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Free ez tax 1. Free ez tax   Investment Income Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: General InformationSSN for joint account. Free ez tax Custodian account for your child. Free ez tax Penalty for failure to supply SSN. Free ez tax Certification. Free ez tax Underreported interest and dividends. Free ez tax How to stop backup withholding due to underreporting. Free ez tax How to stop backup withholding due to an incorrect identification number. Free ez tax Reporting backup withholding. Free ez tax Nonresident aliens. Free ez tax Penalties. Free ez tax Savings account with parent as trustee. Free ez tax Interest IncomeInterest not reported on Form 1099-INT. Free ez tax Nominees. Free ez tax Incorrect amount. Free ez tax Information reporting requirement. Free ez tax Taxable Interest — General Below-Market Loans U. Free ez tax S. Free ez tax Savings Bonds U. Free ez tax S. Free ez tax Treasury Bills, Notes, and Bonds Bonds Sold Between Interest Dates Insurance State or Local Government Obligations Discount on Debt InstrumentsOriginal Issue Discount (OID) Market Discount Bonds Discount on Short-Term Obligations Election To Report All Interest as OID When To Report Interest IncomeConstructive receipt. Free ez tax How To Report Interest IncomeSchedule B (Form 1040A or 1040). Free ez tax Worksheet for savings bonds distributed from a retirement or profit-sharing plan. Free ez tax File Form 1099-INT with the IRS. Free ez tax Dividends and Other DistributionsDividends not reported on Form 1099-DIV. Free ez tax Nominees. Free ez tax Ordinary Dividends Capital Gain Distributions Nondividend Distributions Liquidating Distributions Distributions of Stock and Stock Rights Other Distributions How To Report Dividend IncomeElection. Free ez tax Independent contractor. Free ez tax Investment interest deducted. Free ez tax Exception 1. Free ez tax Exception 2. Free ez tax Undistributed capital gains. Free ez tax File Form 1099-DIV with the IRS. Free ez tax Stripped Preferred Stock REMICs, FASITs, and Other CDOsREMICs Collateralized Debt Obligations (CDOs) FASITs S CorporationsLimit on losses and deductions. Free ez tax Passive activity losses. Free ez tax Form 8582. Free ez tax Investment ClubsInvestments in name of member. Free ez tax Tax Treatment of the Club Topics - This chapter discusses: Interest Income , Discount on Debt Instruments , When To Report Interest Income , How To Report Interest Income , Dividends and Other Distributions , How To Report Dividend Income , Stripped Preferred Stock , Real estate mortgage investment conduits (REMICs), financial asset securitization investment trusts (FASITs), and other collateralized debt obligations (CDOs) , S Corporations , and Investment Clubs . Free ez tax Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 537 Installment Sales 590 Individual Retirement Arrangements (IRAs) 925 Passive Activity and At-Risk Rules 1212 Guide to Original Issue Discount (OID) Instruments Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends Schedule D (Form 1040) Capital Gains and Losses 1040 U. Free ez tax S. Free ez tax Individual Income Tax Return 1040A U. Free ez tax S. Free ez tax Individual Income Tax Return 1040EZ Income Tax Return for Single and Joint Filers With No Dependents 1099 General Instructions for Certain Information Returns 2439 Notice to Shareholder of Undistributed Long-Term Capital Gains 3115 Application for Change in Accounting Method 6251 Alternative Minimum Tax — Individuals 8582 Passive Activity Loss Limitations 8615 Tax for Certain Children Who Have Unearned Income 8814 Parents' Election To Report Child's Interest and Dividends 8815 Exclusion of Interest From Series EE and I U. Free ez tax S. Free ez tax Savings Bonds Issued After 1989 8818 Optional Form To Record Redemption of Series EE and I U. Free ez tax S. Free ez tax Savings Bonds Issued After 1989 8824 Like-Kind Exchanges 8949 Sales and Other Dispositions of Capital Assets 8960 Net Investment Income Tax—Individuals, Estates, and Trusts See chapter 5, How To Get Tax Help , for information about getting these publications and forms. Free ez tax General Information A few items of general interest are covered here. Free ez tax Recordkeeping. Free ez tax You should keep a list showing sources and investment income amounts you receive during the year. Free ez tax Also keep the forms you receive showing your investment income (Forms 1099-INT, Interest Income, and 1099-DIV, Dividends and Distributions, for example) as an important part of your records. Free ez tax Net investment income tax (NIIT). Free ez tax   Beginning in 2013, you may be subject to the NIIT. Free ez tax The NIIT is a 3. Free ez tax 8% tax on the lesser of your net investment income or the amount of your modified adjusted gross income (MAGI) that is over a threshold amount based on your filing status. Free ez tax    Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household (with qualifying person) $200,000 Qualifying Widow(er) with dependent child $250,000    For more information, see Form 8960 and Instructions for Form 8960. Free ez tax Tax on unearned income of certain children. Free ez tax   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. Free ez tax This may happen if all of the following are true. Free ez tax The child had more than $2,000 of unearned income. Free ez tax The child is required to file a tax return. Free ez tax The child was: Under age 18 at the end of 2013, Age 18 at the end of 2013 and did not have earned income that was more than half of the child's support, or A full-time student over age 18 and under age 24 at the end of 2013 and did not have earned income that was more than half of the child's support. Free ez tax At least one of the child's parents was alive at the end of 2013. Free ez tax The child does not file a joint return for 2013. Free ez tax A child born on January 1, 1996, is considered to be age 18 at the end of 2013; a child born on January 1, 1995, is considered to be age 19 at the end of 2013; a child born on January 1, 1990, is considered to be age 24 at the end of 2013. Free ez tax   If all of these statements are true, Form 8615 must be completed and attached to the child's tax return. Free ez tax If any of these statements is not true, Form 8615 is not required and the child's income is taxed at his or her own tax rate. Free ez tax    However, the parent can choose to include the child's interest and dividends on the parent's return if certain requirements are met. Free ez tax Use Form 8814 for this purpose. Free ez tax   For more information about the tax on unearned income of children and the parents' election, see Publication 929, Tax Rules for Children and Dependents. Free ez tax Beneficiary of an estate or trust. Free ez tax   Interest, dividends, and other investment income you receive as a beneficiary of an estate or trust is generally taxable income. Free ez tax You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Free ez tax , from the fiduciary. Free ez tax Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. Free ez tax Social security number (SSN). Free ez tax   You must give your name and SSN or individual tax identification number (ITIN) to any person required by federal tax law to make a return, statement, or other document that relates to you. Free ez tax This includes payers of interest and dividends. Free ez tax If you do not give your SSN or ITIN to the payer of interest, you may have to pay a penalty. Free ez tax SSN for joint account. Free ez tax   If the funds in a joint account belong to one person, list that person's name first on the account and give that person's SSN to the payer. Free ez tax (For information on who owns the funds in a joint account, see Joint accounts , later. Free ez tax ) If the joint account contains combined funds, give the SSN of the person whose name is listed first on the account. Free ez tax This is because only one name and SSN can be shown on Form 1099. Free ez tax   These rules apply both to joint ownership by a married couple and to joint ownership by other individuals. Free ez tax For example, if you open a joint savings account with your child using funds belonging to the child, list the child's name first on the account and give the child's SSN. Free ez tax Custodian account for your child. Free ez tax   If your child is the actual owner of an account that is recorded in your name as custodian for the child, give the child's SSN to the payer. Free ez tax For example, you must give your child's SSN to the payer of dividends on stock owned by your child, even though the dividends are paid to you as custodian. Free ez tax Penalty for failure to supply SSN. Free ez tax   You will be subject to a penalty if, when required, you fail to: Include your SSN on any return, statement, or other document, Give your SSN to another person who must include it on any return, statement, or other document, or Include the SSN of another person on any return, statement, or other document. Free ez tax The penalty is $50 for each failure up to a maximum penalty of $100,000 for any calendar year. Free ez tax   You will not be subject to this penalty if you can show that your failure to provide the SSN was due to reasonable cause and not to willful neglect. Free ez tax   If you fail to supply an SSN, you may also be subject to backup withholding. Free ez tax Backup withholding. Free ez tax   Your investment income is generally not subject to regular withholding. Free ez tax However, it may be subject to backup withholding to ensure that income tax is collected on the income. Free ez tax Under backup withholding, the bank, broker, or other payer of interest, original issue discount (OID), dividends, cash patronage dividends, or royalties must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. Free ez tax   Backup withholding applies if: You do not give the payer your identification number (either a social security number or an employer identification number) in the required manner, The IRS notifies the payer that you gave an incorrect identification number, The IRS notifies the payer