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Filing State Taxes Free

Filing state taxes free Publication 523 - Main Content Table of Contents Main HomeVacant land. Filing state taxes free Factors used to determine main home. Filing state taxes free Figuring Gain or LossSelling Price Amount Realized Adjusted Basis Amount of Gain or Loss Dispositions Other Than Sales Determining BasisCost As Basis Basis Other Than Cost Adjusted Basis Excluding the GainMaximum Exclusion Ownership and Use Tests Reduced Maximum Exclusion Nonqualified Use Business Use or Rental of HomeUnrecaptured section 1250 gain. Filing state taxes free Property Used Partly for Business or Rental Reporting the SaleSeller-financed mortgage. Filing state taxes free Individual taxpayer identification number (ITIN). Filing state taxes free More information. Filing state taxes free Comprehensive Examples Special SituationsException for sales to related persons. Filing state taxes free Deducting Taxes in the Year of SaleForm 1099-S. Filing state taxes free More information. Filing state taxes free Recapturing (Paying Back) a Federal Mortgage Subsidy Recapture of First-Time Homebuyer CreditExample. Filing state taxes free Worksheets How To Get Tax HelpLow Income Taxpayer Clinics Main Home This section explains the term “main home. Filing state taxes free ” Usually, the home you live in most of the time is your main home and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. Filing state taxes free To exclude gain under the rules in this publication, you in most cases must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. Filing state taxes free Land. Filing state taxes free   If you sell the land on which your main home is located, but not the house itself, you cannot exclude any gain you have from the sale of the land. Filing state taxes free Example. Filing state taxes free You buy a piece of land and move your main home to it. Filing state taxes free Then, you sell the land on which your main home was located. Filing state taxes free This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land. Filing state taxes free Vacant land. Filing state taxes free   The sale of vacant land is not a sale of your main home unless: The vacant land is adjacent to land containing your home, You owned and used the vacant land as part of your main home, The separate sale of your home satisfies the requirements for exclusion and occurs within 2 years before or 2 years after the date of the sale of the vacant land, and The other requirements for excluding gain from the sale of a main home have been satisfied with respect to the vacant land. Filing state taxes free If these requirements are met, the sale of the home and the sale of the vacant land are treated as one sale and only one maximum exclusion can be applied to any gain. Filing state taxes free See Excluding the Gain , later. Filing state taxes free The destruction of your home is treated as a sale of your home. Filing state taxes free As a result, you may be able to meet these requirements if you sell vacant land used as a part of your main home within 2 years from the date of the destruction of your main home. Filing state taxes free For information, see Publication 547. Filing state taxes free More than one home. Filing state taxes free   If you have more than one home, you can exclude gain only from the sale of your main home. Filing state taxes free You must include in income the gain from the sale of any other home. Filing state taxes free If you have two homes and live in each of them, your main home is ordinarily the one you live in most of the time during the year. Filing state taxes free Example 1. Filing state taxes free You own two homes, one in New York and one in Florida. Filing state taxes free From 2009 through 2013, you live in the New York home for 7 months and in the Florida residence for 5 months of each year. Filing state taxes free In the absence of facts and circumstances indicating otherwise, the New York home is your main home. Filing state taxes free You would be eligible to exclude the gain from the sale of the New York home but not of the Florida home in 2013. Filing state taxes free Example 2. Filing state taxes free You own a house, but you live in another house that you rent. Filing state taxes free The rented house is your main home. Filing state taxes free Example 3. Filing state taxes free You own two homes, one in Virginia and one in New Hampshire. Filing state taxes free In 2009 and 2010, you lived in the Virginia home. Filing state taxes free In 2011 and 2012, you lived in the New Hampshire home. Filing state taxes free In 2013, you lived again in the Virginia home. Filing state taxes free Your main home in 2009, 2010, and 2013 is the Virginia home. Filing state taxes free Your main home in 2011 and 2012 is the New Hampshire home. Filing state taxes free You would be eligible to exclude gain from the sale of either home (but not both) in 2013. Filing state taxes free Factors used to determine main home. Filing state taxes free   In addition to the amount of time you live in each home, other factors are relevant in determining which home is your main home. Filing state taxes free Those factors include the following. Filing state taxes free Your place of employment. Filing state taxes free The location of your family members' main home. Filing state taxes free Your mailing address for bills and correspondence. Filing state taxes free The address listed on your: Federal and state tax returns, Driver's license, Car registration, and Voter registration card. Filing state taxes free The location of the banks you use. Filing state taxes free The location of recreational clubs and religious organizations of which you are a member. Filing state taxes free Property used partly as your main home. Filing state taxes free   If you use only part of the property as your main home, the rules discussed in this publication apply only to the gain or loss on the sale of that part of the property. Filing state taxes free For details, see Business Use or Rental of Home , later. Filing state taxes free Figuring Gain or Loss To figure the gain or loss on the sale of your main home, you must know the selling price, the amount realized, and the adjusted basis. Filing state taxes free Subtract the adjusted basis from the amount realized to get your gain or loss. Filing state taxes free     Selling price     − Selling expenses       Amount realized     − Adjusted basis       Gain or loss   Gain. Filing state taxes free   Gain is the excess of the amount realized over the adjusted basis of the property. Filing state taxes free Loss. Filing state taxes free   Loss is the excess of the adjusted basis over the amount realized for the property. Filing state taxes free Selling Price The selling price is the total amount you receive for your home. Filing state taxes free It includes money and the fair market value of any other property or any other services you receive and all notes, mortgages or other debts assumed by the buyer as part of the sale. Filing state taxes free Personal property. Filing state taxes free   The selling price of your home does not include amounts you received for personal property sold with your home. Filing state taxes free Personal property is property that is not a permanent part of the home. Filing state taxes free Examples are furniture, draperies, rugs, a washer and dryer, and lawn equipment. Filing state taxes free Separately stated amounts you received for these items should not be shown on Form 1099-S (discussed later). Filing state taxes free Any gains from sales of personal property must be included in your income, but not as part of the sale of your home. Filing state taxes free Payment by employer. Filing state taxes free   You may have to sell your home because of a job transfer. Filing state taxes free If your employer pays you for a loss on the sale or for your selling expenses, do not include the payment as part of the selling price. Filing state taxes free Your employer will include it as wages in box 1 of your Form W-2 and you will include it in your income on Form 1040, line 7, or on Form 1040NR, line 8. Filing state taxes free Option to buy. Filing state taxes free   If you grant an option to buy your home and the option is exercised, add the amount you receive for the option to the selling price of your home. Filing state taxes free If the option is not exercised, you must report the amount as ordinary income in the year the option expires. Filing state taxes free Report this amount on Form 1040, line 21, or on Form 1040NR, line 21. Filing state taxes free Form 1099-S. Filing state taxes free   If you received Form 1099-S, box 2 (gross proceeds) should show the total amount you received for your home. Filing state taxes free   However, box 2 will not include the fair market value of any services or property other than cash or notes you received or will receive. Filing state taxes free Instead, box 4 will be checked to indicate your receipt or expected receipt of these items. Filing state taxes free Amount Realized The amount realized is the selling price minus selling expenses. Filing state taxes free Selling expenses. Filing state taxes free   Selling expenses include: Commissions, Advertising fees, Legal fees, and Loan charges paid by the seller, such as loan placement fees or “points. Filing state taxes free ” Adjusted Basis While you owned your home, you may have made adjustments (increases or decreases) to the basis. Filing state taxes free This adjusted basis must be determined before you can figure gain or loss on the sale of your home. Filing state taxes free For information on how to figure your home's adjusted basis, see Determining Basis , later. Filing state taxes free Amount of Gain or Loss To figure the amount of gain or loss, compare the amount realized to the adjusted basis. Filing state taxes free Gain on sale. Filing state taxes free   If the amount realized is more than the adjusted basis, the difference is a gain and, except for any part you can exclude, generally is taxable. Filing state taxes free Loss on sale. Filing state taxes free   If the amount realized is less than the adjusted basis, the difference is a loss. Filing state taxes free Generally, a loss on the sale of your main home cannot be deducted. Filing state taxes free Jointly owned home. Filing state taxes free   If you and your spouse sell your jointly owned home and file a joint return, you figure your gain or loss as one taxpayer. Filing state taxes free Separate returns. Filing state taxes free   If you file separate returns, each of you must figure your own gain or loss according to your ownership interest in the home. Filing state taxes free Your ownership interest is generally determined by state law. Filing state taxes free Joint owners not married. Filing state taxes free   If you and a joint owner other than your spouse sell your jointly owned home, each of you must figure your own gain or loss according to your ownership interest in the home. Filing state taxes free Each of you applies the rules discussed in this publication on an individual basis. Filing state taxes free Dispositions Other Than Sales Some special rules apply to other dispositions of your main home. Filing state taxes free Foreclosure or repossession. Filing state taxes free   If your home was foreclosed on or repossessed, you have a disposition. Filing state taxes free See Publication 4681 to determine if you have ordinary income, gain, or loss. Filing state taxes free More information. Filing state taxes free   If part of a home is used for business or rental purposes, see Foreclosures and Repossessions in chapter 1 of Publication 544 for more information. Filing state taxes free Publication 544 has examples of how to figure gain or loss on a foreclosure or repossession. Filing state taxes free Abandonment. Filing state taxes free   If you abandon your home, see Publication 4681 to determine if you have ordinary income, gain, or loss. Filing state taxes free Trading (exchanging) homes. Filing state taxes free   If you trade your home for another home, treat the trade as a sale and a purchase. Filing state taxes free Example. Filing state taxes free You owned and lived in a home with an adjusted basis of $41,000. Filing state taxes free A real estate dealer accepted your old home as a trade-in and allowed you $50,000 toward a new home priced at $80,000. Filing state taxes free This is treated as a sale of your old home for $50,000 with a gain of $9,000 ($50,000 − $41,000). Filing state taxes free If the dealer had allowed you $27,000 and assumed your unpaid mortgage of $23,000 on your old home, your sales price would still be $50,000 (the $27,000 trade-in allowed plus the $23,000 mortgage assumed). Filing state taxes free Transfer to spouse. Filing state taxes free   If you transfer your home to your spouse or you transfer it to your former spouse incident to your divorce, you in most cases have no gain or loss (unless the Exception, discussed next, applies). Filing state taxes free This is true even if you receive cash or other consideration for the home. Filing state taxes free As a result, the rules explained in this publication do not apply. Filing state taxes free   If you owned your home jointly with your spouse and transfer your interest in the home to your spouse, or to your former spouse incident to your divorce, the same rule applies. Filing state taxes free You have no gain or loss. Filing state taxes free Exception. Filing state taxes free   These transfer rules do not apply if your spouse or former spouse is a nonresident alien. Filing state taxes free In that case, you generally will have a gain or loss. Filing state taxes free