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Amended Tax Return Form

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Amended Tax Return Form

Amended tax return form Publication 530 - Main Content Table of Contents What You Can and Cannot DeductHardest Hit Fund and Emergency Homeowners' Loan Programs Real Estate Taxes Sales Taxes Home Mortgage Interest Mortgage Insurance Premiums Mortgage Interest CreditFiguring the Credit BasisFiguring Your Basis Adjusted Basis Keeping Records How To Get Tax HelpLow Income Taxpayer Clinics What You Can and Cannot Deduct To deduct expenses of owning a home, you must file Form 1040, U. Amended tax return form S. Amended tax return form Individual Income Tax Return, and itemize your deductions on Schedule A (Form 1040). Amended tax return form If you itemize, you cannot take the standard deduction. Amended tax return form This section explains what expenses you can deduct as a homeowner. Amended tax return form It also points out expenses that you cannot deduct. Amended tax return form There are four primary discussions: real estate taxes, sales taxes, home mortgage interest, and mortgage insurance premiums. Amended tax return form Generally, your real estate taxes, home mortgage interest, and mortgage insurance premiums are included in your house payment. Amended tax return form Your house payment. Amended tax return form   If you took out a mortgage (loan) to finance the purchase of your home, you probably have to make monthly house payments. Amended tax return form Your house payment may include several costs of owning a home. Amended tax return form The only costs you can deduct are real estate taxes actually paid to the taxing authority, interest that qualifies as home mortgage interest, and mortgage insurance premiums. Amended tax return form These are discussed in more detail later. Amended tax return form   Some nondeductible expenses that may be included in your house payment include: Fire or homeowner's insurance premiums, and The amount applied to reduce the principal of the mortgage. Amended tax return form Minister's or military housing allowance. Amended tax return form   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you still can deduct your real estate taxes and your home mortgage interest. Amended tax return form You do not have to reduce your deductions by your nontaxable allowance. Amended tax return form For more information see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers, and Publication 3, Armed Forces' Tax Guide. Amended tax return form Nondeductible payments. Amended tax return form   You cannot deduct any of the following items. Amended tax return form Insurance (other than mortgage insurance premiums), including fire and comprehensive coverage, and title insurance. Amended tax return form Wages you pay for domestic help. Amended tax return form Depreciation. Amended tax return form The cost of utilities, such as gas, electricity, or water. Amended tax return form Most settlement costs. Amended tax return form See Settlement or closing costs under Cost as Basis, later, for more information. Amended tax return form Forfeited deposits, down payments, or earnest money. Amended tax return form Hardest Hit Fund and Emergency Homeowners' Loan Programs You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. Amended tax return form You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. Amended tax return form You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. Amended tax return form If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received), box 4 (mortgage insurance premiums) and box 5 (real property taxes). Amended tax return form However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. Amended tax return form Real Estate Taxes Most state and local governments charge an annual tax on the value of real property. Amended tax return form This is called a real estate tax. Amended tax return form You can deduct the tax if it is assessed uniformly at a like rate on all real property throughout the community. Amended tax return form The proceeds must be for general community or governmental purposes and not be a payment for a special privilege granted or service rendered to you. Amended tax return form Deductible Real Estate Taxes You can deduct real estate taxes imposed on you. Amended tax return form You must have paid them either at settlement or closing, or to a taxing authority (either directly or through an escrow account) during the year. Amended tax return form If you own a cooperative apartment, see Special Rules for Cooperatives , later. Amended tax return form Where to deduct real estate taxes. Amended tax return form   Enter the amount of your deductible real estate taxes on Schedule A (Form 1040), line 6. Amended tax return form Real estate taxes paid at settlement or closing. Amended tax return form   Real estate taxes are generally divided so that you and the seller each pay taxes for the part of the property tax year you owned the home. Amended tax return form Your share of these taxes is fully deductible if you itemize your deductions. Amended tax return form Division of real estate taxes. Amended tax return form   For federal income tax purposes, the seller is treated as paying the property taxes up to, but not including, the date of sale. Amended tax return form You (the buyer) are treated as paying the taxes beginning with the date of sale. Amended tax return form This applies regardless of the lien dates under local law. Amended tax return form Generally, this information is included on the settlement statement you get at closing. Amended tax return form   You and the seller each are considered to have paid your own share of the taxes, even if one or the other paid the entire amount. Amended tax return form You each can deduct your own share, if you itemize deductions, for the year the property is sold. Amended tax return form Example. Amended tax return form You bought your home on September 1. Amended tax return form The property tax year (the period to which the tax relates) in your area is the calendar year. Amended tax return form The tax for the year was $730 and was due and paid by the seller on August 15. Amended tax return form You owned your new home during the property tax year for 122 days (September 1 to December 31, including your date of purchase). Amended tax return form You figure your deduction for real estate taxes on your home as follows. Amended tax return form 1. Amended tax return form Enter the total real estate taxes for the real property tax year $730 2. Amended tax return form Enter the number of days in the property tax year that you owned the property 122 3. Amended tax return form Divide line 2 by 365 . Amended tax return form 3342 4. Amended tax return form Multiply line 1 by line 3. Amended tax return form This is your deduction. Amended tax return form Enter it on Schedule A (Form 1040), line 6 $244   You can deduct $244 on your return for the year if you itemize your deductions. Amended tax return form You are considered to have paid this amount and can deduct it on your return even if, under the contract, you did not have to reimburse the seller. Amended tax return form Delinquent taxes. Amended tax return form   Delinquent taxes are unpaid taxes that were imposed on the seller for an earlier tax year. Amended tax return form If you agree to pay delinquent taxes when you buy your home, you cannot deduct them. Amended tax return form You treat them as part of the cost of your home. Amended tax return form See Real estate taxes , later, under Basis. Amended tax return form Escrow accounts. Amended tax return form   Many monthly house payments include an amount placed in escrow (put in the care of a third party) for real estate taxes. Amended tax return form You may not be able to deduct the total you pay into the escrow account. Amended tax return form You can deduct only the real estate taxes that the lender actually paid from escrow to the taxing authority. Amended tax return form Your real estate tax bill will show this amount. Amended tax return form Refund or rebate of real estate taxes. Amended tax return form   If you receive a refund or rebate of real estate taxes this year for amounts you paid this year, you must reduce your real estate tax deduction by the amount refunded to you. Amended tax return form If the refund or rebate was for real estate taxes paid for a prior year, you may have to include some or all of the refund in your income. Amended tax return form For more information, see Recoveries in Publication 525, Taxable and Nontaxable Income. Amended tax return form Items You Cannot Deduct as Real Estate Taxes The following items are not deductible as real estate taxes. Amended tax return form Charges for services. Amended tax return form   An itemized charge for services to specific property or people is not a tax, even if the charge is paid to the taxing authority. Amended tax return form You cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged for trash collection), or A flat fee charged for a single service provided by your local government (such as a $30 charge for mowing your lawn because it had grown higher than permitted under a local ordinance). Amended tax return form    You must look at your real estate tax bill to decide if any nondeductible itemized charges, such as those listed above, are included in the bill. Amended tax return form If your taxing authority (or lender) does not furnish you a copy of your real estate tax bill, ask for it. Amended tax return form Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. Amended tax return form Assessments for local benefits. Amended tax return form   You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. Amended tax return form Local benefits include the construction of streets, sidewalks, or water and sewer systems. Amended tax return form You must add these amounts to the basis of your property. Amended tax return form   You can, however, deduct assessments (or taxes) for local benefits if they are for maintenance, repair, or interest charges related to those benefits. Amended tax return form An example is a charge to repair an existing sidewalk and any interest included in that charge. Amended tax return form   If only a part of the assessment is for maintenance, repair, or interest charges, you must be able to show the amount of that part to claim the deduction. Amended tax return form If you cannot show what part of the assessment is for maintenance, repair, or interest charges, you cannot deduct any of it. Amended tax return form   An assessment for a local benefit may be listed as an item in your real estate tax bill. Amended tax return form If so, use the rules in this section to find how much of it, if any, you can deduct. Amended tax return form Transfer taxes (or stamp taxes). Amended tax return form   You cannot deduct transfer taxes and similar taxes and charges on the sale of a personal home. Amended tax return form If you are the buyer and you pay them, include them in the cost basis of the property. Amended tax return form If you are the seller and you pay them, they are expenses of the sale and reduce the amount realized on the sale. Amended tax return form Homeowners association assessments. Amended tax return form   You cannot deduct these assessments because the homeowners association, rather than a state or local government, imposes them. Amended tax return form Special Rules for Cooperatives If you own a cooperative apartment, some special rules apply to you, though you generally receive the same tax treatment as other homeowners. Amended tax return form As an owner of a cooperative apartment, you own shares of stock in a corporation that owns or leases housing facilities. Amended tax return form You can deduct your share of the corporation's deductible real estate taxes if the cooperative housing corporation meets the following conditions: The corporation has only one class of stock outstanding, Each stockholder, solely because of ownership of the stock, can live in a house, apartment, or house trailer owned or leased by the corporation, No stockholder can receive any distribution out of capital, except on a partial or complete liquidation of the corporation, and At least one of the following: At least 80% of the corporation's gross income for the tax year was paid by the tenant-stockholders. Amended tax return form For this purpose, gross income means all income received during the entire tax year, including any received before the corporation changed to cooperative ownership. Amended tax return form At least 80% of the total square footage of the corporation's property must be available for use by the tenant-stockholders during the entire tax year. Amended tax return form At least 90% of the expenditures paid or incurred by the corporation were used for the acquisition, construction, management, maintenance, or care of the property for the benefit of the tenant-shareholders during the entire tax year. Amended tax return form Tenant-stockholders. Amended tax return form   A tenant-stockholder can be any entity (such as a corporation, trust, estate, partnership, or association) as well as an individual. Amended tax return form The tenant-stockholder does not have to live in any of the cooperative's dwelling units. Amended tax return form The units that the tenant-stockholder has the right to occupy can be rented to others. Amended tax return form Deductible taxes. Amended tax return form   You figure your share of real estate taxes in the following way. Amended tax return form Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. Amended tax return form Multiply the corporation's deductible real estate taxes by the number you figured in (1). Amended tax return form This is your share of the real estate taxes. Amended tax return form   Generally, the corporation will tell you your share of its real estate tax. Amended tax return form This is the amount you can deduct if it reasonably reflects the cost of real estate taxes for your dwelling unit. Amended tax return form Refund of real estate taxes. Amended tax return form   If the corporation receives a refund of real estate taxes it paid in an earlier year, it must reduce the amount of real estate taxes paid this year when it allocates the tax expense to you. Amended tax return form Your deduction for real estate taxes the corporation paid this year is reduced by your share of the refund the corporation received. Amended tax return form Sales Taxes Generally, you can elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule A (Form 1040). Amended tax return form Deductible sales taxes may include sales taxes paid on your home (including mobile and prefabricated), or home building materials if the tax rate was the same as the general sales tax rate. Amended tax return form For information on figuring your deduction, see the Instructions for Schedule A (Form 1040). Amended tax return form If you elect to deduct the sales taxes paid on your home, or