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Do Students Have To File Taxes

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Do Students Have To File Taxes

Do students have to file taxes 11. Do students have to file taxes   Social Security and Equivalent Railroad Retirement Benefits Table of Contents Introduction Useful Items - You may want to see: Are Any of Your Benefits Taxable? How To Report Your BenefitsHow Much Is Taxable? Examples Deductions Related to Your BenefitsRepayments More Than Gross Benefits Introduction This chapter explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. Do students have to file taxes It explains the following topics. Do students have to file taxes How to figure whether your benefits are taxable. Do students have to file taxes How to use the social security benefits worksheet (with examples). Do students have to file taxes How to report your taxable benefits. Do students have to file taxes How to treat repayments that are more than the benefits you received during the year. Do students have to file taxes Social security benefits include monthly retirement, survivor, and disability benefits. Do students have to file taxes They do not include supplemental security income (SSI) payments, which are not taxable. Do students have to file taxes Equivalent tier 1 railroad retirement benefits are the part of tier 1 benefits that a railroad employee or beneficiary would have been entitled to receive under the social security system. Do students have to file taxes They are commonly called the social security equivalent benefit (SSEB) portion of tier 1 benefits. Do students have to file taxes If you received these benefits during 2013, you should have received a Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Payments by the Railroad Retirement Board. Do students have to file taxes These forms show the amounts received and repaid, and taxes withheld for the year. Do students have to file taxes You may receive more than one of these forms for the same year. Do students have to file taxes You should add the amounts shown on all the Forms SSA-1099 and Forms RRB-1099 you receive for the year to determine the total amounts received and repaid, and taxes withheld for that year. Do students have to file taxes See the Appendix at the end of Publication 915 for more information. Do students have to file taxes Note. Do students have to file taxes When the term “benefits” is used in this chapter, it applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits. Do students have to file taxes What is not covered in this chapter. Do students have to file taxes   This chapter does not cover the tax rules for the following railroad retirement benefits. Do students have to file taxes Non-social security equivalent benefit (NSSEB) portion of tier 1 benefits. Do students have to file taxes Tier 2 benefits. Do students have to file taxes Vested dual benefits. Do students have to file taxes Supplemental annuity benefits. Do students have to file taxes For information on these benefits, see Publication 575, Pension and Annuity Income. Do students have to file taxes   This chapter does not cover the tax rules for social security benefits reported on Form SSA-1042S, Social Security Benefit Statement, or Form RRB-1042S, Statement for Nonresident Alien Recipients of: Payments by the Railroad Retirement Board. Do students have to file taxes For information about these benefits, see Publication 519, U. Do students have to file taxes S. Do students have to file taxes Tax Guide for Aliens, and Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Do students have to file taxes   This chapter also does not cover the tax rules for foreign social security benefits. Do students have to file taxes These benefits are taxable as annuities, unless they are exempt from U. Do students have to file taxes S. Do students have to file taxes tax or treated as a U. Do students have to file taxes S. Do students have to file taxes social security benefit under a tax treaty. Do students have to file taxes Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax 575 Pension and Annuity Income 590 Individual Retirement Arrangements (IRAs) 915 Social Security and Equivalent Railroad Retirement Benefits Forms (and Instructions) 1040-ES Estimated Tax for Individuals SSA-1099 Social Security Benefit Statement RRB-1099 Payments by the Railroad Retirement Board W-4V Voluntary Withholding Request Are Any of Your Benefits Taxable? To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. Do students have to file taxes When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. Do students have to file taxes S. Do students have to file taxes savings bonds, Employer-provided adoption benefits, Foreign earned income or foreign housing, or Income earned by bona fide residents of American Samoa or Puerto Rico. Do students have to file taxes Children's benefits. Do students have to file taxes   The rules in this chapter apply to benefits received by children. Do students have to file taxes See Who is taxed , later. Do students have to file taxes Figuring total income. Do students have to file taxes   To figure the total of one-half of your benefits plus your other income, use Worksheet 11-1 later in this discussion. Do students have to file taxes If the total is more than your base amount, part of your benefits may be taxable. Do students have to file taxes    If you are married and file a joint return for 2013, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. Do students have to file taxes Even if your spouse did not receive any benefits, you must add your spouse's income to yours to figure whether any of your benefits are taxable. Do students have to file taxes    If the only income you received during 2013 was your social security or the SSEB portion of tier 1 railroad retirement benefits, your benefits generally are not taxable and you probably do not have to file a return. Do students have to file taxes If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. Do students have to file taxes Base amount. Do students have to file taxes   Your base amount is: $25,000 if you are single, head of household, or qualifying widow(er), $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $-0- if you are married filing separately and lived with your spouse at any time during 2013. Do students have to file taxes Worksheet 11-1. Do students have to file taxes   You can use Worksheet 11-1 to figure the amount of income to compare with your base amount. Do students have to file taxes This is a quick way to check whether some of your benefits may be taxable. Do students have to file taxes Worksheet 11-1. Do students have to file taxes A Quick Way To Check if Your Benefits May Be Taxable A. Do students have to file taxes Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Do students have to file taxes Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Do students have to file taxes (If you received more than one form, combine the amounts from box 5 and enter the total. Do students have to file taxes ) A. Do students have to file taxes   Note. Do students have to file taxes If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Do students have to file taxes B. Do students have to file taxes Enter one-half of the amount on line A B. Do students have to file taxes   C. Do students have to file taxes Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Do students have to file taxes   D. Do students have to file taxes Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Do students have to file taxes   E. Do students have to file taxes Add lines B, C, and D E. Do students have to file taxes   Note. Do students have to file taxes Compare the amount on line E to your base amount for your filing status. Do students have to file taxes If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. Do students have to file taxes If the amount on line E is more than your base amount, some of your benefits may be taxable. Do students have to file taxes You need to complete Worksheet 1 in Publication 915 (or the Social Security Benefits Worksheet in your tax form instructions). Do students have to file taxes If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits. Do students have to file taxes Example. Do students have to file taxes You and your spouse (both over 65) are filing a joint return for 2013 and you both received social security benefits during the year. Do students have to file taxes In January 2014, you received a Form SSA-1099 showing net benefits of $7,500 in box 5. Do students have to file taxes Your spouse received a Form SSA-1099 showing net benefits of $3,500 in box 5. Do students have to file taxes You also received a taxable pension of $22,800 and interest income of $500. Do students have to file taxes You did not have any tax-exempt interest income. Do students have to file taxes Your benefits are not taxable for 2013 because your income, as figured in Worksheet 11-1, is not more than your base amount ($32,000) for married filing jointly. Do students have to file taxes Even though none of your benefits are taxable, you must file a return for 2013 because your taxable gross income ($23,300) exceeds the minimum filing requirement amount for your filing status. Do students have to file taxes Filled-in Worksheet 