that you are subject to backup withholding on interest or dividends because you have underreported interest or dividends on your income tax return, or You are required, but fail, to certify that you are not subject to backup withholding for the reason described in (3). Free ez tax Certification. Free ez tax   For new accounts paying interest or dividends, you must certify under penalties of perjury that your SSN is correct and that you are not subject to backup withholding. Free ez tax Your payer will give you a Form W-9, Request for Taxpayer Identification Number and Certification, or similar form, to make this certification. Free ez tax If you fail to make this certification, backup withholding may begin immediately on your new account or investment. Free ez tax Underreported interest and dividends. Free ez tax   You will be considered to have underreported your interest and dividends if the IRS has determined for a tax year that: You failed to include any part of a reportable interest or dividend payment required to be shown on your return, or You were required to file a return and to include a reportable interest or dividend payment on that return, but you failed to file the return. Free ez tax How to stop backup withholding due to underreporting. Free ez tax   If you have been notified that you underreported interest or dividends, you can request a determination from the IRS to prevent backup withholding from starting or to stop backup withholding once it has begun. Free ez tax You must show that at least one of the following situations applies. Free ez tax No underreporting occurred. Free ez tax You have a bona fide dispute with the IRS about whether underreporting occurred. Free ez tax Backup withholding will cause or is causing an undue hardship, and it is unlikely that you will underreport interest and dividends in the future. Free ez tax You have corrected the underreporting by filing a return if you did not previously file one and by paying all taxes, penalties, and interest due for any underreported interest or dividend payments. Free ez tax   If the IRS determines that backup withholding should stop, it will provide you with a certification and will notify the payers who were sent notices earlier. Free ez tax How to stop backup withholding due to an incorrect identification number. Free ez tax   If you have been notified by a payer that you are subject to backup withholding because you have provided an incorrect SSN or employer identification number, you can stop it by following the instructions the payer gives you. Free ez tax Reporting backup withholding. Free ez tax   If backup withholding is deducted from your interest or dividend income or other reportable payment, the bank or other business must give you an information return for the year (for example, a Form 1099-INT) indicating the amount withheld. Free ez tax The information return will show any backup withholding as “Federal income tax withheld. Free ez tax ” Nonresident aliens. Free ez tax    Generally, payments made to nonresident aliens are not subject to backup withholding. Free ez tax You can use Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, to certify exempt status. Free ez tax However, this does not exempt you from the 30% (or lower treaty) withholding rate that may apply to your investment income. Free ez tax For information on the 30% rate, see Publication 519, U. Free ez tax S. Free ez tax Tax Guide for Aliens. Free ez tax Penalties. Free ez tax   There are civil and criminal penalties for giving false information to avoid backup withholding. Free ez tax The civil penalty is $500. Free ez tax The criminal penalty, upon conviction, is a fine of up to $1,000, or imprisonment of up to 1 year, or both. Free ez tax Where to report investment income. Free ez tax   Table 1-1 gives an overview of the forms and schedules to use to report some common types of investment income. Free ez tax But see the rest of this publication for detailed information about reporting investment income. Free ez tax Joint accounts. Free ez tax   If two or more persons hold property (such as a savings account, bond, or stock) as joint tenants, tenants by the entirety, or tenants in common, each person's share of any interest or dividends from the property is determined by local law. Free ez tax Community property states. Free ez tax   If you are married and receive a distribution that is community income, one-half of the distribution is generally considered to be received by each spouse. Free ez tax If you file separate returns, you must each report one-half of any taxable distribution. Free ez tax See Publication 555, Community Property, for more information on community income. Free ez tax   If the distribution is not considered community property and you and your spouse file separate returns, each of you must report your separate taxable distributions. Free ez tax Example. Free ez tax You and your spouse have a joint money market account. Free ez tax Under state law, half the income from the account belongs to you, and half belongs to your spouse. Free ez tax If you file separate returns, you each report half the income. Free ez tax Income from property given to a child. Free ez tax   Property you give as a parent to your child under the Model Gifts of Securities to Minors Act, the Uniform Gifts to Minors Act, or any similar law becomes the child's property. Free ez tax   Income from the property is taxable to the child, except that any part used to satisfy a legal obligation to support the child is taxable to the parent or guardian having that legal obligation. Free ez tax Savings account with parent as trustee. Free ez tax   Interest income from a savings account opened for a minor child, but placed in the name and subject to the order of the parents as trustees, is taxable to the child if, under the law of the state in which the child resides, both of the following are true. Free ez tax The savings account legally belongs to the child. Free ez tax The parents are not legally permitted to use any of the funds to support the child. Free ez tax Table 1-1. Free ez tax Where To Report Common Types of Investment Income (For detailed information about reporting investment income, see the rest of this publication, especially How To Report Interest Income and How To Report Dividend Income in chapter 1. Free ez tax ) Type of Income If you file Form 1040, report on . Free ez tax . Free ez tax . Free ez tax If you can file Form 1040A, report on . Free ez tax . Free ez tax . Free ez tax If you can file Form 1040EZ, report on . Free ez tax . Free ez tax . Free ez tax Tax-exempt interest (Form 1099-INT, box 8) Line 8b Line 8b Space to the left of line 2 (enter “TEI” and the amount) Taxable interest that totals $1,500 or less Line 8a (You may need to file Schedule B as well. Free ez tax ) Line 8a (You may need to file Schedule B as well. Free ez tax ) Line 2 Taxable interest that totals more than $1,500 Line 8a; also use Schedule B, line 1 Line 8a; also use Schedule B, line 1   Savings bond interest you will exclude because of higher education expenses Schedule B; also use Form 8815 Schedule B; also use Form 8815   Ordinary dividends that total $1,500 or less Line 9a (You may need to file Schedule B as well. Free ez tax ) Line 9a (You may need to file Schedule B as well. Free ez tax )   Ordinary dividends that total more than $1,500 Line 9a; also use Schedule B, line 5 Line 9a; also use Schedule B, line 5   Qualified dividends (if you do not have to file Schedule D) Line 9b; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 2 Line 9b; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 2   Qualified dividends (if you have to file Schedule D) Line 9b; also use the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet, line 2 You cannot use Form 1040A    You cannot use Form 1040EZ Capital gain distributions (if you do not have to file Schedule D) Line 13; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 3 Line 10; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 3   Capital gain distributions (if you have to file Schedule D) Schedule D, line 13; also use the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet     Section 1250, 1202, or collectibles gain (Form 1099-DIV, box 2b, 2c, or 2d) Form 8949 and Schedule D     Nondividend distributions (Form 1099-DIV, box 3) Generally not reported*     Undistributed capital gains (Form 2439, boxes 1a - 1d) Schedule D     Gain or loss from sales of stocks or bonds Line 13; also use Form 8949, Schedule D, and the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet You cannot use Form 1040A   Gain or loss from exchanges of like-kind investment property Line 13; also use Schedule D, Form 8824, and the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet     *Report any amounts in excess of your basis in your mutual fund shares on Form 8949. Free ez tax Use Part II if you held the shares more than 1 year. Free ez tax Use Part I if you held your mutual fund shares 1 year or less. Free ez tax For details on Form 8949, see Reporting Capital Gains and Losses in chapter 4, and the Instructions for Form 8949. Free ez tax Accuracy-related penalty. Free ez tax   An accuracy-related penalty of 20% can be charged for underpayments of tax due to negligence or disregard of rules or regulations or substantial understatement of tax. Free ez tax For information on the penalty and any interest that applies, see Penalties in chapter 2. Free ez tax Interest Income This section discusses the tax treatment of different types of interest income. Free ez tax In general, any interest that you receive or that is credited to your account and can be withdrawn is taxable income. Free ez tax (It does not have to be entered in your passbook. Free ez tax ) Exceptions to this rule are discussed later. Free ez tax Form 1099-INT. Free ez tax   Interest income is generally reported to you on Form 1099-INT, or a similar statement, by banks, savings and loans, and other payers of interest. Free ez tax This form shows you the interest you received during the year. Free ez tax Keep this form for your records. Free ez tax You do not have to