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Turbo Tax Filing

1040x Tax Form For 20131040ez Instruction BookletMilitary Pay ChartWhere Can I Get 1040ez Tax Forms FreePrintable Tax Form 1040x2013 1040ez FormCompare Tax SoftwareAmending My 2010 Tax ReturnIrs Gov Amended ReturnH&r Block Tax Form1040ez Tax Form 2012Aarp Tax LocationsFiling Tax AmendmentsFree State And Federal Tax Efile1040ez Income Tax FormH & R Block Free Tax FilingAmending TaxesCan I File 2011 Taxes In 2013Free 1040ez Tax FilingFree Online Federal Tax Filing 2011Filing Tax Extension 2012Free 1040ez FilingHr Block Free E FileEasy Tax Form1040ez Form PrintableEz FormGov Forms 1040Www Irs Gov Amended Tax ReturnAmmend TaxesFile 2007 Tax Return Free2011 Tax TablesAmended Return 1040xPrintable Tax Forms 2011Oregon Tax Return Form 1040ezMilitary Filing State TaxesMilitary Filing TaxesFile Taxes For 2010Irsfreetax2010 1040 Tax FormWho Can File 1040ez

Turbo Tax Filing

Turbo tax filing How To Get Tax Help Table of Contents You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways. Turbo tax filing By selecting the method that is best for you, you will have quick and easy access to tax help. Turbo tax filing Contacting your Taxpayer Advocate. Turbo tax filing   If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate. Turbo tax filing   The Taxpayer Advocate represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. Turbo tax filing While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review. Turbo tax filing   To contact your Taxpayer Advocate: Call the Taxpayer Advocate at 1–877–777–4778. Turbo tax filing Call the IRS at 1–800–829–1040. Turbo tax filing Call, write, or fax the Taxpayer Advocate office in your area. Turbo tax filing Call 1–800–829–4059 if you are a TTY/TDD user. Turbo tax filing   For more information, see Publication 1546, The Taxpayer Advocate Service of the IRS. Turbo tax filing Free tax services. Turbo tax filing   To find out what services are available, get Publication 910, Guide to Free Tax Services. Turbo tax filing It contains a list of free tax publications and an index of tax topics. Turbo tax filing It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics. Turbo tax filing Personal computer. Turbo tax filing With your personal computer and modem, you can access the IRS on the Internet at www. Turbo tax filing irs. Turbo tax filing gov. Turbo tax filing While visiting our web site, you can: Find answers to questions you may have. Turbo tax filing Download forms and publications or search for forms and publications by topic or keyword. Turbo tax filing View forms that may be filled in electronically, print the completed form, and then save the form for recordkeeping. Turbo tax filing View Internal Revenue Bulletins published in the last few years. Turbo tax filing Search regulations and the Internal Revenue Code. Turbo tax filing Receive our electronic newsletters on hot tax issues and news. Turbo tax filing Get information on starting and operating a small business. Turbo tax filing You can also reach us with your computer using File Transfer Protocol at ftp. Turbo tax filing irs. Turbo tax filing gov. Turbo tax filing TaxFax Service. Turbo tax filing Using the phone attached to your fax machine, you can receive forms and instructions by calling 703–368–9694. Turbo tax filing Follow the directions from the prompts. Turbo tax filing When you order forms, enter the catalog number for the form you need. Turbo tax filing The items you request will be faxed to you. Turbo tax filing For help with transmission problems, call the FedWorld Help Desk at 703–487–4608. Turbo tax filing Phone. Turbo tax filing Many services are available by phone. Turbo tax filing Ordering forms, instructions, and publications. Turbo tax filing Call 1–800–829–3676 to order current and prior year forms, instructions, and publications. Turbo tax filing Asking tax questions. Turbo tax filing Call the IRS with your tax questions at 1–800–829–1040. Turbo tax filing TTY/TDD equipment. Turbo tax filing If you have access to TTY/TDD equipment, call 1–800–829–4059 to ask tax questions or to order forms and publications. Turbo tax filing TeleTax topics. Turbo tax filing Call 1–800–829–4477 to listen to pre-recorded messages covering various tax topics. Turbo tax filing Evaluating the quality of our telephone services. Turbo tax filing To ensure that IRS representatives give accurate, courteous, and professional answers, we evaluate the quality of our telephone services in several ways. Turbo tax filing A second IRS representative sometimes monitors live telephone calls. Turbo tax filing That person only evaluates the IRS assistor and does not keep a record of any taxpayer's name or tax identification number. Turbo tax filing We sometimes record telephone calls to evaluate IRS assistors objectively. Turbo tax filing We hold these recordings no longer than one week and use them only to measure the quality of assistance. Turbo tax filing We value our customers' opinions. Turbo tax filing Throughout this year, we will be surveying our customers for their opinions on our service. Turbo tax filing Walk-in. Turbo tax filing You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Turbo tax filing Some IRS offices, libraries, grocery stores, copy centers, city and county governments, credit unions, and office supply stores have an extensive collection of products available to print from a CD-ROM or photocopy from reproducible proofs. Turbo tax filing Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Turbo tax filing Mail. Turbo tax filing You can send your order for forms, instructions, and publications to the Distribution Center nearest to you and receive a response within 10 workdays after your request is received. Turbo tax filing Find the address that applies to your part of the country. Turbo tax filing Western part of U. Turbo tax filing S. Turbo tax filing : Western Area Distribution Center Rancho Cordova, CA 95743–0001 Central part of U. Turbo tax filing S. Turbo tax filing : Central Area Distribution Center P. Turbo tax filing O. Turbo tax filing Box 8903 Bloomington, IL 61702–8903 Eastern part of U. Turbo tax filing S. Turbo tax filing and foreign addresses: Eastern Area Distribution Center P. Turbo tax filing O. Turbo tax filing Box 85074 Richmond, VA 23261–5074 CD-ROM. Turbo tax filing You can order IRS Publication 1796, Federal Tax Products on CD-ROM, and obtain: Current tax forms, instructions, and publications. Turbo tax filing Prior-year tax forms and instructions. Turbo tax filing Popular tax forms that may be filled in electronically, printed out for submission, and saved for recordkeeping. Turbo tax filing Internal Revenue Bulletins. Turbo tax filing The CD-ROM can be purchased from National Technical Information Service (NTIS) by calling 1–877–233–6767 or on the Internet at www. Turbo tax filing irs. Turbo tax filing gov. Turbo tax filing The first release is available in mid-December and the final release is available in late January. Turbo tax filing IRS Publication 3207, Small Business Resource Guide, is an interactive CD-ROM that contains information important to small businesses. Turbo tax filing It is available in mid-February. Turbo tax filing You can get a free copy by calling 1–800–829–3676 or visiting the IRS web site at www. Turbo tax filing irs. Turbo tax filing gov. Turbo tax filing Prev  Up  Next   Home   More Online Publications
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Developer Resources

