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Irs 1040ez Form 2012

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Irs 1040ez Form 2012

Irs 1040ez form 2012 36. Irs 1040ez form 2012   Earned Income Credit (EIC) Table of Contents What's New Reminders Introduction Useful Items - You may want to see: Do You Qualify for the Credit?If Improper Claim Made in Prior Year Part A. Irs 1040ez form 2012 Rules for EveryoneRule 1. Irs 1040ez form 2012 Your AGI Must Be Less Than: Rule 2. Irs 1040ez form 2012 You Must Have a Valid Social Security Number (SSN) Rule 3. Irs 1040ez form 2012 Your Filing Status Cannot Be Married Filing Separately Rule 4. Irs 1040ez form 2012 You Must Be a U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 Citizen or Resident Alien All Year Rule 5. Irs 1040ez form 2012 You Cannot File Form 2555 or Form 2555-EZ Rule 6. Irs 1040ez form 2012 Your Investment Income Must Be $3,300 or Less Rule 7. Irs 1040ez form 2012 You Must Have Earned Income Part B. Irs 1040ez form 2012 Rules If You Have a Qualifying ChildRule 8. Irs 1040ez form 2012 Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Rule 9. Irs 1040ez form 2012 Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC Rule 10. Irs 1040ez form 2012 You Cannot Be a Qualifying Child of Another Taxpayer Part C. Irs 1040ez form 2012 Rules If You Do Not Have a Qualifying ChildRule 11. Irs 1040ez form 2012 You Must Be at Least Age 25 but Under Age 65 Rule 12. Irs 1040ez form 2012 You Cannot Be the Dependent of Another Person Rule 13. Irs 1040ez form 2012 You Cannot Be a Qualifying Child of Another Taxpayer Rule 14. Irs 1040ez form 2012 You Must Have Lived in the United States More Than Half of the Year Part D. Irs 1040ez form 2012 Figuring and Claiming the EICRule 15. Irs 1040ez form 2012 Your Earned Income Must Be Less Than: IRS Will Figure the EIC for You How To Figure the EIC Yourself ExamplesExample 1. Irs 1040ez form 2012 John and Janet Smith (Form 1040A) Example 2. Irs 1040ez form 2012 Kelly Green (Form 1040EZ) What's New Earned income amount is more. Irs 1040ez form 2012  The maximum amount of income you can earn and still get the credit has increased. Irs 1040ez form 2012 You may be able to take the credit if: You have three or more qualifying children and you earned less than $46,227 ($51,567 if married filing jointly), You have two qualifying children and you earned less than $43,038 ($48,378 if married filing jointly), You have one qualifying child and you earned less than $37,870 ($43,210 if married filing jointly), or You do not have a qualifying child and you earned less than $14,340 ($19,680 if married filing jointly). Irs 1040ez form 2012 Your adjusted gross income also must be less than the amount in the above list that applies to you. Irs 1040ez form 2012 For details, see Rules 1 and 15. Irs 1040ez form 2012 Investment income amount is more. Irs 1040ez form 2012  The maximum amount of investment income you can have and still get the credit has increased to $3,300. Irs 1040ez form 2012 See Rule 6. Irs 1040ez form 2012 Reminders Increased EIC on certain joint returns. Irs 1040ez form 2012  A married person filing a joint return may get more EIC than someone with the same income but a different filing status. Irs 1040ez form 2012 As a result, the EIC table has different columns for married persons filing jointly than for everyone else. Irs 1040ez form 2012 When you look up your EIC in the EIC Table, be sure to use the correct column for your filing status and the number of children you have. Irs 1040ez form 2012 Online help. Irs 1040ez form 2012  You can use the EITC Assistant at www. Irs 1040ez form 2012 irs. Irs 1040ez form 2012 gov/eitc to find out if you are eligible for the credit. Irs 1040ez form 2012 The EITC Assistant is available in English and Spanish. Irs 1040ez form 2012 EIC questioned by IRS. Irs 1040ez form 2012  The IRS may ask you to provide documents to prove you are entitled to claim the EIC. Irs 1040ez form 2012 We will tell you what documents to send us. Irs 1040ez form 2012 These may include: birth certificates, school records, medical records, etc. Irs 1040ez form 2012 The process of establishing your eligibility will delay your refund. Irs 1040ez form 2012 Introduction The earned income credit (EIC) is a tax credit for certain people who work and have less than $51,567 of earned income. Irs 1040ez form 2012 A tax credit usually means more money in your pocket. Irs 1040ez form 2012 It reduces the amount of tax you owe. Irs 1040ez form 2012 The EIC may also give you a refund. Irs 1040ez form 2012 How do you get the earned income credit?   To claim the EIC, you must: Qualify by meeting certain rules, and File a tax return, even if you: Do not owe any tax, Did not earn enough money to file a return, or Did not have income taxes withheld from your pay. Irs 1040ez form 2012 When you complete your return, you can figure your EIC by using a worksheet in the instructions for Form 1040, Form 1040A, or Form 1040EZ. Irs 1040ez form 2012 Or, if you prefer, you can let the IRS figure the credit for you. Irs 1040ez form 2012 How will this chapter help you?   This chapter will explain the following. Irs 1040ez form 2012 The rules you must meet to qualify for the EIC. Irs 1040ez form 2012 How to figure the EIC. Irs 1040ez form 2012 Useful Items - You may want to see: Publication 596 Earned Income Credit (EIC) Form (and Instructions) Schedule EIC Earned Income Credit (Qualifying Child Information) 8862 Information To Claim Earned Income Credit After Disallowance Do You Qualify for the Credit? To qualify to claim the EIC, you must first meet all of the rules explained in Part A, Rules for Everyone . Irs 1040ez form 2012 Then you must meet the rules in Part B, Rules If You Have a Qualifying Child , or Part C, Rules If You Do Not Have a Qualifying Child . Irs 1040ez form 2012 There is one final rule you must meet in Part D, Figuring and Claiming the EIC . Irs 1040ez form 2012 You qualify for the credit if you meet all the rules in each part that applies to you. Irs 1040ez form 2012 If you have a qualifying child, the rules in Parts A, B, and D apply to you. Irs 1040ez form 2012 If you do not have a qualifying child, the rules in Parts A, C, and D apply to you. Irs 1040ez form 2012 Table 36-1, Earned Income Credit in a Nutshell. Irs 1040ez form 2012   Use Table 36–1 as a guide to Parts A, B, C, and D. Irs 1040ez form 2012 The table is a summary of all the rules in each part. Irs 1040ez form 2012 Do you have a qualifying child?   You have a qualifying child only if you have a child who meets the four tests described in Rule 8 and illustrated in Figure 36–1. Irs 1040ez form 2012 If Improper Claim Made in Prior Year If your EIC for any year after 1996 was denied or reduced for any reason other than a math or clerical error, you must attach a completed Form 8862 to your next tax return to claim the EIC. Irs 1040ez form 2012 You must also qualify to claim the EIC by meeting all the rules described in this chapter. Irs 1040ez form 2012 However, if your EIC was denied or reduced as a result of a math or clerical error, do not attach Form 8862 to your next tax return. Irs 1040ez form 2012 For example, if your arithmetic is incorrect, the IRS can correct it. Irs 1040ez form 2012 If you do not provide a correct social security number, the IRS can deny the EIC. Irs 1040ez form 2012 These kinds of errors are called math or clerical errors. Irs 1040ez form 2012 If your EIC for any year after 1996 was denied and it was determined that your error was due to reckless or intentional disregard of the EIC rules, then you cannot claim the EIC for the next 2 years. Irs 1040ez form 2012 If your error was due to fraud, then you cannot claim the EIC for the next 10 years. Irs 1040ez form 2012 More information. Irs 1040ez form 2012   See chapter 5 in Publication 596 for more detailed information about the disallowance period and Form 8862. Irs 1040ez form 2012 Part A. Irs 1040ez form 2012 Rules for Everyone This part of the chapter discusses Rules 1 through 7. Irs 1040ez form 2012 You must meet all seven rules to qualify for the earned income credit. Irs 1040ez form 2012 If you do not meet all seven rules, you cannot get the credit and you do not need to read the rest of the chapter. Irs 1040ez form 2012 If you meet all seven rules in this part, then read either Part B or Part C (whichever applies) for more rules you must meet. Irs 1040ez form 2012 Rule 1. Irs 1040ez form 2012 Your AGI Must Be Less Than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Irs 1040ez form 2012 Adjusted gross income (AGI). Irs 1040ez form 2012   AGI is the amount on line 38 (Form 1040), line 22 (Form 1040A), or line 4 (Form 1040EZ). Irs 1040ez form 2012 If your AGI is equal to or more than the applicable limit listed above, you cannot claim the EIC. Irs 1040ez form 2012 Example. Irs 1040ez form 2012 Your AGI is $38,550, you are single, and you have one qualifying child. Irs 1040ez form 2012 You cannot claim the EIC because your AGI is not less than $37,870. Irs 1040ez form 2012 However, if your filing status was married filing jointly, you might be able to claim the EIC because your AGI is less than $43,210. Irs 1040ez form 2012 Community property. Irs 1040ez form 2012   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3 ), and live in a state that has community property laws, your AGI includes that portion of both your and your spouse's wages that you are required to include in gross income. Irs 1040ez form 2012 This is different from the community property rules that apply under Rule 7 . Irs 1040ez form 2012 Rule 2. Irs 1040ez form 2012 You Must Have a Valid Social Security Number (SSN) To claim the EIC, you (and your spouse, if filing a joint return) must have a valid SSN issued by the Social Security Administration (SSA). Irs 1040ez form 2012 Any qualifying child listed on Schedule EIC also must have a valid SSN. Irs 1040ez form 2012 (See Rule 8 if you have a qualifying child. Irs 1040ez form 2012 ) If your social security card (or your spouse's, if filing a joint return) says “Not valid for employment” and your SSN was issued so that you (or your spouse) could get a federally funded benefit, you cannot get the EIC. Irs 1040ez form 2012 An example of a federally funded benefit is Medicaid. Irs 1040ez form 2012 If you have a card with the legend “Not valid for employment” and your immigration status has changed so that you are now a U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 citizen or permanent resident, ask the SSA for a new social security card without the legend. Irs 1040ez form 2012 U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 citizen. Irs 1040ez form 2012   If you were a U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 citizen when you received your SSN, you have a valid SSN. Irs 1040ez form 2012 Valid for work only with INS or DHS authorization. Irs 1040ez form 2012   If your social security card reads “Valid for work only with INS authorization” or “Valid for work only with DHS authorization,” you have a valid SSN, but only if that authorization is still valid. Irs 1040ez form 2012 SSN missing or incorrect. Irs 1040ez form 2012   If an SSN for you or your spouse is missing from your tax return or is incorrect, you may not get the EIC. Irs 1040ez form 2012 Other taxpayer identification number. Irs 1040ez form 2012   You cannot get the EIC if, instead of an SSN, you (or your spouse, if filing a joint return) have an individual taxpayer identification number (ITIN). Irs 1040ez form 2012 ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN. Irs 1040ez form 2012 No SSN. Irs 1040ez form 2012   If you do not have a valid SSN, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Irs 1040ez form 2012 You cannot claim the EIC. Irs 1040ez form 2012 Getting an SSN. Irs 1040ez form 2012   If you (or your spouse, if filing a joint return) do not have an SSN, you can apply for one by filing Form SS-5, Application for a Social Security Card, with the SSA. Irs 1040ez form 2012 You can get Form SS-5 online at www. Irs 1040ez form 2012 socialsecurity. Irs 1040ez form 2012 gov, from your local SSA office, or by calling the SSA at 1-800-772-1213. Irs 1040ez form 2012 Filing deadline approaching and still no SSN. Irs 1040ez form 2012   If the filing deadline is approaching and you still do not have an SSN, you have two choices. Irs 1040ez form 2012 Request an automatic 6-month extension of time to file your return. Irs 1040ez form 2012 You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 Individual Income Tax Return. Irs 1040ez form 2012 For more information, see chapter 1 . Irs 1040ez form 2012 File the return on time without claiming the EIC. Irs 1040ez form 2012 After receiving the SSN, file an amended return (Form 1040X, Amended U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 Individual Income Tax Return) claiming the EIC. Irs 1040ez form 2012 Attach a filled-in Schedule EIC if you have a qualifying child. Irs 1040ez form 2012 Table 36-1. Irs 1040ez form 2012 Earned Income Credit in a Nutshell First, you must meet all the rules in this column. Irs 1040ez form 2012 Second, you must meet all the rules in one of these columns, whichever applies. Irs 1040ez form 2012 Third, you must meet the rule in this column. Irs 1040ez form 2012 Part A. Irs 1040ez form 2012  Rules for Everyone Part B. Irs 1040ez form 2012  Rules If You Have a Qualifying Child Part C. Irs 1040ez form 2012  Rules If You Do Not Have a Qualifying Child Part D. Irs 1040ez form 2012  Figuring and Claiming the EIC 1. Irs 1040ez form 2012 Your adjusted gross income (AGI) must be less than: • $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,  • $43,038 ($48,378 for married filing jointly) if you have two qualifying children,  • $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or   • $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Irs 1040ez form 2012 2. Irs 1040ez form 2012 You must have a valid social security number. Irs 1040ez form 2012  3. Irs 1040ez form 2012 Your filing status cannot be “Married filing separately. Irs 1040ez form 2012 ” 4. Irs 1040ez form 2012 You must be a U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 citizen or resident alien all year. Irs 1040ez form 2012  5. Irs 1040ez form 2012 You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income). Irs 1040ez form 2012  6. Irs 1040ez form 2012 Your investment income must be $3,300 or less. Irs 1040ez form 2012  7. Irs 1040ez form 2012 You must have earned income. Irs 1040ez form 2012 8. Irs 1040ez form 2012 Your child must meet the relationship, age, residency, and joint return tests. Irs 1040ez form 2012  9. Irs 1040ez form 2012 Your qualifying child cannot be used by more than one person to claim the EIC. Irs 1040ez form 2012  10. Irs 1040ez form 2012 You cannot be a qualifying child of another person. Irs 1040ez form 2012 11. Irs 1040ez form 2012 You must be at least age 25 but under age 65. Irs 1040ez form 2012  12. Irs 1040ez form 2012 You cannot be the dependent of another person. Irs 1040ez form 2012  13. Irs 1040ez form 2012 You cannot be a qualifying child of another person. Irs 1040ez form 2012  14. Irs 1040ez form 2012 You must have lived in the United States more than half of the year. Irs 1040ez form 2012 15. Irs 1040ez form 2012 Your earned income must be less than: • $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,  • $43,038 ($48,378 for married filing jointly) if you have two qualifying children,  • $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or   • $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Irs 1040ez form 2012 Rule 3. Irs 1040ez form 2012 Your Filing Status Cannot Be Married Filing Separately If you are married, you usually must file a joint return to claim the EIC. Irs 1040ez form 2012 Your filing status cannot be “Married filing separately. Irs 1040ez form 2012 ” Spouse did not live with you. Irs 1040ez form 2012   If you are married and your spouse did not live in your home at any time during the last 6 months of the year, you may be able to file as head of household, instead of married filing separately. Irs 1040ez form 2012 In that case, you may be able to claim the EIC. Irs 1040ez form 2012 For detailed information about filing as head of household, see chapter 2 . Irs 1040ez form 2012 Rule 4. Irs 1040ez form 2012 You Must Be a U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 Citizen or Resident Alien All Year If you (or your spouse, if married) were a nonresident alien for any part of the year, you cannot claim the earned income credit unless your filing status is married filing jointly. Irs 1040ez form 2012 You can use that filing status only if one spouse is a U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 citizen or resident alien and you choose to treat the nonresident spouse as a U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 resident. Irs 1040ez form 2012 If you make this choice, you and your spouse are taxed on your worldwide income. Irs 1040ez form 2012 If you (or your spouse, if married) were a nonresident alien for any part of the year and your filing status is not married filing jointly, enter “No” on the dotted line next to line 64a (Form 1040) or in the space to the left of line 38a (Form 1040A). Irs 1040ez form 2012 If you need more information on making this choice, get Publication 519, U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 Tax Guide for Aliens. Irs 1040ez form 2012 Rule 5. Irs 1040ez form 2012 You Cannot File Form 2555 or Form 2555-EZ You cannot claim the earned income credit if you file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Irs 1040ez form 2012 You file these forms to exclude income earned in foreign countries from your gross income, or to deduct or exclude a foreign housing amount. Irs 1040ez form 2012 U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 possessions are not foreign countries. Irs 1040ez form 2012 See Publication 54, Tax Guide for U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 Citizens and Resident Aliens Abroad, for more detailed information. Irs 1040ez form 2012 Rule 6. Irs 1040ez form 2012 Your Investment Income Must Be $3,300 or Less You cannot claim the earned income credit unless your investment income is $3,300 or less. Irs 1040ez form 2012 If your investment income is more than $3,300, you cannot claim the credit. Irs 1040ez form 2012 For most people, investment income is the total of the following amounts. Irs 1040ez form 2012 Taxable interest (line 8a of Form 1040 or 1040A). Irs 1040ez form 2012 Tax-exempt interest (line 8b of Form 1040 or 1040A). Irs 1040ez form 2012 Dividend income (line 9a of Form 1040 or 1040A). Irs 1040ez form 2012 Capital gain net income (line 13 of Form 1040, if more than zero, or line 10 of Form 1040A). Irs 1040ez form 2012 If you file Form 1040EZ, your investment income is the total of the amount of line 2 and the amount of any tax-exempt interest you wrote to the right of the words “Form 1040EZ” on line 2. Irs 1040ez form 2012 However, see Rule 6 in chapter 1 of Publication 596 if: You are filing Schedule E (Form 1040), Form 4797, or Form 8814, or You are reporting income from the rental of personal property on Form 1040, line 21. Irs 1040ez form 2012 Rule 7. Irs 1040ez form 2012 You Must Have Earned Income This credit is called the “earned income” credit because, to qualify, you must work and have earned income. Irs 1040ez form 2012 If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income. Irs 1040ez form 2012 If you are an employee, earned income includes all the taxable income you get from your employer. Irs 1040ez form 2012 If you are self-employed or a statutory employee, you will figure your earned income on EIC Worksheet B in the instructions for Form 1040. Irs 1040ez form 2012 Earned Income Earned income includes all of the following types of income. Irs 1040ez form 2012 Wages, salaries, tips, and other taxable employee pay. Irs 1040ez form 2012 Employee pay is earned income only if it is taxable. Irs 1040ez form 2012 Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Irs 1040ez form 2012 But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained below. Irs 1040ez form 2012 Net earnings from self-employment. Irs 1040ez form 2012 Gross income received as a statutory employee. Irs 1040ez form 2012 Wages, salaries, and tips. Irs 1040ez form 2012   Wages, salaries, and tips you receive for working are reported to you on Form W-2, in box 1. Irs 1040ez form 2012 You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040). Irs 1040ez form 2012 Nontaxable combat pay election. Irs 1040ez form 2012   You can elect to include your nontaxable combat pay in earned income for the earned income credit. Irs 1040ez form 2012 Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. Irs 1040ez form 2012 Figure the credit with and without your nontaxable combat pay before making the election. Irs 1040ez form 2012   If you make the election, you must include in earned income all nontaxable combat pay you received. Irs 1040ez form 2012 If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. Irs 1040ez form 2012 In other words, if one of you makes the election, the other one can also make it but does not have to. Irs 1040ez form 2012   The amount of your nontaxable combat pay should be shown in box 12 of your Form W-2 with code “Q. Irs 1040ez form 2012 ” Self-employed persons and statutory employees. Irs 1040ez form 2012   If you are self-employed or received income as a statutory employee, you must use the Form 1040 instructions to see if you qualify to get the EIC. Irs 1040ez form 2012 Approved Form 4361 or Form 4029 This section is for persons who have an approved: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, or Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits. Irs 1040ez form 2012 Each approved form exempts certain income from social security taxes. Irs 1040ez form 2012 Each form is discussed here in terms of what is or is not earned income for the EIC. Irs 1040ez form 2012 Form 4361. Irs 1040ez form 2012   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. Irs 1040ez form 2012 This includes wages, salaries, tips, and other taxable employee compensation. Irs 1040ez form 2012 A nontaxable housing allowance or the nontaxable rental value of a home is not earned income. Irs 1040ez form 2012 Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. Irs 1040ez form 2012 Examples include fees for performing marriages and honoraria for delivering speeches. Irs 1040ez form 2012 Form 4029. Irs 1040ez form 2012   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation count as earned income. Irs 1040ez form 2012 However, amounts you received as a self-employed individual do not count as earned income. Irs 1040ez form 2012 Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040. Irs 1040ez form 2012 Disability Benefits If you retired on disability, taxable benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. Irs 1040ez form 2012 Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. Irs 1040ez form 2012 You must report your taxable disability payments on line 7 of either Form 1040 or Form 1040A until you reach minimum retirement age. Irs 1040ez form 2012 Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. Irs 1040ez form 2012 Report taxable pension payments on Form 1040, lines 16a and 16b (or Form 1040A, lines 12a and 12b). Irs 1040ez form 2012 Disability insurance payments. Irs 1040ez form 2012   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. Irs 1040ez form 2012 It does not matter whether you have reached minimum retirement age. Irs 1040ez form 2012 If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J. Irs 1040ez form 2012 ” Income That Is Not Earned Income Examples of items that are not earned income include interest and dividends, pensions