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Irs 1040ez

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Irs 1040ez

Irs 1040ez 1. Irs 1040ez   Investment Income Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: General InformationSSN for joint account. Irs 1040ez Custodian account for your child. Irs 1040ez Penalty for failure to supply SSN. Irs 1040ez Certification. Irs 1040ez Underreported interest and dividends. Irs 1040ez How to stop backup withholding due to underreporting. Irs 1040ez How to stop backup withholding due to an incorrect identification number. Irs 1040ez Reporting backup withholding. Irs 1040ez Nonresident aliens. Irs 1040ez Penalties. Irs 1040ez Savings account with parent as trustee. Irs 1040ez Interest IncomeInterest not reported on Form 1099-INT. Irs 1040ez Nominees. Irs 1040ez Incorrect amount. Irs 1040ez Information reporting requirement. Irs 1040ez Taxable Interest — General Below-Market Loans U. Irs 1040ez S. Irs 1040ez Savings Bonds U. Irs 1040ez S. Irs 1040ez 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. Irs 1040ez How To Report Interest IncomeSchedule B (Form 1040A or 1040). Irs 1040ez Worksheet for savings bonds distributed from a retirement or profit-sharing plan. Irs 1040ez File Form 1099-INT with the IRS. Irs 1040ez Dividends and Other DistributionsDividends not reported on Form 1099-DIV. Irs 1040ez Nominees. Irs 1040ez Ordinary Dividends Capital Gain Distributions Nondividend Distributions Liquidating Distributions Distributions of Stock and Stock Rights Other Distributions How To Report Dividend IncomeElection. Irs 1040ez Independent contractor. Irs 1040ez Investment interest deducted. Irs 1040ez Exception 1. Irs 1040ez Exception 2. Irs 1040ez Undistributed capital gains. Irs 1040ez File Form 1099-DIV with the IRS. Irs 1040ez Stripped Preferred Stock REMICs, FASITs, and Other CDOsREMICs Collateralized Debt Obligations (CDOs) FASITs S CorporationsLimit on losses and deductions. Irs 1040ez Passive activity losses. Irs 1040ez Form 8582. Irs 1040ez Investment ClubsInvestments in name of member. Irs 1040ez 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 . Irs 1040ez 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. Irs 1040ez S. Irs 1040ez Individual Income Tax Return 1040A U. Irs 1040ez S. Irs 1040ez 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. Irs 1040ez S. Irs 1040ez Savings Bonds Issued After 1989 8818 Optional Form To Record Redemption of Series EE and I U. Irs 1040ez S. Irs 1040ez 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. Irs 1040ez General Information A few items of general interest are covered here. Irs 1040ez Recordkeeping. Irs 1040ez You should keep a list showing sources and investment income amounts you receive during the year. Irs 1040ez 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. Irs 1040ez Net investment income tax (NIIT). Irs 1040ez   Beginning in 2013, you may be subject to the NIIT. Irs 1040ez The NIIT is a 3. Irs 1040ez 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. Irs 1040ez    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. Irs 1040ez Tax on unearned income of certain children. Irs 1040ez   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. Irs 1040ez This may happen if all of the following are true. Irs 1040ez The child had more than $2,000 of unearned income. Irs 1040ez The child is required to file a tax return. Irs 1040ez 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. Irs 1040ez At least one of the child's parents was alive at the end of 2013. Irs 1040ez The child does not file a joint return for 2013. Irs 1040ez 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. Irs 1040ez   If all of these statements are true, Form 8615 must be completed and attached to the child's tax return. Irs 1040ez 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. Irs 1040ez    However, the parent can choose to include the child's interest and dividends on the parent's return if certain requirements are met. Irs 1040ez Use Form 8814 for this purpose. Irs 1040ez   For more information about the tax on unearned income of children and the parents' election, see Publication 929, Tax Rules for Children and Dependents. Irs 1040ez Beneficiary of an estate or trust. Irs 1040ez   Interest, dividends, and other investment income you receive as a beneficiary of an estate or trust is generally taxable income. Irs 1040ez You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Irs 1040ez , from the fiduciary. Irs 1040ez Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. Irs 1040ez Social security number (SSN). Irs 1040ez   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. Irs 1040ez This includes payers of interest and dividends. Irs 1040ez If you do not give your SSN or ITIN to the payer of interest, you may have to pay a penalty. Irs 1040ez SSN for joint account. Irs 1040ez   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. Irs 1040ez (For information on who owns the funds in a joint account, see Joint accounts , later. Irs 1040ez ) If the joint account contains combined funds, give the SSN of the person whose name is listed first on the account. Irs 1040ez This is because only one name and SSN can be shown on Form 1099. Irs 1040ez   These rules apply both to joint ownership by a married couple and to joint ownership by other individuals. Irs 1040ez 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. Irs 1040ez Custodian account for your child. Irs 1040ez   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. Irs 1040ez 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. Irs 1040ez Penalty for failure to supply SSN. Irs 1040ez   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. Irs 1040ez The penalty is $50 for each failure up to a maximum penalty of $100,000 for any calendar year. Irs 1040ez   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. Irs 1040ez   If you fail to supply an SSN, you may also be subject to backup withholding. Irs 1040ez Backup withholding. Irs 1040ez   Your investment income is generally not subject to regular withholding. Irs 1040ez However, it may be subject to backup withholding to ensure that income tax is collected on the income. Irs 1040ez 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. Irs 1040ez   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). Irs 1040ez Certification. Irs 1040ez   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. Irs 1040ez Your payer will give you a Form