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2010 Tax Return Online

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2010 Tax Return Online

2010 tax return online Publication 530 - Main Content Table of Contents What You Can and Cannot DeductHardest Hit Fund and Emergency Homeowners' Loan Programs Real Estate Taxes Sales Taxes Home Mortgage Interest Mortgage Insurance Premiums Mortgage Interest CreditFiguring the Credit BasisFiguring Your Basis Adjusted Basis Keeping Records How To Get Tax HelpLow Income Taxpayer Clinics What You Can and Cannot Deduct To deduct expenses of owning a home, you must file Form 1040, U. 2010 tax return online S. 2010 tax return online Individual Income Tax Return, and itemize your deductions on Schedule A (Form 1040). 2010 tax return online If you itemize, you cannot take the standard deduction. 2010 tax return online This section explains what expenses you can deduct as a homeowner. 2010 tax return online It also points out expenses that you cannot deduct. 2010 tax return online There are four primary discussions: real estate taxes, sales taxes, home mortgage interest, and mortgage insurance premiums. 2010 tax return online Generally, your real estate taxes, home mortgage interest, and mortgage insurance premiums are included in your house payment. 2010 tax return online Your house payment. 2010 tax return online   If you took out a mortgage (loan) to finance the purchase of your home, you probably have to make monthly house payments. 2010 tax return online Your house payment may include several costs of owning a home. 2010 tax return online The only costs you can deduct are real estate taxes actually paid to the taxing authority, interest that qualifies as home mortgage interest, and mortgage insurance premiums. 2010 tax return online These are discussed in more detail later. 2010 tax return online   Some nondeductible expenses that may be included in your house payment include: Fire or homeowner's insurance premiums, and The amount applied to reduce the principal of the mortgage. 2010 tax return online Minister's or military housing allowance. 2010 tax return online   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you still can deduct your real estate taxes and your home mortgage interest. 2010 tax return online You do not have to reduce your deductions by your nontaxable allowance. 2010 tax return online For more information see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers, and Publication 3, Armed Forces' Tax Guide. 2010 tax return online Nondeductible payments. 2010 tax return online   You cannot deduct any of the following items. 2010 tax return online Insurance (other than mortgage insurance premiums), including fire and comprehensive coverage, and title insurance. 2010 tax return online Wages you pay for domestic help. 2010 tax return online Depreciation. 2010 tax return online The cost of utilities, such as gas, electricity, or water. 2010 tax return online Most settlement costs. 2010 tax return online See Settlement or closing costs under Cost as Basis, later, for more information. 2010 tax return online Forfeited deposits, down payments, or earnest money. 2010 tax return online Hardest Hit Fund and Emergency Homeowners' Loan Programs You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. 2010 tax return online You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. 2010 tax return online You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. 2010 tax return online If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received), box 4 (mortgage insurance premiums) and box 5 (real property taxes). 2010 tax return online However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. 2010 tax return online Real Estate Taxes Most state and local governments charge an annual tax on the value of real property. 2010 tax return online This is called a real estate tax. 2010 tax return online You can deduct the tax if it is assessed uniformly at a like rate on all real property throughout the community. 2010 tax return online The proceeds must be for general community or governmental purposes and not be a payment for a special privilege granted or service rendered to you. 2010 tax return online Deductible Real Estate Taxes You can deduct real estate taxes imposed on you. 2010 tax return online You must have paid them either at settlement or closing, or to a taxing authority (either directly or through an escrow account) during the year. 2010 tax return online If you own a cooperative apartment, see Special Rules for Cooperatives , later. 2010 tax return online Where to deduct real estate taxes. 2010 tax return online   Enter the amount of your deductible real estate taxes on Schedule A (Form 1040), line 6. 2010 tax return online Real estate taxes paid at settlement or closing. 2010 tax return online   Real estate taxes are generally divided so that you and the seller each pay taxes for the part of the property tax year you owned the home. 2010 tax return online Your share of these taxes is fully deductible if you itemize your deductions. 2010 tax return online Division of real estate taxes. 2010 tax return online   For federal income tax purposes, the seller is treated as paying the property taxes up to, but not including, the date of sale. 2010 tax return online You (the buyer) are treated as paying the taxes beginning with the date of sale. 2010 tax return online This applies regardless of the lien dates under local law. 2010 tax return online Generally, this information is included on the settlement statement you get at closing. 2010 tax return online   You and the seller each are considered to have paid your own share of the taxes, even if one or the other paid the entire amount. 2010 tax return online You each can deduct your own share, if you itemize deductions, for the year the property is sold. 2010 tax return online Example. 2010 tax return online You bought your home on September 1. 2010 tax return online The property tax year (the period to which the tax relates) in your area is the calendar year. 2010 tax return online The tax for the year was $730 and was due and paid by the seller on August 15. 2010 tax return online You owned your new home during the property tax year for 122 days (September 1 to December 31, including your date of purchase). 2010 tax return online You figure your deduction for real estate taxes on your home as follows. 2010 tax return online 1. 2010 tax return online Enter the total real estate taxes for the real property tax year $730 2. 2010 tax return online Enter the number of days in the property tax year that you owned the property 122 3. 2010 tax return online Divide line 2 by 365 . 2010 tax return online 3342 4. 2010 tax return online Multiply line 1 by line 3. 2010 tax return online This is your deduction. 2010 tax return online Enter it on Schedule A (Form 1040), line 6 $244   You can deduct $244 on your return for the year if you itemize your deductions. 2010 tax return online You are considered to have paid this amount and can deduct it on your return even if, under the contract, you did not have to reimburse the seller. 2010 tax return online Delinquent taxes. 2010 tax return online   Delinquent taxes are unpaid taxes that were imposed on the seller for an earlier tax year. 2010 tax return online If you agree to pay delinquent taxes when you buy your home, you cannot deduct them. 2010 tax return online You treat them as part of the cost of your home. 2010 tax return online See Real estate taxes , later, under Basis. 2010 tax return online Escrow accounts. 2010 tax return online   Many monthly house payments include an amount placed in escrow (put in the care of a third party) for real estate taxes. 2010 tax return online You may not be able to deduct the total you pay into the escrow account. 2010 tax return online You can deduct only the real estate taxes that the lender actually paid from escrow to the taxing authority. 2010 tax return online Your real estate tax bill will show this amount. 2010 tax return online Refund or rebate of real estate taxes. 2010 tax return online   If you receive a refund or rebate of real estate taxes this year for amounts you paid this year, you must reduce your real estate tax deduction by the amount refunded to you. 2010 tax return online If the refund or rebate was for real estate taxes paid for a prior year, you may have to include some or all of the refund in your income. 2010 tax return online For more information, see Recoveries in Publication 525, Taxable and Nontaxable Income. 2010 tax return online Items You Cannot Deduct as Real Estate Taxes The following items are not deductible as real estate taxes. 2010 tax return online Charges for services. 2010 tax return online   An itemized charge for services to specific property or people is not a tax, even if the charge is paid to the taxing authority. 2010 tax return online You cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged for trash collection), or A flat fee charged for a single service provided by your local government (such as a $30 charge for mowing your lawn because it had grown higher than permitted under a local ordinance). 2010 tax return online    You must look at your real estate tax bill to decide if any nondeductible itemized charges, such as those listed above, are included in the bill. 2010 tax return online If your taxing authority (or lender) does not furnish you a copy of your real estate tax bill, ask for it. 2010 tax return online Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. 2010 tax return online Assessments for local benefits. 2010 tax return online   You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. 2010 tax return online Local benefits include the construction of streets, sidewalks, or water and sewer systems. 2010 tax return online You must add these amounts to the basis of your property. 2010 tax return online   You can, however, deduct assessments (or taxes) for local benefits if they are for maintenance, repair, or interest charges related to those benefits. 2010 tax return online An example is a charge to repair an existing sidewalk and any interest included in that charge. 2010 tax return online   If only a part of the assessment is for maintenance, repair, or interest charges, you must be able to show the amount of that part to claim the deduction. 2010 tax return online If you cannot show what part of the assessment is for maintenance, repair, or interest charges, you cannot deduct any of it. 2010 tax return online   An assessment for a local benefit may be listed as an item in your real estate tax bill. 2010 tax return online If so, use the rules in this section to find how much of it, if any, you can deduct. 2010 tax return online Transfer taxes (or stamp taxes). 2010 tax return online   You cannot deduct transfer taxes and similar taxes and charges on the sale of a personal home. 2010 tax return online If you are the buyer and you pay them, include them in the cost basis of the property. 2010 tax return online If you are the seller and you pay them, they are expenses of the sale and reduce the amount realized on the sale. 2010 tax return online Homeowners association assessments. 2010 tax return online   You cannot deduct these assessments because the homeowners association, rather than a state or local government, imposes them. 2010 tax return online Special Rules for Cooperatives If you own a cooperative apartment, some special rules apply to you, though you generally receive the same tax treatment as other homeowners. 2010 tax return online As an owner of a cooperative apartment, you own shares of stock in a corporation that owns or leases housing facilities. 2010 tax return online You can deduct your share of the corporation's deductible real estate taxes if the cooperative housing corporation meets the following conditions: The corporation has only one class of stock outstanding, Each stockholder, solely because of ownership of the stock, can live in a house, apartment, or house trailer owned or leased by the corporation, No stockholder can receive any distribution out of capital, except on a partial or complete liquidation of the corporation, and At least one of the following: At least 80% of the corporation's gross income for the tax year was paid by the tenant-stockholders. 2010 tax return online For this purpose, gross income means all income received during the entire tax year, including any received before the corporation changed to cooperative ownership. 2010 tax return online At least 80% of the total square footage of the corporation's property must be available for use by the tenant-stockholders during the entire tax year. 2010 tax return online At least 90% of the expenditures paid or incurred by the corporation were used for the acquisition, construction, management, maintenance, or care of the property for the benefit of the tenant-shareholders during the entire tax year. 2010 tax return online Tenant-stockholders. 