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Tax Forms For Self Employed

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Tax Forms For Self Employed

Tax forms for self employed 5. Tax forms for self employed   Excise Taxes Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Prohibited Tax Shelter TransactionsEntity Level Tax Excess Benefit TransactionsTax on Disqualified Persons Tax on Organization Managers Excess Benefit Transaction Excess Business Holdings Taxable Distributions of Sponsoring Organizations Exception. Tax forms for self employed A donor advised fund does not include: Taxes on Prohibited Benefits Resulting From Donor Advised Fund Distributions Excise Taxes on Private Foundations Excise Taxes on Black Lung Benefit Trusts Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements Introduction An excise tax may be imposed on certain tax-exempt organizations. Tax forms for self employed Topics - This chapter discusses: Prohibited tax shelter transactions Excess benefit transactions Excess business holdings Taxable distributions of sponsoring organizations Taxes on prohibited benefits distributed from donor advised funds Excise taxes on private foundations Excise taxes on 501(c)(21) black lung benefit trusts Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements of Hospitals Useful Items - You may want to see: Forms (and Instructions) 4720 Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code See chapter 6 for more information about getting Form 4720. Tax forms for self employed Prohibited Tax Shelter Transactions Section 4965 imposes an excise tax on: Certain tax-exempt entities that are party to prohibited tax shelter transactions, and Any entity manager who approves or otherwise causes the entity to be a party to a prohibited tax shelter transaction and knows or has reason to know that the transaction is a prohibited tax shelter transaction. Tax forms for self employed  Additionally, section 6033 provides new disclosure requirements on a tax-exempt entity that is a party to a prohibited tax shelter transaction. Tax forms for self employed Tax-exempt entities. Tax forms for self employed   Tax-exempt entities that are subject to section 4965 include: Entities described in section 501(c), including but not limited to the following common types of entities: Instrumentalities of the United States described in section 501(c)(1); Churches, hospitals, museums, schools, scientific research organizations, and other charities described in section 501(c)(3); Civic leagues, social welfare organizations, and local associations of employees described in section 501(c)(4); Labor, agricultural, or horticultural organizations described in section 501(c)(5); Business leagues, chambers of commerce, trade associations, and other organizations described in section 501(c)(6); Voluntary employees' beneficiary associations (VEBAs) described in section 501(c)(9); Credit unions described in section 501(c)(14); Insurance companies described in section 501(c)(15); and Veterans' organizations described in section 501(c)(19). Tax forms for self employed Religious or apostolic associations or corporations described in section 501(d). Tax forms for self employed Entities described in section 170(c), including states, possessions of the United States, the District of Columbia, political subdivisions of states and political subdivisions of possessions of the United States (but not including the United States). Tax forms for self employed Indian tribal governments within the meaning of section 7701(a)(40). Tax forms for self employed Entity manager. Tax forms for self employed    An entity manager is any person with authority or responsibility similar to that exercised by an officer, director, or trustee, and, for any act, the person that has authority or responsibility with respect to the prohibited transaction. Tax forms for self employed Prohibited tax shelter transaction. Tax forms for self employed   A prohibited tax shelter transaction is any listed transaction, within the meaning of section 6707A(c)(2), and any prohibited reportable transactions. Tax forms for self employed A prohibited reportable transaction is a confidential transaction within the meaning of Regulations section 1. Tax forms for self employed 6011-4(b)(3), and a transaction with contractual protection within the meaning of Regulations section 1. Tax forms for self employed 6011-4(b)(4). Tax forms for self employed See the Instructions for Form 8886 for more information on listed transactions and prohibited reportable transactions. Tax forms for self employed Subsequently listed transaction. Tax forms for self employed   Any transaction to which the tax-exempt entity is a party and is later determined to be a listed transaction after the entity has become a party to it, is a subsequently listed transaction. Tax forms for self employed Entity Level Tax Section 4965(a)(1) imposes an entity level excise tax on any tax-exempt entity described in 1, 2, 3, or 4 above that becomes a party to a prohibited tax shelter transaction or is a party to a subsequently listed transaction (defined earlier). Tax forms for self employed The excise tax imposed on a tax-exempt entity applies to tax years in which the entity becomes a party to the prohibited tax shelter transaction and any subsequent tax years. Tax forms for self employed The amount of the excise tax depends on whether the tax-exempt entity knew or had reason to know that the transaction was a prohibited tax shelter transaction at the time it became a party to the transaction. Tax forms for self employed To figure and report the excise tax imposed on a tax-exempt entity for being a party to a prohibited tax shelter transaction, file Form 4720. Tax forms for self employed For more information about this excise tax, including information about how it is figured, see the Instructions for Form 4720. Tax forms for self employed Manager Level Tax Section 4965(a)(2) imposes an excise tax on any tax-exempt entity manager who approves or otherwise causes the entity to be a party to a prohibited tax shelter transaction and knows (or has reason to know) that the transaction is a prohibited tax shelter transaction. Tax forms for self employed The excise tax, in the amount of $20,000, is assessed for each approval or other act causing the organization to be a party to the prohibited tax shelter transaction. Tax forms for self employed To report this tax, file Form 4720. Tax forms for self employed Excess Benefit Transactions Excise tax on excess benefit transactions. Tax forms for self employed   A disqualified person who benefits from an excess benefit transaction, such as compensation, fringe benefits, or contract payments from certain section 501(c)(3), 501(c)(4), or 501(c)(29) organizations, must correct the transaction and may have to pay an excise tax under section 4958. Tax forms for self employed A manager of the organization may also have to pay an excise tax under section 4958. Tax forms for self employed These taxes are reported on Form 4720. Tax forms for self employed   The excise taxes are imposed if an applicable tax-exempt organization provides an excess benefit to a disqualified person and that benefit exceeds the value of the benefit received in exchange. Tax forms for self employed   There are three taxes under section 4958. Tax forms for self employed Disqualified persons are liable for the first two taxes and certain organization managers are liable for the third tax. Tax forms for self employed    Taxes imposed on excess benefit transactions do not apply to a transaction under a written contract that was binding on September 13, 1995, and at all times thereafter before the transaction occurred. Tax forms for self employed Tax on Disqualified Persons An excise tax equal to 25% of the excess benefit is imposed on each excess benefit transaction between an applicable tax-exempt organization and a disqualified person. Tax forms for self employed The disqualified person who benefited from the transaction is liable for the tax. Tax forms for self employed See definition of Disqualified person, later at Disqualified person. Tax forms for self employed Additional tax on the disqualified person. Tax forms for self employed   If the 25% tax is imposed and the excess benefit transaction is not corrected within the taxable period, an additional excise tax equal to 200% of the excess benefit is imposed on any disqualified person involved. Tax forms for self employed   If a disqualified person makes a payment of less than the full correction amount, the 200% tax is imposed only on the unpaid portion of the correction amount. Tax forms for self employed If more than one disqualified person received an excess benefit from an excess benefit transaction, all such disqualified persons are jointly and severally liable for the taxes. Tax forms for self employed   To avoid the 200% tax, a disqualified person must correct the excess benefit transaction during the taxable period. Tax forms for self employed The 200% tax is abated (refunded if collected) if the excess benefit transaction is corrected within a 90-day correction period beginning on the date a statutory notice of deficiency is issued. Tax forms for self employed Taxable period. Tax forms for self employed   The taxable period means the period beginning with the date on which the excess benefit transaction occurs and ending on the earlier of: The date a notice of deficiency was mailed to the disqualified person for the initial tax on the excess benefit transaction, or The date on which the initial tax on the excess benefit transaction for the disqualified person is assessed. Tax forms for self employed Tax on Organization Managers If tax is imposed on a disqualified person for any excess benefit transaction, an excise tax equal to 10% of the excess benefit is imposed on an organization manager who knowingly participated in an excess benefit transaction, unless such participation was not willful and was due to reasonable cause. Tax forms for self employed This tax cannot exceed $20,000 ($10,000 for transactions entered in a tax year beginning before August 18, 2006), for each transaction. Tax forms for self employed There is also joint and several liability for this tax. Tax forms for self employed A person can be liable for both the tax paid by the disqualified person and the organization manager tax for a particular excess benefit transaction. Tax forms for self employed Organization Manager. Tax forms for self employed   An organization manager is any officer, director, or trustee of an applicable tax-exempt organization, or any individual having powers or responsibilities similar to officers, directors, or trustees of the organization, regardless of title. Tax forms for self employed An organization manager is not considered to have participated in an excess benefit transaction where the manager has opposed the transaction in a manner consistent with the fulfillment of the manager's responsibilities to the organization. Tax forms for self employed For example, a director who votes against giving an excess benefit would ordinarily not be subject to the 10% tax. Tax forms for self employed A person participates in a transaction knowingly if the person: Has actual knowledge of sufficient facts so that, based solely upon those facts, such transaction would be an excess benefit transaction; Is aware that such a transaction under these circumstances may violate the provisions of federal tax law governing excess benefit transactions; and Negligently fails to make reasonable attempts to ascertain whether the transaction is an excess benefit transaction, or the manager is in fact aware that it is such a transaction. Tax forms for self employed Knowing does not mean having reason to know. Tax forms for self employed The organization manager ordinarily will not be considered knowing if, after full disclosure of the factual situation to an appropriate professional, the organization manager relied on the professional's reasoned written opinion on matters within the professional's expertise or if the manager relied on the fact that the requirements for the rebuttable presumption of reasonableness have been satisfied. Tax forms for self employed Participation by an organization manager is willful if it is voluntary, conscious, and