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

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

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

3. E-File for FREE

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

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

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

Download Tax Forms 2011

State EfileH&r Block State TaxesIrs GovFree Irs Forms1040nr Form 2012Irs Amended Tax Form 1040xFree 2010 State Tax FilingForm 1040Free Tax Preparation ServicesH&r Free TaxFile An Amended Tax ReturnFiling Tax AmendmentsFree Income TaxOhio 1040xFree Tax Filing H&r BlockFree State Tax E File2012 Tax ReturnsFile Free Tax Extension OnlineState Tax Filing1040ez Form 2013 PdfPrint Free 1040ez Tax FormE File State Tax For FreeFree Tax FilingIrs 2012 Tax Forms 10401040nr OnlineTax 2011 Form2012 Income TaxesCan I Still File 2012 Taxes OnlineState Income Tax ReturnsHr Block Taxes OnlineUs Tax Forms 2012How Long Does An Amended Tax Return TakeTaxslayer Coupon CodeMyfreetaxesFile 2007 Tax Return Online FreeIrs Gov Free State FileIrs Amended Return Form2011 Tax Forms 1040ezHnrblock Free Tax Form1040ez Fillable Form

Download Tax Forms 2011

Download tax forms 2011 4. Download tax forms 2011   Foreign Earned Income and Housing: Exclusion – Deduction Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Who Qualifies for the Exclusions and the Deduction? RequirementsTax Home in Foreign Country Bona Fide Residence Test Physical Presence Test Waiver of Time Requirements U. Download tax forms 2011 S. Download tax forms 2011 Travel Restrictions Foreign Earned Income Foreign Earned Income ExclusionLimit on Excludable Amount Choosing the Exclusion Foreign Housing Exclusion and DeductionHousing Amount Foreign Housing Exclusion Foreign Housing Deduction Married Couples Form 2555 and Form 2555-EZForm 2555-EZ Form 2555 Topics - This chapter discusses: Who qualifies for the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, The requirements that must be met to claim either exclusion or the deduction, How to figure the foreign earned income exclusion, and How to figure the foreign housing exclusion and the foreign housing deduction. Download tax forms 2011 Useful Items - You may want to see: Publication 519 U. Download tax forms 2011 S. Download tax forms 2011 Tax Guide for Aliens 570 Tax Guide for Individuals With Income from U. Download tax forms 2011 S. Download tax forms 2011 Possessions 596 Earned Income Credit (EIC) Form (and Instructions) 1040X Amended U. Download tax forms 2011 S. Download tax forms 2011 Individual Income Tax Return 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion See chapter 7 for information about getting these publications and forms. Download tax forms 2011 Who Qualifies for the Exclusions and the Deduction? If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction. Download tax forms 2011 If you are a U. Download tax forms 2011 S. Download tax forms 2011 citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. Download tax forms 2011 However, you may qualify to exclude from income up to $97,600 of your foreign earnings. Download tax forms 2011 In addition, you can exclude or deduct certain foreign housing amounts. Download tax forms 2011 See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later. Download tax forms 2011 You also may be entitled to exclude from income the value of meals and lodging provided to you by your employer. Download tax forms 2011 See Exclusion of Meals and Lodging, later. Download tax forms 2011 Requirements To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must meet all three of the following requirements. Download tax forms 2011 Your tax home must be in a foreign country. Download tax forms 2011 You must have foreign earned income. Download tax forms 2011 You must be one of the following. Download tax forms 2011 A U. Download tax forms 2011 S. Download tax forms 2011 citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Download tax forms 2011 A U. Download tax forms 2011 S. Download tax forms 2011 resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Download tax forms 2011 A U. Download tax forms 2011 S. Download tax forms 2011 citizen or a U. Download tax forms 2011 S. Download tax forms 2011 resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. Download tax forms 2011 See Publication 519 to find out if you are a U. Download tax forms 2011 S. Download tax forms 2011 resident alien for tax purposes and whether you keep that alien status when you temporarily work abroad. Download tax forms 2011 If you are a nonresident alien married to a U. Download tax forms 2011 S. Download tax forms 2011 citizen or resident alien, and both you and your spouse choose to treat you as a resident alien, you are a resident alien for tax purposes. Download tax forms 2011 For information on making the choice, see the discussion in chapter 1 under Nonresident Alien Spouse Treated as a Resident . Download tax forms 2011 Waiver of minimum time requirements. Download tax forms 2011   The minimum time requirements for bona fide residence and physical presence can be waived if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Download tax forms 2011 This is fully explained under Waiver of Time Requirements , later. Download tax forms 2011   See Figure 4-A and information in this chapter to determine if you are eligible to claim either exclusion or the deduction. Download tax forms 2011 Tax Home in Foreign Country To qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, your tax home must be in a foreign country throughout your period of bona fide residence or physical presence abroad. Download tax forms 2011 Bona fide residence and physical presence are explained later. Download tax forms 2011 Tax Home Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Download tax forms 2011 Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Download tax forms 2011 Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes. Download tax forms 2011 If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live. Download tax forms 2011 If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work. Download tax forms 2011 You are not considered to have a tax home in a foreign country for any period in which your abode is in the United States. Download tax forms 2011 However, your abode is not necessarily in the United States while you are temporarily in the United States. Download tax forms 2011 Your abode is also not necessarily in the United States merely because you maintain a dwelling in the United States, whether or not your spouse or dependents use the dwelling. Download tax forms 2011 “Abode” has been variously defined as one's home, habitation, residence, domicile, or place of dwelling. Download tax forms 2011 It does not mean your principal place of business. Download tax forms 2011 “Abode” has a domestic rather than a vocational meaning and does not mean the same as “tax home. Download tax forms 2011 ” The location of your abode often will depend on where you maintain your economic, family, and personal ties. Download tax forms 2011 Example 1. Download tax forms 2011 You are employed on an offshore oil rig in the territorial waters of a foreign country and work a 28-day on/28-day off schedule. Download tax forms 2011 You return to your family residence in the United States during your off periods. Download tax forms 2011 You are considered to have an abode in the United States and do not satisfy the tax home test in the foreign country. Download tax forms 2011 You cannot claim either of the exclusions or the housing deduction. Download tax forms 2011 Example 2. Download tax forms 2011 For several years, you were a marketing executive with a producer of machine tools in Toledo, Ohio. Download tax forms 2011 In November of last year, your employer transferred you to London, England, for a minimum of 18 months to set up a sales operation for Europe. Download tax forms 2011 Before you left, you distributed business cards showing your business and home addresses in London. Download tax forms 2011 You kept ownership of your home in Toledo but rented it to another family. Download tax forms 2011 You placed your car in storage. Download tax forms 2011 In November of last year, you moved your spouse, children, furniture, and family pets to a home your employer rented for you in London. Download tax forms 2011 Shortly after moving, you leased a car and you and your spouse got British driving licenses. Download tax forms 2011 Your entire family got library cards for the local public library. Download tax forms 2011 You and your spouse opened bank accounts with a London bank and secured consumer credit. Download tax forms 2011 You joined a local business league and both you and your spouse became active in the neighborhood civic association and worked with a local charity. Download tax forms 2011 Your abode is in London for the time you live there. Download tax forms 2011 You satisfy the tax home test in the foreign country. Download tax forms 2011 Please click here for the text description of the image. Download tax forms 2011 Figure 4–A Can I Claim the Exclusion or Deduction? Temporary or Indefinite Assignment The location of your tax home often depends on whether your assignment is temporary or indefinite. Download tax forms 2011 If you are temporarily absent from your tax home in the United States on business, you may be able to deduct your away-from-home expenses (for travel, meals, and lodging), but you would not qualify for the foreign earned income exclusion. Download tax forms 2011 If your new work assignment is for an indefinite period, your new place of employment becomes your tax home and you would not be able to deduct any of the related expenses that you have in the general area of this new work assignment. Download tax forms 2011 If your new tax home is in a foreign country and you meet the other requirements, your earnings may qualify for the foreign earned income exclusion. Download tax forms 2011 If you expect your employment away from home in a single location to last, and it does last, for 1 year or less, it is temporary unless facts and circumstances indicate otherwise. Download tax forms 2011 If you expect it to last for more than 1 year, it is indefinite. Download tax forms 2011 If you expect it to last for 1 year or less, but at some later date you expect it to last longer than 1 year, it is temporary (in the absence of facts and circumstances indicating otherwise) until your expectation changes. Download tax forms 2011 Once your expectation changes, it is indefinite. Download tax forms 2011 Foreign Country To meet the bona fide residence test or the physical presence test, you must live in or be present in a foreign country. Download tax forms 2011 A foreign country includes any territory under the sovereignty of a government other than that of the United States. Download tax forms 2011 The term “foreign country” includes the country's airspace and territorial waters, but not international waters and the airspace above them. Download tax forms 2011 It also includes the seabed and subsoil of those submarine areas adjacent to the country's territorial waters over which it has exclusive rights under international law to explore and exploit the natural resources. Download tax forms 2011 The term “foreign country” does not include Antarctica or U. Download tax forms 2011 S. Download tax forms 2011 possessions such as Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U. Download tax forms 2011 S. Download tax forms 2011 Virgin Islands, and Johnston Island. Download tax forms 2011 For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, the terms “foreign,” “abroad,” and “overseas” refer to areas outside the United States and those areas listed or described in the previous sentence. Download tax forms 2011 American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Residence or presence in a U. Download tax forms 2011 S. Download tax forms 2011 possession does not qualify you for the foreign earned income exclusion. Download tax forms 2011 You may, however, qualify for an exclusion of your possession income on your U. Download tax forms 2011 S. Download tax forms 2011 return. Download tax forms 2011 American Samoa. Download tax forms 2011   There is a possession exclusion available to individuals who are bona fide residents of American Samoa for the entire tax year. Download tax forms 2011 Gross income from sources within American Samoa may be eligible for this exclusion. Download tax forms 2011 Income that is effectively connected with the conduct of a trade or business within American Samoa also may be eligible for this exclusion. Download tax forms 2011 Use Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, to figure the exclusion. Download tax forms 2011 Guam and the Commonwealth of the Northern Mariana Islands. Download tax forms 2011   An exclusion will be available to residents of Guam and the Commonwealth of the Northern Mariana Islands if, and when, new implementation agreements take effect between the United States and those possessions. Download tax forms 2011   For more information, see Publication 570. Download tax forms 2011 Puerto Rico and U. Download tax forms 2011 S. Download tax forms 2011 Virgin Islands Residents of Puerto Rico and the U. Download tax forms 2011 S. Download tax forms 2011 Virgin Islands cannot claim the foreign earned income exclusion or the foreign housing exclusion. Download tax forms 2011 Puerto Rico. Download tax forms 2011   Generally, if you are a U. Download tax forms 2011 S. Download tax forms 2011 citizen who is a bona fide resident of Puerto Rico for the entire tax year, you are not subject to U. Download tax forms 2011 S. Download tax forms 2011 tax on income from Puerto Rican sources. Download tax forms 2011 This does not include amounts paid for services performed as an employee of the United States. Download tax forms 2011 However, you are subject to U. Download tax forms 2011 S. Download tax forms 2011 tax on your income from sources outside Puerto Rico. Download tax forms 2011 In figuring your U. Download tax forms 2011 S. Download tax forms 2011 tax, you cannot deduct expenses allocable to income not subject to tax. Download tax forms 2011 Bona Fide Residence Test You meet the bona fide residence test if you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Download tax forms 2011 You can use the bona fide residence test to qualify for the exclusions and the deduction only if you are either: A U. Download tax forms 2011 S. Download tax forms 2011 citizen, or A U. Download tax forms 2011 S. Download tax forms 2011 resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect. Download tax forms 2011 You do not automatically acquire bona fide resident status merely by living in a foreign country or countries for 1 year. Download tax forms 2011 If you go to a foreign country to work on a particular job for a specified period of time, you ordinarily will not be regarded as a bona fide resident of that country even though you work there for 1 tax year or longer. Download tax forms 2011 The length of your stay and the nature of your job are only two of the factors to be considered in determining whether you meet the bona fide residence test. Download tax forms 2011 Bona fide residence. Download tax forms 2011   To meet the bona fide residence test, you must have established a bona fide residence in a foreign country. Download tax forms 2011   Your bona fide residence is not necessarily the same as your domicile. Download tax forms 2011 Your domicile is your permanent home, the place to which you always return or intend to return. Download tax forms 2011 Example. Download tax forms 2011 You could have your domicile in Cleveland, Ohio, and a bona fide residence in Edinburgh, Scotland, if you intend to return eventually to Cleveland. Download tax forms 2011 The fact that you go to Scotland does not automatically make Scotland your bona fide residence. Download tax forms 2011 If you go there as a tourist, or on a short business trip, and return to the United States, you have not established bona fide residence in Scotland. Download tax forms 2011 But if you go to Scotland to work for an indefinite or extended period and you set up permanent quarters there for yourself and your family, you probably have established a bona fide residence in a foreign country, even though you intend to return eventually to the United States. Download tax forms 2011 You are clearly not a resident of Scotland in the first instance. Download tax forms 2011 However, in the second, you are a resident because your stay in Scotland appears to be permanent. Download tax forms 2011 If your residency is not as clearly defined as either of these illustrations, it may be more difficult to decide whether you have established a bona fide residence. Download tax forms 2011 Determination. Download tax forms 2011   Questions of bona fide residence are determined according to each individual case, taking into account factors such as your intention, the purpose of your trip, and the nature and length of your stay abroad. Download tax forms 2011   To meet the bona fide residence test, you must show the Internal Revenue Service (IRS) that you have been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Download tax forms 2011 The IRS decides whether you are a bona fide resident of a foreign country largely on the basis of facts you report on Form 2555. Download tax forms 2011 IRS cannot make this determination until you file Form 2555. Download tax forms 2011 Statement to foreign authorities. Download tax forms 2011   You are not considered a bona fide resident of a foreign country if you make a statement to the authorities of that country that you are not a resident of that country, and the authorities: Hold that you are not subject to their income tax laws as a resident, or Have not made a final decision on your status. Download tax forms 2011 Special agreements and treaties. Download tax forms 2011   An income tax exemption provided in a treaty or other international agreement will not in itself prevent you from being a bona fide resident of a foreign country. Download tax forms 2011 Whether a treaty prevents you from becoming a bona fide resident of a foreign country is determined under all provisions of the treaty, including specific provisions relating to residence or privileges and immunities. Download tax forms 2011 Example 1. Download tax forms 2011 You are a U. Download tax forms 2011 S. Download tax forms 2011 citizen employed in the United Kingdom by a U. Download tax forms 2011 S. Download tax forms 2011 employer under contract with the U. Download tax forms 2011 S. Download tax forms 2011 Armed Forces. Download tax forms 2011 You are not subject to the North Atlantic Treaty Status of Forces Agreement. Download tax forms 2011 You may be a bona fide resident of the United Kingdom. Download tax forms 2011 Example 2. Download tax forms 2011 You are a U. Download tax forms 2011 S. Download tax forms 2011 citizen in the United Kingdom who qualifies as an “employee” of an armed service or as a member of a “civilian component” under the North Atlantic Treaty Status of Forces Agreement. Download tax forms 2011 You are not a bona fide resident of the United Kingdom. Download tax forms 2011 Example 3. Download tax forms 2011 You are a U. Download tax forms 2011 S. Download tax forms 2011 citizen employed in Japan by a U. Download tax forms 2011 S. Download tax forms 2011 employer under contract with the U. Download tax forms 2011 S. Download tax forms 2011 Armed Forces. Download tax forms 2011 You are subject to the agreement of the Treaty of Mutual Cooperation and Security between the United States and Japan. Download tax forms 2011 Being subject to the agreement does not make you a bona fide resident of Japan. Download tax forms 2011 Example 4. Download tax forms 2011 You are a U. Download tax forms 2011 S. Download tax forms 2011 citizen employed as an “official” by the United Nations in Switzerland. Download tax forms 2011 You are exempt from