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Irs Amended Tax Return 2011

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Irs Amended Tax Return 2011

Irs amended tax return 2011 20. Irs amended tax return 2011   Deducción Estándar Table of Contents Qué Hay de Nuevo Introduction Cantidad de la Deducción Estándar Deducción Estándar para DependientesDefinición del ingreso del trabajo. Irs amended tax return 2011 Quién Debe Detallar las DeduccionesCuándo detallar las deducciones. Irs amended tax return 2011 Personas casadas que presentan la declaración por separado. Irs amended tax return 2011 Qué Hay de Nuevo Aumento de la deducción estándar. Irs amended tax return 2011  La deducción estándar para ciertos contribuyentes que no detallen sus deducciones en el Anexo A del Formulario 1040 es mayor en el año 2013 de lo que fue en el año 2012. Irs amended tax return 2011 La cantidad de la deducción depende de su estado civil para efectos de la declaración. Irs amended tax return 2011 Puede utilizar las Tablas de Deducción Estándar para el año 2013 en este capítulo para calcular la deducción estándar. Irs amended tax return 2011 Introduction Este capítulo trata sobre los siguientes temas: Cómo calcular la cantidad de su deducción estándar. Irs amended tax return 2011 La deducción estándar para dependientes. Irs amended tax return 2011 Quién debe detallar las deducciones. Irs amended tax return 2011 La mayoría de los contribuyentes tienen la opción de tomar la deducción estándar o detallar sus deducciones. Irs amended tax return 2011 Si tene la opción, puede utilizar el método que resulte en la cantidad menor de impuestos. Irs amended tax return 2011 La deducción estándar es una cantidad en dólares que reduce su ingreso tributable. Irs amended tax return 2011 La deducción estándar es un beneficio que, para muchos contribuyentes, elimina la necesidad de detallar deducciones, tales como gastos médicos, aportaciones hechas a obras caritativas, e impuestos, en el Anexo A del Formulario 1040. Irs amended tax return 2011 La deducción estándar es mayor para los contribuyentes que: Tengan 65 años de edad o más o Sean ciegos. Irs amended tax return 2011 Usted se beneficia de la deducción estándar si ésta es mayor que el total de las deducciones detalladas permisibles. Irs amended tax return 2011 Personas que no reúnen los requisitos para la deducción estándar. Irs amended tax return 2011   Su deducción estándar es cero y debe detallar todas las deducciones que tenga si: Su estado civil para efectos de la declaración es casado que presenta la declaración por separado y su cónyuge detalla las deducciones en su propia declaración, Presenta una declaración de impuestos para un año tributario corto debido a un cambio en su período contable anual, o Es extranjero no residente o extranjero con doble residencia durante el año. Irs amended tax return 2011 Se le considera extranjero con doble residencia si tuvo estatus de ambos extranjero no residente y extranjero residente durante el año. Irs amended tax return 2011 Nota. Irs amended tax return 2011 Si es extranjero no residente que está casado con un ciudadano estadounidense o es residente extranjero al final del año, puede elegir ser tratado como residente estadounidense. Irs amended tax return 2011 Vea la Publicación 519, U. Irs amended tax return 2011 S. Irs amended tax return 2011 Tax Guide for Aliens (Guía sobre los impuestos federales estadounidenses para extranjeros), en inglés. Irs amended tax return 2011 Si elige esta opción, puede tomar la deducción estándar. Irs amended tax return 2011 Si alguna exención suya puede ser reclamada en la declaración de impuestos de otra persona (tal como la declaración de sus padres), es posible que su deducción estándar sea limitada. Irs amended tax return 2011 Vea Deducción Estándar para Dependientes , más adelante. Irs amended tax return 2011 Cantidad de la Deducción Estándar La cantidad de la deducción estándar depende de su estado civil para efectos de la declaración, si tiene 65 años de edad o más o es ciego, y si otro contribuyente puede reclamar una exención por usted. Irs amended tax return 2011 Generalmente, las cantidades de deducción estándar se ajustan cada año, conforme a la inflación. Irs amended tax return 2011 La cantidad de la deducción estándar para la mayoría de los contribuyentes se muestra en la Tabla 20-1. Irs amended tax return 2011 Declaración final de un fallecido. Irs amended tax return 2011   La deducción estándar para la declaración final de impuestos de un fallecido es igual a la que hubiese sido si el fallecido hubiese seguido con vida. Irs amended tax return 2011 No obstante, si el fallecido no tenía 65 años de edad o más al morir, no puede reclamar la deducción estándar más alta, concedida por cumplir esa edad. Irs amended tax return 2011 Deducción Estándar Más Alta por Edad (65 Años de Edad o Más) Si tiene 65 años de edad o más el último día del año y no detalla sus deducciones, tiene derecho a una deducción estándar más alta. Irs amended tax return 2011 Se considera que tiene 65 años de edad el día antes de cumplir sus 65 años. Irs amended tax return 2011 Por lo tanto, puede tomar una deducción estándar más alta para el año 2013 si nació antes del 2 de enero de 1949. Irs amended tax return 2011 Utilice la Tabla 20-2 para calcular la cantidad de la deducción estándar. Irs amended tax return 2011 Deducción Estándar Más Alta por Ceguera Si es ciego en el último día del año y no detalla sus deducciones, tiene derecho a una deducción estándar más alta. Irs amended tax return 2011 No está totalmente ciego. Irs amended tax return 2011   Si no está totalmente ciego, tiene que obtener una declaración certificada de un oftalmólogo u optometrista que indique que: Aún cuando tiene sus espejuelos o lentes de contacto puestos, su ojo mejor no registra una cifra de vista mejor que el 20/200 o Su campo visual es de 20 grados o menos. Irs amended tax return 2011   Si es poco probable que la condición de su vista vaya a mejorar más allá de estos límites, dicha declaración debería estipular este hecho. Irs amended tax return 2011 Tiene que guardar esta declaración con sus registros. Irs amended tax return 2011   Si su vista se puede corregir más allá de estos límites únicamente con lentes de contacto que sólo pueda usar durante un corto lapso de tiempo debido a dolor, infección o úlceras, usted puede tomar la deducción estándar más alta por ceguera si reúne los demás requisitos. Irs amended tax return 2011 Cónyuge de 65 Años o Más o Ciego Puede tomar la deducción estándar mayor si su cónyuge tiene 65 años o más de edad o está ciego y: Ustedes presentan una declaración conjunta o Usted presenta una declaración separada y reclama una exención por su cónyuge porque el mismo no tuvo ningún ingreso bruto; y otro contribuyente no pudo haber reclamado a su cónyuge como dependiente. Irs amended tax return 2011 No puede tomar la deducción estándar más alta por una persona que no sea usted o su cónyuge. Irs amended tax return 2011 Ejemplos Los siguientes ejemplos muestran cómo determinar su deducción estándar utilizando la Tabla 20-1 y 20-2. Irs amended tax return 2011 Ejemplo 1. Irs amended tax return 2011 Carlos, de 46 años de edad, y Ana, de 33 años de edad, presentan una declaración conjunta en el año 2013. Irs amended tax return 2011 Ninguno de los dos es ciego ni puede ser reclamado como dependiente. Irs amended tax return 2011 Ellos optan por no detallar sus deducciones. Irs amended tax return 2011 Ellos utilizan la Tabla 20-1. Irs amended tax return 2011 La deducción estándar para ambos es $12,200. Irs amended tax return 2011 Ejemplo 2. Irs amended tax return 2011 Los datos son los mismos que en el Ejemplo 1, salvo que Carlos está ciego al final del año 2013. Irs amended tax return 2011 Carlos y Ana utilizan la Tabla 20-2. Irs amended tax return 2011 La deducción estándar para ambos es $13,400. Irs amended tax return 2011 Ejemplo 3. Irs amended tax return 2011 Roberto y María presentan una declaración conjunta para 2013. Irs amended tax return 2011 Los dos son mayores de 65 años de edad. Irs amended tax return 2011 Ninguno de los dos es ciego y ninguno de los dos puede ser reclamado como dependiente. Irs amended tax return 2011 Si ellos no detallan las deducciones, utilizan la Tabla 20-2. Irs amended tax return 2011 Su deducción estándar es $14,600. Irs amended tax return 2011 Deducción Estándar para Dependientes La deducción estándar de una persona quien otra persona puede reclamar como dependiente en su declaración de impuestos suele limitarse a la cantidad siguiente que sea mayor: $1,000 o El ingreso del trabajo de la persona para el año, más $350 (pero no en exceso de la cantidad normal de la deducción estándar, generalmente $6,100). Irs amended tax return 2011 Sin embargo, la deducción estándar podría ser más alta si la persona tiene 65 años de edad o más o si es ciego. Irs amended tax return 2011 Si alguna exención suya (o de su cónyuge si presentan una declaración conjunta) se puede reclamar en la declaración de impuestos de otra persona, utilice la Tabla 20-3 para determinar su deducción estándar. Irs amended tax return 2011 Definición del ingreso del trabajo. Irs amended tax return 2011   El ingreso del trabajo corresponde a salarios, sueldos, propinas, honorarios por servicios profesionales y otras cantidades recibidas como pagos por trabajo que usted de hecho realiza. Irs amended tax return 2011    Para propósitos de la deducción estándar, el ingreso del trabajo también incluye toda parte de una beca de estudios o de una beca de desarrollo profesional que usted tenga que incluir en el ingreso bruto. Irs amended tax return 2011 Vea Becas de estudios y becas de desarrollo profesional en el capítulo 12, para más información sobre qué se considera una beca de estudios o una beca de