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Filemy2010taxreturnforfree

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Filemy2010taxreturnforfree

Filemy2010taxreturnforfree 23. Filemy2010taxreturnforfree   Interest Expense Table of Contents Introduction Useful Items - You may want to see: Home Mortgage InterestAmount Deductible Points Mortgage Insurance Premiums Form 1098, Mortgage Interest Statement Investment InterestInvestment Property Allocation of Interest Expense Limit on Deduction Items You Cannot DeductPersonal Interest Allocation of Interest How To ReportMore than one borrower. Filemy2010taxreturnforfree Mortgage proceeds used for business or investment. Filemy2010taxreturnforfree Introduction This chapter discusses what interest expenses you can deduct. Filemy2010taxreturnforfree Interest is the amount you pay for the use of borrowed money. Filemy2010taxreturnforfree The following are types of interest you can deduct as itemized deductions on Schedule A (Form 1040). Filemy2010taxreturnforfree Home mortgage interest, including certain points and mortgage insurance premiums. Filemy2010taxreturnforfree Investment interest. Filemy2010taxreturnforfree This chapter explains these deductions. Filemy2010taxreturnforfree It also explains where to deduct other types of interest and lists some types of interest you cannot deduct. Filemy2010taxreturnforfree Use Table 23-1 to find out where to get more information on various types of interest, including investment interest. Filemy2010taxreturnforfree Useful Items - You may want to see: Publication 936 Home Mortgage Interest Deduction 550 Investment Income and Expenses Home Mortgage Interest Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). Filemy2010taxreturnforfree The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan. Filemy2010taxreturnforfree You can deduct home mortgage interest if all the following conditions are met. Filemy2010taxreturnforfree You file Form 1040 and itemize deductions on Schedule A (Form 1040). Filemy2010taxreturnforfree The mortgage is a secured debt on a qualified home in which you have an ownership interest. Filemy2010taxreturnforfree (Generally, your mortgage is a secured debt if you put your home up as collateral to protect the interest of the lender. Filemy2010taxreturnforfree The term “qualified home” means your main home or second home. Filemy2010taxreturnforfree For details, see Publication 936. Filemy2010taxreturnforfree )  Both you and the lender must intend that the loan be repaid. Filemy2010taxreturnforfree Amount Deductible In most cases, you can deduct all of your home mortgage interest. Filemy2010taxreturnforfree How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. Filemy2010taxreturnforfree Fully deductible interest. Filemy2010taxreturnforfree   If all of your mortgages fit into one or more of the following three categories at all times during the year, you can deduct all of the interest on those mortgages. Filemy2010taxreturnforfree (If any one mortgage fits into more than one category, add the debt that fits in each category to your other debt in the same category. Filemy2010taxreturnforfree )   The three categories are as follows: Mortgages you took out on or before October 13, 1987 (called grandfathered debt). Filemy2010taxreturnforfree Mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if throughout 2013 these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately). Filemy2010taxreturnforfree Mortgages you took out after October 13, 1987, other than to buy, build, or improve your home (called home equity debt), but only if throughout 2013 these mortgages totaled $100,000 or less ($50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by (1) and (2). Filemy2010taxreturnforfree The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home. Filemy2010taxreturnforfree   See Part II of Publication 936 for more detailed definitions of grandfathered, home acquisition, and home equity debt. Filemy2010taxreturnforfree    You can use Figure 23-A to check whether your home mortgage interest is fully deductible. Filemy2010taxreturnforfree Figure 23-A. Filemy2010taxreturnforfree Is My Home Mortgage Interest Fully Deductible? Please click here for the text description of the image. Filemy2010taxreturnforfree Figure 23-A. Filemy2010taxreturnforfree Is My Interest Fully Deductible? Limits on deduction. Filemy2010taxreturnforfree   You cannot fully deduct interest on a mortgage that does not fit into any of the three categories listed earlier. Filemy2010taxreturnforfree If this applies to you, see Part II of Publication 936 to figure the amount of interest you can deduct. Filemy2010taxreturnforfree Special Situations This section describes certain items that can be included as home mortgage interest and others that cannot. Filemy2010taxreturnforfree It also describes certain special situations that may affect your deduction. Filemy2010taxreturnforfree Late payment charge on mortgage payment. Filemy2010taxreturnforfree   You can deduct as home mortgage interest a late payment charge if it was not for a specific service performed in connection with your mortgage loan. Filemy2010taxreturnforfree Mortgage prepayment penalty. Filemy2010taxreturnforfree   If you pay off your home mortgage early, you may have to pay a penalty. Filemy2010taxreturnforfree You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. Filemy2010taxreturnforfree Sale of home. Filemy2010taxreturnforfree   If you sell your home, you can deduct your home mortgage interest (subject to any limits that apply) paid up to, but not including, the date of sale. Filemy2010taxreturnforfree Example. Filemy2010taxreturnforfree John and Peggy Harris sold their home on May 7. Filemy2010taxreturnforfree Through April 30, they made home mortgage interest payments of $1,220. Filemy2010taxreturnforfree The settlement sheet for the sale of the home showed $50 interest for the 6-day period in May up to, but not including, the date of sale. Filemy2010taxreturnforfree Their mortgage interest deduction is $1,270 ($1,220 + $50). Filemy2010taxreturnforfree Prepaid interest. Filemy2010taxreturnforfree   If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. Filemy2010taxreturnforfree You can deduct in each year only the interest that qualifies as home mortgage interest for that year. Filemy2010taxreturnforfree However, there is an exception that applies to points, discussed later. Filemy2010taxreturnforfree Mortgage interest credit. Filemy2010taxreturnforfree   You may be able to claim a mortgage interest credit if you were issued a mortgage credit certificate (MCC) by a state or local government. Filemy2010taxreturnforfree Figure the credit on Form 8396, Mortgage Interest Credit. Filemy2010taxreturnforfree If you take this credit, you must reduce your mortgage interest deduction by the amount of the credit. Filemy2010taxreturnforfree   For more information on the credit, see chapter 37. Filemy2010taxreturnforfree Ministers' and military housing allowance. Filemy2010taxreturnforfree   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you can still deduct your home mortgage interest. Filemy2010taxreturnforfree Hardest Hit Fund and Emergency Homeowners' Loan Programs. Filemy2010taxreturnforfree   You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. Filemy2010taxreturnforfree You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. Filemy2010taxreturnforfree You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. Filemy2010taxreturnforfree If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received from payer(s) / borrower(s)), box 4 (mortgage insurance premiums) and box 5 (real property taxes). Filemy2010taxreturnforfree However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. Filemy2010taxreturnforfree Mortgage assistance payments under section 235 of the