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Can I File My 2011 Taxes Now

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Can I File My 2011 Taxes Now

Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Adjustment for premium. Can i file my 2011 taxes now Adjustment for acquisition premium. Can i file my 2011 taxes now Adjustment for market discount. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now “Original issue discount” is defined first. Can i file my 2011 taxes now The other terms are listed alphabetically. Can i file my 2011 taxes now Original issue discount (OID). Can i file my 2011 taxes now   OID is a form of interest. Can i file my 2011 taxes now 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). Can i file my 2011 taxes now Zero coupon bonds and debt instruments that pay no stated interest until maturity are examples of debt instruments that have OID. Can i file my 2011 taxes now Accrual period. Can i file my 2011 taxes now   An accrual period is an interval of time used to measure OID. Can i file my 2011 taxes now The length of an accrual period can be 6 months, a year, or some other period, depending on when the debt instrument was issued. Can i file my 2011 taxes now Acquisition premium. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now A debt instrument does not have acquisition premium, however, if the debt instrument was purchased at a premium. Can i file my 2011 taxes now See Premium, later. Can i file my 2011 taxes now Adjusted issue price. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now In general, the adjusted issue price at the beginning of the debt instrument's first accrual period is its issue price. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Debt instrument. Can i file my 2011 taxes now   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). Can i file my 2011 taxes now It generally does not include an annuity contract. Can i file my 2011 taxes now Issue price. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now Market discount. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now The market discount is the difference between the issue price plus accrued OID and your adjusted basis. Can i file my 2011 taxes now Premium. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now The premium is the excess of the adjusted basis over the payable amounts. Can i file my 2011 taxes now See Publication 550 for information on the tax treatment of bond premium. Can i file my 2011 taxes now Qualified stated interest. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now Stated redemption price at maturity. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now Yield to maturity (YTM). Can i file my 2011 taxes now   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. Can i file my 2011 taxes now The YTM is generally shown on the face of the debt instrument or in the literature you receive from your broker. Can i file my 2011 taxes now If you do not have this information, consult your broker, tax advisor, or the issuer. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now The OID amounts listed are figured without reference to the price or date at which you acquired the debt instrument. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now The following discussions explain what information is contained in each section of the list. Can i file my 2011 taxes now Section I. Can i file my 2011 taxes now   This section contains publicly offered, long-term debt instruments. Can i file my 2011 taxes now Section I-A: Corporate Debt Instruments Issued Before 1985. Can i file my 2011 taxes now Section I-B: Corporate Debt Instruments Issued After 1984. Can i file my 2011 taxes now Section I-C: Inflation-Indexed Debt Instruments. Can i file my 2011 taxes now For each publicly offered debt instrument in Section I, the list contains the following information. Can i file my 2011 taxes now The name of the issuer. Can i file my 2011 taxes now The Committee on Uniform Security Identification Procedures (CUSIP) number. Can i file my 2011 taxes now The issue date. Can i file my 2011 taxes now The maturity date. Can i file my 2011 taxes now The issue price expressed as a percent of principal or of stated redemption price at maturity. Can i file my 2011 taxes now The annual stated or coupon interest rate. Can i file my 2011 taxes now (This rate is shown as 0. Can i file my 2011 taxes now 00 if no annual interest payments are provided. Can i file my 2011 taxes now ) The yield to maturity will be added to Section I-B for bonds issued after December 31, 2006. Can i file my 2011 taxes now The total OID accrued up to January 1 of a calendar year. Can i file my 2011 taxes now (This information is not available for every instrument. Can i file my 2011 taxes now ) 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. Can i file my 2011 taxes now The total OID per $1,000 of principal or maturity value for a calendar year and a subsequent year. Can i file my 2011 taxes now Section II. Can i file my 2011 taxes now   This section contains stripped coupons and principal components of U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now Treasury and Government-Sponsored Enterprise debt instruments. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now This section also includes debt instruments backed by U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now Treasury securities that represent ownership interests in those securities. Can i file my 2011 taxes now   The obligations listed in Section II are arranged by maturity date. Can i file my 2011 taxes now The amounts listed are the total OID for a calendar year per $1,000 of redemption price. Can i file my 2011 taxes now Section III. Can i file my 2011 taxes now   This section contains short-term discount obligations. Can i file my 2011 taxes now Section III-A: Short-Term U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now Treasury Bills. Can i file my 2011 taxes now Section III-B: Federal Home Loan Banks. Can i file my 2011 taxes now Section III-C: Federal National Mortgage Association. Can i file my 2011 taxes now Section III-D: Federal Farm Credit Banks. Can i file my 2011 taxes now Section III-E: Federal Home Loan Mortgage Corporation. Can i file my 2011 taxes now Section III-F: Federal Agricultural Mortgage Corporation. Can i file my 2011 taxes now    Information that supplements Section III-A is available on the Internet at http://www. Can i file my 2011 taxes now treasurydirect. Can i file my 2011 taxes now gov/tdhome. Can i file my 2011 taxes now htm. Can i file my 2011 taxes now   The short-term obligations listed in this section are arranged by maturity date. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Debt Instruments Not on the OID List The list of debt instruments discussed earlier does not contain the following items. Can i file my 2011 taxes now U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now savings bonds. Can i file my 2011 taxes now Certificates of deposit and other face-amount certificates issued at a discount, including syndicated certificates of deposit. Can i file my 2011 taxes now Obligations issued by tax-exempt organizations. Can i file my 2011 taxes now OID debt instruments that matured or were entirely called by the issuer before the tables were posted on the IRS website. Can i file my 2011 taxes now Mortgage-backed securities and mortgage participation certificates. Can i file my 2011 taxes now Long-term OID debt instruments issued before May 28, 1969. Can i file my 2011 taxes now Short-term obligations, other than the obligations listed in Section III. Can i file my 2011 taxes now Debt instruments issued at a discount by states or their political subdivisions. Can i file my 2011 taxes now REMIC regular interests and CDOs. Can i file my 2011 taxes now Commercial paper and banker's acceptances issued at a discount. Can i file my 2011 taxes now Obligations issued at a discount by individuals. Can i file my 2011 taxes now Foreign obligations not traded in the United States and obligations not issued in the United States. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now See Backup Withholding, later. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 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). Can i file my 2011 taxes now Electronic payee statements. Can i file my 2011 taxes now   You can issue Form 1099-OID electronically with the consent of the recipient. Can i file my 2011 taxes now More information. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now If you sell the obligation for the owner before maturity, you must file Form 1099-B to reflect the gross proceeds to the seller. Can i file my 2011 taxes now Do not report the accrued discount to the date of sale on either Form 1099-INT or Form 1099-OID. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now A special rule is used to determine the original issue price for information reporting on U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now Treasury bills (T-bills) listed in Section III-A. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now This noncompetitive discount price is the issue price (expressed as a percent of principal) shown in Section III-A. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Example 1. Can i file my 2011 taxes now There are 13-week and 26-week T-bills maturing on the same date as the T-bill being redeemed. Can i file my 2011 taxes now The price actually paid by the owner cannot be established by owner or middleman records. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now The interest you report on Form 1099-INT is the OID (per $1,000 of principal) shown in Section III-A for that obligation. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now For this purpose, you can rely on Section I of the OID list to determine the following information. Can i file my 2011 taxes now Whether a debt instrument has OID. Can i file my 2011 taxes now The OID to be reported on the Form 1099-OID. Can i file my 2011 taxes now In general, you must report OID on publicly offered, long-term debt instruments listed in Section I. Can i file my 2011 taxes now You also can report OID on other long-term debt instruments. Can i file my 2011 taxes now Form 1099-OID. Can i file my 2011 taxes now   On Form 1099-OID for a calendar year show the following information. Can i file my 2011 taxes now Box 1. Can i file my 2011 taxes now The OID for the actual dates the owner held the debt instruments during a calendar year. Can i file my 2011 taxes now To determine this amount, see Figuring OID, next. Can i file my 2011 taxes now Box 2. Can i file my 2011 taxes now The qualified stated interest paid or credited during the calendar year. Can i file my 2011 taxes now Interest reported here is not reported on Form 1099-INT. Can i file my 2011 taxes now The qualified stated interest on Treasury inflation-protected securities may be reported on Form 1099-INT in box 3 instead. Can i file my 2011 taxes now Box 3. Can i file my 2011 taxes now Any interest or principal forfeited because of an early withdrawal that the owner can deduct from gross income. Can i file my 2011 taxes now Do not reduce the amounts in boxes 1 and 2 by the forfeiture. Can i file my 2011 taxes now Box 4. Can i file my 2011 taxes now Any backup withholding for this debt instrument. Can i file my 2011 taxes now Box 7. Can i file my 2011 taxes now The CUSIP number, if any. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 50 2006). Can i file my 2011 taxes now If the issuer of the debt instrument is other than the payer, show the name of the issuer in this box. Can i file my 2011 taxes now Box 8. Can i file my 2011 taxes now The OID on a U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now Treasury obligation for the part of the year the owner held the debt instrument. Can i file my 2011 taxes now Box 9. Can i file my 2011 taxes now Investment expenses passed on to holders of a single-class REMIC. Can i file my 2011 taxes now Boxes 10-12. Can i file my 2011 taxes now Use to report any state income tax withheld for this debt instrument. Can i file my 2011 taxes now Figuring OID. Can i file my 2011 taxes now   You can determine the OID on a long-term debt instrument by using either of the following. Can i file my 2011 taxes now Section I of the OID list. Can i file my 2011 taxes now The income tax regulations. Can i file my 2011 taxes now Using Section I. Can i file my 2011 taxes now   If the owner held the debt instrument for the entire calendar year, report the OID shown in Section I for the calendar year. