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Tax Return 2013

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Tax Return 2013

Tax return 2013 Publication 523 - Main Content Table of Contents Main HomeVacant land. Tax return 2013 Factors used to determine main home. Tax return 2013 Figuring Gain or LossSelling Price Amount Realized Adjusted Basis Amount of Gain or Loss Dispositions Other Than Sales Determining BasisCost As Basis Basis Other Than Cost Adjusted Basis Excluding the GainMaximum Exclusion Ownership and Use Tests Reduced Maximum Exclusion Nonqualified Use Business Use or Rental of HomeUnrecaptured section 1250 gain. Tax return 2013 Property Used Partly for Business or Rental Reporting the SaleSeller-financed mortgage. Tax return 2013 Individual taxpayer identification number (ITIN). Tax return 2013 More information. Tax return 2013 Comprehensive Examples Special SituationsException for sales to related persons. Tax return 2013 Deducting Taxes in the Year of SaleForm 1099-S. Tax return 2013 More information. Tax return 2013 Recapturing (Paying Back) a Federal Mortgage Subsidy Recapture of First-Time Homebuyer CreditExample. Tax return 2013 Worksheets How To Get Tax HelpLow Income Taxpayer Clinics Main Home This section explains the term “main home. Tax return 2013 ” Usually, the home you live in most of the time is your main home and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. Tax return 2013 To exclude gain under the rules in this publication, you in most cases must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. Tax return 2013 Land. Tax return 2013   If you sell the land on which your main home is located, but not the house itself, you cannot exclude any gain you have from the sale of the land. Tax return 2013 Example. Tax return 2013 You buy a piece of land and move your main home to it. Tax return 2013 Then, you sell the land on which your main home was located. Tax return 2013 This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land. Tax return 2013 Vacant land. Tax return 2013   The sale of vacant land is not a sale of your main home unless: The vacant land is adjacent to land containing your home, You owned and used the vacant land as part of your main home, The separate sale of your home satisfies the requirements for exclusion and occurs within 2 years before or 2 years after the date of the sale of the vacant land, and The other requirements for excluding gain from the sale of a main home have been satisfied with respect to the vacant land. Tax return 2013 If these requirements are met, the sale of the home and the sale of the vacant land are treated as one sale and only one maximum exclusion can be applied to any gain. Tax return 2013 See Excluding the Gain , later. Tax return 2013 The destruction of your home is treated as a sale of your home. Tax return 2013 As a result, you may be able to meet these requirements if you sell vacant land used as a part of your main home within 2 years from the date of the destruction of your main home. Tax return 2013 For information, see Publication 547. Tax return 2013 More than one home. Tax return 2013   If you have more than one home, you can exclude gain only from the sale of your main home. Tax return 2013 You must include in income the gain from the sale of any other home. Tax return 2013 If you have two homes and live in each of them, your main home is ordinarily the one you live in most of the time during the year. Tax return 2013 Example 1. Tax return 2013 You own two homes, one in New York and one in Florida. Tax return 2013 From 2009 through 2013, you live in the New York home for 7 months and in the Florida residence for 5 months of each year. Tax return 2013 In the absence of facts and circumstances indicating otherwise, the New York home is your main home. Tax return 2013 You would be eligible to exclude the gain from the sale of the New York home but not of the Florida home in 2013. Tax return 2013 Example 2. Tax return 2013 You own a house, but you live in another house that you rent. Tax return 2013 The rented house is your main home. Tax return 2013 Example 3. Tax return 2013 You own two homes, one in Virginia and one in New Hampshire. Tax return 2013 In 2009 and 2010, you lived in the Virginia home. Tax return 2013 In 2011 and 2012, you lived in the New Hampshire home. Tax return 2013 In 2013, you lived again in the Virginia home. Tax return 2013 Your main home in 2009, 2010, and 2013 is the Virginia home. Tax return 2013 Your main home in 2011 and 2012 is the New Hampshire home. Tax return 2013 You would be eligible to exclude gain from the sale of either home (but not both) in 2013. Tax return 2013 Factors used to determine main home. Tax return 2013   In addition to the amount of time you live in each home, other factors are relevant in determining which home is your main home. Tax return 2013 Those factors include the following. Tax return 2013 Your place of employment. Tax return 2013 The location of your family members' main home. Tax return 2013 Your mailing address for bills and correspondence. Tax return 2013 The address listed on your: Federal and state tax returns, Driver's license, Car registration, and Voter registration card. Tax return 2013 The location of the banks you use. Tax return 2013 The location of recreational clubs and religious organizations of which you are a member. Tax return 2013 Property used partly as your main home. Tax return 2013   If you use only part of the property as your main home, the rules discussed in this publication apply only to the gain or loss on the sale of that part of the property. Tax return 2013 For details, see Business Use or Rental of Home , later. Tax return 2013 Figuring Gain or Loss To figure the gain or loss on the sale of your main home, you must know the selling price, the amount realized, and the adjusted basis. Tax return 2013 Subtract the adjusted basis from the amount realized to get your gain or loss. Tax return 2013     Selling price     − Selling expenses       Amount realized     − Adjusted basis       Gain or loss   Gain. Tax return 2013   Gain is the excess of the amount realized over the adjusted basis of the property. Tax return 2013 Loss. Tax return 2013   Loss is the excess of the adjusted basis over the amount realized for the property. Tax return 2013 Selling Price The selling price is the total amount you receive for your home. Tax return 2013 It includes money and the fair market value of any other property or any other services you receive and all notes, mortgages or other debts assumed by the buyer as part of the sale. Tax return 2013 Personal property. Tax return 2013   The selling price of your home does not include amounts you received for personal property sold with your home. Tax return 2013 Personal property is property that is not a permanent part of the home. Tax return 2013 Examples are furniture, draperies, rugs, a washer and dryer, and lawn equipment. Tax return 2013 Separately stated amounts you received for these items should not be shown on Form 1099-S (discussed later). Tax return 2013 Any gains from sales of personal property must be included in your income, but not as part of the sale of your home. Tax return 2013 Payment by employer. Tax return 2013   You may have to sell your home because of a job transfer. Tax return 2013 If your employer pays you for a loss on the sale or for your selling expenses, do not include the payment as part of the selling price. Tax return 2013 Your employer will include it as wages in box 1 of your Form W-2 and you will include it in your income on Form 1040, line 7, or on Form 1040NR, line 8. Tax return 2013 Option to buy. Tax return 2013   If you grant an option to buy your home and the option is exercised, add the amount you receive for the option to the selling price of your home. Tax return 2013 If the option is not exercised, you must report the amount as ordinary income in the year the option expires. Tax return 2013 Report this amount on Form 1040, line 21, or on Form 1040NR, line 21. Tax return 2013 Form 1099-S. Tax return 2013   If you received Form 1099-S, box 2 (gross proceeds) should show the total amount you received for your home. Tax return 2013   However, box 2 will not include the fair market value of any services or property other than cash or notes you received or will receive. Tax return 2013 Instead, box 4 will be checked to indicate your receipt or expected receipt of these items. Tax return 2013 Amount Realized The amount realized is the selling price minus selling expenses. Tax return 2013 Selling expenses. Tax return 2013   Selling expenses include: Commissions, Advertising fees, Legal fees, and Loan charges paid by the seller, such as loan placement fees or “points. Tax return 2013 ” Adjusted Basis While you owned your home, you may have made adjustments (increases or decreases) to the basis. Tax return 2013 This adjusted basis must be determined before you can figure gain or loss on the sale of your home. Tax return 2013 For information on how to figure your home's adjusted basis, see Determining Basis , later. Tax return 2013 Amount of Gain or Loss To figure the amount of gain or loss, compare the amount realized to the adjusted basis. Tax return 2013 Gain on sale. Tax return 2013   If the amount realized is more than the adjusted basis, the difference is a gain and, except for any part you can exclude, generally is taxable. Tax return 2013 Loss on sale. Tax return 2013   If the amount realized is less than the adjusted basis, the difference is a loss. Tax return 2013 Generally, a loss on the sale of your main home cannot be deducted. Tax return 2013 Jointly owned home. Tax return 2013   If you and your spouse sell your jointly owned home and file a joint return, you figure your gain or loss as one taxpayer. Tax return 2013 Separate returns. Tax return 2013   If you file separate returns, each of you must figure your own gain or loss according to your ownership interest in the home. Tax return 2013 Your ownership interest is generally determined by state law. Tax return 2013 Joint owners not married. Tax return 2013   If you and a joint owner other than your spouse sell your jointly owned home, each of you must figure your own gain or loss according to your ownership interest in the home. Tax return 2013 Each of you applies the rules discussed in this publication on an individual basis. Tax return 2013 Dispositions Other Than Sales Some special rules apply to other dispositions of your main home. Tax return 2013 Foreclosure or repossession. Tax return 2013   If your home was foreclosed on or repossessed, you have a disposition. Tax return 2013 See Publication 4681 to determine if you have ordinary income, gain, or loss. Tax return 2013 More information. Tax return 2013   If part of a home is used for business or rental purposes, see Foreclosures and Repossessions in chapter 1 of Publication 544 for more information. Tax return 2013 Publication 544 has examples of how to figure gain or loss on a foreclosure or repossession. Tax return 2013 Abandonment. Tax return 2013   If you abandon your home, see Publication 4681 to determine if you have ordinary income, gain, or loss. Tax return 2013 Trading (exchanging) homes. Tax return 2013   If you trade your home for another home, treat the trade as a sale and a purchase. Tax return 2013 Example. Tax return 2013 You owned and lived in a home with an adjusted basis of $41,000. Tax return 2013 A real estate dealer accepted your old home as a trade-in and allowed you $50,000 toward a new home priced at $80,000. Tax return 2013 This is treated as a sale of your old home for $50,000 with a gain of $9,000 ($50,000 − $41,000). Tax return 2013 If the dealer had allowed you $27,000 and assumed your unpaid mortgage of $23,000 on your old home, your sales price would still be $50,000 (the $27,000 trade-in allowed plus the $23,000 mortgage assumed). Tax return 2013 Transfer to spouse. Tax return 2013   If you transfer your home to your spouse or you transfer it to your former spouse incident to your divorce, you in most cases have no gain or loss (unless the Exception, discussed next, applies). Tax return 2013 This is true even if you receive cash or other consideration for the home. Tax return 2013 As a result, the rules explained in this publication do not apply. Tax return 2013   If you owned your home jointly with your spouse and transfer your interest in the home to your spouse, or to your former spouse incident to your divorce, the same rule applies. Tax return 2013 You have no gain or loss. Tax return 2013 Exception. Tax return 2013   These transfer rules do not apply if your spouse or former spouse is a nonresident alien. Tax return 2013 In that case, you generally will have a gain or loss. Tax return 2013 More information. Tax return 2013    See Property Settlements in Publication 504, Divorced or Separated Individuals, for more information. Tax return 2013 Involuntary conversion. Tax return 2013   You have a disposition when your home is destroyed or condemned and you receive other property or money in payment, such as insurance or a condemnation award. Tax return 2013 This is treated as a sale and you may be able to exclude all or part of any gain from the destruction or condemnation of your home, as explained later under Special Situations (see Home destroyed or condemned ). Tax return 2013 Determining Basis You need to know your basis in your home to figure any gain or loss when you sell it. Tax return 2013 Your basis in your home is determined by how you got the home. Tax return 2013 