Software developers and researchers can use these data feeds and APIs to help people find useful government information.

This page can be found at usa.gov/developer


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If you are using these resources and have feedback or want to tell us about your product, please e-mail us. We'd also like to know if you have suggestions for new APIs.


APIs

American Job Center Resources APIs
American Job Center partners with O'Net to provide a variety of APIs that are useful for jobseekers.
Style: RESTful APIs
Read the Documentation.

BusinessUSA Resource Access API
BusinessUSA connects businesses to government services and information. The API provides access to resource abstracts including programs, services, data, events, and more.
Style: RESTful API
Return Format: XML, CSV
Read the Documentation.

Citizen Topics API
This API lists the topics that we use to organize content on USA.gov. You can access it via the /tags call to the Social Media Registry.
Style: RESTful API
Return Format: HTML5, JSON, XML
Read the Documentation.

DigitalGov Search API (formerly USASearch)
Provides DigitalGov Search customers with results. This API is only available for use on official government websites. Sign in is required.
Style: RESTful API (requires DigitalGov Search account)
Return Format: JSON, JSONP, XML
Read the Documentation.

Federal Agency Directory API
This API contains directory information about federal agencies, such as contact methods, in English and Spanish.
Style: RESTful API
Return Format: JSON, JSONP, XML
Read the Documentation. Explore the Interactive Documentation.

Go.USA.gov API
Go.USA.gov is a URL shortener for government employees. The API can shorten, preview, and show clicks on short URLs.
Style: RESTful API
Return Format: JSON, JSONP, XML, plain text
Read the Documentation.

Government Jobs API
This API returns job openings across the federal government and includes all current openings posted on USAJobs.gov that are open to the public and located in the United States. It also includes some state and local government jobs.
Style: RESTful API
Return Format: JSON
Read the Documentation.

MyUSA APIs
Project MyUSA re-imagines how citizens interact with government. Use the MyUSA API to build apps that integrate with MyUSA.
Style: RESTful APIs (requires authentication and registration)
Read the Documentation.

Product Recall Data API
This API returns food recalls from FoodSafety.gov, car recalls from the National Highway Traffic Safety Administration, and product safety recalls from the Consumer Product Safety Commission.
Style: RESTful API
Return Format: JSON
Read the Documentation.

Social Media Registry API
The Social Media Registry is an official source of information about federal government social media accounts.
Style: RESTful API
Return Format: HTML5, JSON, XML
Read the Documentation.

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Data Feeds

1.USA.gov Data
1.USA.gov URLs are created whenever anyone shortens a .gov or .mil URL using bitly.
Style: Raw pub/sub feed
Return Format: JSON
Read the Documentation.

Frequently Asked Questions XML
The contents of our frequently asked questions are available in English and Spanish.
Style: XML data file
Read the Documentation.

List of Non-.gov URLs in Our Search
We search across all federal, state, local, tribal, and territorial government websites. Most government websites end in .gov or .mil, but many do not. This is a list of all government URLs that do not end in .gov or .mil.
Style: TXT file
Read the Documentation.