More information. Filing state taxes free    See Property Settlements in Publication 504, Divorced or Separated Individuals, for more information. Filing state taxes free Involuntary conversion. Filing state taxes free   You have a disposition when your home is destroyed or condemned and you receive other property or money in payment, such as insurance or a condemnation award. Filing state taxes free This is treated as a sale and you may be able to exclude all or part of any gain from the destruction or condemnation of your home, as explained later under Special Situations (see Home destroyed or condemned ). Filing state taxes free Determining Basis You need to know your basis in your home to figure any gain or loss when you sell it. Filing state taxes free Your basis in your home is determined by how you got the home. Filing state taxes free Generally, your basis is its cost if you bought it or built it. Filing state taxes free If you got it in some other way (inheritance, gift, etc. Filing state taxes free ), your basis is generally either its fair market value when you received it or the adjusted basis of the previous owner. Filing state taxes free While you owned your home, you may have made adjustments (increases or decreases) to your home's basis. Filing state taxes free The result of these adjustments is your home's adjusted basis, which is used to figure gain or loss on the sale of your home. Filing state taxes free To figure your adjusted basis, you can use Worksheet 1, near the end of this publication. Filing state taxes free Filled-in examples of that worksheet are included in the Comprehensive Examples , later. Filing state taxes free Cost As Basis The cost of property is the amount you paid for it in cash, debt obligations, other property, or services. Filing state taxes free Purchase. Filing state taxes free   If you bought your home, your basis is its cost to you. Filing state taxes free This includes the purchase price and certain settlement or closing costs. Filing state taxes free In most cases, your purchase price includes your down payment and any debt, such as a first or second mortgage or notes you gave the seller in payment for the home. Filing state taxes free If you build, or contract to build, a new home, your purchase price can include costs of construction, as discussed later. Filing state taxes free Seller-paid points. Filing state taxes free   If the person who sold you your home paid points on your loan, you may have to reduce your home's basis by the amount of the points, as shown in the following chart. Filing state taxes free    IF you bought your home. Filing state taxes free . Filing state taxes free . Filing state taxes free THEN reduce your home's basis by the seller-paid points. Filing state taxes free . Filing state taxes free . Filing state taxes free after 1990 but before April 4, 1994 only if you deducted them as home mortgage interest in the year paid. Filing state taxes free after April 3, 1994 even if you did not deduct them. Filing state taxes free Settlement fees or closing costs. Filing state taxes free   When you bought your home, you may have paid settlement fees or closing costs in addition to the contract price of the property. Filing state taxes free You can include in your basis some of the settlement fees and closing costs you paid for buying the home, but not the fees and costs for getting a mortgage loan. Filing state taxes free A fee paid for buying the home is any fee you would have had to pay even if you paid cash for the home (that is, without the need for financing). Filing state taxes free   Settlement fees do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Filing state taxes free   Some of the settlement fees or closing costs that you can include in your basis are: Abstract fees (abstract of title fees), Charges for installing utility services, Legal fees (including fees for the title search and preparing the sales contract and deed), Recording fees, Survey fees, Transfer or stamp taxes, Owner's title insurance, and Any amounts the seller owes that you agree to pay, such as: Certain real estate taxes (discussed later), Back interest, Recording or mortgage fees, Charges for improvements or repairs, and Sales commissions. Filing state taxes free   Some settlement fees and closing costs you cannot include in your basis are: Fire insurance premiums, Rent for occupancy of the house before closing, Charges for utilities or other services related to occupancy of the house before closing, Any fee or cost that you deducted as a moving expense (allowed for certain fees and costs before 1994), Charges connected with getting a mortgage loan, such as: Mortgage insurance premiums (including funding fees connected with loans guaranteed by the Department of Veterans Affairs), Loan assumption fees, Cost of a credit report, Fee for an appraisal required by a lender, and Fees for refinancing a mortgage. Filing state taxes free Real estate taxes. Filing state taxes free   Real estate taxes for the year you bought your home may affect your basis, as shown in the following chart. Filing state taxes free    IF. Filing state taxes free . Filing state taxes free . Filing state taxes free AND. Filing state taxes free . Filing state taxes free . Filing state taxes free THEN the taxes. Filing state taxes free . Filing state taxes free . Filing state taxes free you pay taxes that the seller owed on the home up to the date of sale the seller does not reimburse you are added to the basis of your home. Filing state taxes free the seller reimburses you do not affect the basis of your home. Filing state taxes free the seller pays taxes for you (taxes owed beginning on the date of sale) you do not reimburse the seller are subtracted from the basis of your home. Filing state taxes free you reimburse the seller do not affect the basis of your home. Filing state taxes free Construction. Filing state taxes free   If you contracted to have your house built on land you own, your basis is: The cost of the land, plus The amount it cost you to complete the house, including: The cost of labor and materials, Any amounts paid to a contractor, Any architect's fees, Building permit charges, Utility meter and connection charges, and Legal fees directly connected with building the house. Filing state taxes free   Your cost includes your down payment and any debt such as a first or second mortgage or notes you gave the seller or builder. Filing state taxes free It also includes certain settlement or closing costs. Filing state taxes free You may have to reduce your basis by points the seller paid for you. Filing state taxes free For more information, see Seller-paid points and Settlement fees or closing costs , earlier. Filing state taxes free Built by you. Filing state taxes free   If you built all or part of your house yourself, its basis is the total amount it cost you to complete it. Filing state taxes free Do not include in the cost of the house: The value of your own labor, or The value of any other labor you did not pay for. Filing state taxes free Temporary housing. Filing state taxes free   If a builder gave you temporary housing while your home was being finished, you must reduce your basis by the part of the contract price that was for the temporary housing. Filing state taxes free To figure the amount of the reduction, multiply the contract price by a fraction. Filing state taxes free The numerator is the value of the temporary housing, and the denominator is the sum of the value of the temporary housing plus the value of the new home. Filing state taxes free Cooperative apartment. Filing state taxes free   If you are a tenant-stockholder in a cooperative housing corporation, your basis in the cooperative apartment used as your home is usually the cost of your stock in the corporation. Filing state taxes free This may include your share of a mortgage on the apartment building. Filing state taxes free Condominium. Filing state taxes free   To determine your basis in a condominium apartment used as your home, use the same rules as for any other home. Filing state taxes free Basis Other Than Cost You must use a basis other than cost, such as adjusted basis or fair market value, if you received your home as a gift, inheritance, a trade, or from your spouse. Filing state taxes free These situations are discussed in the following pages. Filing state taxes free Also, the instructions for Worksheet 1 (near the end of the publication) address each of these issues. Filing state taxes free Other special rules may apply in certain situations. Filing state taxes free If you converted the property, or some part of it, to business or rental use, see Property Changed to Business or Rental Use, in Publication 551. Filing state taxes free Home received as gift. Filing state taxes free   Use the following chart to find the basis of a home you received as a gift. Filing state taxes free IF the donor's adjusted basis at the time of the gift was. Filing state taxes free . Filing state taxes free . Filing state taxes free THEN your basis is. Filing state taxes free . Filing state taxes free . Filing state taxes free more than the fair market value of the home at that time the same as the donor's adjusted basis at the time of the gift. Filing state taxes free   Exception: If using the donor's adjusted basis results in a loss when you sell the home, you must use the fair market value of the home at the time of the gift as your basis. Filing state taxes free If using the fair market value results in a gain, you have neither gain nor loss. Filing state taxes free equal to or less than the fair market value at that time, and you received the gift before 1977 the smaller of the: • donor's adjusted basis, plus  any federal gift tax paid on  the gift, or • the home's fair market value  at the time of the gift. Filing state taxes free equal to or less than the fair market value at that time, and you received the gift after 1976 the same as the donor's adjusted basis, plus the part of any federal gift tax paid that is due to the net increase in value of the home (explained next). Filing state taxes free Fair market value. Filing state taxes free   The fair market value of property at the time of the gift is the value of the property as appraised for purposes of the federal gift tax. Filing state taxes free If the gift was not subject to the federal gift tax, the fair market value is the value as appraised for the purposes of a state gift tax. Filing state taxes free Part of federal gift tax due to net increase in value. Filing state taxes free   Figure the part of the federal gift tax paid that is due to the net increase in value of the home by multiplying the total federal gift tax paid by a fraction. Filing state taxes free The numerator of the fraction is the net increase in the value of the home, and the denominator is the value of the home for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Filing state taxes free The net increase in the value of the home is its fair market value minus the donor's adjusted basis immediately before the gift. Filing state taxes free Home acquired from a decedent who died before or after 2010. Filing state taxes free   If you inherited your home from a decedent who died before or after 2010, your basis is the fair market value of the property on the date of the decedent's death (or the later alternate valuation date chosen by the personal representative of the estate). Filing state taxes free If an estate tax return was filed or required to be filed, the value of the property listed on the estate tax return is your basis. Filing state taxes free If a federal estate tax return did not have to be filed, your basis in the home is the same as its appraised value at the date of death, for purposes of state inheritance or transmission taxes. Filing state taxes free Surviving spouse. Filing state taxes free   If you are a surviving spouse and you owned your home jointly, your basis in the home will change. Filing state taxes free The new basis for the interest your spouse owned will be its fair market value on the date of death (or alternate valuation date). Filing state taxes free The basis in your interest will remain the same. Filing state taxes free Your new basis in the home is the total of these two amounts. Filing state taxes free   If you and your spouse owned the home either as tenants by the entirety or as joint tenants with right of survivorship, you will each be considered to have owned one-half of the home. Filing state taxes free Example. Filing state taxes free Your jointly owned home (owned as joint tenants with right of survivorship) had an adjusted basis of $50,000 on the date of your spouse's death, and the fair market value on that date was $100,000. Filing state taxes free Your new basis in the home is $75,000 ($25,000 for one-half of the adjusted basis plus $50,000 for one-half of the fair market value). Filing state taxes free Community property. Filing state taxes free   In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), each spouse is usually considered to own half of the community property. Filing state taxes free When either spouse dies, the total fair market value of the community property becomes the basis of the entire property, including the part belonging to the surviving spouse. Filing state taxes free For this to apply, at least half the value of the community property interest must be includible in the decedent's gross estate, whether or not the estate must file a return. Filing state taxes free   For more information about community property, see Publication 555, Community Property. Filing state taxes free    If you are selling a home in which you acquired an interest from a decedent who died in 