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Sample 1040x Filled Out

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Sample 1040x Filled Out

Sample 1040x filled out 4. Sample 1040x filled out   Reporting Gains and Losses Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Information Returns Schedule D and Form 8949Long and Short Term Net Gain or Loss Treatment of Capital Losses Capital Gains Tax Rates Form 4797Mark-to-market election. Sample 1040x filled out Introduction This chapter explains how to report capital gains and losses and ordinary gains and losses from sales, exchanges, and other dispositions of property. Sample 1040x filled out Although this discussion refers to Schedule D (Form 1040) and Form 8949, many of the rules discussed here also apply to taxpayers other than individuals. Sample 1040x filled out However, the rules for property held for personal use usually will not apply to taxpayers other than individuals. Sample 1040x filled out Topics - This chapter discusses: Information returns Schedule D (Form 1040) Form 4797 Form 8949 Useful Items - You may want to see: Publication 550 Investment Income and Expenses 537 Installment Sales Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 1099-B Proceeds From Broker and Barter Exchange Transactions 1099-S Proceeds From Real Estate Transactions 4684 Casualties and Thefts 4797 Sales of Business Property 6252 Installment Sale Income 6781 Gains and Losses from Section 1256 Contracts and Straddles 8824 Like-Kind Exchanges 8949 Sales and Other Dispositions of Capital Assets See chapter 5 for information about getting publications and forms. Sample 1040x filled out Information Returns If you sell or exchange certain assets, you should receive an information return showing the proceeds of the sale. Sample 1040x filled out This information is also provided to the IRS. Sample 1040x filled out Form 1099-B. Sample 1040x filled out   If you sold property, such as stocks, bonds, or certain commodities, through a broker, you should receive Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or a substitute statement from the broker. Sample 1040x filled out Use the Form 1099-B or a substitute statement to complete Form 8949 and/or Schedule D. Sample 1040x filled out Whether or not you receive 1099-B, you must report all taxable sales of stock, bonds, commodities, etc. Sample 1040x filled out on Form 8949 and/or Schedule D, as applicable. Sample 1040x filled out For more information on figuring gains and losses from these transactions, see chapter 4 in Publication 550. Sample 1040x filled out For information on reporting the gains and losses, see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). Sample 1040x filled out Form 1099-S. Sample 1040x filled out   An information return must be provided on certain real estate transactions. Sample 1040x filled out Generally, the person responsible for closing the transaction (the “real estate reporting person”) must report on Form 1099-S sales or exchanges of the following types of property. Sample 1040x filled out Land (improved or unimproved), including air space. Sample 1040x filled out An inherently permanent structure, including any residential, commercial, or industrial building. Sample 1040x filled out A condominium unit and its related fixtures and common elements (including land). Sample 1040x filled out Stock in a cooperative housing corporation. Sample 1040x filled out If you sold or exchanged any of the above types of property, the “real estate reporting person” must give you a copy of Form 1099-S or a statement containing the same information as the Form 1099-S. Sample 1040x filled out The “real estate reporting person” could include the buyer's attorney, your attorney, the title or escrow company, a mortgage lender, your broker, the buyer's broker, or the person acquiring the biggest interest in the property. Sample 1040x filled out   For more information see chapter 4 in Publication 550. Sample 1040x filled out Also, see the Instructions for Form 8949. Sample 1040x filled out Schedule D and Form 8949 Form 8949. Sample 1040x filled out   Individuals, corporations, and partnerships, use Form 8949 to report the following. Sample 1040x filled out    Sales or exchanges of capital assets, including stocks, bonds, etc. Sample 1040x filled out , and real estate (if not reported on another form or schedule such as Form 4684, 4797, 6252, 6781, or 8824). Sample 1040x filled out Include these transactions even if you did not receive a Form 1099-B or 1099-S. Sample 1040x filled out Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit. Sample 1040x filled out Nonbusiness bad debts. Sample 1040x filled out   Individuals, If you are filing a joint return, complete as many copies of Form 8949 as you need to report all of your and your spouse's transactions. Sample 1040x filled out You and your spouse may list your transactions on separate forms or you may combine them. Sample 1040x filled out However, you must include on your Schedule D the totals from all Forms 8949 for both you and your spouse. Sample 1040x filled out    Corporations and electing large partnerships also use Form 8949 to report their share of gain or loss from a partnership, S Corporation, estate or trust. Sample 1040x filled out   Business entities meeting certain criteria, may have an exception to some of the normal requirements for completing Form 8949. Sample 1040x filled out See the Instructions for Form 8949. Sample 1040x filled out Schedule D. Sample 1040x filled out    Use Schedule D (Form 1040) to figure the overall gain or loss from transactions reported on Form 8949, and to report certain transactions you do not have to report on Form 8949. Sample 1040x filled out Before completing Schedule D, you may have to complete other forms as shown below. Sample 1040x filled out    Complete all applicable lines of Form 8949 before completing lines 1b, 2, 3, 8b, 9, or 10 of your applicable Schedule D. Sample 1040x filled out Enter on Schedule D the combined totals from all your Forms 8949. Sample 1040x filled out For a sale, exchange, or involuntary conversion of business property, complete Form 4797 (discussed later). Sample 1040x filled out For a like-kind exchange, complete Form 8824. Sample 1040x filled out See Reporting the exchange under Like-Kind Exchanges in chapter 1. Sample 1040x filled out For an installment sale, complete Form 6252. Sample 1040x filled out See Publication 537. Sample 1040x filled out For an involuntary conversion due to casualty or theft, complete Form 4684. Sample 1040x filled out See Publication 547, Casualties, Disasters, and Thefts. Sample 1040x filled out For a disposition of an interest in, or property used in, an activity to which the at-risk rules apply, complete Form 6198, At-Risk Limitations. Sample 1040x filled out See Publication 925, Passive Activity and At-Risk Rules. Sample 1040x filled out For a disposition of an interest in, or property used in, a passive activity, complete Form 8582, Passive Activity Loss Limitations. Sample 1040x filled out See Publication 925. Sample 1040x filled out For gains and losses from section 1256 contracts and straddles, complete Form 6781. Sample 1040x filled out See Publication 550. Sample 1040x filled out Personal-use property. Sample 1040x filled out   Report gain on the sale or exchange of property held for personal use (such as your home) on Form 8949 and Schedule D (Form 1040), as applicable. Sample 1040x filled out Loss from the sale or exchange of property held for personal use is not deductible. Sample 1040x filled out But if you had a loss from the sale or exchange of real estate held for personal use for which you received a Form 1099-S, report the transaction on Form 8949 and Schedule D, even though the loss is not deductible. Sample 1040x filled out See the Instructions for Schedule D (Form 1040) and the Instructions for Form 8949 for information on how to report the transaction. Sample 1040x filled out Long and Short Term Where you report a capital gain or loss depends on how long you own the asset before you sell or exchange it. Sample 1040x filled out The time you own an asset before disposing of it is the holding period. Sample 1040x filled out If you received a Form 1099-B, (or substitute statement) box 1c may help you determine whether the gain or loss is short-term or long-term. Sample 1040x filled out If you hold a capital asset 1 year or less, the gain or loss from its disposition is short term. Sample 1040x filled out Report it in Part I of Form 8949 and/or Schedule D, as applicable. Sample 1040x filled out If you hold a capital asset longer than 1 year, the gain or loss from its disposition is long term. Sample 1040x filled out Report it in Part II of Form 8949 and/or Schedule D, as applicable. Sample 1040x filled out   Table 4-1. Sample 1040x filled out Do I Have a Short-Term or Long-Term Gain or Loss? IF you hold the property. Sample 1040x filled out . Sample 1040x filled out . Sample 1040x filled out  THEN you have a. Sample 1040x filled out . Sample 1040x filled out . Sample 1040x filled out 1 year or less, Short-term capital gain or  loss. Sample 1040x filled out More than 1 year, Long-term capital gain or  loss. Sample 1040x filled out These distinctions are essential to correctly arrive at your net capital gain or loss. Sample 1040x filled out Capital losses are allowed in full against capital gains plus up to $3,000 of ordinary income. Sample 1040x filled out See Capital Gains Tax Rates, later. Sample 1040x filled out Holding period. Sample 1040x filled out   To figure if you held property longer than 1 year, start counting on the day following the day you acquired the property. Sample 1040x filled out The day you disposed of the property is part of your holding period. Sample 1040x filled out Example. Sample 1040x filled out If you bought an asset on June 19, 2012, you should start counting on June 20, 2012. Sample 1040x filled out If you sold the asset on June 19, 2013, your holding period is not longer than 1 year, but if you sold it on June 20, 2013, your holding period is longer than 1 year. Sample 1040x filled out Patent property. Sample 1040x filled out   If you dispose of patent property, you generally are considered to have held the property longer than 1 year, no matter how long you actually held it. Sample 1040x filled out For more information, see Patents in chapter 2. Sample 1040x filled out Inherited property. Sample 1040x filled out   If you inherit property, you are considered to have held the property longer than 1 year, regardless of how long you actually held it. Sample 1040x filled out Installment sale. Sample 1040x filled out   The gain from an installment sale of an asset qualifying for long-term capital gain treatment in the year of sale continues to be long term in later tax years. Sample 1040x filled out If it is short term in the year of sale, it continues to be short term when payments are received in later tax years. Sample 1040x filled out    The date the installment payment is received determines the capital gains rate that should be applied not the date the asset was sold under an installment contract. Sample 1040x filled out Nontaxable exchange. Sample 1040x filled out   If you acquire an asset in exchange for another asset and your basis for the new asset is figured, in whole or in part, by using your basis in the old property, the holding period of the new property includes the holding period of the old property. Sample 1040x filled out That is, it begins on the same day as your holding period for the old property. Sample 1040x filled out Example. Sample 1040x filled out You bought machinery on December 4, 2012. Sample 1040x filled out On June 4, 2013, you traded this machinery for other machinery in a nontaxable exchange. Sample 1040x filled out On December 5, 2013, you sold the machinery you got in the exchange. Sample 1040x filled out Your holding period for this machinery began on December 5, 2012. Sample 1040x filled out Therefore, you held it longer than 1 year. Sample 1040x filled out Corporate liquidation. Sample 1040x filled out   The holding period for property you receive in a liquidation generally starts on the day after you receive it if gain or loss is recognized. Sample 1040x filled out Profit-sharing plan. Sample 1040x filled out   The holding period of common stock withdrawn from a qualified contributory profit-sharing plan begins on the day following the day the plan trustee delivered the stock to the transfer agent with instructions to reissue the stock in your name. Sample 1040x filled out Gift. Sample 1040x filled out   If you receive a gift of property and your basis in it is figured using the donor's basis, your holding period includes the donor's holding period. Sample 1040x filled out For more information on basis, see Publication 551, Basis of