RSS Directory
Find feeds from across government.
Style: RSS

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The Turbo Tax Filing

Turbo tax filing 4. Turbo tax filing   Interest Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Allocation of InterestOrder of funds spent. Turbo tax filing Payments from checking accounts. Turbo tax filing Amounts paid within 30 days. Turbo tax filing Optional method for determining date of reallocation. Turbo tax filing Interest on a segregated account. Turbo tax filing How to report. Turbo tax filing Interest You Can DeductStatement. Turbo tax filing Expenses paid to obtain a mortgage. Turbo tax filing Prepayment penalty. Turbo tax filing De minimis OID. Turbo tax filing Constant-yield method. Turbo tax filing Loan or mortgage ends. Turbo tax filing Interest You Cannot DeductPenalties. Turbo tax filing Who is a key person? Exceptions for pre-June 1997 contracts. Turbo tax filing Interest allocated to unborrowed policy cash value. Turbo tax filing Capitalization of Interest When To Deduct InterestPrepaid interest. Turbo tax filing Discounted loan. Turbo tax filing Refunds of interest. Turbo tax filing Prepaid interest. Turbo tax filing Discounted loan. Turbo tax filing Tax deficiency. Turbo tax filing Related person. Turbo tax filing Below-Market LoansLimit on forgone interest for gift loans of $100,000 or less. Turbo tax filing Introduction This chapter discusses the tax treatment of business interest expense. Turbo tax filing Business interest expense is an amount charged for the use of money you borrowed for business activities. Turbo tax filing Topics - This chapter discusses: Allocation of interest Interest you can deduct Interest you cannot deduct Capitalization of interest When to deduct interest Below-market loans Useful Items - You may want to see: Publication 537 Installment Sales 550 Investment Income and Expenses 936 Home Mortgage Interest Deduction Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch E (Form 1040) Supplemental Income and Loss Sch K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. Turbo tax filing Sch K-1 (Form 1120S) Shareholder's Share of Income, Deductions, Credits, etc. Turbo tax filing 1098 Mortgage Interest Statement 3115 Application for Change in Accounting Method 4952 Investment Interest Expense Deduction 8582 Passive Activity Loss Limitations See chapter 12 for information about getting publications and forms. Turbo tax filing Allocation of Interest The rules for deducting interest vary, depending on whether the loan proceeds are used for business, personal, or investment activities. Turbo tax filing If you use the proceeds of a loan for more than one type of expense, you must allocate the interest based on the use of the loan's proceeds. Turbo tax filing Allocate your interest expense to the following categories. Turbo tax filing Nonpassive trade or business activity interest Passive trade or business activity interest Investment interest Portfolio interest Personal interest In general, you allocate interest on a loan the same way you allocate the loan proceeds. Turbo tax filing You allocate loan proceeds by tracing disbursements to specific uses. Turbo tax filing The easiest way to trace disbursements to specific uses is to keep the proceeds of a particular loan separate from any other funds. Turbo tax filing Secured loan. Turbo tax filing   The allocation of loan proceeds and the related interest is not generally affected by the use of property that secures the loan. Turbo tax filing Example. Turbo tax filing You secure a loan with property used in your business. Turbo tax filing You use the loan proceeds to buy an automobile for personal use. Turbo tax filing You must allocate interest expense on the loan to personal use (purchase of the automobile) even though the loan is secured by business property. Turbo tax filing    If the property that secures the loan is your home, you generally do not allocate the loan proceeds or the related interest. Turbo tax filing The interest is usually deductible as qualified home mortgage interest, regardless of how the loan proceeds are used. Turbo tax filing For more information, see Publication 936. Turbo tax filing Allocation period. Turbo tax filing   The period for which a loan is allocated to a particular use begins on the date the proceeds are used and ends on the earlier of the following dates. Turbo tax filing The date the loan is repaid. Turbo tax filing The date the loan is reallocated to another use. Turbo tax filing Proceeds not disbursed to borrower. Turbo tax filing   Even if the lender disburses the loan proceeds to a third party, the allocation of the loan is still based on your use of the funds. Turbo tax filing This applies whether you pay for property, services, or anything else by incurring a loan, or you take property subject to a debt. Turbo tax filing Proceeds deposited in borrower's account. Turbo tax filing   Treat loan proceeds deposited in an account as property held for investment. Turbo tax filing It does not matter whether the account pays interest. Turbo tax filing Any interest you pay on the loan is investment interest expense. Turbo tax filing If you withdraw the proceeds of the loan, you must reallocate the loan based on the use of the funds. Turbo tax filing Example. Turbo tax filing Celina, a calendar-year taxpayer, borrows $100,000 on January 4 and immediately uses the proceeds to open a checking account. Turbo tax filing No other amounts are deposited in the account during the year and no part of the loan principal is repaid during the year. Turbo tax filing On April 2, Celina uses $20,000 from the checking account for a passive activity expenditure. Turbo tax filing On September 4, Celina uses an additional $40,000 from the account for personal purposes. Turbo tax filing Under the interest allocation rules, the entire $100,000 loan is treated as property held for investment for the period from January 4 through April 1. Turbo tax filing From April 2 through September 3, Celina must treat $20,000 of the loan as used in the passive activity and $80,000 of the loan as property held for investment. Turbo tax filing From September 4 through December 31, she must treat $40,000 of the loan as used for personal purposes, $20,000 as used in the passive activity, and $40,000 as property held for investment. Turbo tax filing Order of funds spent. Turbo tax filing   Generally, you treat loan proceeds deposited in an account as used (spent) before either of the following amounts. Turbo tax filing Any unborrowed amounts held in the same account. Turbo tax filing Any amounts deposited after these loan proceeds. Turbo tax filing Example. Turbo tax filing On January 9, Olena opened a checking account, depositing $500 of the proceeds of Loan A and $1,000 of unborrowed funds. Turbo tax filing The following table shows the transactions in her account during the tax year. Turbo tax filing Date Transaction January 9 $500 proceeds of Loan A and $1,000 unborrowed funds deposited January 14 $500 proceeds of Loan B  deposited February 19 $800 used for personal purposes February 27 $700 used for passive activity June 19 $1,000 proceeds of Loan C  deposited November 20 $800 used for an investment December 18 $600 used for personal purposes Olena treats the $800 used for personal purposes as made from the $500 proceeds of Loan A and $300 of the proceeds of Loan B. Turbo tax filing She treats the $700 used for a passive activity as made from the remaining $200 proceeds of Loan B and $500 of unborrowed funds. Turbo tax filing She treats the $800 used for an investment as made entirely from the proceeds of Loan C. Turbo tax filing She treats the $600 used for personal purposes as made from the remaining $200 proceeds of Loan C and $400 of unborrowed funds. Turbo tax filing For the periods during which loan proceeds are held in the account, Olena treats them as property held for investment. Turbo tax filing Payments from checking accounts. Turbo tax filing   Generally, you treat a payment from a checking or similar account as made at the time the check is written if you mail or deliver it to the payee within a reasonable period after you write it. Turbo tax filing You can treat checks written on the same day as written in any order. Turbo tax filing Amounts paid within 30 days. Turbo tax filing   If you receive loan proceeds in cash or if the loan proceeds are deposited in an account, you can treat any payment (up to the amount of the proceeds) made from any account you own, or from cash, as made from those proceeds. Turbo tax filing This applies to any payment made within 30 days before or after the proceeds are received in cash or deposited in your account. Turbo tax filing   If the loan proceeds are deposited in an account, you can apply this rule even if the rules stated earlier under Order of funds spent would otherwise require you to treat the proceeds as used for other purposes. Turbo tax filing If you apply this rule to any payments, disregard those payments (and the proceeds from which they are made) when applying the rules stated under Order of funds spent. Turbo tax filing   If you received the loan proceeds in cash, you can treat the payment as made on the date you received the cash instead of the date you actually made the payment. Turbo tax filing Example. Turbo tax filing Giovanni gets a loan of $1,000 on August 4 and receives the proceeds in cash. Turbo tax filing Giovanni deposits $1,500 in an account on August 18 and on August 28 writes a check on the account for a passive activity expense. Turbo tax filing Also, Giovanni deposits his paycheck, deposits other loan proceeds, and pays his bills during the same period. Turbo tax filing Regardless of these other transactions, Giovanni can treat $1,000 of the deposit he made on August 18 as being paid on August 4 from the loan proceeds. Turbo tax filing In addition, Giovanni can treat the passive activity expense he paid on August 28 as made from the $1,000 loan proceeds treated as deposited in the account. Turbo tax filing Optional method for determining date of reallocation. Turbo tax filing   You can use the following method to determine the date loan proceeds are reallocated to another use. Turbo tax filing You can treat all payments from loan proceeds in the account during any month as taking place on the later of the following dates. Turbo tax filing The first day of that month. Turbo tax filing The date the loan proceeds are deposited in the account. Turbo tax filing However, you can use this optional method only if you treat all payments from the account during the same calendar month in the same way. Turbo tax filing Interest on a segregated account. Turbo tax filing   If you have an account that contains only loan proceeds and interest earned on the account, you can treat any payment from that account as being made first from the interest. Turbo tax filing When the interest earned is used up, any remaining payments are from loan proceeds. Turbo tax filing Example. Turbo tax filing You borrowed $20,000 and used the proceeds of this loan to open a new savings account. Turbo tax filing When the account had earned interest of $867, you withdrew $20,000 for personal purposes. Turbo tax filing You can treat the withdrawal as coming first from the interest earned on the account, $867, and then from the loan proceeds, $19,133 ($20,000 − $867). Turbo tax filing All the interest charged on the loan from the time it was deposited in the account until the time of the withdrawal is investment interest expense. Turbo tax filing The interest charged on the part of the proceeds used for personal purposes ($19,133) from the time you withdrew it until you either repay it or reallocate it to another use is personal interest expense. Turbo tax filing The interest charged on the loan proceeds you left in the account ($867) continues to be investment interest expense until you either repay it or reallocate it to another use. Turbo tax filing Loan repayment. Turbo tax filing   When you repay any part of a loan allocated to more than one use, treat it as being repaid in the following order. Turbo tax filing Personal use. Turbo tax filing Investments and passive activities (other than those included in (3)). Turbo tax filing Passive activities in connection with a rental real estate activity in which you actively participate. Turbo tax filing Former passive activities. Turbo tax filing Trade or business use and expenses for certain low-income housing projects. Turbo tax filing Line of credit (continuous borrowings). Turbo tax filing   The following rules apply if you have a line of credit or similar arrangement. Turbo tax filing Treat all borrowed funds on which interest accrues at the same fixed or variable rate as a single loan. Turbo tax filing Treat borrowed funds or parts of borrowed funds on which interest accrues at different fixed or variable rates as different loans. Turbo tax filing Treat these loans as repaid in the order shown on the loan agreement. Turbo tax filing Loan refinancing. Turbo tax filing   Allocate the replacement loan to the same uses to which the repaid loan was allocated. Turbo tax filing Make the allocation only to the extent you use the proceeds of the new loan to repay any part of the original loan. Turbo tax filing Debt-financed distribution. Turbo tax filing   A debt-financed distribution occurs when a partnership or S corporation borrows funds and allocates those funds to distributions made to partners or shareholders. Turbo tax filing The manner in which you report the interest expense associated with the distributed debt proceeds depends on your use of those proceeds. Turbo tax filing How to report. Turbo tax filing   If the proceeds were used in a nonpassive trade or business activity, report the interest on Schedule E (Form 1040), line 28; enter “interest expense” and the name of the partnership or S corporation in column (a) and the amount in column (h). Turbo tax filing If the proceeds were used in a passive activity, follow the Instructions for Form 8582, Passive Activity Loss Limitations, to determine the amount of interest expense that can be reported on Schedule E (Form 1040), line 28; enter “interest expense” and the name of the partnership in column (a) and the amount in column (f). Turbo tax filing If the proceeds were used in an investment activity, enter the interest on Form 4952. Turbo tax filing If the proceeds are used for personal purposes, the interest is generally not deductible. Turbo tax filing Interest You Can Deduct You can generally deduct as a business expense all interest you pay or accrue during the tax year on debts related to your trade or business. Turbo tax filing Interest relates to your trade or business if you use the proceeds of the loan for a trade or business expense. Turbo tax filing It does not matter