W-9, Request for Taxpayer Identification Number and Certification, or similar form, to make this certification. Irs 1040ez If you fail to make this certification, backup withholding may begin immediately on your new account or investment. Irs 1040ez Underreported interest and dividends. Irs 1040ez   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. Irs 1040ez How to stop backup withholding due to underreporting. Irs 1040ez   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. Irs 1040ez You must show that at least one of the following situations applies. Irs 1040ez No underreporting occurred. Irs 1040ez You have a bona fide dispute with the IRS about whether underreporting occurred. Irs 1040ez Backup withholding will cause or is causing an undue hardship, and it is unlikely that you will underreport interest and dividends in the future. Irs 1040ez 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. Irs 1040ez   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. Irs 1040ez How to stop backup withholding due to an incorrect identification number. Irs 1040ez   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. Irs 1040ez Reporting backup withholding. Irs 1040ez   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. Irs 1040ez The information return will show any backup withholding as “Federal income tax withheld. Irs 1040ez ” Nonresident aliens. Irs 1040ez    Generally, payments made to nonresident aliens are not subject to backup withholding. Irs 1040ez You can use Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, to certify exempt status. Irs 1040ez However, this does not exempt you from the 30% (or lower treaty) withholding rate that may apply to your investment income. Irs 1040ez For information on the 30% rate, see Publication 519, U. Irs 1040ez S. Irs 1040ez Tax Guide for Aliens. Irs 1040ez Penalties. Irs 1040ez   There are civil and criminal penalties for giving false information to avoid backup withholding. Irs 1040ez The civil penalty is $500. Irs 1040ez The criminal penalty, upon conviction, is a fine of up to $1,000, or imprisonment of up to 1 year, or both. Irs 1040ez Where to report investment income. Irs 1040ez   Table 1-1 gives an overview of the forms and schedules to use to report some common types of investment income. Irs 1040ez But see the rest of this publication for detailed information about reporting investment income. Irs 1040ez Joint accounts. Irs 1040ez   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. Irs 1040ez Community property states. Irs 1040ez   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. Irs 1040ez If you file separate returns, you must each report one-half of any taxable distribution. Irs 1040ez See Publication 555, Community Property, for more information on community income. Irs 1040ez   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. Irs 1040ez Example. Irs 1040ez You and your spouse have a joint money market account. Irs 1040ez Under state law, half the income from the account belongs to you, and half belongs to your spouse. Irs 1040ez If you file separate returns, you each report half the income. Irs 1040ez Income from property given to a child. Irs 1040ez   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. Irs 1040ez   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. Irs 1040ez Savings account with parent as trustee. Irs 1040ez   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. Irs 1040ez The savings account legally belongs to the child. Irs 1040ez The parents are not legally permitted to use any of the funds to support the child. Irs 1040ez Table 1-1. Irs 1040ez 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. Irs 1040ez ) Type of Income If you file Form 1040, report on . Irs 1040ez . Irs 1040ez . Irs 1040ez If you can file Form 1040A, report on . Irs 1040ez . Irs 1040ez . Irs 1040ez If you can file Form 1040EZ, report on . Irs 1040ez . Irs 1040ez . Irs 1040ez 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. Irs 1040ez ) Line 8a (You may need to file Schedule B as well. Irs 1040ez ) 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. Irs 1040ez ) Line 9a (You may need to file Schedule B as well. Irs 1040ez )   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. Irs 1040ez Use Part II if you held the shares more than 1 year. Irs 1040ez Use Part I if you held your mutual fund shares 1 year or less. Irs 1040ez For details on Form 8949, see Reporting Capital Gains and Losses in chapter 4, and the Instructions for Form 8949. Irs 1040ez Accuracy-related penalty. Irs 1040ez   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. Irs 1040ez For information on the penalty and any interest that applies, see Penalties in chapter 2. Irs 1040ez Interest Income This section discusses the tax treatment of different types of interest income. Irs 1040ez In general, any interest that you receive or that is credited to your account and can be withdrawn is taxable income. Irs 1040ez (It does not have to be entered in your passbook. Irs 1040ez ) Exceptions to this rule are discussed later. Irs 1040ez Form 1099-INT. Irs 1040ez   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. Irs 1040ez This form shows you the interest you received during the year. Irs 1040ez Keep this form for your records. Irs 1040ez You do not have to attach it to your tax return. Irs 1040ez   Report on your tax return the total interest income you receive for the tax year. Irs 1040ez Interest not reported on Form 1099-INT. Irs 1040ez   Even if you do not receive Form 1099-INT, you must still report all of your interest income. Irs 1040ez For example, you may receive distributive shares of interest from partnerships or S corporations. Irs 1040ez This interest is reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Irs 1040ez , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. Irs 1040ez Nominees. Irs 1040ez   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. Irs 1040ez   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. Irs 1040ez Incorrect amount. Irs 1040ez   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. Irs 1040ez The new Form 1099-INT you receive will be marked “Corrected. Irs 1040ez ” Form 1099-OID. Irs 1040ez   Reportable interest income also may be shown on Form 1099-OID, Original Issue Discount. Irs 1040ez For more information about amounts shown on this form, see Original Issue Discount (OID) , later in this chapter. Irs 1040ez Exempt-interest dividends. Irs 1040ez   