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Amend Tax Return 2013

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Amend Tax Return 2013

Amend tax return 2013 Publication 1212 - Main Content Table of Contents Definitions Debt Instruments on the OID List Debt Instruments Not on the OID List Information for Brokers and Other MiddlemenShort-Term Obligations Redeemed at Maturity Long-Term Debt Instruments Certificates of Deposit Bearer Bonds and Coupons Backup Withholding Information for Owners of OID Debt InstrumentsExceptions. Amend tax return 2013 Adjustment for premium. Amend tax return 2013 Adjustment for acquisition premium. Amend tax return 2013 Adjustment for market discount. Amend tax return 2013 Form 1099-OID How To Report OID Figuring OID on Long-Term Debt Instruments Figuring OID on Stripped Bonds and Coupons How To Get Tax HelpLow Income Taxpayer Clinics Definitions The following terms are used throughout this publication. Amend tax return 2013 “Original issue discount” is defined first. Amend tax return 2013 The other terms are listed alphabetically. Amend tax return 2013 Original issue discount (OID). Amend tax return 2013   OID is a form of interest. Amend tax return 2013 It is the excess of a debt instrument's stated redemption price at maturity over its issue price (acquisition price for a stripped bond or coupon). Amend tax return 2013 Zero coupon bonds and debt instruments that pay no stated interest until maturity are examples of debt instruments that have OID. Amend tax return 2013 Accrual period. Amend tax return 2013   An accrual period is an interval of time used to measure OID. Amend tax return 2013 The length of an accrual period can be 6 months, a year, or some other period, depending on when the debt instrument was issued. Amend tax return 2013 Acquisition premium. Amend tax return 2013   Acquisition premium is the excess of a debt instrument's adjusted basis immediately after purchase, including purchase at original issue, over the debt instrument's adjusted issue price at that time. Amend tax return 2013 A debt instrument does not have acquisition premium, however, if the debt instrument was purchased at a premium. Amend tax return 2013 See Premium, later. Amend tax return 2013 Adjusted issue price. Amend tax return 2013   The adjusted issue price of a debt instrument at the beginning of an accrual period is used to figure the OID allocable to that period. Amend tax return 2013 In general, the adjusted issue price at the beginning of the debt instrument's first accrual period is its issue price. Amend tax return 2013 The adjusted issue price at the beginning of any subsequent accrual period is the sum of the issue price and all the OID includible in income before that accrual period minus any payment previously made on the debt instrument, other than a payment of qualified stated interest. Amend tax return 2013 Debt instrument. Amend tax return 2013   The term “debt instrument” means any instrument or contractual arrangement that constitutes indebtedness under general principles of federal income tax law (including, for example, a bond, debenture, note, certificate, or other evidence of indebtedness). Amend tax return 2013 It generally does not include an annuity contract. Amend tax return 2013 Issue price. Amend tax return 2013   For debt instruments listed in Section I-A and Section I-B, the issue price generally is the initial offering price to the public (excluding bond houses and brokers) at which a substantial amount of these instruments was sold. Amend tax return 2013 Market discount. Amend tax return 2013   Market discount arises when a debt instrument purchased in the secondary market has decreased in value since its issue date, generally because of an increase in interest rates. Amend tax return 2013 An OID debt instrument has market discount if your adjusted basis in the debt instrument immediately after you acquired it (usually its purchase price) was less than the debt instrument's issue price plus the total OID that accrued before you acquired it. Amend tax return 2013 The market discount is the difference between the issue price plus accrued OID and your adjusted basis. Amend tax return 2013 Premium. Amend tax return 2013   A debt instrument is purchased at a premium if its adjusted basis immediately after purchase is greater than the total of all amounts payable on the debt instrument after the purchase date, other than qualified stated interest. Amend tax return 2013 The premium is the excess of the adjusted basis over the payable amounts. Amend tax return 2013 See Publication 550 for information on the tax treatment of bond premium. Amend tax return 2013 Qualified stated interest. Amend tax return 2013   In general, qualified stated interest is stated interest that is unconditionally payable in cash or property (other than debt instruments of the issuer) at least annually over the term of the debt instrument at a single fixed rate. Amend tax return 2013 Stated redemption price at maturity. Amend tax return 2013   A debt instrument's stated redemption price at maturity is the sum of all amounts (principal and interest) payable on the debt instrument other than qualified stated interest. Amend tax return 2013 Yield to maturity (YTM). Amend tax return 2013   In general, the YTM is the discount rate that, when used in figuring the present value of all principal and interest payments, produces an amount equal to the issue price of the debt instrument. Amend tax return 2013 The YTM is generally shown on the face of the debt instrument or in the literature you receive from your broker. Amend tax return 2013 If you do not have this information, consult your broker, tax advisor, or the issuer. Amend tax return 2013 Debt Instruments on the OID List The OID list on the IRS website can be used by brokers and other middlemen to prepare information returns. Amend tax return 2013 If you own a listed debt instrument, you generally should not rely on the information in the OID list to determine (or compare) the OID to be reported on your tax return. Amend tax return 2013 The OID amounts listed are figured without reference to the price or date at which you acquired the debt instrument. Amend tax return 2013 For information about determining the OID to be reported on your tax return, see the instructions for figuring OID under Information for Owners of OID Debt Instruments, later. Amend tax return 2013 The following discussions explain what information is contained in each section of the list. Amend tax return 2013 Section I. Amend tax return 2013   This section contains publicly offered, long-term debt instruments. Amend tax return 2013 Section I-A: Corporate Debt Instruments Issued Before 1985. Amend tax return 2013 Section I-B: Corporate Debt Instruments Issued After 1984. Amend tax return 2013 Section I-C: Inflation-Indexed Debt Instruments. Amend tax return 2013 For each publicly offered debt instrument in Section I, the list contains the following information. Amend tax return 2013 The name of the issuer. Amend tax return 2013 The Committee on Uniform Security Identification Procedures (CUSIP) number. Amend tax return 2013 The issue date. Amend tax return 2013 The maturity date. Amend tax return 2013 The issue price expressed as a percent of principal or of stated redemption price at maturity. Amend tax return 2013 The annual stated or coupon interest rate. Amend tax return 2013 (This rate is shown as 0. Amend tax return 2013 00 if no annual interest payments are provided. Amend tax return 2013 ) The yield to maturity will be added to Section I-B for bonds issued after December 31, 2006. Amend tax return 2013 The total OID accrued up to January 1 of a calendar year. Amend tax return 2013 (This information is not available for every instrument. Amend tax return 2013 ) For long-term debt instruments issued after July 1, 1982, the daily OID for the accrual periods falling in a calendar year and a subsequent year. Amend tax return 2013 The total OID per $1,000 of principal or maturity value for a calendar year and a subsequent year. Amend tax return 2013 Section II. Amend tax return 2013   This section contains stripped coupons and principal components of U. Amend tax return 2013 S. Amend tax return 2013 Treasury and Government-Sponsored Enterprise debt instruments. Amend tax return 2013 These stripped components are available through the Department of the Treasury's Separate Trading of Registered Interest and Principal of Securities (STRIPS) program and government-sponsored enterprises such as the Resolution Funding Corporation. Amend tax return 2013 This section also includes debt instruments backed by U. Amend tax return 2013 S. Amend tax return 2013 Treasury securities that represent ownership interests in those securities. Amend tax return 2013   The obligations listed in Section II are arranged by maturity date. Amend tax return 2013 The amounts listed are the total OID for a calendar year per $1,000 of redemption price. Amend tax return 2013 Section III. Amend tax return 2013   This section contains short-term discount obligations. Amend tax return 2013 Section III-A: Short-Term U. Amend tax return 2013 S. Amend tax return 2013 Treasury Bills. Amend tax return 2013 Section III-B: Federal Home Loan Banks. Amend tax return 2013 Section III-C: Federal National Mortgage Association. Amend tax return 2013 Section III-D: Federal Farm Credit Banks. Amend tax return 2013 Section III-E: Federal Home Loan Mortgage Corporation. Amend tax return 2013 Section III-F: Federal Agricultural Mortgage Corporation. Amend tax return 2013    Information that supplements Section III-A is available on the Internet at http://www. Amend tax return 2013 treasurydirect. Amend tax return 2013 gov/tdhome. Amend tax return 2013 htm. Amend tax return 2013   The short-term obligations listed in this section are arranged by maturity date. Amend tax return 2013 For each obligation, the list contains the CUSIP number, maturity date, issue date, issue price (expressed as a percent of principal), and discount to be reported as interest for a calendar year per $1,000 of redemption price. Amend tax return 2013 Brokers and other middlemen should rely on the issue price information in Section III only if they are unable to determine the price actually paid by the owner. Amend tax return 2013 Debt Instruments Not on the OID List The list of debt instruments discussed earlier does not contain the following items. Amend tax return 2013 U. Amend tax return 2013 S. Amend tax return 2013 savings bonds. Amend tax return 2013 Certificates of deposit and other face-amount certificates issued at a discount, including syndicated certificates of deposit. Amend tax return 2013 Obligations issued by tax-exempt organizations. Amend tax return 2013 OID debt instruments that matured or were entirely called by the issuer before the tables were posted on the IRS website. Amend tax return 2013 Mortgage-backed securities and mortgage participation certificates. Amend tax return 2013 Long-term OID debt instruments issued before May 28, 1969. Amend tax return 2013 Short-term obligations, other than the obligations listed in Section III. Amend tax return 2013 Debt instruments issued at a discount by states or their political subdivisions. Amend tax return 2013 REMIC regular interests and CDOs. Amend tax return 2013 Commercial paper and banker's acceptances issued at a discount. Amend tax return 2013 Obligations issued at a discount by individuals. Amend tax return 2013 Foreign obligations not traded in the United States and obligations not issued in the United States. Amend tax return 2013 Information for Brokers and Other Middlemen The following discussions contain specific instructions for brokers and middlemen who hold or redeem a debt instrument for the owner. Amend tax return 2013 In general, you must file a Form 1099 for the debt instrument if the interest or OID to be included in the owner's income for a calendar year totals $10 or more. Amend tax return 2013 You also must file a Form 1099 if you were required to deduct and withhold tax, even if the interest or OID is less than $10. Amend tax return 2013 See Backup Withholding, later. Amend tax return 2013 If you must file a Form 1099, furnish a copy to the owner of the debt instrument by January 31 in the year it is due. Amend tax return 2013 File all your Forms 1099 with the IRS, accompanied by Form 1096, by February 28 in the year it is due (March 31 if you file electronically). Amend tax return 2013 Electronic payee statements. Amend tax return 2013   You can issue Form 1099-OID electronically with the consent of the recipient. Amend tax return 2013 More information. Amend tax return 2013   For more information, including penalties for failure to file (or furnish) required information returns or statements, see the General Instructions for Certain Information Returns (Forms 1098, 1099, 3921, 3922, 5498, and W-2G) for the appropriate calendar year. Amend tax return 2013 Short-Term Obligations Redeemed at Maturity If you redeem a short-term discount obligation for the owner at maturity, you must report the discount as interest on Form 1099-INT. Amend tax return 2013 To figure the discount, use the purchase price