2010 tax return online   A tenant-stockholder can be any entity (such as a corporation, trust, estate, partnership, or association) as well as an individual. 2010 tax return online The tenant-stockholder does not have to live in any of the cooperative's dwelling units. 2010 tax return online The units that the tenant-stockholder has the right to occupy can be rented to others. 2010 tax return online Deductible taxes. 2010 tax return online   You figure your share of real estate taxes in the following way. 2010 tax return online Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. 2010 tax return online Multiply the corporation's deductible real estate taxes by the number you figured in (1). 2010 tax return online This is your share of the real estate taxes. 2010 tax return online   Generally, the corporation will tell you your share of its real estate tax. 2010 tax return online This is the amount you can deduct if it reasonably reflects the cost of real estate taxes for your dwelling unit. 2010 tax return online Refund of real estate taxes. 2010 tax return online   If the corporation receives a refund of real estate taxes it paid in an earlier year, it must reduce the amount of real estate taxes paid this year when it allocates the tax expense to you. 2010 tax return online Your deduction for real estate taxes the corporation paid this year is reduced by your share of the refund the corporation received. 2010 tax return online Sales Taxes Generally, you can elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule A (Form 1040). 2010 tax return online Deductible sales taxes may include sales taxes paid on your home (including mobile and prefabricated), or home building materials if the tax rate was the same as the general sales tax rate. 2010 tax return online For information on figuring your deduction, see the Instructions for Schedule A (Form 1040). 2010 tax return online If you elect to deduct the sales taxes paid on your home, or home building materials, you cannot include them as part of your cost basis in the home. 2010 tax return online Home Mortgage Interest This section of the publication gives you basic information about home mortgage interest, including information on interest paid at settlement, points, and Form 1098, Mortgage Interest Statement. 2010 tax return online Most home buyers take out a mortgage (loan) to buy their home. 2010 tax return online They then make monthly payments to either the mortgage holder or someone collecting the payments for the mortgage holder. 2010 tax return online Usually, you can deduct the entire part of your payment that is for mortgage interest, if you itemize your deductions on Schedule A (Form 1040). 2010 tax return online However, your deduction may be limited if: Your total mortgage balance is more than $1 million ($500,000 if married filing separately), or You took out a mortgage for reasons other than to buy, build, or improve your home. 2010 tax return online If either of these situations applies to you, see Publication 936 for more information. 2010 tax return online Also see Publication 936 if you later refinance your mortgage or buy a second home. 2010 tax return online Refund of home mortgage interest. 2010 tax return online   If you receive a refund of home mortgage interest that you deducted in an earlier year and that reduced your tax, you generally must include the refund in income in the year you receive it. 2010 tax return online For more information, see Recoveries in Publication 525. 2010 tax return online The amount of the refund will usually be shown on the mortgage interest statement you receive from your mortgage lender. 2010 tax return online See Mortgage Interest Statement , later. 2010 tax return online Deductible Mortgage Interest To be deductible, the interest you pay must be on a loan secured by your main home or a second home. 2010 tax return online The loan can be a first or second mortgage, a home improvement loan, or a home equity loan. 2010 tax return online Prepaid interest. 2010 tax return online   If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. 2010 tax return online Generally, you can deduct in each year only the interest that qualifies as home mortgage interest for that year. 2010 tax return online An exception (discussed later) applies to points. 2010 tax return online Late payment charge on mortgage payment. 2010 tax return online   You can deduct as home mortgage interest a late payment charge if it was not for a specific service in connection with your mortgage loan. 2010 tax return online Mortgage prepayment penalty. 2010 tax return online   If you pay off your home mortgage early, you may have to pay a penalty. 2010 tax return online You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. 2010 tax return online Ground rent. 2010 tax return online   In some states (such as Maryland), you may buy your home subject to a ground rent. 2010 tax return online A ground rent is an obligation you assume to pay a fixed amount per year on the property. 2010 tax return online Under this arrangement, you are leasing (rather than buying) the land on which your home is located. 2010 tax return online Redeemable ground rents. 2010 tax return online   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct the payments as mortgage interest. 2010 tax return online The ground rent is a redeemable ground rent only if all of the following are true. 2010 tax return online Your lease, including renewal periods, is for more than 15 years. 2010 tax return online You can freely assign the lease. 2010 tax return online You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a specified amount. 2010 tax return online The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. 2010 tax return online   Payments made to end the lease and buy the lessor's entire interest in the land are not redeemable ground rents. 2010 tax return online You cannot deduct them. 2010 tax return online Nonredeemable ground rents. 2010 tax return online   Payments on a nonredeemable ground rent are not mortgage interest. 2010 tax return online You can deduct them as rent only if they are a business expense or if they are for rental property. 2010 tax return online Cooperative apartment. 2010 tax return online   You can usually treat the interest on a loan you took out to buy stock in a cooperative housing corporation as home mortgage interest if you own a cooperative apartment, and the cooperative housing corporation meets the conditions described earlier under Special Rules for Cooperatives . 2010 tax return online In addition, you can treat as home mortgage interest your share of the corporation's deductible mortgage interest. 2010 tax return online Figure your share of mortgage interest the same way that is shown for figuring your share of real estate taxes in the Example under Division of real estate taxes, earlier. 2010 tax return online For more information on cooperatives, see Special Rule for Tenant-Stockholders in Cooperative Housing Corporations in Publication 936. 2010 tax return online Refund of cooperative's mortgage interest. 2010 tax return online   You must reduce your mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. 2010 tax return online The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year. 2010 tax return online   If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. 2010 tax return online Mortgage Interest Paid at Settlement One item that normally appears on a settlement or closing statement is home mortgage interest. 2010 tax return online You can deduct the interest that you pay at settlement if you itemize your deductions on Schedule A (Form 1040). 2010 tax return online This amount should be included in the mortgage interest statement provided by your lender. 2010 tax return online See the discussion under Mortgage Interest Statement , later. 2010 tax return online Also, if you pay interest in advance, see Prepaid interest , earlier, and Points , next. 2010 tax return online Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. 2010 tax return online Points also may be called loan origination fees, maximum loan charges, loan discount, or discount points. 2010 tax return online A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. 2010 tax return online See Points paid by the seller , later. 2010 tax return online General rule. 2010 tax return online   You cannot deduct the full amount of points in the year paid. 2010 tax return online They are prepaid interest, so you generally must deduct them over the life (term) of the mortgage. 2010 tax return online Exception. 2010 tax return online   You can deduct the full amount of points in the year paid if you meet all the following tests. 2010 tax return online Your loan is secured by your main home. 2010 tax return online (Generally, your main home is the one you live in most of the time. 2010 tax return online ) Paying points is an established business practice in the area where the loan was made. 2010 tax return online The points paid were not more than the points generally charged in that area. 2010 tax return online You use the cash method of accounting. 2010 tax return online This means you report income in the year you receive it and deduct expenses in the year you pay them. 2010 tax return online Most individuals use this method. 2010 tax return online The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. 2010 tax return online The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. 2010 tax return online The funds you provided are not required to have been applied to the points. 2010 tax return online They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. 2010 tax return online You cannot have borrowed these funds. 2010 tax return online You use your loan to buy or build your main home. 2010 tax return online The points were computed as a percentage of the principal amount of the mortgage. 2010 tax return online The amount is clearly shown on the settlement statement (such as the Uniform Settlement Statement, Form HUD-1) as points charged for the mortgage. 2010 tax return online The points may be shown as paid from either your funds or the seller's. 2010 tax return online Note. 2010 tax return online If you meet all of the tests listed above and you itemize your deductions in the year you get the loan, you can either deduct the full amount of points in the year paid or deduct them over the life of the loan, beginning in the year you get the loan. 2010 tax return online If you do not itemize your deductions in the year you get the loan, you can spread the points over the life of the loan and deduct the appropriate amount in each future year, if any, when you do itemize your deductions. 2010 tax return online Home improvement loan. 2010 tax return online   You can also fully deduct in the year paid points paid on a loan to improve your main home, if you meet the first six tests listed earlier. 2010 tax return online Refinanced loan. 2010 tax return online   If you use part of the refinanced mortgage proceeds to improve your main home and you meet the first six tests listed earlier, you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. 2010 tax return online You can deduct the rest of the points over the life of the loan. 2010 tax return online Points not fully deductible in year paid. 2010 tax return online    If you do not qualify under the exception to deduct the full amount of points in the year paid (or choose not to do so), see Points in Publication 936 for the rules on when and how much you can deduct. 2010 tax return online Figure A. 2010 tax return online   You can use Figure A, next, as a quick guide to see whether your points are fully deductible in the year paid. 2010 tax return online    Please click here for the text description of the image. 2010 tax return online Figure A. 2010 tax return online Are my points fully deductible this year? Amounts charged for services. 2010 tax return online   Amounts charged by the lender for specific services connected to the loan are not interest. 2010 tax return online Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. 2010 tax return online You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. 2010 tax return online For information about the tax treatment of these amounts and other settlement fees and closing costs, see Basis , later. 2010 tax return online Points paid by the seller. 2010 tax return online   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. 2010 tax return online Treatment by seller. 2010 tax return online   The seller cannot deduct these fees as interest. 2010 tax return online However, they are a selling expense that reduces the seller's amount realized. 2010 tax return online See Publication 523 for more information. 2010 tax return online Treatment by buyer. 