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. Irs 1040ez (However, see Information reporting requirement , next. Irs 1040ez ) Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. Irs 1040ez You do not reduce your basis for distributions that are exempt-interest dividends. Irs 1040ez Information reporting requirement. Irs 1040ez   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file. Irs 1040ez This is an information reporting requirement and does not change the exempt-interest dividends into taxable income. Irs 1040ez See How To Report Interest Income , later. Irs 1040ez Note. Irs 1040ez Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. Irs 1040ez The exempt-interest dividends subject to the alternative minimum tax are shown in box 11 of Form 1099-DIV. Irs 1040ez See Form 6251 and its instructions for more information about this tax. Irs 1040ez Private activity bonds are discussed later under State or Local Government Obligations. Irs 1040ez Interest on VA dividends. Irs 1040ez   Interest on insurance dividends left on deposit with the Department of Veterans Affairs (VA) is not taxable. Irs 1040ez This includes interest paid on dividends on converted United States Government Life Insurance policies and on National Service Life Insurance policies. Irs 1040ez Individual retirement arrangements (IRAs). Irs 1040ez   Interest on a Roth IRA generally is not taxable. Irs 1040ez Interest on a traditional IRA is tax deferred. Irs 1040ez You generally do not include it in your income until you make withdrawals from the IRA. Irs 1040ez See Publication 590 for more information. Irs 1040ez Taxable Interest — General Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. Irs 1040ez The following are some sources of taxable interest. Irs 1040ez Dividends that are actually interest. Irs 1040ez   Certain distributions commonly called dividends are actually interest. Irs 1040ez 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. Irs 1040ez  The “dividends” will be shown as interest income on Form 1099-INT. Irs 1040ez Money market funds. Irs 1040ez   Money market funds are offered by nonbank financial institutions such as mutual funds and stock brokerage houses, and pay dividends. Irs 1040ez Generally, amounts you receive from money market funds should be reported as dividends, not as interest. Irs 1040ez Certificates of deposit and other deferred interest accounts. Irs 1040ez   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. Irs 1040ez 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. Irs 1040ez The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. Irs 1040ez If interest is deferred for more than 1 year, see Original Issue Discount (OID) , later. Irs 1040ez Interest subject to penalty for early withdrawal. Irs 1040ez   If you withdraw funds from a deferred interest account before maturity, you may have to pay a penalty. Irs 1040ez You must report the total amount of interest paid or credited to your account during the year, without subtracting the penalty. Irs 1040ez 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. Irs 1040ez Money borrowed to invest in certificate of deposit. Irs 1040ez   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. Irs 1040ez You must report the total interest you earn on the certificate in your income. Irs 1040ez If you itemize deductions, you can deduct the interest you pay as investment interest, up to the amount of your net investment income. Irs 1040ez See Interest Expenses in chapter 3. Irs 1040ez Example. Irs 1040ez 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. Irs 1040ez 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. Irs 1040ez The bank gives you a Form 1099-INT for 2013 showing the $575 interest you earned. Irs 1040ez The bank also gives you a statement showing that you paid $310 interest for 2013. Irs 1040ez You must include the $575 in your income. Irs 1040ez If you itemize your deductions on Schedule A (Form 1040), Itemized Deductions, you can deduct $310, subject to the net investment income limit. Irs 1040ez Gift for opening account. Irs 1040ez   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. Irs 1040ez   For deposits of less than $5,000, gifts or services valued at more than $10 must be reported as interest. Irs 1040ez For deposits of $5,000 or more, gifts or services valued at more than $20 must be reported as interest. Irs 1040ez The value is determined by the cost to the financial institution. Irs 1040ez Example. Irs 1040ez You open a savings account at your local bank and deposit $800. Irs 1040ez The account earns $20 interest. Irs 1040ez You also receive a $15 calculator. Irs 1040ez 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. Irs 1040ez You must report $35 interest income on your tax return. Irs 1040ez Interest on insurance dividends. Irs 1040ez   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. Irs 1040ez 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. Irs 1040ez Prepaid insurance premiums. Irs 1040ez   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. Irs 1040ez U. Irs 1040ez S. Irs 1040ez obligations. Irs 1040ez   Interest on U. Irs 1040ez S. Irs 1040ez obligations, such as U. Irs 1040ez S. Irs 1040ez Treasury bills, notes, and bonds, issued by any agency or instrumentality of the United States is taxable for federal income tax purposes. Irs 1040ez Interest on tax refunds. Irs 1040ez   Interest you receive on tax refunds is taxable income. Irs 1040ez Interest on condemnation award. Irs 1040ez   If the condemning authority pays you interest to compensate you for a delay in payment of an award, the interest is taxable. Irs 1040ez Installment sale payments. Irs 1040ez   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. Irs 1040ez That interest is taxable when you receive it. Irs 1040ez If little or no interest is provided for in a deferred payment contract, part of each payment may be treated as interest. Irs 1040ez See Unstated Interest and Original Issue Discount (OID) in Publication 537. Irs 1040ez Interest on annuity contract. Irs 1040ez   Accumulated interest on an annuity contract you sell before its maturity date is taxable. Irs 1040ez Usurious interest. Irs 1040ez   Usurious interest is interest charged at an illegal rate. Irs 1040ez This is taxable as interest unless state law automatically changes it to a payment on the principal. Irs 1040ez Interest income on frozen deposits. Irs 1040ez   Exclude from your gross income interest on frozen deposits. Irs 