desarrollo profesional. Irs amended tax return 2011 Ejemplo 1. Irs amended tax return 2011 Miguel es soltero. Irs amended tax return 2011 Sus padres reclaman una exención por él en su declaración de impuestos del año 2013. Irs amended tax return 2011 Tiene ingresos de intereses de $780 y un salario de $150. Irs amended tax return 2011 No tiene deducciones detalladas. Irs amended tax return 2011 Miguel utiliza la Tabla 20-3 para calcular su deducción estándar. Irs amended tax return 2011 Él anota $150 (su ingreso del trabajo) en la línea 1, $500 ($150 + $350) en la línea 3, $1,000 (la cantidad mayor entre $500 y $1,000) en la línea 5, y $6,100 en la línea 6. Irs amended tax return 2011 Su deducción estándar, la cual se anota en la línea 7a, es de $1,000 (la cantidad menor entre $1,000 y $6,100). Irs amended tax return 2011 Ejemplo 2. Irs amended tax return 2011 José, un estudiante universitario a tiempo completo con 22 años de edad, puede ser reclamado como dependiente en la declaración de impuestos del año 2013 de sus padres. Irs amended tax return 2011 José está casado y presenta una declaración por separado. Irs amended tax return 2011 Su esposa no detalla sus deducciones en su declaración. Irs amended tax return 2011 José tiene ingresos de intereses de $1,500 y un salario de $3,800. Irs amended tax return 2011 Él no tiene deducciones detalladas. Irs amended tax return 2011 José utiliza la Tabla 20-3 para calcular su deducción estándar. Irs amended tax return 2011 Él anota su ingreso de trabajo de $3,800 en la línea 1. Irs amended tax return 2011 Él suma las líneas 1 y 2 y anota $4,150 en la línea 3. Irs amended tax return 2011 En la línea 5, él anota $4,150, la cantidad mayor entre las líneas 3 y 4. Irs amended tax return 2011 Ya que José está casado y presenta una declaración por separado, él anota $6,100 en la línea 6. Irs amended tax return 2011 En la línea 7a, él anota $4,150, como su deducción estándar, porque es menos de $6,100, la cantidad en la línea 6. Irs amended tax return 2011 Ejemplo 3. Irs amended tax return 2011 Carla, que es soltera, puede ser reclamada como dependiente en la declaración de impuestos del año 2013 de sus padres. Irs amended tax return 2011 Tiene 18 años de edad y es ciega. Irs amended tax return 2011 Tiene ingresos de intereses de $1,300 y un salario de $2,900. Irs amended tax return 2011 Ella no tiene deducciones detalladas. Irs amended tax return 2011 Carla consulta la Tabla 20-3 para encontrar su deducción estándar. Irs amended tax return 2011 Ella anota su salario de $2,900 en la línea 1. Irs amended tax return 2011 Suma las líneas 1 y 2 y anota $3,250 en la línea 3. Irs amended tax return 2011 En la línea 5, anota $3,250, la mayor entre las líneas 3 y 4. Irs amended tax return 2011 Ya que ella es soltera, Carla anota $6,100 en la línea 6. Irs amended tax return 2011 Anota $3,250 en la línea 7a. Irs amended tax return 2011 Esta es la menor entre las cantidades de las líneas 5 y 6. Irs amended tax return 2011 Ya que ella marcó el recuadro en la parte superior de la hoja, ella anota $1,500 en la línea 7b. Irs amended tax return 2011 Luego, suma las cantidades de las líneas 7a y 7b y anota su deducción estándar de $4,750 en la línea 7c. Irs amended tax return 2011 Ejemplo 4. Irs amended tax return 2011 Edgardo es soltero. Irs amended tax return 2011 Sus padres pueden reclamar una exención por él en su declaración del 2013. Irs amended tax return 2011 Su salario es de $7,000, tiene ingresos por intereses de $500, y pérdida de negocio de $3,000. Irs amended tax return 2011 Él no tiene deducciones detalladas. Irs amended tax return 2011 Edgardo utiliza la Tabla 20-3 para calcular su deducción estándar. Irs amended tax return 2011 Él anota $4,000 ($7,000 - $ 3,000) en la línea 1. Irs amended tax return 2011 Suma las líneas 1 y 2 y anota $4,350 en la línea 3. Irs amended tax return 2011 En la línea 5, anota $4,350, la cantidad mayor entre las líneas 3 y 4. Irs amended tax return 2011 Ya que él es soltero, Edgardo anota $6,100 en la línea 6. Irs amended tax return 2011 En la línea 7a, anota $4,350 como su deducción estándar porque es menor de $6,100, la cantidad que fue anotada en la línea 6. Irs amended tax return 2011 Quién Debe Detallar las Deducciones Debe detallar las deducciones si el total de las mismas es mayor que la cantidad de la deducción estándar. Irs amended tax return 2011 Además, debe detallar las deducciones si no reúne los requisitos para la deducción estándar, según se explicó anteriormente bajo Personas que no reúnen los requisitos para la deducción estándar . Irs amended tax return 2011 Debe calcular primero las deducciones detalladas y comparar aquella cantidad con su deducción estándar para asegurarse de estar utilizando el método que le brinda el mayor beneficio. Irs amended tax return 2011 Puede estar sujeto a un límite en algunas de sus deducciones detalladas si su ingreso bruto ajustado es mayor que: $250,000 si es soltero ($275,000 si es cabeza de familia, $300,000 si es casado que presenta una declaración conjunta o viudo(a) que reúne los requisitos; o $150,000 si es casado que presenta la declaración por separado). Irs amended tax return 2011 Vea el capítulo 29 o las instrucciones para el Anexo A (Formulario 1040) para más información sobre cómo calcular la cantidad exacta de sus deducciones detalladas. Irs amended tax return 2011 Cuándo detallar las deducciones. Irs amended tax return 2011   Es posible que le convenga detallar sus deducciones en el Anexo A (Formulario 1040) si usted: No reúne los requisitos para la deducción estándar o la cantidad que puede reclamar está limitada, Tuvo gastos médicos o dentales cuantiosos que no fueron cubiertos por su seguro durante el año, Pagó intereses e impuestos sobre su vivienda, Tuvo gastos de negocio del empleado cuantiosos que no fueron reembolsados por su empleador u otras deducciones misceláneas, Tuvo pérdidas por hechos fortuitos o por robo cuantiosas que no fueron cubiertas por su seguro, Hizo aportaciones cuantiosas a instituciones de caridad calificadas, o Tiene deducciones detalladas cuyo total es mayor que la deducción estándar a la que, por lo demás, tiene derecho. Irs amended tax return 2011 Estas deducciones se explican en los capítulos 21 al 28. Irs amended tax return 2011   Si decide detallar las deducciones, complete el Anexo A y adjúntelo a su Formulario 1040. Irs amended tax return 2011 Anote la cantidad de la línea 29 del Anexo A en la línea 40 del Formulario 1040. Irs amended tax return 2011 Puede optar por detallar las deducciones para impuestos estatales u otros propósitos. Irs amended tax return 2011   Aun si sus deducciones detalladas son menos que su deducción estándar, puede optar por detallar sus deducciones en la declaración de impuestos federales en vez de tomar la deducción estándar. Irs amended tax return 2011 Es posible que le convenga hacer esto si, por ejemplo, el beneficio tributario de detallar sus deducciones en la declaración de impuestos estatales es mayor que el beneficio tributario que pierde si no toma la deducción estándar en la declaración de impuestos federales. Irs amended tax return 2011 Para elegir esta opción, tiene que marcar el recuadro de la línea 30 del Anexo A. Irs amended tax return 2011 Si cambia de idea. Irs amended tax return 2011   Si no detalla las deducciones y más tarde se da cuenta de que debió haberlas detallado –o si detalla las deducciones y más tarde se da cuenta de que no debió haberlo hecho– puede cambiar su declaración de impuestos presentando el Formulario 1040X, Amended U. Irs amended tax return 2011 S. Irs amended tax return 2011 Individual Income Tax Return (Declaración enmendada del impuesto federal sobre el ingreso personal en los Estados Unidos), en inglés. Irs amended tax return 2011 Vea Declaraciones Enmendadas y Solicitudes de Reembolso en el capítulo 1 para más información sobre las declaraciones enmendadas. Irs amended tax return 2011 Personas casadas que presentan la declaración por separado. Irs amended tax return 2011   Puede cambiar de método para tomar deducciones sólo si usted y su cónyuge hacen los mismos cambios. Irs amended tax return 2011 Cada uno de los dos tienen que presentar una autorización para permitir la determinación de impuestos adicionales que cualquiera de ustedes pueda adeudar como resultado de dicho cambio. Irs amended tax return 2011    Usted y su cónyuge pueden utilizar el método que les resulte en el total de impuestos más bajo, aunque uno de ustedes quizá pague más impuestos de los que hubiera pagado al utilizar el otro método. Irs amended tax return 2011 Tanto usted como su cónyuge tienen que utilizar el mismo método para reclamar deducciones. Irs amended tax return 2011 Si uno de ustedes detalla sus deducciones, el otro debe detallar sus deducciones también, porque él o ella no reunirá los requisitos para la deducción estándar. Irs amended tax return 2011 Vea Personas que no reúnen los requisitos para la deduccón estándar , anteriormente. Irs amended tax return 2011 Tablas de Deducción Estándar para el 2013 Si usted es casado que presenta la declaración por separado y su cónyuge detalla las deducciones, o si usted es extranjero con doble residencia, no puede tomar la deducción estándar aunque haya nacido antes del 2 de enero de 1949 o sea ciego. Irs amended tax return 2011 Tabla 20-1. Irs amended tax return 2011 Tabla de Deducción Estándar para la Mayoría de las Personas* Si su estado civil para efectos de la  declaración es Entonces su  deducción  estándar es: Soltero o casado que presenta la declaración por separado $6,100 Casado que presenta la declaración conjunta o viudo(a) que reúne los requisitos con hijo dependiente 12,200 Cabeza de familia 8,950 * No utilice esta tabla si nació antes del 2 de enero de 1949, o es ciego, o si alguien más puede reclamar una