shown on the owner's copy of the purchase confirmation receipt or similar record, or the price shown in your transaction records. Amend tax return 2013 If you sell the obligation for the owner before maturity, you must file Form 1099-B to reflect the gross proceeds to the seller. Amend tax return 2013 Do not report the accrued discount to the date of sale on either Form 1099-INT or Form 1099-OID. Amend tax return 2013 If the owner's purchase price cannot be determined, figure the discount as if the owner had purchased the obligation at its original issue price. Amend tax return 2013 A special rule is used to determine the original issue price for information reporting on U. Amend tax return 2013 S. Amend tax return 2013 Treasury bills (T-bills) listed in Section III-A. Amend tax return 2013 Under this rule, you treat as the original issue price of the T-bill the noncompetitive (weighted average of accepted auction bids) discount price for the longest-maturity T-bill maturing on the same date as the T-bill being redeemed. Amend tax return 2013 This noncompetitive discount price is the issue price (expressed as a percent of principal) shown in Section III-A. Amend tax return 2013 A similar rule is used to figure the discount on short-term discount obligations issued by the organizations listed in Section III-B through Section III-F. Amend tax return 2013 Example 1. Amend tax return 2013 There are 13-week and 26-week T-bills maturing on the same date as the T-bill being redeemed. Amend tax return 2013 The price actually paid by the owner cannot be established by owner or middleman records. Amend tax return 2013 You treat as the issue price of the T-bill the noncompetitive discount price (expressed as a percent of principal) shown in Section III-A for a 26-week bill maturing on the same date as the T-bill redeemed. Amend tax return 2013 The interest you report on Form 1099-INT is the OID (per $1,000 of principal) shown in Section III-A for that obligation. Amend tax return 2013 Long-Term Debt Instruments If you hold a long-term OID debt instrument as a nominee for the true owner, you generally must file Form 1099-OID. Amend tax return 2013 For this purpose, you can rely on Section I of the OID list to determine the following information. Amend tax return 2013 Whether a debt instrument has OID. Amend tax return 2013 The OID to be reported on the Form 1099-OID. Amend tax return 2013 In general, you must report OID on publicly offered, long-term debt instruments listed in Section I. Amend tax return 2013 You also can report OID on other long-term debt instruments. Amend tax return 2013 Form 1099-OID. Amend tax return 2013   On Form 1099-OID for a calendar year show the following information. Amend tax return 2013 Box 1. Amend tax return 2013 The OID for the actual dates the owner held the debt instruments during a calendar year. Amend tax return 2013 To determine this amount, see Figuring OID, next. Amend tax return 2013 Box 2. Amend tax return 2013 The qualified stated interest paid or credited during the calendar year. Amend tax return 2013 Interest reported here is not reported on Form 1099-INT. Amend tax return 2013 The qualified stated interest on Treasury inflation-protected securities may be reported on Form 1099-INT in box 3 instead. Amend tax return 2013 Box 3. Amend tax return 2013 Any interest or principal forfeited because of an early withdrawal that the owner can deduct from gross income. Amend tax return 2013 Do not reduce the amounts in boxes 1 and 2 by the forfeiture. Amend tax return 2013 Box 4. Amend tax return 2013 Any backup withholding for this debt instrument. Amend tax return 2013 Box 7. Amend tax return 2013 The CUSIP number, if any. Amend tax return 2013 If there is no CUSIP number, give a description of the debt instrument, including the abbreviation for the stock exchange, the abbreviation used by the stock exchange for the issuer, the coupon rate, and the year of maturity (for example, NYSE XYZ 12. Amend tax return 2013 50 2006). Amend tax return 2013 If the issuer of the debt instrument is other than the payer, show the name of the issuer in this box. Amend tax return 2013 Box 8. Amend tax return 2013 The OID on a U. Amend tax return 2013 S. Amend tax return 2013 Treasury obligation for the part of the year the owner held the debt instrument. Amend tax return 2013 Box 9. Amend tax return 2013 Investment expenses passed on to holders of a single-class REMIC. Amend tax return 2013 Boxes 10-12. Amend tax return 2013 Use to report any state income tax withheld for this debt instrument. Amend tax return 2013 Figuring OID. Amend tax return 2013   You can determine the OID on a long-term debt instrument by using either of the following. Amend tax return 2013 Section I of the OID list. Amend tax return 2013 The income tax regulations. Amend tax return 2013 Using Section I. Amend tax return 2013   If the owner held the debt instrument for the entire calendar year, report the OID shown in Section I for the calendar year. Amend tax return 2013 Because OID is listed for each $1,000 of stated redemption price at maturity, you must adjust the listed amount to reflect the debt instrument's actual stated redemption price at maturity. Amend tax return 2013 For example, if the debt instrument's stated redemption price at maturity is $500, report one-half the listed OID. Amend tax return 2013   If the owner held the debt instrument for less than the entire calendar year, figure the OID to report as follows. Amend tax return 2013 Look up the daily OID for the first accrual period in the calendar year during which the owner held the debt instrument. Amend tax return 2013 Multiply the daily OID by the number of days the owner held the debt instrument during that accrual period. Amend tax return 2013 Repeat steps (1) and (2) for any remaining accrual periods for the year during which the owner held the debt instrument. Amend tax return 2013 Add the results in steps (2) and (3) to determine the owner's OID per $1,000 of stated redemption price at maturity. Amend tax return 2013 If necessary, adjust the OID in (4) to reflect the debt instrument's stated redemption price at maturity. Amend tax return 2013 Report the result on Form 1099-OID in box 1. Amend tax return 2013 Using the income tax regulations. Amend tax return 2013   Instead of using Section I to figure OID, you can use the regulations under sections 1272 through 1275 of the Internal Revenue Code. Amend tax return 2013 For example, under the regulations, you can use monthly accrual periods in figuring OID for a debt instrument issued after April 3, 1994, that provides for monthly payments. Amend tax return 2013 (If you use Section I-B, the OID is figured using 6-month accrual periods. Amend tax return 2013 )   For a general explanation of the rules for figuring OID under the regulations, see Figuring OID on Long-Term Debt Instruments under Information for Owners of OID Debt Instruments, later. Amend tax return 2013 Certificates of Deposit If you hold a bank certificate of deposit (CD) as a nominee, you must determine whether the CD has OID and any OID includible in the income of the owner. Amend tax return 2013 You must file an information return showing the reportable interest and OID, if any, on the CD. Amend tax return 2013 These rules apply whether or not you sold the CD to the owner. Amend tax return 2013 Report OID on a CD in the same way as OID on other debt instruments. Amend tax return 2013 See Short-Term Obligations Redeemed at Maturity and Long-Term Debt Instruments, earlier. Amend tax return 2013 Bearer Bonds and Coupons If a coupon from a bearer bond is presented to you for collection before the bond matures, you generally must report the interest on Form 1099-INT. Amend tax return 2013 However, do not report the interest if either of the following apply. Amend tax return 2013 You hold the bond as a nominee for the true owner. Amend tax return 2013 The payee is a foreign person. Amend tax return 2013 See Payments to foreign person under Backup Withholding, later. Amend tax return 2013 Because you cannot assume the presenter of the coupon also owns the bond, you should not report OID on the bond on Form 1099-OID. Amend tax return 2013 The coupon may have been “stripped” (separated) from the bond and separately purchased. Amend tax return 2013 However, if a long-term bearer bond on the OID list is presented to you for redemption upon call or maturity, you should prepare a Form 1099-OID showing the OID for that calendar year, as well as any coupon interest payments collected at the time of redemption. Amend tax return 2013 Backup Withholding If you report OID on Form 1099-OID or interest on Form 1099-INT for a calendar year, you may be required to apply backup withholding to the reportable payment at a rate of 28%. Amend tax return 2013 The backup withholding is deducted at the time a cash payment is made. Amend tax return 2013 See Pub. Amend tax return 2013 1281, Backup Withholding for Missing and Incorrect Name/TIN(s), for more information. Amend tax return 2013 Backup withholding generally applies in the following situations. Amend tax return 2013 The payee does not give you a taxpayer identification number (TIN). Amend tax return 2013 The IRS notifies you that the payee gave an incorrect TIN. Amend tax return 2013 The IRS notifies you that the payee is subject to backup withholding due to payee underreporting. Amend tax return 2013 For debt instruments acquired after 1983: The payee does not certify, under penalties of perjury, that he or she is not subject to backup withholding under (3), or The payee does not certify, under penalties of perjury, that the TIN given is correct. Amend tax return 2013 However, for short-term discount obligations (other than government obligations), bearer bonds and coupons, and U. Amend tax return 2013 S. Amend tax return 2013 savings bonds, backup withholding applies only if the payee does not give you a TIN or gives you an obviously incorrect number for a TIN. Amend tax return 2013 Short-term obligations. Amend tax return 2013   Backup withholding applies to OID on a short-term obligation only when the OID is paid at maturity. Amend tax return 2013 However, backup withholding applies to any interest payable before maturity when the interest is paid or credited. Amend tax return 2013   If the owner of a short-term obligation at maturity is not the original owner and can establish the purchase price of the obligation, the amount subject to backup withholding must be determined by treating the purchase price as the issue price. Amend tax return 2013 However, you can choose to disregard that price if it would require significant manual intervention in the computer or recordkeeping system used for the obligation. Amend tax return 2013 If the purchase price of a listed obligation is not established or is disregarded, you must use the issue price shown in Section III. Amend tax return 2013 Long-term obligations. Amend tax return 2013   If no cash payments are made on a long-term obligation before maturity, backup withholding applies only at maturity. Amend tax return 2013 The amount subject to backup withholding is the OID includible in the owner's gross income for the calendar year when the obligation matures. Amend tax return 2013 The amount to be withheld is limited to the cash paid. Amend tax return 2013 Registered long-term obligations with cash payments. Amend tax return 2013   If a registered long-term obligation has cash payments before maturity, backup withholding applies when a cash payment is made. Amend tax return 2013 The amount subject to backup withholding is the total of the qualified stated interest (defined earlier under Definitions) and OID includible in the owner's gross income for the calendar year when the payment is made. Amend tax return 2013 If more than one cash payment is made during the year, the OID subject to withholding for the year must be allocated among the expected cash payments in the ratio that each bears to the total of the expected cash payments. Amend tax return 2013 For any payment, the required withholding is limited to the cash paid. Amend tax return 2013 Payee not the original owner. Amend tax return 2013   If the payee is not the original owner of the obligation, the OID subject to backup withholding is the OID includible in the gross income of all owners during the calendar year (without regard to any amount paid by the new owner at the time of transfer). Amend tax return 2013 The amount subject to backup withholding at maturity of a listed obligation must be determined using the issue price shown in Section I. Amend tax return 2013 Bearer long-term obligations with cash payments. Amend tax return 2013   If a bearer long-term obligation has cash payments before maturity, backup withholding applies when the cash payments are made. Amend tax return 2013 For payments before maturity, the amount subject to withholding is the qualified stated interest (defined earlier under Definitions) includible in the owner's gross income for the calendar year. Amend tax return 2013 For a payment at maturity, the amount subject to withholding is only the total of any qualified stated interest paid at maturity and the OID includible in the