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Help back taxes 2. Help back taxes   Foreclosures and Repossessions Table of Contents Amount realized and ordinary income on a recourse debt. Help back taxes Amount realized on a nonrecourse debt. Help back taxes If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. Help back taxes The foreclosure or repossession is treated as a sale from which you may realize gain or loss. Help back taxes This is true even if you voluntarily return the property to the lender. Help back taxes If the outstanding loan balance was more than the FMV of the property and the lender cancels all or part of the remaining loan balance, you also may realize ordinary income from the cancellation of debt. Help back taxes You must report this income on your return unless certain exceptions or exclusions apply. Help back taxes See chapter 1 for more details. Help back taxes Borrower's gain or loss. Help back taxes    You figure and report gain or loss from a foreclosure or repossession in the same way as gain or loss from a sale. Help back taxes The gain is the difference between the amount realized and your adjusted basis in the transferred property (amount realized minus adjusted basis). Help back taxes The loss is the difference between your adjusted basis in the transferred property and the amount realized (adjusted basis minus amount realized). Help back taxes For more information on figuring gain or loss from the sale of property, see Gain or Loss From Sales and Exchanges in Publication 544. Help back taxes You can use Table 1-1 to figure your ordinary income from the cancellation of debt and your gain or loss from a foreclosure or repossession. Help back taxes Amount realized and ordinary income on a recourse debt. Help back taxes    If you are personally liable for the debt, the amount realized on the foreclosure or repossession includes the smaller of: The outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, or The FMV of the transferred property. Help back taxes The amount realized also includes any proceeds you received from the foreclosure sale. Help back taxes If the FMV of the transferred property is less than the total outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, the difference is ordinary income from the cancellation of debt. Help back taxes You must report this income on your return unless certain exceptions or exclusions apply. Help back taxes See chapter 1 for more details. Help back taxes       Example 1. Help back taxes Tara bought a new car for $15,000. Help back taxes She made a $2,000 downpayment and borrowed the remaining $13,000 from the dealer's credit company. Help back taxes Tara is personally liable for the loan (recourse debt) and the car is pledged as security for the loan. Help back taxes On August 1, 2013, the credit company repossessed the car because Tara had stopped making loan payments. Help back taxes The balance due after taking into account the payments Tara made was $10,000. Help back taxes The FMV of the car when it was repossessed was $9,000. Help back taxes On November 15, 2013, the credit company forgave the remaining $1,000 balance on the loan due to insufficient assets. Help back taxes In this case, the amount Tara realizes is $9,000. Help back taxes This is the smaller of: The $10,000 outstanding debt immediately before the repossession reduced by the $1,000 for which she remains personally liable immediately after the repossession ($10,000 − $1,000 = $9,000), or The $9,000 FMV of the car. Help back taxes Tara figures her gain or loss on the repossession by comparing the $9,000 amount realized with her $15,000 adjusted basis. Help back taxes She has a $6,000 nondeductible loss. Help back taxes After the cancellation of the remaining balance on the loan in November, Tara also has ordinary income from cancellation of debt in the amount of $1,000 (the remaining balance on the $10,000 loan after the $9,000 amount satisfied by the FMV of the repossessed car). Help back taxes Tara must report this $1,000 on her return unless one of the exceptions or exclusions described in chapter 1 applies. Help back taxes Example 2. Help back taxes Lili paid $200,000 for her home. Help back taxes She made a $15,000 downpayment and borrowed the remaining $185,000 from a bank. Help back taxes Lili is personally liable for the mortgage loan and the house secures the loan. Help back taxes In 2013, the bank foreclosed on the mortgage because Lili stopped making payments. Help back taxes When the bank foreclosed the mortgage, the balance due was $180,000, the FMV of the house was $170,000, and Lili's adjusted basis was $175,000 due to a casualty loss she had deducted. Help back taxes At the time of the foreclosure, the bank forgave $2,000 of the $10,000 debt in excess of the FMV ($180,000 minus $170,000). Help back taxes She remained personally liable for the $8,000 balance. Help back taxes In this case, Lili has ordinary income from the cancellation of debt in the amount of $2,000. Help back taxes The $2,000 income from the cancellation of debt is figured by subtracting the $170,000 FMV of the house from the $172,000 difference between her total outstanding debt immediately before the transfer of property and the amount for which she remains personally liable immediately after the transfer ($180,000 minus $8,000). Help back taxes She is able to exclude the $2,000 of canceled debt from her income under the qualified principal residence indebtedness rules discussed earlier. Help back taxes Lili must also determine her gain or loss from the foreclosure. Help back taxes In this case, the amount that she realizes is $170,000. Help back taxes This is the smaller of: (a) the $180,000 outstanding debt immediately before the transfer reduced by the $8,000 for which she remains personally liable immediately after the transfer ($180,000 − $8,000 = $172,000) or (b) the $170,000 FMV of the house. Help back taxes Lili figures her gain or loss on the foreclosure by comparing the $170,000 amount realized with her $175,000 adjusted basis. Help back taxes She has