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Online Tax Filing 2012

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Online Tax Filing 2012

Online tax filing 2012 5. Online tax filing 2012   Personal Use of Dwelling Unit (Including Vacation Home) Table of Contents Dividing Expenses Dwelling Unit Used as a HomeMain home. Online tax filing 2012 Shared equity financing agreement. Online tax filing 2012 Donation of use of the property. Online tax filing 2012 Examples. Online tax filing 2012 Days used for repairs and maintenance. Online tax filing 2012 Days used as a main home before or after renting. Online tax filing 2012 Reporting Income and DeductionsNot used as a home. Online tax filing 2012 Used as a home but rented less than 15 days. Online tax filing 2012 Used as a home and rented 15 days or more. Online tax filing 2012 If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. Online tax filing 2012 In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. Online tax filing 2012 Only your rental expenses may deducted on Schedule E (Form 1040). Online tax filing 2012 Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). Online tax filing 2012 You must also determine if the dwelling unit is considered a home. Online tax filing 2012 The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. Online tax filing 2012 Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. Online tax filing 2012 There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year. Online tax filing 2012 Dwelling unit. Online tax filing 2012   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. Online tax filing 2012 It also includes all structures or other property belonging to the dwelling unit. Online tax filing 2012 A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. Online tax filing 2012   A dwelling unit does not include property (or part of the property) used solely as a hotel, motel, inn, or similar establishment. Online tax filing 2012 Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. Online tax filing 2012 Example. Online tax filing 2012 You rent a room in your home that is always available for short-term occupancy by paying customers. Online tax filing 2012 You do not use the room yourself and you allow only paying customers to use the room. Online tax filing 2012 This room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. Online tax filing 2012 Dividing Expenses If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. Online tax filing 2012 When dividing your expenses, follow these rules. Online tax filing 2012 Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. Online tax filing 2012 (This rule does not apply when determining whether you used the unit as a home. Online tax filing 2012 ) Any day that the unit is available for rent but not actually rented is not a day of rental use. Online tax filing 2012 Fair rental price. Online tax filing 2012   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. Online tax filing 2012 The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. Online tax filing 2012   Ask yourself the following questions when comparing another property with yours. Online tax filing 2012 Is it used for the same purpose? Is it approximately the same size? Is it in approximately the same condition? Does it have similar furnishings? Is it in a similar location? If any of the answers are no, the properties probably are not similar. Online tax filing 2012 Example. Online tax filing 2012 Your beach cottage was available for rent from June 1 through August 31 (92 days). Online tax filing 2012 Except for the first week in August (7 days), when you were unable to find a renter, you rented the cottage at a fair rental price during that time. Online tax filing 2012 The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. Online tax filing 2012 Your family also used the cottage during the last 2 weeks of May (14 days). Online tax filing 2012 The cottage was not used at all before May 17 or after August 31. Online tax filing 2012 You figure the part of the cottage expenses to treat as rental expenses as follows. Online tax filing 2012 The cottage was used for rental a total of 85 days (92 − 7). Online tax filing 2012 The days it was available for rent but not rented (7 days) are not days of rental use. Online tax filing 2012 The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. Online tax filing 2012 You used the cottage for personal purposes for 14 days (the last 2 weeks in May). Online tax filing 2012 The total use of the cottage was 99 days (14 days personal use + 85 days rental use). Online tax filing 2012 Your rental expenses are 85/99 (86%) of the cottage expenses. Online tax filing 2012 Note. Online tax filing 2012 When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. Online tax filing 2012 Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. Online tax filing 2012 Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. Online tax filing 2012 If you have a net loss, you may not be able to deduct all of the rental expenses. Online tax filing 2012 See Dwelling Unit Used as a Home, next. Online tax filing 2012 Dwelling Unit Used as a Home If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home. Online tax filing 2012 You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of: 14 days, or 10% of the total days it is rented to others at a fair rental price. Online tax filing 2012 See What is a day of personal use , later. Online tax filing 2012 If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price (discussed earlier), do not count that day as a day of rental use in applying (2) above. Online tax filing 2012 Instead, count it as a day of personal use in applying both (1) and (2) above. Online tax filing 2012 What is a day of personal use?   