Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

File Taxes Online

2012 Tax Preparation SoftwareFile 1040nrTax Extension For UnemployedForm 1040 V Payment VoucherAmend Tax Return OnlineFederal Tax Amended ReturnHow Long Do I Have To File An Amended Tax ReturnForm 1040How Can I Efile My 2012 TaxesFile My 2011 Taxes Online FreeFree Back Tax Filing2011 Tax ReturnsInstructions For 1040ez FormAmend 2011 Tax Return Online1040ez OnlineIrs Form 1040x 2011Forms To File 2012 TaxesHow To File An Amended Return For 2012Filing State Income Tax2007 Tax FormsFree H & R BlockWww Irs Gov 2012 Tax Forms1040 Now10 40 EasyFile For 2012 TaxesFree File 1040ez1040ez Tax Instructions2012 1040ez FormNeed File Back TaxesI Need To File My 2011 Tax Return2012 Amended 1040xFree Online Tax Preparation1040ez 2010Www Freetaxhelp ComFiling State Taxes FreeH&r OnlineEz Tax Form OnlineFile My Federal And State Taxes For Free1040ez Online Filing FreeHow To Amend Taxes

File Taxes Online

File taxes online 23. File taxes online   Interest Expense Table of Contents Introduction Useful Items - You may want to see: Home Mortgage InterestAmount Deductible Points Mortgage Insurance Premiums Form 1098, Mortgage Interest Statement Investment InterestInvestment Property Allocation of Interest Expense Limit on Deduction Items You Cannot DeductPersonal Interest Allocation of Interest How To ReportMore than one borrower. File taxes online Mortgage proceeds used for business or investment. File taxes online Introduction This chapter discusses what interest expenses you can deduct. File taxes online Interest is the amount you pay for the use of borrowed money. File taxes online The following are types of interest you can deduct as itemized deductions on Schedule A (Form 1040). File taxes online Home mortgage interest, including certain points and mortgage insurance premiums. File taxes online Investment interest. File taxes online This chapter explains these deductions. File taxes online It also explains where to deduct other types of interest and lists some types of interest you cannot deduct. File taxes online Use Table 23-1 to find out where to get more information on various types of interest, including investment interest. File taxes online Useful Items - You may want to see: Publication 936 Home Mortgage Interest Deduction 550 Investment Income and Expenses Home Mortgage Interest Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). File taxes online The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan. File taxes online You can deduct home mortgage interest if all the following conditions are met. File taxes online You file Form 1040 and itemize deductions on Schedule A (Form 1040). File taxes online The mortgage is a secured debt on a qualified home in which you have an ownership interest. File taxes online (Generally, your mortgage is a secured debt if you put your home up as collateral to protect the interest of the lender. File taxes online The term “qualified home” means your main home or second home. File taxes online For details, see Publication 936. File taxes online )  Both you and the lender must intend that the loan be repaid. File taxes online Amount Deductible In most cases, you can deduct all of your home mortgage interest. File taxes online How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. File taxes online Fully deductible interest. File taxes online   If all of your mortgages fit into one or more of the following three categories at all times during the year, you can deduct all of the interest on those mortgages. File taxes online (If any one mortgage fits into more than one category, add the debt that fits in each category to your other debt in the same category. File taxes online )   The three categories are as follows: Mortgages you took out on or before October 13, 1987 (called grandfathered debt). File taxes online Mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if throughout 2013 these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately). File taxes online Mortgages you took out after October 13, 1987, other than to buy, build, or improve your home (called home equity debt), but only if throughout 2013 these mortgages totaled $100,000 or less ($50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by (1) and (2). File taxes online The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home. File taxes online   See Part II of Publication 936 for more detailed definitions of grandfathered, home acquisition, and home equity debt. File taxes online    You can use Figure 23-A to check whether your home mortgage interest is fully deductible. File taxes online Figure 23-A. File taxes online Is My Home Mortgage Interest Fully Deductible? Please click here for the text description of the image. File taxes online Figure 23-A. File taxes online Is My Interest Fully Deductible? Limits on deduction. File taxes online   You cannot fully deduct interest on a mortgage that does not fit into any of the three categories listed earlier. File taxes online If this applies to you, see Part II of Publication 936 to figure the amount of interest you can deduct. File taxes online Special Situations This section describes certain items that can be included as home mortgage interest and others that cannot. File taxes online It also describes certain special situations that may affect your deduction. File taxes online Late payment charge on mortgage payment. File taxes online   You can deduct as home mortgage interest a late payment charge if it was not for a specific service performed in connection with your mortgage loan. File taxes online Mortgage prepayment penalty. File taxes online   If you pay off your home mortgage early, you may have to pay a penalty. File taxes online You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. File taxes online Sale of home. File taxes online   If you sell your home, you can deduct your home mortgage interest (subject to any limits that apply) paid up to, but not including, the date of sale. File taxes online Example. File taxes online John and Peggy Harris sold their home on May 7. File taxes online Through April 30, they made home mortgage interest payments of $1,220. File taxes online The settlement sheet for the sale of the home showed $50 interest for the 6-day period in May up to, but not including, the date of sale. File taxes online Their mortgage interest deduction is $1,270 ($1,220 + $50). File taxes online Prepaid interest. File taxes online   If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. File taxes online You can deduct in each year only the interest that qualifies as home mortgage interest for that year. File taxes online However, there is an exception that applies to points, discussed later. File taxes online Mortgage interest credit. File taxes online   You may be able to claim a mortgage interest credit if you were issued a mortgage credit certificate (MCC) by a state or local government. File taxes online Figure the credit on Form 8396, Mortgage Interest Credit. File taxes online If you take this credit, you must reduce your mortgage interest deduction by the amount of the credit. File taxes online   For more information on the credit, see chapter 37. File taxes online Ministers' and military housing allowance. File taxes online   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you can still deduct your home mortgage