File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

2010 H R Taxes Free

How To File An Amendment To 2011 TaxesFiling Previous Years TaxesFree Federal And State Tax Filing 2013How To File An Amended Tax Return For 20121040nr Tax Returns2011 Tax AmendmentTax Form For 2011Amend My 2013 Tax Return1040ez InstructionIrs Gov 2010 Tax FormsFree Income Tax HelpFile Income Tax OnlineTaxes 2008File 2005 Taxes FreeTurbo Tax For MilitaryTurbotax 1040x 20121040vFree Tax Form 1040ezWww Irs Govlefile2011 1040aE File 1040x FreeFree State Income Tax Filing2010 Taxes Cheap 1099 G Form W 2Turbotax Free FileFiling 1040 Ez2012 Irs Tax Forms 1040How To Do An Amended Tax ReturnFile Prior Year TaxesHow To Amend A Tax Return OnlineTurbotax 2008 Free EditionIrs 2012 Taxes QuestionsFillable 1040ez 2013H And R Block File Free2010 1040Student Tax RefundFree State File Tax OnlineState Income TaxE File State Taxes1040nr File OnlineFree State Tax Filing 2012

2010 H R Taxes Free

2010 h r taxes free Publication 915 - Main Content Table of Contents Are Any of Your Benefits Taxable?Worksheet A. 2010 h r taxes free Exemption from withholding. 2010 h r taxes free How To Report Your Benefits How Much Is Taxable?Examples Lump-Sum ElectionExample Deductions Related to Your BenefitsRepayments More Than Gross Benefits Worksheets AppendixForm SSA-1099, Social Security Benefit Statement 2013 Form SSA-1042S, Social Security Benefit Statement 2013 (Nonresident Aliens) Form RRB-1099, Payments by the Railroad Retirement Board 2013 Form RRB-1042S, Payments by the Railroad Retirement Board 2013 (Nonresident Aliens) How To Get Tax HelpLow Income Taxpayer Clinics Are Any of Your Benefits Taxable? To find out whether any of your benefits shown on Forms SSA-1099 and RRB-1099 may be taxable, compare the base amount (explained later) for your filing status with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. 2010 h r taxes free When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. 2010 h r taxes free S. 2010 h r taxes free savings bonds, Employer-provided adoption benefits, Foreign earned income or foreign housing, or Income earned by bona fide residents of American Samoa or Puerto Rico. 2010 h r taxes free Children's benefits. 2010 h r taxes free   The rules in this publication apply to benefits received by children. 2010 h r taxes free See Who is taxed , later. 2010 h r taxes free The SSA issues Form SSA-1099 and Form SSA-1042S. 2010 h r taxes free The RRB issues Form RRB-1099 and Form RRB-1042S. 2010 h r taxes free These forms (tax statements) report the amounts paid and repaid, and taxes withheld for a tax year. 2010 h r taxes free You may receive more than one of these forms for the same tax year. 2010 h r taxes free See the Appendix at the end of this publication for more information. 2010 h r taxes free Each original Form RRB-1099 or Form RRB-1042S is valid unless it has been corrected. 2010 h r taxes free The RRB will issue a corrected Form RRB-1099 or Form RRB-1042S if there is an error in the original. 2010 h r taxes free A corrected Form RRB-1099 or Form RRB-1042S is indicated as “CORRECTED” and replaces the corresponding original Form RRB-1099 or Form RRB-1042S. 2010 h r taxes free You must use the latest corrected Form RRB-1099 or Form RRB-1042S you received and any original Form RRB-1099 or Form RRB-1042S that the RRB has not corrected when you determine what amounts to report on your tax return. 2010 h r taxes free Figuring total income. 2010 h r taxes free   To figure the total of one-half of your benefits plus your other income, use Worksheet A, discussed later. 2010 h r taxes free If the total is more than your base amount, part of your benefits may be taxable. 2010 h r taxes free   If you are married and file a joint return for 2013, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. 2010 h r taxes free Even if your spouse did not receive any benefits, you must add your spouse's income to yours to figure whether any of your benefits are taxable. 2010 h r taxes free If the only income you received during 2013 was your social security or the SSEB portion of tier 1 railroad retirement benefits, your benefits generally are not taxable and you probably do not have to file a return. 2010 h r taxes free If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. 2010 h r taxes free Base amount. 2010 h r taxes free   Your base amount is: $25,000 if you are single, head of household, or qualifying widow(er), $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $-0- if you are married filing separately and lived with your spouse at any time during 2013. 2010 h r taxes free Worksheet A. 2010 h r taxes free   You can use Worksheet A to figure the amount of income to compare with your base amount. 2010 h r taxes free This is a quick way to check whether some of your benefits may be taxable. 2010 h r taxes free     Worksheet A. 2010 h r taxes free A Quick Way To Check if Your Benefits May Be Taxable Keep for your records A. 2010 h r taxes free Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. 2010 h r taxes free Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. 2010 h r taxes free (If you received more than one form, combine the amounts from box 5 and enter the total. 2010 h r taxes free ) A. 2010 h r taxes free   Note. 2010 h r taxes free If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. 2010 h r taxes free B. 2010 h r taxes free Enter one-half of the amount on line A B. 2010 h r taxes free   C. 2010 h r taxes free Enter your taxable pensions, wages, interest, dividends, and other taxable income C. 2010 h r taxes free   D. 2010 h r taxes free Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. 2010 h r taxes free   E. 2010 h r taxes free Add lines B, C, and D E. 2010 h r taxes free   Note. 2010 h r taxes free Compare the amount on line E to your base amount for your filing status. 2010 h r taxes free If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. 2010 h r taxes free If the amount on line E is more than your base amount, some of your benefits may be taxable. 2010 h r taxes free You need to complete Worksheet 1, shown later. 2010 h r taxes free If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits . 2010 h r taxes free   Example. 2010 h r taxes free You and your spouse (both over 65) are filing a joint return for 2013 and you both received social security benefits during the year. 2010 h r taxes free In January 2014, you received a Form SSA-1099 showing net benefits of $7,500 in box 5. 2010 h r taxes free Your spouse received a Form SSA-1099 showing net benefits of $3,500 in box 5. 2010 h r taxes free You also received a taxable pension of $22,800 and interest income of $500. 2010 h r taxes free You did not have any tax-exempt interest income. 2010 h r taxes free Your benefits are not taxable for 2013 because your income, as figured in Worksheet A below, is not more than your base amount ($32,000) for married filing jointly. 2010 h r taxes free   Even though none of your benefits are taxable, you must file a return for 2013 because your taxable gross income ($23,300) exceeds the minimum filing requirement amount for your filing status. 2010 h r taxes free     Filled-in Worksheet A. 2010 h r taxes free A Quick Way To Check if Your Benefits May Be Taxable Keep for your records A. 2010 h r taxes free Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. 2010 h r taxes free Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. 2010 h r taxes free (If you received more than one form, combine the amounts from box 5 and enter the total. 2010 h r taxes free ) A. 2010 h r taxes free $11,000 Note. 2010 h r taxes free If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. 2010 h r taxes free B. 2010 h r taxes free Enter one-half of the amount on line A B. 2010 h r taxes free 5,500 C. 2010 h r taxes free Enter your taxable pensions, wages, interest, dividends, and other taxable income C. 2010 h r taxes free 23,300 D. 2010 h r taxes free Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. 2010 h r taxes free -0- E. 2010 h r taxes free Add lines B, C, and D E. 2010 h r taxes free $28,800 Note. 2010 h r taxes free Compare the amount on line E to your base amount for your filing status. 2010 h r taxes free If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. 2010 h r taxes free If the amount on line E is more than your base amount, some of your benefits may be taxable. 2010 h r taxes free You need to complete Worksheet 1, shown later. 2010 h r taxes free If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits . 2010 h r taxes free   Who is taxed. 2010 h r taxes free   Benefits are included in the taxable income (to the extent they are taxable) of the person who has the legal right to receive the benefits. 2010 h r taxes free For example, if you and your child receive benefits, but the check for your child is made out in your name, you must use only your part of the benefits to see whether any benefits are taxable to you. 2010 h r taxes free One-half of the part that belongs to your child must be added to your child's other income to see whether any of those benefits are taxable to your child. 2010 h r taxes free Repayment of benefits. 2010 h r taxes free   Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. 2010 h r taxes free It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. 2010 h r taxes free If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. 2010 h r taxes free   Your gross benefits are shown in box 3 of Form SSA-1099 or Form RRB-1099. 2010 h r taxes free Your repayments are shown in box 4. 2010 h r taxes free The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). 2010 h r taxes free Use the amount in box 5 to figure whether any of your benefits are taxable. 2010 h r taxes free Example. 2010 h r taxes free In 2012, you received $3,000 in social security benefits, and in 2013 you received $2,700. 2010 h r taxes free In March 2013, SSA notified you that you should have received only $2,500 in benefits in 2012. 2010 h r taxes free During 2013, you repaid $500 to SSA. 2010 h r taxes free The Form SSA-1099 you received for 2013 shows $2,700 in box 3 (gross amount) and $500 in box 4 (repayment). 2010 h r taxes free The amount in box 5 shows your net benefits of $2,200 ($2,700 minus $500). 2010 h r taxes free Tax withholding and estimated tax. 2010 h r taxes free   You can choose to have federal income tax withheld from your social security benefits and/or the SSEB portion of your tier 1 railroad retirement benefits. 2010 h r taxes free If you choose to do this, you must complete a Form W-4V, Voluntary Withholding Statement. 2010 h r taxes free   If you do not choose to have income tax withheld, you may have to request additional withholding from other income or pay estimated tax during the year. 2010 h r taxes free For details, see Publication 505, Tax Withholding and Estimated Tax, or the instructions for Form 1040-ES, Estimated Tax for Individuals. 2010 h r taxes free U. 2010 h r taxes free S. 2010 h r taxes free citizens residing abroad. 2010 h r taxes free   U. 2010 h r taxes free S. 2010 h r taxes free citizens who are residents of the following countries are exempt from U. 2010 h r taxes free S. 2010 h r taxes free tax on their benefits. 2010 h r taxes free Canada. 2010 h r taxes free Egypt. 2010 h r taxes free Germany. 2010 h r taxes free Ireland. 2010 h r taxes free Israel. 2010 h r taxes free Italy. 2010 h r taxes free (You must also be a citizen of Italy for the exemption to apply. 2010 h r taxes free ) Romania. 2010 h r taxes free United Kingdom. 2010 h r taxes free   The SSA will not withhold U. 2010 h r taxes free S. 2010 h r taxes free tax from your benefits if you are a U. 2010 h r taxes free S. 2010 h r taxes free citizen. 2010 h r taxes free   The RRB will withhold U. 2010 h r taxes free S. 2010 h r taxes free tax from your benefits unless you file Form RRB-1001, Nonresident Questionnaire, with the RRB to provide citizenship and residency information. 2010 h r taxes free If you do not file Form RRB-1001, the RRB will consider you a nonresident alien and withhold tax from your railroad retirement benefits at a 30% rate. 2010 h r taxes free Contact the RRB to get this form. 2010 h r taxes free Lawful permanent residents. 2010 h r taxes free   For U. 2010 h r taxes free S. 2010 h r taxes free income tax purposes, lawful permanent residents (green card holders) are considered resident aliens until their lawful permanent resident status under the immigration laws is either taken away or is administratively or judicially determined to have been abandoned. 2010 h r taxes free Social security benefits paid to a green card holder are not subject to 30% withholding. 2010 h r taxes free If you are a green card holder and tax was withheld in error on your social security benefits because you have a foreign address, the withholding tax is refundable by the Social Security Administration (SSA) or the IRS. 2010 h r taxes free SSA will refund taxes erroneously withheld if the refund can be processed during the same calendar year in which the tax was withheld. 2010 h r taxes free If SSA cannot refund the taxes withheld, you must file a Form 1040 or 1040A with the Internal Revenue Service Center, Austin, TX 73301 to determine if you are entitled to a refund. 2010 h r taxes free You must also attach the following information to your Form 1040 or 1040A: A copy of the Form SSA-1042S, Social Security Benefit Statement, A copy of the “green card,” and A signed declaration that includes the following statements:    “The SSA should not have withheld federal income tax from my social security benefits because I am a U. 2010 h r taxes free S. 2010 h r taxes free lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. 2010 h r taxes free I am filing a U. 2010 h r taxes free S. 2010 h r taxes free income tax return for the tax year as a resident alien reporting all of my worldwide income. 2010 h r taxes free I have not claimed benefits for the tax year under an income tax treaty as a nonresident alien. 2010 h r taxes free ” Nonresident aliens. 2010 h r taxes free   A nonresident alien is an individual who is not a citizen or resident of the United States. 2010 h r taxes free If you are a nonresident alien, the rules discussed in this publication do not apply to you. 2010 h r taxes free Instead, 85% of your benefits are taxed at a 30% rate, unless exempt (or subject to a lower rate) by treaty. 2010 h r taxes free You will receive a Form SSA-1042S or Form RRB-1042S showing the amount of your benefits. 2010 h r taxes free These forms will also show the tax rate and the amount of tax withheld from your benefits. 2010 h r taxes free   Under tax treaties with the following countries, residents of these countries are exempt from U. 2010 h r taxes free S. 2010 h r taxes free tax on their benefits. 2010 h r taxes free Canada. 2010 h r taxes free Egypt. 2010 h r taxes free Germany. 2010 h r taxes free Ireland. 2010 h r taxes free Israel. 2010 h r taxes free Italy. 2010 h r taxes free Japan. 2010 h r taxes free Romania. 2010 h r taxes free United Kingdom. 2010 h r taxes free   Under a treaty with India, benefits paid to individuals who are both residents and nationals of India are exempt from U. 2010 h r taxes free S. 2010 h r taxes free tax if the benefits are for services performed for the United States, its subdivisions, or local government authorities. 2010 h r taxes free   If you are a resident of Switzerland, your total benefit amount will be taxed at a 15% rate. 2010 h r taxes free   For more information on whether you are a nonresident alien, see Publication 519, U. 2010 h r taxes free S. 2010 h r taxes free Tax Guide for Aliens. 2010 h r taxes free Exemption from withholding. 2010 h r taxes free   If your social security benefits are exempt from tax because you are a resident of one of the treaty countries listed, the SSA will not withhold U. 2010 h r taxes free S. 2010 h r taxes free tax from your benefits. 2010 h r taxes free   If your railroad retirement benefits are exempt from tax because you are a resident of one of the treaty countries listed, you can claim an exemption from withholding by filing Form RRB-1001 with the RRB. 2010 h r taxes free Contact the RRB to get this form. 2010 h r taxes free Canadian or German social security benefits paid to U. 2010 h r taxes free S. 2010 h r taxes free residents. 2010 h r taxes free   Under income tax treaties with Canada and Germany, social security benefits paid by those countries to U. 2010 h r taxes free S. 2010 h r taxes free residents are treated for U. 2010 h r taxes free S. 2010 h r taxes free income tax purposes as if they were paid under the social security legislation of the United States. 2010 h r taxes free If you receive social security benefits from Canada or Germany, include them on line 1 of Worksheet 1, shown later. 2010 h r taxes free How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040 or Form 1040A. 2010 h r taxes free You cannot use Form 1040EZ. 2010 h r taxes free Reporting on Form 1040. 2010 h r taxes free   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 20a and the taxable part on line 20b. 2010 h r taxes free If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 20a. 2010 h r taxes free Reporting on Form 1040A. 2010 h r taxes free   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 14a and the taxable part on line 14b. 2010 h r taxes free If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 14a. 2010 h r taxes free Benefits not taxable. 2010 h r taxes free   If you are filing Form 1040EZ, do not report any benefits on your tax return. 