Assets. Sample 1040x filled out Real property. Sample 1040x filled out   To figure how long you held real property, start counting on the day after you received title to it or, if earlier, the day after you took possession of it and assumed the burdens and privileges of ownership. Sample 1040x filled out   However, taking possession of real property under an option agreement is not enough to start the holding period. Sample 1040x filled out The holding period cannot start until there is an actual contract of sale. Sample 1040x filled out The holding period of the seller cannot end before that time. Sample 1040x filled out Repossession. Sample 1040x filled out   If you sell real property but keep a security interest in it and then later repossess it, your holding period for a later sale includes the period you held the property before the original sale, as well as the period after the repossession. Sample 1040x filled out Your holding period does not include the time between the original sale and the repossession. Sample 1040x filled out That is, it does not include the period during which the first buyer held the property. Sample 1040x filled out Nonbusiness bad debts. Sample 1040x filled out   Nonbusiness bad debts are short-term capital losses. Sample 1040x filled out For information on nonbusiness bad debts, see chapter 4 of Publication 550. Sample 1040x filled out    Net Gain or Loss The totals for short-term capital gains and losses and the totals for long-term capital gains and losses must be figured separately. Sample 1040x filled out Net short-term capital gain or loss. Sample 1040x filled out   Combine your short-term capital gains and losses, including your share of short-term capital gains or losses from partnerships, S corporations, and fiduciaries and any short-term capital loss carryover. Sample 1040x filled out Do this by adding all your short-term capital gains. Sample 1040x filled out Then add all your short-term capital losses. Sample 1040x filled out Subtract the lesser total from the other. Sample 1040x filled out The result is your net short-term capital gain or loss. Sample 1040x filled out Net long-term capital gain or loss. Sample 1040x filled out   Follow the same steps to combine your long-term capital gains and losses. Sample 1040x filled out Include the following items. Sample 1040x filled out Net section 1231 gain from Part I, Form 4797, after any adjustment for nonrecaptured section 1231 losses from prior tax years. Sample 1040x filled out Capital gain distributions from regulated investment companies (mutual funds) and real estate investment trusts. Sample 1040x filled out Your share of long-term capital gains or losses from partnerships, S corporations, and fiduciaries. Sample 1040x filled out Any long-term capital loss carryover. Sample 1040x filled out The result from combining these items with other long-term capital gains and losses is your net long-term capital gain or loss. Sample 1040x filled out Net gain. Sample 1040x filled out   If the total of your capital gains is more than the total of your capital losses, the difference is taxable. Sample 1040x filled out Different tax rates may apply to the part that is a net capital gain. Sample 1040x filled out See Capital Gains Tax Rates, later. Sample 1040x filled out Net loss. Sample 1040x filled out   If the total of your capital losses is more than the total of your capital gains, the difference is deductible. Sample 1040x filled out But there are limits on how much loss you can deduct and when you can deduct it. Sample 1040x filled out See Treatment of Capital Losses, next. Sample 1040x filled out    Treatment of Capital Losses If your capital losses are more than your capital gains, you can deduct the difference as a capital loss deduction even if you do not have ordinary income to offset it. Sample 1040x filled out The yearly limit on the amount of the capital loss you can deduct is $3,000 ($1,500 if you are married and file a separate return). Sample 1040x filled out Table 4-2. Sample 1040x filled out Holding Period for Different Types of Acquisitions Type of acquisition: When your holding period starts: Stocks and bonds bought on a securities market Day after trading date you bought security. Sample 1040x filled out Ends on trading date you sold security. Sample 1040x filled out U. Sample 1040x filled out S. Sample 1040x filled out Treasury notes and bonds If bought at auction, day after notification of bid acceptance. Sample 1040x filled out If bought through subscription, day after subscription was submitted. Sample 1040x filled out Nontaxable exchanges Day after date you acquired old property. Sample 1040x filled out Gift If your basis is giver's adjusted basis, same day as giver's holding period began. Sample 1040x filled out If your basis is FMV, day after date of gift. Sample 1040x filled out Real property bought Generally, day after date you received title to the property. Sample 1040x filled out Real property repossessed Day after date you originally received title to the property, but does not include time between the original sale and date of repossession. Sample 1040x filled out Capital loss carryover. Sample 1040x filled out   Generally, you have a capital loss carryover if either of the following situations applies to you. Sample 1040x filled out Your net loss is more than the yearly limit. Sample 1040x filled out Your taxable income without your deduction for exemptions is less than zero. Sample 1040x filled out If either of these situations applies to you for 2013, see Capital Losses under Reporting Capital Gains and Losses in chapter 4 of Publication 550 to figure the amount you can carryover to 2014. Sample 1040x filled out Example. Sample 1040x filled out Bob and Gloria Sampson sold property in 2013. Sample 1040x filled out The sale resulted in a capital loss of $7,000. Sample 1040x filled out The Sampsons had no other capital transactions. Sample 1040x filled out On their joint 2013 return, the Sampsons deduct $3,000, the yearly limit. Sample 1040x filled out They had taxable income of $2,000. Sample 1040x filled out The unused part of the loss, $4,000 ($7,000 − $3,000), is carried over to 2014. Sample 1040x filled out If the Sampsons' capital loss had been $2,000, it would not have been more than the yearly limit. Sample 1040x filled out Their capital loss deduction would have been $2,000. Sample 1040x filled out They would have no carryover to 2014. Sample 1040x filled out Short-term and long-term losses. Sample 1040x filled out   When you carry over a loss, it retains its original character as either long term or short term. Sample 1040x filled out A short-term loss you carry over to the next tax year is added to short-term losses occurring in that year. Sample 1040x filled out A long-term loss you carry over to the next tax year is added to long-term losses occurring in that year. Sample 1040x filled out A long-term capital loss you carry over to the next year reduces that year's long-term gains before its short-term gains. Sample 1040x filled out   If you have both short-term and long-term losses, your short-term losses are used first against your allowable capital loss deduction. Sample 1040x filled out If, after using your short-term losses, you have not reached the limit on the capital loss deduction, use your long-term losses until you reach the limit. Sample 1040x filled out To figure your capital loss carryover from 2013 to 2014 use the Capital Loss Carryover Worksheet in the 2013 Instructions for Schedule D (Form 1040). Sample 1040x filled out Joint and separate returns. Sample 1040x filled out   On a joint return, the capital gains and losses of spouses are figured as the gains and losses of an individual. Sample 1040x filled out If you are married and filing a separate return, your yearly capital loss deduction is limited to $1,500. Sample 1040x filled out Neither you nor your spouse can deduct any part of the other's loss. Sample 1040x filled out   If you and your spouse once filed separate returns and are now filing a joint return, combine your separate capital loss carryovers. Sample 1040x filled out However, if you and your spouse once filed jointly and are now filing separately, any capital loss carryover from the joint return can be deducted only on the return of the spouse who actually had the loss. Sample 1040x filled out Death of taxpayer. Sample 1040x filled out   Capital losses cannot be carried over after a taxpayer's death. Sample 1040x filled out They are deductible only on the final income tax return filed on the decedent's behalf. Sample 1040x filled out The yearly limit discussed earlier still applies in this situation. Sample 1040x filled out Even if the loss is greater than the limit, the decedent's estate cannot deduct the difference or carry it over to following years. Sample 1040x filled out Corporations. Sample 1040x filled out   A corporation can deduct capital losses only up to the amount of its capital gains. Sample 1040x filled out In other words, if a corporation has a net capital loss, it cannot be deducted in the current tax year. Sample 1040x filled out It must be carried to other tax years and deducted from capital gains occurring in those years. Sample 1040x filled out For more information, see Publication 542. Sample 1040x filled out Capital Gains Tax Rates The tax rates that apply to a net capital gain are generally lower than the tax rates that apply to other income. Sample 1040x filled out These lower rates are called the maximum capital gains rates. Sample 1040x filled out The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. Sample 1040x filled out For 2013, the maximum tax rates for individuals are 0%, 15%, 20%, 25%, and 28%. Sample 1040x filled out Also, individuals, use the Qualified Dividends and Capital Gain Worksheet in the Instructions for Form 1040, or the Schedule D Tax Computation Worksheet in the Instructions for Schedule D (Form 1040) (whichever applies) to figure your tax if you have qualified dividends or net capital gain. Sample 1040x filled out For more information, see chapter 4 of Publication 550. Sample 1040x filled out Also see the Instructions for Schedule D (Form 1040). Sample 1040x filled out Unrecaptured section 1250 gain. Sample 1040x filled out   Generally, this is the part of any long-term capital gain on section 1250 property (real property) that is due to depreciation. Sample 1040x filled out Unrecaptured section 1250 gain cannot be more than the net section 1231 gain or include any gain otherwise treated as ordinary income. Sample 1040x filled out Use the worksheet in the Schedule D instructions to figure your unrecaptured section 1250 gain. Sample 1040x filled out For more information about section 1250 property and net section 1231 gain, see chapter 3. Sample 1040x filled out Form 4797 Use Form 4797 to report: The sale or exchange of: Property used in your trade or business; Depreciable and amortizable property; Oil, gas, geothermal, or other mineral properties; and Section 126 property. Sample 1040x filled out The involuntary conversion (from other than casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business or a transaction entered into for profit. Sample 1040x filled out The disposition of noncapital assets (other than inventory or property held primarily for sale to customers in the ordinary course of your trade or business). Sample 1040x filled out The disposition of capital assets not reported on Schedule D. Sample 1040x filled out The gain or loss (including any related recapture) for partners and S corporation shareholders from certain section 179 property dispositions by partnerships (other than electing large partnerships) and S corporations. Sample 1040x filled out The computation of recapture amounts under sections 179 and 280F(b)(2) when the business use of section 179 or listed property decreases to 50% or less. Sample 1040x filled out Gains or losses treated as ordinary gains or losses, if you are a trader in securities or commodities and made a mark-to-market election under Internal Revenue Code section 475(f). Sample 1040x filled out You can use Form 4797 with Form 1040, 1065, 1120, or 1120S. Sample 1040x filled out Section 1231 gains and losses. Sample 1040x filled out   Show any section 1231 gains and losses in Part I. Sample 1040x filled out Carry a net gain to Schedule D (Form 1040) as a long-term capital gain. Sample 1040x filled out Carry a net loss to Part II of Form 4797 as an ordinary loss. Sample 1040x filled out   If you had any nonrecaptured net section 1231 losses from the preceding 5 tax years, reduce your net gain by those losses and report the amount of the reduction as an ordinary gain in Part II. Sample 1040x filled out Report any remaining gain on Schedule D (Form 1040). Sample 1040x filled out See Section 1231 Gains and Losses in chapter 3. Sample 1040x filled out Ordinary gains and losses. Sample 1040x filled out   Show any ordinary gains and losses in Part II. Sample 1040x filled out This includes a net loss or a recapture of losses from prior years figured in Part I of Form 4797. Sample 1040x filled out It also includes ordinary gain figured in Part III. Sample 1040x filled out Mark-to-market election. Sample 1040x filled out   If you made a mark-to-market election, you should report all gains and losses from trading as ordinary gains and losses in Part II of Form 4797, instead of as capital gains and losses on Form 8949 and Schedule D (Form 1040). Sample 1040x filled out See the Instructions for Form 4797. Sample 1040x filled out Also see Special Rules for Traders in Securities, in chapter 4 of Publication 550. Sample 1040x filled out Ordinary income from depreciation. Sample 1040x filled out   Figure the ordinary income from depreciation on personal property and additional depreciation on real property (as discussed in chapter 3) in Part III. Sample 1040x filled out Carry the ordinary income to Part II of Form 4797 as an ordinary gain. Sample 1040x filled out Carry any remaining gain to Part I as section 1231 gain, unless it is from a casualty or theft. Sample 1040x filled out Carry any remaining gain from a casualty or theft to Form 4684. Sample 1040x filled out Prev  Up  Next   Home   More Online Publications
