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1040 Tax Forms For 2012

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1040 Tax Forms For 2012

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

By law, reporting began in early 2012 for payment card and third-party network transactions that occurred in 2011. Details on the reporting requirements are in these FAQs.

General FAQs on Payment Card and Third Party Network Transactions

Payment Card Transactions FAQs

Third Party Network Transactions FAQs

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The 1040 Tax Forms For 2012

1040 tax forms for 2012 3. 1040 tax forms for 2012   Adjustments to Income Table of Contents Individual Retirement Arrangement (IRA) Contributions and DeductionsContributions to Kay Bailey Hutchison Spousal IRAs. 1040 tax forms for 2012 Deductible contribution. 1040 tax forms for 2012 Nondeductible contribution. 1040 tax forms for 2012 You may be able to subtract amounts from your total income (Form 1040, line 22 or Form 1040A, line 15) or total effectively connected income (Form 1040NR, line 23) to get your adjusted gross income (Form 1040, line 37; Form 1040A, line 21; or Form 1040NR, line 36). 1040 tax forms for 2012 Some adjustments to income follow. 1040 tax forms for 2012 Contributions to your individual retirement arrangement (IRA) (Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32), explained later in this publication. 1040 tax forms for 2012 Certain moving expenses (Form 1040, line 26; or Form 1040NR, line 26) if you changed job locations or started a new job in 2013. 1040 tax forms for 2012 See Publication 521, Moving Expenses, or see Form 3903, Moving Expenses, and its instructions. 1040 tax forms for 2012 Some health insurance costs (Form 1040, line 29 or Form 1040NR, line 29) if you were self-employed and had a net profit for the year, or if you received wages in 2013 from an S corporation in which you were a more-than-2% shareholder. 1040 tax forms for 2012 For more details, see Publication 535, Business Expenses. 1040 tax forms for 2012 Payments to your self-employed SEP, SIMPLE, or qualified plan (Form 1040, line 28 or Form 1040NR, line 28). 1040 tax forms for 2012 For more information, including limits on how much you can deduct, see Publication 560, Retirement Plans for Small Business. 1040 tax forms for 2012 Penalties paid on early withdrawal of savings (Form 1040, line 30 or Form 1040NR, line 30). 1040 tax forms for 2012 Form 1099-INT, Interest Income, or Form 1099-OID, Original Issue Discount, will show the amount of any penalty you were charged. 1040 tax forms for 2012 Alimony payments (Form 1040, line 31a). 1040 tax forms for 2012 For more information, see Publication 504, Divorced or Separated Individuals. 1040 tax forms for 2012 There are other items you can claim as adjustments to income. 1040 tax forms for 2012 These adjustments are discussed in your tax return instructions. 1040 tax forms for 2012 Individual Retirement Arrangement (IRA) Contributions and Deductions This section explains the tax treatment of amounts you pay into traditional IRAs. 1040 tax forms for 2012 A traditional IRA is any IRA that is not a Roth or SIMPLE IRA. 1040 tax forms for 2012 Roth and SIMPLE IRAs are defined earlier in the IRA discussion under Retirement Plan Distributions . 1040 tax forms for 2012 For more detailed information, see Publication 590. 1040 tax forms for 2012 Contributions. 1040 tax forms for 2012   An IRA is a personal savings plan that offers you tax advantages to set aside money for your retirement. 1040 tax forms for 2012 Two advantages of a traditional IRA are: You may be able to deduct some or all of your contributions to it, depending on your circumstances, and Generally, amounts in your IRA, including earnings and gains, are not taxed until distributed. 1040 tax forms for 2012    Although interest earned from your traditional IRA generally is not taxed in the year earned, it is not tax-exempt interest. 1040 tax forms for 2012 Do not report this interest on your tax return as tax-exempt interest. 1040 tax forms for 2012 General limit. 1040 tax forms for 2012   The most that can be contributed for 2013 to your traditional IRA is the smaller of the following amounts. 1040 tax forms for 2012 Your taxable compensation for the year, or $5,500 ($6,500 if you were age 50 or older by the end of 2013). 1040 tax forms for 2012 Contributions to Kay Bailey Hutchison Spousal IRAs. 1040 tax forms for 2012   In the case of a married couple filing a joint return for 2013, up to $5,500 ($6,500 for each spouse age 50 or older by the end of 2013) can be contributed to IRAs on behalf of each spouse, even if one spouse has little or no compensation. 1040 tax forms for 2012 For more information on the general limit and the Kay Bailey Hutchison Spousal IRA limit, see How Much Can Be Contributed? in Publication 590. 1040 tax forms for 2012 Deductible contribution. 1040 tax forms for 2012   Generally, you can deduct the lesser of the contributions to your traditional IRA for the year or the general limit (or Kay Bailey Hutchison Spousal IRA limit, if applicable) just explained. 1040 tax forms for 2012 However, if you or your spouse was covered by an employer retirement plan at any time during the year for which contributions were made, you may not be able to deduct all of the contributions. 1040 tax forms for 2012 Your deduction may be reduced or eliminated, depending on your filing status and the amount of your income. 1040 tax forms for 2012 For more information, see Limit if Covered by Employer Plan in Publication 590. 1040 tax forms for 2012 Nondeductible contribution. 1040 tax forms for 2012   The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. 1040 tax forms for 2012 You must file Form 8606, Nondeductible IRAs, to report nondeductible contributions even if you do not have to file a tax return for the year. 1040 tax forms for 2012    For 2014, the most that can be contributed to your traditional IRA is $5,500 ($6,500 if you are age 50 or older at the end of 2014). 1040 tax forms for 2012 Prev  Up  Next   Home   More Online Publications