and annuities, social security and railroad retirement benefits (including disability benefits), alimony and child support, welfare benefits, workers' compensation benefits, unemployment compensation (insurance), nontaxable foster care payments, and veterans' benefits, including VA rehabilitation payments. Irs 1040ez form 2012 Do not include any of these items in your earned income. Irs 1040ez form 2012 Earnings while an inmate. Irs 1040ez form 2012   Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. Irs 1040ez form 2012 This includes amounts for work performed while in a work release program or while in a halfway house. Irs 1040ez form 2012 Workfare payments. Irs 1040ez form 2012   Nontaxable workfare payments are not earned income for the EIC. Irs 1040ez form 2012 These are cash payments certain people receive from a state or local agency that administers public assistance programs funded under the federal Temporary Assistance for Needy Families (TANF) program in return for certain work activities such as (1) work experience activities (including remodeling or repairing public housing) if private sector employment is not available, or (2) community service program activities. Irs 1040ez form 2012 Community property. Irs 1040ez form 2012   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3 ), and live in a state that has community property laws, your earned income for the EIC does not include any amount earned by your spouse that is treated as belonging to you under those laws. Irs 1040ez form 2012 That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. Irs 1040ez form 2012 Your earned income includes the entire amount you earned, even if part of it is treated as belonging to your spouse under your state's community property laws. Irs 1040ez form 2012 Nevada, Washington, and California domestic partners. Irs 1040ez form 2012   If you are a registered domestic partner in Nevada, Washington, or California, the same rules apply. Irs 1040ez form 2012 Your earned income for the EIC does not include any amount earned by your partner. Irs 1040ez form 2012 Your earned income includes the entire amount you earned. Irs 1040ez form 2012 For details, see Publication 555. Irs 1040ez form 2012 Conservation Reserve Program (CRP) payments. Irs 1040ez form 2012   If you were receiving social security retirement benefits or social security disability benefits at the time you received any CRP payments, your CRP payments are not earned income for the EIC. Irs 1040ez form 2012 Nontaxable military pay. Irs 1040ez form 2012   Nontaxable pay for members of the Armed Forces is not considered earned income for the EIC. Irs 1040ez form 2012 Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). Irs 1040ez form 2012 See Publication 3, Armed Forces' Tax Guide, for more information. Irs 1040ez form 2012    Combat pay. Irs 1040ez form 2012 You can elect to include your nontaxable combat pay in earned income for the EIC. Irs 1040ez form 2012 See Nontaxable combat pay election, earlier. Irs 1040ez form 2012 Part B. Irs 1040ez form 2012 Rules If You Have a Qualifying Child If you have met all of the rules in Part A , read Part B to see if you have a qualifying child. Irs 1040ez form 2012 Part B discusses Rules 8 through 10. Irs 1040ez form 2012 You must meet all three of these rules, in addition to the rules in Parts A and D , to qualify for the earned income credit with a qualifying child. Irs 1040ez form 2012 You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. Irs 1040ez form 2012 (You cannot file Form 1040EZ. Irs 1040ez form 2012 ) You also must complete Schedule EIC and attach it to your return. Irs 1040ez form 2012 If you meet all the rules in Part A and this part, read Part D to find out what to do next. Irs 1040ez form 2012 If you do not meet Rule 8, you do not have a qualifying child. Irs 1040ez form 2012 Read Part C to find out if you can get the earned income credit without a qualifying child. Irs 1040ez form 2012 Rule 8. Irs 1040ez form 2012 Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Your child is a qualifying child if your child meets four tests. Irs 1040ez form 2012 The four tests are: Relationship, Age, Residency, and Joint return. Irs 1040ez form 2012 The four tests are illustrated in Figure 36–1. Irs 1040ez form 2012 The paragraphs that follow contain more information about each test. Irs 1040ez form 2012 Relationship Test To be your qualifying child, a child must be your: Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), or Brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew). Irs 1040ez form 2012 The following definitions clarify the relationship test. Irs 1040ez form 2012 Adopted child. Irs 1040ez form 2012   An adopted child is always treated as your own child. Irs 1040ez form 2012 The term “adopted child” includes a child who was lawfully placed with you for legal adoption. Irs 1040ez form 2012 Foster child. Irs 1040ez form 2012   For the EIC, a person is your foster child if the child is placed with you by an authorized placement agency or by judgement, decree, or other order of any court of competent jurisdiction. Irs 1040ez form 2012 An authorized placement agency includes a state or local government agency. Irs 1040ez form 2012 It also includes a tax-exempt organization licensed by a state. Irs 1040ez form 2012 In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children. Irs 1040ez form 2012 Example. Irs 1040ez form 2012 Debbie, who is 12 years old, was placed in your care 2 years ago by an authorized agency responsible for placing children in foster homes. Irs 1040ez form 2012 Debbie is your foster child. Irs 1040ez form 2012 Age Test Your child must be: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a student, and younger than you (or your spouse, if filing jointly), or Permanently and totally disabled at any time during 2013, regardless of age. Irs 1040ez form 2012    The following examples and definitions clarify the age test. Irs 1040ez form 2012 Example 1—child not under age 19. Irs 1040ez form 2012 Your son turned 19 on December 10. Irs 1040ez form 2012 Unless he was permanently and totally disabled or a student, he is not a qualifying child because, at the end of the year, he was not under age 19. Irs 1040ez form 2012 Example 2—child not younger than you or your spouse. Irs 1040ez form 2012 Your 23-year-old brother, who is a full-time student and unmarried, lives with you and your spouse. Irs 1040ez form 2012 He is not disabled. Irs 1040ez form 2012 Both you and your spouse are 21 years old and you file a joint return. Irs 1040ez form 2012 Your brother is not your qualifying child because he is not younger than you or your spouse. Irs 1040ez form 2012 Example 3—child younger than your spouse but not younger than you. Irs 1040ez form 2012 The facts are the same as in Example 2 except that your spouse is 25 years old. Irs 1040ez form 2012 Because your brother is younger than your spouse, he is your qualifying child even though he is not younger than you. Irs 1040ez form 2012 Student defined. Irs 1040ez form 2012   To qualify as a student, your child must be, during some part of each of any 5 calendar months during the calendar year: A full-time student at a school that has a regular teaching staff, course of study, and regular student body at the school, or A student taking a full-time, on-farm training course given by a school described in (1), or a state, county, or local government. Irs 1040ez form 2012 The 5 calendar months need not be consecutive. Irs 1040ez form 2012   A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance. Irs 1040ez form 2012 School defined. Irs 1040ez form 2012   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. Irs 1040ez form 2012 However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet do not count as schools for the EIC. Irs 1040ez form 2012 Vocational high school students. Irs 1040ez form 2012   Students who work in co-op jobs in private industry as a part of a school's regular course of classroom and practical training are considered full-time students. Irs 1040ez form 2012 Permanently and totally disabled. Irs 1040ez form 2012   Your child is permanently and totally disabled if both of the following apply. Irs 1040ez form 2012 He or she cannot engage in any substantial gainful activity because of a physical or mental condition. Irs 1040ez form 2012 A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. Irs 1040ez form 2012 Residency Test Your child must have lived with you in the United States for more than half of 2013. Irs 1040ez form 2012 The following definitions clarify the residency test. Irs 1040ez form 2012 United States. Irs 1040ez form 2012   This means the 50 states and the District of Columbia. Irs 1040ez form 2012 It does not include Puerto Rico or U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 possessions such as Guam. Irs 1040ez form 2012 Homeless shelter. Irs 1040ez form 2012   Your home can be any location where you regularly live. Irs 1040ez form 2012 You do not need a traditional home. Irs 1040ez form 2012 For example, if your child lived with you for more than half the year in one or more homeless shelters, your child meets the residency test. Irs 1040ez form 2012 Military personnel stationed outside the United States. Irs 1040ez form 2012    U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 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. Irs 1040ez form 2012 Figure 36-1. Irs 1040ez form 2012 Tests for Qualifying Child Please click here for the text description of the image. Irs 1040ez form 2012 Qualifying child Extended active duty. Irs 1040ez form 2012   Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Irs 1040ez form 2012 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. Irs 1040ez form 2012 Birth or death of a child. Irs 1040ez form 2012   A child who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the child's home for more than half the time he or she was alive in 2013. Irs 1040ez form 2012 Temporary absences. Irs 1040ez form 2012   Count time that you or your child is away from home on a temporary absence due to a special circumstance as time the child lived with you. Irs 1040ez form 2012 Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility. Irs 1040ez form 2012 Kidnapped child. Irs 1040ez form 2012    A kidnapped child is treated as living with you for more than half of the year if the child lived with you for more than half the part of the year before the date of the kidnapping. Irs 1040ez form 2012 The child must be presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or your child's family. Irs 1040ez form 2012 This treatment applies for all years until the child is returned. Irs 1040ez form 2012 However, the last year this treatment can apply is the earlier of: The year there is a determination that the child is dead, or The year the child would have reached age 18. Irs 1040ez form 2012   If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC. Irs 1040ez form 2012 Joint Return Test To meet this test, the child cannot file a joint return for the year. Irs 1040ez form 2012 Exception. Irs 1040ez form 2012   An exception to the joint return test applies if your child and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid. Irs 1040ez form 2012 Example 1—child files joint return. Irs 1040ez form 2012 You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. Irs 1040ez form 2012 He earned $25,000 for the year. Irs 1040ez form 2012 The couple files a joint return. Irs 1040ez form 2012 Because your daughter and her husband filed a joint return, she is not your qualifying child. Irs 1040ez form 2012 Example 2—child files joint return only to claim a refund of withheld tax. Irs 1040ez form 2012 Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. Irs 1040ez form 2012 They do not have a child. Irs 1040ez form 2012 Neither is required to file a tax return. Irs 1040ez form 2012 Taxes were taken out of their pay, so they filed a joint return only to get a refund of the withheld taxes. Irs 1040ez form 2012 The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. Irs 1040ez form 2012 Example 3—child files joint return to claim American opportunity credit. Irs 1040ez form 2012 The facts are the same as in Example 2 except no taxes were taken out of your son's pay. Irs 1040ez form 2012 He and his wife are not required to file a tax return, but they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. Irs 1040ez form 2012 Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to get a refund of income tax withheld or estimated tax paid. Irs 1040ez form 2012 The exception to the joint return test does not apply, so your son is not your qualifying child. Irs 1040ez form 2012 Married child. Irs 1040ez form 2012   Even if your child does not file a joint return, if your child was married at the end of the year, he or she cannot be your qualifying child unless: You can claim an exemption for the child, or The reason you cannot claim an exemption for the child is that you let the child's other parent claim the exemption under the Special rule for divorced or separated parents (or parents who live apart) , described later. Irs 1040ez form 2012 Social security number. Irs 1040ez form 2012   The qualifying child must have a valid social security number (SSN) unless the child was born and died in 2013 and you attach to your return a copy of the child's birth certificate, death certificate, or hospital records showing a live birth. Irs 1040ez form 2012 You cannot claim the EIC on the basis of a qualifying child if: The qualifying child's SSN is missing from your tax return or is incorrect, The qualifying child's social security card says “Not valid for employment” and was issued for use in getting a federally funded benefit, or Instead of an SSN, the qualifying child has: An individual taxpayer identification number (ITIN), which is issued to a noncitizen who cannot get an SSN, or An adoption taxpayer identification number (ATIN), which is issued to adopting parents who cannot get an SSN for the child being adopted until the adoption is final. Irs 1040ez form 2012   If you have more than one qualifying child and only one has a valid SSN, you can use only that child to claim the EIC. Irs 1040ez form 2012 For more information about SSNs, see Rule 2 . Irs 1040ez form 2012 Rule 9. Irs 1040ez form 2012 Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC Sometimes a child meets the tests to be a qualifying child of more than one person. Irs 1040ez form 2012 However, only one of these persons can actually treat the child as a qualifying child. Irs 1040ez form 2012 Only that person can use the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit). Irs 1040ez form 2012 The exemption for the child. Irs 1040ez form 2012 The child tax credit. Irs 1040ez form 2012 Head of household filing status. Irs 1040ez form 2012 The credit for child and dependent care expenses. Irs 1040ez form 2012 The exclusion for dependent care benefits. Irs 1040ez form 2012 The EIC. Irs 1040ez form 2012 The other person cannot take any of these benefits based on this qualifying child. Irs 1040ez form 2012 In other words, you and the other person cannot agree to divide these tax benefits between you. Irs 1040ez form 2012 The other person cannot take any of these tax benefits unless he or she has a different qualifying child. Irs 1040ez form 2012 The tiebreaker rules explained next explain who, if anyone, can claim the EIC when more than one person has the same qualifying child. Irs 1040ez form 2012 However, the tiebreaker rules do not apply if the other person is your spouse and you file a joint return. Irs 1040ez form 2012 Tiebreaker rules. Irs 1040ez form 2012   To determine which person can treat the child as a qualifying child to claim the six tax benefits just listed, the following tiebreaker rules apply. Irs 1040ez form 2012 If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. Irs 1040ez form 2012 If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents. Irs 1040ez form 2012 If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. Irs 1040ez form 2012 If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year. Irs 1040ez form 2012 If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year. Irs 1040ez form 2012 If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child. Irs 1040ez form 2012 If the child's parents file a joint return with each other, this rule can be applied by treating the parents' total AGI as divided evenly between them. Irs 1040ez form 2012 See Example 8 . Irs 1040ez form 2012   Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child. Irs 1040ez form 2012 See Examples 1 through 13 . Irs 1040ez form 2012   If you cannot claim the EIC because your qualifying child is treated under the tiebreaker rules as the qualifying child of another person for 2013, you may be able to take the EIC using a different qualifying child, but you cannot take the EIC using the rules in Part C for people who do not have a qualifying child. Irs 1040ez form 2012 If the other person cannot claim the EIC. Irs 1040ez form 2012   If you and someone else have the same qualifying child but the other person cannot claim the EIC because he or she is not eligible or his or her earned income or AGI is too high, you may be able to treat the child as a qualifying child. Irs 1040ez form 2012 See Examples 6 and 7 . Irs 1040ez form 2012 But you cannot treat the child as a qualifying child to claim the EIC if the other person uses the child to claim any of the other six tax benefits listed earlier. Irs 1040ez form 2012 Examples. Irs 1040ez form 2012 The following examples may help you in determining whether you can claim the EIC when you and someone else have the same qualifying child. Irs 1040ez form 2012 Example 1. Irs 1040ez form 2012 You and your 2-year-old son Jimmy lived with your mother all year. Irs 1040ez form 2012 You are 25 years old, unmarried, and your AGI is $9,000. Irs 1040ez form 2012 Your only income was $9,000 from a part-time job. Irs 1040ez form 2012 Your mother's only income was $20,000 from her job, and her AGI is $20,000. Irs 1040ez form 2012 Jimmy's father did not live with you or Jimmy. Irs 1040ez form 2012 The special rule explained later for divorced or separated parents (or parents who live apart) does not apply. Irs 1040ez form 2012 Jimmy is a qualifying child of both you and your mother because he meets the relationship, age, residency, and joint return tests for both you and your mother. Irs 1040ez form 2012 However, only one of you can treat him as a qualifying child to claim the EIC (and the other tax benefits listed earlier for which that person qualifies). Irs 1040ez form 2012 He is not a qualifying child of anyone else, including his father. Irs 1040ez form 2012 If you do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can treat him as a qualifying child to claim the EIC (and any of the other tax benefits listed earlier for which she qualifies). Irs 1040ez form 2012 Example 2. Irs 1040ez form 2012 The facts are the same as in Example 1 except your AGI is $25,000. Irs 1040ez form 2012 Because your mother's AGI is not higher than yours, she cannot claim Jimmy as a qualifying child. Irs 1040ez form 2012 Only you can claim him. Irs 1040ez form 2012 Example 3. Irs 1040ez form 2012 The facts are the same as in Example 1 except that you and your mother both claim Jimmy as a qualifying child. Irs 1040ez form 2012 In this case, you as the child's parent will be the only one allowed to claim Jimmy as a qualifying child for the EIC and the other tax benefits listed earlier for which you qualify. Irs 1040ez form 2012 The IRS will disallow your mother's claim to the EIC and any of the other tax benefits listed earlier unless she has another qualifying child. Irs 1040ez form 2012 Example 4. Irs 1040ez form 2012 The facts are the same as in Example 1 except that you also have two other young children who are qualifying children of both you and your mother. Irs 1040ez form 2012 Only one of you can claim each child. Irs 1040ez form 2012 However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. Irs 1040ez form 2012 For example, if you claim one child, your mother can claim the other two. Irs 1040ez form 2012 Example 5. Irs 1040ez form 2012 The facts are the same as in Example 1 except that you are only 18 years old. Irs 1040ez form 2012 This means you are a qualifying child of your mother. Irs 1040ez form 2012 Because of Rule 10 , discussed next, you cannot claim the EIC and cannot claim Jimmy as a qualifying child. Irs 1040ez form 2012 Only your mother may be able to treat Jimmy as a qualifying child to claim the EIC. Irs 1040ez form 2012 If your mother meets all the other requirements for claiming the EIC and you do not claim Jimmy as a qualifying child for any of the other tax benefits listed earlier, your mother can claim both you and Jimmy as qualifying children for the EIC. Irs 1040ez form 2012 Example 6. Irs 1040ez form 2012 The facts are the same as in Example 1 except that your mother earned $50,000 from her job. Irs 1040ez form 2012 Because your mother's earned income is too high for her to claim the EIC, only you can claim the EIC using your son. Irs 1040ez form 2012 Example 7. Irs 1040ez form 2012 The facts are the same as in Example 1 except that you earned $50,000 from your job and your AGI is $50,500. Irs 1040ez form 2012 Your earned income is too high for you to claim the EIC. Irs 1040ez form 2012 But your mother cannot claim the EIC either, because her AGI is not higher than yours. Irs 1040ez form 2012 Example 8. Irs 1040ez form 2012 The facts are the same as in Example 1 except that you and Jimmy's father are married to each other, live with Jimmy and your mother, and have an AGI of $30,000 on a joint return. Irs 1040ez form 2012 If you and your husband do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can claim him instead. Irs 1040ez form 2012 Even though the AGI on your joint return, $30,000, is more than your mother's AGI of $20,000, for this purpose half of the joint AGI can be treated as yours and half as your husband's. Irs 1040ez form 2012 In other words, each parent's AGI can be treated as $15,000. Irs 1040ez form 2012 Example 9. Irs 1040ez form 2012 You, your husband, and your 10-year-old son Joey lived together until August 1, 2013, when your husband moved out of the household. Irs 1040ez form 2012 In August and September, Joey lived with you. Irs 1040ez form 2012 For the rest of the year, Joey lived with your husband, who is Joey's father. Irs 1040ez form 2012 Joey is a qualifying child of both you and your husband because he lived with each of you for more than half the year and because he met the relationship, age, and joint return tests for both of you. Irs 1040ez form 2012 At the end of the year, you and your husband still were not divorced, legally separated, or separated under a written separation agreement, so the special rule for divorced or separated parents (or parents who live apart) does not apply. Irs 1040ez form 2012 You and your husband will file separate returns. Irs 1040ez form 2012 Your husband agrees to let you treat Joey as a qualifying child. Irs 1040ez form 2012 This means, if your husband does not claim Joey as a qualifying child for any of the tax benefits listed earlier, you can claim him as a qualifying child for any tax benefit listed earlier for which you qualify. Irs 1040ez form 2012 However, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. Irs 1040ez form 2012 See Rule 3 . Irs 1040ez form 2012 Example 10. Irs 1040ez form 2012 The facts are the same as in Example 9 except that you and your husband both claim Joey as a qualifying child. Irs 1040ez form 2012 In this case, only your husband will be allowed to treat Joey as a qualifying child. Irs 1040ez form 2012 This is