intentional. Tax forms for self employed An organization manager's participation is due to reasonable cause if the manager has exercised responsibility on behalf of the organization with ordinary business care and prudence. Tax forms for self employed Excess Benefit Transaction An excess benefit transaction is a transaction in which an economic benefit is provided by an applicable tax-exempt organization, directly or indirectly, to or for the use of any disqualified person, and the value of the economic benefit provided by the organization exceeds the value of the consideration (including the performance of services) received for providing such benefit. Tax forms for self employed The excess benefit transaction rules apply to all transactions with disqualified persons, regardless of whether the amount of the benefit provided is determined in whole or in part by the revenues of one or more activities of the organization. Tax forms for self employed To determine whether an excess benefit transaction has occurred, all consideration and benefits exchanged between a disqualified person and the applicable tax-exempt organization, and all entities it controls, are taken into account. Tax forms for self employed For purposes of determining the value of economic benefits, the value of property, including the right to use property, is the fair market value. Tax forms for self employed Fair market value is the price at which property, or the right to use property, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy, sell, or transfer property or the right to use property, and both having reasonable knowledge of relevant facts. Tax forms for self employed Donor advised fund transactions occurring after August 17, 2006. Tax forms for self employed   For a donor advised fund, an excess benefit transaction includes a grant, loan, compensation, or other similar payment from the fund to a: Donor or donor advisor, Family member of a donor, or donor advisor, 35% controlled entity of a donor, or donor advisor, or 35% controlled entity of a family member of a donor, or donor advisor. Tax forms for self employed   The excess benefit in this transaction is the amount of the grant, loan, compensation, or other similar payment. Tax forms for self employed For additional information, see the Instructions for Form 4720. Tax forms for self employed Supporting organization transactions occurring after July 25, 2006. Tax forms for self employed   For any supporting organization, defined in section 509(a)(3), an excess benefit transaction includes grants, loans, compensation, or other similar payment provided by the supporting organization to a: Substantial contributor, Family member of a substantial contributor, 35% controlled entity of a substantial contributor, or 35% controlled entity of a family member of a substantial contributor. Tax forms for self employed   Additionally, an excess benefit transaction includes any loans provided by the supporting organization to a disqualified person (other than an organization described in section 509(a)(1), (2), or (4)). Tax forms for self employed   The excess benefit for substantial contributors and parties related to those contributors includes the amount of the grant, loan, compensation, or other similar payment. Tax forms for self employed For additional information, see the Instructions for Form 4720. Tax forms for self employed   Excess benefit transaction rules generally do not apply to transactions between a supporting organization and its supported organization described in section 501(c)(4), (5), or (6) in furtherance of charitable purposes. Tax forms for self employed Date of Occurrence An excess benefit transaction occurs on the date the disqualified person receives the economic benefit from the organization for federal income tax purposes. Tax forms for self employed However, when a single contractual arrangement provides for a series of compensation or other payments to or for the use of a disqualified person during the disqualified person's tax year, any excess benefit transaction with respect to these payments occurs on the last day of the taxpayer's tax year. Tax forms for self employed In the case of benefits provided to a qualified pension, profit-sharing, or stock bonus plan, the transaction occurs on the date the benefit is vested. Tax forms for self employed In the case of the transfer of property subject to a substantial risk of forfeiture, or in the case of rights to future compensation or property, the transaction occurs on the date the property, or the rights to future compensation or property, is not subject to a substantial risk of forfeiture. Tax forms for self employed Where the disqualified person elects to include an amount in gross income in the tax year of transfer under section 83(b), the excess benefit transaction occurs on the date the disqualified person receives the economic benefit for federal income tax purposes. Tax forms for self employed Correcting the excess benefit. Tax forms for self employed   An excess benefit transaction is corrected by undoing the excess benefit to the extent possible, and by taking any additional measures necessary to place the organization in a financial position not worse than what it would have been if the disqualified person were dealing under the highest fiduciary standards. Tax forms for self employed   A disqualified person corrects an excess benefit by making a payment in cash or cash equivalents, excluding payment by a promissory note, equal to the correction amount to the applicable tax-exempt organization. Tax forms for self employed The correction amount equals the excess benefit plus the interest on the excess benefit. Tax forms for self employed The interest rate can be no lower than the applicable federal rate, compounded annually, for the month the transaction occurred. Tax forms for self employed   A disqualified person can, with the agreement of the applicable tax-exempt organization, make a payment by returning the specific property previously transferred in the excess transaction. Tax forms for self employed In this case, the disqualified person is treated as making a payment equal to the lesser of: The fair market value of the property on the date the property is returned to the organization, or The fair market value of the property on the date the excess benefit transaction occurred. Tax forms for self employed   If the payment resulting from the return of property is less than the correction amount, the disqualified person must make an additional cash payment to the organization equal to the difference. Tax forms for self employed   If the payment resulting from the return of the property exceeds the correction amount described above, the organization can make a cash payment to the disqualified person equal to the difference. Tax forms for self employed Exception. Tax forms for self employed   For a correction of an excess benefit transaction (discussed earlier), no amount repaid in a manner prescribed by the Secretary can be held in a donor advised fund. Tax forms for self employed Applicable Tax-Exempt Organization An applicable tax-exempt organization is a section 501(c)(3), 501(c)(4), or 501(c)(29) organization that is tax-exempt under section 501(a), or was such an organization at any time during a 5-year period ending on the day of the excess benefit transaction. Tax forms for self employed An applicable tax-exempt organization does not include: A private foundation as defined in section 509(a), A governmental entity that is: Exempt from (or not subject to) taxation without regard to section 501(a), or Not required to file an annual return, or A foreign organization, recognized by the IRS or by treaty, that receives substantially all of its support (other than gross investment income) from sources outside the United States. Tax forms for self employed An organization is not treated as a section 501(c)(3), 501(c)(4), or 501(c)(29) organization for any period covered by a final determination that the organization was not tax-exempt under section 501(a), but only if the determination was not based on private inurement or one or more excess benefit transactions. Tax forms for self employed Disqualified Person A disqualified person is: Any person (at any time during the 5-year period ending on the date of the transaction) in a position to exercise substantial influence over the affairs of the organization, A family member of an individual described in 1, and A 35% controlled entity. Tax forms for self employed For donor advised funds, sponsoring organizations, and certain supporting organizations occurring after August 17, 2006. Tax forms for self employed   The following persons will be considered disqualified persons along with certain family members and 35% controlled entities associated with them. Tax forms for self employed Donors of donor advised funds, Investment advisors of sponsoring organizations, and Disqualified persons of a section 509(a)(3) supporting organization that supports the applicable tax-exempt organization. Tax forms for self employed For certain supporting organization transactions occurring after July 25, 2006. Tax forms for self employed   Substantial contributors to supporting organizations will also be considered disqualified persons with respect to the supporting organizations, along with their family members and 35% controlled entities. Tax forms for self employed Investment advisor. Tax forms for self employed   Investment advisor means for any sponsoring organization, any person compensated by such organization (but not an employee of such organization) for managing the investment of, or providing investment advice for, assets maintained in donor advised funds owned by such sponsoring organization. Tax forms for self employed Substantial contributor. Tax forms for self employed   In general, a substantial contributor means any person who contributed or bequeathed an aggregate of more than $5,000 to the organization, if that amount is more than 2% of the total contributions and bequests received by the end of the organization's tax year in which the contribution or bequest is received. Tax forms for self employed A substantial contributor includes the grantor of a trust. Tax forms for self employed Family members. Tax forms for self employed   Family members of a disqualified person include a disqualified person's spouse, brothers or sisters (whether by whole or half-blood), spouses of brothers or sisters (whether by whole or half-blood), ancestors, children (including a legally adopted child), grandchildren, great grandchildren, and spouses of children, grandchildren, and great grandchildren (whether by whole or half-blood). Tax forms for self employed 35% controlled entity. Tax forms for self employed   A 35% controlled entity is: A corporation in which disqualified persons own more than 35% of the total combined voting power, A partnership in which such persons own more than 35% of the profits interest, or A trust or estate in which such persons own more than 35% of the beneficial interest. Tax forms for self employed   In determining the holdings of a business enterprise, any stock or other interest owned directly or indirectly shall apply. Tax forms for self employed Persons having substantial influence. Tax forms for self employed   Among those who are in a position to exercise substantial influence over the affairs of the organization are, for example, voting members of the governing body, and persons holding the power of: Presidents, chief executives, or chief operating officers. Tax forms for self employed Treasurers and chief financial officers. Tax forms for self employed Persons with a material financial interest in a provider-sponsored organization. Tax forms for self employed Persons not considered to have substantial influence. Tax forms for self employed   Persons who are not considered to be in a position to exercise substantial influence over the affairs of an organization include: An employee who receives benefits that total less than the highly compensated amount in section 414(q)(1)(B)(i) and who does not hold the executive or voting powers mentioned earlier in the discussion on Disqualified Person, is not a family member of a disqualified person, and is not a substantial contributor, Tax-exempt organizations described in section 501(c)(3), and