National Housing Act. Filemy2010taxreturnforfree   If you qualify for mortgage assistance payments for lower-income families under section 235 of the National Housing Act, part or all of the interest on your mortgage may be paid for you. Filemy2010taxreturnforfree You cannot deduct the interest that is paid for you. Filemy2010taxreturnforfree No other effect on taxes. Filemy2010taxreturnforfree   Do not include these mortgage assistance payments in your income. Filemy2010taxreturnforfree Also, do not use these payments to reduce other deductions, such as real estate taxes. Filemy2010taxreturnforfree Divorced or separated individuals. Filemy2010taxreturnforfree   If a divorce or separation agreement requires you or your spouse or former spouse to pay home mortgage interest on a home owned by both of you, the payment of interest may be alimony. Filemy2010taxreturnforfree See the discussion of Payments for jointly-owned home in chapter 18. Filemy2010taxreturnforfree Redeemable ground rents. Filemy2010taxreturnforfree   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. Filemy2010taxreturnforfree   Payments made to end the lease and to buy the lessor's entire interest in the land are not deductible as mortgage interest. Filemy2010taxreturnforfree For more information, see Publication 936. Filemy2010taxreturnforfree Nonredeemable ground rents. Filemy2010taxreturnforfree   Payments on a nonredeemable ground rent are not mortgage interest. Filemy2010taxreturnforfree You can deduct them as rent if they are a business expense or if they are for rental property. Filemy2010taxreturnforfree Reverse mortgages. Filemy2010taxreturnforfree   A reverse mortgage is a loan where the lender pays you (in a lump sum, a monthly advance, a line of credit, or a combination of all three) while you continue to live in your home. Filemy2010taxreturnforfree With a reverse mortgage, you retain title to your home. Filemy2010taxreturnforfree Depending on the plan, your reverse mortgage becomes due with interest when you move, sell your home, reach the end of a pre-selected loan period, or die. Filemy2010taxreturnforfree Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable. Filemy2010taxreturnforfree Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until the loan is paid in full. Filemy2010taxreturnforfree Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt discussed in Publication 936. Filemy2010taxreturnforfree Rental payments. Filemy2010taxreturnforfree   If you live in a house before final settlement on the purchase, any payments you make for that period are rent and not interest. Filemy2010taxreturnforfree This is true even if the settlement papers call them interest. Filemy2010taxreturnforfree You cannot deduct these payments as home mortgage interest. Filemy2010taxreturnforfree Mortgage proceeds invested in tax-exempt securities. Filemy2010taxreturnforfree   You cannot deduct the home mortgage interest on grandfathered debt or home equity debt if you used the proceeds of the mortgage to buy securities or certificates that produce tax-free income. Filemy2010taxreturnforfree “Grandfathered debt” and “home equity debt” are defined earlier under Amount Deductible. Filemy2010taxreturnforfree Refunds of interest. Filemy2010taxreturnforfree   If you receive a refund of interest in the same tax year you paid it, you must reduce your interest expense by the amount refunded to you. Filemy2010taxreturnforfree If you receive a refund of interest you deducted in an earlier year, you generally must include the refund in income in the year you receive it. Filemy2010taxreturnforfree However, you need to include it only up to the amount of the deduction that reduced your tax in the earlier year. Filemy2010taxreturnforfree This is true whether the interest overcharge was refunded to you or was used to reduce the outstanding principal on your mortgage. Filemy2010taxreturnforfree    If you received a refund of interest you overpaid in an earlier year, you generally will receive a Form 1098, Mortgage Interest Statement, showing the refund in box 3. Filemy2010taxreturnforfree For information about Form 1098, see Form 1098, Mortgage Interest Statement , later. Filemy2010taxreturnforfree   For more information on how to treat refunds of interest deducted in earlier years, see Recoveries in chapter 12. Filemy2010taxreturnforfree Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Filemy2010taxreturnforfree Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. Filemy2010taxreturnforfree A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. Filemy2010taxreturnforfree See Points paid by the seller , later. Filemy2010taxreturnforfree General Rule You generally cannot deduct the full amount of points in the year paid. Filemy2010taxreturnforfree Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. Filemy2010taxreturnforfree See Deduction Allowed Ratably , next. Filemy2010taxreturnforfree For exceptions to the general rule, see Deduction Allowed in Year Paid , later. Filemy2010taxreturnforfree Deduction Allowed Ratably If you do not meet the tests listed under Deduction Allowed in Year Paid , later, the loan is not a home improvement loan, or you choose not to deduct your points in full in the year paid, you can deduct the points ratably (equally) over the life of the loan if you meet all the following tests. Filemy2010taxreturnforfree You use the cash method of accounting. Filemy2010taxreturnforfree This means you report income in the year you receive it and deduct expenses in the year you pay them. Filemy2010taxreturnforfree Most individuals use this method. Filemy2010taxreturnforfree Your loan is secured by a home. Filemy2010taxreturnforfree (The home does not need to be your main home. Filemy2010taxreturnforfree ) Your loan period is not more than 30 years. Filemy2010taxreturnforfree If your loan period is more than 10 years, the terms of your loan are the same as other loans offered in your area for the same or longer period. Filemy2010taxreturnforfree Either your loan amount is $250,000 or less, or the number of points is not more than: 4, if your loan period is 15 years or less, or 6, if your loan period is more than 15 years. Filemy2010taxreturnforfree Deduction Allowed in Year Paid You can fully deduct points in the year paid if you meet all the following tests. Filemy2010taxreturnforfree (You can use Figure 23-B as a quick guide to see whether your points are fully deductible in the year paid. Filemy2010taxreturnforfree ) Your loan is secured by your main home. Filemy2010taxreturnforfree (Your main home is the one you ordinarily live in most of the time. Filemy2010taxreturnforfree ) Paying points is an established business practice in the area where the loan was made. Filemy2010taxreturnforfree The points paid were not more than the points generally charged in that area. Filemy2010taxreturnforfree You use the cash method of accounting. Filemy2010taxreturnforfree This means you report income in the year you receive it and deduct expenses in the year you pay them. Filemy2010taxreturnforfree (If you want more information about this method, see Accounting Methods in chapter 1. Filemy2010taxreturnforfree ) The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. Filemy2010taxreturnforfree The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. Filemy2010taxreturnforfree The funds you provided are not required to have been applied to the points. Filemy2010taxreturnforfree They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Filemy2010taxreturnforfree You cannot have borrowed these funds from your lender or mortgage broker. Filemy2010taxreturnforfree You use your loan to buy or build your main home. Filemy2010taxreturnforfree The points were computed as a percentage of the principal amount of the mortgage. Filemy2010taxreturnforfree