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Where To Get 2009 Tax Forms

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Where To Get 2009 Tax Forms

Where to get 2009 tax forms Publication 503 - Main Content Table of Contents Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. Where to get 2009 tax forms Employment Taxes for Household Employers How To Get Tax HelpLow Income Taxpayer Clinics Tests To Claim the Credit To be able to claim the credit for child and dependent care expenses, you must file Form 1040, Form 1040A, or Form 1040NR, not Form 1040EZ or Form 1040NR-EZ, and meet all the following tests. Where to get 2009 tax forms The care must be for one or more qualifying persons who are identified on Form 2441. Where to get 2009 tax forms (See Qualifying Person Test. Where to get 2009 tax forms ) You (and your spouse if filing jointly) must have earned income during the year. Where to get 2009 tax forms (However, see Rule for student-spouse or spouse not able to care for self under Earned Income Test, later. Where to get 2009 tax forms ) You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. Where to get 2009 tax forms (See Work-Related Expense Test, later. Where to get 2009 tax forms ) You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. Where to get 2009 tax forms If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. Where to get 2009 tax forms You cannot make payments to: Your spouse, or The parent of your qualifying person if your qualifying person is your child and under age 13. Where to get 2009 tax forms See Payments to Relatives or Dependents under Work-Related Expense Test, later. Where to get 2009 tax forms Your filing status may be single, head of household, or qualifying widow(er) with dependent child. Where to get 2009 tax forms If you are married, you must file a joint return, unless an exception applies to you. Where to get 2009 tax forms See Joint Return Test, later. Where to get 2009 tax forms You must identify the care provider on your tax return. Where to get 2009 tax forms (See Provider Identification Test, later. Where to get 2009 tax forms ) If you exclude or deduct dependent care benefits provided by a dependent care benefit plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). Where to get 2009 tax forms (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000. Where to get 2009 tax forms See Reduced Dollar Limit under How To Figure the Credit, later. Where to get 2009 tax forms ) These tests are presented in Figure A and are also explained in detail in this publication. Where to get 2009 tax forms Qualifying Person Test Your child and dependent care expenses must be for the care of one or more qualifying persons. Where to get 2009 tax forms A qualifying person is: Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart , later), Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Where to get 2009 tax forms Dependent defined. Where to get 2009 tax forms   A dependent is a person, other than you or your spouse, for whom you can claim an exemption. Where to get 2009 tax forms To be your dependent, a person must be your qualifying child (or your qualifying relative). Where to get 2009 tax forms Qualifying child. Where to get 2009 tax forms   To be your qualifying child, a child must live with you for more than half the year and meet other requirements. Where to get 2009 tax forms More information. Where to get 2009 tax forms   For more information about who is a dependent or a qualifying child, see Publication 501. Where to get 2009 tax forms Physically or mentally not able to care for oneself. Where to get 2009 tax forms   Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. Where to get 2009 tax forms Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves. Where to get 2009 tax forms Person qualifying for part of year. Where to get 2009 tax forms   You determine a person's qualifying status each day. Where to get 2009 tax forms For example, if the person for whom you pay child and dependent care expenses no longer qualifies on September 16, count only those expenses through September 15. Where to get 2009 tax forms Also see Yearly limit under Dollar Limit, later. Where to get 2009 tax forms Birth or death of otherwise qualifying person. Where to get 2009 tax forms   In determining whether a person is a qualifying person, a person who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the person's home more than half the time he or she was alive in 2013. Where to get 2009 tax forms Taxpayer identification number. Where to get 2009 tax forms   You must include on your return the name and taxpayer identification number (generally the social security number) of the qualifying person(s). Where to get 2009 tax forms If the correct information is not shown, the credit may be reduced or disallowed. Where to get 2009 tax forms Individual taxpayer identification number (ITIN) for aliens. Where to get 2009 tax forms   If your qualifying person is a nonresident or resident alien who does not have and cannot get a social security number (SSN), use that person's ITIN. Where to get 2009 tax forms The ITIN is entered wherever an SSN is requested on a tax return. Where to get 2009 tax forms If the alien does not have an ITIN, he or she must apply for one. Where to get 2009 tax forms See Form W-7, Application for IRS Individual Taxpayer Identification Number, for details. Where to get 2009 tax forms   An ITIN is for tax use only. Where to get 2009 tax forms It does not entitle the holder to social security benefits or change the holder's employment or immigration status under U. Where to get 2009 tax forms S. Where to get 2009 tax forms law. Where to get 2009 tax forms Adoption taxpayer identification number (ATIN). Where to get 2009 tax forms   If your qualifying person is a child who was placed in your home for adoption and for whom you do not have an SSN, you must get an ATIN for the child. Where to get 2009 tax forms File Form W-7A, Application for Taxpayer Identification Number for Pending U. Where to get 2009 tax forms S. Where to get 2009 tax forms Adoptions. Where to get 2009 tax forms Child of divorced or separated parents or parents living apart. Where to get 2009 tax forms   Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if: The child was under age 13 or was not physically or mentally able to care for himself or herself, The child received over half of his or her support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year, The child was in the custody of one or both parents for more than half the year, and You were the child's custodial parent. Where to get 2009 tax forms   The custodial parent is the parent with whom the child lived for the greater number of nights in 2013. Where to get 2009 tax forms If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. Where to get 2009 tax forms For details and an exception for a parent who works at night, see Publication 501. Where to get 2009 tax forms   The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. Where to get 2009 tax forms Please click here for the text description of the image. Where to get 2009 tax forms Figure a. Where to get 2009 tax forms Can you claim the credit Earned Income Test To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. Where to get 2009 tax forms Earned income. Where to get 2009 tax forms   Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. Where to get 2009 tax forms A net loss from self-employment reduces earned income. Where to get 2009 tax forms Earned income also includes strike benefits and any disability pay you report as wages. Where to get 2009 tax forms   Generally, only taxable compensation is included. Where to get 2009 tax forms However, you can elect to include nontaxable combat pay in earned income. Where to get 2009 tax forms If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. Where to get 2009 tax forms (In other words, if one of you makes the election, the other one can also make it but does not have to. Where to get 2009 tax forms ) Including this income will give you a larger credit only if your (or your spouse's) other earned income is less than the amount entered on line 3 of Form 2441. Where to get 2009 tax forms You should figure your credit both ways and make the election if it gives you a greater tax benefit. Where to get 2009 tax forms    You can choose to include your nontaxable combat pay in earned income when figuring your credit for child and dependent care expenses, even if you choose not to include it in earned income for the earned income credit or the exclusion or deduction for dependent care benefits. Where to get 2009 tax forms Members of certain religious faiths opposed to social security. Where to get 2009 tax forms   This section is for persons who are members of certain religious faiths that are opposed to participation in Social Security Act programs and have an IRS-approved form that exempts certain income from social security and Medicare taxes. Where to get 2009 tax forms These forms are: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, and Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits, for use by members of recognized religious groups. Where to get 2009 tax forms   Each form is discussed here in terms of what is or is not earned income for purposes of the child and dependent care credit. Where to get 2009 tax forms For information on the use of these forms, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Where to get 2009 tax forms Form 4361. Where to get 2009 tax forms   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee are earned income. Where to get 2009 tax forms This includes wages, salaries, tips, and other taxable employee compensation. Where to get 2009 tax forms   However, amounts you received for ministerial duties, but not as an employee, do not count as earned income. Where to get 2009 tax forms Examples include fees for performing marriages and honoraria for delivering speeches. Where to get 2009 tax forms   Any amount you received for work that is not related to your ministerial duties is earned income. Where to get 2009 tax forms Form 4029. Where to get 2009 tax forms   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation are earned income. Where to get 2009 tax forms   However, amounts you received as a self-employed individual do not count as earned income. Where to get 2009 tax forms What is not earned income?   Earned income does not include: Pensions and annuities, Social security and railroad retirement benefits, Workers' compensation, Interest and dividends, Unemployment compensation, Scholarships or fellowship grants, except for those reported on Form W-2 and paid to you for teaching or other services, Nontaxable workfare payments, Child support payments received, Income of a nonresident alien that is not effectively connected with a U. Where to get 2009 tax forms S. Where to get 2009 tax forms trade or business, or Any amount received for work while an inmate in a penal institution. Where to get 2009 tax forms Rule for student-spouse or spouse not able to care for self. Where to get 2009 tax forms   Your spouse is treated as having earned income for any month that he or she is: A full-time student, or Physically or mentally not able to care for himself or herself. Where to get 2009 tax forms (Your spouse also must live with you for more than half the year. Where to get 2009 tax forms )   If you are filing a joint return, this rule also applies to you. Where to get 2009 tax forms You can be treated as having earned income for any month you are a full-time student or not able to care for yourself. Where to get 2009 tax forms   Figure the earned income of the nonworking spouse, described under (1) or (2) above, as shown under Earned Income Limit under How To Figure the Credit, later. Where to get 2009 tax forms   This rule applies to only one spouse for any one month. Where to get 2009 tax forms If, in the same month, both you and your spouse do not work and are either full-time students or not physically or mentally able to care for yourselves, only one of you can be treated as having earned income in that month. Where to get 2009 tax forms Full-time student. Where to get 2009 tax forms    You are a full-time student if you are enrolled at a school for the number of hours or classes that the school considers full time. Where to get 2009 tax forms You must have been a full-time student for some part of each of 5 calendar months during the year. Where to get 2009 tax forms (The months need not be consecutive. Where to get 2009 tax forms ) School. Where to get 2009 tax forms   The term “school” includes high schools, colleges, universities, and technical, trade, and mechanical schools. Where to get 2009 tax forms A school does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. Where to get 2009 tax forms Work-Related Expense Test Child and dependent care expenses must be work-related to qualify for the credit. Where to get 2009 tax forms Expenses are considered work-related only if both of the following are true. Where to get 2009 tax forms They allow you (and your spouse if filing jointly) to work or look for work. Where to get 2009 tax forms They are for a qualifying person's care. Where to get 2009 tax forms Working or Looking for Work To be work-related, your expenses must allow you to work or look for work. Where to get 2009 tax forms If you are married, generally both you and your spouse must work or look for work. Where to get 2009 tax forms One spouse is treated as working during any month he or she is a full-time student or is not physically or mentally able to care for himself or herself. Where to get 2009 tax forms Your work can be for others or in your own business or partnership. Where to get 2009 tax forms It can be either full time or part time. Where to get 2009 tax forms Work also includes actively looking for work. Where to get 2009 tax forms However, if you do not find a job and have no earned income for the year, you cannot take this credit. Where to get 2009 tax forms See Earned Income Test, earlier. Where to get 2009 tax forms An expense is not considered work-related merely because you had it while you were working. Where to get 2009 tax forms The purpose of the expense must be to allow you to work. Where to get 2009 tax forms Whether your expenses allow you to work or look for work depends on the facts. Where to get 2009 tax forms Example 1. Where to get 2009 tax forms The cost of a babysitter while you and your spouse go out to eat is not normally a work-related expense. Where to get 2009 tax forms Example 2. Where to get 2009 tax forms You work during the day. Where to get 2009 tax forms Your spouse works at night and sleeps during the day. Where to get 2009 tax forms You pay for care of your 5-year-old child during the hours when you are working and your spouse is sleeping. Where to get 2009 tax forms Your expenses are considered work-related. Where to get 2009 tax forms Volunteer work. Where to get 2009 tax forms   For this purpose, you are not considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary. Where to get 2009 tax forms Work for part of year. Where to get 2009 tax forms   