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Filing Military Taxes

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Filing Military Taxes

Filing military taxes 4. Filing military taxes   Filing U. Filing military taxes S. Filing military taxes Tax Returns Table of Contents Who Must FileFiling Requirement if Possession Income Is Excluded When To FileExtension of Time To File Where To File Special Rules for Completing Your U. Filing military taxes S. Filing military taxes Tax ReturnU. Filing military taxes S. Filing military taxes Armed Forces. Filing military taxes Deductions if Possession Income Is Excluded Foreign Tax Credit if Possession Income Is Excluded Self-Employment Tax Additional Medicare Tax Net Investment Income Tax Paying Your TaxesEstimated Tax Double TaxationCompetent Authority Assistance The information in chapter 3 will tell you if a U. Filing military taxes S. Filing military taxes income tax return is required for your situation. Filing military taxes If a U. Filing military taxes S. Filing military taxes return is required, your next step is to see if you meet the filing requirements. Filing military taxes If you do meet the filing requirements, the information presented in this chapter will help you understand the special procedures involved. Filing military taxes This chapter discusses: Filing requirements, When to file your return, Where to send your return, How to adjust your deductions and credits if you are excluding income from American Samoa or Puerto Rico, How to make estimated tax payments and pay self-employment tax, and How to request assistance in resolving instances of double taxation. Filing military taxes Who Must File If you are not required to file a possession tax return that includes your worldwide income, you must generally file a U. Filing military taxes S. Filing military taxes income tax return if your gross income is at least the amount shown in Table 4-1, later, for your filing status and age. Filing military taxes If you were a bona fide resident of American Samoa or Puerto Rico and are able to exclude your possession income from your U. Filing military taxes S. Filing military taxes tax return, your filing requirement may be less than the amount in Table 4-1. Filing military taxes For details, see the information under Filing Requirement if Possession Income Is Excluded , later. Filing military taxes Some individuals (such as those who can be claimed as a dependent on another person's return or who owe certain taxes, such as self-employment tax) must file a tax return even though the gross income is less than the amount shown in Table 4-1 for their filing status and age. Filing military taxes For more information, see the Form 1040 instructions. Filing military taxes Filing Requirement if Possession Income Is Excluded If you were a bona fide resident of American Samoa or Puerto Rico and qualify to exclude possession income on your U. Filing military taxes S. Filing military taxes tax return, you must determine your adjusted filing requirement. Filing military taxes Generally, your filing requirement is based on the total of your (and your spouse's if filing a joint return) personal exemption(s) plus your standard deduction. Filing military taxes Personal exemption. Filing military taxes   When figuring your filing requirement, your personal exemption is allowed in full. Filing military taxes Do not reduce it for this purpose. Filing military taxes Do not include exemptions for your dependents. Filing military taxes Allowable standard deduction. Filing military taxes   Unless your filing status is married filing separately, the minimum income level at which you must file a return is based, in part, on the standard deduction for your filing status and age. Filing military taxes Because the standard deduction applies to all types of income, it must be divided between your excluded income and income from other sources. Filing military taxes Multiply the regular standard deduction for your filing status and age (this is zero if you are married filing a separate return; all others, see Form 1040 instructions) by the following fraction:      Gross income subject to U. Filing military taxes S. Filing military taxes income tax     Gross income from all sources (including excluded possession income)   Example. Filing military taxes Barbara Spruce, a U. Filing military taxes S. Filing military taxes citizen, is single, under 65, and a bona fide resident of American Samoa. Filing military taxes During 2013, she received $20,000 of income from American Samoa sources (qualifies for exclusion) and $8,000 of income from sources outside the possession (subject to U. Filing military taxes S. Filing military taxes income tax). Filing military taxes Her allowable standard deduction for 2013 is figured as follows:   $8,000 $28,000 × $6,100 (regular standard deduction) = $1,743   Adjusted filing requirement. Filing military taxes   Figure your adjusted filing requirement by adding the amount of your allowable standard deduction to the amount of your personal exemption. Filing military taxes You must file a U. Filing military taxes S. Filing military taxes income tax return if your gross income is at least the amount shown on line 3 of the following worksheet. Filing military taxes    1. Filing military taxes Enter the allowable standard deduction you figured earlier under Allowable standard deduction . Filing military taxes If your filing status is married filing separately, enter -0-   2. Filing military taxes Personal exemption. Filing military taxes If your filing status is married filing jointly, enter $7,800; if someone can claim you as a dependent, enter -0-; otherwise, enter $3,900   3. Filing military taxes Add lines 1 and 2. Filing military taxes You must file a U. Filing military taxes S. Filing military taxes income tax return if your gross income from sources outside the relevant possession is at least this amount   Table 4-1. Filing military taxes 2013 Filing Requirements Chart for Most Taxpayers IF your filing status is. Filing military taxes . Filing military taxes . Filing military taxes AND at the end of 2013 you were*. Filing military taxes . Filing military taxes . Filing military taxes THEN file a return if your gross income** was at least. Filing military taxes . Filing military taxes . Filing military taxes single under 65 $10,000 65 or older $11,500 married filing jointly*** under 65 (both spouses) $20,000 65 or older (one spouse) $21,200 65 or older (both spouses) $22,400 married filing separately any age $3,900 head of household under 65 $12,850 65 or older $14,350 qualifying widow(er)  with dependent child under 65 $16,100 65 or older $17,300 * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Filing military taxes ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States (even if you can exclude part or all of it). Filing military taxes Do not include social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time during 2013, or (b) one-half of your social security benefits plus your other gross income is more than $25,000 ($32,000 if married filing jointly). Filing military taxes If (a) or (b) applies, see the instructions for Form 1040 or Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure the taxable part of social security benefits you must include in gross income. Filing military taxes *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900 you must file a return regardless of your age. Filing military taxes Example 1. Filing military taxes James and Joan Thompson, one over 65, are U. Filing military taxes S. Filing military taxes citizens and bona fide residents of Puerto Rico during the entire tax year. Filing military taxes They file a joint income tax return. Filing military taxes During 2013, they received $35,000 of income from Puerto Rico sources (qualifies for exclusion) and $6,000 of income from sources outside Puerto Rico (subject to U. Filing military taxes S. Filing military taxes income tax). Filing military taxes Their allowable standard deduction for 2013 is figured as follows:   $6,000 $41,000 × $13,400 ( standard deduction for 65 or older (one spouse) ) = $1,961   