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Irs free tax filing 6. Irs free tax filing   Dual-Status Tax Year Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tax Year Income Subject to Tax Restrictions for Dual-Status Taxpayers Exemptions How To Figure TaxIncome Tax Credits and Payments Forms To File When and Where To File Introduction You have a dual-status tax year when you have been both a resident alien and a nonresident alien in the same year. Irs free tax filing Dual status does not refer to your citizenship; it refers only to your resident status in the United States. Irs free tax filing In determining your U. Irs free tax filing S. Irs free tax filing income tax liability for a dual-status tax year, different rules apply for the part of the year you are a resident of the United States and the part of the year you are a nonresident. Irs free tax filing The most common dual-status tax years are the years of arrival and departure. Irs free tax filing See Dual-Status Aliens in chapter 1. Irs free tax filing If you are married and choose to be treated as a U. Irs free tax filing S. Irs free tax filing resident for the entire year, as explained in chapter 1, the rules of this chapter do not apply to you for that year. Irs free tax filing Topics - This chapter discusses: Income subject to tax, Restrictions for dual-status taxpayers, Exemptions, How to figure the tax, Forms to file, When and where to file, and How to fill out a dual-status return. Irs free tax filing Useful Items - You may want to see: Publication 503 Child and Dependent Care Expenses 514 Foreign Tax Credit for Individuals 575 Pension and Annuity Income Form (and Instructions) 1040 U. Irs free tax filing S. Irs free tax filing Individual Income Tax Return 1040-C U. Irs free tax filing S. Irs free tax filing Departing Alien Income Tax Return 1040-ES Estimated Tax for Individuals 1040-ES (NR) U. Irs free tax filing S. Irs free tax filing Estimated Tax for Nonresident Alien Individuals 1040NR U. Irs free tax filing S. Irs free tax filing Nonresident Alien Income Tax Return 1116 Foreign Tax Credit See chapter 12 for information about getting these publications and forms. Irs free tax filing Tax Year You must file your tax return on the basis of an annual accounting period called a tax year. Irs free tax filing If you have not previously established a fiscal tax year, your tax year is the calendar year. Irs free tax filing A calendar year is 12 consecutive months ending on December 31. Irs free tax filing If you have previously established a regular fiscal year (12 consecutive months ending on the last day of a month other than December, or a 52–53 week year) and are considered to be a U. Irs free tax filing S. Irs free tax filing resident for any calendar year, you will be treated as a U. Irs free tax filing S. Irs free tax filing resident for any part of your fiscal year that falls within that calendar year. Irs free tax filing Income Subject to Tax For the part of the year you are a resident alien, you are taxed on income from all sources. Irs free tax filing Income from sources outside the United States is taxable if you receive it while you are a resident alien. Irs free tax filing The income is taxable even if you earned it while you were a nonresident alien or if you became a nonresident alien after receiving it and before the end of the year. Irs free tax filing For the part of the year you are a nonresident alien, you are taxed on income from U. Irs free tax filing S. Irs free tax filing sources and on certain foreign source income treated as effectively connected with a U. Irs free tax filing S. Irs free tax filing trade or business. Irs free tax filing (The rules for treating foreign source income as effectively connected are discussed in chapter 4 under Foreign Income. Irs free tax filing ) Income from sources outside the United States that is not effectively connected with a trade or business in the United States is not taxable if you receive it while you are a nonresident alien. Irs free tax filing The income is not taxable even if you earned it while you were a resident alien or if you became a resident alien or a U. Irs free tax filing S. Irs free tax filing citizen after receiving it and before the end of the year. Irs free tax filing Income from U. Irs free tax filing S. Irs free tax filing sources is taxable whether you receive it while a nonresident alien or a resident alien unless specifically exempt under the Internal Revenue Code or a tax treaty provision. Irs free tax filing Generally, tax treaty provisions apply only to the part of the year you were a nonresident. Irs free tax filing In certain cases, however, treaty provisions may apply while you were a resident alien. Irs free tax filing See chapter 9 for more information. Irs free tax filing When determining what income is taxed in the United States, you must consider exemptions under U. Irs free tax filing S. Irs free tax filing tax law as well as the reduced tax rates and exemptions provided by tax treaties between the United States and certain foreign countries. Irs free tax filing For a further discussion of tax treaties, see chapter 9. Irs free tax filing Restrictions for Dual-Status Taxpayers The following restrictions apply if you are filing a tax return for a dual-status tax year. Irs free tax filing 1) Standard deduction. Irs free tax filing   You cannot use the standard deduction allowed on Form 1040. Irs free tax filing However, you can itemize any allowable deductions. Irs free tax filing 2) Exemptions. Irs free tax filing   Your total deduction for the exemptions for your spouse and allowable dependents cannot be more than your taxable income (figured without deducting personal exemptions) for the period you are a resident alien. Irs free tax filing 3) Head of household. Irs free tax filing   You cannot use the head of household Tax Table column or Tax Computation Worksheet. Irs free tax filing 4) Joint return. Irs free tax filing   You cannot file a joint return. Irs free tax filing However, see Choosing Resident Alien Status under Dual-Status Aliens in chapter 1. Irs free tax filing 5) Tax rates. Irs free tax filing   If you are married and a nonresident of the United States for all or part of the tax year and you do not choose to file jointly as discussed in chapter 1, you must use the Tax Table column or Tax Computation Worksheet for married filing separately to figure your tax on income effectively connected with a U. Irs free tax filing S. Irs free tax filing trade or business. Irs free tax filing You cannot use the Tax Table column or Tax Computation Worksheet for married filing jointly or single. Irs free tax filing However, you may be able to file as single if you lived apart from your spouse during the last 6 months of the year and you are a: Married resident of Canada, Mexico, or South Korea, or Married U. Irs free tax filing S. Irs free tax filing national. Irs free tax filing  See the instructions for Form 1040NR to see if you qualify. Irs free tax filing    A U. Irs free tax filing S. Irs free tax filing national is an individual who, although not a U. Irs free tax filing S. Irs free tax filing citizen, owes his or her allegiance to the United States. Irs free tax filing U. Irs free tax filing S. Irs free tax filing nationals include American Samoans and Northern Mariana Islanders who chose to become U. Irs free tax filing S. Irs free tax filing nationals instead of U. Irs free tax filing S. Irs free tax filing citizens. Irs free tax filing 6) Tax credits. Irs free tax filing   You cannot claim the education credits, the earned income credit, or the credit for the elderly or the disabled unless: You are married, and You choose to be treated as a resident for all of 2013 by filing a joint return with your spouse who is a U. Irs free tax filing S. Irs free tax filing citizen or resident, as discussed in chapter 1. Irs free tax filing Exemptions As a dual-status taxpayer, you usually will be able to claim your own personal exemption. Irs free tax filing Subject to the general rules for qualification, you can claim exemptions for your spouse and dependents when you figure taxable income for the part of the year you are a resident alien. Irs free tax filing The amount you can claim for these exemptions is limited to your taxable income (figured before subtracting exemptions) for the part of the year you are a resident alien. Irs free tax filing You cannot use exemptions (other than your own) to reduce taxable income to less than zero for that period. Irs free tax filing Special rules apply to exemptions for the part of the tax year you are a nonresident alien if you are a: Resident of Canada, Mexico, or South Korea, U. Irs free tax filing S. Irs free tax filing national, or Student or business apprentice from India. Irs free tax filing For more information, see Exemptions in chapter 5. Irs free tax filing How To Figure Tax When you figure your U. Irs free tax filing S. Irs free tax filing tax for a dual-status year, you are subject to different rules for the part of the year you are a resident and the part of the year you are a nonresident. Irs free tax filing Income All income for your period of residence and all income that is effectively connected with a trade or business in the United States for your period of nonresidence, after allowable deductions, is added and taxed at the rates that apply to U. Irs free tax filing S. Irs free tax filing citizens and residents. Irs free tax filing Income that is not connected with a trade or business in the United States for your period of nonresidence is subject to the flat 30% rate or lower treaty rate. Irs free tax filing You cannot take any deductions against this income. Irs free tax filing Social security and railroad retirement benefits. Irs free tax filing   During the part of the year you are a nonresident alien, 85% of any U. Irs free tax filing S. Irs free tax filing social security benefits (and the equivalent portion of tier 1 railroad retirement benefits) you receive is subject to the flat 30% tax, unless exempt, or subject to a lower treaty rate. Irs free tax filing (See The 30% Tax in chapter 4. Irs free tax filing )   During the part of the year you are a resident alien, part of the social security and the equivalent portion of tier 1 railroad retirement benefits will be taxed at graduated rates if your modified adjusted gross income plus half of these benefits is more than a certain base amount. Irs free tax filing Use the Social Security Benefits Worksheet in the Form 1040 instructions to help you figure the taxable part of your social security and equivalent tier 1 railroad retirement benefits for the part of the year you were a resident alien. Irs free tax filing If you received U. Irs free tax filing S. Irs free tax filing social security benefits while you were a nonresident alien, the Social Security Administration will send you Form SSA-1042S showing your combined benefits for the entire year and the amount of tax withheld. Irs free tax filing You will not receive separate statements for the benefits received during your periods of U. Irs free tax filing S. Irs free tax filing residence and nonresidence. Irs free tax filing Therefore, it is important for you to keep careful records of these amounts. Irs free tax filing You will need this information to properly complete your return and determine your tax liability. Irs free tax filing If you received railroad retirement benefits while you were a nonresident alien, the U. Irs free tax filing S. Irs free tax filing Railroad Retirement Board (RRB) will send you Form RRB-1042S, Statement for Nonresident Alien Recipients of Payments by the Railroad Retirement Board, and/or Form RRB-1099-R, Annuities or Pensions by the Railroad Retirement Board. Irs free tax filing If your country of legal residence changed or your rate of tax changed during the tax year, you may receive more than one form. Irs free tax filing Tax Credits and Payments This discussion covers tax credits and payments for dual-status aliens. Irs free tax filing Credits As a dual-status alien, you generally can claim tax credits using the same rules that apply to resident aliens. Irs free tax filing There are certain restrictions that may apply. Irs free tax filing These restrictions are discussed here, along with a brief explanation of credits often claimed by individuals. Irs free tax filing Foreign tax credit. Irs free tax filing   If you have paid or are liable for the payment of income tax to a foreign country on income from foreign sources, you may be able to claim a credit for the foreign taxes. Irs free tax filing   If you claim the foreign tax credit, you generally must file Form 1116 with your income tax return. Irs free tax filing For more information, see the Instructions for Form 1116 and Publication 514. Irs free tax filing Child and dependent care credit. Irs free tax filing   You may qualify for this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse so that you can work or look for work. Irs free tax filing Generally, you must be able to claim an exemption for your dependent. Irs free tax filing   Married dual-status aliens can claim the credit only if they choose to file a joint return as discussed in chapter 1, or if they qualify as certain married individuals living apart. Irs free tax filing   The amount of your child and dependent care expense that qualifies for the credit in any tax year cannot be more than your earned income for that tax year. Irs free tax filing   For more information, get Publication 503 and Form 2441. Irs free tax filing Retirement savings contributions credit. Irs free tax filing   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Irs free tax filing You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than $29,500. Irs free tax filing Use Form 8880 to figure the credit. Irs free tax filing For more information, see Publication 590. Irs free tax filing Child tax credit. Irs free tax filing   You may be able to take this credit if you have a qualifying child. Irs free tax filing   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Irs free tax filing Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Irs free tax filing Is a U. Irs free tax filing S. Irs free tax filing citizen, a U. Irs free tax filing S. Irs free tax filing national, or a resident alien. Irs free tax filing Did not provide over half of his or her own support for 2013. Irs free tax filing Lived with you more than half of 2013. Irs free tax filing Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Irs free tax filing Is claimed as a dependent on your return. Irs free tax filing An adopted child is always treated as your own child. Irs free tax filing An adopted child includes a child lawfully placed with you for legal adoption. Irs free tax filing   See your form instructions for additional details. Irs free tax filing Adoption credit. Irs free tax filing   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Irs free tax filing This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Irs free tax filing To claim the adoption credit, file Form 8839 with the U. Irs free tax filing S. Irs free tax filing income tax return that you file. Irs free tax filing   Married dual-status aliens can claim the credit only if they choose to file a joint return with a U. Irs free tax filing S. Irs free tax filing citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Married Persons Not Filing Jointly in the Form 8839 instructions). Irs free tax filing Payments You can report as payments against your U. Irs free tax filing S. Irs free tax filing income tax liability certain taxes you paid, are considered to have paid, or that were withheld from your income. Irs free tax filing These include: Tax withheld from wages earned in the United States, Taxes withheld at the source from various items of income from U. Irs free tax filing S. Irs free tax filing sources other than wages, Estimated tax paid with Form 1040-ES or Form 1040-ES (NR), and Tax paid with Form 1040-C, at the time of departure from the United States. Irs free tax filing Forms To File The U. Irs free tax filing S. Irs free tax filing income tax return you must file as a dual-status alien depends on whether you are a resident alien or a nonresident alien at the end of the tax year. Irs free tax filing Resident at end of year. Irs free tax filing   You must file Form 1040 if you are a dual-status taxpayer who becomes a resident during the year and who is a U. Irs free tax filing S. Irs free tax filing resident on the last day of the tax year. Irs free tax filing Write “Dual-Status Return” across the top of the return. Irs free tax filing Attach a statement to your return to show the income for the part of the year you are a nonresident. Irs free tax filing You can use Form 1040NR or Form 1040NR-EZ as the statement, but be sure to mark “Dual-Status Statement” across the top. Irs free tax filing Nonresident at end of year. Irs free tax filing   You must file Form 1040NR or Form 1040NR-EZ if you are a dual-status taxpayer who gives up residence in the United States during the year and who is not a U. Irs free tax filing S. Irs free tax filing resident on the last day of the tax year. Irs free tax filing Write “Dual-Status Return” across the top of the return. Irs free tax filing Attach a statement to your return to show the income for the part of the year you are a resident. Irs free tax filing You can use Form 1040 as the statement, but be sure to mark “Dual-Status Statement” across the top. Irs free tax filing   If you expatriated or terminated your residency in 2013, you may be required to file an expatriation statement (Form 8854) with your tax return. Irs free tax filing For more information, see Expatriation Tax in chapter 4. Irs free tax filing Statement. Irs free tax filing   Any statement must have your name, address, and taxpayer identification number on it. Irs free tax filing You do not need to sign a separate statement or schedule accompanying your return, because your signature on the return also applies to the supporting statements and schedules. Irs free tax filing When and Where To File If you are a resident alien on the last day of your tax year and report your income on a calendar year basis, you must file no later than April 15 of the year following the close of your tax year. Irs free tax filing If you report your income on other than a calendar year basis, file your return no later than the 15th day of the 4th month following the close of your tax year. Irs free tax filing In either case, file your return with the address for dual-status aliens shown on the back page of the Form 1040 instructions. Irs free tax filing If you are a nonresident alien on the last day of your tax year and you report your income on a calendar year basis, you must file no later than April 15 of the year following the close of your tax year if you receive wages subject to withholding. Irs free tax filing If you report your income on other than a calendar year basis, file your return no later than the 15th day of the 4th month following the close of your tax year. Irs free tax filing If you did not receive wages subject to withholding and you report your income on a calendar year basis, you must file no later than June 15 of the year following the close of your tax year. Irs free tax filing If you report your income on other than a calendar year basis, file your return no later than the 15th day of the 6th month following the close of your tax year. Irs free tax filing In any case, mail your return to:  Department of the Treasury Internal Revenue Service  Austin, TX 73301-0215 If enclosing a payment, mail your return to:  Internal Revenue Service  P. Irs free tax filing O. Irs free tax filing Box 1303 Charlotte, NC 28201-1303 If the regular due date for filing falls on a Saturday, Sunday, or legal holiday, the due date is the next day that is not a Saturday, Sunday, or legal holiday. Irs free tax filing Prev  Up  Next   Home   More Online Publications
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IRS Has $760 Million for People Who Have Not Filed a 2010 Income Tax Return

