Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

What Is Form 1040x

Free 1040ez Tax FormsMilitary State Tax ExemptionsOnline 1040ezState Income Taxes 2012I Need To Amend My 2012 TaxesDownload 1040x FormSearch Free Tax UsaE File Tax ReturnEz Forms 2013How To Amend A 2012 Tax ReturnAmend TaxesTurbotax 1040ezE File State And Federal Taxes For FreeFree State Turbo Tax 2012Filling Out 1040x2008 Tax Software Free DownloadIt 1040ez1040 Tax Form 2010Senior TaxesAarp Tax Preparation SitesIrs Free Tax Preparation OnlineTax Planning Us 1040aHow To File A 1040x AmendmentIrs 1040 Ez Form 2012Students Filing Taxes1040 Income Tax Form2012 TaxTax Form 1040xTax Preparer Software2012 Tax AmendmentIrs Gov Form1040xTurbotax MilitaryH And R Block OnlineFiling Prior Year Tax ReturnsAmend Federal Tax ReturnOnline Tax Extension2012 Amended Tax ReturnFile 2006 Tax Return1040x FormsIncome Tax For Students

What Is Form 1040x

What is form 1040x Publication 587 - Main Content Table of Contents Qualifying for a DeductionExclusive Use Regular Use Trade or Business Use Principal Place of Business Place To Meet Patients, Clients, or Customers Separate Structure Figuring the DeductionUsing Actual Expenses Using the Simplified Method Daycare Facility Standard meal and snack rates. What is form 1040x Sale or Exchange of Your HomeGain on Sale Depreciation Basis Adjustment Reporting the Sale More Information Business Furniture and EquipmentListed Property Property Bought for Business Use Personal Property Converted to Business Use Recordkeeping Where To DeductSelf-Employed Persons Employees Partners How To Get Tax HelpLow Income Taxpayer Clinics Worksheet To Figure the Deduction for Business Use of Your HomeInstructions for the Worksheet Worksheets To Figure the Deduction for Business Use of Your Home (Simplified Method) Instructions for the Simplified Method Worksheet Instructions for the Daycare Facility Worksheet Instructions for the Area Adjustment Worksheet Qualifying for a Deduction Generally, you cannot deduct items related to your home, such as mortgage interest, real estate taxes, utilities, maintenance, rent, depreciation, or property insurance, as business expenses. What is form 1040x However, you may be able to deduct expenses related to the business use of part of your home if you meet specific requirements. What is form 1040x Even then, the deductible amount of these types of expenses may be limited. What is form 1040x Use this section and Figure A, later, to decide if you can deduct expenses for the business use of your home. What is form 1040x To qualify to deduct expenses for business use of your home, you must use part of your home: Exclusively and regularly as your principal place of business (defined later), Exclusively and regularly as a place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, In the case of a separate structure which is not attached to your home, in connection with your trade or business, On a regular basis for certain storage use (see Storage of inventory or product samples , later), For rental use (see Publication 527), or As a daycare facility (see Daycare Facility , later). What is form 1040x Additional tests for employee use. What is form 1040x   If you are an employee and you use a part of your home for business, you may qualify for a deduction for its business use. What is form 1040x You must meet the tests discussed earlier plus: Your business use must be for the convenience of your employer, and You must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer. What is form 1040x If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home. What is form 1040x Exclusive Use To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. What is form 1040x The area used for business can be a room or other separately identifiable space. What is form 1040x The space does not need to be marked off by a permanent partition. What is form 1040x You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes. What is form 1040x Example. What is form 1040x You are an attorney and use a den in your home to write legal briefs and prepare clients' tax returns. What is form 1040x Your family also uses the den for recreation. What is form 1040x The den is not used exclusively in your trade or business, so you cannot claim a deduction for the business use of the den. What is form 1040x Exceptions to Exclusive Use You do not have to meet the exclusive use test if either of the following applies. What is form 1040x You use part of your home for the storage of inventory or product samples (discussed next). What is form 1040x You use part of your home as a daycare facility, discussed later under Daycare Facility . What is form 1040x Note. What is form 1040x With the exception of these two uses, any portion of the home used for business purposes must meet the exclusive use test. What is form 1040x Storage of inventory or product samples. What is form 1040x    If you use part of your home for storage of inventory or product samples, you can deduct expenses for the business use of your home without meeting the exclusive use test. What is form 1040x However, you must meet all the following tests. What is form 1040x You sell products at wholesale or retail as your trade or business. What is form 1040x You keep the inventory or product samples in your home for use in your trade or business. What is form 1040x Your home is the only fixed location of your trade or business. What is form 1040x You use the storage space on a regular basis. What is form 1040x The space you use is a separately identifiable space suitable for storage. What is form 1040x Example. What is form 1040x Your home is the only fixed location of your business of selling mechanics' tools at retail. What is form 1040x You regularly use half of your basement for storage of inventory and product samples. What is form 1040x You sometimes use the area for personal purposes. What is form 1040x The expenses for the storage space are deductible even though you do not use this part of your basement exclusively for business. What is form 1040x Regular Use To qualify under the regular use test, you must use a specific area of your home for business on a regular basis. What is form 1040x Incidental or occasional business use is not regular use. What is form 1040x You must consider all facts and circumstances in determining whether your use is on a regular basis. What is form 1040x Trade or Business Use To qualify under the trade-or-business-use test, you must use part of your home in connection with a trade or business. What is form 1040x If you use your home for a profit-seeking activity that is not a trade or business, you cannot take a deduction for its business use. What is form 1040x Example. What is form 1040x You use part of your home exclusively and regularly to read financial periodicals and reports, clip bond coupons, and carry out similar activities related to your own investments. What is form 1040x You do not make investments as a broker or dealer. What is form 1040x So, your activities are not part of a trade or business and you cannot take a deduction for the business use of your home. What is form 1040x Principal Place of Business You can have more than one business location, including your home, for a single trade or business. What is form 1040x To qualify to deduct the expenses for the business use of your home under the principal place of business test, your home must be your principal place of business for that trade or business. What is form 1040x To determine whether your home is your principal place of business, you must consider: The relative importance of the activities performed at each place where you conduct business, and The amount of time spent at each place where you conduct business. What is form 1040x Your home office will qualify as your principal place of business if you meet the following requirements. What is form 1040x You use it exclusively and regularly for administrative or management activities of your trade or business. What is form 1040x You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. What is form 1040x If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. What is form 1040x However, see the later discussions under Place To Meet Patients, Clients, or Customers and Separate Structure for other ways to qualify to deduct home office expenses. What is form 1040x Administrative or management activities. What is form 1040x   There are many activities that are administrative or managerial in nature. What is form 1040x The following are a few examples. What is form 1040x Billing customers, clients, or patients. What is form 1040x Keeping books and records. What is form 1040x Ordering supplies. What is form 1040x Setting up appointments. What is form 1040x Forwarding orders or writing reports. What is form 1040x Administrative or management activities performed at other locations. What is form 1040x   The following activities performed by you or others will not disqualify your home office from being your principal place of business. What is form 1040x You have others conduct your administrative or management activities at locations other than your home. What is form 1040x (For example, another company does your billing from its place of business. What is form 1040x ) You conduct administrative or management activities at places that are not fixed locations of your business, such as in a car or a hotel room. What is form 1040x You occasionally conduct minimal administrative or management activities at a fixed location outside your home. What is form 1040x You conduct substantial nonadministrative or nonmanagement business activities at a fixed location outside your home. What is form 1040x (For example, you meet with or provide services to customers, clients, or patients at a fixed location of the business outside your home. What is form 1040x ) You have suitable space to conduct administrative or management activities outside your home, but choose to use your home office for those activities instead. What is form 1040x Please click here for the text description of the image. What is form 1040x Can you deduct business use of the home expenses? Example 1. What is form 1040x John is a self-employed plumber. What is form 1040x Most of John's time is spent at customers' homes and offices installing and repairing plumbing. What is form 1040x He has a small office in his home that he uses exclusively and regularly for the administrative or management activities of his business, such as phoning customers, ordering supplies, and keeping his books. What is form 1040x John writes up estimates and records of work completed at his customers' premises. What is form 1040x He does not conduct any substantial administrative or management activities at any fixed location other than his home office. What is form 1040x John does not do his own billing. What is form 1040x He uses a local bookkeeping service to bill his customers. What is form 1040x John's home office qualifies as his principal place of business for deducting expenses for its use. What is form 1040x He uses the home office for the administrative or managerial activities of his plumbing business and he has no other fixed location where he conducts these administrative or managerial activities. What is form 1040x His choice to have his billing done by another company does not disqualify his home office from being his principal place of business. What is form 1040x He meets all the qualifications, including principal place of business, so he can deduct expenses (subject to certain limitations, explained later) for the business use of his home. What is form 1040x Example 2. What is form 1040x Pamela is a self-employed sales representative for several different product lines. What is form 1040x She has an office in her home that she uses exclusively and regularly to set up appointments and write up orders and other reports for the companies whose products she sells. What is form 1040x She occasionally writes up orders and sets up appointments from her hotel room when she is away on business overnight. What is form 1040x Pamela's business is selling products to customers at various locations throughout her territory. What is form 1040x To make these sales, she regularly visits customers to explain the available products and take orders. What is form 1040x Pamela's home office qualifies as her principal place of business for deducting expenses for its use. What is form 1040x She conducts administrative or management activities there and she has no other fixed location where she conducts substantial administrative or management activities. What is form 1040x The fact that she conducts some administrative or management activities in her hotel room (not a fixed location) does not disqualify her home office from being her principal place of business. What is form 1040x She meets all the qualifications, including principal place of business, so she can deduct expenses (subject to certain limitations, explained later) for the business use of her home. What is form 1040x Example 3. What is form 1040x Paul is a self-employed anesthesiologist. What is form 1040x He spends the majority of his time administering anesthesia and postoperative care in three local hospitals. What is form 1040x One of the hospitals provides him with a small shared office where he could conduct administrative or management activities. What is form 1040x Paul very rarely uses the office the hospital provides. What is form 1040x He uses a room in his home that he has converted to an office. What is form 1040x He uses this room exclusively and regularly to conduct all the following activities. What is form 1040x Contacting patients, surgeons, and hospitals regarding scheduling. What is form 1040x Preparing for treatments and presentations. What is form 1040x Maintaining billing records and patient logs. What is form 1040x Satisfying continuing medical education requirements. What is form 1040x Reading medical journals and books. What is form 1040x Paul's home office qualifies as his principal place of business for deducting expenses for its use. What is form 1040x He conducts administrative or management activities for his business as an anesthesiologist there and he has no other fixed location where he conducts substantial administrative or management activities for this business. What is form 1040x His choice to use his home office instead of the one provided by the hospital does not disqualify his home office from being his principal place of business. What is form 1040x His performance of substantial nonadministrative or nonmanagement activities at fixed locations outside his home also does not disqualify his home office from being his principal place of business. What is form 1040x He meets all the qualifications, including principal place of business, so he can deduct expenses (subject to certain limitations, explained later) for the business use of his home. What is form 1040x Example 4. What is form 1040x Kathleen is employed as a teacher. What is form 1040x She is required to teach and meet with students at the school and to grade papers and tests. What is form 1040x The school provides her with a small office where she can work on her lesson plans, grade papers and tests, and meet with parents and students. What is form 1040x The school does not require her to work at home. What is form 1040x Kathleen prefers to use the office she has set up in her home and does not use the one provided by the school. What is form 1040x She uses this home office exclusively and regularly for the administrative duties of her teaching job. What is form 1040x Kathleen must meet the convenience-of-the-employer test, even if her home qualifies as her principal place of business for deducting expenses for its use. What is form 1040x Her employer provides her with an office and does not require her to work at home, so she does not meet the convenience-of-the-employer test and cannot claim a deduction for the business use of her home. What is form 1040x More Than One Trade or Business The same home office can be the principal place of business for two or more separate business activities. What is form 1040x Whether your home office is the principal place of business for more than one business activity must be determined separately for each of your trade or business activities. What is form 1040x You must use the home office exclusively and regularly for one or more of the following purposes. What is form 1040x As the principal place of business for one or more of your trades or businesses. What is form 1040x As a place to meet or deal with patients, clients, or customers in the normal course of one or more of your trades or businesses. What is form 1040x If your home office is a separate structure, in connection with one or more of your trades or businesses. What is form 1040x You can use your home office for more than one business activity, but you cannot use it for any nonbusiness (i. What is form 1040x e. What is form 1040x , personal) activities. What is form 1040x If you are an employee, any use of the home office in connection with your employment must be for the convenience of your employer. What is form 1040x See Rental to employer , later, if you rent part of your home to your employer. What is form 1040x Example. What is form 1040x Tracy White is employed as a teacher. What is form 1040x Her principal place of work is the school, which provides her office space to do her school work. What is form 1040x She also has a mail order jewelry business. What is form 1040x All her work in the jewelry business is done in her home office and the office is used exclusively for that business. What is form 1040x If she meets all the other tests, she can deduct expenses for the business use of her home for the jewelry business. What is form 1040x If Tracy also uses the office for work related to her teaching, she must meet the exclusive use test for both businesses to qualify for the deduction. What is form 1040x As an employee, Tracy must also meet the convenience-of-the-employer test to qualify for the deduction. What is form 1040x She does not meet this test for her work as a teacher, so she cannot claim a deduction for the business use of her home for either activity. What is form 1040x Place To Meet Patients, Clients, or Customers If you meet or deal with patients, clients, or customers in your home in the normal course of your business, even though you also carry on business at another location, you can deduct your expenses for the part of your home used exclusively and regularly for business if you meet both the following tests. What is form 1040x You physically meet with patients, clients, or customers on your premises. What is form 1040x Their use of your home is substantial and integral to the conduct of your business. What is form 1040x Doctors, dentists, attorneys, and other professionals who maintain offices in their homes generally will meet this requirement. What is form 1040x Using your home for occasional meetings and telephone calls will not qualify you to deduct expenses for the business use of your home. What is form 1040x The part of your home you use exclusively and regularly to meet patients, clients, or customers does not have to be your