The Thompsons do not have to file a U. Filing military taxes S. Filing military taxes income tax return because their gross income subject to U. Filing military taxes S. Filing military taxes tax ($6,000) is less than their allowable standard deduction plus their personal exemptions ($1,961+ $7,800= $9,761). Filing military taxes Example 2. Filing military taxes Barbara Spruce (see Example under Allowable standard deduction, earlier), however, must file a U. Filing military taxes S. Filing military taxes income tax return because her gross income subject to U. Filing military taxes S. Filing military taxes tax ($8,000) is more than her allowable standard deduction plus her personal exemption ($1,743 + $3,900 = $5,643). Filing military taxes If you must file a U. Filing military taxes S. Filing military taxes income tax return, you may be able to file a paperless return using IRS e-file. Filing military taxes See your form instructions or visit our website at IRS. Filing military taxes gov. Filing military taxes When To File If you file on a calendar year basis, the due date for filing your U. Filing military taxes S. Filing military taxes income tax return is April 15 following the end of your tax year. Filing military taxes If you use a fiscal year (a year ending on the last day of a month other than December), the due date is the 15th day of the 4th month after the end of your fiscal year. Filing military taxes If any due date falls on a Saturday, Sunday, or legal holiday, your tax return is due on the next business day. Filing military taxes For your 2013 tax return, the due date is April 15, 2014. Filing military taxes If you mail your federal tax return, it is considered timely if it bears an official postmark dated on or before the due date, including any extensions. Filing military taxes If you use a private delivery service designated by the IRS, generally the postmark date is the date the private delivery service records in its database or marks on the mailing label. Filing military taxes See your form instructions for a list of designated private delivery services. Filing military taxes Extension of Time To File You can get an extension of time to file your U. Filing military taxes S. Filing military taxes income tax return. Filing military taxes Special rules apply for those living outside the United States. Filing military taxes Automatic 6-Month Extension If you cannot file your 2013 return by the due date, you can get an automatic 6-month extension of time to file. Filing military taxes Example. Filing military taxes If your return must be filed by April 15, 2014, you will have until October 15, 2014, to file. Filing military taxes Although you are not required to make a payment of the tax you estimate as due, Form 4868 does not extend the time to pay taxes. Filing military taxes If you do not pay the amount due by the regular due date (generally April 15), you will owe interest on any unpaid tax from the original due date to the date you pay the tax. Filing military taxes You may also be charged penalties (see the Instructions for Form 4868). Filing military taxes How to get the automatic extension. Filing military taxes   You can get the automatic 6-month extension if you do one of the following by the due date for filing your return. Filing military taxes E-file Form 4868 using your personal computer or a tax professional. Filing military taxes E-file and pay by credit or debit card. Filing military taxes Your payment must be at least $1. Filing military taxes You may pay by phone or over the Internet. Filing military taxes Do not file Form 4868. Filing military taxes File a paper Form 4868. Filing military taxes If you are a fiscal year taxpayer, you must file a paper Form 4868. Filing military taxes See Form 4868 for information on getting an extension using these options. Filing military taxes When to file. Filing military taxes   You must request the automatic extension by the due date for your return. Filing military taxes You can file your return any time before the 6-month extension period ends. Filing military taxes When you file your return. Filing military taxes   Enter any payment you made related to the extension of time to file on Form 1040, line 68. Filing military taxes If you file Form 1040A, U. Filing military taxes S. Filing military taxes Individual Income Tax Return, or Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents, include that payment in your total payments on Form 1040A, line 41, or Form 1040EZ, line 9. Filing military taxes Also enter “Form 4868” and the amount paid in the space to the left of the entry space for line 41 or line 9. Filing military taxes You cannot ask the Internal Revenue Service to figure your tax if you use the extension of time to file. Filing military taxes Individuals Outside the United States and Puerto Rico You are allowed an automatic 2-month extension (until June 16, 2014, if you use the calendar year) to file your 2013 return and pay any federal income tax due if: You are a U. Filing military taxes S. Filing military taxes citizen or resident, and On the due date of your return: You are living outside of the United States and Puerto Rico, and your main place of business or post of duty is outside the United States and Puerto Rico, or You are in military or naval service on duty outside the United States and Puerto Rico. Filing military taxes However, if you pay the tax due after the regular due date (generally April 15), interest will be charged from April 15 until the date the tax is paid. Filing military taxes If you serve in a combat zone or qualified hazardous duty area, you may be eligible for a longer extension of time to file. Filing military taxes For more information, see Publication 3, Armed Forces' Tax Guide. Filing military taxes Married taxpayers. Filing military taxes   If you file a joint return, only one spouse has to qualify for this automatic extension. Filing military taxes However, if you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies. Filing military taxes How to get the extension. Filing military taxes   To use this special automatic extension, you must attach a statement to your return explaining what situation qualified you for the extension. Filing military taxes (See the situations listed under (2), earlier. Filing military taxes ) Extension beyond 2 months. Filing military taxes   If you cannot file your 2013 return within the automatic 2-month extension period, you can get an additional 4-month extension, for a total of 6 months. Filing military taxes File Form 4868 by the end of the automatic extension period (June 16, 2014 for calendar year taxpayers). Filing military taxes Be sure to check the box on Form 4868, line 8, if appropriate. Filing military taxes   In addition to this 6-month extension, taxpayers who are out of the country (as defined under (2) earlier) can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). Filing military taxes   To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. Filing military taxes Send the letter by the extended due date (October 15 for calendar year taxpayers) to:  Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA   You will not receive any notification from the IRS unless your request is denied for being untimely. Filing military taxes Where To File Use the addresses listed below if you have to file Form 1040 with the United States and you are excluding possession income from American Samoa or Puerto Rico. Filing military taxes If you are not including a check or a money order, send your U. Filing military taxes S. Filing military taxes tax return and all attachments to:   Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA If you are including a check or a money order, send your U. Filing military taxes S. Filing military taxes tax return and all attachments to:  Internal Revenue Service P. Filing military taxes O. Filing military taxes Box 1303 Charlotte, NC 28201-1303 USA Also send your U. Filing military taxes S. Filing military taxes return to these addresses if you are attaching Form 5074 or Form 8689. Filing military taxes If you are not in either of the above categories, send