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Form 1040ez More:label_form_201040ez More:taxes

Form 1040ez more:label_form_201040ez more:taxes Publication 526 - Additional Material Prev  Up  Next   Home   More Online Publications
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Understanding your CP11 Notice

We made changes to your return because we believe there’s a miscalculation. You owe money on your taxes as a result of these changes.

Looking for information for CP11A Notice or CP11M Notice?

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the toll free number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

  • Read your notice carefully ― it will explain why you owe money on your taxes.
  • Pay the amount owed by the date on the notice's payment coupon.
  • Make payment arrangements if you can't pay the full amount you owe.
  • Contact us within 60 days of the date of your notice if you disagree with the change we made.
  • Correct the copy of your tax return that you kept for your records.

You may want to...


Answers to Common Questions

How can I find out what caused my tax return to change?
Please contact us at the number listed on your notice for specific information concerning your tax return.

What should I do if I disagree with the changes you made?
If you disagree, contact us at the toll free number listed on the top right corner of your notice.

If you contact us in writing within 60 days of the date of this notice, we'll reverse the change we made to your account. However, if you're unable to provide us additional information that justifies the reversal and we believe the reversal is in error, we'll forward your case for audit. This step gives you formal appeal rights, including the right to appeal our decision in court before you have to pay the additional tax. After we forward your case, the audit staff will contact you within five to six weeks to fully explain the audit process and your rights. If you don’t contact us within the 60-day period, you'll lose your right to appeal our decision before payment of tax.

If you don't contact us within 60 days, the change won’t be reversed and you must pay the additional tax. You may then file a claim for refund. You must submit the claim within three years of the date you filed the tax return, or within two years of the date of your last payment for this tax.

What happens if I can’t pay the full amount I owe?
You can arrange to make a payment plan with us if you can’t pay the full amount you owe.

Am I charged interest on the money I owe?
Not if you pay the full amount you owe by the date on the payment coupon. However interest accrues on the unpaid balance after that date.

Will I receive a penalty if I can't pay the full amount?
Yes, you will receive a late payment penalty. You can contact us at the number given on your notice if you're unable to pay the full amount shown in your specific notice because of circumstances beyond your control. Contact us by the due date of your payment and, depending on your situation, we may be able to remove the penalty.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Page Last Reviewed or Updated: 19-Feb-2014