exención por usted (o por su cónyuge, si es casado que presenta la declaración conjuntamente). Irs amended tax return 2011 En vez de ésta, utilice la Tabla 20-2 ó 20-3. Irs amended tax return 2011 Tabla 20-2. Irs amended tax return 2011 Tabla de la Deducción Estándar para Personas que Nacieron Antes del 2 de enero de 1949 o que sean ciegas* Marque el número correcto de recuadros siguientes. Irs amended tax return 2011 Luego pase a la tabla. Irs amended tax return 2011 Usted: Nació antes del  2 de enero de 1949□ Es ciego□ Su cónyuge, si reclama  una exención por él o ella: Nació antes del  2 de enero de 1949 □ Es ciego□ Número total de recuadros que marcó   SI su estado civil para   efectos de la  declaración es Y el número en el  recuadro de arriba es ENTONCES su deducción  estándar es: Soltero 1 $7,600   2 9,100 Casado que presenta la 1 $13,400 declaración conjunta o 2 14,600 viudo(a) que reúne los requisitos 3 15,800 con hijo dependiente 4 17,000 Casado que presenta 1 $7,300 la declaración por separado 2 8,500   3 9,700   4 10,900 Cabeza de familia 1 $10,450   2 11,950 *Si alguien más puede reclamar una exención por usted (o su cónyuge, si presenta la declaración conjunta), utilice la tabla 20-3, en vez de ésta. Irs amended tax return 2011 Tabla 20-3. Irs amended tax return 2011 Tabla de Deducción Estándar para Dependientes Utilice esta hoja de trabajo sólo si alguien más puede reclamar una exención por usted (o por su cónyuge, si es casado que presenta la declaración conjuntamente). Irs amended tax return 2011 Marque el número correcto de recuadros más abajo. Irs amended tax return 2011 Luego pase a la hoja de trabajo. Irs amended tax return 2011 Usted:   Nació antes del 2 de enero de 1949 □ Es ciego □ Su cónyuge, si reclama una exención por él o ella: Nació antes del 2 de enero de 1949 □ Es ciego □ Número total de recuadros que marcó 1. Irs amended tax return 2011 Anote su ingreso del trabajo (definido más abajo). Irs amended tax return 2011 Si no tiene ninguno, anote -0-. Irs amended tax return 2011 1. Irs amended tax return 2011   2. Irs amended tax return 2011 Cantidad adicional. Irs amended tax return 2011 2. Irs amended tax return 2011 $350 3. Irs amended tax return 2011 Sume las líneas 1 y 2. Irs amended tax return 2011 3. Irs amended tax return 2011   4. Irs amended tax return 2011 Deducción estándar mínima. Irs amended tax return 2011 4. Irs amended tax return 2011 $1,000 5. Irs amended tax return 2011 De las líneas 3 ó 4, anote la cantidad mayor. Irs amended tax return 2011 5. Irs amended tax return 2011   6. Irs amended tax return 2011 Anote una de las cantidades siguientes según su estado civil para efectos de la declaración. Irs amended tax return 2011 Soltero o Casado que presenta la declaración por separado—$6,100 Casado que presenta la declaración conjunta—$12,200 Cabeza de familia—$8,950 6. Irs amended tax return 2011   7. Irs amended tax return 2011 Deducción estándar. Irs amended tax return 2011         a. Irs amended tax return 2011 De las líneas 5 ó 6, anote la cantidad que sea menor. Irs amended tax return 2011 Si nació después del 1 de enero de 1949, y no es ciego, pare. Irs amended tax return 2011 Ésta es su deducción estándar. Irs amended tax return 2011 De lo contrario, pase a la línea 7b. Irs amended tax return 2011 7a. Irs amended tax return 2011     b. Irs amended tax return 2011 Si nació antes del 2 de enero de 1949, o si es ciego, multiplique $1,500 ($1,200 si es casado) por la cifra en la línea de arriba. Irs amended tax return 2011 7b. Irs amended tax return 2011     c. Irs amended tax return 2011 Sume las líneas 7a y 7b. Irs amended tax return 2011 Ésta es su deducción estándar para el año 2013. Irs amended tax return 2011 7c. Irs amended tax return 2011   El ingreso del trabajo incluye salarios, sueldos, propinas, honorarios por servicios profesionales y otras remuneraciones recibidas por servicios personales que usted prestó. Irs amended tax return 2011 También incluye toda cantidad recibida por concepto de beca que deba incluir en sus ingresos. Irs amended tax return 2011 Prev  Up  Next   Home   More Online Publications
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The Irs Amended Tax Return 2011

Irs amended tax return 2011 1. Irs amended tax return 2011   Investment Income Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: General InformationSSN for joint account. Irs amended tax return 2011 Custodian account for your child. Irs amended tax return 2011 Penalty for failure to supply SSN. Irs amended tax return 2011 Certification. Irs amended tax return 2011 Underreported interest and dividends. Irs amended tax return 2011 How to stop backup withholding due to underreporting. Irs amended tax return 2011 How to stop backup withholding due to an incorrect identification number. Irs amended tax return 2011 Reporting backup withholding. Irs amended tax return 2011 Nonresident aliens. Irs amended tax return 2011 Penalties. Irs amended tax return 2011 Savings account with parent as trustee. Irs amended tax return 2011 Interest IncomeInterest not reported on Form 1099-INT. Irs amended tax return 2011 Nominees. Irs amended tax return 2011 Incorrect amount. Irs amended tax return 2011 Information reporting requirement. Irs amended tax return 2011 Taxable Interest — General Below-Market Loans U. Irs amended tax return 2011 S. Irs amended tax return 2011 Savings Bonds U. Irs amended tax return 2011 S. Irs amended tax return 2011 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 amended tax return 2011 How To Report Interest IncomeSchedule B (Form 1040A or 1040). Irs amended tax return 2011 Worksheet for savings bonds distributed from a retirement or profit-sharing plan. Irs amended tax return 2011 File Form 1099-INT with the IRS. Irs amended tax return 2011 Dividends and Other DistributionsDividends not reported on Form 1099-DIV. Irs amended tax return 2011 Nominees. Irs amended tax return 2011 Ordinary Dividends Capital Gain Distributions Nondividend Distributions Liquidating Distributions Distributions of Stock and Stock Rights Other Distributions How To Report Dividend IncomeElection. Irs amended tax return 2011 Independent contractor. Irs amended tax return 2011 Investment interest deducted. Irs amended tax return 2011 Exception 1. Irs amended tax return 2011 Exception 2. Irs amended tax return 2011 Undistributed capital gains. Irs amended tax return 2011 File Form 1099-DIV with the IRS. Irs amended tax return 2011 Stripped Preferred Stock REMICs, FASITs, and Other CDOsREMICs Collateralized Debt Obligations (CDOs) FASITs S CorporationsLimit on losses and deductions. Irs amended tax return 2011 Passive activity losses. Irs amended tax return 2011 Form 8582. Irs amended tax return 2011 Investment ClubsInvestments in name of member. Irs amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011 S. Irs amended tax return 2011 Individual Income Tax Return 1040A U. Irs amended tax return 2011 S. Irs amended tax return 2011 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 amended tax return 2011 S. Irs amended tax return 2011 Savings Bonds Issued After 1989 8818 Optional Form To Record Redemption of Series EE and I U. Irs amended tax return 2011 S. Irs amended tax return 2011 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 amended tax return 2011 General Information A few items of general interest are covered here. Irs amended tax return 2011 Recordkeeping. Irs amended tax return 2011 You should keep a list showing sources and investment income amounts you receive during the year. Irs amended tax return 2011 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 amended tax return 2011 Net investment income tax (NIIT). Irs amended tax return 2011   Beginning in 2013, you may be subject to the NIIT. Irs amended tax return 2011 The NIIT is a 3. Irs amended tax return 2011 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 amended tax return 2011    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 amended tax return 2011 Tax on unearned income of certain children. Irs amended tax return 2011   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. Irs amended tax return 2011 This may happen if all of the following are true. Irs amended tax return 2011 The child had more than $2,000 of unearned income. Irs amended tax return 2011 The child is required to file a tax return. Irs amended tax return 2011 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 amended tax return 2011 At least one of the child's parents was alive at the end of 2013. Irs amended tax return 2011 The child does not file a joint return for 2013. Irs amended tax return 2011 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 amended tax return 2011   If all of these statements are true, Form 8615 must be completed and attached to the child's tax return. Irs amended tax return 2011 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 amended tax return 2011    However, the parent can choose to include the child's interest and dividends on the parent's return if certain requirements are met. Irs amended tax return 2011 Use Form 8814 for this purpose. Irs amended tax return 2011   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 amended tax return 2011 Beneficiary of an estate or trust. Irs amended tax return 2011   Interest, dividends, and other investment income you receive as a beneficiary of an estate or trust is generally taxable income. Irs amended tax return 2011 You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Irs amended tax return 2011 , from the fiduciary. Irs amended tax return 2011 Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. Irs amended tax return 2011 Social security number (SSN). Irs amended tax return 2011   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 amended tax return 2011 This includes payers of interest and