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Full Time Student Filing Taxes

Full time student filing taxes 9. Full time student filing taxes   Rental Income and Expenses Table of Contents Introduction Useful Items - You may want to see: Rental Income Rental ExpensesVacant while listed for sale. Full time student filing taxes Repairs and Improvements Other Expenses Property Changed to Rental Use Renting Part of Property Not Rented for Profit Personal Use of Dwelling Unit (Including Vacation Home)Example. Full time student filing taxes Dividing Expenses Dwelling Unit Used as a Home Reporting Income and Deductions DepreciationChanging your accounting method to deduct unclaimed depreciation. Full time student filing taxes Limits on Rental LossesAt-Risk Rules Passive Activity Limits How To Report Rental Income and ExpensesSchedule E (Form 1040) Introduction This chapter discusses rental income and expenses. Full time student filing taxes It also covers the following topics. Full time student filing taxes Personal use of dwelling unit (including vacation home). Full time student filing taxes Depreciation. Full time student filing taxes Limits on rental losses. Full time student filing taxes How to report your rental income and expenses. Full time student filing taxes If you sell or otherwise dispose of your rental property, see Publication 544, Sales and Other Dispositions of Assets. Full time student filing taxes If you have a loss from damage to, or theft of, rental property, see Publication 547, Casualties, Disasters, and Thefts. Full time student filing taxes If you rent a condominium or a cooperative apartment, some special rules apply to you even though you receive the same tax treatment as other owners of rental property. Full time student filing taxes See Publication 527, Residential Rental Property, for more information. Full time student filing taxes Useful Items - You may want to see: Publication 527 Residential Rental Property 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 925 Passive Activity and At-Risk Rules 946 How To Depreciate Property Form (and Instructions) 4562 Depreciation and Amortization 6251 Alternative Minimum Tax—Individuals 8582 Passive Activity Loss Limitations Schedule E (Form 1040) Supplemental Income and Loss Rental Income In most cases, you must include in your gross income all amounts you receive as rent. Full time student filing taxes Rental income is any payment you receive for the use or occupation of property. Full time student filing taxes In addition to amounts you receive as normal rent payments, there are other amounts that may be rental income. Full time student filing taxes When to report. Full time student filing taxes   If you are a cash-basis taxpayer, you report rental income on your return for the year you actually or constructively receive it. Full time student filing taxes You are a cash-basis taxpayer if you report income in the year you receive it, regardless of when it was earned. Full time student filing taxes You constructively receive income when it is made available to you, for example, by being credited to your bank account. Full time student filing taxes   For more information about when you constructively receive income, see Accounting Methods in chapter 1. Full time student filing taxes Advance rent. Full time student filing taxes   Advance rent is any amount you receive before the period that it covers. Full time student filing taxes Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use. Full time student filing taxes Example. Full time student filing taxes You sign a 10-year lease to rent your property. Full time student filing taxes In the first year, you receive $5,000 for the first year's rent and $5,000 as rent for the last year of the lease. Full time student filing taxes You must include $10,000 in your income in the first year. Full time student filing taxes Canceling a lease. Full time student filing taxes   If your tenant pays you to cancel a lease, the amount you receive is rent. Full time student filing taxes Include the payment in your income in the year you receive it regardless of your method of accounting. Full time student filing taxes Expenses paid by tenant. Full time student filing taxes   If your tenant pays any of your expenses, the payments are rental income. Full time student filing taxes Because you must include this amount in income, you can deduct the expenses if they are deductible rental expenses. Full time student filing taxes See Rental Expenses , later, for more information. Full time student filing taxes Property or services. Full time student filing taxes   If you receive property or services, instead of money, as rent, include the fair market value of the property or services in your rental income. Full time student filing taxes   If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary. Full time student filing taxes Security deposits. Full time student filing taxes   Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. Full time student filing taxes But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year. Full time student filing taxes   If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. Full time student filing taxes Include it in your income when you receive it. Full time student filing taxes Part interest. Full time student filing taxes   If you own a part interest in rental property, you must report your part of the rental income from the property. Full time student filing taxes Rental of property also used as your home. Full time student filing taxes   If you rent property that you also use as your home and you rent it less than 15 days during the tax year, do not include the rent you receive in your income and do not deduct rental expenses. Full time student filing taxes However, you can deduct on Schedule A (Form 1040) the interest, taxes, and casualty and theft losses that are allowed for nonrental property. Full time student filing taxes See Personal Use of Dwelling Unit (Including Vacation Home) , later. Full time student filing taxes Rental Expenses This part discusses expenses of renting property that you ordinarily can deduct from your rental income. Full time student filing taxes It includes information on the expenses you can deduct if you rent part of your property, or if you change your property to rental use. Full time student filing taxes Depreciation , which you can also deduct from your rental income, is discussed later. Full time student filing taxes Personal use of rental property. Full time student filing taxes   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. Full time student filing taxes Also, your rental expense deductions may be limited. Full time student filing taxes See Personal Use of Dwelling Unit (Including Vacation Home) , later. Full time student filing taxes Part interest. Full time student filing taxes   If you own a part interest in rental property, you can deduct expenses that you paid according to your percentage of ownership. Full time student filing taxes When to deduct. Full time student filing taxes   If you are a cash-basis taxpayer, you generally deduct your rental expenses in the year you pay them. Full time student filing taxes Depreciation. Full time student filing taxes   You can begin to depreciate rental property when it is ready and available for rent. Full time student filing taxes See Placed-in-Service under When Does Depreciation Begin and End in chapter 2 of Publication 527. Full time student filing taxes Pre-rental expenses. Full time student filing taxes   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. Full time student filing taxes Uncollected rent. Full time student filing taxes   If you are a cash-basis taxpayer, do not deduct uncollected rent. Full time student filing taxes Because you have not included it in your income, it is not deductible. Full time student filing taxes Vacant rental property. Full time student filing taxes   If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. Full time student filing taxes However, you cannot deduct any loss of rental income for the period the property is vacant. Full time student filing taxes Vacant while listed for sale. Full time student filing taxes   If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. Full time student filing taxes If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. Full time student filing taxes Repairs and Improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense. Full time student filing taxes Improvements. Full time student filing taxes   You must capitalize any expense you pay to improve your rental property. Full time student filing taxes An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use. Full time student filing taxes Betterments. Full time student filing taxes   Expenses that may result in a betterment to your property include expenses for fixing a pre-existing defect or condition, enlarging or expanding your property, or increasing the capacity, strength, or quality of your property. Full time student filing taxes Restoration. Full time student filing taxes   Expenses that may be for restoration include expenses for replacing a substantial structural part of your property, repairing damage to your property after you properly adjusted the basis of your property as a result of a casualty loss, or rebuilding your property to a like-new condition. Full time student filing taxes Adaptation. Full time student filing taxes   Expenses that may be for adaptation include expenses for altering your property to a use that is not consistent with the intended ordinary use of your property when you began renting the property. Full time student filing taxes Separate the costs of repairs and improvements, and keep accurate records. Full time student filing taxes You will need to know the cost of improvements when you sell or depreciate your property. Full time student filing taxes The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. Full time student filing taxes Other Expenses Other expenses you can deduct from your rental income include advertising, cleaning and maintenance, utilities, fire and liability insurance, taxes, interest, commissions for the collection of rent, ordinary and necessary travel and transportation, and other expenses, discussed next. Full time student filing taxes Insurance premiums paid in advance. Full time student filing taxes   If you pay an insurance premium for more than one year in advance, for each year of coverage you can deduct the part of the premium payment that will apply to that year. Full time student filing