms Welfare and Other Public Assistance Benefits Do not include in your income governmental benefit payments from a public welfare fund based upon need, such as payments to blind individuals under a state public assistance law. 2012 irs income tax forms Payments from a state fund for the victims of crime should not be included in the victims' incomes if they are in the nature of welfare payments. 2012 irs income tax forms Do not deduct medical expenses that are reimbursed by such a fund. 2012 irs income tax forms You must include in your income any welfare payments that are compensation for services or that are obtained fraudulently. 2012 irs income tax forms Reemployment Trade Adjustment Assistance (RTAA) payments. 2012 irs income tax forms   RTAA payments received from a state must be included in your income. 2012 irs income tax forms The state must send you Form 1099-G to advise you of the amount you should include in income. 2012 irs income tax forms The amount should be reported on Form 1040, line 21. 2012 irs income tax forms Persons with disabilities. 2012 irs income tax forms   If you have a disability, you must include in income compensation you receive for services you perform unless the compensation is otherwise excluded. 2012 irs income tax forms However, you do not include in income the value of goods, services, and cash that you receive, not in return for your services, but for your training and rehabilitation because you have a disability. 2012 irs income tax forms Excludable amounts include payments for transportation and attendant care, such as interpreter services for the deaf, reader services for the blind, and services to help individuals with an intellectual disability do their work. 2012 irs income tax forms Disaster relief grants. 2012 irs income tax forms    Do not include post-disaster grants received under the Robert T. 2012 irs income tax forms Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, child care, or funeral expenses. 2012 irs income tax forms Do not deduct casualty losses or medical expenses that are specifically reimbursed by these disaster relief grants. 2012 irs income tax forms If you have deducted a casualty loss for the loss of your personal residence and you later receive a disaster relief grant for the loss of the same residence, you may have to include part or all of the grant in your taxable income. 2012 irs income tax forms See Recoveries , earlier. 2012 irs income tax forms Unemployment assistance payments under the Act are taxable unemployment compensation. 2012 irs income tax forms See Unemployment compensation under Unemployment Benefits, earlier. 2012 irs income tax forms Disaster relief payments. 2012 irs income tax forms   You can exclude from income any amount you receive that is a qualified disaster relief payment. 2012 irs income tax forms A qualified disaster relief payment is an amount paid to you: To reimburse or pay reasonable and necessary personal, family, living, or funeral expenses that result from a qualified disaster; To reimburse or pay reasonable and necessary expenses incurred for the repair or rehabilitation of your home or repair or replacement of its contents to the extent it is due to a qualified disaster; By a person engaged in the furnishing or sale of transportation as a common carrier because of the death or personal physical injuries incurred as a result of a qualified disaster; or By a federal, state, or local government, or agency, or instrumentality in connection with a qualified disaster in order to promote the general welfare. 2012 irs income tax forms You can exclude this amount only to the extent any expense it pays for is not paid for by insurance or otherwise. 2012 irs income tax forms The exclusion does not apply if you were a participant or conspirator in a terrorist action or a representative of one. 2012 irs income tax forms   A qualified disaster is: A disaster which results from a terrorist or military action; A federally declared disaster; or A disaster which results from an accident involving a common carrier, or from any other event, which is determined to be catastrophic by the Secretary of the Treasury or his or her delegate. 2012 irs income tax forms   For amounts paid under item (4), a disaster is qualified if it is determined by an applicable federal, state, or local authority to warrant assistance from the federal, state, or local government, agency, or instrumentality. 2012 irs income tax forms Disaster mitigation payments. 2012 irs income tax forms   You also can exclude from income any amount you receive that is a qualified disaster mitigation payment. 2012 irs income tax forms Qualified disaster mitigation payments are also most commonly paid to you in the period immediately following damage to property as a result of a natural disaster. 2012 irs income tax forms However, disaster mitigation payments are used to mitigate (reduce the severity of) potential damage from future natural disasters. 2012 irs income tax forms They are paid to you through state and local governments based on the provisions of the Robert T. 2012 irs income tax forms Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act. 2012 irs income tax forms   You cannot increase the basis or adjusted basis of your property for improvements made with nontaxable disaster mitigation payments. 