attach it to your tax return. Free ez tax   Report on your tax return the total interest income you receive for the tax year. Free ez tax Interest not reported on Form 1099-INT. Free ez tax   Even if you do not receive Form 1099-INT, you must still report all of your interest income. Free ez tax For example, you may receive distributive shares of interest from partnerships or S corporations. Free ez tax This interest is reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Free ez tax , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. Free ez tax Nominees. Free ez tax   Generally, if someone receives interest as a nominee for you, that person must give you a Form 1099-INT showing the interest received on your behalf. Free ez tax   If you receive a Form 1099-INT that includes amounts belonging to another person, see the discussion on Nominee distributions , later, under How To Report Interest Income. Free ez tax Incorrect amount. Free ez tax   If you receive a Form 1099-INT that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. Free ez tax The new Form 1099-INT you receive will be marked “Corrected. Free ez tax ” Form 1099-OID. Free ez tax   Reportable interest income also may be shown on Form 1099-OID, Original Issue Discount. Free ez tax For more information about amounts shown on this form, see Original Issue Discount (OID) , later in this chapter. Free ez tax Exempt-interest dividends. Free ez tax   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. Free ez tax (However, see Information reporting requirement , next. Free ez tax ) Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. Free ez tax You do not reduce your basis for distributions that are exempt-interest dividends. Free ez tax Information reporting requirement. Free ez tax   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file. Free ez tax This is an information reporting requirement and does not change the exempt-interest dividends into taxable income. Free ez tax See How To Report Interest Income , later. Free ez tax Note. Free ez tax Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. Free ez tax The exempt-interest dividends subject to the alternative minimum tax are shown in box 11 of Form 1099-DIV. Free ez tax See Form 6251 and its instructions for more information about this tax. Free ez tax Private activity bonds are discussed later under State or Local Government Obligations. Free ez tax Interest on VA dividends. Free ez tax   Interest on insurance dividends left on deposit with the Department of Veterans Affairs (VA) is not taxable. Free ez tax This includes interest paid on dividends on converted United States Government Life Insurance policies and on National Service Life Insurance policies. Free ez tax Individual retirement arrangements (IRAs). Free ez tax   Interest on a Roth IRA generally is not taxable. Free ez tax Interest on a traditional IRA is tax deferred. Free ez tax You generally do not include it in your income until you make withdrawals from the IRA. Free ez tax See Publication 590 for more information. Free ez tax Taxable Interest — General Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. Free ez tax The following are some sources of taxable interest. Free ez tax Dividends that are actually interest. Free ez tax   Certain distributions commonly called dividends are actually interest. Free ez tax You must report as interest so-called “dividends” on deposits or on share accounts in: Cooperative banks, Credit unions, Domestic building and loan associations, Domestic savings and loan associations, Federal savings and loan associations, and Mutual savings banks. Free ez tax  The “dividends” will be shown as interest income on Form 1099-INT. Free ez tax Money market funds. Free ez tax   Money market funds are offered by nonbank financial institutions such as mutual funds and stock brokerage houses, and pay dividends. Free ez tax Generally, amounts you receive from money market funds should be reported as dividends, not as interest. Free ez tax Certificates of deposit and other deferred interest accounts. Free ez tax   If you open any of these accounts, interest may be paid at fixed intervals of 1 year or less during the term of the account. Free ez tax You generally must include this interest in your income when you actually receive it or are entitled to receive it without paying a substantial penalty. Free ez tax The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. Free ez tax If interest is deferred for more than 1 year, see Original Issue Discount (OID) , later. Free ez tax Interest subject to penalty for early withdrawal. Free ez tax   If you withdraw funds from a deferred interest account before maturity, you may have to pay a penalty. Free ez tax You must report the total amount of interest paid or credited to your account during the year, without subtracting the penalty. Free ez tax See Penalty on early withdrawal of savings under How To Report Interest Income, later, for more information on how to report the interest and deduct the penalty. Free ez tax Money borrowed to invest in certificate of deposit. Free ez tax   The interest you pay on money borrowed from a bank or savings institution to meet the minimum deposit required for a certificate of deposit from the institution and the interest you earn on the certificate are two separate items. Free ez tax You must report the total interest you earn on the certificate in your income. Free ez tax If you itemize deductions, you can deduct the interest you pay as investment interest, up to the amount of your net investment income. Free ez tax See Interest Expenses in chapter 3. Free ez tax Example. Free ez tax You deposited $5,000 with a bank and borrowed $5,000 from the bank to make up the $10,000 minimum deposit required to buy a 6-month certificate of deposit. Free ez tax The certificate earned $575 at maturity in 2013, but you received only $265, which represented the $575 you earned minus $310 interest charged on your $5,000 loan. Free ez tax The bank gives you a Form 1099-INT for 2013 showing the $575 interest you earned. Free ez tax The bank also gives you a statement showing that you paid $310 interest for 2013. Free ez tax You must include the $575 in your income. Free ez tax If you itemize your deductions on Schedule A (Form 1040), Itemized Deductions, you can deduct $310, subject to the net investment income limit. Free ez tax Gift for opening account. Free ez tax   If you receive noncash gifts or services for making deposits or for opening an account in a savings institution, you may have to report the value as interest. Free ez tax   For deposits of less than $5,000, gifts or services valued at more than $10 must be reported as interest. Free ez tax For deposits of $5,000 or more, gifts or services valued at more than $20 must be reported as interest. Free ez tax The value is determined by the cost to the financial institution. Free ez tax Example. Free ez tax You open a savings account at your local bank and deposit $800. Free ez tax The account earns $20 interest. Free ez tax You also receive a $15 calculator. Free ez tax If no other interest is credited to your account during the year, the Form 1099-INT you receive will show $35 interest for the year. Free ez tax You must report $35 interest income on your tax return. Free ez tax Interest on insurance dividends. Free ez tax   Interest on insurance dividends left on deposit with an insurance company that can be withdrawn annually is taxable to you in the year it is credited to your account. Free ez tax However, if you can withdraw it only on the anniversary date of the policy (or other specified date), the interest is taxable in the year that date occurs. Free ez tax Prepaid insurance premiums. Free ez tax   Any increase in the value of prepaid insurance premiums, advance premiums, or premium deposit funds is interest if it is applied to the payment of premiums due on insurance policies or made available for you to withdraw. Free ez tax U. Free ez tax S. Free ez tax obligations. Free ez tax   Interest on U. Free ez tax S. Free ez tax obligations, such as U. Free ez tax S. Free ez tax Treasury bills, notes, and bonds, issued by any agency or instrumentality of the United States is taxable for federal income tax purposes. Free ez tax Interest on tax refunds. Free ez tax   Interest you receive on tax refunds is taxable income. Free ez tax Interest on condemnation award. Free ez tax   If the condemning authority pays you interest to compensate you for a delay in payment of an award, the interest is taxable. Free ez tax Installment sale payments. Free ez tax   If a contract for the sale or exchange of property provides for deferred payments, it also usually provides for interest payable with the deferred payments. Free ez tax That interest is taxable when you receive it. Free ez tax If little or no interest is provided for in a deferred payment contract, part of each payment may be treated as interest. Free ez tax See Unstated Interest and Original Issue Discount (OID) in Publication 537. Free ez tax Interest on annuity contract. Free ez tax   Accumulated interest on an annuity contract you sell before its maturity date is taxable. Free ez tax Usurious interest. Free ez tax   Usurious interest is interest charged at an illegal rate. Free ez tax This is taxable as interest unless state law automatically changes it to a payment on the principal. Free ez tax Interest income on frozen deposits. Free ez tax   Exclude from your gross income interest on frozen deposits. Free ez tax A deposit is frozen if, at the end of the year, you cannot withdraw any part of the deposit because: The financial institution is bankrupt or insolvent, or The state in which the institution is located has placed limits on withdrawals because other financial institutions in the state are bankrupt or insolvent. Free ez tax   The amount of interest you must exclude is the interest that was credited on the frozen deposits minus the sum of: The net amount you withdrew from these deposits during the year, and The amount you could have withdrawn as of the end of the year (not reduced by any penalty for premature