taxes You cannot deduct the total premium in the year you pay it. Full time student filing taxes Legal and other professional fees. Full time student filing taxes   You can deduct, as a rental expense, legal and other professional expenses, such as tax return preparation fees you paid to prepare Schedule E (Form 1040), Part I. Full time student filing taxes For example, on your 2013 Schedule E, you can deduct fees paid in 2013 to prepare your 2012 Schedule E, Part I. Full time student filing taxes You can also deduct, as a rental expense, any expense (other than federal taxes and penalties) you paid to resolve a tax underpayment related to your rental activities. Full time student filing taxes Local benefit taxes. Full time student filing taxes   In most cases, you cannot deduct charges for local benefits that increase the value of your property, such as charges for putting in streets, sidewalks, or water and sewer systems. Full time student filing taxes These charges are nondepreciable capital expenditures, and must be added to the basis of your property. Full time student filing taxes However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. Full time student filing taxes Local transportation expenses. Full time student filing taxes    You may be able to deduct your ordinary and necessary local transportation expenses if you incur them to collect rental income or to manage, conserve, or maintain your rental property. Full time student filing taxes However, transportation expenses incurred to travel between your home and a rental property generally constitute nondeductible commuting costs unless you use your home as your principal place of business. Full time student filing taxes See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. Full time student filing taxes   Generally, if you use your personal car, pickup truck, or light van for rental activities, you can deduct the expenses using one of two methods: actual expenses or the standard mileage rate. Full time student filing taxes For 2013, the standard mileage rate for business use is 56. Full time student filing taxes 5 cents per mile. Full time student filing taxes For more information, see chapter 26. Full time student filing taxes    To deduct car expenses under either method, you must keep records that follow the rules in chapter 26. Full time student filing taxes In addition, you must complete Form 4562, Part V, and attach it to your tax return. Full time student filing taxes Rental of equipment. Full time student filing taxes   You can deduct the rent you pay for equipment that you use for rental purposes. Full time student filing taxes However, in some cases, lease contracts are actually purchase contracts. Full time student filing taxes If so, you cannot deduct these payments. Full time student filing taxes You can recover the cost of purchased equipment through depreciation. Full time student filing taxes Rental of property. Full time student filing taxes   You can deduct the rent you pay for property that you use for rental purposes. Full time student filing taxes If you buy a leasehold for rental purposes, you can deduct an equal part of the cost each year over the term of the lease. Full time student filing taxes Travel expenses. Full time student filing taxes   You can deduct the ordinary and necessary expenses of traveling away from home if the primary purpose of the trip is to collect rental income or to manage, conserve, or maintain your rental property. Full time student filing taxes You must properly allocate your expenses between rental and nonrental activities. Full time student filing taxes You cannot deduct the cost of traveling away from home if the primary purpose of the trip was to improve your property. Full time student filing taxes You recover the cost of improvements by taking depreciation. Full time student filing taxes For information on travel expenses, see chapter 26. Full time student filing taxes    To deduct travel expenses, you must keep records that follow the rules in chapter 26. Full time student filing taxes   See Rental Expenses in Publication 527 for more information. Full time student filing taxes Property Changed to Rental Use If you change your home or other property (or a part of it) to rental use at any time other than the beginning of your tax year, you must divide yearly expenses, such as taxes and insurance, between rental use and personal use. Full time student filing taxes You can deduct as rental expenses only the part of the expense that is for the part of the year the property was used or held for rental purposes. Full time student filing taxes You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. Full time student filing taxes However, you can include the home mortgage interest, qualified mortgage insurance premiums, and real estate tax expenses for the part of the year the property was held for personal use as an itemized deduction on Schedule A (Form 1040). Full time student filing taxes Example. Full time student filing taxes Your tax year is the calendar year. Full time student filing taxes You moved from your home in May and started renting it out on June 1. Full time student filing taxes You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. Full time student filing taxes Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. Full time student filing taxes Renting Part of Property If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. Full time student filing taxes You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). Full time student filing taxes You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity or painting the outside of your house. Full time student filing taxes There is no change in the types of expenses deductible for the personal-use part of your property. Full time student filing taxes Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). Full time student filing taxes You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. Full time student filing taxes You do not have to divide the expenses that belong only to the rental part of your property. Full time student filing taxes For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense. Full time student filing taxes If you install a second phone line strictly for your tenants' use, all of the cost of the second line is deductible as a rental expense. Full time student filing taxes You can deduct depreciation, discussed later, on the part of the house used for rental purposes as well as on the furniture and equipment you use for rental purposes. Full time student filing taxes How to divide expenses. Full time student filing taxes   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between the rental use and the personal use. Full time student filing taxes You can use any reasonable method for dividing the expense. Full time student filing taxes It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. Full time student filing taxes The two most common methods for dividing an expense are based on (1) the number of rooms in your home, and (2) the square footage of your home. Full time student filing taxes Not Rented for Profit If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. Full time student filing taxes You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. Full time student filing taxes For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Publication 535. Full time student filing taxes Where to report. Full time student filing taxes   Report your not-for-profit rental income on Form 1040, line 21. Full time student filing taxes For example, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions. Full time student filing taxes   If you itemize your deductions, claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on Form 1040, Schedule A, line 23. Full time student filing taxes You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. Full time student filing taxes Personal Use of Dwelling Unit (Including Vacation Home) 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. Full time student filing 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. Full time student filing taxes Only your rental expenses may be deducted on Schedule E (Form 1040). Full time student filing taxes Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). Full time student filing taxes You must also determine if the dwelling unit is considered a home. Full time student filing taxes The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. Full time student filing 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. Full time student filing 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. Full time student filing taxes Dwelling unit. Full time student filing taxes   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. Full time student filing taxes It also includes all structures or other property belonging to the dwelling unit. Full time student filing taxes A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. Full time student filing taxes   A dwelling unit does not include property used solely as a hotel, motel, inn, or similar establishment. Full time student filing 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. Full time student filing taxes Example. Full time student filing taxes   You rent a room in your home that is always available for short-term occupancy by paying customers. Full time student filing taxes You do not use the room yourself, and you allow only paying customers to use the room. Full time student filing taxes The room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. Full time student filing 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. Full time student filing taxes When dividing your expenses, follow these rules. Full time student filing 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. Full time student filing taxes This rule does not apply when determining whether you used the unit as a home. Full time student filing taxes Any day that the unit is available for rent but not actually rented is not a day of rental use. Full time student filing taxes Example. Full time student filing taxes Your beach cottage was available for rent from June 1 through August 31 (92 days). Full time student filing taxes During that time, 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. Full time student filing 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. Full time student filing taxes Your family also used the cottage during the last 2 weeks of May (14 days). Full time student filing taxes The cottage was not used at all before May 17 or after August 31. Full time student