2012 irs income tax forms Home Affordable Modification Program (HAMP). 2012 irs income tax forms   If you benefit from Pay-for-Performance Success Payments under HAMP, the payments are not taxable. 2012 irs income tax forms Mortgage assistance payments under section 235 of the National Housing Act. 2012 irs income tax forms   Payments made under section 235 of the National Housing Act for mortgage assistance are not included in the homeowner's income. 2012 irs income tax forms Interest paid for the homeowner under the mortgage assistance program cannot be deducted. 2012 irs income tax forms Medicare. 2012 irs income tax forms   Medicare benefits received under title XVIII of the Social Security Act are not includible in the gross income of the individuals for whom they are paid. 2012 irs income tax forms This includes basic (part A (Hospital Insurance Benefits for the Aged)) and supplementary (part B (Supplementary Medical Insurance Benefits for the Aged)). 2012 irs income tax forms Old-age, survivors, and disability insurance benefits (OASDI). 2012 irs income tax forms   Generally, OASDI payments under section 202 of title II of the Social Security Act are not includible in the gross income of the individuals to whom they are paid. 2012 irs income tax forms This applies to old-age insurance benefits, and insurance benefits for wives, husbands, children, widows, widowers, mothers and fathers, and parents, as well as the lump-sum death payment. 2012 irs income tax forms Nutrition Program for the Elderly. 2012 irs income tax forms    Food benefits you receive under the Nutrition Program for the Elderly are not taxable. 2012 irs income tax forms If you prepare and serve free meals for the program, include in your income as wages the cash pay you receive, even if you are also eligible for food benefits. 2012 irs income tax forms Payments to reduce cost of winter energy. 2012 irs income tax forms   Payments made by a state to qualified people to reduce their cost of winter energy use are not taxable. 2012 irs income tax forms Other Income The following brief discussions are arranged in alphabetical order. 2012 irs income tax forms Other income items briefly discussed below are referenced to publications which provide more topical information. 2012 irs income tax forms Activity not for profit. 2012 irs income tax forms   You must include on your return income from an activity from which you do not expect to make a profit. 2012 irs income tax forms An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. 2012 irs income tax forms Enter this income on Form 1040, line 21. 2012 irs income tax forms Deductions for expenses related to the activity are limited. 2012 irs income tax forms They cannot total more than the income you report and can be taken only if you itemize deductions on Schedule A (Form 1040). 2012 irs income tax forms See Not-for-Profit Activities in chapter 1 of Publication 535 for information on whether an activity is considered carried on for a profit. 2012 irs income tax forms Alaska Permanent Fund dividend. 2012 irs income tax forms   If you received a payment from Alaska's mineral income fund (Alaska Permanent Fund dividend), report it as income on line 21 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. 2012 irs income tax forms The state of Alaska sends each recipient a document that shows the amount of the payment with the check. 2012 irs income tax forms The amount also is reported to IRS. 2012 irs income tax forms Alimony. 2012 irs income tax forms   Include in your income on Form 1040, line 11, any alimony payments you receive. 2012 irs income tax forms Amounts you receive for child support are not income to you. 2012 irs income tax forms Alimony and child support payments are discussed in chapter 18. 2012 irs income tax forms Bribes. 2012 irs income tax forms   If you receive a bribe, include it in your income. 2012 irs income tax forms Campaign contributions. 2012 irs income tax forms   These contributions are not income to a candidate unless they are diverted to his or her personal use. 2012 irs income tax forms To be exempt from tax, the contributions must be spent for campaign purposes or kept in a fund for use in future campaigns. 2012 irs income tax forms However, interest earned on bank deposits, dividends received on contributed securities, and net gains realized on sales of contributed securities are taxable and must be reported on Form 1120-POL, U. 2012 irs income tax forms S. 2012 irs income tax forms Income Tax Return for Certain Political Organizations. 2012 irs income tax forms Excess campaign funds transferred to an office account must be included in the officeholder's income on Form 1040, line 21, in the year transferred. 2012 irs income tax forms Car pools. 2012 irs income tax forms   Do not include in your income amounts you receive from the passengers for driving a car in a car pool to and from work. 2012 irs income tax forms These amounts are considered reimbursement for your expenses. 2012 irs income tax forms However, this rule does not apply if you have developed car pool arrangements into a profit-making business of transporting workers for hire. 2012 irs income tax forms Cash rebates. 