1040ez 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. Irs 1040ez   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). Irs 1040ez 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. Irs 1040ez   The interest you exclude is treated as credited to your account in the following year. Irs 1040ez You must include it in income in the year you can withdraw it. Irs 1040ez Example. Irs 1040ez $100 of interest was credited on your frozen deposit during the year. Irs 1040ez You withdrew $80 but could not withdraw any more as of the end of the year. Irs 1040ez You must include $80 in your income and exclude $20 from your income for the year. Irs 1040ez You must include the $20 in your income for the year you can withdraw it. Irs 1040ez Bonds traded flat. Irs 1040ez    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. Irs 1040ez The defaulted or unpaid interest is not income and is not taxable as interest if paid later. Irs 1040ez When you receive a payment of that interest, it is a return of capital that reduces the remaining cost basis of your bond. Irs 1040ez Interest that accrues after the date of purchase, however, is taxable interest income for the year received or accrued. Irs 1040ez See Bonds Sold Between Interest Dates , later in this chapter. Irs 1040ez 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. Irs 1040ez The below-market loan rules and exceptions are described in this section. Irs 1040ez For more information, see section 7872 of the Internal Revenue Code and its regulations. Irs 1040ez 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. Irs 1040ez Loans subject to the rules. Irs 1040ez   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. Irs 1040ez 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. Irs 1040ez 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. Irs 1040ez Forgone interest. Irs 1040ez   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. Irs 1040ez Applicable federal rate. Irs 1040ez   Applicable federal rates are published by the IRS each month in the Internal Revenue Bulletin. Irs 1040ez Some IRS offices have these bulletins available for research. Irs 1040ez See chapter 5, How To Get Tax Help , for other ways to get this information. Irs 1040ez Rules for below-market loans. Irs 1040ez   The rules that apply to a below-market loan depend on whether the loan is a gift loan, demand loan, or term loan. Irs 1040ez Gift and demand loans. Irs 1040ez   A gift loan is any below-market loan where the forgone interest is in the nature of a gift. Irs 1040ez   A demand loan is a loan payable in full at any time upon demand by the lender. Irs 1040ez 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. Irs 1040ez   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. Irs 1040ez The borrower is generally treated as transferring the additional payment back to the lender as interest. Irs 1040ez The lender must report that amount as interest income. Irs 1040ez   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. Irs 1040ez The borrower may have to report this payment as taxable income, depending on its classification. Irs 1040ez These transfers are considered to occur annually, generally on December 31. Irs 1040ez Term loans. Irs 1040ez   A term loan is any loan that is not a demand loan. Irs 1040ez 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. Irs 1040ez   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. Irs 1040ez ) on the date the loan is made. Irs 1040ez 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. Irs 1040ez An equal amount is treated as original issue discount (OID). Irs 1040ez The lender must report the annual part of the OID as interest income. Irs 1040ez The borrower may be able to deduct the OID as interest expense. Irs 1040ez See Original Issue Discount (OID) , later. Irs 1040ez Exceptions to the below-market loan rules. Irs 1040ez   Exceptions to the below-market loan rules are discussed here. Irs 1040ez Exception for loans of $10,000 or less. Irs 1040ez   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. Irs 1040ez 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. Irs 1040ez This exception does not apply to a term loan described in (2) earlier that previously has been subject to the below-market loan rules. Irs 1040ez Those rules will continue to apply even if the outstanding balance is reduced to $10,000 or less. Irs 1040ez Exception for loans to continuing care facilities. Irs 1040ez   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. Irs 1040ez For the definitions of qualified continuing care facility and continuing care contract, see Internal Revenue Code section 7872(h). Irs 1040ez Exception for loans without significant tax effect. Irs 1040ez   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. Irs 1040ez 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. Irs 1040ez S. Irs 1040ez trade or business and would not be exempt from U. Irs 1040ez S. Irs 1040ez 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. Irs 1040ez 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. Irs 1040ez 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. Irs 1040ez 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. Irs 1040ez Limit on forgone interest for gift loans of $100,000 or less. Irs 1040ez   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. Irs 1040ez If the borrower's net investment income is $1,000 or less, it is treated as zero. Irs 1040ez This limit does not apply to a loan if the avoidance of federal tax is one of the main purposes of the interest arrangement. Irs 1040ez Effective dates. Irs 1040ez    These rules apply to term loans made after June 6, 1984, and to demand loans outstanding after that date. Irs 1040ez U. Irs 1040ez S. Irs 1040ez Savings Bonds This section provides tax information on U. Irs 1040ez S. Irs 1040ez savings bonds. Irs 1040ez It explains how to report the interest income on these bonds and how to treat transfers of these bonds. Irs 1040ez U. Irs 1040ez S. Irs 1040ez savings bonds currently offered to individuals include Series EE bonds and Series I bonds. Irs 1040ez For other information on U. Irs 1040ez S. Irs 1040ez savings bonds, write to:  For Series HH/H: Bureau of the Fiscal Service Division of Customer Assistance P. Irs 1040ez O. Irs 1040ez Box 2186 Parkersburg, WV 26106-2186  For Series EE and I paper savings bonds: Bureau of the Fiscal Service Division of Customer Assistance P. Irs 1040ez O. Irs 1040ez Box 7012 Parkersburg, WV 