The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. Filemy2010taxreturnforfree The points may be shown as paid from either your funds or the seller's. Filemy2010taxreturnforfree Figure 23-B. Filemy2010taxreturnforfree Are My Points Fully Deductible This Year? Please click here for the text description of the image. Filemy2010taxreturnforfree Figure 23-B. Filemy2010taxreturnforfree Are My Points Fully Deductible This Year? Note. Filemy2010taxreturnforfree If you meet all of these tests, you can choose to either fully deduct the points in the year paid, or deduct them over the life of the loan. Filemy2010taxreturnforfree Home improvement loan. Filemy2010taxreturnforfree   You can also fully deduct in the year paid points paid on a loan to improve your main home, if tests (1) through (6) are met. Filemy2010taxreturnforfree Second home. Filemy2010taxreturnforfree You cannot fully deduct in the year paid points you pay on loans secured by your second home. Filemy2010taxreturnforfree You can deduct these points only over the life of the loan. Filemy2010taxreturnforfree Refinancing. Filemy2010taxreturnforfree   Generally, points you pay to refinance a mortgage are not deductible in full in the year you pay them. Filemy2010taxreturnforfree This is true even if the new mortgage is secured by your main home. Filemy2010taxreturnforfree   However, if you use part of the refinanced mortgage proceeds to improve your main home and you meet the first 6 tests listed under Deduction Allowed in Year Paid , earlier, you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. Filemy2010taxreturnforfree You can deduct the rest of the points over the life of the loan. Filemy2010taxreturnforfree Example 1. Filemy2010taxreturnforfree In 1998, Bill Fields got a mortgage to buy a home. Filemy2010taxreturnforfree In 2013, Bill refinanced that mortgage with a 15-year $100,000 mortgage loan. Filemy2010taxreturnforfree The mortgage is secured by his home. Filemy2010taxreturnforfree To get the new loan, he had to pay three points ($3,000). Filemy2010taxreturnforfree Two points ($2,000) were for prepaid interest, and one point ($1,000) was charged for services, in place of amounts that ordinarily are stated separately on the settlement statement. Filemy2010taxreturnforfree Bill paid the points out of his private funds, rather than out of the proceeds of the new loan. Filemy2010taxreturnforfree The payment of points is an established practice in the area, and the points charged are not more than the amount generally charged there. Filemy2010taxreturnforfree Bill's first payment on the new loan was due July 1. Filemy2010taxreturnforfree He made six payments on the loan in 2013 and is a cash basis taxpayer. Filemy2010taxreturnforfree Bill used the funds from the new mortgage to repay his existing mortgage. Filemy2010taxreturnforfree Although the new mortgage loan was for Bill's continued ownership of his main home, it was not for the purchase or improvement of that home. Filemy2010taxreturnforfree He cannot deduct all of the points in 2013. Filemy2010taxreturnforfree He can deduct two points ($2,000) ratably over the life of the loan. Filemy2010taxreturnforfree He deducts $67 [($2,000 ÷ 180 months) × 6 payments] of the points in 2013. Filemy2010taxreturnforfree The other point ($1,000) was a fee for services and is not deductible. Filemy2010taxreturnforfree Example 2. Filemy2010taxreturnforfree The facts are the same as in Example 1, except that Bill used $25,000 of the loan proceeds to improve his home and $75,000 to repay his existing mortgage. Filemy2010taxreturnforfree Bill deducts 25% ($25,000 ÷ $100,000) of the points ($2,000) in 2013. Filemy2010taxreturnforfree His deduction is $500 ($2,000 × 25%). Filemy2010taxreturnforfree Bill also deducts the ratable part of the remaining $1,500 ($2,000 − $500) that must be spread over the life of the loan. Filemy2010taxreturnforfree This is $50 [($1,500 ÷ 180 months) × 6 payments] in 2013. Filemy2010taxreturnforfree The total amount Bill deducts in 2013 is $550 ($500 + $50). Filemy2010taxreturnforfree Special Situations This section describes certain special situations that may affect your deduction of points. Filemy2010taxreturnforfree Original issue discount. Filemy2010taxreturnforfree   If you do not qualify to either deduct the points in the year paid or deduct them ratably over the life of the loan, or if you choose not to use either of these methods, the points reduce the issue price of the loan. Filemy2010taxreturnforfree This reduction results in original issue discount, which is discussed in chapter 4 of Publication 535. Filemy2010taxreturnforfree Amounts charged for services. Filemy2010taxreturnforfree   Amounts charged by the lender for specific services connected to the loan are not interest. Filemy2010taxreturnforfree Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Filemy2010taxreturnforfree You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Filemy2010taxreturnforfree Points paid by the seller. Filemy2010taxreturnforfree   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Filemy2010taxreturnforfree Treatment by seller. Filemy2010taxreturnforfree   The seller cannot deduct these fees as interest. Filemy2010taxreturnforfree But they are a selling expense that reduces the amount realized by the seller. Filemy2010taxreturnforfree See chapter 15 for information on selling your home. Filemy2010taxreturnforfree Treatment by buyer. Filemy2010taxreturnforfree    The buyer reduces the basis of the home by the amount of the seller-paid points and treats the points as if he or she had paid them. Filemy2010taxreturnforfree If all the tests under Deduction Allowed in Year Paid , earlier, are met, the buyer can deduct the points in the year paid. Filemy2010taxreturnforfree If any of those tests are not met, the buyer deducts the points over the life of the loan. Filemy2010taxreturnforfree   For information about basis, see chapter 13. Filemy2010taxreturnforfree Funds provided are less than points. Filemy2010taxreturnforfree   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the funds you provided were less than the points charged to you (test (6)), you can deduct the points in the year paid, up to the amount of funds you provided. Filemy2010taxreturnforfree In addition, you can deduct any points paid by the seller. Filemy2010taxreturnforfree Example 1. Filemy2010taxreturnforfree When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Filemy2010taxreturnforfree You meet all the tests for deducting points in the year paid, except the only funds you provided were a $750 down payment. Filemy2010taxreturnforfree Of the $1,000 charged for points, you can deduct $750 in the year paid. Filemy2010taxreturnforfree You spread the remaining $250 over the life of the mortgage. Filemy2010taxreturnforfree Example 2. Filemy2010taxreturnforfree The facts are the same as in Example 1, except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. Filemy2010taxreturnforfree In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Filemy2010taxreturnforfree You spread the remaining $250 over the life of the mortgage. Filemy2010taxreturnforfree You must reduce the basis of your home by the $1,000 paid by the seller. Filemy2010taxreturnforfree Excess points. Filemy2010taxreturnforfree   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the points paid were more than generally paid in your area (test (3)), you deduct in the year paid only the points that are generally charged. Filemy2010taxreturnforfree You must spread any additional points over the life of the mortgage. Filemy2010taxreturnforfree Mortgage ending early. Filemy2010taxreturnforfree   If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. Filemy2010taxreturnforfree However, if you refinance the mortgage with the same lender, you cannot deduct any remaining balance of spread