filing taxes You figure the part of the cottage expenses to treat as rental expenses as follows. Full time student filing taxes The cottage was used for rental a total of 85 days (92 − 7). Full time student filing taxes The days it was available for rent but not rented (7 days) are not days of rental use. Full time student filing taxes The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. Full time student filing taxes You used the cottage for personal purposes for 14 days (the last 2 weeks in May). Full time student filing taxes The total use of the cottage was 99 days (14 days personal use + 85 days rental use). Full time student filing taxes Your rental expenses are 85/99 (86%) of the cottage expenses. Full time student filing taxes Note. Full time student filing 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. Full time student filing taxes Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. Full time student filing 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. Full time student filing taxes If you have a net loss, you may not be able to deduct all of the rental expenses. Full time student filing taxes See Dwelling Unit Used as a Home, next. Full time student filing 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. Full time student filing 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. Full time student filing taxes See What is a day of personal use , later. Full time student filing taxes Fair rental price. Full time student filing 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. Full time student filing 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. Full time student filing taxes   If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price, do not count that day as a day of rental use in applying (2) above. Full time student filing taxes Instead, count it as a day of personal use in applying both (1) and (2) above. Full time student filing 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. Full time student filing taxes You or any other person who has an interest in the unit, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). Full time student filing taxes However, see Days used as a main home before or after renting , later. Full time student filing taxes A member of your family or a member of the family of any other person who owns an interest in the unit, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Full time student filing taxes Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. Full time student filing taxes ), and lineal descendants (children, grandchildren, etc. Full time student filing taxes ). Full time student filing taxes Anyone under an arrangement that lets you use some other dwelling unit. Full time student filing taxes Anyone at less than a fair rental price. Full time student filing taxes Main home. Full time student filing 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. Full time student filing taxes Shared equity financing agreement. Full time student filing 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. Full time student filing taxes Donation of use of property. Full time student filing 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. Full time student filing taxes Examples. Full time student filing taxes   The following examples show how to determine days of personal use. Full time student filing taxes Example 1. Full time student filing taxes You and your neighbor are co-owners of a condominium at the beach. Full time student filing taxes Last year, you rented the unit to vacationers whenever possible. Full time student filing taxes The unit was not used as a main home by anyone. Full time student filing taxes Your neighbor used the unit for 2 weeks last year; you did not use it at all. Full time student filing 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. Full time student filing taxes Example 2. Full time student filing taxes You and your neighbors are co-owners of a house under a shared equity financing agreement. Full time student filing taxes Your neighbors live in the house and pay you a fair rental price. Full time student filing 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. Full time student filing taxes This is because your neighbors rent the house as their main home under a shared equity financing agreement. Full time student filing taxes Example 3. Full time student filing taxes You own a rental property that you rent to your son. Full time student filing taxes Your son does not own any interest in this property. Full time student filing taxes He uses it as his main home and pays you a fair rental price. Full time student filing 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. Full time student filing taxes Example 4. Full time student filing taxes You rent your beach house to Joshua. Full time student filing taxes Joshua rents his cabin in the mountains to you. Full time student filing taxes You each pay a fair rental price. Full time student filing taxes You are using your house for personal purposes on the days that Joshua uses it because your house is used by Joshua under an arrangement that allows you to use his house. Full time student filing taxes Days used for repairs and maintenance. Full time student filing 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. Full time student filing 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. Full time student filing taxes Days used as a main home before or after renting. Full time student filing 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. Full time student filing 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. Full time student filing 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. Full time student filing taxes However, this special rule does not apply when dividing expenses between rental and personal use. Full time student filing taxes Examples. Full time student filing taxes   The following examples show how to determine whether you used your rental property as a home. Full time student filing taxes Example 1. Full time student filing taxes You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. Full time student filing taxes You rented the basement apartment at a fair rental price to college students during the regular school year. Full time student filing taxes You rented to them on a 9-month lease (273 days). Full time student filing taxes You figured 10% of the total days rented to others at a fair rental price is 27 days. Full time student filing taxes During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. Full time student filing taxes Your basement apartment was used as a home because you used it for personal purposes for 30 days. Full time student filing taxes Rent-free use by your brothers is considered personal use. Full time student filing 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). Full time student filing taxes Example 2. Full time student filing 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). Full time student filing taxes Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. Full time student filing taxes You figured 10% of the total days rented to others at a fair rental price is 3 days. Full time student filing taxes The room was used as a home because you used it for personal purposes for 21 days. Full time student filing taxes That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). Full time student filing taxes Example 3. Full time student filing taxes You own a condominium apartment in a resort area. Full time student filing taxes You rented it at a fair rental price for a total of 170 days during the year. Full time student filing taxes For 12 of those 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. Full time student filing taxes Your family actually used the apartment for 10 of those days. Full time student filing taxes Therefore, the apartment is treated as having been rented for 160 (170 − 10) days. Full time student filing taxes You figured 10% of the total days rented to others at a fair rental price is 16 days. Full time student filing taxes Your family also used the apartment for 7 other days during the year. Full time student filing taxes You used the apartment as a home because you used it for personal purposes for 17 days. Full time student filing taxes That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). Full time student filing taxes Minimal rental use. Full time student filing 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. Full time student filing taxes See Used as a home but rented less than 15 days , later, for more information. Full time student filing taxes Limit on deductions. Full time student filing taxes   Renting a dwelling unit that is considered a home is not a passive activity. Full time student filing 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. Full time student filing 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. Full time student filing taxes Any expenses carried forward to the next year will be subject to any limits that apply for that year. Full time student filing 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. Full time student filing taxes   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 9-1. Full time student filing taxes Reporting Income and Deductions Property not used for personal purposes. Full time student filing taxes   If you do not use a dwelling unit for personal purposes, see How To Report Rental Income and Expenses , later, for how to report your rental income and expenses. Full time student filing taxes Property used for personal purposes. Full time student filing 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. Full time student filing taxes Not used as a home. Full time student filing taxes   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. Full time student filing 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 Dividing Expenses . Full time student filing taxes The expenses for personal use are not deductible as rental expenses. Full time student filing taxes   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses , later. Full time student filing taxes Used as a home but rented less than 15 days. Full time student filing 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). Full time student filing taxes You are not required to report the rental income and rental expenses from this activity. Full time student filing 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). Full time student filing taxes See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. Full time student filing taxes Used as a home and rented 15 days or