your return to the address shown in the Form 1040 instructions for the possession or state in which you reside. Filing military taxes Special Rules for Completing Your U. Filing military taxes S. Filing military taxes Tax Return If you are not excluding possession income from your U. Filing military taxes S. Filing military taxes tax return, follow the instructions for the specific forms you file. Filing military taxes However, you may not qualify to claim the earned income credit (EIC). Filing military taxes Earned income credit. Filing military taxes   Even if you maintain a household in one of the possessions discussed in this publication that is your main home and the home of your qualifying child, you cannot claim the earned income credit on your U. Filing military taxes S. Filing military taxes tax return. Filing military taxes This credit is available only if you maintain the household in the United States or you are serving on extended active duty in the U. Filing military taxes S. Filing military taxes Armed Forces. Filing military taxes U. Filing military taxes S. Filing military taxes Armed Forces. Filing military taxes   U. Filing military taxes S. Filing military taxes military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC. Filing military taxes Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Filing military taxes Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you do not serve more than 90 days. Filing military taxes Income from American Samoa or Puerto Rico excluded. Filing military taxes   You will not be allowed to take deductions and credits that apply to the excluded income. Filing military taxes The additional information you need follows. Filing military taxes Deductions if Possession Income Is Excluded Deductions that specifically apply to your excluded possession income, such as employee business expenses, are not allowable on your U. Filing military taxes S. Filing military taxes income tax return. Filing military taxes Deductions that do not specifically apply to any particular type of income must be divided between your excluded income from sources in the relevant possession and income from all other sources to find the part that you can deduct on your U. Filing military taxes S. Filing military taxes tax return. Filing military taxes Examples of such deductions are alimony payments, the standard deduction, and certain itemized deductions (such as medical expenses, charitable contributions, real estate taxes, and mortgage interest on your home). Filing military taxes Figuring the deduction. Filing military taxes   To find the part of a deduction that is allowable, multiply the deduction by the following fraction. Filing military taxes   Gross income subject to U. Filing military taxes S. Filing military taxes income tax     Gross income from all sources (including excluded possession income)   Adjustments to Income Your adjusted gross income equals your gross income minus certain deductions (adjustments). Filing military taxes Moving expense deduction. Filing military taxes   Generally, expenses of a move to a possession are directly attributable to wages, salaries, and other earned income from that possession. Filing military taxes Likewise, the expenses of a move back to the United States are generally attributable to U. Filing military taxes S. Filing military taxes earned income. Filing military taxes   If you are claiming expenses for a move to a relevant possession, how and where you will deduct the expenses depends on your status as a bona fide resident and if any of your possession income is excluded on your U. Filing military taxes S. Filing military taxes tax return. Filing military taxes For more information, see Moving expense deduction in chapter 3 under the name of the relevant possession. Filing military taxes   If you are claiming expenses for a move from a U. Filing military taxes S. Filing military taxes possession to the United States, use Form 3903 to figure your deductible expenses and enter the amount on Form 1040, line 26. Filing military taxes For purposes of deducting moving expenses, the possessions are considered part of the United States. Filing military taxes See Publication 521, Moving Expenses, for information about what expenses are deductible. Filing military taxes Self-employment tax deduction. Filing military taxes   Generally, if you are reporting self-employment income on your U. Filing military taxes S. Filing military taxes return, you can include the deductible part of your self-employment tax on Form 1040, line 27. Filing military taxes This is an income tax deduction only; it is not a deduction in figuring net earnings from self-employment (for self-employment tax). Filing military taxes   However, if you are a bona fide resident of American Samoa or Puerto Rico and you exclude all of your self-employment income from gross income, you cannot take the deduction on Form 1040, line 27, because the deduction is related to excluded income. Filing military taxes   If only part of your self-employment income is excluded, the part of the deduction that is based on the nonexcluded income is allowed. Filing military taxes This would happen if, for instance, you have two businesses and only the income from one of them is excludable. Filing military taxes   For purposes of the deduction only, figure the self-employment tax on the nonexcluded income by multiplying your total self-employment tax (from Schedule SE (Form 1040)), Self-Employment Tax) by the following fraction. Filing military taxes   Self-employment income subject to U. Filing military taxes S. Filing military taxes income tax     Total self-employment income (including excluded possession income)   The result is your self-employment tax on nonexcluded income. Filing military taxes Include the deductible part of this amount on Form 1040, line 27. Filing military taxes Individual retirement arrangement (IRA) deduction. Filing military taxes   Do not take excluded income into account when figuring your deductible IRA contribution. Filing military taxes Standard Deduction The standard deduction is composed of the regular standard deduction amount and the additional standard deduction for taxpayers who are blind or age 65 or over. Filing military taxes To find the amount you can claim on Form 1040, line 40, first figure your full standard deduction according to the Instructions for Form 1040. Filing military taxes Then multiply your full standard deduction by the following fraction. Filing military taxes   Gross income subject to U. Filing military taxes S. Filing military taxes income tax     Gross income from all sources (including excluded possession income)   In the space above line 40, enter “Standard deduction modified due to income excluded under section 931 (if American Samoa) or section 933 (if Puerto Rico). Filing military taxes ” This calculation may not be the same as the one you used to determine if you need to file a U. Filing military taxes S. Filing military taxes tax return. Filing military taxes Itemized Deductions Most itemized deductions do not apply to a particular type of income. Filing military taxes However, itemized deductions can be divided into three categories. Filing military taxes Those that apply specifically to excluded income, such as employee business expenses, are not deductible. Filing military taxes Those that apply specifically to income subject to U. Filing military taxes S. Filing military taxes income tax, which might also be employee business expenses, are fully allowable under the Instructions for Schedule A (Form 1040), Itemized Deductions. Filing military taxes Those that do not apply to specific income must be allocated between your gross income subject to U. Filing military taxes S. Filing military taxes income tax and your total gross income from all sources. Filing military taxes The example given later shows how to figure the deductible part of each type of expense that is not related to specific income. Filing military taxes Example. Filing military taxes In 2013, you and your spouse are both under 65 and U. Filing military taxes S. Filing military taxes citizens who are