home building materials, you cannot include them as part of your cost basis in the home. Amended tax return form Home Mortgage Interest This section of the publication gives you basic information about home mortgage interest, including information on interest paid at settlement, points, and Form 1098, Mortgage Interest Statement. Amended tax return form Most home buyers take out a mortgage (loan) to buy their home. Amended tax return form They then make monthly payments to either the mortgage holder or someone collecting the payments for the mortgage holder. Amended tax return form Usually, you can deduct the entire part of your payment that is for mortgage interest, if you itemize your deductions on Schedule A (Form 1040). Amended tax return form However, your deduction may be limited if: Your total mortgage balance is more than $1 million ($500,000 if married filing separately), or You took out a mortgage for reasons other than to buy, build, or improve your home. Amended tax return form If either of these situations applies to you, see Publication 936 for more information. Amended tax return form Also see Publication 936 if you later refinance your mortgage or buy a second home. Amended tax return form Refund of home mortgage interest. Amended tax return form   If you receive a refund of home mortgage interest that you deducted in an earlier year and that reduced your tax, you generally must include the refund in income in the year you receive it. Amended tax return form For more information, see Recoveries in Publication 525. Amended tax return form The amount of the refund will usually be shown on the mortgage interest statement you receive from your mortgage lender. Amended tax return form See Mortgage Interest Statement , later. Amended tax return form Deductible Mortgage Interest To be deductible, the interest you pay must be on a loan secured by your main home or a second home. Amended tax return form The loan can be a first or second mortgage, a home improvement loan, or a home equity loan. Amended tax return form Prepaid interest. Amended tax return form   If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. Amended tax return form Generally, you can deduct in each year only the interest that qualifies as home mortgage interest for that year. Amended tax return form An exception (discussed later) applies to points. Amended tax return form Late payment charge on mortgage payment. Amended tax return form   You can deduct as home mortgage interest a late payment charge if it was not for a specific service in connection with your mortgage loan. Amended tax return form Mortgage prepayment penalty. Amended tax return form   If you pay off your home mortgage early, you may have to pay a penalty. Amended tax return form You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. Amended tax return form Ground rent. Amended tax return form   In some states (such as Maryland), you may buy your home subject to a ground rent. Amended tax return form A ground rent is an obligation you assume to pay a fixed amount per year on the property. Amended tax return form Under this arrangement, you are leasing (rather than buying) the land on which your home is located. Amended tax return form Redeemable ground rents. Amended tax return form   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct the payments as mortgage interest. Amended tax return form The ground rent is a redeemable ground rent only if all of the following are true. Amended tax return form Your lease, including renewal periods, is for more than 15 years. Amended tax return form You can freely assign the lease. Amended tax return form You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a specified amount. Amended tax return form The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. Amended tax return form   Payments made to end the lease and buy the lessor's entire interest in the land are not redeemable ground rents. Amended tax return form You cannot deduct them. Amended tax return form Nonredeemable ground rents. Amended tax return form   Payments on a nonredeemable ground rent are not mortgage interest. Amended tax return form You can deduct them as rent only if they are a business expense or if they are for rental property. Amended tax return form Cooperative apartment. Amended tax return form   You can usually treat the interest on a loan you took out to buy stock in a cooperative housing corporation as home mortgage interest if you own a cooperative apartment, and the cooperative housing corporation meets the conditions described earlier under Special Rules for Cooperatives . Amended tax return form In addition, you can treat as home mortgage interest your share of the corporation's deductible mortgage interest. Amended tax return form Figure your share of mortgage interest the same way that is shown for figuring your share of real estate taxes in the Example under Division of real estate taxes, earlier. Amended tax return form For more information on cooperatives, see Special Rule for Tenant-Stockholders in Cooperative Housing Corporations in Publication 936. Amended tax return form Refund of cooperative's mortgage interest. Amended tax return form   You must reduce your mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. Amended tax return form The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year. Amended tax return form   If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. Amended tax return form Mortgage Interest Paid at Settlement One item that normally appears on a settlement or closing statement is home mortgage interest. Amended tax return form You can deduct the interest that you pay at settlement if you itemize your deductions on Schedule A (Form 1040). Amended tax return form This amount should be included in the mortgage interest statement provided by your lender. Amended tax return form See the discussion under Mortgage Interest Statement , later. Amended tax return form Also, if you pay interest in advance, see Prepaid interest , earlier, and Points , next. Amended tax return form Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Amended tax return form Points also may be called loan origination fees, maximum loan charges, loan discount, or discount points. Amended tax return form A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. Amended tax return form See Points paid by the seller , later. Amended tax return form General rule. Amended tax return form   You cannot deduct the full amount of points in the year paid. Amended tax return form They are prepaid interest, so you generally must deduct them over the life (term) of the mortgage. Amended tax return form Exception. Amended tax return form   You can deduct the full amount of points in the year paid if you meet all the following tests. Amended tax return form Your loan is secured by your main home. Amended tax return form (Generally, your main home is the one you live in most of the time. Amended tax return form ) Paying points is an established business practice in the area where the loan was made. Amended tax return form The points paid were not more than the points generally charged in that area. Amended tax return form You use the cash method of accounting. Amended tax return form This means you report income in the year you receive it and deduct expenses in the year you pay them. Amended tax return form Most individuals use this method. Amended tax return form The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. Amended tax return form The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. Amended tax return form The funds you provided are not required to have been applied to the points. Amended tax return form They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Amended tax return form You cannot have borrowed these funds. Amended tax return form You use your loan to buy or build your main home. Amended tax return form The points were computed as a percentage of the principal amount of the mortgage. Amended tax return form The amount is clearly shown on the settlement statement (such as the Uniform Settlement Statement, Form HUD-1) as points charged for the mortgage. Amended tax return form The points may be shown as paid from either your funds or the seller's. Amended tax return form Note. Amended tax return form If you meet all of the tests listed above and you itemize your deductions in the year you get the loan, you can either deduct the full amount of points in the year paid or deduct them over the life of the loan, beginning in the year you get the loan. Amended tax return form If you do not itemize your deductions in the year you get the loan, you can spread the points over the life of the loan and deduct the appropriate amount in each future year, if any, when you do itemize your deductions. Amended tax return form Home improvement loan. Amended tax return form   You can also fully deduct in the year paid points paid on a loan to improve your main home, if you meet the first six tests listed earlier. Amended tax return form Refinanced loan. Amended tax return form   If you use part of the refinanced mortgage proceeds to improve your main home and you meet the first six tests listed earlier, you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. Amended tax return form You can deduct the rest of the points over the life of the loan. Amended tax return form Points not fully deductible in year paid. Amended tax return form    If you do not qualify under the exception to deduct the full amount of points in the year paid (or choose not to do so), see Points in Publication 936 for the rules on when and how much you can deduct. Amended tax return form Figure A. Amended tax return form   You can use Figure A, next, as a quick guide to see whether your points are fully deductible in the year paid. Amended tax return form    Please click here for the text description of the image. Amended tax return form Figure A. Amended tax return form Are my points fully deductible this year? Amounts charged for services. Amended tax return form   Amounts charged by the lender for specific services connected to the loan are not interest. Amended tax return form Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Amended tax return form You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Amended tax return form For information about the tax treatment of these amounts and other settlement fees and closing costs, see Basis , later. Amended tax return form Points paid by the seller. Amended tax return form   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Amended tax return form Treatment by seller. Amended tax return form   The seller cannot deduct these fees as interest. Amended tax return form However, they are a selling expense that reduces the seller's amount realized. Amended tax return form See Publication 523 for more information. Amended tax return form Treatment by buyer. Amended tax return form   The buyer treats seller-paid points as if he or she had paid them. Amended tax return form If all the tests listed earlier under Exception are met, the buyer can deduct the points in the year paid. Amended tax return form If any of those tests are not met, the buyer must deduct the points over the life of the loan. Amended tax return form   The buyer must also reduce the basis of the home by the amount of the seller-paid points. Amended tax return form For more information about the basis of your home, see Basis , later. Amended tax return form Funds provided are less than points. Amended tax return form   If you meet all the tests listed earlier under Exception except that the funds you provided were less than the points charged to you (test 6), you can deduct the points in the year paid up to the amount of funds you provided. Amended tax return form In addition, you can deduct any points paid by the seller. Amended tax return form Example 1. Amended tax return form When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Amended tax return form You meet all the tests for deducting points in the year paid (see Exception , earlier), except the only funds you provided were a $750 down payment. Amended tax return form Of the $1,000 you were charged for points, you can deduct $750 in the year paid. Amended tax return form You spread the remaining $250 over the life of the mortgage. Amended tax return form Example 2. Amended tax return form The facts are the same as in Example 1 , except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. Amended tax return form In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Amended tax return form You spread the remaining $250 over the life of the mortgage. Amended tax return form You must reduce the basis of your home by the $1,000 paid by the seller. Amended tax return form Excess points. Amended tax return form   If you meet all the tests under Exception , earlier, except that the points paid were more than are generally charged in your area (test 3), you can deduct in the year paid only the points that are generally charged. Amended tax return form You must spread any additional points over the life of the mortgage. Amended tax return form Mortgage ending early. Amended tax return form   If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. Amended tax return form A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Amended tax return form Example. Amended tax return form Dan paid $3,000 in points in 2006 that he had to spread out over the 15-year life of the mortgage. Amended tax return form He had deducted $1,400 of these points through 2012. Amended tax return form Dan prepaid his mortgage in full in 2013. Amended tax return form He can deduct the remaining $1,600 of points in 2013. Amended tax return form Exception. Amended tax return form   If you refinance the mortgage with the same lender, you cannot deduct any remaining points for the year. Amended tax return form Instead, deduct them over the term of the new loan. Amended tax return form Form 1098. Amended tax return form   The mortgage interest statement you receive should show not only the total interest paid during the year, but also your deductible points paid during the year. Amended tax return form See Mortgage Interest Statement , later. Amended tax return form Where To Deduct Home Mortgage Interest Enter on Schedule A (Form 1040), line 10, the home mortgage interest and points reported to you on Form 1098 (discussed next). Amended tax return form If you did not receive a Form 1098, enter your deductible interest on line 11, and any deductible points on line 12. Amended tax return form See Table 1 below for a summary of where to deduct home mortgage interest and real estate taxes. Amended tax return form If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and social security number (SSN) or employer identification number (EIN) on the dotted lines next to line 11. Amended tax return form The seller must give you this number and you must give the seller your SSN. Amended tax return form Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Amended tax