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The Sample 1040x Filled Out

Sample 1040x filled out Publication 3 - Main Content Table of Contents Gross IncomeForeign Source Income Military Spouses Residency Relief Act (MSRRA) Community Property Form W-2 Codes Adjustments to IncomeArmed Forces Reservists Individual Retirement Arrangements Moving Expenses Combat Zone ExclusionCombat Zone Serving in a Combat Zone Amount of Exclusion Alien StatusResident Aliens Nonresident Aliens Dual-Status Aliens Sale of HomePeriod of suspension. Sample 1040x filled out Qualified official extended duty. Sample 1040x filled out ForeclosuresLump Sum Portion of Settlement Payment. Sample 1040x filled out Interest Payment on Lump Sum Portion of Settlement Payment. Sample 1040x filled out Lost Equity Portion of Settlement Payment. Sample 1040x filled out The rules that apply to a lost equity payment you received for the foreclosure of a property that was not your main home are different. Sample 1040x filled out Interest Payment on Lost Equity Portion of Settlement Payment. Sample 1040x filled out Itemized DeductionsEmployee Business Expenses Repayments CreditsFirst-Time Homebuyer Credit Child Tax Credit Earned Income Credit Credit for Excess Social Security Tax Withheld Forgiveness of Decedent's Tax LiabilityCombat Zone Related Forgiveness Terrorist or Military Action Related Forgiveness Claims for Tax Forgiveness Filing ReturnsSame-Sex Marriage Where To File When To File Signing Returns Extension of DeadlinesService That Qualifies for an Extension of Deadline Length of Extension Actions for Which Deadlines Are Extended Deferral of Payment Maximum Rate of Interest How To Get Tax HelpLow Income Taxpayer Clinics Gross Income Members of the Armed Forces receive many different types of pay and allowances. Sample 1040x filled out Some are included in gross income while others are excluded from gross income. Sample 1040x filled out Included items (Table 1) are subject to tax and must be reported on your tax return. Sample 1040x filled out Excluded items (Table 2) are not subject to tax, but may have to be shown on your tax return. Sample 1040x filled out For information on the exclusion of pay for service in a combat zone and other tax benefits for combat zone participants, see Combat Zone Exclusion and Extension of Deadlines , later. Sample 1040x filled out Table 1. Sample 1040x filled out Included Items These items are included in gross income, unless the pay is for service in a combat zone. Sample 1040x filled out Basic pay • Active duty   Bonus pay • Career status   • Attendance at a designated service school     • Enlistment  • Officer   • Back wages     • Overseas extension   • CONUS COLA       • Reenlistment   • Drills         • Reserve training         • Training duty   Other pay  • Accrued leave          • High deployment per diem Special • Aviation career incentives      • Personal money allowances paid to pay • Career sea     high-ranking officers   • Diving duty      • Student loan repayment from programs   • Foreign duty (outside the 48 contiguous     such as the Department of Defense   states and the District of Columbia)     Educational Loan Repayment Program   • Foreign language proficiency     when year's service (requirement) is not   • Hardship duty     attributable to a combat zone   • Hostile fire or imminent danger         • Medical and dental officers   Incentive pay  • Submarine   • Nuclear-qualified officers      • Flight   • Optometry      • Hazardous duty   • Pharmacy      • High altitude/Low Opening (HALO)   • Special compensation for assistance with activities of daily living (SCAADL)         • Special duty assignment pay         • Veterinarian         • Voluntary Separation Incentive       Basic allowance for housing (BAH). Sample 1040x filled out   You can still deduct mortgage interest and real estate taxes on your home if you pay these expenses with your BAH. Sample 1040x filled out Table 2. Sample 1040x filled out Excluded Items The exclusion for certain items applies whether the item is furnished in kind or is a reimbursement or allowance. Sample 1040x filled out There is no exclusion for the personal use of a government-provided vehicle. Sample 1040x filled out Combat  zone pay • Compensation for active service while in a combat zone Note: Limited amount for officers     • Housing and cost-of-living allowances abroad paid by the U. Sample 1040x filled out S. Sample 1040x filled out Government or by a foreign government         • OHA (Overseas Housing Allowance)                     Other pay • Defense counseling         • Disability, including payments received for injuries incurred as a direct result of a terrorist or military action         • Group-term life insurance   Moving • Dislocation   • Professional education   allowances • Military base realignment and   • ROTC educational and subsistence     closure benefit    allowances     (the exclusion is limited as   • State bonus pay for service in a     described above)   combat zone     • Move-in housing   • Survivor and retirement protection     • Moving household and   plan premiums     personal items   • Uniform allowances     • Moving trailers or mobile homes   • Uniforms furnished to enlisted     • Storage   personnel     • Temporary lodging and         temporary lodging expenses                 Travel • Annual round trip for dependent Death • Burial services   allowances students allowances • Death gratuity payments to     • Leave between consecutive   eligible survivors     overseas tours   • Travel of dependents to burial site     • Reassignment in a dependent         restricted status Family • Certain educational expenses for     • Transportation for you or your allowances dependents     dependents during ship overhaul   • Emergencies     or inactivation   • Evacuation to a place of safety     • Per diem   • Separation             In-kind military • Dependent-care assistance program Living • BAH (Basic Allowance for Housing)   benefits • Legal assistance allowances • BAS (Basic Allowance for Subsistence)     • Medical/dental care         • Commissary/exchange discounts         • Space-available travel on government aircraft           Death gratuity. Sample 1040x filled out   Any death gratuity paid to a survivor of a member of the Armed Forces is excluded from gross income. Sample 1040x filled out Differential wage payments. Sample 1040x filled out   Differential wage payments are any payments made by an employer to an individual for a period during which the individual is performing service in the uniformed services while on active duty for a period of more than 30 days and that represent all or a portion of the wages the individual would have received from the employer if the individual was performing services for the employer. Sample 1040x filled out These amounts are taxable and cannot be excluded as combat pay. Sample 1040x filled out Military base realignment and closure benefit. Sample 1040x filled out   Payments made under the Homeowners Assistance Program (HAP) generally are excluded from income. Sample 1040x filled out However, the excludable amount cannot be more than the maximum amount described in subsection (c) of 42 USC 3374 as in effect on November 6, 2009. Sample 1040x filled out Any part of the payment that is more than this limit is included in gross income. Sample 1040x filled out For more information about the HAP, see http://hap. Sample 1040x filled out usace. Sample 1040x filled out army. Sample 1040x filled out mil/Overview. Sample 1040x filled out html. Sample 1040x filled out Qualified reservist distribution (QRD). Sample 1040x filled out   A QRD is a distribution to an individual of all or part of the individual's balance in a cafeteria plan or health flexible spending arrangement if: The individual was a reservist who was ordered or called to active duty for more than 179 days or for an indefinite period, and The distribution is made no sooner than the date the reservist was ordered or called to active duty and no later than the last day reimbursements could otherwise be made under the arrangement for the plan year which includes the date of the order or the call to duty. Sample 1040x filled out A QRD is included in gross income and is subject to employment taxes. Sample 1040x filled out The employer must include the QRD (reduced by after-tax contributions to the health flexible spending arrangement) as wages on Form W-2, Wage and Tax Statement. Sample 1040x filled out Thrift Savings Plan (TSP) distributions. Sample 1040x filled out   If you participate in the Uniformed Services TSP and receive a distribution from your account, the distribution is generally included in your taxable income. Sample 1040x filled out   If your contributions included tax-exempt combat zone pay, the part of the distribution attributable to those contributions is tax exempt. Sample 1040x filled out However, the earnings on the tax-exempt portion of the distribution are taxable. Sample 1040x filled out The TSP will provide a statement showing the taxable and non-taxable portions of the distribution. Sample 1040x filled out Roth Thrift Savings Plan (TSP) balance. Sample 1040x filled out   You may be able to contribute to a designated Roth Account through the TSP known as the Roth TSP. Sample 1040x filled out Roth TSP contributions are after-tax contributions, subject to the same contribution limits as the traditional TSP. Sample 1040x filled out Qualified distributions from a Roth TSP are not included in your income. Sample 1040x filled out For more details, see Thrift Savings Accounts in Part II of Publication 721, Tax Guide to U. Sample 1040x filled out S. Sample 1040x filled out Civil Service Retirement Benefits. Sample 1040x filled out State bonus payments. Sample 1040x filled out   Bonus payments made by a state (or a political subdivision thereof) to a member or former member of the uniformed services of the United States or to a dependent of such member are considered combat pay (and therefore may not be taxable) if the payments are made only because of the member's service in a combat zone. Sample 1040x filled out See Combat Zone , later, for a list of designated combat zones. Sample 1040x filled out Foreign Source Income If you are a U. Sample 1040x filled out S. Sample 1040x filled out citizen with income from sources outside the United States (foreign income), you must report all of that income (except for amounts that U. Sample 1040x filled out S. Sample 1040x filled out law allows you to exclude) on your tax return. Sample 1040x filled out This is true whether you reside inside or outside the United States and whether or not you receive a Form W-2 or a Form 1099. Sample 1040x filled out This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents, and royalties). Sample 1040x filled out Certain taxpayers can exclude income earned in foreign countries. Sample 1040x filled out For 2013, this exclusion amount can be as much as $97,600. Sample 1040x filled out However, the foreign earned income exclusion does not apply to the wages and salaries of military and civilian employees of the U. Sample 1040x filled out S. Sample 1040x filled out Government. Sample 1040x filled out Employees of the U. Sample 1040x filled out S. Sample 1040x filled out Government include those who work at United States Armed Forces exchanges, commissioned and noncommissioned officers' messes, Armed Forces motion picture services, and similar personnel. Sample 