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Where can i file my state and federal taxes online for free Publication 530 - Main Content Table of Contents What You Can and Cannot DeductHardest Hit Fund and Emergency Homeowners' Loan Programs Real Estate Taxes Sales Taxes Home Mortgage Interest Mortgage Insurance Premiums Mortgage Interest CreditFiguring the Credit BasisFiguring Your Basis Adjusted Basis Keeping Records How To Get Tax HelpLow Income Taxpayer Clinics What You Can and Cannot Deduct To deduct expenses of owning a home, you must file Form 1040, U. Where can i file my state and federal taxes online for free S. Where can i file my state and federal taxes online for free Individual Income Tax Return, and itemize your deductions on Schedule A (Form 1040). Where can i file my state and federal taxes online for free If you itemize, you cannot take the standard deduction. Where can i file my state and federal taxes online for free This section explains what expenses you can deduct as a homeowner. Where can i file my state and federal taxes online for free It also points out expenses that you cannot deduct. Where can i file my state and federal taxes online for free There are four primary discussions: real estate taxes, sales taxes, home mortgage interest, and mortgage insurance premiums. Where can i file my state and federal taxes online for free Generally, your real estate taxes, home mortgage interest, and mortgage insurance premiums are included in your house payment. Where can i file my state and federal taxes online for free Your house payment. Where can i file my state and federal taxes online for free   If you took out a mortgage (loan) to finance the purchase of your home, you probably have to make monthly house payments. Where can i file my state and federal taxes online for free Your house payment may include several costs of owning a home. Where can i file my state and federal taxes online for free The only costs you can deduct are real estate taxes actually paid to the taxing authority, interest that qualifies as home mortgage interest, and mortgage insurance premiums. Where can i file my state and federal taxes online for free These are discussed in more detail later. Where can i file my state and federal taxes online for free   Some nondeductible expenses that may be included in your house payment include: Fire or homeowner's insurance premiums, and The amount applied to reduce the principal of the mortgage. Where can i file my state and federal taxes online for free Minister's or military housing allowance. Where can i file my state and federal taxes online for free   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you still can deduct your real estate taxes and your home mortgage interest. Where can i file my state and federal taxes online for free You do not have to reduce your deductions by your nontaxable allowance. Where can i file my state and federal taxes online for free For more information see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers, and Publication 3, Armed Forces' Tax Guide. Where can i file my state and federal taxes online for free Nondeductible payments. Where can i file my state and federal taxes online for free   You cannot deduct any of the following items. Where can i file my state and federal taxes online for free Insurance (other than mortgage insurance premiums), including fire and comprehensive coverage, and title insurance. Where can i file my state and federal taxes online for free Wages you pay for domestic help. Where can i file my state and federal taxes online for free Depreciation. Where can i file my state and federal taxes online for free The cost of utilities, such as gas, electricity, or water. Where can i file my state and federal taxes online for free Most settlement costs. Where can i file my state and federal taxes online for free See Settlement or closing costs under Cost as Basis, later, for more information. Where can i file my state and federal taxes online for free Forfeited deposits, down payments, or earnest money. Where can i file my state and federal taxes online for free Hardest Hit Fund and Emergency Homeowners' Loan Programs You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. Where can i file my state and federal taxes online for free You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. Where can i file my state and federal taxes online for free You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. Where can i file my state and federal taxes online for free If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received), box 4 (mortgage insurance premiums) and box 5 (real property taxes). Where can i file my state and federal taxes online for free However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. Where can i file my state and federal taxes online for free Real Estate Taxes Most state and local governments charge an annual tax on the value of real property. Where can i file my state and federal taxes online for free This is called a real estate tax. Where can i file my state and federal taxes online for free You can deduct the tax if it is assessed uniformly at a like rate on all real property throughout the community. Where can i file my state and federal taxes online for free The proceeds must be for general community or governmental purposes and not be a payment for a special privilege granted or service rendered to you. Where can i file my state and federal taxes online for free Deductible Real Estate Taxes You can deduct real estate taxes imposed on you. Where can i file my state and federal taxes online for free You must have paid them either at settlement or closing, or to a taxing authority (either directly or through an escrow account) during the year. Where can i file my state and federal taxes online for free If you own a cooperative apartment, see Special Rules for Cooperatives , later. Where can i file my state and federal taxes online for free Where to deduct real estate taxes. Where can i file my state and federal taxes online for free   Enter the amount of your deductible real estate taxes on Schedule A (Form 1040), line 6. Where can i file my state and federal taxes online for free Real estate taxes paid at settlement or closing. Where can i file my state and federal taxes online for free   Real estate taxes are generally divided so that you and the seller each pay taxes for the part of the property tax year you owned the home. Where can i file my state and federal taxes online for free Your share of these taxes is fully deductible if you itemize your deductions. Where can i file my state and federal taxes online for free Division of real estate taxes. Where can i file my state and federal taxes online for free   For federal income tax purposes, the seller is treated as paying the property taxes up to, but not including, the date of sale. Where can i file my state and federal taxes online for free You (the buyer) are treated as paying the taxes beginning with the date of sale. Where can i file my state and federal taxes online for free This applies regardless of the lien dates under local law. Where can i file my state and federal taxes online for free Generally, this information is included on the settlement statement you get at closing. Where can i file my state and federal taxes online for free   You and the seller each are considered to have paid your own share of the taxes, even if one or the other paid the entire amount. Where can i file my state and federal taxes online for free You each can deduct your own share, if you itemize deductions, for the year the property is sold. Where can i file my state and federal taxes online for free Example. Where can i file my state and federal taxes online for free You bought your home on September 1. Where can i file my state and federal taxes online for free The property tax year (the period to which the tax relates) in your area is the calendar year. Where can i file my state and federal taxes online for free The tax for the year was $730 and was due and paid by the seller on August 15. Where can i file my state and federal taxes online for free You owned your new home during the property tax year for 122 days (September 1 to December 31, including your date of purchase). Where can i file my state and federal taxes online for free You figure your deduction for real estate taxes on your home as follows. Where can i file my state and federal taxes online for free 1. Where can i file my state and federal taxes online for free Enter the total real estate taxes for the real property tax year $730 2. Where can i file my state and federal taxes online for free Enter the number of days in the property tax year that you owned the property 122 3. Where can i file my state and federal taxes online for free Divide line 2 by 365 . Where can i file my state and federal taxes online for free 3342 4. Where can i file my state and federal taxes online for free Multiply line 1 by line 3. Where can i file my state and federal taxes online for free This is your deduction. Where can i file my state and federal taxes online for free Enter it on Schedule A (Form 1040), line 6 $244   You can deduct $244 on your return for the year if you itemize your deductions. Where can i file my state and federal taxes online for free You are considered to have paid this amount and can deduct it on your return even if, under the contract, you did not have to reimburse the seller. Where can i file my state and federal taxes online for free Delinquent taxes. Where can i file my state and federal taxes online for free   Delinquent taxes are unpaid taxes that were imposed on the seller for an earlier tax year. Where can i file my state and federal taxes online for free If you agree to pay delinquent taxes when you buy your home, you cannot deduct them. Where can i file my state and federal taxes online for free You treat them as part of the cost of your home. Where can i file my state and federal taxes online for free See Real estate taxes , later, under Basis. Where can i file my state and federal taxes online for free Escrow accounts. Where can i file my state and federal taxes online for free   Many monthly house payments include an amount placed in escrow (put in the care of a third party) for real estate taxes. Where can i file my state and federal taxes online for free You may not be able to deduct the total you pay into the escrow account. Where can i file my state and federal taxes online for free You can deduct only the real estate taxes that the lender actually paid from escrow to the taxing authority. Where can i file my state and federal taxes online for free Your real estate tax bill will show this amount. Where can i file my state and federal taxes online for free Refund or rebate of real estate taxes. Where can i file my state and federal taxes online for free   If you receive a refund or rebate of real estate taxes this year for amounts you paid this year, you must reduce your real estate tax deduction by the amount refunded to you. Where can i file my state and federal taxes online for free If the refund or rebate was for real estate taxes paid for a prior year, you may have to include some or all of the refund in your income. Where can i file my state and federal taxes online for free For more information, see Recoveries in Publication 525, Taxable and Nontaxable Income. Where can i file my state and federal taxes online for free Items You Cannot Deduct as Real Estate Taxes The following items are not deductible as real estate taxes. Where can i file my state and federal taxes online for free Charges for services. Where can i file my state and federal taxes online for free   An itemized charge for services to specific property or people is not a tax, even if the charge is paid to the taxing authority. Where can i file my state and federal taxes online for free You cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged for trash collection), or A flat fee charged for a single service provided by your local government (such as a $30 charge for mowing your lawn because it had grown higher than permitted under a local ordinance). Where can i file my state and federal taxes online for free    You must look at your real estate tax bill to decide if any nondeductible itemized charges, such as those listed above, are included in the bill. Where can i file my state and federal taxes online for free If your taxing authority (or lender) does not furnish you a copy of your real estate tax bill, ask for it. Where can i file my state and federal taxes online for free Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. Where can i file my state and federal taxes online for free Assessments for local benefits. Where can i file my state and federal taxes online for free   You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. Where can i file my state and federal taxes online for free Local benefits include the construction of streets, sidewalks, or water and sewer systems. Where can i file my state and federal taxes online for free You must add these amounts to the basis of your property. Where can i file my state and federal taxes online for free   You can, however, deduct assessments (or taxes) for local benefits if they are for maintenance, repair, or interest charges related to those benefits. Where can i file my state and federal taxes online for free An example is a charge to repair an existing sidewalk and any interest included in that charge. Where can i file my state and federal taxes online for free   If only a part of the assessment is for maintenance, repair, or interest charges, you must be able to show the amount of that part to claim the deduction. Where can i file my state and federal taxes online for free If you cannot show what part of the assessment is for maintenance, repair, or interest charges, you cannot deduct any of it. Where can i file my state and federal taxes online for free   An assessment for a local benefit may be listed as an item in your real estate tax bill. Where can i file my state and federal taxes online for free If so, use the rules in this section to find how much of it, if any, you can deduct. Where can i file my state and federal taxes online for free Transfer taxes (or stamp taxes). Where can i file my state and federal taxes online for free   You cannot deduct transfer taxes and similar taxes and charges on the sale of a personal home. Where can i file my state and federal taxes online for free If you are the buyer and you pay them, include them in the cost basis of the property. Where can i file my state and federal taxes online for free If you are the seller and you pay them, they are expenses of the sale and reduce the amount realized on the sale. Where can i file my state and federal taxes online for free Homeowners association assessments. Where can i file my state and federal taxes online for free   You cannot deduct these assessments because the homeowners association, rather than a state or local government, imposes them. Where can i file my state and federal taxes online for free Special Rules for Cooperatives If you own a cooperative apartment, some special rules apply to you, though you generally receive the same tax treatment as other homeowners. Where can i file my state and federal taxes online for free As an owner of a cooperative apartment, you own shares of stock in a corporation that owns or leases housing facilities. Where can i file my state and federal taxes online for free You can deduct your share of the corporation's deductible real estate taxes if the cooperative housing corporation meets the following conditions: The corporation has only one class of stock outstanding, Each stockholder, solely because of ownership of the stock, can live in a house, apartment, or house trailer owned or leased by the corporation, No stockholder can receive any distribution out of capital, except on a partial or complete liquidation of the corporation, and At least one of the following: At least 80% of the corporation's gross income for the tax year was paid by the tenant-stockholders. Where can i file my state and federal taxes online for free For this purpose, gross income means all income received during the entire tax year, including any received before the corporation changed to cooperative ownership. Where can i file my state and federal taxes online for free At least 80% of the total square footage of the corporation's property must be available for use by the tenant-stockholders during the entire tax year. Where can i file my state and federal taxes online for free At least 90% of the expenditures paid or incurred by the corporation were used for the acquisition, construction, management, maintenance, or care of the property for the benefit of the tenant-shareholders during the entire tax year. Where can i file