a $5,000 nondeductible loss. Help back taxes Table 1-1. Help back taxes Worksheet for Foreclosures and Repossessions Part 1. Help back taxes Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). Help back taxes Otherwise, go to Part 2. Help back taxes 1. Help back taxes Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property   2. Help back taxes Enter the fair market value of the transferred property   3. Help back taxes Ordinary income from the cancellation of debt upon foreclosure or repossession. Help back taxes * Subtract line 2 from line 1. Help back taxes If less than zero, enter zero. Help back taxes Next, go to Part 2   Part 2. Help back taxes Gain or loss from foreclosure or repossession. Help back taxes   4. Help back taxes Enter the smaller of line 1 or line 2. Help back taxes If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property   5. Help back taxes Enter any proceeds you received from the foreclosure sale   6. Help back taxes Add line 4 and line 5   7. Help back taxes Enter the adjusted basis of the transferred property   8. Help back taxes Gain or loss from foreclosure or repossession. Help back taxes Subtract line 7 from line 6   * The income may not be taxable. Help back taxes See chapter 1 for more details. Help back taxes Amount realized on a nonrecourse debt. Help back taxes    If you are not personally liable for repaying the debt secured by the transferred property, the amount you realize includes the full amount of the outstanding debt immediately before the transfer. Help back taxes This is true even if the FMV of the property is less than the outstanding debt immediately before the transfer. Help back taxes Example 1. Help back taxes Tara bought a new car for $15,000. Help back taxes She made a $2,000 downpayment and borrowed the remaining $13,000 from the dealer's credit company. Help back taxes Tara is not personally liable for the loan (nonrecourse), but pledged the new car as security for the loan. Help back taxes On August 1, 2013, the credit company repossessed the car because Tara had stopped making loan payments. Help back taxes The balance due after taking into account the payments Tara made was $10,000. Help back taxes The FMV of the car when it was repossessed was $9,000. Help back taxes The amount Tara realized on the repossession is $10,000. Help back taxes That is the outstanding amount of debt immediately before the repossession, even though the FMV of the car is less than $10,000. Help back taxes Tara figures her gain or loss on the repossession by comparing the $10,000 amount realized with her $15,000 adjusted basis. Help back taxes Tara has a $5,000 nondeductible loss. Help back taxes Example 2. Help back taxes Lili paid $200,000 for her home. Help back taxes She made a $15,000 downpayment and borrowed the remaining $185,000 from a bank. Help back taxes She is not personally liable for the loan, but grants the bank a mortgage. Help back taxes The bank foreclosed on the mortgage because Lili stopped making payments. Help back taxes When the bank foreclosed on the mortgage, the balance due was $180,000, the FMV of the house was $170,000, and Lili's adjusted basis was $175,000 due to a casualty loss she had deducted. Help back taxes The amount Lili realized on the foreclosure is $180,000, the outstanding debt immediately before the foreclosure. Help back taxes She figures her gain or loss by comparing the $180,000 amount realized with her $175,000 adjusted basis. Help back taxes Lili has a $5,000 realized gain. Help back taxes See Publication 523 to figure and report any taxable amount. Help back taxes Forms 1099-A and 1099-C. Help back taxes    A lender who acquires an interest in your property in a foreclosure or repossession should send you Form 1099-A, Acquisition or Abandonment of Secured Property, showing information you need to figure your gain or loss. Help back taxes However, if the lender also cancels part of your debt and must file Form 1099-C, the lender can include the information about the foreclosure or repossession on that form instead of on Form 1099-A. Help back taxes The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. Help back taxes For foreclosures or repossessions occurring in 2013, these forms should be sent to you by January 31, 2014. Help back taxes Prev  Up  Next   Home   More Online Publications
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Help back taxes Publication 524 - Main Content Table of Contents Are You Eligible for the Credit?Qualified Individual Income Limits Credit Figured for You Figuring the Credit YourselfStep 1. Help back taxes Determine Initial Amount Step 2. Help back taxes Total Certain Nontaxable Pensions and Benefits Step 3. Help back taxes Determine Excess Adjusted Gross Income Step 4. Help back taxes Determine the Total of Steps 2 and 3 Step 5. Help back taxes Determine Your Credit Examples How To Get Tax Help Are You Eligible for the Credit? You can take the credit for the elderly or the disabled if you meet both of the following requirements. Help back taxes You are a qualified individual. Help back taxes Your income is not more than certain limits. Help back taxes You can use Figure A and Table 1 as guides to see if you are eligible for the credit. Help back taxes Use Figure A first to see if you are a qualified individual. Help back taxes If you are, go to Table 1 to make sure your income is not too high to take the credit. Help back taxes You can take the credit only if you file Form 1040 or Form 1040A. Help back taxes You cannot take the credit if you file Form 1040EZ or Form 1040NR. Help back taxes Qualified Individual You are a qualified individual for this credit if you are a U. Help back taxes S. Help back taxes citizen or resident alien, and either of the following applies. Help back taxes You were age 65 or older at the end of 2013. Help back taxes You were under age 65 at the end of 2013 and all three of the following statements are true. Help back taxes You retired on permanent and total disability (explained later). Help back taxes You received taxable disability income for 