return form Failure to meet either of these requirements may result in a $50 penalty for each failure. Amended tax return form Table 1. Amended tax return form Where To Deduct Interest and Taxes Paid on Your Home See the text for information on what expenses are eligible. Amended tax return form IF you are eligible to deduct . Amended tax return form . Amended tax return form . Amended tax return form THEN report the amount  on Schedule A (Form 1040) . Amended tax return form . Amended tax return form . Amended tax return form real estate taxes line 6. Amended tax return form home mortgage interest and points reported on Form 1098 line 10. Amended tax return form home mortgage interest not reported on  Form 1098 line 11. Amended tax return form points not reported on Form 1098 line 12. Amended tax return form qualified mortgage insurance premiums line 13. Amended tax return form Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage to a mortgage holder in the course of that holder's trade or business, you should receive a Form 1098 or similar statement from the mortgage holder. Amended tax return form The statement will show the total interest paid on your mortgage during the year. Amended tax return form If you bought a main home during the year, it also will show the deductible points you paid and any points you can deduct that were paid by the person who sold you your home. Amended tax return form See Points , earlier. Amended tax return form The interest you paid at settlement should be included on the statement. Amended tax return form If it is not, add the interest from the settlement sheet that qualifies as home mortgage interest to the total shown on Form 1098 or similar statement. Amended tax return form Put the total on Schedule A (Form 1040), line 10, and attach a statement to your return explaining the difference. Amended tax return form Write “See attached” to the right of line 10. Amended tax return form A mortgage holder can be a financial institution, a governmental unit, or a cooperative housing corporation. Amended tax return form If a statement comes from a cooperative housing corporation, it generally will show your share of interest. Amended tax return form Your mortgage interest statement for 2013 should be provided or sent to you by January 31, 2014. Amended tax return form If it is mailed, you should allow adequate time to receive it before contacting the mortgage holder. Amended tax return form A copy of this form will be sent to the IRS also. Amended tax return form Example. Amended tax return form You bought a new home on May 3. Amended tax return form You paid no points on the purchase. Amended tax return form During the year, you made mortgage payments which included $4,480 deductible interest on your new home. Amended tax return form The settlement sheet for the purchase of the home included interest of $620 for 29 days in May. Amended tax return form The mortgage statement you receive from the lender includes total interest of $5,100 ($4,480 + $620). Amended tax return form You can deduct the $5,100 if you itemize your deductions. Amended tax return form Refund of overpaid interest. Amended tax return form   If you receive a refund of mortgage interest you overpaid in a prior year, you generally will receive a Form 1098 showing the refund in box 3. Amended tax return form Generally, you must include the refund in income in the year you receive it. Amended tax return form See Refund of home mortgage interest , earlier, under Home Mortgage Interest. Amended tax return form More than one borrower. Amended tax return form   If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. Amended tax return form Show how much of the interest each of you paid, and give the name and address of the person who received the form. Amended tax return form Deduct your share of the interest on Schedule A (Form 1040), line 11, and write “See attached” to the right of that line. Amended tax return form Mortgage Insurance Premiums You may be able to take an itemized deduction on Schedule A (Form 1040), line 13, for premiums you pay or accrue during 2013 for qualified mortgage insurance in connection with home acquisition debt on your qualified home. Amended tax return form Mortgage insurance premiums you paid or accrued on any mortgage insurance contract issued before January 1, 2007, are not deductible as an itemized deduction. Amended tax return form Qualified Mortgage Insurance Qualified mortgage insurance is mortgage insurance provided by the Veterans Administration, the Federal Housing Administration, or the Rural Housing Administration, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). Amended tax return form Prepaid mortgage insurance premiums. Amended tax return form   If you paid premiums that are allocable to periods after 2013, you must allocate them over the shorter of: The stated term of the mortgage, or 84 months, beginning with the month the insurance was obtained. Amended tax return form The premiums are treated as paid in the year to which they were allocated. Amended tax return form If the mortgage is satisfied before its term, no deduction is allowed for the unamortized balance. Amended tax return form See Publication 936 for details. Amended tax return form Exception for certain mortgage insurance. Amended tax return form   The allocation rules, explained above, do not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or Rural Housing Service. Amended tax return form Home Acquisition Debt Home acquisition debt is a mortgage you took out after October 13, 1987, to buy, build, or substantially improve a qualified home. Amended tax return form It also must be secured by that home. Amended tax return form If the amount of your mortgage is more than the cost of the home plus the cost of any substantial improvements, only the debt that is not more than the cost of the home plus improvements qualifies as home acquisition debt. Amended tax return form Home acquisition debt limit. Amended tax return form   The total amount you can treat as home acquisition debt at any time on your home cannot be more than $1 million ($500,000 if married filing separately). Amended tax return form Discharges of qualified principal residence indebtedness. Amended tax return form   You can exclude from gross income any discharges of qualified principal residence indebtedness made after 2006 and before 2014. Amended tax return form You must reduce the basis of your principal residence (but not below zero) by the amount you exclude. Amended tax return form Principal residence. Amended tax return form   Your principal residence is the home where you ordinarily live most of the time. Amended tax return form You can have only one principal residence at any one time. Amended tax return form Qualified principal residence indebtedness. Amended tax return form   This is a mortgage that you took out to buy, build, or substantially improve your principal residence and that is secured by that residence. Amended tax return form If the amount of your original mortgage is more than the cost of your principal residence plus the cost of substantial improvements, qualified principal residence indebtedness cannot be more than the cost of your principal residence plus improvements. Amended tax return form   Any debt secured by your principal residence that you use to refinance qualified principal residence indebtedness is qualified principal residence indebtedness up to the amount of your old mortgage principal just before the refinancing. Amended tax return form Additional debt incurred to substantially improve your principal residence is also qualified principal residence indebtedness. Amended tax return form Amount you can exclude. Amended tax return form   You can only exclude debt discharged after 2006 and before 2014. Amended tax return form The most you can exclude is $2 million ($1 million if married filing separately). Amended tax return form You cannot exclude any amount that was discharged because of services performed for the lender or on account of any other factor not directly related either to a decline in the value of your residence or to your financial condition. Amended tax return form Ordering rule. Amended tax return form   If only a part of a loan is qualified principal residence indebtedness, you can exclude only the amount of the discharge that is more than the amount of the loan (immediately before the discharge) that is not qualified principal residence indebtedness. Amended tax return form Qualified Home This means your main home or your second home. Amended tax return form A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. Amended tax return form Main home. Amended tax return form   You can have only one main home at any one time. Amended tax return form This is the home where you ordinarily live most of the time. Amended tax return form Second home and other special situations. Amended tax return form   If you have a second home, use part of your home for other than residential living (such as a home office), rent out part of your home, or are having your home constructed, see Qualified Home in Publication 936. Amended tax return form Limit on Deduction If your adjusted gross income (AGI) on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are deductible is reduced and may be eliminated. Amended tax return form See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. Amended tax return form If your AGI is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Amended tax return form Form 1098. Amended tax return form   The amount of mortgage insurance premiums you paid during 2013 should be reported in box 4. Amended tax return form See Form 1098, Mortgage Interest Statement in Publication 936. Amended tax return form Mortgage Interest Credit The mortgage interest credit is intended to help lower-income individuals afford home ownership. Amended tax return form If you qualify, you can claim the credit on Form 8396 each year for part of the home mortgage interest you pay. Amended tax return form Who qualifies. Amended tax return form   You may be eligible for the credit if you were issued a qualified Mortgage Credit Certificate (MCC) from your state or local government. Amended tax return form Generally, an MCC is issued only in connection with a new mortgage for the purchase of your main home. Amended tax return form The MCC will show the certificate credit rate you will use to figure your credit. Amended tax return form It also will show the certified indebtedness amount. Amended tax return form Only the interest on that amount qualifies for the credit. Amended tax return form See Figuring the Credit , later. Amended tax return form You must contact the appropriate government agency about getting an MCC before you get a mortgage and buy your home. Amended tax return form Contact your state or local housing finance agency for information about the availability of MCCs in your area. Amended tax return form How to claim the credit. Amended tax return form   To claim the credit, complete Form 8396 and attach it to your Form 1040 or Form 1040NR, U. Amended tax return form S. Amended tax return form Nonresident Alien Income Tax Return. Amended tax return form Include the credit in your total for Form 1040, line 53, or Form 1040NR, line 50; be sure to check box c and write “Form 8396” on that line. Amended tax return form Reducing your home mortgage interest deduction. Amended tax return form   If you itemize your deductions on Schedule A (Form 1040), you must reduce your home mortgage interest deduction by the amount of the mortgage interest credit shown on Form 8396, line 3. Amended tax return form You must do this even if part of that amount is to be carried forward to 2014. Amended tax return form Selling your home. Amended tax return form   If you purchase a home after 1990 using an MCC, and you sell that home within 9 years, you may have to recapture (repay) all or part of the benefit you received from the MCC program. Amended tax return form For additional information, see Recapturing (Paying Back) a Federal Mortgage Subsidy, in Publication 523. Amended tax return form Figuring the Credit Figure your credit on Form 8396. Amended tax return form Mortgage not more than certified indebtedness. Amended tax return form   If your mortgage loan amount is equal to (or smaller than) the certified indebtedness amount shown on your MCC, enter on Form 8396, line 1, all the interest you paid on your mortgage during the year. Amended tax return form Mortgage more than certified indebtedness. Amended tax return form   If your mortgage loan amount is larger than the certified indebtedness amount shown on your MCC, you can figure the credit on only part of the interest you paid. Amended tax return form To find the amount to enter on line 1, multiply the total interest you paid during the year on your mortgage by the following fraction. Amended tax return form Certified indebtedness amount on your MCC Original amount of your mortgage   The fraction will not change as long as you are entitled to take the mortgage interest credit. Amended tax return form Example. Amended tax return form Emily bought a home this year. Amended tax return form Her mortgage loan is $125,000. Amended tax return form The certified indebtedness amount on her MCC is $100,000. Amended tax return form She paid $7,500 interest this year. Amended tax return form Emily figures the interest to enter on Form 8396, line 1, as follows:   $100,000 = 80% (. Amended tax return form 80)       $125,000       $7,500 x . Amended tax return form 80 = $6,000   Emily enters $6,000 on Form 8396, line 1. Amended tax return form In each later year, she will figure her credit using only 80% of the interest she pays for that year. Amended tax return form Limits Two limits may apply to your credit. Amended tax return form A limit based on the credit rate, and A limit based on your tax. Amended tax return form Limit based on credit rate. Amended tax return form   If the certificate credit rate is higher than 20%, the credit you are allowed cannot be more than $2,000. Amended tax return form Limit based on tax. Amended tax return form   After applying the limit based on the credit rate, your credit generally cannot be more than your tax liability. Amended tax return form See the Credit Limit Worksheet in the Form 8396 instructions to calculate the limit based on tax. Amended tax return form Dividing the Credit If two or more persons (other than a married couple filing a joint return) hold an interest in the home to which the MCC relates, the credit must be divided based on the interest held by each person. Amended tax return form Example. Amended tax return form John and his brother, George, were issued an MCC. Amended tax return form They used it to get a mortgage on their main home. Amended tax return form John has a 60% ownership interest in the home, and George has a 40% ownership interest in the home. Amended tax return form John paid $5,400 mortgage interest this year and George paid $3,600. Amended