points. Filemy2010taxreturnforfree Instead, deduct the remaining balance over the term of the new loan. Filemy2010taxreturnforfree    A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Filemy2010taxreturnforfree Example. Filemy2010taxreturnforfree Dan paid $3,000 in points in 2002 that he had to spread out over the 15-year life of the mortgage. Filemy2010taxreturnforfree He deducts $200 points per year. Filemy2010taxreturnforfree Through 2012, Dan has deducted $2,200 of the points. Filemy2010taxreturnforfree Dan prepaid his mortgage in full in 2013. Filemy2010taxreturnforfree He can deduct the remaining $800 of points in 2013. Filemy2010taxreturnforfree Limits on deduction. Filemy2010taxreturnforfree   You cannot fully deduct points paid on a mortgage unless the mortgage fits into one of the categories listed earlier under Fully deductible interest . Filemy2010taxreturnforfree See Publication 936 for details. Filemy2010taxreturnforfree Mortgage Insurance Premiums You can treat amounts you paid during 2013 for qualified mortgage insurance as home mortgage interest. Filemy2010taxreturnforfree The insurance must be in connection with home acquisition debt and the insurance contract must have been issued after 2006. Filemy2010taxreturnforfree Qualified mortgage insurance. Filemy2010taxreturnforfree   Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). Filemy2010taxreturnforfree   Mortgage insurance provided by the Department of Veterans Affairs is commonly known as a funding fee. Filemy2010taxreturnforfree If provided by the Rural Housing Service, it is commonly known as a guarantee fee. Filemy2010taxreturnforfree These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013. Filemy2010taxreturnforfree Contact the mortgage insurance issuer to determine the deductible amount if it is not reported in box 4 of Form 1098. Filemy2010taxreturnforfree Special rules for prepaid mortgage insurance. Filemy2010taxreturnforfree   Generally, if you paid premiums for qualified mortgage insurance that are allocable to periods after the close of the tax year, such premiums are treated as paid in the period to which they are allocated. Filemy2010taxreturnforfree You must allocate the premiums over the shorter of the stated term of the mortgage or 84 months, beginning with the month the insurance was obtained. Filemy2010taxreturnforfree No deduction is allowed for the unamortized balance if the mortgage is satisfied before its term. Filemy2010taxreturnforfree This paragraph does not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service. Filemy2010taxreturnforfree See the Example below. Filemy2010taxreturnforfree Example. Filemy2010taxreturnforfree Ryan purchased a home in May of 2012 and financed the home with a 15-year mortgage. Filemy2010taxreturnforfree Ryan also prepaid all of the $9,240 in private mortgage insurance required at the time of closing in May. Filemy2010taxreturnforfree Since the $9,240 in private mortgage insurance is allocable to periods after 2012, Ryan must allocate the $9,240 over the shorter of the life of the mortgage or 84 months. Filemy2010taxreturnforfree Ryan's adjusted gross income (AGI) for 2012 is $76,000. Filemy2010taxreturnforfree Ryan can deduct $880 ($9,240 ÷ 84 × 8 months) for qualified mortgage insurance premiums in 2012. Filemy2010taxreturnforfree For 2013, Ryan can deduct $1,320 ($9,240 ÷ 84 × 12 months) if his AGI is $100,000 or less. Filemy2010taxreturnforfree In this example, the mortgage insurance premiums are allocated over 84 months, which is shorter than the life of the mortgage of 15 years (180 months). Filemy2010taxreturnforfree Limit on deduction. Filemy2010taxreturnforfree   If your adjusted gross income on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated. Filemy2010taxreturnforfree See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. Filemy2010taxreturnforfree If your adjusted gross income is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Filemy2010taxreturnforfree Form 1098, Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement from the mortgage holder. Filemy2010taxreturnforfree You will receive the statement if you pay interest to a person (including a financial institution or a cooperative housing corporation) in the course of that person's trade or business. Filemy2010taxreturnforfree A governmental unit is a person for purposes of furnishing the statement. Filemy2010taxreturnforfree The statement for each year should be sent to you by January 31 of the following year. Filemy2010taxreturnforfree A copy of this form will also be sent to the IRS. Filemy2010taxreturnforfree The statement will show the total interest you paid during the year, any mortgage insurance premiums you paid, and if you purchased a main home during the year, it also will show the deductible points paid during the year, including seller-paid points. Filemy2010taxreturnforfree However, it should not show any interest that was paid for you by a government agency. Filemy2010taxreturnforfree As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. Filemy2010taxreturnforfree However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan. Filemy2010taxreturnforfree See Points , earlier, to determine whether you can deduct points not shown on Form 1098. Filemy2010taxreturnforfree Prepaid interest on Form 1098. Filemy2010taxreturnforfree   If you prepaid interest in 2013 that accrued in full by January 15, 2014, this prepaid interest may be included in box 1 of Form 1098. Filemy2010taxreturnforfree However, you cannot deduct the prepaid amount for January 2014 in 2013. Filemy2010taxreturnforfree (See Prepaid interest , earlier. Filemy2010taxreturnforfree ) You will have to figure the interest that accrued for 2014 and subtract it from the amount in box 1. Filemy2010taxreturnforfree You will include the interest for January 2014 with the other interest you pay for 2014. Filemy2010taxreturnforfree See How To Report , later. Filemy2010taxreturnforfree Refunded interest. Filemy2010taxreturnforfree   If you received a refund of mortgage interest you overpaid in an earlier year, you generally will receive a Form 1098 showing the refund in box 3. Filemy2010taxreturnforfree See Refunds of interest , earlier. Filemy2010taxreturnforfree Mortgage insurance premiums. Filemy2010taxreturnforfree   The amount of mortgage insurance premiums you paid during 2013 may be shown in box 4 of Form 1098. Filemy2010taxreturnforfree See Mortgage Insurance Premiums, earlier. Filemy2010taxreturnforfree Investment Interest This section discusses interest expenses you may be able to deduct as an investor. Filemy2010taxreturnforfree If you borrow money to buy property you hold for investment, the interest you pay is investment interest. Filemy2010taxreturnforfree You can deduct investment interest subject to the limit discussed later. Filemy2010taxreturnforfree However, you cannot deduct interest you incurred to produce tax-exempt income. Filemy2010taxreturnforfree Nor can you deduct interest expenses on straddles. Filemy2010taxreturnforfree Investment interest does not include any qualified home mortgage interest or any interest taken into account in computing income or loss from a passive activity. Filemy2010taxreturnforfree Investment Property Property held for investment includes property that produces interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business. Filemy2010taxreturnforfree It also includes property that produces gain or loss (not derived in the ordinary course of a trade or business) from the sale or trade of property producing these types of income or held for investment (other than an interest in a passive activity). Filemy2010taxreturnforfree Investment property also includes an interest in a trade or business activity in which you did not materially participate (other than a passive activity). Filemy2010taxreturnforfree