because, during 2013, the boy lived with him longer than with you. Irs 1040ez form 2012 You cannot claim the EIC (either with or without a qualifying child). Irs 1040ez form 2012 However, your husband's filing status is married filing separately, so he cannot claim the EIC or the credit for child and dependent care expenses. Irs 1040ez form 2012 See Rule 3 . Irs 1040ez form 2012 Example 11. Irs 1040ez form 2012 You, your 5-year-old son and your son's father lived together all year. Irs 1040ez form 2012 You and your son's father are not married. Irs 1040ez form 2012 Your son is a qualifying child of both you and his father because he meets the relationship, age, residency, and joint return tests for both you and his father. Irs 1040ez form 2012 Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. Irs 1040ez form 2012 Neither of you had any other income. Irs 1040ez form 2012 Your son's father agrees to let you treat the child as a qualifying child. Irs 1040ez form 2012 This means, if your son's father does not claim your son as a qualifying child for the EIC or any of the other tax benefits listed earlier, you can claim him as a qualifying child for the EIC and any of the other tax benefits listed earlier for which you qualify. Irs 1040ez form 2012 Example 12. Irs 1040ez form 2012 The facts are the same as in Example 11 except that you and your son's father both claim your son as a qualifying child. Irs 1040ez form 2012 In this case, only your son's father will be allowed to treat your son as a qualifying child. Irs 1040ez form 2012 This is because his AGI, $14,000, is more than your AGI, $12,000. Irs 1040ez form 2012 You cannot claim the EIC (either with or without a qualifying child). Irs 1040ez form 2012 Example 13. Irs 1040ez form 2012 You and your 7-year-old niece, your sister's child, lived with your mother all year. Irs 1040ez form 2012 You are 25 years old, and your AGI is $9,300. Irs 1040ez form 2012 Your only income was from a part-time job. Irs 1040ez form 2012 Your mother's AGI is $15,000. Irs 1040ez form 2012 Her only income was from her job. Irs 1040ez form 2012 Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. Irs 1040ez form 2012 Your niece is a qualifying child of both you and your mother because she meets the relationship, age, residency, and joint return tests for both you and your mother. Irs 1040ez form 2012 However, only your mother can treat her as a qualifying child. Irs 1040ez form 2012 This is because your mother's AGI, $15,000, is more than your AGI, $9,300. Irs 1040ez form 2012 Special rule for divorced or separated parents (or parents who live apart). Irs 1040ez form 2012   A child will be treated as the qualifying child of his or her noncustodial parent (for purposes of claiming an exemption and the child tax credit, but not for the EIC) if all of the following statements are true. Irs 1040ez form 2012 The parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Lived apart at all times during the last 6 months of 2013, whether or not they are or were married. Irs 1040ez form 2012 The child received over half of his or her support for the year from the parents. Irs 1040ez form 2012 The child is in the custody of one or both parents for more than half of 2013. Irs 1040ez form 2012 Either of the following statements is true. Irs 1040ez form 2012 The custodial parent signs Form 8332 or a substantially similar statement that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches the form or statement to his or her return. Irs 1040ez form 2012 If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. Irs 1040ez form 2012 A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2013 provides that the noncustodial parent can claim the child as a dependent, and the noncustodial parent provides at least $600 for support of the child during 2013. Irs 1040ez form 2012  For details, see chapter 3. Irs 1040ez form 2012 Also see Applying Rule 9 to divorced or separated parents (or parents who live apart) , next. Irs 1040ez form 2012 Applying Rule 9 to divorced or separated parents (or parents who live apart). Irs 1040ez form 2012   If a child is treated as the qualifying child of the noncustodial parent under the special rule just described for children of divorced or separated parents (or parents who live apart), only the noncustodial parent can claim an exemption and the child tax credit for the child. Irs 1040ez form 2012 However, the custodial parent, if eligible, or another eligible taxpayer can claim the child as a qualifying child for the EIC and other tax benefits listed earlier in this chapter. Irs 1040ez form 2012 If the child is the qualifying child of more than one person for these benefits, then the tiebreaker rules determine which person can treat the child as a qualifying child. Irs 1040ez form 2012 Example 1. Irs 1040ez form 2012 You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Irs 1040ez form 2012 Your AGI is $10,000. Irs 1040ez form 2012 Your mother’s AGI is $25,000. Irs 1040ez form 2012 Your son's father did not live with you or your son. Irs 1040ez form 2012 Under the special rule for children of divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for the child. Irs 1040ez form 2012 However, your son's father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the EIC. Irs 1040ez form 2012 You and your mother did not have any child care expenses or dependent care benefits. Irs 1040ez form 2012 If you do not claim your son as a qualifying child, your mother can claim him as a qualifying child for the EIC and head of household filing status, if she qualifies for these tax benefits. Irs 1040ez form 2012 Example 2. Irs 1040ez form 2012 The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. Irs 1040ez form 2012 Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. Irs 1040ez form 2012 Example 3. Irs 1040ez form 2012 The facts are the same as in Example 1 except that you and your mother both claim your son as a qualifying child for the EIC. Irs 1040ez form 2012 Your mother also claims him as a qualifying child for head of household filing status. Irs 1040ez form 2012 You as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC. Irs 1040ez form 2012 The IRS will disallow your mother's claim to the EIC and head of household filing status unless she has another qualifying child. Irs 1040ez form 2012 Rule 10. Irs 1040ez form 2012 You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. Irs 1040ez form 2012 ) if all of the following statements are true. Irs 1040ez form 2012 You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Irs 1040ez form 2012 Or, you are that person's brother, sister, half brother, half sister, stepbrother, or stepsister (or a descendant of any of them). Irs 1040ez form 2012 You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student, and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. Irs 1040ez form 2012 You lived with that person in the United States for more than half of the year. Irs 1040ez form 2012 You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). Irs 1040ez form 2012 For more details about the tests to be a qualifying child, see Rule 8 . Irs 1040ez form 2012 If you are a qualifying child of another taxpayer, you cannot claim the EIC. Irs 1040ez form 2012 This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. Irs 1040ez form 2012 Put “No” beside line 64a (Form 1040) or line 38a (Form 1040A). Irs 1040ez form 2012 Example. Irs 1040ez form 2012 You and your daughter lived with your mother all year. Irs 1040ez form 2012 You are 22 years old, unmarried, and attended a trade school full time. Irs 1040ez form 2012 You had a part-time job and earned $5,700. Irs 1040ez form 2012 You had no other income. Irs 1040ez form 2012 Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother. Irs 1040ez form 2012 She can claim the EIC if she meets all the other requirements. Irs 1040ez form 2012 Because you are your mother's qualifying child, you cannot claim the EIC. Irs 1040ez form 2012 This is so even if your mother cannot or does not claim the EIC. Irs 1040ez form 2012 Child of person not required to file a return. Irs 1040ez form 2012   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you meet the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. Irs 1040ez form 2012 Example. Irs 1040ez form 2012 The facts are the same as in the last example except your mother had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. Irs 1040ez form 2012 As a result, you are not your mother's qualifying child. Irs 1040ez form 2012 You can claim the EIC if you meet all the other requirements to do so. Irs 1040ez form 2012   See Rule 10 in Publication 596 for additional examples. Irs 1040ez form 2012 Part C. Irs 1040ez form 2012 Rules If You Do Not Have a Qualifying Child Read this part if you: Do not have a qualifying child, and Have met all the rules in Part A . Irs 1040ez form 2012  Part C discusses Rules 11 through 14. Irs 1040ez form 2012 You must meet all four of these rules, in addition to the rules in Parts A and D , to qualify for the earned income credit without a qualifying child. Irs 1040ez form 2012 If you have a qualifying child, the rules in this part do not apply to you. Irs 1040ez form 2012 You can claim the credit only if you meet all the rules in Parts A, B, and D. Irs 1040ez form 2012 See Rule 8 to find out if you have a qualifying child. Irs 1040ez form 2012 Rule 11. Irs 1040ez form 2012 You Must Be at Least Age 25 but Under Age 65 You must be at least age 25 but under age 65 at the end of 2013. Irs 1040ez form 2012 If you are married filing a joint return, either you or your spouse must be at least age 25 but under age 65 at the end of 2013. Irs 1040ez form 2012 It does not matter which spouse meets the age test, as long as one of the spouses does. Irs 1040ez form 2012 You meet the age test if you were born after December 31, 1948, and before January 2, 1989. Irs 1040ez form 2012 If you are married filing a joint return, you meet the age test if either you or your spouse was born after December 31, 1948, and before January 2, 1989. Irs 1040ez form 2012 If neither you nor your spouse meets the age test, you cannot claim the EIC. Irs 1040ez form 2012 Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Irs 1040ez form 2012 Death of spouse. Irs 1040ez form 2012   If you are filing a joint return with your spouse who died in 2013, you meet the age test if your spouse was at least age 25 but under age 65 at the time of death. Irs 1040ez form 2012 Example 1. Irs 1040ez form 2012 You are age 28 and unmarried. Irs 1040ez form 2012 You meet the age test. Irs 1040ez form 2012 Example 2—spouse meets age test. Irs 1040ez form 2012 You are married and filing a joint return. Irs 1040ez form 2012 You are age 23 and your spouse is age 27. Irs 1040ez form 2012 You meet the age test because your spouse is at least age 25 but under age 65. Irs 1040ez form 2012 Example 3—spouse dies in 2013. Irs 1040ez form 2012 You are married and filing a joint return with your spouse who died in August 2013. Irs 1040ez form 2012 You are age 67. Irs 1040ez form 2012 Your spouse would have become age 65 in November 2013. Irs 1040ez form 2012 Because your spouse was under age 65 when she died, you meet the age test. Irs 1040ez form 2012 Rule 12. Irs 1040ez form 2012 You Cannot Be the Dependent of Another Person If you are not filing a joint return, you meet this rule if: You checked box 6a on Form 1040 or 1040A, or You did not check the “You” box on line 5 of Form 1040EZ, and you entered $10,000 on that line. Irs 1040ez form 2012 If you are filing a joint return, you meet this rule if: You checked both box 6a and box 6b on Form 1040 or 1040A, or You and your spouse did not check either the “You” box or the “Spouse” box on line 5 of Form 1040EZ, and you entered $20,000 on that line. Irs 1040ez form 2012 If you are not sure whether someone else can claim you (or your spouse, if filing a joint return) as a dependent, read the rules for claiming a dependent in chapter 3. Irs 1040ez form 2012 If someone else can claim you (or your spouse, if filing a joint return) as a dependent on his or her return, but does not, you still cannot claim the credit. Irs 1040ez form 2012 Example 1. Irs 1040ez form 2012 In 2013, you were age 25, single, and living at home with your parents. Irs 1040ez form 2012 You worked and were not a student. Irs 1040ez form 2012 You earned $7,500. Irs 1040ez form 2012 Your parents cannot claim you as a dependent. Irs 1040ez form 2012 When you file your return, you claim an exemption for yourself by not checking the “You” box on line 5 of your Form 1040EZ and by entering $10,000 on that line. Irs 1040ez form 2012 You meet this rule. Irs 1040ez form 2012 You can claim the EIC if you meet all the other requirements. Irs 1040ez form 2012 Example 2. Irs 1040ez form 2012 The facts are the same as in Example 1 , except that you earned $2,000. Irs 1040ez form 2012 Your parents can claim you as a dependent but decide not to. Irs 1040ez form 2012 You do not meet this rule. Irs 1040ez form 2012 You cannot claim the credit because your parents could have claimed you as a dependent. Irs 1040ez form 2012 Joint returns. Irs 1040ez form 2012   You generally cannot be claimed as a dependent by another person if you are married and file a joint return. Irs 1040ez form 2012   However, another person may be able to claim you as a dependent if you and your spouse file a joint return only to get a refund of income tax withheld or estimated tax paid. Irs 1040ez form 2012 But neither you nor your spouse can be claimed as a dependent by another person if you claim the EIC on your joint return. Irs 1040ez form 2012 Example 1. Irs 1040ez form 2012 You are 26 years old. Irs 1040ez form 2012 You and your wife live with your parents and had $800 of wages from part-time jobs and no other income. Irs 1040ez form 2012 Neither you nor your wife is required to file a tax return. Irs 1040ez form 2012 You do not have a child. Irs 1040ez form 2012 Taxes were taken out of your pay, so you file a joint return only to get a refund of the withheld taxes. Irs 1040ez form 2012 Your parents are not disqualified from claiming an exemption for you just because you filed a joint return. Irs 1040ez form 2012 They can claim exemptions for you and your wife if all the other tests to do so are met. Irs 1040ez form 2012 Example 2. Irs 1040ez form 2012 The facts are the same as in Example 1 except no taxes were taken out of your pay. Irs 1040ez form 2012 Also, you and your wife are not required to file a tax return, but you file a joint return to claim an EIC of $63 and get a refund of that amount. Irs 1040ez form 2012 Because claiming the EIC is your reason for filing the return, you are not filing it only to get a refund of income tax withheld or estimated tax paid. Irs 1040ez form 2012 Your parents cannot claim an exemption for either you or your wife. Irs 1040ez form 2012 Rule 13. Irs 1040ez form 2012 You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. Irs 1040ez form 2012 ) if all of the following statements are true. Irs 1040ez form 2012 You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Irs 1040ez form 2012 Or, you are that person's brother, sister, half brother, half sister, stepbrother, or stepsister (or a descendant of any of them). Irs 1040ez form 2012 You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student (as defined in Rule 8 ), and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. Irs 1040ez form 2012 You lived with that person in the United States for more than half of the year. Irs 1040ez form 2012 You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). Irs 1040ez form 2012 For more details about the tests to be a qualifying child, see Rule 8 . Irs 1040ez form 2012 If you are a qualifying child of another taxpayer, you cannot claim the EIC. Irs 1040ez form 2012 This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. Irs 1040ez form 2012 Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Irs 1040ez form 2012 Example. Irs 1040ez form 2012 You lived with your mother all year. Irs 1040ez form 2012 You are age 26, unmarried, and permanently and totally disabled. Irs 1040ez form 2012 Your only income was from a community center where you went three days a week to answer telephones. Irs 1040ez form 2012 You earned $5,000 for the year and provided more than half of your own support. Irs 1040ez form 2012 Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother for the EIC. Irs 1040ez form 2012 She can claim the EIC if she meets all the other requirements. Irs 1040ez form 2012 Because you are a qualifying child of your mother, you cannot claim the EIC. Irs 1040ez form 2012 This is so even if your mother cannot or does not claim the EIC. Irs 1040ez form 2012 Joint returns. Irs 1040ez form 2012   You generally cannot be a qualifying child of another taxpayer if you are married and file a joint return. Irs 1040ez form 2012   However, you may be a qualifying child of another taxpayer if you and your spouse file a joint return for the year only to get a refund of income tax withheld or estimated tax paid. Irs 1040ez form 2012 But neither you nor your spouse can be a qualifying child of another taxpayer if you claim the EIC on your joint return. Irs 1040ez form 2012 Child of person not required to file a return. Irs 1040ez form 2012   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you meet the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. Irs 1040ez form 2012 Example. Irs 1040ez form 2012 You lived all year with your father. Irs 1040ez form 2012 You are 27 years old, unmarried, permanently and totally disabled, and earned $13,000. Irs 1040ez form 2012 You have no other income, no children, and provided more than half of your own support. Irs 1040ez form 2012 Your father had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. Irs 1040ez form 2012 As a result, you are not your father's qualifying child. Irs 1040ez form 2012 You can claim the EIC if you meet all the other requirements to do so. Irs 1040ez form 2012   See Rule 13 in Publication 596 for additional examples. Irs 1040ez form 2012 Rule 14. Irs 1040ez form 2012 You Must Have Lived in the United States More Than Half of the Year Your home (and your spouse's, if filing a joint return) must have been in the United States for more than half the year. Irs 1040ez form 2012 If it was not, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Irs 1040ez form 2012 United States. Irs 1040ez form 2012   This means the 50 states and the District of Columbia. Irs 1040ez form 2012 It does not include Puerto Rico or U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 possessions such as Guam. Irs 1040ez form 2012 Homeless shelter. Irs 1040ez form 2012   Your home can be any location where you regularly live. Irs 1040ez form 2012 You do not need a traditional home. Irs 1040ez form 2012 If you lived in one or more homeless shelters in the United States for more than half the year, you meet this rule. Irs 1040ez form 2012 Military personnel stationed outside the United States. Irs 1040ez form 2012   U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 military personnel stationed outside the United States on extended active duty (defined in Rule 8 ) are considered to live in the United States during that duty period for purposes of the EIC. Irs 1040ez form 2012 Part D. Irs 1040ez form 2012 Figuring and Claiming the EIC Read this part if you have met all the rules in Parts A and B, or all the rules in Parts A and C. Irs 1040ez form 2012 Part D discusses Rule 15 . Irs 1040ez form 2012 You must meet this rule, in addition to the rules in Parts A and B , or Parts A and C , to qualify for the earned income credit. Irs 1040ez form 2012 This part of the chapter also explains how to figure the amount of your credit. Irs 1040ez form 2012 You have two choices. Irs 1040ez form 2012 Have the IRS figure the EIC for you. Irs 1040ez form 2012 If you want to do this, see IRS Will Figure the EIC for You . Irs 1040ez form 2012 Figure the EIC yourself. Irs 1040ez form 2012 If you want to do this, see How To Figure the EIC Yourself . Irs 1040ez form 2012 Rule 15. Irs 1040ez form 2012 Your Earned Income Must Be Less Than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Irs 1040ez form 2012 Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. Irs 1040ez form 2012 Employee pay is earned income only if it is taxable. Irs 1040ez form 2012 Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Irs 1040ez form 2012 But there is an exception for nontaxable combat pay, which you can choose to include in earned income. Irs 1040ez form 2012 Earned income is explained in detail in Rule 7 . Irs 1040ez form 2012 Figuring earned income. Irs 1040ez form 2012   If you are self-employed, a statutory employee, or a member of the clergy or a church employee who files Schedule SE (Form 1040), you will figure your earned income when you fill out Part 4 of EIC Worksheet B in the Form 1040 instructions. Irs 1040ez form 2012   Otherwise, figure your earned income by using the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b or the Form 1040A instructions for lines 38a and 38b, or the worksheet in Step 2 of the Form 1040EZ instructions for lines 8a and 8b. Irs 1040ez form 2012   When using one of those worksheets to figure your earned income, you will start with the amount on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). Irs 1040ez form 2012 You will then reduce that amount by any amount included on that line and described in the following list: Scholarship or fellowship grants not reported on a Form W-2, Inmate's income, and Pension or annuity from deferred compensation plans. Irs 1040ez form 2012 Scholarship or fellowship grants not reported on a Form W-2. Irs 1040ez form 2012   A scholarship or fellowship grant that was not reported to you on a Form W-2 is not considered earned income for the earned income credit. Irs 1040ez form 2012 Inmate's income. Irs 1040ez form 2012   Amounts received for work performed while an inmate in a penal institution are not earned income for the earned income credit. Irs 1040ez form 2012 This includes amounts received for work performed while in a work release program or while in a halfway house. Irs 1040ez form 2012 If you received any amount for work done while an inmate in a penal institution and that amount is included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “PRI” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). Irs 1040ez form 2012 Pension or annuity from deferred compensation plans. Irs 1040ez form 2012   A pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan is not considered earned income for the earned income credit. Irs 1040ez form 2012 If you received such an amount and it was included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “DFC” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). Irs 1040ez form 2012 This amount may be reported in box 11 of your Form W-2. Irs 1040ez form 2012 If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or annuity. Irs 1040ez form 2012 Clergy. Irs 1040ez form 2012   If you are a member of the clergy who files Schedule SE and the amount on line 2 of that schedule includes an amount that was also reported on line 7 (Form 1040), subtract that amount from the amount on line 7 (Form 1040) and enter the result in the first space of the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b. Irs 1040ez form 2012 Put “Clergy” on the dotted line next to line 64a (Form 1040). Irs 1040ez form 2012 Church employees. Irs 1040ez form 2012    A church employee means an employee (other than a minister or member of a religious order) of a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes. Irs 1040ez form 2012 If you received wages as a
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Know the Risks