2010, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, to determine your basis. Filing state taxes free Home received as trade. Filing state taxes free   If you acquired your home as a trade for other property, in most cases, the basis of your home is the fair market value (at the time of the trade) of the property you gave up. Filing state taxes free If you traded one home for another, you have made a sale and purchase. Filing state taxes free In that case, you may have a gain. Filing state taxes free See Trading (exchanging) homes under Dispositions Other Than Sales, earlier, for an example of figuring the gain. Filing state taxes free Home received from spouse. Filing state taxes free   If you received your home from your spouse or from your former spouse incident to your divorce, your basis in the home depends on the date of the transfer. Filing state taxes free Transfers after July 18, 1984. Filing state taxes free   If you received the home after July 18, 1984, there was no gain or loss on the transfer. Filing state taxes free In most cases, your basis in this home is the same as your spouse's (or former spouse's) adjusted basis just before you received it. Filing state taxes free This rule applies even if you received the home in exchange for cash, the release of marital rights, the assumption of liabilities, or other considerations. Filing state taxes free   If you owned a home jointly with your spouse and your spouse transferred his or her interest in the home to you, in most cases, your basis in the half interest received from your spouse is the same as your spouse's adjusted basis just before the transfer. Filing state taxes free This also applies if your former spouse transferred his or her interest in the home to you incident to your divorce. Filing state taxes free Your basis in the half interest you already owned does not change. Filing state taxes free Your new basis in the home is the total of these two amounts. Filing state taxes free Transfers before July 19, 1984. Filing state taxes free   If you received your home before July 19, 1984, in exchange for your release of marital rights, in most cases, your basis in the home is generally its fair market value at the time you received it. Filing state taxes free More information. Filing state taxes free   For more information on property received from a spouse or former spouse, see Property Settlements in Publication 504. Filing state taxes free Involuntary conversion. Filing state taxes free   If your home is destroyed or condemned, you may receive insurance proceeds or a condemnation award. Filing state taxes free If you acquired a replacement home with these proceeds, the basis is its cost decreased by any gain not recognized on the conversion under the rules explained in: Publication 547, in the case of a home that was destroyed, or Chapter 1 of Publication 544, in the case of a home that was condemned. Filing state taxes free Example. Filing state taxes free A fire destroyed your home that you owned and used for only 6 months. Filing state taxes free The home had an adjusted basis of $80,000 and the insurance company paid you $130,000 for the loss. Filing state taxes free Your gain is $50,000 ($130,000 − $80,000). Filing state taxes free You bought a replacement home for $100,000. Filing state taxes free The part of your gain that is taxable is $30,000 ($130,000 − $100,000), the unspent part of the payment from the insurance company. Filing state taxes free The rest of the gain ($20,000) is not taxable, so that amount reduces your basis in the new home. Filing state taxes free The basis of the new home is figured as follows. Filing state taxes free Cost of replacement home $100,000 Minus: Gain not recognized 20,000 Basis of the replacement home $80,000 More information. Filing state taxes free   For more information about basis, see Publication 551. Filing state taxes free Adjusted Basis Adjusted basis is your cost or other basis increased or decreased by certain amounts. Filing state taxes free To figure your adjusted basis, you can use Worksheet 1, found toward the end of this publication. Filing state taxes free Filled-in examples of that worksheet are included in Comprehensive Examples , later. Filing state taxes free Recordkeeping. Filing state taxes free You should keep records to prove your home's adjusted basis. Filing state taxes free Ordinarily, you must keep records for 3 years after the due date for filing your return for the tax year in which you sold your home. Filing state taxes free But if you sold a home before May 7, 1997, and postponed tax on any gain, the basis of that home affects the basis of the new home you bought. Filing state taxes free Keep records proving the basis of both homes as long as they are needed for tax purposes. Filing state taxes free The records you should keep include: Proof of the home's purchase price and purchase expenses; Receipts and other records for all improvements, additions, and other items that affect the home's adjusted basis; Any worksheets or other computations you used to figure the adjusted basis of the home you sold, the gain or loss on the sale, the exclusion, and the taxable gain; Any Form 982 you filed to exclude any discharge of qualified principal residence indebtedness; Any Form 2119, Sale of Your Home, you filed to postpone gain from the sale of a previous home before May 7, 1997; and Any worksheets you used to prepare Form 2119, such as the Adjusted Basis of Home Sold Worksheet or the Capital Improvements Worksheet from the Form 2119 instructions, or other source of computations. Filing state taxes free Increases to Basis These include the following. Filing state taxes free Additions and other improvements that have a useful life of more than 1 year. Filing state taxes free Special assessments for local improvements. Filing state taxes free Amounts you spent after a casualty to restore damaged property. Filing state taxes free Improvements. Filing state taxes free   These add to the value of your home, prolong its useful life, or adapt it to new uses. Filing state taxes free You add the cost of additions and other improvements to the basis of your property. Filing state taxes free   The following chart lists some other examples of improvements. Filing state taxes free Examples of Improvements That Increase Basis Additions Bedroom Bathroom Deck Garage Porch Patio Heating & Air Conditioning Heating system Central air conditioning Furnace Duct work Central humidifier Filtration system Lawn & Grounds Landscaping Driveway Walkway Fence  Retaining wall Sprinkler system Swimming pool  Miscellaneous Storm windows, doors New roof Central vacuum Wiring upgrades Satellite dish Security system  Plumbing Septic system Water heater Soft water system Filtration system  Interior Improvements Built-in appliances  Kitchen modernization  Flooring Wall-to-wall carpeting  Insulation Attic Walls Floors Pipes and duct work Improvements no longer part of home. Filing state taxes free   Your home's adjusted basis does not include the cost of any improvements that are replaced and are no longer part of the home. Filing state taxes free Example. Filing state taxes free You put wall-to-wall carpeting in your home 15 years ago. Filing state taxes free Later, you replaced that carpeting with new wall-to-wall carpeting. Filing state taxes free The cost of the old carpeting you replaced is no longer part of your home's adjusted basis. Filing state taxes free Repairs. Filing state taxes free   These maintain your home in good condition but do not add to its value or prolong its life. Filing state taxes free You do not add their cost to the basis of your property. Filing state taxes free Examples. Filing state taxes free Repainting your house inside or outside, fixing your gutters or floors, repairing leaks or plastering, and replacing broken window panes are examples of repairs. Filing state taxes free Exception. Filing state taxes free   The entire job is considered an improvement if items that would otherwise be considered repairs are done as part of an extensive remodeling or restoration of your home. Filing state taxes free For example, if you have a casualty and your home is damaged, increase your basis by the amount you spend on repairs that restore the property to its pre-casualty condition. Filing state taxes free Decreases to Basis These include the following. Filing state taxes free Discharge of qualified principal residence indebtedness that was excluded from income (but not below zero). Filing state taxes free For details, see Publication 4681. Filing state taxes free Some or all of the cancellation of debt income that was excluded due to your bankruptcy or insolvency. Filing state taxes free For details, see Publication 4681. Filing state taxes free Gain you postponed from the sale of a previous home before May 7, 1997. Filing state taxes free Deductible casualty losses. Filing state taxes free Insurance payments you received or expect to receive for casualty losses. Filing state taxes free Payments you received for granting an easement or right-of-way. Filing state taxes free Depreciation allowed or allowable if you used your home for business or rental purposes. Filing state taxes free Energy-related credits allowed for expenditures made on the residence. Filing state taxes free (Reduce the increase in basis otherwise allowable for expenditures on the residence by the amount of credit allowed for those expenditures. Filing state taxes free ) Adoption credit you claimed for improvements added to the basis of your home. Filing state taxes free Nontaxable payments from an adoption assistance program of your employer you used for improvements you added to the basis of your home. Filing state taxes free Energy conservation subsidy excluded from your gross income because you received it (directly or indirectly) from a public utility after 1992 to buy or install any energy conservation measure. Filing state taxes free An energy conservation measure is an installation or modification primarily designed either to reduce consumption of electricity or natural gas or to improve the management of energy demand for a home. Filing state taxes free District of Columbia first-time homebuyer credit allowed on the purchase of a principal residence in the District of Columbia. Filing state taxes free General sales taxes claimed as an itemized deduction on Schedule A (Form 1040) that were imposed on the purchase of personal property, such as a houseboat used as your home or a mobile home. Filing state taxes free Discharges of qualified principal residence indebtedness. Filing state taxes free   You may be able to exclude from gross income a discharge of qualified principal residence indebtedness. Filing state taxes free This exclusion applies to discharges made after 2006 and before 2014. Filing state taxes free If you choose to exclude this income, you must reduce (but not below zero) the basis of your principal residence by the amount excluded from gross income. Filing state taxes free   File Form 982 with your tax return. Filing state taxes free See the form's instructions for detailed information. Filing state taxes free    A decrease in basis due to a discharge of qualified principal residence indebtedness that is excluded from income occurs only if you retain ownership of the principal residence after a discharge. Filing state taxes free In most cases, this would occur in a refinancing or a restructuring of the mortgage. Filing state taxes free Excluding the Gain You may qualify to exclude from your income all or part of any gain from the sale of your main home. Filing state taxes free This means that, if you qualify, you will not have to pay tax on the gain up to the limit described under Maximum Exclusion , next. Filing state taxes free To qualify, you must meet the ownership and use tests described later. Filing state taxes free You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale. Filing state taxes free This choice can be made (or revoked) at any time before the expiration of a 3-year period beginning on the due date of your return (not including extensions) for the year of the sale. Filing state taxes free You can use Worksheet 2 (near the end of this publication) to figure the amount of your exclusion and your taxable gain, if any. Filing state taxes free If you have any taxable gain from the sale of your home, you may have to increase your withholding or make estimated tax payments. Filing state taxes free See Publication 505, Tax Withholding and Estimated Tax. Filing state taxes free Maximum Exclusion You can exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true. Filing state taxes free You meet the ownership test. Filing state taxes free You meet the use test. Filing state taxes free During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. Filing state taxes free For details on gain allocated to periods of nonqualified use, see Nonqualified Use , later. Filing state taxes free If you and another person owned the home jointly but file separate returns, each of you can exclude up to $250,000 of gain from the sale of your interest in the home if each of you meets the three conditions just listed. Filing state taxes free You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons . Filing state taxes free Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. Filing state taxes free This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test). Filing state taxes free Exception. Filing state taxes free   If you owned and lived in the property as your main home for less than 2 years, you can still claim an exclusion in some cases. Filing state taxes free However, the maximum amount you may be able to exclude will be reduced. Filing state taxes free