principal place of business. What is form 1040x Example. What is form 1040x June Quill, a self-employed attorney, works 3 days a week in her city office. What is form 1040x She works 2 days a week in her home office used only for business. What is form 1040x She regularly meets clients there. What is form 1040x Her home office qualifies for a business deduction because she meets clients there in the normal course of her business. What is form 1040x Separate Structure You can deduct expenses for a separate free-standing structure, such as a studio, workshop, garage, or barn, if you use it exclusively and regularly for your business. What is form 1040x The structure does not have to be your principal place of business or a place where you meet patients, clients, or customers. What is form 1040x Example. What is form 1040x John Berry operates a floral shop in town. What is form 1040x He grows the plants for his shop in a greenhouse behind his home. What is form 1040x He uses the greenhouse exclusively and regularly in his business, so he can deduct the expenses for its use, subject to certain limitations, explained later. What is form 1040x Figuring the Deduction After you determine that you meet the tests under Qualifying for a Deduction , you can begin to figure how much you can deduct. What is form 1040x When figuring the amount you can deduct for the business use of your home, you will use either your actual expenses or a simplified method. What is form 1040x Electing to use the simplified method. What is form 1040x   The simplified method is an alternative to the calculation, allocation, and substantiation of actual expenses. What is form 1040x You choose whether or not to figure your deduction using the simplified method each taxable year. What is form 1040x See Using the Simplified Method , later. What is form 1040x Rental to employer. What is form 1040x   If you rent part of your home to your employer and you use the rented part in performing services for your employer as an employee, your deduction for the business use of your home is limited. What is form 1040x You can deduct mortgage interest, qualified mortgage insurance premiums, real estate taxes, and personal casualty losses for the rented part, subject to any limitations. What is form 1040x However, you cannot deduct otherwise allowable trade or business expenses, business casualty losses, or depreciation related to the use of your home (or use the simplified method as an alternative to deducting these actual expenses) in performing services for your employer. What is form 1040x Using Actual Expenses If you do not or cannot elect to use the simplified method for a home, you will figure your deduction for that home using your actual expenses. What is form 1040x You will also need to figure the percentage of your home used for business and the limit on the deduction. What is form 1040x If you are an employee or a partner, or you use your home in your farming business and you file Schedule F (Form 1040), you can use the Worksheet To Figure the Deduction for Business Use of Your Home, near the end of this publication, to help you figure your deduction. What is form 1040x If you use your home in a trade or business and you file Schedule C (Form 1040), you will use Form 8829 to figure your deduction. What is form 1040x Part-year use. What is form 1040x   You cannot deduct expenses for the business use of your home incurred during any part of the year you did not use your home for business purposes. What is form 1040x For example, if you begin using part of your home for business on July 1, and you meet all the tests from that date until the end of the year, consider only your expenses for the last half of the year in figuring your allowable deduction. What is form 1040x Expenses related to tax-exempt income. What is form 1040x   Generally, you cannot deduct expenses that are related to tax-exempt allowances. What is form 1040x However, if you receive a tax-exempt parsonage allowance or a tax-exempt military allowance, your expenses for mortgage interest and real estate taxes are deductible under the normal rules. What is form 1040x No deduction is allowed for other expenses related to the tax-exempt allowance. What is form 1040x   If your housing is provided free of charge and the value of the housing is tax exempt, you cannot deduct the rental value of any portion of the housing. What is form 1040x Actual Expenses You must divide the expenses of operating your home between personal and business use. What is form 1040x The part of a home operating expense you can use to figure your deduction depends on both of the following. What is form 1040x Whether the expense is direct, indirect, or unrelated. What is form 1040x The percentage of your home used for business. What is form 1040x Table 1, next, describes the types of expenses you may have and the extent to which they are deductible. What is form 1040x Table 1. What is form 1040x Types of Expenses  Expense  Description  Deductibility Direct Expenses only for  the business part  of your home. What is form 1040x Deductible in full. What is form 1040x *   Examples:  Painting or repairs  only in the area  used for business. What is form 1040x Exception: May be only partially  deductible in a daycare facility. What is form 1040x See Daycare Facility , later. What is form 1040x Indirect Expenses for  keeping up and running your  entire home. What is form 1040x Deductible based on the percentage of your home used for business. What is form 1040x *   Examples:  Insurance, utilities, and  general repairs. What is form 1040x   Unrelated Expenses only for  the parts of your  home not used  for business. What is form 1040x Not deductible. What is form 1040x   Examples:  Lawn care or painting  a room not used  for business. What is form 1040x   *Subject to the deduction limit, discussed later. What is form 1040x Form 8829 and the Worksheet To Figure the Deduction for Business Use of Your Home have separate columns for direct and indirect expenses. What is form 1040x Certain expenses are deductible whether or not you use your home for business. What is form 1040x If you qualify to deduct business use of the home expenses, use the business percentage of these expenses to figure your total business use of the home deduction. What is form 1040x These expenses include the following. What is form 1040x Real estate taxes. What is form 1040x Qualified mortgage insurance premiums. What is form 1040x Deductible mortgage interest. What is form 1040x Casualty losses. What is form 1040x Other expenses are deductible only if you use your home for business. What is form 1040x You can use the business percentage of these expenses to figure your total business use of the home deduction. What is form 1040x These expenses generally include (but are not limited to) the following. What is form 1040x Depreciation (covered under Depreciating Your Home , later). What is form 1040x Insurance. What is form 1040x Rent paid for the use of property you do not own but use in your trade or business. What is form 1040x Repairs. What is form 1040x Security system. What is form 1040x Utilities and services. What is form 1040x Real estate taxes. What is form 1040x   To figure the business part of your real estate taxes, multiply the real estate taxes paid by the percentage of your home used for business. What is form 1040x   For more information on the deduction for real estate taxes, see Publication 530, Tax Information for Homeowners. What is form 1040x Deductible mortgage interest. What is form 1040x   To figure the business part of your deductible mortgage interest, multiply this interest by the percentage of your home used for business. What is form 1040x You can include interest on a second mortgage in this computation. What is form 1040x If your total mortgage debt is more than $1,000,000 or your home equity debt is more than $100,000, your deduction may be limited. What is form 1040x For more information on what interest is deductible, see Publication 936, Home Mortgage Interest Deduction. What is form 1040x Qualified mortgage insurance premiums. What is form 1040x   To figure the business part of your qualified mortgage insurance premiums, multiply the premiums by the percentage of your home used for business. What is form 1040x You can include premiums for insurance on a second mortgage in this computation. What is form 1040x If your adjusted gross income is more than $100,000 ($50,000 if your filing status is married filing separately), your deduction may be limited. What is form 1040x For more information, see Publication 936, and Line 13 in the Instructions for Schedule A (Form 1040). What is form 1040x Casualty losses. What is form 1040x    If you have a casualty loss on your home that you use for business, treat the casualty loss as a direct expense, an indirect expense, or an unrelated expense, depending on the property affected. What is form 1040x A direct expense is the loss on the portion of the property you use only in your business. What is form 1040x Use the entire loss to figure the business use of the home deduction. What is form 1040x An indirect expense is the loss on property you use for both business and personal purposes. What is form 1040x Use only the business portion to figure the deduction. What is form 1040x An unrelated expense is the loss on property you do not use in your business. What is form 1040x Do not use any of the loss to figure the deduction. What is form 1040x Example. What is form 1040x You meet the rules to take a deduction for an office in your home that is 10% of the total area of your house. What is form 1040x A storm damages your roof. What is form 1040x This is an indirect expense as the roof is part of the whole house and is considered to be used both for business and personal purposes. What is form 1040x You would complete Form 4684, Casualties and Thefts, to report your loss. What is form 1040x You complete both section A (Personal Use Property) and section B (Business and Income-Producing Property) as your home is used both for business and personal purposes. What is form 1040x Since you use 90% of your home for personal purposes, use 90% of the cost or adjusted basis of your home, insurance or other reimbursement, and fair market value, both before and after the storm, to figure the amounts to enter on lines 2, 3, 5, and 6 of Form 4684. What is form 1040x Since you use 10% of your home for business purposes, use 10% of the cost or adjusted basis of your home, insurance or other reimbursement, and fair market value, both before and after the storm, to figure the amounts to enter on lines 20, 21, 23, and 24 of Form 4684. What is form 1040x Forms and worksheets to use. What is form 1040x   If you are filing Schedule C (Form 1040), get Form 8829 and follow the instructions for casualty losses. What is form 1040x If you are an employee or a partner, or you file Schedule F (Form 1040), use the Worksheet To Figure the Deduction for Business Use of Your Home, near the end of this publication. What is form 1040x You will also need to get Form 4684. What is form 1040x More information. What is form 1040x   For more information on casualty losses, see Publication 547, Casualties, Disasters, and Thefts. What is form 1040x Insurance. What is form 1040x   You can deduct the cost of insurance that covers the business part of your home. What is form 1040x However, if your insurance premium gives you coverage for a period that extends past the end of your tax year, you can deduct only the business percentage of the part of the premium that gives you coverage for your tax year. What is form 1040x You can deduct the business percentage of the part that applies to the following year in that year. What is form 1040x Rent. What is form 1040x   If you rent the home you occupy and meet the requirements for business use of the home, you can deduct part of the rent you pay. What is form 1040x To figure your deduction, multiply your rent payments by the percentage of your home used for business. What is form 1040x   If you own your home, you cannot deduct the fair rental value of your home. What is form 1040x However, see Depreciating Your Home , later. What is form 1040x Repairs. What is form 1040x   The cost of repairs that relate to your business, including labor (other than your own labor), is a deductible expense. What is form 1040x For example, a furnace repair benefits the entire home. What is form 1040x If you use 10% of your home for business, you can deduct 10% of the cost of the furnace repair. What is form 1040x   Repairs keep your home in good working order over its useful life. What is form 1040x Examples of common repairs are patching walls and floors, painting, wallpapering, repairing roofs and gutters, and mending leaks. What is form 1040x However, repairs are sometimes treated as a permanent improvement and are not deductible. What is form 1040x See Permanent improvements , later, under Depreciating Your Home. What is form 1040x Security system. What is form 1040x   If you install a security system that protects all the doors and windows in your home, you can deduct the business part of the expenses you incur to maintain and monitor the system. What is form 1040x You also can take a depreciation deduction for the part of the cost of the security system relating to the business use of your home. What is form 1040x Utilities and services. What is form 1040x   Expenses for utilities and services, such as electricity, gas, trash removal, and cleaning services, are primarily personal expenses. What is form 1040x However, if you use part of your home for business, you can deduct the business part of these expenses. What is form 1040x Generally, the business percentage for utilities is the same as the percentage of your home used for business. What is form 1040x Telephone. What is form 1040x   The basic local telephone service charge, including taxes, for the first telephone line into your home (i. What is form 1040x e. What is form 1040x , landline) is a nondeductible personal expense. What is form 1040x However, charges for business long-distance phone calls on that line, as well as the cost of a second line into your home used exclusively for business, are deductible business expenses. What is form 1040x Do not include these expenses as a cost of using your home for business. What is form 1040x Deduct these charges separately on the appropriate form or schedule. What is form 1040x For example, if you file Schedule C (Form 1040), deduct these expenses on line 25, Utilities (instead of line 30, Expenses for business use of your home). What is form 1040x Depreciating Your Home If you own your home and qualify to deduct expenses for its business use, you can claim a deduction for depreciation. What is form 1040x Depreciation is an allowance for the wear and tear on the part of your home used for business. What is form 1040x You cannot depreciate the cost or value of the land. What is form 1040x You recover its cost when you sell or otherwise dispose of the property. What is form 1040x Before you figure your depreciation deduction, you need to know the following information. What is form 1040x The month and year you started using your home for business. What is form 1040x The adjusted basis and fair market value of your home (excluding land) at the time you began using it for business. What is form 1040x The cost of any improvements before and after you began using the property for business. What is form 1040x The percentage of your home used for business. What is form 1040x See Business Percentage , later. What is form 1040x Adjusted basis defined. What is form 1040x   The adjusted basis of your home is generally its cost, plus the cost of any permanent improvements you made to it, minus any casualty losses or depreciation deducted in earlier tax years. What is form 1040x For a discussion of adjusted basis, see Publication 551. What is form 1040x Permanent improvements. What is form 1040x   A permanent improvement increases the value of property, adds to its life, or gives it a new or different use. What is form 1040x Examples of improvements are replacing electric wiring or plumbing, adding a new roof or addition, paneling, or remodeling. What is form 1040x    You must carefully distinguish between repairs and improvements. What is form 1040x See Repairs , earlier, under Actual Expenses. What is form 1040x You also must keep accurate records of these expenses. What is form 1040x These records will help you decide whether an expense is a deductible or a capital (added to the basis) expense. What is form 1040x However, if you make repairs as part of an extensive remodeling or restoration of your home, the entire job is an improvement. What is form 1040x Example. What is form 1040x You buy an older home and fix up two rooms as a beauty salon. What is form 1040x You patch the plaster on the ceilings and walls, paint, repair the floor, install an outside door, and install new wiring, plumbing, and other equipment. What is form 1040x Normally, the patching, painting, and floor work are repairs and the other expenses are permanent improvements. What is form 1040x However, because the work gives your property a new use, the entire remodeling job is a permanent improvement and its cost is added to the basis of the property. What is form 1040x You cannot deduct any portion of it as a repair expense. What is form 1040x Adjusting for depreciation deducted in earlier years. What is form 1040x   Decrease the basis of your property by the depreciation you deducted, or could have deducted, on your tax returns under the method of depreciation you properly selected. What is form 1040x If you deducted less depreciation than you could have under the method you selected, decrease the basis by the amount you could have deducted under that method. What is form 1040x If you did not deduct any depreciation, decrease the basis by the amount you could have deducted. What is form 1040x   If you deducted more depreciation than you should have, decrease your basis by the amount you should have deducted, plus the part of the excess depreciation you deducted that actually decreased your tax liability for any year. What is form 1040x   If you deducted the incorrect amount of depreciation, see Publication 946. What is form 1040x Fair market value defined. What is form 1040x   The fair market value of your home is the price at which the property would change hands between a buyer and a seller, neither having to buy or sell, and both having reasonable knowledge of all necessary facts. What is form 1040x Sales of similar property, on or about the date you begin using your home for business, may be helpful in determining the property's fair market value. What is form 1040x Figuring the depreciation deduction for the current year. What is form 1040x   If you began using your home for business before 2013, continue to use the same depreciation method you used in past tax years. What is form 1040x   If you began using your home for business for the first time in 2013, depreciate the business part as nonresidential real property under the modified accelerated cost recovery system (MACRS). What is form 1040x Under MACRS, nonresidential real property is depreciated