Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

1040x Tax Form 2011

H&r Block Online Filing2014 Tax Forms 1040ezCan I Efile 2012 TaxesIrs Free File 20112013 Tax Booklet 1040ezTax Form 1040ez InstructionsMilitary Onesource Turbotax1040nr Online FilingAmendment Tax Return FormHow Do I File My Taxes For 2012Tax Software ComparisonFile 2012 TaxHow To File Amended Tax Return 20132011 TaxFree Online Tax FilingHow To Amend My Taxes Online2009 1040 Tax FormMilitary Taxes OnlineFreetaxusa2012When Is The Deadline To File TaxesH&r Block Advantage Free2012 Free1040x File OnlineDo You File Taxes If You Are UnemployedFill Out 1040x OnlineH&r Block Free Efile 2011Irs 1040 FormFree H & R Block Tax FilingFree Income Tax HelpAmending 2010 Tax ReturnFile Federal And State Taxes For FreeFederal 1040ez FormIrs Gov FreefileE File 1040ez1040ez Instructions 20132012 Income Tax Forms 1040ezFree File For State Taxes1040ez HelpIrs Amendment Forms2010 Federal Tax Forms And InstructionsForm 1040ez 2013

1040x Tax Form 2011

1040x tax form 2011 5. 1040x tax form 2011   Credits Table of Contents Credit for the Elderly or the DisabledCan You Take the Credit? Figuring the Credit Child and Dependent Care Credit Earned Income Credit (EIC)Do You Qualify for the Earned Income Credit (EIC)? Figuring the EIC This chapter briefly discusses the credit for the elderly or disabled, the child and dependent care credit, and the earned income credit. 1040x tax form 2011 You may be able to reduce your federal income tax by claiming one or more of these credits. 1040x tax form 2011 Credit for the Elderly or the Disabled This section explains who qualifies for the credit for the elderly or the disabled and how to figure this credit. 1040x tax form 2011 For more information, see Publication 524, Credit for the Elderly or the Disabled. 1040x tax form 2011 You can take the credit only if you file Form 1040 or Form 1040A. 1040x tax form 2011 You cannot take the credit if you file Form 1040EZ or Form 1040NR. 1040x tax form 2011 Can You Take the Credit? You can take the credit for the elderly or the disabled if you meet both of the following requirements. 1040x tax form 2011 You are a qualified individual. 1040x tax form 2011 Your income is not more than certain limits. 1040x tax form 2011  You can use Figure 5-A and Figure 5-B as guides to see if you are eligible for the credit. 1040x tax form 2011   Qualified Individual You are a qualified individual for this credit if you are a U. 1040x tax form 2011 S. 1040x tax form 2011 citizen or resident alien, and either of the following applies. 1040x tax form 2011 You were age 65 or older at the end of 2013. 1040x tax form 2011 You were under age 65 at the end of 2013 and all three of the following statements are true. 1040x tax form 2011 You retired on permanent and total disability (explained later). 1040x tax form 2011 You received taxable disability income for 2013. 1040x tax form 2011 On January 1, 2013, you had not reached mandatory retirement age (defined later under Disability income ). 1040x tax form 2011 Age 65. 1040x tax form 2011 You are considered to be age 65 on the day before your 65th birthday. 1040x tax form 2011 Therefore, you are considered to be age 65 at the end of 2013 if you were born before January 2, 1949. 1040x tax form 2011 Figure 5-A. 1040x tax form 2011 Are You a Qualified Individual? This image is too large to be displayed in the current screen. 1040x tax form 2011 Please click the link to view the image. 1040x tax form 2011 Figure 5-A, Are you a qualified individual? U. 1040x tax form 2011 S. 1040x tax form 2011 citizen or resident alien. 1040x tax form 2011   You must be a U. 1040x tax form 2011 S. 1040x tax form 2011 citizen or resident alien (or be treated as a resident alien) to take the credit. 1040x tax form 2011 Generally, you cannot take the credit if you were a nonresident alien at any time during the tax year. 1040x tax form 2011 Exceptions. 1040x tax form 2011   You may be able to take the credit if you are a nonresident alien who is married to a U. 1040x tax form 2011 S. 1040x tax form 2011 citizen or resident alien at the end of the tax year and you and your spouse choose to treat you as a U. 1040x tax form 2011 S. 1040x tax form 2011 resident alien. 1040x tax form 2011 If you make that choice, both you and your spouse are taxed on your worldwide income. 1040x tax form 2011   If you were a nonresident alien at the beginning of the year and a resident alien at the end of the year, and you were married to a U. 1040x tax form 2011 S. 1040x tax form 2011 citizen or resident alien at the end of the year, you may be able to choose to be treated as a U. 1040x tax form 2011 S. 1040x tax form 2011 resident alien for the entire year. 1040x tax form 2011 In that case, you may be allowed to take the credit. 1040x tax form 2011   For information on these choices, see chapter 1 of Publication 519, U. 1040x tax form 2011 S. 1040x tax form 2011 Tax Guide for Aliens. 1040x tax form 2011 Married persons. 1040x tax form 2011   Generally, if you are married at the end of the tax year, you and your spouse must file a joint return to take the credit. 1040x tax form 2011 However, if you and your spouse did not live in the same household at any time during the tax year, you can file either a joint return or separate returns and still take the credit. 1040x tax form 2011 Head of household. 1040x tax form 2011   You can file as head of household and qualify to take the credit even if your spouse lived with you during the first 6 months of the year if you meet certain tests. 1040x tax form 2011 See Publication 524 and Publication 501. 1040x tax form 2011 Under age 65. 1040x tax form 2011   If you are under age 65 at the end of 2013, you can qualify for the credit only if you are retired on permanent and total disability and have taxable disability income (discussed later under Disability income ). 1040x tax form 2011 You are considered to be under age 65 at the end of 2013 if you were born after January 1, 1949. 1040x tax form 2011 You are retired on permanent and total disability if: You were permanently and totally disabled when you retired, and You retired on disability before the end of the tax year. 1040x tax form 2011   Even if you do not retire formally, you may be considered retired on disability when you have stopped working because of your disability. 1040x tax form 2011 If you retired on disability before 1977 and were not permanently and totally disabled at the time, you can qualify for the credit if you were permanently and totally disabled on January 1, 1976, or January 1, 1977. 1040x tax form 2011 Permanent and total disability. 1040x tax form 2011   You are permanently and totally disabled if you cannot engage in any substantial gainful activity because of your physical or mental condition. 1040x tax form 2011 A physician must certify that the condition has lasted or can be expected to last continuously for 12 months or more, or that the condition can be expected to result in death. 1040x tax form 2011 See Physician's statement , later. 1040x tax form 2011 Substantial gainful activity. 1040x tax form 2011   Substantial gainful activity is the performance of significant duties over a reasonable period of time while working for pay or profit, or in work generally done for pay or profit. 1040x tax form 2011   Full-time work (or part-time work done at the employer's convenience) in a competitive work situation for at least the minimum wage conclusively shows that you are able to engage in substantial gainful activity. 1040x tax form 2011   Substantial gainful activity is not work you do to take care of yourself or your home. 1040x tax form 2011 It is not unpaid work on hobbies, institutional therapy or training, school attendance, clubs, social programs, and similar activities. 1040x tax form 2011 However, doing this kind of work may show that you are able to engage in substantial gainful activity. 1040x tax form 2011    Figure 5-B. 1040x tax form 2011 Income Limits IF your filing status is. 1040x tax form 2011 . 1040x tax form 2011 . 1040x tax form 2011 THEN even if you qualify (see Figure 5-A), you CANNOT take the credit if: Your adjusted gross income (AGI)* is equal to or more than. 1040x tax form 2011 . 1040x tax form 2011 . 1040x tax form 2011 OR the total of your nontaxable social security and other nontaxable pension(s), annuities, or disability income is equal to or more than. 1040x tax form 2011 . 1040x tax form 2011 . 1040x tax form 2011 single, head of household, or qualifying widow(er) with dependent child $17,500 $5,000 married filing jointly and only one spouse qualifies in Figure 5-A $20,000 $5,000 married filing jointly and both spouses qualify in Figure 5-A $25,000 $7,500 married filing separately and you lived apart from your spouse for all of 2013 $12,500 $3,750 *AGI is the amount on Form 1040A, line 22, or Form 1040, line 38      The fact that you have not worked for some time is not, of itself, conclusive evidence that you cannot engage in substantial gainful activity. 1040x tax form 2011 Physician's statement. 1040x tax form 2011   If you are under age 65, you must have your physician complete a statement certifying that you were permanently and totally disabled on the date you retired. 1040x tax form 2011   You do not have to file this statement with your tax return, but you must keep it for your records. 1040x tax form 2011 The Instructions for Schedule R (Form 1040A or 1040) include a statement your physician can complete and that you can keep for your records. 