The 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   Other Income Table of Contents Introduction Useful Items - You may want to see: Bartering Canceled DebtsInterest included in canceled debt. Form 1040ez more:label_form_201040ez more:taxes Exceptions Host or Hostess Life Insurance ProceedsSurviving spouse. Form 1040ez more:label_form_201040ez more:taxes Endowment Contract Proceeds Accelerated Death Benefits Public Safety Officer Killed in the Line of Duty Partnership Income S Corporation Income RecoveriesItemized Deduction Recoveries Rents from Personal Property RepaymentsMethod 1. Form 1040ez more:label_form_201040ez more:taxes Method 2. Form 1040ez more:label_form_201040ez more:taxes RoyaltiesDepletion. Form 1040ez more:label_form_201040ez more:taxes Coal and iron ore. Form 1040ez more:label_form_201040ez more:taxes Sale of property interest. Form 1040ez more:label_form_201040ez more:taxes Part of future production sold. Form 1040ez more:label_form_201040ez more:taxes Unemployment BenefitsTypes of unemployment compensation. Form 1040ez more:label_form_201040ez more:taxes Governmental program. Form 1040ez more:label_form_201040ez more:taxes Repayment of unemployment compensation. Form 1040ez more:label_form_201040ez more:taxes Tax withholding. Form 1040ez more:label_form_201040ez more:taxes Repayment of benefits. Form 1040ez more:label_form_201040ez more:taxes Welfare and Other Public Assistance Benefits Other IncomeEmotional distress. Form 1040ez more:label_form_201040ez more:taxes Deduction for costs involved in unlawful discrimination suits. Form 1040ez more:label_form_201040ez more:taxes Energy conservation measure. Form 1040ez more:label_form_201040ez more:taxes Dwelling unit. Form 1040ez more:label_form_201040ez more:taxes Current income required to be distributed. Form 1040ez more:label_form_201040ez more:taxes Current income not required to be distributed. Form 1040ez more:label_form_201040ez more:taxes How to report. Form 1040ez more:label_form_201040ez more:taxes Losses. Form 1040ez more:label_form_201040ez more:taxes Grantor trust. Form 1040ez more:label_form_201040ez more:taxes Nonemployee compensation. Form 1040ez more:label_form_201040ez more:taxes Corporate director. Form 1040ez more:label_form_201040ez more:taxes Personal representatives. Form 1040ez more:label_form_201040ez more:taxes Manager of trade or business for bankruptcy estate. Form 1040ez more:label_form_201040ez more:taxes Notary public. Form 1040ez more:label_form_201040ez more:taxes Election precinct official. Form 1040ez more:label_form_201040ez more:taxes Difficulty-of-care payments. Form 1040ez more:label_form_201040ez more:taxes Maintaining space in home. Form 1040ez more:label_form_201040ez more:taxes Reporting taxable payments. Form 1040ez more:label_form_201040ez more:taxes Lotteries and raffles. Form 1040ez more:label_form_201040ez more:taxes Form W-2G. Form 1040ez more:label_form_201040ez more:taxes Reporting winnings and recordkeeping. Form 1040ez more:label_form_201040ez more:taxes Inherited pension or IRA. Form 1040ez more:label_form_201040ez more:taxes Employee awards or bonuses. Form 1040ez more:label_form_201040ez more:taxes Pulitzer, Nobel, and similar prizes. Form 1040ez more:label_form_201040ez more:taxes Payment for services. Form 1040ez more:label_form_201040ez more:taxes VA payments. Form 1040ez more:label_form_201040ez more:taxes Prizes. Form 1040ez more:label_form_201040ez more:taxes Strike and lockout benefits. Form 1040ez more:label_form_201040ez more:taxes Introduction You must include on your return all items of income you receive in the form of money, property, and services unless the tax law states that you do not include them. Form 1040ez more:label_form_201040ez more:taxes Some items, however, are only partly excluded from income. Form 1040ez more:label_form_201040ez more:taxes This chapter discusses many kinds of income and explains whether they are taxable or nontaxable. Form 1040ez more:label_form_201040ez more:taxes Income that is taxable must be reported on your tax return and is subject to tax. Form 1040ez more:label_form_201040ez more:taxes Income that is nontaxable may have to be shown on your tax return but is not taxable. Form 1040ez more:label_form_201040ez more:taxes This chapter begins with discussions of the following income items. Form 1040ez more:label_form_201040ez more:taxes Bartering. Form 1040ez more:label_form_201040ez more:taxes Canceled debts. Form 1040ez more:label_form_201040ez more:taxes Sales parties at which you are the host or hostess. Form 1040ez more:label_form_201040ez more:taxes Life insurance proceeds. Form 1040ez more:label_form_201040ez more:taxes Partnership income. Form 1040ez more:label_form_201040ez more:taxes S Corporation income. Form 1040ez more:label_form_201040ez more:taxes Recoveries (including state income tax refunds). Form 1040ez more:label_form_201040ez more:taxes Rents from personal property. Form 1040ez more:label_form_201040ez more:taxes Repayments. Form 1040ez more:label_form_201040ez more:taxes Royalties. Form 1040ez more:label_form_201040ez more:taxes Unemployment benefits. Form 1040ez more:label_form_201040ez more:taxes Welfare and other public assistance benefits. Form 1040ez more:label_form_201040ez more:taxes These discussions are followed by brief discussions of other income items. Form 1040ez more:label_form_201040ez more:taxes Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 544 Sales and Other Dispositions of Assets 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Bartering Bartering is an exchange of property or services. Form 1040ez more:label_form_201040ez more:taxes You must include in your income, at the time received, the fair market value of property or services you receive in bartering. Form 1040ez more:label_form_201040ez more:taxes If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise. Form 1040ez more:label_form_201040ez more:taxes Generally, you report this income on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Form 1040ez more:label_form_201040ez more:taxes However, if the barter involves an exchange of something other than services, such as in Example 3 below, you may have to use another form or schedule instead. Form 1040ez more:label_form_201040ez more:taxes Example 1. Form 1040ez more:label_form_201040ez more:taxes You are a self-employed attorney who performs legal services for a client, a small corporation. Form 1040ez more:label_form_201040ez more:taxes The corporation gives you shares of its stock as payment for your services. Form 1040ez more:label_form_201040ez more:taxes You must include the fair market value of the shares in your income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) in the year you receive them. Form 1040ez more:label_form_201040ez more:taxes Example 2. Form 1040ez more:label_form_201040ez more:taxes You are self-employed and a member of a barter club. Form 1040ez more:label_form_201040ez more:taxes The club uses “credit units” as a means of exchange. Form 1040ez more:label_form_201040ez more:taxes It adds credit units to your account for goods or services you provide to members, which you can use to purchase goods or services offered by other members of the barter club. Form 1040ez more:label_form_201040ez more:taxes The club subtracts credit units from your account when you receive goods or services from other members. Form 1040ez more:label_form_201040ez more:taxes You must include in your income the value of the credit units that are added to your account, even though you may not actually receive goods or services from other members until a later tax year. Form 1040ez more:label_form_201040ez more:taxes Example 3. Form 1040ez more:label_form_201040ez more:taxes You own a small apartment building. Form 1040ez more:label_form_201040ez more:taxes In return for 6 months rent-free use of an apartment, an artist gives you a work of art she created. Form 1040ez more:label_form_201040ez more:taxes You must report as rental income on Schedule E (Form 1040), Supplemental Income and Loss, the fair market value of the artwork, and the artist must report as income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) the fair rental value of the apartment. Form 1040ez more:label_form_201040ez more:taxes Form 1099-B from barter exchange. Form 1040ez more:label_form_201040ez more:taxes   If you exchanged property or services through a barter exchange, Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or a similar statement from the barter exchange should be sent to you by February 18, 2014. Form 1040ez more:label_form_201040ez more:taxes It should show the value of cash, property, services, credits, or scrip you received from exchanges during 2013. Form 1040ez more:label_form_201040ez more:taxes The IRS also will receive a copy of Form 1099-B. Form 1040ez more:label_form_201040ez more:taxes Canceled Debts In most cases, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. Form 1040ez more:label_form_201040ez more:taxes You have no income from the canceled debt if it is intended as a gift to you. Form 1040ez more:label_form_201040ez more:taxes A debt includes any indebtedness for which you are liable or which attaches to property you hold. Form 1040ez more:label_form_201040ez more:taxes If the debt is a nonbusiness debt, report the canceled amount on Form 1040, line 21. Form 1040ez more:label_form_201040ez more:taxes If it is a business debt, report the amount on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) (or on Schedule F (Form 1040), Profit or Loss From Farming, if the debt is farm debt and you are a farmer). Form 1040ez more:label_form_201040ez more:taxes Form 1099-C. Form 1040ez more:label_form_201040ez more:taxes   If a Federal Government agency, financial institution, or credit union cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. Form 1040ez more:label_form_201040ez more:taxes The amount of the canceled debt is shown in box 2. Form 1040ez more:label_form_201040ez more:taxes Interest included in canceled debt. Form 1040ez more:label_form_201040ez more:taxes   If any interest is forgiven and included in the amount of canceled debt in box 2, the amount of interest also will be shown in box 3. Form 1040ez more:label_form_201040ez more:taxes Whether or not you must include the interest portion of the canceled debt in your income depends on whether the interest would be deductible when you paid it. Form 1040ez more:label_form_201040ez more:taxes See Deductible debt under Exceptions, later. Form 1040ez more:label_form_201040ez more:taxes   If the interest would not be deductible (such as interest on a personal loan), include in your income the amount from Form 1099-C, box 2. Form 1040ez more:label_form_201040ez more:taxes If the interest would be deductible (such as on a business loan), include in your income the net amount of the canceled debt (the amount shown in box 2 less the interest amount shown in box 3). Form 1040ez more:label_form_201040ez more:taxes Discounted mortgage loan. Form 1040ez more:label_form_201040ez more:taxes   If your financial institution offers a discount for the early payment of your mortgage loan, the amount of the discount is canceled debt. Form 1040ez more:label_form_201040ez more:taxes You must include the canceled amount in your income. Form 1040ez more:label_form_201040ez more:taxes Mortgage relief upon sale or other disposition. Form 1040ez more:label_form_201040ez more:taxes   If you are personally liable for a mortgage (recourse debt), and you are relieved of the mortgage when you dispose of the property, you may realize gain or loss up to the fair market value of the property. Form 1040ez more:label_form_201040ez more:taxes To the extent the mortgage discharge exceeds the fair market value of the property, it is income from discharge of indebtedness unless it qualifies for exclusion under Excluded debt , later. Form 1040ez more:label_form_201040ez more:taxes Report any income from discharge of indebtedness on nonbusiness debt that does not qualify for exclusion as other income on Form 1040, line 21. Form 1040ez more:label_form_201040ez more:taxes    You may be able to exclude part of the mortgage relief on your principal residence. Form 1040ez more:label_form_201040ez more:taxes See Excluded debt, later. Form 1040ez more:label_form_201040ez more:taxes   If you are not personally liable for a mortgage (nonrecourse debt), and you are relieved of the mortgage when you dispose of the property (such as through foreclosure), that relief is included in the amount you realize. Form 1040ez more:label_form_201040ez more:taxes You may have a taxable gain if the amount you realize exceeds your adjusted basis in the property. Form 1040ez more:label_form_201040ez more:taxes Report any gain on nonbusiness property as a capital gain. Form 1040ez more:label_form_201040ez more:taxes   See Publication 4681 for more information. Form 1040ez more:label_form_201040ez more:taxes Stockholder debt. Form 1040ez more:label_form_201040ez more:taxes   