withdrawals of a time deposit). Free ez tax If you receive a Form 1099-INT for interest income on deposits that were frozen at the end of 2013, see Frozen deposits under How To Report Interest Income for information about reporting this interest income exclusion on your tax return. Free ez tax   The interest you exclude is treated as credited to your account in the following year. Free ez tax You must include it in income in the year you can withdraw it. Free ez tax Example. Free ez tax $100 of interest was credited on your frozen deposit during the year. Free ez tax You withdrew $80 but could not withdraw any more as of the end of the year. Free ez tax You must include $80 in your income and exclude $20 from your income for the year. Free ez tax You must include the $20 in your income for the year you can withdraw it. Free ez tax Bonds traded flat. Free ez tax    If you buy a bond at a discount when interest has been defaulted or when the interest has accrued but has not been paid, the transaction is described as trading a bond flat. Free ez tax The defaulted or unpaid interest is not income and is not taxable as interest if paid later. Free ez tax When you receive a payment of that interest, it is a return of capital that reduces the remaining cost basis of your bond. Free ez tax Interest that accrues after the date of purchase, however, is taxable interest income for the year received or accrued. Free ez tax See Bonds Sold Between Interest Dates , later in this chapter. Free ez tax Below-Market Loans If you make a below-market gift or demand loan, you must report as interest income any forgone interest (defined later) from that loan. Free ez tax The below-market loan rules and exceptions are described in this section. Free ez tax For more information, see section 7872 of the Internal Revenue Code and its regulations. Free ez tax If you receive a below-market loan, you may be able to deduct the forgone interest as well as any interest you actually paid, but not if it is personal interest. Free ez tax Loans subject to the rules. Free ez tax   The rules for below-market loans apply to: Gift loans, Pay-related loans, Corporation-shareholder loans, Tax avoidance loans, and Certain loans made to qualified continuing care facilities under a continuing care contract. Free ez tax A pay-related loan is any below-market loan between an employer and an employee or between an independent contractor and a person for whom the contractor provides services. Free ez tax A tax avoidance loan is any below-market loan where the avoidance of federal tax is one of the main purposes of the interest arrangement. Free ez tax Forgone interest. Free ez tax   For any period, forgone interest is: The amount of interest that would be payable for that period if interest accrued on the loan at the applicable federal rate and was payable annually on December 31, minus Any interest actually payable on the loan for the period. Free ez tax Applicable federal rate. Free ez tax   Applicable federal rates are published by the IRS each month in the Internal Revenue Bulletin. Free ez tax Some IRS offices have these bulletins available for research. Free ez tax See chapter 5, How To Get Tax Help , for other ways to get this information. Free ez tax Rules for below-market loans. Free ez tax   The rules that apply to a below-market loan depend on whether the loan is a gift loan, demand loan, or term loan. Free ez tax Gift and demand loans. Free ez tax   A gift loan is any below-market loan where the forgone interest is in the nature of a gift. Free ez tax   A demand loan is a loan payable in full at any time upon demand by the lender. Free ez tax A demand loan is a below-market loan if no interest is charged or if interest is charged at a rate below the applicable federal rate. Free ez tax   A demand loan or gift loan that is a below-market loan is generally treated as an arm's-length transaction in which the lender is treated as having made: A loan to the borrower in exchange for a note that requires the payment of interest at the applicable federal rate, and An additional payment to the borrower in an amount equal to the forgone interest. Free ez tax The borrower is generally treated as transferring the additional payment back to the lender as interest. Free ez tax The lender must report that amount as interest income. Free ez tax   The lender's additional payment to the borrower is treated as a gift, dividend, contribution to capital, pay for services, or other payment, depending on the substance of the transaction. Free ez tax The borrower may have to report this payment as taxable income, depending on its classification. Free ez tax These transfers are considered to occur annually, generally on December 31. Free ez tax Term loans. Free ez tax   A term loan is any loan that is not a demand loan. Free ez tax A term loan is a below-market loan if the amount of the loan is more than the present value of all payments due under the loan. Free ez tax   A lender who makes a below-market term loan other than a gift loan is treated as transferring an additional lump-sum cash payment to the borrower (as a dividend, contribution to capital, etc. Free ez tax ) on the date the loan is made. Free ez tax The amount of this payment is the amount of the loan minus the present value, at the applicable federal rate, of all payments due under the loan. Free ez tax An equal amount is treated as original issue discount (OID). Free ez tax The lender must report the annual part of the OID as interest income. Free ez tax The borrower may be able to deduct the OID as interest expense. Free ez tax See Original Issue Discount (OID) , later. Free ez tax Exceptions to the below-market loan rules. Free ez tax   Exceptions to the below-market loan rules are discussed here. Free ez tax Exception for loans of $10,000 or less. Free ez tax   The rules for below-market loans do not apply to any day on which the total outstanding amount of loans between the borrower and lender is $10,000 or less. Free ez tax This exception applies only to: Gift loans between individuals if the gift loan is not directly used to buy or carry income-producing assets, and Pay-related loans or corporation-shareholder loans if the avoidance of federal tax is not a principal purpose of the interest arrangement. Free ez tax This exception does not apply to a term loan described in (2) earlier that previously has been subject to the below-market loan rules. Free ez tax Those rules will continue to apply even if the outstanding balance is reduced to $10,000 or less. Free ez tax Exception for loans to continuing care facilities. Free ez tax   Loans to qualified continuing care facilities under continuing care contracts are not subject to the rules for below-market loans for the calendar year if the lender or the lender's spouse is age 62 or older at the end of the year. Free ez tax For the definitions of qualified continuing care facility and continuing care contract, see Internal Revenue Code section 7872(h). Free ez tax Exception for loans without significant tax effect. Free ez tax   Loans are excluded from the below-market loan rules if their interest arrangements do not have a significant effect on the federal tax liability of the borrower or the lender. Free ez tax These loans include: Loans made available by the lender to the general public on the same terms and conditions that are consistent with the lender's customary business practice; Loans subsidized by a federal, state, or municipal government that are made available under a program of general application to the public; Certain employee-relocation loans; Certain loans from a foreign person, unless the interest income would be effectively connected with the conduct of a U. Free ez tax S. Free ez tax trade or business and would not be exempt from U. Free ez tax S. Free ez tax tax under an income tax treaty; Gift loans to a charitable organization, contributions to which are deductible, if the total outstanding amount of loans between the organization and lender is $250,000 or less at all times during the tax year; and Other loans on which the interest arrangement can be shown to have no significant effect on the federal tax liability of the lender or the borrower. Free ez tax For a loan described in (6) above, all the facts and circumstances are used to determine if the interest arrangement has a significant effect on the federal tax liability of the lender or borrower. Free ez tax Some factors to be considered are: Whether items of income and deduction generated by the loan offset each other; The amount of these items; The cost to you of complying with the below-market loan rules, if they were to apply; and Any reasons other than taxes for structuring the transaction as a below-market loan. Free ez tax If you structure a transaction to meet this exception and one of the principal purposes of that structure is the avoidance of federal tax, the loan will be considered a tax-avoidance loan, and this exception will not apply. Free ez tax Limit on forgone interest for gift loans of $100,000 or less. Free ez tax   For gift loans between individuals, if the outstanding loans between the lender and borrower total $100,000 or less, the forgone interest to be included in income by the lender and deducted by the borrower is limited to the amount of the borrower's net investment income for the year. Free ez tax If the borrower's net investment income is $1,000 or less, it is treated as zero. Free ez tax This limit does not apply to a loan if the avoidance of federal tax is one of the main purposes of the interest arrangement. Free ez tax Effective dates. Free ez tax    These rules apply to term loans made after June 6, 1984, and to demand loans outstanding after that date. Free ez tax U. Free ez tax S. Free ez tax Savings Bonds This section provides tax information on U. Free ez tax S. Free ez tax savings bonds. Free ez tax It explains how to report the interest income on these bonds and how to treat transfers of these bonds. Free ez tax U. Free ez tax S. Free ez tax savings bonds currently offered to individuals include Series EE bonds and Series I bonds. Free