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IR-2014-30, March 19, 2014

WASHINGTON — Refunds totaling almost $760 million may be waiting for an estimated 918,600 taxpayers who did not file a federal income tax return for 2010, the Internal Revenue Service announced today. However, to collect the money, a return for 2010 must be filed with the IRS no later than Tuesday, April 15, 2014.

"The window is quickly closing for people who are owed refunds from 2010 who haven't filed a tax return," said IRS Commissioner John Koskinen. "We encourage students, part-time workers and others who haven't filed for 2010 to look into this before time runs out on April 15."

The IRS estimates that half the potential refunds for 2010 are more than $571.

Some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim a refund within three years, the money becomes property of the U.S. Treasury.

For 2010 returns, the window closes on April 15, 2014. The law requires that the return be properly addressed, mailed and postmarked by that date. There is no penalty for filing a late return qualifying for a refund.

The IRS reminds taxpayers seeking a 2010 refund that their checks may be held if they have not filed tax returns for 2011 and 2012. In addition, the refund will be applied to any amounts still owed to the IRS or their state tax agency, and may be used to offset unpaid child support or past due federal debts such as student loans.

By failing to file a return, people stand to lose more than just their refund of taxes withheld or paid during 2010. In addition, many low-and-moderate income workers may not have claimed the Earned Income Tax Credit (EITC). For 2010, the credit is worth as much as $5,666. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2010 were:

  • $43,352 ($48,362 if married filing jointly) for those with three or more qualifying children,
  • $40,363 ($45,373 if married filing jointly) for people with two qualifying children,
  • $35,535 ($40,545 if married filing jointly) for those with one qualifying child, and
  • $13,460 ($18,470 if married filing jointly) for people without qualifying children.

Current and prior year tax forms and instructions are available on the Forms and Publications page of IRS.gov or by calling toll-free 800-TAX-FORM (800-829-3676). Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for 2010, 2011 or 2012 should request copies from their employer, bank or other payer.

If these efforts are unsuccessful, taxpayers can get a free transcript showing information from these year-end documents by going to IRS.gov. Taxpayers can also file Form 4506-T to request a transcript of their tax return.