more. Full time student filing 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. Full time student filing 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 Dividing Expenses . Full time student filing taxes The expenses for personal use are not deductible as rental expenses. Full time student filing 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. Full time student filing taxes You do not need to use Worksheet 9-1. Full time student filing taxes   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. Full time student filing taxes To figure your deductible rental expenses and any carryover to next year, use Worksheet 9-1. Full time student filing taxes Depreciation You recover the cost of income-producing property through yearly tax deductions. Full time student filing taxes You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. Full time student filing taxes Three factors determine how much depreciation you can deduct each year: (1) your basis in the property, (2) the recovery period for the property, and (3) the depreciation method used. Full time student filing taxes You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures, and equipment, as an expense. Full time student filing taxes You can deduct depreciation only on the part of your property used for rental purposes. Full time student filing taxes Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. Full time student filing taxes You may have to use Form 4562 to figure and report your depreciation. Full time student filing taxes See How To Report Rental Income and Expenses , later. Full time student filing taxes Alternative minimum tax (AMT). Full time student filing taxes    If you use accelerated depreciation, you may be subject to the AMT. Full time student filing taxes Accelerated depreciation allows you to deduct more depreciation earlier in the recovery period than you could deduct using a straight line method (same deduction each year). Full time student filing taxes Claiming the correct amount of depreciation. Full time student filing taxes   You should claim the correct amount of depreciation each tax year. Full time student filing taxes If you did not claim all the depreciation you were entitled to deduct, you must still reduce your basis in the property by the full amount of depreciation that you could have deducted. Full time student filing taxes   If you deducted an incorrect amount of depreciation for property in any year, you may be able to make a correction by filing Form 1040X, Amended U. Full time student filing taxes S Individual Income Tax Return. Full time student filing taxes If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amount of depreciation. Full time student filing taxes See Claiming the correct amount of depreciation in chapter 2 of Publication 527 for more information. Full time student filing taxes Changing your accounting method to deduct unclaimed depreciation. Full time student filing taxes   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. Full time student filing taxes In some instances, that consent is automatic. Full time student filing taxes For more information, see chapter 1 of Publication 946. Full time student filing taxes Land. Full time student filing taxes   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. Full time student filing taxes The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. Full time student filing taxes More information. Full time student filing taxes   See Publication 527 for more information about depreciating rental property and see Publication 946 for more information about depreciation. Full time student filing taxes Limits on Rental Losses If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can deduct. Full time student filing taxes You must consider these rules in the order shown below. Full time student filing taxes At-risk rules. Full time student filing taxes These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. Full time student filing taxes This applies only if the real property was placed in service after 1986. Full time student filing taxes Passive activity limits. Full time student filing taxes Generally, rental real estate activities are considered passive activities and losses are not deductible unless you have income from other passive activities to offset them. Full time student filing taxes However, there are exceptions. Full time student filing taxes At-Risk Rules You may be subject to the at-risk rules if you have: A loss from an activity carried on as a trade or business or for the production of income, and Amounts invested in the activity for which you are not fully at risk. Full time student filing taxes Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. Full time student filing taxes In most cases, any loss from an activity subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year. Full time student filing taxes You are considered at risk in an activity to the extent of cash and the adjusted basis of other property you contributed to the activity and certain amounts borrowed for use in the activity. Full time student filing taxes See Publication 925 for more information. Full time student filing taxes Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. Full time student filing taxes For this purpose, a rental activity is an activity from which you receive income mainly for the use of tangible property, rather than for services. Full time student filing taxes Limits on passive activity deductions and credits. Full time student filing taxes    Deductions or losses from passive activities are limited. Full time student filing taxes You generally cannot offset income, other than passive income, with losses from passive activities. Full time student filing taxes Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. Full time student filing taxes Any excess loss or credit is carried forward to the next tax year. Full time student filing taxes   For a detailed discussion of these rules, see Publication 925. Full time student filing taxes    You may have to complete Form 8582 to figure the amount of any passive activity loss for the current tax year for all activities and the amount of the passive activity loss allowed on your tax return. Full time student filing taxes Real estate professionals. Full time student filing taxes   Rental activities in which you materially participated during the year are not passive activities if, for that year, you were a real estate professional. Full time student filing taxes For a detailed discussion of the requirements, see Publication 527. Full time student filing taxes For a detailed discussion of material participation, see Publication 925. Full time student filing taxes Exception for Personal Use of Dwelling Unit If you used the rental property as a home during the year, any income, deductions, gain, or loss allocable to such use shall not be taken into account for purposes of the passive activity loss limitation. Full time student filing taxes Instead, follow the rules explained in Personal Use of Dwelling Unit (Including Vacation Home), earlier. Full time student filing taxes Exception for Rental Real Estate Activities With Active Participation If you or your spouse actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. Full time student filing taxes This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. Full time student filing taxes Similarly, you may be able to offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. Full time student filing taxes Active participation. Full time student filing taxes   You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. Full time student filing taxes Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. Full time student filing taxes Maximum special allowance. Full time student filing taxes   The maximum special allowance is: $25,000 for single individuals and married individuals filing a joint return for the tax year, $12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year, and $25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified. Full time student filing taxes   If your modified adjusted gross income (MAGI) is $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to the amount specified above. Full time student filing taxes If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI. Full time student filing taxes   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. Full time student filing taxes More information. Full time student filing taxes   See Publication 925 for more information on the passive loss limits, including information on the treatment of unused disallowed passive losses and credits and the treatment of gains and losses realized on the disposition of a passive activity. Full time student filing taxes How To Report Rental Income and Expenses The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). Full time student filing taxes However, do not use that schedule to report a not-for-profit activity. Full time student filing taxes See Not Rented for Profit, earlier. Full time student filing taxes Providing substantial services. Full time student filing taxes   If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business (Sole Proprietorship). Full time student filing taxes Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. Full time student filing taxes For information, see Publication 334, Tax Guide for Small Business. Full time student filing taxes You also may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. Full time student filing taxes   Use Form 1065, U. Full time student filing taxes S. Full time student filing taxes Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). Full time student filing taxes Qualified joint venture. Full time student filing taxes   If you and your spouse each materially participate as the only members of a jointly owned and operated real estate business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. Full time student filing taxes This election, in most cases, will not increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage if your rental income is subject to self-employment tax. Full time student filing taxes For more information, see Publication 527. Full time student filing taxes Form 1098, Mortgage Interest Statement. Full time student filing taxes    If you paid $600 or more of mortgage interest on your rental property to any one person, you should receive a Form 1098, or similar statement showing the interest you paid for the year. Full time student filing taxes If you and at least one other person (other than your spouse if you file a joint return) were