using the straight line method over 39 years. What is form 1040x For more information on MACRS and other methods of depreciation, see Publication 946. What is form 1040x   To figure the depreciation deduction, you must first figure the part of the cost of your home that can be depreciated (depreciable basis). What is form 1040x The depreciable basis is figured by multiplying the percentage of your home used for business by the smaller of the following. What is form 1040x The adjusted basis of your home (excluding land) on the date you began using your home for business. What is form 1040x The fair market value of your home (excluding land) on the date you began using your home for business. What is form 1040x Depreciation table. What is form 1040x   If 2013 was the first year you used your home for business, you can figure your 2013 depreciation for the business part of your home by using the appropriate percentage from the following table. What is form 1040x Table 2. What is form 1040x MACRS Percentage Table for 39-Year Nonresidential Real Property Month First Used for Business Percentage To Use 1 2. What is form 1040x 461% 2 2. What is form 1040x 247% 3 2. What is form 1040x 033% 4 1. What is form 1040x 819% 5 1. What is form 1040x 605% 6 1. What is form 1040x 391% 7 1. What is form 1040x 177% 8 0. What is form 1040x 963% 9 0. What is form 1040x 749% 10 0. What is form 1040x 535% 11 0. What is form 1040x 321% 12 0. What is form 1040x 107%   Multiply the depreciable basis of the business part of your home by the percentage from the table for the first month you use your home for business. What is form 1040x See Publication 946 for the percentages for the remaining tax years of the recovery period. What is form 1040x Example. What is form 1040x In May, George Miller began to use one room in his home exclusively and regularly to meet clients. What is form 1040x This room is 8% of the square footage of his home. What is form 1040x He bought the home in 2003 for $125,000. What is form 1040x He determined from his property tax records that his adjusted basis in the house (exclusive of land) is $115,000. What is form 1040x In May, the house had a fair market value of $165,000. What is form 1040x He multiplies his adjusted basis of $115,000 (which is less than the fair market value) by 8%. What is form 1040x The result is $9,200, his depreciable basis for the business part of the house. What is form 1040x George files his return based on the calendar year. What is form 1040x May is the 5th month of his tax year. What is form 1040x He multiplies his depreciable basis of $9,200 by 1. What is form 1040x 605% (. What is form 1040x 01605), the percentage from the table for the 5th month. What is form 1040x His depreciation deduction is $147. What is form 1040x 66. What is form 1040x Depreciating permanent improvements. What is form 1040x   Add the costs of permanent improvements made before you began using your home for business to the basis of your property. What is form 1040x Depreciate these costs as part of the cost of your home as explained earlier. What is form 1040x The costs of improvements made after you begin using your home for business (that affect the business part of your home, such as a new roof) are depreciated separately. What is form 1040x Multiply the cost of the improvement by the business-use percentage and depreciate the result over the recovery period that would apply to your home if you began using it for business at the same time as the improvement. What is form 1040x For improvements made this year, the recovery period is 39 years. What is form 1040x For the percentage to use for the first year, see Table 2, earlier. What is form 1040x For more information on recovery periods, see Publication 946. What is form 1040x Business Percentage To find the business percentage, compare the size of the part of your home that you use for business to your whole house. What is form 1040x Use the resulting percentage to figure the business part of the expenses for operating your entire home. What is form 1040x You can use any reasonable method to determine the business percentage. What is form 1040x The following are two commonly used methods for figuring the percentage. What is form 1040x Divide the area (length multiplied by the width) used for business by the total area of your home. What is form 1040x If the rooms in your home are all about the same size, you can divide the number of rooms used for business by the total number of rooms in your home. What is form 1040x Example 1. What is form 1040x Your office is 240 square feet (12 feet × 20 feet). What is form 1040x Your home is 1,200 square feet. What is form 1040x Your office is 20% (240 ÷ 1,200) of the total area of your home. What is form 1040x Your business percentage is 20%. What is form 1040x Example 2. What is form 1040x You use one room in your home for business. What is form 1040x Your home has 10 rooms, all about equal size. What is form 1040x Your office is 10% (1 ÷ 10) of the total area of your home. What is form 1040x Your business percentage is 10%. What is form 1040x Use lines 1-7 of Form 8829, or lines 1-3 on the Worksheet To Figure the Deduction for Business Use of Your Home (near the end of this publication) to figure your business percentage. What is form 1040x Deduction Limit If your gross income from the business use of your home equals or exceeds your total business expenses (including depreciation), you can deduct all your business expenses related to the use of your home. What is form 1040x If your gross income from the business use of your home is less than your total business expenses, your deduction for certain expenses for the business use of your home is limited. What is form 1040x Your deduction of otherwise nondeductible expenses, such as insurance, utilities, and depreciation of your home (with depreciation of your home taken last), that are allocable to the business, is limited to the gross income from the business use of your home minus the sum of the following. What is form 1040x The business part of expenses you could deduct even if you did not use your home for business (such as mortgage interest, real estate taxes, and casualty and theft losses that are allowable as itemized deductions on Schedule A (Form 1040)). What is form 1040x These expenses are discussed in detail under Actual Expenses , earlier. What is form 1040x The business expenses that relate to the business activity in the home (for example, business phone, supplies, and depreciation on equipment), but not to the use of the home itself. What is form 1040x If you are self-employed, do not include in (2) above your deduction for one-half of your self-employment tax. What is form 1040x Carryover of unallowed expenses. What is form 1040x   If your deductions are greater than the current year's limit, you can carry over the excess to the next year in which you use actual expenses. What is form 1040x They are subject to the deduction limit for that year, whether or not you live in the same home during that year. What is form 1040x Figuring the deduction limit and carryover. What is form 1040x   If you are an employee or a partner, or you file Schedule F (Form 1040), use the Worksheet To Figure the Deduction for Business Use of Your Home, near the end of this publication. What is form 1040x If you file Schedule C (Form 1040), figure your deduction limit and carryover on Form 8829. What is form 1040x Example. What is form 1040x You meet the requirements for deducting expenses for the business use of your home. What is form 1040x You use 20% of your home for business. What is form 1040x In 2013, your business expenses and the expenses for the business use of your home are deducted from your gross income in the following order. What is form 1040x    Gross income from business $6,000 Minus:   Deductible mortgage interest and real estate taxes (20%) 3,000 Business expenses not related to the use of your home (100%) (business phone, supplies, and depreciation on equipment) 2,000 Deduction limit $1,000 Minus other expenses allocable to business use of home:   Maintenance, insurance, and utilities (20%) 800 Depreciation allowed (20% = $1,600 allowable, but subject to balance of deduction limit) 200 Other expenses up to the deduction limit $1,000 Depreciation carryover to 2014 ($1,600 − $200) (subject to deduction limit in 2014) $1,400   You can deduct all of the business part of your deductible mortgage interest and real estate taxes ($3,000). What is form 1040x You also can deduct all of your business expenses not related to the use of your home ($2,000). What is form 1040x Additionally, you can deduct all of the business part of your expenses for maintenance, insurance, and utilities, because the total ($800) is less than the $1,000 deduction limit. What is form 1040x Your deduction for depreciation for the business use of your home is limited to $200 ($1,000 minus $800) because of the deduction limit. What is form 1040x You can carry over the $1,400 balance and add it to your depreciation for 2014, subject to your deduction limit in 2014. What is form 1040x More than one place of business. What is form 1040x   If part of the gross income from your trade or business is from the business use of part of your home and part is from a place other than your home, you must determine the part of your gross income from the business use of your home before you figure the deduction limit. What is form 1040x In making this determination, consider the time you spend at each location, the business investment in each location, and any other relevant facts and circumstances. What is form 1040x If your home office qualifies as your principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. What is form 1040x For more information on transportation costs, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. What is form 1040x Using the Simplified Method The simplified method is an alternative to the calculation, allocation, and substantiation of actual expenses. What is form 1040x In most cases, you will figure your deduction by multiplying $5, the prescribed rate, by the area of your home used for a qualified business use. What is form 1040x The area you use to figure your deduction is limited to 300 square feet. What is form 1040x See Simplified Amount , later, for information about figuring the amount of the deduction. What is form 1040x For more information about the simplified method, see Revenue Procedure 2013-13, 2013-06 I. What is form 1040x R. What is form 1040x B. What is form 1040x 478, available at www. What is form 1040x irs. What is form 1040x gov/irb/2013-06_IRB/ar09. What is form 1040x html. What is form 1040x Actual expenses and depreciation of your home. What is form 1040x   If you elect to use the simplified method, you cannot deduct any actual expenses for the business except for business expenses that are not related to the use of the home. What is form 1040x You also cannot deduct any depreciation (including any additional first-year depreciation) or section 179 expense for the portion of the home that is used for a qualified business use. What is form 1040x The depreciation deduction allowable for that portion of the home is deemed to be zero for a year you use the simplified method. What is form 1040x If you figure your deduction for business use of the home using actual expenses in a subsequent year, you will have to use the appropriate optional depreciation table for MACRS to figure your depreciation. What is form 1040x More information. What is form 1040x   For more information about claiming depreciation in a subsequent year, see Revenue Procedure 2013-13, 2013-06 I. What is form 1040x R. What is form 1040x B. What is form 1040x 478, available at www. What is form 1040x irs. What is form 1040x gov/irb/2013-06_IRB/ar09. What is form 1040x html. What is form 1040x See Publication 946 for the optional depreciation tables Although you cannot deduct any depreciation or section 179 expense for the portion of your home used for a qualified business use, you may still claim depreciation or the section 179 expense deduction on other assets used in the business (for example, furniture and equipment). What is form 1040x Expenses deductible without regard to business use. What is form 1040x   When using the simplified method, treat as personal expenses those business expenses related to the use of the home that are deductible without regard to whether there is a qualified business use of the home. What is form 1040x These expenses include mortgage interest, real estate taxes, and casualty losses, subject to any limitations. What is form 1040x See Where To Deduct , later. What is form 1040x If you also rent part of your home, you must still allocate these expenses between rental use and personal use (for this purpose, personal use includes business use reported using the simplified method). What is form 1040x No deduction of carryover of actual expenses. What is form 1040x   If you used actual expenses to figure your deduction for business use of the home in a prior year and your deduction was limited, you cannot deduct the disallowed amount carried over from the prior year during a year you figure your deduction using the simplified method. What is form 1040x Instead, you will continue to carry over the disallowed amount to the next year that you use actual expenses to figure your deduction. What is form 1040x Electing the Simplified Method You choose whether or not to figure your deduction using the simplified method each taxable year. What is form 1040x Make the election for a home by using the simplified method to figure the deduction for the qualified business use of that home on a timely filed, original federal income tax return. What is form 1040x An election for a taxable year, once made, is irrevocable. What is form 1040x A change from using the simplified method in one year to actual expenses in a succeeding taxable year, or vice-versa, is not a change in method of accounting and does not require the consent of the Commissioner. What is form 1040x Shared use. What is form 1040x   If you share your home with someone else who also uses the home in a business that qualifies for this deduction, each of you make your own election. What is form 1040x More than one qualified business use. What is form 1040x   If you conduct more than one business that qualifies for this deduction in your home, your election to use the simplified method applies to all your qualified business uses of that home. What is form 1040x More than one home. What is form 1040x   If you used more than one home during the year (for example, you moved during the year), you can elect to use the simplified method for only one of the homes. What is form 1040x You must figure the deduction for any other home using actual expenses. What is form 1040x Simplified Amount Your deduction for the qualified business use of a home is the sum of each amount you figure for a separate qualified business use of your home. What is form 1040x To figure your deduction for the business use of a home using the simplified method, you will need to know the following information for each qualified business use of the home. What is form 1040x The allowable area of your home used in conducting the business. What is form 1040x If you did not conduct the business for the entire year in the home or the area changed during the year, you will need to know the allowable area you used and the number of days you conducted the business for each month. What is form 1040x The gross income from the business use of your home. What is form 1040x The amount of the business expenses that are not related to the use of your home. What is form 1040x If the qualified business use is for a daycare facility that uses space in your home on a regular (but not exclusive) basis, you will also need to know the percentage of time that part of your home is used for daycare. What is form 1040x To figure the amount you can deduct for qualified business use of your home using the simplified method, follow these 3 steps. What is form 1040x Multiply the allowable area by $5 (or less than $5 if the qualified business use is for a daycare that uses space in your home on a regular, but not exclusive, basis). What is form 1040x See Allowable area and Space used regularly for daycare , later. What is form 1040x Subtract the expenses from the business that are not related to the use of the home from the gross income related to the business use of the home. What is form 1040x If these expenses are greater than the gross income from the business use of the home, then you cannot take a deduction for this business use of the home. What is form 1040x See Gross income limitation , later. What is form 1040x Take the smaller of the amounts from (1) and (2). What is form 1040x This is the amount you can deduct for this qualified business use of your home using the simplified method. What is form 1040x If you are an employee or a partner, or you use your home in your farming business and file Schedule F (Form 1040), you can use the Simplified Method Worksheet, near the end of this publication, to help you figure your deduction. What is form 1040x If you use your home in a trade or business and you file Schedule C (Form 1040), you will use the Simplified Method Worksheet in your Instructions for Schedule C to figure your deduction. What is form 1040x Allowable area. What is form 1040x   In most cases, the allowable area is the smaller of the actual area (in square feet) of your home used in conducting the business and 300 square feet. What is form 1040x Your allowable area may be smaller if you conducted the business as a qualified joint venture with your spouse, the area used by the business was shared with another qualified business use, you used the home for the business for only part of the year, or the area used by the business changed during the year. What is form 1040x You can use the Area Adjustment Worksheet (for simplified method), near the end of this publication, to help you figure your allowable area for a qualified business use. What is form 1040x Area used by a qualified joint venture. What is form 1040x   If the qualified business use of the home is also a qualified joint venture, you and your spouse will figure the deduction for the business use separately. What is form 1040x Split the actual area used in conducting business between you and your spouse in the same manner you split your other tax attributes. What is form 1040x Then, each spouse will figure the allowable area separately. What is form 1040x For more information about qualified joint ventures, see Qualified Joint Venture in the Instructions for Schedule C. What is form 1040x Shared use. What is form 1040x   If you share your home with someone else who uses the home to conduct business that also qualifies for this deduction, you may not include the same square feet to figure your deduction as the other person. What is form 1040x You must allocate the shared space between you and the other person in a reasonable manner. What is form 1040x Example. What is form 1040x Kristin and Lindsey are roommates. What is form 1040x Kristin uses 300 square feet of their home for a qualified business use. What is form 1040x