2010 tax return online   The buyer treats seller-paid points as if he or she had paid them. 2010 tax return online If all the tests listed earlier under Exception are met, the buyer can deduct the points in the year paid. 2010 tax return online If any of those tests are not met, the buyer must deduct the points over the life of the loan. 2010 tax return online   The buyer must also reduce the basis of the home by the amount of the seller-paid points. 2010 tax return online For more information about the basis of your home, see Basis , later. 2010 tax return online Funds provided are less than points. 2010 tax return online   If you meet all the tests listed earlier under Exception except that the funds you provided were less than the points charged to you (test 6), you can deduct the points in the year paid up to the amount of funds you provided. 2010 tax return online In addition, you can deduct any points paid by the seller. 2010 tax return online Example 1. 2010 tax return online When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). 2010 tax return online You meet all the tests for deducting points in the year paid (see Exception , earlier), except the only funds you provided were a $750 down payment. 2010 tax return online Of the $1,000 you were charged for points, you can deduct $750 in the year paid. 2010 tax return online You spread the remaining $250 over the life of the mortgage. 2010 tax return online Example 2. 2010 tax return online The facts are the same as in Example 1 , except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. 2010 tax return online In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). 2010 tax return online You spread the remaining $250 over the life of the mortgage. 2010 tax return online You must reduce the basis of your home by the $1,000 paid by the seller. 2010 tax return online Excess points. 2010 tax return online   If you meet all the tests under Exception , earlier, except that the points paid were more than are generally charged in your area (test 3), you can deduct in the year paid only the points that are generally charged. 2010 tax return online You must spread any additional points over the life of the mortgage. 2010 tax return online Mortgage ending early. 2010 tax return online   If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. 2010 tax return online A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. 2010 tax return online Example. 2010 tax return online Dan paid $3,000 in points in 2006 that he had to spread out over the 15-year life of the mortgage. 2010 tax return online He had deducted $1,400 of these points through 2012. 2010 tax return online Dan prepaid his mortgage in full in 2013. 2010 tax return online He can deduct the remaining $1,600 of points in 2013. 2010 tax return online Exception. 2010 tax return online   If you refinance the mortgage with the same lender, you cannot deduct any remaining points for the year. 2010 tax return online Instead, deduct them over the term of the new loan. 2010 tax return online Form 1098. 2010 tax return online   The mortgage interest statement you receive should show not only the total interest paid during the year, but also your deductible points paid during the year. 2010 tax return online See Mortgage Interest Statement , later. 2010 tax return online Where To Deduct Home Mortgage Interest Enter on Schedule A (Form 1040), line 10, the home mortgage interest and points reported to you on Form 1098 (discussed next). 2010 tax return online If you did not receive a Form 1098, enter your deductible interest on line 11, and any deductible points on line 12. 2010 tax return online See Table 1 below for a summary of where to deduct home mortgage interest and real estate taxes. 2010 tax return online If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and social security number (SSN) or employer identification number (EIN) on the dotted lines next to line 11. 2010 tax return online The seller must give you this number and you must give the seller your SSN. 2010 tax return online Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. 2010 tax return online Failure to meet either of these requirements may result in a $50 penalty for each failure. 2010 tax return online Table 1. 2010 tax return online Where To Deduct Interest and Taxes Paid on Your Home See the text for information on what expenses are eligible. 2010 tax return online IF you are eligible to deduct . 2010 tax return online . 2010 tax return online . 2010 tax return online THEN report the amount  on Schedule A (Form 1040) . 2010 tax return online . 2010 tax return online . 2010 tax return online real estate taxes line 6. 2010 tax return online home mortgage interest and points reported on Form 1098 line 10. 2010 tax return online home mortgage interest not reported on  Form 1098 line 11. 2010 tax return online points not reported on Form 1098 line 12. 2010 tax return online qualified mortgage insurance premiums line 13. 2010 tax return online Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage to a mortgage holder in the course of that holder's trade or business, you should receive a Form 1098 or similar statement from the mortgage holder. 2010 tax return online The statement will show the total interest paid on your mortgage during the year. 2010 tax return online If you bought a main home during the year, it also will show the deductible points you paid and any points you can deduct that were paid by the person who sold you your home. 2010 tax return online See Points , earlier. 2010 tax return online The interest you paid at settlement should be included on the statement. 2010 tax return online If it is not, add the interest from the settlement sheet that qualifies as home mortgage interest to the total shown on Form 1098 or similar statement. 2010 tax return online Put the total on Schedule A (Form 1040), line 10, and attach a statement to your return explaining the difference. 2010 tax return online Write “See attached” to the right of line 10. 2010 tax return online A mortgage holder can be a financial institution, a governmental unit, or a cooperative housing corporation. 2010 tax return online If a statement comes from a cooperative housing corporation, it generally will show your share of interest. 2010 tax return online Your mortgage interest statement for 2013 should be provided or sent to you by January 31, 2014. 2010 tax return online If it is mailed, you should allow adequate time to receive it before contacting the mortgage holder. 2010 tax return online A copy of this form will be sent to the IRS also. 2010 tax return online Example. 2010 tax return online You bought a new home on May 3. 2010 tax return online You paid no points on the purchase. 2010 tax return online During the year, you made mortgage payments which included $4,480 deductible interest on your new home. 2010 tax return online The settlement sheet for the purchase of the home included interest of $620 for 29 days in May. 2010 tax return online The mortgage statement you receive from the lender includes total interest of $5,100 ($4,480 + $620). 2010 tax return online You can deduct the $5,100 if you itemize your deductions. 2010 tax return online Refund of overpaid interest. 2010 tax return online   If you receive a refund of mortgage interest you overpaid in a prior year, you generally will receive a Form 1098 showing the refund in box 3. 2010 tax return online Generally, you must include the refund in income in the year you receive it. 2010 tax return online See Refund of home mortgage interest , earlier, under Home Mortgage Interest. 2010 tax return online More than one borrower. 2010 tax return online   If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. 2010 tax return online Show how much of the interest each of you paid, and give the name and address of the person who received the form. 2010 tax return online Deduct your share of the interest on Schedule A (Form 1040), line 11, and write “See attached” to the right of that line. 2010 tax return online Mortgage Insurance Premiums You may be able to take an itemized deduction on Schedule A (Form 1040), line 13, for premiums you pay or accrue during 2013 for qualified mortgage insurance in connection with home acquisition debt on your qualified home. 2010 tax return online Mortgage insurance premiums you paid or accrued on any mortgage insurance contract issued before January 1, 2007, are not deductible as an itemized deduction. 2010 tax return online Qualified Mortgage Insurance Qualified mortgage insurance is mortgage insurance provided by the Veterans Administration, the Federal Housing Administration, or the Rural Housing Administration, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). 2010 tax return online Prepaid mortgage insurance premiums. 2010 tax return online   If you paid premiums that are allocable to periods after 2013, you must allocate them over the shorter of: The stated term of the mortgage, or 84 months, beginning with the month the insurance was obtained. 2010 tax return online The premiums are treated as paid in the year to which they were allocated. 2010 tax return online If the mortgage is satisfied before its term, no deduction is allowed for the unamortized balance. 2010 tax return online See Publication 936 for details. 2010 tax return online Exception for certain mortgage insurance. 2010 tax return online   The allocation rules, explained above, do not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or Rural Housing Service. 2010 tax return online Home Acquisition Debt Home acquisition debt is a mortgage you took out after October 13, 1987, to buy, build, or substantially improve a qualified home. 2010 tax return online It also must be secured by that home. 2010 tax return online If the amount of your mortgage is more than the cost of the home plus the cost of any substantial improvements, only the debt that is not more than the cost of the home plus improvements qualifies as home acquisition debt. 2010 tax return online Home acquisition debt limit. 2010 tax return online   The total amount you can treat as home acquisition debt at any time on your home cannot be more than $1 million ($500,000 if married filing separately). 2010 tax return online Discharges of qualified principal residence indebtedness. 2010 tax return online   You can exclude from gross income any discharges of qualified principal residence indebtedness made after 2006 and before 2014. 2010 tax return online You must reduce the basis of your principal residence (but not below zero) by the amount you exclude. 2010 tax return online Principal residence. 2010 tax return online   Your principal residence is the home where you ordinarily live most of the time. 2010 tax return online You can have only one principal residence at any one time. 2010 tax return online Qualified principal residence indebtedness. 2010 tax return online   This is a mortgage that you took out to buy, build, or substantially improve your principal residence and that is secured by that residence. 2010 tax return online If the amount of your original mortgage is more than the cost of your principal residence plus the cost of substantial improvements, qualified principal residence indebtedness cannot be more than the cost of your principal residence plus improvements. 2010 tax return online   Any debt secured by your principal residence that you use to refinance qualified principal residence indebtedness is qualified principal residence indebtedness up to the amount of your old mortgage principal just before the refinancing. 2010 tax return online Additional debt incurred to substantially improve your principal residence is also qualified principal residence indebtedness. 2010 tax return online Amount you can exclude. 2010 tax return online   You can only exclude debt discharged after 2006 and before 2014. 2010 tax return online The most you can exclude is $2 million ($1 million if married filing separately). 2010 tax return online You cannot exclude any amount that was discharged because of services performed for the lender or on account of any other factor not directly related either to a decline in the value of your residence or to your financial condition. 2010 tax return online Ordering rule. 2010 tax return online   If only a part of a loan is qualified principal residence indebtedness, you can exclude only the amount of the discharge that is more than the amount of the loan (immediately before the discharge) that is not qualified principal residence indebtedness. 2010 tax return online Qualified Home This means your main home or your second home. 2010 tax return online A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. 2010 tax return online Main home. 2010 tax return online   You can have only one main home at any one time. 2010 tax return online This is the home where you ordinarily live most of the time. 2010 tax return online Second home and other special situations. 2010 tax return online   If you have a second home, use part of your home for other than residential living (such as a home office), rent out part of your home, or are having your home constructed, see Qualified Home in Publication 936. 