Swiss taxation on the salary or wages paid to you by the United Nations. Download tax forms 2011 This does not prevent you from being a bona fide resident of Switzerland. Download tax forms 2011 Effect of voting by absentee ballot. Download tax forms 2011   If you are a U. Download tax forms 2011 S. Download tax forms 2011 citizen living abroad, you can vote by absentee ballot in any election held in the United States without risking your status as a bona fide resident of a foreign country. Download tax forms 2011   However, if you give information to the local election officials about the nature and length of your stay abroad that does not match the information you give for the bona fide residence test, the information given in connection with absentee voting will be considered in determining your status, but will not necessarily be conclusive. Download tax forms 2011 Uninterrupted period including entire tax year. Download tax forms 2011   To meet the bona fide residence test, you must reside in a foreign country or countries for an uninterrupted period that includes an entire tax year. Download tax forms 2011 An entire tax year is from January 1 through December 31 for taxpayers who file their income tax returns on a calendar year basis. Download tax forms 2011   During the period of bona fide residence in a foreign country, you can leave the country for brief or temporary trips back to the United States or elsewhere for vacation or business. Download tax forms 2011 To keep your status as a bona fide resident of a foreign country, you must have a clear intention of returning from such trips, without unreasonable delay, to your foreign residence or to a new bona fide residence in another foreign country. Download tax forms 2011 Example 1. Download tax forms 2011 You arrived with your family in Lisbon, Portugal, on November 1, 2011. Download tax forms 2011 Your assignment is indefinite, and you intend to live there with your family until your company sends you to a new post. Download tax forms 2011 You immediately established residence there. Download tax forms 2011 You spent April of 2012 at a business conference in the United States. Download tax forms 2011 Your family stayed in Lisbon. Download tax forms 2011 Immediately following the conference, you returned to Lisbon and continued living there. Download tax forms 2011 On January 1, 2013, you completed an uninterrupted period of residence for a full tax year (2012), and you meet the bona fide residence test. Download tax forms 2011 Example 2. Download tax forms 2011 Assume the same facts as in Example 1, except that you transferred back to the United States on December 13, 2012. Download tax forms 2011 You would not meet the bona fide residence test because your bona fide residence in the foreign country, although it lasted more than a year, did not include a full tax year. Download tax forms 2011 You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test (discussed later). Download tax forms 2011 Bona fide resident for part of a year. Download tax forms 2011   Once you have established bona fide residence in a foreign country for an uninterrupted period that includes an entire tax year, you are a bona fide resident of that country for the period starting with the date you actually began the residence and ending with the date you abandon the foreign residence. Download tax forms 2011 Your period of bona fide residence can include an entire tax year plus parts of 2 other tax years. Download tax forms 2011 Example. Download tax forms 2011 You were a bona fide resident of Singapore from March 1, 2011, through September 14, 2013. Download tax forms 2011 On September 15, 2013, you returned to the United States. Download tax forms 2011 Since you were a bona fide resident of a foreign country for all of 2012, you were also a bona fide resident of a foreign country from March 1, 2011, through the end of 2011 and from January 1, 2013, through September 14, 2013. Download tax forms 2011 Reassignment. Download tax forms 2011   If you are assigned from one foreign post to another, you may or may not have a break in foreign residence between your assignments, depending on the circumstances. Download tax forms 2011 Example 1. Download tax forms 2011 You were a resident of Pakistan from October 1, 2012, through November 30, 2013. Download tax forms 2011 On December 1, 2013, you and your family returned to the United States to wait for an assignment to another foreign country. Download tax forms 2011 Your household goods also were returned to the United States. Download tax forms 2011 Your foreign residence ended on November 30, 2013, and did not begin again until after you were assigned to another foreign country and physically entered that country. Download tax forms 2011 Since you were not a bona fide resident of a foreign country for the entire tax year of 2012 or 2013 you do not meet the bona fide residence test in either year. Download tax forms 2011 You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test, discussed later. Download tax forms 2011 Example 2. Download tax forms 2011 Assume the same facts as in Example 1, except that upon completion of your assignment in Pakistan you were given a new assignment to Turkey. Download tax forms 2011 On December 1, 2013, you and your family returned to the United States for a month's vacation. Download tax forms 2011 On January 2, 2014, you arrived in Turkey for your new assignment. Download tax forms 2011 Because you did not interrupt your bona fide residence abroad, you meet the bona fide residence test. Download tax forms 2011 Physical Presence Test You meet the physical presence test if you are physically present in a foreign country or countries 330 full days during a period of 12 consecutive months. Download tax forms 2011 The 330 days do not have to be consecutive. Download tax forms 2011 Any U. Download tax forms 2011 S. Download tax forms 2011 citizen or resident alien can use the physical presence test to qualify for the exclusions and the deduction. Download tax forms 2011 The physical presence test is based only on how long you stay in a foreign country or countries. Download tax forms 2011 This test does not depend on the kind of residence you establish, your intentions about returning, or the nature and purpose of your stay abroad. Download tax forms 2011 330 full days. Download tax forms 2011   Generally, to meet the physical presence test, you must be physically present in a foreign country or countries for at least 330 full days during a 12-month period. Download tax forms 2011 You can count days you spent abroad for any reason. Download tax forms 2011 You do not have to be in a foreign country only for employment purposes. Download tax forms 2011 You can be on vacation. Download tax forms 2011   You do not meet the physical presence test if illness, family problems, a vacation, or your employer's orders cause you to be present for less than the required amount of time. Download tax forms 2011 Exception. Download tax forms 2011   You can be physically present in a foreign country or countries for less than 330 full days and still meet the physical presence test if you are required to leave a country because of war or civil unrest. Download tax forms 2011 See Waiver of Time Requirements, later. Download tax forms 2011 Full day. Download tax forms 2011   A full day is a period of 24 consecutive hours, beginning at midnight. Download tax forms 2011 Travel. Download tax forms 2011    When you leave the United States to go directly to a foreign country or when you return directly to the United States from a foreign country, the time you spend on or over international waters does not count toward the 330-day total. Download tax forms 2011 Example. Download tax forms 2011 You leave the United States for France by air on June 10. Download tax forms 2011 You arrive in France at 9:00 a. Download tax forms 2011 m. Download tax forms 2011 on June 11. Download tax forms 2011 Your first full day of physical presence in France is June 12. Download tax forms 2011 Passing over foreign country. Download tax forms 2011   If, in traveling from the United States to a foreign country, you pass over a foreign country before midnight of the day you leave, the first day you can count toward the 330-day total is the day following the day you leave the United States. Download tax forms 2011 Example. Download tax forms 2011 You leave the United States by air at 9:30 a. Download tax forms 2011 m. Download tax forms 2011 on June 10 to travel to Kenya. Download tax forms 2011 You pass over western Africa at 11:00 p. Download tax forms 2011 m. Download tax forms 2011 on June 10 and arrive in Kenya at 12:30 a. Download tax forms 2011 m. Download tax forms 2011 on June 11. Download tax forms 2011 Your first full day in a foreign country is June 11. Download tax forms 2011 Change of location. Download tax forms 2011   You can move about from one place to another in a foreign country or to another foreign country without losing full days. Download tax forms 2011 If any part of your travel is not within any foreign country and takes less than 24 hours, you are considered to be in a foreign country during that part of travel. Download tax forms 2011 Example 1. Download tax forms 2011 You leave Ireland by air at 11:00 p. Download tax forms 2011 m. Download tax forms 2011 on July 6 and arrive in Sweden at 5:00 a. Download tax forms 2011 m. Download tax forms 2011 on July 7. Download tax forms 2011 Your trip takes less than 24 hours and you lose no full days. Download tax forms 2011 Example 2. Download tax forms 2011 You leave Norway by ship at 10:00 p. Download tax forms 2011 m. Download tax forms 2011 on July 6 and arrive in Portugal at 6:00 a. Download tax forms 2011 m. Download tax forms 2011 on July 8. Download tax forms 2011 Since your travel is not within a foreign country or countries and the trip takes more than 24 hours, you lose as full days July 6, 7, and 8. Download tax forms 2011 If you remain in Portugal, your next full day in a foreign country is July 9. Download tax forms 2011 In United States while in transit. Download tax forms 2011   If you are in transit between two points outside the United States and are physically present in the United States for less than 24 hours, you are not treated as present in the United States during the transit. Download tax forms 2011 You are treated as traveling over areas not within any foreign country. Download tax forms 2011    Please click here for the text description of the image. Download tax forms 2011 Figure 4-B How to figure the 12-month period. Download tax forms 2011   There are four rules you should know when figuring the 12-month period. Download tax forms 2011 Your 12-month period can begin with any day of the month. Download tax forms 2011 It ends the day before the same calendar day, 12 months later. Download tax forms 2011 Your 12-month period must be made up of consecutive months. Download tax forms 2011 Any 12-month period can be used if the 330 days in a foreign country fall within that period. Download tax forms 2011 You do not have to begin your 12-month period with your first full day in a foreign country or end it with the day you leave. Download tax forms 2011 You can choose the 12-month period that gives you the greatest exclusion. Download tax forms 2011 In determining whether the 12-month period falls within a longer stay in the foreign country, 12-month periods can overlap one another. Download tax forms 2011 Example 1. Download tax forms 2011 You are a construction worker who works on and off in a foreign country over a 20-month period. Download tax forms 2011 You might pick up the 330 full days in a 12-month period only during the middle months of the time you work in the foreign country because the first few and last few months of the 20-month period are broken up by long visits to the United States. Download tax forms 2011 Example 2. Download tax forms 2011 You work in New Zealand for a 20-month period from January 1, 2012, through August 31, 2013, except that you spend 28 days in February 2012 and 28 days in February 2013 on vacation in the United States. Download tax forms 2011 You are present in New Zealand for at least 330 full days during each of the following two 12-month periods: January 1, 2012 – December 31, 2012 and September 1, 2012 – August 31, 2013. Download tax forms 2011 By overlapping the 12-month periods in this way, you meet the physical presence test for the whole 20-month period. Download tax forms 2011 See Figure 4-B, on the previous page. Download tax forms 2011 Waiver of Time Requirements Both the bona fide residence test and the physical presence test contain minimum time requirements. Download tax forms 2011 The minimum time requirements can be waived, however, if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Download tax forms 2011 You must be able to show that you reasonably could have expected to meet the minimum time requirements if not for the adverse conditions. Download tax forms 2011 To qualify for the waiver, you must actually have your tax home in the foreign country and be a bona fide resident of, or be physically present in, the foreign country on or before the beginning date of the waiver. Download tax forms 2011 Early in 2014, the IRS will publish in the Internal Revenue Bulletin a list of the only countries that qualify for the waiver for 2013 and the effective dates. Download tax forms 2011 If you left one of the countries on or after the date listed for each country, you can meet the bona fide residence test or physical presence test for 2013 without meeting the minimum time requirement. Download tax forms 2011 However, in figuring your exclusion, the number of your qualifying days of bona fide residence or physical presence includes only days of actual residence or presence within the country. Download tax forms 2011 U. Download tax forms 2011 S. Download tax forms 2011 Travel Restrictions If you are present in a foreign country in violation of U. Download tax forms 2011 S. Download tax forms 2011 law, you will not be treated as a bona fide resident of a foreign country or as physically present in a foreign country while you are in violation of the law. Download tax forms 2011 Income that you earn from sources within such a country for services performed during a period of violation does not qualify as foreign earned income. Download tax forms 2011 Your housing expenses within that country (or outside that country for housing your spouse or dependents) while you are in violation of the law cannot be included in figuring your foreign housing amount. Download tax forms 2011 For 2013, the only country to which travel restrictions applied was Cuba. Download tax forms 2011 The restrictions applied for the entire year. Download tax forms 2011 However, individuals working at the U. Download tax forms 2011 S. Download tax forms 2011 Naval Base at Guantanamo Bay in Cuba are not in violation of U. Download tax forms 2011 S. Download tax forms 2011 law. Download tax forms 2011 Personal service income earned by individuals at the base is eligible for the foreign earned income exclusion provided the other requirements are met. Download tax forms 2011 Foreign Earned Income To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income. Download tax forms 2011 Foreign earned income generally is income you receive for services you perform during a period in which you meet both of the following requirements. Download tax forms 2011 Your tax home is in a foreign country. Download tax forms 2011 You meet either the bona fide residence test or the physical presence test. Download tax forms 2011 To determine whether your tax home is in a foreign country, see Tax Home in Foreign Country, earlier. Download tax forms 2011 To determine whether you meet either the bona fide residence test or the physical presence test, see Bona Fide Residence Test and Physical Presence Test, earlier. Download tax forms 2011 Foreign earned income does not include the following amounts. Download tax forms 2011 The value of meals and lodging that you exclude from your income because the meals and lodging were furnished for the convenience of your employer. Download tax forms 2011 Pension or annuity payments you receive, including social security benefits (see Pensions and annuities, later). Download tax forms 2011 Pay you receive as an employee of the U. Download tax forms 2011 S. Download tax forms 2011 Government. Download tax forms 2011 (See U. Download tax forms 2011 S. Download tax forms 2011 Government Employees, later. Download tax forms 2011 ) Amounts you include in your income because of your employer's contributions to a nonexempt employee trust or to a nonqualified annuity contract. Download tax forms 2011 Any unallowable moving expense deduction that you choose to recapture as explained under Moving Expense Attributable to Foreign Earnings in 2 Years in chapter 5. Download tax forms 2011 Payments you receive after the end of the tax year following the tax year in which you performed the services that earned the income. Download tax forms 2011 Earned income. Download tax forms 2011   This is pay for personal services performed, such as wages, salaries, or professional fees. Download tax forms 2011 The list that follows classifies many types of income into three categories. Download tax forms 2011 The column headed Variable Income lists income that may fall into either the earned income category, the unearned income category, or partly into both. Download tax forms 2011 For more information on earned and unearned income, see Earned and Unearned Income, later. Download tax forms 2011 Earned Income Unearned Income Variable Income Salaries and wages Dividends Business profits Commissions Interest Royalties Bonuses Capital gains Rents Professional fees Gambling winnings Scholarships and fellowships Tips Alimony     Social security benefits     Pensions     Annuities     In addition to the types of earned income listed, certain noncash income and allowances or reimbursements are considered earned income. Download tax forms 2011 Noncash income. Download tax forms 2011   The fair market value of property or facilities provided to you by your employer in the form of lodging, meals, or use of a car is earned income. Download tax forms 2011 Allowances or reimbursements. Download tax forms 2011   Earned income includes allowances or reimbursements you receive, such as the following amounts. Download tax forms 2011    Cost-of-living allowances. Download tax forms 2011 Overseas differential. Download tax forms 2011 Family allowance. Download tax forms 2011 Reimbursement for education or education allowance. Download tax forms 2011 Home leave allowance. Download tax forms 2011 Quarters allowance. Download tax forms 2011 Reimbursement for moving or moving allowance (unless excluded from income as discussed later in Reimbursement of employee expenses under Earned and Unearned Income). Download tax forms 2011 Source of Earned Income The source of your earned income is the place where you perform the services for which you received the income. Download tax forms 2011 Foreign earned income is income you receive for working in a foreign country. Download tax forms 2011 Where or how you are paid has no effect on the source of the income. Download tax forms 2011 For example, income you receive for work done in Austria is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City. Download tax forms 2011 Example. Download tax forms 2011 You are a U. Download tax forms 2011 S. Download tax forms 2011 citizen, a bona fide resident of Canada, and working as a mining engineer. Download tax forms 2011 Your salary is $76,800 per year. Download tax forms 2011 You also receive a $6,000 cost-of-living allowance, and a $6,000 education allowance. Download tax forms 2011 Your employment contract did not indicate that you were entitled to these allowances only while outside the United States. Download tax forms 2011 Your total income is $88,800. Download tax forms 2011 You work a 5-day week, Monday through Friday. Download