Lindsey uses 200 square feet of their home for a separate qualified business use. What is form 1040x The qualified business uses share 100 square feet. What is form 1040x In addition to the portion that they do not share, Kristin and Lindsey can both claim 50 of the 100 square feet or divide the 100 square feet between them in any reasonable manner. What is form 1040x If divided evenly, Kristin could claim 250 square feet using the simplified method and Lindsey could claim 150 square feet. What is form 1040x More than one qualified business use. What is form 1040x   If you conduct more than one business qualifying for the deduction, you are limited to a maximum of 300 square feet for all of the businesses. What is form 1040x Allocate the actual square footage used (up to the maximum of 300 square feet) among your qualified business uses in a reasonable manner. What is form 1040x However, do not allocate more square feet to a qualified business use than you actually use for that business. What is form 1040x Rental use. What is form 1040x   The simplified method does not apply to rental use. What is form 1040x A rental use that qualifies for the deduction must be figured using actual expenses. What is form 1040x If the rental use and a qualified business use share the same area, you will have to allocate the actual area used between the two uses. What is form 1040x You cannot use the same area to figure a deduction for the qualified business use as you are using to figure the deduction for the rental use. What is form 1040x Part-year use or area changes. What is form 1040x   If your qualified business use was for a portion of the taxable year (for example, a seasonal business or a business that begins during the taxable year) or you changed the square footage of your qualified business use, your deduction is limited to the average monthly allowable square footage. What is form 1040x You calculate the average monthly allowable square footage by adding the amount of allowable square feet you used in each month and dividing the sum by 12. What is form 1040x When determining the average monthly allowable square footage, you cannot take more than 300 square feet into account for any one month. What is form 1040x Additionally, if your qualified business use was less than 15 days in a month, you must use -0- for that month. What is form 1040x Example 1. What is form 1040x Andy files his federal income tax return on a calendar year basis. What is form 1040x On July 20, he began using 420 square feet of his home for a qualified business use. What is form 1040x He continued to use the 420 square feet until the end of the year. What is form 1040x His average monthly allowable square footage is 125 square feet, which is figured using 300 square feet for each month August through December divided by the number of months in the taxable year ((0 + 0 + 0 + 0 + 0 + 0 + 0 + 300 + 300 + 300 + 300 + 300)/12). What is form 1040x Example 2. What is form 1040x Amy files her federal income tax return on a calendar year basis. What is form 1040x On April 20, she began using 100 square feet of her home for a qualified business use. What is form 1040x On August 5, she expanded the area of her qualified use to 330 square feet. What is form 1040x Amy continued to use the 330 square feet until the end of the year. What is form 1040x Her average monthly allowable square footage is 150 square feet, which is figured using 100 square feet for May through July and 300 square feet for August through December divided by the number of months in the taxable year ((0 + 0 + 0 + 0 + 100 + 100 +100 + 300 + 300 + 300 + 300 + 300)/12). What is form 1040x Gross income limitation. What is form 1040x   Your deduction for business use of the home is limited to an amount equal to the gross income derived from the qualified business use of the home reduced by the business deductions that are unrelated to the use of your home. What is form 1040x If the business deductions that are unrelated to the use of your home are greater than the gross income derived from the qualified business use of your home, then you cannot take a deduction for this qualified business use of your home. What is form 1040x Business expenses not related to use of the home. What is form 1040x   These expenses relate to the business activity in the home, but not to the use of the home itself. What is form 1040x You can still deduct business expenses that are unrelated to the use of the home. What is form 1040x See Where To Deduct , later. What is form 1040x Examples of business expenses that are unrelated to the use of the home are advertising, wages, supplies, dues, and depreciation for equipment. What is form 1040x Space used regularly for daycare. What is form 1040x   If you do not use the area of your home exclusively for daycare, you must reduce the prescribed rate (maximum $5 per square foot) before figuring your deduction. What is form 1040x The reduced rate will equal the prescribed rate times a fraction. What is form 1040x The numerator of the fraction is the number of hours that the space was used during the year for daycare and the denominator is the total number of hours during the year that the space was available for all uses. What is form 1040x You can use the Daycare Facility Worksheet (for simplified method), near the end of this publication, to help you figure the reduced rate. What is form 1040x    If you used at least 300 square feet for daycare regularly and exclusively during the year, then you do not need to reduce the prescribed rate or complete the Daycare Facility Worksheet. What is form 1040x Daycare Facility If you use space in your home on a regular basis for providing daycare, you may be able to claim a deduction for that part of your home even if you use the same space for nonbusiness purposes. What is form 1040x To qualify for this exception to the exclusive use rule, you must meet both of the following requirements. What is form 1040x You must be in the trade or business of providing daycare for children, persons age 65 or older, or persons who are physically or mentally unable to care for themselves. What is form 1040x You must have applied for, been granted, or be exempt from having, a license, certification, registration, or approval as a daycare center or as a family or group daycare home under state law. What is form 1040x You do not meet this requirement if your application was rejected or your license or other authorization was revoked. What is form 1040x Figuring the deduction. What is form 1040x   If you elect to use the simplified method for your home, figure your deduction as described earlier in Using the Simplified Method under Figuring the Deduction. What is form 1040x    If you are figuring your deduction using actual expenses and you regularly use part of your home for daycare, figure what part is used for daycare, as explained in Business Percentage , earlier, under Figuring the Deduction. What is form 1040x If you also use that part exclusively for daycare, deduct all the allocable expenses, subject to the deduction limit, as explained earlier. What is form 1040x   If the use of part of your home as a daycare facility is regular, but not exclusive, you must figure the percentage of time that part of your home is used for daycare. What is form 1040x A room that is available for use throughout each business day and that you regularly use in your business is considered to be used for daycare throughout each business day. What is form 1040x You do not have to keep records to show the specific hours the area was used for business. What is form 1040x You can use the area occasionally for personal reasons. What is form 1040x However, a room you use only occasionally for business does not qualify for the deduction. What is form 1040x To find the percentage of time you actually use your home for business, compare the total time used for business to the total time that part of your home can be used for all purposes. What is form 1040x You can compare the hours of business use in a week with the number of hours in a week (168). What is form 1040x Or you can compare the hours of business use for the year with the number of hours in the year (8,760 in 2013). What is form 1040x If you started or stopped using your home for daycare in 2013, you must prorate the number of hours based on the number of days the home was available for daycare. What is form 1040x Example 1. What is form 1040x Mary Lake used her basement to operate a daycare business for children. What is form 1040x She figures the business percentage of the basement as follows. What is form 1040x Square footage of the basement Square footage of her home = 1,600 3,200 = 50%           She used the basement for daycare an average of 12 hours a day, 5 days a week, for 50 weeks a year. What is form 1040x During the other 12 hours a day, the family could use the basement. What is form 1040x She figures the percentage of time the basement was used for daycare as follows. What is form 1040x Number of hours used for daycare (12 x 5 x 50) Total number of hours in the year (24 x 365) = 3,000 8,760 = 34. What is form 1040x 25%           Mary can deduct 34. What is form 1040x 25% of any direct expenses for the basement. What is form 1040x However, because her indirect expenses are for the entire house, she can deduct only 17. What is form 1040x 13% of the indirect expenses. What is form 1040x She figures the percentage for her indirect expenses as follows. What is form 1040x Business percentage of the basement 50% Multiplied by: Percentage of time used for daycare × 34. What is form 1040x 25% Percentage for indirect expenses 17. What is form 1040x 13% Mary completes Form 8829, Part I, figuring the percentage of her home used for business, including the percentage of time the basement was used. What is form 1040x In Part II, Mary figures her deductible expenses. What is form 1040x She uses the following information to complete Part II. What is form 1040x Gross income from her daycare business $50,000 Expenses not related to the business use of the home $25,000 Tentative profit $25,000 Rent $8,400 Utilities $850 Painting the basement $500 Mary enters her tentative profit, $25,000, on line 8. What is form 1040x (This figure is the same as the amount on line 29 of her Schedule C (Form 1040). What is form 1040x ) The expenses she paid for rent and utilities relate to her entire home. What is form 1040x Therefore, she enters the amount paid for rent on line 18, column (b), and the amount paid for utilities on line 20, column (b). What is form 1040x She shows the total of these expenses on line 22, column (b). What is form 1040x For line 23, she multiplies the amount on line 22, column (b) by the percentage on line 7 and enters the result, $1,585. What is form 1040x Mary paid $500 to have the basement painted. What is form 1040x The painting is a direct expense. What is form 1040x However, because she did not use the basement exclusively for daycare, she must multiply $500 by the percentage of time the basement was used for daycare (34. What is form 1040x 25% – line 6). What is form 1040x She enters $171 (34. What is form 1040x 25% × $500) on line 19, column (a). What is form 1040x She adds line 22, column (a), and line 23 and enters $1,756 ($171 + $1,585) on line 25. What is form 1040x This is less than her deduction limit (line 15), so she can deduct the entire amount. What is form 1040x She follows the instructions to complete the rest of Part II and enters $1,756 on lines 33 and 35. What is form 1040x She then carries the $1,756 to line 30 of her Schedule C (Form 1040). What is form 1040x Example 2. What is form 1040x Assume the same facts as in Example 1 except that Mary also has another room that was available each business day for children to take naps in. What is form 1040x Although she did not keep a record of the number of hours the room was actually used for naps, it was used for part of each business day. What is form 1040x Since the room was available for business use during regular operating hours each business day and was used regularly in the business, it is considered used for daycare throughout each business day. What is form 1040x The basement and room are 60% of the total area of her home. What is form 1040x In figuring her expenses, 34. What is form 1040x 25% of any direct expenses for the basement and room are deductible. What is form 1040x In addition, 20. What is form 1040x 55% (34. What is form 1040x 25% × 60%) of her indirect expenses are deductible. What is form 1040x Example 3. What is form 1040x Assume the same facts as in Example 1 except that Mary stopped using her home for a daycare facility on June 24, 2013. What is form 1040x She used the basement for daycare an average of 12 hours a day, 5 days a week, but for only 25 weeks of the year. What is form 1040x During the other 12 hours a day, the family could still use the basement. What is form 1040x She figures the percentage of time the basement was used for business as follows. What is form 1040x Number of hours used for daycare (12 x 5 x 25) Total number of hours during period used (24 x 175) = 1,500 4,200 = 35. What is form 1040x 71%           Mary can deduct 35. What is form 1040x 71% of any direct expenses for the basement. What is form 1040x However, because her indirect expenses are for the entire house, she can deduct only 17. What is form 1040x 86% of the indirect expenses. What is form 1040x She figures the percentage for her indirect expenses as follows. What is form 1040x Business percentage of the basement 50% Multiplied by: Percentage of time used for daycare × 35. What is form 1040x 71% Percentage for indirect expenses 17. What is form 1040x 86% Meals. What is form 1040x   If you provide food for your daycare recipients, do not include the expense as a cost of using your home for business. What is form 1040x Claim it as a separate deduction on your Schedule C (Form 1040). What is form 1040x You can never deduct the cost of food consumed by you or your family. What is form 1040x You can deduct as a business expense 100% of the actual cost of food consumed by your daycare recipients (see Standard meal and snack rates , later, for an optional method for eligible children) and generally only 50% of the cost of food consumed by your employees. What is form 1040x However, you can deduct 100% of the cost of food consumed by your employees if its value can be excluded from their wages as a de minimis fringe benefit. What is form 1040x For more information on meals that meet these requirements, see Meals in chapter 2 of Publication 15-B, Employer's Tax Guide to Fringe Benefits. What is form 1040x   If you deduct the actual cost of food for your daycare business, keep a separate record (with receipts) of your family's food costs. What is form 1040x   Reimbursements you receive from a sponsor under the Child and Adult Care Food Program of the Department of Agriculture are taxable only to the extent they exceed your expenses for food for eligible children. What is form 1040x If your reimbursements are more than your expenses for food, show the difference as income in Part I of Schedule C (Form 1040). What is form 1040x If your food expenses are greater than the reimbursements, show the difference as an expense in Part V of Schedule C (Form 1040). What is form 1040x Do not include payments or expenses for your own children if they are eligible for the program. What is form 1040x Follow this procedure even if you receive a Form 1099-MISC, Miscellaneous Income, reporting a payment from the sponsor. What is form 1040x Standard meal and snack rates. What is form 1040x   If you qualify as a family daycare provider, you can use the standard meal and snack rates, instead of actual costs, to compute the deductible cost of meals and snacks provided to eligible children. What is form 1040x For these purposes: A family daycare provider is a person engaged in the business of providing family daycare. What is form 1040x Family daycare is childcare provided to eligible children in the home of the family daycare provider. What is form 1040x The care must be non-medical, not involve a transfer of legal custody, and generally last less than 24 hours each day. What is form 1040x Eligible children are minor children receiving family daycare in the home of the family daycare provider. What is form 1040x Eligible children do not include children who are full-time or part-time residents in the home where the childcare is provided or children whose parents or guardians are residents of the same home. What is form 1040x Eligible children do not include children who receive daycare services for personal reasons of the provider. What is form 1040x For example, if a provider provides daycare services for a relative as a favor to that relative, that child is not an eligible child. What is form 1040x   You can compute the deductible cost of each meal and snack you actually purchased and served to an eligible child during the time period you provided family daycare using the standard meal and snack rates shown in Table 3, later. What is form 1040x You can use the standard meal and snack rates for a maximum of one breakfast, one lunch, one dinner, and three snacks per eligible child per day. What is form 1040x If you receive reimbursement for a particular meal or snack, you can deduct only the portion of the applicable standard meal or snack rate that is more than the amount of the reimbursement. What is form 1040x   You can use either the standard meal and snack rates or actual costs to calculate the deductible cost of food provided to eligible children in the family daycare for any particular tax year. What is form 1040x If you choose to use the standard meal and snack rates for a particular tax year, you must use the rates for all your deductible food costs for eligible children during that tax year. What is form 1040x However, if you use the standard meal and snack rates in any tax year, you can use actual costs to compute the deductible cost of food in any other tax year. What is form 1040x   If you use the standard meal and snack rates, you must maintain records to substantiate the computation of the total amount deducted for the cost of food provided to eligible children. What is form 1040x The records kept should include the name of each child, dates and hours of attendance in the daycare, and the type and quantity of meals and snacks served. What is form 1040x This information can be recorded in a log similar to the one shown in Exhibit A, near the end of this publication. What is form 1040x   The standard meal and snack rates include beverages, but do not include non-food supplies used for food preparation, service, or storage, such as containers, paper products, or utensils. What is form 1040x These expenses can be claimed as a separate deduction on your Schedule C (Form 1040). What is form 1040x     Table 3. What is form 1040x Standard Meal and Snack Rates1 Location of Family Daycare Provider Breakfast Lunch Dinner Snack States other than Alaska an
Español

Oops! We can't find the file

Official information and services from the U.S. government

We're sorry, but the page you're looking for might have been removed, had its name changed, or is temporarily unavailable.