liable for, and paid interest on the mortgage, and the other person received the Form 1098, report your share of the interest on Schedule E (Form 1040), line 13. Full time student filing taxes Attach a statement to your return showing the name and address of the other person. Full time student filing taxes In the left margin of Schedule E, next to line 13, enter “See attached. Full time student filing taxes ” Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. Full time student filing taxes , you normally report your rental income and expenses on Schedule E, Part I. Full time student filing taxes List your total income, expenses, and depreciation for each rental property. Full time student filing taxes Be sure to enter the number of fair rental and personal use days on line 2. Full time student filing taxes If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. Full time student filing taxes Complete lines 1 and 2 for each property. Full time student filing taxes However, fill in lines 23a through 26 on only one Schedule E. Full time student filing taxes On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. Full time student filing taxes To find out if you need to attach Form 4562, see Form 4562, in chapter 3 of Publication 527. Full time student filing taxes If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. Full time student filing taxes Form 6198, At-Risk Limitations. Full time student filing taxes See At-Risk Rules , earlier. Full time student filing taxes Also see Publication 925. Full time student filing taxes Form 8582, Passive Activity Loss Limitations. Full time student filing taxes See Passive Activity Limits , earlier. Full time student filing taxes Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. Full time student filing taxes If you need to use page 2 of Schedule E, be sure to use page 2 of the same Schedule E you used to enter your rental activity on page 1. Full time student filing taxes Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). Full time student filing taxes Worksheet 9-1. Full time student filing 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. Full time student filing taxes Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . Full time student filing 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. Full time student filing taxes Rental Use Percentage A. Full time student filing taxes Total days available for rent at fair rental price A. Full time student filing taxes       B. Full time student filing taxes Total days available for rent (line A) but not rented B. Full time student filing taxes       C. Full time student filing taxes Total days of rental use. Full time student filing taxes Subtract line B from line A C. Full time student filing taxes       D. Full time student filing taxes Total days of personal use (including days rented at less than fair rental price) D. Full time student filing taxes       E. Full time student filing taxes Total days of rental and personal use. Full time student filing taxes Add lines C and D E. Full time student filing taxes       F. Full time student filing taxes Percentage of expenses allowed for rental. Full time student filing taxes Divide line C by line E     F. Full time student filing taxes   PART II. Full time student filing taxes Allowable Rental Expenses 1. Full time student filing taxes Enter rents received 1. Full time student filing taxes   2a. Full time student filing taxes Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. Full time student filing taxes       b. Full time student filing taxes Enter the rental portion of real estate taxes b. Full time student filing taxes       c. Full time student filing taxes Enter the rental portion of deductible casualty and theft losses (see instructions) c. Full time student filing taxes       d. Full time student filing taxes Enter direct rental expenses (see instructions) d. Full time student filing taxes       e. Full time student filing taxes Fully deductible rental expenses. Full time student filing taxes Add lines 2a–2d. Full time student filing taxes Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. Full time student filing taxes   3. Full time student filing taxes Subtract line 2e from line 1. Full time student filing taxes If zero or less, enter -0- 3. Full time student filing taxes   4a. Full time student filing taxes Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. Full time student filing taxes       b. Full time student filing taxes Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. Full time student filing taxes       c. Full time student filing taxes Carryover of operating expenses from 2012 worksheet c. Full time student filing taxes       d. Full time student filing taxes Add lines 4a–4c d. Full time student filing taxes       e. Full time student filing taxes Allowable expenses. Full time student filing taxes Enter the smaller of line 3 or line 4d (see instructions) 4e. Full time student filing taxes   5. Full time student filing taxes Subtract line 4e from line 3. Full time student filing taxes If zero or less, enter -0- 5. Full time student filing taxes   6a. Full time student filing taxes Enter the rental portion of excess casualty and theft losses (see instructions) 6a. Full time student filing taxes       b. Full time student filing taxes Enter the rental portion of depreciation of the dwelling unit b. Full time student filing taxes       c. Full time student filing taxes Carryover of excess casualty losses and depreciation from 2012 worksheet c. Full time student filing taxes       d. Full time student filing taxes Add lines 6a–6c d. Full time student filing taxes       e. Full time student filing taxes Allowable excess casualty and theft losses and depreciation. Full time student filing taxes Enter the smaller of  line 5 or line 6d (see instructions) 6e. Full time student filing taxes   PART III. Full time student filing taxes Carryover of Unallowed Expenses to Next Year 7a. Full time student filing taxes Operating expenses to be carried over to next year. Full time student filing taxes Subtract line 4e from line 4d 7a. Full time student filing taxes   b. Full time student filing taxes Excess casualty and theft losses and depreciation to be carried over to next year. Full time student filing taxes  Subtract line 6e from line 6d b. Full time student filing taxes   Worksheet 9-1 Instructions. Full time student filing taxes Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. Full time student filing 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. Full time student filing taxes Line 2a. Full time student filing taxes Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. Full time student filing taxes Do not include interest on a loan that did not benefit the dwelling unit. Full time student filing 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. Full time student filing taxes Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. Full time student filing taxes Include the rental portion of this interest in the total you enter on line 2a of the worksheet. Full time student filing 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. Full time student filing taxes See the Schedule A instructions. Full time student filing taxes However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. Full time student filing taxes See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. Full time student filing taxes Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. Full time student filing taxes   Note. Full time student filing taxes Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. Full time student filing taxes Instead, figure the personal portion on a separate Schedule A. Full time student filing 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. Full time student filing taxes           Line 2c. Full time student filing 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. Full time student filing taxes To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. Full time student filing taxes If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. Full time student filing taxes On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. Full time student filing taxes Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. Full time student filing taxes   Note. Full time student filing taxes Do not file this Form 4684 or use it to figure your personal losses on Schedule A. Full time student filing taxes Instead, figure the personal portion on a separate Form 4684. Full time student filing taxes           Line 2d. Full time student filing taxes Enter the total of your rental expenses that are directly related only to the rental activity. Full time student filing taxes These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. Full time student filing taxes Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. Full time student filing taxes           Line 2e. Full time student filing 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. Full time student filing taxes Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. Full time student filing taxes           Line 4b. Full time student filing taxes On line 2a, you entered the rental portion of the mortgage interest and qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. Full time student filing 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. Full time student filing taxes Do not include interest on a loan that did not benefit the dwelling unit (as explained in the line 2a instructions). Full time student filing taxes           Line 4e. Full time student filing 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. Full time student filing taxes *           Line 6a. Full time student filing taxes To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. Full time student filing taxes   A. Full time student filing taxes Enter the amount from Form 4684, line 10       B. Full time student filing taxes Enter the rental portion of line A       C. Full time student filing taxes Enter the amount from line 2c of this worksheet       D. Full time student filing taxes Subtract line C from line B. Full time student filing taxes Enter the result here and on line 6a of this worksheet               Line 6e. Full time student filing 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. Full time student filing taxes * *Allocating the limited deduction. Full time student filing 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. Full time student filing taxes Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. Full time student filing taxes Prev  Up  Next   Home   More Online Publications

