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Form 1040ez More:label_form_201040ez More:taxes

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Form 1040ez More:label_form_201040ez More:taxes

Form 1040ez more:label_form_201040ez more:taxes Publication 502 - Main Content Table of Contents What Are Medical Expenses? What Expenses Can You Include This Year?Community property states. Form 1040ez more:label_form_201040ez more:taxes How Much of the Expenses Can You Deduct? Whose Medical Expenses Can You Include?Spouse Dependent Decedent What Medical Expenses Are Includible?Abortion Acupuncture Alcoholism Ambulance Annual Physical Examination Artificial Limb Artificial Teeth Bandages Birth Control Pills Body Scan Braille Books and Magazines Breast Pumps and Supplies Breast Reconstruction Surgery Capital Expenses Car Chiropractor Christian Science Practitioner Contact Lenses Crutches Dental Treatment Diagnostic Devices Disabled Dependent Care Expenses Drug Addiction Drugs Eye Exam Eyeglasses Eye Surgery Fertility Enhancement Founder's Fee Guide Dog or Other Service Animal Health Institute Health Maintenance Organization (HMO) Hearing Aids Home Care Home Improvements Hospital Services Insurance Premiums Intellectually and Developmentally Disabled, Special Home for Laboratory Fees Lactation Expenses Lead-Based Paint Removal Learning Disability Legal Fees Lifetime Care—Advance Payments Lodging Long-Term Care Meals Medical Conferences Medical Information Plan Medicines Nursing Home Nursing Services Operations Optometrist Organ Donors Osteopath Oxygen Physical Examination Pregnancy Test Kit Prosthesis Psychiatric Care Psychoanalysis Psychologist Special Education Sterilization Stop-Smoking Programs Surgery Telephone Television Therapy Transplants Transportation Trips Tuition Vasectomy Vision Correction Surgery Weight-Loss Program Wheelchair Wig X-ray What Expenses Are Not Includible?Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Controlled Substances Cosmetic Surgery Dancing Lessons Diaper Service Electrolysis or Hair Removal Flexible Spending Account Funeral Expenses Future Medical Care Hair Transplant Health Club Dues Health Coverage Tax Credit Health Savings Accounts Household Help Illegal Operations and Treatments Insurance Premiums Maternity Clothes Medical Savings Account (MSA) Medicines and Drugs From Other Countries Nonprescription Drugs and Medicines Nutritional Supplements Personal Use Items Swimming Lessons Teeth Whitening Veterinary Fees Weight-Loss Program How Do You Treat Reimbursements?Insurance Reimbursement How Do You Figure and Report the Deduction on Your Tax Return?What Tax Form Do You Use? Sale of Medical Equipment or Property Damages for Personal Injuries Impairment-Related Work Expenses Health Insurance Costs for Self-Employed Persons COBRA Premium Assistance Health Coverage Tax CreditWho Can Take This Credit? Qualifying Family Member Qualified Health Insurance Nonqualified Health Insurance Eligible Coverage Month How To Take the Credit How To Get Tax HelpLow Income Taxpayer Clinics What Are Medical Expenses? Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. Form 1040ez more:label_form_201040ez more:taxes These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. Form 1040ez more:label_form_201040ez more:taxes They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. Form 1040ez more:label_form_201040ez more:taxes Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. Form 1040ez more:label_form_201040ez more:taxes They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation. Form 1040ez more:label_form_201040ez more:taxes Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. Form 1040ez more:label_form_201040ez more:taxes Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract. Form 1040ez more:label_form_201040ez more:taxes What Expenses Can You Include This Year? You can include only the medical and dental expenses you paid this year, regardless of when the services were provided. Form 1040ez more:label_form_201040ez more:taxes (But see Decedent under Whose Medical Expenses Can You Include, for an exception. Form 1040ez more:label_form_201040ez more:taxes ) If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. Form 1040ez more:label_form_201040ez more:taxes If you use a “pay-by-phone” or “online” account to pay your medical expenses, the date reported on the statement of the financial institution showing when payment was made is the date of payment. Form 1040ez more:label_form_201040ez more:taxes If you use a credit card, include medical expenses you charge to your credit card in the year the charge is made, not when you actually pay the amount charged. Form 1040ez more:label_form_201040ez more:taxes If you did not claim a medical or dental expense that would have been deductible in an earlier year, you can file Form 1040X, Amended U. Form 1040ez more:label_form_201040ez more:taxes S. Form 1040ez more:label_form_201040ez more:taxes Individual Income Tax Return, for the year in which you overlooked the expense. Form 1040ez more:label_form_201040ez more:taxes Do not claim the expense on this year's return. Form 1040ez more:label_form_201040ez more:taxes Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. Form 1040ez more:label_form_201040ez more:taxes You cannot include medical expenses that were paid by insurance companies or other sources. Form 1040ez more:label_form_201040ez more:taxes This is true whether the payments were made directly to you, to the patient, or to the provider of the medical services. Form 1040ez more:label_form_201040ez more:taxes Separate returns. Form 1040ez more:label_form_201040ez more:taxes   If you and your spouse live in a noncommunity property state and file separate returns, each of you can include only the medical expenses each actually paid. Form 1040ez more:label_form_201040ez more:taxes Any medical expenses paid out of a joint checking account in which you and your spouse have the same interest are considered to have been paid equally by each of you, unless you can show otherwise. Form 1040ez more:label_form_201040ez more:taxes Community property states. Form 1040ez more:label_form_201040ez more:taxes   If you and your spouse live in a community property state and file separate returns or are registered domestic partners in Nevada, Washington, or California, any medical expenses paid out of community funds are divided equally. Form 1040ez more:label_form_201040ez more:taxes Generally, each of you should include half the expenses. Form 1040ez more:label_form_201040ez more:taxes If medical expenses are paid out of the separate funds of one individual, only the individual who paid the medical expenses can include them. Form 1040ez more:label_form_201040ez more:taxes If you live in a community property state and are not filing a joint return, see Publication 555, Community Property. Form 1040ez more:label_form_201040ez more:taxes How Much of the Expenses Can You Deduct? Generally, you can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 10% of your AGI. Form 1040ez more:label_form_201040ez more:taxes But if either you or your spouse was born before January 2, 1949, you can deduct the amount of your medical and dental expenses that is more than 7. Form 1040ez more:label_form_201040ez more:taxes 5% of your AGI. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes You are unmarried and were born after January 2, 1949, and your AGI is $40,000, 10% of which is $4,000. Form 1040ez more:label_form_201040ez more:taxes You paid medical expenses of $2,500. Form 1040ez more:label_form_201040ez more:taxes You cannot deduct any of your medical expenses because they are not more than 10% of your AGI. Form 1040ez more:label_form_201040ez more:taxes Whose Medical Expenses Can You Include? You can generally include medical expenses you pay for yourself, as well as those you pay for someone who was your spouse or your dependent either when the services were provided or when you paid for them. Form 1040ez more:label_form_201040ez more:taxes There are different rules for decedents and for individuals who are the subject of multiple support agreements. Form 1040ez more:label_form_201040ez more:taxes See Support claimed under a multiple support agreement , later under Qualifying Relative. Form 1040ez more:label_form_201040ez more:taxes Spouse You can include medical expenses you paid for your spouse. Form 1040ez more:label_form_201040ez more:taxes To include these expenses, you must have been married either at the time your spouse received the medical services or at the time you paid the medical expenses. Form 1040ez more:label_form_201040ez more:taxes Example 1. Form 1040ez more:label_form_201040ez more:taxes Mary received medical treatment before she married Bill. Form 1040ez more:label_form_201040ez more:taxes Bill paid for the treatment after they married. Form 1040ez more:label_form_201040ez more:taxes Bill can include these expenses in figuring his medical expense deduction even if Bill and Mary file separate returns. Form 1040ez more:label_form_201040ez more:taxes If Mary had paid the expenses, Bill could not include Mary's expenses in his separate return. Form 1040ez more:label_form_201040ez more:taxes Mary would include the amounts she paid during the year in her separate return. Form 1040ez more:label_form_201040ez more:taxes If they filed a joint return, the medical expenses both paid during the year would be used to figure their medical expense deduction. Form 1040ez more:label_form_201040ez more:taxes Example 2. Form 1040ez more:label_form_201040ez more:taxes This year, John paid medical expenses for his wife Louise, who died last year. Form 1040ez more:label_form_201040ez more:taxes John married Belle this year and they file a joint return. Form 1040ez more:label_form_201040ez more:taxes Because John was married to Louise when she received the medical services, he can include those expenses in figuring his medical expense deduction for this year. Form 1040ez more:label_form_201040ez more:taxes Dependent You can include medical expenses you paid for your dependent. Form 1040ez more:label_form_201040ez more:taxes For you to include these expenses, the person must have been your dependent either at the time the medical services were provided or at the time you paid the expenses. Form 1040ez more:label_form_201040ez more:taxes A person generally qualifies as your dependent for purposes of the medical expense deduction if both of the following requirements are met. Form 1040ez more:label_form_201040ez more:taxes The person was a qualifying child (defined later) or a qualifying relative (defined later), and The person was a U. Form 1040ez more:label_form_201040ez more:taxes S. Form 1040ez more:label_form_201040ez more:taxes citizen or national or a resident of the United States, Canada, or Mexico. Form 1040ez more:label_form_201040ez more:taxes If your qualifying child was adopted, see Exception for adopted child , later. Form 1040ez more:label_form_201040ez more:taxes You can include medical expenses you paid for an individual that would have been your dependent except that: He or she received gross income of $3,900 or more in 2013, He or she filed a joint return for 2013, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Form 1040ez more:label_form_201040ez more:taxes Exception for adopted child. Form 1040ez more:label_form_201040ez more:taxes   If you are a U. Form 1040ez more:label_form_201040ez more:taxes S. Form 1040ez more:label_form_201040ez more:taxes citizen or national and your adopted child lived with you as a member of your household for 2013, that child does not have to be a U. Form 1040ez more:label_form_201040ez more:taxes S. Form 1040ez more:label_form_201040ez more:taxes citizen or national, or a resident of the United States, Canada, or Mexico. Form 1040ez more:label_form_201040ez more:taxes Qualifying Child A qualifying child is a child who: Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew), Was: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a full-time student, and younger than you (or your spouse, if filing jointly), or Any age and permanently and totally disabled, Lived with you for more than half of 2013, Did not provide over half of his or her own support for 2013, and Did not file a joint return, other than to claim a refund. Form 1040ez more:label_form_201040ez more:taxes Adopted child. Form 1040ez more:label_form_201040ez more:taxes   A legally adopted child is treated as your own child. Form 1040ez more:label_form_201040ez more:taxes This child includes a child lawfully placed with you for legal adoption. Form 1040ez more:label_form_201040ez more:taxes   You can include medical expenses that you paid for a child before adoption if the child qualified as your dependent when the medical services were provided or when the expenses were paid. Form 1040ez more:label_form_201040ez more:taxes   If you pay back an adoption agency or other persons for medical expenses they paid under an agreement with you, you are treated as having paid those expenses provided you clearly substantiate that the payment is directly attributable to the medical care of the child. Form 1040ez more:label_form_201040ez more:taxes   But if you pay the agency or other person for medical care that was provided and paid for before adoption negotiations began, you cannot include them as medical expenses. Form 1040ez more:label_form_201040ez more:taxes    You may be able to take a credit for other expenses related to an adoption. Form 1040ez more:label_form_201040ez more:taxes See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. Form 1040ez more:label_form_201040ez more:taxes Child of divorced or separated parents. Form 1040ez more:label_form_201040ez more:taxes   For purposes of the medical and dental expenses deduction, a child of divorced or separated parents can be treated as a dependent of both parents. Form 1040ez more:label_form_201040ez more:taxes Each parent can include the medical expenses he or she pays for the child, even if the other parent claims the child's dependency exemption, if: The child is in the custody of one or both parents for more than half the year, The child receives over half of his or her support during the year from his or her parents, and The child's parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Live apart at all times during the last 6 months of the year. Form 1040ez more:label_form_201040ez more:taxes This does not apply if the child's exemption is being claimed under a multiple support agreement (discussed later). Form 1040ez more:label_form_201040ez more:taxes Qualifying Relative A qualifying relative is a person: Who is your: Son, daughter, stepchild, or foster child, or a descendant of any of them (for example, your grandchild), Brother, sister, half brother, half sister, or a son or daughter of any of them, Father, mother, or an ancestor or sibling of either of them (for example, your grandmother, grandfather, aunt, or uncle), Stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law, or Any other person (other than your spouse) who lived with you all year as a member of your household if your relationship did not violate local law, Who was not a qualifying child (see Qualifying Child, earlier) of any taxpayer for 2013, and For whom you provided over half of the support in 2013. Form 1040ez more:label_form_201040ez more:taxes But see Child of divorced or separated parents , earlier, Support claimed under a multiple support agreement, next, and Kidnapped child under Qualifying Relative in Publication 501. Form 1040ez more:label_form_201040ez more:taxes Support claimed under a multiple support agreement. Form 1040ez more:label_form_201040ez more:taxes   If you are considered to have provided more than half of a qualifying relative's support under a multiple support agreement, you can include medical expenses you pay for that person. Form 1040ez more:label_form_201040ez more:taxes A multiple support agreement is used when two or more people provide more than half of a person's support, but no one alone provides more than half. Form 1040ez more:label_form_201040ez more:taxes   Any medical expenses paid by others who joined you in the agreement cannot be included as medical expenses by anyone. Form 1040ez more:label_form_201040ez more:taxes However, you can include the entire unreimbursed amount you paid for medical expenses. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes You and your three brothers each provide one-fourth of your mother's total support. Form 1040ez more:label_form_201040ez more:taxes Under a multiple support agreement, you treat your mother as your dependent. Form 1040ez more:label_form_201040ez more:taxes You paid all of her medical expenses. Form 1040ez more:label_form_201040ez more:taxes Your brothers repaid you for three-fourths of these expenses. Form 1040ez more:label_form_201040ez more:taxes In figuring your medical expense deduction, you can include only one-fourth of your mother's medical expenses. Form 1040ez more:label_form_201040ez more:taxes Your brothers cannot include any part of the expenses. Form 1040ez more:label_form_201040ez more:taxes However, if you and your brothers share the nonmedical support items and you separately pay all of your mother's medical expenses, you can include the unreimbursed amount you paid for her medical expenses in your medical expenses. Form 1040ez more:label_form_201040ez more:taxes Decedent Medical expenses paid before death by the decedent are included in figuring any deduction for medical and dental expenses on the decedent's final income tax return. Form 1040ez more:label_form_201040ez more:taxes This includes expenses for the decedent's spouse and dependents as well as for the decedent. Form 1040ez more:label_form_201040ez more:taxes The survivor or personal representative of a decedent can choose to treat certain expenses paid by the decedent's estate for the decedent's medical care as paid by the decedent at the time the medical services were provided. Form 1040ez more:label_form_201040ez more:taxes The expenses must be paid within the 1-year period beginning with the day after the date of death. Form 1040ez more:label_form_201040ez more:taxes If you are the survivor or personal representative making this choice, you must attach a statement to the decedent's Form 1040 (or the decedent's amended return, Form 1040X) saying that the expenses have not been and will not be claimed on the estate tax return. Form 1040ez more:label_form_201040ez more:taxes Qualified medical expenses paid before death by the decedent are not deductible if paid with a tax-free distribution from any Archer MSA, Medicare Advantage MSA, or health savings account. Form 1040ez more:label_form_201040ez more:taxes What if the decedent's return had been filed and the medical expenses were not included?   Form 1040X can be filed for the year or years the expenses are treated as paid, unless the period for filing an amended return for that year has passed. Form 1040ez more:label_form_201040ez more:taxes Generally, an amended return must be filed within 3 years of the date the original return was filed, or within 2 years from the time the tax was paid, whichever date is later. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes John properly filed his 2012 income tax return. Form 1040ez more:label_form_201040ez more:taxes He died in 2013 with unpaid medical expenses of $1,500 from 2012 and $1,800 in 2013. Form 1040ez more:label_form_201040ez more:taxes If the expenses are paid within the 1-year period, his survivor or personal representative can file an amended return for 2012 claiming a deduction based on the $1,500 medical expenses. Form 1040ez more:label_form_201040ez more:taxes The $1,800 of medical expenses from 2013 can be included on the decedent's final return for 2013. Form 1040ez more:label_form_201040ez more:taxes What if you pay medical expenses of a deceased spouse or dependent?   