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Federal Tax Return Forms

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Federal Tax Return Forms

Federal tax return forms Publication 536 - Main Content Table of Contents NOL Steps How To Figure an NOLNonbusiness deductions (line 6). Federal tax return forms Nonbusiness income (line 7). Federal tax return forms Nonbusiness capital losses. Federal tax return forms Business capital losses. Federal tax return forms Illustrated Form 1045, Schedule A When To Use an NOLExceptions to 2-Year Carryback Rule Waiving the Carryback Period How To Carry an NOL Back or Forward How To Claim an NOL DeductionDeducting a Carryback Deducting a Carryforward Change in Marital Status Change in Filing Status Illustrated Form 1045 How To Figure an NOL CarryoverIllustrated Form 1045, Schedule B NOL Carryover From 2013 to 2014Worksheet Instructions How To Get Tax HelpLow Income Taxpayer Clinics NOL Steps Follow Steps 1 through 5 to figure and use your NOL. Federal tax return forms Step 1. Federal tax return forms   Complete your tax return for the year. Federal tax return forms You may have an NOL if a negative figure appears on the line below: Individuals — Form 1040, line 41, or Form 1040NR, line 39. Federal tax return forms Estates and trusts — Form 1041, line 22. Federal tax return forms   If the amount on that line is not negative, stop here — you do not have an NOL. Federal tax return forms Step 2. Federal tax return forms   Determine whether you have an NOL and its amount. Federal tax return forms See How To Figure an NOL , later. Federal tax return forms If you do not have an NOL, stop here. Federal tax return forms Step 3. Federal tax return forms   Decide whether to carry the NOL back to a past year or to waive the carryback period and instead carry the NOL forward to a future year. Federal tax return forms See When To Use an NOL , later. Federal tax return forms Step 4. Federal tax return forms   Deduct the NOL in the carryback or carryforward year. Federal tax return forms See How To Claim an NOL Deduction , later. Federal tax return forms If your NOL deduction is equal to or less than your taxable income without the deduction, stop here — you have used up your NOL. Federal tax return forms Step 5. Federal tax return forms   Determine the amount of your unused NOL. Federal tax return forms See How To Figure an NOL Carryover , later. Federal tax return forms Carry over the unused NOL to the next carryback or carryforward year and begin again at Step 4. Federal tax return forms Note. Federal tax return forms   If your NOL deduction includes more than one NOL amount, apply Step 5 separately to each NOL amount, starting with the amount from the earliest year. Federal tax return forms How To Figure an NOL If your deductions for the year are more than your income for the year, you may have an NOL. Federal tax return forms There are rules that limit what you can deduct when figuring an NOL. Federal tax return forms In general, the following items are not allowed when figuring an NOL. Federal tax return forms Any deduction for personal exemptions. Federal tax return forms Capital losses in excess of capital gains. Federal tax return forms The section 1202 exclusion of the gain from the sale or exchange of qualified small business stock. Federal tax return forms Nonbusiness deductions in excess of nonbusiness income. Federal tax return forms The net operating loss deduction. Federal tax return forms The domestic production activities deduction. Federal tax return forms Form 1045, Schedule A. Federal tax return forms   Use Form 1045, Schedule A, to figure an NOL. Federal tax return forms The following discussion explains Schedule A and includes an illustrated example. Federal tax return forms   First, complete Form 1045, Schedule A, line 1, using amounts from your return. Federal tax return forms If line 1 is a negative amount, you may have an NOL. Federal tax return forms   Next, complete the rest of Form 1045, Schedule A, to figure your NOL. Federal tax return forms Nonbusiness deductions (line 6). Federal tax return forms   Enter on line 6 deductions that are not connected to your trade or business or your employment. Federal tax return forms Examples of deductions not related to your trade or business are: Alimony paid, Deductions for contributions to an IRA or a self-employed retirement plan, Health savings account deduction, Archer medical savings account deduction, Most itemized deductions (except for casualty and theft losses, state income tax on trade and business income, and any employee business expenses), and The standard deduction. Federal tax return forms   Do not include on line 6 the deduction for personal exemptions for you, your spouse, or your dependents. Federal tax return forms   Do not enter business deductions on line 6. Federal tax return forms These are deductions that are connected to your trade or business. Federal tax return forms They include the following. Federal tax return forms State income tax on income attributable to trade or business (including wages, salary, and unemployment compensation). Federal tax return forms Moving expenses. Federal tax return forms Educator expenses. Federal tax return forms The deduction for the deductible part of self-employed health insurance. Federal tax return forms Domestic production activities deduction. Federal tax return forms Rental losses. Federal tax return forms Loss on the sale or exchange of business real estate or depreciable property. Federal tax return forms Your share of a business loss from a partnership or an S corporation. Federal tax return forms Ordinary loss on the sale or exchange of stock in a small business corporation or a small business investment company. Federal tax return forms If you itemize your deductions, casualty and theft losses (even if they involve nonbusiness property) and employee business expenses (such as union dues, uniforms, tools, education expenses, and travel and transportation expenses). Federal tax return forms Loss on the sale of accounts receivable (if you use an accrual method of accounting). Federal tax return forms Interest and litigation expenses on state and federal income taxes related to your business. Federal tax return forms Unrecovered investment in a pension or annuity claimed on a decedent's final return. Federal tax return forms Payment by a federal employee to buy back sick leave used in an earlier year. Federal tax return forms Nonbusiness income (line 7). Federal tax return forms   Enter on line 7 only income that is not related to your trade or business or your employment. Federal tax return forms For example, enter your annuity income, dividends, and interest on investments. Federal tax return forms Also, include your share of nonbusiness income from partnerships and S corporations. Federal tax return forms   Do not include on line 7 the income you receive from your trade or business or your employment. Federal tax return forms This includes salaries and wages, self-employment income, unemployment compensation included in your gross income, and your share of business income from partnerships and S corporations. Federal tax return forms Also, do not include rental income or ordinary gain from the sale or other disposition of business real estate or depreciable business property. Federal tax return forms Adjustment for section 1202 exclusion (line 17). Federal tax return forms   Enter on line 17 any gain you excluded under section 1202 on the sale or exchange of qualified small business stock. Federal tax return forms Adjustments for capital losses (lines 19–22). Federal tax return forms   The amount deductible for capital losses is limited based on whether the losses are business capital losses or nonbusiness capital losses. Federal tax return forms Nonbusiness capital losses. Federal tax return forms   You can deduct your nonbusiness capital losses (line 2) only up to the amount of your nonbusiness capital gains without regard to any section 1202 exclusion (line 3). Federal tax return forms If your nonbusiness capital losses are more than your nonbusiness capital gains without regard to any section 1202 exclusion, you cannot deduct the excess. Federal tax return forms Business capital losses. Federal tax return forms   You can deduct your business capital losses (line 11) only up to the total of: Your nonbusiness capital gains that are more than the total of your nonbusiness capital losses and excess nonbusiness deductions (line 10), and Your total business capital gains without regard to any section 1202 exclusion (line 12). Federal tax return forms Domestic production activities deduction (line 23). Federal tax return forms   You cannot take the domestic production activities deduction when figuring your NOL. Federal tax return forms Enter on line 23 any domestic production activities deduction claimed on your return. Federal tax return forms NOLs from other years (line 24). Federal tax return forms   You cannot deduct any NOL carryovers or carrybacks from other years. Federal tax return forms Enter the total amount of your NOL deduction for losses from other years. Federal tax return forms Illustrated Form 1045, Schedule A The following example illustrates how to figure an NOL. Federal tax return forms It includes filled-in pages 1 and 2 of Form 1040 and Form 1045, Schedule A. Federal tax return forms Example. Federal tax return forms Glenn Johnson is in the retail record business. Federal tax return forms He is single and has the following income and deductions on his Form 1040 for 2013. Federal tax return forms See the illustrated Form 1040 , later. Federal tax return forms INCOME   Wages from part-time job $1,225 Interest on savings 425 Net long-term capital gain on sale of real estate used in business 2,000 Glenn's total income $3,650 DEDUCTIONS   Net loss from business (gross income of $67,000 minus expenses of $72,000) $5,000 Net short-term capital loss on sale of stock 1,000 Standard deduction 6,100 Personal exemption 3,900 Glenn's total deductions $16,000 Glenn's deductions exceed his income by $12,350 ($16,000 − $3,650). Federal tax return forms However, to figure whether he has an NOL, certain deductions are not allowed. Federal tax return forms He uses Form 1045, Schedule A, to figure his NOL. Federal tax return forms See the Illustrated Form 1045, Schedule A , later. Federal tax return forms The following items are not allowed on Form 1045, Schedule A. Federal tax return forms Nonbusiness net short-term capital loss $1,000 Nonbusiness deductions (standard deduction, $6,100) minus nonbusiness income (interest, $425) 5,675 Deduction for personal exemption 3,900 Total adjustments to net loss $10,575     Therefore, Glenn's NOL for 2013 is figured as follows: Glenn's total 2013 income $3,650 Less:     Glenn's original 2013 total deductions $16,000   Reduced by the disallowed items − 10,575 − 5,425 Glenn's NOL for 2013 $1,775 This image is too large to be displayed in the current screen. Federal tax return forms Please click the link to view the image. Federal tax return forms Form 1040, page 1 This image is too large to be displayed in the current screen. Federal tax return forms Please click the link to view the image. Federal tax return forms Form 1040, page 2 This image is too large to be displayed in the current screen. Federal tax return forms Please click the link to view the image. Federal tax return forms Form 1045, page 2 When To Use an NOL Generally, if you have an NOL for a tax year ending in 2013, you must carry back the entire amount of the NOL to the 2 tax years before the NOL year (the carryback period), and then carry forward any remaining NOL for up to 20 years after the NOL year (the carryforward period). Federal tax return forms You can, however, choose not to carry back an NOL and only carry it forward. Federal tax return forms See Waiving the Carryback Period , later. Federal tax return forms You cannot deduct any part of the NOL remaining after the 20-year carryforward period. Federal tax return forms NOL year. Federal tax return forms   This is the year in which the NOL occurred. Federal tax return forms Exceptions to 2-Year Carryback Rule Eligible losses, farming losses, qualified disaster losses, and specified liability losses, all defined next, qualify for longer carryback periods. Federal tax return forms Eligible loss. Federal tax return forms   The carryback period for eligible losses is 3 years. Federal tax return forms Only the eligible loss portion of the NOL can be carried back 3 years. Federal tax return forms An eligible loss is any part of an NOL that: Is from a casualty or theft, or Is attributable to a federally declared disaster for a qualified small business or certain qualified farming businesses. Federal tax return forms Qualified small business. Federal tax return forms   A qualified small business is a sole proprietorship or a partnership that has average annual gross receipts (reduced by returns and allowances) of $5 million or less during the 3-year period ending with the tax year of the NOL. Federal tax return forms If the business did not exist for this entire 3-year period, use the period the business was in existence. Federal tax return forms   An eligible loss does not include a farming loss or a qualified disaster loss. Federal tax return forms Farming loss. Federal tax return forms   The carryback period for a farming loss is 5 years. Federal tax return forms Only the farming loss portion of the NOL can be carried back 5 years. Federal tax return forms A farming loss is the smaller of: The amount that would be the NOL for the tax year if only income and deductions attributable to farming businesses were taken into account, or The NOL for the tax year. Federal tax return forms Farming business. Federal tax return forms   A farming business is a trade or business involving cultivation of land or the raising or harvesting of any agricultural or horticultural commodity. Federal tax return forms A farming business can include operating a nursery or sod farm or raising or harvesting most ornamental trees or trees bearing fruit, nuts, or other crops. Federal tax return forms The raising, shearing, feeding, caring for, training, and management of animals is also considered a farming business. Federal tax return forms   A farming business does not include contract harvesting of an agricultural or horticultural commodity grown or raised by someone else. Federal tax return forms It also does not include a business in which you merely buy or sell plants or animals grown or raised entirely by someone else. Federal tax return forms Waiving the 5-year carryback. Federal tax return forms   You can choose to figure the carryback period for a farming loss without regard to the special 5-year carryback rule. Federal tax return forms To make this choice for 2013, attach to your 2013 income tax return filed by the due date (including extensions) a statement that you are choosing to treat any 2013 farming losses without regard to the special 5-year carryback rule. Federal tax return forms If you filed your original return on time but did not file the statement with it, you can make this choice on an amended return filed within 6 months after the due date of the return (excluding extensions). Federal tax return forms Attach an election statement to your amended return, and write “Filed pursuant to section 301. Federal tax return forms 9100-2” at the top of the statement. Federal tax return forms Once made, this choice is irrevocable. Federal tax return forms Qualified disaster loss. Federal tax return forms   The carryback period for a qualified disaster loss is 5 years. Federal tax return forms Only the qualified disaster loss portion of the NOL can be carried back 5 years. Federal tax return forms A qualified disaster loss is the smaller of: The sum of: Any losses attributable to a federally declared disaster and occurring before January 1, 2010, in the disaster area, plus Any allowable qualified disaster expenses (even if you did not choose to treat those expenses as deductions in the current year), or The NOL for the tax year. Federal tax return forms Qualified disaster expenses. Federal tax return forms   A qualified disaster expense is any capital expense paid or incurred in connection with a trade or business or with business-related property which is: For the abatement or control of hazardous substances that were released as a result of a federally declared disaster occurring before January 1, 2010, For the removal of debris from, or the demolition of structures on, real property which is business-related property damaged or destroyed as a result of a federally declared disaster occurring before January 1, 2010, or For the repair of business-related property damaged as a result of a federally declared disaster occurring before January 1, 2010. Federal tax return forms Business-related property is property held for use in a trade or business, property held for the production of income, or inventory property. Federal tax return forms Note. Federal tax return forms Section 198A allows taxpayers to treat certain capital expenses (qualified disaster expenses) as deductions in the year the expenses were paid or incurred. Federal tax return forms Excluded losses. Federal tax return forms   A qualified disaster loss does not include any losses from property used in connection with any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, or any store for which the principal business is the sale of alcoholic beverages for consumption off premises. Federal tax return forms   A qualified disaster loss also does not include any losses from any gambling or animal racing property. Federal tax return forms Gambling or animal racing property is any equipment, furniture, software, or other property used directly in connection with gambling, the racing of animals, or the on-site viewing of such racing, and the portion of any real property (determined by square footage) that is dedicated to gambling, the racing of animals, or the on-site viewing of such racing, unless this portion is less than 100 square feet. Federal tax return forms Specified liability loss. Federal tax return forms   The carryback period for a specified liability loss is 10 years. Federal tax return forms Only the specified liability loss portion of the NOL can be carried back 10 years. Federal tax return forms Generally, a specified liability loss is a loss arising from: Product liability and expenses incurred in the investigation or settlement of, or opposition to, product liability claims, or An act (or failure to act) that occurred at least 3 years before the beginning of the loss year and resulted in a liability under a federal or state law requiring: Reclamation of land, Dismantling of a drilling platform, Remediation of environmental contamination, or Payment under any workers compensation act. Federal tax return forms   Any loss from a liability arising from (1) through (4) above can be taken into account as a specified liability loss only if you used an accrual method of accounting throughout the period in which the act (or failure to act) occurred. Federal tax return forms For details, see section 172(f). Federal