interest. File taxes online Hardest Hit Fund and Emergency Homeowners' Loan Programs. File taxes online   You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. File taxes online You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. File taxes online You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. File taxes online If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received from payer(s) / borrower(s)), box 4 (mortgage insurance premiums) and box 5 (real property taxes). File taxes online However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. File taxes online Mortgage assistance payments under section 235 of the National Housing Act. File taxes online   If you qualify for mortgage assistance payments for lower-income families under section 235 of the National Housing Act, part or all of the interest on your mortgage may be paid for you. File taxes online You cannot deduct the interest that is paid for you. File taxes online No other effect on taxes. File taxes online   Do not include these mortgage assistance payments in your income. File taxes online Also, do not use these payments to reduce other deductions, such as real estate taxes. File taxes online Divorced or separated individuals. File taxes online   If a divorce or separation agreement requires you or your spouse or former spouse to pay home mortgage interest on a home owned by both of you, the payment of interest may be alimony. File taxes online See the discussion of Payments for jointly-owned home in chapter 18. File taxes online Redeemable ground rents. File taxes online   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. File taxes online   Payments made to end the lease and to buy the lessor's entire interest in the land are not deductible as mortgage interest. File taxes online For more information, see Publication 936. File taxes online Nonredeemable ground rents. File taxes online   Payments on a nonredeemable ground rent are not mortgage interest. File taxes online You can deduct them as rent if they are a business expense or if they are for rental property. File taxes online Reverse mortgages. File taxes online   A reverse mortgage is a loan where the lender pays you (in a lump sum, a monthly advance, a line of credit, or a combination of all three) while you continue to live in your home. File taxes online With a reverse mortgage, you retain title to your home. File taxes online Depending on the plan, your reverse mortgage becomes due with interest when you move, sell your home, reach the end of a pre-selected loan period, or die. File taxes online Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable. File taxes online Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until the loan is paid in full. File taxes online Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt discussed in Publication 936. File taxes online Rental payments. File taxes online   If you live in a house before final settlement on the purchase, any payments you make for that period are rent and not interest. File taxes online This is true even if the settlement papers call them interest. File taxes online You cannot deduct these payments as home mortgage interest. File taxes online Mortgage proceeds invested in tax-exempt securities. File taxes online   You cannot deduct the home mortgage interest on grandfathered debt or home equity debt if you used the proceeds of the mortgage to buy securities or certificates that produce tax-free income. File taxes online “Grandfathered debt” and “home equity debt” are defined earlier under Amount Deductible. File taxes online Refunds of interest. File taxes online   If you receive a refund of interest in the same tax year you paid it, you must reduce your interest expense by the amount refunded to you. File taxes online If you receive a refund of interest you deducted in an earlier year, you generally must include the refund in income in the year you receive it. File taxes online However, you need to include it only up to the amount of the deduction that reduced your tax in the earlier year. File taxes online This is true whether the interest overcharge was refunded to you or was used to reduce the outstanding principal on your mortgage. File taxes online    If you received a refund of interest you overpaid in an earlier year, you generally will receive a Form 1098, Mortgage Interest Statement, showing the refund in box 3. File taxes online For information about Form 1098, see Form 1098, Mortgage Interest Statement , later. File taxes online   For more information on how to treat refunds of interest deducted in earlier years, see Recoveries in chapter 12. File taxes online Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. File taxes online Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. File taxes online A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. File taxes online See Points paid by the seller , later. File taxes online General Rule You generally cannot deduct the full amount of points in the year paid. File taxes online Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. File taxes online See Deduction Allowed Ratably , next. File taxes online For exceptions to the general rule, see Deduction Allowed in Year Paid , later. File taxes online Deduction Allowed Ratably If you do not meet the tests listed under Deduction Allowed in Year Paid , later, the loan is not a home improvement loan, or you choose not to deduct your points in full in the year paid, you can deduct the points ratably (equally) over the life of the loan if you meet all the following tests. File taxes online You use the cash method of accounting. File taxes online This means you report income in the year you receive it and deduct expenses in the year you pay them. File taxes online Most individuals use this method. File taxes online Your loan is secured by a home. File taxes online (The home does not need to be your main home. File taxes online ) Your loan period is not more than 30 years. File taxes online If your loan period is more than 10 years, the terms of your loan are the same as other loans offered in your area for the same or longer period. File taxes online Either your loan amount is $250,000 or less, or the number of points is not more than: 4, if your loan period is 15 years or less, or 6, if your loan period is more than 15 years. File taxes online Deduction Allowed in Year Paid You can fully deduct points in the year paid if you meet all the following tests. File taxes online (You can use Figure 23-B as a quick guide to see whether your points are fully deductible in the year paid. File taxes online ) Your loan is secured by your main home. File taxes online (Your main home is the one you ordinarily live in most of the time. File taxes online ) Paying points is an established business practice in the area where the loan was made. File taxes online The points paid were not more than the points generally charged in that area. File taxes online You use the cash method of accounting. File taxes online This means you report income in the year you receive it and deduct expenses in the year you pay them. File taxes online (If you want more information about this method, see Accounting Methods in chapter 1. File taxes online ) The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. File taxes online The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. File