26106-7012  For Series EE and I electronic bonds: Bureau of the Fiscal Service  Division of Customer Assistance P. Irs 1040ez O. Irs 1040ez Box 7015 Parkersburg, WV 26106-7015 Or, on the Internet, visit: www. Irs 1040ez treasurydirect. Irs 1040ez gov/indiv/indiv. Irs 1040ez htm. Irs 1040ez Accrual method taxpayers. Irs 1040ez   If you use an accrual method of accounting, you must report interest on U. Irs 1040ez S. Irs 1040ez savings bonds each year as it accrues. Irs 1040ez You cannot postpone reporting interest until you receive it or until the bonds mature. Irs 1040ez Cash method taxpayers. Irs 1040ez   If you use the cash method of accounting, as most individual taxpayers do, you generally report the interest on U. Irs 1040ez S. Irs 1040ez savings bonds when you receive it. Irs 1040ez But see Reporting options for cash method taxpayers , later. Irs 1040ez Series HH bonds. Irs 1040ez   These bonds were issued at face value. Irs 1040ez Interest is paid twice a year by direct deposit to your bank account. Irs 1040ez If you are a cash method taxpayer, you must report interest on these bonds as income in the year you receive it. Irs 1040ez   Series HH bonds were first offered in 1980 and last offered in August 2004. Irs 1040ez Before 1980, series H bonds were issued. Irs 1040ez Series H bonds are treated the same as series HH bonds. Irs 1040ez If you are a cash method taxpayer, you must report the interest when you receive it. Irs 1040ez   Series H bonds have a maturity period of 30 years. Irs 1040ez Series HH bonds mature in 20 years. Irs 1040ez The last series H bonds matured in 2009. Irs 1040ez The last series HH bonds will mature in 2024. Irs 1040ez Series EE and series I bonds. Irs 1040ez   Interest on these bonds is payable when you redeem the bonds. Irs 1040ez The difference between the purchase price and the redemption value is taxable interest. Irs 1040ez Series EE bonds. Irs 1040ez   Series EE bonds were first offered in January 1980 and have a maturity period of 30 years. Irs 1040ez Before July 1980, series E bonds were issued. Irs 1040ez 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. Irs 1040ez Paper series EE and series E bonds are issued at a discount. Irs 1040ez The face value is payable to you at maturity. Irs 1040ez Electronic series EE bonds are issued at their face value. Irs 1040ez The face value plus accrued interest is payable to you at maturity. Irs 1040ez As of January 1, 2012, paper savings bonds were no longer sold at financial institutions. Irs 1040ez    Owners of paper series EE bonds can convert them to electronic bonds. Irs 1040ez These converted bonds do not retain the denomination listed on the paper certificate but are posted at their purchase price (with accrued interest). Irs 1040ez Series I bonds. Irs 1040ez   Series I bonds were first offered in 1998. Irs 1040ez These are inflation-indexed bonds issued at their face amount with a maturity period of 30 years. Irs 1040ez The face value plus all accrued interest is payable to you at maturity. Irs 1040ez Reporting options for cash method taxpayers. Irs 1040ez   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. Irs 1040ez Method 1. Irs 1040ez Postpone reporting the interest until the earlier of the year you cash or dispose of the bonds or the year in which they mature. Irs 1040ez (However, see Savings bonds traded , later. Irs 1040ez )  Note. Irs 1040ez Series EE bonds issued in 1983 matured in 2013. Irs 1040ez If you have used method 1, you generally must report the interest on these bonds on your 2013 return. Irs 1040ez The last series E bonds were issued in 1980 and matured in 2010. Irs 1040ez If you used method 1, you generally should have reported the interest on these bonds on your 2010 return. Irs 1040ez Method 2. Irs 1040ez Choose to report the increase in redemption value as interest each year. Irs 1040ez  You must use the same method for all series EE, series E, and series I bonds you own. Irs 1040ez If you do not choose method 2 by reporting the increase in redemption value as interest each year, you must use method 1. Irs 1040ez 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. Irs 1040ez To learn how, see Education Savings Bond Program, later. Irs 1040ez Change from method 1. Irs 1040ez   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. Irs 1040ez In the year of change, you must report all interest accrued to date and not previously reported for all your bonds. Irs 1040ez   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. Irs 1040ez Change from method 2. Irs 1040ez   To change from method 2 to method 1, you must request permission from the IRS. Irs 1040ez Permission for the change is automatically granted if you send the IRS a statement that meets all the following requirements. Irs 1040ez You have typed or printed the following number at the top: “131. Irs 1040ez ” It includes your name and social security number under “131. Irs 1040ez ” It includes the year of change (both the beginning and ending dates). Irs 1040ez It identifies the savings bonds for which you are requesting this change. Irs 1040ez 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. Irs 1040ez   You must attach this statement to your tax return for the year of change, which you must file by the due date (including extensions). Irs 1040ez   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. Irs 1040ez On the statement, type or print “Filed pursuant to section 301. Irs 1040ez 9100-2. Irs 1040ez ” To get this extension, you must have filed your original return for the year of the change by the due date (including extensions). Irs 1040ez    By the date you file the original statement with your return, you must also send a signed copy to the address below. Irs 1040ez    Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) P. Irs 1040ez O. Irs 1040ez Box 7604 Benjamin Franklin Station Washington, DC 20044   If you use a private delivery service, send the signed copy to the address below. Irs 1040ez 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. Irs 1040ez In that case, follow the form instructions for an automatic change. Irs 1040ez No user fee is required. Irs 1040ez Co-owners. Irs 1040ez   If a U. Irs 1040ez S. Irs 1040ez 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. Irs 1040ez One co-owner's funds used. Irs 1040ez   If you used your funds to buy the bond, you must pay the tax on the interest. Irs 1040ez This is true even if you let the other co-owner redeem the bond and