owner's gross income for the calendar year when the obligation matures. Amend tax return 2013 The required withholding at maturity is limited to the cash paid. Amend tax return 2013 Sales and redemptions. Amend tax return 2013   If you report the gross proceeds from a sale, exchange, or redemption of a debt instrument on Form 1099-B for a calendar year, you may be required to withhold 28% of the amount reported. Amend tax return 2013 Backup withholding applies in the following situations. Amend tax return 2013 The payee does not give you a TIN. Amend tax return 2013 The IRS notifies you that the payee gave an incorrect TIN. Amend tax return 2013 For debt instruments held in an account opened after 1983, the payee does not certify, under penalties of perjury, that the TIN given is correct. Amend tax return 2013 Payments outside the United States to U. Amend tax return 2013 S. Amend tax return 2013 person. Amend tax return 2013   The requirements for backup withholding and information reporting apply to payments of OID and interest made outside the United States to a U. Amend tax return 2013 S. Amend tax return 2013 person, a controlled foreign corporation, or a foreign person at least 50% of whose income for the preceding 3-year period is effectively connected with the conduct of a U. Amend tax return 2013 S. Amend tax return 2013 trade or business. Amend tax return 2013 Payments to foreign person. Amend tax return 2013   The following discussions explain the rules for backup withholding and information reporting on payments to foreign persons. Amend tax return 2013 U. Amend tax return 2013 S. Amend tax return 2013 -source amount. Amend tax return 2013   Backup withholding and information reporting are not required for payments of U. Amend tax return 2013 S. Amend tax return 2013 -source OID, interest, or proceeds from a sale or redemption of an OID instrument if the payee has given you proof (generally the appropriate Form W-8 or an acceptable substitute) that the payee is a foreign person. Amend tax return 2013 A U. Amend tax return 2013 S. Amend tax return 2013 resident is not a foreign person. Amend tax return 2013 For proof of the payee's foreign status, you can rely on the appropriate Form W-8 or on documentary evidence for payments made outside the United States to an offshore account or, in case of broker proceeds, a sale effected outside the United States. Amend tax return 2013 Receipt of the appropriate Form W-8 does not relieve you from information reporting and backup withholding if you actually know the payee is a U. Amend tax return 2013 S. Amend tax return 2013 person. Amend tax return 2013   For information about the 28% withholding tax that may apply to payments of U. Amend tax return 2013 S. Amend tax return 2013 -source OID or interest to foreign persons, see Publication 515. Amend tax return 2013 Foreign-source amount. Amend tax return 2013   Backup withholding and information reporting are not required for payments of foreign-source OID and interest made outside the United States. Amend tax return 2013 However, if the payments are made inside the United States, the requirements for backup withholding and information reporting will apply unless the payee has given you the appropriate Form W-8 or acceptable substitute as proof that the payee is a foreign person. Amend tax return 2013 More information. Amend tax return 2013   For more information about backup withholding and information reporting on foreign-source amounts or payments to foreign persons, see Regulations section 1. Amend tax return 2013 6049-5. Amend tax return 2013 Information for Owners of OID Debt Instruments This section is for persons who prepare their own tax returns. Amend tax return 2013 It discusses the income tax rules for figuring and reporting OID on long-term debt instruments. Amend tax return 2013 It also includes a similar discussion for stripped bonds and coupons, such as zero coupon bonds available through the Department of the Treasury's STRIPS program and government-sponsored enterprises such as the Resolution Funding Corporation. Amend tax return 2013 However, the information provided does not cover every situation. Amend tax return 2013 More information can be found in the regulations under sections 1271 through 1275 of the Internal Revenue Code. Amend tax return 2013 Including OID in income. Amend tax return 2013   Generally, you include OID in income as it accrues each year, whether or not you receive any payments from the debt instrument issuer. Amend tax return 2013 Exceptions. Amend tax return 2013   The rules for including OID in income as it accrues generally do not apply to the following debt instruments. Amend tax return 2013 U. Amend tax return 2013 S. Amend tax return 2013 savings bonds. Amend tax return 2013 Tax-exempt obligations. Amend tax return 2013 (However, see Tax-Exempt Bonds and Coupons, later. Amend tax return 2013 ) Obligations issued by individuals before March 2, 1984. Amend tax return 2013 Loans of $10,000 or less between individuals who are not in the business of lending money. Amend tax return 2013 (The dollar limit includes outstanding prior loans by the lender to the borrower. Amend tax return 2013 ) This exception does not apply if a principal purpose of the loan is to avoid any federal tax. Amend tax return 2013   See chapter 1 of Publication 550 for information about the rules for these and other types of discounted debt instruments, such as short-term and market discount obligations. Amend tax return 2013 Publication 550 also discusses rules for holders of REMIC interests and CDOs. Amend tax return 2013 De minimis rule. Amend tax return 2013   You can treat OID as zero if the total OID on a debt instrument is less than one-fourth of 1% (. Amend tax return 2013 0025) of the stated redemption price at maturity multiplied by the number of full years from the date of original issue to maturity. Amend tax return 2013 Debt instruments with de minimis OID are not listed in this publication. Amend tax return 2013 There are special rules to determine the de minimis amount in the case of debt instruments that provide for more than one payment of principal. Amend tax return 2013 Also, the de minimis rules generally do not apply to tax-exempt obligations. Amend tax return 2013 Example 2. Amend tax return 2013 You bought at issuance a 10-year debt instrument with a stated redemption price at maturity of $1,000, issued at $980 with OID of $20. Amend tax return 2013 One-fourth of 1% of $1,000 (the stated redemption price) times 10 (the number of full years from the date of original issue to maturity) equals $25. Amend tax return 2013 Under the de minimis rule, you can treat the OID as zero because the $20 discount is less than $25. Amend tax return 2013 Example 3. Amend tax return 2013 Assume the same facts as Example 2, except the debt instrument was issued at $950. Amend tax return 2013 You must report part of the $50 OID each year because it is more than $25. Amend tax return 2013 Choice to report all interest as OID. Amend tax return 2013   Generally, you can choose to treat all interest on a debt instrument acquired after April 3, 1994, as OID and include it in gross income by using the constant yield method. Amend tax return 2013 See Constant yield method under Debt Instruments Issued After 1984, later, for more information. Amend tax return 2013   For this choice, interest includes stated interest, acquisition discount, OID, de minimis OID, market discount, de minimis market discount, and unstated interest, as adjusted by any amortizable bond premium or acquisition premium. Amend tax return 2013 For more information, see Regulations section 1. Amend tax return 2013 1272-3. Amend tax return 2013 Purchase after date of original issue. Amend tax return 2013   A debt instrument you purchased after the date of original issue may have premium, acquisition premium, or market discount. Amend tax return 2013 If so, the OID reported to you on Form 1099-OID may have to be adjusted. Amend tax return 2013 For more information, see Showing an OID adjustment under How To Report OID, later. Amend tax return 2013 The following rules generally do not apply to contingent payment debt instruments. Amend tax return 2013 Adjustment for premium. Amend tax return 2013   If your debt instrument (other than an inflation-indexed debt instrument) has premium, do not report any OID as ordinary income. Amend tax return 2013 Your adjustment is the total OID shown on your Form 1099-OID. Amend tax return 2013 Adjustment for acquisition premium. Amend tax return 2013   If your debt instrument has acquisition premium, reduce the OID you report. Amend tax return 2013 Your adjustment is the difference between the OID shown on your Form 1099-OID and the reduced OID amount figured using the rules explained later under Figuring OID on Long-Term Debt Instruments. Amend tax return 2013 Adjustment for market discount. Amend tax return 2013   If your debt instrument has market discount that you choose to include in income currently, increase the OID you report. Amend tax return 2013 Your adjustment is the accrued market discount for the year. Amend tax return 2013 See Market Discount Bonds in chapter 1 of Publication 550 for information on how to figure accrued market discount and include it in your income currently and for other information about market discount bonds. Amend tax return 2013 If you choose to use the constant yield method to figure accrued market discount, also see Figuring OID on Long-Term Debt Instruments, later. Amend tax return 2013 The constant yield method of figuring accrued OID, explained in those discussions under Constant yield method, is also used to figure accrued market discount. Amend tax return 2013 For more information concerning premium or market discount on an inflation-indexed debt instrument, see Regulations section 1. Amend tax return 2013 1275-7. Amend tax return 2013 Sale, exchange, or redemption. Amend tax return 2013   Generally, you treat your gain or loss from the sale, exchange, or redemption of a discounted debt instrument as a capital gain or loss if you held the debt instrument as a capital asset. Amend tax return 2013 If you sold the debt instrument through a broker, you should receive Form 1099-B or an equivalent statement from the broker. Amend tax return 2013 Use the Form 1099-B or other statement and your brokerage statements to complete Form 8949, and Schedule D (Form 1040). Amend tax return 2013   Your gain or loss is the difference between the amount you realized on the sale, exchange, or redemption and your basis in the debt instrument. Amend tax return 2013 Your basis, generally, is your cost increased by the OID you have included in income each year you held it. Amend tax return 2013 In general, to determine your gain or loss on a tax-exempt bond, figure your basis in the bond by adding to your cost the OID you would have included in income if the bond had been taxable. Amend tax return 2013   See chapter 4 of Publication 550 for more information about the tax treatment of the sale or redemption of discounted debt instruments. Amend tax return 2013 Example 4. Amend tax return 2013 Larry, a calendar year taxpayer, bought a corporate debt instrument at original issue for $86,235. Amend tax return 2013 00 on November 1 of Year 1. Amend tax return 2013 The 15-year debt instrument matures on October 31 of Year 16 at a stated redemption price of $100,000. Amend tax return 2013 The debt instrument provides for semiannual payments of interest at 10%. Amend tax return 2013 Assume the debt instrument is a capital asset in Larry's hands. Amend tax return 2013 The debt instrument has $13,765. Amend tax return 2013 00 of OID ($100,000 stated redemption price at maturity minus $86,235. Amend tax return 2013 00 issue price). Amend tax return 2013 Larry sold the debt instrument for $90,000 on November 1 of Year 4. Amend tax return 2013 Including the OID he will report for the period he held the debt instrument in Year 4, Larry has included $4,556. Amend tax return 2013 00 of OID in income and has increased his basis by that amount to $90,791. Amend tax return 2013 00. Amend tax return 2013 Larry has realized a loss of $791. Amend tax return 2013 00. Amend tax return 2013 All of Larry's loss is capital loss. Amend tax return 2013 Form 1099-OID The issuer of the debt instrument (or your broker, if you purchased or held the debt instrument through a broker) should give you a copy of Form 1099-OID or a similar statement if the accrued OID for the calendar year is $10 or more and the term of the debt instrument is more than 1 year. Amend tax return 2013 Form 1099-OID shows all OID income in box 1 except OID on a U. Amend tax return 2013 S. Amend tax return 2013 Treasury obligation, which is shown in box 8. Amend tax return 2013 It also shows, in box 2, any qualified stated interest you must include in income. Amend tax return 2013 (However, any qualified stated interest on Treasury inflation-protected securities can be reported on Form 1099-INT in box 3. Amend tax return 2013 ) A copy of Form 1099-OID will be sent to the IRS. Amend tax return 2013 Do not attach your copy to your tax return. Amend tax return 2013 Keep it for your