Section 501(c)(4) organizations with respect to transactions engaged in with other section 501(c)(4) organizations. Tax forms for self employed Facts and circumstances. Tax forms for self employed   The determination of whether a person has substantial influence over the affairs of an organization is based on all the facts and circumstances. Tax forms for self employed Facts and circumstances that tend to show a person has substantial influence over the affairs of an organization include, but are not limited to, the following. Tax forms for self employed The person founded the organization. Tax forms for self employed The person is a substantial contributor to the organization under the section 507(d)(2)(A) definition, only taking into account contributions to the organization for the past 5 years. Tax forms for self employed The person's compensation is primarily based on revenues derived from activities of the organization that the person controls. Tax forms for self employed The person has or shares authority to control or determine a substantial portion of the organization's capital expenditures, operating budget, or compensation for employees. Tax forms for self employed The person manages a discrete segment or activity of the organization that represents a substantial portion of the activities, assets, income, or expenses of the organization, as compared to the organization as a whole. Tax forms for self employed The person owns a controlling interest (measured by either vote or value) in a corporation, partnership, or trust that is a disqualified person. Tax forms for self employed The person is a nonstock organization controlled directly or indirectly by one or more disqualified persons. Tax forms for self employed   Facts and circumstances tending to show that a person does not have substantial influence over the affairs of an organization include, but are not limited to, the following. Tax forms for self employed The person has taken a bona fide vow of poverty as an employee or agent of a religious organization or on its behalf. Tax forms for self employed The person is an independent contractor whose sole relationship to the organization is providing professional advice (without having decision-making authority) with respect to transactions from which the independent contractor will not economically benefit either directly or indirectly aside from customary fees received for the professional advice rendered. Tax forms for self employed Any preferential treatment the person receives based on the size of the person's donation is also offered to others making comparable widely solicited donations. Tax forms for self employed The direct supervisor of the person is not a disqualified person. Tax forms for self employed The person does not participate in any management decisions affecting the organization as a whole or a discrete segment of the organization that represents a substantial portion of the activities, assets, income, or expenses of the organization, as compared to the organization as a whole. Tax forms for self employed   In the case of multiple organizations affiliated by common control or governing documents, the determination of whether a person does or does not have substantial influence is made separately for each applicable tax-exempt organization. Tax forms for self employed A person may be a disqualified person with respect to transactions with more than one organization. Tax forms for self employed Reasonable Compensation. Tax forms for self employed    Reasonable compensation is the value that would ordinarily be paid for like services by like enterprises under like circumstances. Tax forms for self employed The section 162 standard will apply in determining the reasonableness of compensation. Tax forms for self employed The fact that a bonus or revenue-sharing arrangement is subject to a cap is a relevant factor in determining reasonableness of compensation. Tax forms for self employed   To determine the reasonableness of compensation, all items of compensation provided by an applicable tax-exempt organization in exchange for performance of services are taken into account in determining the value of compensation (except for economic benefits that are disregarded under the discussion Disregarded benefits , later). Tax forms for self employed Items of compensation include: All forms of cash and noncash compensation, including salary, fees, bonuses, severance payments, and deferred noncash compensation, The payment of liability insurance premiums for, or the payment or reimbursement by the organization of penalties, taxes, or certain expenses under section 4958, unless excludable from income as a de minimis fringe benefit under section 132(a)(4), All other compensatory benefits, whether or not included in gross income for income tax purposes, Taxable and nontaxable fringe benefits, except fringe benefits described in section 132, and Foregone interest on loans. Tax forms for self employed    Intent to treat benefits as compensation. Tax forms for self employed An economic benefit is not treated as consideration for the performance of services unless the organization providing the benefit clearly indicates its intent to treat the benefit as compensation when the benefit is paid. Tax forms for self employed   An applicable tax-exempt organization (or entity that it controls) is treated as clearly indicating its intent to provide an economic benefit as compensation for services only if the organization provides written substantiation that is contemporaneous with the transfer of the economic benefits under consideration. Tax forms for self employed Ways to provide contemporaneous written substantiation of its intent to provide an economic benefit as compensation include: The organization produces a signed written employment contract, The organization reports the benefit as compensation on an original Form W-2, Form 1099, or Form 990, or on an amended form filed before starting an IRS examination, or The disqualified person reports the benefit as income on the person's original Form 1040, or on an amended form filed before starting an IRS examination. Tax forms for self employed Exception. Tax forms for self employed   If the economic benefit is excluded from the disqualified person's gross income for income tax purposes, the applicable tax-exempt organization is not required to indicate its intent to provide an economic benefit as compensation for services. Tax forms for self employed Rebuttable presumption that a transaction is not an excess benefit transaction. Tax forms for self employed   Payments under a compensation arrangement are presumed to be reasonable and the transfer of property (or right to use property) is presumed to be at fair market value, if the following three conditions are met. Tax forms for self employed The transaction is approved in advance by an authorized body of the organization (or an entity it controls) which is composed of individuals who do not have a conflict of interest concerning the transaction. Tax forms for self employed Before making its determination, the authorized body obtained and relied upon appropriate data as to comparability. Tax forms for self employed (There is a special safe harbor for small organizations. Tax forms for self employed If the organization has gross receipts of less than $1 million, appropriate comparability data includes data on compensation paid by three comparable organizations in the same or similar communities for similar services. Tax forms for self employed ) The authorized body adequately documents the basis for its determination concurrently with making that determination. Tax forms for self employed The documentation should include: The terms of the approved transaction and the date approved, The members of the authorized body who were present during debate on the transaction that was approved and those who voted on it, The comparability data obtained and relied upon by the authorized body and how the data was obtained, Any actions by a member of the authorized body having conflict of interest, and Documentation of the basis of the determination before the later of the next meeting of the authorized body or 60 days after the final actions of the authorized body are taken, and approval of records as reasonable, accurate, and complete within a reasonable time thereafter. Tax forms for self employed Disregarded benefits. Tax forms for self employed   The following economic benefits are disregarded for section 4958 purposes. Tax forms for self employed Nontaxable fringe benefits that are excluded from income under section 132. Tax forms for self employed Benefits provided to a volunteer for the organization if the benefit is provided to the general public in exchange for a membership fee or contribution of $75 or less. Tax forms for self employed Benefits provided to a member of an organization due to the payment of a membership fee or to a donor as a result of a deductible contribution, if a significant number of disqualified persons make similar payments or contributions and are offered a similar economic benefit. Tax forms for self employed Benefits provided to a person solely as a member of a charitable class that the applicable tax-exempt organization intends to benefit as part of the accomplishment of its exempt purpose. Tax forms for self employed A transfer of an economic benefit to or for the use of a governmental unit, as defined in section 170(c)(1), if exclusively for public purposes. Tax forms for self employed Special Exception for Initial Contracts      Section 4958 does not apply to any fixed payment made to a person under an initial contract. Tax forms for self employed   A fixed payment is an amount of cash or other property specified in the contract, or determined by a fixed formula that is specified in the contract, which is to be paid or transferred in exchange for the provision of specified services or property. Tax forms for self employed   A fixed formula can, generally, incorporate an amount that depends upon future specified events or contingencies, as long as no one has discretion when calculating the amount of a payment or deciding whether to make a payment (such as a bonus). Tax forms for self employed   An initial contract is a binding written contract between an applicable tax-exempt organization and a person who was not a disqualified person immediately before entering into the contract. Tax forms for self employed   A binding written contract, providing it can be terminated or canceled by the applicable tax-exempt organization without the other party's consent (except as a result of substantial nonperformance) and without substantial penalty, is treated as a new contract, as of the earliest date any termination or cancellation would be effective. Tax forms for self employed Also, if the parties make a material change to a contract, which includes an extension or renewal of the contract (except for an extension or renewal resulting from the exercise of an option by the disqualified person), or a more than incidental change to the amount payable under the contract, it is treated as a new contract as of the effective date of the material change. Tax forms for self employed More information. Tax forms for self employed   For more information, see the Instructions to Forms 990 and 4720. Tax forms for self employed Excess Business Holdings Private foundations are generally not permitted to hold more than a 20% interest in an unrelated business enterprise. Tax forms for self employed They may be subject to an excise tax on the amount of any excess business holdings. Tax forms for self employed For purposes of section 4943, for tax years beginning after August 17, 2006, donor advised funds and certain supporting organizations are considered private foundations. Tax forms for self employed Donor advised fund. Tax forms for self employed   In general, a donor advised fund is a fund or account separately identified by reference to contributions of a donor or donors that is owned and controlled by a sponsoring organization and for which the donor has or expects to have advisory privileges concerning the distribution or investment of the funds. Tax forms for self employed Supporting organizations. Tax forms for self employed   Only certain supporting organizations are subject