If you work or actively look for work during only part of the period covered by the expenses, then you must figure your expenses for each day. Where to get 2009 tax forms For example, if you work all year and pay care expenses of $250 a month ($3,000 for the year), all the expenses are work related. Where to get 2009 tax forms However, if you work or look for work for only 2 months and 15 days during the year and pay expenses of $250 a month, your work-related expenses are limited to $625 (2½ months × $250). Where to get 2009 tax forms Temporary absence from work. Where to get 2009 tax forms   You do not have to figure your expenses for each day during a short, temporary absence from work, such as for vacation or a minor illness, if you have to pay for care anyway. Where to get 2009 tax forms Instead, you can figure your credit including the expenses you paid for the period of absence. Where to get 2009 tax forms   An absence of 2 weeks or less is a short, temporary absence. Where to get 2009 tax forms An absence of more than 2 weeks may be considered a short, temporary absence, depending on the circumstances. Where to get 2009 tax forms Example. Where to get 2009 tax forms You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. Where to get 2009 tax forms You become ill and miss 4 months of work but receive sick pay. Where to get 2009 tax forms You continue to pay the nanny to care for the children while you are ill. Where to get 2009 tax forms Your absence is not a short, temporary absence, and your expenses are not considered work-related. Where to get 2009 tax forms Part-time work. Where to get 2009 tax forms   If you work part-time, you generally must figure your expenses for each day. Where to get 2009 tax forms However, if you have to pay for care weekly, monthly, or in another way that includes both days worked and days not worked, you can figure your credit including the expenses you paid for days you did not work. Where to get 2009 tax forms Any day when you work at least 1 hour is a day of work. Where to get 2009 tax forms Example 1. Where to get 2009 tax forms You work 3 days a week. Where to get 2009 tax forms While you work, your 6-year-old child attends a dependent care center, which complies with all state and local regulations. Where to get 2009 tax forms You can pay the center $150 for any 3 days a week or $250 for 5 days a week. Where to get 2009 tax forms Your child attends the center 5 days a week. Where to get 2009 tax forms Your work-related expenses are limited to $150 a week. Where to get 2009 tax forms Example 2. Where to get 2009 tax forms The facts are the same as in Example 1 except the center does not offer a 3-day option. Where to get 2009 tax forms The entire $250 weekly fee may be a work-related expense. Where to get 2009 tax forms Care of a Qualifying Person To be work-related, your expenses must be to provide care for a qualifying person. Where to get 2009 tax forms You do not have to choose the least expensive way of providing the care. Where to get 2009 tax forms The cost of a paid care provider may be an expense for the care of a qualifying person even if another care provider is available at no cost. Where to get 2009 tax forms Expenses are for the care of a qualifying person only if their main purpose is the person's well-being and protection. Where to get 2009 tax forms Expenses for household services qualify if part of the services is for the care of qualifying persons. Where to get 2009 tax forms See Household Services, later. Where to get 2009 tax forms Expenses not for care. Where to get 2009 tax forms   Expenses for care do not include amounts you pay for food, lodging, clothing, education, and entertainment. Where to get 2009 tax forms However, you can include small amounts paid for these items if they are incidental to and cannot be separated from the cost of caring for the qualifying person. Where to get 2009 tax forms Otherwise, see the discussion of Expenses partly work-related, later. Where to get 2009 tax forms   Child support payments are not for care and do not qualify for the credit. Where to get 2009 tax forms Education. Where to get 2009 tax forms   Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. Where to get 2009 tax forms   Expenses to attend kindergarten or a higher grade are not expenses for care. Where to get 2009 tax forms Do not use these expenses to figure your credit. Where to get 2009 tax forms   However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care. Where to get 2009 tax forms   Summer school and tutoring programs are not for care. Where to get 2009 tax forms Example 1. Where to get 2009 tax forms You take your 3-year-old child to a nursery school that provides lunch and a few educational activities as part of its preschool childcare service. Where to get 2009 tax forms The lunch and educational activities are incidental to the childcare, and their cost cannot be separated from the cost of care. Where to get 2009 tax forms You can count the total cost when you figure the credit. Where to get 2009 tax forms Example 2. Where to get 2009 tax forms You place your 10-year-old child in a boarding school so you can work full time. Where to get 2009 tax forms Only the part of the boarding school expense that is for the care of your child is a work-related expense. Where to get 2009 tax forms You can count that part of the expense in figuring your credit if it can be separated from the cost of education. Where to get 2009 tax forms You cannot count any part of the amount you pay the school for your child's education. Where to get 2009 tax forms Care outside your home. Where to get 2009 tax forms   You can count the cost of care provided outside your home if the care is for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours each day in your home. Where to get 2009 tax forms Dependent care center. Where to get 2009 tax forms   You can count care provided outside your home by a dependent care center only if the center complies with all state and local regulations that apply to these centers. Where to get 2009 tax forms   A dependent care center is a place that provides care for more than six persons (other than persons who live there) and receives a fee, payment, or grant for providing services for any of those persons, even if the center is not run for profit. Where to get 2009 tax forms Camp. Where to get 2009 tax forms   The cost of sending your child to an overnight camp is not considered a work-related expense. Where to get 2009 tax forms    The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer. Where to get 2009 tax forms Transportation. Where to get 2009 tax forms   If a care provider takes a qualifying person to or from a place where care is provided, that transportation is for the care of the qualifying person. Where to get 2009 tax forms This includes transportation by bus, subway, taxi, or private car. Where to get 2009 tax forms However, transportation not provided by a care provider is not for the care of a qualifying person. Where to get 2009 tax forms Also, if you pay the transportation cost for the care provider to come to your home, that expense is not for care of a qualifying person. Where to get 2009 tax forms Fees and deposits. Where to get 2009 tax forms   Fees you paid to an agency to get the services of a care provider, deposits you paid to an agency or preschool, application fees, and other indirect expenses are work-related expenses if you have to pay them to get care, even though they are not directly for care. Where to get 2009 tax forms However, a forfeited deposit is not for the care of a qualifying person if care is not provided. Where to get 2009 tax forms Example 1. Where to get 2009 tax forms You paid a fee to an agency to get the services of the nanny who cares for your 2-year-old daughter while you work. Where to get 2009 tax forms The fee you paid is a work-related expense. Where to get 2009 tax forms Example 2. Where to get 2009 tax forms You placed a deposit with a preschool to reserve a place for your 3-year-old child. Where to get 2009 tax forms You later sent your child to a different preschool and forfeited the deposit. Where to get 2009 tax forms The forfeited deposit is not for care and so is not a work-related expense. Where to get 2009 tax forms Household Services Expenses you pay for household services meet the work-related expense test if they are at least partly for the well-being and protection of a qualifying person. Where to get 2009 tax forms Definition. Where to get 2009 tax forms   Household services are ordinary and usual services done in and around your home that are necessary to run your home. Where to get 2009 tax forms They include the services of a housekeeper, maid, or cook. Where to get 2009 tax forms However, they do not include the services of a chauffeur, bartender, or gardener. Where to get 2009 tax forms Housekeeper. Where to get 2009 tax forms   In this publication, the term housekeeper refers to any household employee whose services include the care of a qualifying person. Where to get 2009 tax forms Expenses partly work-related. Where to get 2009 tax forms   If part of an expense is work-related (for either household services or the care of a qualifying person) and part is for other purposes, you have to divide the expense. Where to get 2009 tax forms To figure your credit, count only the part that is work-related. Where to get 2009 tax forms However, you do not have to divide the expense if only a small part is for other purposes. Where to get 2009 tax forms Example. Where to get 2009 tax forms You pay a housekeeper to care for your 9-year-old and 15-year-old children so you can work. Where to get 2009 tax forms The housekeeper spends most of the time doing normal household work and spends 30 minutes a day driving you to and from work. Where to get 2009 tax forms You do not have to divide the expenses. Where to get 2009 tax forms You can treat the entire expense of the housekeeper as work-related because the time spent driving is minimal. Where to get 2009 tax forms Nor do you have to divide the expenses between the two children, even though the expenses are partly for the 15-year-old child who is not a qualifying person, because the expense is also partly for the care of your 9-year-old child, who is a qualifying person. Where to get 2009 tax forms However, the dollar limit (discussed later) is based on one qualifying person, not two. Where to get 2009 tax forms Meals and lodging provided for housekeeper. Where to get 2009 tax forms   If you have expenses for meals that your housekeeper eats in your home because of his or her employment, count these as work-related expenses. Where to get 2009 tax forms If you have extra expenses for providing lodging in your home to the housekeeper, count these as work-related expenses also. Where to get 2009 tax forms Example. Where to get 2009 tax forms To provide lodging to the housekeeper, you move to an apartment with an extra bedroom. Where to get 2009 tax forms You can count the extra rent and utility expenses for the housekeeper's bedroom as work-related. Where to get 2009 tax forms However, if your housekeeper moves into an existing bedroom in your home, you can count only the extra utility expenses as work-related. Where to get 2009 tax forms Taxes paid on wages. Where to get 2009 tax forms   The taxes you pay on wages for qualifying child and dependent care services are work-related expenses. Where to get 2009 tax forms For more information on a household employer's tax responsibilities, see Employment Taxes for Household Employers, later. Where to get 2009 tax forms Payments to Relatives or Dependents You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. Where to get 2009 tax forms However, do not count any amounts you pay to: A dependent for whom you (or your spouse if filing jointly) can claim an exemption, Your child who was under age 19 at the end of the year, even if he or she is not your dependent, A person who was your spouse any time during the year, or The parent of your qualifying person if your qualifying person is your child and under age 13. Where to get 2009 tax forms Joint Return Test Generally, married couples must file a joint return to take the credit. Where to get 2009 tax forms However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. Where to get 2009 tax forms Legally separated. Where to get 2009 tax forms   You are not considered married if you are legally separated from your spouse under a decree of divorce or separate maintenance. Where to get 2009 tax forms You may be eligible to take the credit on your return using head of household filing status. Where to get 2009 tax forms Married and living apart. Where to get 2009 tax forms   You are not considered married and are eligible to take the credit if all the following apply. Where to get 2009 tax forms You file a return apart from your spouse. Where to get 2009 tax forms Your home is the home of a qualifying person for more than half the year. Where to get 2009 tax forms You pay more than half the cost of keeping up your home for the year. Where to get 2009 tax forms Your spouse does not live in your home for the last 6 months of the year. Where to get 2009 tax forms Costs of keeping up a home. Where to get 2009 tax forms   The costs of keeping up a home normally include property taxes, mortgage interest, rent, utility charges, home repairs, insurance on the home, and food eaten at home. Where to get 2009 tax forms   The costs of keeping up a home do not include payments for clothing, education, medical treatment, vacations, life insurance, transportation, or mortgage principal. Where to get 2009 tax forms   They also do not include the purchase, permanent improvement, or replacement of property. Where to get 2009 tax forms For example, you cannot include the cost of replacing a water heater. Where to get 2009 tax forms However, you can include the cost of repairing a water heater. Where to get 2009 tax forms Death of spouse. Where to get 2009 tax forms   If your spouse died during the year and you do not remarry before the end of the year, you generally must file a joint return to take the credit. Where to get 2009 tax forms If you do remarry before the end of the year, the credit can be claimed on your deceased spouse's own return. Where to get 2009 tax forms Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. Where to get 2009 tax forms Use Form 2441, Part I, to show the information. Where to get 2009 tax forms If you do not have any care providers and you are filing Form 2441 only to report taxable income in Part III, enter “none” in line 1, column (a). Where to get 2009 tax forms Information needed. Where to get 2009 tax forms   To identify the care provider, you must give the provider's: Name, Address, and Taxpayer identification number. Where to get 2009 tax forms    If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. Where to get 2009 tax forms If the care provider is an organization, then it is the employer identification number (EIN). Where to get 2009 tax forms   You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). Where to get 2009 tax forms In this