Individuals who did not file a 2010 return with a potential refund:
 

State or District

Estimated

Number of

Individuals

Median

Potential

Refund

Total

Potential

Refunds*

 

Alabama

15,700

$574

$12,473,000

Alaska

4,700

$649

$4,810,000

Arizona

23,800

$508

$17,517,000

Arkansas

8,400

$562

$6,667,000

California

86,500

$519

$69,752,000

Colorado

17,100

$567

$14,061,000

Connecticut

11,700

$620

$10,304,000

Delaware

3,800

$573

$3,126,000

District of Columbia

3,500

$604

$3,080,000

Florida

56,800

$593

$48,407,000

Georgia

28,400

$539

$22,504,000

Hawaii

6,200

$586

$5,413,000

Idaho

3,500

$490

$2,604,000

Illinois

37,900

$626

$32,696,000

Indiana

19,600

$570

$15,478,000

Iowa

9,200

$576

$7,050,000

Kansas

9,300

$522

$6,986,000

Kentucky

11,500

$576

$8,975,000

Louisiana

17,500

$603

$15,579,000

Maine

3,500

$502

$2,373,000

Maryland

20,700

$575

$18,002,000

Massachusetts

21,000

$560

$17,856,000

Michigan

29,200

$597

$24,259,000

Minnesota

12,700

$516

$9,582,000

Mississippi

8,500

$556

$6,769,000

Missouri

17,900

$514

$13,153,000

Montana

2,900

$534

$2,338,000

Nebraska

4,500

$528

$3,368,000

Nevada

11,400

$570

$9,156,000

New Hampshire

3,800

$602

$3,245,000

New Jersey

29,500

$639

$26,712,000

New Mexico

7,200

$572

$5,915,000

New York

57,400

$623

$50,543,000

North Carolina

24,300

$494

$17,538,000

North Dakota

1,900

$600

$1,551,000

Ohio

32,100

$560

$24,508,000

Oklahoma

15,100

$585

$12,246,000

Oregon

14,300

$519

$10,359,000

Pennsylvania

37,400

$614

$31,009,000

Rhode Island

3,000

$598

$2,472,000

South Carolina

10,200

$532

$7,756,000

South Dakota

2,100

$558

$1,605,000

Tennessee

16,300

$559

$12,839,000

Texas

80,600

$588

$71,998,000

Utah

6,100

$518

$4,705,000

Vermont

1,600

$519

$1,136,000

Virginia

26,300

$568

$22,376,000

Washington

24,800

$640

$23,033,000

West Virginia

4,100

$626

$3,534,000

Wisconsin

10,900

$516

$8,423,000

Wyoming

2,200

$648

$2,045,000

Totals

918,600

$571

$759,889,000

                      * Excluding the Earned Income Tax Credit and other credits.