tax return forms Waiving the 10-year carryback. Federal tax return forms   You can choose to figure the carryback period for a specified liability loss without regard to the special 10-year carryback rule. Federal tax return forms To make this choice for 2013 attach to your 2013 income tax return filed by the due date (including extensions) a statement that you are choosing to treat any 2013 specified liability losses without regard to the special 10-year carryback rule. Federal tax return forms If you filed your original return on time but did not file the statement with it, you can make this choice on an amended return filed within 6 months after the due date of the return (excluding extensions). Federal tax return forms Attach a statement to your amended return and write “Filed pursuant to section 301. Federal tax return forms 9100-2” at the top of the statement. Federal tax return forms Once made, this choice is irrevocable. Federal tax return forms Waiving the Carryback Period You can choose not to carry back your NOL. Federal tax return forms If you make this choice, then you can use your NOL only in the 20-year carryforward period. Federal tax return forms (This choice means you also choose not to carry back any alternative tax NOL. Federal tax return forms ) To make this choice, attach a statement to your original return filed by the due date (including extensions) for the NOL year. Federal tax return forms This statement must show that you are choosing to waive the carryback period under section 172(b)(3). Federal tax return forms If you filed your original return on time but did not file the statement with it, you can make this choice on an amended return filed within 6 months of the due date of the return (excluding extensions). Federal tax return forms Attach a statement to your amended return, and write “Filed pursuant to section 301. Federal tax return forms 9100-2” at the top of the statement. Federal tax return forms Once you choose to waive the carryback period, it generally is irrevocable. Federal tax return forms If you choose to waive the carryback period for more than one NOL, you must make a separate choice and attach a separate statement for each NOL year. Federal tax return forms If you do not file this statement on time, you cannot waive the carryback period. Federal tax return forms How To Carry an NOL Back or Forward If you choose to carry back the NOL, you must first carry the entire NOL to the earliest carryback year. Federal tax return forms If your NOL is not used up, you can carry the rest to the next earliest carryback year, and so on. Federal tax return forms If you waive the carryback period or do not use up the NOL in the carryback period, carry forward what remains of the NOL to the 20 tax years following the NOL year. Federal tax return forms Start by carrying it to the first tax year after the NOL year. Federal tax return forms If you do not use it up, carry the unused part to the next year. Federal tax return forms Continue to carry any unused part of the NOL forward until the NOL is used up or you complete the 20-year carryforward period. Federal tax return forms Example 1. Federal tax return forms You started your business as a sole proprietor in 2013 and had a $42,000 NOL for the year. Federal tax return forms No part of the NOL qualifies for the 3-year, 5-year, or 10-year carryback. Federal tax return forms You begin using your NOL in 2011, the second year before the NOL year, as shown in the following chart. Federal tax return forms Year   Carryback/  Carryover Unused  Loss 2011 $42,000 $40,000 2012 40,000 37,000 2013 (NOL year)     2014 37,000 31,500 2015 31,500 22,500 2016 22,500 12,700 2017 12,700 4,000 2018 4,000 -0- If your loss were larger, you could carry it forward until the year 2033. Federal tax return forms If you still had an unused 2013 carryforward after the year 2033, you would not be allowed to deduct it. Federal tax return forms Example 2. Federal tax return forms Assume the same facts as in Example 1 , except that $4,000 of the NOL is attributable to a casualty loss and this loss qualifies for a 3-year carryback period. Federal tax return forms You begin using the $4,000 in 2010. Federal tax return forms As shown in the following chart, $3,000 of this NOL is used in 2010. Federal tax return forms The remaining $1,000 is carried to 2011 with the $38,000 NOL that you must begin using in 2011. Federal tax return forms Year   Carryback/  Carryover Unused  Loss 2010 $4,000 $1,000 2011 39,000 37,000 2012 37,000 34,000 2013 (NOL year)     2014 34,000 28,500 2015 28,500 19,500 2016 19,500 9,700 2017 9,700 1,000 2018 1,000 -0- How To Claim an NOL Deduction If you have not already carried the NOL to an earlier year, your NOL deduction is the total NOL. Federal tax return forms If you carried the NOL to an earlier year, your NOL deduction is the carried over NOL minus the NOL amount you used in the earlier year or years. Federal tax return forms If you carry more than one NOL to the same year, your NOL deduction is the total of these carrybacks and carryovers. Federal tax return forms NOL resulting in no taxable income. Federal tax return forms   If your NOL is more than the taxable income of the year you carry it to (figured before deducting the NOL), you generally will have an NOL carryover to the next year. Federal tax return forms See How To Figure an NOL Carryover , later, to determine how much NOL you have used and how much you carry to the next year. Federal tax return forms Deducting a Carryback If you carry back your NOL, you can use either Form 1045 or Form 1040X. Federal tax return forms You can get your refund faster by using Form 1045, but you have a shorter time to file it. Federal tax return forms You can use Form 1045 to apply an NOL to all carryback years. Federal tax return forms If you use Form 1040X, you must use a separate Form 1040X for each carryback year to which you apply the NOL. Federal tax return forms Estates and trusts that do not file Form 1045 must file an amended Form 1041 (instead of Form 1040X) for each carryback year to which NOLs are applied. Federal tax return forms Use a copy of the appropriate year's Form 1041, check the “Amended return” box, and follow the Form 1041 instructions for amended returns. Federal tax return forms Include the NOL deduction with other deductions not subject to the 2% limit (line 15a). Federal tax return forms Also, see the special procedures for filing an amended return due to an NOL carryback, explained under Form 1040X , later. Federal tax return forms Form 1045. Federal tax return forms   You can apply for a quick refund by filing Form 1045. Federal tax return forms This form results in a tentative adjustment of tax in the carryback year. Federal tax return forms See the Illustrated Form 1045 . Federal tax return forms at the end of this discussion. Federal tax return forms   If the IRS refunds or credits an amount to you from Form 1045 and later determines that the refund or credit is too much, the IRS may assess and collect the excess immediately. Federal tax return forms   Generally, you must file Form 1045 on or after the date you file your tax return for the NOL year, but not later than one year after the end of the NOL year. Federal tax return forms If the last day of the NOL year falls on a Saturday, Sunday, or holiday, the form will be considered timely if postmarked on the next business day. Federal tax return forms For example, if you are a calendar year taxpayer with a carryback from 2013 to 2011, you must file Form 1045 on or after the date you file your tax return for 2013, but no later than December 31, 2014. Federal tax return forms Form 1040X. Federal tax return forms   If you do not file Form 1045, you can file Form 1040X to get a refund of tax because of an NOL carryback. Federal tax return forms File Form 1040X within 3 years after the due date, including extensions, for filing the return for the NOL year. Federal tax return forms For example, if you are a calendar year taxpayer and filed your 2011 return by the April 15, 2012, due date, you must file a claim for refund of 2008 tax because of an NOL carryback from 2011 by April 15, 2015. Federal tax return forms   Attach a computation of your NOL using Form 1045, Schedule A, and, if it applies, your NOL carryover using Form 1045, Schedule B, discussed later . Federal tax return forms Refiguring your tax. Federal tax return forms   To refigure your total tax liability for a carryback year, first refigure your adjusted gross income for that year. Federal tax return forms (On Form 1045, use lines 10 and 11 and the “After carryback” column for the applicable carryback year. Federal tax return forms ) Use your adjusted gross income after applying the NOL deduction to refigure income or deduction items that are based on, or limited to, a percentage of your adjusted gross income. Federal tax return forms Refigure the following items. Federal tax return forms The special allowance for passive activity losses from rental real estate activities. Federal tax return forms Taxable social security and tier 1 railroad retirement benefits. Federal tax return forms IRA deductions. Federal tax return forms Excludable savings bond interest. Federal tax return forms Excludable employer-provided adoption benefits. Federal tax return forms The student loan interest deduction. Federal tax return forms The tuition and fees deduction. Federal tax return forms   If more than one of these items apply, refigure them in the order listed above, using your adjusted gross income after applying the NOL deduction and any previous item. Federal tax return forms (Enter your NOL deduction on Form 1045, line 10. Federal tax return forms On line 11, using the “After carryback” column, enter your adjusted gross income refigured after applying the NOL deduction and after refiguring any above items. Federal tax return forms )   Next, refigure your taxable income. Federal tax return forms (On Form 1045, use lines 12 through 15 and the “After carryback” column. Federal tax return forms ) Use your refigured adjusted gross income (Form 1045, line 11, using the “After carryback” column) to refigure certain deductions and other items that are based on or limited to a percentage of your adjusted gross income. Federal tax return forms Refigure the following items. Federal tax return forms The itemized deduction for medical expenses. Federal tax return forms The itemized deduction for qualified mortgage insurance premiums. Federal tax return forms The itemized deduction for casualty losses. Federal tax return forms Miscellaneous itemized deductions subject to the 2% limit. Federal tax return forms The overall limit on itemized deductions (do not apply to carryback years beginning after December 31, 2009). Federal tax return forms The phaseout of the deduction for exemptions (do not apply to carryback years beginning after December 31, 2009). Federal tax return forms Qualified motor vehicle tax (do not apply to carryback years beginning after December 31, 2009). Federal tax return forms    Do not refigure the itemized deduction for charitable contributions. Federal tax return forms   Finally, use your refigured taxable income (Form 1045, line 15, using the “After carryback” column) to refigure your total tax liability. Federal tax return forms Refigure your income tax, your alternative minimum tax, and any credits that are based on or limited by your adjusted gross income (AGI), modified adjusted gross income (MAGI), or tax liability. Federal tax return forms (On Form 1045, use lines 16 through 25, and the “After carryback” column. Federal tax return forms ) The earned income credit, for example, may be affected by changes to adjusted gross income or the amount of tax (or both) and, therefore, must be recomputed. Federal tax return forms If you become eligible for a credit because of the carryback, complete the form for that specific credit (such as the EIC Worksheet) for that year. Federal tax return forms   While it is necessary to refigure your income tax, alternative minimum tax, and credits, do not refigure your self-employment tax. Federal tax return forms Deducting a Carryforward If you carry forward your NOL to a tax year after the NOL year, list your NOL deduction as a negative figure on the “Other income” line of Form 1040 or Form 1040NR (line 21 for 2013). Federal tax return forms Estates and trusts include an NOL deduction on Form 1041 with other deductions not subject to the 2% limit (line 15a for 2013). Federal tax return forms You must attach a statement that shows all the important facts about the NOL. Federal tax return forms Your statement should include a computation showing how you figured the NOL deduction. Federal tax return forms If you deduct more than one NOL in the same year, your statement must cover each of them. Federal tax return forms Change in Marital Status If you and your spouse were not married to each other in all years involved in figuring NOL carrybacks and carryovers, only the spouse who had the loss can take the NOL deduction. Federal tax return forms If you file a joint return, the NOL deduction is limited to the income of that spouse. Federal tax return forms For example, if your marital status changes because of death or divorce, and in a later year you have an NOL, you can carry back that loss only to the part of the income reported on the joint return (filed with your former spouse) that was related to your taxable income. Federal tax return forms After you deduct the NOL in the carryback year, the joint rates apply to the resulting taxable income. Federal tax return forms Refund limit. Federal tax return forms   If you are not married in the NOL year (or are married to a different spouse), and in the carryback year you were married and filed a joint return, your refund for the overpaid joint tax may be limited. Federal tax return forms You can claim a refund for the difference between your share of the refigured tax and your contribution toward the tax paid on the joint return. Federal tax return forms The refund cannot be more than the joint overpayment. Federal tax return forms Attach a statement showing how you figured your refund. Federal tax return forms Figuring your share of a joint tax liability. Federal tax return forms   There are five steps for figuring your share of the refigured joint tax liability. Federal tax return forms Figure your total tax as though you had filed as married filing separately. Federal tax return forms Figure your spouse's total tax as though your spouse had also filed as married filing separately. Federal tax return forms Add the amounts in (1) and (2). Federal tax return forms Divide the amount in (1) by the amount in (3). Federal tax return forms Multiply the refigured tax on your joint return by the amount figured in (4). Federal tax return forms This is your share of the joint tax liability. Federal tax return forms Figuring your contribution toward tax paid. Federal tax return forms   Unless you have an agreement or clear evidence of each spouse's contributions toward the payment of the joint tax liability, figure your contribution by adding the tax withheld on your wages and your share of joint estimated tax payments or tax paid with the return. Federal tax return forms If the original return for the carryback year resulted in an overpayment, reduce your contribution by your share of the tax refund. Federal tax return forms Figure your share of a joint payment or refund by the same method used in figuring your share of the joint tax liability. Federal tax return forms Use your taxable income as originally reported on the joint return in steps (1) and (2) above, and substitute the joint payment or refund for the refigured joint tax in step (5). Federal tax return forms Change in Filing Status If you and your spouse were married and filed a joint return for each year involved in figuring NOL carrybacks and carryovers, figure the NOL deduction on a joint return as you would for an individual. Federal tax return forms However, treat the NOL deduction as a joint NOL. Federal tax return forms If you and your spouse were married and filed separate returns for each year involved in figuring NOL carrybacks and carryovers, the spouse who sustained the loss may take the NOL deduction on a separate return. Federal tax return forms Special rules apply for figuring the NOL carrybacks and carryovers of married people whose filing status changes for any tax year involved in figuring an NOL carryback or carryover. Federal tax return forms Separate to joint return. Federal tax return forms   If you and your spouse file a joint return for a carryback or carryforward year, and were married but filed separate returns for any of the tax years involved in figuring the NOL carryback or carryover, treat the separate carryback or carryover as a joint carryback or carryover. Federal tax return forms Joint to separate returns. Federal tax return forms   If you and your spouse file separate returns for a carryback or carryforward year, but filed a joint return for any or all of the tax years involved in figuring the NOL carryover, figure each of your carryovers separately. Federal tax return forms Joint return in NOL year. Federal tax return forms   Figure each spouse's share of the joint NOL through the following steps. Federal tax return forms Figure each spouse's NOL as if he or she filed a separate return. Federal tax return forms See How To Figure an NOL , earlier. Federal tax return forms If only one spouse has an NOL, stop here. Federal tax return forms All of the joint NOL is that spouse's NOL. Federal tax return forms If both spouses have an NOL, multiply the joint NOL by a fraction, the numerator of which is spouse A's NOL figured in (1) and the denominator of which is the total of the spouses' NOLs figured in (1). Federal tax return forms The result is spouse A's share of the joint NOL. Federal tax return forms The rest of the joint NOL is spouse B's share. Federal tax return forms Example 1. Federal tax return forms Mark and Nancy are married and file a joint return for 2013. Federal tax return forms They have an NOL of $5,000. Federal tax return forms They carry the NOL back to 2011, a year in which Mark and Nancy filed separate returns. Federal tax return forms Figured separately, Nancy's 2013 deductions were more than her income, and Mark's income was more than his deductions. Federal tax return forms Mark does not have any NOL to carry back. Federal tax return forms Nancy can carry back the entire $5,000 NOL to her 2011 separate return. Federal tax return forms Example 2. Federal tax return forms Assume the same facts as in Example 1 , except that both Mark and Nancy had deductions in 2013 that were more than their income. Federal tax return forms Figured separately, his NOL is $1,800 and her NOL is $3,000. Federal tax return forms The sum of their separate NOLs ($4,800) is less than their $5,000 joint NOL because his deductions included a $200 net capital loss that is not allowed in figuring his separate NOL. Federal tax return forms The loss is allowed in figuring their joint NOL because it was offset by Nancy's capital gains. Federal tax return forms Mark's share of