What should you do?

  • If you typed the page url, check the spelling.
  • Go to our home page and browse through our topics for the information you want.
  • Go to our site index, and look through the alphabetical listing for links to the page you want.
  • If you need help finding government information, please contact us.
  • Use our search engine to find the information you want.

The What Is Form 1040x

What is form 1040x 3. What is form 1040x   Personal Exemptions and Dependents Table of Contents What's New Introduction Useful Items - You may want to see: ExemptionsPersonal Exemptions Exemptions for Dependents Qualifying Child Qualifying Relative Phaseout of Exemptions Social Security Numbers for DependentsBorn and died in 2013. What is form 1040x Taxpayer identification numbers for aliens. What is form 1040x Taxpayer identification numbers for adoptees. What is form 1040x What's New Exemption amount. What is form 1040x  The amount you can deduct for each exemption has increased. What is form 1040x It was $3,800 for 2012. What is form 1040x It is $3,900 for 2013. What is form 1040x Exemption phaseout. What is form 1040x  You lose at least part of the benefit of your exemptions if your adjusted gross income is more than a certain amount. What is form 1040x For 2013, this amount is $150,000 for a married individual filing a separate return; $250,000 for a single individual; $275,000 for a head of household; and $300,000 for married individuals filing jointly or a qualifying widow(er). What is form 1040x See Phaseout of Exemptions , later. What is form 1040x Introduction This chapter discusses the following topics. What is form 1040x Personal exemptions — You generally can take one for yourself and, if you are married, one for your spouse. What is form 1040x Exemptions for dependents — You generally can take an exemption for each of your dependents. What is form 1040x A dependent is your qualifying child or qualifying relative. What is form 1040x If you are entitled to claim an exemption for a dependent, that dependent cannot claim a personal exemption on his or her own tax return. What is form 1040x Phaseout of exemptions — Your deduction is reduced if your adjusted gross income is more than a certain amount. What is form 1040x Social security number (SSN) requirement for dependents — You must list the SSN of any dependent for whom you claim an exemption. What is form 1040x Deduction. What is form 1040x   Exemptions reduce your taxable income. What is form 1040x You can deduct $3,900 for each exemption you claim in 2013. What is form 1040x But you may lose at least part of the dollar amount of your exemptions if your adjusted gross income is more than a certain amount. What is form 1040x See Phaseout of Exemptions , later. What is form 1040x How to claim exemptions. What is form 1040x    How you claim an exemption on your tax return depends on which form you file. What is form 1040x    If you file Form 1040EZ, the exemption amount is combined with the standard deduction amount and entered on line 5. What is form 1040x    If you file Form 1040A, complete lines 6a through 6d. What is form 1040x The total number of exemptions you can claim is the total in the box on line 6d. What is form 1040x Also complete line 26. What is form 1040x   If you file Form 1040, complete lines 6a through 6d. What is form 1040x The total number of exemptions you can claim is the total in the box on line 6d. What is form 1040x Also complete line 42. What is form 1040x Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information Form (and Instructions) 2120 Multiple Support Declaration 8332 Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent Exemptions There are two types of exemptions you may be able to take: Personal exemptions for yourself and your spouse, and Exemptions for dependents (dependency exemptions). What is form 1040x While each is worth the same amount ($3,900 for 2013), different rules apply to each type. What is form 1040x Personal Exemptions You are generally allowed one exemption for yourself. What is form 1040x If you are married, you may be allowed one exemption for your spouse. What is form 1040x These are called personal exemptions. What is form 1040x Your Own Exemption You can take one exemption for yourself unless you can be claimed as a dependent by another taxpayer. What is form 1040x If another taxpayer is entitled to claim you as a dependent, you cannot take an exemption for yourself even if the other taxpayer does not actually claim you as a dependent. What is form 1040x Your Spouse's Exemption Your spouse is never considered your dependent. What is form 1040x Joint return. What is form 1040x   On a joint return you can claim one exemption for yourself and one for your spouse. What is form 1040x Separate return. What is form 1040x   If you file a separate return, you can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer. What is form 1040x This is true even if the other taxpayer does not actually claim your spouse as a dependent. What is form 1040x You can claim an exemption for your spouse even if he or she is a nonresident alien; in that case, your spouse must have no gross income for U. What is form 1040x S. What is form 1040x tax purposes, must not be filing a return, and must not be the dependent of another taxpayer. What is form 1040x Death of spouse. What is form 1040x   If your spouse died during the year and you file a joint return for yourself and your deceased spouse, you generally can claim your spouse's exemption under the rules just explained in Joint return . What is form 1040x If you file a separate return for the year, you may be able to claim your spouse's exemption under the rules just described in Separate return . What is form 1040x   If you remarried during the year, you cannot take an exemption for your deceased spouse. What is form 1040x   If you are a surviving spouse without gross income and you remarry in the year your spouse died, you can be claimed as an exemption on both the final separate return of your deceased spouse and the separate return of your new spouse for that year. What is form 1040x If you file a joint return with your new spouse, you can be claimed as an exemption only on that return. What is form 1040x Divorced or separated spouse. What is form 1040x   If you obtained a final decree of divorce or separate maintenance during the year, you cannot take your former spouse's exemption. What is form 1040x This rule applies even if you provided all of your former spouse's support. What is form 1040x Exemptions for Dependents You are allowed one exemption for each person you can claim as a dependent. What is form 1040x You can claim an exemption for a dependent even if your dependent files a return. What is form 1040x The term “dependent” means: A qualifying child, or A qualifying relative. What is form 1040x The terms “ qualifying child ” and “ qualifying relative ” are defined later. What is form 1040x You can claim an exemption for a qualifying child or qualifying relative only if these three tests are met. What is form 1040x Dependent taxpayer test. What is form 1040x Joint return test. What is form 1040x Citizen or resident test. What is form 1040x These three tests are explained in detail later. What is form 1040x All the requirements for claiming an exemption for a dependent are summarized in Table 3-1. What is form 1040x Table 3-1. What is form 1040x Overview of the Rules for Claiming an Exemption for a Dependent Caution. What is form 1040x This table is only an overview of the rules. What is form 1040x For details, see the rest of this chapter. What is form 1040x You cannot claim any dependents if you (or your spouse, if filing jointly) could be claimed as a dependent by another taxpayer. What is form 1040x   You cannot claim a married person who files a joint return as a dependent unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid. What is form 1040x   You cannot claim a person as a dependent unless that person is a U. What is form 1040x S. What is form 1040x citizen, U. What is form 1040x S. What is form 1040x resident alien, U. What is form 1040x S. What is form 1040x national, or a resident of Canada or Mexico. What is form 1040x 1  You cannot claim a person as a dependent unless that person is your qualifying child or qualifying relative. What is form 1040x   Tests To Be a Qualifying Child   Tests To Be a Qualifying Relative The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. What is form 1040x   The child must be (a) under age 19 at the end of the year and younger than you (or your spouse, if filing jointly), (b) under age 24 at the end of the year, a student, and younger than you (or your spouse, if filing jointly), or (c) any age if permanently and totally disabled. What is form 1040x   The child must have lived with you for more than half of the year. What is form 1040x 2  The child must not have provided more than half of his or her own support for the year. What is form 1040x   The child is not filing a joint return for the year (unless that return is filed only to get a refund of income tax withheld or estimated tax paid). What is form 1040x  If the child meets the rules to be a qualifying child of more than one person, only one person can actually treat the child as a qualifying child. What is form 1040x See the Special Rule for Qualifying Child of More Than One Person to find out which person is the person entitled to claim the child as a qualifying child. What is form 1040x   The person cannot be your qualifying child or the qualifying child of any other taxpayer. What is form 1040x   The person either (a) must be related to you in one of the ways listed under Relatives who do not have to live with you , or (b) must live with you all year as a member of your household2 (and your relationship must not violate local law). What is form 1040x   The person's gross income for the year must be less than $3,900. What is form 1040x 3  You must provide more than half of the person's total support for the year. What is form 1040x 4  1There is an exception for certain adopted children. What is form 1040x 2There are exceptions for temporary absences, children who were born or died during the year, children of divorced or separated parents (or parents who live apart), and kidnapped children. What is form 1040x 3There is an exception if the person is disabled and has income from a sheltered workshop. What is form 1040x 4There are exceptions for multiple support agreements, children of divorced or separated parents (or parents who live apart), and kidnapped children. What is form 1040x Dependent not allowed a personal exemption. What is form 1040x If you can claim an exemption for your dependent, the dependent cannot claim his or her own personal exemption on his or her own tax return. What is form 1040x This is true even if you do not claim the dependent's exemption on your return. What is form 1040x It is also true if the dependent's exemption on your return is reduced or eliminated under the phaseout rule described under Phaseout of Exemptions, later. What is form 1040x Housekeepers, maids, or servants. What is form 1040x   If these people work for you, you cannot claim exemptions for them. What is form 1040x Child tax credit. What is form 1040x   You may be entitled to a child tax credit for each qualifying child who was under age 17 at the end of the year if you claimed an exemption for that child. What is form 1040x For more information, see chapter 34. What is form 1040x Dependent Taxpayer Test If you can be claimed as a dependent by another person, you cannot claim anyone else as a dependent. What is form 1040x Even if you have a qualifying child or qualifying relative, you cannot claim that person as a dependent. What is form 1040x If you are filing a joint return and your spouse can be claimed as a dependent by someone else, you and your spouse cannot claim any dependents on your joint return. What is form 1040x Joint Return Test You generally cannot claim a married person as a dependent if he or she files a joint return. What is form 1040x Exception. What is form 1040x   You can claim an exemption for a person who files a joint return if that person and his or her spouse file the joint return only to claim a refund of income tax withheld or estimated tax paid. What is form 1040x Example 1—child files joint return. What is form 1040x You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. What is form 1040x He earned $25,000 for the year. What is form 1040x The couple files a joint return. What is form 1040x You cannot take an exemption for your daughter. What is form 1040x Example 2—child files joint return only as claim for refund of withheld tax. What is form 1040x Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. What is form 1040x Neither is required to file a tax return. What is form 1040x They do not have a child. What is form 1040x Taxes were taken out of their pay so they filed a joint return only to get a refund of the withheld taxes. What is form 1040x The exception to the joint return test applies, so you are not disqualified from claiming an exemption for each of them just because they file a joint return. What is form 1040x You can claim exemptions for each of them if all the other tests to do so are met. What is form 1040x Example 3—child files joint return to claim American opportunity credit. What is form 1040x The facts are the same as in Example 2 except no taxes were taken out of your son's pay. What is form 1040x He and his wife are not required to file a tax return. What is form 1040x However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. What is form 1040x Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to get a refund of income tax withheld or estimated tax paid. What is form 1040x The exception to the joint return test does not apply, so you cannot claim an exemption for either of them. What is form 1040x Citizen or Resident Test You cannot claim a person as a dependent unless that person is a U. What is form 1040x S. What is form 1040x citizen, U. What is form 1040x S. What is form 1040x resident alien, U. What is form 1040x S. What is form 1040x national, or a resident of Canada or Mexico. What is form 1040x However, there is an exception for certain adopted children, as explained next. What is form 1040x Exception for adopted child. What is form 1040x   If you are a U. What is form 1040x S. What is form 1040x citizen or U. What is form 1040x S. What is form 1040x national who has legally adopted a child who is not a U. What is form 1040x S. What is form 1040x citizen, U. What is form 1040x S. What is form 1040x resident alien, or U. What is form 1040x S. What is form 1040x national, this test is met if the child lived with you as a member of your household all year. What is form 1040x This exception also applies if the child was lawfully placed with you for legal adoption. What is form 1040x Child's place of residence. What is form 1040x   Children usually are citizens or residents of the country of their parents. What is form 1040x   If you were a U. What is form 1040x S. What is form 1040x citizen when your child was born, the child may be a U. What is form 1040x S. What is form 1040x citizen and meet this test even if the other parent was a nonresident alien and the child was born in a foreign country. What is form 1040x Foreign students' place of residence. What is form 1040x   Foreign students brought to this country under a qualified international education exchange program and placed in American homes for a temporary period generally are not U. What is form 1040x S. What is form 1040x residents and do not meet this test. What is form 1040x You cannot claim an exemption for them. What is form 1040x However, if you provided a home for a foreign student, you may be able to take a charitable contribution deduction. What is form 1040x See Expenses Paid for Student Living With You in chapter 24. What is form 1040x U. What is form 1040x S. What is form 1040x national. What is form 1040x   A U. What is form 1040x S. What is form 1040x national is an individual who, although not a U. What is form 1040x S. What is form 1040x citizen, owes his or her allegiance to the United States. What is form 1040x U. What is form 1040x S. What is form 1040x nationals include American Samoans and Northern Mariana Islanders who chose to become U. What is form 1040x S. What is form 1040x nationals instead of U. What is form 1040x S. What is form 1040x citizens. What is form 1040x Qualifying Child Five tests must be met for a child to be your qualifying child. What is form 1040x The five tests are: Relationship, Age, Residency, Support, and Joint return. What is form 1040x These tests are explained next. What is form 1040x If a child meets the five tests to be the qualifying child of more than one person, a special rule applies to determine which person can actually treat the child as a qualifying child. What is form 1040x See Special Rule for Qualifying Child of More Than One Person, later. What is form 1040x Relationship Test To meet this test, a child must be: Your son, daughter, stepchild, foster child, or a descendant (for example, your grandchild) of any of them, or Your brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant (for example, your niece or nephew) of any of them. What is form 1040x Adopted child. What is form 1040x   An adopted child is always treated as your own child. What is form 1040x The term “adopted child” includes a child who was lawfully placed with you for legal adoption. What is form 1040x Foster child. What is form 1040x   A foster child is an individual who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. What is form 1040x Age Test To meet this test, a child must be: Under age 19 at the end of the year and younger than you (or your spouse, if filing jointly), A student under age 24 at the end of the year and younger than you (or your spouse, if filing jointly), or Permanently and totally disabled at any time during the year, regardless of age. What is form 1040x Example. What is form 1040x Your son turned 19 on December 10. What is form 1040x Unless he was permanently and totally disabled or a student, he does not meet the age test because, at the end of the year, he was not under age 19. What is form 1040x Child must be younger than you or spouse. What is form 1040x   To be your qualifying child, a child who is not permanently and totally disabled must be younger than you. What is form 1040x However, if you are married filing jointly, the child must be younger than you or your spouse but does not have to be younger than both of you. What is form 1040x Example 1—child not younger than you or spouse. What is form 1040x Your 23-year-old brother, who is a student and unmarried, lives with you and your