If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution that is generally dividend income to you. Form 1040ez more:label_form_201040ez more:taxes For more information, see Publication 542, Corporations. Form 1040ez more:label_form_201040ez more:taxes   If you are a stockholder in a corporation and you cancel a debt owed to you by the corporation, you generally do not realize income. Form 1040ez more:label_form_201040ez more:taxes This is because the canceled debt is considered as a contribution to the capital of the corporation equal to the amount of debt principal that you canceled. Form 1040ez more:label_form_201040ez more:taxes Repayment of canceled debt. Form 1040ez more:label_form_201040ez more:taxes   If you included a canceled amount in your income and later pay the debt, you may be able to file a claim for refund for the year the amount was included in income. Form 1040ez more:label_form_201040ez more:taxes You can file a claim on Form 1040X if the statute of limitations for filing a claim is still open. Form 1040ez more:label_form_201040ez more:taxes The statute of limitations generally does not end until 3 years after the due date of your original return. Form 1040ez more:label_form_201040ez more:taxes Exceptions There are several exceptions to the inclusion of canceled debt in income. Form 1040ez more:label_form_201040ez more:taxes These are explained next. Form 1040ez more:label_form_201040ez more:taxes Student loans. Form 1040ez more:label_form_201040ez more:taxes   Certain student loans contain a provision that all or part of the debt incurred to attend the qualified educational institution will be canceled if you work for a certain period of time in certain professions for any of a broad class of employers. Form 1040ez more:label_form_201040ez more:taxes   You do not have income if your student loan is canceled after you agreed to this provision and then performed the services required. Form 1040ez more:label_form_201040ez more:taxes To qualify, the loan must have been made by: The Federal Government, a state or local government, or an instrumentality, agency, or subdivision thereof, A tax-exempt public benefit corporation that has assumed control of a state, county, or municipal hospital, and whose employees are considered public employees under state law, or An educational institution: Under an agreement with an entity described in (1) or (2) that provided the funds to the institution to make the loan, or As part of a program of the institution designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or a tax-exempt organization described in section 501(c)(3). Form 1040ez more:label_form_201040ez more:taxes   A loan to refinance a qualified student loan also will qualify if it was made by an educational institution or a qualified tax-exempt organization under its program designed as described in (3)(b) above. Form 1040ez more:label_form_201040ez more:taxes Education loan repayment assistance. Form 1040ez more:label_form_201040ez more:taxes   Education loan repayments made to you by the National Health Service Corps Loan Repayment Program (NHSC Loan Repayment Program), a state education loan repayment program eligible for funds under the Public Health Service Act, or any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in underserved or health professional shortage areas are not taxable. Form 1040ez more:label_form_201040ez more:taxes    The provision relating to the “other state loan repayment or loan forgiveness program” was added to this exclusion for amounts received in tax years beginning after December 31, 2008. Form 1040ez more:label_form_201040ez more:taxes If you included these amounts in income in 2010, 2011, or 2012, you should file an amended tax return to exclude this income. Form 1040ez more:label_form_201040ez more:taxes See Form 1040X and its instructions for details on filing. Form 1040ez more:label_form_201040ez more:taxes Deductible debt. Form 1040ez more:label_form_201040ez more:taxes   You do not have income from the cancellation of a debt if your payment of the debt would be deductible. Form 1040ez more:label_form_201040ez more:taxes This exception applies only if you use the cash method of accounting. Form 1040ez more:label_form_201040ez more:taxes For more information, see chapter 5 of Publication 334, Tax Guide for Small Business. Form 1040ez more:label_form_201040ez more:taxes Price reduced after purchase. Form 1040ez more:label_form_201040ez more:taxes   In most cases, if the seller reduces the amount of debt you owe for property you purchased, you do not have income from the reduction. Form 1040ez more:label_form_201040ez more:taxes The reduction of the debt is treated as a purchase price adjustment and reduces your basis in the property. Form 1040ez more:label_form_201040ez more:taxes Excluded debt. Form 1040ez more:label_form_201040ez more:taxes   Do not include a canceled debt in your gross income in the following situations. Form 1040ez more:label_form_201040ez more:taxes The debt is canceled in a bankruptcy case under title 11 of the U. Form 1040ez more:label_form_201040ez more:taxes S. Form 1040ez more:label_form_201040ez more:taxes Code. Form 1040ez more:label_form_201040ez more:taxes See Publication 908, Bankruptcy Tax Guide. Form 1040ez more:label_form_201040ez more:taxes The debt is canceled when you are insolvent. Form 1040ez more:label_form_201040ez more:taxes However, you cannot exclude any amount of canceled debt that is more than the amount by which you are insolvent. Form 1040ez more:label_form_201040ez more:taxes See Publication 908. Form 1040ez more:label_form_201040ez more:taxes The debt is qualified farm debt and is canceled by a qualified person. Form 1040ez more:label_form_201040ez more:taxes See chapter 3 of Publication 225, Farmer's Tax Guide. Form 1040ez more:label_form_201040ez more:taxes The debt is qualified real property business debt. Form 1040ez more:label_form_201040ez more:taxes See chapter 5 of Publication 334. Form 1040ez more:label_form_201040ez more:taxes The cancellation is intended as a gift. Form 1040ez more:label_form_201040ez more:taxes The debt is qualified principal residence indebtedness. Form 1040ez more:label_form_201040ez more:taxes See Publication 525 for additional information. Form 1040ez more:label_form_201040ez more:taxes Host or Hostess If you host a party or event at which sales are made, any gift or gratuity you receive for giving the event is a payment for helping a direct seller make sales. Form 1040ez more:label_form_201040ez more:taxes You must report this item as income at its fair market value. Form 1040ez more:label_form_201040ez more:taxes Your out-of-pocket party expenses are subject to the 50% limit for meal and entertainment expenses. Form 1040ez more:label_form_201040ez more:taxes These expenses are deductible as miscellaneous itemized deductions subject to the 2%-of-AGI limit on Schedule A (Form 1040), but only up to the amount of income you receive for giving the party. Form 1040ez more:label_form_201040ez more:taxes For more information about the 50% limit for meal and entertainment expenses, see chapter 26. Form 1040ez more:label_form_201040ez more:taxes Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. Form 1040ez more:label_form_201040ez more:taxes This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. Form 1040ez more:label_form_201040ez more:taxes However, interest income received as a result of life insurance proceeds may be taxable. Form 1040ez more:label_form_201040ez more:taxes Proceeds not received in installments. Form 1040ez more:label_form_201040ez more:taxes   If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death. Form 1040ez more:label_form_201040ez more:taxes If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death. Form 1040ez more:label_form_201040ez more:taxes Proceeds received in installments. Form 1040ez more:label_form_201040ez more:taxes   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. Form 1040ez more:label_form_201040ez more:taxes   To determine the excluded part, divide the amount held by the insurance company (generally the total lump sum payable at the death of the insured person) by the number of installments to be paid. Form 1040ez more:label_form_201040ez more:taxes Include anything over this excluded part in your income as interest. Form 1040ez more:label_form_201040ez more:taxes Surviving spouse. Form 1040ez more:label_form_201040ez more:taxes   If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude up to $1,000 a year of the interest included in the installments. Form 1040ez more:label_form_201040ez more:taxes If you remarry, you can continue to take the exclusion. Form 1040ez more:label_form_201040ez more:taxes Surrender of policy for cash. Form 1040ez more:label_form_201040ez more:taxes   If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. Form 1040ez more:label_form_201040ez more:taxes In most cases, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income. Form 1040ez more:label_form_201040ez more:taxes    You should receive a Form 1099-R showing the total proceeds and the taxable part. Form 1040ez more:label_form_201040ez more:taxes Report these amounts on lines 16a and 16b of Form 1040 or lines 12a and 12b of Form 1040A. Form 1040ez more:label_form_201040ez more:taxes More information. Form 1040ez more:label_form_201040ez more:taxes   For more information, see Life Insurance Proceeds in Publication 525. Form 1040ez more:label_form_201040ez more:taxes Endowment Contract Proceeds An endowment contract is a policy under which you are paid a specified amount of money on a certain date unless you die before that date, in which case, the money is paid to your designated beneficiary. Form 1040ez more:label_form_201040ez more:taxes Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. Form 1040ez more:label_form_201040ez more:taxes To determine your cost, subtract any amount that you previously received under the contract and excluded from your income from the total premiums (or other consideration) paid for the contract. Form 1040ez more:label_form_201040ez more:taxes Include the part of the lump sum payment that is more than your cost in your income. Form 1040ez more:label_form_201040ez more:taxes Accelerated Death Benefits Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are excluded from income if the insured is terminally or chronically ill. Form 1040ez more:label_form_201040ez more:taxes Viatical settlement. Form 1040ez more:label_form_201040ez more:taxes   This is the sale or assignment of any part of the death benefit under a life insurance contract to a viatical settlement provider. Form 1040ez more:label_form_201040ez more:taxes A viatical settlement provider is a person who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill and who meets the requirements of section 101(g)(2)(B) of the Internal Revenue Code. Form 1040ez more:label_form_201040ez more:taxes Exclusion for terminal illness. Form 1040ez more:label_form_201040ez more:taxes    Accelerated death benefits are fully excludable if the insured is a terminally ill individual. Form 1040ez more:label_form_201040ez more:taxes This is a person who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death within 24 months from the date of the certification. Form 1040ez more:label_form_201040ez more:taxes Exclusion for chronic illness. Form 1040ez more:label_form_201040ez more:taxes    If the insured is a chronically ill individual who is not terminally ill, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. Form 1040ez more:label_form_201040ez more:taxes Accelerated death benefits paid on a per diem or other periodic basis are excludable up to a limit. Form 1040ez more:label_form_201040ez more:taxes This limit applies to the total of the accelerated death benefits and any periodic payments received from long-term care insurance contracts. Form 1040ez more:label_form_201040ez more:taxes For information on the limit and the definitions of chronically ill individual, qualified long-term care services, and long-term care insurance contracts, see Long-Term Care Insurance Contracts under Sickness and Injury Benefits in Publication 525. Form 1040ez more:label_form_201040ez more:taxes Exception. Form 1040ez more:label_form_201040ez more:taxes   The exclusion does not apply to any amount paid to a person (other than the insured) who has an insurable interest in the life of the insured because the insured: Is a director, officer, or employee of the person, or Has a financial interest in the person's business. Form 1040ez more:label_form_201040ez more:taxes Form 8853. Form 1040ez more:label_form_201040ez more:taxes   To claim an exclusion for accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return. Form 1040ez more:label_form_201040ez more:taxes You do not have to file Form 8853 to exclude accelerated death benefits paid on the basis of actual expenses incurred. Form 1040ez more:label_form_201040ez more:taxes Public Safety Officer Killed in the Line of Duty