2010 h r taxes free If you are filing Form 1040 or Form 1040A, report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on Form 1040, line 20a, or Form 1040A, line 14a. 2010 h r taxes free Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2010 h r taxes free If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 2010 h r taxes free How Much Is Taxable? If part of your benefits are taxable, how much is taxable depends on the total amount of your benefits and other income. 2010 h r taxes free Generally, the higher that total amount, the greater the taxable part of your benefits. 2010 h r taxes free Maximum taxable part. 2010 h r taxes free   Generally, up to 50% of your benefits will be taxable. 2010 h r taxes free However, up to 85% of your benefits can be taxable if either of the following situations applies to you. 2010 h r taxes free The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly). 2010 h r taxes free You are married filing separately and lived with your spouse at any time during 2013. 2010 h r taxes free Which worksheet to use. 2010 h r taxes free   A worksheet you can use to figure your taxable benefits is in the instructions for your Form 1040 or 1040A. 2010 h r taxes free You can use either that worksheet or Worksheet 1 in this publication, unless any of the following situations applies to you. 2010 h r taxes free You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse is covered by a retirement plan at work. 2010 h r taxes free In this situation you must use the special worksheets in Appendix B of Publication 590 to figure both your IRA deduction and your taxable benefits. 2010 h r taxes free Situation (1) does not apply and you take an exclusion for interest from qualified U. 2010 h r taxes free S. 2010 h r taxes free savings bonds (Form 8815), for adoption benefits (Form 8839), for foreign earned income or housing (Form 2555 or Form 2555-EZ), or for income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. 2010 h r taxes free In this situation, you must use Worksheet 1 in this publication to figure your taxable benefits. 2010 h r taxes free You received a lump-sum payment for an earlier year. 2010 h r taxes free In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in this publication. 2010 h r taxes free See Lump-Sum Election , later. 2010 h r taxes free Examples A few examples you can use as a guide to figure the taxable part of your benefits follow. 2010 h r taxes free Filled-in Worksheet 1. 2010 h r taxes free Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 2010 h r taxes free Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). 2010 h r taxes free None of your benefits are taxable for 2013. 2010 h r taxes free For more information, see Repayments More Than Gross Benefits . 2010 h r taxes free If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 2010 h r taxes free S. 2010 h r taxes free Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. 2010 h r taxes free Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 2010 h r taxes free 1. 2010 h r taxes free Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 2010 h r taxes free Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 2010 h r taxes free $5,980         2. 2010 h r taxes free Enter one-half of line 1 2. 2010 h r taxes free 2,990     3. 2010 h r taxes free Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 2010 h r taxes free 28,990     4. 2010 h r taxes free Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 2010 h r taxes free -0-     5. 2010 h r taxes free Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 2010 h r taxes free -0-     6. 2010 h r taxes free Combine lines 2, 3, 4, and 5 6. 2010 h r taxes free 31,980     7. 2010 h r taxes free Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 2010 h r taxes free  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 2010 h r taxes free -0-     8. 2010 h r taxes free Is the amount on line 7 less than the amount on line 6?             No. 2010 h r taxes free None of your social security benefits are taxable. 2010 h r taxes free Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2010 h r taxes free             Yes. 2010 h r taxes free Subtract line 7 from line 6 8. 2010 h r taxes free 31,980     9. 2010 h r taxes free If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 2010 h r taxes free 25,000       Note. 2010 h r taxes free If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. 2010 h r taxes free 85) and enter the result on line 17. 2010 h r taxes free Then go to line 18. 2010 h r taxes free         10. 2010 h r taxes free Is the amount on line 9 less than the amount on line 8?             No. 2010 h r taxes free None of your benefits are taxable. 2010 h r taxes free Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 2010 h r taxes free If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. 2010 h r taxes free             Yes. 2010 h r taxes free Subtract line 9 from line 8 10. 2010 h r taxes free 6,980     11. 2010 h r taxes free Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 2010 h r taxes free 9,000     12. 2010 h r taxes free Subtract line 11 from line 10. 2010 h r taxes free If zero or less, enter -0- 12. 2010 h r taxes free -0-     13. 2010 h r taxes free Enter the smaller of line 10 or line 11 13. 2010 h r taxes free 6,980     14. 2010 h r taxes free Enter one-half of line 13 14. 2010 h r taxes free 3,490     15. 2010 h r taxes free Enter the smaller of line 2 or line 14 15. 2010 h r taxes free 2,990     16. 2010 h r taxes free Multiply line 12 by 85% (. 2010 h r taxes free 85). 2010 h r taxes free If line 12 is zero, enter -0- 16. 2010 h r taxes free -0-     17. 2010 h r taxes free Add lines 15 and 16 17. 2010 h r taxes free 2,990     18. 2010 h r taxes free Multiply line 1 by 85% (. 2010 h r taxes free 85) 18. 2010 h r taxes free 5,083     19. 2010 h r taxes free Taxable benefits. 2010 h r taxes free Enter the smaller of line 17 or line 18. 2010 h r taxes free Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 2010 h r taxes free $2,990       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 2010 h r taxes free         Example 1. 2010 h r taxes free George White is single and files Form 1040 for 2013. 2010 h r taxes free In addition to receiving social security payments, he received a fully taxable pension of $18,600, wages from a part-time job of $9,400, and taxable interest income of $990, for a total of $28,990. 2010 h r taxes free He received a Form SSA-1099 in January 2014 that shows his net social security benefits of $5,980 in box 5. 2010 h r taxes free   To figure his taxable benefits, George completes Worksheet 1, shown below. 2010 h r taxes free On line 20a of his Form 1040, George enters his net benefits of $5,980. 2010 h r taxes free On line 20b, he enters his taxable benefits of $2,990. 2010 h r taxes free Example 2. 2010 h r taxes free Ray and Alice Hopkins file a joint return on Form 1040A for 2013. 2010 h r taxes free Ray is retired and received a fully taxable pension of $15,500. 2010 h r taxes free He also received social security benefits and his Form SSA-1099 for 2013 shows net benefits of $5,600 in box 5. 2010 h r taxes free Alice worked during the year and had wages of $14,000. 2010 h r taxes free She made a deductible payment to her IRA account of $1,000. 2010 h r taxes free Ray and Alice have two savings accounts with a total of $250 in taxable interest income. 2010 h r taxes free They complete Worksheet 1, entering $29,750 ($15,500 + $14,000 + $250) on line 3. 2010 h r taxes free They find none of Ray's social security benefits are taxable. 2010 h r taxes free On Form 1040A, they enter $5,600 on line 14a and -0- on line 14b. 2010 h r taxes free Filled-in Worksheet 1. 2010 h r taxes free Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 2010 h r taxes free Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). 2010 h r taxes free None of your benefits are taxable for 2013. 2010 h r taxes free For more information, see Repayments More Than Gross Benefits . 2010 h r taxes free If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 2010 h r taxes free S. 2010 h r taxes free Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. 2010 h r taxes free Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 2010 h r taxes free 1. 2010 h r taxes free Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 2010 h r taxes free Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 2010 h r taxes free $5,600         2. 2010 h r taxes free Enter one-half of line 1 2. 2010 h r taxes free 2,800     3. 2010 h r taxes free Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 2010 h r taxes free 29,750     4. 2010 h r taxes free Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 2010 h r taxes free -0-     5. 2010 h r taxes free Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 2010 h r taxes free -0-     6. 2010 h r taxes free Combine lines 2, 3, 4, and 5 6. 2010 h r taxes free 32,550     7. 2010 h r taxes free Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 2010 h r taxes free  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 2010 h r taxes free 1,000     8. 2010 h r taxes free Is the amount on line 7 less than the amount on line 6?             No. 2010 h r taxes free None of your social security benefits are taxable. 2010 h r taxes free Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2010 h r taxes free             Yes. 2010 h r taxes free Subtract line 7 from line 6 8. 2010 h r taxes free 31,550     9. 2010 h r taxes free If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 2010 h r taxes free 32,000       Note. 2010 h r taxes free If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. 2010 h r taxes free 85) and enter the result on line 17. 2010 h r taxes free Then go to line 18. 2010 h r taxes free         10. 2010 h r taxes free Is the amount on line 9 less than the amount on line 8?             No. 2010 h r taxes free None of your benefits are taxable. 2010 h r taxes free Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 2010 h r taxes free If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. 2010 h r taxes free             Yes. 2010 h r taxes free Subtract line 9 from line 8 10. 2010 h r taxes free       11. 2010 h r taxes free Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 2010 h r taxes free       12. 2010 h r taxes free Subtract line 11 from line 10. 2010 h r taxes free If zero or less, enter -0- 12. 2010 h r taxes free       13. 2010 h r taxes free Enter the smaller of line 10 or line 11 13. 2010 h r taxes free       14. 2010 h r taxes free Enter one-half of line 13 14. 2010 h r taxes free       15. 2010 h r taxes free Enter the smaller of line 2 or line 14 15. 2010 h r taxes free       16. 2010 h r taxes free Multiply line 12 by 85% (. 2010 h r taxes free 85). 2010 h r taxes free If line 12 is zero, enter -0- 16. 2010 h r taxes free       17. 2010 h r taxes free Add lines 15 and 16 17. 2010 h r taxes free       18. 2010 h r taxes free Multiply line 1 by 85% (. 2010 h r taxes free 85) 18. 2010 h r taxes free       19. 2010 h r taxes free Taxable benefits. 2010 h r taxes free Enter the smaller of line 17 or line 18. 2010 h r taxes free Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 2010 h r taxes free         If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 2010 h r taxes free         Example 3. 2010 h r taxes free Joe and Betty Johnson file a joint return on Form 1040 for 2013. 2010 h r taxes free Joe is a retired railroad worker and in 2013 received the social security equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. 2010 h r taxes free Joe's Form RRB-1099 shows $10,000 in box 5. 2010 h r taxes free Betty is a retired government worker and received a fully taxable pension of $38,000. 2010 h r taxes free They had $2,300 in taxable interest income plus interest of $200 on a qualified U. 2010 h r taxes free S. 2010 h r taxes free savings bond. 2010 h r taxes free The savings bond interest qualified for the exclusion. 2010 h r taxes free They figure their taxable benefits by completing Worksheet 1 below. 2010 h r taxes free Because they have qualified U. 2010 h r taxes free S. 2010 h r taxes free savings bond interest, they follow the note at the beginning of the worksheet and use the amount from line 2 of their Schedule B (Form 1040A or 1040) on line 3 of the worksheet instead of the amount from line 8a of their Form 1040. 2010 h r taxes free On line 3 of the worksheet, they enter $40,500 ($38,000 + $2,500). 2010 h r taxes free More than 50% of Joe's net benefits are taxable because the income on line 8 of the worksheet ($45,500) is more than $44,000. 2010 h r taxes free (See Maximum taxable part under How Much Is Taxable earlier. 2010 h r taxes free ) Joe and Betty enter $10,000 on Form 1040, line 20a, and $6,275 on Form 1040, line 20b. 2010 h r taxes free Filled-in Worksheet 1. 2010 h r taxes free Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 2010 h r taxes free Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). 2010 h r taxes free None of your benefits are taxable for 2013. 2010 h r taxes free For more information, see Repayments More Than Gross Benefits . 2010 h r taxes free If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 2010 h r taxes free S. 2010 h r taxes free Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. 2010 h r taxes free Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 2010 h r taxes free 1. 2010 h r taxes free Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 2010 h r taxes free Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 2010 h r taxes free $10,000         2. 2010 h r taxes free Enter one-half of line 1 2. 2010 h r taxes free 5,000     3. 2010 h r taxes free Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 2010 h r taxes free 40,500     4. 2010 h r taxes free Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 2010 h r taxes free -0-     5. 2010 h r taxes free Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 2010 h r taxes free -0-     6. 2010 h r taxes free Combine lines 2, 3, 4, and 5 6. 2010 h r taxes free 45,500     7. 2010 h r taxes free Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 2010 h r taxes free  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 2010 h r taxes free -0-     8. 2010 h r taxes free Is the amount on line 7 less than the amount on line 6?             No. 2010 h r taxes free None of your social security benefits are taxable. 2010 h r taxes free Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2010 h r taxes free             Yes. 2010 h r taxes free Subtract line 7 from line 6 8. 2010 h r taxes free 45,500     9. 2010 h r taxes free If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 2010 h r taxes free 32,000       Note. 2010 h r taxes free If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. 2010 h r taxes free 85) and enter the result on line 17. 2010 h r taxes free Then go to line 18. 2010 h r taxes free         10. 2010 h r taxes free Is the amount on line 9 less than the amount on line 8?             No. 2010 h r taxes free None of your benefits are taxable. 2010 h r taxes free Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 2010 h r taxes free If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. 2010 h r taxes free             Yes. 2010 h r taxes free Subtract line 9 from line 8 10. 2010 h r taxes free 13,500     11. 2010 h r taxes free Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 2010 h r taxes free 12,000     12. 2010 h r taxes free Subtract line 11 from line 10. 2010 h r taxes free If zero or less, enter -0- 12. 2010 h r taxes free 1,500     13. 2010 h r taxes free Enter the smaller of line 10 or line 11 13. 2010 h r taxes free 12,000     14. 2010 h r taxes free Enter one-half of line 13 14. 2010 h r taxes free 6,000     15. 2010 h r taxes free Enter the smaller of line 2 or line 14 15. 2010 h r taxes free 5,000     16. 2010 h r taxes free Multiply line 12 by 85% (. 2010 h r taxes free 85). 2010 h r taxes free If line 12 is zero, enter -0- 16. 2010 h r taxes free 1,275     17. 2010 h r taxes free Add lines 15 and 16 17. 2010 h r taxes free 6,275     18. 2010 h r taxes free Multiply line 1 by 85% (. 2010 h r taxes free 85) 18. 2010 h r taxes free 8,500     19. 2010 h r taxes free Taxable benefits. 2010 h r taxes free Enter the smaller of line 17 or line 18. 2010 h r taxes free Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 2010 h r taxes free $6,275       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 2010 h r taxes free         Filled-in Worksheet 1. 2010 h r taxes free Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 2010 h r taxes free Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). 2010 h r taxes free None of your benefits are taxable for 2013. 2010 h r taxes free For more information, see Repayments More Than Gross Benefits . 2010 h r taxes free If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 2010 h r taxes free S. 2010 h r taxes free Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. 2010 h r taxes free Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 2010 h r taxes free 1. 2010 h r taxes free Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 2010 h r taxes free Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 2010 h r taxes free $4,000         2. 2010 h r taxes free Enter one-half of line 1 2. 2010 h r taxes free 2,000     3. 2010 h r taxes free Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 2010 h r taxes free 8,000     4. 2010 h r taxes free Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 2010 h r taxes free -0-     5. 2010 h r taxes free Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 2010 h r taxes free -0-     6. 2010 h r taxes free Combine lines 2, 3, 4, and 5 6. 2010 h r taxes free 10,000     7. 2010 h r taxes free Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 2010 h r taxes free  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 2010 h r taxes free -0-     8. 2010 h r taxes free Is the amount on line 7 less than the amount on line 6?             