11-1. Do students have to file taxes A Quick Way To Check if Your Benefits May Be Taxable A. Do students have to file taxes Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Do students have to file taxes Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Do students have to file taxes (If you received more than one form, combine the amounts from box 5 and enter the total. Do students have to file taxes ) A. Do students have to file taxes $11,000 Note. Do students have to file taxes If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Do students have to file taxes B. Do students have to file taxes Enter one-half of the amount on line A B. Do students have to file taxes 5,500 C. Do students have to file taxes Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Do students have to file taxes 23,300 D. Do students have to file taxes Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Do students have to file taxes -0- E. Do students have to file taxes Add lines B, C, and D E. Do students have to file taxes $28,800 Note. Do students have to file taxes Compare the amount on line E to your base amount for your filing status. Do students have to file taxes If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. Do students have to file taxes If the amount on line E is more than your base amount, some of your benefits may be taxable. Do students have to file taxes You need to complete Worksheet 1 in Publication 915 (or the Social Security Benefits Worksheet in your tax form instructions). Do students have to file taxes If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits. Do students have to file taxes Who is taxed. Do students have to file taxes   Benefits are included in the taxable income (to the extent they are taxable) of the person who has the legal right to receive the benefits. Do students have to file taxes For example, if you and your child receive benefits, but the check for your child is made out in your name, you must use only your part of the benefits to see whether any benefits are taxable to you. Do students have to file taxes One-half of the part that belongs to your child must be added to your child's other income to see whether any of those benefits are taxable to your child. Do students have to file taxes Repayment of benefits. Do students have to file taxes   Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. Do students have to file taxes It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. Do students have to file taxes If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. Do students have to file taxes   Your gross benefits are shown in box 3 of Form SSA-1099 or RRB-1099. Do students have to file taxes Your repayments are shown in box 4. Do students have to file taxes The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). Do students have to file taxes Use the amount in box 5 to figure whether any of your benefits are taxable. Do students have to file taxes Tax withholding and estimated tax. Do students have to file taxes   You can choose to have federal income tax withheld from your social security benefits and/or the SSEB portion of your tier 1 railroad retirement benefits. Do students have to file taxes If you choose to do this, you must complete a Form W-4V. Do students have to file taxes   If you do not choose to have income tax withheld, you may have to request additional withholding from other income or pay estimated tax during the year. Do students have to file taxes For details, see Publication 505 or the instructions for Form 1040-ES. Do students have to file taxes How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040 or Form 1040A. Do students have to file taxes You cannot use Form 1040EZ. Do students have to file taxes Reporting on Form 1040. Do students have to file taxes   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 20a and the taxable part on line 20b. Do students have to file taxes If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 20a. Do students have to file taxes Reporting on Form 1040A. Do students have to file taxes   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 14a and the taxable part on line 14b. Do students have to file taxes If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 14a. Do students have to file taxes Benefits not taxable. Do students have to file taxes   If you are filing Form 1040EZ, do not report any benefits on your tax return. Do students have to file taxes If you are filing Form 1040 or Form 1040A, report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on Form 1040, line 20a, or Form 1040A, line 14a. Do students have to file taxes Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Do students have to file taxes If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Do students have to file taxes How Much Is Taxable? If part of your benefits are taxable, how much is taxable depends on the total amount of your benefits and other income. Do students have to file taxes Generally, the higher that total amount, the greater the taxable part of your benefits. Do students have to file taxes Maximum taxable part. Do students have to file taxes   Generally, up to 50% of your benefits will be taxable. Do students have to file taxes However, up to 85% of your benefits can be taxable if either of the following situations applies to you. Do students have to file taxes The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly). Do students have to file taxes You are married filing separately and lived with your spouse at any time during 2013. Do students have to file taxes Which worksheet to use. Do students have to file taxes   A worksheet you can use to figure your taxable benefits is in the instructions for your Form 1040 or Form 1040A. Do students have to file taxes You can use either that worksheet or Worksheet 1 in Publication 915, unless any of the following situations applies to you. Do students have to file taxes You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse is covered by a retirement plan at work. Do students have to file taxes In this situation, you must use the special worksheets in Appendix B of Publication 590 to figure both your IRA deduction and your taxable benefits. Do students have to file taxes Situation (1) does not apply and you take an exclusion for interest from qualified U. Do students have to file taxes S. Do students have to file taxes savings bonds (Form 8815), for adoption benefits (Form 8839), for foreign earned income or housing (Form 2555 or Form 2555-EZ), or for income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. Do students have to file taxes In this situation, you must use Worksheet 1 in Publication 915 to figure your taxable benefits. Do students have to file taxes You received a lump-sum payment for an earlier year. Do students have to file taxes In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in Publication 915. Do students have to file taxes See Lump-sum election next. Do students have to file taxes Lump-sum election. Do students have to file taxes   You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2013 in your 2013 income, even if the payment includes benefits for an earlier year. Do students have to file taxes    This type of lump-sum benefit payment should not be confused with the lump-sum death benefit that both the SSA and RRB pay to many of their beneficiaries. Do students have to file taxes No part of the lump-sum death benefit is subject to tax. Do students have to file taxes   Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. Do students have to file taxes However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year. Do students have to file taxes You can elect this method if it lowers your taxable benefits. Do students have to file taxes Making the election. Do students have to file taxes   If you received a lump-sum benefit payment in 2013 that includes benefits for one or more earlier years, follow the instructions in Publication 915 under Lump-Sum Election to see whether making the election will lower your taxable benefits. Do students have to file taxes That discussion also explains how to make the election. Do students have to file taxes    Because the earlier year's taxable benefits are included in your 2013 income, no adjustment is made to the earlier year's return. Do students have to file taxes Do not file an amended return for the earlier year. Do students have to file taxes Examples The following are a few examples you can use as a guide to figure the taxable part of your benefits. Do students have to file taxes Example 1. Do students have to file taxes George White is single and files Form 1040 for 2013. Do students have to file taxes He received the following income in 2013: Fully taxable pension $18,600 Wages from part-time job 9,400 Taxable interest income 990 Total $28,990 George also received social security benefits during 2013. Do students have to file taxes The Form SSA-1099 he received in January 2014 shows $5,980 in box 5. Do students have to file taxes To figure his taxable benefits, George completes the worksheet shown here. Do students have to file taxes Filled-in Worksheet 1. Do students have to file taxes Figuring Your Taxable Benefits 1. Do students have to file taxes Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Do students have to file taxes Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $5,980 2. Do students have to file taxes Enter one-half of line 1 2,990 3. Do students have to file taxes Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Do students have to file taxes     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 28,990 4. Do students have to file taxes Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Do students have to file taxes Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Do students have to file taxes Combine lines 2, 3, 4, and 5 31,980 7. Do students have to file taxes Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Do students have to file taxes     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 -0- 8. Do students have to file taxes Is the amount on line 7 less than the amount on line 6?     