If you are a survivor of a public safety officer who was killed in the line of duty, you may be able to exclude from income certain amounts you receive. Form 1040ez more:label_form_201040ez more:taxes For this purpose, the term public safety officer includes law enforcement officers, firefighters, chaplains, and rescue squad and ambulance crew members. Form 1040ez more:label_form_201040ez more:taxes For more information, see Publication 559, Survivors, Executors, and Administrators. Form 1040ez more:label_form_201040ez more:taxes Partnership Income A partnership generally is not a taxable entity. Form 1040ez more:label_form_201040ez more:taxes The income, gains, losses, deductions, and credits of a partnership are passed through to the partners based on each partner's distributive share of these items. Form 1040ez more:label_form_201040ez more:taxes Schedule K-1 (Form 1065). Form 1040ez more:label_form_201040ez more:taxes    Although a partnership generally pays no tax, it must file an information return on Form 1065, U. Form 1040ez more:label_form_201040ez more:taxes S. Form 1040ez more:label_form_201040ez more:taxes Return of Partnership Income, and send Schedule K-1 (Form 1065) to each partner. Form 1040ez more:label_form_201040ez more:taxes In addition, the partnership will send each partner a copy of the Partner's Instructions for Schedule K-1 (Form 1065) to help each partner report his or her share of the partnership's income, deductions, credits, and tax preference items. Form 1040ez more:label_form_201040ez more:taxes Keep Schedule K-1 (Form 1065) for your records. Form 1040ez more:label_form_201040ez more:taxes Do not attach it to your Form 1040, unless you are specifically required to do so. Form 1040ez more:label_form_201040ez more:taxes For more information on partnerships, see Publication 541, Partnerships. Form 1040ez more:label_form_201040ez more:taxes Qualified joint venture. Form 1040ez more:label_form_201040ez more:taxes   If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. Form 1040ez more:label_form_201040ez more:taxes To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. Form 1040ez more:label_form_201040ez more:taxes For further information on how to make the election and which schedule(s) to file, see the instructions for your individual tax return. Form 1040ez more:label_form_201040ez more:taxes S Corporation Income In most cases, an S corporation does not pay tax on its income. Form 1040ez more:label_form_201040ez more:taxes Instead, the income, losses, deductions, and credits of the corporation are passed through to the shareholders based on each shareholder's pro rata share. Form 1040ez more:label_form_201040ez more:taxes Schedule K-1 (Form 1120S). Form 1040ez more:label_form_201040ez more:taxes   An S corporation must file a return on Form 1120S, U. Form 1040ez more:label_form_201040ez more:taxes S. Form 1040ez more:label_form_201040ez more:taxes Income Tax Return for an S Corporation, and send Schedule K-1 (Form 1120S) to each shareholder. Form 1040ez more:label_form_201040ez more:taxes In addition, the S corporation will send each shareholder a copy of the Shareholder's Instructions for Schedule K-1 (Form 1120S) to help each shareholder report his or her share of the S corporation's income, losses, credits, and deductions. Form 1040ez more:label_form_201040ez more:taxes Keep Schedule K-1 (Form 1120S) for your records. Form 1040ez more:label_form_201040ez more:taxes Do not attach it to your Form 1040, unless you are specifically required to do so. Form 1040ez more:label_form_201040ez more:taxes For more information on S corporations and their shareholders, see the Instructions for Form 1120S. Form 1040ez more:label_form_201040ez more:taxes Recoveries A recovery is a return of an amount you deducted or took a credit for in an earlier year. Form 1040ez more:label_form_201040ez more:taxes The most common recoveries are refunds, reimbursements, and rebates of deductions itemized on Schedule A (Form 1040). Form 1040ez more:label_form_201040ez more:taxes You also may have recoveries of non-itemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit. Form 1040ez more:label_form_201040ez more:taxes Tax benefit rule. Form 1040ez more:label_form_201040ez more:taxes   You must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. Form 1040ez more:label_form_201040ez more:taxes For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year. Form 1040ez more:label_form_201040ez more:taxes For more information, see Publication 525. Form 1040ez more:label_form_201040ez more:taxes Federal income tax refund. Form 1040ez more:label_form_201040ez more:taxes   Refunds of federal income taxes are not included in your income because they are never allowed as a deduction from income. Form 1040ez more:label_form_201040ez more:taxes State tax refund. Form 1040ez more:label_form_201040ez more:taxes   If you received a state or local income tax refund (or credit or offset) in 2013, you generally must include it in income if you deducted the tax in an earlier year. Form 1040ez more:label_form_201040ez more:taxes The payer should send Form 1099-G, Certain Government Payments, to you by January 31, 2014. Form 1040ez more:label_form_201040ez more:taxes The IRS also will receive a copy of the Form 1099-G. Form 1040ez more:label_form_201040ez more:taxes If you file Form 1040, use the State and Local Income Tax Refund Worksheet in the 2013 Form 1040 instructions for line 10 to figure the amount (if any) to include in your income. Form 1040ez more:label_form_201040ez more:taxes See Publication 525 for when you must use another worksheet. Form 1040ez more:label_form_201040ez more:taxes   If you could choose to deduct for a tax year either: State and local income taxes, or State and local general sales taxes, then the maximum refund that you may have to include in income is limited to the excess of the tax you chose to deduct for that year over the tax you did not choose to deduct for that year. Form 1040ez more:label_form_201040ez more:taxes For examples, see Publication 525. Form 1040ez more:label_form_201040ez more:taxes Mortgage interest refund. Form 1040ez more:label_form_201040ez more:taxes    If you received a refund or credit in 2013 of mortgage interest paid in an earlier year, the amount should be shown in box 3 of your Form 1098, Mortgage Interest Statement. Form 1040ez more:label_form_201040ez more:taxes Do not subtract the refund amount from the interest you paid in 2013. Form 1040ez more:label_form_201040ez more:taxes You may have to include it in your income under the rules explained in the following discussions. Form 1040ez more:label_form_201040ez more:taxes Interest on recovery. Form 1040ez more:label_form_201040ez more:taxes   Interest on any of the amounts you recover must be reported as interest income in the year received. Form 1040ez more:label_form_201040ez more:taxes For example, report any interest you received on state or local income tax refunds on Form 1040, line 8a. Form 1040ez more:label_form_201040ez more:taxes Recovery and expense in same year. Form 1040ez more:label_form_201040ez more:taxes   If the refund or other recovery and the expense occur in the same year, the recovery reduces the deduction or credit and is not reported as income. Form 1040ez more:label_form_201040ez more:taxes Recovery for 2 or more years. Form 1040ez more:label_form_201040ez more:taxes   If you receive a refund or other recovery that is for amounts you paid in 2 or more separate years, you must allocate, on a pro rata basis, the recovered amount between the years in which you paid it. Form 1040ez more:label_form_201040ez more:taxes This allocation is necessary to determine the amount of recovery from any earlier years and to determine the amount, if any, of your allowable deduction for this item for the current year. Form 1040ez more:label_form_201040ez more:taxes For information on how to compute the allocation, see Recoveries in Publication 525. Form 1040ez more:label_form_201040ez more:taxes Itemized Deduction Recoveries If you recover any amount that you deducted in an earlier year on Schedule A (Form 1040), you generally must include the full amount of the recovery in your income in the year you receive it. Form 1040ez more:label_form_201040ez more:taxes Where to report. Form 1040ez more:label_form_201040ez more:taxes   Enter your state or local income tax refund on Form 1040, line 10, and the total of all other recoveries as other income on Form 1040, line 21. Form 1040ez more:label_form_201040ez more:taxes You cannot use Form 1040A or Form 1040EZ. Form 1040ez more:label_form_201040ez more:taxes Standard deduction limit. Form 1040ez more:label_form_201040ez more:taxes   You generally are allowed to claim the standard deduction if you do not itemize your deductions. Form 1040ez more:label_form_201040ez more:taxes Only your itemized deductions that are more than your standard deduction are subject to the recovery rule (unless you are required to itemize your deductions). Form 1040ez more:label_form_201040ez more:taxes If your total deductions on the earlier year return were not more than your income for that year, include in your income this year the lesser of: Your recoveries, or The amount by which your itemized deductions exceeded the standard deduction. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes For 2012, you filed a joint return. Form 1040ez more:label_form_201040ez more:taxes Your taxable income was $60,000 and you were not entitled to any tax credits. Form 1040ez more:label_form_201040ez more:taxes Your standard deduction was $11,900, and you had itemized deductions of $14,000. Form 1040ez more:label_form_201040ez more:taxes In 2013, you received the following recoveries for amounts deducted on your 2012 return: Medical expenses $200 State and local income tax refund 400 Refund of mortgage interest 325 Total recoveries $925 None of the recoveries were more than the deductions taken for 2012. Form 1040ez more:label_form_201040ez more:taxes The difference between the state and local income tax you deducted and your local general sales tax was more than $400. Form 1040ez more:label_form_201040ez more:taxes Your total recoveries are less than the amount by which your itemized deductions exceeded the standard deduction ($14,000 − 11,900 = $2,100), so you must include your total recoveries in your income for 2013. Form 1040ez more:label_form_201040ez more:taxes Report the state and local income tax refund of $400 on Form 1040, line 10, and the balance of your recoveries, $525, on Form 1040, line 21. Form 1040ez more:label_form_201040ez more:taxes Standard deduction for earlier years. Form 1040ez more:label_form_201040ez more:taxes   To determine if amounts recovered in 2013 must be included in your income, you must know the standard deduction for your filing status for the year the deduction was claimed. Form 1040ez more:label_form_201040ez more:taxes Look in the instructions for your tax return from prior years to locate the standard deduction for the filing status for that prior year. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes You filed a joint return on Form 1040 for 2012 with taxable income of $45,000. Form 1040ez more:label_form_201040ez more:taxes Your itemized deductions were $12,350. Form 1040ez more:label_form_201040ez more:taxes The standard deduction that you could have claimed was $11,900. Form 1040ez more:label_form_201040ez more:taxes In 2013, you recovered $2,100 of your 2012 itemized deductions. Form 1040ez more:label_form_201040ez more:taxes None of the recoveries were more than the actual deductions for 2012. Form 1040ez more:label_form_201040ez more:taxes Include $450 of the recoveries in your 2013 income. Form 1040ez more:label_form_201040ez more:taxes This is the smaller of your recoveries ($2,100) or the amount by which your itemized deductions were more than the standard deduction ($12,350 − $11,900 = $450). Form 1040ez more:label_form_201040ez more:taxes Recovery limited to deduction. Form 1040ez more:label_form_201040ez more:taxes   You do not include in your income any amount of your recovery that is more than the amount you deducted in the earlier year. Form 1040ez more:label_form_201040ez more:taxes The amount you include in your income is limited to the smaller of: The amount deducted on Schedule A (Form 1040), or The amount recovered. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes During 2012 you paid $1,700 for medical expenses. Form 1040ez more:label_form_201040ez more:taxes From this amount you subtracted $1,500, which was 7. Form 1040ez more:label_form_201040ez more:taxes 5% of your adjusted gross income. Form 1040ez more:label_form_201040ez more:taxes Your actual medical expense deduction was $200. Form 1040ez more:label_form_201040ez more:taxes In 2013, you received a $500 reimbursement from your medical insurance for your 2012 expenses. Form 1040ez more:label_form_201040ez more:taxes The only amount of the $500 reimbursement that must be included in your income for 2013 is $200—the amount actually deducted. Form 1040ez more:label_form_201040ez more:taxes Other recoveries. Form 1040ez more:label_form_201040ez more:taxes   See Recoveries in Publication 525 if: You have recoveries of items other than itemized deductions, or You received a recovery for an item for which you claimed a tax credit (other than investment credit or foreign tax credit) in a prior year. Form 1040ez more:label_form_201040ez more:taxes Rents from Personal Property If you rent out personal property, such as equipment or vehicles, how you report your income and expenses is in most cases determined by: Whether or not the rental activity is a business, and Whether or not the rental activity is conducted for profit. Form 1040ez more:label_form_201040ez more:taxes In most cases, if your primary purpose is income or profit and you are involved in the rental activity with continuity and regularity, your rental activity is a business. Form 1040ez more:label_form_201040ez more:taxes See Publication 535, Business Expenses, for details on deducting expenses for both business and not-for-profit activities. Form 1040ez more:label_form_201040ez more:taxes Reporting business income and expenses. Form 1040ez more:label_form_201040ez more:taxes    If you are in the business of renting personal property, report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). Form 1040ez more:label_form_201040ez more:taxes The form instructions have information on how to complete them. Form 1040ez more:label_form_201040ez more:taxes Reporting nonbusiness income. Form 1040ez more:label_form_201040ez more:taxes   If you are not in the business of renting personal property, report your rental income on Form 1040, line 21. Form 1040ez more:label_form_201040ez more:taxes List the type and amount of the income on the dotted line next to line 21. Form 1040ez more:label_form_201040ez more:taxes Reporting nonbusiness expenses. Form 1040ez more:label_form_201040ez more:taxes   If you rent personal property for profit, include your rental expenses in the total amount you enter on Form 1040, line 36. Form 1040ez more:label_form_201040ez more:taxes Also enter the amount and “PPR” on the dotted line next to line 36. Form 1040ez more:label_form_201040ez more:taxes   If you do not rent personal property for profit, your deductions are limited and you cannot report a loss to offset other income. Form 1040ez more:label_form_201040ez more:taxes See Activity not for profit , under Other Income, later. Form 1040ez more:label_form_201040ez more:taxes Repayments If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it. Form 1040ez more:label_form_201040ez more:taxes Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. Form 1040ez more:label_form_201040ez more:taxes Generally, you can claim a deduction or credit only if the repayment qualifies as an expense or loss incurred in your trade or business or in a for-profit transaction. Form 1040ez more:label_form_201040ez more:taxes Type of deduction. Form 1040ez more:label_form_201040ez more:taxes   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. Form 1040ez more:label_form_201040ez more:taxes You generally deduct the repayment on the same form or schedule on which you previously reported it as income. Form 1040ez more:label_form_201040ez more:taxes For example, if you reported it as self-employment income, deduct it as a business expense on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). Form 1040ez more:label_form_201040ez more:taxes If you reported it as a capital gain, deduct it as a capital loss as explained in the Instructions for Schedule D (Form 1040). Form 1040ez more:label_form_201040ez more:taxes If you reported it as wages, unemployment compensation, or other nonbusiness income, deduct it as a miscellaneous itemized deduction on Schedule A (Form 1040). Form 1040ez more:label_form_201040ez more:taxes Repaid social security benefits. Form 1040ez more:label_form_201040ez more:taxes   If you repaid social security benefits or equivalent railroad retirement benefits, see Repayment of benefits in chapter 11. Form 1040ez more:label_form_201040ez more:taxes Repayment of $3,000 or less. Form 1040ez more:label_form_201040ez more:taxes   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. Form 1040ez more:label_form_201040ez more:taxes If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 23. Form 1040ez more:label_form_201040ez more:taxes Repayment over $3,000. Form 1040ez more:label_form_201040ez more:taxes   If the amount you repaid was more than $3,000, you can deduct the repayment (as explained under Type of deduction , earlier). Form 1040ez more:label_form_201040ez more:taxes However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. Form 1040ez more:label_form_201040ez more:taxes This means that at the time you included the income, it appeared that you had an unrestricted right to it. Form 1040ez more:label_form_201040ez more:taxes If you qualify for this choice, figure your tax under both methods and compare the results. Form 1040ez more:label_form_201040ez more:taxes Use the method (deduction or credit) that results in less tax. Form 1040ez more:label_form_201040ez more:taxes When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. Form 1040ez more:label_form_201040ez more:taxes Each instance of repayment is not considered separately. Form 1040ez more:label_form_201040ez more:taxes Method 1. Form 1040ez more:label_form_201040ez more:taxes   Figure your tax for 2013 claiming a deduction for the repaid amount. Form 1040ez more:label_form_201040ez more:taxes If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28. Form 1040ez more:label_form_201040ez more:taxes Method 2. Form 1040ez more:label_form_201040ez more:taxes   Figure your tax for 2013 claiming a credit for the repaid amount. Form 1040ez more:label_form_201040ez more:taxes Follow these steps. Form 1040ez more:label_form_201040ez more:taxes Figure your tax for 2013 without deducting the repaid amount. Form 1040ez more:label_form_201040ez more:taxes Refigure your tax from the earlier year without including in income the amount you repaid in 2013. Form 1040ez more:label_form_201040ez more:taxes Subtract the tax in (2) from the tax shown on your return for the earlier year. Form 1040ez more:label_form_201040ez more:taxes This is the credit. Form 1040ez more:label_form_201040ez more:taxes Subtract the answer in (3) from the tax for 2013 figured without the deduction (Step 1). Form 1040ez more:label_form_201040ez more:taxes   If method 1 results in less tax, deduct the amount repaid. Form 1040ez more:label_form_201040ez more:taxes If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71, by adding the amount of the credit to any other credits on this line, and entering “I. Form 1040ez more:label_form_201040ez more:taxes R. Form 1040ez more:label_form_201040ez more:taxes C. Form 1040ez more:label_form_201040ez more:taxes 1341” in the column to the right of line 71. Form 1040ez more:label_form_201040ez more:taxes   An example of this computation can be found in Publication 525. Form 1040ez more:label_form_201040ez more:taxes Repaid wages subject to social security and Medicare taxes. Form 1040ez more:label_form_201040ez more:taxes   If you had to repay an amount that you included in your wages or compensation in an earlier year on which social security, Medicare, or tier 1 RRTA taxes were paid, ask your employer to refund the excess amount to you. Form 1040ez more:label_form_201040ez more:taxes If the employer refuses to refund the taxes, ask for a statement indicating the amount of the overcollection to support your claim. Form 1040ez more:label_form_201040ez more:taxes File a claim for refund using Form 843, Claim for Refund and Request for Abatement. Form 1040ez more:label_form_201040ez more:taxes Repaid wages subject to Additional Medicare Tax. Form 1040ez more:label_form_201040ez more:taxes   Employers cannot make an adjustment or file a claim for refund for Additional Medicare Tax withholding when there is a repayment of wages received by an employee in a prior year because the employee determines liability for Additional Medicare Tax on the employee's income tax return for the prior year. Form 1040ez more:label_form_201040ez more:taxes If you had to repay an amount that you included in your wages or compensation in an earlier year, and on which Additional Medicare Tax was paid, you may be able to recover the Additional Medicare Tax paid on the amount. Form 1040ez more:label_form_201040ez more:taxes To recover Additional Medicare Tax on the repaid wages or compensation, you must 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 prior year in which the wages or compensation were originally received. Form 1040ez more:label_form_201040ez more:taxes See the Instructions for Form 1040X. Form 1040ez more:label_form_201040ez more:taxes Royalties Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. Form 1040ez more:label_form_201040ez more:taxes In most cases you report royalties in Part I of Schedule E (Form 1040). Form 1040ez more:label_form_201040ez more:taxes However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc. Form 1040ez more:label_form_201040ez more:taxes , report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). Form 1040ez more:label_form_201040ez more:taxes Copyrights and patents. Form 1040ez more:label_form_201040ez more:taxes   Royalties from copyrights on literary, musical, or artistic works, and similar property, or from patents on inventions, are amounts paid to you for the right to use your work over a specified period of time. Form 1040ez more:label_form_201040ez more:taxes Royalties generally are based on the number of units sold, such as the number of books, tickets to a performance, or machines sold. Form 1040ez more:label_form_201040ez more:taxes Oil, gas, and minerals. Form 1040ez more:label_form_201040ez more:taxes   Royalty income from oil, gas, and mineral properties is the amount you receive when natural resources are extracted from your property. Form 1040ez more:label_form_201040ez more:taxes The royalties are based on units, such as barrels, tons, etc. Form 1040ez more:label_form_201040ez more:taxes , and are paid to you by a person or company who leases the property from you. Form 1040ez more:label_form_201040ez more:taxes Depletion. Form 1040ez more:label_form_201040ez more:taxes   If you are the owner of an economic interest in mineral deposits or oil and gas wells, you can recover your investment through the depletion allowance. Form 1040ez more:label_form_201040ez more:taxes For information on this subject, see chapter 9 of Publication 535. Form 1040ez more:label_form_201040ez more:taxes Coal and iron ore. Form 1040ez more:label_form_201040ez more:taxes   Under certain circumstances, you can treat amounts you receive from the disposal of coal and iron ore as payments from the sale of a capital asset, rather than as royalty income. Form 1040ez more:label_form_201040ez more:taxes For information about gain or loss from the sale of coal and iron ore, see Publication 544. Form 1040ez more:label_form_201040ez more:taxes Sale of property interest. Form 1040ez more:label_form_201040ez more:taxes   If you sell your complete interest in oil, gas, or mineral rights, the amount you receive is considered payment for the sale of property used in a trade or business under section 1231, not royalty income. Form 1040ez more:label_form_201040ez more:taxes Under certain circumstances, the sale is subject to capital gain or loss treatment as explained in the Instructions for Schedule D (Form 1040). Form 1040ez more:label_form_201040ez more:taxes For more information on selling section 1231 property, see chapter 3 of Publication 544. Form 1040ez more:label_form_201040ez more:taxes   If you retain a royalty, an overriding royalty, or a net profit interest in a mineral property for the life of the property, you have made a lease or a sublease, and any cash you receive for the assignment of other interests in the property is ordinary income subject to a depletion allowance. Form 1040ez more:label_form_201040ez more:taxes Part of future production sold. Form 1040ez more:label_form_201040ez more:taxes   If you own mineral property but sell part of the future production, in most cases you treat the money you receive from the buyer at the time of the sale as a loan from the buyer. Form 1040ez more:label_form_201040ez more:taxes Do not include it in your income or take depletion based on it. Form 1040ez more:label_form_201040ez more:taxes   When production begins, you include all the proceeds in your income, deduct all the production expenses, and deduct depletion from that amount to arrive at your taxable income from the property. Form 1040ez more:label_form_201040ez more:taxes Unemployment Benefits The tax treatment of unemployment benefits you receive depends on the type of program paying the benefits. Form 1040ez more:label_form_201040ez more:taxes Unemployment