bona fide residents of Puerto Rico during the entire tax year. Filing military taxes You file a joint income tax return. Filing military taxes During 2013, you earned $20,000 from Puerto Rican sources (excluded from U. Filing military taxes S. Filing military taxes gross income) and your spouse earned $60,000 from the U. Filing military taxes S. Filing military taxes Government. Filing military taxes You have $16,000 of itemized deductions that do not apply to any specific type of income. Filing military taxes These are medical expenses of $4,000, real estate taxes of $5,000, home mortgage interest of $6,000, and charitable contributions of $1,000 (cash contributions). Filing military taxes You determine the amount of each deduction that you can claim on your Schedule A (Form 1040), Itemized Deductions, by multiplying the deduction by the fraction shown under Figuring the deduction , earlier under Deductions if Possession Income is Excluded. Filing military taxes   Medical Expenses   $60,000$80,000 × $4,000 = $3,000  (enter on line 1  of Schedule A)     Real Estate Taxes   $60,000$80,000 × $5,000 = $3,750  (enter on line 6  of Schedule A)     Home Mortgage Interest   $60,000$80,000 × $6,000 = $4,500  (enter on line 10 or 11 of  Schedule A)     Charitable Contributions (cash contributions)   $60,000$80,000 × $1,000 = $750  (enter on line 16 of Schedule A)   Enter on Schedule A (Form 1040) only the allowable portion of each deduction. Filing military taxes Overall limitation on itemized deductions. Filing military taxes   If your adjusted gross income (discussed earlier) is over $300,000 if married filing jointly or qualifying widow(er); $275,000 if head of household; $250,000 if single; or $150,000 if married filing separately; see the Itemized Deductions Worksheet in the Instructions for Schedule A (Form 1040), to figure your itemized deductions. Filing military taxes Personal Exemptions Personal exemptions are allowed in full even if excluding possession income. Filing military taxes However, depending upon your adjusted gross income and filing status, the amount you can deduct may be reduced. Filing military taxes See the Deduction for Exemptions Worksheet—Line 42 in the instructions for Form 1040. Filing military taxes Foreign Tax Credit if Possession Income Is Excluded If you must report American Samoa or Puerto Rico source income on your U. Filing military taxes S. Filing military taxes tax return, you can claim a foreign tax credit for income taxes paid to the possession on that income. Filing military taxes However, you cannot claim a foreign tax credit for taxes paid on possession income that is excluded on your U. Filing military taxes S. Filing military taxes tax return. Filing military taxes The foreign tax credit is generally figured on Form 1116. Filing military taxes If you have income, such as U. Filing military taxes S. Filing military taxes Government wages, that is not excludable, and you also have possession source income that is excludable, you must figure the credit by reducing your foreign taxes paid or accrued by the taxes based on the excluded income. Filing military taxes You make this reduction for each separate income category. Filing military taxes To find the amount of this reduction, use the following formula for each income category. Filing military taxes Excluded income from possession sources less deductible expenses based on that income x Tax paid or accrued to the possession = Reduction in foreign taxes Total income subject to possession tax less deductible expenses based on that income Enter the amount of the reduction on Form 1116, line 12. Filing military taxes For more information on the foreign tax credit, see Publication 514. Filing military taxes Example. Filing military taxes Jason and Lynn Reddy are U. Filing military taxes S. Filing military taxes citizens who were bona fide residents of Puerto Rico during all of 2013. Filing military taxes They file a joint tax return. Filing military taxes The following table shows their excludable and taxable income for U. Filing military taxes S. Filing military taxes federal income tax purposes. Filing military taxes   Taxable   Excludable Jason's wages from  U. Filing military taxes S. Filing military taxes Government $25,000     Lynn's wages from Puerto Rico  corp. Filing military taxes     $15,000 Dividend from Puerto Rico corp. Filing military taxes doing business in Puerto Rico     200 Dividend from U. Filing military taxes S. Filing military taxes  corp. Filing military taxes doing business  in U. Filing military taxes S. Filing military taxes * 1,000     Totals $26,000   $15,200 * Income from sources outside Puerto Rico is taxable. Filing military taxes   Jason and Lynn must file 2013 income tax returns with both Puerto Rico and the United States. Filing military taxes They have gross income of $26,000 for U. Filing military taxes S. Filing military taxes tax purposes. Filing military taxes They paid taxes to Puerto Rico of $4,000 ($3,980 on their wages and $20 on the dividend from the Puerto Rico corporation). Filing military taxes They figure their foreign tax credit on two Forms 1116, which they must attach to their U. Filing military taxes S. Filing military taxes return. Filing military taxes They fill out one Form 1116 for wages and one Form 1116 for the dividend. Filing military taxes Jason and Lynn figure the Puerto Rico taxes on excluded income as follows. Filing military taxes   Wages: ($15,000 ÷ $40,000) × $3,980 = $1,493   Dividend: ($200 ÷ $200) × $20 = $20 They enter $1,493 on Form 1116, line 12, for wages and $20 on the second Form 1116, line 12, for the dividend. Filing military taxes Self-Employment Tax Self-employment tax includes both social security and Medicare taxes for individuals who are self-employed. Filing military taxes A U. Filing military taxes S. Filing military taxes citizen or resident alien who is self-employed must pay self-employment tax on net self-employment earnings of $400 or more. Filing military taxes This rule applies whether or not the earnings are excludable from gross income (or whether or not a U. Filing military taxes S. Filing military taxes income tax return must otherwise be filed). Filing military taxes Bona fide residents of the possessions discussed in this publication are considered U. Filing military taxes S. Filing military taxes residents for this purpose and are subject to the self-employment tax. Filing military taxes Forms to file. Filing military taxes   If you have net self-employment income and are subject to self-employment tax, file one of the following with the United States. Filing military taxes If you are required to file Form 1040 with the United States, complete Schedule SE (Form 1040) and attach it to your Form 1040. Filing military taxes If you are not required to file Form 1040 with the United States and you are a bona fide resident of American Samoa, the CNMI, Guam, Puerto Rico, or the USVI, file Form 1040-SS. Filing military taxes If you are a resident of Puerto Rico, you can file the Spanish-language Form 1040-PR instead. Filing military taxes Do not file forms 1040-SS or 1040-PR with Form 1040. Filing military taxes If you are required to pay Additional Medicare Tax (discussed later) on your self-employment income, attach Form 8959, Additional Medicare Tax to Form 1040, Form 1040-SS, or Form 1040-PR, as applicable. Filing military taxes Chapter 11 Bankruptcy cases. Filing military taxes   While you are a debtor in a chapter 11 bankruptcy case, your net profit or loss from self-employment will be included on the income tax return (Form 1041, U. Filing military taxes S. Filing military taxes Income Tax Return for Estates and Trusts) of the bankruptcy estate. Filing military taxes However, you—not the bankruptcy estate—are responsible for paying self-employment tax on your net earnings from self-employment. Filing military taxes   Use Schedule SE (Form 1040), Form 1040-SS, or Form 1040-PR, as determined above, to figure your correct amount of self-employment tax. Filing military taxes   For other reporting requirements, see Chapter 11 Bankruptcy Cases in the Instructions for Form 1040. Filing