taxes online The funds you provided are not required to have been applied to the points. File taxes online They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. File taxes online You cannot have borrowed these funds from your lender or mortgage broker. File taxes online You use your loan to buy or build your main home. File taxes online The points were computed as a percentage of the principal amount of the mortgage. File taxes online The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. File taxes online The points may be shown as paid from either your funds or the seller's. File taxes online Figure 23-B. File taxes online Are My Points Fully Deductible This Year? Please click here for the text description of the image. File taxes online Figure 23-B. File taxes online Are My Points Fully Deductible This Year? Note. File taxes online If you meet all of these tests, you can choose to either fully deduct the points in the year paid, or deduct them over the life of the loan. File taxes online Home improvement loan. File taxes online   You can also fully deduct in the year paid points paid on a loan to improve your main home, if tests (1) through (6) are met. File taxes online Second home. File taxes online You cannot fully deduct in the year paid points you pay on loans secured by your second home. File taxes online You can deduct these points only over the life of the loan. File taxes online Refinancing. File taxes online   Generally, points you pay to refinance a mortgage are not deductible in full in the year you pay them. File taxes online This is true even if the new mortgage is secured by your main home. File taxes online   However, if you use part of the refinanced mortgage proceeds to improve your main home and you meet the first 6 tests listed under Deduction Allowed in Year Paid , earlier, you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. File taxes online You can deduct the rest of the points over the life of the loan. File taxes online Example 1. File taxes online In 1998, Bill Fields got a mortgage to buy a home. File taxes online In 2013, Bill refinanced that mortgage with a 15-year $100,000 mortgage loan. File taxes online The mortgage is secured by his home. File taxes online To get the new loan, he had to pay three points ($3,000). File taxes online Two points ($2,000) were for prepaid interest, and one point ($1,000) was charged for services, in place of amounts that ordinarily are stated separately on the settlement statement. File taxes online Bill paid the points out of his private funds, rather than out of the proceeds of the new loan. File taxes online The payment of points is an established practice in the area, and the points charged are not more than the amount generally charged there. File taxes online Bill's first payment on the new loan was due July 1. File taxes online He made six payments on the loan in 2013 and is a cash basis taxpayer. File taxes online Bill used the funds from the new mortgage to repay his existing mortgage. File taxes online Although the new mortgage loan was for Bill's continued ownership of his main home, it was not for the purchase or improvement of that home. File taxes online He cannot deduct all of the points in 2013. File taxes online He can deduct two points ($2,000) ratably over the life of the loan. File taxes online He deducts $67 [($2,000 ÷ 180 months) × 6 payments] of the points in 2013. File taxes online The other point ($1,000) was a fee for services and is not deductible. File taxes online Example 2. File taxes online The facts are the same as in Example 1, except that Bill used $25,000 of the loan proceeds to improve his home and $75,000 to repay his existing mortgage. File taxes online Bill deducts 25% ($25,000 ÷ $100,000) of the points ($2,000) in 2013. File taxes online His deduction is $500 ($2,000 × 25%). File taxes online Bill also deducts the ratable part of the remaining $1,500 ($2,000 − $500) that must be spread over the life of the loan. File taxes online This is $50 [($1,500 ÷ 180 months) × 6 payments] in 2013. File taxes online The total amount Bill deducts in 2013 is $550 ($500 + $50). File taxes online Special Situations This section describes certain special situations that may affect your deduction of points. File taxes online Original issue discount. File taxes online   If you do not qualify to either deduct the points in the year paid or deduct them ratably over the life of the loan, or if you choose not to use either of these methods, the points reduce the issue price of the loan. File taxes online This reduction results in original issue discount, which is discussed in chapter 4 of Publication 535. File taxes online Amounts charged for services. File taxes online   Amounts charged by the lender for specific services connected to the loan are not interest. File taxes online Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. File taxes online You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. File taxes online Points paid by the seller. File taxes online   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. File taxes online Treatment by seller. File taxes online   The seller cannot deduct these fees as interest. File taxes online But they are a selling expense that reduces the amount realized by the seller. File taxes online See chapter 15 for information on selling your home. File taxes online Treatment by buyer. File taxes online    The buyer reduces the basis of the home by the amount of the seller-paid points and treats the points as if he or she had paid them. File taxes online If all the tests under Deduction Allowed in Year Paid , earlier, are met, the buyer can deduct the points in the year paid. File taxes online If any of those tests are not met, the buyer deducts the points over the life of the loan. File taxes online   For information about basis, see chapter 13. File taxes online Funds provided are less than points. File taxes online   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the funds you provided were less than the points charged to you (test (6)), you can deduct the points in the year paid, up to the amount of funds you provided. File taxes online In addition, you can deduct any points paid by the seller. File taxes online Example 1. File taxes online When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). File taxes online You meet all the tests for deducting points in the year paid, except the only funds you provided were a $750 down payment. File taxes online Of the $1,000 charged for points, you can deduct $750 in the year paid. File taxes online You spread the remaining $250 over the life of the mortgage. File taxes online Example 2. File taxes online The facts are the same as in Example 1, except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. File taxes online In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). File taxes online You spread the remaining $250 over the life of the mortgage. File taxes online You must reduce the basis of your home by the $1,000 paid by the seller. File taxes online Excess points. File taxes online   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the points paid were more than generally paid in your area (test (3)), you deduct in the year paid only the points that are generally charged. File taxes online You must spread any additional points over the life of the mortgage. File