tax forms 2011 After subtracting your vacation, you have a total of 240 workdays in the year. Download tax forms 2011 You worked in the United States during the year for 6 weeks (30 workdays). Download tax forms 2011 The following shows how to figure the part of your income that is for work done in Canada during the year. Download tax forms 2011   Number of days worked in Canada during the year (210) × Total income ($88,800) = $77,700     Number of days of work during the year for which payment was made (240)   Your foreign source earned income is $77,700. Download tax forms 2011 Earned and Unearned Income Earned income was defined earlier as pay for personal services performed. Download tax forms 2011 Some types of income are not easily identified as earned or unearned income. Download tax forms 2011 Some of these types of income are further explained here. Download tax forms 2011 Income from a sole proprietorship or partnership. Download tax forms 2011   Income from a business in which capital investment is an important part of producing the income may be unearned income. Download tax forms 2011 If you are a sole proprietor or partner and your personal services are also an important part of producing the income, the part of the income that represents the value of your personal services will be treated as earned income. Download tax forms 2011 Capital a factor. Download tax forms 2011   If capital investment is an important part of producing income, no more than 30% of your share of the net profits of the business is earned income. Download tax forms 2011   If you have no net profits, the part of your gross profit that represents a reasonable allowance for personal services actually performed is considered earned income. Download tax forms 2011 Because you do not have a net profit, the 30% limit does not apply. Download tax forms 2011 Example 1. Download tax forms 2011 You are a U. Download tax forms 2011 S. Download tax forms 2011 citizen and meet the bona fide residence test. Download tax forms 2011 You invest in a partnership based in Cameroon that is engaged solely in selling merchandise outside the United States. Download tax forms 2011 You perform no services for the partnership. Download tax forms 2011 At the end of the tax year, your share of the net profits is $80,000. Download tax forms 2011 The entire $80,000 is unearned income. Download tax forms 2011 Example 2. Download tax forms 2011 Assume that in Example 1 you spend time operating the business. Download tax forms 2011 Your share of the net profits is $80,000; 30% of your share of the profits is $24,000. Download tax forms 2011 If the value of your services for the year is $15,000, your earned income is limited to the value of your services, $15,000. Download tax forms 2011 Capital not a factor. Download tax forms 2011   If capital is not an income-producing factor and personal services produce the business income, the 30% rule does not apply. Download tax forms 2011 The entire amount of business income is earned income. Download tax forms 2011 Example. Download tax forms 2011 You and Lou Green are management consultants and operate as equal partners in performing services outside the United States. Download tax forms 2011 Because capital is not an income- producing factor, all the income from the partnership is considered earned income. Download tax forms 2011 Income from a corporation. Download tax forms 2011   The salary you receive from a corporation is earned income only if it represents a reasonable allowance as compensation for work you do for the corporation. Download tax forms 2011 Any amount over what is considered a reasonable salary is unearned income. Download tax forms 2011 Example 1. Download tax forms 2011 You are a U. Download tax forms 2011 S. Download tax forms 2011 citizen and an officer and stockholder of a corporation in Honduras. Download tax forms 2011 You perform no work or service of any kind for the corporation. Download tax forms 2011 During the tax year you receive a $10,000 “salary” from the corporation. Download tax forms 2011 The $10,000 clearly is not for personal services and is unearned income. Download tax forms 2011 Example 2. Download tax forms 2011 You are a U. Download tax forms 2011 S. Download tax forms 2011 citizen and work full time as secretary-treasurer of your corporation. Download tax forms 2011 During the tax year you receive $100,000 as salary from the corporation. Download tax forms 2011 If $80,000 is a reasonable allowance as pay for the work you did, then $80,000 is earned income. Download tax forms 2011 Stock options. Download tax forms 2011   You may have earned income if you disposed of stock that you got by exercising a stock option granted to you under an employee stock purchase plan. Download tax forms 2011   If your gain on the disposition of stock you got by exercising an option is treated as capital gain, your gain is unearned income. Download tax forms 2011   However, if you disposed of the stock less than 2 years after you were granted the option or less than 1 year after you got the stock, part of the gain on the disposition may be earned income. Download tax forms 2011 It is considered received in the year you disposed of the stock and earned in the year you performed the services for which you were granted the option. Download tax forms 2011 Any part of the earned income that is due to work you did outside the United States is foreign earned income. Download tax forms 2011   See Publication 525, Taxable and Nontaxable Income, for a discussion of the treatment of stock options. Download tax forms 2011 Pensions and annuities. Download tax forms 2011    For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, amounts received as pensions or annuities are unearned income. Download tax forms 2011 Royalties. Download tax forms 2011   Royalties from the leasing of oil and mineral lands and patents generally are a form of rent or dividends and are unearned income. Download tax forms 2011   Royalties received by a writer are earned income if they are received: For the transfer of property rights of the writer in the writer's product, or Under a contract to write a book or series of articles. Download tax forms 2011 Rental income. Download tax forms 2011   Generally, rental income is unearned income. Download tax forms 2011 If you perform personal services in connection with the production of rent, up to 30% of your net rental income can be considered earned income. Download tax forms 2011 Example. Download tax forms 2011 Larry Smith, a U. Download tax forms 2011 S. Download tax forms 2011 citizen living in Australia, owns and operates a rooming house in Sydney. Download tax forms 2011 If he is operating the rooming house as a business that requires capital and personal services, he can consider up to 30% of net rental income as earned income. Download tax forms 2011 On the other hand, if he just owns the rooming house and performs no personal services connected with its operation, except perhaps making minor repairs and collecting rents, none of his net income from the house is considered earned income. Download tax forms 2011 It is all unearned income. Download tax forms 2011 Professional fees. Download tax forms 2011   If you are engaged in a professional occupation (such as a doctor or lawyer), all fees received in the performance of these services are earned income. Download tax forms 2011 Income of an artist. Download tax forms 2011   Income you receive from the sale of paintings you created is earned income. Download tax forms 2011 Scholarships and fellowships. Download tax forms 2011   Any portion of a scholarship or fellowship grant that is paid to you for teaching, research or other services is considered earned income if you must include it in your gross income. Download tax forms 2011 If the payer of the grant is required to provide you with a Form W-2, Wage and Tax Statement, these amounts will be listed as wages. Download tax forms 2011    Certain scholarship and fellowship income may be exempt under other provisions. Download tax forms 2011 See Publication 970, Tax Benefits for Education, chapter 1. Download tax forms 2011 Use of employer's property or facilities. Download tax forms 2011   If you receive fringe benefits in the form of the right to use your employer's property or facilities, the fair market value of that right is earned income. Download tax forms 2011 Fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being required to buy or sell, and both having reasonable knowledge of all the necessary facts. Download tax forms 2011 Example. Download tax forms 2011 You are privately employed and live in Japan all year. Download tax forms 2011 You are paid a salary of $6,000 a month. Download tax forms 2011 You live rent-free in a house provided by your employer that has a fair rental value of $3,000 a month. Download tax forms 2011 The house is not provided for your employer's convenience. Download tax forms 2011 You report on the calendar-year, cash basis. Download tax forms 2011 You received $72,000 salary from foreign sources plus $36,000 fair rental value of the house, or a total of $108,000 of earned income. Download tax forms 2011 Reimbursement of employee expenses. Download tax forms 2011   If you are reimbursed under an accountable plan (defined below) for expenses you incur on your employer's behalf and you have adequately accounted to your employer for the expenses, do not include the reimbursement for those expenses in your earned income. Download tax forms 2011   The expenses for which you are reimbursed are not considered allocable (related) to your earned income. Download tax forms 2011 If expenses and reimbursement are equal, there is nothing to allocate to excluded income. Download tax forms 2011 If expenses are more than the reimbursement, the unreimbursed expenses are considered to have been incurred in producing earned income and must be divided between your excluded and included income in determining the amount of unreimbursed expenses you can deduct. Download tax forms 2011 (See chapter 5. Download tax forms 2011 ) If the reimbursement is more than the expenses, no expenses remain to be divided between excluded and included income and the excess reimbursement must be included in earned income. Download tax forms 2011   These rules do not apply to the following individuals. Download tax forms 2011 Straight-commission salespersons. Download tax forms 2011 Employees who have arrangements with their employers under which taxes are not withheld on a percentage of the commissions because the employers consider that percentage to be attributable to the employees' expenses. Download tax forms 2011 Accountable plan. Download tax forms 2011   An accountable plan is a reimbursement or allowance arrangement that includes all three of the following rules. Download tax forms 2011 The expenses covered under the plan must have a business connection. Download tax forms 2011 The employee must adequately account to the employer for these expenses within a reasonable period of time. Download tax forms 2011 The employee must return any excess reimbursement or allowance within a reasonable period of time. Download tax forms 2011 Reimbursement of moving expenses. Download tax forms 2011   Reimbursement of moving expenses may be earned income. Download tax forms 2011 You must include as earned income: Any reimbursements of, or payments for, nondeductible moving expenses, Reimbursements that are more than your deductible expenses and that you do not return to your employer, Any reimbursements made (or treated as made) under a nonaccountable plan (any plan that does not meet the rules listed above for an accountable plan), even if they are for deductible expenses, and Any reimbursement of moving expenses you deducted in an earlier year. Download tax forms 2011 This section discusses reimbursements that must be included in earned income. Download tax forms 2011 Publication 521, Moving Expenses, discusses additional rules that apply to moving expense deductions and reimbursements. Download tax forms 2011   The rules for determining when the reimbursement is considered earned or where the reimbursement is considered earned may differ somewhat from the general rules previously discussed. Download tax forms 2011   Although you receive the reimbursement in one tax year, it may be considered earned for services performed, or to be performed, in another tax year. Download tax forms 2011 You must report the reimbursement as income on your return in the year you receive it, even if it is considered earned during a different year. Download tax forms 2011 Move from U. Download tax forms 2011 S. Download tax forms 2011 to foreign country. Download tax forms 2011   If you move from the United States to a foreign country, your moving expense reimbursement is generally considered pay for future services to be performed at the new location. Download tax forms 2011 The reimbursement is considered earned solely in the year of the move if you qualify for the exclusion for a period that includes at least 120 days during that tax year. Download tax forms 2011   If you are neither a bona fide resident of nor physically present in a foreign country or countries for a period that includes 120 days during the year of the move, a portion of the reimbursement is considered earned in the year of the move and a portion is considered earned in the year following the year of the move. Download tax forms 2011 To figure the amount earned in the year of the move, multiply the reimbursement by a fraction. Download tax forms 2011 The numerator (top number) is the number of days in your qualifying period that fall within the year of the move, and the denominator (bottom number) is the total number of days in the year of the move. Download tax forms 2011   The difference between the total reimbursement and the amount considered earned in the year of the move is the amount considered earned in the year following the year of the move. Download tax forms 2011 The part earned in each year is figured as shown in the following example. Download tax forms 2011 Example. Download tax forms 2011 You are a U. Download tax forms 2011 S. Download tax forms 2011 citizen working in the United States. Download tax forms 2011 You were told in October 2012 that you were being transferred to a foreign country. Download tax forms 2011 You arrived in the foreign country on December 15, 2012, and you are a bona fide resident for the remainder of 2012 and all of 2013. Download tax forms 2011 Your employer reimbursed you $2,000 in January 2013 for the part of the moving expense that you were not allowed to deduct. Download tax forms 2011 Because you did not qualify for the exclusion under the bona fide residence test for at least 120 days in 2012 (the year of the move), the reimbursement is considered pay for services performed in the foreign country for both 2012 and 2013. Download tax forms 2011 You figure the part of the reimbursement for services performed in the foreign country in 2012 by multiplying the total reimbursement by a fraction. Download tax forms 2011 The fraction is the number of days during which you were a bona fide resident in 2012 (the year of the move) divided by 366. Download tax forms 2011 The remaining part of the reimbursement is for services performed in the foreign country in 2013. Download tax forms 2011 This computation is used only to determine when the reimbursement is considered earned. Download tax forms 2011 You would include the amount of the reimbursement in income in 2013, the year you received it. Download tax forms 2011 Move between foreign countries. Download tax forms 2011   If you move between foreign countries, any moving expense reimbursement that you must include in income will be considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days in the year of the move. Download tax forms 2011 Move to U. Download tax forms 2011 S. Download tax forms 2011   If you move to the United States, the moving expense reimbursement that you must include in income is generally considered to be U. Download tax forms 2011 S. Download tax forms 2011 source income. Download tax forms 2011   However, if under either an agreement between you and your employer or a statement of company policy that is reduced to writing before your move to the foreign country, your employer will reimburse you for your move back to the United States regardless of whether you continue to work for the employer, the includible reimbursement is considered compensation for past services performed in the foreign country. Download tax forms 2011 The includible reimbursement is considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days during that year. Download tax forms 2011 Otherwise, you treat the includible reimbursement as received for services performed in the foreign country in the year of the move and the year immediately before the year of the move. Download tax forms 2011   See the discussion under Move from U. Download tax forms 2011 S. Download tax forms 2011 to foreign country , earlier, to figure the amount of the includible reimbursement considered earned in the year of the move. Download tax forms 2011 The amount earned in the year before the year of the move is the difference between the total includible reimbursement and the amount earned in the year of the move. Download tax forms 2011 Example. Download tax forms 2011 You are a U. Download tax forms 2011 S. Download tax forms 2011 citizen employed in a foreign country. Download tax forms 2011 You retired from employment with your employer on March 31, 2013, and returned to the United States after having been a bona fide resident of the foreign country for several years. Download tax forms 2011 A written agreement with your employer entered into before you went abroad provided that you would be reimbursed for your move back to the United States. Download tax forms 2011 In April 2013, your former employer reimbursed you $4,000 for the part of the cost of your move back to the United States that you were not allowed to deduct. Download tax forms 2011 Because you were not a bona fide resident of a foreign country or countries for a period that included at least 120 days in 2013 (the year of the move), the includible reimbursement is considered pay for services performed in the foreign country for both 2013 and 2012. Download tax forms 2011 You figure the part of the moving expense reimbursement for services performed in the foreign country for 2013 by multiplying the total includible reimbursement by a fraction. Download tax forms 2011 The fraction is the number of days of foreign residence during the year (90) divided by the number of days in the year (365). Download tax forms 2011 The remaining part of the includible reimbursement is for services performed in the foreign country in 2012. Download tax forms 2011 You report the amount of the includible reimbursement in 2013, the year you received it. Download tax forms 2011    In this example, if you met the physical presence test for a period that included at least 120 days in 2013, the moving expense reimbursement would be considered earned entirely in the year of the move. Download tax forms 2011 Storage expense reimbursements. Download tax forms 2011   If you are reimbursed for storage expenses, the reimbursement is for services you perform during the period of time for which the storage expenses are incurred. Download tax forms 2011 U. Download tax forms 2011 S. Download tax forms 2011 Government Employees For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, foreign earned income does not include any amounts paid by the United States or any of its agencies to its employees. Download tax forms 2011 This includes amounts paid from both appropriated and nonappropriated funds. Download tax forms 2011 The following organizations (and other organizations similarly organized and operated under United States Army, Navy, or Air Force regulations) are integral parts of the Armed Forces, agencies, or instrumentalities of the United States. Download tax