to the excess business holdings tax under section 4943. Tax forms for self employed These include (1) Type III supporting organizations that are not functionally integrated and (2) Type II supporting organizations that accept any gift or contribution from a person who by himself or in connection with a related party controls the supported organization that the Type II supporting organization supports. Tax forms for self employed Taxes. Tax forms for self employed   A private foundation that has excess holdings in a business enterprise may become liable for an excise tax based on the amount of holdings. Tax forms for self employed The initial tax is 10% (5% for tax years beginning before August 18, 2006) of the value of the excess holdings and is imposed on the last day of each tax year that ends during the taxable period. Tax forms for self employed The excess holdings are determined on the day during the tax year when they were the largest. Tax forms for self employed   A foundation that fails to correct the excess business holdings becomes liable for an additional tax of 200% of the remaining excess business holdings as of the earlier of tax assessment or mailing of a notice of deficiency. Tax forms for self employed   For more information on the tax on excess business holdings, see the Instructions for Form 4720. Tax forms for self employed Taxable Distributions of Sponsoring Organizations An excise tax is imposed on a sponsoring organization for each taxable distribution it makes from a donor advised fund. Tax forms for self employed An excise tax is also imposed on any fund manager of the sponsoring organization who agreed to the making of a distribution, knowing that it is a taxable distribution. Tax forms for self employed Taxable distribution. Tax forms for self employed   A taxable distribution is any distribution from a donor advised fund to any natural person or to any other person if: The distribution is for any purpose other than one specified in section 170(c)(2)(B), or The sponsoring organization maintaining the donor advised fund does not exercise expenditure responsibility with respect to the distribution in accordance with section 4945(h). Tax forms for self employed    However, a taxable distribution does not include a distribution from a donor advised fund to: Any organization described in section 170(b)(1)(A) (other than a disqualified supporting organization), The sponsoring organization of the donor advised fund, or Any other donor advised fund. Tax forms for self employed The tax on taxable distributions applies to distributions occurring in tax years beginning after August 17, 2006. Tax forms for self employed Sponsoring organization. Tax forms for self employed   A sponsoring organization is a section 170(c) organization that is neither a government organization (as referred to in section 170(c)(1) and (2)(A)) nor a private foundation. Tax forms for self employed Donor advised fund. Tax forms for self employed    A donor advised fund is a fund or account: Which is separately identified by reference to contributions of a donor or donors, Which is owned and controlled by a sponsoring organization, and For which the donor (or any person appointed or designated by the donor) has or expects to have advisory privileges concerning the distribution or investment of the funds held in the donor advised funds or accounts because of the donor's status as a donor. Tax forms for self employed Exception. Tax forms for self employed A donor advised fund does not include:    A fund or account that makes distributions only to a single identified organization or governmental entity, or Any fund or account for a person described in 3 above that gives advice about which individuals receive grants for travel, study, or similar purposes, if the following three requirements are met: The person's advisory privileges are performed exclusively by such person in their capacity as a committee member of which all the committee members are appointed by the sponsoring organization, No combination of persons with advisory privileges, described in 3 above, or persons related to those in 3 above directly or indirectly control the committee, and All grants from the fund or account are awarded on an objective and nondiscriminatory basis according to a procedure approved in advance by the board of directors of the sponsoring organization. Tax forms for self employed The procedure must be designed to ensure that all grants meet the requirements of section 4945(g)(1), (2), or (3). Tax forms for self employed Disqualified supporting organization. Tax forms for self employed   A disqualified supporting organization includes (1) a Type III supporting organization that is not functionally integrated and (2) any supporting organization where the donor or donor advisor (and any related parties) directly or indirectly controls a supported organization of the supporting organization. Tax forms for self employed Tax on sponsoring organization. Tax forms for self employed   A tax of 20% of the amount of each taxable distribution is imposed on the sponsoring organization. Tax forms for self employed Tax on fund manager. Tax forms for self employed   If a tax is imposed on a taxable distribution of the sponsoring organization, a tax of 5% of the distribution will be imposed on any fund manager who agreed to the distribution knowing that it was a taxable distribution. Tax forms for self employed Any fund manager who took part in the distribution and is liable for the tax must pay the tax. Tax forms for self employed The maximum amount of tax on all fund managers for any one taxable distribution is $10,000. Tax forms for self employed If more than one fund manager is liable for tax on a taxable distribution, all such managers are jointly and severally liable for the tax. Tax forms for self employed   For more information on the tax on taxable distributions of sponsoring organizations, see the Instructions for Form 4720. Tax forms for self employed Taxes on Prohibited Benefits Resulting From Donor Advised Fund Distributions Prohibited benefit. Tax forms for self employed   If any donor, donor advisor, or related party advises the sponsoring organization about making a distribution which results in a donor, donor advisor, or related party receiving (either directly or indirectly) a more than incidental benefit, then such benefit is a prohibited benefit. Tax forms for self employed The tax on prohibited benefits applies to distributions occurring in tax years beginning after August 17, 2006. Tax forms for self employed Donor advisor. Tax forms for self employed   A donor advisor is any person appointed or designated by a donor to advise a sponsoring organization on the distribution or investment of amounts held in the donor's fund or account. Tax forms for self employed Related party. Tax forms for self employed   A related party includes any family member or 35% controlled entity. Tax forms for self employed See the definition of those terms under Disqualified Person , earlier. Tax forms for self employed Tax on donor, donor advisor, or related person. Tax forms for self employed    A tax of 125% of the benefit resulting from the distribution is imposed on both the party who advised as to the distribution (which might be a donor, donor advisor, or related party) and the party who received such benefit (which might be a donor, donor advisor, or related party). Tax forms for self employed The advisor and the party who received the benefit are jointly and severally liable for the tax. Tax forms for self employed Tax on fund managers. Tax forms for self employed   If a tax is imposed on a prohibited benefit received by a donor, donor advisor, or related person, a tax of 10% of the amount of the prohibited benefit is imposed on any fund manager who agreed to the distribution knowing that it would confer a prohibited benefit. Tax forms for self employed Any fund manager who took part in the distribution and is liable for the tax must pay the tax. Tax forms for self employed The maximum amount of tax on all fund managers for any one taxable distribution is $10,000. Tax forms for self employed If more than one fund manager is liable for tax on a taxable distribution, all such managers are jointly and severally liable for the tax. Tax forms for self employed Exception. Tax forms for self employed   If a person engaged in an excess benefit transaction and received a prohibited benefit for the same transaction, the person is taxed under section 4958, and no tax is imposed under section 4967 for a prohibited benefit. Tax forms for self employed   For more information on taxes on prohibited benefits distributed from donor advised funds, see the Instructions for Form 4720. Tax forms for self employed Excise Taxes on Private Foundations There is an excise tax on the net investment income of most domestic private foundations. Tax forms for self employed Capital gains from appreciation are included in the tax base on private foundation net investment income. Tax forms for self employed This tax must be reported on Form 990-PF and must be paid annually at the time for filing that return or in quarterly estimated tax payments if the total tax for the year (section 4940 tax minus credits) is $500 or more. Tax forms for self employed Form 990-W is used to calculate the estimated tax. Tax forms for self employed In addition, there are several other rules that apply to excise taxes on private foundations. Tax forms for self employed These include: Restrictions on self-dealing between private foundations and their substantial contributors and other disqualified persons, Requirements that the foundation annually distribute income for charitable purposes, Limits on their holdings in any business enterprise (see Excess Business Holdings, earlier), Provisions that investments must not jeopardize the carrying out of exempt purposes, and Provisions to assure that expenditures further the organization's exempt purposes. Tax forms for self employed Violations of these provisions give rise to taxes and penalties against the private foundation and, in some cases, its managers, its substantial contributors, and certain related persons. Tax forms for self employed For more information on the excise taxes imposed on private foundations, see the Instructions for Form 4720 and the Instructions for Form 990-PF. Tax forms for self employed Excise Taxes on Black Lung Benefit Trusts A black lung benefit trust that makes any expenditures, payments, or investments other than those described in chapter 4 under 501(c)(21) - Black Lung Benefit Trusts must pay a tax equal to 10% of the amount of such expenditures. Tax forms for self employed If there are any acts of self-dealing between the trust and a disqualified person, a tax equal to 10% of the amount involved is imposed on the disqualified person. Tax forms for self employed Both of these excise taxes are reported on Schedule A (Form 990-BL). Tax forms for self employed See the Form 990-BL instructions for more information on these taxes and what has to be filed, even if the trust is excepted from filing. Tax forms for self employed Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements For tax years beginning after March 23, 2012, new section 4959 imposes an excise tax on hospital organizations which fail to meet certain section 501(r) requirements for each of their hospital facilities. Tax forms for self employed These entities must meet section 501(r)(3) requirements at all times during their tax year. Tax forms for self employed Section 501(r)(3) requirements pertain to a hospital organization preparing a community health needs assessment (CHNA). Tax forms for self employed See Schedule H, Hospitals (Form 990), for details. Tax forms for self employed Prev  Up  Next   Home   More Online Publications
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Know Your Options

Airline delays caused by bad weather, traffic control problems, and mechanical repairs are hard to predict. If your flight is canceled, most airlines will rebook you on the earliest flight possible to your destination, at no additional charge. If you're able to find a flight on another airline, ask the first airline to endorse your ticket to the new carrier. This could save you a fare increase, but there is no rule requiring them to do this.