2013. Help back taxes On January 1, 2013, you had not reached mandatory retirement age (defined later under Disability income ). Help back taxes Age 65. Help back taxes   You are considered to be age 65 on the day before your 65th birthday. Help back taxes As a result, if you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Help back taxes U. Help back taxes S. Help back taxes Citizen or Resident Alien You must be a U. Help back taxes S. Help back taxes citizen or resident alien (or be treated as a resident alien) to take the credit. Help back taxes Generally, you cannot take the credit if you were a nonresident alien at any time during the tax year. Help back taxes Exceptions. Help back taxes   You may be able to take the credit if you are a nonresident alien who is married to a U. Help back taxes S. Help back taxes citizen or resident alien at the end of the tax year and you and your spouse choose to treat you as a U. Help back taxes S. Help back taxes resident alien. Help back taxes If you make that choice, both you and your spouse are taxed on your worldwide incomes. Help back taxes   If you were a nonresident alien at the beginning of the year and a resident alien at the end of the year, and you were married to a U. Help back taxes S. Help back taxes citizen or resident alien at the end of the year, you may be able to choose to be treated as a U. Help back taxes S. Help back taxes resident alien for the entire year. Help back taxes In that case, you may be allowed to take the credit. Help back taxes   For information on these choices, see chapter 1 of Publication 519, U. Help back taxes S. Help back taxes Tax Guide for Aliens. Help back taxes Married Persons Generally, if you are married at the end of the tax year, you and your spouse must file a joint return to take the credit. Help back taxes However, if you and your spouse did not live in the same household at any time during the tax year, you can file either a joint return or separate returns and still take the credit. Help back taxes Head of household. Help back taxes   You can file as head of household and qualify to take the credit, even if your spouse lived with you during the first 6 months of the year, if you meet all the following tests. Help back taxes You file a separate return. Help back taxes You paid more than half the cost of keeping up your home during the tax year. Help back taxes Your spouse did not live in your home at any time during the last 6 months of the tax year and the absence was not temporary. Help back taxes (See Temporary absences under Head of Household in Publication 501. Help back taxes ) Your home was the main home of your child, stepchild, or an eligible foster child for more than half the year. Help back taxes An eligible foster child is a child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. Help back taxes You can claim an exemption for that child, or you cannot claim the exemption only because the noncustodial parent can claim the child using the rules for children of divorced or separated parents. Help back taxes For more information, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Help back taxes Figure A. Help back taxes Are You a Qualified Individual? Please click here for the text description of the image. Help back taxes figure a Under Age 65 If you are under age 65 at the end of 2013, you can qualify for the credit only if you are retired on permanent and total disability (discussed next) and have taxable disability income (discussed later under Disability income ). Help back taxes You are retired on permanent and total disability if: You were permanently and totally disabled when you retired, and You retired on disability before the close of the tax year. Help back taxes Even if you do not retire formally, you may be considered retired on disability when you have stopped working because of your disability. Help back taxes If you retired on disability before 1977, and were not permanently and totally disabled at the time, you can qualify for the credit if you were permanently and totally disabled on January 1, 1976, or January 1, 1977. Help back taxes You are considered to be under age 65 at the end of 2013 if you were born after January 1, 1949. Help back taxes Permanent and total disability. Help back taxes    You are permanently and totally disabled if you cannot engage in any substantial gainful activity because of your physical or mental condition. Help back taxes A qualified physician must certify that the condition has lasted or can be expected to last continuously for 12 months or more, or that the condition can be expected to result in death. Help back taxes See Physician's statement , later. Help back taxes Substantial gainful activity. Help back taxes   Substantial gainful activity is the performance of significant duties over a reasonable period of time while working for pay or profit, or in work generally done for pay or profit. Help back taxes Full-time work (or part-time work done at your employer's convenience) in a competitive work situation for at least the minimum wage conclusively shows that you are able to engage in substantial gainful activity. Help back taxes   Substantial gainful activity is not work you do to take care of yourself or your home. Help back taxes It is not unpaid work on hobbies, institutional therapy or training, school attendance, clubs, social programs, and similar activities. Help back taxes However, doing this kind of work may show that you are able to engage in substantial gainful activity. Help back taxes    The fact that you have not worked for some time is not, of itself, conclusive evidence that you cannot engage in substantial gainful activity. Help back taxes   The following examples illustrate the tests of substantial gainful activity. Help back taxes Example 1. Help back taxes Trisha, a sales clerk, retired on disability. Help back taxes She is 53 years old and now works as a full-time babysitter for the minimum wage. Help back taxes Even though Trisha is doing different work, she is able to do the duties of her new job in a full-time competitive