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Irs free tax filing 12. Irs free tax filing   Other Income Table of Contents Introduction Useful Items - You may want to see: Bartering Canceled DebtsInterest included in canceled debt. Irs free tax filing Exceptions Host or Hostess Life Insurance ProceedsSurviving spouse. Irs free tax filing Endowment Contract Proceeds Accelerated Death Benefits Public Safety Officer Killed in the Line of Duty Partnership Income S Corporation Income RecoveriesItemized Deduction Recoveries Rents from Personal Property RepaymentsMethod 1. Irs free tax filing Method 2. Irs free tax filing RoyaltiesDepletion. Irs free tax filing Coal and iron ore. Irs free tax filing Sale of property interest. Irs free tax filing Part of future production sold. Irs free tax filing Unemployment BenefitsTypes of unemployment compensation. Irs free tax filing Governmental program. Irs free tax filing Repayment of unemployment compensation. Irs free tax filing Tax withholding. Irs free tax filing Repayment of benefits. Irs free tax filing Welfare and Other Public Assistance Benefits Other IncomeEmotional distress. Irs free tax filing Deduction for costs involved in unlawful discrimination suits. Irs free tax filing Energy conservation measure. Irs free tax filing Dwelling unit. Irs free tax filing Current income required to be distributed. Irs free tax filing Current income not required to be distributed. Irs free tax filing How to report. Irs free tax filing Losses. Irs free tax filing Grantor trust. Irs free tax filing Nonemployee compensation. Irs free tax filing Corporate director. Irs free tax filing Personal representatives. Irs free tax filing Manager of trade or business for bankruptcy estate. Irs free tax filing Notary public. Irs free tax filing Election precinct official. Irs free tax filing Difficulty-of-care payments. Irs free tax filing Maintaining space in home. Irs free tax filing Reporting taxable payments. Irs free tax filing Lotteries and raffles. Irs free tax filing Form W-2G. Irs free tax filing Reporting winnings and recordkeeping. Irs free tax filing Inherited pension or IRA. Irs free tax filing Employee awards or bonuses. Irs free tax filing Pulitzer, Nobel, and similar prizes. Irs free tax filing Payment for services. Irs free tax filing VA payments. Irs free tax filing Prizes. Irs free tax filing Strike and lockout benefits. Irs free tax filing Introduction You must include on your return all items of income you receive in the form of money, property, and services unless the tax law states that you do not include them. Irs free tax filing Some items, however, are only partly excluded from income. Irs free tax filing This chapter discusses many kinds of income and explains whether they are taxable or nontaxable. Irs free tax filing Income that is taxable must be reported on your tax return and is subject to tax. Irs free tax filing Income that is nontaxable may have to be shown on your tax return but is not taxable. Irs free tax filing This chapter begins with discussions of the following income items. Irs free tax filing Bartering. Irs free tax filing Canceled debts. Irs free tax filing Sales parties at which you are the host or hostess. Irs free tax filing Life insurance proceeds. Irs free tax filing Partnership income. Irs free tax filing S Corporation income. Irs free tax filing Recoveries (including state income tax refunds). Irs free tax filing Rents from personal property. Irs free tax filing Repayments. Irs free tax filing Royalties. Irs free tax filing Unemployment benefits. Irs free tax filing Welfare and other public assistance benefits. Irs free tax filing These discussions are followed by brief discussions of other income items. Irs free tax filing Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 544 Sales and Other Dispositions of Assets 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Bartering Bartering is an exchange of property or services. Irs free tax filing You must include in your income, at the time received, the fair market value of property or services you receive in bartering. Irs free tax filing If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise. Irs free tax filing Generally, you report this income on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Irs free tax filing However, if the barter involves an exchange of something other than services, such as in Example 3 below, you may have to use another form or schedule instead. Irs free tax filing Example 1. Irs free tax filing You are a self-employed attorney who performs legal services for a client, a small corporation. Irs free tax filing The corporation gives you shares of its stock as payment for your services. Irs free tax filing You must include the fair market value of the shares in your income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) in the year you receive them. Irs free tax filing Example 2. Irs free tax filing You are self-employed and a member of a barter club. Irs free tax filing The club uses “credit units” as a means of exchange. Irs free tax filing It adds credit units to your account for goods or services you provide to members, which you can use to purchase goods or services offered by other members of the barter club. Irs free tax filing The club subtracts credit units from your account when you receive goods or services from other members. Irs free tax filing You must include in your income the value of the credit units that are added to your account, even though you may not actually receive goods or services from other members until a later tax year. Irs free tax filing Example 3. Irs free tax filing You own a small apartment building. Irs free tax filing In return for 6 months rent-free use of an apartment, an artist gives you a work of art she created. Irs free tax filing You must report as rental income on Schedule E (Form 1040), Supplemental Income and Loss, the fair market value of the artwork, and the artist must report as income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) the fair rental value of the apartment. Irs free tax filing Form 1099-B from barter exchange. Irs free tax filing   If you exchanged property or services through a barter exchange, Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or a similar statement from the barter exchange should be sent to you by February 18, 2014. Irs free tax filing It should show the value of cash, property, services, credits, or scrip you received from exchanges during 2013. Irs free tax filing The IRS also will receive a copy of Form 1099-B. Irs free tax filing Canceled Debts In most cases, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. Irs free tax filing You have no income from the canceled debt if it is intended as a gift to you. Irs free tax filing A debt includes any indebtedness for which you are liable or which attaches to property you hold. Irs free tax filing If the debt is a nonbusiness debt, report the canceled amount on Form 1040, line 21. Irs free tax filing If it is a business debt, report the amount on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) (or on Schedule F (Form 1040), Profit or Loss From Farming, if the debt is farm debt and you are a farmer). Irs free tax filing Form 1099-C. Irs free tax filing   If a Federal Government agency, financial institution, or credit union cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. Irs free tax filing The amount of the canceled debt is shown in box 2. Irs free tax filing Interest included in canceled debt. Irs free tax filing   If any interest is forgiven and included in the amount of canceled debt in box 2, the amount of interest also will be shown in box 3. Irs free tax filing Whether or not you must include the interest portion of the canceled debt in your income depends on whether the interest would be deductible when you paid it. Irs free tax filing See Deductible debt under Exceptions, later. Irs free tax filing   If the interest would not be deductible (such as interest on a personal loan), include in your income the amount from Form 1099-C, box 2. Irs free tax filing If the interest would be deductible (such as on a business loan), include in your income the net amount of the canceled debt (the amount shown in box 2 less the interest amount shown in box 3). Irs free tax filing Discounted mortgage loan. Irs free tax filing   If your financial institution offers a discount for the early payment of your mortgage loan, the amount of the discount is canceled debt. Irs free tax filing You must include the canceled amount in your income. Irs free tax filing Mortgage relief upon sale or other disposition. Irs free tax filing   If you are personally liable for a mortgage (recourse debt), and you are relieved of the mortgage when you dispose of the property, you may realize gain or loss up to the fair market value of the property. Irs free tax filing To the extent the mortgage discharge exceeds the fair market value of the property, it is income from discharge of indebtedness unless it qualifies for exclusion under Excluded debt , later. Irs free tax filing Report any income from discharge of indebtedness on nonbusiness debt that does not qualify for exclusion as other income on Form 1040, line 21. Irs free tax filing    You may be able to exclude part of the mortgage relief on your principal residence. Irs free tax filing See Excluded debt, later. Irs free tax filing   If you are not personally liable for a mortgage (nonrecourse debt), and you are relieved of the mortgage when you dispose of the property (such as through foreclosure), that relief is included in the amount you realize. Irs free tax filing You may have a taxable gain if the amount you realize exceeds your adjusted basis in the property. Irs free tax filing Report any gain on nonbusiness property as a capital gain. Irs free tax filing   See Publication 4681 for more information. Irs free tax filing Stockholder debt. Irs free tax filing   If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution that is generally dividend income to you. Irs free tax filing For more information, see Publication 542, Corporations. Irs free tax filing   If you are a stockholder in a corporation and you cancel a debt owed to you by the corporation, you generally do not realize income. Irs free tax filing This is because the canceled debt is considered as a contribution to the capital of the corporation equal to the amount of debt principal that you canceled. Irs free tax filing Repayment of canceled debt. Irs free tax filing   If you included a canceled amount in your income and later pay the debt, you may be able to file a claim for refund for the year the amount was included in income. Irs free tax filing You can file a claim on Form 1040X if the statute of limitations for filing a claim is still open. Irs free tax filing The statute of limitations generally does not end until 3 years after the due date of your original return. Irs free tax filing Exceptions There are several exceptions to the inclusion of canceled debt in income. Irs free tax filing These are explained next. Irs free tax filing Student loans. Irs free tax filing   Certain student loans contain a provision that all or part of the debt incurred to attend the qualified educational institution will be canceled if you work for a certain period of time in certain professions for any of a broad class of employers. Irs free tax filing   You do not have income if your student loan is canceled after you agreed to this provision and then performed the services required. Irs free tax filing To qualify, the loan must have been made by: The Federal Government, a state or local government, or an instrumentality, agency, or subdivision thereof, A tax-exempt public benefit corporation that has assumed control of a state, county, or municipal hospital, and whose employees are considered public employees under state law, or An educational institution: Under an agreement with an entity described in (1) or (2) that provided the funds to the institution to make the loan, or As part of a program of the institution designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or a tax-exempt organization described in section 501(c)(3). Irs free tax filing   A loan to refinance a qualified student loan also will qualify if it was made by an educational institution or a qualified tax-exempt organization under its program designed as described in (3)(b) above. Irs free tax filing Education loan repayment assistance. Irs free tax filing   Education loan repayments made to you by the National Health Service Corps Loan Repayment Program (NHSC Loan Repayment Program), a state education loan repayment program eligible for funds under the Public Health Service Act, or any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in underserved or health professional shortage areas are not taxable. Irs free tax filing    The provision relating to the “other state loan repayment or loan forgiveness program” was added to this exclusion for amounts received in tax years beginning after December 31, 2008. Irs free tax filing If you included these amounts in income in 2010, 2011, or 2012, you should file an amended tax return to exclude this income. Irs free tax filing See Form 1040X and its instructions for details on filing. Irs free tax filing Deductible debt. Irs free tax filing   You do not have income from the cancellation of a debt if your payment of the debt would be deductible. Irs free tax filing This exception applies only if you use the cash method of accounting. Irs free tax filing For more information, see chapter 5 of Publication 334, Tax Guide for Small Business. Irs free tax filing Price reduced after purchase. Irs free tax filing   In most cases, if the seller reduces the amount of debt you owe for property you purchased, you do not have income from the reduction. Irs free tax filing The reduction of the debt is treated as a purchase price adjustment and reduces your basis in the property. Irs free tax filing Excluded debt. Irs free tax filing   Do not include a canceled debt in your gross income in the following situations. Irs free tax filing The debt is canceled in a bankruptcy case under title 11 of the U. Irs free tax filing S. Irs free tax filing Code. Irs free tax filing See Publication 908, Bankruptcy Tax Guide. Irs free tax filing The debt is canceled when you are insolvent. Irs free tax filing However, you cannot exclude any amount of canceled debt that is more than the amount by which you are insolvent. Irs free tax filing See Publication 908. Irs free tax filing The debt is qualified