2012 irs income tax forms   A cash rebate you receive from a dealer or manufacturer of an item you buy is not income, but you must reduce your basis by the amount of the rebate. 2012 irs income tax forms Example. 2012 irs income tax forms You buy a new car for $24,000 cash and receive a $2,000 rebate check from the manufacturer. 2012 irs income tax forms The $2,000 is not income to you. 2012 irs income tax forms Your basis in the car is $22,000. 2012 irs income tax forms This is the basis on which you figure gain or loss if you sell the car and depreciation if you use it for business. 2012 irs income tax forms Casualty insurance and other reimbursements. 2012 irs income tax forms   You generally should not report these reimbursements on your return unless you are figuring gain or loss from the casualty or theft. 2012 irs income tax forms See chapter 25 for more information. 2012 irs income tax forms Child support payments. 2012 irs income tax forms   You should not report these payments on your return. 2012 irs income tax forms See chapter 18 for more information. 2012 irs income tax forms Court awards and damages. 2012 irs income tax forms   To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. 2012 irs income tax forms The character of the income as ordinary income or capital gain depends on the nature of the underlying claim. 2012 irs income tax forms Include the following as ordinary income. 2012 irs income tax forms Interest on any award. 2012 irs income tax forms Compensation for lost wages or lost profits in most cases. 2012 irs income tax forms Punitive damages, in most cases. 2012 irs income tax forms It does not matter if they relate to a physical injury or physical sickness. 2012 irs income tax forms Amounts received in settlement of pension rights (if you did not contribute to the plan). 2012 irs income tax forms Damages for: Patent or copyright infringement, Breach of contract, or Interference with business operations. 2012 irs income tax forms Back pay and damages for emotional distress received to satisfy a claim under title VII of the Civil Rights Act of 1964. 2012 irs income tax forms Attorney fees and costs (including contingent fees) where the underlying recovery is included in gross income. 2012 irs income tax forms   Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments). 2012 irs income tax forms Emotional distress. 2012 irs income tax forms   Emotional distress itself is not a physical injury or physical sickness, but damages you receive for emotional distress due to a physical injury or sickness are treated as received for the physical injury or sickness. 2012 irs income tax forms Do not include them in your income. 2012 irs income tax forms   If the emotional distress is due to a personal injury that is not due to a physical injury or sickness (for example, employment discrimination or injury to reputation), you must include the damages in your income, except for any damages you receive for medical care due to that emotional distress. 2012 irs income tax forms Emotional distress includes physical symptoms that result from emotional distress, such as headaches, insomnia, and stomach disorders. 2012 irs income tax forms Deduction for costs involved in unlawful discrimination suits. 2012 irs income tax forms   You may be able to deduct attorney fees and court costs paid to recover a judgment or settlement for a claim of unlawful discrimination under various provisions of federal, state, and local law listed in Internal Revenue Code section 62(e), a claim against the United States government, or a claim under section 1862(b)(3)(A) of the Social Security Act. 2012 irs income tax forms For more information, see Publication 525. 2012 irs income tax forms Credit card insurance. 2012 irs income tax forms   In most cases, if you receive benefits under a credit card disability or unemployment insurance plan, the benefits are taxable to you. 2012 irs income tax forms These plans make the minimum monthly payment on your credit card account if you cannot make the payment due to injury, illness, disability, or unemployment. 2012 irs income tax forms Report on Form 1040, line 21, the amount of benefits you received during the year that is more than the amount of the premiums you paid during the year. 2012 irs income tax forms Down payment assistance. 2012 irs income tax forms   If you purchase a home and receive assistance from a nonprofit corporation to make the down payment, that assistance is not included in your income. 2012 irs income tax forms If the corporation qualifies as a tax-exempt charitable organization, the assistance is treated as a gift and is included in your basis of the house. 2012 irs income tax forms If the corporation does not qualify, the assistance is treated as a rebate or reduction of the purchase price and is not included in your basis. 2012 irs income tax forms Employment agency fees. 2012 irs income tax forms   If you get a job through an employment agency, and the fee is paid by your employer, the fee is not includible in your income if you are not liable for it. 2012 irs income tax forms However, if you pay it and your employer reimburses you for it, it is includible in your income. 2012 irs income tax forms Energy conservation subsidies. 