1040x filled out Other foreign income earned by military personnel or their spouses may be eligible for the foreign earned income exclusion. Sample 1040x filled out For more information on the exclusion, see Publication 54. Sample 1040x filled out Residents of American Samoa may be able to exclude income from American Samoa. Sample 1040x filled out This possession exclusion does not apply to wages and salaries of military and civilian employees of the U. Sample 1040x filled out S. Sample 1040x filled out Government. Sample 1040x filled out If you need information on the possession exclusion, see Publication 570, Tax Guide for Individuals With Income From U. Sample 1040x filled out S. Sample 1040x filled out Possessions. Sample 1040x filled out Military Spouses Residency Relief Act (MSRRA) If you are the civilian spouse of an active duty U. Sample 1040x filled out S. Sample 1040x filled out military servicemember and your domicile is the same as the servicemember's, you can choose to keep your prior residence or domicile for tax purposes when you accompany the servicemember spouse, who is relocating under military orders to a new duty station in one of the 50 states, the District of Columbia, or a U. Sample 1040x filled out S. Sample 1040x filled out possession. Sample 1040x filled out See Publication 570 for more information. Sample 1040x filled out Domicile. Sample 1040x filled out   Your domicile is the permanent legal home you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return. Sample 1040x filled out It is not always where you presently live. Sample 1040x filled out Community Property The pay you earn as a member of the Armed Forces may be subject to community property laws depending on your marital status, your domicile, and the nature of the payment. Sample 1040x filled out The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Sample 1040x filled out Marital status. Sample 1040x filled out   Community property rules apply to married persons whose domicile during the tax year was in a community property state. Sample 1040x filled out The rules may affect your tax liability if you file separate returns or are divorced during the year. Sample 1040x filled out Nevada, Washington, and California domestic partners. Sample 1040x filled out   A registered domestic partner in Nevada, Washington, or California generally must report half the combined income of the individual and his or her domestic partner. Sample 1040x filled out See Form 8958 and Publication 555, Community Property. Sample 1040x filled out Nature of the payment. Sample 1040x filled out   Active duty military pay is subject to community property laws. Sample 1040x filled out Armed Forces retired or retainer pay may be subject to community property laws. Sample 1040x filled out   For more information on community property laws, see Publication 555. Sample 1040x filled out Form W-2 Codes Form W-2 shows your total pay and other compensation and the income tax, social security tax, and Medicare tax that was withheld during the year. Sample 1040x filled out Form W-2 also shows other amounts that you may find important in box 12. Sample 1040x filled out The amounts shown in box 12 are generally preceded by a code. Sample 1040x filled out A list of codes used in box 12 is shown, next. Sample 1040x filled out Form W-2 Reference Guide for Box 12 Codes A Uncollected social security or RRTA J Nontaxable sick pay T Adoption benefits   tax on tips             K 20% excise tax on excess golden V Income from exercise of B Uncollected Medicare tax on tips   parachute payments   nonstatutory stock option(s)             C Taxable cost of group-term life L Substantiated employee business W Employer contributions (including   insurance over $50,000   expense reimbursements   employee contributions through a           cafeteria plan) to an employee's D Elective deferrals under a section M Uncollected social security or RRTA   health savings account (HSA)   401(k) cash or deferred arrangement   tax on taxable cost of group-term life       plan (including a SIMPLE 401(k)   insurance over $50,000 (former Y Deferrals under a section 409A   arrangement)   employees only)   nonqualified deferred           compensation plan E Elective deferrals under a section N Uncollected Medicare tax on taxable       403(b) salary reduction agreement   cost of group-term life insurance Z Income under section 409A on a       over $50,000 (former employees only)   nonqualified deferred F Elective deferrals under a section       compensation plan   408(k)(6) salary reduction SEP P Excludable moving expense           reimbursements paid directly to AA Designated Roth contributions G Elective deferrals and employer   employee   under a section 401(k) plan   contributions (including nonelective           deferrals) to a section 457(b) Q Nontaxable combat pay BB Designated Roth contributions   deferred compensation plan       under a section 403(b) plan     R Employer contributions to an Archer     H Elective deferrals to a section   MSA DD Cost of employer-sponsored   501(c)(18)(D) tax-exempt       health coverage   organization plan S Employee salary reduction contributions under a section 408(p) SIMPLE  EE  Designated Roth contributions under a governmental section 457(b) plan  Note. Sample 1040x filled out For more information on these codes, see your Form(s) W-2. Sample 1040x filled out Adjustments to Income Adjusted gross income is your total income minus certain adjustments. Sample 1040x filled out The following adjustments are of particular interest to members of the Armed Forces. Sample 1040x filled out Armed Forces Reservists If you are a member of a reserve component of the Armed Forces and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your unreimbursed travel expenses as an adjustment to income on line 24 of Form 1040, U. Sample 1040x filled out S. Sample 1040x filled out Individual Income Tax Return, rather than as a miscellaneous itemized deduction. Sample 1040x filled out Include all unreimbursed expenses from the time you leave home until the time you return home. Sample 1040x filled out The deduction is limited to the amount the federal government generally reimburses its employees for travel expenses. Sample 1040x filled out For more information about this limit, see Per Diem and Car Allowances in chapter 6 of Publication 463. Sample 1040x filled out Member of a reserve component. Sample 1040x filled out   You are a member of a reserve component of the Armed Forces if you are in the Army, Navy, Marine Corps, Air Force, or Coast Guard Reserve, the Army National Guard of the United States, the Air National Guard of the United States, or the Reserve Corps of the Public Health Service. Sample 1040x filled out How to report. Sample 1040x filled out   If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses. Sample 1040x filled out Then enter on Form 1040, line 24, the part of your expenses, up to the federal rate, included on Form 2106, line 10, or Form 2106-EZ, line 6, that is for reserve-related travel more than 100 miles from your home. Sample 1040x filled out Subtract this amount from the total on Form 2106, line 10, or Form 2106-EZ, line 6, and deduct the balance as an itemized deduction on Schedule A (Form 1040), line 21. Sample 1040x filled out Example. Sample 1040x filled out Captain Harris, a member of the Army Reserve, traveled to a location 220 miles from his home to perform his work in the reserves in April 2013. Sample 1040x filled out He incurred $1,549 of unreimbursed expenses consisting of $249 for mileage (440 miles × 56. Sample 1040x filled out 5 cents per mile), $300 for meals, and $1,000 for lodging. Sample 1040x filled out He also had other deductible mileage expenses of $110 for several trips to a location 20 miles from his home. Sample 1040x filled out Only 50% of his meal expenses are deductible. Sample 1040x filled out He shows his total deductible travel expenses of $1,509 ($249 + $150 (50% of $300) + $1,000 + $110) on Form 2106, line 10. Sample 1040x filled out He enters the $1,399 ($249 + $150 + $1,000) for travel over 100 miles from home on Form 1040, line 24. Sample 1040x filled out He then subtracts that $1,399 from the amount on Form 2106, $1,509, and enters $110 on Schedule A (Form 1040), line 21. Sample 1040x filled out Individual Retirement Arrangements Generally, you can deduct the lesser of the contributions to your traditional individual retirement arrangement (IRA) for the year or the general limit (or spousal IRA limit, if applicable). Sample 1040x filled out However, if you or your spouse was covered by an employer-maintained retirement plan at any time during the year for which contributions were made, you may not be able to deduct all of the contributions. Sample 1040x filled out The Form W-2 you or your spouse receives from an employer has a box used to indicate whether you were covered for the year. Sample 1040x filled out The “Retirement plan” box should have a mark in it if you were covered. Sample 1040x filled out For purposes of a deduction for contributions to a traditional IRA, Armed Forces members (including reservists on active duty for more than 90 days during the year) are considered covered by an employer-maintained retirement plan. Sample 1040x filled out Individuals serving in the U. Sample 1040x filled out S. Sample 1040x filled out Armed Forces or in support of the U. Sample 1040x filled out S. Sample 1040x filled out Armed Forces in designated combat zones have additional time to make a qualified retirement contribution to an IRA. Sample 1040x filled out For more information on this extension of deadline provision, see Extension of Deadlines , later. Sample 1040x filled out For more information on IRAs, see Publication 590. Sample 1040x filled out Combat Pay For IRA purposes, your compensation includes nontaxable combat pay. Sample 1040x filled out This means that even though you do not have to include the combat pay in your gross income, you do include it in your compensation when figuring the limits on contributions and deductions of contributions to IRAs. Sample 1040x filled out Qualified Reservist Distributions A qualified reservist distribution is defined below. Sample 1040x filled out It is not subject to the 10% additional tax on early distributions from certain retirement plans. Sample 1040x filled out Definition. Sample 1040x filled out   A distribution you receive is a qualified reservist distribution if the following requirements are met. Sample 1040x filled out You were ordered or called to active duty after September 11, 2001. Sample 1040x filled out You were ordered or called to active duty for a period of more than 179 days or for an indefinite period because you are a member of a reserve component (see Member of a reserve component , earlier, under Armed Forces Reservists. Sample 1040x filled out ) The distribution is from an IRA or from amounts attributable to elective deferrals under a section 401(k) or 403(b) plan or a similar arrangement. Sample 1040x filled out The distribution was made no earlier than the date of the order or call to active duty and no later than the close of the active duty period. Sample 1040x filled out Qualified Reservist Repayments You may be able to contribute (repay) to an IRA amounts equal to any qualified reservist distributions (defined earlier) you received. Sample 1040x filled out You can make these repayment contributions even if they would cause your total contributions to the IRA to be more than the general limit on contributions. Sample 1040x filled out You make these repayment contributions to an IRA, even if you received the qualified reservist distribution from a section 401(k) or 403(b) plan or a similar arrangement. Sample 1040x filled out Limit. Sample 1040x filled out   Your qualified reservist repayments cannot be more than your qualified reservist distributions. Sample 1040x filled out When repayment contributions can be made. Sample 1040x filled out   You cannot make these repayment contributions after the date that is 2 years after your active duty period ends. Sample 1040x filled out No deduction. Sample 1040x filled out   You cannot deduct qualified reservist repayments. Sample 1040x filled out Figuring your IRA deduction. Sample 1040x filled out   The repayment of qualified reservist distributions does not affect the amount you can deduct as an IRA contribution. Sample 1040x filled out Reporting the repayment. Sample 1040x filled out   If you repay a qualified reservist distribution, include the amount of the repayment with nondeductible contributions on line 1 of Form 8606, Nondeductible IRAs. Sample 1040x filled out Moving Expenses To deduct moving expenses, you generally must meet certain time and distance tests. Sample 1040x filled out However, if you are a member of the Armed Forces on active duty and