my state and federal taxes online for free Tenant-stockholders. Where can i file my state and federal taxes online for free   A tenant-stockholder can be any entity (such as a corporation, trust, estate, partnership, or association) as well as an individual. Where can i file my state and federal taxes online for free The tenant-stockholder does not have to live in any of the cooperative's dwelling units. Where can i file my state and federal taxes online for free The units that the tenant-stockholder has the right to occupy can be rented to others. Where can i file my state and federal taxes online for free Deductible taxes. Where can i file my state and federal taxes online for free   You figure your share of real estate taxes in the following way. Where can i file my state and federal taxes online for free Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. Where can i file my state and federal taxes online for free Multiply the corporation's deductible real estate taxes by the number you figured in (1). Where can i file my state and federal taxes online for free This is your share of the real estate taxes. Where can i file my state and federal taxes online for free   Generally, the corporation will tell you your share of its real estate tax. Where can i file my state and federal taxes online for free This is the amount you can deduct if it reasonably reflects the cost of real estate taxes for your dwelling unit. Where can i file my state and federal taxes online for free Refund of real estate taxes. Where can i file my state and federal taxes online for free   If the corporation receives a refund of real estate taxes it paid in an earlier year, it must reduce the amount of real estate taxes paid this year when it allocates the tax expense to you. Where can i file my state and federal taxes online for free Your deduction for real estate taxes the corporation paid this year is reduced by your share of the refund the corporation received. Where can i file my state and federal taxes online for free Sales Taxes Generally, you can elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule A (Form 1040). Where can i file my state and federal taxes online for free Deductible sales taxes may include sales taxes paid on your home (including mobile and prefabricated), or home building materials if the tax rate was the same as the general sales tax rate. Where can i file my state and federal taxes online for free For information on figuring your deduction, see the Instructions for Schedule A (Form 1040). Where can i file my state and federal taxes online for free If you elect to deduct the sales taxes paid on your home, or home building materials, you cannot include them as part of your cost basis in the home. Where can i file my state and federal taxes online for free Home Mortgage Interest This section of the publication gives you basic information about home mortgage interest, including information on interest paid at settlement, points, and Form 1098, Mortgage Interest Statement. Where can i file my state and federal taxes online for free Most home buyers take out a mortgage (loan) to buy their home. Where can i file my state and federal taxes online for free They then make monthly payments to either the mortgage holder or someone collecting the payments for the mortgage holder. Where can i file my state and federal taxes online for free Usually, you can deduct the entire part of your payment that is for mortgage interest, if you itemize your deductions on Schedule A (Form 1040). Where can i file my state and federal taxes online for free However, your deduction may be limited if: Your total mortgage balance is more than $1 million ($500,000 if married filing separately), or You took out a mortgage for reasons other than to buy, build, or improve your home. Where can i file my state and federal taxes online for free If either of these situations applies to you, see Publication 936 for more information. Where can i file my state and federal taxes online for free Also see Publication 936 if you later refinance your mortgage or buy a second home. Where can i file my state and federal taxes online for free Refund of home mortgage interest. Where can i file my state and federal taxes online for free   If you receive a refund of home mortgage interest that you deducted in an earlier year and that reduced your tax, you generally must include the refund in income in the year you receive it. Where can i file my state and federal taxes online for free For more information, see Recoveries in Publication 525. Where can i file my state and federal taxes online for free The amount of the refund will usually be shown on the mortgage interest statement you receive from your mortgage lender. Where can i file my state and federal taxes online for free See Mortgage Interest Statement , later. Where can i file my state and federal taxes online for free Deductible Mortgage Interest To be deductible, the interest you pay must be on a loan secured by your main home or a second home. Where can i file my state and federal taxes online for free The loan can be a first or second mortgage, a home improvement loan, or a home equity loan. Where can i file my state and federal taxes online for free Prepaid interest. Where can i file my state and federal taxes online for free   If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. Where can i file my state and federal taxes online for free Generally, you can deduct in each year only the interest that qualifies as home mortgage interest for that year. Where can i file my state and federal taxes online for free An exception (discussed later) applies to points. Where can i file my state and federal taxes online for free Late payment charge on mortgage payment. Where can i file my state and federal taxes online for free   You can deduct as home mortgage interest a late payment charge if it was not for a specific service in connection with your mortgage loan. Where can i file my state and federal taxes online for free Mortgage prepayment penalty. Where can i file my state and federal taxes online for free   If you pay off your home mortgage early, you may have to pay a penalty. Where can i file my state and federal taxes online for free You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. Where can i file my state and federal taxes online for free Ground rent. Where can i file my state and federal taxes online for free   In some states (such as Maryland), you may buy your home subject to a ground rent. Where can i file my state and federal taxes online for free A ground rent is an obligation you assume to pay a fixed amount per year on the property. Where can i file my state and federal taxes online for free Under this arrangement, you are leasing (rather than buying) the land on which your home is located. Where can i file my state and federal taxes online for free Redeemable ground rents. Where can i file my state and federal taxes online for free   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct the payments as mortgage interest. Where can i file my state and federal taxes online for free The ground rent is a redeemable ground rent only if all of the following are true. Where can i file my state and federal taxes online for free Your lease, including renewal periods, is for more than 15 years. Where can i file my state and federal taxes online for free You can freely assign the lease. Where can i file my state and federal taxes online for free You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a specified amount. Where can i file my state and federal taxes online for free The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. Where can i file my state and federal taxes online for free   Payments made to end the lease and buy the lessor's entire interest in the land are not redeemable ground rents. Where can i file my state and federal taxes online for free You cannot deduct them. Where can i file my state and federal taxes online for free Nonredeemable ground rents. Where can i file my state and federal taxes online for free   Payments on a nonredeemable ground rent are not mortgage interest. Where can i file my state and federal taxes online for free You can deduct them as rent only if they are a business expense or if they are for rental property. Where can i file my state and federal taxes online for free Cooperative apartment. Where can i file my state and federal taxes online for free   You can usually treat the interest on a loan you took out to buy stock in a cooperative housing corporation as home mortgage interest if you own a cooperative apartment, and the cooperative housing corporation meets the conditions described earlier under Special Rules for Cooperatives . Where can i file my state and federal taxes online for free In addition, you can treat as home mortgage interest your share of the corporation's deductible mortgage interest. Where can i file my state and federal taxes online for free Figure your share of mortgage interest the same way that is shown for figuring your share of real estate taxes in the Example under Division of real estate taxes, earlier. Where can i file my state and federal taxes online for free For more information on cooperatives, see Special Rule for Tenant-Stockholders in Cooperative Housing Corporations in Publication 936. Where can i file my state and federal taxes online for free Refund of cooperative's mortgage interest. Where can i file my state and federal taxes online for free   You must reduce your mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. Where can i file my state and federal taxes online for free The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year. Where can i file my state and federal taxes online for free   If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. Where can i file my state and federal taxes online for free Mortgage Interest Paid at Settlement One item that normally appears on a settlement or closing statement is home mortgage interest. Where can i file my state and federal taxes online for free You can deduct the interest that you pay at settlement if you itemize your deductions on Schedule A (Form 1040). Where can i file my state and federal taxes online for free This amount should be included in the mortgage interest statement provided by your lender. Where can i file my state and federal taxes online for free See the discussion under Mortgage Interest Statement , later. Where can i file my state and federal taxes online for free Also, if you pay interest in advance, see Prepaid interest , earlier, and Points , next. Where can i file my state and federal taxes online for free Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Where can i file my state and federal taxes online for free Points also may be called loan origination fees, maximum loan charges, loan discount, or discount points. Where can i file my state and federal taxes online for free A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. Where can i file my state and federal taxes online for free See Points paid by the seller , later. Where can i file my state and federal taxes online for free General rule. Where can i file my state and federal taxes online for free   You cannot deduct the full amount of points in the year paid. Where can i file my state and federal taxes online for free They are prepaid interest, so you generally must deduct them over the life (term) of the mortgage. Where can i file my state and federal taxes online for free Exception. Where can i file my state and federal taxes online for free   You can deduct the full amount of points in the year paid if you meet all the following tests. Where can i file my state and federal taxes online for free Your loan is secured by your main home. Where can i file my state and federal taxes online for free (Generally, your main home is the one you live in most of the time. Where can i file my state and federal taxes online for free ) Paying points is an established business practice in the area where the loan was made. Where can i file my state and federal taxes online for free The points paid were not more than the points generally charged in that area. Where can i file my state and federal taxes online for free You use the cash method of accounting. Where can i file my state and federal taxes online for free This means you report income in the year you receive it and deduct expenses in the year you pay them. Where can i file my state and federal taxes online for free Most individuals use this method. Where can i file my state and federal taxes online for free The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. Where can i file my state and federal taxes online for free The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. Where can i file my state and federal taxes online for free The funds you provided are not required to have been applied to the points. Where can i file my state and federal taxes online for free They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Where can i file my state and federal taxes online for free You cannot have borrowed these funds. Where can i file my state and federal taxes online for free You use your loan to buy or build your main home. Where can i file my state and federal taxes online for free The points were computed as a percentage of the principal amount of the mortgage. Where can i file my state and federal taxes online for free The amount is clearly shown on the settlement statement (such as the Uniform Settlement Statement, Form HUD-1) as points charged for the mortgage. Where can i file my state and federal taxes online for free The points may be shown as paid from either your funds or the seller's. Where can i file my state and federal taxes online for free Note. Where can i file my state and federal taxes online for free If you meet all of the tests listed above and you itemize your deductions in the year you get the loan, you can either deduct the full amount of points in the year paid or deduct them over the life of the loan, beginning in the year you get the loan. Where can i file my state and federal taxes online for free If you do not itemize your deductions in the year you get the loan, you can spread the points over the life of the loan and deduct the appropriate amount in each future year, if any, when you do itemize your deductions. Where can i file my state and federal taxes online for free Home improvement loan. Where can i file my state and federal taxes online for free   You can also fully deduct in the year paid points paid on a loan to improve your main home, if you meet the first six tests listed earlier. Where can i file my state and federal taxes online for free Refinanced loan. Where can i file my state and federal taxes online for free   If you use part of the refinanced mortgage proceeds to improve your main home and you meet the first six tests listed earlier, you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. Where can i file my state and federal taxes online for free You can deduct the rest of the points over the life of the loan. Where can i file my state and federal taxes online for free Points not fully deductible in year paid. Where can i file my state and federal taxes online for free    If you do not qualify under the exception to deduct the full amount of points in the year paid (or choose not to do so), see Points in Publication 936 for the rules on when and how much you can deduct. Where can i file my state and federal taxes online for free Figure A. Where can i file my state and federal taxes online for free   You can use Figure A, next, as a quick guide to see whether your points are fully deductible in the year paid. Where can i file my state and federal taxes online for free    Please click here for the text description of the image. Where can i file my state and federal taxes online for free Figure A. Where can i file my state and federal taxes online for free Are my points fully deductible this year? Amounts charged for services. Where can i file my state and federal taxes online for free   Amounts charged by the lender for specific services connected to the loan are not interest. Where can i file my state and federal taxes online for free Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Where can i file my state and federal taxes online for free You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Where can i file my state and federal taxes online for free For information about the tax treatment of these amounts and other settlement fees and closing costs, see Basis , later. Where can i file my state and federal taxes online for free Points paid by the seller. Where can i file my state and federal taxes online for free   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Where can i file my state and federal taxes online for free Treatment by seller. Where