compensation. Form 1040ez more:label_form_201040ez more:taxes   You must include in income all unemployment compensation you receive. Form 1040ez more:label_form_201040ez more:taxes You should receive a Form 1099-G showing in box 1 the total unemployment compensation paid to you. Form 1040ez more:label_form_201040ez more:taxes In most cases, you enter unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Form 1040ez more:label_form_201040ez more:taxes Types of unemployment compensation. Form 1040ez more:label_form_201040ez more:taxes   Unemployment compensation generally includes any amount received under an unemployment compensation law of the United States or of a state. Form 1040ez more:label_form_201040ez more:taxes It includes the following benefits. Form 1040ez more:label_form_201040ez more:taxes Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund. Form 1040ez more:label_form_201040ez more:taxes State unemployment insurance benefits. Form 1040ez more:label_form_201040ez more:taxes Railroad unemployment compensation benefits. Form 1040ez more:label_form_201040ez more:taxes Disability payments from a government program paid as a substitute for unemployment compensation. Form 1040ez more:label_form_201040ez more:taxes (Amounts received as workers' compensation for injuries or illness are not unemployment compensation. Form 1040ez more:label_form_201040ez more:taxes See chapter 5 for more information. Form 1040ez more:label_form_201040ez more:taxes ) Trade readjustment allowances under the Trade Act of 1974. Form 1040ez more:label_form_201040ez more:taxes Unemployment assistance under the Disaster Relief and Emergency Assistance Act. Form 1040ez more:label_form_201040ez more:taxes Unemployment assistance under the Airline Deregulation Act of 1974 Program. Form 1040ez more:label_form_201040ez more:taxes Governmental program. Form 1040ez more:label_form_201040ez more:taxes   If you contribute to a governmental unemployment compensation program and your contributions are not deductible, amounts you receive under the program are not included as unemployment compensation until you recover your contributions. Form 1040ez more:label_form_201040ez more:taxes If you deducted all of your contributions to the program, the entire amount you receive under the program is included in your income. Form 1040ez more:label_form_201040ez more:taxes Repayment of unemployment compensation. Form 1040ez more:label_form_201040ez more:taxes   If you repaid in 2013 unemployment compensation you received in 2013, subtract the amount you repaid from the total amount you received and enter the difference on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Form 1040ez more:label_form_201040ez more:taxes On the dotted line next to your entry enter “Repaid” and the amount you repaid. Form 1040ez more:label_form_201040ez more:taxes If you repaid unemployment compensation in 2013 that you included in income in an earlier year, you can deduct the amount repaid on Schedule A (Form 1040), line 23, if you itemize deductions. Form 1040ez more:label_form_201040ez more:taxes If the amount is more than $3,000, see Repayments , earlier. Form 1040ez more:label_form_201040ez more:taxes Tax withholding. Form 1040ez more:label_form_201040ez more:taxes   You can choose to have federal income tax withheld from your unemployment compensation. Form 1040ez more:label_form_201040ez more:taxes To make this choice, complete Form W-4V, Voluntary Withholding Request, and give it to the paying office. Form 1040ez more:label_form_201040ez more:taxes Tax will be withheld at 10% of your payment. Form 1040ez more:label_form_201040ez more:taxes    If you do not choose to have tax withheld from your unemployment compensation, you may be liable for estimated tax. Form 1040ez more:label_form_201040ez more:taxes If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Form 1040ez more:label_form_201040ez more:taxes For more information on estimated tax, see chapter 4. Form 1040ez more:label_form_201040ez more:taxes Supplemental unemployment benefits. Form 1040ez more:label_form_201040ez more:taxes   Benefits received from an employer-financed fund (to which the employees did not contribute) are not unemployment compensation. Form 1040ez more:label_form_201040ez more:taxes They are taxable as wages and are subject to withholding for income tax. Form 1040ez more:label_form_201040ez more:taxes They may be subject to social security and Medicare taxes. Form 1040ez more:label_form_201040ez more:taxes For more information, see Supplemental Unemployment Benefits in section 5 of Publication 15-A, Employer's Supplemental Tax Guide. Form 1040ez more:label_form_201040ez more:taxes Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Form 1040ez more:label_form_201040ez more:taxes Repayment of benefits. Form 1040ez more:label_form_201040ez more:taxes   You may have to repay some of your supplemental unemployment benefits to qualify for trade readjustment allowances under the Trade Act of 1974. Form 1040ez more:label_form_201040ez more:taxes If you repay supplemental unemployment benefits in the same year you receive them, reduce the total benefits by the amount you repay. Form 1040ez more:label_form_201040ez more:taxes If you repay the benefits in a later year, you must include the full amount of the benefits received in your income for the year you received them. Form 1040ez more:label_form_201040ez more:taxes   Deduct the repayment in the later year as an adjustment to gross income on Form 1040. Form 1040ez more:label_form_201040ez more:taxes (You cannot use Form 1040A or Form 1040EZ. Form 1040ez more:label_form_201040ez more:taxes ) Include the repayment on Form 1040, line 36, and enter “Sub-Pay TRA” and the amount on the dotted line next to line 36. Form 1040ez more:label_form_201040ez more:taxes If the amount you repay in a later year is more than $3,000, you may be able to take a credit against your tax for the later year instead of deducting the amount repaid. Form 1040ez more:label_form_201040ez more:taxes For more information on this, see Repayments , earlier. Form 1040ez more:label_form_201040ez more:taxes Private unemployment fund. Form 1040ez more:label_form_201040ez more:taxes   Unemployment benefit payments from a private (nonunion) fund to which you voluntarily contribute are taxable only if the amounts you receive are more than your total payments into the fund. Form 1040ez more:label_form_201040ez more:taxes Report the taxable amount on Form 1040, line 21. Form 1040ez more:label_form_201040ez more:taxes Payments by a union. Form 1040ez more:label_form_201040ez more:taxes   Benefits paid to you as an unemployed member of a union from regular union dues are included in your income on Form 1040, line 21. Form 1040ez more:label_form_201040ez more:taxes However, if you contribute to a special union fund and your payments to the fund are not deductible, the unemployment benefits you receive from the fund are includible in your income only to the extent they are more than your contributions. Form 1040ez more:label_form_201040ez more:taxes Guaranteed annual wage. Form 1040ez more:label_form_201040ez more:taxes   Payments you receive from your employer during periods of unemployment, under a union agreement that guarantees you full pay during the year, are taxable as wages. Form 1040ez more:label_form_201040ez more:taxes Include them on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Form 1040ez more:label_form_201040ez more:taxes State employees. Form 1040ez more:label_form_201040ez more:taxes   Payments similar to a state's unemployment compensation may be made by the state to its employees who are not covered by the state's unemployment compensation law. Form 1040ez more:label_form_201040ez more:taxes Although the payments are fully taxable, do not report them as unemployment compensation. Form 1040ez more:label_form_201040ez more:taxes Report these payments on Form 1040, line 21. Form 1040ez more:label_form_201040ez more:taxes Welfare and Other Public Assistance Benefits Do not include in your income governmental benefit payments from a public welfare fund based upon need, such as payments to blind individuals under a state public assistance law. Form 1040ez more:label_form_201040ez more:taxes Payments from a state fund for the victims of crime should not be included in the victims' incomes if they are in the nature of welfare payments. Form 1040ez more:label_form_201040ez more:taxes Do not deduct medical expenses that are reimbursed by such a fund. Form 1040ez more:label_form_201040ez more:taxes You must include in your income any welfare payments that are compensation for services or that are obtained fraudulently. Form 1040ez more:label_form_201040ez more:taxes Reemployment Trade Adjustment Assistance (RTAA) payments. Form 1040ez more:label_form_201040ez more:taxes   RTAA payments received from a state must be included in your income. Form 1040ez more:label_form_201040ez more:taxes The state must send you Form 1099-G to advise you of the amount you should include in income. Form 1040ez more:label_form_201040ez more:taxes The amount should be reported on Form 1040, line 21. Form 1040ez more:label_form_201040ez more:taxes Persons with disabilities. Form 1040ez more:label_form_201040ez more:taxes   If you have a disability, you must include in income compensation you receive for services you perform unless the compensation is otherwise excluded. Form 1040ez more:label_form_201040ez more:taxes However, you do not include in income the value of goods, services, and cash that you receive, not in return for your services, but for your training and rehabilitation because you have a disability. Form 1040ez more:label_form_201040ez more:taxes Excludable amounts include payments for transportation and attendant care, such as interpreter services for the deaf, reader services for the blind, and services to help individuals with an intellectual disability do their work. Form 1040ez more:label_form_201040ez more:taxes Disaster relief grants. Form 1040ez more:label_form_201040ez more:taxes    Do not include post-disaster grants received under the Robert T. Form 1040ez more:label_form_201040ez more:taxes Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, child care, or funeral expenses. Form 1040ez more:label_form_201040ez more:taxes Do not deduct casualty losses or medical expenses that are specifically reimbursed by these disaster relief grants. Form 1040ez more:label_form_201040ez more:taxes If you have deducted a casualty loss for the loss of your personal residence and you later receive a disaster relief grant for the loss of the same residence, you may have to include part or all of the grant in your taxable income. Form 1040ez more:label_form_201040ez more:taxes See Recoveries , earlier. Form 1040ez more:label_form_201040ez more:taxes Unemployment assistance payments under the Act are taxable unemployment compensation. Form 1040ez more:label_form_201040ez more:taxes See Unemployment compensation under Unemployment Benefits, earlier. Form 1040ez more:label_form_201040ez more:taxes Disaster relief payments. Form 1040ez more:label_form_201040ez more:taxes   You can exclude from income any amount you receive that is a qualified disaster relief payment. Form 1040ez more:label_form_201040ez more:taxes A qualified disaster relief payment is an amount paid to you: To reimburse or pay reasonable and necessary personal, family, living, or funeral expenses that result from a qualified disaster; To reimburse or pay reasonable and necessary expenses incurred for the repair or rehabilitation of your home or repair or replacement of its contents to the extent it is due to a qualified disaster; By a person engaged in the furnishing or sale of transportation as a common carrier because of the death or personal physical injuries incurred as a result of a qualified disaster; or By a federal, state, or local government, or agency, or instrumentality in connection with a qualified disaster in order to promote the general welfare. Form 1040ez more:label_form_201040ez more:taxes You can exclude this amount only to the extent any expense it pays for is not paid for by insurance or otherwise. Form 1040ez more:label_form_201040ez more:taxes The exclusion does not apply if you were a participant or conspirator in a terrorist action or a representative of one. Form 1040ez more:label_form_201040ez more:taxes   A qualified disaster is: A disaster which results from a terrorist or military action; A federally declared disaster; or A disaster which results from an accident involving a common carrier, or from any other event, which is determined to be catastrophic by the Secretary of the Treasury or his or her delegate. Form 1040ez more:label_form_201040ez more:taxes   For amounts paid under item (4), a disaster is qualified if it is determined by an applicable federal, state, or local authority to warrant assistance from the federal, state, or local government, agency, or instrumentality. Form 1040ez more:label_form_201040ez more:taxes Disaster mitigation payments. Form 1040ez more:label_form_201040ez more:taxes   You also can exclude from income any amount you receive that is a qualified disaster mitigation payment. Form 1040ez more:label_form_201040ez more:taxes Qualified disaster mitigation payments are also most commonly paid to you in the period immediately following damage to property as a result of a natural disaster. Form 1040ez more:label_form_201040ez more:taxes However, disaster mitigation payments are used to mitigate (reduce the severity of) potential damage from future natural disasters. Form 1040ez more:label_form_201040ez more:taxes They are paid to you through state and local governments based on the provisions of the Robert T. Form 1040ez more:label_form_201040ez more:taxes Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act. Form 1040ez more:label_form_201040ez more:taxes   You cannot increase the basis or adjusted basis of your property for improvements made with nontaxable disaster mitigation payments. Form 1040ez more:label_form_201040ez more:taxes Home Affordable Modification Program (HAMP). Form 1040ez more:label_form_201040ez more:taxes   If you benefit from Pay-for-Performance Success Payments under HAMP, the payments are not taxable. 