military taxes Additional Medicare Tax Beginning in 2013, a 0. Filing military taxes 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 if single, head of household, or qualifying widow(er). Filing military taxes Medicare wages and self-employment income are combined to determine if income exceeds the threshold. Filing military taxes A self-employment loss should not be considered for purposes of this tax. Filing military taxes RRTA compensation should be separately compared to the threshold. Filing military taxes Your employer is responsible for withholding the 0. Filing military taxes 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000. Filing military taxes You should consider this withholding, if applicable, in determining whether you need to make estimated tax payments. Filing military taxes There are no special rules for U. Filing military taxes S. Filing military taxes citizens and nonresident aliens living abroad for purposes of this provision. Filing military taxes Wages, RRTA compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold. Filing military taxes For more information, see Form 8959, Additional Medicare Tax, and its instructions or visit www. Filing military taxes irs. Filing military taxes gov and enter the following words in the search box: Additional Medicare Tax. Filing military taxes You cannot include the Additional Medicare Tax as a deductible part of your self-employment tax. Filing military taxes Net Investment Income Tax Beginning in 2013, the Net Investment Income Tax (NIIT) imposes a 3. Filing military taxes 8% tax on the lesser of an individual’s net investment income or the excess of the individual’s modified adjusted gross income over a specified threshold amount. Filing military taxes Bona fide residents of Puerto Rico and American Samoa who may have a federal income tax return filing obligation may be liable for the NIIT if the taxpayer’s modified adjusted gross income from non-territory sources exceeds a specified threshold amount. Filing military taxes The NIIT does not apply to any individual who is a nonresident alien with respect to the United States. Filing military taxes Bona fide residents must take into account any additional tax liability associated with the NIIT when calculating your estimated tax payments. Filing military taxes Forms to file. Filing military taxes   If you are a bona fide resident of American Samoa and Puerto Rico and you are required to pay the NIIT, you must file Form 1040 with the United States and attach Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts. Filing military taxes For more information, see Form 8960 and its instructions. Filing military taxes Paying Your Taxes You may find that not all of your income tax has been paid through withholding by either the United States or the possession. Filing military taxes This is often true if you have income that is not subject to withholding, such as self-employment, interest, or rental income. Filing military taxes In this situation, you may need to make estimated tax payments. Filing military taxes Estimated Tax If your estimated income tax obligation is to the United States, use the worksheet in the Form 1040-ES package to figure your estimated tax, including self-employment tax. Filing military taxes Include the Additional Medicare Tax and Net Investment Income Tax if applicable. Filing military taxes If you are paying by check or money order, use the payment vouchers in the Form 1040-ES package. Filing military taxes Or, you can make your payments electronically and not have to file any paper forms. Filing military taxes See the Form 1040-ES instructions for information on making payments. Filing military taxes Double Taxation Mutual agreement procedures exist to settle issues where there is inconsistent tax treatment between the IRS and the taxing authorities of the following possessions. Filing military taxes American Samoa. Filing military taxes The Commonwealth of Puerto Rico. Filing military taxes The Commonwealth of the Northern Mariana Islands. Filing military taxes Guam. Filing military taxes The U. Filing military taxes S. Filing military taxes Virgin Islands. Filing military taxes These issues usually involve allocations of income, deductions, credits, or allowances between related persons; determinations of residency; and determinations of the source of income and related expenses. Filing military taxes Competent Authority Assistance The tax coordination agreements between the United States and the possession tax departments contain provisions allowing the competent authorities of the United States and the relevant possession to resolve, by mutual agreement, inconsistent tax treatment by the two jurisdictions. Filing military taxes How to make your request. Filing military taxes   Your request for competent authority assistance must include all the information listed in Revenue Procedure 2006-23, 2006-20 I. Filing military taxes R. Filing military taxes B. Filing military taxes 900 available at www. Filing military taxes irs. Filing military taxes gov/pub/irs-irbs/irb06-49. Filing military taxes pdf. Filing military taxes    Also, see Notice 2013-78, which provides proposed updates to the procedures for requesting U. Filing military taxes S. Filing military taxes competent authority assistance under tax treaties. Filing military taxes As noted, an update to Revenue Procedure 2006-23 will be published in the future. Filing military taxes   Your request must be in the form of a letter addressed to the Deputy Commissioner (International) LB&I. Filing military taxes It must contain a statement that competent authority assistance is requested under the mutual agreement procedure with the possession. Filing military taxes You (or a person having authority to sign your federal return) must sign and date the request. Filing military taxes    Send your written request for U. Filing military taxes S. Filing military taxes assistance under this procedure to:   Deputy Commissioner (International) Large Business and International Division Internal Revenue Service 1111 Constitution Avenue, N. Filing military taxes W. Filing military taxes  Routing: M4-365 Washington, DC 20224 (Attention: TAIT) Nonresident aliens generally must present their initial request for assistance to the relevant possession tax agency. Filing military taxes Credit or Refund In addition to the tax assistance request, if you seek a credit or refund of any overpayment of U. Filing military taxes S. Filing military taxes tax paid on the income in question, you should file a claim on Form 1040X, Amended U. Filing military taxes S. Filing military taxes Individual Income Tax Return. Filing military taxes Indicate on the form that a request for assistance under the mutual agreement procedure with the possession has been filed. Filing military taxes Attach a copy of the request to the form. Filing military taxes Also, you should take whatever steps must be taken under the possession tax code to prevent the expiration of the statutory period for filing a claim for credit or refund of a possession tax. Filing military taxes See Revenue Procedure 2006-54 (or its successor), section 9, for complete information. Filing military taxes Prev  Up  Next   Home   More Online Publications
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The Filing Military Taxes