2010 tax return online Limit on Deduction If your adjusted gross income (AGI) on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are deductible is reduced and may be eliminated. 2010 tax return online See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. 2010 tax return online If your AGI is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. 2010 tax return online Form 1098. 2010 tax return online   The amount of mortgage insurance premiums you paid during 2013 should be reported in box 4. 2010 tax return online See Form 1098, Mortgage Interest Statement in Publication 936. 2010 tax return online Mortgage Interest Credit The mortgage interest credit is intended to help lower-income individuals afford home ownership. 2010 tax return online If you qualify, you can claim the credit on Form 8396 each year for part of the home mortgage interest you pay. 2010 tax return online Who qualifies. 2010 tax return online   You may be eligible for the credit if you were issued a qualified Mortgage Credit Certificate (MCC) from your state or local government. 2010 tax return online Generally, an MCC is issued only in connection with a new mortgage for the purchase of your main home. 2010 tax return online The MCC will show the certificate credit rate you will use to figure your credit. 2010 tax return online It also will show the certified indebtedness amount. 2010 tax return online Only the interest on that amount qualifies for the credit. 2010 tax return online See Figuring the Credit , later. 2010 tax return online You must contact the appropriate government agency about getting an MCC before you get a mortgage and buy your home. 2010 tax return online Contact your state or local housing finance agency for information about the availability of MCCs in your area. 2010 tax return online How to claim the credit. 2010 tax return online   To claim the credit, complete Form 8396 and attach it to your Form 1040 or Form 1040NR, U. 2010 tax return online S. 2010 tax return online Nonresident Alien Income Tax Return. 2010 tax return online Include the credit in your total for Form 1040, line 53, or Form 1040NR, line 50; be sure to check box c and write “Form 8396” on that line. 2010 tax return online Reducing your home mortgage interest deduction. 2010 tax return online   If you itemize your deductions on Schedule A (Form 1040), you must reduce your home mortgage interest deduction by the amount of the mortgage interest credit shown on Form 8396, line 3. 2010 tax return online You must do this even if part of that amount is to be carried forward to 2014. 2010 tax return online Selling your home. 2010 tax return online   If you purchase a home after 1990 using an MCC, and you sell that home within 9 years, you may have to recapture (repay) all or part of the benefit you received from the MCC program. 2010 tax return online For additional information, see Recapturing (Paying Back) a Federal Mortgage Subsidy, in Publication 523. 2010 tax return online Figuring the Credit Figure your credit on Form 8396. 2010 tax return online Mortgage not more than certified indebtedness. 2010 tax return online   If your mortgage loan amount is equal to (or smaller than) the certified indebtedness amount shown on your MCC, enter on Form 8396, line 1, all the interest you paid on your mortgage during the year. 2010 tax return online Mortgage more than certified indebtedness. 2010 tax return online   If your mortgage loan amount is larger than the certified indebtedness amount shown on your MCC, you can figure the credit on only part of the interest you paid. 2010 tax return online To find the amount to enter on line 1, multiply the total interest you paid during the year on your mortgage by the following fraction. 2010 tax return online Certified indebtedness amount on your MCC Original amount of your mortgage   The fraction will not change as long as you are entitled to take the mortgage interest credit. 2010 tax return online Example. 2010 tax return online Emily bought a home this year. 2010 tax return online Her mortgage loan is $125,000. 2010 tax return online The certified indebtedness amount on her MCC is $100,000. 2010 tax return online She paid $7,500 interest this year. 2010 tax return online Emily figures the interest to enter on Form 8396, line 1, as follows:   $100,000 = 80% (. 2010 tax return online 80)       $125,000       $7,500 x . 2010 tax return online 80 = $6,000   Emily enters $6,000 on Form 8396, line 1. 2010 tax return online In each later year, she will figure her credit using only 80% of the interest she pays for that year. 2010 tax return online Limits Two limits may apply to your credit. 2010 tax return online A limit based on the credit rate, and A limit based on your tax. 2010 tax return online Limit based on credit rate. 2010 tax return online   If the certificate credit rate is higher than 20%, the credit you are allowed cannot be more than $2,000. 2010 tax return online Limit based on tax. 2010 tax return online   After applying the limit based on the credit rate, your credit generally cannot be more than your tax liability. 2010 tax return online See the Credit Limit Worksheet in the Form 8396 instructions to calculate the limit based on tax. 2010 tax return online Dividing the Credit If two or more persons (other than a married couple filing a joint return) hold an interest in the home to which the MCC relates, the credit must be divided based on the interest held by each person. 2010 tax return online Example. 2010 tax return online John and his brother, George, were issued an MCC. 2010 tax return online They used it to get a mortgage on their main home. 2010 tax return online John has a 60% ownership interest in the home, and George has a 40% ownership interest in the home. 2010 tax return online John paid $5,400 mortgage interest this year and George paid $3,600. 2010 tax return online The MCC shows a credit rate of 25% and a certified indebtedness amount of $130,000. 2010 tax return online The loan amount (mortgage) on their home is $120,000. 2010 tax return online The credit is limited to $2,000 because the credit rate is more than 20%. 2010 tax return online John figures the credit by multiplying the mortgage interest he paid this year ($5,400) by the certificate credit rate (25%) for a total of $1,350. 2010 tax return online His credit is limited to $1,200 ($2,000 × 60%). 2010 tax return online George figures the credit by multiplying the mortgage interest he paid this year ($3,600) by the certificate credit rate (25%) for a total of $900. 2010 tax return online His credit is limited to $800 ($2,000 × 40%). 2010 tax return online Carryforward If your allowable credit is reduced because of the limit based on your tax, you can carry forward the unused portion of the credit to the next 3 years or until used, whichever comes first. 2010 tax return online Example. 2010 tax return online You receive a mortgage credit certificate from State X. 2010 tax return online This year, your regular tax liability is $1,100, you owe no alternative minimum tax, and your mortgage interest credit is $1,700. 2010 tax return online You claim no other credits. 2010 tax return online Your unused mortgage interest credit for this year is $600 ($1,700 − $1,100). 2010 tax return online You can carry forward this amount to the next 3 years or until used, whichever comes first. 2010 tax return online Credit rate more than 20%. 2010 tax return online   If you are subject to the $2,000 limit because your certificate credit rate is more than 20%, you cannot carry forward any amount more than $2,000 (or your share of the $2,000 if you must divide the credit). 2010 tax return online Example. 2010 tax return online In the earlier example under Dividing the Credit , John and George used the entire $2,000 credit. 2010 tax return online The excess   John $1,350 − $1,200 = $150     George $900 − $800 = $100   $150 for John ($1,350 − $1,200) and $100 for George ($900 − $800) cannot be carried forward to future years, despite the respective tax liabilities for John and George. 2010 tax return online Refinancing If you refinance your original mortgage loan on which you had been given an MCC, you must get a new MCC to be able to claim the credit on the new loan. 2010 tax return online The amount of credit you can claim on the new loan may change. 2010 tax return online Table 2 below summarizes how to figure your credit if you refinance your original mortgage loan. 2010 tax return online Table 2. 2010 tax return online Effect of Refinancing on Your Credit IF you get a new (reissued) MCC and the amount of your new mortgage is . 2010 tax return online . 2010 tax return online . 2010 tax return online THEN the interest you claim on Form 8396, line 1, is* . 2010 tax return online . 2010 tax return online . 2010 tax return online smaller than or equal to the certified indebtedness amount on the new MCC all the interest paid during the year on your new mortgage. 2010 tax return online larger than the certified indebtedness amount on the new MCC interest paid during the year on your new mortgage multiplied by the following fraction. 2010 tax return online         certified indebtedness  amount on your new MCC       original amount of your  mortgage   *The credit using the new MCC cannot be more than the credit using the old MCC. 2010 tax return online  See New MCC cannot increase your credit above. 2010 tax return online An issuer may reissue an MCC after you refinance your mortgage. 2010 tax return online If you did not get a new MCC, you may want to contact the state or local housing finance agency that issued your original MCC for information about whether you can get a reissued MCC. 2010 tax return online Year of refinancing. 2010 tax return online   In the year of refinancing, add the applicable amount of interest paid on the old mortgage and the applicable amount of interest paid on the new mortgage, and enter the total on Form 8396, line 1. 2010 tax return online   If your new MCC has a credit rate different from the rate on the old MCC, you must attach a statement to Form 8396. 2010 tax return online The statement must show the calculation for lines 1, 2, and 3 for the part of the year when the old MCC was in effect. 2010 tax return online It must show a separate calculation for the part of the year when the new MCC was in effect. 2010 tax return online Combine the amounts from both calculations for line 3, enter the total on line 3 of the form, and write “See attached” on the dotted line next to line 2. 2010 tax return online New MCC cannot increase your credit. 2010 tax return online   The credit that you claim with your new MCC cannot be more than the credit that you could have claimed with your old MCC. 2010 tax return online   In most cases, the agency that issues your new MCC will make sure that it does not increase your credit. 2010 tax return online However, if either your old loan or your new loan has a variable (adjustable) interest rate, you will need to check this yourself. 2010 tax return online In that case, you will need to know the amount of the credit you could have claimed using the old MCC. 2010 tax return online   There are two methods for figuring the credit you could have claimed. 2010 tax return online Under one method, you figure the actual credit that would have been allowed. 2010 tax return online This means you use the credit rate on the old MCC and the interest you would have paid on the old loan. 2010 tax return online   If your old loan was a variable rate mortgage, you can use another method to determine the credit that you could have claimed. 2010 tax return online Under this method, you figure the credit using a payment schedule of a hypothetical self-amortizing mortgage with level payments projected to the final maturity date of the old mortgage. 2010 tax return online The interest rate of the hypothetical mortgage is the annual percentage rate (APR) of the new mortgage for purposes of the Federal Truth in Lending Act. 2010 tax return online The principal of the hypothetical mortgage is the remaining outstanding balance of the certified mortgage indebtedness shown on the old MCC. 2010 tax return online    You must choose one method and use it consistently beginning with the first tax year for which you claim the credit based on the new MCC. 2010 tax return online    As part of your tax records, you should keep your old MCC and the schedule of payments for your old mortgage. 2010 tax return online Basis Basis is your starting point for figuring a gain or loss if you later sell your home, or for figuring depreciation if you later use part of your home for business purposes or for rent. 2010 tax return online While you own your home, you may add certain items to your basis. 2010 tax return online You may subtract certain other items from your basis. 2010 tax return online These items are called adjustments to basis and are explained later under Adjusted Basis . 