tax return form The MCC shows a credit rate of 25% and a certified indebtedness amount of $130,000. Amended tax return form The loan amount (mortgage) on their home is $120,000. Amended tax return form The credit is limited to $2,000 because the credit rate is more than 20%. Amended tax return form John figures the credit by multiplying the mortgage interest he paid this year ($5,400) by the certificate credit rate (25%) for a total of $1,350. Amended tax return form His credit is limited to $1,200 ($2,000 × 60%). Amended tax return form George figures the credit by multiplying the mortgage interest he paid this year ($3,600) by the certificate credit rate (25%) for a total of $900. Amended tax return form His credit is limited to $800 ($2,000 × 40%). Amended tax return form Carryforward If your allowable credit is reduced because of the limit based on your tax, you can carry forward the unused portion of the credit to the next 3 years or until used, whichever comes first. Amended tax return form Example. Amended tax return form You receive a mortgage credit certificate from State X. Amended tax return form This year, your regular tax liability is $1,100, you owe no alternative minimum tax, and your mortgage interest credit is $1,700. Amended tax return form You claim no other credits. Amended tax return form Your unused mortgage interest credit for this year is $600 ($1,700 − $1,100). Amended tax return form You can carry forward this amount to the next 3 years or until used, whichever comes first. Amended tax return form Credit rate more than 20%. Amended tax return form   If you are subject to the $2,000 limit because your certificate credit rate is more than 20%, you cannot carry forward any amount more than $2,000 (or your share of the $2,000 if you must divide the credit). Amended tax return form Example. Amended tax return form In the earlier example under Dividing the Credit , John and George used the entire $2,000 credit. Amended tax return form The excess   John $1,350 − $1,200 = $150     George $900 − $800 = $100   $150 for John ($1,350 − $1,200) and $100 for George ($900 − $800) cannot be carried forward to future years, despite the respective tax liabilities for John and George. Amended tax return form Refinancing If you refinance your original mortgage loan on which you had been given an MCC, you must get a new MCC to be able to claim the credit on the new loan. Amended tax return form The amount of credit you can claim on the new loan may change. Amended tax return form Table 2 below summarizes how to figure your credit if you refinance your original mortgage loan. Amended tax return form Table 2. Amended tax return form Effect of Refinancing on Your Credit IF you get a new (reissued) MCC and the amount of your new mortgage is . Amended tax return form . Amended tax return form . Amended tax return form THEN the interest you claim on Form 8396, line 1, is* . Amended tax return form . Amended tax return form . Amended tax return form smaller than or equal to the certified indebtedness amount on the new MCC all the interest paid during the year on your new mortgage. Amended tax return form larger than the certified indebtedness amount on the new MCC interest paid during the year on your new mortgage multiplied by the following fraction. Amended tax return form         certified indebtedness  amount on your new MCC       original amount of your  mortgage   *The credit using the new MCC cannot be more than the credit using the old MCC. Amended tax return form  See New MCC cannot increase your credit above. Amended tax return form An issuer may reissue an MCC after you refinance your mortgage. Amended tax return form If you did not get a new MCC, you may want to contact the state or local housing finance agency that issued your original MCC for information about whether you can get a reissued MCC. Amended tax return form Year of refinancing. Amended tax return form   In the year of refinancing, add the applicable amount of interest paid on the old mortgage and the applicable amount of interest paid on the new mortgage, and enter the total on Form 8396, line 1. Amended tax return form   If your new MCC has a credit rate different from the rate on the old MCC, you must attach a statement to Form 8396. Amended tax return form The statement must show the calculation for lines 1, 2, and 3 for the part of the year when the old MCC was in effect. Amended tax return form It must show a separate calculation for the part of the year when the new MCC was in effect. Amended tax return form Combine the amounts from both calculations for line 3, enter the total on line 3 of the form, and write “See attached” on the dotted line next to line 2. Amended tax return form New MCC cannot increase your credit. Amended tax return form   The credit that you claim with your new MCC cannot be more than the credit that you could have claimed with your old MCC. Amended tax return form   In most cases, the agency that issues your new MCC will make sure that it does not increase your credit. Amended tax return form However, if either your old loan or your new loan has a variable (adjustable) interest rate, you will need to check this yourself. Amended tax return form In that case, you will need to know the amount of the credit you could have claimed using the old MCC. Amended tax return form   There are two methods for figuring the credit you could have claimed. Amended tax return form Under one method, you figure the actual credit that would have been allowed. Amended tax return form This means you use the credit rate on the old MCC and the interest you would have paid on the old loan. Amended tax return form   If your old loan was a variable rate mortgage, you can use another method to determine the credit that you could have claimed. Amended tax return form Under this method, you figure the credit using a payment schedule of a hypothetical self-amortizing mortgage with level payments projected to the final maturity date of the old mortgage. Amended tax return form The interest rate of the hypothetical mortgage is the annual percentage rate (APR) of the new mortgage for purposes of the Federal Truth in Lending Act. Amended tax return form The principal of the hypothetical mortgage is the remaining outstanding balance of the certified mortgage indebtedness shown on the old MCC. Amended tax return form    You must choose one method and use it consistently beginning with the first tax year for which you claim the credit based on the new MCC. Amended tax return form    As part of your tax records, you should keep your old MCC and the schedule of payments for your old mortgage. Amended tax return form Basis Basis is your starting point for figuring a gain or loss if you later sell your home, or for figuring depreciation if you later use part of your home for business purposes or for rent. Amended tax return form While you own your home, you may add certain items to your basis. Amended tax return form You may subtract certain other items from your basis. Amended tax return form These items are called adjustments to basis and are explained later under Adjusted Basis . Amended tax return form It is important that you understand these terms when you first acquire your home because you must keep track of your basis and adjusted basis during the period you own your home. Amended tax return form You also must keep records of the events that affect basis or adjusted basis. Amended tax return form See Keeping Records , below. Amended tax return form Figuring Your Basis How you figure your basis depends on how you acquire your home. Amended tax return form If you buy or build your home, your cost is your basis. Amended tax return form If you receive your home as a gift, your basis is usually the same as the adjusted basis of the person who gave you the property. Amended tax return form If you inherit your home from a decedent, different rules apply depending on the date of the decedent's death. Amended tax return form Each of these topics is discussed later. Amended tax return form Property transferred from a spouse. Amended tax return form   If your home is transferred to you from your spouse, or from your former spouse as a result of a divorce, your basis is the same as your spouse's (or former spouse's) adjusted basis just before the transfer. Amended tax return form Publication 504, Divorced or Separated Individuals, fully discusses transfers between spouses. Amended tax return form Cost as Basis The cost of your home, whether you purchased it or constructed it, is the amount you paid for it, including any debt you assumed. Amended tax return form The cost of your home includes most settlement or closing costs you paid when you bought the home. Amended tax return form If you built your home, your cost includes most closing costs paid when you bought the land or settled on your mortgage. Amended tax return form See Settlement or closing costs , later. Amended tax return form If you elect to deduct the sales taxes on the purchase or construction of your home as an itemized deduction on Schedule A (Form 1040), you cannot include the sales taxes as part of your cost basis in the home. Amended tax return form Purchase. Amended tax return form   The basis of a home you bought is the amount you paid for it. Amended tax return form This usually includes your down payment and any debt you assumed. Amended tax return form The basis of a cooperative apartment is the amount you paid for your shares in the corporation that owns or controls the property. Amended tax return form This amount includes any purchase commissions or other costs of acquiring the shares. Amended tax return form Construction. Amended tax return form   If you contracted to have your home built on land that you own, your basis in the home is your basis in the land plus the amount you paid to have the home built. Amended tax return form This includes the cost of labor and materials, the amount you paid the contractor, any architect's fees, building permit charges, utility meter and connection charges, and legal fees that are directly connected with building your home. Amended tax return form If you built all or part of your home yourself, your basis is the total amount it cost you to build it. Amended tax return form You cannot include in basis the value of your own labor or any other labor for which you did not pay. Amended tax return form Real estate taxes. Amended tax return form   Real estate taxes are usually divided so that you and the seller each pay taxes for the part of the property tax year that each owned the home. Amended tax return form See the earlier discussion of Real estate taxes paid at settlement or closing , under Real Estate Taxes, earlier, to figure the real estate taxes you paid or are considered to have paid. Amended tax return form   If you pay any part of the seller's share of the real estate taxes (the taxes up to the date of sale), and the seller did not reimburse you, add those taxes to your basis in the home. Amended tax return form You cannot deduct them as taxes paid. Amended tax return form   If the seller paid any of your share of the real estate taxes (the taxes beginning with the date of sale), you can still deduct those taxes. Amended tax return form Do not include those taxes in your basis. Amended tax return form If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. Amended tax return form Example 1. Amended tax return form You bought your home on September 1. Amended tax return form The property tax year in your area is the calendar year, and the tax is due on August 15. Amended tax return form The real estate taxes on the home you bought were $1,275 for the year and had been paid by the seller on August 15. Amended tax return form You did not reimburse the seller for your share of the real estate taxes from September 1 through December 31. Amended tax return form You must reduce the basis of your home by the $426 [(122 ÷ 365) × $1,275] the seller paid for you. Amended tax return form You can deduct your $426 share of real estate taxes on your return for the year you purchased your home. Amended tax return form Example 2. Amended tax return form You bought your home on May 3, 2013. Amended tax return form The property tax year in your area is the calendar year. Amended tax return form The taxes for the previous year are assessed on January 2 and are due on May 31 and November 30. Amended tax return form Under state law, the taxes become a lien on May 31. Amended tax return form You agreed to pay all taxes due after the date of sale. Amended tax return form The taxes due in 2013 for 2012 were $1,375. Amended tax return form The taxes due in 2014 for 2013 will be $1,425. Amended tax return form You cannot deduct any of the taxes paid in 2013 because they relate to the 2012 property tax year and you did not own the home until 2013. Amended tax return form Instead, you add the $1,375 to the cost (basis) of your home. Amended tax return form You owned the home in 2013 for 243 days (May 3 to December 31), so you can take a tax deduction on your 2014 return of $949 [(243 ÷ 365) × $1,425] paid in 2014 for 2013. Amended tax return form You add the remaining $476 ($1,425 − $949) of taxes paid in 2014 to the cost (basis) of your home. Amended tax return form Settlement or closing costs. Amended tax return form   If you bought your home, you probably paid settlement or closing costs in addition to the contract price. Amended tax return form These costs are divided between you and the seller according to the sales contract, local custom, or understanding of the parties. Amended tax return form If you built your home, you probably paid these costs when you bought the land or settled on your mortgage. Amended tax return form   The only settlement or closing costs you can deduct are home mortgage interest and certain real estate taxes. Amended tax return form You deduct them in the year you buy your home if you itemize your deductions. Amended tax return form You can add certain other settlement or closing costs to the basis of your home. Amended tax return form Items added to basis. Amended tax return form   You can include in your basis the settlement fees and closing costs you paid for buying your home. Amended tax return form A fee is for buying the home if you would have had to pay it even if you paid cash for the home. Amended tax return form   The following are some of the settlement fees and closing costs that you can include in the original basis of your home. Amended tax return form Abstract fees (abstract of title fees). Amended tax return form Charges for installing utility services. Amended tax return form Legal fees (including fees for the title search and preparation of the sales contract and deed). Amended tax return form Recording fees. Amended tax return form Surveys. Amended tax return form Transfer or stamp taxes. Amended tax return form Owner's title insurance. Amended tax return form Any amount the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, cost for improvements