A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons. Online tax filing 2012 You or any other person who owns an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). Online tax filing 2012 However, see Days used as a main home before or after renting , later. Online tax filing 2012 A member of your family or a member of the family of any other person who owns an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Online tax filing 2012 Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. Online tax filing 2012 ), and lineal descendants (children, grandchildren, etc. Online tax filing 2012 ). Online tax filing 2012 Anyone under an arrangement that lets you use some other dwelling unit. Online tax filing 2012 Anyone at less than a fair rental price. Online tax filing 2012 Main home. Online tax filing 2012   If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. Online tax filing 2012 Shared equity financing agreement. Online tax filing 2012   This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. Online tax filing 2012 Donation of use of the property. Online tax filing 2012   You use a dwelling unit for personal purposes if: You donate the use of the unit to a charitable organization, The organization sells the use of the unit at a fund-raising event, and The “purchaser” uses the unit. Online tax filing 2012 Examples. Online tax filing 2012   The following examples show how to determine if you have days of personal use. Online tax filing 2012 Example 1. Online tax filing 2012 You and your neighbor are co-owners of a condominium at the beach. Online tax filing 2012 Last year, you rented the unit to vacationers whenever possible. Online tax filing 2012 The unit was not used as a main home by anyone. Online tax filing 2012 Your neighbor used the unit for 2 weeks last year; you did not use it at all. Online tax filing 2012 Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. Online tax filing 2012 Example 2. Online tax filing 2012 You and your neighbors are co-owners of a house under a shared equity financing agreement. Online tax filing 2012 Your neighbors live in the house and pay you a fair rental price. Online tax filing 2012 Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. Online tax filing 2012 This is because your neighbors rent the house as their main home under a shared equity financing agreement. Online tax filing 2012 Example 3. Online tax filing 2012 You own a rental property that you rent to your son. Online tax filing 2012 Your son does not own any interest in this property. Online tax filing 2012 He uses it as his main home and pays you a fair rental price. Online tax filing 2012 Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. Online tax filing 2012 Example 4. Online tax filing 2012 You rent your beach house to Rosa. Online tax filing 2012 Rosa rents her cabin in the mountains to you. Online tax filing 2012 You each pay a fair rental price. Online tax filing 2012 You are using your beach house for personal purposes on the days that Rosa uses it because your house is used by Rosa under an arrangement that allows you to use her cabin. Online tax filing 2012 Example 5. Online tax filing 2012 You rent an apartment to your mother at less than a fair rental price. Online tax filing 2012 You are using the apartment for personal purposes on the days that your mother rents it because you rent it for less than a fair rental price. Online tax filing 2012 Days used for repairs and maintenance. Online tax filing 2012   Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. Online tax filing 2012 Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. Online tax filing 2012 Example. Online tax filing 2012 Corey owns a cabin in the mountains that he rents for most of the year. Online tax filing 2012 He spends a week at the cabin with family members. Online tax filing 2012 Corey works on maintenance of the cabin 3 or 4 hours each day during the week and spends the rest of the time fishing, hiking, and relaxing. Online tax filing 2012 Corey's family members, however, work substantially full time on the cabin each day during the week. Online tax filing 2012 The main purpose of being at the cabin that week is to do maintenance work. Online tax filing 2012 Therefore, the use of the cabin during the week by Corey and his family will not be considered personal use by Corey. Online tax filing 2012 Days used as a main home before or after renting. Online tax filing 2012   For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. Online tax filing 2012 Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. Online tax filing 2012 You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold or exchanged the property. Online tax filing 2012 However, this special rule does not apply when dividing expenses between rental and personal use. Online tax filing 2012 See Property Changed to Rental Use in chapter 4. Online tax filing 2012 Example 1. Online tax filing 2012 On February 29, 2012, you moved out of the house you had lived in for 6 years because you accepted a job in another town. Online tax filing 2012 You rented your house at a fair rental price from March 15, 2012, to May 14, 2013 (14 months). Online tax filing 2012 On June 1, 2013, you moved back into your old house. Online tax filing 2012 The days you used the house as your main home from January 1 to February 29, 2012, and from June 1 to December 31, 2013, are not counted as days of personal use. Online tax filing 2012 Therefore, you would use the rules in chapter 1 when figuring your rental income and expenses. Online tax filing 2012 Example 2. Online tax filing 2012 On January 31, you moved out of the condominium where you had lived for 3 years. Online tax filing 2012 You offered it for rent at a fair rental price beginning on February 1. Online tax filing 2012 You were unable to rent it