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Irs Ez Form 2013

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Irs Ez Form 2013

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

Irs ez form 2013 30. Irs ez form 2013   How To Figure Your Tax Table of Contents Introduction Figuring Your Tax Alternative Minimum Tax (AMT) Tax Figured by IRSFiling the Return Introduction After you have figured your income and deductions as explained in Parts One through Five, your next step is to figure your tax. Irs ez form 2013 This chapter discusses: The general steps you take to figure your tax, An additional tax you may have to pay called the alternative minimum tax (AMT), and The conditions you must meet if you want the IRS to figure your tax. Irs ez form 2013 Figuring Your Tax Your income tax is based on your taxable income. Irs ez form 2013 After you figure your income tax and AMT, if any, subtract your tax credits and add any other taxes you may owe. Irs ez form 2013 The result is your total tax. Irs ez form 2013 Compare your total tax with your total payments to determine whether you are entitled to a refund or if you must make a payment. Irs ez form 2013 This section provides a general outline of how to figure your tax. Irs ez form 2013 You can find step-by-step directions in the Instructions for Forms 1040EZ, 1040A, and 1040. Irs ez form 2013 If you are unsure of which tax form you should file, see Which Form Should I Use? in chapter 1. Irs ez form 2013 Tax. Irs ez form 2013   Most taxpayers use either the Tax Table or the Tax Computation Worksheet to figure their income tax. Irs ez form 2013 However, there are special methods if your income includes any of the following items. Irs ez form 2013 A net capital gain. Irs ez form 2013 (See chapter 16. Irs ez form 2013 ) Qualified dividends taxed at the same rates as a net capital gain. Irs ez form 2013 (See chapters 8 and 16. Irs ez form 2013 ) Lump-sum distributions. Irs ez form 2013 (See chapter 10. Irs ez form 2013 ) Farming or fishing income. Irs ez form 2013 (See Schedule J (Form 1040), Income Averaging for Farmers and Fishermen. Irs ez form 2013 ) Unearned income over $2,000 for certain children. Irs ez form 2013 (See chapter 31. Irs ez form 2013 ) Parents' election to report child's interest and dividends. Irs ez form 2013 (See chapter 31. Irs ez form 2013 ) Foreign earned income exclusion or the housing exclusion. Irs ez form 2013 (See Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion, and the Foreign Earned Income Tax Worksheet in the Form 1040 instructions. Irs ez form 2013 ) Credits. Irs ez form 2013   After you figure your income tax and any AMT (discussed later), determine if you are eligible for any tax credits. Irs ez form 2013 Eligibility information for these tax credits is discussed in chapters 32 through 37 and your form instructions. Irs ez form 2013 The following table lists the credits you may be able to subtract from your tax and shows where you can find more information on each credit. Irs ez form 2013 CREDITS For information on: See  chapter: Adoption 37 Alternative motor vehicle 37 Alternative fuel vehicle refueling  property 37 Child and dependent care 32 Child tax 34 Credit to holders of tax credit  bonds 37 Education 35 Elderly or disabled 33 Electric vehicle 37 Foreign tax 37 Mortgage interest 37 Prior year minimum tax 37 Residential energy 37 Retirement savings contributions 37   Some credits (such as the earned income credit) are not listed because they are treated as payments. Irs ez form 2013 See Payments , later. Irs ez form 2013   There are other credits that are not discussed in this publication. Irs ez form 2013 These include the following credits. Irs ez form 2013 General business credit, which is made up of several separate business-related credits. Irs ez form 2013 These generally are reported on Form 3800, General Business Credit, and are discussed in chapter 4 of Publication 334, Tax Guide for Small Business. Irs ez form 2013 Renewable electricity, refined coal, and Indian coal production credit for electricity and refined coal produced at facilities placed in service after October 22, 2004 (after October 2, 2008, for electricity produced from marine and hydrokinetic