what type of property secures the loan. Turbo tax filing You can deduct interest on a debt only if you meet all the following requirements. Turbo tax filing You are legally liable for that debt. Turbo tax filing Both you and the lender intend that the debt be repaid. Turbo tax filing You and the lender have a true debtor-creditor relationship. Turbo tax filing Partial liability. Turbo tax filing   If you are liable for part of a business debt, you can deduct only your share of the total interest paid or accrued. Turbo tax filing Example. Turbo tax filing You and your brother borrow money. Turbo tax filing You are liable for 50% of the note. Turbo tax filing You use your half of the loan in your business, and you make one-half of the loan payments. Turbo tax filing You can deduct your half of the total interest payments as a business deduction. Turbo tax filing Mortgage. Turbo tax filing   Generally, mortgage interest paid or accrued on real estate you own legally or equitably is deductible. Turbo tax filing However, rather than deducting the interest currently, you may have to add it to the cost basis of the property as explained later under Capitalization of Interest. Turbo tax filing Statement. Turbo tax filing   If you paid $600 or more of mortgage interest (including certain points) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement. Turbo tax filing 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. Turbo tax filing A governmental unit is a person for purposes of furnishing the statement. Turbo tax filing   If you receive a refund of interest you overpaid in an earlier year, this amount will be reported in box 3 of Form 1098. Turbo tax filing You cannot deduct this amount. Turbo tax filing For information on how to report this refund, see Refunds of interest, later in this chapter. Turbo tax filing Expenses paid to obtain a mortgage. Turbo tax filing   Certain expenses you pay to obtain a mortgage cannot be deducted as interest. Turbo tax filing These expenses, which include mortgage commissions, abstract fees, and recording fees, are capital expenses. Turbo tax filing If the property mortgaged is business or income-producing property, you can amortize the costs over the life of the mortgage. Turbo tax filing Prepayment penalty. Turbo tax filing   If you pay off your mortgage early and pay the lender a penalty for doing this, you can deduct the penalty as interest. Turbo tax filing Interest on employment tax deficiency. Turbo tax filing   Interest charged on employment taxes assessed on your business is deductible. Turbo tax filing Original issue discount (OID). Turbo tax filing   OID is a form of interest. Turbo tax filing A loan (mortgage or other debt) generally has OID when its proceeds are less than its principal amount. Turbo tax filing The OID is the difference between the stated redemption price at maturity and the issue price of the loan. Turbo tax filing   A loan's stated redemption price at maturity is the sum of all amounts (principal and interest) payable on it other than qualified stated interest. Turbo tax filing Qualified stated interest is stated interest that is unconditionally payable in cash or property (other than another loan of the issuer) at least annually over the term of the loan at a single fixed rate. Turbo tax filing You generally deduct OID over the term of the loan. Turbo tax filing Figure the amount to deduct each year using the constant-yield method, unless the OID on the loan is de minimis. Turbo tax filing De minimis OID. Turbo tax filing   The OID is de minimis if it is less than one-fourth of 1% (. Turbo tax filing 0025) of the stated redemption price of the loan at maturity multiplied by the number of full years from the date of original issue to maturity (the term of the loan). Turbo tax filing   If the OID is de minimis, you can choose one of the following ways to figure the amount you can deduct each year. Turbo tax filing On a constant-yield basis over the term of the loan. Turbo tax filing On a straight-line basis over the term of the loan. Turbo tax filing In proportion to stated interest payments. Turbo tax filing In its entirety at maturity of the loan. Turbo tax filing You make this choice by deducting the OID in a manner consistent with the method chosen on your timely filed tax return for the tax year in which the loan is issued. Turbo tax filing Example. Turbo tax filing On January 1, 2013, you took out a $100,000 discounted loan and received $98,500 in proceeds. Turbo tax filing The loan will mature on January 1, 2023 (a 10-year term), and the $100,000 principal is payable on that date. Turbo tax filing Interest of $10,000 is payable on January 1 of each year, beginning January 1, 2014. Turbo tax filing The $1,500 OID on the loan is de minimis because it is less than $2,500 ($100,000 × . Turbo tax filing 0025 × 10). Turbo tax filing You choose to deduct the OID on a straight-line basis over the term of the loan. Turbo tax filing Beginning in 2013, you can deduct $150 each year for 10 years. Turbo tax filing Constant-yield method. Turbo tax filing   If the OID is not de minimis, you must use the constant-yield method to figure how much you can deduct each year. Turbo tax filing You figure your deduction for the first year using the following steps. Turbo tax filing Determine the issue price of the loan. Turbo tax filing Generally, this equals the proceeds of the loan. Turbo tax filing If you paid points on the loan (as discussed later), the issue price generally is the difference between the proceeds and the points. Turbo tax filing Multiply the result in (1) by the yield to maturity. Turbo tax filing Subtract any qualified stated interest payments from the result in (2). Turbo tax filing This is the OID you can deduct in the first year. Turbo tax filing   To figure your deduction in any subsequent year, follow the above steps, except determine the adjusted issue price in step (1). Turbo tax filing To get the adjusted issue price, add to the issue price any OID previously deducted. Turbo tax filing Then follow steps (2) and (3) above. Turbo tax filing   The yield to maturity is generally shown in the literature you receive from your lender. Turbo tax filing If you do not have this information, consult your lender or tax advisor. Turbo tax filing In general, the yield to maturity is the discount rate that, when used in computing the present value of all principal and interest payments, produces an amount equal to the principal amount of the loan. Turbo tax filing Example. Turbo tax filing The facts are the same as in the previous example, except that you deduct the OID on a constant yield basis over the term of the loan. Turbo tax filing The yield to maturity on your loan is 10. Turbo tax filing 2467%, compounded annually. Turbo tax filing For 2013, you can deduct $93 [($98,500 × . Turbo tax filing 102467) − $10,000]. Turbo tax filing For 2014, you can deduct $103 [($98,593 × . Turbo tax filing 102467) − $10,000]. Turbo tax filing Loan or mortgage ends. Turbo tax filing   If your loan or mortgage ends, you may be able to deduct any remaining OID in the tax year in which the loan or mortgage ends. Turbo tax filing A loan or mortgage may end due to a refinancing, prepayment, foreclosure, or similar event. Turbo tax filing If you refinance with the original lender, you generally cannot deduct the remaining OID in the year in which the refinancing occurs, but you