until April. Online tax filing 2012 On September 15, you sold the condominium. Online tax filing 2012 The days you used the condominium as your main home from January 1 to January 31 are not counted as days of personal use when determining whether you used it as a home. Online tax filing 2012 Examples. Online tax filing 2012   The following examples show how to determine whether you used your rental property as a home. Online tax filing 2012 Example 1. Online tax filing 2012 You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. Online tax filing 2012 You rented the basement apartment at a fair rental price to college students during the regular school year. Online tax filing 2012 You rented to them on a 9-month lease (273 days). Online tax filing 2012 You figured 10% of the total days rented to others at a fair rental price is 27 days. Online tax filing 2012 During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. Online tax filing 2012 Your basement apartment was used as a home because you used it for personal purposes for 30 days. Online tax filing 2012 Rent-free use by your brothers is considered personal use. Online tax filing 2012 Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). Online tax filing 2012 Example 2. Online tax filing 2012 You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). Online tax filing 2012 Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. Online tax filing 2012 You figured 10% of the total days rented to others at a fair rental price is 3 days. Online tax filing 2012 The room was used as a home because you used it for personal purposes for 21 days. Online tax filing 2012 That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). Online tax filing 2012 Example 3. Online tax filing 2012 You own a condominium apartment in a resort area. Online tax filing 2012 You rented it at a fair rental price for a total of 170 days during the year. Online tax filing 2012 For 12 of these days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. Online tax filing 2012 Your family actually used the apartment for 10 of those days. Online tax filing 2012 Therefore, the apartment is treated as having been rented for 160 (170 – 10) days. Online tax filing 2012 You figured 10% of the total days rented to others at a fair rental price is 16 days. Online tax filing 2012 Your family also used the apartment for 7 other days during the year. Online tax filing 2012 You used the apartment as a home because you used it for personal purposes for 17 days. Online tax filing 2012 That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). Online tax filing 2012 Minimal rental use. Online tax filing 2012   If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. Online tax filing 2012 See Used as a home but rented less than 15 days, later, for more information. Online tax filing 2012 Limit on deductions. Online tax filing 2012   Renting a dwelling unit that is considered a home is not a passive activity. Online tax filing 2012 Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. Online tax filing 2012 The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. Online tax filing 2012 Any expenses carried forward to the next year will be subject to any limits that apply for that year. Online tax filing 2012 This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year. Online tax filing 2012   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 5–1. Online tax filing 2012 Reporting Income and Deductions Property not used for personal purposes. Online tax filing 2012   If you do not use a dwelling unit for personal purposes, see chapter 3 for how to report your rental income and expenses. Online tax filing 2012 Property used for personal purposes. Online tax filing 2012   If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home. Online tax filing 2012 Not used as a home. Online tax filing 2012   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. Online tax filing 2012 Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in this chapter under Dividing Expenses . Online tax filing 2012 The expenses for personal use are not deductible as rental expenses. Online tax filing 2012   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses in chapter 3. Online tax filing 2012 Used as a home but rented less than 15 days. Online tax filing 2012   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). Online tax filing 2012 You are not required to report the rental income and rental expenses from this activity. Online tax filing 2012 The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). Online tax filing 2012 See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. Online tax filing 2012 Used as a home and rented 15 days or more. Online tax filing 2012   If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. Online tax filing 2012 Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in this chapter under Dividing Expenses . Online tax filing 2012 The expenses for personal use are not deductible as rental expenses. Online tax filing 2012   If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. Online tax filing 2012 You do not need to use Worksheet 5-1. Online tax filing 2012   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. Online tax filing 2012 To figure your deductible rental expenses and any carryover to next year, use Worksheet 5–1. Online tax filing 2012 Worksheet 5-1. Online tax filing 2012 Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Use this worksheet only if you answer “yes” to all of the following questions. Online tax filing 2012 Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . Online tax filing 2012 ) Did you rent the dwelling unit at a fair rental price 15 days or more this year? Is the total of your rental expenses and depreciation more than your rental income? PART