No. 2010 h r taxes free None of your social security benefits are taxable. 2010 h r taxes free Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2010 h r taxes free             Yes. 2010 h r taxes free Subtract line 7 from line 6 8. 2010 h r taxes free 10,000     9. 2010 h r taxes free If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 2010 h r taxes free         Note. 2010 h r taxes free If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. 2010 h r taxes free 85) and enter the result on line 17. 2010 h r taxes free Then go to line 18. 2010 h r taxes free         10. 2010 h r taxes free Is the amount on line 9 less than the amount on line 8?             No. 2010 h r taxes free None of your benefits are taxable. 2010 h r taxes free Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 2010 h r taxes free If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. 2010 h r taxes free             Yes. 2010 h r taxes free Subtract line 9 from line 8 10. 2010 h r taxes free       11. 2010 h r taxes free Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 2010 h r taxes free       12. 2010 h r taxes free Subtract line 11 from line 10. 2010 h r taxes free If zero or less, enter -0- 12. 2010 h r taxes free       13. 2010 h r taxes free Enter the smaller of line 10 or line 11 13. 2010 h r taxes free       14. 2010 h r taxes free Enter one-half of line 13 14. 2010 h r taxes free       15. 2010 h r taxes free Enter the smaller of line 2 or line 14 15. 2010 h r taxes free       16. 2010 h r taxes free Multiply line 12 by 85% (. 2010 h r taxes free 85). 2010 h r taxes free If line 12 is zero, enter -0- 16. 2010 h r taxes free       17. 2010 h r taxes free Add lines 15 and 16 17. 2010 h r taxes free 8,500     18. 2010 h r taxes free Multiply line 1 by 85% (. 2010 h r taxes free 85) 18. 2010 h r taxes free 3,400     19. 2010 h r taxes free Taxable benefits. 2010 h r taxes free Enter the smaller of line 17 or line 18. 2010 h r taxes free Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 2010 h r taxes free $3,400       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 2010 h r taxes free         Example 4. 2010 h r taxes free Bill and Eileen Jones are married and live together, but file separate Form 1040 returns for 2013. 2010 h r taxes free Bill earned $8,000 during 2013. 2010 h r taxes free The only other income he had for the year was $4,000 net social security benefits (box 5 of his Form SSA-1099). 2010 h r taxes free Bill figures his taxable benefits by completing Worksheet 1 below. 2010 h r taxes free He must include 85% of his social security benefits in his taxable income because he is married filing separately and lived with his spouse during 2013. 2010 h r taxes free See How Much Is Taxable earlier. 2010 h r taxes free Bill enters $4,000 on his Form 1040, line 20a, and $3,400 on Form 1040, line 20b. 2010 h r taxes free Lump-Sum Election You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2013 in your 2013 income, even if the payment includes benefits for an earlier year. 2010 h r taxes free This type of lump-sum benefit payment should not be confused with the lump-sum death benefit that both the SSA and RRB pay to many of their beneficiaries. 2010 h r taxes free No part of the lump-sum death benefit is subject to tax. 2010 h r taxes free Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. 2010 h r taxes free However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year. 2010 h r taxes free You can elect this method if it lowers your taxable benefits. 2010 h r taxes free Under the lump-sum election method, you refigure the taxable part of all your benefits for the earlier year (including the lump-sum payment) using that year's income. 2010 h r taxes free Then you subtract any taxable benefits for that year that you previously reported. 2010 h r taxes free The remainder is the taxable part of the lump-sum payment. 2010 h r taxes free Add it to the taxable part of your benefits for 2013 (figured without the lump-sum payment for the earlier year). 2010 h r taxes free Because the earlier year's taxable benefits are included in your 2013 income, no adjustment is made to the earlier year's return. 2010 h r taxes free Do not file an amended return for the earlier year. 2010 h r taxes free Will the lump-sum election method lower your taxable benefits?   To find out, take the following steps. 2010 h r taxes free Complete Worksheet 1 in this publication. 2010 h r taxes free Complete Worksheet 2 and Worksheet 3 as appropriate. 2010 h r taxes free Use Worksheet 2 if your lump-sum payment was for a year after 1993. 2010 h r taxes free Use Worksheet 3 if it was for 1993 or an earlier year. 2010 h r taxes free Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received the lump-sum payment. 2010 h r taxes free Complete Worksheet 4. 2010 h r taxes free Compare the taxable benefits on line 19 of Worksheet 1 with the taxable benefits on line 21 of Worksheet 4. 2010 h r taxes free If the taxable benefits on Worksheet 4 are lower than the taxable benefits on Worksheet 1, you can elect to report the lower amount on your return. 2010 h r taxes free Making the election. 2010 h r taxes free   If you elect to report your taxable benefits under the lump-sum election method, follow the instructions at the bottom of Worksheet 4. 2010 h r taxes free Do not attach the completed worksheets to your return. 2010 h r taxes free Keep them with your records. 2010 h r taxes free    Once you elect this method of figuring the taxable part of a lump-sum payment, you can revoke your election only with the consent of the IRS. 2010 h r taxes free Lump-sum payment reported on Form SSA-1099 or RRB-1099. 2010 h r taxes free   If you received a lump-sum payment in 2013 that includes benefits for one or more earlier years after 1983, it will be included in box 3 of either Form SSA-1099 or Form RRB-1099. 2010 h r taxes free That part of any lump-sum payment for years before 1984 is not taxed and will not be shown on the form. 2010 h r taxes free The form will also show the year (or years) the payment is for. 2010 h r taxes free However, Form RRB-1099 will not show a breakdown by year (or years) of any lump-sum payment for years before 2011. 2010 h r taxes free You must contact the RRB for a breakdown by year for any amount shown in box 9. 2010 h r taxes free Example Jane Jackson is single. 2010 h r taxes free In 2012 she applied for social security disability benefits but was told she was ineligible. 2010 h r taxes free She appealed the decision and won. 2010 h r taxes free In 2013, she received a lump-sum payment of $6,000, of which $2,000 was for 2012 and $4,000 was for 2013. 2010 h r taxes free Jane also received $5,000 in social security benefits in 2013, so her total benefits in 2013 were $11,000. 2010 h r taxes free Jane's other income for 2012 and 2013 is as follows. 2010 h r taxes free   Income 2012 2013     Wages $20,000 $ 3,500     Interest income 2,000 2,500     Dividend income 1,000 1,500     Fully taxable pension   18,000     Total $23,000 $25,500   To see if the lump-sum election method results in lower taxable benefits, she completes Worksheets 1, 2, and 4 from this publication. 2010 h r taxes free She does not need to complete Worksheet 3 because her lump-sum payment was for years after 1993. 2010 h r taxes free Jane completes Worksheet 1 to find the amount of her taxable benefits for 2013 under the regular method. 2010 h r taxes free She completes Worksheet 2 to find the taxable part of the lump-sum payment for 2012 under the lump-sum election method. 2010 h r taxes free She completes Worksheet 4 to decide if the lump-sum election method will lower her taxable benefits. 2010 h r taxes free After completing the worksheets, Jane compares the amounts from Worksheet 4, line 21, and Worksheet 1, line 19. 2010 h r taxes free Because the amount on Worksheet 4 is smaller, she chooses to use the lump-sum election method. 2010 h r taxes free To do this, she prints “LSE” to the left of Form 1040, line 20a. 2010 h r taxes free She then enters $11,000 on Form 1040, line 20a, and her taxable benefits of $2,500 on line 20b. 2010 h r taxes free Jane's filled-in worksheets (1, 2, and 4) follow. 2010 h r taxes free Jane Jackson's Filled-in Worksheet 1. 2010 h r taxes free Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 2010 h r taxes free Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). 2010 h r taxes free None of your benefits are taxable for 2013. 2010 h r taxes free For more information, see Repayments More Than Gross Benefits . 2010 h r taxes free If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 2010 h r taxes free S. 2010 h r taxes free Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. 2010 h r taxes free Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 2010 h r taxes free 1. 2010 h r taxes free Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 2010 h r taxes free Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 2010 h r taxes free $11,000         2. 2010 h r taxes free Enter one-half of line 1 2. 2010 h r taxes free 5,500     3. 2010 h r taxes free Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 2010 h r taxes free 25,500     4. 2010 h r taxes free Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 2010 h r taxes free -0-     5. 2010 h r taxes free Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 2010 h r taxes free -0-     6. 2010 h r taxes free Combine lines 2, 3, 4, and 5 6. 2010 h r taxes free 31,000     7. 2010 h r taxes free Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 2010 h r taxes free  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 2010 h r taxes free -0-     8. 2010 h r taxes free Is the amount on line 7 less than the amount on line 6?             No. 2010 h r taxes free None of your social security benefits are taxable. 2010 h r taxes free Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2010 h r taxes free             Yes. 2010 h r taxes free Subtract line 7 from line 6 8. 2010 h r taxes free 31,000     9. 2010 h r taxes free If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 2010 h r taxes free 25,000       Note. 2010 h r taxes free If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. 2010 h r taxes free 85) and enter the result on line 17. 2010 h r taxes free Then go to line 18. 2010 h r taxes free         10. 2010 h r taxes free Is the amount on line 9 less than the amount on line 8?             No. 2010 h r taxes free None of your benefits are taxable. 2010 h r taxes free Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 2010 h r taxes free If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. 2010 h r taxes free             Yes. 2010 h r taxes free Subtract line 9 from line 8 10. 2010 h r taxes free 6,000     11. 2010 h r taxes free Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 2010 h r taxes free 9,000     12. 2010 h r taxes free Subtract line 11 from line 10. 2010 h r taxes free If zero or less, enter -0- 12. 2010 h r taxes free -0-     13. 2010 h r taxes free Enter the smaller of line 10 or line 11 13. 2010 h r taxes free 6,000     14. 2010 h r taxes free Enter one-half of line 13 14. 2010 h r taxes free 3,000     15. 2010 h r taxes free Enter the smaller of line 2 or line 14 15. 2010 h r taxes free 3,000     16. 2010 h r taxes free Multiply line 12 by 85% (. 2010 h r taxes free 85). 2010 h r taxes free If line 12 is zero, enter -0- 16. 2010 h r taxes free -0-     17. 2010 h r taxes free Add lines 15 and 16 17. 2010 h r taxes free 3,000     18. 2010 h r taxes free Multiply line 1 by 85% (. 2010 h r taxes free 85) 18. 2010 h r taxes free 9,350     19. 2010 h r taxes free Taxable benefits. 2010 h r taxes free Enter the smaller of line 17 or line 18. 2010 h r taxes free Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 2010 h r taxes free $3,000       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 2010 h r taxes free         Jane Jackson's Filled-in Worksheet 2. 2010 h r taxes free Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993)     Enter earlier year 2012 1. 2010 h r taxes free Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year, plus the lump-sum payment for the earlier year received after that year 1. 2010 h r taxes free $2,000           Note. 2010 h r taxes free If line 1 is zero or less, skip lines 2 through 20 and enter -0- on line 21. 2010 h r taxes free Otherwise, go on to line 2. 2010 h r taxes free             2. 2010 h r taxes free Enter one-half of line 1 2. 2010 h r taxes free 1,000   3. 2010 h r taxes free Enter your adjusted gross income for the earlier year 3. 2010 h r taxes free 23,000   4. 2010 h r taxes free Enter the total of any exclusions/adjustments you claimed in the earlier year for: Adoption benefits (Form 8839) Qualified U. 2010 h r taxes free S. 2010 h r taxes free savings bond interest (Form 8815) Student loan interest (Form 1040, page 1, or Form 1040A, page 1) Tuition and fees (Form 1040, page 1, or Form 1040A, page 1) Domestic production activities (for 2005 through 2012) (Form 1040, page 1) Foreign earned income or housing (Form 2555 or Form 2555-EZ) Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico 4. 2010 h r taxes free -0-   5. 2010 h r taxes free Enter any tax-exempt interest received in the earlier year 5. 2010 h r taxes free -0-   6. 2010 h r taxes free Add lines 2 through 5 6. 2010 h r taxes free 24,000   7. 2010 h r taxes free Enter your taxable benefits for the earlier year that you previously reported 7. 2010 h r taxes free -0-   8. 2010 h r taxes free Subtract line 7 from line 6 8. 2010 h r taxes free 24,000   9. 2010 h r taxes free If, for the earlier year, you were:     Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), married filing separately and you lived apart from your spouse for all of the earlier year, enter $25,000 9. 2010 h r taxes free 25,000     Note. 2010 h r taxes free If you were married filing separately and you lived with your spouse at any time during the earlier year, skip lines 9 through 16; multiply line 8 by 85% (. 2010 h r taxes free 85) and enter the result on line 17. 2010 h r taxes free Then go to line 18. 2010 h r taxes free         10. 2010 h r taxes free Is the amount on line 8 more than the amount on line 9?       No. 2010 h r taxes free Skip lines 10 through 20 and enter -0- on line 21. 2010 h r taxes free       Yes. 2010 h r taxes free Subtract line 9 from line 8 10. 2010 h r taxes free     11. 2010 h r taxes free Enter $12,000 if married filing jointly for the earlier year; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of the earlier year 11. 2010 h r taxes free     12. 2010 h r taxes free Subtract line 11 from line 10. 2010 h r taxes free If zero or less, enter -0- 12. 2010 h r taxes free     13. 2010 h r taxes free Enter the smaller of line 10 or line 11 13. 2010 h r taxes free     14. 2010 h r taxes free Enter one-half of line 13 14. 2010 h r taxes free     15. 2010 h r taxes free Enter the smaller of line 2 or line 14 15. 2010 h r taxes free     16. 2010 h r taxes free Multiply line 12 by 85% (. 2010 h r taxes free 85). 2010 h r taxes free If line 12 is zero, enter -0- 16. 2010 h r taxes free     17. 2010 h r taxes free Add lines 15 and 16 17. 2010 h r taxes free     18. 2010 h r taxes free Multiply line 1 by 85% (. 2010 h r taxes free 85) 18. 2010 h r taxes free     19. 2010 h r taxes free Refigured taxable benefits. 2010 h r taxes free Enter the smaller of line 17 or line 18 19. 2010 h r taxes free     20. 2010 h r taxes free Enter your taxable benefits for the earlier year (or as refigured due to a previous lump-sum payment for the year) 20. 2010 h r taxes free     21. 2010 h r taxes free Additional taxable benefits. 2010 h r taxes free Subtract line 20 from line 19. 2010 h r taxes free Also enter this amount on Worksheet 4, line 20 21. 2010 h r taxes free -0-     Do not file an amended return for this earlier year. 2010 h r taxes free Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received a lump-sum payment in 2013. 2010 h r taxes free   Jane Jackson's Filled-in Worksheet 4. 2010 h r taxes free Figure Your Taxable Benefits Under the Lump-Sum Election Method (Use With Worksheet 2 or 3)     Complete Worksheet 1 and Worksheets 2 and 3 as appropriate before completing this worksheet. 2010 h r taxes free 1. 2010 h r taxes free Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for 2013, minus the lump-sum payment for years before 2013 1. 2010 h r taxes free $9,000         Note. 2010 h r taxes free If line 1 is zero or less, skip lines 2 through 18, enter -0- on line 19 and go to line 20. 2010 h r taxes free Otherwise, go on to line 2. 2010 h r taxes free           2. 2010 h r taxes free Enter one-half of line 1 2. 2010 h r taxes free 4,500   3. 2010 h r taxes free Enter the amount from Worksheet 1, line 3 3. 2010 h r taxes free 25,500   4. 2010 h r taxes free Enter the amount from Worksheet 1, line 4 4. 2010 h r taxes free -0-   5. 2010 h r taxes free Enter the amount from Worksheet 1, line 5 5. 2010 h r taxes free -0-   6. 2010 h r taxes free Combine lines 2, 3, 4, and 5 6. 2010 h r taxes free 30,000   7. 2010 h r taxes free Enter the amount from Worksheet 1, line 7 7. 2010 h r taxes free -0-   8. 2010 h r taxes free Subtract line 7 from line 6 8. 2010 h r taxes free 30,000   9. 2010 h r taxes free Enter the amount from Worksheet 1, line 9. 2010 h r taxes free But if you are married filing separately and lived with your spouse at any time during 2013, skip lines 9 through 16; multiply line 8 by 85% (. 2010 h r taxes free 85) and enter the result on line 17. 2010 h r taxes free Then, go to line 18 9. 2010 h r taxes free 25,000   10. 2010 h r taxes free Is the amount on line 8 more than the amount on line 9? No. 2010 h r taxes free Skip lines 10 through 18, enter -0- on line 19, and go to line 20. 