dividends. Irs amended tax return 2011 If you do not give your SSN or ITIN to the payer of interest, you may have to pay a penalty. Irs amended tax return 2011 SSN for joint account. Irs amended tax return 2011   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 amended tax return 2011 (For information on who owns the funds in a joint account, see Joint accounts , later. Irs amended tax return 2011 ) If the joint account contains combined funds, give the SSN of the person whose name is listed first on the account. Irs amended tax return 2011 This is because only one name and SSN can be shown on Form 1099. Irs amended tax return 2011   These rules apply both to joint ownership by a married couple and to joint ownership by other individuals. Irs amended tax return 2011 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 amended tax return 2011 Custodian account for your child. Irs amended tax return 2011   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 amended tax return 2011 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 amended tax return 2011 Penalty for failure to supply SSN. Irs amended tax return 2011   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 amended tax return 2011 The penalty is $50 for each failure up to a maximum penalty of $100,000 for any calendar year. Irs amended tax return 2011   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 amended tax return 2011   If you fail to supply an SSN, you may also be subject to backup withholding. Irs amended tax return 2011 Backup withholding. Irs amended tax return 2011   Your investment income is generally not subject to regular withholding. Irs amended tax return 2011 However, it may be subject to backup withholding to ensure that income tax is collected on the income. Irs amended tax return 2011 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 amended tax return 2011   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 amended tax return 2011 Certification. Irs amended tax return 2011   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 amended tax return 2011 Your payer will give you a Form W-9, Request for Taxpayer Identification Number and Certification, or similar form, to make this certification. Irs amended tax return 2011 If you fail to make this certification, backup withholding may begin immediately on your new account or investment. Irs amended tax return 2011 Underreported interest and dividends. Irs amended tax return 2011   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 amended tax return 2011 How to stop backup withholding due to underreporting. Irs amended tax return 2011   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 amended tax return 2011 You must show that at least one of the following situations applies. Irs amended tax return 2011 No underreporting occurred. Irs amended tax return 2011 You have a bona fide dispute with the IRS about whether underreporting occurred. Irs amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011   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 amended tax return 2011 How to stop backup withholding due to an incorrect identification number. Irs amended tax return 2011   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 amended tax return 2011 Reporting backup withholding. Irs amended tax return 2011   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 amended tax return 2011 The information return will show any backup withholding as “Federal income tax withheld. Irs amended tax return 2011 ” Nonresident aliens. Irs amended tax return 2011    Generally, payments made to nonresident aliens are not subject to backup withholding. Irs amended tax return 2011 You can use Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, to certify exempt status. Irs amended tax return 2011 However, this does not exempt you from the 30% (or lower treaty) withholding rate that may apply to your investment income. Irs amended tax return 2011 For information on the 30% rate, see Publication 519, U. Irs amended tax return 2011 S. Irs amended tax return 2011 Tax Guide for Aliens. Irs amended tax return 2011 Penalties. Irs amended tax return 2011   There are civil and criminal penalties for giving false information to avoid backup withholding. Irs amended tax return 2011 The civil penalty is $500. Irs amended tax return 2011 The criminal penalty, upon conviction, is a fine of up to $1,000, or imprisonment of up to 1 year, or both. Irs amended tax return 2011 Where to report investment income. Irs amended tax return 2011   Table 1-1 gives an overview of the forms and schedules to use to report some common types of investment income. Irs amended tax return 2011 But see the rest of this publication for detailed information about reporting investment income. Irs amended tax return 2011 Joint accounts. Irs amended tax return 2011   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 amended tax return 2011 Community property states. Irs amended tax return 2011   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 amended tax return 2011 If you file separate returns, you must each report one-half of any taxable distribution. Irs amended tax return 2011 See Publication 555, Community Property, for more information on community income. Irs amended tax return 2011   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 amended tax return 2011 Example. Irs amended tax return 2011 You and your spouse have a joint money market account. Irs amended tax return 2011 Under state law, half the income from the account belongs to you, and half belongs to your spouse. Irs amended tax return 2011 If you file separate returns, you each report half the income. Irs amended tax return 2011 Income from property given to a child. Irs amended tax return 2011   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 amended tax return 2011   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 amended tax return 2011 Savings account with parent as trustee. Irs amended tax return 2011   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 amended tax return 2011 The savings account legally belongs to the child. Irs amended tax return 2011 The parents are not legally permitted to use any of the funds to support the child. Irs amended tax return 2011 Table 1-1. Irs amended tax return 2011 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 amended tax return 2011 ) Type of Income If you file Form 1040, report on . Irs amended tax return 2011 . Irs amended tax return 2011 . Irs amended tax return 2011 If you can file Form 1040A, report on . Irs amended tax return 2011 . Irs amended tax return 2011 . Irs amended tax return 2011 If you can file Form 1040EZ, report on . Irs amended tax return 2011 . Irs amended tax return 2011 . Irs amended tax return 2011 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 amended tax return 2011 ) Line 8a (You may need to file Schedule B as well. Irs amended tax return 2011 ) 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 amended tax return 2011 ) Line 9a (You may need to file Schedule B as well. Irs amended tax return 2011 )   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 amended tax return 2011 Use Part II if you held the shares more than 1 year. Irs amended tax return 2011 Use Part I if you held your mutual fund shares 1 year or less. Irs amended tax return 2011 For details on Form 8949, see Reporting Capital Gains and Losses in chapter 4, and the Instructions for Form 8949. Irs amended tax return 2011 Accuracy-related penalty. Irs amended tax return 2011   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 amended tax return 2011 For information on the penalty and any interest that applies, see Penalties in chapter 2. Irs amended tax return 2011 Interest Income This section discusses the tax treatment of different types of interest income. Irs amended tax return 2011 In general, any interest that you receive or that is credited to your account and can be withdrawn is taxable income. Irs amended tax return 2011 (It does not have to be entered in your passbook. Irs amended tax return 2011 ) Exceptions to this rule are discussed later. Irs amended tax return 2011 Form 1099-INT. Irs amended tax return 2011   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 amended tax return 2011 This form shows you the interest you received during the year. Irs amended tax return 2011 Keep this form for your records. Irs amended tax return 2011 You do not have to attach it to your tax return. Irs amended tax return 2011   Report on your tax return the total interest income you receive for the tax year. Irs amended tax return 2011 Interest not reported on Form 1099-INT. Irs amended tax return 2011   Even if you do not receive Form 1099-INT, you must still report all of your interest income. Irs amended tax return 2011 For example, you may receive distributive shares of interest from partnerships or S corporations. Irs amended tax return 2011 This interest is reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Irs amended tax return 2011 , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. Irs amended tax return 2011 Nominees. Irs amended tax return 2011   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 amended tax return 2011   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 amended tax return 2011 Incorrect amount. Irs amended tax return 2011   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 amended tax return 2011 The new Form 1099-INT you receive will be marked “Corrected. Irs amended tax return 2011 ” Form 1099-OID. Irs amended tax return 2011   Reportable interest income also may be shown on Form 1099-OID, Original Issue Discount. Irs amended tax return 2011 For more information about amounts shown on this form, see Original Issue Discount (OID) , later in this chapter. Irs amended