No. Do students have to file taxes None of your social security benefits are taxable. Do students have to file taxes Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Do students have to file taxes   Yes. Do students have to file taxes Subtract line 7 from line 6 31,980 9. Do students have to file taxes If you are: Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 25,000   Note. Do students have to file taxes If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Do students have to file taxes 85) and enter the result on line 17. Do students have to file taxes Then go to line 18. Do students have to file taxes   10. Do students have to file taxes Is the amount on line 9 less than the amount on line 8?     No. Do students have to file taxes None of your benefits are taxable. Do students have to file taxes Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Do students have to file taxes If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Do students have to file taxes     Yes. Do students have to file taxes Subtract line 9 from line 8 6,980 11. Do students have to file taxes Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 9,000 12. Do students have to file taxes Subtract line 11 from line 10. Do students have to file taxes If zero or less, enter -0- -0- 13. Do students have to file taxes Enter the smaller of line 10 or line 11 6,980 14. Do students have to file taxes Enter one-half of line 13 3,490 15. Do students have to file taxes Enter the smaller of line 2 or line 14 2,990 16. Do students have to file taxes Multiply line 12 by 85% (. Do students have to file taxes 85). Do students have to file taxes If line 12 is zero, enter -0- -0- 17. Do students have to file taxes Add lines 15 and 16 2,990 18. Do students have to file taxes Multiply line 1 by 85% (. Do students have to file taxes 85) 5,083 19. Do students have to file taxes Taxable benefits. Do students have to file taxes Enter the smaller of line 17 or line 18. Do students have to file taxes Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b $2,990 The amount on line 19 of George's worksheet shows that $2,990 of his social security benefits is taxable. Do students have to file taxes On line 20a of his Form 1040, George enters his net benefits of $5,980. Do students have to file taxes On line 20b, he enters his taxable benefits of $2,990. Do students have to file taxes Example 2. Do students have to file taxes Ray and Alice Hopkins file a joint return on Form 1040A for 2013. Do students have to file taxes Ray is retired and received a fully taxable pension of $15,500. Do students have to file taxes He also received social security benefits, and his Form SSA-1099 for 2013 shows net benefits of $5,600 in box 5. Do students have to file taxes Alice worked during the year and had wages of $14,000. Do students have to file taxes She made a deductible payment to her IRA account of $1,000. Do students have to file taxes Ray and Alice have two savings accounts with a total of $250 in taxable interest income. Do students have to file taxes They complete Worksheet 1, entering $29,750 ($15,500 + $14,000 + $250) on line 3. Do students have to file taxes They find none of Ray's social security benefits are taxable. Do students have to file taxes On Form 1040A, they enter $5,600 on line 14a and -0- on line 14b. Do students have to file taxes Filled-in Worksheet 1. Do students have to file taxes Figuring Your Taxable Benefits 1. Do students have to file taxes Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Do students have to file taxes Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $5,600 2. Do students have to file taxes Enter one-half of line 1 2,800 3. Do students have to file taxes Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Do students have to file taxes     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 29,750 4. Do students have to file taxes Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Do students have to file taxes Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Do students have to file taxes Combine lines 2, 3, 4, and 5 32,550 7. Do students have to file taxes Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Do students have to file taxes     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 1,000 8. Do students have to file taxes Is the amount on line 7 less than the amount on line 6?     No. Do students have to file taxes None of your social security benefits are taxable. Do students have to file taxes Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Do students have to file taxes   Yes. Do students have to file taxes Subtract line 7 from line 6 31,550 9. Do students have to file taxes If you are: Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 32,000   Note. Do students have to file taxes If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Do students have to file taxes 85) and enter the result on line 17. Do students have to file taxes Then go to line 18. Do students have to file taxes   10. Do students have to file taxes Is the amount on line 9 less than the amount on line 8?     No. Do students have to file taxes None of your benefits are taxable. Do students have to file taxes Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Do students have to file taxes If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Do students have to file taxes     Yes. Do students have to file taxes Subtract line 9 from line 8   11. Do students have to file taxes Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013   12. Do students have to file taxes Subtract line 11 from line 10. Do students have to file taxes If zero or less, enter -0-   13. Do students have to file taxes Enter the smaller of line 10 or line 11   14. Do students have to file taxes Enter one-half of line 13   15. Do students have to file taxes Enter the smaller of line 2 or line 14   16. Do students have to file taxes Multiply line 12 by 85% (. Do students have to file taxes 85). Do students have to file taxes If line 12 is zero, enter -0-   17. Do students have to file taxes Add lines 15 and 16   18. Do students have to file taxes Multiply line 1 by 85% (. Do students have to file taxes 85)   19. Do students have to file taxes Taxable benefits. Do students have to file taxes Enter the smaller of line 17 or line 18. Do students have to file taxes Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b   Example 3. Do students have to file taxes Joe and Betty Johnson file a joint return on Form 1040 for 2013. Do students have to file taxes Joe is a retired railroad worker and in 2013 received the social security equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. Do students have to file taxes Joe's Form RRB-1099 shows $10,000 in box 5. Do students have to file taxes Betty is a retired government worker and receives a fully taxable pension of $38,000. Do students have to file taxes They had $2,300 in taxable interest income plus interest of $200 on a qualified U. Do students have to file taxes S. Do students have to file taxes savings bond. Do students have to file taxes The savings bond interest qualified for the exclusion. Do students have to file taxes They figure their taxable benefits by completing Worksheet 1. Do students have to file taxes Because they have qualified U. Do students have to file taxes S. Do students have to file taxes savings bond interest, they follow the note at the beginning of the worksheet and use the amount from line 2 of their Schedule B (Form 1040A or 1040) on line 3 of the worksheet instead of the amount from line 8a of their Form 1040. Do students have to file taxes On line 3 of the worksheet, they enter $40,500 ($38,000 + $2,500). Do students have to file taxes Filled-in Worksheet 1. Do students have to file taxes Figuring Your Taxable Benefits Before you begin: • If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Do students have to file taxes • Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Do students have to file taxes None of your benefits are taxable for 2013. Do students have to file taxes For more information, see Repayments More Than Gross Benefits. Do students have to file taxes • If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Do students have to file taxes S. Do students have to file taxes Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Do students have to file taxes Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Do students have to file taxes 1. Do students have to file taxes Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Do students have to file taxes Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $10,000 2. Do students have to file taxes Enter one-half of line 1 5,000 3. Do students have to file taxes Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Do students have to file taxes     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 40,500 4. Do students have to file taxes Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Do students have to file taxes Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Do students have to file taxes Combine lines 2, 3, 4, and 5 45,500 7. Do students have to file taxes Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Do students have to file taxes     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 -0- 8. Do students have to file taxes Is the amount on line 7 less than the amount on line 6?     