1040x tax form 2011 Veterans. 1040x tax form 2011   If the Department of Veterans Affairs (VA) certifies that you are permanently and totally disabled, you can substitute VA Form 21-0172, Certification of Permanent and Total Disability, for the physician's statement you are required to keep. 1040x tax form 2011 VA Form 21-0172 must be signed by a person authorized by the VA to do so. 1040x tax form 2011 You can get this form from your local VA regional office. 1040x tax form 2011 Physician's statement obtained in earlier year. 1040x tax form 2011   If you got a physician's statement in an earlier year and, due to your continued disabled condition, you were unable to engage in any substantial gainful activity during 2013, you may not need to get another physician's statement for 2013. 1040x tax form 2011 For a detailed explanation of the conditions you must meet, see the instructions for Schedule R (Form 1040A or 1040), Part II. 1040x tax form 2011 If you meet the required conditions, you must check the box on Schedule R (Form 1040A or 1040), Part II, line 2. 1040x tax form 2011   If you checked Schedule R (Form 1040A or 1040), Part I, box 4, 5, or 6, print in the space above the box in Part II, line 2, the first name(s) of the spouse(s) for whom the box is checked. 1040x tax form 2011 Disability income. 1040x tax form 2011   If you are under age 65, you must also have taxable disability income to qualify for the credit. 1040x tax form 2011   Disability income must meet the following two requirements. 1040x tax form 2011 It must be paid under your employer's accident or health plan or pension plan. 1040x tax form 2011 It must be included in your income as wages (or payments in lieu of wages) for the time you are absent from work because of permanent and total disability. 1040x tax form 2011 Payments that are not disability income. 1040x tax form 2011   Any payment you receive from a plan that does not provide for disability retirement is not disability income. 1040x tax form 2011 Any lump-sum payment for accrued annual leave that you receive when you retire on disability is a salary payment and is not disability income. 1040x tax form 2011   For purposes of the credit for the elderly or the disabled, disability income does not include amounts you receive after you reach mandatory retirement age. 1040x tax form 2011 Mandatory retirement age is the age set by your employer at which you would have had to retire had you not become disabled. 1040x tax form 2011 Figuring the Credit You can figure the credit yourself, or the IRS will figure it for you. 1040x tax form 2011 Figuring the credit yourself. 1040x tax form 2011   If you figure the credit yourself, fill out the front of Schedule R (Form 1040A or 1040). 1040x tax form 2011 Next, fill out Schedule R (Form 1040A or 1040), Part III. 1040x tax form 2011 Credit figured for you. 1040x tax form 2011   If you can take the credit and you want the IRS to figure the credit for you, see Publication 524 or the Instructions for Schedule R (Form 1040A or 1040). 1040x tax form 2011 If you want the IRS to figure your tax, see chapter 30 of Publication 17, Your Federal Income Tax. 1040x tax form 2011 Child and Dependent Care Credit You may be able to claim this 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. 1040x tax form 2011 The credit can be up to 35% of your expenses. 1040x tax form 2011 To qualify, you must pay these expenses so you can work or look for work. 1040x tax form 2011 If you claim this credit, you must include on your return the name and taxpayer identification number (generally the social security number) of each qualifying person for whom care is provided. 1040x tax form 2011 If the correct information is not shown, the credit may be reduced or disallowed. 1040x tax form 2011 You also must show on your return the name, address, and the taxpayer identification number of the person(s) or organization(s) that provided the care. 1040x tax form 2011 For more information, see Publication 503, Child and Dependent Care Expenses. 1040x tax form 2011 Earned Income Credit (EIC) The earned income credit (EIC) is a refundable tax credit for certain people who work and have earned income under $51,567. 1040x tax form 2011 The EIC is available to persons with or without a qualifying child. 1040x tax form 2011 Credit has no effect on certain welfare benefits. 1040x tax form 2011   Any refund you receive because of the EIC cannot be counted as income when determining whether you or anyone else is eligible for benefits or assistance, or how much you or anyone else can receive, under any federal program or under any state or local program financed in whole or in part with federal funds. 1040x tax form 2011 These programs include the following. 1040x tax form 2011 Medicaid and supplemental security income (SSI). 1040x tax form 2011 Supplemental Nutrition Assistance Program (food stamps). 1040x tax form 2011 Low-income housing. 1040x tax form 2011 Temporary Assistance for Needy Families (TANF). 1040x tax form 2011  In addition, when determining eligibility, the refund cannot be counted as a resource for at least 12 months after you receive it. 1040x tax form 2011 Check with your local benefit coordinator to find out if your refund will affect your benefits. 1040x tax form 2011 Do You Qualify for the Earned Income Credit (EIC)? Use Table 5-1 as an initial guide to the rules you must meet in order to qualify for the EIC. 1040x tax form 2011 The specific rules you must meet depend on whether you have a qualifying child. 1040x tax form 2011 If you have a qualifying child, the rules in Parts A, B, and D apply to you. 1040x tax form 2011 If you do not have a qualifying child, the rules in Parts A, C, and D apply to you. 1040x tax form 2011  If, after reading all the rules in each part that applies to you, you think you may qualify for the credit, see Publication 596, Earned Income Credit, for more details about the EIC. 1040x tax form 2011 You can also find information about the EIC in the instructions for Form 1040 (line 64a), Form 1040A (line 38a), or Form 1040EZ (line 8a). 1040x tax form 2011 The sections that follow provide additional information for some of the rules. 1040x tax form 2011 Adjusted gross income (AGI). 1040x tax form 2011   Under Rule 1, you cannot claim the EIC unless your AGI is less than the applicable limit shown in Part A of Table 5-1. 1040x tax form 2011 Your AGI is the amount on line 37 (Form 1040), line 21 (Form 1040A), or line 4 (Form 1040EZ). 1040x tax form 2011 Table 5-1. 1040x tax form 2011 Earned Income Credit (EIC) in a Nutshell First, you must meet all the rules in this column. 1040x tax form 2011 Second, you must meet all the rules in one of these columns, whichever applies. 1040x tax form 2011 Third, you must meet the rule in this column. 1040x tax form 2011 Part A. 1040x tax form 2011  Rules for Everyone Part B. 1040x tax form 2011  Rules If You Have a Qualifying Child Part C. 1040x tax form 2011  Rules If You Do Not Have a Qualifying Child Part D. 1040x tax form 2011  Figuring and Claiming the EIC 1. 1040x tax form 2011 Your adjusted gross income (AGI) must be less than: •$46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, •$43,038 ($48,378 for married filing jointly) if you have two qualifying children, •$37,870 ($43,210 for married filing jointly) if you have one qualifying child, or  •$14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. 1040x tax form 2011 2. 1040x tax form 2011 You must have a valid social security number. 1040x tax form 2011  3. 1040x tax form 2011 Your filing status cannot be “Married filing separately. 1040x tax form 2011 ” 4. 1040x tax form 2011 You must be a U. 1040x tax form 2011 S. 1040x tax form 2011 citizen or resident alien all year. 1040x tax form 2011  5. 1040x tax form 2011 You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income). 1040x tax form 2011  6. 1040x tax form 2011 Your investment income must be $3,300 or less. 1040x tax form 2011  7. 1040x tax form 2011 You must have earned income. 1040x tax form 2011 8. 1040x tax form 2011 Your child must meet the relationship, age, residency, and joint return tests. 1040x tax form 2011  9. 1040x tax form 2011 Your qualifying child cannot be used by more than one person to claim the EIC. 1040x tax form 2011  10. 1040x tax form 2011 You generally cannot be a qualifying child of another person. 1040x tax form 2011 11. 1040x tax form 2011 You must be at least age 25 but under age 65. 1040x tax form 2011  12. 1040x tax form 2011 You cannot be the dependent of another person. 1040x tax form 2011  13. 1040x tax form 2011 You generally cannot be a qualifying child of another person. 1040x tax form 2011  14. 1040x tax form 2011 You must have lived in the United States more than half of the year. 1040x tax form 2011 15. 1040x tax form 2011 Your earned income must be less than: •$46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, •$43,038 ($48,378 for married filing jointly) if you have two qualifying children, •$37,870 ($43,210 for married filing jointly) if you have one qualifying child, or •$14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. 1040x tax form 2011 Social security number. 1040x tax form 2011   Under Rule 2, you (and your spouse if you are married filing jointly) must have a valid social security number (SSN) issued by the Social Security Administration (SSA). 1040x tax form 2011 Any qualifying child listed on Schedule EIC also must have a valid SSN. 1040x tax form 2011 (See Qualifying child , later, if you have a qualifying child. 