records. Amend tax return 2013 If you are required to file a tax return and you receive Form 1099-OID showing taxable amounts, you must report these amounts on your return. Amend tax return 2013 A 20% accuracy-related penalty may be charged for underpayment of tax due to either negligence or disregard of rules and regulations or substantial understatement of tax. Amend tax return 2013 Form 1099-OID not received. Amend tax return 2013   If you held an OID debt instrument for a calendar year but did not receive a Form 1099-OID, refer to the discussions under Figuring OID on Long-Term Debt Instruments, later, for information on the OID you must report. Amend tax return 2013 Refiguring OID. Amend tax return 2013   You must refigure the OID shown on Form 1099-OID, in box 1 or box 8, to determine the proper amount to include in income if one of the following applies. Amend tax return 2013 You bought the debt instrument at a premium or at an acquisition premium. Amend tax return 2013 The debt instrument is a stripped bond or coupon (including zero coupon bonds backed by U. Amend tax return 2013 S. Amend tax return 2013 Treasury securities). Amend tax return 2013 The debt instrument is a contingent payment or inflation-indexed debt instrument. Amend tax return 2013 See the discussions under Figuring OID on Long-Term Debt Instruments or Figuring OID on Stripped Bonds and Coupons, later, for the specific computations. Amend tax return 2013 Refiguring interest. Amend tax return 2013   If you disposed of a debt instrument or acquired it from another holder between interest dates, see the discussion under Bonds Sold Between Interest Dates in chapter 1 of Publication 550 for information about refiguring the interest shown on Form 1099-OID in box 2. Amend tax return 2013 Nominee. Amend tax return 2013   If you are the holder of an OID debt instrument and you receive a Form 1099-OID that shows your taxpayer identification number and includes amounts belonging to another person, you are considered a “nominee. Amend tax return 2013 ” You must file another Form 1099-OID for each actual owner, showing the OID for the owner. Amend tax return 2013 Show the owner of the debt instrument as the “recipient” and you as the “payer. Amend tax return 2013 ”   Complete Form 1099-OID and Form 1096 and file the forms with the Internal Revenue Service Center for your area. Amend tax return 2013 You must also give a copy of the Form 1099-OID to the actual owner. Amend tax return 2013 However, you are not required to file a nominee return to show amounts belonging to your spouse. Amend tax return 2013 See the Form 1099 instructions for more information. Amend tax return 2013   When preparing your tax return, follow the instructions under Showing an OID adjustment in the next discussion. Amend tax return 2013 How To Report OID Generally, you report your taxable interest and OID income on the interest line of Form 1040EZ, Form 1040A, or Form 1040. Amend tax return 2013 Form 1040 or Form 1040A required. Amend tax return 2013   You must use Form 1040 or Form 1040A (you cannot use Form 1040EZ) under either of the following conditions. Amend tax return 2013 You received a Form 1099-OID as a nominee for the actual owner. Amend tax return 2013 Your total interest and OID income for the year was more than $1,500. Amend tax return 2013 Form 1040 required. Amend tax return 2013   You must use Form 1040 (you cannot use Form 1040A or Form 1040EZ) if you are reporting more or less OID than the amount shown on Form 1099-OID, other than because you are a nominee. Amend tax return 2013 For example, if you paid a premium or an acquisition premium when you purchased the debt instrument, you must use Form 1040 because you will report less OID than shown on Form 1099-OID. Amend tax return 2013 Also, you must use Form 1040 if you were charged an early withdrawal penalty. Amend tax return 2013 Where to report. Amend tax return 2013   List each payer's name (if a brokerage firm gave you a Form 1099, list the brokerage firm as the payer) and the amount received from each payer on Form 1040A, Schedule B, Part I, line 1, or Form 1040, Schedule B, line 1. Amend tax return 2013 Include all OID and periodic interest shown on any Form 1099-OID, boxes 1, 2, and 8, you received for the tax year. Amend tax return 2013 Also include any other OID and interest income for which you did not receive a Form 1099. Amend tax return 2013 Showing an OID adjustment. Amend tax return 2013   If you use Form 1040 to report more or less OID than shown on Form 1099-OID, list the full OID on Schedule B, Part I, line 1, and follow the instructions under 1 or 2, next. Amend tax return 2013   If you use Form 1040A to report the OID shown on a Form 1099-OID you received as a nominee for the actual owner, list the full OID on Schedule B, Part I, line 1 and follow the instructions under 1. Amend tax return 2013 If the OID, as adjusted, is less than the amount shown on Form 1099-OID, show the adjustment as follows. Amend tax return 2013 Under your last entry on line 1, subtotal all interest and OID income listed on line 1. Amend tax return 2013 Below the subtotal, write “Nominee Distribution” or “OID Adjustment” and show the OID you are not required to report. Amend tax return 2013 Subtract that OID from the subtotal and enter the result on line 2. Amend tax return 2013 If the OID, as adjusted, is more than the amount shown on Form 1099-OID, show the adjustment as follows. Amend tax return 2013 Under your last entry on line 1, subtotal all interest and OID income listed on line 1. Amend tax return 2013 Below the subtotal, write “OID Adjustment” and show the additional OID. Amend tax return 2013 Add that OID to the subtotal and enter the result on line 2. Amend tax return 2013 Figuring OID on Long-Term Debt Instruments How you figure the OID on a long-term debt instrument depends on the date it was issued. Amend tax return 2013 It also may depend on the type of the debt instrument. Amend tax return 2013 There are different rules for each of the following debt instruments. Amend tax return 2013 Corporate debt instruments issued after 1954 and before May 28, 1969, and government debt instruments issued after 1954 and before July 2, 1982. Amend tax return 2013 Corporate debt instruments issued after May 27, 1969, and before July 2, 1982. Amend tax return 2013 Debt instruments issued after July 1, 1982, and before 1985. Amend tax return 2013 Debt instruments issued after 1984 (other than debt instruments described in (5) and (6)). Amend tax return 2013 Contingent payment debt instruments issued after August 12, 1996. Amend tax return 2013 Inflation-indexed debt instruments (including Treasury inflation-protected securities) issued after January 5, 1997. Amend tax return 2013 Zero coupon bonds. Amend tax return 2013   The rules for figuring OID on zero coupon bonds backed by U. Amend tax return 2013 S. Amend tax return 2013 Treasury securities are discussed under Figuring OID on Stripped Bonds and Coupons, later. Amend tax return 2013 Corporate Debt Instruments Issued After 1954 and Before May 28, 1969, and Government Debt Instruments Issued After 1954 and Before July 2, 1982 If you hold these debt instruments as capital assets, you include OID in income only in the year the debt instrument is sold, exchanged, or redeemed, and only if you have a gain. Amend tax return 2013 The OID, which is taxed as ordinary income, generally equals the following amount. Amend tax return 2013   number of full months you held the debt instrument  number of full months from date of original issue to date of maturity X original issue discount The balance of the gain is capital gain. Amend tax return 2013 If there is a loss on the sale of the debt instrument, the entire loss is a capital loss and no OID is reported. Amend tax return 2013 Corporate Debt Instruments Issued After May 27, 1969, and Before July 2, 1982 If you hold these debt instruments as capital assets, you must include part of the OID in income each year you own the debt instruments. Amend tax return 2013 For information about showing the correct OID on your tax return, see the discussion under How To Report OID, earlier. Amend tax return 2013 Your basis in the debt instrument is increased by the OID you include in income. Amend tax return 2013 Form 1099-OID. Amend tax return 2013   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. Amend tax return 2013 However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Amend tax return 2013 See Reduction for acquisition premium, later. Amend tax return 2013 If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-A available at www. Amend tax return 2013 irs. Amend tax return 2013 gov/pub1212 by clicking the link under Recent Developments. Amend tax return 2013 Form 1099-OID not received. Amend tax return 2013    The OID listed is for each $1,000 of redemption price. Amend tax return 2013 You must adjust the listed amount if your debt instrument has a different principal amount. Amend tax return 2013 For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Amend tax return 2013   If you held the debt instrument the entire year, use the OID shown in Section I-A for a calendar year. Amend tax return 2013 (If your debt instrument is not listed in Section I-A, consult the issuer for information about the issue price and the OID that accrued for that year. Amend tax return 2013 ) If you did not hold the debt instrument the entire year, figure your OID using the following method. Amend tax return 2013 Divide the OID shown by 12. Amend tax return 2013 Multiply the result in (1) by the number of complete and partial months (for example, 6½ months) you held the debt instrument during a calendar year. Amend tax return 2013 This is the OID to include in income unless you paid an acquisition premium. Amend tax return 2013 The reduction for acquisition premium is discussed next. Amend tax return 2013 Reduction for acquisition premium. Amend tax return 2013   If you bought the debt instrument at an acquisition premium, figure the OID to include in income as follows. Amend tax return 2013 Divide the total OID on the debt instrument by the number of complete months, and any part of a month, from the date of original issue to the maturity date. Amend tax return 2013 This is the monthly OID. Amend tax return 2013 Subtract from your cost the issue price and the accumulated OID from the date of issue to the date of purchase. Amend tax return 2013 (If the result is zero or less, stop here. Amend tax return 2013 You did not pay an acquisition premium. Amend tax return 2013 ) Divide the amount figured in (2) by the number of complete months, and any part of a month, from the date of your purchase to the maturity date. Amend tax return 2013 Subtract the amount figured in (3) from the amount figured in (1). Amend tax return 2013 This is the OID to include in income for each month you hold the debt instrument during the year. Amend tax return 2013 Transfers during the month. Amend tax return 2013   If you buy or sell a debt instrument on any day other than the same day of the month as the date of original issue, the ratable monthly portion of OID for the month of sale is divided between the seller and the buyer according to the number of days each held the debt instrument. Amend tax return 2013 Your holding period for this purpose begins the day you acquire the debt instrument and ends the day before you dispose of it. Amend tax return 2013 Debt Instruments Issued After July 1, 1982, and Before 1985 If you hold these debt instruments as capital assets, you must include part of the OID in income each year you own the debt instruments and increase your basis by the amount included. Amend tax return 2013 For information about showing the correct OID on your tax return, see How To Report OID, earlier. Amend tax return 2013 Form 1099-OID. Amend tax return 2013   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. Amend tax return 2013 However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Amend tax return 2013 See Constant yield method and the discussions on acquisition premium that follow, later. Amend tax return 2013 If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-A available at www. Amend tax return 2013 irs. Amend tax return 2013 gov/pub1212 by clicking the link under Recent Developments. Amend tax return 2013 Form 1099-OID not received. Amend tax return 2013    The OID listed is for each $1,000 of redemption price. Amend tax return 2013 You must adjust the listed amount if your debt instrument has a different principal amount. Amend tax return 2013 For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Amend tax return 2013   If you held the debt instrument the entire year, use the OID shown in Section I-A. Amend tax return 2013 (If your instrument is not listed in Section I-A, consult the issuer for information about the issue price, the yield to maturity, and the OID that accrued for that year. Amend tax return 2013 ) If you did not hold the debt instrument the entire year, figure your OID using either of the following methods. Amend tax return 2013 Method 1. Amend tax return 2013    Divide the total OID for a calendar year by 365 (366 for leap years). Amend tax return 2013 Multiply