taxes online Mortgage ending early. File taxes online   If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. File taxes online However, if you refinance the mortgage with the same lender, you cannot deduct any remaining balance of spread points. File taxes online Instead, deduct the remaining balance over the term of the new loan. File taxes online    A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. File taxes online Example. File taxes online Dan paid $3,000 in points in 2002 that he had to spread out over the 15-year life of the mortgage. File taxes online He deducts $200 points per year. File taxes online Through 2012, Dan has deducted $2,200 of the points. File taxes online Dan prepaid his mortgage in full in 2013. File taxes online He can deduct the remaining $800 of points in 2013. File taxes online Limits on deduction. File taxes online   You cannot fully deduct points paid on a mortgage unless the mortgage fits into one of the categories listed earlier under Fully deductible interest . File taxes online See Publication 936 for details. File taxes online Mortgage Insurance Premiums You can treat amounts you paid during 2013 for qualified mortgage insurance as home mortgage interest. File taxes online The insurance must be in connection with home acquisition debt and the insurance contract must have been issued after 2006. File taxes online Qualified mortgage insurance. File taxes online   Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). File taxes online   Mortgage insurance provided by the Department of Veterans Affairs is commonly known as a funding fee. File taxes online If provided by the Rural Housing Service, it is commonly known as a guarantee fee. File taxes online These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013. File taxes online Contact the mortgage insurance issuer to determine the deductible amount if it is not reported in box 4 of Form 1098. File taxes online Special rules for prepaid mortgage insurance. File taxes online   Generally, if you paid premiums for qualified mortgage insurance that are allocable to periods after the close of the tax year, such premiums are treated as paid in the period to which they are allocated. File taxes online You must allocate the premiums over the shorter of the stated term of the mortgage or 84 months, beginning with the month the insurance was obtained. File taxes online No deduction is allowed for the unamortized balance if the mortgage is satisfied before its term. File taxes online This paragraph does not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service. File taxes online See the Example below. File taxes online Example. File taxes online Ryan purchased a home in May of 2012 and financed the home with a 15-year mortgage. File taxes online Ryan also prepaid all of the $9,240 in private mortgage insurance required at the time of closing in May. File taxes online Since the $9,240 in private mortgage insurance is allocable to periods after 2012, Ryan must allocate the $9,240 over the shorter of the life of the mortgage or 84 months. File taxes online Ryan's adjusted gross income (AGI) for 2012 is $76,000. File taxes online Ryan can deduct $880 ($9,240 ÷ 84 × 8 months) for qualified mortgage insurance premiums in 2012. File taxes online For 2013, Ryan can deduct $1,320 ($9,240 ÷ 84 × 12 months) if his AGI is $100,000 or less. File taxes online In this example, the mortgage insurance premiums are allocated over 84 months, which is shorter than the life of the mortgage of 15 years (180 months). File taxes online Limit on deduction. File taxes online   If your adjusted gross income on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated. File taxes online See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. File taxes online If your adjusted gross income is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. File taxes online Form 1098, Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement from the mortgage holder. File taxes online You will receive the statement if you pay interest to a person (including a financial institution or a cooperative housing corporation) in the course of that person's trade or business. File taxes online A governmental unit is a person for purposes of furnishing the statement. File taxes online The statement for each year should be sent to you by January 31 of the following year. File taxes online A copy of this form will also be sent to the IRS. File taxes online The statement will show the total interest you paid during the year, any mortgage insurance premiums you paid, and if you purchased a main home during the year, it also will show the deductible points paid during the year, including seller-paid points. File taxes online However, it should not show any interest that was paid for you by a government agency. File taxes online As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. File taxes online However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan. File taxes online See Points , earlier, to determine whether you can deduct points not shown on Form 1098. File taxes online Prepaid interest on Form 1098. File taxes online   If you prepaid interest in 2013 that accrued in full by January 15, 2014, this prepaid interest may be included in box 1 of Form 1098. File taxes online However, you cannot deduct the prepaid amount for January 2014 in 2013. File taxes online (See Prepaid interest , earlier. File taxes online ) You will have to figure the interest that accrued for 2014 and subtract it from the amount in box 1. File taxes online You will include the interest for January 2014 with the other interest you pay for 2014. File taxes online See How To Report , later. File taxes online Refunded interest. File taxes online   If you received a refund of mortgage interest you overpaid in an earlier year, you generally will receive a Form 1098 showing the refund in box 3. File taxes online See Refunds of interest , earlier. File taxes online Mortgage insurance premiums. File taxes online   The amount of mortgage insurance premiums you paid during 2013 may be shown in box 4 of Form 1098. File taxes online See Mortgage Insurance Premiums, earlier. File taxes online Investment Interest This section discusses interest expenses you may be able to deduct as an investor. File taxes online If you borrow money to buy property you hold for investment, the interest you pay is investment interest. File taxes online You can deduct investment interest subject to the limit discussed later. File taxes online However, you cannot deduct interest you incurred to produce tax-exempt income. File taxes online Nor can you deduct interest expenses on straddles. File taxes online Investment interest does not include any qualified home mortgage interest or any interest taken into account in computing income or loss from a passive activity. File taxes online Investment Property Property held for investment includes property that produces interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business. File taxes online It also includes property that produces gain or loss (not derived in the ordinary course of a trade or business) from the sale or trade of property producing these types of income or held for investment (other than an interest in a passive activity). File taxes online Investment property also includes an interest in a trade or business activity