case, enter “Tax-Exempt” in the space where Form 2441 asks for the number. Where to get 2009 tax forms   If you cannot provide all of the information or the information is incorrect, you must be able to show that you used due diligence (discussed later) in trying to furnish the necessary information. Where to get 2009 tax forms Getting the information. Where to get 2009 tax forms    You can use Form W-10, Dependent Care Provider's Identification and Certification, to request the required information from the care provider. Where to get 2009 tax forms If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10, including: A copy of the provider's social security card, A copy of the provider's completed Form W-4, Employee's Withholding Allowance Certificate, if he or she is your household employee, A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or A letter or invoice from the provider if it shows the necessary information. Where to get 2009 tax forms    You should keep this information with your tax records. Where to get 2009 tax forms Do not send Form W-10 (or other document containing this information) to the Internal Revenue Service. Where to get 2009 tax forms Due diligence. Where to get 2009 tax forms   If the care provider information you give is incorrect or incomplete, your credit may not be allowed. Where to get 2009 tax forms However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit. Where to get 2009 tax forms   You can show due diligence by getting and keeping the provider's completed Form W-10 or one of the other sources of information just listed. Where to get 2009 tax forms Care providers can be penalized if they do not provide this information to you or if they provide incorrect information. Where to get 2009 tax forms Provider refusal. Where to get 2009 tax forms    If the provider refuses to give you the identifying information, you should report on Form 2441 whatever information you have (such as the name and address). Where to get 2009 tax forms Enter “See Attached Statement” in the columns calling for the information you do not have. Where to get 2009 tax forms Then attach a statement explaining that you requested the information from the care provider, but the provider did not give you the information. Where to get 2009 tax forms Be sure to write your name and social security number on this statement. Where to get 2009 tax forms The statement will show that you used due diligence in trying to furnish the necessary information. Where to get 2009 tax forms U. Where to get 2009 tax forms S. Where to get 2009 tax forms citizens and resident aliens living abroad. Where to get 2009 tax forms   If you are living abroad, your care provider may not have, and may not be required to get, a U. Where to get 2009 tax forms S. Where to get 2009 tax forms taxpayer identification number (for example, an SSN or an EIN). Where to get 2009 tax forms If so, enter “LAFCP” (Living Abroad Foreign Care Provider) in the space for the care provider's taxpayer identification number. Where to get 2009 tax forms How To Figure the Credit Your credit is a percentage of your work-related expenses. Where to get 2009 tax forms Your expenses are subject to the earned income limit and the dollar limit. Where to get 2009 tax forms The percentage is based on your adjusted gross income. Where to get 2009 tax forms Figuring Total Work-Related Expenses To figure the credit for 2013 work-related expenses, count only those you paid by December 31, 2013. Where to get 2009 tax forms Expenses prepaid in an earlier year. Where to get 2009 tax forms   If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. Where to get 2009 tax forms Claim the expenses for the later year as if they were actually paid in that later year. Where to get 2009 tax forms Expenses not paid until the following year. Where to get 2009 tax forms   Do not count 2012 expenses that you paid in 2013 as work-related expenses for 2013. Where to get 2009 tax forms You may be able to claim an additional credit for them on your 2013 return, but you must figure it separately. Where to get 2009 tax forms See Payments for prior year's expenses under Amount of Credit, later. Where to get 2009 tax forms If you had expenses in 2013 that you did not pay until 2014, you cannot count them when figuring your 2013 credit. Where to get 2009 tax forms You may be able to claim a credit for them on your 2014 return. Where to get 2009 tax forms Expenses reimbursed. Where to get 2009 tax forms   If a state social services agency pays you a nontaxable amount to reimburse you for some of your child and dependent care expenses, you cannot count the expenses that are reimbursed as work-related expenses. Where to get 2009 tax forms Example. Where to get 2009 tax forms You paid work-related expenses of $3,000. Where to get 2009 tax forms You are reimbursed $2,000 by a state social services agency. Where to get 2009 tax forms You can use only $1,000 to figure your credit. Where to get 2009 tax forms Medical expenses. Where to get 2009 tax forms   Some expenses for the care of qualifying persons who are not able to care for themselves may qualify as work-related expenses and also as medical expenses. Where to get 2009 tax forms You can use them either way, but you cannot use the same expenses to claim both a credit and a medical expense deduction. Where to get 2009 tax forms   If you use these expenses to figure the credit and they are more than the earned income limit or the dollar limit, discussed later, you can add the excess to your medical expenses. Where to get 2009 tax forms However, if you use your total expenses to figure your medical expense deduction, you cannot use any part of them to figure your credit. Where to get 2009 tax forms For information on medical expenses, see Publication 502, Medical and Dental Expenses. Where to get 2009 tax forms    Amounts excluded from your income under your employer's dependent care benefits plan cannot be used to claim a medical expense deduction. Where to get 2009 tax forms Dependent Care Benefits If you receive dependent care benefits, your dollar limit for purposes of the credit may be reduced. Where to get 2009 tax forms See Reduced Dollar Limit, later. Where to get 2009 tax forms But, even if you cannot take the credit, you may be able to take an exclusion or deduction for the dependent care benefits. Where to get 2009 tax forms Dependent care benefits. Where to get 2009 tax forms    Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. Where to get 2009 tax forms Your salary may have been reduced to pay for these benefits. Where to get 2009 tax forms If you received benefits as an employee, they should be shown in box 10 of your Form W-2, Wage and Tax Statement. Where to get 2009 tax forms See Statement for employee, later. Where to get 2009 tax forms Benefits you received as a partner should be shown in box 13 of your Schedule K-1 (Form 1065) with code O. Where to get 2009 tax forms   Enter the amount of these benefits on Form 2441, Part III, line 12. Where to get 2009 tax forms Exclusion or deduction. Where to get 2009 tax forms   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Where to get 2009 tax forms Your employer can tell you whether your benefit plan qualifies. Where to get 2009 tax forms To claim the exclusion, you must complete Part III of Form 2441. Where to get 2009 tax forms You cannot use Form 1040EZ. Where to get 2009 tax forms   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. Where to get 2009 tax forms Therefore, you would not get an exclusion from wages. Where to get 2009 tax forms Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. Where to get 2009 tax forms To claim the deduction, you must use Form 2441. Where to get 2009 tax forms   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Where to get 2009 tax forms   The definition of earned income for the exclusion or deduction is the same as the definition used when figuring the credit except that earned income for the exclusion or deduction does not include any dependent care benefits you receive. Where to get 2009 tax forms    You can choose to include your nontaxable combat pay in earned income when figuring your exclusion or deduction, even if you choose not to include it in earned income for the earned income credit or the credit for child and dependent care expenses. Where to get 2009 tax forms Statement for employee. Where to get 2009 tax forms   Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. Where to get 2009 tax forms Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. Where to get 2009 tax forms Effect of exclusion on credit. Where to get 2009 tax forms   If you exclude dependent care benefits from your income, the amount of the excluded benefits: Is not included in your work-related expenses, and Reduces the dollar limit, discussed later. Where to get 2009 tax forms Earned Income Limit The amount of work-related expenses you use to figure your credit cannot be more than: Your earned income for the year, if you are single at the end of the year, or The smaller of your or your spouse's earned income for the year if you are married at the end of the year. Where to get 2009 tax forms Earned income for the purpose of figuring the credit is defined under Earned Income Test, earlier. Where to get 2009 tax forms For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year. Where to get 2009 tax forms Example. Where to get 2009 tax forms You remarried on December 3. Where to get 2009 tax forms Your earned income for the year was $18,000. Where to get 2009 tax forms Your new spouse's earned income for the year was $2,000. Where to get 2009 tax forms You paid work-related expenses of $3,000 for the care of your 5-year-old child and qualified to claim the credit. Where to get 2009 tax forms The amount of expenses you use to figure your credit cannot be more than $2,000 (the smaller of your earned income or that of your spouse). Where to get 2009 tax forms Separated spouse. Where to get 2009 tax forms   If you are legally separated or married and living apart from your spouse (as described under Joint Return Test, earlier), you are not considered married for purposes of the earned income limit. Where to get 2009 tax forms Use only your income in figuring the earned income limit. Where to get 2009 tax forms Surviving spouse. Where to get 2009 tax forms   If your spouse died during the year and you file a joint return as a surviving spouse, you may, but are not required to, take into account the earned income of your spouse who died during the year. Where to get 2009 tax forms Community property laws. Where to get 2009 tax forms   Disregard community property laws when you figure earned income for this credit. Where to get 2009 tax forms Self-employment earnings. Where to get 2009 tax forms   If you are self-employed, include your net earnings in earned income. Where to get 2009 tax forms For purposes of the child and dependent care credit, net earnings from self-employment generally means the amount from Schedule SE (either Section A or Section B), line 3, minus any deduction for self-employment tax on Form 1040 or Form 1040NR, line 27. Where to get 2009 tax forms Include your self-employment earnings in earned income, even if they are less than $400 and you did not file Schedule SE. Where to get 2009 tax forms Clergy or church employee. Where to get 2009 tax forms   If you are a member of the clergy or a church employee, see the Instructions for Form 2441 for details. Where to get 2009 tax forms Statutory employee. Where to get 2009 tax forms   If you filed Schedule C (Form 1040) or C-EZ (Form 1040) to report income as a statutory employee, also include as earned income the amount from line 1 of that Schedule C (Form 1040) or C-EZ (Form 1040). Where to get 2009 tax forms Net loss. Where to get 2009 tax forms   You must reduce your earned income by any net loss from self-employment. Where to get 2009 tax forms Optional method if earnings are low or a net loss. Where to get 2009 tax forms   If your net earnings from self-employment are low or you have a net loss, you may be able to figure your net earnings by using an optional method instead of the regular method. Where to get 2009 tax forms Get Publication 334, Tax Guide for Small Business, for details. Where to get 2009 tax forms If you use an optional method to figure net earnings for self-employment tax purposes, include those net earnings in your earned income for this credit. Where to get 2009 tax forms In this case, subtract any deduction you claimed on Form 1040 or Form 1040NR, line 27, from the total of the amounts on Schedule SE, Section B, lines 3 and 4b, to figure your net earnings. Where to get 2009 tax forms You or your spouse is a student or not able to care for self. Where to get 2009 tax forms   Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. Where to get 2009 tax forms His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more. Where to get 2009 tax forms Spouse works. Where to get 2009 tax forms   If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month. Where to get 2009 tax forms Spouse qualifies for part of month. Where to get 2009 tax forms   If your spouse is a full-time student or not able to care for himself or herself for only part of a month, the full $250 (or $500) still applies for that month. Where to get 2009 tax forms You are a student or not able to care for self. Where to get 2009 tax forms   These rules also apply if you are a student or not able to care for yourself and are filing a joint return. Where to get 2009 tax forms For each month or part of a month you are a student or not able to care for yourself, your earned income is considered to be at least $250 (or $500). Where to get 2009 tax forms If you also work during that month, use the higher of $250 (or $500) or your actual earned income for that month. Where to get 2009 tax forms Both spouses qualify. Where to get 2009 tax forms   If, in the same month, both you and your spouse are either full-time students or not able to care for yourselves, only one spouse can be considered to have this earned income of $250 (or $500) for that month. Where to get 2009 tax forms Example. Where to get 2009 tax forms Jim works and keeps up a home for himself and his wife Sharon. Where to get 2009 tax forms Because of an accident, Sharon is not able to care for herself for 11 months during the tax year. Where to get 2009 tax forms During the 11 months, Jim pays $3,300 of work-related expenses for Sharon's care. Where to get 2009 tax forms These expenses also qualify as medical expenses. Where to get 2009 tax forms Their adjusted gross income is $29,000 and the entire amount is Jim's earned income. Where to get 2009 tax forms Jim and Sharon's earned income limit is the smallest of the following amounts. Where to get 2009 tax forms   Jim and Sharon's Earned Income Limit   1) Work-related expenses Jim paid $   3,300   2) Jim's earned income $   29,000   3) Income considered earned by Sharon (11 × $250) $    2,750   Jim and Sharon can use $2,750 to figure the credit and treat the balance of $550 ($3,300 − $2,750) as a medical expense. Where to get 2009 tax forms