Filing military taxes 5. Filing military taxes   Personal Use of Dwelling Unit (Including Vacation Home) Table of Contents Dividing Expenses Dwelling Unit Used as a HomeMain home. Filing military taxes Shared equity financing agreement. Filing military taxes Donation of use of the property. Filing military taxes Examples. Filing military taxes Days used for repairs and maintenance. Filing military taxes Days used as a main home before or after renting. Filing military taxes Reporting Income and DeductionsNot used as a home. Filing military taxes Used as a home but rented less than 15 days. Filing military taxes Used as a home and rented 15 days or more. Filing military taxes If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. Filing military taxes In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. Filing military taxes Only your rental expenses may deducted on Schedule E (Form 1040). Filing military taxes Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). Filing military taxes You must also determine if the dwelling unit is considered a home. Filing military taxes The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. Filing military taxes Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. Filing military taxes There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year. Filing military taxes Dwelling unit. Filing military taxes   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. Filing military taxes It also includes all structures or other property belonging to the dwelling unit. Filing military taxes A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. Filing military taxes   A dwelling unit does not include property (or part of the property) used solely as a hotel, motel, inn, or similar establishment. Filing military taxes Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. Filing military taxes Example. Filing military taxes You rent a room in your home that is always available for short-term occupancy by paying customers. Filing military taxes You do not use the room yourself and you allow only paying customers to use the room. Filing military taxes This room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. Filing military taxes Dividing Expenses If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. Filing military taxes When dividing your expenses, follow these rules. Filing military taxes Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. Filing military taxes (This rule does not apply when determining whether you used the unit as a home. Filing military taxes ) Any day that the unit is available for rent but not actually rented is not a day of rental use. Filing military taxes Fair rental price. Filing military taxes   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. Filing military taxes The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. Filing military taxes   Ask yourself the following questions when comparing another property with yours. Filing military taxes Is it used for the same purpose? Is it approximately the same size? Is it in approximately the same condition? Does it have similar furnishings? Is it in a similar location? If any of the answers are no, the properties probably are not similar. Filing military taxes Example. Filing military taxes Your beach cottage was available for rent from June 1 through August 31 (92 days). Filing military taxes Except for the first week in August (7 days), when you were unable to find a renter, you rented the cottage at a fair rental price during that time. Filing military taxes The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. Filing military taxes Your family also used the cottage during the last 2 weeks of May (14 days). Filing military taxes The cottage was not used at all before May 17 or after August 31. Filing military taxes You figure the part of the cottage expenses to treat as rental expenses as follows. Filing military taxes The cottage was used for rental a total of 85 days (92 − 7). Filing military taxes The days it was available for rent but not rented (7 days) are not days of rental use. Filing military taxes The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. Filing military taxes You used the cottage for personal purposes for 14 days (the last 2 weeks in May). Filing military taxes The total use of the cottage was 99 days (14 days personal use + 85 days rental use). Filing military taxes Your rental expenses are 85/99 (86%) of the cottage expenses. Filing military taxes Note. Filing military taxes When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. Filing military taxes Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. Filing military taxes Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. Filing military taxes If you have a net loss, you may not be able to deduct all of the rental expenses. Filing military taxes See Dwelling Unit Used as a Home, next. Filing military taxes Dwelling Unit Used as a Home If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home. Filing military taxes You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of: 14 days, or 10% of the total days it is rented to others at a fair rental price. Filing military taxes See What is a day of personal use , later. Filing military taxes If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price (discussed earlier), do not count that day as a day of rental use in applying (2) above. Filing military taxes Instead, count it as a day of personal use in applying both (1) and (2) above. Filing military taxes What is a day of personal use?   A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons. Filing military taxes You or any other person who owns an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). Filing military taxes However, see Days used as a main home before or after renting , later. Filing military taxes A member of your family or a member of the family of any other person who owns an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Filing military taxes Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. Filing military taxes ), and lineal descendants (children, grandchildren, etc. Filing military taxes ). Filing military taxes Anyone under an arrangement that lets you use some other dwelling unit. Filing military taxes Anyone at less than a fair rental price. Filing military taxes Main home. Filing military taxes   If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. Filing military taxes Shared equity financing agreement. Filing military taxes   This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. Filing military taxes Donation of use of the property. Filing military taxes   You use a dwelling unit for personal purposes if: You donate the use of the unit to a charitable organization, The organization sells the use of the unit at a fund-raising event, and The “purchaser” uses the unit. Filing military taxes Examples. Filing military taxes   The following examples show how to determine if you have days of personal use. Filing military taxes Example 1. Filing military taxes You and your neighbor are co-owners of a condominium at the beach. Filing military taxes Last year, you rented the unit to vacationers whenever possible. Filing military taxes The unit was not used as a main home by anyone. Filing military taxes Your neighbor used the unit for 2 weeks last year; you did not use it at all. Filing military taxes Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. Filing military taxes Example 2. Filing military taxes You and your neighbors are co-owners of a house under a shared equity financing agreement. Filing military taxes Your neighbors live in the house and pay you a fair rental price. Filing military taxes Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. Filing military taxes This is because your neighbors rent the house as their main home under a shared equity financing agreement. Filing military taxes Example 3. Filing military taxes You own a rental property that you rent to your son. Filing military taxes Your son does not own any interest in this property. Filing military taxes He uses it as his main home and pays you a fair rental price. Filing military taxes Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. Filing military taxes Example 4. Filing military taxes You rent your beach house to Rosa. Filing military taxes Rosa rents her cabin in the mountains to you. Filing military taxes You each pay a fair rental price. Filing military taxes You are using your beach house for personal purposes on the days that Rosa uses it because your house is used by Rosa under an arrangement that allows you to use her cabin. Filing military taxes Example 5. Filing military taxes You rent an apartment to your mother at less than a fair rental price. Filing military taxes You are using the apartment for personal purposes on the days that your mother rents it because you rent it for less than a fair rental price. Filing military taxes Days used for repairs and maintenance. Filing military