No. Do students have to file taxes None of your social security benefits are taxable. Do students have to file taxes Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Do students have to file taxes   Yes. Do students have to file taxes Subtract line 7 from line 6 45,500 9. Do students have to file taxes If you are: Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 32,000   Note. Do students have to file taxes If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Do students have to file taxes 85) and enter the result on line 17. Do students have to file taxes Then go to line 18. Do students have to file taxes   10. Do students have to file taxes Is the amount on line 9 less than the amount on line 8?     No. Do students have to file taxes None of your benefits are taxable. Do students have to file taxes Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Do students have to file taxes If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Do students have to file taxes     Yes. Do students have to file taxes Subtract line 9 from line 8 13,500 11. Do students have to file taxes Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 12,000 12. Do students have to file taxes Subtract line 11 from line 10. Do students have to file taxes If zero or less, enter -0- 1,500 13. Do students have to file taxes Enter the smaller of line 10 or line 11 12,000 14. Do students have to file taxes Enter one-half of line 13 6,000 15. Do students have to file taxes Enter the smaller of line 2 or line 14 5,000 16. Do students have to file taxes Multiply line 12 by 85% (. Do students have to file taxes 85). Do students have to file taxes If line 12 is zero, enter -0- 1,275 17. Do students have to file taxes Add lines 15 and 16 6,275 18. Do students have to file taxes Multiply line 1 by 85% (. Do students have to file taxes 85) 8,500 19. Do students have to file taxes Taxable benefits. Do students have to file taxes Enter the smaller of line 17 or line 18. Do students have to file taxes Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b $6,275 More than 50% of Joe's net benefits are taxable because the income on line 8 of the worksheet ($45,500) is more than $44,000. Do students have to file taxes Joe and Betty enter $10,000 on Form 1040, line 20a, and $6,275 on Form 1040, line 20b. Do students have to file taxes Deductions Related to Your Benefits You may be entitled to deduct certain amounts related to the benefits you receive. Do students have to file taxes Disability payments. Do students have to file taxes   You may have received disability payments from your employer or an insurance company that you included as income on your tax return in an earlier year. Do students have to file taxes If you received a lump-sum payment from SSA or RRB, and you had to repay the employer or insurance company for the disability payments, you can take an itemized deduction for the part of the payments you included in gross income in the earlier year. Do students have to file taxes If the amount you repay is more than $3,000, you may be able to claim a tax credit instead. Do students have to file taxes Claim the deduction or credit in the same way explained under Repayments More Than Gross Benefits , later. Do students have to file taxes Legal expenses. Do students have to file taxes   You can usually deduct legal expenses that you pay or incur to produce or collect taxable income or in connection with the determination, collection, or refund of any tax. Do students have to file taxes   Legal expenses for collecting the taxable part of your benefits are deductible as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Do students have to file taxes Repayments More Than Gross Benefits In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. Do students have to file taxes If this occurred, your net benefits in box 5 will be a negative figure (a figure in parentheses) and none of your benefits will be taxable. Do students have to file taxes Do not use a worksheet in this case. Do students have to file taxes If you receive more than one form, a negative figure in box 5 of one form is used to offset a positive figure in box 5 of another form for that same year. Do students have to file taxes If you have any questions about this negative figure, contact your local SSA office or your local RRB field office. Do students have to file taxes Joint return. Do students have to file taxes   If you and your spouse file a joint return, and your Form SSA-1099 or RRB-1099 has a negative figure in box 5, but your spouse's does not, subtract the amount in box 5 of your form from the amount in box 5 of your spouse's form. Do students have to file taxes You do this to get your net benefits when figuring if your combined benefits are taxable. Do students have to file taxes Example. Do students have to file taxes John and Mary file a joint return for 2013. Do students have to file taxes John received Form SSA-1099 showing $3,000 in box 5. Do students have to file taxes Mary also received Form SSA-1099 and the amount in box 5 was ($500). Do students have to file taxes John and Mary will use $2,500 ($3,000 minus $500) as the amount of their net benefits when figuring if any of their combined benefits are taxable. Do students have to file taxes Repayment of benefits received in an earlier year. Do students have to file taxes   If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 is a negative figure, you can take an itemized deduction for the part of this negative figure that represents benefits you included in gross income in an earlier year. Do students have to file taxes Deduction $3,000 or less. Do students have to file taxes   If this deduction is $3,000 or less, it is subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions. Do students have to file taxes Claim it on Schedule A (Form 1040), line 23. Do students have to file taxes Deduction more than $3,000. Do students have to file taxes    If this deduction is more than $3,000, you should figure your tax two ways: Figure your tax for 2013 with the itemized deduction included on Schedule A, line 28. Do students have to file taxes Figure your tax for 2013 in the following steps. Do students have to file taxes Figure the tax without the itemized deduction included on Schedule A, line 28. Do students have to file taxes For each year after 1983 for which part of the negative figure represents a repayment of benefits, refigure your taxable benefits as if your total benefits for the year were reduced by that part of the negative figure. Do students have to file taxes Then refigure the tax for that year. Do students have to file taxes Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts. Do students have to file taxes Subtract the result in (c) from the result in (a). Do students have to file taxes Compare the tax figured in methods (1) and (2). Do students have to file taxes Your tax for 2013 is the smaller of the two amounts. Do students have to file taxes If method (1) results in less tax, take the itemized deduction on Schedule A (Form 1040), line 28. Do students have to file taxes If method (2) results in less tax, claim a credit for the amount from step 2(c) above on Form 1040, line 71. Do students have to file taxes Check box d and enter “I. Do students have to file taxes R. Do students have to file taxes C. Do students have to file taxes 1341” in the space next to that box. Do students have to file taxes If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 28. Do students have to file taxes Prev  Up  Next   Home   More Online Publications
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The Do Students Have To File Taxes