may be able to deduct it over the term of the new mortgage or loan. Turbo tax filing See Interest paid with funds borrowed from original lender under Interest You Cannot Deduct, later. Turbo tax filing Points. Turbo tax filing   The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a loan or a mortgage. Turbo tax filing These charges are also called loan origination fees, maximum loan charges, discount points, or premium charges. Turbo tax filing If any of these charges (points) are solely for the use of money, they are interest. Turbo tax filing   Because points are prepaid interest, you generally cannot deduct the full amount in the year paid. Turbo tax filing However, you can choose to fully deduct points in the year paid if you meet certain tests. Turbo tax filing For exceptions to the general rule, see Publication 936. Turbo tax filing The points reduce the issue price of the loan and result in original issue discount (OID), deductible as explained in the preceding discussion. Turbo tax filing Partial payments on a nontax debt. Turbo tax filing   If you make partial payments on a debt (other than a debt owed the IRS), the payments are applied, in general, first to interest and any remainder to principal. Turbo tax filing You can deduct only the interest. Turbo tax filing This rule does not apply when it can be inferred that the borrower and lender understood that a different allocation of the payments would be made. Turbo tax filing Installment purchase. Turbo tax filing   If you make an installment purchase of business property, the contract between you and the seller generally provides for the payment of interest. Turbo tax filing If no interest or a low rate of interest is charged under the contract, a portion of the stated principal amount payable under the contract may be recharacterized as interest (unstated interest). Turbo tax filing The amount recharacterized as interest reduces your basis in the property and increases your interest expense. Turbo tax filing For more information on installment sales and unstated interest, see Publication 537. Turbo tax filing Interest You Cannot Deduct Certain interest payments cannot be deducted. Turbo tax filing In addition, certain other expenses that may seem to be interest but are not, cannot be deducted as interest. Turbo tax filing You cannot currently deduct interest that must be capitalized, and you generally cannot deduct personal interest. Turbo tax filing Interest paid with funds borrowed from original lender. Turbo tax filing   If you use the cash method of accounting, you cannot deduct interest you pay with funds borrowed from the original lender through a second loan, an advance, or any other arrangement similar to a loan. Turbo tax filing You can deduct the interest expense once you start making payments on the new loan. Turbo tax filing   When you make a payment on the new loan, you first apply the payment to interest and then to the principal. Turbo tax filing All amounts you apply to the interest on the first loan are deductible, along with any interest you pay on the second loan, subject to any limits that apply. Turbo tax filing Capitalized interest. Turbo tax filing   You cannot currently deduct interest you are required to capitalize under the uniform capitalization rules. Turbo tax filing See Capitalization of Interest, later. Turbo tax filing In addition, if you buy property and pay interest owed by the seller (for example, by assuming the debt and any interest accrued on the property), you cannot deduct the interest. Turbo tax filing Add this interest to the basis of the property. Turbo tax filing Commitment fees or standby charges. Turbo tax filing   Fees you incur to have business funds available on a standby basis, but not for the actual use of the funds, are not deductible as interest payments. Turbo tax filing You may be able to deduct them as business expenses. Turbo tax filing   If the funds are for inventory or certain property used in your business, the fees are indirect costs and you generally must capitalize them under the uniform capitalization rules. Turbo tax filing See Capitalization of Interest, later. Turbo tax filing Interest on income tax. Turbo tax filing   Interest charged on income tax assessed on your individual income tax return is not a business deduction even though the tax due is related to income from your trade or business. Turbo tax filing Treat this interest as a business deduction only in figuring a net operating loss deduction. Turbo tax filing Penalties. Turbo tax filing   Penalties on underpaid deficiencies and underpaid estimated tax are not interest. Turbo tax filing You cannot deduct them. Turbo tax filing Generally, you cannot deduct any fines or penalties. Turbo tax filing Interest on loans with respect to life insurance policies. Turbo tax filing   You generally cannot deduct interest on a debt incurred with respect to any life insurance, annuity, or endowment contract that covers any individual unless that individual is a key person. Turbo tax filing   If the policy or contract covers a key person, you can deduct the interest on up to $50,000 of debt for that person. Turbo tax filing However, the deduction for any month cannot be more than the interest figured using Moody's Composite Yield on Seasoned Corporate Bonds (formerly known as Moody's Corporate Bond Yield Average-Monthly Average Corporates) (Moody's rate) for that month. Turbo tax filing Who is a key person?   A key person is an officer or 20% owner. Turbo tax filing However, the number of individuals you can treat as key persons is limited to the greater of the following. Turbo tax filing Five individuals. Turbo tax filing The lesser of 5% of the total officers and employees of the company or 20 individuals. Turbo tax filing Exceptions for pre-June 1997 contracts. Turbo tax filing   You can generally deduct the interest if the contract was issued before June 9, 1997, and the covered individual is someone other than an employee, officer, or someone financially interested in your business. Turbo tax filing If the contract was purchased before June 21, 1986, you can generally deduct the interest no matter who is covered by the contract. Turbo tax filing Interest allocated to unborrowed policy cash value. Turbo tax filing   Corporations and partnerships generally cannot deduct any interest expense allocable to unborrowed cash values of life insurance, annuity, or endowment contracts. Turbo tax filing This rule applies to contracts issued after June 8, 1997, that cover someone other than an officer, director, employee, or 20% owner. Turbo tax filing For more information, see section 264(f) of the Internal Revenue Code. Turbo tax filing Capitalization of Interest Under the uniform capitalization rules, you generally must capitalize interest on debt equal to your expenditures to produce real property or certain tangible personal property. Turbo tax filing The property must be produced by you for use in your trade or business or for sale to customers. Turbo tax filing You cannot capitalize interest related to property that you acquire in any other manner. Turbo tax filing Interest you paid or incurred during the production period must be capitalized if the property produced is designated property. Turbo tax filing Designated property is any of the following. Turbo tax filing Real property. Turbo tax filing Tangible personal property with a class life of 20 years