2010 tax return online It is important that you understand these terms when you first acquire your home because you must keep track of your basis and adjusted basis during the period you own your home. 2010 tax return online You also must keep records of the events that affect basis or adjusted basis. 2010 tax return online See Keeping Records , below. 2010 tax return online Figuring Your Basis How you figure your basis depends on how you acquire your home. 2010 tax return online If you buy or build your home, your cost is your basis. 2010 tax return online If you receive your home as a gift, your basis is usually the same as the adjusted basis of the person who gave you the property. 2010 tax return online If you inherit your home from a decedent, different rules apply depending on the date of the decedent's death. 2010 tax return online Each of these topics is discussed later. 2010 tax return online Property transferred from a spouse. 2010 tax return online   If your home is transferred to you from your spouse, or from your former spouse as a result of a divorce, your basis is the same as your spouse's (or former spouse's) adjusted basis just before the transfer. 2010 tax return online Publication 504, Divorced or Separated Individuals, fully discusses transfers between spouses. 2010 tax return online Cost as Basis The cost of your home, whether you purchased it or constructed it, is the amount you paid for it, including any debt you assumed. 2010 tax return online The cost of your home includes most settlement or closing costs you paid when you bought the home. 2010 tax return online If you built your home, your cost includes most closing costs paid when you bought the land or settled on your mortgage. 2010 tax return online See Settlement or closing costs , later. 2010 tax return online If you elect to deduct the sales taxes on the purchase or construction of your home as an itemized deduction on Schedule A (Form 1040), you cannot include the sales taxes as part of your cost basis in the home. 2010 tax return online Purchase. 2010 tax return online   The basis of a home you bought is the amount you paid for it. 2010 tax return online This usually includes your down payment and any debt you assumed. 2010 tax return online The basis of a cooperative apartment is the amount you paid for your shares in the corporation that owns or controls the property. 2010 tax return online This amount includes any purchase commissions or other costs of acquiring the shares. 2010 tax return online Construction. 2010 tax return online   If you contracted to have your home built on land that you own, your basis in the home is your basis in the land plus the amount you paid to have the home built. 2010 tax return online This includes the cost of labor and materials, the amount you paid the contractor, any architect's fees, building permit charges, utility meter and connection charges, and legal fees that are directly connected with building your home. 2010 tax return online If you built all or part of your home yourself, your basis is the total amount it cost you to build it. 2010 tax return online You cannot include in basis the value of your own labor or any other labor for which you did not pay. 2010 tax return online Real estate taxes. 2010 tax return online   Real estate taxes are usually divided so that you and the seller each pay taxes for the part of the property tax year that each owned the home. 2010 tax return online See the earlier discussion of Real estate taxes paid at settlement or closing , under Real Estate Taxes, earlier, to figure the real estate taxes you paid or are considered to have paid. 2010 tax return online   If you pay any part of the seller's share of the real estate taxes (the taxes up to the date of sale), and the seller did not reimburse you, add those taxes to your basis in the home. 2010 tax return online You cannot deduct them as taxes paid. 2010 tax return online   If the seller paid any of your share of the real estate taxes (the taxes beginning with the date of sale), you can still deduct those taxes. 2010 tax return online Do not include those taxes in your basis. 2010 tax return online If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. 2010 tax return online Example 1. 2010 tax return online You bought your home on September 1. 2010 tax return online The property tax year in your area is the calendar year, and the tax is due on August 15. 2010 tax return online The real estate taxes on the home you bought were $1,275 for the year and had been paid by the seller on August 15. 2010 tax return online You did not reimburse the seller for your share of the real estate taxes from September 1 through December 31. 2010 tax return online You must reduce the basis of your home by the $426 [(122 ÷ 365) × $1,275] the seller paid for you. 2010 tax return online You can deduct your $426 share of real estate taxes on your return for the year you purchased your home. 2010 tax return online Example 2. 2010 tax return online You bought your home on May 3, 2013. 2010 tax return online The property tax year in your area is the calendar year. 2010 tax return online The taxes for the previous year are assessed on January 2 and are due on May 31 and November 30. 2010 tax return online Under state law, the taxes become a lien on May 31. 2010 tax return online You agreed to pay all taxes due after the date of sale. 2010 tax return online The taxes due in 2013 for 2012 were $1,375. 2010 tax return online The taxes due in 2014 for 2013 will be $1,425. 2010 tax return online You cannot deduct any of the taxes paid in 2013 because they relate to the 2012 property tax year and you did not own the home until 2013. 2010 tax return online Instead, you add the $1,375 to the cost (basis) of your home. 2010 tax return online You owned the home in 2013 for 243 days (May 3 to December 31), so you can take a tax deduction on your 2014 return of $949 [(243 ÷ 365) × $1,425] paid in 2014 for 2013. 2010 tax return online You add the remaining $476 ($1,425 − $949) of taxes paid in 2014 to the cost (basis) of your home. 2010 tax return online Settlement or closing costs. 2010 tax return online   If you bought your home, you probably paid settlement or closing costs in addition to the contract price. 2010 tax return online These costs are divided between you and the seller according to the sales contract, local custom, or understanding of the parties. 2010 tax return online If you built your home, you probably paid these costs when you bought the land or settled on your mortgage. 2010 tax return online   The only settlement or closing costs you can deduct are home mortgage interest and certain real estate taxes. 2010 tax return online You deduct them in the year you buy your home if you itemize your deductions. 2010 tax return online You can add certain other settlement or closing costs to the basis of your home. 2010 tax return online Items added to basis. 2010 tax return online   You can include in your basis the settlement fees and closing costs you paid for buying your home. 2010 tax return online A fee is for buying the home if you would have had to pay it even if you paid cash for the home. 2010 tax return online   The following are some of the settlement fees and closing costs that you can include in the original basis of your home. 2010 tax return online Abstract fees (abstract of title fees). 2010 tax return online Charges for installing utility services. 2010 tax return online Legal fees (including fees for the title search and preparation of the sales contract and deed). 2010 tax return online Recording fees. 2010 tax return online Surveys. 2010 tax return online Transfer or stamp taxes. 2010 tax return online Owner's title insurance. 2010 tax return online Any amount the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, cost for improvements or repairs, and sales commissions. 2010 tax return online   If the seller actually paid for any item for which you are liable and for which you can take a deduction (such as your share of the real estate taxes for the year of sale), you must reduce your basis by that amount unless you are charged for it in the settlement. 2010 tax return online Items not added to basis and not deductible. 2010 tax return online   Here are some settlement and closing costs that you cannot deduct or add to your basis. 2010 tax return online Fire insurance premiums. 2010 tax return online Charges for using utilities or other services related to occupancy of the home before closing. 2010 tax return online Rent for occupying the home before closing. 2010 tax return online Charges connected with getting or refinancing a mortgage loan, such as: Loan assumption fees, Cost of a credit report, and Fee for an appraisal required by a lender. 2010 tax return online Points paid by seller. 2010 tax return online   If you bought your home after April 3, 1994, you must reduce your basis by any points paid for your mortgage by the person who sold you your home. 2010 tax return online   If you bought your home after 1990 but before April 4, 1994, you must reduce your basis by seller-paid points only if you deducted them. 2010 tax return online See Points , earlier, for the rules on deducting points. 2010 tax return online Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined later) to the donor just before it was given to you, its fair market value (FMV) at the time it was given to you, and any gift tax paid on it. 2010 tax return online Fair market value. 2010 tax return online   Fair market value (FMV) is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and who both have a reasonable knowledge of all the necessary facts. 2010 tax return online Donor's adjusted basis is more than FMV. 2010 tax return online   If someone gave you your home and the donor's adjusted basis, when it was given to you, was more than the FMV, your basis at the time of receipt is the same as the donor's adjusted basis. 2010 tax return online Disposition basis. 2010 tax return online   If the donor's adjusted basis at the time of the gift is more than the FMV, your basis (plus or minus any required adjustments, see Adjusted Basis , later) when you dispose of the property will depend on whether you have a gain or a loss. 2010 tax return online Your basis for figuring a gain is the same as the donor's adjusted basis. 2010 tax return online Your basis for figuring a loss is the FMV when you received the gift. 2010 tax return online If you use the donor's adjusted basis to figure a gain and it results in a loss, then you must use the FMV (at the time of the gift) to refigure the loss. 2010 tax return online However, if using the FMV results in a gain, then you neither have a gain nor a loss. 2010 tax return online Example 1. 2010 tax return online Andrew received a house as a gift from Ishmael (the donor). 2010 tax return online At the time of the gift, the home had an FMV of $80,000. 2010 tax return online Ishmael's adjusted basis was $100,000. 2010 tax return online After he received the house, no events occurred to increase or decrease the basis. 2010 tax return online If Andrew sells the house for $120,000, he will have a $20,000 gain because he must use the donor's adjusted basis ($100,000) at the time of the gift as his basis to figure the gain. 2010 tax return online Example 2. 2010 tax return online Same facts as Example 1 , except this time Andrew sells the house for $70,000. 2010 tax return online He will have a loss of $10,000 because he must use the FMV ($80,000) at the time of the gift as his basis to figure the loss. 2010 tax return online Example 3. 2010 tax return online Same facts as Example 1 , except this time Andrew sells the house for $90,000. 2010 tax return online Initially, he figures the gain using Ishmael's adjusted basis ($100,000), which results in a loss of $10,000. 2010 tax return online Since it is a loss, Andrew must now recalculate the loss using the FMV ($80,000), which results in a gain of $10,000. 2010 tax return online So in this situation, Andrew will neither have a gain nor a loss. 2010 tax return online Donor's adjusted basis equal to or less than the FMV. 2010 tax return online   If someone gave you your home after 1976 and the donor's adjusted basis, when it was given to you, was equal to or less than the FMV, your basis at the time of receipt is the same as the donor's adjusted basis, plus the part of any federal gift tax paid that is due to the net increase in value of the home. 2010 tax return online Part of federal gift tax due to net increase in value. 2010 tax return online   Figure the part of the federal gift tax paid that is due to the net increase in value of the home by multiplying the total federal gift tax paid by a fraction. 2010 tax return online The numerator (top part) of the fraction is the net increase in the value of the home, and the denominator (bottom part) is the value of the home for gift tax purposes after reduction for any annual exclusion and marital or charitable deduction that applies to the gift. 2010 tax return online The net increase in the value of the home is its FMV minus the adjusted basis of the donor. 