2010 h r taxes free  Yes. 2010 h r taxes free Subtract line 9 from line 8 10. 2010 h r taxes free 5,000   11. 2010 h r taxes free Enter the amount from Worksheet 1, line 11 11. 2010 h r taxes free 9,000   12. 2010 h r taxes free Subtract line 11 from line 10. 2010 h r taxes free If zero or less, enter -0- 12. 2010 h r taxes free -0-   13. 2010 h r taxes free Enter the smaller of line 10 or line 11 13. 2010 h r taxes free 5,000   14. 2010 h r taxes free Enter one-half of line 13 14. 2010 h r taxes free 2,500   15. 2010 h r taxes free Enter the smaller of line 2 or line 14 15. 2010 h r taxes free 2,500   16. 2010 h r taxes free Multiply line 12 by 85% (. 2010 h r taxes free 85). 2010 h r taxes free If line 12 is zero, enter -0- 16. 2010 h r taxes free -0-   17. 2010 h r taxes free Add lines 15 and 16 17. 2010 h r taxes free 2,500   18. 2010 h r taxes free Multiply line 1 by 85% (. 2010 h r taxes free 85) 18. 2010 h r taxes free 7,650   19. 2010 h r taxes free Enter the smaller of line 17 or line 18 19. 2010 h r taxes free 2,500   20. 2010 h r taxes free Enter the total of the amounts from Worksheet 2, line 21, and Worksheet 3, line 14, for all earlier years for which the lump-sum payment was received 20. 2010 h r taxes free -0-   21. 2010 h r taxes free Taxable benefits under lump-sum election method. 2010 h r taxes free Add lines 19 and 20 21. 2010 h r taxes free $2,500   Next. 2010 h r taxes free Is line 21 above smaller than Worksheet 1, line 19? No. 2010 h r taxes free Do not use this method to figure your taxable benefits. 2010 h r taxes free Follow the instructions on Worksheet 1 to report your benefits. 2010 h r taxes free  Yes. 2010 h r taxes free You can elect to report your taxable benefits under this method. 2010 h r taxes free To elect this method:     Enter “LSE” to the left of Form 1040, line 20a, or Form 1040A, line 14a. 2010 h r taxes free If line 21 above is zero, follow the instructions in line 10 for “No” on Worksheet 1. 2010 h r taxes free Otherwise: Enter the amount from Worksheet 1, line 1, on Form 1040, line 20a, or on Form 1040A, line 14a. 2010 h r taxes free Enter the amount from line 21 above on Form 1040, line 20b, or on Form 1040A, line 14b. 2010 h r taxes free If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 2010 h r taxes free   Deductions Related to Your Benefits You may be entitled to deduct certain amounts related to the benefits you receive. 2010 h r taxes free Disability payments. 2010 h r taxes free   You may have received disability payments from your employer or an insurance company that you included as income on your tax return in an earlier year. 2010 h r taxes free If you received a lump-sum payment from SSA or RRB, and you had to repay the employer or insurance company for the disability payments, you can take an itemized deduction for the part of the payments you included in gross income in the earlier year. 2010 h r taxes free If the amount you repay is more than $3,000, you may be able to claim a tax credit instead. 2010 h r taxes free Claim the deduction or credit in the same way explained under Repayment of benefits received in an earlier year in the section Repayments More Than Gross Benefits , later. 2010 h r taxes free Legal expenses. 2010 h r taxes free   You can usually deduct legal expenses that you pay or incur to produce or collect taxable income or in connection with the determination, collection, or refund of any tax. 2010 h r taxes free   Legal expenses for collecting the taxable part of your benefits are deductible as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. 2010 h r taxes free Repayments More Than Gross Benefits In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. 2010 h r taxes free If this occurred, your net benefits in box 5 will be a negative figure (a figure in parentheses) and none of your benefits will be taxable. 2010 h r taxes free Do not use Worksheet 1 in this case. 2010 h r taxes free If you receive more than one form, a negative figure in box 5 of one form is used to offset a positive figure in box 5 of another form for that same year. 2010 h r taxes free If you have any questions about this negative figure, contact your local SSA office or your local RRB field office. 2010 h r taxes free Joint return. 2010 h r taxes free   If you and your spouse file a joint return, and your Form SSA-1099 or RRB-1099 has a negative figure in box 5, but your spouse's does not, subtract the amount in box 5 of your form from the amount in box 5 of your spouse's form. 2010 h r taxes free You do this to get your net benefits when figuring if your combined benefits are taxable. 2010 h r taxes free Example. 2010 h r taxes free John and Mary file a joint return for 2013. 2010 h r taxes free John received Form SSA-1099 showing $3,000 in box 5. 2010 h r taxes free Mary also received Form SSA-1099 and the amount in box 5 was ($500). 2010 h r taxes free John and Mary will use $2,500 ($3,000 minus $500) as the amount of their net benefits when figuring if any of their combined benefits are taxable. 2010 h r taxes free Repayment of benefits received in an earlier year. 2010 h r taxes free   If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 is a negative figure, you can take an itemized deduction for the part of this negative figure that represents benefits you included in gross income in an earlier year. 2010 h r taxes free Deduction $3,000 or less. 2010 h r taxes free   If this deduction is $3,000 or less, it is subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions. 2010 h r taxes free Claim it on Schedule A (Form 1040), line 23. 2010 h r taxes free Deduction more than $3,000. 2010 h r taxes free   If this deduction is more than $3,000, you should figure your tax two ways: Figure your tax for 2013 with the itemized deduction included on Schedule A, line 28. 2010 h r taxes free Figure your tax for 2013 in the following steps: Figure the tax without the itemized deduction included on Schedule A, line 28. 2010 h r taxes free For each year after 1983 for which part of the negative figure represents a repayment of benefits, refigure your taxable benefits as if your total benefits for the year were reduced by that part of the negative figure. 2010 h r taxes free Then refigure the tax for that year. 2010 h r taxes free Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts. 2010 h r taxes free Subtract the result in (c) from the result in (a). 2010 h r taxes free   Compare the tax figured in methods (1) and (2). 2010 h r taxes free Your tax for 2013 is the smaller of the two amounts. 2010 h r taxes free If method (1) results in less tax, take the itemized deduction on Schedule A (Form 1040), line 28. 2010 h r taxes free If method (2) results in less tax, claim a credit for the amount from step 2(c) above on Form 1040, line 71. 2010 h r taxes free Check box d and enter “I. 2010 h r taxes free R. 2010 h r taxes free C. 2010 h r taxes free 1341” in the space next to that box. 2010 h r taxes free If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 28. 2010 h r taxes free Worksheets Blank Worksheets 1 through 4 are provided in this section: Worksheet 1, Figuring Your Taxable Benefits; Worksheet 2, Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993); Worksheet 3, Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year Before 1994); Worksheet 4, Figure Your Taxable Benefits Under the Lump-Sum Election Method (Use With Worksheet 2 or 3). 2010 h r taxes free Worksheet 1. 2010 h r taxes free Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 2010 h r taxes free Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). 2010 h r taxes free None of your benefits are taxable for 2013. 2010 h r taxes free For more information, see Repayments More Than Gross Benefits . 2010 h r taxes free If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 2010 h r taxes free S. 2010 h r taxes free Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. 2010 h r taxes free Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 2010 h r taxes free 1. 2010 h r taxes free Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 2010 h r taxes free Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 2010 h r taxes free           2. 2010 h r taxes free Enter one-half of line 1 2. 2010 h r taxes free       3. 2010 h r taxes free Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 2010 h r taxes free       4. 2010 h r taxes free Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 2010 h r taxes free       5. 2010 h r taxes free Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 2010 h r taxes free       6. 2010 h r taxes free Combine lines 2, 3, 4, and 5 6. 2010 h r taxes free       7. 2010 h r taxes free Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 2010 h r taxes free  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 2010 h r taxes free       8. 2010 h r taxes free Is the amount on line 7 less than the amount on line 6?             No. 2010 h r taxes free None of your social security benefits are taxable. 2010 h r taxes free Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2010 h r taxes free             Yes. 2010 h r taxes free Subtract line 7 from line 6 8. 2010 h r taxes free       9. 2010 h r taxes free If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 2010 h r taxes free         Note. 2010 h r taxes free If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. 2010 h r taxes free 85) and enter the result on line 17. 2010 h r taxes free Then go to line 18. 2010 h r taxes free         10. 2010 h r taxes free Is the amount on line 9 less than the amount on line 8?             No. 2010 h r taxes free None of your benefits are taxable. 2010 h r taxes free Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 2010 h r taxes free If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. 2010 h r taxes free             Yes. 2010 h r taxes free Subtract line 9 from line 8 10. 2010 h r taxes free       11. 2010 h r taxes free Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 2010 h r taxes free       12. 2010 h r taxes free Subtract line 11 from line 10. 2010 h r taxes free If zero or less, enter -0- 12. 2010 h r taxes free       13. 2010 h r taxes free Enter the smaller of line 10 or line 11 13. 2010 h r taxes free       14. 2010 h r taxes free Enter one-half of line 13 14. 2010 h r taxes free       15. 2010 h r taxes free Enter the smaller of line 2 or line 14 15. 2010 h r taxes free       16. 2010 h r taxes free Multiply line 12 by 85% (. 2010 h r taxes free 85). 2010 h r taxes free If line 12 is zero, enter -0- 16. 2010 h r taxes free       17. 2010 h r taxes free Add lines 15 and 16 17. 2010 h r taxes free       18. 2010 h r taxes free Multiply line 1 by 85% (. 2010 h r taxes free 85) 18. 2010 h r taxes free       19. 2010 h r taxes free Taxable benefits. 2010 h r taxes free Enter the smaller of line 17 or line 18. 2010 h r taxes free Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 2010 h r taxes free         If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 2010 h r taxes free         Worksheet 2. 2010 h r taxes free Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993)     Enter earlier year 1. 2010 h r taxes free Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year, plus the lump-sum payment for the earlier year received after that year 1. 2010 h r taxes free             Note. 2010 h r taxes free If line 1 is zero or less, skip lines 2 through 20 and enter -0- on line 21. 2010 h r taxes free Otherwise, go on to line 2. 2010 h r taxes free             2. 2010 h r taxes free Enter one-half of line 1 2. 2010 h r taxes free     3. 2010 h r taxes free Enter your adjusted gross income for the earlier year 3. 2010 h r taxes free     4. 2010 h r taxes free Enter the total of any exclusions/adjustments you claimed in the earlier year for: Adoption benefits (Form 8839) Qualified U. 2010 h r taxes free S. 2010 h r taxes free savings bond interest (Form 8815) Student loan interest (Form 1040, page 1, or Form 1040A, page 1) Tuition and fees (Form 1040, page 1, or Form 1040A, page 1) Domestic production activities (for 2005 through 2012) (Form 1040, page 1) Foreign earned income or housing (Form 2555 or Form 2555-EZ) Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico 4. 2010 h r taxes free     5. 2010 h r taxes free Enter any tax-exempt interest received in the earlier year 5. 2010 h r taxes free     6. 2010 h r taxes free Add lines 2 through 5 6. 2010 h r taxes free     7. 2010 h r taxes free Enter your taxable benefits for the earlier year that you previously reported 7. 2010 h r taxes free     8. 2010 h r taxes free Subtract line 7 from line 6 8. 2010 h r taxes free     9. 2010 h r taxes free If, for the earlier year, you were:     Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), married filing separately and you lived apart from your spouse for all of the earlier year, enter $25,000 9. 2010 h r taxes free       Note. 2010 h r taxes free If you were married filing separately and you lived with your spouse at any time during the earlier year, skip lines 9 through 16; multiply line 8 by 85% (. 2010 h r taxes free 85) and enter the result on line 17. 2010 h r taxes free Then go to line 18. 2010 h r taxes free         10. 2010 h r taxes free Is the amount on line 8 more than the amount on line 9?       No. 2010 h r taxes free Skip lines 10 through 20 and enter -0- on line 21. 2010 h r taxes free       Yes. 2010 h r taxes free Subtract line 9 from line 8 10. 2010 h r taxes free     11. 2010 h r taxes free Enter $12,000 if married filing jointly for the earlier year; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of the earlier year 11. 2010 h r taxes free     12. 2010 h r taxes free Subtract line 11 from line 10. 2010 h r taxes free If zero or less, enter -0- 12. 2010 h r taxes free     13. 2010 h r taxes free Enter the smaller of line 10 or line 11 13. 2010 h r taxes free     14. 2010 h r taxes free Enter one-half of line 13 14. 2010 h r taxes free     15. 2010 h r taxes free Enter the smaller of line 2 or line 14 15. 2010 h r taxes free     16. 2010 h r taxes free Multiply line 12 by 85% (. 2010 h r taxes free 85). 2010 h r taxes free If line 12 is zero, enter -0- 16. 2010 h r taxes free     17. 2010 h r taxes free Add lines 15 and 16 17. 2010 h r taxes free     18. 2010 h r taxes free Multiply line 1 by 85% (. 2010 h r taxes free 85) 18. 2010 h r taxes free     19. 2010 h r taxes free Refigured taxable benefits. 2010 h r taxes free Enter the smaller of line 17 or line 18 19. 2010 h r taxes free     20. 2010 h r taxes free Enter your taxable benefits for the earlier year (or as refigured due to a previous lump-sum payment for the year) 20. 2010 h r taxes free     21. 2010 h r taxes free Additional taxable benefits. 2010 h r taxes free Subtract line 20 from line 19. 2010 h r taxes free Also enter this amount on Worksheet 4, line 20 21. 2010 h r taxes free       Do not file an amended return for this earlier year. 2010 h r taxes free Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received a lump-sum payment in 2013. 2010 h r taxes free   Worksheet 3. 2010 h r taxes free Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year Before 1994) Enter earlier year 1. 2010 h r taxes free Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year, plus the lump-sum payment for the earlier year received after that year 1. 2010 h r taxes free           Note. 2010 h r taxes free If line 1 is zero or less, skip lines 2 through 13 and enter -0- on line 14. 2010 h r taxes free Otherwise, go on to line 2. 2010 h r taxes free           2. 2010 h r taxes free Enter one-half of line 1 2. 2010 h r taxes free     3. 2010 h r taxes free Enter your adjusted gross income for the earlier year 3. 2010 h r taxes free     4. 2010 h r taxes free Enter the total of any exclusions/adjustments you claimed in the earlier year for: Qualified U. 2010 h r taxes free S. 2010 h r taxes free savings bond interest (Form 8815) Foreign earned income or housing (Form 2555 or Form 2555-EZ) Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico 4. 2010 h r taxes free     5. 2010 h r taxes free Enter any tax-exempt interest received in the earlier year 5. 2010 h r taxes free     6. 2010 h r taxes free Add lines 2 through 5 6. 2010 h r taxes free     7. 2010 h r taxes free Enter your taxable benefits for the earlier year that you previously reported 7. 2010 h r taxes free     8. 2010 h r taxes free Subtract line 7 from line 6 8. 2010 h r taxes free     9. 2010 h r taxes free Enter $25,000 ($32,000 if married filing jointly for the earlier year; $-0- if married filing separately for the earlier year and you lived with your spouse at any time during the earlier year) 9. 2010 h r taxes free     10. 2010 h r taxes free Is the amount on line 8 more than the amount on line 9? No. 2010 h r taxes free Skip lines 10 through 13 and enter -0- on line 14. 2010 h r taxes free  Yes. 2010 h r taxes free Subtract line 9 from line 8. 2010 h r taxes free 10. 2010 h r taxes free     11. 2010 h r taxes free Enter one-half of line 10 11. 2010 h r taxes free     12. 2010 h r taxes free Refigured taxable benefits. 2010 h r taxes free Enter the smaller of line 2 or line 11 12. 2010 h r taxes free     13. 2010 h r taxes free Enter your taxable benefits for the earlier year (or as refigured due to a previous
Español

U.S. Government Photos and Images

Find government photos and images by topic.


Some of these photos are in the public domain or U.S. government works and may be used without permission or fee. However, some images may be protected by license or copyright. You should read the disclaimers on each site before using these images.

If you have questions about the copyright status of an image, please contact the government agency that produced the image.