Topic 602 - Child and Dependent Care Credit

You may be able to claim the child and dependent care credit if you paid work-related expenses for the care of a qualifying individual. The credit is generally a percentage of the amount of work-related expenses you paid to a care provider for the care of a qualifying individual. The percentage depends on your adjusted gross income. Work-related expenses qualifying for the credit are those paid for the care of a qualifying individual to enable you to work or actively look for work.

Expenses are paid for the care of a qualifying individual if the primary function is to assure the individual's well-being and protection. In general, amounts paid for services outside your household qualify for the credit if the care is provided for (i) a qualifying individual who is your qualifying child under age 13 or (ii) a qualifying individual who regularly spends at least 8 hours each day in your household.

The total expenses that may be used to calculate the credit are capped at $3,000 (for one qualifying individual) or at $6,000 (for two or more qualifying individuals). The dollar limits may differ depending on the tax year in question. The expenses qualifying for the computation of the credit must be reduced by the amount of any dependent care benefits provided by your employer that you exclude from gross income. In general, you can exclude up to $5,000 for dependent care benefits received from your employer. Also, generally, the expenses claimed may not exceed the lesser of your earned income or your spouse’s earned income. A special rule applies if your spouse is a full-time student or incapable of self-care. For additional information, refer to Publication 503, Child and Dependent Care Expenses.

For purposes of the child and dependent care credit, a qualifying individual is:

  1. Your dependent qualifying child who is under age 13 when the care is provided,
  2. Your spouse who is physically or mentally incapable of self-care and who has the same principal place of abode as you for more than half of the year, or
  3. Your dependent who is physically or mentally incapable of self-care, and who has the same principal place of abode as you for more than half of the year. For this purpose, whether an individual is your dependent is determined without regard to the individual's gross income, whether the individual files a joint return, or whether you are a dependent of another taxpayer.

An individual is physically or mentally incapable of self-care if, as a result of a physical or mental defect, the individual is incapable of caring for his or her hygiene or nutritional needs, or requires the full-time attention of another person for the individual's own safety or the safety of others.

For more information on who is a dependent or a qualifying child, refer to Publication 501, Exemptions, Standard Deduction, and Filing Information.

A noncustodial parent may not treat a child as a qualifying individual for purposes of the credit, even if the noncustodial parent may claim an exemption for the child. For more information on divorced or separated parents or parents who live apart at all times during the last six months of the year, refer to the topic Child of Divorced or Separated Parents or Parents Living Apart in Publication 503, Child and Dependent Care Expenses.

If a person is a qualifying individual for only a part of the tax year, only those expenses paid during that part of the year are included in calculating the credit.

In addition to paying for the care of a qualifying individual, you must meet all of the following conditions to claim the credit:

  1. Your payment must be made to a care provider who is not your spouse, the parent of your child who is your qualifying individual, your child under age 19, or a dependent of you or your spouse.
  2. You must file a joint return if you are married.
  3. You must provide the taxpayer identification number (usually the social security number) of each qualifying individual on the return on which you claim the credit.
  4. You must report the name, address, and taxpayer identification number (either the social security number, or the employer identification number) of the care provider on your return. If the care provider is a tax-exempt organization, you need only report the name and address on your return. You can use Form W-10 (PDF), Dependent Care Provider's Identification and Certification, to request this information from the care provider. If you do not provide information regarding the care provider, you may still be eligible for the credit if you can show that you exercised due diligence in attempting to provide the required information.