1040x tax form 2011 )   If your social security card (or your spouse's if you are married filing jointly) says “Not valid for employment” and your SSN was issued so that you (or your spouse) could get a federally funded benefit, you cannot get the EIC. 1040x tax form 2011 An example of a federally funded benefit is Medicaid. 1040x tax form 2011 Investment income. 1040x tax form 2011   Under Rule 6, you cannot claim the EIC unless your investment income is $3,300 or less. 1040x tax form 2011 If your investment income is more than $3,300, you cannot claim the credit. 1040x tax form 2011 For most people, investment income is the total of the following amounts. 1040x tax form 2011 Taxable interest (line 8a of Form 1040 or 1040A). 1040x tax form 2011 Tax-exempt interest (line 8b of Form 1040 or 1040A). 1040x tax form 2011 Dividend income (line 9a of Form 1040 or 1040A). 1040x tax form 2011 Capital gain net income (line 13 of Form 1040, if more than zero, or line 10 of Form 1040A). 1040x tax form 2011  If you file Form 1040EZ, your investment income is the total of the amount of line 2 and the amount of any tax-exempt interest you wrote to the right of the words “Form 1040EZ” on line 2. 1040x tax form 2011   For more information about investment income, see Publication 596, Earned Income Credit. 1040x tax form 2011 Earned income. 1040x tax form 2011   Under Rule 7, you must have earned income to claim the EIC. 1040x tax form 2011 Under Rule 15, you cannot claim the EIC unless your earned income is less than the applicable limit shown in Table 5-1, Part D. 1040x tax form 2011 Earned income includes all of the following types of income. 1040x tax form 2011 Wages, salaries, tips, and other taxable employee pay. 1040x tax form 2011 Employee pay is earned income only if it is taxable. 1040x tax form 2011 Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. 1040x tax form 2011 But there is an exception for nontaxable combat pay, which you can choose to include in earned income. 1040x tax form 2011 Net earnings from self-employment. 1040x tax form 2011 Gross income received as a statutory employee. 1040x tax form 2011 Gross income defined. 1040x tax form 2011   Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). 1040x tax form 2011 Do not include any social security benefits unless (a) you are married filing a separate tax return and you lived with your spouse at any time in 2013, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). 1040x tax form 2011 If (a) or (b) applies, see the instructions for Form 1040, lines 20a and 20b to figure the taxable part of social security benefits you must include in gross income. 1040x tax form 2011 Self-employed persons. 1040x tax form 2011   If you are self-employed and your net earnings are $400 or more, be sure to correctly fill out Schedule SE (Form 1040), Self-Employment Tax, and pay the proper amount of self-employment tax. 1040x tax form 2011 If you do not, you may not get all the credit to which you are entitled. 1040x tax form 2011 Disability benefits. 1040x tax form 2011   If you retired on disability, taxable benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. 1040x tax form 2011 Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. 1040x tax form 2011 Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. 1040x tax form 2011   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. 1040x tax form 2011 It does not matter whether you have reached minimum retirement age. 1040x tax form 2011 If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code J. 1040x tax form 2011 Income that is not earned income. 1040x tax form 2011   Examples of items that are not earned income under Rule 7 include interest and dividends, pensions and annuities, social security and railroad retirement benefits (including disability benefits — except for payments covered under Disability benefits earlier), alimony and child support, welfare benefits, workers' compensation benefits, unemployment compensation (insurance), nontaxable foster care payments, and veterans' benefits, including VA rehabilitation payments. 1040x tax form 2011 Do not include any of these items in your earned income. 1040x tax form 2011 Workfare payments. 1040x tax form 2011   Nontaxable workfare payments are not earned income for the EIC. 1040x tax form 2011 These are cash payments certain people receive from a state or local agency that administers public assistance programs funded under the federal Temporary Assistance for Needy Families (TANF) program in return for certain work activities such as (1) work experience activities (including remodeling or repairing public housing) if sufficient private sector employment is not available, or (2) community service program activities. 1040x tax form 2011 Qualifying child. 1040x tax form 2011   Under Rule 8, your child is a qualifying child if your child meets four tests. 1040x tax form 2011 The four tests are: Relationship, Age, Residency, and Joint return. 1040x tax form 2011   The four tests are illustrated in Figure 5-C. 1040x tax form 2011 See Publication 596 for more information about each test. 1040x tax form 2011 Figure 5-C. 1040x tax form 2011 Tests for Qualifying Child A qualifying child for the EIC is a child who is your. 1040x tax form 2011 . 1040x tax form 2011 . 1040x tax form 2011 Son, daughter, stepchild, foster child,  or a descendant of any of them (for example, your grandchild) OR Brother, sister, half brother, half sister, stepbrother,  stepsister, or a descendant of any of them (for example, your  niece or nephew) was . 1040x tax form 2011 . 1040x tax form 2011 . 1040x tax form 2011 Under age 19 at the end of 2013 and younger than you (or your spouse if filing jointly) OR Under age 24 at the end of 2013, a student, and younger than you (or your spouse if filing jointly) OR Permanently and totally disabled at any time during the year, regardless of age who. 1040x tax form 2011 . 1040x tax form 2011 . 1040x tax form 2011 Is not filing a joint return for 2013  (or is filing a joint return for 2013 only as a claim for refund of income tax withheld or estimated tax paid) who. 1040x tax form 2011 . 1040x tax form 2011 . 1040x tax form 2011 Lived with you in the United States for more than half of 2013. 1040x tax form 2011  If the child did not live with you for the required time, see Publication 596 for more information. 1040x tax form 2011 Figuring the EIC To figure the amount of your credit, you have two choices. 1040x tax form 2011 Have the IRS figure the EIC for you. 1040x tax form 2011 If you want to do this, see IRS Will Figure the EIC for You in Publication 596. 1040x tax form 2011 Figure the EIC yourself. 1040x tax form 2011 If you want to do this, see How To Figure the EIC Yourself in Publication 596. 1040x tax form 2011 Prev  Up  Next   Home   More Online Publications
Español

The 1040x Tax Form 2011

1040x tax form 2011 15. 1040x tax form 2011   Selling Your Home Table of Contents Reminder Introduction Useful Items - You may want to see: Main Home Figuring Gain or LossSelling Price Amount Realized Adjusted Basis Amount of Gain or Loss Dispositions Other Than Sales Determining Basis Excluding the GainMaximum Exclusion Ownership and Use Tests Reduced Maximum Exclusion Business Use or Rental of Home Reporting the SaleSeller-financed mortgage. 1040x tax form 2011 More information. 1040x tax form 2011 Special SituationsException for sales to related persons. 1040x tax form 2011 Recapturing (Paying Back) a Federal Mortgage Subsidy Reminder Home sold with undeducted points. 1040x tax form 2011  If you have not deducted all the points you paid to secure a mortgage on your old home, you may be able to deduct the remaining points in the year of the sale. 1040x tax form 2011 See Mortgage ending early under Points in chapter 23. 1040x tax form 2011 Introduction This chapter explains the tax rules that apply when you sell your main home. 1040x tax form 2011 In most cases, your main home is the one in which you live most of the time. 1040x tax form 2011 If you sold your main home in 2013, you may be able to exclude from income any gain up to a limit of $250,000 ($500,000 on a joint return in most cases). 1040x tax form 2011 See Excluding the Gain , later. 1040x tax form 2011 Generally, if you can exclude all the gain, you do not need to report the sale on your tax return. 1040x tax form 2011 If you have gain that cannot be excluded, it is taxable. 1040x tax form 2011 Report it on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D (Form 1040). 1040x tax form 2011 You may also have to complete Form 4797, Sales of Business Property. 1040x tax form 2011 See Reporting the Sale , later. 1040x tax form 2011 If you have a loss on the sale, you generally cannot deduct it on your return. 1040x tax form 2011 However, you may need to report it. 1040x tax form 2011 See Reporting the Sale , later. 1040x tax form 2011 The following are main topics in this chapter. 1040x tax form 2011 Figuring gain or loss. 1040x tax form 2011 Basis. 1040x tax form 2011 Excluding the gain. 1040x tax form 2011 Ownership and use tests. 1040x tax form 2011 Reporting the sale. 1040x tax form 2011 Other topics include the following. 1040x tax form 2011 Business use or rental of home. 1040x tax form 2011 Recapturing a federal mortgage subsidy. 