or more. Turbo tax filing Tangible personal property with an estimated production period of more than 2 years. Turbo tax filing Tangible personal property with an estimated production period of more than 1 year if the estimated cost of production is more than $1 million. Turbo tax filing Property you produce. Turbo tax filing   You produce property if you construct, build, install, manufacture, develop, improve, create, raise, or grow it. Turbo tax filing Treat property produced for you under a contract as produced by you up to the amount you pay or incur for the property. Turbo tax filing Carrying charges. Turbo tax filing   Carrying charges include taxes you pay to carry or develop real estate or to carry, transport, or install personal property. Turbo tax filing You can choose to capitalize carrying charges not subject to the uniform capitalization rules if they are otherwise deductible. Turbo tax filing For more information, see chapter 7. Turbo tax filing Capitalized interest. Turbo tax filing   Treat capitalized interest as a cost of the property produced. Turbo tax filing You recover your interest when you sell or use the property. Turbo tax filing If the property is inventory, recover capitalized interest through cost of goods sold. Turbo tax filing If the property is used in your trade or business, recover capitalized interest through an adjustment to basis, depreciation, amortization, or other method. Turbo tax filing Partnerships and S corporations. Turbo tax filing   The interest capitalization rules are applied first at the partnership or S corporation level. Turbo tax filing The rules are then applied at the partners' or shareholders' level to the extent the partnership or S corporation has insufficient debt to support the production or construction costs. Turbo tax filing   If you are a partner or a shareholder, you may have to capitalize interest you incur during the tax year for the production costs of the partnership or S corporation. Turbo tax filing You may also have to capitalize interest incurred by the partnership or S corporation for your own production costs. Turbo tax filing To properly capitalize interest under these rules, you must be given the required information in an attachment to the Schedule K-1 you receive from the partnership or S corporation. Turbo tax filing Additional information. Turbo tax filing   The procedures for applying the uniform capitalization rules are beyond the scope of this publication. Turbo tax filing For more information, see sections 1. Turbo tax filing 263A-8 through 1. Turbo tax filing 263A-15 of the regulations and Notice 88-99. Turbo tax filing Notice 88-99 is in Cumulative Bulletin 1988-2. Turbo tax filing When To Deduct Interest If the uniform capitalization rules, discussed under Capitalization of Interest, earlier, do not apply to you, deduct interest as follows. Turbo tax filing Cash method. Turbo tax filing   Under the cash method, you can generally deduct only the interest you actually paid during the tax year. Turbo tax filing You cannot deduct a promissory note you gave as payment because it is a promise to pay and not an actual payment. Turbo tax filing Prepaid interest. Turbo tax filing   You generally cannot deduct any interest paid before the year it is due. Turbo tax filing Interest paid in advance can be deducted only in the tax year in which it is due. Turbo tax filing Discounted loan. Turbo tax filing   If interest or a discount is subtracted from your loan proceeds, it is not a payment of interest and you cannot deduct it when you get the loan. Turbo tax filing For more information, see Original issue discount (OID) under Interest You Can Deduct, earlier. Turbo tax filing Refunds of interest. Turbo tax filing   If you pay interest and then receive a refund in the same tax year of any part of the interest, reduce your interest deduction by the refund. Turbo tax filing If you receive the refund in a later tax year, include the refund in your income to the extent the deduction for the interest reduced your tax. Turbo tax filing Accrual method. Turbo tax filing   Under an accrual method, you can deduct only interest that has accrued during the tax year. Turbo tax filing Prepaid interest. Turbo tax filing   See Prepaid interest, earlier. Turbo tax filing Discounted loan. Turbo tax filing   See Discounted loan, earlier. Turbo tax filing Tax deficiency. Turbo tax filing   If you contest a federal income tax deficiency, interest does not accrue until the tax year the final determination of liability is made. Turbo tax filing If you do not contest the deficiency, then the interest accrues in the year the tax was asserted and agreed to by you. Turbo tax filing   However, if you contest but pay the proposed tax deficiency and interest, and you do not designate the payment as a cash bond, then the interest is deductible in the year paid. Turbo tax filing Related person. Turbo tax filing   If you use an accrual method, you cannot deduct interest owed to a related person who uses the cash method until payment is made and the interest is includible in the gross income of that person. Turbo tax filing The relationship is determined as of the end of the tax year for which the interest would otherwise be deductible. Turbo tax filing See section 267 of the Internal Revenue Code for more information. Turbo tax filing Below-Market Loans If you receive a below-market gift or demand loan and use the proceeds in your trade or business, you may be able to deduct the forgone interest. Turbo tax filing See Treatment of gift and demand loans, later, in this discussion. Turbo tax filing A below-market loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. Turbo tax filing A gift or demand loan that is a below-market loan generally is considered an arm's-length transaction in which you, the borrower, are considered as having received both the following. Turbo tax filing A loan in exchange for a note that requires the payment of interest at the applicable federal rate. Turbo tax filing An additional payment in an amount equal to the forgone interest. Turbo tax filing The additional payment is treated as a gift, dividend, contribution to capital, payment of compensation, or other payment, depending on the substance of the transaction. Turbo tax filing Forgone interest. Turbo tax filing   For any period, forgone interest is The interest that would be payable for that period if interest accrued on the loan at the applicable federal rate and was payable annually on December 31, minus Any interest actually payable on the loan for the period. Turbo tax filing Applicable federal rates are published by the IRS each month in the Internal Revenue Bulletin. Turbo tax filing Internal Revenue Bulletins are available on the IRS web site at www. Turbo tax filing irs. Turbo tax filing gov/irb. Turbo tax filing You can also contact an IRS office to get these rates. Turbo tax filing Loans subject to the rules. Turbo tax filing   The rules for below-market loans apply to the following. Turbo tax filing Gift loans (below-market loans where the forgone interest is in the nature of a gift). Turbo tax filing Compensation-related loans (below-market loans between an employer and an employee or between an independent contractor and a person for whom the contractor provides services). Turbo tax filing Corporation-shareholder loans. Turbo tax filing Tax avoidance loans (below-market loans where the