If you qualify for the credit, complete Form 2441 (PDF) and Form 1040 (PDF) or Form 1040A (PDF). If you received dependent care benefits from your employer (this amount should be shown on your Form W-2 (PDF), you must complete Part III of Form 2441. You cannot claim the child and dependent care credit if you use Form 1040EZ (PDF).

If you pay a provider to care for your dependent or spouse in your home, you may be a household employer. If you are a household employer, you may have to withhold and pay social security and Medicare taxes and pay federal unemployment tax. For more information, refer to Publication 926, Household Employer's Tax Guide, or Topic 756.

Page Last Reviewed or Updated: December 12, 2013

The Full Time Student Filing Taxes

Full time student filing taxes Publication 509 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionOrdering forms and publications. Full time student filing taxes Tax questions. Full time student filing taxes Background Information for Using the Tax CalendarsElectronic deposit requirement. Full time student filing taxes Legal holidays. Full time student filing taxes Statewide legal holidays. Full time student filing taxes Future Developments For the latest information about developments related to Publication 509, such as legislation enacted after it was published, go to www. Full time student filing taxes irs. Full time student filing taxes gov/pub509. Full time student filing taxes What's New Publication 1518 discontinued after 2013. Full time student filing taxes  Publication 1518, IRS Tax Calendar for Small Businesses and Self-Employed, is discontinued after 2013. Full time student filing taxes An IRS Tax Calendar and most of the information previously contained in Publication 1518 can be found at www. Full time student filing taxes irs. Full time student filing taxes gov/taxcalendar. Full time student filing taxes Reminders Photographs of missing children. Full time student filing taxes  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Full time student filing taxes Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Full time student filing taxes You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Full time student filing taxes Introduction A tax calendar is a 12-month calendar divided into quarters. Full time student filing taxes The calendar gives specific due dates for: Filing tax forms, Paying taxes, and Taking other actions required by federal tax law. Full time student filing taxes What does this publication contain?   This publication contains the following. Full time student filing taxes A section on how to use the tax calendars. Full time student filing taxes Three tax calendars: General Tax Calendar, Employer's Tax Calendar, and Excise Tax Calendar. Full time student filing taxes A table showing the semiweekly deposit due dates for payroll taxes for 2014. Full time student filing taxes   Most of the due dates discussed in this publication are also included in the IRS Tax Calendar available at www. Full time student filing taxes irs. Full time student filing taxes gov/taxcalendar. Full time student filing taxes Who should use this publication?   Primarily, employers need to use this publication. Full time student filing taxes However, the General Tax Calendar has important due dates for all businesses and individuals. Full time student filing taxes Anyone who must pay excise taxes may need the Excise Tax Calendar . Full time student filing taxes What are the advantages of using a tax calendar?   The following are advantages of using a calendar. Full time student filing taxes You do not have to figure the due dates yourself. Full time student filing taxes You can file or pay timely and avoid penalties. Full time student filing taxes You do not have to adjust the due dates for Saturdays, Sundays, and legal holidays. Full time student filing taxes You do not have to adjust the due dates for special banking rules if you use the Employer's Tax Calendar or Excise Tax Calendar . Full time student filing taxes Which calendar(s) should I use?   To decide which calendar(s) to use, first look at the General Tax Calendar and highlight the dates that apply to you. Full time student filing taxes If you are an employer, also use the Employer's Tax Calendar . Full time student filing taxes If you must pay excise taxes, use the Excise Tax Calendar . Full time student filing taxes Depending on your situation, you may need to use more than one calendar. Full time student filing taxes Table 1. Full time student filing taxes Useful Publications IF you are. Full time student filing taxes . Full time student filing taxes . Full time student filing taxes THEN you may need. Full time student filing taxes . Full time student filing taxes . Full time student filing taxes An employer • Publication 15 (Circular E), Employer's Tax Guide. Full time student filing taxes  • Publication 15-A, Employer's Supplemental Tax Guide. Full time student filing taxes  • Publication 15-B, Employer's Tax Guide to Fringe Benefits. Full time student filing taxes  • Publication 926, Household Employer's Tax Guide. Full time student filing taxes A farmer • Publication 51 (Circular A), Agricultural Employer's Tax Guide. Full time student filing taxes  • Publication 225, Farmer's Tax Guide. Full time student filing taxes An individual • Publication 505, Tax Withholding and Estimated Tax. Full time student filing taxes Required to pay excise taxes • Publication 510, Excise Taxes. Full time student filing taxes What is not in these calendars?   The calendars do not cover the employment or excise tax deposit rules. Full time student filing taxes You can find the deposit rules for employment taxes in Publication 15 (Circular E), Employer's Tax Guide. Full time student filing taxes The deposit rules for excise taxes are in Publication 510, Excise Taxes, and in the Instructions for Form 720, Quarterly Federal Excise Tax Return. Full time student filing taxes In addition, the calendars do not cover filing forms and other requirements for: Estate taxes, Gift taxes, Trusts, Exempt organizations, Certain types of corporations, or Foreign partnerships. Full time student filing taxes What other publications and tax forms will I need?   Table 1 lists other publications you may need to order. Full time student filing taxes Each calendar lists the forms you may need. Full time student filing taxes   See How To Get Tax Help near the end of this publication for information about getting publications and forms. Full time student filing taxes Comments and suggestions. Full time student filing taxes   We welcome your comments about this publication and your suggestions for future editions. Full time student filing taxes   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Full time student filing taxes NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Full time student filing taxes Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Full time student filing taxes   You can send us comments from www. Full time student filing taxes irs. Full time student filing taxes gov/formspubs. Full time student filing taxes Click on More Information and then click on Comment on Tax Forms and Publications. Full time student filing taxes   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our forms and publications. Full time student filing taxes Ordering forms and publications. Full time student filing taxes   Visit www. Full time student filing taxes irs. Full time student filing taxes gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Full time student filing taxes Internal Revenue Service 1201 N. Full time student filing taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Full time student filing taxes   If you have a tax question, check the information available on IRS. Full time student filing taxes gov or call 1-800-829-1040. Full time student filing taxes We cannot answer tax questions sent to either of the above addresses. Full time student filing taxes Background Information for Using the Tax Calendars The following