The 2010 H R Taxes Free

2010 h r taxes free Publication 1212 - Main Content Table of Contents Definitions Debt Instruments on the OID List Debt Instruments Not on the OID List Information for Brokers and Other MiddlemenShort-Term Obligations Redeemed at Maturity Long-Term Debt Instruments Certificates of Deposit Bearer Bonds and Coupons Backup Withholding Information for Owners of OID Debt InstrumentsExceptions. 2010 h r taxes free Adjustment for premium. 2010 h r taxes free Adjustment for acquisition premium. 2010 h r taxes free Adjustment for market discount. 2010 h r taxes free Form 1099-OID How To Report OID Figuring OID on Long-Term Debt Instruments Figuring OID on Stripped Bonds and Coupons How To Get Tax HelpLow Income Taxpayer Clinics Definitions The following terms are used throughout this publication. 2010 h r taxes free “Original issue discount” is defined first. 2010 h r taxes free The other terms are listed alphabetically. 2010 h r taxes free Original issue discount (OID). 2010 h r taxes free   OID is a form of interest. 2010 h r taxes free It is the excess of a debt instrument's stated redemption price at maturity over its issue price (acquisition price for a stripped bond or coupon). 2010 h r taxes free Zero coupon bonds and debt instruments that pay no stated interest until maturity are examples of debt instruments that have OID. 2010 h r taxes free Accrual period. 2010 h r taxes free   An accrual period is an interval of time used to measure OID. 2010 h r taxes free The length of an accrual period can be 6 months, a year, or some other period, depending on when the debt instrument was issued. 2010 h r taxes free Acquisition premium. 2010 h r taxes free   Acquisition premium is the excess of a debt instrument's adjusted basis immediately after purchase, including purchase at original issue, over the debt instrument's adjusted issue price at that time. 2010 h r taxes free A debt instrument does not have acquisition premium, however, if the debt instrument was purchased at a premium. 2010 h r taxes free See Premium, later. 2010 h r taxes free Adjusted issue price. 2010 h r taxes free   The adjusted issue price of a debt instrument at the beginning of an accrual period is used to figure the OID allocable to that period. 2010 h r taxes free In general, the adjusted issue price at the beginning of the debt instrument's first accrual period is its issue price. 2010 h r taxes free The adjusted issue price at the beginning of any subsequent accrual period is the sum of the issue price and all the OID includible in income before that accrual period minus any payment previously made on the debt instrument, other than a payment of qualified stated interest. 2010 h r taxes free Debt instrument. 2010 h r taxes free   The term “debt instrument” means any instrument or contractual arrangement that constitutes indebtedness under general principles of federal income tax law (including, for example, a bond, debenture, note, certificate, or other evidence of indebtedness). 2010 h r taxes free It generally does not include an annuity contract. 2010 h r taxes free Issue price. 2010 h r taxes free   For debt instruments listed in Section I-A and Section I-B, the issue price generally is the initial offering price to the public (excluding bond houses and brokers) at which a substantial amount of these instruments was sold. 2010 h r taxes free Market discount. 2010 h r taxes free   Market discount arises when a debt instrument purchased in the secondary market has decreased in value since its issue date, generally because of an increase in interest rates. 2010 h r taxes free An OID debt instrument has market discount if your adjusted basis in the debt instrument immediately after you acquired it (usually its purchase price) was less than the debt instrument's issue price plus the total OID that accrued before you acquired it. 2010 h r taxes free The market discount is the difference between the issue price plus accrued OID and your adjusted basis. 2010 h r taxes free Premium. 2010 h r taxes free   A debt instrument is purchased at a premium if its adjusted basis immediately after purchase is greater than the total of all amounts payable on the debt instrument after the purchase date, other than qualified stated interest. 2010 h r taxes free The premium is the excess of the adjusted basis over the payable amounts. 2010 h r taxes free See Publication 550 for information on the tax treatment of bond premium. 2010 h r taxes free Qualified stated interest. 2010 h r taxes free   In general, qualified stated interest is stated interest that is unconditionally payable in cash or property (other than debt instruments of the issuer) at least annually over the term of the debt instrument at a single fixed rate. 2010 h r taxes free Stated redemption price at maturity. 2010 h r taxes free   A debt instrument's stated redemption price at maturity is the sum of all amounts (principal and interest) payable on the debt instrument other than qualified stated interest. 2010 h r taxes free Yield to maturity (YTM). 2010 h r taxes free   In general, the YTM is the discount rate that, when used in figuring the present value of all principal and interest payments, produces an amount equal to the issue price of the debt instrument. 2010 h r taxes free The YTM is generally shown on the face of the debt instrument or in the literature you receive from your broker. 2010 h r taxes free If you do not have this information, consult your broker, tax advisor, or the issuer. 2010 h r taxes free Debt Instruments on the OID List The OID list on the IRS website can be used by brokers and other middlemen to prepare information returns. 2010 h r taxes free If you own a listed debt instrument, you generally should not rely on the information in the OID list to determine (or compare) the OID to be reported on your tax return. 2010 h r taxes free The OID amounts listed are figured without reference to the price or date at which you acquired the debt instrument. 2010 h r taxes free For information about determining the OID to be reported on your tax return, see the instructions for figuring OID under Information for Owners of OID Debt Instruments, later. 2010 h r taxes free The following discussions explain what information is contained in each section of the list. 2010 h r taxes free Section I. 2010 h r taxes free   This section contains publicly offered, long-term debt instruments. 2010 h r taxes free Section I-A: Corporate Debt Instruments Issued Before 1985. 2010 h r taxes free Section I-B: Corporate Debt Instruments Issued After 1984. 2010 h r taxes free Section I-C: Inflation-Indexed Debt Instruments. 2010 h r taxes free For each publicly offered debt instrument in Section I, the list contains the following information. 2010 h r taxes free The name of the issuer. 2010 h r taxes free The Committee on Uniform Security Identification Procedures (CUSIP) number. 2010 h r taxes free The issue date. 2010 h r taxes free The maturity date. 2010 h r taxes free The issue price expressed as a percent of principal or of stated redemption price at maturity. 2010 h r taxes free The annual stated or coupon interest rate. 2010 h r taxes free (This rate is shown as 0. 2010 h r taxes free 00 if no annual interest payments are provided. 2010 h r taxes free ) The yield to maturity will be added to Section I-B for bonds issued after December 31, 2006. 2010 h r taxes free The total OID accrued up to January 1 of a calendar year. 2010 h r taxes free (This information is not available for every instrument. 2010 h r taxes free ) For long-term debt instruments issued after July 1, 1982, the daily OID for the accrual periods falling in a calendar year and a subsequent year. 2010 h r taxes free The total OID per $1,000 of principal or maturity value for a calendar year and a subsequent year. 2010 h r taxes free Section II. 2010 h r taxes free   This section contains stripped coupons and principal components of U. 2010 h r taxes free S. 2010 h r taxes free Treasury and Government-Sponsored Enterprise debt instruments. 2010 h r taxes free These stripped components are available through the Department of the Treasury's Separate Trading of Registered Interest and Principal of Securities (STRIPS) program and government-sponsored enterprises such as the Resolution Funding Corporation. 2010 h r taxes free This section also includes debt instruments backed by U. 2010 h r taxes free S. 2010 h r taxes free Treasury securities that represent ownership interests in those securities. 2010 h r taxes free   The obligations listed in Section II are arranged by maturity date. 2010 h r taxes free The amounts listed are the total OID for a calendar year per $1,000 of redemption price. 2010 h r taxes free Section III. 2010 h r taxes free   This section contains short-term discount obligations. 2010 h r taxes free Section III-A: Short-Term U. 2010 h r taxes free S. 2010 h r taxes free Treasury Bills. 2010 h r taxes free Section III-B: Federal Home Loan Banks. 2010 h r taxes free Section III-C: Federal National Mortgage Association. 2010 h r taxes free Section III-D: Federal Farm Credit Banks. 2010 h r taxes free Section III-E: Federal Home Loan Mortgage Corporation. 2010 h r taxes free Section III-F: Federal Agricultural Mortgage Corporation. 2010 h r taxes free    Information that supplements Section III-A is available on the Internet at http://www. 2010 h r taxes free treasurydirect. 2010 h r taxes free gov/tdhome. 2010 h r taxes free htm. 2010 h r taxes free   The short-term obligations listed in this section are arranged by maturity date. 2010 h r taxes free For each obligation, the list contains the CUSIP number, maturity date, issue date, issue price (expressed as a percent of principal), and discount to be reported as interest for a calendar year per $1,000 of redemption price. 2010 h r taxes free Brokers and other middlemen should rely on the issue price information in Section III only if they are unable to determine the price actually paid by the owner. 2010 h r taxes free Debt Instruments Not on the OID List The list of debt instruments discussed earlier does not contain the following items. 2010 h r taxes free U. 2010 h r taxes free S. 2010 h r taxes free savings bonds. 2010 h r taxes free Certificates of deposit and other face-amount certificates issued at a discount, including syndicated certificates of deposit. 2010 h r taxes free Obligations issued by tax-exempt organizations. 2010 h r taxes free OID debt instruments that matured or were entirely called by the issuer before the tables were posted on the IRS website. 2010 h r taxes free Mortgage-backed securities and mortgage participation certificates. 2010 h r taxes free Long-term OID debt instruments issued before May 28, 1969. 2010 h r taxes free Short-term obligations, other than the obligations listed in Section III. 2010 h r taxes free Debt instruments issued at a discount by states or their political subdivisions. 2010 h r taxes free REMIC regular interests and CDOs. 2010 h r taxes free Commercial paper and banker's acceptances issued at a discount. 2010 h r taxes free Obligations issued at a discount by individuals. 2010 h r taxes free Foreign obligations not traded in the United States and obligations not issued in the United States. 2010 h r taxes free Information for Brokers and Other Middlemen The following discussions contain specific instructions for brokers and middlemen who hold or redeem a debt instrument for the owner. 2010 h r taxes free In general, you must file a Form 1099 for the debt instrument if the interest or OID to be included in the owner's income for a calendar year totals $10 or more. 2010 h r taxes free You also must file a Form 1099 if you were required to deduct and withhold tax, even if the interest or OID is less than $10. 2010 h r taxes free See Backup Withholding, later. 2010 h r taxes free If you must file a Form 1099, furnish a copy to the owner of the debt instrument by January 31 in the year it is due. 2010 h r taxes free File all your Forms 1099 with the IRS, accompanied by Form 1096, by February 28 in the year it is due (March 31 if you file electronically). 2010 h r taxes free Electronic payee statements. 2010 h r taxes free   You can issue Form 1099-OID electronically with the consent of the recipient. 2010 h r taxes free More information. 2010 h r taxes free   For more information, including penalties for failure to file (or furnish) required information returns or statements, see the General Instructions for Certain Information Returns (Forms 1098, 1099, 3921, 3922, 5498, and W-2G) for the appropriate calendar year. 2010 h r taxes free Short-Term Obligations Redeemed at Maturity If you redeem a short-term discount obligation for the owner at maturity, you must report the discount as interest on Form 1099-INT. 2010 h r taxes free To figure the discount, use the purchase price shown on the owner's copy of the purchase confirmation receipt or similar record, or the price shown in your transaction records. 2010 h r taxes free If you sell the obligation for the owner before maturity, you must file Form 1099-B to reflect the gross proceeds to the seller. 2010 h r taxes free Do not report the accrued discount to the date of sale on either Form 1099-INT or Form 1099-OID. 2010 h r taxes free If the owner's purchase price cannot be determined, figure the discount as if the owner had purchased the obligation at its original issue price. 2010 h r taxes free A special rule is used to determine the original issue price for information reporting on U. 2010 h r taxes free S. 2010 h r taxes free Treasury bills (T-bills) listed in Section III-A. 2010 h r taxes free Under this rule, you treat as the original issue price of the T-bill the noncompetitive (weighted average of accepted auction bids) discount price for the longest-maturity T-bill maturing on the same date as the T-bill being redeemed. 2010 h r taxes free This noncompetitive discount price is the issue price (expressed as a percent of principal) shown in Section III-A. 2010 h r taxes free A similar rule is used to figure the discount on short-term discount obligations issued by the organizations listed in Section III-B through Section III-F. 2010 h r taxes free Example 1. 2010 h r taxes free There are 13-week and 26-week T-bills maturing on the same date as the T-bill being redeemed. 2010 h r taxes free The price actually paid by the owner cannot be established by owner or middleman records. 2010 h r taxes free You treat as the issue price of the T-bill the noncompetitive discount price (expressed as a percent of principal) shown in Section III-A for a 26-week bill maturing on the same date as the T-bill redeemed. 2010 h r taxes free The interest you report on Form 1099-INT is the OID (per $1,000 of principal) shown in Section III-A for that obligation. 2010 h r taxes free Long-Term Debt Instruments If you hold a long-term OID debt instrument as a nominee for the true owner, you generally must file Form 1099-OID. 2010 h r taxes free For this purpose, you can rely on Section I of the OID list to determine the following information. 2010 h r taxes free Whether a debt instrument has OID. 2010 h r taxes free The OID to be reported on the Form 1099-OID. 2010 h r taxes free In general, you must report OID on publicly offered, long-term debt instruments listed in Section I. 2010 h r taxes free You also can report OID on other long-term debt instruments. 2010 h r taxes free Form 1099-OID. 2010 h r taxes free   On Form 1099-OID for a calendar year show the following information. 2010 h r taxes free Box 1. 2010 h r taxes free The OID for the actual dates the owner held the debt instruments during a calendar year. 2010 h r taxes free To determine this amount, see Figuring OID, next. 2010 h r taxes free Box 2. 2010 h r taxes free The qualified stated interest paid or credited during the calendar year. 2010 h r taxes free Interest reported here is not reported on Form 1099-INT. 2010 h r taxes free The qualified stated interest on Treasury inflation-protected securities may be reported on Form 1099-INT in box 3 instead. 2010 h r taxes free Box 3. 2010 h r taxes free Any interest or principal forfeited because of an early withdrawal that the owner can deduct from gross income. 2010 h r taxes free Do not reduce the amounts in boxes 1 and 2 by the forfeiture. 2010 h r taxes free Box 4. 2010 h r taxes free Any backup withholding for this debt instrument. 2010 h r taxes free Box 7. 2010 h r taxes free The CUSIP number, if any. 2010 h r taxes free If there is no CUSIP number, give a description of the debt instrument, including the abbreviation for the stock exchange, the abbreviation used by the stock exchange for the issuer, the coupon rate, and the year of maturity (for example, NYSE XYZ 12. 2010 h r taxes free 50 2006). 2010 h r taxes free If the issuer of the debt instrument is other than the payer, show the name of the issuer in this box. 2010 h r taxes free Box 8. 2010 h r taxes free The OID on a U. 2010 h r taxes free S. 2010 h r taxes free Treasury obligation for the part of the year the owner held the debt instrument. 2010 h r taxes free Box 9. 2010 h r taxes free Investment expenses passed on to holders of a single-class REMIC. 2010 h r taxes free Boxes 10-12. 2010 h r taxes free Use to report any state income tax withheld for this debt instrument. 2010 h r taxes free Figuring OID. 2010 h r taxes free   You can determine the OID on a long-term debt instrument by using either of the following. 2010 h r taxes free Section I of the OID list. 2010 h r taxes free The income tax regulations. 2010 h r taxes free Using Section I. 2010 h r taxes free   If the owner held the debt instrument for the entire calendar year, report the OID shown in Section I for the calendar year. 2010 h r taxes free Because OID is listed for each $1,000 of stated redemption price at maturity, you must adjust the listed amount to reflect the debt instrument's actual stated redemption price at maturity. 2010 h r taxes free For example, if the debt instrument's stated redemption price at maturity is $500, report one-half the listed OID. 2010 h r taxes free   If the owner held the debt instrument for less than the entire calendar year, figure the OID to report as follows. 2010 h r taxes free Look up the daily OID for the first accrual period in the calendar year during which the owner held the debt instrument. 2010 h r taxes free Multiply the daily OID by the number of days the owner held the debt instrument during that accrual period. 2010 h r taxes free Repeat steps (1) and (2) for any remaining accrual periods for the year during which the owner held the debt instrument. 2010 h r taxes free Add the results in steps (2) and (3) to determine the owner's OID per $1,000 of stated redemption price at maturity. 2010 h r taxes free If necessary, adjust the OID in (4) to reflect the debt instrument's stated redemption price at maturity. 2010 h r taxes free Report the result on Form 1099-OID in box 1. 2010 h r taxes free Using the income tax regulations. 2010 h r taxes free   Instead of using Section I to figure OID, you can use the regulations under sections 1272 through 1275 of the Internal Revenue Code. 2010 h r taxes free For example, under the regulations, you can use monthly accrual periods in figuring OID for a debt instrument issued after April 3, 1994, that provides for monthly payments. 2010 h r taxes free (If you use Section I-B, the OID is figured using 6-month accrual periods. 