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1040 Ez Electronic Filing

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1040 Ez Electronic Filing

1040 ez electronic filing 16. 1040 ez electronic filing   Reporting Gains and Losses Table of Contents What's New Introduction Useful Items - You may want to see: Reporting Capital Gains and Losses Exception 1. 1040 ez electronic filing Exception 2. 1040 ez electronic filing File Form 1099-B or Form 1099-S with the IRS. 1040 ez electronic filing Capital Losses Capital Gain Tax Rates What's New Maximum capital gain rates. 1040 ez electronic filing . 1040 ez electronic filing  For 2013, the maximum capital gain rates are 0%, 15%, 20%, 25%, and 28%. 1040 ez electronic filing Introduction This chapter discusses how to report capital gains and losses from sales, exchanges, and other dispositions of investment property on Form 8949 and Schedule D (Form 1040). 1040 ez electronic filing The discussion includes the following topics. 1040 ez electronic filing How to report short-term gains and losses. 1040 ez electronic filing How to report long-term gains and losses. 1040 ez electronic filing How to figure capital loss carryovers. 1040 ez electronic filing How to figure your tax on a net capital gain. 1040 ez electronic filing If you sell or otherwise dispose of property used in a trade or business or for the production of income, see Publication 544, Sales and Other Dispositions of Assets, before completing Schedule D (Form 1040). 1040 ez electronic filing Useful Items - You may want to see: Publication 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses Form (and Instructions) 4797 Sales of Business Property 6252 Installment Sale Income 8582 Passive Activity Loss Limitations 8949 Sales and Other Dispositions of Capital Assets Schedule D (Form 1040) Capital Gains and Losses Reporting Capital Gains and Losses Generally, report capital gains and losses on Form 8949. 1040 ez electronic filing Complete Form 8949 before you complete line 1b, 2, 3, 8b, 9, or 10 of Schedule D (Form 1040). 1040 ez electronic filing Use Form 8949 to report: The sale or exchange of a capital asset not reported on another form or schedule; Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit; and Nonbusiness bad debts. 1040 ez electronic filing Use Schedule D (Form 1040): To figure the overall gain or loss from transactions reported on Form 8949; To report a gain from Form 6252 or Part I of Form 4797; To report a gain or loss from Form 4684, 6781, or 8824; To report capital gain distributions not reported directly on Form 1040 or Form 1040A; To report a capital loss carryover from the previous tax year to the current tax year; To report your share of a gain or (loss) from a partnership, S corporation, estate, or trust; To report transactions reported to you on a Form 1099-B (or substitute statement) showing basis was reported to the IRS and to which none of the Form 8949 adjustments or codes apply; and To report undistributed long-term capital gains from Form 2439. 1040 ez electronic filing On Form 8949, enter all sales and exchanges of capital assets, including stocks, bonds, etc. 1040 ez electronic filing , and real estate (if not reported on Form 4684, 4797, 6252, 6781, 8824, or line 1a or 8a of Schedule D). 1040 ez electronic filing Include these transactions even if you did not receive a Form 1099-B or 1099-S (or substitute statement) for the transaction. 1040 ez electronic filing Report short-term gains or losses in Part I. 1040 ez electronic filing Report long-term gains or losses in Part II. 1040 ez electronic filing Use as many Forms 8949 as you need. 1040 ez electronic filing Exceptions to filing Form 8949 and Schedule D (Form 1040). 1040 ez electronic filing   There are certain situations where you may not have to file Form 8949 and/or Schedule D (Form 1040). 1040 ez electronic filing Exception 1. 1040 ez electronic filing   You do not have to file Form 8949 or Schedule D (Form 1040) if you have no capital losses and your only capital gains are capital gain distributions from Form(s) 1099-DIV, box 2a (or substitute statements). 1040 ez electronic filing (If any Form(s) 1099-DIV (or substitute statements) you receive have an amount in box 2b (unrecaptured section 1250 gain), box 2c (section 1202 gain), or box 2d (collectibles (28%) gain), you do not qualify for this exception. 1040 ez electronic filing ) If you qualify for this exception, report your capital gain distributions directly on line 13 of Form 1040 (and check the box on line 13). 1040 ez electronic filing Also use the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 instructions to figure your tax. 1040 ez electronic filing You can report your capital gain distributions on line 10 of Form 1040A, instead of on Form 1040, if none of the Forms 1099-DIV (or substitute statements) you received have an amount in box 2b, 2c, or 2d, and you do not have to file Form 1040. 1040 ez electronic filing Exception 2. 1040 ez electronic filing   You must file Schedule D (Form 1040), but generally do not have to file Form 8949, if Exception 1 does not apply and your only capital gains and losses are: Capital gain distributions; A capital loss carryover; A gain from Form 2439 or 6252 or Part I of Form 4797; A gain or loss from Form 4684, 6781, or 8824; A gain or loss from a partnership, S corporation, estate, or trust; or Gains and losses from transactions for which you received a Form 1099-B (or substitute statement) that shows the basis was reported to the IRS and for which you do not need to make any adjustments in column (g) of Form 8949 or enter any codes in column (f) of Form 8949. 1040 ez electronic filing Installment sales. 1040 ez electronic filing   You cannot use the installment method to report a gain from the sale of stock or securities traded on an established securities market. 1040 ez electronic filing You must report the entire gain in the year of sale (the year in which the trade date occurs). 1040 ez electronic filing Passive activity gains and losses. 1040 ez electronic filing    If you have gains or losses from a passive activity, you may also have to report them on Form 8582. 1040 ez electronic filing In some cases, the loss may be limited under the passive activity rules. 1040 ez electronic filing Refer to Form 8582 and its instructions for more information about reporting capital gains and losses from a passive activity. 