in which you did not materially participate (other than a passive activity). File taxes online Partners, shareholders, and beneficiaries. File taxes online   To determine your investment interest, combine your share of investment interest from a partnership, S corporation, estate, or trust with your other investment interest. File taxes online Allocation of Interest Expense If you borrow money for business or personal purposes as well as for investment, you must allocate the debt among those purposes. File taxes online Only the interest expense on the part of the debt used for investment purposes is treated as investment interest. File taxes online The allocation is not affected by the use of property that secures the debt. File taxes online Limit on Deduction Generally, your deduction for investment interest expense is limited to the amount of your net investment income. File taxes online You can carry over the amount of investment interest that you could not deduct because of this limit to the next tax year. File taxes online The interest carried over is treated as investment interest paid or accrued in that next year. File taxes online You can carry over disallowed investment interest to the next tax year even if it is more than your taxable income in the year the interest was paid or accrued. File taxes online Net Investment Income Determine the amount of your net investment income by subtracting your investment expenses (other than interest expense) from your investment income. File taxes online Investment income. File taxes online    This generally includes your gross income from property held for investment (such as interest, dividends, annuities, and royalties). File taxes online Investment income does not include Alaska Permanent Fund dividends. File taxes online It also does not include qualified dividends or net capital gain unless you choose to include them. File taxes online Choosing to include qualified dividends. File taxes online   Investment income generally does not include qualified dividends, discussed in chapter 8. File taxes online However, you can choose to include all or part of your qualified dividends in investment income. File taxes online   You make this choice by completing Form 4952, line 4g, according to its instructions. File taxes online   If you choose to include any amount of your qualified dividends in investment income, you must reduce your qualified dividends that are eligible for the lower capital gains tax rates by the same amount. File taxes online Choosing to include net capital gain. File taxes online   Investment income generally does not include net capital gain from disposing of investment property (including capital gain distributions from mutual funds). File taxes online However, you can choose to include all or part of your net capital gain in investment income. File taxes online    You make this choice by completing Form 4952, line 4g, according to its instructions. File taxes online   If you choose to include any amount of your net capital gain in investment income, you must reduce your net capital gain that is eligible for the lower capital gains tax rates by the same amount. File taxes online    Before making either choice, consider the overall effect on your tax liability. File taxes online Compare your tax if you make one or both of these choices with your tax if you do not. File taxes online Investment income of child reported on parent's return. File taxes online    Investment income includes the part of your child's interest and dividend income that you choose to report on your return. File taxes online If the child does not have qualified dividends, Alaska Permanent Fund dividends, or capital gain distributions, this is the amount on line 6 of Form 8814, Parents' Election To Report Child's Interest and Dividends. File taxes online Child's qualified dividends. File taxes online   If part of the amount you report is your child's qualified dividends, that part (which is reported on Form 1040, line 9b) generally does not count as investment income. File taxes online However, you can choose to include all or part of it in investment income, as explained under Choosing to include qualified dividends , earlier. File taxes online   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured next under Child's Alaska Permanent Fund dividends). File taxes online Child's Alaska Permanent Fund dividends. File taxes online   If part of the amount you report is your child's Alaska Permanent Fund dividends, that part does not count as investment income. File taxes online To figure the amount of your child's income that you can consider your investment income, start with the amount on Form 8814, line 6. File taxes online Multiply that amount by a percentage that is equal to the Alaska Permanent Fund dividends divided by the total amount on Form 8814, line 4. File taxes online Subtract the result from the amount on Form 8814, line 12. File taxes online Child's capital gain distributions. File taxes online    If part of the amount you report is your child's capital gain distributions, that part (which is reported on Schedule D, line 13, or Form 1040, line 13) generally does not count as investment income. File taxes online However, you can choose to include all or part of it in investment income, as explained in Choosing to include net capital gain , earlier. File taxes online   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured under Child's Alaska Permanent Fund dividends , earlier). File taxes online Investment expenses. File taxes online   Investment expenses are your allowed deductions (other than interest expense) directly connected with the production of investment income. File taxes online Investment expenses that are included as a miscellaneous itemized deduction on Schedule A (Form 1040) are allowable deductions after applying the 2% limit that applies to miscellaneous itemized deductions. File taxes online Use the smaller of: The investment expenses included on Schedule A (Form 1040), line 23, or The amount on Schedule A, line 27. File taxes online Losses from passive activities. File taxes online   Income or expenses that you used in computing income or loss from a passive activity are not included in determining your investment income or investment expenses (including investment interest expense). File taxes online See Publication 925, Passive Activity and At-Risk Rules, for information about passive activities. File taxes online Form 4952 Use Form 4952, Investment Interest Expense Deduction, to figure your deduction for investment interest. File taxes online Exception to use of Form 4952. File taxes online   You do not have to complete Form 4952 or attach it to your return if you meet all of the following tests. File taxes online Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified dividends. File taxes online You do not have any other deductible investment expenses. File taxes online You have no carryover of investment interest expense from 2012. File taxes online If you meet all of these tests, you can deduct all of your investment interest. File taxes online More Information For more information on investment interest, see Interest Expenses in chapter 3 of Publication 550. File taxes online Items You Cannot Deduct Some interest payments are not deductible. File taxes online Certain expenses similar to interest