If you paid medical expenses for your deceased spouse or dependent, include them as medical expenses on your Form 1040 in the year paid, whether they are paid before or after the decedent's death. Form 1040ez more:label_form_201040ez more:taxes The expenses can be included if the person was your spouse or dependent either at the time the medical services were provided or at the time you paid the expenses. Form 1040ez more:label_form_201040ez more:taxes What Medical Expenses Are Includible? Following is a list of items that you can include in figuring your medical expense deduction. Form 1040ez more:label_form_201040ez more:taxes The items are listed in alphabetical order. Form 1040ez more:label_form_201040ez more:taxes This list does not include all possible medical expenses. Form 1040ez more:label_form_201040ez more:taxes To determine if an expense not listed can be included in figuring your medical expense deduction, see What Are Medical Expenses , earlier. Form 1040ez more:label_form_201040ez more:taxes Abortion You can include in medical expenses the amount you pay for a legal abortion. Form 1040ez more:label_form_201040ez more:taxes Acupuncture You can include in medical expenses the amount you pay for acupuncture. Form 1040ez more:label_form_201040ez more:taxes Alcoholism You can include in medical expenses amounts you pay for an inpatient's treatment at a therapeutic center for alcohol addiction. Form 1040ez more:label_form_201040ez more:taxes This includes meals and lodging provided by the center during treatment. Form 1040ez more:label_form_201040ez more:taxes You can also include in medical expenses amounts you pay for transportation to and from Alcoholics Anonymous meetings in your community if the attendance is pursuant to medical advice that membership in Alcoholics Anonymous is necessary for the treatment of a disease involving the excessive use of alcoholic liquors. Form 1040ez more:label_form_201040ez more:taxes Ambulance You can include in medical expenses amounts you pay for ambulance service. Form 1040ez more:label_form_201040ez more:taxes Annual Physical Examination See Physical Examination , later. Form 1040ez more:label_form_201040ez more:taxes Artificial Limb You can include in medical expenses the amount you pay for an artificial limb. Form 1040ez more:label_form_201040ez more:taxes Artificial Teeth You can include in medical expenses the amount you pay for artificial teeth. Form 1040ez more:label_form_201040ez more:taxes Bandages You can include in medical expenses the cost of medical supplies such as bandages. Form 1040ez more:label_form_201040ez more:taxes Birth Control Pills You can include in medical expenses the amount you pay for birth control pills prescribed by a doctor. Form 1040ez more:label_form_201040ez more:taxes Body Scan You can include in medical expenses the cost of an electronic body scan. Form 1040ez more:label_form_201040ez more:taxes Braille Books and Magazines You can include in medical expenses the part of the cost of Braille books and magazines for use by a visually impaired person that is more than the cost of regular printed editions. Form 1040ez more:label_form_201040ez more:taxes Breast Pumps and Supplies You can include in medical expenses the cost of breast pumps and supplies that assist lactation. Form 1040ez more:label_form_201040ez more:taxes Breast Reconstruction Surgery You can include in medical expenses the amounts you pay for breast reconstruction surgery, as well as breast prosthesis, following a mastectomy for cancer. Form 1040ez more:label_form_201040ez more:taxes See Cosmetic Surgery , later. Form 1040ez more:label_form_201040ez more:taxes Capital Expenses You can include in medical expenses amounts you pay for special equipment installed in a home, or for improvements, if their main purpose is medical care for you, your spouse, or your dependent. Form 1040ez more:label_form_201040ez more:taxes The cost of permanent improvements that increase the value of your property may be partly included as a medical expense. Form 1040ez more:label_form_201040ez more:taxes The cost of the improvement is reduced by the increase in the value of your property. Form 1040ez more:label_form_201040ez more:taxes The difference is a medical expense. Form 1040ez more:label_form_201040ez more:taxes If the value of your property is not increased by the improvement, the entire cost is included as a medical expense. Form 1040ez more:label_form_201040ez more:taxes Certain improvements made to accommodate a home to your disabled condition, or that of your spouse or your dependents who live with you, do not usually increase the value of the home and the cost can be included in full as medical expenses. Form 1040ez more:label_form_201040ez more:taxes These improvements include, but are not limited to, the following items. Form 1040ez more:label_form_201040ez more:taxes Constructing entrance or exit ramps for your home. Form 1040ez more:label_form_201040ez more:taxes Widening doorways at entrances or exits to your home. Form 1040ez more:label_form_201040ez more:taxes Widening or otherwise modifying hallways and interior doorways. Form 1040ez more:label_form_201040ez more:taxes Installing railings, support bars, or other modifications to bathrooms. Form 1040ez more:label_form_201040ez more:taxes Lowering or modifying kitchen cabinets and equipment. Form 1040ez more:label_form_201040ez more:taxes Moving or modifying electrical outlets and fixtures. Form 1040ez more:label_form_201040ez more:taxes Installing porch lifts and other forms of lifts (but elevators generally add value to the house). Form 1040ez more:label_form_201040ez more:taxes Modifying fire alarms, smoke detectors, and other warning systems. Form 1040ez more:label_form_201040ez more:taxes Modifying stairways. Form 1040ez more:label_form_201040ez more:taxes Adding handrails or grab bars anywhere (whether or not in bathrooms). Form 1040ez more:label_form_201040ez more:taxes Modifying hardware on doors. Form 1040ez more:label_form_201040ez more:taxes Modifying areas in front of entrance and exit doorways. Form 1040ez more:label_form_201040ez more:taxes Grading the ground to provide access to the residence. Form 1040ez more:label_form_201040ez more:taxes Only reasonable costs to accommodate a home to a disabled condition are considered medical care. Form 1040ez more:label_form_201040ez more:taxes Additional costs for personal motives, such as for architectural or aesthetic reasons, are not medical expenses. Form 1040ez more:label_form_201040ez more:taxes Capital expense worksheet. Form 1040ez more:label_form_201040ez more:taxes   Use Worksheet A to figure the amount of your capital expense to include in your medical expenses. Form 1040ez more:label_form_201040ez more:taxes Worksheet A. Form 1040ez more:label_form_201040ez more:taxes Capital Expense Worksheet Instructions: Use this worksheet to figure the amount, if any, of your medical expenses due to a home improvement. Form 1040ez more:label_form_201040ez more:taxes 1. Form 1040ez more:label_form_201040ez more:taxes Enter the amount you paid for the home improvement 1. Form 1040ez more:label_form_201040ez more:taxes   2. Form 1040ez more:label_form_201040ez more:taxes Enter the value of your home immediately after the improvement 2. Form 1040ez more:label_form_201040ez more:taxes       3. Form 1040ez more:label_form_201040ez more:taxes Enter the value of your home immediately before the improvement 3. Form 1040ez more:label_form_201040ez more:taxes       4. Form 1040ez more:label_form_201040ez more:taxes Subtract line 3 from line 2. Form 1040ez more:label_form_201040ez more:taxes This is the increase in the value of your home due to the improvement 4. Form 1040ez more:label_form_201040ez more:taxes     • If line 4 is more than or equal to line 1, you have no medical expenses due to the home improvement; stop here. Form 1040ez more:label_form_201040ez more:taxes       • If line 4 is less than line 1, go to line 5. Form 1040ez more:label_form_201040ez more:taxes     5. Form 1040ez more:label_form_201040ez more:taxes Subtract line 4 from line 1. Form 1040ez more:label_form_201040ez more:taxes These are your medical expenses due to the home improvement 5. Form 1040ez more:label_form_201040ez more:taxes   Operation and upkeep. Form 1040ez more:label_form_201040ez more:taxes   Amounts you pay for operation and upkeep of a capital asset qualify as medical expenses, as long as the main reason for them is medical care. Form 1040ez more:label_form_201040ez more:taxes This rule applies even if none or only part of the original cost of the capital asset qualified as a medical care expense. Form 1040ez more:label_form_201040ez more:taxes Improvements to property rented by a person with a disability. Form 1040ez more:label_form_201040ez more:taxes   Amounts paid to buy and install special plumbing fixtures for a person with a disability, mainly for medical reasons, in a rented house are medical expenses. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes John has arthritis and a heart condition. Form 1040ez more:label_form_201040ez more:taxes He cannot climb stairs or get into a bathtub. Form 1040ez more:label_form_201040ez more:taxes On his doctor's advice, he installs a bathroom with a shower stall on the first floor of his two-story rented house. Form 1040ez more:label_form_201040ez more:taxes The landlord did not pay any of the cost of buying and installing the special plumbing and did not lower the rent. Form 1040ez more:label_form_201040ez more:taxes John can include in medical expenses the entire amount he paid. Form 1040ez more:label_form_201040ez more:taxes Car You can include in medical expenses the cost of special hand controls and other special equipment installed in a car for the use of a person with a disability. Form 1040ez more:label_form_201040ez more:taxes Special design. Form 1040ez more:label_form_201040ez more:taxes   You can include in medical expenses the difference between the cost of a regular car and a car specially designed to hold a wheelchair. Form 1040ez more:label_form_201040ez more:taxes Cost of operation. Form 1040ez more:label_form_201040ez more:taxes   The includible costs of using a car for medical reasons are explained under Transportation , later. Form 1040ez more:label_form_201040ez more:taxes Chiropractor You can include in medical expenses fees you pay to a chiropractor for medical care. Form 1040ez more:label_form_201040ez more:taxes Christian Science Practitioner You can include in medical expenses fees you pay to Christian Science practitioners for medical care. Form 1040ez more:label_form_201040ez more:taxes Contact Lenses You can include in medical expenses amounts you pay for contact lenses needed for medical reasons. Form 1040ez more:label_form_201040ez more:taxes You can also include the cost of equipment and materials required for using contact lenses, such as saline solution and enzyme cleaner. Form 1040ez more:label_form_201040ez more:taxes See Eyeglasses and Eye Surgery , later. Form 1040ez more:label_form_201040ez more:taxes Crutches You can include in medical expenses the amount you pay to buy or rent crutches. Form 1040ez more:label_form_201040ez more:taxes Dental Treatment You can include in medical expenses the amounts you pay for the prevention and alleviation of dental disease. Form 1040ez more:label_form_201040ez more:taxes Preventive treatment includes the services of a dental hygienist or dentist for such procedures as teeth cleaning, the application of sealants, and fluoride treatments to prevent tooth decay. Form 1040ez more:label_form_201040ez more:taxes Treatment to alleviate dental disease include services of a dentist for procedures such as X-rays, fillings, braces, extractions, dentures, and other dental ailments. Form 1040ez more:label_form_201040ez more:taxes But see Teeth Whitening under What Expenses Are Not Includible, later. Form 1040ez more:label_form_201040ez more:taxes Diagnostic Devices You can include in medical expenses the cost of devices used in diagnosing and treating illness and disease. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes You have diabetes and use a blood sugar test kit to monitor your blood sugar level. Form 1040ez more:label_form_201040ez more:taxes You can include the cost of the blood sugar test kit in your medical expenses. Form 1040ez more:label_form_201040ez more:taxes Disabled Dependent Care Expenses Some disabled dependent care expenses may qualify as either: Medical expenses, or Work-related expenses for purposes of taking a credit for dependent care. Form 1040ez more:label_form_201040ez more:taxes (See Publication 503, Child and Dependent Care Expenses. Form 1040ez more:label_form_201040ez more:taxes ) You can choose to apply them either way as long as you do not use the same expenses to claim both a credit and a medical expense deduction. Form 1040ez more:label_form_201040ez more:taxes Drug Addiction You can include in medical expenses amounts you pay for an inpatient's treatment at a therapeutic center for drug addiction. Form 1040ez more:label_form_201040ez more:taxes This includes meals and lodging at the center during treatment. Form 1040ez more:label_form_201040ez more:taxes Drugs See Medicines , later. Form 1040ez more:label_form_201040ez more:taxes Eye Exam You can include in medical expenses the amount you pay for eye examinations. Form 1040ez more:label_form_201040ez more:taxes Eyeglasses You can include in medical expenses amounts you pay for eyeglasses and contact lenses needed for medical reasons. Form 1040ez more:label_form_201040ez more:taxes See Contact Lenses , earlier, for more information. Form 1040ez more:label_form_201040ez more:taxes Eye Surgery You can include in medical expenses the amount you pay for eye surgery to treat defective vision, such as laser eye surgery or radial keratotomy. Form 1040ez more:label_form_201040ez more:taxes Fertility Enhancement You can include in medical expenses the cost of the following procedures to overcome an inability to have children. Form 1040ez more:label_form_201040ez more:taxes Procedures such as in vitro fertilization (including temporary storage of eggs or sperm). Form 1040ez more:label_form_201040ez more:taxes Surgery, including an operation to reverse prior surgery that prevented the person operated on from having children. Form 1040ez more:label_form_201040ez more:taxes Founder's Fee See Lifetime Care—Advance Payments , later. Form 1040ez more:label_form_201040ez more:taxes Guide Dog or Other Service Animal You can include in medical expenses the costs of buying, training, and maintaining a guide dog or other service animal to assist a visually impaired or hearing disabled person, or a person with other physical disabilities. Form 1040ez more:label_form_201040ez more:taxes In general, this includes any costs, such as food, grooming, and veterinary care, incurred in maintaining the health and vitality of the service animal so that it may perform its duties. Form 1040ez more:label_form_201040ez more:taxes Health Institute You can include in medical expenses fees you pay for treatment at a health institute only if the treatment is prescribed by a physician and the physician issues a statement that the treatment is necessary to alleviate a physical or mental defect or illness of the individual receiving the treatment. Form 1040ez more:label_form_201040ez more:taxes Health Maintenance Organization (HMO) You can include in medical expenses amounts you pay to entitle you, your spouse, or a dependent to receive medical care from an HMO. Form 1040ez more:label_form_201040ez more:taxes These amounts are treated as medical insurance premiums. Form 1040ez more:label_form_201040ez more:taxes See Insurance Premiums , later. Form 1040ez more:label_form_201040ez more:taxes Hearing Aids You can include in medical expenses the cost of a hearing aid and batteries, repairs, and maintenance needed to operate it. Form 1040ez more:label_form_201040ez more:taxes Home Care See Nursing Services , later. Form 1040ez more:label_form_201040ez more:taxes Home Improvements See Capital Expenses , earlier. Form 1040ez more:label_form_201040ez more:taxes Hospital Services You can include in medical expenses amounts you pay for the cost of inpatient care at a hospital or similar institution if a principal reason for being there is to receive medical care. Form 1040ez more:label_form_201040ez more:taxes This includes amounts paid for meals and lodging. Form 1040ez more:label_form_201040ez more:taxes Also see Lodging , later. Form 1040ez more:label_form_201040ez more:taxes Insurance Premiums You can include in medical expenses insurance premiums you pay for policies that cover medical care. Form 1040ez more:label_form_201040ez more:taxes Medical care policies can provide payment for treatment that includes: Hospitalization, surgical services, X-rays, Prescription drugs and insulin, Dental care, Replacement of lost or damaged contact lenses, and Long-term care (subject to additional limitations). Form 1040ez more:label_form_201040ez more:taxes See Qualified Long-Term Care Insurance Contracts under Long-Term Care, later. Form 1040ez more:label_form_201040ez more:taxes If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. Form 1040ez more:label_form_201040ez more:taxes The cost of the medical part must be separately stated in the insurance contract or given to you in a separate statement. Form 1040ez more:label_form_201040ez more:taxes Health coverage tax credit. Form 1040ez more:label_form_201040ez more:taxes   If, during 2013, you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment TAA (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient, you must complete Form 8885 before completing Schedule A. Form 1040ez more:label_form_201040ez more:taxes When figuring the amount of insurance premiums you can deduct on Schedule A, do not include: Any amounts you included on Form 8885, Any qualified health insurance premiums you paid to “U. Form 1040ez more:label_form_201040ez more:taxes S. Form 1040ez more:label_form_201040ez more:taxes Treasury–HCTC,” or Any health coverage tax credit advance payments shown on Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Form 1040ez more:label_form_201040ez more:taxes Employer-Sponsored Health Insurance Plan Do not include in your medical and dental expenses any insurance premiums paid by an employer-sponsored health insurance plan unless the premiums are included on your Form W-2, Wage and Tax Statement. Form 1040ez more:label_form_201040ez more:taxes Also, do not include any other medical and dental expenses paid by the plan unless the amount paid is included on your Form W-2. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes You are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program. Form 1040ez more:label_form_201040ez more:taxes Your share of the FEHB premium is paid by making a pre-tax reduction in your salary. Form 1040ez more:label_form_201040ez more:taxes Because you are an employee whose insurance premiums are paid with money that is never included in your gross income, you cannot deduct the premiums paid with that money. Form 1040ez more:label_form_201040ez more:taxes Long-term care services. Form 1040ez more:label_form_201040ez more:taxes   Contributions made by your employer to provide coverage for qualified long-term care services under a flexible spending or similar arrangement must be included in your income. Form 1040ez more:label_form_201040ez more:taxes This amount will be reported as wages on your Form W-2. Form 1040ez more:label_form_201040ez more:taxes Retired public safety officers. Form 1040ez more:label_form_201040ez more:taxes   If you are a retired public safety officer, do not include as medical expenses any health or long-term care insurance premiums that you elected to have paid with tax-free distributions from a retirement plan. Form 1040ez more:label_form_201040ez more:taxes This applies only to distributions that would otherwise be included in income. Form 1040ez more:label_form_201040ez more:taxes Health reimbursement arrangement (HRA). Form 1040ez more:label_form_201040ez more:taxes   If you have medical expenses that are reimbursed by a health reimbursement arrangement, you cannot include those expenses in your medical expenses. Form 1040ez more:label_form_201040ez more:taxes This is because an HRA is funded solely by the employer. Form 1040ez more:label_form_201040ez more:taxes Medicare A If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare A. Form 1040ez more:label_form_201040ez more:taxes The payroll tax paid for Medicare A is not a medical expense. Form 1040ez more:label_form_201040ez more:taxes If you are not covered under social security (or were not a government employee who paid Medicare tax), you can voluntarily enroll in Medicare A. Form 1040ez more:label_form_201040ez more:taxes In this situation you can include the premiums you paid for Medicare A as a medical expense. Form 1040ez more:label_form_201040ez more:taxes Medicare B Medicare B is a supplemental medical insurance. Form 1040ez more:label_form_201040ez more:taxes Premiums you pay for Medicare B are a medical expense. Form 1040ez more:label_form_201040ez more:taxes Check the information you received from the Social Security Administration to find out your premium. Form 1040ez more:label_form_201040ez more:taxes Medicare D Medicare D is a voluntary prescription drug insurance program for persons with Medicare A or B. Form 1040ez more:label_form_201040ez more:taxes You can include as a medical expense premiums you pay for Medicare D. Form 1040ez more:label_form_201040ez more:taxes Prepaid Insurance Premiums Premiums you pay before you are age 65 for insurance for medical care for yourself, your spouse, or your dependents after you reach age 65 are medical care expenses in the year paid if they are: Payable in equal yearly installments or more often, and Payable for at least 10 years, or until you reach age 65 (but not for less than 5 years). Form 1040ez more:label_form_201040ez more:taxes Unused Sick Leave Used To Pay Premiums You must include in gross income cash payments you receive at the time of retirement for unused sick leave. Form 1040ez more:label_form_201040ez more:taxes You also must include in gross income the value of unused sick leave that, at your option, your employer applies to the cost of your continuing participation in your employer's health plan after you retire. Form 1040ez more:label_form_201040ez more:taxes You can include this cost of continuing participation in the health plan as a medical expense. Form 1040ez more:label_form_201040ez more:taxes If you participate in a health plan where your employer automatically applies the value of unused sick leave to the cost of your continuing participation in the health plan (and you do not have the option to receive cash), do not include the value of the unused sick leave in gross income. Form 1040ez more:label_form_201040ez more:taxes You cannot include this cost of continuing participation in that health plan as a medical expense. Form 1040ez more:label_form_201040ez more:taxes Insurance Premiums You Cannot Include You cannot include premiums you pay for: Life insurance policies, Policies providing payment for loss of earnings, Policies for loss of life, limb, sight, etc. Form 1040ez more:label_form_201040ez more:taxes , Policies that pay you a guaranteed amount each week for a stated number of weeks if you are hospitalized for sickness or injury, The part of your car insurance that provides medical insurance coverage for all persons injured in or by your car because the part of the premium providing insurance for you, your spouse, and your dependents is not stated separately from the part of the premium providing insurance for medical care for others, or Health or long-term care insurance if you elected to pay these premiums with tax-free distributions from a retirement plan made directly to the insurance provider and these distributions would otherwise have been included in income. Form 1040ez more:label_form_201040ez more:taxes Taxes imposed by any governmental unit, such as Medicare taxes, are not insurance premiums. Form 1040ez more:label_form_201040ez more:taxes Coverage for nondependents. Form 1040ez more:label_form_201040ez more:taxes   Generally, you cannot deduct any additional premium you pay as the result of including on your policy someone who is not your spouse or dependent, even if that person is your child under age 27. Form 1040ez more:label_form_201040ez more:taxes However, you can deduct the additional premium if that person is: Your child whom you do not claim as a