Generally, your basis is its cost if you bought it or built it. Tax return 2013 If you got it in some other way (inheritance, gift, etc. Tax return 2013 ), your basis is generally either its fair market value when you received it or the adjusted basis of the previous owner. Tax return 2013 While you owned your home, you may have made adjustments (increases or decreases) to your home's basis. Tax return 2013 The result of these adjustments is your home's adjusted basis, which is used to figure gain or loss on the sale of your home. Tax return 2013 To figure your adjusted basis, you can use Worksheet 1, near the end of this publication. Tax return 2013 Filled-in examples of that worksheet are included in the Comprehensive Examples , later. Tax return 2013 Cost As Basis The cost of property is the amount you paid for it in cash, debt obligations, other property, or services. Tax return 2013 Purchase. Tax return 2013   If you bought your home, your basis is its cost to you. Tax return 2013 This includes the purchase price and certain settlement or closing costs. Tax return 2013 In most cases, your purchase price includes your down payment and any debt, such as a first or second mortgage or notes you gave the seller in payment for the home. Tax return 2013 If you build, or contract to build, a new home, your purchase price can include costs of construction, as discussed later. Tax return 2013 Seller-paid points. Tax return 2013   If the person who sold you your home paid points on your loan, you may have to reduce your home's basis by the amount of the points, as shown in the following chart. Tax return 2013    IF you bought your home. Tax return 2013 . Tax return 2013 . Tax return 2013 THEN reduce your home's basis by the seller-paid points. Tax return 2013 . Tax return 2013 . Tax return 2013 after 1990 but before April 4, 1994 only if you deducted them as home mortgage interest in the year paid. Tax return 2013 after April 3, 1994 even if you did not deduct them. Tax return 2013 Settlement fees or closing costs. Tax return 2013   When you bought your home, you may have paid settlement fees or closing costs in addition to the contract price of the property. Tax return 2013 You can include in your basis some of the settlement fees and closing costs you paid for buying the home, but not the fees and costs for getting a mortgage loan. Tax return 2013 A fee paid for buying the home is any fee you would have had to pay even if you paid cash for the home (that is, without the need for financing). Tax return 2013   Settlement fees do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Tax return 2013   Some of the settlement fees or closing costs that you can include in your basis are: Abstract fees (abstract of title fees), Charges for installing utility services, Legal fees (including fees for the title search and preparing the sales contract and deed), Recording fees, Survey fees, Transfer or stamp taxes, Owner's title insurance, and Any amounts the seller owes that you agree to pay, such as: Certain real estate taxes (discussed later), Back interest, Recording or mortgage fees, Charges for improvements or repairs, and Sales commissions. Tax return 2013   Some settlement fees and closing costs you cannot include in your basis are: Fire insurance premiums, Rent for occupancy of the house before closing, Charges for utilities or other services related to occupancy of the house before closing, Any fee or cost that you deducted as a moving expense (allowed for certain fees and costs before 1994), Charges connected with getting a mortgage loan, such as: Mortgage insurance premiums (including funding fees connected with loans guaranteed by the Department of Veterans Affairs), Loan assumption fees, Cost of a credit report, Fee for an appraisal required by a lender, and Fees for refinancing a mortgage. Tax return 2013 Real estate taxes. Tax return 2013   Real estate taxes for the year you bought your home may affect your basis, as shown in the following chart. Tax return 2013    IF. Tax return 2013 . Tax return 2013 . Tax return 2013 AND. Tax return 2013 . Tax return 2013 . Tax return 2013 THEN the taxes. Tax return 2013 . Tax return 2013 . Tax return 2013 you pay taxes that the seller owed on the home up to the date of sale the seller does not reimburse you are added to the basis of your home. Tax return 2013 the seller reimburses you do not affect the basis of your home. Tax return 2013 the seller pays taxes for you (taxes owed beginning on the date of sale) you do not reimburse the seller are subtracted from the basis of your home. Tax return 2013 you reimburse the seller do not affect the basis of your home. Tax return 2013 Construction. Tax return 2013   If you contracted to have your house built on land you own, your basis is: The cost of the land, plus The amount it cost you to complete the house, including: The cost of labor and materials, Any amounts paid to a contractor, Any architect's fees, Building permit charges, Utility meter and connection charges, and Legal fees directly connected with building the house. Tax return 2013   Your cost includes your down payment and any debt such as a first or second mortgage or notes you gave the seller or builder. Tax return 2013 It also includes certain settlement or closing costs. Tax return 2013 You may have to reduce your basis by points the seller paid for you. Tax return 2013 For more information, see Seller-paid points and Settlement fees or closing costs , earlier. Tax return 2013 Built by you. Tax return 2013   If you built all or part of your house yourself, its basis is the total amount it cost you to complete it. Tax return 2013 Do not include in the cost of the house: The value of your own labor, or The value of any other labor you did not pay for. Tax return 2013 Temporary housing. Tax return 2013   If a builder gave you temporary housing while your home was being finished, you must reduce your basis by the part of the contract price that was for the temporary housing. Tax return 2013 To figure the amount of the reduction, multiply the contract price by a fraction. Tax return 2013 The numerator is the value of the temporary housing, and the denominator is the sum of the value of the temporary housing plus the value of the new home. Tax return 2013 Cooperative apartment. Tax return 2013   If you are a tenant-stockholder in a cooperative housing corporation, your basis in the cooperative apartment used as your home is usually the cost of your stock in the corporation. Tax return 2013 This may include your share of a mortgage on the apartment building. Tax return 2013 Condominium. Tax return 2013   To determine your basis in a condominium apartment used as your home, use the same rules as for any other home. Tax return 2013 Basis Other Than Cost You must use a basis other than cost, such as adjusted basis or fair market value, if you received your home as a gift, inheritance, a trade, or from your spouse. Tax return 2013 These situations are discussed in the following pages. Tax return 2013 Also, the instructions for Worksheet 1 (near the end of the publication) address each of these issues. Tax return 2013 Other special rules may apply in certain situations. Tax return 2013 If you converted the property, or some part of it, to business or rental use, see Property Changed to Business or Rental Use, in Publication 551. Tax return 2013 Home received as gift. Tax return 2013   Use the following chart to find the basis of a home you received as a gift. Tax return 2013 IF the donor's adjusted basis at the time of the gift was. Tax return 2013 . Tax return 2013 . Tax return 2013 THEN your basis is. Tax return 2013 . Tax return 2013 . Tax return 2013 more than the fair market value of the home at that time the same as the donor's adjusted basis at the time of the gift. Tax return 2013   Exception: If using the donor's adjusted basis results in a loss when you sell the home, you must use the fair market value of the home at the time of the gift as your basis. Tax return 2013 If using the fair market value results in a gain, you have neither gain nor loss. Tax return 2013 equal to or less than the fair market value at that time, and you received the gift before 1977 the smaller of the: • donor's adjusted basis, plus  any federal gift tax paid on  the gift, or • the home's fair market value  at the time of the gift. Tax return 2013 equal to or less than the fair market value at that time, and you received the gift after 1976 the same as the donor's adjusted basis, plus the part of any federal gift tax paid that is due to the net increase in value of the home (explained next). Tax return 2013 Fair market value. Tax return 2013   The fair market value of property at the time of the gift is the value of the property as appraised for purposes of the federal gift tax. Tax return 2013 If the gift was not subject to the federal gift tax, the fair market value is the value as appraised for the purposes of a state gift tax. Tax return 2013 Part of federal gift tax due to net increase in value. Tax return 2013   Figure the part of the federal gift tax paid that is due to the net increase in value of the home by multiplying the total federal gift tax paid by a fraction. Tax return 2013 The numerator of the fraction is the net increase in the value of the home, and the denominator is the value of the home for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Tax return 2013 The net increase in the value of the home is its fair market value minus the donor's adjusted basis immediately before the gift. Tax return 2013 Home acquired from a decedent who died before or after 2010. Tax return 2013   If you inherited your home from a decedent who died before or after 2010, your basis is the fair market value of the property on the date of the decedent's death (or the later alternate valuation date chosen by the personal representative of the estate). Tax return 2013 If an estate tax return was filed or required to be filed, the value of the property listed on the estate tax return is your basis. Tax return 2013 If a federal estate tax return did not have to be filed, your basis in the home is the same as its appraised value at the date of death, for purposes of state inheritance or transmission taxes. Tax return 2013 Surviving spouse. Tax return 2013   If you are a surviving spouse and you owned your home jointly, your basis in the home will change. Tax return 2013 The new basis for the interest your spouse owned will be its fair market value on the date of death (or alternate valuation date). Tax return 2013 The basis in your interest will remain the same. Tax return 2013 Your new basis in the home is the total of these two amounts. Tax return 2013   If you and your spouse owned the home either as tenants by the entirety or as joint tenants with right of survivorship, you will each be considered to have owned one-half of the home. Tax return 2013 Example. Tax return 2013 Your jointly owned home (owned as joint tenants with right of survivorship) had an adjusted basis of $50,000 on the date of your spouse's death, and the fair market value on that date was $100,000. Tax return 2013 Your new basis in the home is $75,000 ($25,000 for one-half of the adjusted basis plus $50,000 for one-half of the fair market value). Tax return 2013 Community property. Tax return 2013   In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), each spouse is usually considered to own half of the community property. Tax return 2013 When either spouse dies, the total fair market value of the community property becomes the basis of the entire property, including the part belonging to the surviving spouse. Tax return 2013 For this to apply, at least half the value of the community property interest must be includible in the decedent's gross estate, whether or not the estate must file a return. Tax return 2013   For more information about community property, see Publication 555, Community Property. Tax return 2013    If you are selling a home in which you acquired an interest from a decedent who died in 2010, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, to determine your basis. Tax return 2013 Home received as trade. Tax return 2013   If you acquired your home as a trade for other property, in most cases, the basis of your home is the fair market value (at the time of the trade) of the property you gave up. Tax return 2013 If you traded one home for another, you have made a sale and purchase. Tax return 2013 In that case, you may have a gain. Tax return 2013 See Trading (exchanging) homes under Dispositions Other Than Sales, earlier, for an example of figuring the gain. Tax return 2013 Home received from spouse. Tax return 2013   If you received your home from your spouse or from your former spouse incident to your divorce, your basis in the home depends on the date of the transfer. Tax return 2013 Transfers after July 18, 1984. Tax return 2013   If you received the home after July 18, 1984, there was no gain or loss on the transfer. Tax return 2013 In most cases, your basis in this home is the same as your spouse's (or former spouse's) adjusted basis just before you received it. Tax return 2013 This rule applies even if you received the home in exchange for cash, the release of marital rights, the assumption of liabilities, or other considerations. Tax return 2013   If you owned a home jointly with your spouse and your spouse transferred his or her interest in the home to you, in most cases, your basis in the half interest received from your spouse is the same as your spouse's adjusted