can i file my state and federal taxes online for free   The seller cannot deduct these fees as interest. Where can i file my state and federal taxes online for free However, they are a selling expense that reduces the seller's amount realized. Where can i file my state and federal taxes online for free See Publication 523 for more information. Where can i file my state and federal taxes online for free Treatment by buyer. Where can i file my state and federal taxes online for free   The buyer treats seller-paid points as if he or she had paid them. Where can i file my state and federal taxes online for free If all the tests listed earlier under Exception are met, the buyer can deduct the points in the year paid. Where can i file my state and federal taxes online for free If any of those tests are not met, the buyer must deduct the points over the life of the loan. Where can i file my state and federal taxes online for free   The buyer must also reduce the basis of the home by the amount of the seller-paid points. Where can i file my state and federal taxes online for free For more information about the basis of your home, see Basis , later. Where can i file my state and federal taxes online for free Funds provided are less than points. Where can i file my state and federal taxes online for free   If you meet all the tests listed earlier under Exception except that the funds you provided were less than the points charged to you (test 6), you can deduct the points in the year paid up to the amount of funds you provided. Where can i file my state and federal taxes online for free In addition, you can deduct any points paid by the seller. Where can i file my state and federal taxes online for free Example 1. Where can i file my state and federal taxes online for free When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Where can i file my state and federal taxes online for free You meet all the tests for deducting points in the year paid (see Exception , earlier), except the only funds you provided were a $750 down payment. Where can i file my state and federal taxes online for free Of the $1,000 you were charged for points, you can deduct $750 in the year paid. Where can i file my state and federal taxes online for free You spread the remaining $250 over the life of the mortgage. Where can i file my state and federal taxes online for free Example 2. Where can i file my state and federal taxes online for free The facts are the same as in Example 1 , except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. Where can i file my state and federal taxes online for free In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Where can i file my state and federal taxes online for free You spread the remaining $250 over the life of the mortgage. Where can i file my state and federal taxes online for free You must reduce the basis of your home by the $1,000 paid by the seller. Where can i file my state and federal taxes online for free Excess points. Where can i file my state and federal taxes online for free   If you meet all the tests under Exception , earlier, except that the points paid were more than are generally charged in your area (test 3), you can deduct in the year paid only the points that are generally charged. Where can i file my state and federal taxes online for free You must spread any additional points over the life of the mortgage. Where can i file my state and federal taxes online for free Mortgage ending early. Where can i file my state and federal taxes online for free   If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. Where can i file my state and federal taxes online for free A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Where can i file my state and federal taxes online for free Example. Where can i file my state and federal taxes online for free Dan paid $3,000 in points in 2006 that he had to spread out over the 15-year life of the mortgage. Where can i file my state and federal taxes online for free He had deducted $1,400 of these points through 2012. Where can i file my state and federal taxes online for free Dan prepaid his mortgage in full in 2013. Where can i file my state and federal taxes online for free He can deduct the remaining $1,600 of points in 2013. Where can i file my state and federal taxes online for free Exception. Where can i file my state and federal taxes online for free   If you refinance the mortgage with the same lender, you cannot deduct any remaining points for the year. Where can i file my state and federal taxes online for free Instead, deduct them over the term of the new loan. Where can i file my state and federal taxes online for free Form 1098. Where can i file my state and federal taxes online for free   The mortgage interest statement you receive should show not only the total interest paid during the year, but also your deductible points paid during the year. Where can i file my state and federal taxes online for free See Mortgage Interest Statement , later. Where can i file my state and federal taxes online for free Where To Deduct Home Mortgage Interest Enter on Schedule A (Form 1040), line 10, the home mortgage interest and points reported to you on Form 1098 (discussed next). Where can i file my state and federal taxes online for free If you did not receive a Form 1098, enter your deductible interest on line 11, and any deductible points on line 12. Where can i file my state and federal taxes online for free See Table 1 below for a summary of where to deduct home mortgage interest and real estate taxes. Where can i file my state and federal taxes online for free If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and social security number (SSN) or employer identification number (EIN) on the dotted lines next to line 11. Where can i file my state and federal taxes online for free The seller must give you this number and you must give the seller your SSN. Where can i file my state and federal taxes online for free Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Where can i file my state and federal taxes online for free Failure to meet either of these requirements may result in a $50 penalty for each failure. Where can i file my state and federal taxes online for free Table 1. Where can i file my state and federal taxes online for free Where To Deduct Interest and Taxes Paid on Your Home See the text for information on what expenses are eligible. Where can i file my state and federal taxes online for free IF you are eligible to deduct . Where can i file my state and federal taxes online for free . Where can i file my state and federal taxes online for free . Where can i file my state and federal taxes online for free THEN report the amount  on Schedule A (Form 1040) . Where can i file my state and federal taxes online for free . Where can i file my state and federal taxes online for free . Where can i file my state and federal taxes online for free real estate taxes line 6. Where can i file my state and federal taxes online for free home mortgage interest and points reported on Form 1098 line 10. Where can i file my state and federal taxes online for free home mortgage interest not reported on  Form 1098 line 11. Where can i file my state and federal taxes online for free points not reported on Form 1098 line 12. Where can i file my state and federal taxes online for free qualified mortgage insurance premiums line 13. Where can i file my state and federal taxes online for free Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage to a mortgage holder in the course of that holder's trade or business, you should receive a Form 1098 or similar statement from the mortgage holder. Where can i file my state and federal taxes online for free The statement will show the total interest paid on your mortgage during the year. Where can i file my state and federal taxes online for free If you bought a main home during the year, it also will show the deductible points you paid and any points you can deduct that were paid by the person who sold you your home. Where can i file my state and federal taxes online for free See Points , earlier. Where can i file my state and federal taxes online for free The interest you paid at settlement should be included on the statement. Where can i file my state and federal taxes online for free If it is not, add the interest from the settlement sheet that qualifies as home mortgage interest to the total shown on Form 1098 or similar statement. Where can i file my state and federal taxes online for free Put the total on Schedule A (Form 1040), line 10, and attach a statement to your return explaining the difference. Where can i file my state and federal taxes online for free Write “See attached” to the right of line 10. Where can i file my state and federal taxes online for free A mortgage holder can be a financial institution, a governmental unit, or a cooperative housing corporation. Where can i file my state and federal taxes online for free If a statement comes from a cooperative housing corporation, it generally will show your share of interest. Where can i file my state and federal taxes online for free Your mortgage interest statement for 2013 should be provided or sent to you by January 31, 2014. Where can i file my state and federal taxes online for free If it is mailed, you should allow adequate time to receive it before contacting the mortgage holder. Where can i file my state and federal taxes online for free A copy of this form will be sent to the IRS also. Where can i file my state and federal taxes online for free Example. Where can i file my state and federal taxes online for free You bought a new home on May 3. Where can i file my state and federal taxes online for free You paid no points on the purchase. Where can i file my state and federal taxes online for free During the year, you made mortgage payments which included $4,480 deductible interest on your new home. Where can i file my state and federal taxes online for free The settlement sheet for the purchase of the home included interest of $620 for 29 days in May. Where can i file my state and federal taxes online for free The mortgage statement you receive from the lender includes total interest of $5,100 ($4,480 + $620). Where can i file my state and federal taxes online for free You can deduct the $5,100 if you itemize your deductions. Where can i file my state and federal taxes online for free Refund of overpaid interest. Where can i file my state and federal taxes online for free   If you receive a refund of mortgage interest you overpaid in a prior year, you generally will receive a Form 1098 showing the refund in box 3. Where can i file my state and federal taxes online for free Generally, you must include the refund in income in the year you receive it. Where can i file my state and federal taxes online for free See Refund of home mortgage interest , earlier, under Home Mortgage Interest. Where can i file my state and federal taxes online for free More than one borrower. Where can i file my state and federal taxes online for free   If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. Where can i file my state and federal taxes online for free Show how much of the interest each of you paid, and give the name and address of the person who received the form. Where can i file my state and federal taxes online for free Deduct your share of the interest on Schedule A (Form 1040), line 11, and write “See attached” to the right of that line. Where can i file my state and federal taxes online for free Mortgage Insurance Premiums You may be able to take an itemized deduction on Schedule A (Form 1040), line 13, for premiums you pay or accrue during 2013 for qualified mortgage insurance in connection with home acquisition debt on your qualified home. Where can i file my state and federal taxes online for free Mortgage insurance premiums you paid or accrued on any mortgage insurance contract issued before January 1, 2007, are not deductible as an itemized deduction. Where can i file my state and federal taxes online for free Qualified Mortgage Insurance Qualified mortgage insurance is mortgage insurance provided by the Veterans Administration, the Federal Housing Administration, or the Rural Housing Administration, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). Where can i file my state and federal taxes online for free Prepaid mortgage insurance premiums. Where can i file my state and federal taxes online for free   If you paid premiums that are allocable to periods after 2013, you must allocate them over the shorter of: The stated term of the mortgage, or 84 months, beginning with the month the insurance was obtained. Where can i file my state and federal taxes online for free The premiums are treated as paid in the year to which they were allocated. Where can i file my state and federal taxes online for free If the mortgage is satisfied before its term, no deduction is allowed for the unamortized balance. Where can i file my state and federal taxes online for free See Publication 936 for details. Where can i file my state and federal taxes online for free Exception for certain mortgage insurance. Where can i file my state and federal taxes online for free   The allocation rules, explained above, do not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or Rural Housing Service. Where can i file my state and federal taxes online for free Home Acquisition Debt Home acquisition debt is a mortgage you took out after October 13, 1987, to buy, build, or substantially improve a qualified home. Where can i file my state and federal taxes online for free It also must be secured by that home. Where can i file my state and federal taxes online for free If the amount of your mortgage is more than the cost of the home plus the cost of any substantial improvements, only the debt that is not more than the cost of the home plus improvements qualifies as home acquisition debt. Where can i file my state and federal taxes online for free Home acquisition debt limit. Where can i file my state and federal taxes online for free   The total amount you can treat as home acquisition debt at any time on your home cannot be more than $1 million ($500,000 if married filing separately). Where can i file my state and federal taxes online for free Discharges of qualified principal residence indebtedness. Where can i file my state and federal taxes online for free   You can exclude from gross income any discharges of qualified principal residence indebtedness made after 2006 and before 2014. Where can i file my state and federal taxes online for free You must reduce the basis of your principal residence (but not below zero) by the amount you exclude. Where can i file my state and federal taxes online for free Principal residence. Where can i file my state and federal taxes online for free   Your principal residence is the home where you ordinarily live most of the time. Where can i file my state and federal taxes online for free You can have only one principal residence at any one time. Where can i file my state and federal taxes online for free Qualified principal residence indebtedness. Where can i file my state and federal taxes online for free   This is a mortgage that you took out to buy, build, or substantially improve your principal residence and that is secured by that residence. Where can i file my state and federal taxes online for free If the amount of your original mortgage is more than the cost of your principal residence plus the cost of substantial improvements, qualified principal residence indebtedness cannot be more than the cost of your principal residence plus improvements. Where can i file my state and federal taxes online for free   Any debt secured by your principal residence that you use to refinance qualified principal residence indebtedness is qualified principal residence indebtedness up to the amount of your old mortgage principal just before the refinancing. Where can i file my state and federal taxes online for free Additional debt incurred to substantially improve your principal residence is also qualified principal residence indebtedness. Where can i file my state and federal taxes online for free Amount you can exclude. Where can i file my state and federal taxes online for free   You can only exclude debt discharged after 2006 and before 2014. Where can i file my state and federal taxes online for free The most you can exclude is $2 million ($1 million if married filing separately). Where can i file my state and federal taxes online for free You cannot exclude any amount that was discharged because of services performed for the lender or on account of any other factor not directly related either to a decline in the value of your residence or to your financial condition. Where can i file my state and federal taxes online for free