work situation for the minimum wage. Help back taxes She cannot take the credit because she is able to engage in substantial gainful activity. Help back taxes Example 2. Help back taxes Tom, a bookkeeper, retired on disability. Help back taxes He is 59 years old and now drives a truck for a charitable organization. Help back taxes He sets his own hours and is not paid. Help back taxes Duties of this nature generally are performed for pay or profit. Help back taxes Some weeks he works 10 hours, and some weeks he works 40 hours. Help back taxes Over the year he averages 20 hours a week. Help back taxes The kind of work and his average hours a week conclusively show that Tom is able to engage in substantial gainful activity. Help back taxes This is true even though Tom is not paid and he sets his own hours. Help back taxes He cannot take the credit. Help back taxes Example 3. Help back taxes John, who retired on disability, took a job with a former employer on a trial basis. Help back taxes The purpose of the job was to see if John could do the work. Help back taxes The trial period lasted for 6 months during which John was paid the minimum wage. Help back taxes Because of John's disability, he was assigned only light duties of a nonproductive “make-work” nature. Help back taxes The activity was gainful because John was paid at least the minimum wage. Help back taxes But the activity was not substantial because his duties were nonproductive. Help back taxes These facts do not, by themselves, show that John is able to engage in substantial gainful activity. Help back taxes Example 4. Help back taxes Joan, who retired on disability from a job as a bookkeeper, lives with her sister who manages several motel units. Help back taxes Joan helps her sister for 1 or 2 hours a day by performing duties such as washing dishes, answering phones, registering guests, and bookkeeping. Help back taxes Joan can select the time of day when she feels most fit to work. Help back taxes Work of this nature, performed off and on during the day at Joan's convenience, is not activity of a “substantial and gainful” nature even if she is paid for the work. Help back taxes The performance of these duties does not, of itself, show that Joan is able to engage in substantial gainful activity. Help back taxes Sheltered employment. Help back taxes   Certain work offered at qualified locations to physically or mentally impaired persons is considered sheltered employment. Help back taxes These qualified locations are in sheltered workshops, hospitals and similar institutions, homebound programs, and Department of Veterans Affairs (VA) sponsored homes. Help back taxes   Compared to commercial employment, pay is lower for sheltered employment. Help back taxes Therefore, one usually does not look for sheltered employment if he or she can get other employment. Help back taxes The fact that one has accepted sheltered employment is not proof of the person's ability to engage in substantial gainful activity. Help back taxes Physician's statement. Help back taxes   If you are under age 65, you must have your physician complete a statement certifying that you were permanently and totally disabled on the date you retired. Help back taxes You can use the statement in the Instructions for Schedule R. Help back taxes   You do not have to file this statement with your Form 1040 or Form 1040A, but you must keep it for your records. Help back taxes Veterans. Help back taxes    If the Department of Veterans Affairs (VA) certifies that you are permanently and totally disabled, you can substitute VA Form 21-0172, Certification of Permanent and Total Disability, for the physician's statement you are required to keep. Help back taxes VA Form 21-0172 must be signed by a person authorized by the VA to do so. Help back taxes You can get this form from your local VA regional office. Help back taxes Physician's statement obtained in earlier year. Help back taxes   If you got a physician's statement in an earlier year and, due to your continued disabled condition, you were unable to engage in any substantial gainful activity during 2013, you may not need to get another physician's statement for 2013. Help back taxes For a detailed explanation of the conditions you must meet, see the instructions for Schedule R, Part II. Help back taxes If you meet the required conditions, check the box on your Schedule R, Part II, line 2. Help back taxes   If you checked box 4, 5, or 6 in Part I of Schedule R, enter in the space above the box on line 2 in Part II the first name(s) of the spouse(s) for whom the box is checked. Help back taxes Disability income. Help back taxes   If you are under age 65, you must also have taxable disability income to qualify for the credit. Help back taxes Disability income must meet both of the following requirements. Help back taxes It must be paid under your employer's accident or health plan or pension plan. Help back taxes It must be included in your income as wages (or payments instead of wages) for the time you are absent from work because of permanent and total disability. Help back taxes Payments that are not disability income. Help back taxes    Any payment you receive from a plan that does not provide for disability retirement is not disability income. Help back taxes Any lump-sum payment for accrued annual leave that you receive when you retire on disability is a salary payment and is not disability income. Help back taxes    For purposes of the credit for the elderly or the disabled, disability income does not include amounts you receive after you reach mandatory retirement age. Help back taxes Mandatory retirement age is the age set by your employer at which you would have had to retire, had you not become disabled. Help back taxes Income Limits To determine if you can claim the credit, you must consider two income limits. Help back taxes The first limit is the amount of your adjusted gross income (AGI). Help back taxes The second limit is the amount of nontaxable social security and other nontaxable pensions, annuities, or disability income you