basis just before the transfer. Tax return 2013 This also applies if your former spouse transferred his or her interest in the home to you incident to your divorce. Tax return 2013 Your basis in the half interest you already owned does not change. Tax return 2013 Your new basis in the home is the total of these two amounts. Tax return 2013 Transfers before July 19, 1984. Tax return 2013   If you received your home before July 19, 1984, in exchange for your release of marital rights, in most cases, your basis in the home is generally its fair market value at the time you received it. Tax return 2013 More information. Tax return 2013   For more information on property received from a spouse or former spouse, see Property Settlements in Publication 504. Tax return 2013 Involuntary conversion. Tax return 2013   If your home is destroyed or condemned, you may receive insurance proceeds or a condemnation award. Tax return 2013 If you acquired a replacement home with these proceeds, the basis is its cost decreased by any gain not recognized on the conversion under the rules explained in: Publication 547, in the case of a home that was destroyed, or Chapter 1 of Publication 544, in the case of a home that was condemned. Tax return 2013 Example. Tax return 2013 A fire destroyed your home that you owned and used for only 6 months. Tax return 2013 The home had an adjusted basis of $80,000 and the insurance company paid you $130,000 for the loss. Tax return 2013 Your gain is $50,000 ($130,000 − $80,000). Tax return 2013 You bought a replacement home for $100,000. Tax return 2013 The part of your gain that is taxable is $30,000 ($130,000 − $100,000), the unspent part of the payment from the insurance company. Tax return 2013 The rest of the gain ($20,000) is not taxable, so that amount reduces your basis in the new home. Tax return 2013 The basis of the new home is figured as follows. Tax return 2013 Cost of replacement home $100,000 Minus: Gain not recognized 20,000 Basis of the replacement home $80,000 More information. Tax return 2013   For more information about basis, see Publication 551. Tax return 2013 Adjusted Basis Adjusted basis is your cost or other basis increased or decreased by certain amounts. Tax return 2013 To figure your adjusted basis, you can use Worksheet 1, found toward the end of this publication. Tax return 2013 Filled-in examples of that worksheet are included in Comprehensive Examples , later. Tax return 2013 Recordkeeping. Tax return 2013 You should keep records to prove your home's adjusted basis. Tax return 2013 Ordinarily, you must keep records for 3 years after the due date for filing your return for the tax year in which you sold your home. Tax return 2013 But if you sold a home before May 7, 1997, and postponed tax on any gain, the basis of that home affects the basis of the new home you bought. Tax return 2013 Keep records proving the basis of both homes as long as they are needed for tax purposes. Tax return 2013 The records you should keep include: Proof of the home's purchase price and purchase expenses; Receipts and other records for all improvements, additions, and other items that affect the home's adjusted basis; Any worksheets or other computations you used to figure the adjusted basis of the home you sold, the gain or loss on the sale, the exclusion, and the taxable gain; Any Form 982 you filed to exclude any discharge of qualified principal residence indebtedness; Any Form 2119, Sale of Your Home, you filed to postpone gain from the sale of a previous home before May 7, 1997; and Any worksheets you used to prepare Form 2119, such as the Adjusted Basis of Home Sold Worksheet or the Capital Improvements Worksheet from the Form 2119 instructions, or other source of computations. Tax return 2013 Increases to Basis These include the following. Tax return 2013 Additions and other improvements that have a useful life of more than 1 year. Tax return 2013 Special assessments for local improvements. Tax return 2013 Amounts you spent after a casualty to restore damaged property. Tax return 2013 Improvements. Tax return 2013   These add to the value of your home, prolong its useful life, or adapt it to new uses. Tax return 2013 You add the cost of additions and other improvements to the basis of your property. Tax return 2013   The following chart lists some other examples of improvements. Tax return 2013 Examples of Improvements That Increase Basis Additions Bedroom Bathroom Deck Garage Porch Patio Heating & Air Conditioning Heating system Central air conditioning Furnace Duct work Central humidifier Filtration system Lawn & Grounds Landscaping Driveway Walkway Fence  Retaining wall Sprinkler system Swimming pool  Miscellaneous Storm windows, doors New roof Central vacuum Wiring upgrades Satellite dish Security system  Plumbing Septic system Water heater Soft water system Filtration system  Interior Improvements Built-in appliances  Kitchen modernization  Flooring Wall-to-wall carpeting  Insulation Attic Walls Floors Pipes and duct work Improvements no longer part of home. Tax return 2013   Your home's adjusted basis does not include the cost of any improvements that are replaced and are no longer part of the home. Tax return 2013 Example. Tax return 2013 You put wall-to-wall carpeting in your home 15 years ago. Tax return 2013 Later, you replaced that carpeting with new wall-to-wall carpeting. Tax return 2013 The cost of the old carpeting you replaced is no longer part of your home's adjusted basis. Tax return 2013 Repairs. Tax return 2013   These maintain your home in good condition but do not add to its value or prolong its life. Tax return 2013 You do not add their cost to the basis of your property. Tax return 2013 Examples. Tax return 2013 Repainting your house inside or outside, fixing your gutters or floors, repairing leaks or plastering, and replacing broken window panes are examples of repairs. Tax return 2013 Exception. Tax return 2013   The entire job is considered an improvement if items that would otherwise be considered repairs are done as part of an extensive remodeling or restoration of your home. Tax return 2013 For example, if you have a casualty and your home is damaged, increase your basis by the amount you spend on repairs that restore the property to its pre-casualty condition. Tax return 2013 Decreases to Basis These include the following. Tax return 2013 Discharge of qualified principal residence indebtedness that was excluded from income (but not below zero). Tax return 2013 For details, see Publication 4681. Tax return 2013 Some or all of the cancellation of debt income that was excluded due to your bankruptcy or insolvency. Tax return 2013 For details, see Publication 4681. Tax return 2013 Gain you postponed from the sale of a previous home before May 7, 1997. Tax return 2013 Deductible casualty losses. Tax return 2013 Insurance payments you received or expect to receive for casualty losses. Tax return 2013 Payments you received for granting an easement or right-of-way. Tax return 2013 Depreciation allowed or allowable if you used your home for business or rental purposes. Tax return 2013 Energy-related credits allowed for expenditures made on the residence. Tax return 2013 (Reduce the increase in basis otherwise allowable for expenditures on the residence by the amount of credit allowed for those expenditures. Tax return 2013 ) Adoption credit you claimed for improvements added to the basis of your home. Tax return 2013 Nontaxable payments from an adoption assistance program of your employer you used for improvements you added to the basis of your home. Tax return 2013 Energy conservation subsidy excluded from your gross income because you received it (directly or indirectly) from a public utility after 1992 to buy or install any energy conservation measure. Tax return 2013 An energy conservation measure is an installation or modification primarily designed either to reduce consumption of electricity or natural gas or to improve the management of energy demand for a home. Tax return 2013 District of Columbia first-time homebuyer credit allowed on the purchase of a principal residence in the District of Columbia. Tax return 2013 General sales taxes claimed as an itemized deduction on Schedule A (Form 1040) that were imposed on the purchase of personal property, such as a houseboat used as your home or a mobile home. Tax return 2013 Discharges of qualified principal residence indebtedness. Tax return 2013   You may be able to exclude from gross income a discharge of qualified principal residence indebtedness. Tax return 2013 This exclusion applies to discharges made after 2006 and before 2014. Tax return 2013 If you choose to exclude this income, you must reduce (but not below zero) the basis of your principal residence by the amount excluded from gross income. Tax return 2013   File Form 982 with your tax return. Tax return 2013 See the form's instructions for detailed information. Tax return 2013    A decrease in basis due to a discharge of qualified principal residence indebtedness that is excluded from income occurs only if you retain ownership of the principal residence after a discharge. Tax return 2013 In most cases, this would occur in a refinancing or a restructuring of the mortgage. Tax return 2013 Excluding the Gain You may qualify to exclude from your income all or part of any gain from the sale of your main home. Tax return 2013 This means that, if you qualify, you will not have to pay tax on the gain up to the limit described under Maximum Exclusion , next. Tax return 2013 To qualify, you must meet the ownership and use tests described later. Tax return 2013 You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale. Tax return 2013 This choice can be made (or revoked) at any time before the expiration of a 3-year period beginning on the due date of your return (not including extensions) for the year of the sale. Tax return 2013 You can use Worksheet 2 (near the end of this publication) to figure the amount of your exclusion and your taxable gain, if any. Tax return 2013 If you have any taxable gain from the sale of your home, you may have to increase your withholding or make estimated tax payments. Tax return 2013 See Publication 505, Tax Withholding and Estimated Tax. Tax return 2013 Maximum Exclusion You can exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true. Tax return 2013 You meet the ownership test. Tax return 2013 You meet the use test. Tax return 2013 During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. Tax return 2013 For details on gain allocated to periods of nonqualified use, see Nonqualified Use , later. Tax return 2013 If you and another person owned the home jointly but file separate returns, each of you can exclude up to $250,000 of gain from the sale of your interest in the home if each of you meets the three conditions just listed. Tax return 2013 You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons . Tax return 2013 Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. Tax return 2013 This means that 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). Tax return 2013 Exception. Tax return 2013   If you owned and lived in the property as your main home for less than 2 years, you can still claim an exclusion in some cases. Tax return 2013 However, the maximum amount you may be able to exclude will be reduced. Tax return 2013 See Reduced Maximum Exclusion , later. Tax return 2013 Example 1—home owned and occupied for at least 2 years. Tax return 2013 Mya bought and moved into her main home in September 2011. Tax return 2013 She sold the home at a gain in October 2013. Tax return 2013 During the 5-year period ending on the date of sale in October 2013, she owned and lived in the home for more than 2 years. Tax return 2013 She meets the ownership and use tests. Tax return 2013 Example 2—ownership test met but use test not met. Tax return 2013 Ayden bought a home, lived in it for 6 months, moved out, and never occupied the home again. Tax return 2013 He later sold the home for a gain in June 2013. Tax return 2013 He owned the home during the entire 5-year period ending on the date of sale. Tax return 2013 He meets the ownership test but not the use test. Tax return 2013 He cannot exclude any part of his gain on the sale unless he qualified for a reduced maximum exclusion (explained later). Tax return 2013 Period of Ownership and Use The required 2 years of ownership and use during the 5-year period ending on the date of the sale do not have to be continuous nor do they both have to occur at the same time. Tax return 2013 You meet the tests if you can show that you owned and lived in the property as your main home for either 24 full months or 730 days (365 × 2) during the 5-year period ending on the date of sale. Tax return 2013 Example. Tax return 2013 Naomi bought and moved into a house in July 2009. Tax return 2013 She lived there for 13 months and then moved in with a friend. Tax return 2013 She later moved back into her house and lived there for 12 months until she sold it in August 2013. Tax return 2013 Naomi meets the ownership and use tests because, during the 5-year period ending on the date of sale, she owned the house for more than 2 years and lived in it for a total of 25 (13 + 12) months. Tax return 2013 Temporary absence. Tax return 2013   Short temporary absences for vacations or other seasonal absences, even if you rent out the property during the absences, are counted as periods of use. Tax return 2013 The following examples assume that the reduced maximum exclusion (discussed