forms 2011 United States Armed Forces exchanges. Download tax forms 2011 Commissioned and noncommissioned officers' messes. Download tax forms 2011 Armed Forces motion picture services. Download tax forms 2011 Kindergartens on foreign Armed Forces installations. Download tax forms 2011 Amounts paid by the United States or its agencies to persons who are not their employees may qualify for exclusion or deduction. Download tax forms 2011 If you are a U. Download tax forms 2011 S. Download tax forms 2011 Government employee paid by a U. Download tax forms 2011 S. Download tax forms 2011 agency that assigned you to a foreign government to perform specific services for which the agency is reimbursed by the foreign government, your pay is from the U. Download tax forms 2011 S. Download tax forms 2011 Government and does not qualify for exclusion or deduction. Download tax forms 2011 If you have questions about whether you are an employee or an independent contractor, get Publication 15-A, Employer's Supplemental Tax Guide. Download tax forms 2011 American Institute in Taiwan. Download tax forms 2011   Amounts paid by the American Institute in Taiwan are not foreign earned income for purposes of the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. Download tax forms 2011 If you are an employee of the American Institute in Taiwan, allowances you receive are exempt from U. Download tax forms 2011 S. Download tax forms 2011 tax up to the amount that equals tax-exempt allowances received by civilian employees of the U. Download tax forms 2011 S. Download tax forms 2011 Government. Download tax forms 2011 Allowances. Download tax forms 2011   Cost-of-living and foreign-area allowances paid under certain acts of Congress to U. Download tax forms 2011 S. Download tax forms 2011 civilian officers and employees stationed in Alaska and Hawaii or elsewhere outside the 48 contiguous states and the District of Columbia can be excluded from gross income. Download tax forms 2011 Post differentials are wages that must be included in gross income, regardless of the act of Congress under which they are paid. Download tax forms 2011 More information. Download tax forms 2011   Publication 516, U. Download tax forms 2011 S. Download tax forms 2011 Government Civilian Employees Stationed Abroad, has more information for U. Download tax forms 2011 S. Download tax forms 2011 Government employees abroad. Download tax forms 2011 Exclusion of Meals and Lodging You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. Download tax forms 2011 The meals are furnished: On the business premises of your employer, and For the convenience of your employer. Download tax forms 2011 The lodging is furnished: On the business premises of your employer, For the convenience of your employer, and As a condition of your employment. Download tax forms 2011 If these conditions are met, do not include the value of the meals or lodging in your income, even if a law or your employment contract says that they are provided as compensation. Download tax forms 2011 Amounts you do not include in income because of these rules are not foreign earned income. Download tax forms 2011 If you receive a Form W-2, excludable amounts should not be included in the total reported in box 1 as wages. Download tax forms 2011 Family. Download tax forms 2011   Your family, for this purpose, includes only your spouse and your dependents. Download tax forms 2011 Lodging. Download tax forms 2011   The value of lodging includes the cost of heat, electricity, gas, water, sewer service, and similar items needed to make the lodging fit to live in. Download tax forms 2011 Business premises of employer. Download tax forms 2011   Generally, the business premises of your employer is wherever you work. Download tax forms 2011 For example, if you work as a housekeeper, meals and lodging provided in your employer's home are provided on the business premises of your employer. Download tax forms 2011 Similarly, meals provided to cowhands while herding cattle on land leased or owned by their employer are considered provided on the premises of their employer. Download tax forms 2011 Convenience of employer. Download tax forms 2011   Whether meals or lodging are provided for your employer's convenience must be determined from all the facts and circumstances. Download tax forms 2011 Meals furnished at no charge are considered provided for your employer's convenience if there is a good business reason for providing them, other than to give you more pay. Download tax forms 2011   On the other hand, if your employer provides meals to you or your family as a means of giving you more pay, and there is no other business reason for providing them, their value is extra income to you because they are not furnished for the convenience of your employer. Download tax forms 2011 Condition of employment. Download tax forms 2011   Lodging is provided as a condition of employment if you must accept the lodging to properly carry out the duties of your job. Download tax forms 2011 You must accept lodging to properly carry out your duties if, for example, you must be available for duty at all times or you could not perform your duties if the lodging was not furnished. Download tax forms 2011 Foreign camps. Download tax forms 2011   If the lodging is in a camp located in a foreign country, the camp is considered part of your employer's business premises. Download tax forms 2011 The camp must be: Provided for your employer's convenience because the place where you work is in a remote area where satisfactory housing is not available to you on the open market within a reasonable commuting distance, Located as close as reasonably possible in the area where you work, and Provided in a common area or enclave that is not available to the general public for lodging or accommodations and that normally houses at least ten employees. Download tax forms 2011 Foreign Earned Income Exclusion If your tax home is in a foreign country and you meet the bona fide residence test or the physical presence test, you can choose to exclude from your income a limited amount of your foreign earned income. Download tax forms 2011 Foreign earned income was defined earlier in this chapter. Download tax forms 2011 You also can choose to exclude from your income a foreign housing amount. Download tax forms 2011 This is explained later under Foreign Housing Exclusion. Download tax forms 2011 If you choose to exclude a foreign housing amount, you must figure the foreign housing exclusion before you figure the foreign earned income exclusion. Download tax forms 2011 Your foreign earned income exclusion is limited to your foreign earned income minus your foreign housing exclusion. Download tax forms 2011 If you choose to exclude foreign earned income, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. Download tax forms 2011 This includes any expenses, losses, and other normally deductible items allocable to the excluded income. Download tax forms 2011 For more information about deductions and credits, see chapter 5 . Download tax forms 2011 Limit on Excludable Amount You may be able to exclude up to $97,600 of your foreign earned income in 2013. Download tax forms 2011 You cannot exclude more than the smaller of: $97,600, or Your foreign earned income (discussed earlier) for the tax year minus your foreign housing exclusion (discussed later). Download tax forms 2011 If both you and your spouse work abroad and each of you meets either the bona fide residence test or the physical presence test, you can each choose the foreign earned income exclusion. Download tax forms 2011 You do not both need to meet the same test. Download tax forms 2011 Together, you and your spouse can exclude as much as $195,200. Download tax forms 2011 Paid in year following work. Download tax forms 2011   Generally, you are considered to have earned income in the year in which you do the work for which you receive the income, even if you work in one year but are not paid until the following year. Download tax forms 2011 If you report your income on a cash basis, you report the income on your return for the year you receive it. Download tax forms 2011 If you work one year, but are not paid for that work until the next year, the amount you can exclude in the year you are paid is the amount you could have excluded in the year you did the work if you had been paid in that year. Download tax forms 2011 For an exception to this general rule, see Year-end payroll period, later. Download tax forms 2011 Example. Download tax forms 2011 You were a bona fide resident of Brazil for all of 2012 and 2013. Download tax forms 2011 You report your income on the cash basis. Download tax forms 2011 In 2012, you were paid $84,200 for work you did in Brazil during that year. Download tax forms 2011 You excluded all of the $84,200 from your income in 2012. Download tax forms 2011 In 2013, you were paid $117,300 for your work in Brazil. Download tax forms 2011 $18,800 was for work you did in 2012 and $98,500 was for work you did in 2013. Download tax forms 2011 You can exclude $10,900 of the $18,800 from your income in 2013. Download tax forms 2011 This is the $95,100 maximum exclusion in 2012 minus the $84,200 actually excluded that year. Download tax forms 2011 You must include the remaining $7,900 in income in 2013 because you could not have excluded that income in 2012 if you had received it that year. Download tax forms 2011 You can exclude $97,600 of the $98,500 you were paid for work you did in 2013 from your 2013 income. Download tax forms 2011 Your total foreign earned income exclusion for 2013 is $108,500 ($10,900 for work you did in 2012 and $97,600 for work you did in 2013). Download tax forms 2011 You would include in your 2013 income $8,800 ($7,900 for the work you did in 2012 and $900 for the work you did in 2013). Download tax forms 2011 Year-end payroll period. Download tax forms 2011   There is an exception to the general rule that income is considered earned in the year you do the work for which you receive the income. Download tax forms 2011 If you are a cash-basis taxpayer, any salary or wage payment you receive after the end of the year in which you do the work for which you receive the pay is considered earned entirely in the year you receive it if all four of the following apply. Download tax forms 2011 The period for which the payment is made is a normal payroll period of your employer that regularly applies to you. Download tax forms 2011 The payroll period includes the last day of your tax year (December 31 if you figure your taxes on a calendar-year basis). Download tax forms 2011 The payroll period is not longer than 16 days. Download tax forms 2011 The payday comes at the same time in relation to the payroll period that it would normally come and it comes before the end of the next payroll period. Download tax forms 2011 Example. Download tax forms 2011 You are paid twice a month. Download tax forms 2011 For the normal payroll period that begins on the first of the month and ends on the fifteenth of the month, you are paid on the sixteenth day of the month. Download tax forms 2011 For the normal payroll period that begins on the sixteenth of the month and ends on the last day of the month, you are paid on the first day of the following month. Download tax forms 2011 Because all of the above conditions are met, the pay you received on January 1, 2013, is considered earned in 2013. Download tax forms 2011 Income earned over more than 1 year. Download tax forms 2011   Regardless of when you actually receive income, you must apply it to the year in which you earned it in figuring your excludable amount for that year. Download tax forms 2011 For example, a bonus may be based on work you did over several years. Download tax forms 2011 You determine the amount of the bonus that is considered earned in a particular year in two steps. Download tax forms 2011 Divide the bonus by the number of calendar months in the period when you did the work that resulted in the bonus. Download tax forms 2011 Multiply the result of (1) by the number of months you did the work during the year. Download tax forms 2011 This is the amount that is subject to the exclusion limit for that tax year. Download tax forms 2011 Income received more than 1 year after it was earned. Download tax forms 2011   You cannot exclude income you receive after the end of the year following the year you do the work to earn it. Download tax forms 2011 Example. Download tax forms 2011   You were a bona fide resident of Sweden for 2011, 2012, and 2013. Download tax forms 2011 You report your income on the cash basis. Download tax forms 2011 In 2011, you were paid $69,000 for work you did in Sweden that year and in 2012 you were paid $74,000 for that year's work in Sweden. Download tax forms 2011 You excluded all the income on your 2011 and 2012 returns. Download tax forms 2011   In 2013, you were paid $92,000; $82,000 for your work in Sweden during 2013, and $10,000 for work you did in Sweden in 2011. Download tax forms 2011 You cannot exclude any of the $10,000 for work done in 2011 because you received it after the end of the year following the year in which you earned it. Download tax forms 2011 You must include the $10,000 in income. Download tax forms 2011 You can exclude all of the $82,000 received for work you did in 2013. Download tax forms 2011 Community income. Download tax forms 2011   The maximum exclusion applies separately to the earnings of spouses. Download tax forms 2011 Ignore any community property laws when you figure your limit on the foreign earned income exclusion. Download tax forms 2011 Part-year exclusion. Download tax forms 2011   If the period for which you qualify for the foreign earned income exclusion includes only part of the year, you must adjust the maximum limit based on the number of qualifying days in the year. Download tax forms 2011 The number of qualifying days is the number of days in the year within the period on which you both: Have your tax home in a foreign country, and Meet either the bona fide residence test or the physical presence test. Download tax forms 2011   For this purpose, you can count as qualifying days all days within a period of 12 consecutive months once you are physically present and have your tax home in a foreign country for 330 full days. Download tax forms 2011 To figure your maximum exclusion, multiply the maximum excludable amount for the year by the number of your qualifying days in the year, and then divide the result by the number of days in the year. Download tax forms 2011 Example. Download tax forms 2011 You report your income on the calendar-year basis and you qualified for the foreign earned income exclusion under the bona fide residence test for 75 days in 2013. Download tax forms 2011 You can exclude a maximum of 75/365 of $97,600, or $20,055, of your foreign earned income for 2013. Download tax forms 2011 If you qualify under the bona fide residence test for all of 2014, you can exclude your foreign earned income up to the 2014 limit. Download tax forms 2011 Physical presence test. Download tax forms 2011   Under the physical presence test, a 12-month period can be any period of 12 consecutive months that includes 330 full days. Download tax forms 2011 If you qualify for the foreign earned income exclusion under the physical presence test for part of a year, it is important to carefully choose the 12-month period that will allow the maximum exclusion for that year. Download tax forms 2011 Example. Download tax forms 2011 You are physically present and have your tax home in a foreign country for a 16-month period from June 1, 2012, through September 30, 2013, except for 16 days in December 2012 when you were on vacation in the United States. Download tax forms 2011 You figure the maximum exclusion for 2012 as follows. Download tax forms 2011 Beginning with June 1, 2012, count forward 330 full days. Download tax forms 2011 Do not count the 16 days you spent in the United States. Download tax forms 2011 The 330th day, May 12, 2013, is the last day of a 12-month period. Download tax forms 2011 Count backward 12 months from May 11, 2013, to find the first day of this 12-month period, May 12, 2012. Download tax forms 2011 This 12-month period runs from May 12, 2012, through May 11, 2013. Download tax forms 2011 Count the total days during 2012 that fall within this 12-month period. Download tax forms 2011 This is 234 days (May 12, 2012 – December 31, 2012). Download tax forms 2011 Multiply $95,100 (the maximum exclusion for 2012) by the fraction 234/366 to find your maximum exclusion for 2012 ($60,802). Download tax forms 2011 You figure the maximum exclusion for 2013 in the opposite manner. Download tax forms 2011 Beginning with your last full day, September 30, 2013, count backward 330 full days. Download tax forms 2011 Do not count the 16 days you spent in the United States. Download tax forms 2011 That day, October 20, 2012, is the first day of a 12-month period. Download tax forms 2011 Count forward 12 months from October 20, 2012, to find the last day of this 12-month period, October 19, 2013. Download tax forms 2011 This 12-month period runs from October 20, 2012, through October 19, 2013. Download tax forms 2011 Count the total days during 2013 that fall within this 12-month period. Download tax forms 2011 This is 292 days (January 1, 2013 – October 19, 2013). Download tax forms 2011 Multiply $97,600, the maximum limit, by the fraction 292/365 to find your maximum exclusion for 2013 ($78,080). Download tax forms 2011 Choosing the Exclusion The foreign earned income exclusion is voluntary. Download tax forms 2011 You can choose the exclusion by completing the appropriate parts of Form 2555. Download tax forms 2011 When You Can Choose the Exclusion Your initial choice of the exclusion on Form 2555 or Form 2555-EZ generally must be made with one of the following returns. Download tax forms 2011 A return filed by the due date (including any extensions). Download tax forms 2011 A return amending a timely-filed return. Download tax forms 2011 Amended returns generally must be filed by the later of 3 years after the filing date of the original return or 2 years after the tax is paid. Download tax forms 2011 A return filed within 1 year from the original due date of the return (determined without regard to any extensions). Download tax forms 2011 Filing after the above periods. Download tax forms 2011   You can choose the exclusion on a return filed after the periods described above if you owe no federal income tax after taking into account the exclusion. Download tax forms 2011 If you owe federal income tax after taking into account the exclusion, you can choose the exclusion on a return filed after the periods described earlier if you file before the IRS discovers that you failed to choose the exclusion. Download tax forms 2011 Whether or not you owe federal income tax after taking the exclusion into account, if you file your return after the periods described earlier, you must type or legibly print at the top of the first page of the Form 1040 “Filed pursuant to section 1. Download tax forms 2011 911-7(a)(2)(i)(D). Download tax forms 2011 ” If you owe federal income tax after taking into account the foreign earned income exclusion and the IRS discovered that you failed to choose the exclusion, you may still be able to choose the exclusion. Download tax forms 2011 You must request a private letter ruling under Income Tax Regulation 301. Download tax forms 2011 9100-3 and Revenue Procedure 2013-1, 2013-1 I. Download tax forms 2011 R. Download tax forms 2011 B. Download tax forms 2011 1, available at www. Download tax forms 2011 irs. Download tax forms 2011 gov/irb/2013-01_IRB/ar06. Download tax forms 2011 html. Download tax forms 2011 Effect of Choosing the Exclusion Once you choose to exclude your foreign earned income, that choice remains in effect for that year and all later years unless you revoke it. Download tax forms 2011 Foreign tax credit or deduction. Download tax forms 2011  
Español