their $5,000 joint NOL is $1,875 ($5,000 × $1,800/$4,800) and Nancy's is $3,125 ($5,000 − $1,875). Federal tax return forms Joint return in previous carryback or carryforward year. Federal tax return forms   If only one spouse had an NOL deduction on the previous year's joint return, all of the joint carryover is that spouse's carryover. Federal tax return forms If both spouses had an NOL deduction (including separate carryovers of a joint NOL, figured as explained in the previous discussion ), figure each spouse's share of the joint carryover through the following steps. Federal tax return forms Figure each spouse's modified taxable income as if he or she filed a separate return. Federal tax return forms See Modified taxable income under How To Figure an NOL Carryover , later. Federal tax return forms Multiply the joint modified taxable income you used to figure the joint carryover by a fraction, the numerator of which is spouse A's modified taxable income figured in (1) and the denominator of which is the total of the spouses' modified taxable incomes figured in (1). Federal tax return forms This is spouse A's share of the joint modified taxable income. Federal tax return forms Subtract the amount figured in (2) from the joint modified taxable income. Federal tax return forms This is spouse B's share of the joint modified taxable income. Federal tax return forms Reduce the amount figured in (3), but not below zero, by spouse B's NOL deduction. Federal tax return forms Add the amounts figured in (2) and (4). Federal tax return forms Subtract the amount figured in (5) from spouse A's NOL deduction. Federal tax return forms This is spouse A's share of the joint carryover. Federal tax return forms The rest of the joint carryover is spouse B's share. Federal tax return forms Example. Federal tax return forms Sam and Wanda filed a joint return for 2011 and separate returns for 2012 and 2013. Federal tax return forms In 2013, Sam had an NOL of $18,000 and Wanda had an NOL of $2,000. Federal tax return forms They choose to carry back both NOLs 2 years to their 2011 joint return and claim a $20,000 NOL deduction. Federal tax return forms Their joint modified taxable income (MTI) for 2011 is $15,000, and their joint NOL carryover to 2012 is $5,000 ($20,000 – $15,000). Federal tax return forms Sam and Wanda each figure their separate MTI for 2011 as if they had filed separate returns. Federal tax return forms Then they figure their shares of the $5,000 carryover as follows. Federal tax return forms Step 1. Federal tax return forms   Sam's separate MTI $9,000 Wanda's separate MTI + 3,000 Total MTI $12,000 Step 2. Federal tax return forms   Joint MTI $15,000 Sam's MTI ÷ total MTI ($9,000 ÷ $12,000) × . Federal tax return forms 75 Sam's share of joint MTI $11,250 Step 3. Federal tax return forms   Joint MTI $15,000 Sam's share of joint MTI − 11,250 Wanda's share of joint MTI $3,750 Step 4. Federal tax return forms   Wanda's share of joint MTI $3,750 Wanda's NOL deduction − 2,000 Wanda's remaining share $1,750 Step 5. Federal tax return forms   Sam's share of joint MTI $11,250 Wanda's remaining share + 1,750 Joint MTI to be offset $13,000 Step 6. Federal tax return forms   Sam's NOL deduction $18,000 Joint MTI to be offset − 13,000 Sam's carryover to 2012 $5,000 Joint carryover to 2012 $5,000 Sam's carryover − 5,000 Wanda's carryover to 2012 $-0- Wanda's $2,000 NOL deduction offsets $2,000 of her $3,750 share of the joint modified taxable income and is completely used up. Federal tax return forms She has no carryover to 2012. Federal tax return forms Sam's $18,000 NOL deduction offsets all of his $11,250 share of joint modified taxable income and the remaining $1,750 of Wanda's share. Federal tax return forms His carryover to 2012 is $5,000. Federal tax return forms Illustrated Form 1045 The following example illustrates how to use Form 1045 to claim an NOL deduction in a carryback year. Federal tax return forms It includes a filled-in page 1 of Form 1045. Federal tax return forms Example. Federal tax return forms Martha Sanders is a self-employed contractor. Federal tax return forms Martha's 2013 deductions are more than her 2013 income because of a business loss. Federal tax return forms She uses Form 1045 to carry back her NOL 2 years and claim an NOL deduction in 2011. Federal tax return forms Her filing status in both years was single. Federal tax return forms See the filled-in Form 1045 later. Federal tax return forms Martha figures her 2013 NOL on Form 1045, Schedule A (not shown). Federal tax return forms (For an example using Form 1045, Schedule A, see Illustrated Form 1045, Schedule A under How To Figure an NOL , earlier. Federal tax return forms ) She enters the $10,000 NOL from Form 1045, Schedule A, line 25, on Form 1045, line 1a. Federal tax return forms Martha completes lines 10 through 25, using the “Before carryback” column under the column for the second preceding tax year ended 12/31/11 on page 1 of Form 1045 using the following amounts from her 2011 return. Federal tax return forms 2011 Adjusted gross income $50,000 Itemized deductions:     Medical expenses [$6,000 − ($50,000 × 7. Federal tax return forms 5%)] $2,250   State income tax + 2,000   Real estate tax + 4,000   Home mortgage interest + 5,000   Total itemized deductions $13,250 Exemption $3,700 Income tax $4,550 Self-employment tax $6,120   Martha refigures her taxable income for 2011 after carrying back her 2013 NOL as follows: 2011 Adjusted gross income $50,000 Less:     NOL from 2013 −10,000 2011 Adjusted gross income after carryback $40,000 Less:     Itemized deductions:     Medical expenses [$6,000 − ($40,000 × 7. Federal tax return forms 5%)] $3,000   State income tax + 2,000   Real estate tax + 4,000   Home mortgage interest + 5,000   Total itemized deductions −14,000 Less:     Exemption − 3,700 2011 Taxable income after carryback $22,300 Martha then completes lines 10 through 25, using the “After carryback” column under the column for the second preceding tax year ended 12/31/11. Federal tax return forms On line 10, Martha enters her $10,000 NOL deduction. Federal tax return forms Her new adjusted gross income on line 11 is $40,000 ($50,000 − $10,000). Federal tax return forms To complete line 12, she must refigure her medical expense deduction using her new adjusted gross income. Federal tax return forms Her refigured medical expense deduction is $3,000 [$6,000 − ($40,000 × 7. Federal tax return forms 5%)]. Federal tax return forms This increases her total itemized deductions to $14,000 [$13,250 + ($3,000 − $2,250)]. Federal tax return forms Martha uses her refigured taxable income ($22,300) from line 15, and the tax tables in her 2011 Form 1040 instructions to find her income tax. Federal tax return forms She enters the new amount, $2,924, on line 16, and her new total tax liability, $9,044, on line 25. Federal tax return forms Martha used up her $10,000 NOL in 2011 so she does not complete a column for the first preceding tax year ended 12/31/2012. Federal tax return forms The decrease in tax because of her NOL deduction (line 27) is $1,612. Federal tax return forms Martha files Form 1045 after filing her 2013 return, but no later than December 31, 2014. Federal tax return forms She mails it to the Internal Revenue Service Center for the place where she lives as shown in the 2013 instructions for Form 1040 and attaches a copy of her 2013 return (including the applicable forms and schedules). Federal tax return forms This image is too large to be displayed in the current screen. Federal tax return forms Please click the link to view the image. Federal tax return forms Form 1045, page 1 How To Figure an NOL Carryover If your NOL is more than your taxable income for the year to which you carry it (figured before deducting the NOL), you may have an NOL carryover. Federal tax return forms You must make certain modifications to your taxable income to determine how much NOL you will use up in that year and how much you can carry over to the next tax year. Federal tax return forms Your carryover is the excess of your NOL deduction over your modified taxable income for the carryback or carryforward year. Federal tax return forms If your NOL deduction includes more than one NOL, apply the NOLs against your modified taxable income in the same order in which you incurred them, starting with the earliest. Federal tax return forms Modified taxable income. Federal tax return forms   Your modified taxable income is your taxable income figured with the following changes. Federal tax return forms You cannot claim an NOL deduction for the NOL carryover you are figuring or for any later NOL. Federal tax return forms You cannot claim a deduction for capital losses in excess of your capital gains. Federal tax return forms Also, you must increase your taxable income by the amount of any section 1202 exclusion. Federal tax return forms You cannot claim the domestic production activities deduction. Federal tax return forms You cannot claim a deduction for your exemptions for yourself, your spouse, or dependents. Federal tax return forms You must figure any item affected by the amount of your adjusted gross income after making the changes in (1), (2), and (3), above, and certain other changes to your adjusted gross income that result from (1), (2), and (3). Federal tax return forms This includes income and deduction items used to figure adjusted gross income (for example, IRA deductions), as well as certain itemized deductions. Federal tax return forms To figure a charitable contribution deduction, do not include deductions for NOL carrybacks in the change in (1) but do include deductions for NOL carryforwards from tax years before the NOL year. Federal tax return forms   Your taxable income as modified cannot be less than zero. Federal tax return forms Form 1045, Schedule B. Federal tax return forms   You can use Form 1045, Schedule B, to figure your modified taxable income for carryback years and your carryover from each of those years. Federal tax return forms Do not use Form 1045, Schedule B, for a carryforward year. Federal tax return forms If your 2013 return includes an NOL deduction from an NOL year before 2013 that reduced your taxable income to zero (to less than zero, if an estate or trust), see NOL Carryover From 2013 to 2014 , later. Federal tax return forms Illustrated Form 1045, Schedule B The following example illustrates how to figure an NOL carryover from a carryback year. Federal tax return forms It includes a filled-in Form 1045, Schedule B. Federal tax return forms Example. Federal tax return forms Ida Brown runs a small clothing shop. Federal tax return forms In 2013, she has an NOL of $36,000 that she carries back to 2011. Federal tax return forms She has no other carrybacks or carryforwards to 2011. Federal tax return forms Ida's adjusted gross income in 2011 was $35,000, consisting of her salary of $36,000 minus a $1,000 capital loss deduction. Federal tax return forms She is single and claimed only one personal exemption of $3,700. Federal tax return forms During that year, she gave $1,450 in charitable contributions. Federal tax return forms Her medical expenses were $3,000. Federal tax return forms She also deducted $1,650 in taxes and $3,125 in home mortgage interest. Federal tax return forms Her deduction for charitable contributions was not limited because her contributions, $1,450, were less than 50% of her adjusted gross income. Federal tax return forms The deduction for medical expenses was limited to expenses over 7. Federal tax return forms 5% of adjusted gross income (. Federal tax return forms 075 × $35,000 = $2,625; $3,000 − $2,625 = $375). Federal tax return forms The deductions for taxes and home mortgage interest were not subject to any limits. Federal tax return forms She was able to claim $6,600 ($1,450 + $375 + $1,650 + $3,125) in itemized deductions and a personal exemption deduction of $3,700 for 2011. Federal tax return forms She had no other deductions in 2011 (except the NOL deduction). Federal tax return forms Her taxable income (figured without the NOL deduction) for the year was $24,700. Federal tax return forms Ida's adjusted gross income in 2012 was $9,325, consisting of net business income from the clothing shop of $12,325 and a net capital loss of $3,000. Federal tax return forms She did not itemize her deductions in 2012. Federal tax return forms She deducted the standard deduction of $5,950 and the personal exemption deduction of $3,800. Federal tax return forms She had no other deductions in 2012 (other than the NOL deduction). Federal tax return forms Her taxable income, therefore, was ($425). Federal tax return forms Ida's $36,000 carryback will result in her having 2011 taxable income of zero. Federal tax return forms She then completes the column for the second preceding tax year ended 12/31/11 on Form 1045, Schedule B, to figure how much of her NOL she uses up in 2011 and how much she can carry over to 2012. Federal tax return forms She completes the column for the first preceding tax year ended 12/31/12. Federal tax return forms See the illustrated Form 1045, Schedule B , shown later. Federal tax return forms Column 1, line 1. Federal tax return forms Ida enters $36,000, her 2013 net operating loss, on line 1. Federal tax return forms Column 1, line 2. Federal tax return forms She enters $24,700, her 2011 taxable income (figured without the NOL deduction), on line 2. Federal tax return forms Column 1, line 3. Federal tax return forms Ida enters her net capital loss deduction of $1,000 on line 3. Federal tax return forms Column 1, lines 4 and 5. Federal tax return forms Ida had no section 1202 exclusion or domestic production activities deduction in 2011. Federal tax return forms She enters zero on lines 4 and 5. Federal tax return forms Column 1, line 6. Federal tax return forms Although Ida's entry on line 3 modifies her adjusted gross income, that does not affect any other items included in her adjusted gross income. Federal tax return forms Ida enters zero on line 6. Federal tax return forms Column 1, line 7. Federal tax return forms Ida had itemized deductions and entered $1,000 on line 3, so she completes lines 11 through 38 to figure her adjustment to itemized deductions. Federal tax return forms On line 7, she enters the total adjustment from line 38. Federal tax return forms Column 1, line 8. Federal tax return forms Ida enters the deduction for her personal exemption of $3,700 for 2011. Federal tax return forms Column 1, line 9. Federal tax return forms After combining lines 2 through 8, Ida's modified taxable income is $29,475. Federal tax return forms Column 1, line 10. Federal tax return forms Ida figures her carryover to 2012 by subtracting her modified taxable income (line 9) from her NOL deduction (line 1). Federal tax return forms She enters the $6,525 carryover on line 10. Federal tax return forms She also enters the $6,525 as her NOL deduction for 2012 on Form 1045, page 1, line 10, in the “After carryback” column under the column for the first preceding tax year ended 12/31/12. Federal tax return forms (For an illustrated example of page 1 of Form 1045, see Illustrated Form 1045 under How To Claim an NOL Deduction , earlier. Federal tax return forms ) Next, Ida completes column 2 for the first preceding tax year ended 12/31/12. Federal tax return forms Column 1, line 11. Federal tax return forms Ida's adjusted gross income for 2011 was $35,000. Federal tax return forms Column 1, line 12. Federal tax return forms She adds lines 3 through 6 and enters $1,000 on line 12. Federal tax return forms (This is her net capital loss deduction added back, which modifies her adjusted gross income. Federal tax return forms ) Column 1, line 13. Federal tax return forms Her modified adjusted gross income for 2011 is now $36,000. Federal tax return forms Column 1, line 14. Federal tax return forms On her 2011 tax return, she deducted $375 as medical expenses. Federal tax return forms Column 1, line 15. Federal tax return forms Her actual medical expenses were $3,000. Federal tax return forms Column 1, line 16. Federal tax return forms She multiplies her modified adjusted gross income, $36,000, by . Federal tax return forms 075. Federal tax return forms She enters $2,700 on line 16. Federal tax return forms Column 1, line 17. Federal tax return forms She substracts $2,700 from her actual medical expenses, $3,000. Federal tax return forms She enters $300 on line 17. Federal tax return forms This is her modified medical deduction. Federal tax return forms Column 1, line 18. Federal tax return forms The difference between her medical deduction and her modified medical deduction is $75. Federal tax return forms She enters this on line 18. Federal tax return forms Column 1, lines 19 through 21. Federal tax return forms Ida had no deduction for qualified mortgage insurance premiums in 2011. Federal tax return forms She skips lines 19 and 20 and enters zero on line 21. Federal tax return forms Column 1, line 22. Federal tax return forms She enters her modified adjusted gross income of $36,000 on line 22. Federal tax return forms Column 1, line 23. Federal tax return forms She had no other carrybacks to 2011 and enters zero on line 23. Federal tax return forms Column 1, line 24. Federal tax return forms Her modified adjusted gross income remains $36,000. Federal tax return forms Column 1, line 25. Federal tax return forms Her actual contributions for 2011 were $1,450, which she enters on line 25. Federal tax return forms Column 1, line 26. Federal tax return forms She now refigures her charitable contributions based on her modified adjusted gross income. Federal tax return forms Her contributions are well below the 50% limit, so she enters $1,450 on line 26. Federal tax return forms Column 1, line 27. Federal tax return forms The difference is zero. Federal tax return forms Column 1, lines 28 through 37. Federal tax return forms Ida had no casualty losses or deductions for miscellaneous items in 2011. Federal tax return forms She skips lines 28 through 31 and lines 33 through 36. Federal tax return forms Ida enters zero on lines 32 and 37. Federal tax return forms Column 1, line 38. Federal tax return forms She combines lines 18, 21, 27, 32, and 37 and enters $75 on line 38. Federal tax return forms She carries this figure to line 7. Federal tax return forms Column 2, line 1. Federal tax return forms Ida enters $6,525, the carryback of her 2013 NOL to 2012, from column 1, line 10, on line 1. Federal tax return forms Column 2, line 2. Federal tax return forms She enters ($425), her 2012 taxable income, on line 2. Federal tax return forms Column 2, line 3. Federal tax return forms Ida enters her net capital loss deduction of $3,000 on line 3. Federal tax return forms Column 2, lines 4 and 5. Federal tax return forms Ida had no section 1202 exclusion or domestic production activities deduction in 2012. Federal tax return forms She enters zero on lines 4 and 5. Federal tax return forms Column 2, line 6. Federal tax return forms Although Ida's entry on line 3 modifies her adjusted gross income, that does not affect any other items included in her adjusted gross income. Federal