Partners, shareholders, and beneficiaries. Filemy2010taxreturnforfree   To determine your investment interest, combine your share of investment interest from a partnership, S corporation, estate, or trust with your other investment interest. Filemy2010taxreturnforfree Allocation of Interest Expense If you borrow money for business or personal purposes as well as for investment, you must allocate the debt among those purposes. Filemy2010taxreturnforfree Only the interest expense on the part of the debt used for investment purposes is treated as investment interest. Filemy2010taxreturnforfree The allocation is not affected by the use of property that secures the debt. Filemy2010taxreturnforfree Limit on Deduction Generally, your deduction for investment interest expense is limited to the amount of your net investment income. Filemy2010taxreturnforfree You can carry over the amount of investment interest that you could not deduct because of this limit to the next tax year. Filemy2010taxreturnforfree The interest carried over is treated as investment interest paid or accrued in that next year. Filemy2010taxreturnforfree You can carry over disallowed investment interest to the next tax year even if it is more than your taxable income in the year the interest was paid or accrued. Filemy2010taxreturnforfree Net Investment Income Determine the amount of your net investment income by subtracting your investment expenses (other than interest expense) from your investment income. Filemy2010taxreturnforfree Investment income. Filemy2010taxreturnforfree    This generally includes your gross income from property held for investment (such as interest, dividends, annuities, and royalties). Filemy2010taxreturnforfree Investment income does not include Alaska Permanent Fund dividends. Filemy2010taxreturnforfree It also does not include qualified dividends or net capital gain unless you choose to include them. Filemy2010taxreturnforfree Choosing to include qualified dividends. Filemy2010taxreturnforfree   Investment income generally does not include qualified dividends, discussed in chapter 8. Filemy2010taxreturnforfree However, you can choose to include all or part of your qualified dividends in investment income. Filemy2010taxreturnforfree   You make this choice by completing Form 4952, line 4g, according to its instructions. Filemy2010taxreturnforfree   If you choose to include any amount of your qualified dividends in investment income, you must reduce your qualified dividends that are eligible for the lower capital gains tax rates by the same amount. Filemy2010taxreturnforfree Choosing to include net capital gain. Filemy2010taxreturnforfree   Investment income generally does not include net capital gain from disposing of investment property (including capital gain distributions from mutual funds). Filemy2010taxreturnforfree However, you can choose to include all or part of your net capital gain in investment income. Filemy2010taxreturnforfree    You make this choice by completing Form 4952, line 4g, according to its instructions. Filemy2010taxreturnforfree   If you choose to include any amount of your net capital gain in investment income, you must reduce your net capital gain that is eligible for the lower capital gains tax rates by the same amount. Filemy2010taxreturnforfree    Before making either choice, consider the overall effect on your tax liability. Filemy2010taxreturnforfree Compare your tax if you make one or both of these choices with your tax if you do not. Filemy2010taxreturnforfree Investment income of child reported on parent's return. Filemy2010taxreturnforfree    Investment income includes the part of your child's interest and dividend income that you choose to report on your return. Filemy2010taxreturnforfree If the child does not have qualified dividends, Alaska Permanent Fund dividends, or capital gain distributions, this is the amount on line 6 of Form 8814, Parents' Election To Report Child's Interest and Dividends. Filemy2010taxreturnforfree Child's qualified dividends. Filemy2010taxreturnforfree   If part of the amount you report is your child's qualified dividends, that part (which is reported on Form 1040, line 9b) generally does not count as investment income. Filemy2010taxreturnforfree However, you can choose to include all or part of it in investment income, as explained under Choosing to include qualified dividends , earlier. Filemy2010taxreturnforfree   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured next under Child's Alaska Permanent Fund dividends). Filemy2010taxreturnforfree Child's Alaska Permanent Fund dividends. Filemy2010taxreturnforfree   If part of the amount you report is your child's Alaska Permanent Fund dividends, that part does not count as investment income. Filemy2010taxreturnforfree To figure the amount of your child's income that you can consider your investment income, start with the amount on Form 8814, line 6. Filemy2010taxreturnforfree Multiply that amount by a percentage that is equal to the Alaska Permanent Fund dividends divided by the total amount on Form 8814, line 4. Filemy2010taxreturnforfree Subtract the result from the amount on Form 8814, line 12. Filemy2010taxreturnforfree Child's capital gain distributions. Filemy2010taxreturnforfree    If part of the amount you report is your child's capital gain distributions, that part (which is reported on Schedule D, line 13, or Form 1040, line 13) generally does not count as investment income. Filemy2010taxreturnforfree However, you can choose to include all or part of it in investment income, as explained in Choosing to include net capital gain , earlier. Filemy2010taxreturnforfree   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured under Child's Alaska Permanent Fund dividends , earlier). Filemy2010taxreturnforfree Investment expenses. Filemy2010taxreturnforfree   Investment expenses are your allowed deductions (other than interest expense) directly connected with the production of investment income. Filemy2010taxreturnforfree Investment expenses that are included as a miscellaneous itemized deduction on Schedule A (Form 1040) are allowable deductions after applying the 2% limit that applies to miscellaneous itemized deductions. Filemy2010taxreturnforfree Use the smaller of: The investment expenses included on Schedule A (Form 1040), line 23, or The amount on Schedule A, line 27. Filemy2010taxreturnforfree Losses from passive activities. Filemy2010taxreturnforfree   Income or expenses that you used in computing income or loss from a passive activity are not included in determining your investment income or investment expenses (including investment interest expense). Filemy2010taxreturnforfree See Publication 925, Passive Activity and At-Risk Rules, for information about passive activities. Filemy2010taxreturnforfree Form 4952 Use Form 4952, Investment Interest Expense Deduction, to figure your deduction for investment interest. Filemy2010taxreturnforfree Exception to use of Form 4952. Filemy2010taxreturnforfree   You do not have to complete Form 4952 or attach it to your return if you meet all of the following tests. Filemy2010taxreturnforfree Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified dividends. Filemy2010taxreturnforfree You do not have any other deductible investment expenses. Filemy2010taxreturnforfree You have no carryover of investment interest expense from 2012. Filemy2010taxreturnforfree If you meet all of these tests, you can deduct all of your investment interest. Filemy2010taxreturnforfree More Information For more information on investment interest, see Interest Expenses in chapter 3 of Publication 550. Filemy2010taxreturnforfree Items You Cannot Deduct Some interest payments are not deductible. Filemy2010taxreturnforfree Certain expenses similar to interest also are not