AmeriCorps

AmeriCorps offers opportunities for adults of all ages and backgrounds to serve through a network of partnerships with local and national nonprofit groups.

Contact the Agency or Department

Website: AmeriCorps

E-mail:

Address: 1201 New York Avenue, NW
Washington, DC 20525

Phone Number: (202) 606-5000

TTY: (800) 833-3722

Forms: AmeriCorps Forms

The Download Tax Forms 2011

Download tax forms 2011 Publication 936 - Main Content Table of Contents Part I. Download tax forms 2011 Home Mortgage InterestSecured Debt Qualified Home Special Situations Points Mortgage Insurance Premiums Form 1098, Mortgage Interest Statement How To Report Special Rule for Tenant-Stockholders in Cooperative Housing Corporations Part II. Download tax forms 2011 Limits on Home Mortgage Interest DeductionHome Acquisition Debt Home Equity Debt Grandfathered Debt Table 1 Instructions How To Get Tax HelpLow Income Taxpayer Clinics Part I. Download tax forms 2011 Home Mortgage Interest This part explains what you can deduct as home mortgage interest. Download tax forms 2011 It includes discussions on points, mortgage insurance premiums, and how to report deductible interest on your tax return. Download tax forms 2011 Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). Download tax forms 2011 The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan. Download tax forms 2011 You can deduct home mortgage interest if all the following conditions are met. Download tax forms 2011 You file Form 1040 and itemize deductions on Schedule A (Form 1040). Download tax forms 2011 The mortgage is a secured debt on a qualified home in which you have an ownership interest. Download tax forms 2011 Secured Debt and Qualified Home are explained later. Download tax forms 2011  Both you and the lender must intend that the loan be repaid. Download tax forms 2011 Fully deductible interest. Download tax forms 2011   In most cases, you can deduct all of your home mortgage interest. Download tax forms 2011 How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. Download tax forms 2011   If all of your mortgages fit into one or more of the following three categories at all times during the year, you can deduct all of the interest on those mortgages. Download tax forms 2011 (If any one mortgage fits into more than one category, add the debt that fits in each category to your other debt in the same category. Download tax forms 2011 ) If one or more of your mortgages does not fit into any of these categories, use Part II of this publication to figure the amount of interest you can deduct. Download tax forms 2011   The three categories are as follows. Download tax forms 2011 Mortgages you took out on or before October 13, 1987 (called grandfathered debt). Download tax forms 2011 Mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if throughout 2013 these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately). Download tax forms 2011 Mortgages you took out after October 13, 1987, other than to buy, build, or improve your home (called home equity debt), but only if throughout 2013 these mortgages totaled $100,000 or less ($50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by (1) and (2). Download tax forms 2011 The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home. Download tax forms 2011   See Part II for more detailed definitions of grandfathered, home acquisition, and home equity debt. Download tax forms 2011    You can use Figure A to check whether your home mortgage interest is fully deductible. Download tax forms 2011 This image is too large to be displayed in the current screen. Download tax forms 2011 Please click the link to view the image. Download tax forms 2011 Figure A. Download tax forms 2011 Is My Home Mortgage Interest Fully Deductible? Secured Debt You can deduct your home mortgage interest only if your mortgage is a secured debt. Download tax forms 2011 A secured debt is one in which you sign an instrument (such as a mortgage, deed of trust, or land contract) that: Makes your ownership in a qualified home security for payment of the debt, Provides, in case of default, that your home could satisfy the debt, and Is recorded or is otherwise perfected under any state or local law that applies. Download tax forms 2011 In other words, your mortgage is a secured debt if you put your home up as collateral to protect the interests of the lender. Download tax forms 2011 If you cannot pay the debt, your home can then serve as payment to the lender to satisfy (pay) the debt. Download tax forms 2011 In this publication, mortgage will refer to secured debt. Download tax forms 2011 Debt not secured by home. Download tax forms 2011   A debt is not secured by your home if it is secured solely because of a lien on your general assets or if it is a security interest that attaches to the property without your consent (such as a mechanic's lien or judgment lien). Download tax forms 2011   A debt is not secured by your home if it once was, but is no longer secured by your home. Download tax forms 2011 Wraparound mortgage. Download tax forms 2011   This is not a secured debt unless it is recorded or otherwise perfected under state law. Download tax forms 2011 Example. Download tax forms 2011 Beth owns a home subject to a mortgage of $40,000. Download tax forms 2011 She sells the home for $100,000 to John, who takes it subject to the $40,000 mortgage. Download tax forms 2011 Beth continues to make the payments on the $40,000 note. Download tax forms 2011 John pays $10,000 down and gives Beth a $90,000 note secured by a wraparound mortgage on the home. Download tax forms 2011 Beth does not record or otherwise perfect the $90,000 mortgage under the state law that applies. Download tax forms 2011 Therefore, the mortgage is not a secured debt and John cannot deduct any of the interest he pays on it as home mortgage interest. Download tax forms 2011 Choice to treat the debt as not secured by your home. Download tax forms 2011   You can choose to treat any debt secured by your qualified home as not secured by the home. Download tax forms 2011 This treatment begins with the tax year for which you make the choice and continues for all later tax years. Download tax forms 2011 You can revoke your choice only with the consent of the Internal Revenue Service (IRS). Download tax forms 2011   You may want to treat a debt as not secured by your home if the interest on that debt is fully deductible (for example, as a business expense) whether or not it qualifies as home mortgage interest. Download tax forms 2011 This may allow you, if the limits in Part II apply, more of a deduction for interest on other debts that are deductible only as home mortgage interest. Download tax forms 2011 Cooperative apartment owner. Download tax forms 2011   If you own stock in a cooperative housing corporation, see the Special Rule for Tenant-Stockholders in Cooperative Housing Corporations , near the end of this Part I. Download tax forms 2011 Qualified Home For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. Download tax forms 2011 This means your main home or your second home. Download tax forms 2011 A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. Download tax forms 2011 The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes. Download tax forms 2011 Otherwise, it is considered personal interest and is not deductible. Download tax forms 2011 Main home. Download tax forms 2011   You can have only one main home at any one time. Download tax forms 2011 This is the home where you ordinarily live most of the time. Download tax forms 2011 Second home. Download tax forms 2011   A second home is a home that you choose to treat as your second home. Download tax forms 2011 Second home not rented out. Download tax forms 2011   If you have a second home that you do not hold out for rent or resale to others at any time during the year, you can treat it as a qualified home. Download tax forms 2011 You do not have to use the home during the year. Download tax forms 2011 Second home rented out. Download tax forms 2011   If you have a second home and rent it out part of the year, you also must use it as a home during the year for it to be a qualified home. Download tax forms 2011 You must use this home more than 14 days or more than 10% of the number of days during the year that the home is rented at a fair rental, whichever is longer. Download tax forms 2011 If you do not use the home long enough, it is considered rental property and not a second home. Download tax forms 2011 For information on residential rental property, see Publication 527. Download tax forms 2011 More than one second home. Download tax forms 2011   If you have more than one second home, you can treat only one as the qualified second home during any year. Download tax forms 2011 However, you can change the home you treat as a second home during the year in the following situations. Download tax forms 2011 If you get a new home during the year, you can choose to treat the new home as your second home as of the day you buy it. Download tax forms 2011 If your main home no longer qualifies as your main home, you can choose to treat it as your second home as of the day you stop using it as your main home. Download tax forms 2011 If your second home is sold during the year or becomes your main home, you can choose a new second home as of the day you sell the old one or begin using it as your main home. Download tax forms 2011 Divided use of your home. Download tax forms 2011   The only part of your home that is considered a qualified home is the part you use for residential living. Download tax forms 2011 If you use part of your home for other than residential living, such as a home office, you must allocate the use of your home. Download tax forms 2011 You must then divide both the cost and fair market value of your home between the part that is a qualified home and the part that is not. Download tax forms 2011 Dividing the cost may affect the amount of your home acquisition debt, which is limited to the cost of your home plus the cost of any improvements. Download tax forms 2011 (See Home Acquisition Debt in Part II. Download tax forms 2011 ) Dividing the fair market value may affect your home equity debt limit, also explained in Part II . Download tax forms 2011 Renting out part of home. Download tax forms 2011   If you rent out part of a qualified home to another person (tenant), you can treat the rented part as being used by you for residential living only if all of the following conditions apply. Download tax forms 2011 The rented part of your home is used by the tenant primarily for residential living. Download tax forms 2011 The rented part of your home is not a self-contained residential unit having separate sleeping, cooking, and toilet facilities. Download tax forms 2011 You do not rent (directly or by sublease) the same or different parts of your home to more than two tenants at any time during the tax year. Download tax forms 2011 If two persons (and dependents of either) share the same sleeping quarters, they are treated as one tenant. Download tax forms 2011 Office in home. Download tax forms 2011   If you have an office in your home that you use in your business, see Publication 587, Business Use of Your Home. Download tax forms 2011 It explains how to figure your deduction for the business use of your home, which includes the business part of your home mortgage interest. Download tax forms 2011 Home under construction. Download tax forms 2011   You can treat a home under construction as a qualified home for a period of up to 24 months, but only if it becomes your qualified home at the time it is ready for occupancy. Download tax forms 2011   The 24-month period can start any time on or after the day construction begins. Download tax forms 2011 Home destroyed. Download tax forms 2011   You may be able to continue treating your home as a qualified home even after it is destroyed in a fire, storm, tornado, earthquake, or other casualty. Download tax forms 2011 This means you can continue to deduct the interest you pay on your home mortgage, subject to the limits described in this publication. Download tax forms 2011   You can continue treating a destroyed home as a qualified home if, within a reasonable period of time after the home is destroyed, you: Rebuild the destroyed home and move into it, or Sell the land on which the home was located. Download tax forms 2011   This rule applies to your main home and to a second home that you treat as a qualified home. Download tax forms 2011 Time-sharing arrangements. Download tax forms 2011   You can treat a home you own under a time-sharing plan as a qualified home if it meets all the requirements. Download tax forms 2011 A time-sharing plan is an arrangement between two or more people that limits each person's interest in the home or right to use it to a certain part of the year. Download tax forms 2011 Rental of time-share. Download tax forms 2011   If you rent out your time-share, it qualifies as a second home only if you also use it as a home during the year. Download tax forms 2011 See Second home rented out , earlier, for the use requirement. Download tax forms 2011 To know whether you meet that requirement, count your days of use and rental of the home only during the time you have a right to use it or to receive any benefits from the rental of it. Download tax forms 2011 Married taxpayers. Download tax forms 2011   If you are married and file a joint return, your qualified home(s) can be owned either jointly or by only one spouse. Download tax forms 2011 Separate returns. Download tax forms 2011   If you are married filing separately and you and your spouse own more than one home, you can each take into account only one home as a qualified home. Download tax forms 2011 However, if you both consent in writing, then one spouse can take both the main home and a second home into account. Download tax forms 2011 Special Situations This section describes certain items that can be included as home mortgage interest and others that cannot. Download tax forms 2011 It also describes certain special situations that may affect your deduction. Download tax forms 2011 Late payment charge on mortgage payment. Download tax forms 2011   You can deduct as home mortgage interest a late payment charge if it was not for a specific service performed in connection with your mortgage loan. Download tax forms 2011 Mortgage prepayment penalty. Download tax forms 2011   If you pay off your home mortgage early, you may have to pay a penalty. Download tax forms 2011 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. Download tax forms 2011 Sale of home. Download tax forms 2011   If you sell your home, you can deduct your home mortgage interest (subject to any limits that apply) paid up to, but not including, the date of the sale. Download tax forms 2011 Example. Download tax forms 2011 John and Peggy Harris sold their home on May 7. Download tax forms 2011 Through April 30, they made home mortgage interest payments of $1,220. Download tax forms 2011 The settlement sheet for the sale of the home showed $50 interest for the 6-day period in May up to, but not including, the date of sale. Download tax forms 2011 Their mortgage interest deduction is $1,270 ($1,220 + $50). Download tax forms 2011 Prepaid interest. Download tax forms 2011   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. Download tax forms 2011 You can deduct in each year only the interest that qualifies as home mortgage interest for that year. Download tax forms 2011 However, there is an exception that applies to points, discussed later. Download tax forms 2011 Mortgage interest credit. Download tax forms 2011    You may be able to claim a mortgage interest credit if you were issued a mortgage credit certificate (MCC) by a state or local government. Download tax forms 2011 Figure the credit on Form 8396, Mortgage Interest Credit. Download tax forms 2011 If you take this credit, you must reduce your mortgage interest deduction by the amount of the credit. Download tax forms 2011   See Form 8396 and Publication 530 for more information on the mortgage interest credit. Download tax forms 2011 Ministers' and military housing allowance. Download tax forms 2011   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you can still deduct your home mortgage interest. Download tax forms 2011 Hardest Hit Fund and Emergency Homeowners' Loan Programs. Download tax forms 2011   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. Download tax forms 2011 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. Download tax forms 2011 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. Download tax forms 2011 If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098–MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received from payer(s) / borrower(s)), box 4 (mortgage insurance premiums), and box 5 (other information including real property taxes paid). Download tax forms 2011 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. Download tax forms 2011 Mortgage assistance payments under section 235 of the National Housing Act. Download tax forms 2011   If you qualify for mortgage assistance payments for lower-income families under section 235 of the National Housing Act, part or all of the interest on your mortgage may be paid for you. Download tax forms 2011 You cannot deduct the interest that is paid for you. Download tax forms 2011 No other effect on taxes. Download tax forms 2011   Do not include these mortgage assistance payments in your income. Download tax forms 2011 Also, do not use these payments to reduce other deductions, such as real estate taxes. Download tax forms 2011 Divorced or separated individuals. Download tax forms 2011   If a divorce or separation agreement requires you or your spouse or former spouse to pay home mortgage interest on a home owned by both of you, the payment of interest may be alimony. Download tax forms 2011 See the discussion of Payments for jointly-owned home under Alimony in Publication 504, Divorced or Separated Individuals. Download tax forms 2011 Redeemable ground rents. Download tax forms 2011   In some states (such as Maryland), you can buy your home subject to a ground rent. Download tax forms 2011 A ground rent is an obligation you assume to pay a fixed amount per year on the property. Download tax forms 2011 Under this arrangement, you are leasing (rather than buying) the land on which your home is located. Download tax forms 2011   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. Download tax forms 2011   A ground rent is a redeemable ground rent if all of the following are true. Download tax forms 2011 Your lease, including renewal periods, is for more than 15 years. Download tax forms 2011 You can freely assign the lease. Download tax forms 2011 You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a specific amount. Download