See Reduced Maximum Exclusion , later. Filing state taxes free Example 1—home owned and occupied for at least 2 years. Filing state taxes free Mya bought and moved into her main home in September 2011. Filing state taxes free She sold the home at a gain in October 2013. Filing state taxes free During the 5-year period ending on the date of sale in October 2013, she owned and lived in the home for more than 2 years. Filing state taxes free She meets the ownership and use tests. Filing state taxes free Example 2—ownership test met but use test not met. Filing state taxes free Ayden bought a home, lived in it for 6 months, moved out, and never occupied the home again. Filing state taxes free He later sold the home for a gain in June 2013. Filing state taxes free He owned the home during the entire 5-year period ending on the date of sale. Filing state taxes free He meets the ownership test but not the use test. Filing state taxes free He cannot exclude any part of his gain on the sale unless he qualified for a reduced maximum exclusion (explained later). Filing state taxes free Period of Ownership and Use The required 2 years of ownership and use during the 5-year period ending on the date of the sale do not have to be continuous nor do they both have to occur at the same time. Filing state taxes free You meet the tests if you can show that you owned and lived in the property as your main home for either 24 full months or 730 days (365 × 2) during the 5-year period ending on the date of sale. Filing state taxes free Example. Filing state taxes free Naomi bought and moved into a house in July 2009. Filing state taxes free She lived there for 13 months and then moved in with a friend. Filing state taxes free She later moved back into her house and lived there for 12 months until she sold it in August 2013. Filing state taxes free Naomi meets the ownership and use tests because, during the 5-year period ending on the date of sale, she owned the house for more than 2 years and lived in it for a total of 25 (13 + 12) months. Filing state taxes free Temporary absence. Filing state taxes free   Short temporary absences for vacations or other seasonal absences, even if you rent out the property during the absences, are counted as periods of use. Filing state taxes free The following examples assume that the reduced maximum exclusion (discussed later) does not apply to the sales. Filing state taxes free Example 1. Filing state taxes free David Johnson, who is single, bought and moved into his home on February 1, 2011. Filing state taxes free Each year during 2011 and 2012, David left his home for a 2-month summer vacation. Filing state taxes free David sold the house on March 1, 2013. Filing state taxes free Although the total time David lived in his home is less than 2 years (21 months), he meets the use requirement and may exclude gain. Filing state taxes free The 2-month vacations are short temporary absences and are counted as periods of use in determining whether David used the home for the required 2 years. Filing state taxes free Example 2. Filing state taxes free Professor Paul Beard, who is single, bought and moved into a house in December 2010, went abroad for a 1-year sabbatical leave in January 2012, returned to the house in January 2013, and sold it at a gain in February 2013. Filing state taxes free Because his leave was not a short temporary absence, he cannot include the period of leave to meet the 2-year use test. Filing state taxes free He cannot exclude any part of his gain because he did not use the residence for the required 2 years. Filing state taxes free Ownership and use tests met at different times. Filing state taxes free   You can meet the ownership and use tests during different 2-year periods. Filing state taxes free However, you must meet both tests during the 5-year period ending on the date of the sale. Filing state taxes free Example. Filing state taxes free Beginning in 2002, Helen Jones lived in a rented apartment. Filing state taxes free The apartment building was later converted to condominiums, and she bought her same apartment on December 3, 2010. Filing state taxes free In 2011, Helen became ill and on April 14 of that year she moved to her daughter's home. Filing state taxes free On July 12, 2013, while still living in her daughter's home, she sold her condominium. Filing state taxes free Helen can exclude gain on the sale of her condominium because she met the ownership and use tests during the 5-year period from July 13, 2008, to July 12, 2013, the date she sold the condominium. Filing state taxes free She owned her condominium from December 3, 2010, to July 12, 2013 (more than 2 years). Filing state taxes free She lived in the property from July 13, 2008 (the beginning of the 5-year period), to April 14, 2011 (more than 2 years). Filing state taxes free The time Helen lived in her daughter's home during the 5-year period can be counted toward her period of ownership, and the time she lived in her rented apartment during the 5-year period can be counted toward her period of use. Filing state taxes free Cooperative apartment. Filing state taxes free   If you sold stock as a tenant-shareholder in a cooperative housing corporation, the ownership and use tests are met if, during the 5-year period ending on the date of sale, you: Owned the stock for at least 2 years, and Lived in the house or apartment that the stock entitled you to occupy as your main home for at least 2 years. Filing state taxes free Exceptions to Ownership and Use Tests The following sections contain exceptions to the ownership and use tests for certain taxpayers. Filing state taxes free Exception for individuals with a disability. Filing state taxes free   There is an exception to the use test if: You become physically or mentally unable to care for yourself, and You owned and lived in your home as your main home for a total of at least 1 year during the 5-year period before the sale of your home. Filing state taxes free Under this exception, you are considered to live in your home during any time within the 5-year period that you own the home and live in a facility (including a nursing home) licensed by a state or political subdivision to care for persons in your condition. Filing state taxes free   If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion. Filing state taxes free Previous home destroyed or condemned. Filing state taxes free   For the ownership and use tests, you add the time you owned and lived in a previous home that was destroyed or condemned to the time you owned and lived in the replacement home on whose sale you wish to exclude gain. Filing state taxes free This rule applies if any part of the basis of the home you sold depended on the basis of the destroyed or condemned home (see Involuntary Conversions in Publication 551). Filing state taxes free Otherwise, you must have owned and lived in the same home for 2 of the 5 years before the sale to qualify for the exclusion. Filing state taxes free Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. Filing state taxes free   You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve on qualified official extended duty (defined later) as a member of the uniformed services or Foreign Service of the United States, or as an employee of the intelligence community. Filing state taxes free You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve outside the United States either as an employee of the Peace Corps on qualified official extended duty (defined later) or as an enrolled volunteer or volunteer leader of the Peace Corps. Filing state taxes free This means that you may be able to meet the 2-year use test even if, because of your service, you did not actually live in your home for at least the required 2 years during the 5-year period ending on the date of sale. Filing state taxes free   If this helps you qualify to exclude gain, you can choose to have the 5-year test period suspended by filing a return for the year of sale that does not include the gain. Filing state taxes free Example. Filing state taxes free John bought and moved into a home in 2005. Filing state taxes free He lived in it as his main home for 2½ years. Filing state taxes free For the next 6 years, he did not live in it because he was on qualified official extended duty with the Army. Filing state taxes free He then sold the home at a gain in 2013. Filing state taxes free To meet the use test, John chooses to suspend the 5-year test period for the 6 years he was on qualified official extended duty. Filing state taxes free This means he can disregard those 6 years. Filing state taxes free Therefore, John's 5-year test period consists of the 5 years before he went on qualified official extended duty. Filing state taxes free He meets the ownership and use tests because he owned and lived in the home for 2½ years during this test period. Filing state taxes free Period of suspension. Filing state taxes free   The period of suspension cannot last more than 10 years. Filing state taxes free Together, the 10-year suspension period and the 5-year test period can be as long as, but no more than, 15 years. Filing state taxes free You cannot suspend the 5-year period for more than one property at a time. Filing state taxes free You can revoke your choice to suspend the 5-year period at any time. Filing state taxes free Example. Filing state taxes free Mary bought a home on April 1, 1997. Filing state taxes free She used it as her main home until August 31, 2000. Filing state taxes free On September 1, 2000, she went on qualified official extended duty with the Navy. Filing state taxes free She did not live in the house again before selling it on July 31, 2013. Filing state taxes free Mary chooses to use the entire 10-year suspension period. Filing state taxes free Therefore, the suspension period would extend back from July 31, 2013, to August 1, 2003, and the 5-year test period would extend back to August 1, 1998. Filing state taxes free During that period, Mary owned the house all 5 years and lived in it as her main home from August 1, 1998, until August 31, 2000, a period of more than 24 months. Filing state taxes free She meets the ownership and use tests because she owned and lived in the home for at least 2 years during this test period. Filing state taxes free Uniformed services. Filing state taxes free   The uniformed services are: The Armed Forces (the Army, Navy, Air Force, Marine Corps, and Coast Guard), The commissioned corps of the National Oceanic and Atmospheric Administration, and The commissioned corps of the Public Health Service. Filing state taxes free Foreign Service member. Filing state taxes free   For purposes of the choice to suspend the 5-year test period for ownership and use, you are a member of the Foreign Service if you are any of the following. Filing state taxes free A Chief of mission. Filing state taxes free An Ambassador at large. Filing state taxes free A member of the Senior Foreign Service. Filing state taxes free A Foreign Service officer. Filing state taxes free Part of the Foreign Service personnel. Filing state taxes free Employee of the intelligence community. Filing state taxes free   For purposes of the choice to suspend the 5-year test period for ownership and use, you are an employee of the intelligence community if you are an employee of any of the following. Filing state taxes free The Office of the Director of National Intelligence. Filing state taxes free The Central Intelligence Agency. Filing state taxes free The National Security Agency. Filing state taxes free The Defense Intelligence Agency. Filing state taxes free The National Geospatial-Intelligence Agency. Filing state taxes free The National Reconnaissance Office and any other office within the Department of Defense for the collection of specialized national intelligence through reconnaissance programs. Filing state taxes free Any of the intelligence elements of the Army, the Navy, the Air Force, the Marine Corps, the Federal Bureau of Investigation, the Department of Treasury, the Department of Energy, and the Coast Guard. Filing state taxes free The Bureau of Intelligence and Research of the Department of State. Filing state taxes free Any of the elements of the Department of Homeland Security concerned with the analyses of foreign intelligence information. Filing state taxes free Qualified official extended duty. Filing state taxes free   You are on qualified official extended duty if you are on extended duty while: Serving at a duty station at least 50 miles from your main home, or Living in Government quarters under Government orders. Filing state taxes free   You are on extended duty when you are called or ordered to active duty for a period of more than 90 days or for an indefinite period. Filing state taxes free Married Persons If you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use tests, you can exclude up to $250,000 of the gain. Filing state taxes free (But see Special rules for joint returns, next. Filing state taxes free ) Special rules for joint returns. Filing state taxes free   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. Filing state taxes free You are married and file a joint return for the year. Filing state taxes free Either you or your spouse meets the ownership test. Filing state taxes free Both you and your spouse meet the use test. Filing state taxes free During the 2-year period ending on the date of the sale, neither you nor your spouse excluded gain from the sale of another home. Filing state taxes free If either spouse does not satisfy all these requirements, the maximum exclusion that can be claimed by the couple is the total of the maximum exclusions that each spouse would qualify for