keep all the proceeds. Irs 1040ez 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. Irs 1040ez The co-owner who redeemed the bond is a “nominee. Irs 1040ez ” 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. Irs 1040ez Both co-owners' funds used. Irs 1040ez   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. Irs 1040ez Community property. Irs 1040ez   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. Irs 1040ez If you file separate returns, each of you generally must report one-half of the bond interest. Irs 1040ez For more information about community property, see Publication 555. Irs 1040ez Table 1-2. Irs 1040ez   These rules are also shown in Table 1-2. Irs 1040ez Child as only owner. Irs 1040ez   Interest on U. Irs 1040ez S. Irs 1040ez 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. Irs 1040ez 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. Irs 1040ez Choice to report interest each year. Irs 1040ez   The choice to report the accrued interest each year can be made either by your child or by you for your child. Irs 1040ez 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. Irs 1040ez Either you or your child should keep a copy of this return. Irs 1040ez   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. Irs 1040ez S. Irs 1040ez savings bond interest under this choice. Irs 1040ez However, see Tax on unearned income of certain children , earlier, under General Information. Irs 1040ez 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 . Irs 1040ez Ownership transferred. Irs 1040ez   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. Irs 1040ez But, if the bonds were reissued in your name alone, you do not have to report the interest accrued at that time. Irs 1040ez   This same rule applies when bonds (other than bonds held as community property) are transferred between spouses or incident to divorce. Irs 1040ez Example. Irs 1040ez You bought series EE bonds entirely with your own funds. Irs 1040ez You did not choose to report the accrued interest each year. Irs 1040ez Later, you transfer the bonds to your former spouse under a divorce agreement. Irs 1040ez 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. Irs 1040ez Your former spouse includes in income the interest on the bonds from the date of transfer to the date of redemption. Irs 1040ez Table 1-2. Irs 1040ez Who Pays the Tax on U. Irs 1040ez S. Irs 1040ez Savings Bond Interest IF . Irs 1040ez . Irs 1040ez . Irs 1040ez THEN the interest must be reported by . Irs 1040ez . Irs 1040ez . Irs 1040ez you buy a bond in your name and the name of another person as co-owners, using only your own funds you. Irs 1040ez 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. Irs 1040ez 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. Irs 1040ez you and your spouse, who live in a community property state, buy a bond that is community property you and your spouse. Irs 1040ez If you file separate returns, both you and your spouse generally report one-half of the interest. Irs 1040ez Purchased jointly. Irs 1040ez   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. Irs 1040ez 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. Irs 1040ez This interest, however, as well as all interest earned after the reissue, is income to the former co-owner. Irs 1040ez   This income-reporting rule also applies when the bonds are reissued in the name of your former co-owner and a new co-owner. Irs 1040ez But the new co-owner will report only his or her share of the interest earned after the transfer. Irs 1040ez   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. Irs 1040ez Example 1. Irs 1040ez You and your spouse each spent an equal amount to buy a $1,000 series EE savings bond. Irs 1040ez The bond was issued to you and your spouse as co-owners. Irs 1040ez You both postpone reporting interest on the bond. Irs 1040ez You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Irs 1040ez At that time neither you nor your spouse has to report the interest earned to the date of reissue. Irs 1040ez Example 2. Irs 1040ez You bought a $1,000 series EE savings bond entirely with your own funds. Irs 1040ez The bond was issued to you and your spouse as co-owners. Irs 1040ez You both postponed reporting interest on the bond. Irs 1040ez You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Irs 1040ez You must report half the interest earned to the date of reissue. Irs 1040ez Transfer to a trust. Irs 1040ez   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. Irs 1040ez 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. Irs 1040ez 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. Irs 1040ez   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. Irs 1040ez See Savings bonds traded , later. Irs 1040ez Decedents. Irs 1040ez   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. Irs 1040ez Decedent who reported interest each year. Irs 1040ez   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. Irs 1040ez The person who acquires the bonds includes in income only interest earned after the date of death. Irs 1040ez Decedent who postponed reporting interest. Irs 1040ez   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. Irs 1040ez The surviving spouse or personal representative (executor, administrator, etc. Irs 1040ez ) 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. Irs 1040ez The person who acquires the bonds then includes in income only interest earned after the date of death. Irs 1040ez 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. Irs 1040ez 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. Irs 1040ez 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. Irs 1040ez 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. Irs 1040ez For more information on income in respect of a decedent, see Publication 559, Survivors, Executors, and Administrators. Irs 1040ez Example 1. Irs 1040ez Your uncle, a cash method taxpayer, died and left you a $1,000 series EE bond. Irs 1040ez He had bought the bond for $500 and had not chosen to report the interest each year. Irs 1040ez 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. Irs 1040ez Your uncle's executor chose not to include the $200 accrued interest in your uncle's final income tax return. Irs 1040ez The $200 is income in respect of the decedent. Irs 1040ez You are a cash method taxpayer and do not choose to report the interest each year as it is earned. Irs 1040ez 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. Irs 