tax return 2011 Exempt-interest dividends. Irs amended tax return 2011   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 amended tax return 2011 (However, see Information reporting requirement , next. Irs amended tax return 2011 ) Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. Irs amended tax return 2011 You do not reduce your basis for distributions that are exempt-interest dividends. Irs amended tax return 2011 Information reporting requirement. Irs amended tax return 2011   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file. Irs amended tax return 2011 This is an information reporting requirement and does not change the exempt-interest dividends into taxable income. Irs amended tax return 2011 See How To Report Interest Income , later. Irs amended tax return 2011 Note. Irs amended tax return 2011 Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. Irs amended tax return 2011 The exempt-interest dividends subject to the alternative minimum tax are shown in box 11 of Form 1099-DIV. Irs amended tax return 2011 See Form 6251 and its instructions for more information about this tax. Irs amended tax return 2011 Private activity bonds are discussed later under State or Local Government Obligations. Irs amended tax return 2011 Interest on VA dividends. Irs amended tax return 2011   Interest on insurance dividends left on deposit with the Department of Veterans Affairs (VA) is not taxable. Irs amended tax return 2011 This includes interest paid on dividends on converted United States Government Life Insurance policies and on National Service Life Insurance policies. Irs amended tax return 2011 Individual retirement arrangements (IRAs). Irs amended tax return 2011   Interest on a Roth IRA generally is not taxable. Irs amended tax return 2011 Interest on a traditional IRA is tax deferred. Irs amended tax return 2011 You generally do not include it in your income until you make withdrawals from the IRA. Irs amended tax return 2011 See Publication 590 for more information. Irs amended tax return 2011 Taxable Interest — General Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. Irs amended tax return 2011 The following are some sources of taxable interest. Irs amended tax return 2011 Dividends that are actually interest. Irs amended tax return 2011   Certain distributions commonly called dividends are actually interest. Irs amended tax return 2011 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 amended tax return 2011  The “dividends” will be shown as interest income on Form 1099-INT. Irs amended tax return 2011 Money market funds. Irs amended tax return 2011   Money market funds are offered by nonbank financial institutions such as mutual funds and stock brokerage houses, and pay dividends. Irs amended tax return 2011 Generally, amounts you receive from money market funds should be reported as dividends, not as interest. Irs amended tax return 2011 Certificates of deposit and other deferred interest accounts. Irs amended tax return 2011   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 amended tax return 2011 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 amended tax return 2011 The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. Irs amended tax return 2011 If interest is deferred for more than 1 year, see Original Issue Discount (OID) , later. Irs amended tax return 2011 Interest subject to penalty for early withdrawal. Irs amended tax return 2011   If you withdraw funds from a deferred interest account before maturity, you may have to pay a penalty. Irs amended tax return 2011 You must report the total amount of interest paid or credited to your account during the year, without subtracting the penalty. Irs amended tax return 2011 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 amended tax return 2011 Money borrowed to invest in certificate of deposit. Irs amended tax return 2011   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 amended tax return 2011 You must report the total interest you earn on the certificate in your income. Irs amended tax return 2011 If you itemize deductions, you can deduct the interest you pay as investment interest, up to the amount of your net investment income. Irs amended tax return 2011 See Interest Expenses in chapter 3. Irs amended tax return 2011 Example. Irs amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011 The bank gives you a Form 1099-INT for 2013 showing the $575 interest you earned. Irs amended tax return 2011 The bank also gives you a statement showing that you paid $310 interest for 2013. Irs amended tax return 2011 You must include the $575 in your income. Irs amended tax return 2011 If you itemize your deductions on Schedule A (Form 1040), Itemized Deductions, you can deduct $310, subject to the net investment income limit. Irs amended tax return 2011 Gift for opening account. Irs amended tax return 2011   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 amended tax return 2011   For deposits of less than $5,000, gifts or services valued at more than $10 must be reported as interest. Irs amended tax return 2011 For deposits of $5,000 or more, gifts or services valued at more than $20 must be reported as interest. Irs amended tax return 2011 The value is determined by the cost to the financial institution. Irs amended tax return 2011 Example. Irs amended tax return 2011 You open a savings account at your local bank and deposit $800. Irs amended tax return 2011 The account earns $20 interest. Irs amended tax return 2011 You also receive a $15 calculator. Irs amended tax return 2011 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 amended tax return 2011 You must report $35 interest income on your tax return. Irs amended tax return 2011 Interest on insurance dividends. Irs amended tax return 2011   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 amended tax return 2011 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 amended tax return 2011 Prepaid insurance premiums. Irs amended tax return 2011   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 amended tax return 2011 U. Irs amended tax return 2011 S. Irs amended tax return 2011 obligations. Irs amended tax return 2011   Interest on U. Irs amended tax return 2011 S. Irs amended tax return 2011 obligations, such as U. Irs amended tax return 2011 S. Irs amended tax return 2011 Treasury bills, notes, and bonds, issued by any agency or instrumentality of the United States is taxable for federal income tax purposes. Irs amended tax return 2011 Interest on tax refunds. Irs amended tax return 2011   Interest you receive on tax refunds is taxable income. Irs amended tax return 2011 Interest on condemnation award. Irs amended tax return 2011   If the condemning authority pays you interest to compensate you for a delay in payment of an award, the interest is taxable. Irs amended tax return 2011 Installment sale payments. Irs amended tax return 2011   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 amended tax return 2011 That interest is taxable when you receive it. Irs amended tax return 2011 If little or no interest is provided for in a deferred payment contract, part of each payment may be treated as interest. Irs amended tax return 2011 See Unstated Interest and Original Issue Discount (OID) in Publication 537. Irs amended tax return 2011 Interest on annuity contract. Irs amended tax return 2011   Accumulated interest on an annuity contract you sell before its maturity date is taxable. Irs amended tax return 2011 Usurious interest. Irs amended tax return 2011   Usurious interest is interest charged at an illegal rate. Irs amended tax return 2011 This is taxable as interest unless state law automatically changes it to a payment on the principal. Irs amended tax return 2011 Interest income on frozen deposits. Irs amended tax return 2011   Exclude from your gross income interest on frozen deposits. Irs amended tax return 2011 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 amended tax return 2011   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 amended tax return 2011 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 amended tax return 2011   The interest you exclude is treated as credited to your account in the following year. Irs amended tax return 2011 You must include it in income in the year you can withdraw it. Irs amended tax return 2011 Example. Irs amended tax return 2011 $100 of interest was credited on your frozen deposit during the year. Irs amended tax return 2011 You withdrew $80 but could not withdraw any more as of the end of the year. Irs amended tax return 2011 You must include $80 in your income and exclude $20 from your income for the year. Irs amended tax return 2011 You must include the $20 in your income for the year you can withdraw it. Irs amended tax return 2011 Bonds traded flat. Irs amended tax return 2011    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 amended tax return 2011 The defaulted or unpaid interest is not income and is not taxable as interest if paid later. Irs amended tax return 2011 When you receive a payment of that interest, it is a return of capital that reduces the remaining cost basis of your bond. Irs amended tax return 2011 Interest that accrues after the date of purchase, however, is taxable interest income for the year received or accrued. Irs amended tax return 2011 See Bonds Sold Between Interest Dates , later in this chapter. Irs amended tax return 2011 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 amended tax return 2011 The below-market loan rules and exceptions are described in this section. Irs amended tax return 2011 For more information, see section 7872 of the Internal Revenue Code and its regulations. Irs amended tax return 2011 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 amended tax return 2011 Loans