dependent because of the rules for children of divorced or separated parents, Any person you could have claimed as a dependent on your return except that person received $3,900 or more of gross income or filed a joint return, or Any person you could have claimed as a dependent except that you, or your spouse if filing jointly, can be claimed as a dependent on someone else's 2013 return. Form 1040ez more:label_form_201040ez more:taxes  Also, if you had family coverage when you added this individual to your policy and your premiums did not increase, you can enter on Schedule A (Form 1040) the full amount of your medical and dental insurance premiums. Form 1040ez more:label_form_201040ez more:taxes Intellectually and Developmentally Disabled, Special Home for You can include in medical expenses the cost of keeping a person who is intellectually and developmentally disabled in a special home, not the home of a relative, on the recommendation of a psychiatrist to help the person adjust from life in a mental hospital to community living. Form 1040ez more:label_form_201040ez more:taxes Laboratory Fees You can include in medical expenses the amounts you pay for laboratory fees that are part of medical care. Form 1040ez more:label_form_201040ez more:taxes Lactation Expenses See Breast Pumps and Supplies , earlier. Form 1040ez more:label_form_201040ez more:taxes Lead-Based Paint Removal You can include in medical expenses the cost of removing lead-based paints from surfaces in your home to prevent a child who has or had lead poisoning from eating the paint. Form 1040ez more:label_form_201040ez more:taxes These surfaces must be in poor repair (peeling or cracking) or within the child's reach. Form 1040ez more:label_form_201040ez more:taxes The cost of repainting the scraped area is not a medical expense. Form 1040ez more:label_form_201040ez more:taxes If, instead of removing the paint, you cover the area with wallboard or paneling, treat these items as capital expenses. Form 1040ez more:label_form_201040ez more:taxes See Capital Expenses , earlier. Form 1040ez more:label_form_201040ez more:taxes Do not include the cost of painting the wallboard as a medical expense. Form 1040ez more:label_form_201040ez more:taxes Learning Disability See Special Education , later. Form 1040ez more:label_form_201040ez more:taxes Legal Fees You can include in medical expenses legal fees you paid that are necessary to authorize treatment for mental illness. Form 1040ez more:label_form_201040ez more:taxes However, you cannot include in medical expenses fees for the management of a guardianship estate, fees for conducting the affairs of the person being treated, or other fees that are not necessary for medical care. Form 1040ez more:label_form_201040ez more:taxes Lifetime Care—Advance Payments You can include in medical expenses a part of a life-care fee or “founder's fee” you pay either monthly or as a lump sum under an agreement with a retirement home. Form 1040ez more:label_form_201040ez more:taxes The part of the payment you include is the amount properly allocable to medical care. Form 1040ez more:label_form_201040ez more:taxes The agreement must require that you pay a specific fee as a condition for the home's promise to provide lifetime care that includes medical care. Form 1040ez more:label_form_201040ez more:taxes You can use a statement from the retirement home to prove the amount properly allocable to medical care. Form 1040ez more:label_form_201040ez more:taxes The statement must be based either on the home's prior experience or on information from a comparable home. Form 1040ez more:label_form_201040ez more:taxes Dependents with disabilities. Form 1040ez more:label_form_201040ez more:taxes   You can include in medical expenses advance payments to a private institution for lifetime care, treatment, and training of your physically or mentally impaired child upon your death or when you become unable to provide care. Form 1040ez more:label_form_201040ez more:taxes The payments must be a condition for the institution's future acceptance of your child and must not be refundable. Form 1040ez more:label_form_201040ez more:taxes Payments for future medical care. Form 1040ez more:label_form_201040ez more:taxes   Generally, you cannot include in medical expenses current payments for medical care (including medical insurance) to be provided substantially beyond the end of the year. Form 1040ez more:label_form_201040ez more:taxes This rule does not apply in situations where the future care is purchased in connection with obtaining lifetime care of the type described earlier. Form 1040ez more:label_form_201040ez more:taxes Lodging You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to receive medical care. Form 1040ez more:label_form_201040ez more:taxes See Nursing Home , later. Form 1040ez more:label_form_201040ez more:taxes You may be able to include in medical expenses the cost of lodging not provided in a hospital or similar institution. Form 1040ez more:label_form_201040ez more:taxes You can include the cost of such lodging while away from home if all of the following requirements are met. Form 1040ez more:label_form_201040ez more:taxes The lodging is primarily for and essential to medical care. Form 1040ez more:label_form_201040ez more:taxes The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital. Form 1040ez more:label_form_201040ez more:taxes The lodging is not lavish or extravagant under the circumstances. Form 1040ez more:label_form_201040ez more:taxes There is no significant element of personal pleasure, recreation, or vacation in the travel away from home. Form 1040ez more:label_form_201040ez more:taxes The amount you include in medical expenses for lodging cannot be more than $50 for each night for each person. Form 1040ez more:label_form_201040ez more:taxes You can include lodging for a person traveling with the person receiving the medical care. Form 1040ez more:label_form_201040ez more:taxes For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Form 1040ez more:label_form_201040ez more:taxes Meals are not included. Form 1040ez more:label_form_201040ez more:taxes Do not include the cost of lodging while away from home for medical treatment if that treatment is not received from a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital or if that lodging is not primarily for or essential to the medical care received. Form 1040ez more:label_form_201040ez more:taxes Long-Term Care You can include in medical expenses amounts paid for qualified long-term care services and premiums paid for qualified long-term care insurance contracts. Form 1040ez more:label_form_201040ez more:taxes Qualified Long-Term Care Services Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services (defined later) that are: Required by a chronically ill individual, and Provided pursuant to a plan of care prescribed by a licensed health care practitioner. Form 1040ez more:label_form_201040ez more:taxes Chronically ill individual. Form 1040ez more:label_form_201040ez more:taxes   An individual is chronically ill if, within the previous 12 months, a licensed health care practitioner has certified that the individual meets either of the following descriptions. Form 1040ez more:label_form_201040ez more:taxes He or she is unable to perform at least two activities of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capacity. Form 1040ez more:label_form_201040ez more:taxes Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. Form 1040ez more:label_form_201040ez more:taxes He or she requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Form 1040ez more:label_form_201040ez more:taxes Maintenance and personal care services. Form 1040ez more:label_form_201040ez more:taxes    Maintenance or personal care services is care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment). Form 1040ez more:label_form_201040ez more:taxes Qualified Long-Term Care Insurance Contracts A qualified long-term care insurance contract is an insurance contract that provides only coverage of qualified long-term care services. Form 1040ez more:label_form_201040ez more:taxes The contract must: Be guaranteed renewable, Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed, Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract must be used only to reduce future premiums or increase future benefits, and Generally not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer, or the contract makes per diem or other periodic payments without regard to expenses. Form 1040ez more:label_form_201040ez more:taxes The amount of qualified long-term care premiums you can include is limited. Form 1040ez more:label_form_201040ez more:taxes You can include the following as medical expenses on Schedule A (Form 1040). Form 1040ez more:label_form_201040ez more:taxes Qualified long-term care premiums up to the following amounts. Form 1040ez more:label_form_201040ez more:taxes Age 40 or under – $360. Form 1040ez more:label_form_201040ez more:taxes Age 41 to 50 – $680. Form 1040ez more:label_form_201040ez more:taxes Age 51 to 60 – $1,360. Form 1040ez more:label_form_201040ez more:taxes Age 61 to 70 – $3,640. Form 1040ez more:label_form_201040ez more:taxes Age 71 or over – $4,550. Form 1040ez more:label_form_201040ez more:taxes Unreimbursed expenses for qualified long-term care services. Form 1040ez more:label_form_201040ez more:taxes Note. Form 1040ez more:label_form_201040ez more:taxes The limit on premiums is for each person. Form 1040ez more:label_form_201040ez more:taxes Also, if you are an eligible retired public safety officer, you cannot include premiums for long-term care insurance if you elected to pay these premiums with tax-free distributions from a qualified retirement plan made directly to the insurance provider and these distributions would otherwise have been included in your income. Form 1040ez more:label_form_201040ez more:taxes Meals You can include in medical expenses the cost of meals at a hospital or similar institution if a principal reason for being there is to get medical care. Form 1040ez more:label_form_201040ez more:taxes You cannot include in medical expenses the cost of meals that are not part of inpatient care. Form 1040ez more:label_form_201040ez more:taxes Also see Weight-Loss Program and Nutritional Supplements , later. Form 1040ez more:label_form_201040ez more:taxes Medical Conferences You can include in medical expenses amounts paid for admission and transportation to a medical conference if the medical conference concerns the chronic illness of yourself, your spouse, or your dependent. Form 1040ez more:label_form_201040ez more:taxes The costs of the medical conference must be primarily for and necessary to the medical care of you, your spouse, or your dependent. Form 1040ez more:label_form_201040ez more:taxes The majority of the time spent at the conference must be spent attending sessions on medical information. Form 1040ez more:label_form_201040ez more:taxes The cost of meals and lodging while attending the conference is not deductible as a medical expense. Form 1040ez more:label_form_201040ez more:taxes Medical Information Plan You can include in medical expenses amounts paid to a plan that keeps medical information in a computer data bank and retrieves and furnishes the information upon request to an attending physician. Form 1040ez more:label_form_201040ez more:taxes Medicines You can include in medical expenses amounts you pay for prescribed medicines and drugs. Form 1040ez more:label_form_201040ez more:taxes A prescribed drug is one that requires a prescription by a doctor for its use by an individual. Form 1040ez more:label_form_201040ez more:taxes You can also include amounts you pay for insulin. Form 1040ez more:label_form_201040ez more:taxes Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed. Form 1040ez more:label_form_201040ez more:taxes Imported medicines and drugs. Form 1040ez more:label_form_201040ez more:taxes   If you imported medicines or drugs from other countries, see Medicines and Drugs From Other Countries , under What Expenses Are Not Includible, later. Form 1040ez more:label_form_201040ez more:taxes Nursing Home You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. Form 1040ez more:label_form_201040ez more:taxes This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care. Form 1040ez more:label_form_201040ez more:taxes Do not include the cost of meals and lodging if the reason for being in the home is personal. Form 1040ez more:label_form_201040ez more:taxes You can, however, include in medical expenses the part of the cost that is for medical or nursing care. Form 1040ez more:label_form_201040ez more:taxes Nursing Services You can include in medical expenses wages and other amounts you pay for nursing services. Form 1040ez more:label_form_201040ez more:taxes The services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. Form 1040ez more:label_form_201040ez more:taxes This includes services connected with caring for the patient's condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. Form 1040ez more:label_form_201040ez more:taxes These services can be provided in your home or another care facility. Form 1040ez more:label_form_201040ez more:taxes Generally, only the amount spent for nursing services is a medical expense. Form 1040ez more:label_form_201040ez more:taxes If the attendant also provides personal and household services, amounts paid to the attendant must be divided between the time spent performing household and personal services and the time spent for nursing services. Form 1040ez more:label_form_201040ez more:taxes For example, because of your medical condition you pay a visiting nurse $300 per week for medical and household services. Form 1040ez more:label_form_201040ez more:taxes She spends 10% of her time doing household services such as washing dishes and laundry. Form 1040ez more:label_form_201040ez more:taxes You can include only $270 per week as medical expenses. Form 1040ez more:label_form_201040ez more:taxes The $30 (10% × $300) allocated to household services cannot be included. Form 1040ez more:label_form_201040ez more:taxes However, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. Form 1040ez more:label_form_201040ez more:taxes See Maintenance and personal care services under Long-Term Care, earlier. Form 1040ez more:label_form_201040ez more:taxes Additionally, certain expenses for household services or for the care of a qualifying individual incurred to allow you to work may qualify for the child and dependent care credit. Form 1040ez more:label_form_201040ez more:taxes See Publication 503. Form 1040ez more:label_form_201040ez more:taxes You can also include in medical expenses part of the amount you pay for that attendant's meals. Form 1040ez more:label_form_201040ez more:taxes Divide the food expense among the household members to find the cost of the attendant's food. Form 1040ez more:label_form_201040ez more:taxes Then divide that cost in the same manner as in the preceding paragraph. Form 1040ez more:label_form_201040ez more:taxes If you had to pay additional amounts for household upkeep because of the attendant, you can include the extra amounts with your medical expenses. Form 1040ez more:label_form_201040ez more:taxes This includes extra rent or utilities you pay because you moved to a larger apartment to provide space for the attendant. Form 1040ez more:label_form_201040ez more:taxes Employment taxes. Form 1040ez more:label_form_201040ez more:taxes   You can include as a medical expense social security tax, FUTA, Medicare tax, and state employment taxes you pay for an attendant who provides medical care. Form 1040ez more:label_form_201040ez more:taxes If the attendant also provides personal and household services, you can include as a medical expense only the amount of employment taxes paid for medical services as explained earlier. Form 1040ez more:label_form_201040ez more:taxes For information on employment tax responsibilities of household employers, see Publication 926, Household Employer's Tax Guide. Form 1040ez more:label_form_201040ez more:taxes Operations You can include in medical expenses amounts you pay for legal operations that are not for unnecessary cosmetic surgery. Form 1040ez more:label_form_201040ez more:taxes See Cosmetic Surgery under What Expenses Are Not Includible, later. Form 1040ez more:label_form_201040ez more:taxes Optometrist See Eyeglasses , earlier. Form 1040ez more:label_form_201040ez more:taxes Organ Donors See Transplants , later. Form 1040ez more:label_form_201040ez more:taxes Osteopath You can include in medical expenses amounts you pay to an osteopath for medical care. Form 1040ez more:label_form_201040ez more:taxes Oxygen You can include in medical expenses amounts you pay for oxygen and oxygen equipment to relieve breathing problems caused by a medical condition. Form 1040ez more:label_form_201040ez more:taxes Physical Examination You can include in medical expenses the amount you pay for an annual physical examination and diagnostic tests by a physician. Form 1040ez more:label_form_201040ez more:taxes You do not have to be ill at the time of the examination. Form 1040ez more:label_form_201040ez more:taxes Pregnancy Test Kit You can include in medical expenses the amount you pay to purchase a pregnancy test kit to determine if you are pregnant. Form 1040ez more:label_form_201040ez more:taxes Prosthesis See Artificial Limb and Breast Reconstruction Surgery , earlier. Form 1040ez more:label_form_201040ez more:taxes Psychiatric Care You can include in medical expenses amounts you pay for psychiatric care. Form 1040ez more:label_form_201040ez more:taxes This includes the cost of supporting a mentally ill dependent at a specially equipped medical center where the dependent receives medical care. Form 1040ez more:label_form_201040ez more:taxes See Psychoanalysis, next, and Transportation , later. Form 1040ez more:label_form_201040ez more:taxes Psychoanalysis You can include in medical expenses payments for psychoanalysis. Form 1040ez more:label_form_201040ez more:taxes However, you cannot include payments for psychoanalysis that is part of required training to be a psychoanalyst. Form 1040ez more:label_form_201040ez more:taxes Psychologist You can include in medical expenses amounts you pay to a psychologist for medical care. Form 1040ez more:label_form_201040ez more:taxes Special Education You can include in medical expenses fees you pay on a doctor's recommendation for a child's tutoring by a teacher who is specially trained and qualified to work with children who have learning disabilities caused by mental or physical impairments, including nervous system disorders. Form 1040ez more:label_form_201040ez more:taxes You can include in medical expenses the cost (tuition, meals, and lodging) of attending a school that furnishes special education to help a child to overcome learning disabilities. Form 1040ez more:label_form_201040ez more:taxes A doctor must recommend that the child attend the school. Form 1040ez more:label_form_201040ez more:taxes Overcoming the learning disabilities must be a principal reason for attending the school, and any ordinary education received must be incidental to the special education provided. Form 1040ez more:label_form_201040ez more:taxes Special education includes: Teaching Braille to a visually impaired person, Teaching lip reading to a hearing disabled person, or Giving remedial language training to correct a condition caused by a birth defect. Form 1040ez more:label_form_201040ez more:taxes Sterilization You can include in medical expenses the cost of a legal sterilization (a legally performed operation to make a person unable to have children). Form 1040ez more:label_form_201040ez more:taxes Also see Vasectomy , later. Form 1040ez more:label_form_201040ez more:taxes Stop-Smoking Programs You can include in medical expenses amounts you pay for a program to stop smoking. Form 1040ez more:label_form_201040ez more:taxes However, you cannot include in medical expenses amounts you pay for drugs that do not require a prescription, such as nicotine gum or patches, that are designed to help stop smoking. Form 1040ez more:label_form_201040ez more:taxes Surgery See Operations , earlier. Form 1040ez more:label_form_201040ez more:taxes Telephone You can include in medical expenses the cost of special telephone equipment that lets a person who is deaf, hard of hearing or has a speech disability communicate over a regular telephone. Form 1040ez more:label_form_201040ez more:taxes This includes teletypewriter (TTY) and telecommunications device for the deaf (TDD) equipment. Form 1040ez more:label_form_201040ez more:taxes You can also include the cost of repairing the equipment. Form 1040ez more:label_form_201040ez more:taxes Television You can include in medical expenses the cost of equipment that displays the audio part of television programs as subtitles for persons with a hearing disability. Form 1040ez more:label_form_201040ez more:taxes This may be the cost of an adapter that attaches to a regular set. Form 1040ez more:label_form_201040ez more:taxes It also may be the part of the cost of a specially equipped television that exceeds the cost of the same model regular television set. Form 1040ez more:label_form_201040ez more:taxes Therapy You can include in medical expenses amounts you pay for therapy received as medical treatment. Form 1040ez more:label_form_201040ez more:taxes Transplants You can include in medical expenses amounts paid for medical care you receive because you are a donor or a possible donor of a kidney or other organ. Form 1040ez more:label_form_201040ez more:taxes This includes transportation. Form 1040ez more:label_form_201040ez more:taxes You can include any expenses you pay for the medical care of a donor in connection with the donating of an organ. Form 1040ez more:label_form_201040ez more:taxes This includes transportation. Form 1040ez more:label_form_201040ez more:taxes Transportation You can include in medical expenses amounts paid for transportation primarily for, and essential to, medical care. Form 1040ez more:label_form_201040ez more:taxes You can include:    Bus, taxi, train, or plane fares or ambulance service, Transportation expenses of a parent who must go with a child who needs medical care, Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone, and Transportation expenses for regular visits to see a mentally ill dependent, if these visits are recommended as a part of treatment. Form 1040ez more:label_form_201040ez more:taxes Car expenses. Form 1040ez more:label_form_201040ez more:taxes   You can include out-of-pocket expenses, such as the cost of gas and oil, when you use a car for medical reasons. Form 1040ez more:label_form_201040ez more:taxes You cannot include depreciation, insurance, general repair, or maintenance expenses. Form 1040ez more:label_form_201040ez more:taxes   If you do not want to use your actual expenses for 2013, you can use the standard medical mileage rate of 24 cents a mile. Form 1040ez more:label_form_201040ez more:taxes    You can also include parking fees and tolls. Form 1040ez more:label_form_201040ez more:taxes You can add these fees and tolls to your medical expenses whether you use actual expenses or the standard mileage rate. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes In 2013, Bill Jones drove 2,800 miles for medical reasons. Form 1040ez more:label_form_201040ez more:taxes He spent $500 for gas, $30 for oil, and $100 for tolls and parking. Form 1040ez more:label_form_201040ez more:taxes He wants to figure the amount he can include in medical expenses both ways to see which gives him the greater deduction. Form 1040ez more:label_form_201040ez more:taxes He figures the actual expenses first. Form 1040ez more:label_form_201040ez more:taxes He adds the $500 for gas, the $30 for oil, and the $100 for tolls and parking for a total of $630. Form 1040ez more:label_form_201040ez more:taxes He then figures the standard mileage amount. Form 1040ez more:label_form_201040ez more:taxes He multiplies 2,800 miles by 24 cents a mile for a total of $672. Form 1040ez more:label_form_201040ez more:taxes He then adds the $100 tolls and parking for a total of $772. Form 1040ez more:label_form_201040ez more:taxes Bill includes the $772 of car expenses with his other medical expenses for the year because the $772 is more than the $630 he figured using actual expenses. Form 1040ez more:label_form_201040ez more:taxes Transportation expenses you cannot include. Form 1040ez more:label_form_201040ez more:taxes    You cannot include in medical expenses the cost of transportation in the following situations. Form 1040ez more:label_form_201040ez more:taxes Going to and from work, even if your condition requires an unusual means of transportation. Form 1040ez more:label_form_201040ez more:taxes Travel for purely personal reasons to another city for an operation or other medical care. Form 1040ez more:label_form_201040ez more:taxes Travel that is merely for the general improvement of one's health. Form 1040ez more:label_form_201040ez more:taxes The costs of operating a specially equipped car for other than medical reasons. Form 1040ez more:label_form_201040ez more:taxes Trips You can include in medical expenses amounts you pay for transportation to another city if the trip is primarily for, and essential to, receiving medical services. Form 1040ez more:label_form_201040ez more:taxes You may be able to include up to $50 for each night for each person. Form 1040ez more:label_form_201040ez more:taxes You can include lodging for a person traveling with the person receiving the medical care. Form 1040ez more:label_form_201040ez more:taxes For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Form 1040ez more:label_form_201040ez more:taxes Meals are not included. Form 1040ez more:label_form_201040ez more:taxes See Lodging , earlier. Form 1040ez more:label_form_201040ez more:taxes You cannot include in medical expenses a trip or vacation taken merely for a change in environment, improvement of morale, or general improvement of health, even if the trip is made on the advice of a doctor. Form 1040ez more:label_form_201040ez more:taxes However, see Medical Conferences , earlier. Form 1040ez more:label_form_201040ez more:taxes Tuition Under special circumstances, you can include charges for tuition in medical expenses. Form 1040ez more:label_form_201040ez more:taxes See Special Education , earlier. Form 1040ez more:label_form_201040ez more:taxes You can include charges for a health plan included in a lump-sum tuition fee if the charges are separately stated or can easily be obtained from the school. Form 1040ez more:label_form_201040ez more:taxes Vasectomy You can include in medical expenses the amount you pay for a vasectomy. Form 1040ez more:label_form_201040ez more:taxes Vision Correction Surgery See Eye Surgery , earlier. Form 1040ez more:label_form_201040ez more:taxes Weight-Loss Program You can include in medical expenses amounts you pay to lose weight if it is a treatment for a specific disease diagnosed by a physician (such as obesity, hypertension, or heart disease). Form 1040ez more:label_form_201040ez more:taxes This includes fees you pay for membership in a weight reduction group as well as fees for attendance at periodic meetings. Form 1040ez more:label_form_201040ez more:taxes You cannot include membership dues in a gym, health club, or spa as medical expenses, but you can include separate fees charged there for weight loss activities. Form 1040ez more:label_form_201040ez more:taxes You cannot include the cost of diet food or beverages in medical expenses because the diet food and beverages substitute for what is normally consumed to satisfy nutritional needs. Form 1040ez more:label_form_201040ez more:taxes You can include the cost of special food in medical expenses only if: The food does not satisfy normal nutritional needs, The food alleviates or treats an illness, and The need for the food is substantiated by a physician. Form 1040ez more:label_form_201040ez more:taxes The amount you can include in medical expenses is limited to the amount by which the cost of the special food exceeds the cost of a normal diet. Form 1040ez more:label_form_201040ez more:taxes See also Weight-Loss Program under What Expenses Are Not Includible, later. Form 1040ez more:label_form_201040ez more:taxes Wheelchair You can include in medical expenses amounts you pay for a wheelchair used mainly for the relief of sickness or disability, and not just to provide transportation to and from work. Form 1040ez more:label_form_201040ez more:taxes The cost of operating and maintaining the wheelchair is also a medical expense. Form 1040ez more:label_form_201040ez more:taxes Wig You can include in medical expenses the cost of a wig purchased upon the advice of a physician for the mental health of a patient who has lost all of his or her hair from disease. Form 1040ez more:label_form_201040ez more:taxes X-ray You can include in medical expenses amounts you pay for X-rays for medical reasons. Form 1040ez more:label_form_201040ez more:taxes What Expenses Are Not Includible? Following is a list of some items that you cannot include in figuring your medical expense deduction. Form 1040ez more:label_form_201040ez more:taxes The items are listed in alphabetical order. Form 1040ez more:label_form_201040ez more:taxes Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby You cannot include in medical expenses amounts you pay for the care of children, even if the expenses enable you, your spouse, or your dependent to get medical or dental treatment. Form 1040ez more:label_form_201040ez more:taxes Also, any expense allowed as a childcare credit cannot be treated as an expense paid for medical care. Form 1040ez more:label_form_201040ez more:taxes Controlled Substances You cannot include in medical expenses amounts you pay for controlled substances (such as marijuana, laetrile, etc. Form 1040ez more:label_form_201040ez more:taxes ), even if such substances are legalized by state law. Form 1040ez more:label_form_201040ez more:taxes Such substances are not legal under federal law and cannot be included in medical expenses. Form 1040ez more:label_form_201040ez more:taxes Cosmetic Surgery Generally, you cannot include in medical expenses the amount you pay for unnecessary cosmetic surgery. Form 1040ez more:label_form_201040ez more:taxes This includes any procedure that is directed at improving the patient's appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. Form 1040ez more:label_form_201040ez more:taxes You generally cannot include in medical expenses the amount you pay for procedures such as face lifts, hair transplants, hair removal (electrolysis), and liposuction. Form 1040ez more:label_form_201040ez more:taxes You can include in medical expenses the amount you pay for cosmetic surgery if it is necessary to improve a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes An individual undergoes surgery that removes a breast as part of treatment for cancer. Form 1040ez more:label_form_201040ez more:taxes She pays a surgeon to reconstruct the breast. Form 1040ez more:label_form_201040ez more:taxes The surgery to reconstruct the breast corrects a deformity directly related to the disease. Form 1040ez more:label_form_201040ez more:taxes The cost of the surgery is includible in her medical expenses. Form 1040ez more:label_form_201040ez more:taxes Dancing Lessons You cannot include in medical expenses the cost of dancing lessons, swimming lessons, etc. Form 1040ez more:label_form_201040ez more:taxes , even if they are recommended by a doctor, if they are only for the improvement of general health. Form 1040ez more:label_form_201040ez more:taxes Diaper Service You cannot include in medical expenses the amount you pay for diapers or diaper services, unless they are needed to relieve the effects of a particular disease. Form 1040ez more:label_form_201040ez more:taxes Electrolysis or Hair Removal See Cosmetic Surgery , earlier. Form 1040ez more:label_form_201040ez more:taxes Flexible Spending Account You cannot include in medical expenses amounts for which you are fully reimbursed by your flexible spending account if you contribute a part of your income on a pre-tax basis to pay for the qualified benefit. Form 1040ez more:label_form_201040ez more:taxes Funeral Expenses You cannot include in medical expenses amounts you pay for funerals. Form 1040ez more:label_form_201040ez more:taxes Future Medical Care Generally, you cannot include in medical expenses current payments for medical care (including medical insurance) to be provided substantially beyond the end of the year. Form 1040ez more:label_form_201040ez more:taxes This rule does not apply in situations where the future care is purchased in connection with obtaining lifetime care or long-term care of the type described at Lifetime Care—Advance Payments or Long-Term Care, earlier under What Medical Expenses Are Includible. Form 1040ez more:label_form_201040ez more:taxes Hair Transplant See Cosmetic Surgery , earlier. Form 1040ez more:label_form_201040ez more:taxes Health Club Dues You cannot include in medical expenses health club dues or amounts paid to improve one's general health or to relieve physical or mental discomfort not related to a particular medical condition. Form 1040ez more:label_form_201040ez more:taxes You cannot include in medical expenses the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. Form 1040ez more:label_form_201040ez more:taxes Health Coverage Tax Credit You cannot include in medical expenses amounts you pay for health insurance that you use in figuring your health coverage tax credit. Form 1040ez more:label_form_201040ez more:taxes For more information, see Health Coverage Tax Credit , later. Form 1040ez more:label_form_201040ez more:taxes Health Savings Accounts You cannot include in medical expenses any payment or distribution for medical expenses out of a health savings account. Form 1040ez more:label_form_201040ez more:taxes Contributions to health savings accounts are deducted separately. Form 1040ez more:label_form_201040ez more:taxes See Publication 969. Form 1040ez more:label_form_201040ez more:taxes Household Help You cannot include in medical expenses the cost of household help, even if such help is recommended by a doctor. Form 1040ez more:label_form_201040ez more:taxes This is a personal expense that is not deductible. Form 1040ez more:label_form_201040ez more:taxes However, you may be able to include certain expenses paid to a person providing nursing-type services. Form 1040ez more:label_form_201040ez more:taxes For more information, see Nursing Services , earlier under What Medical Expenses Are Includible. Form 1040ez more:label_form_201040ez more:taxes Also, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. Form 1040ez more:label_form_201040ez more:taxes For more information, see Long-Term Care , earlier under What Medical Expenses Are Includible. Form 1040ez more:label_form_201040ez more:taxes Illegal Operations and Treatments You cannot include in medical expenses amounts you pay for illegal operations, treatments, or controlled substances whether rendered or prescribed by licensed or unlicensed practitioners. Form 1040ez more:label_form_201040ez more:taxes Insurance Premiums See Insurance Premiums under What Medical Expenses Are Includible, earlier. Form 1040ez more:label_form_201040ez more:taxes Maternity Clothes You cannot include in medical expenses amounts you pay for maternity clothes. Form 1040ez more:label_form_201040ez more:taxes Medical Savings Account (MSA) You cannot include in medical expenses amounts you contribute to an Archer MSA. Form 1040ez more:label_form_201040ez more:taxes You cannot include expenses you pay for with a tax-free distribution from your Archer MSA. Form 1040ez more:label_form_201040ez more:taxes You also cannot use other funds equal to the amount of the distribution and include the expenses. Form 1040ez more:label_form_201040ez more:taxes For more information on Archer MSAs, see Publication 969. Form 1040ez more:label_form_201040ez more:taxes Medicines and Drugs From Other Countries In general, you cannot include in your medical expenses the cost of a prescribed drug brought in (or ordered shipped) from another country. Form 1040ez more:label_form_201040ez more:taxes You can only include the cost of a drug that was imported legally. Form 1040ez more:label_form_201040ez more:taxes For example, you can include the cost of a prescribed drug the Food and Drug Administration announces can be legally imported by individuals. Form 1040ez more:label_form_201040ez more:taxes You can include the cost of a prescribed drug you purchase and consume in another country if the drug is legal in both the other country and the United States. Form 1040ez more:label_form_201040ez more:taxes Nonprescription Drugs and Medicines Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes Your doctor recommends that you take aspirin. Form 1040ez more:label_form_201040ez more:taxes Because aspirin is a drug that does not require a physician's prescription, you cannot include its cost in your medical expenses. Form 1040ez more:label_form_201040ez more:taxes Nutritional Supplements You cannot include in medical expenses the cost of nutritional supplements, vitamins, herbal supplements, “natural medicines,” etc. Form 1040ez more:label_form_201040ez more:taxes unless they are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician. Form 1040ez more:label_form_201040ez more:taxes Otherwise, these items are taken to maintain your ordinary good health, and are not for medical care. Form 1040ez more:label_form_201040ez more:taxes Personal Use Items You cannot include in medical expenses the cost of an item ordinarily used for personal, living, or family purposes unless it is used primarily to prevent or alleviate a physical or mental defect or illness. Form 1040ez more:label_form_201040ez more:taxes For example, the cost of a toothbrush and toothpaste is a nondeductible personal expense. Form 1040ez more:label_form_201040ez more:taxes In order to accommodate an individual with a physical defect, you may have to purchase an item ordinarily used as a personal, living, or family item in a special form. Form 1040ez more:label_form_201040ez more:taxes You can include the excess of the cost of the item in a special form over the cost of the item in normal form as a medical expense. Form 1040ez more:label_form_201040ez more:taxes (See Braille Books and Magazines under What Medical Expenses Are Includible, earlier. Form 1040ez more:label_form_201040ez more:taxes ) Swimming Lessons See Dancing Lessons , earlier. Form 1040ez more:label_form_201040ez more:taxes Teeth Whitening You cannot include in medical expenses amounts paid to whiten teeth. Form 1040ez more:label_form_201040ez more:taxes See Cosmetic Surgery , earlier. Form 1040ez more:label_form_201040ez more:taxes Veterinary Fees You generally cannot include veterinary fees in your medical expenses, but see Guide Dog or Other Service Animal under What Medical Expenses Are Includible, earlier. Form 1040ez more:label_form_201040ez more:taxes Weight-Loss Program You cannot include in medical expenses the cost of a weight-loss program if the purpose of the weight loss is the improvement of appearance, general health, or sense of well-being. Form 1040ez more:label_form_201040ez more:taxes You cannot include amounts you pay to lose weight unless the weight loss is a treatment for a specific disease diagnosed by a physician (such as obesity, hypertension, or heart disease). Form 1040ez more:label_form_201040ez more:taxes If the weight-loss treatment is not for a specific disease diagnosed by a physician, you cannot include either the fees you pay for membership in a weight reduction group or fees for attendance at periodic meetings. Form 1040ez more:label_form_201040ez more:taxes Also, you cannot include membership dues in a gym, health club, or spa. Form 1040ez more:label_form_201040ez more:taxes You cannot include the cost of diet food or beverages in medical expenses because the diet food and beverages substitute for what is normally consumed to satisfy nutritional needs. Form 1040ez more:label_form_201040ez more:taxes See Weight-Loss Program under What Medical Expenses Are Includible, earlier. Form 1040ez more:label_form_201040ez more:taxes How Do You Treat Reimbursements? You can include in medical expenses only those amounts paid during the tax year for which you received no insurance or other reimbursement. Form 1040ez more:label_form_201040ez more:taxes Insurance Reimbursement You must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year. Form 1040ez more:label_form_201040ez more:taxes This includes payments from Medicare. Form 1040ez more:label_form_201040ez more:taxes Even if a policy provides reimbursement only for certain specific medical expenses, you must use amounts you receive from that policy to reduce your total medical expenses, including those it does not reimburse. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes You have insurance policies that cover your hospital and doctors' bills but not your nursing bills. Form 1040ez more:label_form_201040ez more:taxes The insurance you receive for the hospital and doctors' bills is more than their charges. Form 1040ez more:label_form_201040ez more:taxes In figuring your medical deduction, you must reduce the total amount you spent for medical care by the total amount of insurance you received, even if the policies do not cover some of your medical expenses. Form 1040ez more:label_form_201040ez more:taxes Health reimbursement arrange
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Understanding Your CP62 Notice

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Page Last Reviewed or Updated: 04-Mar-2014

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The Form 1040ez More:label_form_201040ez More:taxes