tax forms 2011 The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. Download tax forms 2011   Payments made to end the lease and to buy the lessor's entire interest in the land are not deductible as mortgage interest. Download tax forms 2011 Nonredeemable ground rents. Download tax forms 2011   Payments on a nonredeemable ground rent are not mortgage interest. Download tax forms 2011 You can deduct them as rent if they are a business expense or if they are for rental property. Download tax forms 2011 Reverse mortgages. Download tax forms 2011   A reverse mortgage is a loan where the lender pays you (in a lump sum, a monthly advance, a line of credit, or a combination of all three) while you continue to live in your home. Download tax forms 2011 With a reverse mortgage, you retain title to your home. Download tax forms 2011 Depending on the plan, your reverse mortgage becomes due with interest when you move, sell your home, reach the end of a pre-selected loan period, or die. Download tax forms 2011 Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable. Download tax forms 2011 Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until you actually pay it, which is usually when you pay off the loan in full. Download tax forms 2011 Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt discussed in Part II. Download tax forms 2011 Rental payments. Download tax forms 2011   If you live in a house before final settlement on the purchase, any payments you make for that period are rent and not interest. Download tax forms 2011 This is true even if the settlement papers call them interest. Download tax forms 2011 You cannot deduct these payments as home mortgage interest. Download tax forms 2011 Mortgage proceeds invested in tax-exempt securities. Download tax forms 2011   You cannot deduct the home mortgage interest on grandfathered debt or home equity debt if you used the proceeds of the mortgage to buy securities or certificates that produce tax-free income. Download tax forms 2011 “Grandfathered debt” and “home equity debt” are defined in Part II of this publication. Download tax forms 2011 Refunds of interest. Download tax forms 2011   If you receive a refund of interest in the same tax year you paid it, you must reduce your interest expense by the amount refunded to you. Download tax forms 2011 If you receive a refund of interest you deducted in an earlier year, you generally must include the refund in income in the year you receive it. Download tax forms 2011 However, you need to include it only up to the amount of the deduction that reduced your tax in the earlier year. Download tax forms 2011 This is true whether the interest overcharge was refunded to you or was used to reduce the outstanding principal on your mortgage. Download tax forms 2011 If you need to include the refund in income, report it on Form 1040, line 21. Download tax forms 2011   If you received a refund of interest you overpaid in an earlier year, you generally will receive a Form 1098, Mortgage Interest Statement, showing the refund in box 3. Download tax forms 2011 For information about Form 1098, see Form 1098, Mortgage Interest Statement , later. Download tax forms 2011   For more information on how to treat refunds of interest deducted in earlier years, see Recoveries in Publication 525, Taxable and Nontaxable Income. Download tax forms 2011 Cooperative apartment owner. Download tax forms 2011   If you own a cooperative apartment, you must reduce your home mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. Download tax forms 2011 The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year. Download tax forms 2011   If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. Download tax forms 2011 Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Download tax forms 2011 Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. Download tax forms 2011 This image is too large to be displayed in the current screen. Download tax forms 2011 Please click the link to view the image. Download tax forms 2011 Figure B. Download tax forms 2011 Are My Points Fully Deductible This Year? A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. Download tax forms 2011 See Points paid by the seller , later. Download tax forms 2011 General Rule You generally cannot deduct the full amount of points in the year paid. Download tax forms 2011 Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. Download tax forms 2011 See Deduction Allowed Ratably , next. Download tax forms 2011 For exceptions to the general rule, see Deduction Allowed in Year Paid , later. Download tax forms 2011 Deduction Allowed Ratably If you do not meet the tests listed under Deduction Allowed in Year Paid , later, the loan is not a home improvement loan, or you choose not to deduct your points in full in the year paid, you can deduct the points ratably (equally) over the life of the loan if you meet all the following tests. Download tax forms 2011 You use the cash method of accounting. Download tax forms 2011 This means you report income in the year you receive it and deduct expenses in the year you pay them. Download tax forms 2011 Most individuals use this method. Download tax forms 2011 Your loan is secured by a home. Download tax forms 2011 (The home does not need to be your main home. Download tax forms 2011 ) Your loan period is not more than 30 years. Download tax forms 2011 If your loan period is more than 10 years, the terms of your loan are the same as other loans offered in your area for the same or longer period. Download tax forms 2011 Either your loan amount is $250,000 or less, or the number of points is not more than: 4, if your loan period is 15 years or less, or 6, if your loan period is more than 15 years. Download tax forms 2011 Example. Download tax forms 2011 You use the cash method of accounting. Download tax forms 2011 In 2013, you took out a $100,000 loan payable over 20 years. Download tax forms 2011 The terms of the loan are the same as for other 20-year loans offered in your area. Download tax forms 2011 You paid $4,800 in points. Download tax forms 2011 You made 3 monthly payments on the loan in 2013. Download tax forms 2011 You can deduct $60 [($4,800 ÷ 240 months) x 3 payments] in 2013. Download tax forms 2011 In 2014, if you make all twelve payments, you will be able to deduct $240 ($20 x 12). Download tax forms 2011 Deduction Allowed in Year Paid You can fully deduct points in the year paid if you meet all the following tests. Download tax forms 2011 (You can use Figure B as a quick guide to see whether your points are fully deductible in the year paid. Download tax forms 2011 ) Your loan is secured by your main home. Download tax forms 2011 (Your main home is the one you ordinarily live in most of the time. Download tax forms 2011 ) Paying points is an established business practice in the area where the loan was made. Download tax forms 2011 The points paid were not more than the points generally charged in that area. Download tax forms 2011 You use the cash method of accounting. Download tax forms 2011 This means you report income in the year you receive it and deduct expenses in the year you pay them. Download tax forms 2011 Most individuals use this method. Download tax forms 2011 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. Download tax forms 2011 The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. Download tax forms 2011 The funds you provided are not required to have been applied to the points. Download tax forms 2011 They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Download tax forms 2011 You cannot have borrowed these funds from your lender or mortgage broker. Download tax forms 2011 You use your loan to buy or build your main home. Download tax forms 2011 The points were computed as a percentage of the principal amount of the mortgage. Download tax forms 2011 The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. Download tax forms 2011 The points may be shown as paid from either your funds or the seller's. Download tax forms 2011 Note. Download tax forms 2011 If you meet all of these tests, you can choose to either fully deduct the points in the year paid, or deduct them over the life of the loan. Download tax forms 2011 Home improvement loan. Download tax forms 2011   You can also fully deduct in the year paid points paid on a loan to improve your main home, if tests (1) through (6) are met. Download tax forms 2011 Second home. Download tax forms 2011 You cannot fully deduct in the year paid points you pay on loans secured by your second home. Download tax forms 2011 You can deduct these points only over the life of the loan. Download tax forms 2011 Refinancing. Download tax forms 2011   Generally, points you pay to refinance a mortgage are not deductible in full in the year you pay them. Download tax forms 2011 This is true even if the new mortgage is secured by your main home. Download tax forms 2011   However, if you use part of the refinanced mortgage proceeds to improve your main home and you meet the first 6 tests listed under Deduction Allowed in Year Paid , you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. Download tax forms 2011 You can deduct the rest of the points over the life of the loan. Download tax forms 2011 Example 1. Download tax forms 2011 In 1998, Bill Fields got a mortgage to buy a home. Download tax forms 2011 In 2013, Bill refinanced that mortgage with a 15-year $100,000 mortgage loan. Download tax forms 2011 The mortgage is secured by his home. Download tax forms 2011 To get the new loan, he had to pay three points ($3,000). Download tax forms 2011 Two points ($2,000) were for prepaid interest, and one point ($1,000) was charged for services, in place of amounts that ordinarily are stated separately on the settlement statement. Download tax forms 2011 Bill paid the points out of his private funds, rather than out of the proceeds of the new loan. Download tax forms 2011 The payment of points is an established practice in the area, and the points charged are not more than the amount generally charged there. Download tax forms 2011 Bill's first payment on the new loan was due July 1. Download tax forms 2011 He made six payments on the loan in 2013 and is a cash basis taxpayer. Download tax forms 2011 Bill used the funds from the new mortgage to repay his existing mortgage. Download tax forms 2011 Although the new mortgage loan was for Bill's continued ownership of his main home, it was not for the purchase or improvement of that home. Download tax forms 2011 He cannot deduct all of the points in 2013. Download tax forms 2011 He can deduct two points ($2,000) ratably over the life of the loan. Download tax forms 2011 He deducts $67 [($2,000 ÷ 180 months) × 6 payments] of the points in 2013. Download tax forms 2011 The other point ($1,000) was a fee for services and is not deductible. Download tax forms 2011 Example 2. Download tax forms 2011 The facts are the same as in Example 1, except that Bill used $25,000 of the loan proceeds to improve his home and $75,000 to repay his existing mortgage. Download tax forms 2011 Bill deducts 25% ($25,000 ÷ $100,000) of the points ($2,000) in 2013. Download tax forms 2011 His deduction is $500 ($2,000 × 25%). Download tax forms 2011 Bill also deducts the ratable part of the remaining $1,500 ($2,000 − $500) that must be spread over the life of the loan. Download tax forms 2011 This is $50 [($1,500 ÷ 180 months) × 6 payments] in 2013. Download tax forms 2011 The total amount Bill deducts in 2013 is $550 ($500 + $50). Download tax forms 2011 Special Situations This section describes certain special situations that may affect your deduction of points. Download tax forms 2011 Original issue discount. Download tax forms 2011   If you do not qualify to either deduct the points in the year paid or deduct them ratably over the life of the loan, or if you choose not to use either of these methods, the points reduce the issue price of the loan. Download tax forms 2011 This reduction results in original issue discount, which is discussed in chapter 4 of Publication 535. Download tax forms 2011 Amounts charged for services. Download tax forms 2011    Amounts charged by the lender for specific services connected to the loan are not interest. Download tax forms 2011 Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Download tax forms 2011  You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Download tax forms 2011 Points paid by the seller. Download tax forms 2011   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Download tax forms 2011 Treatment by seller. Download tax forms 2011   The seller cannot deduct these fees as interest. Download tax forms 2011 But they are a selling expense that reduces the amount realized by the seller. Download tax forms 2011 See Publication 523 for information on selling your home. Download tax forms 2011 Treatment by buyer. Download tax forms 2011   The buyer reduces the basis of the home by the amount of the seller-paid points and treats the points as if he or she had paid them. Download tax forms 2011 If all the tests under Deduction Allowed in Year Paid , earlier, are met, the buyer can deduct the points in the year paid. Download tax forms 2011 If any of those tests are not met, the buyer deducts the points over the life of the loan. Download tax forms 2011   If you need information about the basis of your home, see Publication 523 or Publication 530. Download tax forms 2011 Funds provided are less than points. Download tax forms 2011   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the funds you provided were less than the points charged to you (test (6)), you can deduct the points in the year paid, up to the amount of funds you provided. Download tax forms 2011 In addition, you can deduct any points paid by the seller. Download tax forms 2011 Example 1. Download tax forms 2011 When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Download tax forms 2011 You meet all the tests for deducting points in the year paid, except the only funds you provided were a $750 down payment. Download tax forms 2011 Of the $1,000 charged for points, you can deduct $750 in the year paid. Download tax forms 2011 You spread the remaining $250 over the life of the mortgage. Download tax forms 2011 Example 2. Download tax forms 2011 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. Download tax forms 2011 In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Download tax forms 2011 You spread the remaining $250 over the life of the mortgage. Download tax forms 2011 You must reduce the basis of your home by the $1,000 paid by the seller. Download tax forms 2011 Excess points. Download tax forms 2011   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the points paid were more than generally paid in your area (test (3)), you deduct in the year paid only the points that are generally charged. Download tax forms 2011 You must spread any additional points over the life of the mortgage. Download tax forms 2011 Mortgage ending early. Download tax forms 2011   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. Download tax forms 2011 However, if you refinance the mortgage with the same lender, you cannot deduct any remaining balance of spread points. Download tax forms 2011 Instead, deduct the remaining balance over the term of the new loan. Download tax forms 2011   A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Download tax forms 2011 Example. Download tax forms 2011 Dan paid $3,000 in points in 2002 that he had to spread out over the 15-year life of the mortgage. Download tax forms 2011 He deducts $200 points per year. Download tax forms 2011 Through 2012, Dan has deducted $2,200 of the points. Download tax forms 2011 Dan prepaid his mortgage in full in 2013. Download tax forms 2011 He can deduct the remaining $800 of points in 2013. Download tax forms 2011 Limits on deduction. Download tax forms 2011   You cannot fully deduct points paid on a mortgage that exceeds the limits discussed in Part II . Download tax forms 2011 See the Table 1 Instructions for line 10. Download tax forms 2011 Form 1098. Download tax forms 2011    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. Download tax forms 2011 See Form 1098, Mortgage Interest Statement , later. Download tax forms 2011 Mortgage Insurance Premiums You can treat amounts you paid during 2013 for qualified mortgage insurance as home mortgage interest. Download tax forms 2011 The insurance must be in connection with home acquisition debt, and the insurance contract must have been issued after 2006. Download tax forms 2011 Qualified mortgage insurance. Download tax forms 2011   Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). Download tax forms 2011   Mortgage insurance provided by the Department of Veterans Affairs is commonly known as a funding fee. Download tax forms 2011 If provided by the Rural Housing Service, it is commonly known as a guarantee fee. Download tax forms 2011 The funding fee and guarantee fee can either be included in the amount of the loan or paid in full at the time of closing. Download tax forms 2011 These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013. Download tax forms 2011 Contact the mortgage insurance issuer to determine the deductible amount if it is not reported in box 4 of Form 1098. Download tax forms 2011 Special rules for prepaid mortgage insurance. Download tax forms 2011   Generally, if you paid premiums for qualified mortgage insurance that are properly allocable to periods after the close of the tax year, such premiums are treated as paid in the period to which they are allocated. Download tax forms 2011 You must allocate the premiums over the shorter of the stated term of the mortgage or 84 months, beginning with the month the insurance was obtained. Download tax forms 2011 No deduction is allowed for the unamortized balance if the mortgage is satisfied before its term. Download tax forms 2011 This paragraph does not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service. Download tax forms 2011 Example. Download tax forms 2011 Ryan purchased a home in May of 2012 and financed the home with a 15-year mortgage. Download tax forms 2011 Ryan also prepaid all of the $9,240 in private mortgage insurance required at the time of closing in May. Download tax forms 2011 Since the $9,240 in private mortgage insurance is allocable to periods after 2012, Ryan must allocate the $9,240 over the shorter of the life of the mortgage or 84 months. Download tax forms 2011 Ryan's adjusted gross income (AGI) for 2012 is $76,000. Download tax forms 2011 Ryan can deduct $880 ($9,240 ÷ 84 x 8 months) for qualified mortgage insurance premiums in 2012. Download tax forms 2011 For 2013, Ryan can deduct $1,320 ($9,240 ÷ 84 x 12 months) if his AGI is $100,000 or less. Download tax forms 2011 In this example, the mortgage insurance premiums are allocated over 84 months, which is shorter than the life