However, if they use the $3,300 first as a medical expense, they cannot use any part of that amount to figure the credit. Where to get 2009 tax forms Dollar Limit There is a dollar limit on the amount of your work-related expenses you can use to figure the credit. Where to get 2009 tax forms This limit is $3,000 for one qualifying person, or $6,000 for two or more qualifying persons. Where to get 2009 tax forms If you paid work-related expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000. Where to get 2009 tax forms This limit does not need to be divided equally among them. Where to get 2009 tax forms For example, if your work-related expenses for the care of one qualifying person are $3,200 and your work-related expenses for another qualifying person are $2,800, you can use the total, $6,000, when figuring the credit. Where to get 2009 tax forms Yearly limit. Where to get 2009 tax forms   The dollar limit is a yearly limit. Where to get 2009 tax forms The amount of the dollar limit remains the same no matter how long, during the year, you have a qualifying person in your household. Where to get 2009 tax forms Use the $3,000 limit if you paid work-related expenses for the care of one qualifying person at any time during the year. Where to get 2009 tax forms Use $6,000 if you paid work-related expenses for the care of more than one qualifying person at any time during the year. Where to get 2009 tax forms Example 1. Where to get 2009 tax forms You pay $500 a month for after-school care for your son. Where to get 2009 tax forms He turned 13 on May 1 and is no longer a qualifying person. Where to get 2009 tax forms You can use the $2,000 of expenses for his care January through April to figure your credit because it is not more than the $3,000 yearly limit. Where to get 2009 tax forms Example 2. Where to get 2009 tax forms In July of this year, to permit your spouse to begin a new job, you enrolled your 3-year-old daughter in a nursery school that provides preschool childcare. Where to get 2009 tax forms You paid $300 per month for the childcare. Where to get 2009 tax forms You can use the full $1,800 you paid ($300 × 6 months) as qualified expenses because it is not more than the $3,000 yearly limit. Where to get 2009 tax forms Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. Where to get 2009 tax forms Your reduced dollar limit is figured on Form 2441, Part III. Where to get 2009 tax forms See Dependent Care Benefits, earlier, for information on excluding or deducting these benefits. Where to get 2009 tax forms Example 1. Where to get 2009 tax forms George is a widower with one child and earns $24,000 a year. Where to get 2009 tax forms He pays work-related expenses of $2,900 for the care of his 4-year-old child and qualifies to claim the credit for child and dependent care expenses. Where to get 2009 tax forms His employer pays an additional $1,000 under a qualified dependent care benefit plan. Where to get 2009 tax forms This $1,000 is excluded from George's income. Where to get 2009 tax forms Although the dollar limit for his work-related expenses is $3,000 (one qualifying person), George figures his credit on only $2,000 of the $2,900 work-related expenses he paid. Where to get 2009 tax forms This is because his dollar limit is reduced as shown next. Where to get 2009 tax forms   George's Reduced Dollar Limit 1) Maximum allowable expenses for one qualifying person $3,000 2) Minus: Dependent care benefits George excludes from income −1,000 3) Reduced dollar limit on expenses George can use for the credit $2,000 Example 2. Where to get 2009 tax forms Randall is married and both he and his wife are employed. Where to get 2009 tax forms Each has earned income in excess of $6,000. Where to get 2009 tax forms They have two children, Anne and Andy, ages 2 and 4, who attend a daycare facility licensed and regulated by the state. Where to get 2009 tax forms Randall's work-related expenses are $6,000 for the year. Where to get 2009 tax forms Randall's employer has a dependent care assistance program as part of its cafeteria plan, which allows employees to make pre-tax contributions to a dependent care flexible spending arrangement. Where to get 2009 tax forms Randall has elected to take the maximum $5,000 exclusion from his salary to cover dependent care expenses through this program. Where to get 2009 tax forms Although the dollar limit for his work-related expenses is $6,000 (two or more qualifying persons), Randall figures his credit on only $1,000 of the $6,000 work-related expense paid. Where to get 2009 tax forms This is because his dollar limit is reduced as shown next. Where to get 2009 tax forms   Randall's Reduced Dollar Limit 1) Maximum allowable expenses for two qualifying persons $6,000 2) Minus: Dependent care benefits selected from employer's cafeteria plan and  excluded from Randall's income −5,000 3) Reduced dollar limit on work-related expenses Randall can use for the credit $1,000 Amount of Credit To determine the amount of your credit, multiply your work-related expenses (after applying the earned income and dollar limits) by a percentage. Where to get 2009 tax forms This percentage depends on your adjusted gross income shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. Where to get 2009 tax forms The following table shows the percentage to use based on adjusted gross income. Where to get 2009 tax forms   IF your adjusted gross income is: THEN the       Over:       But not over:   percentage is:       $0   —   $15,000   35%       15,000   —   17,000   34%       17,000   —   19,000   33%       19,000   —   21,000   32%       21,000   —   23,000   31%       23,000   —   25,000   30%       25,000   —   27,000   29%       27,000   —   29,000   28%       29,000   —   31,000   27%       31,000   —   33,000   26%       33,000   —   35,000   25%       35,000   —   37,000   24%       37,000   —   39,000   23%       39,000   —   41,000   22%       41,000   —   43,000   21%       43,000   —   No limit   20%   To qualify for the credit, you must have one or more qualifying persons. Where to get 2009 tax forms You should show the expenses for each person on Form 2441, line 2, column (c). Where to get 2009 tax forms However, it is possible a qualifying person could have no expenses and a second qualifying person could have expenses exceeding $3,000. Where to get 2009 tax forms You should list -0- for the one person and the actual amount for the second person. Where to get 2009 tax forms The $6,000 limit that applies to two or more qualifying persons would still be used to compute your credit unless you already excluded or deducted, in Part III of Form 2441, certain dependent care benefits paid to you (or on your behalf) by your employer. Where to get 2009 tax forms Example. Where to get 2009 tax forms Roger and Megan Paris have two qualifying children. Where to get 2009 tax forms They received $1,000 of dependent care benefits from Megan's employer during 2013, but they incurred a total of $19,500 of child and dependent care expenses. Where to get 2009 tax forms They complete Part III of Form 2441 to exclude the $1,000 from their taxable income (offsetting $1,000 of their expenses). Where to get 2009 tax forms Roger and Megan continue to line 27 to figure their credit using the remaining $18,500 of expenses. Where to get 2009 tax forms Line 30 tells them to complete line 2 without including any dependent care benefits. Where to get 2009 tax forms They complete line 2 of Form 2441, listing both Susan and James, as shown in the Line 2 example above. Where to get 2009 tax forms Line 2 Example (a) Qualifying person's name (b) Qualifying person's social security number (c) Qualified expenses you incurred and paid in 2013 for the person listed in column (a) First Last Susan Paris 123-00-6789 -0- James Paris 987-00-4321 18,500. Where to get 2009 tax forms 00 All of Susan's expenses were covered by the $1,000 of employer-provided dependent care benefits. Where to get 2009 tax forms However, their son James has special needs and they paid $18,500 for his care. Where to get 2009 tax forms Line 3 imposes a $5,000 limit for two or more children ($6,000 limit, minus $1,000 already excluded from income = $5,000) and Roger and Megan continue to complete the form. Where to get 2009 tax forms Even though line 2 indicates one of the Paris children did not have any dependent care expenses, it does not change the fact that they had two qualifying children for the purposes of Form 2441. Where to get 2009 tax forms Payments for prior year's expenses. Where to get 2009 tax forms   If you had work-related expenses in 2012 that you paid in 2013, you may be able to increase the credit on your 2013 return. Where to get 2009 tax forms Attach a statement to your form showing how you figured the additional amount from 2012. Where to get 2009 tax forms Then enter “CPYE” (Credit for Prior Year Expenses) and the amount of the credit on the dotted line next to line 9 on Form 2441. Where to get 2009 tax forms Also enter the name and taxpayer identification number of the person for whom you paid the prior year's expenses. Where to get 2009 tax forms Then add this credit to the amount on line 9, and replace the amount on line 9 with the total. Where to get 2009 tax forms See Worksheet A. Where to get 2009 tax forms Example. Where to get 2009 tax forms In 2012, Sam and Kate had childcare expenses of $2,600 for their 12-year-old child. Where to get 2009 tax forms Of the $2,600, they paid $2,000 in 2012 and $600 in 2013. Where to get 2009 tax forms Their adjusted gross income for 2012 was $30,000. Where to get 2009 tax forms Sam's earned income of $14,000 was less than Kate's earned income. Where to get 2009 tax forms A credit for their 2012 expenses paid in 2013 is not allowed in 2012. Where to get 2009 tax forms It is allowed for the 2013 tax year, but they must use their adjusted gross income for 2012 to compute the amount. Where to get 2009 tax forms The filled-in Worksheet A they used to figure this credit is shown later. Where to get 2009 tax forms Sam and Kate add the $162 from line 13 of this worksheet to their 2013 credit and enter the total on their Form 2441, line 9. Where to get 2009 tax forms They enter “CPYE $162” and their child's name and SSN in the space to the left of line 9. Where to get 2009 tax forms Worksheet A. Where to get 2009 tax forms Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. Where to get 2009 tax forms 1. Where to get 2009 tax forms   Enter your 2012 qualified expenses paid in 2012 1. Where to get 2009 tax forms     2. Where to get 2009 tax forms   Enter your 2012 qualified expenses paid in 2013 2. Where to get 2009 tax forms     3. Where to get 2009 tax forms   Add the amounts on lines 1 and 2 3. Where to get 2009 tax forms     4. Where to get 2009 tax forms   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. Where to get 2009 tax forms     5. Where to get 2009 tax forms   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. Where to get 2009 tax forms     6. Where to get 2009 tax forms   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. Where to get 2009 tax forms     7. Where to get 2009 tax forms   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. Where to get 2009 tax forms     8. Where to get 2009 tax forms   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. Where to get 2009 tax forms     9. Where to get 2009 tax forms   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. Where to get 2009 tax forms     10. Where to get 2009 tax forms   Subtract the amount on line 9 from the amount on line 8 and enter the result. Where to get 2009 tax forms If zero or less, stop here. Where to get 2009 tax forms You cannot increase your 2013 credit by any previous year's expenses 10. Where to get 2009 tax forms     11. Where to get 2009 tax forms   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. Where to get 2009 tax forms     12. Where to get 2009 tax forms   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. Where to get 2009 tax forms             IF your 2012 adjusted gross income is:   THEN the decimal                 Over:   But not over:     amount is:                 $0 — $15,000     . Where to get 2009 tax forms 35                 15,000 — 17,000     . Where to get 2009 tax forms 34                 17,000 — 19,000     . Where to get 2009 tax forms 33                 19,000 — 21,000     . Where to get 2009 tax forms 32                 21,000 — 23,000     . Where to get 2009 tax forms 31                 23,000 — 25,000     . Where to get 2009 tax forms 30                 25,000 — 27,000     . Where to get 2009 tax forms 29                 27,000 — 29,000     . Where to get 2009 tax forms 28                 29,000 — 31,000     . Where to get 2009 tax forms 27                 31,000 — 33,000     . Where to get 2009 tax forms 26                 33,000 — 35,000     . Where to get 2009 tax forms 25                 35,000 — 37,000     . Where to get 2009 tax forms 24                 37,000 — 39,000     . Where to get 2009 tax forms 23                 39,000 — 41,000     . Where to get 2009 tax forms 22                 41,000 — 43,000     . Where to get 2009 tax forms 21                 43,000 — No limit     . Where to get 2009 tax forms 20           13. Where to get 2009 tax forms   Multiply line 10 by line 12. Where to get 2009 tax forms Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. Where to get 2009 tax forms Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses           Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. Where to get 2009 tax forms       Worksheet A. Where to get 2009 tax forms Filled-in Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. Where to get 2009 tax forms 1. Where to get 2009 tax forms   Enter your 2012 qualified expenses paid in 2012 1. Where to get 2009 tax forms   $2,000 2. Where to get 2009 tax forms   Enter your 2012 qualified expenses paid in 2013 2. Where to get 2009 tax forms   600 3. Where to get 2009 tax forms   Add the amounts on lines 1 and 2 3. Where to get 2009 tax forms   2,600 4. Where to get 2009 tax forms   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. Where to get 2009 tax forms   3,000 5. Where to get 2009 tax forms   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. Where to get 2009 tax forms   0 6. Where to get 2009 tax forms   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. Where to get 2009 tax forms   3,000 7. Where to get 2009 tax forms   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. Where to get 2009 tax forms   14,000 8. Where to get 2009 tax forms   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. Where to get 2009 tax forms   2,600 9. Where to get 2009 tax forms   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. Where to get 2009 tax forms   2,000 10. Where to get 2009 tax forms   Subtract the amount on line 9 from the amount on line 8 and enter the result. Where to get 2009 tax forms If zero or less, stop here. Where to get 2009 tax forms You cannot increase your 2013 credit by any previous year's expenses 10. Where to get 2009 tax forms   600 11. Where to get 2009 tax forms   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. Where