Do students have to file taxes 7. Do students have to file taxes   Costs You Can Deduct or Capitalize Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Carrying Charges Research and Experimental CostsProduct. Do students have to file taxes Costs not included. Do students have to file taxes Intangible Drilling Costs Exploration CostsPartnerships and S corporations. Do students have to file taxes Development Costs Circulation Costs Business Start-Up and Organizational Costs Reforestation Costs Retired Asset Removal Costs Barrier Removal CostsOther barrier removals. Do students have to file taxes Film and Television Production Costs What's New Film and television productions costs. Do students have to file taxes  The election to expense film and television production costs does not apply to productions that begin after December 31, 2013. Do students have to file taxes See Film and Television Production Costs , later. Do students have to file taxes Introduction This chapter discusses costs you can elect to deduct or capitalize. Do students have to file taxes You generally deduct a cost as a current business expense by subtracting it from your income in either the year you incur it or the year you pay it. Do students have to file taxes If you capitalize a cost, you may be able to recover it over a period of years through periodic deductions for amortization, depletion, or depreciation. Do students have to file taxes When you capitalize a cost, you add it to the basis of property to which it relates. Do students have to file taxes A partnership, corporation, estate, or trust makes the election to deduct or capitalize the costs discussed in this chapter except for exploration costs for mineral deposits. Do students have to file taxes Each individual partner, shareholder, or beneficiary elects whether to deduct or capitalize exploration costs. Do students have to file taxes You may be subject to the alternative minimum tax (AMT) if you deduct research and experimental, intangible drilling, exploration, development, circulation, or business organizational costs. Do students have to file taxes For more information on the alternative minimum tax, see the instructions for the following forms. Do students have to file taxes Form 6251, Alternative Minimum Tax—Individuals. Do students have to file taxes Form 4626, Alternative Minimum Tax—Corporations. Do students have to file taxes Topics - This chapter discusses: Carrying charges Research and experimental costs Intangible drilling costs Exploration costs Development costs Circulation costs Qualified disaster expenses Business start-up and organizational costs Reforestation costs Retired asset removal costs Barrier removal costs Film and television production costs Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 3468 Investment Credit 8826 Disabled Access Credit See chapter 12 for information about getting publications and forms. Do students have to file taxes Carrying Charges Carrying charges include the taxes and interest you pay to carry or develop real property or to carry, transport, or install personal property. Do students have to file taxes Certain carrying charges must be capitalized under the uniform capitalization rules. Do students have to file taxes (For information on capitalization of interest, see chapter 4 . Do students have to file taxes ) You can elect to capitalize carrying charges not subject to the uniform capitalization rules, but only if they are otherwise deductible. Do students have to file taxes You can elect to capitalize carrying charges separately for each project you have and for each type of carrying charge. Do students have to file taxes For unimproved and unproductive real property, your election is good for only 1 year. Do students have to file taxes You must decide whether to capitalize carrying charges each year the property remains unimproved and unproductive. Do students have to file taxes For other real property, your election to capitalize carrying charges remains in effect until construction or development is completed. Do students have to file taxes For personal property, your election is effective until the date you install or first use it, whichever is later. Do students have to file taxes How to make the election. Do students have to file taxes   To make the election to capitalize a carrying charge, attach a statement to your original tax return for the year the election is to be effective indicating which charges you are electing to capitalize. Do students have to file taxes However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Do students have to file taxes Attach the statement to the amended return and write “Filed pursuant to section 301. Do students have to file taxes 9100-2” on the statement. Do students have to file taxes File the amended return at the same address you filed the original return. Do students have to file taxes Research and Experimental Costs The costs of research and experimentation are generally capital expenses. Do students have to file taxes However, you can elect to deduct these costs as a current business expense. Do students have to file taxes Your election to deduct these costs is binding for the year it is made and for all later years unless you get IRS approval to make a change. Do students have to file taxes If you meet certain requirements, you may elect to defer and amortize research and experimental costs. Do students have to file taxes For information on electing to defer and amortize these costs, see Research and Experimental Costs in chapter 8. Do students have to file taxes Research and experimental costs defined. Do students have to file taxes   Research and experimental costs are reasonable costs you incur in your trade or business for activities intended to provide information that would eliminate uncertainty about the development or improvement of a product. Do students have to file taxes Uncertainty exists if the information available to you does not establish how to develop or improve a product or the appropriate design of a product. Do students have to file taxes Whether costs qualify as research and experimental costs depends on the nature of the activity to which the costs relate rather than on the nature of the product or improvement being developed or the level of technological advancement. Do students have to file taxes      The costs of obtaining a patent, including attorneys' fees paid or incurred in making and perfecting a patent application, are research and experimental costs. Do students have to file taxes However, costs paid or incurred to obtain another's patent are not research and experimental costs. Do students have to file taxes Product. Do students have to file taxes   The term “product” includes any of the following items. Do students have to file taxes Formula. Do students have to file taxes Invention. Do students have to file taxes Patent. Do students have to file taxes Pilot model. Do students have to file taxes Process. Do students have to file taxes Technique. Do students have to file taxes Property similar to the items listed above. Do students have to file taxes It also includes products used by you in your trade or business or held for sale, lease, or license. Do students have to file taxes Costs not included. Do students have to file taxes   Research and experimental costs do not include expenses for any of the following activities. Do students have to file taxes Advertising or promotions. Do students have to file taxes Consumer surveys. Do students have to file taxes Efficiency surveys. Do students have to file taxes Management studies. Do students have to file taxes Quality control testing. Do students have to file taxes Research in connection with literary, historical, or similar projects. Do students have to file taxes The acquisition of another's patent, model, production, or process. Do students have to file taxes When and how to elect. Do students have to file taxes   You make the election to deduct research and experimental costs by deducting them on your tax return for the year in which you first pay or incur research and experimental costs. Do students have to file taxes If you do not make the election to deduct research and experimental costs in the first year in which you pay or incur the costs, you can deduct the costs in a later year only with approval from the IRS. Do students have to file taxes Deducting or Amortizing Research and Experimentation Costs IF you . Do students have to file taxes . Do students have to file taxes . Do students have to file taxes THEN . Do students have to file taxes . Do students have to file taxes . Do students have to file taxes Elect to deduct research and experimental costs as a current business expense Deduct all research and experimental costs in the first year you pay or incur the costs and all later years. Do students have to file taxes Do not deduct research and experimental costs as a current business expense If you meet the requirements, amortize them over at least 60 months, starting with the month you first receive an economic benefit from the research. Do students have to file taxes See Research and Experimental Costs in chapter 8. Do students have to file taxes Research credit. Do students have to file taxes   If you pay or incur qualified research expenses, you may be able to take the research credit. Do students have to file taxes For more information see Form 6765, Credit for Increasing Research Activities and its instructions. Do students have to file taxes Intangible Drilling Costs The costs of developing oil, gas, or geothermal wells are ordinarily capital expenditures. Do students have to file taxes You can usually recover them through depreciation or depletion. Do students have to file taxes However, you can elect to deduct intangible drilling costs (IDCs) as a current business expense. Do students have to file taxes These are certain drilling and development costs for wells in the United States in which you hold an operating or working interest. Do students have to file taxes You can deduct only costs for drilling or preparing a well for the production of oil, gas, or