ez tax For other information on U. Free ez tax S. Free ez tax savings bonds, write to:  For Series HH/H: Bureau of the Fiscal Service Division of Customer Assistance P. Free ez tax O. Free ez tax Box 2186 Parkersburg, WV 26106-2186  For Series EE and I paper savings bonds: Bureau of the Fiscal Service Division of Customer Assistance P. Free ez tax O. Free ez tax Box 7012 Parkersburg, WV 26106-7012  For Series EE and I electronic bonds: Bureau of the Fiscal Service  Division of Customer Assistance P. Free ez tax O. Free ez tax Box 7015 Parkersburg, WV 26106-7015 Or, on the Internet, visit: www. Free ez tax treasurydirect. Free ez tax gov/indiv/indiv. Free ez tax htm. Free ez tax Accrual method taxpayers. Free ez tax   If you use an accrual method of accounting, you must report interest on U. Free ez tax S. Free ez tax savings bonds each year as it accrues. Free ez tax You cannot postpone reporting interest until you receive it or until the bonds mature. Free ez tax Cash method taxpayers. Free ez tax   If you use the cash method of accounting, as most individual taxpayers do, you generally report the interest on U. Free ez tax S. Free ez tax savings bonds when you receive it. Free ez tax But see Reporting options for cash method taxpayers , later. Free ez tax Series HH bonds. Free ez tax   These bonds were issued at face value. Free ez tax Interest is paid twice a year by direct deposit to your bank account. Free ez tax If you are a cash method taxpayer, you must report interest on these bonds as income in the year you receive it. Free ez tax   Series HH bonds were first offered in 1980 and last offered in August 2004. Free ez tax Before 1980, series H bonds were issued. Free ez tax Series H bonds are treated the same as series HH bonds. Free ez tax If you are a cash method taxpayer, you must report the interest when you receive it. Free ez tax   Series H bonds have a maturity period of 30 years. Free ez tax Series HH bonds mature in 20 years. Free ez tax The last series H bonds matured in 2009. Free ez tax The last series HH bonds will mature in 2024. Free ez tax Series EE and series I bonds. Free ez tax   Interest on these bonds is payable when you redeem the bonds. Free ez tax The difference between the purchase price and the redemption value is taxable interest. Free ez tax Series EE bonds. Free ez tax   Series EE bonds were first offered in January 1980 and have a maturity period of 30 years. Free ez tax Before July 1980, series E bonds were issued. Free ez tax The original 10-year maturity period of series E bonds has been extended to 40 years for bonds issued before December 1965 and 30 years for bonds issued after November 1965. Free ez tax Paper series EE and series E bonds are issued at a discount. Free ez tax The face value is payable to you at maturity. Free ez tax Electronic series EE bonds are issued at their face value. Free ez tax The face value plus accrued interest is payable to you at maturity. Free ez tax As of January 1, 2012, paper savings bonds were no longer sold at financial institutions. Free ez tax    Owners of paper series EE bonds can convert them to electronic bonds. Free ez tax These converted bonds do not retain the denomination listed on the paper certificate but are posted at their purchase price (with accrued interest). Free ez tax Series I bonds. Free ez tax   Series I bonds were first offered in 1998. Free ez tax These are inflation-indexed bonds issued at their face amount with a maturity period of 30 years. Free ez tax The face value plus all accrued interest is payable to you at maturity. Free ez tax Reporting options for cash method taxpayers. Free ez tax   If you use the cash method of reporting income, you can report the interest on series EE, series E, and series I bonds in either of the following ways. Free ez tax Method 1. Free ez tax Postpone reporting the interest until the earlier of the year you cash or dispose of the bonds or the year in which they mature. Free ez tax (However, see Savings bonds traded , later. Free ez tax )  Note. Free ez tax Series EE bonds issued in 1983 matured in 2013. Free ez tax If you have used method 1, you generally must report the interest on these bonds on your 2013 return. Free ez tax The last series E bonds were issued in 1980 and matured in 2010. Free ez tax If you used method 1, you generally should have reported the interest on these bonds on your 2010 return. Free ez tax Method 2. Free ez tax Choose to report the increase in redemption value as interest each year. Free ez tax  You must use the same method for all series EE, series E, and series I bonds you own. Free ez tax If you do not choose method 2 by reporting the increase in redemption value as interest each year, you must use method 1. Free ez tax If you plan to cash your bonds in the same year you will pay for higher educational expenses, you may want to use method 1 because you may be able to exclude the interest from your income. Free ez tax To learn how, see Education Savings Bond Program, later. Free ez tax Change from method 1. Free ez tax   If you want to change your method of reporting the interest from method 1 to method 2, you can do so without permission from the IRS. Free ez tax In the year of change, you must report all interest accrued to date and not previously reported for all your bonds. Free ez tax   Once you choose to report the interest each year, you must continue to do so for all series EE, series E, and series I bonds you own and for any you get later, unless you request permission to change, as explained next. Free ez tax Change from method 2. Free ez tax   To change from method 2 to method 1, you must request permission from the IRS. Free ez tax Permission for the change is automatically granted if you send the IRS a statement that meets all the following requirements. Free ez tax You have typed or printed the following number at the top: “131. Free ez tax ” It includes your name and social security number under “131. Free ez tax ” It includes the year of change (both the beginning and ending dates). Free ez tax It identifies the savings bonds for which you are requesting this change. Free ez tax It includes your agreement to: Report all interest on any bonds acquired during or after the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest; and Report all interest on the bonds acquired before the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, with the exception of the interest reported in prior tax years. Free ez tax   You must attach this statement to your tax return for the year of change, which you must file by the due date (including extensions). Free ez tax   You can have an automatic extension of 6 months from the due date of your return for the year of change (excluding extensions) to file the statement with an amended return. Free ez tax On the statement, type or print “Filed pursuant to section 301. Free ez tax 9100-2. Free ez tax ” To get this extension, you must have filed your original return for the year of the change by the due date (including extensions). Free ez tax    By the date you file the original statement with your return, you must also send a signed copy to the address below. Free ez tax    Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) P. Free ez tax O. Free ez tax Box 7604 Benjamin Franklin Station Washington, DC 20044   If you use a private delivery service, send the signed copy to the address below. Free ez tax Internal Revenue Service Attention: CC:IT&A  (Automatic Rulings Branch) Room 5336 1111 Constitution Avenue, NW Washington, DC 20224    Instead of filing this statement, you can request permission to change from method 2 to method 1 by filing Form 3115. Free ez tax In that case, follow the form instructions for an automatic change. Free ez tax No user fee is required. Free ez tax Co-owners. Free ez tax   If a U. Free ez tax S. Free ez tax savings bond is issued in the names of co-owners, such as you and your child or you and your spouse, interest on the bond is generally taxable to the co-owner who bought the bond. Free ez tax One co-owner's funds used. Free ez tax   If you used your funds to buy the bond, you must pay the tax on the interest. Free ez tax This is true even if you let the other co-owner redeem the bond and keep all the proceeds. Free ez tax Under these circumstances, the co-owner who redeemed the bond will receive a Form 1099-INT at the time of redemption and must provide you with another Form 1099-INT showing the amount of interest from the bond taxable to you. Free ez tax The co-owner who redeemed the bond is a “nominee. Free ez tax ” See Nominee distributions under How To Report Interest Income, later, for more information about how a person who is a nominee reports interest income belonging to another person. Free ez tax Both co-owners' funds used. Free ez tax   If you and the other co-owner each contribute part of the bond's purchase price, the interest is generally taxable to each of you, in proportion to the amount each of you paid. Free ez tax Community property. Free ez tax   If you and your spouse live in a community property state and hold bonds as community property, one-half of the interest is considered received by each of you. Free ez tax If you file separate returns, each of you generally must report one-half of the bond interest. Free ez tax For more information about community property, see Publication 555. Free ez tax Table 1-2. Free ez tax   These rules are also shown in Table 1-2. Free ez tax Child as only owner. Free ez tax   Interest on U. Free ez tax S. Free ez tax savings bonds bought for and registered only in the name of your child is income to your child, even if you paid for the bonds and are named as beneficiary. Free ez tax If the bonds are series EE, series E, or series I bonds, the interest on the bonds is income to your child in the earlier of the year the bonds are cashed or disposed of or the year the bonds mature, unless your child chooses to report the interest income each year. Free ez tax Choice to report interest each year. Free ez tax   The choice to report the accrued interest each year can be made either by your child or by