Ordering rule. Where can i file my state and federal taxes online for free   If only a part of a loan is qualified principal residence indebtedness, you can exclude only the amount of the discharge that is more than the amount of the loan (immediately before the discharge) that is not qualified principal residence indebtedness. Where can i file my state and federal taxes online for free Qualified Home This means your main home or your second home. Where can i file my state and federal taxes online for free A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. Where can i file my state and federal taxes online for free Main home. Where can i file my state and federal taxes online for free   You can have only one main home at any one time. Where can i file my state and federal taxes online for free This is the home where you ordinarily live most of the time. Where can i file my state and federal taxes online for free Second home and other special situations. Where can i file my state and federal taxes online for free   If you have a second home, use part of your home for other than residential living (such as a home office), rent out part of your home, or are having your home constructed, see Qualified Home in Publication 936. Where can i file my state and federal taxes online for free Limit on Deduction If your adjusted gross income (AGI) on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are deductible is reduced and may be eliminated. Where can i file my state and federal taxes online for free See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. Where can i file my state and federal taxes online for free If your AGI is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Where can i file my state and federal taxes online for free Form 1098. Where can i file my state and federal taxes online for free   The amount of mortgage insurance premiums you paid during 2013 should be reported in box 4. Where can i file my state and federal taxes online for free See Form 1098, Mortgage Interest Statement in Publication 936. Where can i file my state and federal taxes online for free Mortgage Interest Credit The mortgage interest credit is intended to help lower-income individuals afford home ownership. Where can i file my state and federal taxes online for free If you qualify, you can claim the credit on Form 8396 each year for part of the home mortgage interest you pay. Where can i file my state and federal taxes online for free Who qualifies. Where can i file my state and federal taxes online for free   You may be eligible for the credit if you were issued a qualified Mortgage Credit Certificate (MCC) from your state or local government. Where can i file my state and federal taxes online for free Generally, an MCC is issued only in connection with a new mortgage for the purchase of your main home. Where can i file my state and federal taxes online for free The MCC will show the certificate credit rate you will use to figure your credit. Where can i file my state and federal taxes online for free It also will show the certified indebtedness amount. Where can i file my state and federal taxes online for free Only the interest on that amount qualifies for the credit. Where can i file my state and federal taxes online for free See Figuring the Credit , later. Where can i file my state and federal taxes online for free You must contact the appropriate government agency about getting an MCC before you get a mortgage and buy your home. Where can i file my state and federal taxes online for free Contact your state or local housing finance agency for information about the availability of MCCs in your area. Where can i file my state and federal taxes online for free How to claim the credit. Where can i file my state and federal taxes online for free   To claim the credit, complete Form 8396 and attach it to your Form 1040 or Form 1040NR, U. Where can i file my state and federal taxes online for free S. Where can i file my state and federal taxes online for free Nonresident Alien Income Tax Return. Where can i file my state and federal taxes online for free Include the credit in your total for Form 1040, line 53, or Form 1040NR, line 50; be sure to check box c and write “Form 8396” on that line. Where can i file my state and federal taxes online for free Reducing your home mortgage interest deduction. Where can i file my state and federal taxes online for free   If you itemize your deductions on Schedule A (Form 1040), you must reduce your home mortgage interest deduction by the amount of the mortgage interest credit shown on Form 8396, line 3. Where can i file my state and federal taxes online for free You must do this even if part of that amount is to be carried forward to 2014. Where can i file my state and federal taxes online for free Selling your home. Where can i file my state and federal taxes online for free   If you purchase a home after 1990 using an MCC, and you sell that home within 9 years, you may have to recapture (repay) all or part of the benefit you received from the MCC program. Where can i file my state and federal taxes online for free For additional information, see Recapturing (Paying Back) a Federal Mortgage Subsidy, in Publication 523. Where can i file my state and federal taxes online for free Figuring the Credit Figure your credit on Form 8396. Where can i file my state and federal taxes online for free Mortgage not more than certified indebtedness. Where can i file my state and federal taxes online for free   If your mortgage loan amount is equal to (or smaller than) the certified indebtedness amount shown on your MCC, enter on Form 8396, line 1, all the interest you paid on your mortgage during the year. Where can i file my state and federal taxes online for free Mortgage more than certified indebtedness. Where can i file my state and federal taxes online for free   If your mortgage loan amount is larger than the certified indebtedness amount shown on your MCC, you can figure the credit on only part of the interest you paid. Where can i file my state and federal taxes online for free To find the amount to enter on line 1, multiply the total interest you paid during the year on your mortgage by the following fraction. Where can i file my state and federal taxes online for free Certified indebtedness amount on your MCC Original amount of your mortgage   The fraction will not change as long as you are entitled to take the mortgage interest credit. Where can i file my state and federal taxes online for free Example. Where can i file my state and federal taxes online for free Emily bought a home this year. Where can i file my state and federal taxes online for free Her mortgage loan is $125,000. Where can i file my state and federal taxes online for free The certified indebtedness amount on her MCC is $100,000. Where can i file my state and federal taxes online for free She paid $7,500 interest this year. Where can i file my state and federal taxes online for free Emily figures the interest to enter on Form 8396, line 1, as follows:   $100,000 = 80% (. Where can i file my state and federal taxes online for free 80)       $125,000       $7,500 x . Where can i file my state and federal taxes online for free 80 = $6,000   Emily enters $6,000 on Form 8396, line 1. Where can i file my state and federal taxes online for free In each later year, she will figure her credit using only 80% of the interest she pays for that year. Where can i file my state and federal taxes online for free Limits Two limits may apply to your credit. Where can i file my state and federal taxes online for free A limit based on the credit rate, and A limit based on your tax. Where can i file my state and federal taxes online for free Limit based on credit rate. Where can i file my state and federal taxes online for free   If the certificate credit rate is higher than 20%, the credit you are allowed cannot be more than $2,000. Where can i file my state and federal taxes online for free Limit based on tax. Where can i file my state and federal taxes online for free   After applying the limit based on the credit rate, your credit generally cannot be more than your tax liability. Where can i file my state and federal taxes online for free See the Credit Limit Worksheet in the Form 8396 instructions to calculate the limit based on tax. Where can i file my state and federal taxes online for free Dividing the Credit If two or more persons (other than a married couple filing a joint return) hold an interest in the home to which the MCC relates, the credit must be divided based on the interest held by each person. Where can i file my state and federal taxes online for free Example. Where can i file my state and federal taxes online for free John and his brother, George, were issued an MCC. Where can i file my state and federal taxes online for free They used it to get a mortgage on their main home. Where can i file my state and federal taxes online for free John has a 60% ownership interest in the home, and George has a 40% ownership interest in the home. Where can i file my state and federal taxes online for free John paid $5,400 mortgage interest this year and George paid $3,600. Where can i file my state and federal taxes online for free The MCC shows a credit rate of 25% and a certified indebtedness amount of $130,000. Where can i file my state and federal taxes online for free The loan amount (mortgage) on their home is $120,000. Where can i file my state and federal taxes online for free The credit is limited to $2,000 because the credit rate is more than 20%. Where can i file my state and federal taxes online for free John figures the credit by multiplying the mortgage interest he paid this year ($5,400) by the certificate credit rate (25%) for a total of $1,350. Where can i file my state and federal taxes online for free His credit is limited to $1,200 ($2,000 × 60%). Where can i file my state and federal taxes online for free George figures the credit by multiplying the mortgage interest he paid this year ($3,600) by the certificate credit rate (25%) for a total of $900. Where can i file my state and federal taxes online for free His credit is limited to $800 ($2,000 × 40%). Where can i file my state and federal taxes online for free Carryforward If your allowable credit is reduced because of the limit based on your tax, you can carry forward the unused portion of the credit to the next 3 years or until used, whichever comes first. Where can i file my state and federal taxes online for free Example. Where can i file my state and federal taxes online for free You receive a mortgage credit certificate from State X. Where can i file my state and federal taxes online for free This year, your regular tax liability is $1,100, you owe no alternative minimum tax, and your mortgage interest credit is $1,700. Where can i file my state and federal taxes online for free You claim no other credits. Where can i file my state and federal taxes online for free Your unused mortgage interest credit for this year is $600 ($1,700 − $1,100). Where can i file my state and federal taxes online for free You can carry forward this amount to the next 3 years or until used, whichever comes first. Where can i file my state and federal taxes online for free Credit rate more than 20%. Where can i file my state and federal taxes online for free   If you are subject to the $2,000 limit because your certificate credit rate is more than 20%, you cannot carry forward any amount more than $2,000 (or your share of the $2,000 if you must divide the credit). Where can i file my state and federal taxes online for free Example. Where can i file my state and federal taxes online for free In the earlier example under Dividing the Credit , John and George used the entire $2,000 credit. Where can i file my state and federal taxes online for free The excess   John $1,350 − $1,200 = $150     George $900 − $800 = $100   $150 for John ($1,350 − $1,200) and $100 for George ($900 − $800) cannot be carried forward to future years, despite the respective tax liabilities for John and George. Where can i file my state and federal taxes online for free Refinancing If you refinance your original mortgage loan on which you had been given an MCC, you must get a new MCC to be able to claim the credit on the new loan. Where can i file my state and federal taxes online for free The amount of credit you can claim on the new loan may change. Where can i file my state and federal taxes online for free Table 2 below summarizes how to figure your credit if you refinance your original mortgage loan. Where can i file my state and federal taxes online for free Table 2. Where can i file my state and federal taxes online for free Effect of Refinancing on Your Credit IF you get a new (reissued) MCC and the amount of your new mortgage is . Where can i file my state and federal taxes online for free . Where can i file my state and federal taxes online for free . Where can i file my state and federal taxes online for free THEN the interest you claim on Form 8396, line 1, is* . Where can i file my state and federal taxes online for free . Where can i file my state and federal taxes online for free . Where can i file my state and federal taxes online for free smaller than or equal to the certified indebtedness amount on the new MCC all the interest paid during the year on your new mortgage. Where can i file my state and federal taxes online for free larger than the certified indebtedness amount on the new MCC interest paid during the year on your new mortgage multiplied by the following fraction. Where can i file my state and federal taxes online for free         certified indebtedness  amount on your new MCC       original amount of your  mortgage   *The credit using the new MCC cannot be more than the credit using the old MCC. Where can i file my state and federal taxes online for free  See New MCC cannot increase your credit above. Where can i file my state and federal taxes online for free An issuer may reissue an MCC after you refinance your mortgage. Where can i file my state and federal taxes online for free If you did not get a new MCC, you may want to contact the state or local housing finance agency that issued your original MCC for information about whether you can get a reissued MCC. Where can i file my state and federal taxes online for free Year of refinancing. Where can i file my state and federal taxes online for free   In the year of refinancing, add the applicable amount of interest paid on the old mortgage and the applicable amount of interest paid on the new mortgage, and enter the total on Form 8396, line 1. Where can i file my state and federal taxes online for free   If your new MCC has a credit rate different from the rate on the old MCC, you must attach a statement to Form 8396. Where can i file my state and federal taxes online for free The statement must show the calculation for lines 1, 2, and 3 for the part of the year when the old MCC was in effect. Where can i file my state and federal taxes online for free It must show a separate calculation for the part of the year when the new MCC was in effect. Where can i file my state and federal taxes online for free Combine the amounts from both calculations for line 3, enter the total on line 3 of the form, and write “See attached” on the dotted line next to line 2. Where can i file my state and federal taxes online for free New MCC cannot increase your credit. Where can i file my state and federal taxes online for free   The credit that you claim with your new MCC cannot be more than the credit that you could have claimed with your old MCC. Where can i file my state and federal taxes online for free   In most cases, the agency that issues your new MCC will make sure that it does not increase your credit. Where can i file my state and federal taxes online for free However, if either your old loan or your new loan has a variable (adjustable) interest rate, you will need to check this yourself. Where can i file my state and federal taxes online for free In that case, you will need to know the amount of the credit you could have claimed using the old MCC. Where can i file my state and federal taxes online for free   There are two methods for figuring the credit you could have claimed. Where can i file my state and federal taxes online for free Under one method, you figure the actual credit that would have been allowed. Where can i file my state and federal taxes online for free This means you use the credit rate on the old MCC and the interest you would have paid on the old loan. Where can i file my state and federal taxes online for free   If your old loan was a variable rate mortgage, you can use another method to determine the credit that you could have claimed. Where can i file my state and federal taxes online for free Under this method, you