you move because of a permanent change of station, you do not have to meet these tests. Sample 1040x filled out You can deduct your unreimbursed moving expenses on Form 3903. Sample 1040x filled out Permanent change of station. Sample 1040x filled out   A permanent change of station includes: A move from your home to your first post of active duty, A move from one permanent post of duty to another, and A move from your last post of duty to your home or to a nearer point in the United States. Sample 1040x filled out The move must occur within 1 year of ending your active duty or within the period allowed under the Joint Federal Travel Regulations. Sample 1040x filled out Spouse and dependents. Sample 1040x filled out   If you are the spouse or dependent of a member of the Armed Forces who deserts, is imprisoned, or dies, a permanent change of station for you includes a move to: The member's place of enlistment or induction, Your, or the member's, home of record, or A nearer point in the United States. Sample 1040x filled out   If the military moves you to or from a different location than the member, the moves are treated as a single move to your new main job location. Sample 1040x filled out Services or reimbursements provided by the government. Sample 1040x filled out   Do not include in your income the value of moving and storage services provided by the government because of a permanent change of station. Sample 1040x filled out Similarly, do not include in income amounts received as a dislocation allowance, temporary lodging expense, temporary lodging allowance, or move-in housing allowance. Sample 1040x filled out   Generally, if the total reimbursements or allowances that you receive from the government because of the move are more than your actual moving expenses, the excess is included in your wages on Form W-2. Sample 1040x filled out However, if any reimbursements or allowances (other than dislocation, temporary lodging, temporary lodging expense, or move-in housing allowances) exceed the cost of moving and the excess is not included in your wages on Form W-2, the excess still must be included in gross income on Form 1040, line 7. Sample 1040x filled out   Use Form 3903 to deduct qualified expenses that exceed your reimbursements and allowances (including dislocation, temporary lodging, temporary lodging expense, or move-in housing allowances that are excluded from gross income). Sample 1040x filled out   If you must relocate and your spouse and dependents move to or from a different location, do not include in income reimbursements, allowances, or the value of moving and storage services provided by the government to move you and your spouse and dependents to and from the separate locations. Sample 1040x filled out   Do not deduct any expenses for moving services that were provided by the government. Sample 1040x filled out Also, do not deduct any expenses that were reimbursed by an allowance you did not include in income. Sample 1040x filled out Deductible Moving Expenses If you move because of a permanent change of station, you can deduct the reasonable unreimbursed expenses of moving you and members of your household. Sample 1040x filled out You can deduct expenses (if not reimbursed or furnished in kind) for: Moving household goods and personal effects, and Travel. Sample 1040x filled out Moving household goods and personal effects. Sample 1040x filled out   You can deduct the expenses of moving your household goods and personal effects, including expenses for hauling a trailer, packing, crating, in-transit storage, and insurance. Sample 1040x filled out You cannot deduct expenses for moving furniture or other goods you bought on the way from your old home to your new home. Sample 1040x filled out Storing and insuring household goods and personal effects. Sample 1040x filled out   You can include only the cost of storing and insuring your household goods and personal effects within any period of 30 consecutive days after the day these goods and effects are moved from your former home and before they are delivered to your new home. Sample 1040x filled out Travel. Sample 1040x filled out   You can deduct the expenses of traveling (including lodging but not meals) from your old home to your new home, including car expenses and air fare. Sample 1040x filled out You can deduct as car expenses either: Your actual out-of-pocket expenses such as gas and oil, or The standard mileage rate of 24 cents a mile. Sample 1040x filled out   You can add parking fees and tolls to the amount claimed under either method. Sample 1040x filled out You cannot deduct any expenses for meals. Sample 1040x filled out You cannot deduct the cost of unnecessary side trips or lavish and extravagant lodging. Sample 1040x filled out Member of your household. Sample 1040x filled out   A member of your household is anyone who has both your former home and your new home as his or her main home. Sample 1040x filled out It does not include a tenant or employee unless you can claim that person as a dependent. Sample 1040x filled out Foreign Moves A foreign move is a move from the United States or its possessions to a foreign country or from one foreign country to another foreign country. Sample 1040x filled out A move from a foreign country to the United States or its possessions is not a foreign move. Sample 1040x filled out For a foreign move, the deductible moving expenses described earlier are expanded to include the reasonable expenses of: Moving your household goods and personal effects to and from storage, and Storing these items for part or all of the time the new job location remains your main job location. Sample 1040x filled out The new job location must be outside the United States. Sample 1040x filled out Reporting Moving Expenses Figure moving expense deductions on Form 3903. Sample 1040x filled out Carry the deduction from Form 3903 to Form 1040, line 26. Sample 1040x filled out For more information, see Publication 521 and Form 3903. Sample 1040x filled out Combat Zone Exclusion If you are a member of the U. Sample 1040x filled out S. Sample 1040x filled out Armed Forces who serves in a combat zone (defined later), you can exclude certain pay from your income. Sample 1040x filled out This pay is generally referred to as “combat pay. Sample 1040x filled out ” You do not actually need to show the exclusion on your tax return because income that qualifies for the combat zone exclusion is not included in the wages reported on your Form W-2. Sample 1040x filled out (See Form W-2 , later. Sample 1040x filled out ) The month for which you receive the pay must be a month in which you either served in a combat zone or were hospitalized as a result of wounds, disease, or injury incurred while serving in the combat zone. Sample 1040x filled out You do not have to receive the excluded pay while you are in a combat zone, are hospitalized, or in the same year you served in a combat zone. Sample 1040x filled out If you are an enlisted member, warrant officer, or commissioned warrant officer, you can exclude the following amounts from your income. Sample 1040x filled out (Other officer personnel are discussed under Amount of Exclusion , later. Sample 1040x filled out ) Active duty pay earned in any month you served in a combat zone. Sample 1040x filled out Imminent danger/hostile fire pay. Sample 1040x filled out A reenlistment bonus if the voluntary extension or reenlistment occurs in a month you served in a combat zone. Sample 1040x filled out Pay for accrued leave earned in any month you served in a combat zone. Sample 1040x filled out The Department of Defense must determine that the unused leave was earned during that period. Sample 1040x filled out Pay received for duties as a member of the Armed Forces in clubs, messes, post and station theaters, and other nonappropriated fund activities. Sample 1040x filled out The pay must be earned in a month you served in a combat zone. Sample 1040x filled out Awards for suggestions, inventions, or scientific achievements you are entitled to because of a submission you made in a month you served in a combat zone. Sample 1040x filled out Student loan repayments. Sample 1040x filled out If the entire year of service required to earn the repayment was performed in a combat zone, the entire repayment made because of that year of service is excluded. Sample 1040x filled out If only part of that year of service was performed in a combat zone, only part of the repayment qualifies for exclusion. Sample 1040x filled out For example, if you served in a combat zone for 5 months, 5/12 of your repayment qualifies for exclusion. Sample 1040x filled out Retirement pay and pensions do not qualify for the combat zone exclusion. Sample 1040x filled out Partial (month) service. Sample 1040x filled out   If you serve in a combat zone for any part of one or more days during a particular month, you are entitled to an exclusion for that entire month. Sample 1040x filled out Form W-2. Sample 1040x filled out   The wages shown in box 1 of your 2013 Form W-2 should not include military pay excluded from your income under the combat zone exclusion provisions. Sample 1040x filled out If it does, you will need to get a corrected Form W-2 from your finance office. Sample 1040x filled out   You cannot exclude as combat pay any wages shown in box 1 of Form W-2. Sample 1040x filled out Combat Zone A combat zone is any area the President of the United States designates by Executive Order as an area in which the U. Sample 1040x filled out S. Sample 1040x filled out Armed Forces are engaging or have engaged in combat. Sample 1040x filled out An area usually becomes a combat zone and ceases to be a combat zone on the dates the President designates by Executive Order. Sample 1040x filled out Afghanistan area. Sample 1040x filled out   By Executive Order No. Sample 1040x filled out 13239, Afghanistan (and airspace above) was designated as a combat zone beginning September 19, 2001. Sample 1040x filled out On December 14, 2001, the following countries were certified by the Department of Defense for combat zone tax benefits due to their direct support of military operations in the Afghanistan combat zone. Sample 1040x filled out Djibouti. Sample 1040x filled out Jordan. Sample 1040x filled out Kyrgyzstan. Sample 1040x filled out Pakistan. Sample 1040x filled out Somalia. Sample 1040x filled out Syria. Sample 1040x filled out Tajikistan. Sample 1040x filled out Uzbekistan. Sample 1040x filled out Yemen. Sample 1040x filled out The Philippines. Sample 1040x filled out  Note. Sample 1040x filled out For the Philippines only, the personnel must be deployed in conjunction with Operation Enduring Freedom supporting military operations in the Afghanistan combat zone. Sample 1040x filled out The Kosovo area. Sample 1040x filled out   By Executive Order No. Sample 1040x filled out 13119, the following locations (including airspace above) were designated as a combat zone beginning March 24, 1999. Sample 1040x filled out Federal Republic of Yugoslavia (Serbia/Montenegro). Sample 1040x filled out Albania. Sample 1040x filled out Kosovo. Sample 1040x filled out The Adriatic Sea. Sample 1040x filled out The Ionian Sea—north of the 39th parallel. Sample 1040x filled out Note. Sample 1040x filled out The combat zone designation for Montenegro and Kosovo (previously a province within Serbia) under Executive Order 13119 remains in force even though Montenegro and Kosovo became independent nations since EO 13119 was signed. Sample 1040x filled out Arabian peninsula. Sample 1040x filled out   By Executive Order No. Sample 1040x filled out 12744, the following locations (and airspace above) were designated as a combat zone beginning January 17, 1991. Sample 1040x filled out The Persian Gulf. Sample 1040x filled out The Red Sea. Sample 1040x filled out The Gulf of Oman. Sample 1040x filled out The part of the Arabian Sea that is north of 10 degrees north latitude and west of 68 degrees east longitude. Sample 1040x filled out The Gulf of Aden. Sample 1040x filled out The total land areas of Iraq, Kuwait, Saudi Arabia, Oman, Bahrain, Qatar, and the United Arab Emirates. Sample 1040x filled out Jordan which is in direct support of the Arabian Peninsula. Sample 1040x filled out Serving in a Combat Zone You are considered to be serving in a combat zone if you are either assigned on official temporary duty to a combat zone or you qualify for hostile fire/imminent danger pay while in a combat zone. Sample 1040x filled out Service in a combat zone includes any periods you are absent from duty because of sickness, wounds, or leave. Sample 1040x filled out If, as a result of serving in a combat zone, a person becomes a prisoner of war or is missing in action, that person is considered to be serving in the combat zone so long as he or she