geothermal steam or hot water. Do students have to file taxes You can elect to deduct only the costs of items with no salvage value. Do students have to file taxes These include wages, fuel, repairs, hauling, and supplies related to drilling wells and preparing them for production. Do students have to file taxes Your cost for any drilling or development work done by contractors under any form of contract is also an IDC. Do students have to file taxes However, see Amounts paid to contractor that must be capitalized , later. Do students have to file taxes You can also elect to deduct the cost of drilling exploratory bore holes to determine the location and delineation of offshore hydrocarbon deposits if the shaft is capable of conducting hydrocarbons to the surface on completion. Do students have to file taxes It does not matter whether there is any intent to produce hydrocarbons. Do students have to file taxes If you do not elect to deduct your IDCs as a current business expense, you can elect to deduct them over the 60-month period beginning with the month they were paid or incurred. Do students have to file taxes Amounts paid to contractor that must be capitalized. Do students have to file taxes   Amounts paid to a contractor must be capitalized if they are either: Amounts properly allocable to the cost of depreciable property, or Amounts paid only out of production or proceeds from production if these amounts are depletable income to the recipient. Do students have to file taxes How to make the election. Do students have to file taxes   You elect to deduct IDCs as a current business expense by taking the deduction on your income tax return for the first tax year you have eligible costs. Do students have to file taxes No formal statement is required. Do students have to file taxes If you file Schedule C (Form 1040), enter these costs under “Other expenses. Do students have to file taxes ”   For oil and gas wells, your election is binding for the year it is made and for all later years. Do students have to file taxes For geothermal wells, your election can be revoked by the filing of an amended return on which you do not take the deduction. Do students have to file taxes You can file the amended return for the year up to the normal time of expiration for filing a claim for credit or refund, generally, within 3 years after the date you filed the original return or within 2 years after the date you paid the tax, whichever is later. Do students have to file taxes Energy credit for costs of geothermal wells. Do students have to file taxes   If you capitalize the drilling and development costs of geothermal wells that you place in service during the tax year, you may be able to claim a business energy credit. Do students have to file taxes See the Instructions for Form 3468 for more information. Do students have to file taxes Nonproductive well. Do students have to file taxes   If you capitalize your IDCs, you have another option if the well is nonproductive. Do students have to file taxes You can deduct the IDCs of the nonproductive well as an ordinary loss. Do students have to file taxes You must indicate and clearly state your election on your tax return for the year the well is completed. Do students have to file taxes Once made, the election for oil and gas wells is binding for all later years. Do students have to file taxes You can revoke your election for a geothermal well by filing an amended return that does not claim the loss. Do students have to file taxes Costs incurred outside the United States. Do students have to file taxes   You cannot deduct as a current business expense all the IDCs paid or incurred for an oil, gas, or geothermal well located outside the United States. Do students have to file taxes However, you can elect to include the costs in the adjusted basis of the well to figure depletion or depreciation. Do students have to file taxes If you do not make this election, you can deduct the costs over the 10-year period beginning with the tax year in which you paid or incurred them. Do students have to file taxes These rules do not apply to a nonproductive well. Do students have to file taxes Exploration Costs The costs of determining the existence, location, extent, or quality of any mineral deposit are ordinarily capital expenditures if the costs lead to the development of a mine. Do students have to file taxes You recover these costs through depletion as the mineral is removed from the ground. Do students have to file taxes However, you can elect to deduct domestic exploration costs paid or incurred before the beginning of the development stage of the mine (except those for oil and gas wells). Do students have to file taxes How to make the election. Do students have to file taxes   You elect to deduct exploration costs by taking the deduction on your income tax return, or on an amended income tax return, for the first tax year for which you wish to deduct the costs paid or incurred during the tax year. Do students have to file taxes Your return must adequately describe and identify each property or mine, and clearly state how much is being deducted for each one. Do students have to file taxes The election applies to the tax year you make this election and all later tax years. Do students have to file taxes Partnerships and S corporations. Do students have to file taxes   Each partner, not the partnership, elects whether to capitalize or to deduct that partner's share of exploration costs. Do students have to file taxes Each shareholder, not the S corporation, elects whether to capitalize or to deduct that shareholder's share of exploration costs. Do students have to file taxes Reduced corporate deductions for exploration costs. Do students have to file taxes   A corporation (other than an S corporation) can deduct only 70% of its domestic exploration costs. Do students have to file taxes It must capitalize the remaining 30% of costs and amortize them over the 60-month period starting with the month the exploration costs are paid or incurred. Do students have to file taxes A corporation may also elect to capitalize and amortize mining exploration costs over a 10-year period. Do students have to file taxes For more information on this method of amortization, see Internal Revenue Code section 59(e). Do students have to file taxes   The 30% the corporation capitalizes cannot be added to its basis in the property to figure cost depletion. Do students have to file taxes However, the amount amortized is treated as additional depreciation and is subject to recapture as ordinary income on a disposition of the property. Do students have to file taxes See Section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. Do students have to file taxes   These rules also apply to the deduction of development costs by corporations. Do students have to file taxes See Development Costs , later. Do students have to file taxes Recapture of exploration expenses. Do students have to file taxes   When your mine reaches the producing stage, you must recapture any exploration costs you elected to deduct. Do students have to file taxes Use either of the following methods. Do students have to file taxes Method 1—Include the deducted costs in gross income for the tax year the mine reaches the producing stage. Do students have to file taxes Your election must be clearly indicated on the return. Do students have to file taxes Increase your adjusted basis in the mine by the amount included in income. Do students have to file taxes Generally, you must elect this recapture method by the due date (including extensions) of your return. Do students have to file taxes However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Do students have to file taxes Make the election on your amended return and write “Filed pursuant to section 301. Do students have to file taxes 9100-2” on the form where you are including the income. Do students have to file taxes File the amended return at the same address you filed the original return. Do students have to file taxes Method 2—Do not claim any depletion deduction for the tax year the mine reaches the producing stage and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. Do students have to file taxes   You also must recapture deducted exploration costs if you receive a bonus or royalty from mine property before it reaches the producing stage. Do students have to file taxes Do not claim any depletion deduction for the tax year you receive the bonus or royalty and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. Do students have to file taxes   Generally, if you dispose of the mine before you have fully recaptured the exploration costs you deducted, recapture the balance by treating all or part of your gain as ordinary income. Do students have to file taxes Under these circumstances, you generally treat as ordinary income all of your gain if it is less than your adjusted exploration costs with respect to the mine. Do students have to file taxes If your gain is more than your adjusted exploration costs, treat as ordinary income only a part of your gain, up to the amount of your adjusted exploration costs. Do students have to file taxes Foreign exploration costs. Do students have to file taxes   If you pay or incur exploration costs for a mine or other