figure the credit using a payment schedule of a hypothetical self-amortizing mortgage with level payments projected to the final maturity date of the old mortgage. Where can i file my state and federal taxes online for free The interest rate of the hypothetical mortgage is the annual percentage rate (APR) of the new mortgage for purposes of the Federal Truth in Lending Act. Where can i file my state and federal taxes online for free The principal of the hypothetical mortgage is the remaining outstanding balance of the certified mortgage indebtedness shown on the old MCC. Where can i file my state and federal taxes online for free    You must choose one method and use it consistently beginning with the first tax year for which you claim the credit based on the new MCC. Where can i file my state and federal taxes online for free    As part of your tax records, you should keep your old MCC and the schedule of payments for your old mortgage. Where can i file my state and federal taxes online for free Basis Basis is your starting point for figuring a gain or loss if you later sell your home, or for figuring depreciation if you later use part of your home for business purposes or for rent. Where can i file my state and federal taxes online for free While you own your home, you may add certain items to your basis. Where can i file my state and federal taxes online for free You may subtract certain other items from your basis. Where can i file my state and federal taxes online for free These items are called adjustments to basis and are explained later under Adjusted Basis . Where can i file my state and federal taxes online for free It is important that you understand these terms when you first acquire your home because you must keep track of your basis and adjusted basis during the period you own your home. Where can i file my state and federal taxes online for free You also must keep records of the events that affect basis or adjusted basis. Where can i file my state and federal taxes online for free See Keeping Records , below. Where can i file my state and federal taxes online for free Figuring Your Basis How you figure your basis depends on how you acquire your home. Where can i file my state and federal taxes online for free If you buy or build your home, your cost is your basis. Where can i file my state and federal taxes online for free If you receive your home as a gift, your basis is usually the same as the adjusted basis of the person who gave you the property. Where can i file my state and federal taxes online for free If you inherit your home from a decedent, different rules apply depending on the date of the decedent's death. Where can i file my state and federal taxes online for free Each of these topics is discussed later. Where can i file my state and federal taxes online for free Property transferred from a spouse. Where can i file my state and federal taxes online for free   If your home is transferred to you from your spouse, or from your former spouse as a result of a divorce, your basis is the same as your spouse's (or former spouse's) adjusted basis just before the transfer. Where can i file my state and federal taxes online for free Publication 504, Divorced or Separated Individuals, fully discusses transfers between spouses. Where can i file my state and federal taxes online for free Cost as Basis The cost of your home, whether you purchased it or constructed it, is the amount you paid for it, including any debt you assumed. Where can i file my state and federal taxes online for free The cost of your home includes most settlement or closing costs you paid when you bought the home. Where can i file my state and federal taxes online for free If you built your home, your cost includes most closing costs paid when you bought the land or settled on your mortgage. Where can i file my state and federal taxes online for free See Settlement or closing costs , later. Where can i file my state and federal taxes online for free If you elect to deduct the sales taxes on the purchase or construction of your home as an itemized deduction on Schedule A (Form 1040), you cannot include the sales taxes as part of your cost basis in the home. Where can i file my state and federal taxes online for free Purchase. Where can i file my state and federal taxes online for free   The basis of a home you bought is the amount you paid for it. Where can i file my state and federal taxes online for free This usually includes your down payment and any debt you assumed. Where can i file my state and federal taxes online for free The basis of a cooperative apartment is the amount you paid for your shares in the corporation that owns or controls the property. Where can i file my state and federal taxes online for free This amount includes any purchase commissions or other costs of acquiring the shares. Where can i file my state and federal taxes online for free Construction. Where can i file my state and federal taxes online for free   If you contracted to have your home built on land that you own, your basis in the home is your basis in the land plus the amount you paid to have the home built. Where can i file my state and federal taxes online for free This includes the cost of labor and materials, the amount you paid the contractor, any architect's fees, building permit charges, utility meter and connection charges, and legal fees that are directly connected with building your home. Where can i file my state and federal taxes online for free If you built all or part of your home yourself, your basis is the total amount it cost you to build it. Where can i file my state and federal taxes online for free You cannot include in basis the value of your own labor or any other labor for which you did not pay. Where can i file my state and federal taxes online for free Real estate taxes. Where can i file my state and federal taxes online for free   Real estate taxes are usually divided so that you and the seller each pay taxes for the part of the property tax year that each owned the home. Where can i file my state and federal taxes online for free See the earlier discussion of Real estate taxes paid at settlement or closing , under Real Estate Taxes, earlier, to figure the real estate taxes you paid or are considered to have paid. Where can i file my state and federal taxes online for free   If you pay any part of the seller's share of the real estate taxes (the taxes up to the date of sale), and the seller did not reimburse you, add those taxes to your basis in the home. Where can i file my state and federal taxes online for free You cannot deduct them as taxes paid. Where can i file my state and federal taxes online for free   If the seller paid any of your share of the real estate taxes (the taxes beginning with the date of sale), you can still deduct those taxes. Where can i file my state and federal taxes online for free Do not include those taxes in your basis. Where can i file my state and federal taxes online for free If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. Where can i file my state and federal taxes online for free Example 1. Where can i file my state and federal taxes online for free You bought your home on September 1. Where can i file my state and federal taxes online for free The property tax year in your area is the calendar year, and the tax is due on August 15. Where can i file my state and federal taxes online for free The real estate taxes on the home you bought were $1,275 for the year and had been paid by the seller on August 15. Where can i file my state and federal taxes online for free You did not reimburse the seller for your share of the real estate taxes from September 1 through December 31. Where can i file my state and federal taxes online for free You must reduce the basis of your home by the $426 [(122 ÷ 365) × $1,275] the seller paid for you. Where can i file my state and federal taxes online for free You can deduct your $426 share of real estate taxes on your return for the year you purchased your home. Where can i file my state and federal taxes online for free Example 2. Where can i file my state and federal taxes online for free You bought your home on May 3, 2013. Where can i file my state and federal taxes online for free The property tax year in your area is the calendar year. Where can i file my state and federal taxes online for free The taxes for the previous year are assessed on January 2 and are due on May 31 and November 30. Where can i file my state and federal taxes online for free Under state law, the taxes become a lien on May 31. Where can i file my state and federal taxes online for free You agreed to pay all taxes due after the date of sale. Where can i file my state and federal taxes online for free The taxes due in 2013 for 2012 were $1,375. Where can i file my state and federal taxes online for free The taxes due in 2014 for 2013 will be $1,425. Where can i file my state and federal taxes online for free You cannot deduct any of the taxes paid in 2013 because they relate to the 2012 property tax year and you did not own the home until 2013. Where can i file my state and federal taxes online for free Instead, you add the $1,375 to the cost (basis) of your home. Where can i file my state and federal taxes online for free You owned the home in 2013 for 243 days (May 3 to December 31), so you can take a tax deduction on your 2014 return of $949 [(243 ÷ 365) × $1,425] paid in 2014 for 2013. Where can i file my state and federal taxes online for free You add the remaining $476 ($1,425 − $949) of taxes paid in 2014 to the cost (basis) of your home. Where can i file my state and federal taxes online for free Settlement or closing costs. Where can i file my state and federal taxes online for free   If you bought your home, you probably paid settlement or closing costs in addition to the contract price. Where can i file my state and federal taxes online for free These costs are divided between you and the seller according to the sales contract, local custom, or understanding of the parties. Where can i file my state and federal taxes online for free If you built your home, you probably paid these costs when you bought the land or settled on your mortgage. Where can i file my state and federal taxes online for free   The only settlement or closing costs you can deduct are home mortgage interest and certain real estate taxes. Where can i file my state and federal taxes online for free You deduct them in the year you buy your home if you itemize your deductions. Where can i file my state and federal taxes online for free You can add certain other settlement or closing costs to the basis of your home. Where can i file my state and federal taxes online for free Items added to basis. Where can i file my state and federal taxes online for free   You can include in your basis the settlement fees and closing costs you paid for buying your home. Where can i file my state and federal taxes online for free A fee is for buying the home if you would have had to pay it even if you paid cash for the home. Where can i file my state and federal taxes online for free   The following are some of the settlement fees and closing costs that you can include in the original basis of your home. Where can i file my state and federal taxes online for free Abstract fees (abstract of title fees). Where can i file my state and federal taxes online for free Charges for installing utility services. Where can i file my state and federal taxes online for free Legal fees (including fees for the title search and preparation of the sales contract and deed). Where can i file my state and federal taxes online for free Recording fees. Where can i file my state and federal taxes online for free Surveys. Where can i file my state and federal taxes online for free Transfer or stamp taxes. Where can i file my state and federal taxes online for free Owner's title insurance. Where can i file my state and federal taxes online for free Any amount the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, cost for improvements or repairs, and sales commissions. Where can i file my state and federal taxes online for free   If the seller actually paid for any item for which you are liable and for which you can take a deduction (such as your share of the real estate taxes for the year of sale), you must reduce your basis by that amount unless you are charged for it in the settlement. Where can i file my state and federal taxes online for free Items not added to basis and not deductible. Where can i file my state and federal taxes online for free   Here are some settlement and closing costs that you cannot deduct or add to your basis. Where can i file my state and federal taxes online for free Fire insurance premiums. Where can i file my state and federal taxes online for free Charges for using utilities or other services related to occupancy of the home before closing. Where can i file my state and federal taxes online for free Rent for occupying the home before closing. Where can i file my state and federal taxes online for free Charges connected with getting or refinancing a mortgage loan, such as: Loan assumption fees, Cost of a credit report, and Fee for an appraisal required by a lender. Where can i file my state and federal taxes online for free Points paid by seller. Where can i file my state and federal taxes online for free   If you bought your home after April 3, 1994, you must reduce your basis by any points paid for your mortgage by the person who sold you your home. Where can i file my state and federal taxes online for free   If you bought your home after 1990 but before April 4, 1994, you must reduce your basis by seller-paid points only if you deducted them. Where can i file my state and federal taxes online for free See Points , earlier, for the rules on deducting points. Where can i file my state and federal taxes online for free Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined later) to the donor just before it was given to you, its fair market value (FMV) at the time it was given to you, and any gift tax paid on it. Where can i file my state and federal taxes online for free Fair market value. Where can i file my state and federal taxes online for free   Fair market value (FMV) is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and who both have a reasonable knowledge of all the necessary facts. Where can i file my state and federal taxes online for free Donor's adjusted basis is more than FMV. Where can i file my state and federal taxes online for free   If someone gave you your home and the donor's adjusted basis, when it was given to you, was more than the FMV, your basis at the time of receipt is the same as the donor's adjusted basis. Where can i file my state and federal taxes online for free Disposition basis. Where can i file my state and federal taxes online for free   If the donor's adjusted basis at the time of the gift is more than the FMV, your basis (plus or minus any required adjustments, see Adjusted Basis , later) when you dispose of the property will depend on whether you have a gain or a loss. Where can i file my state and federal taxes online for free Your basis for figuring a gain is the same as the donor's adjusted basis. Where can i file my state and federal taxes online for free Your basis for figuring a loss is the FMV when you received the gift. Where can i file my state and federal taxes online for free If you use the donor's adjusted basis to figure a gain and it results in a loss, then you must use the FMV (at the time of the gift) to refigure the loss. Where can i file my state and federal taxes online for free However, if using the FMV results in a gain, then you neither have a gain nor a loss. Where can i file my state and federal taxes online for free Example 1. Where can i file my state and federal taxes online for free Andrew received a house as a gift from Ishmael (the donor). Where can i file my state and federal taxes online for free At the time of the gift, the home had an FMV of $80,000. Where can i file my state and federal taxes online for free Ishmael's adjusted basis was $100,000. Where can i file my state and federal taxes online for free After he received the house, no events occurred to increase or decrease the basis. Where can i file my state and federal taxes online for free If Andrew sells the house for $120,000, he will have a $20,000 gain because he must use the donor's adjusted basis ($100,000) at the time of the gift as his basis to figure the gain. Where can i file my state and federal taxes online for free Example 2. Where can i file my state and federal taxes online for free Same facts as Example 1 , except this time Andrew sells the house for $70,000. Where can i file my state and federal taxes online for free He will have a loss of $10,000 because he