tax return forms Ida enters zero on line 6. Federal tax return forms Column 2, line 7. Federal tax return forms Because Ida did not itemize deductions on her 2012 tax return, she enters zero on line 7. Federal tax return forms Column 2, line 8. Federal tax return forms Ida enters the deduction for her personal exemption of $3,800 for 2012. Federal tax return forms Column 2, line 9. Federal tax return forms After combining lines 2 through 8, Ida's modified taxable income is $6,375. Federal tax return forms Column 2, line 10. Federal tax return forms Ida figures her carryforward to 2014 by subtracting her modified taxable income (line 9) from her NOL deduction (line 1). Federal tax return forms She enters the $150 carryover on line 10. Federal tax return forms This image is too large to be displayed in the current screen. Federal tax return forms Please click the link to view the image. Federal tax return forms Form 1045, page 3 This image is too large to be displayed in the current screen. Federal tax return forms Please click the link to view the image. Federal tax return forms Form 1045, page 4 NOL Carryover From 2013 to 2014 If you had an NOL deduction carried forward from a year prior to 2013 that resulted in your having taxable income on your 2013 return of zero (of less than zero, if an estate or trust), complete Table 1 , Worksheet for NOL Carryover From 2013 to 2014, on the following pages. Federal tax return forms It will help you figure your NOL to carry to 2014. Federal tax return forms Keep the worksheet for your records. Federal tax return forms Worksheet Instructions At the top of the worksheet, enter the NOL year for which you are figuring the carryover. Federal tax return forms More than one NOL. Federal tax return forms   If your 2013 NOL deduction includes amounts for more than one loss year, complete this worksheet only for one loss year. Federal tax return forms To determine which year, start with your earliest NOL and subtract each NOL separately from your taxable income figured without the NOL deduction. Federal tax return forms Complete this worksheet for the earliest NOL that results in your having taxable income below zero. Federal tax return forms Your NOL carryover to 2014 is the total of the amount on line 10 of the worksheet and all later NOL amounts. Federal tax return forms Example. Federal tax return forms Your taxable income for 2013 is $5,000 without your $9,000 NOL deduction. Federal tax return forms Your NOL deduction includes a $2,000 carryover from 2011 and a $7,000 carryover from 2012. Federal tax return forms Subtract your 2011 NOL of $2,000 from $5,000. Federal tax return forms This gives you taxable income of $3,000. Federal tax return forms Your 2011 NOL is now completely used up. Federal tax return forms Subtract your $7,000 2012 NOL from $3,000. Federal tax return forms This gives you taxable income of ($4,000). Federal tax return forms You now complete the worksheet for your 2012 NOL. Federal tax return forms Your NOL carryover to 2014 is the unused part of your 2012 NOL from line 10 of the worksheet. Federal tax return forms Line 2. Federal tax return forms   Treat your NOL deduction for the NOL year entered at the top of the worksheet and later years as a positive amount. Federal tax return forms Add it to your negative taxable income (figured without the NOL deduction). Federal tax return forms Enter the result on line 2. Federal tax return forms Line 6. Federal tax return forms   You must refigure the following income and deductions based on adjusted gross income. Federal tax return forms The special allowance for passive activity losses from rental real estate activities. Federal tax return forms Taxable social security and tier 1 railroad retirement benefits. Federal tax return forms IRA deductions. Federal tax return forms Excludable savings bond interest. Federal tax return forms Excludable employer-provided adoption benefits. Federal tax return forms The student loan interest deduction. Federal tax return forms The tuition and fees deduction. Federal tax return forms   If none of these items apply to you, enter zero on line 6. Federal tax return forms Otherwise, increase your adjusted gross income by the total of lines 3 through 5 and your NOL deduction for the NOL year entered at the top of the worksheet and later years. Federal tax return forms Using this increased adjusted gross income, refigure the items that apply, in the order listed above. Federal tax return forms Your adjustment for each item is the difference between the refigured amount and the amount included on your return. Federal tax return forms Combine the adjustments for previous items with your adjusted gross income before refiguring the next item. Federal tax return forms Keep a record of your computations. Federal tax return forms   Enter your total adjustments for the above items on line 6. Federal tax return forms Line 7. Federal tax return forms   Enter zero if you claimed the standard deduction or the amounts on lines 3 through 5 are zero. Federal tax return forms Otherwise, use lines 11 through 33 of the worksheet to figure the amount to enter on this line. Federal tax return forms Complete only those sections that apply to you. Federal tax return forms Estates and trusts. Federal tax return forms   Enter zero on line 7 if you did not claim any miscellaneous deductions on Form 1041, line 15c, or a casualty or theft loss. Federal tax return forms Otherwise, refigure these deductions by substituting modified adjusted gross income (see below ) for adjusted gross income. Federal tax return forms Subtract the recomputed deductions from those claimed on the return. Federal tax return forms Enter the result on line 7. Federal tax return forms Modified adjusted gross income. Federal tax return forms   To refigure miscellaneous itemized deductions of an estate or trust (Form 1041, line 15c), modified adjusted gross income is the total of the following amounts. Federal tax return forms The adjusted gross income on the return. Federal tax return forms The amounts from lines 3 through 5 of the worksheet. Federal tax return forms The exemption amount from Form 1041, line 20. Federal tax return forms The NOL deduction for the NOL year entered at the top of the worksheet and for later years. Federal tax return forms   To refigure the casualty and theft loss deduction of an estate or trust, modified adjusted gross income is the total of the following amounts. Federal tax return forms The adjusted gross income amount you used to figure the deduction claimed on the return. Federal tax return forms The amounts from lines 3 through 5 of the worksheet. Federal tax return forms The NOL deduction for the NOL year entered at the top of the worksheet and for later years. Federal tax return forms Line 11. Federal tax return forms   Treat your NOL deduction for the NOL year entered at the top of the worksheet and for later years as a positive amount. Federal tax return forms Add it to your adjusted gross income. Federal tax return forms Enter the result on line 11. Federal tax return forms Line 20. Federal tax return forms   Is your modified adjusted gross income from line 13 of this worksheet more than $100,000 ($50,000 if married filing separately)?   □ Yes. Federal tax return forms Your deduction is limited. Federal tax return forms Refigure your deduction using the Mortgage Insurance Premiums Deduction Worksheet in the 2013 Instructions for Form 1045. Federal tax return forms On line 2 of the Mortgage Insurance Premiums Deduction Worksheet, enter the amount from line 13 of this worksheet. Federal tax return forms   □ No. Federal tax return forms Your deduction is not limited. Federal tax return forms Enter the amount from line 19 on line 20 and enter -0- on line 21. Federal tax return forms Line 23. Federal tax return forms   If you had a contributions carryover from 2012 to 2013 and your NOL deduction includes an amount from an NOL year before 2012, you may have to reduce your contributions carryover. Federal tax return forms Reduce the contributions carryover by the amount of any adjustment you made to your 2012 charitable contributions deduction when figuring your NOL carryover to 2013. Federal tax return forms Use the reduced contributions carryover to figure the amount to enter on line 23. Federal tax return forms Please click here for the text description of the image. Federal tax return forms Worksheet for NOL Carryover Worksheet for NOL Carryover (Continued) How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Federal tax return forms Free help with your tax return. Federal tax return forms   You can get free help preparing your return nationwide from IRS-certified volunteers. Federal tax return forms The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Federal tax return forms The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Federal tax return forms Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Federal tax return forms In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Federal tax return forms To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Federal tax return forms gov, download the IRS2Go app, or call 1-800-906-9887. Federal tax return forms   As part of the TCE program, AARP offers the Tax-Aide counseling program. Federal tax return forms To find the nearest AARP Tax-Aide site, visit AARP's website at www. Federal tax return forms aarp. Federal tax return forms org/money/taxaide or call 1-888-227-7669. Federal tax return forms For more information on these programs, go to IRS. Federal tax return forms gov and enter “VITA” in the search box. Federal tax return forms Internet. Federal tax return forms    IRS. Federal tax return forms gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Federal tax return forms Download the free IRS2Go app from the iTunes app store or from Google Play. Federal tax return forms Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Federal tax return forms Check the status of your 2013 refund with the Where's My Refund? application on IRS. Federal tax return forms gov or download the IRS2Go app and select the Refund Status option. Federal tax return forms The IRS issues more than 9 out of 10 refunds in less than 21 days. Federal tax return forms Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Federal tax return forms You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Federal tax return forms The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Federal tax return forms Use the Interactive Tax Assistant (ITA) to research your tax questions. Federal tax return forms No need to wait on the phone or stand in line. Federal tax return forms The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Federal tax return forms When you reach the response screen, you can print the entire interview and the final response for your records. Federal tax return forms New subject areas are added on a regular basis. Federal tax return forms  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Federal tax return forms gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Federal tax return forms You can use the IRS Tax Map to search publications and instructions by topic or keyword. Federal tax return forms The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Federal tax return forms When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Federal tax return forms Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Federal tax return forms You can also ask the IRS to mail a return or an account transcript to you. Federal tax return forms Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Federal tax return forms gov or by calling 1-800-908-9946. Federal tax return forms Tax return and tax account transcripts are generally available for the current year and the past three years. Federal tax return forms Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Federal tax return forms Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Federal tax return forms If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Federal tax return forms Check the status of your amended return using Where's My Amended Return? Go to IRS. Federal tax return forms gov and enter Where's My Amended Return? in the search box. Federal tax return forms You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Federal tax return forms It can take up to 3 weeks from the date you mailed it to show up in our system. Federal tax return forms Make a payment using one of several safe and convenient electronic payment options available on IRS. Federal tax return forms gov. Federal tax return forms Select the Payment tab on the front page of IRS. Federal tax return forms gov for more information. Federal tax return forms Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Federal tax return forms Figure your income tax withholding with the IRS Withholding Calculator on IRS. Federal tax return forms gov. Federal tax return forms Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Federal tax return forms Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Federal tax return forms gov. Federal tax return forms Request an Electronic Filing PIN by going to IRS. Federal tax return forms gov and entering Electronic Filing PIN in the search box. Federal tax return forms Download forms, instructions and publications, including accessible versions for people with disabilities. Federal tax return forms Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Federal tax return forms gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Federal tax return forms An employee can answer questions about your tax account or help you set up a payment plan. Federal tax return forms Before you visit, check the Office Locator on IRS. Federal tax return forms gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Federal tax return forms If you have a special need, such as a disability, you can request an appointment. Federal tax return forms Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Federal tax return forms Apply for an Employer Identification Number (EIN). Federal tax return forms Go to IRS. Federal tax return forms gov and enter Apply for an EIN in the search box. Federal tax return forms Read the Internal Revenue Code, regulations, or other official guidance. Federal tax return forms Read Internal Revenue Bulletins. Federal tax return forms Sign up to receive local and national tax news and more by email. Federal tax return forms Just click on “subscriptions” above the search box on IRS. Federal tax return forms gov and choose from a variety of options. Federal tax return forms Phone. Federal tax return forms    You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Federal tax return forms Download the free IRS2Go app from the iTunes app store or from Google Play. Federal tax return forms Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Federal tax return forms gov, or download the IRS2Go app. Federal tax return forms Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Federal tax return forms The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Federal tax return forms Most VITA and TCE sites offer free electronic filing. Federal tax return forms Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Federal tax return forms Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Federal tax return forms Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. Federal tax return forms If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Federal tax return forms The IRS issues more than 9 out of 10 refunds in less than 21 days. Federal tax return forms Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Federal tax return forms Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. Federal tax return forms The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Federal tax return forms Note, the above information is for our automated hotline. Federal tax return forms Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. Federal tax return forms Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Federal tax return forms You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Federal tax return forms It can take up to 3 weeks from the date you mailed it to show up in our system. Federal tax return forms Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). Federal tax return forms You should receive your order within 10 business days. Federal tax return forms Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. Federal tax return forms If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. Federal tax return forms Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Federal tax return forms The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Federal tax return forms These individuals can also contact the IRS through relay services such as the Federal Relay Service. Federal tax return forms Walk-in. Federal tax return forms   You can find a selection of forms, publications and services — in person. Federal tax return forms Products. Federal tax return forms You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Federal tax return forms Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Federal tax return forms Services. Federal tax return forms You can walk in to your local TAC for face-to-face tax help. Federal tax return forms An employee can answer questions about your tax account or help you set up a payment plan. Federal tax return forms Before visiting, use the Office Locator tool on IRS. Federal tax return forms gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. Federal tax return forms Mail. Federal tax return forms   You can send your order for forms, instructions, and publications to the address below. Federal tax return forms You should receive a response within 10 business days after your request is received. Federal tax return forms Internal Revenue Service 1201 N. Federal tax return forms Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. Federal tax return forms The Taxpayer Advocate Service (TAS) is your voice at the IRS. Federal tax return forms Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Federal tax return forms   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. Federal tax return forms We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Federal tax return forms You face (or your business is facing) an immediate threat of adverse action. Federal tax return forms You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Federal tax return forms   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Federal tax return forms Here's why we can help: TAS is an independent organization within the IRS. Federal tax return forms Our advocates know how to work with the IRS. Federal tax return forms Our services are free and tailored to meet your needs. Federal tax return forms We have offices in every state, the District of Columbia, and Puerto Rico. Federal tax return forms   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. Federal tax return forms   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Federal tax return forms If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. Federal tax return forms Low Income Taxpayer Clinics Low Income
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Understanding your CP01 Notice