farm debt and is canceled by a qualified person. Irs free tax filing See chapter 3 of Publication 225, Farmer's Tax Guide. Irs free tax filing The debt is qualified real property business debt. Irs free tax filing See chapter 5 of Publication 334. Irs free tax filing The cancellation is intended as a gift. Irs free tax filing The debt is qualified principal residence indebtedness. Irs free tax filing See Publication 525 for additional information. Irs free tax filing Host or Hostess If you host a party or event at which sales are made, any gift or gratuity you receive for giving the event is a payment for helping a direct seller make sales. Irs free tax filing You must report this item as income at its fair market value. Irs free tax filing Your out-of-pocket party expenses are subject to the 50% limit for meal and entertainment expenses. Irs free tax filing These expenses are deductible as miscellaneous itemized deductions subject to the 2%-of-AGI limit on Schedule A (Form 1040), but only up to the amount of income you receive for giving the party. Irs free tax filing For more information about the 50% limit for meal and entertainment expenses, see chapter 26. Irs free tax filing Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. Irs free tax filing This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. Irs free tax filing However, interest income received as a result of life insurance proceeds may be taxable. Irs free tax filing Proceeds not received in installments. Irs free tax filing   If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death. Irs free tax filing If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death. Irs free tax filing Proceeds received in installments. Irs free tax filing   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. Irs free tax filing   To determine the excluded part, divide the amount held by the insurance company (generally the total lump sum payable at the death of the insured person) by the number of installments to be paid. Irs free tax filing Include anything over this excluded part in your income as interest. Irs free tax filing Surviving spouse. Irs free tax filing   If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude up to $1,000 a year of the interest included in the installments. Irs free tax filing If you remarry, you can continue to take the exclusion. Irs free tax filing Surrender of policy for cash. Irs free tax filing   If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. Irs free tax filing In most cases, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income. Irs free tax filing    You should receive a Form 1099-R showing the total proceeds and the taxable part. Irs free tax filing Report these amounts on lines 16a and 16b of Form 1040 or lines 12a and 12b of Form 1040A. Irs free tax filing More information. Irs free tax filing   For more information, see Life Insurance Proceeds in Publication 525. Irs free tax filing Endowment Contract Proceeds An endowment contract is a policy under which you are paid a specified amount of money on a certain date unless you die before that date, in which case, the money is paid to your designated beneficiary. Irs free tax filing Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. Irs free tax filing To determine your cost, subtract any amount that you previously received under the contract and excluded from your income from the total premiums (or other consideration) paid for the contract. Irs free tax filing Include the part of the lump sum payment that is more than your cost in your income. Irs free tax filing Accelerated Death Benefits Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are excluded from income if the insured is terminally or chronically ill. Irs free tax filing Viatical settlement. Irs free tax filing   This is the sale or assignment of any part of the death benefit under a life insurance contract to a viatical settlement provider. Irs free tax filing A viatical settlement provider is a person who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill and who meets the requirements of section 101(g)(2)(B) of the Internal Revenue Code. Irs free tax filing Exclusion for terminal illness. Irs free tax filing    Accelerated death benefits are fully excludable if the insured is a terminally ill individual. Irs free tax filing This is a person who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death within 24 months from the date of the certification. Irs free tax filing Exclusion for chronic illness. Irs free tax filing    If the insured is a chronically ill individual who is not terminally ill, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. Irs free tax filing Accelerated death benefits paid on a per diem or other periodic basis are excludable up to a limit. Irs free tax filing This limit applies to the total of the accelerated death benefits and any periodic payments received from long-term care insurance contracts. Irs free tax filing For information on the limit and the definitions of chronically ill individual, qualified long-term care services, and long-term care insurance contracts, see Long-Term Care Insurance Contracts under Sickness and Injury Benefits in Publication 525. Irs free tax filing Exception. Irs free tax filing   The exclusion does not apply to any amount paid to a person (other than the insured) who has an insurable interest in the life of the insured because the insured: Is a director, officer, or employee of the person, or Has a financial interest in the person's business. Irs free tax filing Form 8853. Irs free tax filing   To claim an exclusion for accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return. Irs free tax filing You do not have to file Form 8853 to exclude accelerated death benefits paid on the basis of actual expenses incurred. Irs free tax filing Public Safety Officer Killed in the Line of Duty If you are a survivor of a public safety officer who was killed in the line of duty, you may be able to exclude from income certain amounts you receive. Irs free tax filing For this purpose, the term public safety officer includes law enforcement officers, firefighters, chaplains, and rescue squad and ambulance crew members. Irs free tax filing For more information, see Publication 559, Survivors, Executors, and Administrators. Irs free tax filing Partnership Income A partnership generally is not a taxable entity. Irs free tax filing The income, gains, losses, deductions, and credits of a partnership are passed through to the partners based on each partner's distributive share of these items. Irs free tax filing Schedule K-1 (Form 1065). Irs free tax filing    Although a partnership generally pays no tax, it must file an information return on Form 1065, U. Irs free tax filing S. Irs free tax filing Return of Partnership Income, and send Schedule K-1 (Form 1065) to each partner. Irs free tax filing In addition, the partnership will send each partner a copy of the Partner's Instructions for Schedule K-1 (Form 1065) to help each partner report his or her share of the partnership's income, deductions, credits, and tax preference items. Irs free tax filing Keep Schedule K-1 (Form 1065) for your records. Irs free tax filing Do not attach it to your Form 1040, unless you are specifically required to do so. Irs free tax filing For more information on partnerships, see Publication 541, Partnerships. Irs free tax filing Qualified joint venture. Irs free tax filing   If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. Irs free tax filing To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. Irs free tax filing For further information on how to make the election and which schedule(s) to file, see the instructions for your individual tax return. Irs free tax filing S Corporation Income In most cases, an S corporation does not pay tax on its income. Irs free tax filing Instead, the income, losses, deductions, and credits of the corporation are passed through to the shareholders based on each shareholder's pro rata share. Irs free tax filing Schedule K-1 (Form 1120S). Irs free tax filing   An S corporation must file a return on Form 1120S, U. Irs free tax filing S. Irs free tax filing Income Tax Return for an S Corporation, and send Schedule K-1 (Form 1120S) to each shareholder. Irs free tax filing In addition, the S corporation will send each shareholder a copy of the Shareholder's Instructions for Schedule K-1 (Form 1120S) to help each shareholder report his or her share of the S corporation's income, losses, credits, and deductions. Irs free tax filing Keep Schedule K-1 (Form 1120S) for your records. Irs free tax filing Do not attach it to your Form 1040, unless you are specifically required to do so. Irs free tax filing For more information on S corporations and their shareholders, see the Instructions for Form 1120S. Irs free tax filing Recoveries A recovery is a return of an amount you deducted or took a credit for in an earlier year. Irs free tax filing The most common recoveries are refunds, reimbursements, and rebates of deductions itemized on Schedule A (Form 1040). Irs free tax filing You also may have recoveries of non-itemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit. Irs free tax filing Tax benefit rule. Irs free tax filing   You must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. Irs free tax filing For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year. Irs free tax filing For more information, see Publication 525. Irs free tax filing Federal income tax refund. Irs free tax filing   Refunds of federal income taxes are not included in your income because they are never allowed as a deduction from income. Irs free tax filing State tax refund. Irs free tax filing   If you received a state or local income tax refund (or credit or offset) in 2013, you generally must include it in income if you deducted the tax in an earlier year. Irs free tax filing The payer should send Form 1099-G, Certain Government Payments, to you by January 31, 2014. Irs free tax filing The IRS also will receive a copy of the Form 1099-G. Irs free tax filing If you file Form 1040, use the State and Local Income Tax Refund Worksheet in the 2013 Form 1040 instructions for line 10 to figure the amount (if any) to include in your income. Irs free tax filing See Publication 525 for when you must use another worksheet. Irs free tax filing   If you could choose to deduct for a tax year either: State and local income taxes, or State and local general sales taxes, then the maximum refund that you may have to include in income is limited to the excess of the tax you chose to deduct for that year over the tax you did not choose to deduct for that year. Irs free tax filing For examples, see Publication 525. Irs free tax filing Mortgage interest refund. Irs free tax filing    If you received a refund or credit in 2013 of mortgage interest paid in an earlier year, the amount should be shown in box 3 of your Form 1098, Mortgage Interest Statement. Irs free tax filing Do not subtract the refund amount from the interest you paid in 2013. Irs free tax filing You may have to include it in your income under the rules explained in the following discussions. Irs free tax filing Interest on recovery. Irs free tax filing   Interest on any of the amounts you recover must be reported as interest income in the year received. Irs free tax filing For example, report any interest you received on state or local income tax refunds on Form 1040, line 8a. Irs free tax filing Recovery and expense in same year. Irs free tax filing   If the refund or other recovery and the expense occur in the same year, the recovery reduces the deduction or credit and is not reported as income. Irs free tax filing Recovery for 2 or more years. Irs free tax filing   If you receive a refund or other recovery that is for amounts you paid in 2 or more separate years, you must allocate, on a pro rata basis, the recovered amount between the years in which you paid it. Irs free tax filing This allocation is necessary to determine the amount of recovery from any earlier years and to determine the amount, if any, of your allowable deduction for this item for the current year. Irs free tax filing For information on how to compute the allocation, see Recoveries in Publication 525. Irs free tax filing Itemized Deduction Recoveries If you recover any amount that you deducted in an earlier year on Schedule A (Form 1040), you generally must include the full amount of the recovery in your income in the year you receive it. Irs free tax filing Where to report. Irs free tax filing   Enter your state or local income tax refund on Form 1040, line 10, and the total of all other recoveries as other income on Form 1040, line 21. Irs free tax filing You cannot use Form 1040A or Form 1040EZ. Irs free tax filing Standard deduction limit. Irs free tax filing   You generally are allowed to claim the standard deduction if you do not itemize your deductions. Irs free tax filing Only your itemized deductions that are more than your standard deduction are subject to the recovery rule (unless you are required to itemize your deductions). Irs free tax filing If your total deductions on the earlier year return were not more than your income for that year, include in your income this year the lesser of: Your recoveries, or The amount by which your itemized deductions exceeded the standard deduction. Irs free tax filing Example. Irs free tax filing For 2012, you filed a joint return. Irs free tax filing Your taxable income was $60,000 and you were not entitled to any tax credits. Irs free tax filing Your standard deduction was $11,900, and you had itemized deductions of $14,000. Irs free tax filing In 2013, you received the following recoveries for amounts deducted on your 2012 return: Medical expenses $200 State and local income tax refund 400 Refund of mortgage interest 325 Total recoveries $925 None of the recoveries were more than the deductions taken for 2012. Irs free tax filing The difference between the state and local income tax you deducted and your local general sales tax was more than $400. Irs free tax filing Your total recoveries are less than the amount by which your itemized deductions exceeded the standard deduction ($14,000 − 11,900 = $2,100), so you must include your total recoveries in your income for 2013. Irs free tax filing Report the state and local income tax refund of $400 on Form 1040, line 10, and the balance of your recoveries, $525, on Form 1040, line 21. Irs free tax filing Standard deduction for earlier years. Irs free tax filing   To determine if amounts