renewables), and Indian coal produced at facilities placed in service after August 8, 2005. Irs ez form 2013 See Form 8835, Part II. Irs ez form 2013 Work opportunity credit. Irs ez form 2013 See Form 5884. Irs ez form 2013 Credit for employer social security and Medicare taxes paid on certain employee tips. Irs ez form 2013 See Form 8846. Irs ez form 2013 Other taxes. Irs ez form 2013   After you subtract your tax credits, determine whether there are any other taxes you must pay. Irs ez form 2013 This chapter does not explain these other taxes. Irs ez form 2013 You can find that information in other chapters of this publication and your form instructions. Irs ez form 2013 See the following table for other taxes you may need to add to your income tax. Irs ez form 2013 OTHER TAXES For information on: See  chapter: Additional taxes on qualified retirement plans and IRAs 10, 17 Household employment taxes 32 Recapture of an education credit 35 Social security and Medicare tax on wages 5 Social security and Medicare tax on tips 6 Uncollected social security and Medicare tax on tips 6   You also may have to pay AMT (discussed later in this chapter). Irs ez form 2013   There are other taxes that are not discussed in this publication. Irs ez form 2013 These include the following items. Irs ez form 2013 Self-employment tax. Irs ez form 2013 You must figure this tax if either of the following applies to you (or your spouse if you file a joint return). Irs ez form 2013 Your net earnings from self-employment from other than church employee income were $400 or more. Irs ez form 2013 The term “net earnings from self-employment” may include certain nonemployee compensation and other amounts reported to you on Form 1099-MISC, Miscellaneous Income. Irs ez form 2013 If you received a Form 1099-MISC, see the Instructions for Recipient on the back. Irs ez form 2013 Also see the Instructions for Schedule SE (Form 1040), Self-Employment Tax; and Publication 334, Tax Guide for Small Business. Irs ez form 2013 You had church employee income of $108. Irs ez form 2013 28 or more. Irs ez form 2013 Additional Medicare Tax. Irs ez form 2013 Beginning in 2013, you may be subject to a 0. Irs ez form 2013 9% Additional Medicare Tax that applies to Medicare wages, Railroad Retirement Act compensation, and self-employment income over a threshold based on your filing status. Irs ez form 2013 For more information, see the Instructions for Form 1040, line 60 and Form 8959. Irs ez form 2013 Net Investment Income Tax (NIIT). Irs ez form 2013 Beginning in 2013, you may be subject to Net Investment Income Tax (NIIT). Irs ez form 2013 NIIT is a 3. Irs ez form 2013 8% tax on the lesser of net investment income or the excess of your modified adjusted gross income over a threshold amount. Irs ez form 2013 For more information, see the Instructions for Form 1040, line 60 and Form 8960. Irs ez form 2013 Recapture taxes. Irs ez form 2013 You may have to pay these taxes if you previously claimed an investment credit, a low-income housing credit, a new markets credit, a qualified plug-in electric drive motor vehicle credit, an alternative motor vehicle credit, a credit for employer-provided child care facilities, an Indian employment credit, or other credits listed in the instructions for Form 1040, line 60. Irs ez form 2013 For more information, see the instructions for Form 1040, line 60. Irs ez form 2013 Section 72(m)(5) excess benefits tax. Irs ez form 2013 If you are (or were) a 5% owner of a business and you received a distribution that exceeds the benefits provided for you under the qualified pension or annuity plan formula, you may have to pay this additional tax. Irs ez form 2013 See Tax on Excess Benefits in chapter 4 of Publication 560, Retirement Plans for Small Business. Irs ez form 2013 Uncollected social security and Medicare tax on group-term life insurance. Irs ez form 2013 If your former employer provides you with more than $50,000 of group-term life insurance coverage, you must pay the employee part of social security and Medicare taxes on those premiums. Irs ez form 2013 The amount should be shown in box 12 of your Form W-2 with codes M and N. Irs ez form 2013 Tax on golden parachute payments. Irs ez