to get 2009 tax forms   30,000 12. Where to get 2009 tax forms   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. Where to get 2009 tax forms   . Where to get 2009 tax forms 27         IF your 2012 adjusted gross income is:   THEN the decimal                 Over   But not over     amount is:                 $0 — $15,000     . Where to get 2009 tax forms 35                 15,000 — 17,000     . Where to get 2009 tax forms 34                 17,000 — 19,000     . Where to get 2009 tax forms 33                 19,000 — 21,000     . Where to get 2009 tax forms 32                 21,000 — 23,000     . Where to get 2009 tax forms 31                 23,000 — 25,000     . Where to get 2009 tax forms 30                 25,000 — 27,000     . Where to get 2009 tax forms 29                 27,000 — 29,000     . Where to get 2009 tax forms 28                 29,000 — 31,000     . Where to get 2009 tax forms 27                 31,000 — 33,000     . Where to get 2009 tax forms 26                 33,000 — 35,000     . Where to get 2009 tax forms 25                 35,000 — 37,000     . Where to get 2009 tax forms 24                 37,000 — 39,000     . Where to get 2009 tax forms 23                 39,000 — 41,000     . Where to get 2009 tax forms 22                 41,000 — 43,000     . Where to get 2009 tax forms 21                 43,000 — No limit     . Where to get 2009 tax forms 20           13. Where to get 2009 tax forms   Multiply line 10 by line 12. Where to get 2009 tax forms Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. Where to get 2009 tax forms Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses             Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. Where to get 2009 tax forms   $162   How To Claim the Credit To claim the credit, you can file Form 1040, Form 1040A, or Form 1040NR. Where to get 2009 tax forms You cannot claim the credit on Form 1040EZ or Form 1040NR-EZ. Where to get 2009 tax forms Form 1040, Form 1040A, or Form 1040NR. Where to get 2009 tax forms    You must complete Form 2441 and attach it to your Form 1040, Form 1040A, or Form 1040NR. Where to get 2009 tax forms Enter the credit on your Form 1040, line 48; Form 1040A, line 29; or Form 1040NR, line 46. Where to get 2009 tax forms Limit on credit. Where to get 2009 tax forms    The amount of credit you can claim is limited to your tax. Where to get 2009 tax forms For more information, see the Instructions for Form 2441. Where to get 2009 tax forms Tax credit not refundable. Where to get 2009 tax forms   You cannot get a refund for any part of the credit that is more than this limit. Where to get 2009 tax forms Recordkeeping. Where to get 2009 tax forms You should keep records of your work-related expenses. Where to get 2009 tax forms Also, if your dependent or spouse is not able to care for himself or herself, your records should show both the nature and length of the disability. Where to get 2009 tax forms Other records you should keep to support your claim for the credit are described under Provider Identification Test, earlier. Where to get 2009 tax forms Employment Taxes for Household Employers If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. Where to get 2009 tax forms If you are a household employer, you will need an employer identification number (EIN) and you may have to pay employment taxes. Where to get 2009 tax forms If the individuals who work in your home are self-employed, you are not liable for any of the taxes discussed in this section. Where to get 2009 tax forms Self-employed persons who are in business for themselves are not household employees. Where to get 2009 tax forms Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. Where to get 2009 tax forms If you use a placement agency that exercises control over what work is done and how it will be done by a babysitter or companion who works in your home, the worker is not your employee. Where to get 2009 tax forms This control could include providing rules of conduct and appearance and requiring regular reports. Where to get 2009 tax forms In this case, you do not have to pay employment taxes. Where to get 2009 tax forms But, if an agency merely gives you a list of sitters and you hire one from that list, and pay the sitter directly, the sitter may be your employee. Where to get 2009 tax forms If you have a household employee, you may be subject to: Social security and Medicare taxes, Federal unemployment tax, and Federal income tax withholding. Where to get 2009 tax forms Social security and Medicare taxes are generally withheld from the employee's pay and matched by the employer. Where to get 2009 tax forms Federal unemployment (FUTA) tax is paid by the employer only and provides for payments of unemployment compensation to workers who have lost their jobs. Where to get 2009 tax forms Federal income tax is withheld from the employee's total pay if the employee asks you to do so and you agree. Where to get 2009 tax forms For more information on a household employer's tax responsibilities, see Publication 926 and Schedule H (Form 1040) and its instructions. Where to get 2009 tax forms State employment tax. Where to get 2009 tax forms   You may also have to pay state unemployment tax. Where to get 2009 tax forms Contact your state unemployment tax office for information. Where to get 2009 tax forms You should also find out whether you need to pay or collect other state employment taxes or carry worker's compensation insurance. Where to get 2009 tax forms For a list of state unemployment tax agencies, visit the U. Where to get 2009 tax forms S. Where to get 2009 tax forms Department of Labor's website. Where to get 2009 tax forms To find that website, use the link in Publication 926 or search online. Where to get 2009 tax forms How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Where to get 2009 tax forms Free help with your tax return. Where to get 2009 tax forms   You can get free help preparing your return nationwide from IRS-certified volunteers. Where to get 2009 tax forms The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Where to get 2009 tax forms The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Where to get 2009 tax forms Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Where to get 2009 tax forms In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Where to get 2009 tax forms To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Where to get 2009 tax forms gov, download the IRS2Go app, or call 1-800-906-9887. Where to get 2009 tax forms   As part of the TCE program, AARP offers the Tax-Aide counseling program. Where to get 2009 tax forms To find the nearest AARP Tax-Aide site, visit AARP's website at www. Where to get 2009 tax forms aarp. Where to get 2009 tax forms org/money/taxaide or call 1-888-227-7669. Where to get 2009 tax forms For more information on these programs, go to IRS. Where to get 2009 tax forms gov and enter “VITA” in the search box. Where to get 2009 tax forms Internet. Where to get 2009 tax forms    IRS. Where to get 2009 tax forms gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Where to get 2009 tax forms Download the free IRS2Go app from the iTunes app store or from Google Play. Where to get 2009 tax forms Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Where to get 2009 tax forms Check the status of your 2013 refund with the Where's My Refund? application on IRS. Where to get 2009 tax forms gov or download the IRS2Go app and select the Refund Status option. Where to get 2009 tax forms The IRS issues more than 9 out of 10 refunds in less than 21 days. Where to get 2009 tax forms Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Where to get 2009 tax forms You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Where to get 2009 tax forms The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Where to get 2009 tax forms Use the Interactive Tax Assistant (ITA) to research your tax questions. Where to get 2009 tax forms No need to wait on the phone or stand in line. Where to get 2009 tax forms The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Where to get 2009 tax forms When you reach the response screen, you can print the entire interview and the final response for your records. Where to get 2009 tax forms New subject areas are added on a regular basis. Where to get 2009 tax forms  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Where to get 2009 tax forms gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Where to get 2009 tax forms You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Where to get 2009 tax forms The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Where to get 2009 tax forms When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Where to get 2009 tax forms Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Where to get 2009 tax forms You can also ask the IRS to mail a return or an account transcript to you. Where to get 2009 tax forms Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Where to get 2009 tax forms gov or by calling 1-800-908-9946. Where to get 2009 tax forms Tax return and tax account transcripts are generally available for the current year and the past three years. Where to get 2009 tax forms Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Where to get 2009 tax forms Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Where to get 2009 tax forms If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Where to get 2009 tax forms Check the status of your amended return using Where's My Amended Return? Go to IRS. Where to get 2009 tax forms gov and enter Where's My Amended Return? in the search box. Where to get 2009 tax forms You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Where to get 2009 tax forms It can take up to 3 weeks from the date you mailed it to show up in our system. Where to get 2009 tax forms Make a payment using one of several safe and convenient electronic payment options available on IRS. Where to get 2009 tax forms gov. Where to get 2009 tax forms Select the Payment tab on the front page of IRS. Where to get 2009 tax forms gov for more information. Where to get 2009 tax forms Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Where to get 2009 tax forms Figure your income tax withholding with the IRS Withholding Calculator on IRS. Where to get 2009 tax forms gov. Where to get 2009 tax forms Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Where to get 2009 tax forms Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Where to get 2009 tax forms gov. Where to get 2009 tax forms Request an Electronic Filing PIN by going to IRS. Where to get 2009 tax forms gov and entering Electronic Filing PIN in the search box. Where to get 2009 tax forms Download forms, instructions and publications, including accessible versions for people with disabilities. Where to get 2009 tax forms Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Where to get 2009 tax forms gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Where to get 2009 tax forms An employee can answer questions about your tax account or help you set up a payment plan. Where to get 2009 tax forms Before you visit, check the Office Locator on IRS. Where to get 2009 tax forms gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Where to get 2009 tax forms If you have a special need, such as a disability, you can request an appointment. Where to get 2009 tax forms Call the local number listed in the Office Locator, or look in the phone book under Unit
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The Where To Get 2009 Tax Forms

Where to get 2009 tax forms 4. Where to get 2009 tax forms   Interest Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Allocation of InterestOrder of funds spent. Where to get 2009 tax forms Payments from checking accounts. Where to get 2009 tax forms Amounts paid within 30 days. Where to get 2009 tax forms Optional method for determining date of reallocation. Where to get 2009 tax forms Interest on a segregated account. Where to get 2009 tax forms How to report. Where to get 2009 tax forms Interest You Can DeductStatement. Where to get 2009 tax forms Expenses paid to obtain a mortgage. Where to get 2009 tax forms Prepayment penalty. Where to get 2009 tax forms De minimis OID. Where to get 2009 tax forms Constant-yield method. Where to get 2009 tax forms Loan or mortgage ends. Where to get 2009 tax forms Interest You Cannot DeductPenalties. Where to get 2009 tax forms Who is a key person? Exceptions for pre-June 1997 contracts. Where to get 2009 tax forms Interest allocated to unborrowed policy cash value. Where to get 2009 tax forms Capitalization of Interest When To Deduct InterestPrepaid interest. Where to get 2009 tax forms Discounted loan. Where to get 2009 tax forms Refunds of interest. Where to get 2009 tax forms Prepaid interest. Where to get 2009 tax forms Discounted loan. Where to get 2009 tax forms Tax deficiency. Where to get 2009 tax forms Related person. Where to get 2009 tax forms Below-Market LoansLimit on forgone interest for gift loans of $100,000 or less. Where to get 2009 tax forms Introduction This chapter discusses the tax treatment of business interest expense. Where to get 2009 tax forms Business interest expense is an amount charged for the use of money you borrowed for business activities. Where to get 2009 tax forms Topics - This chapter discusses: Allocation of interest Interest you can deduct Interest you cannot deduct Capitalization of interest When to deduct interest Below-market loans Useful Items - You may want to see: Publication 537 Installment Sales 550 Investment Income and Expenses 936 Home Mortgage Interest Deduction Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch E (Form 1040) Supplemental Income and Loss Sch K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. Where to get 2009 tax forms Sch K-1 (Form 1120S) Shareholder's Share of Income, Deductions, Credits, etc. Where to get 2009 tax forms 1098 Mortgage Interest Statement 3115 Application for Change in Accounting Method 4952 Investment Interest Expense Deduction 8582 Passive Activity Loss Limitations See chapter 12 for information about getting publications and forms. Where to get 2009 tax forms Allocation of Interest The rules for deducting interest vary, depending on whether the loan proceeds are used for business, personal, or investment activities. Where to get 2009 tax forms If you use the proceeds of a loan for more than one type of expense, you must allocate the interest based on the use of the loan's proceeds. Where to get 2009 tax forms Allocate your interest expense to the following categories. Where to get 2009 tax forms Nonpassive trade or business activity interest Passive trade or business activity interest Investment interest Portfolio interest Personal interest In general, you allocate interest on a loan the same way you allocate the loan proceeds. Where to get 2009 tax forms You allocate loan proceeds by tracing disbursements to specific uses. Where to get 2009 tax forms The easiest way to trace disbursements to specific uses is to keep the proceeds of a particular loan separate from any other funds. Where to get 2009 