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now For example, if the debt instrument's stated redemption price at maturity is $500, report one-half the listed OID. Can i file my 2011 taxes now   If the owner held the debt instrument for less than the entire calendar year, figure the OID to report as follows. Can i file my 2011 taxes now Look up the daily OID for the first accrual period in the calendar year during which the owner held the debt instrument. Can i file my 2011 taxes now Multiply the daily OID by the number of days the owner held the debt instrument during that accrual period. Can i file my 2011 taxes now Repeat steps (1) and (2) for any remaining accrual periods for the year during which the owner held the debt instrument. Can i file my 2011 taxes now Add the results in steps (2) and (3) to determine the owner's OID per $1,000 of stated redemption price at maturity. Can i file my 2011 taxes now If necessary, adjust the OID in (4) to reflect the debt instrument's stated redemption price at maturity. Can i file my 2011 taxes now Report the result on Form 1099-OID in box 1. Can i file my 2011 taxes now Using the income tax regulations. Can i file my 2011 taxes now   Instead of using Section I to figure OID, you can use the regulations under sections 1272 through 1275 of the Internal Revenue Code. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now (If you use Section I-B, the OID is figured using 6-month accrual periods. Can i file my 2011 taxes now )   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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now You must file an information return showing the reportable interest and OID, if any, on the CD. Can i file my 2011 taxes now These rules apply whether or not you sold the CD to the owner. Can i file my 2011 taxes now Report OID on a CD in the same way as OID on other debt instruments. Can i file my 2011 taxes now See Short-Term Obligations Redeemed at Maturity and Long-Term Debt Instruments, earlier. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now However, do not report the interest if either of the following apply. Can i file my 2011 taxes now You hold the bond as a nominee for the true owner. Can i file my 2011 taxes now The payee is a foreign person. Can i file my 2011 taxes now See Payments to foreign person under Backup Withholding, later. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now The coupon may have been “stripped” (separated) from the bond and separately purchased. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 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%. Can i file my 2011 taxes now The backup withholding is deducted at the time a cash payment is made. Can i file my 2011 taxes now See Pub. Can i file my 2011 taxes now 1281, Backup Withholding for Missing and Incorrect Name/TIN(s), for more information. Can i file my 2011 taxes now Backup withholding generally applies in the following situations. Can i file my 2011 taxes now The payee does not give you a taxpayer identification number (TIN). Can i file my 2011 taxes now The IRS notifies you that the payee gave an incorrect TIN. Can i file my 2011 taxes now The IRS notifies you that the payee is subject to backup withholding due to payee underreporting. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now However, for short-term discount obligations (other than government obligations), bearer bonds and coupons, and U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Short-term obligations. Can i file my 2011 taxes now   Backup withholding applies to OID on a short-term obligation only when the OID is paid at maturity. Can i file my 2011 taxes now However, backup withholding applies to any interest payable before maturity when the interest is paid or credited. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now If the purchase price of a listed obligation is not established or is disregarded, you must use the issue price shown in Section III. Can i file my 2011 taxes now Long-term obligations. Can i file my 2011 taxes now   If no cash payments are made on a long-term obligation before maturity, backup withholding applies only at maturity. Can i file my 2011 taxes now The amount subject to backup withholding is the OID includible in the owner's gross income for the calendar year when the obligation matures. Can i file my 2011 taxes now The amount to be withheld is limited to the cash paid. Can i file my 2011 taxes now Registered long-term obligations with cash payments. Can i file my 2011 taxes now   If a registered long-term obligation has cash payments before maturity, backup withholding applies when a cash payment is made. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now For any payment, the required withholding is limited to the cash paid. Can i file my 2011 taxes now Payee not the original owner. Can i file my 2011 taxes now   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). Can i file my 2011 taxes now The amount subject to backup withholding at maturity of a listed obligation must be determined using the issue price shown in Section I. Can i file my 2011 taxes now Bearer long-term obligations with cash payments. Can i file my 2011 taxes now   If a bearer long-term obligation has cash payments before maturity, backup withholding applies when the cash payments are made. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now The required withholding at maturity is limited to the cash paid. Can i file my 2011 taxes now Sales and redemptions. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now Backup withholding applies in the following situations. Can i file my 2011 taxes now The payee does not give you a TIN. Can i file my 2011 taxes now The IRS notifies you that the payee gave an incorrect TIN. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Payments outside the United States to U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now person. Can i file my 2011 taxes now   The requirements for backup withholding and information reporting apply to payments of OID and interest made outside the United States to a U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now S. Can i file my 2011 taxes now trade or business. Can i file my 2011 taxes now Payments to foreign person. Can i file my 2011 taxes now   The following discussions explain the rules for backup withholding and information reporting on payments to foreign persons. Can i file my 2011 taxes now U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now -source amount. Can i file my 2011 taxes now   Backup withholding and information reporting are not required for payments of U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now -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. Can i file my 2011 taxes now A U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now resident is not a foreign person. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now S. Can i file my 2011 taxes now person. Can i file my 2011 taxes now   For information about the 28% withholding tax that may apply to payments of U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now -source OID or interest to foreign persons, see Publication 515. Can i file my 2011 taxes now Foreign-source amount. Can i file my 2011 taxes now   Backup withholding and information reporting are not required for payments of foreign-source OID and interest made outside the United States. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now More information. Can i file my 2011 taxes now   For more information about backup withholding and information reporting on foreign-source amounts or payments to foreign persons, see Regulations section 1. Can i file my 2011 taxes now 6049-5. Can i file my 2011 taxes now Information for Owners of OID Debt Instruments This section is for persons who prepare their own tax returns. Can i file my 2011 taxes now It discusses the income tax rules for figuring and reporting OID on long-term debt instruments. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now However, the information provided does not cover every situation. Can i file my 2011 taxes now More information can be found in the regulations under sections 1271 through 1275 of the Internal Revenue Code. Can i file my 2011 taxes now Including OID in income. Can i file my 2011 taxes now   Generally, you include OID in income as it accrues each year, whether or not you receive any payments from the debt instrument issuer. Can i file my 2011 taxes now Exceptions. Can i file my 2011 taxes now   The rules for including OID in income as it accrues generally do not apply to the following debt instruments. Can i file my 2011 taxes now U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now savings bonds. Can i file my 2011 taxes now Tax-exempt obligations. Can i file my 2011 taxes now (However, see Tax-Exempt Bonds and Coupons, later. Can i file my 2011 taxes now ) Obligations issued by individuals before March 2, 1984. Can i file my 2011 taxes now Loans of $10,000 or less between individuals who are not in the business of lending money. Can i file my 2011 taxes now (The dollar limit includes outstanding prior loans by the lender to the borrower. Can i file my 2011 taxes now ) This exception does not apply if a principal purpose of the loan is to avoid any federal tax. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now Publication 550 also discusses rules for holders of REMIC interests and CDOs. Can i file my 2011 taxes now De minimis rule. Can i file my 2011 taxes now   You can treat OID as zero if the total OID on a debt instrument is less than one-fourth of 1% (. Can i file my 2011 taxes now 0025) of the stated redemption price at maturity multiplied by the number of full years from the date of original issue to maturity. Can i file my 2011 taxes now Debt instruments with de minimis OID are not listed in this publication. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Also, the de minimis rules generally do not apply to tax-exempt obligations. Can i file my 2011 taxes now Example 2. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Under the de minimis rule, you can treat the OID as zero because the $20 discount is less than $25. Can i file my 2011 taxes now Example 3. Can i file my 2011 taxes now Assume the same facts as Example 2, except the debt instrument was issued at $950. Can i file my 2011 taxes now You must report part of the $50 OID each year because it is more than $25. Can i file my 2011 taxes now Choice to report all interest as OID. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now See Constant yield method under Debt Instruments Issued After 1984, later, for more information. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now For more information, see Regulations section 1. Can i file my 2011 taxes now 1272-3. Can i file my 2011 taxes now Purchase after date of original issue. Can i file my 2011 taxes now   A debt instrument you purchased after the date of original issue may have premium, acquisition premium, or market discount. Can i file my 2011 taxes now If so, the OID reported to you on Form 1099-OID may have to be adjusted. Can i file my 2011 taxes now For more information, see Showing an OID adjustment under How To Report OID, later. Can i file my 2011 taxes now The following rules generally do not apply to contingent payment debt instruments. Can i file my 2011 taxes now Adjustment for premium. Can i file my 2011 taxes now   If your debt instrument (other than an inflation-indexed debt instrument) has premium, do not report any OID as ordinary income. Can i file my 2011 taxes now Your adjustment is the total OID shown on your Form 1099-OID. Can i file my 2011 taxes now Adjustment for acquisition premium. Can i file my 2011 taxes now   If your debt instrument has acquisition premium, reduce the OID you report. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Adjustment for market discount. Can i file my 2011 taxes now   If your debt instrument has market discount that you choose to include in income currently, increase the OID you report. Can i file my 2011 taxes now Your adjustment is the accrued market discount for the year. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now If you choose to use the constant yield method to figure accrued market discount, also see Figuring OID on Long-Term Debt Instruments, later. Can i file my 2011 taxes now The constant yield method of figuring accrued OID, explained in those discussions under Constant yield method, is also used to figure accrued market discount. Can i file my 2011 taxes now For more information concerning premium or market discount on an inflation-indexed debt instrument, see Regulations section 1. Can i file my 2011 taxes now 1275-7. Can i file my 2011 taxes now Sale, exchange, or redemption. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now If you sold the debt instrument through a broker, you should receive Form 1099-B or an equivalent statement from the broker. Can i file my 2011 taxes now Use the Form 1099-B or other statement and your brokerage statements to complete Form 8949, and Schedule D (Form 1040). Can i file my 2011 taxes now   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. Can i file my 2011 taxes now Your basis, generally, is your cost increased by the OID you have included in income each year you held it. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now   See chapter 4 of Publication 550 for more information about the tax treatment of the sale or redemption of discounted debt instruments. Can i file my 2011 taxes now Example 4. Can i file my 2011 taxes now Larry, a calendar year taxpayer, bought a corporate debt instrument at original issue for $86,235. Can i file my 2011 taxes now 00 on November 1 of Year 1. Can i file my 2011 taxes now The 15-year debt instrument matures on October 31 of Year 16 at a stated redemption price of $100,000. Can i file my 2011 taxes now The debt instrument provides for semiannual payments of interest at 10%. Can i file my 2011 taxes now Assume the debt instrument is a capital asset in Larry's hands. Can i file my 2011 taxes now The debt instrument has $13,765. Can i file my 2011 taxes now 00 of OID ($100,000 stated redemption price at maturity minus $86,235. Can i file my 2011 taxes now 00 issue price). Can i file my 2011 taxes now Larry sold the debt instrument for $90,000 on November 1 of Year 4. Can i file my 2011 taxes now Including the OID he will report for the period he held the debt instrument in Year 4, Larry has included $4,556. Can i file my 2011 taxes now 00 of OID in income and has increased his basis by that amount to $90,791. Can i file my 2011 taxes now 00. Can i file my 2011 taxes now Larry has realized a loss of $791. Can i file my 2011 taxes now 00. Can i file my 2011 taxes now All of Larry's loss is capital loss. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Form 1099-OID shows all OID income in box 1 except OID on a U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now Treasury obligation, which is shown in box 8. Can i file my 2011 taxes now It also shows, in box 2, any qualified stated interest you must include in income. Can i file my 2011 taxes now (However, any qualified stated interest on Treasury inflation-protected securities can be reported on Form 1099-INT in box 3. Can i file my 2011 taxes now ) A copy of Form 1099-OID will be sent to the IRS. Can i file my 2011 taxes now Do not attach your copy to your tax return. Can i file my 2011 taxes now Keep it for your records. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Form 1099-OID not received. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now Refiguring OID. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now You bought the debt instrument at a premium or at an acquisition premium. Can i file my 2011 taxes now The debt instrument is a stripped bond or coupon (including zero coupon bonds backed by U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now Treasury securities). Can i file my 2011 taxes now The debt instrument is a contingent payment or inflation-indexed debt instrument. Can i file my 2011 taxes now See the discussions under Figuring OID on Long-Term Debt Instruments or Figuring OID on Stripped Bonds and Coupons, later, for the specific computations. Can i file my 2011 taxes now Refiguring interest. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now Nominee. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now ” You must file another Form 1099-OID for each actual owner, showing the OID for the owner. Can i file my 2011 taxes now Show the owner of the debt instrument as the “recipient” and you as the “payer. Can i file my 2011 taxes now ”   Complete Form 1099-OID and Form 1096 and file the forms with the Internal Revenue Service Center for your area. Can i file my 2011 taxes now You must also give a copy of the Form 1099-OID to the actual owner. Can i file my 2011 taxes now However, you are not required to file a nominee return to show amounts belonging to your spouse. Can i file my 2011 taxes now See the Form 1099 instructions for more information. Can i file my 2011 taxes now   When preparing your tax return, follow the instructions under Showing an OID adjustment in the next discussion. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Form 1040 or Form 1040A required. Can i file my 2011 taxes now   You must use Form 1040 or Form 1040A (you cannot use Form 1040EZ) under either of the following conditions. Can i file my 2011 taxes now You received a Form 1099-OID as a nominee for the actual owner. Can i file my 2011 taxes now Your total interest and OID income for the year was more than $1,500. Can i file my 2011 taxes now Form 1040 required. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Also, you must use Form 1040 if you were charged an early withdrawal penalty. Can i file my 2011 taxes now Where to report. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now Include all OID and periodic interest shown on any Form 1099-OID, boxes 1, 2, and 8, you received for the tax year. Can i file my 2011 taxes now Also include any other OID and interest income for which you did not receive a Form 1099. Can i file my 2011 taxes now Showing an OID adjustment. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now If the OID, as adjusted, is less than the amount shown on Form 1099-OID, show the adjustment as follows. Can i file my 2011 taxes now Under your last entry on line 1, subtotal all interest and OID income listed on line 1. Can i file my 2011 taxes now Below the subtotal, write “Nominee Distribution” or “OID Adjustment” and show the OID you are not required to report. Can i file my 2011 taxes now Subtract that OID from the subtotal and enter the result on line 2. Can i file my 2011 taxes now If the OID, as adjusted, is more than the amount shown on Form 1099-OID, show the adjustment as follows. Can i file my 2011 taxes now Under your last entry on line 1, subtotal all interest and OID income listed on line 1. Can i file my 2011 taxes now Below the subtotal, write “OID Adjustment” and show the additional OID. Can i file my 2011 taxes now Add that OID to the subtotal and enter the result on line 2. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now It also may depend on the type of the debt instrument. Can i file my 2011 taxes now There are different rules for each of the following debt instruments. Can i file my 2011 taxes now Corporate debt instruments issued after 1954 and before May 28, 1969, and government debt instruments issued after 1954 and before July 2, 1982. Can i file my 2011 taxes now Corporate debt instruments issued after May 27, 1969, and before July 2, 1982. Can i file my 2011 taxes now Debt instruments issued after July 1, 1982, and before 1985. Can i file my 2011 taxes now Debt instruments issued after 1984 (other than debt instruments described in (5) and (6)). Can i file my 2011 taxes now Contingent payment debt instruments issued after August 12, 1996. Can i file my 2011 taxes now Inflation-indexed debt instruments (including Treasury inflation-protected securities) issued after January 5, 1997. Can i file my 2011 taxes now Zero coupon bonds. Can i file my 2011 taxes now   The rules for figuring OID on zero coupon bonds backed by U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now Treasury securities are discussed under Figuring OID on Stripped Bonds and Coupons, later. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now The OID, which is taxed as ordinary income, generally equals the following amount. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now If there is a loss on the sale of the debt instrument, the entire loss is a capital loss and no OID is reported. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now For information about showing the correct OID on your tax return, see the discussion under How To Report OID, earlier. Can i file my 2011 taxes now Your basis in the debt instrument is increased by the OID you include in income. Can i file my 2011 taxes now Form 1099-OID. Can i file my 2011 taxes now   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. Can i file my 2011 taxes now However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Can i file my 2011 taxes now See Reduction for acquisition premium, later. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now irs. Can i file my 2011 taxes now gov/pub1212 by clicking the link under Recent Developments. Can i file my 2011 taxes now Form 1099-OID not received. Can i file my 2011 taxes now    The OID listed is for each $1,000 of redemption price. Can i file my 2011 taxes now You must adjust the listed amount if your debt instrument has a different principal amount. Can i file my 2011 taxes now For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Can i file my 2011 taxes now   If you held the debt instrument the entire year, use the OID shown in Section I-A for a calendar year. Can i file my 2011 taxes now (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. Can i file my 2011 taxes now ) If you did not hold the debt instrument the entire year, figure your OID using the following method. Can i file my 2011 taxes now Divide the OID shown by 12. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now This is the OID to include in income unless you paid an acquisition premium. Can i file my 2011 taxes now The reduction for acquisition premium is discussed next. Can i file my 2011 taxes now Reduction for acquisition premium. Can i file my 2011 taxes now   If you bought the debt instrument at an acquisition premium, figure the OID to include in income as follows. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now This is the monthly OID. Can i file my 2011 taxes now Subtract from your cost the issue price and the accumulated OID from the date of issue to the date of purchase. Can i file my 2011 taxes now (If the result is zero or less, stop here. Can i file my 2011 taxes now You did not pay an acquisition premium. Can i file my 2011 taxes now ) 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. Can i file my 2011 taxes now Subtract the amount figured in (3) from the amount figured in (1). Can i file my 2011 taxes now This is the OID to include in income for each month you hold the debt instrument during the year. Can i file my 2011 taxes now Transfers during the month. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now Your holding period for this purpose begins the day you acquire the debt instrument and ends the day before you dispose of it. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now For information about showing the correct OID on your tax return, see How To Report OID, earlier. Can i file my 2011 taxes now Form 1099-OID. Can i file my 2011 taxes now   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. Can i file my 2011 taxes now However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Can i file my 2011 taxes now See Constant yield method and the discussions on acquisition premium that follow, later. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now irs. Can i file my 2011 taxes now gov/pub1212 by clicking the link under Recent Developments. Can i file my 2011 taxes now Form 1099-OID not received. Can i file my 2011 taxes now    The OID listed is for each $1,000 of redemption price. Can i file my 2011 taxes now You must adjust the listed amount if your debt instrument has a different principal amount. Can i file my 2011 taxes now For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Can i file my 2011 taxes now   If you held the debt instrument the entire year, use the OID shown in Section I-A. Can i file my 2011 taxes now (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. Can i file my 2011 taxes now ) If you did not hold the debt instrument the entire year, figure your OID using either of the following methods. Can i file my 2011 taxes now Method 1. Can i file my 2011 taxes now    Divide the total OID for a calendar year by 365 (366 for leap years). Can i file my 2011 taxes now Multiply the result in (1) by the number of days you held the debt instrument during that particular year. Can i file my 2011 taxes now  This computation is an approximation and may result in a slightly higher OID than Method 2. Can i file my 2011 taxes now Method 2. Can i file my 2011 taxes now    Look up the daily OID for the first accrual period you held the debt instrument during a calendar year. Can i file my 2011 taxes now (See Accrual period under Constant yield method, next. Can i file my 2011 taxes now ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. Can i file my 2011 taxes now If you held the debt instrument for part of both accrual periods, repeat (1) and (2) for the second accrual period. Can i file my 2011 taxes now Add the results of (2) and (3). Can i file my 2011 taxes now This is the OID to include in income, unless you paid an acquisition premium. Can i file my 2011 taxes now (The reduction for acquisition premium is discussed later. Can i file my 2011 taxes now ) Constant yield method. Can i file my 2011 taxes now   This discussion shows how to figure OID on debt instruments issued after July 1, 1982, and before 1985, using a constant yield method. Can i file my 2011 taxes now OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. Can i file my 2011 taxes now   Figure the OID allocable to any accrual period as follows. Can i file my 2011 taxes now Multiply the adjusted issue price at the beginning of the accrual period by the debt instrument's yield to maturity. Can i file my 2011 taxes now Subtract from the result in (1) any qualified stated interest allocable to the accrual period. Can i file my 2011 taxes now Accrual period. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now Your tax year will usually include parts of two accrual periods. Can i file my 2011 taxes now Daily OID. Can i file my 2011 taxes now   The OID for any accrual period is allocated equally to each day in the accrual period. Can i file my 2011 taxes now You must include in income the sum of the OID amounts for each day you hold the debt instrument during the year. Can i file my 2011 taxes now If your tax year includes parts of two or more accrual periods, you must include the proper daily OID amounts for each accrual period. Can i file my 2011 taxes now Figuring daily OID. Can i file my 2011 taxes now   The daily OID for the initial accrual period is figured using the following formula. Can i file my 2011 taxes now   (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. Can i file my 2011 taxes now Reduction for acquisition premium on debt instruments purchased before July 19, 1984. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Reduction for acquisition premium on debt instruments purchased after July 18, 1984. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now However, the method of figuring the daily acquisition premium is different from the method described in the preceding discussion. Can i file my 2011 taxes now To figure the daily acquisition premium under this method, multiply the daily OID by the following fraction. Can i file my 2011 taxes now The numerator is the acquisition premium. Can i file my 2011 taxes now The denominator is the total OID remaining for the debt instrument after your purchase date. Can i file my 2011 taxes now Section I-A is available at www. Can i file my 2011 taxes now irs. Can i file my 2011 taxes now gov/pub1212 and clicking the link under Recent Developments. Can i file my 2011 taxes now Using Section I-A to figure accumulated OID. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now The amount from the “Total OID to January 1, YYYY” column for your debt instrument. Can i file my 2011 taxes now The OID from January 1 of a calendar year to the date of purchase, figured as follows. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Add the amounts figured in (2a) and (2b). Can i file my 2011 taxes now 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. Can i file my 2011 taxes now You must include the OID in gross income whether or not you hold the debt instrument as a capital asset. Can i file my 2011 taxes now Your basis in the debt instrument is increased by the OID you include in income. Can i file my 2011 taxes now For information about showing the correct OID on your tax return, see How To Report OID, earlier. Can i file my 2011 taxes now Form 1099-OID. Can i file my 2011 taxes now   You should receive a Form 1099-OID showing OID for the part of a calendar year you held the debt instrument. Can i file my 2011 taxes now However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Can i file my 2011 taxes now See Constant yield method and Reduction for acquisition premium, later. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now See Contingent Payment Debt Instruments or Inflation-Indexed Debt Instruments, later. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now irs. Can i file my 2011 taxes now gov/pub1212 by clicking the link under Recent Developments. Can i file my 2011 taxes now Form 1099-OID not received. Can i file my 2011 taxes now   The OID listed is for each $1,000 of redemption price. Can i file my 2011 taxes now You must adjust the listed amount if your debt instrument has a different principal amount. Can i file my 2011 taxes now For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Can i file my 2011 taxes now   Use the OID shown in Section I-B for a calendar year if you held the debt instrument the entire year. Can i file my 2011 taxes now (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. Can i file my 2011 taxes now ) If you did not hold the debt instrument the entire year, figure your OID as follows. Can i file my 2011 taxes now Look up the daily OID for the first accrual period in which you held the debt instrument during a calendar year. Can i file my 2011 taxes now (See Accrual period under Constant yield method, later. Can i file my 2011 taxes now ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. Can i file my 2011 taxes now Repeat (1) and (2) for any remaining accrual periods in which you held the debt instrument. Can i file my 2011 taxes now Add the results of (2) and (3). Can i file my 2011 taxes now This is the OID to include in income for that year, unless you paid an acquisition premium. Can i file my 2011 taxes now (The reduction for acquisition premium is discussed later. Can i file my 2011 taxes now ) Tax-exempt bond. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now You need to make this adjustment to determine if you have a gain or loss on a later disposition of the bond. Can i file my 2011 taxes now In general, use the rules that follow to determine your OID. Can i file my 2011 taxes now Constant yield method. Can i file my 2011 taxes now   This discussion shows how to figure OID on debt instruments issued after 1984 using a constant yield method. Can i file my 2011 taxes now (The special rules that apply to contingent payment debt instruments and inflation-indexed debt instruments are explained later. Can i file my 2011 taxes now ) OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. Can i file my 2011 taxes now   Figure the OID allocable to any accrual period as follows. Can i file my 2011 taxes now Multiply the adjusted issue price at the beginning of the accrual period by a fraction. Can i file my 2011 taxes now The numerator of the fraction is the debt instrument's yield to maturity and the denominator is the number of accrual periods per year. Can i file my 2011 taxes now The yield must be stated appropriately taking into account the length of the particular accrual period. Can i file my 2011 taxes now Subtract from the result in (1) any qualified stated interest allocable to the accrual period. Can i file my 2011 taxes now Accrual period. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now For example, a debt instrument maturing on March 31 has accrual periods that end on September 30 and March 31 of each calendar year. Can i file my 2011 taxes now Any short period is included as the first accrual period. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now However, the OID listed for these debt instruments in Section I-B has been figured using 6-month accrual periods. Can i file my 2011 taxes now Daily OID. Can i file my 2011 taxes now   The OID for any accrual period is allocated equally to each day in the accrual period. Can i file my 2011 taxes now Figure the amount to include in income by adding the OID for each day you hold the debt instrument during the year. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Figuring daily OID. Can i file my 2011 taxes now   The daily OID for the initial accrual period is figured using the following formula. Can i file my 2011 taxes now   (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. Can i file my 2011 taxes now Example 5. Can i file my 2011 taxes now On January 1 of Year 1, you bought a 15-year, 10% debt instrument of A Corporation at original issue for $86,235. Can i file my 2011 taxes now 17. Can i file my 2011 taxes now According to the prospectus, the debt instrument matures on December 31 of Year 15 at a stated redemption price of $100,000. Can i file my 2011 taxes now The yield to maturity is 12%, compounded semiannually. Can i file my 2011 taxes now The debt instrument provides for qualified stated interest payments of $5,000 on June 30 and December 31 of each calendar year. Can i file my 2011 taxes now The accrual periods are the 6-month periods ending on each of these dates. Can i file my 2011 taxes now The number of days for the first accrual period (January 1 through June 30) is 181 days (182 for leap years). Can i file my 2011 taxes now The daily OID for the first accrual period is figured as follows. Can i file my 2011 taxes now   ($86,235. Can i file my 2011 taxes now 17 x . Can i file my 2011 taxes now 12/2) – $5,000     181 days     = $174. Can i file my 2011 taxes now 11020 = $. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 17 + $174. Can i file my 2011 taxes now 11), or $86,409. Can i file my 2011 taxes now 28. Can i file my 2011 taxes now The number of days for the second accrual period (July 1 through December 31) is 184 days. Can i file my 2011 taxes now The daily OID for the second accrual period is figured as follows. Can i file my 2011 taxes now   ($86,409. Can i file my 2011 taxes now 28 x . Can i file my 2011 taxes now 12/2) – $5,000     184 days     = $184. Can i file my 2011 taxes now 55681 = $1. Can i file my 2011 taxes now 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, $174. Can i file my 2011 taxes now 11 ($. Can i file my 2011 taxes now 95665 × 182 days) plus $184. Can i file my 2011 taxes now 56 ($1. Can i file my 2011 taxes now 00303 × 184 days), or $358. Can i file my 2011 taxes now 67. Can i file my 2011 taxes now Add the OID to the $10,000 interest you report on your income tax return for Year 1. Can i file my 2011 taxes now Example 6. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Also, the interest payment dates are October 31 and April 30 of each calendar year. Can i file my 2011 taxes now The accrual periods are the 6-month periods ending on each of these dates. Can i file my 2011 taxes now The number of days for the first accrual period (May 1 through October 31) is 184 days. Can i file my 2011 taxes now The daily OID for the first accrual period is figured as follows. Can i file my 2011 taxes now   ($86,235. Can i file my 2011 taxes now 17 x . Can i file my 2011 taxes now 12/2) – $5,000     184 days     = $174. Can i file my 2011 taxes now 11020 = $. Can i file my 2011 taxes now 94625   184           The number of days for the second accrual period (November 1 through April 30) is 181 days (182 for leap years). Can i file my 2011 taxes now The daily OID for the second accrual period is figured as follows. Can i file my 2011 taxes now   ($86,409. Can i file my 2011 taxes now 28 x . Can i file my 2011 taxes now 12/2) – $5,000     181 days     = $184. Can i file my 2011 taxes now 55681 = $1. Can i file my 2011 taxes now 01965   181 If you hold the debt instrument through the end of Year 1, you must include $236. Can i file my 2011 taxes now 31 of OID in income. Can i file my 2011 taxes now This is $174. Can i file my 2011 taxes now 11 ($. Can i file my 2011 taxes now 94625 × 184 days) for the period May 1 through October 31 plus $62. Can i file my 2011 taxes now 20 ($1. Can i file my 2011 taxes now 01965 × 61 days) for the period November 1 through December 31. Can i file my 2011 taxes now The OID is added to the $5,000 interest income paid on October 31 of Year 1. Can i file my 2011 taxes now Your basis in the debt instrument is increased by the OID you include in income. Can i file my 2011 taxes now On January 1 of Year 2, your basis in the A Corporation debt instrument is $86,471. Can i file my 2011 taxes now 48 ($86,235. Can i file my 2011 taxes now 17 + $236. Can i file my 2011 taxes now 31). Can i file my 2011 taxes now Short first accrual period. Can i file my 2011 taxes now   You may have to make adjustments if a debt instrument has a short first accrual period. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now (The remaining accrual periods begin on May 1 and November 1. Can i file my 2011 taxes now ) For this short period, figure the daily OID as described earlier, but adjust the yield for the length of the short accrual period. Can i file my 2011 taxes now You may use any reasonable compounding method in determining OID for a short period. Can i file my 2011 taxes now Examples of reasonable compounding methods include continuous compounding and monthly compounding (that is, simple interest within a month). Can i file my 2011 taxes now Consult your tax advisor for more information about making this computation. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now Reduction for acquisition premium. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now To figure the daily acquisition premium, multiply the daily OID by the following fraction. Can i file my 2011 taxes now The numerator is the acquisition premium. Can i file my 2011 taxes now The denominator is the total OID remaining for the debt instrument after your purchase date. Can i file my 2011 taxes now Example 7. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now The adjusted issue price on November 1 of Year 1 is $86,409. Can i file my 2011 taxes now 28 ($86,235. Can i file my 2011 taxes now 17 + $174. Can i file my 2011 taxes now 11). Can i file my 2011 taxes now In this case, you paid an acquisition premium of $590. Can i file my 2011 taxes now 72 ($87,000 − $86,409. Can i file my 2011 taxes now 28). Can i file my 2011 taxes now The daily OID for the accrual period November 1 through April 30, reduced for the acquisition premium, is figured as follows. Can i file my 2011 taxes now 1) Daily OID on date of purchase (2nd accrual period) $1. Can i file my 2011 taxes now 01965*  2)  Acquisition premium $590. Can i file my 2011 taxes now 72    3)  Total OID remaining after purchase date ($13,764. Can i file my 2011 taxes now 83 − $174. Can i file my 2011 taxes now 11) 13,590. Can i file my 2011 taxes now 72   4) Line 2 ÷ line 3 . Can i file my 2011 taxes now 04346  5)  Line 1 × line 4 . Can i file my 2011 taxes now 04432  6)  Daily OID reduced for the acquisition premium. Can i file my 2011 taxes now Line 1 − line 5 $0. Can i file my 2011 taxes now 97533  * As shown in Example 6. Can i file my 2011 taxes now The total OID to include in income for Year 1 is $59. Can i file my 2011 taxes now 50 ($. Can i file my 2011 taxes now 97533 × 61 days). Can i file my 2011 taxes now 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. Can i file my 2011 taxes now In general, a contingent payment debt instrument provides for one or more payments that are contingent as to timing or amount. Can i file my 2011 taxes now If you hold a contingent payment bond, you must report OID as it accrues each year. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now To figure OID accruals on contingent payment debt instruments, holders and issuers must use the noncontingent bond method. Can i file my 2011 taxes now Noncontingent bond method. Can i file my 2011 taxes now    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. Can i file my 2011 taxes now In general, holders and issuers accrue OID on this projected payment schedule using the constant yield method that applies to fixed payment debt instruments. Can i file my 2011 taxes now When a contingent payment differs from the projected fixed amount, the holders and issuers make adjustments to their OID accruals. Can i file my 2011 taxes now If the actual contingent payment is larger than expected, both the issuer and the holder increase their OID accruals. Can i file my 2011 taxes now If the actual contingent payment is smaller than expected, holders and issuers generally decrease their OID accruals. Can i file my 2011 taxes now Form 1099-OID. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now For example, the amount may not be correct if the contingent payment was different from the projected amount. Can i file my 2011 taxes now If the amount in box 1 is not correct, you must figure the OID to report on your return under the following rules. Can i file my 2011 taxes now For information on showing an OID adjustment on your tax return, see How To Report OID, earlier. Can i file my 2011 taxes now Figuring OID. Can i file my 2011 taxes now   To figure OID on a contingent payment debt instrument, you need to know the “comparable yield” and “projected payment schedule” of the debt instrument. Can i file my 2011 taxes now The issuer must make these available to you. Can i file my 2011 taxes now Comparable yield. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now The comparable yield is determined as of the debt instrument's issue date. Can i file my 2011 taxes now Projected payment schedule. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now The projected payment schedule is created by the issuer as of the debt instrument's issue date. Can i file my 2011 taxes now It is used to determine the issuer's and holder's interest accruals and adjustments. Can i file my 2011 taxes now Steps for figuring OID. Can i file my 2011 taxes now   Figure the OID on a contingent payment debt instrument in two steps. Can i file my 2011 taxes now Figure the OID using the constant yield method (discussed earlier under Debt Instruments Issued After 1984 ) that applies to fixed payment debt instruments. Can i file my 2011 taxes now Use the comparable yield as the yield to maturity. Can i file my 2011 taxes now 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). Can i file my 2011 taxes now Do not treat any amount payable as qualified stated interest. Can i file my 2011 taxes now Adjust the OID in (1) to account for actual contingent payments. Can i file my 2011 taxes now If the contingent payment is greater than the projected fixed amount, you have a positive adjustment. Can i file my 2011 taxes now If the contingent payment is less than the projected fixed amount, you have a negative adjustment. Can i file my 2011 taxes now Net positive adjustment. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now Treat a net positive adjustment as additional OID for the tax year. Can i file my 2011 taxes now Net negative adjustment. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now Use a net negative adjustment to offset OID on the debt instrument for the tax year. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now Basis adjustments. Can i file my 2011 taxes now   In general, increase your basis in a contingent payment debt instrument by the OID included in income. Can i file my 2011 taxes now Your basis, however, is not affected by any negative or positive adjustments. Can i file my 2011 taxes now Decrease your basis by any noncontingent payment received and the projected contingent payment scheduled to be received. Can i file my 2011 taxes now Treatment of gain or loss on sale or exchange. Can i file my 2011 taxes now   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. Can i file my 2011 taxes now 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. Can i file my 2011 taxes now If the debt instrument is a capital asset, treat any loss that is more than your prior OID accruals as a capital loss. Can i file my 2011 taxes now See Regulations section 1. Can i file my 2011 taxes now 1275-4 for exceptions to these rules. Can i file my 2011 taxes now Premium, acquisition premium, and market discount. Can i file my 2011 taxes now   The rules for accruing premium, acquisition premium, and market discount do not apply to a contingent payment debt instrument. Can i file my 2011 taxes now See Regulations section 1. Can i file my 2011 taxes now 1275-4 to determine how to account for these items. Can i file my 2011 taxes now Inflation-Indexed Debt Instruments This discussion shows how you figure OID on certain inflation-indexed debt instruments issued after January 5, 1997. Can i file my 2011 taxes now An inflation-indexed debt instrument is generally a debt instrument on which the payments are adjusted for inflation and d
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Can i file my 2011 taxes now 22. Can i file my 2011 taxes now   Taxes Table of Contents IntroductionIndian tribal government. Can i file my 2011 taxes now Useful Items - You may want to see: Tests To Deduct Any Tax Income TaxesState and Local Income Taxes Foreign Income Taxes General Sales TaxesMotor vehicles. Can i file my 2011 taxes now Real Estate TaxesReal estate taxes for prior years. Can i file my 2011 taxes now Examples. Can i file my 2011 taxes now Form 1099-S. Can i file my 2011 taxes now Real Estate-Related Items You Cannot Deduct Personal Property Taxes Taxes and Fees You Cannot Deduct Where To Deduct Introduction This chapter discusses which taxes you can deduct if you itemize deductions on Schedule A (Form 1040). Can i file my 2011 taxes now It also explains which taxes you can deduct on other schedules or forms and which taxes you cannot deduct. Can i file my 2011 taxes now This chapter covers the following topics. Can i file my 2011 taxes now Income taxes (federal, state, local, and foreign). Can i file my 2011 taxes now General sales taxes (state and local). Can i file my 2011 taxes now Real estate taxes (state, local, and foreign). Can i file my 2011 taxes now Personal property taxes (state and local). Can i file my 2011 taxes now Taxes and fees you cannot deduct. Can i file my 2011 taxes now Use Table 22-1 as a guide to determine which taxes you can deduct. Can i file my 2011 taxes now The end of the chapter contains a section that explains which forms you use to deduct different types of taxes. Can i file my 2011 taxes now Business taxes. Can i file my 2011 taxes now   You can deduct certain taxes only if they are ordinary and necessary expenses of your trade or business or of producing income. Can i file my 2011 taxes now For information on these taxes, see Publication 535, Business Expenses. Can i file my 2011 taxes now State or local taxes. Can i file my 2011 taxes now   These are taxes imposed by the 50 states, U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now possessions, or any of their political subdivisions (such as a county or city), or by the District of Columbia. Can i file my 2011 taxes now Indian tribal government. Can i file my 2011 taxes now   An Indian tribal government recognized by the Secretary of the Treasury as performing substantial government functions will be treated as a state for purposes of claiming a deduction for taxes. Can i file my 2011 taxes now Income taxes, real estate taxes, and personal property taxes imposed by that Indian tribal government (or by any of its subdivisions that are treated as political subdivisions of a state) are deductible. Can i file my 2011 taxes now General sales taxes. Can i file my 2011 taxes now   These are taxes imposed at one rate on retail sales of a broad range of classes of items. Can i file my 2011 taxes now Foreign taxes. Can i file my 2011 taxes now   These are taxes imposed by a foreign country or any of its political subdivisions. Can i file my 2011 taxes now Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 530 Tax Information for Homeowners Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule E (Form 1040) Supplemental Income and Loss 1116 Foreign Tax Credit Tests To Deduct Any Tax The following two tests must be met for you to deduct any tax. Can i file my 2011 taxes now The tax must be imposed on you. Can i file my 2011 taxes now You must pay the tax during your tax year. Can i file my 2011 taxes now The tax must be imposed on you. Can i file my 2011 taxes now   In general, you can deduct only taxes imposed on you. Can i file my 2011 taxes now   Generally, you can deduct property taxes only if you are an owner of the property. Can i file my 2011 taxes now If your spouse owns the property and pays the real estate taxes, the taxes are deductible on your spouse's separate return or on your joint return. Can i file my 2011 taxes now You must pay the tax during your tax year. Can i file my 2011 taxes now   If you are a cash basis taxpayer, you can deduct only those taxes you actually paid during your tax year. Can i file my 2011 taxes now If you pay your taxes by check, the day you mail or deliver the check is the date of payment, provided the check is honored by the financial institution. Can i file my 2011 taxes now If you use a pay-by-phone account (such as a credit card or electronic funds withdrawal), the date reported on the statement