form 2013 This tax applies if you received an “excess parachute payment” (EPP) due to a change in a corporation's ownership or control. Irs ez form 2013 The amount should be shown in box 12 of your Form W-2 with code K. Irs ez form 2013 See the instructions for Form 1040, line 60. Irs ez form 2013 Tax on accumulation distribution of trusts. Irs ez form 2013 This applies if you are the beneficiary of a trust that accumulated its income instead of distributing it currently. Irs ez form 2013 See Form 4970 and its instructions. Irs ez form 2013 Additional tax on HSAs or MSAs. Irs ez form 2013 If amounts contributed to, or distributed from, your health savings account or medical savings account do not meet the rules for these accounts, you may have to pay additional taxes. Irs ez form 2013 See Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans; Form 8853, Archer MSAs and Long-Term Care Insurance Contracts; Form 8889, Health Savings Accounts (HSAs); and Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts. Irs ez form 2013 Additional tax on Coverdell ESAs. Irs ez form 2013 This applies if amounts contributed to, or distributed from, your Coverdell ESA do not meet the rules for these accounts. Irs ez form 2013 See Publication 970, Tax Benefits for Education, and Form 5329. Irs ez form 2013 Additional tax on qualified tuition programs. Irs ez form 2013 This applies to amounts distributed from qualified tuition programs that do not meet the rules for these accounts. Irs ez form 2013 See Publication 970 and Form 5329. Irs ez form 2013 Excise tax on insider stock compensation from an expatriated corporation. Irs ez form 2013 You may owe a 15% excise tax on the value of nonstatutory stock options and certain other stock-based compensation held by you or a member of your family from an expatriated corporation or its expanded affiliated group in which you were an officer, director, or more-than-10% owner. Irs ez form 2013 For more information, see the instructions for Form 1040, line 60. Irs ez form 2013 Additional tax on income you received from a nonqualified deferred compensation plan that fails to meet certain requirements. Irs ez form 2013 This income should be shown in Form W-2, box 12, with code Z, or in Form 1099-MISC, box 15b. Irs ez form 2013 For more information, see the instructions for Form 1040, line 60. Irs ez form 2013 Interest on the tax due on installment income from the sale of certain residential lots and timeshares. Irs ez form 2013 For more information, see the instructions for Form 1040, line 60. Irs ez form 2013 Interest on the deferred tax on gain from certain installment sales with a sales price over $150,000. Irs ez form 2013 For more information, see the instructions for Form 1040, line 60. Irs ez form 2013 Repayment of first-time homebuyer credit. Irs ez form 2013 For more information, see Form 5405, Repayment of the First-Time Homebuyer Credit, and its instructions. Irs ez form 2013 Also see the instructions for Form 1040, line 59b. Irs ez form 2013 Payments. Irs ez form 2013   After you determine your total tax, figure the total payments you have already made for the year. Irs ez form 2013 Include credits that are treated as payments. Irs ez form 2013 This chapter does not explain these payments and credits. Irs ez form 2013 You can find that information in other chapters of this publication and your form instructions. Irs ez form 2013 See the following table for amounts you can include in your total payments. Irs ez form 2013 PAYMENTS For information on: See  chapter: Child tax credit (additional) 34 Earned income credit 36 Estimated tax paid 4 Excess social security   and RRTA tax withheld 37 Federal income tax withheld 4 Health coverage tax credit 37 Credit for tax on   undistributed capital gain 37 Tax paid with extension 1   Another credit that is treated as a payment is the credit for federal excise tax paid on fuels. Irs ez form 2013 This credit is for persons who have a nontaxable use of certain fuels, such as diesel fuel and kerosene. Irs ez form 2013 It is claimed on Form 1040, line 70. Irs ez form 2013 See Form 4136, Credit for Federal Tax Paid on Fuels. Irs ez form 2013 Refund or balance due. Irs ez form 2013   To determine whether you