also are not deductible. File taxes online Nondeductible expenses include the following items. File taxes online Personal interest (discussed later). File taxes online Service charges (however, see Other Expenses (Line 23) in chapter 28). File taxes online Annual fees for credit cards. File taxes online Loan fees. File taxes online Credit investigation fees. File taxes online Interest to purchase or carry tax-exempt securities. File taxes online Penalties. File taxes online   You cannot deduct fines and penalties paid to a government for violations of law, regardless of their nature. File taxes online Personal Interest Personal interest is not deductible. File taxes online Personal interest is any interest that is not home mortgage interest, investment interest, business interest, or other deductible interest. File taxes online It includes the following items. File taxes online Interest on car loans (unless you use the car for business). File taxes online Interest on federal, state, or local income tax. File taxes online Finance charges on credit cards, retail installment contracts, and revolving charge accounts incurred for personal expenses. File taxes online Late payment charges by a public utility. File taxes online You may be able to deduct interest you pay on a qualified student loan. File taxes online For details, see Publication 970, Tax Benefits for Education. File taxes online Allocation of Interest If you use the proceeds of a loan for more than one purpose (for example, personal and business), you must allocate the interest on the loan to each use. File taxes online However, you do not have to allocate home mortgage interest if it is fully deductible, regardless of how the funds are used. File taxes online You allocate interest (other than fully deductible home mortgage interest) on a loan in the same way as the loan itself is allocated. File taxes online You do this by tracing disbursements of the debt proceeds to specific uses. File taxes online For details on how to do this, see chapter 4 of Publication 535. File taxes online How To Report You must file Form 1040 to deduct any home mortgage interest expense on your tax return. File taxes online Where you deduct your interest expense generally depends on how you use the loan proceeds. File taxes online See Table 23-1 for a summary of where to deduct your interest expense. File taxes online Home mortgage interest and points. File taxes online   Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. File taxes online If you paid more deductible interest to the financial institution than the amount shown on Form 1098, show the larger deductible amount on line 10. File taxes online Attach a statement explaining the difference and print “See attached” next to line 10. File taxes online    Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. File taxes online If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and taxpayer identification number (TIN) on the dotted lines next to line 11. File taxes online The seller must give you this number and you must give the seller your TIN. File taxes online A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. File taxes online Failure to meet any of these requirements may result in a $50 penalty for each failure. File taxes online The TIN can be either a social security number, an individual taxpayer identification number (issued by the Internal Revenue Service), or an employer identification number. File taxes online See Social Security Number (SSN) in chapter 1 for more information about TINs. File taxes online    If you can take a deduction for points that were not reported to you on Form 1098, deduct those points on Schedule A (Form 1040), line 12. File taxes online   Deduct mortgage insurance premiums on Schedule A (Form 1040), line 13. File taxes online More than one borrower. File taxes online   If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. File taxes online Show how much of the interest each of you paid, and give the name and address of the person who received the form. File taxes online Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. File taxes online Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13. File taxes online   Similarly, if you are the payer of record on a mortgage on which there are other borrowers entitled to a deduction for the interest shown on the Form 1098 you received, deduct only your share of the interest on Schedule A (Form 1040), line 10. File taxes online You should let each of the other borrowers know what his or her share is. File taxes online Mortgage proceeds used for business or investment. File taxes online    If your home mortgage interest deduction is limited, but all or part of the mortgage proceeds were used for business, investment, or other deductible activities, see Table 23-1. File taxes online It shows where to deduct the part of your excess interest that is for those activities. File taxes online Investment interest. File taxes online    Deduct investment interest, subject to certain limits discussed in Publication 550, on Schedule A (Form 1040), line 14. File taxes online Amortization of bond premium. File taxes online   There are various ways to treat the premium you pay to buy taxable bonds. File taxes online See Bond Premium Amortization in Publication 550. File taxes online Income-producing rental or royalty interest. File taxes online   Deduct interest on a loan for income-producing rental or royalty property that is not used in your business in Part I of Schedule E (Form 1040). File taxes online Example. File taxes online You rent out part of your home and borrow money to make repairs. File taxes online You can deduct only the interest payment for the rented part in Part I of Schedule E (Form 1040). File taxes online Deduct the rest of the interest payment on Schedule A (Form 1040) if it is deductible home mortgage interest. File taxes online Table 23-1. File taxes online Where To Deduct Your Interest Expense IF you have . File taxes online . File taxes online . File taxes online THEN deduct it on . File taxes online . File taxes online . File taxes online AND for more information go to . File taxes online . File taxes online . File taxes online deductible student loan interest Form 1040, line 33, or Form 1040A, line 18 Publication 970. File taxes online deductible home mortgage interest and points reported on Form 1098 Schedule A (Form 1040), line 10 Publication 936. File taxes online deductible home mortgage interest not reported on Form 1098 Schedule A (Form 1040), line 11 Publication 936. File taxes online deductible points not reported on Form 1098 Schedule A (Form 1040), line 12 Publication 936. File taxes online deductible mortgage insurance premiums Schedule A (Form 1040), line 13 Publication 936. File taxes online deductible investment interest (other than incurred to produce rents or royalties) Schedule A (Form 1040), line 14 Publication 550. File taxes online deductible business interest (non-farm) Schedule C or C-EZ (Form 1040) Publication 535. File taxes online deductible farm business interest Schedule F (Form 1040) Publications 225 and 535. File taxes online deductible interest incurred to produce rents or royalties Schedule E (Form 1040) Publications 527 and 535. File taxes online personal interest not deductible. File taxes online Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