spouse. What is form 1040x He is not disabled. What is form 1040x Both you and your spouse are 21 years old, and you file a joint return. What is form 1040x Your brother is not your qualifying child because he is not younger than you or your spouse. What is form 1040x Example 2—child younger than your spouse but not younger than you. What is form 1040x The facts are the same as in Example 1 except your spouse is 25 years old. What is form 1040x Because your brother is younger than your spouse, and you and your spouse are filing a joint return, your brother is your qualifying child, even though he is not younger than you. What is form 1040x Student defined. What is form 1040x   To qualify as a student, your child must be, during some part of each of any 5 calendar months of the year: A full-time student at a school that has a regular teaching staff, course of study, and a regularly enrolled student body at the school, or A student taking a full-time, on-farm training course given by a school described in (1), or by a state, county, or local government agency. What is form 1040x The 5 calendar months do not have to be consecutive. What is form 1040x Full-time student. What is form 1040x   A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance. What is form 1040x School defined. What is form 1040x   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. What is form 1040x However, an on-the-job training course, correspondence school, or school offering courses only through the Internet does not count as a school. What is form 1040x Vocational high school students. What is form 1040x   Students who work on “co-op” jobs in private industry as a part of a school's regular course of classroom and practical training are considered full-time students. What is form 1040x Permanently and totally disabled. What is form 1040x   Your child is permanently and totally disabled if both of the following apply. What is form 1040x He or she cannot engage in any substantial gainful activity because of a physical or mental condition. What is form 1040x A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. What is form 1040x Residency Test To meet this test, your child must have lived with you for more than half the year. What is form 1040x There are exceptions for temporary absences, children who were born or died during the year, kidnapped children, and children of divorced or separated parents. What is form 1040x Temporary absences. What is form 1040x   Your child is considered to have lived with you during periods of time when one of you, or both, are temporarily absent due to special circumstances such as: Illness, Education, Business, Vacation, or Military service. What is form 1040x Your child is also considered to have lived with you during any required hospital stay following birth, as long as the child would have lived with you during that time but for the hospitalization. What is form 1040x Death or birth of child. What is form 1040x   A child who was born or died during the year is treated as having lived with you more than half of the year if your home was the child's home more than half of the time he or she was alive during the year. What is form 1040x Child born alive. What is form 1040x   You may be able to claim an exemption for a child born alive during the year, even if the child lived only for a moment. What is form 1040x State or local law must treat the child as having been born alive. What is form 1040x There must be proof of a live birth shown by an official document, such as a birth certificate. What is form 1040x The child must be your qualifying child or qualifying relative, and all the other tests to claim an exemption for a dependent must be met. What is form 1040x Stillborn child. What is form 1040x   You cannot claim an exemption for a stillborn child. What is form 1040x Kidnapped child. What is form 1040x   You may be able to treat your child as meeting the residency test even if the child has been kidnapped. What is form 1040x See Publication 501 for details. What is form 1040x Children of divorced or separated parents (or parents who live apart). What is form 1040x   In most cases, because of the residency test, a child of divorced or separated parents is the qualifying child of the custodial parent. What is form 1040x However, the child will be treated as the qualifying child of the noncustodial parent if all four of the following statements are true. What is form 1040x The parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Lived apart at all times during the last 6 months of the year, whether or not they are or were married. What is form 1040x The child received over half of his or her support for the year from the parents. What is form 1040x The child is in the custody of one or both parents for more than half of the year. What is form 1040x Either of the following statements is true. What is form 1040x The custodial parent signs a written declaration, discussed later, that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches this written declaration to his or her return. What is form 1040x (If the decree or agreement went into effect after 1984 and before 2009, see Post-1984 and pre-2009 divorce decree or separation agreement , later. What is form 1040x If the decree or agreement went into effect after 2008, see Post-2008 divorce decree or separation agreement , later. What is form 1040x ) A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2013 states that the noncustodial parent can claim the child as a dependent, the decree or agreement was not changed after 1984 to say the noncustodial parent cannot claim the child as a dependent, and the noncustodial parent provides at least $600 for the child's support during the year. What is form 1040x Custodial parent and noncustodial parent. What is form 1040x   The custodial parent is the parent with whom the child lived for the greater number of nights during the year. What is form 1040x The other parent is the noncustodial parent. What is form 1040x   If the parents divorced or separated during the year and the child lived with both parents before the separation, the custodial parent is the one with whom the child lived for the greater number of nights during the rest of the year. What is form 1040x   A child is treated as living with a parent for a night if the child sleeps: At that parent's home, whether or not the parent is present, or In the company of the parent, when the child does not sleep at a parent's home (for example, the parent and child are on vacation together). What is form 1040x Equal number of nights. What is form 1040x   If the child lived with each parent for an equal number of nights during the year, the custodial parent is the parent with the higher adjusted gross income (AGI). What is form 1040x December 31. What is form 1040x   The night of December 31 is treated as part of the year in which it begins. What is form 1040x For example, December 31, 2013, is treated as part of 2013. What is form 1040x Emancipated child. What is form 1040x   If a child is emancipated under state law, the child is treated as not living with either parent. What is form 1040x See Examples 5 and 6. What is form 1040x Absences. What is form 1040x   If a child was not with either parent on a particular night (because, for example, the child was staying at a friend's house), the child is treated as living with the parent with whom the child normally would have lived for that night, except for the absence. What is form 1040x But if it cannot be determined with which parent the child normally would have lived or if the child would not have lived with either parent that night, the child is treated as not living with either parent that night. What is form 1040x Parent works at night. What is form 1040x   If, due to a parent's nighttime work schedule, a child lives for a greater number of days, but not nights, with the parent who works at night, that parent is treated as the custodial parent. What is form 1040x On a school day, the child is treated as living at the primary residence registered with the school. What is form 1040x Example 1—child lived with one parent for a greater number of nights. What is form 1040x You and your child’s other parent are divorced. What is form 1040x In 2013, your child lived with you 210 nights and with the other parent 155 nights. What is form 1040x You are the custodial parent. What is form 1040x Example 2—child is away at camp. What is form 1040x In 2013, your daughter lives with each parent for alternate weeks. What is form 1040x In the summer, she spends 6 weeks at summer camp. What is form 1040x During the time she is at camp, she is treated as living with you for 3 weeks and with her other parent, your ex-spouse, for 3 weeks because this is how long she would have lived with each parent if she had not attended summer camp. What is form 1040x Example 3—child lived same number of nights with each parent. What is form 1040x Your son lived with you 180 nights during the year and lived the same number of nights with his other parent, your ex-spouse. What is form 1040x Your AGI is $40,000. What is form 1040x Your ex-spouse's AGI is $25,000. What is form 1040x You are treated as your son's custodial parent because you have the higher AGI. What is form 1040x Example 4—child is at parent’s home but with other parent. What is form 1040x Your son normally lives with you during the week and with his other parent, your ex-spouse, every other weekend. What is form 1040x You become ill and are hospitalized. What is form 1040x The other parent lives in your home with your son for 10 consecutive days while you are in the hospital. What is form 1040x Your son is treated as living with you during this 10-day period because he was living in your home. What is form 1040x Example 5—child emancipated in May. What is form 1040x When your son turned age 18 in May 2013, he became emancipated under the law of the state where he lives. What is form 1040x As a result, he is not considered in the custody of his parents for more than half of the year. What is form 1040x The special rule for children of divorced or separated parents does not apply. What is form 1040x Example 6—child emancipated in August. What is form 1040x Your daughter lives with you from January 1, 2013, until May 31, 2013, and lives with her other parent, your ex-spouse, from June 1, 2013, through the end of the year. What is form 1040x She turns 18 and is emancipated under state law on August 1, 2013. What is form 1040x Because she is treated as not living with either parent beginning on August 1, she is treated as living with you the greater number of nights in 2013. What is form 1040x You are the custodial parent. What is form 1040x Written declaration. What is form 1040x    The custodial parent may use either Form 8332 or a similar statement (containing the same information required by the form) to make the written declaration to release the exemption to the noncustodial parent. What is form 1040x The noncustodial parent must attach a copy of the form or statement to his or her tax return. What is form 1040x   The exemption can be released for 1 year, for a number of specified years (for example, alternate years), or for all future years, as specified in the declaration. What is form 1040x Post-1984 and pre-2009 divorce decree or separation agreement. What is form 1040x   If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. What is form 1040x The decree or agreement must state all three of the following. What is form 1040x The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support. What is form 1040x The custodial parent will not claim the child as a dependent for the year. What is form 1040x The years for which the noncustodial parent, rather than the custodial parent, can claim the child as a dependent. What is form 1040x   The noncustodial parent must attach all of the following pages of the decree or agreement to his or her tax return. What is form 1040x The cover page (write the other parent's social security number on this page). What is form 1040x The pages that include all of the information identified in items (1) through (3) above. What is form 1040x The signature page with the other parent's signature and the date of the agreement. What is form 1040x Post-2008 divorce decree or separation agreement. What is form 1040x   The noncustodial parent cannot attach pages from the decree or agreement instead of Form 8332 if the decree or agreement went into effect after 2008. What is form 1040x The custodial parent must sign either Form 8332 or a similar statement whose only purpose is to release the custodial parent's claim to an exemption for a child, and the noncustodial parent must attach a copy to his or her return. What is form 1040x The form or statement must release the custodial parent's claim to the child without any conditions. What is form 1040x For example, the release must not depend on the noncustodial parent paying support. What is form 1040x    The noncustodial parent must attach the required information even if it was filed with a return in an earlier year. What is form 1040x Revocation of release of claim to an exemption. What is form 1040x   The custodial parent can revoke a release of claim to exemption that he or she previously released to the noncustodial parent on Form 8332 (or a similar statement). What is form 1040x For the revocation to be effective for 2013, the custodial parent must have given (or made reasonable efforts to give) written notice of the revocation to the noncustodial parent in 2012 or earlier. What is form 1040x The custodial parent can use Part III of Form 8332 for this purpose and must attach a copy of the revocation to his or her return for each tax year he or she claims the child as a dependent as a result of the revocation. What is form 1040x Remarried parent. What is form 1040x   If you remarry, the support provided by your new spouse is treated as provided by you. What is form 1040x Parents who never married. What is form 1040x   This special rule for divorced or separated parents also applies to parents who never married, and who lived apart at all times during the last 6 months of the year. What is form 1040x Support Test (To Be a Qualifying Child) To meet this test, the child cannot have provided more than half of his or her own support for the year. What is form 1040x This test is different from the support test to be a qualifying relative, which is described later. What is form 1040x However, to see what is or is not support, see Support Test (To Be a Qualifying Relative) , later. What is form 1040x If you are not sure whether a child provided more than half of his or her own support, you may find Worksheet 3-1 helpful. What is form 1040x Worksheet 3-1. What is form 1040x Worksheet for Determining Support Funds Belonging to the Person You Supported       1. What is form 1040x Enter the total funds belonging to the person you supported, including income received (taxable and nontaxable) and amounts borrowed during the year, plus the amount in savings and other accounts at the beginning of the year. What is form 1040x Do not include funds provided by the state; include those amounts on line 23 instead 1. What is form 1040x     2. What is form 1040x Enter the amount on line 1 that was used for the person's support 2. What is form 1040x     3. What is form 1040x Enter the amount on line 1 that was used for other purposes 3. What is form 1040x     4. What is form 1040x Enter the total amount in the person's savings and other accounts at the end of the year 4. What is form 1040x     5. What is form 1040x Add lines 2 through 4. What is form 1040x (This amount should equal line 1. What is form 1040x ) 5. What is form 1040x     Expenses for Entire Household (where the person you supported lived)       6. What is form 1040x Lodging (complete line 6a or 6b):         a. What is form 1040x Enter the total rent paid 6a. What is form 1040x       b. What is form 1040x Enter the fair rental value of the home. What is form 1040x If the person you supported owned the home,  also include this amount in line 21 6b. What is form 1040x     7. What is form 1040x Enter the total food expenses 7. What is form 1040x     8. What is form 1040x Enter the total amount of utilities (heat, light, water, etc. What is form 1040x not included in line 6a or 6b) 8. What is form 1040x     9. What is form 1040x Enter the total amount of repairs (not included in line 6a or 6b) 9. What is form 1040x     10. What is form 1040x Enter the total of other expenses. What is form 1040x Do not include expenses of maintaining the home, such as mortgage interest, real estate taxes, and insurance 10. What is form 1040x     11. What is form 1040x Add lines 6a through 10. What is form 1040x These are the total household expenses 11. What is form 1040x     12. What is form 1040x Enter total number of persons who lived in the household 12. What is form 1040x     Expenses for the Person You Supported       13. What is form 1040x Divide line 11 by line 12. What is form 1040x This is the person's share of the household expenses 13. What is form 1040x     14. What is form 1040x Enter the person's total clothing expenses 14. What is form 1040x     15. What is form 1040x Enter the person's total education expenses 15. What is form 1040x     16. What is form 1040x Enter the person's total medical and dental expenses not paid for or reimbursed by insurance 16. What is form 1040x     17. What is form 1040x Enter the person's total travel and recreation expenses 17. What is form 1040x     18. What is form 1040x Enter the total of the person's other expenses 18. What is form 1040x     19. What is form 1040x Add lines 13 through 18. What is form 1040x This is the total cost of the person's support for the year 19. What is form 1040x     Did the Person Provide More Than Half of His or Her Own Support?       20. What is form 1040x Multiply line 19 by 50% (. What is form 1040x 50) 20. What is form 1040x     21. What is form 1040x Enter the amount from line 2, plus the amount from line 6b if the person you supported owned  the home. What is form 1040x This is the amount the person provided for his or her own support 21. What is form 1040x     22. What is form 1040x Is line 21 more than line 20?   