are entitled to a refund or whether you must make a payment, compare your total payments with your total tax. Irs ez form 2013 If you are entitled to a refund, see your form instructions for information on having it directly deposited into one or more of your accounts, or to purchase U. Irs ez form 2013 S. Irs ez form 2013 savings bonds instead of receiving a paper check. Irs ez form 2013 Alternative Minimum Tax (AMT) This section briefly discusses an additional tax you may have to pay. Irs ez form 2013 The tax law gives special treatment to some kinds of income and allows special deductions and credits for some kinds of expenses. Irs ez form 2013 Taxpayers who benefit from this special treatment may have to pay at least a minimum amount of tax through an additional tax called AMT. Irs ez form 2013 You may have to pay the AMT if your taxable income for regular tax purposes, combined with certain adjustments and tax preference items, is more than a certain amount. Irs ez form 2013 See Form 6251, Alternative Minimum Tax — Individuals. Irs ez form 2013 Adjustments and tax preference items. Irs ez form 2013   The more common adjustments and tax preference items include: Addition of personal exemptions, Addition of the standard deduction (if claimed), Addition of itemized deductions claimed for state and local taxes, certain interest, most miscellaneous deductions, and part of medical expenses, Subtraction of any refund of state and local taxes included in gross income, Changes to accelerated depreciation of certain property, Difference between gain or loss on the sale of property reported for regular tax purposes and AMT purposes, Addition of certain income from incentive stock options, Change in certain passive activity loss deductions, Addition of certain depletion that is more than the adjusted basis of the property, Addition of part of the deduction for certain intangible drilling costs, and Addition of tax-exempt interest on certain private activity bonds. Irs ez form 2013 More information. Irs ez form 2013   For more information about the AMT, see the instructions for Form 6251. Irs ez form 2013 Tax Figured by IRS If you file by April 15, 2014, you can have the IRS figure your tax for you on Form 1040EZ, Form 1040A, or Form 1040. Irs ez form 2013 If the IRS figures your tax and you paid too much, you will receive a refund. Irs ez form 2013 If you did not pay enough, you will receive a bill for the balance. Irs ez form 2013 To avoid interest or the penalty for late payment, you must pay the bill within 30 days of the date of the bill or by the due date for your return, whichever is later. Irs ez form 2013 The IRS can also figure the credit for the elderly or the disabled and the earned income credit for you. Irs ez form 2013 When the IRS cannot figure your tax. Irs ez form 2013   The IRS cannot figure your tax for you if any of the following apply. Irs ez form 2013 You want your refund directly deposited into your accounts. Irs ez form 2013 You want any part of your refund applied to your 2014 estimated tax. Irs ez form 2013 You had income for the year from sources other than wages, salaries, tips, interest, dividends, taxable social security benefits, unemployment compensation, IRA distributions, pensions, and annuities. Irs ez form 2013 Your taxable income is $100,000 or more. Irs ez form 2013 You itemize deductions. Irs ez form 2013 You file any of the following forms. Irs ez form 2013 Form 2555, Foreign Earned Income. Irs ez form 2013 Form 2555-EZ, Foreign Earned Income Exclusion. Irs ez form 2013 Form 4137, Social Security and Medicare Tax on Unreported Tip Income. Irs ez form 2013 Form 4970, Tax on Accumulation Distribution of Trusts. Irs ez form 2013 Form 4972, Tax on Lump-Sum Distributions. Irs ez form 2013 Form 6198, At-Risk Limitations. Irs ez form 2013 Form 6251, Alternative Minimum Tax—Individuals. Irs ez form 2013 Form 8606, Nondeductible IRAs. Irs ez form 2013 Form 8615, Tax for Certain Children Who Have Unearned Income. Irs ez form 2013 Form 8814, Parents' Election To Report Child's Interest and Dividends. Irs ez form 2013 Form 8839, Qualified Adoption Expenses. Irs ez form 2013 Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Irs ez form 2013 Form 