later) does not apply to the sales. Tax return 2013 Example 1. Tax return 2013 David Johnson, who is single, bought and moved into his home on February 1, 2011. Tax return 2013 Each year during 2011 and 2012, David left his home for a 2-month summer vacation. Tax return 2013 David sold the house on March 1, 2013. Tax return 2013 Although the total time David lived in his home is less than 2 years (21 months), he meets the use requirement and may exclude gain. Tax return 2013 The 2-month vacations are short temporary absences and are counted as periods of use in determining whether David used the home for the required 2 years. Tax return 2013 Example 2. Tax return 2013 Professor Paul Beard, who is single, bought and moved into a house in December 2010, went abroad for a 1-year sabbatical leave in January 2012, returned to the house in January 2013, and sold it at a gain in February 2013. Tax return 2013 Because his leave was not a short temporary absence, he cannot include the period of leave to meet the 2-year use test. Tax return 2013 He cannot exclude any part of his gain because he did not use the residence for the required 2 years. Tax return 2013 Ownership and use tests met at different times. Tax return 2013   You can meet the ownership and use tests during different 2-year periods. Tax return 2013 However, you must meet both tests during the 5-year period ending on the date of the sale. Tax return 2013 Example. Tax return 2013 Beginning in 2002, Helen Jones lived in a rented apartment. Tax return 2013 The apartment building was later converted to condominiums, and she bought her same apartment on December 3, 2010. Tax return 2013 In 2011, Helen became ill and on April 14 of that year she moved to her daughter's home. Tax return 2013 On July 12, 2013, while still living in her daughter's home, she sold her condominium. Tax return 2013 Helen can exclude gain on the sale of her condominium because she met the ownership and use tests during the 5-year period from July 13, 2008, to July 12, 2013, the date she sold the condominium. Tax return 2013 She owned her condominium from December 3, 2010, to July 12, 2013 (more than 2 years). Tax return 2013 She lived in the property from July 13, 2008 (the beginning of the 5-year period), to April 14, 2011 (more than 2 years). Tax return 2013 The time Helen lived in her daughter's home during the 5-year period can be counted toward her period of ownership, and the time she lived in her rented apartment during the 5-year period can be counted toward her period of use. Tax return 2013 Cooperative apartment. Tax return 2013   If you sold stock as a tenant-shareholder in a cooperative housing corporation, the ownership and use tests are met if, during the 5-year period ending on the date of sale, you: Owned the stock for at least 2 years, and Lived in the house or apartment that the stock entitled you to occupy as your main home for at least 2 years. Tax return 2013 Exceptions to Ownership and Use Tests The following sections contain exceptions to the ownership and use tests for certain taxpayers. Tax return 2013 Exception for individuals with a disability. Tax return 2013   There is an exception to the use test if: You become physically or mentally unable to care for yourself, and You owned and lived in your home as your main home for a total of at least 1 year during the 5-year period before the sale of your home. Tax return 2013 Under this exception, you are considered to live in your home during any time within the 5-year period that you own the home and live in a facility (including a nursing home) licensed by a state or political subdivision to care for persons in your condition. Tax return 2013   If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion. Tax return 2013 Previous home destroyed or condemned. Tax return 2013   For the ownership and use tests, you add the time you owned and lived in a previous home that was destroyed or condemned to the time you owned and lived in the replacement home on whose sale you wish to exclude gain. Tax return 2013 This rule applies if any part of the basis of the home you sold depended on the basis of the destroyed or condemned home (see Involuntary Conversions in Publication 551). Tax return 2013 Otherwise, you must have owned and lived in the same home for 2 of the 5 years before the sale to qualify for the exclusion. Tax return 2013 Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. Tax return 2013   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 (defined later) as a member of the uniformed services or Foreign Service of the United States, or as an employee of the intelligence community. Tax return 2013 You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve outside the United States either as an employee of the Peace Corps on qualified official extended duty (defined later) or as an enrolled volunteer or volunteer leader of the Peace Corps. Tax return 2013 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. Tax return 2013   If this helps you qualify to exclude gain, you can choose to have the 5-year test period suspended by filing a return for the year of sale that does not include the gain. Tax return 2013 Example. Tax return 2013 John bought and moved into a home in 2005. Tax return 2013 He lived in it as his main home for 2½ years. Tax return 2013 For the next 6 years, he did not live in it because he was on qualified official extended duty with the Army. Tax return 2013 He then sold the home at a gain in 2013. Tax return 2013 To meet the use test, John chooses to suspend the 5-year test period for the 6 years he was on qualified official extended duty. Tax return 2013 This means he can disregard those 6 years. Tax return 2013 Therefore, John's 5-year test period consists of the 5 years before he went on qualified official extended duty. Tax return 2013 He meets the ownership and use tests because he owned and lived in the home for 2½ years during this test period. Tax return 2013 Period of suspension. Tax return 2013   The period of suspension cannot last more than 10 years. Tax return 2013 Together, the 10-year suspension period and the 5-year test period can be as long as, but no more than, 15 years. Tax return 2013 You cannot suspend the 5-year period for more than one property at a time. Tax return 2013 You can revoke your choice to suspend the 5-year period at any time. Tax return 2013 Example. Tax return 2013 Mary bought a home on April 1, 1997. Tax return 2013 She used it as her main home until August 31, 2000. Tax return 2013 On September 1, 2000, she went on qualified official extended duty with the Navy. Tax return 2013 She did not live in the house again before selling it on July 31, 2013. Tax return 2013 Mary chooses to use the entire 10-year suspension period. Tax return 2013 Therefore, the suspension period would extend back from July 31, 2013, to August 1, 2003, and the 5-year test period would extend back to August 1, 1998. Tax return 2013 During that period, Mary owned the house all 5 years and lived in it as her main home from August 1, 1998, until August 31, 2000, a period of more than 24 months. Tax return 2013 She meets the ownership and use tests because she owned and lived in the home for at least 2 years during this test period. Tax return 2013 Uniformed services. Tax return 2013   The uniformed services are: The Armed Forces (the Army, Navy, Air Force, Marine Corps, and Coast Guard), The commissioned corps of the National Oceanic and Atmospheric Administration, and The commissioned corps of the Public Health Service. Tax return 2013 Foreign Service member. Tax return 2013   For purposes of the choice to suspend the 5-year test period for ownership and use, you are a member of the Foreign Service if you are any of the following. Tax return 2013 A Chief of mission. Tax return 2013 An Ambassador at large. Tax return 2013 A member of the Senior Foreign Service. Tax return 2013 A Foreign Service officer. Tax return 2013 Part of the Foreign Service personnel. Tax return 2013 Employee of the intelligence community. Tax return 2013   For purposes of the choice to suspend the 5-year test period for ownership and use, you are an employee of the intelligence community if you are an employee of any of the following. Tax return 2013 The Office of the Director of National Intelligence. Tax return 2013 The Central Intelligence Agency. Tax return 2013 The National Security Agency. Tax return 2013 The Defense Intelligence Agency. Tax return 2013 The National Geospatial-Intelligence Agency. Tax return 2013 The National Reconnaissance Office and any other office within the Department of Defense for the collection of specialized national intelligence through reconnaissance programs. Tax return 2013 Any of the intelligence elements of the Army, the Navy, the Air Force, the Marine Corps, the Federal Bureau of Investigation, the Department of Treasury, the Department of Energy, and the Coast Guard. Tax return 2013 The Bureau of Intelligence and Research of the Department of State. Tax return 2013 Any of the elements of the Department of Homeland Security concerned with the analyses of foreign intelligence information. Tax return 2013 Qualified official extended duty. Tax return 2013   You are on qualified official extended duty if you are on extended duty while: Serving at a duty station at least 50 miles from your main home, or Living in Government quarters under Government orders. Tax return 2013   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. Tax return 2013 Married Persons If you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use tests, you can exclude up to $250,000 of the gain. Tax return 2013 (But see Special rules for joint returns, next. Tax return 2013 ) Special rules for joint returns. Tax return 2013   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. Tax return 2013 You are married and file a joint return for the year. Tax return 2013 Either you or your spouse meets the ownership test. Tax return 2013 Both you and your spouse meet the use test. Tax return 2013 During the 2-year period ending on the date of the sale, neither you nor your spouse excluded gain from the sale of another home. Tax return 2013 If either spouse does not satisfy all these requirements, the maximum exclusion that can be claimed by the couple is the total of the maximum exclusions that each spouse would qualify for if not married and the amounts were figured separately. Tax return 2013 For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property. Tax return 2013 Example 1—one spouse sells a home. Tax return 2013 Emily sells her home in June 2013 for a gain of $300,000. Tax return 2013 She marries Jamie later in the year. Tax return 2013 She meets the ownership and use tests, but Jamie does not. Tax return 2013 Emily can exclude up to $250,000 of gain on a separate or joint return for 2013. Tax return 2013 The $500,000 maximum exclusion for certain joint returns does not apply because Jamie does not meet the use test. Tax return 2013 Example 2—each spouse sells a home. Tax return 2013 The facts are the same as in Example 1 except that Jamie also sells a home in 2013 for a gain of $200,000 before he marries Emily. Tax return 2013 He meets the ownership and use tests on his home, but Emily does not. Tax return 2013 Emily can exclude $250,000 of gain and Jamie can exclude $200,000 of gain on the respective sales of their individual homes. Tax return 2013 However, Emily cannot use Jamie's unused exclusion to exclude more than $250,000 of gain. Tax return 2013 Therefore, Emily and Jamie must recognize $50,000 of gain on the sale of Emily's home. Tax return 2013 The $500,000 maximum exclusion for certain joint returns does not apply because Emily and Jamie do not both meet the use test for the same home. Tax return 2013 Sale of main home by surviving spouse. Tax return 2013   If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home. Tax return 2013   If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. Tax return 2013 The sale or exchange took place after 2008. Tax return 2013 The sale or exchange took place no more than 2 years after the date of death of your spouse. Tax return 2013 You have not remarried. Tax return 2013 You and your spouse met the use test at the time of your spouse's death. Tax return 2013 You or your spouse met the ownership test at the time of your spouse's death. Tax return 2013 Neither you nor your spouse excluded gain from the sale of another home during the last 2 years before the date of death. Tax return 2013 The ownership and use tests were described earlier. Tax return 2013 Example. Tax return 2013 Harry owned and used a house as his main home since 2009. Tax return 2013 Harry and Wilma married on July 1, 2013, and from that date they used Harry's house as their main home. Tax return 2013 Harry died on August 15, 2013, and Wilma inherited the property. Tax return 2013 Wilma sold the property on September 1, 2013, at which time she had not remarried. Tax return 2013 Although Wilma owned and used the house for less than 2 years, Wilma is considered to have satisfied the ownership and use tests because her period of ownership and use includes the period that Harry owned and used the property before death. Tax return 2013 Home transferred from spouse. Tax return 2013   If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it. Tax return 2013 Use of home after divorce. Tax return 2013   You are considered to have used property as your main home during any period when: You owned it, and Your spouse or former spouse is allowed to live in it