1040x tax form 2011 Useful Items - You may want to see: Publication 523 Selling Your Home 530 Tax Information for Homeowners 547 Casualties, Disasters, and Thefts Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 982 Reduction of Tax Attributes Due to Discharge of Indebtedness 8828 Recapture of Federal Mortgage Subsidy 8949 Sales and Other Dispositions of Capital Assets Main Home This section explains the term “main home. 1040x tax form 2011 ” Usually, the home you live in most of the time is your main home and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. 1040x tax form 2011 To exclude gain under the rules of this chapter, you in most cases must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. 1040x tax form 2011 Land. 1040x tax form 2011   If you sell the land on which your main home is located, but not the house itself, you cannot exclude any gain you have from the sale of the land. 1040x tax form 2011 However, if you sell vacant land used as part of your main home and that is adjacent to it, you may be able to exclude the gain from the sale under certain circumstances. 1040x tax form 2011 See Vacant land under Main Home in Publication 523 for more information. 1040x tax form 2011 Example. 1040x tax form 2011 You buy a piece of land and move your main home to it. 1040x tax form 2011 Then you sell the land on which your main home was located. 1040x tax form 2011 This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land. 1040x tax form 2011 More than one home. 1040x tax form 2011   If you have more than one home, you can exclude gain only from the sale of your main home. 1040x tax form 2011 You must include in income gain from the sale of any other home. 1040x tax form 2011 If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time during the year. 1040x tax form 2011 Example 1. 1040x tax form 2011 You own two homes, one in New York and one in Florida. 1040x tax form 2011 From 2009 through 2013, you live in the New York home for 7 months and in the Florida residence for 5 months of each year. 1040x tax form 2011 In the absence of facts and circumstances indicating otherwise, the New York home is your main home. 1040x tax form 2011 You would be eligible to exclude the gain from the sale of the New York home but not of the Florida home in 2013. 1040x tax form 2011 Example 2. 1040x tax form 2011 You own a house, but you live in another house that you rent. 1040x tax form 2011 The rented house is your main home. 1040x tax form 2011 Example 3. 1040x tax form 2011 You own two homes, one in Virginia and one in New Hampshire. 1040x tax form 2011 In 2009 and 2010, you lived in the Virginia home. 1040x tax form 2011 In 2011 and 2012, you lived in the New Hampshire home. 1040x tax form 2011 In 2013, you lived again in the Virginia home. 1040x tax form 2011 Your main home in 2009, 2010, and 2013 is the Virginia home. 1040x tax form 2011 Your main home in 2011 and 2012 is the New Hampshire home. 1040x tax form 2011 You would be eligible to exclude gain from the sale of either home (but not both) in 2013. 1040x tax form 2011 Property used partly as your main home. 1040x tax form 2011   If you use only part of the property as your main home, the rules discussed in this publication apply only to the gain or loss on the sale of that part of the property. 1040x tax form 2011 For details, see Business Use or Rental of Home , later. 1040x tax form 2011 Figuring Gain or Loss To figure the gain or loss on the sale of your main home, you must know the selling price, the amount realized, and the adjusted basis. 1040x tax form 2011 Subtract the adjusted basis from the amount realized to get your gain or loss. 1040x tax form 2011     Selling price     − Selling expenses       Amount realized       Amount realized     − Adjusted basis       Gain or loss   Selling Price The selling price is the total amount you receive for your home. 1040x tax form 2011 It includes money and the fair market value of any other property or any other services you receive and all notes, mortgages or other debts assumed by the buyer as part of the sale. 1040x tax form 2011 Payment by employer. 1040x tax form 2011   You may have to sell your home because of a job transfer. 1040x tax form 2011 If your employer pays you for a loss on the sale or for your selling expenses, do not include the payment as part of the selling price. 1040x tax form 2011 Your employer will include it as wages in box 1 of your Form W-2, and you will include it in your income on Form 1040, line 7. 1040x tax form 2011 Option to buy. 1040x tax form 2011   If you grant an option to buy your home and the option is exercised, add the amount you receive for the option to the selling price of your home. 1040x tax form 2011 If the option is not exercised, you must report the amount as ordinary income in the year the option expires. 1040x tax form 2011 Report this amount on Form 1040, line 21. 1040x tax form 2011 Form 1099-S. 1040x tax form 2011   If you received Form 1099-S, Proceeds From Real Estate Transactions, box 2 (Gross proceeds) should show the total amount you received for your home. 1040x tax form 2011   However, box 2 will not include the fair market value of any services or property other than cash or notes you received or will receive. 1040x tax form 2011 Instead, box 4 will be checked to indicate your receipt or expected receipt of these items. 1040x tax form 2011 Amount Realized The amount realized is the selling price minus selling expenses. 1040x tax form 2011 Selling expenses. 1040x tax form 2011   Selling expenses include: Commissions, Advertising fees, Legal fees, and Loan charges paid by the seller, such as loan placement fees or “points. 1040x tax form 2011 ” Adjusted Basis While you owned your home, you may have made adjustments (increases or decreases) to the basis. 1040x tax form 2011 This adjusted basis must be determined before you can figure gain or loss on the sale of your home. 1040x tax form 2011 For information on how to figure your home's adjusted basis, see Determining Basis , later. 1040x tax form 2011 Amount of Gain or Loss To figure the amount of gain or loss, compare the amount realized to the adjusted basis. 1040x tax form 2011 Gain on sale. 1040x tax form 2011   If the amount realized is more than the adjusted basis, the difference is a gain and, except for any part you can exclude, in most cases is taxable. 1040x tax form 2011 Loss on sale. 1040x tax form 2011   If the amount realized is less than the adjusted basis, the difference is a loss. 1040x tax form 2011 A loss on the sale of your main home cannot be deducted. 1040x tax form 2011 Jointly owned home. 1040x tax form 2011   If you and your spouse sell your jointly owned home and file a joint return, you figure your gain or loss as one taxpayer. 1040x tax form 2011 Separate returns. 1040x tax form 2011   If you file separate returns, each of you must figure your own gain or loss according to your ownership interest in the home. 1040x tax form 2011 Your ownership interest is generally determined by state law. 1040x tax form 2011 Joint owners not married. 1040x tax form 2011   If you and a joint owner other than your spouse sell your jointly owned home, each of you must figure your own gain or loss according to your ownership interest in the home. 1040x tax form 2011 Each of you applies the rules discussed in this chapter on an individual basis. 1040x tax form 2011 Dispositions Other Than Sales Some special rules apply to other dispositions of your main home. 1040x tax form 2011 Foreclosure or repossession. 1040x tax form 2011   If your home was foreclosed on or repossessed, you have a disposition. 1040x tax form 2011 See Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments, to determine if you have ordinary income, gain, or loss. 1040x tax form 2011 Abandonment. 1040x tax form 2011   If you abandon your home, see Publication 4681 to determine if you have ordinary income, gain, or loss. 1040x tax form 2011 Trading (exchanging) homes. 1040x tax form 2011   If you trade your old home for another home, treat the trade as a sale and a purchase. 1040x tax form 2011 Example. 1040x tax form 2011 You owned and lived in a home with an adjusted basis of $41,000. 1040x tax form 2011 A real estate dealer accepted your old home as a trade-in and allowed you $50,000 toward a new home priced at $80,000. 1040x tax form 2011 This is treated as a sale of your old home for $50,000 with a gain of $9,000 ($50,000 – $41,000). 1040x tax form 2011 If the dealer had allowed you $27,000 and assumed your unpaid mortgage of $23,000 on your old home, your sales price would still be $50,000 (the $27,000 trade-in allowed plus the $23,000 mortgage assumed). 1040x tax form 2011 Transfer to spouse. 1040x tax form 2011   If you transfer your home to your spouse or you transfer it to your former spouse incident to your divorce, you in most cases have no gain or loss. 1040x tax form 2011 This is true even if you receive cash or other consideration for the home. 1040x tax form 2011 As a result, the rules in this chapter do not apply. 1040x tax form 2011 More information. 1040x tax form 2011   If you need more information, see Transfer to spouse in Publication 523 and Property Settlements in Publication 504, Divorced or Separated Individuals. 1040x tax form 2011 Involuntary conversion. 1040x tax form 2011   You have a disposition when your home is destroyed or condemned and you receive other property or money in payment, such as insurance or a condemnation award. 1040x tax form 2011 This is treated as a sale and you may be able to exclude all or part of any gain from the destruction or condemnation of your home, as explained later under Special Situations . 