taxes   Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. Filing military taxes Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. Filing military taxes Example. Filing military taxes Corey owns a cabin in the mountains that he rents for most of the year. Filing military taxes He spends a week at the cabin with family members. Filing military taxes Corey works on maintenance of the cabin 3 or 4 hours each day during the week and spends the rest of the time fishing, hiking, and relaxing. Filing military taxes Corey's family members, however, work substantially full time on the cabin each day during the week. Filing military taxes The main purpose of being at the cabin that week is to do maintenance work. Filing military taxes Therefore, the use of the cabin during the week by Corey and his family will not be considered personal use by Corey. Filing military taxes Days used as a main home before or after renting. Filing military taxes   For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. Filing military taxes Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. Filing military taxes You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold or exchanged the property. Filing military taxes However, this special rule does not apply when dividing expenses between rental and personal use. Filing military taxes See Property Changed to Rental Use in chapter 4. Filing military taxes Example 1. Filing military taxes On February 29, 2012, you moved out of the house you had lived in for 6 years because you accepted a job in another town. Filing military taxes You rented your house at a fair rental price from March 15, 2012, to May 14, 2013 (14 months). Filing military taxes On June 1, 2013, you moved back into your old house. Filing military taxes The days you used the house as your main home from January 1 to February 29, 2012, and from June 1 to December 31, 2013, are not counted as days of personal use. Filing military taxes Therefore, you would use the rules in chapter 1 when figuring your rental income and expenses. Filing military taxes Example 2. Filing military taxes On January 31, you moved out of the condominium where you had lived for 3 years. Filing military taxes You offered it for rent at a fair rental price beginning on February 1. Filing military taxes You were unable to rent it until April. Filing military taxes On September 15, you sold the condominium. Filing military taxes The days you used the condominium as your main home from January 1 to January 31 are not counted as days of personal use when determining whether you used it as a home. Filing military taxes Examples. Filing military taxes   The following examples show how to determine whether you used your rental property as a home. Filing military taxes Example 1. Filing military taxes You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. Filing military taxes You rented the basement apartment at a fair rental price to college students during the regular school year. Filing military taxes You rented to them on a 9-month lease (273 days). Filing military taxes You figured 10% of the total days rented to others at a fair rental price is 27 days. Filing military taxes During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. Filing military taxes Your basement apartment was used as a home because you used it for personal purposes for 30 days. Filing military taxes Rent-free use by your brothers is considered personal use. Filing military taxes Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). Filing military taxes Example 2. Filing military taxes You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). Filing military taxes Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. Filing military taxes You figured 10% of the total days rented to others at a fair rental price is 3 days. Filing military taxes The room was used as a home because you used it for personal purposes for 21 days. Filing military taxes That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). Filing military taxes Example 3. Filing military taxes You own a condominium apartment in a resort area. Filing military taxes You rented it at a fair rental price for a total of 170 days during the year. Filing military taxes For 12 of these days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. Filing military taxes Your family actually used the apartment for 10 of those days. Filing military taxes Therefore, the apartment is treated as having been rented for 160 (170 – 10) days. Filing military taxes You figured 10% of the total days rented to others at a fair rental price is 16 days. Filing military taxes Your family also used the apartment for 7 other days during the year. Filing military taxes You used the apartment as a home because you used it for personal purposes for 17 days. Filing military taxes That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). Filing military taxes Minimal rental use. Filing military taxes   If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. Filing military taxes See Used as a home but rented less than 15 days, later, for more information. Filing military taxes Limit on deductions. Filing military taxes   Renting a dwelling unit that is considered a home is not a passive activity. Filing military taxes Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. Filing military taxes The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. Filing military taxes Any expenses carried forward to the next year will be subject to any limits that apply for that year. Filing military taxes This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year. Filing military taxes   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 5–1. Filing military taxes Reporting Income and Deductions Property not used for personal purposes. Filing military taxes   If you do not use a dwelling unit for personal purposes, see chapter 3 for how to report your rental income and expenses. Filing military taxes Property used for personal purposes. Filing military taxes   If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home. Filing military taxes Not used as a home. Filing military taxes   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. Filing military taxes Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in this chapter under Dividing Expenses . Filing military taxes The expenses for personal use are not deductible as rental expenses. Filing military taxes   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses in chapter 3. Filing military taxes Used as a home but rented less than 15 days. Filing military taxes   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). Filing military taxes You are not required to report the rental income and rental expenses from this activity. Filing military taxes The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). Filing military taxes See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. Filing military taxes Used as a home and rented 15 days or more. Filing military taxes   If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. Filing military taxes Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in this chapter under Dividing Expenses . Filing military taxes The expenses for personal use are not deductible as rental expenses. Filing military taxes   If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. Filing military taxes You do not need to use Worksheet 5-1. Filing military taxes   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. Filing military taxes To figure your deductible rental expenses and any carryover to next year, use Worksheet 5–1. Filing military taxes Worksheet 5-1. Filing military taxes Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Use this worksheet only if you answer “yes” to all of the following questions. Filing military taxes Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . Filing military taxes ) Did you rent the dwelling unit at a fair rental price 15 days or more this year? Is the total of your rental expenses and depreciation more than your rental income? PART I. Filing military taxes Rental Use Percentage A. Filing military taxes Total days available for rent at fair