natural deposit located outside the United States, you cannot deduct all the costs in the current year. Do students have to file taxes You can elect to include the costs (other than for an oil, gas, or geothermal well) in the adjusted basis of the mineral property to figure cost depletion. Do students have to file taxes (Cost depletion is discussed in chapter 9 . Do students have to file taxes ) If you do not make this election, you must deduct the costs over the 10-year period beginning with the tax year in which you pay or incur them. Do students have to file taxes These rules also apply to foreign development costs. Do students have to file taxes Development Costs You can deduct costs paid or incurred during the tax year for developing a mine or any other natural deposit (other than an oil or gas well) located in the United States. Do students have to file taxes These costs must be paid or incurred after the discovery of ores or minerals in commercially marketable quantities. Do students have to file taxes Development costs also include depreciation on improvements used in the development of ores or minerals and costs incurred for you by a contractor. Do students have to file taxes Development costs do not include the costs for the acquisition or improvement of depreciable property. Do students have to file taxes Instead of deducting development costs in the year paid or incurred, you can elect to treat the cost as deferred expenses and deduct them ratably as the units of produced ores or minerals benefited by the expenses are sold. Do students have to file taxes This election applies each tax year to expenses paid or incurred in that year. Do students have to file taxes Once made, the election is binding for the year and cannot be revoked for any reason. Do students have to file taxes How to make the election. Do students have to file taxes   The election to deduct development costs ratably as the ores or minerals are sold must be made for each mine or other natural deposit by a clear indication on your return or by a statement filed with the IRS office where you file your return. Do students have to file taxes Generally, you must make the election by the due date of the return (including extensions). Do students have to file taxes However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Do students have to file taxes Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Do students have to file taxes 9100-2. Do students have to file taxes ” File the amended return at the same address you filed the original return. Do students have to file taxes Foreign development costs. Do students have to file taxes   The rules discussed earlier for foreign exploration costs apply to foreign development costs. Do students have to file taxes Reduced corporate deductions for development costs. Do students have to file taxes   The rules discussed earlier for reduced corporate deductions for exploration costs also apply to corporate deductions for development costs. Do students have to file taxes Circulation Costs A publisher can deduct as a current business expense the costs of establishing, maintaining, or increasing the circulation of a newspaper, magazine, or other periodical. Do students have to file taxes For example, a publisher can deduct the cost of hiring extra employees for a limited time to get new subscriptions through telephone calls. Do students have to file taxes Circulation costs are deductible even if they normally would be capitalized. Do students have to file taxes This rule does not apply to the following costs that must be capitalized. Do students have to file taxes The purchase of land or depreciable property. Do students have to file taxes The acquisition of circulation through the purchase of any part of the business of another publisher of a newspaper, magazine, or other periodical, including the purchase of another publisher's list of subscribers. Do students have to file taxes Other treatment of circulation costs. Do students have to file taxes   If you do not want to deduct circulation costs as a current business expense, you can elect one of the following ways to recover these costs. Do students have to file taxes Capitalize all circulation costs that are properly chargeable to a capital account (see chapter 1 ). Do students have to file taxes Amortize circulation costs over the 3-year period beginning with the tax year they were paid or incurred. Do students have to file taxes How to make the election. Do students have to file taxes   You elect to capitalize circulation costs by attaching a statement to your return for the first tax year the election applies. Do students have to file taxes Your election is binding for the year it is made and for all later years, unless you get IRS approval to revoke it. Do students have to file taxes Business Start-Up and Organizational Costs Business start-up and organizational costs are generally capital expenditures. Do students have to file taxes However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. Do students have to file taxes The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Do students have to file taxes Any remaining costs must be amortized. Do students have to file taxes For information about amortizing start-up and organizational costs, see chapter 8 . Do students have to file taxes Start-up costs include any amounts paid or incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business. Do students have to file taxes Organizational costs include the costs of creating a corporation. Do students have to file taxes For more information on start-up and organizational costs, see chapter 8 . Do students have to file taxes How to make the election. Do students have to file taxes   You elect to deduct the start-up or organizational costs by claiming the deduction on your income tax return (filed by the due date including extensions) for the tax year in which the active trade or business begins. Do students have to file taxes However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Do students have to file taxes Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Do students have to file taxes 9100-2. Do students have to file taxes ” File the amended return at the same address you filed the original return. Do students have to file taxes The election applies when computing taxable income for the current tax year and all subsequent years. Do students have to file taxes Reforestation Costs Reforestation costs are generally capital expenditures. Do students have to file taxes However, you can elect to deduct up to $10,000 ($5,000 if married filing separately; $0 for a trust) of qualifying reforestation costs paid or incurred after October 22, 2004, for each qualified timber property. Do students have to file taxes The remaining costs can be amortized over an 84-month period. Do students have to file taxes For information about amortizing reforestation costs, see chapter 8 . Do students have to file taxes Qualifying reforestation costs are the direct costs of planting or seeding for forestation or reforestation. Do students have to file taxes Qualified timber property is property that contains trees in significant commercial quantities. Do students have to file taxes See chapter 8 for more information on qualifying reforestation costs and qualified timber property. Do students have to file taxes If you elect to deduct qualified reforestation costs, create and maintain separate timber accounts for each qualified timber property and include all reforestation costs and the dates each was applied. Do students have to file taxes Do not include this qualified timber property in any account (for example, depletion block) for which depletion is allowed. Do students have to file taxes How to make the election. Do students have to file taxes   You elect to deduct qualifying reforestation costs by claiming the deduction on your timely filed income tax return (including extensions) for the tax year the expenses were paid or incurred. Do students have to file taxes If Form T (Timber), Forest Activities Schedule, is required, complete Part IV of Form T. Do students have to file taxes If Form T is not required, attach a statement containing the following information for each qualified timber property for which an election is being made. Do students have to file taxes The unique stand identification numbers. Do students have to file taxes The total number of acres reforested during the tax year. Do students have to file taxes The nature of the reforestation treatments. Do students have to file taxes The total amounts of qualified reforestation expenditures eligible to be amortized or deducted. Do students have to file taxes   If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Do students have to file taxes Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Do students have to file taxes 9100-2. Do students have to file taxes ” File the amended return at the same address you filed the original return. Do students have to file taxes The election applies when computing taxable income for the current tax year and all subsequent years. Do students have to file taxes   For additional information on reforestation costs, see chapter 8 . Do students have to file taxes Recapture. Do students have to file taxes   This deduction may