1040 ez electronic filing Form 1099-B transactions. 1040 ez electronic filing   If you sold property, such as stocks, bonds, or certain commodities, through a broker, you should receive Form 1099-B or substitute statement from the broker. 1040 ez electronic filing Use the Form 1099-B or the substitute statement to complete Form 8949. 1040 ez electronic filing If you sold a covered security in 2013, your broker should send you a Form 1099-B (or substitute statement) that shows your basis. 1040 ez electronic filing This will help you complete Form 8949. 1040 ez electronic filing Generally, a covered security is a security you acquired after 2010. 1040 ez electronic filing   Report the gross proceeds shown in box 2a of Form 1099-B as the sales price in column (d) of either Part I or Part II of Form 8949, whichever applies. 1040 ez electronic filing However, if the broker advises you, in box 2a of Form 1099-B, that gross proceeds (sales price) less commissions and option premiums were reported to the IRS, enter that net sales price in column (d) of either Part I or Part II of Form 8949, whichever applies. 1040 ez electronic filing    Include in column (g) any expense of sale, such as broker's fees, commissions, state and local transfer taxes, and option premiums, unless you reported the net sales price in column (d). 1040 ez electronic filing If you include an expense of sale in column (g), enter “E” in column (f). 1040 ez electronic filing Form 1099-CAP transactions. 1040 ez electronic filing   If a corporation in which you own stock has had a change in control or a substantial change in capital structure, you should receive Form 1099-CAP or a substitute statement from the corporation. 1040 ez electronic filing Use the Form 1099-CAP or substitute statement to fill in Form 8949. 1040 ez electronic filing If your computations show that you would have a loss because of the change, do not enter any amounts on Form 8949 or Schedule D (Form 1040). 1040 ez electronic filing You cannot claim a loss on Schedule D (Form 1040) as a result of this transaction. 1040 ez electronic filing   Report the aggregate amount received shown in box 2 of Form 1099-CAP as the sales price in column (d) of either Part I or Part II of Form 8949, whichever applies. 1040 ez electronic filing Form 1099-S transactions. 1040 ez electronic filing   If you sold or traded reportable real estate, you generally should receive from the real estate reporting person a Form 1099-S showing the gross proceeds. 1040 ez electronic filing    “Reportable real estate” is defined as any present or future ownership interest in any of the following: Improved or unimproved land, including air space; Inherently permanent structures, including any residential, commercial, or industrial building; A condominium unit and its accessory fixtures and common elements, including land; and Stock in a cooperative housing corporation (as defined in section 216 of the Internal Revenue Code). 1040 ez electronic filing   A “real estate reporting person” could include the buyer's attorney, your attorney, the title or escrow company, a mortgage lender, your broker, the buyer's broker, or the person acquiring the biggest interest in the property. 1040 ez electronic filing   Your Form 1099-S will show the gross proceeds from the sale or exchange in box 2. 1040 ez electronic filing See the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040) for how to report these transactions and include them in Part I or Part II of Form 8949 as appropriate. 1040 ez electronic filing However, report like-kind exchanges on Form 8824 instead. 1040 ez electronic filing   It is unlawful for any real estate reporting person to separately charge you for complying with the requirement to file Form 1099-S. 1040 ez electronic filing Nominees. 1040 ez electronic filing   If you receive gross proceeds as a nominee (that is, the gross proceeds are in your name but actually belong to someone else), see the Instructions for Form 8949 for how to report these amounts on Form 8949. 1040 ez electronic filing File Form 1099-B or Form 1099-S with the IRS. 1040 ez electronic filing   If you received gross proceeds as a nominee in 2013, you must file a Form 1099-B or Form 1099-S for those proceeds with the IRS. 1040 ez electronic filing Send the Form 1099-B or Form 1099-S with a Form 1096, Annual Summary and Transmittal of U. 1040 ez electronic filing S. 1040 ez electronic filing Information Returns, to your Internal Revenue Service Center by February 28, 2014 (March 31, 2014, if you file Form 1099-B or Form 1099-S electronically). 1040 ez electronic filing Give the actual owner of the proceeds Copy B of the Form 1099-B or Form 1099-S by February 18, 2014. 1040 ez electronic filing On Form 1099-B, you should be listed as the “Payer. 1040 ez electronic filing ” The other owner should be listed as the “Recipient. 1040 ez electronic filing ” On Form 1099-S, you should be listed as the “Filer. 1040 ez electronic filing ” The other owner should be listed as the “Transferor. 1040 ez electronic filing ” You do not have to file a Form 1099-B or Form 1099-S to show proceeds for your spouse. 1040 ez electronic filing For more information about the reporting requirements and the penalties for failure to file (or furnish) certain information returns, see the General Instructions for Certain Information Returns. 1040 ez electronic filing If you are filing electronically see Publication 1220. 1040 ez electronic filing Sale of property bought at various times. 1040 ez electronic filing   If you sell a block of stock or other property that you bought at various times, report the short-term gain or loss from the sale on one row in Part I of Form 8949, and the long-term gain or loss on one row in Part II of Form 8949. 1040 ez electronic filing Write “Various” in column (b) for the “Date acquired. 1040 ez electronic filing ” Sale expenses. 1040 ez electronic filing    On Form 8949, include in column (g) any expense of sale, such as broker's fees, commissions, state and local transfer taxes, and option premiums, unless you reported the net sales price in column (d). 1040 ez electronic filing If you include an expense of sale in column (g), enter “E” in column (f). 1040 ez electronic filing   For more information about adjustments to basis, see chapter 13. 1040 ez electronic filing Short-term gains and losses. 