2010 h r taxes free )   For a general explanation of the rules for figuring OID under the regulations, see Figuring OID on Long-Term Debt Instruments under Information for Owners of OID Debt Instruments, later. 2010 h r taxes free Certificates of Deposit If you hold a bank certificate of deposit (CD) as a nominee, you must determine whether the CD has OID and any OID includible in the income of the owner. 2010 h r taxes free You must file an information return showing the reportable interest and OID, if any, on the CD. 2010 h r taxes free These rules apply whether or not you sold the CD to the owner. 2010 h r taxes free Report OID on a CD in the same way as OID on other debt instruments. 2010 h r taxes free See Short-Term Obligations Redeemed at Maturity and Long-Term Debt Instruments, earlier. 2010 h r taxes free Bearer Bonds and Coupons If a coupon from a bearer bond is presented to you for collection before the bond matures, you generally must report the interest on Form 1099-INT. 2010 h r taxes free However, do not report the interest if either of the following apply. 2010 h r taxes free You hold the bond as a nominee for the true owner. 2010 h r taxes free The payee is a foreign person. 2010 h r taxes free See Payments to foreign person under Backup Withholding, later. 2010 h r taxes free Because you cannot assume the presenter of the coupon also owns the bond, you should not report OID on the bond on Form 1099-OID. 2010 h r taxes free The coupon may have been “stripped” (separated) from the bond and separately purchased. 2010 h r taxes free However, if a long-term bearer bond on the OID list is presented to you for redemption upon call or maturity, you should prepare a Form 1099-OID showing the OID for that calendar year, as well as any coupon interest payments collected at the time of redemption. 2010 h r taxes free Backup Withholding If you report OID on Form 1099-OID or interest on Form 1099-INT for a calendar year, you may be required to apply backup withholding to the reportable payment at a rate of 28%. 2010 h r taxes free The backup withholding is deducted at the time a cash payment is made. 2010 h r taxes free See Pub. 2010 h r taxes free 1281, Backup Withholding for Missing and Incorrect Name/TIN(s), for more information. 2010 h r taxes free Backup withholding generally applies in the following situations. 2010 h r taxes free The payee does not give you a taxpayer identification number (TIN). 2010 h r taxes free The IRS notifies you that the payee gave an incorrect TIN. 2010 h r taxes free The IRS notifies you that the payee is subject to backup withholding due to payee underreporting. 2010 h r taxes free For debt instruments acquired after 1983: The payee does not certify, under penalties of perjury, that he or she is not subject to backup withholding under (3), or The payee does not certify, under penalties of perjury, that the TIN given is correct. 2010 h r taxes free However, for short-term discount obligations (other than government obligations), bearer bonds and coupons, and U. 2010 h r taxes free S. 2010 h r taxes free savings bonds, backup withholding applies only if the payee does not give you a TIN or gives you an obviously incorrect number for a TIN. 2010 h r taxes free Short-term obligations. 2010 h r taxes free   Backup withholding applies to OID on a short-term obligation only when the OID is paid at maturity. 2010 h r taxes free However, backup withholding applies to any interest payable before maturity when the interest is paid or credited. 2010 h r taxes free   If the owner of a short-term obligation at maturity is not the original owner and can establish the purchase price of the obligation, the amount subject to backup withholding must be determined by treating the purchase price as the issue price. 2010 h r taxes free However, you can choose to disregard that price if it would require significant manual intervention in the computer or recordkeeping system used for the obligation. 2010 h r taxes free If the purchase price of a listed obligation is not established or is disregarded, you must use the issue price shown in Section III. 2010 h r taxes free Long-term obligations. 2010 h r taxes free   If no cash payments are made on a long-term obligation before maturity, backup withholding applies only at maturity. 2010 h r taxes free The amount subject to backup withholding is the OID includible in the owner's gross income for the calendar year when the obligation matures. 2010 h r taxes free The amount to be withheld is limited to the cash paid. 2010 h r taxes free Registered long-term obligations with cash payments. 2010 h r taxes free   If a registered long-term obligation has cash payments before maturity, backup withholding applies when a cash payment is made. 2010 h r taxes free The amount subject to backup withholding is the total of the qualified stated interest (defined earlier under Definitions) and OID includible in the owner's gross income for the calendar year when the payment is made. 2010 h r taxes free If more than one cash payment is made during the year, the OID subject to withholding for the year must be allocated among the expected cash payments in the ratio that each bears to the total of the expected cash payments. 2010 h r taxes free For any payment, the required withholding is limited to the cash paid. 2010 h r taxes free Payee not the original owner. 2010 h r taxes free   If the payee is not the original owner of the obligation, the OID subject to backup withholding is the OID includible in the gross income of all owners during the calendar year (without regard to any amount paid by the new owner at the time of transfer). 2010 h r taxes free The amount subject to backup withholding at maturity of a listed obligation must be determined using the issue price shown in Section I. 2010 h r taxes free Bearer long-term obligations with cash payments. 2010 h r taxes free   If a bearer long-term obligation has cash payments before maturity, backup withholding applies when the cash payments are made. 2010 h r taxes free For payments before maturity, the amount subject to withholding is the qualified stated interest (defined earlier under Definitions) includible in the owner's gross income for the calendar year. 2010 h r taxes free For a payment at maturity, the amount subject to withholding is only the total of any qualified stated interest paid at maturity and the OID includible in the owner's gross income for the calendar year when the obligation matures. 2010 h r taxes free The required withholding at maturity is limited to the cash paid. 2010 h r taxes free Sales and redemptions. 2010 h r taxes free   If you report the gross proceeds from a sale, exchange, or redemption of a debt instrument on Form 1099-B for a calendar year, you may be required to withhold 28% of the amount reported. 2010 h r taxes free Backup withholding applies in the following situations. 2010 h r taxes free The payee does not give you a TIN. 2010 h r taxes free The IRS notifies you that the payee gave an incorrect TIN. 2010 h r taxes free For debt instruments held in an account opened after 1983, the payee does not certify, under penalties of perjury, that the TIN given is correct. 2010 h r taxes free Payments outside the United States to U. 2010 h r taxes free S. 2010 h r taxes free person. 2010 h r taxes free   The requirements for backup withholding and information reporting apply to payments of OID and interest made outside the United States to a U. 2010 h r taxes free S. 2010 h r taxes free person, a controlled foreign corporation, or a foreign person at least 50% of whose income for the preceding 3-year period is effectively connected with the conduct of a U. 2010 h r taxes free S. 2010 h r taxes free trade or business. 2010 h r taxes free Payments to foreign person. 2010 h r taxes free   The following discussions explain the rules for backup withholding and information reporting on payments to foreign persons. 2010 h r taxes free U. 2010 h r taxes free S. 2010 h r taxes free -source amount. 2010 h r taxes free   Backup withholding and information reporting are not required for payments of U. 2010 h r taxes free S. 2010 h r taxes free -source OID, interest, or proceeds from a sale or redemption of an OID instrument if the payee has given you proof (generally the appropriate Form W-8 or an acceptable substitute) that the payee is a foreign person. 2010 h r taxes free A U. 2010 h r taxes free S. 2010 h r taxes free resident is not a foreign person. 2010 h r taxes free For proof of the payee's foreign status, you can rely on the appropriate Form W-8 or on documentary evidence for payments made outside the United States to an offshore account or, in case of broker proceeds, a sale effected outside the United States. 2010 h r taxes free Receipt of the appropriate Form W-8 does not relieve you from information reporting and backup withholding if you actually know the payee is a U. 2010 h r taxes free S. 2010 h r taxes free person. 2010 h r taxes free   For information about the 28% withholding tax that may apply to payments of U. 2010 h r taxes free S. 2010 h r taxes free -source OID or interest to foreign persons, see Publication 515. 2010 h r taxes free Foreign-source amount. 2010 h r taxes free   Backup withholding and information reporting are not required for payments of foreign-source OID and interest made outside the United States. 2010 h r taxes free However, if the payments are made inside the United States, the requirements for backup withholding and information reporting will apply unless the payee has given you the appropriate Form W-8 or acceptable substitute as proof that the payee is a foreign person. 2010 h r taxes free More information. 2010 h r taxes free   For more information about backup withholding and information reporting on foreign-source amounts or payments to foreign persons, see Regulations section 1. 2010 h r taxes free 6049-5. 2010 h r taxes free Information for Owners of OID Debt Instruments This section is for persons who prepare their own tax returns. 2010 h r taxes free It discusses the income tax rules for figuring and reporting OID on long-term debt instruments. 2010 h r taxes free It also includes a similar discussion for stripped bonds and coupons, such as zero coupon bonds available through the Department of the Treasury's STRIPS program and government-sponsored enterprises such as the Resolution Funding Corporation. 2010 h r taxes free However, the information provided does not cover every situation. 2010 h r taxes free More information can be found in the regulations under sections 1271 through 1275 of the Internal Revenue Code. 2010 h r taxes free Including OID in income. 2010 h r taxes free   Generally, you include OID in income as it accrues each year, whether or not you receive any payments from the debt instrument issuer. 2010 h r taxes free Exceptions. 2010 h r taxes free   The rules for including OID in income as it accrues generally do not apply to the following debt instruments. 2010 h r taxes free U. 2010 h r taxes free S. 2010 h r taxes free savings bonds. 2010 h r taxes free Tax-exempt obligations. 2010 h r taxes free (However, see Tax-Exempt Bonds and Coupons, later. 2010 h r taxes free ) Obligations issued by individuals before March 2, 1984. 2010 h r taxes free Loans of $10,000 or less between individuals who are not in the business of lending money. 2010 h r taxes free (The dollar limit includes outstanding prior loans by the lender to the borrower. 2010 h r taxes free ) This exception does not apply if a principal purpose of the loan is to avoid any federal tax. 2010 h r taxes free   See chapter 1 of Publication 550 for information about the rules for these and other types of discounted debt instruments, such as short-term and market discount obligations. 2010 h r taxes free Publication 550 also discusses rules for holders of REMIC interests and CDOs. 2010 h r taxes free De minimis rule. 2010 h r taxes free   You can treat OID as zero if the total OID on a debt instrument is less than one-fourth of 1% (. 2010 h r taxes free 0025) of the stated redemption price at maturity multiplied by the number of full years from the date of original issue to maturity. 2010 h r taxes free Debt instruments with de minimis OID are not listed in this publication. 2010 h r taxes free There are special rules to determine the de minimis amount in the case of debt instruments that provide for more than one payment of principal. 2010 h r taxes free Also, the de minimis rules generally do not apply to tax-exempt obligations. 2010 h r taxes free Example 2. 2010 h r taxes free You bought at issuance a 10-year debt instrument with a stated redemption price at maturity of $1,000, issued at $980 with OID of $20. 2010 h r taxes free One-fourth of 1% of $1,000 (the stated redemption price) times 10 (the number of full years from the date of original issue to maturity) equals $25. 2010 h r taxes free Under the de minimis rule, you can treat the OID as zero because the $20 discount is less than $25. 2010 h r taxes free Example 3. 2010 h r taxes free Assume the same facts as Example 2, except the debt instrument was issued at $950. 2010 h r taxes free You must report part of the $50 OID each year because it is more than $25. 2010 h r taxes free Choice to report all interest as OID. 2010 h r taxes free   Generally, you can choose to treat all interest on a debt instrument acquired after April 3, 1994, as OID and include it in gross income by using the constant yield method. 2010 h r taxes free See Constant yield method under Debt Instruments Issued After 1984, later, for more information. 2010 h r taxes free   For this choice, interest includes stated interest, acquisition discount, OID, de minimis OID, market discount, de minimis market discount, and unstated interest, as adjusted by any amortizable bond premium or acquisition premium. 2010 h r taxes free For more information, see Regulations section 1. 2010 h r taxes free 1272-3. 2010 h r taxes free Purchase after date of original issue. 2010 h r taxes free   A debt instrument you purchased after the date of original issue may have premium, acquisition premium, or market discount. 2010 h r taxes free If so, the OID reported to you on Form 1099-OID may have to be adjusted. 2010 h r taxes free For more information, see Showing an OID adjustment under How To Report OID, later. 2010 h r taxes free The following rules generally do not apply to contingent payment debt instruments. 2010 h r taxes free Adjustment for premium. 2010 h r taxes free   If your debt instrument (other than an inflation-indexed debt instrument) has premium, do not report any OID as ordinary income. 2010 h r taxes free Your adjustment is the total OID shown on your Form 1099-OID. 2010 h r taxes free Adjustment for acquisition premium. 2010 h r taxes free   If your debt instrument has acquisition premium, reduce the OID you report. 2010 h r taxes free Your adjustment is the difference between the OID shown on your Form 1099-OID and the reduced OID amount figured using the rules explained later under Figuring OID on Long-Term Debt Instruments. 2010 h r taxes free Adjustment for market discount. 2010 h r taxes free   If your debt instrument has market discount that you choose to include in income currently, increase the OID you report. 2010 h r taxes free Your adjustment is the accrued market discount for the year. 2010 h r taxes free See Market Discount Bonds in chapter 1 of Publication 550 for information on how to figure accrued market discount and include it in your income currently and for other information about market discount bonds. 2010 h r taxes free If you choose to use the constant yield method to figure accrued market discount, also see Figuring OID on Long-Term Debt Instruments, later. 2010 h r taxes free The constant yield method of figuring accrued OID, explained in those discussions under Constant yield method, is also used to figure accrued market discount. 2010 h r taxes free For more information concerning premium or market discount on an inflation-indexed debt instrument, see Regulations section 1. 2010 h r taxes free 1275-7. 2010 h r taxes free Sale, exchange, or redemption. 2010 h r taxes free   Generally, you treat your gain or loss from the sale, exchange, or redemption of a discounted debt instrument as a capital gain or loss if you held the debt instrument as a capital asset. 2010 h r taxes free If you sold the debt instrument through a broker, you should receive Form 1099-B or an equivalent statement from the broker. 2010 h r taxes free Use the Form 1099-B or other statement and your brokerage statements to complete Form 8949, and Schedule D (Form 1040). 2010 h r taxes free   Your gain or loss is the difference between the amount you realized on the sale, exchange, or redemption and your basis in the debt instrument. 2010 h r taxes free Your basis, generally, is your cost increased by the OID you have included in income each year you held it. 2010 h r taxes free In general, to determine your gain or loss on a tax-exempt bond, figure your basis in the bond by adding to your cost the OID you would have included in income if the bond had been taxable. 2010 h r taxes free   See chapter 4 of Publication 550 for more information about the tax treatment of the sale or redemption of discounted debt instruments. 2010 h r taxes free Example 4. 2010 h r taxes free Larry, a calendar year taxpayer, bought a corporate debt instrument at original issue for $86,235. 2010 h r taxes free 00 on November 1 of Year 1. 2010 h r taxes free The 15-year debt instrument matures on October 31 of Year 16 at a stated redemption price of $100,000. 2010 h r taxes free The debt instrument provides for semiannual payments of interest at 10%. 2010 h r taxes free Assume the debt instrument is a capital asset in Larry's hands. 2010 h r taxes free The debt instrument has $13,765. 2010 h r taxes free 00 of OID ($100,000 stated redemption price at maturity minus $86,235. 2010 h r taxes free 00 issue price). 2010 h r taxes free Larry sold the debt instrument for $90,000 on November 1 of Year 4. 2010 h r taxes free Including the OID he will report for the period he held the debt instrument in Year 4, Larry has included $4,556. 2010 h r taxes free 00 of OID in income and has increased his basis by that amount to $90,791. 2010 h r taxes free 00. 2010 h r taxes free Larry has realized a loss of $791. 2010 h r taxes free 00. 2010 h r taxes free All of Larry's loss is capital loss. 2010 h r taxes free Form 1099-OID The issuer of the debt instrument (or your broker, if you purchased or held the debt instrument through a broker) should give you a copy of Form 1099-OID or a similar statement if the accrued OID for the calendar year is $10 or more and the term of the debt instrument is more than 1 year. 2010 h r taxes free Form 1099-OID shows all OID income in box 1 except OID on a U. 2010 h r taxes free S. 2010 h r taxes free Treasury obligation, which is shown in box 8. 2010 h r taxes free It also shows, in box 2, any qualified stated interest you must include in income. 2010 h r taxes free (However, any qualified stated interest on Treasury inflation-protected securities can be reported on Form 1099-INT in box 3. 2010 h r taxes free ) A copy of Form 1099-OID will be sent to the IRS. 2010 h r taxes free Do not attach your copy to your tax return. 2010 h r taxes free Keep it for your records. 