of the financial institution showing when payment was made is the date of payment. Can i file my 2011 taxes now If you contest a tax liability and are a cash basis taxpayer, you can deduct the tax only in the year you actually pay it (or transfer money or other property to provide for satisfaction of the contested liability). Can i file my 2011 taxes now See Publication 538, Accounting Periods and Methods, for details. Can i file my 2011 taxes now    If you use an accrual method of accounting, see Publication 538 for more information. Can i file my 2011 taxes now Income Taxes This section discusses the deductibility of state and local income taxes (including employee contributions to state benefit funds) and foreign income taxes. Can i file my 2011 taxes now State and Local Income Taxes You can deduct state and local income taxes. Can i file my 2011 taxes now However, you can elect to deduct state and local general sales taxes instead of state and local income taxes. Can i file my 2011 taxes now See General Sales Taxes , later. Can i file my 2011 taxes now Exception. Can i file my 2011 taxes now    You cannot deduct state and local income taxes you pay on income that is exempt from federal income tax, unless the exempt income is interest income. Can i file my 2011 taxes now For example, you cannot deduct the part of a state's income tax that is on a cost-of-living allowance exempt from federal income tax. Can i file my 2011 taxes now What To Deduct Your deduction may be for withheld taxes, estimated tax payments, or other tax payments as follows. Can i file my 2011 taxes now Withheld taxes. Can i file my 2011 taxes now   You can deduct state and local income taxes withheld from your salary in the year they are withheld. Can i file my 2011 taxes now Your Form(s) W-2 will show these amounts. Can i file my 2011 taxes now Forms W-2G, 1099-G, 1099-R, and 1099-MISC may also show state and local income taxes withheld. Can i file my 2011 taxes now Estimated tax payments. Can i file my 2011 taxes now   You can deduct estimated tax payments you made during the year to a state or local government. Can i file my 2011 taxes now However, you must have a reasonable basis for making the estimated tax payments. Can i file my 2011 taxes now Any estimated state or local tax payments that are not made in good faith at the time of payment are not deductible. Can i file my 2011 taxes now For example, you made an estimated state income tax payment. Can i file my 2011 taxes now However, the estimate of your state tax liability shows that you will get a refund of the full amount of your estimated payment. Can i file my 2011 taxes now You had no reasonable basis to believe you had any additional liability for state income taxes and you cannot deduct the estimated tax payment. Can i file my 2011 taxes now Refund applied to taxes. Can i file my 2011 taxes now   You can deduct any part of a refund of prior-year state or local income taxes that you chose to have credited to your 2013 estimated state or local income taxes. Can i file my 2011 taxes now    Do not reduce your deduction by either of the following items. Can i file my 2011 taxes now Any state or local income tax refund (or credit) you expect to receive for 2013. Can i file my 2011 taxes now Any refund of (or credit for) prior-year state and local income taxes you actually received in 2013. Can i file my 2011 taxes now   However, part or all of this refund (or credit) may be taxable. Can i file my 2011 taxes now See Refund (or credit) of state or local income taxes , later. Can i file my 2011 taxes now Separate federal returns. Can i file my 2011 taxes now   If you and your spouse file separate state, local, and federal income tax returns, you each can deduct on your federal return only the amount of your own state and local income tax that you paid during the tax year. Can i file my 2011 taxes now Joint state and local returns. Can i file my 2011 taxes now   If you and your spouse file joint state and local returns and separate federal returns, each of you can deduct on your separate federal return a part of the total state and local income taxes paid during the tax year. Can i file my 2011 taxes now You can deduct only the amount of the total taxes that is proportionate to your gross income compared to the combined gross income of you and your spouse. Can i file my 2011 taxes now However, you cannot deduct more than the amount you actually paid during the year. Can i file my 2011 taxes now You can avoid this calculation if you and your spouse are jointly and individually liable for the full amount of the state and local income taxes. Can i file my 2011 taxes now If so, you and your spouse can deduct on your separate federal returns the amount you each actually paid. Can i file my 2011 taxes now Joint federal return. Can i file my 2011 taxes now   If you file a joint federal return, you can deduct the total of the state and local income taxes both of you paid. Can i file my 2011 taxes now Contributions to state benefit funds. Can i file my 2011 taxes now    As an employee, you can deduct mandatory contributions to state benefit funds withheld from your wages that provide protection against loss of wages. Can i file my 2011 taxes now For example, certain states require employees to make contributions to state funds providing disability or unemployment insurance benefits. Can i file my 2011 taxes now Mandatory payments made to the following state benefit funds are deductible as state income taxes on Schedule A (Form 1040), line 5. Can i file my 2011 taxes now Alaska Unemployment Compensation Fund. Can i file my 2011 taxes now California Nonoccupational Disability Benefit Fund. Can i file my 2011 taxes now New Jersey Nonoccupational Disability Benefit Fund. Can i file my 2011 taxes now New Jersey Unemployment Compensation Fund. Can i file my 2011 taxes now New York Nonoccupational Disability Benefit Fund. Can i file my 2011 taxes now Pennsylvania Unemployment Compensation Fund. Can i file my 2011 taxes now Rhode Island Temporary Disability Benefit Fund. Can i file my 2011 taxes now Washington State Supplemental Workmen's Compensation Fund. Can i file my 2011 taxes now    Employee contributions to private or voluntary disability plans are not deductible. Can i file my 2011 taxes now Refund (or credit) of state or local income taxes. Can i file my 2011 taxes now   If you receive a refund of (or credit for) state or local income taxes in a year after the year in which you paid them, you may have to include the refund in income on Form 1040, line 10, in the year you receive it. Can i file my 2011 taxes now This includes refunds resulting from taxes that were overwithheld, applied from a prior year return, not figured correctly, or figured again because of an amended return. Can i file my 2011 taxes now If you did not itemize your deductions in the previous year, do not include the refund in income. Can i file my 2011 taxes now If you deducted the taxes in the previous year, include all or part of the refund on Form 1040, line 10, in the year you receive the refund. Can i file my 2011 taxes now For a discussion of how much to include, see Recoveries in chapter 12. Can i file my 2011 taxes now Foreign Income Taxes Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now possession. Can i file my 2011 taxes now However, you cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now tax under the foreign earned income exclusion or the foreign housing exclusion. Can i file my 2011 taxes now For information on these exclusions, see Publication 54, Tax Guide for U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now Citizens and Resident Aliens Abroad. Can i file my 2011 taxes now For information on the foreign tax credit, see Publication 514. Can i file my 2011 taxes now General Sales Taxes You can elect to deduct state and local general sales taxes, instead of state and local income taxes, as an itemized deduction on Schedule A (Form 1040), line 5b. Can i file my 2011 taxes now You can use either your actual expenses or the state and local sales tax tables to figure your sales tax deduction. Can i file my 2011 taxes now Actual expenses. Can i file my 2011 taxes now   Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) if the tax rate was the same as the general sales tax rate. Can i file my 2011 taxes now However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. Can i file my 2011 taxes now If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. Can i file my 2011 taxes now If you use the actual expenses method, you must have receipts to show the general sales taxes paid. Can i file my 2011 taxes now Do not include sales taxes paid on items used in your trade or business. Can i file my 2011 taxes now Motor vehicles. Can i file my 2011 taxes now   For purposes of this section, motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. Can i file my 2011 taxes now This also includes sales taxes on a leased motor vehicle, but not on vehicles used in your trade or business. Can i file my 2011 taxes now Optional sales tax tables. Can i file my 2011 taxes now   Instead of using your actual expenses, you can figure your state and local general sales tax deduction using the state and local sales tax tables in the Instructions for Schedule A (Form 1040). Can i file my 2011 taxes now You may also be able to add the state and local general sales taxes paid on certain specified items. Can i file my 2011 taxes now   Your applicable table amount is based on the state where you live, your income, and the number of exemptions claimed on your tax return. Can i file my 2011 taxes now Your income is your adjusted gross income plus any nontaxable items such as the following. Can i file my 2011 taxes now Tax-exempt interest. Can i file my 2011 taxes now Veterans' benefits. Can i file my 2011 taxes now Nontaxable combat pay. Can i file my 2011 taxes now Workers' compensation. Can i file my 2011 taxes now Nontaxable part of social security and railroad retirement benefits. Can i file my 2011 taxes now Nontaxable part of IRA, pension, or annuity distributions, excluding rollovers. Can i file my 2011 taxes now Public assistance payments. Can i file my 2011 taxes now If you lived in different states during the same tax year, you must prorate your applicable table amount for each state based on the days you lived in each state. Can i file my 2011 taxes now See the Instructions for Schedule A (Form 1040), line 5, for details. Can i file my 2011 taxes now Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real property levied for the general public welfare. Can i file my 2011 taxes now You can deduct these taxes only if they are based on the assessed value of the real property and charged uniformly against all property under the jurisdiction of the taxing authority. Can i file my 2011 taxes now Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. Can i file my 2011 taxes now They also do not include itemized charges for services (such as trash collection) assessed against specific property or certain people, even if the charge is paid to the taxing authority. Can i file my 2011 taxes now For more information about taxes and charges that are not deductible, see Real Estate-Related Items You Cannot Deduct , later. Can i file my 2011 taxes now Tenant-shareholders in a cooperative housing corporation. Can i file my 2011 taxes now   Generally, if you are a tenant-stockholder in a cooperative housing corporation, you can deduct the amount paid to the corporation that represents your share of the real estate taxes the corporation paid or incurred for your dwelling unit. Can i file my 2011 taxes now The corporation should provide you with a statement showing your share of the taxes. Can i file my 2011 taxes now For more information, see Special Rules for Cooperatives in Publication 530. Can i file my 2011 taxes now Division of real estate taxes between buyers and sellers. Can i file my 2011 taxes now   If you bought or sold real estate during the year, the real estate taxes must be divided between the buyer and the seller. Can i file my 2011 taxes now   The buyer and the seller must divide the real estate taxes according to the number of days in the real property tax year (the period to which the tax is imposed relates) that each owned the property. Can i file my 2011 taxes now The seller is treated as paying the taxes up to, but not including, the date of sale. Can i file my 2011 taxes now The buyer is treated as paying the taxes beginning with the date of sale. Can i file my 2011 taxes now This applies regardless of the lien dates under local law. Can i file my 2011 taxes