Each airline has its own policies about what it will do for delayed passengers; there are no federal requirements. If your flight is delayed or canceled, ask the airline if it will pay for meals or a phone call. Contrary to what many people believe, airlines are not required to do so.

Tarmac Delays

Under new federal rules, U.S. airlines operating domestic flights must allow passengers to deplane after a tarmac delay of three hours. The only exceptions allowed are for safety or security, or if air traffic control advises the pilot otherwise. Carriers are also required to provided adequate food and drinking water within two hours of being delayed on the tarmac; they must also maintain operable lavatories and, if necessary, provide medical attention.
There are other protections as well, such as prohibiting airlines from scheduling chronically delayed flights. For more information, search for Airline Passenger Protections on the Department of Transportation's website.

Overbooked Flights

Selling more tickets than there are seats is not illegal. Most airlines overbook their flights to compensate for "no-shows." If there are more passengers than seats just before a plane is scheduled to depart, you could be "bumped" or left behind against your will. Whether you are bumped or not may depend on when you officially check-in for your flight, so try to arrive early. The U.S. Department of Transportation requires airlines to ask people to give up their seats voluntarily, in exchange for compensation. Airlines decide what to offer volunteers, such as money, a free trip, food or lodging.

Federal rules protect you if you are "bumped" on most flights within the United States and on outbound international flights. Passengers who are involuntarily bumped are protected under Federal Aviation Administration guidelines. If you volunteer to be bumped, your agreement with the airline that is not regulated and will depend on negotiating at the gate.
The airline must give you a written statement describing your rights, as well as the airline's boarding priority rules and criteria. If the airline is not able to get you to your final destination within one hour of your original arrival time, the airline must pay you an amount equal to 200% of your one-way fare, with a maximum of $650. To receive this payment, you must have a confirmed reservation. You must also meet the airline's deadlines for ticketing and check-in. An airline may offer you a free ticket on a future flight in place of a check, but you have the right to insist on a check.

The Tax Forms For Self Employed

Tax forms for self employed 23. Tax forms for self employed   Interest Expense Table of Contents Introduction Useful Items - You may want to see: Home Mortgage InterestAmount Deductible Points Mortgage Insurance Premiums Form 1098, Mortgage Interest Statement Investment InterestInvestment Property Allocation of Interest Expense Limit on Deduction Items You Cannot DeductPersonal Interest Allocation of Interest How To ReportMore than one borrower. Tax forms for self employed Mortgage proceeds used for business or investment. Tax forms for self employed Introduction This chapter discusses what interest expenses you can deduct. Tax forms for self employed Interest is the amount you pay for the use of borrowed money. Tax forms for self employed The following are types of interest you can deduct as itemized deductions on Schedule A (Form 1040). Tax forms for self employed Home mortgage interest, including certain points and mortgage insurance premiums. Tax forms for self employed Investment interest. Tax forms for self employed This chapter explains these deductions. Tax forms for self employed It also explains where to deduct other types of interest and lists some types of interest you cannot deduct. Tax forms for self employed Use Table 23-1 to find out where to get more information on various types of interest, including investment interest. Tax forms for self employed Useful Items - You may want to see: Publication 936 Home Mortgage Interest Deduction 550 Investment Income and Expenses Home Mortgage Interest Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). Tax forms for self employed The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan. Tax forms for self employed You can deduct home mortgage interest if all the following conditions are met. Tax forms for self employed You file Form 1040 and itemize deductions on Schedule A (Form 1040). Tax forms for self employed The mortgage is a secured debt on a qualified home in which you have an ownership interest. Tax forms for self employed (Generally, your mortgage is a secured debt if you put your home up as collateral to protect the interest of the lender. Tax forms for self employed The term “qualified home” means your main home or second home. Tax forms for self employed For details, see Publication 936. Tax forms for self employed )  Both you and the lender must intend that the loan be repaid. Tax forms for self employed Amount Deductible In most cases, you can deduct all of your home mortgage interest. Tax forms for self employed How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. Tax forms for self employed Fully deductible interest. Tax forms for self employed   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. Tax forms for self employed (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. Tax forms for self employed )   The three categories are as follows: Mortgages you took out on or before October 13, 1987 (called grandfathered debt). Tax forms for self employed 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). Tax forms for self employed 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). Tax forms for self employed The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home. Tax forms for self employed   See Part II of Publication 936 for more detailed definitions of grandfathered, home acquisition, and home equity debt. Tax forms for self employed    You can use Figure 23-A to check whether your home mortgage interest is fully deductible. Tax forms for self employed Figure 23-A. Tax forms for self employed Is My Home Mortgage Interest Fully Deductible? Please click here for the text description of the image. Tax forms for self employed Figure 23-A. Tax forms for self employed Is My Interest Fully Deductible? Limits on deduction. Tax forms for self employed   You cannot fully deduct interest on a mortgage that does not fit into any of the three categories listed earlier. Tax forms for self employed If this applies to you, see Part II of Publication 936 to figure the amount of interest you can deduct. Tax forms for self employed Special Situations This section describes certain items that can be included as home mortgage interest and others that cannot. Tax forms for self employed It also describes certain special situations that may affect your deduction. Tax forms for self employed Late payment charge on mortgage payment. Tax forms for self employed   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. Tax forms for self employed Mortgage prepayment penalty. Tax forms for self employed   If you pay off your home mortgage early, you may have to pay a penalty. Tax forms for self employed 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. Tax forms for self employed Sale of home. Tax forms for self employed   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 sale. Tax forms for self employed Example. Tax forms for self employed John and Peggy Harris sold their home on May 7. Tax forms for self employed Through April 30, they made home mortgage interest payments of $1,220. Tax forms for self employed 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. Tax forms for self employed Their mortgage interest deduction is $1,270 ($1,220 + $50). Tax forms for self employed Prepaid interest. Tax forms for self employed   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. Tax forms for self employed You can deduct in each year only the interest that qualifies as home mortgage interest for that year. Tax forms for self employed However, there is an exception that applies to points, discussed later. Tax forms for self employed Mortgage interest credit. Tax forms for self employed   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. Tax forms for self employed Figure the credit on Form 8396, Mortgage Interest Credit. Tax forms for self employed If you take this credit, you must reduce your mortgage interest deduction by the amount of the credit. Tax forms for self employed   For more information on the credit, see chapter 37. Tax forms for self employed Ministers' and military housing allowance. Tax forms for self employed   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. Tax forms for self employed Hardest Hit Fund and Emergency Homeowners' Loan Programs. Tax forms for self employed   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. Tax forms for self employed 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. Tax forms for self employed 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. Tax forms for self employed 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 (real property taxes). Tax forms for self employed 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. Tax forms for self employed Mortgage assistance payments under section 235 of the National Housing Act. Tax forms for self employed   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. Tax forms for self employed You cannot deduct the interest that is paid for you. Tax forms for self employed No other effect on taxes. Tax forms for self employed   Do not include these mortgage assistance payments in your income. Tax forms for self employed Also, do not use these payments to reduce other deductions, such as real estate taxes. Tax forms for self employed Divorced or separated individuals. Tax forms for self employed   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. Tax forms for self employed See the discussion of Payments for jointly-owned home in chapter 18. Tax forms for self employed Redeemable ground rents. Tax forms for self employed   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. Tax forms for self employed   Payments made to end the lease and to buy the lessor's entire interest in the land are not deductible as mortgage interest. Tax forms for self employed For more information, see Publication 936. Tax forms for self employed Nonredeemable ground rents. Tax forms for self employed   Payments on a nonredeemable ground rent are not mortgage interest. Tax forms for self employed You can deduct them as rent if they are a business expense or if they are for rental property. Tax forms for self employed Reverse mortgages. Tax forms for self employed   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. Tax forms for self employed With a reverse mortgage, you retain title to your home. Tax forms for self employed 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. Tax forms for self employed Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable. Tax forms for self employed Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until the loan is paid in full. Tax forms for self employed Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt discussed in Publication 936. Tax forms for self employed Rental