1040 ez electronic filing   Capital gain or loss on the sale or trade of investment property held 1 year or less is a short-term capital gain or loss. 1040 ez electronic filing You report it in Part I of Form 8949. 1040 ez electronic filing   You combine your share of short-term capital gain or loss from partnerships, S corporations, estates, and trusts, and any short-term capital loss carryover, with your other short-term capital gains and losses to figure your net short-term capital gain or loss on line 7 of Schedule D (Form 1040). 1040 ez electronic filing Long-term gains and losses. 1040 ez electronic filing    A capital gain or loss on the sale or trade of investment property held more than 1 year is a long-term capital gain or loss. 1040 ez electronic filing You report it in Part II of Form 8949. 1040 ez electronic filing   You report the following in Part II of Schedule D (Form 1040): Undistributed long-term capital gains from a mutual fund (or other regulated investment company) or real estate investment trust (REIT); Your share of long-term capital gains or losses from partnerships, S corporations, estates, and trusts; All capital gain distributions from mutual funds and REITs not reported directly on line 10 of Form 1040A or line 13 of Form 1040; and Long-term capital loss carryovers. 1040 ez electronic filing    The result after combining these items with your other long-term capital gains and losses is your net long-term capital gain or loss (Schedule D (Form 1040), line 15). 1040 ez electronic filing Total net gain or loss. 1040 ez electronic filing   To figure your total net gain or loss, combine your net short-term capital gain or loss (Schedule D (Form 1040), line 7) with your net long-term capital gain or loss (Schedule D (Form 1040), line 15). 1040 ez electronic filing Enter the result on Schedule D (Form 1040), Part III, line 16. 1040 ez electronic filing If your losses are more than your gains, see Capital Losses , next. 1040 ez electronic filing If both lines 15 and 16 of your Schedule D (Form 1040) are gains and your taxable income on your Form 1040 is more than zero, see Capital Gain Tax Rates , later. 1040 ez electronic filing Capital Losses If your capital losses are more than your capital gains, you can claim a capital loss deduction. 1040 ez electronic filing Report the amount of the deduction on line 13 of Form 1040, in parentheses. 1040 ez electronic filing Limit on deduction. 1040 ez electronic filing   Your allowable capital loss deduction, figured on Schedule D (Form 1040), is the lesser of: $3,000 ($1,500 if you are married and file a separate return); or Your total net loss as shown on line 16 of Schedule D (Form 1040). 1040 ez electronic filing   You can use your total net loss to reduce your income dollar for dollar, up to the $3,000 limit. 1040 ez electronic filing Capital loss carryover. 1040 ez electronic filing   If you have a total net loss on line 16 of Schedule D (Form 1040) that is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you had incurred it in that next year. 1040 ez electronic filing If part of the loss is still unused, you can carry it over to later years until it is completely used up. 1040 ez electronic filing   When you figure the amount of any capital loss carryover to the next year, you must take the current year's allowable deduction into account, whether or not you claimed it and whether or not you filed a return for the current year. 1040 ez electronic filing   When you carry over a loss, it remains long term or short term. 1040 ez electronic filing A long-term capital loss you carry over to the next tax year will reduce that year's long-term capital gains before it reduces that year's short-term capital gains. 1040 ez electronic filing Figuring your carryover. 1040 ez electronic filing   The amount of your capital loss carryover is the amount of your total net loss that is more than the lesser of: Your allowable capital loss deduction for the year; or Your taxable income increased by your allowable capital loss deduction for the year and your deduction for personal exemptions. 1040 ez electronic filing   If your deductions are more than your gross income for the tax year, use your negative taxable income in computing the amount in item (2). 1040 ez electronic filing    Complete the Capital Loss Carryover Worksheet in the Instructions for Schedule D or Publication 550 to determine the part of your capital loss that you can carry over. 1040 ez electronic filing Example. 1040 ez electronic filing Bob and Gloria sold securities in 2013. 1040 ez electronic filing The sales resulted in a capital loss of $7,000. 1040 ez electronic filing They had no other capital transactions. 1040 ez electronic filing Their taxable income was $26,000. 1040 ez electronic filing On their joint 2013 return, they can deduct $3,000. 1040 ez electronic filing The unused part of the loss, $4,000 ($7,000 − $3,000), can be carried over to 2014. 1040 ez electronic filing If their capital loss had been $2,000, their capital loss deduction would have been $2,000. 1040 ez electronic filing They would have no carryover. 1040 ez electronic filing Use short-term losses first. 1040 ez electronic filing   When you figure your capital loss carryover, use your short-term capital losses first, even if you incurred them after a long-term capital loss. 1040 ez electronic filing If you have not reached the limit on the capital loss deduction after using the short-term capital losses, use the long-term capital losses until you reach the limit. 1040 ez electronic filing Decedent's capital loss. 1040 ez electronic filing    A capital loss sustained by a decedent during his or her last tax year (or carried over to that year from an earlier year) can be deducted only on the final income tax return filed for the decedent. 1040 ez electronic filing The capital loss limits discussed earlier still apply in this situation. 1040 ez electronic filing The decedent's estate cannot deduct any of the loss or carry it over to following years. 1040 ez electronic filing Joint and separate returns. 1040 ez electronic filing   If you and your spouse once filed separate returns and are now filing a joint return, combine your separate capital loss carryovers. 