now Generally, this information is included on the settlement statement provided at the closing. Can i file my 2011 taxes now    If you (the seller) cannot deduct taxes until they are paid because you use the cash method of accounting, and the buyer of your property is personally liable for the tax, you are considered to have paid your part of the tax at the time of the sale. Can i file my 2011 taxes now This lets you deduct the part of the tax to the date of sale even though you did not actually pay it. Can i file my 2011 taxes now However, you must also include the amount of that tax in the selling price of the property. Can i file my 2011 taxes now The buyer must include the same amount in his or her cost of the property. Can i file my 2011 taxes now   You figure your deduction for taxes on each property bought or sold during the real property tax year as follows. Can i file my 2011 taxes now Worksheet 22-1. Can i file my 2011 taxes now Figuring Your Real Estate Tax Deduction 1. Can i file my 2011 taxes now Enter the total real estate taxes for the real property tax year   2. Can i file my 2011 taxes now Enter the number of days in the real property tax year that you owned the property   3. Can i file my 2011 taxes now Divide line 2 by 365 (for leap years, divide line 2 by 366) . Can i file my 2011 taxes now 4. Can i file my 2011 taxes now Multiply line 1 by line 3. Can i file my 2011 taxes now This is your deduction. Can i file my 2011 taxes now Enter it on Schedule A (Form 1040), line 6   Note. Can i file my 2011 taxes now Repeat steps 1 through 4 for each property you bought or sold during the real property tax year. Can i file my 2011 taxes now Your total deduction is the sum of the line 4 amounts for all of the properties. Can i file my 2011 taxes now Real estate taxes for prior years. Can i file my 2011 taxes now   Do not divide delinquent taxes between the buyer and seller if the taxes are for any real property tax year before the one in which the property is sold. Can i file my 2011 taxes now Even if the buyer agrees to pay the delinquent taxes, the buyer cannot deduct them. Can i file my 2011 taxes now The buyer must add them to the cost of the property. Can i file my 2011 taxes now The seller can deduct these taxes paid by the buyer. Can i file my 2011 taxes now However, the seller must include them in the selling price. Can i file my 2011 taxes now Examples. Can i file my 2011 taxes now   The following examples illustrate how real estate taxes are divided between buyer and seller. Can i file my 2011 taxes now Example 1. Can i file my 2011 taxes now Dennis and Beth White's real property tax year for both their old home and their new home is the calendar year, with payment due August 1. Can i file my 2011 taxes now The tax on their old home, sold on May 7, was $620. Can i file my 2011 taxes now The tax on their new home, bought on May 3, was $732. Can i file my 2011 taxes now Dennis and Beth are considered to have paid a proportionate share of the real estate taxes on the old home even though they did not actually pay them to the taxing authority. Can i file my 2011 taxes now On the other hand, they can claim only a proportionate share of the taxes they paid on their new property even though they paid the entire amount. Can i file my 2011 taxes now Dennis and Beth owned their old home during the real property tax year for 126 days (January 1 to May 6, the day before the sale). Can i file my 2011 taxes now They figure their deduction for taxes on their old home as follows. Can i file my 2011 taxes now Worksheet 22-1. Can i file my 2011 taxes now Figuring Your Real Estate Tax Deduction — Taxes on Old Home 1. Can i file my 2011 taxes now Enter the total real estate taxes for the real property tax year $620 2. Can i file my 2011 taxes now Enter the number of days in the real property tax year that you owned the property 126 3. Can i file my 2011 taxes now Divide line 2 by 365 (for leap years, divide line 2 by 366) . Can i file my 2011 taxes now 3452 4. Can i file my 2011 taxes now Multiply line 1 by line 3. Can i file my 2011 taxes now This is your deduction. Can i file my 2011 taxes now Enter it on Schedule A (Form 1040), line 6 $214 Since the buyers of their old home paid all of the taxes, Dennis and Beth also include the $214 in the selling price of the old home. Can i file my 2011 taxes now (The buyers add the $214 to their cost of the home. Can i file my 2011 taxes now ) Dennis and Beth owned their new home during the real property tax year for 243 days (May 3 to December 31, including their date of purchase). Can i file my 2011 taxes now They figure their deduction for taxes on their new home as follows. Can i file my 2011 taxes now Worksheet 22-1. Can i file my 2011 taxes now Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. Can i file my 2011 taxes now Enter the total real estate taxes for the real property tax year $732 2. Can i file my 2011 taxes now Enter the number of days in the real property tax year that you owned the property 243 3. Can i file my 2011 taxes now Divide line 2 by 365 (for leap years, divide line 2 by 366) . Can i file my 2011 taxes now 6658 4. Can i file my 2011 taxes now Multiply line 1 by line 3. Can i file my 2011 taxes now This is your deduction. Can i file my 2011 taxes now Enter it on Schedule A (Form 1040), line 6 $487 Since Dennis and Beth paid all of the taxes on the new home, they add $245 ($732 paid less $487 deduction) to their cost of the new home. Can i file my 2011 taxes now (The sellers add this $245 to their selling price and deduct the $245 as a real estate tax. Can i file my 2011 taxes now ) Dennis and Beth's real estate tax deduction for their old and new homes is the sum of $214 and $487, or $701. Can i file my 2011 taxes now They will enter this amount on Schedule A (Form 1040), line 6. Can i file my 2011 taxes now Example 2. Can i file my 2011 taxes now George and Helen Brown bought a new home on May 3, 2013. Can i file my 2011 taxes now Their real property tax year for the new home is the calendar year. Can i file my 2011 taxes now Real estate taxes for 2012 were assessed in their state on January 1, 2013. Can i file my 2011 taxes now The taxes became due on May 31, 2013, and October 31, 2013. Can i file my 2011 taxes now The Browns agreed to pay all taxes due after the date of purchase. Can i file my 2011 taxes now Real estate taxes for 2012 were $680. Can i file my 2011 taxes now They paid $340 on May 31, 2013, and $340 on October 31, 2013. Can i file my 2011 taxes now These taxes were for the 2012 real property tax year. Can i file my 2011 taxes now The Browns cannot deduct them since they did not own the property until 2013. Can i file my 2011 taxes now Instead, they must add $680 to the cost of their new home. Can i file my 2011 taxes now In January 2014, the Browns receive their 2013 property tax statement for $752, which they will pay in 2014. Can i file my 2011 taxes now The Browns owned their new home during the 2013 real property tax year for 243 days (May 3 to December 31). Can i file my 2011 taxes now They will figure their 2014 deduction for taxes as follows. Can i file my 2011 taxes now Worksheet 22-1. Can i file my 2011 taxes now Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. Can i file my 2011 taxes now Enter the total real estate taxes for the real property tax year $752 2. Can i file my 2011 taxes now Enter the number of days in the real property tax year that you owned the property 243 3. Can i file my 2011 taxes now Divide line 2 by 365 (for leap years, divide line 2 by 366) . Can i file my 2011 taxes now 6658 4. Can i file my 2011 taxes now Multiply line 1 by line 3. Can i file my 2011 taxes now This is your deduction. Can i file my 2011 taxes now Claim it on Schedule A (Form 1040), line 6 $501 The remaining $251 ($752 paid less $501 deduction) of taxes paid in 2014, along with the $680 paid in 2013, is added to the cost of their new home. Can i file my 2011 taxes now Because the taxes up to the date of sale are considered paid by the seller on the date of sale, the seller is entitled to a 2013 tax deduction of $931. Can i file my 2011 taxes now This is the sum of the $680 for 2012 and the $251 for the 122 days the seller owned the home in 2013. Can i file my 2011 taxes now The seller must also include the $931 in the selling price when he or she figures the gain or loss on the sale. Can i file my 2011 taxes now The seller should contact the Browns in January 2014 to find out how much real estate tax is due for 2013. Can i file my 2011 taxes now Form 1099-S. Can i file my 2011 taxes now   For certain sales or exchanges of real estate, the person responsible for closing the sale (generally the settlement agent) prepares Form 1099-S, Proceeds From Real Estate Transactions, to report certain information to the IRS and to the seller of the property. Can i file my 2011 taxes now Box 2 of Form 1099-S is for the gross proceeds from the sale and should include the portion of the seller's real estate tax liability that the buyer will pay after the date of sale. Can i file my 2011 taxes now The buyer includes these taxes in the cost basis of the property, and the seller both deducts this amount as a tax paid and includes it in the sales price of the property. Can i file my 2011 taxes now   For a real estate transaction that involves a home, any real estate tax the seller paid in advance but that is the liability of the buyer appears on Form 1099-S, box 5. Can i file my 2011 taxes now The buyer deducts this amount as a real estate tax, and the seller reduces his or her real estate tax deduction (or includes it in income) by the same amount. Can i file my 2011 taxes now See Refund (or rebate) , later. Can i file my 2011 taxes now Taxes placed in escrow. Can i file my 2011 taxes now   If your monthly mortgage payment includes an amount placed in escrow (put in the care of a third party) for real estate taxes, you may not be able to deduct the total amount placed in escrow. Can i file my 2011 taxes now You can deduct only the real estate tax that the third party actually paid to the taxing authority. Can i file my 2011 taxes now If the third party does not notify you of the amount of real estate tax that was paid for you, contact the third party or the taxing authority to find the proper amount to show on your return. Can i file my 2011 taxes now Tenants by the entirety. Can i file my 2011 taxes now   If you and your spouse held property as tenants by the entirety and you file separate federal returns, each of you can deduct only the taxes each of you paid on the property. Can i file my 2011 taxes now Divorced individuals. Can i file my 2011 taxes now   If your divorce or separation agreement states that you must pay the real estate taxes for a home owned by you and your spouse, part of your payments may be deductible as alimony and part as real estate taxes. Can i file my 2011 taxes now See Taxes and insurance in chapter 18 for more information. Can i file my 2011 taxes now Ministers' and military housing allowances. Can i file my 2011 taxes now   If you are a minister or a member of the uniformed services and receive a housing allowance that you can exclude from income, you still can deduct all of the real estate taxes you pay on your home. Can i file my 2011 taxes now Refund (or rebate). Can i file my 2011 taxes now   If you received a refund or rebate in 2013 of real estate taxes you paid in 2013, you must reduce your deduction by the amount refunded to you. Can i file my 2011 taxes now If you received a refund or rebate in 2013 of real estate taxes you deducted in an earlier year (either as an itemized deduction or an increase to your standard deduction), you generally must include the refund or rebate in income in the year you receive it. Can i file my 2011 taxes now However, the amount you include in income is limited to the amount of the deduction that reduced your tax in the earlier year. Can i file my 2011 taxes now For more information, see Recoveries in chapter 12. Can i file my 2011 taxes now Table 22-1. Can i file my 2011 taxes now Which Taxes Can You Deduct? Type of Tax You Can Deduct You Cannot Deduct Fees and Charges Fees and charges that are expenses of your trade or business or of producing income. Can i file my 2011 taxes now Fees and charges that are not expenses of your trade or business or of producing income, such as fees for driver's licenses, car inspections, parking, or charges for water bills (see Taxes and Fees You Cannot Deduct ). Can i file my 2011 taxes now     Fines and penalties. Can i file my 2011 taxes now Income Taxes State and local income taxes. Can i file