or repairs, and sales commissions. Amended tax return form   If the seller actually paid for any item for which you are liable and for which you can take a deduction (such as your share of the real estate taxes for the year of sale), you must reduce your basis by that amount unless you are charged for it in the settlement. Amended tax return form Items not added to basis and not deductible. Amended tax return form   Here are some settlement and closing costs that you cannot deduct or add to your basis. Amended tax return form Fire insurance premiums. Amended tax return form Charges for using utilities or other services related to occupancy of the home before closing. Amended tax return form Rent for occupying the home before closing. Amended tax return form Charges connected with getting or refinancing a mortgage loan, such as: Loan assumption fees, Cost of a credit report, and Fee for an appraisal required by a lender. Amended tax return form Points paid by seller. Amended tax return form   If you bought your home after April 3, 1994, you must reduce your basis by any points paid for your mortgage by the person who sold you your home. Amended tax return form   If you bought your home after 1990 but before April 4, 1994, you must reduce your basis by seller-paid points only if you deducted them. Amended tax return form See Points , earlier, for the rules on deducting points. Amended tax return form Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined later) to the donor just before it was given to you, its fair market value (FMV) at the time it was given to you, and any gift tax paid on it. Amended tax return form Fair market value. Amended tax return form   Fair market value (FMV) is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and who both have a reasonable knowledge of all the necessary facts. Amended tax return form Donor's adjusted basis is more than FMV. Amended tax return form   If someone gave you your home and the donor's adjusted basis, when it was given to you, was more than the FMV, your basis at the time of receipt is the same as the donor's adjusted basis. Amended tax return form Disposition basis. Amended tax return form   If the donor's adjusted basis at the time of the gift is more than the FMV, your basis (plus or minus any required adjustments, see Adjusted Basis , later) when you dispose of the property will depend on whether you have a gain or a loss. Amended tax return form Your basis for figuring a gain is the same as the donor's adjusted basis. Amended tax return form Your basis for figuring a loss is the FMV when you received the gift. Amended tax return form If you use the donor's adjusted basis to figure a gain and it results in a loss, then you must use the FMV (at the time of the gift) to refigure the loss. Amended tax return form However, if using the FMV results in a gain, then you neither have a gain nor a loss. Amended tax return form Example 1. Amended tax return form Andrew received a house as a gift from Ishmael (the donor). Amended tax return form At the time of the gift, the home had an FMV of $80,000. Amended tax return form Ishmael's adjusted basis was $100,000. Amended tax return form After he received the house, no events occurred to increase or decrease the basis. Amended tax return form If Andrew sells the house for $120,000, he will have a $20,000 gain because he must use the donor's adjusted basis ($100,000) at the time of the gift as his basis to figure the gain. Amended tax return form Example 2. Amended tax return form Same facts as Example 1 , except this time Andrew sells the house for $70,000. Amended tax return form He will have a loss of $10,000 because he must use the FMV ($80,000) at the time of the gift as his basis to figure the loss. Amended tax return form Example 3. Amended tax return form Same facts as Example 1 , except this time Andrew sells the house for $90,000. Amended tax return form Initially, he figures the gain using Ishmael's adjusted basis ($100,000), which results in a loss of $10,000. Amended tax return form Since it is a loss, Andrew must now recalculate the loss using the FMV ($80,000), which results in a gain of $10,000. Amended tax return form So in this situation, Andrew will neither have a gain nor a loss. Amended tax return form Donor's adjusted basis equal to or less than the FMV. Amended tax return form   If someone gave you your home after 1976 and the donor's adjusted basis, when it was given to you, was equal to or less than the FMV, your basis at the time of receipt is the same as the donor's adjusted basis, plus the part of any federal gift tax paid that is due to the net increase in value of the home. Amended tax return form Part of federal gift tax due to net increase in value. Amended tax return form   Figure the part of the federal gift tax paid that is due to the net increase in value of the home by multiplying the total federal gift tax paid by a fraction. Amended tax return form The numerator (top part) of the fraction is the net increase in the value of the home, and the denominator (bottom part) is the value of the home for gift tax purposes after reduction for any annual exclusion and marital or charitable deduction that applies to the gift. Amended tax return form The net increase in the value of the home is its FMV minus the adjusted basis of the donor. Amended tax return form Publication 551 gives more information, including examples, on figuring your basis when you receive property as a gift. Amended tax return form Inheritance Your basis in a home you inherited is generally the fair market value of the home on the date of the decedent's death or on the alternative valuation date if the personal representative for the estate chooses to use alternative valuation. Amended tax return form If an estate tax return was filed, your basis is generally the value of the home listed on the estate tax return. Amended tax return form If an estate tax return was not filed, your basis is the appraised value of the home at the decedent's date of death for state inheritance or transmission taxes. Amended tax return form Publication 551 and Publication 559, Survivors, Executors, and Administrators, have more information on the basis of inherited property. Amended tax return form If you inherited your home from someone who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. Amended tax return form Adjusted Basis While you own your home, various events may take place that can change the original basis of your home. Amended tax return form These events can increase or decrease your original basis. Amended tax return form The result is called adjusted basis. Amended tax return form See Table 3, on this page, for a list of some of the items that can adjust your basis. Amended tax return form Table 3. Amended tax return form Adjusted Basis This table lists examples of some items that generally will increase or decrease your basis in your home. Amended tax return form It is not intended to be all-inclusive. Amended tax return form Increases to Basis Decreases to Basis Improvements: Putting an addition on your home Replacing an entire roof Paving your driveway Installing central air conditioning Rewiring your home Assessments for local improvements (see Assessments for local benefits , under What You Can and Cannot Deduct, earlier) Amounts spent to restore damaged property Insurance or other reimbursement for casualty losses Deductible casualty loss not covered by insurance Payments received for easement or right-of-way granted Depreciation allowed or allowable if home is used for business or rental purposes Value of subsidy for energy conservation measure excluded from income Improvements. Amended tax return form   An improvement materially adds to the value of your home, considerably prolongs its useful life, or adapts it to new uses. Amended tax return form You must add the cost of any improvements to the basis of your home. Amended tax return form You cannot deduct these costs. Amended tax return form   Improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, and paving your driveway. Amended tax return form Amount added to basis. Amended tax return form   The amount you add to your basis for improvements is your actual cost. Amended tax return form This includes all costs for material and labor, except your own labor, and all expenses related to the improvement. Amended tax return form For example, if you had your lot surveyed to put up a fence, the cost of the survey is a part of the cost of the fence. Amended tax return form   You also must add to your basis state and local assessments for improvements such as streets and sidewalks if they increase the value of the property. Amended tax return form These assessments are discussed earlier under Real Estate Taxes . Amended tax return form Improvements no longer part of home. Amended tax return form    Your home's adjusted basis does not include the cost of any improvements that are replaced and are no longer part of the home. Amended tax return form Example. Amended tax return form You put wall-to-wall carpeting in your home 15 years ago. Amended tax return form Later, you replaced that carpeting with new wall-to-wall carpeting. Amended tax return form The cost of the old carpeting you replaced is no longer part of your home's adjusted basis. Amended tax return form Repairs versus improvements. Amended tax return form   A repair keeps your home in an ordinary, efficient operating condition. Amended tax return form It does not add to the value of your home or prolong its life. Amended tax return form Repairs include repainting your home inside or outside, fixing your gutters or floors, fixing leaks or plastering, and replacing broken window panes. Amended tax return form You cannot deduct repair costs and generally cannot add them to the basis of your home. Amended tax return form   However, repairs that are done as part of an extensive remodeling or restoration of your home are considered improvements. Amended tax return form You add them to the basis of your home. Amended tax return form Records to keep. Amended tax return form   You can use Table 4 (at the end of the publication) as a guide to help you keep track of improvements to your home. Amended tax return form Also see Keeping Records , below. Amended tax return form Energy conservation subsidy. Amended tax return form   If a public utility gives you (directly or indirectly) a subsidy for the purchase or installation of an energy conservation measure for your home, do not include the value of that subsidy in your income. Amended tax return form You must reduce the basis of your home by that value. Amended tax return form   An energy conservation measure is an installation or modification primarily designed to reduce consumption of electricity or natural gas or to improve the management of energy demand. Amended tax return form Keeping Records Keeping full and accurate records is vital to properly report your income and expenses, to support your deductions and credits, and to know the basis or adjusted basis of your home. Amended tax return form These records include your purchase contract and settlement papers if you bought the property, or other objective evidence if you acquired it by gift, inheritance, or similar means. Amended tax return form You should keep any receipts, canceled checks, and similar evidence for improvements or other additions to the basis. Amended tax return form In addition, you should keep track of any decreases to the basis such as those listed in Table 3, earlier. Amended tax return form How to keep records. Amended tax return form   How you keep records is up to you, but they must be clear and accurate and must be available to the IRS. Amended tax return form How long to keep records. Amended tax return form   You must keep your records for as long as they are important for meeting any provision of the federal tax law. Amended tax return form   Keep records that support an item of income, a deduction, or a credit appearing on a return until the period of limitations for the return runs out. Amended tax return form (A period of limitations is the period of time after which no legal action can be brought. Amended tax return form ) For assessment of tax you owe, this is generally 3 years from the date you filed the return. Amended tax return form For filing a claim for credit or refund, this is generally 3 years from the date you filed the original return, or 2 years from the date you paid the tax, whichever is later. Amended tax return form Returns filed before the due date are treated as filed on the due date. Amended tax return form   You may need to keep records relating to the basis of property (discussed earlier) for longer than the period of limitations. Amended tax return form Keep those records as long as they are important in figuring the basis of the original or replacement property. Amended tax return form Generally, this means for as long as you own the property and, after you dispose of it, for the period of limitations that applies to you. Amended tax return form Table 4. Amended tax return form Record of Home Improvements Keep this for your records. Amended tax return form Also, keep receipts or other proof of improvements. Amended tax return form Remove from this record any improvements that are no longer part of your main home. Amended tax return form For example, if you put wall-to-wall carpeting in your home and later replace it with new wall-to-wall carpeting, remove the cost of the first carpeting. Amended tax return form (a) Type of Improvement (b) Date (c) Amount   (a) Type of Improvement (b) Date (c) Amount Additions:       Heating & Air  Conditioning:     Bedroom       Heating system     Bathroom       Central air conditioning     Deck       Furnace     Garage       Duct work     Porch       Central humidifier     Patio       Filtration system     Storage shed       Other     Fireplace       Electrical:     Other           Lawn & Grounds:       Lighting fixtures           Wiring upgrades     Landscaping       Other     Driveway       Plumbing:     Walkway           Fences       Water heater     Retaining wall       Soft water system     Sprinkler system       Filtration system     Swimming pool       Other     Exterior lighting       Insulation:     Other           Communications:       Attic           Walls     Satellite dish       Floors     Intercom       Pipes and duct work     Security system       Other     Other             Miscellaneous:       Interior  Improvements:     Storm windows and doors       Built-in appliances     Roof       Kitchen modernization     Central vacuum       Bathroom modernization     Other       Flooring             Wall-to-wall carpeting             Other     How To
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Housing Office (HUD)

The Housing Office regulates the housing industry and administers the Federal Housing Adminstration. The regulatory programs administered by the Housing Office include single family housing and multifamily housing programs.