1040ez 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. Irs 1040ez Example 2. Irs 1040ez 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. Irs 1040ez $300 is the interest earned after your uncle's death. Irs 1040ez Example 3. Irs 1040ez 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. Irs 1040ez Example 4. Irs 1040ez When your aunt died, she owned series HH bonds that she had acquired in a trade for series EE bonds. Irs 1040ez You were the beneficiary of these bonds. Irs 1040ez Your aunt used the cash method and did not choose to report the interest on the series EE bonds each year as it accrued. Irs 1040ez Your aunt's executor chose not to include any interest earned before your aunt's death on her final return. Irs 1040ez 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. Irs 1040ez You must report any interest received during the year as income on your return. Irs 1040ez 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. Irs 1040ez For information on when to report the interest on the series EE bonds traded, see Savings bonds traded , later. Irs 1040ez Savings bonds distributed from a retirement or profit-sharing plan. Irs 1040ez   If you acquire a U. Irs 1040ez S. Irs 1040ez 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). Irs 1040ez 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. Irs 1040ez 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. Irs 1040ez Savings bonds traded. Irs 1040ez   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. Irs 1040ez (You cannot trade series I bonds for series HH bonds. Irs 1040ez After August 31, 2004, you cannot trade any other series of bonds for series HH bonds. Irs 1040ez ) Any cash you received is income up to the amount of the interest earned on the bonds traded. Irs 1040ez 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. Irs 1040ez 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. Irs 1040ez Example. Irs 1040ez You traded series EE bonds (on which you postponed reporting the interest) for $2,500 in series HH bonds and $223 in cash. Irs 1040ez You reported the $223 as taxable income on your tax return. Irs 1040ez At the time of the trade, the series EE bonds had accrued interest of $523 and a redemption value of $2,723. Irs 1040ez You hold the series HH bonds until maturity, when you receive $2,500. Irs 1040ez You must report $300 as interest income in the year of maturity. Irs 1040ez This is the difference between their redemption value, $2,500, and your cost, $2,200 (the amount you paid for the series EE bonds). Irs 1040ez (It is also the difference between the accrued interest of $523 on the series EE bonds and the $223 cash received on the trade. Irs 1040ez ) Choice to report interest in year of trade. Irs 1040ez   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. Irs 1040ez If you made this choice, it is treated as a change from method 1. Irs 1040ez See Change from method 1 under Series EE and series I bonds, earlier. Irs 1040ez Form 1099-INT for U. Irs 1040ez S. Irs 1040ez savings bond interest. Irs 1040ez   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. Irs 1040ez 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. Irs 1040ez However, your Form 1099-INT may show more interest than you have to include on your income tax return. Irs 1040ez For example, this may happen if any of the following are true. Irs 1040ez You chose to report the increase in the redemption value of the bond each year. Irs 1040ez The interest shown on your Form 1099-INT will not be reduced by amounts previously included in income. Irs 1040ez You received the bond from a decedent. Irs 1040ez 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. Irs 1040ez Ownership of the bond was transferred. Irs 1040ez The interest shown on your Form 1099-INT will not be reduced by interest that accrued before the transfer. Irs 1040ez You were named as a co-owner, and the other co-owner contributed funds to buy the bond. Irs 1040ez The interest shown on your Form 1099-INT will not be reduced by the amount you received as nominee for the other co-owner. Irs 1040ez (See Co-owners , earlier in this section, for more information about the reporting requirements. Irs 1040ez ) You received the bond in a taxable distribution from a retirement or profit-sharing plan. Irs 1040ez 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. Irs 1040ez (This amount is generally shown on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Irs 1040ez , for the year of distribution. Irs 1040ez )   For more information on including the correct amount of interest on your return, see U. Irs 1040ez S. Irs 1040ez savings bond interest previously reported or Nominee distributions under How To Report Interest Income, later. Irs 1040ez    Interest on U. Irs 1040ez S. Irs 1040ez savings bonds is exempt from state and local taxes. Irs 1040ez The Form 1099-INT you receive will indicate the amount that is for U. Irs 1040ez S. Irs 1040ez savings bonds interest in box 3. Irs 1040ez Do not include this income on your state or local income tax return. Irs 1040ez 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. Irs 1040ez S. Irs 1040ez savings bonds during the year if you pay qualified higher educational expenses during the same year. Irs 1040ez This exclusion is known as the Education Savings Bond Program. Irs 1040ez You do not qualify for this exclusion if your filing status is married filing separately. Irs 1040ez Form 8815. Irs 1040ez   Use Form 8815 to figure your exclusion. Irs 1040ez Attach the form to your Form 1040 or Form 1040A. Irs 1040ez Qualified U. Irs 1040ez S. Irs 1040ez savings bonds. Irs 1040ez   A qualified U. Irs 1040ez S. Irs 1040ez savings bond is a series EE bond issued after 1989 or a series I bond. Irs 1040ez The bond must be issued either in your name (sole owner) or in your and your spouse's names (co-owners). Irs 1040ez You must be at least 24 years old before the bond's issue date. Irs 1040ez 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. Irs 1040ez    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. Irs 1040ez Beneficiary. Irs 1040ez   You can designate any individual (including a child) as a beneficiary of the bond. Irs 1040ez Verification by IRS. Irs 1040ez   If you claim the exclusion, the IRS will check it by using bond redemption information from the Department of Treasury. Irs 1040ez Qualified expenses. Irs 1040ez   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. Irs 1040ez   