Cyber security, phishing, worms, firewalls, Trojan horses, hackers, and viruses seem to be in the news every day. Plus warnings to update your virus protection, watch out for online scams, protect your privacy, and watch what you click on are everywhere. But what does it all mean? And what can you do to safeguard access to your computer and to protect yourself and your family? What is this all about?

The first step in protecting yourself is to recognize the risks and become familiar with some of the terminology associated with cyber security. The Department of Homeland Security created this list of terms: Hacker, attacker, or intruder - These terms are applied to the people who seek to exploit weaknesses in software and computer systems for their own gain. Although their intentions are sometimes fairly benign and motivated solely by curiosity, their actions are typically in violation of the intended use of the systems they are exploiting. The results can range from mere mischief (creating a virus with no intentionally negative impact) to malicious (stealing or altering information).

Malicious code includes code such as viruses, worms, and Trojan horses. Although some people use these terms interchangeably, they have unique characteristics:

  • Viruses - This type of malicious code requires you to actually do something before it infects your computer. This action could be opening an email attachment or going to a particular web page.
  • Worms - Worms propagate without you r doing anything. They typically start by exploiting a software vulnerability (a flaw that allows the software's intended security policy to be violated). Then once the victim computer has been infected, the worm will attempt to find and infect other computers. Similar to viruses, worms can propagate via email, web sites, or network-based software. The automated self-propagation of worms distinguishes them from viruses.
  • Trojan horses - A Trojan horse program is software that claims to do one thing while, in fact, doing something different behind the scenes. For example, a program that claims it will speed up your computer may actually be sending your confidential information to an intruder.
  • Spyware - This sneaky software rides its way onto computers when you download screensavers, games, music, and other applications. Spyware sends information about what you're doing on the Internet to a third-party, usually to target you with pop-up ads. Browsers enable you to block pop-ups. You can also install anti-spyware to stop this threat to your privacy.

Minimize Access to Your Information

It is probably easy for you to identify people who could gain physical access to your computer—family members, roommates, co-workers, members of a cleaning crew, and maybe some others. But identifying the people who could gain remote access to your computer becomes much more difficult. As long as you have a computer and connect it to a network or the internet, you are vulnerable to someone or something else accessing or corrupting your information. Luckily, you can develop habits that make it more difficult.

Lock or log-off your computer when you are away from it. This prevents another person from waiting for you to leave and then sitting down at your computer and accessing all of your information.

To be really secure, disconnect your computer from the Internet when you aren't using it. DSL and cable modems make it possible for users to be online all the time, but this convenience comes with risks. The likelihood that attackers or viruses scanning the network for available computers will target your computer becomes much higher if your computer is always connected.

Evaluate your security settings. It is important to examine your computer's settings, especially the security settings, and select options that meet your needs without putting you at increased risk. Many, but not all Internet providers offer free security software. If you don't receive free software, you should consider buying a commercial product that includes virus scan, firewall, and pop-up blockers. You should also be aware of your Internet cookies setting. Cookies are short pieces of data used by web servers to identify users. Some cookies are useful for storing images and data from websites that you frequent, but others are malicious and collect information about you. You'll have to decide how much risk from cookies you can accept. Finally, if you install a patch or a new version of software, or if you hear of something that might affect your settings, reevaluate your settings to make sure they are still appropriate.

Look for a privacy policy statement or seal that indicates the site abides by privacy standards. Take time to read how your privacy is protected.

Look for signals that you are using a secure web page. A secure site encrypts or scrambles personal information so it cannot be easily intercepted. Signals include a screen notice that says you are on a secure site, a closed lock or unbroken key in the bottom corner of your screen, or the first letters of the Internet address you are viewing changes from "http" to "https."

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What if Your Online Privacy is Compromised?

If you believe you might have revealed sensitive information about your organization, report it to the appropriate people within the organization, including network administrators. They can be alert for any suspicious or unusual activity.

If you believe your financial accounts may be compromised, contact your financial institution immediately and close any accounts that may have been compromised. Watch for any unexplainable charges to your account.

Check your credit reports for unusual activity.

Report your situation to local police, and file a report with the Federal Trade Commission.

Protecting Children Online

The Children's Online Privacy Protection Act requires commercial websites to obtain parental consent before collecting, using, or disclosing personal information from children under 13. For more information, contact the FTC about Children's Privacy.