1040 ez electronic filing However, if you and your spouse once filed a joint return and are now filing separate returns, any capital loss carryover from the joint return can be deducted only on the return of the spouse who actually had the loss. 1040 ez electronic filing Capital Gain Tax Rates The tax rates that apply to a net capital gain are generally lower than the tax rates that apply to other income. 1040 ez electronic filing These lower rates are called the maximum capital gain rates. 1040 ez electronic filing The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. 1040 ez electronic filing For 2013, the maximum capital gain rates are 0%, 15%, 20%, 25%, and 28%. 1040 ez electronic filing See Table 16-1 for details. 1040 ez electronic filing If you figure your tax using the maximum capital gain rate and the regular tax computation results in a lower tax, the regular tax computation applies. 1040 ez electronic filing Example. 1040 ez electronic filing All of your net capital gain is from selling collectibles, so the capital gain rate would be 28%. 1040 ez electronic filing If you are otherwise subject to a rate lower than 28%, the 28% rate does not apply. 1040 ez electronic filing Investment interest deducted. 1040 ez electronic filing   If you claim a deduction for investment interest, you may have to reduce the amount of your net capital gain that is eligible for the capital gain tax rates. 1040 ez electronic filing Reduce it by the amount of the net capital gain you choose to include in investment income when figuring the limit on your investment interest deduction. 1040 ez electronic filing This is done on the Schedule D Tax Worksheet or the Qualified Dividends and Capital Gain Tax Worksheet. 1040 ez electronic filing For more information about the limit on investment interest, see Interest Expenses in chapter 3 of Publication 550. 1040 ez electronic filing Table 16-1. 1040 ez electronic filing What Is Your Maximum Capital Gain Rate? IF your net capital gain is from . 1040 ez electronic filing . 1040 ez electronic filing . 1040 ez electronic filing THEN your  maximum capital gain rate is . 1040 ez electronic filing . 1040 ez electronic filing . 1040 ez electronic filing a collectibles gain 28% an eligible gain on qualified small business stock minus the section 1202 exclusion 28% an unrecaptured section 1250 gain 25% other gain1 and the regular tax rate that would apply is 39. 1040 ez electronic filing 6% 20% other gain1 and the regular tax rate that would apply is 25%, 28%, 33%, or 35% 15% other gain1 and the regular tax rate that would apply is 10% or 15% 0% 1 Other gain means any gain that is not collectibles gain, gain on qualified small business stock, or unrecaptured section 1250 gain. 1040 ez electronic filing     Collectibles gain or loss. 1040 ez electronic filing   This is gain or loss from the sale or trade of a work of art, rug, antique, metal (such as gold, silver, and platinum bullion), gem, stamp, coin, or alcoholic beverage held more than 1 year. 1040 ez electronic filing   Collectibles gain includes gain from sale of an interest in a partnership, S corporation, or trust due to unrealized appreciation of collectibles. 1040 ez electronic filing Gain on qualified small business stock. 1040 ez electronic filing    If you realized a gain from qualified small business stock that you held more than 5 years, you generally can exclude some or all of your gain under section 1202. 1040 ez electronic filing The eligible gain minus your section 1202 exclusion is a 28% rate gain. 1040 ez electronic filing See Gains on Qualified Small Business Stock in chapter 4 of Publication 550. 1040 ez electronic filing Unrecaptured section 1250 gain. 1040 ez electronic filing    Generally, this is any part of your capital gain from selling section 1250 property (real property) that is due to depreciation (but not more than your net section 1231 gain), reduced by any net loss in the 28% group. 1040 ez electronic filing Use the Unrecaptured Section 1250 Gain Worksheet in the Schedule D (Form 1040) instructions to figure your unrecaptured section 1250 gain. 1040 ez electronic filing For more information about section 1250 property and section 1231 gain, see chapter 3 of Publication 544. 1040 ez electronic filing Tax computation using maximum capital gain rates. 1040 ez electronic filing   Use the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet (whichever applies) to figure your tax if you have qualified dividends or net capital gain. 1040 ez electronic filing You have net capital gain if Schedule D (Form 1040), lines 15 and 16, are both gains. 1040 ez electronic filing Schedule D Tax Worksheet. 1040 ez electronic filing   Use the Schedule D Tax Worksheet in the Schedule D (Form 1040) instructions to figure your tax if: You have to file Schedule D (Form 1040); and Schedule D (Form 1040), line 18 (28% rate gain) or line 19 (unrecaptured section 1250 gain), is more than zero. 1040 ez electronic filing Qualified Dividends and Capital Gain Tax Worksheet. 1040 ez electronic filing   If you do not have to use the Schedule D Tax Worksheet (as explained above) and any of the following apply, use the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Form 1040 or Form 1040A (whichever you file) to figure your tax. 1040 ez electronic filing You received qualified dividends. 1040 ez electronic filing (See Qualified Dividends in chapter 8. 1040 ez electronic filing ) You do not have to file Schedule D (Form 1040) and you received capital gain distributions. 1040 ez electronic filing (See Exceptions to filing Form 8949 and Schedule D (Form 1040) , earlier. 1040 ez electronic filing ) Schedule D (Form 1040), lines 15 and 16, are both more than zero. 1040 ez electronic filing Alternative minimum tax. 1040 ez electronic filing   These capital gain rates are also used in figuring alternative minimum tax. 1040 ez electronic filing Prev  Up  Next   Home   More Online Publications
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The 1040 Ez Electronic Filing