of the mortgage of 15 years (180 months). Download tax forms 2011 Limit on deduction. Download tax forms 2011   If your adjusted gross income on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated. Download tax forms 2011 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. Download tax forms 2011 If your adjusted gross income is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Download tax forms 2011 Form 1098. Download tax forms 2011   The mortgage interest statement you receive should show not only the total interest paid during the year, but also your mortgage insurance premiums paid during the year, which may qualify to be treated as deductible mortgage interest. Download tax forms 2011 See Form 1098, Mortgage Interest Statement, next. Download tax forms 2011 Form 1098, Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement from the mortgage holder. Download tax forms 2011 You will receive the statement if you pay interest to a person (including a financial institution or cooperative housing corporation) in the course of that person's trade or business. Download tax forms 2011 A governmental unit is a person for purposes of furnishing the statement. Download tax forms 2011 The statement for each year should be sent to you by January 31 of the following year. Download tax forms 2011 A copy of this form will also be sent to the IRS. Download tax forms 2011 The statement will show the total interest you paid during the year, any mortgage insurance premiums you paid, and if you purchased a main home during the year, it also will show the deductible points paid during the year, including seller-paid points. Download tax forms 2011 However, it should not show any interest that was paid for you by a government agency. Download tax forms 2011 As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. Download tax forms 2011 However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan. Download tax forms 2011 See the earlier discussion of Points to determine whether you can deduct points not shown on Form 1098. Download tax forms 2011 Prepaid interest on Form 1098. Download tax forms 2011   If you prepaid interest in 2013 that accrued in full by January 15, 2014, this prepaid interest may be included in box 1 of Form 1098. Download tax forms 2011 However, you cannot deduct the prepaid amount for January 2014 in 2013. Download tax forms 2011 (See Prepaid interest , earlier. Download tax forms 2011 ) You will have to figure the interest that accrued for 2014 and subtract it from the amount in box 1. Download tax forms 2011 You will include the interest for January 2014 with other interest you pay for 2014. Download tax forms 2011 Refunded interest. Download tax forms 2011   If you received a refund of mortgage interest you overpaid in an earlier year, you generally will receive a Form 1098 showing the refund in box 3. Download tax forms 2011 See Refunds of interest , earlier. Download tax forms 2011 Mortgage insurance premiums. Download tax forms 2011   The amount of mortgage insurance premiums you paid during 2013 may be shown in Box 4 of Form 1098. Download tax forms 2011 See Mortgage Insurance Premiums , earlier. Download tax forms 2011 How To Report Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. Download tax forms 2011 If you paid more deductible interest to the financial institution than the amount shown on Form 1098, show the larger deductible amount on line 10. Download tax forms 2011 Attach a statement explaining the difference and print “See attached” next to line 10. Download tax forms 2011 Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. Download tax forms 2011 If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and taxpayer identification number (TIN) on the dotted lines next to line 11. Download tax forms 2011 The seller must give you this number and you must give the seller your TIN. Download tax forms 2011 A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Download tax forms 2011 Failure to meet any of these requirements may result in a $50 penalty for each failure. Download tax forms 2011 The TIN can be either a social security number, an individual taxpayer identification number (issued by the Internal Revenue Service), or an employer identification number. Download tax forms 2011 If you can take a deduction for points that were not reported to you on Form 1098, deduct those points on Schedule A (Form 1040), line 12. Download tax forms 2011 Deduct mortgage insurance premiums on Schedule A (Form 1040), line 13. Download tax forms 2011 More than one borrower. Download tax forms 2011   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. Download tax forms 2011 Show how much of the interest each of you paid, and give the name and address of the person who received the form. Download tax forms 2011 Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. Download tax forms 2011 Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13. Download tax forms 2011   Similarly, if you are the payer of record on a mortgage on which there are other borrowers entitled to a deduction for the interest shown on the Form 1098 you received, deduct only your share of the interest on Schedule A (Form 1040), line 10. Download tax forms 2011 Let each of the other borrowers know what his or her share is. Download tax forms 2011 Mortgage proceeds used for business or investment. Download tax forms 2011   If your home mortgage interest deduction is limited under the rules explained in Part II , but all or part of the mortgage proceeds were used for business, investment, or other deductible activities, see Table 2 near the end of this publication. Download tax forms 2011 It shows where to deduct the part of your excess interest that is for those activities. Download tax forms 2011 The Table 1 Instructions for line 13 in Part II explain how to divide the excess interest among the activities for which the mortgage proceeds were used. Download tax forms 2011 Special Rule for Tenant-Stockholders in Cooperative Housing Corporations A qualified home includes stock in a cooperative housing corporation owned by a tenant-stockholder. Download tax forms 2011 This applies only if the tenant-stockholder is entitled to live in the house or apartment because of owning stock in the cooperative. Download tax forms 2011 Cooperative housing corporation. Download tax forms 2011   This is a corporation that meets all of the following conditions. Download tax forms 2011 Has only one class of stock outstanding, Has no stockholders other than those who own the stock that can live in a house, apartment, or house trailer owned or leased by the corporation, Has no stockholders who can receive any distribution out of capital other than on a liquidation of the corporation, and Meets at least one of the following requirements. Download tax forms 2011 Receives at least 80% of its gross income for the year in which the mortgage interest is paid or incurred from tenant-stockholders. Download tax forms 2011 For this purpose, gross income is all income received during the entire year, including amounts received before the corporation changed to cooperative ownership. Download tax forms 2011 At all times during the year, at least 80% of the total square footage of the corporation's property is used or available for use by the tenant-stockholders for residential or residential-related use. Download tax forms 2011 At least 90% of the corporation's expenditures paid or incurred during the year are for the acquisition, construction, management, maintenance, or care of corporate property for the benefit of the tenant-stockholders. Download tax forms 2011 Stock used to secure debt. Download tax forms 2011   In some cases, you cannot use your cooperative housing stock to secure a debt because of either: Restrictions under local or state law, or Restrictions in the cooperative agreement (other than restrictions in which the main purpose is to permit the tenant- stockholder to treat unsecured debt as secured debt). Download tax forms 2011 However, you can treat a debt as secured by the stock to the extent that the proceeds are used to buy the stock under the allocation of interest rules. Download tax forms 2011 See chapter 4 of Publication 535 for details on these rules. Download tax forms 2011 Figuring deductible home mortgage interest. Download tax forms 2011   Generally, if you are a tenant-stockholder, you can deduct payments you make for your share of the interest paid or incurred by the cooperative. Download tax forms 2011 The interest must be on a debt to buy, build, change, improve, or maintain the cooperative's housing, or on a debt to buy the land. Download tax forms 2011   Figure your share of this interest by multiplying the total by the following fraction. Download tax forms 2011      Your shares of stock in the cooperative   The total shares of stock in the cooperative Limits on deduction. Download tax forms 2011   To figure how the limits discussed in Part II apply to you, treat your share of the cooperative's debt as debt incurred by you. Download tax forms 2011 The cooperative should determine your share of its grandfathered debt, its home acquisition debt, and its home equity debt. Download tax forms 2011 (Your share of each of these types of debt is equal to the average balance of each debt multiplied by the fraction just given. Download tax forms 2011 ) After your share of the average balance of each type of debt is determined, you include it with the average balance of that type of debt secured by your stock. Download tax forms 2011 Form 1098. Download tax forms 2011    The cooperative should give you a Form 1098 showing your share of the interest. Download tax forms 2011 Use the rules in this publication to determine your deductible mortgage interest. Download tax forms 2011 Part II. Download tax forms 2011 Limits on Home Mortgage Interest Deduction This part of the publication discusses the limits on deductible home mortgage interest. Download tax forms 2011 These limits apply to your home mortgage interest expense if you have a home mortgage that does not fit into any of the three categories listed at the beginning of Part I under Fully deductible interest . Download tax forms 2011 Your home mortgage interest deduction is limited to the interest on the part of your home mortgage debt that is not more than your qualified loan limit. Download tax forms 2011 This is the part of your home mortgage debt that is grandfathered debt or that is not more than the limits for home acquisition debt and home equity debt. Download tax forms 2011 Table 1 can help you figure your qualified loan limit and your deductible home mortgage interest. Download tax forms 2011 Home Acquisition Debt Home acquisition debt is a mortgage you took out after October 13, 1987, to buy, build, or substantially improve a qualified home (your main or second home). Download tax forms 2011 It also must be secured by that home. Download tax forms 2011 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. Download tax forms 2011 The additional debt may qualify as home equity debt (discussed later). Download tax forms 2011 Home acquisition debt limit. Download tax forms 2011   The total amount you can treat as home acquisition debt at any time on your main home and second home cannot be more than $1 million ($500,000 if married filing separately). Download tax forms 2011 This limit is reduced (but not below zero) by the amount of your grandfathered debt (discussed later). Download tax forms 2011 Debt over this limit may qualify as home equity debt (also discussed later). Download tax forms 2011 Refinanced home acquisition debt. Download tax forms 2011   Any secured debt you use to refinance home acquisition debt is treated as home acquisition debt. Download tax forms 2011 However, the new debt will qualify as home acquisition debt only up to the amount of the balance of the old mortgage principal just before the refinancing. Download tax forms 2011 Any additional debt not used to buy, build, or substantially improve a qualified home is not home acquisition debt, but may qualify as home equity debt (discussed later). Download tax forms 2011 Mortgage that qualifies later. Download tax forms 2011   A mortgage that does not qualify as home acquisition debt because it does not meet all the requirements may qualify at a later time. Download tax forms 2011 For example, a debt that you use to buy your home may not qualify as home acquisition debt because it is not secured by the home. Download tax forms 2011 However, if the debt is later secured by the home, it may qualify as home acquisition debt after that time. Download tax forms 2011 Similarly, a debt that you use to buy property may not qualify because the property is not a qualified home. Download tax forms 2011 However, if the property later becomes a qualified home, the debt may qualify after that time. Download tax forms 2011 Mortgage treated as used to buy, build, or improve home. Download tax forms 2011   A mortgage secured by a qualified home may be treated as home acquisition debt, even if you do not actually use the proceeds to buy, build, or substantially improve the home. Download tax forms 2011 This applies in the following situations. Download tax forms 2011 You buy your home within 90 days before or after the date you take out the mortgage. Download tax forms 2011 The home acquisition debt is limited to the home's cost, plus the cost of any substantial improvements within the limit described below in (2) or (3). Download tax forms 2011 (See Example 1 later. Download tax forms 2011 ) You build or improve your home and take out the mortgage before the work is completed. Download tax forms 2011 The home acquisition debt is limited to the amount of the expenses incurred within 24 months before the date of the mortgage. Download tax forms 2011 You build or improve your home and take out the mortgage within 90 days after the work is completed. Download tax forms 2011 The home acquisition debt is limited to the amount of the expenses incurred within the period beginning 24 months before the work is completed and ending on the date of the mortgage. Download tax forms 2011 (See Example 2 later. Download tax forms 2011 ) Example 1. Download tax forms 2011 You bought your main home on June 3 for $175,000. Download tax forms 2011 You paid for the home with cash you got from the sale of your old home. Download tax forms 2011 On July 15, you took out a mortgage of $150,000 secured by your main home. Download tax forms 2011 You used the $150,000 to invest in stocks. Download tax forms 2011 You can treat the mortgage as taken out to buy your home because you bought the home within 90 days before you took out the mortgage. Download tax forms 2011 The entire mortgage qualifies as home acquisition debt because it was not more than the home's cost. Download tax forms 2011 Example 2. Download tax forms 2011 On January 31, John began building a home on the lot that he owned. Download tax forms 2011 He used $45,000 of his personal funds to build the home. Download tax forms 2011 The home was completed on October 31. Download tax forms 2011 On November 21, John took out a $36,000 mortgage that was secured by the home. Download tax forms 2011 The mortgage can be treated as used to build the home because it was taken out within 90 days after the home was completed. Download tax forms 2011 The entire mortgage qualifies as home acquisition debt because it was not more than the expenses incurred within the period beginning 24 months before the home was completed. Download tax forms 2011 This is illustrated by Figure C. Download tax forms 2011   Please click here for the text description of the image. Download tax forms 2011 Figure C. Download tax forms 2011 John's example Date of the mortgage. Download tax forms 2011   The date you take out your mortgage is the day the loan proceeds are disbursed. Download tax forms 2011 This is generally the closing date. Download tax forms 2011 You can treat the day you apply in writing for your mortgage as the date you take it out. Download tax forms 2011 However, this applies only if you receive the loan proceeds within a reasonable time (such as within 30 days) after your application is approved. Download tax forms 2011 If a timely application you make is rejected, a reasonable additional time will be allowed to make a new application. Download tax forms 2011 Cost of home or improvements. Download tax forms 2011   To determine your cost, include amounts paid to acquire any interest in a qualified home or to substantially improve the home. Download tax forms 2011   The cost of building or substantially improving a qualified home includes the costs to acquire real property and building materials, fees for architects and design plans, and required building permits. Download tax forms 2011 Substantial improvement. Download tax forms 2011   An improvement is substantial if it: Adds to the value of your home, Prolongs your home's useful life, or Adapts your home to new uses. Download tax forms 2011    Repairs that maintain your home in good condition, such as repainting your home, are not substantial improvements. Download tax forms 2011 However, if you paint your home as part of a renovation that substantially improves your qualified home, you can include the painting costs in the cost of the improvements. Download tax forms 2011 Acquiring an interest in a home because of a divorce. Download tax forms 2011   If you incur debt to acquire the interest of a spouse or former spouse in a home, because of a divorce or legal separation, you can treat that debt as home acquisition debt. Download tax forms 2011 Part of home not a qualified home. Download tax forms 2011    To figure your home acquisition debt, you must divide the cost of your home and improvements between the part of your home that is a qualified home and any part that is not a qualified home. Download tax forms 2011 See Divided use of your home under Qualified Home in Part I. Download tax forms 2011 Home Equity Debt If you took out a loan for reasons other than to buy, build, or substantially improve your home, it may qualify as home equity debt. Download tax forms 2011 In addition, debt you incurred to buy, build, or substantially improve your home, to the extent it is more than the home acquisition debt limit (discussed earlier), may qualify as home equity debt. Download tax forms 2011 Home equity debt is a mortgage you took out after October 13, 1987, that: Does not qualify as home acquisition debt or as grandfathered debt, and Is secured by your qualified home. Download tax forms 2011 Example. Download tax forms 2011 You bought your home for cash 10 years ago. Download tax forms 2011 You did not have a mortgage on your home until last year, when you took out a $50,000 loan, secured by your home, to pay for your daughter's college tuition and your father's medical bills. Download tax forms 2011 This loan is home