1040x tax form 2011 Determining Basis You need to know your basis in your home to figure any gain or loss when you sell it. 1040x tax form 2011 Your basis in your home is determined by how you got the home. 1040x tax form 2011 Generally, your basis is its cost if you bought it or built it. 1040x tax form 2011 If you got it in some other way (inheritance, gift, etc. 1040x tax form 2011 ), your basis is generally either its fair market value when you received it or the adjusted basis of the previous owner. 1040x tax form 2011 While you owned your home, you may have made adjustments (increases or decreases) to your home's basis. 1040x tax form 2011 The result of these adjustments is your home's adjusted basis, which is used to figure gain or loss on the sale of your home. 1040x tax form 2011 See Adjusted Basis , later. 1040x tax form 2011 You can find more information on basis and adjusted basis in chapter 13 of this publication and in Publication 523. 1040x tax form 2011 Cost As Basis The cost of property is the amount you paid for it in cash, debt obligations, other property, or services. 1040x tax form 2011 Purchase. 1040x tax form 2011   If you bought your home, your basis is its cost to you. 1040x tax form 2011 This includes the purchase price and certain settlement or closing costs. 1040x tax form 2011 In most cases, your purchase price includes your down payment and any debt, such as a first or second mortgage or notes you gave the seller in payment for the home. 1040x tax form 2011 If you build, or contract to build, a new home, your purchase price can include costs of construction, as discussed in Publication 523. 1040x tax form 2011 Settlement fees or closing costs. 1040x tax form 2011   When you bought your home, you may have paid settlement fees or closing costs in addition to the contract price of the property. 1040x tax form 2011 You can include in your basis some of the settlement fees and closing costs you paid for buying the home, but not the fees and costs for getting a mortgage loan. 1040x tax form 2011 A fee paid for buying the home is any fee you would have had to pay even if you paid cash for the home (that is, without the need for financing). 1040x tax form 2011    Chapter 13 lists some of the settlement fees and closing costs that you can include in the basis of property, including your home. 1040x tax form 2011 It also lists some settlement costs that cannot be included in basis. 1040x tax form 2011   Also see Publication 523 for additional items and a discussion of basis other than cost. 1040x tax form 2011 Adjusted Basis Adjusted basis is your cost or other basis increased or decreased by certain amounts. 1040x tax form 2011 To figure your adjusted basis, you can use Worksheet 1 in Publication 523. 1040x tax form 2011 Do not use Worksheet 1 if you acquired an interest in your home from a decedent who died in 2010 and whose executor filed Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent. 1040x tax form 2011 Increases to basis. 1040x tax form 2011   These include the following. 1040x tax form 2011 Additions and other improvements that have a useful life of more than 1 year. 1040x tax form 2011 Special assessments for local improvements. 1040x tax form 2011 Amounts you spent after a casualty to restore damaged property. 1040x tax form 2011 Improvements. 1040x tax form 2011   These add to the value of your home, prolong its useful life, or adapt it to new uses. 1040x tax form 2011 You add the cost of additions and other improvements to the basis of your property. 1040x tax form 2011   For example, putting a recreation room or another bathroom in your unfinished basement, putting up a new fence, putting in new plumbing or wiring, putting on a new roof, or paving your unpaved driveway are improvements. 1040x tax form 2011 An addition to your house, such as a new deck, a sunroom, or a new garage, is also an improvement. 1040x tax form 2011 Repairs. 1040x tax form 2011   These maintain your home in good condition but do not add to its value or prolong its life. 1040x tax form 2011 You do not add their cost to the basis of your property. 1040x tax form 2011   Examples of repairs include repainting your house inside or outside, fixing your gutters or floors, repairing leaks or plastering, and replacing broken window panes. 1040x tax form 2011 Decreases to basis. 1040x tax form 2011   These include the following. 1040x tax form 2011 Discharge of qualified principal residence indebtedness that was excluded from income. 1040x tax form 2011 Some or all of the cancellation of debt income that was excluded due to your bankruptcy or insolvency. 1040x tax form 2011 For details, see Publication 4681. 1040x tax form 2011 Gain you postponed from the sale of a previous home before May 7, 1997. 1040x tax form 2011 Deductible casualty losses. 1040x tax form 2011 Insurance payments you received or expect to receive for casualty losses. 1040x tax form 2011 Payments you received for granting an easement or right-of-way. 1040x tax form 2011 Depreciation allowed or allowable if you used your home for business or rental purposes. 1040x tax form 2011 Energy-related credits allowed for expenditures made on the residence. 1040x tax form 2011 (Reduce the increase in basis otherwise allowable for expenditures on the residence by the amount of credit allowed for those expenditures. 1040x tax form 2011 ) Adoption credit you claimed for improvements added to the basis of your home. 1040x tax form 2011 Nontaxable payments from an adoption assistance program of your employer you used for improvements you added to the basis of your home. 1040x tax form 2011 Energy conservation subsidy excluded from your gross income because you received it (directly or indirectly) from a public utility after 1992 to buy or install any energy conservation measure. 1040x tax form 2011 An energy conservation measure is an installation or modification primarily designed either to reduce consumption of electricity or natural gas or to improve the management of energy demand for a home. 1040x tax form 2011 District of Columbia first-time homebuyer credit (allowed on the purchase of a principal residence in the District of Columbia beginning on August 5, 1997 and before January 1, 2012). 1040x tax form 2011 General sales taxes (allowed beginning 2004 and ending before 2014) claimed as an itemized deduction on Schedule A (Form 1040) that were imposed on the purchase of personal property, such as a houseboat used as your home or a mobile home. 1040x tax form 2011 Discharges of qualified principal residence indebtedness. 1040x tax form 2011   You may be able to exclude from gross income a discharge of qualified principal residence indebtedness. 1040x tax form 2011 This exclusion applies to discharges made after 2006 and before 2014. 1040x tax form 2011 If you choose to exclude this income, you must reduce (but not below zero) the basis of the principal residence by the amount excluded from your gross income. 1040x tax form 2011   File Form 982 with your tax return. 1040x tax form 2011 See the form's instructions for detailed information. 1040x tax form 2011 Recordkeeping. 1040x tax form 2011 You should keep records to prove your home's adjusted basis. 1040x tax form 2011 Ordinarily, you must keep records for 3 years after the due date for filing your return for the tax year in which you sold your home. 1040x tax form 2011 But if you sold a home before May 7, 1997, and postponed tax on any gain, the basis of that home affects the basis of the new home you bought. 1040x tax form 2011 Keep records proving the basis of both homes as long as they are needed for tax purposes. 1040x tax form 2011 The records you should keep include: Proof of the home's purchase price and purchase expenses, Receipts and other records for all improvements, additions, and other items that affect the home's adjusted basis, Any worksheets or other computations you used to figure the adjusted basis of the home you sold, the gain or loss on the sale, the exclusion, and the taxable gain, Any Form 982 you filed to report any discharge of qualified principal residence indebtedness, Any Form 2119, Sale of Your Home, you filed to postpone gain from the sale of a previous home before May 7, 1997, and Any worksheets you used to prepare Form 2119, such as the Adjusted Basis of Home Sold Worksheet or the Capital Improvements Worksheet from the Form 2119 instructions, or other source of computations. 1040x tax form 2011 Excluding the Gain You may qualify to exclude from your income all or part of any gain from the sale of your main home. 1040x tax form 2011 This means that, if you qualify, you will not have to pay tax on the gain up to the limit described under Maximum Exclusion , next. 1040x tax form 2011 To qualify, you must meet the ownership and use tests described later. 1040x tax form 2011 You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale. 1040x tax form 2011 You can use Worksheet 2 in Publication 523 to figure the amount of your exclusion and your taxable gain, if any. 1040x tax form 2011 If you have any taxable gain from the sale of your home, you may have to increase your withholding or make estimated tax payments. 1040x tax form 2011 See Publication 505, Tax Withholding and Estimated Tax. 1040x tax form 2011 Maximum Exclusion You can exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true. 1040x tax form 2011 You meet the ownership test. 1040x tax form 2011 You meet the use test. 1040x tax form 2011 During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. 1040x tax form 2011 For details on gain allocated to periods of nonqualified use, see Periods of nonqualified use , later. 