subject to the rules. Irs amended tax return 2011   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 amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011 Forgone interest. Irs amended tax return 2011   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 amended tax return 2011 Applicable federal rate. Irs amended tax return 2011   Applicable federal rates are published by the IRS each month in the Internal Revenue Bulletin. Irs amended tax return 2011 Some IRS offices have these bulletins available for research. Irs amended tax return 2011 See chapter 5, How To Get Tax Help , for other ways to get this information. Irs amended tax return 2011 Rules for below-market loans. Irs amended tax return 2011   The rules that apply to a below-market loan depend on whether the loan is a gift loan, demand loan, or term loan. Irs amended tax return 2011 Gift and demand loans. Irs amended tax return 2011   A gift loan is any below-market loan where the forgone interest is in the nature of a gift. Irs amended tax return 2011   A demand loan is a loan payable in full at any time upon demand by the lender. Irs amended tax return 2011 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 amended tax return 2011   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 amended tax return 2011 The borrower is generally treated as transferring the additional payment back to the lender as interest. Irs amended tax return 2011 The lender must report that amount as interest income. Irs amended tax return 2011   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 amended tax return 2011 The borrower may have to report this payment as taxable income, depending on its classification. Irs amended tax return 2011 These transfers are considered to occur annually, generally on December 31. Irs amended tax return 2011 Term loans. Irs amended tax return 2011   A term loan is any loan that is not a demand loan. Irs amended tax return 2011 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 amended tax return 2011   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 amended tax return 2011 ) on the date the loan is made. Irs amended tax return 2011 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 amended tax return 2011 An equal amount is treated as original issue discount (OID). Irs amended tax return 2011 The lender must report the annual part of the OID as interest income. Irs amended tax return 2011 The borrower may be able to deduct the OID as interest expense. Irs amended tax return 2011 See Original Issue Discount (OID) , later. Irs amended tax return 2011 Exceptions to the below-market loan rules. Irs amended tax return 2011   Exceptions to the below-market loan rules are discussed here. Irs amended tax return 2011 Exception for loans of $10,000 or less. Irs amended tax return 2011   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 amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011 Those rules will continue to apply even if the outstanding balance is reduced to $10,000 or less. Irs amended tax return 2011 Exception for loans to continuing care facilities. Irs amended tax return 2011   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 amended tax return 2011 For the definitions of qualified continuing care facility and continuing care contract, see Internal Revenue Code section 7872(h). Irs amended tax return 2011 Exception for loans without significant tax effect. Irs amended tax return 2011   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 amended tax return 2011 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 amended tax return 2011 S. Irs amended tax return 2011 trade or business and would not be exempt from U. Irs amended tax return 2011 S. Irs amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011 Limit on forgone interest for gift loans of $100,000 or less. Irs amended tax return 2011   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 amended tax return 2011 If the borrower's net investment income is $1,000 or less, it is treated as zero. Irs amended tax return 2011 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 amended tax return 2011 Effective dates. Irs amended tax return 2011    These rules apply to term loans made after June 6, 1984, and to demand loans outstanding after that date. Irs amended tax return 2011 U. Irs amended tax return 2011 S. Irs amended tax return 2011 Savings Bonds This section provides tax information on U. Irs amended tax return 2011 S. Irs amended tax return 2011 savings bonds. Irs amended tax return 2011 It explains how to report the interest income on these bonds and how to treat transfers of these bonds. Irs amended tax return 2011 U. Irs amended tax return 2011 S. Irs amended tax return 2011 savings bonds currently offered to individuals include Series EE bonds and Series I bonds. Irs amended tax return 2011 For other information on U. Irs amended tax return 2011 S. Irs amended tax return 2011 savings bonds, write to:  For Series HH/H: Bureau of the Fiscal Service Division of Customer Assistance P. Irs amended tax return 2011 O. Irs amended tax return 2011 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 amended tax return 2011 O. Irs amended tax return 2011 Box 7012 Parkersburg, WV 26106-7012  For Series EE and I electronic bonds: Bureau of the Fiscal Service  Division of Customer Assistance P. Irs amended tax return 2011 O. Irs amended tax return 2011 Box 7015 Parkersburg, WV 26106-7015 Or, on the Internet, visit: www. Irs amended tax return 2011 treasurydirect. Irs amended tax return 2011 gov/indiv/indiv. Irs amended tax return 2011 htm. Irs amended tax return 2011 Accrual method taxpayers. Irs amended tax return 2011   If you use an accrual method of accounting, you must report interest on U. Irs amended tax return 2011 S. Irs amended tax return 2011 savings bonds each year as it accrues. Irs amended tax return 2011 You cannot postpone reporting interest until you receive it or until the bonds mature. Irs amended tax return 2011 Cash method taxpayers. Irs amended tax return 2011   If you use the cash method of accounting, as most individual taxpayers do, you generally report the interest on U. Irs amended tax return 2011 S. Irs amended tax return 2011 savings bonds when you receive it. Irs amended tax return 2011 But see Reporting options for cash method taxpayers , later. Irs amended tax return 2011 Series HH bonds. Irs amended tax return 2011   These bonds were issued at face value. Irs amended tax return 2011 Interest is paid twice a year by direct deposit to your bank account. Irs amended tax return 2011 If you are a cash method taxpayer, you must report interest on these bonds as income in the year you receive it. Irs amended tax return 2011   Series HH bonds were first offered in 1980 and last offered in August 2004. Irs amended tax return 2011 Before 1980, series H bonds were issued. Irs amended tax return 2011 Series H bonds are treated the same as series HH bonds. Irs amended tax return 2011 If you are a cash method taxpayer, you must report the interest when you receive it. Irs amended tax return 2011   Series H bonds have a maturity period of 30 years. Irs amended tax return 2011 Series HH bonds mature in 20 years. Irs amended tax return 2011 The last series H bonds matured in 2009. Irs amended tax return 2011 The last series HH bonds will mature in 2024. Irs amended tax return 2011 Series EE and series I bonds. Irs amended tax return 2011   Interest on these bonds is payable when you redeem the bonds. Irs amended tax return 2011 The difference between the purchase price and the redemption value is taxable interest. Irs amended tax return 2011 Series EE bonds. Irs amended tax return 2011   Series EE bonds were first offered in January 1980 and have a maturity period of 30 years. Irs amended tax return 2011 Before July 1980, series E bonds were issued. Irs amended tax return 2011 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 amended tax return 2011 Paper series EE and series E bonds are issued at a discount. Irs amended tax return 2011 The face value is payable to you at maturity. Irs amended tax return 2011 Electronic series EE bonds are issued at their face value. Irs amended tax return 2011 The face value plus accrued interest is payable to you at maturity. Irs amended tax return 2011 As of January 1, 2012, paper savings bonds were no longer sold at financial institutions. Irs amended tax return 2011    Owners of paper series EE bonds can convert them to electronic bonds. Irs amended tax return 2011 These converted bonds do not retain the denomination listed on the paper certificate but are posted at their purchase price (with accrued interest). Irs amended tax return 2011 Series I bonds. Irs amended tax return 2011   Series I bonds were first offered in 1998. Irs amended tax return 2011 These are inflation-indexed bonds issued at their face amount with a maturity period of 30 years. Irs amended tax return 2011 The face value plus all accrued interest is payable to you at maturity. Irs amended tax return 2011 Reporting options for cash method taxpayers. Irs amended tax return 2011   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 amended tax return 2011 Method 1. Irs amended tax return 2011 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 amended tax return 2011 (However, see Savings bonds traded , later. Irs amended tax return 2011 )  Note. Irs amended tax return 2011 Series EE bonds issued in 1983 matured in 2013. Irs amended tax return 2011 If you have used method 1, you generally must report the interest on these bonds on your 2013 return. Irs amended tax return 2011 The last series E bonds were issued in 1980 and matured in 2010. Irs amended tax return 2011 If you used method 1, you generally should have reported the interest on these bonds on your 2010 