payments. Tax forms for self employed   If you live in a house before final settlement on the purchase, any payments you make for that period are rent and not interest. Tax forms for self employed This is true even if the settlement papers call them interest. Tax forms for self employed You cannot deduct these payments as home mortgage interest. Tax forms for self employed Mortgage proceeds invested in tax-exempt securities. Tax forms for self employed   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. Tax forms for self employed “Grandfathered debt” and “home equity debt” are defined earlier under Amount Deductible. Tax forms for self employed Refunds of interest. Tax forms for self employed   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. Tax forms for self employed 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. Tax forms for self employed However, you need to include it only up to the amount of the deduction that reduced your tax in the earlier year. Tax forms for self employed This is true whether the interest overcharge was refunded to you or was used to reduce the outstanding principal on your mortgage. Tax forms for self employed    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. Tax forms for self employed For information about Form 1098, see Form 1098, Mortgage Interest Statement , later. Tax forms for self employed   For more information on how to treat refunds of interest deducted in earlier years, see Recoveries in chapter 12. Tax forms for self employed Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Tax forms for self employed Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. Tax forms for self employed A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. Tax forms for self employed See Points paid by the seller , later. Tax forms for self employed General Rule You generally cannot deduct the full amount of points in the year paid. Tax forms for self employed Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. Tax forms for self employed See Deduction Allowed Ratably , next. Tax forms for self employed For exceptions to the general rule, see Deduction Allowed in Year Paid , later. Tax forms for self employed 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. Tax forms for self employed You use the cash method of accounting. Tax forms for self employed This means you report income in the year you receive it and deduct expenses in the year you pay them. Tax forms for self employed Most individuals use this method. Tax forms for self employed Your loan is secured by a home. Tax forms for self employed (The home does not need to be your main home. Tax forms for self employed ) Your loan period is not more than 30 years. Tax forms for self employed 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. Tax forms for self employed 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. Tax forms for self employed Deduction Allowed in Year Paid You can fully deduct points in the year paid if you meet all the following tests. Tax forms for self employed (You can use Figure 23-B as a quick guide to see whether your points are fully deductible in the year paid. Tax forms for self employed ) Your loan is secured by your main home. Tax forms for self employed (Your main home is the one you ordinarily live in most of the time. Tax forms for self employed ) Paying points is an established business practice in the area where the loan was made. Tax forms for self employed The points paid were not more than the points generally charged in that area. Tax forms for self employed You use the cash method of accounting. Tax forms for self employed This means you report income in the year you receive it and deduct expenses in the year you pay them. Tax forms for self employed (If you want more information about this method, see Accounting Methods in chapter 1. Tax forms for self employed ) 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. Tax forms for self employed The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. Tax forms for self employed The funds you provided are not required to have been applied to the points. Tax forms for self employed They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Tax forms for self employed You cannot have borrowed these funds from your lender or mortgage broker. Tax forms for self employed You use your loan to buy or build your main home. Tax forms for self employed The points were computed as a percentage of the principal amount of the mortgage. Tax forms for self employed The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. Tax forms for self employed The points may be shown as paid from either your funds or the seller's. Tax forms for self employed Figure 23-B. Tax forms for self employed Are My Points Fully Deductible This Year? Please click here for the text description of the image. Tax forms for self employed Figure 23-B. Tax forms for self employed Are My Points Fully Deductible This Year? Note. Tax forms for self employed 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. Tax forms for self employed Home improvement loan. Tax forms for self employed   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. Tax forms for self employed Second home. Tax forms for self employed You cannot fully deduct in the year paid points you pay on loans secured by your second home. Tax forms for self employed You can deduct these points only over the life of the loan. Tax forms for self employed Refinancing. Tax forms for self employed   Generally, points you pay to refinance a mortgage are not deductible in full in the year you pay them. Tax forms for self employed This is true even if the new mortgage is secured by your main home. Tax forms for self employed   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 , earlier, you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. Tax forms for self employed You can deduct the rest of the points over the life of the loan. Tax forms for self employed Example 1. Tax forms for self employed In 1998, Bill Fields got a mortgage to buy a home. Tax forms for self employed In 2013, Bill refinanced that mortgage with a 15-year $100,000 mortgage loan. Tax forms for self employed The mortgage is secured by his home. Tax forms for self employed To get the new loan, he had to pay three points ($3,000). Tax forms for self employed 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. Tax forms for self employed Bill paid the points out of his private funds, rather than out of the proceeds of the new loan. Tax forms for self employed The payment of points is an established practice in the area, and the points charged are not more than the amount generally charged there. Tax forms for self employed Bill's first payment on the new loan was due July 1. Tax forms for self employed He made six payments on the loan in 2013 and is a cash basis taxpayer. Tax forms for self employed Bill used the funds from the new mortgage to repay his existing mortgage. Tax forms for self employed 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. Tax forms for self employed He cannot deduct all of the points in 2013. Tax forms for self employed He can deduct two points ($2,000) ratably over the life of the loan. Tax forms for self employed He deducts $67 [($2,000 ÷ 180 months) × 6 payments] of the points in 2013. Tax forms for self employed The other point ($1,000) was a fee for services and is not deductible. Tax forms for self employed Example 2. Tax forms for self employed 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. Tax forms for self employed Bill deducts 25% ($25,000 ÷ $100,000) of the points ($2,000) in 2013. Tax forms for self employed His deduction is $500 ($2,000 × 25%). Tax forms for self employed Bill also deducts the ratable part of the remaining $1,500 ($2,000 − $500) that must be spread over the life of the loan. Tax forms for self employed This is $50 [($1,500 ÷ 180 months) × 6 payments] in 2013. Tax forms for self employed The total amount Bill deducts in 2013 is $550 ($500 + $50). Tax forms for self employed Special Situations This section describes certain special situations that may affect your deduction of points. Tax forms for self employed Original issue discount. Tax forms for self employed   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. Tax forms for self employed This reduction results in original issue discount, which is discussed in chapter 4 of Publication 535. Tax forms for self employed Amounts charged for services. Tax forms for self employed   Amounts charged by the lender for specific services connected to the loan are not interest. Tax forms for self employed Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Tax forms for self employed You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Tax forms for self employed Points paid by the seller. Tax forms for self employed   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Tax forms for self employed Treatment by seller. Tax forms for self employed   The seller cannot deduct these fees as interest. Tax forms for self employed But they are a selling expense that reduces the amount realized by the seller. Tax forms for self employed See chapter 15 for information on selling your home. Tax forms for self employed Treatment by buyer. Tax forms for self employed    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. Tax forms for self employed If all the tests under Deduction Allowed in Year Paid , earlier, are met, the buyer can deduct the points in the year paid. Tax forms for self employed If any of those tests are not met, the buyer deducts the points over the life of the loan. Tax forms for self employed   For information about basis, see chapter 13. Tax forms for self employed Funds provided are less than points. Tax forms for self employed   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. Tax forms for self employed In addition, you can deduct any points paid by the seller. Tax forms for self employed Example 1. Tax forms for self employed When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Tax forms for self employed You meet all the tests for deducting points in the year paid, except the only funds you provided were a $750 down payment. Tax forms for self employed Of the $1,000 charged for points, you can deduct $750 in the year paid. Tax forms for self employed You spread the remaining $250 over the life of the mortgage. Tax forms for self employed Example 2. Tax forms for self employed 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. Tax forms for self employed In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Tax forms for self employed You spread the remaining $250 over the life of the mortgage. Tax forms for self employed You must reduce the basis of your home by the $1,000 paid by the seller. Tax forms for self employed Excess points. Tax forms for self employed   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. Tax forms for self employed You must spread any additional points over the life of the mortgage. Tax forms for self employed Mortgage ending early. Tax forms for self employed   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. Tax forms for self employed However, if you refinance the mortgage with the same lender, you cannot deduct any remaining balance of spread points. Tax forms for