brief explanations may be helpful to you in using the tax calendars. Full time student filing taxes IRS e-services make taxes easier. Full time student filing taxes   Now more than ever before, businesses can enjoy the benefits of filing and paying their federal taxes electronically. Full time student filing taxes Whether you rely on a tax professional or handle your own taxes, the IRS offers you convenient programs to make taxes easier. Full time student filing taxes    You can e-file your Form 1040; certain business tax returns such as Forms 1120, 1120S, and 1065; certain employment tax returns such as Forms 940 and 941; certain excise tax returns such as Forms 720, 2290, and 8849; and Form 1099 and other information returns. Full time student filing taxes Visit www. Full time student filing taxes irs. Full time student filing taxes gov/efile for more information. Full time student filing taxes You can pay taxes online or by phone using the Electronic Federal Tax Payments System (EFTPS). Full time student filing taxes For detailed information about using this free service, see Electronic deposit requirement below. Full time student filing taxes   Use these electronic options to make filing and paying taxes easier. Full time student filing taxes For more information on electronic payments, visit the IRS website at www. Full time student filing taxes irs. Full time student filing taxes gov/e-pay. Full time student filing taxes Tax deposits. Full time student filing taxes   Some taxes can be paid with the return on which they are reported. Full time student filing taxes However, in many cases, you have to deposit the tax before the due date for filing the return. Full time student filing taxes Tax deposits are figured for periods of time that are shorter than the time period covered by the return. Full time student filing taxes See Publication 15 (Circular E) for the employment tax deposit rules. Full time student filing taxes For the excise tax deposit rules, see Publication 510 or the Instructions for Form 720. Full time student filing taxes    Electronic deposit requirement. Full time student filing taxes   You must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). Full time student filing taxes Generally, electronic fund transfers are made using the Electronic Federal Tax Payment System (EFTPS). Full time student filing taxes EFTPS is a free service provided by the Department of Treasury. Full time student filing taxes If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Full time student filing taxes   To get more information or to enroll in EFTPS, call 1-800-555-4477 (business), 1-800-316-6541 (individual), or 1-800-733-4829 (TDD/TTY). Full time student filing taxes You can also visit the EFTPS website at www. Full time student filing taxes eftps. Full time student filing taxes gov. Full time student filing taxes Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. Full time student filing taxes    If you fail to timely, properly, and in full make your federal tax deposit, you may be subject to a failure-to-deposit penalty. Full time student filing taxes For an EFTPS deposit to be on time, you must initiate the deposit by 8 p. Full time student filing taxes m. Full time student filing taxes Eastern time the day before the date the deposit is due. Full time student filing taxes Saturday, Sunday, or legal holiday. Full time student filing taxes   Generally, if a due date for performing any act for tax purposes falls on a Saturday, Sunday, or legal holiday, the act is considered to be performed timely if it is performed no later than the next day that is not a Saturday, Sunday, or legal holiday. Full time student filing taxes The term legal holiday means any legal holiday in the District of Columbia. Full time student filing taxes The calendars provided in this publication make the adjustment for Saturdays, Sundays, and legal holidays. Full time student filing taxes But you must make any adjustments for statewide legal holidays, as discussed next. Full time student filing taxes An exception to this rule for certain excise taxes is noted later under the Excise Tax Calendar. Full time student filing taxes Legal holidays. Full time student filing taxes   Legal holidays for 2014 are listed below. Full time student filing taxes January 1— New Year's Day January 20— Birthday of Martin Luther King, Jr. Full time student filing taxes / Inauguration Day February 17— Washington's Birthday April 16— District of Columbia Emancipation Day May 26— Memorial Day July 4— Independence Day September 1— Labor Day October 13— Columbus Day November 11— Veterans Day November 27— Thanksgiving Day December 25— Christmas Day Statewide legal holidays. Full time student filing taxes   A statewide legal holiday delays a due date for filing a return only if the IRS office where you are required to file is located in that state. Full time student filing taxes A statewide legal holiday does not delay a due date for making a federal tax deposit. Full time student filing taxes Extended due date for Forms 1098, 1099, and W-2 if filed electronically. Full time student filing taxes   If you file Forms 1098, 1099, or W-2 electronically, your due date for filing them with the IRS or the Social Security Administration (SSA) will be extended to March 31. Full time student filing taxes   For 2014, the due date for giving the recipient these forms is January 31. Full time student filing taxes   For information about filing Forms 1098, 1099, or W-2G electronically, see Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically. Full time student filing taxes For information about filing Form W-2 electronically with the SSA, visit www. Full time student filing taxes ssa. Full time student filing taxes gov/employer or call 1-800-772-6270. Full time student filing taxes Penalties. Full time student filing taxes   Whenever possible, you should take action before the listed due date. Full time student filing taxes If you are late, you may have to pay a penalty as well as interest on any overdue taxes. Full time student filing taxes   Be sure to follow all the tax laws that apply to you. Full time student filing taxes In addition to civil penalties, criminal penalties may be imposed for intentionally not paying taxes, for intentionally filing a false return, or for not filing a required return. Full time student filing taxes Use of private delivery services. Full time student filing taxes   You can use certain private delivery services designated by the IRS to meet the timely mailing as timely filing/paying rule for tax returns and payments. Full time student filing taxes These private delivery services include only the following. Full time student filing taxes DHL Express (DHL): DHL Same Day Service. Full time student filing taxes Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2 Day, FedEx International Priority, and FedEx International First. Full time student filing taxes United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. Full time student filing taxes M. Full time student filing taxes , UPS Worldwide Express Plus, and UPS Worldwide Express. Full time student filing taxes   For the IRS mailing address to use if you are using a private delivery service, go to IRS. Full time student filing taxes gov and enter “private delivery service” in the search box. Full time student filing taxes   The private delivery service can tell you how to get written proof of the mailing date. Full time student filing taxes    The U. Full time student filing taxes S. Full time student filing taxes Postal Service advises that private delivery services cannot deliver items to P. Full time student filing taxes O. Full time student filing taxes boxes. Full time student filing taxes You must use the U. Full time student filing taxes S. Full time student filing taxes Postal Service to mail any item to an IRS P. Full time student filing taxes O. Full time student filing taxes box address. Full time student filing taxes Prev  Up  Next   Home   More Online Publications