TEB Financial Restructuring Compliance

To promote voluntary compliance with federal tax laws, Tax Exempt Bonds (TEB) has compiled material to educate and assist issuers and conduit borrowers as they navigate the hazards of defaulted or distressed tax-exempt, tax credit or direct pay debt. Note, however, that these materials should not be relied upon as legal authority. The Internal Revenue Code and applicable regulations are complex and these materials do not address every situation.

Information on Reissuance of Obligations

Actions taken with respect to defaulted or distressed debt can inadvertently trigger a reissuance for federal tax purposes leading to the loss of tax exemption for the debt (or, in the case of tax credit or direct pay bonds, loss of the credit or subsidy). The reissuance rules apply to all tax-exempt, tax credit and direct pay bonds from a large bond issue to a small lease entered into to purchase equipment (for example, police cars) to a note held by a local bank.

  • Reissuance of Tax Exempt Obligations: Some Basic Concepts provides an educational overview on reissuance.
  • A Reissuance Lesson, part of IRS training materials, discusses situations in which post-issuance changes in the terms of an obligation cause a deemed reissuance. It also discusses the extinguishment of bonds and certain temporary relief provided to issuers who acquire and hold their own bonds.
  • Our Reissuance Contact Letter, mailed to some issuers as part of our education and outreach efforts, summarizes some of the causes and consequences of inadvertent reissuance.

Information on Sales or Leases of Bond-Financed Property

In addition to reissuance, the sale or lease of property financed with tax-exempt bonds may make the bonds taxable or, in the case of tax credit or direct pay bonds, cause a loss of the credit or subsidy.  Such actions can result in noncompliance with the qualified use requirements jeopardizing the tax-advantaged status of the bonds financing the property.  However, certain self-correction options are available to remediate such noncompliance.

Whatever the violation, TEB encourages voluntary compliance  (including the VCAP Program)  as a vehicle for expeditiously correcting self-discovered problems in bond issuances.

If you have questions, email them to TEB and indicate "Financial Restructuring" in the subject line.  Be sure to include your name, telephone number and the best time to reach you, as we may reply to your questions by telephone.