self employed Instead, deduct the remaining balance over the term of the new loan. Tax forms for self employed    A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Tax forms for self employed Example. Tax forms for self employed Dan paid $3,000 in points in 2002 that he had to spread out over the 15-year life of the mortgage. Tax forms for self employed He deducts $200 points per year. Tax forms for self employed Through 2012, Dan has deducted $2,200 of the points. Tax forms for self employed Dan prepaid his mortgage in full in 2013. Tax forms for self employed He can deduct the remaining $800 of points in 2013. Tax forms for self employed Limits on deduction. Tax forms for self employed   You cannot fully deduct points paid on a mortgage unless the mortgage fits into one of the categories listed earlier under Fully deductible interest . Tax forms for self employed See Publication 936 for details. Tax forms for self employed Mortgage Insurance Premiums You can treat amounts you paid during 2013 for qualified mortgage insurance as home mortgage interest. Tax forms for self employed The insurance must be in connection with home acquisition debt and the insurance contract must have been issued after 2006. Tax forms for self employed Qualified mortgage insurance. Tax forms for self employed   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). Tax forms for self employed   Mortgage insurance provided by the Department of Veterans Affairs is commonly known as a funding fee. Tax forms for self employed If provided by the Rural Housing Service, it is commonly known as a guarantee fee. Tax forms for self employed These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013. Tax forms for self employed Contact the mortgage insurance issuer to determine the deductible amount if it is not reported in box 4 of Form 1098. Tax forms for self employed Special rules for prepaid mortgage insurance. Tax forms for self employed   Generally, if you paid premiums for qualified mortgage insurance that are allocable to periods after the close of the tax year, such premiums are treated as paid in the period to which they are allocated. Tax forms for self employed 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. Tax forms for self employed No deduction is allowed for the unamortized balance if the mortgage is satisfied before its term. Tax forms for self employed This paragraph does not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service. Tax forms for self employed See the Example below. Tax forms for self employed Example. Tax forms for self employed Ryan purchased a home in May of 2012 and financed the home with a 15-year mortgage. Tax forms for self employed Ryan also prepaid all of the $9,240 in private mortgage insurance required at the time of closing in May. Tax forms for self employed 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. Tax forms for self employed Ryan's adjusted gross income (AGI) for 2012 is $76,000. Tax forms for self employed Ryan can deduct $880 ($9,240 ÷ 84 × 8 months) for qualified mortgage insurance premiums in 2012. Tax forms for self employed For 2013, Ryan can deduct $1,320 ($9,240 ÷ 84 × 12 months) if his AGI is $100,000 or less. Tax forms for self employed 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). Tax forms for self employed Limit on deduction. Tax forms for self employed   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. Tax forms for self employed 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. Tax forms for self employed If your adjusted gross income is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Tax forms for self employed 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. Tax forms for self employed You will receive the statement if you pay interest to a person (including a financial institution or a cooperative housing corporation) in the course of that person's trade or business. Tax forms for self employed A governmental unit is a person for purposes of furnishing the statement. Tax forms for self employed The statement for each year should be sent to you by January 31 of the following year. Tax forms for self employed A copy of this form will also be sent to the IRS. Tax forms for self employed 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. Tax forms for self employed However, it should not show any interest that was paid for you by a government agency. Tax forms for self employed As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. Tax forms for self employed However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan. Tax forms for self employed See Points , earlier, to determine whether you can deduct points not shown on Form 1098. Tax forms for self employed Prepaid interest on Form 1098. Tax forms for self employed   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. Tax forms for self employed However, you cannot deduct the prepaid amount for January 2014 in 2013. Tax forms for self employed (See Prepaid interest , earlier. Tax forms for self employed ) You will have to figure the interest that accrued for 2014 and subtract it from the amount in box 1. Tax forms for self employed You will include the interest for January 2014 with the other interest you pay for 2014. Tax forms for self employed See How To Report , later. Tax forms for self employed Refunded interest. Tax forms for self employed   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. Tax forms for self employed See Refunds of interest , earlier. Tax forms for self employed Mortgage insurance premiums. Tax forms for self employed   The amount of mortgage insurance premiums you paid during 2013 may be shown in box 4 of Form 1098. Tax forms for self employed See Mortgage Insurance Premiums, earlier. Tax forms for self employed Investment Interest This section discusses interest expenses you may be able to deduct as an investor. Tax forms for self employed If you borrow money to buy property you hold for investment, the interest you pay is investment interest. Tax forms for self employed You can deduct investment interest subject to the limit discussed later. Tax forms for self employed However, you cannot deduct interest you incurred to produce tax-exempt income. Tax forms for self employed Nor can you deduct interest expenses on straddles. Tax forms for self employed Investment interest does not include any qualified home mortgage interest or any interest taken into account in computing income or loss from a passive activity. Tax forms for self employed Investment Property Property held for investment includes property that produces interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business. Tax forms for self employed It also includes property that produces gain or loss (not derived in the ordinary course of a trade or business) from the sale or trade of property producing these types of income or held for investment (other than an interest in a passive activity). Tax forms for self employed Investment property also includes an interest in a trade or business activity in which you did not materially participate (other than a passive activity). Tax forms for self employed Partners, shareholders, and beneficiaries. Tax forms for self employed   To determine your investment interest, combine your share of investment interest from a partnership, S corporation, estate, or trust with your other investment interest. Tax forms for self employed Allocation of Interest Expense If you borrow money for business or personal purposes as well as for investment, you must allocate the debt among those purposes. Tax forms for self employed Only the interest expense on the part of the debt used for investment purposes is treated as investment interest. Tax forms for self employed The allocation is not affected by the use of property that secures the debt. Tax forms for self employed Limit on Deduction Generally, your deduction for investment interest expense is limited to the amount of your net investment income. Tax forms for self employed You can carry over the amount of investment interest that you could not deduct because of this limit to the next tax year. Tax forms for self employed The interest carried over is treated as investment interest paid or accrued in that next year. Tax forms for self employed You can carry over disallowed investment interest to the next tax year even if it is more than your taxable income in the year the interest was paid or accrued. Tax forms for self employed Net Investment Income Determine the amount of your net investment income by subtracting your investment expenses (other than interest expense) from your investment income. Tax forms for self employed Investment income. Tax forms for self employed    This generally includes your gross income from property held for investment (such as interest, dividends, annuities, and royalties). Tax forms for self employed Investment income does not include Alaska Permanent Fund dividends. Tax forms for self employed It also does not include qualified dividends or net capital gain unless you choose to include them. Tax forms for self employed Choosing to include qualified dividends. Tax forms for self employed   Investment income generally does not include qualified dividends, discussed in chapter 8. Tax forms for self employed However, you can choose to include all or part of your qualified dividends in investment income. Tax forms for self employed   You make this choice by completing Form 4952, line 4g, according to its instructions. Tax forms for self employed   If you choose to include any amount of your qualified dividends in investment income, you must reduce your qualified dividends that are eligible for the lower capital gains tax rates by the same amount. Tax forms for self employed Choosing to include net capital gain. Tax forms for self employed   Investment income generally does not include net capital gain from disposing of investment property (including capital gain distributions from mutual funds). Tax forms for self employed However, you can choose to include all or part of your net capital gain in investment income. Tax forms for self employed    You make this choice by completing Form 4952, line 4g, according to its instructions. Tax forms for self employed   If you choose to include any amount of your net capital gain in investment income, you must reduce your net capital gain that is eligible for the lower capital gains tax rates by the same amount. Tax forms for self employed    Before making either choice, consider the overall effect on your tax liability. Tax forms for self employed Compare your tax if you make one or both of these choices with your tax if you do not. Tax forms for self employed Investment income of child reported on parent's return. Tax forms for self employed    Investment income includes the part of your child's interest and dividend income that you choose to report on your return. Tax forms for self employed If the child does not have qualified dividends, Alaska Permanent Fund dividends, or capital gain distributions, this is the amount on line 6 of Form 8814, Parents' Election To Report Child's Interest and Dividends. Tax forms for self employed Child's qualified dividends. Tax forms for self employed   If part of the amount you report is your child's qualified dividends, that