keeps that status for military pay purposes. Sample 1040x filled out Hospitalized While Serving in a Combat Zone If you are hospitalized while serving in a combat zone, the wound, disease, or injury causing the hospitalization will be presumed to have been incurred while serving in the combat zone unless there is clear evidence to the contrary. Sample 1040x filled out Example. Sample 1040x filled out You are hospitalized for a specific disease in a combat zone where you have been serving for 3 weeks, and the disease for which you are hospitalized has an incubation period of 2 to 4 weeks. Sample 1040x filled out The disease is presumed to have been incurred while you were serving in the combat zone. Sample 1040x filled out On the other hand, if the incubation period of the disease is 1 year, the disease would not have been incurred while you were serving in the combat zone. Sample 1040x filled out Hospitalized After Leaving a Combat Zone In some cases, the wound, disease, or injury may have been incurred while you were serving in the combat zone, even though you were not hospitalized until after you left. Sample 1040x filled out In that case, you can exclude military pay earned while you are hospitalized as a result of the wound, disease, or injury. Sample 1040x filled out Example. Sample 1040x filled out You were hospitalized for a specific disease 3 weeks after you left the combat zone. Sample 1040x filled out The incubation period of the disease is from 2 to 4 weeks. Sample 1040x filled out The disease is presumed to have been incurred while serving in the combat zone. Sample 1040x filled out Nonqualifying Presence in Combat Zone None of the following types of military service qualify as service in a combat zone. Sample 1040x filled out Presence in a combat zone while on leave from a duty station located outside the combat zone. Sample 1040x filled out Passage over or through a combat zone during a trip between two points that are outside a combat zone. Sample 1040x filled out Presence in a combat zone solely for your personal convenience. Sample 1040x filled out Service Outside Combat Zone Considered Service in Combat Zone Military service outside a combat zone is considered to be performed in a combat zone if: The Department of Defense designates that the service is in direct support of military operations in the combat zone, and The service qualifies you for special military pay for duty subject to hostile fire or imminent danger. Sample 1040x filled out Military pay received for this service will qualify for the combat zone exclusion if all of the requirements (other than service in a combat zone) are met and the pay is verifiable by reference to military pay records. Sample 1040x filled out Amount of Exclusion If you are an enlisted member, warrant officer, or commissioned warrant officer and you serve in a combat zone during any part of a month, you can exclude all of your military pay for that month. Sample 1040x filled out It should not be included in the wages reported on your Form W-2. Sample 1040x filled out You also can exclude military pay earned while you are hospitalized as a result of wounds, disease, or injury incurred in the combat zone. Sample 1040x filled out If you are hospitalized, you cannot exclude any military pay received for any month of service that begins more than 2 years after the end of combat activities in the combat zone. Sample 1040x filled out Your hospitalization does not have to be in the combat zone. Sample 1040x filled out If you are a commissioned officer (other than a commissioned warrant officer), you can exclude your pay according to the rules just discussed. Sample 1040x filled out However, the amount of your exclusion is limited to the highest rate of enlisted pay (plus imminent danger/hostile fire pay you received) for each month during any part of which you served in a combat zone or were hospitalized as a result of your service there. Sample 1040x filled out Alien Status For tax purposes, an alien is an individual who is not a U. Sample 1040x filled out S. Sample 1040x filled out citizen. Sample 1040x filled out An alien is in one of three categories: resident, nonresident, or dual-status. Sample 1040x filled out Placement in the correct category is crucial in determining what income to report and what forms to file. Sample 1040x filled out Under peacetime enlistment rules, you generally cannot enlist in the Armed Forces unless you are a citizen or have been legally admitted to the United States for permanent residence. Sample 1040x filled out If you are an alien enlistee in the Armed Forces, you are probably a resident alien. Sample 1040x filled out If, under an income tax treaty, you are considered a resident of a foreign country, see your base legal officer. Sample 1040x filled out Other aliens who are in the United States only because of military assignments and who have a home outside the United States are nonresident aliens. Sample 1040x filled out Guam and Puerto Rico have special rules. Sample 1040x filled out Residents of those areas should contact their taxing authority with their questions. Sample 1040x filled out Most members of the Armed Forces are U. Sample 1040x filled out S. Sample 1040x filled out citizens or resident aliens. Sample 1040x filled out However, if you have questions about your alien status or the alien status of your dependents or spouse, you should read the information in the following paragraphs and see Publication 519. Sample 1040x filled out Resident Aliens You are considered a resident alien of the United States for tax purposes if you meet either the “green card test” or the “substantial presence test” for the calendar year (January 1–December 31). Sample 1040x filled out If you meet the substantial presence test for 2014, you did not meet either the green card test or the substantial presence test for 2012 or 2013, and you did not choose to be treated as a resident for part of 2012, you may be able to choose to be treated as a U. Sample 1040x filled out S. Sample 1040x filled out resident for part of 2013. Sample 1040x filled out See First-Year Choice in Publication 519. Sample 1040x filled out These tests are explained in Publication 519. Sample 1040x filled out Generally, resident aliens are taxed on their worldwide income and file the same tax forms as U. Sample 1040x filled out S. Sample 1040x filled out citizens. Sample 1040x filled out Treating nonresident alien spouse as resident alien. Sample 1040x filled out   A nonresident alien spouse can be treated as a resident alien if all the following conditions are met. Sample 1040x filled out One spouse is a U. Sample 1040x filled out S. Sample 1040x filled out citizen or resident alien at the end of the tax year. Sample 1040x filled out That spouse is married to the nonresident alien at the end of the tax year. Sample 1040x filled out You both choose to treat the nonresident alien spouse as a resident alien. Sample 1040x filled out Making the choice. Sample 1040x filled out   Both you and your spouse must sign a statement and attach it to your joint return for the first tax year for which the choice applies. Sample 1040x filled out Include in the statement: A declaration that one spouse was a nonresident alien and the other was a U. Sample 1040x filled out S. Sample 1040x filled out citizen or resident alien on the last day of the year, A declaration that both spouses choose to be treated as U. Sample 1040x filled out S. Sample 1040x filled out residents for the entire tax year, and The name, address, and taxpayer identification number (social security number or individual taxpayer identification number) of each spouse. Sample 1040x filled out If the nonresident alien spouse is not eligible to get a social security number, he or she should file Form W-7, Application for IRS Individual Taxpayer Identification Number. Sample 1040x filled out    Once you make this choice, the nonresident alien spouse's worldwide income is subject to U. Sample 1040x filled out S. Sample 1040x filled out tax. Sample 1040x filled out If the nonresident alien spouse has substantial foreign income, there may be no advantage to making this choice. Sample 1040x filled out Ending the choice. Sample 1040x filled out   Once you make this choice, it applies to all later years unless one of the following situations occurs. Sample 1040x filled out You or your spouse revokes the choice. Sample 1040x filled out You or your spouse dies. Sample 1040x filled out You and your spouse become legally separated under a decree of divorce or separate maintenance. Sample 1040x filled out The Internal Revenue Service ends the choice because you or your spouse kept inadequate records. Sample 1040x filled out For specific details on these situations, see Publication 519. Sample 1040x filled out   If the choice is ended for any of these reasons, neither spouse can make the choice for any later year. Sample 1040x filled out Choice not made. Sample 1040x filled out   If you and your nonresident alien spouse do not make this choice: You cannot file a joint return. Sample 1040x filled out You can file as married filing separately, or head of household if you qualify. Sample 1040x filled out You can claim an exemption for your nonresident alien spouse if he or she has no gross income for U. Sample 1040x filled out S. Sample 1040x filled out tax purposes and is not another taxpayer's dependent. Sample 1040x filled out The nonresident alien spouse generally does not have to file a federal income tax return if he or she had no income from sources in the United States. Sample 1040x filled out If a return has to be filed, see the next discussion. Sample 1040x filled out The nonresident alien spouse is not eligible for the earned income credit if he or she has to file a return. Sample 1040x filled out Nonresident Aliens If you are an alien who does not meet the requirements discussed earlier to be a resident alien, you are a nonresident alien. Sample 1040x filled out If you are required to file a federal tax return, you must file either Form 1040NR, U. Sample 1040x filled out S. Sample 1040x filled out Nonresident Alien Income Tax Return, or Form 1040NR-EZ, U. Sample 1040x filled out S. Sample 1040x filled out Income Tax Return for Certain Nonresident Aliens With No Dependents. Sample 1040x filled out See the form instructions for information on who must file and filing status. Sample 1040x filled out If you are a nonresident alien, you generally must pay tax on income from sources in the United States. Sample 1040x filled out Your income from conducting a trade or business in the United States is taxed at graduated U. Sample 1040x filled out S. Sample 1040x filled out tax rates. Sample 1040x filled out Other income from U. Sample 1040x filled out S. Sample 1040x filled out sources is taxed at a flat 30% (or lower treaty) rate. Sample 1040x filled out For example, dividends from a U. Sample 1040x filled out S. Sample 1040x filled out corporation paid to a nonresident alien generally are subject to a 30% (or lower treaty) rate. Sample 1040x filled out Dual-Status Aliens You can be both a nonresident and resident alien during the same tax year. Sample 1040x filled out This usually occurs in the year you arrive in or depart from the United States. Sample 1040x filled out If you are a dual-status alien, you are taxed on income from all sources for the part of the year you are a resident alien. Sample 1040x filled out Generally, for the part of the year you are a nonresident alien, you are taxed only on income from sources in the United States. Sample 1040x filled out Sale of Home You may not have to pay tax on all or part of the gain from the sale of your main home. Sample 1040x filled out Usually, your main home is the one you live in most of the time. Sample 1040x filled out It can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. Sample 1040x filled out You generally can exclude up to $250,000 of gain ($500,000, in most cases, if married filing a joint return) realized on the sale or exchange of a main home in 2013. Sample 1040x filled out The exclusion is allowed each time you sell or exchange a main home, but generally not more than once every 2 years. Sample 1040x filled out To be eligible, during the 5-year period ending on the date of the sale, you must have owned the home for at least 2 years (the ownership test), and lived in the home as your main home for at least 2 years (the use test). Sample 1040x filled out Exception to ownership and use tests. Sample 1040x filled out   You can exclude gain, but the maximum amount of gain you can exclude will be reduced if you do not meet the ownership and use tests due to a move to a new permanent duty station. Sample 1040x filled out 5-year test period suspended. Sample 1040x filled out   You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve on qualified