return. Irs amended tax return 2011 Method 2. Irs amended tax return 2011 Choose to report the increase in redemption value as interest each year. Irs amended tax return 2011  You must use the same method for all series EE, series E, and series I bonds you own. Irs amended tax return 2011 If you do not choose method 2 by reporting the increase in redemption value as interest each year, you must use method 1. Irs amended tax return 2011 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 amended tax return 2011 To learn how, see Education Savings Bond Program, later. Irs amended tax return 2011 Change from method 1. Irs amended tax return 2011   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 amended tax return 2011 In the year of change, you must report all interest accrued to date and not previously reported for all your bonds. Irs amended tax return 2011   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 amended tax return 2011 Change from method 2. Irs amended tax return 2011   To change from method 2 to method 1, you must request permission from the IRS. Irs amended tax return 2011 Permission for the change is automatically granted if you send the IRS a statement that meets all the following requirements. Irs amended tax return 2011 You have typed or printed the following number at the top: “131. Irs amended tax return 2011 ” It includes your name and social security number under “131. Irs amended tax return 2011 ” It includes the year of change (both the beginning and ending dates). Irs amended tax return 2011 It identifies the savings bonds for which you are requesting this change. Irs amended tax return 2011 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 amended tax return 2011   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 amended tax return 2011   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 amended tax return 2011 On the statement, type or print “Filed pursuant to section 301. Irs amended tax return 2011 9100-2. Irs amended tax return 2011 ” To get this extension, you must have filed your original return for the year of the change by the due date (including extensions). Irs amended tax return 2011    By the date you file the original statement with your return, you must also send a signed copy to the address below. Irs amended tax return 2011    Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) P. Irs amended tax return 2011 O. Irs amended tax return 2011 Box 7604 Benjamin Franklin Station Washington, DC 20044   If you use a private delivery service, send the signed copy to the address below. Irs amended tax return 2011 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 amended tax return 2011 In that case, follow the form instructions for an automatic change. Irs amended tax return 2011 No user fee is required. Irs amended tax return 2011 Co-owners. Irs amended tax return 2011   If a U. Irs amended tax return 2011 S. Irs amended tax return 2011 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 amended tax return 2011 One co-owner's funds used. Irs amended tax return 2011   If you used your funds to buy the bond, you must pay the tax on the interest. Irs amended tax return 2011 This is true even if you let the other co-owner redeem the bond and keep all the proceeds. Irs amended tax return 2011 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 amended tax return 2011 The co-owner who redeemed the bond is a “nominee. Irs amended tax return 2011 ” 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 amended tax return 2011 Both co-owners' funds used. Irs amended tax return 2011   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 amended tax return 2011 Community property. Irs amended tax return 2011   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 amended tax return 2011 If you file separate returns, each of you generally must report one-half of the bond interest. Irs amended tax return 2011 For more information about community property, see Publication 555. Irs amended tax return 2011 Table 1-2. Irs amended tax return 2011   These rules are also shown in Table 1-2. Irs amended tax return 2011 Child as only owner. Irs amended tax return 2011   Interest on U. Irs amended tax return 2011 S. Irs amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011 Choice to report interest each year. Irs amended tax return 2011   The choice to report the accrued interest each year can be made either by your child or by you for your child. Irs amended tax return 2011 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 amended tax return 2011 Either you or your child should keep a copy of this return. Irs amended tax return 2011   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 amended tax return 2011 S. Irs amended tax return 2011 savings bond interest under this choice. Irs amended tax return 2011 However, see Tax on unearned income of certain children , earlier, under General Information. Irs amended tax return 2011 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 amended tax return 2011 Ownership transferred. Irs amended tax return 2011   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 amended tax return 2011 But, if the bonds were reissued in your name alone, you do not have to report the interest accrued at that time. Irs amended tax return 2011   This same rule applies when bonds (other than bonds held as community property) are transferred between spouses or incident to divorce. Irs amended tax return 2011 Example. Irs amended tax return 2011 You bought series EE bonds entirely with your own funds. Irs amended tax return 2011 You did not choose to report the accrued interest each year. Irs amended tax return 2011 Later, you transfer the bonds to your former spouse under a divorce agreement. Irs amended tax return 2011 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 amended tax return 2011 Your former spouse includes in income the interest on the bonds from the date of transfer to the date of redemption. Irs amended tax return 2011 Table 1-2. Irs amended tax return 2011 Who Pays the Tax on U. Irs amended tax return 2011 S. Irs amended tax return 2011 Savings Bond Interest IF . Irs amended tax return 2011 . Irs amended tax return 2011 . Irs amended tax return 2011 THEN the interest must be reported by . Irs amended tax return 2011 . Irs amended tax return 2011 . Irs amended tax return 2011 you buy a bond in your name and the name of another person as co-owners, using only your own funds you. Irs amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011 you and your spouse, who live in a community property state, buy a bond that is community property you and your spouse. Irs amended tax return 2011 If you file separate returns, both you and your spouse generally report one-half of the interest. Irs amended tax return 2011 Purchased jointly. Irs amended tax return 2011   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 amended tax return 2011 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 amended tax return 2011 This interest, however, as well as all interest earned after the reissue, is income to the former co-owner. Irs amended tax return 2011   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 amended tax return 2011 But the new co-owner will report only his or her share of the interest earned after the transfer. Irs amended tax return 2011   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 amended tax return 2011 Example 1. Irs amended tax return 2011 You and your spouse each spent an equal amount to buy a $1,000 series EE savings bond. Irs amended tax return 2011 The bond was issued to you and your spouse as co-owners. Irs amended tax return 2011 You both postpone reporting interest on the bond. Irs amended tax return 2011 You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Irs amended tax return 2011 At that time neither you nor your spouse has to report the interest earned to the date of reissue. Irs amended tax return 2011 Example 2. Irs amended tax return 2011 You bought a $1,000 series EE savings bond entirely with your own funds. Irs amended tax return 2011 The bond was issued to you and your spouse as co-owners. Irs amended tax return 2011 You both postponed reporting interest on the bond. Irs amended tax return 2011 You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Irs amended tax return 2011 You must report half the interest earned to the date of reissue. Irs amended tax return 2011 Transfer to a trust. Irs amended tax return 2011   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 amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011   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 amended tax return 2011 See Savings bonds traded , later. Irs amended tax return 2011 Decedents. Irs amended tax return 2011   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 amended tax return 2011 Decedent who reported interest each year. Irs amended tax return 2011   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 amended tax return 2011 The person who acquires the bonds includes in income only interest earned after the date of death. Irs amended tax return 2011 Decedent who postponed reporting interest. Irs amended tax return 2011   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 amended tax return 2011 The surviving spouse or personal representative (executor, administrator, etc. Irs amended tax return 2011 ) 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 amended tax return 2011 The person who acquires the bonds then includes in income only interest earned after the date of death. Irs amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011 For more information on income in respect of a decedent, see Publication 559, Survivors, Executors, and Administrators. Irs amended tax return 2011 Example 1. Irs amended tax return 2011 Your