if not married and the amounts were figured separately. Filing state taxes free For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property. Filing state taxes free Example 1—one spouse sells a home. Filing state taxes free Emily sells her home in June 2013 for a gain of $300,000. Filing state taxes free She marries Jamie later in the year. Filing state taxes free She meets the ownership and use tests, but Jamie does not. Filing state taxes free Emily can exclude up to $250,000 of gain on a separate or joint return for 2013. Filing state taxes free The $500,000 maximum exclusion for certain joint returns does not apply because Jamie does not meet the use test. Filing state taxes free Example 2—each spouse sells a home. Filing state taxes free The facts are the same as in Example 1 except that Jamie also sells a home in 2013 for a gain of $200,000 before he marries Emily. Filing state taxes free He meets the ownership and use tests on his home, but Emily does not. Filing state taxes free Emily can exclude $250,000 of gain and Jamie can exclude $200,000 of gain on the respective sales of their individual homes. Filing state taxes free However, Emily cannot use Jamie's unused exclusion to exclude more than $250,000 of gain. Filing state taxes free Therefore, Emily and Jamie must recognize $50,000 of gain on the sale of Emily's home. Filing state taxes free The $500,000 maximum exclusion for certain joint returns does not apply because Emily and Jamie do not both meet the use test for the same home. Filing state taxes free Sale of main home by surviving spouse. Filing state taxes free   If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home. Filing state taxes free   If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. Filing state taxes free The sale or exchange took place after 2008. Filing state taxes free The sale or exchange took place no more than 2 years after the date of death of your spouse. Filing state taxes free You have not remarried. Filing state taxes free You and your spouse met the use test at the time of your spouse's death. Filing state taxes free You or your spouse met the ownership test at the time of your spouse's death. Filing state taxes free Neither you nor your spouse excluded gain from the sale of another home during the last 2 years before the date of death. Filing state taxes free The ownership and use tests were described earlier. Filing state taxes free Example. Filing state taxes free Harry owned and used a house as his main home since 2009. Filing state taxes free Harry and Wilma married on July 1, 2013, and from that date they used Harry's house as their main home. Filing state taxes free Harry died on August 15, 2013, and Wilma inherited the property. Filing state taxes free Wilma sold the property on September 1, 2013, at which time she had not remarried. Filing state taxes free Although Wilma owned and used the house for less than 2 years, Wilma is considered to have satisfied the ownership and use tests because her period of ownership and use includes the period that Harry owned and used the property before death. Filing state taxes free Home transferred from spouse. Filing state taxes free   If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it. Filing state taxes free Use of home after divorce. Filing state taxes free   You are considered to have used property as your main home during any period when: You owned it, and Your spouse or former spouse is allowed to live in it under a divorce or separation instrument and uses it as his or her main home. Filing state taxes free Reduced Maximum Exclusion If you fail to meet the requirements to qualify for the $250,000 or $500,000 exclusion, you may still qualify for a reduced exclusion. Filing state taxes free This applies to those who: Fail to meet the ownership and use tests, or Have used the exclusion within 2 years of selling their current home. Filing state taxes free In both cases, to qualify for a reduced exclusion, the sale of your main home must be due to one of the following reasons. Filing state taxes free A change in place of employment. Filing state taxes free Health. Filing state taxes free Unforeseen circumstances. Filing state taxes free Qualified individual. Filing state taxes free   For purposes of the reduced maximum exclusion, a qualified individual is any of the following. Filing state taxes free You. Filing state taxes free Your spouse. Filing state taxes free A co-owner of the home. Filing state taxes free A person whose main home is the same as yours. Filing state taxes free Primary reason for sale. Filing state taxes free   One of the three reasons above will be considered to be the primary reason you sold your home if either (1) or (2) is true. Filing state taxes free You qualify under a “safe harbor. Filing state taxes free ” This is a specific set of facts and circumstances that, if applicable, qualifies you to claim a reduced maximum exclusion. Filing state taxes free Safe harbors corresponding to the reasons listed above are described later. Filing state taxes free A safe harbor does not apply, but you can establish, based on facts and circumstances, that the primary reason for the sale is a change in place of employment, health, or unforeseen circumstances. Filing state taxes free  Factors that may be relevant in determining your primary reason for sale include whether: Your sale and the circumstances causing it were close in time, The circumstances causing your sale occurred during the time you owned and used the property as your main home, The circumstances causing your sale were not reasonably foreseeable when you began using the property as your main home, Your financial ability to maintain the property became materially impaired, The suitability of the property as your main home materially changed, and During the time you owned the property, you used it as your home. Filing state taxes free Change in Place of Employment You may qualify for a reduced exclusion if the primary reason for the sale of your main home is a change in the location of employment of a qualified individual. Filing state taxes free Employment. Filing state taxes free   For this purpose, employment includes the start of work with a new employer or continuation of work with the same employer. Filing state taxes free It also includes the start or continuation of self-employment. Filing state taxes free Distance safe harbor. Filing state taxes free   A change in place of employment is considered to be the reason you sold your home if: The change occurred during the period you owned and used the property as your main home, and The new place of employment is at least 50 miles farther from the home you sold than was the former place of employment (or, if there was no former place of employment, the distance between your new place of employment and the home sold is at least 50 miles). Filing state taxes free Example. Filing state taxes free Justin was unemployed and living in a townhouse in Florida he had owned and used as his main home since 2012. Filing state taxes free He got a job in North Carolina and sold his townhouse in 2013. Filing state taxes free Because the distance between Justin's new place of employment and the home he sold is at least 50 miles, the sale satisfies the conditions of the distance safe harbor. Filing state taxes free Justin's sale of his home is considered to be because of a change in place of employment, and he is entitled to claim a reduced maximum exclusion of gain from the sale. Filing state taxes free Health The sale of your main home is because of health if your primary reason for the sale is: To obtain, provide, or facilitate the diagnosis, cure, mitigation, or treatment of disease, illness, or injury of a qualified individual, or To obtain or provide medical or personal care for a qualified individual suffering from a disease, illness, or injury. Filing state taxes free The sale of your home is not because of health if the sale merely benefits a qualified individual's general health or well-being. Filing state taxes free For purposes of this reason, a qualified individual includes, in addition to the individuals listed earlier under Qualified individual , any of the following family members of these individuals. Filing state taxes free Parent, grandparent, stepmother, stepfather. Filing state taxes free Child, grandchild, stepchild, adopted child, eligible foster child. Filing state taxes free Brother, sister, stepbrother, stepsister, half-brother, half-sister. Filing state taxes free Mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, or daughter-in-law. Filing state taxes free Uncle, aunt, nephew, niece, or cousin. Filing state taxes free Example. Filing state taxes free In 2012, Chase and Lauren, spouses, bought a house that they used as their main home. Filing state taxes free Lauren's father has a chronic disease and is unable to care for himself. Filing state taxes free In 2013, Chase and Lauren sold their home in order to move into Lauren's father's house to provide care for him. Filing state taxes free Because the primary reason for the sale of their home was to provide care for Lauren's father, Chase and Lauren are entitled to a reduced maximum exclusion. Filing state taxes free Doctor's recommendation safe harbor. Filing state taxes free   Health is considered to be the reason you sold your home if, for one or more of the reasons listed at the beginning of this discussion, a doctor recommends a change of residence. Filing state taxes free Unforeseen Circumstances The sale of your main home is because of an unforeseen circumstance if your primary reason for the sale is the occurrence of an event that you could not reasonably have anticipated before buying and occupying that home. Filing state taxes free You are not considered to have an unforeseen circumstance if the primary reason you sold your home was that you preferred to get a different home or because your finances improved. Filing state taxes free Specific event safe harbors. Filing state taxes free   Unforeseen circumstances are considered to be the reason for selling your home if any of the following events occurred while you owned and used the property as your main home. Filing state taxes free An involuntary conversion of your home, such as when your home is destroyed or condemned. Filing state taxes free Natural or man-made disasters or acts of war or terrorism resulting in a casualty to your home, whether or not your loss is deductible. Filing state taxes free In the case of qualified individuals (listed earlier under Qualified individual ): Death, Unemployment (if the individual is eligible for unemployment compensation), A change in employment or self-employment status that results in the individual's inability to pay reasonable basic living expenses (listed under Reasonable basic living expenses , later) for his or her household, Divorce or legal separation under a decree of divorce or separate maintenance, or Multiple births resulting from the same pregnancy. Filing state taxes free An event the IRS determined to be an unforeseen circumstance in published guidance of general applicability. Filing state taxes free For example, the IRS determined the September 11, 2001, terrorist attacks to be an unforeseen circumstance. Filing state taxes free Reasonable basic living expenses. Filing state taxes free   Reasonable basic living expenses for your household include the following. Filing state taxes free Amounts spent for food. Filing state taxes free Amounts spent for clothing. Filing state taxes free Housing and related expenses. Filing state taxes free Medical expenses. Filing state taxes free Transportation expenses. Filing state taxes free Tax payments. Filing state taxes free Court-ordered payments. Filing state taxes free Expenses reasonably necessary to produce income. Filing state taxes free   Any of these amounts spent to maintain an affluent or luxurious standard of living are not reasonable basic living expenses. Filing state taxes free Nonqualified Use Gain from the sale or exchange of the main home is not excludable from income if it is allocable to periods of nonqualified use. Filing state taxes free Nonqualified use means any period after 2008 where neither you nor your spouse (or your former spouse) used the property as a main home, with certain exceptions (see next). Filing state taxes free Exceptions. Filing state taxes free   A period of nonqualified use does not include: Any portion of the 5-year period ending on the date of the sale or exchange after the last date you (or your spouse) use the property as a main home; Any period (not to exceed an aggregate period of 10 years) during which you (or your spouse) are serving on qualified official extended duty: As a member of the uniformed services; As a member of the Foreign Service of the United States; or As an employee of the intelligence community; and Any other period of temporary absence (not to exceed an aggregate period of 2 years) due to change of employment, health conditions, or such other unforeseen circumstances as may be specified by the IRS. Filing state taxes free Calculation. Filing state taxes free   To figure the portion of the gain allocated to the period of nonqualified use, multiply the gain (net of any depreciation allowed or allowable on the property for periods after May 6, 1997) by the following fraction:   Total nonqualified use during the period of ownership after 2008     Total period of ownership     This calculation can be found in Worksheet 2, line 10, later in this publication. Filing state taxes free   For examples of this calculation, see Business Use or Rental of Home , next. Filing state taxes free Business Use or Rental of Home You may be able to exclude gain