avoidance of federal tax is one of the main purposes of the interest arrangement). Turbo tax filing Loans to qualified continuing care facilities under a continuing care contract (made after October 11, 1985). Turbo tax filing   Except as noted in (5) above, these rules apply to demand loans (loans payable in full at any time upon the lender's demand) outstanding after June 6, 1984, and to term loans (loans that are not demand loans) made after that date. Turbo tax filing Treatment of gift and demand loans. Turbo tax filing   If you receive a below-market gift loan or demand loan, you are treated as receiving an additional payment (as a gift, dividend, etc. Turbo tax filing ) equal to the forgone interest on the loan. Turbo tax filing You are then treated as transferring this amount back to the lender as interest. Turbo tax filing These transfers are considered to occur annually, generally on December 31. Turbo tax filing If you use the loan proceeds in your trade or business, you can deduct the forgone interest each year as a business interest expense. Turbo tax filing The lender must report it as interest income. Turbo tax filing Limit on forgone interest for gift loans of $100,000 or less. Turbo tax filing   For gift loans between individuals, forgone interest treated as transferred back to the lender is limited to the borrower's net investment income for the year. Turbo tax filing This limit applies if the outstanding loans between the lender and borrower total $100,000 or less. Turbo tax filing If the borrower's net investment income is $1,000 or less, it is treated as zero. Turbo tax filing This limit does not apply to a loan if the avoidance of any federal tax is one of the main purposes of the interest arrangement. Turbo tax filing Treatment of term loans. Turbo tax filing   If you receive a below-market term loan other than a gift or demand loan, you are treated as receiving an additional cash payment (as a dividend, etc. Turbo tax filing ) on the date the loan is made. Turbo tax filing This payment is equal to the loan amount minus the present value, at the applicable federal rate, of all payments due under the loan. Turbo tax filing The same amount is treated as original issue discount on the loan. Turbo tax filing See Original issue discount (OID) under Interest You Can Deduct, earlier. Turbo tax filing Exceptions for loans of $10,000 or less. Turbo tax filing   The rules for below-market loans do not apply to any day on which the total outstanding loans between the borrower and lender is $10,000 or less. Turbo tax filing This exception applies only to the following. Turbo tax filing Gift loans between individuals if the loan is not directly used to buy or carry income-producing assets. Turbo tax filing Compensation-related loans or corporation-shareholder loans if the avoidance of any federal tax is not a principal purpose of the interest arrangement. Turbo tax filing This exception does not apply to a term loan described in (2) above that was previously subject to the below-market loan rules. Turbo tax filing Those rules will continue to apply even if the outstanding balance is reduced to $10,000 or less. Turbo tax filing Exceptions for loans without significant tax effect. Turbo tax filing   The following loans are specifically exempted from the rules for below-market loans because their interest arrangements do not have a significant effect on the federal tax liability of the borrower or the lender. Turbo tax filing Loans made available by lenders to the general public on the same terms and conditions that are consistent with the lender's customary business practices. Turbo tax filing Loans subsidized by a federal, state, or municipal government that are made available under a program of general application to the public. Turbo tax filing Certain employee-relocation loans. Turbo tax filing Certain loans to or from a foreign person, unless the interest income would be effectively connected with the conduct of a U. Turbo tax filing S. Turbo tax filing trade or business and not exempt from U. Turbo tax filing S. Turbo tax filing tax under an income tax treaty. Turbo tax filing Any other loan if the taxpayer can show that the interest arrangement has no significant effect on the federal tax liability of the lender or the borrower. Turbo tax filing Whether an interest arrangement has a significant effect on the federal tax liability of the lender or the borrower will be determined by all the facts and circumstances. Turbo tax filing Consider all the following factors. Turbo tax filing Whether items of income and deduction generated by the loan offset each other. Turbo tax filing The amount of the items. Turbo tax filing The cost of complying with the below-market loan provisions if they were to apply. Turbo tax filing Any reasons, other than taxes, for structuring the transaction as a below-market loan. Turbo tax filing Exception for loans to qualified continuing care facilities. Turbo tax filing   The below-market interest rules do not apply to a loan owed by a qualified continuing care facility under a continuing care contract if the lender or lender's spouse is age 62 or older by the end of the calendar year. Turbo tax filing A qualified continuing care facility is one or more facilities (excluding nursing homes) meeting the requirements listed below. Turbo tax filing Designed to provide services under continuing care contracts (defined below). Turbo tax filing Includes an independent living unit, and either an assisted living or nursing facility, or both. Turbo tax filing Substantially all of the independent living unit residents are covered by continuing care contracts. Turbo tax filing A continuing care contract is a written contract between an individual and a qualified continuing care facility that includes all of the following conditions. Turbo tax filing The individual or individual's spouse must be entitled to use the facility for the rest of their life or lives. Turbo tax filing The individual or individual's spouse will be provided with housing, as appropriate for the health of the individual or individual's spouse in an: independent living unit (which has additional available facilities outside the unit for the provision of meals and other personal care), and assisted living or nursing facility available in the continuing care facility. Turbo tax filing The individual or individual's spouse will be provided with assisted living or nursing care available in the continuing care facility, as required for the health of the individual or the individual's spouse. Turbo tax filing For more information, see section 7872(h) of the Internal Revenue Code. Turbo tax filing Sale or exchange of property. Turbo tax filing   Different rules generally apply to a loan connected with the sale or exchange of property. Turbo tax filing If the loan does not provide adequate stated interest, part of the principal payment may be considered interest. Turbo tax filing However, there are exceptions that may require you to apply the below-market interest rate rules to these loans. Turbo tax filing See Unstated Interest and Original Issue Discount (OID) in Publication 537. Turbo tax filing More information. Turbo tax filing   For more information on below-market loans, see section 7872 of the Internal Revenue Code and section 1. Turbo tax filing 7872-5 of the regulations. Turbo tax filing Prev  Up  Next   Home   More Online Publications