uncle, a cash method taxpayer, died and left you a $1,000 series EE bond. Irs amended tax return 2011 He had bought the bond for $500 and had not chosen to report the interest each year. Irs amended tax return 2011 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 amended tax return 2011 Your uncle's executor chose not to include the $200 accrued interest in your uncle's final income tax return. Irs amended tax return 2011 The $200 is income in respect of the decedent. Irs amended tax return 2011 You are a cash method taxpayer and do not choose to report the interest each year as it is earned. Irs amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011 Example 2. Irs amended tax return 2011 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 amended tax return 2011 $300 is the interest earned after your uncle's death. Irs amended tax return 2011 Example 3. Irs amended tax return 2011 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 amended tax return 2011 Example 4. Irs amended tax return 2011 When your aunt died, she owned series HH bonds that she had acquired in a trade for series EE bonds. Irs amended tax return 2011 You were the beneficiary of these bonds. Irs amended tax return 2011 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 amended tax return 2011 Your aunt's executor chose not to include any interest earned before your aunt's death on her final return. Irs amended tax return 2011 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 amended tax return 2011 You must report any interest received during the year as income on your return. Irs amended tax return 2011 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 amended tax return 2011 For information on when to report the interest on the series EE bonds traded, see Savings bonds traded , later. Irs amended tax return 2011 Savings bonds distributed from a retirement or profit-sharing plan. Irs amended tax return 2011   If you acquire a U. Irs amended tax return 2011 S. Irs amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011 Savings bonds traded. Irs amended tax return 2011   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 amended tax return 2011 (You cannot trade series I bonds for series HH bonds. Irs amended tax return 2011 After August 31, 2004, you cannot trade any other series of bonds for series HH bonds. Irs amended tax return 2011 ) Any cash you received is income up to the amount of the interest earned on the bonds traded. Irs amended tax return 2011 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 amended tax return 2011 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 amended tax return 2011 Example. Irs amended tax return 2011 You traded series EE bonds (on which you postponed reporting the interest) for $2,500 in series HH bonds and $223 in cash. Irs amended tax return 2011 You reported the $223 as taxable income on your tax return. Irs amended tax return 2011 At the time of the trade, the series EE bonds had accrued interest of $523 and a redemption value of $2,723. Irs amended tax return 2011 You hold the series HH bonds until maturity, when you receive $2,500. Irs amended tax return 2011 You must report $300 as interest income in the year of maturity. Irs amended tax return 2011 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 amended tax return 2011 (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 amended tax return 2011 ) Choice to report interest in year of trade. Irs amended tax return 2011   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 amended tax return 2011 If you made this choice, it is treated as a change from method 1. Irs amended tax return 2011 See Change from method 1 under Series EE and series I bonds, earlier. Irs amended tax return 2011 Form 1099-INT for U. Irs amended tax return 2011 S. Irs amended tax return 2011 savings bond interest. Irs amended tax return 2011   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 amended tax return 2011 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 amended tax return 2011 However, your Form 1099-INT may show more interest than you have to include on your income tax return. Irs amended tax return 2011 For example, this may happen if any of the following are true. Irs amended tax return 2011 You chose to report the increase in the redemption value of the bond each year. Irs amended tax return 2011 The interest shown on your Form 1099-INT will not be reduced by amounts previously included in income. Irs amended tax return 2011 You received the bond from a decedent. Irs amended tax return 2011 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 amended tax return 2011 Ownership of the bond was transferred. Irs amended tax return 2011 The interest shown on your Form 1099-INT will not be reduced by interest that accrued before the transfer. Irs amended tax return 2011 You were named as a co-owner, and the other co-owner contributed funds to buy the bond. Irs amended tax return 2011 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 amended tax return 2011 (See Co-owners , earlier in this section, for more information about the reporting requirements. Irs amended tax return 2011 ) You received the bond in a taxable distribution from a retirement or profit-sharing plan. Irs amended tax return 2011 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 amended tax return 2011 (This amount is generally shown on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Irs amended tax return 2011 , for the year of distribution. Irs amended tax return 2011 )   For more information on including the correct amount of interest on your return, see U. Irs amended tax return 2011 S. Irs amended tax return 2011 savings bond interest previously reported or Nominee distributions under How To Report Interest Income, later. Irs amended tax return 2011    Interest on U. Irs amended tax return 2011 S. Irs amended tax return 2011 savings bonds is exempt from state and local taxes. Irs amended tax return 2011 The Form 1099-INT you receive will indicate the amount that is for U. Irs amended tax return 2011 S. Irs amended tax return 2011 savings bonds interest in box 3. Irs amended tax return 2011 Do not include this income on your state or local income tax return. Irs amended tax return 2011 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 amended tax return 2011 S. Irs amended tax return 2011 savings bonds during the year if you pay qualified higher educational expenses during the same year. Irs amended tax return 2011 This exclusion is known as the Education Savings Bond Program. Irs amended tax return 2011 You do not qualify for this exclusion if your filing status is married filing separately. Irs amended tax return 2011 Form 8815. Irs amended tax return 2011   Use Form 8815 to figure your exclusion. Irs amended tax return 2011 Attach the form to your Form 1040 or Form 1040A. Irs amended tax return 2011 Qualified U. Irs amended tax return 2011 S. Irs amended tax return 2011 savings bonds. Irs amended tax return 2011   A qualified U. Irs amended tax return 2011 S. Irs amended tax return 2011 savings bond is a series EE bond issued after 1989 or a series I bond. Irs amended tax return 2011 The bond must be issued either in your name (sole owner) or in your and your spouse's names (co-owners). Irs amended tax return 2011 You must be at least 24 years old before the bond's issue date. Irs amended tax return 2011 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 amended tax return 2011    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 amended tax return 2011 Beneficiary. Irs amended tax return 2011   You can designate any individual (including a child) as a beneficiary of the bond. Irs amended tax return 2011 Verification by IRS. Irs amended tax return 2011   If you claim the exclusion, the IRS will check it by using bond redemption information from the Department of Treasury. Irs amended tax return 2011 Qualified expenses. Irs amended tax return 2011   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 amended tax return 2011   Qualified expenses include any contribution you make to a qualified tuition program or to a Coverdell education savings account. Irs amended tax return 2011 For information about these programs, see Publication 970, Tax Benefits for Education. Irs amended tax return 2011   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 amended tax return 2011 Eligible educational institutions. Irs amended tax return 2011   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 amended tax return 2011 Reduction for certain benefits. Irs amended tax return 2011   You must reduce your qualified higher educational expenses by all of the following tax-free benefits. Irs amended tax return 2011 Tax-free part of scholarships and fellowships. Irs amended tax return 2011 Expenses used to figure the tax-free portion of distributions from a Coverdell ESA. Irs amended tax return 2011 Expenses used to figure the tax-free portion of distributions from a qualified tuition program. Irs amended tax return 2011 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 amended tax return 2011 Any expense used in figuring the American Opportunity and lifetime learning credits. Irs amended tax return 2011 For information about these benefits, see Publication 970. Irs amended tax return 2011 Amount excludable. Irs amended tax return 2011   If the total proceeds (interest and principal) from the qualified U. Irs amended tax return 2011 S. Irs amended tax return 2011 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 amended tax return 2011 If the proceeds are more than the expenses, you may be able to exclude only part of the interest. Irs amended tax return 2011   To determine the excludable amount, multiply the interest part of the proceeds by a fraction. Irs amended tax return 2011 The numer