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Turbotax deluxe federal e file 2012 for pc download Publication 503 - Introductory Material Table of Contents Future Developments Reminders IntroductionOrdering forms and publications. Turbotax deluxe federal e file 2012 for pc download Tax questions. Turbotax deluxe federal e file 2012 for pc download Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 503, such as legislation enacted after it was published, go to www. Turbotax deluxe federal e file 2012 for pc download irs. Turbotax deluxe federal e file 2012 for pc download gov/pub503. Turbotax deluxe federal e file 2012 for pc download Reminders Taxpayer identification number needed for each qualifying person. Turbotax deluxe federal e file 2012 for pc download  You must include on line 2 of Form 2441, Child and Dependent Care Expenses, the name and taxpayer identification number (generally the social security number) of each qualifying person. Turbotax deluxe federal e file 2012 for pc download See Taxpayer identification number under Qualifying Person Test, later. Turbotax deluxe federal e file 2012 for pc download You may have to pay employment taxes. Turbotax deluxe federal e file 2012 for pc download  If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer who has to pay employment taxes. Turbotax deluxe federal e file 2012 for pc download Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. Turbotax deluxe federal e file 2012 for pc download See Employment Taxes for Household Employers, later. Turbotax deluxe federal e file 2012 for pc download Photographs of missing children. Turbotax deluxe federal e file 2012 for pc download  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Turbotax deluxe federal e file 2012 for pc download Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Turbotax deluxe federal e file 2012 for pc download 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. Turbotax deluxe federal e file 2012 for pc download Introduction This publication explains the tests you must meet to claim the credit for child and dependent care expenses. Turbotax deluxe federal e file 2012 for pc download It explains how to figure and claim the credit. Turbotax deluxe federal e file 2012 for pc download You may be able to claim the credit if you pay someone to care for your dependent who is under age 13 or for your spouse or dependent who is not able to care for himself or herself. Turbotax deluxe federal e file 2012 for pc download The credit can be up to 35% of your expenses. Turbotax deluxe federal e file 2012 for pc download To qualify, you must pay these expenses so you can work or look for work. Turbotax deluxe federal e file 2012 for pc download This publication also discusses some of the employment tax rules for household employers. Turbotax deluxe federal e file 2012 for pc download Dependent care benefits. Turbotax deluxe federal e file 2012 for pc download   If you received any dependent care benefits from your employer during the year, you may be able to exclude from your income all or part of them. Turbotax deluxe federal e file 2012 for pc download You must complete Form 2441, Part III, before you can figure the amount of your credit. Turbotax deluxe federal e file 2012 for pc download See Dependent Care Benefits under How To Figure the Credit, later. Turbotax deluxe federal e file 2012 for pc download Comments and suggestions. Turbotax deluxe federal e file 2012 for pc download   We welcome your comments about this publication and your suggestions for future editions. Turbotax deluxe federal e file 2012 for pc download   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Turbotax deluxe federal e file 2012 for pc download NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Turbotax deluxe federal e file 2012 for pc download Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Turbotax deluxe federal e file 2012 for pc download   You can send your comments from www. Turbotax deluxe federal e file 2012 for pc download irs. Turbotax deluxe federal e file 2012 for pc download gov/formspubs/. Turbotax deluxe federal e file 2012 for pc download Click on “More Information” and then on “Comment on Tax Forms and Publications. Turbotax deluxe federal e file 2012 for pc download ”   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. Turbotax deluxe federal e file 2012 for pc download Ordering forms and publications. Turbotax deluxe federal e file 2012 for pc download   Visit www. Turbotax deluxe federal e file 2012 for pc download irs. Turbotax deluxe federal e file 2012 for pc download 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. Turbotax deluxe federal e file 2012 for pc download Internal Revenue Service 1201 N. Turbotax deluxe federal e file 2012 for pc download Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Turbotax deluxe federal e file 2012 for pc download   If you have a tax question, check the information available on IRS. Turbotax deluxe federal e file 2012 for pc download gov or call 1-800-829-1040. Turbotax deluxe federal e file 2012 for pc download We cannot answer tax questions sent to either of the above addresses. Turbotax deluxe federal e file 2012 for pc download Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 926 Household Employer's Tax Guide Form (and Instructions) 2441 Child and Dependent Care Expenses Schedule H (Form 1040) Household Employment Taxes W-10 Dependent Care Provider's Identification and Certification See How To Get Tax Help , near the end of this publication, for information about getting these publications and forms. Turbotax deluxe federal e file 2012 for pc download Prev  Up  Next   Home   More Online Publications
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Estimated Taxes

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Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.