The Amended Tax Return Form

Amended tax return form 32. Amended tax return form   Child and Dependent Care Credit Table of Contents Reminders Introduction Useful Items - You may want to see: Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. Amended tax return form Employment Taxes for Household Employers Reminders Taxpayer identification number needed for each qualifying person. Amended tax return form  You must include on line 2 of Form 2441 the name and taxpayer identification number (generally the social security number) of each qualifying person. Amended tax return form See Taxpayer identification number under Qualifying Person Test, later. Amended tax return form You may have to pay employment taxes. Amended tax return form  If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer who has to pay employment taxes. Amended tax return form Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. Amended tax return form See Employment Taxes for Household Employers , later. Amended tax return form Introduction This chapter discusses the credit for child and dependent care expenses and covers the following topics. Amended tax return form Tests you must meet to claim the credit. Amended tax return form How to figure the credit. Amended tax return form How to claim the credit. Amended tax return form Employment taxes you may have to pay as a household employer. Amended tax return form You may be able to claim the credit if you pay someone to care for your dependent who is under age 13 or for your spouse or dependent who is not able to care for himself or herself. Amended tax return form The credit can be up to 35% of your expenses. Amended tax return form To qualify, you must pay these expenses so you can work or look for work. Amended tax return form This credit should not be confused with the child tax credit discussed in chapter 34. Amended tax return form Dependent care benefits. Amended tax return form   If you received any dependent care benefits from your employer during the year, you may be able to exclude from your income all or part of them. Amended tax return form You must complete Form 2441, Part III, before you can figure the amount of your credit. Amended tax return form See Dependent Care Benefits under How To Figure the Credit, later. Amended tax return form Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 503 Child and Dependent Care Expenses 926 Household Employer's Tax Guide Form (and Instructions) 2441 Child and Dependent Care Expenses Schedule H (Form 1040) Household Employment Taxes W-7 Application for IRS Individual Taxpayer Identification Number W-10 Dependent Care Provider's Identification and Certification Tests To Claim the Credit To be able to claim the credit for child and dependent care expenses, you must file Form 1040 or Form 1040A, not Form 1040EZ, and meet all the following tests. Amended tax return form The care must be for one or more qualifying persons who are identified on Form 2441. Amended tax return form (See Qualifying Person Test . Amended tax return form ) You (and your spouse if filing jointly) must have earned income during the year. Amended tax return form (However, see Rule for student-spouse or spouse not able to care for self under Earned Income Test, later. Amended tax return form ) You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. Amended tax return form (See Work-Related Expense Test , later. Amended tax return form ) You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. Amended tax return form If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. Amended tax return form You cannot make payments to: Your spouse, or The parent of your qualifying person if your qualifying person is your child and under age 13. Amended tax return form (See Payments to Relatives or Dependents under Work-Related Expense Test, later. Amended tax return form ) Your filing status may be single, head of household, or qualifying widow(er) with dependent child. Amended tax return form If you are married, you must file a joint return, unless an exception applies to you. Amended tax return form (See Joint Return Test , later. Amended tax return form ) You must identify the care provider on your tax return. Amended tax return form (See Provider Identification Test , later. Amended tax return form ) If you exclude or deduct dependent care benefits provided by a dependent care benefits plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). Amended tax return form (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000. Amended tax return form See Reduced Dollar Limit under How To Figure the Credit, later. Amended tax return form ) These tests are presented in Figure 32-A and are also explained in detail in this chapter. Amended tax return form Figure 32-A. Amended tax return form Can You Claim the Credit? Please click here for the text description of the image. Amended tax return form Figure 32-A Can You Claim the Credit? Qualifying Person Test Your child and dependent care expenses must be for the care of one or more qualifying persons. Amended tax return form A qualifying person is: Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart, later), Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Amended tax return form Dependent defined. Amended tax return form   A dependent is a person, other than you or your spouse, for whom you can claim an exemption. Amended tax return form To be your dependent, a person must be your qualifying child (or your qualifying relative). Amended tax return form Qualifying child. Amended tax return form   To be your qualifying child, a child must live with you for more than half the year and meet other requirements. Amended tax return form More information. Amended tax return form   For more information about who is a dependent or a qualifying child, see chapter 3. Amended tax return form Physically or mentally not able to care for oneself. Amended tax return form   Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. Amended tax return form Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves. Amended tax return form Person qualifying for part of year. Amended tax return form   You determine a person's qualifying status each day. Amended tax return form For example, if the person for whom you pay child and dependent care expenses no longer qualifies on September 16, count only those expenses through September 15. Amended tax return form Also see Yearly limit under Dollar Limit, later. Amended tax return form Birth or death of otherwise qualifying person. Amended tax return form   In determining whether a person is a qualifying person, a person who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the person's home for more than half the time he or she was alive in 2013. Amended tax return form Taxpayer identification number. Amended tax return form   You must include on your return the name and taxpayer identification number (generally the social security number) of the qualifying person(s). Amended tax return form If the correct information is not shown, the credit may be reduced or disallowed. Amended tax return form Individual taxpayer identification number (ITIN) for aliens. Amended tax return form   If your qualifying person is a nonresident or resident alien who does not have and cannot get a social security number (SSN), use that person's ITIN. Amended tax return form The ITIN is entered wherever an SSN is requested on a tax return. Amended tax return form To apply for an ITIN, see Form W-7. Amended tax return form   An ITIN is for tax use only. Amended tax return form It does not entitle the holder to social security benefits or change the holder's employment or immigration status under U. Amended tax return form S. Amended tax return form law. Amended tax return form Adoption taxpayer identification number (ATIN). Amended tax return form   If your qualifying person is a child who was placed in your home for adoption and for whom you do not have an SSN, you must get an ATIN for the child. Amended tax return form File Form W-7A, Application for Taxpayer Identification Number for Pending U. Amended tax return form S. Amended tax return form Adoptions. Amended tax return form Child of divorced or separated parents or parents living apart. Amended tax return form   Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if: The child was under age 13 or was not physically or mentally able to care for himself or herself, The child received over half of his or her support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year, The child was in the custody of one or both parents for more than half the year, and You were the child's custodial parent. Amended tax return form   The custodial parent is the parent with whom the child lived for the greater number of nights in 2013. Amended tax return form If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. Amended tax return form For details and an exception for a parent who works at night, see Pub. Amended tax return form 501. Amended tax return form   The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. Amended tax return form Earned Income Test To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. Amended tax return form Earned income. Amended tax return form   Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. Amended tax return form A net loss from self-employment reduces earned income. Amended tax return form Earned income also includes strike benefits and any disability pay you report as wages. Amended tax return form   Generally, only taxable compensation is included. Amended tax return form However, you can elect to include nontaxable combat pay in earned income. Amended tax return form If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. Amended tax return form (In other words, if one of you makes the election, the other one can also make it but does not have to. Amended tax return form ) You should figure your credit both ways and make the election if it gives you a greater tax benefit. Amended tax return form Members of certain religious faiths opposed to social security. Amended tax return form   Certain income earned by persons who are members of certain religious faiths that are opposed to participation in Social Security Act programs and have an IRS-approved form that exempts certain income from social security and Medicare taxes may not be considered earned income for this purpose. Amended tax return form See Earned Income Test in Publication 503. Amended tax return form Not earned income. Amended tax return form   Earned income does not include: Pensions and annuities, Social security and railroad retirement benefits, Workers' compensation, Interest and dividends, Unemployment compensation, Scholarship or fellowship grants, except for those reported on a Form W-2 and paid to you for teaching or other services, Nontaxable workfare payments, Child support payments received by you, Income of nonresident aliens that is not effectively connected with a U. Amended tax return form S. Amended tax return form trade or business, or Any amount received for work while an inmate in a penal institution. Amended tax return form Rule for student-spouse or spouse not able to care for self. Amended tax return form   Your spouse is treated as having earned income for any month that he or she is: A full-time student, or Physically or mentally not able to care for himself or herself. Amended tax return form (Your spouse also must live with you for more than half the year. Amended tax return form )   If you are filing a joint return, this rule also applies to you. Amended tax return form You can be treated as having earned income for any month you are a full-time student or not able to care for yourself. Amended tax return form   Figure the earned income of the nonworking spouse described under (1) or (2) above as explained under Earned Income Limit , later. Amended tax return form   This rule applies to only one spouse for any one month. Amended tax return form If, in the same month, both you and your spouse do not work and are either full-time students or not physically or mentally able to care for yourselves, only one of you can be treated as having earned income in that month. Amended tax return form Full-time student. Amended tax return form   You are a full-time student if you are enrolled at a school for the number of hours or classes that the school considers full time. Amended tax return form You must have been a full-time student for some part of each of 5 calendar months during the year. Amended tax return form (The months need not be consecutive. Amended tax return form ) School. Amended tax return form   The term “school” includes high schools, colleges, universities, and technical, trade, and mechanical schools. Amended tax return form A school does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. Amended tax return form Work-Related Expense Test Child and dependent care expenses must be work-related to qualify for the credit. Amended tax return form Expenses are considered work-related only if both of the following are true. Amended tax return form They allow you (and your spouse if filing jointly) to work or look for work. Amended tax return form They are for a qualifying person's care. Amended tax return form Working or Looking for Work To be work-related, your expenses must allow you to work or look for work. Amended tax return form If you are married, generally both you and your spouse must work or look for work. Amended tax return form One spouse is treated as working during any month he or she is a full-time student or is not physically or mentally able to care for himself or herself. Amended tax return form Your work can be for others or in your own business or partnership. Amended tax return form It can be either full time or part time. Amended tax return form Work also includes actively looking for work. Amended tax return form However, if you do not find a job and have no earned income for the year, you cannot take this credit. Amended tax return form See Earned Income Test , earlier. Amended tax return form An expense is not considered work-related merely because you had it while you were working. Amended tax return form The purpose of the expense must be to allow you to work. Amended tax return form Whether your expenses allow you to work or look for work depends on the facts. Amended tax return form Example 1. Amended tax return form The cost of a babysitter while you and your spouse go out to eat is not normally a work-related expense. Amended tax return form Example 2. Amended tax return form You work during the day. Amended tax return form Your spouse works at night and sleeps during the day. Amended tax return form You pay for care of your 5-year-old child during the hours when you are working and your spouse is sleeping. Amended tax return form Your expenses are considered work-related. Amended tax return form Volunteer work. Amended tax return form    For this purpose, you are not considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary. Amended tax return form Work for part of year. Amended tax return form   If you work or actively look for work during only part of the period covered by the expenses, then you must figure your expenses for each day. Amended tax return form For example, if you work all year and pay care expenses of $250 a month ($3,000 for the year), all the expenses are work-related. Amended tax return form However, if you work or look for work for only 2 months and 15 days during the year and pay expenses of $250 a month, your work-related expenses are limited to $625 (2½ months × $250). Amended tax return form Temporary absence from work. Amended tax return form   You do not have to figure your expenses for each day during a