must use the FMV ($80,000) at the time of the gift as his basis to figure the loss. Where can i file my state and federal taxes online for free Example 3. Where can i file my state and federal taxes online for free Same facts as Example 1 , except this time Andrew sells the house for $90,000. Where can i file my state and federal taxes online for free Initially, he figures the gain using Ishmael's adjusted basis ($100,000), which results in a loss of $10,000. Where can i file my state and federal taxes online for free Since it is a loss, Andrew must now recalculate the loss using the FMV ($80,000), which results in a gain of $10,000. Where can i file my state and federal taxes online for free So in this situation, Andrew will neither have a gain nor a loss. Where can i file my state and federal taxes online for free Donor's adjusted basis equal to or less than the FMV. Where can i file my state and federal taxes online for free   If someone gave you your home after 1976 and the donor's adjusted basis, when it was given to you, was equal to or less than the FMV, your basis at the time of receipt is the same as the donor's adjusted basis, plus the part of any federal gift tax paid that is due to the net increase in value of the home. Where can i file my state and federal taxes online for free Part of federal gift tax due to net increase in value. Where can i file my state and federal taxes online for free   Figure the part of the federal gift tax paid that is due to the net increase in value of the home by multiplying the total federal gift tax paid by a fraction. Where can i file my state and federal taxes online for free The numerator (top part) of the fraction is the net increase in the value of the home, and the denominator (bottom part) is the value of the home for gift tax purposes after reduction for any annual exclusion and marital or charitable deduction that applies to the gift. Where can i file my state and federal taxes online for free The net increase in the value of the home is its FMV minus the adjusted basis of the donor. Where can i file my state and federal taxes online for free Publication 551 gives more information, including examples, on figuring your basis when you receive property as a gift. Where can i file my state and federal taxes online for free Inheritance Your basis in a home you inherited is generally the fair market value of the home on the date of the decedent's death or on the alternative valuation date if the personal representative for the estate chooses to use alternative valuation. Where can i file my state and federal taxes online for free If an estate tax return was filed, your basis is generally the value of the home listed on the estate tax return. Where can i file my state and federal taxes online for free If an estate tax return was not filed, your basis is the appraised value of the home at the decedent's date of death for state inheritance or transmission taxes. Where can i file my state and federal taxes online for free Publication 551 and Publication 559, Survivors, Executors, and Administrators, have more information on the basis of inherited property. Where can i file my state and federal taxes online for free If you inherited your home from someone who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. Where can i file my state and federal taxes online for free Adjusted Basis While you own your home, various events may take place that can change the original basis of your home. Where can i file my state and federal taxes online for free These events can increase or decrease your original basis. Where can i file my state and federal taxes online for free The result is called adjusted basis. Where can i file my state and federal taxes online for free See Table 3, on this page, for a list of some of the items that can adjust your basis. Where can i file my state and federal taxes online for free Table 3. Where can i file my state and federal taxes online for free Adjusted Basis This table lists examples of some items that generally will increase or decrease your basis in your home. Where can i file my state and federal taxes online for free It is not intended to be all-inclusive. Where can i file my state and federal taxes online for free Increases to Basis Decreases to Basis Improvements: Putting an addition on your home Replacing an entire roof Paving your driveway Installing central air conditioning Rewiring your home Assessments for local improvements (see Assessments for local benefits , under What You Can and Cannot Deduct, earlier) Amounts spent to restore damaged property Insurance or other reimbursement for casualty losses Deductible casualty loss not covered by insurance Payments received for easement or right-of-way granted Depreciation allowed or allowable if home is used for business or rental purposes Value of subsidy for energy conservation measure excluded from income Improvements. Where can i file my state and federal taxes online for free   An improvement materially adds to the value of your home, considerably prolongs its useful life, or adapts it to new uses. Where can i file my state and federal taxes online for free You must add the cost of any improvements to the basis of your home. Where can i file my state and federal taxes online for free You cannot deduct these costs. Where can i file my state and federal taxes online for free   Improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, and paving your driveway. Where can i file my state and federal taxes online for free Amount added to basis. Where can i file my state and federal taxes online for free   The amount you add to your basis for improvements is your actual cost. Where can i file my state and federal taxes online for free This includes all costs for material and labor, except your own labor, and all expenses related to the improvement. Where can i file my state and federal taxes online for free For example, if you had your lot surveyed to put up a fence, the cost of the survey is a part of the cost of the fence. Where can i file my state and federal taxes online for free   You also must add to your basis state and local assessments for improvements such as streets and sidewalks if they increase the value of the property. Where can i file my state and federal taxes online for free These assessments are discussed earlier under Real Estate Taxes . Where can i file my state and federal taxes online for free Improvements no longer part of home. Where can i file my state and federal taxes online for free    Your home's adjusted basis does not include the cost of any improvements that are replaced and are no longer part of the home. Where can i file my state and federal taxes online for free Example. Where can i file my state and federal taxes online for free You put wall-to-wall carpeting in your home 15 years ago. Where can i file my state and federal taxes online for free Later, you replaced that carpeting with new wall-to-wall carpeting. Where can i file my state and federal taxes online for free The cost of the old carpeting you replaced is no longer part of your home's adjusted basis. Where can i file my state and federal taxes online for free Repairs versus improvements. Where can i file my state and federal taxes online for free   A repair keeps your home in an ordinary, efficient operating condition. Where can i file my state and federal taxes online for free It does not add to the value of your home or prolong its life. Where can i file my state and federal taxes online for free Repairs include repainting your home inside or outside, fixing your gutters or floors, fixing leaks or plastering, and replacing broken window panes. Where can i file my state and federal taxes online for free You cannot deduct repair costs and generally cannot add them to the basis of your home. Where can i file my state and federal taxes online for free   However, repairs that are done as part of an extensive remodeling or restoration of your home are considered improvements. Where can i file my state and federal taxes online for free You add them to the basis of your home. Where can i file my state and federal taxes online for free Records to keep. Where can i file my state and federal taxes online for free   You can use Table 4 (at the end of the publication) as a guide to help you keep track of improvements to your home. Where can i file my state and federal taxes online for free Also see Keeping Records , below. Where can i file my state and federal taxes online for free Energy conservation subsidy. Where can i file my state and federal taxes online for free   If a public utility gives you (directly or indirectly) a subsidy for the purchase or installation of an energy conservation measure for your home, do not include the value of that subsidy in your income. Where can i file my state and federal taxes online for free You must reduce the basis of your home by that value. Where can i file my state and federal taxes online for free   An energy conservation measure is an installation or modification primarily designed to reduce consumption of electricity or natural gas or to improve the management of energy demand. Where can i file my state and federal taxes online for free Keeping Records Keeping full and accurate records is vital to properly report your income and expenses, to support your deductions and credits, and to know the basis or adjusted basis of your home. Where can i file my state and federal taxes online for free These records include your purchase contract and settlement papers if you bought the property, or other objective evidence if you acquired it by gift, inheritance, or similar means. Where can i file my state and federal taxes online for free You should keep any receipts, canceled checks, and similar evidence for improvements or other additions to the basis. Where can i file my state and federal taxes online for free In addition, you should keep track of any decreases to the basis such as those listed in Table 3, earlier. Where can i file my state and federal taxes online for free How to keep records. Where can i file my state and federal taxes online for free   How you keep records is up to you, but they must be clear and accurate and must be available to the IRS. Where can i file my state and federal taxes online for free How long to keep records. Where can i file my state and federal taxes online for free   You must keep your records for as long as they are important for meeting any provision of the federal tax law. Where can i file my state and federal taxes online for free   Keep records that support an item of income, a deduction, or a credit appearing on a return until the period of limitations for the return runs out. Where can i file my state and federal taxes online for free (A period of limitations is the period of time after which no legal action can be brought. Where can i file my state and federal taxes online for free ) For assessment of tax you owe, this is generally 3 years from the date you filed the return. Where can i file my state and federal taxes online for free For filing a claim for credit or refund, this is generally 3 years from the date you filed the original return, or 2 years from the date you paid the tax, whichever is later. Where can i file my state and federal taxes online for free Returns filed before the due date are treated as filed on the due date. Where can i file my state and federal taxes online for free   You may need to keep records relating to the basis of property (discussed earlier) for longer than the period of limitations. Where can i file my state and federal taxes online for free Keep those records as long as they are important in figuring the basis of the original or replacement property. Where can i file my state and federal taxes online for free Generally, this means for as long as you own the property and, after you dispose of it, for the period of limitations that applies to you. Where can i file my state and federal taxes online for free Table 4. Where can i file my state and federal taxes online for free Record of Home Improvements Keep this for your records. Where can i file my state and federal taxes online for free Also, keep receipts or other proof of improvements. Where can i file my state and federal taxes online for free Remove from this record any improvements that are no longer part of your main home. Where can i file my state and federal taxes online for free For example, if you put wall-to-wall carpeting in your home and later replace it with new wall-to-wall carpeting, remove the cost of the first carpeting. Where can i file my state and federal taxes online for free (a) Type of Improvement (b) Date (c) Amount   (a) Type of Improvement (b) Date (c) Amount Additions:       Heating & Air  Conditioning:     Bedroom       Heating system     Bathroom       Central air conditioning     Deck       Furnace     Garage       Duct work     Porch       Central humidifier     Patio       Filtration system     Storage shed       Other     Fireplace       Electrical:     Other           Lawn & Grounds:       Lighting fixtures           Wiring upgrades     Landscaping       Other     Driveway       Plumbing:     Walkway           Fences       Water heater     Retaining wall       Soft water system     Sprinkler system       Filtration system     Swimming pool       Other     Exterior lighting       Insulation:     Other           Communications:       Attic           Walls     Satellite dish       Floors     Intercom       Pipes and duct work     Security system       Other     Other             Miscellaneous:       Interior  Improvements:     Storm windows and doors       Built-in appliances     Roof       Kitchen modernization     Central vacuum       Bathroom modernization     Other       Flooring             Wall-to-wall carpeting             Other     How To
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Where can i file my state and federal taxes online for free 27. Where can i file my state and federal taxes online for free   Tax Benefits for Work-Related Education Table of Contents What's New Introduction Useful Items - You may want to see: Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. Where can i file my state and federal taxes online for free Transportation Expenses Travel Expenses No Double Benefit Allowed Reimbursements Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping What's New Standard mileage rate. Where can i file my state and federal taxes online for free  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013, through December 31, 2013, is 56½ cents per mile. Where can i file my state and federal taxes online for free For more information, see Transportation Expenses under What Expenses Can Be Deducted. Where can i file my state and federal taxes online for free Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. Where can i file my state and federal taxes online for free To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040) if you are an employee, File Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040) if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education . Where can i file my state and federal taxes online for free If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. Where can i file my state and federal taxes online for free Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. Where can i file my state and federal taxes online for free See chapter 28. Where can i file my state and federal taxes online for free If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. Where can i file my state and federal taxes online for free Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits (see chapter 35). Where can i file my state and federal taxes online for free You may qualify for these other benefits even if you do not meet the requirements listed earlier. Where can i file my state and federal taxes online for free Also, keep in mind that your work-related education expenses may qualify you to claim more than one tax benefit. Where can i file my state and federal taxes online for free Generally, you may claim any number of benefits as long as you use different expenses to figure each one. Where can i file my state and federal taxes online for free When you figure your taxes, you may want to compare these tax benefits so you can choose the method(s) that give you the lowest tax liability. Where can i file my state and federal taxes online for free Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 970 Tax Benefits for Education Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses Schedule A (Form 1040) Itemized Deductions Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. Where can i file my state and federal taxes online for free This is education that meets at least one of the following two tests. Where can i file my state and federal taxes online for