1040 ez electronic filing 18. 1040 ez electronic filing   Alimony Table of Contents IntroductionSpouse or former spouse. 1040 ez electronic filing Divorce or separation instrument. 1040 ez electronic filing Useful Items - You may want to see: General RulesMortgage payments. 1040 ez electronic filing Taxes and insurance. 1040 ez electronic filing Other payments to a third party. 1040 ez electronic filing Instruments Executed After 1984Payments to a third party. 1040 ez electronic filing Exception. 1040 ez electronic filing Substitute payments. 1040 ez electronic filing Specifically designated as child support. 1040 ez electronic filing Contingency relating to your child. 1040 ez electronic filing Clearly associated with a contingency. 1040 ez electronic filing How To Deduct Alimony Paid How To Report Alimony Received Recapture Rule Introduction This chapter discusses the rules that apply if you pay or receive alimony. 1040 ez electronic filing It covers the following topics. 1040 ez electronic filing What payments are alimony. 1040 ez electronic filing What payments are not alimony, such as child support. 1040 ez electronic filing How to deduct alimony you paid. 1040 ez electronic filing How to report alimony you received as income. 1040 ez electronic filing Whether you must recapture the tax benefits of alimony. 1040 ez electronic filing Recapture means adding back in your income all or part of a deduction you took in a prior year. 1040 ez electronic filing Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument. 1040 ez electronic filing It does not include voluntary payments that are not made under a divorce or separation instrument. 1040 ez electronic filing Alimony is deductible by the payer and must be included in the spouse's or former spouse's income. 1040 ez electronic filing Although this chapter is generally written for the payer of the alimony, the recipient can use the information to determine whether an amount received is alimony. 1040 ez electronic filing To be alimony, a payment must meet certain requirements. 1040 ez electronic filing Different requirements generally apply to payments under instruments executed after 1984 and to payments under instruments executed before 1985. 1040 ez electronic filing This chapter discusses the rules for payments under instruments executed after 1984. 1040 ez electronic filing If you need the rules for payments under pre-1985 instruments, get and keep a copy of the 2004 version of Publication 504. 1040 ez electronic filing That was the last year the information on pre-1985 instruments was included in Publication 504. 1040 ez electronic filing Use Table 18-1 in this chapter as a guide to determine whether certain payments are considered alimony. 1040 ez electronic filing Definitions. 1040 ez electronic filing   The following definitions apply throughout this chapter. 1040 ez electronic filing Spouse or former spouse. 1040 ez electronic filing   Unless otherwise stated, the term “spouse” includes former spouse. 1040 ez electronic filing Divorce or separation instrument. 1040 ez electronic filing   The term “divorce or separation instrument” means: A decree of divorce or separate maintenance or a written instrument incident to that decree, A written separation agreement, or A decree or any type of court order requiring a spouse to make payments for the support or maintenance of the other spouse. 1040 ez electronic filing This includes a temporary decree, an interlocutory (not final) decree, and a decree of alimony pendente lite (while awaiting action on the final decree or agreement). 1040 ez electronic filing Useful Items - You may want to see: Publication 504 Divorced or Separated Individuals General Rules The following rules apply to alimony regardless of when the divorce or separation instrument was executed. 1040 ez electronic filing Payments not alimony. 1040 ez electronic filing   Not all payments under a divorce or separation instrument are alimony. 1040 ez electronic filing Alimony does not include: Child support, Noncash property settlements, Payments that are your spouse's part of community income, as explained under Community Property in Publication 504, Payments to keep up the payer's property, or Use of the payer's property. 1040 ez electronic filing Payments to a third party. 1040 ez electronic filing   Cash payments, checks, or money orders to a third party on behalf of your spouse under the terms of your divorce or separation instrument can be alimony, if they otherwise qualify. 1040 ez electronic filing These include payments for your spouse's medical expenses, housing costs (rent, utilities, etc. 1040 ez electronic filing ), taxes, tuition, etc. 1040 ez electronic filing The payments are treated as received by your spouse and then paid to the third party. 1040 ez electronic filing Life insurance premiums. 1040 ez electronic filing   Alimony includes premiums you must pay under your divorce or separation instrument for insurance on your life to the extent your spouse owns the policy. 1040 ez electronic filing Payments for jointly-owned home. 1040 ez electronic filing   If your divorce or separation instrument states that you must pay expenses for a home owned by you and your spouse, some of your payments may be alimony. 1040 ez electronic filing Mortgage payments. 1040 ez electronic filing   If you must pay all the mortgage payments (principal and interest) on a jointly-owned home, and they otherwise qualify as alimony, you can deduct one-half of the total payments as alimony. 1040 ez electronic filing If you itemize deductions and the home is a qualified home, you can claim one-half of the interest in figuring your deductible interest. 1040 ez electronic filing Your spouse must report one-half of the payments as alimony received. 1040 ez electronic filing If your spouse itemizes deductions and the home is a qualified home, he or she can claim one-half of the interest on the mortgage in figuring deductible interest. 1040 ez electronic filing Taxes and insurance. 1040 ez electronic filing   If you must pay all the real estate taxes or insurance on a home held as tenants in common, you can deduct one-half of these payments as alimony. 1040 ez electronic filing Your spouse must report one-half of these payments as alimony received. 1040 ez electronic filing If you and your spouse itemize deductions, you can each claim one-half of the real estate taxes and none of the home insurance. 1040 ez electronic filing    If your home is held as tenants by the entirety or joint tenants, none of your payments for taxes or insurance are alimony. 1040 ez electronic filing But if you itemize deductions, you can claim all of the real estate taxes and none of the home insurance. 1040 ez electronic filing Other payments to a third party. 1040 ez electronic filing   If you made other third-party payments, see Publication 504 to see whether any part of the payments qualifies as alimony. 