2010 tax return online Publication 551 gives more information, including examples, on figuring your basis when you receive property as a gift. 2010 tax return online Inheritance Your basis in a home you inherited is generally the fair market value of the home on the date of the decedent's death or on the alternative valuation date if the personal representative for the estate chooses to use alternative valuation. 2010 tax return online If an estate tax return was filed, your basis is generally the value of the home listed on the estate tax return. 2010 tax return online If an estate tax return was not filed, your basis is the appraised value of the home at the decedent's date of death for state inheritance or transmission taxes. 2010 tax return online Publication 551 and Publication 559, Survivors, Executors, and Administrators, have more information on the basis of inherited property. 2010 tax return online If you inherited your home from someone who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. 2010 tax return online Adjusted Basis While you own your home, various events may take place that can change the original basis of your home. 2010 tax return online These events can increase or decrease your original basis. 2010 tax return online The result is called adjusted basis. 2010 tax return online See Table 3, on this page, for a list of some of the items that can adjust your basis. 2010 tax return online Table 3. 2010 tax return online Adjusted Basis This table lists examples of some items that generally will increase or decrease your basis in your home. 2010 tax return online It is not intended to be all-inclusive. 2010 tax return online Increases to Basis Decreases to Basis Improvements: Putting an addition on your home Replacing an entire roof Paving your driveway Installing central air conditioning Rewiring your home Assessments for local improvements (see Assessments for local benefits , under What You Can and Cannot Deduct, earlier) Amounts spent to restore damaged property Insurance or other reimbursement for casualty losses Deductible casualty loss not covered by insurance Payments received for easement or right-of-way granted Depreciation allowed or allowable if home is used for business or rental purposes Value of subsidy for energy conservation measure excluded from income Improvements. 2010 tax return online   An improvement materially adds to the value of your home, considerably prolongs its useful life, or adapts it to new uses. 2010 tax return online You must add the cost of any improvements to the basis of your home. 2010 tax return online You cannot deduct these costs. 2010 tax return online   Improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, and paving your driveway. 2010 tax return online Amount added to basis. 2010 tax return online   The amount you add to your basis for improvements is your actual cost. 2010 tax return online This includes all costs for material and labor, except your own labor, and all expenses related to the improvement. 2010 tax return online For example, if you had your lot surveyed to put up a fence, the cost of the survey is a part of the cost of the fence. 2010 tax return online   You also must add to your basis state and local assessments for improvements such as streets and sidewalks if they increase the value of the property. 2010 tax return online These assessments are discussed earlier under Real Estate Taxes . 2010 tax return online Improvements no longer part of home. 2010 tax return online    Your home's adjusted basis does not include the cost of any improvements that are replaced and are no longer part of the home. 2010 tax return online Example. 2010 tax return online You put wall-to-wall carpeting in your home 15 years ago. 2010 tax return online Later, you replaced that carpeting with new wall-to-wall carpeting. 2010 tax return online The cost of the old carpeting you replaced is no longer part of your home's adjusted basis. 2010 tax return online Repairs versus improvements. 2010 tax return online   A repair keeps your home in an ordinary, efficient operating condition. 2010 tax return online It does not add to the value of your home or prolong its life. 2010 tax return online Repairs include repainting your home inside or outside, fixing your gutters or floors, fixing leaks or plastering, and replacing broken window panes. 2010 tax return online You cannot deduct repair costs and generally cannot add them to the basis of your home. 2010 tax return online   However, repairs that are done as part of an extensive remodeling or restoration of your home are considered improvements. 2010 tax return online You add them to the basis of your home. 2010 tax return online Records to keep. 2010 tax return online   You can use Table 4 (at the end of the publication) as a guide to help you keep track of improvements to your home. 2010 tax return online Also see Keeping Records , below. 2010 tax return online Energy conservation subsidy. 2010 tax return online   If a public utility gives you (directly or indirectly) a subsidy for the purchase or installation of an energy conservation measure for your home, do not include the value of that subsidy in your income. 2010 tax return online You must reduce the basis of your home by that value. 2010 tax return online   An energy conservation measure is an installation or modification primarily designed to reduce consumption of electricity or natural gas or to improve the management of energy demand. 2010 tax return online Keeping Records Keeping full and accurate records is vital to properly report your income and expenses, to support your deductions and credits, and to know the basis or adjusted basis of your home. 2010 tax return online These records include your purchase contract and settlement papers if you bought the property, or other objective evidence if you acquired it by gift, inheritance, or similar means. 2010 tax return online You should keep any receipts, canceled checks, and similar evidence for improvements or other additions to the basis. 2010 tax return online In addition, you should keep track of any decreases to the basis such as those listed in Table 3, earlier. 2010 tax return online How to keep records. 2010 tax return online   How you keep records is up to you, but they must be clear and accurate and must be available to the IRS. 2010 tax return online How long to keep records. 2010 tax return online   You must keep your records for as long as they are important for meeting any provision of the federal tax law. 2010 tax return online   Keep records that support an item of income, a deduction, or a credit appearing on a return until the period of limitations for the return runs out. 2010 tax return online (A period of limitations is the period of time after which no legal action can be brought. 2010 tax return online ) For assessment of tax you owe, this is generally 3 years from the date you filed the return. 2010 tax return online For filing a claim for credit or refund, this is generally 3 years from the date you filed the original return, or 2 years from the date you paid the tax, whichever is later. 2010 tax return online Returns filed before the due date are treated as filed on the due date. 2010 tax return online   You may need to keep records relating to the basis of property (discussed earlier) for longer than the period of limitations. 2010 tax return online Keep those records as long as they are important in figuring the basis of the original or replacement property. 2010 tax return online Generally, this means for as long as you own the property and, after you dispose of it, for the period of limitations that applies to you. 2010 tax return online Table 4. 2010 tax return online Record of Home Improvements Keep this for your records. 2010 tax return online Also, keep receipts or other proof of improvements. 2010 tax return online Remove from this record any improvements that are no longer part of your main home. 2010 tax return online For example, if you put wall-to-wall carpeting in your home and later replace it with new wall-to-wall carpeting, remove the cost of the first carpeting. 2010 tax return online (a) Type of Improvement (b) Date (c) Amount   (a) Type of Improvement (b) Date (c) Amount Additions:       Heating & Air  Conditioning:     Bedroom       Heating system     Bathroom       Central air conditioning     Deck       Furnace     Garage       Duct work     Porch       Central humidifier     Patio       Filtration system     Storage shed       Other     Fireplace       Electrical:     Other           Lawn & Grounds:       Lighting fixtures           Wiring upgrades     Landscaping       Other     Driveway       Plumbing:     Walkway           Fences       Water heater     Retaining wall       Soft water system     Sprinkler system       Filtration system     Swimming pool       Other     Exterior lighting       Insulation:     Other           Communications:       Attic           Walls     Satellite dish       Floors     Intercom       Pipes and duct work     Security system       Other     Other             Miscellaneous:       Interior  Improvements:     Storm windows and doors       Built-in appliances     Roof       Kitchen modernization     Central vacuum       Bathroom modernization     Other       Flooring             Wall-to-wall carpeting             Other     How To
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The 2010 Tax Return Online

2010 tax return online Index A Accounting method Accrual, Accrual Method, Accrual method. 2010 tax return online Automatic procedures, Automatic change procedures. 2010 tax return online Cash, Cash Method, Cash method. 2010 tax return online Change in, Change in Accounting Method Combination, Combination Method Special, Special Methods Accounting periods, Accounting Periods Accrual method Income - general rule, Income—General Rule Income - special rules, Income—Special Rules Of accounting, Accrual Method Adjusted basis, Adjusted basis. 2010 tax return online Administrator, Executor or administrator. 2010 tax return online Alternative fuel vehicle refueling property credit, Alternative fuel vehicle refueling property credit (Form 8911). 2010 tax return online Alternative motor vehicle credit, Alternative motor vehicle credit (Form 8910). 2010 tax return online Appeal rights, Appeals. 2010 tax return online Appreciation, Appreciation. 2010 tax return online Audits, Examinations (audits). 2010 tax return online Automobile (see Car expenses) B Bad debts, Bad Debts Barter income, Bartering for Property or Services Basis of property, Basis. 2010 tax return online Bribes, Expenses You Cannot Deduct Business expenses, Business Expenses Business income, Business Income Business use of your home, Business Use of Your Home C Canceled debt, Canceled Debt Cancellation of qualified real property business debt, Cancellation of qualified real property business debt. 2010 tax return online Capital gain or loss, Is My Gain or Loss Ordinary or Capital? Car expenses, Car and Truck Expenses, Methods for Deducting Car and Truck Expenses Carbon dioxide sequestration credit, Carbon dioxide sequestration credit (Form 8933). 2010 tax return online Cash discount, Cash discounts. 2010 tax return online , Cash discounts. 2010 tax return online Cash method Expenses, Expenses Income, Income Changing accounting method, Changing accounting method. 2010 tax return online Charitable contributions, Expenses You Cannot Deduct Child employed by parent, Child employed by parent. 2010 tax return online Claim for refund, Refunds. 2010 tax return online Collection of tax, Collections. 2010 tax return online Combination method of accounting, Combination Method Comments on publication, Comments and suggestions. 2010 tax return online Condemned property, Condemned property. 2010 tax return online Consignments, Consignments. 2010 tax return online Construction allowances, Construction allowances. 2010 tax return online Cost of goods sold, How To Figure Cost of Goods Sold Credit Alternative fuel vehicle refueling property, Alternative fuel vehicle refueling property credit (Form 8911). 2010 tax return online Alternative motor vehicle, Alternative motor vehicle credit (Form 8910). 2010 tax return online Carbon dioxide sequestration, Carbon dioxide sequestration credit (Form 8933). 2010 tax return online Disabled access, Disabled access credit (Form 8826). 2010 tax return online Distilled spirits, Distilled spirits credit (Form 8906). 2010 tax return online Employer-provided childcare, Credit for employer-provided childcare facilities and services (Form 8882). 2010 tax return online How to claim, How To Claim the Credit Indian coal, Renewable electricity, refined coal, and Indian coal production credit (Form 8835). 2010 tax return online Investment, Investment credit (Form 3468). 2010 tax return online Low sulfur diesel fuel production, Low sulfur diesel fuel production credit (Form 8896). 