We received the information that you provided and have verified your claim of identity theft. We have placed an identity theft indicator on your account.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

  • You need take no further action except continue to file your federal income tax returns as required by law.

You may want to...


Answers to Common Questions

What effect does the Identity Theft Indicator have on my account?
The indicator assists the IRS in identifying you as the valid owner of the Social Security Number (SSN) that is shown on your tax return. The indicator has no effect on your ability to file your tax return, make payments, or receive a refund.

What happens if someone else uses my SSN to file a fraudulent tax return?
The indicator that was placed on your account will alert us to research to make sure that a tax return filed with your SSN is valid. If the tax return is found to be invalid, we won't process it.

How long does the indicator remain on my account?
Because you were a victim of identity theft, to protect your tax account, the indicator will remain on your account unless you specifically request that it be removed.

Who should I contact if I have more questions about my account related to identity theft?
The Identity Theft Specialized Unit can assist you with questions regarding identity theft related to your account. You may call them at 1-800-908-4490. The number can also be found on your notice. For all other tax account related questions contact the IRS help desk at 1-800-829-1040.

Where can I find more information on preventing identity theft?


Tips for next year

File your return as you normally would. If we find that someone is attempting to use your SSN for filing a tax return we will notify you and provide you with a PIN to use when filing your return.

 