from the sale of a home you have used for business or to produce rental income if you meet the ownership and use tests. Filing state taxes free Example 1. Filing state taxes free On May 23, 2007, Amy, who is unmarried for all years in this example, bought a house. Filing state taxes free She moved in on that date and lived in it until May 31, 2009, when she moved out of the house and put it up for rent. Filing state taxes free The house was rented from June 1, 2009, to March 31, 2011. Filing state taxes free Amy claimed depreciation deductions in 2009 through 2011 totaling $10,000. Filing state taxes free Amy moved back into the house on April 1, 2011, and lived there until she sold it on January 31, 2013, for a gain of $200,000. Filing state taxes free During the 5-year period ending on the date of the sale (January 31, 2008–January 31, 2013), Amy owned and lived in the house for more than 2 years as shown in the following table. Filing state taxes free Five-Year Period Used as Home Used as Rental 1/31/08 – 5/31/09 16 months   6/01/09 – 3/31/11   22 months 4/01/11 – 1/31/13 22 months     38 months 22 months       During the period Amy owned the house (2,080 days), her period of nonqualified use was 668 days. Filing state taxes free Because the gain attributable to periods of nonqualified use is $60,990, Amy can exclude $129,010 of her gain, as shown on Worksheet 2. Filing state taxes free Example 2. Filing state taxes free William owned and used a house as his main home from 2007 through 2010. Filing state taxes free On January 1, 2011, he moved to another state. Filing state taxes free He rented his house from that date until April 30, 2013, when he sold it. Filing state taxes free During the 5-year period ending on the date of sale (May 1, 2008-April 30, 2013), William owned and lived in the house for more than 2 years. Filing state taxes free Because it was rental property at the time of the sale, he must report the sale on Form 4797. Filing state taxes free Because the period of nonqualified use does not include any part of the 5-year period after the last date William lived in the house, he has no period of nonqualified use. Filing state taxes free Because he met the ownership and use tests, he can exclude gain up to $250,000. Filing state taxes free However, he cannot exclude the part of the gain equal to the depreciation he claimed or could have claimed for renting the house, as explained next. Filing state taxes free Depreciation after May 6, 1997. Filing state taxes free   If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. Filing state taxes free If you can show by adequate records or other evidence that the depreciation allowed was less than the amount allowable, then you may limit the amount of gain recognized to the depreciation allowed. Filing state taxes free Unrecaptured section 1250 gain. Filing state taxes free   This is the part of any long-term capital gain from the sale of your home that is due to depreciation and cannot be excluded. Filing state taxes free To figure the amount of unrecaptured section 1250 gain to be reported on Schedule D (Form 1040), you must also take into account certain gains or losses from the sale of property other than your home. Filing state taxes free Use the Unrecaptured Section 1250 Gain Worksheet in the Schedule D instructions for this purpose. Filing state taxes free Worksheet 2. Filing state taxes free Taxable Gain on Sale of Home—Completed Example 1 for Amy Part 1. Filing state taxes free Gain or (Loss) on Sale       1. Filing state taxes free   Selling price of home 1. Filing state taxes free     2. Filing state taxes free   Selling expenses (including commissions, advertising and legal fees, and seller-paid loan charges) 2. Filing state taxes free     3. Filing state taxes free   Subtract line 2 from line 1. Filing state taxes free This is the amount realized 3. Filing state taxes free     4. Filing state taxes free   Adjusted basis of home sold (from Worksheet 1, line 13) 4. Filing state taxes free     5. Filing state taxes free   Gain or (loss) on the sale. Filing state taxes free Subtract line 4 from line 3. Filing state taxes free If this is a loss, stop here 5. Filing state taxes free 200,000   Part 2. Filing state taxes free Exclusion and Taxable Gain       6. Filing state taxes free   Enter any depreciation allowed or allowable on the property for periods after May 6, 1997. Filing state taxes free If none, enter -0- 6. Filing state taxes free 10,000   7. Filing state taxes free   Subtract line 6 from line 5. Filing state taxes free If the result is less than zero, enter -0- 7. Filing state taxes free 190,000   8. Filing state taxes free   Aggregate number of days of nonqualified use after 2008. Filing state taxes free If none, enter -0-. Filing state taxes free  If line 8 is equal to zero, skip to line 12 and enter the amount from line 7 on line 12 8. Filing state taxes free 668   9. Filing state taxes free   Number of days taxpayer owned the property 9. Filing state taxes free 2,080   10. Filing state taxes free   Divide the amount on line 8 by the amount on line 9. Filing state taxes free Enter the result as a decimal (rounded to at least 3 places). Filing state taxes free But do not enter an amount greater than 1. Filing state taxes free 00 10. Filing state taxes free 0. Filing state taxes free 321   11. Filing state taxes free   Gain allocated to nonqualified use. Filing state taxes free (Line 7 multiplied by line 10) 11. Filing state taxes free 60,990   12. Filing state taxes free   Gain eligible for exclusion. Filing state taxes free Subtract line 11 from line 7 12. Filing state taxes free 129,010   13. Filing state taxes free   If you qualify to exclude gain on the sale, enter your maximum exclusion (see Maximum Exclusion ). Filing state taxes free  If you qualify for a reduced maximum exclusion, enter the amount from Worksheet 3, line 7. Filing state taxes free If you do  not qualify to exclude gain, enter -0- 13. Filing state taxes free 250,000   14. Filing state taxes free   Exclusion. Filing state taxes free Enter the smaller of line 12 or line 13 14. Filing state taxes free 129,010   15. Filing state taxes free   Taxable gain. Filing state taxes free Subtract line 14 from line 5. Filing state taxes free Report your taxable gain as described under Reporting the Sale . Filing state taxes free If the amount on line 6 is more than zero, complete line 16 15. Filing state taxes free 70,990   16. Filing state taxes free   Enter the smaller of line 6 or line 15. Filing state taxes free Enter this amount on line 12 of the Unrecaptured Section 1250 Gain  Worksheet in the instructions for Schedule D (Form 1040) 16. Filing state taxes free 10,000 Property Used Partly for Business or Rental If you use property partly as a home and partly for business or to produce rental income, the treatment of any gain on the sale depends partly on whether the business or rental part of the property is part of your home or separate from it. Filing state taxes free Part of Home Used for Business or Rental If the part of your property used for business or to produce rental income is within your home, such as a room used as a home office for a business, you do not need to allocate gain on the sale of the property between the business part of the property and the part used as a home. Filing state taxes free In addition, you do not need to report the sale of the business or rental part on Form 4797. Filing state taxes free This is true whether or not you were entitled to claim any depreciation. Filing state taxes free However, you cannot exclude the part of any gain equal to any depreciation allowed or allowable after May 6, 1997. Filing state taxes free See Depreciation after May 6, 1997, earlier. Filing state taxes free Example 1. Filing state taxes free Ray sold his main home in 2013 at a $30,000 gain. Filing state taxes free He has no gains or losses from the sale of property other than the gain from the sale of his home. Filing state taxes free He meets the ownership and use tests to exclude the gain from his income. Filing state taxes free However, he used part of the home as a business office in 2012 and claimed $500 depreciation. Filing state taxes free Because the business office was part of his home (not separate from it), he does not have to allocate the gain on the sale between the business part of the property and the part used as a home. Filing state taxes free In addition, he does not have to report any part of the gain on Form 4797. Filing state taxes free Because Ray was entitled to take a depreciation deduction, he must recognize $500 of the gain as unrecaptured section 1250 gain. Filing state taxes free He reports his gain, exclusion, and the taxable gain of $500 on Form 8949 and Schedule D (Form 1040). Filing state taxes free Example 2. Filing state taxes free The facts are the same as in Example 1 except that Ray was not entitled to claim depreciation for the business use of his home. Filing state taxes free Since Ray did not claim any depreciation, he can exclude the entire $30,000 gain. Filing state taxes free Separate Part of Property Used for Business or Rental You may have used part of your property as your home and a separate part of it for business or to produce rental income. Filing state taxes free Examples are: A working farm on which your house was located, A duplex in w
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Page Last Reviewed or Updated: 14-Mar-2014

The Filing State Taxes Free

Filing state taxes free Publication 972 - Main Content Table of Contents Child Tax CreditQualifying Child Limits on the Credit Claiming the Credit Earned Income Additional Child Tax Credit How To Get Tax HelpLow Income Taxpayer Clinics Child Tax Credit This credit is for people who have a qualifying child as defined later. Filing state taxes free It is in addition to the credit for child and dependent care expenses (on Form 1040, line 48; Form 1040A, line 29; or Form 1040NR, line 46) and the earned income credit (on Form 1040, line 64a; or Form 1040A, line 38a). Filing state taxes free The maximum amount you can claim for the credit is $1,000 for each qualifying child. Filing state taxes free 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. Filing state taxes free S. Filing state taxes free citizen, a U. Filing state taxes free S. Filing state taxes free national, or a U. Filing state taxes free S. Filing state taxes free resident alien. Filing state taxes free For more information, see Publication 519, U. Filing state taxes free S. Filing state taxes free Tax Guide for Aliens. Filing state taxes free If the child was adopted, see Adopted child , later. Filing state taxes free For each qualifying child, you must either check the box on Form 1040 or Form 1040A, line 6c, column (4); or Form 1040NR, line 7c, column (4). Filing state taxes free Example. Filing state taxes free Your 10-year-old nephew lives in Mexico and qualifies as your dependent. Filing state taxes free Because he is not a U. Filing state taxes free S. Filing state taxes free citizen, U. Filing state taxes free S. Filing state taxes free national, or U. Filing state taxes free S. Filing state taxes free resident alien, he is not a qualifying child for the child tax credit. Filing state taxes free Filers who have certain child dependents with an IRS Individual Taxpayer Identification Number (ITIN). Filing state taxes free   If you are claiming a child tax credit or additional child tax credit for a child identified on your tax return with an ITIN, you must complete Part I of Schedule 8812 (Form 1040A or 1040). Filing state taxes free   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. Filing state taxes free To be treated as a resident of the United States, a child generally will need to meet the requirements of the substantial presence test. Filing state taxes free For more information about the substantial presence test, see Publication 519, U. Filing state taxes free S. Filing state taxes free Tax Guide for Aliens. Filing state taxes free Adopted child. Filing state taxes free   An adopted child is always treated as your own child. Filing state taxes free An adopted child includes a child lawfully placed with you for legal adoption. Filing state taxes free   If you are a U. Filing state taxes free S. Filing state taxes free citizen or U. Filing state taxes free S. Filing state taxes free 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. Filing state taxes free Exceptions to time lived with you. Filing state taxes free    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. Filing state taxes free Temporary absences by you or the child for special circumstances, such as school, vacation, business, medical care, military service, or detention in a juvenile facility, count as time the child lived with you. Filing state taxes free   There are also exceptions for kidnapped children and children of divorced or separated parents. Filing state taxes free For details, see the instructions for line 6c in either the Form 1040 or Form 1040A instructions. Filing state taxes free Qualifying child of more than one person. Filing state taxes free   A special rule applies if your qualifying child is the qualifying child of more than one person. Filing state taxes free For details, see the instructions for line 6c in either the Form 1040 or Form 1040A instructions. Filing state taxes free Limits on the Credit You must reduce your child tax credit if either (1) or (2) applies. Filing state taxes free The amount on Form 1040, line 46; Form 1040A, line 28; or Form 1040NR, line 44, is less than the credit. Filing state taxes free If this amount is zero, you cannot take this credit because there is no tax to reduce. Filing state taxes free