short, temporary absence from work, such as for vacation or a minor illness, if you have to pay for care anyway. Amended tax return form Instead, you can figure your credit including the expenses you paid for the period of absence. Amended tax return form   An absence of 2 weeks or less is a short, temporary absence. Amended tax return form An absence of more than 2 weeks may be considered a short, temporary absence, depending on the circumstances. Amended tax return form Example. Amended tax return form You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. Amended tax return form You become ill and miss 4 months of work but receive sick pay. Amended tax return form You continue to pay the nanny to care for the children while you are ill. Amended tax return form Your absence is not a short, temporary absence, and your expenses are not considered work-related. Amended tax return form Part-time work. Amended tax return form   If you work part-time, you generally must figure your expenses for each day. Amended tax return form However, if you have to pay for care weekly, monthly, or in another way that includes both days worked and days not worked, you can figure your credit including the expenses you paid for days you did not work. Amended tax return form Any day when you work at least 1 hour is a day of work. Amended tax return form Example 1. Amended tax return form You work 3 days a week. Amended tax return form While you work, your 6-year-old child attends a dependent care center, which complies with all state and local regulations. Amended tax return form You can pay the center $150 for any 3 days a week or $250 for 5 days a week. Amended tax return form Your child attends the center 5 days a week. Amended tax return form Your work-related expenses are limited to $150 a week. Amended tax return form Example 2. Amended tax return form The facts are the same as in Example 1 except the center does not offer a 3-day option. Amended tax return form The entire $250 weekly fee may be a work-related expense. Amended tax return form Care of a Qualifying Person To be work-related, your expenses must be to provide care for a qualifying person. Amended tax return form You do not have to choose the least expensive way of providing care. Amended tax return form The cost of a paid care provider may be an expense for the care of a qualifying person even if another care provider is available at no cost. Amended tax return form Expenses are for the care of a qualifying person only if their main purpose is the person's well-being and protection. Amended tax return form Expenses for household services qualify if part of the services is for the care of qualifying persons. Amended tax return form See Household services , later. Amended tax return form Expenses not for care. Amended tax return form   Expenses for care do not include amounts you pay for food, lodging, clothing, education, and entertainment. Amended tax return form However, you can include small amounts paid for these items if they are incidental to and cannot be separated from the cost of caring for the qualifying person. Amended tax return form   Child support payments are not for care and do not qualify for the credit. Amended tax return form Education. Amended tax return form   Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. Amended tax return form Expenses to attend kindergarten or a higher grade are not expenses for care. Amended tax return form Do not use these expenses to figure your credit. Amended tax return form   However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care. Amended tax return form   Summer school and tutoring programs are not for care. Amended tax return form Example 1. Amended tax return form You take your 3-year-old child to a nursery school that provides lunch and educational activities as a part of its preschool childcare service. Amended tax return form The lunch and educational activities are incidental to the childcare, and their cost cannot be separated from the cost of care. Amended tax return form You can count the total cost when you figure the credit. Amended tax return form Example 2. Amended tax return form You place your 10-year-old child in a boarding school so you can work full time. Amended tax return form Only the part of the boarding school expense that is for the care of your child is a work-related expense. Amended tax return form You can count that part of the expense in figuring your credit if it can be separated from the cost of education. Amended tax return form You cannot count any part of the amount you pay the school for your child's education. Amended tax return form Care outside your home. Amended tax return form   You can count the cost of care provided outside your home if the care is for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours each day in your home. Amended tax return form Dependent care center. Amended tax return form   You can count care provided outside your home by a dependent care center only if the center complies with all state and local regulations that apply to these centers. Amended tax return form   A dependent care center is a place that provides care for more than six persons (other than persons who live there) and receives a fee, payment, or grant for providing services for any of those persons, even if the center is not run for profit. Amended tax return form Camp. Amended tax return form   The cost of sending your child to an overnight camp is not considered a work-related expense. Amended tax return form The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer. Amended tax return form Transportation. Amended tax return form   If a care provider takes a qualifying person to or from a place where care is provided, that transportation is for the care of the qualifying person. Amended tax return form This includes transportation by bus, subway, taxi, or private car. Amended tax return form However, transportation not provided by a care provider is not for the care of a qualifying person. Amended tax return form Also, if you pay the transportation cost for the care provider to come to your home, that expense is not for care of a qualifying person. Amended tax return form Fees and deposits. Amended tax return form   Fees you paid to an agency to get the services of a care provider, deposits you paid to an agency or preschool, application fees, and other indirect expenses are work-related expenses if you have to pay them to get care, even though they are not directly for care. Amended tax return form However, a forfeited deposit is not for the care of a qualifying person if care is not provided. Amended tax return form Example 1. Amended tax return form You paid a fee to an agency to get the services of the nanny who cares for your 2-year-old daughter while you work. Amended tax return form The fee you paid is a work-related expense. Amended tax return form Example 2. Amended tax return form You placed a deposit with a preschool to reserve a place for your 3-year-old child. Amended tax return form You later sent your child to a different preschool and forfeited the deposit. Amended tax return form The forfeited deposit is not for care and so is not a work-related expense. Amended tax return form Household services. Amended tax return form   Expenses you pay for household services meet the work-related expense test if they are at least partly for the well-being and protection of a qualifying person. Amended tax return form   Household services are ordinary and usual services done in and around your home that are necessary to run your home. Amended tax return form They include the services of a housekeeper, maid, or cook. Amended tax return form However, they do not include the services of a chauffeur, bartender, or gardener. Amended tax return form See Household Services in Publication 503 for more information. Amended tax return form   In this chapter, the term housekeeper refers to any household employee whose services include the care of a qualifying person. Amended tax return form Taxes paid on wages. Amended tax return form   The taxes you pay on wages for qualifying child and dependent care services are work-related expenses. Amended tax return form See Employment Taxes for Household Employers , later. Amended tax return form Payments to Relatives or Dependents You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. Amended tax return form However, do not count any amounts you pay to: A dependent for whom you (or your spouse if filing jointly) can claim an exemption, Your child who was under age 19 at the end of the year, even if he or she is not your dependent, A person who was your spouse any time during the year, or The parent of your qualifying person if your qualifying person is your child and under age 13. Amended tax return form Joint Return Test Generally, married couples must file a joint return to take the credit. Amended tax return form However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. Amended tax return form Legally separated. Amended tax return form   You are not considered married if you are legally separated from your spouse under a decree of divorce or separate maintenance. Amended tax return form You may be eligible to take the credit on your return using head of household filing status. Amended tax return form Married and living apart. Amended tax return form   You are not considered married and are eligible to take the credit if all the following apply. Amended tax return form You file a return apart from your spouse. Amended tax return form Your home is the home of a qualifying person for more than half the year. Amended tax return form You pay more than half the cost of keeping up your home for the year. Amended tax return form Your spouse does not live in your home for the last 6 months of the year. Amended tax return form Costs of keeping up a home. Amended tax return form   The costs of keeping up a home normally include property taxes, mortgage interest, rent, utility charges, home repairs, insurance on the home, and food eaten at home. Amended tax return form   The costs of keeping up a home do not include payments for clothing, education, medical treatment, vacations, life insurance, transportation, or mortgage principal. Amended tax return form   They also do not include the purchase, permanent improvement, or replacement of property. Amended tax return form For example, you cannot include the cost of replacing a water heater. Amended tax return form However, you can include the cost of repairing a water heater. Amended tax return form Death of spouse. Amended tax return form   If your spouse died during the year and you do not remarry before the end of the year, you generally must file a joint return to take the credit. Amended tax return form If you do remarry before the end of the year, the credit can be claimed on your deceased spouse's return. Amended tax return form Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. Amended tax return form Use Form 2441, Part I, to show the information. Amended tax return form If you do not have any care providers and you are filing Form 2441 only to report taxable income in Part III, enter “none” in line 1, column (a). Amended tax return form Information needed. Amended tax return form   To identify the care provider, you must give the provider's: Name, Address, and Taxpayer identification number. Amended tax return form   If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. Amended tax return form If the care provider is an organization, then it is the employer identification number (EIN). Amended tax return form   You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). Amended tax return form In this case, enter “Tax-Exempt” in the space where Form 2441 asks for the number. Amended tax return form   If you cannot provide all of the information or if the information is incorrect, you must be able to show that you used due diligence (discussed later) in trying to furnish the necessary information. Amended tax return form Getting the information. Amended tax return form   You can use Form W-10 to request the required information from the care provider. Amended tax return form If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10 including: A copy of the provider's social security card, A copy of the provider's completed Form W-4 if he or she is your household employee, A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or A letter or invoice from the provider if it shows the information. Amended tax return form    You should keep this information with your tax records. Amended tax return form Do not send Form W-10 (or other document containing this information) to the Internal Revenue Service. Amended tax return form Due diligence. Amended tax return form   If the care provider information you give is incorrect or incomplete, your credit may not be allowed. Amended tax return form However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit. Amended tax return form   You can show due diligence by getting and keeping the provider's completed Form W-10 or one of the other sources of information just listed. Amended tax return form Care providers can be penalized if they do not provide this information to you or if they provide incorrect information. Amended tax return form Provider refusal. Amended tax return form   If the provider refuses to give you their identifying information, you should report on Form 2441 whatever information you have (such as the name and address). Amended tax return form Enter “See Attached Statement” in the columns calling for the information you do not have. Amended tax return form Then attach a statement explaining that you requested the information from the care provider, but the provider did not give you the information. Amended tax return form Be sure to write your name and social security number on this statement. Amended tax return form The statement will show that you used due diligence in trying to furnish the necessary information. Amended tax return form U. Amended tax return form S. Amended tax return form citizens and resident aliens living abroad. Amended tax return form   If you are living abroad, your care provider may not have, and may not be required to get, a U. Amended tax return form S. Amended tax return form taxpayer identification number (for example, an SSN or EIN). Amended tax return form If so, enter “LAFCP” (Living Abroad Foreign Care Provider) in the space for the care provider's taxpayer identification number. Amended tax return form How To Figure the Credit Your credit is a percentage of your work-related expenses. Amended tax return form Your expenses are subject to the earned income limit and the dollar limit. Amended tax return form The percentage is based on your adjusted gross income. Amended tax return form Figuring Total Work-Related Expenses To figure the credit for 2013 work-related expenses, count only those you paid by December 31, 2013. Amended tax return form Expenses prepaid in an earlier year. Amended tax return form   If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. Amended tax return form Claim the expenses for the later year as if they were actually paid in that later year. Amended tax return form Expenses not paid until the following year. Amended tax return form   Do not count 2012 expenses that you paid in 2013 as work-related expenses for 2013. Amended tax return form You may be able to claim an additional credit for them on your 2013 return, but you must figure it separately. Amended tax return form See Payments for prior year's expenses under Amount of Credit in Publication 503. Amended tax return form    If you had expenses in 2013 that you did not pay until 2014, you cannot count them when figuring your 