my 2011 taxes now Federal income taxes. Can i file my 2011 taxes now   Foreign income taxes. Can i file my 2011 taxes now     Employee contributions to state funds listed under Contributions to state benefit funds . Can i file my 2011 taxes now Employee contributions to private or voluntary disability plans. Can i file my 2011 taxes now     State and local general sales taxes if you choose to deduct state and local income taxes. Can i file my 2011 taxes now General Sales Taxes State and local general sales taxes, including compensating use taxes. Can i file my 2011 taxes now State and local income taxes if you choose to deduct state and local general sales taxes. Can i file my 2011 taxes now Other Taxes Taxes that are expenses of your trade or business. Can i file my 2011 taxes now Federal excise taxes, such as tax on gasoline, that are not expenses of your trade or business or of producing income. Can i file my 2011 taxes now   Taxes on property producing rent or royalty income. Can i file my 2011 taxes now Per capita taxes. Can i file my 2011 taxes now   Occupational taxes. Can i file my 2011 taxes now See chapter 28. Can i file my 2011 taxes now     One-half of self-employment tax paid. Can i file my 2011 taxes now   Personal Property Taxes State and local personal property taxes. Can i file my 2011 taxes now Customs duties that are not expenses of your trade or business or of producing income. Can i file my 2011 taxes now Real Estate Taxes State and local real estate taxes. Can i file my 2011 taxes now Real estate taxes that are treated as imposed on someone else (see Division of real estate taxes between buyers and sellers ). Can i file my 2011 taxes now   Foreign real estate taxes. Can i file my 2011 taxes now Taxes for local benefits (with exceptions). Can i file my 2011 taxes now See Real Estate-Related Items You Cannot Deduct . Can i file my 2011 taxes now   Tenant's share of real estate taxes paid by  cooperative housing corporation. Can i file my 2011 taxes now Trash and garbage pickup fees (with exceptions). Can i file my 2011 taxes now See Real Estate-Related Items You Cannot Deduct . Can i file my 2011 taxes now     Rent increase due to higher real estate taxes. Can i file my 2011 taxes now     Homeowners' association charges. Can i file my 2011 taxes now Real Estate-Related Items You Cannot Deduct Payments for the following items generally are not deductible as real estate taxes. Can i file my 2011 taxes now Taxes for local benefits. Can i file my 2011 taxes now Itemized charges for services (such as trash and garbage pickup fees). Can i file my 2011 taxes now Transfer taxes (or stamp taxes). Can i file my 2011 taxes now Rent increases due to higher real estate taxes. Can i file my 2011 taxes now Homeowners' association charges. Can i file my 2011 taxes now Taxes for local benefits. Can i file my 2011 taxes now   Deductible real estate taxes generally do not include taxes charged for local benefits and improvements tending to increase the value of your property. Can i file my 2011 taxes now These include assessments for streets, sidewalks, water mains, sewer lines, public parking facilities, and similar improvements. Can i file my 2011 taxes now You should increase the basis of your property by the amount of the assessment. Can i file my 2011 taxes now   Local benefit taxes are deductible only if they are for maintenance, repair, or interest charges related to those benefits. Can i file my 2011 taxes now If only a part of the taxes is for maintenance, repair, or interest, you must be able to show the amount of that part to claim the deduction. Can i file my 2011 taxes now If you cannot determine what part of the tax is for maintenance, repair, or interest, none of it is deductible. Can i file my 2011 taxes now    Taxes for local benefits may be included in your real estate tax bill. Can i file my 2011 taxes now If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. Can i file my 2011 taxes now You should use the rules above to determine if the local benefit tax is deductible. Can i file my 2011 taxes now Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. Can i file my 2011 taxes now Itemized charges for services. Can i file my 2011 taxes now    An itemized charge for services assessed against specific property or certain people is not a tax, even if the charge is paid to the taxing authority. Can i file my 2011 taxes now For example, you cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged to each homeowner for trash collection), or A flat fee charged for a single service provided by your government (such as a $30 charge for mowing your lawn because it was allowed to grow higher than permitted under your local ordinance). Can i file my 2011 taxes now    You must look at your real estate tax bill to determine if any nondeductible itemized charges, such as those listed above, are included in the bill. Can i file my 2011 taxes now If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. Can i file my 2011 taxes now Exception. Can i file my 2011 taxes now   Service charges used to maintain or improve services (such as trash collection or police and fire protection) are deductible as real estate taxes if: The fees or charges are imposed at a like rate against all property in the taxing jurisdiction, The funds collected are not earmarked; instead, they are commingled with general revenue funds, and Funds used to maintain or improve services are not limited to or determined by the amount of these fees or charges collected. Can i file my 2011 taxes now Transfer taxes (or stamp taxes). Can i file my 2011 taxes now   Transfer taxes and similar taxes and charges on the sale of a personal home are not deductible. Can i file my 2011 taxes now If they are paid by the seller, they are expenses of the sale and reduce the amount realized on the sale. Can i file my 2011 taxes now If paid by the buyer, they are included in the cost basis of the property. Can i file my 2011 taxes now Rent increase due to higher real estate taxes. Can i file my 2011 taxes now   If your landlord increases your rent in the form of a tax surcharge because of increased real estate taxes, you cannot deduct the increase as taxes. Can i file my 2011 taxes now Homeowners' association charges. Can i file my 2011 taxes now   These charges are not deductible because they are imposed by the homeowners' association, rather than the state or local government. Can i file my 2011 taxes now Personal Property Taxes Personal property tax is deductible if it is a state or local tax that is: Charged on personal property, Based only on the value of the personal property, and Charged on a yearly basis, even if it is collected more or less than once a year. Can i file my 2011 taxes now A tax that meets the above requirements can be considered charged on personal property even if it is for the exercise of a privilege. Can i file my 2011 taxes now For example, a yearly tax based on value qualifies as a personal property tax even if it is called a registration fee and is for the privilege of registering motor vehicles or using them on the highways. Can i file my 2011 taxes now If the tax is partly based on value and partly based on other criteria, it may qualify in part. Can i file my 2011 taxes now Example. Can i file my 2011 taxes now Your state charges a yearly motor vehicle registration tax of 1% of value plus 50 cents per hundredweight. Can i file my 2011 taxes now You paid $32 based on the value ($1,500) and weight (3,400 lbs. Can i file my 2011 taxes now ) of your car. Can i file my 2011 taxes now You can deduct $15 (1% × $1,500) as a personal property tax because it is based on the value. Can i file my 2011 taxes now The remaining $17 ($. Can i file my 2011 taxes now 50 × 34), based on the weight, is not deductible. Can i file my 2011 taxes now Taxes and Fees You Cannot Deduct Many federal, state, and local government taxes are not deductible because they do not fall within the categories discussed earlier. Can i file my 2011 taxes now Other taxes and fees, such as federal income taxes, are not deductible because the tax law specifically prohibits a deduction for them. Can i file my 2011 taxes now See Table 22-1. Can i file my 2011 taxes now Taxes and fees that are generally not deductible include the following items. Can i file my 2011 taxes now Employment taxes. Can i file my 2011 taxes now This includes social security, Medicare, and railroad retirement taxes withheld from your pay. Can i file my 2011 taxes now However, one-half of self-employment tax you pay is deductible. Can i file my 2011 taxes now In addition, the social security and other employment taxes you pay on the wages of a household worker may be included in medical expenses that you can deduct or child care expenses that allow you to claim the child and dependent care credit. Can i file my 2011 taxes now For more information, see chapters 21 and 32. Can i file my 2011 taxes now Estate, inheritance, legacy, or succession taxes. Can i file my 2011 taxes now However, you can deduct the estate tax attributable to income in respect of a decedent if you, as a beneficiary, must include that income in your gross income. Can i file my 2011 taxes now In that case, deduct the estate tax as a miscellaneous deduction that is not subject to the 2%-of-adjusted-gross-income limit. Can i file my 2011 taxes now For more information, see Publication 559, Survivors, Executors, and Administrators. Can i file my 2011 taxes now Federal income taxes. Can i file my 2011 taxes now This includes income taxes withheld from your pay. Can i file my 2011 taxes now Fines and penalties. Can i file my 2011 taxes now You cannot deduct fines and penalties paid to a government for violation of any law, including related amounts forfeited as collateral deposits. Can i file my 2011 taxes now Gift taxes. Can i file my 2011 taxes now License fees. Can i file my 2011 taxes now You cannot deduct license fees for personal purposes (such as marriage, driver's, and dog license fees). Can i file my 2011 taxes now Per capita taxes. Can i file my 2011 taxes now You cannot deduct state or local per capita taxes. Can i file my 2011 taxes now Many taxes and fees other than those listed above are also nondeductible, unless they are ordinary and necessary expenses of a business or income producing activity. Can i file my 2011 taxes now For other nondeductible items, see Real Estate-Related Items You Cannot Deduct , earlier. Can i file my 2011 taxes now Where To Deduct You deduct taxes on the following schedules. Can i file my 2011 taxes now State and local income taxes. Can i file my 2011 taxes now    These taxes are deducted on Schedule A (Form 1040), line 5, even if your only source of income is from business, rents, or royalties. Can i file my 2011 taxes now Check box a on line 5. Can i file my 2011 taxes now General sales taxes. Can i file my 2011 taxes now   Sales taxes are deducted on Schedule A (Form 1040), line 5. Can i file my 2011 taxes now You must check box b on line 5. Can i file my 2011 taxes now If you elect to deduct sales taxes, you cannot deduct state and local income taxes on Schedule A (Form 1040), line 5, box a. Can i file my 2011 taxes now Foreign income taxes. Can i file my 2011 taxes now   Generally, income taxes you pay to a foreign country or U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now possession can be claimed as an itemized deduction on Schedule A (Form 1040), line 8, or as a credit against your U. Can i file my 2011 taxes now S. Can i file my 2011 taxes now income tax on Form 1040, line 47. Can i file my 2011 taxes now To claim the credit, you may have to complete and attach Form 1116. Can i file my 2011 taxes now For more information, see chapter 37, the Form 1040 instructions, or Publication 514. Can i file my 2011 taxes now Real estate taxes and personal property taxes. Can i file my 2011 taxes now    Real estate and personal property taxes are deducted on Schedule A (Form 1040), lines 6 and 7, respectively, unless they are paid on property used in your business, in which case they are deducted on Schedule C, Schedule C-EZ, or Schedule F (Form 1040). Can i file my 2011 taxes now Taxes on property that produces rent or royalty income are deducted on Schedule E (Form 1040). Can i file my 2011 taxes now Self-employment tax. Can i file my 2011 taxes now    Deduct one-half of your self-employment tax on Form 1040, line 27. Can i file my 2011 taxes now Other taxes. Can i file my 2011 taxes now    All other deductible taxes are deducted on Schedule A (Form 1040), line 8. Can i file my 2011 taxes now Prev  Up  Next   Home   More Online Publications