Form 1040ez more:label_form_201040ez more:taxes Publication 936 - Main Content Table of Contents Part I. Form 1040ez more:label_form_201040ez more:taxes Home Mortgage InterestSecured Debt Qualified Home Special Situations Points Mortgage Insurance Premiums Form 1098, Mortgage Interest Statement How To Report Special Rule for Tenant-Stockholders in Cooperative Housing Corporations Part II. Form 1040ez more:label_form_201040ez more:taxes Limits on Home Mortgage Interest DeductionHome Acquisition Debt Home Equity Debt Grandfathered Debt Table 1 Instructions How To Get Tax HelpLow Income Taxpayer Clinics Part I. Form 1040ez more:label_form_201040ez more:taxes Home Mortgage Interest This part explains what you can deduct as home mortgage interest. Form 1040ez more:label_form_201040ez more:taxes It includes discussions on points, mortgage insurance premiums, and how to report deductible interest on your tax return. Form 1040ez more:label_form_201040ez more:taxes Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). Form 1040ez more:label_form_201040ez more:taxes The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan. Form 1040ez more:label_form_201040ez more:taxes You can deduct home mortgage interest if all the following conditions are met. Form 1040ez more:label_form_201040ez more:taxes You file Form 1040 and itemize deductions on Schedule A (Form 1040). Form 1040ez more:label_form_201040ez more:taxes The mortgage is a secured debt on a qualified home in which you have an ownership interest. Form 1040ez more:label_form_201040ez more:taxes Secured Debt and Qualified Home are explained later. Form 1040ez more:label_form_201040ez more:taxes  Both you and the lender must intend that the loan be repaid. Form 1040ez more:label_form_201040ez more:taxes Fully deductible interest. Form 1040ez more:label_form_201040ez more:taxes   In most cases, you can deduct all of your home mortgage interest. Form 1040ez more:label_form_201040ez more:taxes How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. Form 1040ez more:label_form_201040ez more:taxes   If all of your mortgages fit into one or more of the following three categories at all times during the year, you can deduct all of the interest on those mortgages. Form 1040ez more:label_form_201040ez more:taxes (If any one mortgage fits into more than one category, add the debt that fits in each category to your other debt in the same category. Form 1040ez more:label_form_201040ez more:taxes ) If one or more of your mortgages does not fit into any of these categories, use Part II of this publication to figure the amount of interest you can deduct. Form 1040ez more:label_form_201040ez more:taxes   The three categories are as follows. Form 1040ez more:label_form_201040ez more:taxes Mortgages you took out on or before October 13, 1987 (called grandfathered debt). Form 1040ez more:label_form_201040ez more:taxes Mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if throughout 2013 these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately). Form 1040ez more:label_form_201040ez more:taxes Mortgages you took out after October 13, 1987, other than to buy, build, or improve your home (called home equity debt), but only if throughout 2013 these mortgages totaled $100,000 or less ($50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by (1) and (2). Form 1040ez more:label_form_201040ez more:taxes The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home. Form 1040ez more:label_form_201040ez more:taxes   See Part II for more detailed definitions of grandfathered, home acquisition, and home equity debt. Form 1040ez more:label_form_201040ez more:taxes    You can use Figure A to check whether your home mortgage interest is fully deductible. Form 1040ez more:label_form_201040ez more:taxes This image is too large to be displayed in the current screen. Form 1040ez more:label_form_201040ez more:taxes Please click the link to view the image. Form 1040ez more:label_form_201040ez more:taxes Figure A. Form 1040ez more:label_form_201040ez more:taxes Is My Home Mortgage Interest Fully Deductible? Secured Debt You can deduct your home mortgage interest only if your mortgage is a secured debt. Form 1040ez more:label_form_201040ez more:taxes A secured debt is one in which you sign an instrument (such as a mortgage, deed of trust, or land contract) that: Makes your ownership in a qualified home security for payment of the debt, Provides, in case of default, that your home could satisfy the debt, and Is recorded or is otherwise perfected under any state or local law that applies. Form 1040ez more:label_form_201040ez more:taxes In other words, your mortgage is a secured debt if you put your home up as collateral to protect the interests of the lender. Form 1040ez more:label_form_201040ez more:taxes If you cannot pay the debt, your home can then serve as payment to the lender to satisfy (pay) the debt. Form 1040ez more:label_form_201040ez more:taxes In this publication, mortgage will refer to secured debt. Form 1040ez more:label_form_201040ez more:taxes Debt not secured by home. Form 1040ez more:label_form_201040ez more:taxes   A debt is not secured by your home if it is secured solely because of a lien on your general assets or if it is a security interest that attaches to the property without your consent (such as a mechanic's lien or judgment lien). Form 1040ez more:label_form_201040ez more:taxes   A debt is not secured by your home if it once was, but is no longer secured by your home. Form 1040ez more:label_form_201040ez more:taxes Wraparound mortgage. Form 1040ez more:label_form_201040ez more:taxes   This is not a secured debt unless it is recorded or otherwise perfected under state law. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes Beth owns a home subject to a mortgage of $40,000. Form 1040ez more:label_form_201040ez more:taxes She sells the home for $100,000 to John, who takes it subject to the $40,000 mortgage. Form 1040ez more:label_form_201040ez more:taxes Beth continues to make the payments on the $40,000 note. Form 1040ez more:label_form_201040ez more:taxes John pays $10,000 down and gives Beth a $90,000 note secured by a wraparound mortgage on the home. Form 1040ez more:label_form_201040ez more:taxes Beth does not record or otherwise perfect the $90,000 mortgage under the state law that applies. Form 1040ez more:label_form_201040ez more:taxes Therefore, the mortgage is not a secured debt and John cannot deduct any of the interest he pays on it as home mortgage interest. Form 1040ez more:label_form_201040ez more:taxes Choice to treat the debt as not secured by your home. Form 1040ez more:label_form_201040ez more:taxes   You can choose to treat any debt secured by your qualified home as not secured by the home. Form 1040ez more:label_form_201040ez more:taxes This treatment begins with the tax year for which you make the choice and continues for all later tax years. Form 1040ez more:label_form_201040ez more:taxes You can revoke your choice only with the consent of the Internal Revenue Service (IRS). Form 1040ez more:label_form_201040ez more:taxes   You may want to treat a debt as not secured by your home if the interest on that debt is fully deductible (for example, as a business expense) whether or not it qualifies as home mortgage interest. Form 1040ez more:label_form_201040ez more:taxes This may allow you, if the limits in Part II apply, more of a deduction for interest on other debts that are deductible only as home mortgage interest. Form 1040ez more:label_form_201040ez more:taxes Cooperative apartment owner. Form 1040ez more:label_form_201040ez more:taxes   If you own stock in a cooperative housing corporation, see the Special Rule for Tenant-Stockholders in Cooperative Housing Corporations , near the end of this Part I. Form 1040ez more:label_form_201040ez more:taxes Qualified Home For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. Form 1040ez more:label_form_201040ez more:taxes This means your main home or your second home. Form 1040ez more:label_form_201040ez more:taxes A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. Form 1040ez more:label_form_201040ez more:taxes The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes. Form 1040ez more:label_form_201040ez more:taxes Otherwise, it is considered personal interest and is not deductible. Form 1040ez more:label_form_201040ez more:taxes Main home. Form 1040ez more:label_form_201040ez more:taxes   You can have only one main home at any one time. Form 1040ez more:label_form_201040ez more:taxes This is the home where you ordinarily live most of the time. Form 1040ez more:label_form_201040ez more:taxes Second home. Form 1040ez more:label_form_201040ez more:taxes   A second home is a home that you choose to treat as your second home. Form 1040ez more:label_form_201040ez more:taxes Second home not rented out. Form 1040ez more:label_form_201040ez more:taxes   If you have a second home that you do not hold out for rent or resale to others at any time during the year, you can treat it as a qualified home. Form 1040ez more:label_form_201040ez more:taxes You do not have to use the home during the year. Form 1040ez more:label_form_201040ez more:taxes Second home rented out. Form 1040ez more:label_form_201040ez more:taxes   If you have a second home and rent it out part of the year, you also must use it as a home during the year for it to be a qualified home. Form 1040ez more:label_form_201040ez more:taxes You must use this home more than 14 days or more than 10% of the number of days during the year that the home is rented at a fair rental, whichever is longer. Form 1040ez more:label_form_201040ez more:taxes If you do not use the home long enough, it is considered rental property and not a second home. Form 1040ez more:label_form_201040ez more:taxes For information on residential rental property, see Publication 527. Form 1040ez more:label_form_201040ez more:taxes More than one second home. Form 1040ez more:label_form_201040ez more:taxes   If you have more than one second home, you can treat only one as the qualified second home during any year. Form 1040ez more:label_form_201040ez more:taxes However, you can change the home you treat as a second home during the year in the following situations. Form 1040ez more:label_form_201040ez more:taxes If you get a new home during the year, you can choose to treat the new home as your second home as of the day you buy it. Form 1040ez more:label_form_201040ez more:taxes If your main home no longer qualifies as your main home, you can choose to treat it as your second home as of the day you stop using it as your main home. Form 1040ez more:label_form_201040ez more:taxes If your second home is sold during the year or becomes your main home, you can choose a new second home as of the day you sell the old one or begin using it as your main home. Form 1040ez more:label_form_201040ez more:taxes Divided use of your home. Form 1040ez more:label_form_201040ez more:taxes   The only part of your home that is considered a qualified home is the part you use for residential living. Form 1040ez more:label_form_201040ez more:taxes If you use part of your home for other than residential living, such as a home office, you must allocate the use of your home. Form 1040ez more:label_form_201040ez more:taxes You must then divide both the cost and fair market value of your home between the part that is a qualified home and the part that is not. Form 1040ez more:label_form_201040ez more:taxes Dividing the cost may affect the amount of your home acquisition debt, which is limited to the cost of your home plus the cost of any improvements. Form 1040ez more:label_form_201040ez more:taxes (See Home Acquisition Debt in Part II. Form 1040ez more:label_form_201040ez more:taxes ) Dividing the fair market value may affect your home equity debt limit, also explained in Part II . Form 1040ez more:label_form_201040ez more:taxes Renting out part of home. Form 1040ez more:label_form_201040ez more:taxes   If you rent out part of a qualified home to another person (tenant), you can treat the rented part as being used by you for residential living only if all of the following conditions apply. Form 1040ez more:label_form_201040ez more:taxes The rented part of your home is used by the tenant primarily for residential living. Form 1040ez more:label_form_201040ez more:taxes The rented part of your home is not a self-contained residential unit having separate sleeping, cooking, and toilet facilities. Form 1040ez more:label_form_201040ez more:taxes You do not rent (directly or by sublease) the same or different parts of your home to more than two tenants at any time during the tax year. Form 1040ez more:label_form_201040ez more:taxes If two persons (and dependents of either) share the same sleeping quarters, they are treated as one tenant. Form 1040ez more:label_form_201040ez more:taxes Office in home. Form 1040ez more:label_form_201040ez more:taxes   If you have an office in your home that you use in your business, see Publication 587, Business Use of Your Home. Form 1040ez more:label_form_201040ez more:taxes It explains how to figure your deduction for the business use of your home, which includes the business part of your home mortgage interest. Form 1040ez more:label_form_201040ez more:taxes Home under construction. Form 1040ez more:label_form_201040ez more:taxes   You can treat a home under construction as a qualified home for a period of up to 24 months, but only if it becomes your qualified home at the time it is ready for occupancy. Form 1040ez more:label_form_201040ez more:taxes   The 24-month period can start any time on or after the day construction begins. Form 1040ez more:label_form_201040ez more:taxes Home destroyed. Form 1040ez more:label_form_201040ez more:taxes   You may be able to continue treating your home as a qualified home even after it is destroyed in a fire, storm, tornado, earthquake, or other casualty. Form 1040ez more:label_form_201040ez more:taxes This means you can continue to deduct the interest you pay on your home mortgage, subject to the limits described in this publication. Form 1040ez more:label_form_201040ez more:taxes   You can continue treating a destroyed home as a qualified home if, within a reasonable period of time after the home is destroyed, you: Rebuild the destroyed home and move into it, or Sell the land on which the home was located. Form 1040ez more:label_form_201040ez more:taxes   This rule applies to your main home and to a second home that you treat as a qualified home. Form 1040ez more:label_form_201040ez more:taxes Time-sharing arrangements. Form 1040ez more:label_form_201040ez more:taxes   You can treat a home you own under a time-sharing plan as a qualified home if it meets all the requirements. Form 1040ez more:label_form_201040ez more:taxes A time-sharing plan is an arrangement between two or more people that limits each person's interest in the home or right to use it to a certain part of the year. Form 1040ez more:label_form_201040ez more:taxes Rental of time-share. Form 1040ez more:label_form_201040ez more:taxes   If you rent out your time-share, it qualifies as a second home only if you also use it as a home during the year. Form 1040ez more:label_form_201040ez more:taxes See Second home rented out , earlier, for the use requirement. Form 1040ez more:label_form_201040ez more:taxes To know whether you meet that requirement, count your days of use and rental of the home only during the time you have a right to use it or to receive any benefits from the rental of it. Form 1040ez more:label_form_201040ez more:taxes Married taxpayers. Form 1040ez more:label_form_201040ez more:taxes   If you are married and file a joint return, your qualified home(s) can be owned either jointly or by only one spouse. Form 1040ez more:label_form_201040ez more:taxes Separate returns. Form 1040ez more:label_form_201040ez more:taxes   If you are married filing separately and you and your spouse own more than one home, you can each take into account only one home as a qualified home. Form 1040ez more:label_form_201040ez more:taxes However, if you both consent in writing, then one spouse can take both the main home and a second home into account. Form 1040ez more:label_form_201040ez more:taxes Special Situations This section describes certain items that can be included as home mortgage interest and others that cannot. Form 1040ez more:label_form_201040ez more:taxes It also describes certain special situations that may affect your deduction. Form 1040ez more:label_form_201040ez more:taxes Late payment charge on mortgage payment. Form 1040ez more:label_form_201040ez more:taxes   You can deduct as home mortgage interest a late payment charge if it was not for a specific service performed in connection with your mortgage loan. Form 1040ez more:label_form_201040ez more:taxes Mortgage prepayment penalty. Form 1040ez more:label_form_201040ez more:taxes   If you pay off your home mortgage early, you may have to pay a penalty. Form 1040ez more:label_form_201040ez more:taxes You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. Form 1040ez more:label_form_201040ez more:taxes Sale of home. Form 1040ez more:label_form_201040ez more:taxes   If you sell your home, you can deduct your home mortgage interest (subject to any limits that apply) paid up to, but not including, the date of the sale. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes John and Peggy Harris sold their home on May 7. Form 1040ez more:label_form_201040ez more:taxes Through April 30, they made home mortgage interest payments of $1,220. Form 1040ez more:label_form_201040ez more:taxes The settlement sheet for the sale of the home showed $50 interest for the 6-day period in May up to, but not including, the date of sale. Form 1040ez more:label_form_201040ez more:taxes Their mortgage interest deduction is $1,270 ($1,220 + $50). Form 1040ez more:label_form_201040ez more:taxes Prepaid interest. Form 1040ez more:label_form_201040ez more:taxes   If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. Form 1040ez more:label_form_201040ez more:taxes You can deduct in each year only the interest that qualifies as home mortgage interest for that year. Form 1040ez more:label_form_201040ez more:taxes However, there is an exception that applies to points, discussed later. Form 1040ez more:label_form_201040ez more:taxes Mortgage interest credit. Form 1040ez more:label_form_201040ez more:taxes    You may be able to claim a mortgage interest credit if you were issued a mortgage credit certificate (MCC) by a state or local government. Form 1040ez more:label_form_201040ez more:taxes Figure the credit on Form 8396, Mortgage Interest Credit. Form 1040ez more:label_form_201040ez more:taxes If you take this credit, you must reduce your mortgage interest deduction by the amount of the credit. Form 1040ez more:label_form_201040ez more:taxes   See Form 8396 and Publication 530 for more information on the mortgage interest credit. Form 1040ez more:label_form_201040ez more:taxes Ministers' and military housing allowance. Form 1040ez more:label_form_201040ez more:taxes   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you can still deduct your home mortgage interest. Form 1040ez more:label_form_201040ez more:taxes Hardest Hit Fund and Emergency Homeowners' Loan Programs. Form 1040ez more:label_form_201040ez more:taxes   You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. Form 1040ez more:label_form_201040ez more:taxes You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. Form 1040ez more:label_form_201040ez more:taxes You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. Form 1040ez more:label_form_201040ez more:taxes If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098–MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received from payer(s) / borrower(s)), box 4 (mortgage insurance premiums), and box 5 (other information including real property taxes paid). Form 1040ez more:label_form_201040ez more:taxes However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. Form 1040ez more:label_form_201040ez more:taxes Mortgage assistance payments under section 235 of the National Housing Act. Form 1040ez more:label_form_201040ez more:taxes   If you qualify for mortgage assistance payments for lower-income families under section 235 of the National Housing Act, part or all of the interest on your mortgage may be paid for you. Form 1040ez more:label_form_201040ez more:taxes You cannot deduct the interest that is paid for you. Form 1040ez more:label_form_201040ez more:taxes No other effect on taxes. Form 1040ez more:label_form_201040ez more:taxes   Do not include these mortgage assistance payments in your income. Form 1040ez more:label_form_201040ez more:taxes Also, do not use these payments to reduce other deductions, such as real estate taxes. Form 1040ez more:label_form_201040ez more:taxes Divorced or separated individuals. Form 1040ez more:label_form_201040ez more:taxes   If a divorce or separation agreement requires you or your spouse or former spouse to pay home mortgage interest on a home owned by both of you, the payment of interest may be alimony. Form 1040ez more:label_form_201040ez more:taxes See the discussion of Payments for jointly-owned home under Alimony in Publication 504, Divorced or Separated Individuals. Form 1040ez more:label_form_201040ez more:taxes Redeemable ground rents. Form 1040ez more:label_form_201040ez more:taxes   In some states (such as Maryland), you can buy your home subject to a ground rent. Form 1040ez more:label_form_201040ez more:taxes A ground rent is an obligation you assume to pay a fixed amount per year on the property. Form 1040ez more:label_form_201040ez more:taxes Under this arrangement, you are leasing (rather than buying) the land on which your home is located. Form 1040ez more:label_form_201040ez more:taxes   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. Form 1040ez more:label_form_201040ez more:taxes   A ground rent is a redeemable ground rent if all of the following are true. Form 1040ez more:label_form_201040ez more:taxes Your lease, including renewal periods, is for more than 15 years. Form 1040ez more:label_form_201040ez more:taxes You can freely assign the lease. Form 1040ez more:label_form_201040ez more:taxes You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a specific amount. Form 1040ez more:label_form_201040ez more:taxes The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. Form 1040ez more:label_form_201040ez more:taxes   Payments made to end the lease and to buy the lessor's entire interest in the land are not deductible as mortgage interest. Form 1040ez more:label_form_201040ez more:taxes Nonredeemable ground rents. Form 1040ez more:label_form_201040ez more:taxes   Payments on a nonredeemable ground rent are not mortgage interest. Form 1040ez more:label_form_201040ez more:taxes You can deduct them as rent if they are a business expense or if they are for rental property. Form 1040ez more:label_form_201040ez more:taxes Reverse mortgages. Form 1040ez more:label_form_201040ez more:taxes   A reverse mortgage is a loan where the lender pays you (in a lump sum, a monthly advance, a line of credit, or a combination of all three) while you continue to live in your home. Form 1040ez more:label_form_201040ez more:taxes With a reverse mortgage, you retain title to your home. Form 1040ez more:label_form_201040ez more:taxes Depending on the plan, your reverse mortgage becomes due with interest when you move, sell your home, reach the end of a pre-selected loan period, or die. Form 1040ez more:label_form_201040ez more:taxes Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable. Form 1040ez more:label_form_201040ez more:taxes Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until you actually pay it, which is usually when you pay off the loan in full. Form 1040ez more:label_form_201040ez more:taxes Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt discussed in Part II. Form 1040ez more:label_form_201040ez more:taxes Rental payments. Form 1040ez more:label_form_201040ez more:taxes   If you live in a house before final settlement on the purchase, any payments you make for that period are rent and not interest. Form 1040ez more:label_form_201040ez more:taxes This is true even if the settlement papers call them interest. Form 1040ez more:label_form_201040ez more:taxes You cannot deduct these payments as home mortgage interest. Form 1040ez more:label_form_201040ez more:taxes Mortgage proceeds invested in tax-exempt securities. Form 1040ez more:label_form_201040ez more:taxes   You cannot deduct the home mortgage interest on grandfathered debt or home equity debt if you used the proceeds of the mortgage to buy securities or certificates that produce tax-free income. Form 1040ez more:label_form_201040ez more:taxes “Grandfathered debt” and “home equity debt” are