received. Help back taxes The limits are shown in Table 1. Help back taxes If your AGI and your nontaxable pensions, annuities, or disability income are less than the income limits, you may be able to claim the credit. Help back taxes See Figuring the Credit Yourself , later. Help back taxes Table 1. Help back taxes Income Limits IF your filing status is THEN, even if you qualify (see Figure A), you CANNOT take the credit if   Your adjusted gross income (AGI)* is equal to or more than. Help back taxes . Help back taxes . Help back taxes     OR the total of your nontaxable social security and other nontaxable pension(s), annuities, or disability income is equal to or more than. Help back taxes . Help back taxes . Help back taxes   single, head of household, or qualifying widow(er) with dependent child   $17,500     $5,000   married filing jointly and only one spouse qualifies in Figure A   $20,000     $5,000   married filing jointly and both spouses qualify in Figure A   $25,000     $7,500   married filing separately and you lived apart from your spouse for all of 2013   $12,500     $3,750   * AGI is the amount on Form 1040A, line 22, or Form 1040, line 38. Help back taxes If your AGI or your nontaxable pensions, annuities, or disability income are equal to or more than the income limits, you cannot take the credit. Help back taxes Credit Figured for You You can figure the credit yourself, or the Internal Revenue Service (IRS) will figure it for you. Help back taxes See Figuring the Credit Yourself , next. Help back taxes If you can take the credit and you want the IRS to figure the credit for you, attach Schedule R to your return. Help back taxes Check the appropriate box in Part I of Schedule R and fill in Part II and lines 11, 13a, and 13b of Part III, if they apply to you. Help back taxes If you file Form 1040A, enter “CFE” in the space to the left of Form 1040A, line 30. Help back taxes If you file Form 1040, check box c on Form 1040, line 53, and enter “CFE” on the line next to that box. Help back taxes Attach Schedule R to your return. Help back taxes Table 2. Help back taxes Initial Amounts IF your filing status is. Help back taxes . Help back taxes . Help back taxes   THEN enter on line 10 of Schedule R. Help back taxes . Help back taxes . Help back taxes single,head of household, or qualifying widow(er) with dependent child and, by the end of 2013, you were       • 65 or older $5,000   • under 65 and retired on permanent and total disability1 $5,000 married filing a joint return and by the end of 2013       • both of you were 65 or older $7,500   • both of you were under 65 and one of you retired on permanent and total disability1 $5,000   • both of you were under 65 and both of you retired on permanent and total disability2 $7,500   • one of you was 65 or older, and the other was under 65 and retired on permanent  and total disability3 $7,500   • one of you was 65 or older, and the other was under 65 and not retired on permanent  and total disability $5,000 married filing a separate return and you did not live with your spouse at any time during the year and, by the end of 2013, you were       • 65 or older $3,750   • under 65 and retired on permanent and total disability1 $3,750   1 Amount cannot be more than the taxable disability income. Help back taxes     2 Amount cannot be more than your combined taxable disability income. Help back taxes     3 Amount is $5,000 plus the taxable disability income of the spouse under age 65, but not more than $7,500. Help back taxes   Figuring the Credit Yourself If you figure the credit yourself, fill out the front of Schedule R. Help back taxes Next, fill out Schedule R, Part III. Help back taxes If you file Form 1040A, enter the amount from Schedule R, line 22 on line 30. Help back taxes If you file Form 1040, include the amount from Schedule R, line 22 on line 53, check box c, and enter “Sch R” on the line next to that box. Help back taxes There are five steps in Part III to determine the amount of your credit. Help back taxes Determine your initial amount (lines 10–12). Help back taxes Determine the total of any nontaxable social security and certain other nontaxable pensions, annuities, and disability benefits you received (lines 13a, 13b, and 13c). Help back taxes Determine your excess adjusted gross income (lines 14–17). Help back taxes Determine the total of steps 2 and 3 (line 18). Help back taxes Determine your credit (lines 19–22). Help back taxes These steps are discussed in more detail next. Help back taxes Step 1. Help back taxes Determine Initial Amount To figure the credit, you must first determine your initial amount using lines 10 through 12. Help back taxes See Table 2. Help back taxes Your initial amount is on line 12. Help back taxes Initial amounts for persons under age 65. Help back taxes   If you are a qualified individual under age 65, your initial amount cannot be more than your taxable disability income. Help back taxes Special rules for joint returns. Help back taxes   If you are a qualified individual under age 65, and your spouse is also a qualified individual, your initial amount is your taxable disability income plus $5,000. Help back taxes   If you are a qualified individual, and both you and your spouse are under age 65, your initial amount cannot be more than your combined taxable disability income. Help back taxes Step 2. Help back taxes Total Certain Nontaxable Pensions and Benefits Step 2 is to figure the total amount of nontaxable social security and certain other nontaxable payments you received during the year. Help back taxes You must reduce your initial amount by these payments. Help back taxes Enter these nontaxable payments on lines 13a or 13b and total them on line 13c. Help back taxes If you are married filing jointly, you must enter the combined amount of nontaxable payments both you and your spouse received. Help back taxes Worksheets are provided in the instructions for Forms 1040 and 1040A to help you determine if any of your social security benefits (or equivalent railroad retirement benefits) are taxable. Help