tax forms Secured loan. Where to get 2009 tax forms   The allocation of loan proceeds and the related interest is not generally affected by the use of property that secures the loan. Where to get 2009 tax forms Example. Where to get 2009 tax forms You secure a loan with property used in your business. Where to get 2009 tax forms You use the loan proceeds to buy an automobile for personal use. Where to get 2009 tax forms You must allocate interest expense on the loan to personal use (purchase of the automobile) even though the loan is secured by business property. Where to get 2009 tax forms    If the property that secures the loan is your home, you generally do not allocate the loan proceeds or the related interest. Where to get 2009 tax forms The interest is usually deductible as qualified home mortgage interest, regardless of how the loan proceeds are used. Where to get 2009 tax forms For more information, see Publication 936. Where to get 2009 tax forms Allocation period. Where to get 2009 tax forms   The period for which a loan is allocated to a particular use begins on the date the proceeds are used and ends on the earlier of the following dates. Where to get 2009 tax forms The date the loan is repaid. Where to get 2009 tax forms The date the loan is reallocated to another use. Where to get 2009 tax forms Proceeds not disbursed to borrower. Where to get 2009 tax forms   Even if the lender disburses the loan proceeds to a third party, the allocation of the loan is still based on your use of the funds. Where to get 2009 tax forms This applies whether you pay for property, services, or anything else by incurring a loan, or you take property subject to a debt. Where to get 2009 tax forms Proceeds deposited in borrower's account. Where to get 2009 tax forms   Treat loan proceeds deposited in an account as property held for investment. Where to get 2009 tax forms It does not matter whether the account pays interest. Where to get 2009 tax forms Any interest you pay on the loan is investment interest expense. Where to get 2009 tax forms If you withdraw the proceeds of the loan, you must reallocate the loan based on the use of the funds. Where to get 2009 tax forms Example. Where to get 2009 tax forms Celina, a calendar-year taxpayer, borrows $100,000 on January 4 and immediately uses the proceeds to open a checking account. Where to get 2009 tax forms No other amounts are deposited in the account during the year and no part of the loan principal is repaid during the year. Where to get 2009 tax forms On April 2, Celina uses $20,000 from the checking account for a passive activity expenditure. Where to get 2009 tax forms On September 4, Celina uses an additional $40,000 from the account for personal purposes. Where to get 2009 tax forms Under the interest allocation rules, the entire $100,000 loan is treated as property held for investment for the period from January 4 through April 1. Where to get 2009 tax forms From April 2 through September 3, Celina must treat $20,000 of the loan as used in the passive activity and $80,000 of the loan as property held for investment. Where to get 2009 tax forms From September 4 through December 31, she must treat $40,000 of the loan as used for personal purposes, $20,000 as used in the passive activity, and $40,000 as property held for investment. Where to get 2009 tax forms Order of funds spent. Where to get 2009 tax forms   Generally, you treat loan proceeds deposited in an account as used (spent) before either of the following amounts. Where to get 2009 tax forms Any unborrowed amounts held in the same account. Where to get 2009 tax forms Any amounts deposited after these loan proceeds. Where to get 2009 tax forms Example. Where to get 2009 tax forms On January 9, Olena opened a checking account, depositing $500 of the proceeds of Loan A and $1,000 of unborrowed funds. Where to get 2009 tax forms The following table shows the transactions in her account during the tax year. Where to get 2009 tax forms Date Transaction January 9 $500 proceeds of Loan A and $1,000 unborrowed funds deposited January 14 $500 proceeds of Loan B  deposited February 19 $800 used for personal purposes February 27 $700 used for passive activity June 19 $1,000 proceeds of Loan C  deposited November 20 $800 used for an investment December 18 $600 used for personal purposes Olena treats the $800 used for personal purposes as made from the $500 proceeds of Loan A and $300 of the proceeds of Loan B. Where to get 2009 tax forms She treats the $700 used for a passive activity as made from the remaining $200 proceeds of Loan B and $500 of unborrowed funds. Where to get 2009 tax forms She treats the $800 used for an investment as made entirely from the proceeds of Loan C. Where to get 2009 tax forms She treats the $600 used for personal purposes as made from the remaining $200 proceeds of Loan C and $400 of unborrowed funds. Where to get 2009 tax forms For the periods during which loan proceeds are held in the account, Olena treats them as property held for investment. Where to get 2009 tax forms Payments from checking accounts. Where to get 2009 tax forms   Generally, you treat a payment from a checking or similar account as made at the time the check is written if you mail or deliver it to the payee within a reasonable period after you write it. Where to get 2009 tax forms You can treat checks written on the same day as written in any order. Where to get 2009 tax forms Amounts paid within 30 days. Where to get 2009 tax forms   If you receive loan proceeds in cash or if the loan proceeds are deposited in an account, you can treat any payment (up to the amount of the proceeds) made from any account you own, or from cash, as made from those proceeds. Where to get 2009 tax forms This applies to any payment made within 30 days before or after the proceeds are received in cash or deposited in your account. Where to get 2009 tax forms   If the loan proceeds are deposited in an account, you can apply this rule even if the rules stated earlier under Order of funds spent would otherwise require you to treat the proceeds as used for other purposes. Where to get 2009 tax forms If you apply this rule to any payments, disregard those payments (and the proceeds from which they are made) when applying the rules stated under Order of funds spent. Where to get 2009 tax forms   If you received the loan proceeds in cash, you can treat the payment as made on the date you received the cash instead of the date you actually made the payment. Where to get 2009 tax forms Example. Where to get 2009 tax forms Giovanni gets a loan of $1,000 on August 4 and receives the proceeds in cash. Where to get 2009 tax forms Giovanni deposits $1,500 in an account on August 18 and on August 28 writes a check on the account for a passive activity expense. Where to get 2009 tax forms Also, Giovanni deposits his paycheck, deposits other loan proceeds, and pays his bills during the same period. Where to get 2009 tax forms Regardless of these other transactions, Giovanni can treat $1,000 of the deposit he made on August 18 as being paid on August 4 from the loan proceeds. Where to get 2009 tax forms In addition, Giovanni can treat the passive activity expense he paid on August 28 as made from the $1,000 loan proceeds treated as deposited in the account. Where to get 2009 tax forms Optional method for determining date of reallocation. Where to get 2009 tax forms   You can use the following method to determine the date loan proceeds are reallocated to another use. Where to get 2009 tax forms You can treat all payments from loan proceeds in the account during any month as taking place on the later of the following dates. Where to get 2009 tax forms The first day of that month. Where to get 2009 tax forms The date the loan proceeds are deposited in the account. Where to get 2009 tax forms However, you can use this optional method only if you treat all payments from the account during the same calendar month in the same way. Where to get 2009 tax forms Interest on a segregated account. Where to get 2009 tax forms   If you have an account that contains only loan proceeds and interest earned on the account, you can treat any payment from that account as being made first from the interest. Where to get 2009 tax forms When the interest earned is used up, any remaining payments are from loan proceeds. Where to get 2009 tax forms Example. Where to get 2009 tax forms You borrowed $20,000 and used the proceeds of this loan to open a new savings account. Where to get 2009 tax forms When the account had earned interest of $867, you withdrew $20,000 for personal purposes. Where to get 2009 tax forms You can treat the withdrawal as coming first from the interest earned on the account, $867, and then from the loan proceeds, $19,133 ($20,000 − $867). Where to get 2009 tax forms All the interest charged on the loan from the time it was deposited in the account until the time of the withdrawal is investment interest expense. Where to get 2009 tax forms The interest charged on the part of the proceeds used for personal purposes ($19,133) from the time you withdrew it until you either repay it or reallocate it to another use is personal interest expense. Where to get 2009 tax forms The interest charged on the loan proceeds you left in the account ($867) continues to be investment interest expense until you either repay it or reallocate it to another use. Where to get 2009 tax forms Loan repayment. Where to get 2009 tax forms   When you repay any part of a loan allocated to more than one use, treat it as being repaid in the following order. Where to get 2009 tax forms Personal use. Where to get 2009 tax forms Investments and passive activities (other than those included in (3)). Where to get 2009 tax forms Passive activities in connection with a rental real estate activity in which you actively participate. Where to get 2009 tax forms Former passive activities. Where to get 2009 tax forms Trade or business use and expenses for certain low-income housing projects. Where to get 2009 tax forms Line of credit (continuous borrowings). Where to get 2009 tax forms   The following rules apply if you have a line of credit or similar arrangement. Where to get 2009 tax forms Treat all borrowed funds on which interest accrues at the same fixed or variable rate as a single loan. Where to get 2009 tax forms Treat borrowed funds or parts of borrowed funds on which interest accrues at different fixed or variable rates as different loans. Where to get 2009 tax forms Treat these loans as repaid in the order shown on the loan agreement. Where to get 2009 tax forms Loan refinancing. Where to get 2009 tax forms   Allocate the replacement loan to the same uses to which the repaid loan was allocated. Where to get 2009 tax forms Make the allocation only to the extent you use the proceeds of the new loan to repay any part of the original loan. Where to get 2009 tax forms Debt-financed distribution. Where to get 2009 tax forms   A debt-financed distribution occurs when a partnership or S corporation borrows funds and allocates those funds to distributions made to partners or shareholders. Where to get 2009 tax forms The manner in which you report the interest expense associated with the distributed debt proceeds depends on your use of those proceeds. Where to get 2009 tax forms How to report. Where to get 2009 tax forms   If the proceeds were used in a nonpassive trade or business activity, report the interest on Schedule E (Form 1040), line 28; enter “interest expense” and the name of the partnership or S corporation in column (a) and the amount in column (h). Where to get 2009 tax forms If the proceeds were used in a passive activity, follow the Instructions for Form 8582, Passive Activity Loss Limitations, to determine the amount of interest expense that can be reported on Schedule E (Form 1040), line 28; enter “interest expense” and the name of the partnership in column (a) and the amount in column (f). Where to get 2009 tax forms If the proceeds were used in an investment activity, enter the interest on Form 4952. Where to get 2009 tax forms If the proceeds are used for personal purposes, the interest is generally not deductible. Where to get 2009 tax forms Interest You Can Deduct You can generally deduct as a business expense all interest you pay or accrue during the tax year on debts related to your trade or business. Where to get 2009 tax forms Interest relates to your trade or business if you use the proceeds of the loan for a trade or business expense. Where to get 2009 tax forms It does not matter what type of property secures the loan. Where to get 2009 tax forms You can deduct interest on a debt only if you meet all the following requirements. Where to get 2009 tax forms You are legally liable for that debt. Where to get 2009 tax forms Both you and the lender intend that the debt be repaid. Where to get 2009 tax forms You and the lender have a true debtor-creditor relationship. Where to get 2009 tax forms Partial liability. Where to get 2009 tax forms   If you are liable for part of a business debt, you can deduct only your share of the total interest paid or accrued. Where to get 2009 tax forms Example. Where to get 2009 tax forms You and your brother borrow money. Where to get 2009 tax forms You are liable for 50% of the note. Where to get 2009 tax forms You use your half of the loan in your business, and you make one-half of the loan payments. Where to get 2009 tax forms You can deduct your half of the total interest payments as a business deduction. Where to get 2009 tax forms Mortgage. Where to get 2009 tax forms   Generally, mortgage interest paid or accrued on real estate you own legally or equitably is deductible. Where to get 2009 tax forms However, rather than deducting the interest currently, you may have to add it to the cost basis of the property as explained later under Capitalization of Interest. Where to get 2009 tax forms Statement. Where to get 2009 tax forms   If you paid $600 or more of mortgage interest (including certain points) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement. Where to get 2009 tax forms You will receive the statement if you pay interest to a person (including a financial institution or a cooperative housing corporation) in the course of that person's trade or business. Where to get 2009 tax forms A governmental unit is a person for purposes of furnishing the statement. Where to get 2009 tax forms   If you receive a refund of interest you overpaid in an earlier year, this amount will be reported in box 3 of Form 1098. Where to get 2009 tax forms You cannot deduct this amount. Where to get 2009 tax forms For information on how to report this refund, see Refunds of interest, later in this chapter. Where to get 2009 tax forms Expenses paid to obtain a mortgage. Where to get 2009 tax forms   Certain expenses you pay to obtain a mortgage cannot be deducted as interest. Where to get 2009 tax forms These expenses, which include mortgage commissions, abstract fees, and recording fees, are capital expenses. Where to get 2009 tax forms If the property mortgaged is business or income-producing property, you