But you may be able to take the additional child tax credit. Filing state taxes free See Additional Child Tax Credit, later. Filing state taxes free Your modified adjusted gross income (AGI) is more than the amount shown below for your filing status. Filing state taxes free Married filing jointly – $110,000. Filing state taxes free Single, head of household, or qualifying widow(er) – $75,000. Filing state taxes free Married filing separately – $55,000. Filing state taxes free Modified AGI. Filing state taxes free   For purposes of the child tax credit, your modified AGI is your AGI plus the following amounts that may apply to you. Filing state taxes free Any amount excluded from income because of the exclusion of income from Puerto Rico. Filing state taxes free On the dotted line next to Form 1040, line 38, enter the amount excluded and identify it as “EPRI. Filing state taxes free ” Also attach a copy of any Form(s) 499R-2/W-2PR to your return. Filing state taxes free Any amount on line 45 or line 50 of Form 2555, Foreign Earned Income. Filing state taxes free Any amount on line 18 of Form 2555-EZ, Foreign Earned Income Exclusion. Filing state taxes free Any amount on line 15 of Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa. Filing state taxes free   If you do not have any of the above, your modified AGI is the same as your AGI. Filing state taxes free AGI. Filing state taxes free   Your AGI is the amount on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. Filing state taxes free Claiming the Credit To claim the child tax credit, you must file Form 1040, Form 1040A, or Form 1040NR. Filing state taxes free You cannot claim the child tax credit on Form 1040EZ or Form 1040NR-EZ. Filing state taxes free You must provide the name and identification number (usually a social security number) on your tax return for each qualifying child. Filing state taxes free Earned Income You will need to figure your earned income using one of the worksheets that appear later in this publication if you are completing the Line 11 Worksheet , later, or Schedule 8812. Filing state taxes free Form 1040 or Form 1040NR filers, use the 1040 and 1040NR Filers — Earned Income Worksheet , later, to figure your earned income. Filing state taxes free Form 1040A filers, use the 1040A Filers —- Earned Income Worksheet , later. Filing state taxes free For this purpose, earned income includes only: Taxable earned income, and Nontaxable combat pay. Filing state taxes free Additional Child Tax Credit This credit is for certain individuals who get less than the full amount of the child tax credit. Filing state taxes free The additional child tax credit may give you a refund even if you do not owe any tax. Filing state taxes free How to claim the additional child tax credit. Filing state taxes free   To claim the additional child tax credit, follow the steps below. Filing state taxes free Make sure you figured the amount, if any, of your child tax credit. Filing state taxes free If you answered “Yes” on line 9 or line 10 of the Child Tax Credit Worksheet in the Form 1040, Form 1040A, or Form 1040NR instructions (or on line 13 of the Child Tax Credit Worksheet in this publication), use Parts II through IV of Schedule 8812 to see if you can take the additional child tax credit. Filing state taxes free If you have an additional child tax credit on line 13 of Schedule 8812, carry it to Form 1040, line 65; Form 1040A, line 39; or Form 1040NR, line 63. Filing state taxes free Child Tax Credit Worksheet This image is too large to be displayed in the current screen. Filing state taxes free Please click the link to view the image. Filing state taxes free Child tax worksheet - page 1. Filing state taxes free Child Tax Credit Worksheet—Continued This image is too large to be displayed in the current screen. Filing state taxes free Please click the link to view the image. Filing state taxes free Child tax worksheet - page 2. Filing state taxes free Line 11 Worksheet This image is too large to be displayed in the current screen. Filing state taxes free Please click the link to view the image. Filing state taxes free Line 11 worksheet - page 1. Filing state taxes free Line 11 Worksheet—Continued This image is too large to be displayed in the current screen. Filing state taxes free Please click the link to view the image. Filing state taxes free Line 11 worksheet - page 2. Filing state taxes free 1040 and 1040NR Filers — Earned Income Worksheet (for line 2 of the Line 11 Worksheet or line 4a of Schedule 8812, Child Tax Credit) Before you begin:    ✓Use this worksheet only if you were sent here from the Line 11 Worksheet earlier in this publication or line  4a of Schedule 8812, Child Tax Credit. Filing state taxes free  ✓Disregard community property laws when figuring the amounts to enter on this worksheet. Filing state taxes free  ✓If married filing jointly, include your spouse's amounts with yours when completing this worksheet. Filing state taxes free     1. Filing state taxes free a. Filing state taxes free Enter the amount from Form 1040, line 7, or Form 1040NR, line 8 1a. Filing state taxes free     b. Filing state taxes free Enter the amount of any nontaxable combat pay received. Filing state taxes free Also enter this amount on Schedule 8812, line 4b. Filing state taxes free This amount should be shown in Form(s) W-2, box 12, with code Q. Filing state taxes free 1b. Filing state taxes free       Next, if you are filing Schedule C, C-EZ, F, or SE, or you received a Schedule K-1 (Form 1065 or Form 1065-B), go to line 2a. Filing state taxes free Otherwise, skip lines 2a through 2e and go to line 3. Filing state taxes free     2. Filing state taxes free a. Filing state taxes free Enter any statutory employee income reported on line 1 of Schedule C or C-EZ 2a. Filing state taxes free     b. Filing state taxes free Enter any net profit or (loss) from Schedule C, line 31; Schedule C-EZ, line 3; Schedule K-1 (Form 1065), box 14, code A (other than farming); and Schedule K-1 (Form 1065-B), box 9, code J1. Filing state taxes free * Reduce any Schedule K-1 amounts as described in the instructions for completing Schedule SE in the Partner's Instructions for Schedule K-1. Filing state taxes free Do not include on this line any statutory employee income or any other amounts exempt from self-employment tax. Filing state taxes free Options and commodities dealers must add any gain or subtract any loss (in the normal course of dealing in or trading section 1256 contracts) from section 1256 contracts or related property 2b. Filing state taxes free     c. Filing state taxes free Enter any net farm profit or (loss) from Schedule F, line 34, and from farm partnerships, Schedule K-1 (Form 1065), box 14, code A. Filing state taxes free * Reduce any Schedule K-1 amounts as described in the instructions for completing Schedule SE in the Partner's Instructions for Schedule K-1. Filing state taxes free Do not include on this line any amounts exempt from self-employment tax 2c. Filing state taxes free         d. Filing state taxes free If you used the farm optional method to figure net earnings from self-employment, enter the amount from Schedule SE, Section B, line 15. Filing state taxes free Otherwise, skip this line and enter on line 2e the amount from line 2c 2d. Filing state taxes free         e. Filing state taxes free If line 2c is a profit, enter the smaller of line 2c or line 2d. Filing state taxes free If line 2c is a (loss), enter the (loss) from line 2c. Filing state taxes free 2e. Filing state taxes free   3. Filing state taxes free Combine lines 1a, 1b, 2a, 2b, and 2e. Filing state taxes free If zero or less, stop. Filing state taxes free Do not complete the rest of this worksheet. Filing state taxes free Instead, enter -0- on line 2 of the Line 11 Worksheet or line 4a of Schedule 8812, whichever applies 3. Filing state taxes free   4. Filing state taxes free Enter any amount included on line 1a that is:               a. Filing state taxes free A scholarship or fellowship grant not reported on Form W-2 4a. Filing state taxes free         b. Filing state taxes free For work done while an inmate in a penal institution (enter “PRI” and this amount on the dotted line next to line 7 of Form 1040 or line 8 of Form 1040NR) 4b. Filing state taxes free         c. Filing state taxes free A pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan (enter “DFC” and this amount on the dotted line next to line 7 of Form 1040 or line 8 of Form 1040NR). Filing state taxes free This amount may be shown in box 11 of your Form W-2. Filing state taxes free If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or annuity. Filing state taxes free 4c. Filing state taxes free       5. Filing state taxes free a. Filing state taxes free Enter any amount included on line 3 that is also included on Form 2555, line 43, or Form 2555-EZ, line 18. Filing state taxes free Do not include any amount that is also included on line 4a, 4b, or 4c above 5a. Filing state taxes free             b. Filing state taxes free Enter the portion, if any, of the amount from Form 2555, line 44 that you also included on Schedule E in partnership net income or (loss) or deducted on Form 1040, line 27, or Form 1040NR, line 27; Schedule C; Schedule C-EZ; or Schedule F. Filing state taxes free 5b. Filing state taxes free             c. Filing state taxes free Subtract line 5b from line 5a 5c. Filing state taxes free       6. Filing state taxes free Enter the amount from Form 1040, line 27, or Form 1040NR, line 27 6. Filing state taxes free       7. Filing state taxes free Add lines 4a through 4c, 5c, and 6 7. Filing state taxes free   8. Filing state taxes free Subtract line 7 from line 3 8. Filing state taxes free       If you were sent here from the Line 11 Worksheet, enter this amount on line 2 of that worksheet. Filing state taxes free If you were sent here from Schedule 8812, enter this amount on line 4a of that form. Filing state taxes free     *If you have any Schedule K-1 amounts and you are not required to file Schedule SE, complete the appropriate line(s) of Schedule SE, Section A. Filing state taxes free Put your name and social security number on Schedule SE and attach it to your return. Filing state taxes free                     1040A Filers — Earned Income Worksheet (for line 2 of the Line 11 Worksheet) Before you begin:   ✓Use this worksheet only if you were sent here from the Line 11 Worksheet earlier in this publication. Filing state taxes free  ✓Disregard community property laws when figuring the amounts to enter on this worksheet. Filing state taxes free               1. Filing state taxes free a. Filing state taxes free Enter the amount from Form 1040A, line 7 1a. Filing state taxes free         b. Filing state taxes free Enter the amount of any nontaxable combat pay received. Filing state taxes free Also enter this amount on Schedule 8812, line 4b. Filing state taxes free This amount should be shown in Form(s) W-2, box 12, with code Q. Filing state taxes free 1b. Filing state taxes free         c. Filing state taxes free Add lines 1a and 1b. Filing state taxes free     1c. Filing state taxes free   2. Filing state taxes free Enter any amount included on line 1a that is:           a. Filing state taxes free A scholarship or fellowship grant not reported on Form W-2 2a. Filing state taxes free         b. Filing state taxes free For work done while an inmate in a penal institution (enter “PRI” and this amount next to line 7 of Form 1040A) 2b. Filing state taxes free         c. Filing state taxes free A pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan (enter “DFC” and this amount next to line 7 of Form 1040A). Filing state taxes free This amount may be shown in box 11 of your Form W-2. Filing state taxes free If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or annuity 2c. Filing state taxes free       3. Filing state taxes free Add lines 2a through 2c 3. Filing state taxes free   4. Filing state taxes free Subtract line 3 from line 1c. Filing state taxes free Enter the result here and on line 2 of the Line 11 Worksheet 4. Filing state taxes free                 Additional Medicare Tax and RRTA Tax Worksheet (for line 6 of the Line 11 Worksheet) If your employer withheld or you paid Additional Medicare Tax or Tier 1 RRTA taxes, use this worksheet to figure the amount to enter on line 6 of the Line 11 Worksheet. Filing state taxes free Social security tax, Medicare tax, and Additional Medicare Tax on wages. Filing state taxes free 1. Filing state taxes free Enter the social security tax withheld (Form(s) W-2, box 4) 1. Filing state taxes free   2. Filing state taxes free Enter the Medicare tax withheld (Form(s) W-2, box 6). Filing state taxes free Box 6 includes any Additional Medicare Tax 2. Filing state taxes free   3. Filing state taxes free Enter the Additional Medicare Tax, if any, on wages (Form 8959, line 7) 3. Filing state taxes free   4. Filing state taxes free Add lines 1, 2, and 3 4. Filing state taxes free   5. Filing state taxes free Enter the Additional Medicare Tax withheld (Form 8959, line 22) 5. Filing state taxes free   6. Filing state taxes free Subtract line 5 from line 4 6. Filing state taxes free   Additional Medicare Tax on Self-Employment Income. Filing state taxes free 7. Filing state taxes free Enter one-half of the Additional Medicare Tax, if any, on self-employment income (one-half of Form 8959, line 13) 7. Filing state taxes free   Tier 1 RRTA taxes as an employee of a railroad (enter amounts on lines 8, 9, 10, and 11) or employee representative (enter amounts on lines 12, 13, 14, and 15). Filing state taxes free Do not include amounts in Form W-2, box 14, that are identified as Additional Medicare Tax or Tier 2 