2010 h r taxes free If you are required to file a tax return and you receive Form 1099-OID showing taxable amounts, you must report these amounts on your return. 2010 h r taxes free A 20% accuracy-related penalty may be charged for underpayment of tax due to either negligence or disregard of rules and regulations or substantial understatement of tax. 2010 h r taxes free Form 1099-OID not received. 2010 h r taxes free   If you held an OID debt instrument for a calendar year but did not receive a Form 1099-OID, refer to the discussions under Figuring OID on Long-Term Debt Instruments, later, for information on the OID you must report. 2010 h r taxes free Refiguring OID. 2010 h r taxes free   You must refigure the OID shown on Form 1099-OID, in box 1 or box 8, to determine the proper amount to include in income if one of the following applies. 2010 h r taxes free You bought the debt instrument at a premium or at an acquisition premium. 2010 h r taxes free The debt instrument is a stripped bond or coupon (including zero coupon bonds backed by U. 2010 h r taxes free S. 2010 h r taxes free Treasury securities). 2010 h r taxes free The debt instrument is a contingent payment or inflation-indexed debt instrument. 2010 h r taxes free See the discussions under Figuring OID on Long-Term Debt Instruments or Figuring OID on Stripped Bonds and Coupons, later, for the specific computations. 2010 h r taxes free Refiguring interest. 2010 h r taxes free   If you disposed of a debt instrument or acquired it from another holder between interest dates, see the discussion under Bonds Sold Between Interest Dates in chapter 1 of Publication 550 for information about refiguring the interest shown on Form 1099-OID in box 2. 2010 h r taxes free Nominee. 2010 h r taxes free   If you are the holder of an OID debt instrument and you receive a Form 1099-OID that shows your taxpayer identification number and includes amounts belonging to another person, you are considered a “nominee. 2010 h r taxes free ” You must file another Form 1099-OID for each actual owner, showing the OID for the owner. 2010 h r taxes free Show the owner of the debt instrument as the “recipient” and you as the “payer. 2010 h r taxes free ”   Complete Form 1099-OID and Form 1096 and file the forms with the Internal Revenue Service Center for your area. 2010 h r taxes free You must also give a copy of the Form 1099-OID to the actual owner. 2010 h r taxes free However, you are not required to file a nominee return to show amounts belonging to your spouse. 2010 h r taxes free See the Form 1099 instructions for more information. 2010 h r taxes free   When preparing your tax return, follow the instructions under Showing an OID adjustment in the next discussion. 2010 h r taxes free How To Report OID Generally, you report your taxable interest and OID income on the interest line of Form 1040EZ, Form 1040A, or Form 1040. 2010 h r taxes free Form 1040 or Form 1040A required. 2010 h r taxes free   You must use Form 1040 or Form 1040A (you cannot use Form 1040EZ) under either of the following conditions. 2010 h r taxes free You received a Form 1099-OID as a nominee for the actual owner. 2010 h r taxes free Your total interest and OID income for the year was more than $1,500. 2010 h r taxes free Form 1040 required. 2010 h r taxes free   You must use Form 1040 (you cannot use Form 1040A or Form 1040EZ) if you are reporting more or less OID than the amount shown on Form 1099-OID, other than because you are a nominee. 2010 h r taxes free For example, if you paid a premium or an acquisition premium when you purchased the debt instrument, you must use Form 1040 because you will report less OID than shown on Form 1099-OID. 2010 h r taxes free Also, you must use Form 1040 if you were charged an early withdrawal penalty. 2010 h r taxes free Where to report. 2010 h r taxes free   List each payer's name (if a brokerage firm gave you a Form 1099, list the brokerage firm as the payer) and the amount received from each payer on Form 1040A, Schedule B, Part I, line 1, or Form 1040, Schedule B, line 1. 2010 h r taxes free Include all OID and periodic interest shown on any Form 1099-OID, boxes 1, 2, and 8, you received for the tax year. 2010 h r taxes free Also include any other OID and interest income for which you did not receive a Form 1099. 2010 h r taxes free Showing an OID adjustment. 2010 h r taxes free   If you use Form 1040 to report more or less OID than shown on Form 1099-OID, list the full OID on Schedule B, Part I, line 1, and follow the instructions under 1 or 2, next. 2010 h r taxes free   If you use Form 1040A to report the OID shown on a Form 1099-OID you received as a nominee for the actual owner, list the full OID on Schedule B, Part I, line 1 and follow the instructions under 1. 2010 h r taxes free If the OID, as adjusted, is less than the amount shown on Form 1099-OID, show the adjustment as follows. 2010 h r taxes free Under your last entry on line 1, subtotal all interest and OID income listed on line 1. 2010 h r taxes free Below the subtotal, write “Nominee Distribution” or “OID Adjustment” and show the OID you are not required to report. 2010 h r taxes free Subtract that OID from the subtotal and enter the result on line 2. 2010 h r taxes free If the OID, as adjusted, is more than the amount shown on Form 1099-OID, show the adjustment as follows. 2010 h r taxes free Under your last entry on line 1, subtotal all interest and OID income listed on line 1. 2010 h r taxes free Below the subtotal, write “OID Adjustment” and show the additional OID. 2010 h r taxes free Add that OID to the subtotal and enter the result on line 2. 2010 h r taxes free Figuring OID on Long-Term Debt Instruments How you figure the OID on a long-term debt instrument depends on the date it was issued. 2010 h r taxes free It also may depend on the type of the debt instrument. 2010 h r taxes free There are different rules for each of the following debt instruments. 2010 h r taxes free Corporate debt instruments issued after 1954 and before May 28, 1969, and government debt instruments issued after 1954 and before July 2, 1982. 2010 h r taxes free Corporate debt instruments issued after May 27, 1969, and before July 2, 1982. 2010 h r taxes free Debt instruments issued after July 1, 1982, and before 1985. 2010 h r taxes free Debt instruments issued after 1984 (other than debt instruments described in (5) and (6)). 2010 h r taxes free Contingent payment debt instruments issued after August 12, 1996. 2010 h r taxes free Inflation-indexed debt instruments (including Treasury inflation-protected securities) issued after January 5, 1997. 2010 h r taxes free Zero coupon bonds. 2010 h r taxes free   The rules for figuring OID on zero coupon bonds backed by U. 2010 h r taxes free S. 2010 h r taxes free Treasury securities are discussed under Figuring OID on Stripped Bonds and Coupons, later. 2010 h r taxes free Corporate Debt Instruments Issued After 1954 and Before May 28, 1969, and Government Debt Instruments Issued After 1954 and Before July 2, 1982 If you hold these debt instruments as capital assets, you include OID in income only in the year the debt instrument is sold, exchanged, or redeemed, and only if you have a gain. 2010 h r taxes free The OID, which is taxed as ordinary income, generally equals the following amount. 2010 h r taxes free   number of full months you held the debt instrument  number of full months from date of original issue to date of maturity X original issue discount The balance of the gain is capital gain. 2010 h r taxes free If there is a loss on the sale of the debt instrument, the entire loss is a capital loss and no OID is reported. 2010 h r taxes free Corporate Debt Instruments Issued After May 27, 1969, and Before July 2, 1982 If you hold these debt instruments as capital assets, you must include part of the OID in income each year you own the debt instruments. 2010 h r taxes free For information about showing the correct OID on your tax return, see the discussion under How To Report OID, earlier. 2010 h r taxes free Your basis in the debt instrument is increased by the OID you include in income. 2010 h r taxes free Form 1099-OID. 2010 h r taxes free   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. 2010 h r taxes free However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. 2010 h r taxes free See Reduction for acquisition premium, later. 2010 h r taxes free If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-A available at www. 2010 h r taxes free irs. 2010 h r taxes free gov/pub1212 by clicking the link under Recent Developments. 2010 h r taxes free Form 1099-OID not received. 2010 h r taxes free    The OID listed is for each $1,000 of redemption price. 2010 h r taxes free You must adjust the listed amount if your debt instrument has a different principal amount. 2010 h r taxes free For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. 2010 h r taxes free   If you held the debt instrument the entire year, use the OID shown in Section I-A for a calendar year. 2010 h r taxes free (If your debt instrument is not listed in Section I-A, consult the issuer for information about the issue price and the OID that accrued for that year. 2010 h r taxes free ) If you did not hold the debt instrument the entire year, figure your OID using the following method. 2010 h r taxes free Divide the OID shown by 12. 2010 h r taxes free Multiply the result in (1) by the number of complete and partial months (for example, 6½ months) you held the debt instrument during a calendar year. 2010 h r taxes free This is the OID to include in income unless you paid an acquisition premium. 2010 h r taxes free The reduction for acquisition premium is discussed next. 2010 h r taxes free Reduction for acquisition premium. 2010 h r taxes free   If you bought the debt instrument at an acquisition premium, figure the OID to include in income as follows. 2010 h r taxes free Divide the total OID on the debt instrument by the number of complete months, and any part of a month, from the date of original issue to the maturity date. 2010 h r taxes free This is the monthly OID. 2010 h r taxes free Subtract from your cost the issue price and the accumulated OID from the date of issue to the date of purchase. 2010 h r taxes free (If the result is zero or less, stop here. 2010 h r taxes free You did not pay an acquisition premium. 2010 h r taxes free ) Divide the amount figured in (2) by the number of complete months, and any part of a month, from the date of your purchase to the maturity date. 2010 h r taxes free Subtract the amount figured in (3) from the amount figured in (1). 2010 h r taxes free This is the OID to include in income for each month you hold the debt instrument during the year. 2010 h r taxes free Transfers during the month. 2010 h r taxes free   If you buy or sell a debt instrument on any day other than the same day of the month as the date of original issue, the ratable monthly portion of OID for the month of sale is divided between the seller and the buyer according to the number of days each held the debt instrument. 2010 h r taxes free Your holding period for this purpose begins the day you acquire the debt instrument and ends the day before you dispose of it. 2010 h r taxes free Debt Instruments Issued After July 1, 1982, and Before 1985 If you hold these debt instruments as capital assets, you must include part of the OID in income each year you own the debt instruments and increase your basis by the amount included. 2010 h r taxes free For information about showing the correct OID on your tax return, see How To Report OID, earlier. 2010 h r taxes free Form 1099-OID. 2010 h r taxes free   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. 2010 h r taxes free However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. 2010 h r taxes free See Constant yield method and the discussions on acquisition premium that follow, later. 2010 h r taxes free If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-A available at www. 2010 h r taxes free irs. 2010 h r taxes free gov/pub1212 by clicking the link under Recent Developments. 2010 h r taxes free Form 1099-OID not received. 2010 h r taxes free    The OID listed is for each $1,000 of redemption price. 2010 h r taxes free You must adjust the listed amount if your debt instrument has a different principal amount. 2010 h r taxes free For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. 2010 h r taxes free   If you held the debt instrument the entire year, use the OID shown in Section I-A. 2010 h r taxes free (If your instrument is not listed in Section I-A, consult the issuer for information about the issue price, the yield to maturity, and the OID that accrued for that year. 2010 h r taxes free ) If you did not hold the debt instrument the entire year, figure your OID using either of the following methods. 2010 h r taxes free Method 1. 2010 h r taxes free    Divide the total OID for a calendar year by 365 (366 for leap years). 2010 h r taxes free Multiply the result in (1) by the number of days you held the debt instrument during that particular year. 2010 h r taxes free  This computation is an approximation and may result in a slightly higher OID than Method 2. 2010 h r taxes free Method 2. 2010 h r taxes free    Look up the daily OID for the first accrual period you held the debt instrument during a calendar year. 2010 h r taxes free (See Accrual period under Constant yield method, next. 2010 h r taxes free ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. 2010 h r taxes free If you held the debt instrument for part of both accrual periods, repeat (1) and (2) for the second accrual period. 2010 h r taxes free Add the results of (2) and (3). 2010 h r taxes free This is the OID to include in income, unless you paid an acquisition premium. 2010 h r taxes free (The reduction for acquisition premium is discussed later. 2010 h r taxes free ) Constant yield method. 2010 h r taxes free   This discussion shows how to figure OID on debt instruments issued after July 1, 1982, and before 1985, using a constant yield method. 2010 h r taxes free OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. 2010 h r taxes free   Figure the OID allocable to any accrual period as follows. 2010 h r taxes free Multiply the adjusted issue price at the beginning of the accrual period by the debt instrument's yield to maturity. 2010 h r taxes free Subtract from the result in (1) any qualified stated interest allocable to the accrual period. 2010 h r taxes free Accrual period. 2010 h r taxes free   An accrual period for any OID debt instrument issued after July 1, 1982, and before 1985 is each 1-year period beginning on the date of the issue of the obligation and each anniversary thereafter, or the shorter period to maturity for the last accrual period. 2010 h r taxes free Your tax year will usually include parts of two accrual periods. 2010 h r taxes free Daily OID. 2010 h r taxes free   The OID for any accrual period is allocated equally to each day in the accrual period. 2010 h r taxes free You must include in income the sum of the OID amounts for each day you hold the debt instrument during the year. 2010 h r taxes free If your tax year includes parts of two or more accrual periods, you must include the proper daily OID amounts for each accrual period. 2010 h r taxes free Figuring daily OID. 2010 h r taxes free   The daily OID for the initial accrual period is figured using the following formula. 2010 h r taxes free   (ip × ytm) − qsi     p   ip = issue price ytm = yield to maturity qsi = qualified stated interest p = number of days in accrual period         The daily OID for subsequent accrual periods is figured the same way except the adjusted issue price at the beginning of each period is used in the formula instead of the issue price. 2010 h r taxes free Reduction for acquisition premium on debt instruments purchased before July 19, 1984. 2010 h r taxes free   If you bought the debt instrument at an acquisition premium before July 19, 1984, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. 2010 h r taxes free Figure the daily acquisition premium by dividing the total acquisition premium by the number of days in the period beginning on your purchase date and ending on the day before the date of maturity. 2010 h r taxes free Reduction for acquisition premium on debt instruments purchased after July 18, 1984. 2010 h r taxes free   If you bought the debt instrument at an acquisition premium after July 18, 1984, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. 2010 h r taxes free However, the method of figuring the daily acquisition premium is different from the method described in the preceding discussion. 2010 h r taxes free To figure the daily acquisition premium under this method, multiply the daily OID by the following fraction. 2010 h r taxes free The numerator is the acquisition premium. 2010 h r taxes free The denominator is the total OID remaining for the debt instrument after your purchase date. 2010 h r taxes free Section I-A is available at www. 2010 h r taxes free irs. 2010 h r taxes free gov/pub1212 and clicking the link under Recent Developments. 2010 h r taxes free Using Section I-A to figure accumulated OID. 2010 h r taxes free   If you bought your corporate debt instrument in a calendar year or the subsequent year, you can figure the accumulated OID to the date of purchase by adding the following amounts. 2010 h r taxes free The amount from the “Total OID to January 1, YYYY” column for your debt instrument. 2010 h r taxes free The OID from January 1 of a calendar year to the date of purchase, figured as follows. 2010 h r taxes free Multiply the daily OID for the first accrual period in the calendar year by the number of days from January 1 to the date of purchase, or the end of the accrual period if the debt instrument was purchased in the second or third accrual period. 2010 h r taxes free Multiply the daily OID for each subsequent accrual period by the number of days in the period to the date of purchase or the end of the accrual period, whichever applies. 2010 h r taxes free Add the amounts figured in (2a) and (2b). 2010 h r taxes free Debt Instruments Issued After 1984 If you hold debt instruments issued after 1984, you must report part of the OID in gross income each year that you own the debt instruments. 2010 h r taxes free You must include the OID in gross income whether or not you hold the debt instrument as a capital asset. 2010 h r taxes free Your basis in the debt instrument is increased by the OID you include in income. 2010 h r taxes free For information about showing the correct OID on your tax return, see How To Report OID, earlier. 2010 h r taxes free Form 1099-OID. 2010 h r taxes free   You should receive a Form 1099-OID showing OID for the part of a calendar year you held the debt instrument. 2010 h r taxes free However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. 2010 h r taxes free See Constant yield method and Reduction for acquisition premium, later. 2010 h r taxes free   You may also need to refigure the OID for a contingent payment or inflation-indexed debt instrument on which the amount reported on Form 1099-OID is inaccurate. 2010 h r taxes free See Contingent Payment Debt Instruments or Inflation-Indexed Debt Instruments, later. 2010 h r taxes free If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-B available at www. 2010 h r taxes free irs. 2010 h r taxes free gov/pub1212 by clicking the link under Recent Developments. 