can amortize the costs over the life of the mortgage. Where to get 2009 tax forms Prepayment penalty. Where to get 2009 tax forms   If you pay off your mortgage early and pay the lender a penalty for doing this, you can deduct the penalty as interest. Where to get 2009 tax forms Interest on employment tax deficiency. Where to get 2009 tax forms   Interest charged on employment taxes assessed on your business is deductible. Where to get 2009 tax forms Original issue discount (OID). Where to get 2009 tax forms   OID is a form of interest. Where to get 2009 tax forms A loan (mortgage or other debt) generally has OID when its proceeds are less than its principal amount. Where to get 2009 tax forms The OID is the difference between the stated redemption price at maturity and the issue price of the loan. Where to get 2009 tax forms   A loan's stated redemption price at maturity is the sum of all amounts (principal and interest) payable on it other than qualified stated interest. Where to get 2009 tax forms Qualified stated interest is stated interest that is unconditionally payable in cash or property (other than another loan of the issuer) at least annually over the term of the loan at a single fixed rate. Where to get 2009 tax forms You generally deduct OID over the term of the loan. Where to get 2009 tax forms Figure the amount to deduct each year using the constant-yield method, unless the OID on the loan is de minimis. Where to get 2009 tax forms De minimis OID. Where to get 2009 tax forms   The OID is de minimis if it is less than one-fourth of 1% (. Where to get 2009 tax forms 0025) of the stated redemption price of the loan at maturity multiplied by the number of full years from the date of original issue to maturity (the term of the loan). Where to get 2009 tax forms   If the OID is de minimis, you can choose one of the following ways to figure the amount you can deduct each year. Where to get 2009 tax forms On a constant-yield basis over the term of the loan. Where to get 2009 tax forms On a straight-line basis over the term of the loan. Where to get 2009 tax forms In proportion to stated interest payments. Where to get 2009 tax forms In its entirety at maturity of the loan. Where to get 2009 tax forms You make this choice by deducting the OID in a manner consistent with the method chosen on your timely filed tax return for the tax year in which the loan is issued. Where to get 2009 tax forms Example. Where to get 2009 tax forms On January 1, 2013, you took out a $100,000 discounted loan and received $98,500 in proceeds. Where to get 2009 tax forms The loan will mature on January 1, 2023 (a 10-year term), and the $100,000 principal is payable on that date. Where to get 2009 tax forms Interest of $10,000 is payable on January 1 of each year, beginning January 1, 2014. Where to get 2009 tax forms The $1,500 OID on the loan is de minimis because it is less than $2,500 ($100,000 × . Where to get 2009 tax forms 0025 × 10). Where to get 2009 tax forms You choose to deduct the OID on a straight-line basis over the term of the loan. Where to get 2009 tax forms Beginning in 2013, you can deduct $150 each year for 10 years. Where to get 2009 tax forms Constant-yield method. Where to get 2009 tax forms   If the OID is not de minimis, you must use the constant-yield method to figure how much you can deduct each year. Where to get 2009 tax forms You figure your deduction for the first year using the following steps. Where to get 2009 tax forms Determine the issue price of the loan. Where to get 2009 tax forms Generally, this equals the proceeds of the loan. Where to get 2009 tax forms If you paid points on the loan (as discussed later), the issue price generally is the difference between the proceeds and the points. Where to get 2009 tax forms Multiply the result in (1) by the yield to maturity. Where to get 2009 tax forms Subtract any qualified stated interest payments from the result in (2). Where to get 2009 tax forms This is the OID you can deduct in the first year. Where to get 2009 tax forms   To figure your deduction in any subsequent year, follow the above steps, except determine the adjusted issue price in step (1). Where to get 2009 tax forms To get the adjusted issue price, add to the issue price any OID previously deducted. Where to get 2009 tax forms Then follow steps (2) and (3) above. Where to get 2009 tax forms   The yield to maturity is generally shown in the literature you receive from your lender. Where to get 2009 tax forms If you do not have this information, consult your lender or tax advisor. Where to get 2009 tax forms In general, the yield to maturity is the discount rate that, when used in computing the present value of all principal and interest payments, produces an amount equal to the principal amount of the loan. Where to get 2009 tax forms Example. Where to get 2009 tax forms The facts are the same as in the previous example, except that you deduct the OID on a constant yield basis over the term of the loan. Where to get 2009 tax forms The yield to maturity on your loan is 10. Where to get 2009 tax forms 2467%, compounded annually. Where to get 2009 tax forms For 2013, you can deduct $93 [($98,500 × . Where to get 2009 tax forms 102467) − $10,000]. Where to get 2009 tax forms For 2014, you can deduct $103 [($98,593 × . Where to get 2009 tax forms 102467) − $10,000]. Where to get 2009 tax forms Loan or mortgage ends. Where to get 2009 tax forms   If your loan or mortgage ends, you may be able to deduct any remaining OID in the tax year in which the loan or mortgage ends. Where to get 2009 tax forms A loan or mortgage may end due to a refinancing, prepayment, foreclosure, or similar event. Where to get 2009 tax forms If you refinance with the original lender, you generally cannot deduct the remaining OID in the year in which the refinancing occurs, but you may be able to deduct it over the term of the new mortgage or loan. Where to get 2009 tax forms See Interest paid with funds borrowed from original lender under Interest You Cannot Deduct, later. Where to get 2009 tax forms Points. Where to get 2009 tax forms   The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a loan or a mortgage. Where to get 2009 tax forms These charges are also called loan origination fees, maximum loan charges, discount points, or premium charges. Where to get 2009 tax forms If any of these charges (points) are solely for the use of money, they are interest. Where to get 2009 tax forms   Because points are prepaid interest, you generally cannot deduct the full amount in the year paid. Where to get 2009 tax forms However, you can choose to fully deduct points in the year paid if you meet certain tests. Where to get 2009 tax forms For exceptions to the general rule, see Publication 936. Where to get 2009 tax forms The points reduce the issue price of the loan and result in original issue discount (OID), deductible as explained in the preceding discussion. Where to get 2009 tax forms Partial payments on a nontax debt. Where to get 2009 tax forms   If you make partial payments on a debt (other than a debt owed the IRS), the payments are applied, in general, first to interest and any remainder to principal. Where to get 2009 tax forms You can deduct only the interest. Where to get 2009 tax forms This rule does not apply when it can be inferred that the borrower and lender understood that a different allocation of the payments would be made. Where to get 2009 tax forms Installment purchase. Where to get 2009 tax forms   If you make an installment purchase of business property, the contract between you and the seller generally provides for the payment of interest. Where to get 2009 tax forms If no interest or a low rate of interest is charged under the contract, a portion of the stated principal amount payable under the contract may be recharacterized as interest (unstated interest). Where to get 2009 tax forms The amount recharacterized as interest reduces your basis in the property and increases your interest expense. Where to get 2009 tax forms For more information on installment sales and unstated interest, see Publication 537. Where to get 2009 tax forms Interest You Cannot Deduct Certain interest payments cannot be deducted. Where to get 2009 tax forms In addition, certain other expenses that may seem to be interest but are not, cannot be deducted as interest. Where to get 2009 tax forms You cannot currently deduct interest that must be capitalized, and you generally cannot deduct personal interest. Where to get 2009 tax forms Interest paid with funds borrowed from original lender. Where to get 2009 tax forms   If you use the cash method of accounting, you cannot deduct interest you pay with funds borrowed from the original lender through a second loan, an advance, or any other arrangement similar to a loan. Where to get 2009 tax forms You can deduct the interest expense once you start making payments on the new loan. Where to get 2009 tax forms   When you make a payment on the new loan, you first apply the payment to interest and then to the principal. Where to get 2009 tax forms All amounts you apply to the interest on the first loan are deductible, along with any interest you pay on the second loan, subject to any limits that apply. Where to get 2009 tax forms Capitalized interest. Where to get 2009 tax forms   You cannot currently deduct interest you are required to capitalize under the uniform capitalization rules. Where to get 2009 tax forms See Capitalization of Interest, later. Where to get 2009 tax forms In addition, if you buy property and pay interest owed by the seller (for example, by assuming the debt and any interest accrued on the property), you cannot deduct the interest. Where to get 2009 tax forms Add this interest to the basis of the property. Where to get 2009 tax forms Commitment fees or standby charges. Where to get 2009 tax forms   Fees you incur to have business funds available on a standby basis, but not for the actual use of the funds, are not deductible as interest payments. Where to get 2009 tax forms You may be able to deduct them as business expenses. Where to get 2009 tax forms   If the funds are for inventory or certain property used in your business, the fees are indirect costs and you generally must capitalize them under the uniform capitalization rules. Where to get 2009 tax forms See Capitalization of Interest, later. Where to get 2009 tax forms Interest on income tax. Where to get 2009 tax forms   Interest charged on income tax assessed on your individual income tax return is not a business deduction even though the tax due is related to income from your trade or business. Where to get 2009 tax forms Treat this interest as a business deduction only in figuring a net operating loss deduction. Where to get 2009 tax forms Penalties. Where to get 2009 tax forms   Penalties on underpaid deficiencies and underpaid estimated tax are not interest. Where to get 2009 tax forms You cannot deduct them. Where to get 2009 tax forms Generally, you cannot deduct any fines or penalties. Where to get 2009 tax forms Interest on loans with respect to life insurance policies. Where to get 2009 tax forms   You generally cannot deduct interest on a debt incurred with respect to any life insurance, annuity, or endowment contract that covers any individual unless that individual is a key person. Where to get 2009 tax forms   If the policy or contract covers a key person, you can deduct the interest on up to $50,000 of debt for that person. Where to get 2009 tax forms However, the deduction for any month cannot be more than the interest figured using Moody's Composite Yield on Seasoned Corporate Bonds (formerly known as Moody's Corporate Bond Yield Average-Monthly Average Corporates) (Moody's rate) for that month. Where to get 2009 tax forms Who is a key person?   A key person is an officer or 20% owner. Where to get 2009 tax forms However, the number of individuals you can treat as key persons is limited to the greater of the following. Where to get 2009 tax forms Five individuals. Where to get 2009 tax forms The lesser of 5% of the total officers and employees of the company or 20 individuals. Where to get 2009 tax forms Exceptions for pre-June 1997 contracts. Where to get 2009 tax forms   You can generally deduct the interest if the contract was issued before June 9, 1997, and the covered individual is someone other than an employee, officer, or someone financially interested in your business. Where to get 2009 tax forms If the contract was purchased before June 21, 1986, you can generally deduct the interest no matter who is covered by the contract. Where to get 2009 tax forms Interest allocated to unborrowed policy cash value. Where to get 2009 tax forms   Corporations and partnerships generally cannot deduct any interest expense allocable to unborrowed cash values of life insurance, annuity, or endowment contracts. Where to get 2009 tax forms This rule applies to contracts issued after June 8, 1997, that cover someone other than an officer, director, employee, or 20% owner. Where to get 2009 tax forms For more information, see section 264(f) of the Internal Revenue Code. Where to get 2009 tax forms Capitalization of Interest Under the uniform capitalization rules, you generally must capitalize interest on debt equal to your expenditures to produce real property or certain tangible personal property. Where to get 2009 tax forms The property must be produced by you for use in your trade or business or for sale to customers. Where to get 2009 tax forms You cannot capitalize interest related to property that you acquire in any other manner. Where to get 2009 tax forms Interest you paid or incurred during the production period must be capitalized if the property produced is designated property. Where to get 2009 tax forms Designated property is any of the following. Where to get 2009 tax forms Real property. Where to get 2009 tax forms Tangible personal property with a class life of 20 years or more. Where to get 2009 tax forms Tangible personal property with an estimated production period of more than 2 years. Where to get 2009 tax forms Tangible personal property with an estimated production period of more than 1 year if the estimated cost of production is more than $1 million. Where to get 2009 tax forms Property you produce. Where to get 2009 tax forms   You produce property if you construct, build, install, manufacture, develop, improve, create, raise, or grow it. Where to get 2009 tax forms Treat property produced for you under a contract as produced by you up to the amount you pay or incur for the property. Where to get 2009 tax forms Carrying charges. Where to get 2009 tax forms   Carrying charges include taxes you pay to carry or develop real estate or to carry, transport, or install personal property. Where to get 2009 tax forms You can choose to capitalize carrying charges not subject to the uniform capitalization rules if they are otherwise deductible. Where to get 2009 tax forms For more information, see chapter 7. Where to get 2009 tax forms Capitalized interest. Where to get 2009 tax forms   Treat capitalized interest as a cost of the