2013 credit. Amended tax return form You may be able to claim a credit for them on your 2014 return. Amended tax return form Expenses reimbursed. Amended tax return form   If a state social services agency pays you a nontaxable amount to reimburse you for some of your child and dependent care expenses, you cannot count the expenses that are reimbursed as work-related expenses. Amended tax return form Example. Amended tax return form You paid work-related expenses of $3,000. Amended tax return form You are reimbursed $2,000 by a state social services agency. Amended tax return form You can use only $1,000 to figure your credit. Amended tax return form Medical expenses. Amended tax return form   Some expenses for the care of qualifying persons who are not able to care for themselves may qualify as work-related expenses and also as medical expenses. Amended tax return form You can use them either way, but you cannot use the same expenses to claim both a credit and a medical expense deduction. Amended tax return form   If you use these expenses to figure the credit and they are more than the earned income limit or the dollar limit, discussed later, you can add the excess to your medical expenses. Amended tax return form However, if you use your total expenses to figure your medical expense deduction, you cannot use any part of them to figure your credit. Amended tax return form    Amounts excluded from your income under your employer's dependent care benefits plan cannot be used to claim a medical expense deduction. Amended tax return form Dependent Care Benefits If you receive dependent care benefits, your dollar limit for purposes of the credit may be reduced. Amended tax return form See Reduced Dollar Limit , later. Amended tax return form But, even if you cannot take the credit, you may be able to take an exclusion or deduction for the dependent care benefits. Amended tax return form Dependent care benefits. Amended tax return form   Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. Amended tax return form Your salary may have been reduced to pay for these benefits. Amended tax return form If you received benefits as an employee, they should be shown in box 10 of your Form W-2. Amended tax return form See Statement for employee , later. Amended tax return form Benefits you received as a partner should be shown in box 13 of your Schedule K-1 (Form 1065) with code O. Amended tax return form Enter the amount of these benefits on Form 2441, Part III, line 12. Amended tax return form Exclusion or deduction. Amended tax return form   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Amended tax return form Your employer can tell you whether your benefit plan qualifies. Amended tax return form To claim the exclusion, you must complete Part III of Form 2441. Amended tax return form You cannot use Form 1040EZ. Amended tax return form   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. Amended tax return form Therefore, you would not get an exclusion from wages. Amended tax return form Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. Amended tax return form To claim the deduction, you must use Form 2441. Amended tax return form   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Amended tax return form The definition of earned income for the exclusion or deduction is the same as the definition used when figuring the credit except that earned income for the exclusion or deduction does not include any dependent care benefits you receive. Amended tax return form See Earned Income Limit, later. Amended tax return form    You can choose to include your nontaxable combat pay in earned income when figuring your exclusion or deduction, even if you choose not to include it in earned income for the earned income credit or the credit for child and dependent care expenses. Amended tax return form Statement for employee. Amended tax return form   Your employer must give you a Form W-2 (or similar statement) showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. Amended tax return form Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. Amended tax return form Effect of exclusion on credit. Amended tax return form   If you exclude dependent care benefits from your income, the amount of the excluded benefits: Is not included in your work-related expenses, and Reduces the dollar limit, discussed later. Amended tax return form Earned Income Limit The amount of work-related expenses you use to figure your credit cannot be more than: Your earned income for the year if you are single at the end of the year, or The smaller of your or your spouse's earned income for the year if you are married at the end of the year. Amended tax return form Earned income is defined under Earned Income Test , earlier. Amended tax return form For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year. Amended tax return form Separated spouse. Amended tax return form   If you are legally separated or married and living apart from your spouse (as described under Joint Return Test , earlier), you are not considered married for purposes of the earned income limit. Amended tax return form Use only your income in figuring the earned income limit. Amended tax return form Surviving spouse. Amended tax return form   If your spouse died during the year and you file a joint return as a surviving spouse, you may, but are not required to, take into account the earned income of your spouse who died during the year. Amended tax return form Community property laws. Amended tax return form   You should disregard community property laws when you figure earned income for this credit. Amended tax return form You or your spouse is a student or not able to care for self. Amended tax return form   Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. Amended tax return form His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more. Amended tax return form Spouse works. Amended tax return form   If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month. Amended tax return form Spouse qualifies for part of month. Amended tax return form    If your spouse is a full-time student or not able to care for himself or herself for only part of a month, the full $250 (or $500) still applies for that month. Amended tax return form You are a student or not able to care for self. Amended tax return form   These rules also apply if you are a student or not able to care for yourself and you are filing a joint return. Amended tax return form For each month or part of a month you are a student or not able to care for yourself, your earned income is considered to be at least $250 (or $500). Amended tax return form If you also work during that month, use the higher of $250 (or $500) or your actual earned income for that month. Amended tax return form Both spouses qualify. Amended tax return form   If, in the same month, both you and your spouse are either full-time students or not able to care for yourselves, only one spouse can be considered to have this earned income of $250 (or $500) for that month. Amended tax return form Dollar Limit There is a dollar limit on the amount of your work-related expenses you can use to figure the credit. Amended tax return form This limit is $3,000 for one qualifying person, or $6,000 for two or more qualifying persons. Amended tax return form If you paid work-related expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000. Amended tax return form This $6,000 limit does not need to be divided equally among them. Amended tax return form For example, if your work-related expenses for the care of one qualifying person are $3,200 and your work-related expenses for another qualifying person are $2,800, you can use the total, $6,000, when figuring the credit. Amended tax return form Yearly limit. Amended tax return form   The dollar limit is a yearly limit. Amended tax return form The amount of the dollar limit remains the same no matter how long, during the year, you have a qualifying person in your household. Amended tax return form Use the $3,000 limit if you paid work-related expenses for the care of one qualifying person at any time during the year. Amended tax return form Use $6,000 if you paid work-related expenses for the care of more than one qualifying person at any time during the year. Amended tax return form Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. Amended tax return form Your reduced dollar limit is figured on Form 2441, Part III. Amended tax return form See Dependent Care Benefits , earlier, for information on excluding or deducting these benefits. Amended tax return form Example 1. Amended tax return form George is a widower with one child and earns $24,000 a year. Amended tax return form He pays work-related expenses of $2,900 for the care of his 4-year-old child and qualifies to claim the credit for child and dependent care expenses. Amended tax return form His employer pays an additional $1,000 under a dependent care benefit plan. Amended tax return form This $1,000 is excluded from George's income. Amended tax return form Although the dollar limit for his work-related expenses is $3,000 (one qualifying person), George figures his credit on only $2,000 of the $2,900 work-related expenses he paid. Amended tax return form This is because his dollar limit is reduced as shown next. Amended tax return form   George's Reduced Dollar Limit 1) Maximum allowable expenses for one qualifying person $3,000 2) Minus: Dependent care benefits George excludes from income −1,000 3) Reduced dollar limit on expenses George can use for the credit $2,000 Example 2. Amended tax return form Randall is married and both he and his wife are employed. Amended tax return form Each has earned income in excess of $6,000. Amended tax return form They have two children, Anne and Andy, ages 2 and 4, who attend a daycare facility licensed and regulated by the state. Amended tax return form Randall's work-related expenses are $6,000 for the year. Amended tax return form Randall's employer has a dependent care assistance program as part of its cafeteria plan, which allows employees to make pre-tax contributions to a dependent care flexible spending arrangement. Amended tax return form Randall has elected to take the maximum $5,000 exclusion from his salary to cover dependent care expenses through this program. Amended tax return form Although the dollar limit for his work- related expenses is $6,000 (two or more qualifying persons), Randall figures his credit on only $1,000 of the $6,000 work-related expense paid. Amended tax return form This is because his dollar limit is reduced as shown next. Amended tax return form   Randall's Reduced Dollar Limit 1) Maximum allowable expenses for two qualifying persons $6,000 2) Minus: Dependent care benefits Randall selects from employer's cafeteria plan and excludes from income −5,000 3) Reduced dollar limit on expenses Randall can use for the credit $1,000 Amount of Credit To determine the amount of your credit, multiply your work-related expenses (after applying the earned income and dollar limits) by a percentage. Amended tax return form This percentage depends on your adjusted gross income shown on Form 1040, line 38, or Form 1040A, line 22. Amended tax return form The following table shows the percentage to use based on adjusted gross income. Amended tax return form   IF your adjusted gross income is: THEN the percentage is:       Over   But not over         $0   $15,000   35%       15,000   17,000   34%       17,000   19,000   33%       19,000   21,000   32%       21,000   23,000   31%       23,000   25,000   30%       25,000   27,000   29%       27,000   29,000   28%       29,000   31,000   27%       31,000   33,000   26%       33,000   35,000   25%       35,000   37,000   24%       37,000   39,000   23%       39,000   41,000   22%       41,000   43,000   21%       43,000   No limit   20%   How To Claim the Credit To claim the credit, you can file Form 1040 or Form 1040A. Amended tax return form You cannot claim the credit on Form 1040EZ. Amended tax return form Form 1040 or 1040A. Amended tax return form   You must complete Form 2441 and attach it to your Form 1040 or 1040A. Amended tax return form Enter the credit on Form 1040, line 48, or Form 1040A, line 29. Amended tax return form Limit on credit. Amended tax return form   The amount of credit you can claim is generally limited to the amount of your tax. Amended tax return form For more information, see the Instructions for Form 2441. Amended tax return form Tax credit not refundable. Amended tax return form   You cannot get a refund for any part of the credit that is more than this limit. Amended tax return form Recordkeeping. Amended tax return form You should keep records of your work-related expenses. Amended tax return form Also, if your dependent or spouse is not able to care for himself or herself, your records should show both the nature and the length of the disability. Amended tax return form Other records you should keep to support your claim for the credit are described earlier under Provider Identification Test . Amended tax return form Employment Taxes for Household Employers If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. Amended tax return form If you are a household employer, you will need an employer identification number (EIN) and you may have to pay employment taxes. Amended tax return form If the individuals who work in your home are self-employed, you are not liable for any of the taxes discussed in this section. Amended tax return form Self-employed persons who are in business for themselves are not household employees. Amended tax return form Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. Amended tax return form If you use a placement agency that exercises control over what work is done and how it will be done by a babysitter or companion who works in your home, the worker is not your employee. Amended tax return form This control could include providing rules of conduct and appearance and requiring regular reports. Amended tax return form In this case, you do not have to pay employment taxes. Amended tax return form But, if an agency merely gives you a list of sitters and you hire one from that list, and pay the sitter directly, the sitter may be your employee. Amended tax return form If you have a household employee, you may be subject to: Social security and Medicare taxes, Federal unemployment tax, and Federal income tax withholding. Amended tax return form Social security and Medicare taxes are generally withheld from the employee's pay and matched by the employer. Amended tax return form Federal unemployment (FUTA) tax is paid by the employer only and provides for payments of unemployment compensation to workers who have lost their jobs. Amended tax return form Federal income tax is withheld from the employee's total pay if the employee asks you to do so and you agree. Amended tax return form For more information on a household employer's tax responsibilities, see Publication 926 and Schedule H (Form 1040) and its instructions. Amended tax return form State employment tax. Amended tax return form   You may also have to pay state unemployment tax. Amended tax return form Contact your state unemployment tax office for information. Amended tax return form You should also find out whether you need to pay or collect other state employment taxes or carry workers' compensation insurance. Amended tax return form For a list of state unemployment tax agencies, visit the U. Amended tax return form S. Amended tax return form Department of Labor's website. Amended tax return form A link to that website is in Publication 926, or you can find it with an online search. Amended tax return form Prev  Up  Next   Home   More Online Publications