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The Irs 1040ez Form 2012

Irs 1040ez form 2012 1. Irs 1040ez form 2012   Investment Income Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: General InformationSSN for joint account. Irs 1040ez form 2012 Custodian account for your child. Irs 1040ez form 2012 Penalty for failure to supply SSN. Irs 1040ez form 2012 Certification. Irs 1040ez form 2012 Underreported interest and dividends. Irs 1040ez form 2012 How to stop backup withholding due to underreporting. Irs 1040ez form 2012 How to stop backup withholding due to an incorrect identification number. Irs 1040ez form 2012 Reporting backup withholding. Irs 1040ez form 2012 Nonresident aliens. Irs 1040ez form 2012 Penalties. Irs 1040ez form 2012 Savings account with parent as trustee. Irs 1040ez form 2012 Interest IncomeInterest not reported on Form 1099-INT. Irs 1040ez form 2012 Nominees. Irs 1040ez form 2012 Incorrect amount. Irs 1040ez form 2012 Information reporting requirement. Irs 1040ez form 2012 Taxable Interest — General Below-Market Loans U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 Savings Bonds U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 Treasury Bills, Notes, and Bonds Bonds Sold Between Interest Dates Insurance State or Local Government Obligations Discount on Debt InstrumentsOriginal Issue Discount (OID) Market Discount Bonds Discount on Short-Term Obligations Election To Report All Interest as OID When To Report Interest IncomeConstructive receipt. Irs 1040ez form 2012 How To Report Interest IncomeSchedule B (Form 1040A or 1040). Irs 1040ez form 2012 Worksheet for savings bonds distributed from a retirement or profit-sharing plan. Irs 1040ez form 2012 File Form 1099-INT with the IRS. Irs 1040ez form 2012 Dividends and Other DistributionsDividends not reported on Form 1099-DIV. Irs 1040ez form 2012 Nominees. Irs 1040ez form 2012 Ordinary Dividends Capital Gain Distributions Nondividend Distributions Liquidating Distributions Distributions of Stock and Stock Rights Other Distributions How To Report Dividend IncomeElection. Irs 1040ez form 2012 Independent contractor. Irs 1040ez form 2012 Investment interest deducted. Irs 1040ez form 2012 Exception 1. Irs 1040ez form 2012 Exception 2. Irs 1040ez form 2012 Undistributed capital gains. Irs 1040ez form 2012 File Form 1099-DIV with the IRS. Irs 1040ez form 2012 Stripped Preferred Stock REMICs, FASITs, and Other CDOsREMICs Collateralized Debt Obligations (CDOs) FASITs S CorporationsLimit on losses and deductions. Irs 1040ez form 2012 Passive activity losses. Irs 1040ez form 2012 Form 8582. Irs 1040ez form 2012 Investment ClubsInvestments in name of member. Irs 1040ez form 2012 Tax Treatment of the Club Topics - This chapter discusses: Interest Income , Discount on Debt Instruments , When To Report Interest Income , How To Report Interest Income , Dividends and Other Distributions , How To Report Dividend Income , Stripped Preferred Stock , Real estate mortgage investment conduits (REMICs), financial asset securitization investment trusts (FASITs), and other collateralized debt obligations (CDOs) , S Corporations , and Investment Clubs . Irs 1040ez form 2012 Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 537 Installment Sales 590 Individual Retirement Arrangements (IRAs) 925 Passive Activity and At-Risk Rules 1212 Guide to Original Issue Discount (OID) Instruments Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends Schedule D (Form 1040) Capital Gains and Losses 1040 U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 Individual Income Tax Return 1040A U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 Individual Income Tax Return 1040EZ Income Tax Return for Single and Joint Filers With No Dependents 1099 General Instructions for Certain Information Returns 2439 Notice to Shareholder of Undistributed Long-Term Capital Gains 3115 Application for Change in Accounting Method 6251 Alternative Minimum Tax — Individuals 8582 Passive Activity Loss Limitations 8615 Tax for Certain Children Who Have Unearned Income 8814 Parents' Election To Report Child's Interest and Dividends 8815 Exclusion of Interest From Series EE and I U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 Savings Bonds Issued After 1989 8818 Optional Form To Record Redemption of Series EE and I U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 Savings Bonds Issued After 1989 8824 Like-Kind Exchanges 8949 Sales and Other Dispositions of Capital Assets 8960 Net Investment Income Tax—Individuals, Estates, and Trusts See chapter 5, How To Get Tax Help , for information about getting these publications and forms. Irs 1040ez form 2012 General Information A few items of general interest are covered here. Irs 1040ez form 2012 Recordkeeping. Irs 1040ez form 2012 You should keep a list showing sources and investment income amounts you receive during the year. Irs 1040ez form 2012 Also keep the forms you receive showing your investment income (Forms 1099-INT, Interest Income, and 1099-DIV, Dividends and Distributions, for example) as an important part of your records. Irs 1040ez form 2012 Net investment income tax (NIIT). Irs 1040ez form 2012   Beginning in 2013, you may be subject to the NIIT. Irs 1040ez form 2012 The NIIT is a 3. Irs 1040ez form 2012 8% tax on the lesser of your net investment income or the amount of your modified adjusted gross income (MAGI) that is over a threshold amount based on your filing status. Irs 1040ez form 2012    Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household (with qualifying person) $200,000 Qualifying Widow(er) with dependent child $250,000    For more information, see Form 8960 and Instructions for Form 8960. Irs 1040ez form 2012 Tax on unearned income of certain children. Irs 1040ez form 2012   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. Irs 1040ez form 2012 This may happen if all of the following are true. Irs 1040ez form 2012 The child had more than $2,000 of unearned income. Irs 1040ez form 2012 The child is required to file a tax return. Irs 1040ez form 2012 The child was: Under age 18 at the end of 2013, Age 18 at the end of 2013 and did not have earned income that was more than half of the child's support, or A full-time student over age 18 and under age 24 at the end of 2013 and did not have earned income that was more than half of the child's support. Irs 1040ez form 2012 At least one of the child's parents was alive at the end of 2013. Irs 1040ez form 2012 The child does not file a joint return for 2013. Irs 1040ez form 2012 A child born on January 1, 1996, is considered to be age 18 at the end of 2013; a child born on January 1, 1995, is considered to be age 19 at the end of 2013; a child born on January 1, 1990, is considered to be age 24 at the end of 2013. Irs 1040ez form 2012   If all of these statements are true, Form 8615 must be completed and attached to the child's tax return. Irs 1040ez form 2012 If any of these statements is not true, Form 8615 is not required and the child's income is taxed at his or her own tax rate. Irs 1040ez form 2012    However, the parent can choose to include the child's interest and dividends on the parent's return if certain requirements are met. Irs 1040ez form 2012 Use Form 8814 for this purpose. Irs 1040ez form 2012   For more information about the tax on unearned income of children and the parents' election, see Publication 929, Tax Rules for Children and Dependents. Irs 1040ez form 2012 Beneficiary of an estate or trust. Irs 1040ez form 2012   Interest, dividends, and other investment income you receive as a beneficiary of an estate or trust is generally taxable income. Irs 1040ez form 2012 You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Irs 1040ez form 2012 , from the fiduciary. Irs 1040ez form 2012 Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. Irs 1040ez form 2012 Social security number (SSN). Irs 1040ez form 2012   You must give your name and SSN or individual tax identification number (ITIN) to any person required by federal tax law to make a return, statement, or other document that relates to you. Irs 1040ez form 2012 This includes payers of interest and dividends. Irs 1040ez form 2012 If you do not give your SSN or ITIN to the payer of interest, you may have to pay a penalty. Irs 1040ez form 2012 SSN for joint account. Irs 1040ez form 2012   If the funds in a joint account belong to one person, list that person's name first on the account and give that person's SSN to the payer. Irs 1040ez form 2012 (For information on who owns the funds in a joint account, see Joint accounts , later. Irs 1040ez form 2012 ) If the joint account contains combined funds, give the SSN of the person whose name is listed first on the account. Irs 1040ez form 2012 This is because only one name and SSN can be shown on Form 1099. Irs 1040ez form 2012   These rules apply both to joint ownership by a married couple and to joint ownership by other individuals. Irs 1040ez form 2012 For example, if you open a joint savings account with your child using funds belonging to the child, list the child's name first on the account and give the child's SSN. Irs 1040ez form 2012 Custodian account for your child. Irs 1040ez form 2012   If your child is the actual owner of an account that is recorded in your name as custodian for the child, give the child's SSN to the payer. Irs 1040ez form 2012 For example, you must give your child's SSN to the payer of dividends on stock owned by your child, even though the dividends are paid to you as custodian. Irs 1040ez form 2012 Penalty for failure to supply SSN. Irs 1040ez form 2012   You will be subject to a penalty if, when required, you fail to: Include your SSN on any return, statement, or other document, Give your SSN to another person who must include it on any return, statement, or other document, or Include the SSN of another person on any return, statement, or other document. Irs 1040ez form 2012 The penalty is $50 for each failure up to a maximum penalty of $100,000 for any calendar year. Irs 1040ez form 2012   You will not be subject to this penalty if you can show that your failure to provide the SSN was due to reasonable cause and not to willful neglect. Irs 1040ez form 2012   If you fail to supply an SSN, you may also be subject to backup withholding. Irs 1040ez form 2012 Backup withholding. Irs 1040ez form 2012   Your investment income is generally not subject to regular withholding. Irs 1040ez form 2012 However, it may be subject to backup withholding to ensure that income tax is collected on the income. Irs 1040ez form 2012 Under backup withholding, the bank, broker, or other payer of interest, original issue discount (OID), dividends, cash patronage dividends, or royalties must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. Irs 1040ez form 2012   Backup withholding applies if: You do not give the payer your identification number (either a social security number or an employer identification number) in the required manner, The IRS notifies the payer that you gave an incorrect identification number, The IRS notifies the payer that you are subject to backup withholding on interest or dividends because you have underreported interest or dividends on your income tax return, or You are required, but fail, to certify that you are not subject to backup withholding for the reason described in (3). Irs 1040ez form 2012 Certification. Irs 1040ez form 2012   For new accounts paying interest or dividends, you must certify under penalties of perjury that your SSN is correct and that you are not subject to backup withholding. Irs 1040ez form 2012 Your payer will give you a Form W-9, Request for Taxpayer Identification Number and Certification, or similar form, to make this certification. Irs 1040ez form 2012 If you fail to make this certification, backup withholding may begin immediately on your new account or investment. Irs 1040ez form 2012 Underreported interest and dividends. Irs 1040ez form 2012   You will be considered to have underreported your interest and dividends if the IRS has determined for a tax year that: You failed to include any part of a reportable interest or dividend payment required to be shown on your return, or You were required to file a return and to include a reportable interest or dividend payment on that return, but you failed to file the return. Irs 1040ez form 2012 How to stop backup withholding due to underreporting. Irs 1040ez form 2012   If you have been notified that you underreported interest or dividends, you can request a determination from the IRS to prevent backup withholding from starting or to stop backup withholding once it has begun. Irs 1040ez form 2012 You must show that at least one of the following situations applies. Irs 1040ez form 2012 No underreporting occurred. Irs 1040ez form 2012 You have a bona fide dispute with the IRS about whether underreporting occurred. Irs 1040ez form 2012 Backup withholding will cause or is causing an undue hardship, and it is unlikely that you will underreport interest and dividends in the future. Irs 1040ez form 2012 You have corrected the underreporting by filing a return if you did not previously file one and by paying all taxes, penalties, and interest due for any underreported interest or dividend payments. Irs 1040ez form 2012   If the IRS determines that backup withholding should stop, it will provide you with a certification and will notify the payers who were sent notices earlier. Irs 1040ez form 2012 How to stop backup withholding due to an incorrect identification number. Irs 1040ez form 2012   If you have been notified by a payer that you are subject to backup withholding because you have provided an incorrect SSN or employer identification number, you can stop it by following the instructions the payer gives you. Irs 1040ez form 2012 Reporting backup withholding. Irs 1040ez form 2012   If backup withholding is deducted from your interest or dividend income or other reportable payment, the bank or other business must give you an information return for the year (for example, a Form 1099-INT) indicating the amount withheld. Irs 1040ez form 2012 The information return will show any backup withholding as “Federal income tax withheld. Irs 1040ez form 2012 ” Nonresident aliens. Irs 1040ez form 2012    Generally, payments made to nonresident aliens are not subject to backup withholding. Irs 1040ez form 2012 You can use Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, to certify exempt status. Irs 1040ez form 2012 However, this does not exempt you from the 30% (or lower treaty) withholding rate that may apply to your investment income. Irs 1040ez form 2012 For information on the 30% rate, see Publication 519, U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 Tax Guide for Aliens. Irs 1040ez form 2012 Penalties. Irs 1040ez form 2012   There are civil and criminal penalties for giving false information to avoid backup withholding. Irs 1040ez form 2012 The civil penalty is $500. Irs 1040ez form 2012 The criminal penalty, upon conviction, is a fine of up to $1,000, or imprisonment of up to 1 year, or both. Irs 1040ez form 2012 Where to report investment income. Irs 1040ez form 2012   Table 1-1 gives an overview of the forms and schedules to use to report some common types of investment income. Irs 1040ez form 2012 But see the rest of this publication for detailed information about reporting investment income. Irs 1040ez form 2012 Joint accounts. Irs 1040ez form 2012   If two or more persons hold property (such as a savings account, bond, or stock) as joint tenants, tenants by the entirety, or tenants in common, each person's share of any interest or dividends from the property is determined by local law. Irs 1040ez form 2012 Community property states. Irs 1040ez form 2012   If you are married and receive a distribution that is community income, one-half of the distribution is generally considered to be received by each spouse. Irs 1040ez form 2012 If you file separate returns, you must each report one-half of any taxable distribution. Irs 1040ez form 2012 See Publication 555, Community Property, for more information on community income. Irs 1040ez form 2012   If the distribution is not considered community property and you and your spouse file separate returns, each of you must report your separate taxable distributions. Irs 1040ez form 2012 Example. Irs 1040ez form 2012 You and your spouse have a joint money market account. Irs 1040ez form 2012 Under state law, half the income from the account belongs to you, and half belongs to your spouse. Irs 1040ez form 2012 If you file separate returns, you each report half the income. Irs 1040ez form 2012 Income from property given to a child. Irs 1040ez form 2012   Property you give as a parent to your child under the Model Gifts of Securities to Minors Act, the Uniform Gifts to Minors Act, or any similar law becomes the child's property. Irs 1040ez form 2012   Income from the property is taxable to the child, except that any part used to satisfy a legal obligation to support the child is taxable to the parent or guardian having that legal obligation. Irs 1040ez form 2012 Savings account with parent as trustee. Irs 1040ez form 2012   Interest income from a savings account opened for a minor child, but placed in the name and subject to the order of the parents as trustees, is taxable to the child if, under the law of the state in which the child resides, both of the following are true. Irs 1040ez form 2012 The savings account legally belongs to the child. Irs 1040ez form 2012 The parents are not legally permitted to use any of the funds to support the child. Irs 1040ez form 2012 Table 1-1. Irs 1040ez form 2012 Where To Report Common Types of Investment Income (For detailed information about reporting investment income, see the rest of this publication, especially How To Report Interest Income and How To Report Dividend Income in chapter 1. Irs 1040ez form 2012 ) Type of Income If you file Form 1040, report on . Irs 1040ez form 2012 . Irs 1040ez form 2012 . Irs 1040ez form 2012 If you can file Form 1040A, report on . Irs 1040ez form 2012 . Irs 1040ez form 2012 . Irs 1040ez form 2012 If you can file Form 1040EZ, report on . Irs 1040ez form 2012 . Irs 1040ez form 2012 . Irs 1040ez form 2012 Tax-exempt interest (Form 1099-INT, box 8) Line 8b Line 8b Space to the left of line 2 (enter “TEI” and the amount) Taxable interest that totals $1,500 or less Line 8a (You may need to file Schedule B as well. Irs 1040ez form 2012 ) Line 8a (You may need to file Schedule B as well. Irs 1040ez form 2012 ) Line 2 Taxable interest that totals more than $1,500 Line 8a; also use Schedule B, line 1 Line 8a; also use Schedule B, line 1   Savings bond interest you will exclude because of higher education expenses Schedule B; also use Form 8815 Schedule B; also use Form 8815   Ordinary dividends that total $1,500 or less Line 9a (You may need to file Schedule B as well. Irs 1040ez form 2012 ) Line 9a (You may need to file Schedule B as well. Irs 1040ez form 2012 )   Ordinary dividends that total more than $1,500 Line 9a; also use Schedule B, line 5 Line 9a; also use Schedule B, line 5   Qualified dividends (if you do not have to file Schedule D) Line 9b; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 2 