8889, Health Savings Accounts (HSAs). Irs ez form 2013 Form 8919, Uncollected Social Security and Medicare Tax on Wages. Irs ez form 2013 Filing the Return After you complete the line entries for the tax form you are filing, fill in your name and address. Irs ez form 2013 Enter your social security number in the space provided. Irs ez form 2013 If you are married, enter the social security numbers of you and your spouse even if you file separately. Irs ez form 2013 Sign and date your return and enter your occupation(s). Irs ez form 2013 If you are filing a joint return, both you and your spouse must sign it. Irs ez form 2013 Enter your daytime phone number in the space provided. Irs ez form 2013 This may help speed the processing of your return if we have a question that can be answered over the phone. Irs ez form 2013 If you are filing a joint return, you may enter either your or your spouse's daytime phone number. Irs ez form 2013 If you want to allow a friend, family member, or any other person you choose to discuss your 2013 tax return with the IRS, check the “Yes” box in the “Third party designee” area on your return. Irs ez form 2013 Also enter the designee's name, phone number, and any five digits the designee chooses as his or her personal identification number (PIN). Irs ez form 2013 If you check the “Yes” box, you, and your spouse if filing a joint return, are authorizing the IRS to call the designee to answer any questions that may arise during the processing of your return. Irs ez form 2013 Fill in and attach any schedules and forms asked for on the lines you completed to your paper return. Irs ez form 2013 Attach a copy of each of your Forms W-2 to your paper return. Irs ez form 2013 Also attach to your paper return any Form 1099-R you received that has withholding tax in box 4. Irs ez form 2013 Mail your return to the Internal Revenue Service Center for the area where you live. Irs ez form 2013 A list of Service Center addresses is in the instructions for your tax return. Irs ez form 2013 Form 1040EZ Line Entries Read lines 1 through 8b and fill in the lines that apply to you. Irs ez form 2013 Do not complete lines 9 through 12. Irs ez form 2013 If you are filing a joint return, use the space to the left of line 6 to separately show your taxable income and your spouse's taxable income. Irs ez form 2013 Payments. Irs ez form 2013   Enter any federal income tax withheld on line 7. Irs ez form 2013 Federal income tax withheld is shown on Form W-2, box 2, or Form 1099, box 4. Irs ez form 2013 Earned income credit. Irs ez form 2013   If you can take this credit, as discussed in chapter 36, the IRS can figure it for you. Irs ez form 2013 Enter “EIC” in the space to the left of line 8a. Irs ez form 2013 Enter the nontaxable combat pay you elect to include in earned income on line 8b. Irs ez form 2013   If your credit for any year after 1996 was reduced or disallowed by the IRS, you may also have to file Form 8862, Information To Claim Earned Income Credit After Disallowance, with your return. Irs ez form 2013 For details, see the Form 1040EZ Instructions. Irs ez form 2013 Form 1040A Line Entries Read lines 1 through 27 and fill in the lines that apply to you. Irs ez form 2013 If you are filing a joint return, use the space to the left of the entry space for line 27 to separately show your taxable income and your spouse's taxable income. Irs ez form 2013 Do not complete line 28. Irs ez form 2013 Complete lines 29 through 33 and 36 through 40 if they apply to you. Irs ez form 2013 However, do not fill in lines 30 and 38a if you want the IRS to figure the credits shown on those lines. Irs ez form 2013 Also, enter any write-in information that applies to you in the space to the left of line 41. Irs ez form 2013 Do not complete lines 34, 35, and 42 through 46. Irs ez form 2013 Payments. Irs ez form 2013   Enter any federal income tax withheld that is shown on Form W-2, box 2, or Form 1099, box 4, on line 36. Irs ez form 2013 Enter any estimated tax payments you made on line 37. Irs ez form 2013 Credit for child and dependent care expenses. Irs ez form 2013   If you can take this credit, as discussed in chapter 32, complete Form 2441, Child and Dependent Care Expenses, and