1040x tax form 2011 You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons . 1040x tax form 2011 Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. 1040x tax form 2011 This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test). 1040x tax form 2011 Exception. 1040x tax form 2011   If you owned and lived in the property as your main home for less than 2 years, you can still claim an exclusion in some cases. 1040x tax form 2011 However, the maximum amount you may be able to exclude will be reduced. 1040x tax form 2011 See Reduced Maximum Exclusion , later. 1040x tax form 2011 Example 1—home owned and occupied for at least 2 years. 1040x tax form 2011 Mya bought and moved into her main home in September 2011. 1040x tax form 2011 She sold the home at a gain in October 2013. 1040x tax form 2011 During the 5-year period ending on the date of sale in October 2013, she owned and lived in the home for more than 2 years. 1040x tax form 2011 She meets the ownership and use tests. 1040x tax form 2011 Example 2—ownership test met but use test not met. 1040x tax form 2011 Ayden bought a home, lived in it for 6 months, moved out, and never occupied the home again. 1040x tax form 2011 He later sold the home for a gain. 1040x tax form 2011 He owned the home during the entire 5-year period ending on the date of sale. 1040x tax form 2011 He meets the ownership test but not the use test. 1040x tax form 2011 He cannot exclude any part of his gain on the sale unless he qualified for a reduced maximum exclusion (explained later). 1040x tax form 2011 Period of Ownership and Use The required 2 years of ownership and use during the 5-year period ending on the date of the sale do not have to be continuous nor do they both have to occur at the same time. 1040x tax form 2011 You meet the tests if you can show that you owned and lived in the property as your main home for either 24 full months or 730 days (365 × 2) during the 5-year period ending on the date of sale. 1040x tax form 2011 Temporary absence. 1040x tax form 2011   Short temporary absences for vacations or other seasonal absences, even if you rent out the property during the absences, are counted as periods of use. 1040x tax form 2011 The following examples assume that the reduced maximum exclusion (discussed later) does not apply to the sales. 1040x tax form 2011 Example 1. 1040x tax form 2011 David Johnson, who is single, bought and moved into his home on February 1, 2011. 1040x tax form 2011 Each year during 2011 and 2012, David left his home for a 2-month summer vacation. 1040x tax form 2011 David sold the house on March 1, 2013. 1040x tax form 2011 Although the total time David used his home is less than 2 years (21 months), he meets the requirement and may exclude gain. 1040x tax form 2011 The 2-month vacations are short temporary absences and are counted as periods of use in determining whether David used the home for the required 2 years. 1040x tax form 2011 Example 2. 1040x tax form 2011 Professor Paul Beard, who is single, bought and moved into a house on August 18, 2010. 1040x tax form 2011 He lived in it as his main home continuously until January 5, 2012, when he went abroad for a 1-year sabbatical leave. 1040x tax form 2011 On February 6, 2013, 1 month after returning from the leave, Paul sold the house at a gain. 1040x tax form 2011 Because his leave was not a short temporary absence, he cannot include the period of leave to meet the 2-year use test. 1040x tax form 2011 He cannot exclude any part of his gain, because he did not use the residence for the required 2 years. 1040x tax form 2011 Ownership and use tests met at different times. 1040x tax form 2011   You can meet the ownership and use tests during different 2-year periods. 1040x tax form 2011 However, you must meet both tests during the 5-year period ending on the date of the sale. 1040x tax form 2011 Example. 1040x tax form 2011 Beginning in 2002, Helen Jones lived in a rented apartment. 1040x tax form 2011 The apartment building was later converted to condominiums, and she bought her same apartment on December 3, 2010. 1040x tax form 2011 In 2011, Helen became ill and on April 14 of that year she moved to her daughter's home. 1040x tax form 2011 On July 12, 2013, while still living in her daughter's home, she sold her condominium. 1040x tax form 2011 Helen can exclude gain on the sale of her condominium because she met the ownership and use tests during the 5-year period from July 13, 2008, to July 12, 2013, the date she sold the condominium. 1040x tax form 2011 She owned her condominium from December 3, 2010, to July 12, 2013 (more than 2 years). 1040x tax form 2011 She lived in the property from July 13, 2008 (the beginning of the 5-year period), to April 14, 2011 (more than 2 years). 1040x tax form 2011 The time Helen lived in her daughter's home during the 5-year period can be counted toward her period of ownership, and the time she lived in her rented apartment during the 5-year period can be counted toward her period of use. 1040x tax form 2011 Cooperative apartment. 1040x tax form 2011   If you sold stock as a tenant-stockholder in a cooperative housing corporation, the ownership and use tests are met if, during the 5-year period ending on the date of sale, you: Owned the stock for at least 2 years, and Lived in the house or apartment that the stock entitles you to occupy as your main home for at least 2 years. 1040x tax form 2011 Exceptions to Ownership and Use Tests The following sections contain exceptions to the ownership and use tests for certain taxpayers. 1040x tax form 2011 Exception for individuals with a disability. 1040x tax form 2011   There is an exception to the use test if: You become physically or mentally unable to care for yourself, and You owned and lived in your home as your main home for a total of at least 1 year during the 5-year period before the sale of your home. 1040x tax form 2011 Under this exception, you are considered to live in your home during any time within the 5-year period that you own the home and live in a facility (including a nursing home) licensed by a state or political subdivision to care for persons in your condition. 1040x tax form 2011 If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion. 1040x tax form 2011 Previous home destroyed or condemned. 1040x tax form 2011   For the ownership and use tests, you add the time you owned and lived in a previous home that was destroyed or condemned to the time you owned and lived in the replacement home on whose sale you wish to exclude gain. 1040x tax form 2011 This rule applies if any part of the basis of the home you sold depended on the basis of the destroyed or condemned home. 1040x tax form 2011 Otherwise, you must have owned and lived in the same home for 2 of the 5 years before the sale to qualify for the exclusion. 1040x tax form 2011 Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. 1040x tax form 2011   You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve on “qualified official extended duty” as a member of the uniformed services or Foreign Service of the United States, or as an employee of the intelligence community. 1040x tax form 2011 You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve outside the United States either as an employee of the Peace Corps on "qualified official extended duty" or as an enrolled volunteer or volunteer leader of the Peace Corps. 1040x tax form 2011 This means that you may be able to meet the 2-year use test even if, because of your service, you did not actually live in your home for at least the required 2 years during the 5-year period ending on the date of sale. 1040x tax form 2011   If this helps you qualify to exclude gain, you can choose to have the 5-year test period suspended by filing a return for the year of sale that does not include the gain. 1040x tax form 2011 For more information about the suspension of the 5-year test period, see Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps in Publication 523. 1040x tax form 2011 Married Persons If you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use tests, you can exclude up to $250,000 of the gain. 1040x tax form 2011 (But see Special rules for joint returns , next. 1040x tax form 2011 ) Special rules for joint returns. 1040x tax form 2011   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. 1040x tax form 2011 You are married and file a joint return for the year. 1040x tax form 2011 Either you or your spouse meets the ownership test. 1040x tax form 2011 Both you and your spouse meet the use test. 1040x tax form 2011 During the 2-year period ending on the date of the sale, neither you nor your spouse excluded gain from the sale of another home. 1040x tax form 2011 If either spouse does not satisfy all these requirements, the maximum exclusion that can be claimed by the couple is the total of the maximum exclusions that each spouse would qualify for if not married and the amounts were figured separately. 1040x tax form 2011 For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property. 1040x tax form 2011 Example 1—one spouse sells a home. 1040x tax form 2011 Emily sells her home in June 2013 for a gain of $300,000. 1040x tax form 2011 She marries Jamie later in the year. 1040x tax form 2011 She meets the ownership and use tests, but Jamie does not. 1040x tax form 2011 Emily can exclude up to $250,000 of gain on a separate or joint return for 2013. 