equity debt. Download tax forms 2011 Home equity debt limit. Download tax forms 2011   There is a limit on the amount of debt that can be treated as home equity debt. Download tax forms 2011 The total home equity debt on your main home and second home is limited to the smaller of: $100,000 ($50,000 if married filing separately), or The total of each home's fair market value (FMV) reduced (but not below zero) by the amount of its home acquisition debt and grandfathered debt. Download tax forms 2011 Determine the FMV and the outstanding home acquisition and grandfathered debt for each home on the date that the last debt was secured by the home. Download tax forms 2011 Example. Download tax forms 2011 You own one home that you bought in 2000. Download tax forms 2011 Its FMV now is $110,000, and the current balance on your original mortgage (home acquisition debt) is $95,000. Download tax forms 2011 Bank M offers you a home mortgage loan of 125% of the FMV of the home less any outstanding mortgages or other liens. Download tax forms 2011 To consolidate some of your other debts, you take out a $42,500 home mortgage loan [(125% × $110,000) − $95,000] with Bank M. Download tax forms 2011 Your home equity debt is limited to $15,000. Download tax forms 2011 This is the smaller of: $100,000, the maximum limit, or $15,000, the amount that the FMV of $110,000 exceeds the amount of home acquisition debt of $95,000. Download tax forms 2011 Debt higher than limit. Download tax forms 2011   Interest on amounts over the home equity debt limit (such as the interest on $27,500 [$42,500 − $15,000] in the preceding example) generally is treated as personal interest and is not deductible. Download tax forms 2011 But if the proceeds of the loan were used for investment, business, or other deductible purposes, the interest may be deductible. Download tax forms 2011 If it is, see the Table 1 Instructions for line 13 for an explanation of how to allocate the excess interest. Download tax forms 2011 Part of home not a qualified home. Download tax forms 2011   To figure the limit on your home equity debt, you must divide the FMV of your home between the part that is a qualified home and any part that is not a qualified home. Download tax forms 2011 See Divided use of your home under Qualified Home in Part I. Download tax forms 2011 Fair market value (FMV). Download tax forms 2011    This is the price at which the home would change hands between you and a buyer, neither having to sell or buy, and both having reasonable knowledge of all relevant facts. Download tax forms 2011 Sales of similar homes in your area, on about the same date your last debt was secured by the home, may be helpful in figuring the FMV. Download tax forms 2011 Grandfathered Debt If you took out a mortgage on your home before October 14, 1987, or you refinanced such a mortgage, it may qualify as grandfathered debt. Download tax forms 2011 To qualify, it must have been secured by your qualified home on October 13, 1987, and at all times after that date. Download tax forms 2011 How you used the proceeds does not matter. Download tax forms 2011 Grandfathered debt is not limited. Download tax forms 2011 All of the interest you paid on grandfathered debt is fully deductible home mortgage interest. Download tax forms 2011 However, the amount of your grandfathered debt reduces the $1 million limit for home acquisition debt and the limit based on your home's fair market value for home equity debt. Download tax forms 2011 Refinanced grandfathered debt. Download tax forms 2011   If you refinanced grandfathered debt after October 13, 1987, for an amount that was not more than the mortgage principal left on the debt, then you still treat it as grandfathered debt. Download tax forms 2011 To the extent the new debt is more than that mortgage principal, it is treated as home acquisition or home equity debt, and the mortgage is a mixed-use mortgage (discussed later under Average Mortgage Balance in the Table 1 instructions). Download tax forms 2011 The debt must be secured by the qualified home. Download tax forms 2011   You treat grandfathered debt that was refinanced after October 13, 1987, as grandfathered debt only for the term left on the debt that was refinanced. Download tax forms 2011 After that, you treat it as home acquisition debt or home equity debt, depending on how you used the proceeds. Download tax forms 2011 Exception. Download tax forms 2011   If the debt before refinancing was like a balloon note (the principal on the debt was not amortized over the term of the debt), then you treat the refinanced debt as grandfathered debt for the term of the first refinancing. Download tax forms 2011 This term cannot be more than 30 years. Download tax forms 2011 Example. Download tax forms 2011 Chester took out a $200,000 first mortgage on his home in 1986. Download tax forms 2011 The mortgage was a five-year balloon note and the entire balance on the note was due in 1991. Download tax forms 2011 Chester refinanced the debt in 1991 with a new 20-year mortgage. Download tax forms 2011 The refinanced debt is treated as grandfathered debt for its entire term (20 years). Download tax forms 2011 Line-of-credit mortgage. Download tax forms 2011    If you had a line-of-credit mortgage on October 13, 1987, and borrowed additional amounts against it after that date, then the additional amounts are either home acquisition debt or home equity debt depending on how you used the proceeds. Download tax forms 2011 The balance on the mortgage before you borrowed the additional amounts is grandfathered debt. Download tax forms 2011 The newly borrowed amounts are not grandfathered debt because the funds were borrowed after October 13, 1987. Download tax forms 2011 See Average Mortgage Balance in the Table 1 Instructions that follow. Download tax forms 2011 Table 1 Instructions Unless you are subject to the overall limit on itemized deductions, you can deduct all of the interest you paid during the year on mortgages secured by your main home or second home in either of the following two situations. Download tax forms 2011 All the mortgages are grandfathered debt. Download tax forms 2011 The total of the mortgage balances for the entire year is within the limits discussed earlier under Home Acquisition Debt and Home Equity Debt . Download tax forms 2011 In either of those cases, you do not need Table 1. Download tax forms 2011 Otherwise, you can use Table 1 to determine your qualified loan limit and deductible home mortgage interest. Download tax forms 2011 Fill out only one Table 1 for both your main and second home regardless of how many mortgages you have. Download tax forms 2011 Table 1. Download tax forms 2011 Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. Download tax forms 2011 Part I Qualified Loan Limit 1. Download tax forms 2011 Enter the average balance of all your grandfathered debt. Download tax forms 2011 See line 1 instructions 1. Download tax forms 2011   2. Download tax forms 2011 Enter the average balance of all your home acquisition debt. Download tax forms 2011 See line 2 instructions 2. Download tax forms 2011   3. Download tax forms 2011 Enter $1,000,000 ($500,000 if married filing separately) 3. Download tax forms 2011   4. Download tax forms 2011 Enter the larger of the amount on line 1 or the amount on line 3 4. Download tax forms 2011   5. Download tax forms 2011 Add the amounts on lines 1 and 2. Download tax forms 2011 Enter the total here 5. Download tax forms 2011   6. Download tax forms 2011 Enter the smaller of the amount on line 4 or the amount on line 5 6. Download tax forms 2011   7. Download tax forms 2011 If you have home equity debt, enter the smaller of $100,000 ($50,000 if married filing separately) or your limited amount. Download tax forms 2011 See the line 7 instructions for the limit which may apply to you. Download tax forms 2011 7. Download tax forms 2011   8. Download tax forms 2011 Add the amounts on lines 6 and 7. Download tax forms 2011 Enter the total. Download tax forms 2011 This is your qualified loan limit. Download tax forms 2011 8. Download tax forms 2011   Part II Deductible Home Mortgage Interest 9. Download tax forms 2011 Enter the total of the average balances of all mortgages on all qualified homes. Download tax forms 2011  See line 9 instructions 9. Download tax forms 2011     If line 8 is less than line 9, go on to line 10. Download tax forms 2011 If line 8 is equal to or more than line 9, stop here. Download tax forms 2011 All of your interest on all the mortgages included on line 9 is deductible as home mortgage interest on Schedule A (Form 1040). Download tax forms 2011     10. Download tax forms 2011 Enter the total amount of interest that you paid. Download tax forms 2011 See line 10 instructions 10. Download tax forms 2011   11. Download tax forms 2011 Divide the amount on line 8 by the amount on line 9. Download tax forms 2011 Enter the result as a decimal amount (rounded to three places) 11. Download tax forms 2011 × . Download tax forms 2011 12. Download tax forms 2011 Multiply the amount on line 10 by the decimal amount on line 11. Download tax forms 2011 Enter the result. Download tax forms 2011 This is your deductible home mortgage interest. Download tax forms 2011 Enter this amount on Schedule A (Form 1040) 12. Download tax forms 2011   13. Download tax forms 2011 Subtract the amount on line 12 from the amount on line 10. Download tax forms 2011 Enter the result. Download tax forms 2011 This is not home mortgage interest. Download tax forms 2011 See line 13 instructions 13. Download tax forms 2011   Home equity debt only. Download tax forms 2011   If all of your mortgages are home equity debt, do not fill in lines 1 through 5. Download tax forms 2011 Enter zero on line 6 and complete the rest of Table 1. Download tax forms 2011 Average Mortgage Balance You have to figure the average balance of each mortgage to determine your qualified loan limit. Download tax forms 2011 You need these amounts to complete lines 1, 2, and 9 of Table 1. Download tax forms 2011 You can use the highest mortgage balances during the year, but you may benefit most by using the average balances. Download tax forms 2011 The following are methods you can use to figure your average mortgage balances. Download tax forms 2011 However, if a mortgage has more than one category of debt, see Mixed-use mortgages , later, in this section. Download tax forms 2011 Average of first and last balance method. Download tax forms 2011   You can use this method if all the following apply. Download tax forms 2011 You did not borrow any new amounts on the mortgage during the year. Download tax forms 2011 (This does not include borrowing the original mortgage amount. Download tax forms 2011 ) You did not prepay more than one month's principal during the year. Download tax forms 2011 (This includes prepayment by refinancing your home or by applying proceeds from its sale. Download tax forms 2011 ) You had to make level payments at fixed equal intervals on at least a semi-annual basis. Download tax forms 2011 You treat your payments as level even if they were adjusted from time to time because of changes in the interest rate. Download tax forms 2011    To figure your average balance, complete the following worksheet. Download tax forms 2011    1. Download tax forms 2011 Enter the balance as of the first day of the year that the mortgage was secured by your qualified home during the year (generally January 1)   2. Download tax forms 2011 Enter the balance as of the last day of the year that the mortgage was secured by your qualified home during the year (generally December 31)   3. Download tax forms 2011 Add amounts on lines 1 and 2   4. Download tax forms 2011 Divide the amount on line 3 by 2. Download tax forms 2011 Enter the result   Interest paid divided by interest rate method. Download tax forms 2011   You can use this method if at all times in 2013 the mortgage was secured by your qualified home and the interest was paid at least monthly. Download tax forms 2011    Complete the following worksheet to figure your average balance. Download tax forms 2011    1. Download tax forms 2011 Enter the interest paid in 2013. Download tax forms 2011 Do not include points, mortgage insurance premiums, or any interest paid in 2013 that is for a year after 2013. Download tax forms 2011 However, do include interest that is for 2013 but was paid in an earlier year   2. Download tax forms 2011 Enter the annual interest rate on the mortgage. Download tax forms 2011 If the interest rate varied in 2013, use the lowest rate for the year   3. Download tax forms 2011 Divide the amount on line 1 by the amount on line 2. Download tax forms 2011 Enter the result   Example. Download tax forms 2011 Mr. Download tax forms 2011 Blue had a line of credit secured by his main home all year. Download tax forms 2011 He paid interest of $2,500 on this loan. Download tax forms 2011 The interest rate on the loan was 9% (. Download tax forms 2011 09) all year. Download tax forms 2011 His average balance using this method is $27,778, figured as follows. Download tax forms 2011 1. Download tax forms 2011 Enter the interest paid in 2013. Download tax forms 2011 Do not include points, mortgage insurance premiums, or any interest paid in 2013 that is for a year after 2013. Download tax forms 2011 However, do include interest that is for 2013 but was paid in an earlier year $2,500 2. Download tax forms 2011 Enter the annual interest rate on the mortgage. Download tax forms 2011 If the interest rate varied in 2013, use the lowest rate for the year . Download tax forms 2011 09 3. Download tax forms 2011 Divide the amount on line 1 by the amount on line 2. Download tax forms 2011 Enter the result $27,778 Statements provided by your lender. Download tax forms 2011   If you receive monthly statements showing the closing balance or the average balance for the month, you can use either to figure your average balance for the year. Download tax forms 2011 You can treat the balance as zero for any month the mortgage was not secured by your qualified home. Download tax forms 2011   For each mortgage, figure your average balance by adding your monthly closing or average balances and dividing that total by the number of months the home secured by that mortgage was a qualified home during the year. Download tax forms 2011   If your lender can give you your average balance for the year, you can use that amount. Download tax forms 2011 Example. Download tax forms 2011 Ms. Download tax forms 2011 Brown had a home equity loan secured by her main home all year. Download tax forms 2011 She received monthly statements showing her average balance for each month. Download tax forms 2011 She can figure her average balance for the year by adding her monthly average balances and dividing the total by 12. Download tax forms 2011 Mixed-use mortgages. Download tax forms 2011   A mixed-use mortgage is a loan that consists of more than one of the three categories of debt (grandfathered debt, home acquisition debt, and home equity debt). Download tax forms 2011 For example, a mortgage you took out during the year is a mixed-use mortgage if you used its proceeds partly to refinance a mortgage that you took out in an earlier year to buy your home (home acquisition debt) and partly to buy a car (home equity debt). Download tax forms 2011   Complete lines 1 and 2 of Table 1 by including the separate average balances of any grandfathered debt and home acquisition debt in your mixed-use mortgage. Download tax forms 2011 Do not use the methods described earlier in this section to figure the average balance of either category. Download tax forms 2011 Instead, for each category, use the following method. Download tax forms 2011 Figure the balance of that category of debt for each month. Download tax forms 2011 This is the amount of the loan proceeds allocated to that category, reduced by your principal payments on the mortgage previously applied to that category. Download tax forms 2011 Principal payments on a mixed-use mortgage are applied in full to each category of debt, until its balance is zero, in the following order: First, any home equity debt, Next, any grandfathered debt, and Finally, any home acquisition debt. Download tax forms 2011 Add together the monthly balances figured in (1). Download tax forms 2011 Divide the result in (2) by 12. Download tax forms 2011   Complete line 9 of Table 1 by including the average balance of the entire mixed-use mortgage, figured under one of the methods described earlier in this section. Download tax forms 2011 Example 1. Download tax forms 2011 In 1986, Sharon took out a $1,400,000 mortgage to buy her main home (grandfathered debt). Download tax forms 2011 On March 2, 2013, when the home had a fair market value of $1,700,000 and she owed $1,100,000 on the mortgage, Sharon took out a second mortgage for $200,000. Download tax forms 2011 She used $180,000 of the proceeds to make substantial improvements to her home (home acquisition debt) and the remaining $20,000 to buy a car (home equity debt). Download tax forms 2011 Under the loan agreement, Sharon must make principal payments of $1,000 at the end of each month. Download tax forms 2011 During 2013, her principal payments on the second mortgage totaled $10,000. Download tax forms 2011 To complete Table 1, line 2, Sharon must figure a separate average balance for the part of her second mortgage that is home acquisition debt. Download tax forms 2011 The January and February balances were zero. Download tax forms 2011 The March through December balances were all $180,000, because none of her principal payments are applied to the home acquisition debt. Download tax forms 2011 (They are all applied to the home equity debt, reducing it to $10,000 [$20,000 − $10,000]. Download tax forms 2011 ) The monthly balances of the home acquisition debt total $1,800,000 ($180,000 × 10). Download tax forms 2011 Therefore, the average balance of the home acquisition debt for 2013 was $150,000 ($1,800,000 ÷ 12). Download tax forms 2011 Example 2. Download tax forms 2011 The facts are the same as in Example 1. Download tax forms 2011 In 2014, Sharon's January through October principal payments on her second mortgage are applied to the home equity debt, reducing it to zero. Download tax forms 2011 The balance of the home acquisition debt remains $180,000 for each of those months. Download tax forms 2011 Because her November and December principal payments are applied to the home acquisition debt, the November balance is $179,000 ($180,000 − $1,000) and the December balance is $178,000 ($180,000 − $2,000). Download tax forms 2011 The monthly balances total $2,157,000 [($180,000 × 10) + $179,000 + $178,000]. Download tax forms 2011 Therefore, the average balance of the home acquisition debt for 2014 is $179,750 ($2,157,000 ÷ 12). Download tax forms 2011 L