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   Payments made under section 235 of the National Housing Act for mortgage assistance are not included in the homeowner's income. Form 1040ez more:label_form_201040ez more:taxes Interest paid for the homeowner under the mortgage assistance program cannot be deducted. Form 1040ez more:label_form_201040ez more:taxes Medicare. Form 1040ez more:label_form_201040ez more:taxes   Medicare benefits received under title XVIII of the Social Security Act are not includible in the gross income of the individuals for whom they are paid. Form 1040ez more:label_form_201040ez more:taxes This includes basic (part A (Hospital Insurance Benefits for the Aged)) and supplementary (part B (Supplementary Medical Insurance Benefits for the Aged)). Form 1040ez more:label_form_201040ez more:taxes Old-age, survivors, and disability insurance benefits (OASDI). Form 1040ez more:label_form_201040ez more:taxes   Generally, OASDI payments under section 202 of title II of the Social Security Act are not includible in the gross income of the individuals to whom they are paid. Form 1040ez more:label_form_201040ez more:taxes This applies to old-age insurance benefits, and insurance benefits for wives, husbands, children, widows, widowers, mothers and fathers, and parents, as well as the lump-sum death payment. Form 1040ez more:label_form_201040ez more:taxes Nutrition Program for the Elderly. Form 1040ez more:label_form_201040ez more:taxes    Food benefits you receive under the Nutrition Program for the Elderly are not taxable. Form 1040ez more:label_form_201040ez more:taxes If you prepare and serve free meals for the program, include in your income as wages the cash pay you receive, even if you are also eligible for food benefits. Form 1040ez more:label_form_201040ez more:taxes Payments to reduce cost of winter energy. Form 1040ez more:label_form_201040ez more:taxes   Payments made by a state to qualified people to reduce their cost of winter energy use are not taxable. Form 1040ez more:label_form_201040ez more:taxes Other Income The following brief discussions are arranged in alphabetical order. Form 1040ez more:label_form_201040ez more:taxes Other income items briefly discussed below are referenced to publications which provide more topical information. Form 1040ez more:label_form_201040ez more:taxes Activity not for profit. Form 1040ez more:label_form_201040ez more:taxes   You must include on your return income from an activity from which you do not expect to make a profit. Form 1040ez more:label_form_201040ez more:taxes An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. Form 1040ez more:label_form_201040ez more:taxes Enter this income on Form 1040, line 21. Form 1040ez more:label_form_201040ez more:taxes Deductions for expenses related to the activity are limited. Form 1040ez more:label_form_201040ez more:taxes They cannot total more than the income you report and can be taken only if you itemize deductions on Schedule A (Form 1040). Form 1040ez more:label_form_201040ez more:taxes See Not-for-Profit Activities in chapter 1 of Publication 535 for information on whether an activity is considered carried on for a profit. Form 1040ez more:label_form_201040ez more:taxes Alaska Permanent Fund dividend. Form 1040ez more:label_form_201040ez more:taxes   If you received a payment from Alaska's mineral income fund (Alaska Permanent Fund dividend), report it as income on line 21 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Form 1040ez more:label_form_201040ez more:taxes The state of Alaska sends each recipient a document that shows the amount of the payment with the check. Form 1040ez more:label_form_201040ez more:taxes The amount also is reported to IRS. Form 1040ez more:label_form_201040ez more:taxes Alimony. Form 1040ez more:label_form_201040ez more:taxes   Include in your income on Form 1040, line 11, any alimony payments you receive. Form 1040ez more:label_form_201040ez more:taxes Amounts you receive for child support are not income to you. Form 1040ez more:label_form_201040ez more:taxes Alimony and child support payments are discussed in chapter 18. Form 1040ez more:label_form_201040ez more:taxes Bribes. Form 1040ez more:label_form_201040ez more:taxes   If you receive a bribe, include it in your income. Form 1040ez more:label_form_201040ez more:taxes Campaign contributions. Form 1040ez more:label_form_201040ez more:taxes   These contributions are not income to a candidate unless they are diverted to his or her personal use. Form 1040ez more:label_form_201040ez more:taxes To be exempt from tax, the contributions must be spent for campaign purposes or kept in a fund for use in future campaigns. Form 1040ez more:label_form_201040ez more:taxes However, interest earned on bank deposits, dividends received on contributed securities, and net gains realized on sales of contributed securities are taxable and must be reported on Form 1120-POL, U. Form 1040ez more:label_form_201040ez more:taxes S. Form 1040ez more:label_form_201040ez more:taxes Income Tax Return for Certain Political Organizations. Form 1040ez more:label_form_201040ez more:taxes Excess campaign funds transferred to an office account must be included in the officeholder's income on Form 1040, line 21, in the year transferred. Form 1040ez more:label_form_201040ez more:taxes Car pools. Form 1040ez more:label_form_201040ez more:taxes   Do not include in your income amounts you receive from the passengers for driving a car in a car pool to and from work. Form 1040ez more:label_form_201040ez more:taxes These amounts are considered reimbursement for your expenses. Form 1040ez more:label_form_201040ez more:taxes However, this rule does not apply if you have developed car pool arrangements into a profit-making business of transporting workers for hire. Form 1040ez more:label_form_201040ez more:taxes Cash rebates. Form 1040ez more:label_form_201040ez more:taxes   A cash rebate you receive from a dealer or manufacturer of an item you buy is not income, but you must reduce your basis by the amount of the rebate. Form 1040ez more:label_form_201040ez more:taxes Example. Form 1040ez more:label_form_201040ez more:taxes You buy a new car for $24,000 cash and receive a $2,000 rebate check from the manufacturer. Form 1040ez more:label_form_201040ez more:taxes The $2,000 is not income to you. Form 1040ez more:label_form_201040ez more:taxes Your basis in the car is $22,000. Form 1040ez more:label_form_201040ez more:taxes This is the basis on which you figure gain or loss if you sell the car and depreciation if you use it for business. Form 1040ez more:label_form_201040ez more:taxes Casualty insurance and other reimbursements. Form 1040ez more:label_form_201040ez more:taxes   You generally should not report these reimbursements on your return unless you are figuring gain or loss from the casualty or theft. Form 1040ez more:label_form_201040ez more:taxes See chapter 25 for more information. Form 1040ez more:label_form_201040ez more:taxes Child support payments. Form 1040ez more:label_form_201040ez more:taxes   You should not report these payments on your return. Form 1040ez more:label_form_201040ez more:taxes See chapter 18 for more information. Form 1040ez more:label_form_201040ez more:taxes Court awards and damages. Form 1040ez more:label_form_201040ez more:taxes   To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. Form 1040ez more:label_form_201040ez more:taxes The character of the income as ordinary income or capital gain depends on the nature of the underlying claim. Form 1040ez more:label_form_201040ez more:taxes Include the following as ordinary income. Form 1040ez more:label_form_201040ez more:taxes Interest on any award. Form 1040ez more:label_form_201040ez more:taxes Compensation for lost wages or lost profits in most cases. Form 1040ez more:label_form_201040ez more:taxes Punitive damages, in most cases. Form 1040ez more:label_form_201040ez more:taxes It does not matter if they relate to a physical injury or physical sickness. Form 1040ez more:label_form_201040ez more:taxes Amounts received in settlement of pension rights (if you did not contribute to the plan). Form 1040ez more:label_form_201040ez more:taxes Damages for: Patent or copyright infringement, Breach of contract, or Interference with business operations. Form 1040ez more:label_form_201040ez more:taxes Back pay and damages for emotional distress received to satisfy a claim under title VII of the Civil Rights Act of 1964. Form 1040ez more:label_form_201040ez more:taxes Attorney fees and costs (including contingent fees) where the underlying recovery is included in gross income. Form 1040ez more:label_form_201040ez more:taxes   Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments). Form 1040ez more:label_form_201040ez more:taxes Emotional distress. Form 1040ez more:label_form_201040ez more:taxes   Emotional distress itself is not a physical injury or physical sickness, but damages you receive for emotional distress due to a physical injury or sickness are treated as received for the physical injury or sickness. Form 1040ez more:label_form_201040ez more:taxes Do not include them in your income. Form 1040ez more:label_form_201040ez more:taxes   If the emotional distress is due to a personal injury that is not due to a physical injury or sickness (for example, employment discrimination or injury to reputation), you must include the damages in your income, except for any damages you receive for medical care due to that emotional distress. Form 1040ez more:label_form_201040ez more:taxes Emotional distress includes physical symptoms that result from emotional distress, such as headaches, insomnia, and stomach disorders. Form 1040ez more:label_form_201040ez more:taxes Deduction for costs involved in unlawful discrimination suits. Form 1040ez more:label_form_201040ez more:taxes   You may be able to deduct attorney fees and court costs paid to recover a judgment or settlement for a claim of unlawful discrimination under various provisions of federal, state, and local law listed in Internal Revenue Code section 62(e), a claim against the United States government, or a claim under section 1862(b)(3)(A) of the Social Security Act. Form 1040ez more:label_form_201040ez more:taxes For more information, see Publication 525. Form 1040ez more:label_form_201040ez more:taxes Credit card insurance. Form 1040ez more:label_form_201040ez more:taxes   In most cases, if you receive benefits under a credit card disability or unemployment insurance plan, the benefits are taxable to you. Form 1040ez more:label_form_201040ez more:taxes These plans make the minimum monthly payment on your credit card account if you cannot make the payment due to injury, illness, disability, or unemployment. Form 1040ez more:label_form_201040ez more:taxes Report on Form 1040, line 21, the amount of benefits you received during the year that is more than the amount of the premiums you paid during the year. Form 1040ez more:label_form_201040ez more:taxes Down payment assistance. Form 1040ez more:label_form_201040ez more:taxes   If you purchase a home and receive assistance from a nonprofit corporation to make the down payment, that assistance is not included in your income. Form 1040ez more:label_form_201040ez more:taxes If the corporation qualifies as a tax-exempt charitable organization, the assistance is treated as a gift and is included in your basis of the house. Form 1040ez more:label_form_201040ez more:taxes If the corporation does not qualify, the assistance is treated as a rebate or reduction of the purchase price and is not included in your basis. Form 1040ez more:label_form_201040ez more:taxes Employment agency fees. Form 1040ez more:label_form_201040ez