Qualified expenses include any contribution you make to a qualified tuition program or to a Coverdell education savings account. Irs 1040ez For information about these programs, see Publication 970, Tax Benefits for Education. Irs 1040ez   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. Irs 1040ez Eligible educational institutions. Irs 1040ez   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. Irs 1040ez Reduction for certain benefits. Irs 1040ez   You must reduce your qualified higher educational expenses by all of the following tax-free benefits. Irs 1040ez Tax-free part of scholarships and fellowships. Irs 1040ez Expenses used to figure the tax-free portion of distributions from a Coverdell ESA. Irs 1040ez Expenses used to figure the tax-free portion of distributions from a qualified tuition program. Irs 1040ez 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. Irs 1040ez Any expense used in figuring the American Opportunity and lifetime learning credits. Irs 1040ez For information about these benefits, see Publication 970. Irs 1040ez Amount excludable. Irs 1040ez   If the total proceeds (interest and principal) from the qualified U. Irs 1040ez S. Irs 1040ez 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. Irs 1040ez If the proceeds are more than the expenses, you may be able to exclude only part of the interest. Irs 1040ez   To determine the excludable amount, multiply the interest part of the proceeds by a fraction. Irs 1040ez The numer
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The Irs 1040ez

Irs 1040ez Publication 915 - Introductory Material Table of Contents Reminders IntroductionOrdering forms and publications. Irs 1040ez Tax questions. Irs 1040ez Useful Items - You may want to see: Reminders Future developments. Irs 1040ez  The IRS has created a page on IRS. Irs 1040ez gov for information about Publication 915, at www. Irs 1040ez irs. Irs 1040ez gov/pub915. Irs 1040ez Information about any future developments affecting Publication 915 (such as legislation enacted after we release it) will be posted on that page. Irs 1040ez Photographs of missing children. Irs 1040ez  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Irs 1040ez Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Irs 1040ez You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Irs 1040ez Introduction This publication explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. Irs 1040ez It is prepared through the joint efforts of the Internal Revenue Service (IRS), the Social Security Administration (SSA), and the U. Irs 1040ez S. Irs 1040ez Railroad Retirement Board (RRB). Irs 1040ez Social security benefits include monthly retirement, survivor, and disability benefits. Irs 1040ez They do not include supplemental security income (SSI) payments, which are not taxable. Irs 1040ez Equivalent tier 1 railroad retirement benefits are the part of tier 1 benefits that a railroad employee or beneficiary would have been entitled to receive under the social security system. Irs 1040ez They are commonly called the social security equivalent benefit (SSEB) portion of tier 1 benefits. Irs 1040ez If you received these benefits during 2013, you should have received a Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Payments by the Railroad Retirement Board, showing the amount. Irs 1040ez (If you are a nonresident alien, you should have received Form SSA-1042S, Social Security Benefit Statement, or Form RRB-1042S, Statement for Nonresident Alien Recipients of: Payments by the Railroad Retirement Board. Irs 1040ez ) Note. Irs 1040ez When the term “benefits” is used in this publication, it applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits. Irs 1040ez What is covered in this publication. Irs 1040ez   This publication covers the following topics: Whether any of your benefits are taxable, How much is taxable, How to report taxable benefits, How to treat lump-sum benefit payments, and Deductions related to your benefits, including a deduction or credit you can claim if your repayments are more than your gross benefits. Irs 1040ez The Appendix at the end of this publication explains items shown on your Form SSA-1099, SSA-1042S, RRB-1099, or RRB-1042S. Irs 1040ez What is not covered in this publication. Irs 1040ez   This publication does not cover the tax rules for the following railroad retirement benefits: Non-social security equivalent benefit (NSSEB) portion of tier 1 benefits, Tier 2 benefits, Vested dual benefits, and Supplemental annuity benefits. Irs 1040ez For information on these taxable pension benefits, see Publication 575, Pension and Annuity Income. Irs 1040ez   This publication also does not cover the tax rules for foreign social security benefits. Irs 1040ez These benefits are taxable as annuities, unless they are exempt from U. Irs 1040ez S. Irs 1040ez tax or treated as a U. Irs 1040ez S. Irs 1040ez social security benefit under a tax treaty. Irs 1040ez Comments and suggestions. Irs 1040ez   We welcome your comments about this publication and your suggestions for future editions. Irs 1040ez   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Irs 1040ez NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Irs 1040ez Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Irs 1040ez   You can send your comments from www. Irs 1040ez irs. Irs 1040ez gov/formspubs/. Irs 1040ez Click on “More Information” and then on “Comment on Tax Forms and Publications”. Irs 1040ez   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Irs 1040ez Ordering forms and publications. Irs 1040ez   Visit www. Irs 1040ez irs. Irs 1040ez gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Irs 1040ez Internal Revenue Service 1201 N. Irs 1040ez Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Irs 1040ez   If you have a tax question, check the information available on IRS. Irs 1040ez gov or call 1-800-829-1040. Irs 1040ez We cannot answer tax questions sent to either of the above addresses. Irs 1040ez Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax 575 Pension and Annuity Income 590 Individual Retirement Arrangements (IRAs) Forms (and Instructions) 1040-ES Estimated Tax for Individuals SSA-1099 Social Security Benefit Statement RRB-1099 Payments by the Railroad Retirement Board W-4V Voluntary Withholding Request See How To Get Tax Help near the end of this publication for information about getting these publications and forms. Irs 1040ez Prev  Up  Next   Home   More Online Publications