Line 9b; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 2   Qualified dividends (if you have to file Schedule D) Line 9b; also use the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet, line 2 You cannot use Form 1040A    You cannot use Form 1040EZ Capital gain distributions (if you do not have to file Schedule D) Line 13; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 3 Line 10; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 3   Capital gain distributions (if you have to file Schedule D) Schedule D, line 13; also use the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet     Section 1250, 1202, or collectibles gain (Form 1099-DIV, box 2b, 2c, or 2d) Form 8949 and Schedule D     Nondividend distributions (Form 1099-DIV, box 3) Generally not reported*     Undistributed capital gains (Form 2439, boxes 1a - 1d) Schedule D     Gain or loss from sales of stocks or bonds Line 13; also use Form 8949, Schedule D, and the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet You cannot use Form 1040A   Gain or loss from exchanges of like-kind investment property Line 13; also use Schedule D, Form 8824, and the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet     *Report any amounts in excess of your basis in your mutual fund shares on Form 8949. Irs 1040ez form 2012 Use Part II if you held the shares more than 1 year. Irs 1040ez form 2012 Use Part I if you held your mutual fund shares 1 year or less. Irs 1040ez form 2012 For details on Form 8949, see Reporting Capital Gains and Losses in chapter 4, and the Instructions for Form 8949. Irs 1040ez form 2012 Accuracy-related penalty. Irs 1040ez form 2012   An accuracy-related penalty of 20% can be charged for underpayments of tax due to negligence or disregard of rules or regulations or substantial understatement of tax. Irs 1040ez form 2012 For information on the penalty and any interest that applies, see Penalties in chapter 2. Irs 1040ez form 2012 Interest Income This section discusses the tax treatment of different types of interest income. Irs 1040ez form 2012 In general, any interest that you receive or that is credited to your account and can be withdrawn is taxable income. Irs 1040ez form 2012 (It does not have to be entered in your passbook. Irs 1040ez form 2012 ) Exceptions to this rule are discussed later. Irs 1040ez form 2012 Form 1099-INT. Irs 1040ez form 2012   Interest income is generally reported to you on Form 1099-INT, or a similar statement, by banks, savings and loans, and other payers of interest. Irs 1040ez form 2012 This form shows you the interest you received during the year. Irs 1040ez form 2012 Keep this form for your records. Irs 1040ez form 2012 You do not have to attach it to your tax return. Irs 1040ez form 2012   Report on your tax return the total interest income you receive for the tax year. Irs 1040ez form 2012 Interest not reported on Form 1099-INT. Irs 1040ez form 2012   Even if you do not receive Form 1099-INT, you must still report all of your interest income. Irs 1040ez form 2012 For example, you may receive distributive shares of interest from partnerships or S corporations. Irs 1040ez form 2012 This interest is reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Irs 1040ez form 2012 , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. Irs 1040ez form 2012 Nominees. Irs 1040ez form 2012   Generally, if someone receives interest as a nominee for you, that person must give you a Form 1099-INT showing the interest received on your behalf. Irs 1040ez form 2012   If you receive a Form 1099-INT that includes amounts belonging to another person, see the discussion on Nominee distributions , later, under How To Report Interest Income. Irs 1040ez form 2012 Incorrect amount. Irs 1040ez form 2012   If you receive a Form 1099-INT that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. Irs 1040ez form 2012 The new Form 1099-INT you receive will be marked “Corrected. Irs 1040ez form 2012 ” Form 1099-OID. Irs 1040ez form 2012   Reportable interest income also may be shown on Form 1099-OID, Original Issue Discount. Irs 1040ez form 2012 For more information about amounts shown on this form, see Original Issue Discount (OID) , later in this chapter. Irs 1040ez form 2012 Exempt-interest dividends. Irs 1040ez form 2012   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. Irs 1040ez form 2012 (However, see Information reporting requirement , next. Irs 1040ez form 2012 ) Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. Irs 1040ez form 2012 You do not reduce your basis for distributions that are exempt-interest dividends. Irs 1040ez form 2012 Information reporting requirement. Irs 1040ez form 2012   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file. Irs 1040ez form 2012 This is an information reporting requirement and does not change the exempt-interest dividends into taxable income. Irs 1040ez form 2012 See How To Report Interest Income , later. Irs 1040ez form 2012 Note. Irs 1040ez form 2012 Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. Irs 1040ez form 2012 The exempt-interest dividends subject to the alternative minimum tax are shown in box 11 of Form 1099-DIV. Irs 1040ez form 2012 See Form 6251 and its instructions for more information about this tax. Irs 1040ez form 2012 Private activity bonds are discussed later under State or Local Government Obligations. Irs 1040ez form 2012 Interest on VA dividends. Irs 1040ez form 2012   Interest on insurance dividends left on deposit with the Department of Veterans Affairs (VA) is not taxable. Irs 1040ez form 2012 This includes interest paid on dividends on converted United States Government Life Insurance policies and on National Service Life Insurance policies. Irs 1040ez form 2012 Individual retirement arrangements (IRAs). Irs 1040ez form 2012   Interest on a Roth IRA generally is not taxable. Irs 1040ez form 2012 Interest on a traditional IRA is tax deferred. Irs 1040ez form 2012 You generally do not include it in your income until you make withdrawals from the IRA. Irs 1040ez form 2012 See Publication 590 for more information. Irs 1040ez form 2012 Taxable Interest — General Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. Irs 1040ez form 2012 The following are some sources of taxable interest. Irs 1040ez form 2012 Dividends that are actually interest. Irs 1040ez form 2012   Certain distributions commonly called dividends are actually interest. Irs 1040ez form 2012 You must report as interest so-called “dividends” on deposits or on share accounts in: Cooperative banks, Credit unions, Domestic building and loan associations, Domestic savings and loan associations, Federal savings and loan associations, and Mutual savings banks. Irs 1040ez form 2012  The “dividends” will be shown as interest income on Form 1099-INT. Irs 1040ez form 2012 Money market funds. Irs 1040ez form 2012   Money market funds are offered by nonbank financial institutions such as mutual funds and stock brokerage houses, and pay dividends. Irs 1040ez form 2012 Generally, amounts you receive from money market funds should be reported as dividends, not as interest. Irs 1040ez form 2012 Certificates of deposit and other deferred interest accounts. Irs 1040ez form 2012   If you open any of these accounts, interest may be paid at fixed intervals of 1 year or less during the term of the account. Irs 1040ez form 2012 You generally must include this interest in your income when you actually receive it or are entitled to receive it without paying a substantial penalty. Irs 1040ez form 2012 The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. Irs 1040ez form 2012 If interest is deferred for more than 1 year, see Original Issue Discount (OID) , later. Irs 1040ez form 2012 Interest subject to penalty for early withdrawal. Irs 1040ez form 2012   If you withdraw funds from a deferred interest account before maturity, you may have to pay a penalty. Irs 1040ez form 2012 You must report the total amount of interest paid or credited to your account during the year, without subtracting the penalty. Irs 1040ez form 2012 See Penalty on early withdrawal of savings under How To Report Interest Income, later, for more information on how to report the interest and deduct the penalty. Irs 1040ez form 2012 Money borrowed to invest in certificate of deposit. Irs 1040ez form 2012   The interest you pay on money borrowed from a bank or savings institution to meet the minimum deposit required for a certificate of deposit from the institution and the interest you earn on the certificate are two separate items. Irs 1040ez form 2012 You must report the total interest you earn on the certificate in your income. Irs 1040ez form 2012 If you itemize deductions, you can deduct the interest you pay as investment interest, up to the amount of your net investment income. Irs 1040ez form 2012 See Interest Expenses in chapter 3. Irs 1040ez form 2012 Example. Irs 1040ez form 2012 You deposited $5,000 with a bank and borrowed $5,000 from the bank to make up the $10,000 minimum deposit required to buy a 6-month certificate of deposit. Irs 1040ez form 2012 The certificate earned $575 at maturity in 2013, but you received only $265, which represented the $575 you earned minus $310 interest charged on your $5,000 loan. Irs 1040ez form 2012 The bank gives you a Form 1099-INT for 2013 showing the $575 interest you earned. Irs 1040ez form 2012 The bank also gives you a statement showing that you paid $310 interest for 2013. Irs 1040ez form 2012 You must include the $575 in your income. Irs 1040ez form 2012 If you itemize your deductions on Schedule A (Form 1040), Itemized Deductions, you can deduct $310, subject to the net investment income limit. Irs 1040ez form 2012 Gift for opening account. Irs 1040ez form 2012   If you receive noncash gifts or services for making deposits or for opening an account in a savings institution, you may have to report the value as interest. Irs 1040ez form 2012   For deposits of less than $5,000, gifts or services valued at more than $10 must be reported as interest. Irs 1040ez form 2012 For deposits of $5,000 or more, gifts or services valued at more than $20 must be reported as interest. Irs 1040ez form 2012 The value is determined by the cost to the financial institution. Irs 1040ez form 2012 Example. Irs 1040ez form 2012 You open a savings account at your local bank and deposit $800. Irs 1040ez form 2012 The account earns $20 interest. Irs 1040ez form 2012 You also receive a $15 calculator. Irs 1040ez form 2012 If no other interest is credited to your account during the year, the Form 1099-INT you receive will show $35 interest for the year. Irs 1040ez form 2012 You must report $35 interest income on your tax return. Irs 1040ez form 2012 Interest on insurance dividends. Irs 1040ez form 2012   Interest on insurance dividends left on deposit with an insurance company that can be withdrawn annually is taxable to you in the year it is credited to your account. Irs 1040ez form 2012 However, if you can withdraw it only on the anniversary date of the policy (or other specified date), the interest is taxable in the year that date occurs. Irs 1040ez form 2012 Prepaid insurance premiums. Irs 1040ez form 2012   Any increase in the value of prepaid insurance premiums, advance premiums, or premium deposit funds is interest if it is applied to the payment of premiums due on insurance policies or made available for you to withdraw. Irs 1040ez form 2012 U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 obligations. Irs 1040ez form 2012   Interest on U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 obligations, such as U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 Treasury bills, notes, and bonds, issued by any agency or instrumentality of the United States is taxable for federal income tax purposes. Irs 1040ez form 2012 Interest on tax refunds. Irs 1040ez form 2012   Interest you receive on tax refunds is taxable income. Irs 1040ez form 2012 Interest on condemnation award. Irs 1040ez form 2012   If the condemning authority pays you interest to compensate you for a delay in payment of an award, the interest is taxable. Irs 1040ez form 2012 Installment sale payments. Irs 1040ez form 2012   If a contract for the sale or exchange of property provides for deferred payments, it also usually provides for interest payable with the deferred payments. Irs 1040ez form 2012 That interest is taxable when you receive it. Irs 1040ez form 2012 If little or no interest is provided for in a deferred payment contract, part of each payment may be treated as interest. Irs 1040ez form 2012 See Unstated Interest and Original Issue Discount (OID) in Publication 537. Irs 1040ez form 2012 Interest on annuity contract. Irs 1040ez form 2012   Accumulated interest on an annuity contract you sell before its maturity date is taxable. Irs 1040ez form 2012 Usurious interest. Irs 1040ez form 2012   Usurious interest is interest charged at an illegal rate. Irs 1040ez form 2012 This is taxable as interest unless state law automatically changes it to a payment on the principal. Irs 1040ez form 2012 Interest income on frozen deposits. Irs 1040ez form 2012   Exclude from your gross income interest on frozen deposits. Irs 1040ez form 2012 A deposit is frozen if, at the end of the year, you cannot withdraw any part of the deposit because: The financial institution is bankrupt or insolvent, or The state in which the institution is located has placed limits on withdrawals because other financial institutions in the state are bankrupt or insolvent. Irs 1040ez form 2012   The amount of interest you must exclude is the interest that was credited on the frozen deposits minus the sum of: The net amount you withdrew from these deposits during the year, and The amount you could have withdrawn as of the end of the year (not reduced by any penalty for premature withdrawals of a time deposit). Irs 1040ez form 2012 If you receive a Form 1099-INT for interest income on deposits that were frozen at the end of 2013, see Frozen deposits under How To Report Interest Income for information about reporting this interest income exclusion on your tax return. Irs 1040ez form 2012   The interest you exclude is treated as credited to your account in the following year. Irs 1040ez form 2012 You must include it in income in the year you can withdraw it. Irs 1040ez form 2012 Example. Irs 1040ez form 2012 $100 of interest was credited on your frozen deposit during the year. Irs 1040ez form 2012 You withdrew $80 but could not withdraw any more as of the end of the year. Irs 1040ez form 2012 You must include $80 in your income and exclude $20 from your income for the year. Irs 1040ez form 2012 You must include the $20 in your income for the year you can withdraw it. Irs 1040ez form 2012 Bonds traded flat. Irs 1040ez form 2012    If you buy a bond at a discount when interest has been defaulted or when the interest has accrued but has not been paid, the transaction is described as trading a bond flat. Irs 1040ez form 2012 The defaulted or unpaid interest is not income and is not taxable as interest if paid later. Irs 1040ez form 2012 When you receive a payment of that interest, it is a return of capital that reduces the remaining cost basis of your bond. Irs 1040ez form 2012 Interest that accrues after the date of purchase, however, is taxable interest income for the year received or accrued. Irs 1040ez form 2012 See Bonds Sold Between Interest Dates , later in this chapter. Irs 1040ez form 2012 Below-Market Loans If you make a below-market gift or demand loan, you must report as interest income any forgone interest (defined later) from that loan. Irs 1040ez form 2012 The below-market loan rules and exceptions are described in this section. Irs 1040ez form 2012 For more information, see section 7872 of the Internal Revenue Code and its regulations. Irs 1040ez form 2012 If you receive a below-market loan, you may be able to deduct the forgone interest as well as any interest you actually paid, but not if it is personal interest. Irs 1040ez form 2012 Loans subject to the rules. Irs 1040ez form 2012   The rules for below-market loans apply to: Gift loans, Pay-related loans, Corporation-shareholder loans, Tax avoidance loans, and Certain loans made to qualified continuing care facilities under a continuing care contract. Irs 1040ez form 2012 A pay-related loan is any below-market loan between an employer and an employee or between an independent contractor and a person for whom the contractor provides services. Irs 1040ez form 2012 A tax avoidance loan is any below-market loan where the avoidance of federal tax is one of the main purposes of the interest arrangement. Irs 1040ez form 2012 Forgone interest. Irs 1040ez form 2012   For any period, forgone interest is: The amount of interest that would be payable for that period if interest accrued on the loan at the applicable federal rate and was payable annually on December 31, minus Any interest actually payable on the loan for the period. Irs 1040ez form 2012 Applicable federal rate. Irs 1040ez form 2012   Applicable federal rates are published by the IRS each month in the Internal Revenue Bulletin. Irs 1040ez form 2012 Some IRS offices have these bulletins available for research. Irs 1040ez form 2012 See chapter 5, How To Get Tax Help , for other ways to get this information. Irs 1040ez form 2012 Rules for below-market loans. Irs 1040ez form 2012   The rules that apply to a below-market loan depend on whether the loan is a gift loan, demand loan, or term loan. Irs 1040ez form 2012 Gift and demand loans. Irs 1040ez form 2012   A gift loan is any below-market loan where the forgone interest is in the nature of a gift. Irs 1040ez form 2012   A demand loan is a loan payable in full at any time upon demand by the lender. Irs 1040ez form 2012 A demand loan is a below-market loan if no interest is charged or if interest is charged at a rate below the applicable federal rate. Irs 1040ez form 2012   A demand loan or gift loan that is a below-market loan is generally treated as an arm's-length transaction in which the lender is treated as having made: A loan to the borrower in exchange for a note that requires the payment of interest at the applicable federal rate, and An additional payment to the borrower in an amount equal to the forgone interest. Irs 1040ez form 2012 The borrower is generally treated as transferring the additional payment back to the lender as interest. Irs 1040ez form 2012 The lender must report that amount as interest income. Irs 1040ez form 2012   The lender's additional payment to the borrower is treated as a gift, dividend, contribution to capital, pay for services, or other payment, depending on the substance of the transaction. Irs 1040ez form 2012 The borrower may have to report this payment as taxable income, depending on its classification. Irs 1040ez form 2012 These transfers are considered to occur annually, generally on December 31. Irs 1040ez form 2012 Term loans. Irs 1040ez form 2012   A term loan is any loan that is not a demand loan. Irs 1040ez form 2012 A term loan is a below-market loan if the amount of the loan is more than the present value of all payments due under the loan. Irs 1040ez form 2012   A lender who makes a below-market term loan other than a gift loan is treated as