back taxes Include the following nontaxable payments in the amounts you enter on lines 13a and 13b. Help back taxes Nontaxable social security payments. Help back taxes This is the nontaxable part of the benefits shown in box 5 of Form SSA-1099, Social Security Benefit Statement, before deducting any amounts withheld to pay premiums on supplementary Medicare insurance, and before any reduction because of benefits received under workers' compensation. Help back taxes (Do not include a lump-sum death benefit payment you may receive as a surviving spouse, or a surviving child's insurance benefit payments you may receive as a guardian. Help back taxes ) Nontaxable railroad retirement pension payments treated as social security. Help back taxes This is the nontaxable part of the benefits shown in box 5 of Form RRB-1099, Payments by the Railroad Retirement Board. Help back taxes Nontaxable pension or annuity payments or disability benefits that are paid under a law administered by the Department of Veterans Affairs (VA). Help back taxes (Do not include amounts received as a pension, annuity, or similar allowance for personal injuries or sickness resulting from active service in the armed forces of any country or in the National Oceanic and Atmospheric Administration or the Public Health Service, or as a disability annuity under section 808 of the Foreign Service Act of 1980. Help back taxes ) Pension or annuity payments or disability benefits that are excluded from income under any provision of federal law other than the Internal Revenue Code. Help back taxes (Do not include amounts that are a return of your cost of a pension or annuity. Help back taxes These amounts do not reduce your initial amount. Help back taxes ) You should be sure to take into account all of the nontaxable amounts you receive. Help back taxes These amounts are verified by the IRS through information supplied by other government agencies. Help back taxes Step 3. Help back taxes Determine Excess Adjusted Gross Income You also must reduce your initial amount by your excess adjusted gross income. Help back taxes Figure your excess adjusted gross income on lines 14–17. Help back taxes You figure your excess adjusted gross income as follows. Help back taxes Subtract from your adjusted gross income (Form 1040A, line 22 or Form 1040, line 38) the amount shown for your filing status. Help back taxes $7,500 if you are single, a head of household, or a qualifying widow(er) with dependent child, $10,000 if you are married filing jointly, or $5,000 if you are married filing separately and you and your spouse did not live in the same household at any time during the tax year. Help back taxes Divide the result of (1) by 2. Help back taxes Step 4. Help back taxes Determine the Total of Steps 2 and 3 To determine if you can take the credit, you must add (on line 18) the amounts you figured in Step 2 (line 13c) and Step 3 (line 17). Help back taxes Step 5. Help back taxes Determine Your Credit Subtract the amount determined in Step 4 (line 18) from the amount determined in Step 1 (line 12), and multiply the result by 15% (. Help back taxes 15). Help back taxes In certain cases, the amount of your credit may be limited. Help back taxes See Limit on credit , later. Help back taxes Example. Help back taxes You are 66 years old and your spouse is 64. Help back taxes Your spouse is not disabled. Help back taxes You file a joint return on Form 1040. Help back taxes Your adjusted gross income is $14,630. Help back taxes Together you received $3,200 from social security, which was nontaxable. Help back taxes You figure the credit as follows: Example applying the 5 step process Amount (Line references (shown in parentheses) are to the Schedule R)      1. Help back taxes Initial amount (line 12) $5,000 2. Help back taxes Total nontaxable social security  and other nontaxable  pensions (line 13c) $3,200   3. Help back taxes Excess adjusted gross income  ($14,630–$10,000) ÷ 2 (line 17) 2,315   4. Help back taxes Add (2) and (3) (line 18) 5,515 5. Help back taxes Subtract (4) from (1) (line 12 – line 18 = line 19) (Do not enter less than -0-) $ -0- You cannot take the credit because your nontaxable social security plus your excess adjusted gross income is more than your initial amount. Help back taxes Limit on credit. Help back taxes   The amount of credit you can claim is generally limited to the amount of your tax. Help back taxes Use the Credit Limit Worksheet in the Instructions for Schedule R to determine if your credit is limited. Help back taxes Examples The following examples illustrate the credit for the elderly or the disabled. Help back taxes The initial amounts are taken from Table 2, earlier. Help back taxes Example 1. Help back taxes James Davis is 58 years old, single, and files Form 1040A. Help back taxes In 2011 he retired on permanent and total disability, and he is still permanently and totally disabled. Help back taxes He got the required physician's statement in 2011 and kept it with his tax records. Help back taxes His physician signed on line B of the statement. Help back taxes This year James checks the box in Schedule R, Part II. Help back taxes He does not need to get another statement for 2013. Help back taxes He received the following income for the year: Nontaxable social security $1,500 Interest (taxable) 100 Taxable disability pension 11,400       James' adjusted gross income is $11,500 ($11,400 + $100). Help back taxes He figures the credit on Schedule R as follows: 1. Help back taxes Initial amount   $5,000 2. Help back taxes Taxable disability pension   11,400 3. Help back taxes Smaller of line 1 or line 2   5,000 4. Help back taxes Nontaxable social security  benefits $1,500     5. Help back taxes Excess adjusted gross income  ($11,500 − $7,500) ÷ 2 2,000     6. Help back taxes Add lines 4 and 5   3,500 7. Help back taxes Subtract line 6 from line 3  (Do not enter less than (-0-))   1,500 8. Help back taxes Multiply line 7 by 15% (. Help back taxes 15)   225 9. Help back taxes Enter the amount from the  Credit Limit Worksheet in the  