free The education is required by your employer or the law to keep your present salary, status, or job. Where can i file my state and federal taxes online for free The required education must serve a bona fide business purpose of your employer. Where can i file my state and federal taxes online for free The education maintains or improves skills needed in your present work. Where can i file my state and federal taxes online for free However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. Where can i file my state and federal taxes online for free You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. Where can i file my state and federal taxes online for free Use Figure 27-A, later, as a quick check to see if your education qualifies. Where can i file my state and federal taxes online for free Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. Where can i file my state and federal taxes online for free This additional education is qualifying work-related education if all three of the following requirements are met. Where can i file my state and federal taxes online for free It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. Where can i file my state and federal taxes online for free When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. Where can i file my state and federal taxes online for free See Education To Maintain or Improve Skills , later. Where can i file my state and federal taxes online for free Example. Where can i file my state and federal taxes online for free You are a teacher who has satisfied the minimum requirements for teaching. Where can i file my state and federal taxes online for free Your employer requires you to take an additional college course each year to keep your teaching job. Where can i file my state and federal taxes online for free If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. Where can i file my state and federal taxes online for free Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. Where can i file my state and federal taxes online for free This could include refresher courses, courses on current developments, and academic or vocational courses. Where can i file my state and federal taxes online for free Example. Where can i file my state and federal taxes online for free You repair televisions, radios, and stereo systems for XYZ Store. Where can i file my state and federal taxes online for free To keep up with the latest changes, you take special courses in radio and stereo service. Where can i file my state and federal taxes online for free These courses maintain and improve skills required in your work. Where can i file my state and federal taxes online for free Maintaining skills vs. Where can i file my state and federal taxes online for free qualifying for new job. Where can i file my state and federal taxes online for free   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. Where can i file my state and federal taxes online for free Education during temporary absence. Where can i file my state and federal taxes online for free   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. Where can i file my state and federal taxes online for free Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. Where can i file my state and federal taxes online for free Example. Where can i file my state and federal taxes online for free You quit your biology research job to become a full-time biology graduate student for one year. Where can i file my state and federal taxes online for free If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. Where can i file my state and federal taxes online for free Education during indefinite absence. Where can i file my state and federal taxes online for free   If you stop work for more than a year, your absence from your job is considered indefinite. Where can i file my state and federal taxes online for free Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. Where can i file my state and federal taxes online for free Therefore, it is not qualifying work-related education. Where can i file my state and federal taxes online for free Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. Where can i file my state and federal taxes online for free The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. Where can i file my state and federal taxes online for free Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. Where can i file my state and federal taxes online for free This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. Where can i file my state and federal taxes online for free You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. Where can i file my state and federal taxes online for free Example 1. Where can i file my state and federal taxes online for free You are a full-time engineering student. Where can i file my state and federal taxes online for free Although you have not received your degree or certification, you work part-time as an engineer for a firm that will employ you as a full-time engineer after you finish college. Where can i file my state and federal taxes online for free Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. Where can i file my state and federal taxes online for free The education is not qualifying work-related education. Where can i file my state and federal taxes online for free Example 2. Where can i file my state and federal taxes online for free You are an accountant and you have met the minimum educational requirements of your employer. Where can i file my state and federal taxes online for free Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. Where can i file my state and federal taxes online for free These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. Where can i file my state and federal taxes online for free Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. Where can i file my state and federal taxes online for free The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. Where can i file my state and federal taxes online for free If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. Where can i file my state and federal taxes online for free The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. Where can i file my state and federal taxes online for free You generally will be considered a faculty member when one or more of the following occurs. Where can i file my state and federal taxes online for free You have tenure. Where can i file my state and federal taxes online for free Your years of service count toward obtaining tenure. Where can i file my state and federal taxes online for free You have a vote in faculty decisions. Where can i file my state and federal taxes online for free Your school makes contributions for you to a retirement plan other than social security or a similar program. Where can i file my state and federal taxes online for free Example 1. Where can i file my state and federal taxes online for free The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. Where can i file my state and federal taxes online for free In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. Where can i file my state and federal taxes online for free If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. Where can i file my state and federal taxes online for free However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. Where can i file my state and federal taxes online for free Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. Where can i file my state and federal taxes online for free If you have all the required education except the fifth year, you have met the minimum educational requirements. Where can i file my state and federal taxes online for free The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. Where can i file my state and federal taxes online for free Figure 27-A Does Your Work-Related Education Qualify? Please click here for the text description of the image. Where can i file my state and federal taxes online for free Figure 27-A. Where can i file my state and federal taxes online for free Does Your Work-Related Education Qualify?" Example 2. Where can i file my state and federal taxes online for free Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. Where can i file my state and federal taxes online for free The additional four education courses can be qualifying work-related education. Where can i file my state and federal taxes online for free Although you do not have all the required courses, you have already met the minimum educational requirements. Where can i file my state and federal taxes online for free Example 3. Where can i file my state and federal taxes online for free Assume the same facts as in Example 1 except that you are hired with only 3 years of college. Where can i file my state and federal taxes online for free The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. Where can i file my state and federal taxes online for free They are needed to meet the minimum educational requirements for employment as a teacher. Where can i file my state and federal taxes online for free Example 4. Where can i file my state and federal taxes online for free You have a bachelor's degree and you work as a temporary instructor at a university. Where can i file my state and federal taxes online for free At the same time, you take graduate courses toward an advanced degree. Where can i file my state and federal taxes online for free The rules of the university state that you can become a faculty member only if you get a graduate degree. Where can i file my state and federal taxes online for free Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. Where can i file my state and federal taxes online for free You have not met the minimum educational requirements to qualify you as a faculty member. Where can i file my state and federal taxes online for free The graduate courses are not qualifying work-related education. Where can i file my state and federal taxes online for free Certification in a new state. Where can i file my state and federal taxes online for free   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. Where can i file my state and federal taxes online for free This is true even if you must get additional education to be certified in another state. Where can i file my state and federal taxes online for free Any additional education you need is qualifying work-related education. Where can i file my state and federal taxes online for free You have already met the minimum requirements for teaching. Where can i file my state and federal taxes online for free Teaching in another state is not a new trade or business. Where can i file my state and federal taxes online for free Example. Where can i file my state and federal taxes online for free You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. Where can i file my state and federal taxes online for free You move to State B and are promptly hired as a teacher. Where can i file my state and federal taxes online for free You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. Where can i file my state and federal taxes online for free These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. Where can i file my state and federal taxes online for free Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. Where can i file my state and federal taxes online for free This is true even if you do not plan to enter that trade or business. Where can i file my state and federal taxes online for free If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. Where can i file my state and federal taxes online for free Example 1. Where can i file my state and federal taxes online for free You are an accountant. Where can i file my state and federal taxes online for free Your employer requires you to get a law degree at your own expense. Where can i file my state and federal taxes online for free You register at a law school for the regular curriculum that leads to a law degree. Where can i file my state and federal taxes online for free Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. Where can i file my state and federal taxes online for free Example 2. Where can i file my state and federal taxes online for free You are a general practitioner of medicine. Where can i file my state and federal taxes online for free You take a 2-week course to review developments in several specialized fields of medicine. Where can i file my state and federal taxes online for free The course does not qualify you for a new profession. Where can i file my state and federal taxes online for free It is qualifying work-related education because it maintains or improves skills required in your present profession. Where can i file my state and federal taxes online for free Example 3. Where can i file my state and federal taxes online for free While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. Where can i file my state and federal taxes online for free The program will lead to qualifying you to practice psychoanalysis. Where can i file my state and federal taxes online for free The psychoanalytic training does not qualify you for a new profession. Where can i file my state and federal taxes online for free It is qualifying work-related education because it maintains or improves skills required in your present profession. Where can i file my state and federal taxes online for free Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. Where can i file my state and federal taxes online for free They are part of a program of study that can qualify you for a new profession. Where can i file my state and federal taxes online for free Teaching and Related Duties All teaching and related duties are considered the same general kind of work. Where can i file my state and federal taxes online for free A change in duties in any of the following ways is not considered a change to a new business. Where can i file my state and federal taxes online for free Elementary school teacher to secondary school teacher. Where can i file my state and federal taxes online for free Teacher of one subject, such as biology, to teacher of another subject, such as art. Where can i file my state and federal taxes online for free Classroom teacher to guidance counselor. Where can i file my state and federal taxes online for free Classroom teacher to school administrator. Where can i file my state and federal taxes online for free What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education , you can generally deduct your education expenses as business expenses. Where can i file my state and federal taxes online for free If you are not self-employed, you can deduct business expenses only if you itemize your deductions. Where can i file my state and federal taxes online for free You cannot deduct expenses related to tax-exempt and excluded income. Where can i file my state and federal taxes online for free Deductible expenses. Where can i file my state and federal taxes online for free   The following education expenses can be deducted. Where can i file my state and federal taxes online for free Tuition, books, supplies, lab fees, and similar items. Where can i file my state and federal taxes online for free Certain transportation and travel costs. Where can i file my state and federal taxes online for free Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. Where can i file my state and federal taxes online for free Nondeductible expenses. Where can i file my state and federal taxes online for free   You cannot deduct personal or capital expenses. Where can i file my state and federal taxes online for free For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. Where can i file my state and federal taxes online for free This amount is a personal expense. Where can i file my state and federal taxes online for free Unclaimed reimbursement. Where can i file my state and federal taxes online for free   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. Where can i file my state and federal taxes online for free Example. Where can i file my state and federal taxes online for free Your employer agrees to pay your education expenses if you file a voucher showing your expenses. Where can i file my state and federal taxes online for free You do not file a voucher, and you do not get reimbursed. Where can i file my state and federal taxes online for free Because you did not file a voucher, you cannot deduct the expenses on your tax return. Where can i file my state and federal taxes online for free Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. Where can i file my state and federal taxes online for free If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. Where can i file my state and federal taxes online for free Temporary basis. Where can i file my state and federal taxes online for free   You go to school on a temporary basis if either of the following situations