Estimated tax is used to pay income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. If you do not pay enough through withholding or estimated tax payments, you may be charged a penalty. If you do not pay enough by the due date of each payment period you may be charged a penalty even if you are due a refund when you file your tax return.

How to Pay Estimated Tax

If you are filing as a sole proprietor, partner, S corporation shareholder and/or a self-employed individual, you should use Form 1040-ES, Estimated Tax for Individuals (PDF), to figure and pay your estimated tax. For additional information on filing for a sole proprietor, partners, and/or S corporation shareholder, refer to Publication 505, Tax Withholding and Estimated Tax.

If you are filing as a corporation you should use Form 1120-W, Estimated Tax for Corporations (PDF), to figure the estimated tax. You must deposit the payments. For additional information on filing for a corporation, refer to Publication 542, Corporations.

Who Must Pay Estimated Tax

If you are filing as a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return.

If you are filing as a corporation you generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return.

If you had a tax liability for the prior year, you may have to pay estimated tax for the current year. See the worksheet in Form 1040-ES (PDF) for more details on who must pay estimated tax.

Who Does Not Have To Pay Estimated Tax

If you receive salaries and wages, you can avoid having to pay estimated tax by asking your employer to withhold more tax from your earnings. To do this, file a new Form W-4 (PDF) with your employer. There is a special line on Form W-4 for you to enter the additional amount you want your employer to withhold.

You do not have to pay estimated tax for the current year if you meet all three of the following conditions.

  • You had no tax liability for the prior year
  • You were a U.S. citizen or resident for the whole year
  • Your prior tax year covered a 12 month period

You had no tax liability for the prior year if your total tax was zero or you did not have to file an income tax return. For additional information on how to figure your estimated tax, refer to Publication 505, Tax Withholding and Estimated Tax.

Estimated tax requirements are different for farmers and fishermen. Publication 505, Tax Withholding and Estimated Tax, provides more information about these special estimated tax rules.

How To Figure Estimated Tax

To figure your estimated tax, you must figure your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year.

When figuring your estimated tax for the current year, it may be helpful to use your income, deductions, and credits for prior year as a starting point. Use your prior year's federal tax return as a guide. You can use the worksheet in Form 1040-ES (PDF) to figure your estimated tax. You will need to estimate the amount of income you expect to earn for the year. If you estimated your earnings too high, simply complete another Form 1040-ES worksheet to refigure your estimated tax for the next quarter. If you estimated your earnings too low, again complete another Form 1040-ES worksheet to recalculate your estimated tax for the next quarter. You want to estimate your income as accurately as you can to avoid penalties.

You must make adjustments both for changes in your own situation and for recent changes in the tax law.

When To Pay Estimated Taxes

For estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date. If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return, see underpayment of tax below for more information.

Using the EFTPS system is the easiest way to pay your federal taxes for individuals as well as businesses. Make ALL of your federal tax payments including federal tax deposits (FTDs), installment agreement and estimated tax payments using Electronic Federal Tax Payment System (EFTPS). If it is easier to pay your estimated taxes weekly, bi-weekly, monthly, etc. you can, as long as you have paid enough in by the end of the quarter. Using EFTPS, you can access a history of your payments, so you know how much and when you made your estimated tax payments.

Underpayment of Estimated Tax

If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. There are special rules for farmers and fishermen. Please refer to Publication 505 Tax Withholding and Estimated Tax, for additional information.

However, if your income is received unevenly during the year, you may be able to avoid or lower the penalty by annualizing your income and making unequal payments. Use Form 2210 (PDF), Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if you owe a penalty for underpaying your estimated tax. Please refer to the Form 1040 Instructions (PDF) or the Form 1040A Instructions for where to report the estimated tax penalty on your return.

The penalty may also be waived if:

  1. The failure to make estimated payments was caused by a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty, or
  2. You retired (after reaching age 62) or became disabled during the tax year for which estimated payments were required to be made or in the preceding tax year, and the underpayment was due to reasonable cause and not willful neglect.

You should also use Form 2210 (PDF) to request a waiver of the penalty for the reasons shown above.

Page Last Reviewed or Updated: 31-Oct-2013

The Turbotax Deluxe Federal E File 2012 For Pc Download

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