deductible. Filemy2010taxreturnforfree Nondeductible expenses include the following items. Filemy2010taxreturnforfree Personal interest (discussed later). Filemy2010taxreturnforfree Service charges (however, see Other Expenses (Line 23) in chapter 28). Filemy2010taxreturnforfree Annual fees for credit cards. Filemy2010taxreturnforfree Loan fees. Filemy2010taxreturnforfree Credit investigation fees. Filemy2010taxreturnforfree Interest to purchase or carry tax-exempt securities. Filemy2010taxreturnforfree Penalties. Filemy2010taxreturnforfree   You cannot deduct fines and penalties paid to a government for violations of law, regardless of their nature. Filemy2010taxreturnforfree Personal Interest Personal interest is not deductible. Filemy2010taxreturnforfree Personal interest is any interest that is not home mortgage interest, investment interest, business interest, or other deductible interest. Filemy2010taxreturnforfree It includes the following items. Filemy2010taxreturnforfree Interest on car loans (unless you use the car for business). Filemy2010taxreturnforfree Interest on federal, state, or local income tax. Filemy2010taxreturnforfree Finance charges on credit cards, retail installment contracts, and revolving charge accounts incurred for personal expenses. Filemy2010taxreturnforfree Late payment charges by a public utility. Filemy2010taxreturnforfree You may be able to deduct interest you pay on a qualified student loan. Filemy2010taxreturnforfree For details, see Publication 970, Tax Benefits for Education. Filemy2010taxreturnforfree Allocation of Interest If you use the proceeds of a loan for more than one purpose (for example, personal and business), you must allocate the interest on the loan to each use. Filemy2010taxreturnforfree However, you do not have to allocate home mortgage interest if it is fully deductible, regardless of how the funds are used. Filemy2010taxreturnforfree You allocate interest (other than fully deductible home mortgage interest) on a loan in the same way as the loan itself is allocated. Filemy2010taxreturnforfree You do this by tracing disbursements of the debt proceeds to specific uses. Filemy2010taxreturnforfree For details on how to do this, see chapter 4 of Publication 535. Filemy2010taxreturnforfree How To Report You must file Form 1040 to deduct any home mortgage interest expense on your tax return. Filemy2010taxreturnforfree Where you deduct your interest expense generally depends on how you use the loan proceeds. Filemy2010taxreturnforfree See Table 23-1 for a summary of where to deduct your interest expense. Filemy2010taxreturnforfree Home mortgage interest and points. Filemy2010taxreturnforfree   Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. Filemy2010taxreturnforfree If you paid more deductible interest to the financial institution than the amount shown on Form 1098, show the larger deductible amount on line 10. Filemy2010taxreturnforfree Attach a statement explaining the difference and print “See attached” next to line 10. Filemy2010taxreturnforfree    Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. Filemy2010taxreturnforfree If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and taxpayer identification number (TIN) on the dotted lines next to line 11. Filemy2010taxreturnforfree The seller must give you this number and you must give the seller your TIN. Filemy2010taxreturnforfree A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Filemy2010taxreturnforfree Failure to meet any of these requirements may result in a $50 penalty for each failure. Filemy2010taxreturnforfree The TIN can be either a social security number, an individual taxpayer identification number (issued by the Internal Revenue Service), or an employer identification number. Filemy2010taxreturnforfree See Social Security Number (SSN) in chapter 1 for more information about TINs. Filemy2010taxreturnforfree    If you can take a deduction for points that were not reported to you on Form 1098, deduct those points on Schedule A (Form 1040), line 12. Filemy2010taxreturnforfree   Deduct mortgage insurance premiums on Schedule A (Form 1040), line 13. Filemy2010taxreturnforfree More than one borrower. Filemy2010taxreturnforfree   If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. Filemy2010taxreturnforfree Show how much of the interest each of you paid, and give the name and address of the person who received the form. Filemy2010taxreturnforfree Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. Filemy2010taxreturnforfree Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13. Filemy2010taxreturnforfree   Similarly, if you are the payer of record on a mortgage on which there are other borrowers entitled to a deduction for the interest shown on the Form 1098 you received, deduct only your share of the interest on Schedule A (Form 1040), line 10. Filemy2010taxreturnforfree You should let each of the other borrowers know what his or her share is. Filemy2010taxreturnforfree Mortgage proceeds used for business or investment. Filemy2010taxreturnforfree    If your home mortgage interest deduction is limited, but all or part of the mortgage proceeds were used for business, investment, or other deductible activities, see Table 23-1. Filemy2010taxreturnforfree It shows where to deduct the part of your excess interest that is for those activities. Filemy2010taxreturnforfree Investment interest. Filemy2010taxreturnforfree    Deduct investment interest, subject to certain limits discussed in Publication 550, on Schedule A (Form 1040), line 14. Filemy2010taxreturnforfree Amortization of bond premium. Filemy2010taxreturnforfree   There are various ways to treat the premium you pay to buy taxable bonds. Filemy2010taxreturnforfree See Bond Premium Amortization in Publication 550. Filemy2010taxreturnforfree Income-producing rental or royalty interest. Filemy2010taxreturnforfree   Deduct interest on a loan for income-producing rental or royalty property that is not used in your business in Part I of Schedule E (Form 1040). Filemy2010taxreturnforfree Example. Filemy2010taxreturnforfree You rent out part of your home and borrow money to make repairs. Filemy2010taxreturnforfree You can deduct only the interest payment for the rented part in Part I of Schedule E (Form 1040). Filemy2010taxreturnforfree Deduct the rest of the interest payment on Schedule A (Form 1040) if it is deductible home mortgage interest. Filemy2010taxreturnforfree Table 23-1. Filemy2010taxreturnforfree Where To Deduct Your Interest Expense IF you have . Filemy2010taxreturnforfree . Filemy2010taxreturnforfree . Filemy2010taxreturnforfree THEN deduct it on . Filemy2010taxreturnforfree . Filemy2010taxreturnforfree . Filemy2010taxreturnforfree AND for more information go to . Filemy2010taxreturnforfree . Filemy2010taxreturnforfree . Filemy2010taxreturnforfree deductible student loan interest Form 1040, line 33, or Form 1040A, line 18 Publication 970. Filemy2010taxreturnforfree deductible home mortgage interest and points reported on Form 1098 Schedule A (Form 1040), line 10 Publication 936. Filemy2010taxreturnforfree deductible home mortgage interest not reported on Form 1098 Schedule A (Form 1040), line 11 Publication 936. Filemy2010taxreturnforfree deductible points not reported on Form 1098 Schedule A (Form 1040), line 12 Publication 936. Filemy2010taxreturnforfree deductible mortgage insurance premiums Schedule A (Form 1040), line 13 Publication 936. Filemy2010taxreturnforfree deductible investment interest (other than incurred to produce rents or royalties) Schedule A (Form 1040), line 14 Publication 550. Filemy2010taxreturnforfree deductible business interest (non-farm) Schedule C or C-EZ (Form 1040) Publication 535. Filemy2010taxreturnforfree deductible farm business interest Schedule F (Form 1040) Publications 225 and 535. Filemy2010taxreturnforfree deductible interest incurred to produce rents or royalties Schedule E (Form 1040) Publications 527 and 535. Filemy2010taxreturnforfree personal interest not deductible. Filemy2010taxreturnforfree Prev  Up  Next   Home   More Online Publications