defined in Part II of this publication. Form 1040ez more:label_form_201040ez more:taxes Refunds of interest. Form 1040ez more:label_form_201040ez more:taxes   If you receive a refund of interest in the same tax year you paid it, you must reduce your interest expense by the amount refunded to you. Form 1040ez more:label_form_201040ez more:taxes If you receive a refund of interest you deducted in an earlier year, you generally must include the refund in income in the year you receive it. Form 1040ez more:label_form_201040ez more:taxes However, you need to include it only up to the amount of the deduction that reduced your tax in the earlier year. Form 1040ez more:label_form_201040ez more:taxes This is true whether the interest overcharge was refunded to you or was used to reduce the outstanding principal on your mortgage. Form 1040ez more:label_form_201040ez more:taxes If you need to include the refund in income, report it on Form 1040, line 21. Form 1040ez more:label_form_201040ez more:taxes   If you received a refund of interest you overpaid in an earlier year, you generally will receive a Form 1098, Mortgage Interest Statement, showing the refund in box 3. Form 1040ez more:label_form_201040ez more:taxes For information about Form 1098, see Form 1098, Mortgage Interest Statement , later. Form 1040ez more:label_form_201040ez more:taxes   For more information on how to treat refunds of interest deducted in earlier years, see Recoveries in Publication 525, Taxable and Nontaxable Income. Form 1040ez more:label_form_201040ez more:taxes Cooperative apartment owner. Form 1040ez more:label_form_201040ez more:taxes   If you own a cooperative apartment, you must reduce your home mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. Form 1040ez more:label_form_201040ez more:taxes The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year. Form 1040ez more:label_form_201040ez more:taxes   If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. Form 1040ez more:label_form_201040ez more:taxes Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Form 1040ez more:label_form_201040ez more:taxes Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. Form 1040ez more:label_form_201040ez more:taxes This image is too large to be displayed in the current screen. Form 1040ez more:label_form_201040ez more:taxes Please click the link to view the image. Form 1040ez more:label_form_201040ez more:taxes Figure B. Form 1040ez more:label_form_201040ez more:taxes Are My Points Fully Deductible This Year? A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. Form 1040ez more:label_form_201040ez more:taxes See Points paid by the seller , later. Form 1040ez more:label_form_201040ez more:taxes General Rule You generally cannot deduct the full amount of points in the year paid. Form 1040ez more:label_form_201040ez more:taxes Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. Form 1040ez more:label_form_201040ez more:taxes See Deduction Allowed Ratably , next. Form 1040ez more:label_form_201040ez more:taxes For exceptions to the general rule, see Deduction Allowed in Year Paid , later. Form 1040ez more:label_form_201040ez more:taxes Deduction Allowed Ratably If you do not meet the tests listed under Deduction Allowed in Year Paid , later, the loan is not a home improvement loan, or you choose not to deduct your points in full in the year paid, you can deduct the points ratably (equally) over the life of the loan if you meet all the following tests. Form 1040ez more:label_form_201040ez more:taxes You use the cash method of accounting. Form 1040ez more:label_form_201040ez more:taxes This means you report income in the year you receive it and deduct expenses in the year you pay them. Form 1040ez more:label_form_201040ez more:taxes Most individuals use this method. Form 1040ez more:label_form_201040ez more:taxes Your loan is secured by a home. Form 1040ez more:label_form_201040ez more:taxes (The home does not need to be your main home. Form 1040ez more:label_form_201040ez more:taxes ) Your loan period is not more than 30 years. Form 1040ez more:label_form_201040ez more:taxes If your loan period is more than 10 years, the terms of your loan are the same as other loans offered in your area for the same or longer period. Form 1040ez more:label_form_201040ez more:taxes Either your loan amount is $250,000 or less, or the number of points is not more than: 4, if your loan period is 15 years or less, or 6, if your loan period is more than 15 years. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes You use the cash method of accounting. Form 1040ez more:label_form_201040ez more:taxes In 2013, you took out a $100,000 loan payable over 20 years. Form 1040ez more:label_form_201040ez more:taxes The terms of the loan are the same as for other 20-year loans offered in your area. Form 1040ez more:label_form_201040ez more:taxes You paid $4,800 in points. Form 1040ez more:label_form_201040ez more:taxes You made 3 monthly payments on the loan in 2013. Form 1040ez more:label_form_201040ez more:taxes You can deduct $60 [($4,800 ÷ 240 months) x 3 payments] in 2013. Form 1040ez more:label_form_201040ez more:taxes In 2014, if you make all twelve payments, you will be able to deduct $240 ($20 x 12). Form 1040ez more:label_form_201040ez more:taxes Deduction Allowed in Year Paid You can fully deduct points in the year paid if you meet all the following tests. Form 1040ez more:label_form_201040ez more:taxes (You can use Figure B as a quick guide to see whether your points are fully deductible in the year paid. Form 1040ez more:label_form_201040ez more:taxes ) Your loan is secured by your main home. Form 1040ez more:label_form_201040ez more:taxes (Your main home is the one you ordinarily live in most of the time. Form 1040ez more:label_form_201040ez more:taxes ) Paying points is an established business practice in the area where the loan was made. Form 1040ez more:label_form_201040ez more:taxes The points paid were not more than the points generally charged in that area. Form 1040ez more:label_form_201040ez more:taxes You use the cash method of accounting. Form 1040ez more:label_form_201040ez more:taxes This means you report income in the year you receive it and deduct expenses in the year you pay them. Form 1040ez more:label_form_201040ez more:taxes Most individuals use this method. Form 1040ez more:label_form_201040ez more:taxes The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. Form 1040ez more:label_form_201040ez more:taxes The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. Form 1040ez more:label_form_201040ez more:taxes The funds you provided are not required to have been applied to the points. Form 1040ez more:label_form_201040ez more:taxes They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Form 1040ez more:label_form_201040ez more:taxes You cannot have borrowed these funds from your lender or mortgage broker. Form 1040ez more:label_form_201040ez more:taxes You use your loan to buy or build your main home. Form 1040ez more:label_form_201040ez more:taxes The points were computed as a percentage of the principal amount of the mortgage. Form 1040ez more:label_form_201040ez more:taxes The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. Form 1040ez more:label_form_201040ez more:taxes The points may be shown as paid from either your funds or the seller's. Form 1040ez more:label_form_201040ez more:taxes Note. Form 1040ez more:label_form_201040ez more:taxes If you meet all of these tests, you can choose to either fully deduct the points in the year paid, or deduct them over the life of the loan. Form 1040ez more:label_form_201040ez more:taxes Home improvement loan. Form 1040ez more:label_form_201040ez more:taxes   You can also fully deduct in the year paid points paid on a loan to improve your main home, if tests (1) through (6) are met. Form 1040ez more:label_form_201040ez more:taxes Second home. Form 1040ez more:label_form_201040ez more:taxes You cannot fully deduct in the year paid points you pay on loans secured by your second home. Form 1040ez more:label_form_201040ez more:taxes You can deduct these points only over the life of the loan. Form 1040ez more:label_form_201040ez more:taxes Refinancing. Form 1040ez more:label_form_201040ez more:taxes   Generally, points you pay to refinance a mortgage are not deductible in full in the year you pay them. Form 1040ez more:label_form_201040ez more:taxes This is true even if the new mortgage is secured by your main home. Form 1040ez more:label_form_201040ez more:taxes   However, if you use part of the refinanced mortgage proceeds to improve your main home and you meet the first 6 tests listed under Deduction Allowed in Year Paid , you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. Form 1040ez more:label_form_201040ez more:taxes You can deduct the rest of the points over the life of the loan. Form 1040ez more:label_form_201040ez more:taxes Example 1. Form 1040ez more:label_form_201040ez more:taxes In 1998, Bill Fields got a mortgage to buy a home. Form 1040ez more:label_form_201040ez more:taxes In 2013, Bill refinanced that mortgage with a 15-year $100,000 mortgage loan. Form 1040ez more:label_form_201040ez more:taxes The mortgage is secured by his home. Form 1040ez more:label_form_201040ez more:taxes To get the new loan, he had to pay three points ($3,000). Form 1040ez more:label_form_201040ez more:taxes Two points ($2,000) were for prepaid interest, and one point ($1,000) was charged for services, in place of amounts that ordinarily are stated separately on the settlement statement. Form 1040ez more:label_form_201040ez more:taxes Bill paid the points out of his private funds, rather than out of the proceeds of the new loan. Form 1040ez more:label_form_201040ez more:taxes The payment of points is an established practice in the area, and the points charged are not more than the amount generally charged there. Form 1040ez more:label_form_201040ez more:taxes Bill's first payment on the new loan was due July 1. Form 1040ez more:label_form_201040ez more:taxes He made six payments on the loan in 2013 and is a cash basis taxpayer. Form 1040ez more:label_form_201040ez more:taxes Bill used the funds from the new mortgage to repay his existing mortgage. Form 1040ez more:label_form_201040ez more:taxes Although the new mortgage loan was for Bill's continued ownership of his main home, it was not for the purchase or improvement of that home. Form 1040ez more:label_form_201040ez more:taxes He cannot deduct all of the points in 2013. Form 1040ez more:label_form_201040ez more:taxes He can deduct two points ($2,000) ratably over the life of the loan. Form 1040ez more:label_form_201040ez more:taxes He deducts $67 [($2,000 ÷ 180 months) × 6 payments] of the points in 2013. Form 1040ez more:label_form_201040ez more:taxes The other point ($1,000) was a fee for services and is not deductible. Form 1040ez more:label_form_201040ez more:taxes Example 2. Form 1040ez more:label_form_201040ez more:taxes The facts are the same as in Example 1, except that Bill used $25,000 of the loan proceeds to improve his home and $75,000 to repay his existing mortgage. Form 1040ez more:label_form_201040ez more:taxes Bill deducts 25% ($25,000 ÷ $100,000) of the points ($2,000) in 2013. Form 1040ez more:label_form_201040ez more:taxes His deduction is $500 ($2,000 × 25%). Form 1040ez more:label_form_201040ez more:taxes Bill also deducts the ratable part of the remaining $1,500 ($2,000 − $500) that must be spread over the life of the loan. Form 1040ez more:label_form_201040ez more:taxes This is $50 [($1,500 ÷ 180 months) × 6 payments] in 2013. Form 1040ez more:label_form_201040ez more:taxes The total amount Bill deducts in 2013 is $550 ($500 + $50). Form 1040ez more:label_form_201040ez more:taxes Special Situations This section describes certain special situations that may affect your deduction of points. Form 1040ez more:label_form_201040ez more:taxes Original issue discount. Form 1040ez more:label_form_201040ez more:taxes   If you do not qualify to either deduct the points in the year paid or deduct them ratably over the life of the loan, or if you choose not to use either of these methods, the points reduce the issue price of the loan. Form 1040ez more:label_form_201040ez more:taxes This reduction results in original issue discount, which is discussed in chapter 4 of Publication 535. Form 1040ez more:label_form_201040ez more:taxes Amounts charged for services. Form 1040ez more:label_form_201040ez more:taxes    Amounts charged by the lender for specific services connected to the loan are not interest. Form 1040ez more:label_form_201040ez more:taxes Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Form 1040ez more:label_form_201040ez more:taxes  You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Form 1040ez more:label_form_201040ez more:taxes Points paid by the seller. Form 1040ez more:label_form_201040ez more:taxes   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Form 1040ez more:label_form_201040ez more:taxes Treatment by seller. Form 1040ez more:label_form_201040ez more:taxes   The seller cannot deduct these fees as interest. Form 1040ez more:label_form_201040ez more:taxes But they are a selling expense that reduces the amount realized by the seller. Form 1040ez more:label_form_201040ez more:taxes See Publication 523 for information on selling your home. Form 1040ez more:label_form_201040ez more:taxes Treatment by buyer. Form 1040ez more:label_form_201040ez more:taxes   The buyer reduces the basis of the home by the amount of the seller-paid points and treats the points as if he or she had paid them. Form 1040ez more:label_form_201040ez more:taxes If all the tests under Deduction Allowed in Year Paid , earlier, are met, the buyer can deduct the points in the year paid. Form 1040ez more:label_form_201040ez more:taxes If any of those tests are not met, the buyer deducts the points over the life of the loan. Form 1040ez more:label_form_201040ez more:taxes   If you need information about the basis of your home, see Publication 523 or Publication 530. Form 1040ez more:label_form_201040ez more:taxes Funds provided are less than points. Form 1040ez more:label_form_201040ez more:taxes   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the funds you provided were less than the points charged to you (test (6)), you can deduct the points in the year paid, up to the amount of funds you provided. Form 1040ez more:label_form_201040ez more:taxes In addition, you can deduct any points paid by the seller. Form 1040ez more:label_form_201040ez more:taxes Example 1. Form 1040ez more:label_form_201040ez more:taxes When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Form 1040ez more:label_form_201040ez more:taxes You meet all the tests for deducting points in the year paid, except the only funds you provided were a $750 down payment. Form 1040ez more:label_form_201040ez more:taxes Of the $1,000 charged for points, you can deduct $750 in the year paid. Form 1040ez more:label_form_201040ez more:taxes You spread the remaining $250 over the life of the mortgage. Form 1040ez more:label_form_201040ez more:taxes Example 2. Form 1040ez more:label_form_201040ez more:taxes The facts are the same as in Example 1, except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. Form 1040ez more:label_form_201040ez more:taxes In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Form 1040ez more:label_form_201040ez more:taxes You spread the remaining $250 over the life of the mortgage. Form 1040ez more:label_form_201040ez more:taxes You must reduce the basis of your home by the $1,000 paid by the seller. Form 1040ez more:label_form_201040ez more:taxes Excess points. Form 1040ez more:label_form_201040ez more:taxes   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the points paid were more than generally paid in your area (test (3)), you deduct in the year paid only the points that are generally charged. Form 1040ez more:label_form_201040ez more:taxes You must spread any additional points over the life of the mortgage. Form 1040ez more:label_form_201040ez more:taxes Mortgage ending early. Form 1040ez more:label_form_201040ez more:taxes   If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. Form 1040ez more:label_form_201040ez more:taxes However, if you refinance the mortgage with the same lender, you cannot deduct any remaining balance of spread points. Form 1040ez more:label_form_201040ez more:taxes Instead, deduct the remaining balance over the term of the new loan. Form 1040ez more:label_form_201040ez more:taxes   A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes Dan paid $3,000 in points in 2002 that he had to spread out over the 15-year life of the mortgage. Form 1040ez more:label_form_201040ez more:taxes He deducts $200 points per year. Form 1040ez more:label_form_201040ez more:taxes Through 2012, Dan has deducted $2,200 of the points. Form 1040ez more:label_form_201040ez more:taxes Dan prepaid his mortgage in full in 2013. Form 1040ez more:label_form_201040ez more:taxes He can deduct the remaining $800 of points in 2013. Form 1040ez more:label_form_201040ez more:taxes Limits on deduction. Form 1040ez more:label_form_201040ez more:taxes   You cannot fully deduct points paid on a mortgage that exceeds the limits discussed in Part II . Form 1040ez more:label_form_201040ez more:taxes See the Table 1 Instructions for line 10. Form 1040ez more:label_form_201040ez more:taxes Form 1098. Form 1040ez more:label_form_201040ez more:taxes    The mortgage interest statement you receive should show not only the total interest paid during the year, but also your deductible points paid during the year. Form 1040ez more:label_form_201040ez more:taxes See Form 1098, Mortgage Interest Statement , later. Form 1040ez more:label_form_201040ez more:taxes Mortgage Insurance Premiums You can treat amounts you paid during 2013 for qualified mortgage insurance as home mortgage interest. Form 1040ez more:label_form_201040ez more:taxes The insurance must be in connection with home acquisition debt, and the insurance contract must have been issued after 2006. Form 1040ez more:label_form_201040ez more:taxes Qualified mortgage insurance. Form 1040ez more:label_form_201040ez more:taxes   Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). Form 1040ez more:label_form_201040ez more:taxes   Mortgage insurance provided by the Department of Veterans Affairs is commonly known as a funding fee. Form 1040ez more:label_form_201040ez more:taxes If provided by the Rural Housing Service, it is commonly known as a guarantee fee. Form 1040ez more:label_form_201040ez more:taxes The funding fee and guarantee fee can either be included in the amount of the loan or paid in full at the time of closing. Form 1040ez more:label_form_201040ez more:taxes These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013. Form 1040ez more:label_form_201040ez more:taxes Contact the mortgage insurance issuer to determine the deductible amount if it is not reported in box 4 of Form 1098. Form 1040ez more:label_form_201040ez more:taxes Special rules for prepaid mortgage insurance. Form 1040ez more:label_form_201040ez more:taxes   Generally, if you paid premiums for qualified mortgage insurance that are properly allocable to periods after the close of the tax year, such premiums are treated as paid in the period to which they are allocated. Form 1040ez more:label_form_201040ez more:taxes You must allocate the premiums over the shorter of the stated term of the mortgage or 84 months, beginning with the month the insurance was obtained. Form 1040ez more:label_form_201040ez more:taxes No deduction is allowed for the unamortized balance if the mortgage is satisfied before its term. Form 1040ez more:label_form_201040ez more:taxes This paragraph does not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes Ryan purchased a home in May of 2012 and financed the home with a 15-year mortgage. Form 1040ez more:label_form_201040ez more:taxes Ryan also prepaid all of the $9,240 in private mortgage insurance required at the time of closing in May. Form 1040ez more:label_form_201040ez more:taxes Since the $9,240 in private mortgage insurance is allocable to periods after 2012, Ryan must allocate the $9,240 over the shorter of the life of the mortgage or 84 months. Form 1040ez more:label_form_201040ez more:taxes Ryan's adjusted gross income (AGI) for 2012 is $76,000. Form 1040ez more:label_form_201040ez more:taxes Ryan can deduct $880 ($9,240 ÷ 84 x 8 months) for qualified mortgage insurance premiums in 2012. Form 1040ez more:label_form_201040ez more:taxes For 2013, Ryan can deduct $1,320 ($9,240 ÷ 84 x 12 months) if his AGI is $100,000 or less. Form 1040ez more:label_form_201040ez more:taxes In this example, the mortgage insurance premiums are allocated over 84 months, which is shorter than the life of the mortgage of 15 years (180 months). Form 1040ez more:label_form_201040ez more:taxes Limit on deduction. Form 1040ez more:label_form_201040ez more:taxes   If your adjusted gross income on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated. Form 1040ez more:label_form_201040ez more:taxes See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. Form 1040ez more:label_form_201040ez more:taxes If your adjusted gross income is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Form 1040ez more:label_form_201040ez more:taxes Form 1098. Form 1040ez more:label_form_201040ez more:taxes   The mortgage interest statement you receive should show not only the total interest paid during the year, but also your mortgage insurance premiums paid during the year, which may qualify to be treated as deductible mortgage interest. Form 1040ez more:label_form_201040ez more:taxes See Form 1098, Mortgage Interest Statement, next. Form 1040ez more:label_form_201040ez more:taxes Form 1098, Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement from the mortgage holder. Form 1040ez more:label_form_201040ez more:taxes You will receive the statement if you pay interest to a person (including a financial institution or cooperative housing corporation) in the course of that person's trade or business. Form 1040ez more:label_form_201040ez more:taxes A governmental unit is a person for purposes of furnishing the statement. Form 1040ez more:label_form_201040ez more:taxes The statement for each