Page Last Reviewed or Updated: 27-Feb-2014

The Federal Tax Return Forms

Federal tax return forms 12. Federal tax return forms   Other Income Table of Contents Introduction Useful Items - You may want to see: Bartering Canceled DebtsInterest included in canceled debt. Federal tax return forms Exceptions Host or Hostess Life Insurance ProceedsSurviving spouse. Federal tax return forms Endowment Contract Proceeds Accelerated Death Benefits Public Safety Officer Killed in the Line of Duty Partnership Income S Corporation Income RecoveriesItemized Deduction Recoveries Rents from Personal Property RepaymentsMethod 1. Federal tax return forms Method 2. Federal tax return forms RoyaltiesDepletion. Federal tax return forms Coal and iron ore. Federal tax return forms Sale of property interest. Federal tax return forms Part of future production sold. Federal tax return forms Unemployment BenefitsTypes of unemployment compensation. Federal tax return forms Governmental program. Federal tax return forms Repayment of unemployment compensation. Federal tax return forms Tax withholding. Federal tax return forms Repayment of benefits. Federal tax return forms Welfare and Other Public Assistance Benefits Other IncomeEmotional distress. Federal tax return forms Deduction for costs involved in unlawful discrimination suits. Federal tax return forms Energy conservation measure. Federal tax return forms Dwelling unit. Federal tax return forms Current income required to be distributed. Federal tax return forms Current income not required to be distributed. Federal tax return forms How to report. Federal tax return forms Losses. Federal tax return forms Grantor trust. Federal tax return forms Nonemployee compensation. Federal tax return forms Corporate director. Federal tax return forms Personal representatives. Federal tax return forms Manager of trade or business for bankruptcy estate. Federal tax return forms Notary public. Federal tax return forms Election precinct official. Federal tax return forms Difficulty-of-care payments. Federal tax return forms Maintaining space in home. Federal tax return forms Reporting taxable payments. Federal tax return forms Lotteries and raffles. Federal tax return forms Form W-2G. Federal tax return forms Reporting winnings and recordkeeping. Federal tax return forms Inherited pension or IRA. Federal tax return forms Employee awards or bonuses. Federal tax return forms Pulitzer, Nobel, and similar prizes. Federal tax return forms Payment for services. Federal tax return forms VA payments. Federal tax return forms Prizes. Federal tax return forms Strike and lockout benefits. Federal tax return forms Introduction You must include on your return all items of income you receive in the form of money, property, and services unless the tax law states that you do not include them. Federal tax return forms Some items, however, are only partly excluded from income. Federal tax return forms This chapter discusses many kinds of income and explains whether they are taxable or nontaxable. Federal tax return forms Income that is taxable must be reported on your tax return and is subject to tax. Federal tax return forms Income that is nontaxable may have to be shown on your tax return but is not taxable. Federal tax return forms This chapter begins with discussions of the following income items. Federal tax return forms Bartering. Federal tax return forms Canceled debts. Federal tax return forms Sales parties at which you are the host or hostess. Federal tax return forms Life insurance proceeds. Federal tax return forms Partnership income. Federal tax return forms S Corporation income. Federal tax return forms Recoveries (including state income tax refunds). Federal tax return forms Rents from personal property. Federal tax return forms Repayments. Federal tax return forms Royalties. Federal tax return forms Unemployment benefits. Federal tax return forms Welfare and other public assistance benefits. Federal tax return forms These discussions are followed by brief discussions of other income items. Federal tax return forms Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 544 Sales and Other Dispositions of Assets 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Bartering Bartering is an exchange of property or services. Federal tax return forms You must include in your income, at the time received, the fair market value of property or services you receive in bartering. Federal tax return forms If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise. Federal tax return forms Generally, you report this income on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Federal tax return forms However, if the barter involves an exchange of something other than services, such as in Example 3 below, you may have to use another form or schedule instead. Federal tax return forms Example 1. Federal tax return forms You are a self-employed attorney who performs legal services for a client, a small corporation. Federal tax return forms The corporation gives you shares of its stock as payment for your services. Federal tax return forms You must include the fair market value of the shares in your income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) in the year you receive them. Federal tax return forms Example 2. Federal tax return forms You are self-employed and a member of a barter club. Federal tax return forms The club uses “credit units” as a means of exchange. Federal tax return forms It adds credit units to your account for goods or services you provide to members, which you can use to purchase goods or services offered by other members of the barter club. Federal tax return forms The club subtracts credit units from your account when you receive goods or services from other members. Federal tax return forms You must include in your income the value of the credit units that are added to your account, even though you may not actually receive goods or services from other members until a later tax year. Federal tax return forms Example 3. Federal tax return forms You own a small apartment building. Federal tax return forms In return for 6 months rent-free use of an apartment, an artist gives you a work of art she created. Federal tax return forms You must report as rental income on Schedule E (Form 1040), Supplemental Income and Loss, the fair market value of the artwork, and the artist must report as income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) the fair rental value of the apartment. Federal tax return forms Form 1099-B from barter exchange. Federal tax return forms   If you exchanged property or services through a barter exchange, Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or a similar statement from the barter exchange should be sent to you by February 18, 2014. Federal tax return forms It should show the value of cash, property, services, credits, or scrip you received from exchanges during 2013. Federal tax return forms The IRS also will receive a copy of Form 1099-B. Federal tax return forms Canceled Debts In most cases, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. Federal tax return forms You have no income from the canceled debt if it is intended as a gift to you. Federal tax return forms A debt includes any indebtedness for which you are liable or which attaches to property you hold. Federal tax return forms If the debt is a nonbusiness debt, report the canceled amount on Form 1040, line 21. Federal tax return forms If it is a business debt, report the amount on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) (or on Schedule F (Form 1040), Profit or Loss From Farming, if the debt is farm debt and you are a farmer). Federal tax return forms Form 1099-C. Federal tax return forms   If a Federal Government agency, financial institution, or credit union cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. Federal tax return forms The amount of the canceled debt is shown in box 2. Federal tax return forms Interest included in canceled debt. Federal tax return forms   If any interest is forgiven and included in the amount of canceled debt in box 2, the amount of interest also will be shown in box 3. Federal tax return forms Whether or not you must include the interest portion of the canceled debt in your income depends on whether the interest would be deductible when you paid it. Federal tax return forms See Deductible debt under Exceptions, later. Federal tax return forms   If the interest would not be deductible (such as interest on a personal loan), include in your income the amount from Form 1099-C, box 2. Federal tax return forms If the interest would be deductible (such as on a business loan), include in your income the net amount of the canceled debt (the amount shown in box 2 less the interest amount shown in box 3). Federal tax return forms Discounted mortgage loan. Federal tax return forms   If your financial institution offers a discount for the early payment of your mortgage loan, the amount of the discount is canceled debt. Federal tax return forms You must include the canceled amount in your income. Federal tax return forms Mortgage relief upon sale or other disposition. Federal tax return forms   If you are personally liable for a mortgage (recourse debt), and you are relieved of the mortgage when you dispose of the property, you may realize gain or loss up to the fair market value of the property. Federal tax return forms To the extent the mortgage discharge exceeds the fair market value of the property, it is income from discharge of indebtedness unless it qualifies for exclusion under Excluded debt , later. Federal tax return forms Report any income from discharge of indebtedness on nonbusiness debt that does not qualify for exclusion as other income on Form 1040, line 21. Federal tax return forms    You may be able to exclude part of the mortgage relief on your principal residence. Federal tax return forms See Excluded debt, later. Federal tax return forms   If you are not personally liable for a mortgage (nonrecourse debt), and you are relieved of the mortgage when you dispose of the property (such as through foreclosure), that relief is included in the amount you realize. Federal tax return forms You may have a taxable gain if the amount you realize exceeds your adjusted basis in the property. Federal tax return forms Report any gain on nonbusiness property as a capital gain. Federal tax return forms   See Publication 4681 for more information. Federal tax return forms Stockholder debt. Federal tax return forms   If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution that is generally dividend income to you. Federal tax return forms For more information, see Publication 542, Corporations. Federal tax return forms   If you are a stockholder in a corporation and you cancel a debt owed to you by the corporation, you generally do not realize income. Federal tax return forms This is because the canceled debt is considered as a contribution to the capital of the corporation equal to the amount of debt principal that you canceled. Federal tax return forms Repayment of canceled debt. Federal tax return forms   If you included a canceled amount in your income and later pay the debt, you may be able to file a claim for refund for the year the amount was included in income. Federal tax return forms You can file a claim on Form 1040X if the statute of limitations for filing a claim is still open. Federal tax return forms The statute of limitations generally does not end until 3 years after the due date of your original return. Federal tax return forms Exceptions There are several exceptions to the inclusion of canceled debt in income. Federal tax return forms These are explained next. Federal tax return forms Student loans. Federal tax return forms   Certain student loans contain a provision that all or part of the debt incurred to attend the qualified educational institution will be canceled if you work for a certain period of time in certain professions for any of a broad class of employers. Federal tax return forms   You do not have income if your student loan is canceled after you agreed to this provision and then performed the services required. Federal tax return forms To qualify, the loan must have been made by: The Federal Government, a state or local government, or an instrumentality, agency, or subdivision thereof, A tax-exempt public benefit corporation that has assumed control of a state, county, or municipal hospital, and whose employees are considered public employees under state law, or An educational institution: Under an agreement with an entity described in (1) or (2) that provided the funds to the institution to make the loan, or As part of a program of the institution designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or a tax-exempt organization described in section 501(c)(3). Federal tax return forms   A loan to refinance a qualified student loan also will qualify if it was made by an educational institution or a qualified tax-exempt organization under its program designed as described in (3)(b) above. Federal tax return forms Education loan repayment assistance. Federal tax return forms   Education loan repayments made to you by the National Health Service Corps Loan Repayment Program (NHSC Loan Repayment Program), a state education loan repayment program eligible for funds under the Public Health Service Act, or any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in underserved or health professional shortage areas are not taxable. Federal tax return forms    The provision relating to the “other state loan repayment or loan forgiveness program” was added to this exclusion for amounts received in tax years beginning after December 31, 2008. Federal tax return forms If you included these amounts in income in 2010, 2011, or 2012, you should file an amended tax return to exclude this income. Federal tax return forms See Form 1040X and its instructions for details on filing. Federal tax return forms Deductible debt. Federal tax return forms   You do not have income from the cancellation of a debt if your payment of the debt would be deductible. Federal tax return forms This exception applies only if you use the cash method of accounting. Federal tax return forms For more information, see chapter 5 of Publication 334, Tax Guide for Small Business. Federal tax return forms Price reduced after purchase. Federal tax return forms   In most cases, if the seller reduces the amount of debt you owe for property you purchased, you do not have income from the reduction. Federal tax return forms The reduction of the debt is treated as a purchase price adjustment and reduces your basis in the property. Federal tax return forms Excluded debt. Federal tax return forms   Do not include a canceled debt in your gross income in the following situations. Federal tax return forms The debt is canceled in a bankruptcy case under title 11 of the U. Federal tax return forms S. Federal tax return forms Code. Federal tax return forms See Publication 908, Bankruptcy Tax Guide. Federal tax return forms The debt is canceled when you are insolvent. Federal tax return forms However, you cannot exclude any amount of canceled debt that is more than the amount by which you are insolvent. Federal tax return forms See Publication 908. Federal tax return forms The debt is qualified farm debt and is canceled by a qualified person. Federal tax return forms See chapter 3 of Publication 225, Farmer's Tax Guide. Federal tax return forms The debt is qualified real property business debt. Federal tax return forms See chapter 5 of Publication 334. Federal tax return forms The cancellation is intended as a gift. Federal tax return forms The debt is qualified principal residence indebtedness. Federal tax return forms See Publication 525 for additional information. Federal tax return forms Host or Hostess If you host a party or event at which sales are made, any gift or gratuity you receive for giving the event is a payment for helping a direct seller make sales. Federal tax return forms You must report this item as income at its fair market value. Federal tax return forms Your out-of-pocket party expenses are subject to the 50% limit for meal and entertainment expenses. Federal tax return forms These expenses are deductible as miscellaneous itemized deductions subject to the 2%-of-AGI limit on Schedule A (Form 1040), but only up to the amount of income you receive for giving the party. Federal tax return forms For more information about the 50% limit for meal and entertainment expenses, see chapter 26. Federal tax return forms Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. Federal tax return forms This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. Federal tax return forms However, interest income received as a result of life insurance proceeds may be taxable. Federal tax return forms Proceeds not received in installments. Federal tax return forms   If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death. Federal tax return forms If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death. Federal tax return forms Proceeds received in installments. Federal tax return forms   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. Federal tax return forms   To determine the excluded part, divide the amount held by the insurance company (generally the total lump sum payable at the death of the insured person) by the number of installments to be paid. Federal tax return forms Include anything over this excluded part in your income as interest. Federal tax return forms Surviving spouse. Federal tax return forms   If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude up to $1,000 a year of the interest included in the installments. Federal tax return forms If you remarry, you can continue to take the exclusion. Federal tax return forms Surrender of policy for cash. Federal tax return forms   If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. Federal tax return forms In most cases, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income. Federal tax return forms    You should receive a Form 1099-R showing the total proceeds and the taxable part. Federal tax return forms Report these amounts on lines 16a and 16b of Form 1040 or lines 12a and 12b of Form 1040A. Federal tax return forms More information. Federal tax return forms   For more information, see Life Insurance Proceeds in Publication 525. Federal tax return forms Endowment Contract Proceeds An endowment contract is a policy under which you are paid a specified amount of money on a certain date unless you die before that date, in which case, the money is paid to your designated beneficiary. Federal tax return forms Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. Federal tax return forms To determine your cost, subtract any amount that you previously received under the contract and excluded from your income from the total premiums (or other consideration) paid for the contract. Federal tax return forms Include the part of the lump sum payment that is more than your cost in your income. Federal tax return forms Accelerated Death Benefits Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are excluded from income if the insured is terminally or chronically ill. Federal tax return forms Viatical settlement. Federal tax return forms   This is the sale or assignment of any part of the death benefit under a life insurance contract to a viatical settlement provider. Federal tax return forms A viatical settlement provider is a person who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill and who meets the requirements of section 101(g)(2)(B) of the Internal Revenue Code. Federal tax return forms Exclusion for terminal illness. Federal tax return forms    Accelerated death benefits are fully excludable if the insured is a terminally ill individual. Federal tax return forms This is a person who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death within 24 months from the date of the certification. Federal tax return forms Exclusion for chronic illness. Federal tax return forms    If the insured is a chronically ill individual who is not terminally ill, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. Federal tax return forms Accelerated death benefits paid on a per diem or other periodic basis are excludable up to a limit. Federal tax return forms This limit applies to the total of the accelerated death benefits and any periodic payments received from long-term care insurance contracts. Federal tax return forms For information on the limit and the definitions of chronically ill individual, qualified long-term care services, and long-term care insurance contracts, see Long-Term Care Insurance Contracts under Sickness and Injury Benefits in Publication 525. Federal tax return forms Exception. Federal tax return forms   The exclusion does not apply to any amount paid to a person (other than the insured) who has an insurable interest in the life of the insured because the insured: Is a director, officer, or employee of the person, or Has a financial interest in the person's business. Federal tax return forms Form 8853. Federal tax return forms   To claim an exclusion for accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return. Federal tax return forms You do not have to file Form 8853 to exclude accelerated death benefits paid on the basis of actual expenses incurred. Federal tax return forms Public Safety Officer Killed in the Line of Duty If you are a survivor of a public safety officer who was killed in the line of duty, you may be able to exclude from income certain amounts you receive. Federal tax return forms For this purpose, the term public safety officer includes law enforcement officers, firefighters, chaplains, and rescue squad and ambulance crew members. Federal tax return forms For more information, see Publication 559, Survivors, Executors, and Administrators. Federal tax return forms Partnership Income A partnership generally is not a taxable entity. Federal tax return forms The income, gains, losses, deductions, and credits of a partnership are passed through to the partners based on each partner's distributive share of these items. Federal tax return forms Schedule K-1 (Form 1065). Federal tax return forms    Although a partnership generally pays no tax, it must file an information return on Form 1065, U. Federal tax return forms S. Federal tax return forms Return of Partnership Income, and send Schedule K-1 (Form 1065) to each partner. Federal tax return forms In addition, the partnership will send each partner a copy of the Partner's Instructions for Schedule K-1 (Form 1065) to help each partner report his or her share of the partnership's income, deductions, credits, and tax preference items. Federal tax return forms Keep Schedule K-1 (Form 1065) for your records. Federal tax return forms Do not attach it to your Form 1040, unless you are specifically required to do so. Federal tax return forms For more information on partnerships, see Publication 541, Partnerships. Federal tax return forms Qualified joint venture. Federal tax return forms   If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. Federal tax return forms To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. Federal tax return forms For further information on how to make the election and which schedule(s) to file, see the instructions for your individual tax return. Federal tax return forms S Corporation Income In most cases, an S corporation does not pay tax on its income. Federal tax return forms Instead, the income, losses, deductions, and credits of the corporation are passed through to the shareholders based on each shareholder's pro rata share. Federal tax return forms Schedule K-1 (Form 1120S). Federal tax return forms   An S corporation must file a return on Form 1120S, U. Federal tax return forms S. Federal tax return forms Income Tax Return for an S Corporation, and send Schedule K-1 (Form 1120S) to each shareholder. Federal tax return forms In addition, the S corporation will send each shareholder a copy of the Shareholder's Instructions for Schedule K-1 (Form 1120S) to help each shareholder report his or her share of the S corporation's income, losses, credits, and deductions. Federal tax return forms Keep Schedule K-1 (Form 1120S) for your records. Federal tax return forms Do not attach it to your Form 1040, unless you are specifically required to do so. Federal tax return forms For more information on S corporations and their shareholders, see the Instructions for Form 1120S. Federal tax return forms Recoveries A recovery is a return of an amount you deducted or took a credit for in an earlier year. Federal tax return forms The most common recoveries are refunds, reimbursements, and rebates of deductions itemized on Schedule A (Form 1040). Federal tax return forms You also may have recoveries of non-itemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit. Federal tax return forms Tax benefit rule. Federal tax return forms   You must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. Federal tax return forms For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year. Federal tax return forms For more information, see Publication 525. Federal tax return forms Federal income tax refund. Federal tax return forms   Refunds of federal income taxes are not included in your income because they are never allowed as a