1040x tax form 2011 The $500,000 maximum exclusion for certain joint returns does not apply because Jamie does not meet the use test. 1040x tax form 2011 Example 2—each spouse sells a home. 1040x tax form 2011 The facts are the same as in Example 1 except that Jamie also sells a home in 2013 for a gain of $200,000 before he marries Emily. 1040x tax form 2011 He meets the ownership and use tests on his home, but Emily does not. 1040x tax form 2011 Emily can exclude $250,000 of gain and Jamie can exclude $200,000 of gain on the respective sales of their individual homes. 1040x tax form 2011 However, Emily cannot use Jamie's unused exclusion to exclude more than $250,000 of gain. 1040x tax form 2011 Therefore, Emily and Jamie must recognize $50,000 of gain on the sale of Emily's home. 1040x tax form 2011 The $500,000 maximum exclusion for certain joint returns does not apply because Emily and Jamie do not both meet the use test for the same home. 1040x tax form 2011 Sale of main home by surviving spouse. 1040x tax form 2011   If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home. 1040x tax form 2011   If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. 1040x tax form 2011 The sale or exchange took place after 2008. 1040x tax form 2011 The sale or exchange took place no more than 2 years after the date of death of your spouse. 1040x tax form 2011 You have not remarried. 1040x tax form 2011 You and your spouse met the use test at the time of your spouse's death. 1040x tax form 2011 You or your spouse met the ownership test at the time of your spouse's death. 1040x tax form 2011 Neither you nor your spouse excluded gain from the sale of another home during the last 2 years. 1040x tax form 2011 Example. 1040x tax form 2011   Harry owned and used a house as his main home since 2009. 1040x tax form 2011 Harry and Wilma married on July 1, 2013, and from that date they use Harry's house as their main home. 1040x tax form 2011 Harry died on August 15, 2013, and Wilma inherited the property. 1040x tax form 2011 Wilma sold the property on September 3, 2013, at which time she had not remarried. 1040x tax form 2011 Although Wilma owned and used the house for less than 2 years, Wilma is considered to have satisfied the ownership and use tests because her period of ownership and use includes the period that Harry owned and used the property before death. 1040x tax form 2011 Home transferred from spouse. 1040x tax form 2011   If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it. 1040x tax form 2011 Use of home after divorce. 1040x tax form 2011   You are considered to have used property as your main home during any period when: You owned it, and Your spouse or former spouse is allowed to live in it under a divorce or separation instrument and uses it as his or her main home. 1040x tax form 2011 Reduced Maximum Exclusion If you fail to meet the requirements to qualify for the $250,000 or $500,000 exclusion, you may still qualify for a reduced exclusion. 1040x tax form 2011 This applies to those who: Fail to meet the ownership and use tests, or Have used the exclusion within 2 years of selling their current home. 1040x tax form 2011 In both cases, to qualify for a reduced exclusion, the sale of your main home must be due to one of the following reasons. 1040x tax form 2011 A change in place of employment. 1040x tax form 2011 Health. 1040x tax form 2011 Unforeseen circumstances. 1040x tax form 2011 Unforeseen circumstances. 1040x tax form 2011   The sale of your main home is because of an unforeseen circumstance if your primary reason for the sale is the occurrence of an event that you could not reasonably have anticipated before buying and occupying your main home. 1040x tax form 2011   See Publication 523 for more information and to use Worksheet 3 to figure your reduced maximum exclusion. 1040x tax form 2011 Business Use or Rental of Home You may be able to exclude gain from the sale of a home you have used for business or to produce rental income. 1040x tax form 2011 But you must meet the ownership and use tests. 1040x tax form 2011 Periods of nonqualified use. 1040x tax form 2011   In most cases, gain from the sale or exchange of your main home will not qualify for the exclusion to the extent that the gains are allocated to periods of nonqualified use. 1040x tax form 2011 Nonqualified use is any period after 2008 during which neither you nor your spouse (or your former spouse) used the property as a main home with the following exceptions. 1040x tax form 2011 Exceptions. 1040x tax form 2011   A period of nonqualified use does not include: Any portion of the 5-year period ending on the date of the sale or exchange after the last date you (or your spouse) use the property as a main home; Any period (not to exceed an aggregate period of 10 years) during which you (or your spouse) are serving on qualified official extended duty: As a member of the uniformed services; As a member of the Foreign Service of the United States; or As an employee of the intelligence community; and Any other period of temporary absence (not to exceed an aggregate period of 2 years) due to change of employment, health conditions, or such other unforeseen circumstances as may be specified by the IRS. 1040x tax form 2011 The gain resulting from the sale of the property is allocated between qualified and nonqualified use periods based on the amount of time the property was held for qualified and nonqualified use. 1040x tax form 2011 Gain from the sale or exchange of a main home allocable to periods of qualified use will continue to qualify for the exclusion for the sale of your main home. 1040x tax form 2011 Gain from the sale or exchange of property allocable to nonqualified use will not qualify for the exclusion. 1040x tax form 2011 Calculation. 1040x tax form 2011   To figure the portion of the gain allocated to the period of nonqualified use, multiply the gain by the following fraction:   Total nonqualified use during the period of ownership after 2008      Total period of ownership     This calculation can be found in Worksheet 2, line 10, in Publication 523. 1040x tax form 2011 Example 1. 1040x tax form 2011 On May 23, 2007, Amy, who is unmarried for all years in this example, bought a house. 1040x tax form 2011 She moved in on that date and lived in it until May 31, 2009, when she moved out of the house and put it up for rent. 1040x tax form 2011 The house was rented from June 1, 2009, to March 31, 2011. 1040x tax form 2011 Amy claimed depreciation deductions in 2009 through 2011 totaling $10,000. 1040x tax form 2011 Amy moved back into the house on April 1, 2011, and lived there until she sold it on January 31, 2013, for a gain of $200,000. 1040x tax form 2011 During the 5-year period ending on the date of the sale (January 31, 2008-January 31, 2013), Amy owned and lived in the house for more than 2 years as shown in the following table. 1040x tax form 2011 Five Year Period Used as  Home Used as  Rental 1/31/08 – 5/31/09 16 months       6/1/09 – 3/31/11   22 months 4/1/11 – 1/31/13 22 months         38 months 22 months During the period Amy owned the house (2,080 days), her period of nonqualified use was 668 days. 1040x tax form 2011 Amy divides 668 by 2,080 and obtains a decimal (rounded to at least three decimal places) of 0. 1040x tax form 2011 321. 1040x tax form 2011 To figure her gain attributable to the period of nonqualified use, she multiplies $190,000 (the gain not attributable to the $10,000 depreciation deduction) by 0. 1040x tax form 2011 321. 1040x tax form 2011 Because the gain attributable to periods of nonqualified use is $60,990, Amy can exclude $129,010 of her gain. 1040x tax form 2011 Example 2. 1040x tax form 2011 William owned and used a house as his main home from 2007 through 2010. 1040x tax form 2011 On January 1, 2011, he moved to another state. 1040x tax form 2011 He rented his house from that date until April 30, 2013, when he sold it. 1040x tax form 2011 During the 5-year period ending on the date of sale (May 1, 2008-April 30, 2013), William owned and lived in the house for more than 2 years. 1040x tax form 2011 He must report the sale on Form 4797 because it was rental property at the time of sale. 1040x tax form 2011 Because the period of nonqualified use does not include any part of the 5-year period after the last date William lived in the house, he has no period of nonqualified use. 1040x tax form 2011 Because he met the ownership and use tests, he can exclude gain up to $250,000. 1040x tax form 2011 However, he cannot exclude the part of the gain equal to the depreciation he claimed or could have claimed for renting the house, as explained next. 1040x tax form 2011 Depreciation after May 6, 1997. 1040x tax form 2011   If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. 1040x tax form 2011 If you can show by adequate records or other evidence that the depreciation allowed was less than the amount allowable, then you may limit the amount of gain recognized to the depreciation allowed. 1040x tax form 2011 See Publication 544 for more information. 1040x tax form 2011 Property used partly for business or rental. 1040x tax form 2011   If you used property partly as a home and partly for business or to produce rental income, see Publication 523. 1040x tax form 2011 Reporting the Sale Do not report the 2013 sale of your main home on your tax return unless: You have a gain and do not qualify to exclude all of it, You have a gain and choose not to exclude it, or You received Form 1099-S. 1040x tax form 2011 If any of these conditions apply, report the entire gain or loss. 1040x tax form 2011 For details on how to report the gain or loss, see the Instructions for Schedule D (Form 1040) and the Instructions for Form 8949. 