year should be sent to you by January 31 of the following year. Form 1040ez more:label_form_201040ez more:taxes A copy of this form will also be sent to the IRS. Form 1040ez more:label_form_201040ez more:taxes The statement will show the total interest you paid during the year, any mortgage insurance premiums you paid, and if you purchased a main home during the year, it also will show the deductible points paid during the year, including seller-paid points. Form 1040ez more:label_form_201040ez more:taxes However, it should not show any interest that was paid for you by a government agency. Form 1040ez more:label_form_201040ez more:taxes As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. Form 1040ez more:label_form_201040ez more:taxes However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan. Form 1040ez more:label_form_201040ez more:taxes See the earlier discussion of Points to determine whether you can deduct points not shown on Form 1098. Form 1040ez more:label_form_201040ez more:taxes Prepaid interest on Form 1098. Form 1040ez more:label_form_201040ez more:taxes   If you prepaid interest in 2013 that accrued in full by January 15, 2014, this prepaid interest may be included in box 1 of Form 1098. Form 1040ez more:label_form_201040ez more:taxes However, you cannot deduct the prepaid amount for January 2014 in 2013. Form 1040ez more:label_form_201040ez more:taxes (See Prepaid interest , earlier. Form 1040ez more:label_form_201040ez more:taxes ) You will have to figure the interest that accrued for 2014 and subtract it from the amount in box 1. Form 1040ez more:label_form_201040ez more:taxes You will include the interest for January 2014 with other interest you pay for 2014. Form 1040ez more:label_form_201040ez more:taxes Refunded interest. Form 1040ez more:label_form_201040ez more:taxes   If you received a refund of mortgage interest you overpaid in an earlier year, you generally will receive a Form 1098 showing the refund in box 3. Form 1040ez more:label_form_201040ez more:taxes See Refunds of interest , earlier. Form 1040ez more:label_form_201040ez more:taxes Mortgage insurance premiums. Form 1040ez more:label_form_201040ez more:taxes   The amount of mortgage insurance premiums you paid during 2013 may be shown in Box 4 of Form 1098. Form 1040ez more:label_form_201040ez more:taxes See Mortgage Insurance Premiums , earlier. Form 1040ez more:label_form_201040ez more:taxes How To Report Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. Form 1040ez more:label_form_201040ez more:taxes If you paid more deductible interest to the financial institution than the amount shown on Form 1098, show the larger deductible amount on line 10. Form 1040ez more:label_form_201040ez more:taxes Attach a statement explaining the difference and print “See attached” next to line 10. Form 1040ez more:label_form_201040ez more:taxes Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. Form 1040ez more:label_form_201040ez more:taxes If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and taxpayer identification number (TIN) on the dotted lines next to line 11. Form 1040ez more:label_form_201040ez more:taxes The seller must give you this number and you must give the seller your TIN. Form 1040ez more:label_form_201040ez more:taxes A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Form 1040ez more:label_form_201040ez more:taxes Failure to meet any of these requirements may result in a $50 penalty for each failure. Form 1040ez more:label_form_201040ez more:taxes The TIN can be either a social security number, an individual taxpayer identification number (issued by the Internal Revenue Service), or an employer identification number. Form 1040ez more:label_form_201040ez more:taxes If you can take a deduction for points that were not reported to you on Form 1098, deduct those points on Schedule A (Form 1040), line 12. Form 1040ez more:label_form_201040ez more:taxes Deduct mortgage insurance premiums on Schedule A (Form 1040), line 13. Form 1040ez more:label_form_201040ez more:taxes More than one borrower. Form 1040ez more:label_form_201040ez more:taxes   If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. Form 1040ez more:label_form_201040ez more:taxes Show how much of the interest each of you paid, and give the name and address of the person who received the form. Form 1040ez more:label_form_201040ez more:taxes Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. Form 1040ez more:label_form_201040ez more:taxes Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13. Form 1040ez more:label_form_201040ez more:taxes   Similarly, if you are the payer of record on a mortgage on which there are other borrowers entitled to a deduction for the interest shown on the Form 1098 you received, deduct only your share of the interest on Schedule A (Form 1040), line 10. Form 1040ez more:label_form_201040ez more:taxes Let each of the other borrowers know what his or her share is. Form 1040ez more:label_form_201040ez more:taxes Mortgage proceeds used for business or investment. Form 1040ez more:label_form_201040ez more:taxes   If your home mortgage interest deduction is limited under the rules explained in Part II , but all or part of the mortgage proceeds were used for business, investment, or other deductible activities, see Table 2 near the end of this publication. Form 1040ez more:label_form_201040ez more:taxes It shows where to deduct the part of your excess interest that is for those activities. Form 1040ez more:label_form_201040ez more:taxes The Table 1 Instructions for line 13 in Part II explain how to divide the excess interest among the activities for which the mortgage proceeds were used. Form 1040ez more:label_form_201040ez more:taxes Special Rule for Tenant-Stockholders in Cooperative Housing Corporations A qualified home includes stock in a cooperative housing corporation owned by a tenant-stockholder. Form 1040ez more:label_form_201040ez more:taxes This applies only if the tenant-stockholder is entitled to live in the house or apartment because of owning stock in the cooperative. Form 1040ez more:label_form_201040ez more:taxes Cooperative housing corporation. Form 1040ez more:label_form_201040ez more:taxes   This is a corporation that meets all of the following conditions. Form 1040ez more:label_form_201040ez more:taxes Has only one class of stock outstanding, Has no stockholders other than those who own the stock that can live in a house, apartment, or house trailer owned or leased by the corporation, Has no stockholders who can receive any distribution out of capital other than on a liquidation of the corporation, and Meets at least one of the following requirements. Form 1040ez more:label_form_201040ez more:taxes Receives at least 80% of its gross income for the year in which the mortgage interest is paid or incurred from tenant-stockholders. Form 1040ez more:label_form_201040ez more:taxes For this purpose, gross income is all income received during the entire year, including amounts received before the corporation changed to cooperative ownership. Form 1040ez more:label_form_201040ez more:taxes At all times during the year, at least 80% of the total square footage of the corporation's property is used or available for use by the tenant-stockholders for residential or residential-related use. Form 1040ez more:label_form_201040ez more:taxes At least 90% of the corporation's expenditures paid or incurred during the year are for the acquisition, construction, management, maintenance, or care of corporate property for the benefit of the tenant-stockholders. Form 1040ez more:label_form_201040ez more:taxes Stock used to secure debt. Form 1040ez more:label_form_201040ez more:taxes   In some cases, you cannot use your cooperative housing stock to secure a debt because of either: Restrictions under local or state law, or Restrictions in the cooperative agreement (other than restrictions in which the main purpose is to permit the tenant- stockholder to treat unsecured debt as secured debt). Form 1040ez more:label_form_201040ez more:taxes However, you can treat a debt as secured by the stock to the extent that the proceeds are used to buy the stock under the allocation of interest rules. Form 1040ez more:label_form_201040ez more:taxes See chapter 4 of Publication 535 for details on these rules. Form 1040ez more:label_form_201040ez more:taxes Figuring deductible home mortgage interest. Form 1040ez more:label_form_201040ez more:taxes   Generally, if you are a tenant-stockholder, you can deduct payments you make for your share of the interest paid or incurred by the cooperative. Form 1040ez more:label_form_201040ez more:taxes The interest must be on a debt to buy, build, change, improve, or maintain the cooperative's housing, or on a debt to buy the land. Form 1040ez more:label_form_201040ez more:taxes   Figure your share of this interest by multiplying the total by the following fraction. Form 1040ez more:label_form_201040ez more:taxes      Your shares of stock in the cooperative   The total shares of stock in the cooperative Limits on deduction. Form 1040ez more:label_form_201040ez more:taxes   To figure how the limits discussed in Part II apply to you, treat your share of the cooperative's debt as debt incurred by you. Form 1040ez more:label_form_201040ez more:taxes The cooperative should determine your share of its grandfathered debt, its home acquisition debt, and its home equity debt. Form 1040ez more:label_form_201040ez more:taxes (Your share of each of these types of debt is equal to the average balance of each debt multiplied by the fraction just given. Form 1040ez more:label_form_201040ez more:taxes ) After your share of the average balance of each type of debt is determined, you include it with the average balance of that type of debt secured by your stock. Form 1040ez more:label_form_201040ez more:taxes Form 1098. Form 1040ez more:label_form_201040ez more:taxes    The cooperative should give you a Form 1098 showing your share of the interest. Form 1040ez more:label_form_201040ez more:taxes Use the rules in this publication to determine your deductible mortgage interest. Form 1040ez more:label_form_201040ez more:taxes Part II. Form 1040ez more:label_form_201040ez more:taxes Limits on Home Mortgage Interest Deduction This part of the publication discusses the limits on deductible home mortgage interest. Form 1040ez more:label_form_201040ez more:taxes These limits apply to your home mortgage interest expense if you have a home mortgage that does not fit into any of the three categories listed at the beginning of Part I under Fully deductible interest . Form 1040ez more:label_form_201040ez more:taxes Your home mortgage interest deduction is limited to the interest on the part of your home mortgage debt that is not more than your qualified loan limit. Form 1040ez more:label_form_201040ez more:taxes This is the part of your home mortgage debt that is grandfathered debt or that is not more than the limits for home acquisition debt and home equity debt. Form 1040ez more:label_form_201040ez more:taxes Table 1 can help you figure your qualified loan limit and your deductible home mortgage interest. Form 1040ez more:label_form_201040ez more:taxes Home Acquisition Debt Home acquisition debt is a mortgage you took out after October 13, 1987, to buy, build, or substantially improve a qualified home (your main or second home). Form 1040ez more:label_form_201040ez more:taxes It also must be secured by that home. Form 1040ez more:label_form_201040ez more:taxes If the amount of your mortgage is more than the cost of the home plus the cost of any substantial improvements, only the debt that is not more than the cost of the home plus improvements qualifies as home acquisition debt. Form 1040ez more:label_form_201040ez more:taxes The additional debt may qualify as home equity debt (discussed later). Form 1040ez more:label_form_201040ez more:taxes Home acquisition debt limit. Form 1040ez more:label_form_201040ez more:taxes   The total amount you can treat as home acquisition debt at any time on your main home and second home cannot be more than $1 million ($500,000 if married filing separately). Form 1040ez more:label_form_201040ez more:taxes This limit is reduced (but not below zero) by the amount of your grandfathered debt (discussed later). Form 1040ez more:label_form_201040ez more:taxes Debt over this limit may qualify as home equity debt (also discussed later). Form 1040ez more:label_form_201040ez more:taxes Refinanced home acquisition debt. Form 1040ez more:label_form_201040ez more:taxes   Any secured debt you use to refinance home acquisition debt is treated as home acquisition debt. Form 1040ez more:label_form_201040ez more:taxes However, the new debt will qualify as home acquisition debt only up to the amount of the balance of the old mortgage principal just before the refinancing. Form 1040ez more:label_form_201040ez more:taxes Any additional debt not used to buy, build, or substantially improve a qualified home is not home acquisition debt, but may qualify as home equity debt (discussed later). Form 1040ez more:label_form_201040ez more:taxes Mortgage that qualifies later. Form 1040ez more:label_form_201040ez more:taxes   A mortgage that does not qualify as home acquisition debt because it does not meet all the requirements may qualify at a later time. Form 1040ez more:label_form_201040ez more:taxes For example, a debt that you use to buy your home may not qualify as home acquisition debt because it is not secured by the home. Form 1040ez more:label_form_201040ez more:taxes However, if the debt is later secured by the home, it may qualify as home acquisition debt after that time. Form 1040ez more:label_form_201040ez more:taxes Similarly, a debt that you use to buy property may not qualify because the property is not a qualified home. Form 1040ez more:label_form_201040ez more:taxes However, if the property later becomes a qualified home, the debt may qualify after that time. Form 1040ez more:label_form_201040ez more:taxes Mortgage treated as used to buy, build, or improve home. Form 1040ez more:label_form_201040ez more:taxes   A mortgage secured by a qualified home may be treated as home acquisition debt, even if you do not actually use the proceeds to buy, build, or substantially improve the home. Form 1040ez more:label_form_201040ez more:taxes This applies in the following situations. Form 1040ez more:label_form_201040ez more:taxes You buy your home within 90 days before or after the date you take out the mortgage. Form 1040ez more:label_form_201040ez more:taxes The home acquisition debt is limited to the home's cost, plus the cost of any substantial improvements within the limit described below in (2) or (3). Form 1040ez more:label_form_201040ez more:taxes (See Example 1 later. Form 1040ez more:label_form_201040ez more:taxes ) You build or improve your home and take out the mortgage before the work is completed. Form 1040ez more:label_form_201040ez more:taxes The home acquisition debt is limited to the amount of the expenses incurred within 24 months before the date of the mortgage. Form 1040ez more:label_form_201040ez more:taxes You build or improve your home and take out the mortgage within 90 days after the work is completed. Form 1040ez more:label_form_201040ez more:taxes The home acquisition debt is limited to the amount of the expenses incurred within the period beginning 24 months before the work is completed and ending on the date of the mortgage. Form 1040ez more:label_form_201040ez more:taxes (See Example 2 later. Form 1040ez more:label_form_201040ez more:taxes ) Example 1. Form 1040ez more:label_form_201040ez more:taxes You bought your main home on June 3 for $175,000. Form 1040ez more:label_form_201040ez more:taxes You paid for the home with cash you got from the sale of your old home. Form 1040ez more:label_form_201040ez more:taxes On July 15, you took out a mortgage of $150,000 secured by your main home. Form 1040ez more:label_form_201040ez more:taxes You used the $150,000 to invest in stocks. Form 1040ez more:label_form_201040ez more:taxes You can treat the mortgage as taken out to buy your home because you bought the home within 90 days before you took out the mortgage. Form 1040ez more:label_form_201040ez more:taxes The entire mortgage qualifies as home acquisition debt because it was not more than the home's cost. Form 1040ez more:label_form_201040ez more:taxes Example 2. Form 1040ez more:label_form_201040ez more:taxes On January 31, John began building a home on the lot that he owned. Form 1040ez more:label_form_201040ez more:taxes He used $45,000 of his personal funds to build the home. Form 1040ez more:label_form_201040ez more:taxes The home was completed on October 31. Form 1040ez more:label_form_201040ez more:taxes On November 21, John took out a $36,000 mortgage that was secured by the home. Form 1040ez more:label_form_201040ez more:taxes The mortgage can be treated as used to build the home because it was taken out within 90 days after the home was completed. Form 1040ez more:label_form_201040ez more:taxes The entire mortgage qualifies as home acquisition debt because it was not more than the expenses incurred within the period beginning 24 months before the home was completed. Form 1040ez more:label_form_201040ez more:taxes This is illustrated by Figure C. Form 1040ez more:label_form_201040ez more:taxes   Please click here for the text description of the image. Form 1040ez more:label_form_201040ez more:taxes Figure C. Form 1040ez more:label_form_201040ez more:taxes John's example Date of the mortgage. Form 1040ez more:label_form_201040ez more:taxes   The date you take out your mortgage is the day the loan proceeds are disbursed. Form 1040ez more:label_form_201040ez more:taxes This is generally the closing date. Form 1040ez more:label_form_201040ez more:taxes You can treat the day you apply in writing for your mortgage as the date you take it out. Form 1040ez more:label_form_201040ez more:taxes However, this applies only if you receive the loan proceeds within a reasonable time (such as within 30 days) after your application is approved. Form 1040ez more:label_form_201040ez more:taxes If a timely application you make is rejected, a reasonable additional time will be allowed to make a new application. Form 1040ez more:label_form_201040ez more:taxes Cost of home or improvements. Form 1040ez more:label_form_201040ez more:taxes   To determine your cost, include amounts paid to acquire any interest in a qualified home or to substantially improve the home. Form 1040ez more:label_form_201040ez more:taxes   The cost of building or substantially improving a qualified home includes the costs to acquire real property and building materials, fees for architects and design plans, and required building permits. Form 1040ez more:label_form_201040ez more:taxes Substantial improvement. Form 1040ez more:label_form_201040ez more:taxes   An improvement is substantial if it: Adds to the value of your home, Prolongs your home's useful life, or Adapts your home to new uses. Form 1040ez more:label_form_201040ez more:taxes    Repairs that maintain your home in good condition, such as repainting your home, are not substantial improvements. Form 1040ez more:label_form_201040ez more:taxes However, if you paint your home as part of a renovation that substantially improves your qualified home, you can include the painting costs in the cost of the improvements. Form 1040ez more:label_form_201040ez more:taxes Acquiring an interest in a home because of a divorce. Form 1040ez more:label_form_201040ez more:taxes   If you incur debt to acquire the interest of a spouse or former spouse in a home, because of a divorce or legal separation, you can treat that debt as home acquisition debt. Form 1040ez more:label_form_201040ez more:taxes Part of home not a qualified home. Form 1040ez more:label_form_201040ez more:taxes    To figure your home acquisition debt, you must divide the cost of your home and improvements between the part of your home that is a qualified home and any part that is not a qualified home. Form 1040ez more:label_form_201040ez more:taxes See Divided use of your home under Qualified Home in Part I. Form 1040ez more:label_form_201040ez more:taxes Home Equity Debt If you took out a loan for reasons other than to buy, build, or substantially improve your home, it may qualify as home equity debt. Form 1040ez more:label_form_201040ez more:taxes In addition, debt you incurred to buy, build, or substantially improve your home, to the extent it is more than the home acquisition debt limit (discussed earlier), may qualify as home equity debt. Form 1040ez more:label_form_201040ez more:taxes Home equity debt is a mortgage you took out after October 13, 1987, that: Does not qualify as home acquisition debt or as grandfathered debt, and Is secured by your qualified home. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes You bought your home for cash 10 years ago. Form 1040ez more:label_form_201040ez more:taxes You did not have a mortgage on your home until last year, when you took out a $50,000 loan, secured by your home, to pay for your daughter's college tuition and your father's medical bills. Form 1040ez more:label_form_201040ez more:taxes This loan is home equity debt. Form 1040ez more:label_form_201040ez more:taxes Home equity debt limit. Form 1040ez more:label_form_201040ez more:taxes   There is a limit on the amount of debt that can be treated as home equity debt. Form 1040ez more:label_form_201040ez more:taxes The total home equity debt on your main home and second home is limited to the smaller of: $100,000 ($50,000 if married filing separately), or The total of each home's fair market value (FMV) reduced (but not below zero) by the amount of its home acquisition debt and grandfathered debt. Form 1040ez more:label_form_201040ez more:taxes Determine the FMV and the outstanding home acquisition and grandfathered debt for each home on the date that the last debt was secured by the home. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes You own one home that you bought in 2000. Form 1040ez more:label_form_201040ez more:taxes Its FMV now is $110,000, and the current balance on your original mortgage (home acquisition debt) is $95,000. Form 1040ez more:label_form_201040ez more:taxes Bank M offers you a home mortgage loan of 125% of the FMV of the home less any outstanding mortgages or other liens. Form 1040ez more:label_form_201040ez more:taxes To consolidate some of your other debts, you take out a $42,500 home mortgage loan [(125% × $110,000) − $95,000] with Bank M. Form 1040ez more:label_form_201040ez more:taxes Your home equity debt is limited to $15,000. Form 1040ez more:label_form_201040ez more:taxes This is the smaller of: $100,000, the maximum limit, or $15,000, the amount that the FMV of $110,000 exceeds the amount of home acquisition debt of $95,000. Form 1040ez more:label_form_201040ez more:taxes Debt higher than limit. Form 1040ez more:label_form_201040ez more:taxes   Interest on amounts over the home equity debt limit (such as the interest on $27,500 [$42,500 − $15,000] in the preceding example) generally is treated as personal interest and is not deductible. Form 1040ez more:label_form_201040ez more:taxes But if the proceeds of the loan were used for investment, business, or other deductible purposes, the interest may be deductible. Form 1040ez more:label_form_201040ez more:taxes If it is, see the Table 1 Instructions for line 13 for an explanation of how to allocate the excess interest. Form 1040ez more:label_form_201040ez more:taxes Part of home not a qualified home. Form 1040ez more:label_form_201040ez more:taxes   To figure the limit on your home equity debt, you must divide the FMV of your home between the part that is a qualified home and any part that is not a qualified home. Form 1040ez more:label_form_201040ez more:taxes See Divided use of your home under Qualified Home in Part I. Form 1040ez more:label_form_201040ez more:taxes Fair market value (FMV). Form 1040ez more:label_form_201040ez more:taxes    This is the price at which the home would change hands between you and a buyer, neither having to sell or buy, and both having reasonable knowledge of all relevant facts. Form 1040ez more:label_form_201040ez more:taxes Sales of similar homes in your area, on about the same date your last debt was secured by the home, may be helpful in figuring the FMV. Form 1040ez more:label_form_201040ez more:taxes Grandfathered Debt If you took out a mortgage on your home before October 14, 1987, or you refinanced such a mortgage, it may qualify as grandfathered debt. Form 1040ez more:label_form_201040ez more:taxes To qualify, it must have been secured by your qualified home on October 13, 1987, and at all times after that date. Form 1040ez more:label_form_201040ez more:taxes How you used the proceeds does not matter. Form 1040ez more:label_form_201040ez more:taxes Grandfathered debt is not limited. Form 1040ez more:label_form_201040ez more:taxes All of the interest you paid on grandfathered debt is fully deductible home mortgage interest. Form 1040ez more:label_form_201040ez more:taxes However, the amount of your grandfathered debt reduces the $1 million limit for home acquisition debt and the limit based on your home's fair market value for home equity debt. Form 1040ez more:label_form_201040ez more:taxes Refinanced grandfathered debt. Form 1040ez more:label_form_201040ez more:taxes   If you refinanced grandfathered debt after October 13, 1987, for an amount that was not more than the mortgage principal left on the debt, then you still treat it as grandfathered debt. Form 1040ez more:label_form_201040ez more:taxes To the extent the new debt is more than that mortgage principal, it is treated as home acquisition or home equity debt, and the mortgage is a mixed-use mortgage (discussed later under Average Mortgage Balance in the Table 1 instructions). Form 1040ez more:label_form_201040ez more:taxes The debt must be secured by the qualified home. Form 1040ez more:label_form_201040ez more:taxes   You treat grandfathered debt that was refinanced after October 13, 1987, as grandfathered debt only for the term left on the debt that was refinanced. Form 1040ez more:label_form_201040ez more:taxes After that, you treat it as home acquisition debt or home equity debt, depending on how you used the proceeds. Form 1040ez more:label_form_201040ez more:taxes Exception. Form 1040ez more:label_form_201040ez more:taxes   If the debt before refinancing was like a balloon note (the principal on the debt was not amortized over the term of the debt), then you treat the refinanced debt as grandfathered debt for the term of the first refinancing. Form 1040ez more:label_form_201040ez more:taxes This term cannot be more than 30 years. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes Chester took out a $200,000 first mortgage on his home in 1986. Form 1040ez more:label_form_201040ez more:taxes The mortgage was a five-year balloon note and the entire balance on the note was due in 1991. Form 1040ez more:label_form_201040ez more:taxes Chester refinanced the debt in 1991 with a new 20-year mortgage. Form 1040ez more:label_form_201040ez more:taxes The refinanced debt is treated as grandfathered debt for its entire term (20 years). Form 1040ez more:label_form_201040ez more:taxes Line-of-credit mortgage. Form 1040ez more:label_form_201040ez more:taxes    If you had a line-of-credit mortgage on October 13, 1987, and borrowed additional amounts against it after that date, then the additional amounts are either home acquisition debt or home equity debt depending on how you used the proceeds. Form 1040ez more:label_form_201040ez more:taxes The balance on the mortgage before you borrowed the additional amounts is grandfathered debt. Form 1040ez more:label_form_201040ez more:taxes The newly borrowed amounts are not grandfathered debt because the funds were borrowed after October 13, 1987. Form 1040ez more:label_form_201040ez more:taxes See Average Mortgage Balance in the Table 1 Instructions that follow. Form 1040ez more:label_form_201040ez more:taxes Table 1 Instructions Unless you are subject to the overall limit on itemized deductions, you can deduct all of the interest you paid during the year on mortgages secured by your main home or second home in either of the following two situations. Form 1040ez more:label_form_201040ez more:taxes All the mortgages are grandfathered debt. Form 1040ez more:label_form_201040ez more:taxes The total of the mortgage balances for the entire year is within the limits discussed earlier under Home Acquisition Debt and Home Equity Debt . Form 1040ez more:label_form_201040ez more:taxes In either of those cases, you do not need Table 1. Form 1040ez more:label_form_201040ez more:taxes Otherwise, you can use Table 1 to determine your qualified loan limit and deductible home mortgage interest. Form 1040ez more:label_form_201040ez more:taxes Fill out only one Table 1 for both your main and second home regardless of how many mortgages you have. Form 1040ez more:label_form_201040ez more:taxes Table 1. Form 1040ez more:label_form_201040ez more:taxes Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. Form 1040ez more:label_form_201040ez more:taxes Part I Qualified Loan Limit 1. Form 1040ez more:label_form_201040ez more:taxes Enter the average balance of all your grandfathered debt. Form 1040ez more:label_form_201040ez more:taxes See line 1 instructions 1. Form 1040ez more:label_form_201040ez more:taxes   2. Form 1040ez more:label_form_201040ez more:taxes Enter the average balance of all your home acquisition debt. Form 1040ez more:label_form_201040ez more:taxes See line 2 instructions 2. Form 1040ez more:label_form_201040ez more:taxes   3. Form 1040ez more:label_form_201040ez more:taxes Enter $1,000,000 ($500,000 if married filing separately) 3. Form 1040ez more:label_form_201040ez more:taxes   4. Form 1040ez more:label_form_201040ez more:taxes Enter the larger of the amount on line 1 or the amount on line 3 4. Form 1040ez more:label_form_201040ez more:taxes   5. Form 1040ez more:label_form_201040ez more:taxes Add the amounts on lines 1 and 2. Form 1040ez more:label_form_201040ez more:taxes Enter the total here 5. Form 1040ez more:label_form_201040ez more:taxes   6. Form 1040ez more:label_form_201040ez more:taxes Enter the smaller of the amount on line 4 or the amount on line 5 6. Form 1040ez more:label_form_201040ez more:taxes   7. Form 1040ez more:label_form_201040ez more:taxes If you have home equity debt, enter the smaller of $100,000 ($50,000 if married filing separately) or your limited amount. Form 1040ez more:label_form_201040ez more:taxes See the line 7 instructions for the limit which may apply to you. Form 1040ez more:label_form_201040ez more:taxes 7. Form 1040ez more:label_form_201040ez more:taxes   8. Form 1040ez more:label_form_201040ez more:taxes Add the amounts on lines 6 and 7. Form 1040ez more:label_form_201040ez more:taxes Enter the total. Form 1040ez more:label_form_201040ez more:taxes This is your qualified loan limit. Form 1040ez more:label_form_201040ez more:taxes 8. Form 1040ez more:label_form_201040ez more:taxes   Part II Deductible Home Mortgage Interest 9. Form 1040ez more:label_form_201040ez more:taxes Enter the total of the average balances of all mortgages on all qualified homes. Form 1040ez more:label_form_201040ez more:taxes  See line 9 instructions 9. Form 1040ez more:label_form_201040ez more:taxes     If line 8 is less than line 9, go on to line 10. Form 1040ez more:label_form_201040ez more:taxes If line 8 is equal to or more than line 9, stop here. Form 1040ez more:label_form_201040ez more:taxes All of your interest on all the mortgages included on line 9 is deductible as home mortgage interest on Schedule A (Form 1040). Form 1040ez more:label_form_201040ez more:taxes     10. Form 1040ez more:label_form_201040ez more:taxes Enter the total amount of interest that you paid. Form 1040ez more:label_form_201040ez more:taxes See line 10 instructions 10. Form 1040ez more:label_form_201040ez more:taxes   11. Form 1040ez more:label_form_201040ez more:taxes Divide the amount on line 8 by the amount on line 9. Form 1040ez more:label_form_201040ez more:taxes Enter the result as a decimal amount (rounded to three places) 11. Form 1040ez more:label_form_201040ez more:taxes × . Form 1040ez more:label_form_201040ez more:taxes 12. Form 1040ez more:label_form_201040ez more:taxes Multiply the amount on line 10 by the decimal amount on line 11. Form 1040ez more:label_form_201040ez more:taxes Enter the result. Form 1040ez more:label_form_201040ez more:taxes This is your deductible home mortgage interest. Form 1040ez more:label_form_201040ez more:taxes Enter this amount on Schedule A (Form 1040) 12. Form 1040ez more:label_form_201040ez more:taxes   13. Form 1040ez more:label_form_201040ez more:taxes Subtract the amount on line 12 from the amount on line 10. Form 1040ez more:label_form_201040ez more:taxes Enter the result. Form 1040ez more:label_form_201040ez more:taxes This is not home mortgage interest. Form 1040ez more:label_form_201040ez more:taxes See line 13 instructions 13. Form 1040ez more:label_form_201040ez more:taxes   Home equity debt only. Form 1040ez more:label_form_201040ez more:taxes   If all of your mortgages are home equity debt, do not fill in lines 1 through 5. Form 1040ez more:label_form_201040ez more:taxes Enter zero on line 6 and complete the rest of Table 1. Form 1040ez more:label_form_201040ez more:taxes Average Mortgage Balance You have to figure the average balance of each mortgage to determine your qualified loan limit. Form 1040ez more:label_form_201040ez more:taxes You need these amounts to complete lines 1, 2, and 9 of Table 1. Form 1040ez more:label_form_201040ez more:taxes You can use the highest mortgage balances during the year, but you may benefit most by using the average balances. Form 1040ez more:label_form_201040ez more:taxes The following are methods you can use to figure your average mortgage balances. Form 1040ez more:label_form_201040ez more:taxes However, if a mortgage has more than one category of debt, see Mixed-use mortgages , later, in this section. Form 1040ez more:label_form_201040ez more:taxes Average of first and last balance method. Form 1040ez more:label_form_201040ez more:taxes   You can use this method if all the following apply. Form 1040ez more:label_form_201040ez more:taxes You did not borrow any new amounts on the mortgage during the year. Form 1040ez more:label_form_201040ez more:taxes (This does not include borrowing the original mortgage amount. Form 1040ez more:label_form_201040ez more:taxes ) You did not prepay more than one month's principal during the year. Form 1040ez more:label_form_201040ez more:taxes (This includes prepayment by refinancing your home or by applying proceeds from its sale. Form 1040ez more:label_form_201040ez more:taxes ) You had to make level payments at fixed equal intervals on at least a semi-annual basis. Form 1040ez more:label_form_201040ez more:taxes You treat your payments as level even if they were adjusted from time to time because of changes in the interest rate. Form 1040ez more:label_form_201040ez more:taxes    To figure your average balance, complete the following worksheet. Form 1040ez more:label_form_201040ez more:taxes    1. Form 1040ez more:label_form_201040ez more:taxes Enter the balance as of the first day of the year that the mortgage was secured by your qualified home during the year (generally January 1)   2. Form 1040ez more:label_form_201040ez more:taxes Enter the balance as of the last day of the year that the mortgage was secured by your qualified home during the year (generally December 31)   3. Form 1040ez more:label_form_201040ez more:taxes Add amounts on lines 1 and 2   4. Form 1040ez more:label_form_201040ez more:taxes Divide the amount on line 3 by 2. Form 1040ez more:label_form_201040ez more:taxes Enter the result   Interest paid divided by interest rate method. Form 1040ez more:label_form_201040ez more:taxes   You can use this method if at all times in 2013 the mortgage was secured by your qualified home and the interest was paid at least monthly. Form 1040ez more:label_form_201040ez more:taxes    Complete the following worksheet to figure your average balance. Form 1040ez more:label_form_201040ez more:taxes    1. Form 1040ez more:label_form_201040ez more:taxes Enter the interest paid in 2013. Form 1040ez more:label_form_201040ez more:taxes Do not include points, mortgage insurance premiums, or any interest paid in 2013 that is for a year after 2013. Form 1040ez more:label_form_201040ez more:taxes However, do include interest that is for 2013 but was paid in an earlier year   2. Form 1040ez more:label_form_201040ez more:taxes Enter the annual interest rate on the mortgage. Form 1040ez more:label_form_201040ez more:taxes If the interest rate varied in 2013, use the lowest rate for the year   3. Form 1040ez more:label_form_201040ez more:taxes Divide the amount on line 1 by the amount on line 2. Form 1040ez more:label_form_201040ez more:taxes Enter the result   Example. Form 1040ez more:label_form_201040ez more:taxes Mr. Form 1040ez more:label_form_201040ez more:taxes Blue had a line of credit secured by his main home all year. Form 1040ez more:label_form_201040ez more:taxes He paid interest of $2,500 on this loan. Form 1040ez more:label_form_201040ez more:taxes The interest rate on the loan was 9% (. Form 1040ez more:label_form_201040ez more:taxes 09) all year. Form 1040ez more:label_form_201040ez more:taxes His average balance using this method is $27,778, figured as follows. Form 1040ez more:label_form_201040ez more:taxes 1. Form 1040ez more:label_form_201040ez more:taxes Enter the interest paid in 2013. Form 1040ez more:label_form_201040ez more:taxes Do not include points, mortgage insurance premiums, or any interest paid in 2013 that is for a year after 2013. Form 1040ez more:label_form_201040ez more:taxes However, do include interest that is for 2013 but was paid in an earlier year $2,500 2. Form 1040ez more:label_form_201040ez more:taxes Enter the annual interest rate on the mortgage. Form 1040ez more:label_form_201040ez more:taxes If the interest rate varied in 2013, use the lowest rate for the year . Form 1040ez more:label_form_201040ez more:taxes 09 3. Form 1040ez more:label_form_201040ez more:taxes Divide the amount on line 1 by the amount on line 2. Form 1040ez more:label_form_201040ez more:taxes Enter the result $27,778 Statements provided by your lender. Form 1040ez more:label_form_201040ez more:taxes   If you receive monthly statements showing the closing balance or the average balance for the month, you can use either to figure your average balance for the year. Form 1040ez more:label_form_201040ez more:taxes You can treat the balance as zero for any month the mortgage was not secured by your qualified home. Form 1040ez more:label_form_201040ez more:taxes   For each mortgage, figure your average balance by adding your monthly closing or average balances and dividing that total by the number of months the home secured by that mortgage was a qualified home during the year. Form 1040ez more:label_form_201040ez more:taxes   If your lender can give you your average balance for the year, you can use that amount. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes Ms. Form 1040ez more:label_form_201040ez more:taxes Brown had a home equity loan secured by her main home all year. Form 1040ez more:label_form_201040ez more:taxes She received monthly statements showing her average balance for each month. Form 1040ez more:label_form_201040ez more:taxes She can figure her average balance for the year by adding her monthly average balances and dividing the total by 12. Form 1040ez more:label_form_201040ez more:taxes Mixed-use mortgages. Form 1040ez more:label_form_201040ez more:taxes   A mixed-use mortgage is a loan that consists of more than one of the three categories of debt (grandfathered debt, home acquisition debt, and home equity debt). Form 1040ez more:label_form_201040ez more:taxes For example, a mortgage you took out during the year is a mixed-use mortgage if you used its proceeds partly to refinance a mortgage that you took out in an earlier year to buy your home (home acquisition debt) and partly to buy a car (home equity debt). Form 1040ez more:label_form_201040ez more:taxes   Complete lines 1 and 2 of Table 1 by including the separate average balances of any grandfathered debt and home acquisition debt in your mixed-use mortgage. Form 1040ez more:label_form_201040ez more:taxes Do not use the methods described earlier in this section to figure the average balance of either category. Form 1040ez more:label_form_201040ez more:taxes Instead, for each category, use the following method. Form 1040ez more:label_form_201040ez more:taxes Figure the balance of that category of debt for each month. Form 1040ez more:label_form_201040ez more:taxes This is the amount of the loan proceeds allocated to that category, reduced by your principal payments on the mortgage previously applied to that category. Form 1040ez more:label_form_201040ez more:taxes Principal payments on a mixed-use mortgage are applied in full to each category of debt, until its balance is zero, in the following order: First, any home equity debt, Next, any grandfathered debt, and Finally, any home acquisition debt. Form 1040ez more:label_form_201040ez more:taxes Add together the monthly balances figured in (1). Form 1040ez more:label_form_201040ez more:taxes Divide the result in (2) by 12. Form 1040ez more:label_form_201040ez more:taxes   Complete line 9 of Table 1 by including the average balance of the entire mixed-use mortgage, figured under one of the methods described earlier in this section. Form 1040ez more:label_form_201040ez more:taxes Example 1. Form 1040ez more:label_form_201040ez more:taxes In 1986, Sharon took out a $1,400,000 mortgage to buy her main home (grandfathered debt). Form 1040ez more:label_form_201040ez more:taxes On March 2, 2013, when the home had a fair market value of $1,700,000 and she owed $1,100,000 on the mortgage, Sharon took out a second mortgage for $200,000. Form 1040ez more:label_form_201040ez more:taxes She used $180,000 of the proceeds to make substantial improvements to her home (home acquisition debt) and the remaining $20,000 to buy a car (home equity debt). Form 1040ez more:label_form_201040ez more:taxes Under the loan agreement, Sharon must make principal payments of $1,000 at the end of each month. Form 1040ez more:label_form_201040ez more:taxes During 2013, her principal payments on the second mortgage totaled $10,000. Form 1040ez more:label_form_201040ez more:taxes To complete Table 1, line 2, Sharon must figure a separate average balance for the part of her second mortgage that is home acquisition debt. Form 1040ez more:label_form_201040ez more:taxes The January and February balances were zero. Form 1040ez more:label_form_201040ez more:taxes The March through December balances were all $180,000, because none of her principal payments are applied to the home acquisition debt. Form 1040ez more:label_form_201040ez more:taxes (They are all applied to the home equity debt, reducing it to $10,000 [$20,000 − $10,000]. Form 1040ez more:label_form_201040ez more:taxes ) The monthly balances of the home acquisition debt total $1,800,000 ($180,000 × 10). Form 1040ez more:label_form_201040ez more:taxes Therefore, the average balance of the home acquisition debt for 2013 was $150,000 ($1,800,000 ÷ 12). Form 1040ez more:label_form_201040ez more:taxes Example 2. Form 1040ez more:label_form_201040ez more:taxes The facts are the same as in Example 1. Form 1040ez more:label_form_201040ez more:taxes In 2014, Sharon's January through October principal payments on her second mortgage are applied to the home equity debt, reducing it to zero. Form 1040ez more:label_form_201040ez more:taxes The balance of the home acquisition debt remains $180,000 for each of those months. Form 1040ez more:label_form_201040ez more:taxes Because her November and December principal payments are applied to the home acquisition debt, the November balance is $179,000 ($180,000 − $1,000) and the December balance is $178,000 ($180,000 − $2,000). Form 1040ez more:label_form_201040ez more:taxes The monthly balances total $2,157,000 [($180,000 × 10) + $179,000 + $178,000]. Form 1040ez more:label_form_201040ez more:taxes Therefore, the average balance of the home acquisition debt for 2014 is $179,750 ($2,157,000 ÷ 12). Form 1040ez more:label_form_201040ez more:taxes L