recovered in 2013 must be included in your income, you must know the standard deduction for your filing status for the year the deduction was claimed. Irs free tax filing Look in the instructions for your tax return from prior years to locate the standard deduction for the filing status for that prior year. Irs free tax filing Example. Irs free tax filing You filed a joint return on Form 1040 for 2012 with taxable income of $45,000. Irs free tax filing Your itemized deductions were $12,350. Irs free tax filing The standard deduction that you could have claimed was $11,900. Irs free tax filing In 2013, you recovered $2,100 of your 2012 itemized deductions. Irs free tax filing None of the recoveries were more than the actual deductions for 2012. Irs free tax filing Include $450 of the recoveries in your 2013 income. Irs free tax filing This is the smaller of your recoveries ($2,100) or the amount by which your itemized deductions were more than the standard deduction ($12,350 − $11,900 = $450). Irs free tax filing Recovery limited to deduction. Irs free tax filing   You do not include in your income any amount of your recovery that is more than the amount you deducted in the earlier year. Irs free tax filing The amount you include in your income is limited to the smaller of: The amount deducted on Schedule A (Form 1040), or The amount recovered. Irs free tax filing Example. Irs free tax filing During 2012 you paid $1,700 for medical expenses. Irs free tax filing From this amount you subtracted $1,500, which was 7. Irs free tax filing 5% of your adjusted gross income. Irs free tax filing Your actual medical expense deduction was $200. Irs free tax filing In 2013, you received a $500 reimbursement from your medical insurance for your 2012 expenses. Irs free tax filing The only amount of the $500 reimbursement that must be included in your income for 2013 is $200—the amount actually deducted. Irs free tax filing Other recoveries. Irs free tax filing   See Recoveries in Publication 525 if: You have recoveries of items other than itemized deductions, or You received a recovery for an item for which you claimed a tax credit (other than investment credit or foreign tax credit) in a prior year. Irs free tax filing Rents from Personal Property If you rent out personal property, such as equipment or vehicles, how you report your income and expenses is in most cases determined by: Whether or not the rental activity is a business, and Whether or not the rental activity is conducted for profit. Irs free tax filing In most cases, if your primary purpose is income or profit and you are involved in the rental activity with continuity and regularity, your rental activity is a business. Irs free tax filing See Publication 535, Business Expenses, for details on deducting expenses for both business and not-for-profit activities. Irs free tax filing Reporting business income and expenses. Irs free tax filing    If you are in the business of renting personal property, report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). Irs free tax filing The form instructions have information on how to complete them. Irs free tax filing Reporting nonbusiness income. Irs free tax filing   If you are not in the business of renting personal property, report your rental income on Form 1040, line 21. Irs free tax filing List the type and amount of the income on the dotted line next to line 21. Irs free tax filing Reporting nonbusiness expenses. Irs free tax filing   If you rent personal property for profit, include your rental expenses in the total amount you enter on Form 1040, line 36. Irs free tax filing Also enter the amount and “PPR” on the dotted line next to line 36. Irs free tax filing   If you do not rent personal property for profit, your deductions are limited and you cannot report a loss to offset other income. Irs free tax filing See Activity not for profit , under Other Income, later. Irs free tax filing Repayments If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it. Irs free tax filing Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. Irs free tax filing Generally, you can claim a deduction or credit only if the repayment qualifies as an expense or loss incurred in your trade or business or in a for-profit transaction. Irs free tax filing Type of deduction. Irs free tax filing   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. Irs free tax filing You generally deduct the repayment on the same form or schedule on which you previously reported it as income. Irs free tax filing For example, if you reported it as self-employment income, deduct it as a business expense on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). Irs free tax filing If you reported it as a capital gain, deduct it as a capital loss as explained in the Instructions for Schedule D (Form 1040). Irs free tax filing If you reported it as wages, unemployment compensation, or other nonbusiness income, deduct it as a miscellaneous itemized deduction on Schedule A (Form 1040). Irs free tax filing Repaid social security benefits. Irs free tax filing   If you repaid social security benefits or equivalent railroad retirement benefits, see Repayment of benefits in chapter 11. Irs free tax filing Repayment of $3,000 or less. Irs free tax filing   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. Irs free tax filing If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 23. Irs free tax filing Repayment over $3,000. Irs free tax filing   If the amount you repaid was more than $3,000, you can deduct the repayment (as explained under Type of deduction , earlier). Irs free tax filing However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. Irs free tax filing This means that at the time you included the income, it appeared that you had an unrestricted right to it. Irs free tax filing If you qualify for this choice, figure your tax under both methods and compare the results. Irs free tax filing Use the method (deduction or credit) that results in less tax. Irs free tax filing When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. Irs free tax filing Each instance of repayment is not considered separately. Irs free tax filing Method 1. Irs free tax filing   Figure your tax for 2013 claiming a deduction for the repaid amount. Irs free tax filing If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28. Irs free tax filing Method 2. Irs free tax filing   Figure your tax for 2013 claiming a credit for the repaid amount. Irs free tax filing Follow these steps. Irs free tax filing Figure your tax for 2013 without deducting the repaid amount. Irs free tax filing Refigure your tax from the earlier year without including in income the amount you repaid in 2013. Irs free tax filing Subtract the tax in (2) from the tax shown on your return for the earlier year. Irs free tax filing This is the credit. Irs free tax filing Subtract the answer in (3) from the tax for 2013 figured without the deduction (Step 1). Irs free tax filing   If method 1 results in less tax, deduct the amount repaid. Irs free tax filing If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71, by adding the amount of the credit to any other credits on this line, and entering “I. Irs free tax filing R. Irs free tax filing C. Irs free tax filing 1341” in the column to the right of line 71. Irs free tax filing   An example of this computation can be found in Publication 525. Irs free tax filing Repaid wages subject to social security and Medicare taxes. Irs free tax filing   If you had to repay an amount that you included in your wages or compensation in an earlier year on which social security, Medicare, or tier 1 RRTA taxes were paid, ask your employer to refund the excess amount to you. Irs free tax filing If the employer refuses to refund the taxes, ask for a statement indicating the amount of the overcollection to support your claim. Irs free tax filing File a claim for refund using Form 843, Claim for Refund and Request for Abatement. Irs free tax filing Repaid wages subject to Additional Medicare Tax. Irs free tax filing   Employers cannot make an adjustment or file a claim for refund for Additional Medicare Tax withholding when there is a repayment of wages received by an employee in a prior year because the employee determines liability for Additional Medicare Tax on the employee's income tax return for the prior year. Irs free tax filing If you had to repay an amount that you included in your wages or compensation in an earlier year, and on which Additional Medicare Tax was paid, you may be able to recover the Additional Medicare Tax paid on the amount. Irs free tax filing To recover Additional Medicare Tax on the repaid wages or compensation, you must file Form 1040X, Amended U. Irs free tax filing S. Irs free tax filing Individual Income Tax Return, for the prior year in which the wages or compensation were originally received. Irs free tax filing See the Instructions for Form 1040X. Irs free tax filing Royalties Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. Irs free tax filing In most cases you report royalties in Part I of Schedule E (Form 1040). Irs free tax filing However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc. Irs free tax filing , report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). Irs free tax filing Copyrights and patents. Irs free tax filing   Royalties from copyrights on literary, musical, or artistic works, and similar property, or from patents on inventions, are amounts paid to you for the right to use your work over a specified period of time. Irs free tax filing Royalties generally are based on the number of units sold, such as the number of books, tickets to a performance, or machines sold. Irs free tax filing Oil, gas, and minerals. Irs free tax filing   Royalty income from oil, gas, and mineral properties is the amount you receive when natural resources are extracted from your property. Irs free tax filing The royalties are based on units, such as barrels, tons, etc. Irs free tax filing , and are paid to you by a person or company who leases the property from you. Irs free tax filing Depletion. Irs free tax filing   If you are the owner of an economic interest in mineral deposits or oil and gas wells, you can recover your investment through the depletion allowance. Irs free tax filing For information on this subject, see chapter 9 of Publication 535. Irs free tax filing Coal and iron ore. Irs free tax filing   Under certain circumstances, you can treat amounts you receive from the disposal of coal and iron ore as payments from the sale of a capital asset, rather than as royalty income. Irs free tax filing For information about gain or loss from the sale of coal and iron ore, see Publication 544. Irs free tax filing Sale of property interest. Irs free tax filing   If you sell your complete interest in oil, gas, or mineral rights, the amount you receive is considered payment for the sale of property used in a trade or business under section 1231, not royalty income. Irs free tax filing Under certain circumstances, the sale is subject to capital gain or loss treatment as explained in the Instructions for Schedule D (Form 1040). Irs free tax filing For more information on selling section 1231 property, see chapter 3 of Publication 544. Irs free tax filing   If you retain a royalty, an overriding royalty, or a net profit interest in a mineral property for the life of the property, you have made a lease or a sublease, and any cash you receive for the assignment of other interests in the property is ordinary income subject to a depletion allowance. Irs free tax filing Part of future production sold. Irs free tax filing   If you own mineral property but sell part of the future production, in most cases you treat the money you receive from the buyer at the time of the sale as a loan from the buyer. Irs free tax filing Do not include it in your income or take depletion based on it. Irs free tax filing   When production begins, you include all the proceeds in your income, deduct all the production expenses, and deduct depletion from that amount to arrive at your taxable income from the property. Irs free tax filing Unemployment Benefits The tax treatment of unemployment benefits you receive depends on the type of program paying the benefits. Irs free tax filing Unemployment compensation. Irs free tax filing   You must include in income all unemployment compensation you receive. Irs free tax filing You should receive a Form 1099-G showing in box 1 the total unemployment compensation paid to you. Irs free tax filing In most cases, you enter unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Irs free tax filing Types of unemployment compensation. Irs free tax filing   Unemployment compensation generally includes any amount received under an unemployment compensation law of the United States or of a state. Irs free tax filing It includes the following benefits. Irs free tax filing Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund. Irs free tax filing State unemployment insurance benefits. Irs free tax filing Railroad unemployment compensation benefits. Irs free tax filing Disability payments from a government program paid as a substitute for unemployment compensation. Irs free tax filing (Amounts received as workers' compensation for injuries or illness are not unemployment compensation. Irs free tax filing See chapter 5 for more information. Irs free tax filing ) Trade readjustment allowances under the Trade Act of 1974. Irs free tax filing Unemployment assistance under the Disaster Relief and Emergency Assistance Act. Irs free tax filing Unemployment assistance under the Airline Deregulation Act of 1974 Program. Irs free tax filing Governmental program. Irs free tax filing   If you contribute to a governmental unemployment compensation program and your contributions are not deductible, amounts you receive under the program are not included as unemployment compensation until you recover your contributions. Irs free tax filing If you deducted all of your contributions to the program, the entire amount you receive under the program is included in your income. Irs free tax filing Repayment of unemployment compensation. Irs free tax filing   If you repaid in 2013 unemployment compensation you received in 2013, subtract the amount you repaid from the total amount you received and enter the difference on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Irs free tax filing On the dotted line next to your entry enter “Repaid” and the amount you repaid. Irs free tax filing If you repaid unemployment compensation