No. What is form 1040x You meet the support test for this person to be your qualifying child. What is form 1040x If this person also meets the other tests to be a qualifying child, stop here; do not complete lines 23–26. What is form 1040x Otherwise, go to line 23 and fill out the rest of the worksheet to determine if this person is your qualifying relative. What is form 1040x    Yes. What is form 1040x You do not meet the support test for this person to be either your qualifying child or your qualifying relative. What is form 1040x Stop here. What is form 1040x        Did You Provide More Than Half?       23. What is form 1040x Enter the amount others provided for the person's support. What is form 1040x Include amounts provided by state, local, and other welfare societies or agencies. What is form 1040x Do not include any amounts included on line 1 23. What is form 1040x     24. What is form 1040x Add lines 21 and 23 24. What is form 1040x     25. What is form 1040x Subtract line 24 from line 19. What is form 1040x This is the amount you provided for the person's support 25. What is form 1040x     26. What is form 1040x Is line 25 more than line 20?   Yes. What is form 1040x You meet the support test for this person to be your qualifying relative. What is form 1040x    No. What is form 1040x You do not meet the support test for this person to be your qualifying relative. What is form 1040x You cannot claim an exemption for this person unless you can do so under a multiple support agreement, the support test for children of divorced or separated parents, or the special rule for kidnapped children. What is form 1040x See Multiple Support Agreement or Support Test for Children of Divorced or Separated Parents (or Parents Who Live Apart) , or Kidnapped child under Qualifying Relative. What is form 1040x   Example. What is form 1040x You provided $4,000 toward your 16-year-old son's support for the year. What is form 1040x He has a part-time job and provided $6,000 to his own support. What is form 1040x He provided more than half of his own support for the year. What is form 1040x He is not your qualifying child. What is form 1040x Foster care payments and expenses. What is form 1040x   Payments you receive for the support of a foster child from a child placement agency are considered support provided by the agency. What is form 1040x Similarly, payments you receive for the support of a foster child from a state or county are considered support provided by the state or county. What is form 1040x   If you are not in the trade or business of providing foster care and your unreimbursed out-of-pocket expenses in caring for a foster child were mainly to benefit an organization qualified to receive deductible charitable contributions, the expenses are deductible as charitable contributions but are not considered support you provided. What is form 1040x For more information about the deduction for charitable contributions, see chapter 24. What is form 1040x If your unreimbursed expenses are not deductible as charitable contributions, they may qualify as support you provided. What is form 1040x   If you are in the trade or business of providing foster care, your unreimbursed expenses are not considered support provided by you. What is form 1040x Example 1. What is form 1040x Lauren, a foster child, lived with Mr. What is form 1040x and Mrs. What is form 1040x Smith for the last 3 months of the year. What is form 1040x The Smiths cared for Lauren because they wanted to adopt her (although she had not been placed with them for adoption). What is form 1040x They did not care for her as a trade or business or to benefit the agency that placed her in their home. What is form 1040x The Smiths' unreimbursed expenses are not deductible as charitable contributions but are considered support they provided for Lauren. What is form 1040x Example 2. What is form 1040x You provided $3,000 toward your 10-year-old foster child's support for the year. What is form 1040x The state government provided $4,000, which is considered support provided by the state, not by the child. What is form 1040x See Support provided by the state (welfare, food stamps, housing, etc. What is form 1040x ) , later. What is form 1040x Your foster child did not provide more than half of her own support for the year. What is form 1040x Scholarships. What is form 1040x   A scholarship received by a child who is a student is not taken into account in determining whether the child provided more than half of his or her own support. What is form 1040x Joint Return Test (To Be a Qualifying Child) To meet this test, the child cannot file a joint return for the year. What is form 1040x Exception. What is form 1040x   An exception to the joint return test applies if your child and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid. What is form 1040x Example 1—child files joint return. What is form 1040x You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. What is form 1040x He earned $25,000 for the year. What is form 1040x The couple files a joint return. What is form 1040x Because your daughter and her husband file a joint return, she is not your qualifying child. What is form 1040x Example 2—child files joint return only as a claim for refund of withheld tax. What is form 1040x Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. What is form 1040x Neither is required to file a tax return. What is form 1040x They do not have a child. What is form 1040x Taxes were taken out of their pay so they filed a joint return only to get a refund of the withheld taxes. What is form 1040x The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. What is form 1040x Example 3—child files joint return to claim American opportunity credit. What is form 1040x The facts are the same as in Example 2 except no taxes were taken out of your son's pay. What is form 1040x He and his wife were not required to file a tax return. What is form 1040x However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. What is form 1040x Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to get a refund of income tax withheld or estimated tax paid. What is form 1040x The exception to the joint return test does not apply, so your son is not your qualifying child. What is form 1040x Special Rule for Qualifying Child of More Than One Person If your qualifying child is not a qualifying child of anyone else, this special rule does not apply to you and you do not need to read about it. What is form 1040x This is also true if your qualifying child is not a qualifying child of anyone else except your spouse with whom you file a joint return. What is form 1040x If a child is treated as the qualifying child of the noncustodial parent under the rules for children of divorced or separated parents (or parents who live apart) described earlier, see Applying this special rule to divorced or separated parents (or parents who live apart), later. What is form 1040x Sometimes, a child meets the relationship, age, residency, support, and joint return tests to be a qualifying child of more than one person. What is form 1040x Although the child is a qualifying child of each of these persons, only one person can actually treat the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit). What is form 1040x The exemption for the child. What is form 1040x The child tax credit. What is form 1040x Head of household filing status. What is form 1040x The credit for child and dependent care expenses. What is form 1040x The exclusion from income for dependent care benefits. What is form 1040x The earned income credit. What is form 1040x The other person cannot take any of these benefits based on this qualifying child. What is form 1040x In other words, you and the other person cannot agree to divide these benefits between you. What is form 1040x The other person cannot take any of these tax benefits for a child unless he or she has a different qualifying child. What is form 1040x Tiebreaker rules. What is form 1040x   To determine which person can treat the child as a qualifying child to claim these six tax benefits, the following tiebreaker rules apply. What is form 1040x If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. What is form 1040x If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents. What is form 1040x If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. What is form 1040x If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year. What is form 1040x If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year. What is form 1040x If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child. What is form 1040x If the child's parents file a joint return with each other, this rule can be applied by dividing the parents' combined AGI equally between the parents. What is form 1040x See Example 6 . What is form 1040x   Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child. What is form 1040x Example 1—child lived with parent and grandparent. What is form 1040x You and your 3-year-old daughter Jane lived with your mother all year. What is form 1040x You are 25 years old, unmarried, and your AGI is $9,000. What is form 1040x Your mother's AGI is $15,000. What is form 1040x Jane's father did not live with you or your daughter. What is form 1040x You have not signed Form 8332 (or a similar statement) to release the child's exemption to the noncustodial parent. What is form 1040x Jane is a qualifying child of both you and your mother because she meets the relationship, age, residency, support, and joint return tests for both you and your mother. What is form 1040x However, only one of you can claim her. What is form 1040x Jane is not a qualifying child of anyone else, including her father. What is form 1040x You agree to let your mother claim Jane. What is form 1040x This means your mother can claim Jane as a qualifying child for all of the six tax benefits listed earlier, if she qualifies (and if you do not claim Jane as a qualifying child for any of those tax benefits). What is form 1040x Example 2—parent has higher AGI than grandparent. What is form 1040x The facts are the same as in Example 1 except your AGI is $18,000. What is form 1040x Because your mother's AGI is not higher than yours, she cannot claim Jane. What is form 1040x Only you can claim Jane. What is form 1040x Example 3—two persons claim same child. What is form 1040x The facts are the same as in Example 1 except that you and your mother both claim Jane as a qualifying child. What is form 1040x In this case, you, as the child's parent, will be the only one allowed to claim Jane as a qualifying child. What is form 1040x The IRS will disallow your mother's claim to the six tax benefits listed earlier unless she has another qualifying child. What is form 1040x Example 4—qualifying children split between two persons. What is form 1040x The facts are the same as in Example 1 except you also have two other young children who are qualifying children of both you and your mother. What is form 1040x Only one of you can claim each child. What is form 1040x However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. What is form 1040x For example, if you claim one child, your mother can claim the other two. What is form 1040x Example 5—taxpayer who is a qualifying child. What is form 1040x The facts are the same as in Example 1 except you are only 18 years old and did not provide more than half of your own support for the year. What is form 1040x This means you are your mother's qualifying child. What is form 1040x If she can claim you as a dependent, then you cannot claim your daughter as a dependent because of the Dependent Taxpayer Test explained earlier. What is form 1040x Example 6—child lived with both parents and grandparent. What is form 1040x The facts are the same as in Example 1 except you are married to your daughter's father. What is form 1040x The two of you live together with your daughter and your mother, and have an AGI of $20,000 on a joint return. What is form 1040x If you and your husband do not claim your daughter as a qualifying child, your mother can claim her instead. What is form 1040x Even though the AGI on your joint return, $20,000, is more than your mother's AGI of $15,000, for this purpose each parent's AGI can be treated as $10,000, so your mother's $15,000 AGI is treated as higher than the highest AGI of any of the child's parents who can claim the child. What is form 1040x Example 7—separated parents. What is form 1040x You, your husband, and your 10-year-old son lived together until August 1, 2013, when your husband moved out of the household. What is form 1040x In August and September, your son lived with you. What is form 1040x For the rest of the year, your son lived with your husband, the boy's father. What is form 1040x Your son is a qualifying child of both you and your husband because your son lived with each of you for more than half the year and because he met the relationship, age, support, and joint return tests for both of you. What is form 1040x At the end of the year, you and your husband still were not divorced, legally separated, or separated under a written separation agreement, so the rule for children of divorced or separated parents (or parents who live apart) does not apply. What is form 1040x You and your husband will file separate returns. What is form 1040x Your husband agrees to let you treat your son as a qualifying child. What is form 1040x This means, if your husband does not claim your son as a qualifying child, you can claim your son as a qualifying child for the dependency exemption, child tax credit, and exclusion for dependent care benefits (if you qualify for each of those tax benefits). What is form 1040x However, you cannot claim head of household filing status because you and your husband did not live apart for the last 6 months of the year. What is form 1040x As a result, your filing status is married filing separately, so you cannot claim the earned income credit or the credit for child and dependent care expenses. What is form 1040x Example 8—separated parents claim same child. What is form 1040x The facts are the same as in Example 7 except that you and your husband both claim your son as a qualifying child. What is form 1040x In this case, only your husband will be allowed to treat your son as a qualifying child. What is form 1040x This is because, during 2013, the boy lived with him longer than with you. What is form 1040x If you claimed an exemption or the child tax credit for your son, the IRS will disallow your claim to both these tax benefits. What is form 1040x If you do not have another qualifying child or dependent, the IRS will also disallow your claim to the exclusion for dependent care benefits. What is form 1040x In addition, because you and your husband did not live apart for the last 6 months of the year, your husband cannot claim head of household filing status. What is form 1040x As a result, his filing status is married filing separately, so he cannot claim the earned income credit or the credit for child and dependent care expenses. What is form 1040x Example 9—unmarried parents. What is form 1040x You, your 5-year-old son, and your son's father lived together all year. What is form 1040x You and your son's father are not married. What is form 1040x Your son is a qualifying child of both you and his father because he meets the relationship, age, residency, support, and joint return tests for both you and his father. What is form 1040x Your AGI is $12,000 and your son's father's AGI is $14,000. What is form 1040x Your son's father agrees to let you claim the child as a qualifying child. What is form 1040x This means you can claim him as a qualifying child for the dependency exemption, child tax credit, head of household filing status, credit for child and dependent care expenses, exclusion for dependent care benefits, and the earned income credit, if you qualify for each of those tax benefits (and if your son's father does not, in fact, claim your son as a qualifying child for any of those tax benefits). What is form 1040x Example 10—unmarried parents claim same child. What is form 1040x The facts are the same as in Example 9 except that you and your son's father both claim your son as a qualifying child. What is form 1040x In this case, only your son's father will be allowed to treat your son as a qualifying child. What is form 1040x This is because his AGI, $14,000, is more than your AGI, $12,000. What is form 1040x If you claimed an exemption or the child tax credit for your son, the IRS will disallow your claim to both these tax benefits. What is form 1040x If you do not have another qualifying child or dependent, the IRS will also disallow your claim to the earned income credit, head of household filing status, the credit for child and dependent care expenses, and the exclusion for dependent care benefits. What is form 1040x Example 11—child did not live with a parent. What is form 1040x You and your 7-year-old niece, your sister's child, lived with your mother all year. What is form 1040x You are 25 years old, and your AGI is $9,300. What is form 1040x Your mother's AGI is $15,000. What is form 1040x Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. What is form 1040x Your niece is a qualifying child of both you and your mother because she meets the relationship, age, residency, support, and joint return tests for both you and your mother. What is form 1040x However, only your mother can treat her as a qualifying child. What is form 1040x This is because your mother's AGI, $15,000, is more than your AGI, $9,300. What is form 1040x Applying this special rule to divorced or separated parents (or parents who live apart). What is form 1040x   If a child is treated as the qualifying child of the noncustodial parent under the rules described earlier for children of divorced or separated parents (or parents who live apart), only the noncustodial parent can claim an exemption and the child tax credit for the child. What is form 1040x However, the custodial parent, if eligible, or other eligible person can claim the child as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, and the earned income credit. What is form 1040x If the child is the qualifying child of more than one person for these benefits, then the tiebreaker rules just explained determine which person can treat the child as a qualifying child. What is form 1040x Example 1. What is form 1040x You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. What is form 1040x Your AGI is $10,000. What is form 1040x Your mother's AGI is $25,000. What is form 1040x Your son's father did not live with you or your son. What is form 1040x Under the rules explained earlier for children of divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for him. What is form 1040x Because of this, you cannot claim an exemption or the child tax credit for your son. What is form 1040x However, your son's father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the earned income credit. What is form 1040x You and your mother did not have any child care expenses or dependent care benefits, so neither of you can claim the credit for child and dependent care expenses or the exclusion for dependent care benefits. What is form 1040x But the boy is a qualifying child of both