1040 ez electronic filing Instruments Executed After 1984 The following rules for alimony apply to payments under divorce or separation instruments executed after 1984. 1040 ez electronic filing Exception for instruments executed before 1985. 1040 ez electronic filing   There are two situations where the rules for instruments executed after 1984 apply to instruments executed before 1985. 1040 ez electronic filing A divorce or separation instrument executed before 1985 and then modified after 1984 to specify that the after-1984 rules will apply. 1040 ez electronic filing A temporary divorce or separation instrument executed before 1985 and incorporated into, or adopted by, a final decree executed after 1984 that: Changes the amount or period of payment, or Adds or deletes any contingency or condition. 1040 ez electronic filing   For the rules for alimony payments under pre-1985 instruments not meeting these exceptions, get the 2004 version of Publication 504 at www. 1040 ez electronic filing irs. 1040 ez electronic filing gov/pub504. 1040 ez electronic filing Example 1. 1040 ez electronic filing In November 1984, you and your former spouse executed a written separation agreement. 1040 ez electronic filing In February 1985, a decree of divorce was substituted for the written separation agreement. 1040 ez electronic filing The decree of divorce did not change the terms for the alimony you pay your former spouse. 1040 ez electronic filing The decree of divorce is treated as executed before 1985. 1040 ez electronic filing Alimony payments under this decree are not subject to the rules for payments under instruments executed after 1984. 1040 ez electronic filing Example 2. 1040 ez electronic filing Assume the same facts as in Example 1 except that the decree of divorce changed the amount of the alimony. 1040 ez electronic filing In this example, the decree of divorce is not treated as executed before 1985. 1040 ez electronic filing The alimony payments are subject to the rules for payments under instruments executed after 1984. 1040 ez electronic filing Alimony requirements. 1040 ez electronic filing   A payment to or for a spouse under a divorce or separation instrument is alimony if the spouses do not file a joint return with each other and all the following requirements are met. 1040 ez electronic filing The payment is in cash. 1040 ez electronic filing The instrument does not designate the payment as not alimony. 1040 ez electronic filing Spouses legally separated under a decree of divorce or separate maintenance are not members of the same household. 1040 ez electronic filing There is no liability to make any payment (in cash or property) after the death of the recipient spouse. 1040 ez electronic filing The payment is not treated as child support. 1040 ez electronic filing Each of these requirements is discussed below. 1040 ez electronic filing Cash payment requirement. 1040 ez electronic filing   Only cash payments, including checks and money orders, qualify as alimony. 1040 ez electronic filing The following do not qualify as alimony. 1040 ez electronic filing Transfers of services or property (including a debt instrument of a third party or an annuity contract). 1040 ez electronic filing Execution of a debt instrument by the payer. 1040 ez electronic filing The use of the payer's property. 1040 ez electronic filing Payments to a third party. 1040 ez electronic filing   Cash payments to a third party under the terms of your divorce or separation instrument can qualify as cash payments to your spouse. 1040 ez electronic filing See Payments to a third party under General Rules, earlier. 1040 ez electronic filing   Also, cash payments made to a third party at the written request of your spouse may qualify as alimony if all the following requirements are met. 1040 ez electronic filing The payments are in lieu of payments of alimony directly to your spouse. 1040 ez electronic filing The written request states that both spouses intend the payments to be treated as alimony. 1040 ez electronic filing You receive the written request from your spouse before you file your return for the year you made the payments. 1040 ez electronic filing Payments designated as not alimony. 1040 ez electronic filing   You and your spouse can designate that otherwise qualifying payments are not alimony. 1040 ez electronic filing You do this by including a provision in your divorce or separation instrument that states the payments are not deductible as alimony by you and are excludable from your spouse's income. 1040 ez electronic filing For this purpose, any instrument (written statement) signed by both of you that makes this designation and that refers to a previous written separation agreement is treated as a written separation agreement (and therefore a divorce or separation instrument). 1040 ez electronic filing If you are subject to temporary support orders, the designation must be made in the original or a later temporary support order. 1040 ez electronic filing   Your spouse can exclude the payments from income only if he or she attaches a copy of the instrument designating them as not alimony to his or her return. 1040 ez electronic filing The copy must be attached each year the designation applies. 1040 ez electronic filing Spouses cannot be members of the same household. 1040 ez electronic filing    Payments to your spouse while you are members of the same household are not alimony if you are legally separated under a decree of divorce or separate maintenance. 1040 ez electronic filing A home you formerly shared is considered one household, even if you physically separate yourselves in the home. 1040 ez electronic filing   You are not treated as members of the same household if one of you is preparing to leave the household and does leave no later than 1 month after the date of the payment. 1040 ez electronic filing Exception. 1040 ez electronic filing   If you are not legally separated under a decree of divorce or separate maintenance, a payment under a written separation agreement, support decree, or other court order may qualify as alimony even if you are members of the same household when the payment is made. 1040 ez electronic filing Table 18-1. 1040 ez electronic filing Alimony Requirements (Instruments Executed After 1984) Payments ARE alimony if all of the following are true: Payments are NOT alimony if any of the following are true: Payments are required by a divorce or separation instrument. 