property produced. Where to get 2009 tax forms You recover your interest when you sell or use the property. Where to get 2009 tax forms If the property is inventory, recover capitalized interest through cost of goods sold. Where to get 2009 tax forms If the property is used in your trade or business, recover capitalized interest through an adjustment to basis, depreciation, amortization, or other method. Where to get 2009 tax forms Partnerships and S corporations. Where to get 2009 tax forms   The interest capitalization rules are applied first at the partnership or S corporation level. Where to get 2009 tax forms The rules are then applied at the partners' or shareholders' level to the extent the partnership or S corporation has insufficient debt to support the production or construction costs. Where to get 2009 tax forms   If you are a partner or a shareholder, you may have to capitalize interest you incur during the tax year for the production costs of the partnership or S corporation. Where to get 2009 tax forms You may also have to capitalize interest incurred by the partnership or S corporation for your own production costs. Where to get 2009 tax forms To properly capitalize interest under these rules, you must be given the required information in an attachment to the Schedule K-1 you receive from the partnership or S corporation. Where to get 2009 tax forms Additional information. Where to get 2009 tax forms   The procedures for applying the uniform capitalization rules are beyond the scope of this publication. Where to get 2009 tax forms For more information, see sections 1. Where to get 2009 tax forms 263A-8 through 1. Where to get 2009 tax forms 263A-15 of the regulations and Notice 88-99. Where to get 2009 tax forms Notice 88-99 is in Cumulative Bulletin 1988-2. Where to get 2009 tax forms When To Deduct Interest If the uniform capitalization rules, discussed under Capitalization of Interest, earlier, do not apply to you, deduct interest as follows. Where to get 2009 tax forms Cash method. Where to get 2009 tax forms   Under the cash method, you can generally deduct only the interest you actually paid during the tax year. Where to get 2009 tax forms You cannot deduct a promissory note you gave as payment because it is a promise to pay and not an actual payment. Where to get 2009 tax forms Prepaid interest. Where to get 2009 tax forms   You generally cannot deduct any interest paid before the year it is due. Where to get 2009 tax forms Interest paid in advance can be deducted only in the tax year in which it is due. Where to get 2009 tax forms Discounted loan. Where to get 2009 tax forms   If interest or a discount is subtracted from your loan proceeds, it is not a payment of interest and you cannot deduct it when you get the loan. Where to get 2009 tax forms For more information, see Original issue discount (OID) under Interest You Can Deduct, earlier. Where to get 2009 tax forms Refunds of interest. Where to get 2009 tax forms   If you pay interest and then receive a refund in the same tax year of any part of the interest, reduce your interest deduction by the refund. Where to get 2009 tax forms If you receive the refund in a later tax year, include the refund in your income to the extent the deduction for the interest reduced your tax. Where to get 2009 tax forms Accrual method. Where to get 2009 tax forms   Under an accrual method, you can deduct only interest that has accrued during the tax year. Where to get 2009 tax forms Prepaid interest. Where to get 2009 tax forms   See Prepaid interest, earlier. Where to get 2009 tax forms Discounted loan. Where to get 2009 tax forms   See Discounted loan, earlier. Where to get 2009 tax forms Tax deficiency. Where to get 2009 tax forms   If you contest a federal income tax deficiency, interest does not accrue until the tax year the final determination of liability is made. Where to get 2009 tax forms If you do not contest the deficiency, then the interest accrues in the year the tax was asserted and agreed to by you. Where to get 2009 tax forms   However, if you contest but pay the proposed tax deficiency and interest, and you do not designate the payment as a cash bond, then the interest is deductible in the year paid. Where to get 2009 tax forms Related person. Where to get 2009 tax forms   If you use an accrual method, you cannot deduct interest owed to a related person who uses the cash method until payment is made and the interest is includible in the gross income of that person. Where to get 2009 tax forms The relationship is determined as of the end of the tax year for which the interest would otherwise be deductible. Where to get 2009 tax forms See section 267 of the Internal Revenue Code for more information. Where to get 2009 tax forms Below-Market Loans If you receive a below-market gift or demand loan and use the proceeds in your trade or business, you may be able to deduct the forgone interest. Where to get 2009 tax forms See Treatment of gift and demand loans, later, in this discussion. Where to get 2009 tax forms A below-market loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. Where to get 2009 tax forms A gift or demand loan that is a below-market loan generally is considered an arm's-length transaction in which you, the borrower, are considered as having received both the following. Where to get 2009 tax forms A loan in exchange for a note that requires the payment of interest at the applicable federal rate. Where to get 2009 tax forms An additional payment in an amount equal to the forgone interest. Where to get 2009 tax forms The additional payment is treated as a gift, dividend, contribution to capital, payment of compensation, or other payment, depending on the substance of the transaction. Where to get 2009 tax forms Forgone interest. Where to get 2009 tax forms   For any period, forgone interest is The interest that would be payable for that period if interest accrued on the loan at the applicable federal rate and was payable annually on December 31, minus Any interest actually payable on the loan for the period. Where to get 2009 tax forms Applicable federal rates are published by the IRS each month in the Internal Revenue Bulletin. Where to get 2009 tax forms Internal Revenue Bulletins are available on the IRS web site at www. Where to get 2009 tax forms irs. Where to get 2009 tax forms gov/irb. Where to get 2009 tax forms You can also contact an IRS office to get these rates. Where to get 2009 tax forms Loans subject to the rules. Where to get 2009 tax forms   The rules for below-market loans apply to the following. Where to get 2009 tax forms Gift loans (below-market loans where the forgone interest is in the nature of a gift). Where to get 2009 tax forms Compensation-related loans (below-market loans between an employer and an employee or between an independent contractor and a person for whom the contractor provides services). Where to get 2009 tax forms Corporation-shareholder loans. Where to get 2009 tax forms Tax avoidance loans (below-market loans where the avoidance of federal tax is one of the main purposes of the interest arrangement). Where to get 2009 tax forms Loans to qualified continuing care facilities under a continuing care contract (made after October 11, 1985). Where to get 2009 tax forms   Except as noted in (5) above, these rules apply to demand loans (loans payable in full at any time upon the lender's demand) outstanding after June 6, 1984, and to term loans (loans that are not demand loans) made after that date. Where to get 2009 tax forms Treatment of gift and demand loans. Where to get 2009 tax forms   If you receive a below-market gift loan or demand loan, you are treated as receiving an additional payment (as a gift, dividend, etc. Where to get 2009 tax forms ) equal to the forgone interest on the loan. Where to get 2009 tax forms You are then treated as transferring this amount back to the lender as interest. Where to get 2009 tax forms These transfers are considered to occur annually, generally on December 31. Where to get 2009 tax forms If you use the loan proceeds in your trade or business, you can deduct the forgone interest each year as a business interest expense. Where to get 2009 tax forms The lender must report it as interest income. Where to get 2009 tax forms Limit on forgone interest for gift loans of $100,000 or less. Where to get 2009 tax forms   For gift loans between individuals, forgone interest treated as transferred back to the lender is limited to the borrower's net investment income for the year. Where to get 2009 tax forms This limit applies if the outstanding loans between the lender and borrower total $100,000 or less. Where to get 2009 tax forms If the borrower's net investment income is $1,000 or less, it is treated as zero. Where to get 2009 tax forms This limit does not apply to a loan if the avoidance of any federal tax is one of the main purposes of the interest arrangement. Where to get 2009 tax forms Treatment of term loans. Where to get 2009 tax forms   If you receive a below-market term loan other than a gift or demand loan, you are treated as receiving an additional cash payment (as a dividend, etc. Where to get 2009 tax forms ) on the date the loan is made. Where to get 2009 tax forms This payment is equal to the loan amount minus the present value, at the applicable federal rate, of all payments due under the loan. Where to get 2009 tax forms The same amount is treated as original issue discount on the loan. Where to get 2009 tax forms See Original issue discount (OID) under Interest You Can Deduct, earlier. Where to get 2009 tax forms Exceptions for loans of $10,000 or less. Where to get 2009 tax forms   The rules for below-market loans do not apply to any day on which the total outstanding loans between the borrower and lender is $10,000 or less. Where to get 2009 tax forms This exception applies only to the following. Where to get 2009 tax forms Gift loans between individuals if the loan is not directly used to buy or carry income-producing assets. Where to get 2009 tax forms Compensation-related loans or corporation-shareholder loans if the avoidance of any federal tax is not a principal purpose of the interest arrangement. Where to get 2009 tax forms This exception does not apply to a term loan described in (2) above that was previously subject to the below-market loan rules. Where to get 2009 tax forms Those rules will continue to apply even if the outstanding balance is reduced to $10,000 or less. Where to get 2009 tax forms Exceptions for loans without significant tax effect. Where to get 2009 tax forms   The following loans are specifically exempted from the rules for below-market loans because their interest arrangements do not have a significant effect on the federal tax liability of the borrower or the lender. Where to get 2009 tax forms Loans made available by lenders to the general public on the same terms and conditions that are consistent with the lender's customary business practices. Where to get 2009 tax forms Loans subsidized by a federal, state, or municipal government that are made available under a program of general application to the public. Where to get 2009 tax forms Certain employee-relocation loans. Where to get 2009 tax forms Certain loans to or from a foreign person, unless the interest income would be effectively connected with the conduct of a U. Where to get 2009 tax forms S. Where to get 2009 tax forms trade or business and not exempt from U. Where to get 2009 tax forms S. Where to get 2009 tax forms tax under an income tax treaty. Where to get 2009 tax forms Any other loan if the taxpayer can show that the interest arrangement has no significant effect on the federal tax liability of the lender or the borrower. Where to get 2009 tax forms Whether an interest arrangement has a significant effect on the federal tax liability of the lender or the borrower will be determined by all the facts and circumstances. Where to get 2009 tax forms Consider all the following factors. Where to get 2009 tax forms Whether items of income and deduction generated by the loan offset each other. Where to get 2009 tax forms The amount of the items. Where to get 2009 tax forms The cost of complying with the below-market loan provisions if they were to apply. Where to get 2009 tax forms Any reasons, other than taxes, for structuring the transaction as a below-market loan. Where to get 2009 tax forms Exception for loans to qualified continuing care facilities. Where to get 2009 tax forms   The below-market interest rules do not apply to a loan owed by a qualified continuing care facility under a continuing care contract if the lender or lender's spouse is age 62 or older by the end of the calendar year. Where to get 2009 tax forms A qualified continuing care facility is one or more facilities (excluding nursing homes) meeting the requirements listed below. Where to get 2009 tax forms Designed to provide services under continuing care contracts (defined below). Where to get 2009 tax forms Includes an independent living unit, and either an assisted living or nursing facility, or both. Where to get 2009 tax forms Substantially all of the independent living unit residents are covered by continuing care contracts. Where to get 2009 tax forms A continuing care contract is a written contract between an individual and a qualified continuing care facility that includes all of the following conditions. Where to get 2009 tax forms The individual or individual's spouse must be entitled to use the facility for the rest of their life or lives. Where to get 2009 tax forms The individual or individual's spouse will be provided with housing, as appropriate for the health of the individual or individual's spouse in an: independent living unit (which has additional available facilities outside the unit for the provision of meals and other personal care), and assisted living or nursing facility available in the continuing care facility. Where to get 2009 tax forms The individual or individual's spouse will be provided with assisted living or nursing care available in the continuing care facility, as required for the health of the individual or the individual's spouse. Where to get 2009 tax forms For more information, see section 7872(h) of the Internal Revenue Code. Where to get 2009 tax forms Sale or exchange of property. Where to get 2009 tax forms   Different rules generally apply to a loan connected with the sale or exchange of property. Where to get 2009 tax forms If the loan does not provide adequate stated interest, part of the principal payment may be considered interest. Where to get 2009 tax forms However, there are exceptions that may require you to apply the below-market interest rate rules to these loans. Where to get 2009 tax forms See Unstated Interest and Original Issue Discount (OID) in Publication 537. Where to get 2009 tax forms More information. Where to get 2009 tax forms   For more information on below-market loans, see section 7872 of the Internal Revenue Code and section 1. Where to get 2009 tax forms 7872-5 of the regulations. Where to get 2009 tax forms Prev  Up  Next   Home   More Online Publications