under a divorce or separation instrument and uses it as his or her main home. Tax return 2013 Reduced Maximum Exclusion If you fail to meet the requirements to qualify for the $250,000 or $500,000 exclusion, you may still qualify for a reduced exclusion. Tax return 2013 This applies to those who: Fail to meet the ownership and use tests, or Have used the exclusion within 2 years of selling their current home. Tax return 2013 In both cases, to qualify for a reduced exclusion, the sale of your main home must be due to one of the following reasons. Tax return 2013 A change in place of employment. Tax return 2013 Health. Tax return 2013 Unforeseen circumstances. Tax return 2013 Qualified individual. Tax return 2013   For purposes of the reduced maximum exclusion, a qualified individual is any of the following. Tax return 2013 You. Tax return 2013 Your spouse. Tax return 2013 A co-owner of the home. Tax return 2013 A person whose main home is the same as yours. Tax return 2013 Primary reason for sale. Tax return 2013   One of the three reasons above will be considered to be the primary reason you sold your home if either (1) or (2) is true. Tax return 2013 You qualify under a “safe harbor. Tax return 2013 ” This is a specific set of facts and circumstances that, if applicable, qualifies you to claim a reduced maximum exclusion. Tax return 2013 Safe harbors corresponding to the reasons listed above are described later. Tax return 2013 A safe harbor does not apply, but you can establish, based on facts and circumstances, that the primary reason for the sale is a change in place of employment, health, or unforeseen circumstances. Tax return 2013  Factors that may be relevant in determining your primary reason for sale include whether: Your sale and the circumstances causing it were close in time, The circumstances causing your sale occurred during the time you owned and used the property as your main home, The circumstances causing your sale were not reasonably foreseeable when you began using the property as your main home, Your financial ability to maintain the property became materially impaired, The suitability of the property as your main home materially changed, and During the time you owned the property, you used it as your home. Tax return 2013 Change in Place of Employment You may qualify for a reduced exclusion if the primary reason for the sale of your main home is a change in the location of employment of a qualified individual. Tax return 2013 Employment. Tax return 2013   For this purpose, employment includes the start of work with a new employer or continuation of work with the same employer. Tax return 2013 It also includes the start or continuation of self-employment. Tax return 2013 Distance safe harbor. Tax return 2013   A change in place of employment is considered to be the reason you sold your home if: The change occurred during the period you owned and used the property as your main home, and The new place of employment is at least 50 miles farther from the home you sold than was the former place of employment (or, if there was no former place of employment, the distance between your new place of employment and the home sold is at least 50 miles). Tax return 2013 Example. Tax return 2013 Justin was unemployed and living in a townhouse in Florida he had owned and used as his main home since 2012. Tax return 2013 He got a job in North Carolina and sold his townhouse in 2013. Tax return 2013 Because the distance between Justin's new place of employment and the home he sold is at least 50 miles, the sale satisfies the conditions of the distance safe harbor. Tax return 2013 Justin's sale of his home is considered to be because of a change in place of employment, and he is entitled to claim a reduced maximum exclusion of gain from the sale. Tax return 2013 Health The sale of your main home is because of health if your primary reason for the sale is: To obtain, provide, or facilitate the diagnosis, cure, mitigation, or treatment of disease, illness, or injury of a qualified individual, or To obtain or provide medical or personal care for a qualified individual suffering from a disease, illness, or injury. Tax return 2013 The sale of your home is not because of health if the sale merely benefits a qualified individual's general health or well-being. Tax return 2013 For purposes of this reason, a qualified individual includes, in addition to the individuals listed earlier under Qualified individual , any of the following family members of these individuals. Tax return 2013 Parent, grandparent, stepmother, stepfather. Tax return 2013 Child, grandchild, stepchild, adopted child, eligible foster child. Tax return 2013 Brother, sister, stepbrother, stepsister, half-brother, half-sister. Tax return 2013 Mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, or daughter-in-law. Tax return 2013 Uncle, aunt, nephew, niece, or cousin. Tax return 2013 Example. Tax return 2013 In 2012, Chase and Lauren, spouses, bought a house that they used as their main home. Tax return 2013 Lauren's father has a chronic disease and is unable to care for himself. Tax return 2013 In 2013, Chase and Lauren sold their home in order to move into Lauren's father's house to provide care for him. Tax return 2013 Because the primary reason for the sale of their home was to provide care for Lauren's father, Chase and Lauren are entitled to a reduced maximum exclusion. Tax return 2013 Doctor's recommendation safe harbor. Tax return 2013   Health is considered to be the reason you sold your home if, for one or more of the reasons listed at the beginning of this discussion, a doctor recommends a change of residence. Tax return 2013 Unforeseen Circumstances The sale of your main home is because of an unforeseen circumstance if your primary reason for the sale is the occurrence of an event that you could not reasonably have anticipated before buying and occupying that home. Tax return 2013 You are not considered to have an unforeseen circumstance if the primary reason you sold your home was that you preferred to get a different home or because your finances improved. Tax return 2013 Specific event safe harbors. Tax return 2013   Unforeseen circumstances are considered to be the reason for selling your home if any of the following events occurred while you owned and used the property as your main home. Tax return 2013 An involuntary conversion of your home, such as when your home is destroyed or condemned. Tax return 2013 Natural or man-made disasters or acts of war or terrorism resulting in a casualty to your home, whether or not your loss is deductible. Tax return 2013 In the case of qualified individuals (listed earlier under Qualified individual ): Death, Unemployment (if the individual is eligible for unemployment compensation), A change in employment or self-employment status that results in the individual's inability to pay reasonable basic living expenses (listed under Reasonable basic living expenses , later) for his or her household, Divorce or legal separation under a decree of divorce or separate maintenance, or Multiple births resulting from the same pregnancy. Tax return 2013 An event the IRS determined to be an unforeseen circumstance in published guidance of general applicability. Tax return 2013 For example, the IRS determined the September 11, 2001, terrorist attacks to be an unforeseen circumstance. Tax return 2013 Reasonable basic living expenses. Tax return 2013   Reasonable basic living expenses for your household include the following. Tax return 2013 Amounts spent for food. Tax return 2013 Amounts spent for clothing. Tax return 2013 Housing and related expenses. Tax return 2013 Medical expenses. Tax return 2013 Transportation expenses. Tax return 2013 Tax payments. Tax return 2013 Court-ordered payments. Tax return 2013 Expenses reasonably necessary to produce income. Tax return 2013   Any of these amounts spent to maintain an affluent or luxurious standard of living are not reasonable basic living expenses. Tax return 2013 Nonqualified Use Gain from the sale or exchange of the main home is not excludable from income if it is allocable to periods of nonqualified use. Tax return 2013 Nonqualified use means any period after 2008 where neither you nor your spouse (or your former spouse) used the property as a main home, with certain exceptions (see next). Tax return 2013 Exceptions. Tax return 2013   A period of nonqualified use does not include: Any portion of the 5-year period ending on the date of the sale or exchange after the last date you (or your spouse) use the property as a main home; Any period (not to exceed an aggregate period of 10 years) during which you (or your spouse) are serving on qualified official extended duty: As a member of the uniformed services; As a member of the Foreign Service of the United States; or As an employee of the intelligence community; and Any other period of temporary absence (not to exceed an aggregate period of 2 years) due to change of employment, health conditions, or such other unforeseen circumstances as may be specified by the IRS. Tax return 2013 Calculation. Tax return 2013   To figure the portion of the gain allocated to the period of nonqualified use, multiply the gain (net of any depreciation allowed or allowable on the property for periods after May 6, 1997) by the following fraction:   Total nonqualified use during the period of ownership after 2008     Total period of ownership     This calculation can be found in Worksheet 2, line 10, later in this publication. Tax return 2013   For examples of this calculation, see Business Use or Rental of Home , next. Tax return 2013 Business Use or Rental of Home You may be able to exclude gain from the sale of a home you have used for business or to produce rental income if you meet the ownership and use tests. Tax return 2013 Example 1. Tax return 2013 On May 23, 2007, Amy, who is unmarried for all years in this example, bought a house. Tax return 2013 She moved in on that date and lived in it until May 31, 2009, when she moved out of the house and put it up for rent. Tax return 2013 The house was rented from June 1, 2009, to March 31, 2011. Tax return 2013 Amy claimed depreciation deductions in 2009 through 2011 totaling $10,000. Tax return 2013 Amy moved back into the house on April 1, 2011, and lived there until she sold it on January 31, 2013, for a gain of $200,000. Tax return 2013 During the 5-year period ending on the date of the sale (January 31, 2008–January 31, 2013), Amy owned and lived in the house for more than 2 years as shown in the following table. Tax return 2013 Five-Year Period Used as Home Used as Rental 1/31/08 – 5/31/09 16 months   6/01/09 – 3/31/11   22 months 4/01/11 – 1/31/13 22 months     38 months 22 months       During the period Amy owned the house (2,080 days), her period of nonqualified use was 668 days. Tax return 2013 Because the gain attributable to periods of nonqualified use is $60,990, Amy can exclude $129,010 of her gain, as shown on Worksheet 2. Tax return 2013 Example 2. Tax return 2013 William owned and used a house as his main home from 2007 through 2010. Tax return 2013 On January 1, 2011, he moved to another state. Tax return 2013 He rented his house from that date until April 30, 2013, when he sold it. Tax return 2013 During the 5-year period ending on the date of sale (May 1, 2008-April 30, 2013), William owned and lived in the house for more than 2 years. Tax return 2013 Because it was rental property at the time of the sale, he must report the sale on Form 4797. Tax return 2013 Because the period of nonqualified use does not include any part of the 5-year period after the last date William lived in the house, he has no period of nonqualified use. Tax return 2013 Because he met the ownership and use tests, he can exclude gain up to $250,000. Tax return 2013 However, he cannot exclude the part of the gain equal to the depreciation he claimed or could have claimed for renting the house, as explained next. Tax return 2013 Depreciation after May 6, 1997. Tax return 2013   If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. Tax return 2013 If you can show by adequate records or other evidence that the depreciation allowed was less than the amount allowable, then you may limit the amount of gain recognized to the depreciation allowed. Tax return 2013 Unrecaptured section 1250 gain. Tax return 2013   This is the part of any long-term capital gain from the sale of your home that is due to depreciation and cannot be excluded. Tax return 2013 To figure the amount of unrecaptured section 1250 gain to be reported on Schedule D (Form 1040), you must also take into account certain gains or losses from the sale of property other than your home. Tax return 2013 Use the Unrecaptured Section 1250 Gain Worksheet in the Schedule D instructions for this purpose. Tax return 2013 Worksheet 2. Tax return 2013 Taxable Gain on Sale of Home—Completed Example 1 for Amy Part 1. Tax return 2013 Gain or (Loss) on Sale       1. Tax return 2013   Selling price of home 1. Tax return 2013     2. Tax return 2013   Selling expenses (including commissions, advertising and legal fees, and seller-paid loan charges) 2. Tax return 2013     3. Tax return 2013   Subtract line 2 from line 1. Tax return 2013 This is the amount realized 3. Tax return 2013     4. Tax return 2013   Adjusted basis of home sold (from Worksheet 1, line 13) 4. Tax return 2013     5. Tax return 2013   Gain or (loss) on the sale. Tax return 2013 Subtract line 4 from line 3. Tax return 2013 If this is a loss, stop here 5. Tax return 