the result in (1) by the number of days you held the debt instrument during that particular year. Amend tax return 2013  This computation is an approximation and may result in a slightly higher OID than Method 2. Amend tax return 2013 Method 2. Amend tax return 2013    Look up the daily OID for the first accrual period you held the debt instrument during a calendar year. Amend tax return 2013 (See Accrual period under Constant yield method, next. Amend tax return 2013 ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. Amend tax return 2013 If you held the debt instrument for part of both accrual periods, repeat (1) and (2) for the second accrual period. Amend tax return 2013 Add the results of (2) and (3). Amend tax return 2013 This is the OID to include in income, unless you paid an acquisition premium. Amend tax return 2013 (The reduction for acquisition premium is discussed later. Amend tax return 2013 ) Constant yield method. Amend tax return 2013   This discussion shows how to figure OID on debt instruments issued after July 1, 1982, and before 1985, using a constant yield method. Amend tax return 2013 OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. Amend tax return 2013   Figure the OID allocable to any accrual period as follows. Amend tax return 2013 Multiply the adjusted issue price at the beginning of the accrual period by the debt instrument's yield to maturity. Amend tax return 2013 Subtract from the result in (1) any qualified stated interest allocable to the accrual period. Amend tax return 2013 Accrual period. Amend tax return 2013   An accrual period for any OID debt instrument issued after July 1, 1982, and before 1985 is each 1-year period beginning on the date of the issue of the obligation and each anniversary thereafter, or the shorter period to maturity for the last accrual period. Amend tax return 2013 Your tax year will usually include parts of two accrual periods. Amend tax return 2013 Daily OID. Amend tax return 2013   The OID for any accrual period is allocated equally to each day in the accrual period. Amend tax return 2013 You must include in income the sum of the OID amounts for each day you hold the debt instrument during the year. Amend tax return 2013 If your tax year includes parts of two or more accrual periods, you must include the proper daily OID amounts for each accrual period. Amend tax return 2013 Figuring daily OID. Amend tax return 2013   The daily OID for the initial accrual period is figured using the following formula. Amend tax return 2013   (ip × ytm) − qsi     p   ip = issue price ytm = yield to maturity qsi = qualified stated interest p = number of days in accrual period         The daily OID for subsequent accrual periods is figured the same way except the adjusted issue price at the beginning of each period is used in the formula instead of the issue price. Amend tax return 2013 Reduction for acquisition premium on debt instruments purchased before July 19, 1984. Amend tax return 2013   If you bought the debt instrument at an acquisition premium before July 19, 1984, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. Amend tax return 2013 Figure the daily acquisition premium by dividing the total acquisition premium by the number of days in the period beginning on your purchase date and ending on the day before the date of maturity. Amend tax return 2013 Reduction for acquisition premium on debt instruments purchased after July 18, 1984. Amend tax return 2013   If you bought the debt instrument at an acquisition premium after July 18, 1984, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. Amend tax return 2013 However, the method of figuring the daily acquisition premium is different from the method described in the preceding discussion. Amend tax return 2013 To figure the daily acquisition premium under this method, multiply the daily OID by the following fraction. Amend tax return 2013 The numerator is the acquisition premium. Amend tax return 2013 The denominator is the total OID remaining for the debt instrument after your purchase date. Amend tax return 2013 Section I-A is available at www. Amend tax return 2013 irs. Amend tax return 2013 gov/pub1212 and clicking the link under Recent Developments. Amend tax return 2013 Using Section I-A to figure accumulated OID. Amend tax return 2013   If you bought your corporate debt instrument in a calendar year or the subsequent year, you can figure the accumulated OID to the date of purchase by adding the following amounts. Amend tax return 2013 The amount from the “Total OID to January 1, YYYY” column for your debt instrument. Amend tax return 2013 The OID from January 1 of a calendar year to the date of purchase, figured as follows. Amend tax return 2013 Multiply the daily OID for the first accrual period in the calendar year by the number of days from January 1 to the date of purchase, or the end of the accrual period if the debt instrument was purchased in the second or third accrual period. Amend tax return 2013 Multiply the daily OID for each subsequent accrual period by the number of days in the period to the date of purchase or the end of the accrual period, whichever applies. Amend tax return 2013 Add the amounts figured in (2a) and (2b). Amend tax return 2013 Debt Instruments Issued After 1984 If you hold debt instruments issued after 1984, you must report part of the OID in gross income each year that you own the debt instruments. Amend tax return 2013 You must include the OID in gross income whether or not you hold the debt instrument as a capital asset. Amend tax return 2013 Your basis in the debt instrument is increased by the OID you include in income. Amend tax return 2013 For information about showing the correct OID on your tax return, see How To Report OID, earlier. Amend tax return 2013 Form 1099-OID. Amend tax return 2013   You should receive a Form 1099-OID showing OID for the part of a calendar year you held the debt instrument. Amend tax return 2013 However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Amend tax return 2013 See Constant yield method and Reduction for acquisition premium, later. Amend tax return 2013   You may also need to refigure the OID for a contingent payment or inflation-indexed debt instrument on which the amount reported on Form 1099-OID is inaccurate. Amend tax return 2013 See Contingent Payment Debt Instruments or Inflation-Indexed Debt Instruments, later. Amend tax return 2013 If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-B available at www. Amend tax return 2013 irs. Amend tax return 2013 gov/pub1212 by clicking the link under Recent Developments. Amend tax return 2013 Form 1099-OID not received. Amend tax return 2013   The OID listed is for each $1,000 of redemption price. Amend tax return 2013 You must adjust the listed amount if your debt instrument has a different principal amount. Amend tax return 2013 For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Amend tax return 2013   Use the OID shown in Section I-B for a calendar year if you held the debt instrument the entire year. Amend tax return 2013 (If your debt instrument is not listed in Section I-B, consult the issuer for information about the issue price, the yield to maturity, and the OID that accrued for that year. Amend tax return 2013 ) If you did not hold the debt instrument the entire year, figure your OID as follows. Amend tax return 2013 Look up the daily OID for the first accrual period in which you held the debt instrument during a calendar year. Amend tax return 2013 (See Accrual period under Constant yield method, later. Amend tax return 2013 ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. Amend tax return 2013 Repeat (1) and (2) for any remaining accrual periods in which you held the debt instrument. Amend tax return 2013 Add the results of (2) and (3). Amend tax return 2013 This is the OID to include in income for that year, unless you paid an acquisition premium. Amend tax return 2013 (The reduction for acquisition premium is discussed later. Amend tax return 2013 ) Tax-exempt bond. Amend tax return 2013   If you own a tax-exempt bond, figure your basis in the bond by adding to your cost the OID you would have included in income if the bond had been taxable. Amend tax return 2013 You need to make this adjustment to determine if you have a gain or loss on a later disposition of the bond. Amend tax return 2013 In general, use the rules that follow to determine your OID. Amend tax return 2013 Constant yield method. Amend tax return 2013   This discussion shows how to figure OID on debt instruments issued after 1984 using a constant yield method. Amend tax return 2013 (The special rules that apply to contingent payment debt instruments and inflation-indexed debt instruments are explained later. Amend tax return 2013 ) OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. Amend tax return 2013   Figure the OID allocable to any accrual period as follows. Amend tax return 2013 Multiply the adjusted issue price at the beginning of the accrual period by a fraction. Amend tax return 2013 The numerator of the fraction is the debt instrument's yield to maturity and the denominator is the number of accrual periods per year. Amend tax return 2013 The yield must be stated appropriately taking into account the length of the particular accrual period. Amend tax return 2013 Subtract from the result in (1) any qualified stated interest allocable to the accrual period. Amend tax return 2013 Accrual period. Amend tax return 2013   For debt instruments issued after 1984 and before April 4, 1994, an accrual period is each 6-month period that ends on the day that corresponds to the stated maturity date of the debt instrument or the date 6 months before that date. Amend tax return 2013 For example, a debt instrument maturing on March 31 has accrual periods that end on September 30 and March 31 of each calendar year. Amend tax return 2013 Any short period is included as the first accrual period. Amend tax return 2013   For debt instruments issued after April 3, 1994, accrual periods may be of any length and may vary in length over the term of the debt instrument, as long as each accrual period is no longer than 1 year and all payments are made on the first or last day of an accrual period. Amend tax return 2013 However, the OID listed for these debt instruments in Section I-B has been figured using 6-month accrual periods. Amend tax return 2013 Daily OID. Amend tax return 2013   The OID for any accrual period is allocated equally to each day in the accrual period. Amend tax return 2013 Figure the amount to include in income by adding the OID for each day you hold the debt instrument during the year. Amend tax return 2013 Since your tax year will usually include parts of two or more accrual periods, you must include the proper daily OID for each accrual period. Amend tax return 2013 If your debt instrument has 6-month accrual periods, your tax year will usually include one full 6-month accrual period and parts of two other 6-month periods. Amend tax return 2013 Figuring daily OID. Amend tax return 2013   The daily OID for the initial accrual period is figured using the following formula. Amend tax return 2013   (ip × ytm/n) − qsi     p   ip = issue price ytm = yield to maturity n = number of accrual periods in 1 year qsi = qualified stated interest p = number of days in accrual period       The daily OID for subsequent accrual periods is figured the same way except the adjusted issue price at the beginning of each period is used in the formula instead of the issue price. Amend tax return 2013 Example 5. Amend tax return 2013 On January 1 of Year 1, you bought a 15-year, 10% debt instrument of A Corporation at original issue for $86,235. Amend tax return 2013 17. Amend tax return 2013 According to the prospectus, the debt instrument matures on December 31 of Year 15 at a stated redemption price of $100,000. Amend tax return 2013 The yield to maturity is 12%, compounded semiannually. Amend tax return 2013 The debt instrument provides for qualified stated interest payments of $5,000 on June 30 and December 31 of each calendar year. Amend tax return 2013 The accrual periods are the 6-month periods ending on each of these dates. Amend tax return 2013 The number of days for the first accrual period (January 1 through June 30) is 181 days (182 for leap years). Amend tax return 2013 The daily OID for the first accrual period is figured as follows. Amend tax return 2013   ($86,235. Amend tax return 2013 17 x . Amend tax return 2013 12/2) – $5,000     181 days     = $174. Amend tax return 2013 11020 = $. Amend tax return 2013 96193   181           The adjusted issue price at the beginning of the second accrual period is the issue price plus the OID previously includible in income ($86,235. Amend tax return 2013 17 + $174. Amend tax return 2013 11), or $86,409. Amend tax return 2013 28. Amend tax return 2013 The number of days for the second accrual period (July 1 through December 31) is 184 days. Amend tax return 2013 The daily OID for the second accrual period is figured as follows. Amend tax return 2013   ($86,409. Amend tax return 2013 28 x . Amend tax return 2013 12/2) – $5,000     184 days     = $184. Amend tax return 2013 