have to be recaptured as ordinary income under section 1245 when you sell or otherwise dispose of the property that would have received an addition to basis if you had not elected to deduct the expenditure. Do students have to file taxes For more information on recapturing the deduction, see Depreciation Recapture in Publication 544. Do students have to file taxes Retired Asset Removal Costs If you retire and remove a depreciable asset in connection with the installation or production of a replacement asset, you can deduct the costs of removing the retired asset. Do students have to file taxes However, if you replace a component (part) of a depreciable asset, capitalize the removal costs if the replacement is an improvement and deduct the costs if the replacement is a repair. Do students have to file taxes Barrier Removal Costs The cost of an improvement to a business asset is normally a capital expense. Do students have to file taxes However, you can elect to deduct the costs of making a facility or public transportation vehicle more accessible to and usable by those who are disabled or elderly. Do students have to file taxes You must own or lease the facility or vehicle for use in connection with your trade or business. Do students have to file taxes A facility is all or any part of buildings, structures, equipment, roads, walks, parking lots, or similar real or personal property. Do students have to file taxes A public transportation vehicle is a vehicle, such as a bus or railroad car, that provides transportation service to the public (including service for your customers, even if you are not in the business of providing transportation services). Do students have to file taxes You cannot deduct any costs that you paid or incurred to completely renovate or build a facility or public transportation vehicle or to replace depreciable property in the normal course of business. Do students have to file taxes Deduction limit. Do students have to file taxes   The most you can deduct as a cost of removing barriers to the disabled and the elderly for any tax year is $15,000. Do students have to file taxes However, you can add any costs over this limit to the basis of the property and depreciate these excess costs. Do students have to file taxes Partners and partnerships. Do students have to file taxes   The $15,000 limit applies to a partnership and also to each partner in the partnership. Do students have to file taxes A partner can allocate the $15,000 limit in any manner among the partner's individually incurred costs and the partner's distributive share of partnership costs. Do students have to file taxes If the partner cannot deduct the entire share of partnership costs, the partnership can add any costs not deducted to the basis of the improved property. Do students have to file taxes   A partnership must be able to show that any amount added to basis was not deducted by the partner and that it was over a partner's $15,000 limit (as determined by the partner). Do students have to file taxes If the partnership cannot show this, it is presumed that the partner was able to deduct the distributive share of the partnership's costs in full. Do students have to file taxes Example. Do students have to file taxes Emilio Azul's distributive share of ABC partnership's deductible expenses for the removal of architectural barriers was $14,000. Do students have to file taxes Emilio had $12,000 of similar expenses in his sole proprietorship. Do students have to file taxes He elected to deduct $7,000 of them. Do students have to file taxes Emilio allocated the remaining $8,000 of the $15,000 limit to his share of ABC's expenses. Do students have to file taxes Emilio can add the excess $5,000 of his own expenses to the basis of the property used in his business. Do students have to file taxes Also, if ABC can show that Emilio could not deduct $6,000 ($14,000 – $8,000) of his share of the partnership's expenses because of how Emilio applied the limit, ABC can add $6,000 to the basis of its property. Do students have to file taxes Qualification standards. Do students have to file taxes   You can deduct your costs as a current expense only if the barrier removal meets the guidelines and requirements issued by the Architectural and Transportation Barriers Compliance Board under the Americans with Disabilities Act (ADA) of 1990. Do students have to file taxes You can view the Americans with Disabilities Act at www. Do students have to file taxes ada. Do students have to file taxes gov/pubs/ada. Do students have to file taxes htm. Do students have to file taxes   The following is a list of some architectural barrier removal costs that can be deducted. Do students have to file taxes Ground and floor surfaces. Do students have to file taxes Walks. Do students have to file taxes Parking lots. Do students have to file taxes Ramps. Do students have to file taxes Entrances. Do students have to file taxes Doors and doorways. Do students have to file taxes Stairs. Do students have to file taxes Floors. Do students have to file taxes Toilet rooms. Do students have to file taxes Water fountains. Do students have to file taxes Public telephones. Do students have to file taxes Elevators. Do students have to file taxes Controls. Do students have to file taxes Signage. Do students have to file taxes Alarms. Do students have to file taxes Protruding objects. Do students have to file taxes Symbols of accessibility. Do students have to file taxes You can find the ADA guidelines and requirements for architectural barrier removal at www. Do students have to file taxes usdoj. Do students have to file taxes gov/crt/ada/reg3a. Do students have to file taxes html. Do students have to file taxes   The costs for removal of transportation barriers from rail facilities, buses, and rapid and light rail vehicles are deductible. Do students have to file taxes You can find the guidelines and requirements for transportation barrier removal at www. Do students have to file taxes fta. Do students have to file taxes dot. Do students have to file taxes gov. Do students have to file taxes   Also, you can access the ADA website at www. Do students have to file taxes ada. Do students have to file taxes gov for additional information. Do students have to file taxes Other barrier removals. Do students have to file taxes   To be deductible, expenses of removing any barrier not covered by the above standards must meet all three of the following tests. Do students have to file taxes The removed barrier must be a substantial barrier to access or use of a facility or public transportation vehicle by persons who have a disability or are elderly. Do students have to file taxes The removed barrier must have been a barrier for at least one major group of persons who have a disability or are elderly (such as people who are blind, deaf, or wheelchair users). Do students have to file taxes The barrier must be removed without creating any new barrier that significantly impairs access to or use of the facility or vehicle by a major group of persons who have a disability or are elderly. Do students have to file taxes How to make the election. Do students have to file taxes   If you elect to deduct your costs for removing barriers to the disabled or the elderly, claim the deduction on your income tax return (partnership return for partnerships) for the tax year the expenses were paid or incurred. Do students have to file taxes Identify the deduction as a separate item. Do students have to file taxes The election applies to all the qualifying costs you have during the year, up to the $15,000 limit. Do students have to file taxes If you make this election, you must maintain adequate records to support your deduction. Do students have to file taxes   For your election to be valid, you generally must file your return by its due date, including extensions. Do students have to file taxes However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Do students have to file taxes Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Do students have to file taxes 9100-2. Do students have to file taxes ” File the amended return at the same address you filed the original return. Do students have to file taxes Your election is irrevocable after the due date, including extensions, of your return. Do students have to file taxes Disabled access credit. Do students have to file taxes   If you make your business accessible to persons with disabilities and your business is an eligible small business, you may be able to claim the disabled access credit. Do students have to file taxes If you choose to claim the credit, you must reduce the amount you deduct or capitalize by the amount of the credit. Do students have to file taxes   For more information, see Form 8826, Disabled Access Credit. Do students have to file taxes Film and Television Production Costs Film and television production costs are generally capital expenses. Do students have to file taxes However, you can elect to deduct costs paid or incurred for certain productions commencing before January 1, 2014. Do students have to file taxes For more information, see section 181 of the Internal Revenue Code and the related Treasury Regulations. Do students have to file taxes Prev  Up  Next   Home   More Online Publications