2013 200,000   Part 2. Tax return 2013 Exclusion and Taxable Gain       6. Tax return 2013   Enter any depreciation allowed or allowable on the property for periods after May 6, 1997. Tax return 2013 If none, enter -0- 6. Tax return 2013 10,000   7. Tax return 2013   Subtract line 6 from line 5. Tax return 2013 If the result is less than zero, enter -0- 7. Tax return 2013 190,000   8. Tax return 2013   Aggregate number of days of nonqualified use after 2008. Tax return 2013 If none, enter -0-. Tax return 2013  If line 8 is equal to zero, skip to line 12 and enter the amount from line 7 on line 12 8. Tax return 2013 668   9. Tax return 2013   Number of days taxpayer owned the property 9. Tax return 2013 2,080   10. Tax return 2013   Divide the amount on line 8 by the amount on line 9. Tax return 2013 Enter the result as a decimal (rounded to at least 3 places). Tax return 2013 But do not enter an amount greater than 1. Tax return 2013 00 10. Tax return 2013 0. Tax return 2013 321   11. Tax return 2013   Gain allocated to nonqualified use. Tax return 2013 (Line 7 multiplied by line 10) 11. Tax return 2013 60,990   12. Tax return 2013   Gain eligible for exclusion. Tax return 2013 Subtract line 11 from line 7 12. Tax return 2013 129,010   13. Tax return 2013   If you qualify to exclude gain on the sale, enter your maximum exclusion (see Maximum Exclusion ). Tax return 2013  If you qualify for a reduced maximum exclusion, enter the amount from Worksheet 3, line 7. Tax return 2013 If you do  not qualify to exclude gain, enter -0- 13. Tax return 2013 250,000   14. Tax return 2013   Exclusion. Tax return 2013 Enter the smaller of line 12 or line 13 14. Tax return 2013 129,010   15. Tax return 2013   Taxable gain. Tax return 2013 Subtract line 14 from line 5. Tax return 2013 Report your taxable gain as described under Reporting the Sale . Tax return 2013 If the amount on line 6 is more than zero, complete line 16 15. Tax return 2013 70,990   16. Tax return 2013   Enter the smaller of line 6 or line 15. Tax return 2013 Enter this amount on line 12 of the Unrecaptured Section 1250 Gain  Worksheet in the instructions for Schedule D (Form 1040) 16. Tax return 2013 10,000 Property Used Partly for Business or Rental If you use property partly as a home and partly for business or to produce rental income, the treatment of any gain on the sale depends partly on whether the business or rental part of the property is part of your home or separate from it. Tax return 2013 Part of Home Used for Business or Rental If the part of your property used for business or to produce rental income is within your home, such as a room used as a home office for a business, you do not need to allocate gain on the sale of the property between the business part of the property and the part used as a home. Tax return 2013 In addition, you do not need to report the sale of the business or rental part on Form 4797. Tax return 2013 This is true whether or not you were entitled to claim any depreciation. Tax return 2013 However, you cannot exclude the part of any gain equal to any depreciation allowed or allowable after May 6, 1997. Tax return 2013 See Depreciation after May 6, 1997, earlier. Tax return 2013 Example 1. Tax return 2013 Ray sold his main home in 2013 at a $30,000 gain. Tax return 2013 He has no gains or losses from the sale of property other than the gain from the sale of his home. Tax return 2013 He meets the ownership and use tests to exclude the gain from his income. Tax return 2013 However, he used part of the home as a business office in 2012 and claimed $500 depreciation. Tax return 2013 Because the business office was part of his home (not separate from it), he does not have to allocate the gain on the sale between the business part of the property and the part used as a home. Tax return 2013 In addition, he does not have to report any part of the gain on Form 4797. Tax return 2013 Because Ray was entitled to take a depreciation deduction, he must recognize $500 of the gain as unrecaptured section 1250 gain. Tax return 2013 He reports his gain, exclusion, and the taxable gain of $500 on Form 8949 and Schedule D (Form 1040). Tax return 2013 Example 2. Tax return 2013 The facts are the same as in Example 1 except that Ray was not entitled to claim depreciation for the business use of his home. Tax return 2013 Since Ray did not claim any depreciation, he can exclude the entire $30,000 gain. Tax return 2013 Separate Part of Property Used for Business or Rental You may have used part of your property as your home and a separate part of it for business or to produce rental income. Tax return 2013 Examples are: A working farm on which your house was located, A duplex in w
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The Tax Return 2013

Tax return 2013 Index Symbols 529 program (see Qualified tuition program (QTP)) A Academic period American opportunity credit, Academic period. Tax return 2013 Lifetime learning credit, Academic period. Tax return 2013 Student loan interest deduction, Academic period. Tax return 2013 Tuition and fees deduction, Academic period. Tax return 2013 Accountable plans, Accountable Plans, Allocating your reimbursements for meals. Tax return 2013 Additional tax Coverdell ESA On excess contributions, Additional Tax on Excess Contributions, Figuring and reporting the additional tax. Tax return 2013 On taxable distributions, Additional Tax on Taxable Distributions IRA distributions, education exception, Education Exception to Additional Tax on Early IRA Distributions Qualified tuition program (QTP), on taxable distributions, Additional Tax on Taxable Distributions Adjusted qualified education expenses (see Qualified education expenses) American opportunity credit Adjustments to qualified education expenses, Adjustments to Qualified Education Expenses Claiming dependent's expenses, Who Can Claim a Dependent's Expenses, Tuition reduction. Tax return 2013 Tuition reduction, Tuition reduction. Tax return 2013 Claiming the credit, Can You Claim the Credit, Who Cannot Claim the Credit, Claiming the Credit Qualifying to claim (Figure 2-1), Coordination with Coverdell ESA distributions, Figuring the Taxable Portion of a Distribution Coordination with qualified tuition program (QTP) distributions, Coordination With American Opportunity and Lifetime Learning Credits Eligible educational institution, Eligible educational institution. Tax return 2013 Eligible student, Who Is an Eligible Student Requirements (Figure 2-2), Expenses qualifying for, What Expenses Qualify, Adjustments to Qualified Education Expenses Figuring the credit, Figuring the Credit Income level, effect on amount of credit, Effect of the Amount of Your Income on the Amount of Your Credit, Phaseout. Tax return 2013 Income limits, Effect of the Amount of Your Income on the Amount of Your Credit, Phaseout. Tax return 2013 Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Tax return 2013 Worksheet 2-1, Claiming the Credit Overview of American opportunity credit (Table 2-1), Introduction Phaseout, Phaseout. Tax return 2013 Qualified education expenses, Qualified Education Expenses Tax benefit of, What is the tax benefit of the American opportunity credit. Tax return 2013 Armed Forces Health Professions Scholarship and Financial Assistance Program, Exceptions. Tax return 2013 Assistance (see Tax help) Athletic scholarships, Athletic Scholarships B Bar review course, Bar or CPA Review Course Bonds, education savings (see Education savings bond program) Business deduction for work-related education, Business Deduction for Work-Related Education, Illustrated Example Accountable plans, Accountable Plans, Allocating your reimbursements for meals. Tax return 2013 Adjustments to qualifying work-related education expenses, Adjustments to Qualifying Work-Related Education Expenses Allocating meal reimbursements, Allocating your reimbursements for meals. Tax return 2013 Deductible education expenses, What Expenses Can Be Deducted, Adjustments to Qualifying Work-Related Education Expenses Deducting business expenses, Deducting Business Expenses, Impairment-Related Work Expenses Double benefit not allowed, No Double Benefit Allowed Education required by employer or by law, Education Required by Employer or by Law Education to maintain or improve skills, Education To Maintain or Improve Skills Education to meet minimum requirements, Education To Meet Minimum Requirements, Certification in a new state. Tax return 2013 Education to qualify for new trade or business, Education That Qualifies You for a New Trade or Business, Teaching and Related Duties Excess expenses, accountable plan, Excess expenses. Tax return 2013 , Allocating your reimbursements for meals. Tax return 2013 Indefinite absence, Education during indefinite absence. Tax return 2013 Maintaining skills vs. Tax return 2013 qualifying for new job, Maintaining skills vs. Tax return 2013 qualifying for new job. Tax return 2013 Nonaccountable plans, Nonaccountable Plans Nondeductible expenses, Nondeductible expenses. Tax return 2013 Qualified education expenses, What Expenses Can Be Deducted, Adjustments to Qualifying Work-Related Education Expenses Recordkeeping requirements, Recordkeeping, Examples of records to keep. Tax return 2013 Reimbursements, treatment of, How To Treat Reimbursements, Reimbursements for nondeductible expenses. Tax return 2013 Tax benefit of, What is the tax benefit of taking a business deduction for work-related education. Tax return 2013 Tax-free educational assistance, Tax-free educational assistance. Tax return 2013 Teachers, Requirements for Teachers, Teaching and Related Duties Temporary absence to acquire education, Education during temporary absence. Tax return 2013 Transportation expenses, Transportation Expenses, Using your car. Tax return 2013 Travel expenses, Travel Expenses C Cancellation of student loan (see Student loan cancellation) Candidate for a degree Scholarships and fellowships, Candidate for a degree. Tax return 2013 Change of designated beneficiary Coverdell ESA, Changing the Designated Beneficiary Qualified tuition program, Changing the Designated Beneficiary Collapsed loans, Interest on refinanced student loans. Tax return 2013 Comprehensive or bundled fees American opportunity credit, Comprehensive or bundled fees. Tax return 2013 Lifetime learning credit, Comprehensive or bundled fees. Tax return 2013 Tuition and fees deduction, Comprehensive or bundled fees. Tax return 2013 Consolidated loans used to refinance student loans, Interest on refinanced student loans. Tax return 2013 Conventions outside U. Tax return 2013 S. Tax return 2013 , Cruises and conventions. Tax return 2013 Coverdell education savings account (ESA), Coverdell Education Savings Account (ESA), Figuring the Taxable Portion of a Distribution, Coordination With American Opportunity and Lifetime Learning Credits, Worksheet 7-3. Tax return 2013 Coverdell ESA—Taxable Distributions and Basis Additional tax On excess contributions, Additional Tax on Excess Contributions, Figuring and reporting the additional tax. Tax return 2013 On taxable distributions, Additional Tax on Taxable Distributions Assets to be distributed at age 30 or death of beneficiary, When Assets Must Be Distributed Contribution limits, Contribution Limits, Figuring the limit. Tax return 2013 Figuring the limit (Worksheet 6-2), Figuring the limit. Tax return 2013 Contributions to, Contributions, Figuring and reporting the additional tax. Tax return 2013 Table 7-2, Contributions Coordination with American opportunity and lifetime learning credits, Coordination With American Opportunity and Lifetime Learning Credits Coordination with qualified tuition program (QTP), Coordination With Qualified Tuition Program (QTP) Distributions Defined, What Is a Coverdell ESA Distributions, Distributions, How To Figure the Taxable Earnings Overview (Table 7-3), Distributions Divorce, transfer due to, Transfer Because of Divorce Eligible educational institution, Eligible Educational Institution Figuring taxable portion of distribution, Figuring the Taxable Portion of a Distribution Worksheet 7-3, Worksheet 7-3. Tax return 2013 Coverdell ESA—Taxable Distributions and Basis Figuring the taxable earnings in required distribution, How To Figure the Taxable Earnings Losses, Losses on Coverdell ESA Investments Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Tax return 2013 , MAGI when using Form 1040NR-EZ. Tax return 2013 Worksheet 6-1, Worksheet 7-1. Tax return 2013 MAGI for a Coverdell ESA Overview (Table 6-1), Coverdell Education Savings Account (ESA) Qualified education expenses, Qualified Education Expenses, Qualified Elementary and Secondary Education Expenses Rollovers, Rollovers Tax benefit of, What is the tax benefit of the Coverdell ESA. Tax return 2013 Tax-free distributions, Tax-Free Distributions Taxable distributions, Taxable Distributions, Figuring the additional tax. Tax return 2013 Worksheet 7-3 to figure, Worksheet 7-3. Tax return 2013 Coverdell ESA—Taxable Distributions and Basis Transfers, Rollovers CPA review course, Bar or CPA Review Course Credits American opportunity (see American opportunity credit) Lifetime learning (see Lifetime learning credit) Cruises, educational, Cruises and conventions. Tax return 2013 D Deductions (see Business deduction for work-related education) Designated beneficiary Coverdell ESA, What Is a Coverdell ESA, Changing the Designated Beneficiary Qualified tuition program (QTP), Designated beneficiary. Tax return 2013 , Changing the Designated Beneficiary Disabilities, persons with