2010 tax return online Low-income housing, Low-income housing credit (Form 8586). 2010 tax return online New markets, New markets credit (Form 8874). 2010 tax return online Nonconventional source fuel, Nonconventional source fuel credit (Form 8907). 2010 tax return online Orphan drug, Orphan drug credit (Form 8820). 2010 tax return online Qualified plug-in electric drive motor vehicle, Qualified plug-in electric drive motor vehicle credit (Form 8936). 2010 tax return online Refined coal, Renewable electricity, refined coal, and Indian coal production credit (Form 8835). 2010 tax return online Renewable electricity, Renewable electricity, refined coal, and Indian coal production credit (Form 8835). 2010 tax return online Small employer health insurance premiums, Credit for small employer health insurance premiums (Form 8941). 2010 tax return online Small employer pension plan startup costs, Credit for small employer pension plan startup costs (Form 8881). 2010 tax return online Taxes paid on certain employee tips, Credit for employer social security and Medicare taxes paid on certain employee tips (Form 8846). 2010 tax return online Work opportunity, Work opportunity credit (Form 5884). 2010 tax return online D Damages, Damages. 2010 tax return online Debt Bad, Bad Debts Canceled, Canceled Debt Qualified real property business, Qualified real property business debt. 2010 tax return online Refund offset against, Offset against debts. 2010 tax return online Definitions Accounting methods, Accounting Methods Accounting periods, Accounting Periods Barter, Bartering for Property or Services Basis, Basis. 2010 tax return online Business bad debt, Business bad debt. 2010 tax return online Calendar tax year, Calendar tax year. 2010 tax return online Cash discount, Cash discounts. 2010 tax return online , Cash discounts. 2010 tax return online Disposition of property, What Is a Disposition of Property? Drawing account, Merchandise withdrawn from sale. 2010 tax return online Entertainment expenses, Entertainment expenses. 2010 tax return online Fair market value, Fair market value. 2010 tax return online Fiscal tax year, Fiscal tax year. 2010 tax return online Fringe benefit, Fringe benefits. 2010 tax return online Local transportation expenses, Local transportation expenses. 2010 tax return online Necessary expense, Introduction Net operating loss, Net Operating Losses (NOLs) Nonbusiness bad debt, Nonbusiness bad debts. 2010 tax return online Ordinary expense, Introduction Principal place of business, Principal place of business. 2010 tax return online Qualified long-term real property, Qualified long-term real property. 2010 tax return online Qualified real property business debt, Cancellation of qualified real property business debt. 2010 tax return online Rent, Rent Expense Restricted property, Other Income Retail space, Retail space. 2010 tax return online Self-employment (SE) tax, Self-Employment (SE) Tax Sole proprietor, Sole proprietor. 2010 tax return online Tax home, Local transportation expenses. 2010 tax return online Trade discount, Trade discounts. 2010 tax return online , Cash discounts. 2010 tax return online Travel expenses, Travel, Meals, and Entertainment Depreciation Deduction, Depreciation Listed property, Listed property. 2010 tax return online Depreciation, recapture, Recapture of depreciation. 2010 tax return online Direct seller, Direct seller. 2010 tax return online , Real estate agent or direct seller. 2010 tax return online Disabled access credit, Disabled access credit (Form 8826). 2010 tax return online Disposition of property Business property, Introduction Installment sale, Installment sales. 2010 tax return online , Installment sales. 2010 tax return online Like-kind exchange, Like-kind exchanges. 2010 tax return online , Like-kind exchanges. 2010 tax return online , Exchange of like-kind property. 2010 tax return online Nontaxable exchange, Nontaxable exchanges. 2010 tax return online Sale of a business, Sale of a business. 2010 tax return online Distilled spirits credit, Distilled spirits credit (Form 8906). 2010 tax return online Dividend income, Interest and Dividend Income Donation of inventory, Donation of inventory. 2010 tax return online Drawing account, Merchandise withdrawn from sale. 2010 tax return online Due date of return, When Is My Tax Return Due? E e-file, IRS e-file (Electronic Filing) Economic injury, Economic injury. 2010 tax return online EFTPS, EFTPS Electronic filing, IRS e-file (Electronic Filing) Employee, Employee. 2010 tax return online Employee benefit programs, Fringe benefits. 2010 tax return online Employees' pay, Employees' Pay Employer identification number (EIN), Employer identification number (EIN). 2010 tax return online Employment taxes About, Employment Taxes Deduction for, Employment taxes. 2010 tax return online Entertainment expenses, Entertainment expenses. 2010 tax return online (see Travel expenses) Escrow, payments placed in, Payment placed in escrow. 2010 tax return online Estimated tax, How Do I Pay Income Tax? Examinations (audits), Examinations (audits). 2010 tax return online Excise taxes About, Excise Taxes Deduction for, Excise taxes. 2010 tax return online Executor, Executor or administrator. 2010 tax return online Expenses, Business Expenses Bad debts, Bad Debts Car, Car and Truck Expenses Depreciation, Depreciation Employees' pay, Employees' Pay Entertainment, Travel, Meals, and Entertainment Home, business use, Business Use of Your Home Insurance, Insurance Interest, Interest Legal and professional fees, Legal and Professional Fees Meals, Travel, Meals, and Entertainment Nondeductible, Expenses You Cannot Deduct Other, Other Expenses You Can Deduct Pension plans, Pension Plans Rent, Rent Expense Taxes, Taxes Travel, Travel, Meals, and Entertainment Truck, Car and Truck Expenses F Fair market value, Fair market value. 2010 tax return online Filing business taxes, Filing and Paying Business Taxes Fishing crew member, Fishing crew member. 2010 tax return online , Fishing crew member. 2010 tax return online Form 1040 (tax return), How Do I File? 1040-ES (estimated tax), How Do I Pay Income Tax? 1040-V (voucher), Balance due. 2010 tax return online 1099-B (barter), Information returns. 2010 tax return online 1099-MISC (miscellaneous), Form 1099-MISC. 2010 tax return online , Information returns. 2010 tax return online 1128 (change tax year), Change in tax year. 2010 tax return online 2210 (underpayment of estimated tax), Penalty for underpayment of tax. 2010 tax return online 2290 (excise tax for heavy trucks), Form 2290. 2010 tax return online 3115 (change accounting method), Change in Accounting Method 3468 (investment credit), Investment credit (Form 3468). 2010 tax return online 3800 (general business credit), Useful Items - You may want to see: 4562 (depreciation), Form 4562. 2010 tax return online 4684 (casualty and theft), Casualties and thefts. 2010 tax return online 4797 (sale of business property), Dispositions of business property and depreciable property. 2010 tax return online , Condemned property. 2010 tax return online , Listed property. 2010 tax return online 4868 (extension), When Is My Tax Return Due? 5884 (work opportunity credit), Work opportunity credit (Form 5884). 2010 tax return online 6251 (alternative minimum tax), Useful Items - You may want to see: 6252 (installment sale), Installment sales. 2010 tax return online 720 (excise tax return), Form 720. 2010 tax return online 8300 (cash payments over $10,000), Form 8300. 2010 tax return online 8586 (low-income housing), Low-income housing credit (Form 8586). 2010 tax return online 8594 (asset acquisition), Sale of a business. 2010 tax return online 8820 (orphan drug credit), Orphan drug credit (Form 8820). 2010 tax return online 8824 (like-kind exchange), Like-kind exchanges. 2010 tax return online , Like-kind exchanges. 2010 tax return online 8826 (disabled access credit), Disabled access credit (Form 8826). 2010 tax return online 8829 (business in home), Deduction limit. 2010 tax return online 8835 (renewable electricity, coal credit), Renewable electricity, refined coal, and Indian coal production credit (Form 8835). 2010 tax return online 8846 (credit for social security on tip income), Credit for employer social security and Medicare taxes paid on certain employee tips (Form 8846). 2010 tax return online 8857 (innocent spouse), Innocent spouse relief. 2010 tax return online 8874 (new markets credit), New markets credit (Form 8874). 2010 tax return online 8879 (self-selected PIN), Using an Authorized IRS e-file Provider 8881 (pension plan startup costs credit), Credit for small employer pension plan startup costs (Form 8881). 2010 tax return online 8882 (employer-provided childcare credit), Credit for employer-provided childcare facilities and services (Form 8882). 2010 tax return online 8886 (transaction statement), Reminders 8896 (low sulfur diesel fuel production credit), Low sulfur diesel fuel production credit (Form 8896). 2010 tax return online 8906 (distilled spirits credit), Distilled spirits credit (Form 8906). 2010 tax return online 8907 (nonconventional fuel credit), Nonconventional source fuel credit (Form 8907). 2010 tax return online 8910 (alternative vehicle credit), Alternative motor vehicle credit (Form 8910). 2010 tax return online , Car and Truck Expenses 8911 (alternative fuel refueling property credit), Alternative fuel vehicle refueling property credit (Form 8911). 2010 tax return online 8933 (carbon dioxide sequestration credit), Carbon dioxide sequestration credit (Form 8933). 2010 tax return online 8936 (qualified plug-in electric drive motor vehicle), Qualified plug-in electric drive motor vehicle credit (Form 8936). 2010 tax return online 8941 (small employer health insurance premiums), Credit for small employer health insurance premiums (Form 8941). 2010 tax return online 982 (discharge of indebtedness), Exclusions Schedule C (sole proprietor), How Do I File? Schedule C-EZ (sole proprietor), How Do I File? Schedule SE (self-employment tax), Who must pay self-employment tax. 2010 tax return online SS-4 (application for EIN), Employer identification number (EIN). 2010 tax return online SS-5 (application for SSN), Social security number (SSN). 2010 tax return online W-2 (report wages), Form W-2. 2010 tax return online W-4 (employee withholding), Employee. 2010 tax return online W-7 (application for ITIN), Individual taxpayer identification number (ITIN). 2010 tax return online W-9 (request for TIN), Other payee. 2010 tax return online Fringe benefits, Fringe benefits. 2010 tax return online Fuel taxes, Fuel taxes. 2010 tax return online G Gains and losses, Gains and losses. 2010 tax return online General business credits, General Business Credits, Business Credits Gross profit Accuracy, Testing Gross Profit Accuracy Additions to, Additions to Gross Profit Guidelines for selected occupations, Guidelines for Selected Occupations (see also Occupations, selected) H Health insurance, deduction for self-employed, Self-employed health insurance deduction. 2010 tax return online Home, business use of, Business Use of Your Home Hotels, boarding houses, and apartments, Hotels, boarding houses, and apartments. 2010 tax return online Husband and wife business, Business owned and operated by spouses. 2010 tax return online I Identification numbers, Identification Numbers Income, Items That Are Not Income (see also Not income) Accounting for your, Accounting for Your Income Barter, Bartering for Property or Services Business, Business Income Damages, Damages. 2010 tax return online Gains and losses, Gains and losses. 2010 tax return online Kickbacks, Kickbacks. 2010 tax return online Kinds of income, Kinds of Income Lost income payments, Lost income payments. 2010 tax return online Other, Other Income Paid to a third party, Income paid to a third party. 2010 tax return online Personal property rent, Personal Property Rents Promissory notes, Promissory notes. 2010 tax return online Recapture of depreciation, Recapture of depreciation. 2010 tax return online Recovery of items previously deducted, Recovery of items previously deducted. 2010 tax return online Rental, Real Estate Rents, Personal Property Rents Restricted property, Restricted property. 2010 tax return online Income tax About, Income Tax Deduction for, Income taxes. 2010 tax return online How to pay, How Do I Pay Income Tax? Underpayment penalty, Penalty for underpayment of tax. 2010 tax return online Income tax return, who must file, Do I Have To File an Income Tax Return? Independent contractor, Independent contractor. 2010 tax return online , Employment Taxes, Sole proprietor or independent contractor. 2010 tax return online Individual taxpayer identification number (ITIN), Individual taxpayer identification number (ITIN). 2010 tax return online Information returns, Information Returns Information, How to get more, How To Get More Information Innocent spouse relief, Innocent spouse relief. 