55681 = $1. Amend tax return 2013 00303   184 Since the first and second accrual periods coincide exactly with your tax year, you include in income for Year 1 the OID allocable to the first two accrual periods, $174. Amend tax return 2013 11 ($. Amend tax return 2013 95665 × 182 days) plus $184. Amend tax return 2013 56 ($1. Amend tax return 2013 00303 × 184 days), or $358. Amend tax return 2013 67. Amend tax return 2013 Add the OID to the $10,000 interest you report on your income tax return for Year 1. Amend tax return 2013 Example 6. Amend tax return 2013 Assume the same facts as in Example 5, except that you bought the debt instrument at original issue on May 1 of Year 1, with a maturity date of April 30, Year 16. Amend tax return 2013 Also, the interest payment dates are October 31 and April 30 of each calendar year. Amend tax return 2013 The accrual periods are the 6-month periods ending on each of these dates. Amend tax return 2013 The number of days for the first accrual period (May 1 through October 31) is 184 days. Amend tax return 2013 The daily OID for the first accrual period is figured as follows. Amend tax return 2013   ($86,235. Amend tax return 2013 17 x . Amend tax return 2013 12/2) – $5,000     184 days     = $174. Amend tax return 2013 11020 = $. Amend tax return 2013 94625   184           The number of days for the second accrual period (November 1 through April 30) is 181 days (182 for leap years). Amend tax return 2013 The daily OID for the second accrual period is figured as follows. Amend tax return 2013   ($86,409. Amend tax return 2013 28 x . Amend tax return 2013 12/2) – $5,000     181 days     = $184. Amend tax return 2013 55681 = $1. Amend tax return 2013 01965   181 If you hold the debt instrument through the end of Year 1, you must include $236. Amend tax return 2013 31 of OID in income. Amend tax return 2013 This is $174. Amend tax return 2013 11 ($. Amend tax return 2013 94625 × 184 days) for the period May 1 through October 31 plus $62. Amend tax return 2013 20 ($1. Amend tax return 2013 01965 × 61 days) for the period November 1 through December 31. Amend tax return 2013 The OID is added to the $5,000 interest income paid on October 31 of Year 1. Amend tax return 2013 Your basis in the debt instrument is increased by the OID you include in income. Amend tax return 2013 On January 1 of Year 2, your basis in the A Corporation debt instrument is $86,471. Amend tax return 2013 48 ($86,235. Amend tax return 2013 17 + $236. Amend tax return 2013 31). Amend tax return 2013 Short first accrual period. Amend tax return 2013   You may have to make adjustments if a debt instrument has a short first accrual period. Amend tax return 2013 For example, a debt instrument with 6-month accrual periods that is issued on February 15 and matures on October 31 has a short first accrual period that ends April 30. Amend tax return 2013 (The remaining accrual periods begin on May 1 and November 1. Amend tax return 2013 ) For this short period, figure the daily OID as described earlier, but adjust the yield for the length of the short accrual period. Amend tax return 2013 You may use any reasonable compounding method in determining OID for a short period. Amend tax return 2013 Examples of reasonable compounding methods include continuous compounding and monthly compounding (that is, simple interest within a month). Amend tax return 2013 Consult your tax advisor for more information about making this computation. Amend tax return 2013   The OID for the final accrual period is the difference between the amount payable at maturity (other than a payment of qualified stated interest) and the adjusted issue price at the beginning of the final accrual period. Amend tax return 2013 Reduction for acquisition premium. Amend tax return 2013   If you bought the debt instrument at an acquisition premium, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. Amend tax return 2013 To figure the daily acquisition premium, multiply the daily OID by the following fraction. Amend tax return 2013 The numerator is the acquisition premium. Amend tax return 2013 The denominator is the total OID remaining for the debt instrument after your purchase date. Amend tax return 2013 Example 7. Amend tax return 2013 Assume the same facts as in Example 6, except that you bought the debt instrument on November 1 of Year 1 for $87,000, after its original issue on May 1 of Year 1. Amend tax return 2013 The adjusted issue price on November 1 of Year 1 is $86,409. Amend tax return 2013 28 ($86,235. Amend tax return 2013 17 + $174. Amend tax return 2013 11). Amend tax return 2013 In this case, you paid an acquisition premium of $590. Amend tax return 2013 72 ($87,000 − $86,409. Amend tax return 2013 28). Amend tax return 2013 The daily OID for the accrual period November 1 through April 30, reduced for the acquisition premium, is figured as follows. Amend tax return 2013 1) Daily OID on date of purchase (2nd accrual period) $1. Amend tax return 2013 01965*  2)  Acquisition premium $590. Amend tax return 2013 72    3)  Total OID remaining after purchase date ($13,764. Amend tax return 2013 83 − $174. Amend tax return 2013 11) 13,590. Amend tax return 2013 72   4) Line 2 ÷ line 3 . Amend tax return 2013 04346  5)  Line 1 × line 4 . Amend tax return 2013 04432  6)  Daily OID reduced for the acquisition premium. Amend tax return 2013 Line 1 − line 5 $0. Amend tax return 2013 97533  * As shown in Example 6. Amend tax return 2013 The total OID to include in income for Year 1 is $59. Amend tax return 2013 50 ($. Amend tax return 2013 97533 × 61 days). Amend tax return 2013 Contingent Payment Debt Instruments This discussion shows how to figure OID on a contingent payment debt instrument issued after August 12, 1996, that was issued for cash or publicly traded property. Amend tax return 2013 In general, a contingent payment debt instrument provides for one or more payments that are contingent as to timing or amount. Amend tax return 2013 If you hold a contingent payment bond, you must report OID as it accrues each year. Amend tax return 2013 Because the actual payments on a contingent payment debt instrument cannot be known in advance, issuers and holders cannot use the constant yield method (discussed earlier under Debt Instruments Issued After 1984) without making certain assumptions about the payments on the debt instrument. Amend tax return 2013 To figure OID accruals on contingent payment debt instruments, holders and issuers must use the noncontingent bond method. Amend tax return 2013 Noncontingent bond method. Amend tax return 2013    Under this method, the issuer must compute a comparable yield for the debt instrument and, based on this yield, construct a projected payment schedule for the instrument, which includes a projected fixed amount for each contingent payment. Amend tax return 2013 In general, holders and issuers accrue OID on this projected payment schedule using the constant yield method that applies to fixed payment debt instruments. Amend tax return 2013 When a contingent payment differs from the projected fixed amount, the holders and issuers make adjustments to their OID accruals. Amend tax return 2013 If the actual contingent payment is larger than expected, both the issuer and the holder increase their OID accruals. Amend tax return 2013 If the actual contingent payment is smaller than expected, holders and issuers generally decrease their OID accruals. Amend tax return 2013 Form 1099-OID. Amend tax return 2013   The amount shown on Form 1099-OID in box 1 you receive for a contingent payment debt instrument may not be the correct amount to include in income. Amend tax return 2013 For example, the amount may not be correct if the contingent payment was different from the projected amount. Amend tax return 2013 If the amount in box 1 is not correct, you must figure the OID to report on your return under the following rules. Amend tax return 2013 For information on showing an OID adjustment on your tax return, see How To Report OID, earlier. Amend tax return 2013 Figuring OID. Amend tax return 2013   To figure OID on a contingent payment debt instrument, you need to know the “comparable yield” and “projected payment schedule” of the debt instrument. Amend tax return 2013 The issuer must make these available to you. Amend tax return 2013 Comparable yield. Amend tax return 2013   The comparable yield generally is the yield at which the issuer would issue a fixed rate debt instrument with terms and conditions similar to those of the contingent payment debt instrument. Amend tax return 2013 The comparable yield is determined as of the debt instrument's issue date. Amend tax return 2013 Projected payment schedule. Amend tax return 2013   The projected payment schedule for a contingent payment debt instrument includes all fixed payments due under the instrument and a projected fixed amount for each contingent payment. Amend tax return 2013 The projected payment schedule is created by the issuer as of the debt instrument's issue date. Amend tax return 2013 It is used to determine the issuer's and holder's interest accruals and adjustments. Amend tax return 2013 Steps for figuring OID. Amend tax return 2013   Figure the OID on a contingent payment debt instrument in two steps. Amend tax return 2013 Figure the OID using the constant yield method (discussed earlier under Debt Instruments Issued After 1984 ) that applies to fixed payment debt instruments. Amend tax return 2013 Use the comparable yield as the yield to maturity. Amend tax return 2013 In general, use the projected payment schedule to determine the instrument's adjusted issue price at the beginning of each accrual period (other than the initial period). Amend tax return 2013 Do not treat any amount payable as qualified stated interest. Amend tax return 2013 Adjust the OID in (1) to account for actual contingent payments. Amend tax return 2013 If the contingent payment is greater than the projected fixed amount, you have a positive adjustment. Amend tax return 2013 If the contingent payment is less than the projected fixed amount, you have a negative adjustment. Amend tax return 2013 Net positive adjustment. Amend tax return 2013   A net positive adjustment exists for a tax year when the total of any positive adjustments described in (2) above for the tax year is more than the total of any negative adjustments for the tax year. Amend tax return 2013 Treat a net positive adjustment as additional OID for the tax year. Amend tax return 2013 Net negative adjustment. Amend tax return 2013   A net negative adjustment exists for a tax year when the total of any negative adjustments described in (2) above for the tax year is more than the total of any positive adjustments for the tax year. Amend tax return 2013 Use a net negative adjustment to offset OID on the debt instrument for the tax year. Amend tax return 2013 If the net negative adjustment is more than the OID on the debt instrument for the tax year, you can claim the difference as an ordinary loss. Amend tax return 2013 However, the amount you can claim as an ordinary loss is limited to the OID on the debt instrument you included in income in prior tax years. Amend tax return 2013 You must carry forward any net negative adjustment that is more than the total OID for the tax year and prior tax years and treat it as a negative adjustment in the next tax year. Amend tax return 2013 Basis adjustments. Amend tax return 2013   In general, increase your basis in a contingent payment debt instrument by the OID included in income. Amend tax return 2013 Your basis, however, is not affected by any negative or positive adjustments. Amend tax return 2013 Decrease your basis by any noncontingent payment received and the projected contingent payment scheduled to be received. Amend tax return 2013 Treatment of gain or loss on sale or exchange. Amend tax return 2013   If you sell a contingent payment debt instrument at a gain, your gain is ordinary income (interest income), even if you hold the debt instrument as a capital asset. Amend tax return 2013 If you sell a contingent payment debt instrument at a loss, your loss is an ordinary loss to the extent of your prior OID accruals on the debt instrument. Amend tax return 2013 If the debt instrument is a capital asset, treat any loss that is more than your prior OID accruals as a capital loss. Amend tax return 2013 See Regulations section 1. Amend tax return 2013 1275-4 for exceptions to these rules. Amend tax return 2013 Premium, acquisition premium, and market discount. Amend tax return 2013   The rules for accruing premium, acquisition premium, and market discount do not apply to a contingent payment debt instrument. Amend tax return 2013 See Regulations section 1. Amend tax return 2013 1275-4 to determine how to account for these items. Amend tax return 2013 Inflation-Indexed Debt Instruments This discussion shows how you figure OID on certain inflation-indexed debt instruments issued after January 5, 1997. Amend tax return 2013 An inflation-indexed debt instrument is generally a debt instrument on which the payments are adjusted for inflation and d
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Contact My Local Office in Iowa