Page Last Reviewed or Updated: 04-Sep-2013

The File Taxes Online

File taxes online 34. File taxes online   Child Tax Credit Table of Contents Introduction Useful Items - You may want to see: Qualifying Child Amount of CreditLimits on the Credit Claiming the Credit Additional Child Tax Credit Completing Schedule 8812 (Form 1040A or 1040)Part I Parts II–IV Introduction The child tax credit is a credit that may reduce your tax by as much as $1,000 for each of your qualifying children. File taxes online The additional child tax credit is a credit you may be able to take if you are not able to claim the full amount of the child tax credit. File taxes online This chapter explains the following. File taxes online Who is a qualifying child. File taxes online The amount of the credit. File taxes online How to claim the credit. File taxes online The child tax credit and the additional child tax credit should not be confused with the child and dependent care credit discussed in chapter 32. File taxes online If you have no tax. File taxes online   Credits, such as the child tax credit or the credit for child and dependent care expenses, are used to reduce tax. File taxes online If your tax on Form 1040, line 46, or Form 1040A, line 28, is zero, do not figure the child tax credit because there is no tax to reduce. File taxes online However, you may qualify for the additional child tax credit on line 65 (Form 1040) or line 39 (Form 1040A). File taxes online Useful Items - You may want to see: Publication 972 Child Tax Credit Form (and Instructions) Schedule 8812 (Form 1040A or 1040) Child Tax Credit W-4 Employee's Withholding Allowance Certificate Qualifying Child A qualifying child for purposes of the child tax credit is a child who: Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your grandchild, niece, or nephew), Was under age 17 at the end of 2013, Did not provide over half of his or her own support for 2013, Lived with you for more than half of 2013 (see Exceptions to time lived with you , later), Is claimed as a dependent on your return, Does not file a joint return for the year (or files it only as a claim for refund), and Was a U. File taxes online S. File taxes online citizen, a U. File taxes online S. File taxes online national, or a resident of the United States. File taxes online If the child was adopted, see Adopted child , later. File taxes online For each qualifying child you must check the box on Form 1040 or Form 1040A, line 6c. File taxes online Example 1. File taxes online Your son turned 17 on December 30, 2013. File taxes online He is a citizen of the United States and you claimed him as a dependent on your return. File taxes online He is not a qualifying child for the child tax credit because he was not under age 17 at the end of 2013. File taxes online Example 2. File taxes online Your daughter turned 8 years old in 2013. File taxes online She is not a citizen of the United States, has an ITIN, and lived in Mexico all of 2013. File taxes online She is not a qualifying child for the child tax credit because she was not a resident of the United States for 2013. File taxes online Filers who have certain child dependents with an Individual Taxpayer Identification Number (ITIN). File taxes online   If you are claiming a child tax credit or additional child tax credit for a child you identified on your tax return with an ITIN instead of an SSN, you must complete Part I of Schedule 8812 (Form 1040A or 1040). File taxes online   Although a child may be your dependent, you may only claim a child tax credit or additional child tax credit for a dependent who is a citizen, national, or resident of the United States. File taxes online To be treated as a resident of the United States, a child generally will need to meet the requirements of the substantial presence test. File taxes online For more information about the substantial presence test, see Publication 519, U. File taxes online S. File taxes online Tax Guide for Aliens. File taxes online Adopted child. File taxes online   An adopted child is always treated as your own child. File taxes online An adopted child includes a child lawfully placed with you for legal adoption. File taxes online   If you are a U. File taxes online S. File taxes online citizen or U. File taxes online S. File taxes online national and your adopted child lived with you all year as a member of your household in 2013, that child meets condition (7) above to be a qualifying child for the child tax credit. File taxes online Exceptions to time lived with you. File taxes online   A child is considered to have lived with you for more than half of 2013 if the child was born or died in 2013 and your home was this child's home for more than half the time he or she was alive. File taxes online Temporary absences by you or the child for special circumstances, such as for school, vacation, business, medical care, military service, or detention in a juvenile facility, count as time the child lived with you. File taxes online   There are also exceptions for kidnapped children and children of divorced or separated parents. File taxes online For details, see Residency Test in chapter 3. File taxes online Qualifying child of more than one person. File taxes online   A special rule applies if your qualifying child is the qualifying child of more than one person. File taxes online For details, see Special Rule for Qualifying Child of More Than One Person in chapter 3. File taxes online Amount of Credit The maximum amount you can claim for the credit is $1,000 for each qualifying child. File taxes online Limits on the Credit You must reduce your child tax credit if either (1) or (2) applies. File taxes online The amount on Form 1040, line 46, or Form 1040A, line 28, is less than the credit. File taxes online If this amount is zero, you cannot take this credit because there is no tax to reduce. File taxes online But you may be able to take the additional child tax credit. File taxes online See Additional Child Tax Credit , later. File taxes online Your modified adjusted gross income (AGI) is more than the amount shown below for your filing status. File taxes online Married filing jointly - $110,000. File taxes online Single, head of household, or qualifying widow(er) - $75,000. File taxes online Married filing separately - $55,000. File taxes online Modified AGI. File taxes online   For purposes of the child tax credit, your modified AGI is your AGI plus the following amounts that may apply to you. File taxes online Any amount excluded from income because of the exclusion of income from  Puerto Rico. File taxes online On the dotted line next to Form 1040, line 38, enter the amount excluded and identify it as “EPRI. File taxes online ” Also attach a copy of any Form(s) 499R-2/W-2PR to your return. File taxes online Any amount on line 45 or line 50 of Form 2555, Foreign Earned Income. File taxes online Any amount on line 18 of Form 2555-EZ, Foreign Earned Income Exclusion. File taxes online Any amount on line 15 of Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa. File taxes online   If you do not have any of the above, your modified AGI is the same as your AGI. File taxes online AGI. File taxes online   Your AGI is the amount on Form 1040, line 38, or Form 1040A, line 22. File taxes online Claiming the Credit To claim the child tax credit, you must file Form 1040 or Form 1040A. File taxes online You cannot claim the child tax credit on Form 1040EZ. File taxes online You must provide the name and identification number (usually a social security number) on your tax return for each qualifying child. File taxes online If you claim the child tax credit with a child identified by an ITIN, you must also file Schedule 8812. File taxes online To figure your credit, first review the Child Tax Credit Worksheet in your Form 1040 or 1040A instructions. File taxes online If you are instructed to use Publication 972, you may not use the worksheet in your tax return instructions; instead, you must use Publication 972 to figure the credit. File taxes online If you are not instructed to use Publication 972, you may use the Child Tax Credit Worksheet in your Form 1040 or 1040A instructions or Publication 972 to figure the credit. File taxes online Additional Child Tax Credit This credit is for certain individuals who get less than the full amount of the child tax credit. File taxes online The additional child tax credit may give you a refund even if you do not owe any tax. File taxes online How to claim the additional child tax credit. File taxes online   To claim the additional child tax credit, follow the steps below. File taxes online Make sure you figured the amount, if any, of your child tax credit. File taxes online See Claiming the Credit , earlier. File taxes online If you answered “Yes” on line 9 or line 10 of the Child Tax Credit Worksheet in the Form 1040 or Form 1040A instructions, or line 13 of the Child Tax Credit Worksheet in Publication 972, use Parts II through IV of Schedule 8812 to see if you can take the additional child tax credit. File taxes online If you have an additional child tax credit on line 13 of Schedule 8812, carry it to Form 1040, line 65, or Form 1040A, line 39. File taxes online Completing Schedule 8812 (Form 1040A or 1040) Schedule 8812 contains four parts, but can really be thought of as two sections. File taxes online Part I is distinct and separate from Parts II–IV. File taxes online If all your children are identified by social security numbers or IRS adoption taxpayer identification numbers and you are not claiming the additional child tax credit, you do not need to complete or attach Schedule 8812 to your tax return. File taxes online Part I You only need to complete Part I if you are claiming the child tax credit for a child identified by an IRS individual taxpayer identification number (ITIN). File taxes online When completing Part I, only answer the questions with regard to children identified by an ITIN; you do not need to complete Part I of Schedule 8812 for any child that is identified by a social security number (SSN) or an IRS adoption taxpayer identification number (ATIN). File taxes online If all the children for whom you checked the box in column 4 of line 6c on your Form 1040 or Form 1040A are identified by an SSN or an ATIN, you do not need to complete Part I of Schedule 8812. File taxes online Parts II–IV Parts II–IV help you figure your additional child tax credit. File taxes online Generally, you should only complete Parts II–IV if you are instructed to do so after completing the Child Tax Credit Worksheet in your tax return instructions or Publication 972. File taxes online See How to claim the additional child tax credit , earlier. File taxes online Prev  Up  Next   Home   More Online Publications