I. Online tax filing 2012 Rental Use Percentage A. Online tax filing 2012 Total days available for rent at fair rental price A. Online tax filing 2012       B. Online tax filing 2012 Total days available for rent (line A) but not rented B. Online tax filing 2012       C. Online tax filing 2012 Total days of rental use. Online tax filing 2012 Subtract line B from line A C. Online tax filing 2012       D. Online tax filing 2012 Total days of personal use (including days rented at less than fair rental price) D. Online tax filing 2012       E. Online tax filing 2012 Total days of rental and personal use. Online tax filing 2012 Add lines C and D E. Online tax filing 2012       F. Online tax filing 2012 Percentage of expenses allowed for rental. Online tax filing 2012 Divide line C by line E     F. Online tax filing 2012 . Online tax filing 2012 PART II. Online tax filing 2012 Allowable Rental Expenses 1. Online tax filing 2012 Enter rents received 1. Online tax filing 2012   2a. Online tax filing 2012 Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. Online tax filing 2012       b. Online tax filing 2012 Enter the rental portion of real estate taxes b. Online tax filing 2012       c. Online tax filing 2012 Enter the rental portion of deductible casualty and theft losses (see instructions) c. Online tax filing 2012       d. Online tax filing 2012 Enter direct rental expenses (see instructions) d. Online tax filing 2012       e. Online tax filing 2012 Fully deductible rental expenses. Online tax filing 2012 Add lines 2a–2d. Online tax filing 2012 Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. Online tax filing 2012   3. Online tax filing 2012 Subtract line 2e from line 1. Online tax filing 2012 If zero or less, enter -0- 3. Online tax filing 2012   4a. Online tax filing 2012 Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. Online tax filing 2012       b. Online tax filing 2012 Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. Online tax filing 2012       c. Online tax filing 2012 Carryover of operating expenses from 2012 worksheet c. Online tax filing 2012       d. Online tax filing 2012 Add lines 4a–4c d. Online tax filing 2012       e. Online tax filing 2012 Allowable expenses. Online tax filing 2012 Enter the smaller of line 3 or line 4d (see instructions) 4e. Online tax filing 2012   5. Online tax filing 2012 Subtract line 4e from line 3. Online tax filing 2012 If zero or less, enter -0- 5. Online tax filing 2012   6a. Online tax filing 2012 Enter the rental portion of excess casualty and theft losses (see instructions) 6a. Online tax filing 2012       b. Online tax filing 2012 Enter the rental portion of depreciation of the dwelling unit b. Online tax filing 2012       c. Online tax filing 2012 Carryover of excess casualty losses and depreciation from 2012 worksheet c. Online tax filing 2012       d. Online tax filing 2012 Add lines 6a–6c d. Online tax filing 2012       e. Online tax filing 2012 Allowable excess casualty and theft losses and depreciation. Online tax filing 2012 Enter the smaller of  line 5 or line 6d (see instructions) 6e. Online tax filing 2012   PART III. Online tax filing 2012 Carryover of Unallowed Expenses to Next Year 7a. Online tax filing 2012 Operating expenses to be carried over to next year. Online tax filing 2012 Subtract line 4e from line 4d 7a. Online tax filing 2012   b. Online tax filing 2012 Excess casualty and theft losses and depreciation to be carried over to next year. Online tax filing 2012  Subtract line 6e from line 6d b. Online tax filing 2012   Worksheet 5-1 Instructions. Online tax filing 2012 Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. Online tax filing 2012 Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4b, and 6a–6b of  Part II. Online tax filing 2012 Line 2a. Online tax filing 2012 Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. Online tax filing 2012 Do not include interest on a loan that did not benefit the dwelling unit. Online tax filing 2012 For example, do not include interest on a home equity loan used to pay off credit cards or other personal loans, buy a car, or pay college tuition. Online tax filing 2012 Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. Online tax filing 2012 Include the rental portion of this interest in the total you enter on line 2a of the worksheet. Online tax filing 2012   Figure the qualified mortgage insurance premiums on the dwelling unit that you could deduct on line 13 of Schedule A as if you had not rented the unit. Online tax filing 2012 See the Schedule A instructions. Online tax filing 2012 However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. Online tax filing 2012 See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. Online tax filing 2012 Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. Online tax filing 2012   Note. Online tax filing 2012 Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. Online tax filing 2012 Instead, figure the personal portion on a separate Schedule A. Online tax filing 2012 If you have deducted mortgage interest or qualified mortgage insurance premiums on the dwelling unit on other forms, such as Schedule C or F, remember to reduce your Schedule A deduction by that amount. Online tax filing 2012           Line 2c. Online tax filing 2012 Figure the casualty and theft losses related to the dwelling unit that you could deduct on Schedule A as if you had not rented the dwelling unit. Online tax filing 2012 To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. Online tax filing 2012 If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. Online tax filing 2012 On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. Online tax filing 2012 Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. Online tax filing 2012   Note. Online tax