2012 irs income tax forms   You can exclude from gross income any subsidy provided, either directly or indirectly, by public utilities for the purchase or installation of an energy conservation measure for a dwelling unit. 2012 irs income tax forms Energy conservation measure. 2012 irs income tax forms   This includes installations or modifications that are primarily designed to reduce consumption of electricity or natural gas, or improve the management of energy demand. 2012 irs income tax forms Dwelling unit. 2012 irs income tax forms   This includes a house, apartment, condominium, mobile home, boat, or similar property. 2012 irs income tax forms If a building or structure contains both dwelling and other units, any subsidy must be properly allocated. 2012 irs income tax forms Estate and trust income. 2012 irs income tax forms    An estate or trust, unlike a partnership, may have to pay federal income tax. 2012 irs income tax forms If you are a beneficiary of an estate or trust, you may be taxed on your share of its income distributed or required to be distributed to you. 2012 irs income tax forms However, there is never a double tax. 2012 irs income tax forms Estates and trusts file their returns on Form 1041, U. 2012 irs income tax forms S. 2012 irs income tax forms Income Tax Return for Estates and Trusts, and your share of the income is reported to you on Schedule K-1 (Form 1041). 2012 irs income tax forms Current income required to be distributed. 2012 irs income tax forms   If you are the beneficiary of an estate or trust that must distribute all of its current income, you must report your share of the distributable net income, whether or not you actually received it. 2012 irs income tax forms Current income not required to be distributed. 2012 irs income tax forms    If you are the beneficiary of an estate or trust and the fiduciary has the choice of whether to distribute all or part of the current income, you must report: All income that is required to be distributed to you, whether or not it is actually distributed, plus All other amounts actually paid or credited to you, up to the amount of your share of distributable net income. 2012 irs income tax forms How to report. 2012 irs income tax forms   Treat each item of income the same way that the estate or trust would treat it. 2012 irs income tax forms For example, if a trust's dividend income is distributed to you, you report the distribution as dividend income on your return. 2012 irs income tax forms The same rule applies to distributions of tax-exempt interest and capital gains. 2012 irs income tax forms   The fiduciary of the estate or trust must tell you the type of items making up your share of the estate or trust income and any credits you are allowed on your individual income tax return. 2012 irs income tax forms Losses. 2012 irs income tax forms   Losses of estates and trusts generally are not deductible by the beneficiaries. 2012 irs income tax forms Grantor trust. 2012 irs income tax forms   Income earned by a grantor trust is taxable to the grantor, not the beneficiary, if the grantor keeps certain control over the trust. 2012 irs income tax forms (The grantor is the one who transferred property to the trust. 2012 irs income tax forms ) This rule applies if the property (or income from the property) put into the trust will or may revert (be returned) to the grantor or the grantor's spouse. 2012 irs income tax forms   Generally, a trust is a grantor trust if the grantor has a reversionary interest valued (at the date of transfer) at more than 5% of the value of the transferred property. 2012 irs income tax forms Expenses paid by another. 2012 irs income tax forms   If your personal expenses are paid for by another person, such as a corporation, the payment may be taxable to you depending upon your relationship with that person and the nature of the payment. 2012 irs income tax forms But if the payment makes up for a loss caused by that person, and only restores you to the position you were in before the loss, the payment is not includible in your income. 2012 irs income tax forms Fees for services. 2012 irs income tax forms   Include all fees for your services in your income. 2012 irs income tax forms Examples of these fees are amounts you receive for services you perform as: A corporate director, An executor, administrator, or personal representative of an estate, A manager of a trade or business you operated before declaring Chapter 11 bankruptcy, A notary public, or An election precinct official. 2012 irs income tax forms Nonemployee compensation. 2012 irs income tax forms   If you are not an employee and the fees for your services from the same payer total $600 or more for the year, you may receive a Form 1099-MISC. 2012 irs income tax forms You may need to report your fees as self-employment income. 2012 irs income tax forms See Self-Employed Persons , in chapter 1, for a discussion of when you are considered self-employed. 2012 irs income tax forms Corporate director. 2012 irs income tax forms   Corporate director fees are self-employment income. 2012 irs income tax forms Report these payments on Schedule C or Schedule C-EZ (Form 1040). 2012 irs income tax forms Personal representatives. 2012 irs income tax forms   All personal representatives must include in their gross income fees paid to them from an estate. 