part (which is reported on Form 1040, line 9b) generally does not count as investment income. Tax forms for self employed However, you can choose to include all or part of it in investment income, as explained under Choosing to include qualified dividends , earlier. Tax forms for self employed   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured next under Child's Alaska Permanent Fund dividends). Tax forms for self employed Child's Alaska Permanent Fund dividends. Tax forms for self employed   If part of the amount you report is your child's Alaska Permanent Fund dividends, that part does not count as investment income. Tax forms for self employed To figure the amount of your child's income that you can consider your investment income, start with the amount on Form 8814, line 6. Tax forms for self employed Multiply that amount by a percentage that is equal to the Alaska Permanent Fund dividends divided by the total amount on Form 8814, line 4. Tax forms for self employed Subtract the result from the amount on Form 8814, line 12. Tax forms for self employed Child's capital gain distributions. Tax forms for self employed    If part of the amount you report is your child's capital gain distributions, that part (which is reported on Schedule D, line 13, or Form 1040, line 13) generally does not count as investment income. Tax forms for self employed However, you can choose to include all or part of it in investment income, as explained in Choosing to include net capital gain , earlier. Tax forms for self employed   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured under Child's Alaska Permanent Fund dividends , earlier). Tax forms for self employed Investment expenses. Tax forms for self employed   Investment expenses are your allowed deductions (other than interest expense) directly connected with the production of investment income. Tax forms for self employed Investment expenses that are included as a miscellaneous itemized deduction on Schedule A (Form 1040) are allowable deductions after applying the 2% limit that applies to miscellaneous itemized deductions. Tax forms for self employed Use the smaller of: The investment expenses included on Schedule A (Form 1040), line 23, or The amount on Schedule A, line 27. Tax forms for self employed Losses from passive activities. Tax forms for self employed   Income or expenses that you used in computing income or loss from a passive activity are not included in determining your investment income or investment expenses (including investment interest expense). Tax forms for self employed See Publication 925, Passive Activity and At-Risk Rules, for information about passive activities. Tax forms for self employed Form 4952 Use Form 4952, Investment Interest Expense Deduction, to figure your deduction for investment interest. Tax forms for self employed Exception to use of Form 4952. Tax forms for self employed   You do not have to complete Form 4952 or attach it to your return if you meet all of the following tests. Tax forms for self employed Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified dividends. Tax forms for self employed You do not have any other deductible investment expenses. Tax forms for self employed You have no carryover of investment interest expense from 2012. Tax forms for self employed If you meet all of these tests, you can deduct all of your investment interest. Tax forms for self employed More Information For more information on investment interest, see Interest Expenses in chapter 3 of Publication 550. Tax forms for self employed Items You Cannot Deduct Some interest payments are not deductible. Tax forms for self employed Certain expenses similar to interest also are not deductible. Tax forms for self employed Nondeductible expenses include the following items. Tax forms for self employed Personal interest (discussed later). Tax forms for self employed Service charges (however, see Other Expenses (Line 23) in chapter 28). Tax forms for self employed Annual fees for credit cards. Tax forms for self employed Loan fees. Tax forms for self employed Credit investigation fees. Tax forms for self employed Interest to purchase or carry tax-exempt securities. Tax forms for self employed Penalties. Tax forms for self employed   You cannot deduct fines and penalties paid to a government for violations of law, regardless of their nature. Tax forms for self employed Personal Interest Personal interest is not deductible. Tax forms for self employed Personal interest is any interest that is not home mortgage interest, investment interest, business interest, or other deductible interest. Tax forms for self employed It includes the following items. Tax forms for self employed Interest on car loans (unless you use the car for business). Tax forms for self employed Interest on federal, state, or local income tax. Tax forms for self employed Finance charges on credit cards, retail installment contracts, and revolving charge accounts incurred for personal expenses. Tax forms for self employed Late payment charges by a public utility. Tax forms for self employed You may be able to deduct interest you pay on a qualified student loan. Tax forms for self employed For details, see Publication 970, Tax Benefits for Education. Tax forms for self employed Allocation of Interest If you use the proceeds of a loan for more than one purpose (for example, personal and business), you must allocate the interest on the loan to each use. Tax forms for self employed However, you do not have to allocate home mortgage interest if it is fully deductible, regardless of how the funds are used. Tax forms for self employed You allocate interest (other than fully deductible home mortgage interest) on a loan in the same way as the loan itself is allocated. Tax forms for self employed You do this by tracing disbursements of the debt proceeds to specific uses. Tax forms for self employed For details on how to do this, see chapter 4 of Publication 535. Tax forms for self employed How To Report You must file Form 1040 to deduct any home mortgage interest expense on your tax return. Tax forms for self employed Where you deduct your interest expense generally depends on how you use the loan proceeds. Tax forms for self employed See Table 23-1 for a summary of where to deduct your interest expense. Tax forms for self employed Home mortgage interest and points. Tax forms for self employed   Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. Tax forms for self employed 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. Tax forms for self employed Attach a statement explaining the difference and print “See attached” next to line 10. Tax forms for self employed    Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. Tax forms for self employed 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. Tax forms for self employed The seller must give you this number and you must give the seller your TIN. Tax forms for self employed A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Tax forms for self employed Failure to meet any of these requirements may result in a $50 penalty for each failure. Tax forms for self employed 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. Tax forms for self employed See Social Security Number (SSN) in chapter 1 for more information about TINs. Tax forms for self employed    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. Tax forms for self employed   Deduct mortgage insurance premiums on Schedule A (Form 1040), line 13. Tax forms for self employed More than one borrower. Tax forms for self employed   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. Tax forms for self employed Show how much of the interest each of you paid, and give the name and address of the person who received the form. Tax forms for self employed Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. Tax forms for self employed Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13. Tax forms for self employed   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. Tax forms for self employed You should let each of the other borrowers know what his or her share is. Tax forms for self employed Mortgage proceeds used for business or investment. Tax forms for self employed    If your home mortgage interest deduction is limited, but all or part of the mortgage proceeds were used for business, investment, or other deductible activities, see Table 23-1. Tax forms for self employed It shows where to deduct the part of your excess interest that is for those activities. Tax forms for self employed Investment interest. Tax forms for self employed    Deduct investment interest, subject to certain limits discussed in Publication 550, on Schedule A (Form 1040), line 14. Tax forms for self employed Amortization of bond premium. Tax forms for self employed   There are various ways to treat the premium you pay to buy taxable bonds. Tax forms for self employed See Bond Premium Amortization in Publication 550. Tax forms for self employed Income-producing rental or royalty interest. Tax forms for self employed   Deduct interest on a loan for income-producing rental or royalty property that is not used in your business in Part I of Schedule E (Form 1040). Tax forms for self employed Example. Tax forms for self employed You rent out part of your home and borrow money to make repairs. Tax forms for self employed You can deduct only the interest payment for the rented part in Part I of Schedule E (Form 1040). Tax forms for self employed Deduct the rest of the interest payment on Schedule A (Form 1040) if it is deductible home mortgage interest. Tax forms for self employed Table 23-1. Tax forms for self employed Where To Deduct Your Interest Expense IF you have . Tax forms for self employed . Tax forms for self employed . Tax forms for self employed THEN deduct it on . Tax forms for self employed . Tax forms for self employed . Tax forms for self employed AND for more information go to . Tax forms for self employed . Tax forms for self employed . Tax forms for self employed deductible student loan interest Form 1040, line 33, or Form 1040A, line 18 Publication 970. Tax forms for self employed deductible home mortgage interest and points reported on Form 1098 Schedule A (Form 1040), line 10 Publication 936. Tax forms for self employed deductible home mortgage interest not reported on Form 1098 Schedule A (Form 1040), line 11 Publication 936. Tax forms for self employed deductible points not reported on Form 1098 Schedule A (Form 1040), line 12 Publication 936. Tax forms for self employed deductible mortgage insurance premiums Schedule A (Form 1040), line 13 Publication 936. Tax forms for self employed deductible investment interest (other than incurred to produce rents or royalties) Schedule A (Form 1040), line 14 Publication 550. Tax forms for self employed deductible business interest (non-farm) Schedule C or C-EZ (Form 1040) Publication 535. Tax forms for self employed deductible farm business interest Schedule F (Form 1040) Publications 225 and 535. Tax forms for self employed deductible interest incurred to produce rents or royalties Schedule E (Form 1040) Publications 527 and 535. Tax forms for self employed personal interest not deductible. Tax forms for self employed Prev  Up  Next   Home   More Online Publications