Impairment-related work expenses, Impairment-Related Work Expenses Distributions (see specific benefit ) Divorce Coverdell ESA transfer due to, Transfer Because of Divorce Expenses paid under decree American opportunity credit, Expenses paid by dependent. Tax return 2013 Lifetime learning credit, Expenses paid by dependent. Tax return 2013 Tuition and fees deduction, Expenses paid under divorce decree. Tax return 2013 Double benefit not allowed American opportunity credit, No Double Benefit Allowed Lifetime learning credit, No Double Benefit Allowed Student loan interest deduction, No Double Benefit Allowed Tuition and fees deduction, No Double Benefit Allowed Work-related education, No Double Benefit Allowed E Early distributions from IRAs, Education Exception to Additional Tax on Early IRA Distributions, Reporting Early Distributions Eligible educational institution, Eligible educational institution. Tax return 2013 Figuring amount not subject to 10% tax, Figuring the Amount Not Subject to the 10% Tax Qualified education expenses, Qualified education expenses. Tax return 2013 Reporting, Reporting Early Distributions Education IRA (see Coverdell education savings account (ESA)) Education loans (see Student loan interest deduction) Education savings account (see Coverdell education savings account (ESA)) Education savings bond program Cashing in bonds tax free, Who Can Cash In Bonds Tax Free, MAGI when using Form 1040. Tax return 2013 Claiming dependent's exemption, Dependent for whom you claim an exemption. Tax return 2013 Claiming exclusion, Claiming the Exclusion Eligible educational institution, Eligible educational institution. Tax return 2013 Figuring tax-free amount, Figuring the Tax-Free Amount Income level, effect on amount of exclusion, Effect of the Amount of Your Income on the Amount of Your Exclusion Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Tax return 2013 , MAGI when using Form 1040. Tax return 2013 Phaseout, Effect of the Amount of Your Income on the Amount of Your Exclusion Qualified education expenses, Qualified education expenses. Tax return 2013 Educational assistance, employer-provided (see Employer-provided educational assistance) Eligible educational institution American opportunity credit, Eligible educational institution. Tax return 2013 Cancellation of student loan, Eligible educational institution. Tax return 2013 Coverdell ESA, Eligible Educational Institution Early distributions from IRAs, Eligible educational institution. Tax return 2013 Education savings bond program, Eligible educational institution. Tax return 2013 Lifetime learning credit, Eligible educational institution. Tax return 2013 Qualified tuition program (QTP), Eligible educational institution. Tax return 2013 Qualified tuition reduction, Qualified Tuition Reduction Scholarships and fellowships, Eligible educational institution. Tax return 2013 , Eligible educational institution. Tax return 2013 Student loan cancellation, Eligible educational institution. Tax return 2013 Student loan interest deduction, Eligible educational institution. Tax return 2013 Tuition and fees deduction, Eligible educational institution. Tax return 2013 Eligible elementary or secondary school Coverdell ESA, Eligible elementary or secondary school. Tax return 2013 Eligible student American opportunity credit, Who Is an Eligible Student Lifetime learning credit, Who Is an Eligible Student Student loan interest deduction, Eligible student. Tax return 2013 Tuition and fees deduction, Who Is an Eligible Student Employees Deducting work-related education expenses, Employees Employer-provided educational assistance, Employer-Provided Educational Assistance, Working condition fringe benefit. Tax return 2013 ESAs (see Coverdell education savings account (ESA)) Estimated tax, Reminders Excess contributions Coverdell ESA, Additional Tax on Excess Contributions, Figuring and reporting the additional tax. Tax return 2013 Excess expenses, accountable plan, Excess expenses. Tax return 2013 , Allocating your reimbursements for meals. Tax return 2013 Expenses (see specific benefit ) F Family members, beneficiary Coverdell ESA, Members of the beneficiary's family. Tax return 2013 Qualified tuition program (QTP), Members of the beneficiary's family. Tax return 2013 Fee-basis officials, work-related education deduction, Performing Artists and Fee-Basis Officials Fellowships (see Scholarships and fellowships) Figures (see Tables and figures) Financial aid (see Scholarships and fellowships) Form 1098-E Student loan interest deduction, Loan origination fee. Tax return 2013 , Form 1098-E. Tax return 2013 Form 1098-T, Reminders American opportunity credit, Form 1098-T. Tax return 2013 Lifetime learning credit, Form 1098-T. Tax return 2013 Tuition and fees deduction, Form 1098-T. Tax return 2013 Form 1099-Q Coverdell ESA, Exceptions. Tax return 2013 , Earnings and basis. Tax return 2013 Qualified tuition program (QTP), Earnings and return of investment. Tax return 2013 Form 1099-R Early distributions from IRAs, Reporting Early Distributions Form 2106, 50% limit on meals. Tax return 2013 , Form 2106 or 2106-EZ. Tax return 2013 Form 2106-EZ, 50% limit on meals. Tax return 2013 , Form 2106 or 2106-EZ. Tax return 2013 , Using Form 2106-EZ. Tax return 2013 Filled-in example, Form 5329 Coverdell ESA, Figuring the additional tax. Tax return 2013 Early distributions from IRAs, Reporting Early Distributions Qualified tuition program (QTP), Figuring the additional tax. Tax return 2013 Form 8815, MAGI when using Form 1040. Tax return 2013 , Claiming the Exclusion Form 8863 Filled-in examples, Form 8917 Filled-in examples, Form W-9S, Form 1098-T. Tax return 2013 , Form 1098-T. Tax return 2013 , Form 1098-E. Tax return 2013 , Form 1098-T. Tax return 2013 Free tax services, Free help with your tax return. Tax return 2013 Fulbright grants, Fulbright Grants G Glossary, Glossary. Tax return 2013 , Glossary, Transfer: Graduate education tuition reduction, Graduate Education Grants Fulbright, Fulbright Grants Pell, Pell Grants and Other Title IV Need-Based Education Grants Title IV need-based education, Pell Grants and Other Title IV Need-Based Education Grants H Half-time student American opportunity credit, Enrolled at least half-time. Tax return 2013 Coverdell ESA, Half-time student. Tax return 2013 Early distributions from IRAs, Half-time student. Tax return 2013 Student loan interest deduction, Enrolled at least half-time. Tax return 2013 Help (see Tax help) I Illustrated example of education credits (Appendix A), Appendix A. Tax return 2013 Illustrated Example of Education Credits, Impairment-related work expenses Work-related education deduction, Impairment-Related Work Expenses Individual retirement arrangements (IRAs), Coverdell Education Savings Account (ESA) Early distributions (see Early distributions from IRAs) L Lifetime learning credit, Differences between the American opportunity and lifetime learning credits. Tax return 2013 Academic period, Academic period. Tax return 2013 Adjustments to qualified education expenses, Adjustments to Qualified Education Expenses Claiming dependent's expenses, Who Can Claim a Dependent's Expenses Tuition reduction, Tuition reduction. Tax return 2013 Claiming the credit, Can You Claim the Credit, Who Cannot Claim the Credit, Claiming the Credit Qualifying to claim (Figure 3-1), Coordination with Coverdell ESA distributions, Figuring the Taxable Portion of a Distribution, Coordination With American Opportunity and Lifetime Learning Credits Coordination with qualified tuition program (QTP) distributions, Coordination With American Opportunity and Lifetime Learning Credits Eligible educational institution, Eligible educational institution. Tax return 2013 Eligible student, Who Is an Eligible Student Expenses qualifying for, What Expenses Qualify, Amounts that do not reduce qualified education expenses. Tax return 2013 Figuring the credit, Figuring the Credit, Claiming the Credit Income level, effect on amount of credit, Effect of the Amount of Your Income on the Amount of Your Credit Income limits, Effect of the Amount of Your Income on the Amount of Your Credit Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Tax return 2013 Worksheet 3-1, MAGI when using Form 1040. Tax return 2013 Overview (Table 3-1), Table 3-1. Tax return 2013 Overview of the Lifetime Learning Credit Phaseout, Phaseout. Tax return 2013 Qualified education expenses, Qualified Education Expenses, Amounts that do not reduce qualified education expenses. Tax return 2013 Qualifying to claim (Figure 3-1), Tax benefit of, What is the tax benefit of the lifetime learning credit. Tax return 2013 Loans Cancellation (see Student loan cancellation) Capitalized interest on student loan, Capitalized interest. Tax return 2013 Origination fees on student loan, Loan origination fee. Tax return 2013 Qualified education expenses paid with American opportunity credit, Academic period. Tax return 2013 Lifetime learning credit, Paid with borrowed funds. Tax return 2013 Student loan repayment assistance, Student Loan Repayment Assistance Losses, deducting Coverdell ESA, Losses on Coverdell ESA Investments Qualified tuition program (QTP), Losses on QTP Investments Luxury water transportation, Cruises and conventions. Tax return 2013 M Mileage deduction for work-related education, What's New, Using your car. Tax return 2013 Military academy cadets, Payment to Service Academy Cadets Missing children, photographs of, Reminders Modified adjusted gross income (MAGI) American opportunity credit Worksheet 2-1, Claiming the Credit Coverdell ESA, Modified adjusted gross income (MAGI). Tax return 2013 , MAGI when using Form 1040NR-EZ. Tax return 2013 Worksheet 6-1, Worksheet 7-1. Tax return 2013 MAGI for a Coverdell ESA Education savings bond program, Modified adjusted gross income (MAGI). Tax return 2013 , MAGI when using Form 1040. Tax return 2013 Lifetime learning credit, Modified adjusted gross income (MAGI). Tax return 2013 Worksheet 3-1, MAGI when using Form 1040. Tax return 2013 Student loan interest deduction, Modified adjusted gross income (MAGI). Tax return 2013 Table 4-2, Table 4-2. Tax return 2013 Effect of MAGI on Student Loan Interest Deduction Tuition and fees deduction, Modified adjusted gross income (MAGI). Tax return 2013 Table 6-2, Table 6-2. Tax return 2013 Effect of MAGI on Maximum Tuition and Fees Deduction Worksheet 6-1, Worksheet 6-1. Tax return 2013 MAGI for the Tuition and Fees Deduction N National Health Service Corps Scholarship Program, Exceptions. Tax return 2013 , Exceptions. Tax return 2013 Nonaccountable plans Work-related education, Nonaccountable Plans P Pell grants, Pell Grants and Other Title IV Need-Based Education Grants, Coordination with Pell grants and other scholarships. Tax return 2013 , Coordination with Pell grants and other scholarships. Tax return 2013 Performing artists, work-related education deduction, Performing Artists and Fee-Basis Officials Phaseout American opportunity credit, Phaseout. Tax return 2013 Education savings bond program, Effect of the Amount of Your Income on the Amount of Your Exclusion Lifetime learning credit, Phaseout. Tax return 2013 Student loan interest deduction, Phaseout. Tax return 2013 , Effect of the Amount of Your Income on the Amount of Your Deduction Publications (see Tax help) Q Qualified education expenses Adjustments to American opportunity credit, Adjustments to Qualified Education Expenses Coverdell ESA, Adjusted qualified education expenses. Tax return 2013 Education savings bond program, Adjusted qualified education expenses. Tax return 2013 Lifetime learning credit, Adjustments to Qualified Education Expenses Qualified tuition program (QTP), Adjusted qualified education expenses. Tax return 2013 Student loan interest deduction, Adjustments to Qualified Education Expenses Tuition and fees deduction, Adjustments to Qualified Education Expenses Work-related education, Adjustments to Qualifying Work-Related Education Expenses American opportunity credit, Qualified Education Expenses, Adjustments to Qualified Education Expenses Coverdell ESA, Qualified Education Expenses, Qualified Elementary and Secondary Education Expenses Early distributions from IRAs, Qualified education expenses. Tax return 2013 Education savings bond program, Qualified education expenses. Tax return 2013 Expenses not qualified American opportunity credit, Expenses That Do Not Qualify, Comprehensive or bundled fees. Tax return 2013 Lifetime learning credit, Expenses That Do Not Qualify Tuition and fees deduction, Expenses That Do Not Qualify Lifetime learning credit, Qualified Education Expenses, Amounts that do not reduce qualified education expenses. Tax return 2013 Qualified tuition program (QTP), Qualified education expenses. Tax return 2013 Scholarships and fellowships, Qualified education expenses. Tax return 2013 Student loan interest deduction, Qualified Education Expenses Tuition and fees deduction, What Expenses Qualify, Adjustments to Qualified Education Expenses Work-related education, What Expenses Can Be Deducted, Adjustments to Qualifying Work-Related Education Expenses Qualified elementary and secondary education expenses Coverdell ESAs, Qualified Elementary and Secondary Education Expenses Qualified employer plans Student loan interest deduction not allowed, Qualified employer plan. Tax return 2013 Qualified student loans, Qualified Student Loan, Qualified employer plan. Tax return 2013 Qualified tuition program (QTP), Qualified Tuition Program (QTP), Changing the Designated Beneficiary Additional