in 2013 that you included in income in an earlier year, you can deduct the amount repaid on Schedule A (Form 1040), line 23, if you itemize deductions. Irs free tax filing If the amount is more than $3,000, see Repayments , earlier. Irs free tax filing Tax withholding. Irs free tax filing   You can choose to have federal income tax withheld from your unemployment compensation. Irs free tax filing To make this choice, complete Form W-4V, Voluntary Withholding Request, and give it to the paying office. Irs free tax filing Tax will be withheld at 10% of your payment. Irs free tax filing    If you do not choose to have tax withheld from your unemployment compensation, you may be liable for estimated tax. Irs free tax filing If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Irs free tax filing For more information on estimated tax, see chapter 4. Irs free tax filing Supplemental unemployment benefits. Irs free tax filing   Benefits received from an employer-financed fund (to which the employees did not contribute) are not unemployment compensation. Irs free tax filing They are taxable as wages and are subject to withholding for income tax. Irs free tax filing They may be subject to social security and Medicare taxes. Irs free tax filing For more information, see Supplemental Unemployment Benefits in section 5 of Publication 15-A, Employer's Supplemental Tax Guide. Irs free tax filing Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Irs free tax filing Repayment of benefits. Irs free tax filing   You may have to repay some of your supplemental unemployment benefits to qualify for trade readjustment allowances under the Trade Act of 1974. Irs free tax filing If you repay supplemental unemployment benefits in the same year you receive them, reduce the total benefits by the amount you repay. Irs free tax filing If you repay the benefits in a later year, you must include the full amount of the benefits received in your income for the year you received them. Irs free tax filing   Deduct the repayment in the later year as an adjustment to gross income on Form 1040. Irs free tax filing (You cannot use Form 1040A or Form 1040EZ. Irs free tax filing ) Include the repayment on Form 1040, line 36, and enter “Sub-Pay TRA” and the amount on the dotted line next to line 36. Irs free tax filing If the amount you repay in a later year is more than $3,000, you may be able to take a credit against your tax for the later year instead of deducting the amount repaid. Irs free tax filing For more information on this, see Repayments , earlier. Irs free tax filing Private unemployment fund. Irs free tax filing   Unemployment benefit payments from a private (nonunion) fund to which you voluntarily contribute are taxable only if the amounts you receive are more than your total payments into the fund. Irs free tax filing Report the taxable amount on Form 1040, line 21. Irs free tax filing Payments by a union. Irs free tax filing   Benefits paid to you as an unemployed member of a union from regular union dues are included in your income on Form 1040, line 21. Irs free tax filing However, if you contribute to a special union fund and your payments to the fund are not deductible, the unemployment benefits you receive from the fund are includible in your income only to the extent they are more than your contributions. Irs free tax filing Guaranteed annual wage. Irs free tax filing   Payments you receive from your employer during periods of unemployment, under a union agreement that guarantees you full pay during the year, are taxable as wages. Irs free tax filing Include them on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Irs free tax filing State employees. Irs free tax filing   Payments similar to a state's unemployment compensation may be made by the state to its employees who are not covered by the state's unemployment compensation law. Irs free tax filing Although the payments are fully taxable, do not report them as unemployment compensation. Irs free tax filing Report these payments on Form 1040, line 21. Irs free tax filing Welfare and Other Public Assistance Benefits Do not include in your income governmental benefit payments from a public welfare fund based upon need, such as payments to blind individuals under a state public assistance law. Irs free tax filing Payments from a state fund for the victims of crime should not be included in the victims' incomes if they are in the nature of welfare payments. Irs free tax filing Do not deduct medical expenses that are reimbursed by such a fund. Irs free tax filing You must include in your income any welfare payments that are compensation for services or that are obtained fraudulently. Irs free tax filing Reemployment Trade Adjustment Assistance (RTAA) payments. Irs free tax filing   RTAA payments received from a state must be included in your income. Irs free tax filing The state must send you Form 1099-G to advise you of the amount you should include in income. Irs free tax filing The amount should be reported on Form 1040, line 21. Irs free tax filing Persons with disabilities. Irs free tax filing   If you have a disability, you must include in income compensation you receive for services you perform unless the compensation is otherwise excluded. Irs free tax filing However, you do not include in income the value of goods, services, and cash that you receive, not in return for your services, but for your training and rehabilitation because you have a disability. Irs free tax filing Excludable amounts include payments for transportation and attendant care, such as interpreter services for the deaf, reader services for the blind, and services to help individuals with an intellectual disability do their work. Irs free tax filing Disaster relief grants. Irs free tax filing    Do not include post-disaster grants received under the Robert T. Irs free tax filing Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, child care, or funeral expenses. Irs free tax filing Do not deduct casualty losses or medical expenses that are specifically reimbursed by these disaster relief grants. Irs free tax filing If you have deducted a casualty loss for the loss of your personal residence and you later receive a disaster relief grant for the loss of the same residence, you may have to include part or all of the grant in your taxable income. Irs free tax filing See Recoveries , earlier. Irs free tax filing Unemployment assistance payments under the Act are taxable unemployment compensation. Irs free tax filing See Unemployment compensation under Unemployment Benefits, earlier. Irs free tax filing Disaster relief payments. Irs free tax filing   You can exclude from income any amount you receive that is a qualified disaster relief payment. Irs free tax filing A qualified disaster relief payment is an amount paid to you: To reimburse or pay reasonable and necessary personal, family, living, or funeral expenses that result from a qualified disaster; To reimburse or pay reasonable and necessary expenses incurred for the repair or rehabilitation of your home or repair or replacement of its contents to the extent it is due to a qualified disaster; By a person engaged in the furnishing or sale of transportation as a common carrier because of the death or personal physical injuries incurred as a result of a qualified disaster; or By a federal, state, or local government, or agency, or instrumentality in connection with a qualified disaster in order to promote the general welfare. Irs free tax filing You can exclude this amount only to the extent any expense it pays for is not paid for by insurance or otherwise. Irs free tax filing The exclusion does not apply if you were a participant or conspirator in a terrorist action or a representative of one. Irs free tax filing   A qualified disaster is: A disaster which results from a terrorist or military action; A federally declared disaster; or A disaster which results from an accident involving a common carrier, or from any other event, which is determined to be catastrophic by the Secretary of the Treasury or his or her delegate. Irs free tax filing   For amounts paid under item (4), a disaster is qualified if it is determined by an applicable federal, state, or local authority to warrant assistance from the federal, state, or local government, agency, or instrumentality. Irs free tax filing Disaster mitigation payments. Irs free tax filing   You also can exclude from income any amount you receive that is a qualified disaster mitigation payment. Irs free tax filing Qualified disaster mitigation payments are also most commonly paid to you in the period immediately following damage to property as a result of a natural disaster. Irs free tax filing However, disaster mitigation payments are used to mitigate (reduce the severity of) potential damage from future natural disasters. Irs free tax filing They are paid to you through state and local governments based on the provisions of the Robert T. Irs free tax filing Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act. Irs free tax filing   You cannot increase the basis or adjusted basis of your property for improvements made with nontaxable disaster mitigation payments. Irs free tax filing Home Affordable Modification Program (HAMP). Irs free tax filing   If you benefit from Pay-for-Performance Success Payments under HAMP, the payments are not taxable. Irs free tax filing Mortgage assistance payments under section 235 of the National Housing Act. Irs free tax filing   Payments made under section 235 of the National Housing Act for mortgage assistance are not included in the homeowner's income. Irs free tax filing Interest paid for the homeowner under the mortgage assistance program cannot be deducted. Irs free tax filing Medicare. Irs free tax filing   Medicare benefits received under title XVIII of the Social Security Act are not includible in the gross income of the individuals for whom they are paid. Irs free tax filing This includes basic (part A (Hospital Insurance Benefits for the Aged)) and supplementary (part B (Supplementary Medical Insurance Benefits for the Aged)). Irs free tax filing Old-age, survivors, and disability insurance benefits (OASDI). Irs free tax filing   Generally, OASDI payments under section 202 of title II of the Social Security Act are not includible in the gross income of the individuals to whom they are paid. Irs free tax filing This applies to old-age insurance benefits, and insurance benefits for wives, husbands, children, widows, widowers, mothers and fathers, and parents, as well as the lump-sum death payment. Irs free tax filing Nutrition Program for the Elderly. Irs free tax filing    Food benefits you receive under the Nutrition Program for the Elderly are not taxable. Irs free tax filing If you prepare and serve free meals for the program, include in your income as wages the cash pay you receive, even if you are also eligible for food benefits. Irs free tax filing Payments to reduce cost of winter energy. Irs free tax filing   Payments made by a state to qualified people to reduce their cost of winter energy use are not taxable. Irs free tax filing Other Income The following brief discussions are arranged in alphabetical order. Irs free tax filing Other income items briefly discussed below are referenced to publications which provide more topical information. Irs free tax filing Activity not for profit. Irs free tax filing   You must include on your return income from an activity from which you do not expect to make a profit. Irs free tax filing An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. Irs free tax filing Enter this income on Form 1040, line 21. Irs free tax filing Deductions for expenses related to the activity are limited. Irs free tax filing They cannot total more than the income you report and can be taken only if you itemize deductions on Schedule A (Form 1040). Irs free tax filing See Not-for-Profit Activities in chapter 1 of Publication 535 for information on whether an activity is considered carried on for a profit. Irs free tax filing Alaska Permanent Fund dividend. Irs free tax filing   If you received a payment from Alaska's mineral income fund (Alaska Permanent Fund dividend), report it as income on line 21 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Irs free tax filing The state of Alaska sends each recipient a document that shows the amount of the payment with the check. Irs free tax filing The amount also is reported to IRS. Irs free tax filing Alimony. Irs free tax filing   Include in your income on Form 1040, line 11, any alimony payments you receive. Irs free tax filing Amounts you receive for child support are not income to you. Irs free tax filing Alimony and child support payments are discussed in chapter 18. Irs free tax filing Bribes. Irs free tax filing   If you receive a bribe, include it in your income. Irs free tax filing Campaign contributions. Irs free tax filing   These contributions are not income to a candidate unless they are diverted to his or her personal use. Irs free tax filing To be exempt from tax, the contributions must be spent for campaign purposes or kept in a fund for use in future campaigns. Irs free tax filing However, interest earned on bank deposits, dividends received on contributed securities, and net gains realized on sales of contributed securities are taxable and must be reported on Form 1120-POL, U. Irs free tax filing S. Irs free tax filing Income Tax Return for Certain Political Organizations. Irs free tax filing Excess campaign funds transferred to an office account must be included in the officeholder's income on Form 1040, line 21, in the year transferred. Irs free tax filing Car pools. Irs free tax filing   Do not include in your income amounts you receive from the passengers for driving a car in a car pool to and from work. Irs free tax filing These amounts are considered reimbursement for your expenses. Irs free tax filing However, this rule does not apply if you have developed car pool arrangements into a profit-making business of transporting workers for hire. Irs free tax filing Cash rebates. Irs free tax filing   A cash rebate you receive from a dealer or manufacturer of an item you buy is not income, but you must reduce your basis by the amount of the rebate. Irs free tax filing Example. Irs free tax filing You buy a new car for $24,000 cash and receive a $2,000 rebate check from the manufacturer. Irs free tax filing The $2,000 is not income to you. Irs free tax filing Your basis in the car is $22,000. Irs free tax filing This is the basis on which you figure