tax. Filing state taxes free Do not include amounts shown on Form CT-2 on line 3 for Additional Medicare Tax or line 4 for Tier 2 tax. Filing state taxes free 8. Filing state taxes free Enter the Tier 1 tax (Form(s) W-2, box 14) 8. Filing state taxes free   9. Filing state taxes free Enter the Medicare tax (Form(s) W-2, box 14) 9. Filing state taxes free   10. Filing state taxes free Enter the Additional Medicare Tax, if any, on RRTA compensation as an employee (Form 8959, line 17). Filing state taxes free Do not use the same amount from Form 8959, line 17, for both this line and line 14 10. Filing state taxes free   11. Filing state taxes free Add lines 8, 9, and 10 11. Filing state taxes free   12. Filing state taxes free Enter one-half of Tier 1 tax (one-half of Form(s) CT-2, line 1, for all 4 quarters of 2013) 12. Filing state taxes free   13. Filing state taxes free Enter one-half of Tier 1 Medicare tax (one-half of Form(s) CT-2, line 2, for all 4 quarters of 2013) 13. Filing state taxes free   14. Filing state taxes free Enter one-half of the Additional Medicare Tax, if any, on RRTA compensation as an employee representative (one-half of Form 8959, line 17). Filing state taxes free Do not use the same amount from Form 8959, line 17, for both this line and line 10 14. Filing state taxes free   15. Filing state taxes free Add lines 12, 13, and 14 15. Filing state taxes free   Line 6 amount 16. Filing state taxes free Add lines 6, 7, 11, and 15. Filing state taxes free Enter here and on line 6 of the Line 11 Worksheet. Filing state taxes free 16. Filing state taxes free   Paperwork Reduction Act Notice. Filing state taxes free   We ask for the information on the worksheets in this publication to carry out the Internal Revenue laws of the United States. Filing state taxes free You are required to give us the information if requested. Filing state taxes free We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax. Filing state taxes free   You are not required to provide the information requested on a form (or worksheet in this publication) that is subject to the Paperwork Reduction Act unless the form (or publication) displays a valid OMB control number. Filing state taxes free Books or records relating to a form, its instructions, or this publication must be retained as long as their contents may become material in the administration of any Internal Revenue law. Filing state taxes free Generally, tax returns and return information are confidential, as required by section 6103. Filing state taxes free   The average time and expenses required to complete these worksheets will vary depending on individual circumstances. Filing state taxes free For the estimated averages, see the instructions for your income tax return. Filing state taxes free   If you have suggestions for making these worksheets simpler, we would be happy to hear from you. Filing state taxes free See Comments and suggestions , earlier. Filing state taxes free How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Filing state taxes free Free help with your tax return. Filing state taxes free   You can get free help preparing your return nationwide from IRS-certified volunteers. Filing state taxes free The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Filing state taxes free The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Filing state taxes free Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Filing state taxes free In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Filing state taxes free To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Filing state taxes free gov, download the IRS2Go app, or call 1-800-906-9887. Filing state taxes free   As part of the TCE program, AARP offers the Tax-Aide counseling program. Filing state taxes free To find the nearest AARP Tax-Aide site, visit AARP's website at www. Filing state taxes free aarp. Filing state taxes free org/money/taxaide or call 1-888-227-7669. Filing state taxes free For more information on these programs, go to IRS. Filing state taxes free gov and enter “VITA” in the search box. Filing state taxes free Internet. Filing state taxes free    IRS. Filing state taxes free gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Filing state taxes free Download the free IRS2Go app from the iTunes app store or from Google Play. Filing state taxes free Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Filing state taxes free Check the status of your 2013 refund with the Where's My Refund? application on IRS. Filing state taxes free gov or download the IRS2Go app and select the Refund Status option. Filing state taxes free The IRS issues more than 9 out of 10 refunds in less than 21 days. Filing state taxes free Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Filing state taxes free You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Filing state taxes free The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Filing state taxes free Use the Interactive Tax Assistant (ITA) to research your tax questions. Filing state taxes free No need to wait on the phone or stand in line. Filing state taxes free The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Filing state taxes free When you reach the response screen, you can print the entire interview and the final response for your records. Filing state taxes free New subject areas are added on a regular basis. Filing state taxes free  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Filing state taxes free gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Filing state taxes free You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Filing state taxes free The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Filing state taxes free When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Filing state taxes free Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Filing state taxes free You can also ask the IRS to mail a return or an account transcript to you. Filing state taxes free Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Filing state taxes free gov or by calling 1-800-908-9946. Filing state taxes free Tax return and tax account transcripts are generally available for the current year and the past three years. Filing state taxes free Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Filing state taxes free Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Filing state taxes free If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Filing state taxes free Check the status of your amended return using Where's My Amended Return? Go to IRS. Filing state taxes free gov and enter Where's My Amended Return? in the search box. Filing state taxes free You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Filing state taxes free It can take up to 3 weeks from the date you mailed it to show up in our system. Filing state taxes free Make a payment using one of several safe and convenient electronic payment options available on IRS. Filing state taxes free gov. Filing state taxes free Select the Payment tab on the front page of IRS. Filing state taxes free gov for more information. Filing state taxes free Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Filing state taxes free Figure your income tax withholding with the IRS Withholding Calculator on IRS. Filing state taxes free gov. Filing state taxes free Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Filing state taxes free Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Filing state taxes free gov. Filing state taxes free Request an Electronic Filing PIN by going to IRS. Filing state taxes free gov and entering Electronic Filing PIN in the search box. Filing state taxes free Download forms, instructions and publications, including accessible versions for people with disabilities. Filing state taxes free Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Filing state taxes free gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Filing state taxes free An employee can answer questions about your tax account or help you set up a payment plan. Filing state taxes free Before you visit, check the Office Locator on IRS. Filing state taxes free gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Filing state taxes free If you have a special need, such as a disability, you can request an appointment. Filing state taxes free Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Filing state taxes free Apply for an Employer Identification Number (EIN). Filing state taxes free Go to IRS. Filing state taxes free gov and enter Apply for an EIN in the search box. Filing state taxes free Read the Internal Revenue Code, regulations, or other official guidance. Filing state taxes free Read Internal Revenue Bulletins. Filing state taxes free Sign up to receive local and national tax news and more by email. Filing state taxes free Just click on “subscriptions” above the search box on IRS. Filing state taxes free gov and choose from a variety of options. Filing state taxes free    Phone. Filing state taxes free You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Filing state taxes free Download the free IRS2Go app from the iTunes app store or from Google Play. Filing state taxes free Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Filing state taxes free gov, or download the IRS2Go app. Filing state taxes free Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Filing state taxes free The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Filing state taxes free Most VITA and TCE sites offer free electronic filing. Filing state taxes free Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Filing state taxes free Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Filing state taxes free Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. Filing state taxes free If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Filing state taxes free The IRS issues more than 9 out of 10 refunds in less than 21 days. Filing state taxes free Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Filing state taxes free Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. Filing state taxes free The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Filing state taxes free Note, the above information is for our automated hotline. Filing state taxes free Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. Filing state taxes free Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Filing state taxes free You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Filing state taxes free It can take up to 3 weeks from the date you mailed it to show up in our system. Filing state taxes free Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). Filing state taxes free You should receive your order within 10 business days. Filing state taxes free Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. Filing state taxes free If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. Filing state taxes free Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Filing state taxes free The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Filing state taxes free These individuals can also contact the IRS through relay services such as the Federal Relay Service. Filing state taxes free    Walk-in. Filing state taxes free You can find a selection of forms, publications and services — in-person. Filing state taxes free Products. Filing state taxes free You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Filing state taxes free Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Filing state taxes free Services. Filing state taxes free You can walk in to your local TAC for face-to-face tax help. Filing state taxes free An employee can answer questions about your tax account or help you set up a payment plan. Filing state taxes free Before visiting, use the Office Locator tool on IRS. Filing state taxes free gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. Filing state taxes free    Mail. Filing state taxes free You can send your order for forms, instructions, and publications to the address below. Filing state taxes free You should receive a response within 10 business days after your request is received. Filing state taxes free Internal Revenue Service 1201 N. Filing state taxes free Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. Filing state taxes free The Taxpayer Advocate Service (TAS) is your voice at the IRS. Filing state taxes free Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Filing state taxes free   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. Filing state taxes free We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Filing state taxes free You face (or your business is facing) an immediate threat of adverse action. Filing state taxes free You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Filing state taxes free   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Filing state taxes free Here's why we can help: TAS is an independent organization within the IRS. Filing state taxes free Our advocates know how to work with the IRS. Filing state taxes free Our services are free and tailored to meet your needs. Filing state taxes free We have offices in every state, the District of Columbia, and Puerto Rico. Filing state taxes free   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. Filing state taxes free   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Filing state taxes free If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. Filing state taxes free Low Income Taxpayer Clinics Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. Filing state taxes free Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Filing state taxes free Visit Taxpayer Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. Filing state taxes free Prev  Up  Next   Home   More Online Publications