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City Street Address Days/Hours of Service Telephone*
Cedar Rapids 425 Second St. SE
Cedar Rapids, IA 52401

Monday - Friday 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.)

 

Services Provided

(319) 364-5327 
Davenport  101 W. 2nd St.
Davenport, IA 52801

Monday-Wednesday 8:30 a.m.-4:30 p.m.
(Closed for lunch from 12:00 noon - 1:00 p.m.)

 

**This office will be open 10:30 a.m. - 4:30 p.m. on Mondays**

 

**This office will be open normal hours on Tuesdays**

 

**This office will be open 8:30 a.m. - 2:00 p.m. on Wednesdays**

 

**This office will be closed Thursdays and Fridays until further notice**

 

Services Provided

(563) 326-6052 
Des Moines  210 Walnut St.
Des Moines, IA 50309 

Monday-Friday 8:30 a.m.-4:30 p.m.
(Closed for lunch from 12:00 noon - 1:00 p.m.)

 

Services Provided

(515) 564-6618 
Fort Dodge**  1728 Central Ave.
Fort Dodge, IA 50501 

January - April: This office will be open the 1st and 3rd Monday of each month.

May - December: This office will be open only the 1st Monday of each month..

Monday 10:00 a.m.-3:30 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.)

 

**Whenever a Federal Holiday falls on the Monday we are scheduled to be open, we will be open on Tuesday of that week.
 

Services Provided

(515) 576-1744 
Sioux City  3539 Southern Hills Drive
Sioux City, IA
51106 

Monday-Friday 8:30 a.m.-4:30 p.m.
(Closed for lunch 11:30 a.m. - 12:30 p.m.)

 

Services Provided

(712) 274-8019 
Waterloo  201 Tower Park Dr.
Suite 102
Waterloo, IA 50701 

Monday - Friday 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.) 

 

Services Provided

(319) 234-5719 
Waterloo/remote
Taxpayer Assistance
available at Eastside Ministerial Alliance
205 Adams Street,
Suite 1
Waterloo, IA 50703

Monday-Thursday-9:30 a.m.-4:00 p.m.; 
Friday-9:00 a.m.-2:00 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.)
 

Services Provided

 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses). For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service: Call (515) 564-6888 in Des Moines or 1-877-777-4778 elsewhere, or see  Publication 1546, The Taxpayer Advocate Service of the IRS. For further information, see  Tax Topic 104.

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
210 Walnut St. Stop 4312
Des Moines, IA 50309