tax on taxable distributions, Additional Tax on Taxable Distributions Change of designated beneficiary, Changing the Designated Beneficiary Contributions to, How Much Can You Contribute Coordination with American opportunity and lifetime learning credits, Coordination With American Opportunity and Lifetime Learning Credits Coordination with Coverdell ESA distributions, Coordination With Coverdell ESA Distributions Defined, What Is a Qualified Tuition Program Eligible educational institution, Eligible educational institution. Tax return 2013 Figuring taxable portion of distribution, Figuring the Taxable Portion of a Distribution, Losses on QTP Investments Losses, Losses on QTP Investments Qualified education expenses, Qualified education expenses. Tax return 2013 Rollovers, Rollovers and Other Transfers, Changing the Designated Beneficiary Tax benefit of, What is the tax benefit of a QTP. Tax return 2013 Taxability of distributions, Are Distributions Taxable, Figuring the additional tax. Tax return 2013 Taxable earnings, Taxable earnings. Tax return 2013 Transfers, Rollovers and Other Transfers, Changing the Designated Beneficiary Qualified tuition reduction, Qualified Tuition Reduction, How To Report Qualified U. Tax return 2013 S. Tax return 2013 savings bonds, Qualified U. Tax return 2013 S. Tax return 2013 savings bonds. Tax return 2013 Qualifying work-related education, Qualifying Work-Related Education, Teaching and Related Duties Determining if qualified (Figure 11-1), R Recapture American opportunity credit, Credit recapture. Tax return 2013 Lifetime learning credit, Credit recapture. Tax return 2013 Tuition and fees deduction, Credit recapture. Tax return 2013 Recordkeeping requirements Work-related education, Recordkeeping, Examples of records to keep. Tax return 2013 Refinanced student loans, Interest on refinanced student loans. Tax return 2013 , Refinanced Loan Reimbursements Nondeductible expenses, Reimbursements for nondeductible expenses. Tax return 2013 Work-related education, How To Treat Reimbursements, Reimbursements for nondeductible expenses. Tax return 2013 Related persons Coverdell ESA, Members of the beneficiary's family. Tax return 2013 Qualified tuition program (QTP), Members of the beneficiary's family. Tax return 2013 Student loan interest deduction, Related person. Tax return 2013 Repayment programs (see Student loan repayment assistance) Reporting American opportunity credit, Claiming the Credit Coverdell ESA, Exceptions. Tax return 2013 , Figuring and reporting the additional tax. Tax return 2013 , Figuring the Taxable Portion of a Distribution, Figuring the additional tax. Tax return 2013 Early distributions from IRAs, Reporting Early Distributions Education savings bond program, Claiming the Exclusion Lifetime learning credit, Claiming the Credit Qualified tuition program (QTP), Taxable earnings. Tax return 2013 , Losses on QTP Investments, Rollovers Scholarships and fellowships, taxable, Reporting Scholarships and Fellowships Student loan interest deduction, Claiming the Deduction Tuition and fees deduction, Claiming the Deduction Tuition reduction, taxable, How To Report Work-related education expenses, Deducting Business Expenses, Impairment-Related Work Expenses Revolving lines of credit, interest on, Interest on revolving lines of credit. Tax return 2013 Rollovers Coverdell ESA, Rollovers Qualified tuition program (QTP), Rollovers and Other Transfers, Changing the Designated Beneficiary S Scholarships and fellowships, Scholarships and Fellowships, Form 1040NR-EZ. Tax return 2013 , Coordination with Pell grants and other scholarships. Tax return 2013 , Coordination with Pell grants and other scholarships. Tax return 2013 Athletic scholarships, Athletic Scholarships Eligible educational institution, Eligible educational institution. Tax return 2013 , Eligible educational institution. Tax return 2013 Figuring tax-free and taxable parts (Worksheet 1-1), Worksheet 1-1. Tax return 2013 Qualified education expenses, Qualified education expenses. Tax return 2013 Reporting, Reporting Scholarships and Fellowships Scholarship, defined, Scholarships and Fellowships Tax treatment of (Table 1-1), Tax-Free Scholarships and Fellowships Tax-free, Tax-Free Scholarships and Fellowships, Athletic Scholarships Taxable, Taxable Scholarships and Fellowships Section 501(c)(3) organizations (see Student loan cancellation) Section 529 program (see Qualified tuition program (QTP)) Self-employed persons Deducting work-related education expenses, Self-Employed Persons Service academy cadets, Payment to Service Academy Cadets Sports, games, hobbies, and noncredit courses American opportunity credit, Sports, games, hobbies, and noncredit courses. Tax return 2013 Education savings bond program, Qualified education expenses. Tax return 2013 Lifetime learning credit, Sports, games, hobbies, and noncredit courses. Tax return 2013 Tuition and fees deduction, Sports, games, hobbies, and noncredit courses. Tax return 2013 Standard mileage rate Work-related education, What's New, Using your car. Tax return 2013 State prepaid education accounts (see Qualified tuition program (QTP)) Student loan cancellation, Student Loan Cancellation Eligible educational institution, Eligible educational institution. Tax return 2013 Section 501(c)(3) organizations, Section 501(c)(3) organization. Tax return 2013 Student loan interest deduction Academic period, Academic period. Tax return 2013 Adjustments to qualified education expenses, Adjustments to Qualified Education Expenses Allocation between interest and principal, Allocating Payments Between Interest and Principal Claiming the deduction, Claiming the Deduction Eligible educational institution, Eligible educational institution. Tax return 2013 Eligible student, Eligible student. Tax return 2013 Figuring the deduction, Figuring the Deduction, Which Worksheet To Use Include as interest, Include As Interest Income level, effect on amount of deduction, Effect of the Amount of Your Income on the Amount of Your Deduction Loan repayment assistance, Do Not Include As Interest Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Tax return 2013 , Which Worksheet To Use Table 4-2, Table 4-2. Tax return 2013 Effect of MAGI on Student Loan Interest Deduction Not included as interest, Do Not Include As Interest Phaseout, Phaseout. Tax return 2013 , Effect of the Amount of Your Income on the Amount of Your Deduction Qualified education expenses, Qualified Education Expenses Qualified employer plans, Qualified employer plan. Tax return 2013 Qualified student loans, Qualified Student Loan, Qualified employer plan. Tax return 2013 Reasonable period of time, Reasonable period of time. Tax return 2013 Related persons, Related person. Tax return 2013 Student loan interest, defined, Student Loan Interest Defined, When Must Interest Be Paid Third party interest payments, Interest paid by others. Tax return 2013 When interest must be paid, When Must Interest Be Paid Worksheet 4-1, Worksheet 4-1. Tax return 2013 Student Loan Interest Deduction Worksheet Student loan repayment assistance, Student Loan Repayment Assistance Surviving spouse Coverdell ESA transfer to, Exception for Transfer to Surviving Spouse or Family Member T Tables and figures American opportunity credit Eligible student requirements (Figure 2-2), Overview (Table 2-1), Introduction Qualifying to claim (Figure 2-1), Comparison of education tax benefits (Appendix B), Coverdell ESAs Contributions to (Table 7-2), Contribution Limits Distributions (Table 7-3), Distributions Overview (Table 6-1), Coverdell Education Savings Account (ESA) Education credits Overview of American opportunity credit (Table 2-1), Introduction Overview of lifetime learning credit (Table 3-1), Table 3-1. Tax return 2013 Overview of the Lifetime Learning Credit Lifetime learning credit Overview (Table 3-1), Table 3-1. Tax return 2013 Overview of the Lifetime Learning Credit Qualifying to claim (Figure 3-1), Scholarships and fellowships, taxability of (Table 1-1), Tax-Free Scholarships and Fellowships Student loan interest deduction MAGI, effect of (Table 4-2), Table 4-2. Tax return 2013 Effect of MAGI on Student Loan Interest Deduction Overview (Table 4-1), Table 4-1. Tax return 2013 Student Loan Interest Deduction at a Glance Summary chart of differences between education tax benefits (Appendix B), Tuition and fees deduction MAGI, effect of (Table 6-2), Table 6-2. Tax return 2013 Effect of MAGI on Maximum Tuition and Fees Deduction Overview (Table 6-1), Table 6-1. Tax return 2013 Tuition and Fees Deduction at a Glance Work-related education, qualifying (Figure 112-1), Tax help, How To Get Tax Help Tax-free educational assistance American opportunity credit, Tax-free educational assistance. Tax return 2013 Coverdell ESA, Adjusted qualified education expenses. Tax return 2013 Early distributions from IRAs, Figuring the Amount Not Subject to the 10% Tax Education savings bond program, Adjusted qualified education expenses. Tax return 2013 Lifetime learning credit, Tax-free educational assistance. Tax return 2013 Qualified tuition program (QTP), Adjusted qualified education expenses. Tax return 2013 Tuition and fees deduction, Tax-free educational assistance. Tax return 2013 Work-related education, Tax-free educational assistance. Tax return 2013 Taxable scholarships and fellowships, Taxable Scholarships and Fellowships Teachers, Requirements for Teachers, Teaching and Related Duties Temporary-basis student, transportation expenses of, Temporary basis. Tax return 2013 Title IV need-based education grants, Pell Grants and Other Title IV Need-Based Education Grants Transfers Coverdell ESA, Rollovers Qualified tuition program (QTP), Rollovers and Other Transfers, Changing the Designated Beneficiary Transportation expenses Work-related education, Transportation Expenses, Using your car. Tax return 2013 Travel expenses 50% limit on meals, 50% limit on meals. Tax return 2013 Not deductible as form of education, Travel as Education Work-related education, Travel Expenses TTY/TDD information, How To Get Tax Help Tuition and fees deduction, Tuition and Fees Deduction, Illustrated Example Academic period, Academic period. Tax return 2013 Adjustments to qualified education expenses, Adjustments to Qualified Education Expenses Can you claim the deduction, Can You Claim the Deduction Claiming dependent's expenses, Who Can Claim a Dependent's Expenses Claiming the deduction, Claiming the Deduction Double benefit not allowed, No Double Benefit Allowed Eligible educational institution, Eligible educational institution. Tax return 2013 Eligible student, Who Is an Eligible Student Expenses not qualifying for, Expenses That Do Not Qualify Expenses qualifying for, What Expenses Qualify, Adjustments to Qualified Education Expenses Figuring the deduction, Figuring the Deduction, MAGI when using Form 1040. Tax return 2013 Income level, effect on amount of deduction, Effect of the Amount of Your Income on the Amount of Your Deduction Loan used to pay tuition and fees, Paid with borrowed funds. Tax return 2013 Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Tax return 2013 Table 6-2, Table 6-2. Tax return 2013 Effect of MAGI on Maximum Tuition and Fees Deduction Worksheet 6-1, Worksheet 6-1. Tax return 2013 MAGI for the Tuition and Fees Deduction Overview (Table 4-1), Table 4-1. Tax return 2013 Student Loan Interest Deduction at a Glance Overview (Table 6-1), Table 6-1. Tax return 2013 Tuition and Fees Deduction at a Glance Qualified education expenses, What Expenses Qualify, Adjustments to Qualified Education Expenses Qualifying for deduction, Can You Claim the Deduction Tax benefit of, What is the tax benefit of the tuition and fees deduction. Tax return 2013 Tax-free educational assistance, Tax-free educational assistance. Tax return 2013 Tuition reduction American opportunity credit, Tuition reduction. Tax return 2013 Lifetime learning credit, Tuition reduction. Tax return 2013 Qualified, Qualified Tuition Reduction, How To Report Tuition and fees deduction, Tuition reduction. Tax return 2013 U U. Tax return 2013 S. Tax return 2013 savings bonds, Qualified U. Tax return 2013 S. Tax return 2013 savings bonds. Tax return 2013 Unclaimed reimbursement Work-related education, Unclaimed reimbursement. Tax return 2013 V Veterans' benefits, Veterans' Benefits Voluntary interest payments, Voluntary interest payments. Tax return 2013 W Withholding, Analyzing your tax withholding. Tax return 2013 Work-related education (see Business deduction for work-related education) Working condition fringe benefit, Working condition fringe benefit. Tax return 2013 Worksheets Coverdell ESA Contribution limit (Worksheet 6-2), Figuring the limit. Tax return 2013 MAGI, calculation of (Worksheet 6-1), Worksheet 7-1. Tax return 2013 MAGI for a Coverdell ESA Taxable distributions and basis (Worksheet 6-3), Worksheet 7-3. Tax return 2013 Coverdell ESA—Taxable Distributions and Basis Taxable distributions and basis (Worksheet 7-3), Worksheet 7-3. Tax return 2013 Coverdell ESA—Taxable Distributions and Basis Lifetime learning credit MAGI calculation (Worksheet 3-1), MAGI when using Form 1040. Tax return 2013 Scholarships and fellowships, taxable income (Worksheet 1-1), Worksheet 1-1. Tax return 2013 Student loan interest deduction (Worksheet 4-1), Worksheet 4-1. Tax return 2013 Student Loan Interest Deduction Worksheet Tuition and fees deduction, MAGI calculation (Worksheet 6-1), Worksheet 6-1. Tax return 2013 MAGI for the Tuition and Fees Deduction Prev  Up     Home   More Online Publications