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The Filemy2010taxreturnforfree

Filemy2010taxreturnforfree Index A Absence, temporary, Temporary absences. Filemy2010taxreturnforfree Address, change of, Reminders Aliens (see Nonresident aliens) Alimony, Alimony. Filemy2010taxreturnforfree , Alimony, Instruments Executed Before 1985 Community income, Alimony (Community Income) Fees paid for getting, Fees for getting alimony. Filemy2010taxreturnforfree No exemption for spouse, Alimony paid. Filemy2010taxreturnforfree Annual exclusion, gift tax, Annual exclusion. Filemy2010taxreturnforfree Annulment decrees Absolute decree, Ending the Marital Community Amended return required, Unmarried persons. Filemy2010taxreturnforfree Considered unmarried, Unmarried persons. Filemy2010taxreturnforfree Archer MSA, Archer medical savings account (MSA). Filemy2010taxreturnforfree Assistance (see Tax help) B Basis Property received in settlement, Basis of property received. Filemy2010taxreturnforfree Benefits paid under QDROs, Benefits paid to a child or other dependent. Filemy2010taxreturnforfree , Benefits paid to a spouse or former spouse. Filemy2010taxreturnforfree Birth of dependent, Death or birth. Filemy2010taxreturnforfree C Change of address, Reminders Change of name, Reminders Change of withholding, Reminders Child custody, Custodial parent and noncustodial parent. Filemy2010taxreturnforfree Child support Alimony, difference from, Child support. Filemy2010taxreturnforfree Clearly associated with contingency, Clearly associated with a contingency. Filemy2010taxreturnforfree Contingency relating to child, Contingency relating to your child. Filemy2010taxreturnforfree Payment specifically designated as, Specifically designated as child support. Filemy2010taxreturnforfree Child support under pre-1985 agreement, Child support under pre-1985 agreement. Filemy2010taxreturnforfree Child tax credit, Exemptions for Dependents Children Birth of child Head of household, qualifying person to file as, Death or birth. Filemy2010taxreturnforfree Claiming parent, when child is head of household, Special rule for parent. Filemy2010taxreturnforfree Custody of, Custodial parent and noncustodial parent. Filemy2010taxreturnforfree Death of child Head of household, qualifying person to file as, Death or birth. Filemy2010taxreturnforfree Photographs of missing children, Reminders Community income, Community Income, Alimony (Community Income) Community property, Community Property, Alimony (Community Income) (see also Community income) Ending the marital community, Ending the Marital Community Laws disregarded, Certain community income not treated as community income by one spouse. Filemy2010taxreturnforfree States, Community property states. Filemy2010taxreturnforfree Costs of getting divorce, Costs of Getting a Divorce Fees for tax advice, Fees for tax advice. Filemy2010taxreturnforfree Nondeductible expenses, Nondeductible expenses. Filemy2010taxreturnforfree Custody of child, Custodial parent and noncustodial parent. Filemy2010taxreturnforfree D Death of dependent, Death or birth. Filemy2010taxreturnforfree Death of recipient spouse. Filemy2010taxreturnforfree , Alimony Requirements Debts of spouse Refund applied to, Tax refund applied to spouse's debts. Filemy2010taxreturnforfree Deductions Alimony paid, Deducting alimony paid. Filemy2010taxreturnforfree Alimony recapture, Deducting the recapture. Filemy2010taxreturnforfree Limits on IRAs, IRA contribution and deduction limits. Filemy2010taxreturnforfree Marital, Marital deduction. Filemy2010taxreturnforfree Dependents Exemption for, Exemptions for Dependents, Special Rule for Qualifying Child of More Than One Person Qualifying child, Exemptions for Dependents Qualifying child (Table 3), Table 3. Filemy2010taxreturnforfree Overview of the Rules for Claiming an Exemption for a Dependent Qualifying relative, Exemptions for Dependents Qualifying relative (Table 3), Table 3. Filemy2010taxreturnforfree Overview of the Rules for Claiming an Exemption for a Dependent Social security numbers, Reminders Divorce decrees Absolute decree, Ending the Marital Community Amended, Amended instrument. Filemy2010taxreturnforfree Costs of getting, Costs of Getting a Divorce Defined for purposes of alimony, Divorce or separation instrument. Filemy2010taxreturnforfree Invalid, Invalid decree. Filemy2010taxreturnforfree Unmarried persons, Unmarried persons. Filemy2010taxreturnforfree Divorced parents, Children of Divorced or Separated Parents (or Parents Who Live Apart) Child custody, Custodial parent and noncustodial parent. Filemy2010taxreturnforfree Domestic relations orders (see Qualified domestic relations orders (QDROs)) Domicile, Community Income E Earned income, Earned income. Filemy2010taxreturnforfree Equitable relief (see Relief from joint liability) Estimated tax, Tax Withholding and Estimated Tax Joint payments, Joint estimated tax payments. Filemy2010taxreturnforfree Exemptions, Exemptions, Special Rule for Qualifying Child of More Than One Person Dependents, Exemptions for Dependents, Special Rule for Qualifying Child of More Than One Person Personal, Personal Exemptions Spouse, Exemption for Your Spouse F Fees for tax advice, Fees for tax advice. Filemy2010taxreturnforfree Filing status, Filing Status, More information. Filemy2010taxreturnforfree Head of household, Requirements. Filemy2010taxreturnforfree Form 1040 Deducting alimony paid, Deducting alimony paid. Filemy2010taxreturnforfree Reporting alimony received, Reporting alimony received. Filemy2010taxreturnforfree Form 1040X Annulment, decree of, Unmarried persons. Filemy2010taxreturnforfree Form 8332 Release of exemption to noncustodial parent, Written declaration. Filemy2010taxreturnforfree Form 8379 Injured spouse, Injured spouse. Filemy2010taxreturnforfree Form 8857 Innocent spouse relief, Relief from joint liability. Filemy2010taxreturnforfree Form W-4 Withholding, Tax Withholding and Estimated Tax Form W-7 Individual taxpayer identification number (ITIN), Reminders Former spouse Defined for purposes of alimony, Spouse or former spouse. Filemy2010taxreturnforfree Free tax services, How To Get Tax Help G Gift tax, Gift Tax on Property Settlements, Annual exclusion. Filemy2010taxreturnforfree , Gift Tax Return H Head of household, Head of Household Health savings accounts (HSAs), Health savings account (HSA). Filemy2010taxreturnforfree Help (see Tax help) Home owned jointly Alimony payments for, Payments for jointly-owned home. Filemy2010taxreturnforfree Expenses for, as alimony (Table 4), Table 4. Filemy2010taxreturnforfree Expenses for a Jointly-Owned Home Sale of, Sale of home. Filemy2010taxreturnforfree HSAs (Health savings accounts), Health savings account (HSA). Filemy2010taxreturnforfree I Identification number, Reminders Income, Community Income (see also Community income) Alimony received, Reporting alimony received. Filemy2010taxreturnforfree Individual retirement arrangements (IRAs), Individual Retirement Arrangements, IRA contribution and deduction limits. Filemy2010taxreturnforfree Individual taxpayer identification numbers (ITINs), Reminders Injured spouse, Injured spouse. Filemy2010taxreturnforfree Innocent spouse relief, Relief from joint liability. Filemy2010taxreturnforfree Insurance premiums, Life insurance premiums. Filemy2010taxreturnforfree Invalid decree, Invalid decree. Filemy2010taxreturnforfree IRAs (Individual retirement arrangements), Individual Retirement Arrangements, IRA contribution and deduction limits. Filemy2010taxreturnforfree Itemized deductions on separate returns, Itemized