2010 tax return online Installment sales, Installment sales. 2010 tax return online Insurance Expense, Insurance Nondeductible premiums, Nondeductible premiums. 2010 tax return online Prepayment, Prepayment. 2010 tax return online Proceeds, Insurance proceeds. 2010 tax return online Self-employed health, Self-employed health insurance deduction. 2010 tax return online Insurance agent Former, Insurance agent, former. 2010 tax return online Retired, Insurance agent, retired. 2010 tax return online Interest Expenses, Interest Income, Interest and Dividend Income Inventories, Inventories Investment credit, Investment credit (Form 3468). 2010 tax return online K Kickbacks, Kickbacks. 2010 tax return online , Expenses You Cannot Deduct L Lease bonus, Lease bonus. 2010 tax return online Lease cancellation payments, Lease cancellation payments. 2010 tax return online Legal fees, Legal and Professional Fees Like-kind exchanges, Like-kind exchanges. 2010 tax return online , Exchange of like-kind property. 2010 tax return online Limited liability company, Limited liability company (LLC). 2010 tax return online Listed property, Listed property. 2010 tax return online Lobbying expense, Expenses You Cannot Deduct Local transportation expenses, Local transportation expenses. 2010 tax return online Lodging, Meals and lodging. 2010 tax return online Long-term capital gain or loss, Is My Capital Gain or Loss Short Term or Long Term? Lost income payments, Lost income payments. 2010 tax return online Low sulfur diesel fuel production credit, Low sulfur diesel fuel production credit (Form 8896). 2010 tax return online Low-income housing credit, Low-income housing credit (Form 8586). 2010 tax return online M Meals, Meals and lodging. 2010 tax return online (see Travel expenses) Methods for figuring net earnings, Methods for Figuring Net Earnings Mileage rate for vehicles, Standard mileage rate. 2010 tax return online Motor vehicle, alternative credit, Alternative motor vehicle credit (Form 8910). 2010 tax return online N Net operating losses, Net Operating Losses (NOLs) Net profit or loss, Introduction New markets credit, New markets credit (Form 8874). 2010 tax return online Newspaper carrier or distributor, Newspaper carrier or distributor. 2010 tax return online Newspaper or magazine vendor, Newspaper or magazine vendor. 2010 tax return online Nonbusiness bad debt, Nonbusiness bad debts. 2010 tax return online Nonconventional source fuel credit, Nonconventional source fuel credit (Form 8907). 2010 tax return online Nondeductible insurance premiums, Nondeductible premiums. 2010 tax return online Nonemployee compensation, Introduction Nontaxable exchanges, Nontaxable exchanges. 2010 tax return online Not income Appreciation, Appreciation. 2010 tax return online Consignments, Consignments. 2010 tax return online Constructions allowances, Construction allowances. 2010 tax return online Exchange of like-kind property, Exchange of like-kind property. 2010 tax return online Leasehold improvements, Leasehold improvements. 2010 tax return online Loans, Loans. 2010 tax return online Sales tax, Sales tax. 2010 tax return online Not-for-profit activities, Not-for-Profit Activities Notary public, Notary public. 2010 tax return online , Notary public. 2010 tax return online O Occupations, selected Administrator, Executor or administrator. 2010 tax return online Direct seller, Direct seller. 2010 tax return online , Real estate agent or direct seller. 2010 tax return online Executor, Executor or administrator. 2010 tax return online Fishing crew member, Fishing crew member. 2010 tax return online Insurance agent, former, Insurance agent, former. 2010 tax return online Insurance agent, retired, Insurance agent, retired. 2010 tax return online Newspaper carrier or distributor, Newspaper carrier or distributor. 2010 tax return online Newspaper or magazine vendor, Newspaper or magazine vendor. 2010 tax return online Notary public, Notary public. 2010 tax return online Public official, Public official. 2010 tax return online Real estate agent, Real estate agent or direct seller. 2010 tax return online Securities dealer, Securities dealer. 2010 tax return online Securities trader, Securities trader. 2010 tax return online Office in the home, Office in the home. 2010 tax return online (see also Business use of your home) Optional methods, using both, Using Both Optional Methods Ordinary gain or loss, Is My Gain or Loss Ordinary or Capital? Orphan drug credit, Orphan drug credit (Form 8820). 2010 tax return online P Parking fees, Parking fees and tolls. 2010 tax return online Partners, husband and wife, Business owned and operated by spouses. 2010 tax return online Pay, kinds of, Kinds of pay. 2010 tax return online Paying Business taxes, Filing and Paying Business Taxes Income tax, How Do I Pay Income Tax? Payments to third parties, Payments to third parties. 2010 tax return online Penalties and fines, Expenses You Cannot Deduct Penalty Failure to file Form 8300, Penalties. 2010 tax return online Failure to file information returns, Penalties. 2010 tax return online Failure to furnish correct payee statements, Penalties. 2010 tax return online Underpayment of tax, Penalty for underpayment of tax. 2010 tax return online Waiver of, Waiver of penalties. 2010 tax return online Pension plans, Pension Plans Personal property tax, Personal property tax. 2010 tax return online Prepaid expense Extends useful life, Prepayment. 2010 tax return online Rent, Rent paid in advance. 2010 tax return online Professional fees, Legal and Professional Fees Promissory notes, Promissory notes. 2010 tax return online Public official, Public official. 2010 tax return online Punitive damages, Punitive damages. 2010 tax return online Q Qualified plug-in electric drive motor vehicle credit, Qualified plug-in electric drive motor vehicle credit (Form 8936). 2010 tax return online Qualified real property business debt, Qualified real property business debt. 2010 tax return online R Real estate Agent, Real estate agent or direct seller. 2010 tax return online Dealer, Real estate dealer. 2010 tax return online Rent, Real Estate Rents Taxes, Real estate taxes. 2010 tax return online Recovery of items previously deducted, Recovery of items previously deducted. 2010 tax return online Refund Inquiries, Refund inquiries. 2010 tax return online Offsets against debts, Offset against debts. 2010 tax return online Related persons Unreasonable rent, Unreasonable rent. 2010 tax return online Renewable electricity, refined coal, and Indian coal production credit, Renewable electricity, refined coal, and Indian coal production credit (Form 8835). 2010 tax return online Rent expense, Rent Expense Rental income, Real Estate Rents Repayment of income, Repayment of income. 2010 tax return online Reportable transaction disclosure statement, Reminders Reporting self-employment tax, Reporting Self-Employment Tax Restricted property, Restricted property. 2010 tax return online Retirement plans (see Pension plans) S Salaries, Employees' Pay Sale of a business, Sale of a business. 2010 tax return online Sale of property, What Is a Disposition of Property? (see also Disposition of property) Sales of assets, Introduction Sales tax, Sales tax. 2010 tax return online Schedule C, How Do I File? Schedule C-EZ, How Do I File? Schedule SE (Form 1040), Who must pay self-employment tax. 2010 tax return online Schedule SE, filing requirement, Reporting Self-Employment Tax SE tax About, Self-Employment (SE) Tax Aliens, Aliens. 2010 tax return online Child employed by parent, Child employed by parent. 2010 tax return online Church employee, Church employee. 2010 tax return online Community property income, Community Property Income Deduction for, Self-employment tax. 2010 tax return online Earning credits, Earning credits in 2013 and 2014. 2010 tax return online Effects of using an optional method, Effects of using an optional method. 2010 tax return online Farm optional method, Farm Optional Method Fiscal year filer, Fiscal Year Filer Fishing crew member, Fishing crew member. 2010 tax return online Gain or loss, Gain or Loss Government employee, State or local government employee. 2010 tax return online , Foreign government or international organization employee. 2010 tax return online Joint return, Joint return. 2010 tax return online Lost income payments, Lost Income Payments Maximum earnings For 2011, What's New for 2013, Maximum earnings subject to SE tax. 2010 tax return online Subject to, Maximum earnings subject to self-employment tax. 2010 tax return online Methods for figuring net earnings, Methods for Figuring Net Earnings More than one business, More Than One Business, More than one business. 2010 tax return online Nonfarm optional method, Nonfarm Optional Method Notary public, Notary public. 2010 tax return online Optional methods Farm, Farm Optional Method Nonfarm, Nonfarm Optional Method Rate, SE tax rate. 2010 tax return online Regular method, Regular Method Residing abroad, U. 2010 tax return online S. 2010 tax return online citizen or resident alien residing abroad. 2010 tax return online Special rules and exceptions, Special Rules and Exceptions Tax rate, SE tax rate. 2010 tax return online Time limit for posting income, The Social Security Administration (SSA) time limit for posting self-employment income. 2010 tax return online Who must pay, Who Must Pay SE Tax? Why use an optional method, Why use an optional method? Section 179 Deduction, Section 179 deduction. 2010 tax return online Property, Section 179 property. 2010 tax return online Securities Dealer, Securities dealer. 2010 tax return online Trader, Securities trader. 2010 tax return online Self-employed health insurance deduction, Self-employed health insurance deduction. 2010 tax return online Self-employment tax (see SE tax) Settlement payments, Settlement payments. 2010 tax return online Short-term capital gain or loss, Is My Capital Gain or Loss Short Term or Long Term? Signature, electronic, Electronic signatures. 2010 tax return online Small Business Administration, Small Business Administration Small employer health insurance premiums credit, Credit for small employer health insurance premiums (Form 8941). 2010 tax return online Social security coverage, Social security coverage. 2010 tax return online Social security number (SSN), Social security number (SSN). 2010 tax return online Sole proprietor, Sole proprietor. 2010 tax return online , Sole proprietor or independent contractor. 2010 tax return online Sport utility vehicle, Section 179 deduction. 2010 tax return online Standard mileage rate, Standard mileage rate. 2010 tax return online For 2011, What's New for 2013 Statutory employee, Statutory employee. 2010 tax return online Suggestions for publication, Comments and suggestions. 2010 tax return online SUV, Section 179 deduction. 2010 tax return online T Tax home, Local transportation expenses. 2010 tax return online , Travel expenses. 2010 tax return online Tax preparation fees, Tax preparation fees. 2010 tax return online Tax refund Claim for, Refunds. 2010 tax return online Offset against debts, Offset against debts. 2010 tax return online Tax return How to file, How Do I File? Who must file, Do I Have To File an Income Tax Return? Tax year, Accounting Periods Calendar, Calendar tax year. 2010 tax return online Change in, Change in tax year. 2010 tax return online Fiscal, Fiscal tax year. 2010 tax return online Taxes Deduction for, Taxes Employment, Employment Taxes, Employment taxes. 2010 tax return online Excise, Excise Taxes, Excise taxes. 2010 tax return online Fuel, Fuel taxes. 2010 tax return online Income, Income Tax, Income taxes. 2010 tax return online Paid on certain employee tips, Credit for employer social security and Medicare taxes paid on certain employee tips (Form 8846). 2010 tax return online Personal property, Personal property tax. 2010 tax return online Real estate, Real estate taxes. 2010 tax return online Sales, Sales tax. 2010 tax return online Self-employment, Self-Employment (SE) Tax, Self-employment tax. 2010 tax return online Taxpayer rights, Declaration of Taxpayer Rights Third parties, Payments to, Payments to third parties. 2010 tax return online Tolls, Parking fees and tolls. 2010 tax return online Trade discount, Trade discounts. 2010 tax return online , Trade discounts. 2010 tax return online Trade or business, Trade or business. 2010 tax return online Trailer park owner, Trailer park owner. 2010 tax return online Transportation expenses, Local transportation expenses. 2010 tax return online Travel expenses, Travel expenses. 2010 tax return online U Underpayment of tax penalty, Penalty for underpayment of tax. 2010 tax return online Uniform capitalization rules, Uniform Capitalization Rules W Wages, Employees' Pay Work opportunity credit, Work opportunity credit (Form 5884). 2010 tax return online Prev  Up     Home   More Online Publications