deduction from income. Federal tax return forms State tax refund. Federal tax return forms   If you received a state or local income tax refund (or credit or offset) in 2013, you generally must include it in income if you deducted the tax in an earlier year. Federal tax return forms The payer should send Form 1099-G, Certain Government Payments, to you by January 31, 2014. Federal tax return forms The IRS also will receive a copy of the Form 1099-G. Federal tax return forms If you file Form 1040, use the State and Local Income Tax Refund Worksheet in the 2013 Form 1040 instructions for line 10 to figure the amount (if any) to include in your income. Federal tax return forms See Publication 525 for when you must use another worksheet. Federal tax return forms   If you could choose to deduct for a tax year either: State and local income taxes, or State and local general sales taxes, then the maximum refund that you may have to include in income is limited to the excess of the tax you chose to deduct for that year over the tax you did not choose to deduct for that year. Federal tax return forms For examples, see Publication 525. Federal tax return forms Mortgage interest refund. Federal tax return forms    If you received a refund or credit in 2013 of mortgage interest paid in an earlier year, the amount should be shown in box 3 of your Form 1098, Mortgage Interest Statement. Federal tax return forms Do not subtract the refund amount from the interest you paid in 2013. Federal tax return forms You may have to include it in your income under the rules explained in the following discussions. Federal tax return forms Interest on recovery. Federal tax return forms   Interest on any of the amounts you recover must be reported as interest income in the year received. Federal tax return forms For example, report any interest you received on state or local income tax refunds on Form 1040, line 8a. Federal tax return forms Recovery and expense in same year. Federal tax return forms   If the refund or other recovery and the expense occur in the same year, the recovery reduces the deduction or credit and is not reported as income. Federal tax return forms Recovery for 2 or more years. Federal tax return forms   If you receive a refund or other recovery that is for amounts you paid in 2 or more separate years, you must allocate, on a pro rata basis, the recovered amount between the years in which you paid it. Federal tax return forms This allocation is necessary to determine the amount of recovery from any earlier years and to determine the amount, if any, of your allowable deduction for this item for the current year. Federal tax return forms For information on how to compute the allocation, see Recoveries in Publication 525. Federal tax return forms Itemized Deduction Recoveries If you recover any amount that you deducted in an earlier year on Schedule A (Form 1040), you generally must include the full amount of the recovery in your income in the year you receive it. Federal tax return forms Where to report. Federal tax return forms   Enter your state or local income tax refund on Form 1040, line 10, and the total of all other recoveries as other income on Form 1040, line 21. Federal tax return forms You cannot use Form 1040A or Form 1040EZ. Federal tax return forms Standard deduction limit. Federal tax return forms   You generally are allowed to claim the standard deduction if you do not itemize your deductions. Federal tax return forms Only your itemized deductions that are more than your standard deduction are subject to the recovery rule (unless you are required to itemize your deductions). Federal tax return forms If your total deductions on the earlier year return were not more than your income for that year, include in your income this year the lesser of: Your recoveries, or The amount by which your itemized deductions exceeded the standard deduction. Federal tax return forms Example. Federal tax return forms For 2012, you filed a joint return. Federal tax return forms Your taxable income was $60,000 and you were not entitled to any tax credits. Federal tax return forms Your standard deduction was $11,900, and you had itemized deductions of $14,000. Federal tax return forms In 2013, you received the following recoveries for amounts deducted on your 2012 return: Medical expenses $200 State and local income tax refund 400 Refund of mortgage interest 325 Total recoveries $925 None of the recoveries were more than the deductions taken for 2012. Federal tax return forms The difference between the state and local income tax you deducted and your local general sales tax was more than $400. Federal tax return forms Your total recoveries are less than the amount by which your itemized deductions exceeded the standard deduction ($14,000 − 11,900 = $2,100), so you must include your total recoveries in your income for 2013. Federal tax return forms Report the state and local income tax refund of $400 on Form 1040, line 10, and the balance of your recoveries, $525, on Form 1040, line 21. Federal tax return forms Standard deduction for earlier years. Federal tax return forms   To determine if amounts recovered in 2013 must be included in your income, you must know the standard deduction for your filing status for the year the deduction was claimed. Federal tax return forms Look in the instructions for your tax return from prior years to locate the standard deduction for the filing status for that prior year. Federal tax return forms Example. Federal tax return forms You filed a joint return on Form 1040 for 2012 with taxable income of $45,000. Federal tax return forms Your itemized deductions were $12,350. Federal tax return forms The standard deduction that you could have claimed was $11,900. Federal tax return forms In 2013, you recovered $2,100 of your 2012 itemized deductions. Federal tax return forms None of the recoveries were more than the actual deductions for 2012. Federal tax return forms Include $450 of the recoveries in your 2013 income. Federal tax return forms This is the smaller of your recoveries ($2,100) or the amount by which your itemized deductions were more than the standard deduction ($12,350 − $11,900 = $450). Federal tax return forms Recovery limited to deduction. Federal tax return forms   You do not include in your income any amount of your recovery that is more than the amount you deducted in the earlier year. Federal tax return forms The amount you include in your income is limited to the smaller of: The amount deducted on Schedule A (Form 1040), or The amount recovered. Federal tax return forms Example. Federal tax return forms During 2012 you paid $1,700 for medical expenses. Federal tax return forms From this amount you subtracted $1,500, which was 7. Federal tax return forms 5% of your adjusted gross income. Federal tax return forms Your actual medical expense deduction was $200. Federal tax return forms In 2013, you received a $500 reimbursement from your medical insurance for your 2012 expenses. Federal tax return forms The only amount of the $500 reimbursement that must be included in your income for 2013 is $200—the amount actually deducted. Federal tax return forms Other recoveries. Federal tax return forms   See Recoveries in Publication 525 if: You have recoveries of items other than itemized deductions, or You received a recovery for an item for which you claimed a tax credit (other than investment credit or foreign tax credit) in a prior year. Federal tax return forms Rents from Personal Property If you rent out personal property, such as equipment or vehicles, how you report your income and expenses is in most cases determined by: Whether or not the rental activity is a business, and Whether or not the rental activity is conducted for profit. Federal tax return forms In most cases, if your primary purpose is income or profit and you are involved in the rental activity with continuity and regularity, your rental activity is a business. Federal tax return forms See Publication 535, Business Expenses, for details on deducting expenses for both business and not-for-profit activities. Federal tax return forms Reporting business income and expenses. Federal tax return forms    If you are in the business of renting personal property, report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). Federal tax return forms The form instructions have information on how to complete them. Federal tax return forms Reporting nonbusiness income. Federal tax return forms   If you are not in the business of renting personal property, report your rental income on Form 1040, line 21. Federal tax return forms List the type and amount of the income on the dotted line next to line 21. Federal tax return forms Reporting nonbusiness expenses. Federal tax return forms   If you rent personal property for profit, include your rental expenses in the total amount you enter on Form 1040, line 36. Federal tax return forms Also enter the amount and “PPR” on the dotted line next to line 36. Federal tax return forms   If you do not rent personal property for profit, your deductions are limited and you cannot report a loss to offset other income. Federal tax return forms See Activity not for profit , under Other Income, later. Federal tax return forms Repayments If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it. Federal tax return forms Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. Federal tax return forms Generally, you can claim a deduction or credit only if the repayment qualifies as an expense or loss incurred in your trade or business or in a for-profit transaction. Federal tax return forms Type of deduction. Federal tax return forms   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. Federal tax return forms You generally deduct the repayment on the same form or schedule on which you previously reported it as income. Federal tax return forms For example, if you reported it as self-employment income, deduct it as a business expense on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). Federal tax return forms If you reported it as a capital gain, deduct it as a capital loss as explained in the Instructions for Schedule D (Form 1040). Federal tax return forms If you reported it as wages, unemployment compensation, or other nonbusiness income, deduct it as a miscellaneous itemized deduction on Schedule A (Form 1040). Federal tax return forms Repaid social security benefits. Federal tax return forms   If you repaid social security benefits or equivalent railroad retirement benefits, see Repayment of benefits in chapter 11. Federal tax return forms Repayment of $3,000 or less. Federal tax return forms   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. Federal tax return forms If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 23. Federal tax return forms Repayment over $3,000. Federal tax return forms   If the amount you repaid was more than $3,000, you can deduct the repayment (as explained under Type of deduction , earlier). Federal tax return forms However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. Federal tax return forms This means that at the time you included the income, it appeared that you had an unrestricted right to it. Federal tax return forms If you qualify for this choice, figure your tax under both methods and compare the results. Federal tax return forms Use the method (deduction or credit) that results in less tax. Federal tax return forms When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. Federal tax return forms Each instance of repayment is not considered separately. Federal tax return forms Method 1. Federal tax return forms   Figure your tax for 2013 claiming a deduction for the repaid amount. Federal tax return forms If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28. Federal tax return forms Method 2. Federal tax return forms   Figure your tax for 2013 claiming a credit for the repaid amount. Federal tax return forms Follow these steps. Federal tax return forms Figure your tax for 2013 without deducting the repaid amount. Federal tax return forms Refigure your tax from the earlier year without including in income the amount you repaid in 2013. Federal tax return forms Subtract the tax in (2) from the tax shown on your return for the earlier year. Federal tax return forms This is the credit. Federal tax return forms Subtract the answer in (3) from the tax for 2013 figured without the deduction (Step 1). Federal tax return forms   If method 1 results in less tax, deduct the amount repaid. Federal tax return forms If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71, by adding the amount of the credit to any other credits on this line, and entering “I. Federal tax return forms R. Federal tax return forms C. Federal tax return forms 1341” in the column to the right of line 71. Federal tax return forms   An example of this computation can be found in Publication 525. Federal tax return forms Repaid wages subject to social security and Medicare taxes. Federal tax return forms   If you had to repay an amount that you included in your wages or compensation in an earlier year on which social security, Medicare, or tier 1 RRTA taxes were paid, ask your employer to refund the excess amount to you. Federal tax return forms If the employer refuses to refund the taxes, ask for a statement indicating the amount of the overcollection to support your claim. Federal tax return forms File a claim for refund using Form 843, Claim for Refund and Request for Abatement. Federal tax return forms Repaid wages subject to Additional Medicare Tax. Federal tax return forms   Employers cannot make an adjustment or file a claim for refund for Additional Medicare Tax withholding when there is a repayment of wages received by an employee in a prior year because the employee determines liability for Additional Medicare Tax on the employee's income tax return for the prior year. Federal tax return forms If you had to repay an amount that you included in your wages or compensation in an earlier year, and on which Additional Medicare Tax was paid, you may be able to recover the Additional Medicare Tax paid on the amount. Federal tax return forms To recover Additional Medicare Tax on the repaid wages or compensation, you must file Form 1040X, Amended U. Federal tax return forms S. Federal tax return forms Individual Income Tax Return, for the prior year in which the wages or compensation were originally received. Federal tax return forms See the Instructions for Form 1040X. Federal tax return forms Royalties Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. Federal tax return forms In most cases you report royalties in Part I of Schedule E (Form 1040). Federal tax return forms However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc. Federal tax return forms , report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). Federal tax return forms Copyrights and patents. Federal tax return forms   Royalties from copyrights on literary, musical, or artistic works, and similar property, or from patents on inventions, are amounts paid to you for the right to use your work over a specified period of time. Federal tax return forms Royalties generally are based on the number of units sold, such as the number of books, tickets to a performance, or machines sold. Federal tax return forms Oil, gas, and minerals. Federal tax return forms   Royalty income from oil, gas, and mineral properties is the amount you receive when natural resources are extracted from your property. Federal tax return forms The royalties are based on units, such as barrels, tons, etc. Federal tax return forms , and are paid to you by a person or company who leases the property from you. Federal tax return forms Depletion. Federal tax return forms   If you are the owner of an economic interest in mineral deposits or oil and gas wells, you can recover your investment through the depletion allowance. Federal tax return forms For information on this subject, see chapter 9 of Publication 535. Federal tax return forms Coal and iron ore. Federal tax return forms   Under certain circumstances, you can treat amounts you receive from the disposal of coal and iron ore as payments from the sale of a capital asset, rather than as royalty income. Federal tax return forms For information about gain or loss from the sale of coal and iron ore, see Publication 544. Federal tax return forms Sale of property interest. Federal tax return forms   If you sell your complete interest in oil, gas, or mineral rights, the amount you receive is considered payment for the sale of property used in a trade or business under section 1231, not royalty income. Federal tax return forms Under certain circumstances, the sale is subject to capital gain or loss treatment as explained in the Instructions for Schedule D (Form 1040). Federal tax return forms For more information on selling section 1231 property, see chapter 3 of Publication 544. Federal tax return forms   If you retain a royalty, an overriding royalty, or a net profit interest in a mineral property for the life of the property, you have made a lease or a sublease, and any cash you receive for the assignment of other interests in the property is ordinary income subject to a depletion allowance. Federal tax return forms Part of future production sold. Federal tax return forms   If you own mineral property but sell part of the future production, in most cases you treat the money you receive from the buyer at the time of the sale as a loan from the buyer. Federal tax return forms Do not include it in your income or take depletion based on it. Federal tax return forms   When production begins, you include all the proceeds in your income, deduct all the production expenses, and deduct depletion from that amount to arrive at your taxable income from the property. Federal tax return forms Unemployment Benefits The tax treatment of unemployment benefits you receive depends on the type of program paying the benefits. Federal tax return forms Unemployment compensation. Federal tax return forms   You must include in income all unemployment compensation you receive. Federal tax return forms You should receive a Form 1099-G showing in box 1 the total unemployment compensation paid to you. Federal tax return forms In most cases, you enter unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Federal tax return forms Types of unemployment compensation. Federal tax return forms   Unemployment compensation generally includes any amount received under an unemployment compensation law of the United States or of a state. Federal tax return forms It includes the following benefits. Federal tax return forms Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund. Federal tax return forms State unemployment insurance benefits. Federal tax return forms Railroad unemployment compensation benefits. Federal tax return forms Disability payments from a government program paid as a substitute for unemployment compensation. Federal tax return forms (Amounts received as workers' compensation for injuries or illness are not unemployment compensation. Federal tax return forms See chapter 5 for more information. Federal tax return forms ) Trade readjustment allowances under the Trade Act of 1974. Federal tax return forms Unemployment assistance under the Disaster Relief and Emergency Assistance Act. Federal tax return forms Unemployment assistance under the Airline Deregulation Act of 1974 Program. Federal tax return forms Governmental program. Federal tax return forms   If you contribute to a governmental unemployment compensation program and your contributions are not deductible, amounts you receive under the program are not included as unemployment compensation until you recover your contributions. Federal tax return forms If you deducted all of your contributions to the program, the entire amount you receive under the program is included in your income. Federal tax return forms Repayment of unemployment compensation. Federal tax return forms   If you repaid in 2013 unemployment compensation you received in 2013, subtract the amount you repaid from the total amount you received and enter the difference on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Federal tax return forms On the dotted line next to your entry enter “Repaid” and the amount you repaid. Federal tax return forms If you repaid unemployment compensation in 2013 that you included in income in an earlier year, you can deduct the amount repaid on Schedule A (Form 1040), line 23, if you itemize deductions. Federal tax return forms If the amount is more than $3,000, see Repayments , earlier. Federal tax return forms Tax withholding. Federal tax return forms   You can choose to have federal income tax withheld from your unemployment compensation. Federal tax return forms To make this choice, complete Form W-4V, Voluntary Withholding Request, and give it to the paying office. Federal tax return forms Tax will be withheld at 10% of your payment. Federal tax return forms    If you do not choose to have tax withheld from your unemployment compensation, you may be liable for estimated tax. Federal tax return forms If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Federal tax return forms For more information on estimated tax, see chapter 4. Federal tax return forms Supplemental unemployment benefits. Federal tax return forms   Benefits received from an employer-financed fund (to which the employees did not contribute) are not unemployment compensation. Federal tax return forms They are taxable as wages and are subject to withholding for income tax. Federal tax return forms They may be subject to social security and Medicare taxes. Federal tax return forms For more information, see Supplemental Unemployment Benefits in section 5 of Publication 15-A, Employer's Supplemental Tax Guide. Federal tax return forms Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Federal tax return forms Repayment of benefits. Federal tax return forms   You may have to repay some of your supplemental unemployment benefits to qualify for trade readjustment allowances under the Trade Act of 1974. Federal tax return forms If you repay supplemental unemployment benefits in the same year you receive them, reduce the total benefits by the amount you repay. Federal tax return forms If you repay the benefits in a later year, you must include the full amount of the benefits received in your income for the year you received them. Federal tax return forms   Deduct the repayment in the later year as an adjustment to gross income on Form 1040. Federal tax return forms (You cannot use Form 1040A or Form 1040EZ. Federal tax return forms ) Include the repayment on Form 1040, line 36, and enter “Sub-Pay TRA” and the amount on the dotted line next to line 36. Federal tax return forms If the amount you repay in a later year is more than $3,000, you may be able to take a credit against your tax for the later year instead of deducting the amount repaid. Federal tax return forms For more information on this, see Repayments , earlier. Federal tax return forms Private unemployment fund. Federal tax return forms   Unemployment benefit payments from a private (nonunion) fund to which you voluntarily contribute are taxable only if the amounts you receive are more than your total payments into the fund. Federal tax return forms Report the taxable amount on Form 1040, line 21. Federal tax return forms Payments by a union. Federal tax return forms   Benefits paid to you as an unemployed member of a union from regular union dues are included in your income on Form 1040, line 21. Federal tax return forms However, if you contribute to a special union fund and your payments to the fund are not deductible, the unemployment benefits you receive from the fund are includible in your income only to the extent they are more than your contributions. Federal tax return forms Guaranteed annual wage. Federal tax return forms   Payments you receive from your employer during periods of unemployment, under a union agreement that guarantees you full pay during the year, are taxable as wages. Federal tax return forms Include them on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Federal tax return forms State employees. Federal tax return forms   Payments similar to a state's unemployment compensation may be made by the state to its employees who are not covered by the state's unemployment compensation law. Federal tax return forms Although the payments are fully taxable, do not report them as unemployment compensation. Federal tax return forms Report these payments on Form 1040, line 21. Federal tax return forms Welfare and Other Public Assistance Benefits Do not include in your income governmental benefit payments from a public welfare fund based upon need, such as payments to blind individuals under a state public assistance law. Federal tax return forms Payments from a state fund for the victims of crime should not be included in the victims' incomes if they are in the nature of welfare payments. Federal tax return forms Do not deduct medical expenses that are reimbursed by such a fund. Federal tax return forms You must include in your income any welfare payments that are compensation for services or that are obtained fraudulently. Federal tax return forms Reemployment Trade Adjustment Assistance (RTAA) payments. Federal tax return forms   RTAA payments received