deductions. Filemy2010taxreturnforfree ITINs (Individual taxpayer identification numbers), Reminders J Joint liability Relief from, Reminders, Relief from joint liability. Filemy2010taxreturnforfree Joint returns, Married Filing Jointly Change from separate return, Joint return after separate returns. Filemy2010taxreturnforfree Change to separate return, Separate returns after joint return. Filemy2010taxreturnforfree Divorced taxpayers, Divorced taxpayers. Filemy2010taxreturnforfree Exemption for spouse, Joint return. Filemy2010taxreturnforfree Joint and individual liability, Joint and individual liability. Filemy2010taxreturnforfree Relief from joint liability, Relief from joint liability. Filemy2010taxreturnforfree Signing, Signing a joint return. Filemy2010taxreturnforfree Jointly-owned home Alimony payments for, Payments for jointly-owned home. Filemy2010taxreturnforfree Expenses for, as alimony (Table 4), Table 4. Filemy2010taxreturnforfree Expenses for a Jointly-Owned Home Sale of, Sale of Jointly-Owned Property, Sale of home. Filemy2010taxreturnforfree K Kidnapped child Head of household status and, Kidnapped child. Filemy2010taxreturnforfree L Liability for taxes (see Relief from joint liability) Life insurance premiums as alimony, Life insurance premiums. Filemy2010taxreturnforfree M Marital community, ending, Ending the Marital Community Marital status, Marital status. Filemy2010taxreturnforfree Married persons, Married persons. Filemy2010taxreturnforfree Medical savings accounts (MSAs), Archer medical savings account (MSA). Filemy2010taxreturnforfree Missing children, photographs of, Reminders More information (see Tax help) Mortgage payments as alimony, Payments for jointly-owned home. Filemy2010taxreturnforfree MSAs (Medical savings accounts), Archer medical savings account (MSA). Filemy2010taxreturnforfree N Name, change of, Reminders Nondeductible expenses, Nondeductible expenses. Filemy2010taxreturnforfree Nonresident aliens Joint returns, Nonresident alien. Filemy2010taxreturnforfree Withholding, Withholding on nonresident aliens. Filemy2010taxreturnforfree P Parent Head of household, claim for, Special rule for parent. Filemy2010taxreturnforfree Parents, divorced or separated, Children of Divorced or Separated Parents (or Parents Who Live Apart) Personal exemptions, Personal Exemptions Phaseout of Exemptions, Phaseout of Exemptions Property settlements, Property Settlements, Sale of home. Filemy2010taxreturnforfree Publications (see Tax help) Q Qualified domestic relations orders (QDROs), Qualified Domestic Relations Order, Benefits paid to a child or other dependent. Filemy2010taxreturnforfree , Benefits paid to a spouse or former spouse. Filemy2010taxreturnforfree Qualifying child, exemption for, Exemptions for Dependents Qualifying child, exemption for (Table 3), Table 3. Filemy2010taxreturnforfree Overview of the Rules for Claiming an Exemption for a Dependent Qualifying person, head of household, Qualifying person. Filemy2010taxreturnforfree Table 2, Table 2. Filemy2010taxreturnforfree Who Is a Qualifying Person Qualifying You To File as Head of Household?1 Qualifying relative, exemption for, Exemptions for Dependents Qualifying relative, exemption for (Table 3), Table 3. Filemy2010taxreturnforfree Overview of the Rules for Claiming an Exemption for a Dependent R Recapture of alimony, Recapture of Alimony Refunds Injured spouse, community property, Injured spouse. Filemy2010taxreturnforfree Spouse's debts, applied to, Tax refund applied to spouse's debts. Filemy2010taxreturnforfree Release of exemption to noncustodial parent, Written declaration. Filemy2010taxreturnforfree Revocation, Revocation of release of claim to an exemption. Filemy2010taxreturnforfree Relief from joint liability, Reminders, Relief from joint liability. Filemy2010taxreturnforfree Relief from separate return liability Community income, Relief from liability arising from community property law. Filemy2010taxreturnforfree Reporting requirements Alimony received, Reporting alimony received. Filemy2010taxreturnforfree Returns Amended return required, Unmarried persons. Filemy2010taxreturnforfree Joint (see Joint returns) Separate (see Separate returns) Rollovers, Rollovers. Filemy2010taxreturnforfree S Sales of jointly-owned property, Sale of Jointly-Owned Property Section 1041 election, Basis of property received. Filemy2010taxreturnforfree Separate maintenance decrees, Unmarried persons. Filemy2010taxreturnforfree , Divorce or separation instrument. Filemy2010taxreturnforfree , Ending the Marital Community Separate returns, Married Filing Separately Change to or from joint return, Joint return after separate returns. Filemy2010taxreturnforfree Community or separate income, Community or separate income. Filemy2010taxreturnforfree Exemption for spouse, Separate return. Filemy2010taxreturnforfree Itemized deductions, Itemized deductions. Filemy2010taxreturnforfree Relief from liability, Relief from liability arising from community property law. Filemy2010taxreturnforfree Separate liability, Separate liability. Filemy2010taxreturnforfree Tax consequences, Separate returns may give you a higher tax. Filemy2010taxreturnforfree Separated parents, Children of Divorced or Separated Parents (or Parents Who Live Apart) Separation agreements, Ending the Marital Community Defined for purposes of alimony, Divorce or separation instrument. Filemy2010taxreturnforfree Separation of liability (see Relief from joint liability) Settlement of property (see Property settlements) Social security benefits, Social security benefits. Filemy2010taxreturnforfree Social security numbers (SSNs) Alimony recipient's number required, Alimony Dependents, Reminders Spousal IRA, Spousal IRA. Filemy2010taxreturnforfree Spouse Defined for purposes of alimony, Spouse or former spouse. Filemy2010taxreturnforfree Refund applied to debts, Tax refund applied to spouse's debts. Filemy2010taxreturnforfree Statute of limitations Amended return, Unmarried persons. Filemy2010taxreturnforfree Injured spouse allocation, Injured spouse. Filemy2010taxreturnforfree T Tables and figures Exemption for dependents (Table 3), Table 3. Filemy2010taxreturnforfree Overview of the Rules for Claiming an Exemption for a Dependent Itemized deductions on separate returns (Table 1), Table 1. Filemy2010taxreturnforfree Itemized Deductions on Separate Returns Jointly-owned home, expenses for, as alimony (Table 4), Table 4. Filemy2010taxreturnforfree Expenses for a Jointly-Owned Home Property transferred pursuant to divorce (Table 5), Table 5. Filemy2010taxreturnforfree Property Transferred Pursuant to Divorce Qualifying person for head of household (Table 2), Table 2. Filemy2010taxreturnforfree Who Is a Qualifying Person Qualifying You To File as Head of Household?1 Tax advice fees, Fees for tax advice. Filemy2010taxreturnforfree Tax help, How To Get Tax Help Tax withholding (see Withholding) Taxpayer Advocate, The Taxpayer Advocate Service is Here to Help You. Filemy2010taxreturnforfree Taxpayer identification numbers, Reminders Third parties Alimony payments to, Payments to a third party. Filemy2010taxreturnforfree , Payments to a third party. Filemy2010taxreturnforfree Property settlements, transfers to, Transfers to third parties. Filemy2010taxreturnforfree Tiebreaker rules, Tiebreaker rules. Filemy2010taxreturnforfree TTY/TDD information, How To Get Tax Help U Underpayment of alimony, Underpayment. Filemy2010taxreturnforfree Unmarried persons, Unmarried persons. Filemy2010taxreturnforfree W Withholding Change of, Reminders, Tax Withholding and Estimated Tax Nonresident aliens, Withholding on nonresident aliens. Filemy2010taxreturnforfree Worksheets Recapture of alimony (Worksheet 1), How to figure and report the recapture. Filemy2010taxreturnforfree Prev  Up     Home   More Online Publications