official extended duty as a member of the Armed Forces. Sample 1040x filled out This means that you may be able to meet the 2-year use test even if, because of your service, you did not actually live in your home for at least the required 2 years during the 5-year period ending on the date of sale. Sample 1040x filled out Example. Sample 1040x filled out David bought and moved into a home in 2005. Sample 1040x filled out He lived in it as his main home for 2½ years. Sample 1040x filled out For the next 6 years, he did not live in it because he was on qualified official extended duty with the Army. Sample 1040x filled out He then sold the home at a gain in 2013. Sample 1040x filled out To meet the use test, David chooses to suspend the 5-year test period for the 6 years he was on qualifying official extended duty. Sample 1040x filled out This means he can disregard those 6 years. Sample 1040x filled out Therefore, David's 5-year test period consists of the 5 years before he went on qualifying official extended duty. Sample 1040x filled out He meets the ownership and use tests because he owned and lived in the home for 2½ years during this test period. Sample 1040x filled out Period of suspension. Sample 1040x filled out   The period of suspension cannot last more than 10 years. Sample 1040x filled out You cannot suspend the 5-year period for more than one property at a time. Sample 1040x filled out You can revoke your choice to suspend the 5-year period at any time. Sample 1040x filled out Qualified official extended duty. Sample 1040x filled out   You are on qualified official extended duty if you serve on extended duty either: At a duty station at least 50 miles from your main home, or While you live in Government quarters under Government orders. Sample 1040x filled out   You are on extended duty when you are called or ordered to active duty for a period of more than 90 days or for an indefinite period. Sample 1040x filled out Property used for rental or business. Sample 1040x filled out   You may be able to exclude your gain from the sale of a home that you have used as a rental property or for business. Sample 1040x filled out However, you must meet the ownership and use tests discussed in Publication 523. Sample 1040x filled out Nonqualified use. Sample 1040x filled out   If the sale of your main home results in a gain that is allocated to one or more period(s) of nonqualified use, you cannot exclude that gain from your income. Sample 1040x filled out   Nonqualified use means any period after 2008 when neither you nor your spouse (or your former spouse) used the property as a main home, with certain exceptions. Sample 1040x filled out For example, a period of nonqualified use does not include any period (not to exceed a total of 10 years) during which you or your spouse is serving on qualified official extended duty. Sample 1040x filled out Loss. Sample 1040x filled out   You cannot deduct a loss from the sale of your main home. Sample 1040x filled out More information. Sample 1040x filled out   For more information, see Publication 523. Sample 1040x filled out Foreclosures There may be tax consequences as a result of compensation payments for foreclosures. Sample 1040x filled out Payments made for violations of the Service Members Civil Relief Act (SCRA). Sample 1040x filled out   All service members who received a settlement payment reported on a Form 1099 may need to report the amount on their tax return. Sample 1040x filled out Generally, you must include settlement payments in income. Sample 1040x filled out However, the tax treatment of settlement payments will depend on the facts and circumstances. Sample 1040x filled out Lump Sum Portion of Settlement Payment. Sample 1040x filled out    Generally, you must include the lump sum payment in gross income. Sample 1040x filled out In limited circumstances you may be able to exclude part or all of the lump sum payment from gross income. Sample 1040x filled out For example, you may qualify to exclude part or all of the payment from gross income if you can show that the payment was made to reimburse specific nondeductible expenses (such as living expenses) you incurred because of the SCRA violation. Sample 1040x filled out Interest Payment on Lump Sum Portion of Settlement Payment. Sample 1040x filled out    You must include any interest on the lump sum portion of your settlement payment in your income. Sample 1040x filled out Lost Equity Portion of Settlement Payment. Sample 1040x filled out    If you lost your main home in foreclosure, you should treat the lost equity payment as an additional amount you received on the foreclosure of the home. Sample 1040x filled out You will have a gain on the foreclosure only if the sum of the lost equity payment and the value of the main home at foreclosure is more than what you paid for the home. Sample 1040x filled out In many cases, this gain may be excluded from income. Sample 1040x filled out For more information on the rules for excluding all or part of any gain from the sale (including a foreclosure) of a main home, see Pub. Sample 1040x filled out 523, Selling Your Home. Sample 1040x filled out The rules that apply to a lost equity payment you received for the foreclosure of a property that was not your main home are different. Sample 1040x filled out    To find rules for reporting gain or loss on the foreclosure of property that was not your main home, see Pub. Sample 1040x filled out 544, Sales and Other Dispositions of Assets. Sample 1040x filled out Interest Payment on Lost Equity Portion of Settlement Payment. Sample 1040x filled out    You must include any interest on the lost equity portion of your settlement payment in your income. Sample 1040x filled out Itemized Deductions To figure your taxable income, you must subtract either your standard deduction or your itemized deductions from adjusted gross income. Sample 1040x filled out For information on the standard deduction, see Publication 501. Sample 1040x filled out Itemized deductions are figured on Schedule A (Form 1040). Sample 1040x filled out This chapter discusses miscellaneous itemized deductions of particular interest to members of the Armed Forces. Sample 1040x filled out For information on other itemized deductions, see the publications listed below. Sample 1040x filled out Publication 502, Medical and Dental Expenses. Sample 1040x filled out Publication 526, Charitable Contributions. Sample 1040x filled out Publication 547, Casualties, Disasters, and Thefts. Sample 1040x filled out Publication 550, Investment Income and Expenses. Sample 1040x filled out You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. Sample 1040x filled out For information on deductions that are not subject to the 2% limit, see Publication 529. Sample 1040x filled out Employee Business Expenses Deductible employee business expenses generally are miscellaneous itemized deductions subject to the 2% limit. Sample 1040x filled out Certain employee business expenses are deductible as adjustments to income. Sample 1040x filled out For information on many employee business expenses, see Publication 463. Sample 1040x filled out Generally, you must file Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses, to claim these expenses. Sample 1040x filled out You do not have to file Form 2106 or Form 2106-EZ if you are claiming only unreimbursed expenses for uniforms, professional society dues, and work-related educational expenses (all discussed later). Sample 1040x filled out You can deduct these expenses directly on Schedule A (Form 1040). Sample 1040x filled out Reimbursement. Sample 1040x filled out   Generally, to receive advances, reimbursements, or other allowances from the government, you must adequately account for your expenses and return any excess reimbursement. Sample 1040x filled out Your reimbursed expenses are not deductible. Sample 1040x filled out   If your expenses are more than your reimbursement, the excess expenses are deductible (subject to the 2% limit) if you can prove them. Sample 1040x filled out You must file Form 2106 to report these expenses. Sample 1040x filled out   You can use the shorter Form 2106-EZ if you meet all three of the following conditions. Sample 1040x filled out You are an employee deducting expenses related to your job. Sample 1040x filled out You were not reimbursed by your employer for your expenses. Sample 1040x filled out (Amounts included in box 1 of Form W-2 are not considered reimbursements. Sample 1040x filled out ) If you claim car expenses, you use the standard mileage rate. Sample 1040x filled out    For 2013, the standard mileage rate is 56. Sample 1040x filled out 5 cents a mile for all business miles driven. Sample 1040x filled out This rate is adjusted periodically. Sample 1040x filled out Travel Expenses You can deduct unreimbursed travel expenses only if they are incurred while you are traveling away from home. Sample 1040x filled out If you are a member of the U. Sample 1040x filled out S. Sample 1040x filled out Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. Sample 1040x filled out You cannot deduct your expenses for meals and lodging while at your permanent duty station. Sample 1040x filled out You cannot deduct these expenses even if you have to maintain a home in the United States for your family members who are not allowed to accompany you overseas. Sample 1040x filled out A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a home aboard ship for travel expense purposes. Sample 1040x filled out To be deductible, your travel expenses must be work related. Sample 1040x filled out You cannot deduct any expenses for personal travel, such as visits to family while on furlough, leave, or liberty. Sample 1040x filled out Away from home. Sample 1040x filled out   Home is your permanent duty station (which can be a ship or base), regardless of where you or your family live. Sample 1040x filled out You are away from home if you are away from your permanent duty station substantially longer than an ordinary day's work and you need to get sleep or rest to meet the demands of your work while away from home. Sample 1040x filled out   Examples of deductible travel expenses include: Expenses for business-related meals (generally limited to 50% of your unreimbursed cost), lodging, taxicabs, business telephone calls, tips, laundry, and dry cleaning while you are away from home on temporary duty or temporary additional duty, and Expenses of carrying out official business while on “No Cost” orders. Sample 1040x filled out    You cannot deduct any expenses for travel away from home if the temporary assignment in a single location is realistically expected to last (and does in fact last) for more than 1 year. Sample 1040x filled out This rule may not apply if you are participating in a federal crime investigation or prosecution. Sample 1040x filled out For more information, see Publication 463 and the Form 2106 instructions. Sample 1040x filled out Transportation Expenses These expenses include the ordinary and necessary costs of: Getting from one workplace to another when you are not away from home, Going to a business meeting away from your regular workplace, and Getting from your home to a temporary workplace when you have a regular place of work. Sample 1040x filled out These expenses include the costs of transportation by air, bus, rail, taxi, and driving and maintaining your car. Sample 1040x filled out Transportation expenses incurred while traveling away from home are included with your travel expenses, discussed earlier. Sample 1040x filled out However, if you use your car while traveling away from home overnight, see the rules in chapter 4 of Publication 463 to figure your car expense deduction. Sample 1040x filled out If you must go from one workplace to another while on duty (for example, as a courier or to attend meetings) without being away from home, your unreimbursed transportation expenses are deductible. Sample 1040x filled out However, the expenses of getting to and from your regular place of work (commuting) are not deductible. Sample 1040x filled out Temporary work location. Sample 1040x filled out   If you have one or more regular places of business away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location. Sample 1040x filled out   Generally, if your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary. Sample 1040x filled out   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. Sample 1040x filled out If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. Sample 1040x filled out    If you do not have a regular place of business, but you ordinarily work in the metropolitan area where you live, you can deduct daily transportation expenses between your home and a temporary work site outside your metropolitan area. Sample 1040x filled out However, you cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. Sample 1040x filled out These are nondeductible commuting costs. Sample 1040x filled out Armed Forces reservists. Sample 1040x filled out   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. Sample 1040x filled out You can deduct the expense of getting from one workplace to the other. Sample 1040x filled out You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. Sample 1040x filled out In this case, your transportation generally is a nondeductible commuting expense. Sample 1040x filled out However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. Sample 1040x filled out   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. Sample 1040x filled out If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. Sample 1040x filled out See Armed Forces Reservists under Adjustments to Income, earlier. Sample 1040x filled out Uniforms You usually cannot deduct the expenses for uniform cost and upkeep. Sample 1040x filled out Generally, you must wear uniforms when on duty and you are allowed to wear them when off duty. Sample 1040x filled out If military regulations prohibit you from wearing certain uniforms when off duty, you can deduct the cost and upkeep of the uniforms, but you must reduce your expenses by any allowance or reimbursement you receive. Sample 1040x filled out Unreimbursed expenses for the cost and upkeep of the following articles are deductible. Sample 1040x filled out Military battle dress uniforms and utility uniforms that you cannot wear when off duty. Sample 1040x filled out Articles not replacing regular clothing, including insignia of rank, corps devices, epaulets, aiguillettes, and swords. Sample 1040x filled out Reservists' uniforms if you can wear the uniform only while performing duties as a reservist. Sample 1040x filled out Professional Dues You can deduct unreimbursed dues paid to professional societies directly related to your military position. Sample 1040x filled out However, you cannot deduct amounts paid to an officers' club or a noncommissioned officers' club. Sample 1040x filled out Example. Sample 1040x filled out Lieutenant Margaret Allen, an electrical engineer at Maxwell Air Force Base, can deduct professional dues paid to the American Society of Electrical Engineers. Sample 1040x filled out Educational Expenses You can deduct the unreimbursed costs of qualifying work-related education. Sample 1040x filled out This is education that meets at least one of the following two tests. Sample 1040x filled out The education is required by your employer or the law to keep your present salary, status, or job. Sample 1040x filled out The required education must serve a bona fide business purpose of your employer. Sample 1040x filled out The education maintains or improves skills needed in your present work. Sample 1040x filled out However, even if the education meets one or both of the above tests, it is not qualifying education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. Sample 1040x filled out You can deduct the expenses for qualifying work-related education even if the education could lead to a degree. Sample 1040x filled out Example 1. Sample 1040x filled out Lieutenant Colonel Mason has a degree in financial management and is in charge of base finances at her post of duty. Sample 1040x filled out She took an advanced finance course. Sample 1040x filled out She already meets the minimum qualifications for her job. Sample 1040x filled out By taking the course, she is improving skills in her current position. Sample 1040x filled out The course does not qualify her for a new trade or business. Sample 1040x filled out She can deduct educational expenses that are more than the educational allowance she received. Sample 1040x filled out Example 2. Sample 1040x filled out Major Williams worked in the military base legal office as a legal intern. Sample 1040x filled out He was placed in excess leave status by his employer to attend law school. Sample 1040x filled out He paid all his educational expenses and was not reimbursed. Sample 1040x filled out After obtaining his law degree, he passed the state bar exam and worked as a judge advocate. Sample 1040x filled out His educational expenses are not deductible because the law degree qualified him for a new trade or business, even though the education maintained and improved his skills in his work. Sample 1040x filled out Travel to obtain education. Sample 1040x filled out   If your work-related education qualifies, you can deduct the costs of travel, including meals (subject to the 50% limit), and lodging, if the main purpose of the trip is to obtain the education. Sample 1040x filled out   You cannot deduct the cost of travel that is itself a form of education, even if it is directly related to your duties in your work or business. Sample 1040x filled out Transportation for education. Sample 1040x filled out   If your work-related education qualifies for a deduction, you can deduct the costs of transportation to obtain that education. Sample 1040x filled out However, you cannot deduct the cost of services provided in kind, such as base-provided transportation to or from class. Sample 1040x filled out Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Sample 1040x filled out   If you need more information on educational expenses, see Publication 970. Sample 1040x filled out Repayments If you had to repay to your employer an amount that you included in your income in an earlier year, you may be able to deduct the repaid amount from your income for the year in which you repaid it. Sample 1040x filled out Repayment of $3,000 or less. Sample 1040x filled out   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. Sample 1040x filled out If you reported it as wages, deduct it as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Sample 1040x filled out Repayment over $3,000. Sample 1040x filled out   If the amount you repaid was more than $3,000, see Repayments in Publication 525. Sample 1040x filled out Credits After you have figured your taxable income and tax liability, you can determine if you are entitled to any tax credits. Sample 1040x filled out This publication discusses the first-time homebuyer credit, child tax credit, earned income credit, and credit for excess social security tax withheld. Sample 1040x filled out For information on other credits, see your tax form instructions. Sample 1040x filled out First-Time Homebuyer Credit The first-time homebuyer credit is not available for homes purchased after 2011. Sample 1040x filled out In 2011, this credit had already expired for most taxpayers, however, certain members of the uniformed services and Foreign Service and certain employees of the intelligence community could claim the credit for homes purchased in 2011. Sample 1040x filled out If you bought the home (and claimed the credit) after 2008, you generally must repay the credit if you dispose of the home or the home stops being your main home within the 36-month period beginning on the purchase date. Sample 1040x filled out If the home continues to be your main home for at least 36 months beginning on the purchase date, you do not have to repay any of the credit. Sample 1040x filled out If you bought your home in 2008, you generally must repay the credit over a 15-year period in 15 equal installments. Sample 1040x filled out For more information, see Form 5405, Repayment of the First-Time Homebuyer Credit, and its instructions. Sample 1040x filled out Child Tax Credit The child tax credit is a credit that may reduce your tax by as much as $1,000 for each of your qualifying children. Sample 1040x filled out The additional child tax credit is a credit you may be able to take if you are not able to claim the full amount of the child tax credit. Sample 1040x filled out The child tax credit is not the same as the credit for child and dependent care expenses. Sample 1040x filled out See Publication 503 for information on the credit for child and dependent care expenses. Sample 1040x filled out Qualifying Child A qualifying child for purposes of the child tax credit is a child who: 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), Was under age 17 at the end of 2013, Did not provide over half of his or her own support for 2013, Lived with you for more than half of 2013 (see Exceptions to time lived with you, later), Is claimed as a dependent on your return, Does not file a joint return for the year (or files it only as a claim for refund), and Was a U. Sample 1040x filled out S. Sample 1040x filled out citizen, a U. Sample 1040x filled out S. Sample 1040x filled out national, or a U. Sample 1040x filled out S. Sample 1040x filled out resident alien. Sample 1040x filled out If the child was adopted, see Adopted child . Sample 1040x filled out For each qualifying child you must check the box on Form 1040 or Form 1040A, line 6c, column (4). Sample 1040x filled out Exceptions to time lived with you. Sample 1040x filled out   A child is considered to have lived with you for all of 2013 if the child was born or died in 2013 and your home was this child's home for the entire time he or she was alive. Sample 1040x filled out Temporary absences by you or the child for special circumstances, such as school, vacation, business, medical care, military service, or detention in a juvenile facility, count as time the child lived with you. Sample 1040x filled out   There are also exceptions for kidnapped children and children of divorced or separated parents. Sample 1040x filled out For details, see Publication 501. Sample 1040x filled out Qualifying child of more than one person. Sample 1040x filled out   A special rule applies if your qualifying child is the qualifying child of more than one person. Sample 1040x filled out For details, see Publication 501. Sample 1040x filled out Adopted child. Sample 1040x filled out   An adopted child is always treated as your own child. Sample 1040x filled out An adopted child includes a child lawfully placed with you for legal adoption. Sample 1040x filled out   If you are a U. Sample 1040x filled out S. Sample 1040x filled out citizen or U. Sample 1040x filled out S. Sample 1040x filled out national and your adopted child lived with you as a member of your household all year, that child meets condition (7) above to be a qualifying child for the child tax credit. Sample 1040x filled out Amount of Credit The maximum amount you can claim for the credit is $1,000 for each qualifying child. Sample 1040x filled out Limits on the credit. Sample 1040x filled out   You must reduce your child tax credit if either (1) or (2), below, applies. Sample 1040x filled out The amount on Form 1040, line 46, or Form 1040A, line 28, is less than the credit. Sample 1040x filled out If the amount is zero, you cannot take this credit because there is no tax to reduce. Sample 1040x filled out However, you may be able to take the additional child tax credit. Sample 1040x filled out See Additional Child Tax Credit , later. Sample 1040x filled out Your modified adjusted gross income (AGI) is more than the amount shown below for your filing status. Sample 1040x filled out Married filing jointly — $110,000. Sample 1040x filled out Single, head of household,  or qualifying widow(er) — $75,000. Sample 1040x filled out Married filing separately — $55,000. Sample 1040x filled out Modified AGI. Sample 1040x filled out   For purposes of the child tax credit, your modified AGI is the amount on Form 1040, line 38, or Form 1040A, line 22, plus the following amounts that may apply to you. Sample 1040x filled out Any amount excluded from income because of the exclusion of income from Puerto Rico. Sample 1040x filled out Any amount on line 45 or line 50 of Form 2555, Foreign Earned Income. Sample 1040x filled out Any amount on line 18 of Form 2555-EZ, Foreign Earned Income Exclusion. Sample 1040x filled out Any amount on line 15 of Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa. Sample 1040x filled out   If you do not have any of the above, your modified AGI is the same as your AGI. Sample 1040x filled out Claiming the Credit To claim the child tax credit, you must file Form 1040 or Form 1040A. Sample 1040x filled out For more information on the child tax credit, see the instructions for Form 1040 or Form 1040A. Sample 1040x filled out Also attach Schedule 8812, Child Tax Credit, if required. Sample 1040x filled out Additional Child Tax Credit This credit is for certain individuals who get less than the full amount of the child tax credit. Sample 1040x filled out The additional child tax credit may give you a refund even if you do not owe any tax. Sample 1040x filled out For more information, see the instructions for Form 1040 or Form 1040A, and Schedule 8812. Sample 1040x filled out Earned Income Credit The earned income credit (EIC) is a cr