transferring an additional lump-sum cash payment to the borrower (as a dividend, contribution to capital, etc. Irs 1040ez form 2012 ) on the date the loan is made. Irs 1040ez form 2012 The amount of this payment is the amount of the loan minus the present value, at the applicable federal rate, of all payments due under the loan. Irs 1040ez form 2012 An equal amount is treated as original issue discount (OID). Irs 1040ez form 2012 The lender must report the annual part of the OID as interest income. Irs 1040ez form 2012 The borrower may be able to deduct the OID as interest expense. Irs 1040ez form 2012 See Original Issue Discount (OID) , later. Irs 1040ez form 2012 Exceptions to the below-market loan rules. Irs 1040ez form 2012   Exceptions to the below-market loan rules are discussed here. Irs 1040ez form 2012 Exception for loans of $10,000 or less. Irs 1040ez form 2012   The rules for below-market loans do not apply to any day on which the total outstanding amount of loans between the borrower and lender is $10,000 or less. Irs 1040ez form 2012 This exception applies only to: Gift loans between individuals if the gift loan is not directly used to buy or carry income-producing assets, and Pay-related loans or corporation-shareholder loans if the avoidance of federal tax is not a principal purpose of the interest arrangement. Irs 1040ez form 2012 This exception does not apply to a term loan described in (2) earlier that previously has been subject to the below-market loan rules. Irs 1040ez form 2012 Those rules will continue to apply even if the outstanding balance is reduced to $10,000 or less. Irs 1040ez form 2012 Exception for loans to continuing care facilities. Irs 1040ez form 2012   Loans to qualified continuing care facilities under continuing care contracts are not subject to the rules for below-market loans for the calendar year if the lender or the lender's spouse is age 62 or older at the end of the year. Irs 1040ez form 2012 For the definitions of qualified continuing care facility and continuing care contract, see Internal Revenue Code section 7872(h). Irs 1040ez form 2012 Exception for loans without significant tax effect. Irs 1040ez form 2012   Loans are excluded from the below-market loan rules if their interest arrangements do not have a significant effect on the federal tax liability of the borrower or the lender. Irs 1040ez form 2012 These loans include: Loans made available by the lender to the general public on the same terms and conditions that are consistent with the lender's customary business practice; Loans subsidized by a federal, state, or municipal government that are made available under a program of general application to the public; Certain employee-relocation loans; Certain loans from a foreign person, unless the interest income would be effectively connected with the conduct of a U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 trade or business and would not be exempt from U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 tax under an income tax treaty; Gift loans to a charitable organization, contributions to which are deductible, if the total outstanding amount of loans between the organization and lender is $250,000 or less at all times during the tax year; and Other loans on which the interest arrangement can be shown to have no significant effect on the federal tax liability of the lender or the borrower. Irs 1040ez form 2012 For a loan described in (6) above, all the facts and circumstances are used to determine if the interest arrangement has a significant effect on the federal tax liability of the lender or borrower. Irs 1040ez form 2012 Some factors to be considered are: Whether items of income and deduction generated by the loan offset each other; The amount of these items; The cost to you of complying with the below-market loan rules, if they were to apply; and Any reasons other than taxes for structuring the transaction as a below-market loan. Irs 1040ez form 2012 If you structure a transaction to meet this exception and one of the principal purposes of that structure is the avoidance of federal tax, the loan will be considered a tax-avoidance loan, and this exception will not apply. Irs 1040ez form 2012 Limit on forgone interest for gift loans of $100,000 or less. Irs 1040ez form 2012   For gift loans between individuals, if the outstanding loans between the lender and borrower total $100,000 or less, the forgone interest to be included in income by the lender and deducted by the borrower is limited to the amount of the borrower's net investment income for the year. Irs 1040ez form 2012 If the borrower's net investment income is $1,000 or less, it is treated as zero. Irs 1040ez form 2012 This limit does not apply to a loan if the avoidance of federal tax is one of the main purposes of the interest arrangement. Irs 1040ez form 2012 Effective dates. Irs 1040ez form 2012    These rules apply to term loans made after June 6, 1984, and to demand loans outstanding after that date. Irs 1040ez form 2012 U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 Savings Bonds This section provides tax information on U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bonds. Irs 1040ez form 2012 It explains how to report the interest income on these bonds and how to treat transfers of these bonds. Irs 1040ez form 2012 U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bonds currently offered to individuals include Series EE bonds and Series I bonds. Irs 1040ez form 2012 For other information on U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bonds, write to:  For Series HH/H: Bureau of the Fiscal Service Division of Customer Assistance P. Irs 1040ez form 2012 O. Irs 1040ez form 2012 Box 2186 Parkersburg, WV 26106-2186  For Series EE and I paper savings bonds: Bureau of the Fiscal Service Division of Customer Assistance P. Irs 1040ez form 2012 O. Irs 1040ez form 2012 Box 7012 Parkersburg, WV 26106-7012  For Series EE and I electronic bonds: Bureau of the Fiscal Service  Division of Customer Assistance P. Irs 1040ez form 2012 O. Irs 1040ez form 2012 Box 7015 Parkersburg, WV 26106-7015 Or, on the Internet, visit: www. Irs 1040ez form 2012 treasurydirect. Irs 1040ez form 2012 gov/indiv/indiv. Irs 1040ez form 2012 htm. Irs 1040ez form 2012 Accrual method taxpayers. Irs 1040ez form 2012   If you use an accrual method of accounting, you must report interest on U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bonds each year as it accrues. Irs 1040ez form 2012 You cannot postpone reporting interest until you receive it or until the bonds mature. Irs 1040ez form 2012 Cash method taxpayers. Irs 1040ez form 2012   If you use the cash method of accounting, as most individual taxpayers do, you generally report the interest on U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bonds when you receive it. Irs 1040ez form 2012 But see Reporting options for cash method taxpayers , later. Irs 1040ez form 2012 Series HH bonds. Irs 1040ez form 2012   These bonds were issued at face value. Irs 1040ez form 2012 Interest is paid twice a year by direct deposit to your bank account. Irs 1040ez form 2012 If you are a cash method taxpayer, you must report interest on these bonds as income in the year you receive it. Irs 1040ez form 2012   Series HH bonds were first offered in 1980 and last offered in August 2004. Irs 1040ez form 2012 Before 1980, series H bonds were issued. Irs 1040ez form 2012 Series H bonds are treated the same as series HH bonds. Irs 1040ez form 2012 If you are a cash method taxpayer, you must report the interest when you receive it. Irs 1040ez form 2012   Series H bonds have a maturity period of 30 years. Irs 1040ez form 2012 Series HH bonds mature in 20 years. Irs 1040ez form 2012 The last series H bonds matured in 2009. Irs 1040ez form 2012 The last series HH bonds will mature in 2024. Irs 1040ez form 2012 Series EE and series I bonds. Irs 1040ez form 2012   Interest on these bonds is payable when you redeem the bonds. Irs 1040ez form 2012 The difference between the purchase price and the redemption value is taxable interest. Irs 1040ez form 2012 Series EE bonds. Irs 1040ez form 2012   Series EE bonds were first offered in January 1980 and have a maturity period of 30 years. Irs 1040ez form 2012 Before July 1980, series E bonds were issued. Irs 1040ez form 2012 The original 10-year maturity period of series E bonds has been extended to 40 years for bonds issued before December 1965 and 30 years for bonds issued after November 1965. Irs 1040ez form 2012 Paper series EE and series E bonds are issued at a discount. Irs 1040ez form 2012 The face value is payable to you at maturity. Irs 1040ez form 2012 Electronic series EE bonds are issued at their face value. Irs 1040ez form 2012 The face value plus accrued interest is payable to you at maturity. Irs 1040ez form 2012 As of January 1, 2012, paper savings bonds were no longer sold at financial institutions. Irs 1040ez form 2012    Owners of paper series EE bonds can convert them to electronic bonds. Irs 1040ez form 2012 These converted bonds do not retain the denomination listed on the paper certificate but are posted at their purchase price (with accrued interest). Irs 1040ez form 2012 Series I bonds. Irs 1040ez form 2012   Series I bonds were first offered in 1998. Irs 1040ez form 2012 These are inflation-indexed bonds issued at their face amount with a maturity period of 30 years. Irs 1040ez form 2012 The face value plus all accrued interest is payable to you at maturity. Irs 1040ez form 2012 Reporting options for cash method taxpayers. Irs 1040ez form 2012   If you use the cash method of reporting income, you can report the interest on series EE, series E, and series I bonds in either of the following ways. Irs 1040ez form 2012 Method 1. Irs 1040ez form 2012 Postpone reporting the interest until the earlier of the year you cash or dispose of the bonds or the year in which they mature. Irs 1040ez form 2012 (However, see Savings bonds traded , later. Irs 1040ez form 2012 )  Note. Irs 1040ez form 2012 Series EE bonds issued in 1983 matured in 2013. Irs 1040ez form 2012 If you have used method 1, you generally must report the interest on these bonds on your 2013 return. Irs 1040ez form 2012 The last series E bonds were issued in 1980 and matured in 2010. Irs 1040ez form 2012 If you used method 1, you generally should have reported the interest on these bonds on your 2010 return. Irs 1040ez form 2012 Method 2. Irs 1040ez form 2012 Choose to report the increase in redemption value as interest each year. Irs 1040ez form 2012  You must use the same method for all series EE, series E, and series I bonds you own. Irs 1040ez form 2012 If you do not choose method 2 by reporting the increase in redemption value as interest each year, you must use method 1. Irs 1040ez form 2012 If you plan to cash your bonds in the same year you will pay for higher educational expenses, you may want to use method 1 because you may be able to exclude the interest from your income. Irs 1040ez form 2012 To learn how, see Education Savings Bond Program, later. Irs 1040ez form 2012 Change from method 1. Irs 1040ez form 2012   If you want to change your method of reporting the interest from method 1 to method 2, you can do so without permission from the IRS. Irs 1040ez form 2012 In the year of change, you must report all interest accrued to date and not previously reported for all your bonds. Irs 1040ez form 2012   Once you choose to report the interest each year, you must continue to do so for all series EE, series E, and series I bonds you own and for any you get later, unless you request permission to change, as explained next. Irs 1040ez form 2012 Change from method 2. Irs 1040ez form 2012   To change from method 2 to method 1, you must request permission from the IRS. Irs 1040ez form 2012 Permission for the change is automatically granted if you send the IRS a statement that meets all the following requirements. Irs 1040ez form 2012 You have typed or printed the following number at the top: “131. Irs 1040ez form 2012 ” It includes your name and social security number under “131. Irs 1040ez form 2012 ” It includes the year of change (both the beginning and ending dates). Irs 1040ez form 2012 It identifies the savings bonds for which you are requesting this change. Irs 1040ez form 2012 It includes your agreement to: Report all interest on any bonds acquired during or after the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest; and Report all interest on the bonds acquired before the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, with the exception of the interest reported in prior tax years. Irs 1040ez form 2012   You must attach this statement to your tax return for the year of change, which you must file by the due date (including extensions). Irs 1040ez form 2012   You can have an automatic extension of 6 months from the due date of your return for the year of change (excluding extensions) to file the statement with an amended return. Irs 1040ez form 2012 On the statement, type or print “Filed pursuant to section 301. Irs 1040ez form 2012 9100-2. Irs 1040ez form 2012 ” To get this extension, you must have filed your original return for the year of the change by the due date (including extensions). Irs 1040ez form 2012    By the date you file the original statement with your return, you must also send a signed copy to the address below. Irs 1040ez form 2012    Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) P. Irs 1040ez form 2012 O. Irs 1040ez form 2012 Box 7604 Benjamin Franklin Station Washington, DC 20044   If you use a private delivery service, send the signed copy to the address below. Irs 1040ez form 2012 Internal Revenue Service Attention: CC:IT&A  (Automatic Rulings Branch) Room 5336 1111 Constitution Avenue, NW Washington, DC 20224    Instead of filing this statement, you can request permission to change from method 2 to method 1 by filing Form 3115. Irs 1040ez form 2012 In that case, follow the form instructions for an automatic change. Irs 1040ez form 2012 No user fee is required. Irs 1040ez form 2012 Co-owners. Irs 1040ez form 2012   If a U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bond is issued in the names of co-owners, such as you and your child or you and your spouse, interest on the bond is generally taxable to the co-owner who bought the bond. Irs 1040ez form 2012 One co-owner's funds used. Irs 1040ez form 2012   If you used your funds to buy the bond, you must pay the tax on the interest. Irs 1040ez form 2012 This is true even if you let the other co-owner redeem the bond and keep all the proceeds. Irs 1040ez form 2012 Under these circumstances, the co-owner who redeemed the bond will receive a Form 1099-INT at the time of redemption and must provide you with another Form 1099-INT showing the amount of interest from the bond taxable to you. Irs 1040ez form 2012 The co-owner who redeemed the bond is a “nominee. Irs 1040ez form 2012 ” See Nominee distributions under How To Report Interest Income, later, for more information about how a person who is a nominee reports interest income belonging to another person. Irs 1040ez form 2012 Both co-owners' funds used. Irs 1040ez form 2012   If you and the other co-owner each contribute part of the bond's purchase price, the interest is generally taxable to each of you, in proportion to the amount each of you paid. Irs 1040ez form 2012 Community property. Irs 1040ez form 2012   If you and your spouse live in a community property state and hold bonds as community property, one-half of the interest is considered received by each of you. Irs 1040ez form 2012 If you file separate returns, each of you generally must report one-half of the bond interest. Irs 1040ez form 2012 For more information about community property, see Publication 555. Irs 1040ez form 2012 Table 1-2. Irs 1040ez form 2012   These rules are also shown in Table 1-2. Irs 1040ez form 2012 Child as only owner. Irs 1040ez form 2012   Interest on U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bonds bought for and registered only in the name of your child is income to your child, even if you paid for the bonds and are named as beneficiary. Irs 1040ez form 2012 If the bonds are series EE, series E, or series I bonds, the interest on the bonds is income to your child in the earlier of the year the bonds are cashed or disposed of or the year the bonds mature, unless your child chooses to report the interest income each year. Irs 1040ez form 2012 Choice to report interest each year. Irs 1040ez form 2012   The choice to report the accrued interest each year can be made either by your child or by you for your child. Irs 1040ez form 2012 This choice is made by filing an income tax return that shows all the interest earned to date, and by stating on the return that your child chooses to report the interest each year. Irs 1040ez form 2012 Either you or your child should keep a copy of this return. Irs 1040ez form 2012   Unless your child is otherwise required to file a tax return for any year after making this choice, your child does not have to file a return only to report the annual accrual of U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bond interest under this choice. Irs 1040ez form 2012 However, see Tax on unearned income of certain children , earlier, under General Information. Irs 1040ez form 2012 Neither you nor your child can change the way you report the interest unless you request permission from the IRS, as discussed earlier under Change from method 2 . Irs 1040ez form 2012 Ownership transferred. Irs 1040ez form 2012   If you bought series E, series EE, or series I bonds entirely with your own funds and had them reissued in your co-owner's name or beneficiary's name alone, you must include in your gross income for the year of reissue all interest that you earned on these bonds and have not previously reported. Irs 1040ez form 2012 But, if the bonds were reissued in your name alone, you do not have to report the interest accrued at that time. Irs 1040ez form 2012   This same rule applies when bonds (other than bonds held as community property) are transferred between spouses or incident to divorce. Irs 1040ez form 2012 Example. Irs 1040ez form 2012 You bought series EE bonds entirely with your own funds. Irs 1040ez form 2012 You did not choose to report the accrued interest each year. Irs 1040ez form 2012 Later, you transfer the bonds to your former spouse under a divorce agreement. Irs 1040ez form 2012 You must include the deferred accrued interest, from the date of the original issue of the bonds to the date of transfer, in your income in the year of transfer. Irs 1040ez form 2012 Your former spouse includes in income the interest on the bonds from the date of transfer to the date of redemption. Irs 1040ez form 2012 Table 1-2. Irs 1040ez form 2012 Who Pays the Tax on U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 Savings Bond Interest IF . Irs 1040ez form 2012 . Irs 1040ez form 2012 . Irs 1040ez form 2012 THEN the interest must be reported by . Irs 1040ez form 2012 . Irs 1040ez form 2012 . Irs 1040ez form 2012 you buy a bond in your name and the name of another person as co-owners, using only your own funds you. Irs 1040ez form 2012 you buy a bond in the name of another