filing 2012 Do not file this Form 4684 or use it to figure your personal losses on Schedule A. Online tax filing 2012 Instead, figure the personal portion on a separate Form 4684. Online tax filing 2012           Line 2d. Online tax filing 2012 Enter the total of your rental expenses that are directly related only to the rental activity. Online tax filing 2012 These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. Online tax filing 2012 Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. Online tax filing 2012           Line 2e. Online tax filing 2012 You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses on Schedule E even if your rental expenses are more than your rental income. Online tax filing 2012 Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. Online tax filing 2012           Line 4b. Online tax filing 2012 On line 2a, you entered the rental portion of the mortgage interest or qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. Online tax filing 2012 If you had additional mortgage interest and qualified mortgage insurance premiums that would not be deductible on Schedule A because of limits imposed on them, enter on line 4b of this worksheet the rental portion of those excess amounts. Online tax filing 2012 Do not include interest on a loan that did not benefit the dwelling unit  (as explained in the line 2a instructions). Online tax filing 2012           Line 4e. Online tax filing 2012 You can deduct the amounts on lines 4a, 4b, and 4c as rental expenses on Schedule E only to the extent they are not more than the amount on line 4e. Online tax filing 2012 *           Line 6a. Online tax filing 2012 To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. Online tax filing 2012   A. Online tax filing 2012 Enter the amount from Form 4684, line 10       B. Online tax filing 2012 Enter the rental portion of line A       C. Online tax filing 2012 Enter the amount from line 2c of this worksheet       D. Online tax filing 2012 Subtract line C from line B. Online tax filing 2012 Enter the result here and on line 6a of this worksheet               Line 6e. Online tax filing 2012 You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses on Schedule E only to the extent they are not more than the amount on line 6e. Online tax filing 2012 * *Allocating the limited deduction. Online tax filing 2012 If you cannot deduct all of the amount on line 4d or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4d or 6d. Online tax filing 2012 Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. Online tax filing 2012 Prev  Up  Next   Home   More Online Publications
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The Online Tax Filing 2012

Online tax filing 2012 Publication 4681 - Introductory Material Table of Contents Reminder IntroductionOrdering forms and publications. Online tax filing 2012 Tax questions. Online tax filing 2012 Useful Items - You may want to see: Common Situations Covered In This Publication Reminder Future Developments. Online tax filing 2012  Information about any future developments affecting Publication 4681 (such as legislation enacted after we release it) will be posted at www. Online tax filing 2012 irs. Online tax filing 2012 gov/pub4681. Online tax filing 2012 Photographs of missing children. Online tax filing 2012   The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Online tax filing 2012 Photographs of missing children selected by the Center may appear in this publication on pages that otherwise would be blank. Online tax filing 2012 You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Online tax filing 2012 Introduction This publication explains the federal tax treatment of canceled debts, foreclosures, repossessions, and abandonments. Online tax filing 2012 Generally, if you owe a debt to someone else and they cancel or forgive that debt for less than its full amount, you are treated for income tax purposes as having income and may have to pay tax on this income. Online tax filing 2012 Note. Online tax filing 2012 This publication generally refers to debt that is canceled, forgiven, or discharged for less than the full amount of the debt as “canceled debt. Online tax filing 2012 ” Sometimes a debt, or part of a debt, that you do not have to pay is not considered canceled debt. Online tax filing 2012 These exceptions are discussed later under Exceptions . Online tax filing 2012 Sometimes a canceled debt may be excluded from your income. Online tax filing 2012 But if you do exclude canceled debt from income, you may be required to reduce your “tax attributes. Online tax filing 2012 ” These exclusions and the reduction of tax attributes associated with them are discussed later under Exclusions . Online tax filing 2012 Foreclosure and repossession are remedies that your lender may exercise if you fail to make payments on your loan and you have previously granted that lender a mortgage or other security interest in some of your property. Online tax filing 2012 These remedies allow the lender to seize or sell the property securing the loan. Online tax filing 2012 When your property is foreclosed upon or repossessed and sold, you are treated as having sold the property and you may recognize taxable gain. Online tax filing 2012 Whether you also recognize income from canceled debt depends in part on whether you are personally liable for the debt and in part on whether the outstanding loan balance is more than the fair market value (FMV) of the property. Online tax filing 2012 Figuring your gain or loss and income from canceled debt arising from a foreclosure or repossession is discussed later under Foreclosures and Repossessions . Online tax filing 2012 Generally, you abandon property when you voluntarily and permanently give up possession and use of property you own with