you and your mother for head of household filing status and the earned income credit because he meets the relationship, age, residency, support, and joint return tests for both you and your mother. What is form 1040x (Note: The support test does not apply for the earned income credit. What is form 1040x ) However, you agree to let your mother claim your son. What is form 1040x This means she can claim him for head of household filing status and the earned income credit if she qualifies for each and if you do not claim him as a qualifying child for the earned income credit. What is form 1040x (You cannot claim head of household filing status because your mother paid the entire cost of keeping up the home. What is form 1040x ) Example 2. What is form 1040x The facts are the same as in Example 1 except your AGI is $25,000 and your mother's AGI is $21,000. What is form 1040x Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. What is form 1040x Example 3. What is form 1040x The facts are the same as in Example 1 except you and your mother both claim your son as a qualifying child for the earned income credit. What is form 1040x Your mother also claims him as a qualifying child for head of household filing status. What is form 1040x You, as the child's parent, will be the only one allowed to claim your son as a qualifying child for the earned income credit. What is form 1040x The IRS will disallow your mother's claim to the earned income credit and head of household filing status unless she has another qualifying child. What is form 1040x Qualifying Relative Four tests must be met for a person to be your qualifying relative. What is form 1040x The four tests are: Not a qualifying child test, Member of household or relationship test, Gross income test, and Support test. What is form 1040x Age. What is form 1040x   Unlike a qualifying child, a qualifying relative can be any age. What is form 1040x There is no age test for a qualifying relative. What is form 1040x Kidnapped child. What is form 1040x   You may be able to treat a child as your qualifying relative even if the child has been kidnapped. What is form 1040x See Publication 501 for details. What is form 1040x Not a Qualifying Child Test A child is not your qualifying relative if the child is your qualifying child or the qualifying child of any other taxpayer. What is form 1040x Example 1. What is form 1040x Your 22-year-old daughter, who is a student, lives with you and meets all the tests to be your qualifying child. What is form 1040x She is not your qualifying relative. What is form 1040x Example 2. What is form 1040x Your 2-year-old son lives with your parents and meets all the tests to be their qualifying child. What is form 1040x He is not your qualifying relative. What is form 1040x Example 3. What is form 1040x Your son lives with you but is not your qualifying child because he is 30 years old and does not meet the age test. What is form 1040x He may be your qualifying relative if the gross income test and the support test are met. What is form 1040x Example 4. What is form 1040x Your 13-year-old grandson lived with his mother for 3 months, with his uncle for 4 months, and with you for 5 months during the year. What is form 1040x He is not your qualifying child because he does not meet the residency test. What is form 1040x He may be your qualifying relative if the gross income test and the support test are met. What is form 1040x Child of person not required to file a return. What is form 1040x   A child is not the qualifying child of any other taxpayer and so may qualify as your qualifying relative if the child's parent (or other person for whom the child is defined as a qualifying child) is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. What is form 1040x Example 1—return not required. What is form 1040x You support an unrelated friend and her 3-year-old child, who lived with you all year in your home. What is form 1040x Your friend has no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. What is form 1040x Both your friend and her child are your qualifying relatives if the support test is met. What is form 1040x Example 2—return filed to claim refund. What is form 1040x The facts are the same as in Example 1 except your friend had wages of $1,500 during the year and had income tax withheld from her wages. What is form 1040x She files a return only to get a refund of the income tax withheld and does not claim the earned income credit or any other tax credits or deductions. What is form 1040x Both your friend and her child are your qualifying relatives if the support test is met. What is form 1040x Example 3—earned income credit claimed. What is form 1040x The facts are the same as in Example 2 except your friend had wages of $8,000 during the year and claimed the earned income credit on her return. What is form 1040x Your friend's child is the qualifying child of another taxpayer (your friend), so you cannot claim your friend's child as your qualifying relative. What is form 1040x Child in Canada or Mexico. What is form 1040x   You may be able to claim your child as a dependent even if the child lives in Canada or Mexico. What is form 1040x If the child does not live with you, the child does not meet the residency test to be your qualifying child. What is form 1040x However, the child may still be your qualifying relative. What is form 1040x If the persons the child does live with are not U. What is form 1040x S. What is form 1040x citizens and have no U. What is form 1040x S. What is form 1040x gross income, those persons are not “taxpayers,” so the child is not the qualifying child of any other taxpayer. What is form 1040x If the child is not the qualifying child of any other taxpayer, the child is your qualifying relative as long as the gross income test and the support test are met. What is form 1040x   You cannot claim as a dependent a child who lives in a foreign country other than Canada or Mexico, unless the child is a U. What is form 1040x S. What is form 1040x citizen, U. What is form 1040x S. What is form 1040x resident alien, or U. What is form 1040x S. What is form 1040x national. What is form 1040x There is an exception for certain adopted children who lived with you all year. What is form 1040x See Citizen or Resident Test , earlier. What is form 1040x Example. What is form 1040x You provide all the support of your children, ages 6, 8, and 12, who live in Mexico with your mother and have no income. What is form 1040x You are single and live in the United States. What is form 1040x Your mother is not a U. What is form 1040x S. What is form 1040x citizen and has no U. What is form 1040x S. What is form 1040x income, so she is not a “taxpayer. What is form 1040x ” Your children are not your qualifying children because they do not meet the residency test. What is form 1040x But since they are not the qualifying children of any other taxpayer, they are your qualifying relatives and you can claim them as dependents. What is form 1040x You may also be able to claim your mother as a dependent if the gross income and support tests are met. What is form 1040x Member of Household or Relationship Test To meet this test, a person must either: Live with you all year as a member of your household, or Be related to you in one of the ways listed under Relatives who do not have to live with you . What is form 1040x If at any time during the year the person was your spouse, that person cannot be your qualifying relative. What is form 1040x However, see Personal Exemptions , earlier. What is form 1040x Relatives who do not have to live with you. What is form 1040x   A person related to you in any of the following ways does not have to live with you all year as a member of your household to meet this test. What is form 1040x Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). What is form 1040x (A legally adopted child is considered your child. What is form 1040x ) Your brother, sister, half brother, half sister, stepbrother, or stepsister. What is form 1040x Your father, mother, grandparent, or other direct ancestor, but not foster parent. What is form 1040x Your stepfather or stepmother. What is form 1040x A son or daughter of your brother or sister. What is form 1040x A son or daughter of your half brother or half sister. What is form 1040x A brother or sister of your father or mother. What is form 1040x Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. What is form 1040x Any of these relationships that were established by marriage are not ended by death or divorce. What is form 1040x Example. What is form 1040x You and your wife began supporting your wife's father, a widower, in 2006. What is form 1040x Your wife died in 2012. What is form 1040x Despite your wife's death, your father-in-law continues to meet this test, even if he does not live with you. What is form 1040x You can claim him as a dependent if all other tests are met, including the gross income test and support test. What is form 1040x Foster child. What is form 1040x   A foster child is an individual who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. What is form 1040x Joint return. What is form 1040x   If you file a joint return, the person can be related to either you or your spouse. What is form 1040x Also, the person does not need to be related to the spouse who provides support. What is form 1040x   For example, your spouse's uncle who receives more than half of his support from you may be your qualifying relative, even though he does not live with you. What is form 1040x However, if you and your spouse file separate returns, your spouse's uncle can be your qualifying relative only if he lives with you all year as a member of your household. What is form 1040x Temporary absences. What is form 1040x   A person is considered to live with you as a member of your household during periods of time when one of you, or both, are temporarily absent due to special circumstances such as: Illness, Education, Business, Vacation, or Military service. What is form 1040x   If the person is placed in a nursing home for an indefinite period of time to receive constant medical care, the absence may be considered temporary. What is form 1040x Death or birth. What is form 1040x   A person who died during the year, but lived with you as a member of your household until death, will meet this test. What is form 1040x The same is true for a child who was born during the year and lived with you as a member of your household for the rest of the year. What is form 1040x The test is also met if a child lived with you as a member of your household except for any required hospital stay following birth. What is form 1040x   If your dependent died during the year and you otherwise qualify to claim an exemption for the dependent, you can still claim the exemption. What is form 1040x Example. What is form 1040x Your dependent mother died on January 15. What is form 1040x She met the tests to be your qualifying relative. What is form 1040x The other tests to claim an exemption for a dependent were also met. What is form 1040x You can claim an exemption for her on your return. What is form 1040x Local law violated. What is form 1040x   A person does not meet this test if at any time during the year the relationship between you and that person violates local law. What is form 1040x Example. What is form 1040x Your girlfriend lived with you as a member of your household all year. What is form 1040x However, your relationship with her violated the laws of the state where you live, because she was married to someone else. What is form 1040x Therefore, she does not meet this test and you cannot claim her as a dependent. What is form 1040x Adopted child. What is form 1040x   An adopted child is always treated as your own child. What is form 1040x The term “adopted child” includes a child who was lawfully placed with you for legal adoption. What is form 1040x Cousin. What is form 1040x   Your cousin meets this test only if he or she lives with you all year as a member of your household. What is form 1040x A cousin is a descendant of a brother or sister of your father or mother. What is form 1040x Gross Income Test To meet this test, a person's gross income for the year must be less than $3,900. What is form 1040x Gross income defined. What is form 1040x   Gross income is all income in the form of money, property, and services that is not exempt from tax. What is form 1040x   In a manufacturing, merchandising, or mining business, gross income is the total net sales minus the cost of goods sold, plus any miscellaneous income from the business. What is form 1040x   Gross receipts from rental property are gross income. What is form 1040x Do not deduct taxes, repairs, or other expenses, to determine the gross income from rental property. What is form 1040x   Gross income includes a partner's share of the gross (not a share of the net) partnership income. What is form 1040x    Gross income also includes all taxable unemployment compensation and certain scholarship and fellowship grants. What is form 1040x Scholarships received by degree candidates and used for tuition, fees, supplies, books, and equipment required for particular courses generally are not included in gross income. What is form 1040x For more information about scholarships, see chapter 12. What is form 1040x   Tax-exempt income, such as certain social security benefits, is not included in gross income. What is form 1040x Disabled dependent working at sheltered workshop. What is form 1040x   For purposes of the gross income test, the gross income of an individual who is permanently and totally disabled at any time during the year does not include income for services the individual performs at a sheltered workshop. What is form 1040x The availability of medical care at the workshop must be the main reason for the individual's presence there. What is form 1040x Also, the income must come solely from activities at the workshop that are incident to this medical care. What is form 1040x   A “sheltered workshop” is a school that: Provides special instruction or training designed to alleviate the disability of the individual, and Is operated by certain tax-exempt organizations, or by a state, a U. What is form 1040x S. What is form 1040x possession, a political subdivision of a state or possession, the United States, or the District of Columbia. What is form 1040x “Permanently and totally disabled” has the same meaning here as under Qualifying Child, earlier. What is form 1040x Support Test (To Be a Qualifying Relative) To meet this test, you generally must provide more than half of a person's total support during the calendar year. What is form 1040x However, if two or more persons provide support, but no one person provides more than half of a person's total support, see Multiple Support Agreement , later. What is form 1040x How to determine if support test is met. What is form 1040x   You figure whether you have provided more than half of a person's total support by comparing the amount you contributed to that person's support with the entire amount of support that person received from all sources. What is form 1040x This includes support the person provided from his or her own funds. What is form 1040x   You may find Worksheet 3-1 helpful in figuring whether you provided more than half of a person's support. What is form 1040x Person's own funds not used for support. What is form 1040x   A person's own funds are not support unless they are actually spent for support. What is form 1040x Example. What is form 1040x Your mother received $2,400 in social security benefits and $300 in interest. What is form 1040x She paid $2,000 for lodging and $400 for recreation. What is form 1040x She put $300 in a savings account. What is form 1040x Even though your mother received a total of $2,700 ($2,400 + $300), she spent only $2,400 ($2,000 + $400) for her own support. What is form 1040x If you spent more than $2,400 for her support and no other support was received, you have provided more than half of her support. What is form 1040x Child's wages used for own support. What is form 1040x   You cannot include in your contribution to your child's support any support paid for by the child with the child's own wages, even if you paid the wages. What is form 1040x Year support is provided. What is form 1040x   The year you provide the support is the year you pay for it, even if you do so with borrowed money that you repay in a later year. What is form 1040x   If you use a fiscal year to report your income, you must provide more than half of the dependent's support for the calendar year in which your fiscal year begins. What is form 1040x Armed Forces dependency allotments. What is form 1040x   The part of the allotment contributed by the government and the part taken out of your military pay are both considered provided by you in figuring whether you provide more than half of the support. What is form 1040x If your allotment is used to support persons other than those you name, you can take the exemptions for them if they otherwise qualify. What is form 1040x Example. What is form 1040x You are in the Armed Forces. What is form 1040x You authorize an allotment for your widowed mother that she uses to support herself and her sister. What is form 1040x If the allotment provides more than half of each person's support, you can take an exemption for each of them, if they otherwise qualify, even though you authorize the allotment only for your mother. What is form 1040x Tax-exempt military quarters allowances. What is form 1040x   These allowances are treated the same way as dependency allotments in figuring support. What is form 1040x The allotment of pay and the tax-exempt basic allowance for quarters are both considered as provided by you for support. What is form 1040x Tax-exempt income. What is form 1040x   In figuring a person's total support, include tax-exempt income, savings, and borrowed amounts used to support that person. What is form 1040x Tax-exempt income includes certain social security benefits, welfare benefits, nontaxable life insurance proceeds, Armed Forces family allotments, nontaxable pensions, and tax-exempt interest. What is form 1040x Example 1. What is form 1040x You provide $4,000 toward your mother's support during the year. What is form 1040x She has earned income of $600, nontaxable social security benefits of $4,800, and tax-exempt interest of $200. What is form 1040x She uses all these for her support. What is form 1040x You cannot claim an exemption for your mother because the $4,000 you provide is not more than half of her total support of $9,600 ($4,000 + $600 + $4,800 + $200). What is form 1040x Example 2. What is form 1040x Your niece takes out a student loan of $2,500 a