1040 ez electronic filing Payments are not required by a divorce or separation instrument. 1040 ez electronic filing Payer and recipient spouse do not file a joint return with each other. 1040 ez electronic filing Payer and recipient spouse file a joint return with each other. 1040 ez electronic filing Payment is in cash (including checks or money orders). 1040 ez electronic filing Payment is: Not in cash, A noncash property settlement, Spouse's part of community income, or To keep up the payer's property. 1040 ez electronic filing Payment is not designated in the instrument as not alimony. 1040 ez electronic filing Payment is designated in the instrument as not alimony. 1040 ez electronic filing Spouses legally separated under a decree of divorce or separate maintenance are not members of the same household. 1040 ez electronic filing Spouses legally separated under a decree of divorce or separate maintenance are members of the same household. 1040 ez electronic filing Payments are not required after death of the recipient spouse. 1040 ez electronic filing Payments are required after death of the recipient spouse. 1040 ez electronic filing Payment is not treated as child support. 1040 ez electronic filing Payment is treated as child support. 1040 ez electronic filing These payments are deductible by the payer and includible in income by the recipient. 1040 ez electronic filing These payments are neither deductible by the payer nor includible in income by the recipient. 1040 ez electronic filing Liability for payments after death of recipient spouse. 1040 ez electronic filing   If any part of payments you make must continue to be made for any period after your spouse's death, that part of your payments is not alimony, whether made before or after the death. 1040 ez electronic filing If all of the payments would continue, then none of the payments made before or after the death are alimony. 1040 ez electronic filing   The divorce or separation instrument does not have to expressly state that the payments cease upon the death of your spouse if, for example, the liability for continued payments would end under state law. 1040 ez electronic filing Example. 1040 ez electronic filing You must pay your former spouse $10,000 in cash each year for 10 years. 1040 ez electronic filing Your divorce decree states that the payments will end upon your former spouse's death. 1040 ez electronic filing You must also pay your former spouse or your former spouse's estate $20,000 in cash each year for 10 years. 1040 ez electronic filing The death of your spouse would not terminate these payments under state law. 1040 ez electronic filing The $10,000 annual payments may qualify as alimony. 1040 ez electronic filing The $20,000 annual payments that do not end upon your former spouse's death are not alimony. 1040 ez electronic filing Substitute payments. 1040 ez electronic filing   If you must make any payments in cash or property after your spouse's death as a substitute for continuing otherwise qualifying payments before the death, the otherwise qualifying payments are not alimony. 1040 ez electronic filing To the extent that your payments begin, accelerate, or increase because of the death of your spouse, otherwise qualifying payments you made may be treated as payments that were not alimony. 1040 ez electronic filing Whether or not such payments will be treated as not alimony depends on all the facts and circumstances. 1040 ez electronic filing Example 1. 1040 ez electronic filing Under your divorce decree, you must pay your former spouse $30,000 annually. 1040 ez electronic filing The payments will stop at the end of 6 years or upon your former spouse's death, if earlier. 1040 ez electronic filing Your former spouse has custody of your minor children. 1040 ez electronic filing The decree provides that if any child is still a minor at your spouse's death, you must pay $10,000 annually to a trust until the youngest child reaches the age of majority. 1040 ez electronic filing The trust income and corpus (principal) are to be used for your children's benefit. 1040 ez electronic filing These facts indicate that the payments to be made after your former spouse's death are a substitute for $10,000 of the $30,000 annual payments. 1040 ez electronic filing Of each of the $30,000 annual payments, $10,000 is not alimony. 1040 ez electronic filing Example 2. 1040 ez electronic filing Under your divorce decree, you must pay your former spouse $30,000 annually. 1040 ez electronic filing The payments will stop at the end of 15 years or upon your former spouse's death, if earlier. 1040 ez electronic filing The decree provides that if your former spouse dies before the end of the 15-year period, you must pay the estate the difference between $450,000 ($30,000 × 15) and the total amount paid up to that time. 1040 ez electronic filing For example, if your spouse dies at the end of the tenth year, you must pay the estate $150,000 ($450,000 − $300,000). 1040 ez electronic filing These facts indicate that the lump-sum payment to be made after your former spouse's death is a substitute for the full amount of the $30,000 annual payments. 1040 ez electronic filing None of the annual payments are alimony. 1040 ez electronic filing The result would be the same if the payment required at death were to be discounted by an appropriate interest factor to account for the prepayment. 1040 ez electronic filing Child support. 1040 ez electronic filing   A payment that is specifically designated as child support or treated as specifically designated as child support under your divorce or separation instrument is not alimony. 1040 ez electronic filing The amount of child support may vary over time. 1040 ez electronic filing Child support payments are not deductible by the payer and are not taxable to the recipient. 1040 ez electronic filing Specifically designated as child support. 1040 ez electronic filing   A payment will be treated as specifically designated as child support to the extent that the payment is reduced either: On the happening of a contingency relating to your child, or At a time that can be clearly associated with the contingency. 1040 ez electronic filing A payment may be treated as specifically designated as child support even if other separate payments are specifically designated as child support. 1040 ez electronic filing Contingency relating to your child. 