Instructions for Schedule R, line 21   151 10. Help back taxes Credit (Enter the smaller of  line 8 or line 9)   $ 151 He enters $151 on line 30 of Form 1040A. Help back taxes The Schedule R for James Davis is not shown. Help back taxes Example 2. Help back taxes William White is 53. Help back taxes His wife Helen is 49. Help back taxes William had a stroke 3 years ago and retired on permanent and total disability. Help back taxes He is still permanently and totally disabled because of the stroke. Help back taxes In November, Helen was injured in an accident at work and retired on permanent and total disability. Help back taxes William received nontaxable social security disability benefits of $2,000 during the year and a taxable disability pension of $6,200. Help back taxes Helen earned $12,500 from her job and received a taxable disability pension of $1,700. Help back taxes Their joint return on Form 1040 shows adjusted gross income of $20,400 ($6,200 + $12,500 + $1,700). Help back taxes They do not itemize deductions. Help back taxes They do not have any amounts that would increase their standard deduction. Help back taxes Helen's doctor completed the physician's statement in the Instructions for Schedule R. Help back taxes Helen is not required to include the statement with their return, but she must keep it for her records. Help back taxes William got a physician's statement for the year he had the stroke. Help back taxes His doctor had signed on line B of that physician's statement to certify that William was permanently and totally disabled. Help back taxes William has kept the physician's statement with his records. Help back taxes He checks the box on Schedule R, Part II and writes his first name in the space above the box on line 2. Help back taxes William and Helen use Schedule R to figure their $41 credit for the elderly or the disabled. Help back taxes They attach Schedule R to their Form 1040 and enter $41 on line 53. Help back taxes They check box c on line 53 and enter “Sch R” on the line next to that box. Help back taxes See their filled-in Schedule R and Helen's filled-in physician's statement, later. Help back taxes Instructions for Physician's Statement     Taxpayer Physician If you retired after 1976, enter the date you retired in the space provided on the statement below. Help back taxes A person is permanently and totally disabled if both of the following apply:   1. Help back taxes He or she cannot engage in any substantial gainful activity because of a physical or mental condition. Help back taxes   2. Help back taxes A physician determines that the disability has lasted or can be expected to last continuously for at least a year or can lead to death. Help back taxes Physician's Statement     I certify that Helen A. Help back taxes White Name of disabled person was permanently and totally disabled on January 1, 1976, or January 1, 1977, or was permanently and totally disabled on the date he or she retired. Help back taxes If retired after 1976, enter the date retired ▶ November 1, 2013   Physician: Sign your name on either A or B below. Help back taxes AThe disability has lasted or can be expected to last continuously for at least a year     Physician's signatureDate BThere is no reasonable probability that the disabled condition will ever improve Ayden D. Help back taxes Doctor 2/8/14   Physician's signatureDate Physician's name Physician's address Ayden D. Help back taxes Doctor 1900 Green St. Help back taxes , Hometown, MD 20000         This image is too large to be displayed in the current screen. Help back taxes Please click the link to view the image. Help back taxes Page 1 of Schedule R for the Whites This image is too large to be displayed in the current screen. Help back taxes Please click the link to view the image. Help back taxes Page 2 of Schedule R for the Whites How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. Help back taxes Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. Help back taxes Free help with your tax return. Help back taxes   Free help in preparing your return is available nationwide from IRS-certified volunteers. Help back taxes The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. Help back taxes The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Help back taxes Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Help back taxes Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Help back taxes To find the nearest VITA or TCE site, visit IRS. Help back taxes gov or call 1-800-906-9887. Help back taxes   As part of the TCE program, AARP offers the Tax-Aide counseling program. Help back taxes To find the nearest AARP Tax-Aide site, visit AARP's website at www. Help back taxes aarp. Help back taxes org/money/taxaide or call 1-888-227-7669. Help back taxes   For more information on these programs, go to IRS. Help back taxes gov and enter “VITA” in the search box. Help back taxes Internet. Help back taxes IRS. Help back taxes gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. Help back taxes Apply for an Employer Identification Number (EIN). Help back taxes Go to IRS. Help back taxes gov and enter Apply for an EIN in the search box. Help back taxes Request an Electronic Filing PIN by going to IRS. Help back taxes gov and entering Electronic Filing PIN in the search box. Help back taxes Check the status of your 2013 refund with Where's My Refund? Go to IRS. Help back taxes gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. Help back taxes If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Help back taxes Check the status of your amended return. Help back taxes Go to IRS. Help back taxes gov and enter Where's My Amended Return in the search box. Help back taxes Download forms, instructions, and publications, including some accessible versions. Help back taxes Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. Help back taxes gov or IRS2Go. Help back taxes Tax return and tax account transcripts are generally available for the current year and past three years. Help back taxes Figure your income tax withholding with the IRS