gain or loss if you sell the car and depreciation if you use it for business. Irs free tax filing Casualty insurance and other reimbursements. Irs free tax filing   You generally should not report these reimbursements on your return unless you are figuring gain or loss from the casualty or theft. Irs free tax filing See chapter 25 for more information. Irs free tax filing Child support payments. Irs free tax filing   You should not report these payments on your return. Irs free tax filing See chapter 18 for more information. Irs free tax filing Court awards and damages. Irs free tax filing   To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. Irs free tax filing The character of the income as ordinary income or capital gain depends on the nature of the underlying claim. Irs free tax filing Include the following as ordinary income. Irs free tax filing Interest on any award. Irs free tax filing Compensation for lost wages or lost profits in most cases. Irs free tax filing Punitive damages, in most cases. Irs free tax filing It does not matter if they relate to a physical injury or physical sickness. Irs free tax filing Amounts received in settlement of pension rights (if you did not contribute to the plan). Irs free tax filing Damages for: Patent or copyright infringement, Breach of contract, or Interference with business operations. Irs free tax filing Back pay and damages for emotional distress received to satisfy a claim under title VII of the Civil Rights Act of 1964. Irs free tax filing Attorney fees and costs (including contingent fees) where the underlying recovery is included in gross income. Irs free tax filing   Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments). Irs free tax filing Emotional distress. Irs free tax filing   Emotional distress itself is not a physical injury or physical sickness, but damages you receive for emotional distress due to a physical injury or sickness are treated as received for the physical injury or sickness. Irs free tax filing Do not include them in your income. Irs free tax filing   If the emotional distress is due to a personal injury that is not due to a physical injury or sickness (for example, employment discrimination or injury to reputation), you must include the damages in your income, except for any damages you receive for medical care due to that emotional distress. Irs free tax filing Emotional distress includes physical symptoms that result from emotional distress, such as headaches, insomnia, and stomach disorders. Irs free tax filing Deduction for costs involved in unlawful discrimination suits. Irs free tax filing   You may be able to deduct attorney fees and court costs paid to recover a judgment or settlement for a claim of unlawful discrimination under various provisions of federal, state, and local law listed in Internal Revenue Code section 62(e), a claim against the United States government, or a claim under section 1862(b)(3)(A) of the Social Security Act. Irs free tax filing For more information, see Publication 525. Irs free tax filing Credit card insurance. Irs free tax filing   In most cases, if you receive benefits under a credit card disability or unemployment insurance plan, the benefits are taxable to you. Irs free tax filing These plans make the minimum monthly payment on your credit card account if you cannot make the payment due to injury, illness, disability, or unemployment. Irs free tax filing Report on Form 1040, line 21, the amount of benefits you received during the year that is more than the amount of the premiums you paid during the year. Irs free tax filing Down payment assistance. Irs free tax filing   If you purchase a home and receive assistance from a nonprofit corporation to make the down payment, that assistance is not included in your income. Irs free tax filing If the corporation qualifies as a tax-exempt charitable organization, the assistance is treated as a gift and is included in your basis of the house. Irs free tax filing If the corporation does not qualify, the assistance is treated as a rebate or reduction of the purchase price and is not included in your basis. Irs free tax filing Employment agency fees. Irs free tax filing   If you get a job through an employment agency, and the fee is paid by your employer, the fee is not includible in your income if you are not liable for it. Irs free tax filing However, if you pay it and your employer reimburses you for it, it is includible in your income. Irs free tax filing Energy conservation subsidies. Irs free tax filing   You can exclude from gross income any subsidy provided, either directly or indirectly, by public utilities for the purchase or installation of an energy conservation measure for a dwelling unit. Irs free tax filing Energy conservation measure. Irs free tax filing   This includes installations or modifications that are primarily designed to reduce consumption of electricity or natural gas, or improve the management of energy demand. Irs free tax filing Dwelling unit. Irs free tax filing   This includes a house, apartment, condominium, mobile home, boat, or similar property. Irs free tax filing If a building or structure contains both dwelling and other units, any subsidy must be properly allocated. Irs free tax filing Estate and trust income. Irs free tax filing    An estate or trust, unlike a partnership, may have to pay federal income tax. Irs free tax filing If you are a beneficiary of an estate or trust, you may be taxed on your share of its income distributed or required to be distributed to you. Irs free tax filing However, there is never a double tax. Irs free tax filing Estates and trusts file their returns on Form 1041, U. Irs free tax filing S. Irs free tax filing Income Tax Return for Estates and Trusts, and your share of the income is reported to you on Schedule K-1 (Form 1041). Irs free tax filing Current income required to be distributed. Irs free tax filing   If you are the beneficiary of an estate or trust that must distribute all of its current income, you must report your share of the distributable net income, whether or not you actually received it. Irs free tax filing Current income not required to be distributed. Irs free tax filing    If you are the beneficiary of an estate or trust and the fiduciary has the choice of whether to distribute all or part of the current income, you must report: All income that is required to be distributed to you, whether or not it is actually distributed, plus All other amounts actually paid or credited to you, up to the amount of your share of distributable net income. Irs free tax filing How to report. Irs free tax filing   Treat each item of income the same way that the estate or trust would treat it. Irs free tax filing For example, if a trust's dividend income is distributed to you, you report the distribution as dividend income on your return. Irs free tax filing The same rule applies to distributions of tax-exempt interest and capital gains. Irs free tax filing   The fiduciary of the estate or trust must tell you the type of items making up your share of the estate or trust income and any credits you are allowed on your individual income tax return. Irs free tax filing Losses. Irs free tax filing   Losses of estates and trusts generally are not deductible by the beneficiaries. Irs free tax filing Grantor trust. Irs free tax filing   Income earned by a grantor trust is taxable to the grantor, not the beneficiary, if the grantor keeps certain control over the trust. Irs free tax filing (The grantor is the one who transferred property to the trust. Irs free tax filing ) This rule applies if the property (or income from the property) put into the trust will or may revert (be returned) to the grantor or the grantor's spouse. Irs free tax filing   Generally, a trust is a grantor trust if the grantor has a reversionary interest valued (at the date of transfer) at more than 5% of the value of the transferred property. Irs free tax filing Expenses paid by another. Irs free tax filing   If your personal expenses are paid for by another person, such as a corporation, the payment may be taxable to you depending upon your relationship with that person and the nature of the payment. Irs free tax filing But if the payment makes up for a loss caused by that person, and only restores you to the position you were in before the loss, the payment is not includible in your income. Irs free tax filing Fees for services. Irs free tax filing   Include all fees for your services in your income. Irs free tax filing Examples of these fees are amounts you receive for services you perform as: A corporate director, An executor, administrator, or personal representative of an estate, A manager of a trade or business you operated before declaring Chapter 11 bankruptcy, A notary public, or An election precinct official. Irs free tax filing Nonemployee compensation. Irs free tax filing   If you are not an employee and the fees for your services from the same payer total $600 or more for the year, you may receive a Form 1099-MISC. Irs free tax filing You may need to report your fees as self-employment income. Irs free tax filing See Self-Employed Persons , in chapter 1, for a discussion of when you are considered self-employed. Irs free tax filing Corporate director. Irs free tax filing   Corporate director fees are self-employment income. Irs free tax filing Report these payments on Schedule C or Schedule C-EZ (Form 1040). Irs free tax filing Personal representatives. Irs free tax filing   All personal representatives must include in their gross income fees paid to them from an estate. Irs free tax filing If you are not in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on Form 1040, line 21. Irs free tax filing If you are in the trade or business of being an executor, report these fees as self-employment income on Schedule C or Schedule C-EZ (Form 1040). Irs free tax filing The fee is not includible in income if it is waived. Irs free tax filing Manager of trade or business for bankruptcy estate. Irs free tax filing   Include in your income all payments received from your bankruptcy estate for managing or operating a trade or business that you operated before you filed for bankruptcy. Irs free tax filing Report this income on Form 1040, line 21. Irs free tax filing Notary public. Irs free tax filing    Report payments for these services on Schedule C or Schedule C-EZ (Form 1040). Irs free tax filing These payments are not subject to self-employment tax. Irs free tax filing See the separate instructions for Schedule SE (Form 1040) for details. Irs free tax filing Election precinct official. Irs free tax filing    You should receive a Form W-2 showing payments for services performed as an election official or election worker. Irs free tax filing Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Irs free tax filing Foster care providers. Irs free tax filing   Payments you receive from a state, political subdivision, or a qualified foster care placement agency for providing care to qualified foster individuals in your home generally are not included in your income. Irs free tax filing However, you must include in your income payments received for the care of more than 5 individuals age 19 or older and certain difficulty-of-care payments. Irs free tax filing   A qualified foster individual is a person who: Is living in a foster family home, and Was placed there by: An agency of a state or one of its political subdivisions, or A qualified foster care placement agency. Irs free tax filing Difficulty-of-care payments. Irs free tax filing   These are additional payments that are designated by the payer as compensation for providing the additional care that is required for physically, mentally, or emotionally handicapped qualified foster individuals. Irs free tax filing A state must determine that the additional compensation is needed, and the care for which the payments are made must be provided in your home. Irs free tax filing   You must include in your income difficulty-of-care payments received for more than: 10 qualified foster individuals under age 19, or 5 qualified foster individuals age 19 or older. Irs free tax filing Maintaining space in home. Irs free tax filing   If you are paid to maintain space in your home for emergency foster care, you must include the payment in your income. Irs free tax filing Reporting taxable payments. Irs free tax filing    If you receive payments that you must include in your income, you are in business as a foster care provider and you are self-employed. Irs free tax filing Report the payments on Schedule C or Schedule C-EZ (Form 1040). Irs free tax filing See Publication 587, Business Use of Your Home, to help you determine the amount you can deduct for the use of your home. Irs free tax filing Found property. Irs free tax filing   If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession. Irs free tax filing Free tour. Irs free tax filing   If you received a free tour from a travel agency for organizing a group of tourists, you must include its value in your income. Irs free tax filing Report the fair market value of the tour on Form 1040, line 21, if you are not in the trade or business of organizing tours. Irs free tax filing You cannot deduct your expenses in serving as the voluntary leader of the group at the group's request. Irs free tax filing If you organize tours as a trade or business, report the tour's value on Schedule C or Schedule C-EZ (Form 1040). Irs free tax filing Gambling winnings. Irs free tax filing   You must include your gambling winnings in income on Form 1040, line 21. Irs free tax filing If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings. Irs free tax filing Lotteries and raffles. Irs free tax filing   Winnings from lotteries and raffles are gambling winnings. Irs free tax filing In addition to cash winnings, you must include in your income the fair market value of bonds, cars, houses, and other noncash prizes. Irs free tax filing    If you win a state lottery prize payable in installments, see Publication 525 for more information. Irs free tax filing Form W-2G. Irs free tax filing   You may have received a Form W-2G, Certain Gambling Winnings, showing the amount of your gambling winnings and any tax taken out of them. Irs free tax filing Include the amount from box 1 on Form 1040, line 21. Irs free tax filing Include the amount shown in box 4 on Form 1040, line 62, as federal income tax withheld. Irs free tax filing Reporting winnings and recordkeeping. Irs free tax filing   For more information on reporting gam