1040 ez electronic filing   A contingency relates to your child if it depends on any event relating to that child. 1040 ez electronic filing It does not matter whether the event is certain or likely to occur. 1040 ez electronic filing Events relating to your child include the child's: Becoming employed, Dying, Leaving the household, Leaving school, Marrying, or Reaching a specified age or income level. 1040 ez electronic filing Clearly associated with a contingency. 1040 ez electronic filing   Payments that would otherwise qualify as alimony are presumed to be reduced at a time clearly associated with the happening of a contingency relating to your child only in the following situations. 1040 ez electronic filing The payments are to be reduced not more than 6 months before or after the date the child will reach 18, 21, or local age of majority. 1040 ez electronic filing The payments are to be reduced on two or more occasions that occur not more than 1 year before or after a different one of your children reaches a certain age from 18 to 24. 1040 ez electronic filing This certain age must be the same for each child, but need not be a whole number of years. 1040 ez electronic filing In all other situations, reductions in payments are not treated as clearly associated with the happening of a contingency relating to your child. 1040 ez electronic filing   Either you or the IRS can overcome the presumption in the two situations above. 1040 ez electronic filing This is done by showing that the time at which the payments are to be reduced was determined independently of any contingencies relating to your children. 1040 ez electronic filing For example, if you can show that the period of alimony payments is customary in the local jurisdiction, such as a period equal to one-half of the duration of the marriage, you can overcome the presumption and may be able to treat the amount as alimony. 1040 ez electronic filing How To Deduct Alimony Paid You can deduct alimony you paid, whether or not you itemize deductions on your return. 1040 ez electronic filing You must file Form 1040. 1040 ez electronic filing You cannot use Form 1040A or Form 1040EZ. 1040 ez electronic filing Enter the amount of alimony you paid on Form 1040, line 31a. 1040 ez electronic filing In the space provided on line 31b, enter your spouse's social security number (SSN) or individual taxpayer identification number (ITIN). 1040 ez electronic filing If you paid alimony to more than one person, enter the SSN or ITIN of one of the recipients. 1040 ez electronic filing Show the SSN or ITIN and amount paid to each other recipient on an attached statement. 1040 ez electronic filing Enter your total payments on line 31a. 1040 ez electronic filing You must provide your spouse's SSN or ITIN. 1040 ez electronic filing If you do not, you may have to pay a $50 penalty and your deduction may be disallowed. 1040 ez electronic filing For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. 1040 ez electronic filing How To Report Alimony Received Report alimony you received as income on Form 1040, line 11. 1040 ez electronic filing You cannot use Form 1040A or Form 1040EZ. 1040 ez electronic filing You must give the person who paid the alimony your SSN or ITIN. 1040 ez electronic filing If you do not, you may have to pay a $50 penalty. 1040 ez electronic filing Recapture Rule If your alimony payments decrease or end during the first 3 calendar years, you may be subject to the recapture rule. 1040 ez electronic filing If you are subject to this rule, you have to include in income in the third year part of the alimony payments you previously deducted. 1040 ez electronic filing Your spouse can deduct in the third year part of the alimony payments he or she previously included in income. 1040 ez electronic filing The 3-year period starts with the first calendar year you make a payment qualifying as alimony under a decree of divorce or separate maintenance or a written separation agreement. 1040 ez electronic filing Do not include any time in which payments were being made under temporary support orders. 1040 ez electronic filing The second and third years are the next 2 calendar years, whether or not payments are made during those years. 1040 ez electronic filing The reasons for a reduction or end of alimony payments that can require a recapture include: A change in your divorce or separation instrument, A failure to make timely payments, A reduction in your ability to provide support, or A reduction in your spouse's support needs. 1040 ez electronic filing When to apply the recapture rule. 1040 ez electronic filing   You are subject to the recapture rule in the third year if the alimony you pay in the third year decreases by more than $15,000 from the second year or the alimony you pay in the second and third years decreases significantly from the alimony you pay in the first year. 1040 ez electronic filing   When you figure a decrease in alimony, do not include the following amounts. 1040 ez electronic filing Payments made under a temporary support order. 1040 ez electronic filing Payments required over a period of at least 3 calendar years that vary because they are a fixed part of your income from a business or property, or from compensation for employment or self-employment. 1040 ez electronic filing Payments that decrease because of the death of either spouse or the remarriage of the spouse receiving the payments before the end of the third year. 1040 ez electronic filing Figuring the recapture. 1040 ez electronic filing   You can use Worksheet 1 in Publication 504 to figure recaptured alimony. 1040 ez electronic filing Including the recapture in income. 1040 ez electronic filing   If you must include a recapture amount in income, show it on Form 1040, line 11 (“Alimony received”). 1040 ez electronic filing Cross out “received” and enter “recapture. 1040 ez electronic filing ” On the dotted line next to the amount, enter your spouse's last name and SSN or ITIN. 1040 ez electronic filing Deducting the recapture. 1040 ez electronic filing   If you can deduct a recapture amount, show it on Form 1040, line 31a (“Alimony paid”). 1040 ez electronic filing Cross out “paid” and enter “recapture. 1040 ez electronic filing ” In the space provided, enter your spouse's SSN or ITIN. 1040 ez electronic filing Prev  Up  Next   Home   More Online Publications