applies to you. Where can i file my state and federal taxes online for free Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. Where can i file my state and federal taxes online for free Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Where can i file my state and federal taxes online for free Your attendance is temporary up to the date you determine it will last more than 1 year. Where can i file my state and federal taxes online for free Note. Where can i file my state and federal taxes online for free If you are in either situation (1) or (2), your attendance is not temporary if facts and circumstances indicate otherwise. Where can i file my state and federal taxes online for free Attendance not on a temporary basis. Where can i file my state and federal taxes online for free   You do not go to school on a temporary basis if either of the following situations apply to you. Where can i file my state and federal taxes online for free Your attendance at school is realistically expected to last more than 1 year. Where can i file my state and federal taxes online for free It does not matter how long you actually attend. Where can i file my state and federal taxes online for free Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Where can i file my state and federal taxes online for free Your attendance is not temporary after the date you determine it will last more than 1 year. Where can i file my state and federal taxes online for free Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. Where can i file my state and federal taxes online for free This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. Where can i file my state and federal taxes online for free Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Where can i file my state and federal taxes online for free Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. Where can i file my state and federal taxes online for free Example 1. Where can i file my state and federal taxes online for free You regularly work in a nearby town, and go directly from work to home. Where can i file my state and federal taxes online for free You also attend school every work night for 3 months to take a course that improves your job skills. Where can i file my state and federal taxes online for free Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. Where can i file my state and federal taxes online for free This is true regardless of the distance traveled. Where can i file my state and federal taxes online for free Example 2. Where can i file my state and federal taxes online for free Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. Where can i file my state and federal taxes online for free You can deduct your transportation expenses from your regular work site to school and then home. Where can i file my state and federal taxes online for free Example 3. Where can i file my state and federal taxes online for free Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. Where can i file my state and federal taxes online for free Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. Where can i file my state and federal taxes online for free Example 4. Where can i file my state and federal taxes online for free Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. Where can i file my state and federal taxes online for free Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. Where can i file my state and federal taxes online for free If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. Where can i file my state and federal taxes online for free If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. Where can i file my state and federal taxes online for free Using your car. Where can i file my state and federal taxes online for free   If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. Where can i file my state and federal taxes online for free The standard mileage rate for miles driven from January 1, 2013, through December 31, 2013 is 56½ cents per mile. Where can i file my state and federal taxes online for free Whichever method you use, you can also deduct parking fees and tolls. Where can i file my state and federal taxes online for free See chapter 26 for information on deducting your actual expenses of using a car. Where can i file my state and federal taxes online for free Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. Where can i file my state and federal taxes online for free Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. Where can i file my state and federal taxes online for free For more information, see chapter 26. Where can i file my state and federal taxes online for free You cannot deduct expenses for personal activities, such as sightseeing, visiting, or entertaining. Where can i file my state and federal taxes online for free Mainly personal travel. Where can i file my state and federal taxes online for free   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. Where can i file my state and federal taxes online for free You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. Where can i file my state and federal taxes online for free   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. Where can i file my state and federal taxes online for free An important factor is the comparison of time spent on personal activities with time spent on educational activities. Where can i file my state and federal taxes online for free If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. Where can i file my state and federal taxes online for free Example 1. Where can i file my state and federal taxes online for free John works in Newark, New Jersey. Where can i file my state and federal taxes online for free He traveled to Chicago to take a deductible 1-week course at the request of his employer. Where can i file my state and federal taxes online for free His main reason for going to Chicago was to take the course. Where can i file my state and federal taxes online for free While there, he took a sight-seeing trip, entertained some friends, and took a side trip to Pleasantville for a day. Where can i file my state and federal taxes online for free Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. Where can i file my state and federal taxes online for free He cannot deduct his transportation expenses of going to Pleasantville. Where can i file my state and federal taxes online for free He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. Where can i file my state and federal taxes online for free Example 2. Where can i file my state and federal taxes online for free Sue works in Boston. Where can i file my state and federal taxes online for free She went to a university in Michigan to take a course for work. Where can i file my state and federal taxes online for free The course is qualifying work-related education. Where can i file my state and federal taxes online for free She took one course, which is one-fourth of a full course load of study. Where can i file my state and federal taxes online for free She spent the rest of the time on personal activities. Where can i file my state and federal taxes online for free Her reasons for taking the course in Michigan were all personal. Where can i file my state and federal taxes online for free Sue's trip is mainly personal because three-fourths of her time is considered personal time. Where can i file my state and federal taxes online for free She cannot deduct the cost of her round-trip train ticket to Michigan. Where can i file my state and federal taxes online for free She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. Where can i file my state and federal taxes online for free Example 3. Where can i file my state and federal taxes online for free Dave works in Nashville and recently traveled to California to take a 2-week seminar. Where can i file my state and federal taxes online for free The seminar is qualifying work-related education. Where can i file my state and federal taxes online for free While there, he spent an extra 8 weeks on personal activities. Where can i file my state and federal taxes online for free The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. Where can i file my state and federal taxes online for free Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. Where can i file my state and federal taxes online for free He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. Where can i file my state and federal taxes online for free Cruises and conventions. Where can i file my state and federal taxes online for free   Certain cruises and conventions offer seminars or courses as part of their itinerary. Where can i file my state and federal taxes online for free Even if the seminars or courses are work-related, your deduction for travel may be limited. Where can i file my state and federal taxes online for free This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. Where can i file my state and federal taxes online for free   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. Where can i file my state and federal taxes online for free 50% limit on meals. Where can i file my state and federal taxes online for free   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. Where can i file my state and federal taxes online for free You cannot have been reimbursed for the meals. Where can i file my state and federal taxes online for free   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. Where can i file my state and federal taxes online for free Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. Where can i file my state and federal taxes online for free Example. Where can i file my state and federal taxes online for free You are a French language teacher. Where can i file my state and federal taxes online for free While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. Where can i file my state and federal taxes online for free You chose your itinerary and most of your activities to improve your French language skills. Where can i file my state and federal taxes online for free You cannot deduct your travel expenses as education expenses. Where can i file my state and federal taxes online for free This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. Where can i file my state and federal taxes online for free No Double Benefit Allowed You cannot do either of the following. Where can i file my state and federal taxes online for free Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, the tuition and fees deduction (see chapter 35). Where can i file my state and federal taxes online for free Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. Where can i file my state and federal taxes online for free See Adjustments to Qualifying Work-Related Education Expenses , next. Where can i file my state and federal taxes online for free Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. Where can i file my state and federal taxes online for free You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. Where can i file my state and federal taxes online for free For more information, see chapter 12 of Publication 970. Where can i file my state and federal taxes online for free Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see chapter 1 of Publication 970), The tax-free part of Pell grants (see chapter 1 of Publication 970), The tax-free part of employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received for education assistance. Where can i file my state and federal taxes online for free Amounts that do not reduce qualifying work-related education expenses. Where can i file my state and federal taxes online for free   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Where can i file my state and federal taxes online for free   Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. Where can i file my state and federal taxes online for free Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. Where can i file my state and federal taxes online for free There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. Where can i file my state and federal taxes online for free You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. Where can i file my state and federal taxes online for free For information on how to treat reimbursements under both accountable and nonaccountable plans, see Reimbursements in chapter 26. Where can i file my state and federal taxes online for free Deducting Business Expenses Self-employed persons and employees report business expenses differently. Where can i file my state and federal taxes online for free The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. Where can i file my state and federal taxes online for free Self-Employed Persons If you are self-employed, report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C, C-EZ, or F). Where can i file my state and federal taxes online for free If your educational expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. Where can i file my state and federal taxes online for free See the instructions for the form you file for information on how to complete it. Where can i file my state and federal taxes online for free Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. Where can i file my state and federal taxes online for free If either (1) or (2) applies, you can deduct the total qualifying cost. Where can i file my state and federal taxes online for free If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. Where can i file my state and federal taxes online for free In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21. Where can i file my state and federal taxes online for free (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Where can i file my state and federal taxes online for free ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Where can i file my state and federal taxes online for free See chapter 28. Where can i file my state and federal taxes online for free Form 2106 or 2106-EZ. Where can i file my state and federal taxes online for free   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or Form 2106-EZ. Where can i file my state and federal taxes online for free Form not required. Where can i file my state and federal taxes online for free   Do not complete either Form 2106 or Form 2106-EZ if: If amounts included in box 1 of your Form W-2, are not considered reimbursements, and You are not claiming travel, transportation, meal, or entertainment expenses. Where can i file my state and federal taxes online for free   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21. Where can i file my state and federal taxes online for free (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Where can i file my state and federal taxes online for free ) Using Form 2106-EZ. Where can i file my state and federal taxes online for free   This form is shorter and easier to use than Form 2106. Where can i file my state and federal taxes online for free Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. Where can i file my state and federal taxes online for free   If you do not meet both of these requirements, use Form 2106. Where can i file my state and federal taxes online for free Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. Where can i file my state and federal taxes online for free Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24. Where can i file my state and federal taxes online for free You do not have to itemize your deductions on Schedule A (Form 1040), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. Where can i file my state and federal taxes online for free You must complete Form 2106 or 2106-EZ to figure your deduction, even if you meet the requirements described earlier under Form not required . Where can i file my state and federal taxes online for free For more information on qualified performing artists, see chapter 6 of Publication 463. Where can i file my state and federal taxes online for free Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28. Where can i file my state and federal taxes online for free They are not subject to the 2%-of-adjusted-gross-income limit. Where can i file my state and federal taxes online for free To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . Where can i file my state and federal taxes online for free For more information on impairment-related work expenses, see chapter 6 of Publication 463. Where can i file my state and federal taxes online for free Recordkeeping You must keep records as proof of any deduction claimed on your tax return. Where can i file my state and federal taxes online for free Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. Where can i file my state and federal taxes online for free For specific information about keeping records of business expenses, see Recordkeeping in chapter 26. Where can i file my state and federal taxes online for free Prev  Up  Next   Home   More Online Publications