2012 irs income tax forms If you are not in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on Form 1040, line 21. 2012 irs income tax forms If you are in the trade or business of being an executor, report these fees as self-employment income on Schedule C or Schedule C-EZ (Form 1040). 2012 irs income tax forms The fee is not includible in income if it is waived. 2012 irs income tax forms Manager of trade or business for bankruptcy estate. 2012 irs income tax forms   Include in your income all payments received from your bankruptcy estate for managing or operating a trade or business that you operated before you filed for bankruptcy. 2012 irs income tax forms Report this income on Form 1040, line 21. 2012 irs income tax forms Notary public. 2012 irs income tax forms    Report payments for these services on Schedule C or Schedule C-EZ (Form 1040). 2012 irs income tax forms These payments are not subject to self-employment tax. 2012 irs income tax forms See the separate instructions for Schedule SE (Form 1040) for details. 2012 irs income tax forms Election precinct official. 2012 irs income tax forms    You should receive a Form W-2 showing payments for services performed as an election official or election worker. 2012 irs income tax forms Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. 2012 irs income tax forms Foster care providers. 2012 irs income tax forms   Payments you receive from a state, political subdivision, or a qualified foster care placement agency for providing care to qualified foster individuals in your home generally are not included in your income. 2012 irs income tax forms However, you must include in your income payments received for the care of more than 5 individuals age 19 or older and certain difficulty-of-care payments. 2012 irs income tax forms   A qualified foster individual is a person who: Is living in a foster family home, and Was placed there by: An agency of a state or one of its political subdivisions, or A qualified foster care placement agency. 2012 irs income tax forms Difficulty-of-care payments. 2012 irs income tax forms   These are additional payments that are designated by the payer as compensation for providing the additional care that is required for physically, mentally, or emotionally handicapped qualified foster individuals. 2012 irs income tax forms A state must determine that the additional compensation is needed, and the care for which the payments are made must be provided in your home. 2012 irs income tax forms   You must include in your income difficulty-of-care payments received for more than: 10 qualified foster individuals under age 19, or 5 qualified foster individuals age 19 or older. 2012 irs income tax forms Maintaining space in home. 2012 irs income tax forms   If you are paid to maintain space in your home for emergency foster care, you must include the payment in your income. 2012 irs income tax forms Reporting taxable payments. 2012 irs income tax forms    If you receive payments that you must include in your income, you are in business as a foster care provider and you are self-employed. 2012 irs income tax forms Report the payments on Schedule C or Schedule C-EZ (Form 1040). 2012 irs income tax forms See Publication 587, Business Use of Your Home, to help you determine the amount you can deduct for the use of your home. 2012 irs income tax forms Found property. 2012 irs income tax forms   If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession. 2012 irs income tax forms Free tour. 2012 irs income tax forms   If you received a free tour from a travel agency for organizing a group of tourists, you must include its value in your income. 2012 irs income tax forms Report the fair market value of the tour on Form 1040, line 21, if you are not in the trade or business of organizing tours. 2012 irs income tax forms You cannot deduct your expenses in serving as the voluntary leader of the group at the group's request. 2012 irs income tax forms If you organize tours as a trade or business, report the tour's value on Schedule C or Schedule C-EZ (Form 1040). 2012 irs income tax forms Gambling winnings. 2012 irs income tax forms   You must include your gambling winnings in income on Form 1040, line 21. 2012 irs income tax forms If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings. 2012 irs income tax forms Lotteries and raffles. 2012 irs income tax forms   Winnings from lotteries and raffles are gambling winnings. 2012 irs income tax forms In addition to cash winnings, you must include in your income the fair market value of bonds, cars, houses, and other noncash prizes. 2012 irs income tax forms    If you win a state lottery prize payable in installments, see Publication 525 for more information. 2012 irs income tax forms Form W-2G. 2012 irs income tax forms   You may have received a Form W-2G, Certain Gambling Winnings, showing the amount of your gambling winnings and any tax taken out of them. 2012 irs income tax forms Include the amount from box 1 on Form 1040, line 21. 2012 irs income tax forms Include the amount shown in box 4 on Form 1040, line 62, as federal income tax withheld. 2012 irs income tax forms Reporting winnings and recordkeeping. 2012 irs income tax forms   For more information on reporting gam