you for your child. Free ez tax This choice is made by filing an income tax return that shows all the interest earned to date, and by stating on the return that your child chooses to report the interest each year. Free ez tax Either you or your child should keep a copy of this return. Free ez tax   Unless your child is otherwise required to file a tax return for any year after making this choice, your child does not have to file a return only to report the annual accrual of U. Free ez tax S. Free ez tax savings bond interest under this choice. Free ez tax However, see Tax on unearned income of certain children , earlier, under General Information. Free ez tax Neither you nor your child can change the way you report the interest unless you request permission from the IRS, as discussed earlier under Change from method 2 . Free ez tax Ownership transferred. Free ez tax   If you bought series E, series EE, or series I bonds entirely with your own funds and had them reissued in your co-owner's name or beneficiary's name alone, you must include in your gross income for the year of reissue all interest that you earned on these bonds and have not previously reported. Free ez tax But, if the bonds were reissued in your name alone, you do not have to report the interest accrued at that time. Free ez tax   This same rule applies when bonds (other than bonds held as community property) are transferred between spouses or incident to divorce. Free ez tax Example. Free ez tax You bought series EE bonds entirely with your own funds. Free ez tax You did not choose to report the accrued interest each year. Free ez tax Later, you transfer the bonds to your former spouse under a divorce agreement. Free ez tax You must include the deferred accrued interest, from the date of the original issue of the bonds to the date of transfer, in your income in the year of transfer. Free ez tax Your former spouse includes in income the interest on the bonds from the date of transfer to the date of redemption. Free ez tax Table 1-2. Free ez tax Who Pays the Tax on U. Free ez tax S. Free ez tax Savings Bond Interest IF . Free ez tax . Free ez tax . Free ez tax THEN the interest must be reported by . Free ez tax . Free ez tax . Free ez tax you buy a bond in your name and the name of another person as co-owners, using only your own funds you. Free ez tax you buy a bond in the name of another person, who is the sole owner of the bond the person for whom you bought the bond. Free ez tax you and another person buy a bond as co-owners, each contributing part of the purchase price both you and the other co-owner, in proportion to the amount each paid for the bond. Free ez tax you and your spouse, who live in a community property state, buy a bond that is community property you and your spouse. Free ez tax If you file separate returns, both you and your spouse generally report one-half of the interest. Free ez tax Purchased jointly. Free ez tax   If you and a co-owner each contributed funds to buy series E, series EE, or series I bonds jointly and later have the bonds reissued in the co-owner's name alone, you must include in your gross income for the year of reissue your share of all the interest earned on the bonds that you have not previously reported. Free ez tax The former co-owner does not have to include in gross income at the time of reissue his or her share of the interest earned that was not reported before the transfer. Free ez tax This interest, however, as well as all interest earned after the reissue, is income to the former co-owner. Free ez tax   This income-reporting rule also applies when the bonds are reissued in the name of your former co-owner and a new co-owner. Free ez tax But the new co-owner will report only his or her share of the interest earned after the transfer. Free ez tax   If bonds that you and a co-owner bought jointly are reissued to each of you separately in the same proportion as your contribution to the purchase price, neither you nor your co-owner has to report at that time the interest earned before the bonds were reissued. Free ez tax Example 1. Free ez tax You and your spouse each spent an equal amount to buy a $1,000 series EE savings bond. Free ez tax The bond was issued to you and your spouse as co-owners. Free ez tax You both postpone reporting interest on the bond. Free ez tax You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Free ez tax At that time neither you nor your spouse has to report the interest earned to the date of reissue. Free ez tax Example 2. Free ez tax You bought a $1,000 series EE savings bond entirely with your own funds. Free ez tax The bond was issued to you and your spouse as co-owners. Free ez tax You both postponed reporting interest on the bond. Free ez tax You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Free ez tax You must report half the interest earned to the date of reissue. Free ez tax Transfer to a trust. Free ez tax   If you own series E, series EE, or series I bonds and transfer them to a trust, giving up all rights of ownership, you must include in your income for that year the interest earned to the date of transfer if you have not already reported it. Free ez tax However, if you are considered the owner of the trust and if the increase in value both before and after the transfer continues to be taxable to you, you can continue to defer reporting the interest earned each year. Free ez tax You must include the total interest in your income in the year you cash or dispose of the bonds or the year the bonds finally mature, whichever is earlier. Free ez tax   The same rules apply to previously unreported interest on series EE or series E bonds if the transfer to a trust consisted of series HH or series H bonds you acquired in a trade for the series EE or series E bonds. Free ez tax See Savings bonds traded , later. Free ez tax Decedents. Free ez tax   The manner of reporting interest income on series E, series EE, or series I bonds, after the death of the owner (decedent), depends on the accounting and income-reporting methods previously used by the decedent. Free ez tax Decedent who reported interest each year. Free ez tax   If the bonds transferred because of death were owned by a person who used an accrual method, or who used the cash method and had chosen to report the interest each year, the interest earned in the year of death up to the date of death must be reported on that person's final return. Free ez tax The person who acquires the bonds includes in income only interest earned after the date of death. Free ez tax Decedent who postponed reporting interest. Free ez tax   If the transferred bonds were owned by a decedent who had used the cash method and had not chosen to report the interest each year, and who had bought the bonds entirely with his or her own funds, all interest earned before death must be reported in one of the following ways. Free ez tax The surviving spouse or personal representative (executor, administrator, etc. Free ez tax ) who files the final income tax return of the decedent can choose to include on that return all interest earned on the bonds before the decedent's death. Free ez tax The person who acquires the bonds then includes in income only interest earned after the date of death. Free ez tax If the choice in (1) is not made, the interest earned up to the date of death is income in respect of the decedent and should not be included in the decedent's final return. Free ez tax All interest earned both before and after the decedent's death (except any part reported by the estate on its income tax return) is income to the person who acquires the bonds. Free ez tax If that person uses the cash method and does not choose to report the interest each year, he or she can postpone reporting it until the year the bonds are cashed or disposed of or the year they mature, whichever is earlier. Free ez tax In the year that person reports the interest, he or she can claim a deduction for any federal estate tax paid on the part of the interest included in the decedent's estate. Free ez tax For more information on income in respect of a decedent, see Publication 559, Survivors, Executors, and Administrators. Free ez tax Example 1. Free ez tax Your uncle, a cash method taxpayer, died and left you a $1,000 series EE bond. Free ez tax He had bought the bond for $500 and had not chosen to report the interest each year. Free ez tax At the date of death, interest of $200 had accrued on the bond, and its value of $700 was included in your uncle's estate. Free ez tax Your uncle's executor chose not to include the $200 accrued interest in your uncle's final income tax return. Free ez tax The $200 is income in respect of the decedent. Free ez tax You are a cash method taxpayer and do not choose to report the interest each year as it is earned. Free ez tax If you cash the bond when it reaches maturity value of $1,000, you report $500 interest income—the difference between maturity value of $1,000 and the original cost of $500. Free ez tax For that year, you can deduct (as a miscellaneous itemized deduction not subject to the 2%-of-adjusted-gross-income limit) any federal estate tax paid because the $200 interest was included in your uncle's estate. Free ez tax Example 2. Free ez tax If, in Example 1 , the executor had chosen to include the $200 accrued interest in your uncle's final return, you would report only $300 as interest when you cashed the bond at maturity. Free ez tax $300 is the interest earned after your uncle's death. Free ez tax Example 3. Free ez tax If, in Example 1 , you make or have made the choice to report the increase in redemption value as interest each year, you include in gross income for the year you acquire the bond all of the unreported increase in value of all series E, series EE, and series I bonds you hold, including the $200 on the bond you inherited from your uncle. Free ez tax Example 4. Free ez tax When your aunt died, she owned series HH bonds that she had acquired in a trade for series EE bonds. Free ez tax You were the beneficiary of these bonds. Free ez tax Your aunt used the cash method and did not choose to report