person, who is the sole owner of the bond the person for whom you bought the bond. Irs 1040ez form 2012 you and another person buy a bond as co-owners, each contributing part of the purchase price both you and the other co-owner, in proportion to the amount each paid for the bond. Irs 1040ez form 2012 you and your spouse, who live in a community property state, buy a bond that is community property you and your spouse. Irs 1040ez form 2012 If you file separate returns, both you and your spouse generally report one-half of the interest. Irs 1040ez form 2012 Purchased jointly. Irs 1040ez form 2012   If you and a co-owner each contributed funds to buy series E, series EE, or series I bonds jointly and later have the bonds reissued in the co-owner's name alone, you must include in your gross income for the year of reissue your share of all the interest earned on the bonds that you have not previously reported. Irs 1040ez form 2012 The former co-owner does not have to include in gross income at the time of reissue his or her share of the interest earned that was not reported before the transfer. Irs 1040ez form 2012 This interest, however, as well as all interest earned after the reissue, is income to the former co-owner. Irs 1040ez form 2012   This income-reporting rule also applies when the bonds are reissued in the name of your former co-owner and a new co-owner. Irs 1040ez form 2012 But the new co-owner will report only his or her share of the interest earned after the transfer. Irs 1040ez form 2012   If bonds that you and a co-owner bought jointly are reissued to each of you separately in the same proportion as your contribution to the purchase price, neither you nor your co-owner has to report at that time the interest earned before the bonds were reissued. Irs 1040ez form 2012 Example 1. Irs 1040ez form 2012 You and your spouse each spent an equal amount to buy a $1,000 series EE savings bond. Irs 1040ez form 2012 The bond was issued to you and your spouse as co-owners. Irs 1040ez form 2012 You both postpone reporting interest on the bond. Irs 1040ez form 2012 You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Irs 1040ez form 2012 At that time neither you nor your spouse has to report the interest earned to the date of reissue. Irs 1040ez form 2012 Example 2. Irs 1040ez form 2012 You bought a $1,000 series EE savings bond entirely with your own funds. Irs 1040ez form 2012 The bond was issued to you and your spouse as co-owners. Irs 1040ez form 2012 You both postponed reporting interest on the bond. Irs 1040ez form 2012 You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Irs 1040ez form 2012 You must report half the interest earned to the date of reissue. Irs 1040ez form 2012 Transfer to a trust. Irs 1040ez form 2012   If you own series E, series EE, or series I bonds and transfer them to a trust, giving up all rights of ownership, you must include in your income for that year the interest earned to the date of transfer if you have not already reported it. Irs 1040ez form 2012 However, if you are considered the owner of the trust and if the increase in value both before and after the transfer continues to be taxable to you, you can continue to defer reporting the interest earned each year. Irs 1040ez form 2012 You must include the total interest in your income in the year you cash or dispose of the bonds or the year the bonds finally mature, whichever is earlier. Irs 1040ez form 2012   The same rules apply to previously unreported interest on series EE or series E bonds if the transfer to a trust consisted of series HH or series H bonds you acquired in a trade for the series EE or series E bonds. Irs 1040ez form 2012 See Savings bonds traded , later. Irs 1040ez form 2012 Decedents. Irs 1040ez form 2012   The manner of reporting interest income on series E, series EE, or series I bonds, after the death of the owner (decedent), depends on the accounting and income-reporting methods previously used by the decedent. Irs 1040ez form 2012 Decedent who reported interest each year. Irs 1040ez form 2012   If the bonds transferred because of death were owned by a person who used an accrual method, or who used the cash method and had chosen to report the interest each year, the interest earned in the year of death up to the date of death must be reported on that person's final return. Irs 1040ez form 2012 The person who acquires the bonds includes in income only interest earned after the date of death. Irs 1040ez form 2012 Decedent who postponed reporting interest. Irs 1040ez form 2012   If the transferred bonds were owned by a decedent who had used the cash method and had not chosen to report the interest each year, and who had bought the bonds entirely with his or her own funds, all interest earned before death must be reported in one of the following ways. Irs 1040ez form 2012 The surviving spouse or personal representative (executor, administrator, etc. Irs 1040ez form 2012 ) who files the final income tax return of the decedent can choose to include on that return all interest earned on the bonds before the decedent's death. Irs 1040ez form 2012 The person who acquires the bonds then includes in income only interest earned after the date of death. Irs 1040ez form 2012 If the choice in (1) is not made, the interest earned up to the date of death is income in respect of the decedent and should not be included in the decedent's final return. Irs 1040ez form 2012 All interest earned both before and after the decedent's death (except any part reported by the estate on its income tax return) is income to the person who acquires the bonds. Irs 1040ez form 2012 If that person uses the cash method and does not choose to report the interest each year, he or she can postpone reporting it until the year the bonds are cashed or disposed of or the year they mature, whichever is earlier. Irs 1040ez form 2012 In the year that person reports the interest, he or she can claim a deduction for any federal estate tax paid on the part of the interest included in the decedent's estate. Irs 1040ez form 2012 For more information on income in respect of a decedent, see Publication 559, Survivors, Executors, and Administrators. Irs 1040ez form 2012 Example 1. Irs 1040ez form 2012 Your uncle, a cash method taxpayer, died and left you a $1,000 series EE bond. Irs 1040ez form 2012 He had bought the bond for $500 and had not chosen to report the interest each year. Irs 1040ez form 2012 At the date of death, interest of $200 had accrued on the bond, and its value of $700 was included in your uncle's estate. Irs 1040ez form 2012 Your uncle's executor chose not to include the $200 accrued interest in your uncle's final income tax return. Irs 1040ez form 2012 The $200 is income in respect of the decedent. Irs 1040ez form 2012 You are a cash method taxpayer and do not choose to report the interest each year as it is earned. Irs 1040ez form 2012 If you cash the bond when it reaches maturity value of $1,000, you report $500 interest income—the difference between maturity value of $1,000 and the original cost of $500. Irs 1040ez form 2012 For that year, you can deduct (as a miscellaneous itemized deduction not subject to the 2%-of-adjusted-gross-income limit) any federal estate tax paid because the $200 interest was included in your uncle's estate. Irs 1040ez form 2012 Example 2. Irs 1040ez form 2012 If, in Example 1 , the executor had chosen to include the $200 accrued interest in your uncle's final return, you would report only $300 as interest when you cashed the bond at maturity. Irs 1040ez form 2012 $300 is the interest earned after your uncle's death. Irs 1040ez form 2012 Example 3. Irs 1040ez form 2012 If, in Example 1 , you make or have made the choice to report the increase in redemption value as interest each year, you include in gross income for the year you acquire the bond all of the unreported increase in value of all series E, series EE, and series I bonds you hold, including the $200 on the bond you inherited from your uncle. Irs 1040ez form 2012 Example 4. Irs 1040ez form 2012 When your aunt died, she owned series HH bonds that she had acquired in a trade for series EE bonds. Irs 1040ez form 2012 You were the beneficiary of these bonds. Irs 1040ez form 2012 Your aunt used the cash method and did not choose to report the interest on the series EE bonds each year as it accrued. Irs 1040ez form 2012 Your aunt's executor chose not to include any interest earned before your aunt's death on her final return. Irs 1040ez form 2012 The income in respect of the decedent is the sum of the unreported interest on the series EE bonds and the interest, if any, payable on the series HH bonds but not received as of the date of your aunt's death. Irs 1040ez form 2012 You must report any interest received during the year as income on your return. Irs 1040ez form 2012 The part of the interest payable but not received before your aunt's death is income in respect of the decedent and may qualify for the estate tax deduction. Irs 1040ez form 2012 For information on when to report the interest on the series EE bonds traded, see Savings bonds traded , later. Irs 1040ez form 2012 Savings bonds distributed from a retirement or profit-sharing plan. Irs 1040ez form 2012   If you acquire a U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bond in a taxable distribution from a retirement or profit-sharing plan, your income for the year of distribution includes the bond's redemption value (its cost plus the interest accrued before the distribution). Irs 1040ez form 2012 When you redeem the bond (whether in the year of distribution or later), your interest income includes only the interest accrued after the bond was distributed. Irs 1040ez form 2012 To figure the interest reported as a taxable distribution and your interest income when you redeem the bond, see Worksheet for savings bonds distributed from a retirement or profit-sharing plan under How To Report Interest Income, later. Irs 1040ez form 2012 Savings bonds traded. Irs 1040ez form 2012   If you postponed reporting the interest on your series EE or series E bonds, you did not recognize taxable income when you traded the bonds for series HH or series H bonds, unless you received cash in the trade. Irs 1040ez form 2012 (You cannot trade series I bonds for series HH bonds. Irs 1040ez form 2012 After August 31, 2004, you cannot trade any other series of bonds for series HH bonds. Irs 1040ez form 2012 ) Any cash you received is income up to the amount of the interest earned on the bonds traded. Irs 1040ez form 2012 When your series HH or series H bonds mature, or if you dispose of them before maturity, you report as interest the difference between their redemption value and your cost. Irs 1040ez form 2012 Your cost is the sum of the amount you paid for the traded series EE or series E bonds plus any amount you had to pay at the time of the trade. Irs 1040ez form 2012 Example. Irs 1040ez form 2012 You traded series EE bonds (on which you postponed reporting the interest) for $2,500 in series HH bonds and $223 in cash. Irs 1040ez form 2012 You reported the $223 as taxable income on your tax return. Irs 1040ez form 2012 At the time of the trade, the series EE bonds had accrued interest of $523 and a redemption value of $2,723. Irs 1040ez form 2012 You hold the series HH bonds until maturity, when you receive $2,500. Irs 1040ez form 2012 You must report $300 as interest income in the year of maturity. Irs 1040ez form 2012 This is the difference between their redemption value, $2,500, and your cost, $2,200 (the amount you paid for the series EE bonds). Irs 1040ez form 2012 (It is also the difference between the accrued interest of $523 on the series EE bonds and the $223 cash received on the trade. Irs 1040ez form 2012 ) Choice to report interest in year of trade. Irs 1040ez form 2012   You could have chosen to treat all of the previously unreported accrued interest on series EE or series E bonds traded for series HH bonds as income in the year of the trade. Irs 1040ez form 2012 If you made this choice, it is treated as a change from method 1. Irs 1040ez form 2012 See Change from method 1 under Series EE and series I bonds, earlier. Irs 1040ez form 2012 Form 1099-INT for U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bond interest. Irs 1040ez form 2012   When you cash a bond, the bank or other payer that redeems it must give you a Form 1099-INT if the interest part of the payment you receive is $10 or more. Irs 1040ez form 2012 Box 3 of your Form 1099-INT should show the interest as the difference between the amount you received and the amount paid for the bond. Irs 1040ez form 2012 However, your Form 1099-INT may show more interest than you have to include on your income tax return. Irs 1040ez form 2012 For example, this may happen if any of the following are true. Irs 1040ez form 2012 You chose to report the increase in the redemption value of the bond each year. Irs 1040ez form 2012 The interest shown on your Form 1099-INT will not be reduced by amounts previously included in income. Irs 1040ez form 2012 You received the bond from a decedent. Irs 1040ez form 2012 The interest shown on your Form 1099-INT will not be reduced by any interest reported by the decedent before death, or on the decedent's final return, or by the estate on the estate's income tax return. Irs 1040ez form 2012 Ownership of the bond was transferred. Irs 1040ez form 2012 The interest shown on your Form 1099-INT will not be reduced by interest that accrued before the transfer. Irs 1040ez form 2012 You were named as a co-owner, and the other co-owner contributed funds to buy the bond. Irs 1040ez form 2012 The interest shown on your Form 1099-INT will not be reduced by the amount you received as nominee for the other co-owner. Irs 1040ez form 2012 (See Co-owners , earlier in this section, for more information about the reporting requirements. Irs 1040ez form 2012 ) You received the bond in a taxable distribution from a retirement or profit-sharing plan. Irs 1040ez form 2012 The interest shown on your Form 1099-INT will not be reduced by the interest portion of the amount taxable as a distribution from the plan and not taxable as interest. Irs 1040ez form 2012 (This amount is generally shown on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Irs 1040ez form 2012 , for the year of distribution. Irs 1040ez form 2012 )   For more information on including the correct amount of interest on your return, see U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bond interest previously reported or Nominee distributions under How To Report Interest Income, later. Irs 1040ez form 2012    Interest on U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bonds is exempt from state and local taxes. Irs 1040ez form 2012 The Form 1099-INT you receive will indicate the amount that is for U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bonds interest in box 3. Irs 1040ez form 2012 Do not include this income on your state or local income tax return. Irs 1040ez form 2012 Education Savings Bond Program You may be able to exclude from income all or part of the interest you receive on the redemption of qualified U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bonds during the year if you pay qualified higher educational expenses during the same year. Irs 1040ez form 2012 This exclusion is known as the Education Savings Bond Program. Irs 1040ez form 2012 You do not qualify for this exclusion if your filing status is married filing separately. Irs 1040ez form 2012 Form 8815. Irs 1040ez form 2012   Use Form 8815 to figure your exclusion. Irs 1040ez form 2012 Attach the form to your Form 1040 or Form 1040A. Irs 1040ez form 2012 Qualified U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bonds. Irs 1040ez form 2012   A qualified U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bond is a series EE bond issued after 1989 or a series I bond. Irs 1040ez form 2012 The bond must be issued either in your name (sole owner) or in your and your spouse's names (co-owners). Irs 1040ez form 2012 You must be at least 24 years old before the bond's issue date. Irs 1040ez form 2012 For example, a bond bought by a parent and issued in the name of his or her child under age 24 does not qualify for the exclusion by the parent or child. Irs 1040ez form 2012    The issue date of a bond may be earlier than the date the bond is purchased because the issue date assigned to a bond is the first day of the month in which it is purchased. Irs 1040ez form 2012 Beneficiary. Irs 1040ez form 2012   You can designate any individual (including a child) as a beneficiary of the bond. Irs 1040ez form 2012 Verification by IRS. Irs 1040ez form 2012   If you claim the exclusion, the IRS will check it by using bond redemption information from the Department of Treasury. Irs 1040ez form 2012 Qualified expenses. Irs 1040ez form 2012   Qualified higher educational expenses are tuition and fees required for you, your spouse, or your dependent (for whom you claim an exemption) to attend an eligible educational institution. Irs 1040ez form 2012   Qualified expenses include any contribution you make to a qualified tuition program or to a Coverdell education savings account. Irs 1040ez form 2012 For information about these programs, see Publication 970, Tax Benefits for Education. Irs 1040ez form 2012   Qualified expenses do not include expenses for room and board or for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. Irs 1040ez form 2012 Eligible educational institutions. Irs 1040ez form 2012   These institutions include most public, private, and nonprofit universities, colleges, and vocational schools that are accredited and eligible to participate in student aid programs run by the Department of Education. Irs 1040ez form 2012 Reduction for certain benefits. Irs 1040ez form 2012   You must reduce your qualified higher educational expenses by all of the following tax-free benefits. Irs 1040ez form 2012 Tax-free part of scholarships and fellowships. Irs 1040ez form 2012 Expenses used to figure the tax-free portion of distributions from a Coverdell ESA. Irs 1040ez form 2012 Expenses used to figure the tax-free portion of distributions from a qualified tuition program. Irs 1040ez form 2012 Any tax-free payments (other than gifts or inheritances) received as educational assistance, such as: Veterans' educational assistance benefits, Qualified tuition reductions, or Employer-provided educational assistance. Irs 1040ez form 2012 Any expense used in figuring the American Opportunity and lifetime learning credits. Irs 1040ez form 2012 For information about these benefits, see Publication 970. Irs 1040ez form 2012 Amount excludable. Irs 1040ez form 2012   If the total proceeds (interest and principal) from the qualified U. Irs 1040ez form 2012 S. Irs 1040ez form 2012 savings bonds you redeem during the year are not more than your adjusted qualified higher educational expenses for the year, you may be able to exclude all of the interest. Irs 1040ez form 2012 If the proceeds are more than the expenses, you may be able to exclude only part of the interest. Irs 1040ez form 2012   To determine the excludable amount, multiply the interest part of the proceeds by a fraction. Irs 1040ez form 2012 The numer