more:taxes   If you get a job through an employment agency, and the fee is paid by your employer, the fee is not includible in your income if you are not liable for it. Form 1040ez more:label_form_201040ez more:taxes However, if you pay it and your employer reimburses you for it, it is includible in your income. Form 1040ez more:label_form_201040ez more:taxes Energy conservation subsidies. Form 1040ez more:label_form_201040ez more:taxes   You can exclude from gross income any subsidy provided, either directly or indirectly, by public utilities for the purchase or installation of an energy conservation measure for a dwelling unit. Form 1040ez more:label_form_201040ez more:taxes Energy conservation measure. Form 1040ez more:label_form_201040ez more:taxes   This includes installations or modifications that are primarily designed to reduce consumption of electricity or natural gas, or improve the management of energy demand. Form 1040ez more:label_form_201040ez more:taxes Dwelling unit. Form 1040ez more:label_form_201040ez more:taxes   This includes a house, apartment, condominium, mobile home, boat, or similar property. Form 1040ez more:label_form_201040ez more:taxes If a building or structure contains both dwelling and other units, any subsidy must be properly allocated. Form 1040ez more:label_form_201040ez more:taxes Estate and trust income. Form 1040ez more:label_form_201040ez more:taxes    An estate or trust, unlike a partnership, may have to pay federal income tax. Form 1040ez more:label_form_201040ez more:taxes If you are a beneficiary of an estate or trust, you may be taxed on your share of its income distributed or required to be distributed to you. Form 1040ez more:label_form_201040ez more:taxes However, there is never a double tax. Form 1040ez more:label_form_201040ez more:taxes Estates and trusts file their returns on Form 1041, U. Form 1040ez more:label_form_201040ez more:taxes S. Form 1040ez more:label_form_201040ez more:taxes Income Tax Return for Estates and Trusts, and your share of the income is reported to you on Schedule K-1 (Form 1041). Form 1040ez more:label_form_201040ez more:taxes Current income required to be distributed. Form 1040ez more:label_form_201040ez more:taxes   If you are the beneficiary of an estate or trust that must distribute all of its current income, you must report your share of the distributable net income, whether or not you actually received it. Form 1040ez more:label_form_201040ez more:taxes Current income not required to be distributed. Form 1040ez more:label_form_201040ez more:taxes    If you are the beneficiary of an estate or trust and the fiduciary has the choice of whether to distribute all or part of the current income, you must report: All income that is required to be distributed to you, whether or not it is actually distributed, plus All other amounts actually paid or credited to you, up to the amount of your share of distributable net income. Form 1040ez more:label_form_201040ez more:taxes How to report. Form 1040ez more:label_form_201040ez more:taxes   Treat each item of income the same way that the estate or trust would treat it. Form 1040ez more:label_form_201040ez more:taxes For example, if a trust's dividend income is distributed to you, you report the distribution as dividend income on your return. Form 1040ez more:label_form_201040ez more:taxes The same rule applies to distributions of tax-exempt interest and capital gains. Form 1040ez more:label_form_201040ez more:taxes   The fiduciary of the estate or trust must tell you the type of items making up your share of the estate or trust income and any credits you are allowed on your individual income tax return. Form 1040ez more:label_form_201040ez more:taxes Losses. Form 1040ez more:label_form_201040ez more:taxes   Losses of estates and trusts generally are not deductible by the beneficiaries. Form 1040ez more:label_form_201040ez more:taxes Grantor trust. Form 1040ez more:label_form_201040ez more:taxes   Income earned by a grantor trust is taxable to the grantor, not the beneficiary, if the grantor keeps certain control over the trust. Form 1040ez more:label_form_201040ez more:taxes (The grantor is the one who transferred property to the trust. Form 1040ez more:label_form_201040ez more:taxes ) This rule applies if the property (or income from the property) put into the trust will or may revert (be returned) to the grantor or the grantor's spouse. Form 1040ez more:label_form_201040ez more:taxes   Generally, a trust is a grantor trust if the grantor has a reversionary interest valued (at the date of transfer) at more than 5% of the value of the transferred property. Form 1040ez more:label_form_201040ez more:taxes Expenses paid by another. Form 1040ez more:label_form_201040ez more:taxes   If your personal expenses are paid for by another person, such as a corporation, the payment may be taxable to you depending upon your relationship with that person and the nature of the payment. Form 1040ez more:label_form_201040ez more:taxes But if the payment makes up for a loss caused by that person, and only restores you to the position you were in before the loss, the payment is not includible in your income. Form 1040ez more:label_form_201040ez more:taxes Fees for services. Form 1040ez more:label_form_201040ez more:taxes   Include all fees for your services in your income. Form 1040ez more:label_form_201040ez more:taxes Examples of these fees are amounts you receive for services you perform as: A corporate director, An executor, administrator, or personal representative of an estate, A manager of a trade or business you operated before declaring Chapter 11 bankruptcy, A notary public, or An election precinct official. Form 1040ez more:label_form_201040ez more:taxes Nonemployee compensation. Form 1040ez more:label_form_201040ez more:taxes   If you are not an employee and the fees for your services from the same payer total $600 or more for the year, you may receive a Form 1099-MISC. Form 1040ez more:label_form_201040ez more:taxes You may need to report your fees as self-employment income. Form 1040ez more:label_form_201040ez more:taxes See Self-Employed Persons , in chapter 1, for a discussion of when you are considered self-employed. Form 1040ez more:label_form_201040ez more:taxes Corporate director. Form 1040ez more:label_form_201040ez more:taxes   Corporate director fees are self-employment income. Form 1040ez more:label_form_201040ez more:taxes Report these payments on Schedule C or Schedule C-EZ (Form 1040). Form 1040ez more:label_form_201040ez more:taxes Personal representatives. Form 1040ez more:label_form_201040ez more:taxes   All personal representatives must include in their gross income fees paid to them from an estate. Form 1040ez more:label_form_201040ez more:taxes If you are not in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on Form 1040, line 21. Form 1040ez more:label_form_201040ez more:taxes If you are in the trade or business of being an executor, report these fees as self-employment income on Schedule C or Schedule C-EZ (Form 1040). Form 1040ez more:label_form_201040ez more:taxes The fee is not includible in income if it is waived. Form 1040ez more:label_form_201040ez more:taxes Manager of trade or business for bankruptcy estate. Form 1040ez more:label_form_201040ez more:taxes   Include in your income all payments received from your bankruptcy estate for managing or operating a trade or business that you operated before you filed for bankruptcy. Form 1040ez more:label_form_201040ez more:taxes Report this income on Form 1040, line 21. Form 1040ez more:label_form_201040ez more:taxes Notary public. Form 1040ez more:label_form_201040ez more:taxes    Report payments for these services on Schedule C or Schedule C-EZ (Form 1040). Form 1040ez more:label_form_201040ez more:taxes These payments are not subject to self-employment tax. Form 1040ez more:label_form_201040ez more:taxes See the separate instructions for Schedule SE (Form 1040) for details. Form 1040ez more:label_form_201040ez more:taxes Election precinct official. Form 1040ez more:label_form_201040ez more:taxes    You should receive a Form W-2 showing payments for services performed as an election official or election worker. Form 1040ez more:label_form_201040ez more:taxes Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Form 1040ez more:label_form_201040ez more:taxes Foster care providers. Form 1040ez more:label_form_201040ez more:taxes   Payments you receive from a state, political subdivision, or a qualified foster care placement agency for providing care to qualified foster individuals in your home generally are not included in your income. Form 1040ez more:label_form_201040ez more:taxes However, you must include in your income payments received for the care of more than 5 individuals age 19 or older and certain difficulty-of-care payments. Form 1040ez more:label_form_201040ez more:taxes   A qualified foster individual is a person who: Is living in a foster family home, and Was placed there by: An agency of a state or one of its political subdivisions, or A qualified foster care placement agency. Form 1040ez more:label_form_201040ez more:taxes Difficulty-of-care payments. Form 1040ez more:label_form_201040ez more:taxes   These are additional payments that are designated by the payer as compensation for providing the additional care that is required for physically, mentally, or emotionally handicapped qualified foster individuals. Form 1040ez more:label_form_201040ez more:taxes A state must determine that the additional compensation is needed, and the care for which the payments are made must be provided in your home. Form 1040ez more:label_form_201040ez more:taxes   You must include in your income difficulty-of-care payments received for more than: 10 qualified foster individuals under age 19, or 5 qualified foster individuals age 19 or older. Form 1040ez more:label_form_201040ez more:taxes Maintaining space in home. Form 1040ez more:label_form_201040ez more:taxes   If you are paid to maintain space in your home for emergency foster care, you must include the payment in your income. Form 1040ez more:label_form_201040ez more:taxes Reporting taxable payments. Form 1040ez more:label_form_201040ez more:taxes    If you receive payments that you must include in your income, you are in business as a foster care provider and you are self-employed. Form 1040ez more:label_form_201040ez more:taxes Report the payments on Schedule C or Schedule C-EZ (Form 1040). Form 1040ez more:label_form_201040ez more:taxes See Publication 587, Business Use of Your Home, to help you determine the amount you can deduct for the use of your home. Form 1040ez more:label_form_201040ez more:taxes Found property. Form 1040ez more:label_form_201040ez more:taxes   If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession. Form 1040ez more:label_form_201040ez more:taxes Free tour. Form 1040ez more:label_form_201040ez more:taxes   If you received a free tour from a travel agency for organizing a group of tourists, you must include its value in your income. Form 1040ez more:label_form_201040ez more:taxes Report the fair market value of the tour on Form 1040, line 21, if you are not in the trade or business of organizing tours. Form 1040ez more:label_form_201040ez more:taxes You cannot deduct your expenses in serving as the voluntary leader of the group at the group's request. Form 1040ez more:label_form_201040ez more:taxes If you organize tours as a trade or business, report the tour's value on Schedule C or Schedule C-EZ (Form 1040). Form 1040ez more:label_form_201040ez more:taxes Gambling winnings. Form 1040ez more:label_form_201040ez more:taxes   You must include your gambling winnings in income on Form 1040, line 21. Form 1040ez more:label_form_201040ez more:taxes If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings. Form 1040ez more:label_form_201040ez more:taxes Lotteries and raffles. Form 1040ez more:label_form_201040ez more:taxes   Winnings from lotteries and raffles are gambling winnings. Form 1040ez more:label_form_201040ez more:taxes In addition to cash winnings, you must include in your income the fair market value of bonds, cars, houses, and other noncash prizes. Form 1040ez more:label_form_201040ez more:taxes    If you win a state lottery prize payable in installments, see Publication 525 for more information. Form 1040ez more:label_form_201040ez more:taxes Form W-2G. Form 1040ez more:label_form_201040ez more:taxes   You may have received a Form W-2G, Certain Gambling Winnings, showing the amount of your gambling winnings and any tax taken out of them. Form 1040ez more:label_form_201040ez more:taxes Include the amount from box 1 on Form 1040, line 21. Form 1040ez more:label_form_201040ez more:taxes Include the amount shown in box 4 on Form 1040, line 62, as federal income tax withheld. Form 1040ez more:label_form_201040ez more:taxes Reporting winnings and recordkeeping. Form 1040ez more:label_form_201040ez more:taxes   For more information on reporting gam