attach it to your return. Irs ez form 2013 Enter the amount of the credit on line 29. Irs ez form 2013 The IRS will not figure this credit. Irs ez form 2013 Credit for the elderly or the disabled. Irs ez form 2013   If you can take this credit, as discussed in chapter 33, the IRS can figure it for you. Irs ez form 2013 Enter “CFE” in the space to the left of line 30 and attach Schedule R (Form 1040A or 1040), Credit for the Elderly or the Disabled, to your paper return. Irs ez form 2013 On Schedule R (Form 1040A or 1040), check the box in Part I for your filing status and age. Irs ez form 2013 Complete Part II and Part III, lines 11 and 13, if they apply. Irs ez form 2013 Earned income credit. Irs ez form 2013   If you can take this credit, as discussed in chapter 36, the IRS can figure it for you. Irs ez form 2013 Enter “EIC” to the left of the entry space for line 38a. Irs ez form 2013 Enter the nontaxable combat pay you elect to include in earned income on line 38b. Irs ez form 2013    If you have a qualifying child, you must fill in Schedule EIC (Form 1040A or 1040), Earned Income Credit, and attach it to your paper return. Irs ez form 2013 If you do not provide the child's social security number on Schedule EIC, line 2, the credit will be reduced or disallowed unless the child was born and died in 2013. Irs ez form 2013   If your credit for any year after 1996 was reduced or disallowed by the IRS, you may also have to file Form 8862 with your return. Irs ez form 2013 For details, see the Form 1040A Instructions. Irs ez form 2013 Form 1040 Line Entries Read lines 1 through 43 and fill in the lines that apply to you. Irs ez form 2013 Do not complete line 44. Irs ez form 2013 If you are filing a joint return, use the space under the words “Adjusted Gross Income” on the front of your return to separately show your taxable income and your spouse's taxable income. Irs ez form 2013 Read lines 45 through 71. Irs ez form 2013 Fill in the lines that apply to you, but do not fill in lines 54, 61, and 72. Irs ez form 2013 Also, do not complete line 55 and lines 73 through 77. Irs ez form 2013 Do not fill in line 53, box “c,” if you are completing Schedule R (Form 1040A or 1040), or line 64a if you want the IRS to figure the credits shown on those lines. Irs ez form 2013 Payments. Irs ez form 2013   Enter any federal income tax withheld that is shown on Form W-2, box 2, or Form 1099, box 4, on line 62. Irs ez form 2013 Enter any estimated tax payments you made on line 63. Irs ez form 2013 Credit for child and dependent care expenses. Irs ez form 2013   If you can take this credit, as discussed in chapter 32, complete Form 2441 and attach it to your paper return. Irs ez form 2013 Enter the amount of the credit on line 48. Irs ez form 2013 The IRS will not figure this credit. Irs ez form 2013 Credit for the elderly or the disabled. Irs ez form 2013   If you can take this credit, as discussed in chapter 33, the IRS can figure it for you. Irs ez form 2013 Enter “CFE” on the line next to line 53, check box “c,” and attach Schedule R (Form 1040A or 1040) to your paper return. Irs ez form 2013 On Schedule R (Form 1040A or 1040), check the box in Part I for your filing status and age. Irs ez form 2013 Complete Part II and Part III, lines 11 and 13, if they apply. Irs ez form 2013 Earned income credit. Irs ez form 2013   If you can take this credit, as discussed in chapter 36, the IRS can figure it for you. Irs ez form 2013 Enter “EIC” on the dotted line next to Form 1040, line 64a. Irs ez form 2013 Enter the nontaxable combat pay you elect to include in earned income on line 64b. Irs ez form 2013   If you have a qualifying child, you must fill in Schedule EIC (Form 1040A or 1040), Earned Income Credit, and attach it to your paper return. Irs ez form 2013 If you do not provide the child's social security number on Schedule EIC, line 2, the credit will be reduced or disallowed unless the child was born and died in 2013. Irs ez form 2013   If your credit for any year after 1996 was reduced or disallowed by the IRS, you may also have to file Form 8862 with your return. Irs ez form 2013 For details, see the Form 1040 Instructions. Irs ez form 2013 Prev  Up  Next   Home   More Online Publications