Withholding Calculator on IRS. Help back taxes gov. Help back taxes Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Help back taxes Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Help back taxes gov. Help back taxes Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. Help back taxes gov or IRS2Go. Help back taxes Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. Help back taxes An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. Help back taxes Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. Help back taxes If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. Help back taxes Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Help back taxes Locate the nearest volunteer help site with the VITA Locator Tool on IRS. Help back taxes gov. Help back taxes Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Help back taxes The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Help back taxes Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. Help back taxes AARP offers the Tax-Aide counseling program as part of the TCE program. Help back taxes Visit AARP's website to find the nearest Tax-Aide location. Help back taxes Research your tax questions. Help back taxes Search publications and instructions by topic or keyword. Help back taxes Read the Internal Revenue Code, regulations, or other official guidance. Help back taxes Read Internal Revenue Bulletins. Help back taxes Sign up to receive local and national tax news by email. Help back taxes Phone. Help back taxes You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Help back taxes Download the free IRS2Go mobile app from the iTunes app store or from Google Play. Help back taxes Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Help back taxes Call to locate the nearest volunteer help site, 1-800-906-9887. Help back taxes Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Help back taxes The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Help back taxes Most VITA and TCE sites offer free electronic filing. Help back taxes Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Help back taxes Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Help back taxes Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. Help back taxes The automated Where's My Refund? information is available 24 hours a day, 7 days a week. Help back taxes If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Help back taxes Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Help back taxes Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Help back taxes Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Help back taxes Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Help back taxes Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). Help back taxes You should receive your order within 10 business days. Help back taxes Call to order transcripts of your tax returns or tax account, 1-800-908-9946. Help back taxes Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. Help back taxes Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. Help back taxes Call to ask tax questions, 1-800-829-1040. Help back taxes Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Help back taxes The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Help back taxes These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. Help back taxes gsa. Help back taxes gov/fedrelay. Help back taxes Walk-in. Help back taxes You can find a selection of forms, publications and services — in-person, face-to-face. Help back taxes Products. Help back taxes You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Help back taxes Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Help back taxes Services. Help back taxes You can walk in to your local TAC most business days for personal, face-to-face tax help. Help back taxes An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Help back taxes If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. Help back taxes No appointment is necessary—just walk in. Help back taxes Before visiting, check www. Help back taxes irs. Help back taxes gov/localcontacts for hours of operation and services provided. Help back taxes Mail. Help back taxes You can send your order for forms, instructions, and publications to the address below. Help back taxes You should receive a response within 10 business days after your request is received. Help back taxes  Internal Revenue Service 1201 N. Help back taxes Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. Help back taxes   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Help back taxes Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Help back taxes What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. Help back taxes We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Help back taxes You face (or your business is facing) an immediate threat of adverse action. Help back taxes You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Help back taxes   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Help back taxes Here's why we can help: TAS is an independent organization within the IRS. Help back taxes Our advocates know how to work with the IRS. Help back taxes Our services are free and tailored to meet your needs. Help back taxes We have offices in every state, the District of Columbia, and Puerto Rico. Help back taxes How can you reach us?   If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. Help back taxes irs. Help back taxes gov/advocate, or call us toll-free at 1-877-777-4778. Help back taxes How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Help back taxes If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Help back taxes irs. Help back taxes gov/sams. Help back taxes Low Income Taxpayer Clinics. Help back taxes   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. Help back taxes Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Help back taxes Visit www. Help back taxes TaxpayerAdvocate. Help back taxes irs. Help back taxes gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. Help back taxes Prev  Up  Next   Home   More Online Publications