rental price A. Filing military taxes       B. Filing military taxes Total days available for rent (line A) but not rented B. Filing military taxes       C. Filing military taxes Total days of rental use. Filing military taxes Subtract line B from line A C. Filing military taxes       D. Filing military taxes Total days of personal use (including days rented at less than fair rental price) D. Filing military taxes       E. Filing military taxes Total days of rental and personal use. Filing military taxes Add lines C and D E. Filing military taxes       F. Filing military taxes Percentage of expenses allowed for rental. Filing military taxes Divide line C by line E     F. Filing military taxes . Filing military taxes PART II. Filing military taxes Allowable Rental Expenses 1. Filing military taxes Enter rents received 1. Filing military taxes   2a. Filing military taxes Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. Filing military taxes       b. Filing military taxes Enter the rental portion of real estate taxes b. Filing military taxes       c. Filing military taxes Enter the rental portion of deductible casualty and theft losses (see instructions) c. Filing military taxes       d. Filing military taxes Enter direct rental expenses (see instructions) d. Filing military taxes       e. Filing military taxes Fully deductible rental expenses. Filing military taxes Add lines 2a–2d. Filing military taxes Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. Filing military taxes   3. Filing military taxes Subtract line 2e from line 1. Filing military taxes If zero or less, enter -0- 3. Filing military taxes   4a. Filing military taxes Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. Filing military taxes       b. Filing military taxes Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. Filing military taxes       c. Filing military taxes Carryover of operating expenses from 2012 worksheet c. Filing military taxes       d. Filing military taxes Add lines 4a–4c d. Filing military taxes       e. Filing military taxes Allowable expenses. Filing military taxes Enter the smaller of line 3 or line 4d (see instructions) 4e. Filing military taxes   5. Filing military taxes Subtract line 4e from line 3. Filing military taxes If zero or less, enter -0- 5. Filing military taxes   6a. Filing military taxes Enter the rental portion of excess casualty and theft losses (see instructions) 6a. Filing military taxes       b. Filing military taxes Enter the rental portion of depreciation of the dwelling unit b. Filing military taxes       c. Filing military taxes Carryover of excess casualty losses and depreciation from 2012 worksheet c. Filing military taxes       d. Filing military taxes Add lines 6a–6c d. Filing military taxes       e. Filing military taxes Allowable excess casualty and theft losses and depreciation. Filing military taxes Enter the smaller of  line 5 or line 6d (see instructions) 6e. Filing military taxes   PART III. Filing military taxes Carryover of Unallowed Expenses to Next Year 7a. Filing military taxes Operating expenses to be carried over to next year. Filing military taxes Subtract line 4e from line 4d 7a. Filing military taxes   b. Filing military taxes Excess casualty and theft losses and depreciation to be carried over to next year. Filing military taxes  Subtract line 6e from line 6d b. Filing military taxes   Worksheet 5-1 Instructions. Filing military taxes Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. Filing military taxes Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4b, and 6a–6b of  Part II. Filing military taxes Line 2a. Filing military taxes Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. Filing military taxes Do not include interest on a loan that did not benefit the dwelling unit. Filing military taxes For example, do not include interest on a home equity loan used to pay off credit cards or other personal loans, buy a car, or pay college tuition. Filing military taxes Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. Filing military taxes Include the rental portion of this interest in the total you enter on line 2a of the worksheet. Filing military taxes   Figure the qualified mortgage insurance premiums on the dwelling unit that you could deduct on line 13 of Schedule A as if you had not rented the unit. Filing military taxes See the Schedule A instructions. Filing military taxes However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. Filing military taxes See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. Filing military taxes Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. Filing military taxes   Note. Filing military taxes Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. Filing military taxes Instead, figure the personal portion on a separate Schedule A. Filing military taxes If you have deducted mortgage interest or qualified mortgage insurance premiums on the dwelling unit on other forms, such as Schedule C or F, remember to reduce your Schedule A deduction by that amount. Filing military taxes           Line 2c. Filing military taxes Figure the casualty and theft losses related to the dwelling unit that you could deduct on Schedule A as if you had not rented the dwelling unit. Filing military taxes To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. Filing military taxes If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. Filing military taxes On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. Filing military taxes Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. Filing military taxes   Note. Filing military taxes Do not file this Form 4684 or use it to figure your personal losses on Schedule A. Filing military taxes Instead, figure the personal portion on a separate Form 4684. Filing military taxes           Line 2d. Filing military taxes Enter the total of your rental expenses that are directly related only to the rental activity. Filing military taxes These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. Filing military taxes Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. Filing military taxes           Line 2e. Filing military taxes You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses on Schedule E even if your rental expenses are more than your rental income. Filing military taxes Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. Filing military taxes           Line 4b. Filing military taxes On line 2a, you entered the rental portion of the mortgage interest or qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. Filing military taxes If you had additional mortgage interest and qualified mortgage insurance premiums that would not be deductible on Schedule A because of limits imposed on them, enter on line 4b of this worksheet the rental portion of those excess amounts. Filing military taxes Do not include interest on a loan that did not benefit the dwelling unit  (as explained in the line 2a instructions). Filing military taxes           Line 4e. Filing military taxes You can deduct the amounts on lines 4a, 4b, and 4c as rental expenses on Schedule E only to the extent they are not more than the amount on line 4e. Filing military taxes *           Line 6a. Filing military taxes To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. Filing military taxes   A. Filing military taxes Enter the amount from Form 4684, line 10       B. Filing military taxes Enter the rental portion of line A       C. Filing military taxes Enter the amount from line 2c of this worksheet       D. Filing military taxes Subtract line C from line B. Filing military taxes Enter the result here and on line 6a of this worksheet               Line 6e. Filing military taxes You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses on Schedule E only to the extent they are not more than the amount on line 6e. Filing military taxes * *Allocating the limited deduction. Filing military taxes If you cannot deduct all of the amount on line 4d or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4d or 6d. Filing military taxes Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. Filing military taxes Prev  Up  Next   Home   More Online Publications