2010 h r taxes free Form 1099-OID not received. 2010 h r taxes free   The OID listed is for each $1,000 of redemption price. 2010 h r taxes free You must adjust the listed amount if your debt instrument has a different principal amount. 2010 h r taxes free For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. 2010 h r taxes free   Use the OID shown in Section I-B for a calendar year if you held the debt instrument the entire year. 2010 h r taxes free (If your debt instrument is not listed in Section I-B, consult the issuer for information about the issue price, the yield to maturity, and the OID that accrued for that year. 2010 h r taxes free ) If you did not hold the debt instrument the entire year, figure your OID as follows. 2010 h r taxes free Look up the daily OID for the first accrual period in which you held the debt instrument during a calendar year. 2010 h r taxes free (See Accrual period under Constant yield method, later. 2010 h r taxes free ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. 2010 h r taxes free Repeat (1) and (2) for any remaining accrual periods in which you held the debt instrument. 2010 h r taxes free Add the results of (2) and (3). 2010 h r taxes free This is the OID to include in income for that year, unless you paid an acquisition premium. 2010 h r taxes free (The reduction for acquisition premium is discussed later. 2010 h r taxes free ) Tax-exempt bond. 2010 h r taxes free   If you own a tax-exempt bond, figure your basis in the bond by adding to your cost the OID you would have included in income if the bond had been taxable. 2010 h r taxes free You need to make this adjustment to determine if you have a gain or loss on a later disposition of the bond. 2010 h r taxes free In general, use the rules that follow to determine your OID. 2010 h r taxes free Constant yield method. 2010 h r taxes free   This discussion shows how to figure OID on debt instruments issued after 1984 using a constant yield method. 2010 h r taxes free (The special rules that apply to contingent payment debt instruments and inflation-indexed debt instruments are explained later. 2010 h r taxes free ) OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. 2010 h r taxes free   Figure the OID allocable to any accrual period as follows. 2010 h r taxes free Multiply the adjusted issue price at the beginning of the accrual period by a fraction. 2010 h r taxes free The numerator of the fraction is the debt instrument's yield to maturity and the denominator is the number of accrual periods per year. 2010 h r taxes free The yield must be stated appropriately taking into account the length of the particular accrual period. 2010 h r taxes free Subtract from the result in (1) any qualified stated interest allocable to the accrual period. 2010 h r taxes free Accrual period. 2010 h r taxes free   For debt instruments issued after 1984 and before April 4, 1994, an accrual period is each 6-month period that ends on the day that corresponds to the stated maturity date of the debt instrument or the date 6 months before that date. 2010 h r taxes free For example, a debt instrument maturing on March 31 has accrual periods that end on September 30 and March 31 of each calendar year. 2010 h r taxes free Any short period is included as the first accrual period. 2010 h r taxes free   For debt instruments issued after April 3, 1994, accrual periods may be of any length and may vary in length over the term of the debt instrument, as long as each accrual period is no longer than 1 year and all payments are made on the first or last day of an accrual period. 2010 h r taxes free However, the OID listed for these debt instruments in Section I-B has been figured using 6-month accrual periods. 2010 h r taxes free Daily OID. 2010 h r taxes free   The OID for any accrual period is allocated equally to each day in the accrual period. 2010 h r taxes free Figure the amount to include in income by adding the OID for each day you hold the debt instrument during the year. 2010 h r taxes free Since your tax year will usually include parts of two or more accrual periods, you must include the proper daily OID for each accrual period. 2010 h r taxes free If your debt instrument has 6-month accrual periods, your tax year will usually include one full 6-month accrual period and parts of two other 6-month periods. 2010 h r taxes free Figuring daily OID. 2010 h r taxes free   The daily OID for the initial accrual period is figured using the following formula. 2010 h r taxes free   (ip × ytm/n) − qsi     p   ip = issue price ytm = yield to maturity n = number of accrual periods in 1 year qsi = qualified stated interest p = number of days in accrual period       The daily OID for subsequent accrual periods is figured the same way except the adjusted issue price at the beginning of each period is used in the formula instead of the issue price. 2010 h r taxes free Example 5. 2010 h r taxes free On January 1 of Year 1, you bought a 15-year, 10% debt instrument of A Corporation at original issue for $86,235. 2010 h r taxes free 17. 2010 h r taxes free According to the prospectus, the debt instrument matures on December 31 of Year 15 at a stated redemption price of $100,000. 2010 h r taxes free The yield to maturity is 12%, compounded semiannually. 2010 h r taxes free The debt instrument provides for qualified stated interest payments of $5,000 on June 30 and December 31 of each calendar year. 2010 h r taxes free The accrual periods are the 6-month periods ending on each of these dates. 2010 h r taxes free The number of days for the first accrual period (January 1 through June 30) is 181 days (182 for leap years). 2010 h r taxes free The daily OID for the first accrual period is figured as follows. 2010 h r taxes free   ($86,235. 2010 h r taxes free 17 x . 2010 h r taxes free 12/2) – $5,000     181 days     = $174. 2010 h r taxes free 11020 = $. 2010 h r taxes free 96193   181           The adjusted issue price at the beginning of the second accrual period is the issue price plus the OID previously includible in income ($86,235. 2010 h r taxes free 17 + $174. 2010 h r taxes free 11), or $86,409. 2010 h r taxes free 28. 2010 h r taxes free The number of days for the second accrual period (July 1 through December 31) is 184 days. 2010 h r taxes free The daily OID for the second accrual period is figured as follows. 2010 h r taxes free   ($86,409. 2010 h r taxes free 28 x . 2010 h r taxes free 12/2) – $5,000     184 days     = $184. 2010 h r taxes free 55681 = $1. 2010 h r taxes free 00303   184 Since the first and second accrual periods coincide exactly with your tax year, you include in income for Year 1 the OID allocable to the first two accrual periods, $174. 2010 h r taxes free 11 ($. 2010 h r taxes free 95665 × 182 days) plus $184. 2010 h r taxes free 56 ($1. 2010 h r taxes free 00303 × 184 days), or $358. 2010 h r taxes free 67. 2010 h r taxes free Add the OID to the $10,000 interest you report on your income tax return for Year 1. 2010 h r taxes free Example 6. 2010 h r taxes free Assume the same facts as in Example 5, except that you bought the debt instrument at original issue on May 1 of Year 1, with a maturity date of April 30, Year 16. 2010 h r taxes free Also, the interest payment dates are October 31 and April 30 of each calendar year. 2010 h r taxes free The accrual periods are the 6-month periods ending on each of these dates. 2010 h r taxes free The number of days for the first accrual period (May 1 through October 31) is 184 days. 2010 h r taxes free The daily OID for the first accrual period is figured as follows. 2010 h r taxes free   ($86,235. 2010 h r taxes free 17 x . 2010 h r taxes free 12/2) – $5,000     184 days     = $174. 2010 h r taxes free 11020 = $. 2010 h r taxes free 94625   184           The number of days for the second accrual period (November 1 through April 30) is 181 days (182 for leap years). 2010 h r taxes free The daily OID for the second accrual period is figured as follows. 2010 h r taxes free   ($86,409. 2010 h r taxes free 28 x . 2010 h r taxes free 12/2) – $5,000     181 days     = $184. 2010 h r taxes free 55681 = $1. 2010 h r taxes free 01965   181 If you hold the debt instrument through the end of Year 1, you must include $236. 2010 h r taxes free 31 of OID in income. 2010 h r taxes free This is $174. 2010 h r taxes free 11 ($. 2010 h r taxes free 94625 × 184 days) for the period May 1 through October 31 plus $62. 2010 h r taxes free 20 ($1. 2010 h r taxes free 01965 × 61 days) for the period November 1 through December 31. 2010 h r taxes free The OID is added to the $5,000 interest income paid on October 31 of Year 1. 2010 h r taxes free Your basis in the debt instrument is increased by the OID you include in income. 2010 h r taxes free On January 1 of Year 2, your basis in the A Corporation debt instrument is $86,471. 2010 h r taxes free 48 ($86,235. 2010 h r taxes free 17 + $236. 2010 h r taxes free 31). 2010 h r taxes free Short first accrual period. 2010 h r taxes free   You may have to make adjustments if a debt instrument has a short first accrual period. 2010 h r taxes free For example, a debt instrument with 6-month accrual periods that is issued on February 15 and matures on October 31 has a short first accrual period that ends April 30. 2010 h r taxes free (The remaining accrual periods begin on May 1 and November 1. 2010 h r taxes free ) For this short period, figure the daily OID as described earlier, but adjust the yield for the length of the short accrual period. 2010 h r taxes free You may use any reasonable compounding method in determining OID for a short period. 2010 h r taxes free Examples of reasonable compounding methods include continuous compounding and monthly compounding (that is, simple interest within a month). 2010 h r taxes free Consult your tax advisor for more information about making this computation. 2010 h r taxes free   The OID for the final accrual period is the difference between the amount payable at maturity (other than a payment of qualified stated interest) and the adjusted issue price at the beginning of the final accrual period. 2010 h r taxes free Reduction for acquisition premium. 2010 h r taxes free   If you bought the debt instrument at an acquisition premium, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. 2010 h r taxes free To figure the daily acquisition premium, multiply the daily OID by the following fraction. 2010 h r taxes free The numerator is the acquisition premium. 2010 h r taxes free The denominator is the total OID remaining for the debt instrument after your purchase date. 2010 h r taxes free Example 7. 2010 h r taxes free Assume the same facts as in Example 6, except that you bought the debt instrument on November 1 of Year 1 for $87,000, after its original issue on May 1 of Year 1. 2010 h r taxes free The adjusted issue price on November 1 of Year 1 is $86,409. 2010 h r taxes free 28 ($86,235. 2010 h r taxes free 17 + $174. 2010 h r taxes free 11). 2010 h r taxes free In this case, you paid an acquisition premium of $590. 2010 h r taxes free 72 ($87,000 − $86,409. 2010 h r taxes free 28). 2010 h r taxes free The daily OID for the accrual period November 1 through April 30, reduced for the acquisition premium, is figured as follows. 2010 h r taxes free 1) Daily OID on date of purchase (2nd accrual period) $1. 2010 h r taxes free 01965*  2)  Acquisition premium $590. 2010 h r taxes free 72    3)  Total OID remaining after purchase date ($13,764. 2010 h r taxes free 83 − $174. 2010 h r taxes free 11) 13,590. 2010 h r taxes free 72   4) Line 2 ÷ line 3 . 2010 h r taxes free 04346  5)  Line 1 × line 4 . 2010 h r taxes free 04432  6)  Daily OID reduced for the acquisition premium. 2010 h r taxes free Line 1 − line 5 $0. 2010 h r taxes free 97533  * As shown in Example 6. 2010 h r taxes free The total OID to include in income for Year 1 is $59. 2010 h r taxes free 50 ($. 2010 h r taxes free 97533 × 61 days). 2010 h r taxes free Contingent Payment Debt Instruments This discussion shows how to figure OID on a contingent payment debt instrument issued after August 12, 1996, that was issued for cash or publicly traded property. 2010 h r taxes free In general, a contingent payment debt instrument provides for one or more payments that are contingent as to timing or amount. 2010 h r taxes free If you hold a contingent payment bond, you must report OID as it accrues each year. 2010 h r taxes free Because the actual payments on a contingent payment debt instrument cannot be known in advance, issuers and holders cannot use the constant yield method (discussed earlier under Debt Instruments Issued After 1984) without making certain assumptions about the payments on the debt instrument. 2010 h r taxes free To figure OID accruals on contingent payment debt instruments, holders and issuers must use the noncontingent bond method. 2010 h r taxes free Noncontingent bond method. 2010 h r taxes free    Under this method, the issuer must compute a comparable yield for the debt instrument and, based on this yield, construct a projected payment schedule for the instrument, which includes a projected fixed amount for each contingent payment. 2010 h r taxes free In general, holders and issuers accrue OID on this projected payment schedule using the constant yield method that applies to fixed payment debt instruments. 2010 h r taxes free When a contingent payment differs from the projected fixed amount, the holders and issuers make adjustments to their OID accruals. 2010 h r taxes free If the actual contingent payment is larger than expected, both the issuer and the holder increase their OID accruals. 2010 h r taxes free If the actual contingent payment is smaller than expected, holders and issuers generally decrease their OID accruals. 2010 h r taxes free Form 1099-OID. 2010 h r taxes free   The amount shown on Form 1099-OID in box 1 you receive for a contingent payment debt instrument may not be the correct amount to include in income. 2010 h r taxes free For example, the amount may not be correct if the contingent payment was different from the projected amount. 2010 h r taxes free If the amount in box 1 is not correct, you must figure the OID to report on your return under the following rules. 2010 h r taxes free For information on showing an OID adjustment on your tax return, see How To Report OID, earlier. 2010 h r taxes free Figuring OID. 2010 h r taxes free   To figure OID on a contingent payment debt instrument, you need to know the “comparable yield” and “projected payment schedule” of the debt instrument. 2010 h r taxes free The issuer must make these available to you. 2010 h r taxes free Comparable yield. 2010 h r taxes free   The comparable yield generally is the yield at which the issuer would issue a fixed rate debt instrument with terms and conditions similar to those of the contingent payment debt instrument. 2010 h r taxes free The comparable yield is determined as of the debt instrument's issue date. 2010 h r taxes free Projected payment schedule. 2010 h r taxes free   The projected payment schedule for a contingent payment debt instrument includes all fixed payments due under the instrument and a projected fixed amount for each contingent payment. 2010 h r taxes free The projected payment schedule is created by the issuer as of the debt instrument's issue date. 2010 h r taxes free It is used to determine the issuer's and holder's interest accruals and adjustments. 2010 h r taxes free Steps for figuring OID. 2010 h r taxes free   Figure the OID on a contingent payment debt instrument in two steps. 2010 h r taxes free Figure the OID using the constant yield method (discussed earlier under Debt Instruments Issued After 1984 ) that applies to fixed payment debt instruments. 2010 h r taxes free Use the comparable yield as the yield to maturity. 2010 h r taxes free In general, use the projected payment schedule to determine the instrument's adjusted issue price at the beginning of each accrual period (other than the initial period). 2010 h r taxes free Do not treat any amount payable as qualified stated interest. 2010 h r taxes free Adjust the OID in (1) to account for actual contingent payments. 2010 h r taxes free If the contingent payment is greater than the projected fixed amount, you have a positive adjustment. 2010 h r taxes free If the contingent payment is less than the projected fixed amount, you have a negative adjustment. 2010 h r taxes free Net positive adjustment. 2010 h r taxes free   A net positive adjustment exists for a tax year when the total of any positive adjustments described in (2) above for the tax year is more than the total of any negative adjustments for the tax year. 2010 h r taxes free Treat a net positive adjustment as additional OID for the tax year. 2010 h r taxes free Net negative adjustment. 2010 h r taxes free   A net negative adjustment exists for a tax year when the total of any negative adjustments described in (2) above for the tax year is more than the total of any positive adjustments for the tax year. 2010 h r taxes free Use a net negative adjustment to offset OID on the debt instrument for the tax year. 2010 h r taxes free If the net negative adjustment is more than the OID on the debt instrument for the tax year, you can claim the difference as an ordinary loss. 2010 h r taxes free However, the amount you can claim as an ordinary loss is limited to the OID on the debt instrument you included in income in prior tax years. 2010 h r taxes free You must carry forward any net negative adjustment that is more than the total OID for the tax year and prior tax years and treat it as a negative adjustment in the next tax year. 2010 h r taxes free Basis adjustments. 2010 h r taxes free   In general, increase your basis in a contingent payment debt instrument by the OID included in income. 2010 h r taxes free Your basis, however, is not affected by any negative or positive adjustments. 2010 h r taxes free Decrease your basis by any noncontingent payment received and the projected contingent payment scheduled to be received. 2010 h r taxes free Treatment of gain or loss on sale or exchange. 2010 h r taxes free   If you sell a contingent payment debt instrument at a gain, your gain is ordinary income (interest income), even if you hold the debt instrument as a capital asset. 2010 h r taxes free If you sell a contingent payment debt instrument at a loss, your loss is an ordinary loss to the extent of your prior OID accruals on the debt instrument. 2010 h r taxes free If the debt instrument is a capital asset, treat any loss that is more than your prior OID accruals as a capital loss. 2010 h r taxes free See Regulations section 1. 2010 h r taxes free 1275-4 for exceptions to these rules. 2010 h r taxes free Premium, acquisition premium, and market discount. 2010 h r taxes free   The rules for accruing premium, acquisition premium, and market discount do not apply to a contingent payment debt instrument. 2010 h r taxes free See Regulations section 1. 2010 h r taxes free 1275-4 to determine how to account for these items. 2010 h r taxes free Inflation-Indexed Debt Instruments This discussion shows how you figure OID on certain inflation-indexed debt instruments issued after January 5, 1997. 2010 h r taxes free An inflation-indexed debt instrument is generally a debt instrument on which the payments are adjusted for inflation and d