1040x tax form 2011 If you used the home for business or to produce rental income, you may have to use Form 4797 to report the sale of the business or rental part (or the sale of the entire property if used entirely for business or rental). 1040x tax form 2011 See Business Use or Rental of Home in Publication 523 and the Instructions for Form 4797. 1040x tax form 2011 Installment sale. 1040x tax form 2011    Some sales are made under arrangements that provide for part or all of the selling price to be paid in a later year. 1040x tax form 2011 These sales are called “installment sales. 1040x tax form 2011 ” If you finance the buyer's purchase of your home yourself instead of having the buyer get a loan or mortgage from a bank, you probably have an installment sale. 1040x tax form 2011 You may be able to report the part of the gain you cannot exclude on the installment basis. 1040x tax form 2011    Use Form 6252, Installment Sale Income, to report the sale. 1040x tax form 2011 Enter your exclusion on line 15 of Form 6252. 1040x tax form 2011 Seller-financed mortgage. 1040x tax form 2011   If you sell your home and hold a note, mortgage, or other financial agreement, the payments you receive in most cases consist of both interest and principal. 1040x tax form 2011 You must separately report as interest income the interest you receive as part of each payment. 1040x tax form 2011 If the buyer of your home uses the property as a main or second home, you must also report the name, address, and social security number (SSN) of the buyer on line 1 of Schedule B (Form 1040A or 1040). 1040x tax form 2011 The buyer must give you his or her SSN, and you must give the buyer your SSN. 1040x tax form 2011 Failure to meet these requirements may result in a $50 penalty for each failure. 1040x tax form 2011 If either you or the buyer does not have and is not eligible to get an SSN, see Social Security Number in chapter 1. 1040x tax form 2011 More information. 1040x tax form 2011   For more information on installment sales, see Publication 537, Installment Sales. 1040x tax form 2011 Special Situations The situations that follow may affect your exclusion. 1040x tax form 2011 Sale of home acquired in a like-kind exchange. 1040x tax form 2011   You cannot claim the exclusion if: You acquired your home in a like-kind exchange (also known as a section 1031 exchange), or your basis in your home is determined by reference to the basis of the home in the hands of the person who acquired the property in a like-kind exchange (for example, you received the home from that person as a gift), and You sold the home during the 5-year period beginning with the date your home was acquired in the like-kind exchange. 1040x tax form 2011 Gain from a like-kind exchange is not taxable at the time of the exchange. 1040x tax form 2011 This means that gain will not be taxed until you sell or otherwise dispose of the property you receive. 1040x tax form 2011 To defer gain from a like-kind exchange, you must have exchanged business or investment property for business or investment property of a like kind. 1040x tax form 2011 For more information about like-kind exchanges, see Publication 544, Sales and Other Dispositions of Assets. 1040x tax form 2011 Home relinquished in a like-kind exchange. 1040x tax form 2011   If you use your main home partly for business or rental purposes and then exchange the home for another property, see Publication 523. 1040x tax form 2011 Expatriates. 1040x tax form 2011   You cannot claim the exclusion if the expatriation tax applies to you. 1040x tax form 2011 The expatriation tax applies to certain U. 1040x tax form 2011 S. 1040x tax form 2011 citizens who have renounced their citizenship (and to certain long-term residents who have ended their residency). 1040x tax form 2011 For more information about the expatriation tax, see Expatriation Tax in chapter 4 of Publication 519, U. 1040x tax form 2011 S. 1040x tax form 2011 Tax Guide for Aliens. 1040x tax form 2011 Home destroyed or condemned. 1040x tax form 2011   If your home was destroyed or condemned, any gain (for example, because of insurance proceeds you received) qualifies for the exclusion. 1040x tax form 2011   Any part of the gain that cannot be excluded (because it is more than the maximum exclusion) can be postponed under the rules explained in: Publication 547, in the case of a home that was destroyed, or Publication 544, chapter 1, in the case of a home that was condemned. 1040x tax form 2011 Sale of remainder interest. 1040x tax form 2011   Subject to the other rules in this chapter, you can choose to exclude gain from the sale of a remainder interest in your home. 1040x tax form 2011 If you make this choice, you cannot choose to exclude gain from your sale of any other interest in the home that you sell separately. 1040x tax form 2011 Exception for sales to related persons. 1040x tax form 2011   You cannot exclude gain from the sale of a remainder interest in your home to a related person. 1040x tax form 2011 Related persons include your brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. 1040x tax form 2011 ), and lineal descendants (children, grandchildren, etc. 1040x tax form 2011 ). 1040x tax form 2011 Related persons also include certain corporations, partnerships, trusts, and exempt organizations. 1040x tax form 2011 Recapturing (Paying Back) a Federal Mortgage Subsidy If you financed your home under a federally subsidized program (loans from tax-exempt qualified mortgage bonds or loans with mortgage credit certificates), you may have to recapture all or part of the benefit you received from that program when you sell or otherwise dispose of your home. 1040x tax form 2011 You recapture the benefit by increasing your federal income tax for the year of the sale. 1040x tax form 2011 You may have to pay this recapture tax even if you can exclude your gain from income under the rules discussed earlier; that exclusion does not affect the recapture tax. 1040x tax form 2011 Loans subject to recapture rules. 1040x tax form 2011   The recapture applies to loans that: Came from the proceeds of qualified mortgage bonds, or Were based on mortgage credit certificates. 1040x tax form 2011 The recapture also applies to assumptions of these loans. 1040x tax form 2011 When recapture applies. 1040x tax form 2011   Recapture of the federal mortgage subsidy applies only if you meet both of the following conditions. 1040x tax form 2011 You sell or otherwise dispose of your home at a gain within the first 9 years after the date you close your mortgage loan. 1040x tax form 2011 Your income for the year of disposition is more than that year's adjusted qualifying income for your family size for that year (related to the income requirements a person must meet to qualify for the federally subsidized program). 1040x tax form 2011 When recapture does not apply. 1040x tax form 2011   Recapture does not apply in any of the following situations. 1040x tax form 2011 Your mortgage loan was a qualified home improvement loan (QHIL) of not more than $15,000 used for alterations, repairs, and improvements that protect or improve the basic livability or energy efficiency of your home. 1040x tax form 2011 Your mortgage loan was a QHIL of not more than $150,000 in the case of a QHIL used to repair damage from Hurricane Katrina to homes in the hurricane disaster area; a QHIL funded by a qualified mortgage bond that is a qualified Gulf Opportunity Zone Bond; or a QHIL for an owner-occupied home in the Gulf Opportunity Zone (GO Zone), Rita GO Zone, or Wilma GO Zone. 1040x tax form 2011 For more information, see Publication 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma. 1040x tax form 2011 Also see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. 1040x tax form 2011 The home is disposed of as a result of your death. 1040x tax form 2011 You dispose of the home more than 9 years after the date you closed your mortgage loan. 1040x tax form 2011 You transfer the home to your spouse, or to your former spouse incident to a divorce, where no gain is included in your income. 1040x tax form 2011 You dispose of the home at a loss. 1040x tax form 2011 Your home is destroyed by a casualty, and you replace it on its original site within 2 years after the end of the tax year when the destruction happened. 1040x tax form 2011 The replacement period is extended for main homes destroyed in a federally declared disaster area, a Midwestern disaster area, the Kansas disaster area, and the Hurricane Katrina disaster area. 1040x tax form 2011 For more information, see Replacement Period in Publication 547. 1040x tax form 2011 You refinance your mortgage loan (unless you later meet the conditions listed previously under When recapture applies ). 1040x tax form 2011 Notice of amounts. 1040x tax form 2011   At or near the time of settlement of your mortgage loan, you should receive a notice that provides the federally subsidized amount and other information you will need to figure your recapture tax. 1040x tax form 2011 How to figure and report the recapture. 1040x tax form 2011    The recapture tax is figured on Form 8828. 1040x tax form 2011 If you sell your home and your mortgage is subject to recapture rules, you must file Form 8828 even if you do not owe a recapture tax. 1040x tax form 2011 Attach Form 8828 to your Form 1040. 1040x tax form 2011 For more information, see Form 8828 and its instructions. 1040x tax form 2011 Prev  Up  Next   Home   More Online Publications