the intention of ending your ownership but without passing it on to anyone else. Online tax filing 2012 Figuring your gain or loss and income from canceled debt arising from an abandonment is discussed later under Abandonments . Online tax filing 2012 This publication also includes detailed examples with filled-in forms. Online tax filing 2012 Comments and suggestions. Online tax filing 2012    We welcome your comments about this publication and your suggestions for future editions. Online tax filing 2012   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Online tax filing 2012 NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Online tax filing 2012 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Online tax filing 2012   You can send your comments from www. Online tax filing 2012 irs. Online tax filing 2012 gov/formspubs. Online tax filing 2012 Click on “More Information” and then on “Comment on Tax Forms and Publications”. Online tax filing 2012   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Online tax filing 2012 Ordering forms and publications. Online tax filing 2012    Visit www. Online tax filing 2012 irs. Online tax filing 2012 gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Online tax filing 2012 Internal Revenue Service 1201 N. Online tax filing 2012 Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Online tax filing 2012    If you have a tax question, check the information available on IRS. Online tax filing 2012 gov or call 1-800-829-1040. Online tax filing 2012 We cannot answer tax questions sent to either of the above addresses. Online tax filing 2012 Useful Items - You may want to see: Publication 225 Farmer's Tax Guide 334 Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ) 523 Selling Your Home 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 542 Corporations 544 Sales and Other Dispositions of Assets 551 Basis of Assets 908 Bankruptcy Tax Guide Form (and Instructions) 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) 1099-C Cancellation of Debt 1099-DIV Dividends and Distributions 3800 General Business Credit Common Situations Covered In This Publication The sections of this publication that apply to you depend on the type of debt canceled, the tax attributes you have, and whether or not you continue to own the property that was subject to the debt. Online tax filing 2012 Some examples of common circumstances are provided in the following paragraphs to help guide you through this publication. Online tax filing 2012 These examples do not cover every situation but are intended to provide general guidance for the most common situations. Online tax filing 2012 Nonbusiness credit card debt cancellation. Online tax filing 2012    If you had a nonbusiness credit card debt canceled, you may be able to exclude the canceled debt from income if the cancellation occurred in a title 11 bankruptcy case or you were insolvent immediately before the cancellation. Online tax filing 2012 You should read Bankruptcy or Insolvency under Exclusions in chapter 1 to see if you can exclude the canceled debt from income under one of those provisions. Online tax filing 2012 If you can exclude part or all of the canceled debt from income, you should also read Bankruptcy and Insolvency under Reduction of Tax Attributes in chapter 1. Online tax filing 2012 Personal vehicle repossession. Online tax filing 2012    If you had a personal vehicle repossessed and disposed of by the lender during the year, you will need to determine your gain or nondeductible loss on the disposition. Online tax filing 2012 This is explained in chapter 2 . Online tax filing 2012 If the lender also canceled all or part of the remaining amount of the loan, you may be able to exclude the canceled debt from income if the cancellation occurred in a title 11 bankruptcy case or you were insolvent immediately before the cancellation. Online tax filing 2012 You should read Bankruptcy or Insolvency under Exclusions in chapter 1 to see if you can exclude the canceled debt from income under one of those provisions. Online tax filing 2012 If you can exclude part or all of the canceled debt from income, you should also read Bankruptcy and Insolvency under Reduction of Tax Attributes in chapter 1. Online tax filing 2012 Main home foreclosure or abandonment. Online tax filing 2012    If a lender foreclosed on your main home during the year, you will need to determine your gain or loss on the foreclosure. Online tax filing 2012 Foreclosures are explained in chapter 2 and abandonments are explained in chapter 3. Online tax filing 2012 If the lender also canceled all or part of the remaining amount on the mortgage loan and you were personally liable for the debt, you should also read Qualified Principal Residence Indebtedness under Exclusions in chapter 1 to see if you can exclude part or all of the canceled debt from income. Online tax filing 2012 Detailed Example 2 and Example 3 in chapter 4 use filled-in forms to help explain these provisions. Online tax filing 2012 Main home loan modification (workout agreement). Online tax filing 2012    If a lender agrees to a mortgage loan modification (a “workout”) that includes a reduction in the principal balance of the loan, you should read Qualified Principal Residence Indebtedness under Exclusions in chapter 1 to see if you can exclude part or all of the canceled debt from income. Online tax filing 2012 If you can exclude part or all of the canceled debt from income, you should also read Qualified Principal Residence Indebtedness under Reduction of Tax Attributes in chapter 1. Online tax filing 2012 Detailed Example 1 in chapter 4 uses filled-in forms to help explain the tax implications of a mortgage workout scenario. Online tax filing 2012 Prev  Up  Next   Home   More Online Publications