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Amend Tax Return 2013

Amend tax return 2013 27. Amend tax return 2013   Tax Benefits for Work-Related Education Table of Contents What's New Introduction Useful Items - You may want to see: Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. Amend tax return 2013 Transportation Expenses Travel Expenses No Double Benefit Allowed Reimbursements Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping What's New Standard mileage rate. Amend tax return 2013  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013, through December 31, 2013, is 56½ cents per mile. Amend tax return 2013 For more information, see Transportation Expenses under What Expenses Can Be Deducted. Amend tax return 2013 Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. Amend tax return 2013 To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040) if you are an employee, File Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040) if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education . Amend tax return 2013 If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. Amend tax return 2013 Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. Amend tax return 2013 See chapter 28. Amend tax return 2013 If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. Amend tax return 2013 Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits (see chapter 35). Amend tax return 2013 You may qualify for these other benefits even if you do not meet the requirements listed earlier. Amend tax return 2013 Also, keep in mind that your work-related education expenses may qualify you to claim more than one tax benefit. Amend tax return 2013 Generally, you may claim any number of benefits as long as you use different expenses to figure each one. Amend tax return 2013 When you figure your taxes, you may want to compare these tax benefits so you can choose the method(s) that give you the lowest tax liability. Amend tax return 2013 Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 970 Tax Benefits for Education Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses Schedule A (Form 1040) Itemized Deductions Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. Amend tax return 2013 This is education that meets at least one of the following two tests. Amend tax return 2013 The education is required by your employer or the law to keep your present salary, status, or job. Amend tax return 2013 The required education must serve a bona fide business purpose of your employer. Amend tax return 2013 The education maintains or improves skills needed in your present work. Amend tax return 2013 However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. Amend tax return 2013 You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. Amend tax return 2013 Use Figure 27-A, later, as a quick check to see if your education qualifies. Amend tax return 2013 Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. Amend tax return 2013 This additional education is qualifying work-related education if all three of the following requirements are met. Amend tax return 2013 It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. Amend tax return 2013 When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. Amend tax return 2013 See Education To Maintain or Improve Skills , later. Amend tax return 2013 Example. Amend tax return 2013 You are a teacher who has satisfied the minimum requirements for teaching. Amend tax return 2013 Your employer requires you to take an additional college course each year to keep your teaching job. Amend tax return 2013 If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. Amend tax return 2013 Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. Amend tax return 2013 This could include refresher courses, courses on current developments, and academic or vocational courses. Amend tax return 2013 Example. Amend tax return 2013 You repair televisions, radios, and stereo systems for XYZ Store. Amend tax return 2013 To keep up with the latest changes, you take special courses in radio and stereo service. Amend tax return 2013 These courses maintain and improve skills required in your work. Amend tax return 2013 Maintaining skills vs. Amend tax return 2013 qualifying for new job. Amend tax return 2013   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. Amend tax return 2013 Education during temporary absence. Amend tax return 2013   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. Amend tax return 2013 Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. Amend tax return 2013 Example. Amend tax return 2013 You quit your biology research job to become a full-time biology graduate student for one year. Amend tax return 2013 If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. Amend tax return 2013 Education during indefinite absence. Amend tax return 2013   If you stop work for more than a year, your absence from your job is considered indefinite. Amend tax return 2013 Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. Amend tax return 2013 Therefore, it is not qualifying work-related education. Amend tax return 2013 Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. Amend tax return 2013 The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. Amend tax return 2013 Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. Amend tax return 2013 This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. Amend tax return 2013 You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. Amend tax return 2013 Example 1. Amend tax return 2013 You are a full-time engineering student. Amend tax return 2013 Although you have not received your degree or certification, you work part-time as an engineer for a firm that will employ you as a full-time engineer after you finish college. Amend tax return 2013 Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. Amend tax return 2013 The education is not qualifying work-related education. Amend tax return 2013 Example 2. Amend tax return 2013 You are an accountant and you have met the minimum educational requirements of your employer. Amend tax return 2013 Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. Amend tax return 2013 These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. Amend tax return 2013 Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. Amend tax return 2013 The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. Amend tax return 2013 If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. Amend tax return 2013 The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. Amend tax return 2013 You generally will be considered a faculty member when one or more of the following occurs. Amend tax return 2013 You have tenure. Amend tax return 2013 Your years of service count toward obtaining tenure. Amend tax return 2013 You have a vote in faculty decisions. Amend tax return 2013 Your school makes contributions for you to a retirement plan other than social security or a similar program. Amend tax return 2013 Example 1. Amend tax return 2013 The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. Amend tax return 2013 In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. Amend tax return 2013 If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. Amend tax return 2013 However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. Amend tax return 2013 Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. Amend tax return 2013 If you have all the required education except the fifth year, you have met the minimum educational requirements. Amend tax return 2013 The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. Amend tax return 2013 Figure 27-A Does Your Work-Related Education Qualify? Please click here for the text description of the image. Amend tax return 2013 Figure 27-A. Amend tax return 2013 Does Your Work-Related Education Qualify?" Example 2. Amend tax return 2013 Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. Amend tax return 2013 The additional four education courses can be qualifying work-related education. Amend tax return 2013 Although you do not have all the required courses, you have already met the minimum educational requirements. Amend tax return 2013 Example 3. Amend tax return 2013 Assume the same facts as in Example 1 except that you are hired with only 3 years of college. Amend tax return 2013 The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. Amend tax return 2013 They are needed to meet the minimum educational requirements for employment as a teacher. Amend tax return 2013 Example 4. Amend tax return 2013 You have a bachelor's degree and you work as a temporary instructor at a university. Amend tax return 2013 At the same time, you take graduate courses toward an advanced degree. Amend tax return 2013 The rules of the university state that you can become a faculty member only if you get a graduate degree. Amend tax return 2013 Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. Amend tax return 2013 You have not met the minimum educational requirements to qualify you as a faculty member. Amend tax return 2013 The graduate courses are not qualifying work-related education. Amend tax return 2013 Certification in a new state. Amend tax return 2013   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. Amend tax return 2013 This is true even if you must get additional education to be certified in another state. Amend tax return 2013 Any additional education you need is qualifying work-related education. Amend tax return 2013 You have already met the minimum requirements for teaching. Amend tax return 2013 Teaching in another state is not a new trade or business. Amend tax return 2013 Example. Amend tax return 2013 You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. Amend tax return 2013 You move to State B and are promptly hired as a teacher. Amend tax return 2013 You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. Amend tax return 2013 These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. Amend tax return 2013 Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. Amend tax return 2013 This is true even if you do not plan to enter that trade or business. Amend tax return 2013 If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. Amend tax return 2013 Example 1. Amend tax return 2013 You are an accountant. Amend tax return 2013 Your employer requires you to get a law degree at your own expense. Amend tax return 2013 You register at a law school for the regular curriculum that leads to a law degree. Amend tax return 2013 Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. Amend tax return 2013 Example 2. Amend tax return 2013 You are a general practitioner of medicine. Amend tax return 2013 You take a 2-week course to review developments in several specialized fields of medicine. Amend tax return 2013 The course does not qualify you for a new profession. Amend tax return 2013 It is qualifying work-related education because it maintains or improves skills required in your present profession. Amend tax return 2013 Example 3. Amend tax return 2013 While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. Amend tax return 2013 The program will lead to qualifying you to practice psychoanalysis. Amend tax return 2013 The psychoanalytic training does not qualify you for a new profession. Amend tax return 2013 It is qualifying work-related education because it maintains or improves skills required in your present profession. Amend tax return 2013 Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. Amend tax return 2013 They are part of a program of study that can qualify you for a new profession. Amend tax return 2013 Teaching and Related Duties All teaching and related duties are considered the same general kind of work. Amend tax return 2013 A change in duties in any of the following ways is not considered a change to a new business. Amend tax return 2013 Elementary school teacher to secondary school teacher. Amend tax return 2013 Teacher of one subject, such as biology, to teacher of another subject, such as art. Amend tax return 2013 Classroom teacher to guidance counselor. Amend tax return 2013 Classroom teacher to school administrator. Amend tax return 2013 What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education , you can generally deduct your education expenses as business expenses. Amend tax return 2013 If you are not self-employed, you can deduct business expenses only if you itemize your deductions. Amend tax return 2013 You cannot deduct expenses related to tax-exempt and excluded income. Amend tax return 2013 Deductible expenses. Amend tax return 2013   The following education expenses can be deducted. Amend tax return 2013 Tuition, books, supplies, lab fees, and similar items. Amend tax return 2013 Certain transportation and travel costs. Amend tax return 2013 Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. Amend tax return 2013 Nondeductible expenses. Amend tax return 2013   You cannot deduct personal or capital expenses. Amend tax return 2013 For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. Amend tax return 2013 This amount is a personal expense. Amend tax return 2013 Unclaimed reimbursement. Amend tax return 2013   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. Amend tax return 2013 Example. Amend tax return 2013 Your employer agrees to pay your education expenses if you file a voucher showing your expenses. Amend tax return 2013 You do not file a voucher, and you do not get reimbursed. Amend tax return 2013 Because you did not file a voucher, you cannot deduct the expenses on your tax return. Amend tax return 2013 Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. Amend tax return 2013 If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. Amend tax return 2013 Temporary basis. Amend tax return 2013   You go to school on a temporary basis if either of the following situations applies to you. Amend tax return 2013 Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. Amend tax return 2013 Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Amend tax return 2013 Your attendance is temporary up to the date you determine it will last more than 1 year. Amend tax return 2013 Note. Amend tax return 2013 If you are in either situation (1) or (2), your attendance is not temporary if facts and circumstances indicate otherwise. Amend tax return 2013 Attendance not on a temporary basis. Amend tax return 2013   You do not go to school on a temporary basis if either of the following situations apply to you. Amend tax return 2013 Your attendance at school is realistically expected to last more than 1 year. Amend tax return 2013 It does not matter how long you actually attend. Amend tax return 2013 Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Amend tax return 2013 Your attendance is not temporary after the date you determine it will last more than 1 year. Amend tax return 2013 Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. Amend tax return 2013 This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. Amend tax return 2013 Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Amend tax return 2013 Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. Amend tax return 2013 Example 1. Amend tax return 2013 You regularly work in a nearby town, and go directly from work to home. Amend tax return 2013 You also attend school every work night for 3 months to take a course that improves your job skills. Amend tax return 2013 Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. Amend tax return 2013 This is true regardless of the distance traveled. Amend tax return 2013 Example 2. Amend tax return 2013 Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. Amend tax return 2013 You can deduct your transportation expenses from your regular work site to school and then home. Amend tax return 2013 Example 3. Amend tax return 2013 Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. Amend tax return 2013 Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. Amend tax return 2013 Example 4. Amend tax return 2013 Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. Amend tax return 2013 Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. Amend tax return 2013 If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. Amend tax return 2013 If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. Amend tax return 2013 Using your car. Amend tax return 2013   If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. Amend tax return 2013 The standard mileage rate for miles driven from January 1, 2013, through December 31, 2013 is 56½ cents per mile. Amend tax return 2013 Whichever method you use, you can also deduct parking fees and tolls. Amend tax return 2013 See chapter 26 for information on deducting your actual expenses of using a car. Amend tax return 2013 Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. Amend tax return 2013 Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. Amend tax return 2013 For more information, see chapter 26. Amend tax return 2013 You cannot deduct expenses for personal activities, such as sightseeing, visiting, or entertaining. Amend tax return 2013 Mainly personal travel. Amend tax return 2013   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. Amend tax return 2013 You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. Amend tax return 2013   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. Amend tax return 2013 An important factor is the comparison of time spent on personal activities with time spent on educational activities. Amend tax return 2013 If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. Amend tax return 2013 Example 1. Amend tax return 2013 John works in Newark, New Jersey. Amend tax return 2013 He traveled to Chicago to take a deductible 1-week course at the request of his employer. Amend tax return 2013 His main reason for going to Chicago was to take the course. Amend tax return 2013 While there, he took a sight-seeing trip, entertained some friends, and took a side trip to Pleasantville for a day. Amend tax return 2013 Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. Amend tax return 2013 He cannot deduct his transportation expenses of going to Pleasantville. Amend tax return 2013 He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. Amend tax return 2013 Example 2. Amend tax return 2013 Sue works in Boston. Amend tax return 2013 She went to a university in Michigan to take a course for work. Amend tax return 2013 The course is qualifying work-related education. Amend tax return 2013 She took one course, which is one-fourth of a full course load of study. Amend tax return 2013 She spent the rest of the time on personal activities. Amend tax return 2013 Her reasons for taking the course in Michigan were all personal. Amend tax return 2013 Sue's trip is mainly personal because three-fourths of her time is considered personal time. Amend tax return 2013 She cannot deduct the cost of her round-trip train ticket to Michigan. Amend tax return 2013 She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. Amend tax return 2013 Example 3. Amend tax return 2013 Dave works in Nashville and recently traveled to California to take a 2-week seminar. Amend tax return 2013 The seminar is qualifying work-related education. Amend tax return 2013 While there, he spent an extra 8 weeks on personal activities. Amend tax return 2013 The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. Amend tax return 2013 Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. Amend tax return 2013 He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. Amend tax return 2013 Cruises and conventions. Amend tax return 2013   Certain cruises and conventions offer seminars or courses as part of their itinerary. Amend tax return 2013 Even if the seminars or courses are work-related, your deduction for travel may be limited. Amend tax return 2013 This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. Amend tax return 2013   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. Amend tax return 2013 50% limit on meals. Amend tax return 2013   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. Amend tax return 2013 You cannot have been reimbursed for the meals. Amend tax return 2013   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. Amend tax return 2013 Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. Amend tax return 2013 Example. Amend tax return 2013 You are a French language teacher. Amend tax return 2013 While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. Amend tax return 2013 You chose your itinerary and most of your activities to improve your French language skills. Amend tax return 2013 You cannot deduct your travel expenses as education expenses. Amend tax return 2013 This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. Amend tax return 2013 No Double Benefit Allowed You cannot do either of the following. Amend tax return 2013 Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, the tuition and fees deduction (see chapter 35). Amend tax return 2013 Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. Amend tax return 2013 See Adjustments to Qualifying Work-Related Education Expenses , next. Amend tax return 2013 Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. Amend tax return 2013 You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. Amend tax return 2013 For more information, see chapter 12 of Publication 970. Amend tax return 2013 Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see chapter 1 of Publication 970), The tax-free part of Pell grants (see chapter 1 of Publication 970), The tax-free part of employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received for education assistance. Amend tax return 2013 Amounts that do not reduce qualifying work-related education expenses. Amend tax return 2013   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Amend tax return 2013   Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. Amend tax return 2013 Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. Amend tax return 2013 There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. Amend tax return 2013 You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. Amend tax return 2013 For information on how to treat reimbursements under both accountable and nonaccountable plans, see Reimbursements in chapter 26. Amend tax return 2013 Deducting Business Expenses Self-employed persons and employees report business expenses differently. Amend tax return 2013 The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. Amend tax return 2013 Self-Employed Persons If you are self-employed, report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C, C-EZ, or F). Amend tax return 2013 If your educational expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. Amend tax return 2013 See the instructions for the form you file for information on how to complete it. Amend tax return 2013 Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. Amend tax return 2013 If either (1) or (2) applies, you can deduct the total qualifying cost. Amend tax return 2013 If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. Amend tax return 2013 In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21. Amend tax return 2013 (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Amend tax return 2013 ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Amend tax return 2013 See chapter 28. Amend tax return 2013 Form 2106 or 2106-EZ. Amend tax return 2013   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or Form 2106-EZ. Amend tax return 2013 Form not required. Amend tax return 2013   Do not complete either Form 2106 or Form 2106-EZ if: If amounts included in box 1 of your Form W-2, are not considered reimbursements, and You are not claiming travel, transportation, meal, or entertainment expenses. Amend tax return 2013   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21. Amend tax return 2013 (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Amend tax return 2013 ) Using Form 2106-EZ. Amend tax return 2013   This form is shorter and easier to use than Form 2106. Amend tax return 2013 Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. Amend tax return 2013   If you do not meet both of these requirements, use Form 2106. Amend tax return 2013 Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. Amend tax return 2013 Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24. Amend tax return 2013 You do not have to itemize your deductions on Schedule A (Form 1040), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. Amend tax return 2013 You must complete Form 2106 or 2106-EZ to figure your deduction, even if you meet the requirements described earlier under Form not required . Amend tax return 2013 For more information on qualified performing artists, see chapter 6 of Publication 463. Amend tax return 2013 Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28. Amend tax return 2013 They are not subject to the 2%-of-adjusted-gross-income limit. Amend tax return 2013 To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . Amend tax return 2013 For more information on impairment-related work expenses, see chapter 6 of Publication 463. Amend tax return 2013 Recordkeeping You must keep records as proof of any deduction claimed on your tax return. Amend tax return 2013 Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. Amend tax return 2013 For specific information about keeping records of business expenses, see Recordkeeping in chapter 26. Amend tax return 2013 Prev  Up  Next   Home   More Online Publications