the interest on the series EE bonds each year as it accrued. Free ez tax Your aunt's executor chose not to include any interest earned before your aunt's death on her final return. Free ez tax The income in respect of the decedent is the sum of the unreported interest on the series EE bonds and the interest, if any, payable on the series HH bonds but not received as of the date of your aunt's death. Free ez tax You must report any interest received during the year as income on your return. Free ez tax The part of the interest payable but not received before your aunt's death is income in respect of the decedent and may qualify for the estate tax deduction. Free ez tax For information on when to report the interest on the series EE bonds traded, see Savings bonds traded , later. Free ez tax Savings bonds distributed from a retirement or profit-sharing plan. Free ez tax   If you acquire a U. Free ez tax S. Free ez tax savings bond in a taxable distribution from a retirement or profit-sharing plan, your income for the year of distribution includes the bond's redemption value (its cost plus the interest accrued before the distribution). Free ez tax When you redeem the bond (whether in the year of distribution or later), your interest income includes only the interest accrued after the bond was distributed. Free ez tax To figure the interest reported as a taxable distribution and your interest income when you redeem the bond, see Worksheet for savings bonds distributed from a retirement or profit-sharing plan under How To Report Interest Income, later. Free ez tax Savings bonds traded. Free ez tax   If you postponed reporting the interest on your series EE or series E bonds, you did not recognize taxable income when you traded the bonds for series HH or series H bonds, unless you received cash in the trade. Free ez tax (You cannot trade series I bonds for series HH bonds. Free ez tax After August 31, 2004, you cannot trade any other series of bonds for series HH bonds. Free ez tax ) Any cash you received is income up to the amount of the interest earned on the bonds traded. Free ez tax When your series HH or series H bonds mature, or if you dispose of them before maturity, you report as interest the difference between their redemption value and your cost. Free ez tax Your cost is the sum of the amount you paid for the traded series EE or series E bonds plus any amount you had to pay at the time of the trade. Free ez tax Example. Free ez tax You traded series EE bonds (on which you postponed reporting the interest) for $2,500 in series HH bonds and $223 in cash. Free ez tax You reported the $223 as taxable income on your tax return. Free ez tax At the time of the trade, the series EE bonds had accrued interest of $523 and a redemption value of $2,723. Free ez tax You hold the series HH bonds until maturity, when you receive $2,500. Free ez tax You must report $300 as interest income in the year of maturity. Free ez tax This is the difference between their redemption value, $2,500, and your cost, $2,200 (the amount you paid for the series EE bonds). Free ez tax (It is also the difference between the accrued interest of $523 on the series EE bonds and the $223 cash received on the trade. Free ez tax ) Choice to report interest in year of trade. Free ez tax   You could have chosen to treat all of the previously unreported accrued interest on series EE or series E bonds traded for series HH bonds as income in the year of the trade. Free ez tax If you made this choice, it is treated as a change from method 1. Free ez tax See Change from method 1 under Series EE and series I bonds, earlier. Free ez tax Form 1099-INT for U. Free ez tax S. Free ez tax savings bond interest. Free ez tax   When you cash a bond, the bank or other payer that redeems it must give you a Form 1099-INT if the interest part of the payment you receive is $10 or more. Free ez tax Box 3 of your Form 1099-INT should show the interest as the difference between the amount you received and the amount paid for the bond. Free ez tax However, your Form 1099-INT may show more interest than you have to include on your income tax return. Free ez tax For example, this may happen if any of the following are true. Free ez tax You chose to report the increase in the redemption value of the bond each year. Free ez tax The interest shown on your Form 1099-INT will not be reduced by amounts previously included in income. Free ez tax You received the bond from a decedent. Free ez tax The interest shown on your Form 1099-INT will not be reduced by any interest reported by the decedent before death, or on the decedent's final return, or by the estate on the estate's income tax return. Free ez tax Ownership of the bond was transferred. Free ez tax The interest shown on your Form 1099-INT will not be reduced by interest that accrued before the transfer. Free ez tax You were named as a co-owner, and the other co-owner contributed funds to buy the bond. Free ez tax The interest shown on your Form 1099-INT will not be reduced by the amount you received as nominee for the other co-owner. Free ez tax (See Co-owners , earlier in this section, for more information about the reporting requirements. Free ez tax ) You received the bond in a taxable distribution from a retirement or profit-sharing plan. Free ez tax The interest shown on your Form 1099-INT will not be reduced by the interest portion of the amount taxable as a distribution from the plan and not taxable as interest. Free ez tax (This amount is generally shown on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Free ez tax , for the year of distribution. Free ez tax )   For more information on including the correct amount of interest on your return, see U. Free ez tax S. Free ez tax savings bond interest previously reported or Nominee distributions under How To Report Interest Income, later. Free ez tax    Interest on U. Free ez tax S. Free ez tax savings bonds is exempt from state and local taxes. Free ez tax The Form 1099-INT you receive will indicate the amount that is for U. Free ez tax S. Free ez tax savings bonds interest in box 3. Free ez tax Do not include this income on your state or local income tax return. Free ez tax Education Savings Bond Program You may be able to exclude from income all or part of the interest you receive on the redemption of qualified U. Free ez tax S. Free ez tax savings bonds during the year if you pay qualified higher educational expenses during the same year. Free ez tax This exclusion is known as the Education Savings Bond Program. Free ez tax You do not qualify for this exclusion if your filing status is married filing separately. Free ez tax Form 8815. Free ez tax   Use Form 8815 to figure your exclusion. Free ez tax Attach the form to your Form 1040 or Form 1040A. Free ez tax Qualified U. Free ez tax S. Free ez tax savings bonds. Free ez tax   A qualified U. Free ez tax S. Free ez tax savings bond is a series EE bond issued after 1989 or a series I bond. Free ez tax The bond must be issued either in your name (sole owner) or in your and your spouse's names (co-owners). Free ez tax You must be at least 24 years old before the bond's issue date. Free ez tax For example, a bond bought by a parent and issued in the name of his or her child under age 24 does not qualify for the exclusion by the parent or child. Free ez tax    The issue date of a bond may be earlier than the date the bond is purchased because the issue date assigned to a bond is the first day of the month in which it is purchased. Free ez tax Beneficiary. Free ez tax   You can designate any individual (including a child) as a beneficiary of the bond. Free ez tax Verification by IRS. Free ez tax   If you claim the exclusion, the IRS will check it by using bond redemption information from the Department of Treasury. Free ez tax Qualified expenses. Free ez tax   Qualified higher educational expenses are tuition and fees required for you, your spouse, or your dependent (for whom you claim an exemption) to attend an eligible educational institution. Free ez tax   Qualified expenses include any contribution you make to a qualified tuition program or to a Coverdell education savings account. Free ez tax For information about these programs, see Publication 970, Tax Benefits for Education. Free ez tax   Qualified expenses do not include expenses for room and board or for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. Free ez tax Eligible educational institutions. Free ez tax   These institutions include most public, private, and nonprofit universities, colleges, and vocational schools that are accredited and eligible to participate in student aid programs run by the Department of Education. Free ez tax Reduction for certain benefits. Free ez tax   You must reduce your qualified higher educational expenses by all of the following tax-free benefits. Free ez tax Tax-free part of scholarships and fellowships. Free ez tax Expenses used to figure the tax-free portion of distributions from a Coverdell ESA. Free ez tax Expenses used to figure the tax-free portion of distributions from a qualified tuition program. Free ez tax Any tax-free payments (other than gifts or inheritances) received as educational assistance, such as: Veterans' educational assistance benefits, Qualified tuition reductions, or Employer-provided educational assistance. Free ez tax Any expense used in figuring the American Opportunity and lifetime learning credits. Free ez tax For information about these benefits, see Publication 970. Free ez tax Amount excludable. Free ez tax   If the total proceeds (interest and principal) from the qualified U. Free ez tax S. Free ez tax savings bonds you redeem during the year are not more than your adjusted qualified higher educational expenses for the year, you may be able to exclude all of the interest. Free ez tax If the proceeds are more than the expenses, you may be able to exclude only part of the interest. Free ez tax   To determine the excludable amount, multiply the interest part of the proceeds by a fraction. Free ez tax The numer
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Register to Vote