from a state must be included in your income. Federal tax return forms The state must send you Form 1099-G to advise you of the amount you should include in income. Federal tax return forms The amount should be reported on Form 1040, line 21. Federal tax return forms Persons with disabilities. Federal tax return forms   If you have a disability, you must include in income compensation you receive for services you perform unless the compensation is otherwise excluded. Federal tax return forms However, you do not include in income the value of goods, services, and cash that you receive, not in return for your services, but for your training and rehabilitation because you have a disability. Federal tax return forms Excludable amounts include payments for transportation and attendant care, such as interpreter services for the deaf, reader services for the blind, and services to help individuals with an intellectual disability do their work. Federal tax return forms Disaster relief grants. Federal tax return forms    Do not include post-disaster grants received under the Robert T. Federal tax return forms Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, child care, or funeral expenses. Federal tax return forms Do not deduct casualty losses or medical expenses that are specifically reimbursed by these disaster relief grants. Federal tax return forms If you have deducted a casualty loss for the loss of your personal residence and you later receive a disaster relief grant for the loss of the same residence, you may have to include part or all of the grant in your taxable income. Federal tax return forms See Recoveries , earlier. Federal tax return forms Unemployment assistance payments under the Act are taxable unemployment compensation. Federal tax return forms See Unemployment compensation under Unemployment Benefits, earlier. Federal tax return forms Disaster relief payments. Federal tax return forms   You can exclude from income any amount you receive that is a qualified disaster relief payment. Federal tax return forms A qualified disaster relief payment is an amount paid to you: To reimburse or pay reasonable and necessary personal, family, living, or funeral expenses that result from a qualified disaster; To reimburse or pay reasonable and necessary expenses incurred for the repair or rehabilitation of your home or repair or replacement of its contents to the extent it is due to a qualified disaster; By a person engaged in the furnishing or sale of transportation as a common carrier because of the death or personal physical injuries incurred as a result of a qualified disaster; or By a federal, state, or local government, or agency, or instrumentality in connection with a qualified disaster in order to promote the general welfare. Federal tax return forms You can exclude this amount only to the extent any expense it pays for is not paid for by insurance or otherwise. Federal tax return forms The exclusion does not apply if you were a participant or conspirator in a terrorist action or a representative of one. Federal tax return forms   A qualified disaster is: A disaster which results from a terrorist or military action; A federally declared disaster; or A disaster which results from an accident involving a common carrier, or from any other event, which is determined to be catastrophic by the Secretary of the Treasury or his or her delegate. Federal tax return forms   For amounts paid under item (4), a disaster is qualified if it is determined by an applicable federal, state, or local authority to warrant assistance from the federal, state, or local government, agency, or instrumentality. Federal tax return forms Disaster mitigation payments. Federal tax return forms   You also can exclude from income any amount you receive that is a qualified disaster mitigation payment. Federal tax return forms Qualified disaster mitigation payments are also most commonly paid to you in the period immediately following damage to property as a result of a natural disaster. Federal tax return forms However, disaster mitigation payments are used to mitigate (reduce the severity of) potential damage from future natural disasters. Federal tax return forms They are paid to you through state and local governments based on the provisions of the Robert T. Federal tax return forms Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act. Federal tax return forms   You cannot increase the basis or adjusted basis of your property for improvements made with nontaxable disaster mitigation payments. Federal tax return forms Home Affordable Modification Program (HAMP). Federal tax return forms   If you benefit from Pay-for-Performance Success Payments under HAMP, the payments are not taxable. Federal tax return forms Mortgage assistance payments under section 235 of the National Housing Act. Federal tax return forms   Payments made under section 235 of the National Housing Act for mortgage assistance are not included in the homeowner's income. Federal tax return forms Interest paid for the homeowner under the mortgage assistance program cannot be deducted. Federal tax return forms Medicare. Federal tax return forms   Medicare benefits received under title XVIII of the Social Security Act are not includible in the gross income of the individuals for whom they are paid. Federal tax return forms This includes basic (part A (Hospital Insurance Benefits for the Aged)) and supplementary (part B (Supplementary Medical Insurance Benefits for the Aged)). Federal tax return forms Old-age, survivors, and disability insurance benefits (OASDI). Federal tax return forms   Generally, OASDI payments under section 202 of title II of the Social Security Act are not includible in the gross income of the individuals to whom they are paid. Federal tax return forms This applies to old-age insurance benefits, and insurance benefits for wives, husbands, children, widows, widowers, mothers and fathers, and parents, as well as the lump-sum death payment. Federal tax return forms Nutrition Program for the Elderly. Federal tax return forms    Food benefits you receive under the Nutrition Program for the Elderly are not taxable. Federal tax return forms If you prepare and serve free meals for the program, include in your income as wages the cash pay you receive, even if you are also eligible for food benefits. Federal tax return forms Payments to reduce cost of winter energy. Federal tax return forms   Payments made by a state to qualified people to reduce their cost of winter energy use are not taxable. Federal tax return forms Other Income The following brief discussions are arranged in alphabetical order. Federal tax return forms Other income items briefly discussed below are referenced to publications which provide more topical information. Federal tax return forms Activity not for profit. Federal tax return forms   You must include on your return income from an activity from which you do not expect to make a profit. Federal tax return forms An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. Federal tax return forms Enter this income on Form 1040, line 21. Federal tax return forms Deductions for expenses related to the activity are limited. Federal tax return forms They cannot total more than the income you report and can be taken only if you itemize deductions on Schedule A (Form 1040). Federal tax return forms See Not-for-Profit Activities in chapter 1 of Publication 535 for information on whether an activity is considered carried on for a profit. Federal tax return forms Alaska Permanent Fund dividend. Federal tax return forms   If you received a payment from Alaska's mineral income fund (Alaska Permanent Fund dividend), report it as income on line 21 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Federal tax return forms The state of Alaska sends each recipient a document that shows the amount of the payment with the check. Federal tax return forms The amount also is reported to IRS. Federal tax return forms Alimony. Federal tax return forms   Include in your income on Form 1040, line 11, any alimony payments you receive. Federal tax return forms Amounts you receive for child support are not income to you. Federal tax return forms Alimony and child support payments are discussed in chapter 18. Federal tax return forms Bribes. Federal tax return forms   If you receive a bribe, include it in your income. Federal tax return forms Campaign contributions. Federal tax return forms   These contributions are not income to a candidate unless they are diverted to his or her personal use. Federal tax return forms To be exempt from tax, the contributions must be spent for campaign purposes or kept in a fund for use in future campaigns. Federal tax return forms However, interest earned on bank deposits, dividends received on contributed securities, and net gains realized on sales of contributed securities are taxable and must be reported on Form 1120-POL, U. Federal tax return forms S. Federal tax return forms Income Tax Return for Certain Political Organizations. Federal tax return forms Excess campaign funds transferred to an office account must be included in the officeholder's income on Form 1040, line 21, in the year transferred. Federal tax return forms Car pools. Federal tax return forms   Do not include in your income amounts you receive from the passengers for driving a car in a car pool to and from work. Federal tax return forms These amounts are considered reimbursement for your expenses. Federal tax return forms However, this rule does not apply if you have developed car pool arrangements into a profit-making business of transporting workers for hire. Federal tax return forms Cash rebates. Federal tax return forms   A cash rebate you receive from a dealer or manufacturer of an item you buy is not income, but you must reduce your basis by the amount of the rebate. Federal tax return forms Example. Federal tax return forms You buy a new car for $24,000 cash and receive a $2,000 rebate check from the manufacturer. Federal tax return forms The $2,000 is not income to you. Federal tax return forms Your basis in the car is $22,000. Federal tax return forms This is the basis on which you figure gain or loss if you sell the car and depreciation if you use it for business. Federal tax return forms Casualty insurance and other reimbursements. Federal tax return forms   You generally should not report these reimbursements on your return unless you are figuring gain or loss from the casualty or theft. Federal tax return forms See chapter 25 for more information. Federal tax return forms Child support payments. Federal tax return forms   You should not report these payments on your return. Federal tax return forms See chapter 18 for more information. Federal tax return forms Court awards and damages. Federal tax return forms   To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. Federal tax return forms The character of the income as ordinary income or capital gain depends on the nature of the underlying claim. Federal tax return forms Include the following as ordinary income. Federal tax return forms Interest on any award. Federal tax return forms Compensation for lost wages or lost profits in most cases. Federal tax return forms Punitive damages, in most cases. Federal tax return forms It does not matter if they relate to a physical injury or physical sickness. Federal tax return forms Amounts received in settlement of pension rights (if you did not contribute to the plan). Federal tax return forms Damages for: Patent or copyright infringement, Breach of contract, or Interference with business operations. Federal tax return forms Back pay and damages for emotional distress received to satisfy a claim under title VII of the Civil Rights Act of 1964. Federal tax return forms Attorney fees and costs (including contingent fees) where the underlying recovery is included in gross income. Federal tax return forms   Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments). Federal tax return forms Emotional distress. Federal tax return forms   Emotional distress itself is not a physical injury or physical sickness, but damages you receive for emotional distress due to a physical injury or sickness are treated as received for the physical injury or sickness. Federal tax return forms Do not include them in your income. Federal tax return forms   If the emotional distress is due to a personal injury that is not due to a physical injury or sickness (for example, employment discrimination or injury to reputation), you must include the damages in your income, except for any damages you receive for medical care due to that emotional distress. Federal tax return forms Emotional distress includes physical symptoms that result from emotional distress, such as headaches, insomnia, and stomach disorders. Federal tax return forms Deduction for costs involved in unlawful discrimination suits. Federal tax return forms   You may be able to deduct attorney fees and court costs paid to recover a judgment or settlement for a claim of unlawful discrimination under various provisions of federal, state, and local law listed in Internal Revenue Code section 62(e), a claim against the United States government, or a claim under section 1862(b)(3)(A) of the Social Security Act. Federal tax return forms For more information, see Publication 525. Federal tax return forms Credit card insurance. Federal tax return forms   In most cases, if you receive benefits under a credit card disability or unemployment insurance plan, the benefits are taxable to you. Federal tax return forms These plans make the minimum monthly payment on your credit card account if you cannot make the payment due to injury, illness, disability, or unemployment. Federal tax return forms Report on Form 1040, line 21, the amount of benefits you received during the year that is more than the amount of the premiums you paid during the year. Federal tax return forms Down payment assistance. Federal tax return forms   If you purchase a home and receive assistance from a nonprofit corporation to make the down payment, that assistance is not included in your income. Federal tax return forms If the corporation qualifies as a tax-exempt charitable organization, the assistance is treated as a gift and is included in your basis of the house. Federal tax return forms If the corporation does not qualify, the assistance is treated as a rebate or reduction of the purchase price and is not included in your basis. Federal tax return forms Employment agency fees. Federal tax return forms   If you get a job through an employment agency, and the fee is paid by your employer, the fee is not includible in your income if you are not liable for it. Federal tax return forms However, if you pay it and your employer reimburses you for it, it is includible in your income. Federal tax return forms Energy conservation subsidies. Federal tax return forms   You can exclude from gross income any subsidy provided, either directly or indirectly, by public utilities for the purchase or installation of an energy conservation measure for a dwelling unit. Federal tax return forms Energy conservation measure. Federal tax return forms   This includes installations or modifications that are primarily designed to reduce consumption of electricity or natural gas, or improve the management of energy demand. Federal tax return forms Dwelling unit. Federal tax return forms   This includes a house, apartment, condominium, mobile home, boat, or similar property. Federal tax return forms If a building or structure contains both dwelling and other units, any subsidy must be properly allocated. Federal tax return forms Estate and trust income. Federal tax return forms    An estate or trust, unlike a partnership, may have to pay federal income tax. Federal tax return forms If you are a beneficiary of an estate or trust, you may be taxed on your share of its income distributed or required to be distributed to you. Federal tax return forms However, there is never a double tax. Federal tax return forms Estates and trusts file their returns on Form 1041, U. Federal tax return forms S. Federal tax return forms Income Tax Return for Estates and Trusts, and your share of the income is reported to you on Schedule K-1 (Form 1041). Federal tax return forms Current income required to be distributed. Federal tax return forms   If you are the beneficiary of an estate or trust that must distribute all of its current income, you must report your share of the distributable net income, whether or not you actually received it. Federal tax return forms Current income not required to be distributed. Federal tax return forms    If you are the beneficiary of an estate or trust and the fiduciary has the choice of whether to distribute all or part of the current income, you must report: All income that is required to be distributed to you, whether or not it is actually distributed, plus All other amounts actually paid or credited to you, up to the amount of your share of distributable net income. Federal tax return forms How to report. Federal tax return forms   Treat each item of income the same way that the estate or trust would treat it. Federal tax return forms For example, if a trust's dividend income is distributed to you, you report the distribution as dividend income on your return. Federal tax return forms The same rule applies to distributions of tax-exempt interest and capital gains. Federal tax return forms   The fiduciary of the estate or trust must tell you the type of items making up your share of the estate or trust income and any credits you are allowed on your individual income tax return. Federal tax return forms Losses. Federal tax return forms   Losses of estates and trusts generally are not deductible by the beneficiaries. Federal tax return forms Grantor trust. Federal tax return forms   Income earned by a grantor trust is taxable to the grantor, not the beneficiary, if the grantor keeps certain control over the trust. Federal tax return forms (The grantor is the one who transferred property to the trust. Federal tax return forms ) This rule applies if the property (or income from the property) put into the trust will or may revert (be returned) to the grantor or the grantor's spouse. Federal tax return forms   Generally, a trust is a grantor trust if the grantor has a reversionary interest valued (at the date of transfer) at more than 5% of the value of the transferred property. Federal tax return forms Expenses paid by another. Federal tax return forms   If your personal expenses are paid for by another person, such as a corporation, the payment may be taxable to you depending upon your relationship with that person and the nature of the payment. Federal tax return forms But if the payment makes up for a loss caused by that person, and only restores you to the position you were in before the loss, the payment is not includible in your income. Federal tax return forms Fees for services. Federal tax return forms   Include all fees for your services in your income. Federal tax return forms Examples of these fees are amounts you receive for services you perform as: A corporate director, An executor, administrator, or personal representative of an estate, A manager of a trade or business you operated before declaring Chapter 11 bankruptcy, A notary public, or An election precinct official. Federal tax return forms Nonemployee compensation. Federal tax return forms   If you are not an employee and the fees for your services from the same payer total $600 or more for the year, you may receive a Form 1099-MISC. Federal tax return forms You may need to report your fees as self-employment income. Federal tax return forms See Self-Employed Persons , in chapter 1, for a discussion of when you are considered self-employed. Federal tax return forms Corporate director. Federal tax return forms   Corporate director fees are self-employment income. Federal tax return forms Report these payments on Schedule C or Schedule C-EZ (Form 1040). Federal tax return forms Personal representatives. Federal tax return forms   All personal representatives must include in their gross income fees paid to them from an estate. Federal tax return forms If you are not in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on Form 1040, line 21. Federal tax return forms If you are in the trade or business of being an executor, report these fees as self-employment income on Schedule C or Schedule C-EZ (Form 1040). Federal tax return forms The fee is not includible in income if it is waived. Federal tax return forms Manager of trade or business for bankruptcy estate. Federal tax return forms   Include in your income all payments received from your bankruptcy estate for managing or operating a trade or business that you operated before you filed for bankruptcy. Federal tax return forms Report this income on Form 1040, line 21. Federal tax return forms Notary public. Federal tax return forms    Report payments for these services on Schedule C or Schedule C-EZ (Form 1040). Federal tax return forms These payments are not subject to self-employment tax. Federal tax return forms See the separate instructions for Schedule SE (Form 1040) for details. Federal tax return forms Election precinct official. Federal tax return forms    You should receive a Form W-2 showing payments for services performed as an election official or election worker. Federal tax return forms Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Federal tax return forms Foster care providers. Federal tax return forms   Payments you receive from a state, political subdivision, or a qualified foster care placement agency for providing care to qualified foster individuals in your home generally are not included in your income. Federal tax return forms However, you must include in your income payments received for the care of more than 5 individuals age 19 or older and certain difficulty-of-care payments. Federal tax return forms   A qualified foster individual is a person who: Is living in a foster family home, and Was placed there by: An agency of a state or one of its political subdivisions, or A qualified foster care placement agency. Federal tax return forms Difficulty-of-care payments. Federal tax return forms   These are additional payments that are designated by the payer as compensation for providing the additional care that is required for physically, mentally, or emotionally handicapped qualified foster individuals. Federal tax return forms A state must determine that the additional compensation is needed, and the care for which the payments are made must be provided in your home. Federal tax return forms   You must include in your income difficulty-of-care payments received for more than: 10 qualified foster individuals under age 19, or 5 qualified foster individuals age 19 or older. Federal tax return forms Maintaining space in home. Federal tax return forms   If you are paid to maintain space in your home for emergency foster care, you must include the payment in your income. Federal tax return forms Reporting taxable payments. Federal tax return forms    If you receive payments that you must include in your income, you are in business as a foster care provider and you are self-employed. Federal tax return forms Report the payments on Schedule C or Schedule C-EZ (Form 1040). Federal tax return forms See Publication 587, Business Use of Your Home, to help you determine the amount you can deduct for the use of your home. Federal tax return forms Found property. Federal tax return forms   If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession. Federal tax return forms Free tour. Federal tax return forms   If you received a free tour from a travel agency for organizing a group of tourists, you must include its value in your income. Federal tax return forms Report the fair market value of the tour on Form 1040, line 21, if you are not in the trade or business of organizing tours. Federal tax return forms You cannot deduct your expenses in serving as the voluntary leader of the group at the group's request. Federal tax return forms If you organize tours as a trade or business, report the tour's value on Schedule C or Schedule C-EZ (Form 1040). Federal tax return forms Gambling winnings. Federal tax return forms   You must include your gambling winnings in income on Form 1040, line 21. Federal tax return forms If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings. Federal tax return forms Lotteries and raffles. Federal tax return forms   Winnings from lotteries and raffles are gambling winnings. Federal tax return forms In addition to cash winnings, you must include in your income the fair market value of bonds, cars, houses, and other noncash prizes. Federal tax return forms    If you win a state lottery prize payable in installments, see Publication 525 for more information. Federal tax return forms Form W-2G. Federal tax return forms   You may have received a Form W-2G, Certain Gambling Winnings, showing the amount of your gambling winnings and any tax taken out of them. Federal tax return forms Include the amount from box 1 on Form 1040, line 21. Federal tax return forms Include the amount shown in box 4 on Form 1040, line 62, as federal income tax withheld. Federal tax return forms Reporting winnings and recordkeeping. Federal tax return forms   For more information on reporting gam