Find assistance with registering to vote and voting.

Registering to Vote

The U.S. Election Assistance Commission has resources for voters, including voter guides, registration information, voting accessibility, and information for military and overseas voters.

Voter Eligibility

To be eligible to vote, you must be a U.S. citizen. In most states, you must be 18 years old to vote, but some states do allow 17 year olds to vote. States also have their own residency requirements to vote. For additional information about state-specific requirements and voter eligibility, contact your state election office.

How to Register

In almost all states, you can register by mail to vote using the National Mail Voter Registration Form. North Dakota, Wyoming, American Samoa, Guam, Puerto Rico, and the U.S. Virgin Islands do not accept the National Mail Voter Registration Form. New Hampshire accepts it only as a request for an absentee voter mail-in registration form. If you live in one of these states, please check with your state election office to find out how to register to vote.

You may also use the National Mail Voter Registration Form to update your registration if you changed your name, to change your address, or to register with a political party.

You may be able to apply to register to vote in person at the following public facilities:

In some states, you can also register online to vote. To learn if your state offers online voter registration, please contact your state election office.

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State Registration Deadlines

Almost every state has a voter registration deadline. In order to be eligible to vote in the November elections, you must submit the National Mail Voter Registration Form by these deadlines:

  • Alabama – Voter registration is closed during the 10 days before an election. Applications must be postmarked or delivered by the eleventh day prior to the election.
  • Alaska – 30 days before the election
  • Arizona – 29 days before the election
  • Arkansas – 30 days before the election
  • California – 15 days before the election
  • Colorado – 29 days before the election. If the application is received in the mails without a postmark, it must be received within 5 days of the close of registration.
  • Connecticut – 14 days before the election
  • Delaware – The fourth Saturday before a primary or general election, and 10 days before a special election.
  • District of Columbia – 30 days before the election
  • Florida – 29 days before the election
  • Georgia – The fifth Monday before any general primary, general election, or presidential preference primary, or regularly scheduled special election following the Georgia Election Code. If a special  election is scheduled on a date other that those dates prescribed by the Georgia Election Code, registration would close on the fifth day after the call.
  • Hawaii – 30 days before the election
  • Idaho – 25 days before the election
  • Illinois – 28 days before the election
  • Indiana – 29 days before the election
  • Iowa – Must be delivered by 5 PM, 10 days before the election, if it is a state primary or general election; 11 days before all others. Registration forms which are postmarked 15 or more days before an election are considered on time even if received after the deadline. If you fail to meet these deadlines, you can register to vote on election day.
  • Kansas – Postmarked or delivered 21 days before the election.
  • Kentucky – 29 days before the election
  • Louisiana – 30 days before the election
  • Maine – Delivered 21 business days before the election or you can register in-person up to and including election day.
  • Maryland – Delivered by 9 PM, 21 days before the election
  • Massachusetts – 20 days before the election
  • Michigan – 30 days before the election
  • Minnesota – Delivered by 5 PM, 21 days before the election. You can also register at the polling place on election day.
  • Mississippi – 30 days before the election
  • Missouri – 28 days before the election
  • Montana – 30 days before the election
  • Nebraska – The third Friday before the election (or delivered by 6 PM, on the second Friday before the election)
  • Nevada – The deadline for mail-in registration is the fifth Saturday before any primary or general election. In person registration remains available until 9 PM on the third Tuesday preceding any primary or general election. You may register to vote in person only by appearing at the office of the County Clerk/Registrar of Voters.
  • New Hampshire – Town and city clerks will accept the National Mail Voter Registration Form only as a request for their own absentee voter mail-in registration form, which your city or town clerk must receive by 10 days before the election. You can register at the town or city clerk’s office or in-person on election day.
  • New Jersey – 21 days before the election
  • New Mexico – 28 days before the election
  • New York – 25 days before the election
  • North Carolina – Postmarked 25 days before the election or received in the elections office or designated voter registration agency site by 5 PM, 25 days before the election.
  • North Dakota – No voter registration
  • Ohio – 30 days before the election
  • Oklahoma – 25 days before the election
  • Oregon – 21 days before the election
  • Pennsylvania – 30 days before an election or primary
  • Rhode Island – 30 days before the election
  • South Carolina – 30 days before the election
  • South Dakota – Received 15 days before the election
  • Tennessee – 30 days before the election
  • Texas – 30 days before the election
  • Utah – 30 days before the election for mail-in applications and 15 days before the election for walk-in registration at the county clerk’s office
  • Vermont – Delivered to the town clerk before 5 PM, on the Wednesday before the election
  • Virginia – Delivered 22 days before the election
  • Washington – 29 days before the election or 8 days before the election if delivered in person to the local voter registration office
  • West Virginia – 21 days before the election
  • Wisconsin – 20 days before the election or completed in the local voter registration office up to 5 PM or the close of business, whichever is later, on the Friday before the election. You can also register at the polling place on election day.
  • Wyoming – Cannot accept the National Mail Voter Registration Form. You can register in-person, by mail, or at the polls on election day.

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The Free Ez Tax

Free ez tax Index A Assistance (see Tax help) B Base amount, Base amount. Free ez tax C Canadian social security benefits, Canadian or German social security benefits paid to U. Free ez tax S. Free ez tax residents. Free ez tax Children's benefits, Children's benefits. Free ez tax Comments on publication, Comments and suggestions. Free ez tax D Deductions related to benefits, Deductions Related to Your Benefits $3,000 or less, Deduction $3,000 or less. Free ez tax $3,000. Free ez tax 01 or more, Deduction more than $3,000. Free ez tax Disability benefits repaid, Disability payments. Free ez tax E Estimated tax, Tax withholding and estimated tax. Free ez tax F Form 1040, Reporting on Form 1040. Free ez tax Form 1040A, Reporting on Form 1040A. Free ez tax Form RRB-1042S, Form RRB-1042S, Payments by the Railroad Retirement Board 2013 (Nonresident Aliens) Form RRB-1099, Lump-sum payment reported on Form SSA-1099 or RRB-1099. Free ez tax , Form RRB-1099, Payments by the Railroad Retirement Board 2013 Form SSA-1042S, Form SSA-1042S, Social Security Benefit Statement 2013 (Nonresident Aliens) Form SSA-1099, Lump-sum payment reported on Form SSA-1099 or RRB-1099. Free ez tax , Appendix Form W-4V, Tax withholding and estimated tax. Free ez tax Free tax services, Free help with your tax return. Free ez tax Future developments Product page, Reminders G German social security benefits, Canadian or German social security benefits paid to U. Free ez tax S. Free ez tax residents. Free ez tax H Help (see Tax help) J Joint returns, Joint return. Free ez tax L Legal expenses, Legal expenses. Free ez tax Lump-sum election, Lump-Sum Election Example, Example M Missing children, photographs of, Reminders N Nonresident aliens, Nonresident aliens. Free ez tax Form RRB-1042S, Form RRB-1042S, Payments by the Railroad Retirement Board 2013 (Nonresident Aliens) Form SSA-1042S, Form SSA-1042S, Social Security Benefit Statement 2013 (Nonresident Aliens) Nontaxable benefits, Benefits not taxable. Free ez tax P Permanent resident aliens, Lawful permanent residents. Free ez tax Publications (see Tax help) R Railroad retirement benefits, Introduction Repayments Benefits received in earlier year, Repayment of benefits. Free ez tax , Repayment of benefits received in an earlier year. Free ez tax Disability benefits, Disability payments. Free ez tax Gross benefits, Repayment of benefits. Free ez tax , Repayments More Than Gross Benefits Reporting requirements, How To Report Your Benefits Lump-sum payment, Lump-sum payment reported on Form SSA-1099 or RRB-1099. Free ez tax S Social Security benefits, Introduction Suggestions for publication, Comments and suggestions. Free ez tax T Tax help, How To Get Tax Help Taxable benefits Determination of, Are Any of Your Benefits Taxable?, How Much Is Taxable? Maximum taxable part, Maximum taxable part. Free ez tax Person receiving benefits determines, Who is taxed. Free ez tax Worksheets, Worksheet A. Free ez tax Examples, Examples, Worksheets Which to use, Which worksheet to use. Free ez tax Total income, figuring, Figuring total income. Free ez tax TTY/TDD information, How To Get Tax Help U U. Free ez tax S. Free ez tax citizens residing abroad, U. Free ez tax S. Free ez tax citizens residing abroad. Free ez tax U. Free ez tax S. Free ez tax residents Canadian or German social security benefits paid to, Canadian or German social security benefits paid to U. Free ez tax S. Free ez tax residents. Free ez tax W Withholding, Tax withholding and estimated tax. Free ez tax Exemption from, Exemption from withholding. Free ez tax Form W-4V, Tax withholding and estimated tax. Free ez tax Voluntary, Tax withholding and estimated tax. Free ez tax Worksheets Taxable benefits Blank Worksheet 1, Worksheets Filled-in Worksheet 1, Filled-in Worksheet 1. Free ez tax Figuring Your Taxable Benefits, Filled-in Worksheet 1. Free ez tax Figuring Your Taxable Benefits, Filled-in Worksheet 1. Free ez tax Figuring Your Taxable Benefits, Filled-in Worksheet 1. Free ez tax Figuring Your Taxable Benefits Quick calculation, sample, Worksheet A. Free ez tax Prev  Up     Home   More Online Publications